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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 10-K
FOR ANNUAL TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to _____
Commission file number 001-13254
WEEKS REALTY, L.P.
(Exact name of registrant as specified in its charter)
Georgia 58-2121388
(State of incorporation) (I.R.S. Employer Identification No.)
4497 Park Drive 30093
Norcross, Georgia (Zip Code)
(Address of principal executive
offices)
Registrant's telephone number, including area code: (770) 923-4076
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of exchange on which registered
Units of Limited Partnership Interest Not applicable
("Units")
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
The aggregate market value of the Common Units held by non-affiliates was
approximately $622,596,000.
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TABLE OF CONTENTS
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Item No. FINANCIAL INFORMATION Page No.
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PART I
1. Business.................................................. 3
2. Properties................................................ 13
3. Legal Proceedings......................................... 24
4. Submission of Matters to a Vote of Security Holders....... 24
PART II
Market for Registrant's Common Equity and Related
5. Shareholder Matters....................................... 25
6. Selected Financial Data................................... 26
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 28
Quantitative and Qualitative Disclosures about Market
7A Risks..................................................... 42
8. Financial Statements and Supplementary Data............... 42
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure....................... 42
PART III
10. Directors and Executive Officers of the Registrant........ 43
11. Executive Compensation.................................... 47
Security Ownership of Certain Beneficial Owners and
12. Management................................................ 55
13. Certain Relationships and Related Transactions............ 59
PART IV
Exhibits, Financial Statement Schedule and Reports on Form
14. 8-K....................................................... 62
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PART I
ITEM 1. BUSINESS
THE OPERATING PARTNERSHIP
Weeks Realty, L.P. (a Georgia limited partnership, the "Operating
Partnership" or "Registrant") and its subsidiaries own, operate, develop,
construct, acquire and manage industrial and suburban office buildings in the
southeast United States and Texas. Weeks Corporation (a Georgia corporation),
through its wholly owned subsidiaries, Weeks GP Holdings, Inc. ("Weeks GP") and
Weeks LP Holdings, Inc. ("Weeks LP"), referred to herein as the "Company," is
the sole general partner and a limited partner and owns a majority interest in
the Operating Partnership. The Operating Partnership, including the operations
of its subsidiaries, conducts substantially all of the on-going operations of
Weeks Corporation, a publicly traded company that operates as a self-
administered and self-managed real estate investment trust ("REIT") under the
Internal Revenue Code of 1986, as amended (the "Code"). Since 1965, the
Operating Partnership, together with its affiliates and predecessors, has
developed, owned, managed, constructed and acquired primarily institutional-
quality industrial and suburban office properties in select metropolitan
markets in the southeast United States and Texas.
The Operating Partnership, including the operating entities described below,
is the entity through which all of the Company's operations are conducted. At
December 31, 1998, the Company controlled the Operating Partnership as the
holder of a 72.9% ownership interest in the Operating Partnership. At December
31, 1998, the Company owned the sole 1.3% general partnership interest in the
Operating Partnership through Weeks GP and a 71.6% limited partnership interest
through Weeks LP. Additionally, at December 31, 1998, Weeks LP owns all of the
6,000,000 series A preferred units outstanding, as discussed below. The other
limited partners of the Operating Partnership are those individuals and
entities (including certain officers and directors of the Company) (i) who, at
the time of the Company's initial public offering, elected to hold all or a
portion of their respective interests in the Company in the form of Units
rather than receiving shares of the Company's common stock and (ii) who have
contributed, directly or indirectly, certain assets, properties and businesses
to the capital of the Operating Partnership (collectively, the "Limited
Partners"). At December 31, 1998, the Operating Partnership had 26,988,413
common units of limited partnership interest ("Common Units"), 6,000,000, 8%
series A preferred units, 1,400,000, 8% series C preferred units and 2,600,000,
8.625% series D preferred units outstanding. The Common Units have
substantially the same economic characteristics as the Company's common stock.
The series A preferred units have substantially the same economic
characteristics as the Company's series A preferred stock. The series A, C and
D preferred units carry cumulative distribution requirements and have
liquidation preferences of $25.00 per unit.
Each Common Unit may be redeemed by the holder thereof for either one share
of the Company's common stock or cash equal to the fair market value thereof at
the time of such redemption, at the option of the Company. As of December 31,
1998, the Company had issued common stock in connection with all redemptions.
With each redemption of outstanding Common Units for the Company's common
stock, the Company's percentage ownership in the Operating Partnership will
increase. In addition, whenever the Company issues shares of its equity
securities, the Company will contribute any net proceeds therefrom to the
Operating Partnership and the Operating Partnership will issue an equivalent
number of Units to either Weeks GP or Weeks LP, as appropriate, having
substantially the same economic characteristics as the equity securities issued
by the Company. The Company's weighted average ownership interest in the
Operating Partnership was 73.7% and 76.5% for the years ended December 31, 1998
and 1997, respectively. Both Weeks GP and Weeks LP are qualified REIT
subsidiaries within the meaning of Section 856(i)(2) of the Code and their
existence is disregarded for federal income tax purposes.
As of December 31, 1998, the Operating Partnership's in-service property
portfolio consisted of 282 industrial properties, 32 suburban office properties
and five retail/ground leased properties comprising 25,797,000 square feet. In-
service properties exclude properties under development which are not yet
stabilized
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(i.e., substantially leased) and properties under agreement to acquire. As of
December 31, 1998, the Operating Partnership's primary markets and the
concentration of the Operating Partnership's portfolio (based on square footage
of in-service properties) are Atlanta, Georgia (56.8%), Nashville, Tennessee
(10.5%), Raleigh-Durham-Chapel Hill (the "Research Triangle"), North Carolina
(9.8%), Miami, Florida (9.5%), Dallas, Texas (5.4%), Orlando, Florida (3.3%),
Jacksonville, Florida (2.5%), Spartanburg, South Carolina (1.5%), and Tampa,
Florida (0.7%). In addition, 54 industrial, suburban office and retail
properties were under development, in lease-up or under agreement to acquire at
December 31, 1998, comprising an additional 5,923,000 square feet (see
"Properties" below).
As sole general partner, the Company (through Weeks GP), has the exclusive
power under the agreement of limited partnership of the Operating Partnership
to manage and conduct the business of the Operating Partnership, subject to the
consent of a majority in interest of the Limited Partners (other than Weeks LP)
in connection with (i) the sale of all or substantially all of the assets of
the Operating Partnership, (ii) the merger of the Operating Partnership into
another entity if the Operating Partnership is not the surviving entity, (iii)
the dissolution of the Operating Partnership or (iv) the acquisition of any
personal or real property other than in the name of the Operating Partnership
or of certain other entities in which the Operating Partnership has an
interest. The board of directors of the Company manages the affairs of the
Company, which directs the affairs of the Operating Partnership through Weeks
GP. The Operating Partnership cannot be terminated, except in connection with a
sale of all or substantially all of the assets of the General Partner or a
decree of judicial dissolution of the Operating Partnership pursuant to the
provisions of Georgia law, prior to December 31, 2093, without a vote of the
Limited Partners. The Company's limited and general partnership interests in
the Operating Partnership entitle it to share in cash distributions from, and
in profits and losses of, the Operating Partnership in proportion to the
Company's percentage interest therein (through Weeks GP and Weeks LP) and
entitle the Company to vote (through Weeks LP) on all matters requiring a vote
of the Limited Partners (other than the matters set forth in subsections (i)
through (iv) of this paragraph).
Additionally, the terms of the limited partnership agreement obligate the
Company to contribute the net proceeds from the issuance of additional equity
securities, including issuances under the Company's incentive stock plan, to
the Operating Partnership in exchange for Units having substantially the same
economic characteristics as the equity securities issued by the Company.
Operating Partnership net profits, net losses and cash flow (after all
allocations to preferred ownership interests) are allocated to the partners in
proportion to their common ownership interests. Cash distributions from the
Operating Partnership shall be, at a minimum, sufficient to enable the Company
to satisfy its annual dividend requirements to maintain its REIT status under
the Code.
The Operating Partnership conducts its third-party service businesses
through two companies (the "Service Companies"): Weeks Realty Services, Inc.
("Weeks Realty Services"), conducts third-party landscape, property management
and leasing services, and Weeks Construction Services, Inc. ("Weeks
Construction Service"), conducts third-party construction services. The
Operating Partnership holds 100% of the nonvoting and 1% of the voting common
stock of these Subsidiaries. The remaining voting common stock is held by three
executive officers of the Operating Partnership. The ownership of the common
stock of the Service Companies entitles the Operating Partnership to
substantially all (99%) of the economic benefits from the results of the
Service Companies' operations (see Notes 2 and 5 to the consolidated financial
statements).
Certain of the Operating Partnership's operating real estate assets are
owned through subsidiary limited liability companies and partnerships. At
December 31, 1998, the Operating Partnership owned 23 operating buildings
totaling approximately 2,446,000 square feet and approximately five acres of
land subject to ground leases located in Miami, Florida and owned four
operating buildings totaling approximately 241,000 square feet located in the
Research Triangle area of North Carolina through such entities. The Operating
Partnership also owns a 50% interest in an 86,000 square foot building in
Atlanta, Georgia through a 50% owned limited liability company.
In addition, the Operating Partnership owns or owns indirect interests in
certain buildings under development through limited liability companies and
partnerships. At December 31, 1998, the Operating
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Partnership owned five buildings in Miami/Ft. Lauderdale, Florida, one building
in Orlando, Florida and one building in Atlanta, Georgia totaling approximately
900,000 square feet through such entities.
The Operating Partnership will terminate on the earlier of a sale of all or
substantially all of its assets, the election of the general partner (with the
consent of the limited partners) to dissolve the Operating Partnership, or
December 31, 2093.
Based on Common Units outstanding on February 28, 1999, executive officers
and directors of the Company own approximately 14% of the Common Units of the
Operating Partnership, including those Common Units attributable to shares of
the Company that are owned by such executive officers and directors.
The Annual Report on Form 10-K, including documents incorporated herein by
reference, contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended (the "Securities Act"), and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). Forward-looking statements are inherently subject to risks and
uncertainties, many of which cannot be predicted with accuracy and some of
which might not even be anticipated. Future events and actual results,
financial and otherwise, may differ materially from the events and results
discussed in the forward-looking statements. Factors that might cause such a
difference include, but are not limited to, the general economic climate,
competition and the supply of and demand for industrial and suburban office
properties in the Operating Partnership's markets, interest rate levels, the
availability of financing, potential environmental liability and other risks
associated with the ownership, development and acquisition of properties,
including risks that tenants will not take or remain in occupancy or pay rent,
or that construction or operating costs may be greater than anticipated, and
those discussed in "Management's Discussion and Analysis of Results of
Operations and Financial Condition" appearing elsewhere herein.
Operating Partnership History
The Operating Partnership's predecessor entitles were founded in 1965 by
A.R. Weeks, Sr., the father of A. Ray Weeks, Jr., the Company's Chairman of the
Board and Chief Executive Officer. Under the leadership of A. Ray Weeks, Jr.
and Forrest W. Robinson, the Company's President and Chief Operating Officer,
the Operating Partnership's predecessor entities operated as a private real
estate organization until August 1994, when the Company completed an initial
public offering and elected to be taxed as a REIT and the Operating Partnership
was formed. Thomas D. Senkbeil joined the Company as Vice Chairman of the Board
and Chief Investment Officer in October 1992. Prior to joining the Company, Mr.
Senkbeil had been a principal in another real estate development and management
firm in Atlanta, Georgia.
In November 1996, the Operating Partnership completed the initial phase of
the acquisition of the properties and related operations of NWI Warehouse
Group, L.P. ("NWI"), and Buckley & Company Real Estate, Inc. ("Buckley"), each
of Nashville, Tennessee (see Note 3 to the consolidated financial statements).
Through that transaction, the Operating Partnership established a presence in
Nashville, Tennessee, and both of the principals of NWI and Buckley, John W.
Nelley, Jr., and Albert W. Buckley, Jr., joined the Company as Managing
Directors with responsibility for the Operating Partnership's activities in
Nashville, Tennessee. In December 1996, the Operating Partnership completed the
initial phase of its acquisition of the properties and related operations of
Lichtin Properties, Inc. ("Lichtin"), of the Research Triangle area of North
Carolina (see Note 3 to the consolidated financial statements). Through that
transaction, the Operating Partnership established a presence in the Research
Triangle, and Harold S. Lichtin, the President of Lichtin, joined the Company's
Board of Directors. John W. Nelley, Jr., and Harold S. Lichtin currently serve
on the Company's Board of Directors.
In January 1998, the Operating Partnership acquired a 2,477,000 square foot,
24-building property portfolio in Miami, Florida (see Note 3 to the
consolidated financial statements) and in February 1998, one of the Service
Companies acquired a one-third interest in Codina Group, Inc., a South Florida
commercial and industrial real estate services company that developed the
portfolio (see Note 5 to the consolidated financial statements). St. Joe
Corporation, a publicly traded company which, through its subsidiaries, is the
largest single
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private landowner in the State of Florida, also purchased a one-third interest
in Codina Group, Inc. Through these combined transactions, the Operating
Partnership established a presence in South Florida with the intention of
pursuing development and acquisition opportunities in the area.
In June 1998, the Operating Partnership entered into the Dallas/Ft. Worth
market through the acquisition of real estate properties. During 1998, the
Operating Partnership established an office presence in Dallas, Texas for the
purpose of expanding the Operating Partnership's real estate holdings and
operations in Texas. The establishment of a local office in Dallas, Texas is
similar to the Operating Partnership's strategy of establishing local offices
in Orlando, Tampa and Jacksonville, Florida.
The Company was incorporated in Georgia as A. R. Weeks & Associates Inc. in
1983. The Company changed its name to Weeks Corporation in June 1994. The
Company's executive offices are located at 4497 Park Drive, Norcross, Georgia,
30093 and its telephone number is (770) 923-4076. Weeks GP and Weeks LP, both
Georgia Corporations, were incorporated in October 1996. The Operating
Partnership is a Georgia limited Partnership that was formed in June 1994 for
the purpose of consolidating the operating and development businesses of the
Company and a portfolio of certain properties described herein. The Company,
the Operating Partnership and the Service Companies currently employ
approximately 576 full-time employees.
Recent Developments
On March 1, 1999, the Company announced that it had entered into an
Agreement and Plan of Merger with Duke Realty Investments, Inc., an Indiana
based REIT specializing in industrial and office building development and
ownership whose common stock is traded on the New York Stock Exchange under the
trading symbol "DRE" ("Duke"), and that the Operating Partnership had entered
into an Agreement and Plan of Merger with Duke Realty Limited Partnership, the
operating partnership through which Duke owns and manages its properties ("Duke
OP"). These agreements provide for the merger of the Company with and into Duke
and the merger of the Operating Partnership with and into Duke OP. After the
effective time of the mergers, Duke will change its name to Duke-Weeks Realty
Corporation.
The consummation of the transactions contemplated by the merger agreements
is expected to occur in the second or third quarter of 1999, and is subject to
approval by the stockholders of Duke and the shareholders of the Company and
satisfaction of certain other customary closing conditions. There can be no
assurance that the transactions contemplated by the merger agreements will be
consummated. For a more complete description of the pending merger
transactions, see "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
Competition
Numerous properties compete with the Operating Partnership's properties in
attracting tenants and corporate users. Some of these competing properties may
be newer or better located than the Operating Partnership's properties. The
number of competitive industrial or suburban office properties and the
availability of land suitable for industrial or suburban office development in
a particular area could have a material effect on the Operating Partnership's
ability to lease or develop space. The Operating Partnership may be competing
with other developers that have greater resources than the Operating
Partnership. In addition, in order to maintain its qualification as a REIT, the
Operating Partnership will be required under the Code to distribute annually
significant amounts of cash from operations, while some of its competitors may
be able to retain more of their working capital to finance projects.
The Operating Partnership competes for tenants based on its high level of
client service, the quality of its properties and business parks, and its
ability to successfully develop a wide range of industrial and suburban office
properties. Leases at the Operating Partnership's properties are priced
competitively based on market conditions, supply and demand characteristics,
and the quality of the Operating Partnership's properties and services. The
Operating Partnership does not seek to compete solely on the basis of providing
the low-cost solution for all tenants.
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Real Estate Investments
The Operating Partnership's real estate investments are subject to varying
degrees of risk. Income from the Operating Partnership's properties and the
demand for new development properties may be adversely affected by the general
economic climate; local conditions such as oversupply of industrial or office
properties or a reduction in demand for industrial or office properties in the
markets where the Operating Partnership owns properties; the attractiveness of
the Operating Partnership's properties; the ability of the Operating
Partnership to provide adequate maintenance and insurance; and increased
operating costs (including real estate taxes). In addition, income from the
Operating Partnership's properties and the value of its real estate are also
affected by such factors as the cost of regulatory compliance, interest rate
levels and the availability of financing. The Operating Partnership's income
and operations would be adversely affected if a significant number of tenants
were unable to pay rent or the Operating Partnership's properties could not be
rented on favorable terms. Certain significant expenditures associated with the
Operating Partnership's investments in real estate (such as mortgage payments,
if any, real estate taxes and maintenance costs) are generally not reduced when
circumstances cause a reduction in income from the property.
Environmental Liabilities
Under various federal, state and local laws and regulations, an owner or
operator of real estate may be held liable for the costs of removal or
remediation of hazardous or toxic substances located on or in the property.
These laws often impose such liability without regard to whether the owner
knows of, or was responsible for, the presence of such hazardous or toxic
substances. The costs of any required remediation or removal of such substances
may be substantial. In addition, the owner's liability as to any property is
generally not limited under such laws and regulations and could exceed the
value of the property and/or the aggregate assets of the owner. The presence of
such substances, or the failure to remediate such substances properly, may also
adversely affect the owner's ability to sell or lease the property or to borrow
using the property as collateral. Under such laws and regulations, an owner or
entity that arranges for the disposal or treatment of hazardous or toxic
substances at a disposal or treatment facility may also be liable for the costs
of removal or remediation of all such substances at such facility, whether or
not such facility is owned or operated by such person. Certain tenants of the
Operating Partnership handle and store hazardous substances at the Operating
Partnership's properties. As a result, in connection with the ownership of the
Operating Partnership's properties or land held for development and a tenant's
improper handling, storage, disposal or treatment of such hazardous or toxic
substances, the Operating Partnership may be liable for such costs, including
the removal or remediation of all such substances from such properties. Some
laws and regulations impose liability for the release of certain materials into
the air or water from a property, including asbestos, and such release can form
the basis for liability to third parties for personal injury or other damages.
Other laws and regulations can limit the development of and impose liability
for the disturbance of wetlands or the habitats of threatened or endangered
species.
The Operating Partnership regularly makes capital expenditures and reviews
the conditions of its properties and its land held for development in order to
maintain compliance with applicable environmental laws. Based on facts
currently known to it, the Operating Partnership does not believe it will be
required under existing environmental laws to expend amounts that would have a
material adverse effect on its results of operations, financial condition or
liquidity. However, no assurance can be given that material environmental
liabilities do not exist, that any prior owner or operator of a property or
land held for development did not create any material environmental condition
not known to the Operating Partnership, that a material environmental condition
does not otherwise exist as to any one or more of the properties or land held
for development, or that future uses and conditions (including changes in
applicable environmental laws and regulations and the uses and conditions of
properties in the vicinity, such as leaking underground storage tanks and the
activities of the tenants) will not result in the imposition of environmental
liability. No material expenditures were made by the Operating Partnership in
1998, 1997 or 1996 relating to environmental matters.
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INVESTMENT OBJECTIVES AND OPERATING STRATEGIES
The Operating Partnership's primary investment objectives are to increase
shareholder value and to increase per share cash available for distribution by
(1) developing institutional-quality, functional multi-tenant and build-to-suit
industrial and suburban office properties, (2) acquiring industrial and
suburban office properties in strategic locations where the Operating
Partnership can establish or enhance its market presence, (3) maximizing cash
flow through active leasing and management of its properties, and (4) expanding
strategically into new geographic markets. The Operating Partnership has
structured its operations, as discussed in more detail below, to meet these
investment objectives.
Fully Integrated Real Estate Organization
The Operating Partnership is a fully integrated real estate company with
resources dedicated to:
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. landscaping
. marketing
. property management
. development
. civil engineering
. construction
. legal
. investment analysis
. design
. asset management
. information systems
. financing
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The Operating Partnership believes that by providing a full range of
services it can control quality and provide greater client service, improve
timely delivery of its industrial and suburban office developments and promote
cost savings.
Development of Business Park Environments
The Operating Partnership develops and owns its properties primarily in
business park environments (see discussion under "Properties"). Alone or with
its joint venture partners, the Operating Partnership controls all aspects of
the development process in a majority of the business parks in which it
operates, including site selection and project concept, master planning and
zoning, design and construction, leasing and property management. Each business
park is in proximity to an interstate highway interchange and retail and
residential amenities.
The Operating Partnership's business parks emphasize flexible land plans,
extensive landscaping and protective covenants which restrict the uses and
control the architecture and signage. In addition to its properties, the
Operating Partnership provides landscaping services for other corporate users
in its controlled business parks. The Operating Partnership will continue to
emphasize business park development in future years.
Product Focus
The Operating Partnership develops or acquires industrial and suburban
office properties, primarily in suburban locations (see related discussion of
product types under "Properties"). The Operating Partnership's properties can
include both single-tenant (build-to-suit) buildings and multi-tenant
buildings. The Operating Partnership designs properties that can be modified
economically to meet the needs of various clients and that can often function
as either multi-tenant or single-tenant buildings.
The Operating Partnership develops institutional-quality, general purpose
properties that are designed to be architecturally attractive and to serve the
needs of a variety of tenants in a particular submarket. The Operating
Partnership attempts to limit tenant improvement expenditures to those which
are in demand by, and adaptable
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with moderate modification to, a high number of users in a market. The
Operating Partnership controls tenant improvement expenditures by utilizing its
in-house interior finish department to supervise the construction process and
by compensating its marketing representatives based on a formula which takes
into account the cost of tenant finish requirements. The Operating Partnership
uses standard finish materials for most of its tenants. The Operating
Partnership's annual purchase programs allow it to procure these materials on a
volume discount basis.
Market Focus
The Operating Partnership focuses its activities in what it believes are
some of the fastest growing markets in the southeast United States and Texas.
As detailed below, the states where the Operating Partnership focuses its
activities have generally experienced greater percentage growth in population
and employment than the United States as a whole.
Population and Employment Growth
(percentage change)
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Non-Farm
Population Growth Employment Growth
Jul '97--Jul Jan '98--Jan
'98(a) '99(b)
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Florida.................................. 1.6% 4.0%
Georgia.................................. 2.0% 3.1%
North Carolina........................... 1.6% 3.2%
South Carolina........................... 1.3% 3.3%
Tennessee................................ 1.1% 1.5%
Texas.................................... 1.9% 3.1%
U.S. Average............................. 1.0% 2.2%
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(a) Source: U.S. Census Bureau.
(b) Source: Bureau of Labor Statistics.
Metropolitan Atlanta, Georgia. The Operating Partnership was founded and is
currently headquartered in metropolitan Atlanta, and is one of metropolitan
Atlanta's largest industrial property owners. Metropolitan Atlanta's rapid
growth in both employment and population is due in part to its role as a
business and distribution center for the entire Southeast.
According to Jamison Research, Inc. ("Jamison"), which publishes data on
metropolitan Atlanta's industrial and office real estate markets, the
metropolitan area in 1998 recorded industrial net absorption of approximately
11.0 million square feet, and over the past five years, metropolitan Atlanta's
industrial net absorption has totaled more than 60.0 million square feet. Also
according to Jamison, metropolitan Atlanta's office market recorded net
absorption of approximately 5.6 million square feet during 1998. The
approximately 16.6 million square feet of combined industrial and office net
absorption in metropolitan Atlanta in 1998, compares with approximately 17.0
million square feet in 1997.
The Operating Partnership's completed and in-service properties located in
metropolitan Atlanta comprised approximately 93% industrial properties and
approximately 7% suburban office properties at December 31, 1998, and had an
average occupancy rate on such date of 95.4%, nearly four percentage points
better than the overall market occupancy, according to figures published by
Jamison.
The Operating Partnership believes that one of the reasons that the
occupancy rate of its metropolitan Atlanta properties is higher than the
overall market is that it generally focuses its activities on the submarkets
that are among the metropolitan area's strongest. According to Jamison, the
major submarkets where the
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Operating Partnership generally focuses its activities accounted for less than
60% of metropolitan Atlanta's approximately 441 million square feet of
industrial and office space at December 31, 1998, but recorded more than 85% of
the metropolitan area's net absorption in 1998. The Operating Partnership
allocates its development activity in metropolitan Atlanta among all four of
its primary industrial and suburban office property types and among a number of
distinct submarkets, based on its determination of supply and demand
conditions.
Nashville, Tennessee. The Operating Partnership entered the Nashville market
in November 1996 with its acquisition of NWI (see Note 3 to the consolidated
financial statements). Like Atlanta, Nashville is the state capital and has a
well-developed transportation infrastructure. Nashville is also well located as
a point of distribution. According to the Nashville Area Chamber of Commerce,
Nashville lies within a 600 mile radius of 50% of the United States population.
At December 31, 1998, all of the Operating Partnership's completed and in-
service properties in Nashville are industrial properties and had an average
occupancy rate on such date of 96.5%.
Research Triangle, North Carolina. The Operating Partnership entered the
Research Triangle area of North Carolina in December 1996 with its acquisition
of Lichtin (see Note 3 to the consolidated financial statements). The Research
Triangle market is characterized as a center for high technology,
communications, research and development and health care, and attracts many of
its employees from its three universities: Duke University, The University of
North Carolina and North Carolina State University. Research Triangle Park,
which is located adjacent to most of the Operating Partnership's portfolio, is
one of the nation's largest planned research parks, with more than 70 national
and international research organizations employing over 35,000 people. Research
Triangle Park generally consists of corporate-owned facilities devoted to
research and development. Many of the Operating Partnership's properties house
administrative, technology and service functions that complement the activities
of businesses with facilities located within Research Triangle Park.
The Operating Partnership's completed and in-service properties in the
Research Triangle comprised 23 industrial properties and 11 suburban office
properties at December 31, 1998, and had an average occupancy rate on such date
of 93.2%.
Orlando, Florida. The Operating Partnership entered the Orlando market in
April 1995 with the purchase of an approximately 190,000 square foot portfolio
of industrial properties. The Operating Partnership's decision to expand into
Orlando was based in part on the city's geographic location as a point of
distribution for the state of Florida, the most highly populated state in the
Southeast. Since entering Orlando in 1995, the Operating Partnership has
increased its portfolio of in-service properties to approximately 858,000
square feet as of December 31, 1998, and has opened a local office. All of the
Operating Partnership's 12 completed and in-service properties in Orlando at
December 31, 1998, are industrial properties, and these properties had an
average occupancy rate on such date of 97.5%.
Tampa, Florida. The Operating Partnership entered the Tampa market in 1997,
with plans to develop two new business parks, totaling approximately 1.5
million square feet. At year-end, the Operating Partnership's 174,000 square
foot in-service property was 100%. The Operating Partnership currently
maintains a local office in Tampa and also uses personnel located in the
Operating Partnership's Orlando, Florida office to support its Tampa
operations.
Jacksonville, Florida. The Operating Partnership entered the Jacksonville
market in 1997 by acquiring the rights to the remaining land at Jacksonville
International Tradeport, the only industrial park in a tax increment financing
district, located near the Jacksonville International Airport. The Operating
Partnership estimates that the development potential of this land at December
31, 1998, may total more than 2.0 million square feet. The Operating
Partnership's Jacksonville office is lead by two local market officers who have
primary responsibility for developing Jacksonville International Tradeport. The
Operating Partnership's 10 in-service properties in Jacksonville were 93.5%
occupied as of December 31, 1998.
10
<PAGE>
Miami, Florida. The Operating Partnership entered the Miami market in early
1998 through the acquisition of Beacon Centre, a 24-building, 2.5 million
square foot mixed use industrial, office and retail development, located near
the Miami International Airport. In connection with the acquisition of Beacon
Centre, the Operating Partnership also acquired a one-third interest in Codina
Group, Inc., a South Florida commercial and industrial real estate services
company that developed the property (see notes 3 and 5 to the consolidated
financial statements). St. Joe Corporation, a publicly traded company which,
through its subsidiaries, is the largest single private landowner in the State
of Florida, also purchased a one-third interest in Codina Group, Inc. Through
these combined transactions, the Operating Partnership is pursuing additional
development and acquisition activity throughout South Florida.
Dallas/Ft. Worth, Texas. The Operating Partnership entered the Dallas/Ft.
Worth market in 1998 through the acquisition of nine industrial buildings
totaling approximately 1.9 million square feet and approximately 68.0 acres of
undeveloped land. The Operating Partnership hired a local market officer whose
primary responsibilities are to manage the existing portfolio and expand the
Operating Partnership's operations in Texas through both development and
acquisition of properties.
Spartanburg, South Carolina. Spartanburg is the Operating Partnership's
smallest market and is served out of the Operating Partnership's Atlanta
headquarters. The Operating Partnership's activities in Spartanburg consist of
properties owned and developed at Hillside business park. Hillside is located
one exit north on I-85 from BMW's automobile production facility that opened in
1995. The occupancy rate of the Operating Partnership's approximately 386,000
square feet of three completed and in-service industrial properties in
Spartanburg was 100% as of December 31, 1998.
BUSINESS GROWTH STRATEGY
Development
The Operating Partnership is an experienced developer of institutional-
quality, general purpose industrial and suburban office multi-tenant and build-
to-suit properties, and has personnel engaged in all phases of the development
process, including market analysis, site selection, zoning, design, civil
engineering, construction and landscaping. The Operating Partnership currently
has adequate sources for raw materials needed to construct its new properties,
including access to qualified labor and subcontractors. In 1998 and 1997, the
Operating Partnership completed and stabilized 45 development properties and
three property expansions totaling approximately 5.3 million square feet.
Acquisitions
The Operating Partnership balances its development activity by making
opportunistic acquisitions in strategic locations that establish or enhance the
Operating Partnership's market position, or where the Operating Partnership's
skills and market knowledge can enhance value through additional development,
property management or physical upgrades. In 1998 and 1997, the Operating
Partnership acquired 85 properties totaling approximately 7.0 million square
feet.
Risks of Development and Acquisitions
New project development is subject to a number of risks, including risks of
construction delays or cost overruns that may increase project costs, risks
that the project will not achieve anticipated occupancy levels or sustain
anticipated rent levels, and new project commencement risks such as the failure
to obtain zoning, occupancy and other required government permits and
authorizations, and the incurrence of development costs in connection with
projects that are not pursued to completion.
Acquisitions entail risks that (i) existing agreements to acquire properties
may fail to close, (ii) acquired properties may not perform in accordance with
management's expectations, including projected occupancy and rental rates,
(iii) the senior executives and employees of an acquired business will not be
successfully integrated into the Operating Partnership, or (iv) the Operating
Partnership may have underestimated the cost of improvements required to bring
an acquired property up to standards established for the market position
11
<PAGE>
intended for that property. Although the Operating Partnership has successfully
acquired properties and effectively integrated their operations in the past,
there can be no assurance that the Operating Partnership will be able to
continue to make successful acquisitions in the future or that any such
acquisitions will be successfully integrated into the Operating Partnership's
operations. Furthermore, there can be no assurance that an acquisition will not
have an adverse effect upon the Operating Partnership's operating results,
particularly in the fiscal quarters immediately following the consummation of
such acquisition, or that the Operating Partnership will be able to continue to
operate an acquired business in a profitable manner.
Both development and acquisitions also involve risks that the Operating
Partnership will fail to obtain adequate sources of financing (see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources").
Land Control
An important part of the Operating Partnership's development strategy is to
own or control land sufficient to allow it to develop exclusive business park
environments and to accommodate the expansion and relocation needs of its
tenants. The Operating Partnership employs a number of ownership and control
arrangements in its land strategy, including outright purchases, joint
ventures, staged acquisitions, options and exclusive marketing and development
agreements. By doing so, the Operating Partnership believes that it can control
sufficient land acreage, while mitigating the negative impact of land carrying
costs.
At December 31, 1998, the Operating Partnership owned or controlled (through
agreements to purchase, joint ventures, options and marketing and development
agreements) approximately 1,871 net usable acres of undeveloped land, located
primarily in existing business parks with zoning and infrastructure in place.
The Operating Partnership believes the development potential of this land may
total approximately 19.6 million square feet (see "Properties").
Internal Growth
The Operating Partnership attempts to maximize its available cash flow by
increasing the occupancy rate of those properties that are not fully leased,
maintaining high occupancy rates, raising effective rental rates and
controlling operating expenses and capital expenditures. The occupancy rate of
the Operating Partnership's in-service properties (i.e., those having reached
substantial lease-up) was 94.7% as of December 31, 1998. The Operating
Partnership believes that its emphasis on providing quality facilities and
client service has resulted in a high retention of its tenants and low
turnover. Of the leases that expired in 1998 (representing approximately 4.0
million square feet), tenants occupying approximately 70% of such space renewed
their leases with the Operating Partnership or expanded into larger spaces
under new leases with the Operating Partnership. These expansions totaled
approximately 1,800,000 square feet. The Operating Partnership believes that
this high retention of its tenants results in lower re-leasing costs and
decreased potential loss due to vacancy.
The leases for the Operating Partnership's properties have terms ranging
from one to fifteen years, with terms for multi-tenant properties typically
between three and five years and for build-to-suit properties typically between
seven and ten years. Typically, the tenant in a multi-tenant property pays for
increases in taxes, operating costs and insurance above a base year level. For
build-to-suit properties, the tenant typically pays for all taxes, insurance
and operating costs. Approximately 69% of the Operating Partnership's leases
(based on leased square footage as of December 31, 1998) contain contractual
rent escalations.
The high average occupancy of the Operating Partnership's in-service
properties reflects the generally strong supply and demand conditions in its
markets. As a result, the Operating Partnership continues to be able to
increase average rents and generally to avoid offering tenant concessions.
During 1998, the Operating Partnership renewed or re-leased approximately
4.0 million square feet of second-generation space in its properties. Cash-
basis rental rates on a comparable space basis increased by an average of 5.9%,
calculated by comparing the initial cash-basis rent to be paid by the tenant
under the new or renewed lease with the ending cash-basis rent paid by the
tenant under the previous lease on the same space.
As shown in the table provided under "Properties--Tenants," no single tenant
accounted for more than 1.9% of annualized base rent from leases under which
tenants were paying rent as of December 31, 1998.
12
<PAGE>
Geographic Expansion
From the Operating Partnership's base in metropolitan Atlanta, Georgia, the
Operating Partnership intends to continue expanding carefully into new markets.
The Operating Partnership expands into other markets only when it believes it
can achieve over time a significant market presence. The Operating
Partnership's geographic expansion activities to date have included the 1990
expansion into Spartanburg, South Carolina, the 1995 expansion into Orlando,
Florida, the 1996 expansions into Nashville, Tennessee and the Research
Triangle area of North Carolina, the 1997 expansions into Tampa and
Jacksonville, Florida and the 1998 expansions into Miami and the greater South
Florida markets and the Dallas, Texas market. As a result of its geographic
expansion, the Operating Partnership has reduced its concentration of
properties in metropolitan Atlanta, Georgia, to 56.8% at December 31, 1998
(based on square footage of in-service properties, excluding properties under
development and/or under agreement to acquire), from 95% at December 31, 1995
(calculated on the same basis). The Operating Partnership's concentration in
metropolitan Atlanta, Georgia is expected to continue to decline with the
expansions into additional markets. For a breakdown of the Operating
Partnership's properties by market, including properties under development or
in lease-up or under agreement to acquire, see "Properties".
ITEM 2. PROPERTIES
As of December 31, 1998, the Operating Partnership owned or had agreements
to acquire 373 properties, including 52 properties that were under development
or in lease-up and two properties which were under agreement to acquire. Four
of these properties were held in 50% owned entities and one property under
development was held in an 85% owned joint venture. Of these 373 properties,
322 were industrial buildings, 46 were office buildings and five were retail
buildings. The Operating Partnership's 319 completed and in-service properties
(i.e., excluding properties under development or in lease-up or under agreement
to acquire) were 94.7% occupied at December 31, 1998.
The following table sets forth, as of December 31, 1998, the location and
type of property by square feet for the 373 properties discussed above.
Location and Type of Properties
(by square feet)
<TABLE>
<CAPTION>
Percent
Business Bulk Business Total Suburban of
Location Distribution Warehouse Service Industrial Office Retail Total Total
- -------- ------------ --------- --------- ---------- --------- ------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Atlanta, GA............. 7,763,742 5,380,898 1,731,487 14,876,127 1,374,740 48,977 16,299,844 51.4%
Nashville, TN........... 2,030,751 731,886 633,199 3,395,836 174,436 -- 3,570,272 11.3%
Research Triangle, NC... 867,175 -- 1,092,418 1,959,593 1,308,313 -- 3,267,906 10.3%
Miami, FL............... 2,310,596 -- 105,980 2,416,576 63,240 415,855 2,895,671 9.1%
Dallas/Ft. Worth, TX.... 241,029 1,682,217 -- 1,923,246 152,000 -- 2,075,246 6.5%
Orlando, FL............. 394,657 689,883 288,487 1,373,027 109,021 -- 1,482,048 4.7%
Jacksonville, FL........ -- 732,130 -- 732,130 72,205 -- 804,335 2.5%
Spartanburg, SC......... 198,000 293,200 -- 491,200 -- -- 491,200 1.5%
Tampa, FL............... 160,680 173,514 -- 334,194 125,000 -- 459,194 1.4%
Ft. Lauderdale, FL...... 275,336 -- -- 275,336 99,000 -- 374,336 1.3%
---------- --------- --------- ---------- --------- ------- ---------- -----
Total................... 14,241,966 9,683,728 3,851,571 27,777,265 3,477,955 464,832 31,720,052 100.0%
========== ========= ========= ========== ========= ======= ========== =====
Percent of Total........ 44.9% 30.5% 12.1% 87.5% 11.0% 1.5% 100.0%
========== ========= ========= ========== ========= ======= ==========
</TABLE>
Included in the 373 properties discussed above are 21 industrial properties
totaling approximately 1,181,000 square feet that were sold in January 1999. In
addition, the properties discussed above include five other industrial
properties, included one property under development, totaling approximately
1,255,000 square feet that are under agreement to be sold in 1999. All of these
properties are located in Atlanta, Georgia.
13
<PAGE>
Industrial Properties
The Operating Partnership owned, had under development or in lease-up or had
agreements to acquire 322 industrial buildings as of December 31, 1998. These
buildings can be characterized by their use: business distribution, bulk
warehouse or business service. The Operating Partnership owned, had under
development or in lease-up or had agreements to acquire 191 business
distribution buildings, 58 bulk warehouse buildings, and 73 business service
buildings at year-end.
The Operating Partnership's business distribution buildings are generally
20,000 to 200,000 square feet in size, have warehouse clear ceiling heights of
18 to 24 feet, building depths of 100 to 240 feet, office finish of 10% to 55%
and dock-high truck doors (which are designed to accommodate tractor-trailers).
These buildings may function as headquarters, sales and administration,
research and development and light manufacturing facilities in addition to
distribution facilities.
The Operating Partnership's bulk warehouse buildings are generally 75,000 to
360,000 square feet in size, have clear ceiling heights of 24 to 30 feet,
building depths of 200 to 500 feet, office finish of 2% to 20% and dock-high
truck doors. These buildings generally function as regional or local
distribution and warehouse facilities.
The Operating Partnership's business service buildings are generally 20,000
to 110,000 square feet in size, have clear ceiling heights of 14 to 16 feet,
building depths of 80 to 160 feet, office finish of 35% to 100% and drive-in
truck doors (which are designed to accommodate delivery vans). These buildings
are used by tenants primarily for clerical, administrative and executive
offices.
Office Properties
At December 31, 1998, the Operating Partnership owned, had under development
or in lease-up or had agreements to acquire 46 suburban office buildings. The
Operating Partnership's typical suburban office building ranges in size from
approximately 30,000 to 150,000 square feet, with grade-level parking with an
average of 4.5 parking spaces per 1,000 square feet of leasable space.
Occupancy Rate of In-Service Properties by Property Type
The occupancy rate of the Operating Partnership's in-service properties as
of December 31, 1998 (by property type) was as follows:
Occupancy Rate of In-Service Properties
as of December 31, 1998
(by property type)
<TABLE>
<S> <C>
Business distribution.................................................. 94.3%
Bulk warehouse......................................................... 95.4%
Business service....................................................... 95.9%
----
Total industrial average.............................................. 94.9%
----
Suburban office........................................................ 92.8%
Retail................................................................. 90.7%
----
Total average......................................................... 94.7%
====
</TABLE>
Business Parks
A key to the Operating Partnership's success has been the development of
properties within business parks where the Operating Partnership controls
virtually all aspects of the development process, including site selection and
project concept, master planning and zoning, design and construction, leasing
and property management. For developments of land held in joint ventures, the
Operating Partnership must obtain certain approvals from its joint venture
partners.
14
<PAGE>
The Operating Partnership's business parks are generally in proximity to an
interstate highway interchange and are close to retail and residential
amenities. The business parks are generally master planned to accommodate a
variety of uses. The business parks are generally well landscaped with
protective covenants which restrict the 14-18 uses and control the architecture
and signage. The majority of the Operating Partnership's properties and land
held for development are located in business parks. The Operating Partnership's
ability to develop both multi-tenant buildings for lease and build-to-suit
buildings for lease or sale results in more rapid development of the business
parks. The Operating Partnership's control of land in business parks also
generates revenues from various sources including land sales, building
construction, landscape installation and maintenance, lease commissions and
property management fees.
The buildings within business parks typically have a mix of uses ranging
from distribution and service to office and light manufacturing. The Operating
Partnership facilitates the coexistence of these diverse functions within
business parks through controlled signage and architecture, landscaping and
building placement.
The information provided in the table set forth below reflects information
regarding the Operating Partnership's properties (summarized by submarket and
business park) as of December 31, 1998, including properties under development
or in lease-up, or under agreement to acquire.
Properties and Business Parks
(as of December 31, 1998)
<TABLE>
<CAPTION>
Total
Number of Square Office Occupancy
Market and Business Park Buildings Feet Finish(1) Rate(2)
- ------------------------ --------- --------- --------- ---------
<S> <C> <C> <C> <C>
IN-SERVICE PROPERTIES
METROPOLITAN ATLANTA, GA
Northeast/I-85 Submarket
Gwinnett Park............ 39 2,416,538 37.8% 87.1%
Horizon (3).............. 9 1,937,127 7.6% 97.0%
Northwoods............... 16 709,625 48.0% 100.0%
Berkeley Lake Distribu-
tion Center (4)......... 4 666,442 5.9% 100.0%
Gwinnett Pavilion........ 8 538,713 38.9% 99.8%
The Business Park at Sug-
arloaf (5).............. 4 505,110 52.1% 100.0%
Peachtree Corners Busi-
ness Center............. 4 356,355 11.2% 95.8%
Pinebrook................ 3 346,402 13.9% 100.0%
Northbrook............... 2 308,480 7.9% 83.1%
Druid Chase Office Park.. 4 281,198 100.0% 79.5%
Meadowbrook.............. 4 249,767 34.8% 100.0%
Park Creek............... 3 183,927 71.0% 98.9%
Crestwood Pointe......... 1 105,295 100.0% 93.1%
Peachtree Corners Tech-
nology Center........... 2 102,800 40.5% 100.0%
River Green.............. 2 59,138 80.0% 100.0%
Other Northeast/I-85..... 9 606,834 33.8% 96.7%
--- --------- ----- -----
Total Northeast/I-85
Submarket.............. 114 9,373,751 31.2% 94.4%
--- --------- ----- -----
North Central Submarket
Northmeadow.............. 12 652,279 79.1% 100.0%
Hembree Park............. 7 410,304 62.0% 97.0%
Hembree Crest............ 4 285,247 16.3% 100.0%
Mansell Commons.......... 9 223,762 61.5% 100.0%
Northwinds Pointe........ 2 213,490 100.0% 98.7%
Brookside Office Park.... 1 106,631 100.0% 100.0%
Other North Central...... 2 128,693 55.7% 100.0%
--- --------- ----- -----
Total North Central
Submarket.............. 37 2,020,406 66.7% 99.2%
--- --------- ----- -----
</TABLE>
15
<PAGE>
Properties and Business Parks
(as of December 31, 1998)
<TABLE>
<CAPTION>
Total
Number of Square Office Occupancy
Market and Business Park Buildings Feet Finish(1) Rate(2)
- ------------------------ --------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Airport/South Atlanta Submarket
Southridge (6)....................... 9 560,241 19.0% 98.2%
Liberty Distribution Center.......... 1 300,600 1.0% 100.0%
Sullivan International (6)........... 4 78,168 39.4% 100.0%
Other Airport/South Atlanta (7)...... 1 253,890 1.2% 100.0%
--- ---------- ----- -----
Total Airport/South Atlanta
Submarket.......................... 15 1,192,899 12.0% 99.2%
--- ---------- ----- -----
Northwest/I-75 Submarket
Northwest Business Center............ 12 473,348 65.4% 95.2%
Franklin Forest...................... 9 306,321 69.7% 88.6%
Town Point........................... 3 305,200 21.7% 100.0%
Other Northwest/I-75 (8)............. 2 385,551 15.0% 100.0%
--- ---------- ----- -----
Total Northwest/I-75 Submarket...... 26 1,470,420 44.0% 96.1%
--- ---------- ----- -----
Stone Mountain Submarket
Park North (6)....................... 8 542,470 37.0% 86.9%
--- ---------- ----- -----
Total Stone Mountain Submarket...... 8 542,470 37.0% 86.9%
--- ---------- ----- -----
Chattahoochee Submarket
Other Chattahoochee.................. 1 48,007 21.9% 100.0%
--- ---------- ----- -----
Total Chattahoochee Submarket....... 1 48,007 21.9% 100.0%
--- ---------- ----- -----
TOTAL METROPOLITAN ATLANTA, GA...... 201 14,647,953 36.0% 95.4%
--- ---------- ----- -----
NASHVILLE, TN
Airpark Business Center.............. 13 1,160,212 39.2% 94.4%
Brentwood South Business Center...... 6 504,264 25.2% 95.5%
Aspen Grove Business Center.......... 3 394,713 23.9% 98.2%
Four-Forty Business Center........... 2 269,502 18.8% 100.0%
Metro Center......................... 3 234,552 63.6% 100.0%
Royal Parkway Center................. 2 146,031 92.9% 100.0%
--- ---------- ----- -----
TOTAL NASHVILLE, TN................. 29 2,709,274 37.3% 96.5%
--- ---------- ----- -----
RESEARCH TRIANGLE, NC
Perimeter Park West.................. 8 591,736 92.9% 95.1%
Perimeter Park....................... 8 473,574 96.8% 97.2%
Enterprise Center.................... 4 425,234 74.7% 89.1%
Metro Center......................... 3 271,219 19.8% 94.5%
Woodlake Center...................... 2 205,500 63.5% 100.0%
Research Triangle Industrial Center.. 3 154,056 8.0% 69.1%
Spring Forest Business Center........ 2 109,965 100.0% 81.4%
Interchange Plaza.................... 2 106,781 49.1% 100.0%
Regency Forest....................... 1 103,340 100.0% 100.0%
Other Research Triangle.............. 1 93,990 95.1% 100.0%
--- ---------- ----- -----
TOTAL RESEARCH TRIANGLE, NC......... 34 2,535,395 74.0% 93.2%
--- ---------- ----- -----
</TABLE>
16
<PAGE>
Properties and Business Parks
(as of December 31, 1998)
<TABLE>
<CAPTION>
Total
Number of Square Office Occupancy
Market and Business Park Buildings Feet Finish(1) Rate(2)
- ------------------------ --------- ---------- --------- ---------
<S> <C> <C> <C> <C>
MIAMI, FL
Beacon Centre....................... 23 2,446,071 38.9% 93.4%
--- ---------- ----- -----
TOTAL MIAMI, FL.................... 23 2,446,071 38.9% 93.4%
--- ---------- ----- -----
DALLAS/FT. WORTH, TX
Northgate International ............ 2 434,800 3.8% 88.4%
Water's Ridge....................... 2 359,515 4.2% 100.0%
Freeport North...................... 1 280,000 33.0% 100.0%
CentrePort Distribution Cen-
ter (10)........................... 1 310,000 0.0% 50.0%
--- ---------- ----- -----
TOTAL DALLAS/FT. WORTH, TX......... 6 1,384,315 8.9% 85.1%
--- ---------- ----- -----
ORLANDO, FL
Parksouth Distribution Center....... 4 486,883 12.5% 97.7%
Airport Commerce Center............. 7 310,007 36.2% 96.9%
Technology Park..................... 1 60,892 93.2% 100.0%
--- ---------- ----- -----
TOTAL ORLANDO, FL.................. 12 857,782 26.8% 97.5%
--- ---------- ----- -----
JACKSONVILLE, FL
Jacksonville International
Tradeport.......................... 6 585,030 19.0% 93.5%
Centurion Square.................... 4 72,205 98.6% 100.0%
--- ---------- ----- -----
TOTAL JACKSONVILLE, FL............. 10 657,235 27.7% 94.2%
--- ---------- ----- -----
SPARTANBURG, SC
Hillside............................ 3 385,600 15.2% 100.0%
--- ---------- ----- -----
TOTAL SPARTANBURG, SC.............. 3 385,600 15.2% 100.0%
--- ---------- ----- -----
TAMPA, FL
Fairfield Distribution Center....... 1 173,514 6.3% 100.0%
--- ---------- ----- -----
TOTAL TAMPA, FL.................... 1 173,514 6.3% 100.0%
--- ---------- ----- -----
TOTAL PROPERTIES IN SERVICE........ 319 25,797,139 37.7% 94.7%
--- ---------- ----- -----
PROPERTIES UNDER DEVELOPMENT OR IN
LEASE-UP
METROPOLITAN ATLANTA, GA
Northeast/I-85 Submarket
Horizon............................. 1 247,700 5.0% 0.0%
The Business Park at Sugarloaf...... 2 158,898 52.0% 62.5%
Crestwood Pointe.................... 1 105,295 100.0% 75.5%
Peachtree Corners Technology Cen-
ter................................ 1 59,200 25.0% 19.6%
Other Northeast/I-85................ 1 35,100 15.0% 100.0%
--- ---------- ----- -----
Total Northeast/I-85 Submarket..... 6 606,193 36.4% 37.2%
--- ---------- ----- -----
North Central Submarket
Hembree Park........................ 2 196,950 25.0% 54.0%
Brookside........................... 1 128,355 100.0% 0.0%
Ridgeland Corporate Center.......... 1 125,000 24.0% 100.0%
Northmeadow......................... 2 109,790 100.0% 93.8%
--- ---------- ----- -----
Total North Central Submarket...... 6 560,095 56.7% 59.7%
--- ---------- ----- -----
</TABLE>
17
<PAGE>
Properties and Business Parks
(as of December 31, 1998)
<TABLE>
<CAPTION>
Total
Number of Square Office Occupancy
Market and Business Park Buildings Feet Finish(1) Rate(2)
- ------------------------ --------- --------- --------- ---------
<S> <C> <C> <C> <C>
Airport/South Atlanta Submarket
Liberty Distribution Center........... 1 210,000 5.0% 0.0%
Southridge (9)........................ 1 182,400 15.0% 0.0%
--- --------- ----- -----
Total Airport/South Atlanta
Submarket........................... 2 392,400 9.6% 0.0%
--- --------- ----- -----
Northwest/I-75 Submarket
Town Point............................ 1 93,203 100.0% 0.0%
--- --------- ----- -----
Total Northwest/I-75 Submarket....... 1 93,203 100.0% 0.0%
--- --------- ----- -----
TOTAL METROPOLITAN ATLANTA, GA....... 15 1,651,891 40.5% 33.9%
--- --------- ----- -----
NASHVILLE, TN
Aspen Grove Business Center........... 4 278,113 60.4% 3.5%
Nashville Business Center............. 1 194,750 10.0% 37.5%
Four-Forty Business Center............ 2 174,444 28.7% 75.1%
Cumberland Business Center at Metro
Center............................... 1 166,441 10.0% 3.0%
Airpark Business Center............... 1 47,250 100.0% 29.0%
--- --------- ----- -----
TOTAL NASHVILLE, TN.................. 9 860,998 35.0% 27.0%
--- --------- ----- -----
RESEARCH TRIANGLE, NC
Perimeter Park West................... 3 332,914 100.0% 86.1%
Woodlake Center....................... 2 236,400 15.9% 0.0%
Regency Forest........................ 1 103,597 100.0% 100%
Enterprise Center..................... 1 59,600 100.0% 0.0%
--- --------- ----- -----
TOTAL RESEARCH TRIANGLE, NC.......... 7 732,511 72.9% 53.3%
--- --------- ----- -----
DALLAS/FT. WORTH, TX
Freeport North........................ 2 423,005 24.2% 70.4%
Texas Plaza........................... 1 115,926 70.0% 53.3%
Legacy Business Park.................. 1 100,000 100.0% 100.0%
--- --------- ----- -----
TOTAL DALLAS/FT. WORTH, TX........... 4 638,931 44.4% 71.9%
--- --------- ----- -----
ORLANDO, FL
Parksouth Distribution Center......... 1 203,000 10.0% 0.0%
Technology Park....................... 2 121,775 75.0% 71.2%
Northpoint............................ 1 109,021 100.0% 81.0%
Celebration Service Center............ 2 105,820 75.0% 37.9%
Lee Vista............................. 1 84,650 25.0% 30.8%
--- --------- ----- -----
TOTAL ORLANDO, FL.................... 7 624,266 51.4% 38.6%
--- --------- ----- -----
FORT LAUDERDALE, FL
Port-95............................... 2 275,336 13.5% 69.5%
Beacon Pointe at Weston............... 1 99,000 100.0% 0.0%
--- --------- ----- -----
TOTAL FORT LAUDERDALE, FL............ 3 374,336 36.4% 51.1%
--- --------- ----- -----
MIAMI, FL
Beacon Station at Gran Park........... 2 359,600 5.0% 0.0%
--- --------- ----- -----
TOTAL MIAMI, FL...................... 2 359,600 5.0% 0.0%
--- --------- ----- -----
</TABLE>
18
<PAGE>
Properties and Business Parks
(as of December 31, 1998)
<TABLE>
<CAPTION>
Total
Number of Square Office Occupancy
Market and Business Park Buildings Feet Finish(1) Rate(2)
- ------------------------ --------- ---------- --------- ---------
<S> <C> <C> <C> <C>
TAMPA, FL
Fairfield Distribution Center........ 2 160,680 16.4% 39.8%
Highland Oaks........................ 1 125,000 100.0% 0.0%
--- ---------- ----- -----
TOTAL TAMPA, FL..................... 3 285,680 53.0% 22.4%
--- ---------- ----- -----
JACKSONVILLE, FL
Jacksonville International
Tradeport........................... 1 147,100 10.0% 41.7%
--- ---------- ----- -----
TOTAL JACKSONVILLE, FL.............. 1 147,100 10.0% 41.7%
--- ---------- ----- -----
SPARTANBURG, SC
Hillside............................. 1 105,600 20.0% 0.0%
--- ---------- ----- -----
TOTAL SPARTANBURG, SC............... 1 105,600 20.0% 0.0%
--- ---------- ----- -----
TOTAL PROPERTIES UNDER DEVELOPMENT
OR IN LEASE-UP..................... 52 5,780,913 42.4% 38.1%
--- ---------- ----- -----
PROPERTIES UNDER AGREEMENT TO ACQUIRE
MIAMI, FL
Beacon Centre........................ 1 90,000 15.0% 79.8%
--- ---------- ----- -----
TOTAL MIAMI, FL..................... 1 90,000 15.0% 79.8%
--- ---------- ----- -----
DALLAS/FT. WORTH, TX
Legacy Business Park................. 1 52,000 100.0% 100.0%
--- ---------- ----- -----
TOTAL DALLAS/FT. WORTH, TX.......... 1 52,000 100.0% 100.0%
--- ---------- ----- -----
TOTAL PROPERTIES UNDER AGREEMENT TO
ACQUIRE............................ 2 142,000 46.1% 87.2%
--- ---------- ----- -----
TOTAL PORTFOLIO .................... 373 31,720,052 38.6% 84.3%
=== ========== ===== =====
</TABLE>
- --------
(1) Represents the percentage of rentable square feet that is built out as
office space rather than as warehouse or distribution space. For properties
under development represents current budgeted office finish.
(2) Occupancy or leasing rate includes percentage occupancy for completed and
in service properties at December 31, 1998. For properties under
development or in lease-up represents leasing or pre-leasing as of February
15, 1999.
(3) Includes one building totaling 356,000 square feet under agreement to sell.
(4) Includes one building totaling 240,000 square feet under agreement to sell.
(5) Includes two buildings totaling 336,000 square feet held in unconsolidated
entities.
(6) Business park was sold in January 1999.
(7) Includes one building totaling 253,890 square feet under agreement to sell.
(8) Includes one building totaling 222,900 square feet under agreement to sell
and one building totaling 162,651 square feet leased under a direct
financing lease.
(9) Includes one building totaling 182,400 square feet under agreement to sell.
(10) Includes one building totaling 310,000 square feet held in an
unconsolidated entity.
19
<PAGE>
Development Land
The following schedule details the Operating Partnership's undeveloped land
interests at December 31, 1998. The land detailed below is located primarily in
existing business parks with zoning and infrastructure in place. The Operating
Partnership estimates that the total development potential of the development
land could ultimately total approximately 19.6 million square feet.
Development Land
as of December 31, 1998
(in net usable acres)
<TABLE>
<CAPTION>
Research Ft.
Atlanta Orlando Jacksonville Nashville Triangle Miami Lauderdale Tampa Spartanburg Dallas
--------- --------- ------------ --------- --------- ------ ---------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Company owned... 296.7 48.9 9.5 44.0 104.9 -- -- 43.4 -- 67.9
Owned in joint
ventures(1).... 112.6 -- -- -- -- -- -- -- 335.6 --
Under agreement
to acquire(2).. 66.5 -- 16.0 85.9 9.8 9.3 16.9 23.4 -- --
Optioned........ -- 102.0 177.6 -- 110.3 -- 50.0 18.6 -- --
Marketing/ development
agreements(3).. 98.1 -- -- -- -- -- -- 23.4 -- --
--------- --------- --------- --------- --------- ------ ------- --------- --------- ---------
Total........... 573.9 150.9 203.1 129.9 225.0 9.3 66.9 108.8 335.6 67.9
========= ========= ========= ========= ========= ====== ======= ========= ========= =========
Estimated
development
potential
(square
feet)(4)....... 6,557,500 1,730,000 2,132,000 1,483,000 2,310,000 85,000 675,000 1,290,000 2,340,000(5) 1,040,000
========= ========= ========= ========= ========= ====== ======= ========= ========= =========
<CAPTION>
Total
----------
<S> <C>
Company owned... 615.3
Owned in joint
ventures(1).... 448.2
Under agreement
to acquire(2).. 227.8
Optioned........ 458.5
Marketing/ development
agreements(3).. 121.5
----------
Total........... 1,871.3
==========
Estimated
development
potential
(square
feet)(4)....... 19,642,500
==========
</TABLE>
- -------
(1) The Operating Partnership's interests in its undeveloped land held in joint
ventures range from 0% to 30%.
(2) The Operating Partnership has agreed to purchase this land over various
periods ranging up to approximately five years, subject to the completion
of due diligence and customary closing conditions.
(3) Under the terms of the development agreements, the Operating Partnership
will generally either develop properties for a fee, or have certain rights
to acquire land for development or to acquire developed properties upon
their completion. The marketing agreements generally provide for the
Operating Partnership or its subsidiaries to be paid marketing or
management fees in conjunction with services provided. Both the development
and marketing agreements generally contain certain non-competition
provisions covering a limited geographic area.
(4) Based upon the Operating Partnership's estimate of the appropriate density
and anticipated building types that may be developed, net of land necessary
to provide for adequate infrastructure. There can be no assurance that the
Operating Partnership's estimate of development potential will be realized.
(5) The Operating Partnership estimates it will eventually develop
approximately one-half the acreage in Spartanburg it owns in joint ventures
and that the remainder will be sold to third parties. Estimated development
potential reflects only that land which is not currently expected to be
sold.
20
<PAGE>
Tenants
The Operating Partnership believes that its emphasis on developing quality
properties and providing a high level of client service has resulted in
increased tenant retention. As of December 31, 1998, the Operating
Partnership's properties were leased to 1,016 tenants including local,
regional, national and international companies. The Operating Partnership's
30 largest tenants (measured by annualized base rent at December 31, 1998)
occupy a total of approximately 5.5 million square feet and represent 25.2% of
the Operating Partnership's total annualized base rent as shown in the table
below.
<TABLE>
<CAPTION>
30 Largest Tenants Measured by Annualized Base Rent
------------------------------------------------------
% of Total
Square Number Annualized Annualized
Tenant Feet of Leases Base Rent(1) Base Rent(1) Location
------ --------- --------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C>
1Northern Telecom,
Inc.(2)................ 401,349 8 $ 3,002,853 1.9% NC,TN
2Scientific Atlanta,
Inc.................... 573,951 11 2,621,439 1.7% GA
3United States Postal
Service................ 409,026 5 2,336,893 1.5% FL,TX
4Interpath
Communications, Inc.... 178,456 3 2,128,010 1.4% NC
5Hussmann Corporation... 374,045 1 1,984,687 1.3% GA
6PPD Pharmaco, Inc. .... 164,495 5 1,888,173 1.2% NC
7Radiant Systems,
Inc. .................. 106,631 1 1,609,789 1.0% GA
8Alltel................. 114,476 7 1,539,758 1.0% NC
9Honeywell, Inc. ....... 119,961 4 1,501,052 1.0% GA
10 Ikon Office
Solutions, Inc......... 177,000 4 1,468,400 0.9% GA
11GTE Mobilnet Service
Corporation............ 126,124 3 1,351,146 0.9% NC,GA
12United Healthcare
Services, Inc. ........ 110,000 2 1,208,000 0.8% GA,SC
13Radian International
LLC.................... 90,159 2 1,173,802 0.8% GA
14Innotrac Corporation.. 303,481 2 1,124,905 0.7% GA
15Moore U.S.A., Inc..... 274,951 2 1,085,266 0.7% TX,FL
16AIG Claim Services,
Inc. .................. 52,372 1 1,050,059 0.7% GA
17Tech Data
Corporation............ 138,996 1 1,049,492 0.7% FL
18Square D Company...... 102,262 2 1,000,749 0.6% TN,FL
19DeVry Inc............. 64,981 1 928,269 0.6% GA
20The Athlete's Foot
Group, Inc. ........... 162,651 1 924,069 0.6% GA
21Anixter, Inc.......... 167,460 2 913,150 0.6% GA
22Ingram-Micro, Inc. ... 193,973 4 909,466 0.6% GA,FL
23Merisel, Inc.......... 142,487 2 900,147 0.6% FL
24Fisher Scientific
Company................ 223,219 1 875,019 0.6% GA
25Reckitt & Colman,
Inc.................... 356,000 2 871,840 0.6% GA
26Tekelec............... 98,210 3 842,303 0.5% NC
27Data General
Corporation............ 89,680 2 817,304 0.5% GA
28National Data
Corporation............ 50,283 4 786,777 0.4% GA
29Saab Cars U.S.A.,
Inc. .................. 63,625 3 749,509 0.4% GA
30Vanstar Corporation... 86,880 4 740,446 0.4% GA
--------- --- ----------- ----
5,517,184 93 $39,382,772 25.2%
========= === =========== ====
</TABLE>
- --------
(1) Annualized cash base rent net of rental concessions, if any, based on
leases in place for stabilized properties and properties in lease-up where
tenants were paying rent as of December 31, 1998.
(2) Leases with Northern Telecom, totaling 370,824 square feet, expire on June
30, 2005, but are subject to an early-termination right that permits
Northern Telecom to terminate any of the leases on June 30, 2000, by
delivering an early-termination notice to the Operating Partnership on or
before June 30, 1999. In the event it exercises its early-termination
option, Northern Telecom will be obligated to make certain termination
payments to the Operating Partnership.
21
<PAGE>
Lease Expirations
The following tables show scheduled lease expirations for the Operating
Partnership's total property portfolio, for its industrial property portfolio
and for its office property portfolio based on leases under which tenants were
paying rent as of December 31, 1998, assuming no exercise of renewal options or
termination rights, if any:
<TABLE>
<CAPTION>
Annualized % of Total
Year of Square Feet % of Total Base Rent(1) Annualized
Expiration (in thousands) Square Feet (in thousands) Base Rent
---------- -------------- ----------- -------------- ----------
<S> <C> <C> <C> <C> <C>
Total Portfolio 1999 3,871 15.6% $ 22,550 13.8%
2000 3,770 15.2% 23,119 14.2%
2001 3,066 12.3% 18,784 11.5%
2002 2,942 11.8% 23,672 14.5%
2003 3,417 13.8% 27,148 16.6%
2004 1,307 5.3% 8,276 5.1%
2005 1,417 5.7% 4,927 3.0%
2006 769 3.1% 3,977 2.4%
2007 1,335 5.4% 8,528 5.2%
2008 1,622 6.5% 13,772 8.4%
2009 149 0.6% 1,095 0.7%
2010 65 0.3% 90 0.1%
2011 405 1.6% 2,201 1.3%
2012 152 0.6% 1,744 1.1%
2013 and later 544 2.2% 3,238 2.1%
------ ----- -------- -----
24,831(2) 100.0% $163,121 100.0%
====== ===== ======== =====
<CAPTION>
Annualized % of Total
Year of Square Feet % of Total Base Rent(1) Annualized
Expiration (in thousands) Square Feet (in thousands) Base Rent
---------- -------------- ----------- -------------- ----------
<S> <C> <C> <C> <C> <C>
Industrial Properties 1999 3,600 16.0% $ 19,112 14.9%
2000 3,525 15.7% 19,658 15.3%
2001 2,932 13.1% 16,900 13.2%
2002 2,521 11.2% 16,580 12.9%
2003 2,965 13.2% 19,239 15.0%
2004 1,191 5.3% 6,304 4.9%
2005 1,386 6.2% 4,467 3.5%
2006 748 3.3% 3,608 2.8%
2007 1,271 5.7% 7,936 6.2%
2008 1,336 6.0% 8,319 6.5%
2010 149 0.7% 1,095 0.9%
2009 0 0.0% 0 0.0%
2011 349 1.6% 2,121 1.7%
2012 87 0.4% 580 0.5%
2013 and later 392 1.6% 2,158 1.7%
------ ----- -------- -----
22,452 100.0% $128,077 100.0%
====== ===== ======== =====
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Annualized
Square Feet Base Rent(1) % of Total
Year of (in % of Total (in Annualized
Expiration thousands) Square Feet thousands) Base Rent
---------- ----------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Suburban Office
Properties 1999 222 11.3% $ 3,011 9.4%
2000 194 9.9% 2,916 9.1%
2001 129 6.6% 1,784 5.6%
2002 418 21.4% 7,033 22.0%
2003 435 22.2% 7,549 23.6%
2004 108 5.5% 1,796 5.6%
2005 26 1.3% 382 1.2%
2006 17 0.9% 309 1.0%
2007 56 2.9% 592 1.9%
2008 286 14.6% 5,453 17.0%
2009 0 0.0% 0 0.0%
2010 0 0.0% 0 0.0%
2011 0 0.0% 0 0.0%
2012 66 3.4% 1,166 3.6%
2013 and later 0 0.0% 0 0.0%
----- ----- ------- -----
1,957 100.0% $31,991 100.0%
===== ===== ======= =====
</TABLE>
- --------
(1) Annualized base rent represents the annualized monthly base rental at the
time of lease expiration.
(2) The total square footage expiring as of December 31, 1998 is comprised of
24,425,840 square feet of leases in stabilized properties and 405,523
square feet of leases in development properties where tenants were paying
rent as of December 31, 1998.
Re-leasing Costs
Although re-leasing costs may vary from year-to-year depending on conditions
in the Operating Partnership's real estate markets and the mix of leasing
between property types, the Operating Partnership endeavors to control re-
leasing costs by:
. acting as general contractor with respect to construction of tenant
improvements, thereby saving the fees paid to outside contractors and
enabling the Operating Partnership to control the quality and timely
completion of the work;
. constructing general purpose improvements that can be adapted to
different tenants' requirements at relatively low cost;
. paying leasing commissions to its in-house marketing representatives
that take into account the cost of tenant improvements thereby providing
an incentive to minimize cost; and
. using its in-house marketing representatives to negotiate directly with
tenants when possible, thereby saving the cost of commissions to outside
brokers.
23
<PAGE>
The following table summarizes by year the Operating Partnership's
capitalized tenant improvement and leasing costs incurred in the renewal or re-
leasing of previously occupied space.
Capitalized Tenant Improvements and Leasing Costs
<TABLE>
<CAPTION>
1998 1997 1996
------ ------ ------
(In thousands,
except per square
foot information)
<S> <C> <C> <C>
Industrial Properties
Re-leasing
Square feet leased..................................... 1,843 1,073 678
Capitalized tenant improvements and leasing
commissions........................................... $3,826 $2,276 $1,395
Capitalized tenant improvements and leasing commissions
per square foot....................................... $ 2.08 $ 2.12 $ 2.06
Renewal
Square feet renewed.................................... 2,173 2,358 1,027
Capitalized tenant improvements and leasing
commissions........................................... $1,582 $1,392 $1,055
Capitalized tenant improvements and leasing commissions
per square foot....................................... $ 0.73 $ 0.59 $ 1.03
Total
Square feet............................................ 4,016 3,431 1,705
Capitalized tenant improvements and leasing
commissions........................................... $5,408 $3,668 $2,450
Capitalized tenant improvements and leasing commissions
per square foot....................................... $ 1.35 $ 1.07 $ 1.44
Suburban Office Properties
Re-leasing
Square feet leased..................................... 103 69 16
Capitalized tenant improvements and leasing
commissions........................................... $ 347 $ 493 $ 45
Capitalized tenant improvements and leasing commissions
per square foot....................................... $ 3.36 $ 7.11 $ 2.80
Renewal
Square feet renewed.................................... 92 134 106
Capitalized tenant improvements and leasing
commissions........................................... $ 160 $ 267 $ 290
Capitalized tenant improvements and leasing commissions
per square foot....................................... $ 1.74 $ 1.99 $ 2.74
Total
Square feet............................................ 195 203 122
Capitalized tenant improvements and leasing
commissions........................................... $ 507 $ 760 $ 335
Capitalized tenant improvements and leasing commissions
per square foot....................................... $ 2.60 $ 3.74 $ 2.75
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
The Operating Partnership is not currently involved in any material
litigation other than litigation which is expected to be covered by liability
insurance or which is not expected to have a material adverse effect on the
Operating Partnership's results of operations or financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to security holders for a vote during the fourth
quarter of 1998.
24
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS
There is no established public trading market for the Operating
Partnership's Common Units. As of March 15, 1999, there were 57 holders of
record of Common Units of the Operating Partnership.
The following table sets forth the quarterly per Unit distributions paid by
the Operating Partnership to holders of its Common Units with respect to each
such period.
<TABLE>
<CAPTION>
Quarter Ended Distribution
------------- ------------
<S> <C>
1997
March 31, 1997.............................................. $ 0.43
June 30, 1997............................................... $ 0.43
September 30, 1997.......................................... $ 0.43
December 31, 1997........................................... $0.465
1998
March 31, 1998.............................................. $0.465
June 30, 1998............................................... $0.465
September 30, 1998.......................................... $0.465
December 31, 1998........................................... $0.505
</TABLE>
The Operating Partnership currently anticipates making regular quarterly
distributions to holders of the Units in sufficient amounts to enable the
Company to satisfy the dividend requirements necessary to maintain its status
as a REIT. The distributions for each quarterly period are declared and paid
one quarter in arrears. Future distributions are dependent upon many factors
including the Operating Partnership's earnings, capital requirements, its
financial condition and its available cash flow and are governed by the
discretion of the Board of Directors of the Company.
Effective October 1, 1998 and December 31, 1998, the Operating Partnership
to issued 107,155 Common Units in partial or full consideration for the
acquisition of land and certain real estate properties from Lichtin and
affiliates. The aggregate value of the properties acquired by the Company in
exchange for such Common Units was approximately $3.1 million. The Common Units
were issued pursuant to an exemption from registration under Section 4(2) of
the Securities Act of 1933, as amended (the "Securities Act") in reliance, in
part, upon the representations and warranties set forth in the Lichtin
acquisition agreements. The Common Units are subject to a registration rights
and lock-up agreement that restricts the disposition of the Common Units until
December 31, 1999.
On November 1, 1998, the Operating Partnership to issued 4,253 Common Units
to GB Partners, Ltd. in connection with the acquisition of certain land and
real estate property located in Jacksonville, Florida. The aggregate value of
the Common Units issued to GB Partners, Ltd. was $125,000. The Common Units
were issued pursuant to an exemption from registration under Section 4(2) of
the Securities Act in reliance, in part, upon the representations and
warranties set forth in the acquisition agreement. The Common Units are subject
to a registration rights and lock-up agreement that restricts the disposition
of the Common Units for a period of one year from the date of issuance.
25
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Weeks Realty, L.P.
----------------------------------------------
1998 1997 1996 1995 1994
---------- -------- -------- -------- --------
(In thousands, except per unit amounts)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data, at year end
Real estate assets before
accumulated depreciation...... $1,404,281 $856,500 $592,841 $319,763 $162,709
Real estate assets, net........ 1,307,898 794,952 551,372 289,874 139,750
Total assets................... 1,447,592 852,361 591,849 320,441 176,674
Total indebtedness............. 654,424 275,515 296,975 147,305 71,961
Other limited partner's capital
interests, at redeemption
value......................... 206,163 180,246 149,133 64,508 56,723
Partner's capital.............. 544,402 377,146 132,808 99,104 41,630
</TABLE>
<TABLE>
<CAPTION>
Weeks
Weeks Realty, L.P. Group(1)
--------------------------------------------------------- --------
Year Ended Year Ended Year Ended Year Ended Aug.24 to Jan. 1
Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31, to Aug.
1998 1997 1996 1995 1994 23, 1994
---------- ---------- ---------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Operating Data
Rental and reimbursement
revenues............... $ 149,143 $ 90,806 $ 52,679 $ 34,015 $ 8,877 $ 11,914
Total revenues.......... 150,974 92,020 53,883 35,271 9,312 16,538
Operating, maintenance,
management and real
estate tax expense..... 35,318 19,904 11,474 7,250 1,807 3,136
Depreciation and
amortization........... 38,348 24,144 13,474 8,177 2,098 2,920
Interest expense,
including amortization
of deferred financing
costs.................. 30,782 18,833 12,643 8,797 2,210 7,004
General and
administrative
expenses............... 5,809 3,652 2,315 1,494 379 1,099
Interest income......... 965 1,509 492 334 224 --
Equity in earnings of
unconsolidated
entities............... 2,864 1,989 1,340 1,220 692 91
Income before
extraordinary loss..... 44,599 29,194 15,809 11,107 3,734 516
Net income.............. 44,234 29,194 15,809 11,107 1,067 516
Net income available to
common unitholders..... 31,043 26,474 15,809 11,107 1,067 516
Weighted average common
units--basic........... 26,134 21,380 14,280 10,760 10,268 N/A
Weighted average common
units--diluted......... 26,299 21,580 14,386 10,832 10,286 N/A
Per Common Unit Data
Income before
extraordinary loss--
basic.................. $ 1.20 $ 1.24 $ 1.11 $ 1.03 $ 0.36 N/A
Income before
extraordinary loss--
diluted................ 1.19 1.23 1.10 1.03 0.36 N/A
Net income--basic....... 1.19 1.24 1.11 1.03 0.10 N/A
Net income--diluted..... 1.18 1.23 1.10 1.03 0.10 N/A
Distributions(2)........ 1.90 1.755 1.63 1.525 0.525 N/A
Other Data
Cash provided by (used
in):
Operating activities.. $ 77,821 $ 49,097 $ 28,031 $ 18,678 $ 3,954 $ 2,769
Investing activities.. (454,721) (173,574) (120,323) (117,127) (38,148) (14,953)
Financing activities.. 372,982 129,638 91,570 93,097 40,352 12,229
Funds from
operations(3)(4)....... 69,940 50,343 29,323 19,307 5,832 N/A
</TABLE>
26
<PAGE>
- --------
(1) Represents the historical combined operations and combined financial
position of Weeks Group, the predecessor entity. On August 24, 1994, the
Company, the parent of the Operating Partnership, completed an initial
public offering and related formation transactions.
(2) Distributions are declared and paid quarterly in arrears. Amounts reflect
distributions attributable to the year presented.
(3) The Operating Partnership believes that funds from operations provides an
additional indicator of the financial performance of the Company. Funds
from operations is defined by the National Association of Real Estate
Investment Trusts ("NAREIT") to mean net income (loss) determined in
accordance with generally accepted accounting principles ("GAAP") excluding
gains (or losses) from debt restructuring and sales of operating property,
plus depreciation and amortization, and after adjustments for
unconsolidated partnerships and joint ventures. Adjustments for
unconsolidated partnerships and joint ventures will be calculated to
reflect funds from operations on the same basis. The Operating Partnership
computes funds from operations under the current NAREIT definition by
subtracting from net income the distributions to preferred unitholders
before making an adjustment for the non-cash items described above. Funds
from operations is influenced not only by the operations of the properties,
but also by the capital structure of the Operating Partnership.
Accordingly, management expects that funds from operations will be one of
the factors considered by the Board of Directors of the Company in
determining the amount of cash distributions the Operating Partnership will
pay to its unitholders. Funds from operations does not represent cash flow
from operating, investing and financing activities as defined by GAAP,
which are discussed under "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital
Resources" below. Additionally, funds from operations does not measure
whether cash flow is sufficient to fund all cash flow needs, including
principal amortization, capital expenditures and distributions to
unitholders, and should not be considered as an alternative to net income
for purposes of evaluating the Operating Partnership's operating
performance or as an alternative to cash flow, as defined by GAAP, as a
measure of liquidity. Funds from operations presented herein under the
NAREIT guidelines is not necessarily comparable to funds from operations
presented by other real estate companies due to the fact that not all real
estate companies use the same definition. However, the Operating
Partnership's funds from operations is comparable to the funds from
operations of real estate companies that use the current NAREIT definition.
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations" for the Operating Partnership's computation of its
funds from operations.
(4) Represents funds from operations available to common unitholders.
27
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the selected
financial data and the accompanying consolidated financial statements of the
Operating Partnership and notes thereto, included elsewhere herein. In addition
to historical information, management's discussion and analysis and other
statements issued or made from time to time by the Operating Partnership or its
representatives contain statements which may constitute "Forward-looking
Statements" within the meaning of the Securities Act of 1933, as amended, and
the Securities Exchange Act of 1934, as amended, each as amended by the Private
Securities Litigation Reform Act of 1995, U.S.C.A. Sections 77z-2 and 78u-5
(Supp. 1996). Those statements include statements regarding the intent, belief
or current expectations of the Operating Partnership and members of its
management team as well as the assumptions on which such statements are based.
Any such Forward-looking Statements are not guarantees of future performance
and the Operating Partnership's actual results could differ materially from
those set forth in such Forward-looking Statements. Factors currently known to
management that could cause actual results to differ materially from those set
forth in such Forward-looking Statements include general economic conditions,
local real estate conditions, timely leasing of occupied square footage upon
expiration, interest rates, availability of equity and debt financing, current
construction schedules, the status of lease negotiations with potential
tenants, the satisfactory completion of due diligence procedures and other
risks detailed from time to time in the Operating Partnership's filings with
the Securities and Exchange Commission, including Quarterly Reports on Form 10-
Q, Current Reports on Form 8-K and this Annual Report on Form 10-K. The
Operating Partnership undertakes no obligation to update or revise Forward-
looking Statements to reflect changed assumptions, the occurrence of
unanticipated events or changes to future operating results over time.
General
The Company was founded in 1965 and operated as a private real estate
company until August 1994, when it completed an initial public offering and
elected to be taxed as a REIT. As a self-administered and self-managed REIT,
the Company, through the Operating Partnership owns, develops, acquires and
manages primarily industrial and suburban office properties in the southeastern
United States and Texas. The Operating Partnership's third-party service
businesses are conducted through the Service Companies: Weeks Realty Services
(fee landscape, property management and commercial brokerage services) and
Weeks Construction Services (fee construction), which are accounted for on the
equity method. For a further description of the Operating Partnership, see Note
1 to the consolidated financial statements.
Announced Merger Transaction
On March 1, 1999, the Company announced that it had entered into an
Agreement and Plan of Merger (the "REIT Merger Agreement") with Duke Realty
Investments, Inc., an Indiana based REIT specializing in industrial and office
building development and ownership ("Duke"), and that the Operating Partnership
had entered into an Agreement and Plan of Merger (the "OP Merger Agreement"
and, together with the REIT Merger Agreement, the "Merger Agreements") with
Duke Realty Limited Partnership, an Indiana limited partnership of which Duke
is the managing general partner ("Duke OP"). The Merger Agreements provide for
a merger of the Company with and into Duke (the "REIT Merger") and a merger of
the Operating Partnership with and into Duke OP (the "OP Merger" and, together
with the REIT Merger, the "Mergers"). At the effective time of the Mergers,
Duke will change its name to Duke-Weeks Realty Corporation ("Duke-Weeks").
Pursuant to the Merger Agreements: (i) each outstanding share of common
stock, par value $0.01 per share, of the Company ("Weeks Common Stock") will be
converted into the right to receive 1.38 shares of common stock, par value
$0.01 per share, of Duke ("Duke Common Stock"); (ii) each issued and
outstanding share of 8.0% Series A Cumulative Redeemable Preferred Stock, par
value $0.01 per share, of the Company will be converted into the right to
receive one preference share representing 1/1000 of a share of 8.0% series F
28
<PAGE>
Cumulative Redeemable Preferred Stock, par value $0.01 per share, of Duke;
(iii) each issued and outstanding share of 8.625% Series D Cumulative
Redeemable Preferred Stock, par value $0.01 per share, of the Company will be
converted into the right to receive on preference share representing 1/1000 of
a share of 8.625% Series H Cumulative Redeemable Preferred Stock, par value
$0.01 per share, of Duke; (iv) each issued and outstanding Common Unit in the
Operating Partnership will be converted into 1.38 common units of limited
partnership interest in Duke OP; (v) each issued and outstanding 8.0% Series A
Cumulative Redeemable Preferred Partnership Unit in the Operating Partnership
will be converted into 1/1000 of one 8.0% Series F Cumulative Redeemable
Preferred Unit in Duke OP; (vi) each issued and outstanding 8.0% Series C
Cumulative Redeemable Preferred Partnership Unit in the Operating Partnership
will be converted into 1/1000 of one 8.0% Series G Cumulative Redeemable
Preferred Unit in Duke OP; and (vii) each issued and outstanding 8.625% Series
D Cumulative Redeemable Preferred Partnership Unit in the Operating Partnership
will be converted into 1/1000 of one 8.625% Series H Cumulative Redeemable
Preferred Unit in Duke OP.
Holders representing 2% of the outstanding Weeks Common Stock have entered
into voting agreements, agreeing to vote their shares in favor of the
transaction contemplated by the Merger Agreements. Holders representing 5% of
the outstanding Duke Common Stock have entered into voting agreements, agreeing
to vote their shares in favor of the transactions contemplated by the Merger
Agreements. The requisite approvals of the partners of Duke OP and the
Operating Partnership to the transactions have been obtained.
The consummation of the transactions contemplated by the Merger Agreements
is expected to occur in the second or third quarter of 1999 and is subject to
approval by the stockholders of Duke and the shareholders of the Company and
satisfaction of certain other customary closing conditions. Additionally,
certain Company debt holders, lenders and others will be requested to approve
certain other aspects of the Mergers. There can be no assurance that the
transactions contemplated by the Merger Agreements will be consummated. The
Company has agreed with Duke that if the REIT Merger Agreement is terminated
under certain circumstances, the Company will pay Duke certain fees and
expenses. Duke has agreed with the Company that if the REIT Merger Agreement is
terminated under certain other circumstances, Duke will pay the Company certain
fees and expenses.
Results of Operations
Operating results in 1998 when compared to 1997, reflect the Operating
Partnership's continued strong performance as measured by increased total
revenue of $58,954,000 or 64.1%, increased net income of $11,899,000 or 51.8%
and increased net income available to Common Unitholders of $2,619,000 or
12.9%. As discussed in more detail below, these increases were achieved through
both the operating results from acquired properties and stabilized development
properties (i.e., those development properties placed in-service) and to a
lesser extent the increased year-to-year performance of the core or "same
store" property portfolio.
A significant part of the Operating Partnership's growth in 1998 can be
attributed to the acquisition of 48 operating properties totaling approximately
4,856,000 square feet during 1998 and the full year impact of 37 operating
properties totaling approximately 2,134,000 square feet acquired during 1997.
Through its 1998 acquisitions, the Operating Partnership expanded its
operations in Florida, including a January 1998 acquisition of a 2,477,000
square foot, 24-building portfolio in Miami, Florida, as well as opening a new
market in Dallas, Texas and continuing to expand its existing markets in
Nashville, Tennessee and the Raleigh-Durham-Chapel Hill area of North Carolina.
Operating results in 1998 were also positively impacted by increasing
contributions from the Operating Partnership's active development programs
throughout all of its markets. The Operating Partnership stabilized 27
properties and one property expansion totaling 3,310,000 square feet in 1998
and received full year contributions from 18 properties and two property
expansions totaling 2,014,000 square feet stabilized during
29
<PAGE>
1997. Based on square feet of development properties placed in service, 1998
represents the single largest year in the Operating Partnership's history.
These stabilized development properties continue to achieve higher yields than
those achieved on acquisition properties, and, as a result, are expected to
continue to be a significant element of the Operating Partnership's future
growth strategy. Core properties, as defined below, also contributed to overall
operating results with increased property operating revenues less property
operating expenses, of 1.6% in 1998.
The Operating Partnership continues to diversify its property holdings
throughout the southeastern United States and, in 1998, the Operating
Partnership further expanded into the Dallas/Ft. Worth, Texas market. Including
properties under development and under agreement to acquire at December 31,
1998 and 1997, the Company's current portfolio is located in the following
cities and the percentage of its holdings in each city (measured by square
feet) is detailed below:
<TABLE>
<CAPTION>
Percent of Total Portfolio
Square Feet
---------------------------
Property Location Dec. 31, 1998 Dec. 31, 1997
----------------- ------------- -------------
<S> <C> <C>
Atlanta, GA...................................... 51.4% 58.7%
Nashville, TN.................................... 11.3% 11.6%
Research Triangle, NC............................ 10.3% 10.4%
Miami, FL........................................ 9.1% 11.0%
Dallas/Ft. Worth, TX............................. 6.5% --
Orlando, FL...................................... 4.7% 4.9%
Jacksonville, FL................................. 2.5% 0.7%
Spartanburg, SC.................................. 1.5% 1.7%
Tampa, FL........................................ 1.4% 1.0%
Ft. Lauderdale, FL............................... 1.3% --
----- -----
Total............................................ 100.0% 100.0%
===== =====
</TABLE>
Consolidated operating information relating to the Operating Partnership's
properties for 1998, 1997 and 1996 is summarized below (in thousands):
<TABLE>
<CAPTION>
% Change % Change
1998 vs. 1997 vs.
1998 1997 1996 1997 1996
-------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
Rental revenues................. $131,771 $80,419 $48,162 63.9% 67.0%
Tenant reimbursements........... 17,372 10,387 4,517 67.2% 130.0%
-------- ------- ------- ---- -----
Property operating revenues..... $149,143 $90,806 $52,679 64.2% 72.4%
-------- ------- ------- ---- -----
Operating, maintenance and
management expenses............ $ 22,494 $12,694 $ 6,749 77.2% 88.1%
Real estate taxes............... 12,824 7,210 4,725 77.9% 52.6%
Depreciation and amortization... 38,348 24,144 13,474 58.8% 79.2%
-------- ------- ------- ---- -----
Property operating expenses..... $ 73,666 $44,048 $24,948 67.2% 76.6%
-------- ------- ------- ---- -----
Property operating revenues less
property operating expenses.... $ 75,477 $46,758 $27,731 61.4% 68.6%
======== ======= ======= ==== =====
</TABLE>
Comparison of Year Ended December 31, 1998 to Year Ended December 31, 1997
Year to year comparisons of property operating revenues and expenses for
1998 and 1997 are discussed herein using the categories "core properties,"
"development properties" and "acquisition properties." Core properties are
defined as properties which were stabilized and operating for comparable full
year periods in 1998 and 1997. The Operating Partnership defines a property as
stabilized upon the earlier of substantial lease-up or one year from building
shell completion. Development properties reflect properties completed and
stabilized, and acquisition properties are properties acquired, subsequent to
January 1, 1997.
30
<PAGE>
Property operating revenues increased $58,337,000 or 64.2% in 1998. Of this
increase, $39,564,000, $16,935,000 and $1,838,000 were attributable to
acquisition, development and core properties, respectively. The increases from
acquisition and development properties were due to the acquisition of 85
operating properties (48 in 1998 and 37 in 1997) totaling 6,990,000 square feet
and the stabilization of 41 development properties (27 in 1998 and 14 in 1997)
and three property expansions (one in 1998 and two in 1997) totaling 4,717,000
square feet. Property operating expenses increased $29,618,000 or 67.2% between
years, due primarily to the growth in the property portfolio resulting from the
acquisition and development properties discussed above.
For the comparable years of 1998 and 1997, operating results of the core
properties, representing 191 properties totaling 13,474,000 square feet, are
summarized below (in thousands):
<TABLE>
<CAPTION>
1998 1997 % Change
------- ------- --------
<S> <C> <C> <C>
Rental revenues................................... $72,477 $70,931 2.2%
Tenant reimbursements............................. 8,553 8,261 3.5%
------- ------- ---
Property operating revenues....................... $81,030 $79,192 2.3%
------- ------- ---
Operating, maintenance and management expenses.... $11,270 $10,758 4.8%
Real estate taxes................................. 6,557 6,526 0.5%
Depreciation and amortization..................... 22,064 21,405 3.1%
------- ------- ---
Property operating expenses....................... $39,891 $38,689 3.1%
------- ------- ---
Property operating revenues less property
operating expenses............................... $41,139 $40,503 1.6%
======= ======= ===
Average occupancy................................. 95.7% 96.3%
======= =======
</TABLE>
Property operating revenues from core properties increased 2.3% despite a
decrease in overall average occupancy. This increase was due to both rental
rate and reimbursement increases between periods. Property operating expenses
increased 3.1% due primarily to increased utilities, security and management
expenses. Property operating revenues less property operating expenses from
core properties increased 2.1%, exclusive of depreciation and amortization
expense.
Interest expense increased $11,949,000 or 63.4% from $18,833,000 in 1997 to
$30,782,000 in 1998, due primarily to increased mortgage interest of $6,348,000
related to mortgage debt assumed in connection with certain of the Operating
Partnership's 1997 and 1998 property acquisitions and increased net interest
expense on unsecured bank borrowings and unsecured note borrowings due
primarily to higher average borrowing levels used to finance the Operating
Partnership's growth in 1998 compared to 1997.
Operating Partnership general and administrative expenses increased
$2,157,000 or 59.1% from $3,652,000 in 1997 to $5,809,000 in 1998, due
primarily to increased personnel and related administrative costs attributable
to the Operating Partnership's geographic expansion, including the opening of
an office in Dallas, Texas and the continued growth of its existing offices in
Orlando and Tampa, Florida during 1998. As a percentage of total revenue,
general and administrative expenses decreased from 4.0% in 1997 to 3.8% in
1998.
Interest income decreased $544,000 or 36.1% from $1,509,000 in 1997 to
$965,000 in 1998, due primarily to the settlement of approximately $10,870,000
of real estate loans in 1998.
Equity in earnings of unconsolidated entities represents primarily the
Operating Partnership's 99% economic interest in the earnings of the Service
Companies and their subsidiaries after the elimination of intercompany profits
to the Operating Partnership. Equity in earnings of the Service Companies and
their subsidiaries increased by $566,000 or 28.7% from $1,969,000 in 1997 to
$2,535,000 in 1998 due to increased profits from the third-party service
businesses (construction, landscape and commercial brokerage), increased gains
on sales of real estate, principally land, profits from the Service Companies'
1998 investment in Codina
31
<PAGE>
Group, Inc. ("Codina"), a Miami, Florida based real estate services company,
offset by increased carrying costs relating to additional land investments
between years. Equity in earnings of unconsolidated real estate entities
increased from $20,000 in 1997 to $329,000 in 1998, due primarily to a full
year of earnings in 1998 compared to one month in 1997 from the Operating
Partnership's 50% investment in a single building joint venture.
Segment Operations
The Operating Partnership manages its business through geographic operating
segments and segment operating performance is measured based on profits before
interest expense and depreciation and amortization expense, referred to herein
as "segment earnings." See note 12 to the consolidated financial statements for
an additional discussion and presentation of segment information.
A comparison of segment earnings in 1998 and 1997 is detailed below (in
thousands):
<TABLE>
<CAPTION>
Segment Earnings
----------------
Operating Segments 1998 1997
------------------ -------- -------
<S> <C> <C>
Georgia..................................................... $ 63,872 $51,112
North Carolina.............................................. 17,864 11,519
South Florida............................................... 14,741 --
Tennessee................................................... 12,260 7,721
Other....................................................... 6,975 2,157
-------- -------
Total....................................................... $115,712 $72,509
======== =======
</TABLE>
Segment earnings, as defined, increased $43,203,000 or 59.6% from
$72,509,000 in 1997 to $115,712,000 in 1998. Segment earnings in Georgia
increased due primarily to a full year of operating earnings in 1998 from the
stabilization of development properties in the second half of 1997 and a
partial year of earnings from development properties stabilized throughout
1998. North Carolina segment earnings increased due primarily to the
acquisition of additional properties in the second half of 1997 relating to the
Operating Partnership's December 31, 1996, Lichtin acquisition transaction (see
Note 3 to the consolidated financial statements) and from the stabilization of
development properties in 1998. South Florida segment earnings reflect the
Operating Partnership's January 1998 expansion into the South Florida market
through the acquisition of a 24-building, 2,477,000 square foot property
portfolio in Miami, Florida. Segment earnings in Tennessee increased due
primarily to the acquisition of additional properties in 1997 and 1998 relating
to Operating Partnership's 1996 NWI acquisition transaction (see Note 3 to the
consolidated financial statements) as well as the acquisition of additional
properties from third parties in 1998. Other segment earnings grew in 1998 from
the Operating Partnership's entry into the Dallas/Ft. Worth, Texas market and
the related acquisition of properties in June 1998, from the full year of
earnings in 1998 relating to the Operating Partnership's late 1997 entry into
the Jacksonville, Florida market and from the continued expansion of the
Orlando, Florida market primarily through the additional stabilization of
development properties.
Comparison of Year Ended December 31, 1997 to Year Ended December 31, 1996
Year to year comparisons of property operating revenues and expenses for
1997 and 1996 are discussed herein using the categories "core properties,"
"development properties" and "acquisition properties." Core properties are
defined as properties which were stabilized and operating for comparable full
year periods in 1997 and 1996. Development properties reflect properties
completed and stabilized, and acquisition properties are properties acquired,
subsequent to January 1, 1996.
Property operating revenues increased $38,127,000 or 72.4% in 1997. Of this
increase, $29,626,000, $7,660,000 and $841,000 were attributable to
acquisition, development and core properties, respectively. The increases from
acquisition and development properties were due to the acquisition of 83
operating properties (37 in 1997 and 46 in 1996) totaling 5,402,000 square feet
and the stabilization of 26 development properties (18 in 1997 and eight in
1996) and three property expansions (two in 1997 and one in 1996) totaling
2,848,000 square feet. As four of the 1997 development properties totaling
608,000 square feet stabilized on January 1,
32
<PAGE>
1997, they were considered core properties in the 1998 to 1997 comparison
discussed previously. Property operating expenses increased $19,100,000 or
76.6% between years, due primarily to the growth in the property portfolio
resulting from the acquisition and development properties discussed above.
For the comparable years of 1997 and 1996, operating results of the core
properties, representing 134 properties totaling 8,861,000 square feet, are
summarized below (in thousands):
<TABLE>
<CAPTION>
1997 1996 % Change
------- ------- --------
<S> <C> <C> <C>
Rental revenues................................... $43,216 $42,549 1.6 %
Tenant reimbursements............................. 4,196 4,022 4.3 %
------- ------- ----
Property operating revenues....................... $47,412 $46,571 1.8 %
------- ------- ----
Operating, maintenance and management expenses.... $ 6,715 $ 6,222 7.9 %
Real estate taxes................................. 4,114 4,299 (4.3)%
Depreciation and amortization..................... 12,229 11,889 2.9 %
------- ------- ----
Property operating expenses....................... $23,058 $22,410 2.9 %
------- ------- ----
Property operating revenues less property
operating expenses............................... $24,354 $24,161 0.8 %
======= ======= ====
Average occupancy................................. 95.2% 96.1%
======= =======
</TABLE>
Property operating revenues from core properties increased 1.8% despite the
impact of lost property operating revenues between years of approximately
$242,000 resulting from the sale of a 96,000 square foot building in April 1997
and a decrease in overall average occupancy. Adjusted for the building sale
discussed above, property operating revenues from core properties increased
2.3% between years. This increase was due to both rental rate and reimbursement
increases between periods. Property operating expenses increased 2.9% due
primarily to increased utilities, repairs and maintenance and management
expenses offset by lower real estate taxes in 1997. Lower real estate taxes
resulted primarily from the successful resolution of disputed property tax
assessments. Property operating revenues less property operating expenses from
core properties increased 2.0%, exclusive of depreciation and amortization
expense and after adjusting for the building sale discussed above.
Interest expense increased $6,190,000 or 49.0% from $12,643,000 in 1996 to
$18,833,000 in 1997, due primarily to increased interest on mortgage notes
payable of $6,418,000 related to mortgage indebtedness assumed in connection
with the Operating Partnership's 1996 and 1997 acquisitions. The increase in
mortgage interest expense was offset by a decrease in net interest expense on
revolving line of credit borrowings between years due primarily to a larger
percentage of revolving line of credit borrowings being utilized for the
Operating Partnership's increased development activity in 1997, resulting in
increased interest capitalization as a percentage of total line of credit
interest expense in 1997 compared to 1996.
Operating Partnership general and administrative expenses increased
$1,337,000 or 57.8% from $2,315,000 in 1996 to $3,652,000 in 1997, due
primarily to increased personnel and related administrative costs attributable
to the Operating Partnership's southeast expansion. The majority of the
increase relates to the additional general and administrative expenses
associated with the Operating Partnership's Nashville, Tennessee and Raleigh,
North Carolina operations, both of which were acquired in the fourth quarter of
1996, and expenses related to the establishment of an office in Orlando,
Florida, which also occurred in the fourth quarter of 1996. As a percentage of
total revenue, general and administrative expenses decreased from 4.3% in 1996
to 4.0% in 1997.
Interest income increased $1,017,000 or 206.7% from $492,000 in 1996 to
$1,509,000 in 1997 due primarily to increased real estate loan interest,
including $442,000 of real estate loan interest on loans to affiliated entities
and others.
Equity in earnings of unconsolidated entities represents primarily the
Operating Partnership's 99% economic interest in the earnings of the Service
Companies and their subsidiaries after the elimination of interest expense and
intercompany profits to the Operating Partnership. Equity in earnings of the
Service
33
<PAGE>
Companies and their subsidiaries increased by $629,000 or 46.9% from $1,340,000
in 1996 to $1,969,000 in 1997 due primarily to gains on sales of real estate
properties, principally land, and increased earnings from partnerships and
joint ventures, also principally due to gains from land sales. Apart from these
gains, net earnings from the operations of the Service Companies were
comparable between years.
Segment Operations
A comparison of segment earnings in 1997 and 1996 is detailed below (in
thousands):
<TABLE>
<CAPTION>
Segment
Earnings
---------------
Operating Segments 1997 1996
------------------ ------- -------
<S> <C> <C>
Georgia...................................................... $51,112 $41,083
North Carolina............................................... 11,519 --
Tennessee.................................................... 7,721 1,047
Other........................................................ 2,157 1,066
------- -------
Total........................................................ $72,509 $43,196
======= =======
</TABLE>
Segment earnings increased $29,313,000 or 67.9% from $43,196,000 in 1996 to
$72,509,000 in 1998. Segment earnings in Georgia increased due primarily to the
stabilization of development properties throughout 1996 and 1997 as well as
property acquisitions in both years. North Carolina segment earnings in 1997
reflect the operating results from the initial acquisition from Lichtin of
operating properties in the Research Triangle area of North Carolina on
December 31, 1996 and the additional property acquisitions in 1997 associated
with that same transaction (see Note 3 to the consolidated financial
statements). Segment earnings in Tennessee increased in 1997 due primarily to
the full year operating results from the initial acquisition from NWI of
operating properties in Nashville, Tennessee on November 1, 1996 and from the
partial year impact of additional property acquisitions in 1997 associated with
that same transaction (see Note 3 to the consolidated financial statements).
Other segment earnings increased due primarily to the stabilization of
additional development properties in Orlando, Florida in 1996 and 1997 and the
Operating Partnership's entry into the Jacksonville, Florida market in late
1997.
Liquidity and Capital Resources
The Operating Partnership continues to generate increasing cash flows from
operations. Cash provided by operating activities increased $28,724,000 or
58.5%, from $49,097,000 in 1997, to $77,821,000 in 1998. The increase resulted
primarily from a full year of operating income in 1998 from 37 operating
buildings acquired and 18 development properties and two property expansions
stabilized in 1997, and from the partial year operating income from 48
buildings acquired and 27 development properties and one property expansion
stabilized in 1998.
The Operating Partnership's net cash flow from operations is currently
sufficient to meet the Operating Partnership's current operational needs and to
satisfy the Operating Partnership's current quarterly distribution
requirements, which are structured to ensure that the Company can satisfy the
dividend requirements necessary to maintain its status as a REIT. Operating
Partnership management believes that operating cash flows will continue to be
adequate to fund these requirements in 1999.
In 1998, the Operating Partnership invested $392,015,000 in property
acquisition, development, construction and real estate loan activities. This
compares to $182,762,000 in 1997. This increased cash investment activity
reflects the increased cash component of the Operating Partnership's building
acquisition activity in 1998 compared to 1997 of approximately $113,397,000
with the remaining increase due to increased development and land acquisition
activity in 1998. In addition, the Operating Partnership's investments in and
advances to unconsolidated entities increased from $2,504,000 in 1997 to
$66,324,000 in 1998, due partially to the Operating Partnership financing the
operations of the Service Companies through direct line of credit borrowings
subsequent to March 1998. Previously, the Service Companies were financed
through bank line of credit borrowings. The increased investments and advances
in 1998 also reflects the Service Companies' $9,600,000 investment in Codina as
well as additional real estate investments.
34
<PAGE>
Financing for the Operating Partnership's property investment activities in
1998 consisted primarily of $55,835,000 from common capital contributions from
the Company, $97,662,000 from preferred partnership units issuances,
$285,000,000 from unsecured note and term loan borrowings and increased
revolving credit facility borrowings of $35,105,000 offset by repayments and
retirements of mortgage and other notes payable of $32,333,000. This compares
to $251,916,000 from both common and preferred capital contributions from the
Company, offset by repayments and retirements of debt balances totaling
$86,329,000 in 1997. The debt and equity components of the Company's or
Operating Partnership's on-going financing strategy may differ based upon
future market conditions.
In 1998, the Operating Partnership increased its available borrowing
capacity under its syndicated, unsecured, line of credit arrangements (the
"Credit Facility") from $225,000,000 to $245,000,000 and lowered its borrowing
costs from LIBOR plus 1.05% to LIBOR plus 0.80%. The Credit Facility may be
used to, among other things, meet the Operating Partnership's operational
obligations and to fund the distributions necessary for the Company to meet its
annual REIT dividend requirements. The Operating Partnership currently intends
to finance its development and acquisition activities primarily through
borrowings under the Credit Facility, refinanced, as necessary, through the
issuance of both common and preferred partnership interests and public and
private unsecured debt obligations. Additionally, the Operating Partnership may
selectively use real estate asset sales and other joint venture arrangements to
supplement the financing of its development pipeline. At December 31, 1998, the
Operating Partnership had available capacity under the Credit Facility of
approximately $126,975,000 (see Note 4 to the consolidated financial
statements). The Credit Facility matures on December 31, 2000, and provides for
annual extensions through December 31, 2002.
In January 1999, the Operating Partnership sold 21 buildings totaling
approximately 1,181,000 square feet for net proceeds of approximately
$51,832,000. In early 1999, the Operating Partnership has and intends to
completely use these proceeds to acquire identified operating buildings and
additional development land.
The Operating Partnership received unsecured debt ratings from Standard &
Poor's, Moody's and Duff & Phelps in 1997. The Operating Partnership's current
ratings give the Operating Partnership "investment grade" status for all
current unsecured debt offerings. In 1998, the Operating Partnership utilized
its investment grade status and accessed the unsecured debt markets for the
first time through the issuance of $200,000,000 of unsecured notes. These
rating levels are subject to change based on the above rating agencies'
continuing assessments of the Operating Partnership's financial strength and
operating performance. Any change in rating status could increase or decrease
the Operating Partnership's financing costs.
The Operating Partnership believes it currently has adequate liquidity and
sources of capital, including available borrowing capacity under its existing
Credit Facility and remaining capacity of $550,000,000 under its $750,000,000
universal shelf registration, to meet its current operational requirements, to
fund annual principal requirements under existing mortgage notes payable and to
fund its current development and acquisition activity. It is management's
expectation that the Operating Partnership will continue to have access to the
additional capital resources necessary to further expand and develop its
business and to refinance mortgage notes payable as they mature in 1999. These
resources include debt and equity financings, in both public and private
markets, including the use of the Operating Partnership's available capacity
under its current universal shelf registration. As an alternative to the more
traditional debt and equity financings used in prior years, the Operating
Partnership has, in early 1999, and may continue to utilize selective real
estate asset sales and other joint venture arrangements to provide additional
sources of capital in periods where the pricing, terms and availability of
other traditional financing sources are not advantageous to the Operating
Partnership. Future development and acquisition activities will be undertaken
by the Operating Partnership only as suitable opportunities arise. Such
activities are not expected to be undertaken unless adequate sources of
financing are available and a satisfactory budget with appropriate targeted
returns on investment has been internally approved.
35
<PAGE>
Total consolidated debt amounted to $654,424,000 at December 31, 1998,
including unsecured note borrowings of $200,000,000, unsecured bank borrowings
of $203,025,000 and mortgage notes payable of $251,399,000. Of the $251,399,000
of mortgage indebtedness, $250,788,000 is fixed rate and $611,000 is variable
rate. At December 31, 1998, the weighted average interest rate on the Operating
Partnership's fixed rate mortgage debt was 8.3% and on its variable rate
mortgage debt was 6.1%. The weighted average interest rates under the Credit
Facility and the unsecured term loan, exclusive of the impact of the interest
rate swaps discussed below, at December 31, 1998, were each 6.5%. The weighted
average interest rate on the Operating Partnership's unsecured notes was 7.125%
at December 31, 1998. Based on the outstanding balance of mortgage notes
payable at December 31, 1998, the weighted average interest rates on the
mortgage notes with a final maturity in each of the next five years and
thereafter were 7.3% in 1999, 9.0% in 2000, 7.9% in 2001, 8.2% in 2002, 8.3% in
2003 and 8.5% thereafter.
Including total consolidated debt obligations of $654,424,000 and $2,309,000
of other notes payable on unconsolidated properties, the total debt obligations
of the Operating Partnership and its unconsolidated entities was $656,733,000
or 39% of total market capitalization (defined as total debt plus the market
equity value of the Operating Partnership's common and preferred units) at
December 31, 1998. At December 31, 1998, (based on the closing price of the
common stock of the Company of $28.1875 on December 31, 1998) the 26,988,413
Common Units outstanding would have a total market value of $760,736,000, the
10,000,000 preferred partnership units outstanding would have a liquidation
value of $250,000,000 and the 350,000 common unit warrant equivalents
outstanding would have a book value of $1,400,000, resulting in total equity
value of $1,012,136,000.
Management of Market Risks
The Operating Partnership's principal market risk relates to its exposure to
interest changes, primarily changes in short-term LIBOR and U.S. prime interest
rates and medium-term U.S. treasury security interest rates used as the
benchmark interest rate for the Operating Partnership's seven to ten year fixed
rate unsecured notes. Changes in short-term interest rates cause the Operating
Partnership's interest costs on unhedged line of credit borrowings to increase
or decrease on a period to period basis. Changes in medium-term U.S. treasury
security interest rates will cause the Operating Partnership's interest costs
on expected future medium-term unsecured note borrowings to increase or
decrease based on changes in the interest rates.
The Operating Partnership's primary derivative and other financial
instruments subject to interest rate risk are the Operating Partnership's fixed
and variable rate borrowing arrangements and outstanding interest rate swap
arrangements. The Operating Partnership's other financial instruments (cash and
cash equivalents, receivables, other assets, accounts payable and other
liabilities) are not generally subject to interest rate risks due to the short-
term nature and type of these instruments.
The Operating Partnership uses interest rate swap and treasury rate
guarantee hedge arrangements to manage its exposure to interest rate changes.
At December 31, 1998, outstanding interest rate swap arrangements serve to
decrease the negative impact of increased short-term interest rates on the
Operating Partnership's financial results by fixing interest rates on otherwise
variable rate debt instruments. In prior years, the Operating Partnership used
treasury rate guarantee hedge arrangements to effectively fix the interest rate
on anticipated future debt issuances, however, at December 31, 1998, the
Operating Partnership had no outstanding treasury rate guarantee hedge
arrangements.
36
<PAGE>
Following is a summary of the terms of the Operating Partnership's fixed and
variable rate borrowing arrangements and interest rate swap arrangements at
December 31, 1998:
<TABLE>
<CAPTION>
Average Average
Principal/Notional Fair Interest Years to
Dollars in thousands Amount Value Rate Maturity
- -------------------- ------------------ -------- -------- --------
<S> <C> <C> <C> <C>
Debt
Mortgage Debt
Fixed rate.................... $250,788 $259,770 8.3% 6.5
Variable rate................. 611 611 6.1% 11.9
Unsecured notes -- fixed rate.. 200,000 191,131 7.1% 7.4
Unsecured term loan--variable
rate.......................... 85,000 85,000 6.5% 3.0
Unsecured line of credit
facilities--Variable rate..... 118,025 118,025 6.5% 1.8
Interest Rate Swaps
Unsecured line of credit
swaps......................... $ 40,000 $ (1,446) -- 2.1
Average pay rate.............. -- -- 6.7% --
Average receive rate.......... -- -- 5.2% --
Unsecured term loan swaps...... 85,000 169 -- 3.0
Average pay rate.............. -- -- 5.0% --
Average receive rate.......... -- -- 5.3% --
</TABLE>
If interest rates under the unsecured line of credit facilities and term
loan, in excess of the $125,000,000 effectively converted to fixed rates
discussed above, and under the Operating Partnership's variable rate mortgage
debt fluctuated by 1.0%, interest costs to the Operating Partnership, based on
outstanding borrowings at December 31, 1998, would increase or decrease by
approximately $800,000 on an annualized basis.
As reflected in the table above, the interest rate swap arrangements would
require the net payment of approximately $1,277,000 (at December 31, 1998), if
the arrangements were terminated. Under current accounting rules, these
potential costs are not recognized currently in the Operating Partnership's
financial statements, but instead are reflected as part of interest expense
over the life of the related hedged borrowings, causing reported interest costs
to be higher than current interest costs on similar unhedged indebtedness. The
costs associated with terminated swap and hedge arrangements can result in
charges to operations to the extent hedged borrowings are not completed or are
no longer outstanding.
At December 31, 1998, the Operating Partnership does not have any exposure
to foreign currency exchange risk, equity price risk or other material market
risks.
Current Development and Acquisition Activity
At December 31, 1998, the Operating Partnership had committed development
and acquisitions totaling approximately $354,339,000 representing 54 buildings
totaling 5,923,000 square feet. Net of six buildings stabilized, one building
acquired and one building under agreement to be sold in early 1999 totaling
1,058,000 square feet and with a total cost of $50,966,000, and including other
changes in estimated costs to complete development properties, the Operating
Partnership had at February 28, 1999, committed development and acquisitions
totaling approximately $312,998,000 representing 46 buildings totaling
4,865,000 square feet. Properties to be acquired as of February 28, 1999,
consist of one building totaling 90,000 square feet with a total expected cost
of approximately $5,100,000. Development properties as of February 28, 1999,
consist of 45 buildings totaling 4,775,000 square feet with a total expected
cost of $307,898,000.
37
<PAGE>
It is expected that such development and acquisition properties will
stabilize or be acquired as detailed below:
<TABLE>
<CAPTION>
Square Estimated
Year Buildings Feet Cost
---- --------- --------- ------------
<S> <C> <C> <C>
1999 21 2,286,000 $154,254,000
2000 24 2,399,000 154,844,000
2010 1 180,000 3,900,000
--- --------- ------------
46 4,865,000 $312,998,000
=== ========= ============
</TABLE>
In addition, the Operating Partnership has committed, subject to completing
or updating its due diligence procedures, to acquire development land totaling
$32,641,000 over various periods ranging up to five years.
The information provided above includes forward-looking data about expected
property acquisitions or stabilizations that is based on current construction
schedules, the status of lease negotiations with potential tenants, the
successful completion of due diligence procedures and other relevant factors
currently available to the Operating Partnership. There can be no assurance
that any of these factors will not change or that any change will not affect
the accuracy of such forward-looking data.
Supplemental Disclosure of Funds from Operations
The Operating Partnership believes that funds from operations provides an
additional indicator of the financial performance of the Operating Partnership.
Funds from operations is defined by NAREIT to mean net income (loss) determined
in accordance with GAAP excluding gains (or losses) from debt restructuring and
sales of operating property, plus depreciation and amortization, and after
adjustments for unconsolidated partnerships and joint ventures. Adjustments for
unconsolidated partnerships and joint ventures will be calculated to reflect
funds from operations on the same basis. The Operating Partnership computes
funds from operations under the current NAREIT definition by subtracting from
net income the distributions to preferred unitholders before making an
adjustment for the non-cash items described above. Funds from operations is
influenced not only by the operations of the properties, but also by the
capital structure of the Operating Partnership. Accordingly, management expects
that funds from operations will be one of the factors considered by the Board
of Directors of the Company in determining the amount of cash distributions the
Operating Partnership will pay to its Common Unitholders. Funds from operations
does not represent cash flow from operating, investing and financing activities
as defined by GAAP, which are discussed under "Liquidity and Capital Resources"
above. Additionally, funds from operations does not measure whether cash flow
is sufficient to fund all cash flow needs, including principal amortization,
capital expenditures and dividends to shareholders, and should not be
considered as an alternative to net income for purposes of evaluating the
Operating Partnership's operating performance or as an alternative to cash
flow, as defined by GAAP, as a measure of liquidity. Funds from operations
presented herein under the NAREIT guidelines is not necessarily comparable to
funds from operations presented by other real estate companies due to the fact
that not all real estate companies use the same definition. However, the
Operating Partnership's funds from operations is comparable to the funds from
operations of real estate companies that use the current NAREIT definition.
The Operating Partnership's calculation of funds from operations follows the
guidelines issued by NAREIT, including the recognition of rental income on the
"straight-line" basis consistent with its treatment in the Operating
Partnership's statements of operations under GAAP. The "straight-line" rental
adjustment increased rental revenues by $2,129,000, $680,000 and $475,000 in
1998, 1997 and 1996, respectively. In accordance with the NAREIT guidelines,
the Operating Partnership excludes gains or losses on sales of operating
(previously depreciated) real estate assets in calculating funds from
operations, but includes gains or losses on sales of undepreciated assets
(land) that are of a recurring nature. Pre-tax gains on land sales are included
in funds from operations in the amount of $1,023,000, $636,000, and $67,000 in
1998, 1997, and 1996, respectively.
38
<PAGE>
In 1998, funds from operations available to Common Unitholders increased
$19,597,000 or 38.9% to $69,940,000, compared to funds from operations of
$50,343,000 in 1997. Funds from operations for 1998, 1997 and 1996, are
detailed below (in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Net income available to Common Unitholders....... $31,043 $26,474 $15,809
Extraordinary loss............................... 365 -- --
Depreciation and amortization.................... 38,348 24,144 13,474
Depreciation and amortization--unconsolidated
entities........................................ 237 10 40
Gain on sale of operating real estate assets..... (53) (209) --
Gain on sale of operating real estate assets--
unconsolidated entities......................... -- (76) --
------- ------- -------
Funds from operations available to Common
Unitholders..................................... $69,940 $50,343 $29,323
======= ======= =======
Weighted average Common Units
Basic........................................... 26,134 21,380 14,280
======= ======= =======
Diluted(a)...................................... 26,299 21,580 14,386
======= ======= =======
</TABLE>
- --------
(a) Represents the weighted average Common Units outstanding plus the dilutive
effect of the Company's outstanding stock options. Common Unit equivalents
related to the Company's outstanding stock options totaled 165,000,
200,000, and 106,000 in 1998, 1997, and 1996, respectively.
Supplemental Information on Capital Expenditures and Leasing Costs
The following table details the Operating Partnership's capital expenditures
and leasing costs for 1998, 1997, and 1996 (in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Building acquisitions(1)(2)..................... $287,998 $129,884 $201,660
Development and land acquisition
activity(3)(4)................................. 265,389 137,815 70,476
Non-revenue-producing building improvements..... 1,900 1,059 543
Tenant improvement and leasing costs on second-
generation leases(5)........................... 7,022 4,541 2,995
-------- -------- --------
$562,309 $273,299 $275,674
======== ======== ========
</TABLE>
- --------
(1) Building acquisitions in 1997 included two buildings acquired while still
under development.
(2) Reflects aggregate acquisition costs including the assumption of
indebtedness of $88,273,000, the issuance of $42,422,000 of Common Units
and other assumed liabilities, net of other assets, of $4,224,000 in 1998.
Reflects aggregate acquisition costs including the assumption of
indebtedness of $59,748,000, the issuance of $31,210,000 of Common Units
and exclusive of the decrease in other acquisition related payables, net of
receivables, of $756,000 in 1997. Reflects aggregate acquisition costs
including the assumption of mortgage notes payable of $104,628,000, the
issuance of $55,209,000 of Common Units and other acquisition related
payables, net of receivables, of $906,000 in 1996.
(3) Includes first-generation leasing costs on development properties totaling
$9,391,000, $3,774,000, and $1,287,000 in 1998, 1997, and 1996,
respectively.
(4) Reflects aggregate development, land acquisition and leasing costs net of
the settlement of real estate development loans of $10,870,000, including
the assumption of indebtedness of $2,864,000, the issuance of $13,181,000
of Common Units and exclusive of the increase in construction payables of
$1,756,000 in 1998. Reflects aggregate costs including the assumption of
indebtedness of $5,121,000, the issuance of $388,000 of Common Units, net
of the settlement of real estate development loans of $7,376,000 and
exclusive of the decrease in construction payables of $776,000 in 1997.
Reflects aggregate costs net of the decrease in construction payables of
$743,000 in 1996.
(5) Includes second-generation leasing costs totaling $2,706,000, $2,073,000,
and $1,331,000 in 1998, 1997, and 1996, respectively.
39
<PAGE>
Recent Accounting Pronouncements
The Operating Partnership adopted Statements of Financial Accounting
Standards ("SFAS") 130, "Reporting of Comprehensive Income," during 1998 which
established standards for reporting and display of comprehensive income and its
components. Comprehensive income is the total of net income and all other
nonowner changes in shareholders' equity. As of December 31, 1998, the
Operating Partnership had no items of other comprehensive income.
Effective for the year ended December 31, 1998, the Operating Partnership
implemented the disclosure requirements of SFAS 131, "Disclosures About
Segments of an Enterprise and Related Information." Segment disclosures under
SFAS 131 for each of the three years in the period ended December 31, 1998 are
reflected in note 12 to the consolidated financial statements.
In March 1998, Emerging Issues Task Force Issue No. 97-11, "Accounting for
Internal Costs Relating to Real Estate Property Acquisitions," was issued
prescribing that internal acquisition costs relating to the acquisition of
operating real estate properties should be expensed as incurred. Effective with
the first quarter of 1998, the Operating Partnership implemented this new
guideline, which did not have a material impact on the Operating Partnership's
financial position or results of operations.
In June 1998, SFAS 133, "Accounting for Derivative Instruments and for
Hedging Activities," was issued prescribing new accounting standards for the
accounting and disclosures of derivative instruments and hedging transactions.
SFAS 133 will require the Operating Partnership to record all derivative
instruments on the balance sheet at fair value. Changes in derivative fair
values will either be recorded in earnings along with the changes in fair value
of related hedged assets or liabilities or as an adjustment to stockholders
equity depending on the nature and type of derivative instrument. SFAS 133 will
be effective for the Operating Partnership beginning January 1, 2000. The
Operating Partnership is evaluating the provisions of SFAS 133 and plans to
adopt SFAS 133 in its financial statements beginning in 2000. The impact of
SFAS 133 on the Operating Partnership's financial statements will depend on the
extent, type and effectiveness of the Operating Partnership's hedging
activities. However, the Operating Partnership does not believe the effect of
adopting SFAS 133 will be material to its financial position or results of
operations.
Impact of Inflation
In the last three years, inflation has not had a significant impact on the
Operating Partnership because of the relatively low inflation rate.
Substantially all tenant leases do, however, contain provisions designed to
protect the Operating Partnership from the impact of inflation. Most of the
Operating Partnership's leases require the tenants to pay a share of operating
expenses, including common area maintenance, real estate taxes and insurance,
thereby reducing the Operating Partnership's exposure to increases in costs and
operating expenses resulting from inflation. In addition, many of the leases
are for terms of less than seven years which may enable the Operating
Partnership to replace existing leases with new leases at higher base rentals
if rents under the existing leases are below the then-existing market rate.
However, there can be no assurance that the Operating Partnership would be able
to replace existing leases with new leases at higher base rentals.
Year 2000
General. The term "year 2000 issue" is a general term used to describe the
various problems that may result from the improper processing of dates and
date-sensitive calculations by computers and other machinery and equipment as
the year 2000 is approached and reached. The year 2000 issue is the result of
many computer programs recognizing a date ending with "00" as the year 1900
rather than 2000, causing potential system failures or miscalculations which
could result in disruptions of normal business operations.
State of Readiness. The Operating Partnership's primary financial and
operating systems are supplied by third-party suppliers. Based on
communications with these third-party suppliers, internal evaluations of the
third-party systems and internal assessments of in-house information systems,
the Operating Partnership expects these systems to be year 2000 compliant by
the end of the second quarter of 1999. Additionally, the Operating Partnership
has evaluated its telephone systems and such systems are expected to be fully
year 2000 compliant before the end of 1999.
40
<PAGE>
The Operating Partnership is also assessing the potential impact of the year
2000 issue resulting from the potential failure of its key building mechanical
systems or the failure of its major vendors, suppliers and tenants to be year
2000 compliant. Key building mechanical systems include, but are not limited
to, HVAC systems, elevators and security systems. Major vendors and suppliers
include providers of utility services and suppliers of raw materials utilized
in the development and construction of buildings. The Operating Partnership's
assessments include the use of questionnaires and direct discussions with such
vendors, suppliers and tenants. The Operating Partnership anticipates the
completion of its assessments and evaluations in these areas in the first half
of 1999.
Cost to Address Year 2000 Issues. Through December 31, 1998, the Operating
Partnership has spent approximately $53,000 to upgrade and replace certain
computer hardware systems and its telecommunication systems to ensure Year 2000
compliance. The Operating Partnership estimates that it will spend an
additional $135,000 on computer hardware system upgrades and replacements
during 1999 relating to Year 2000 compliance issues. A significant portion of
such actual and future expenditures are part of the Operating Partnership's on-
going technology enhancement program and, as such, these expenditures are not
incremental costs associated with Year 2000 readiness. The Operating
Partnership does not expect to incur additional incremental costs in excess of
amounts stated above relating to year 2000 compliance and the Operating
Partnership does not believe the total costs of Year 2000 compliance to be
material to the Operating Partnership's consolidated financial condition or
results of operations taken as a whole. The Operating Partnership continues to
allocate the time and resources necessary to timely resolve significant year
2000 issues.
Risks Presented by Year 2000 Issues. The Operating Partnership's major and
most reasonably likely worse case risks associated with the year 2000 issue
relate to the failure of key vendors, suppliers and tenants to be fully year
2000 compliant. Failures of critical utility systems or other building
mechanical systems could lead to significant business disruptions for tenants.
Failures of tenants' businesses that rely heavily on information technology or
that are involved in the information technology business could also lead to
significant business disruptions or failures. These occurrences could impact
the Operating Partnership's cash flow and results of operations should these
disruptions lead to a tenants' inability to continue to meet their rental
obligations to the Operating Partnership.
Failures of major suppliers to deliver building raw materials to the
Operating Partnership due to year 2000 issues could result in the Operating
Partnership being unable to complete buildings in a timely manner or at the
costs budgeted by the Operating Partnership. This could result in slower
overall business growth and increased costs of constructing new buildings, both
of which could impact the Operating Partnership's future financial condition
and results of operations.
Based on information obtained from such third parties to date, the Operating
Partnership does not believe that the impact of the year 2000 issue will have a
material adverse impact on the Operating Partnership's financial condition or
results of operations. However, such conclusions are based upon communications,
evaluations, and assessments to date, and if future negative events occur which
cannot be resolved in a timely manner, it could result in material financial
risk to the Operating Partnership.
Contingency Plans. To date, the Operating Partnership has not established
any contingency plans for possible year 2000 issues. After its assessments are
completed in the first half of 1999, the Operating Partnership anticipates
evaluating and developing contingency plans, to the extent such plans are
feasible, to address identified risks. It is anticipated that any such plans
will be developed in the second half of 1999.
The information provided above regarding the Operating Partnership's year
2000 preparedness includes Forward-looking Statements based upon management's
current assessment of year 2000 issues impacting the Operating Partnership.
Such assessments are, in part, based on representations of other third parties
regarding their year 2000 preparedness. Such Forward-looking Statements involve
risks and uncertainties and there can be no assurance that any of the factors
or statements regarding the year 2000 issue will not change and that any change
will not affect the accuracy of the Operating Partnership's Forward-looking
Statements.
41
<PAGE>
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
A discussion of the Operating Partnership's exposure to, and management of,
market risk appears in Management's Discussion and Analysis of Financial
Condition and Results of Operations included in Item 7 of this Form 10-K. Such
discussion under the caption "Management of Market Risks" is incorporated
herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of the Registrant and supplementary
data are detailed under Item 14(a) and filed as part of this report on the
pages indicated.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
42
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Directors and Executive Officers of the Company, the parent of the
Operating Partnership, and their positions are as follows:
<TABLE>
<CAPTION>
Name Age Title
---- --- -----
<C> <C> <S>
Directors
Chairman of the Board and Chief Executive
A. Ray Weeks, Jr............... 46 Officer
Vice Chairman of the Board and Chief
Thomas D. Senkbeil............. 49 Investment Officer
Forrest W. Robinson............ 47 President and Chief Operating Officer
John W. Nelley, Jr............. 50 Managing Director, Nashville Operations
Barrington H. Branch........... 58 Director
George D. Busbee............... 71 Director
William Cavanaugh III.......... 60 Director
Armando Codina................. 52 Director
Charles R. Eitel............... 49 Director
Harold S. Lichtin.............. 50 Director
William O. McCoy............... 65 Director
Executive Officers
Senior Vice President and Chief Financial
David P. Stockert.............. 36 Officer
Senior Vice President, North Carolina
Robert G. Cutlip............... 49 Operations
Senior Vice President, Construction
Clyde H. Duckett............... 56 Services
Mark W. Flowers................ 41 Senior Vice President, Landscape Services
Senior Vice President, North Florida
Charles D. Graham.............. 55 Operations
Senior Vice President, Dallas/Ft. Worth
Jeffrey D. Turner.............. 38 Operations
Eben Hardie III................ 40 Senior Vice President, Development
Elizabeth C. Belden............ 44 Vice President, Corporate Counsel
Arthur J. Quirk................ 41 Vice President and Controller
Vice President, Development &
Thomas W. Trocheck............. 44 Acquisitions
Susan C. Walker................ 45 Vice President, Investor Relations
Robert T. Weeks................ 38 Vice President, Information Technology
</TABLE>
The Board of Directors of the Company currently consists of eleven persons.
Directors of the Company are divided into three classes serving staggered
three-year terms, with directors serving until the election and qualification
of their successors. Certain information regarding the directors is set forth
below. This information has been furnished by the respective individuals:
Directors--Terms Expiring in 1999
Thomas D. Senkbeil. Director of the Company since October 1992. Mr.
Senkbeil has been the Vice Chairman of the Board and Chief Investment Officer
of the Company since October 1992. From September 1984 to October 1992, Mr.
Senkbeil served as Executive Vice President and Managing Partner of Senkbeil &
Associates, Inc. and Anderson & Senkbeil, Inc., each a real estate development
firm. Mr. Senkbeil is 49 years old.
John W. Nelley, Jr. Director of the Company since November 1996. In
addition, Mr. Nelley has been a Managing Director of the Company, with
responsibilities for the Company's activities in Nashville, Tennessee, since
November 1996. Since 1982, Mr. Nelley has been a General Partner of NWI
Warehouse Group, L.P., an industrial warehouse development company in
Nashville, Tennessee, whose assets and business have been acquired, or are
under agreement to be acquired, by the Company. Mr. Nelley is 50 years old.
Barrington H. Branch. Director of the Company since August 1994. He is
currently President of The Branch-Shelton Company LLC, a private investment
banking firm. From October 1991 to February 1997,
43
<PAGE>
Mr. Branch was President and Chief Executive Officer of DIHC Management
Corporation, the wholly owned U.S. real estate investment subsidiary of
Pensionenfonds PGGM, the second largest private pension fund in The
Netherlands. Mr. Branch is 58 years old.
William Cavanaugh III. Director of the Company since June 1997. Mr.
Cavanaugh has been President and Chief Executive Officer of Carolina Power &
Light Company ("CP&L") since October 1996. He joined CP&L in September 1992 and
served as the Company's President and Chief Operating Officer until October
1996, when he became Chief Executive Officer. Prior to joining CP&L, he was
Chairman, Chief Executive Officer and Director of Entergy Operations,
Incorporated, and Group President--Energy Supply for Entergy Corporation. He is
a member of the Board of Directors of the Nuclear Energy Institute, the
Association of Edison Illuminating Companies, Wachovia Bank of North Carolina,
North Carolina Citizens for Business and Industry, and the Southeastern
Electric Exchange. Mr. Cavanaugh is 60 years old.
Armando Codina. Director of the Company since June 1998. For over 20 years,
Mr. Codina has been Chairman and Chief Executive Officer of Codina Group, Inc.,
a Miami based real estate investment, development, construction, brokerage and
property management firm of which the Company owns a one-third interest. Mr.
Codina serves on the boards of AMR Inc. (American Airlines), American Bankers
Insurance Group, Inc., BellSouth Corporation, FPL Group Inc. and Winn-Dixie
Stores, Inc. Mr. Codina is 52 years old.
Directors--Terms Expiring in 2000
A. Ray Weeks, Jr. Chairman of the Board of Directors and Chief Executive
Officer of the Company since its incorporation in 1983. He was also the
President of the Company from 1983 through March 1991. Mr. Weeks is 46 years
old.
George D. Busbee. Director of the Company since August 1994. He has been of
counsel to the law firm of King & Spalding since January 1994 and was a Partner
of King & Spalding from January 1983 to December 1993. Mr. Busbee is a former
Governor of the State of Georgia. He is currently a director of Union Camp
Corporation. Mr. Busbee is 71 years old.
William O. McCoy. Director of the Company since August 1994. Since December
1997, Mr. McCoy has been a partner of Franklin Street partners, an investment
management firm in Chapel Hill, North Carolina. Mr. McCoy was Vice President-
Finance for the University of North Carolina system from February 1995 to
November 1998. He was President of BellSouth Enterprises and Vice Chairman of
the Board of BellSouth Corporation, a regional telecommunications company, from
1983 until January 1995. He is currently a Director of Carolina Power & Light
Company, Kenan Transport Company, Fidelity Investments and the Liberty
Corporation. Mr. McCoy is 65 years old.
Directors--Terms Expiring in 2001
Forrest W. Robinson. Director and President of the Company since April 1991
and the Chief Operating Officer since May 1988. Mr. Robinson is 47 years old.
Charles R. Eitel. Director of the Company since August 1994. Since February
1997, Mr. Eitel has been President and Chief Operating Officer of Interface,
Inc., a worldwide commercial interiors products and services company. He was
President and Chief Executive Officer, Floorcoverings Group, Interface, Inc.,
and served as Executive Vice President of Interface, Inc., from October 1994
until February 1997. Mr. Eitel was President and Chief Executive Officer of
Interface Flooring Systems from November 1993 to February 1994, and was
President of the Floor Coverings Division of Collins & Aikman from July 1987 to
November 1993. He is currently on the board of directors of Interface, Inc. Mr.
Eitel is 49 years old.
Harold S. Lichtin. Director of the Company since December 1996. Since
October 1997, Mr. Lichtin has been President of Lichtin Corporation, a real
estate and investment firm. Mr. Lichtin had been a Managing
44
<PAGE>
Director of the Company, with responsibilities for the Company's activities in
the Research Triangle area of North Carolina, from December 1996 through
September 1997 and since October 1997 has served as a consultant to the
Company. From 1977 to December 1996, Mr. Lichtin was President of Lichtin
Properties, Inc., a commercial development and property management company that
was acquired by the Company in December 1996. Mr. Lichtin is 50 years old.
The following is a biographical summary of the experience of the executive
officers, other than those who are also directors, of the Company:
David P. Stockert. Senior Vice President and Chief Financial Officer of the
Company since June 1995. Vice President and Associate in the Real Estate
Investment Banking Group of Dean Witter Reynolds Inc. (now Morgan Stanley Dean
Witter) from July 1990 to June 1995. CPA with Ernst & Whinney (now Ernst &
Young) from May 1985 to August 1988. Master of Business Administration from
Columbia University Business School and Bachelor of Science in Accounting from
the University of Colorado.
Robert G. Cutlip. Senior Vice President, North Carolina Operations, of the
Company since October 1997. Senior Vice President, Development, of the Company
from April 1993 to September 1997. Vice President and Principal-in-Charge of
Dallas Industrial and Phoenix/Colorado Operations of Paragon Group, a national
full service real estate development company, from January 1992 to April 1993,
Vice President and Principal of Dallas Industrial from January 1990 to December
1991 and Vice President, Operations from January 1988 to January 1990. Master
of Business Administration from University of Southern California, Master of
Science in Civil Engineering from Vanderbilt University and Bachelor of Science
in Civil Engineering from U.S. Air Force Academy.
Clyde H. Duckett. Senior Vice President, Construction Services, of the
Company since January 1989. Professional Engineer registered in Georgia, South
Carolina and Tennessee. Bachelor of Science in Mechanical Engineering from
Tennessee Technological University.
Mark W. Flowers. Senior Vice President, Landscape Services, of the Company
since October 1993. Vice President, Landscape of the Company from October 1987
through September 1993. Bachelor of Science in Horticulture from the University
of Georgia.
Charles D. Graham. Senior Vice President, North Florida Operations, since
October 1997. President of Wilma, Inc., a national real estate development
firm, from June 1983 to October 1997. Vice President and Chief Financial
Officer of the Sea Pines Company, a national real estate developer of resort
communities, from 1980 to 1983. Master of Accountancy and Bachelor of Science
in Business Administration from Florida State University.
Eben Hardie III. Senior Vice President, Development of the Company since
October 1997. President of Cauble Development Services Company from December
1994 to October 1997. Senior Vice President, Kern Realty Services from 1988 to
1994. Bachelor of Science in Economics from the Wharton School of the
University of Pennsylvania.
Jeffrey D. Turner. Senior Vice President, Dallas/Ft. Worth Operations since
June 1998. Vice President-Dallas Industrial for Paragon Group, Inc. a national
full-service real estate development company, from January 1985 through June
1998. Bachelor of Arts in Marketing from Anderson University.
Elizabeth C. Belden. Vice President, Corporate Counsel, of the Company since
October 1985. Juris Doctor from Emory University and Bachelor of Social
Sciences from Colorado State University.
Arthur J. Quirk. Vice President and Controller of the Company since December
1994. Vice President-Controller and Chief Accounting Officer for Allegiant
Physician Services, Inc., a physician management services company, from August
1993 to November 1994. Chief Financial Officer/Controller for TransTel Group
Inc., a start-up telecommunications company, from November 1991 to July 1993.
From June 1980 to October
45
<PAGE>
1991 served in various capacities including Senior Audit Manager at Arthur
Andersen LLP. Bachelor of Science in Accounting from Auburn University.
Thomas W. Trocheck. Vice President, Development & Acquisitions, of the
Company since May 1989. Professional Engineer registered in Georgia, Florida
and South Carolina. Bachelor of Science in Civil Engineering from the Georgia
Institute of Technology and Bachelor of Arts in Government and Business
Administration from Florida State University.
Susan C. Walker. Vice President, Investor Relations, of the Company since
October 1997. Public Information Manager and speechwriter for the President of
the Federal Reserve Bank of Atlanta from June 1991 through September 1997.
Previous editorial positions with the Gwinnett Daily News, the Washington
Business Journal, and Inc. magazine. Bachelor of Arts in Classics from Stanford
University.
Robert T. Weeks. Vice President, Information Technology, of the Company
since January 1992. Director of Information Systems of the Company from March
1989 through December 1991. Master of Business Administration from Georgia
State University and Bachelor of Business Administration from the University of
Georgia. Ray Weeks and Robert Weeks are first cousins.
Section 16(a) Beneficial Ownership Reporting Compliance
Compliance with Section 16(a) of the Exchange Act requires the Company's
officers, directors, and persons who own more than 10% of the Company's Common
Stock to file certain reports with respect to each such person's beneficial
ownership of the Company's Common Stock. In addition, Item 405 of
Regulation S-K requires the Company to identify in this current report each
reporting person who failed to file on a timely basis reports required by
Section 16(a) of the Exchange Act during the most recent fiscal year or prior
fiscal year. Based on a review of the copies of such forms furnished to the
Company, the Company believes that all reports required to be filed pursuant to
Section 16(a) during 1998 were timely filed except that Harold S. Litchtin, a
director of the Company, filed two late Forms 4, and John W. Nelley, Jr., an
executive officer and director of the Company, filed a late Form 4.
46
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table
The following sets forth certain information concerning the compensation
paid to the Company's chief executive officer, each of the four other most
highly compensated executive officers of the Company and one former executive
officer of the Company (collectively, the "Named Executive Officers"):
<TABLE>
<CAPTION>
Long-Term
Compensation Awards
-----------------------
Securities
Annual Compensation Restricted Underlying
Name and Principal ----------------------- Stock Options All Other
Position Year Salary Bonus(2)(3)(4) Awards (#) Compensation(5)
- ------------------ ---- -------- -------------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
A. Ray Weeks, Jr.(1).... 1998 $295,277 $250,000 $300,000(6) 100,000 $ 7,531
Chairman of the Board
and 1997 264,231 192,000 -- 10,000 7,071
Chief Executive Officer 1996 218,451 -- -- 25,000 171,544
Thomas D. Senkbeil...... 1998 244,661 210,000 -- 75,000 7,531
Vice Chairman of the
Board 1997 217,392 155,000 -- -- 7,136
and Chief Investment
Officer 1996 196,382 136,000 235,000(7) 20,000 7,231
Forrest W. Robinson..... 1998 229,662 190,000 -- 65,000 7,531
President and Chief 1997 205,280 140,000 -- -- 7,125
Operating Officer 1996 196,382 128,000 200,000(7) 20,000 7,231
David P. Stockert....... 1998 219,246 175,000 -- 55,000 7,240
Senior Vice President
and 1997 193,480 127,500 -- -- 6,743
Chief Financial Officer 1996 184,687 116,000 200,000(7) 17,500 5,077
John W. Nelley, Jr.(8).. 1998 213,600 110,000 -- 37,500 8,881
Managing Director--
Nashville 1997 167,292 67,000 -- -- 9,007
Operations 1996 20,557 -- -- 40,000 962
Klay W. Simpson(9)...... 1998 29,989 448,861(10) -- -- 5,176
Senior Vice President--
Marketing 1997 57,200 348,092(10) -- -- 3,900
1996 57,200 318,014(10) -- 8,000 2,828
</TABLE>
- --------
(1) In 1998, Mr. Weeks elected to defer $143,914 of salary payments through the
Company's Deferred Compensation Plan (discussed below). As discussed in
note (5) below, in 1998, Mr. Weeks elected to add a prior year deferred
bonus amount totaling $181,503 to the Deferred Compensation Plan. Under the
provisions of the Deferred Compensation Plan and Mr. Weeks elections under
the Plan, Mr. Weeks' compensation deferrals are invested in hypothetical
shares of the Company's common stock. The value of Mr. Weeks' deferred
compensation account, at any point in time, equals the value of the
hypothetical shares of common stock held by the plan, including the
reinvestment of hypothetical cash and common stock dividends on such
shares, at the current market price of the Company's common stock. At
December 31, 1998, the value of Mr. Weeks deferred compensation account was
$309,346.
(2) Bonus amounts for 1998 totaling $250,000 for Mr. Weeks, $210,000 for Mr.
Senkbeil, $190,000 for Mr. Robinson, $175,000 for Mr. Stockert and $100,000
for Mr. Nelley earned in 1998 were paid in 1999.
(3) Bonus amounts for 1997 totaling $192,000 for Mr. Weeks, $155,000 for Mr.
Senkbeil, $140,000 for Mr. Robinson, $127,500 for Mr. Stockert and $67,000
for Mr. Nelley earned in 1997 were paid in 1998.
(4) Bonus amounts for 1996 totaling $136,000 for Mr. Senkbeil, $128,000 for Mr.
Robinson and $116,000 for Mr. Stockert earned in 1996 were paid in 1997.
(5) For 1998, amounts include the Company's matching contributions to its
401(k) retirement savings plan of $3,200 for Mr. Weeks, $3,200 for Mr.
Senkbeil, $3,200 for Mr. Robinson, $3,200 for Mr. Stockert, $3,200 for Mr.
Nelley and $3,200 for Mr. Simpson. Amounts for 1998 also include health
care and disability premium payments of $4,331 for Mr. Weeks, $4,331 for
Mr. Senkbeil, $4,331 for Mr. Robinson, $4,040 for Mr. Stockert, $5,681 for
Mr. Nelley and $1,976 for Mr. Simpson. For 1996, the amount for Mr. Weeks
also includes a bonus totaling $164,000 earned in 1996 that the
Compensation Committee of the Board of Directors elected to defer for a
period of five years. The terms of such bonus deferral also
47
<PAGE>
provided for the payment of interest to Mr. Weeks on the amount of the
deferred bonus. Total interest earned on the deferred bonus totaled $6,503
in 1998 and $11,000 in 1997. Effective July 1, 1998, Mr. Weeks elected to
have the aggregate deferred amount, including accrued interest, totaling
$181,503 be considered part of the Deferred Compensation Plan.
(6) Represents the value of 10,835 restricted shares of the Company's Common
Stock granted to Mr. Weeks on January 21, 1999, related to 1998
performance. These shares were granted in recognition of successful prior
service to the Company and will be earned through the continued financial
performance of the Company as stated below. These shares vest ratably over
the four year period ended January 21, 2003, provided the Company's annual
per share funds from operations growth exceeds 9% on an annual basis for
each vesting period. Funds from operations is a REIT industry measurement
that is one of the tools used by the Board of Directors to assess the
financial performance of the Company. At December 31, 1998, the restricted
stock granted to Mr. Weeks had a value of 305,412 (assuming all shares
will fully vest in accordance with the terms of the arrangements).
Dividends are paid on the restricted stock at the same rate payable to
common shareholders.
(7) Represents the value of 7,015, 5,970 and 5,970 restricted shares of the
Company's Common Stock granted on February 17, 1997, to Mr. Senkbeil, Mr.
Robinson and Mr. Stockert, respectively, related to 1996 performance.
These shares were granted in recognition of successful prior service to
the Company and will be earned through the continued financial performance
of the Company as stated below. These shares vest ratably over the four
year period ended February 17, 2000, provided the Company's annual per
share funds from operations growth exceeds 10% on an annual basis for each
vesting period. Effective on each of February 17, 1999 and 1998, 25% of
the restricted stock granted to Mr. Senkbeil, Mr. Robinson and Mr.
Stockert vested in accordance with the terms of their restricted stock
arrangements discussed above. At December 31, 1998, the restricted stock
granted to Mr. Senkbeil, Mr. Robinson and Mr. Stockert had a value of
$197,735, $168,279 and $168,297, respectively (assuming all shares will
fully vest in accordance with the terms of the arrangements). Dividends
are paid on the restricted stock at the same rate payable to common
shareholders.
(8) Mr. Nelley was employed by the Company on November 1, 1996.
(9) Mr. Simpson resigned his employment with the Company on June 16, 1998.
(10) Amounts represent commissions earned on real estate transactions under the
terms of Mr. Simpson's employment arrangement with the Company.
Option Grants in Last Fiscal Year
The following table sets forth the individual grants of stock options made
during 1998 to each Named Executive Officer.
<TABLE>
<CAPTION>
Individual Grants
------------------------------------------------
Potential Realizable Value
Number of at Assumed Annual Rates of
Securities Percent of Total Stock Price Appreciation
Underlying Options Granted Exercise for Option Term(2)
Options to Employees in Price Expiration ---------------------------
Name Granted(1) Fiscal Year ($/Share) Date 5% 10%
- ---- ---------- ---------------- --------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
A. Ray Weeks, Jr........ 100,000 18.10% $32.00 5/20/08 $ 2,012,463 $ 5,099,976
Thomas D. Senkbeil...... 75,000 13.57% 32.00 5/20/08 1,509,347 3,824,982
Forrest W. Robinson..... 65,000 11.76% 32.00 5/20/08 1,308,101 3,314,984
David P. Stockert....... 55,000 9.95% 32.00 5/20/08 1,106,855 2,804,987
John W. Nelley, Jr...... 37,500 6.79% 32.00 5/20/08 754,674 1,912,491
Klay W. Simpson......... -- -- -- -- -- --
</TABLE>
- --------
(1) All options listed above become exercisable ratably on the first, second
and third anniversaries, respectively, following the date of grant.
48
<PAGE>
(2) Amounts for the Named Executive Officers shown under the "Potential
Realizable Value" columns above have been calculated by multiplying the
exercise price by the annual appreciation rate shown (compounded for the
term of the options), subtracting the exercise price per share and
multiplying the gain per share by the number of shares covered by the
options. These amounts represent certain assumed rates of appreciation
only. Actual gains, if any, on stock option exercises are dependent on the
future performance of the Company's common stock and overall market
conditions. Accordingly, the amounts reflected in this table may not be
achieved.
Options Exercised and Fiscal Year-End Option Values Table
The following table sets forth information with respect to options exercised
during the last fiscal year and the value of unexercised in-the-money options
held by the Named Executive Officers of the Company at December 31, 1998.
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised Options at In-the-Money Options at
Shares Fiscal Year-End(#) Fiscal Year-End($)(2)
Acquired Value ----------------------------------- -------------------------
Name on Exercise(#) Realized($)(1) Exercisable Unexercisable Exercisable Unexercisable
- ---- -------------- -------------- --------------- ---------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
A. Ray Weeks, Jr........ -- -- 85,000 115,000 $617,397 $18,228
Thomas D. Senkbeil...... -- -- 68,333 81,667 $520,728 $14,584
Forrest W. Robinson..... -- -- 68,333 71,667 $520,728 $14,584
David P. Stockert....... -- -- 60,667 60,833 $236,459 $12,760
John W. Nelley, Jr...... -- -- 40,000 37,500 -- --
Klay W. Simpson......... 20,344 $118,180 -- -- -- --
</TABLE>
- --------
(1) In accordance with the Securities and Exchange Commission's rules, values
are determined by subtracting the exercise price from the fair market value
of the underlying Common Stock on the option exercise date.
(2) In accordance with the Securities and Exchange Commission's rules, values
are determined by subtracting the exercise price from the fair market value
of the underlying Common Stock. For purposes of this table, fair market
value is deemed to be $28.1875, the price of the Common Stock as reported
on the New York Stock Exchange on December 31, 1998.
Meetings of the Board of Directors
During 1998, the Board of Directors held four regular meetings and five
special meetings. In 1998, all of the directors, other than Armando Codina (who
was appointed in June), attended at least 75% of the Board meetings and the
meetings held by committees of the Board of Directors on which the directors
served.
Committees of the Board of Directors
The Board of Directors controls the management of the Company and its
property and the disposition thereof and is responsible for the general
policies of the Company and general supervision of the Company's activities. To
assist in carrying out its duties, the Board has delegated certain authority to
an Audit Committee and a Compensation Committee.
Audit Committee. The Audit Committee consists of William O. McCoy and
Charles R. Eitel. William O. McCoy is the Chairman of the Committee. The Audit
Committee makes recommendations concerning the engagement of independent public
accountants, reviews with the independent public accountants the plans and
results of the audit engagement, approves professional services provided by the
independent public accountants, reviews the independence of the independent
public accountants, considers the range of audit and non-audit fees and reviews
the adequacy of the Company's internal accounting controls. The Audit Committee
held one meeting during 1998.
49
<PAGE>
Compensation Committee. The Compensation Committee consists of Barrington H.
Branch and George D. Busbee. Barrington H. Branch is the Chairman of the
Committee. The Compensation Committee is responsible for determining
compensation for the Company's executive officers and for administering the
Company's Incentive Stock Plans. The Compensation Committee held two meetings
during 1998.
Compensation Committee Interlocks and Insider Participation. During 1998,
Messrs. Branch and Busbee served as members of the Compensation Committee. No
member of the Compensation Committee was an officer or employee of the Company
or any of its subsidiaries during 1998. Mr. Busbee is of counsel to the law
firm of King & Spalding. Mr. Busbee, formerly a Partner of such firm, retired
from King & Spalding as of December 31, 1993. King & Spalding provided certain
legal services to the Company in 1998, including services in connection with
offerings of debt and equity securities by the Company and the Operating
Partnership and certain significant acquisitions made by the Company. See
"Certain Transactions--Transactions with Directors." There are no Compensation
Committee interlocks.
The Board does not have a nominating committee.
Compensation of Directors
The Company pays its directors who are not employees of the Company fees for
their services as directors. Non-employee directors receive annual compensation
of $20,000 plus a fee of $1,000 for attendance in person and $250 for
attendance by telephone at each meeting of the Board of Directors.
Each non-employee director, upon joining the Board of Directors, receives an
initial grant of options to purchase 5,000 shares of Common Stock at an
exercise price equal to the fair market value of the Common Stock at the date
of the grant of such options. Thereafter, each director who is serving as such
on December 31 of each calendar year and who has served as such for more than
one year will, on each December 31, automatically receive an annual grant of
options to purchase 5,000 shares of Common Stock at an exercise price equal to
the fair market value of the Common Stock at the date of the grant of such
options.
Noncompetition and Employment Agreements
Certain of the Named Executive Officers and directors had employment and
noncompetition agreements with the Company, as set forth below.
Each of A. Ray Weeks, Jr., Thomas D. Senkbeil, Forrest W. Robinson, David P.
Stockert, John W. Nelley, Jr., and Harold S. Lichtin has entered into a
noncompetition agreement (the "Noncompete Agreement") with the Company, the
Operating Partnership, Weeks Realty Services and Weeks Construction Services.
The Noncompete Agreements, with certain exceptions, prohibit each individual
from serving as an officer, director, or partner of, owning any interest in or
performing certain managerial functions on behalf of any entity that engages
directly or indirectly in the development, operation, management, leasing,
construction or landscaping of any industrial or office properties during the
term of his employment or consulting arrangement with the Company, as
applicable, and for a period of three years thereafter, with respect to
Messrs. Weeks, Senkbeil and Robinson, for a period of two years thereafter,
with respect to Mr. Stockert, and for a period of one year thereafter, with
respect to Messrs. Nelley and Lichtin.
On November 1, 1996, John W. Neeley, Jr. entered into an employment
agreement with the Company (the "Employment Agreement"), and, effective October
1, 1997, Mr. Lichtin entered into a consulting agreement (the "Consulting
Agreement") with the Company. The Employment Agreement provides for a three-
year term of employment for Mr. Neeley, and the Consulting Agreement provides
for a consulting arrangement until December 31, 1999. Annual compensation
(including bonus and stock option or restricted stock awards) is set in
accordance with the criteria established by the Compensation Committee of the
Board of Directors. See "Board Compensation Committee Report on Executive
Compensation." The employment agreements for Messrs. Weeks, Senkbeil, Robinson
and Stockert expired in 1998.
50
<PAGE>
Change of Control Agreements
A. Ray Weeks, Jr., Thomas D. Senkbeil, Forrest W. Robinson, David P.
Stockert and John W. Nelley, Jr. each have entered into Change of Control
Agreements with the Company which entitle the officers to receive, upon a
change of control, severance payments if his employment terminates voluntarily
or involuntarily before the first anniversary of the change in control or
involuntarily before the second anniversary of the change in control. The
benefits on such a termination would equal 2.5 times such officer's
compensation package (as defined in the agreement) and any unvested stock
options or restricted stock awards would vest automatically.
1998 Deferred Compensation Plan
The Company has adopted the Weeks Corporation Amended and Restated 1998
Deferred Compensation Plan (the "Deferred Compensation Plan"), which permits
eligible executives and directors of the Company and its affiliates to defer
the payment of all or a portion of their compensation or retainer payable for
services as an eligible executive or a director. Each eligible executive or
director may elect, on or before December 31 of any calendar year, to defer the
payment of the compensation or retainer payable on or after the January 1. If
an eligible executive or director has made such a deferral election for any
calendar year and has not revoked such election before the beginning of any
subsequent calendar year, his or her election shall remain in effect for each
such calendar year and shall be irrevocable through the end of each such
subsequent calendar year.
Any amount deferred under the Deferred Compensation Plan will not be paid to
the eligible executive or director as earned, but will be credited to a
bookkeeping account maintained by the Company in the name of the eligible
executive or director, and the eligible executive or director shall elect when
he or she makes a deferral election whether this account shall be deemed
invested in interest (based on the prime interest rate as reported in The Wall
Street Journal) or in Common Stock. Each participating eligible executive or
director will be treated as a general and unsecured creditor of the Company and
its affiliates with respect to such funds.
The balance credited to an eligible executive's or director's account shall
become distributable to him or her as of the first day of the calendar quarter
which immediately follows the calendar quarter which includes his or her date
of death or the effective date of his or her resignation, removal or retirement
as an eligible executive or director, whichever comes first, and the
distribution shall be made (or shall begin) as soon as practicable after the
beginning of such calendar quarter. All distributions under the Deferred
Compensation Plan shall be made in cash, and all such distributions shall be
made in a lump sum unless the eligible executive or director elects at least
one full year before his or her account first becomes distributable to have his
or her account distributed in either 5 or 10 annual installments. In addition,
an eligible executive or director may receive a distribution under the Deferred
Compensation Plan pursuant to a limited early withdrawal right, and the
eligible executive or director may designate a beneficiary to receive the
balance credited to his or her account in the event of his or her death.
Board Compensation Committee Report on Executive Compensation
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors. The Compensation Committee is
composed of two independent, non-employee directors who are responsible for
developing, administering and monitoring the compensation policies applicable
to the Company's executive officers, and for administering the Company's
Incentive Stock Plans, under which grants may be made to executive officers and
other key employees. The Compensation Committee considers recommendations from
management, along with other factors, and reviews independently prepared
industry compensation information.
Executive Compensation Philosophy.
The Compensation Committee believes that a fundamental goal of the Company's
executive compensation program should be to foster a high-performance culture
that motivates and retains high-performing executives,
51
<PAGE>
to promote teamwork, to align compensation with business objectives and
sustained performance and to provide incentives to create value for the
Company's shareholders. The Compensation Committee believes that a significant
portion of total executive officer compensation should consist of variable,
performance-based components, such as bonuses and restricted stock and stock
option awards, which can increase or decrease to reflect changes in Company or
individual performance.
The Compensation Committee uses as its primary market benchmark the
practices of a peer group of equity real estate investment trusts ("REITs")
similar in business focus, market capitalization and/or performance to the
Company. It believes that equity REITs offer the most likely competition for
executive talent. Comparative compensation information for the peer group of
equity REITs used by the Compensation Committee was obtained from the SNL
Executive Compensation Review 1998 -- REITs. The Compensation Committee
believes that a peer group comparison enables the Company to determine a fair
level of compensation for executive officers, while assuring shareholders that
executive pay levels are reasonable.
Components of Compensation.
Base Salary. Base salary levels are determined based on the executive's
performance, tenure and industry experience, as well as the Company's financial
performance. Base salaries are reviewed annually by the Compensation Committee.
Annual salary increases for executive officers take into account (i) the actual
and budgeted future financial performance of the Company (including growth in
funds from operations, which the Compensation Committee believes is one of the
appropriate measures of the Company's performance), (ii) individual
performance, (iii) the functions performed by the executive officer, and (iv)
changes in the compensation practices of the peer group. The weight given such
factors by the Compensation Committee may vary from individual to individual.
Short-Term Incentive Awards. During 1998, the Company had a discretionary
bonus program based on each executive officer's performance and the Company's
overall financial and operational performance. Some of the specific factors
taken into account in determining bonus awards for 1998 included (i) the
Company's growth in funds from operations per share and achievement of budgeted
financial results; (ii) the total return to an investor in the Company's Common
Stock, assuming a holding period for the full year and the reinvestment of
dividends, in relation to the index of equity REITs prepared by NAREIT; (iii)
the success of the Company's acquisition, development and new market expansion
activities; (iv) the successful execution of the Company's debt and equity
capital-raising activities; and (v) the achievement of other subjective
individual performance goals. Consideration of these factors is subjective, and
no specific weightings were applied.
Long-Term Incentive Awards. The Company adopted the Incentive Stock Plans to
attract and provide incentives to officers, key employees and directors. The
Incentive Stock Plans provide for grants of options, stock appreciation rights
and restricted stock. The Incentive Stock Plans are designed to motivate
executive officers and key employees to maximize shareholder value. The 1994
Incentive Stock Plan had 47,889 shares of Common Stock available for future
issuance by the Compensation Committee as of December 31, 1998. The Company's
1998 Incentive Stock Plan, had 885,000 shares of Common Stock available for
future issuance by the Compensation Committee as of December 31, 1998.
The Compensation Committee grants awards under the Incentive Stock Plans
based on a number of factors, including (i) the investment performance of the
Company's equity securities, (ii) the executive officer's or key employee's
position in the Company, (iii) his or her performance and responsibilities,
(iv) equity participation levels of comparable executives and key employees at
other companies in the compensation peer group and (v) individual contribution
to the Company's financial performance. However, the Incentive Stock Plans do
not provide any formulaic method for weighting these factors, and a decision to
grant an award is based primarily upon the Compensation Committee's evaluation
of the past as well as the future anticipated performance and responsibilities
of the individual in question.
52
<PAGE>
Chief Executive Officer Compensation.
The compensation of A. Ray Weeks, Jr. during 1998 was determined on the same
basis as discussed above for the Company's other executive officers. For 1998,
Mr. Weeks' compensation consisted of base salary and bonus, and grants of
restricted stock and options under the 1998 Incentive Stock Plan, each as
described under "--Summary Compensation Table" above. Mr. Weeks' compensation
for 1998 was based on his contribution to the Company's growth and financial
performance during the year, and the success of its expansion strategy, and
took into account the compensation practices relating to the Chief Executive
Officers of the compensation peer group. Mr. Weeks' base salary, bonus and
award levels under the Incentive Stock Plans will continue to be reviewed
annually by the Compensation Committee.
Policy With Respect to the $1 Million Deduction Limit.
The Omnibus Budget Reconciliation Act of 1993 placed certain limits on the
deductibility of non-performance-based executive compensation for a company's
employees, unless certain requirements are met.
Currently, the Compensation Committee does not believe that there is a risk
of losing deductions under this law. However, in the future, the Compensation
Committee intends to consider carefully any plan or compensation arrangement
that might result in the disallowance of compensation deductions. It will use
its best judgment, taking all factors into account, including the materiality
of any deductions that may be lost versus the broader interests of the Company
to be served by paying adequate compensation for services rendered, before
adopting any plan or compensation arrangement.
Compensation Committee
Barrington H. Branch, Chairman
George D. Busbee
The foregoing report should not be deemed incorporated by reference by any
general statement incorporating by reference this current report into any
filing under the Securities Act or under the Exchange Act (together with the
Securities Act, the "Acts"), except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
53
<PAGE>
Stock Performance Graph
The following stock price performance graph compares the Company's
performance to the S&P 500 and the index of equity REITs prepared by NAREIT.
Equity REITs are defined by NAREIT as those which derive more than 75% of their
income from equity investments in real estate assets. The NAREIT equity REIT
index includes all tax-qualified REITs listed on the New York Stock Exchange,
the American Stock Exchange and the NASDAQ National Market. The performance
graph assumes $100 invested in the Company's Common Stock as of August 18,
1994, the date on which the Company's Common Stock began trading on the New
York Stock Exchange, and assumes the investment of the same amount as of August
31, 1994, in the S&P 500 and the NAREIT equity REIT index. The difference in
the initial start dates is due to the fact that the Company's Common Stock did
not start to trade publicly until August 18, 1994, and only month-end data is
available for the NAREIT equity REIT index in that year. The Company believes
that the net effect of this difference in start dates does not have a material
effect on the performance graph. Total return includes reinvestment of
dividends. Stock price performance for the Company for the period from August
18, 1994, through December 31, 1998, is not necessarily indicative of future
results.
[GRAPH APPEARS HERE]
NAREIT
DATE WEEKS INDEX S&P500
- ------------------- ---------- --------- ----------
08/94 $100.0 $100.0 $100.0
FYE 12/31/94 $109.5 $ 98.2 $ 97.6
FYE 12/31/95 $134.4 $114.1 $134.1
FYE 12/31/96 $189.0 $153.0 $164.9
FYE 12/31/97 $191.8 $184.1 $219.9
FYE 12/31/98 $179.6 $151.8 $282.71
54
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information concerning the beneficial
ownership of shares of Common Stock of the Company, the parent of the Operating
Partnership, as of February 28, 1999 for (i) directors of the Company, (ii) the
Chief Executive Officer and each of the Named Executive Officers, (iii) the
directors and executive officers of the Company as a group and (iv) each person
known to the Company who is, or may be deemed to be, the beneficial owner of
more than 5% of the Company's common stock. The number of shares represents the
number of shares of common stock the person holds plus the number of shares
into which Common Units in the Operating Partnership held by the person are
exchangeable (if the Company elects to issue shares rather than pay cash upon
such exchange). Common Units are exchangeable for common stock or cash, at the
option of the Company. The right to exchange Common Units for shares of common
stock or cash (the "Exchange Rights") may be exercised by the holders of Common
Units (other than John W. Nelley, Jr., Harold S. Lichtin and Armando Codina and
certain entities controlled by them, who are contractually restricted from
exercising the Exchange Rights as described below) from time to time, in whole
or in part.
The Exchange Rights may be exercised by John W. Nelley. Jr., and certain
entities controlled by him, with respect to Common Units beneficially owned by
him through such entities, from time to time, in whole or in part, after
November 1, 1999. The Exchange Rights, generally may be exercised by Harold S.
Lichtin and certain entities that he controls from time to time, in whole or in
part, after December 31, 1999. The Exchange Rights may be exercised by Armando
Codina and certain entities controlled by him, with respect to Common Units
beneficially owned by him through such entities, in whole or in part, after the
earlier of (i) January 9, 2001, or (ii) the date of Mr. Codina's death or
removal from the Board of Directors.
55
<PAGE>
<TABLE>
<CAPTION>
Beneficial Ownership
Beneficial Ownership Assuming Assuming Exchange of Units
No Exchange of Units for Common Stock for Common Stock
--------------------------------------------------- -----------------------------------
% of Shares
% of Shares of Number of of
Name and Address of Number of Shares of Common Stock Shares of Common Stock
Beneficial Owner Common Stock(1) Outstanding Common Stock(1) Outstanding
- ------------------- --------------------- ------------------ --------------- ------------
<S> <C> <C> <C> <C>
LaSalle Advisors Capital
Management, Inc./ABKB/LaSalle
Securities Limited
Partnership(2).............. 1,765,100(2) 8.94% 1,765,100 6.52%
200 East Randolph Drive
Chicago, IL 60601
FMR Corp.(3)................. 1,228,600(3) 6.22% 1,228,600 4.54%
82 Devonshire Street
Boston, MA 02109
J.P. Morgan & Co.
Incorporated(4)............. 1,198,500(4) 6.07% 1,198,500 4.43%
60 Wall Street
New York, NY 10260
AEW Capital Management, L.P./
AEW Capital Management,
Inc./AEW TSF, Inc./AEW TSF,
L.L.C./ AEW Targeted
Securities Fund, L.P. TSF,
L.L.C./AEW Employees Holdings
TSF, L.P.(5)................. 1,181,929(5) 5.69% 1,181,929 4.20%
225 Franklin Street
Boston, Massachusetts 02110
A. Ray Weeks, Jr.(6)......... 383,486(7)(8) 1.93% 1,816,391(7)(8) 6.69%
Chairman, Chief Executive
Officer and Director
Thomas D. Senkbeil(6)........ 123,498(8) * 219,565(8)(9)(10) *
Vice Chairman, Chief
Investment Officer and
Director
Forrest W. Robinson(6)....... 94,376(8) * 166,503(8)(9)(10) *
President, Chief Operating
Officer and Director
David P. Stockert(6)......... 75,027(8) * 75,027(8) *
Senior Vice President and
Chief Financial Officer
John W. Nelley, Jr.(6)....... 149,829(8)(11) * 2,835,478(8)(11) 10.46%
Managing Director and
Director
Klay W. Simpson(16).......... 1,444 * 5,554 *
Senior Vice President,
Marketing
Harold S. Lichtin(6)......... 322,178(12)(13) 1.63% 1,053,168(12)(13) 3.89%
Director
Barrington H. Branch(6)...... 19,500(13) * 19,500(13) *
Director
George D. Busbee(6).......... 23,000(13) * 23,000(13) *
Director
William Cavanaugh III(6)..... 10,000(13) * 10,000(13) *
Director
Armando Codina(6)............ 5,000(13)(14) * 277,566(13)(14) 1.03%
Director
Charles R. Eitel(6).......... 20,000(13) * 20,000(13) *
Director
William O. McCoy(6).......... 22,000(13) * 22,000(13) *
Director
All executives officers and
directors as a group (15
persons).................... 1,262,258(15) 6.25% 6,383,672(15) 23.19%
</TABLE>
56
<PAGE>
- --------
* Represents less than 1% of the Company's outstanding common stock.
(1) Except as otherwise indicated, each of the parties listed has sole voting
and investment power over the shares owned.
(2) According to a Schedule 13G, dated February 12, 1999, filed on behalf of
LaSalle Advisors Capital Management, Inc. ("LaSalle") and ABKB/LaSalle
Securities Limited Partnership ("ABKB"), registered investment advisory
companies, each entity represents the following beneficial ownership,
voting rights and stock disposition powers with respect to the Company's
Common Stock. LaSalle claims beneficial ownership of 669,050 shares or 3.4%
of the Company's Common Stock, the sole power to vote or to direct the vote
and sole power to dispose or to direct the disposition of 316,350 shares,
shared power to vote or to direct the vote of 33,000 shares, the shared
power to direct the disposition of 352,700 shares and disclaims sole or
shared voting powers of 319,700 shares of Common Stock. ABKB claims
beneficial ownership of 1,096,050 shares or 5.6% of the Company's Common
Stock, the sole power to vote or to direct the vote of 292,200 shares, the
sole power to dispose or to direct the disposition of 263,700 shares,
shared power to vote or to direct the vote of 740,335 shares, shared power
to dispose or to direct the disposition of 832,350 shares and disclaims
sole or shared voting power to 63,515 shares of Common Stock.
(3) According to a Schedule 13G, dated February 1, 1999, filed on behalf of FMR
Corp., a parent holding company, Edward C. Johnson 3d, as Chairman and a
significant shareholder of FMR Corp., and Abigail P. Johnson, as
significant shareholder of FMR Corp., may also be deemed beneficial owners
of said shares by virtue of their relationships to FMR Corp., and the
companies discussed herein. FMR Corp., through a wholly owned investment
advisory company, Fidelity Management & Research Company ("Fidelity"), has
sole power to dispose of 911,100 shares of the Company's Common Stock owned
by Fidelity funds ("Funds") for which it serves as an advisor. Neither FMR
Corp. nor Edward C. Johnson 3d has the sole power to vote or direct the
voting of 911,100 shares as such power resides with each Fidelity Funds'
Board of Trustees. FMR Corp., through a wholly owned subsidiary bank,
Fidelity Management Trust Company, has sole power to dispose or direct the
disposition of 317,500 shares, the sole power to vote or direct the vote of
308,900 shares and disclaims the power to vote or to direct the vote of
8,600 shares, in its capacity as investment manager of the bank's
institutional accounts.
(4) According to a Schedule 13G, filed February 23, 1999, on behalf of J.P.
Morgan & Co. Incorporated ("J.P. Morgan"), a parent holding company, J.P.
Morgan, through subsidiary investment advisory companies and a bank, has
the sole power to vote or to direct the vote of 1,018,800 shares, the sole
power to dispose of or direct the disposition of 1,198,500 shares and
disclaims the power to vote or to direct the vote of 179,700 shares of
Common Stock.
(5) According to a Schedule 13G/A, filed on behalf of AEW Capital Management,
L.P., AEW Capital Management, Inc., AEW TSF, Inc., AEW TSF, L.L.C., AEW
Employee Holdings TSF, L.P., and AEW Targeted Securities Fund, L.P. (the
"AEW Entities"), AEW Capital Management, L.P. and AEW Capital Management,
Inc., through their ownership or management of the AEW Entities, have the
sole power to vote or to direct the vote and the sole power to dispose or
to direct the disposition of 1,181,929 shares of the Company's Common
Stock. AEW TSF, Inc., AEW TSF, L.L.C., AEW Employee Holdings TSF, L.P. and
AEW Targeted Securities Fund, L.P. report the beneficial or actual sole
power to vote or to direct the vote and the sole power to dispose or to
direct the disposition of 1,046,729 shares of the Company's Common Stock.
The total shares beneficially owned by the AEW Entities includes 1,046,729
shares issuable upon the exercise of a common stock warrant which is
currently exercisable.
(6) Beneficial owner's address is 4497 Park Drive, Norcross, GA 30093.
(7) Includes 31,810 shares of common stock held by a foundation of which Mr.
Weeks is a director and 3,000 shares of Common Stock held by a family trust
of which Mr. Weeks is a trustee. Also, includes 3,467 shares of Common
Stock and 400,155 Common Units held by trusts of which Mr. Weeks is co-
trustee and a 20% beneficiary, and 255,623 Common Units held by
corporations that Mr. Weeks controls, including Common Units held by those
corporations discussed in notes (9) and (10) below, and 163,048 Common
Units held by Mr. Weeks' spouse. Mr. Weeks disclaims benefieial ownership
of 34,810 shares of Common Stock held by the foundation and family trust
discussed above.
(8) Includes 88,333, 68,333, 68,333, 60,667, and 40,000 shares issuable to Mr.
Weeks, Mr. Senkbeil, Mr. Robinson, Mr. Stockert, and Mr. Nelley,
respectively, upon exercise of stock options which are currently
exercisable or exercisable within 60 days, but does not include 111,667,
81,667, 71,667, 60,833 and 37,500 shares issuable to Mr. Weeks, Mr.
Senkbeil, Mr. Robinson, Mr. Stockert and Mr. Nelley, respectively, upon
exercise of stock options which are not exercisable within 60 days.
57
<PAGE>
(9) Includes 42,993 Common Units held by a corporation which is owned 60%, 30%
and 10%, respectively, by Mr. Weeks, Mr. Senkbeil and Mr. Robinson.
(10) Includes 257 Common Units held by a corporation which is owned 75%, 20%
and 5%, respectively, by Mr. Weeks, Mr. Senkbeil and Mr. Robinson.
(11) Includes 100,000 shares of Common Stock and 2,685,649 Common Units held by
a partnership of which Mr. Nelley is a general partner. Mr. Nelley
disclaims beneficial ownership of 78,437 of such shares of Common Stock
and 2,106,537 of such Common Units.
(12) Includes 282,178 shares of Common Stock and 694,053 Common Units held by
entities which Mr. Lichtin controls and 298 Common Units held by Mr.
Lichtin's spouse.
(13) Includes 40,000, 18,000, 18,000, 9,000, 75,000, 17,600 and 18,000 shares
issuable to Mr. Lichtin, Mr. Branch, Mr. Busbee, Mr. Cavanaugh, Mr.
Codina, Mr. Eitel and Mr. McCoy, respectively, upon the exercise of stock
options and warrants which are currently exercisable or exercisable within
60 days.
(14) Includes 148,043 Common Units held by entities which Mr. Codina controls.
(15) Includes 462,600 shares issuable upon the exercise of stock options and
warrants which are currently exercisable or exercisable within 60 days,
but does not include 523,000 shares issuable upon exercise of stock
options and warrants which are not exercisable within 60 days.
(16) Mr. Simpson resigned his employment with the Company on June 16, 1998.
58
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
General
The following information is presented for the Company, the parent of the
Operating Partnership.
In connection with the Company's August 1994 initial public offering, the
Company incurred $38 million in mortgage indebtedness with The Prudential
Insurance Company of America. A. Ray Weeks, Jr., certain members of the family
of A. Ray Weeks, Jr. (the "Weeks Family"), Forrest W. Robinson, Louis Robinson
(Forrest W. Robinson's father), a trust of which A. Ray Weeks, Jr. is the
trustee and of which A. Ray Weeks, Jr. and the Weeks Family are beneficiaries,
and a trust of which A. Ray Weeks, Jr., Harry T. Weeks (A. Ray Weeks, Jr.'s
uncle) and John P. Weeks (A. Ray Weeks, Jr.'s brother) are trustees and of
which A. Ray Weeks, Jr. and the Weeks Family are beneficiaries severally, but
not jointly, guaranteed collection of a portion of this indebtedness. At
December 31, 1998, such guarantees extended to, in the aggregate, the first
$20.7 million due on such indebtedness.
Transactions with Executive Officers
A. Ray Weeks, Jr., Helen Ballard Weeks and the ARW Family Trust (a trust for
the benefit of A. Ray Weeks, Jr.'s minor children), own shares of capital stock
of The International Cornerstone Group, Inc. ("Cornerstone") representing less
than 7% of the outstanding shares of Cornerstone capital stock at December 31,
1998. Ballard Designs, Inc. ("Ballard Designs"), a national home furnishing
mail order firm, which is a wholly owned subsidiary of Cornerstone, leases an
aggregate of 97,639 square feet of space in two of the Operating Partnership's
properties. The aggregate base rent and tenant reimbursable expenses paid by
Ballard Designs in 1998 with respect to such leases was approximately $465,000.
In connection with the acquisition of certain assets owned by NWI Warehouse
Group, L.P. and its affiliates (collectively, "NWI") in 1996, the Company
agreed, subject to certain conditions, to acquire additional properties from
NWI over a period of time. Pursuant to such agreements, during 1998 the Company
acquired four properties totaling approximately 267,395 square feet and 18.6
net usable acres of land for an aggregate purchase price of $16,498,922,
consisting of 429,468 Common Units of limited partnership interests in the
Operating Partnership with a value of approximately $12,498,000 and the
assumption of indebtedness. John W. Nelley, a director and executive officer of
the Company, and Albert W. Buckley, Jr., an executive officer of the Company,
own interests in NWI. As a result of this ownership, Mr. Nelley and Mr. Buckley
beneficially acquired 92,607 Units and 90,871 Units, respectively, in
connection with these acquisitions. The purchase prices paid for these
additional properties and land were the result of arm's length negotiations
between the Company and NWI in connection with the initial closing of the NWI
transaction. At December 31, 1998, the Company had advanced $4,450,000 to NWI
under a $5,700,000 demand loan agreement. The loan bears interest at LIBOR plus
2.10% and is secured by real estate properties held by NWI, for which the
Company has arrangements to acquire in future periods. Interest earned under
the agreement and included in the accompanying statements of operations totaled
approximately $346,000 for the year ended December 31, 1998.
In connection with the Company's October 1997 acquisition of certain assets
owned by GB Partners, Ltd. ("GB Partners") in the Jacksonville Tradeport, the
Company agreed, subject to certain conditions, to pay to GB Partners certain
fees in connection with the development of properties in the Jacksonville
Tradeport. Charles D. Graham, an executive officer of the Company, owns a 50%
economic interest in GB Partners. Pursuant to such agreements, in connection
with the development of properties during 1998 in the Jacksonville Tradeport,
the Company issued 6,900 Common Units to GB Partners with a value of
approximately $210,000.
In September 1998, the Company assigned the right to acquire four buildings
in Dallas, Texas to NWI, and NWI acquired the buildings for aggregate
consideration of approximately $34,645,000. Simultaneously, the Company
advanced $31,600,000 under a $33,600,000 adjustable rate loan agreement with
NWI and entered
59
<PAGE>
into an option arrangement enabling the Company to acquire the buildings from
NWI. The adjustable rate loan was secured by the four buildings, accrued
interest at LIBOR plus 1.30% and matured on the acquisition of buildings by the
Company. In January 1999, the Company acquired the four industrial buildings
from NWI for aggregate acquisition consideration of approximately $35,151,000,
which resulted in a gain to NWI, net of intercompany eliminations, of
approximately $245,000.
The Company leases the use of a turboprop airplane from time to time from
M&W Aviation, an entity in which A. Ray Weeks, Jr., owns a 50% interest. Lease
payments to M&W Aviation in 1998 totaled approximately $120,000.
Transactions with Directors
George D. Busbee, a director of the Company, is of counsel to the law firm
of King & Spalding. Mr. Busbee, formerly a partner of such firm, retired from
King & Spalding as of December 31, 1993. King & Spalding provided certain legal
services to the Company in 1998, including services in connection with
offerings of debt and equity securities by the Company and the Operating
Partnership and certain significant acquisitions made by the Company.
In connection with the acquisition of certain assets owned by Lichtin
Properties, Inc. and its affiliates (collectively, "Lichtin Entities") in 1996,
the Company agreed, subject to certain conditions, to acquire additional
properties from the Lichtin Entities over a period of time. Pursuant to such
agreements, during 1998 the Company acquired approximately 49.8 net usable
acres of land in exchange for an aggregate of 217,904 Common Units with a value
of approximately $6,356,000. The Lichtin Entities also received 14,502 Common
Units with a value of approximately $468,000 in connection a development
project pursuant to such agreements. Harold S. Lichtin, a director of the
Company, and certain of his affiliates own interests in the Lichtin Entities.
As a result of this ownership, Mr. Lichtin and his affiliates beneficially
acquired 230,228 Units, respectively, in connection with these acquisitions.
The purchase prices paid for these additional properties and land were the
result of arm's length negotiations between the Company and the Lichtin
Entities in connection with the initial closing of the Lichtin transaction.
As part of the Lichtin Properties transaction, the Operating Partnership
assumed certain mortgage indebtedness encumbering the properties acquired from
Lichtin Properties. Pursuant to pre-existing agreements that survived the
closing of the Lichtin Properties transaction, Mr. Lichtin has guaranteed
payment of a portion of the principal of such mortgage indebtedness. At
December 31, 1998, the maximum potential aggregate liability under such
guarantees was approximately $3.5 million. In addition, such pre-existing
agreements provide that Mr. Lichtin will indemnify the holders of such mortgage
indebtedness against losses resulting from the Operating Partnership's failure
to discharge its mortgage covenants relating to environmental matters and to
fund tenant improvements and lease commission costs. The Operating Partnership
has agreed to indemnify Mr. Lichtin for any losses incurred by him as a
consequence of circumstances arising after the closing date of the Lichtin
Properties transaction under such guarantees and indemnities.
The Company entered into a Development Agreement with Gran Central
Corporation, an affiliate of St. Joe Corporation (together with its affiliates,
herein referred to as "Gran Central"), and Armando Codina and his affiliates
(together with his affiliates, herein referred to as "Codina") in June 1998 for
the joint development of properties (a) in the Beacon Point Office Park in
Weston, Florida, under contract to be acquired by Codina (the "Weston
Property"), and (b) in the Beacon Station development in Medley, Florida owned
by Gran Central (the "Medley Property"), providing for the right to jointly
develop the Weston Property and the Medley Property. If a development of any of
the properties is approved by the Company and Gran Central and pursued, Codina
Group, Inc., in which each of Mr. Codina, St. Joe Corporation and the Company
owns a 1/3 interest, shall be engaged at market rates to provide development,
construction, management and leasing services. In addition, if parcels within
the Weston Property are developed, Codina will receive a profits interests
60
<PAGE>
in these projects as a partner in the project partnerships, the value of which
will be determined upon stabilization of the applicable property. Codina shall
not receive a profits interests in the development of any portion of the Medley
Property. Pursuant to this Development Agreement, a project partnership was
formed by the Company, Gran Central and Codina in 1998 to develop a project on
a parcel within the Weston Property. The Company and Codina also formed three
project partnerships to develop buildings on three parcels of land in Port
Everglades Park in Hollywood, Florida. Codina did not invest capital in such
project partnerships, but received a profits interest, the value of which will
be determined upon stabilization of the applicable property. In addition,
Codina Group, Inc. was engaged at market rates to provide development,
construction, management and leasing services to such projects. In 1998, Codina
Group, Inc. received aggregate fee income in connection with the foregoing
projects of approximately $2,180,000.
Codina Group, Inc. also provides property management services for the
Company's properties located in Beacon Centre, which the Company acquired in
January 1998. Management fees paid to Codina Group, Inc. in 1998 totaled
approximately $694,000.
61
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
(A)1.Financial Statements
The following Consolidated Financial Statements of the Operating
Partnership together with the applicable Report of Independent Public
Accountants, are listed below:
<TABLE>
<CAPTION>
Weeks Realty, L.P. and Subsidiaries Page Number
<S> <C>
Report of Independent Public Accountants on Financial
Statements and Schedule ..................................... F-1
Consolidated Balance Sheets of the Operating Partnership at
December 31, 1998 and 1997................................... F-2
Consolidated Statements of Operations of the Operating
Partnership for the years ended December 31, 1998, 1997 and
1996......................................................... F-3
Consolidated Statements of Partner's Capital of the Operating
Partnership for the years ended December 31, 1998, 1997 and
1996......................................................... F-4
Consolidated Statements of Cash Flows of the Operating
Partnership for the years ended December 31, 1998, 1997 and
1996......................................................... F-5
Notes to Consolidated Financial Statements.................... F-6
2. Financial Statement Schedule
Schedule III--Real Estate Assets and Accumulated
Depreciation................................................. S-1 to S-16
</TABLE>
3. Exhibits
Certain of the exhibits required by item 601 of Regulation S-K have been
filed with previous reports by the Registrant and are herein incorporated
by reference thereto.
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
2.1** Agreement of Merger by and between NWI Warehouse Group, LLC and Weeks
Realty, L.P., dated November 1, 1996.
2.2** Contribution Agreement for Development Properties between Weeks
Realty, L.P., and NWI Warehouse Group, L.P., dated November 1, 1996.
2.3** Contribution Agreement for Aspen Grove Land between Weeks Realty,
L.P., and NWI Warehouse Group, L.P., dated November 1, 1996.
2.4** Contribution Agreement for I-440 Land between Weeks Realty, L.P., and
NWI Warehouse Group, L.P., dated November 1, 1996.
2.5** Contribution Agreement for NWI Operating Business by and between
Weeks Realty, L.P. and NWI Warehouse Group, L.P., dated November 1,
1996.
2.6** Contribution Agreement for Buckley Operating Business by and between
Weeks Realty, L.P. and Buckley & Company Real Estate, Inc., dated
November 1, 1996.
2.7** Contribution Agreement for Briley Land between Weeks Realty, L.P. and
NWI Warehouse Group, L.P., dated November 1, 1996.
2.8*** Contribution Agreement by and between Harold S. Lichtin and Weeks
Realty, L.P., dated December 31, 1996.
2.9*** Contribution Agreement for Northern Telecom Properties, among the
Contributors identified therein (the "Contributors") and Weeks
Realty, L.P. doing business as Weeks Realty Limited Partnership,
dated December 31, 1996.
2.10*** Contribution Agreement (Perimeter Park West Land) among Harold S.
Lichtin, Marie Antoinette Robertson, and Perimeter Park West
Associates, and Weeks Realty, L.P. doing business as Weeks Realty
Limited Partnership, dated December 31, 1996.
2.11*** Contribution Agreement for Completed Properties Lichtin Portfolio
among the Contributors and Weeks Realty, L.P. doing business as Weeks
Realty Limited Partnership, dated December 31, 1996.
</TABLE>
62
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
2.12*** Contribution Agreement for Development Properties and Regency
Forrest Land among the Contributors and Weeks Realty, L.P. doing
business as Weeks Realty Limited Partnership, dated December 31,
1996.
2.13***** Beacon Centre Contribution Agreement dated January 2, 1998 by and
between Armando Codina, Codina West Dade Development Corporation,
Codina Family Investments, Ltd., The Benenson Capital Company, Raha
Associates, Inc., Laurence Tisch, Preston Tisch, Raha Associates
II, Inc., Codina West Dade Development Corporation No. 5, and Weeks
Realty, L.P., and Weeks Corporation.
2.14(f) Agreement and Plan of Merger, dated as of February 28, 1999, by and
among Duke Realty Limited Partnership and Weeks Realty, L.P.
4.1** Second Amended and Restated Agreement of Limited Partnership of
Weeks Realty, L.P., dated October 30, 1996.
4.2** First Amendment to the Second Amended and Restated Agreement of
Limited Partnership of Weeks Realty, L.P. by and among NWI
Warehouse Group, L.P., Buckley & Company Real Estate, Inc. and
Weeks GP Holdings, Inc., dated November 1, 1996.
4.3*** Second Amendment to the Second Amended and Restated Agreement of
Limited Partnership of Weeks Realty, L.P. by and among Harold S.
Lichtin, Noel A. Lichtin, Marie Antoinette Robertson, Amy R.
Ehrman, Roland G. Robertson and Perimeter Park West Associates
Limited Partnership, Weeks GP Holdings, Inc. and Weeks Corporation,
dated December 31, 1996.
4.4+++ Third Amendment to Second Amended and Restated Agreement of Limited
Partnership of Weeks Realty, L.P., dated January 31, 1997.
4.5(g) Fourth Amendment to Second Amended and Restated Agreement of
Limited Partnership of Weeks Realty, L.P., dated August 1, 1997.
4.6++++ Fifth Amendment to Second Amended and Restated Agreement of Limited
Partnership of Weeks Realty, L.P., dated October 7, 1997.
4.7(g) Sixth Amendment to Second Amended and Restated Agreement of Limited
Partnership of Weeks Realty, L.P., dated October 27, 1997.
4.8(g) Seventh Amendment to Second Amended and Restated Agreement of
Limited Partnership of Weeks Realty, L.P., dated December 30, 1997,
but effective as of August 1, 1997.
4.9***** Eighth Amendment to the Second Amended and Restated Agreement of
Limited Partnership of Weeks Realty, L.P. dated January 9, 1998.
4.10 Ninth Amendment to the Second Amended and Restated Agreement of
Limited Partnership of Weeks Realty, L.P., dated January 20, 1998.
4.11(a) Tenth Amendment to Second Amended and Restated Agreement of Limited
Partnership of Weeks Realty, L.P., dated April 3, 1998.
4.12(a) Eleventh Amendment to Second Amended and Restated Agreement of
Limited Partnership of Weeks Realty, L.P., dated May 26, 1998.
4.13(a) Twelfth Amendment to Second Amended and Restated Agreement of
Limited Partnership of Weeks Realty, L.P., dated June 3, 1998.
4.14(b) Thirteenth Amendment to Second Amended and Restated Agreement of
Limited Partnership of Weeks Realty, L.P., dated August 7, 1998.
4.15 Fourteenth Amendment to the Second Amended and Restated Agreement
of Limited Partnership of Weeks Realty, L.P. dated November 6,
1998.
4.16 Fifteenth Amendment to the Second Amended and Restated Agreement of
Limited Partnership of Weeks Realty, L.P. dated November 12, 1998.
4.17(d) Indenture, dated as of March 20, 1998, between the Registrant and
State Street Bank and Trust Company.
4.18(d) Form of First Supplemental Indenture, dated as of July 30, 1998,
between the Registrant and State Street Bank and Trust Company.
10.1**** Employment Agreements between Weeks Realty Services, Inc. and A.
Ray Weeks, Jr., Thomas D. Senkbeil and Forrest W. Robinson,
respectively.
</TABLE>
63
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
10.2**** Employment Agreements between Weeks Realty Services, Inc. and A. Ray
Weeks, Jr., Thomas D. Senkbeil and Forrest W. Robinson,
respectively.
10.3**** Employment Agreements between Weeks Construction Services, Inc. and
A. Ray Weeks, Jr. and Forrest W. Robinson, respectively.
10.4**** Noncompetition Agreements among the Company, Weeks Realty, L.P.,
Weeks Realty Services, Inc., Weeks Construction Services, Inc. and
each of A. Ray Weeks, Jr., Thomas D. Senkbeil and Forrest W.
Robinson.
10.5+ Credit Agreement dated September 25, 1996, by and among Wachovia
Bank of Georgia, N.A., as agent bank for Wachovia Bank of Georgia,
N.A., First Union National Bank of Georgia, Commerzbank A.G. and
Mellon Bank, N.A. as lenders, Weeks Realty, L.P., Weeks Construction
Services, Inc., Weeks Realty Services, Inc., Weeks Development
Partnership and Weeks Financing Limited Partnership, as borrowers,
and Weeks Corporation and Weeks Realty, L.P., as guarantors.
10.6++ Park North Purchase and Sale Agreement between Copley Properties
Inc., Parknorth Associates, Parknorth Associates II, Parknorth
Associates III and Weeks Realty, L.P., dated March 28, 1995.
10.7# Purchase and Sale Agreement by and among North Meadow Associates
Joint Venture, ASC North Fulton Associates Joint Venture and Weeks
Realty, L.P., dated July 7, 1995.
10.8## Noncompetition Agreement between Weeks Corporation, Weeks Realty,
L.P., Weeks Realty Services, Inc. and Weeks Construction Services,
Inc. and David P. Stockert, dated June 26, 1995.
10.9## Agreement of Purchase and Sale between Premprop-Northwoods 6
Partnership, Premprop-Northwoods 18-22 Partnership, and Premprop-
Northwoods 23 Partnership and Weeks Realty, L.P. dated November 6,
1995. The Exhibits and Schedules to this Agreement are listed in,
but not filed with, this exhibit. Such Exhibits and Schedules have
been omitted for purposes of this filing, but will be furnished to
the Commission supplementary upon request.
10.10### Real Estate Purchase and Sale Agreement by and between Principal
Mutual Life Insurance Company and Weeks Realty, L.P., dated May 28,
1996.
10.11** Noncompetition Agreement by and among NWI Warehouse Group, L.P.,
Weeks Corporation, Weeks Realty, L.P., Weeks Realty Services, Inc.,
Weeks Construction Services, Inc., Weeks GP Holdings, Inc., Weeks LP
Holdings, Inc., and their respective successors, dated November 1,
1996.
10.12** Noncompetition Agreement by and among John W. Nelley, Jr., Weeks
Corporation, Weeks Realty, L.P., Weeks Realty Services, Inc., Weeks
Construction Services, Inc., Weeks GP Holdings, Inc., Weeks LP
Holdings, Inc., and any other entity under the common control of
Weeks Corporation, and their respective successors, dated November
1, 1996.
10.13** Noncompetition Agreement by and among Albert W. Buckley, Jr., Weeks
Corporation, Weeks Realty, L.P., Weeks Realty Services, Inc., Weeks
Construction Services, Inc., Weeks GP Holdings, Inc., Weeks LP
Holdings, Inc., and any other entity under the common control of
Weeks Corporation, and their respective successors, dated November
1, 1996.
10.14(g) Consulting Agreement by and between Harold S. Lichtin and Weeks
Corporation, dated December 30, 1997, effective October 1, 1997.
10.15*** Noncompetition Agreement by and between Harold S. Lichtin, Weeks
Corporation, Weeks Realty, L.P., Weeks Realty Services, Inc., Weeks
Construction Services, Inc., Weeks GP Holdings, Inc., Weeks LP
Holdings, Inc., and any other entity under the common control of
Weeks Corporation, and their respective successors, dated December
31, 1996.
10.16++ First Amendment to Credit Agreement dated September 1, 1997 by and
among Wachovia Bank of Georgia, N.A., as agent bank for Wachovia
Bank of Georgia, N.A., First Union National Bank of Georgia,
Commerzbank A.G. and Mellon Bank, as lenders, Weeks Realty, L.P.,
Weeks Construction Services, Inc., Weeks Realty Services, Inc.,
Weeks Development Partnership and Weeks Financing Limited
Partnership, as borrowers, and Weeks Corporation, Weeks GP Holdings,
Inc., Weeks LP Holdings, Inc., and Week Realty, L.P., as guarantors.
</TABLE>
64
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<C> <S>
10.17(g) Settlement Agreement and Mutual Release by and among Weeks
Corporation, the affiliates and related companies of Weeks
Corporation identified therein, and Harold S. Lichtin, dated
December 30, 1997, effective October 1, 1997.
10.18#### Securities Purchase Agreement among Codina Group, Inc., Armando
Codina, St. Joe Corporation and Weeks Realty Services, Inc. dated as
of February 24, 1998.
10.19#### Shareholders' Agreement among Codina Group, Inc., Armando Codina,
St. Joe Corporation and Weeks Realty Services, Inc. dated as of
February 24, 1998.
10.20(a) Syndicated Credit Agreement dated July 1, 1998, by and among Weeks
Realty, L.P., as borrower, Weeks Corporation, Weeks GP Holdings,
Inc., and Weeks LP Holdings, Inc., as guarantors, and Wachovia Bank,
N.A., as agent bank for syndicated bank group.
10.21(a) Swing Credit Agreement dated July 1, 1998, by and among Weeks
Realty, L.P., as borrower, Weeks Corporation, Weeks GP Holdings,
Inc., and Weeks LP Holdings, Inc., as guarantors, and Wachovia Bank,
N.A., as lender.
10.22(e) Asset Purchase Agreement dated April 23, 1998, among MEPC PLC and
Weeks Realty, L.P., and certain other purchases as described
therein.
10.23(c) Specimen 6 7/8% Note due March 15, 2005.
10.24(d) Specimen 7 3/8% Note due August 1, 2007.
10.25 Syndicated Term Loan Agreement, dated December 4, 1998, by and among
Weeks Realty, L.P., as borrower, Weeks Corporation, Week GP
Holdings, Inc. and Weeks LP Holdings, Inc., as guarantors and
Wachovia Bank, N.A., as administrative agent, First Union National
Bank, as syndication agent, and Nations Bank, as documentation
agent, for the syndicated bank group.
10.26 Form of Change in control agreement.
10.27 Form of Change in control agreement.
10.28 Form of Change in control agreement.
21.1 List of subsidiaries of the Registrant.
23.1 Consent of Arthur Andersen LLP regarding Weeks Realty, L.P.'s Form
S-3, file No. 333-32755 and Form S-3, file No. 333-50871.
27.1 Financial Data Schedule for the year ended December 31, 1998.
99.1(f) Form of Agreement and Irrevocable Proxy by and between Weeks and
certain holders of Duke Common Stock and Duke Common Units.
99.2(f) Form of Agreement and Irrevocable Proxy by and between Weeks and
certain holders of Weeks Common Stock and Weeks Common Units.
99.3(f) Press Release dated March 1, 1999.
</TABLE>
- --------
** Filed as an exhibit to the Company's Current Report on Form 8-K dated
November 1, 1996.
*** Filed as an exhibit to the Company's Current Report on Form 8-K dated
December 31, 1996.
**** Filed as an exhibit to the Company's Annual Report on Form 10-K for the
year ended December 31, 1994.
***** Filed as an exhibit to the Operating Partnership's Current Report on Form
8-K dated January 9, 1998.
# Filed as an exhibit to the Company's Current Report on Form 8-K dated
August 31, 1995.
## Filed as an exhibit to the Company's Annual Report on Form 10-K for the
year ended December 31, 1995.
### Filed as an exhibit to the Company's Current Report on Form 8-K dated
August 9, 1996.
#### Filed as an exhibit to the Operating Partnership's Current Report on Form
8-K dated March 17, 1998.
+ Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for
the quarterly period ended September 30, 1996.
++ Filed as an exhibit to the Company's Current Report on Form 8-K dated
July 12, 1995.
65
<PAGE>
++ Filed as an exhibit to the Operating Partnership's Quarterly Report on
Form 10-Q for the quarterly period ended September 30, 1997.
+++ Filed as an exhibit to the Company's Current Report on Form 8-K dated May
7, 1997.
++++ Filed as an exhibit to the Company's Current Report on Form 8-K dated
October 7, 1997.
<TABLE>
<C> <S>
a. Filed as an exhibit to the Company's Current Report on Form 10-Q for the
quarterly period ended June 30, 1998.
b. Filed as an exhibit to the Company's Current Report on Form 10-Q for the
quarterly period ended September 30, 1998.
Filed as an exhibit to the Operating Partnership's Form 8-A, filed on
c. March 18, 1998.
Filed as an exhibit to the Operating Partnership's Form 8-A, filed on
d. August 3, 1998.
Filed as an exhibit to the Operating Partnership's Form 8-K, dated June
e. 16, 1998.
Filed as an exhibit to the Operating Partnership's Form 8-K, dated
f. February 28, 1999.
g. Filed as an exhibit to the Operating Partnership's Annual Report on Form
10-K for the year ended December 31, 1997.
</TABLE>
(B)1. Reports on Form 8-K
None
66
<PAGE>
Signatures
Pursuant to the requirements of Section 13 or 15(d) 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.
WEEKS REALTY, L.P.
(Registrant)
By: Weeks GP Holdings, Inc.,
as General Partner
March 31, 1999 /s/ A. R. Weeks, Jr.
By: _________________________________
A. R. Weeks, Jr., Chairman and
Chief
Executive Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capabilities on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ A. R. Weeks, Jr. Chairman of the Board, Chief March 31, 1999
_________________________________ Executive Officer and
A. R. Weeks, Jr. Director
/s/ Thomas D. Senkbeil Vice Chairman, Chief March 31, 1999
_________________________________ Investment Officer and
Thomas D. Senkbeil Director
/s/ Forrest W. Robinson President, Chief Operating March 31, 1999
_________________________________ Officer and Director
Forrest W. Robinson
/s/ John W. Nelley, Jr. Managing Director and March 31, 1999
_________________________________ Director
John W. Nelley, Jr.
/s/ David P. Stockert Senior Vice President and March 31, 1999
_________________________________ Chief Financial Officer
David P. Stockert
/s/ Arthur J. Quirk Vice President and March 31, 1999
_________________________________ Controller
Arthur J. Quirk
/s/ Barrington H. Branch Director March 31, 1999
_________________________________
Barrington H. Branch
/s/ George D. Busbee Director March 31, 1999
_________________________________
George D. Busbee
/s/ William Cavanaugh III Director March 31, 1999
_________________________________
William Cavanaugh III
/s/ Armando Codina Director March 31, 1999
_________________________________
Armando Codina
/s/ Charles R. Eitel Director March 31, 1999
_________________________________
Charles R. Eitel
/s/ Harold S. Lichtin Director March 31, 1999
_________________________________
Harold S. Lichtin
/s/ William O. McCoy Director March 31, 1999
_________________________________
William O. McCoy
</TABLE>
67
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Weeks Realty, L.P.:
We have audited the accompanying consolidated balance sheets of Weeks
Realty, L.P. (a Georgia limited partnership) and subsidiaries as of December
31, 1998 and 1997, and the related consolidated statements of operations,
partners' capital and cash flows for each of the three years in the period
ended December 31, 1998. These financial statements and the schedule referred
to below are the responsibility of the Operating Partnership's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Weeks Realty, L.P. and
subsidiaries as of December 31, 1998 and 1997, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1998 in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index to
financial statements is presented for purposes of complying with the Securities
and Exchange Commission's rules and is not part of the basic financial
statements. This schedule has been subjected to the auditing procedures applied
in the audits of the basic financial statements and, in our opinion, fairly
states in all material respects the financial data required to be set forth
therein in relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
February 26, 1999
F-1
<PAGE>
WEEKS REALTY, L.P.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
--------------------
1998 1997
---------- --------
(In thousands,
except unit data)
<S> <C> <C>
Assets
Real estate assets
Land.................................................... $ 169,443 $106,196
Buildings and improvements.............................. 1,031,617 627,309
Accumulated depreciation................................ (96,383) (61,548)
---------- --------
Operating real estate assets......................... 1,104,677 671,957
Developments in progress................................ 160,783 100,433
Land held for future development........................ 42,438 22,562
---------- --------
Net real estate assets............................... 1,307,898 794,952
Cash and cash equivalents................................ 1,503 5,421
Receivables.............................................. 15,316 7,031
Deferred costs, net...................................... 29,163 13,087
Investments in and notes receivable from unconsolidated
service companies....................................... 43,639 9,257
Investments in unconsolidated real estate entites........ 35,204 2,525
Other assets............................................. 14,869 20,088
---------- --------
$1,447,592 $852,361
========== ========
Liabilities and Partners' Capital
Debt
Mortgage notes payable.................................. $ 251,399 $192,595
Unsecured bank borrowings............................... 203,025 82,920
Unsecured notes......................................... 200,000 --
---------- --------
Total debt........................................... 654,424 275,515
Accounts payable and accrued expenses.................... 32,977 14,578
Other liabilities........................................ 9,626 4,876
---------- --------
Total liabilities.................................... 697,027 294,969
---------- --------
Commitments and contingencies
Other limited partners' capital interests, 7,314,001 and
5,632,695 common units at December 31, 1998 and 1997,
respectively, at redemption value (Note 1).............. 206,163 180,246
---------- --------
Partners' capital
Series A preferred units, at $25.00 liquidation
preference, 6,000,000 of 8% cumulative redeemable units
outstanding at December 31, 1998 and 1997,
respectively........................................... 150,000 150,000
Series C preferred units, at $25.00 liquidation
preference, 1,400,000 of 8% cumulative redeemable units
outstanding at December 31, 1998....................... 35,000 --
Series D preferred units, at $25.00 liquidation
preference, 2,600,000 of 8.625% cumulative redeemable
units outstanding at December 31, 1998................. 65,000 --
Common units, 19,674,412 and 17,703,992 common units
outstanding at December 31, 1998 and 1997,
respectively........................................... 294,402 227,146
---------- --------
Total partners' capital.............................. 544,402 377,146
---------- --------
$1,447,592 $852,361
========== ========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
F-2
<PAGE>
WEEKS REALTY, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------
1998 1997 1996
-------- ------- -------
(In thousands, except
per unit data)
<S> <C> <C> <C>
Revenue
Rental............................................. $131,771 $80,419 $48,162
Tenant reimbursements.............................. 17,372 10,387 4,517
Other.............................................. 1,831 1,214 1,204
-------- ------- -------
150,974 92,020 53,883
-------- ------- -------
Expenses
Property operating, maintenance and management..... 22,494 12,694 6,749
Real estate taxes.................................. 12,824 7,210 4,725
Depreciation and amortization...................... 38,348 24,144 13,474
Interest, including amortization of deferred
financing costs................................... 30,782 18,833 12,643
General and administrative......................... 5,809 3,652 2,315
-------- ------- -------
110,257 66,533 39,906
-------- ------- -------
Income before Equity in Earnings of Unconsolidated
Entities
Interest Income and Gain on Sale of Real Estate
Assets............................................ 40,717 25,487 13,977
Equity in earnings of unconsolidated service
companies......................................... 2,535 1,969 1,340
Equity in earnings of unconsolidated real estate
entities.......................................... 329 20 --
Interest income.................................... 965 1,509 492
Gain on sale of real estate assets................. 53 209 --
-------- ------- -------
Income Before Extraordinary Loss.................... 44,599 29,194 15,809
Extraordinary loss................................. (365) -- --
-------- ------- -------
Net Income.......................................... 44,234 29,194 15,809
Distributions to preferred unitholders............. (13,191) (2,720) --
-------- ------- -------
Net Income Available to Common Unitholders.......... $ 31,043 $26,474 $15,809
======== ======= =======
Net Income Per Common Unit
Basic
Income before extraordinary loss, net of preferred
distributions.................................... $ 1.20 $ 1.24 $ 1.11
Extraordinary loss................................ (0.01) -- --
-------- ------- -------
Net income available to common unitholders........ $ 1.19 $ 1.24 $ 1.11
======== ======= =======
Diluted
Income before extraordinary loss, net of preferred
distributions.................................... $ 1.19 $ 1.23 $ 1.10
Extraordinary loss................................ (0.01) -- --
-------- ------- -------
Net income available to common unitholders........ $ 1.18 $ 1.23 $ 1.10
======== ======= =======
Weighted Average Common Units
Basic.............................................. 26,134 21,380 14,280
======== ======= =======
Diluted............................................ 26,299 21,580 14,386
======== ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
WEEKS REALTY, L.P.
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
<TABLE>
<CAPTION>
Other
Weeks Limited
Preferred Units Corporation Total Partners'
---------------------------- Common Partners' Capital
Series A Series C Series D Units Capital Interests
-------- -------- -------- ----------- --------- ---------
(In thousands, except per unit data)
<S> <C> <C> <C> <C> <C> <C>
Balance, December,
1995................... $ -- $ -- $ -- $ 99,104 $ 99,104 $ 64,508
Cash contributions from
Company-- common
units.................. -- -- -- 69,279 69,279 --
Units issued in exchange
for property........... -- -- -- 7,124 7,124 48,085
Net income.............. -- -- -- 12,745 12,745 3,064
Distributions to common
unitholders ($1.60 per
unit).................. -- -- -- (17,860) (17,860) (4,108)
Adjustment to reflect
other limited partners'
capital at redemption
value.................. -- -- -- (37,584) (37,584) 37,584
-------- ------- ------- -------- -------- --------
Balance, December 31,
1996................... -- -- -- 132,808 132,808 149,133
Cash contributions from
Company-- common
units.................. -- -- -- 107,291 107,291 --
Cash contributions from
Company-- preferred
units.................. 150,000 -- -- (5,375) 144,625 --
Units issued in exchange
for property........... -- -- -- -- -- 31,876
Net income.............. 2,720 -- -- 20,255 22,975 6,219
Distributions to common
unitholders ($1.72 per
unit).................. -- -- -- (27,321) (27,321) (7,782)
Distributions to series
A preferred unitholders
($0.45 per unit)....... (2,720) -- -- -- (2,720) --
Restricted share grants,
net of deferred
compensation........... -- -- -- 288 288 --
Adjustment to reflect
other limited partners'
capital at redemption
value.................. -- -- -- (800) (800) 800
-------- ------- ------- -------- -------- --------
Balance, December 31,
1997................... 150,000 -- -- 227,146 377,146 180,246
Cash contributions from
Company-- common
units.................. -- -- -- 55,835 55,835 --
Cash contributions--
preferred units........ -- 35,000 65,000 (2,338) 97,662 --
Units issued in exchange
for property........... -- -- -- -- -- 55,701
Net income.............. 12,000 428 763 22,874 36,065 8,169
Distributions to common
unitholders ($1.86 per
unit).................. -- -- -- (35,484) (35,484) (11,891)
Distributions to series
A preferred unitholders
($2.00 per unit)....... (12,000) -- -- -- (12,000) --
Distributions to series
C preferred unitholders
($0.31 per unit)....... -- (428) -- -- (428) --
Distributions to series
D preferred unitholders
($0.29 per unit)....... -- -- (763) -- (763) --
Restricted share grants,
net of deferred
compensation........... -- -- -- 307 307 --
Adjustment to reflect
other limited partners'
capital at redemption
value.................. -- -- -- 26,062 26,062 (26,062)
-------- ------- ------- -------- -------- --------
Balance, December 31,
1998................... $150,000 $35,000 $65,000 $294,402 $544,402 $206,163
======== ======= ======= ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
WEEKS REALTY, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------
1998 1997 1996
--------- --------- ---------
(In thousands)
<S> <C> <C> <C>
Operating Activities
Net income................................... $ 44,234 $ 29,194 $ 15,809
Adjustments to reconcile net income to net
cash provided by operating activities:
Extraordinary loss.......................... 365 -- --
Depreciation and amortization............... 38,348 24,144 13,474
Amortization of deferred financing costs.... 1,686 933 864
Amortization of deferred compensation....... 307 288 --
Straight-line rent revenue (2,129) (680) (475)
Gain on sale of real estate assets.......... (53) (209) --
Undistributed earnings of unconsolidated
entities................................... -- (678) --
Net change in:
Deferred costs.............................. (12,096) (5,847) (2,618)
Receivables................................. (5,400) (1,151) (184)
Other assets................................ (952) (1,292) (1,427)
Accounts payable and accrued expenses....... 10,639 2,482 1,366
Other liabilities........................... 2,872 1,913 1,222
--------- --------- ---------
Net cash provided by operating activities... 77,821 49,097 28,031
--------- --------- ---------
Investing Activities
Property acquisition, development and
construction................................ (386,623) (163,589) (113,056)
Real estate loans............................ (5,392) (19,173) (8,146)
Investments in and advances to unconsolidated
entities.................................... (66,324) (2,504) --
Proceeds from sale of real estate assets..... 2,373 2,484 --
Collections on real estate loans, notes
receivable and other........................ 936 9,208 879
Distributions in excess of earnings of
unconsolidated entities..................... 309 -- --
--------- --------- ---------
Net cash used in investing activities........ (454,721) (173,574) (120,323)
--------- --------- ---------
Financing Activities
Capital contributions from Company--common
units....................................... 55,835 107,291 69,279
Capital contributions--preferred units....... 97,662 -- --
Capital contributions from Company--preferred
units....................................... -- 144,625 --
Unsecured note borrowings.................... 200,000 -- --
Proceeds from bank term loan................. 85,000 -- --
Line of credit proceeds (repayments), net.... 35,105 (16,480) 65,117
Payments of mortgage and other notes
payable..................................... (32,333) (69,849) (20,075)
Debt prepayment penalties.................... (276) -- --
Deferred financing costs..................... (8,636) (126) (783)
Distributions................................ (59,375) (35,823) (21,968)
--------- --------- ---------
Net cash provided by financing activities.... 372,982 129,638 91,570
--------- --------- ---------
Increase (Decrease) in Cash and Cash
Equivalents.................................. (3,918) 5,161 (722)
Cash and Cash Equivalents, beginning of
period....................................... 5,421 260 982
--------- --------- ---------
Cash and Cash Equivalents, end of period...... $ 1,503 $ 5,421 $ 260
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
WEEKS REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS
Weeks Realty, L.P. (a Georgia limited partnership, the "Operating
Partnership") and its subsidiaries acquire, develop, own and manage industrial
and suburban office buildings in the southeast United States and Texas. Weeks
Corporation (a Georgia corporation, referred to herein as the "Company")
through its wholly-owned subsidiaries, Weeks GP Holdings, Inc. and Weeks LP
Holdings, Inc. is the sole general partner and a limited partner and owns a
majority interest in the Operating Partnership. The Operating Partnership,
including the operations of its subsidiaries, conducts substantially all of the
on-going operations of Weeks Corporation, a publicly traded company which
operates as a self-administered and self-managed real estate investment trust
("REIT") under the Internal Revenue Code of 1986 (the "Code").
As of December 31, 1998, the Company owned 72.9% of the common units of
limited partnership interest ("Common Units") in the Operating Partnership.
Common Units held by persons other than the Company (the "Other Limited
Partnership Interests") represented a 27.1% partnership interest in the
Operating Partnership. The Company's weighted average ownership interest in the
Operating Partnership was 73.7%, 76.5% and 80.6% for the years ended December
31, 1998, 1997 and 1996, respectively.
The Operating Partnership conducts its third-party service businesses
through two companies (the "Service Companies"): Weeks Realty Services, Inc.
and Weeks Construction Services, Inc. Together the Service Companies and their
subsidiaries conduct third-party construction, development, landscape, property
management and commercial brokerage services. The Operating Partnership holds
100% of the nonvoting and 1% of the voting common stock of these Service
Companies. The remaining voting common stock is held by three executive
officers of the Operating Partnership. The ownership of the common stock of the
Service Companies entitles the Operating Partnership to substantially all (99%)
of the economic benefits from the results of the Service Companies' operations.
Under the provisions of the limited partnership agreement, as amended, the
Operating Partnership is obligated, upon request, to redeem each Common Unit
held by the Other Limited Partnership Interests for shares of Weeks Corporation
common stock on a one-for-one basis, or cash, at the Company's option. The
Company currently anticipates that it will elect to issue common stock for
Common Units presented for redemption by the Other Limited Partnership
Interests in the Operating Partnership. The Other Limited Partnership
Interests' redemption rights are reflected in the caption "other limited
partners' capital interests" in the accompanying consolidated balance sheets at
the cash redemption price (computed using the Weeks Corporation closing stock
price as quoted on the New York Stock Exchange) at the balance sheet dates.
Additionally, the terms of the limited partnership agreement obligate the
Company to contribute the net proceeds from the issuance of additional equity
securities, including issuances under the Company's incentive stock plan (Note
7), to the Operating Partnership in exchange for Units having substantially the
same economic characteristics as the equity securities issued by the Company.
Operating Partnership net profits, net losses and cash flow (after
allocations to preferred ownership interests) are allocated to the partners in
proportion to their common ownership interests. Cash distributions from the
Operating Partnership shall be, at a minimum, sufficient to enable the Company
to satisfy its annual dividend requirements to maintain its REIT status under
the Code.
As of December 31, 1998, the Operating Partnership's in-service property
portfolio, including three industrial properties totaling 646,000 square feet
held in unconsolidated entities, consisted of 282 industrial properties, 32
suburban office properties and five retail properties comprising 25,797,000
square feet. In-service
F-6
<PAGE>
WEEKS REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
properties exclude properties under development which are not yet stabilized
and properties under agreement to acquire. The Operating Partnership's primary
markets and the concentration of the Company's portfolio (based on square
footage) of in-service properties are Atlanta, Georgia (56.8%), Nashville,
Tennessee (10.5%), Raleigh-Durham-Chapel Hill, North Carolina (9.8%), Miami,
Florida (9.5%), Dallas/Ft. Worth, Texas (5.4%), Orlando, Florida (3.3%),
Jacksonville, Florida (2.5%), Spartanburg, South Carolina (1.5%) and Tampa,
Florida (0.7%). In addition, 54 industrial, and suburban office properties were
under development, in lease-up or under agreement to acquire at December 31,
1998, comprising an additional 5,923,000 square feet.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements include the consolidated
financial position of the Operating Partnership and its subsidiaries at
December 31, 1998 and 1997, and their results of operations for each of the
three years in the period ended December 31, 1998. The Service Companies and
their subsidiaries are reflected in the accompanying consolidated financial
statements on the equity method of accounting as discussed below. All
significant intercompany balances and transactions have been eliminated in the
consolidated financial statements.
Real Estate Assets
Real estate assets are stated at depreciated cost. Major improvements and
replacements are capitalized and depreciated over their estimated useful lives
when they extend the useful life, increase capacity or improve efficiency of
the related asset. All other repairs and maintenance are expensed as incurred.
Costs related to the planning, development and construction of buildings and
improvements, including interest, property taxes and insurance and allocated
overhead costs incurred during the construction period, are capitalized.
Depreciation is calculated using the straight-line method, generally over 35
years, for buildings and improvements. Tenant improvements are capitalized and
depreciated using the straight-line method over the term of the related lease.
The Operating Partnership continually evaluates the recoverability of the
carrying value of its real estate investments using the methodology prescribed
in Statement of Financial Accounting Standards ("SFAS") 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
of." Factors considered by management in evaluating impairment include
significant declines in property operating profits, recurring property
operating losses and other significant adverse changes in general market
conditions that are considered permanent in nature. If any real estate
investment is considered impaired, a loss is provided to reduce the carrying
value of the investment to its fair value.
Cash and Cash Equivalents
Cash and cash equivalents include cash and highly liquid investments,
consisting primarily of money market accounts, with original maturities of
three months or less.
Revenue Recognition
Rental income from operating leases is recognized on a straight-line basis
over the terms of the respective leases. Straight-line rent receivables totaled
$5,832,000 and $3,703,000 at December 31, 1998 and 1997, respectively. Tenant
reimbursements for property taxes and other recoverable expenses are recognized
as revenues in the period the applicable expenses are incurred. Revenues for
development, construction, landscape, property management and leasing services
provided by the Service Companies are recognized over the period during which
the related services are rendered.
F-7
<PAGE>
WEEKS REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The Operating Partnership accounts for one lease as a direct financing
lease. Direct financing lease income totaled $735,000, $754,000 and $768,000 in
1998, 1997 and 1996, respectively, and was included in other revenues in the
accompanying consolidated statements of operations. The net carrying value of
the direct financing lease, included in other assets in the accompanying
consolidated balance sheets, was $4,825,000 and $5,003,000 at December 31, 1998
and 1997, respectively.
Deferred Costs
Costs incurred to procure operating leases and in connection with financing
arrangements are capitalized and amortized on a straight-line basis over the
terms of the related lease or loan arrangements. Unamortized lease and
financing costs are written off upon the early termination of the related lease
or loan agreement.
Investments in Unconsolidated Entities
The Operating Partnership accounts for its investments in the Service
Companies and their subsidiaries and other non-majority owned entities on the
equity method of accounting.
Interest Rate Management Agreements
The Operating Partnership uses interest rate swap and treasury rate
guarantee hedge arrangements to manage its exposure to interest rate changes.
Such arrangements are considered hedges of specific current borrowings. The
costs paid or benefits received under interest rate swap arrangements are
recognized as adjustments to interest expense. The costs or benefits resulting
from the early settlement of interest rate swap arrangements are deferred and
recognized as adjustments to interest expense over the original life of the
related swap arrangement as long as the specific borrowings are outstanding.
The costs or benefits resulting from the settlement of treasury rate guarantee
hedge arrangements are recognized as adjustments to interest expense over the
term of the specifically hedged borrowings upon issuance of the indebtedness.
The costs or benefits of terminated interest rate swap or treasury rate
guarantee hedge arrangements are recognized in income or expense in the period
of settlement to the extent hedged borrowings are no longer outstanding.
Income Taxes
The Operating Partnership is a limited partnership and, therefore, is not
subject to federal and state income taxes. The respective share of taxable
income or loss of the Operating Partnership is required to be included in the
individual partners' income tax returns. Accordingly, no income taxes have been
provided for in the accompanying consolidated financial statements.
The Service Companies and their subsidiaries are taxed as regular taxable
corporations. The impact of income taxes, if any, reduces the amount of the
earnings of the Service Companies otherwise recognized by the Company under the
equity method. For the three years in the period ended December 31, 1998, the
impact of the Service Companies' income taxes and their related tax attributes
were not material to the accompanying consolidated financial statements.
Per Unit Data
Basic net income per Common Unit is computed by dividing net income by the
weighted average number of Common Units outstanding during the period. Diluted
net income per Common Unit is computed to reflect the additional dilution of
outstanding stock options and all other securities which are convertible into
Common Units.
F-8
<PAGE>
WEEKS REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Stock-Based Compensation
Under the provisions of SFAS 123, "Accounting for Stock-Based Compensation,"
the Operating Partnership has elected to account for stock-based compensation
under the intrinsic-value method prescribed by Accounting Principles Board
("APB") Opinion 25, "Accounting for Stock Issued to Employees" for all periods
presented. The additional fair value and other disclosures relating to
outstanding stock options prescribed by SFAS 123 are included in note 7 to
these consolidated financial statements.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
notes thereto. Actual results could differ from those estimates.
Recent Accounting Pronouncements
The Operating Partnership adopted SFAS 130, "Reporting of Comprehensive
Income," during 1998 which establishes standards for reporting and display of
comprehensive income and its components. Comprehensive income is the total of
net income and all other nonowner changes in shareholders' equity. As of
December 31, 1998, the Operating Partnership had no items of other
comprehensive income.
Effective for the year ended December 31, 1998, the Operating Partnership
implemented the disclosure requirements of SFAS 131, "Disclosures About
Segments of an Enterprise and Related Information." Segment disclosures under
SFAS 131 for each of the three years in the period ended December 31, 1998 are
included in note 12 to these consolidated financial statements.
In March 1998, Emerging Issues Task Force Issue No. 97-11, "Accounting for
Internal Costs Relating to Real Estate Property Acquisitions," was issued
prescribing that internal acquisition costs relating to the acquisition of
operating real estate properties should be expensed as incurred. Effective with
the first quarter of 1998, the Operating Partnership implemented this new
guideline, which did not have a material impact on the Operating Partnership's
financial position or results of operations.
In June 1998, SFAS 133, "Accounting for Derivative Instruments and for
Hedging Activities," was issued prescribing new accounting standards for the
accounting and disclosures of derivative instruments and hedging transactions.
SFAS 133 will require the Operating Partnership to record all derivative
instruments on the balance sheet at fair value. Changes in derivative fair
values will either be recorded in earnings along with the changes in fair value
of related hedged assets or liabilities or as an adjustment to shareholders'
equity depending on the nature and type of derivative instrument. SFAS 133 will
be effective for the Operating Partnership beginning January 1, 2000. The
Operating Partnership is evaluating the provisions of SFAS 133 and plans to
adopt SFAS 133 in it financial statements beginning in 2000. The impact of SFAS
133 on the Operating Partnership's financial statements will depend on the
extent, type and effectiveness of the Operating Partnership's hedging
activities. However, the Operating Partnership does not believe the effect of
adopting SFAS 133 will be material to its financial position or results of
operations.
Reclassifications
Certain prior year amounts have been reclassified to conform to the 1998
presentation.
3. ACQUISITIONS / DISPOSITIONS
Acquisitions
In 1998, the Operating Partnership acquired 48 industrial, suburban office
and retail buildings totaling approximately 4,856,000 square feet and
approximately five acres of land subject to ground leases for
F-9
<PAGE>
WEEKS REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
aggregate acquisition consideration of approximately $287,998,000, including
closing costs and acquisition expenses. The aggregate acquisition consideration
was comprised of the assumption of mortgage indebtedness of $84,272,000, the
issuance of approximately $42,422,000 of Common Units, the assumption of
certain other liabilities in excess of certain other assets of approximately
$4,224,000 and approximately $157,080,000 of cash, funded through the Operating
Partnership's revolving line of credit and used to fund the assumption and
repayment of indebtedness, closing costs and acquisition expenses. The acquired
properties are located in Florida, Georgia, North Carolina, Tennessee and
Texas. Two of the buildings, under development prior to their acquisition, were
acquired from NWI Warehouse Group, L.P. ("NWI"), a related entity, for total
acquisition consideration of approximately $13,957,000. Also, in 1998, the
Operating Partnership acquired land from NWI and Lichtin Properties, Inc. and
affiliates ("Lichtin"), also a related entity, for total consideration of
approximately $8,910,000.
In 1997, the Operating Partnership acquired 39 industrial and suburban
office buildings, including two buildings under development, totaling
approximately 2,325,000 square feet for aggregate acquisition consideration of
approximately $129,884,000. The aggregate acquisition consideration was
comprised of the assumption of mortgage indebtedness of approximately
$24,010,000, the issuance of approximately $31,114,000 of Common Units and the
assumption and repayment of other indebtedness and the payment of cash through
borrowings under the Operating Partnership's revolving line of credit totaling
approximately $74,760,000. The acquired properties are located in Florida,
Georgia, North Carolina and Tennessee. Nineteen of the industrial and suburban
office buildings totaling 1,547,000 square feet were acquired from NWI and
Lichtin for aggregate acquisition consideration of $92,756,000. Also, in 1997,
the Operating Partnership acquired land from Lichtin for total consideration of
$1,000,000.
The Operating Partnership made initial acquisitions of property portfolios
and the business operations of NWI in Nashville, Tennessee, and Lichtin in the
Raleigh-Durham-Chapel Hill area of North Carolina, on November 1, 1996 and
December 31, 1996, respectively, in transactions accounted for under the
purchase method. These acquisitions consisted of initial property portfolios of
31 industrial and suburban office buildings totaling approximately 2,513,000
square feet, 82 net usable acres of undeveloped land and options to acquire 177
acres of undeveloped land and the aggregate acquisition consideration was
approximately $171,135,000. Acquisition consideration was comprised of the
assumption of mortgage indebtedness of approximately $89,535,000, the issuance
of approximately $7,124,000 of common stock, the issuance of approximately
$48,085,000 of Common Units and approximately $26,391,000 of cash, including
amounts necessary to fund the assumption and repayment of other indebtedness,
closing costs and acquisition expenses, all funded through the Operating
Partnership's revolving line of credit.
The Operating Partnership's consolidated results of operations have included
the operating results of NWI and Lichtin from their effective acquisition
dates. The unaudited pro forma information below presents the consolidated
results of operations as if the initial phases of the NWI and Lichtin
acquisitions had occurred at the beginning of 1996 (in thousands, except per
unit amounts). The unaudited pro forma information is not necessarily
indicative of the results of operations of the Operating Partnership had the
acquisitions occurred at the beginning of 1996, nor is it necessarily
indicative of future results.
<TABLE>
<CAPTION>
1996
-------
<S> <C>
Revenues............................................................... $70,954
Net income............................................................. 14,360
Net income per Common Unit--basic...................................... $ 0.89
Net income per Common Unit--diluted.................................... 0.89
</TABLE>
F-10
<PAGE>
WEEKS REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Also in 1996, the Operating Partnership acquired 15 industrial and suburban
office buildings totaling approximately 761,000 square feet located in Atlanta,
Georgia for an aggregate price of approximately $40,102,000, including closing
costs and acquisition expenses. The acquisitions were funded through revolving
line of credit borrowings.
Dispositions
In July 1998, the Operating Partnership sold a 30,381 square foot building
located in Miami, Florida to one of the building's tenants for approximately
$2,373,000, resulting in a gain of approximately $53,000. This building was
originally acquired in January 1998 as part of a Miami, Florida portfolio
acquisition.
In January 1999, the Operating Partnership sold 21 buildings totaling
approximately 1,181,000 square feet located in Atlanta, Georgia for net
proceeds of approximately $51,832,000, resulting in a gain of approximately
$4,900,000. For income tax purposes, the Operating Partnership intends to use
the proceeds from the sale to complete a tax-deferred, like-kind exchange. As
part of this arrangement, the Operating Partnership has also agreed to sell,
upon the completion of construction, an additional building totaling
approximately 182,000 square feet for approximately $7,300,000.
In April 1997, the Operating Partnership sold a 96,000 square foot
industrial building located in Spartanburg, South Carolina to one of the
building's tenants for approximately $2,484,000, resulting in a gain of
approximately $209,000. For income tax purposes, the Operating Partnership
completed a tax-deferred, like-kind exchange involving one of the industrial
buildings acquired in 1997.
4. BORROWINGS
Total borrowings at December 31, 1998 and 1997 consist of the following (in
thousands):
<TABLE>
<CAPTION>
December 31,
-----------------
1998 1997
-------- --------
<S> <C> <C>
Unsecured Notes
Due 2005, interest at 6.875%................................ $100,000 $ --
Due 2007, interest at 7.375%................................ 100,000 --
-------- --------
200,000 --
-------- --------
Unsecured Bank Borrowings
Credit Facility............................................. 118,025 82,920
Term Loan................................................... 85,000 --
-------- --------
203,025 82,920
-------- --------
Mortgage Notes Payable
Fixed rate notes, interest at 6.00% to 9.80%, due in 1999 to
2012........................................................ 250,788 186,798
Variable rate industrial revenue bonds, interest at 6.06% at
December 31, 1998,
due in 2010................................................. 611 5,797
-------- --------
251,399 192,595
-------- --------
Total Borrowings............................................. $654,424 $275,515
======== ========
</TABLE>
F-11
<PAGE>
WEEKS REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Unsecured Notes
During 1998, the Operating Partnership completed the issuance of
$200,000,000 of unsecured notes. In March 1998, the Operating Partnership
issued $100,000,000 of 6.875% unsecured notes due March 15, 2005. A portion of
the proceeds from the unsecured notes totaling $4,566,000 was used to settle a
treasury rate guarantee hedge arrangement which was entered into in 1997 to
effectively fix the interest rate on the unsecured note borrowing. The costs to
settle the hedge were included in deferred financing costs and are amortized
over the life of the unsecured notes as interest expense, resulting in an
effective interest rate of approximately 7.6%. In August 1998, the Operating
Partnership issued $100,000,000 of 7.375% unsecured notes due August 1, 2007.
These unsecured notes are subject to certain covenants, including those
governing the Operating Partnership's interest and fixed charge coverage and
total leverage.
Unsecured Bank Borrowings
Credit Facility
Effective July 1998, the Operating Partnership refinanced its existing
$225,000,000 syndicated revolving line of credit (the "Line of Credit") and
expanded its bank lending group to five banks. Additionally, effective July
1998, the Operating Partnership entered into a $20,000,000 swing revolving
credit facility (the "Swing Facility") with one bank. Together, the combined
Line of Credit and Swing Facility are referred to herein as the "Credit
Facility." The Credit Facility is unsecured and can be used for development and
construction, acquisitions and general corporate purposes. The entire Credit
Facility is guaranteed by the Company. Additionally, the Company and the
Operating Partnership are required to meet certain financial and non-financial
covenants including those governing the Company's and the Operating
Partnership's maximum unsecured borrowings, interest and fixed charge coverage,
total leverage, limitations on secured borrowings and a restriction on the
amount of dividends and distributions to not more than 95% of "funds from
operations," a REIT industry measure of operating performance, unless the
additional amounts are necessary to maintain the Company's REIT status under
the Code. The Line of Credit matures on December 31, 2000, and may be extended
annually through December 31, 2002, subject to annual extension fees of 0.10%
and the prior consent of the banks in the bank lending group. The Swing
Facility matures on June 30, 1999, and may be extended annually, subject to the
prior consent of the lender.
Interest under the Credit Facility accrues at bank prime minus 0.25% or at
LIBOR plus 0.80% at the election of the Operating Partnership. In addition, the
Operating Partnership pays annual facility fees equal to 0.15% of the total
Line of Credit. The weighted average interest rate on Credit Facility
borrowings, excluding the effect of the interest rate swap agreements described
below, was 6.5% at December 31, 1998. Prior to July 1998, interest under the
Credit Facility accrued at bank prime minus 0.25% or at LIBOR plus 1.05%, at
the election of the Operating Partnership, and fees on the unused portion of
the Credit Facility were 0.15%.
At December 31, 1998, the Operating Partnership had in place two interest
rate swap agreements with a commercial bank to effectively change the interest
costs on $40,000,000 of Credit Facility borrowings from the variable rates
discussed above to fixed rates. The agreements, with notional principal amounts
of $10,000,000 and $30,000,000, mature in July 1999 and July 2001 with
effective fixed interest rates of 7.3% and 7.6%, respectively.
In periods prior to March 1998, the Service Companies and certain of their
subsidiaries were direct borrowers under the Credit Facility. In connection
with the issuance of the unsecured notes in March 1998 and the refinancing of
the Credit Facility discussed above, the Service Companies and certain of their
subsidiaries refinanced their Credit Facility borrowings with intercompany
loans from the Operating Partnership (see Note 5).
F-12
<PAGE>
WEEKS REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Term Loan
In December 1998, the Operating Partnership entered into an $85,000,000
unsecured syndicated bank term loan (the "Term Loan") with a group of five
banks. Interest accrues on the Term Loan at LIBOR plus 1.25% and the Term Loan
matures on December 31, 2001. Simultaneously with the execution of the Term
Loan, the Operating Partnership entered into three interest rate swap
agreements with three commercial banks to effectively change the interest
costs on the entire $85,000,000 Term Loan from its variable rate to fixed
rates. The interest rate swap agreements, with notional principal amounts of
$35,000,000, $25,000,000 and $25,000,000, mature on December 31, 2001, and
effectively convert interest costs on the Term Loan to a fixed rate of
approximately 6.3% through maturity.
Mortgage Notes Payable
At December 31, 1998, fixed rate mortgage notes payable included 32 notes
with a weighted average interest rate of 8.3%. The weighted average term to
maturity of fixed rate mortgage notes payable was 6.5 years at December 31,
1998. Total mortgage indebtedness increased by $58,804,000 in 1998 due to the
assumption of seven mortgage notes totaling $91,137,000 in connection with the
Operating Partnership's property acquisitions, net of principal repayments and
retirements of $32,333,000. Certain Operating Partnership and Company officers
and Common Unitholders guarantee a portion of the fixed rate mortgage notes.
Debt Maturities
Scheduled maturities of total borrowings at December 31, 1998, are
summarized as follows (in thousands):
<TABLE>
<CAPTION>
Year Amount
---- ---------
<S> <C>
1999............................................................ $ 71,766(a)
2000............................................................ 134,690(a)
2001............................................................ 91,352
2002............................................................ 9,874
2003............................................................ 7,854
2004 and thereafter............................................. 338,888
---------
$ 654,424
=========
</TABLE>
- --------
(a) Includes $19,875 maturing in 1999 under the Swing Facility and $98,150
maturing in 2000 under the Line of Credit, assuming that no extensions are
exercised.
Net real estate assets totaling $372,256,000 and $242,268,000 at December
31, 1998 and 1997, respectively, were pledged as collateral under mortgage
notes payable. Interest capitalized in 1998, 1997 and 1996, totaled
$11,968,000, $5,289,000 and $2,358,000, respectively.
The extraordinary loss of $365,000 in 1998 represents loan prepayment
penalties and the write-off of unamortized deferred financing costs related to
the early retirement of certain mortgage debt in 1998.
F-13
<PAGE>
WEEKS REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
5. INVESTMENTS IN AND NOTES RECEIVABLE FROM UNCONSOLIDATED ENTITIES
Service Companies and Subsidiaries
The Operating Partnership conducts third-party development, construction,
landscape, property management and commercial brokerage businesses through the
Service Companies and their subsidiaries. Additionally, the Service Companies
and their subsidiaries own land held for sale or future development, either
directly or through ownership interests in real estate partnerships and joint
ventures. The Operating Partnership has acquired and intends, based on market
conditions, to acquire land from the Service Companies and their subsidiaries
for the development of properties. As discussed in Note 2, these Service
Companies and their subsidiaries are accounted for on the equity method of
accounting. Under the equity method, the Operating Partnership recognizes, in
its consolidated statements of operations, its economic share (99%) of the
earnings and losses of the Service Companies and their subsidiaries.
The following information summarizes the financial position, results of
operations and cash flows of the Service Companies and their subsidiaries on a
combined basis (in thousands):
<TABLE>
<CAPTION>
December 31,
-----------------
Financial Position 1998 1997
- ------------------ -------- -------
<S> <C> <C>
Assets
Real estate assets........................................... $ 22,768 $12,403
Investments in unconsolidated entities....................... 12,096 2,849
Receivables and other assets................................. 26,634 20,158
-------- -------
$61,498 $35,410
======== =======
Liabilities and Equity
Borrowings from the Operating Partnership.................... $44,575 $10,900
Credit Facility borrowings................................... -- 16,620
Other borrowings............................................. 2,309 2,000
Other liabilities............................................ 15,472 7,513
Total equity (deficit)....................................... (858) (1,623)
-------- -------
$ 61,498 $35,410
======== =======
</TABLE>
Effective March 1998, the operations of the Service Companies and their
subsidiaries are financed through line of credit borrowings from the Operating
Partnership. These line of credit borrowings accrue interest at bank prime plus
1%, payable monthly, and are due on demand. Previously, these entities were
financed through direct borrowings under the Credit Facility. As part of these
financing arrangements, the Service Companies and their subsidiaries have
agreed not to incur any additional unsecured borrowings other than through
borrowings from the Operating Partnership. Borrowings from the Operating
Partnership also include $10,876,000 of 12% notes due in 2004.
At December 31, 1998, the Operating Partnership's investment in and notes
receivable from the Service Companies and subsidiaries totaling $43,639,000
includes notes receivable from the Service Companies and subsidiaries of
$44,575,000 and the Operating Partnership's investment in the Service Companies
of ($936,000).
F-14
<PAGE>
WEEKS REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------
Results of Operations 1998 1997 1996
- --------------------- -------- ------- -------
(in thousands)
<S> <C> <C> <C>
Revenue
Construction and development fees.................. $ 3,756 $ 2,517 $ 2,233
Landscape.......................................... 7,425 5,974 5,035
Commissions........................................ 1,149 828 448
Property management fees and other................. 427 449 509
-------- ------- -------
12,757 9,768 8,225
-------- ------- -------
Cost and expenses
Direct costs....................................... 6,464 5,202 4,327
Interest expense -- Operating Partnership.......... 2,898 1,308 1,314
Interest expense -- third parties.................. 155 372 365
General and administrative......................... 3,358 2,397 1,694
Other.............................................. 1,490 494 498
-------- ------- -------
14,365 9,773 8,198
-------- ------- -------
Income (loss) before gains on of real estate and
equity in earnings of partnerships and joint
ventures.......................................... (1,608) (5) 27
Gain on sale of real estate -- third parties....... 885 422 --
Gain on sale of real estate -- Operating
Partnership....................................... 315 580 --
Equity in earnings of unconsolidated entities...... 1,076 257 (1)
-------- ------- -------
Net income......................................... $ 668 $ 1,254 $ 26
======== ======= =======
Net income attributable to the Operating
Partnership....................................... $ 661 $ 1,241 $ 26
Interest expense -- Operating Partnership.......... 2,898 1,308 1,314
Elimination of intercompany profits --
Operating Partnership.............................. (1,024) (580) --
-------- ------- -------
Equity in earnings of Service Companies............ $ 2,535 $ 1,969 $ 1,340
======== ======= =======
Distributions and interest paid to the Operating
Partnership....................................... $ 2,898 $ 1,311 $ 1,313
======== ======= =======
Cash Flow
- ---------
Operating activities............................... $ 1,657 $(4,915) $ 4,460
Investing activities............................... (20,972) (4,086) (2,540)
Financing activities............................... 14,403 11,979 (487)
</TABLE>
In connection with the Operating Partnership's January 1998 acquisition of a
real estate portfolio in Miami, Florida, the Service Companies acquired a one-
third interest in Codina Group, Inc. ("Codina"), a Miami-based real estate
services company, for aggregate consideration of approximately $9,600,000. The
Services Companies account for their investment in Codina on the equity method
of accounting.
Real Estate Entities
At December 31, 1998 and 1997, the Operating Partnership owned a 50%
interest in a limited liability company ("LLC") which owns an 86,000 square
foot industrial building in Atlanta, Georgia. The Operating Partnership's
investment in this LLC totaled $3,065,000 and $2,525,000 at December 31, 1998
and 1997, respectively, and its equity in earnings were $288,000 and $20,000
for the years ended December 31, 1998 and 1997, respectively. The total assets,
liabilities and equity of the LLC were $6,134,000, $4,000 and
F-15
<PAGE>
WEEKS REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
$6,130,000, respectively, at December 31, 1998, and $5,645,000, $595,000 and
$5,050,000, respectively, at December 31, 1997.
In September 1998, the Operating Partnership assigned the right to acquire
four buildings in Dallas, Texas to NWI, a related entity, and NWI acquired the
buildings for aggregate consideration of approximately $34,645,000.
Simultaneously, the Operating Partnership advanced $31,600,000 under a
$33,600,000 adjustable rate loan agreement with NWI and entered into an option
arrangement enabling the Operating Partnership to acquire the buildings from
NWI. The adjustable rate loan was secured by the four buildings, accrued
interest at LIBOR plus 1.30% and matured on the acquisition of buildings by the
Operating Partnership. In January 1999, the Operating Partnership acquired the
four industrial buildings from NWI for aggregate acquisition consideration of
approximately $35,151,000, which resulted in a gain to NWI, net of intercompany
eliminations, of approximately $245,000.
The Operating Partnership accounted for this transaction with NWI as an
investment in real estate under the equity method of accounting. In 1998, the
Operating Partnership recognized earnings of $41,000 under the equity method.
At December 31, 1998, the Operating Partnership had invested $32,139,000 under
the terms of the arrangements with NWI. Total assets, liabilities and equity of
the underlying investment were $34,942,000, $1,438,000 and $33,504,000,
respectively, at December 31, 1998.
6. PARTNERS' CAPITAL
Preferred Units
At December 31, 1998 and 1997, the Operating Partnership had outstanding
6,000,000, 8% Series A cumulative redeemable preferred limited partnership
interests (the "Series A Preferred Units"). The Series A Preferred Units have a
liquidation preference of $25.00 per unit and are redeemable at the option of
the Operating Partnership on or after October 10, 2002, at a redemption price
of $25.00 per unit. The Series A Preferred Units are owned by the Company.
In November 1998, the Operating Partnership sold 1,400,000, 8% Series C
cumulative redeemable preferred limited partnership interests (the "Series C
Preferred Units"). The Series C Preferred Units have a liquidation preference
of $25.00 per preferred unit and are redeemable by the Operating Partnership on
or after November 6, 2003, at a redemption price of $25.00 per preferred unit.
In combination with the issuance of the Series C Preferred Units, the Company
issued a warrant that entitles its holder to purchase 1,046,729 shares of
Company common stock at a price of $33.4375 per share or 8% 1,400,000 shares of
Company Series A Preferred Stock at a price of $25.00 per share. The Series C
Preferred Units are automatically redeemed upon the exercise of the warrant.
The warrant has a perpetual term unless the Series C Preferred Units are
redeemed by the Operating Partnership, in which case the warrant expires within
30 days of redemption. The Operating Partnership received net proceeds of
approximately $34,400,000 from this transaction. The Operating Partnership has
accounted for this arrangement as a convertible preferred limited partnership
interest in the accompanying consolidated financial statements.
Also, in November 1998, the Operating Partnership sold 2,600,000, 8.625%
Series D cumulative redeemable preferred limited partnership interests (the
"Series D Preferred Units") and received net proceeds of approximately
$63,300,000. The Series D Preferred Units have a liquidation preference of
$25.00 per preferred unit and are redeemable at the option of the Operating
Partnership on or after November 12, 2003, at a redemption price of $25.00 per
preferred unit.
Common Units
In 1998, 1997 and 1996, the Operating Partnership issued Common Units to the
Company totaling 1,541,547, 3,584,200 and 2,573,333, and received net proceeds
of $47,200,000, $106,568,000 and $68,532,000,
F-16
<PAGE>
WEEKS REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
respectively, from the contribution by the Company of the net proceeds from the
sale of Company common stock in the public equity markets. Additionally, in
1998, 1997 and 1996, the Operating partnership issued Common Units to the
Company totaling 265,000, 36,000 and 35,000 and received net proceeds of
$7,235,000, $723,000 and $747,000, respectively, resulting from the issuance of
Company common stock under the Company's incentive stock and dividend
reinvestment plans. The proceeds were used to reduce Credit Facility borrowings
or to repay mortgage indebtedness.
In 1998 and 1997, restricted shares of common stock ( the "Restricted
Stock") valued at $80,000 and $1,183,000 were granted to certain Company
officers and employees as an incentive for future service and continued
financial performance of the Company and Operating Partnership. Generally, the
Restricted Stock vests ratably over four year periods and the vesting of most
of the Restricted Stock is contingent upon the Company's achieving specified
levels of financial performance. The value of the restricted shares is included
in partners' capital offset by the amount of the unamortized deferred
compensation expense ($668,000 and $895,000 at December 31, 1998 and 1997,
respectively). Compensation expense is recognized ratably over the vesting
periods.
In February 1998, the Company contributed $1,400,000 to the Operating
Partnership resulting from the Company's sale of 350,000 common stock warrants.
In return, the Operating Partnership agreed to issued 350,000 Common Units to
the Company in exchange for an exercise price of $32.75 per Common Unit upon
the exercise of such warrants. The terms of this agreement are structured to
parallel the terms of the Company's sale of 350,000 common stock warrants with
an exercise price of $32.75 per common share. The Operating Partnership's
obligation to issue Common Units and the Company's common stock warrants expire
in February 2008.
The Operating Partnership issued 1,845,307, 1,147,505 and 1,917,720 Common
Units to persons other than the Company with aggregate values of $55,701,000,
$31,876,000 and $48,085,000 in 1998, 1997 and 1996, respectively, in exchange
for full or partial interests in certain land and buildings.
Distributions
For the years detailed below, Common Unitholders of the minority interests
in the Operating Partnership received and Preferred Unitholders of the minority
interests in the Operating Partnership earned cash distributions from the
Operating Partnership as follows (in thousands, except per unit amounts):
<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Common Units
Distributions......................................... $47,375 $35,103 $21,968
Distributions per Unit................................ $ 1.86 $ 1.72 $ 1.60
Series A Preferred Units
Distributions(a)...................................... $12,000 $ 2,720 --
Distributions per Unit(a)............................. $ 2.00 $ 0.45 --
Series C Preferred Units
Distributions......................................... $ 428 -- --
Distributions per Unit................................ $ 0.31 -- --
Series D Preferred Units
Distributions......................................... $ 763 -- --
Distributions per Unit................................ $ 0.29 -- --
</TABLE>
- --------
(a) In 1997, Series A Preferred Units distributions totaling $720,000 or $0.12
per unit were paid and $2,000,000 or $0.33 per unit were accrued.
F-17
<PAGE>
WEEKS REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
In January 1999, the Operating Partnership made distributions to Common
Unitholders of $13,582,000 or $0.505 per Common Unit relating to fourth quarter
1998 operating results and made distributions to the holders of the Series A
Preferred Units of $3,000,000 or $0.50 per unit, the Series C Preferred Units
of $662,000 or $0.47 per unit and the Series D Preferred Units of $1,230,000 or
$0.47 per unit.
Computation of Net Income Per Common Unit
Reconciliations of net income per Common Unit and weighted average Common
Units used in the Operating Partnership's basic and diluted net income per
Common Unit computations are detailed below (in thousands, except per share
data):
<TABLE>
<CAPTION>
1998 1997 1996
-------- ------- -------
<S> <C> <C> <C>
Computation of Income Available to Common
Unitholders
Income before extraordinary loss................... $ 44,599 $29,194 $15,809
Distributions to preferred unitholders............. (13,191) (2,720) --
-------- ------- -------
Income available to Common Unitholders before
extraordinary loss-- basic and diluted............ 31,408 26,474 15,809
Extraordinary loss................................. (365) -- --
-------- ------- -------
Net income available to Common Unitholders -- basic
and diluted....................................... $ 31,043 $26,474 $15,809
======== ======= =======
Computation of Weighted Average Common Units
Weighted average Common Units -- basic............. 26,134 21,380 14,280
Dilutive securities -- Stock options............... 165 200 106
-------- ------- -------
Weighted average Common Units--diluted............. 26,299 21,580 14,386
======== ======= =======
Income Available to Common Unitholders
Before Extraordinary Loss Per Unit
Basic............................................. $ 1.20 $ 1.24 $ 1.11
Diluted........................................... 1.19 1.23 1.10
Net Income Per Common Unit
Basic............................................. $ 1.19 $ 1.24 $ 1.11
Diluted........................................... 1.18 1.23 1.10
</TABLE>
Basic net income per Common Unit for the periods presented was computed by
dividing net income available to Common Unitholders by the weighted average
number of Common Units outstanding during the year. Diluted net income per
Common Unit was computed based on the dilutive effect of the Company's
outstanding stock options. The Company has 662,000, 76,000 and 147,000
outstanding stock options in 1998, 1997 and 1996 that were not dilutive and
350,000 outstanding stock warrants that were not dilutive in 1998. In addition,
the convertible feature of the Series C Preferred Units was not dilutive in
1998.
7. INCENTIVE STOCK PLAN
The Company has two Incentive Stock Plans (the "Plans") under which shares
of the Company's common stock have been reserved for the issuance of stock
options and restricted stock. Common shares totaling 2,400,000 have been
reserved for issuance under the Plans. Participants in the Plans may be
officers and employees of the Company and the Service Companies, as well as
Company directors. The exercise price
F-18
<PAGE>
WEEKS REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
of all options under the Plans is not less than the fair market value of the
Company's common stock on the date of grant and such options may be exercised
for periods up to ten years. Upon the exercise of stock options issued under
the Plans, the Company contributes the net proceeds realized to the Operating
Partnership in exchange for Common Units (see Note 1). As discussed in Note 2,
the Operating Partnership accounts for stock-based compensation under APB
Opinion 25. The additional disclosures required by SFAS 123 are and detailed
below.
Under SFAS 123, the fair value of stock options granted in 1998, 1997 and
1996 has been estimated using a binomial option pricing model with the
following weighted average assumptions for grants in 1998, 1997 and 1996,
respectively: risk free interest rates of 5.4% in 1998, 5.5% in 1997, and 5.7%
in 1996; expected option lives of five years for options granted in each year;
expected volatility of 17.0% in 1998, 16.6% in 1997 and 16.5% in 1996, and
expected dividend yields of 6.1% in 1998, 5.1% in 1997, and 5.7% in 1996. Using
these assumptions, the estimated fair value of options granted in 1998, 1997
and 1996 was $1,961,000, $373,000, and $945,000, respectively, and such amounts
would be included in compensation expense over the vesting period of the
options. Pro forma net income, net income available to Common Unitholders and
net income per Common Unit in 1998, 1997 and 1996, assuming the Operating
Partnership had accounted for the Plans under SFAS 123 were as follows (in
thousands, except per share amounts):
<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Net income
As reported........................................... $44,234 $29,194 $15,809
Pro forma............................................. 43,502 28,899 15,216
Net income available to Common Unitholders
As reported........................................... 31,043 26,474 15,809
Pro forma............................................. 30,311 26,179 15,216
Net income per Common Unit
As reported--basic.................................... $ 1.19 $ 1.24 $ 1.11
Pro forma--basic...................................... 1.16 1.22 1.07
As reported--diluted.................................. 1.18 1.23 1.10
Pro forma--diluted.................................... 1.15 1.21 1.06
</TABLE>
The pro forma annual compensation cost included in determining pro forma net
income and net income available to Common Unitholders may not be representative
of future pro forma annual compensation cost since the estimated fair value of
Company stock options is included in compensation expense over the vesting
period, and additional Company stock options may be granted in future years.
F-19
<PAGE>
WEEKS REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
A summary of stock option activity under the Plans is presented in the table
and narrative below (share amounts in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
---------------- ---------------- ----------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
------ -------- ------ -------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Options outstanding,
beginning of year......... 807 $24.26 753 $23.06 503 $19.90
Granted.................... 552 31.77 91 32.40 283 28.22
Exercised.................. (35) 20.27 (34) 19.38 (33) 19.25
Forfeited.................. (4) 27.64 (3) 23.32 -- --
----- ------ ----- ------ ----- ------
Options outstanding, end of
year...................... 1,320 $27.50 807 $24.26 753 $23.06
===== ====== ===== ====== ===== ======
Options exercisable, end of
year...................... 701 $23.93 632 $22.98 552 $22.10
===== ====== ===== ====== ===== ======
Weighted average per share
fair value of options
granted................... $3.55 $4.10 $3.34
===== ===== =====
</TABLE>
At December 31, 1998, options for 532,000 shares were outstanding having
exercise prices ranging from $19.25 to $26.00, with a weighted average exercise
price of $21.48 and a weighted average remaining life of 6.2 years, of which
489,000 options were exercisable with a weighted average exercise price of
$21.09. Options for 788,000 shares were also outstanding having exercise prices
ranging from $28.00 to $33.75, with a weighted average exercise price of $31.56
and a weighted average remaining life of 9.1 years, of which 212,000 options
were exercisable with a weighted average exercise price of $30.48.
8. EMPLOYEE BENEFIT PLAN
The Operating Partnership and the Service Companies ("Plan Sponsors")
sponsor a 401(k) retirement savings plan covering substantially all employees
meeting certain age and service requirements. Employees may contribute up to
the lesser of 20% of their annual compensation or the annual statutory limit
($10,000 in 1998) to the plan. Plan Sponsors' contributions are made on a
discretionary basis up to a maximum of 100% of the employees' contributions
(currently 50% of the employee's contribution up to 4% of an employee's annual
compensation). Total Plan Sponsor contributions were $277,000, $168,000, and
$88,000 in 1998, 1997, and 1996, respectively.
F-20
<PAGE>
WEEKS REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
9. DEFERRED COSTS
Deferred costs consist of the following (in thousands):
<TABLE>
<CAPTION>
December 31,
-----------------
1998 1997
-------- -------
<S> <C> <C>
Deferred lease costs...................................... $ 29,658 $18,551
Deferred financing costs.................................. 12,318 3,996
-------- -------
41,976 22,547
Less accumulated amortization............................. (12,813) (9,460)
-------- -------
$ 29,163 $13,087
======== =======
</TABLE>
10. LEASING ACTIVITY
Future minimum rents due under noncancelable operating leases with tenants
at December 31, 1998, were as follows (in thousands):
<TABLE>
<CAPTION>
Year Amount
---- --------
<S> <C>
1999................................................................ $143,021
2000................................................................ 123,382
2001................................................................ 104,346
2002................................................................ 80,804
2003................................................................ 55,175
2004 and thereafter................................................. 137,140
--------
$643,868
========
</TABLE>
11. RELATED-PARTY TRANSACTIONS
In addition to certain related party transactions described in Notes 3 and 5
to these consolidated financial statements, at December 31, 1998 and 1997,
receivables included $464,000 and $463,000, respectively, due from the Service
Companies and their subsidiaries, relating to accrued interest on the advances
to the Service Companies and their subsidiaries. At December 31, 1998 and 1997,
accounts payable and accrued expenses included $3,313,000 and $703,000,
respectively, due to the Service Companies and their subsidiaries.
At December 31, 1998 and 1997, other assets included outstanding loan
advances totaling $4,450,000 due from NWI, a related entity, under a $5,700,000
demand loan agreement. The loan bears interest at LIBOR plus 2.10% and is
secured by real estate assets held by NWI, for which the Operating Partnership
has arrangements to acquire in future periods. Interest earned under the
agreement and included in the accompanying consolidated statements of
operations totaled $346,000 and $197,000 in the years ended December 31, 1998
and 1997, respectively.
The Service Companies also provide development, construction, landscape and
leasing services to affiliated partnerships and joint ventures. In 1998, 1997
and 1996, total revenues for such services to related parties of the Service
Companies were as follows (in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Construction and development fees...................... $ 743 $ 390 $ 678
Landscape.............................................. 472 327 271
Commissions............................................ 283 398 94
------ ------ ------
$1,498 $1,115 $1,043
====== ====== ======
</TABLE>
F-21
<PAGE>
WEEKS REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
In addition, the Operating Partnership paid development, leasing and
property management fees totaling $1,701,000, $479,000 and $694,000,
respectively, to Codina in 1998.
12. SEGMENTS
Effective for the year ended December 31, 1998, the Operating Partnership
implemented the segment disclosure requirements of SFAS 131. The Operating
Partnership's primary business is the acquisition, development and ownership of
industrial and suburban office properties in the southeast United States and
Texas. At December 31, 1998, the Operating Partnership's in-service operating
property portfolio (based on square footage) consisted of 90.1% industrial
properties, 8.1% suburban office properties and 1.8% retail and other
properties.
The Operating Partnership manages its properties and operating business
through geographic markets. Each geographic market is managed by local market
managers who are knowledgeable about the specific real estate fundamentals and
characteristics of the market. The Operating Partnership executes its business
plan through this geographic market strategy of utilizing local market
knowledge coupled with meaningful concentrations of properties in those
markets.
Segment operating performance is measured on segment earnings before
interest expense and depreciation and amortization expense. Segment revenues
consist primarily of property operating revenues from in-service properties,
but also include other miscellaneous segment revenues. Segment earnings before
equity in earnings of unconsolidated entities consist of segment revenues less
segment property operating, maintenance, management and real estate tax
expenses and direct segment general and administrative expenses. To the extent
an operating segment generates earnings from unconsolidated entities, such
earnings are included in the measurement of segment earnings as shown below.
The Operating Partnership's measurement of segment earnings is consistent with
the Operating Partnership's calculation of segment unleveraged "funds from
operations," a REIT industry measure of operating performance. Segment
information has been prepared using the accounting policies described in Note 2
to the consolidated financial statements. Intersegment transactions are not
material to the presentation of the segment data.
F-22
<PAGE>
WEEKS REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
A summary of reportable segment revenues and segment earnings is detailed
below (in thousands):
<TABLE>
<CAPTION>
North South Segment
Georgia Carolina Florida Tennessee Other(a) Total
------- -------- ------- --------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
1998
Segment revenues.......... $79,307 $24,251 $21,915 $15,483 $10,018 $150,974
======= ======= ======= ======= ======= ========
Segment earnings before
equity in earnings of
unconsolidated entities.. $61,008 $17,864 $14,741 $12,260 $ 6,975 $112,848
Equity in earnings of
unconsolidated service
companies............... 2,535 -- -- -- -- 2,535
Equity in earnings of
unconsolidated real
estate entities......... 329 -- -- -- -- 329
------- ------- ------- ------- ------- --------
Segment earnings.......... $63,872 $17,864 $14,741 $12,260 $ 6,975 $115,712
======= ======= ======= ======= ======= ========
1997
Segment revenues.......... $62,995 $15,889 $ -- $ 9,958 $ 3,178 $ 92,020
======= ======= ======= ======= ======= ========
Segment earnings before
equity in earnings of
unconsolidated entities.. $49,123 $11,519 $ -- $ 7,721 $ 2,157 $ 70,520
Equity in earnings of
unconsolidated service
companies............... 1,969 -- -- -- -- 1,969
Equity in earnings of
unconsolidated real
estate entities......... 20 -- -- -- -- 20
------- ------- ------- ------- ------- --------
Segment earnings.......... $51,112 $11,519 $ -- $ 7,721 $ 2,157 $ 72,509
======= ======= ======= ======= ======= ========
1996
Segment revenues.......... $50,979 $ -- $ -- $ 1,376 $ 1,528 $ 53,883
======= ======= ======= ======= ======= ========
Segment earnings before
equity in earnings of
unconsolidated entities.. $39,743 $ -- $ -- $ 1,047 $ 1,066 $ 41,856
Equity in earnings of
unconsolidated service
companies............... 1,340 -- -- -- -- 1,340
------- ------- ------- ------- ------- --------
Segment earnings.......... $41,083 $ -- $ -- $ 1,047 $ 1,066 $ 43,196
======= ======= ======= ======= ======= ========
</TABLE>
- --------
(a) Represents aggregate data for operating segments below the quantitative
thresholds prescribed by SFAS 131.
F-23
<PAGE>
WEEKS REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
A summary of segment assets is detailed below (in thousands):
<TABLE>
<CAPTION>
North South Segment
Georgia Carolina Florida Tennessee Other(a) Total
-------- -------- -------- --------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
1998
Land.................... $ 77,134 $ 26,018 $ 25,634 $ 25,340 $ 15,317 $ 169,443
Buildings and
improvements........... 499,637 169,819 147,568 119,781 94,812 1,031,617
Accumulated
depreciation........... (69,623) (11,060) (5,077) (6,986) (3,637) (96,383)
-------- -------- -------- -------- -------- ----------
Operating real estate
assets............... 507,148 184,777 168,125 138,135 106,492 1,104,677
Other segment
assets(b).............. 87,892 24,343 24,977 42,742 63,753 243,707
Equity in earnings of
unconsolidated service
companies.............. 43,639 -- -- -- -- 43,639
Equity in earnings of
unconsolidated real
estate entities........ 35,204 -- -- -- -- 35,204
-------- -------- -------- -------- -------- ----------
Total segment assets.. $673,883 $209,120 $193,102 $180,877 $170,245 $1,427,227
======== ======== ======== ======== ======== ==========
Additions to real estate
assets................. $125,413 $ 46,968 $198,054 $ 64,955 $114,824 $ 550,214
======== ======== ======== ======== ======== ==========
1997
Land.................... $ 62,277 $ 20,801 $ -- $ 18,661 $ 4,457 $ 106,196
Buildings and
improvements........... 392,945 122,594 -- 82,587 29,183 627,309
Accumulated
depreciation........... (52,584) (4,721) -- (3,022) (1,221) (61,548)
-------- -------- -------- -------- -------- ----------
Operating real estate
assets............... 402,638 138,674 -- 98,226 32,419 671,957
Other segment
assets(b).............. 77,522 25,826 -- 20,549 23,539 147,436
Equity in earnings of
unconsolidated service
companies.............. 9,257 -- -- -- -- 9,257
Equity in earnings of
unconsolidated real
estate entities........ 2,525 -- -- -- -- 2,525
-------- -------- -------- -------- -------- ----------
Total segment assets.. $491,942 $164,500 $ -- $118,775 $ 55,958 $ 831,175
======== ======== ======== ======== ======== ==========
Additions to real estate
assets................. $115,780 $ 74,773 $ -- $ 43,584 $ 33,316 $ 267,453
======== ======== ======== ======== ======== ==========
1996
Land.................... $ 47,169 $ 13,562 $ -- $ 14,178 $ 2,324 $ 77,233
Buildings and
improvements........... 301,408 76,899 -- 56,919 14,776 450,002
Accumulated
depreciation........... (40,560) -- -- (379) (530) (41,469)
-------- -------- -------- -------- -------- ----------
Operating real estate
assets............... 308,017 90,461 -- 70,718 16,570 485,766
Other segment
assets(b).............. 67,683 3,290 -- 6,723 6,352 84,048
Equity in earnings of
unconsolidated service
companies.............. 7,760 -- -- -- -- 7,760
-------- -------- -------- -------- -------- ----------
Total segment assets.. $383,460 $ 93,751 $ -- $ 77,441 $ 22,922 $ 577,574
======== ======== ======== ======== ======== ==========
Additions to real estate
assets................. $ 87,786 $ 93,751 $ -- $ 77,251 $ 14,291 $ 273,079
======== ======== ======== ======== ======== ==========
</TABLE>
- --------
(a) Represents aggregate data for operating segments below the quantitative
thresholds prescribed by SFAS 131.
(b) Includes primarily development in progress, land held for development,
deferred leasing costs and tenant receivables.
F-24
<PAGE>
WEEKS REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Reconciliations of segment earnings to consolidated income before
extraordinary loss and segment assets to consolidated total assets is as
follows:
<TABLE>
<CAPTION>
1998 1997 1996
Segment Earnings ---------- -------- --------
<S> <C> <C> <C>
Segment earnings........ $ 115,712 $ 72,509 $ 43,196
Depreciation and
amortization expense... (38,348) (24,144) (13,474)
Interest expense........ (30,782) (18,833) (12,643)
Corporate general and
administrative
expense................ (3,001) (2,056) (1,762)
Interest income......... 965 1,509 492
Gain on sale of real
estate assets.......... 53 209 --
---------- -------- --------
Consolidated income
before extraordinary
loss................... $ 44,599 $ 29,194 $ 15,809
========== ======== ========
<CAPTION>
1998 1997 1996
Segment Assets ---------- -------- --------
<S> <C> <C> <C>
Segment assets.......... $1,427,227 $831,175 $577,574
Deferred financing
costs, net............. 8,455 1,594 2,401
Corporate other assets.. 11,910 19,592 11,874
---------- -------- --------
Total consolidated
assets................. $1,447,592 $852,361 $591,849
========== ======== ========
</TABLE>
13. COMMITMENTS AND CONTINGENCIES
The Operating Partnership has entered into agreements, subject to the
completion of due diligence and customary closing conditions, for the future
acquisition of land and buildings totaling approximately $45,741,000, including
land and building commitments of approximately $9,170,000 from NWI and Lichtin
and approximately $9,100,000 from Codina and affiliates. Of this total,
$32,641,000 represents committed land acquisitions and $13,100,000 represents
committed building acquisitions. Letters of credit were issued on behalf of the
Company totaling $1,125,000 in support of certain development and land
acquisition arrangements at December 31, 1998.
The Operating Partnership is subject to various legal proceedings and claims
that arise in the ordinary course of business. While the resolution of these
matters cannot be predicted with certainty, management believes that the final
outcome of such matters will not have a material adverse effect on the
Operating Partnership's financial position or results of operations.
14. SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid, net of amounts capitalized (see Note 4), totaled $22,813,000,
$17,958,000, and $11,265,000 in 1998, 1997 and 1996, respectively.
Significant noncash investing and financing activities were as follows:
1. The Operating Partnership's 1998 property acquisition, development and
investment activity included the settlement of real estate development
loans of $10,870,000, the assumption of other liabilities in excess of
other assets of $4,224,000, the assumption of indebtedness of
$91,137,000 and the issuance of Common Units valued at $55,701,000. In
addition, in 1998, restricted common stock was issued at an aggregate
value of $80,000.
F-25
<PAGE>
WEEKS REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
2. The Operating Partnership's 1997 property acquisition, development and
investment activity included the settlement of real estate loans of
$7,376,000, the assumption of indebtedness of $64,869,000, and the
issuance of Common Units valued at $31,876,000. Additionally, in 1997,
restricted common stock was issued at an aggregate value of $1,183,000.
3. The Operating Partnership's 1996 acquisitions of NWI and Lichtin
included the assumption of indebtedness of $104,628,000, and the
issuance of Common Units valued at $55,209,000.
15. FINANCIAL INSTRUMENTS
Based on interest rates and other pertinent information available to the
Operating Partnership at December 31, 1998 and 1997, the Operating Partnership
estimated that the carrying values of cash and cash equivalents, notes
receivable from the Service Companies and their subsidiaries, receivables and
other assets, and accounts payable and other liabilities approximated their
fair values due to the short-term nature of the instruments and when compared
to instruments of similar type terms and maturity.
The estimated fair value of the Operating Partnership's interest rate swap
and treasury rate guarantee hedge and borrowing arrangements (see Note 4), were
determined based on quoted market prices for similar financial instruments. The
estimated fair value of the Operating Partnership's interest rate swap
arrangements was approximately $1,277,000 and $1,055,000 less than the
Operating Partnership's carrying value at December 31, 1998 and 1997,
respectively. The estimated fair value of the Operating Partnership's treasury
rate guarantee hedge arrangement was $3,210,000 less than the Operating
Partnership's carrying value at December 31, 1997. There were no outstanding
treasury rate guarantee hedge arrangements at December 31, 1998. The estimated
fair value of the Operating Partnership's unsecured note borrowings and fixed
rate mortgage notes payable was $4,168,000 in excess of their carrying value
(adjusted for the unamortized costs of the settled treasury rate guarantee
hedge arrangement totaling $4,055,000) at December 31, 1998. The fixed rate
mortgage notes payable approximated their carrying value and no unsecured notes
were outstanding at December 31, 1997.
Under current accounting principles and as discussed in Note 2, the
difference between the fair value and carrying amount of the interest rate swap
arrangements are not currently recognized in the Operating Partnership's
consolidated financial statements. The Operating Partnership monitors the
credit quality of the counterparties to its interest rate swap arrangements and
does not anticipate nonperformance from such parties.
Disclosure about fair value of financial instruments was based on pertinent
information available to management as of December 31, 1998 and 1997. Although
management is not aware of any factors that would significantly affect the fair
value amounts, such amounts have not been comprehensively revalued for purposes
of these financial statements since December 31, 1998.
16. FINANCIAL INFORMATION OF GENERAL PARTNER
As discussed in Note 1, Weeks GP Holdings, Inc., a Georgia corporation,
("Weeks GP") is the sole general partner of the Operating Partnership and holds
a 1.3% interest in the Operating Partnership as of December 31, 1998. Weeks GP
is a wholly owned subsidiary of Weeks Corporation, a publicly traded real
estate investment trust. Under the terms of the limited partnership agreement
of the Operating Partnership, Weeks Corporation has guaranteed the performance
of Weeks GP with respect to any general partner duties and obligations arising
under the limited partnership agreement. The consolidated balance sheet of
Weeks GP detailed below includes the accounts of the Operating Partnership and
reflects Weeks GP's 1.3% partnership interest in shareholders' equity. The
98.7% limited partnership interests are
F-26
<PAGE>
WEEKS REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
reflected as interests of limited partners in the Operating Partnership in the
accompanying balance sheet. The interests of the limited partners in the
Operating Partnership includes the 71.6% limited partnership interests of Weeks
LP Holdings, Inc., also a wholly owned subsidiary of Weeks Corporation (see
Note 1). The limited partners of the Operating Partnership should note that
they do not have any ownership interest in Weeks GP.
The consolidated balance sheet of Weeks GP as of December 31, 1998, is
presented for informational purposes only and should be read in conjunction
with the accompanying notes to the consolidated financial statements of the
Operating Partnership included herein.
<TABLE>
<CAPTION>
(In thousands, except share data)
<S> <C>
Assets
Real estate assets
Land..................................... $ 169,443
Buildings and improvements............... 1,031,617
Accumulated depreciation................. (96,383)
----------
Operating real estate assets............ 1,104,677
Developments in progress................. 160,783
Land held for future development......... 42,438
----------
Net real estate assets.................. 1,307,898
Cash and cash equivalents................. 1,503
Receivables............................... 15,316
Deferred costs, net....................... 29,163
Investments in and notes receivable from
unconsolidated service companies......... 43,639
Investments in unconsolidated real estate
entities................................. 35,204
Other assets.............................. 14,869
----------
$1,447,592
==========
Liabilities and Shareholder's Equity
Debt
Mortgage notes payable................... $ 251,399
Unsecured bank borrowings................ 203,025
Unsecured notes.......................... 200,000
----------
Total debt.............................. 654,424
Accounts payable and accrued expenses..... 32,977
Other liabilities......................... 9,626
----------
Total liabilities....................... 697,027
Minority Interests in Operating
Partnership.............................. 744,303
----------
Commitments and Contingencies (Note 13)
Shareholder's equity
Common stock, $.01 par value, 1,000
shares authorized, 100 shares issued and
outstanding at December 31, 1998........ --
Additional paid-in capital............... 6,262
Retained earnings........................ --
----------
Total shareholder's equity.............. 6,262
----------
$1,447,592
==========
</TABLE>
F-27
<PAGE>
WEEKS REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
17. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Selected quarterly financial information for 1998 and 1997 was as
follows (in thousands, except per share amounts):
<TABLE>
<CAPTION>
First Second Third Fourth
Quarter Quarter Quarter Quarter
------- ------- ------- -------
<S> <C> <C> <C> <C>
1998
Revenue........................................ $32,693 $36,326 $39,087 $42,868
Income before extraordinary loss............... 10,318 10,930 11,220 12,131
Net income..................................... 10,318 10,930 11,220 11,766
Net income available to Common Unitholders..... 7,318 7,930 8,220 7,575
Net income per Common Unit:
Basic
Income before extraordinary loss, net of
preferred distributions..................... $ 0.29 $ 0.30 $ 0.31 $ 0.30
Net income................................... 0.29 0.30 0.31 0.28
Diluted
Income before extraordinary loss, net of
preferred distributions..................... 0.29 0.30 0.31 0.29
Net income................................... 0.29 0.30 0.31 0.28
1997
Revenue........................................ $19,899 $21,439 $24,279 $26,403
Income before extraordinary loss............... 5,058 6,698 7,451 9,987
Net income..................................... 5,058 6,698 7,451 9,987
Net income available to Common Unitholders..... 5,058 6,698 7,451 7,267
Net income per Common Unit:
Basic
Income before extraordinary loss, net of
preferred distributions..................... $ 0.27 $ 0.32 $ 0.33 $ 0.32
Net income................................... 0.27 0.32 0.33 0.32
Diluted
Income before extraordinary loss, net of
preferred distributions..................... 0.27 0.32 0.32 0.31
Net income................................... 0.27 0.32 0.32 0.31
</TABLE>
18. SUBSEQUENT EVENTS (UNAUDITED)
On March 1, 1999, the Company announced that it had entered into an
Agreement and Plan of Merger (the "REIT Merger Agreement") with Duke Realty
Investments, Inc., an Indiana based REIT specializing in industrial and
office building development and ownership ("Duke"), and that the Operating
Partnership had entered into an Agreement and Plan of Merger (the "OP
Merger Agreement" and, together with the REIT Merger Agreement, the "Merger
Agreements") with Duke Realty Limited Partnership, an Indiana limited
partnership of which Duke is the managing general partner ("Duke OP"). The
Merger Agreements provide for a merger of the Company with and
F-28
<PAGE>
WEEKS REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
into Duke (the "REIT Merger") and a merger of the Operating Partnership
with and into Duke OP (the "OP Merger" and, together with the REIT Merger,
the "Mergers"). At the effective time of the Mergers, Duke will change its
name to Duke-Weeks Realty Corporation.
Pursuant to the Merger Agreements: (i) each outstanding share of common
stock, par value $0.01 per share, of the Company ("Weeks Common Stock")
will be converted into the right to receive 1.38 shares of common stock,
par value $0.01 per share, of Duke ("Duke Common Stock"); (ii) each issued
and outstanding share of 8.0% Series A Preferred Stock, par value $0.01 per
share, of the Company will be converted into the right to receive one
preference share representing 1/1000 of a share of 8.0% Series F Cumulative
Redeemable Preferred Stock, par value $0.01 per share, of Duke; (iii) each
issued and outstanding share of 8.625% Series D Cumulative Redeemable
Preferred Stock, par value $0.01 per share, of the Company will be
converted into the right to receive one preference share representing
1/1000 of a share of 8.625% Series H Cumulative Redeemable Preferred Stock,
par value $0.01 per share, of Duke; (iv) each issued and outstanding Common
Unit in the Operating Partnership will be converted into 1.38 common units
of limited partnership interest in Duke OP; (v) each issued and outstanding
8.0% Series A Preferred Unit in the Operating Partnership will be converted
into 1/1000 of one 8.0% Series F Cumulative Redeemable Preferred Unit in
Duke OP; (vi) each issued and outstanding 8.0% Series C Preferred Unit in
the Operating Partnership will be converted into 1/1000 of one 8.0% Series
G Preferred Unit in Duke OP; and (vii) each issued and outstanding 8.625%
Series D Preferred Unit in the Operating Partnership will be converted into
1/1000 of one 8.625% Series H Cumulative Redeemable Preferred Unit in Duke
OP.
Holders' representing 2% of the outstanding Weeks Common Stock have
entered into voting agreements, agreeing to vote their shares in favor of
the transaction contemplated by the Merger Agreements. Holders'
representing 5% of the outstanding Duke Common Stock have entered into
voting agreements, agreeing to vote their shares in favor of the
transactions contemplated by the Merger Agreements. The requisite approvals
of the partners of Duke OP and the Operating Partnership to the
transactions have been obtained.
The consummation of the transactions contemplated by the Merger
Agreements is expected to occur in the second or third quarter of 1999 and
is subject to approval by the stockholders of Duke and the shareholders of
the Company and satisfaction of certain other customary closing conditions.
Additionally, certain Company debt holders, lenders and others will be
requested to approve certain other aspects of the Mergers. There can be no
assurance that the transactions contemplated by the Merger Agreements will
be consummated. The Company has agreed with Duke that if the REIT Merger
Agreement is terminated under certain circumstances, the Company will pay
Duke certain fees and expenses. Duke has agreed with the Company that if
the REIT Merger Agreement is terminated under certain other circumstances,
Duke will pay the Company certain fees and expenses.
F-29
<PAGE>
WEEKS REALTY, L.P. SCHEDULE III
REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1998
(In Thousands)
<TABLE>
<CAPTION>
Gross Amount at Which
Carried at Close of
Initial Costs Period
----------------- Cost Capitalized ------------------------
Market/Business Property Related Building and Subsequent to Building and Accumulated Year
Park/Property Type(1) Encumbrances Land Improvements Acquisition Land Improvements Total Depreciation Developed(2)
- --------------- -------- ------------ ---- ------------ ---------------- ---- ------------ ------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ATLANTA, GEORGIA
Northeast/I-85
Submarket
Northeast/I-85
Submarket
Gwinnett Park
1 1750 Beaver
Ruin............ S $640 $4,068 $ -- $640 $4,068 $4,708 $ 174 1997
2 4258 Commu-
nications Dr.... D (a) 8 725 508 29 1,212 1,241 678 1981
3 4261 Commu-
nications Dr.... D 254 1,446 36 254 1,482 1,736 211 1981
4 4291 Commu-
nications Dr.... D (a) 4 327 126 16 441 457 267 1981
5 1826 Doan
Way............. D (b) 18 1,167 238 18 1,405 1,423 599 1984
6 1857 Doan
Way............. D 23 6 5 23 11 34 2 1970
7 1650 Inter-
national Blvd... D (a) 69 994 94 69 1,088 1,157 487 1984
8 4245 Inter-
national Blvd... D (a) 192 2,913 3,063 192 5,976 6,168 1,484 1985
9 4250 Inter-
national Blvd... D 193 1,542 305 216 1,824 2,040 713 1986
10 4295 Inter-
national Blvd... D (a) 58 1,058 132 58 1,190 1,248 472 1984
11 4320 Inter-
national Blvd... D (a) 44 710 223 44 933 977 422 1984
12 4350 Inter-
national Blvd... D (a) 78 938 573 78 1,511 1,589 867 1982
13 4355 Inter-
national Blvd... D (d) 233 811 335 233 1,146 1,379 286 1983
14 4405-A In-
ternational
Blvd............ S 97 957 878 97 1,835 1,932 1,029 1984
15 4405-B In-
ternational
Blvd............ S 118 1,152 1,325 118 2,477 2,595 1,626 1984
16 4405-C In-
ternational
Blvd............ S 21 422 183 21 605 626 310 1984
17 1828 Meca
Way............. D (b) 16 487 598 16 1,085 1,101 681 1975
18 1858 Meca
Way............. D (a) 20 931 16 27 940 967 394 1975
19 4316 Park
Dr.............. D 262 1,685 -- 262 1,685 1,947 38 1980
20 4317 Park
Dr.............. D 671 1,414 241 671 1,655 2,326 674 1985
21 4357 Park
Dr.............. D (e) 12 865 379 12 1,244 1,256 636 1979
22 4366 Park
Dr.............. O 6 406 343 22 733 755 422 1981
23 4386 Park
Dr.............. D 17 758 7 17 765 782 325 1973
24 4436 Park
Dr.............. D 18 195 315 18 510 528 255 1968
25 4437 Park
Dr.............. D (a) 21 659 470 21 1,129 1,150 592 1978
26 4467 Park
Dr.............. D (b) 6 537 243 6 780 786 246 1978
27 4476 Park
Dr.............. D (b) 14 372 20 14 392 406 137 1977
28 4487 Park
Dr.............. D (b) 6 1,048 1,241 6 2,289 2,295 1,600 1978
29 1835 Shack-
leford Ct....... O (a) 29 2,780 611 29 3,391 3,420 919 1990
30 1854 Shack-
leford Ct....... O 52 4,085 1,586 52 5,671 5,723 2,270 1985
31 4274 Shack-
leford Rd....... D (a) 27 614 1,072 27 1,686 1,713 1,263 1974
32 4275 Shack-
leford Rd....... O (f) 8 1,173 447 12 1,616 1,628 745 1985
<CAPTION>
Market/Business Year
Park/Property Acquired(3)
- --------------- -----------
<S> <C>
ATLANTA, GEORGIA
Gwinnett Park
1 1750 Beaver
Ruin............
2 4258 Commu-
nications Dr....
3 4261 Commu-
nications Dr.... 1994
4 4291 Commu-
nications Dr....
5 1826 Doan
Way.............
6 1857 Doan
Way.............
7 1650 Inter-
national Blvd...
8 4245 Inter-
national Blvd...
9 4250 Inter-
national Blvd...
10 4295 Inter-
national Blvd...
11 4320 Inter-
national Blvd...
12 4350 Inter-
national Blvd...
13 4355 Inter-
national Blvd... 1994
14 4405-A In-
ternational
Blvd............
15 4405-B In-
ternational
Blvd............
16 4405-C In-
ternational
Blvd............
17 1828 Meca
Way.............
18 1858 Meca
Way.............
19 4316 Park
Dr.............. 1998
20 4317 Park
Dr..............
21 4357 Park
Dr..............
22 4366 Park
Dr..............
23 4386 Park
Dr..............
24 4436 Park
Dr..............
25 4437 Park
Dr..............
26 4467 Park
Dr..............
27 4476 Park
Dr..............
28 4487 Park
Dr..............
29 1835 Shack-
leford Ct.......
30 1854 Shack-
leford Ct.......
31 4274 Shack-
leford Rd.......
32 4275 Shack-
leford Rd.......
</TABLE>
S-1
<PAGE>
SCHEDULE III
<TABLE>
<CAPTION>
Gross Amount at Which
Initial Costs Carried at Close of Period
------------------- Cost Capitalized ---------------------------
Market/Business Property Related Building and Subsequent to Building and Accumulated
Park/Property Type(1) Encumbrances Land Improvements Acquisition Land Improvements Total Depreciation
- --------------- -------- ------------ ------ ------------ ---------------- ------ ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
33 4344 Shackle-
ford Rd.......... D $ 286 $ 984 $ 166 $ 286 $ 1,150 $ 1,436 $ 197
34 4355 Shackle-
ford Rd.......... D (a) 7 886 609 7 1,495 1,502 847
35 4364 Shackle-
ford Rd.......... D (a) 9 40 50 9 90 99 67
36 4366 Shackle-
ford Rd.......... D 20 420 874 26 1,288 1,314 866
37 4388 Shackle-
ford Rd.......... D (a) 33 1,181 246 43 1,417 1,460 279
38 4400 Shackle-
ford Rd.......... D 14 315 48 18 359 377 89
39 4444 Shackle-
ford Rd.......... D (a) 31 731 1,121 31 1,852 1,883 1,405
------ ------- ------- ------ ------- ------- -------
Total........... $3,635 $41,802 $18,727 $3,738 $60,426 $64,164 $24,574
------ ------- ------- ------ ------- ------- -------
<CAPTION>
Market/Business Year Year
Park/Property Developed(2) Acquired(3)
- --------------- ------------ -----------
<S> <C> <C>
33 4344 Shackle-
ford Rd.......... 1975 1994
34 4355 Shackle-
ford Rd.......... 1972
35 4364 Shackle-
ford Rd.......... 1973
36 4366 Shackle-
ford Rd.......... 1981
37 4388 Shackle-
ford Rd.......... 1981
38 4400 Shackle-
ford Rd.......... 1981
39 4444 Shackle-
ford Rd.......... 1979
Total...........
Horizon
40 90 Horizon
Dr............... D (b) $ 120 $ 659 $ 70 $ 120 $ 729 $ 849 $ 167
41 225 Horizon
Dr............... B (b) 121 1,423 794 121 2,217 2,338 954
42 250 Horizon
Dr............... B 466 6,131 -- 466 6,131 6,597 155
43 300 Horizon
Dr............... B 798 4,455 2,752 847 7,158 8,005 609
44 70
Crestridge....... D 575 2,947 -- 575 2,947 3,522 11
45 2700
Crestridge....... B 1,600 11,757 -- 1,600 11,757 13,357 76
46 2775 Horizon
Ridge Ct......... B 732 5,906 -- 732 5,906 6,638 426
47 2780 Horizon
Ridge Ct......... B 826 4,949 5 826 4,954 5,780 283
48 2800 Vista
Ridge Dr......... B 443 5,463 73 443 5,536 5,979 540
------ ------- ------- ------ ------- ------- -------
Total........... $5,681 $43,690 $ 3,694 $5,730 $47,335 $53,065 $ 3,221
------ ------- ------- ------ ------- ------- -------
Horizon
40 90 Horizon
Dr............... 1992
41 225 Horizon
Dr............... 1990
42 250 Horizon
Dr............... 1997
43 300 Horizon
Dr............... 1994
44 70
Crestridge....... 1998
45 2700
Crestridge....... 1998
46 2775 Horizon
Ridge Ct......... 1996
47 2780 Horizon
Ridge Ct......... 1997
48 2800 Vista
Ridge Dr......... 1995
Total...........
Northwoods
49 2915 Court-
yards Circle..... D $ 268 $ 1,793 $ 92 $ 268 $ 1,885 $ 2,153 $ 252
50 2925 Court-
yards Dr......... D 333 2,618 5 333 2,623 2,956 283
51 2975 Court-
yards Circle..... D 144 997 9 144 1,006 1,150 108
52 2995 Court-
yards Circle..... D 109 677 8 109 685 794 74
53 2725
Northwoods
Pkwy............. D 440 2,231 12 440 2,243 2,683 210
54 2755
Northwoods
Pkwy............. D 249 2,201 -- 249 2,201 2,450 207
55 2775
Northwoods
Pkwy............. D 322 1,976 50 322 2,026 2,348 214
56 2850
Northwoods
Pkwy............. D 562 3,961 50 562 4,011 4,573 432
57 3040
Northwoods
Pkwy............. D 298 1,510 2 298 1,512 1,810 142
58 3044
Northwoods Cir-
cle.............. D 167 730 26 167 756 923 81
59 3055
Northwoods
Pkwy............. D 213 916 34 213 950 1,163 110
60 3075
Northwoods
Pkwy............. S 374 2,750 4 374 2,754 3,128 259
61 3080
Northwoods Cir-
cle.............. O 387 2,215 37 387 2,252 2,639 249
62 3100
Northwoods
Pkwy............. S 393 2,177 33 393 2,210 2,603 212
63 3155
Northwoods
Pkwy............. S 331 1,808 335 331 2,143 2,474 213
64 3175
Northwoods
Pkwy............. S 250 1,644 108 250 1,752 2,002 160
------ ------- ------- ------ ------- ------- -------
Total........... $4,840 $30,204 $ 805 $4,840 $31,009 $35,849 $ 3,206
------ ------- ------- ------ ------- ------- -------
Northwoods
49 2915 Court-
yards Circle..... 1986 1995
50 2925 Court-
yards Dr......... 1986 1995
51 2975 Court-
yards Circle..... 1986 1995
52 2995 Court-
yards Circle..... 1986 1995
53 2725
Northwoods
Pkwy............. 1984 1996
54 2755
Northwoods
Pkwy............. 1986 1996
55 2775
Northwoods
Pkwy............. 1986 1996
56 2850
Northwoods
Pkwy............. 1988 1995
57 3040
Northwoods
Pkwy............. 1984 1996
58 3044
Northwoods Cir-
cle.............. 1984 1995
59 3055
Northwoods
Pkwy............. 1985 1996
60 3075
Northwoods
Pkwy............. 1985 1996
61 3080
Northwoods Cir-
cle.............. 1952 1996
62 3100
Northwoods
Pkwy............. 1985 1996
63 3155
Northwoods
Pkwy............. 1985 1996
64 3175
Northwoods
Pkwy............. 1985 1996
Total...........
</TABLE>
S-2
<PAGE>
SCHEDULE III
<TABLE>
<CAPTION>
Gross Amount at Which
Initial Costs Carried at Close of Period
------------------- Cost Capitalized ---------------------------
Market/Business Property Related Building and Subsequent to Building and Accumulated
Park/Property Type(1) Encumbrances Land Improvements Acquisition Land Improvements Total Depreciation
- --------------- -------- ------------ ------ ------------ ---------------- ------ ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Berkeley Lake Dis-
tribution Center
65 3130 North
Berkeley Lake.... B $ 675 $ 4,455 $ 3 $ 675 $ 4,458 $ 5,133 $ 255
66 3270 Summit
Ridge Pkwy....... B 499 3,896 -- 499 3,896 4,395 27
67 3280 Summit
Ridge Pkwy....... B 485 4,277 19 485 4,296 4,781 236
68 3290 Summit
Ridge Pkwy....... B 257 2,255 2 257 2,257 2,514 129
------ ------- ------ ------ ------- ------- ------
Total........... $1,916 $14,883 $ 24 $1,916 $14,907 $16,823 $ 647
------ ------- ------ ------ ------- ------- ------
<CAPTION>
Market/Business Year Year
Park/Property Developed(2) Acquired(3)
- --------------- ------------ -----------
<S> <C> <C>
Berkeley Lake Dis-
tribution Center
65 3130 North
Berkeley Lake.... 1996
66 3270 Summit
Ridge Pkwy....... 1998
67 3280 Summit
Ridge Pkwy....... 1997
68 3290 Summit
Ridge Pkwy....... 1997
Total...........
Gwinnett Pavilion
69 1480 Beaver
Ruin Rd.......... R $ 248 $ 982 $ 482 $ 248 $ 1,464 $ 1,712 $ 571
70 1505 Pavil-
ion Place........ D (a) 448 1,149 1,189 448 2,338 2,786 1,272
71 3883 Steve
Reynolds Blvd.... D (b) 612 3,101 104 612 3,205 3,817 791
72 3890 Steve
Reynolds Blvd.... D (b) 519 1,746 224 519 1,970 2,489 404
73 3905 Steve
Reynolds Blvd.... D 697 2,108 1 697 2,109 2,806 181
74 3950 Steve
Reynolds Blvd.... B (a) 684 1,701 29 684 1,730 2,414 343
75 4020 Steve
Reynolds Blvd.... D 417 1,868 21 417 1,889 2,306 107
76 4025 Steve
Reynolds Blvd.... D 461 2,252 14 461 2,266 2,727 274
------ ------- ------ ------ ------- ------- ------
Total........... $4,086 $14,907 $2,064 $4,086 $16,971 $21,057 $3,943
------ ------- ------ ------ ------- ------- ------
Gwinnett Pavilion
69 1480 Beaver
Ruin Rd.......... 1989
70 1505 Pavil-
ion Place........ 1988
71 3883 Steve
Reynolds Blvd.... 1990
72 3890 Steve
Reynolds Blvd.... 1991
73 3905 Steve
Reynolds Blvd.... 1995
74 3950 Steve
Reynolds Blvd.... 1992
75 4020 Steve
Reynolds Blvd.... 1997
76 4025 Steve
Reynolds Blvd.... 1994
Total...........
The Business Park
at Sugarloaf
77 2775 Pre-
miere Pkwy....... D $ 560 $ 3,519 $ -- $ 560 $ 3,519 $ 4,079 $ 21
78 6700 Sugar-
loaf Pkwy........ S 1,042 5,591 -- 1,042 5,591 6,633 32
------ ------- ------ ------ ------- ------- ------
Total........... $1,602 $ 9,110 $ -- $1,602 $ 9,110 $10,712 $ 53
------ ------- ------ ------ ------- ------- ------
The Business Park
at Sugarloaf
77 2775 Pre-
miere Pkwy....... 1997
78 6700 Sugar-
loaf Pkwy........ 1998
Total...........
Peachtree Corners
Business Center
79 5401 Buford
Hwy.............. B $ 294 $ 1,865 $ 163 $ 294 $ 2,028 $ 2,322 $ 259
80 5403 Buford
Hwy.............. B 420 2,737 13 420 2,750 3,170 303
81 5405 Buford
Hwy.............. B 217 1,546 31 217 1,577 1,794 183
82 5409 Buford
Hwy.............. B 364 2,675 25 364 2,700 3,064 296
------ ------- ------ ------ ------- ------- ------
Total........... $1,295 $ 8,823 $ 232 $1,295 $ 9,055 $10,350 $1,041
------ ------- ------ ------ ------- ------- ------
Peachtree Corners
Business Center
79 5401 Buford
Hwy.............. 1987 1995
80 5403 Buford
Hwy.............. 1987 1995
81 5405 Buford
Hwy.............. 1989 1995
82 5409 Buford
Hwy.............. 1989 1995
Total...........
Pinebrook
83 2625
Pinemeadow Ct.... B $ 813 $ 3,216 $ 8 $ 813 $ 3,224 $ 4,037 $ 468
84 2660
Pinemeadow Ct.... B 450 2,581 -- 450 2,581 3,031 173
85 2450 Satel-
lite Blvd........ B 821 3,466 -- 821 3,466 4,287 524
------ ------- ------ ------ ------- ------- ------
Total........... $2,084 $ 9,263 $ 8 $2,084 $ 9,271 $11,355 $1,165
------ ------- ------ ------ ------- ------- ------
Pinebrook
83 2625
Pinemeadow Ct.... 1994
84 2660
Pinemeadow Ct.... 1996
85 2450 Satel-
lite Blvd........ 1994 1994
Total...........
Northbrook
86 1000
Northbrook
Pkwy............. B (a) $ 363 $ 1,980 $ 876 $ 363 $ 2,856 $ 3,219 $1,401
87 675 Old
Peachtree Rd..... B 434 2,385 29 434 2,414 2,848 754
------ ------- ------ ------ ------- ------- ------
Total........... $ 797 $ 4,365 $ 905 $ 797 $ 5,270 $ 6,067 $2,155
------ ------- ------ ------ ------- ------- ------
Northbrook
86 1000
Northbrook
Pkwy............. 1986
87 675 Old
Peachtree Rd..... 1988
Total...........
</TABLE>
S-3
<PAGE>
SCHEDULE III
<TABLE>
<CAPTION>
Gross Amount at Which
Initial Costs Carried at Close of Period
------------------- Cost Capitalized ---------------------------
Market/Business Property Related Building and Subsequent to Building and Accumulated Year
Park/Property Type(1) Encumbrances Land Improvements Acquisition Land Improvements Total Depreciation Developed(2)
- ---------------- -------- ------------ ------ ------------ ---------------- ------ ------------ ------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Druid Chase
88 2801 Buford
Hwy............. O $ 794 $ 3,505 $1,966 $ 794 $ 5,471 $ 6,265 $2,026 1977
89 1190 West
Druid Hills
Dr.............. O 689 2,722 917 689 3,639 4,328 1,265 1980
90 2071 North
Druid
Hills Rd....... R 98 65 21 98 86 184 39 1968
91 6 West Druid
Hills Dr........ O 473 2,980 677 473 3,657 4,130 1,092 1968
------ ------- ------ ------ ------- ------- ------
Total........... $2,054 $ 9,272 $3,581 $2,054 $12,853 $14,907 $4,422
------ ------- ------ ------ ------- ------- ------
<CAPTION>
Market/Business Year
Park/Property Acquired(3)
- ----------------- -----------
<S> <C>
Druid Chase
88 2801 Buford
Hwy............. 1989
89 1190 West
Druid Hills
Dr.............. 1989
90 2071 North
Druid
Hills Rd.......
91 6 West Druid
Hills Dr........ 1989
Total...........
Meadowbrook
92 2450
Meadowbrook
Pkwy............ D $ 716 $ 2,419 $ 28 $ 716 $ 2,447 $ 3,163 $ 381 1989
93 2475
Meadowbrook
Pkwy............ D 529 1,567 601 529 2,168 2,697 938 1986
94 2500
Meadowbrook
Pkwy............ D (a) 411 1,103 797 411 1,900 2,311 995 1987
95 2505
Meadowbrook
Pkwy............ D 307 1,228 422 307 1,650 1,957 436 1990
------ ------- ------ ------ ------- ------- ------
Total........... $1,963 $ 6,317 $1,848 $1,963 $ 8,165 $10,128 $2,750
------ ------- ------ ------ ------- ------- ------
Meadowbrook
92 2450
Meadowbrook
Pkwy............ 1994
93 2475
Meadowbrook
Pkwy............
94 2500
Meadowbrook
Pkwy............
95 2505
Meadowbrook
Pkwy............
Total...........
Park Creek
96 2825 Breck-
inridge Blvd.... S $ 317 $ 2,366 $ 51 $ 317 $ 2,417 $ 2,734 $ 235 1986
97 2875 Breck-
inridge Blvd.... S 476 3,496 33 476 3,529 4,005 343 1986
98 2885 Breck-
inridge Blvd.... S 487 5,235 -- 487 5,235 5,722 177 1997
------ ------- ------ ------ ------- ------- ------
Total........... $1,280 $11,097 $ 84 $1,280 $11,181 $12,461 $ 755
------ ------- ------ ------ ------- ------- ------
Park Creek
96 2825 Breck-
inridge Blvd.... 1996
97 2875 Breck-
inridge Blvd.... 1996
98 2885 Breck-
inridge Blvd....
Total...........
Crestwood Pointe
99 3805 Crest-
wood Pkwy....... O $ 877 $ 8,771 $ -- $ 877 $ 8,771 $ 9,648 $ 457 1997
------ ------- ------ ------ ------- ------- ------
Total........... $ 877 $ 8,771 $ -- $ 877 $ 8,771 $ 9,648 $ 457
------ ------- ------ ------ ------- ------- ------
Crestwood Pointe
99 3805 Crest-
wood Pkwy.......
Total...........
Peachtree Cor-
ners Technology
Center
100 3170 Reps
Miller Rd....... D $ 500 $ 2,448 $ -- $ 500 $ 2,448 $ 2,948 $ 72 1998
101 3180 Reps
Miller Rd....... D 500 1,875 -- 500 1,875 2,375 36 1998
------ ------- ------ ------ ------- ------- ------
Total........... $1,000 $ 4,323 $ -- $1,000 $ 4,323 $ 5,323 $ 108
------ ------- ------ ------ ------- ------- ------
Peachtree Cor-
ners Technology
Center
100 3170 Reps
Miller Rd.......
101 3180 Reps
Miller Rd.......
Total...........
River Green
102 3450 River
Green Ct........ D $ 194 $ 892 $ 12 $ 194 $ 904 $ 1,098 $ 95 1989
103 4800 River
Green Pkwy...... D 152 1,150 14 152 1,164 1,316 122 1989
------ ------- ------ ------ ------- ------- ------
Total........... $ 346 $ 2,042 $ 26 $ 346 $ 2,068 $ 2,414 $ 217
------ ------- ------ ------ ------- ------- ------
River Green
102 3450 River
Green Ct........ 1995
103 4800 River
Green Pkwy...... 1995
Total...........
Other
Northeast/I-85-
Properties
104 1705 Belle
Meade Ct........ D $ 277 $ 953 $ 7 $ 277 $ 960 $ 1,237 $ 149 1988
105 4125 Buford
Hwy............. B 778 3,823 23 778 3,846 4,624 393 1995
106 6525-27
Jimmy Carter
Blvd............ D 509 3,131 58 509 3,189 3,698 304 1983
107 3171 McCall
Dr.............. D 112 385 21 112 406 518 63 1967
108 5300
Peachtree Indus-
trial Blvd...... R 434 1,493 -- 434 1,493 1,927 232 1966
Other
Northeast/I-85-
Properties
104 1705 Belle
Meade Ct........ 1994
105 4125 Buford
Hwy.............
106 6525-27
Jimmy Carter
Blvd............ 1996
107 3171 McCall
Dr.............. 1994
108 5300
Peachtree Indus-
trial Blvd...... 1994
</TABLE>
S-4
<PAGE>
SCHEDULE III
<TABLE>
<CAPTION>
Gross Amount at Which
Initial Costs Carried at Close of Period
------------------- Cost Capitalized ---------------------------
Market/Business Property Related Building and Subsequent to Building and Accumulated
Park/Property Type(1) Encumbrances Land Improvements Acquisition Land Improvements Total Depreciation
- ------------------ -------- ------------ ------ ------------ ---------------- ------ ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
109 5755
Peachtree Indus-
trial Blvd....... O $ 800 $ 4,020 $-- $ 800 $ 4,020 $ 4,820 $ 190
110 5765
Peachtree Indus-
trial Blvd....... D 521 3,248 13 521 3,261 3,782 146
111 5775
Peachtree Indus-
trial Blvd....... D 521 2,382 128 521 2,510 3,031 113
112 4280 North-
east Expressway.. B 534 1,838 2 534 1,840 2,374 287
--- --- ------ ------- ---- ------ ------- ------- ------
Total........... $4,486 $21,273 $252 $4,486 $21,525 $26,011 $1,877
--- --- ------ ------- ---- ------ ------- ------- ------
<CAPTION>
Market/Business Year Year
Park/Property Developed(2) Acquired(3)
- ------------------ ------------ -----------
<S> <C> <C>
109 5755
Peachtree Indus-
trial Blvd....... 1997
110 5765
Peachtree Indus-
trial Blvd....... 1997
111 5775
Peachtree Indus-
trial Blvd....... 1997
112 4280 North-
east Expressway.. 1962 1994
------------ -----------
Total...........
------------ -----------
North Central
Submarket
North Central
Submarket
Northmeadow
113 11835
Alpharetta Hwy... O $ 524 $ 1,396 $142 $ 524 $ 1,538 $ 2,062 $ 205
114 1400 Hembree
Rd............... S 545 3,092 -- 545 3,092 3,637 --
115 1100
Northmeadow
Pkwy............. S 552 3,178 179 552 3,357 3,909 405
116 1125
Northmeadow
Pkwy............. D 320 2,222 77 320 2,299 2,619 270
117 1150
Northmeadow
Pkwy............. D 464 2,963 6 464 2,969 3,433 346
118 1175
Northmeadow
Pkwy............. D 328 3,068 58 328 3,126 3,454 411
119 1225
Northmeadow
Pkwy............. S 336 3,286 47 336 3,333 3,669 397
120 1250
Northmeadow
Pkwy............. D 312 2,328 7 312 2,335 2,647 275
121 1325
Northmeadow
Pkwy............. S 472 4,491 160 472 4,651 5,123 579
122 1335
Northmeadow
Pkwy............. S 946 6,347 -- 946 6,347 7,293 212
123 1350
Northmeadow
Pkwy............. D 672 2,556 15 672 2,571 3,243 301
124 11390 Old
Roswell Rd....... S 530 3,245 -- 530 3,245 3,775 82
--- --- ------ ------- ---- ------ ------- ------- ------
Total........... $6,001 $38,172 $691 $6,001 $38,863 $44,864 $3,483
--- --- ------ ------- ---- ------ ------- ------- ------
Northmeadow
113 11835
Alpharetta Hwy... 1994
114 1400 Hembree
Rd............... 1998
115 1100
Northmeadow
Pkwy............. 1989 1995
116 1125
Northmeadow
Pkwy............. 1987 1995
117 1150
Northmeadow
Pkwy............. 1988 1995
118 1175
Northmeadow
Pkwy............. 1987 1995
119 1225
Northmeadow
Pkwy............. 1989 1995
120 1250
Northmeadow
Pkwy............. 1989 1995
121 1325
Northmeadow
Pkwy............. 1990 1995
122 1335
Northmeadow
Pkwy............. 1997
123 1350
Northmeadow
Pkwy............. 1994
124 11390 Old
Roswell Rd....... 1997
------------ -----------
Total...........
------------ -----------
Hembree Park
125 105 Hembree
Park Dr.......... D $ 288 $ 2,067 $ 77 $ 288 $ 2,144 $ 2,432 $ 267
126 150 Hembree
Park Dr.......... D 641 2,015 224 824 2,056 2,880 257
127 200 Hembree
Park Dr.......... D 160 1,978 152 160 2,130 2,290 254
128 250 Hembree
Park Dr.......... D 686 4,466 -- 686 4,466 5,152 120
129 645 Hembree
Pkwy............. D 248 1,997 159 248 2,156 2,404 276
130 655 Hembree
Pkwy............. D 248 1,997 51 248 2,048 2,296 275
131 660 Hembree
Pkwy............. D 785 4,597 -- 785 4,597 5,382 55
--- --- ------ ------- ---- ------ ------- ------- ------
Total........... $3,056 $19,117 $663 $3,239 $19,597 $22,836 $1,504
--- --- ------ ------- ---- ------ ------- ------- ------
Hembree Park
125 105 Hembree
Park Dr.......... 1988 1995
126 150 Hembree
Park Dr.......... 1985 1995
127 200 Hembree
Park Dr.......... 1985 1995
128 250 Hembree
Park Dr.......... 1996
129 645 Hembree
Pkwy............. 1986 1995
130 655 Hembree
Pkwy............. 1986 1995
131 660 Hembree
Pkwy............. 1998
------------ -----------
Total...........
------------ -----------
Hembree Crest
132 11415 Old
Roswell Rd....... B $ 648 $ 1,947 $ 51 $ 648 $ 1,998 $ 2,646 $ 255
133 11800 Wills
Rd............... D 304 1,570 109 304 1,679 1,983 245
134 11810 Wills
Rd............... D 296 2,180 2 296 2,182 2,478 255
135 11820 Wills
Rd............... D 488 3,793 75 488 3,868 4,356 463
--- --- ------ ------- ---- ------ ------- ------- ------
Total........... $1,736 $ 9,490 $237 $1,736 $ 9,727 $11,463 $1,218
--- --- ------ ------- ---- ------ ------- ------- ------
Mansell Commons
136 993 Mansell
Rd............... D $ 136 $ 919 $ 47 $ 136 $ 966 $ 1,102 $ 123
137 995 Mansell
Rd............... D 80 714 32 80 746 826 100
Hembree Crest
132 11415 Old
Roswell Rd....... 1991 1995
133 11800 Wills
Rd............... 1987 1995
134 11810 Wills
Rd............... 1987 1995
135 11820 Wills
Rd............... 1987 1995
------------ -----------
Total...........
------------ -----------
Mansell Commons
136 993 Mansell
Rd............... 1987 1995
137 995 Mansell
Rd............... 1987 1995
</TABLE>
S-5
<PAGE>
SCHEDULE III
<TABLE>
<CAPTION>
Gross Amount at Which
Initial Costs Carried at Close of Period
------------------- Cost Capitalized ---------------------------
Market/Business Property Related Building and Subsequent to Building and Accumulated
Park/Property Type(1) Encumbrances Land Improvements Acquisition Land Improvements Total Depreciation
- --------------- -------- ------------ ------ ------------ ---------------- ------ ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
138 997 Mansell
Rd............... D $ 72 $ 612 $ 7 $ 72 $ 619 $ 691 $ 75
139 999 Mansell
Rd............... D 104 816 5 104 821 925 95
140 1003 Mansell
Rd............... D 136 881 167 136 1,048 1,184 179
141 1005 Mansell
Rd............... D 72 714 26 72 740 812 97
142 1007 Mansell
Rd............... D 168 1,592 22 168 1,614 1,782 201
143 1009 Mansell
Rd............... S 264 1,620 21 264 1,641 1,905 191
144 1011 Mansell
Rd............... S 256 1,647 29 256 1,676 1,932 199
------ ------- ----- ------ ------- ------- ------
Total........... $1,288 $ 9,515 $ 356 $1,288 $ 9,871 $11,159 $1,260
------ ------- ----- ------ ------- ------- ------
<CAPTION>
Market/Business Year Year
Park/Property Developed(2) Acquired(3)
- --------------- ------------ -----------
<S> <C> <C>
138 997 Mansell
Rd............... 1987 1995
139 999 Mansell
Rd............... 1987 1995
140 1003 Mansell
Rd............... 1990 1995
141 1005 Mansell
Rd............... 1990 1995
142 1007 Mansell
Rd............... 1990 1995
143 1009 Mansell
Rd............... 1986 1995
144 1011 Mansell
Rd............... 1984 1995
Total...........
Northwinds Pointe
145 2550
Northwinds
Pkwy............. O $2,271 $12,991 $ -- $2,271 $12,991 $15,262 $ 119
146 2555
Northwinds
Pkwy............. O 1,813 5,977 -- 1,813 5,977 7,790 285
------ ------- ----- ------ ------- ------- ------
Total........... $4,084 $18,968 $ -- $4,084 $18,968 $23,052 $ 404
------ ------- ----- ------ ------- ------- ------
Northwinds Pointe
145 2550
Northwinds
Pkwy............. 1998
146 2555
Northwinds
Pkwy............. 1997
Total...........
Brookside Office
Park
147 3925
Brookside Pkwy... O $1,269 $ 9,689 $ -- $1,269 $ 9,689 $10,958 $ 97
------ ------- ----- ------ ------- ------- ------
Total........... $1,269 $ 9,689 $ -- $1,269 $ 9,689 $10,958 $ 97
------ ------- ----- ------ ------- ------- ------
Brookside Office
Park
147 3925
Brookside Pkwy... 1998
Total...........
Other North Cen-
tral Properties
148 10745
Westside Pkwy.... O $ 925 $ 3,513 $ 79 $ 925 $ 3,592 $ 4,517 $ 418
149 7250 McGinnis
Ferry Rd......... D 498 3,712 6 498 3,718 4,216 310
------ ------- ----- ------ ------- ------- ------
Total........... $1,423 $ 7,225 $ 85 $1,423 $ 7,310 $ 8,733 $ 728
------ ------- ----- ------ ------- ------- ------
Other North Cen-
tral Properties
148 10745
Westside Pkwy.... 1995
149 7250 McGinnis
Ferry Rd......... 1996
Total...........
Airport/South At-
lanta Submarket
Airport/South At-
lanta Submarket
Southridge
150 5025 Derrick
Jones Rd......... D $ 647 $ 3,598 $ -- $ 647 $ 3,598 $ 4,245 $ 178
151 5099
Southridge
Pkwy............. D 306 1,053 139 306 1,192 1,498 218
152 5136
Southridge
Pkwy............. D 480 1,653 132 480 1,785 2,265 288
153 5139
Southridge
Pkwy............. D 465 1,601 13 465 1,614 2,079 252
154 5149
Southridge
Pkwy............. D 816 3,384 43 816 3,427 4,243 345
155 5156
Southridge
Pkwy............. D 676 2,330 17 676 2,347 3,023 365
156 5159
Southridge
Pkwy............. D 454 2,989 -- 454 2,989 3,443 8
157 5169
Southridge
Pkwy............. D 431 2,468 16 431 2,484 2,915 253
158 5195
Southridge
Pkwy............. D 390 2,334 -- 390 2,334 2,724 80
------ ------- ----- ------ ------- ------- ------
Total........... $4,665 $21,410 $ 360 $4,665 $21,770 $26,435 $1,987
------ ------- ----- ------ ------- ------- ------
Southridge
150 5025 Derrick
Jones Rd......... 1997
151 5099
Southridge
Pkwy............. 1990 1994
152 5136
Southridge
Pkwy............. 1990 1994
153 5139
Southridge
Pkwy............. 1991 1994
154 5149
Southridge
Pkwy............. 1990 1994
155 5156
Southridge
Pkwy............. 1992 1994
156 5159
Southridge
Pkwy............. 1998 1998
157 5169
Southridge
Pkwy............. 1994
158 5195
Southridge
Pkwy............. 1997
Total...........
Sullivan Interna-
tional
159 703 Sullivan
Rd............... D $ 225 $ 781 $ 213 $ 225 $ 994 $ 1,219 $ 146
160 721 Sullivan
Rd............... D 242 834 43 242 877 1,119 141
Sullivan Interna-
tional
159 703 Sullivan
Rd............... 1990 1994
160 721 Sullivan
Rd............... 1991 1994
</TABLE>
S-6
<PAGE>
SCHEDULE III
<TABLE>
<CAPTION>
Gross Amount at Which
Initial Costs Carried at Close of Period
------------------- Cost Capitalized ---------------------------
Market/Business Property Related Building and Subsequent to Building and Accumulated
Park/Property Type(1) Encumbrances Land Improvements Acquisition Land Improvements Total Depreciation
- --------------- -------- ------------ ------ ------------ ---------------- ------ ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
161 727 Sullivan
Rd............... D $ 260 $ 898 $ 29 $ 260 $ 927 $ 1,187 $ 150
162 739 Sullivan
Rd............... D 226 778 13 226 791 1,017 124
------ ------- ----- ------ ------- ------- ------
Total........... $ 953 $ 3,291 $ 298 $ 953 $ 3,589 $ 4,542 $ 561
------ ------- ----- ------ ------- ------- ------
<CAPTION>
Market/Business Year Year
Park/Property Developed(2) Acquired(3)
- --------------- ------------ -----------
<S> <C> <C>
161 727 Sullivan
Rd............... 1988 1994
162 739 Sullivan
Rd............... 1989 1994
Total...........
Liberty Distribu-
tion Center
163 120 Declara-
tion Dr.......... B $ 615 $ 6,244 $ -- $ 615 $ 6,244 $ 6,859 $ 211
------ ------- ----- ------ ------- ------- ------
Total........... $ 615 $ 6,244 $ -- $ 615 $ 6,244 $ 6,859 $ 211
------ ------- ----- ------ ------- ------- ------
Liberty Distribu-
tion Center
163 120 Declara-
tion Dr.......... 1997
Total...........
Other
Airport/South At-
lanta Properties
164 105 Kings
Mill Rd.......... B (a) $ 457 $ 4,951 $ -- $ 457 $ 4,951 $ 5,408 $ 555
------ ------- ----- ------ ------- ------- ------
Total........... $ 457 $ 4,951 $ -- $ 457 $ 4,951 $ 5,408 $ 555
------ ------- ----- ------ ------- ------- ------
Other
Airport/South At-
lanta Properties
164 105 Kings
Mill Rd.......... 1994
Total...........
Northwest/I-75
Submarket
Northwest/I-75
Submarket
Town Point
165 3240 Town
Point Dr......... D $1,092 $ 4,199 $ 90 $1,092 $ 4,289 $ 5,381 $ 255
166 3330 West
Town Point Dr.... D 551 1,551 375 551 1,926 2,477 302
167 3350 West
Town Point Dr.... D 434 2,214 2 434 2,216 2,650 201
------ ------- ----- ------ ------- ------- ------
Total........... $2,077 $ 7,964 $ 467 $2,077 $ 8,431 $10,508 $ 758
------ ------- ----- ------ ------- ------- ------
Town Point
165 3240 Town
Point Dr......... 1997
166 3330 West
Town Point Dr.... 1994
167 3350 West
Town Point Dr.... 1995
Total...........
Northwest Business
Center
168 1331-37-41-51
Capital Circle... S $ 558 $ 4,443 $ 109 $ 558 $ 4,552 $ 5,110 $ 437
169 1335 Capital
Circle........... S 416 1,704 54 416 1,758 2,174 166
170 2220 North-
west Pkwy........ S (y) 483 2,969 -- 483 2,969 3,452 44
171 2225 North-
west Pkwy........ S (y) 327 2,050 -- 327 2,050 2,377 30
172 2250 North-
west Pkwy........ D 320 2,223 18 320 2,241 2,561 132
173 2252 North-
west Pkwy........ S 92 759 9 92 768 860 44
174 2254 North-
west Pkwy........ S 175 1,442 4 175 1,446 1,621 80
175 2256 North-
west Pkwy........ S 85 702 -- 85 702 787 41
176 2258 North-
west Pkwy........ S 47 388 9 47 397 444 22
177 2260 North-
west Pkwy........ S 294 2,436 67 294 2,503 2,797 150
178 2262 North-
west Pkwy........ S 161 1,333 39 161 1,372 1,533 81
179 2264 North-
west Pkwy........ D 353 2,104 9 353 2,113 2,466 144
------ ------- ----- ------ ------- ------- ------
Total........... $3,311 $22,553 $ 318 $3,311 $22,871 $26,182 $1,371
------ ------- ----- ------ ------- ------- ------
Northwest Business
Center
168 1331-37-41-51
Capital Circle... 1985 1996
169 1335 Capital
Circle........... 1985 1996
170 2220 North-
west Pkwy........ 1988 1998
171 2225 North-
west Pkwy........ 1988 1998
172 2250 North-
west Pkwy........ 1982 1997
173 2252 North-
west Pkwy........ 1982 1997
174 2254 North-
west Pkwy........ 1982 1997
175 2256 North-
west Pkwy........ 1982 1997
176 2258 North-
west Pkwy........ 1982 1997
177 2260 North-
west Pkwy........ 1982 1997
178 2262 North-
west Pkwy........ 1982 1997
179 2264 North-
west Pkwy........ 1982 1997
Total...........
Franklin Forest
180 805 Franklin
Ct............... D $ 313 $ 1,638 $ 32 $ 313 $ 1,670 $ 1,983 $ 99
181 810 Franklin
Ct............... S 255 1,414 27 255 1,441 1,696 84
182 811 Livings-
ton Ct........... S 193 1,089 2 193 1,091 1,284 66
183 821 Livings-
ton Ct........... S 145 803 44 145 847 992 49
184 825 Franklin
Ct............... D 358 2,261 -- 358 2,261 2,619 142
Franklin Forest
180 805 Franklin
Ct............... 1983 1997
181 810 Franklin
Ct............... 1983 1997
182 811 Livings-
ton Ct........... 1983 1997
183 821 Livings-
ton Ct........... 1983 1997
184 825 Franklin
Ct............... 1983 1997
</TABLE>
S-7
<PAGE>
SCHEDULE III
<TABLE>
<CAPTION>
Gross Amount at which
Initial Costs Carried at Close of Period
-------------------- Cost Capitalized -----------------------------
Market/Business Property Related Building and Subsequent to Building and Accumulated
Park/Property Type(1) Encumbrances Land Improvements Acquisition Land Improvements Total Depreciation
- --------------- -------- ------------ ------- ------------ ---------------- ------- ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
185 830 Franklin
Ct............... S $ 133 $ 740 $ -- $ 133 $ 740 $ 873 $ 41
186 835 Franklin
Ct............... D 393 2,461 41 393 2,502 2,895 148
187 840 Franklin
Ct............... D 242 1,855 2 242 1,857 2,099 103
188 841 Livings-
ton Ct........... D 275 1,855 2 275 1,857 2,132 104
------- -------- ------- ------- -------- -------- -------
Total........... $ 2,307 $ 14,116 $ 150 $ 2,307 $ 14,266 $ 16,573 $ 836
------- -------- ------- ------- -------- -------- -------
<CAPTION>
Market/Business Year Year
Park/Property Developed(2) Acquired(3)
- --------------- ------------ -----------
<S> <C> <C>
185 830 Franklin
Ct............... 1983 1997
186 835 Franklin
Ct............... 1983 1997
187 840 Franklin
Ct............... 1983 1997
188 841 Livings-
ton Ct........... 1983 1997
Total...........
Other Northwest/
I-75 Properties
189 240
Northpoint
Pkwy............. B $ 822 $ 4,912 $ 22 $ 822 $ 4,934 $ 5,756 $ 409
------- -------- ------- ------- -------- -------- -------
Total........... $ 822 $ 4,912 $ 22 $ 822 $ 4,934 $ 5,756 $ 409
------- -------- ------- ------- -------- -------- -------
Other Northwest/
I-75 Properties
189 240
Northpoint
Pkwy............. 1995
Total...........
Stone Mountain
Submarket
Stone Mountain
Submarket
Park North
190 675 Parknorth
Blvd............. D $ 611 $ 2,743 $ 108 $ 611 $ 2,851 $ 3,462 $ 389
191 696 Parknorth
Blvd............. D 532 2,748 20 532 2,768 3,300 336
192 715 Parknorth
Blvd............. D 375 2,118 8 375 2,126 2,501 259
193 735 Parknorth
Blvd............. D 709 3,155 58 709 3,213 3,922 416
194 736 Parknorth
Blvd............. S 627 1,023 67 627 1,090 1,717 145
195 780 Parknorth
Blvd............. D 328 1,847 58 328 1,905 2,233 232
196 808 Parknorth
Blvd............. S 162 608 6 162 614 776 74
197 815 Parknorth
Blvd............. S 249 983 6 249 989 1,238 121
------- -------- ------- ------- -------- -------- -------
Total........... $ 3,593 $ 15,225 $ 331 $ 3,593 $ 15,556 $ 19,149 $ 1,972
------- -------- ------- ------- -------- -------- -------
Park North
190 675 Parknorth
Blvd............. 1990 1995
191 696 Parknorth
Blvd............. 1986 1995
192 715 Parknorth
Blvd............. 1989 1995
193 735 Parknorth
Blvd............. 1989 1995
194 736 Parknorth
Blvd............. 1992 1995
195 780 Parknorth
Blvd............. 1988 1995
196 808 Parknorth
Blvd............. 1986 1995
197 815 Parknorth
Blvd............. 1989 1995
Total...........
Chattahoochee
Submarket
Chattahoochee
Submarket
Other Chattahoo-
chee Properties
198 1670 DeFoors
Ave.............. D $ 82 $ 660 $ 963 $ 82 $ 1,623 $ 1,705 $ 924
------- -------- ------- ------- -------- -------- -------
Total........... $ 82 $ 660 $ 963 $ 82 $ 1,623 $ 1,705 $ 924
------- -------- ------- ------- -------- -------- -------
Other Chattahoo-
chee Properties
198 1670 DeFoors
Ave.............. 1960 1989
Total...........
TOTAL ATLANTA,
GEORGIA........... $75,681 $453,644 $37,191 $76,016 $490,500 $566,516 $68,869
------- -------- ------- ------- -------- -------- -------
NASHVILLE,
TENNESSEE
Airpark Business
Center
199 400 Airpark
Center Dr. ...... S (i)(j) $ 419 $ 1,679 $ 45 $ 419 $ 1,724 $ 2,143 $ 155
200 500 Airpark
Center Dr. ...... D (i)(j) 923 3,697 102 923 3,799 4,722 323
201 600 Airpark
Center Dr. ...... D (i)(j) 729 2,918 73 729 2,991 3,720 270
202 700 Airpark
Center Dr. ...... D (i)(j) 801 3,286 3 801 3,289 4,090 283
203 800 Airpark
Center Dr. ...... D (k) 924 3,701 210 924 3,911 4,835 344
204 900 Airpark
Center Dr. ...... D (k) 798 3,193 1 798 3,194 3,992 277
205 1000 Airpark
Center Dr. ...... D 1,300 7,367 24 1,300 7,391 8,691 312
TOTAL ATLANTA,
GEORGIA...........
NASHVILLE,
TENNESSEE
Airpark Business
Center
199 400 Airpark
Center Dr. ...... 1989 1996
200 500 Airpark
Center Dr. ...... 1988 1996
201 600 Airpark
Center Dr. ...... 1990 1996
202 700 Airpark
Center Dr. ...... 1992 1996
203 800 Airpark
Center Dr. ...... 1995 1996
204 900 Airpark
Center Dr. ...... 1995 1996
205 1000 Airpark
Center Dr. ...... 1997 1997
</TABLE>
S-8
<PAGE>
SCHEDULE III
<TABLE>
<CAPTION>
Gross Amount at which
Initial Costs Carried at Close of Period
-------------------- Cost Capitalized -----------------------------
Market/Business Property Related Building and Subsequent to Building and Accumulated
Park/Property Type(1) Encumbrances Land Improvements Acquisition Land Improvements Total Depreciation
- --------------- -------- ------------ ------- ------------ ---------------- ------- ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
206 1400 Donelson
Pike............. S (i)(j) $ 1,276 $ 5,076 $ -- $ 1,276 $ 5,076 $ 6,352 $ 436
207 1410 Donelson
Pike............. S (i)(j) 1,411 5,696 273 1,411 5,969 7,380 548
208 1411-1449
Donelson Pike.... B 1,308 7,412 3 1,308 7,415 8,723 290
209 1413 Donelson
Pike B (l) 549 2,196 1 549 2,197 2,746 190
210 1420 Donelson
Pike............. S (i)(j) 1,331 5,346 174 1,331 5,520 6,851 516
211 5270 Harding
Place............ B (l) 535 2,143 -- 535 2,143 2,678 186
------- -------- ------ ------- -------- -------- ------
Total........... $12,304 $ 53,710 $ 909 $12,304 $ 54,619 $ 66,923 $4,130
------- -------- ------ ------- -------- -------- ------
Brentwood South
Business Center
212 7104
Crossroad
Blvd. ........... D (g) $ 1,065 $ 4,272 $ 12 $ 1,065 $ 4,284 $ 5,349 $ 382
213 7106
Crossroad
Blvd. ........... D (g) 1,065 4,266 43 1,065 4,309 5,374 375
214 7108
Crossroad
Blvd. ........... D (g) 848 3,396 37 848 3,433 4,281 297
215 119 Seaboard
Lane............. D (h) 569 2,280 -- 569 2,280 2,849 198
216 121 Seaboard
Lane............. D (f) 445 1,784 -- 445 1,784 2,229 155
217 123 Seaboard
Lane............. D (f) 489 1,956 -- 489 1,956 2,445 169
------- -------- ------ ------- -------- -------- ------
Total........... $ 4,481 $ 17,954 $ 92 $ 4,481 $ 18,046 $ 22,527 $1,576
------- -------- ------ ------- -------- -------- ------
Aspen Grove
Business Center
218 277 Mallory
Station Rd. ..... D $ 936 $ 5,324 $ 138 $ 936 $ 5,462 $ 6,398 $ 328
219 320 Premier
Ct. ............. D 1,151 6,521 -- 1,151 6,521 7,672 74
220 416 Mary
Lindsey Polk Dr.. D 943 5,343 -- 943 5,343 6,286 57
------- -------- ------ ------- -------- -------- ------
Total........... $ 3,030 $ 17,188 $ 138 $ 3,030 $ 17,326 $ 20,356 $ 459
------- -------- ------ ------- -------- -------- ------
Four-Forty
Business Center...
221 731-759
Melrose Ave...... B $ 938 $ 5,318 $ 23 $ 938 $ 5,341 $ 6,279 $ 335
222 736-782
Melrose Ave. .... D 1,521 5,447 -- 1,521 5,447 6,968 90
------- -------- ------ ------- -------- -------- ------
Total........... $ 2,459 $ 10,765 $ 23 $ 2,459 $ 10,788 $ 13,247 $ 425
------- -------- ------ ------- -------- -------- ------
Metro Center
223 545
Mainstream Dr. .. O (z) $ 847 $ 4,890 $ -- $ 847 $ 4,890 $ 5,737 $ 139
224 566
Mainstream Dr. .. B 454 2,590 -- 454 2,590 3,044 72
225 621
Mainstream Dr. .. S 428 2,434 -- 428 2,434 2,862 61
------- -------- ------ ------- -------- -------- ------
Total............ $ 1,729 $ 9,914 $ -- $ 1,729 $ 9,914 $ 11,643 $ 272
------- -------- ------ ------- -------- -------- ------
Royal Parkway
Center
226 2501-2515
Perimeter Park
Dr............... D $ 734 $ 4,992 $ -- $ 734 $ 4,992 $ 5,726 $ 68
227 500-520 Royal
Pkwy............. S 603 4,096 -- 603 4,096 4,699 56
------- -------- ------ ------- -------- -------- ------
Total........... $ 1,337 $ 9,088 $ -- $ 1,337 $ 9,088 $ 10,425 $ 124
------- -------- ------ ------- -------- -------- ------
TOTAL NASHVILLE,
TENNESSEE......... $25,340 $118,619 $1,162 $25,340 $119,781 $145,121 $6,986
------- -------- ------ ------- -------- -------- ------
<CAPTION>
Market/Business Year Year
Park/Property Developed(2) Acquired(3)
- --------------- ------------ -----------
<S> <C> <C>
206 1400 Donelson
Pike............. 1986 1996
207 1410 Donelson
Pike............. 1986 1996
208 1411-1449
Donelson Pike.... 1996 1997
209 1413 Donelson
Pike 1996 1996
210 1420 Donelson
Pike............. 1985 1996
211 5270 Harding
Place............ 1996 1996
Total...........
Brentwood South
Business Center
212 7104
Crossroad
Blvd. ........... 1987 1996
213 7106
Crossroad
Blvd. ........... 1987 1996
214 7108
Crossroad
Blvd. ........... 1989 1996
215 119 Seaboard
Lane............. 1990 1996
216 121 Seaboard
Lane............. 1990 1996
217 123 Seaboard
Lane............. 1990 1996
Total...........
Aspen Grove
Business Center
218 277 Mallory
Station Rd. ..... 1996 1997
219 320 Premier
Ct. ............. 1996 1998
220 416 Mary
Lindsey Polk Dr.. 1996 1998
Total...........
Four-Forty
Business Center...
221 731-759
Melrose Ave...... 1997 1997
222 736-782
Melrose Ave. .... 1997
Total...........
Metro Center
223 545
Mainstream Dr. .. 1983 1988
224 566
Mainstream Dr. .. 1982 1998
225 621
Mainstream Dr. .. 1984 1998
Total............
Royal Parkway
Center
226 2501-2515
Perimeter Park
Dr............... 1990 1998
227 500-520 Royal
Pkwy............. 1990 1998
Total...........
TOTAL NASHVILLE,
TENNESSEE.........
</TABLE>
S-9
<PAGE>
SCHEDULE III
<TABLE>
<CAPTION>
Gross Amount at Which
Initial Costs Carried at Close of Period
------------------- Cost Capitalized ---------------------------
Market/Business Property Related Building and Subsequent to Building and Accumulated
Park/Property Type(1) Encumbrances Land Improvements Acquisition Land Improvements Total Depreciation
- --------------- -------- ------------ ------ ------------ ---------------- ------ ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
RESEARCH TRIANGLE,
NORTH CAROLINA
Perimeter Park
West
228 1100
Perimeter Park
Dr. ............. S $ 777 $ 4,588 $132 $ 777 $ 4,720 $ 5,497 $ 245
229 1400
Perimeter Park
Dr. ............. O (n) 666 3,777 25 666 3,802 4,468 394
230 1500
Perimeter Park
Dr. ............. O 1,148 6,511 -- 1,148 6,511 7,659 670
231 1600
Perimeter Park
Dr. ............. O (r) 1,463 8,296 8 1,463 8,304 9,767 853
232 1700
Perimeter Park
Dr. ............. O 540 6,189 -- 540 6,189 6,729 134
233 1800
Perimeter Park
Dr. ............. O (r) 907 5,140 8 907 5,148 6,055 529
234 2000
Perimeter Park
Dr. ............. O 787 4,466 196 787 4,662 5,449 208
235 4025
Paramount Pkwy... O 540 10,147 -- 540 10,147 10,687 30
------ ------- ---- ------ ------- ------- -------
Total........... $6,828 $49,114 $369 $6,828 $49,483 $56,311 $ 3,063
------ ------- ---- ------ ------- ------- -------
Perimeter Park
236 100 Perimeter
Park Dr. ........ S (v) $ 477 $ 3,030 $ 51 $ 477 $ 3,081 $ 3,558 $ 161
237 200 Perimeter
Park Dr. ........ S 567 3,048 36 567 3,084 3,651 160
238 300 Perimeter
Park Dr. ........ S (v) 567 3,047 32 567 3,079 3,646 159
239 400 Perimeter
Park Dr. ........ S (w) 486 4,051 41 486 4,092 4,578 212
240 500 Perimeter
Park Dr. ........ S (v) 522 4,051 51 522 4,102 4,624 212
241 800 Perimeter
Park Dr. ........ S (x) 405 3,048 34 405 3,082 3,487 159
242 900 Perimeter
Park Dr. ........ S (m) 629 3,568 26 629 3,594 4,223 368
243 1000
Perimeter Park
Dr. ............. S (v) 405 2,667 24 405 2,691 3,096 144
------ ------- ---- ------ ------- ------- -------
Total........... $4,058 $26,510 $295 $4,058 $26,805 $30,863 $ 1,575
------ ------- ---- ------ ------- ------- -------
Enterprise
Center............
244 507 Airport
Blvd. ........... S (r) $1,327 $ 7,578 $145 $1,327 $ 7,723 $ 9,050 $ 806
245 5150 McCrim-
mon Pkwy. ....... S 1,739 11,796 -- 1,739 11,796 13,535 109
246 5151 McCrim-
mon Pkwy. ....... S 1,318 7,474 6 1,318 7,480 8,798 769
247 2600 Perime-
ter Park Dr. .... S 975 5,528 -- 975 5,528 6,503 224
------ ------- ---- ------ ------- ------- -------
Total........... $5,359 $32,376 $151 $5,359 $32,527 $37,886 $41,908
------ ------- ---- ------ ------- ------- -------
Metro Center
248 2800
Perimeter Park
Dr. ............. D (q) $ 777 $ 4,405 $141 $ 777 $ 4,546 $ 5,323 $ 479
249 2900
Perimeter Park
Dr. ............. D (q) 235 1,330 13 235 1,343 1,578 137
250 3000
Perimeter Park
Dr. ............. D (q) 482 2,733 21 482 2,754 3,236 282
------ ------- ---- ------ ------- ------- -------
Total........... $1,494 $ 8,468 $175 $1,494 $ 8,643 $10,137 $ 898
------ ------- ---- ------ ------- ------- -------
Woodlake Center
251 100
Innovation
Ave. ............ D (p) $ 633 $ 3,590 $ 14 $ 633 $ 3,604 $ 4,237 $ 370
252 101
Innovation
Ave. ............ D (u) 615 3,488 -- 615 3,488 4,103 166
------ ------- ---- ------ ------- ------- -------
Total............ $1,248 $ 7,078 $ 14 $1,248 $ 7,092 $ 8,340 $ 536
------ ------- ---- ------ ------- ------- -------
<CAPTION>
Market/Business Year Year
Park/Property Developed(2) Acquired(3)
- --------------- ------------ -----------
<S> <C> <C>
RESEARCH TRIANGLE,
NORTH CAROLINA
Perimeter Park
West
228 1100
Perimeter Park
Dr. ............. 1990 1997
229 1400
Perimeter Park
Dr. ............. 1991 1996
230 1500
Perimeter Park
Dr. ............. 1996 1996
231 1600
Perimeter Park
Dr. ............. 1994 1996
232 1700
Perimeter Park
Dr. ............. 1997
233 1800
Perimeter Park
Dr. ............. 1994 1996
234 2000
Perimeter Park
Dr. ............. 1997 1997
235 4025
Paramount Pkwy... 1998
Total...........
Perimeter Park
236 100 Perimeter
Park Dr. ........ 1987 1997
237 200 Perimeter
Park Dr. ........ 1987 1997
238 300 Perimeter
Park Dr. ........ 1986 1997
239 400 Perimeter
Park Dr. ........ 1984 1997
240 500 Perimeter
Park Dr. ........ 1985 1997
241 800 Perimeter
Park Dr. ........ 1984 1997
242 900 Perimeter
Park Dr. ........ 1982 1996
243 1000
Perimeter Park
Dr. ............. 1982 1997
Total...........
Enterprise
Center............
244 507 Airport
Blvd. ........... 1993 1996
245 5150 McCrim-
mon Pkwy. ....... 1998
246 5151 McCrim-
mon Pkwy. ....... 1995 1996
247 2600 Perime-
ter Park Dr. .... 1997 1997
Total...........
Metro Center
248 2800
Perimeter Park
Dr. ............. 1992 1996
249 2900
Perimeter Park
Dr. ............. 1990 1996
250 3000
Perimeter Park
Dr. ............. 1989 1996
Total...........
Woodlake Center
251 100
Innovation
Ave. ............ 1994 1996
252 101
Innovation
Ave. ............ 1997 1997
Total............
</TABLE>
S-10
<PAGE>
SCHEDULE III
<TABLE>
<CAPTION>
Gross Amount at Which
Initial Costs Carried at Close of Period
-------------------- Cost Capitalized -----------------------------
Market/Business Property Related Building and Subsequent to Building and Accumulated
Park/Property Type(1) Encumbrances Land Improvements Acquisition Land Improvements Total Depreciation
- --------------- -------- ------------ ------- ------------ ---------------- ------- ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Research Triangle
Industrial Center
253 409-A Airport
Blvd. ........... D (w) $ 296 $ 2,037 $ 3 $ 296 $ 2,040 $ 2,336 $ 153
254 409-B Airport
Blvd. ........... D (w) 175 1,203 9 175 1,212 1,387 90
255 409-C Airport
Blvd. ........... D (w) 185 1,304 46 185 1,350 1,535 100
------- -------- ------ ------- -------- -------- -------
Total........... $ 656 $ 4,544 $ 58 $ 656 $ 4,602 $ 5,258 $ 343
------- -------- ------ ------- -------- -------- -------
Spring Forest
Business Center
256 3100 Spring
Forest Rd. ...... S $ 616 $ 3,611 $ -- $ 616 $ 3,611 $ 4,227 $ 69
257 3200 Spring
Forest Rd. ...... S 561 4,270 -- 561 4,270 4,831 80
------- -------- ------ ------- -------- -------- -------
Total........... $ 1,177 $ 7,881 $ -- $ 1,177 $ 7,881 $ 9,058 $ 149
------- -------- ------ ------- -------- -------- -------
Interchange Plaza
258 5520 Capital
Center Dr. ...... O (o) $ 842 $ 4,772 $ 1 $ 842 $ 4,773 $ 5,615 $ 491
259 801 Jones
Franklin Rd. .... O (t) 1,351 7,660 4 1,351 7,664 9,015 788
------- -------- ------ ------- -------- -------- -------
Total........... $ 2,193 $ 12,432 $ 5 $ 2,193 $ 12,437 $ 14,630 $ 1,279
------- -------- ------ ------- -------- -------- -------
Regency Forest
260 4000 Regency
Pkwy. ........... O $ 1,230 $ 10,279 $ -- $ 1,230 $ 10,279 $ 11,509 $ 274
------- -------- ------ ------- -------- -------- -------
Total........... $ 1,230 $ 10,279 $ -- $ 1,230 $ 10,279 $ 11,509 $ 274
------- -------- ------ ------- -------- -------- -------
Other Research
Triangle
Properties
261 6501 Weston
Pkwy. ........... O (s) $ 1,775 $ 10,064 $ 6 $ 1,775 $ 10,070 $ 11,845 $ 1,035
------- -------- ------ ------- -------- -------- -------
Total........... $ 1,775 $ 10,064 $ 6 $ 1,775 $ 10,070 $ 11,845 $ 1,035
------- -------- ------ ------- -------- -------- -------
TOTAL RESEARCH
TRIANGLE, NORTH
CAROLINA........ $26,018 $168,746 $1,073 $26,018 $169,819 $195,837 $11,060
------- -------- ------ ------- -------- -------- -------
MIAMI, FLORIDA
Beacon Centre
262 1401-1419 NW
84th Ave. ....... D (cc) $ 914 $ 4,834 $ -- $ 914 $ 4,834 $ 5,748 $ 167
263 1600-1616 NW
84th Ave. ....... D (aa) 709 4,532 -- 709 4,532 5,241 155
264 1601-1629 NW
84th Ave. ....... D (cc) 1,180 6,292 -- 1,180 6,292 7,472 220
265 1701-1729 NW
84th Ave. ....... D (aa) 1,072 6,165 -- 1,072 6,165 7,237 214
266 1701-2085 NW
87th Ave. ....... D (cc) 1,965 15,763 -- 1,965 15,763 17,728 528
267 1850 NW 84th
Ave. ............ D (bb) 845 5,452 -- 845 5,452 6,297 188
268 1900-1924 NW
84th Ave. ....... S (bb) 469 3,942 -- 469 3,942 4,411 135
269 2000 NW 84th
Ave. ............ D (aa) 893 7,742 -- 893 7,742 8,635 261
270 2001-2023 NW
84th Ave. ....... D (aa) 883 5,822 -- 883 5,822 6,705 203
271 2101-2119 NW
84th Ave. ....... D (bb) 753 3,685 -- 753 3,685 4,438 132
272 2105-2153 NW
86th Ave. ....... D (cc) 853 5,457 -- 853 5,457 6,310 188
<CAPTION>
Market/Business Year Year
Park/Property Developed(2) Acquired(3)
- --------------- ------------ -----------
<S> <C> <C>
Research Triangle
Industrial Center
253 409-A Airport
Blvd. ........... 1982 1997
254 409-B Airport
Blvd. ........... 1983 1997
255 409-C Airport
Blvd. ........... 1986 1997
Total...........
Spring Forest
Business Center
256 3100 Spring
Forest Rd. ...... 1992 1998
257 3200 Spring
Forest Rd. ...... 1986 1998
Total...........
Interchange Plaza
258 5520 Capital
Center Dr. ...... 1993 1996
259 801 Jones
Franklin Rd. .... 1995 1996
Total...........
Regency Forest
260 4000 Regency
Pkwy. ........... 1997 1998
Total...........
Other Research
Triangle
Properties
261 6501 Weston
Pkwy. ........... 1996 1996
Total...........
TOTAL RESEARCH
TRIANGLE, NORTH
CAROLINA........
MIAMI, FLORIDA
Beacon Centre
262 1401-1419 NW
84th Ave. ....... 1995 1998
263 1600-1616 NW
84th Ave. ....... 1992 1998
264 1601-1629 NW
84th Ave. ....... 1993 1998
265 1701-1729 NW
84th Ave. ....... 1992 1998
266 1701-2085 NW
87th Ave. ....... 1992 1998
267 1850 NW 84th
Ave. ............ 1989 1998
268 1900-1924 NW
84th Ave. ....... 1990 1998
269 2000 NW 84th
Ave. ............ 1989 1998
270 2001-2023 NW
84th Ave. ....... 1992 1998
271 2101-2119 NW
84th Ave. ....... 1989 1998
272 2105-2153 NW
86th Ave. ....... 1993 1998
</TABLE>
S-11
<PAGE>
SCHEDULE III
<TABLE>
<CAPTION>
Gross Amount at Which
Initial Costs Carried at Close of Period
-------------------- Cost Capitalized -----------------------------
Market/Business Property Related Building and Subsequent to Building and Accumulated
Park/Property Type(1) Encumbrances Land Improvements Acquisition Land Improvements Total Depreciation
- --------------- -------- ------------ ------- ------------ ---------------- ------- ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
273 2250 NW 84th
Ave. ............. S (cc) $ 453 $ 3,668 $ -- $ 453 $ 3,668 $ 4,121 $ 117
274 8323 NW 12th
St. .............. O/R (bb) 1,498 9,078 -- 1,498 9,078 10,576 344
275 8400 NW 25th
St. .............. D 2,045 11,921 -- 2,045 11,921 13,966 401
276 8400-8416 NW
17th St. ......... D (bb) 709 4,109 -- 709 4,109 4,818 143
277 8401 NW 17th
St. .............. D (cc) 479 3,714 -- 479 3,714 4,193 118
278 8491 NW 17th
St. .............. S (bb) 469 3,523 -- 469 3,523 3,992 112
279 8500 NW 17th
St. .............. D 759 3,912 -- 759 3,912 4,671 138
280 8501 NW 17th
St. .............. D (cc) 1,965 12,232 -- 1,965 12,232 14,197 421
281 8530 NW 23rd
St. .............. D (cc) 861 5,474 -- 861 5,474 6,335 187
282 8550 NW 17th
St. .............. D 703 4,243 -- 703 4,243 4,946 146
283 8575 NW 13th
Terrace........... R 3,480 6,179 -- 3,480 6,179 9,659 235
284 8600 NW 17th
St. .............. O 723 9,829 -- 723 9,829 10,552 324
285 1695 NW 87th
Ave. (Ground
Lease)............ R (bb) 300 -- -- 300 -- 300 --
286 8695 NW 12th
St. (Ground
Lease)............ R (bb) 202 -- -- 202 -- 202 --
287 8695 NW 13th
Terrace (Ground
Lease)............ R (bb) 196 -- -- 196 -- 196 --
288 8696 NW 13th
Terrace (Ground
Lease)............ R (bb) 256 -- -- 256 -- 256 --
------- -------- ----- ------- -------- -------- ------
Total............. $25,634 $147,568 $ -- $25,634 $147,568 $173,202 $5,077
------- -------- ----- ------- -------- -------- ------
TOTAL MIAMI,
FLORIDA......... $25,634 $147,568 $ -- $25,634 $147,568 $173,202 $5,077
------- -------- ----- ------- -------- -------- ------
DALLAS/FT. WORTH,
TEXAS
Freeport North
289 600 South
Royal Ln.......... B $ 1,644 $ 9,396 $ -- $ 1,644 $ 9,396 $ 11,040 $ 213
------- -------- ----- ------- -------- -------- ------
Total............ $ 1,644 $ 9,396 $ -- $ 1,644 $ 9,396 $ 11,040 $ 213
------- -------- ----- ------- -------- -------- ------
Northgate
International
290 3101 Marquis
Dr................ B $ 790 $ 4,516 $ -- $ 790 $ 4,516 $ 5,306 $ 106
291 3102 Miller
Park Dr. South.... B 1,401 7,992 -- 1,401 7,992 9,393 190
------- -------- ----- ------- -------- -------- ------
Total............ $ 2,191 $ 12,508 $ -- $ 2,191 $ 12,508 $ 14,699 $ 296
------- -------- ----- ------- -------- -------- ------
Water's Ridge
292 1550 Lakeway
Dr. .............. B $ 1,324 $ 7,550 $ -- $ 1,324 $ 7,550 $ 8,874 $ 166
293 501 East
Corporate Dr. .... B 965 5,506 -- 965 5,506 6,471 124
------- -------- ----- ------- -------- -------- ------
Total............ $ 2,289 $ 13,056 $ -- $ 2,289 $ 13,056 $ 15,345 $ 290
------- -------- ----- ------- -------- -------- ------
TOTAL DALLAS/FT.
WORTH, TEXAS..... $ 6,124 $ 34,960 $ -- $ 6,124 $ 34,960 $ 41,084 $ 799
------- -------- ----- ------- -------- -------- ------
<CAPTION>
Market/Business Year Year
Park/Property Developed(2) Acquired(3)
- --------------- ------------ -----------
<S> <C> <C>
273 2250 NW 84th
Ave. ............. 1994 1998
274 8323 NW 12th
St. .............. 1991 1998
275 8400 NW 25th
St. .............. 1997 1998
276 8400-8416 NW
17th St. ......... 1991 1998
277 8401 NW 17th
St. .............. 1993 1998
278 8491 NW 17th
St. .............. 1990 1998
279 8500 NW 17th
St. .............. 1995 1998
280 8501 NW 17th
St. .............. 1995 1998
281 8530 NW 23rd
St. .............. 1994 1998
282 8550 NW 17th
St. .............. 1995 1998
283 8575 NW 13th
Terrace........... 1993 1998
284 8600 NW 17th
St. .............. 1993 1998
285 1695 NW 87th
Ave. (Ground
Lease)............ 1998
286 8695 NW 12th
St. (Ground
Lease)............ 1998
287 8695 NW 13th
Terrace (Ground
Lease)............ 1998
288 8696 NW 13th
Terrace (Ground
Lease)............ 1998
Total.............
TOTAL MIAMI,
FLORIDA.........
DALLAS/FT. WORTH,
TEXAS
Freeport North
289 600 South
Royal Ln.......... 1996 1998
Total............
Northgate
International
290 3101 Marquis
Dr................ 1996 1998
291 3102 Miller
Park Dr. South.... 1996 1998
Total............
Water's Ridge
292 1550 Lakeway
Dr. .............. 1997 1998
293 501 East
Corporate Dr. .... 1998 1998
Total............
TOTAL DALLAS/FT.
WORTH, TEXAS.....
</TABLE>
S-12
<PAGE>
SCHEDULE III
<TABLE>
<CAPTION>
Gross Amount at Which
Initial Costs Carried at Close of Period
------------------- Cost Capitalized ---------------------------
Market/Business Property Related Building and Subsequent to Building and Accumulated
Park/Property Type(1) Encumbrances Land Improvements Acquisition Land Improvements Total Depreciation
- --------------- -------- ------------ ------ ------------ ---------------- ------ ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ORLANDO, FLORIDA
Parksouth
Distribution
Center
294 2490
Principal Row.... B $ 493 $ 3,284 $ -- $ 493 $ 3,284 $ 3,777 $ 150
295 2491
Principal Row.... B 593 3,493 -- 593 3,493 4,086 31
296 2500
Principal Row.... B 565 3,915 56 565 3,971 4,536 256
297 9600
Parksouth Ct..... B 649 3,757 -- 649 3,757 4,406 170
------ ------- ----- ------ ------- ------- ------
Total........... $2,300 $14,449 $ 56 $2,300 $14,505 $16,805 $ 607
------ ------- ----- ------ ------- ------- ------
Airport Commerce
Center
298 8249 Parkline
Blvd............. D $ 214 $ 1,661 $ 32 $ 214 $ 1,693 $ 1,907 $ 187
299 8351 Parkline
Blvd............. D (c) 212 1,785 3 212 1,788 2,000 234
300 8500 Parkline
Blvd............. D (c) 691 3,200 157 691 3,357 4,048 488
301 8501 Parkline
Blvd............. D (c) 169 1,212 7 169 1,219 1,388 162
302 8549 Parkline
Blvd............. D (c) 149 1,231 99 149 1,330 1,479 171
303 1629 Prime
Ct............... D 281 2,129 8 281 2,137 2,418 82
304 1630 Prime
Ct............... D 323 1,650 1 323 1,651 1,974 145
------ ------- ----- ------ ------- ------- ------
Total........... $2,039 $12,868 $ 307 $2,039 $13,175 $15,214 $1,469
------ ------- ----- ------ ------- ------- ------
Technology Park
305 100
Technology
Pkwy............. S $ 641 $ 2,580 $ 234 $ 641 $ 2,814 $ 3,455 $ 200
------ ------- ----- ------ ------- ------- ------
Total........... $ 641 $ 2,580 $ 234 $ 641 $ 2,814 $ 3,455 $ 200
------ ------- ----- ------ ------- ------- ------
TOTAL ORLANDO,
FLORIDA......... $4,980 $29,897 $ 597 $4,980 $30,494 $35,474 $2,276
------ ------- ----- ------ ------- ------- ------
JACKSONVILLE,
FLORIDA
Jacksonville
International
Tradeport
306 13340
International
Pkwy............. B $ 289 $ 2,495 $ 114 $ 289 $ 2,609 $ 2,898 $ 119
307 13350
International
Pkwy............. B 289 2,217 -- 289 2,217 2,506 60
308 1350
Tradeport Dr..... B 538 3,659 -- 538 3,659 4,197 71
309 1371
Tradeport Dr..... B 544 3,672 -- 544 3,672 4,216 72
310 13291 Vantage
Way.............. B 499 3,414 -- 499 3,414 3,913 68
311 1460 Vantage
Way.............. B 497 4,248 -- 497 4,248 4,745 22
------ ------- ----- ------ ------- ------- ------
Total........... $2,656 $19,705 $ 114 $2,656 $19,819 $22,475 $ 412
------ ------- ----- ------ ------- ------- ------
Centurion Square
312 8380
Baymeadows Rd. .. O $ 469 $ 2,589 $ -- $ 469 $ 2,589 $ 3,058 $ 66
313 8382
Baymeadows Rd. .. O 185 1,002 -- 185 1,002 1,187 25
314 8384
Baymeadows Rd. .. O 205 1,107 -- 205 1,107 1,312 28
315 8386
Baymeadows Rd. .. O 178 962 -- 178 962 1,140 24
------ ------- ----- ------ ------- ------- ------
Total........... $1,037 $ 5,660 $ -- $1,037 $ 5,660 $ 6,697 $ 143
------ ------- ----- ------ ------- ------- ------
TOTAL
JACKSONVILLE,
FLORIDA......... $3,693 $25,365 $ 114 $3,693 $25,479 $29,172 $ 555
------ ------- ----- ------ ------- ------- ------
<CAPTION>
Market/Business Year Year
Park/Property Developed(2) Acquired(3)
- --------------- ------------ -----------
<S> <C> <C>
ORLANDO, FLORIDA
Parksouth
Distribution
Center
294 2490
Principal Row.... 1997
295 2491
Principal Row.... 1998
296 2500
Principal Row.... 1996
297 9600
Parksouth Ct..... 1997
Total...........
Airport Commerce
Center
298 8249 Parkline
Blvd............. 1996
299 8351 Parkline
Blvd............. 1994 1995
300 8500 Parkline
Blvd............. 1986 1995
301 8501 Parkline
Blvd............. 1991 1995
302 8549 Parkline
Blvd............. 1992 1995
303 1629 Prime
Ct............... 1997
304 1630 Prime
Ct............... 1996
Total...........
Technology Park
305 100
Technology
Pkwy............. 1986 1997
Total...........
TOTAL ORLANDO,
FLORIDA.........
JACKSONVILLE,
FLORIDA
Jacksonville
International
Tradeport
306 13340
International
Pkwy............. 1997 1997
307 13350
International
Pkwy............. 1998 1997
308 1350
Tradeport Dr..... 1989 1998
309 1371
Tradeport Dr..... 1995 1998
310 13291 Vantage
Way.............. 1995 1998
311 1460 Vantage
Way.............. 1998
Total...........
Centurion Square
312 8380
Baymeadows Rd. .. 1983 1998
313 8382
Baymeadows Rd. .. 1983 1998
314 8384
Baymeadows Rd. .. 1983 1998
315 8386
Baymeadows Rd. .. 1983 1998
Total...........
TOTAL
JACKSONVILLE,
FLORIDA.........
</TABLE>
S-13
<PAGE>
SCHEDULE III
<TABLE>
<CAPTION>
Gross Amount at Which
Initial Costs Carried at Close of Period
--------------------- Cost Capitalized --------------------------------
Market/Business Property Related Building and Subsequent to Building and
Park/Property Type(1) Encumbrances Land Improvements Acquisition Land Improvements Total
- --------------- -------- ------------ -------- ------------ ---------------- -------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
TAMPA, FLORIDA
Fairfield
Distribution
Center
316 4720 Oak Fair
Blvd. ........... B $ 520 $ 3,879 $ -- $ 520 $ 3,879 $ 4,399
-------- -------- ------- -------- ---------- ----------
Total........... $ 520 $ 3,879 $ -- $ 520 $ 3,879 $ 4,399
-------- -------- ------- -------- ---------- ----------
TOTAL TAMPA,
FLORIDA......... $ 520 $ 3,879 $ -- $ 520 $ 3,879 $ 4,399
-------- -------- ------- -------- ---------- ----------
SPARTANBURG, SOUTH
CAROLINA
Hillside
317 170 Parkway
West............. B $ 223 $ 2,539 $ 5 $ 223 $ 2,544 $ 2,767
318 190 Parkway
West............. B 276 2,350 -- 276 2,350 2,626
319 285 Parkway
East............. B 619 4,243 -- 619 4,243 4,862
-------- -------- ------- -------- ---------- ----------
Total........... $ 1,118 $ 9,132 $ 5 $ 1,118 $ 9,137 $ 10,255
-------- -------- ------- -------- ---------- ----------
TOTAL
SPARTANBURG,
SOUTH CAROLINA.. $ 1,118 $ 9,132 $ 5 $ 1,118 $ 9,137 $ 10,255
-------- -------- ------- -------- ---------- ----------
LAND HELD FOR
FUTURE
DEVELOPMENT....... 2,310 $ 39,346 $ -- $ 3,092 $ 42,438 $ -- $ 42,438
------- -------- -------- ------- -------- ---------- ----------
PROPERTY TOTALS... 247,731(dd) $208,454 $991,810 $43,234 $211,881 $1,031,617 $1,243,498(ee)(ff)
======= ======== ======== ======= ======== ========== ==========
<CAPTION>
Market/Business Accumulated Year Year
Park/Property Depreciation Developed(2) Acquired(3)
- --------------- ------------ ------------ -----------
<S> <C> <C> <C>
TAMPA, FLORIDA
Fairfield
Distribution
Center
316 4720 Oak Fair
Blvd. ........... $ 7 1998
------------
Total........... $ 7
------------
TOTAL TAMPA,
FLORIDA......... $ 7
------------
SPARTANBURG, SOUTH
CAROLINA
Hillside
317 170 Parkway
West............. $ 171 1995
318 190 Parkway
West............. 123 1997
319 285 Parkway
East............. 460 1994
------------
Total........... $ 754
------------
TOTAL
SPARTANBURG,
SOUTH CAROLINA.. $ 754
------------
LAND HELD FOR
FUTURE
DEVELOPMENT....... $ --
------------
PROPERTY TOTALS... $96,383
============
</TABLE>
- ----
Amounts in footnotes are in whole dollars.
(1) D = business distribution; B = bulk warehouse; S = business service; O =
suburban office; R = retail.
(2) The year of development means the year in which shell construction was
completed.
(3) For properties acquired by the Operating Partnership, including properties
previously developed and sold by the Operating Partnership, the year of
acquisition means the year in which an ownership interest in the property
was acquired or is expected to be acquired, unless otherwise noted.
(a) These properties are collectively encumbered by a mortgage of $38,000,000.
(b) These properties are collectively encumbered by a mortgage of $10,300,000.
(c) These properties are collectively encumbered by a mortgage of $5,200,000.
(d) These properties are collectively encumbered by a mortgage of $1,710,000.
(e) These properties are collectively encumbered by a mortgage of $1,191,000.
(f) These properties are collectively encumbered by a mortgage of $611,000.
(g) These properties are collectively encumbered by a mortgage of $6,891,000.
(h) These properties are collectively encumbered by a mortgage of $2,130,000.
(i) These properties are collectively encumbered by a mortgage of $11,730,000.
(j) These properties are collectively encumbered by a mortgage of $1,884,000.
(k) These properties are collectively encumbered by a mortgage of $8,568,000.
(l) These properties are collectively encumbered by a mortgage of $6,720,000.
(m) These properties are collectively encumbered by a mortgage of $2,828,000.
(n) These properties are collectively encumbered by a mortgage of $2,639,000.
S-14
<PAGE>
SCHEDULE III
(o) These properties are collectively encumbered by a mortgage of $2,855,000.
(p) These properties are collectively encumbered by a mortgage of $2,327,000.
(q) These properties are collectively encumbered by a mortgage of $6,547,000.
(r) These properties are collectively encumbered by a mortgage of $15,569,000.
(s) These properties are collectively encumbered by a mortgage of $7,440,000.
(t) These properties are collectively encumbered by a mortgage of $5,608,000.
(u) These properties are collectively encumbered by a mortgage of $3,512,000.
(v) These properties are collectively encumbered by a mortgage of $12,691,000.
(w) These properties are collectively encumbered by a mortgage of $4,073,000.
(x) These properties are collectively encumbered by a mortgage of $3,012,000.
(y) These properties are collectively encumbered by a mortgage of $3,255,000.
(z) These properties are collectively encumbered by a mortgage of $2,894,000.
(aa) These properties are collectively encumbered by a mortgage of $15,152,000.
(bb) These properties are collectively encumbered by a mortgage of $21,463,000.
(cc) These properties are collectively encumbered by a mortgage of $38,621,000.
(dd) Total related encumbrances include all mortgage notes payable in the
accompanying financial statements, except a mortgage of $3,668,000 which
is secured by the property at 1950 Vaughn Road which underlies a direct
financing lease discussed in note 2 to the consolidated financial
statements.
(ee) The aggregate cost for federal income tax purposes was approximately
$1,088,000,000.
(ff) Excludes developments in progress of $160,783,000.
S-15
<PAGE>
SCHEDULE III
WEEKS REALTY, L.P.
REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1998
Depreciation of the Operating Partnership's real estate assets is calculated
over the following estimated useful lives on a straight-line basis:
. Buildings--35 years
. Tenant improvements--life of the lease
A summary of activity for real estate assets and accumulated depreciation
for the years ended December 31, 1998, 1997 and 1996, were as follows (in
thousands):
<TABLE>
<CAPTION>
1998 1997 1996
---------- -------- --------
<S> <C> <C> <C>
Real Estate Assets
Balance, beginning of period.................... $ 856,500 $592,841 $319,763
Additions....................................... 262,215 137,566 71,418
Building acquisitions(a)........................ 287,998 129,884 201,660
Sales of property............................... (2,373) (2,456) --
Property retirements............................ (59) (1,335) --
---------- -------- --------
Balance, end of period.......................... $1,404,281 $856,500 $592,841
========== ======== ========
Accumulated Depreciation
Balance, beginning of period.................... $ 61,548 $ 41,469 $ 29,889
Depreciation expense............................ 34,916 21,586 11,580
Sales of property............................... (53) (182) --
Property retirements............................ (28) (1,325) --
---------- -------- --------
Balance, end of period.......................... $ 96,383 $ 61,548 $ 41,469
========== ======== ========
</TABLE>
- --------
(a) See Note 14 to the Operating Partnership's consolidated financial
statements, included herein on page F-25, for a summary of certain noncash
consideration utilized in the Operating Partnership's real estate
acquisitions.
S-16
<PAGE>
Exhibit 4.10
NINTH AMENDMENT
TO THE
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
WEEKS REALTY, L.P.
THIS NINTH AMENDMENT TO THE SECOND AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF WEEKS REALTY, L.P. (the "Amendment") is entered into as
of the 22nd day of January, 1998, by and among WEEKS GP HOLDINGS, INC., a
Georgia corporation (the "General Partner"), WEEKS CORPORATION, a Georgia
corporation (the "Company"), and PCTC ASSOCIATES, LLC, a Georgia limited
liability company (the "Contributor").
RECITALS
--------
Weeks Realty, L.P. (the "Partnership") is a Georgia limited partnership.
The General Partner is the sole general partner of the Partnership and is a
wholly owned subsidiary of the Company. The partnership agreement of the
Partnership is that certain Second Amended and Restated Agreement of Limited
Partnership of Weeks Realty, L.P., dated as of October 30, 1996, as amended by
the First Amendment to the Partnership Agreement dated November 1, 1996, the
Second Amendment to the Partnership Agreement dated December 31, 1996, the Third
Amendment to the Partnership Agreement dated January 31, 1997, the Fourth
Amendment to the Partnership Agreement dated August 1, 1997, the Fifth Amendment
to the Partnership Agreement dated October 7, 1997, the Sixth Amendment to the
Partnership Agreement dated October 27, 1997, the Seventh Amendment to the
Partnership Agreement dated as of December 30, 1997 and effective as of August
1, 1997, and the Eighth Amendment to the Partnership Agreement dated January 9,
1998 (the "Partnership Agreement"). Capitalized terms used herein without
definition shall have the meanings ascribed to them in the Partnership
Agreement.
<PAGE>
Pursuant to the agreements and instruments listed or referred to on Exhibit
A hereto (the ("Transaction Documents"), and the transactions effected by the
Transaction Documents, effective as of the date hereof the Contributor has
contributed, directly or indirectly, certain properties to the capital of the
Partnership.
Pursuant to the Partnership Agreement (including, without limitation,
Section 9.3 and Section 15.7(b)(ii) thereof), the General Partner is authorized
(without the consent of any Limited Partner) to admit additional Limited
Partners to the Partnership for such Capital Contributions as are determined by
the General Partner to be appropriate, and to amend the Partnership Agreement to
reflect such admissions.
The General Partner wishes to amend the Partnership Agreement as set forth
herein to reflect the admission of the Contributor as a Limited Partner of the
Partnership, and the Contributor wishes to enter into this Amendment to
memorialize their agreement as to certain matters relating to their becoming
Limited Partners of the Partnership.
AGREEMENT
---------
In consideration of the circumstances referred to in the Recitals, the
consummation of the transactions effected pursuant to the Transaction Documents,
the mutual covenants and agreements contained herein, and other good and
valuable consideration, the receipt, adequacy and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Admission. The Contributor hereby is admitted to the Partnership as a
---------
Limited Partner, effective as of the date hereof, and the Contributor hereby
agrees to be bound by the Partnership Agreement, including, but not limited to,
the transfer restrictions contained in Article IX thereof.
-2-
<PAGE>
2. Capital Contributions. The Contributor is agreed to have made, as of
---------------------
the date hereof, the Capital Contributions set forth on Exhibit B hereto. The
agreed to gross fair market values of any property other than money contributed
by the Contributor, which shall be such property's initial Gross Asset Value,
are shown on Exhibit B.
3. Initial Partnership Units; Rights.
---------------------------------
(1) The Partnership Units attributable to the Partnership Interests of
the Contributor, effective upon its admission as a Limited Partner at the
date hereof, are as set forth on Exhibit B hereto, and the Partnership
Agreement is hereby amended to reflect the Contributor having such
Partnership Units.
(2) The Partnership does hereby grant to the Contributor, and the
Contributor does hereby accept, the right, but not the obligation (herein
such rights being sometimes referred to as the "Rights"), to require the
Partnership to redeem all or a portion of the Partnership Units issued to
it pursuant to the Transaction Documents, on the terms and subject to the
conditions and restrictions contained in Exhibit D hereto. The Rights are
governed solely by this Amendment and Exhibit D hereto, and the Contributor
shall not have any rights with respect to the "Rights" provided for in
Section 11.1 and Exhibit B-1 to the Partnership Agreement. The Rights
granted hereunder may be exercised by the Contributor, on the terms and
subject to the conditions and restrictions contained in Exhibit D hereto,
upon delivery to the Partnership of a Conversion Exercise Notice, in the
form of Schedule 1 attached to Exhibit D, which notice shall specify the
Partnership Units with respect to which the Rights are being exercised.
Once delivered, the Conversion Exercise Notice shall be irrevocable,
subject to compliance by the General Partner and the Partnership with the
terms of the Rights.
4. Restated Percentage Interests. After giving effect to the admission
-----------------------------
of the Contributor as a Limited Partner at the date hereof, the Percentage
Interests of all of the Partners have been
-3-
<PAGE>
revised and are as reflected on Exhibit C hereto, and the Partnership Agreement
is hereby amended accordingly.
5. [Intentionally omitted.]
6. Adjustments to Partnership Units. The parties acknowledge that the
--------------------------------
Transaction Documents provide for the issuance of additional Partnership Units
to the Contributors, and accordingly the Contributors' final Partnership
Interests and Units, and the resulting restated Percentage Interests of all of
the Partners, following such issuance cannot be determined on the date hereof.
At the time of issuance and final determination provided for in the Transaction
Documents, the General Partner shall supplement this Amendment by executing and
attaching hereto supplements to Exhibits B and C (which shall be captioned
"Exhibit B-1," "Exhibit C-1," and so on and shall identify the Capital
Contribution to which it relates). Such supplements shall be in accordance with
the terms of the Transaction Documents. The Partnership Agreement shall be
deemed to be amended as reflected in each such supplement to this Amendment.
7. Proration of Distributions. Notwithstanding any contrary provision of
--------------------------
the Partnership Agreement, including, without limitation, Section 6.2 thereof,
the Contributor agrees that the distribution of Net Operating Cash Flow made for
the calendar quarter in which the Partnership Units are issued, by reason of the
Capital Contribution made pursuant to the Transaction Documents, shall be equal
to the amount of Net Operating Cash Flow otherwise distributable with respect to
such Partnership Units under the terms of the Partnership Agreement, multiplied
by a fraction, the numerator of which is the number of calendar days beginning
on the date of issuance of the Partnership Units and ending on the last day of
such calendar quarter and the denominator of which is the total number of days
in the calendar quarter in which the Partnership Units are issued.
-4-
<PAGE>
8. Representations and Warranties.
------------------------------
(1) Contributor's Representations. The Contributor hereby reaffirms
-----------------------------
and makes to each of the Partnership and the General Partner those
representations and warranties contained in Sections 2 and 3 of the
Contribution Agreement identified in Exhibit A attached hereto. In
---------
addition, the Contributor hereby represents and warrants to the Partnership
and the General Partner that (i) the Contributor is acquiring the
Partnership Units for the Contributor's own account and not with a view to,
or for sale in connection with, the "distribution," as such term is used in
Section 2(11) of the Securities Act of 1933, as amended (the "Securities
Act"), of any of the Partnership Units in violation of the Securities Act;
(ii) each of the Managers of the Contributor is an "accredited investor,"
as that term is defined in Rule 501(a) of Regulation D promulgated under
the Securities Act; (iii) the Contributor understands that the Partnership
Units have not been registered under the Securities Act by reason of a
specific exemption from the registration provisions of the Securities Act
which depends upon, among other things, the nature of the investment intent
and the accuracy of the Contributor's representations as expressed herein;
(iv) the Contributor has had an opportunity to discuss the Partnership's
business, management and financial affairs with the Partnership's
management and the opportunity to review the Partnership's financial
records; (v) the Contributor understands and acknowledges that no public
market now exists for any of the Partnership Units and that there can be no
assurance that a public market will ever exist for the Partnership Units;
and (vi) the Contributor has such knowledge and experience in financial and
business matters, or has been adequately advised by its financial
representatives, that the Contributor is capable of evaluating the merits
and risks of the purchase of the Partnership Units pursuant to this
Amendment and of protecting the Contributor's interests in connection
herewith.
(2) No Liens. The Contributor represents and warrants to the
--------
Partnership and the General Partner that at the date hereof none of the
Partnership Units issued or issuable to the Contributor pursuant to the
Transaction Documents, and none of the shares of Common
-5-
<PAGE>
Stock that may be acquired by the Contributor upon exercise of Rights, is
subject to any Lien, other than the security interest created by paragraph
11 hereof.
(3) Definition. All of the representations, warranties, covenants and
----------
agreements of the Contributor referred to in this paragraph 8 are referred
to collectively as the "Representations and Warranties."
(4) General Partner Representations. The General Partner represents
-------------------------------
and warrants to the Contributor as follows:
(i) Organization. The General Partner is duly incorporated,
------------
validly existing and in good standing under the laws of the State of
Georgia.
(ii) Due Authorization; Binding Agreement. The execution,
------------------------------------
delivery and performance of this Amendment by the General Partner have
been duly and validly authorized by all necessary action of the
General Partner and the Partnership. This Amendment has been duly
executed and delivered by the General Partner and constitutes a legal,
valid and binding obligation of the General Partner and the
Partnership, enforceable against the General Partner and the
Partnership in accordance with the terms hereof.
(iii) Consents and Approvals. No consent, waiver, approval or
----------------------
authorization of, or filing, registration or qualification with, or
notice to, any governmental unit or any other Person is required to be
made, obtained or given by the General Partner in connection with the
execution, delivery and performance of this Amendment, other than
consents, waivers, approvals or authorizations that have been obtained
prior to the date hereof.
(iv) Partnership Units. The Partnership Units issued pursuant
-----------------
to the Transaction Documents are duly authorized and, when issued in
accordance with the
-6-
<PAGE>
Transaction Documents, will be duly issued, fully paid and
nonassessable and will be unencumbered except for the security
interest created by paragraph 11 hereof.
9. Survival of Representations and Warranties. All of the
------------------------------------------
Representations and Warranties shall survive the consummation of the
transactions contemplated by the Transaction Documents; provided, however, that
no claim for a breach of any Representation or Warranty may be maintained by the
Partnership, the Company or the General Partner unless the Partnership, the
Company or the General Partner shall have delivered a written notice ("Notice of
Breach") specifying the details of such claimed breach to the Contributor on or
before the first anniversary of this Amendment (the "Survival Period").
10. Indemnification.
---------------
(1) The Contributor indemnifies and holds harmless the Partnership,
the Company and the General Partner against and from all liabilities,
demands, claims, actions or causes of action, assessments, losses, fines,
penalties, costs, damages and expenses (including, without limitation,
reasonable attorneys' and accountants' fees and expenses actually incurred)
sustained or incurred by the Partnership, the Company or the General
Partner as a result of or arising out of any inaccuracy in or breach of a
Representation or Warranty.
(2) The Partnership, the Company and the General Partner shall not be
entitled to indemnification hereunder unless a Notice of Breach has been
delivered by the Partnership, the Company or the General Partner to the
Contributor.
(3) If a claim for indemnification is asserted by the Partnership, the
Company or the General Partner against the Contributor, the Contributor
shall have the right, at its own expense, to participate in the defense of
any claim, action or proceeding asserted against the Partnership, the
Company or the General Partner that resulted in the claim for
-7-
<PAGE>
indemnification, and if such right is exercised, the parties shall
cooperate in the defense of such action or proceeding.
(4) Indemnification of the Partnership, the Company and the General
Partner pursuant to this paragraph 10 shall be the exclusive remedy of the
Partnership, the Company and the General Partner for any breach of any
Representation or Warranty contained in this Amendment. Nothing contained
herein shall limit any remedy the Partnership (or any affiliate of the
Partnership including, without limitation, any affiliate of the Partnership
as determined with respect to the voting or economic control held by or in
the Partnership) may have under the Transaction Documents, including,
without limitation, the remedy of specific performance for any failure by
the Contributor to contribute a property or otherwise limit any remedy the
Partnership, the Company or the General Partner may have for any commission
of fraud made by the Contributor.
11. Security and Remedies.
---------------------
(1) The Contributor hereby grants to the Partnership a lien upon and a
continuing security interest in the Partnership Units issued to it pursuant
to the Transaction Documents and the shares of Common Stock acquired by it
upon exercise of Rights with respect to such Partnership Units (the
"Collateral"), which shall be security for the indemnification obligations
of the Contributor under paragraph 10 hereof. Except as otherwise provided
in this Amendment, the indemnification obligations of the Contributor
hereunder with respect to breaches of Representations and Warranties shall
be payable out of the Contributor's entire Collateral; provided, however,
that the Contributor may satisfy all or any part of such indemnification
obligation in cash if the Contributor so elects. Any Transfer by the
Contributor of its Collateral shall be subject to the lien and security
interest granted hereby.
(2) In the event the General Partner asserts that the Contributor has
an indemnification obligation to the Partnership, the Company or the
General Partner under
-8-
<PAGE>
paragraph 10 hereof, the General Partner shall deliver written notice (the
"Indemnification Notice") to the Contributor describing in reasonable
detail the circumstances giving rise to such obligation and the amount
thereof. If, within thirty (30) days after the receipt of an
Indemnification Notice, the Contributor delivers written notice to the
General Partner indicating that the Contributor disputes the circumstances
giving rise to or the amount of such claimed indemnification obligation,
the General Partner may submit such matter for binding arbitration in
accordance with the provisions of Article XIV of the Partnership Agreement
by delivering a Demand Notice to the Contributor pursuant to such Article
XIV. If, after receiving timely notice of a dispute hereunder from the
Contributor, the General Partner fails to so submit the matter for
arbitration within twenty (20) days after receipt of such notice from the
Contributor, then the Contributor shall be relieved of the claimed
indemnification obligation described in the Indemnification Notice. In the
event the Contributor (i) receives an Indemnification Notice and fails to
timely deliver notice to the General Partner of their dispute as to the
indemnification obligation and fails to make payment within thirty (30)
days after delivery of an Indemnification Notice or (ii) has an
indemnification obligation to the Partnership or the General Partner under
paragraph 10 hereof as determined pursuant to Article XIV of the
Partnership Agreement, and does not satisfy such obligation within ten (10)
days after the decision rendered in the arbitration, then, in either event,
the Partnership shall have any and all remedies of a secured creditor under
the Uniform Commercial Code, and, in addition thereto, at the election of
the Partnership, the Partnership shall, to the extent permitted by law, be
deemed, without the payment of any further consideration or the taking of
any further action required by the Contributor, to have acquired from the
Contributor such portion of the Collateral as shall be equal in value
(based, in the case of Partnership Units, on the Current Per Share Market
Price as computed as of the date immediately preceding such deemed
acquisition of the number of shares of Common Stock for which such
Partnership Units could be redeemed if the General Partner assumed the
redemption obligation and elected to pay the Redemption Price (as defined
in Exhibit D) in shares of Common Stock (assuming the ownership limits in
the Articles of Incorporation would not prohibit the issuance of any such
shares of Common Stock to the Contributor), and, in the case of shares of
Common Stock, on the Current Per
-9-
<PAGE>
Share Common Stock Price computed as of the date immediately preceding such
deemed acquisition) to the amount recoverable from the Contributor under
paragraph 10 hereof. In the event the Partnership shall have acquired from
the Contributor any Collateral pursuant to this paragraph 11, the General
Partner shall deliver written notice to the Contributor within ten (10)
days thereafter identifying the specific Collateral acquired and, if such
Collateral consists of Partnership Units, the Percentage Interests of the
Contributor following such acquisition. Unless and until the Partnership
shall have acquired from the Contributor any Collateral pursuant to this
paragraph 11, the Contributor shall retain all rights with respect to the
Collateral not expressly limited herein or in the Partnership Agreement,
including, without limitation, rights to distributions provided for in the
Partnership Agreement and rights to dividends on shares of Common Stock.
The Contributor hereby agrees to take any and all actions and to execute
and deliver any and all documents or instruments necessary to perfect the
security interest created by this Amendment, including delivering the
certificates representing the Partnership Units or shares of Common Stock
to the General Partner.
(3) On the first day immediately following the expiration of the
Survival Period as defined in paragraph 9 hereof (or, if a Notice of Breach
has been delivered to the Contributor prior to such date, then on the first
day immediately following the resolution of such Notice of Breach) the
Contributor will be relieved of the restrictions on transferability
provided for by this Amendment (except that the transfer restrictions
contained in the Partnership Agreement shall continue) and the security
interest in the Collateral shall terminate without further action, and the
Partnership, at the request of the Contributor, shall promptly execute and
deliver any document or instrument reasonably requested by the Contributor
to evidence such termination.
12. Recourse. Notwithstanding anything contained in this Amendment or in
--------
the Partnership Agreement to the contrary, the recourse of the General Partner,
the Company or the Partnership under paragraph 10 hereof with respect to
breaches of Representations and Warranties of the Contributor shall not be
limited to the Collateral.
-10-
<PAGE>
13. Restriction on Transfer. In connection with the security interest
-----------------------
granted by the Contributor under paragraph 11 hereof, the Contributor agrees
that any shares of Common Stock and any portion of the Contributor's Partnership
Interests included in the Collateral shall not be Transferred without the
consent of the General Partner; provided, however, that the Contributor may
Transfer all or any portion of such shares of Common Stock or Partnership
Interests to an Affiliate of such person (so long as such Affiliate remains an
Affiliate of such person), subject to the prior security interest granted in
paragraph 11 hereof and to the restrictions contained in Article IX of the
Partnership Agreement. Upon exercise of the Rights with respect to any
Partnership Units included in the Collateral, the Partnership, in perfection of
the security interest herein granted, shall retain the certificate(s)
representing the portion of the Common Stock issued upon such exercise that is
included in such Collateral. If any portion of the Partnership Interests of the
Contributor included in the Collateral is represented by certificates, the
Partnership shall retain such certificates in perfection of the security
interest herein granted. On the first day immediately following the expiration
of the Survival Period as defined in paragraph 9 hereof (or, if a Notice of
Breach has been delivered to the Contributor prior to such date, then on the
first day immediately following the resolution of such Notice of Breach) the
Contributor will be relieved of the restrictions on transferability provided for
by this paragraph 13 without further action, and the Partnership, at the request
of the Contributor, shall promptly execute and deliver any document or
instrument reasonably requested by the Contributor to evidence such termination.
14. Miscellaneous. This Amendment shall be governed by and construed in
-------------
conformity with the laws of the State of Georgia. For the purposes of the
notice provisions of the Partnership Agreement, the address of each of the
Contributor is as set forth on the signature page hereof. Except as expressly
amended hereby, the Partnership Agreement shall remain in full force and effect.
This Amendment and all the terms and provisions hereof shall be binding upon and
shall inure to the benefit of the parties, and their legal representatives,
heirs, successors and permitted assigns.
-11-
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this Amendment
as of the date first above written.
WEEKS REALTY, L.P., a Georgia limited
partnership
By: Weeks GP Holdings, Inc., a Georgia
corporation, its Sole General Partner
By:
_____________________________________
Name:
Title:
CONTRIBUTOR:
PCTC ASSOCIATES, LLC
By:
_____________________________________
Timothy P. Bright
Manager
By:
_____________________________________
William F. Law, Jr.
Manager
Address: 1355 Peachtree Street
-------
Suite 500 South Tower
Atlanta, Georgia 30309
Solely to evidence its agreement to
its undertakings in Exhibit D hereto:
WEEKS CORPORATION
By:_________________________________
Name:_______________________________
Title:______________________________
-12-
<PAGE>
Exhibit A
---------
TRANSACTION DOCUMENTS
1. Contract for the Partnership Contribution of Real and Personal Property,
dated January 20, 1998, by and among PCTC Associates, LLC and Weeks Realty,
L.P. (the "Contribution Agreement")
2. Registration Rights and Lock-Up Agreement, dated January 20, 1998, by and
among Weeks Corporation and PCTC Associates, LLC
A-1
<PAGE>
Exhibit B
---------
Capital Contribution:
- --------------------
PCTC Associates, LLC Capital Contribution: All assets, properties and
businesses transferred from PCTC Associates at January 20,
1998, to the Partnership pursuant to the Transaction Documents
(as defined in the foregoing Amendment)
Gross Fair Market Value of Property Contributions:
- -------------------------------------------------
Gross Fair Market Value of all
property other than money included in
PCTC Associates, LLC Contribution: $1,239,075.58
PCTC Associates, LLC Units issued hereby: 38,806
B-1
<PAGE>
Exhibit C
---------
PARTNERSHIP UNITS/PERCENTAGE INTERESTS
All Partners
<TABLE>
<CAPTION>
Partner Units Percentage Interest
- ------- ---------- -------------------
<S> <C> <C>
Weeks GP Holdings, Inc. 237,503 0.971%
Weeks LP Holdings, Inc. 17,467,840 71.426%
NWI Warehouse Group, L.P. 2,281,273 9.328%
A. Ray Weeks, Jr. 614,079 2.511%
John P. Weeks 239,791 0.981%
Marsha L. Weeks 228,047 0.932%
Trust U/W/1/ 212,663 0.870%
Patricia L. Weeks 206,607 0.845%
Deborah Weeks Felker 198,339 0.811%
Trust B/2/ 187,492 0.767%
Helen B. Weeks 163,048 0.667%
Weeks Horizon Corp. 116,012 0.474%
Oakdale Land Management, Inc. 110,493 0.452%
Weeks Hillside Corp. 78,145 0.320%
Thomas D. Senkbeil 52,817 0.216%
Weeks Southridge Corp. 42,993 0.176%
</TABLE>
- --------------------
/1/ A. R. Weeks, Jr., as Trustee U/W of Alvin Ray Weeks dated March 1, 1983,
f/b/o Marsha Lee Weeks, A. R. Weeks, Jr., Deborah Weeks Felker, Patricia Louise
Weeks and John Phillip Weeks.
/2/ Harry T. Weeks, A. R. Weeks, Jr., and Martha Patterson Weeks as
Trustees under Trust Agreement dated 10/27/76, as amended, f/b/o Marsha Lee
Weeks, A. R. Weeks, Jr., Deborah Weeks Felker, Patricia Louise Weeks and John
Phillip Weeks.
C-1
<PAGE>
<TABLE>
<S> <C> <C>
Forrest W. Robinson 28,877 0.118%
Harry T. Weeks 27,535 0.113%
Louis C. Robinson 20,016 0.082%
Buckley & Company Real Estate, Inc. 20,000 0.082%
HV, Inc. 17,074 0.070%
Clyde H. Duckett 5,627 0.023%
John C. Atwell 5,627 0.023%
Robert G. Cutlip 5,138 0.021%
Klay W. Simpson 4,110 0.017%
Mark W. Flowers 1,541 0.006%
Weeks Management Corp 1,142 0.005%
RTF Management Corp. 257 0.001%
Marie Antoinette Robertson 268,045 1.096%
Harold S. Lichtin 28,780 0.118%
Noel A. Lichtin 153 0.001%
Perimeter Park West Associates
Limited Partnership 252,796 1.034%
Amy R. Ehrman 2,053 0.008%
Roland G. Robertson 2,053 0.008%
Roderick Duncan 2,928 0.012%
Timothy Nicholls 1,757 0.007%
James McCabe 39 0.000%
Anne Broaddus 1,561 0.006%
Harold S. Lichtin Family 342,569 1.401%
Lmited Partnership
GB Partners, Ltd. 11,561 0.047%
Armando Codina 124,523 0.509%
Codina Family Investments, Ltd. 30,351 0.124%
Codina West Dade 117,692 0.481%
Development Corporation
The Benenson Capital Company 320,721 1.311%
Raha Associates, Inc. 7,281 0.030%
Preston R. Tisch 164,001 0.671%
Laurence A. Tisch 164,001 0.671%
PCTC Associates, LLC 38,806 0.159%
---------- -------
Total 24,455,757 100.000%
========== =======
</TABLE>
C-2
<PAGE>
Exhibit D
---------
RIGHTS TERMS
------------
The Rights granted by the Partnership to the Contributor (referred to in
this Exhibit as "Limited Partners"), pursuant to paragraph 3(b) of the foregoing
Amendment shall be subject to the following terms and conditions:
1. Definitions. Capitalized terms used in this Exhibit without
-----------
definition shall have the meanings given to them in the Partnership Agreement or
the foregoing Amendment, as applicable, and the following terms and phrases
shall, for purposes of this Exhibit D, the Partnership Agreement and the
foregoing Amendment, have the meanings set forth below:
"Cash Purchase Price" shall have the meaning set forth in Paragraph 4
-------------------
hereof.
"Closing Notice" shall mean the written notice to be given by the
--------------
General Partner to the Exercising Partner(s) in response to the receipt by the
General Partner of a Conversion Exercise Notice from such Exercising Partner(s).
The form of the Closing Notice is attached hereto as Schedule 2.
"Computation Date" shall mean the date on which a Conversion Exercise
-----------------
Notice is delivered to the General Partner.
"Conversion Exercise Notice" shall have the meaning set forth in
--------------------------
Paragraph 2 hereof.
"Conversion Factor" shall mean 100%, provided that such factor shall
-----------------
be adjusted in accordance with the provisions of paragraph 10 hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended, or any successor statute.
"Exercising Partners" shall have the meaning set forth in Paragraph 2
-------------------
hereof.
"Offered Partnership Units" shall mean the Partnership Units of the
-------------------------
Exercising Partner(s) identified in a Conversion Exercise Notice that, pursuant
to the exercise of Rights, must be redeemed by the Partnership or acquired by
the General Partner and/or Weeks LP Holdings under the terms hereof.
"Redemption Price" shall mean the Cash Purchase Price or the Stock
----------------
Purchase Price.
"Rights" shall have the meaning set forth in paragraph 3(b) of the
------
foregoing Amendment.
C-1
<PAGE>
"Securities Act" shall mean the Securities Act of 1933, as amended, or
--------------
any successor statute.
"Stock Purchase Price" shall have the meaning set forth in Paragraph 4
--------------------
hereof.
2. Delivery of Conversion Exercise Notices. Any one or more Limited
---------------------------------------
Partners ("Exercising Partners") may, subject to the limitations set forth
herein, deliver to the General Partner written notice (the "Conversion Exercise
Notice") pursuant to which such Exercising Partners elect to exercise the
Rights. The form of Conversion Exercise Notice is attached hereto as Schedule
1.
3. Limitations on Exercise of Rights; Deemed Exercise.
--------------------------------------------------
(1) No Conversion Exercise Notice, with respect to any Unit may be
delivered to the General Partner by a Limited Partner until the later of
(i) the first anniversary of the date of each such issuance, or (ii) the
date on which either (A) there is a registration statement effective under
the Securities Act with respect to any resale by such Limited Partner of
any of such shares of Common Stock, or (B) in the opinion of counsel to
Weeks, shares of Common Stock that could be issued to such Limited Partner
pursuant to such exercise of Rights may be issued without registration
under the Securities Act.
(2) A Limited Partner may not exercise the Rights for less than one
thousand (1,000) Partnership Units or, if such Limited Partner holds less
than one thousand (1,000) Partnership Units, all of the Partnership Units
held by such Limited Partner.
(3) Neither the General Partner nor the Partnership shall have any
obligation or authority to redeem or purchase Offered Partnership Units to
the extent that issuance of shares of Common Stock in payment of the Stock
Purchase Price for any part of the Offered Partnership Units would result
(i) in the violation of the General Ownership Limit (as such term is
defined in the Articles of Incorporation), (ii) would cause Weeks to fail
the stock ownership test of Section 856(a)(6) of the Code, or (iii) would
otherwise cause Weeks to fail to qualify as a REIT; provided that in any
such case, the General Partner or the Partnership shall purchase for cash
those offered Partnership Units which may not be redeemed with shares of
Common Stock. Each Exercising Partner shall provide to the General Partner
such information as the General Partner may request regarding such
Exercising Partner's actual and constructive ownership of Common Stock (and
of individuals, and entities related to such Exercising Partner) in order
for the General Partner to determine, in its sole discretion, whether a
purchase or redemption of the Offered Partnership Units for shares of
Common Stock would result in a violation of such restrictions.
(4) If, after complying with all applicable provisions of the
Partnership Agreement, any Person with an ownership interest in any of the
Contributor becomes the owner of any Partnership Units previously owned by
the any of the Contributor, such Person may exercise the Rights granted
with respect to such Partnership Units in accordance with the terms hereof.
C-2
<PAGE>
4. Computation of Redemption Price/Form of Payment. The Redemption Price
-----------------------------------------------
payable by the Partnership to each Exercising Partner for the Offered
Partnership Units shall be payable, at the election of the General Partner, by
the delivery by the Partnership of the Redemption Price. Notwithstanding the
foregoing, at the election of the General Partner, the Redemption Price may be
the Stock Purchase Price for part of the Offered Partnership Units and the Cash
Purchase Price for the remainder of the Offered Partnership Units. The "Stock
Purchase Price" shall mean the number of shares of Common Stock equal to the
product, expressed as a whole number, of (i) the number of Offered Partnership
Units, multiplied by (ii) the Conversion Factor. The "Cash Purchase Price"
shall mean an amount of cash (in immediately available funds) equal to (i) the
number of shares of Common Stock that would be issued to the Exercising Partner
if the Stock Purchase Price were paid for such Offered Partnership Units,
multiplied by (ii) the Current Per Share Market Price computed as of the
Computation Date. To the extent the Partnership elects to pay the Stock
Purchase Price, it shall obtain the necessary shares of Common Stock in exchange
for the issuance of additional Partnership Interests to the General Partner,
Weeks LP Holdings, or any combination thereof, as determined by the General
Partner in its sole discretion, and the General Partner and/or Weeks LP Holdings
shall obtain the necessary shares of Common Stock in exchange for the issuance
of additional capital stock to Weeks.
5. Closing; Delivery of Closing Notice. The closing of the redemption of
-----------------------------------
Offered Partnership Units shall, unless otherwise mutually agreed, be held at
the principal office of the Partnership, as follows:
(a) Within ten (10) days after the receipt by the Partnership of the
Conversion Exercise Notice, the Partnership shall deliver a Closing
Notice to the Exercising Partner(s). The Closing Notice shall state a date
for the closing of the redemption of the Offered Partnership Units, which
date shall not be later than the later of (i) twenty (20) days after the
receipt by the Partnership of the Conversion Exercise Notice (forty-five
(45) days as to the Offered Partnership Units for which the Cash Purchase
Price will be paid), and (ii) the first (1st) business day after the
expiration or termination of the waiting period applicable to each
Exercising Partner, if any, under the Hart-Scott Act.
(b) If applicable, the Closing Notice shall (i) specify the
Partnership's election to pay the Cash Purchase Price for some or all of
the Offered Partnership Units and (ii) set forth the computation of the
Cash Purchase Price to be paid by the Partnership to such Exercising
Partner(s). The Cash Purchase Price shall be paid by wire transfer of
immediately available funds to such account of the Exercising Partner as is
designated in the Conversion Exercise Notice.
6. Assumption by the General Partner and/or Weeks LP Holdings.
----------------------------------------------------------
Notwithstanding anything in this Exhibit D to the contrary, the General Partner,
Weeks LP Holdings or any combination thereof (an "Assumer" or, collectively, the
"Assumers") may, in the sole and absolute discretion of the General Partner,
assume directly and satisfy the exercise of a Right by paying the Electing
Partner the Redemption Price. In such event, the Assumers shall acquire the
Offered Partnership Units and shall be treated for all purposes of this
Agreement as the owner of such Partnership Units, which shall be held by the
Assumers in their respective existing capacities as
C-3
<PAGE>
general partner or Limited Partners, as the case may be. In the event the
General Partner shall exercise the Assumers' right to satisfy a Right in the
manner described in this Paragraph 6, the Partnership shall have no obligation
to pay any amount to the Exercising Partner with respect to such Exercising
Partner's exercise of a Right; provided, however, that the Partnership shall
remain liable to the Exercising Partner to the extent that any such Exercising
Partner's Right is not fully satisfied; and each of the Exercising Partner, the
Partnership, and the Assumers shall treat the transaction between the Assumers
and the Exercising Partner as a sale of the Exercising Partner's Partnership
Units to the Assumers for federal income tax purposes. To the extent the
Assumers elect to pay the Stock Purchase Price, they shall obtain the necessary
shares of Common Stock in exchange for the issuance of additional capital stock
to Weeks. Each Exercising Partner agrees to execute such documents as the
General Partner may reasonably require in connection with the issuance of Common
Stock upon exercise of a Right.
7. Closing Deliveries. At the closing, payment of the Redemption Price
------------------
shall be accompanied by proper instruments of transfer and assignment for the
Offered Partnership Units and by the delivery of (i) representations and
warranties of (A) the Exercising Partner with respect to its due authority to
sell all of the right, title and interest in and to the Offered Partnership
Units and with respect to the status of the Offered Partnership Units being
sold, free and clear of all Liens, and (B) the Partnership or the Assumers, as
applicable, with respect to due authority for the redemption or purchase of such
Offered Partnership Units, and (ii) to the extent that shares of Common Stock
are issued in payment of the Stock Purchase Price, (A) an opinion of counsel for
Weeks, reasonably satisfactory to the Exercising Partner(s), to the effect that
such shares of Common Stock have been duly authorized, are validly issued,
fully-paid and nonassessable, and (b) a stock certificate or certificates
evidencing the Common Stock to be issued and registered in the name of the
Exercising Partner(s) or its (their) designee.
8. Covenants of Weeks. To facilitate the Partnership's and the Assumers'
------------------
ability to fully perform their obligations hereunder, Weeks covenants and agrees
as follows:
(a) At all times during the pendency of the Rights, Weeks shall
reserve for issuance such number of shares of Common Stock as may be
necessary to enable Weeks to issue shares of Common Stock in full payment
of the Stock Purchase Price in regard to all Partnership Units that are
from time to time outstanding and with respect to which Rights exist.
(b) During the pendency of the Rights, the Limited Partners shall
receive in a timely manner all communications transmitted from time to time
by Weeks to its shareholders generally.
9. Limited Partners' Covenants. Each Limited Partner covenants and
---------------------------
agrees that all Offered Partnership Units tendered in accordance with the
exercise of Rights shall be delivered free and clear of all Liens. Should any
Liens exist or arise with respect to such Offered Partnership Units, neither the
Assumers nor the Partnership shall be under any obligation to redeem or acquire
the same unless, in connection therewith, the General Partner has elected to pay
a portion of the Redemption Price in the form of the Cash Purchase Price in
circumstances in which such Cash
C-4
<PAGE>
Purchase Price will be sufficient to cause such existing Lien to be discharged
in full upon application of all or a part of the Cash Purchase Price. The
Partnership and the Assumers are expressly authorized to apply such portion of
the Cash Purchase Price as may be necessary to discharge such Lien in full. Each
Limited Partner further agrees that, in the event any state or local property
transfer tax is payable as a result of the transfer of its Offered Partnership
Units to the Partnership or the Assumers, such Limited Partner shall assume and
pay such transfer tax.
10. Antidilution Provisions
-----------------------
(a) The Conversion Factor shall be subject to adjustment from time to
time effective upon the occurrence of the following events and shall be
expressed as a percentage, calculated to the nearest one-thousandth of one
percent (.001%):
(i) In case Weeks shall pay or make a dividend or other
distribution on any class of stock of Weeks in shares of Common Stock,
the Conversion Factor in effect at the opening of business on the day
following the date fixed for the determination of shareholders
entitled to receive such dividend or other distribution shall be
increased in proportion to the increase in outstanding shares of
Common Stock resulting from such dividend or other distribution, such
increase to become effective immediately after the opening of business
on the day following the record date fixed for such dividend or other
distribution.
(ii) In case outstanding shares of Common Stock shall be
subdivided into a greater number of shares, the Conversion Factor in
effect at the opening of business on the day following the day upon
which such subdivision becomes effective shall be proportionately
increased, and, conversely, in case the outstanding shares of Common
Stock shall be combined into a smaller number of shares, the
Conversion Factor in effect at the opening of business on the day
following the day upon which such combination becomes effective shall
be proportionately reduced, such increase or reduction, as the case
may be, to become effective immediately after the opening of business
on the day following the day upon which such subdivision or
combination becomes effective.
(b) In case Weeks shall issue rights, options or warrants to all
holders of its shares of Common Stock entitling them to subscribe for or
purchase Common Stock or other securities convertible into shares of Common
Stock at a price per share less than the Current Per Share Market Price as
of the day before the "ex date" with respect to the issuance or
distribution, each Limited Partner holding Rights shall be entitled to
receive such number of such rights, options or warrants, as the case may
be, as he would have been entitled to receive had he exercised all of his
then existing Rights immediately prior to the record date for such issuance
by Weeks. The term "ex date" shall mean the first date on which shares of
Common Stock trade regular way without the right to receive such issuance
or distribution.
C-5
<PAGE>
(c) In case the shares of Common Stock shall be changed into the same
or a different number of shares of any class or classes of stock, whether
by capital reorganization, reclassification, or otherwise (other than
subdivision or combination of shares described in subparagraph (a) (ii) of
this Paragraph), then and in each such event the Limited Partners holding
Rights shall have the right thereafter to exercise their Rights for the
kind and amount of shares and other securities and property that would have
been received upon such reorganization, reclassification or other change by
holders of the number of shares of Common Stock with respect to which such
Rights could have been exercised immediately prior to such reorganization,
reclassification or change.
(d) The General Partner may, but shall not be required to, make such
adjustments to the number of shares of Common Stock issuable upon exercise
of Rights, in addition to those required by this Paragraph 10, as the
General Partner considers to be advisable in order that any event treated
for federal income tax purposes as a dividend of stock or stock rights
shall not be taxable to the recipients. The General Partner shall have the
power to resolve any ambiguity or correct any error in the adjustments made
pursuant to this Paragraph and its actions in so doing shall be final and
conclusive, absent manifest error by the General Partner in taking such
action.
11. Fractions of Shares. No fractional shares of Common Stock shall be
-------------------
issued upon exercise of Rights. If Rights shall be exercised with respect to
more than one Offered Partnership Unit at one time by the same Exercising
Partner, the number of full shares of Common Stock comprising the Stock Purchase
Price (or the cash equivalent amount thereof to the extent the Cash Purchase
Price is paid) shall be computed on the basis of the aggregate number of Offered
Partnership Units. Instead of any fractional share of Common Stock that would
otherwise be issuable upon exercise of Rights, the Partnership or the Assumers
shall pay a cash adjustment in respect of such fraction in an amount equal to
the Cash Purchase Price computed hereunder for such fraction of a share.
12. Notice of Adjustments of Conversion Factor. Whenever the Conversion
------------------------------------------
Factor is adjusted as herein provided:
(a) the General Partner shall compute the adjusted Conversion Factor
in accordance with Paragraph 10 hereof and shall prepare a certificate
signed by the chief financial officer or the Treasurer of the General
Partner setting forth the adjusted Conversion Factor and showing in
reasonable detail the facts upon which such adjustment is based; and
(b) notice stating that the Conversion Factor has been adjusted and
setting forth the adjusted Conversion Factor shall forthwith be mailed by
the General Partner to all holders of Rights at their last addresses on
record under this Agreement.
13. Notice of Certain Corporate Actions.
-----------------------------------
In case:
C-6
<PAGE>
(a) Weeks shall declare a dividend (or any other distribution) on its
Common Stock payable otherwise than in cash; or
(b) Weeks shall authorize the granting to the holders of its Common
Stock of rights, options or warrants to subscribe for or purchase any
shares of stock of any class or of any other rights; or
(c) of any reclassification of the shares of Common Stock (other than
a subdivision or combination of its outstanding Common Stock, or of any
consolidation, merger or share exchange to which Weeks is a party and for
which approval of any shareholders of Weeks is required), or of the sale or
transfer of all or substantially all of the assets of Weeks; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of Weeks;
then the General Partner shall cause to be mailed to all holders of Rights at
their last addresses on record under this Agreement, at least 20 days (or 12
days in any case specified in clause (a) or (b) above) prior to the applicable
record date hereinafter specified, a notice stating (i) the date on which a
record is to be taken for the purpose of such dividend, distribution, rights,
options or warrants, or, if a record is not to be taken, the date as of which
the holders of shares of Common Stock of record to be entitled to such dividend,
distribution, rights, options or warrants are to be determined, or (ii) the date
on which such reclassification, consolidation, merger, share exchange, sale,
transfer, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of shares of
Common Stock of record shall be entitled to exchange their shares for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, share exchange, sale, transfer, dissolution, liquidation
or winding up.
14. Provisions in Case of Consolidation, Merger or Sale of Assets.
-------------------------------------------------------------
In case of any consolidation of Weeks with, or merger of Weeks into, any
other Person, any merger or consolidation of another Person into Weeks (other
than a merger that does not result in any reclassification, conversion, exchange
or cancellation of outstanding shares of Common Stock), any acquisition of the
outstanding Common Stock by share exchange, or any sale or transfer of all or
substantially all of the assets of Weeks, the Person formed by such
consolidation or resulting from such merger or that acquires the outstanding
Common Stock or such assets of Weeks as the case may be, shall execute and
deliver to each holder of Rights an agreement providing that such holder shall
have the right thereafter, during the period such rights shall be exercisable
(which shall be at least as long as the period for which the Rights can be
exercised under the other provisions of this Agreement), to exercise the Rights
for the kind and amount of securities, cash and other property receivable upon
such consolidation, merger, share exchange, sale or transfer by a holder of the
number of shares of Common Stock for which the Rights might have been exercised
immediately prior to such consolidation, merger, share exchange, sale or
transfer, assuming both that (a) such holder of shares of Common Stock is not a
Person with which Weeks consolidated or into which Weeks merged or that merged
into Weeks, or that acquired the outstanding Common Stock by share
C-7
<PAGE>
exchange, or to which such sale or transfer was made, as the case may be (a
"Constituent Person"), or an Affiliate of a Constituent Person, and that (b)
such holder does not exercise his right of election, if any, as to the kind or
amount of securities, cash or other property receivable upon such consolidation,
merger, share exchange, sale or transfer (provided that if the kind or amount of
--------
securities, cash and other property receivable upon such consolidation, merger,
share exchange, sale or transfer is not the same for each share of Common Stock
in respect of which such right of election, if any, is not exercised ("non-
electing Share"), then for the purpose of this Paragraph 14, the kind and amount
of securities, cash and other property receivable upon such consolidation,
merger, share exchange, sale or transfer by each non-electing Share shall be
deemed to be the kind and amount so receivable per non-electing Share by a
plurality of the non-electing Shares). Such agreement shall provide for
adjustments that, for events subsequent to the effective date of such agreement,
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Exhibit D.
The above provisions of this Paragraph 14 shall similarly apply to
successive consolidations, mergers, sales or transfers.
C-8
<PAGE>
SCHEDULE 1
CONVERSION EXERCISE NOTICE
--------------------------
To: Weeks Realty, L.P.
Reference is made to that certain Seventh Amendment (the "Amendment") to
the Second Amended and Restated Agreement of Limited Partnership of Weeks
Realty, L.P. (the "Partnership"). Capitalized terms used but not defined herein
shall have the meanings set forth in Amendment. Pursuant to Exhibit D to the
Amendment, the undersigned, being a limited partner of the Partnership (an
"Exercising Partner"), hereby elects to exercise its Rights as to the number of
Offered Partnership Units specified opposite its name below:
Number of Offered
Exercising Limited Partner Partnership Units
- -------------------------- -----------------
---------------------------------------
Signature of Exercising Limited Partner
Date:__________________________________
<PAGE>
SCHEDULE 2
CLOSING NOTICE
--------------
To: Exercising Limited Partner(s)
Reference is made to that certain Seventh Amendment (the "Amendment") to
the Second Amended and Restated Agreement of Limited Partnership of Weeks
Realty, L.P. (the "Partnership"). Capitalized terms used but not defined herein
shall have the meaning set forth in Amendment. The closing of the redemption of
the Offered Partnership Units shall occur at _______, ________, Georgia, on
___________. Pursuant to Exhibit D to the Amendment, the Partnership hereby
notifies the Exercising Partner(s) that it has elected to pay the Cash Purchase
Price to the Exercising Partner(s) for the number of Offered Partnership Units
set forth below, and that the computation of the Cash Purchase Price is set
forth on an attachment hereto.
NUMBER OF OFFERED CASH PURCHASE
EXERCISING PARTNER(S) PARTNERSHIP UNITS PRICE
- --------------------- ----------------- -------------
WEEKS REALTY, L.P.
By: Weeks GP Holdings, Inc., General Partner
By:_________________________________________
Title:______________________________________
Date:_______________________________________
<PAGE>
EXHIBIT 4.15
FOURTEENTH AMENDMENT TO THE
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
WEEKS REALTY, L.P.
This Fourteenth Amendment to the Second Amended and Restated Agreement of
Limited Partnership of Weeks Realty, L.P. (this "Amendment") is entered into as
of November 6, 1998, by and among Weeks GP Holdings, Inc., a Georgia corporation
(the "General Partner"), AEW Targeted Securities Fund, L.P., a Delaware limited
partnership ("AEW Fund"), and Weeks LP Holdings, Inc., a Georgia corporation,
solely in its capacity as holder of the Series A Preferred Partnership Units.
All capitalized terms used herein shall have the meanings given to them in the
Second Amended and Restated Agreement of Limited Partnership of Weeks Realty,
L.P., dated October 30, 1996, as amended by the First Amendment to the
Partnership Agreement dated November 1, 1996, the Second Amendment to the
Partnership Agreement dated December 31, 1996, the Third Amendment to the
Partnership Agreement dated January 31, 1997, the Fourth Amendment to the
Partnership Agreement dated August 1, 1997, the Fifth Amendment to the
Partnership Agreement dated October 7, 1997, the Sixth Amendment to the
Partnership Agreement dated October 27, 1997, the Seventh Amendment to the
Partnership Agreement dated December 30, 1997 and effective as of August 1,
1997, the Eighth Amendment to the Partnership Agreement dated January 9, 1998,
the Ninth Amendment to the Partnership Agreement dated January 20, 1998, the
Tenth Amendment to the Partnership Agreement dated April 3, 1998, the Eleventh
Amendment to the Partnership Agreement dated May 26, 1998, the Twelfth Amendment
to the Partnership Agreement dated June 3, 1998, and the Thirteenth Amendment to
the Partnership Agreement dated August 7, 1998 (the "Partnership Agreement").
Capitalized terms used in this Amendment without definition shall have the
meanings given to them in the Partnership Agreement.
WHEREAS, pursuant to that certain Securities Purchase Agreement dated the
date hereof by and among AEW Fund, Weeks and the Partnership (the "Securities
Purchase Agreement"), AEW Fund desires to contribute $33,862,500 to the
Partnership in exchange for partnership interests in the Partnership as set
forth herein;
WHEREAS, pursuant to the Securities Purchase Agreement, AEW Fund desires to
contribute $1,137,500 million to Weeks in exchange for a warrant which
represents the right to purchase either (i) 1,046,729 shares of Common Stock or
(ii) 1,400,000 shares of Series A Preferred Stock;
WHEREAS, Weeks will contribute the proceeds from the warrant, either
through the General Partner or Weeks LP, or both, to the Partnership in exchange
for a reciprocal warrant issuable to Weeks; and
WHEREAS, as provided in Section 9.3 of the Partnership Agreement, the
General Partner is authorized to cause the Partnership to issue additional
interests in the Partnership in exchange for such contribution.
<PAGE>
NOW THEREFORE, in consideration of the mutual covenants herein contained,
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
1. Contribution.
------------
AEW Fund hereby contributes to the Partnership $33,862,500 million as a
contribution to the capital of the Partnership.
2. Issuance of Series C Preferred Partnership Units; Rights.
--------------------------------------------------------
In consideration of the contribution to the Partnership pursuant to Section
1 hereof, the Partnership hereby issues to AEW Fund 1,400,000 Series C Preferred
Partnership Units (as defined herein). Exhibit S to the Partnership Agreement,
---------
attached hereto, is hereby inserted into the Partnership Agreement. AEW Fund
hereby agrees that it shall not have any rights with respect to the "Rights"
provided for in Section 11.1 and Exhibit B-1 to the Partnership Agreement.
3. Definitions.
-----------
In addition to those terms defined in the Partnership Agreement, the
following definitions shall be for all purposes, unless otherwise clearly
indicated to the contrary, inserted into the Partnership Agreement and applied
to the terms used in the Partnership Agreement and in this Amendment:
"AEW Warrant" means the right to purchase (i) an aggregate of
-----------
1,046,729 shares of Common Stock or (ii) an aggregate of 1,400,000 shares
of Series A Preferred Stock pursuant to the terms of that certain Warrant
dated November 6, 1998 issued by Weeks."
"Series C Preferred Partnership Unit" means a Partnership Unit issued
-----------------------------------
by the Partnership to AEW Fund in consideration of the contribution by AEW
Fund to the Partnership of $24.1875. The Series C Preferred Partnership
Units shall constitute Preferred Partnership Units. The Series C Preferred
Partnership Units shall have the voting powers, designation, preferences
and relative, participating, optional or other special rights and
qualifications, limitations or restrictions as are set forth in Exhibit S,
---------
attached hereto.
In addition, the definition of "Liquidation Preference Amount" appearing in
Article I of the Partnership Agreement is hereby deleted in its entirety and the
following definition is inserted in its place:
"Liquidation Preference Amount" means, with respect to any Preferred
-----------------------------
Partnership Unit, the amount payable with respect to such Preferred
Partnership Unit
-2-
<PAGE>
(as established by the instrument designating such Preferred Partnership
Units) upon the voluntary or involuntary dissolution, liquidation or
winding up of the Partnership, or upon the earlier redemption of such
Preferred Partnership Units, as the case may be, other than accrued and
unpaid quarterly distributions in arrears.
4. Allocations and Other Tax and Accounting Matters.
------------------------------------------------
Exhibit F to the Partnership Agreement is hereby deleted in its entirety
---------
and Exhibit F attached hereto is hereby inserted in its place.
---------
5. Admission. AEW Fund is hereby admitted to the Partnership as a
---------
Limited Partner, effective as of the date hereof, and AEW Fund hereby agrees to
be bound by the terms of the Partnership Agreement.
6. Exhibits to Partnership Agreement.
---------------------------------
The General Partner shall maintain the information set forth in Exhibit A
---------
to the Partnership Agreement, as such information shall change from time to
time, in such form as the General Partner deems appropriate for the conduct of
the Partnership affairs, and Exhibit A shall be deemed amended from time to time
---------
to reflect the information so maintained by the General Partner, whether or not
a formal amendment to the Partnership Agreement has been executed amending such
Exhibit A. In addition to the issuance of Series C Preferred Partnership Units
- ---------
pursuant to this Amendment, such information shall reflect (and Exhibit A shall
---------
be deemed amended from time to time to reflect) the issuance of any additional
Partnership Units to any Person, the transfer of Partnership Units and the
redemption of any Partnership Units, all as contemplated herein.
7. Miscellaneous. This Amendment shall be governed by and construed in
-------------
conformity with the laws of the State of Georgia. For the purposes of the
notice provisions of the Partnership Agreement, the address of AEW Fund is as
set forth on the signature page hereof. Except as expressly amended hereby, the
Partnership Agreement shall remain in full force and effect. This Amendment and
all the terms and provisions hereof shall be binding upon and shall inure to the
benefit of the parties, and their legal representatives, heirs, successors and
permitted assigns.
-3-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first written above.
GENERAL PARTNER:
WEEKS GP HOLDINGS, INC.,
a Georgia corporation
By: ___________________________________
Name:
Title:
LIMITED PARTNER:
AEW TARGETED SECURITIES FUND, L.P.,
a Delaware limited partnership
By: AEW TSF, L.L.C., a Delaware limited liability
By: AEW TSF, INC., a Delaware corporation,
By: ___________________________
Name:
Title:
Address: 225 Franklin Street
Boston, MA 02109
Attn: AEW TSF, Inc.
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SOLELY IN ITS CAPACITY AS HOLDER OF THE
SERIES A PREFERRED PARTNERSHIP UNITS:
LIMITED PARTNER:
WEEKS LP HOLDINGS, INC.,
a Georgia corporation
By:_____________________________________
Name:
Title:
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EXHIBIT F
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WEEKS REALTY, L.P.
ALLOCATIONS
Section 1. Allocation of Net Income and Net Loss.
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(a) Net Income. After giving effect to the special allocations
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set forth in Section 2 hereof, Net Income for any fiscal year or other
applicable period shall be allocated in the following manner and order of
priority:
(1) To the General Partner until the cumulative allocations of
Net Income under this Section 1(a)(1) equal the cumulative Net
Losses allocated to the General Partner under Section 1(b)(5)
hereof.
(2) To those Partners who have received allocations of Net Loss
under Section 1(b)(4) hereof until the cumulative allocations of
Net Income under this Section 1(a)(2) equal such cumulative
allocations of Net Loss (such allocation of Net Income to be in
proportion to the cumulative allocations of Net Loss under such
section to each such Partner).
(3) To the Partners holding Preferred Partnership Units until
the cumulative allocations of Net Income under this Section
1(a)(3) equal the cumulative allocations of Net Loss to such
Partners under Section 1(b)(3) hereof (such allocation of Net
Income being in proportion to the cumulative allocations of Net
Loss under such section to each such Partner).
(4) To those Partners who have received allocations of Net Loss
under Section 1(b)(2) hereof until the cumulative allocations of
Net Income under this Section 1(a)(4) equal such cumulative
allocations of Net Loss (such allocation of Net Income to be in
proportion to the cumulative allocations of Net Loss under such
section to each such Partner).
(5) To the Partners until the cumulative allocations of Net
Income under this Section 1(a)(5) equal the cumulative
allocations of Net Loss to such Partners under Section 1(b)(1)
hereof (such allocation of Net Income to be in proportion to the
cumulative allocations of Net Loss under such section to each
such Partner).
(6) Any remaining Net Income shall be allocated to the Partners
who hold Common Partnership Units in proportion to their
respective Percentage Interests as holders of Common Partnership
Units.
F-1
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(b) Net Losses. After giving effect to the special allocations
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set forth in Section 2 hereof, Net Losses shall be allocated to the
Partners as follows:
(1) To the Partners who hold Common Partnership Units in
accordance with their respective Percentage Interests as holders
of Common Partnership Units, except as otherwise provided in this
Section 1(b).
(2) To the extent that an allocation of Net Loss under Section
1(b)(1) would cause a Partner to have an Adjusted Capital Account
Deficit at the end of such taxable year (or increase any existing
Adjusted Capital Account Deficit of such Partner), such Net Loss
shall instead be allocated to those Partners who hold Common
Partnership Units, if any, for whom such allocation of Net Loss
would not cause or increase an Adjusted Capital Account Deficit.
Solely for purposes of this Section 1(b)(2), the Adjusted Capital
Account Deficit, in the case of those Partners who also hold
Preferred Partnership Units, shall be determined without regard
to the amount credited to such Partners' Capital Accounts for the
aggregate Liquidation Preference Amount attributable to such
Preferred Partnership Units, and in the case of a Principal or a
Principal-Controlled Partnership, shall be determined without
regard to such Partner's deficit Capital Account restoration
obligation under Section 8.7(b) of the Partnership Agreement. The
Net Loss allocated under this Section 1(b)(2) shall be allocated
among the Partners who may receive such allocation in proportion
to their respective Percentage Interests in Common Partnership
Units.
(3) Any remaining Net Loss shall be allocated to the holders of
Preferred Partnership Units in accordance with their respective
Percentage Interests as holders of Preferred Partnership Units to
the extent that such allocation of Net Loss would not cause or
increase an Adjusted Capital Account Deficit of such Partners.
(4) Any remaining Net Loss shall be allocated to the Principals
and the Principal-Controlled Partnerships in accordance with
their respective Percentage Interests in Common Partnership
Units; provided that if, after the death of a Principal, the
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estate of such Principal or any Principal-Controlled Partnership
with respect to such Principal elects pursuant to Section 8.7(c)
of the Partnership Agreement to eliminate or reduce its deficit
Capital Account restoration obligation under Section 8.7(b) of
the Partnership Agreement, Net Losses shall not be allocated to
such Partner to the extent that such allocation would cause such
Partner to have an Adjusted Capital Account Deficit (or would
increase any existing Adjusted Capital Account Deficit of such
Partner) as of the end of such taxable year, and instead shall be
allocated to those Principals and Principal-Controlled
Partnerships as to whom the foregoing limitation does not apply.
(5) Any remaining Net Loss shall be allocated to the General
Partner.
Section 2. Special Allocations. Notwithstanding any provisions of paragraph
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1 of this Exhibit F, the following special allocations shall be made in the
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following order:
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(a) Minimum Gain Chargeback (Nonrecourse Liabilities). If there is a net
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decrease in Partnership Minimum Gain for any Partnership fiscal year (except as
a result of certain conversions or refinancings of Partnership indebtedness,
certain capital contributions, or certain revaluations of Property as further
outlined in Regulation Sections 1.704-2(d)(4), (f)(2) or (f)(3)), each Partner
shall be specially allocated items of Partnership income and gain for such year
(and, if necessary, subsequent years) in an amount equal to that Partner's share
of the net decrease in Partnership Minimum Gain. The items to be so allocated
shall be determined in accordance with Regulation Section 1.704-2(f). This
paragraph (a) is intended to comply with the minimum gain chargeback requirement
in said section of the Regulations and shall be interpreted consistently
therewith. Allocations pursuant to this paragraph (a) shall be made in
proportion to the respective amounts required to be allocated to each Partner
pursuant hereto.
(b) Minimum Gain Attributable to Partner Nonrecourse Debt. If there is a
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net decrease in Minimum Gain Attributable to Partner Nonrecourse Debt during any
fiscal year (other than due to the conversion, refinancing or other change in
the debt instrument causing it to become partially or wholly nonrecourse,
certain capital contributions, or certain revaluations of Property as further
outlined in Regulation Section 1.704-2(i)(4)), each Partner shall be specially
allocated items of Partnership income and gain for such year (and, if necessary,
subsequent years) in an amount equal to that Partner's share of the net decrease
in the Minimum Gain Attributable to Partner Nonrecourse Debt. The items to be
so allocated shall be determined in accordance with Regulation Sections 1.704-
2(i)(4) and (j)(2). This paragraph (b) is intended to comply with the minimum
gain chargeback requirement with respect to Partner Nonrecourse Debt contained
in said sections of the Regulations and shall be interpreted consistently
therewith. Allocations pursuant to this paragraph (b) shall be made in
proportion to the respective amounts required to be allocated to each Partner
pursuant hereto.
(c) Qualified Income Offset. In the event any Partner unexpectedly
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receives any adjustments, allocations or distributions described in Regulation
Section 1.704-1(b)(2)(ii)(d)(4), (5), or (6), and such Partner has an Adjusted
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Capital Account Deficit, items of Partnership income and gain shall be specially
allocated to such Partner in an amount and manner sufficient to eliminate the
Adjusted Capital Account Deficit as quickly as possible. This paragraph (c) is
intended to constitute a "qualified income offset" under Regulation Section
1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith.
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(d) Nonrecourse Deductions. Nonrecourse Deductions for any fiscal year or
----------------------
other applicable period shall be allocated to the Partners in accordance with
their respective Percentage Interests in Common Partnership Units.
(e) Partner Nonrecourse Deductions. Partner Nonrecourse Deductions for any
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fiscal year or other applicable period shall be specially allocated to the
Partner that bears the economic risk of loss for the debt in respect of which
such Partner Nonrecourse Deductions are attributable (as determined under
Regulations Sections 1.704-2(b)(4) and (i)(1)).
F-4
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(f) Curative Allocations. The Regulatory Allocations (as hereinafter
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defined) shall be taken into account in allocating other items of income, gain,
loss, and deduction among the Partners so that, to the extent possible, the
cumulative net amount of allocations of Partnership items under Sections 1 and 2
of this Exhibit F shall be equal to the net amount that would have been
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allocated to each Partner if the Regulatory Allocations had not occurred. This
paragraph (f) is intended to minimize, to the extent possible and to the extent
necessary, any economic distortions which may result from application of the
Regulatory Allocations and shall be interpreted in a manner consistent
therewith. For purposes hereof, "Regulatory Allocations" shall mean all the
allocations provided under this Section 2 other than paragraphs (f), (g), (h)
and (i).
(g) Priority Allocation With Respect To Preferred Partnership Units. All
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or a portion of the remaining items of Partnership gross income or gain for the
Partnership fiscal year, if any, shall be specially allocated to the holders of
the outstanding Series A Preferred Partnership Units and Series C Preferred
Partnership Units (the "Preferred Unit Holders") in an amount equal to the
excess, if any, of the cumulative distributions received by the Preferred Unit
Holders pursuant to Section 6.2(i) of the Partnership Agreement, as amended, for
the current Partnership fiscal year and all prior Partnership fiscal years
(other than any distributions that are treated as being in satisfaction of the
Liquidation Preference Amount for any Preferred Partnership Units) over the
cumulative allocations of Partnership gross income and gain to the Preferred
Unit Holders under this Section 2(g) for all prior Partnership fiscal years.
Such allocations shall be made in proportion to relative excess amounts
determined for each such holder. Solely for purposes of making the required
allocation under this Section 2(g) in the fiscal year in which the Partnership
is liquidated, the amount of any accrued but unpaid distributions in arrears in
respect of the Preferred Partnership Units (determined in accordance with the
relevant provisions of Exhibit R and Exhibit S to the Agreement) shall be
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treated as having been distributed to the Preferred Unit Holders immediately
prior to such liquidation under Section 6.2(i) hereof.
(h) Special Additional Priority Allocations With Respect to Series C
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Preferred Partnership Units. In addition to the priority allocations set forth
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in paragraph (g), the following allocations shall be made only in the taxable
years as specified in this Section 2(h), and shall be made prior to making the
allocations in Section 2(g), and in the following priority:
(A) Items of Partnership gross income or gain for the Partnership
fiscal year shall be specially allocated to the holder of the outstanding
Series C Preferred Partnership Units until the cumulative allocations under
this Section 2(h)(A) equal the difference between the aggregate Liquidation
Preference Amounts with respect to such Units and the amount contributed to
the Partnership with respect to such Units.
(B) If the Series C Preferred Partnership Units are redeemed pursuant
to Section 5(a) or 5(b) or put pursuant to Section 6 of Exhibit S to this
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Agreement, additional items of Partnership gross income or gain for the
Partnership fiscal year shall be specially allocated to the holder of the
redeemed Series C Preferred Partnership Units until such holder's Capital
F-5
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Account balance equals (i) if the Series C Preferred Partnership Units are
redeemed pursuant to Section 5(b) or put pursuant to Section 6, the
Liquidation Preference Amount, plus the amount of any accrued but unpaid
quarterly distributions (the "Target Balance"), and (ii) if the Series C
Preferred Partnership Units are redeemed pursuant to Section 5(a), the sum
of (X) the Target Balance, plus (Y) if the AEW Warrant has not been
exercised on or before the Expiration Date of the AEW Warrant (as defined
therein), the Target Balance with respect to the Series C Preferred
Partnership Units redeemed, multiplied by the following applicable
percentage based on the time of redemption of such Units:
Redemption on or after November 6, Percentage
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2003 4%
2004 3%
2005 2%
2006 1%
2007 0%
(C) If the Series C Preferred Partnership Units are redeemed pursuant
to Section 5(c) of Exhibit S to this Agreement, additional items of
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Partnership gross income or gain for the Partnership fiscal year shall be
specially allocated to the holder of the redeemed Series C Preferred
Partnership Units until such holder's Capital Account balance equals the
sum of (i) the Target Balance, plus (ii) the Target Balance with respect to
the Series C Preferred Partnership Units redeemed, multiplied by the
following applicable percentage based on the time of redemption of such
Units:
Redemption on or after November 6, Percentage
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1998 10%
1999 9%
2000 8%
2001 7%
2002 6%
(D) The priority allocations provided by this paragraph (h) shall
only be made with respect to: (i) any fiscal year, or portion thereof, in
which a Redemption Date or Exchange Date falls (as defined in Exhibit S to
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this Agreement); (ii) solely with respect to the allocation provided by
paragraph (h)(A) above, the fiscal year in which the partnership interest
of a holder of Series C Preferred Partnership Units is "liquidated" within
the meaning of Regulations Section 1.704-1(b)(2)(ii)(g); and (iii) any
fiscal year immediately prior to any of the fiscal years referenced in
clauses (i) and (ii) to the extent that the Exchange Date, the Redemption
Date or liquidating distributions occur on or before the due date (not
including extensions) for filing the Partnership's federal income tax
return for such prior fiscal year.
(i) Allocation of Nonrecourse Liabilities. The "excess nonrecourse
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liabilities" of the Partnership (as defined in Regulations Section 1.752-
3(a)(3)) shall be allocated among the Partners in proportion to their respective
interests in Common Partnership Units.
F-6
<PAGE>
Section 3. Tax Allocations.
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(a) Generally. Subject to paragraphs (b) and (c) hereof, items of
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income, gain, loss, deduction and credit to be allocated for income tax purposes
(collectively, "Tax Items") shall be allocated among the Partners on the same
basis as their respective book items.
(b) Sections 1245/1250 Recapture. If any portion of gain from the
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sale of property is treated as gain which is ordinary income by virtue of the
application of Code Sections 1245 or 1250 ("Affected Gain"), then (A) such
Affected Gain shall be allocated among the Partners in the same proportion that
the depreciation and amortization deductions giving rise to the Affected Gain
were allocated and (B) other Tax Items of gain of the same character that would
have been recognized, but for the application of Code Sections 1245 and/or 1250,
shall be allocated away from those Partners who are allocated Affected Gain
pursuant to Clause (A) so that, to the extent possible, the other Partners are
allocated the same amount, and type, of capital gain that would have been
allocated to them had Code Sections 1245 and/or 1250 not applied. For purposes
hereof, in order to determine the proportionate allocations of depreciation and
amortization deductions for each fiscal year or other applicable period, such
deductions shall be deemed allocated on the same basis as Net Income and Net
Loss for such respective period.
(c) Allocations Respecting Section 704(c) and Revaluations.
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Notwithstanding paragraph (b) hereof, Tax Items with respect to Property that is
subject to Code Section 704(c) and/or Regulation Section 1.704-1(b)(2)(iv)(f)
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(collectively "Section 704(c) Tax Items") shall be allocated in accordance with
said Code section and/or Regulation Section 1.704-1(b)(4)(i), as the case may
be. Specifically, the allocation of all Section 704(c) Tax Items shall be made
in accordance with the "traditional method" set forth in Regulation Section
1.704-3(b)(1) and thus shall be subject to the ceiling rule stated in said
section of the Regulations.
(d) Return of Capital Determination. For purposes of computing the
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return on the capital of the holder of Series C Preferred Partnership Units, the
capital of a holder of the Series C Preferred Partnership Units attributable to
each such Unit shall be treated as returned (x) when the Unit is redeemed by the
Partnership or (y) to the extent that the Partnership has distributed with
respect to such Unit an amount that exceeds the cumulative quarterly
distributions accrued thereon, plus the difference between $25 and the amount
contributed to the Partnership with respect to such Unit. Such return of capital
determination is solely for the internal tax accounting purposes of the holders
of the Series C Preferred Partnership Units and shall not in any way affect the
distributions to the Partners under this Agreement or the allocations of Net
Profit, Net Loss and other items under this Exhibit F.
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F-7
<PAGE>
EXHIBIT S
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WEEKS REALTY, L.P.
DESIGNATION OF THE VOTING POWERS, DESIGNATION, PREFERENCES AND
RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS AND
QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS
The following are the terms of the Series C Preferred Partnership Units
established pursuant to this Amendment:
8. NUMBER. The maximum number of authorized units of the Series C
Preferred Partnership Units shall be 1,400,000.
9. RELATIVE SENIORITY. In respect of rights to receive distributions (as
provided in Section 3 below), the Series C Preferred Partnership Units shall
rank (a) senior to any class or series of Partnership Units of the Partnership
ranking, as to the payment of distributions, junior to the Series C Preferred
Partnership Units (collectively, "Junior Partnership Units"), and (b) on a
parity with any class or series of Partnership Units of the Partnership if the
holders of such class or series of Partnership Units and the Series C Preferred
Partnership Units shall be entitled to the receipt of distributions and of
amounts distributable upon liquidation, dissolution or winding up (taking into
account the effects of allocations of Net Profits, Net Losses and other items)
in proportion to their respective amounts of accrued and unpaid distributions
per unit or liquidation preferences, without preference or priority one over the
other, whether or not the distribution rates, distribution payment dates,
liquidation preferences or redemption prices per unit thereof are different from
those of the Series C Preferred Partnership Units (collectively, "Parity
Partnership Units"). The Series A Preferred Partnership Units are Parity
Partnership Units with the Series C Preferred Partnership Units, and all Common
Partnership Units shall rank junior to Preferred Partnership Units as to rights
to receive distributions and rights upon liquidation, dissolution or winding up
of the Partnership. Upon liquidation, dissolution or winding up of the
Partnership, the holders of the Series A Preferred Partnership Units and Series
C Preferred Partnership Units shall be entitled to such distributions as are
provided in Section 8.2 of this Agreement, taking into account the required
allocations of Net Profits, Net Losses and other items to the Partners as
provided in Exhibit F to this Agreement. Nothing contained in Exhibit F or
--------- ---------
Exhibit S to this Agreement shall prohibit the Partnership from issuing
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additional Partnership Units which are Parity Partnership Units with the Series
C Preferred Partnership Units.
10. QUARTERLY DISTRIBUTIONS.
1. The holder of the then outstanding Series C Preferred Partnership
Units shall be entitled to receive, when, as and if declared by the General
Partner out of funds legally available therefor, cumulative distributions
at the rate of $2.00 per unit per year, payable in equal amounts of $.50
per unit (plus the amount of any accrued but unpaid distributions from
S-1
<PAGE>
prior periods) quarterly in cash on the last day of each January, April,
July and October or, if not a Business Day (as hereinafter defined), the
next succeeding Business Day. Quarterly distributions shall begin to
accrue and shall be fully cumulative from the first date on which the
pertinent units of the Series C Preferred Partnership Units are issued and
sold and shall first be payable on January 31, 1999 (each such payment date
being hereafter called a "Quarterly Distribution Date" and each period
ending on a Quarterly Distribution Date being hereinafter called a
"Quarterly Distribution Period"). Quarterly distributions shall be payable
to holder of record as it appears in the records of the Partnership at the
close of business on the applicable record date (the "Record Date"), which
shall be the 15th day of the calendar month in which the applicable
Quarterly Distribution Date falls on or such other date designated by the
General Partner for the payment of quarterly distributions that is not more
than 50 nor less than 10 days prior to such Quarterly Distribution Date.
The amount of any quarterly distribution payable for any Quarterly
Distribution Period shorter than a full Quarterly Distribution Period shall
be prorated and computed on the basis of the actual number of days in such
period on the basis of a 360-day year of twelve 30-day months. Quarterly
distributions paid on the Series C Preferred Partnership Units in an amount
less than the total amount of such quarterly distributions at the time
accrued and payable on such units shall be allocated pro rata on a per unit
basis among all such units at the time outstanding.
"Business Day" shall mean any day, other than a Saturday or
Sunday, that is neither a legal holiday nor a day on which banking
institutions in New York, New York or Atlanta, Georgia are authorized or
required by law, regulation or executive order to close.
2. The amount of any quarterly distributions accrued on any Series C
Preferred Partnership Units at any Quarterly Distribution Date shall be the
amount of any unpaid quarterly distributions accumulated thereon, to and
including such Quarterly Distribution Date, whether or not earned or
declared, plus an amount equivalent to interest at the rate of eight
percent (8%) per annum compounded quarterly in arrears on any accrued and
unpaid quarterly distributions accrued to and including the most recent
prior Quarterly Distribution Date. The amount of quarterly distributions
accrued on any Series C Preferred Partnership Units at any date other than
a Quarterly Distribution Date shall be equal to the sum of the amount of
any unpaid quarterly distributions accumulated thereon, to and including
the last preceding Quarterly Distribution Date, whether or not earned or
declared, plus an amount equivalent to interest at the rate of eight
percent (8%) per annum compounded quarterly in arrears on any accrued and
unpaid quarterly distributions accrued to and including the most recent
prior Quarterly Distribution Date, and plus an amount calculated on the
basis of the quarterly distribution rate of $.50 per unit for the period
after such last preceding Quarterly Distribution Date to and including the
date as of which the calculation is made based on the actual number of days
in such period on the basis of a 360-day year of twelve 30-day months.
3. Except as provided herein, the Series C Preferred Partnership
Units will not be entitled to any quarterly distributions in excess of full
cumulative quarterly distributions
S-2
<PAGE>
as described above and shall not be entitled to participate in the earnings
or assets of the Partnership, and no interest, or sum of money in lieu of
interest, shall be payable in respect of any quarterly distribution payment
or payments on the Series C Preferred Partnership Units which may be in
arrears, except as otherwise provided herein.
4. Any quarterly distribution payment made on the Series C Preferred
Partnership Units shall first be credited against the earliest accrued but
unpaid distribution due with respect to such units which remains payable.
5. No quarterly distributions on the Series C Preferred Partnership
Units shall be authorized by the General Partner or be paid or set apart
for payment by the Partnership at such time as the terms and provisions of
any agreement of the Partnership, including any agreement relating to its
indebtedness, prohibit such authorization, payment or setting apart for
payment or provide that such authorization, payment or setting apart for
payment would constitute a breach thereof or a default thereunder, or if
such authorization or payment shall be restricted or prohibited by law.
Notwithstanding the foregoing, quarterly distributions on the Series C
Preferred Partnership Units will accrue whether or not the Partnership has
earnings, whether or not there are funds legally available for the payment
of such quarterly distributions and whether or not such quarterly
distributions are authorized.
6. So long as any Series C Preferred Partnership Units remain
outstanding, no distributions, except as described in the immediately
following sentence, shall be declared or paid or set apart for payment on
any class or series of Parity Partnership Units for any period unless full
cumulative quarterly distributions have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof
set apart for such payment on the Series C Preferred Partnership Units for
all Quarterly Distribution Periods terminating on or prior to the
distribution payment date for such class or series of Parity Partnership
Units. When quarterly distributions are not paid in full or a sum
sufficient for such payment is not set apart, as aforesaid, all
distributions declared upon Series C Preferred Partnership Units and all
distributions declared upon any other class or series of Parity Partnership
Units shall be declared ratably in proportion to the respective amounts of
distributions accumulated and unpaid on the Series C Preferred Partnership
Units and accumulated and unpaid on such Parity Partnership Units.
7. So long as any Series C Preferred Partnership Units remain
outstanding, no distributions (other than distributions paid solely in
units of, or options, warrants or rights to subscribe for or purchase,
Junior Units) shall be declared or paid or set apart for payment or other
distribution declared or made upon Junior Units, nor shall any Junior Units
be redeemed, purchased or otherwise acquired (other than a redemption,
purchase or other acquisition of Common Units made for purposes of any
employee incentive or benefit plan of the Partnership or any subsidiary)
for any consideration (or any monies be paid to or made available for a
sinking fund for the redemption of any such units) by the Partnership,
directly or indirectly (except by conversion into or exchange for Junior
Units), unless in each case (i) the full cumulative quarterly distributions
on all outstanding Series C Preferred
S-3
<PAGE>
Partnership Units shall have been or contemporaneously are declared and
paid or declared and set apart for payment for all past Quarterly
Distribution Periods with respect to the Series C Preferred Partnership
Units and (ii) sufficient funds shall have been or contemporaneously are
declared and paid or declared and set apart for the payment of the
quarterly distribution for the current Quarterly Distribution Period with
respect to the Series C Preferred Partnership Units.
11. LIQUIDATION RIGHTS.
1. Upon the voluntary or involuntary liquidation, dissolution or
winding up of the Partnership, the holder of the Series C Preferred
Partnership Units then outstanding shall be entitled to receive and to be
paid out of the assets of the Partnership available for distribution to its
Partners, before any payment or distribution shall be made on any Junior
Units, the amount of $25.00 per unit, plus accrued and unpaid quarterly
distributions thereon, plus an amount equivalent to interest at the rate of
eight percent (8%) per annum compounded quarterly in arrears on any accrued
and unpaid quarterly distributions accrued to and including such
liquidation date; provided, however, that in no event shall such amount
exceed such holder's Capital Account balance on the date of such
distribution.
2. Neither a consolidation nor a merger of any other entity into or
with the Partnership or Weeks, nor a statutory share exchange by Weeks
shall be deemed to be a dissolution, liquidation or winding up, voluntary
or involuntary, for the purposes hereof. A sale, transfer or conveyance of
all or substantially all of the property or business of the Partnership
shall be deemed to be a dissolution, liquidation or winding up for the
purposes hereof.
12. REDEMPTION.
1. OPTIONAL REDEMPTION. On and after November 6, 2003, the
Partnership may, at its option, redeem at any time all, but not part, of
the Series C Preferred Partnership Units at a price per unit equal to the
Redemption Price (as defined below). For purposes of this Section 5(a),
and for purposes of Sections 5(b) and 5(c), the "Redemption Price" shall
equal the portion of the Capital Account balance of the holder of such
Units attributable to such Units, as determined after taking into account
all contributions and distributions, to and including the date fixed for
redemption (the "Redemption Date"), as well as all allocations of Net
Profit, Net Losses and other items to such holder with respect to the
portion of the fiscal year ending on the Redemption Date (including without
limitation the allocations provided by Sections 2(g) and 2(h) of Exhibit F
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to this Agreement, to the extent applicable to the type of redemption
involved). The Redemption Price shall be paid to the holder of the Series
C Preferred Partnership Units (X) if the Current Per Share Market Price is
less than or equal to the Common Stock Exercise Price (as defined in the
AEW Warrant), in cash, or (Y) if the Current Per Share Market Price is
greater than the Common Stock Exercise Price (as defined in the AEW
Warrant), in cash, or at the option of the Partnership, in a number of
shares of Common Stock equal to (i) the aggregate Redemption
S-4
<PAGE>
Price to be paid by the Partnership, divided by (ii) the Current Per Share
Market Price. In addition, if an additional amount of income or gain is
allocated or allocable to the holder of the Series C Preferred Partnership
Units pursuant to Section 2(h)(B)(ii)(Y) of Exhibit F to this Agreement,
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then on the Expiration Date of the AEW Warrant (as defined therein), an
additional cash payment shall be paid to such holder in the amount of such
allocation.
2. REDEMPTION FOLLOWING EXERCISE OF THE AEW WARRANT. If the AEW
Warrant is exercised for shares of Common Stock and the Series C Preferred
Partnership Units have not previously been redeemed, the Partnership may,
at its option, redeem, on or before the 30th day following the exercise of
the AEW Warrant, all, but not part, of the Series C Preferred Partnership
Units at the Redemption Price per unit, and such Redemption Price shall be
paid to the holder in cash, or at the option of the Partnership, in a
number of shares of Common Stock equal to (i) the aggregate Redemption
Price to be paid by the Partnership for such Series C Preferred Partnership
Units, divided by (ii) the Current Per Share Market Price. If the AEW
Warrant is exercised for shares of Series A Preferred Stock, the Series C
Preferred Partnership Units have not previously been redeemed, and the
exercise price is paid for by the holder in cash, the Partnership may, at
its option, redeem, on or before the 30th day following the exercise of the
AEW Warrant, all, but not part, of the Series C Preferred Partnership Units
at the Redemption Price per unit, and such Redemption Price shall be paid
to the holder in cash.
3. REDEMPTION FOLLOWING CERTAIN CONSOLIDATIONS OR MERGERS OF THE
PARTNERSHIP WITHIN FIVE YEARS. If, prior to November 6, 2003, (i) the
Partnership shall effect or consummate a consolidation with or a merger of
the Partnership with or into another entity, and the surviving entity is
not taxed as a partnership for federal income tax purposes, and (ii) the
AEW Warrant has not been exercised on or before the date of the
consummation of such transaction (the "Merger Date"), the Partnership shall
redeem on the Merger Date, all, but not part, of the Series C Preferred
Partnership Units at the Redemption Price per unit. The Redemption Price
shall be paid to the holder of the Series C Preferred Partnership Units in
cash, or at the option of the Partnership, in a number of shares of Common
Stock equal to (i) the aggregate Redemption Price to be paid by the
Partnership, divided by (ii) the Current Per Share Market Price.
4. PROCEDURES OF REDEMPTION.
(1) Notice of redemption will be mailed by the Partnership to the
holder of the Series C Preferred Partnership Units to be redeemed not
less than 5 days nor more than 30 days prior to the Redemption Date at
the address set forth in the Partnership's records. Any notice mailed
in the manner provided herein shall be conclusively presumed to have
been given on the date mailed whether or not the holder received the
notice. In addition to any information required by law, such notice
shall state: (a) the Redemption Date; (b) the Redemption Price; and
(c) that distributions on the units to be redeemed will cease to
accumulate on the Redemption Date.
S-5
<PAGE>
(2) If notice has been mailed in accordance with subparagraph (1)
above and provided that on or before the Redemption Date specified in
such notice all funds necessary for such redemption shall have been
irrevocably set aside by the Partnership, separate and apart from its
other funds in trust for the benefit of the holder of the Series C
Preferred Partnership Units so called for redemption, so as to be, and
to continue to be available therefor, then, from and after the
Redemption Date, distributions on the Series C Preferred Partnership
Units so called for redemption shall cease to accumulate, and said
units shall no longer be deemed to be outstanding and shall not have
the status of Series C Preferred Partnership Units and all rights of
the holder thereof as a partner of the Partnership (except the right
to receive the Redemption Price) shall cease. Upon surrender, in
accordance with such notice, of the Series C Preferred Partnership
Units so redeemed, such Series C Preferred Partnership Units shall be
redeemed by the Partnership at the Redemption Price.
(3) Any funds deposited with a bank or trust company for the
purpose of redeeming Series C Preferred Partnership Units shall be
irrevocably deposited except that:
(a) the Partnership shall be entitled to receive from such
bank or trust company the interest or other earnings, if any,
earned on any money so deposited in trust, and the holder of any
Series C Preferred Partnership Units redeemed shall have no claim
to such interest or other earnings; and
(b) any balance of monies so deposited by the Partnership
and unclaimed by the holder of the Series C Preferred Partnership
Units entitled thereto at the expiration of two years from the
applicable Redemption Date shall be repaid, together with any
interest or other earnings earned thereon, to the Partnership,
and after any such repayment, the holder of the units entitled to
the funds so repaid to the Partnership shall look only to the
Partnership for payment without interest or other earnings.
(4) Unless full accumulated distributions on all Series C
Preferred Partnership Units and any other class or series of Parity
Partnership Units shall have been or contemporaneously are declared
and paid or declared and a sum sufficient for the payment thereof set
apart for payment for all past Quarterly Distribution Periods and the
then current Quarterly Distribution Period, no Series C Preferred
Partnership Units or Parity Partnership Units shall be redeemed or
purchased or otherwise acquired directly or indirectly; provided,
however, that the foregoing provision shall not restrict or otherwise
adversely affect the rights of the holder of the Series C Preferred
Partnership Units under Section 6 hereof.
S-6
<PAGE>
(5) If the Redemption Date is after a Record Date and before the
related Quarterly Distribution Date, the distribution payable on such
Quarterly Distribution Date shall be paid on the Redemption Date to
the holder in whose name the Series C Preferred Partnership Units to
be redeemed are registered at the close of business on such Record
Date notwithstanding the redemption thereof between such Record Date
and the related Quarterly Distribution Date.
13. PUT RIGHTS.
1. EXERCISE OF PUT RIGHT. The holder of the Series C Preferred
Partnership Units shall have the right, at its option, to put (the "Put
Right") to the Partnership at any time all, but not part, of the Series C
Preferred Partnership Units at a price per unit (the "Put Price") equal to
the portion of the Capital Account balance of the holder of such Units
attributable to such Units, as determined after taking into account all
contributions and distributions, to and including the date fixed for such
exchange (the "Exchange Date"), as well as all allocations of Net Profit,
Net Losses and other items to such holder with respect to the fiscal year
in which the Exchange Date falls (including without limitation the
allocations provided by Sections 2(g) and 2(h) of Exhibit F to this
---------
Agreement, to the extent applicable to the exchange). The Put Price shall
be paid to the holder, at the option of the Partnership, in (i) cash, or
(ii) a number of shares of Common Stock equal to either (x) the aggregate
Put Price to be paid by the Partnership divided by the Current Per Share
Market Price, if the Current Per Share Market Price is greater than
$33.4375 per share (the "Put Exchange Price"), or (y) 1,046,729 shares of
Common Stock, if the Current Per Share Market Price is less than or equal
to the Put Exchange Price (the "Put Share Exchange Rate").
2. PROCEDURES OF PUT RIGHT.
(1) The Put Right shall terminate at the close of business on (i)
the Redemption Date set pursuant to Section 5 hereof, or (ii) if the
Partnership shall so elect and state in the notice of redemption, the
date on which the Partnership irrevocably deposits with a designated
bank or trust company money sufficient to pay, on the Redemption Date,
the Redemption Price, unless the Partnership shall default in making
payment of the amount payable upon such redemption.
(2) In order to exercise the Put Right, the holder of the Series
C Preferred Partnership Units shall mail notice of the exercise of
such right to the Partnership not less than 5 days nor more than 30
days prior to the Exchange Date and shall surrender to the Partnership
the units to be exchanged on the Exchange Date. If the Exchange Date
is after a Record Date and before the related Quarterly Distribution
Date, the distribution payable on such Quarterly Distribution Date
shall be paid on the Exchange Date to the holder in whose name the
Series C Preferred Partnership Units to be exchanged are registered at
the close of business on such Record Date notwithstanding the exchange
thereof between such Record Date and the related Quarterly
Distribution Date.
S-7
<PAGE>
(3) The Put Share Exchange Rate shall be adjusted from time to
time as follows:
(i) In case Weeks shall, after the date of original issuance
ofthe Series C Preferred Partnership Units, (A) pay an
extraordinary dividend or make an extraordinary distribution on
its Common Stock in shares of its Common Stock, (B) subdivide or
split its outstanding Common Stock into a greater number of
shares, (C) combine its outstanding Common Stock into a smaller
number of shares or (D) issue any shares of capital stock by
reclassification of its Common Stock, the Put Share Exchange Rate
in effect immediately prior thereto shall be adjusted so that the
holder of any Series C Preferred Partnership Units thereafter
surrendered for exchange shall be entitled to receive the number
of shares of Common Stock of Weeks which such holder would have
owned or have been entitled to receive after the occurrence of
any of the events described above had such units been surrendered
for exchange immediately prior to the occurrence of such event or
the record date therefor, whichever is earlier. An adjustment
made pursuant to this clause (i) shall become effective
immediately after the close of business on the record date for
determination of shareholders entitled to receive such
extraordinary dividend or extraordinary distribution in the case
of an extraordinary dividend or extraordinary distribution
(except as provided in subparagraph (6) below) and shall become
effective immediately after the close of business on the
effective date in the case of a subdivision, split, combination
or reclassification.
(ii) No adjustment in the Put Share Exchange Rate shall be
required unless such adjustment would require an increase or
decrease of at least 1%; provided, however, that any adjustments
-------- -------
which by reason of this subparagraph (ii) are not required to be
made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this subparagraph
(3) shall be made to the nearest 1/100th of a share (with .005 of
a share being rounded upward).
(4) Whenever the Put Share Exchange Rate is adjusted in
accordance with subparagraph (3), the Put Exchange Price shall be
adjusted by multiplying such Put Exchange Price immediately prior to
such adjustment by a fraction, of which the numerator shall be the
number of shares of Common Stock issuable upon exchange immediately
prior to such adjustment, and of which the denominator shall be the
number of shares of Common Stock issuable upon exchange immediately
thereafter.
(5) In any case in which subparagraph (3) above provides that
an adjustment shall become effective immediately after a record date
for an event and
S-8
<PAGE>
the date fixed for exchange occurs after such record date but before
the occurrence of such event, the Partnership may defer until the
actual occurrence of such event (i) issuing to the holder of the
Series C Preferred Partnership Units surrendered for exchange the
additional shares of Common Stock issuable upon such exchange by
reason of the adjustment required by such event over and above the
Common Stock issuable upon such exchange before giving effect to such
adjustment and (ii) paying to such holder any amount in cash in lieu
of any fraction pursuant to Section 12.
(6) Notwithstanding any other provision herein to the contrary,
the issuance of any shares of Common Stock pursuant to any plan
providing for the reinvestment of dividends or interest payable on
securities of Weeks and the investment of additional optional amounts
in shares of Common Stock under any such plan shall not be deemed to
constitute an issuance of Common Stock. There shall be no adjustment
of the Put Share Exchange Rate in case of the issuance of any stock of
Weeks in a reorganization, acquisition, stock sale or other similar
transaction except as specifically set forth in Section 11. If any
action or transaction would require adjustment of the Put Share
Exchange Rate pursuant to more than one provision, only one adjustment
shall be made and such adjustment shall be the amount of adjustment
which has the highest absolute value.
(7) Subject to the provision of Section 12(a), Weeks shall not
take any action which results in adjustment of the number of shares of
Common Stock issuable upon exchange of Series C Preferred Partnership
Units if the total number of shares of Common Stock issuable after
such action upon exchange of the Series C Preferred Partnership Units
then outstanding, together with the total number of shares of Common
Stock then outstanding, would exceed the total number of shares of
Common Stock then authorized under Weeks' Articles of Incorporation.
Subject to the foregoing, Weeks shall take all such actions as it may
deem reasonable under the circumstances to provide for the issuance of
such number of shares of Common Stock as would be necessary to allow
for the exchange from time to time, and taking into account
adjustments as herein provided, of the outstanding Series C Preferred
Partnership Units in accordance with the terms and provisions of
Weeks' Articles of Incorporation.
14. VOTING RIGHTS. Except as required by law, the holder of the Series C
Preferred Partnership Units shall not be entitled to vote at any meeting of the
Partners or for any other purpose or otherwise to participate in any action
taken by the Partnership or the Partners, or to receive notice of any meeting of
the Partners; provided, however that so long as the Series C Preferred
Partnership Units remain outstanding, the Partnership will not, without the
affirmative vote or consent of the holder of the Series C Preferred Partnership
Units, (i) authorize or create a class or series of Partnership Units ranking
prior to the Series C Preferred Partnership Units, as to the payment of
distributions or as to the distribution of assets upon liquidation, dissolution
or winding up (taking into account the effects of allocations of Net Profits,
Net Losses and other items), (ii) amend, alter or repeal the provisions of the
Partnership Agreement so as to materially and adversely affect any
S-9
<PAGE>
right, preference, privilege or voting power of the Series C Preferred
Partnership Units (provided that the amendment of the provisions of the
Partnership Agreement so as to authorize or create or to increase the authorized
amount of any class of Units that are not senior in any respect to the Series C
Preferred Partnership Units, or any Parity Partnership Units, shall not be
deemed to adversely affect the rights, preferences, privileges or voting power
of the Series C Preferred Partnership Units); or (iii) effect or consummate a
consolidation with or a merger of the Partnership with or into another entity,
unless each Series C Preferred Partnership Unit (x) shall remain outstanding
without a material and adverse change to its terms and rights or (y) shall be
converted into or exchanged for preferred units of the surviving entity having
preferences, voting powers, restrictions, limitations as to distributions,
qualifications and terms or conditions of redemption thereof identical to that
of a Series C Preferred Partnership Unit (except for changes that do not
materially and adversely affect the holder of Series C Preferred Partnership
Units). The foregoing voting provisions will not apply if, at or prior to the
time when the act with respect to which such vote would otherwise be required
shall be effected, all outstanding Series C Preferred Partnership Units shall
have been redeemed or called for redemption pursuant to Section 5 or 6 hereof
and sufficient funds shall have been deposited in trust to effect such
redemption. Nothing contained in this Section 7 shall adversely affect the
rights granted to AEW Fund pursuant to that certain Management Rights Letter (as
defined in the Securities Purchase Agreement).
15. CONVERSION. Except as otherwise set forth herein, the Series C
Preferred Partnership Units are not convertible into or exchangeable for any
other property or securities of the Partnership.
16. NO MATURITY. The Series C Preferred Partnership Units shall have no
stated maturity and will not be subject to any sinking fund or mandatory
redemption provisions.
17. RESTRICTIONS ON TRANSFER. The Series C Preferred Partnership Units
may only be transferred in whole and not in part. The Series C Preferred
Partnership Units are subject to the transfer restrictions set forth in Article
IX of the Partnership Agreement. For this purpose, no Restricted Period shall
apply with respect to the Series C Preferred Partnership Units, and the "Rights"
applicable shall be the Put Right and the other provisions of Section 6 hereof.
18. PROVISIONS IN CASE OF CONSOLIDATION, MERGER OR SALE OF ASSETS. In
case of any consolidation of Weeks with, or merger of Weeks into, any other
Person, any merger or consolidation of another Person into Weeks (other than a
merger that does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock), any acquisition of the
outstanding Common Stock by share exchange, or any sale or transfer of all or
substantially all of the assets of Weeks, the Person formed by such
consolidation or resulting from such merger or that acquires the outstanding
Common Stock or such assets of Weeks as the case may be, shall execute and
deliver to the holder of Series C Preferred Partnership Units an agreement
providing that such holder shall have the rights provided herein, during the
period such rights shall be exercisable (which shall be at least as long as the
period for which such rights can be exercised pursuant to the terms hereof), to
exercise such rights for the kind and amount of securities, cash and other
property receivable upon such consolidation, merger, share exchange, sale or
transfer
S-10
<PAGE>
by a holder of the number of shares of Common Stock for which such rights might
have been exercised immediately prior to such consolidation, merger, share
exchange, sale or transfer, assuming both that (a) such holder of shares of
Common Stock is not a Person with which Weeks consolidated or into which Weeks
merged or that merged into Weeks, or that acquired the outstanding Common Stock
by share exchange, or to which such sale or transfer was made, as the case may
be (a "Constituent Person"), or an Affiliate of a Constituent Person, and that
(b) such holder does not exercise his right of election, if any, as to the kind
or amount of securities, cash or other property receivable upon such
consolidation, merger, share exchange, sale or transfer (provided that if the
--------
kind or amount of securities, cash and other property receivable upon such
consolidation, merger, share exchange, sale or transfer is not the same for each
share of Common Stock in respect of which such right of election, if any, is not
exercised ("non-electing Share"), then for the purpose of this Section 11, the
kind and amount of securities, cash and other property receivable upon such
consolidation, merger, share exchange, sale or transfer by each non-electing
Share shall be deemed to be the kind and amount so receivable per non-electing
Share by a plurality of the non-electing Shares). Such agreement shall provide
for adjustments that, for events subsequent to the effective date of such
agreement, shall be as nearly equivalent as may be practicable to the
adjustments provided for herein.
19. GENERAL.
a. All shares of Common Stock delivered upon exchange or redemption
of the Series C Preferred Partnership Units will upon delivery be duly and
validly issued and fully paid and nonassessable. Weeks covenants that it
will at all times reserve and keep available, free from preemptive rights,
out of the aggregate of its authorized but unissued shares of Common Stock
or its issued shares of Common Stock held in its treasury, or both, for the
purpose of effecting the exchange or redemption of the Series C Preferred
Partnership Units, the full number of shares of Common Stock deliverable
upon the exchange or redemption of all outstanding shares of Series C
Preferred Partnership Units not theretofore exchanged or redeemed.
b. In connection with the exchange or redemption of any Series C
Preferred Partnership Units, fractions of such units may be converted;
however, no fractional shares or scrip representing fractions of shares of
Common Stock shall be issued upon exchange or redemption of the Series C
Preferred Partnership Units. Instead of any fractional interest in a share
of Common Stock which would otherwise be deliverable upon the exchange or
redemption of a share of Series C Preferred Partnership Units (or fraction
thereof), the Partnership shall pay to the holder of such unit an amount in
cash (computed to the nearest cent) equal to the Current Per Share Market
Price immediately preceding the date of exchange or redemption multiplied
by the fraction of a share of Common Stock represented by such fractional
interest
c. For purposes hereof, the number of shares of Common Stock at any
time outstanding shall not include any shares of Common Stock then owned or
held by or for the account of Weeks or any entity controlled by Weeks.
S-11
<PAGE>
d. Neither the General Partner nor the Partnership shall have any
obligation or authority to redeem or exchange any Series C Preferred
Partnership Units to the extent that issuance of shares of Common Stock
would result (i) in the violation of the General Ownership Limit (as such
term is defined in the Articles of Incorporation), (ii) would cause Weeks
to fail the stock ownership test of Section 856(a)(6) of the Code, or (iii)
would otherwise cause Weeks to fail to qualify as a REIT; provided that in
any such case, the General Partner or the Partnership shall purchase for
cash those Series C Preferred Partnership Units which may not be redeemed
or exchanged with shares of Common Stock. Each holder shall provide to the
General Partner such information as the General Partner may request
regarding such holder's actual and constructive ownership of Common Stock
and Preferred Stock (and of individuals, and entities related to such
holder) in order for the General Partner to determine, in its sole
discretion, whether an exchange or redemption of the Series C Preferred
Partnership Units for shares of Common Stock would result in a violation of
such restrictions.
e. To the extent the Partnership issues shares of Common Stock, it
shall obtain the necessary shares of Common Stock in exchange for the
issuance of additional Partnership Interests to the General Partner, Weeks
LP Holdings, or any combination thereof, as determined by the General
Partner in its sole discretion, and the General Partner and/or Weeks LP
Holdings may obtain the necessary shares of Common Stock from Weeks.
f. Notwithstanding anything herein to the contrary, the General
Partner, Weeks LP Holdings or any combination thereof (an "Assumer" or,
collectively, the "Assumers") may, in the sole and absolute discretion of
the General Partner, assume directly and satisfy the exercise of a
redemption or exchange right by paying the holder of Series C Preferred
Partnership Units the Redemption Price or Put Price, as applicable. In
such event, the Assumers shall acquire the Series C Preferred Partnership
Units and shall be treated for all purposes as the owner of such Series C
Preferred Partnership Units, which shall be held by the Assumers in their
respective existing capacities as general partner or Limited Partners, as
the case may be. In the event the General Partner shall exercise the
Assumers' right to satisfy a redemption or exchange right in the manner
described in this paragraph, the Partnership shall have no obligation to
pay any amount to such holder with respect to such holder's exercise of
such right; provided, however, that the Partnership shall remain liable to
the holder to the extent that any such holder's right is not fully
satisfied; and each of the holder, the Partnership, and the Assumers shall
treat the transaction between the Assumers and the holder as a sale of the
holder's Series C Preferred Partnership Units to the Assumers for federal
income tax purposes. To the extent the Assumers issue shares of Common
Stock, they may obtain the necessary shares of Common Stock from Weeks.
Each holder agrees to execute such documents as the General Partner may
reasonably require in connection with the issuance of Common Stock.
g. Redemption or exchange of Series C Preferred Partnership Units
shall be accompanied by proper instruments of transfer and assignment for
such Series C Preferred
S-12
<PAGE>
Partnership Units and by the delivery of (i) representations and warranties
of (A) such holder with respect to its due authority to transfer all of the
right, title and interest in and to such Series C Preferred Partnership
Units and with respect to the status of the Series C Preferred Partnership
Units being transferred, free and clear of all Liens, and (B) the
Partnership or the Assumers, as applicable, with respect to due authority
for the redemption or exchange of such Series C Preferred Partnership
Units, and (ii) to the extent that shares of Common Stock are issued, (A)
an opinion of counsel for Weeks, reasonably satisfactory to the holder(s),
to the effect that such shares of Common Stock have been duly authorized,
are validly issued, fully-paid and nonassessable, and (b) a stock
certificate or certificates evidencing the Common Stock to be issued and
registered in the name of the holder or its designee.
h. The holder of Series C Preferred Partnership Units covenants and
agrees that all such Partnership Units redeemed or exchanged shall be
delivered free and clear of all Liens. Should any Liens exist or arise
with respect to such Series C Preferred Partnership Units, neither the
Assumers nor the Partnership shall be under any obligation to redeem or
acquire the same unless, in connection therewith, the General Partner has
elected to pay a portion of the Redemption Price or the Put Price, as
applicable, in the form of the cash in circumstances in which such cash
will be sufficient to cause such existing Lien to be discharged in full
upon application of all or a part of the cash. The Partnership and the
Assumers are expressly authorized to apply such portion of the cash as may
be necessary to discharge such Lien in full. The holder further agrees
that, in the event any state or local property transfer tax is payable as a
result of the transfer of its Series C Preferred Partnership Units to the
Partnership or the Assumers, such holder shall assume and pay such transfer
tax.
i. The rights of the holder of the Series C Preferred Partnership
Units, in its capacity as a holder of the Series C Preferred Partnership
Units, are in addition to and not in limitation on any other rights or
authority of the holder of the Series C Preferred Partnership Units, in any
other capacity, under the Partnership Agreement. In addition, nothing
contained herein shall be deemed to limit or otherwise restrict any rights
or authority of the holder of the Series C Preferred Partnership Units
under the Partnership Agreement, other than in its capacity as a holder of
the Series C Preferred Partnership Units.
S-13
<PAGE>
EXHIBIT 4.16
FIFTEENTH AMENDMENT TO THE
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
WEEKS REALTY, L.P.
This Fifteenth Amendment to the Second Amended and Restated Agreement of
Limited Partnership of Weeks Realty, L.P. (this "Amendment") is entered into as
of November 12, 1998, by and between Weeks GP Holdings, Inc., a Georgia
corporation (the "General Partner"), and Greene Street 1998 Exchange Fund, L.P.,
a Delaware limited partnership ("Greene Street Fund"). All capitalized terms
used herein shall have the meanings given to them in the Second Amended and
Restated Agreement of Limited Partnership of Weeks Realty, L.P., dated October
30, 1996, as amended by the First Amendment to the Partnership Agreement dated
November 1, 1996, the Second Amendment to the Partnership Agreement dated
December 31, 1996, the Third Amendment to the Partnership Agreement dated
January 31, 1997, the Fourth Amendment to the Partnership Agreement dated August
1, 1997, the Fifth Amendment to the Partnership Agreement dated October 7, 1997,
the Sixth Amendment to the Partnership Agreement dated October 27, 1997, the
Seventh Amendment to the Partnership Agreement dated December 30, 1997 and
effective as of August 1, 1997, the Eighth Amendment to the Partnership
Agreement dated January 9, 1998, the Ninth Amendment to the Partnership
Agreement dated January 20, 1998, the Tenth Amendment to the Partnership
Agreement dated April 3, 1998, the Eleventh Amendment to the Partnership
Agreement dated May 26, 1998, the Twelfth Amendment to the Partnership Agreement
dated June 3, 1998, the Thirteenth Amendment to the Partnership Agreement dated
August 7, 1998, and the Fourteenth Amendment to the Partnership Agreement dated
November 6, 1998 (the "Partnership Agreement").
WHEREAS, pursuant to that certain Private Placement Purchase Agreement
dated the date hereof by and among Greene Street Fund, Weeks and the Partnership
(the "Purchase Agreement"), Greene Street Fund desires to contribute $65 million
to the Partnership in exchange for partnership interests in the Partnership as
set forth herein; and
WHEREAS, as provided in Section 9.3 of the Partnership Agreement, the
General Partner is authorized to cause the Partnership to issue additional
interests in the Partnership in exchange for such contribution.
NOW THEREFORE, in consideration of the mutual covenants herein contained,
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
<PAGE>
1. Contribution.
------------
Greene Street Fund hereby contributes to the Partnership $65 million as a
contribution to the capital of the Partnership.
2. Issuance of Series D Preferred Partnership Units; Rights.
--------------------------------------------------------
In consideration of the contribution to the Partnership pursuant to Section
1 hereof, the Partnership hereby issues to Greene Street Fund 2,600,000 Series D
Preferred Partnership Units (as defined herein). Exhibit T to the Partnership
---------
Agreement, attached hereto, is hereby inserted into the Partnership Agreement.
Greene Street Fund hereby agrees that it shall not have any rights with respect
to the "Rights" provided for in Section 11.1 and Exhibit B-1 to the Partnership
Agreement.
3. Definitions.
-----------
In addition to those terms defined in the Partnership Agreement, the
following definitions shall be for all purposes, unless otherwise clearly
indicated to the contrary, inserted into the Partnership Agreement and applied
to the terms used in the Partnership Agreement and in this Amendment:
"Series D Preferred Partnership Unit" means a Partnership Unit issued
-----------------------------------
by the Partnership to Greene Street Fund in consideration of the
contribution by Greene Street Fund to the Partnership of $25.00. The
Series D Preferred Partnership Units shall constitute Preferred Partnership
Units. The Series D Preferred Partnership Units shall have the voting
powers, designation, preferences and relative, participating, optional or
other special rights and qualifications, limitations or restrictions as are
set forth in Exhibit T, attached hereto.
---------
"Series D Preferred Stock" means the 8.625% Series D Cumulative
------------------------
Redeemable Preferred Stock, par value $0.01 per share, having a liquidation
preference equal to $25.00 per share issued by Weeks.
In addition, the definition of "Liquidation Preference Amount" appearing in
Article I of the Partnership Agreement is hereby deleted in its entirety and the
following definition is inserted in its place:
"Liquidation Preference Amount" shall have the meaning set forth in
-----------------------------
Exhibit F to the Partnership Agreement.
---------
4. Allocations and Other Tax and Accounting Matters.
------------------------------------------------
Exhibit F to the Partnership Agreement is hereby deleted in its entirety
---------
and Exhibit F attached hereto is hereby inserted in its place.
---------
-2-
<PAGE>
5. Admission. Greene Street Fund is hereby admitted to the Partnership
---------
as a Limited Partner, effective as of the date hereof, and Greene Street Fund
hereby agrees to be bound by the terms of the Partnership Agreement.
6. Exhibits to Partnership Agreement.
---------------------------------
The General Partner shall maintain the information set forth in Exhibit A
---------
to the Partnership Agreement, as such information shall change from time to
time, in such form as the General Partner deems appropriate for the conduct of
the Partnership affairs, and Exhibit A shall be deemed amended from time to time
---------
to reflect the information so maintained by the General Partner, whether or not
a formal amendment to the Partnership Agreement has been executed amending such
Exhibit A. In addition to the issuance of Series D Preferred Partnership Units
- ---------
pursuant to this Amendment, such information shall reflect (and Exhibit A shall
---------
be deemed amended from time to time to reflect) the issuance of any additional
Partnership Units to any Person, the transfer of Partnership Units and the
redemption of any Partnership Units, all as contemplated herein.
7. Miscellaneous. This Amendment shall be governed by and construed in
-------------
conformity with the laws of the State of Georgia. For the purposes of the
notice provisions of the Partnership Agreement, the address of Greene Street
Fund is as set forth on the signature page hereof. Except as expressly amended
hereby, the Partnership Agreement shall remain in full force and effect. This
Amendment and all the terms and provisions hereof shall be binding upon and
shall inure to the benefit of the parties, and their legal representatives,
heirs, successors and permitted assigns.
-3-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first written above.
GENERAL PARTNER:
WEEKS GP HOLDINGS, INC.,
a Georgia corporation
By:________________________
Name:
Title:
LIMITED PARTNER:
GREENE STREET 1998 EXCHANGE FUND. L.P.
a Delaware limited partnership
By: Goldman Sachs Management Partners, L.P., its
By: Goldman Sachs Management, Inc., its
General Partner
By:______________________________
Name:
Title:
Address: c/o Goldman, Sachs & Co.
One New York Plaza
New York, New York 10004
Attn: Elizabeth Groves
<PAGE>
EXHIBIT F
---------
WEEKS REALTY, L.P.
ALLOCATIONS
Section 1. Allocation of Net Income and Net Loss.
-------------------------------------
(a) Net Income. After giving effect to the special allocations set
----------
forth in Section 2 hereof, Net Income for any fiscal year or other
applicable period shall be allocated in the following manner and order of
priority:
(1) To the General Partner until the cumulative allocations of Net
Income under this Section 1(a)(1) equal the cumulative Net Losses
allocated to the General Partner under Section 1(b)(5) hereof.
(2) To those Partners who have received allocations of Net Loss under
Section 1(b)(4) hereof until the cumulative allocations of Net Income
under this Section 1(a)(2) equal such cumulative allocations of Net
Loss (such allocation of Net Income to be in proportion to the
cumulative allocations of Net Loss under such section to each such
Partner).
(3) To the Partners holding Preferred Partnership Units until the
cumulative allocations of Net Income under this Section 1(a)(3) equal
the cumulative allocations of Net Loss to such Partners under Section
1(b)(3) hereof (such allocation of Net Income being in proportion to
the cumulative allocations of Net Loss under such section to each such
Partner).
(4) To those Partners who have received allocations of Net Loss under
Section 1(b)(2) hereof until the cumulative allocations of Net Income
under this Section 1(a)(4) equal such cumulative allocations of Net
Loss (such allocation of Net Income to be in proportion to the
cumulative allocations of Net Loss under such section to each such
Partner).
(5) To the Partners until the cumulative allocations of Net Income
under this Section 1(a)(5) equal the cumulative allocations of Net
Loss to such Partners under Section 1(b)(1) hereof (such allocation of
Net Income to be in proportion to the cumulative allocations of Net
Loss under such section to each such Partner).
(6) To the holders of Series D Preferred Partnership Units until the
cumulative allocations of Net Income under this Section 1(a)(6) equal
the cumulative quarterly distributions that have accrued on such Units
for the current and all prior fiscal years under Section 3(a) and 3(b)
of Exhibit T (irrespective of whether such accrued
---------
<PAGE>
amounts have been paid to such holders or remain unpaid as of the time
such allocation is being made).
(7) Any remaining Net Income shall be allocated to the Partners who
hold Common Partnership Units in proportion to their respective
Percentage Interests as holders of Common Partnership Units.
(b) Net Losses. After giving effect to the special allocations set
-----------
forth in Section 2 hereof, Net Losses shall be allocated to the Partners as
follows:
(1) To the Partners who hold Common Partnership Units in accordance
with their respective Percentage Interests as holders of Common
Partnership Units, except as otherwise provided in this Section 1(b).
(2) To the extent that an allocation of Net Loss under Section
1(b)(1) would cause a Partner to have an Adjusted Capital Account
Deficit at the end of such taxable year (or increase any existing
Adjusted Capital Account Deficit of such Partner), such Net Loss shall
instead be allocated to those Partners who hold Common Partnership
Units, if any, for whom such allocation of Net Loss would not cause or
increase an Adjusted Capital Account Deficit. Solely for purposes of
this Section 1(b)(2), the Adjusted Capital Account Deficit, in the
case of those Partners who also hold Preferred Partnership Units,
shall be determined without regard to the amount credited to such
Partners' Capital Accounts for the aggregate Liquidation Preference
Amount attributable to such Preferred Partnership Units, and in the
case of a Principal or a Principal-Controlled Partnership, shall be
determined without regard to such Partner's deficit Capital Account
restoration obligation under Section 8.7(b) of the Partnership
Agreement. The Net Loss allocated under this Section 1(b)(2) shall be
allocated among the Partners who may receive such allocation in
proportion to their respective Percentage Interests in Common
Partnership Units.
(3) Any remaining Net Loss shall be allocated to the holders of
Preferred Partnership Units in accordance with their respective
Percentage Interests as holders of Preferred Partnership Units to the
extent that such allocation of Net Loss would not cause or increase an
Adjusted Capital Account Deficit of such Partners.
(4) Any remaining Net Loss shall be allocated to the Principals and
the Principal-Controlled Partnerships in accordance with their
respective Percentage Interests in Common Partnership Units; provided
--------
that if, after the death of a Principal, the estate of such Principal
----
or any Principal-Controlled Partnership with respect to such Principal
elects pursuant to Section 8.7(c) of the Partnership Agreement to
eliminate or reduce its deficit Capital Account restoration obligation
under Section 8.7(b) of the Partnership Agreement, Net Losses shall
not be allocated to such Partner to the extent that such allocation
would cause such Partner to have an Adjusted Capital Account Deficit
(or would increase any existing Adjusted
F-3
<PAGE>
Capital Account Deficit of such Partner) as of the end of such taxable
year, and instead shall be allocated to those Principals and
Principal-Controlled Partnerships as to whom the foregoing limitation
does not apply.
(5) Any remaining Net Loss shall be allocated to the General Partner.
(c) Definition of Liquidation Preference Amount. For purposes of this
-------------------------------------------
Exhibit F, the term "Liquidation Preference Amount" means, with respect to any
- ---------
Preferred Partnership Unit, the amount payable with respect to such Preferred
Partnership Unit (as established by the instrument designating such Preferred
Partnership Units) upon the voluntary or involuntary dissolution, liquidation or
winding up of the Partnership, as the case may be, other than accrued and unpaid
quarterly distributions in arrears.
Section 2. Special Allocations. Notwithstanding any provisions of paragraph 1
-------------------
of this Exhibit F, the following special allocations shall be made in the
---------
following order:
(a) Minimum Gain Chargeback (Nonrecourse Liabilities). If there is a net
-------------------------------------------------
decrease in Partnership Minimum Gain for any Partnership fiscal year (except as
a result of certain conversions or refinancings of Partnership indebtedness,
certain capital contributions, or certain revaluations of Property as further
outlined in Regulation Sections 1.704-2(d)(4), (f)(2) or (f)(3)), each Partner
shall be specially allocated items of Partnership income and gain for such year
(and, if necessary, subsequent years) in an amount equal to that Partner's share
of the net decrease in Partnership Minimum Gain. The items to be so allocated
shall be determined in accordance with Regulation Section 1.704-2(f). This
paragraph (a) is intended to comply with the minimum gain chargeback requirement
in said section of the Regulations and shall be interpreted consistently
therewith. Allocations pursuant to this paragraph (a) shall be made in
proportion to the respective amounts required to be allocated to each Partner
pursuant hereto.
(b) Minimum Gain Attributable to Partner Nonrecourse Debt. If there is a
-----------------------------------------------------
net decrease in Minimum Gain Attributable to Partner Nonrecourse Debt during any
fiscal year (other than due to the conversion, refinancing or other change in
the debt instrument causing it to become partially or wholly nonrecourse,
certain capital contributions, or certain revaluations of Property as further
outlined in Regulation Section 1.704-2(i)(4)), each Partner shall be specially
allocated items of Partnership income and gain for such year (and, if necessary,
subsequent years) in an amount equal to that Partner's share of the net decrease
in the Minimum Gain Attributable to Partner Nonrecourse Debt. The items to be
so allocated shall be determined in accordance with Regulation Sections 1.704-
2(i)(4) and (j)(2). This paragraph (b) is intended to comply with the minimum
gain chargeback requirement with respect to Partner Nonrecourse Debt contained
in said sections of the Regulations and shall be interpreted consistently
therewith. Allocations pursuant to this paragraph (b) shall be made in
proportion to the respective amounts required to be allocated to each Partner
pursuant hereto.
(c) Qualified Income Offset. In the event any Partner unexpectedly
-----------------------
receives any adjustments, allocations or distributions described in Regulation
Section 1.704-1(b)(2)(ii)(d)(4), (5), or (6), and such Partner has an Adjusted
- - - -
Capital Account Deficit, items of Partnership income and
F-4
<PAGE>
gain shall be specially allocated to such Partner in an amount and manner
sufficient to eliminate the Adjusted Capital Account Deficit as quickly as
possible. This paragraph (c) is intended to constitute a "qualified income
offset" under Regulation Section 1.704-1(b)(2)(ii)(d) and shall be interpreted
-
consistently therewith.
(d) Nonrecourse Deductions. Nonrecourse Deductions for any fiscal year or
----------------------
other applicable period shall be allocated to the Partners in accordance with
their respective Percentage Interests in Common Partnership Units.
(e) Partner Nonrecourse Deductions. Partner Nonrecourse Deductions for any
------------------------------
fiscal year or other applicable period shall be specially allocated to the
Partner that bears the economic risk of loss for the debt in respect of which
such Partner Nonrecourse Deductions are attributable (as determined under
Regulations Sections 1.704-2(b)(4) and (i)(1)).
(f) Curative Allocations. The Regulatory Allocations (as hereinafter
--------------------
defined) shall be taken into account in allocating other items of income, gain,
loss, and deduction among the Partners so that, to the extent possible, the
cumulative net amount of allocations of Partnership items under Sections 1 and 2
of this Exhibit F shall be equal to the net amount that would have been
---------
allocated to each Partner if the Regulatory Allocations had not occurred. This
paragraph (f) is intended to minimize, to the extent possible and to the extent
necessary, any economic distortions which may result from application of the
Regulatory Allocations and shall be interpreted in a manner consistent
therewith. For purposes hereof, "Regulatory Allocations" shall mean all the
allocations provided under this Section 2 other than paragraphs (f), (g), (h),
(i), (j) and (k).
(g) Priority Allocation With Respect To Preferred Partnership Units. All
---------------------------------------------------------------
or a portion of the remaining items of Partnership gross income or gain for the
Partnership fiscal year, if any, shall be specially allocated to the holders of
the outstanding Series A Preferred Partnership Units and Series C Preferred
Partnership Units (the "Preferred Unit Holders") in an amount equal to the
excess, if any, of the cumulative distributions received by the Preferred Unit
Holders pursuant to Section 6.2(i) of the Partnership Agreement, as amended, for
the current Partnership fiscal year and all prior Partnership fiscal years
(other than any distributions that are treated as being in satisfaction of the
Liquidation Preference Amount for any Preferred Partnership Units) over the
cumulative allocations of Partnership gross income and gain to the Preferred
Unit Holders under this Section 2(g) for all prior Partnership fiscal years.
Such allocations shall be made in proportion to relative excess amounts
determined for each such holder. Solely for purposes of making the required
allocation under this Section 2(g) in the fiscal year in which the Partnership
is liquidated, the amount of any accrued but unpaid distributions in arrears in
respect of the Preferred Partnership Units (determined in accordance with the
relevant provisions of Exhibit R and Exhibit S to the Partnership Agreement)
--------- ---------
shall be treated as having been distributed to the Preferred Unit Holders
immediately prior to such liquidation under Section 6.2(i) hereof.
(h) Special Additional Priority Allocations With Respect to Series C
----------------------------------------------------------------
Preferred Partnership Units. In addition to the priority allocations set forth
- ---------------------------
in paragraph (g), the following allocations shall be made only in the taxable
years as specified in this Section 2(h), and shall be made prior to making the
allocations in Section 2(g), and in the following priority:
F-5
<PAGE>
(A) Items of Partnership gross income or gain for the Partnership
fiscal year shall be specially allocated to the holder of the outstanding
Series C Preferred Partnership Units until the cumulative allocations under
this Section 2(h)(A) equal the difference between the aggregate Liquidation
Preference Amounts with respect to such Units and the amount contributed to
the Partnership with respect to such Units.
(B) If the Series C Preferred Partnership Units are redeemed pursuant
to Section 5(a) or 5(b) or put pursuant to Section 6 of Exhibit S to this
---------
Partnership Agreement, additional items of Partnership gross income or gain
for the Partnership fiscal year shall be specially allocated to the holder
of the redeemed Series C Preferred Partnership Units until such holder's
Capital Account balance equals (i) if the Series C Preferred Partnership
Units are redeemed pursuant to Section 5(b) or put pursuant to Section 6,
the Liquidation Preference Amount, plus the amount of any accrued but
unpaid quarterly distributions (the "Target Balance"), and (ii) if the
Series C Preferred Partnership Units are redeemed pursuant to Section 5(a),
the sum of (X) the Target Balance, plus (Y) if the AEW Warrant has not been
exercised on or before the Expiration Date of the AEW Warrant (as defined
therein), the Target Balance with respect to the Series C Preferred
Partnership Units redeemed, multiplied by the following applicable
percentage based on the time of redemption of such Units:
Redemption on or after November 6, Percentage
---------------------------------- ----------
2003 4%
2004 3%
2005 2%
2006 1%
2007 0%
(C) If the Series C Preferred Partnership Units are redeemed pursuant
to Section 5(c) of Exhibit S to this Partnership Agreement, additional
---------
items of Partnership gross income or gain for the Partnership fiscal year
shall be specially allocated to the holder of the redeemed Series C
Preferred Partnership Units until such holder's Capital Account balance
equals the sum of (i) the Target Balance, plus (ii) the Target Balance with
respect to the Series C Preferred Partnership Units redeemed, multiplied by
the following applicable percentage based on the time of redemption of such
Units:
Redemption on or after November 6, Percentage
---------------------------------- ----------
1998 10%
1999 9%
2000 8%
2001 7%
F-6
<PAGE>
2002 6%
(D) The priority allocations provided by this paragraph (h) shall
only be made with respect to: (i) any fiscal year, or portion thereof, in
which a Redemption Date or Exchange Date falls (as defined in Exhibit S to
---------
this Partnership Agreement); (ii) solely with respect to the allocation
provided by paragraph (h)(A) above, the fiscal year in which the
partnership interest of a holder of Series C Preferred Partnership Units is
"liquidated" within the meaning of Regulations Section 1.704-
1(b)(2)(ii)(g); and (iii) any fiscal year immediately prior to any of the
fiscal years referenced in clauses (i) and (ii) to the extent that the
Exchange Date, the Redemption Date or liquidating distributions occur on or
before the due date (not including extensions) for filing the Partnership's
federal income tax return for such prior fiscal year.
(i) Special Additional Priority Allocation of Gross Income With Respect to
----------------------------------------------------------------------
Series D Preferred Partnership Units. Prior to making the priority allocation
- ------------------------------------
in Section 2(g) hereof, in the event that the Series D Preferred Partnership
Units are redeemed under Sections 5(a) or 6(f) of Exhibit T, the holder shall be
---------
allocated items of Partnership gross income and gain for the Partnership fiscal
year in which such redemption or exchange occurs until the holder's Capital
Account balance equals the sum of the Liquidation Preference Amount of such
Units plus the amount of any accrued but unpaid quarterly distributions with
respect to such Units as of the date of such redemption or exchange.
(j) Priority Rule if More Than One Class of Preferred Partnership Units is
----------------------------------------------------------------------
Redeemed in a Fiscal Year. In the event that units of more than one class of
- -------------------------
Preferred Partnership Units are redeemed in a fiscal year, and there is
insufficient Partnership gross income and gain for such fiscal year (or portion
thereof) to make all of the required gross income allocations provided in
Sections 2(h) and (i) hereof, then the available gross income and gain shall be
allocated pari passu to the holders of each such class of Units in proportion to
the amounts of gross income and gain they would otherwise have been allocated
under such Sections.
(k) Allocation of Nonrecourse Liabilities. The "excess nonrecourse
-------------------------------------
liabilities" of the Partnership (as defined in Regulations Section 1.752-
3(a)(3)) shall be allocated among the Partners in proportion to their respective
interests in Common Partnership Units.
Section 3. Tax Allocations.
----------------
(a) Generally. Subject to paragraphs (b) and (c) hereof, items of income,
---------
gain, loss, deduction and credit to be allocated for income tax purposes
(collectively, "Tax Items") shall be allocated among the Partners on the same
basis as their respective book items.
F-7
<PAGE>
(b) Sections 1245/1250 Recapture. If any portion of gain from the sale of
----------------------------
property is treated as gain which is ordinary income by virtue of the
application of Code Sections 1245 or 1250 ("Affected Gain"), then (A) such
Affected Gain shall be allocated among the Partners in the same proportion that
the depreciation and amortization deductions giving rise to the Affected Gain
were allocated and (B) other Tax Items of gain of the same character that would
have been recognized, but for the application of Code Sections 1245 and/or 1250,
shall be allocated away from those Partners who are allocated Affected Gain
pursuant to Clause (A) so that, to the extent possible, the other Partners are
allocated the same amount, and type, of capital gain that would have been
allocated to them had Code Sections 1245 and/or 1250 not applied. For purposes
hereof, in order to determine the proportionate allocations of depreciation and
amortization deductions for each fiscal year or other applicable period, such
deductions shall be deemed allocated on the same basis as Net Income and Net
Loss for such respective period.
(c) Allocations Respecting Section 704(c) and Revaluations.
------------------------------------------------------
Notwithstanding paragraph (b) hereof, Tax Items with respect to Property that is
subject to Code Section 704(c) and/or Regulation Section 1.704-1(b)(2)(iv)(f)
-
(collectively "Section 704(c) Tax Items") shall be allocated in accordance with
said Code section and/or Regulation Section 1.704-1(b)(4)(i), as the case may
be. Specifically, the allocation of all Section 704(c) Tax Items shall be made
in accordance with the "traditional method" set forth in Regulation Section
1.704-3(b)(1) and thus shall be subject to the ceiling rule stated in said
section of the Regulations.
(d) Return of Capital Determination. For purposes of computing the return
-------------------------------
on the capital of the holder of Series C Preferred Partnership Units, the
capital of a holder of the Series C Preferred Partnership Units attributable to
each such Unit shall be treated as returned (x) when the Unit is redeemed by the
Partnership or (y) to the extent that the Partnership has distributed with
respect to such Unit an amount that exceeds the cumulative quarterly
distributions accrued thereon, plus the difference between $25 and the amount
contributed to the Partnership with respect to such Unit. Such return of capital
determination is solely for the internal tax accounting purposes of the holders
of the Series C Preferred Partnership Units and shall not in any way affect the
distributions to the Partners under this Partnership Agreement or the
allocations of Net Income, Net Loss and other items under this Exhibit F.
---------
F-8
<PAGE>
EXHIBIT T
---------
WEEKS REALTY, L.P.
DESIGNATION OF THE VOTING POWERS, DESIGNATION, PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS AND QUALIFICATIONS, LIMITATIONS
OR RESTRICTIONS
The following are the terms of the Series D Preferred Partnership Units
established pursuant to this Amendment:
8. NUMBER. The maximum number of authorized units of the Series D
Preferred Partnership Units shall be 2,600,000.
9. RELATIVE SENIORITY. In respect of rights to receive distributions (as
provided in Section 3 below), the Series D Preferred Partnership Units shall
rank (a) senior to any class or series of Partnership Units of the Partnership
ranking, as to the payment of distributions, junior to the Series D Preferred
Partnership Units (collectively, "Junior Partnership Units"), and (b) on a
parity with any class or series of Partnership Units of the Partnership if the
holders of such class or series of Partnership Units and the Series D Preferred
Partnership Units shall be entitled to the receipt of distributions and of
amounts distributable upon liquidation, dissolution or winding up (taking into
account the effects of allocations of Net Income, Net Losses and other items) in
proportion to their respective amounts of accrued and unpaid distributions per
unit or liquidation preferences, without preference or priority one over the
other, whether or not the distribution rates, distribution payment dates,
liquidation preferences or redemption prices per unit thereof are different from
those of the Series D Preferred Partnership Units (collectively, "Parity
Partnership Units"). The Series A Preferred Partnership Units, the Series C
Preferred Partnership Units and the Series D Preferred Partnership Units are
Parity Partnership Units with each other, and all Common Partnership Units shall
rank junior to Preferred Partnership Units as to rights to receive distributions
and rights upon liquidation, dissolution or winding up of the Partnership. Upon
liquidation, dissolution or winding up of the Partnership, the holders of the
Series A Preferred Partnership Units, Series C Preferred Partnership Units and
Series D Preferred Partnership Units shall be entitled to such distributions as
are provided in Section 8.2 of this Partnership Agreement, taking into account
the required allocations of Net Income, Net Losses and other items to the
Partners as provided in Exhibit F to this Partnership Agreement. Nothing
---------
contained in Exhibit F or Exhibit T to this Partnership Agreement shall prohibit
--------- ---------
the Partnership from issuing additional Partnership Units which are Parity
Partnership Units with the Series D Preferred Partnership Units.
10. QUARTERLY DISTRIBUTIONS.
(a) The holder of the then outstanding Series D Preferred Partnership
Units shall be entitled to receive, when, as and if declared by the General
Partner out of funds legally available therefor, cumulative distributions
at the rate of $2.15625 per unit per year, payable
T-1
<PAGE>
in equal amounts of $.5390625 per unit (plus the amount of any accrued but
unpaid distributions from prior periods) quarterly in cash on the last day
of each January, April, July and October or, if not a Business Day (as
hereinafter defined), the next succeeding Business Day, except that if such
Business Day falls in the next calendar year, such payment will be made on
the immediately preceding Business Day, in each case with the same force
and effect as if made on such date. Quarterly distributions shall begin to
accrue and shall be fully cumulative from the first date on which the
pertinent units of the Series D Preferred Partnership Units are issued and
sold and shall first be payable on January 31, 1999 (each such payment date
being hereafter called a "Quarterly Distribution Date" and each period
ending on a Quarterly Distribution Date being hereinafter called a
"Quarterly Distribution Period"). Quarterly distributions shall be payable
to the holder of record as it appears in the records of the Partnership at
the close of business on the applicable record date (the "Record Date"),
which shall be the 15th day of the calendar month in which the applicable
Quarterly Distribution Date falls on (or the preceding month if the
Quarterly Distribution Date has been moved because the last day of January,
April, July or October is not a Business Day) or such other date designated
by the General Partner for the payment of quarterly distributions that is
not more than 50 nor less than 10 days prior to such Quarterly Distribution
Date. The amount of any quarterly distribution payable for any Quarterly
Distribution Period shorter than a full Quarterly Distribution Period shall
be prorated and computed on the basis of the actual number of days in such
period on the basis of a 360-day year of twelve 30-day months. Quarterly
distributions paid on the Series D Preferred Partnership Units in an amount
less than the total amount of such quarterly distributions at the time
accrued and payable on such units shall be allocated pro rata on a per unit
basis among all such units at the time outstanding.
"Business Day" shall mean any day, other than a Saturday or
Sunday, that is neither a legal holiday nor a day on which banking
institutions in New York, New York or Atlanta, Georgia are authorized or
required by law, regulation or executive order to close.
(b) The amount of any quarterly distributions accrued on any Series D
Preferred Partnership Units at any Quarterly Distribution Date shall be the
amount of any unpaid quarterly distributions accumulated thereon, to and
including such Quarterly Distribution Date, whether or not earned or
declared. The amount of quarterly distributions accrued on any Series D
Preferred Partnership Units at any date other than a Quarterly Distribution
Date shall be equal to the sum of the amount of any unpaid quarterly
distributions accumulated thereon, to and including the last preceding
Quarterly Distribution Date, whether or not earned or declared, plus an
amount calculated on the basis of the quarterly distribution rate of
$.5390625 per unit for the period after such last preceding Quarterly
Distribution Date to and including the date as of which the calculation is
made based on the actual number of days in such period on the basis of a
360-day year of twelve 30-day months.
(c) Except as provided herein, the Series D Preferred Partnership
Units will not be entitled to any quarterly distributions in excess of full
cumulative quarterly distributions as described above and shall not be
entitled to participate in the earnings or assets of the
T-2
<PAGE>
Partnership, and no interest, or sum of money in lieu of interest, shall be
payable in respect of any quarterly distribution payment or payments on the
Series D Preferred Partnership Units which may be in arrears, except as
otherwise provided herein.
(d) Any quarterly distribution payment made on the Series D Preferred
Partnership Units shall first be credited against the earliest accrued but
unpaid distribution due with respect to such units which remains payable.
(e) No quarterly distributions on the Series D Preferred Partnership
Units shall be authorized by the General Partner or be paid or set apart
for payment by the Partnership at such time as the terms and provisions of
any agreement of the Partnership, including any agreement relating to its
indebtedness, prohibit such authorization, payment or setting apart for
payment or provide that such authorization, payment or setting apart for
payment would constitute a breach thereof or a default thereunder, or if
such authorization or payment shall be restricted or prohibited by law.
Notwithstanding the foregoing, quarterly distributions on the Series D
Preferred Partnership Units will accrue whether or not the Partnership has
earnings, whether or not there are funds legally available for the payment
of such quarterly distributions and whether or not such quarterly
distributions are authorized.
(f) So long as any Series D Preferred Partnership Units remain
outstanding, no distributions, except as described in the immediately
following sentence, shall be declared or paid or set apart for payment on
any class or series of Parity Partnership Units for any period unless full
cumulative quarterly distributions have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof
set apart for such payment on the Series D Preferred Partnership Units for
all Quarterly Distribution Periods terminating on or prior to the
distribution payment date for such class or series of Parity Partnership
Units. When quarterly distributions are not paid in full or a sum
sufficient for such payment is not set apart, as aforesaid, all
distributions declared upon Series D Preferred Partnership Units and all
distributions declared upon any other class or series of Parity Partnership
Units shall be declared ratably in proportion to the respective amounts of
distributions accumulated and unpaid on the Series D Preferred Partnership
Units and accumulated and unpaid on such Parity Partnership Units.
(g) So long as any Series D Preferred Partnership Units remain
outstanding, no distributions (other than distributions paid solely in
units of, or options, warrants or rights to subscribe for or purchase,
Junior Units) shall be declared or paid or set apart for payment or other
distribution declared or made upon Junior Units, nor shall any Junior Units
be redeemed, purchased or otherwise acquired (other than a redemption,
purchase or other acquisition of Common Units made for purposes of any
employee incentive or benefit plan of the Partnership or any subsidiary)
for any consideration (or any monies be paid to or made available for a
sinking fund for the redemption of any such units) by the Partnership,
directly or indirectly (except by conversion into or exchange for Junior
Units), unless in each case the full cumulative quarterly distributions on
all outstanding Series D Preferred Partnership Units shall have been or
contemporaneously are declared and paid or declared and set apart
T-3
<PAGE>
for payment for all past Quarterly Distribution Periods with respect to the
Series D Preferred Partnership Units.
11. LIQUIDATION RIGHTS.
(a) Upon the voluntary or involuntary liquidation, dissolution or
winding up of the Partnership, the holder of the Series D Preferred
Partnership Units then outstanding shall be entitled to receive and to be
paid out of the assets of the Partnership available for distribution to its
Partners, before any payment or distribution shall be made on any Junior
Units, the amount of $25.00 per unit, plus accrued and unpaid quarterly
distributions thereon; provided, however, that in no event shall such
amount exceed such holder's Capital Account balance on the date of such
distribution.
(b) Neither a consolidation nor a merger of any other entity into or
with the Partnership or Weeks, nor a statutory share exchange by Weeks
shall be deemed to be a dissolution, liquidation or winding up, voluntary
or involuntary, for the purposes hereof. A sale, transfer or conveyance of
all or substantially all of the property or business of the Partnership
shall be deemed to be a dissolution, liquidation or winding up for the
purposes hereof.
12. REDEMPTION.
(a) OPTIONAL REDEMPTION. On and after November 12, 2003, the
Partnership may, at its option, redeem at any time all, but not part, of
the Series D Preferred Partnership Units at a price per unit equal to the
Redemption Price. For purposes of this Section 5(a), the "Redemption
Price" shall equal the portion of the Capital Account balance of the holder
of such Units attributable to such Units, as determined after taking into
account all contributions and distributions through and including the date
fixed for redemption (the "Redemption Date"), as well as all allocations of
Net Income, Net Losses and other items to such holder with respect to the
portion of the fiscal year ending on the Redemption Date. The Redemption
Price shall be paid to the holder of the Series D Preferred Partnership
Units in cash.
(b) PROCEDURES OF REDEMPTION.
(1) Notice of redemption will be mailed by the Partnership to
the holder of the Series D Preferred Partnership Units to be redeemed
not less than 30 days nor more than 60 days prior to the Redemption
Date at the address set forth in the Partnership's records. Any notice
mailed in the manner provided herein shall be conclusively presumed to
have been given on the date mailed whether or not the holder received
the notice. In addition to any information required by law, such
notice shall state: (a) the Redemption Date; (b) the Redemption Price;
and (c) that distributions on the units to be redeemed will cease to
accumulate on the Redemption Date.
T-4
<PAGE>
(2) If notice has been mailed in accordance with subparagraph
(1) above and provided that on or before the Redemption Date specified
in such notice all funds necessary for such redemption shall have been
irrevocably set aside by the Partnership, separate and apart from its
other funds in trust for the benefit of the holder of the Series D
Preferred Partnership Units so called for redemption, so as to be, and
to continue to be available therefor, then, from and after the
Redemption Date, distributions on the Series D Preferred Partnership
Units so called for redemption shall cease to accumulate, and said
units shall no longer be deemed to be outstanding and shall not have
the status of Series D Preferred Partnership Units and all rights of
the holder thereof as a partner of the Partnership (except the right
to receive the Redemption Price) shall cease. Upon surrender, in
accordance with such notice, of the Series D Preferred Partnership
Units so redeemed, such Series D Preferred Partnership Units shall be
redeemed by the Partnership at the Redemption Price.
(3) Any funds deposited with a bank or trust company for the
purpose of redeeming Series D Preferred Partnership Units shall be
irrevocably deposited except that:
(i) the Partnership shall be entitled to receive from such
bank or trust company the interest or other earnings, if any,
earned on any money so deposited in trust, and the holder of any
Series D Preferred Partnership Units redeemed shall have no claim
to such interest or other earnings; and
(ii) any balance of monies so deposited by the Partnership
and unclaimed by the holder of the Series D Preferred Partnership
Units entitled thereto at the expiration of two years from the
applicable Redemption Date shall be repaid, together with any
interest or other earnings earned thereon, to the Partnership,
and after any such repayment, the holder of the units entitled to
the funds so repaid to the Partnership shall look only to the
Partnership for payment without interest or other earnings.
(4) Except as otherwise provided herein, unless full accumulated
distributions on all Series D Preferred Partnership Units and any
other class or series of Parity Partnership Units shall have been or
contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for payment for all past
Quarterly Distribution Periods and the then current Quarterly
Distribution Period, no Series D Preferred Partnership Units or Parity
Partnership Units shall be redeemed or purchased or otherwise acquired
directly or indirectly.
(5) If the Redemption Date is after a Record Date and before the
related Quarterly Distribution Date, the distribution payable on such
Quarterly Distribution Date shall be paid on the Redemption Date to
the holder in whose name the Series
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<PAGE>
D Preferred Partnership Units to be redeemed are registered at the
close of business on such Record Date notwithstanding the redemption
thereof between such Record Date and the related Quarterly
Distribution Date.
13. EXCHANGE RIGHTS.
(a) OPTIONAL EXCHANGE AFTER NOVEMBER 12, 2008. On and after November
12, 2008, the holder of the Series D Preferred Partnership Units shall have
the right, at its option, to exchange (the "Exchange Right") at any time
all, but not part, of the Series D Preferred Partnership Units at the rate
(the "Share Exchange Rate") of one Series D Preferred Partnership Unit for
one share of Series D Preferred Stock, subject to certain adjustments
below.
(b) OPTIONAL EXCHANGE FOLLOWING CERTAIN EVENTS. At any time (i)
after full distributions have not have been timely made on the Series D
Preferred Partnership Units with respect to six prior Quarterly
Distribution Periods, whether or not consecutive (provided that a
distribution in respect of the Series D Preferred Partnership Units shall
be considered timely made if made within two Business Days after the
applicable Quarterly Distribution Date if at the time of such late payment
there shall not be any prior Quarterly Distribution Periods in respect of
which full distributions were not timely made), (ii) upon receipt by the
holder of the Series D Preferred Partnership Units of (A) notice from the
General Partner that the General Partner has taken the position that the
Partnership is, or upon the consummation of an identified event in the
immediate future will be, a "Publicly Traded Partnership" within the
meaning of Section 7704 of the Code (a "PTP"), and (B) an opinion rendered
by independent legal counsel familiar with such matters addressed to the
holder of the Series D Preferred Partnership Units, that the Partnership is
or likely is, or upon the occurrence of a defined event in the immediate
future will be or likely will be, a PTP, or (iii) prior to November 12,
2008, if the Partnership shall effect or consummate a consolidation with or
a merger of the Partnership with or into another entity, and the surviving
entity is not taxed as a partnership for federal income tax purposes, the
holder of the Series D Preferred Partnership Units shall have the right, at
its option, to exercise its Exchange Right at any time for all, but not
part, of the Series D Preferred Partnership Units at the Share Exchange
Rate, subject to certain adjustments below.
(c) OPTIONAL EXCHANGE AFTER NOVEMBER 12, 2001 AND PRIOR TO NOVEMBER
12, 2008. If on and after November 12, 2001 and prior to November 12,
2008, the holder of the Series D Preferred Partnership Units shall deliver
to the General Partner either (A) a private ruling letter addressed to the
holder of the Series D Preferred Partnership Units or (B) an opinion of
independent legal counsel based on the enactment of temporary or final
Treasury Regulations or the publication of a Revenue Ruling, in either case
to the effect that the ability to exchange the Series D Preferred
Partnership Units would not cause the Series D Preferred Partnership Units
to be considered "stocks and securities" within the meaning of Section
351(e) of the Code for purposes of determining whether the holder of the
Series D Preferred Partnership Units is an "investment company" under
Section 721(b) of
T-6
<PAGE>
the Code if an exchange is permitted at such earlier date, the holder of
the Series D Preferred Partnership Units shall have the right, at its
option exercisable at any time after such private letter ruling or legal
opinion has been delivered, to exercise its Exchange Right for all, but not
part, of the Series D Preferred Partnership Units at the Share Exchange
Rate, subject to certain adjustments below.
(d) OPTIONAL EXCHANGE FOLLOWING OWNERSHIP OF EXCESS PARTNERSHIP
INTEREST. If the holder of the Series D Preferred Partnership Units
determines, in the reasonable judgment of such holder, that based on
results or projected results there exists an imminent and substantial risk
that such holder's interest in the Partnership represents or will represent
more than 19.5% of the total profits or capital interests in the
Partnership for a taxable year, determined in accordance with Treasury
Regulations Section 1.731-2(e)(4) (the "19.5% Limit"), the holder of the
Series D Preferred Partnership Units shall have the right, at its option,
to exercise its Exchange Right for such number of the Series D Preferred
Partnership Units which are in excess of the 19.5% Limit, at the Share
Exchange Rate, subject to certain adjustments below.
(e) PROCEDURES OF EXCHANGE RIGHT.
(1) The Exchange Right shall terminate at the close of business
on (i) the Redemption Date set pursuant to Section 5 hereof, or (ii)
if the Partnership shall so elect and state in the notice of
redemption, the date on which the Partnership irrevocably deposits
with a designated bank or trust company money sufficient to pay, on
the Redemption Date, the Redemption Price (as defined in Section 6(f)
below) unless the Partnership shall default in making payment of the
amount payable upon such redemption.
(2) In order to exercise the Exchange Right, the holder of the
Series D Preferred Partnership Units shall mail notice of the exercise
of such right to the Partnership not less than 30 days nor more than
60 days prior to the Exchange Date and shall surrender to the
Partnership the units to be exchanged on the Exchange Date. If the
Exchange Date is after a Record Date and before the related Quarterly
Distribution Date, the distribution payable on such Quarterly
Distribution Date shall be paid on the Exchange Date to the holder in
whose name the Series D Preferred Partnership Units to be exchanged
are registered at the close of business on such Record Date
notwithstanding the exchange thereof between such Record Date and the
related Quarterly Distribution Date.
(3) The Share Exchange Rate shall be adjusted from time to time
as follows:
(i) In case Weeks shall (A) pay an extraordinary dividend
or make an extraordinary distribution on its Series D Preferred
Stock in shares of its Series D Preferred Stock, (B) subdivide or
split its
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<PAGE>
outstanding Series D Preferred Stock into a greater number of
shares, (C) combine its outstanding Series D Preferred Stock into
a smaller number of shares or (D) issue any shares of capital
stock by reclassification of its Series D Preferred Stock, the
Share Exchange Rate in effect immediately prior thereto shall be
adjusted so that the holder of any Series D Preferred Partnership
Units thereafter surrendered for exchange shall be entitled to
receive the number of shares of Series D Preferred Stock which
such holder would have owned or have been entitled to receive
after the occurrence of any of the events described above had
such units been surrendered for exchange immediately prior to the
occurrence of such event or the record date therefor, whichever
is earlier. An adjustment made pursuant to this clause (i) shall
become effective immediately after the close of business on the
record date for determination of shareholders entitled to receive
such extraordinary dividend or extraordinary distribution in the
case of an extraordinary dividend or extraordinary distribution
(except as provided in subparagraph (6) below) and shall become
effective immediately after the close of business on the
effective date in the case of a subdivision, split, combination
or reclassification.
(ii) No adjustment in the Share Exchange Rate shall be
required unless such adjustment would require an increase or
decrease of at least 1%; provided, however, that any adjustments
-------- -------
which by reason of this subparagraph (ii) are not required to be
made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this subparagraph
(3) shall be made to the nearest 1/100th of a share (with .005 of
a share being rounded upward).
(4) In any case in which subparagraph (3) above provides that
an adjustment shall become effective immediately after a record date
for an event and the date fixed for exchange occurs after such record
date but before the occurrence of such event, the Partnership may
defer until the actual occurrence of such event (i) issuing to the
holder of the Series D Preferred Partnership Units surrendered for
exchange the additional shares of Series D Preferred Stock issuable
upon such exchange by reason of the adjustment required by such event
over and above the Series D Preferred Stock issuable upon such
exchange before giving effect to such adjustment and (ii) paying to
such holder any amount in cash in lieu of any fraction pursuant to
Section 12.
(5) There shall be no adjustment of the Share Exchange Rate in
case of the issuance of any stock of Weeks in a reorganization,
acquisition, stock sale or other similar transaction except as
specifically set forth in Section 11. If any action or transaction
would require adjustment of the Share Exchange Rate pursuant to more
than one provision, only one adjustment shall be made and such
adjustment shall be the amount of adjustment which has the highest
absolute value.
T-8
<PAGE>
(6) Subject to the provisions of Section 12(a), Weeks shall not
take any action which results in adjustment of the number of shares of
Series D Preferred Stock issuable upon exchange of Series D Preferred
Partnership Units if the total number of shares of Series D Preferred
Stock issuable after such action upon exchange of the Series D
Preferred Partnership Units then outstanding, together with the total
number of shares of Series D Preferred Stock then outstanding, would
exceed the total number of shares of Series D Preferred Stock then
authorized under the Articles of Incorporation. Subject to the
foregoing, Weeks shall take all such actions as it may deem reasonable
under the circumstances to provide for the issuance of such number of
shares of Series D Preferred Stock as would be necessary to allow for
the exchange from time to time, and taking into account adjustments as
herein provided, of the outstanding Series D Preferred Partnership
Units in accordance with the terms and provisions of the Articles of
Incorporation.
(f) REDEMPTION RIGHT OF PARTNERSHIP. Notwithstanding anything to the
contrary contained in Sections 6(a), (b), (c) or (d), the Partnership may,
at its option, after receipt of notice from the holder of the Series D
Preferred Partnership Units that it has exercised its Exchange Right,
redeem all, but not part (or, in the case of Section 6(d), such number of
Units that are in excess of the 19.5% Limit), of the Series D Preferred
Partnership Units at a price per unit equal to the Redemption Price. In
such event, the Redemption Price shall be paid to the holder of the Series
D Preferred Partnership Units in cash on the Exchange Date. For purposes
of this Section 6(f), the "Redemption Price" shall equal the portion of the
Capital Account balance of the holder of such Units attributable to such
Units, as determined after taking into account all contributions and
distributions through and including the date fixed for redemption, as well
as all allocations of Net Income, Net Losses and other items to such holder
with respect to the portion of the fiscal year ending on the date of such
redemption.
14. VOTING RIGHTS. Except as required by law, the holder of the Series D
Preferred Partnership Units shall not be entitled to vote at any meeting of the
Partners or for any other purpose or otherwise to participate in any action
taken by the Partnership or the Partners, or to receive notice of any meeting of
the Partners; provided, however that so long as the Series D Preferred
Partnership Units remain outstanding, the Partnership will not, without the
affirmative vote or consent of the holder of the Series D Preferred Partnership
Units, (i) authorize or create a class or series of Partnership Units ranking
prior to the Series D Preferred Partnership Units, as to the payment of
distributions or as to the distribution of assets upon liquidation, dissolution
or winding up (taking into account the effects of allocations of Net Income, Net
Losses and other items), (ii) amend, alter or repeal the provisions of the
Partnership Agreement so as to materially and adversely affect any right,
preference, privilege or voting power of the Series D Preferred Partnership
Units (provided that the amendment of the provisions of the Partnership
Agreement so as to authorize or create or to increase the authorized amount of
any class of Units that are not senior in any respect to the Series D Preferred
Partnership Units, or any Parity Partnership Units, shall not be deemed to
adversely affect the rights, preferences, privileges or voting power of the
Series D Preferred
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<PAGE>
Partnership Units); or (iii) except for a consolidation or merger set forth in
Section 6(b)(iii) hereof, effect or consummate a consolidation with or a merger
of the Partnership with or into another entity, unless each Series D Preferred
Partnership Unit (x) shall remain outstanding without a material and adverse
change to its terms and rights or (y) shall be converted into or exchanged for
preferred units of the surviving entity having preferences, voting powers,
restrictions, limitations as to distributions, qualifications and terms or
conditions of redemption thereof identical to that of a Series D Preferred
Partnership Unit (except for changes that do not materially and adversely affect
the holder of Series D Preferred Partnership Units). The foregoing voting
provisions will not apply if, at or prior to the time when the act with respect
to which such vote would otherwise be required shall be effected, all
outstanding Series D Preferred Partnership Units shall have been redeemed or
called for redemption pursuant to Section 5 hereof and sufficient funds shall
have been deposited in trust to effect such redemption.
15. CONVERSION. Except as otherwise set forth herein, the Series D
Preferred Partnership Units are not convertible into or exchangeable for any
other property or securities of the Partnership.
16. NO MATURITY. The Series D Preferred Partnership Units shall have no
stated maturity and will not be subject to any sinking fund or mandatory
redemption provisions.
17. RESTRICTIONS ON TRANSFER. The Series D Preferred Partnership Units
may only be transferred in whole and not in part. The Series D Preferred
Partnership Units are subject to the transfer restrictions set forth in Article
IX of the Partnership Agreement; provided, however, that if the holder of the
Series D Preferred Partnership Units determines, in the reasonable judgment of
such holder, that based on results or projected results, there exists an
imminent and substantial risk that such holder's interest in the Partnership
represents or will represent more than the 19.5% Limit, then such holder shall
be permitted to transfer its Series D Preferred Partnership Units without the
prior consent of the General Partner. For this purpose, no Restricted Period
shall apply with respect to the Series D Preferred Partnership Units, and the
"Rights" applicable shall be the Exchange Right and the other provisions of
Section 6 hereof.
18. PROVISIONS IN CASE OF CONSOLIDATION, MERGER OR SALE OF ASSETS. In
case of any consolidation of Weeks with, or merger of Weeks into, any other
Person, any merger or consolidation of another Person into Weeks (other than a
merger that does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Series D Preferred Stock), any acquisition
of the outstanding Common Stock by share exchange, or any sale or transfer of
all or substantially all of the assets of Weeks, the Person formed by such
consolidation or resulting from such merger or that acquires the outstanding
Common Stock or such assets of Weeks as the case may be, shall execute and
deliver to the holder of Series D Preferred Partnership Units an agreement
providing that such holder shall have the rights provided herein, during the
period such rights shall be exercisable (which shall be at least as long as the
period for which such rights can be exercised pursuant to the terms hereof), to
exercise such rights for the kind and amount of securities, cash and other
property receivable upon such consolidation, merger, share exchange, sale or
transfer by a holder of the number of shares of Series D Preferred Stock for
which such rights
T-10
<PAGE>
might have been exercised immediately prior to such consolidation, merger, share
exchange, sale or transfer, assuming both that (a) such holder is not a Person
with which Weeks consolidated or into which Weeks merged or that merged into
Weeks, or that acquired the outstanding Common Stock by share exchange, or to
which such sale or transfer was made, as the case may be (a "Constituent
Person"), or an Affiliate of a Constituent Person, and that (b) such holder does
not exercise his right of election, if any, as to the kind or amount of
securities, cash or other property receivable upon such consolidation, merger,
share exchange, sale or transfer (provided that if the kind or amount of
securities, cash and other property receivable upon such consolidation, merger,
share exchange, sale or transfer is not the same for each share of capital stock
in respect of which such right of election, if any, is not exercised ("non-
electing Share"), then for the purpose of this Section 11, the kind and amount
of securities, cash and other property receivable upon such consolidation,
merger, share exchange, sale or transfer by each non-electing Share shall be
deemed to be the kind and amount so receivable per non-electing Share by a
plurality of the non-electing Shares). Such agreement shall provide for
adjustments that, for events subsequent to the effective date of such agreement,
shall be as nearly equivalent as may be practicable to the adjustments provided
for herein.
19. GENERAL.
(a) All shares of Series D Preferred Stock delivered upon exchange of
the Series D Preferred Partnership Units will upon delivery be duly and
validly issued and fully paid and nonassessable. Weeks covenants that it
will at all times reserve and keep available, free from preemptive rights,
out of the aggregate of its authorized but unissued shares of Series D
Preferred Stock for the purpose of effecting the exchange of the Series D
Preferred Partnership Units, the full number of shares of Series D
Preferred Stock deliverable upon the exchange of all outstanding shares of
Series D Preferred Partnership Units.
(b) In connection with the exchange of any Series D Preferred
Partnership Units, fractions of such units may be converted; however, no
fractional shares or scrip representing fractions of shares of Series D
Preferred Stock shall be issued upon exchange of the Series D Preferred
Partnership Units. Instead of any fractional interest in a share of Series
D Preferred Stock which would otherwise be deliverable upon the exchange or
redemption of a share of Series D Preferred Partnership Units (or fraction
thereof), the Partnership shall pay to the holder of such unit an amount in
cash (computed to the nearest cent) equal to $25.00 multiplied by the
fraction of a share of Series D Preferred Stock represented by such
fractional interest
(c) Neither the General Partner nor the Partnership shall have any
obligation or authority to exchange any Series D Preferred Partnership
Units to the extent that issuance of shares of Series D Preferred Stock
would result (i) in the violation of the General Ownership Limit (as such
term is defined in the Articles of Incorporation), (ii) would cause Weeks
to fail the stock ownership test of Section 856(a)(6) of the Code, or (iii)
would otherwise cause Weeks to fail to qualify as a REIT; provided that in
any such case, the General Partner or the Partnership shall purchase for
cash those Series D Preferred Partnership Units which may not be exchanged
with shares of Series D Preferred Stock.
T-11
<PAGE>
Each holder shall provide to the General Partner such information as the
General Partner may request regarding such holder's actual and constructive
ownership of Common Stock and Preferred Stock (and of individuals, and
entities related to such holder) in order for the General Partner to
determine, in its sole discretion, whether an exchange of the Series D
Preferred Partnership Units for shares of Series D Preferred Stock would
result in a violation of such restrictions.
(d) To the extent the Partnership issues shares of Series D Preferred
Stock, it shall obtain the necessary shares of Series D Preferred Stock in
exchange for the issuance of additional Partnership Interests to the
General Partner, Weeks LP Holdings, or any combination thereof, as
determined by the General Partner in its sole discretion, and the General
Partner and/or Weeks LP Holdings may obtain the necessary shares of Series
D Preferred Stock from Weeks.
(e) Notwithstanding anything herein to the contrary, the General
Partner, Weeks LP Holdings or any combination thereof (an "Assumer" or,
collectively, the "Assumers") may, in the sole and absolute discretion of
the General Partner, assume directly and satisfy the exercise of a
redemption or exchange right by paying the holder of Series D Preferred
Partnership Units the Redemption Price or Exchange Price, as applicable.
In such event, the Assumers shall acquire the Series D Preferred
Partnership Units and shall be treated for all purposes as the owner of
such Series D Preferred Partnership Units, which shall be held by the
Assumers in their respective existing capacities as General Partner or
Limited Partner, as the case may be. In the event the General Partner
shall exercise the Assumers' right to satisfy a redemption or exchange
right in the manner described in this paragraph, the Partnership shall have
no obligation to pay any amount to such holder with respect to such
holder's exercise of such right; provided, however, that the Partnership
shall remain liable to the holder to the extent that any such holder's
right is not fully satisfied; and each of the holder, the Partnership, and
the Assumers shall treat the transaction between the Assumers and the
holder as a sale of the holder's Series D Preferred Partnership Units to
the Assumers for federal income tax purposes. To the extent the Assumers
issue shares of Series D Preferred Stock, they may obtain the necessary
shares of Series D Preferred Stock from Weeks. Each holder agrees to
execute such documents as the General Partner may reasonably require in
connection with the issuance of Series D Preferred Stock.
(f) Redemption or exchange of Series D Preferred Partnership Units
shall be accompanied by proper instruments of transfer and assignment for
such Series D Preferred Partnership Units and by the delivery of (i)
representations and warranties of (A) such holder with respect to its due
authority to transfer all of the right, title and interest in and to such
Series D Preferred Partnership Units and with respect to the status of the
Series D Preferred Partnership Units being transferred, free and clear of
all Liens, and (B) the Partnership or the Assumers, as applicable, with
respect to due authority for the redemption or exchange of such Series D
Preferred Partnership Units, and (ii) to the extent that shares of Series D
Preferred Stock are issued, (A) an opinion of counsel for Weeks, reasonably
satisfactory to the holder, to the effect that such shares of Series D
Preferred Stock have been duly
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<PAGE>
authorized, are validly issued, fully-paid and nonassessable, and (b) a
stock certificate or certificates evidencing the Series D Preferred Stock
to be issued and registered in the name of the holder or its designee.
(g) The holder of Series D Preferred Partnership Units covenants and
agrees that all such Partnership Units redeemed or exchanged shall be
delivered free and clear of all Liens. Should any Liens exist or arise
with respect to such Series D Preferred Partnership Units, neither the
Assumers nor the Partnership shall be under any obligation to redeem or
acquire the same unless, in connection therewith, the General Partner has
elected to pay a portion of the Redemption Price or the Exchange Price, as
applicable, in the form of cash in circumstances in which such cash will be
sufficient to cause such existing Lien to be discharged in full upon
application of all or a part of the cash. The Partnership and the Assumers
are expressly authorized to apply such portion of the cash as may be
necessary to discharge such Lien in full. The holder further agrees that,
in the event any state or local property transfer tax is payable as a
result of the transfer of its Series D Preferred Partnership Units to the
Partnership or the Assumers, such holder shall assume and pay such transfer
tax.
(h) The certificates representing the Series D Preferred Stock issued
upon exchange of the Series D Preferred Partnership Units shall contain the
following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED,
SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT
(A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND ANY APPLICABLE
STATE LAW, OR (B) IF WEEKS HAS BEEN FURNISHED WITH A SATISFACTORY
OPINION OF COUNSEL FOR THE HOLDER OF THE SHARES REPRESENTED HEREBY, OR
OTHER EVIDENCE SATISFACTORY TO WEEKS, THAT SUCH TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM
THE PROVISIONS OF SECTION 5 OF THE ACT AND THE RULES AND REGULATIONS
THEREUNDER AND ANY APPLICABLE STATE LAW.
(i) The rights of the holder of the Series D Preferred Partnership
Units, in its capacity as a holder of the Series D Preferred Partnership
Units, are in addition to and not in limitation on any other rights or
authority of the holder of the Series D Preferred Partnership Units, in any
other capacity, under the Partnership Agreement. In addition, nothing
contained herein shall be deemed to limit or otherwise restrict any rights
or authority of the holder of the Series D Preferred Partnership Units
under the Partnership Agreement, other than in its capacity as a holder of
the Series D Preferred Partnership Units.
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<PAGE>
- --------------------------------------------------------------------------------
EXHIBIT 10.25
SYNDICATED TERM LOAN AGREEMENT
BY AND AMONG
WEEKS REALTY, L.P.,
AS BORROWER,
AND
WEEKS CORPORATION, WEEKS GP HOLDINGS, INC.
AND WEEKS LP HOLDINGS, INC.,
AS GUARANTORS,
AND
EACH BANK THAT IS OR BECOMES A SIGNATORY HERETO,
AS BANKS,
AND
WACHOVIA BANK, N.A.,
AS ADMINISTRATIVE AGENT,
AND
FIRST UNION NATIONAL BANK,
AS SYNDICATION AGENT,
AND
NATIONSBANK, N.A.,
AS DOCUMENTATION AGENT
IN THE PRINCIPAL AMOUNT OF
$85,000,000
DECEMBER 4, 1998
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
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<S> <C>
ARTICLE I DEFINITIONS AND CONSTRUCTION................................................ 2
1.01 Defined Terms......................................................... 2
"Administrative Agent"................................................ 2
"Affected Bank"....................................................... 2
"Affiliate"........................................................... 2
"Agreement"........................................................... 2
"Annualized NOI"...................................................... 2
"Applicable Margin"................................................... 2
"Assignee"............................................................ 3
"Assignment and Acceptance"........................................... 3
"Authorized Signatory"................................................ 3
"Banks"............................................................... 3
"Base Rate"........................................................... 3
"Base Rate Tranche"................................................... 3
"BBA"................................................................. 3
"Breakage Costs"...................................................... 3
"Breakage Period"..................................................... 3
"Capitalized Lease Obligation"........................................ 3
"Change in Control,".................................................. 3
"Code"................................................................ 4
"Commitment".......................................................... 4
"Commitment Share".................................................... 4
"Consolidated Entity"................................................. 5
"Control"............................................................. 5
"Debt"................................................................ 5
"Debt Rating"......................................................... 5
"Debt Rating Table"................................................... 5
"Default"............................................................. 6
"Development in Progress"............................................. 6
"Development in Progress Value"....................................... 6
"Direct Financing Lease".............................................. 6
"Direct Financing Lease Value"........................................ 6
"Documentation Agent"................................................. 6
"Dollars" or "$"...................................................... 6
"Domestic Business Day"............................................... 6
"Employee Benefit Plan"............................................... 6
"Environmental Laws".................................................. 7
"ERISA"............................................................... 7
</TABLE>
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<TABLE>
<S> <C>
"Euro-Dollar Business Day"............................................. 7
"Federal Funds Rate"................................................... 7
"Fixed Charges"........................................................ 7
"Fixed Charge Coverage Ratio".......................................... 7
"Floating Rate"........................................................ 7
"Funds from Operations"................................................ 7
"Full Recourse Covenants".............................................. 8
"GAAP"................................................................. 8
"Guaranty" or "Guarantee,"............................................. 8
"Income"............................................................... 8
"Income Property"...................................................... 8
"Income Property Value"................................................ 9
"Indebtedness for Money Borrowed"...................................... 9
"Initial Date"......................................................... 9
"Initial Permitted Mortgage Debt"...................................... 9
"Intercompany Debt".................................................... 9
"Interest Coverage Ratio".............................................. 9
"Interest Expense"..................................................... 9
"Interest Period"...................................................... 10
"Interest Rate Election"............................................... 10
"Key Executives"....................................................... 10
"Land Held for Future Development"..................................... 11
"Land Value"........................................................... 11
"Lending Office"....................................................... 11
"Leverage Ratio"....................................................... 11
"LIBOR Rate"........................................................... 11
"LIBOR Rate Tranche"................................................... 11
"Lien"................................................................. 11
"Loan"................................................................. 12
"Loan Documents"....................................................... 12
"Mandate Letter"....................................................... 12
"Margin Stock"......................................................... 12
"Material Venture"..................................................... 12
"Maturity Date"........................................................ 12
"Measurement Date"..................................................... 12
"Measurement Period"................................................... 12
"Minority Interests"................................................... 12
"Moody's".............................................................. 12
"Mortgage"............................................................. 12
"Mortgage Debt"........................................................ 12
"MPPAA"................................................................ 12
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
"Multiemployer Plan"................................................... 12
"Non-Consolidated Subsidiary".......................................... 13
"Non-Consolidated Subsidiary Value".................................... 13
"Non-Consolidated Venture"............................................. 13
"Non-Consolidated Venture Value"....................................... 13
"Note"................................................................. 13
"Notes Receivable Value"............................................... 13
"Notice of Borrowing".................................................. 13
"Obligations".......................................................... 14
"Operating Expenses"................................................... 14
"Participant".......................................................... 14
"PBGC"................................................................. 14
"Performance Pricing Determination Date"............................... 14
"Permitted Borrowing".................................................. 15
"Permitted Encumbrances"............................................... 15
"Permitted Guaranties"................................................. 16
"Permitted Mortgage Debt".............................................. 17
"Permitted Tax-Exempt Financing"....................................... 17
"Person"............................................................... 17
"Preferred Dividends".................................................. 17
"Prime Rate"........................................................... 18
"Property"............................................................. 18
"Property Interest(s)"................................................. 18
"Related Parties"...................................................... 18
"Reportable Event"..................................................... 18
"Required Banks"....................................................... 18
"Restricted Investment"................................................ 18
"SEC".................................................................. 19
"Standard and Poor's".................................................. 19
"Subsidiary"........................................................... 19
"Substances"........................................................... 19
"Swing Bank"........................................................... 19
"Swing Credit Agreement"............................................... 20
"Syndicated Credit Agreement".......................................... 20
"Syndicated Term Loan Guaranties"...................................... 20
"Syndication Agent".................................................... 20
"Taxes"................................................................ 20
"Total Annualized NOI"................................................. 20
"Total Asset Value".................................................... 20
"Total Debt"........................................................... 20
"Total Interest Bearing Debt".......................................... 20
</TABLE>
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<TABLE>
<S> <C>
"Total Secured Debt".................................................. 20
"Total Unsecured Debt"................................................ 21
"Tranche"............................................................. 21
"Transferee".......................................................... 21
"Unencumbered Property Value"......................................... 21
1.02 Accounting Terms and Determinations................................... 21
1.03 References............................................................ 21
1.04 Use of Defined Terms.................................................. 22
1.05 Terminology........................................................... 22
ARTICLE II SYNDICATED TERM LOAN....................................................... 22
2.01 Syndicated Term Loan.................................................. 22
2.02 Rate of Interest on Loan.............................................. 22
2.03 Notice of Interest Rate Elections..................................... 22
2.04 Interest Period Presumption........................................... 23
2.05 Funding of the Loan................................................... 24
2.06 Interest Payments on Loan............................................. 25
2.07 Maturity.............................................................. 25
2.08 Notes................................................................. 25
2.09 Use of Loan Proceeds.................................................. 25
2.10 Prepayment of Loan.................................................... 25
2.11 General Provisions as to Payments..................................... 26
2.12 Default Rate of Interest.............................................. 28
2.13 Commitment Fee........................................................ 29
2.14 Increased Costs; Illegality; Capital Adequacy......................... 29
2.15 Calculation of Compensation to Banks;
Required Transfer by Banks........................................... 30
ARTICLE III THE AGENTS................................................................ 31
3.01 Appointment of Administrative Agent;
Powers and Immunities................................................. 31
3.02 Reliance by Administrative Agent...................................... 32
3.03 Defaults.............................................................. 32
3.04 Rights of Administrative Agent as a Bank.............................. 32
3.05 Indemnification....................................................... 33
3.06 Consequential Damages................................................. 33
3.07 Payee of Note Treated as Owner........................................ 33
3.08 Nonreliance on Administrative Agent and
Other Banks........................................................... 34
3.09 Failure to Act........................................................ 34
3.10 Resignation or Removal of Administrative Agent........................ 34
3.11 Directions to Administrative Agent.................................... 35
3.12 Appointment of Syndication Agent...................................... 35
</TABLE>
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<TABLE>
<S> <C>
3.13 Appointment of Documentation Agent.................................... 36
ARTICLE IV CONDITIONS TO TERM LOAN.................................................... 36
4.01 Borrower's Authority.......................................... 36
4.02 Guarantors' Authority......................................... 36
4.03 Financial Statements.......................................... 37
4.04 Certificate of Compliance..................................... 37
4.05 Representations and Warranties................................ 37
4.06 Payment of Fees............................................... 37
4.07 Notes......................................................... 37
4.08 Syndicated Term Loan Guaranties............................... 37
4.09 Certificates of Incumbency.................................... 37
4.10 REIT Status................................................... 37
4.11 Opinion of Counsel............................................ 37
4.12 Interest Rate Election........................................ 37
4.13 Notice of Borrowing........................................... 38
4.14 Intercreditor Agreement....................................... 38
4.15 Other Documentation........................................... 38
4.16 Key Executives................................................ 38
4.17 No Material Adverse Change.................................... 38
4.18 Full Compliance............................................... 38
4.19 No Default; No Claims......................................... 38
4.20 Debt Rating................................................... 39
ARTICLE V [THIS ARTICLE IS INTENTIONALLY OMITTED.].................................... 39
ARTICLE VI ENVIRONMENTAL MATTERS...................................................... 39
6.01 Representations, Warranties................................... 39
6.02 Continued Compliance.......................................... 40
ARTICLE VII REPRESENTATIONS AND WARRANTIES............................................ 40
7.01 Related Parties............................................... 40
7.02 Corporate Organization........................................ 40
7.03 Limited Partnership Organization.............................. 41
7.04 General Partnership Organization.............................. 41
7.05 Limited Liability Company Organization........................ 41
7.06 Power and Authority........................................... 41
7.07 Enforceability................................................ 41
7.08 Violation of Organizational Documents......................... 42
7.09 Conflicts..................................................... 42
7.10 Title......................................................... 42
7.11 Existence of Liens............................................ 42
7.12 Financial Condition........................................... 42
7.13 Litigation.................................................... 42
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7.14 Foreign Qualifications........................................ 43
7.15 Tax Obligations............................................... 43
7.16 Capital Stock................................................. 43
7.17 Insolvency.................................................... 43
7.18 Margin Stock.................................................. 43
7.19 Franchises, Licenses, Etc..................................... 44
7.20 ERISA......................................................... 44
7.21 Financial Statements.......................................... 45
7.22 Misrepresentations............................................ 45
ARTICLE VIII AFFIRMATIVE COVENANTS.................................................... 45
8.01 Location of Records........................................... 45
8.02 Inspection.................................................... 46
8.03 Financial and Other Information............................... 46
8.04 Governmental Obligations...................................... 48
8.05 Insurance..................................................... 48
8.06 Operation of Properties, Inspection........................... 48
8.07 Preservation of Business...................................... 49
8.08 Maintenance of Records........................................ 49
8.09 Notice of Adverse Changes..................................... 49
8.10 Notice of Litigation.......................................... 50
8.11 Payment of Obligations........................................ 50
8.12 REIT Status................................................... 50
8.13 Compliance With Laws.......................................... 50
8.14 Notice of Exercise of Remedies Under Mortgages................ 51
8.15 Management.................................................... 51
8.16 Deposit Accounts.............................................. 51
8.17 Intercompany Transactions..................................... 51
8.18 Debt Rating................................................... 51
ARTICLE IX NEGATIVE COVENANTS......................................................... 51
9.01 Guaranties.................................................... 51
9.02 Merger, Consolidation, etc.................................... 52
9.03 Disposition of Assets......................................... 52
9.04 Judgments..................................................... 52
9.05 Indebtedness of Weeks Corporation and Borrower................ 52
9.06 Indebtedness of Subsidiaries.................................. 53
9.07 Secured Indebtedness.......................................... 53
9.08 Indebtedness and Activities of GP Holdings
and LP Holdings............................................... 53
9.09 Dividends and Distributions................................... 54
9.10 Environmental Matters......................................... 54
9.11 Change in Control............................................. 54
</TABLE>
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9.12 Advances, Loans and Other Restricted
Investments................................................... 54
9.13 Liens......................................................... 55
ARTICLE X FINANCIAL COVENANTS......................................................... 55
10.01 Minimum Interest Coverage Ratio............................... 55
10.02 Minimum Fixed Charge Coverage Ratio........................... 55
10.03 Maximum Leverage.............................................. 55
10.04 Maximum Unsecured Debt........................................ 55
10.05 Maximum Secured Debt.......................................... 55
10.06 Minimum Debt Yield............................................ 55
ARTICLE XI DEFAULT.................................................................... 55
11.01 Nonpayment of Obligations..................................... 56
11.02 Other Monetary Defaults....................................... 56
11.03 Defaults of Material Ventures................................. 56
11.04 Breach of Warranty or Representation.......................... 56
11.05 Breach of Covenants........................................... 56
11.06 Weeks Realty Partnership Agreement
Defaults...................................................... 57
11.07 Permitted Mortgage Debt Defaults.............................. 57
11.08 Voluntary Insolvency Proceedings.............................. 57
11.09 Involuntary Insolvency Proceedings............................ 57
11.10 Voluntary Receivership........................................ 57
11.11 Involuntary Receivership...................................... 57
11.12 Assignment for the Benefit of Creditors....................... 57
11.13 Insolvency.................................................... 58
11.14 Interest Rate Agreements...................................... 58
11.15 Syndicated Term Loan Guaranties............................... 58
11.16 Syndicated Credit Agreement................................... 58
11.17 Swing Credit Agreement........................................ 58
ARTICLE XII RIGHTS AND REMEDIES....................................................... 58
12.01 Prior to Default.............................................. 58
12.02 Upon Default.................................................. 58
12.03 Cure of Defaults.............................................. 59
12.04 Costs of Collection........................................... 59
12.05 Setoff........................................................ 60
12.06 Sharing of Collections........................................ 60
ARTICLE XIII FEES AND EXPENSES; INDEMNIFICATION....................................... 61
13.01 Fees and Expenses............................................. 61
13.02 Administrative Agent's Operations Fee......................... 61
13.03 Amendment, Waiver and Prepayment Fees......................... 61
</TABLE>
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13.04 Indemnification............................................... 62
ARTICLE XIV MISCELLANEOUS............................................................. 62
14.01 Cumulative Rights; Non-waiver................................. 62
14.02 No Obligation to Third Parties................................ 63
14.03 Successors and Assigns........................................ 63
14.04 Governing Law................................................. 65
14.05 Survival of Obligations....................................... 66
14.06 Entire Agreement.............................................. 66
14.07 Invalidity.................................................... 66
14.08 Headings...................................................... 66
14.09 Changes in Forms.............................................. 66
14.10 Notices....................................................... 66
14.11 Amendments and Waivers........................................ 68
14.12 Time of the Essence........................................... 69
14.13 Execution in Counterparts..................................... 69
14.14 Attorneys' Fees............................................... 69
14.15 Confidentiality............................................... 69
14.16 Representations by Banks...................................... 70
14.17 Miscellaneous................................................. 70
</TABLE>
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<PAGE>
TABLE OF EXHIBITS AND SCHEDULES
-------------------------------
EXHIBIT DESCRIPTION
- ------- -----------
A Form of Notice of Borrowing
B Form of Assignment and Acceptance
C Form of Syndicated Term Note
D Form of Syndicated Term Loan Guaranty
E Form of Certificate of Chief Financial Officer
F Form of Interest Rate Election
SCHEDULE DESCRIPTION
- -------- -----------
1 Initial Permitted Mortgage Debt
2 Commitments and Commitment Shares
7.01 Related Parties
9.06 Indebtedness for Money Borrowed
-ix-
<PAGE>
SYNDICATED TERM LOAN AGREEMENT
------------------------------
THIS SYNDICATED TERM LOAN AGREEMENT (the "AGREEMENT") is made and entered
---------
into as of December 4, 1998, by and among WEEKS REALTY, L.P., a Georgia limited
partnership ("BORROWER"), WEEKS CORPORATION, a Georgia corporation ("WEEKS
-------- -----
CORPORATION"), WEEKS GP HOLDINGS, INC., a Georgia corporation ("GP HOLDINGS"),
- ----------- -----------
WEEKS LP HOLDINGS, INC., a Georgia corporation ("LP HOLDINGS") (Weeks
-----------
Corporation, GP Holdings and LP Holdings, collectively, "GUARANTORS," and each,
----------
individually, a "GUARANTOR"), each Bank that is or becomes a signatory hereto
---------
(collectively, "BANKS," and each, individually, a "BANK"), WACHOVIA BANK, N.A.,
----- ----
a national banking association ("WACHOVIA"), in its capacity as Banks'
--------
administrative agent hereunder (including any successor, "ADMINISTRATIVE
--------------
AGENT"), FIRST UNION NATIONAL BANK, a national banking association ("FUNB"), in
- ----- ----
its capacity as syndication agent hereunder (including its successors,
"SYNDICATION AGENT"), and NATIONSBANK, N.A., a national banking association
-----------------
("NATIONSBANK"), in its capacity as documentation agent hereunder (including any
------------
successors, "DOCUMENTATION AGENT").
-------------------
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Borrower desires to borrow from Banks the sum of $85,000,000 for a
fixed term, on the terms and conditions set forth herein; and
WHEREAS, Banks are willing to make a term loan to Borrower, in the
principal sum of $85,000,000, on the terms and conditions set forth herein; and
WHEREAS, Weeks Corporation is the owner of 100% of the issued and
outstanding capital stock of GP Holdings and 100% of the issued and outstanding
capital stock of LP Holdings; and
WHEREAS, GP Holdings constitutes the sole general partner of Borrower, and
LP Holdings holds a majority interest in Borrower as a limited partnership
interest; and
WHEREAS, the term loan will be to the direct financial interest and
advantage of Guarantors, and in order to induce Banks to enter into this
Agreement and to make a term loan to Borrower pursuant to its terms, Guarantors
have agreed to guaranty the full and prompt payment and performance when due of
the Obligations (as defined herein), to become parties to this Agreement and to
become bound by the terms and conditions hereof;
<PAGE>
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants contained herein, and for other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged by the
parties hereto, the parties hereto agree as follows:
ARTICLE I
---------
DEFINITIONS AND CONSTRUCTION
----------------------------
1.1 DEFINED TERMS. In addition to those terms defined elsewhere in this
-------------
Agreement, as used in this Agreement, the following terms shall have the
following meanings, unless the context otherwise requires:
"ADMINISTRATIVE AGENT" shall mean Wachovia, in its capacity as the
--------------------
administrative agent for Banks in accordance with the appointment as
administrative agent pursuant to the provisions of Article III.
"AFFECTED BANK" shall have the meaning ascribed to such term in Section
-------------
2.15(c).
"AFFILIATE" of a Person shall mean any other Person which, directly and/or
---------
indirectly, owns or Controls, on an aggregate basis, including all beneficial
ownership and ownership or Control as a trustee, guardian or other fiduciary, in
excess of twenty percent (20%) of the outstanding capital stock having ordinary
voting power to elect a majority of the board of directors (irrespective of
whether, at the time, stock of any other class or classes of such Person shall
have or might have voting power by reason of the happening of any contingency)
of such Person.
"AGREEMENT" shall mean this Syndicated Term Loan Agreement, together with
---------
any amendments or supplements hereto and schedules or exhibits hereto.
"ANNUALIZED NOI" shall mean, with respect to an Income Property or a
--------------
Property subject to a Direct Financing Lease, as of any given date, the annual
net operating income from the collection of rents and reimbursements according
to leases in good standing, including income from property accounted for as
Direct Financing Leases, after deducting all Operating Expenses, calculated by
annualizing the income received and Operating Expenses incurred during the
quarterly period ending most recently prior to such date, reported in accordance
with GAAP. "ANNUALIZED NOI" for properties acquired by the owner thereof during
--------------
any Measurement Period may be adjusted to reflect the actual performance of such
property for the entire
2
<PAGE>
quarterly period irrespective of the date such property was acquired.
"APPLICABLE MARGIN" shall mean, as of any given day, the percentage rate
-----------------
per annum determined by reference to the Debt Rating Table and based on the Debt
Rating, if any, as determined by Administrative Agent, or lack of a Debt Rating,
in effect as of such day, if such day is a Performance Pricing Determination
Date, or otherwise as of the Performance Pricing Determination Date immediately
preceding such day.
"ASSIGNEE" shall have the meaning ascribed to said term in Section
--------
14.03(c).
"ASSIGNMENT AND ACCEPTANCE" shall mean an Assignment and Acceptance
-------------------------
executed in accordance with the provisions of Section 14.03(c) and in the form
of Exhibit B.
---------
"AUTHORIZED SIGNATORY" shall mean, with respect to a Person, such senior
--------------------
personnel of such Person as may be duly authorized and designated in writing by
such Person to execute documents, agreements and instruments, including the Loan
Documents, on behalf of such Person.
"BANKS" shall mean all Banks that are or become signatories to this
-----
Agreement. "BANK" means any one of such Banks.
----
"BASE RATE" shall mean the higher of (a) the Prime Rate or (b) .50% per
---------
annum (50 basis points) plus the Federal Funds Rate.
"BASE RATE TRANCHE" shall mean each Tranche which accrues interest at the
-----------------
Floating Rate in accordance with Section 2.03(c).
"BBA" shall mean the British Bankers Association.
---
"BREAKAGE COSTS" shall mean, with respect to any outstanding principal
--------------
amount of any LIBOR Rate Tranche being paid before the last day of the Interest
Period therefor, such amount or amounts as shall compensate Banks for any actual
loss, cost or expense incurred by Banks (but excluding lost profits) as a result
of such payment being made before the last day of the Interest Period,
including, without limitation, an amount equal to the excess, if any, of (a) the
amount of interest which would have accrued on the amount so paid for the period
from the date of such payment to the last day of the Interest Period (such
period herein referred to as the "BREAKAGE PERIOD") at the applicable LIBOR
---------------
Rate, less the Applicable Margin, over (b) the amount of interest (as reasonably
determined by Administrative Agent) Banks would have paid on deposits in Dollars
of comparable amounts for a term comparable to
3
<PAGE>
the Breakage Period placed with Banks by leading banks in the London interbank
market.
"CAPITALIZED LEASE OBLIGATION" shall mean that portion of any obligation of
----------------------------
a Person, as a lessee under a lease, which at the time would be required to be
capitalized on the balance sheet of such Person in accordance with GAAP.
"CHANGE IN CONTROL," in the case of any entity which is a partnership,
-----------------
shall mean: (a) a change in the identity of any general partner thereof,(b) the
sale of all or substantially all of its assets, or (c) its liquidation or
dissolution or its adoption of any plan of liquidation or dissolution or its
public announcement of its intention to liquidate or dissolve; and in the case
of any entity which is a corporation, shall mean (a) any transaction, whether by
merger, consolidation, asset sale, tender offer, reverse stock split or
otherwise, which results in the acquisition of beneficial ownership (as such
term is defined under rules and regulations promulgated under the Securities
Exchange Act of 1934, as amended) by any Person of 25% or more of the
outstanding shares of all classes of equity securities of any such corporation
having ordinary voting rights, other than A.R. Weeks, Jr., or any of his
siblings, or any of their respective estates, or any trusts or family
partnerships pursuant to which voting control of such equity securities may be
exercised by A.R. Weeks, Jr. or any of his siblings, individually or as a
trustee or pursuant to contractual rights, (b) the sale of all or substantially
all of the assets of such entity, or (c) its liquidation or dissolution or its
adoption of any plan of liquidation or dissolution or its public announcement of
its intention to liquidate or dissolve. In determining the acquisition or
beneficial ownership of the outstanding shares of equity securities by any
individual for purposes of the definition of "CHANGE IN CONTROL" hereunder, the
-----------------
term "individual" shall have the meaning ascribed to such term in Section
542(a)(2) of the Code, and an individual shall be deemed to have acquired or to
have beneficial ownership of all shares that would be attributed to or treated
as held by such individual for purposes of determining whether the corporation
is closely held in accordance with Sections 856(a)(6) and 856(h) of the Code.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, together
----
with the Treasury Regulations promulgated pursuant thereto.
"COMMITMENT" shall mean, with respect to each Bank, as of any given date,
----------
an amount equal to the product obtained by multiplying such Bank's Commitment
Share by the outstanding principal amount of the Loan on such date. The
Commitment of each Bank as in effect on the date of this Agreement and as in
effect on the date of each amendment hereto shall be set forth on Schedule 2.
----------
4
<PAGE>
"COMMITMENT SHARE" shall mean, with respect to each Bank, the Commitment
----------------
Share set forth opposite such Bank's name on the signature pages hereof or on
any amendment to this Agreement, or, in the case of any Bank which has made an
assignment of a percentage interest in its rights and obligations under this
Agreement or accepted an assignment of a percentage interest in another Bank's
rights and obligations under this Agreement, in either case pursuant to an
Assignment and Acceptance, such Bank's Commitment Share immediately prior to its
making or accepting such assignment, plus the percentage interest purchased or
minus the percentage interest sold, as the case may be, pursuant to the
Assignment and Acceptance. The Commitment Share of each Bank as in effect on the
date of this Agreement and as in effect on the date of each amendment hereto
shall be set forth on Schedule 2.
----------
"CONSOLIDATED ENTITY" shall mean Borrower or any other entity which is
-------------------
under the Control of either Weeks Corporation or Borrower and whose accounts are
consolidated under GAAP in the financial statements of Weeks Corporation.
"CONTROL" shall mean, with respect to any entity, the power to direct the
-------
management and policies of such entity, directly or indirectly, whether through
the ownership of voting securities or otherwise.
"DEBT" of any Person means, at any date, without duplication, (a) all
----
Indebtedness for Money Borrowed owing by such Person, (b) all Capitalized Lease
Obligations of such Person, (c) all obligations of such Person to reimburse any
bank or other Person in respect of amounts paid or to be paid under a letter of
credit or similar instrument, to the extent such obligations would be required,
in accordance with GAAP, to be included as a liability on such Person's balance
sheet, and (d) all Debt of others secured by a Lien on any asset of such Person,
whether or not such Debt is assumed by such Person, which Debt at the time would
be required to be capitalized on the balance sheet of such Person in accordance
with GAAP; provided, however, that the term Debt shall not include any such
-------- -------
obligations to the extent such obligations have been the subject of a "legal"
defeasance, a "covenant" defeasance or an "in substance" defeasance in
accordance with GAAP.
"DEBT RATING" shall mean, as of any given day, whichever is the higher of
-----------
(a) the higher of the rating, if any, of Borrower's senior unsecured, unenhanced
debt (or, if no such rating exists, its issuer credit rating, if any, for debt
of such type) given by Moody's or Standard and Poor's (as such rating may change
from time to time) (provided that in the event of a double or greater split
--------
rating, the rating immediately below the highest rating shall apply), or, if
only one of them rates Borrower's senior unsecured,
5
<PAGE>
unenhanced debt, such rating, or (b) the higher of the rating, if any, of Weeks
Corporation's senior unsecured,unenhanced debt (or, if no such rating exists,
its issuer credit rating, if any, for debt of such type) given by Moody's or
Standard and Poor's (as such rating may change from time to time) (provided that
--------
in the event of a double or greater split rating, the rating immediately below
the highest rating shall apply), or, if only one of them rates Weeks
Corporation's senior unsecured, unenhanced debt, such rating; or, if Moody's or
Standard and Poor's rates such debt of only Borrower or only Weeks Corporation
but not both, the higher of such ratings of such one entity.
"DEBT RATING TABLE" shall mean the following:
-----------------
- ----------------------------------------------------------------------
PERFORMANCE SENIOR UNSECURED APPLICABLE MARGIN
PRICING LEVEL DEBT RATING
S&P/MOODY'S
- ----------------------------------------------------------------------
I Above 0.95%
BBB+/Baal
- ----------------------------------------------------------------------
II BBB+/Baa1 1.10%
- ----------------------------------------------------------------------
III BBB/Baa2 1.25%
- ----------------------------------------------------------------------
IV BBB-/Baa3 1.45%
- ----------------------------------------------------------------------
V Below BBB-/Baa3 1.90%
- ----------------------------------------------------------------------
"DEFAULT" shall mean any of the events or conditions described in Article
-------
XI.
"DEVELOPMENT IN PROGRESS" shall mean a Property that will or is intended to
-----------------------
be income producing upon completion and that is being improved with a building
which is under construction.
"DEVELOPMENT IN PROGRESS VALUE" shall mean, with respect to a Development
-----------------------------
in Progress, the book value of such property, including the improvements upon
such property and the underlying land, all determined in accordance with GAAP.
"DIRECT FINANCING LEASE" shall mean a lease of Property under which Weeks
----------------------
Corporation or a Consolidated Entity is the lessor and which is required, in
accordance with GAAP, to be capitalized on the balance sheet of the lessee
thereunder and classified as a long term receivable on the balance sheet of the
lessor thereunder.
"DIRECT FINANCING LEASE VALUE" shall mean, with respect to a Direct
----------------------------
Financing Lease, the book value of such Direct Financing Lease, determined in
accordance with GAAP.
6
<PAGE>
"DOCUMENTATION AGENT" shall mean NationsBank, in its capacity as the
-------------------
documentation agent in accordance with its appointment as documentation agent
pursuant to the provisions of Article III.
"DOLLARS" or "$" means dollars in lawful currency of the United States of
------- -
America.
"DOMESTIC BUSINESS DAY" means any day except a Saturday, Sunday or other
---------------------
day on which commercial banks in Georgia are authorized by law to close
(including, without limitation, any day which is a federal banking holiday in
the United States of America).
"EMPLOYEE BENEFIT PLAN" shall mean any employee welfare benefit plan or any
---------------------
employee pension benefit plan, as those terms are defined in Section 3(1) and
3(2) of ERISA, for the benefit of the employees of Weeks Corporation or any
Consolidated Entity which is a member of a controlled group or under common
control with any such Person, as such terms are defined in Section 4001(a)(14)
of ERISA.
"ENVIRONMENTAL LAWS" shall mean all state, federal or local environmental
------------------
laws and regulations.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time.
"EURO-DOLLAR BUSINESS DAY" means any Domestic Business Day on which
------------------------
dealings in Dollar deposits are carried out in the London interbank market.
"FEDERAL FUNDS RATE" shall mean, for any day, the rate per annum (rounded
------------------
upward, if necessary, to the next higher 1/100 of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers on such day, as
published by the Federal Reserve Bank of New York, on the Domestic Business Day
next succeeding such day, provided that(a) if the day for which such rate is to
--------
be determined is not a Domestic Business Day, the "FEDERAL FUNDS RATE" for such
------------------
day shall be such rate on such transactions on the next preceding Domestic
Business Day as so published on the next succeeding Domestic Business Day, and
(b) if such rate is not so published for any day, the "FEDERAL FUNDS RATE" for
------------------
such day shall be the average rate charged to Administrative Agent on such day
on such transactions, as determined by Administrative Agent.
"FIXED CHARGES" shall mean the sum of (a) Interest Expense, and (b)
-------------
Preferred Dividends.
7
<PAGE>
"FIXED CHARGE COVERAGE RATIO" shall mean, as of any Measurement Date, the
---------------------------
ratio of Income for the Measurement Period ending on such Measurement Date to
Fixed Charges for such Measurement Period.
"FLOATING RATE" shall mean the Base Rate minus .25% per annum (25 basis
-------------
points).
"FUNDS FROM OPERATIONS" shall mean net income (loss) of Weeks Corporation,
---------------------
determined on a consolidated basis in accordance with GAAP, before deducting the
------
portion of such net income (loss) allocable to Minority Interests, Preferred
Dividends, gains (or losses) from debt restructuring and sales of income
producing Property, depreciation and amortization, and after adjustments for
-----
unconsolidated partnerships and joint ventures. Adjustments for unconsolidated
partnerships and joint ventures will be calculated to reflect "FUNDS FROM
----------
OPERATIONS" on the same basis. It is acknowledged that the computation of
- ----------
"FUNDS FROM OPERATIONS" may be adjusted from time to time to be consistent with
- ----------------------
the conventions adopted by the National Association of Real Estate Investment
Trusts.
"FULL RECOURSE COVENANTS" shall mean those full recourse covenants,
-----------------------
warranties and representations typically found in secured, non-recourse real
property financing documents, including covenants and indemnities with respect
to environmental matters, liability for payment of taxes, payment of rents after
an event of default, fraud and similar matters.
"GAAP" means generally accepted accounting principles applied on a basis
----
consistent with those which, in accordance with Section 1.02, are to be used in
making the calculations for purposes of determining compliance with the terms of
this Agreement.
"GUARANTY" or "GUARANTEE," as applied to an obligation (each a "primary
-------- ---------
obligation"), shall mean and include: (a) any guaranty, direct or indirect, in
any manner, of any part or all of such primary obligation; (b) any agreement,
direct or indirect, contingent or otherwise, the intended or practical effect of
which is to assure in any way the payment or performance (or payment of damages
in the event of non-performance) of any part or all of such primary obligation,
including, without limiting the foregoing, any reimbursement obligations as to
amounts drawn by beneficiaries under letters of credit; and (c) any obligation,
whether or not contingent, (i) to purchase any such primary obligation or any
property or asset constituting direct or indirect security therefor, (ii) to
advance or supply funds (A) for the purchase or payment of such primary
obligation or (B) to maintain working capital, equity capital or the net worth,
cash flow, solvency or other balance sheet or income statement condition of any
other
8
<PAGE>
person, (iii) to purchase property, assets, securities or services primarily for
the purpose of assuring the owner or holder of any primary obligation of the
ability of the primary obligor with respect to such primary obligation to make
payment thereof, or (iv) otherwise to assure or hold harmless the owner or
holder of such primary obligation against loss in respect thereof.
"INCOME" shall mean the net income of Weeks Corporation, determined on a
------
consolidated basis in accordance with GAAP, before deducting (a) Interest
------
Expense and Preferred Dividends, (b) the portion of such net income allocable to
Minority Interests, (c) losses on the sale of income producing Property, (d)
federal, state and local income tax, (e) depreciation and amortization, and (f)
losses owing to debt restructuring, and before adding (g) gains on the sale of
------
income producing Property, and (h) gains owing to debt restructuring.
"INCOME PROPERTY" shall mean an income producing Property which is wholly-
---------------
owned by Weeks Corporation or a Consolidated Entity and improved with a
completed building, but which is not leased under a Direct Financing Lease.
"INCOME PROPERTY VALUE" shall mean, with respect to any Income Property,
---------------------
the quotient obtained by dividing the Annualized NOI for such property by a
capitalization rate of 9.50%.
"INDEBTEDNESS FOR MONEY BORROWED" of any Person means, at any date, without
-------------------------------
duplication, all indebtedness for money borrowed by such Person, all
indebtedness evidenced by notes, bonds, debentures or similar instruments
payable by such Person (secured or unsecured, full recourse or non-recourse),
all obligations of such Person to reimburse any bank or other Person in respect
of amounts paid or to be paid under a banker's acceptance, all indebtedness of
such Person issued or assumed as full or partial payment for property or
services (excluding unsecured accounts payable and other unsecured obligations
incurred in the ordinary and regular course of the business of such Person), all
obligations of such Person for reimbursement with respect to letters of credit
procured for the account of such Person as a credit enhancement for any of the
foregoing, and including interest which is accrued on any such indebtedness but
not paid on the original due date therefor or within any applicable cure or
grace period as provided by the underlying contract for such interest.
"INITIAL DATE" shall have the meaning ascribed to such term in Section
------------
2.11(c).
"INITIAL PERMITTED MORTGAGE DEBT" shall mean those loans identified on
-------------------------------
Schedule 1, together with all extensions, renewals, modifications and
- ----------
refinancings thereof.
9
<PAGE>
"INTERCOMPANY DEBT" shall mean Debt owing by Weeks Corporation or any
-----------------
Subsidiary, on the one hand, to Weeks Corporation or another Subsidiary, on the
other hand.
"INTEREST COVERAGE RATIO" shall mean, as of any Measurement Date, the ratio
-----------------------
of Income for the Measurement Period ending on such Measurement Date to Interest
Expense for such Measurement Period.
"INTEREST EXPENSE" shall mean, with respect to any period, an amount equal
----------------
to the sum of (a) the interest payable during such period with respect to
Indebtedness for Money Borrowed of Weeks Corporation and the Consolidated
Entities and reported as an expense in accordance with GAAP and not as a
capitalized item, and (b) the interest component of Capitalized Lease
Obligations of Weeks Corporation and the Consolidated Entities payable during
such period.
"INTEREST PERIOD" shall mean:
---------------
(1) With respect to each LIBOR Rate Tranche, the period commencing on
the effective date of the applicable Interest Rate Election and ending on the
numerically corresponding day in the first, second, third or sixth month
thereafter, as Borrower may elect in the applicable Interest Rate Election;
provided that:
- --------
(1) any Interest Period (subject to subparagraph (iii) below)
which would otherwise end on a day which is not a Euro-Dollar Business
Day shall be extended to the next succeeding Euro-Dollar Business Day
unless such Euro-Dollar Business Day falls in another calendar month,
in which case such Interest Period shall end on the next preceding
Euro-Dollar Business Day;
(2) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the appropriate subsequent calendar
month) shall, subject to subparagraph (iii) below, end on the last
Euro-Dollar Business Day of the appropriate subsequent calendar month;
and
(3) no Interest Period may be selected which would end after the
Maturity Date unless an Interest Period ending on the numerically
corresponding day in the first month after the effective date of the
applicable Interest Rate Election would otherwise end after the
Maturity
10
<PAGE>
Date, in which case the Interest Period shall end on the Maturity
Date; and
(2) With respect to each Base Rate Tranche, the period commencing on
the effective date of the applicable Interest Rate Election and ending on the
earlier of 30 days thereafter or the Maturity Date; provided that:
--------
(1) any Interest Period (subject to subparagraph (ii) below)
which would otherwise end on a day which is not a Domestic Business
Day shall be extended to the next succeeding Domestic Business Day;
and
(2) no Interest Period shall end after the Maturity Date.
"INTEREST RATE ELECTION" shall mean an election of an Interest Rate for a
----------------------
Tranche, in the form of Exhibit F.
---------
"KEY EXECUTIVES" shall have the meaning ascribed to such term in Section
--------------
4.16.
"LAND HELD FOR FUTURE DEVELOPMENT" shall mean a Property which is neither
--------------------------------
an Income Property, nor a Development in Progress, nor a Property subject to a
Direct Financing Lease.
"LAND VALUE" shall mean the book value of Land Held for Future Development,
----------
determined in accordance with GAAP.
"LENDING OFFICE" shall mean, as to each Bank, its office located at its
--------------
address set forth on the signature pages hereof (or identified on the signatures
pages hereof as its Lending Office) or such other office as such Bank may
hereafter designate as its Lending Office by notice to Borrower, Administrative
Agent and each other Bank.
"LEVERAGE RATIO" shall mean the ratio of Total Debt (but excluding Minority
--------------
Interests and liabilities consisting of accruals and valuation reserves) to
Total Asset Value.
"LIBOR RATE" shall mean the prevailing London Interbank Offered Rate
----------
(LIBOR) for any Interest Period, as published by the BBA and reported by Dow
Jones Market Services, Inc. (Page 3750) (or, in the absence or unavailability of
Dow Jones Market Services, Inc. (Page 3750), as such rate is determined by any
other comparable interest rate reporting service available to Administrative
Agent) for the second Euro-Dollar Business Day immediately preceding the first
day of the Interest Period (provided that if no prevailing London Interbank
--------
Offered Rate (LIBOR) for a selected Interest Period is published by BBA, such
rate shall be determined by Administrative
11
<PAGE>
Agent by interpolation or extrapolation with reference to the prevailing London
Interbank Offered Rate (LIBOR) published by BBA for periods of shorter and/or
longer durations), PLUS THE APPLICABLE MARGIN, as said rate may be adjusted by
Administrative Agent from time to time as necessary to compensate Banks for any
loss of yield to Banks on LIBOR Rate Tranches which would otherwise result from
any change in applicable law, rules, regulations, treaties, or governmental or
judicial directives, in the interpretation or administration thereof, or in
Banks' compliance therewith.
"LIBOR RATE TRANCHE" shall mean each Tranche which accrues interest at the
------------------
LIBOR Rate in accordance with the terms and conditions of this Agreement.
"LIEN" shall mean, with respect to any Property Interest, any Mortgage and
----
any other claim of lien, pledge, assignment, charge, security interest, title
retention agreement, levy, execution, attachment, garnishment, encumbrance or
servitude of any kind, whether by consensual agreement or by operation of
statute or other law, and whether voluntary or involuntary, and whether or not
choate, vested or perfected.
"LOAN" shall mean the term loan made by Banks ratably in accordance with
----
their respective Commitments pursuant to Article II.
"LOAN DOCUMENTS" shall mean this Agreement, the Notes, the Syndicated Term
--------------
Loan Guaranties, and all other documents, agreements, certificates, and reports
called for herein or executed in connection herewith or contemplated hereby, as
the same may be amended from time to time.
"MANDATE LETTER" shall mean that certain Mandate Letter dated October 8,
--------------
1998, from Wachovia to Weeks Corporation and Borrower, outlining the proposed
terms and conditions of the financing evidenced by this Agreement.
"MARGIN STOCK" shall mean margin stock, as defined in Section 221.2(h) (or
------------
any successor provision) of the Regulations of the Board of Governors of the
Federal Reserve System.
"MATERIAL VENTURE" shall mean a Non-Consolidated Venture having a Non-
----------------
Consolidated Venture Value in excess of $10,000,000 and with respect to which
Weeks Corporation or a Subsidiary, either alone or together with each other or
one or more other Subsidiaries, has Control.
"MATURITY DATE" shall mean December 31, 2001.
-------------
12
<PAGE>
"MEASUREMENT DATE" shall mean September 30, 1998, and each December 31,
----------------
March 31, June 30, and September 30 thereafter.
"MEASUREMENT PERIOD" shall mean the three (3) month period ending on a
------------------
Measurement Date.
"MINORITY INTERESTS" shall mean the partnership interests in Borrower held
------------------
by limited partners other than LP Holdings.
"MOODY'S" shall mean Moody's Investor Services, Inc. and its successors and
-------
assigns succeeding to its rating agency business.
"MORTGAGE" shall mean any mortgage, deed of trust, deed to secure debt or
--------
other security instrument pursuant to which, under applicable law, an interest
in real estate is voluntarily conveyed as security for a debt.
"MORTGAGE DEBT" shall mean all Indebtedness for Money Borrowed which is
-------------
secured by a Mortgage.
"MPPAA" shall mean the Multiemployer Pension Plan Amendments Act of 1980,
-----
amending Title IV of ERISA.
"MULTIEMPLOYER PLAN" shall have the meaning set forth in Section 4001(a)(3)
------------------
of ERISA.
"NON-CONSOLIDATED SUBSIDIARY" shall mean a Subsidiary which is not a
---------------------------
Consolidated Entity. "NON-CONSOLIDATED SUBSIDIARIES" shall mean, collectively,
-----------------------------
all such Non-Consolidated Subsidiaries.
"NON-CONSOLIDATED SUBSIDIARY VALUE" shall mean the aggregate book value,
---------------------------------
before accumulated depreciation, of the assets of all Non-Consolidated
Subsidiaries (excluding all Intercompany Debt owing to any Non-Consolidated
Subsidiary and excluding goodwill and other intangible assets to the extent the
aggregate book value of such good will and other intangible assets exceeds 33
1/3% of the aggregate book value of all the assets), determined in accordance
with GAAP, as reflected on the most recent consolidated financial statements of
Weeks Corporation (whether quarterly or annual) delivered pursuant to Section
8.03 or, prior to the initial delivery of financial statements pursuant to
Section 8.03, the consolidated financial statements of Weeks Corporation for its
fiscal quarter ending September 30, 1998.
"NON-CONSOLIDATED VENTURE" shall mean any enterprise of any nature
------------------------
whatsoever (including, without limitation, a joint venture, general partnership,
limited partnership, limited liability company, corporation or trust) formed by
Weeks Corporation and/or any Consolidated Entity, as parties to the enterprise,
and any
13
<PAGE>
other Persons, as other parties to the enterprise, which enterprise is not a
Subsidiary.
"NON-CONSOLIDATED VENTURE VALUE" shall mean the net book value, before
------------------------------
accumulated depreciation, of all interests of Weeks Corporation and all
Consolidated Entities in Non-Consolidated Ventures (excluding goodwill and other
intangible assets), determined in accordance with GAAP, as reflected on the most
recent consolidated financial statements of Weeks Corporation (whether quarterly
or annual) delivered pursuant to Section 8.03 or, prior to the initial delivery
of financial statements pursuant to Section 8.03, the consolidated financial
statements of Weeks Corporation for its fiscal quarter ending September 30,
1998.
"NOTE" shall mean a Syndicated Term Note, made by Borrower payable to the
----
order of a Bank and in the form of Exhibit C, evidencing the ratable share of
---------
the Loan made by such Bank to Borrower, and any extension, renewal, modification
or restatement thereof made by Borrower to the order of such Bank. "NOTES"
-----
shall mean all such Syndicated Term Notes.
"NOTES RECEIVABLE VALUE" shall mean the book value, determined in
----------------------
accordance with GAAP, of those promissory notes which are from third parties to
Weeks Corporation or any Consolidated Entity and are secured by Mortgages.
"NOTICE OF BORROWING" shall mean a request made by Borrower in the form of
-------------------
Exhibit A that the Banks make the Loan.
- ---------
"OBLIGATIONS" shall mean the aggregate amount of all indebtedness,
-----------
liabilities and obligations of Borrower to Banks under, pursuant to or arising
out of this Agreement, including, without limiting the generality of the
foregoing: any and all indebtedness, liabilities and obligations of Borrower to
Banks evidenced by the Notes; all principal and interest owing thereunder; all
Administrative Agent's and Banks' fees authorized under the terms of this
Agreement; all charges and expenses of or incidental to the preparation,
renewal, modification or enforcement of any of the foregoing and any and all
extensions or renewals thereof in whole or in part; whether or not any of the
foregoing is absolute, contingent, mature, unmatured, or otherwise; and all
Administrative Agent's and Banks' charges, expenses, and costs of collection of
any or all of the foregoing, including reasonable attorneys' fees (if collected
by or through an attorney).
"OPERATING EXPENSES" shall mean, with respect to a Property, all expenses
------------------
incurred to operate the Property, including, without limitation, expenses for
---------
administration, utilities, insurance, property taxes, repairs and maintenance,
hypothetical management fees of three percent (3%) of rent, and an accrued
structural
14
<PAGE>
reserve of $0.0125 per square foot for each square foot of the building area of
such Property in existence at the end of the period (the equivalent of $0.05 per
square foot per annum), but excluding interest expense or debt service payments
---------
under any indebtedness secured by a Lien on the Property.
"PARTICIPANT" shall have the meaning ascribed to said term in Section
-----------
14.03(b).
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
----
"PERFORMANCE PRICING DETERMINATION DATE" shall mean (a) the date of this
--------------------------------------
Agreement, and (b) any of the following dates: January 1, 1999, and the first
day of each calendar quarter (April 1, July 1, October 1, and January 1)
thereafter as of which day the Debt Rating, as determined by Administrative
Agent, shall be either (i) lower than the Debt Rating, as determined by
Administrative Agent, in effect on the immediately preceding Performance Pricing
Determination Date, or (ii) higher than the Debt Rating, as determined by
Administrative Agent, in effect on the immediately preceding Performance Pricing
Determination Date, if Borrower shall have given Administrative Agent written
notice on or before such day of Borrower's determination that the Debt Rating as
of such day is or shall be higher than the Debt Rating in effect on such
immediately preceding Performance Pricing Determination Date. For purposes of
this definition, if there is no Debt Rating in effect on a Performance Pricing
Determination Date there shall nevertheless be deemed to be a Debt Rating in
effect on such date which is below Standard and Poor's BBB- rating and below
Moody's Investor Service Baa3 rating.
"PERMITTED BORROWING" shall mean non-revolving Indebtedness for Money
-------------------
Borrowed incurred by Weeks Corporation or Borrower (a) which is neither secured
by a Lien on any Property Interest of Borrower or any Consolidated Entity nor
subject to an agreement that it shall be secured, upon the lapse of time, the
occurrence of any event, the failure to satisfy any condition, or otherwise, by
a Lien on any Property Interest of Borrower or any Consolidated Entity, (b)
which matures not less than one year after the date it shall have been made, (c)
which, if evidenced by a security (within the meaning of applicable federal
securities laws and state Blue Sky laws), is evidenced by a security issued in a
private placement, public offering or otherwise made in compliance with all
applicable federal securities laws and state Blue Sky laws, and (d) which has a
payment seniority no higher than that of the Loan.
"PERMITTED ENCUMBRANCES" shall mean any or all of the following:
----------------------
15
<PAGE>
(a) inchoate Liens arising in the ordinary course of business and
incident to construction or maintenance of real property, or Liens arising in
the ordinary course of business and incident to construction or maintenance of
real property now or hereafter filed of record which are being contested in good
faith by appropriate proceedings and have not proceeded to a judgment which has
remained outstanding for more than ten (10) days after the entering thereof,
provided that, by reason of such proceedings no such real property is subject to
- --------
a material risk of loss or forfeiture;
(b) Liens arising in the ordinary course of business for taxes,
assessments and brokerage commission on real property which are not yet past
due, or are being contested in good faith by appropriate proceedings and have
not proceeded to a judgment which has remained outstanding for more than ten
(10) days after the entering thereof, provided that, by reason of nonpayment, no
--------
such real property is subject to a material risk of loss or forfeiture;
(3) minor defects and irregularities in title to any real property
which in the aggregate do not materially impair the value or use of the real
property for the purposes for which it is or may reasonably be expected to be
held;
(4) easements, exceptions, reservations, or other agreements for the
purpose of pipelines, conduits, cables, wire communication lines, power lines
and substations, streets, trails, walkways, drainage, irrigation, water, and
sewerage purposes, dikes, canals, ditches, the removal of oil, gas, coal, or
other minerals, and other like purposes affecting real property, facilities, or
equipment which in the aggregate do not materially burden or impair the value or
use of such property for the purposes for which it is or may reasonably be
expected to be held;
(5) easements, exceptions, reservations, or other agreements for the
purpose of facilitating the joint or common use of property in an industrial
park or similar real property project affecting real property which in the
aggregate do not materially burden or impair the value or use of such property
for the purposes for which it is or may reasonably be expected to be held;
(6) rights reserved to or vested in any governmental agency to control
or regulate the use of any real property;
(7) any obligations or duties affecting any real property to any
governmental agency with respect to any right, power, franchise, grant, license,
or permit;
(8) present or future zoning laws and ordinances or other laws and
ordinances restricting the occupancy, use, or enjoyment of real property;
16
<PAGE>
(9) statutory Liens, other than those described in clauses (a) or (b)
above, arising in the ordinary course of business with respect to obligations
which are not delinquent or are being contested in good faith, provided, that
--------
adequate reserves have been set aside with respect thereto and, by reason of
nonpayment, no property is subject to a material risk of loss or forfeiture;
(10) covenants, conditions, and restrictions affecting the use of real
property which (i) do not, and will not, interfere in any material respect with
the intended use of the property by any tenant under any lease in effect with
respect to such property, which use is consistent with such tenant's rights
under its lease; (ii) do not contain any restrictions upon Borrower's
transferability of title to such property or the ability of Borrower to encumber
said property; and (iii) which in the aggregate do not materially impair the
value or use of the real property for the purposes for which it is or may
reasonably be expected to be operated and held, including the present or
intended use by all tenants under leases currently in effect with respect to the
property; and
(11) rights of tenants under space leases covering real property
entered into in the ordinary course of business of the owner thereof.
"PERMITTED GUARANTIES" shall mean: (a) the Syndicated Term Loan Guaranties,
--------------------
(b) any Guaranty of the indebtedness of Borrower, not to exceed the principal
amount of $225,000,000 at any one time outstanding, now or hereafter owing to
Banks (as defined in the Syndicated Credit Agreement) under the Syndicated
Credit Agreement, (c) any Guaranty of the indebtedness of Borrower, not to
exceed the principal amount of $30,000,000 at any one time outstanding, now or
hereafter owing to Swing Bank under the Swing Credit Agreement, (d) Guaranties
of the obligations of Weeks Corporation or any Subsidiary, (e) Guaranties of
loans secured by real property owned by a Non-Consolidated Subsidiary or a Non-
Consolidated Venture, provided that the aggregate amount of all indebtedness
guaranteed by such Guaranties shall not exceed, at any one time, five percent
(5%) of Total Asset Value, (f) Guaranties of the payment or performance of
obligations of a Subsidiary with respect to obligations undertaken in the normal
course of the business operations of such Subsidiary, other than Indebtedness
for Money Borrowed of such Subsidiary, and (g) Guaranties of the payment and
performance of Weeks Construction Services, Inc. or any of its wholly-owned
subsidiaries engaged in construction contracting with respect to such Person's
construction contracts and surety bonds, provided the sum of the uncompleted
--------
contract values guaranteed by such Guaranties shall not exceed $50,000,000 at
any one time.
"PERMITTED MORTGAGE DEBT" shall mean any debt financing which is secured by
-----------------------
a first priority Mortgage granted by Weeks
17
<PAGE>
Corporation or any Subsidiary on real property and which is (a) Initial
Permitted Mortgage Debt; or (b) a debt financing which meets the following
conditions: (i) the holder of the Mortgage has recourse only to the collateral
securing the debt financing and not to the general assets of Weeks Corporation
or any Consolidated Entity or Non-Consolidated Subsidiary, except for liability
for Full Recourse Covenants, (ii) the debt financing has an original term of
five (5) years or more, and (iii) the debt financing would not result in a
violation of the restriction set forth in Section 10.04; (c) a Permitted Tax
Exempt Financing, or (d) a debt financing which is not described in clause (a),
clause (b) or clause (c) and which has a principal amount which, when aggregated
with the principal amount of all other such debt financings described in this
clause (d), does not exceed $20,000,000 at any one time.
"PERMITTED TAX-EXEMPT FINANCING" shall mean a Debt owing by Weeks
------------------------------
Corporation or any Subsidiary arising out of the issuance of tax-exempt
industrial revenue bonds issued by a public or quasi-public authority.
"PERSON" shall mean an individual, a corporation, a partnership, an
------
unincorporated association, a trust or any other entity or organization,
including, but not limited to, a government or political subdivision or an
agency or instrumentality thereof.
"PREFERRED DIVIDENDS" shall mean, for any period, without duplication of
-------------------
such amounts as constitute intercompany debts or distributions, the sum of (a)
dividends or distributions due and payable or accrued during such period on
preferred stock issued by Weeks Corporation or a Subsidiary, and (b)
distributions which are the functional equivalent of preferred dividends (i.e.,
which the issuer is required to make prior to distributions on another class or
other classes of partnership interests) and which are due and payable or accrued
during such period on preferred partnership interests issued by Borrower or any
other Subsidiary.
"PRIME RATE" shall mean the interest rate denominated as Wachovia's "prime
----------
rate" and set by Wachovia in its sole discretion from time to time as an
interest rate basis for borrowings, which is one of several interest rate bases
used by Wachovia, and which rate is not the lowest interest rate available from
Wachovia. Loans are made by Wachovia from time to time at interest rates equal
to, above or below its "prime rate." In the event Wachovia shall abolish or
abandon the practice of establishing its "prime rate," Administrative Agent
shall designate a comparable reference rate which shall be deemed to be the
"PRIME RATE" hereunder.
----------
"PROPERTY" shall mean real property owned from time to time by Weeks
--------
Corporation or any Consolidated Entity.
18
<PAGE>
"PROPERTY INTEREST(S)" shall mean any interest in any property or asset of
--------------------
any kind, whether real, personal or mixed, or tangible or intangible.
"RELATED PARTIES" shall mean, collectively, (a) Weeks Corporation, (b) all
---------------
Subsidiaries (except Borrower), (c) all Non-Consolidated Ventures in which Weeks
Corporation and/or any Consolidated Entities own at least 20% of the equity
interests and over which Weeks Corporation and/or any Consolidated Entities have
Control, and (d) all Non-Consolidated Ventures in which Weeks Corporation and/or
any Consolidated Entities own at least 50% of the equity interests. "RELATED
-------
PARTY" shall mean any one such Person.
- -----
"REPORTABLE EVENT" shall mean any of the events described in Section
----------------
4043(b) of ERISA.
"REQUIRED BANKS" shall mean, at any time prior to the maturity of the Notes
--------------
(whether by acceleration or otherwise), any Bank or Banks whose Commitment or
Commitments constitute at least 66-2/3% of the outstanding principal amount of
the Loan.
"RESTRICTED INVESTMENT" shall mean any acquisition of Property Interests by
---------------------
Weeks Corporation, Borrower or any other Subsidiary in exchange for cash or
other Property Interests, whether in the form of an acquisition of stock, debt
security, or other indebtedness or obligation, or the purchase or acquisition of
any other Property Interests, or by loan, advance, capital contribution, or
subscription, except the following: (a) tangible and intangible assets
------
including real property to be used in the business of Borrower or a Related
Party so long as the acquisition costs thereof constitute capital expenditures
not otherwise prohibited hereunder; (b) goods held for sale or lease or to be
used in the provision of services by Borrower or a Related Party in the ordinary
course of business; (c) current assets purchased for use, or arising from the
sale or lease of goods or the rendering of services, in the ordinary course of
business of Borrower or a Related Party; (d) direct obligations of the United
States of America, or any agency thereof, or obligations guaranteed by the
United States of America, provided that such obligations mature within one year
--------
from the date of acquisition thereof; (e) certificates of deposit maturing
within one year from the date of acquisition, bankers acceptances, Eurodollar
bank deposits, or overnight bank deposits, in each case issued by, created by,
or with a bank or trust company organized under the laws of the United States or
any state thereof having capital and surplus aggregating at least $100,000,000;
(f) commercial paper given the highest rating by a national credit rating
agency, including, without limitation, Standard and Poor's or Moody's, and
maturing not more
19
<PAGE>
than 270 days from the date of creation thereof; (g) tender bonds the payment of
the principal of and interest on which is fully supported by a letter of credit
issued by a bank organized or licensed under the laws of the United States or
any state thereof whose long-term certificates of deposit are rated at least AA
or the equivalent thereof by Standard and Poor's, or Aa or the equivalent
thereof by Moody's; and (h) investments in debt or equity securities rated at
least BBB+ or the equivalent thereof by Standard and Poor's, or at least Baa1 or
the equivalent thereof by Moody's not exceeding an aggregate amount outstanding
at any one time of $5,000,000.
"SEC" shall mean the Securities and Exchange Commission.
---
"STANDARD AND POOR'S" shall mean Standard and Poor's Ratings Services and
-------------------
its successors and assigns succeeding to its rating agency business.
"SUBSIDIARY" means (a) any Consolidated Entity, and (b) any other
----------
corporation or entity the majority of the shares of the non-voting capital stock
or other equivalent ownership interests of which (except directors' qualifying
shares) are at the time directly or indirectly owned by Weeks Corporation and/or
Borrower, and the majority of the shares of the voting capital stock or other
equivalent ownership interests of which (except directors' qualifying shares)
are at the time directly or indirectly owned by Weeks Corporation or any
Consolidated Entity, and/or any officer of Weeks Corporation.
"SUBSTANCES" shall mean all hazardous or toxic substances or wastes,
----------
including, but not limited to, asbestos, PCBs, petroleum products, fertilizers
and pesticides.
"SWING BANK" shall mean Wachovia, as lender under the Swing Credit
----------
Agreement, or Wachovia or any other institutional lender under any other Swing
Credit Agreement.
"SWING CREDIT AGREEMENT" shall mean that certain Swing Credit Agreement,
----------------------
dated July 1, 1998, by and among Borrower, as borrower, Weeks Corporation, GP
Holdings and LP Holdings, as guarantors, and Swing Bank, as lender, or any
extension, renewal, modification or replacement thereof.
"SYNDICATED CREDIT AGREEMENT" shall mean that certain Syndicated Credit
---------------------------
Agreement, dated July 1, 1998, by and among Borrower, as borrower, Weeks
Corporation, GP Holdings and LP Holdings, as guarantors, each Bank that was,
became or becomes a signatory thereto, as Banks, and Wachovia, as Administrative
Agent.
20
<PAGE>
"SYNDICATED TERM LOAN GUARANTIES" shall mean, collectively, an
-------------------------------
unconditional guaranty of payment and performance, in the form of Exhibit D,
---------
executed by each Guarantor, in favor of Banks, whereby such Guarantor
unconditionally guaranties the payment and performance when due of all
Obligations of Borrower to Banks, and a "SYNDICATED TERM LOAN GUARANTY" shall
-----------------------------
mean any such unconditional guaranty.
"SYNDICATION AGENT" shall mean FUNB, in its capacity as the syndication
-----------------
agent in accordance with its appointment as syndication agent pursuant to the
provisions of Article III.
"TAXES" shall have the meaning ascribed to such term in Section 2.11(c).
-----
"TOTAL ANNUALIZED NOI" shall mean the aggregate Annualized NOI with respect
--------------------
to all Income Property and all Property subject to a Direct Financing Lease.
"TOTAL ASSET VALUE" shall mean, at any Measurement Date, the sum, without
-----------------
duplication, of (a) the Income Property Value of all Income Property, (b) the
Direct Financing Lease Value of all Direct Financing Leases, (c) the Development
in Progress Value of all Developments in Progress, (d) the Land Value of all
Land Held for Future Development, (e) the Notes Receivable Value, (f) the Non-
Consolidated Subsidiary Value, and (g) the Non-Consolidated Venture Value.
"TOTAL DEBT" shall mean, without duplication, all Debt (other than
----------
Intercompany Debt) owing by Weeks Corporation or any Subsidiary.
"TOTAL INTEREST BEARING DEBT" shall mean, without duplication, all Debt
---------------------------
(other than Intercompany Debt) of Weeks Corporation or any Subsidiary consisting
of Capitalized Lease Obligations or Indebtedness for Money Borrowed.
"TOTAL SECURED DEBT" shall mean, without duplication, all Debt (other than
------------------
Intercompany Debt) of Weeks Corporation or any Subsidiary consisting of: (a)
Capitalized Lease Obligations; or (b) Indebtedness for Money Borrowed, which in
either case is secured by a Mortgage on any real property.
"TOTAL UNSECURED DEBT" means, without duplication, all Debt (other than
--------------------
Intercompany Debt) of Weeks Corporation or any Subsidiary which is not secured
by a Mortgage on any real property.
"TRANCHE" shall mean a segment of the Loan constituting a specified
-------
principal amount thereof equal to $10,000,000 or a larger
21
<PAGE>
integral multiple of $1,000,000 (up to and including the entire principal amount
of the Loan) for which an Interest Rate Election, made by Borrower in accordance
with Section 2.03, shall be in effect.
"TRANSFEREE" shall have the meaning ascribed to such term in Section
----------
14.03(d).
"UNENCUMBERED PROPERTY VALUE" shall mean the Income Property Value of all
---------------------------
Income Property, plus the Direct Financing Lease Value of each Direct Financing
Lease, in each case that is free and clear of Mortgage Debt. The factors in the
foregoing calculation shall be determined with respect to Weeks Corporation and
the Subsidiaries, without duplication, or, where the context requires that such
calculation shall be determined with respect solely to Borrower, solely to
Borrower.
1.2 ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise specified
-----------------------------------
herein, all terms of an accounting character used herein shall be interpreted,
all accounting determinations hereunder shall be made, and all financial
statements required to be delivered hereunder shall be prepared, in accordance
with GAAP, applied on a basis consistent (except for changes concurred in by
Borrower's independent public accountants or otherwise required by a change in
GAAP) with the most recent audited consolidated financial statements of Weeks
Corporation delivered to Banks, unless with respect to any such change concurred
in by the Borrower's independent public accountants or required by GAAP, in
determining compliance with any of the provisions of this Agreement or any of
the other Loan Documents: (a) Weeks Corporation or Borrower shall have objected
to determining such compliance on such basis at the time of delivery of such
financial statements, or (b) the Required Banks shall so object in writing
within thirty (30) days after the delivery of such financial statements, in
either of which events such calculations shall be made on a basis consistent
with those used in the preparation of the latest financial statements as to
which such objection shall not have been made (which, if objection is made in
respect of the first financial statements delivered under Section 8.03, shall
mean the financial statements referred to in Section 7.12).
1.3 REFERENCES. Unless otherwise indicated, references in this Agreement
----------
to "Articles," "Exhibits," "Schedules," "Sections" and other subdivisions or
paragraphs are references to articles, exhibits, schedules, sections and other
subdivisions or paragraphs hereof.
1.4 USE OF DEFINED TERMS. All terms defined in this Agreement shall have
--------------------
the same defined meanings when used in any of
22
<PAGE>
the other Loan Documents, unless otherwise defined therein or unless the context
shall require otherwise.
1.5 TERMINOLOGY. All personal pronouns used in this Agreement, whether
-----------
used in the masculine, feminine or neuter gender, shall include all other
genders; the singular shall include the plural, and the plural shall include the
singular. Titles of Articles and Sections in this Agreement are for convenience
only and neither limit nor amplify the provisions of this Agreement. When
anything is described or referred to in the Loan Documents in general terms and
one or more examples or components of what has been described or referred to
generally is associated with that description (whether or not following the word
"including"), the examples or components shall be deemed illustrative only and
shall not be construed as limiting the generality of the description or
reference in any way.
ARTICLE II
----------
SYNDICATED TERM LOAN
--------------------
1.6 SYNDICATED TERM LOAN. Upon the satisfaction, on or before December 31,
--------------------
1998, of each of the conditions of Article IV and subject to all other terms and
conditions of this Agreement, Banks shall make a term loan to Borrower under
which Banks will, ratably in accordance with their respective Commitments, make
the Loan to Borrower in the amount of $85,000,000.
1.7 RATE OF INTEREST ON LOAN. Interest shall accrue on the unpaid
------------------------
principal amount of the Loan at the LIBOR Rate or LIBOR Rates elected by
Borrower in accordance with the provisions of Section 2.03, provided that no
--------
more than five (5) LIBOR Rates shall be in effect at any one time.
1.8 NOTICE OF INTEREST RATE ELECTIONS.
---------------------------------
(1) Borrower shall give Administrative Agent, prior to 10:00 a.m.
(Atlanta, Georgia time) on a Euro-Dollar Business Day which is at least three
(3) Euro-Dollar Business Days before the making of the Loan, to be effective on
the day the Loan is to be made, (i) an Interest Rate Election for a Tranche
constituting the entire principal amount of the Loan or (ii) Interest Rate
Elections for a number, not to exceed five (5), of Tranches (each in the
principal amount of $10,000,000 or a larger integral multiple of $1,000,000),
which in the aggregate constitute the entire principal amount of the Loan.
23
<PAGE>
(2) Borrower shall give Administrative Agent, prior to 10:00 a.m.
(Atlanta, Georgia time) on a Euro-Dollar Business Day which is at least three
(3) Euro-Dollar Business Days before the last day of the Interest Period in
effect for each Tranche, to be effective on the day after the last day of the
then expiring Interest Period, (i) in the case of any Tranche as to which the
Interest Period is expiring, an Interest Rate Election for the entire Tranche or
(ii) in the case of a Tranche in the principal amount of $20,000,000 or more as
to which the Interest Period is expiring, Interest Rate Elections for more than
one Tranche (each in the principal amount of $10,000,000 or a larger integral
multiple of $1,000,000) which, in the aggregate, have a principal amount equal
to the amount of the Tranche as to which the Interest Period is expiring or
(iii) in the case of more than one Tranche as to which the Interest Period is
expiring, an Interest Rate Election for a single Tranche in the aggregate of the
principal amounts of all such Tranches as to which the Interest Period is
expiring, or Interest Rate Elections for a number of Tranches (each in the
principal amount of $10,000,000 or a larger integral multiple of $1,000,000),
which in the aggregate constitute the aggregate of the principal amounts of all
such Tranches as to which the Interest Period is expiring.
(3) Each Interest Rate Election shall specify (i) the effective date
of the Interest Rate Election, (ii) the amount of the Tranche for which the
Interest Rate Election is being made, (iii) the Interest Period elected, and
(iv) such other information called for in the form of the Interest Rate
Election. Any such Interest Rate Election which Administrative Agent believes in
good faith to have been given by a duly authorized agent of Borrower shall be
deemed given by Borrower. Notwithstanding any provision of this Agreement to the
contrary, if, after Administrative Agent's receipt of Borrower's Interest Rate
Election, Administrative Agent determines in good faith that it is not possible
to determine the applicable LIBOR Rate or the LIBOR Rate shall not cover the
actual cost to Banks of obtaining United States dollar deposits in the Interbank
Eurodollar Market plus the Applicable Margin, then Administrative Agent shall
promptly notify Borrower and Banks of such determination, and the Tranche
subject to the Interest Rate Election shall bear interest at the Floating Rate.
(4) Upon receipt of an Interest Rate Election, Administrative Agent
shall promptly notify each Bank of the contents thereof. Such Interest Rate
Election, once received by Administrative Agent, shall not thereafter be
revocable.
1.9 INTEREST PERIOD PRESUMPTION. In the event that Administrative Agent
---------------------------
shall not receive an Interest Rate Election at least three (3) Euro-Dollar
Business Days before the last day of an Interest Period applicable to a Tranche,
the Interest Period for the Tranche shall be, effective on the day after the
last day of
24
<PAGE>
the expiring Interest Period, the same as the expiring Interest Period, provided
--------
that if an Interest Period which is the same as the expiring Interest Period
would expire after the Maturity Date, the Interest Period for the Tranche shall
be, effective on the day after the last day of the expiring Interest Period, the
longest Interest Period that would be available to Borrower under the terms and
conditions of this Agreement that would not expire after the Maturity Date.
1.10 FUNDING OF THE LOAN. Not later than 2:00 p.m. (Atlanta, Georgia time)
-------------------
on the day the Loan is to be made, each Bank shall make available its ratable
share of the Loan, in federal or other funds immediately available in Atlanta,
Georgia, to Administrative Agent at its address determined pursuant to Section
14.10. Unless Administrative Agent determines that any applicable condition
specified in Article IV has not been satisfied, Administrative Agent will make
the funds so received from Banks available to Borrower by crediting a checking
account maintained by Borrower with Administrative Agent. Unless Administrative
Agent receives notice from a Bank at Administrative Agent's address specified
pursuant to Section 14.10, no later than 4:00 p.m. (Atlanta, Georgia time) on
the day the Loan is to be made, stating that such Bank will not make available
its ratable share of the Loan, Administrative Agent shall be entitled to assume
that such Bank will make available its ratable share of the Loan and, in
reliance on such assumption, Administrative Agent may (but shall not be
obligated to) make such Bank's ratable share of the Loan available to Borrower
for the account of such Bank. If Administrative Agent makes such Bank's ratable
share of the Loan available to Borrower as provided above, and if such Bank does
not in fact make its ratable share of the Loan available on such day,
Administrative Agent shall be entitled to recover such Bank's ratable share of
the Loan from such Bank or Borrower (and for such purpose shall be entitled to
charge such amount to any account of Borrower maintained with Administrative
Agent), together with interest thereon for each day during the period from the
date of the Loan until such sum shall be paid in full at a rate per annum equal
to the rate at which Administrative Agent determines that it obtained (or could
have obtained) overnight federal funds to cover such amount for each such day
during such period, provided that (i) any such payment by Borrower of such
--------
Bank's ratable share of the Loan and interest thereon shall be without prejudice
to any rights that Borrower may have against such Bank, and (ii) until such Bank
has paid its ratable share of the Loan, together with interest pursuant to the
foregoing, it will have no interest in or rights with respect to the Loan for
any purpose hereunder. If Administrative Agent determines not to exercise its
option to advance funds for the account of such Bank, it shall forthwith notify
Borrower of such determination.
25
<PAGE>
1.11 INTEREST PAYMENTS ON LOAN. Accrued and unpaid interest on the unpaid
-------------------------
principal amount of each Tranche shall be due and payable on the last day of the
Interest Period applicable thereto and, if earlier, three (3) months after the
first day of the Interest Period applicable thereto. Interest payable on the
Loan shall be computed on the basis of a hypothetical year of 360 days for the
actual number of days elapsed.
1.12 MATURITY. The entire unpaid principal amount of the Loan, together
--------
with all accrued and unpaid interest thereon, shall be due and payable on the
Maturity Date.
1.13 NOTES. (a) The ratable share of the Loan made by each Bank shall be
-----
evidenced by a Note made by Borrower payable to the order of such Bank in an
amount equal to the original principal amount of such Bank's Commitment.
(b) Upon receipt of each Bank's Note pursuant to Section 4.07,
Administrative Agent shall deliver such Note to such Bank.
(c) In the event of loss, theft, destruction, total or partial
obliteration, mutilation or inappropriate cancellation of a Note, Borrower will
execute and deliver, in lieu thereof, a replacement Note identical in form and
substance to such Note and dated as of the date of such Note.
1.14 USE OF LOAN PROCEEDS. The proceeds of the Loan will be used by
--------------------
Borrower solely (a) to prepay Borrower's obligations under the Syndicated Credit
Agreement (including the amount of compensation, if any, determined to be due
pursuant to Section 2.10(e) of the Syndicated Credit Agreement and the fee due
pursuant to Section 13.03 of the Syndicated Credit Agreement) to Agent (as
defined in the Syndicated Credit Agreement), in such amount as Borrower shall
direct, and (b) to prepay Borrower's obligations under the Swing Credit
Agreement to Swing Bank, in such amount as Borrower shall direct.
1.15 PREPAYMENT OF LOAN. (a) Borrower may, upon at least five (5) Euro-
------------------
Dollar Business Days' notice to Administrative Agent, prepay the Loan in whole,
but not in part, by paying the entire outstanding principal amount of the Loan,
plus, if such prepayment is not made on the last day of the Interest Periods
applicable to the LIBOR Rate Tranches, if any, the amount of compensation, if
any, determined to be due pursuant to paragraph (c) of this Section 2.10 and the
fee due pursuant to Section 13.03.
(b) Upon receipt of a notice of prepayment pursuant to this Section
2.10, Administrative Agent shall promptly notify each Bank of the contents
thereof and of such Bank's ratable share of
26
<PAGE>
such prepayment. Such notice, once received by Administrative Agent, shall not
thereafter be revocable by Borrower.
(c) Upon prepayment of the Loan in accordance with paragraph (a) of
this Section 2.10 or as a result of an acceleration of the maturity of the Loan
upon a Default, Borrower shall pay to Administrative Agent, to be applied
ratably to each Bank's pro rata portion of the Loan, compensation with respect
to the prepayment of the LIBOR Rate Tranches, if any, not made on the last day
of the Interest Periods applicable thereto, equal to Banks' Breakage Costs with
respect thereto.
1.16 GENERAL PROVISIONS AS TO PAYMENTS. (a) Borrower shall make each
---------------------------------
payment of interest on, and the payment of principal on, the Loan and of fees
hereunder, not later than 1:00 p.m. (Atlanta, Georgia time) on the day when due,
in federal or other funds immediately available in Atlanta, Georgia, to
Administrative Agent at its address referred to in Section 14.10. All such
payments of principal of, and interest on, the Loan and of fees hereunder shall
be credited to the account of Borrower on the day so received by Administrative
Agent, if received before 1:00 p.m. (Atlanta, Georgia time), or on the next
Domestic Business Day, if so received after 1:00 p.m. (Atlanta, Georgia time).
Administrative Agent will promptly distribute to each Bank its ratable share of
each such payment received by Administrative Agent for the account of Banks. If
Administrative Agent fails to distribute to any Bank its ratable share of any
such payment on the day received, if received not later than 1:00 p.m. (Atlanta,
Georgia time) on such day, or on the next Domestic Business Day, if received
after 1:00 p.m. (Atlanta, Georgia time) on such day, such Bank shall be entitled
to recover such Bank's ratable share of such payment from Administrative Agent,
together with interest thereon for each day during the period from the date the
distribution of such Bank's ratable share of such payment shall have become due
until such distribution shall be made, at a rate per annum equal to the rate at
which Administrative Agent determines that it obtained (or could have obtained)
overnight federal funds in such amount for each such day during such period.
(1) Whenever any payment of principal of, or interest on, Base Rate
Tranches or fees hereunder shall be due on a day which is not a Domestic
Business Day, the date for payment thereof shall be extended to the next
succeeding Domestic Business Day. Whenever any payment of principal of or
interest on LIBOR Rate Tranches shall be due on a day which is not a Euro-Dollar
Business Day, the date for payment thereof shall be extended to the next
succeeding Euro-Dollar Business Day, unless such Euro-Dollar Business Day falls
in another calendar month, in which case the date for payment thereof shall be
the next preceding Euro-Dollar Business Day.
27
<PAGE>
(2) All payments of principal, interest and fees and all other amounts
to be made by Borrower pursuant to this Agreement with respect to the Loan or
fees relating thereto shall be paid without deduction for, and free from, any
taxes, imposts, levies, deductions, or withholdings now or hereafter imposed by
any governmental authority or by any taxing authority thereof or therein,
excluding in the case of each Bank or Administrative Agent (i) any taxes imposed
by the United States or any political subdivision thereof on the effectively
connected net income of it or its Lending Office or any franchise taxes imposed
by such jurisdiction, (ii) taxes imposed on the net income of, or franchise
taxes imposed upon, it by the jurisdiction under the laws of which it is
organized or by any political subdivision thereof, (iii) taxes imposed on the
net income of its Lending Office, and franchise taxes imposed on it, by the
jurisdiction of its Lending Office, or any political subdivision thereof, (iv)
any taxes imposed on it by Section 884(a) of the Internal Revenue Code of 1986,
as amended (and any successor statute to Section 884(a)), and (v) any United
States withholding tax payable with respect to any payments to it under the laws
(including, without limitation, any treaty, ruling, judicial or administrative
determination or regulation) in effect on the Initial Date (as hereinafter
defined), but not excluding any United States withholding tax payable or
-----------------
increased as a result of any change in any law, treaty, ruling, judicial or
administrative determination or regulation, or interpretation thereof occurring
after said Initial Date (all such non-excluded taxes, levies, imposts,
deductions and withholdings hereinafter referred to as "TAXES"). For purposes
-----
hereof, the term "INITIAL DATE" shall mean, in the case of each Bank or
------------
Administrative Agent party hereto on the date hereof, the date of this
Agreement, and in the case of each other Bank or Administrative Agent, the
effective date of the Assignment and Acceptance, or other instrument pursuant to
which it became a Bank or other party hereunder.
In the event that Borrower is required by applicable law to make any such
withholding or deduction of Taxes with respect to any Loan or fee or other
amount, Borrower shall pay such deduction or withholding to the applicable
taxing authority, shall promptly furnish to the Affected Bank in respect of
which such deduction or withholding is made all receipts and other documents
evidencing such payment, and shall pay to the Affected Bank additional amounts
as may be necessary in order that the amount received by the Affected Bank after
the required withholding or other payment shall equal the amount it would have
received had no such withholding or other payment been made. If in such event no
withholding or deduction of Taxes are payable in respect to any Loan or fee
relating thereto, Borrower shall furnish the Affected Bank, at its written
request, a certificate from each applicable taxing authority or an opinion of
counsel reasonably acceptable to it, in either case stating that such payments
are exempt from or not
28
<PAGE>
subject to withholding or deduction of Taxes. If Borrower fails to provide such
original or certified copy of a receipt evidencing payment of Taxes or
certificate(s) or opinion of counsel described in the preceding sentence,
Borrower hereby agrees to compensate the Affected Bank for, and indemnify it
with respect to, the tax consequences of Borrower's failure to provide evidence
of tax payments or tax exemption; provided, however, that Borrower shall not be
-------- -------
obligated to indemnify any party for penalties, additions to tax, interest or
expenses associated with the payment of Taxes if the Affected Bank's liability
for such Taxes has arisen as a result of the violation by it of the terms of
this Agreement. Such compensation or indemnification payment shall be made
within 30 days from the date such Affected Bank makes written request therefor.
Any such request shall be made within 90 days after the date on which such
payment of Taxes was made. Each such request shall be accompanied by a copy of
the statement from the taxing authority demanding payment by the Affected Bank
of such Taxes or by a certificate from the Affected Bank which certificate shall
set forth in reasonable detail the basis for any additional amount payable to
such party under this Section 2.11(c) (together with reasonable evidence of
payment of such Taxes).
Each Bank or Administrative Agent which is not organized under the laws of
the United States or any state thereof agrees, as soon as practicable after
receipt by it of a request by Borrower to do so, to file all appropriate forms
and take other appropriate action to obtain a certificate or other appropriate
document from the appropriate governmental authority in the jurisdiction
imposing the relevant Taxes, establishing that it is entitled to receive
payments of principal and interest under this Agreement and the Notes without
deduction and free from withholding of any Taxes imposed by such jurisdiction;
provided that if it is unable, for any reason, to establish such exemption or to
- --------
file such forms, in any event, during such period of time as such request for
exemption is pending, Borrower shall nonetheless remain obligated under the
terms of the immediately preceding paragraph.
In the event any Affected Bank receives a refund of any Taxes paid by
Borrower pursuant to this Section 2.11(c), it will pay to Borrower the amount of
such refund promptly upon receipt thereof; provided that if at any time
--------
thereafter it is required to return such refund, Borrower shall promptly repay
to it the amount of such refund.
Without prejudice to the survival of any other agreement of Borrower
hereunder, the agreements and obligations of Borrower, Banks and Administrative
Agent contained in this Section 2.11(c) shall be applicable with respect to any
Transferee, and any calculations required by such provisions (i) shall be made
based upon the circumstances of such Transferee, and (ii) constitute a
continuing agreement and shall survive the termination of this Agreement and the
payment in full or cancellation of the Notes.
29
<PAGE>
1.17 DEFAULT RATE OF INTEREST. If a Default shall occur under this
------------------------
Agreement, interest shall accrue on the entire unpaid principal amount of the
Loan from and after the date of such occurrence through and including the date
on which such Default shall have been cured at a rate of interest equal to the
highest rate otherwise applicable to any Tranche plus an additional two percent
(2.00%) per annum (200 basis points).
1.18 COMMITMENT FEE. In consideration of Banks' agreement to make the Loan
--------------
in accordance with the terms and conditions of this Agreement, Borrower shall
pay Administrative Agent, for the ratable benefit of Banks, a Commitment Fee,
which shall be due and payable on the effective date of this Agreement, equal to
0.50% (50 basis points) of the principal amount of the Loan.
1.19 INCREASED COSTS; ILLEGALITY; CAPITAL ADEQUACY. (a) If any Bank should
---------------------------------------------
suffer any increased cost in connection with the Loan, as a result of any change
subsequent to the date hereof causing the imposition or increase of any reserve,
insurance, tax or assessment requirement (other than a tax assessable on the
Bank's overall net income or gross receipts) or the compliance with any
guidelines or requests from any governmental authority issued subsequent to the
date hereof (whether or not having the force of law), such Bank shall, upon
becoming aware of such increased costs, certify to Borrower the amount thereof
(and such certification shall be deemed prima facie correct), whereupon Borrower
----- -----
shall have the option either to: (i) prepay in full the Notes in accordance with
the provisions of Section 2.10, or (ii) pay such Bank on subsequent interest
payment dates such additional amounts as will compensate such Bank, from the
date of receipt of certification, for such increased costs.
(1) In the event that the introduction of or any change subsequent to
the date hereof in any applicable law, rule or regulation or in the
interpretation or administration thereof or compliance by any Bank with any
request or directive (whether or not having the force of law) of any
governmental authority shall, in the determination of such Bank (which
determination shall be made in good faith and shall be deemed prima facie
----- -----
correct) make it unlawful or impractical for such Bank to make, fund or maintain
the Loan, such Bank shall promptly, upon becoming aware of such event, notify
Borrower thereof, whereupon Borrower shall, upon receipt of such notice, pay in
full such amounts as will compensate such Bank for any losses (not including
lost profits) or expenses which such Bank shall have sustained or incurred as a
result of such event (and the determination of which by such Bank shall be
deemed prima facie correct, as certified by such Bank).
----- -----
(2) If, after the date hereof, the adoption of any applicable law,
rule or regulation regarding capital adequacy, or
30
<PAGE>
any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the administration
thereof, or compliance by any Bank with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, affects the amount of capital required or
expected to be maintained by such Bank or any person or entity in Control of
such Bank and such Bank determines that the amount of said capital is increased
by or based upon such Bank's obligations hereunder, then such Bank will promptly
notify Borrower thereof, and from time to time, upon demand by such Bank,
Borrower shall pay to such Bank such additional amount or amounts as will
compensate such Bank in light of such circumstances, to the extent that such
Bank reasonably determines such increase in capital is allocable to its
obligations hereunder.
1.20 CALCULATION OF COMPENSATION TO BANKS; REQUIRED TRANSFER BY BANKS.
----------------------------------------------------------------
(1) Any Bank or Administrative Agent requiring compensation pursuant
to Section 2.11(c) or subparagraphs (a), (b) and (c) of Section 2.14 shall
deliver to Borrower a certificate setting forth in reasonable detail the
calculations of any additional amounts required in order to compensate such Bank
or Administrative Agent under Section 2.11(c) or subparagraphs (a), (b) and (c)
of Section 2.14. In determining any such amounts, the Affected Bank may use
any reasonable averaging and attribution method, provided such Affected Bank
--------
shall use such methods in good faith, and such methods shall be in accordance
with those generally used by such Bank for this purpose for other comparable
credit facilities.
(2) Any Bank or other Person entitled to claim any additional amounts
payable pursuant to Section 2.11 or Section 2.14 shall endeavor in good faith
(consistent with its internal policy and legal and regulatory restrictions) to
retain the jurisdiction of its Lending Office or change the jurisdiction of its
Lending Office, as the case may be, if such retention or change would avoid the
need for, or reduce the amount of, any such additional amounts which may
thereafter accrue and such retention or change would not, in its reasonable
judgment, be otherwise materially disadvantageous to it, provided that nothing
--------
contained in this Section 2.15(b) shall be deemed to require any Bank or other
Person to retain, maintain or establish an office in any jurisdiction for the
sole purpose of avoiding the need for, or reducing the amount of, any such
additional amounts which may thereafter accrue.
(3) Notwithstanding the foregoing, in the event Borrower is required
to pay any Bank or Administrative Agent amounts pursuant to Section 2.11 or
Section 2.14 and the designation of a different Lending Office pursuant to
Section 2.15(b) will not avoid
31
<PAGE>
the need for compensation to such Bank or Administrative Agent, as the case may
be (an "AFFECTED BANK"), Borrower may give notice to such Affected Bank (with
-------------
copies to Administrative Agent) that it wishes to seek one or more assignees
(which may be one or more of the Banks) to assume the Commitment of such
Affected Bank and to purchase its ratable share of the outstanding Loan and its
Note; provided, that if there is more than one Affected Bank that has requested
--------
substantially and proportionally equal compensation hereunder, Borrower shall
elect to seek an assignee to assume the Commitments of all such Affected Banks.
Each Affected Bank agrees to sell its Commitment, its ratable share of the Loan,
its Note and its interest in this Agreement in accordance with Section 14.03(c)
to any such assignee for an amount equal to the sum of the outstanding unpaid
principal of and accrued interest on its ratable share of the such Loan and its
Note, plus all other fees and amounts (including, without limitation, any
compensation due to such Affected Banks under Section 2.11 or Section 2.14)
calculated, in each case, to the date such ratable share of the Loan, Note and
interest are purchased. Upon such sale or prepayment, each such Affected Bank
shall have no further commitment or other obligation to Borrower hereunder or
under any Note, except as provided in Section 2.11(c).
ARTICLE III
-----------
THE AGENTS
----------
32
<PAGE>
1.21 APPOINTMENT OF ADMINISTRATIVE AGENT; POWERS AND IMMUNITIES. Each Bank
----------------------------------------------------------
hereby irrevocably appoints and authorizes Administrative Agent to act as its
administrative agent hereunder and under the other Loan Documents with such
powers as are specifically delegated to Administrative Agent by the terms hereof
and thereof, together with such other powers as are reasonably incidental
thereto. Administrative Agent: (a) shall have no duties or responsibilities
except as expressly set forth in this Agreement and the other Loan Documents,
and shall not by reason of this Agreement or any other Loan Document be a
trustee for any Bank; (b) shall not be responsible to Banks for any recitals,
statements, representations or warranties contained in this Agreement or any
other Loan Document, or in any certificate or other document referred to or
provided for in, or received by any Bank under, this Agreement or any other Loan
Document, or for the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document or any other document
referred to or provided for herein or therein or for any failure by Borrower to
perform any of its obligations hereunder or thereunder; (c) shall not be
required to initiate or conduct any litigation or collection proceedings
hereunder or under any other Loan Document except to the extent requested by the
Required Banks, and then only on terms and conditions satisfactory to
Administrative Agent, and (d) shall not be responsible for any action taken or
omitted to be taken by it hereunder or under any other Loan Document or any
other document or instrument referred to or provided for herein or therein or in
connection herewith or therewith, except for its own gross negligence or wilful
misconduct. Administrative Agent may employ agents and attorneys-in-fact and
shall not be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. The provisions of this
Article III are solely for the benefit of Administrative Agent and Banks, and
Borrower shall not have any rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties under this Agreement
and under the other Loan Documents, Administrative Agent shall act solely as
agent of Banks and does not assume and shall not be deemed to have assumed any
obligation towards or relationship of agency or trust with or for Borrower. The
duties of Administrative Agent shall be ministerial and administrative in
nature, and Administrative Agent shall not have by reason of this Agreement or
any other Loan Document a fiduciary relationship in respect of any Bank.
Administrative Agent shall administer the Loan and the Loan Documents with the
same degree of care as that customarily employed by Administrative Agent in the
administration of similar credit facilities for its own account.
1.22 RELIANCE BY ADMINISTRATIVE AGENT. Administrative Agent shall be
--------------------------------
entitled to rely upon any certification, notice or other communication
(including any thereof by telephone, telecopier, telegram or cable) believed by
it to be genuine and correct and to
33
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have been signed or sent by or on behalf of the proper person or persons, and
upon advice and statements of legal counsel, independent accountants or other
experts selected by Administrative Agent. As to any matters not expressly
provided for by this Agreement or any other Loan Document, Administrative Agent
shall in all cases be fully protected in acting, or in refraining from acting,
hereunder and thereunder in accordance with instructions signed by the Required
Banks, and such instructions of the Required Banks in any action taken or
failure to act pursuant thereto shall be binding on all Banks.
1.23 DEFAULTS. Administrative Agent shall not be deemed to have knowledge
--------
of the occurrence of a Default (other than the nonpayment of principal of or
interest on the Loan) unless Administrative Agent has received notice from a
Bank or Borrower specifying such Default and stating that such notice is a
"Notice of Default." In the event that Administrative Agent receives such a
notice of the occurrence of a Default, Administrative Agent shall give prompt
notice thereof to Banks. Administrative Agent shall give each Bank prompt notice
of each nonpayment of principal of or interest on the Loan whether or not it has
received any notice of the occurrence of such nonpayment. Administrative Agent
shall (subject to Article XII) take such action hereunder with respect to such
Default as shall be directed by the Required Banks, provided that, unless and
--------
until Administrative Agent shall have received such directions, Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default as it shall deem advisable in
the best interests of the Banks.
1.24 RIGHTS OF ADMINISTRATIVE AGENT AS A BANK. With respect to the ratable
----------------------------------------
share of the Loan made by Wachovia in its capacity as a Bank hereunder, Wachovia
in its capacity as a Bank hereunder shall have the same rights and powers
hereunder as any other Bank and may exercise the same as though Wachovia were
not acting as Administrative Agent, and the term "BANK" or "BANKS" shall, unless
---- -----
the context otherwise indicates, include Wachovia in its individual capacity.
Wachovia may (without having to account therefor to any Bank) accept deposits
from, lend money to, and generally engage in any kind of banking, trust or other
business with Borrower (and any of Borrower's Affiliates) as if Wachovia were
not acting as Administrative Agent, and Wachovia and any Affiliate of Wachovia
may accept fees and other consideration from Borrower (in addition to any agency
fees and arrangement fees heretofore agreed to between Borrower and
Administrative Agent) for services in connection with this Agreement or any
other Loan Document or otherwise without having to account for the same to
Banks.
1.25 INDEMNIFICATION. Each Bank severally agrees to indemnify
---------------
Administrative Agent, to the extent Administrative Agent shall not have been
reimbursed by Borrower, ratably in accordance with its
34
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Commitment, for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including, without
limitation, counsel fees and disbursements) or disbursements of any kind and
nature whatsoever which may be imposed on, incurred by or asserted against
Administrative Agent in any way relating to or arising out of this Agreement or
any other Loan Document or any other documents contemplated by or referred to
herein or therein or the transactions contemplated hereby or thereby (excluding,
unless a Default has occurred and is continuing, the normal administrative costs
and expenses incident to the performance of its agency duties hereunder) or the
enforcement of any of the terms hereof or thereof or any such other documents;
provided that no Bank shall be liable for any of the foregoing to the extent
- --------
they arise from the gross negligence or wilful misconduct of Administrative
Agent. If any indemnity furnished to Administrative Agent for any purpose shall,
in the opinion of Administrative Agent, be insufficient or become impaired,
Administrative Agent may call for additional indemnity and cease, or not
commence, to do the acts indemnified against until such additional indemnity is
furnished.
1.26 CONSEQUENTIAL DAMAGES. AGENT SHALL NOT BE RESPONSIBLE OR LIABLE TO
---------------------
ANY BANK, BORROWER OR ANY OTHER PERSON OR ENTITY FOR ANY PUNITIVE, EXEMPLARY OR
CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF THIS AGREEMENT, THE
OTHER LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
1.27 PAYEE OF NOTE TREATED AS OWNER. Administrative Agent may deem and
------------------------------
treat the payee of any Note as the owner thereof for all purposes hereof unless
and until a written notice of the assignment or transfer thereof shall have been
filed with Administrative Agent and the provisions of Section 14.03(c) have been
satisfied. Any requests, authority or consent of any person who at the time of
making such request or giving such authority or consent is the holder of any
Note shall be conclusive and binding on any subsequent holder, Transferee or
Assignee of that or of any Note or Notes issued in exchange therefor or
replacement thereof.
1.28 NONRELIANCE ON ADMINISTRATIVE AGENT AND OTHER BANKS. Each Bank agrees
---------------------------------------------------
that it has, independently and without reliance on Administrative Agent or any
other Bank, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of Borrower and decision to enter into
this Agreement and that it will, independently and without reliance upon
Administrative Agent or any other Bank, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
analysis and decisions in taking or not taking action under this Agreement or
any of the other Loan Documents. Administrative Agent shall not be required to
keep itself (or any Bank) informed as to the performance or observance by
Borrower of this Agreement or any of the other Loan Documents or any other
35
<PAGE>
document referred to or provided for herein or therein or to inspect the
properties or books of Borrower or any other Person. Except for notices, reports
and other documents and information expressly required to be furnished to Banks
by Administrative Agent hereunder or under the other Loan Documents,
Administrative Agent shall not have any duty or responsibility to provide any
Bank with any credit or other information concerning the affairs, financial
condition or business of Borrower or any other Person (or any of their
Affiliates) which may come into the possession of Administrative Agent; provided
--------
that Administrative Agent shall make available to any Bank, upon such Bank's
request, (a) copies of Administrative Agent's records with respect to all sums
received or expended by Administrative Agent in connection with the Loan and the
Loan Documents, and (b) information as to the amount of the then outstanding
Loan.
1.29 FAILURE TO ACT. Except for action expressly required of
--------------
Administrative Agent hereunder or under the other Loan Documents, Administrative
Agent shall in all cases be fully justified in failing or refusing to act
hereunder and thereunder unless it shall receive further assurances to its
satisfaction by Banks of their indemnification obligations under Section 3.05
against any and all liability and expense which may be incurred by
Administrative Agent by reason of taking, continuing to take, or failing to take
any such action.
1.30 RESIGNATION OR REMOVAL OF ADMINISTRATIVE AGENT. Subject to the
----------------------------------------------
appointment and acceptance of a successor Administrative Agent as provided
below, Administrative Agent may resign at any time by giving notice thereof to
Banks and Borrower, and Administrative Agent may be removed at any time with or
without cause by the Required Banks. Upon any such resignation or removal,
Required Banks shall have the right to appoint a successor Administrative Agent,
subject to the approval of Borrower, which approval shall not be unreasonably
withheld or delayed; provided, however, that no such approval of Borrower shall
--------
be required if a Default is in existence. If no successor Administrative Agent
shall have been so appointed by the Required Banks and shall have accepted such
appointment within thirty (30) days after the retiring Administrative Agent's
notice of resignation or the Required Banks' removal of the retiring
Administrative Agent, then the retiring Administrative Agent may, on behalf of
Banks, appoint a successor Administrative Agent, subject to the approval of
Borrower, which approval shall not be unreasonably withheld or delayed;
provided, however, that no such approval of Borrower shall be required if a
- --------
Default is in existence. Any successor Administrative Agent shall be a bank
which has a combined capital and surplus of at least $500,000,000. Upon the
acceptance of any appointment as Administrative Agent hereunder by a successor
Administrative Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers,
36
<PAGE>
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. After any retiring Administrative Agent's resignation or removal
hereunder as Administrative Agent, the provisions of this Article III shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as the Administrative Agent hereunder.
1.31 DIRECTIONS TO ADMINISTRATIVE AGENT. Whenever a provision of this
----------------------------------
Agreement provides that the giving, making or taking, as the case may be, of a
consent, approval, instruction, direction, acceptance, request or other action
by the Required Banks is required as a condition to the right or duty of Weeks
Corporation or Borrower or Administrative Agent to take or refrain from taking
any action or to the existence of any status or condition, and Administrative
Agent shall have notified all Banks of the action, status or condition for which
such consent, approval, instruction, direction, acceptance, request or other
action is required, such consent, approval, instruction, direction, acceptance,
request or other action may be, at the option of Administrative Agent, deemed
given, made or taken, as the case may be, by each Bank, unless such Bank shall
have given Administrative Agent contrary instructions within seven (7) Domestic
Business Days after its receipt of such notice from Administrative Agent.
Notwithstanding the foregoing, Administrative Agent reserves the right to
refrain from acting on any matter which requires the consent, approval,
direction, instruction, acceptance, request or other action of one or more Banks
unless and until Administrative Agent shall have actually received the same from
such party or parties as provided for herein.
1.32 APPOINTMENT OF SYNDICATION AGENT. Each Bank hereby irrevocably
--------------------------------
appoints and authorizes Syndication Agent to act as its syndication agent
hereunder and under the other Loan Documents with such powers as may from time
to time be specifically delegated to Syndication Agent and assumed by
Syndication Agent by the terms of a separate written instrument signed by all
Banks, the Administrative Agent and the Syndication Agent, together with such
other powers as are reasonably incidental thereto. Syndication Agent shall have
no duties or responsibilities as of the date of this Agreement, no such separate
written instrument having been signed, and shall hereafter have no duties or
responsibilities except as expressly set forth in any such written instrument.
1.33 APPOINTMENT OF DOCUMENTATION AGENT. Each Bank hereby irrevocably
----------------------------------
appoints and authorizes Documentation Agent to act as its documentation agent
hereunder and under the other Loan Documents with such powers as may from time
to time be specifically delegated to Documentation Agent and assumed by
Documentation Agent by the terms of a separate written instrument signed by all
Banks, the Administrative Agent and the Documentation Agent, together with
37
<PAGE>
such other powers as are reasonably incidental thereto. Documentation Agent
shall have no duties or responsibilities as of the date of this Agreement, no
such separate written instrument having been signed, and shall hereafter have no
duties or responsibilities except as expressly set forth in any such written
instrument.
ARTICLE IV
----------
CONDITIONS TO TERM LOAN
-----------------------
The obligation of Banks to make the Loan is subject to the satisfaction, on
or before December 31, 1998, of the following conditions:
1.34 BORROWER'S AUTHORITY. Administrative Agent shall have received a
--------------------
Certificate of General Partner of Borrower, in form and substance acceptable to
Administrative Agent, authorizing the execution, delivery and performance of
this Agreement and the borrowing by it hereunder, together with such other
papers, certifications or other documents as Administrative Agent may require to
evidence that Borrower has the legal power and authority to enter into this
Agreement, the other Loan Documents, and the transactions contemplated hereby.
1.35 GUARANTORS' AUTHORITY. Administrative Agent shall have received
---------------------
certified copies of resolutions of Weeks Corporation's, GP Holdings' and LP
Holdings' respective Boards of Directors authorizing the execution, delivery and
performance of this Agreement and the Syndicated Term Loan Guaranty executed by
it, together with such other papers, certifications or documents of Guarantors
as Administrative Agent may require to evidence that each such Guarantor has the
power and authority to enter into this Agreement, the Syndicated Term Loan
Guaranty executed by it, and the transactions contemplated hereby.
1.36 FINANCIAL STATEMENTS. Banks shall have received the quarterly
--------------------
unaudited financial statements of Weeks Corporation for the quarter ending
September 30, 1998, in the form and certified by Weeks Corporation's chief
financial officer as required by the provisions of Section 8.03(a) of the
Syndicated Credit Agreement.
1.37 CERTIFICATE OF COMPLIANCE. Banks shall have received a certificate of
-------------------------
Weeks Corporation's chief financial officer certifying compliance by Borrower
and Weeks Corporation with the provisions of the Syndicated Credit Agreement,
including the financial covenants set forth in Article X thereof, as of the end
of the quarter ending September 30, 1998, and containing a computation
evidencing compliance with such financial covenants as
38
<PAGE>
of such period and in accordance with GAAP, as required by the provisions of
Section 8.03(b) of the Syndicated Credit Agreement.
1.38 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
------------------------------
Borrower and Weeks Corporation set forth in Articles VI and VII, and in all
agreements, documents and instruments executed and delivered pursuant hereto
shall be true and correct in all material respects when made or deemed made
hereunder or thereunder.
1.39 PAYMENT OF FEES. Administrative Agent shall have received payment in
---------------
full of all fees, charges, and expenses as required by or otherwise due in
connection with the Mandate Letter and this Agreement, including attorneys' fees
and expenses of Administrative Agent's counsel and the Commitment Fee due
pursuant to Section 2.13.
1.40 NOTES. Administrative Agent shall have received the original Notes,
-----
duly executed and delivered by Borrower.
1.41 SYNDICATED TERM LOAN GUARANTIES. Administrative Agent shall have
-------------------------------
received the original Syndicated Term Loan Guaranties, duly executed and
delivered by Guarantors.
1.42 CERTIFICATES OF INCUMBENCY. Administrative Agent shall have received
--------------------------
an original Certificate of Incumbency from Borrower and each Guarantor with
respect to the Authorized Signatory of each such party.
1.43 REIT STATUS. Weeks Corporation shall be qualified as a real estate
-----------
investment trust under the Code.
1.44 OPINION OF COUNSEL. Administrative Agent shall have received a
------------------
favorable opinion letter from King & Spalding, counsel to Borrower and
Guarantors, in form and substance satisfactory to Administrative Agent and its
counsel.
1.45 INTEREST RATE ELECTION. Administrative Agent shall have received an
----------------------
Interest Rate Election, executed by an Authorized Signatory of Borrower, in
accordance with the provisions of Section 2.03(a).
1.46 NOTICE OF BORROWING. Administrative Agent shall have received a
-------------------
Notice of Borrowing, executed by an Authorized Signatory of Borrower.
1.47 INTERCREDITOR AGREEMENT. Banks and Agent (as said terms are defined
-----------------------
in the Syndicated Credit Agreement), Banks and Administrative Agent (as said
terms are defined herein), Borrower and Guarantors shall have entered into an
intercreditor agreement
39
<PAGE>
providing for the application of collections made on the Loans (as defined in
the Syndicated Credit Agreement) and the Loan (as defined herein), in the event
of a Default (as defined in the Syndicated Credit Agreement) or a Default (as
defined in this Agreement).
1.48 OTHER DOCUMENTATION. Administrative Agent shall have received such
-------------------
other loan documentation as deemed reasonably necessary or desirable by
Administrative Agent or its counsel, satisfactory in form and substance to
Administrative Agent, providing for the Loan to be made.
1.49 KEY EXECUTIVES. The Key Executives shall be A. R. Weeks, Jr., Thomas
--------------
D. Senkbeil and Forrest W. Robinson.
1.50 NO MATERIAL ADVERSE CHANGE. There shall not have occurred any
--------------------------
material adverse change in the financial condition, properties, or operations of
Borrower and the Related Parties (all of the foregoing taken as a whole) or
Borrower (standing alone) since June 30, 1998, nor shall any change have
occurred in the financial condition of Borrower and the Related Parties (all of
the foregoing taken as a whole) or of Borrower (standing alone) which (a) shall
have materially adversely affected the rights or remedies of Administrative
Agent or any Bank under any of the Loan Documents, or (b) which the Required
Banks have in good faith determined has caused, or is likely to cause, as of the
end of the fiscal quarter of Borrower ending December 31, 1998, a default by
Borrower in the payment of amounts owing hereunder or a default by Borrower in
respect of the financial covenants set forth in Article X.
1.51 FULL COMPLIANCE. Borrower and Weeks Corporation shall be in full
---------------
compliance with all the terms and conditions of this Agreement.
1.52 NO DEFAULT; NO CLAIMS. No Default or an event that upon notice or
---------------------
lapse of time or both, would constitute a Default shall have occurred, and there
will be no claim, action, suit or proceeding pending or threatened against
Borrower or any Related
Party that would result in a material adverse change in the financial condition,
assets, or operations of Borrower and the Related Parties (all of the foregoing
taken as a whole) or of Borrower (standing alone).
1.53 DEBT RATING. The Debt Rating shall be better than or equal to the
-----------
Debt Rating designated in the Debt Rating Table for Performance Pricing Level
IV.
ARTICLE V
---------
40
<PAGE>
[THIS ARTICLE IS INTENTIONALLY OMITTED.]
ARTICLE VI
----------
ENVIRONMENTAL MATTERS
---------------------
1.54 REPRESENTATIONS, WARRANTIES. Weeks Corporation and Borrower represent
---------------------------
and warrant to Administrative Agent and Banks that, except as otherwise
disclosed in writing by Borrower to Administrative Agent, (a) no real property
of Borrower or any Related Parties is now being used in violation of any
Environmental Laws, except such use as would not have a material adverse effect
on the financial condition, operations, or properties of Borrower and the
Related Parties (all of the foregoing taken as a whole) or Borrower (standing
alone) or would constitute a breach of the provisions of Section 9.10; (b) that
no proceedings have been commenced against Borrower or any Related Party
concerning any alleged material violations of any Environmental Laws on or
related to any of their respective real properties; (c) neither Weeks
Corporation nor Borrower has any reason to know of any such alleged violations,
except such alleged violations as would not have a material adverse effect on
the financial condition, operations, or properties of Borrower and the Related
Parties (all of the foregoing taken as a whole) or Borrower (standing alone) or
would constitute a breach of the provisions of Section 9.10; (d) the real
properties of Borrower and the Related Parties are free of any Substances and
are not being used for the storage, treatment or disposal of any Substances, or
if there are any Substances on any such real properties, Weeks Corporation or a
Related Party, as the case may be, is maintaining them in accordance with all
applicable laws, except to the extent such failure so to maintain such
Substances would not have a material adverse effect on the financial condition,
operations, or properties of Weeks Corporation and the Related Parties (all of
the foregoing taken as a whole) or Borrower (standing alone) or would constitute
a breach of the provisions of Section 9.10; (e) if Borrower or any Related
Party, as the case may be, is transporting any Substances, such transportation
is being conducted in compliance with all applicable laws, except to the extent
such failure so to conduct such transportation would not have a material adverse
effect on the financial condition, operations, or properties of Borrower and the
Related Parties (all of the foregoing taken as a whole) or Borrower (standing
alone) or would constitute a breach of the provisions of Section 9.10; (f) Weeks
Corporation and the Related Parties, as the case may be, have all required
permits for the use and discharge of any Substances on their respective real
properties and all uses and discharges on such properties are being made in
compliance with such permits, except to the extent that the failure to have a
required permit or failure to make such uses and discharges in compliance with
such permits would not have a material adverse
41
<PAGE>
effect on the financial condition, operations, or properties of Borrower and the
Related Parties (all of the foregoing taken as a whole) or Borrower (standing
alone) or would constitute a breach of the provisions of Section 9.10; and (g)
Weeks Corporation and Borrower have made a complete disclosure to Administrative
Agent and Banks of all facts which might indicate a material environmental risk
or the material violation of any Environmental Laws on or related to the real
properties of Borrower and the Related Parties.
1.55 CONTINUED COMPLIANCE. Weeks Corporation and Borrower covenant that
--------------------
Borrower will promptly inform Administrative Agent in writing of any material
environmental risk or material violation of any Environmental Laws on or related
to any real properties of Borrower or any Related Party or the commencement of
any proceedings against Borrower or any Related Party or receipt of any notices
by any such Person concerning any alleged material violation of Environmental
Laws on or related to any such real property. Should Administrative Agent or any
Bank be reasonably concerned that any such real property may be at risk of
suffering a material impairment in value owing to environmental contamination or
other environmental matters, at such Person's request, Borrower shall obtain and
deliver to Administrative Agent and such Person (if not Administrative Agent) an
environmental audit covering such real property from experts reasonably
acceptable to Administrative Agent or such Bank, as the case may be, at
Borrower's sole expense.
ARTICLE VII
-----------
REPRESENTATIONS AND WARRANTIES
------------------------------
In order to induce Administrative Agent, Syndication Agent, Documentation
Agent and Banks to enter into the Loan Documents and to make the Loan as
contemplated hereby, Borrower and Weeks Corporation represent and warrant to
Administrative Agent, Syndication Agent, Documentation Agent and Banks, each of
which representations and warranties is deemed to be material, that:
1.56 RELATED PARTIES. Schedule 7.01 sets forth the identity of each of the
--------------- -------------
Related Parties in existence as of November 1, 1998.
1.57 CORPORATE ORGANIZATION. Weeks Corporation, Weeks Construction
----------------------
Services, Inc. ("CONSTRUCTION"), Weeks Realty Services, Inc. ("REALTY"), GP
------------ ------
Holdings and LP Holdings each is a corporation duly organized, validly existing
and in good standing under the laws of the State of Georgia and has full right,
power and authority to conduct its business as currently conducted; each
maintains its principal place of business and its chief executive office at 4497
Park Drive, Norcross, Georgia 30093.
42
<PAGE>
1.58 LIMITED PARTNERSHIP ORGANIZATION. Borrower, Weeks Financing Limited
--------------------------------
Partnership ("FINANCING"), Weeks NC Financing Limited Partnership,
---------
Codina/Tradewind, Ltd., Codina/Tradewind No. 4, Ltd., and Raha Associates, Ltd.
each is a limited partnership duly organized and validly existing and in good
standing under the laws of the State of Georgia and has full right, power and
authority to conduct its business as currently conducted; each maintains its
principal place of business and its chief executive office at 4497 Park Drive,
Norcross, Georgia 30093.
1.59 GENERAL PARTNERSHIP ORGANIZATION. Weeks Development Partnership, New
--------------------------------
World Partners Joint Venture, New World Partners Joint Venture Number Two, New
World Partners Joint Venture Number Three and New World Partners Joint Venture
Number Four each is a general partnership duly organized and validly existing
under the laws of the State of Georgia and has full right, power and authority
to conduct its business as currently conducted; each maintains its principal
place of business and its chief executive office at 4497 Park Drive, Norcross,
Georgia 30093.
1.60 LIMITED LIABILITY COMPANY ORGANIZATION. Weeks Special Purpose, LLC,
--------------------------------------
Weeks SPV Financing, LLC, and Weeks Beacon Centre LLC each is a limited
liability company duly organized and validly existing and in good standing under
the laws of the State of Georgia and has full right, power and authority to
conduct its business as currently conducted; each maintains its principal place
of business and its chief executive office at 4497 Park Drive, Norcross, Georgia
30093.
1.61 POWER AND AUTHORITY. Borrower and Guarantors each has full right,
-------------------
power and authority to enter into the Loan Documents and to consummate the
transactions contemplated hereby and has taken all necessary action to authorize
the execution, delivery and performance of this Agreement and the documents
contemplated to be executed and delivered hereby.
1.62 ENFORCEABILITY. The Loan Documents constitute valid obligations of
--------------
the parties executing the same, legally binding upon Borrower and each
Guarantor, as the case may be, and enforceable in accordance with their terms,
except as enforcement may be affected by bankruptcy, insolvency and other laws
and equitable principals affecting the rights and remedies of creditors
generally and except as may be limited by general principals of equity. No
consent, license, or approval of any governmental authority, bureau or agency is
required in connection with the execution, delivery, performance, validity or
enforceability of the Loan Documents.
1.63 VIOLATION OF ORGANIZATIONAL DOCUMENTS. The execution, delivery and
-------------------------------------
performance of the Loan Documents will not violate the provisions of the
Articles of Incorporation or By-Laws of Weeks
43
<PAGE>
Corporation, GP Holdings or LP Holdings, or the partnership agreement or
certificate of Borrower.
1.64 CONFLICTS. The execution, delivery and performance of the Loan
---------
Documents will not violate the provisions of any Mortgage, indenture, security
agreement, contract, undertaking or other agreement to which Borrower or any
Guarantor, or any combination thereof is a party, or which purports to be
binding upon Borrower or any Guarantor or any combination thereof, or any of
their respective properties or assets. No consent, approval, authorization,
waiver or notice to any other person or entity is required for the execution,
delivery and performance of the Loan Documents by Borrower and Guarantors,
except for such consents, approvals, authorizations, and waivers which have been
obtained, are unconditional and are in full force and effect, and such notices
which have been given.
1.65 TITLE. Borrower and the Related Parties each has good and marketable
-----
title to all of its respective properties, subject to the Permitted Encumbrances
and the Liens permitted pursuant to Section 9.13.
1.66 EXISTENCE OF LIENS. No Mortgage, financing statement, notice of lien,
------------------
security agreement, or any other agreement or instrument creating or giving
notice of a security interest in or an encumbrance, Lien, or charge against any
property of Borrower or any Related Party is in existence or on file in any
public office, except as permitted by Section 9.13.
1.67 FINANCIAL CONDITION. All financial statements and all other financial
-------------------
information of Borrower and Weeks Corporation furnished to Administrative Agent
or any Bank are complete and correct in all material respects and accurately
reflect their respective financial conditions and the results of operations for
the respective periods to which such statements relate. There are no material
liabilities, direct or indirect, fixed or contingent, of Borrower or Weeks
Corporation required to be reflected or disclosed therein that are not so
reflected or disclosed therein or in the Notes thereto.
1.68 LITIGATION. There is no litigation, proceeding, or investigation
----------
pending or, to the knowledge of Borrower or Weeks Corporation, threatened, that
is reasonably expected to result in any materially adverse change in the
operations, properties or financial conditions of Borrower and the Related
Parties (all of the foregoing taken as a whole) or Borrower (standing alone) or
that question the validity of any action taken or to be taken by Borrower or
Weeks Corporation pursuant to or in connection with the transactions
contemplated by the Loan Documents, nor does Borrower or Weeks Corporation know
or have any reasonable grounds to know
44
<PAGE>
the basis for the institution of any such litigation, proceeding or
investigation.
1.69 FOREIGN QUALIFICATIONS. Borrower, Construction, Realty, Financing,
----------------------
Weeks Corporation, GP Holdings and LP Holdings are qualified to do business in
all states where required by applicable law, except where the failure to be so
qualified would not have a material adverse effect on Borrower and the Related
Parties (all of the foregoing taken as a whole) or Borrower (standing alone).
1.70 TAX OBLIGATIONS. Neither Borrower nor Weeks Corporation has knowledge
---------------
of any tax return required to be filed by them that has not been filed with the
appropriate governmental agency or for which they have not received an extension
beyond the date hereof; neither Borrower nor Weeks Corporation will be, as of
the date of this Agreement, in default with respect to such filings. Borrower
and Weeks Corporation have paid or will have paid as of the date of this
Agreement all taxes now or then claimed to be due by any federal, state or local
taxing authority. Except as otherwise disclosed to Administrative Agent pursuant
to this Agreement, neither the Internal Revenue Service nor any other taxing
authority is now asserting, or to the knowledge of Borrower or Weeks
Corporation, has threatened to assert, any deficiency claim for additional taxes
against them in any material amount, and no waivers of the Statute of
Limitations have been granted to the Commissioner of Internal Revenue or any
other taxing authority by Borrower or Weeks Corporation.
1.71 CAPITAL STOCK. All capital stock, debentures, bonds, Notes and all
-------------
other securities of Borrower and each Related Party presently issued and
outstanding are validly and properly issued in accordance with all applicable
laws, including, but not limited to, the "Blue Sky" laws of all applicable
states and the federal securities laws.
1.72 INSOLVENCY. After giving effect to the execution and delivery of the
----------
Loan Documents and the making of the Loan, neither Borrower nor any Guarantor
will be "insolvent," within the meaning of such term as used in O.C.G.A. (S) 18-
2-22 or as defined in Section 101 of the United States Bankruptcy Code, as
amended, or will be unable to pay its debts generally as such debts become due,
or have an unreasonably small capital.
1.73 MARGIN STOCK. Neither Borrower nor Weeks Corporation is engaged
------------
principally or as one of its important activities, in the business of purchasing
or carrying Margin Stock, and no part of the proceeds of the Loan made pursuant
to this Agreement will be used to purchase or carry any Margin Stock or to
extend credit to others for the purpose of purchasing or carrying any Margin
Stock, or be used for any purpose which violates, or which is inconsistent with,
45
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the provisions of Regulation X of the Board of Governors of the Federal Reserve
System.
1.74 FRANCHISES, LICENSES, ETC. Borrower and each Related Party each
-------------------------
possesses all franchises, certificates, licenses, permits and other
authorizations from governmental or political authorities or subdivisions or
regulatory authorities, and all patents, trademarks, service marks, trade names,
copyrights, licenses and other rights, free from burdensome restrictions, that
are necessary for the ownership, maintenance and operation of any of its
property and assets, and the absence of which would have a material adverse
effect on the financial condition, operations, or properties of Borrower and the
Related Parties (all of the foregoing taken as a whole) or Borrower (standing
alone). Neither Borrower nor any Related Party is in violation of any thereof
which is reasonably expected to have a material adverse effect on the financial
condition, operations, or properties of Borrower and the Related Parties (all of
the foregoing taken as a whole) or Borrower (standing alone).
1.75 ERISA. If Borrower or any Related Party is subject to any provision
-----
of ERISA as of the date hereof or at any time during the term of this Agreement,
then (a) each such member is in compliance with the requirements of ERISA with
respect to each Employee Benefit Plan, where the failure so to comply would have
a material adverse effect on the financial condition, operations, or properties
of Borrower and the Related Parties (all of the foregoing taken as a whole) or
Borrower (standing alone), (b) no fact, including, but not limited to, any
Reportable Event exists in connection with any Employee Benefit Plan which, more
likely than not, would constitute grounds for the termination of any such Plan
by the PBGC or for the appointment by the appropriate United States District
Court of a Trustee to administer any such Plan, where such termination would
result in a material adverse change in the financial condition, operations, or
properties of Borrower and the Related Parties (all of the foregoing taken as a
whole) or Borrower (standing alone), (c) no such member either maintains or
contributes to any Employee Benefit Plan that has an "accumulated funding
deficiency" (as defined in Section 412 of the Code) in an amount greater than
$500,000, (d) no such member either maintains or contributes to any Employee
Benefit Plan which has incurred any material liability to the PBGC (other than
for premium payments due in the ordinary course of business, which premiums will
be paid when due and payable), (e) no such member either maintains or
contributes to any Employee Benefit Plan which has insufficient assets to
qualify for a standard termination pursuant to Section 4041 of ERISA, (f) except
as otherwise disclosed to Administrative Agent in writing, no such member is
required pursuant to the terms of any applicable collective bargaining agreement
to pay or accrue any contributions with respect to any Employee Benefit Plan
that is a Multiemployer Plan and there has been no complete or partial
46
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withdrawal by any such member from any such Multiemployer Plan within the
contemplation of MPPAA, (g) except as otherwise disclosed to Administrative
Agent in writing, no such member either maintains or contributes to any Employee
Benefit Plan that provides medical benefits, life insurance benefits or other
welfare benefits as defined in Section 3(1) of ERISA (excluding health
continuation coverage required under Section 601 of ERISA) for former employees
of such member, (h) except as otherwise disclosed to Administrative Agent in
writing, no such member either maintains or contributes to any non-qualified,
unfunded deferred compensation plan, and (i) no such member or any fiduciary
with respect to any Employee Benefit Plan has engaged in a "prohibited
transaction" within the meaning of Section 4975 of the Code or Section 406 of
ERISA with respect to any Employee Benefit Plan which is reasonably expected to
have a material adverse effect on the financial condition, operations or
properties of Borrower and the Related Parties (all of the foregoing taken as a
whole) or Borrower (standing alone).
1.76 FINANCIAL STATEMENTS. None of the financial statements delivered by
--------------------
Borrower or Weeks Corporation to Administrative Agent or any Bank pursuant to
this Agreement contains, as of the date of delivery thereof, any untrue
statement of material fact nor do such financial statements and such written
statements, taken as a whole, omit to state a material fact or any fact
necessary to make the statements contained therein not misleading.
1.77 MISREPRESENTATIONS. No representation or warranty by Borrower or
------------------
Weeks Corporation made herein and no statement or certificate to be furnished to
Administrative Agent or any Bank pursuant hereto in connection with the
transactions contemplated hereby contains or will contain any untrue statement
of a material fact or omits or will omit to state a material fact necessary to
make the statements contained therein not misleading.
ARTICLE VII
-----------
AFFIRMATIVE COVENANTS
---------------------
In order to induce Administrative Agent, Syndication Agent, Documentation
Agent and Banks to enter into the Loan Documents and to make the Loan
contemplated hereby, Borrower and Weeks Corporation covenant and agree with
Administrative Agent, Syndication Agent, Documentation Agent and Banks that from
and after the date hereof, and so long as any Obligations remain outstanding or
this Agreement remains in effect, that:
1.78 LOCATION OF RECORDS. Borrower and Weeks Corporation shall maintain
-------------------
all their books and records at Borrower's chief executive office as set forth in
this Agreement or at such other location in the State of Georgia disclosed in a
written notice
47
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given by Borrower to Administrative Agent prior to moving said books and records
to such other location.
1.79 INSPECTION. Borrower and Weeks Corporation shall permit each of
----------
Administrative Agent and any Bank, or any persons duly designated by it to call
at their respective places of business at any reasonable time, and without
hindrance or delay, to inspect, audit, check and make extracts from their
respective books, records, journals, orders, receipts and any correspondence or
other data relating to its business or any other transactions between or among
the parties hereto.
1.80 FINANCIAL AND OTHER INFORMATION. Borrower and Weeks Corporation shall
-------------------------------
furnish to Administrative Agent and each Bank the following financial
information:
(1) Quarterly, not later than forty-five (45) days after the end of
each of the first three (3) fiscal quarters of each fiscal year of Weeks
Corporation, unaudited financial statements of Weeks Corporation, including the
accounts of Weeks Corporation and all Consolidated Entities reported on a
consolidated basis in accordance with GAAP (subject to customary adjustments and
the absence of notes thereto), as of the end of such quarter, including a
balance sheet and detailed statement of profit and loss, in the form included by
Weeks Corporation in its Quarterly Report on Form 10-Q filed in respect of such
quarterly period with the SEC or otherwise in form reasonably acceptable to
Administrative Agent and the Required Banks, all certified by Weeks
Corporation's chief financial officer. Weeks Corporation's chief financial
officer shall certify with respect to all such financial statements that the
financial statements submitted (i) are in accordance with Borrower's and the
Related Parties' books and records; (ii) present fairly in all material respects
the financial position and results of operations as of and for the periods
specified; (iii) set forth all material claims and liabilities, contingent or
otherwise, required by GAAP to be disclosed therein; and (iv) fully disclose the
existence of any Default hereunder, including the nature and period of existence
thereof.
(2) Not later than the date on which quarterly or annual financial
statements are required to be delivered pursuant to Section 8.03(a) or 8.03(c),
a certificate of Weeks Corporation's chief financial officer, in the form of
Exhibit E, certifying compliance by Borrower and Weeks Corporation with this
- ---------
Agreement, including the financial covenants set forth in Article X as of the
end of such quarter or year, as the case may be, and containing a computation
evidencing compliance with such financial covenants as of such period and in
accordance with GAAP. Said certificates shall also include a statement by such
officer as to the outstanding principal balance of the Loan.
48
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(3) Annually, not later than one hundred twenty (120) days after the
end of Weeks Corporation's fiscal year end, financial statements of Weeks
Corporation, including the accounts of Weeks Corporation and all Consolidated
Entities reported on a consolidated basis in accordance with GAAP, as of and for
the period ending at such fiscal year end, including a balance sheet and
detailed statement of profit and loss, in the form included by Weeks Corporation
in its Annual Report on Form 10-K filed in respect of such annual period with
the SEC or otherwise in form reasonably acceptable to Administrative Agent and
the Required Banks, audited by an independent practicing certified public
accountant of recognized national standing or otherwise reasonably acceptable to
Administrative Agent and the Required Banks, together with an auditor's opinion
of such accountant without material qualification.
(4) On the due date therefor (taking into account any extensions
granted by the SEC), or upon the filing thereof with the SEC, if sooner, all
notices and reports filed by Borrower or any Related Party with the SEC.
(5) From time to time (but not more frequently than quarterly) at
Administrative Agent's or any Bank's request, summary reports on the net
operating income of Income Properties, rent rolls and property level reports
supporting the calculation of Annualized NOI, in form and content reasonably
satisfactory to Administrative Agent or such Bank, as the case may be.
(6) If requested by Administrative Agent or any Bank, quarterly, not
later than forty-five (45) days after the end of each fiscal quarter of each
Non-Consolidated Subsidiary, to the extent not disclosed in the consolidated
financial statements of Weeks Corporation or the notes thereto, unaudited
financial statements of each such Non-Consolidated Subsidiary, reported in
accordance with GAAP (subject to customary adjustments and the absence of notes
thereto), as of the end of such quarter, including a balance sheet and detailed
statement of profit and loss, in form reasonably acceptable to Administrative
Agent or such Bank, as the case may be, each certified by the chief financial
officer of such Non-Consolidated Subsidiary. Such chief financial officer shall
certify with respect to such financial statements that the financial statements
submitted (i) are in accordance with such Non-Consolidated Subsidiary's books
and records; (ii) present fairly in all material respects the financial position
and results of operations as of and for the periods specified; and (iii) set
forth all material claims and liabilities, contingent or otherwise, required by
GAAP to be disclosed therein.
(7) Such other or more frequent data, information, and reports with
respect to Borrower or any Related Party as
49
<PAGE>
Administrative Agent or any Bank may reasonably request from time to time.
1.81 GOVERNMENTAL OBLIGATIONS. Borrower and Weeks Corporation will pay and
------------------------
discharge promptly or cause to be paid and discharged promptly all taxes,
assessments, and governmental charges or levies imposed upon them or upon their
income or property, real, personal, or mixed, or upon any part thereof, as well
as all claims of any kind (including claims for labor, materials and supplies),
which, if unpaid, might by law become a lien or charge against said property;
provided, however, that neither Borrower nor Weeks Corporation shall be required
to pay any such tax, assessment, charge, levy, or claim if (a) the amount,
applicability or validity thereof shall currently be contested in good faith by
appropriate proceedings, and if they shall have set aside on their books
reserves (segregated to the extent required by sound accounting practice) deemed
by Administrative Agent or Banks adequate with respect thereto, and by reason of
such nonpayment no material property of Borrower or Weeks Corporation is subject
to a material risk of loss or forfeiture, or (b) the amount of such unpaid
taxes, assessments, governmental charges or levies, or other such claims not so
paid or discharged does not exceed $250,000 in the aggregate and with respect to
which they shall not have set aside reserves pursuant to the foregoing clause
(a).
1.82 INSURANCE. Borrower and the Related Parties each shall maintain or
---------
cause to be maintained adequate and customary insurance with respect to its or
their general operations and their real properties, including coverage for
public liability, director's liability, casualty, business interruption, loss of
rents and workers' compensation with financially sound and reputable insurers in
such amounts as are customary in the case of firms of established reputations
engaged in the same or a similar business and similarly situated.
1.83 OPERATION OF PROPERTIES, INSPECTION. Borrower and Weeks Corporation
-----------------------------------
shall operate and maintain their material properties in good condition and
repair (normal wear and tear, casualty and obsolescence excepted), shall not
commit or suffer any waste to any of such properties or do or suffer to be done
anything which would increase the risk of casualty to any of such properties or
any part thereof or which would result in the cancellation of any insurance
policy carried with respect to any of such properties. Borrower and Weeks
Corporation shall comply promptly with all applicable laws, rules, ordinances,
regulations, judgments, governmental determinations, restrictive covenants and
easements affecting any of such properties or any part thereof (the
REQUIREMENTS") and shall cause such properties to comply at all times and in
- -------------
all respects with all Requirements, and shall at all times operate such
properties, and perform any construction of any portion thereof, in all respects
in accordance with all Requirements, except in each
50
<PAGE>
case where failure to do so would not have a material adverse effect on the
financial condition, operations or properties of Borrower and the Related
Parties (all of the foregoing taken as a whole) or Borrower (standing alone).
Borrower and Weeks Corporation shall promptly repair, restore or replace any
part of such properties which may be damaged by fire or other casualty or which
may be affected by any condemnation proceeding, except where such repair,
restoration, or replacement is not, in the judgment of the Key Executives of
Weeks Corporation, required for the operation of the business of Borrower or
Weeks Corporation, as the case may be. Administrative Agent, Banks and any
persons authorized by Administrative Agent and Banks shall have the right at all
reasonable times and upon reasonable prior notice to inspect such properties,
any improvements existing or being constructed thereon and all materials used or
to be used in such improvements; provided, however, that nothing contained
herein shall be deemed to impose upon Administrative Agent or Banks any
obligation to undertake such inspections or any liability for the failure to
detect or failure to act with respect to any defect which was or might have been
disclosed by such inspections.
1.84 PRESERVATION OF BUSINESS. Borrower and Weeks Corporation shall take
------------------------
all appropriate action necessary to protect their businesses and assets
consistent with normal practices and conduct their respective businesses in a
sound and businesslike manner; Weeks Corporation, GP Holdings and LP Holdings
each shall do or cause to be done all things necessary to preserve and keep in
full force and effect its corporate existence and all its material rights; and
Borrower, Development and Financing each shall do or cause to be done all things
necessary to preserve and keep in full force and effect its partnership
existence and its material rights.
1.85 MAINTENANCE OF RECORDS. Borrower and Weeks Corporation shall keep
----------------------
adequate records and books of accounts, in which complete entries will be made,
reflecting all their respective financial transactions.
51
<PAGE>
1.86 NOTICE OF ADVERSE CHANGES. Borrower and Weeks Corporation shall, as
-------------------------
soon as possible, and in any event within five (5) Domestic Business Days after
they become aware of the occurrence of a material adverse change in their
businesses, properties, operations, or conditions (financial or other),
including notice of (a) any default occurring with respect to any of their
obligations owed to any other creditor where the total liability of Borrower or
Weeks Corporation with respect thereto is in excess of $500,000, (b)
acceleration of any part or demand for payment in full of any of their
respective outstanding obligations in an amount in excess of $500,000 earlier
than the scheduled date, or (c) Borrower's or Weeks Corporation's receiving
notice of intent by any person, firm, corporation or any other entity to whom
Borrower or Weeks Corporation is indebted in an amount in excess of $500,000 to
declare any debt due, or determine that any provision of any agreement between
such party and Borrower or Weeks Corporation has been violated, furnish to
Administrative Agent and Banks a statement setting forth details of such
material adverse change and the action that it proposes to take with respect
thereto.
1.87 NOTICE OF LITIGATION. Borrower and Weeks Corporation shall promptly
--------------------
notify Administrative Agent and Banks in the event of any legal action filed
against Borrower or any Related Party which, if adversely determined, would have
a material adverse effect on the financial condition or operations of Borrower
and the Related Parties (all of the foregoing taken as a whole) or Borrower
(standing alone).
1.88 PAYMENT OF OBLIGATIONS. Borrower and Weeks Corporation shall pay or
----------------------
cause to be paid the principal of, and, if any, the interest and premium on all
indebtedness heretofore or hereafter incurred or assumed by them when and as the
same shall become due and payable, unless such indebtedness be renewed or
extended; and faithfully observe, perform and discharge all the covenants,
conditions and obligations that are imposed upon them by any and all indentures
and other agreements securing or evidencing such indebtedness or pursuant to
which such indebtedness is issued, and not permit the continuance of any act or
omission that is, or the provisions thereof may be declared to be, a default in
the payment of principal and interest, unless waived, pursuant to the provisions
thereof; provided, however, that Borrower and Weeks Corporation shall not be
--------
required to make any payment or to take any other action pursuant to this
Section 8.11 at any time while they shall be currently contesting in good faith
by appropriate proceedings their obligations to make such a payment or to take
such action, if they shall have set aside on their books, reserves (segregated
to the extent required by sound accounting practices) deemed adequate with
respect thereto; and provided further that this Section 8.11 shall not be
----------------
applicable to (a) real property mortgage debt (held by parties other than Banks)
on properties
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owned by entities which neither Weeks Corporation nor Borrower Control and in
which Borrower and Weeks Corporation, in the aggregate, own less than a 50%
beneficial interest, or (b) indebtedness outstanding in principal amounts
aggregating less than $500,000.
1.89 REIT STATUS. Weeks Corporation shall at all times be and remain
-----------
qualified as a real estate investment trust under the Code.
1.90 COMPLIANCE WITH LAWS. Borrower and Weeks Corporation shall conduct
--------------------
and maintain their respective businesses in a regular manner and in compliance
with all laws, regulations and ordinances, including but not limited to any
applicable securities laws, zoning laws, ordinances and regulations affecting
Borrower's and Weeks Corporation's operations, including but not limited to all
Environmental Laws and ecological laws, ordinances and regulations, except where
the failure to do so would not have a material adverse effect on the financial
condition, operations or properties of Borrower and the Related Parties (all of
the foregoing taken as a whole) or Borrower (standing alone).
1.91 NOTICE OF EXERCISE OF REMEDIES UNDER MORTGAGES. Borrower and Weeks
----------------------------------------------
Corporation shall give prompt written notice to Administrative Agent and Banks
of the giving of a notice of any event of default under any Mortgage to which
Weeks Corporation is or Borrower is a party by the holder thereof, or upon the
holder of any such Mortgage taking any action to enforce its rights and remedies
thereunder, including, without limitation, any self-help or judicial remedies
with respect to collateral or any legal action to collect any indebtedness.
1.92 MANAGEMENT. Weeks Corporation and Borrower shall have management
----------
reasonably satisfactory to Administrative Agent and the Required Banks.
1.93 DEPOSIT ACCOUNTS. Weeks Corporation and Borrower shall maintain their
----------------
principal depository accounts with one or more Banks.
1.94 INTERCOMPANY TRANSACTIONS. Any and all transactions, agreements or
-------------------------
undertakings of any nature whatsoever between Borrower or any Related Party, on
the one hand, and any Affiliate of such Person, on the other hand, shall be
arms-length and upon terms and conditions at least as favorable to Borrower or
such Related Party, as the case may be, as could reasonably be obtained in a
similar transaction with a party that is not an Affiliate of such Person.
1.95 DEBT RATING. Borrower shall give written notice to Administrative
-----------
Agent promptly of any change in the Debt Rating.
53
<PAGE>
ARTICLE IX
----------
NEGATIVE COVENANTS
------------------
In order to induce Administrative Agent, Syndication Agent, Documentation
Agent and Banks to enter into the Loan Documents and to make the Loan as
contemplated hereby, Borrower and Weeks Corporation covenant and agree with
Administrative Agent, Syndication Agent, Documentation Agent and Banks that from
and after the date hereof, and so long as any Obligations remain outstanding or
this Agreement remains in effect, without the prior written consent of the
Required Banks:
1.96 GUARANTIES. Neither Weeks Corporation nor Borrower nor any other
----------
Subsidiary shall guarantee, endorse, become surety with respect to, become
obligated under any partnership or joint venture, or otherwise become directly
or contingently liable for, or in connection with, the obligations of any other
person, firm, corporation, or any other entity pursuant to any Guaranties,
except for the Permitted Guaranties.
1.97 MERGER, CONSOLIDATION, ETC. Neither Weeks Corporation nor Borrower
--------------------------
nor any other Subsidiary shall enter into any merger, reorganization or
consolidation, except with each other, or acquire in a single transaction a
portfolio of properties (whether through the payment of cash, exchange of
property, assumption of debt or the issuance or exchange of equity or debt
securities) that, upon completion thereof, (a) shall, in the case of a merger,
reorganization or consolidation, not result in Weeks Corporation or Borrower
being the surviving entity; or (b) shall increase Total Asset Value by more
than twenty percent (20%) of Total Asset Value prior to such transaction.
1.98 DISPOSITION OF ASSETS. Weeks Corporation, Borrower and the other
---------------------
Subsidiaries shall not in the aggregate sell or dispose of, during any twelve
(12) month period, Income Property having an aggregate book value in excess of
five percent (5%) of Total Asset Value (except for sales occurring pursuant to
the exercise of purchase options under lease agreements), nor shall Weeks
Corporation and Borrower, on an aggregate basis, sell all or substantially all
of their assets or take any action that would make it impossible for them to
carry out their business as now conducted, nor shall Weeks Corporation or
Borrower sell, transfer, or otherwise dispose of any assets other than (a)
assets sold or otherwise disposed of in the ordinary course of business; (b)
assets that are not in the judgment of the Board of Directors of Weeks
Corporation required in the operation of the business of Borrower and that do
not comprise a significant portion of Borrower's and Weeks Corporation's
consolidated assets; and
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(c) assets sold or otherwise disposed of as permitted in this Agreement,
provided that nothing in this Section 9.03 shall prohibit the sale of real
- --------
property to a tenant pursuant to a purchase option granted to such tenant.
1.99 JUDGMENTS. Weeks Corporation and Borrower shall not allow any number
---------
of judgments for the payment of money in excess of the aggregate sum of
$1,000,000, excluding such judgments to the extent payment thereof is covered by
insurance, to remain unsatisfied against Borrower or any Related Party for a
period of thirty (30) consecutive days, unless execution thereof is stayed.
1.000INDEBTEDNESS OF WEEKS CORPORATION AND BORROWER. Neither Weeks
----------------------------------------------
Corporation nor Borrower shall incur, assume or otherwise become liable for any
Indebtedness for Money Borrowed, except for Indebtedness for Money Borrowed that
------
constitutes (a) Indebtedness for Money Borrowed from Banks under this Agreement,
(b) Indebtedness for Money Borrowed, not to exceed the principal amount of
$225,000,000 at any one time outstanding, from Banks (as defined in the
Syndicated Credit Agreement) under the Syndicated Credit Agreement, (c)
Indebtedness for Money Borrowed, not to exceed the principal amount of
$30,000,000 at any one time outstanding, from Swing Bank under the Swing Credit
Agreement, (d) unsecured Intercompany Debt, (e) Permitted Borrowings, (f)
unsecured, non-revolving Indebtedness for Money Borrowed incurred by Weeks
Corporation or Borrower in connection with the acquisition of Properties or an
interest in a business enterprise, (g) other unsecured Indebtedness for Money
Borrowed in an aggregate principal amount not to exceed $20,000,000 having a
payment seniority no higher than that of the Loan, (h) secured Indebtedness for
Money Borrowed not prohibited in accordance with Section 9.07, or (i)
Indebtedness for Money Borrowed for which such Person shall have become
obligated solely pursuant to a Permitted Guaranty.
1.101INDEBTEDNESS OF SUBSIDIARIES. No Subsidiary (other than Borrower, GP
----------------------------
Holdings and LP Holdings) shall incur, assume or otherwise become obligated for
any Indebtedness for Money Borrowed, except for Indebtedness for Money Borrowed
------
that constitutes (a) Indebtedness outstanding on the date of this Agreement and
described on Schedule 9.06, or any extension, renewal, modification or
-------------
refinancing thereof, (b) Intercompany Debt, (c) secured Indebtedness for Money
Borrowed not prohibited in accordance with Section 9.07, or (d) Indebtedness for
Money Borrowed for which such Person shall have become obligated solely pursuant
to a Permitted Guaranty.
1.102SECURED INDEBTEDNESS. Neither Weeks Corporation nor Borrower nor any
--------------------
other Subsidiary (other than GP Holdings and LP Holdings) shall incur, assume or
otherwise become obligated for secured Indebtedness for Money Borrowed, except
------
for secured Indebtedness for Money Borrowed that constitutes (a) Permitted
55
<PAGE>
Mortgage Debt, (b) Permitted Tax Exempt Financings, (c) other secured
Indebtedness for Money Borrowed (including purchase or non-purchase money debt
secured by any real or personal property) that does not exceed, when aggregated
with all other secured Indebtedness for Money Borrowed permitted under this
Agreement solely by virtue of this subsection (c) of this Section 9.07,
$20,000,000, or (d) secured Indebtedness for Money Borrowed for which such
Person shall have become obligated solely pursuant to a Permitted Guaranty.
1.103INDEBTEDNESS AND ACTIVITIES OF GP HOLDINGS AND LP HOLDINGS. Neither
----------------------------------------------------------
GP Holdings nor LP Holdings shall (a) incur, assume or otherwise become
obligated for any Indebtedness for Money Borrowed, except for such Indebtedness
------
for Money Borrowed as may be incurred or assumed by GP Holdings solely by virtue
of its status as the general partner of Borrower and the incurrence or
assumption by Borrower of Indebtedness for Money Borrowed not prohibited by the
terms and conditions of this Agreement, (b) hold any assets, except for its
partnership interests in Borrower, (c) conduct any business activities, except
activities related or incidental to its ownership of partnership interests in
Borrower, or (d) derive any revenue, except from its ownership of partnership
interests in Borrower.
1.104DIVIDENDS AND DISTRIBUTIONS. The aggregate sum (but without
---------------------------
duplication) of all dividends paid by Weeks Corporation and all distributions
made by Borrower to its limited partners (excluding any special dividends and
---------
distributions representing the gain from the sale or disposition of Properties)
shall not exceed 95% of Funds from Operations for any fiscal year of Weeks
Corporation, unless such dividends or distributions are necessary in order to
maintain the status of Weeks Corporation as a real estate investment trust under
the Code or are necessary to allow Weeks Corporation or Borrower to make
distributions so that Weeks Corporation will not incur federal income or excise
tax.
1.105ENVIRONMENTAL MATTERS. Neither Weeks Corporation nor Borrower nor any
---------------------
other Subsidiary shall suffer an impairment of its assets which exceeds, when
aggregated with all other such impairments of Weeks Corporation's or Borrower's
assets, the sum of $20,000,000 in book value owing to environmental
contamination or other environmental matters, including, without limitation, the
violation of Environmental Laws or permits and the storage, treatment,
transportation or disposal of Substances.
1.106CHANGE IN CONTROL. No Change in Control of Borrower or Weeks
-----------------
Corporation shall occur, there shall be no transfer by Weeks Corporation of its
ownership of any of the capital stock of GP Holdings, GP Holdings shall issue no
capital stock to any Person other than Weeks Corporation, there shall be no
transfer of any right, title or interest of GP Holdings in its general partner
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<PAGE>
interest in Borrower, and no general partner shall be admitted to Borrower other
than GP Holdings.
1.107ADVANCES, LOANS AND OTHER RESTRICTED INVESTMENTS. Neither Weeks
------------------------------------------------
Corporation nor Borrower nor any other Subsidiary shall make any Restricted
Investments, except (a) investments in and advances to Non-Consolidated
Subsidiaries in an aggregate amount outstanding at any one time not to exceed
ten percent (10%) of Total Asset Value, (b) investments in and advances to Non-
Consolidated Ventures in an aggregate amount outstanding at any one time not to
exceed ten percent (10%) of Total Asset Value, (c) investments in and advances
to Consolidated Entities, (d) other loans, advances and extensions of credit
constituting Intercompany Debt, (e) loans, advances or extensions of credit made
under any incentive compensation plan approved by the Board of Directors of
Weeks Corporation, (f) other loans, advances or extensions of credit to any
Person, including its stockholders, partners, officers, or other executives, and
other Restricted Investments that do not exceed in the aggregate the sum of
$10,000,000 at any one time outstanding, and (g) deposits required by government
agencies or public utilities.
1.108LIENS. Neither Weeks Corporation nor Borrower nor any other
-----
Subsidiary shall create, incur, assume or suffer to exist any Lien of any nature
upon or with respect to any of its respective Properties, whether now owned or
hereafter acquired, except for (a) Permitted Encumbrances, (b) Mortgages
------
securing Permitted Mortgage Debt or Permitted Tax Exempt Financings, and (c)
other Liens securing Indebtedness for Money Borrowed not prohibited in
accordance with Section 9.07.
ARTICLE X
---------
FINANCIAL COVENANTS
-------------------
In order to induce Administrative Agent, Syndication Agent, Documentation
Agent and Banks to enter into the Loan Documents and to make the Loan
contemplated hereby, Borrower and Weeks Corporation covenant and agree with
Administrative Agent, Syndication Agent, Documentation Agent and Banks that from
and after the date hereof, and so long as any amount remains outstanding on the
Obligations or this Agreement remains in effect:
1.109MINIMUM INTEREST COVERAGE RATIO. The Interest Coverage Ratio shall
-------------------------------
not be less than 2.00:1.00.
1.110MINIMUM FIXED CHARGE COVERAGE RATIO. The Fixed Charge Coverage Ratio
-----------------------------------
shall not be less than 1.75:1.00.
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1.111 MAXIMUM LEVERAGE. The Leverage Ratio shall not exceed 0.50:1.00.
----------------
1.112 MAXIMUM UNSECURED DEBT. The Total Unsecured Debt shall not exceed
----------------------
either (a) 55% of the Unencumbered Property Value, or (b) 60% of the
Unencumbered Property Value calculated with respect only to Property of
Borrower.
1.113 MAXIMUM SECURED DEBT. The Total Secured Debt shall not exceed 35%
--------------------
of Total Asset Value.
1.114 MINIMUM DEBT YIELD. At any Measurement Date, Total Annualized NOI
------------------
shall not be less than 13% of Total Interest Bearing Debt.
All accounting terms used but not defined herein shall be used as defined
under GAAP. All references to financial information and results of operations
are intended to apply to Weeks Corporation and the Consolidated Entities on a
consolidated basis.
ARTICLE XI
----------
DEFAULT
-------
Each of the following shall constitute a Default hereunder:
1.115 NONPAYMENT OF OBLIGATIONS. Failure of Borrower to make any payment
-------------------------
of principal or interest on the Obligations when due;
1.116 OTHER MONETARY DEFAULTS. Failure of Weeks Corporation or Borrower or
-----------------------
any other Subsidiary to make any payment when due, including payments of
principal or interest (whether by acceleration or otherwise), or before the
expiration of any applicable cure period, on any obligation of Weeks
Corporation, Borrower or any other Subsidiary (other than the Obligations, any
Permitted Mortgage Debt, or any Obligations (as defined in the Syndicated Credit
Agreement), or any Swing Obligations (as defined in the Swing Credit
Agreement)), the aggregate amount of which obligation (whether or not then due)
exceeds $1,000,000, or there shall occur any event or condition which results in
the acceleration of the maturity of such obligation (including, without
limitation, any required mandatory prepayment or "put" to Weeks Corporation,
Borrower or any other Subsidiary) or enables (with any requirement for the
giving of notice or lapse of time or both having been satisfied) the holders of
such obligation or any Person acting on their behalf to accelerate the maturity
thereof (including, without limitation, any such mandatory prepayment or "put");
1.117 DEFAULTS OF MATERIAL VENTURES. Failure of any Material Venture to
-----------------------------
make any payment when due, including payments of
58
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principal or interest (whether by acceleration or otherwise), or before the
expiration of any applicable cure period, on any obligation of such Material
Venture, the aggregate amount of which obligation (whether or not then due)
exceeds $2,000,000, or there shall occur any event or condition which results in
the acceleration of the maturity of such obligation (including, without
limitation, any required mandatory prepayment or "put" to such Material Venture)
or enables (with any requirement for the giving of notice or lapse of time or
both having been satisfied) the holders of such obligation or any Person acting
on their behalf to accelerate the maturity thereof (including, without
limitation, any such mandatory prepayment or "put") or there should occur a
default by any such Material Venture under any Mortgage securing any such
obligation which default shall continue beyond any applicable cure period;
1.118 BREACH OF WARRANTY OR REPRESENTATION. Any representation or
------------------------------------
warranty made by Borrower or Weeks Corporation in the Loan Documents, or any
other statement furnished at any time hereunder or in connection with the Loan
Documents, is untrue in any material respect when made or furnished;
1.119 BREACH OF COVENANTS. Default by Borrower or Weeks Corporation
-------------------
under, or in the observance or performance of any of the covenants contained in,
this Agreement or the other Loan Documents;
1.120 WEEKS REALTY PARTNERSHIP AGREEMENT DEFAULTS. There shall occur a
-------------------------------------------
material default by GP Holdings or LP Holdings in the performance of any of its
respective obligations under the Weeks Realty, L.P. Partnership Agreement and
such default shall continue beyond any applicable cure period;
1.121 PERMITTED MORTGAGE DEBT DEFAULTS. Default by Weeks Corporation or
--------------------------------
Borrower under any Permitted Mortgage Debt or any Mortgage securing any
Permitted Mortgage Debt which default shall continue beyond any applicable cure
period and the aggregate amount of which Permitted Mortgage Debt (whether or not
then due) exceeds $5,000,000, or there shall occur any event or condition which
results in the acceleration of the maturity of such Permitted Mortgage Debt
(including, without limitation, any required mandatory prepayment or "put" to
Weeks Corporation or Borrower) or enables (with any requirement for the giving
of notice or lapse of time or both having been satisfied) the holders of such
Permitted Mortgage Debt or any Person acting on their behalf to accelerate the
maturity thereof (including, without limitation, any such mandatory prepayment
or "put");
1.122 VOLUNTARY INSOLVENCY PROCEEDINGS. The filing by Weeks Corporation,
--------------------------------
Borrower or any other Subsidiary or any Material
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Venture of a petition under any chapter of the Federal Bankruptcy Code, as
amended, or of any proceeding seeking any relief under any other insolvency or
debtor relief act or law, state or federal, now or hereafter existing;
1.123 INVOLUNTARY INSOLVENCY PROCEEDINGS. The filing against Weeks
----------------------------------
Corporation, Borrower or any other Subsidiary or any Material Venture of a
petition under any chapter of the Federal Bankruptcy Code, as amended, or of any
proceeding seeking any relief under any other insolvency or debtor relief act or
law, state or federal, now or hereafter existing;
1.124 VOLUNTARY RECEIVERSHIP. The application by Weeks Corporation,
----------------------
Borrower or any other Subsidiary or any Material Venture for or the consent or
acquiescence of such Person in the appointment of a receiver or trustee for all
or a substantial part of any of their respective properties;
1.125 INVOLUNTARY RECEIVERSHIP. The involuntary appointment of a receiver
------------------------
or trustee for all or a substantial part of any property or assets of Weeks
Corporation, Borrower or any other Subsidiary or any Material Venture, or the
issuance of a warrant, attachment, execution or similar process against a
substantial part of the property of any such Person;
1.126 ASSIGNMENT FOR THE BENEFIT OF CREDITORS. The making by Weeks
---------------------------------------
Corporation, Borrower or any other Subsidiary or any Material Venture of a
general assignment for the benefit of creditors;
1.127 INSOLVENCY. The inability of Weeks Corporation, Borrower or any
----------
other Subsidiary or any Material Venture, or the admission of any such Person in
writing of its inability to pay such Person's debts generally as they mature;
1.128 INTEREST RATE AGREEMENTS. Default by Weeks Corporation, Borrower or
------------------------
any other Subsidiary or any Material Venture under any interest rate agreement
or similar agreement between any such Person and Administrative Agent or any
Bank relating to this Agreement shall occur, such default shall continue beyond
any applicable cure period, and such default shall render such Person liable to
pay the counterparty under such agreement a net amount in excess of $1,000,000;
1.129 SYNDICATED TERM LOAN GUARANTIES. The termination or revocation of
-------------------------------
any Syndicated Term Loan Guaranty, the denial or disaffirmation by any Guarantor
of its obligations under a Syndicated Term Loan Guaranty or any provision of a
Syndicated Term Loan Guaranty, or any Syndicated Term Loan Guaranty shall
otherwise cease to be in full force or effect;
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1.130 SYNDICATED CREDIT AGREEMENT. Any Default (as defined in the
---------------------------
Syndicated Credit Agreement) shall occur under the Syndicated Credit Agreement
and shall not be cured within any applicable cure period; and
1.131 SWING CREDIT AGREEMENT. Any Swing Line Default (as defined in the
--------------------
Swing Credit Agreement) shall occur under the Swing Credit Agreement and shall
not be cured within any applicable cure period.
ARTICLE XII
-----------
RIGHTS AND REMEDIES
-------------------
1.132 PRIOR TO DEFAULT. Before or after the occurrence of a Default:
----------------
Administrative Agent and Banks may examine, audit or inspect Borrower's or Weeks
Corporation's books and records at any reasonable time or times and may enter
upon their respective premises for such purposes. Borrower and Weeks
Corporation shall assist Administrative Agent and Banks in whatever way
reasonably necessary to make each such examination, audit and inspection.
1.133 UPON DEFAULT. Upon the occurrence of any Default and the expiration
------------
of any applicable cure period: Administrative Agent shall, at the request of the
Required Banks (a) terminate this Agreement and declare the Obligations,
notwithstanding any provisions thereof, without demand or notice of any kind,
immediately due and payable, whereupon the Obligations shall become immediately
due and payable and may be collected forthwith; (b) perform any agreement of
Borrower or Weeks Corporation hereunder or under any of the Loan Documents which
such party shall fail to perform, and Borrower and Weeks Corporation agree to
reimburse forthwith Administrative Agent and Banks for all expenses of
Administrative Agent and Banks in connection with the foregoing, together with
interest thereon at the Floating Rate from the date incurred until reimbursed;
and (c) exercise from time to time any other rights and remedies available to it
and the Banks under the Loan Documents and applicable law.
1.134 CURE OF DEFAULTS. Anything herein contained to the contrary
----------------
notwithstanding, the provisions of this Section 12.03 shall not apply to any
Default consisting of a failure to comply with any Sections of Articles IX or X,
to any Default consisting of a failure to repay the Notes on the Maturity Date,
to any Default consisting of a failure to make any payment of principal on the
Obligations when due, to any Default under Section 11.15, 11.16 or 11.17, or to
any Default that is specifically excluded from any provision for cure of
defaults pursuant to the terms of any other of the Loan Documents. In the event
of the occurrence of a Default which consists of failure to make a payment of
interest on the
61
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Obligations when due, neither Administrative Agent nor any Bank will, on account
of said Default, accelerate the maturity of any Obligations, exercise any other
rights or remedies under the Loan Documents, or institute any court action under
this Agreement or any of the Loan Documents if, within three (3) Domestic
Business Days after the date of occurrence of said Default, Borrower makes such
payment to Administrative Agent. In the event of the occurrence of a Default of
a type set forth in Section 11.05 pertaining to covenants set forth in this
Agreement or in the other Loan Documents, other than those covenants set forth
in Articles IX and X hereof, neither Administrative Agent nor any Bank will, on
account of said Default, accelerate the maturity of any Obligations, exercise
any other rights or remedies under the Loan Documents, or institute any court
action under this Agreement or any of the Loan Documents if (a) within thirty
(30) days after the earlier to occur of (i) the date written notice thereof has
been given to Borrower by Administrative Agent, or (ii) the date a Key Executive
otherwise has actual knowledge of any such Default, or (b) in the case of any
covenants set forth in the other Loan Documents, within any applicable grace
period provided for therein, Borrower fully cures said Default. Except as
specifically set forth in this Section 12.03, no default notice or cure period
shall be applicable with respect to the breach by Borrower or Weeks Corporation
of any of their respective obligations under this Agreement or under any of the
Loan Documents. This Section 12.03 shall not be applicable during the pendency
of any bankruptcy proceedings affecting Borrower or any Guarantor.
1.135 COSTS OF COLLECTION. Borrower agrees to pay all costs of
-------------------
Administrative Agent and Banks of collection of the Obligations and enforcement
or rights hereunder, and, if collected by or through an attorney, reasonable
attorneys' fees and also other legal and court expenses.
1.136 SETOFF. Borrower and Guarantors hereby agree that Administrative
------
Agent and any Bank may, upon the occurrence of a Default and during the
continuance thereof, without notice, apply any balances, credits, deposits,
accounts, monies or other indebtedness now or hereafter owing by any Bank to
Borrower or any Guarantor in satisfaction of any Obligation then due and
payable; provided, however, that nothing herein contained shall authorize or
-------- -------
entitle Administrative Agent or any Bank to exercise any right of setoff against
any accounts, monies, government securities, or other properties held by such
Person under any escrow, trust, special purpose account, or similar arrangement
established with such Person by Borrower or any Guarantor for the purpose of (a)
implementing a "legal" defeasance, a "covenant" defeasance or an "in substance"
defeasance of Debt of Weeks Corporation or Borrower or any Guarantor, or (b)
maintaining security deposits of tenants of any of the Properties.
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1.137 SHARING OF COLLECTIONS. Each Bank agrees that if it shall, by
----------------------
exercising any right of setoff or counterclaim or resort to collateral security
or otherwise, receive payment of a proportion of the aggregate amount of
principal and interest owing with respect to the Note held by it which is
greater than the proportion received by any other Bank in respect of the
aggregate amount of all principal and interest owing with respect to the Note
held by such other Bank, the Bank receiving such proportionately greater payment
shall purchase such participations in the Notes held by the other Banks owing to
such other Banks, and such other adjustments shall be made, as may be required
so that all such payments of principal and interest with respect to the Notes
held by the Banks owing to such other Banks shall be shared by the Banks pro
rata; provided that if all or any portion of such payment received by the
--------
purchasing Bank is thereafter recovered from such purchasing Bank, such purchase
from each other Bank shall be rescinded and such other Bank shall repay to the
purchasing Bank, as the case may be, the purchase price of such participation to
the extent of such recovery, together with an amount equal to such other Bank's
ratable share (according to the proportion of (a) the amount of such other
Bank's required repayment to (b) the total amount so recovered from the
purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. Borrower agrees,
to the fullest extent it may effectively do so under applicable law, that any
holder of a participation in a Note, whether or not acquired pursuant to the
foregoing arrangements, may exercise rights of setoff or counterclaim and other
rights with respect to such participation as fully as if such holder of a
participation were a direct creditor of Borrower in the amount of such
participation.
ARTICLE XII
-----------
FEES AND EXPENSES; INDEMNIFICATION
----------------------------------
1.139 FEES AND EXPENSES. Borrower and Guarantors shall provide, at their
-----------------
expense, to Administrative Agent all documents, instruments, assurances, and
certificates as Administrative Agent may reasonably deem necessary to consummate
the transactions contemplated hereby. Borrower and Guarantors shall be
obligated, jointly and severally, to Administrative Agent to pay all reasonable
fees, expenses and costs incurred by Administrative Agent in connection with the
preparation, negotiation, and entering into of this Agreement and the other Loan
Documents and the administration of the Loan, including any amendments or
modifications thereto, whether incurred before, on or after the date of this
Agreement, including, but not limited to, reasonable attorneys' fees and
expenses. All the foregoing costs and expenses may, at the discretion of
Administrative Agent and upon notice to Borrower, be charged to the Notes as
advances thereunder. In the event Administrative Agent pays any of the costs or
expenses under this Section 13.01, Borrower and Weeks Corporation shall
reimburse Administrative Agent promptly upon demand, and all such sums shall
bear interest at the Default Rate set forth in Section 2.12.
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1.139 ADMINISTRATIVE AGENT'S OPERATIONS FEE. In addition to the fees and
-------------------------------------
expenses payable by Borrower pursuant to Section 13.01 and any other provision
of this Agreement or the other Loan Documents, Borrower agrees to pay to
Administrative Agent, for its sole account, in consideration of its
administration of the transactions evidenced by this Agreement and its
performance of services hereunder, those fees provided for and calculated as set
forth in the Mandate Letter, including an annual Administrative Agent's
Operations Fee. The Administrative Agent's Operations Fee shall be due and
payable in advance, for each year (or part thereof) during which any of the
Obligations are outstanding, on the date of this Agreement and on each
anniversary date thereof, and shall be fully earned and nonrefundable when paid.
1.140 AMENDMENT, WAIVER AND PREPAYMENT FEES. In addition to the fees and
-------------------------------------
expenses payable by Borrower pursuant to Section 13.01 and any other provision
of this Agreement or the other Loan Documents, Borrower agrees to pay to
Administrative Agent, for its sole account, as compensation for administrative
and other services in connection therewith, (a) a fee in the minimum amount of
$5,000 (or such greater reasonable amount as may be charged by Administrative
Agent) upon each request by Weeks Corporation or Borrower for any amendment to,
or waiver of, any term or condition set forth in this Agreement or any of the
other Loan Documents, except for such a request, if any, which Administrative
Agent shall determine in good faith shall impose no more than an insignificant
administrative, financial or other burden on Administrative Agent, and (b) a fee
in such reasonable amount as may be charged by Administrative Agent (not to
exceed $3,000) upon any prepayment of the Loan made pursuant to the provisions
of Section 2.10, if such prepayment is not made on the last day of the Interest
Periods applicable to the LIBOR Rate Tranches, if any, which fee shall be due
and payable upon the making of any such prepayment and shall be fully earned and
nonrefundable when paid.
1.141 INDEMNIFICATION. At all times prior to and after the consummation
---------------
of the transactions contemplated by this Agreement, Borrower and Guarantors,
jointly and severally, agree to hold harmless Banks, Administrative Agent, their
respective directors, officers, employees, agents, affiliates, successors and
assigns from and indemnify Banks, Administrative Agent, their respective
directors, officers, employees, agents, affiliates, successors and assigns,
against all demands, loss, damages, judgments, costs and expenses (including,
without limitation, reasonable attorneys' fees and expenses) actually incurred
by any of the foregoing, whether direct or indirect, as a result of or arising
from or relating to any claim for relief or cause of action made, brought,
asserted or threatened by any entity, asserting a claim for any legal or
equitable remedy against any person under any statute, or regulation or as a
matter of law, including, without limitation, any federal or state securities
laws or under any common law or equitable case or otherwise, arising from or in
connection with this Agreement, the other Loan Documents, any of the
transactions
64
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contemplated by this Agreement, or use of any proceeds of the Loan, except to
the extent such losses, damages, costs or expenses are due to the wilful
misconduct or gross negligence of, or breach of this Agreement by Administrative
Agent, Banks, or any such indemnitee. At the request of Administrative Agent and
any Bank, Borrower and Guarantors, jointly and severally, will indemnify any
assignee to whom any Bank transfers or sells all or any portion of its interest
in the Loan or participations therein on terms substantially similar to the
terms set forth above. Administrative Agent and Banks shall not be responsible
or liable to any entity for consequential damages which may be alleged as a
result of this Agreement or any of the transactions contemplated hereby.
ARTICLE XIV
-----------
MISCELLANEOUS
-------------
1.142 CUMULATIVE RIGHTS; NON-WAIVER. No delay or omission by
-----------------------------
Administrative Agent or any Bank to exercise any right, power or remedy accruing
upon any Default shall exhaust or impair any such right, power or remedy or
shall be construed to be a waiver of any such Default, or acquiescence therein,
and every right, power and remedy given by this Agreement to Administrative
Agent or Banks may be exercised from time to time and as often as may be deemed
expedient by Administrative Agent or any Bank. No consent or waiver, expressed
or implied, by Administrative Agent or Banks to or of any Default shall be
deemed or construed to be a consent or waiver to or of any other Default. No
delay, indulgence, departure, act or omission by Administrative Agent or Banks
or any holder of any of the Notes shall release, discharge, modify, change or
otherwise affect the original liability under the Notes or any other obligation
of Borrower, or any maker, surety or Guarantor, or preclude Administrative Agent
or Banks from exercising any right, privilege or power granted herein or alter
the security title, security interest or lien hereof. Administrative Agent or
Banks may at any time, without notice to or further consent from Borrower,
surrender or substitute any property or other security of any kind or nature
whatsoever securing the Obligations or release any Guarantor, and no such action
will release Borrower's obligations hereunder or alter the effect hereof. No
right, power or remedy conferred upon or reserved to Administrative Agent or
Banks hereunder is intended to be exclusive of any other right, power or remedy,
but each and every such right, power and remedy shall be cumulative and
concurrent and shall be in addition to any other right, power and remedy given
hereunder or under the other Loan Documents or now or hereafter existing at law,
in equity or by statute.
1.143 NO OBLIGATION TO THIRD PARTIES. The Loan Documents are made solely
------------------------------
for the benefit of Guarantors, Borrower, Administrative Agent, Syndication
Agent, Documentation Agent, each Bank and their respective successors and
assigns. No other party whatsoever shall have standing to bring any action as
the result of the Loan Documents, or to assume that Administrative Agent or any
Bank will
65
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exercise any remedies provided herein, and no party other than Administrative
Agent and each Bank, their respective successors and assigns, shall be deemed to
be a beneficiary of any right or remedy provided by the Loan Documents in favor
of such parties, any and all of which may be freely waived in whole or in part
by Administrative Agent or Banks, in accordance with the terms and conditions of
this Agreement. Nothing contained in this Section 14.02 is intended to deprive
Borrower of the benefit of any covenant by Administrative Agent and each Bank in
favor of Borrower contained in the Loan Documents.
1.144 SUCCESSORS AND ASSIGNS.
----------------------
(1) The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns; provided that Borrower may not assign or otherwise transfer any of
--------
their rights under this Agreement.
(2) Any Bank may at any time sell to one or more persons (each a
"PARTICIPANT") participation interests in any Loan owing to such Bank any Note
-----------
held by such Bank, any Commitment hereunder or any other interest of such Bank
hereunder. In the event of any such sale by a Bank of a participation interest
to a Participant, such Bank's obligations under this Agreement shall remain
unchanged, such Bank shall remain solely responsible for the performance
thereof, such Bank shall remain the holder of any such Note for all purposes
under this Agreement, and Borrower and Administrative Agent shall continue to
deal solely and directly with such Bank in connection with such Bank's rights
and obligations under this Agreement. In no event shall a Bank that sells a
participation be obligated to the Participant to take or refrain from taking any
action hereunder, except that such Bank may agree that it will not (except as
provided below), without the consent of the Participant, agree to (i) the change
of any date fixed for the payment of principal of or interest on the Loan, (ii)
the change of the amount of any principal, interest or fees due on any date
fixed for the payment thereof with respect to the Loan, (iii) the change of the
principal of the Loan, (iv) any change in the rate at which either interest is
payable thereon or (if the Participant is entitled to any part thereof) fee is
payable hereunder from the rate at which the Participant is entitled to receive
interest or fee (as the case may be) in respect of such participation, (v) the
release or substitution of all or any substantial part of the collateral (if
any) held as security for the Loan, or (vi) the release of any Guaranty given to
support payment of the Loan. Each Bank selling a participation interest in any
Loan, Note, Commitment or other interest under this Agreement shall, within ten
(10) Domestic Business Days of such sale, provide Borrower and Administrative
Agent with written notification stating that such sale has occurred and
identifying the Participant and the interest purchased by such Participant.
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(3) Any Bank may at any time assign to one or more banks or
financial institutions (each an "ASSIGNEE") all or a proportionate part of its
--------
rights and obligations under this Agreement, the Notes and the other Loan
Documents, and such Assignee shall assume all such rights and obligations,
pursuant to an Assignment and Acceptance, executed by such Assignee, such
transferor Bank and Administrative Agent, provided that (i) no interest may be
--------
sold by a Bank pursuant to this paragraph (c) unless the Assignee shall agree to
assume ratably equivalent portions of the transferor Bank's Commitment, (ii) no
interest may be sold by a Bank pursuant to this paragraph (c) without the
written consent of Administrative Agent, which consent shall not be unreasonably
withheld, (iii) if a Bank is assigning only a portion of its Commitment, then
the amount of the Commitment being assigned (determined as of the effective date
of the assignment) shall be in an amount not less than $5,000,000, (iv) except
during the continuance of a Default, no interest may be sold by a Bank pursuant
to this paragraph (c) to any Assignee that is not then a Bank or an Affiliate of
a Bank without the written consent of Borrower, which consent shall not be
unreasonably withheld, and (v) a Bank may not, at any one time, have more than
two (2) Assignees that are not Banks immediately prior to such assignment. Upon
(A) execution of the Assignment and Acceptance by such transferor Bank, such
Assignee, Administrative Agent and Borrower, (B) delivery of an executed copy of
the Assignment and Acceptance to Borrower and Administrative Agent, (C) payment
by such Assignee to such transferor Bank of an amount equal to the purchase
price agreed between such transferor Bank and such Assignee, and (D) payment by
the transferor Bank of a processing and recordation fee of $2,500 to
Administrative Agent, for its sole account, such Assignee shall for all purposes
be a Bank party to this Agreement and shall have all the rights and obligations
of a Bank under this Agreement to the same extent as if it were an original
party hereto with a Commitment as set forth in such instrument of assumption,
and the transferor Bank shall be released from its obligations hereunder to a
corresponding extent, and no further consent or action by Borrower, Banks or
Administrative Agent shall be required. Upon the consummation of any transfer to
an Assignee pursuant to this paragraph (c), the transferor Bank, the
Administrative Agent and Borrower shall make appropriate arrangements so that,
if required, a new Note is issued to each of such Assignee and such transferor
Bank.
(4) Borrower authorizes Administrative Agent and each Bank to
disclose to any Participant or Assignee (each a "TRANSFEREE") and any
----------
prospective Transferee any and all financial information in such Administrative
Agent's or Bank's possession concerning Borrower which has been delivered to
such Administrative Agent or any Bank by Borrower or Administrative Agent
pursuant to this Agreement or which has been delivered to such Administrative
Agent or any Bank by Borrower in connection with such
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Administrative Agent's or such Bank's credit evaluation prior to entering into
this Agreement, provided that such Transferee or prospective Transferee agrees
--------
to take reasonable actions to preserve the confidentiality of any such
confidential financial information disclosed.
(5) Anything in this Section 14.03 to the contrary notwithstanding,
any Bank may assign and pledge all or any portion of its ratable share of the
Loan and/or obligations owing to it to any Federal Reserve Bank or the United
States Treasury as collateral security pursuant to Regulation A of the Board of
Governors of the Federal Reserve System and any Operating Circular issued by
such Federal Reserve Bank, provided that any payment in respect of such assigned
--------
share of the Loan and/or obligations made by Borrower to the assigning and/or
pledging Bank in accordance with the terms of this Agreement shall satisfy
Borrower's obligations hereunder in respect of such assigned share of the Loan
and/or obligations to the extent of such payment. No such assignment shall
release the assigning and/or pledging Bank from its obligations hereunder.
1.145 GOVERNING LAW. This Agreement is entered into in the State of
-------------
Georgia, and the rights and obligations of the parties hereunder shall be
governed by, construed and interpreted in accordance with, the laws of the State
of Georgia.
1.146 SURVIVAL OF OBLIGATIONS. All representations, warranties and
-----------------------
covenants contained herein shall survive the Closings and the execution and
delivery of the Notes or any other documents contemplated hereby.
1.147 ENTIRE AGREEMENT. This Agreement (together with the provisions of
the Mandate Letter relating to fees payable to Administrative Agent) constitutes
the entire agreement of the parties hereto with respect to the subject matter
hereof.
1.148 INVALIDITY. Any provision of this Agreement that is prohibited or
----------
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability of such
provisions in any other jurisdiction.
1.149 HEADINGS. Article and Section headings used in this Agreement are
--------
for convenience of reference only and are not part of this Agreement for any
other purpose.
1.150 CHANGES IN FORMS. Administrative Agent reserves the right to make
----------------
reasonable changes in the forms of all certificates and other documents to be
executed and delivered to any Bank or
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Administrative Agent by Borrower or Weeks Corporation hereunder.
1.151 NOTICES. Any notice, payment, demand or communication required or
-------
permitted to be given by the provisions of this Agreement shall be deemed to
have been sufficiently given or served for all purposes if delivered personally
to a party or to an officer of the party to whom the same is directed, or if
sent by facsimile transmission or by United States Mail, first class postage and
charges prepaid, addressed or transmitted to such party at the following address
or facsimile number, or to such other address or facsimile number as shall be
furnished in writing by any party to the other, pursuant to the provisions
hereof:
If to Borrower, to: WEEKS REALTY, L.P.
c/o Weeks Corporation
4497 Park Drive
Norcross, Georgia 30093
Attn: Chief Financial Officer
Facsimile No.: (770) 717-2479
with a copy to: King & Spalding
191 Peachtree Street, N.E.
Atlanta, GA 30303-1740
Attn: William B. Fryer, Esq.
Facsimile No.: (404) 572-5100
and with a copy to: Weeks Corporation
4497 Park Drive
Norcross, Georgia 30093
Attn: Elizabeth C. Belden, Esq.
Corporate Counsel
Facsimile No.: (770) 717-2479
If to Weeks Corporation,
to: Weeks Corporation
4497 Park Drive
Norcross, Georgia 30093
Attn: Chief Financial Officer
Facsimile No.: (770) 717-2479
If to Weeks GP
Holdings, Inc., to: Weeks GP Holdings, Inc.
c/o Weeks Corporation
4497 Park Drive
Norcross, Georgia 30093
Attn: Chief Financial Officer
Facsimile No.: (770) 717-2479
69
<PAGE>
If to Weeks LP
Holdings, Inc., to: Weeks LP Holdings, Inc.
c/o Weeks Corporation
4497 Park Drive
Norcross, Georgia 30093
Attn: Chief Financial Officer
Facsimile No.: (770) 717-2479
If to a Bank, to: The address or facsimile number set forth opposite
its name on the signature pages hereof
If to Administrative
Agent, to: Wachovia Bank, N.A.
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attn: Steven B. Wood
Vice President
Facsimile No.: (404) 332-4066
with a copy to: Wachovia Corporate Services, Inc.
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attn: Corporate Finance Department
Facsimile No.: (404) 332-4005
and with a copy to: Smith, Gambrell & Russell, LLP
Suite 3100, Promenade II
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309
Attn: Ronald E. Barab, Esq.
Facsimile No.: (404) 815-3509
If to Syndication
Agent, to: First Union National Bank
One First Union Center, NC 01 56
Charlotte, North Carolina 28288
Attn: John Schissel
Vice President
REIT Banking Group
Facsimile No.: (704) 383-6205
If to Documentation
Agent, to: NationsBank, N.A.
600 Peachtree Street, N.E.
6th Floor, GA 1-006-6-25
Atlanta, Georgia 30308
Attn: Kevin M. Brown
Vice President
Facsimile No.: (404) 607-4145
70
<PAGE>
Any such notice shall be deemed given as of the date so delivered personally or
sent by facsimile transmission (with confirmation of completed transmission), or
five (5) days after the date on which same was deposited, first class postage
prepaid, in a regularly maintained receptacle for the deposit of United States
Mail, addressed as aforesaid.
1.152 AMENDMENTS AND WAIVERS. (a) Any provision of this Agreement, the
----------------------
Notes or any other Loan Documents may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed ("signed," as used in this
Section 14.11, shall include, without limitation, signatures received by
facsimile transmission followed by a signed original) by Borrower and the
Required Banks (and, if the rights or duties of Administrative Agent are
affected thereby, by Administrative Agent); provided that no such amendment or
--------
waiver shall, unless signed by all Banks, (i) change the Commitment of any Bank
or subject any Bank to any additional obligation, (ii) change the principal of
or rate of interest on the Loan or any fees (other than fees payable solely to
Administrative Agent) hereunder, (iii) change the date fixed for any payment of
principal of or interest on the Loan or any fees hereunder, (iv) change the
amount of principal, interest or fees due on any date fixed for the payment
thereof, (v) change the percentage of the Commitments or of the aggregate unpaid
principal amount of the Notes, or the percentage of any Bank which shall be
required for Banks or any of them to take any action under this Section 14.11
or any other provision of this Agreement, (vi) change the manner of application
of any payments made under this Agreement or the Notes, (vii) release any
Syndicated Term Loan Guaranty, (viii) change the definition of Required Banks,
(ix) change the substance of the Debt Rating Table, or (x) change this Section
14.11.
(b) Neither Weeks Corporation nor Borrower will obtain from any Bank
its written agreement to waive or amend any of the provisions of this Agreement
except through Administrative Agent, and Administrative Agent shall be supplied
by Weeks Corporation or Borrower with sufficient information to enable Banks to
make an informed decision with respect thereto. Executed or true and correct
copies of any waiver or consent effected pursuant to the provisions of this
Agreement shall be delivered by Borrower to Administrative Agent forthwith
following the date which the same shall have been executed and delivered by the
requisite percentage of Banks. Borrower will not, directly or indirectly, pay or
cause to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, to any Bank (in its capacity as such) as
consideration for or as an inducement to the entering into by such Bank of any
waiver or amendment of any of the terms and provisions of this Agreement, unless
such remuneration is concurrently paid, on the same terms, ratably to all Banks,
provided that the provisions of this Section 14.11(b) shall not impair or in
- --------
any way affect Borrower's obligations to pay, and
71
<PAGE>
Administrative Agent's entitlement to collect, the fees provided for in Section
13.03 upon any request by Borrower for a waiver or amendment.
1.153 TIME OF THE ESSENCE. Time is of the essence of this Agreement.
-------------------
1.154 EXECUTION IN COUNTERPARTS. This Agreement and any amendment hereof
-------------------------
or waiver of any provision hereof may be executed in multiple counterparts, each
of which shall be treated as an original, but all of which shall constitute one
and the same agreement, amendment or waiver, as the case may be.
1.155 ATTORNEYS' FEES. All references to attorneys' fees or reasonable
---------------
attorneys' fees in this Agreement or in any of the Loan Documents shall mean
actual attorneys' fees incurred by a Bank or Administrative Agent without
reference to any statutory presumption as to the amount thereof.
1.156 CONFIDENTIALITY. Each of Banks, Administrative Agent, Syndication
---------------
Agent and Documentation Agent agrees to exercise commercially reasonable efforts
to keep any information delivered or made available to it by Weeks Corporation
or Borrower confidential from anyone other than persons employed or retained by
it who are or expected to become engaged in evaluating, approving, structuring
or administering the Loan; provided that nothing herein shall prevent any Bank,
--------
Administrative Agent, Syndication Agent or Documentation Agent from disclosing
such information (a) to any other Bank, (b) upon the order of any court or
administrative agency, (c) upon the request or demand of any regulatory agency
or authority having jurisdiction over it, (d) which has been publicly disclosed
without breach of these or any other applicable confidentiality provisions, (e)
to the extent reasonably required in connection with any litigation to which any
Bank or Banks may be a party, (f) to the extent reasonably required in
connection with the exercise of any remedy hereunder, (g) to its legal counsel
and independent auditors (each of whom it agrees to advise as to the
confidential nature of such information) and (h) to any actual or proposed
Transferee of all or a part of its rights hereunder which has agreed in writing
to be bound by the provisions of this Section 14.15; provided that should
--------
disclosure of any such confidential information be required by virtue of the
preceding clause (b) or clause (e), the relevant Bank, Administrative Agent,
Syndication Agent or Documentation Agent shall promptly notify Borrower of same;
provided, further, that neither any Bank nor Administrative Agent nor
- -------- -------
Syndication Agent nor Documentation Agent shall be required to delay compliance
with any directive to disclose any such information so as to allow Weeks
Corporation or Borrower to effect any action seeking to prevent such disclosure.
72
<PAGE>
1.157 REPRESENTATIONS BY BANKS. Each of Banks hereby represents that (a)
------------------------
it is a commercial lender or financial institution which makes commercial loans
in the ordinary course of its business and that it will make its ratable share
of the Loan for its own account in the ordinary course of such business;
provided that, subject to Section 14.03, the disposition of the Note or Notes
- --------
held by it shall at all times be within its exclusive control, and (b) no part
of the funds to be used by it to fund its ratable share of the Loan constitutes
or will constitute (i) assets allocated to any separate account maintained by it
in which any employee benefit plan (or its related trust) has any interest nor
(ii) any other assets of any employee benefit plan. As used in this Section, the
terms "employee benefit plan" and "separate account" shall have the respective
meanings assigned to such terms in Section 3 of ERISA.
1.158 MISCELLANEOUS. The Loan Documents shall inure to the benefit of and
-------------
be binding upon Borrower, Guarantors, Banks, Administrative Agent, Syndication
Agent, Documentation Agent and their respective heirs, executors, legal
representatives, successors, successors-in-title and assigns, subject to all
restrictions on transfer herein or in the other Loan Documents. Neither the Loan
Documents nor the proceeds of the Loan contemplated by the Loan Documents may be
assigned by Borrower without the prior consent of Banks, which may be given or
withheld at the discretion of Banks. The Loan Documents may be discharged or
terminated only by an instrument in writing signed by the party against whom
enforcement of such discharge or termination is sought. Nothing contained in the
Loan Documents shall be construed to create an agency, partnership or joint
venture between Borrower and Banks. Wherever in the Loan Documents it is
indicated that the approval, consent or determination of Banks is to be given or
made at the option or in the discretion or judgment of Banks, then such Banks,
or any of them, may grant or withhold such approval or consent or make such
determination without restriction in its sole and absolute discretion. The
obligations of Borrower under this Agreement and the Notes shall be subject to
the limitation that payments of interest shall not be required to the extent
that receipt thereof would be contrary to provisions of law applicable to Banks
limiting rates of interest which may be charged or collected by Banks. In the
event that any such payment in excess of the maximum rate of interest allowed by
applicable law is inadvertently paid by Borrower or inadvertently received by
the Banks, the amount in excess of the maximum rate of interest allowed by
applicable law shall be credited as a payment of principal, unless Borrower
shall notify the Banks in writing that Borrower elects to have such excess sum
returned to it forthwith. All exhibits referred to in the Loan Documents are by
such reference incorporated into the Loan Documents as if fully set forth
therein.
73
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered in their names and on their behalf, and their seals to be affixed
and attested, all as of the day and year first above written.
BORROWER:
--------
WEEKS REALTY, L.P.
ATTEST: BY: WEEKS GP HOLDINGS, INC., its
sole General Partner
_________________________ By:______________________(Seal)
Secretary
Its:_______________________
[CORPORATE SEAL]
GUARANTORS:
----------
ATTEST: WEEKS CORPORATION
_________________________ By:_________________________________
Secretary
Its:_____________________________
[CORPORATE SEAL]
ATTEST: WEEKS GP HOLDINGS, INC.
_________________________ By:___________________________
Secretary
Its:_______________________
[CORPORATE SEAL]
ATTEST: WEEKS LP HOLDINGS, INC.
_________________________ By:___________________________
Secretary
Its:_______________________
[CORPORATE SEAL]
ADMINISTRATIVE AGENT:
--------------------
WACHOVIA BANK, N.A.,
as Administrative Agent
By:________________________________
Its:____________________________
[BANK SEAL]
74
<PAGE>
SYNDICATION AGENT:
-----------------
FIRST UNION NATIONAL BANK,
as Syndication Agent
By:________________________________
Its:____________________________
[BANK SEAL]
DOCUMENTATION AGENT:
-------------------
NATIONSBANK, N.A.,
as Documentation Agent
By:________________________________
Its:____________________________
[BANK SEAL]
BANKS:
-----
Commitment Share: WACHOVIA BANK, N.A.
23.52941176%
Address: By:________________________________
191 Peachtree Street, N.E.
Atlanta, GA 30303 Its:____________________________
Date:
[BANK SEAL]
Commitment Share: FIRST UNION NATIONAL BANK
17.64705882%
Address: By:________________________________
One First Union Center
NC 01-56 Its:____________________________
75
<PAGE>
Charlotte, NC 28288 Date:
[BANK SEAL]
Commitment Share: NATIONSBANK, N.A.
23.52941176%
Address: By:________________________________
600 Peachtree Street, N.E.
6th Floor Its:____________________________
GA 1-006-6-25 Date:
Atlanta, GA 30308 [BANK SEAL]
Commitment Share: COMMERZBANK A.G. - ATLANTA AGENCY
23.52941176%
Address: By:________________________________
2 World Financial Center
New York, NY 1281-1050 Its:____________________________
By:________________________________
Its:____________________________
Date:
[BANK SEAL]
Commitment Share: SUNTRUST BANK, ATLANTA
11.76470588%
Address: By:________________________________
9th Floor, 50 Hurt Plaza
Atlanta, GA 30302 Its:____________________________
Date:
[BANK SEAL]
76
<PAGE>
SCHEDULE 2
<TABLE>
<CAPTION>
COMMITMENT
BANK SHARE COMMITMENT
- ---- ----- ----------
<S> <C> <C>
Wachovia Bank, N.A. 23.52941176% $20,000,000.00
First Union National Bank 17.64705882% $15,000,000.00
NationsBank, N.A. 23.52941176% $20,000,000.00
Commerzbank A.G. -
Atlanta Agency 23.52941176% $20,000,000.00
SunTrust Bank, Atlanta 11.76470588% $10,000,000.00
------------ --------------
TOTAL: 100.00000000% $85,000,000.00
</TABLE>
<PAGE>
SCHEDULE 9.06
WEEKS CORPORATION
UNSECURED DEBT AS OF NOVEMBER 1, 1998
<TABLE>
<CAPTION>
BALANCE INTEREST FIXED/ MATURITY BALANCE AT
LENDER BORROWER 1/NOV/98 RATE VARIABLE TYPE DATE MATURITY
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Wilma South Corporation Weeks Tradeport LP $2,000,000 7.00% Fixed Interest 27/Oct/00 $2,000,000
Only
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 10.26
CHANGE IN CONTROL AGREEMENT
This Change in Control Agreement ("Agreement") is entered into this
______ day of February, 1999, by and between Weeks Corporation, a Georgia
corporation, and ________________________________________________
("Executive").
WHEREAS, Executive is employed by Weeks or provides services directly
or indirectly to Weeks as an employee of one, or more than one, Weeks Affiliate;
and
WHEREAS, Weeks desires to continue to retain Executive's services,
trust, confidence and complete and undivided attention if there is any
speculation regarding a Change in Control of Weeks;
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained in this Agreement and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Weeks and Executive
hereby agree as follows:
(S) 1.
Definitions
-----------
1.1 Board. The term "Board" for purposes of this Agreement shall mean the
-----
Board of Directors of Weeks.
1.2 Cause. The term "Cause" for purposes of this Agreement shall mean:
-----
(a) Executive is convicted of any felony or any misdemeanor that the
Board in good faith determines involves moral turpitude;
(b) Executive engages in a fraudulent or dishonest act that materially
damages or prejudices Weeks or a Weeks Affiliate or engages in conduct or
activities materially damaging to the property, business or reputation of
Weeks or a Weeks Affiliate, all as determined by the Board in good faith;
(c) Any act or omission by Executive involving gross malfeasance or
gross negligence in the performance of his duties and responsibilities to
Weeks to the material detriment of Weeks or a Weeks Affiliate, all as
determined by the Board in good faith, which has not been corrected by
Executive (as determined by the Board in good faith) within thirty (30)
days after written notice from the Board of any such act or omission;
(d) Any failure by Executive to comply in any material respect with
any appropriate and proper written policies or directives of Weeks or a
Weeks Affiliate, which failure has a material and adverse effect on the
business or reputation of Weeks or a Weeks Affiliate, all as determined by
the Board in good faith, which has not been corrected by Executive (as
determined by the Board in good faith) within thirty (30) days after
written notice from the Board of such failure;
<PAGE>
(e) Executive's continued habitual insobriety or substance abuse, as
determined by the Board in good faith after written notice from the Board
and after a reasonable opportunity to undergo appropriate treatment for a
reasonable period; or
(f) Any diversion by Executive of any viable and significant business
opportunity from Weeks or a Weeks Affiliate (other than with the prior
written consent of the Board) which Executive effects directly or
indirectly for his own benefit.
1.3 Change in Control. The term "Change in Control" for purposes of this
-----------------
Agreement shall mean:
(a) a "change in control" of Weeks of a nature that would be required
to be reported in response to Item 6(e) of Schedule 14A for a proxy
statement filed under Section 14(a) of the Securities Exchange Act of 1934,
as amended ("1934 Act");
(b) a "person" (as that term is used in Section 14(d)(2) of the 1934
Act) becomes after the effective date of this Agreement the beneficial
owner (as defined in Rule 13d-3 under the 1934 Act) directly or indirectly
of securities representing 50% or more of the combined voting power for
election of directors of the then outstanding securities of Weeks;
(c) the individuals who at the beginning of any period of two
consecutive years or less constitute the Board cease for any reason during
such period to constitute at least a majority of the Board, unless the
election or nomination for election of each new member of the Board was
recommended or approved by vote of at least two-thirds of the members of
the Board then serving as such who were members of the Board at the
beginning of such period;
(d) the shareholders of Weeks approve any dissolution or liquidation
of Weeks or any sale or disposition of 50% or more of the assets or
business of Weeks; or
(e) the shareholders of Weeks approve a merger or consolidation to
which Weeks is a party (other than a merger or consolidation with a wholly-
owned subsidiary of Weeks) or a share exchange in which Weeks will exchange
Weeks shares for shares of another corporation as a result of which the
persons who were shareholders of Weeks immediately before the effective
date of such merger, consolidation or share exchange will have beneficial
ownership of less than 50% of the combined voting power for election of
directors of the surviving corporation immediately following the effective
date of such merger, consolidation or share exchange, based exclusively on
such beneficial ownership of such voting power which is held by such
persons in the surviving corporation immediately following such effective
date in substantially the same proportion by such persons as such
-2-
<PAGE>
person's beneficial ownership in such voting power in Weeks was held
immediately before such effective date.
1.4 Code. The term "Code" for purposes of this Agreement shall mean the
----
Internal Revenue Code of 1986, as amended.
1.5 Confidential or Proprietary Information. The term "Confidential or
---------------------------------------
Proprietary Information" for purposes of this Agreement shall mean any secret,
confidential, or proprietary information of Weeks or a Weeks Affiliate (not
otherwise included in the definition of Trade Secret in (S) 1.13 of this
Agreement) that has not become generally available to the public by the act of
one who has the right to disclose such information without violating any right
of Weeks or a Weeks Affiliate.
1.6 Current Compensation Package. The term "Current Compensation Package"
----------------------------
for purposes of this Agreement shall mean:
(a) Executive's annual salary from Weeks and any Weeks Affiliate
(including any deferrals of such annual salary) as in effect on the date
his employment with Weeks or a Weeks Affiliate terminates or on any date in
the twenty-four (24) month period ending on such date, whichever is
greater; and
(b) the (i) highest average total annual cash bonus paid to Executive
by Weeks and any Weeks Affiliate in any three (3) calendar years (A) in the
five (5) calendar year period which includes the date his employment with
Weeks or a Weeks Affiliate terminates or, if no bonus has been paid before
his employment terminates in such calendar year, (B) in the five (5)
calendar year period immediately preceding the calendar year in which his
employment with Weeks or a Weeks Affiliate terminates or (ii) the average
total annual cash bonus that Executive has been paid each calendar year by
Weeks and any Weeks Affiliate if Executive has been paid bonuses in less
than three (3) calendar years; and
(c) the monthly family coverage premium Weeks charges for health care
continuation coverage under Section 602 of the Employee Retirement Income
Security Act of 1974, as amended, as of the date Executive's employment
with Weeks or a Weeks Affiliate terminates multiplied by twelve (12).
If a cash bonus described in (S) 1.6(b) was paid for a period of employment
which was less than a full calendar year, such cash bonus shall be converted
into an annualized cash bonus and taken into account under (S) 1.6(b) as an
annualized bonus. Such annualized cash bonus shall equal the cash bonus
actually paid for a calendar year, divided by the number of days Executive was
employed by Weeks or a Weeks Affiliate in such calendar year and then multiplied
by 365.
1.7 Disability. The term "Disability" for purposes of this Agreement
----------
means that Executive is unable as a result of a mental or physical condition or
illness to perform the essential functions of his job even with reasonable
accommodation for any consecutive 180-day period.
-3-
<PAGE>
1.8 Good Reason. The term "Good Reason" for purposes of this Agreement
-----------
shall mean any of the following acts or failures to act by Weeks or a Weeks
Affiliate which Weeks or such Weeks Affiliate fails to correct within thirty
(30) days after notice thereof by Executive to the Board:
(a) Weeks or any Weeks Affiliate materially diminishes Executive's
basic duties and responsibilities (as distinguished from his title or
reporting relationships) without his express written consent;
(b) Weeks or any Weeks Affiliate materially reduces Executive's annual
salary, reduces his reasonable opportunity for an annual bonus comparable
to his most recent annual bonus opportunity or reduces any other part of
his compensation package (other than a reduction in such package which is
applicable to the compensation package made available to all other senior
executives) without his express written consent, or
(c) Weeks or any Weeks Affiliate transfers Executive's primary work
site, without his express written consent, to a location that is more than
thirty (30) miles from Executive's primary work site on the date of this
Agreement or, if Executive consents to a transfer to a new work site, that
is more than thirty (30) from such new work site.
If Executive consents in writing to any change under this (S) 1.8, such consent
shall be irrevocable.
1.9 Industrial or Office Property. The term "Industrial or Office
-----------------------------
Property" for purposes of this Agreement shall mean any real property on which a
distribution facility, service center or office building development, or any
combination of the foregoing, has been constructed or is now or hereafter
proposed to be constructed (for example, and not by way of limitation, a
property of the type managed by Weeks or a Weeks Affiliate).
1.10 Managerial Responsibilities. The term "Managerial Responsibilities"
---------------------------
for purposes of this Agreement means managerial and supervisory responsibilities
and duties that are substantially the same as those Executive is performing for
Weeks or a Weeks Affiliate on the effective date of this Agreement.
1.11 Restricted Period. The term "Restricted Period" for purposes of this
-----------------
Agreement shall mean the period which starts on the date Executive's employment
by Weeks or a Weeks Affiliate terminates under circumstances which create an
obligation for Weeks under (S) 2 of this Agreement and which ends (a)(i) 270
days after such termination date or, exclusively for purposes of (S) 3(b) of
this Agreement and (S) 4 of this Agreement, (ii) 540 days after such termination
date or (b) on the first date following such a termination on which Weeks
breaches any obligation to Executive under (S) 2 of this Agreement, whichever
period is shorter.
-4-
<PAGE>
1.12 Territory. The term "Territory" for purposes of this Agreement shall
---------
mean the area within a thirty (30) mile radius of any Industrial or Office
Property that Weeks or a Weeks Affiliate has developed, operated, managed,
leased, constructed, or landscaped, or is in the process of developing,
operating, managing, leasing, constructing or landscaping, or has entered into a
binding, written agreement to do so on the effective date of this Agreement.
1.13 Trade Secret. The term "Trade Secret" for purposes of this Agreement
------------
shall mean information, including, but not limited to, technical or nontechnical
data, a formula, a pattern, a compilation, a program, a device, a method, a
technique, a drawing, a process, financial data, financial plans, product plans,
or a list of actual or potential customers or suppliers that:
(a) derives economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by proper means by,
other persons who can obtain economic value from its disclosure or use, and
(b) is the subject of reasonable efforts by Weeks or a Weeks Affiliate
to maintain its secrecy.
1.14 Weeks. The term "Weeks" for purposes of this Agreement shall mean
-----
Weeks Corporation and any successor to Weeks.
1.15 Weeks Affiliate. The term "Weeks Affiliate" for purposes of this
---------------
Agreement shall mean Weeks Realty, L.P., and any successor to Weeks Realty,
L.P., Weeks Realty Services, Inc. and any successor to Weeks Realty Services,
Inc., and Weeks Construction Services, Inc. and any successor to Weeks
Construction Services, Inc., and any organization whose employees would be
treated as employees of Weeks, Weeks Realty L.P., Weeks Realty Services, Inc.,
or Weeks Construction Services, Inc. under Section 414(b) or Section 414(c) of
the Code if "50 percent" were substituted for "80 percent" in the income tax
regulations under Code Section 414(b) or Code Section 414(c).
(S) 2.
Compensation
------------
(a) If Weeks or a Weeks Affiliate terminates Executive's employment
without Cause (i) during the sixty (60) day period which ends on the date
Weeks enters into any binding, written agreement which will effect a Change
in Control if approved by Weeks' shareholders or (ii) during the period
which starts on the date on which Weeks enters into any such agreement and
ends on the date such agreement terminates or on the effective date of the
related Change in Control, whichever comes first or (iii) during the one
hundred and twenty (120) day period that ends on the effective date of a
Change in Control (if no binding, written agreement had been entered into
by Weeks which effected such Change in Control),
-5-
<PAGE>
(b) if Executive resigns for Good Reason during any period described
in (S) 2(a) of this Agreement, or
(c) if Weeks or a Weeks Affiliate terminates Executive's employment
without Cause or if Executive resigns for Good Reason within the twenty-
four (24) month period that ends on the second anniversary of the effective
date of a Change in Control, then:
(1) Weeks shall pay Executive 1.5 times his Current Compensation
Package in cash in a lump sum within ninety (90) days after the date
his employment so terminates or within thirty (30) days after a Change
in Control, whichever comes first, if Executive's employment
terminates before a Change in Control or, if Executive's employment
terminates on or after a Change in Control, within thirty (30) days
after his employment so terminates, and
(2) each outstanding stock option granted to Executive by Weeks
shall become fully vested and exercisable on the date his employment
so terminates and shall remain exercisable for the remaining term of
each such option (as if Executive had remained employed by Weeks or a
Weeks Affiliate) subject to the same terms and conditions as if
Executive had remained employed by Weeks or a Weeks Affiliate for such
term or such period (other than any term or condition which gives
Weeks the right to cancel any such option) and any restrictions on any
outstanding restricted stock grants to Executive by Weeks immediately
shall expire and Executive's right to such stock shall be
nonforfeitable.
(d) Executive expressly waives his right, if any, to have any payment
made under this (S) 2 taken into account to increase the benefits otherwise
payable to, or on behalf of, Executive under any employee benefit plan
maintained by Weeks or a Weeks Affiliate.
(e) Executive agrees that Weeks will have no obligation to Executive
under this (S) 2 if his employment terminates exclusively as a result of
his death or Disability.
(S) 3.
Noncompetition
--------------
(a) No Competitive Activity. Absent the Board's consent, Executive
-----------------------
shall not, during the Restricted Period and within the Territory, serve as
an owner, partner, employee, agent, consultant, advisor, contractor,
salesman, stockholder, investor, officer or director, or engage in any
Managerial Responsibilities, for or on behalf of, any corporation,
partnership, venture, or other business entity that engages directly or
indirectly in the development, operation, management, leasing,
construction, or landscaping of an Industrial or Office Property.
-6-
<PAGE>
(b) No Solicitation of Customers or Clients. Executive shall not
---------------------------------------
during the Restricted Period solicit any customer or client of Weeks or any
Weeks Affiliate with whom Executive had any material business contact
during the two (2) year period which ends on the date his employment by
Weeks or a Weeks Affiliate terminates for the purpose of competing with
Weeks or any Weeks Affiliate for any reason, either individually, or as an
owner, partner, employee, agent, consultant, advisor, contractor, salesman,
stockholder, investor, officer or director of, or service provider to, any
corporation, partnership, venture or other business entity.
(S) 4.
Antipirating of Employees
-------------------------
Executive will not during the Restricted Period employ or seek to
employ on his own behalf or on behalf of any other person, firm or corporation
that engages, directly or indirectly, in the development, operation, management,
leasing, construction, or landscaping of an Industrial or Office Property, any
person who was employed by Weeks or a Weeks Affiliate in an executive,
managerial, or supervisory capacity during the term of Executive's employment by
Weeks or a Weeks Affiliate, with whom Executive had business dealings during the
two (2) year period which ends on the date Executive's employment by Weeks or a
Weeks Affiliate terminates (whether or not such employee would commit a breach
of contract), and who has not ceased to be employed by Weeks or a Weeks
Affiliate for a period of at least one (1) year.
(S) 5.
Trade Secrets and Confidential Information
------------------------------------------
Executive hereby agrees that he will hold in a fiduciary capacity for
the benefit of Weeks and each Weeks Affiliate, and will not directly or
indirectly use or disclose, any Trade Secret that Executive may have acquired
during the term of his employment by Weeks or a Weeks Affiliate for so long as
such information remains a Trade Secret.
Executive in addition agrees that during the Restricted Period he will
hold in a fiduciary capacity for the benefit of Weeks and each Weeks Affiliate,
and will not directly or indirectly use or disclose, any Confidential or
Proprietary Information that Executive may have acquired (whether or not
developed or compiled by Executive and whether or not Executive was authorized
to have access to such information) during the term of, in the course of, or as
a result of his employment by Weeks or a Weeks Affiliate.
(S) 6.
Reasonable and Necessary Restrictions
-------------------------------------
Executive acknowledges that the restrictions, prohibitions and other
provisions set forth in this Agreement, including without limitation the
Territory and Restricted Period, are reasonable, fair and equitable in scope,
terms and duration; are
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<PAGE>
necessary to protect the legitimate business interests of Weeks; and are a
material inducement to Weeks to enter into this Agreement. Executive covenants
that he will not challenge the enforceability of this Agreement nor will he
raise any equitable defense to its enforcement.
(S) 7.
Specific Performance
--------------------
Executive acknowledges that the obligations undertaken by him pursuant
to this Agreement are unique and that Weeks likely will have no adequate remedy
at law if Executive shall fail to perform any of his obligations under this
Agreement, and Executive therefore confirms that Weeks' right to specific
performance of the terms of this Agreement is essential to protect the rights
and interests of Weeks. Accordingly, in addition to any other remedies that
Weeks may have at law or in equity, Weeks will have the right to have all
obligations, covenants, agreements and other provisions of this Agreement
specifically performed by Executive, and Weeks will have the right to obtain
preliminary and permanent injunctive relief to secure specific performance and
to prevent a breach or contemplated breach of this Agreement by Executive, and
Executive submits to the jurisdiction of the courts of the State of Georgia for
this purpose.
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<PAGE>
(S) 8.
Tax Protection
--------------
If Weeks or Weeks' accountants determine that the payments called for
under this Agreement or any other payments or benefits made available to
Executive by Weeks or a Weeks Affiliate will result in Executive being subject
to an excise tax under Section 4999 of the Code and/or if such an excise tax is
assessed against Executive as a result of such payments or other benefits, Weeks
shall make a Gross Up Payment (as defined in this (S) 8) to or on behalf of
Executive as and when such determination(s) and assessment(s), as appropriate,
are made, provided Executive takes such action (other than waiving his right to
any payments or benefits) as Weeks reasonably requests under the circumstances
to mitigate or challenge such tax; provided, however, if Weeks or Weeks'
accountants makes such a determination and, further, determine that Executive
will not be subject to any such tax if he waives his right to receive a part of
such payments and such part does not exceed $25,000, Executive agrees to
irrevocably waive his right to receive such part if an independent accountant or
lawyer retained by Executive and paid by Weeks agrees with the determination
made by Weeks or Weeks' accountants. A "Gross Up Payment" for purposes of this
Agreement shall mean a payment to or on behalf of Executive which shall be
sufficient to pay (i) any excise tax described in this (S) 8 in full, (ii) any
federal, state and local income tax and social security or other employment tax
on the payment made to pay such excise tax as well as any additional excise tax
on such payment and (iii) any interest or penalties assessed by the Internal
Revenue Service on Executive if such interest or penalties are attributable to
Weeks' failure to comply with its obligations under this (S) 8 or applicable
law. Any determination under this (S) 8 by Weeks or Weeks' accountants shall be
made in accordance with Section 280G of the Code and any applicable related
regulations (whether proposed, temporary or final) and any related Internal
Revenue Service rulings and any related case law and, if Weeks reasonably
requests that Executive take action to mitigate or challenge, or to mitigate and
challenge, any such tax or assessment and Executive complies with such request,
Weeks shall provide Executive with such information and such expert advice and
assistance from Weeks' accountants, lawyers and other advisors as he may
reasonably request and shall pay for all expenses incurred in effecting such
compliance and any related fines, penalties, interest and other assessments.
(S) 9.
Miscellaneous Provisions
------------------------
9.1 Assignment. This Agreement is for the personal services of Executive,
----------
and the rights and obligations of Executive under this Agreement are not
assignable or delegable in whole or in part by Executive without the prior
written consent of Weeks. This Agreement is assignable in whole or in part to
any parent, subsidiaries, or affiliates of Weeks, but only if such person or
entity is financially capable of fulfilling the obligations of Weeks under this
Agreement and Weeks as part of any Change in Control transaction shall assign
Weeks' obligations under this Agreement to Weeks' successor and such successor
shall expressly agree to such assignment or Weeks on the date of the Change in
Control (without any further action on the part of Executive) shall take the
action called for in (S) 2 of
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<PAGE>
this Agreement as if Executive had been terminated without Cause without regard
to whether his employment actually has terminated.
9.2 Governing Law. This Agreement will be governed by and construed under
-------------
the laws of the State of Georgia (without reference to the choice of law
principles thereof). Executive consents to jurisdiction and venue in the state
and federal courts of the State of Georgia for any action arising from a dispute
under this Agreement, and for any such action brought in such a court, expressly
waives any defense he might otherwise have based on lack of personal
jurisdiction or improper venue, or that the action has been brought in an
inconvenient forum.
9.3 Counterparts. This Agreement may be executed in counterparts, each of
------------
which will be deemed an original, but all of which together will constitute one
and the same instrument.
9.4 Headings, References. The headings and captions used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
9.5 Attorneys Fees. If any action at law or in equity is necessary for
--------------
Executive to enforce or interpret the terms of this Agreement, Weeks shall pay
Executive's reasonable attorneys' and other reasonable expenses incurred with
respect to such action. If any other action is taken with respect to this
Agreement, Weeks shall bear its own attorneys' fees and expenses and Executive
shall bear his own attorneys' fees and expenses.
9.6 Amendments and Waivers. Except as otherwise specified in this
----------------------
Agreement, this Agreement may be amended, and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of Weeks and
Executive.
9.7 Severability. Any provision of this Agreement held to be
------------
unenforceable under applicable law will be enforced to the maximum extent
possible, and the balance of this Agreement will remain in full force and
effect.
9.8 Entire Agreement. This Agreement constitutes the entire understanding
----------------
and agreement of Weeks and Executive with respect to the transactions
contemplated in this Agreement, and supersedes all prior understandings and
agreements between Weeks and Executive with respect to such transactions.
9.9 Notices. Any notice required hereunder to be given by either Weeks or
-------
Executive will be in writing and will be deemed effectively given upon personal
delivery to the party to be notified or five (5) days after deposit with the
United States Post office by registered or certified mail, postage prepaid, to
the other party at the address set forth below or to such other address as
either party may from time to time designate by ten (10) days advance written
notice pursuant to this (S) 9.9. All such written communication will be
directed as follows:
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<PAGE>
If to Weeks:
Weeks Corporation
4497 Park Drive
Norcross, Georgia 30093
Attention: Chief Executive Officer
If to Executive:
9.10 Binding Effect. This Agreement shall be for the benefit of, and shall
--------------
be binding upon, Weeks and Executive and their respective heirs, personal
representatives, legal representatives, successors and assigns, subject,
however, to the provisions in (S) 9.1 of this Agreement.
9.11 Not an Employment Contract. This Agreement is not an employment
--------------------------
contract and shall not give Executive the right to continue in employment by
Weeks or a Weeks Affiliate for any period of time or from time to time.
Moreover, this Agreement shall not adversely affect the right of Weeks or a
Weeks Affiliate to terminate Executive's employment with or without cause at any
time.
IN WITNESS WHEREOF, Weeks and Executive have executed this Agreement
effective as of the date first above written.
WEEKS CORPORATION
By:________________________________
Chief Executive Officer
EXECUTIVE
--------------------------------
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EXHIBIT 10.27
CHANGE IN CONTROL AGREEMENT
This Change in Control Agreement ("Agreement") is entered into this
______ day of February, 1999, by and between Weeks Corporation, a Georgia
corporation, and ________________________________________________ ("Executive").
WHEREAS, Executive is employed by Weeks or provides services directly
or indirectly to Weeks as an employee of one, or more than one, Weeks Affiliate;
and
WHEREAS, Weeks desires to continue to retain Executive's services,
trust, confidence and complete and undivided attention if there is any
speculation regarding a Change in Control of Weeks;
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained in this Agreement and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Weeks and Executive
hereby agree as follows:
(S) 1.
Definitions
-----------
1.1 Board. The term "Board" for purposes of this Agreement shall mean the
-----
Board of Directors of Weeks.
1.2 Cause. The term "Cause" for purposes of this Agreement shall mean:
-----
(a) Executive is convicted of any felony or any misdemeanor that the
Board in good faith determines involves moral turpitude;
(b) Executive engages in a fraudulent or dishonest act that materially
damages or prejudices Weeks or a Weeks Affiliate or engages in conduct or
activities materially damaging to the property, business or reputation of
Weeks or a Weeks Affiliate, all as determined by the Board in good faith;
(c) Any act or omission by Executive involving gross malfeasance or
gross negligence in the performance of his duties and responsibilities to
Weeks to the material detriment of Weeks or a Weeks Affiliate, all as
determined by the Board in good faith, which has not been corrected by
Executive (as determined by the Board in good faith) within thirty (30)
days after written notice from the Board of any such act or omission;
(d) Any failure by Executive to comply in any material respect with
any appropriate and proper written policies or directives of Weeks or a
Weeks Affiliate, which failure has a material and adverse effect on the
business or reputation of Weeks or a Weeks Affiliate, all as determined by
the Board in good faith, which has not been corrected by Executive (as
determined by the Board in good faith) within thirty (30) days after
written notice from the Board of such failure;
<PAGE>
(e) Executive's continued habitual insobriety or substance abuse, as
determined by the Board in good faith after written notice from the Board
and after a reasonable opportunity to undergo appropriate treatment for a
reasonable period; or
(f) Any diversion by Executive of any viable and significant business
opportunity from Weeks or a Weeks Affiliate (other than with the prior
written consent of the Board) which Executive effects directly or
indirectly for his own benefit.
1.3 Change in Control. The term "Change in Control" for purposes of this
-----------------
Agreement shall mean:
(a) a "change in control" of Weeks of a nature that would be required
to be reported in response to Item 6(e) of Schedule 14A for a proxy
statement filed under Section 14(a) of the Securities Exchange Act of 1934,
as amended ("1934 Act");
(b) a "person" (as that term is used in Section 14(d)(2) of the 1934
Act) becomes after the effective date of this Agreement the beneficial
owner (as defined in Rule 13d-3 under the 1934 Act) directly or indirectly
of securities representing 50% or more of the combined voting power for
election of directors of the then outstanding securities of Weeks;
(c) the individuals who at the beginning of any period of two
consecutive years or less constitute the Board cease for any reason during
such period to constitute at least a majority of the Board, unless the
election or nomination for election of each new member of the Board was
recommended or approved by vote of at least two-thirds of the members of
the Board then serving as such who were members of the Board at the
beginning of such period;
(d) the shareholders of Weeks approve any dissolution or liquidation
of Weeks or any sale or disposition of 50% or more of the assets or
business of Weeks; or
(e) the shareholders of Weeks approve a merger or consolidation to
which Weeks is a party (other than a merger or consolidation with a wholly-
owned subsidiary of Weeks) or a share exchange in which Weeks will exchange
Weeks shares for shares of another corporation as a result of which the
persons who were shareholders of Weeks immediately before the effective
date of such merger, consolidation or share exchange will have beneficial
ownership of less than 50% of the combined voting power for election of
directors of the surviving corporation immediately following the effective
date of such merger, consolidation or share exchange based exclusively on
such beneficial ownership of such voting power which is held by such
persons in the surviving corporation immediately following such effective
date in substantially the same proportion by such persons as such
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<PAGE>
person's beneficial ownership in such voting power in Weeks was held
immediately before such effective date.
1.4 Code. The term "Code" for purposes of this Agreement shall mean the
----
Internal Revenue Code of 1986, as amended.
1.5 Confidential or Proprietary Information. The term "Confidential or
---------------------------------------
Proprietary Information" for purposes of this Agreement shall mean any secret,
confidential, or proprietary information of Weeks or a Weeks Affiliate (not
otherwise included in the definition of Trade Secret in (S) 1.13 of this
Agreement) that has not become generally available to the public by the act of
one who has the right to disclose such information without violating any right
of Weeks or a Weeks Affiliate.
1.6 Current Compensation Package. The term "Current Compensation Package"
----------------------------
for purposes of this Agreement shall mean:
(a) Executive's annual salary from Weeks and any Weeks Affiliate
(including any deferrals of such annual salary) as in effect on the date
his employment with Weeks or a Weeks Affiliate terminates or on any date in
the twenty-four (24) month period ending on such date, whichever is
greater; and
(b) the (i) highest average total annual cash bonus paid to Executive
by Weeks and any Weeks Affiliate in any three (3) calendar years (A) in the
five (5) calendar year period which includes the date his employment with
Weeks or a Weeks Affiliate terminates or, if no bonus has been paid before
his employment terminates in such calendar year, (B) in the five (5)
calendar year period immediately preceding the calendar year in which his
employment with Weeks or a Weeks Affiliate terminates or (ii) the average
total annual cash bonus that Executive has been paid each calendar year by
Weeks and any Weeks Affiliate if Executive has been paid bonuses in less
than three (3) calendar years; and
(c) the monthly family coverage premium Weeks charges for health care
continuation coverage under Section 602 of the Employee Retirement Income
Security Act of 1974, as amended, as of the date Executive's employment
with Weeks or a Weeks Affiliate terminates multiplied by twelve (12).
If a cash bonus described in (S) 1.6(b) was paid for a period of employment
which was less than a full calendar year, such cash bonus shall be converted
into an annualized cash bonus and taken into account under (S) 1.6(b) as an
annualized bonus. Such annualized cash bonus shall equal the cash bonus
actually paid for a calendar year, divided by the number of days Executive was
employed by Weeks or a Weeks Affiliate in such calendar year and then multiplied
by 365.
1.7 Disability. The term "Disability" for purposes of this Agreement
----------
means that Executive is unable as a result of a mental or physical condition or
illness to perform the essential functions of his job even with reasonable
accommodation for any consecutive 180-day period.
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<PAGE>
1.8 Good Reason. The term "Good Reason" for purposes of this Agreement
-----------
shall mean any of the following acts or failures to act by Weeks or a Weeks
Affiliate which Weeks or such Weeks Affiliate fails to correct within thirty
(30) days after notice thereof by Executive to the Board:
(a) Weeks or any Weeks Affiliate materially diminishes Executive's
basic duties and responsibilities or changes his title without his express
written consent;
(b) Weeks or any Weeks Affiliate materially reduces Executive's annual
salary, reduces his reasonable opportunity for an annual bonus comparable
to his most recent annual bonus opportunity or reduces any other part of
his compensation package (other than a reduction in such package which is
applicable to the compensation package made available to all other senior
executives) without his express written consent, or
(c) Weeks or any Weeks Affiliate transfers Executive's primary work
site, without his express written consent, to a location that is more than
thirty (30) miles from Executive's primary work site on the date of this
Agreement or, if Executive consents to a transfer to a new work site, that
is more than thirty (30) from such new work site.
If Executive consents in writing to any change under this (S) 1.8, such consent
shall be irrevocable.
1.9 Industrial or Office Property. The term "Industrial or Office
-----------------------------
Property" for purposes of this Agreement shall mean any real property on which a
distribution facility, service center or office building development, or any
combination of the foregoing, has been constructed or is now or hereafter
proposed to be constructed (for example, and not by way of limitation, a
property of the type managed by Weeks or a Weeks Affiliate).
1.10 Managerial Responsibilities. The term "Managerial Responsibilities"
---------------------------
for purposes of this Agreement means managerial and supervisory responsibilities
and duties that are substantially the same as those Executive is performing for
Weeks or a Weeks Affiliate on the effective date of this Agreement.
1.11 Restricted Period. The term "Restricted Period" for purposes of this
-----------------
Agreement shall mean the period which starts on the date Executive's employment
by Weeks or a Weeks Affiliate terminates under circumstances which create an
obligation for Weeks under (S) 2 of this Agreement and which ends (a)(i) on the
first anniversary of such termination date or, exclusively for purposes of (S)
3(b) of this Agreement and (S) 4 of this Agreement, (ii) on the second
anniversary of such termination date or (b) on the first date following such a
termination on which Weeks breaches any obligation to Executive under (S) 2 of
this Agreement, whichever period is shorter.
1.12 Territory. The term "Territory" for purposes of this Agreement shall
---------
mean the area within a thirty (30) mile radius of any Industrial or Office
Property that Weeks or a
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<PAGE>
Weeks Affiliate has developed, operated, managed, leased, constructed, or
landscaped, or is in the process of developing, operating, managing, leasing,
constructing or landscaping, or has entered into a binding, written agreement to
do so, on the effective date of this Agreement.
1.13 Trade Secret. The term "Trade Secret" for purposes of this Agreement
------------
shall mean information, including, but not limited to, technical or nontechnical
data, a formula, a pattern, a compilation, a program, a device, a method, a
technique, a drawing, a process, financial data, financial plans, product plans,
or a list of actual or potential customers or suppliers that:
(a) derives economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by proper means by,
other persons who can obtain economic value from its disclosure or use, and
(b) is the subject of reasonable efforts by Weeks or a Weeks Affiliate
to maintain its secrecy.
1.14 Weeks. The term "Weeks" for purposes of this Agreement shall mean
-----
Weeks Corporation and any successor to Weeks.
1.15 Weeks Affiliate. The term "Weeks Affiliate" for purposes of this
---------------
Agreement shall mean Weeks Realty, L.P., and any successor to Weeks Realty,
L.P., Weeks Realty Services, Inc. and any successor to Weeks Realty Services,
Inc., and Weeks Construction Services, Inc. and any successor to Weeks
Construction Services, Inc., and any organization whose employees would be
treated as employees of Weeks, Weeks Realty L.P., Weeks Realty Services, Inc.,
or Weeks Construction Services, Inc. under Section 414(b) or Section 414(c) of
the Code if "50 percent" were substituted for "80 percent" in the income tax
regulations under Code Section 414(b) or Code Section 414(c).
(S) 2.
Compensation
------------
(a) If Weeks or a Weeks Affiliate terminates Executive's employment
without Cause (i) during the sixty (60) day period which ends on the date
Weeks enters into any binding, written agreement which will effect a Change
in Control if approved by Weeks' shareholders or (ii) during the period
which starts on the date on which Weeks enters into any such agreement and
ends on the date such agreement terminates or on the effective date of the
related Change in Control, whichever comes first or (iii) during the one
hundred and twenty (120) day period that ends on the effective date of a
Change in Control (if no binding, written agreement had been entered into
by Weeks which effected such Change in Control),
(b) if Executive resigns for Good Reason during any period described
in (S) 2(a) of this Agreement,
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<PAGE>
(c) if Weeks or a Weeks Affiliate terminates Executive's employment
without Cause or if Executive resigns for any reason within the twelve (12)
month period that ends on the first anniversary of the effective date of a
Change in Control, or
(d) if Weeks or a Weeks Affiliate terminates Executive's employment
without Cause or if Executive resigns for Good Reason within the twelve
(12) month period that ends on the second anniversary of the effective date
of a Change in Control, then:
(1) Weeks shall pay Executive 2.5 times his Current Compensation
Package in cash in a lump sum within ninety (90) days after the date
his employment so terminates or within thirty (30) days after a Change
in Control, whichever comes first, if Executive's employment
terminates before a Change in Control or, if Executive's employment
terminates on or after a Change in Control, within thirty (30) days
after his employment so terminates, and
(2) each outstanding stock option granted to Executive by Weeks
shall become fully vested and exercisable on the date his employment
so terminates and shall remain exercisable for the remaining term of
each such option (as if Executive had remained employed by Weeks or a
Weeks Affiliate) subject to the same terms and conditions as if
Executive had remained employed by Weeks or a Weeks Affiliate for such
term or such period (other than any term or condition which gives
Weeks the right to cancel any such option) and any restrictions on any
outstanding restricted stock grants to Executive by Weeks immediately
shall expire and Executive's right to such stock shall be
nonforfeitable.
(e) Executive expressly waives his right, if any, to have any payment
made under this (S) 2 taken into account to increase the benefits otherwise
payable to, or on behalf of, Executive under any employee benefit plan
maintained by Weeks or a Weeks Affiliate.
(f) Executive agrees that Weeks will have no obligation to Executive
under this (S) 2 if his employment terminates exclusively as a result of his
death or Disability.
(S) 3.
Noncompetition
--------------
(a) No Competitive Activity. Absent the Board's consent, Executive
-----------------------
shall not, during the Restricted Period and within the Territory, serve as
an owner, partner, employee, agent, consultant, advisor, contractor,
salesman, stockholder, investor, officer or director, or engage in any
Managerial Responsibilities, for or on behalf of, any corporation,
partnership, venture, or other business entity that engages directly or
indirectly in the development, operation, management, leasing,
construction, or landscaping of an Industrial or Office Property.
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<PAGE>
(b) No Solicitation of Customers or Clients. Executive shall not
---------------------------------------
during the Restricted Period solicit any customer or client of Weeks or any
Weeks Affiliate with whom Executive had any material business contact
during the two (2) year period which ends on the date his employment by
Weeks or a Weeks Affiliate terminates for the purpose of competing with
Weeks or any Weeks Affiliate for any reason, either individually, or as an
owner, partner, employee, agent, consultant, advisor, contractor, salesman,
stockholder, investor, officer or director of, or service provider to, any
corporation, partnership, venture or other business entity.
(S) 4.
Antipirating of Employees
-------------------------
Executive will not during the Restricted Period employ or seek to
employ on his own behalf or on behalf of any other person, firm or corporation
that engages, directly or indirectly, in the development, operation, management,
leasing, construction, or landscaping of an Industrial or Office Property, any
person who was employed by Weeks or a Weeks Affiliate in an executive,
managerial, or supervisory capacity during the term of Executive's employment by
Weeks or a Weeks Affiliate, with whom Executive had business dealings during the
two (2) year period which ends on the date Executive's employment by Weeks or a
Weeks Affiliate terminates (whether or not such employee would commit a breach
of contract), and who has not ceased to be employed by Weeks or a Weeks
Affiliate for a period of at least one (1) year.
(S) 5.
Trade Secrets and Confidential Information
------------------------------------------
Executive hereby agrees that he will hold in a fiduciary capacity for
the benefit of Weeks and each Weeks Affiliate, and will not directly or
indirectly use or disclose, any Trade Secret that Executive may have acquired
during the term of his employment by Weeks or a Weeks Affiliate for so long as
such information remains a Trade Secret.
Executive in addition agrees that during the Restricted Period he will
hold in a fiduciary capacity for the benefit of Weeks and each Weeks Affiliate,
and will not directly or indirectly use or disclose, any Confidential or
Proprietary Information that Executive may have acquired (whether or not
developed or compiled by Executive and whether or not Executive was authorized
to have access to such information) during the term of, in the course of, or as
a result of his employment by Weeks or a Weeks Affiliate.
(S) 6.
Reasonable and Necessary Restrictions
-------------------------------------
Executive acknowledges that the restrictions, prohibitions and other
provisions set forth in this Agreement, including without limitation the
Territory and
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<PAGE>
Restricted Period, are reasonable, fair and equitable in scope, terms and
duration; are necessary to protect the legitimate business interests of Weeks;
and are a material inducement to Weeks to enter into this Agreement. Executive
covenants that he will not challenge the enforceability of this Agreement nor
will he raise any equitable defense to its enforcement.
(S) 7.
Specific Performance
--------------------
Executive acknowledges that the obligations undertaken by him pursuant
to this Agreement are unique and that Weeks likely will have no adequate remedy
at law if Executive shall fail to perform any of his obligations under this
Agreement, and Executive therefore confirms that Weeks' right to specific
performance of the terms of this Agreement is essential to protect the rights
and interests of Weeks. Accordingly, in addition to any other remedies that
Weeks may have at law or in equity, Weeks will have the right to have all
obligations, covenants, agreements and other provisions of this Agreement
specifically performed by Executive, and Weeks will have the right to obtain
preliminary and permanent injunctive relief to secure specific performance and
to prevent a breach or contemplated breach of this Agreement by Executive, and
Executive submits to the jurisdiction of the courts of the State of Georgia for
this purpose.
(S) 8.
Tax Protection
--------------
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<PAGE>
If Weeks or Weeks' accountants determine that the payments called for
under this Agreement or any other payments or benefits made available to
Executive by Weeks or a Weeks Affiliate will result in Executive being subject
to an excise tax under Section 4999 of the Code and/or if such an excise tax is
assessed against Executive as a result of such payments or other benefits, Weeks
shall make a Gross Up Payment (as defined in this (S) 8) to or on behalf of
Executive as and when such determination(s) and assessment(s), as appropriate,
are made, provided Executive takes such action (other than waiving his right to
any payments or benefits) as Weeks reasonably requests under the circumstances
to mitigate or challenge such tax; provided, however, if Weeks or Weeks'
accountants makes such a determination and, further, determine that Executive
will not be subject to any such tax if he waives his right to receive a part of
such payments and such part does not exceed $25,000, Executive agrees to
irrevocably waive his right to receive such part if an independent accountant or
lawyer retained by Executive and paid by Weeks agrees with the determination
made by Weeks or Weeks' accountants. A "Gross Up Payment" for purposes of this
Agreement shall mean a payment to or on behalf of Executive which shall be
sufficient to pay (i) any excise tax described in this (S) 8 in full, (ii) any
federal, state and local income tax and social security or other employment tax
on the payment made to pay such excise tax as well as any additional excise tax
on such payment and (iii) any interest or penalties assessed by the Internal
Revenue Service on Executive if such interest or penalties are attributable to
Weeks' failure to comply with its obligations under this (S) 8 or applicable
law. Any determination under this (S) 8 by Weeks or Weeks' accountants shall be
made in accordance with Section 280G of the Code and any applicable related
regulations (whether proposed, temporary or final) and any related Internal
Revenue Service rulings and any related case law and, if Weeks reasonably
requests that Executive take action to mitigate or challenge, or to mitigate and
challenge, any such tax or assessment and Executive complies with such request,
Weeks shall provide Executive with such information and such expert advice and
assistance from Weeks' accountants, lawyers and other advisors as he may
reasonably request and shall pay for all expenses incurred in effecting such
compliance and any related fines, penalties, interest and other assessments.
(S) 9.
Miscellaneous Provisions
------------------------
9.1 Assignment. This Agreement is for the personal services of Executive,
----------
and the rights and obligations of Executive under this Agreement are not
assignable or delegable in whole or in part by Executive without the prior
written consent of Weeks. This Agreement is assignable in whole or in part to
any parent, subsidiaries, or affiliates of Weeks, but only if such person or
entity is financially capable of fulfilling the obligations of Weeks under this
Agreement and Weeks as part of any Change in Control transaction shall assign
Weeks' obligations under this Agreement to Weeks' successor and such successor
shall expressly agree to such assignment or Weeks on the date of the Change in
Control (without any further action on the part of Executive) shall take the
action called for in (S) 2 of this Agreement as if Executive had been terminated
without Cause without regard to whether his employment actually has terminated.
-9-
<PAGE>
9.2 Governing Law. This Agreement will be governed by and construed under
-------------
the laws of the State of Georgia (without reference to the choice of law
principles thereof). Executive consents to jurisdiction and venue in the state
and federal courts of the State of Georgia for any action arising from a dispute
under this Agreement, and for any such action brought in such a court, expressly
waives any defense he might otherwise have based on lack of personal
jurisdiction or improper venue, or that the action has been brought in an
inconvenient forum.
9.3 Counterparts. This Agreement may be executed in counterparts, each of
------------
which will be deemed an original, but all of which together will constitute one
and the same instrument.
9.4 Headings, References. The headings and captions used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
9.5 Attorneys Fees. If any action at law or in equity is necessary for
--------------
Executive to enforce or interpret the terms of this Agreement, Weeks shall pay
Executive's reasonable attorneys' and other reasonable expenses incurred with
respect to such action. If any other action is taken with respect to this
Agreement, Weeks shall bear its own attorneys' fees and expenses and Executive
shall bear his own attorneys' fees and expenses.
9.6 Amendments and Waivers. Except as otherwise specified in this
----------------------
Agreement, this Agreement may be amended, and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of Weeks and
Executive.
9.7 Severability. Any provision of this Agreement held to be
------------
unenforceable under applicable law will be enforced to the maximum extent
possible, and the balance of this Agreement will remain in full force and
effect.
9.8 Entire Agreement. This Agreement constitutes the entire understanding
----------------
and agreement of Weeks and Executive with respect to the transactions
contemplated in this Agreement, and supersedes all prior understandings and
agreements between Weeks and Executive with respect to such transactions.
9.9 Notices. Any notice required hereunder to be given by either Weeks or
-------
Executive will be in writing and will be deemed effectively given upon personal
delivery to the party to be notified or five (5) days after deposit with the
United States Post office by registered or certified mail, postage prepaid, to
the other party at the address set forth below or to such other address as
either party may from time to time designate by ten (10) days advance written
notice pursuant to this (S) 9.9. All such written communication will be
directed as follows:
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<PAGE>
If to Weeks:
Weeks Corporation
4497 Park Drive
Norcross, Georgia 30093
Attention: Chief Financial Officer
If to Executive:
9.10 Binding Effect. This Agreement shall be for the benefit of, and shall
--------------
be binding upon, Weeks and Executive and their respective heirs, personal
representatives, legal representatives, successors and assigns, subject,
however, to the provisions in (S) 9.1 of this Agreement.
9.11 Not an Employment Contract. This Agreement is not an employment
--------------------------
contract and shall not give Executive the right to continue in employment by
Weeks or a Weeks Affiliate for any period of time or from time to time.
Moreover, this Agreement shall not adversely affect the right of Weeks or a
Weeks Affiliate to terminate Executive's employment with or without cause at any
time.
IN WITNESS WHEREOF, Weeks and Executive have executed this Agreement
effective as of the date first above written.
WEEKS CORPORATION
By:________________________________
Chief Financial Officer
EXECUTIVE
-----------------------------------
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<PAGE>
EXHIBIT 10.28
CHANGE IN CONTROL AGREEMENT
This Change in Control Agreement ("Agreement") is entered into this
______ day of February, 1999, by and between Weeks Corporation, a Georgia
corporation, and ________________________________________________ ("Executive").
WHEREAS, Executive is employed by Weeks or provides services directly
or indirectly to Weeks as an employee of one, or more than one, Weeks Affiliate;
and
WHEREAS, Weeks desires to continue to retain Executive's services,
trust, confidence and complete and undivided attention if there is any
speculation regarding a Change in Control of Weeks;
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained in this Agreement and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Weeks and Executive
hereby agree as follows:
(S) 1.
Definitions
-----------
1.1 Board. The term "Board" for purposes of this Agreement shall mean the
-----
Board of Directors of Weeks.
1.2 Cause. The term "Cause" for purposes of this Agreement shall mean:
-----
(a) Executive is convicted of any felony or any misdemeanor that the
Board in good faith determines involves moral turpitude;
(b) Executive engages in a fraudulent or dishonest act that materially
damages or prejudices Weeks or a Weeks Affiliate or engages in conduct or
activities materially damaging to the property, business or reputation of
Weeks or a Weeks Affiliate, all as determined by the Board in good faith;
(c) Any act or omission by Executive involving gross malfeasance or
gross negligence in the performance of his duties and responsibilities to
Weeks to the material detriment of Weeks or a Weeks Affiliate, all as
determined by the Board in good faith, which has not been corrected by
Executive (as determined by the Board in good faith) within thirty (30)
days after written notice from the Board of any such act or omission;
(d) Any failure by Executive to comply in any material respect with
any appropriate and proper written policies or directives of Weeks or a
Weeks Affiliate, which failure has a material and adverse effect on the
business or reputation of Weeks or a Weeks Affiliate, all as determined by
the Board in good faith, which has not been corrected by Executive (as
determined by the Board in good faith) within thirty (30) days after
written notice from the Board of such failure;
<PAGE>
(e) Executive's continued habitual insobriety or substance abuse, as
determined by the Board in good faith after written notice from the Board
and after a reasonable opportunity to undergo appropriate treatment for a
reasonable period; or
(f) Any diversion by Executive of any viable and significant business
opportunity from Weeks or a Weeks Affiliate (other than with the prior
written consent of the Board) which Executive effects directly or
indirectly for his own benefit.
1.3 Change in Control. The term "Change in Control" for purposes of this
-----------------
Agreement shall mean:
(a) a "change in control" of Weeks of a nature that would be required
to be reported in response to Item 6(e) of Schedule 14A for a proxy
statement filed under Section 14(a) of the Securities Exchange Act of 1934,
as amended ("1934 Act");
(b) a "person" (as that term is used in Section 14(d)(2) of the 1934
Act) becomes after the effective date of this Agreement the beneficial
owner (as defined in Rule 13d-3 under the 1934 Act) directly or indirectly
of securities representing 50% or more of the combined voting power for
election of directors of the then outstanding securities of Weeks;
(c) the individuals who at the beginning of any period of two
consecutive years or less constitute the Board cease for any reason during
such period to constitute at least a majority of the Board, unless the
election or nomination for election of each new member of the Board was
recommended or approved by vote of at least two-thirds of the members of
the Board then serving as such who were members of the Board at the
beginning of such period;
(d) the shareholders of Weeks approve any dissolution or liquidation
of Weeks or any sale or disposition of 50% or more of the assets or
business of Weeks; or
(e) the shareholders of Weeks approve a merger or consolidation to
which Weeks is a party (other than a merger or consolidation with a wholly-
owned subsidiary of Weeks) or a share exchange in which Weeks will exchange
Weeks shares for shares of another corporation as a result of which the
persons who were shareholders of Weeks immediately before the effective
date of such merger, consolidation or share exchange will have beneficial
ownership of less than 50% of the combined voting power for election of
directors of the surviving corporation immediately following the effective
date of such merger, consolidation or share exchange, based exclusively on
such beneficial ownership of such voting power which is held by such
persons in the surviving corporation immediately following such effective
date in substantially the same proportion by such persons as such
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<PAGE>
person's beneficial ownership in such voting power in Weeks was held
immediately before such effective date.
1.4 Code. The term "Code" for purposes of this Agreement shall mean the
----
Internal Revenue Code of 1986, as amended.
1.5 Confidential or Proprietary Information. The term "Confidential or
---------------------------------------
Proprietary Information" for purposes of this Agreement shall mean any secret,
confidential, or proprietary information of Weeks or a Weeks Affiliate (not
otherwise included in the definition of Trade Secret in (S) 1.13 of this
Agreement) that has not become generally available to the public by the act of
one who has the right to disclose such information without violating any right
of Weeks or a Weeks Affiliate.
1.6 Current Compensation Package. The term "Current Compensation Package"
----------------------------
for purposes of this Agreement shall mean:
(a) Executive's annual salary from Weeks and any Weeks Affiliate
(including any deferrals of such annual salary) as in effect on the date
his employment with Weeks or a Weeks Affiliate terminates or on any date in
the twenty-four (24) month period ending on such date, whichever is
greater; and
(b) the (i) highest average total annual cash bonus paid to Executive
by Weeks and any Weeks Affiliate in any three (3) calendar years (A) in the
five (5) calendar year period which includes the date his employment with
Weeks or a Weeks Affiliate terminates or, if no bonus has been paid before
his employment terminates in such calendar year, (B) in the five (5)
calendar year period immediately preceding the calendar year in which his
employment with Weeks or a Weeks Affiliate terminates or (ii) the average
total annual cash bonus that Executive has been paid each calendar year by
Weeks and any Weeks Affiliate if Executive has been paid bonuses in less
than three (3) calendar years; and
(c) the monthly family coverage premium Weeks charges for health care
continuation coverage under Section 602 of the Employee Retirement Income
Security Act of 1974, as amended, as of the date Executive's employment
with Weeks or a Weeks Affiliate terminates multiplied by twelve (12).
If a cash bonus described in (S) 1.6(b) was paid for a period of employment
which was less than a full calendar year, such cash bonus shall be converted
into an annualized cash bonus and taken into account under (S) 1.6(b) as an
annualized bonus. Such annualized cash bonus shall equal the cash bonus
actually paid for a calendar year, divided by the number of days Executive was
employed by Weeks or a Weeks Affiliate in such calendar year and then multiplied
by 365.
1.7 Disability. The term "Disability" for purposes of this Agreement
----------
means that Executive is unable as a result of a mental or physical condition or
illness to perform the essential functions of his job even with reasonable
accommodation for any consecutive 180-day period.
-3-
<PAGE>
1.8 Good Reason. The term "Good Reason" for purposes of this Agreement
-----------
shall mean any of the following acts or failures to act by Weeks or a Weeks
Affiliate which Weeks or such Weeks Affiliate fails to correct within thirty
(30) days after notice thereof by Executive to the Board:
(a) Weeks or any Weeks Affiliate materially diminishes Executive's
basic duties and responsibilities (as distinguished from his title or
reporting relationships) without his express written consent;
(b) Weeks or any Weeks Affiliate materially reduces Executive's annual
salary, reduces his reasonable opportunity for an annual bonus comparable
to his most recent annual bonus opportunity or reduces any other part of
his compensation package (other than a reduction in such package which is
applicable to the compensation package made available to all other senior
executives) without his express written consent, or
(c) Weeks or any Weeks Affiliate transfers Executive's primary work
site, without his express written consent, to a location that is more than
thirty (30) miles from Executive's primary work site on the date of this
Agreement or, if Executive consents to a transfer to a new work site, that
is more than thirty (30) from such new work site.
If Executive consents in writing to any change under this (S) 1.8, such consent
shall be irrevocable.
1.9 Industrial or Office Property. The term "Industrial or Office
-----------------------------
Property" for purposes of this Agreement shall mean any real property on which a
distribution facility, service center or office building development, or any
combination of the foregoing, has been constructed or is now or hereafter
proposed to be constructed (for example, and not by way of limitation, a
property of the type managed by Weeks or a Weeks Affiliate).
1.10 Managerial Responsibilities. The term "Managerial Responsibilities"
---------------------------
for purposes of this Agreement means managerial and supervisory responsibilities
and duties that are substantially the same as those Executive is performing for
Weeks or a Weeks Affiliate on the effective date of this Agreement.
1.11 Restricted Period. The term "Restricted Period" for purposes of this
-----------------
Agreement shall mean the period which starts on the date Executive's employment
by Weeks or a Weeks Affiliate terminates under circumstances which create an
obligation for Weeks under (S) 2 of this Agreement and which ends (a)(i) on the
first anniversary of such termination date or, exclusively for purposes of (S)
3(b) of this Agreement and (S) 4 of this Agreement, (ii) on the second
anniversary of such termination date or (b) on the first date following such a
termination on which Weeks breaches any obligation to Executive under (S) 2 of
this Agreement, whichever period is shorter.
-4-
<PAGE>
1.12 Territory. The term "Territory" for purposes of this Agreement shall
---------
mean the area within a thirty (30) mile radius of any Industrial or Office
Property that Weeks or a Weeks Affiliate has developed, operated, managed,
leased, constructed, or landscaped, or is in the process of developing,
operating, managing, leasing, constructing or landscaping, or has entered into a
binding, written agreement to do so on the effective date of this Agreement.
1.13 Trade Secret. The term "Trade Secret" for purposes of this Agreement
------------
shall mean information, including, but not limited to, technical or nontechnical
data, a formula, a pattern, a compilation, a program, a device, a method, a
technique, a drawing, a process, financial data, financial plans, product plans,
or a list of actual or potential customers or suppliers that:
(a) derives economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by proper means by,
other persons who can obtain economic value from its disclosure or use, and
(b) is the subject of reasonable efforts by Weeks or a Weeks Affiliate
to maintain its secrecy.
1.14 Weeks. The term "Weeks" for purposes of this Agreement shall mean
-----
Weeks Corporation and any successor to Weeks.
1.15 Weeks Affiliate. The term "Weeks Affiliate" for purposes of this
---------------
Agreement shall mean Weeks Realty, L.P., and any successor to Weeks Realty,
L.P., Weeks Realty Services, Inc. and any successor to Weeks Realty Services,
Inc., and Weeks Construction Services, Inc. and any successor to Weeks
Construction Services, Inc., and any organization whose employees would be
treated as employees of Weeks, Weeks Realty L.P., Weeks Realty Services, Inc.,
or Weeks Construction Services, Inc. under Section 414(b) or Section 414(c) of
the Code if "50 percent" were substituted for "80 percent" in the income tax
regulations under Code Section 414(b) or Code Section 414(c).
(S) 2.
Compensation
------------
(a) If Weeks or a Weeks Affiliate terminates Executive's employment
without Cause (i) during the sixty (60) day period which ends on the date
Weeks enters into any binding, written agreement which will effect a Change
in Control if approved by Weeks' shareholders or (ii) during the period
which starts on the date on which Weeks enters into any such agreement and
ends on the date such agreement terminates or on the effective date of the
related Change in Control, whichever comes first or (iii) during the one
hundred and twenty (120) day period that ends on the effective date of a
Change in Control (if no binding, written agreement had been entered into
by Weeks which effected such Change in Control),
-5-
<PAGE>
(b) if Executive resigns for Good Reason during any period described
in (S) 2(a) of this Agreement, or
(c) if Weeks or a Weeks Affiliate terminates Executive's employment
without Cause or if Executive resigns for Good Reason within the twenty-
four (24) month period that ends on the second anniversary of the effective
date of a Change in Control, then:
(1) Weeks shall pay Executive 2 times his Current Compensation
Package in cash in a lump sum within ninety (90) days after the date
his employment so terminates or within thirty (30) days after a Change
in Control, whichever comes first, if Executive's employment
terminates before a Change in Control or, if Executive's employment
terminates on or after a Change in Control, within thirty (30) days
after his employment so terminates, and
(2) each outstanding stock option granted to Executive by Weeks
shall become fully vested and exercisable on the date his employment
so terminates and shall remain exercisable for the remaining term of
each such option (as if Executive had remained employed by Weeks or a
Weeks Affiliate) subject to the same terms and conditions as if
Executive had remained employed by Weeks or a Weeks Affiliate for such
term or such period (other than any term or condition which gives
Weeks the right to cancel any such option) and any restrictions on any
outstanding restricted stock grants to Executive by Weeks immediately
shall expire and Executive's right to such stock shall be
nonforfeitable.
(d) Executive expressly waives his right, if any, to have any payment
made under this (S) 2 taken into account to increase the benefits otherwise
payable to, or on behalf of, Executive under any employee benefit plan
maintained by Weeks or a Weeks Affiliate.
(e) Executive agrees that Weeks will have no obligation to Executive
under this (S) 2 if his employment terminates exclusively as a result of
his death or Disability.
(S) 3.
Noncompetition
--------------
(a) No Competitive Activity. Absent the Board's consent, Executive
-----------------------
shall not, during the Restricted Period and within the Territory, serve as
an owner, partner, employee, agent, consultant, advisor, contractor,
salesman, stockholder, investor, officer or director, or engage in any
Managerial Responsibilities, for or on behalf of, any corporation,
partnership, venture, or other business entity that engages directly or
indirectly in the development, operation, management, leasing,
construction, or landscaping of an Industrial or Office Property.
-6-
<PAGE>
(b) No Solicitation of Customers or Clients. Executive shall not
---------------------------------------
during the Restricted Period solicit any customer or client of Weeks or any
Weeks Affiliate with whom Executive had any material business contact
during the two (2) year period which ends on the date his employment by
Weeks or a Weeks Affiliate terminates for the purpose of competing with
Weeks or any Weeks Affiliate for any reason, either individually, or as an
owner, partner, employee, agent, consultant, advisor, contractor, salesman,
stockholder, investor, officer or director of, or service provider to, any
corporation, partnership, venture or other business entity.
(S) 4.
Antipirating of Employees
-------------------------
Executive will not during the Restricted Period employ or seek to
employ on his own behalf or on behalf of any other person, firm or corporation
that engages, directly or indirectly, in the development, operation, management,
leasing, construction, or landscaping of an Industrial or Office Property, any
person who was employed by Weeks or a Weeks Affiliate in an executive,
managerial, or supervisory capacity during the term of Executive's employment by
Weeks or a Weeks Affiliate, with whom Executive had business dealings during the
two (2) year period which ends on the date Executive's employment by Weeks or a
Weeks Affiliate terminates (whether or not such employee would commit a breach
of contract), and who has not ceased to be employed by Weeks or a Weeks
Affiliate for a period of at least one (1) year.
(S) 5.
Trade Secrets and Confidential Information
------------------------------------------
Executive hereby agrees that he will hold in a fiduciary capacity for
the benefit of Weeks and each Weeks Affiliate, and will not directly or
indirectly use or disclose, any Trade Secret that Executive may have acquired
during the term of his employment by Weeks or a Weeks Affiliate for so long as
such information remains a Trade Secret.
Executive in addition agrees that during the Restricted Period he will
hold in a fiduciary capacity for the benefit of Weeks and each Weeks Affiliate,
and will not directly or indirectly use or disclose, any Confidential or
Proprietary Information that Executive may have acquired (whether or not
developed or compiled by Executive and whether or not Executive was authorized
to have access to such information) during the term of, in the course of, or as
a result of his employment by Weeks or a Weeks Affiliate.
(S) 6.
Reasonable and Necessary Restrictions
-------------------------------------
Executive acknowledges that the restrictions, prohibitions and other
provisions set forth in this Agreement, including without limitation the
Territory and Restricted Period, are reasonable, fair and equitable in scope,
terms and duration; are
-7-
<PAGE>
necessary to protect the legitimate business interests of Weeks; and are a
material inducement to Weeks to enter into this Agreement. Executive covenants
that he will not challenge the enforceability of this Agreement nor will he
raise any equitable defense to its enforcement.
(S) 7.
Specific Performance
--------------------
Executive acknowledges that the obligations undertaken by him pursuant
to this Agreement are unique and that Weeks likely will have no adequate remedy
at law if Executive shall fail to perform any of his obligations under this
Agreement, and Executive therefore confirms that Weeks' right to specific
performance of the terms of this Agreement is essential to protect the rights
and interests of Weeks. Accordingly, in addition to any other remedies that
Weeks may have at law or in equity, Weeks will have the right to have all
obligations, covenants, agreements and other provisions of this Agreement
specifically performed by Executive, and Weeks will have the right to obtain
preliminary and permanent injunctive relief to secure specific performance and
to prevent a breach or contemplated breach of this Agreement by Executive, and
Executive submits to the jurisdiction of the courts of the State of Georgia for
this purpose.
-8-
<PAGE>
(S) 8.
Tax Protection
--------------
If Weeks or Weeks' accountants determine that the payments called for
under this Agreement or any other payments or benefits made available to
Executive by Weeks or a Weeks Affiliate will result in Executive being subject
to an excise tax under Section 4999 of the Code and/or if such an excise tax is
assessed against Executive as a result of such payments or other benefits, Weeks
shall make a Gross Up Payment (as defined in this (S) 8) to or on behalf of
Executive as and when such determination(s) and assessment(s), as appropriate,
are made, provided Executive takes such action (other than waiving his right to
any payments or benefits) as Weeks reasonably requests under the circumstances
to mitigate or challenge such tax; provided, however, if Weeks or Weeks'
accountants makes such a determination and, further, determine that Executive
will not be subject to any such tax if he waives his right to receive a part of
such payments and such part does not exceed $25,000, Executive agrees to
irrevocably waive his right to receive such part if an independent accountant or
lawyer retained by Executive and paid by Weeks agrees with the determination
made by Weeks or Weeks' accountants. A "Gross Up Payment" for purposes of this
Agreement shall mean a payment to or on behalf of Executive which shall be
sufficient to pay (i) any excise tax described in this (S) 8 in full, (ii) any
federal, state and local income tax and social security or other employment tax
on the payment made to pay such excise tax as well as any additional excise tax
on such payment and (iii) any interest or penalties assessed by the Internal
Revenue Service on Executive if such interest or penalties are attributable to
Weeks' failure to comply with its obligations under this (S) 8 or applicable
law. Any determination under this (S) 8 by Weeks or Weeks' accountants shall be
made in accordance with Section 280G of the Code and any applicable related
regulations (whether proposed, temporary or final) and any related Internal
Revenue Service rulings and any related case law and, if Weeks reasonably
requests that Executive take action to mitigate or challenge, or to mitigate and
challenge, any such tax or assessment and Executive complies with such request,
Weeks shall provide Executive with such information and such expert advice and
assistance from Weeks' accountants, lawyers and other advisors as he may
reasonably request and shall pay for all expenses incurred in effecting such
compliance and any related fines, penalties, interest and other assessments.
(S) 9.
Miscellaneous Provisions
------------------------
9.1 Assignment. This Agreement is for the personal services of Executive,
----------
and the rights and obligations of Executive under this Agreement are not
assignable or delegable in whole or in part by Executive without the prior
written consent of Weeks. This Agreement is assignable in whole or in part to
any parent, subsidiaries, or affiliates of Weeks, but only if such person or
entity is financially capable of fulfilling the obligations of Weeks under this
Agreement and Weeks as part of any Change in Control transaction shall assign
Weeks' obligations under this Agreement to Weeks' successor and such successor
shall expressly agree to such assignment or Weeks on the date of the Change in
Control (without any further action on the part of Executive) shall take the
action called for in (S) 2 of
-9-
<PAGE>
this Agreement as if Executive had been terminated without Cause without regard
to whether his employment actually has terminated.
9.2 Governing Law. This Agreement will be governed by and construed under
-------------
the laws of the State of Georgia (without reference to the choice of law
principles thereof). Executive consents to jurisdiction and venue in the state
and federal courts of the State of Georgia for any action arising from a dispute
under this Agreement, and for any such action brought in such a court, expressly
waives any defense he might otherwise have based on lack of personal
jurisdiction or improper venue, or that the action has been brought in an
inconvenient forum.
9.3 Counterparts. This Agreement may be executed in counterparts, each of
------------
which will be deemed an original, but all of which together will constitute one
and the same instrument.
9.4 Headings, References. The headings and captions used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
9.5 Attorneys Fees. If any action at law or in equity is necessary for
--------------
Executive to enforce or interpret the terms of this Agreement, Weeks shall pay
Executive's reasonable attorneys' and other reasonable expenses incurred with
respect to such action. If any other action is taken with respect to this
Agreement, Weeks shall bear its own attorneys' fees and expenses and Executive
shall bear his own attorneys' fees and expenses.
9.6 Amendments and Waivers. Except as otherwise specified in this
----------------------
Agreement, this Agreement may be amended, and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of Weeks and
Executive.
9.7 Severability. Any provision of this Agreement held to be
------------
unenforceable under applicable law will be enforced to the maximum extent
possible, and the balance of this Agreement will remain in full force and
effect.
9.8 Entire Agreement. This Agreement constitutes the entire understanding
----------------
and agreement of Weeks and Executive with respect to the transactions
contemplated in this Agreement, and supersedes all prior understandings and
agreements between Weeks and Executive with respect to such transactions.
9.9 Notices. Any notice required hereunder to be given by either Weeks or
-------
Executive will be in writing and will be deemed effectively given upon personal
delivery to the party to be notified or five (5) days after deposit with the
United States Post office by registered or certified mail, postage prepaid, to
the other party at the address set forth below or to such other address as
either party may from time to time designate by ten (10) days advance written
notice pursuant to this (S) 9.9. All such written communication will be
directed as follows:
-10-
<PAGE>
If to Weeks:
Weeks Corporation
4497 Park Drive
Norcross, Georgia 30093
Attention: Chief Executive Officer
If to Executive:
9.10 Binding Effect. This Agreement shall be for the benefit of, and shall
--------------
be binding upon, Weeks and Executive and their respective heirs, personal
representatives, legal representatives, successors and assigns, subject,
however, to the provisions in (S) 9.1 of this Agreement.
9.11 Not an Employment Contract. This Agreement is not an employment
--------------------------
contract and shall not give Executive the right to continue in employment by
Weeks or a Weeks Affiliate for any period of time or from time to time.
Moreover, this Agreement shall not adversely affect the right of Weeks or a
Weeks Affiliate to terminate Executive's employment with or without cause at any
time.
IN WITNESS WHEREOF, Weeks and Executive have executed this Agreement
effective as of the date first above written.
WEEKS CORPORATION
By:_______________________________
Chief Executive Officer
EXECUTIVE
----------------------------------
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<PAGE>
EXHIBIT 21.1
SUBSIDIARIES OF THE REGISTRANT
DECEMBER 31, 1998
The financial statements of the following entities were consolidated with
those of the Registrant in the consolidated financial statements of the
Registrant incorporated herein as of December 31, 1998:
. Weeks Realty Construction Services, Inc., a Georgia corporation.
The Operating Partnership owns 100% of the common stock.
. Weeks Special Purpose LLC, a Georgia limited liability company.
The Operating Partnership owns 100% of the member interests.
. Weeks SPV Financing LLC, a Georgia limited liability company.
Weeks Special Purpose LLC owns 100% of the member interests.
. Weeks Beacon Centre LLC, a Georgia limited liability company.
The Operating Partnership owns 100% of the member interests.
. Codina/Tradewind, Ltd., a Florida limited partnership.
The Operating Partnership owns a 99.99% limited and general
partnership interest and Weeks Beacon Centre LLC owns a .01%
general partnership interest.
. Codina/Tradewind No. 4, Ltd., a Florida limited partnership.
The Operating Partnership owns a 99.99% limited and general
partnership interest and Weeks Beacon Centre LLC owns a .01%
general partnership interest.
. Raha Associates, Ltd., a Florida limited partnership.
The Operating Partnership owns a 99.99% limited and general
partnership interest and Weeks Beacon Centre LLC owns a .01%
general partnership interest.
. New World Partners Joint Venture, a Florida general partnership.
Codina/Tradewind, Ltd. owns a 50% general partnership interest and
Raha Associates, Ltd. owns a 50% general partnership interest.
. New World Partners Joint Venture Number Two, a Florida general
partnership.
Codina/Tradewind, Ltd. owns a 50% general partnership interest and
Raha Associates, Ltd. owns a 50% general partnership interest.
. New World Partners Joint Venture Number Three, a Florida general
partnership.
Codina/Tradewind, Ltd. owns a 50% general partnership interest and
Raha Associates, Ltd. owns a 50% general partnership interest.
. New World Partners Joint Venture Number Four, a Florida general
partnership.
Codina/Tradewind, No. 4, Ltd., owns a 50% general partnership
interest and Raha Associates, Ltd. owns a 50% general partnership
interest.
<PAGE>
. Weeks P-95 LLC, a Georgia limited liability company.
The Operating Partnership owns 100% of the member interests.
. P-95/Global Limited Partnership, a Georgia limited partnership.
The Operating Partnership owns a 99.9% limited partnership
interest and Weeks P-95 LLC owns a 0.1% general partnership
interest.
. P-95/Fed Limited Partnership, a Georgia limited partnership.
The Operating Partnership owns a 99.9% limited partnership
interest and Weeks P-95 LLC owns a 0.1% general partnership
interest.
. P-95/Three Limited Partnership, a Georgia limited partnership.
The Operating Partnership owns a 99.9% limited partnership
interest and Weeks P-95 LLC owns a 0.1% general partnership
interest.
. Weeks WBP, LLC, a Georgia limited liability company.
The Operating Partnership owns 100% of the member interests.
. Weeks NC Financing Limited Partnership, a Georgia limited
partnership.
The Operating Partnership directly owns a 99% partnership interest
and indirectly owns a 1% partnership interest through its
ownership of Weeks Special Purpose LLC and Weeks SPV Financing
LLC.
. North Point Limited Partnership No. 1, a Florida limited partnership.
The Operating Partnership owns an 85% partnership interest and
Weeks Development Partnership owns a 15% partnership interest.
. BT Options Partners, Ltd., a Florida limited partnership.
The Operating Partnership owns a 95% general partnership interest.
The Operating Partnership accounted for the following entities on the equity
method, at December 31, 1998.
. Weeks Realty Services, Inc., a Georgia corporation.
The Operating Partnership owns 100% of the non-voting common stock
and 1% of the voting common stock.
. Weeks Construction Services, Inc., a Georgia corporation.
The Operating Partnership owns 100% of the non-voting common stock
and 1% of the voting common stock.
. Weeks Development Partnership, a Georgia partnership.
Weeks Construction Services, Inc. and Weeks Realty Services, Inc.
own 100% of the partnership interests.
. Sugarloaf Holdings One, LLC, a Georgia limited liability company.
The Operating Partnership owns a 50% member interest.
. BP One Limited Partnership, a Delaware limited partnership.
The Operating Partnership owns a 49.9% limited partnership
interest and Weeks WBP LLC owns a 0.1% general partnership
interest.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report dated February 26, 1999 and to all references to our
Firm, included in this Form 10-K, into Weeks Realty, L.P.'s previously filed
Registration Statements on Form S-3 (File Nos. 333-32755 and 333-50871).
ARTHUR ANDERSEN LLP
Atlanta, Georgia
March 26, 1999
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<PAGE>
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<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
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<SECURITIES> 0
<RECEIVABLES> 15,316
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0
0
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<INCOME-PRETAX> 44,599
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