EXHIBIT 10.10
NOTE PURCHASE AGREEMENT
MID-AMERICA APARTMENTS, L.P.
0000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
MID-AMERICA APARTMENT COMMUNITIES, INC.
0000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
As of November 24, 1997
The Prudential Insurance Company of America
c/o Prudential Capital Group
Xxx Xxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Ladies and Gentlemen:
The undersigned, Mid-America Apartments, L.P. (the
"Partnership") and Mid-America Apartment Communities, Inc. (the
"REIT"), hereby agree with you as follows:
1. AUTHORIZATION OF ISSUE OF NOTES. The Partnership has
authorized the issuance of its senior unsecured promissory notes
in the aggregate principal amount of the Converted Loans, to be
dated the date of issuance thereof, to mature on the Conversion
Maturity Date, to bear interest on the unpaid balance thereof
from the date thereof until the principal thereof shall have
become due and payable at the Converted Note Rate, and on overdue
payments at the rate specified therein, and to be substantially
in the form of Schedule 1A attached hereto. The term "Notes" as
used herein shall include each such senior unsecured promissory
note delivered pursuant to any provision of this Agreement and
each such senior unsecured promissory note delivered in
substitution or exchange for any other Note pursuant to any such
provision. Other capitalized terms that are used herein are
defined in Section 10 hereof, beginning on page 34.
2. PURCHASE AND SALE OF NOTES. The Partnership hereby
agrees to sell to you and, subject to the terms and conditions
herein set forth, you agree to purchase from the Partnership,
Notes in the aggregate principal amount equal to the aggregate
principal amount of the Converted Loans. The Partnership will
deliver to you, at your offices described above (or at such other
place as you may designate), one or more Notes registered in your
name, evidencing the aggregate principal amount of Notes to be
purchased by you and in such denomination or denominations as may
be acceptable to you, against the payment of the purchase price
of such Notes by delivery of the notes evidencing the Converted
Loans in an aggregate principal amount equal to the principal
amount of Converted Loans on the date of closing of this
transaction, which shall be the Conversion Date (hereinafter also
called the "closing" or the "date of closing").
Notwithstanding anything to the contrary in this Agreement,
should you suffer a loss of principal on any loan to the
Partnership, the REIT or any Affiliate of either, your obligation
hereunder to purchase the Notes shall automatically terminate and
be of no further force or effect.
3. CONDITIONS OF CLOSING. On the Conversion Date, you
will purchase the Notes and will release your Liens against the
Collateral, subject to the fulfillment, on or prior to the
Conversion Date, of the following conditions.
3A. Conversion Issues.
(i) No default nor any event which, through the giving
of notice or the passage of time, would constitute a
default, (A) shall have occurred on any of your loans with
the Partnership, the REIT or Affiliates of either, and be
continuing at the Conversion Date, or (B) will result from
the conversion of the Converted Loans as provided for
herein.
(ii) As more particularly outlined herein, the
Partnership shall have (A) executed and delivered to you
such documents evidencing the conversion of the Converted
Loans into senior, unsecured, fully recourse loans of the
Partnership as you may require, including, without
limitation, the Notes,(B) delivered such evidence as you may
require to evidence the Partnership's authority to enter
into the conversion transaction, and (C) provided such
representations and warranties as of the Conversion Date as
you may reasonably require including matters relating to
title, environmental matters, possession of agreements,
permits, easements, trademarks, labor and employee
relations.
(iii) No earlier than sixty (60) days prior to the
Conversion Date, you shall have received letters from S & P
and one other Nationally Recognized Rating Agency, stating
that, based on the assumption that the Liens held by you in
the Collateral and securing the Converted Loans will be
released, the Notes and the other senior long term unsecured
debt of the Partnership have received a rating of at least
"BBB-" from S&P and the equivalent of S&P's BBB- rating from
one such other Nationally Recognized Rating Agency.
(iv) The Partnership and the REIT shall provide written
evidence satisfactory to you that the covenants in this
Agreement, except in paragraph 5L hereof, have been
satisfied during the term of this Agreement, and the
covenants in paragraph 6A have been strictly satisfied for
the four (4) consecutive financial quarters immediately
preceding the date of the Partnership's conversion request.
Any calculations required to provide such evidence shall
treat the Converted Loans and any other secured Debt of the
Partnership and its Subsidiaries that will be converted to
unsecured contemporaneously with the Converted Loans, as
having been unsecured for the four (4) consecutive financial
quarters preceding the request.
(v) The Partnership shall provide sixty (60) days
written notice to you prior to the Conversion Date. Such
notice shall include, at minimum, a proposed Conversion
Date, a list of the Convertible Loans to be converted, and a
statement that all conditions to the conversion as described
herein have been satisfied or will be satisfied as of
closing.
(vi) The Partnership shall pay your reasonable out-of-
pocket expenses relating to the conversion, including the
fees and expenses of your outside legal counsel.
(vii) With its conversion notice the Partnership
shall pay to you a $20,000 non-refundable fee. At closing,
the Partnership shall pay you an additional fee equal to
.25% multiplied by the principal amount of the Converted
Loans, less the $20,000 fee described in the preceding
sentence.
(viii) The (A) market value of the outstanding
common stock of the REIT on a date within thirty (30) days
of closing plus (B) the Consolidated Funded Debt of the REIT
as of that date, shall exceed $1 billion.
(ix) On the closing date, no more than eighteen percent
(18%) of the apartment units owned by the Partnership, the
REIT and their respective Affiliates collectively shall be
located in one Metropolitan Statistical Area. For the
purposes of this determination, the counties in which
Southhaven, Mississippi, Olive Branch, Mississippi and Horn
Lake Mississippi are located shall be considered part of the
Memphis, Tennessee, Metropolitan Statistical Area.
(x) All of the Converted Loan Borrowers shall have
been dissolved and their assets distributed to the
Partnership pursuant to documentation satisfactory to you.
(xi) All accrued and unpaid interest on the Converted
Loans through the Conversion Date shall have been paid to
you in immediately available federal funds.
3B. Execution and Delivery of Documents. The Partnership
and the REIT shall have delivered, or caused to be delivered, to
you duly executed, original or certified copies of the following
documents, each to be dated the date of Closing unless otherwise
indicated:
(i) the Note(s).
(ii) a favorable opinion of Baker, Donelson, Bearman &
Xxxxxxxx, special counsel to the Partnership and the REIT
(or such other counsel designated by the Partnership and the
REIT and reasonably acceptable to you) satisfactory to you
and substantially in the form of Schedule 3B(ii) attached
hereto and as to such other matters as you may reasonably
request. The Partnership and the REIT hereby direct such
counsel to deliver such opinion, agree that the issuance and
sale of any Notes will constitute a reconfirmation of such
direction, and understand and agree that you will and are
hereby authorized to rely on such opinion.
(iii) the Certificate of Limited Partnership of the
Partnership and the Articles of Incorporation of the REIT,
each certified as of a date within thirty (30) days of
Closing by the Secretary of State of the State in which each
such entity was formed.
(iv) the limited partnership agreement of the
Partnership, and the By-Laws of the REIT, certified (as to
the REIT) by its Secretary and (as to the Partnership) by
its general partner.
(v) an incumbency certificate signed by the general
partner of the Partnership and an incumbency certificate
signed by the Secretary or an Assistant Secretary and one
other officer (who is not signing any other document or
agreement in connection herewith) of the REIT, in each case
certifying as to the names, titles and true signatures of
the general partners of the Partnership and the officers of
the REIT authorized to sign this Agreement and the Notes and
the other documents to be delivered hereunder.
(vi) (a) certificate of the general partner of the
Partnership and certificate of the Secretary of the REIT
(A) attaching appropriate authority documents of the
Partnership and the REIT (respectively) evidencing approval
of the transactions contemplated by this Agreement, and the
other Loan Documents and the issuance of the Notes, and the
other Loan Documents, and the execution, delivery and perfor
xxxxx thereof, and authorizing certain general partners (as
to the Partnership) and certain officers of the REIT (as to
the REIT) to execute and deliver the same, and certifying
that such authority documents were duly and validly adopted
and such consents and resolutions have not since been
amended, revoked or rescinded,(B) certifying that no
dissolution, liquidation or winding up proceedings as to the
Partnership or the REIT have been commenced or are
contemplated, and (C) identifying and attaching any proposed
or effected amendments to or changes in the Certificate of
Limited Partnership of the Partnership or the Articles of
Incorporation of the REIT since the date of the certified
copies thereof provided pursuant to clause (i) above or, if
none, so certifying.
(vii) an Officer's Certificate certifying that(A)
the representations and warranties contained in paragraph 8
hereof shall be true on and as of the date of closing,
except to the extent of changes caused by the transactions
herein contemplated; (B) there shall exist on the date of
closing no Default or Event of Default; (C) no condition,
event or act that has had or would have a Material Adverse
Effect has occurred since the date of this Agreement nor is
threatened or reasonably likely to occur.
(viii) corporate and tax good standing certificates
as to (A) the Partnership, from the State of Tennessee,
(B) the REIT, from the State of Tennessee, and (C) each of
the other Converted Loan Borrowers, from their respective
States of incorporation or formation (as the case may be).
(ix) a letter or letters from the auditor or auditors
for the Partnership, the REIT and the Converted Loan
Borrowers addressed to you, stating that such firm or firms
have reviewed the provisions for Federal, state and other
income taxes of the Partnership, the REIT and the Converted
Loan Borrowers contained in the financial statements as of
and for the periods ended in the last quarter prior to the
Conversion Date and that, in the opinion of such firm, the
Partnership, the REIT and the Converted Loan Borrowers have
each either paid or made adequate provision in the
consolidated balance sheets included in such financial
statements for all unpaid Federal, state and other income
taxes for the fiscal years then ended, and for all fiscal
years ended prior thereto which have not been examined and
reported on by the taxing authorities or closed by
applicable statute.
(x) Certified copies of Requests for Information or
Copies (Form UCC-11) or equivalent reports listing all
effective financing statements which name the Partnership,
the REIT or any of the Converted Loan Borrowers (under their
present name and previous names) as debtor and which are
filed in the offices of the Secretaries of State of
Tennessee, Florida, and Georgia and any other State in which
a Converted Borrower was either organized, incorporated or
owned property, together with copies of such financing
statements, which shall show no Liens other than the
Permitted Liens.
(xi) Such documents as you may reasonably request
evidencing the authorization of the dissolution of the
Converted Loan Borrowers and the distribution of their
assets to the Partnership.
(xii) One or more unconditional guaranties of
payment and performance from the REIT of all of the
obligations of the Partnership hereunder and under the other
Loan Documents, including, without limitation, the Notes,
reasonably satisfactory in form and content to you and in
the form of Schedule 3B (xii) attached hereto (each, a "REIT
Guaranty"; collectively, the "REIT Guaranties").
(xiii) documents evidencing the satisfaction of the
conditions contained in 3A hereof.
(xiv) Additional documents or certificates with
respect to such legal matters or partnership or corporate or
other proceedings related to the transactions contemplated
hereby as may be reasonably requested by you.
3C. Opinion of Purchaser's Special Counsel. You shall have
received from Glass, XxXxxxxxxx, Xxxxxxxx & Xxxxxxx, LLP, or such
other counsel who is acting as special counsel for you in
connection with this transaction, a favorable opinion
satisfactory to you as to such matters incident to the matters
herein contemplated as you may reasonably request.
3D. Purchase Permitted By Applicable Laws. The purchase of
and payment for the Notes to be purchased by you on the date of
closing on the terms and conditions herein provided (including
the use of the proceeds of such Notes by the Partnership) shall
not violate any applicable law or governmental regulation
(including, without limitation, Section 5 of the Securities Act
or Regulation G, T or X of the Board of Governors of the Federal
Reserve System) and shall not subject you to any tax, penalty,
liability or other onerous condition under or pursuant to any
applicable law or governmental regulation, and you shall have
received such certificates or other evidence as you may request
to establish compliance with this condition.
3E. Proceedings. All partnership, corporate and other
proceedings taken or to be taken in connection with the
transactions contemplated hereby and all documents incident
thereto shall be satisfactory in substance and form to you, and
you shall have received all such counterpart originals or
certified or other copies of such documents as you may reasonably
request.
3F. Privity Letter. You shall have received a letter
addressed to you from KMPG Peat Marwick (or such other nationally
recognized firm of independent public accountants that are
members of the SEC practice section of the American Institute of
Certified Public Accountants) to the effect that it acknowledges
and understands that (i) the Partnership and the REIT have
provided you with a copy of their most recent annual financial
statements, as audited by said accounting firm, together with the
report of such accounting firm on such financial statements, (ii)
you intend to rely upon the report of said accounting firm in
connection with your decision to purchase the Notes hereby and
(iii) accordingly, you are in privity with said accounting firm
with respect to such audited financial statements.
4. PREPAYMENTS.
4A. Optional Prepayments. Notes shall be subject to
prepayment, in whole at any time or from time to time in part (in
multiples of $5,000,000), at the option of the Partnership, at
100% of the principal amount so prepaid plus interest thereon to
the prepayment date and the Prepayment Premium, if any, with
respect to each Note.
The Partnership shall give the holder of each Note
irrevocable written notice of any prepayment pursuant to this
paragraph 4A not less than 30 days prior to the prepayment date,
specifying such prepayment date and the principal amount of the
Notes, and of the Notes held by such holder, to be prepaid on
such date and stating that such prepaying is to be made pursuant
to this Paragraph 4A. Notice of prepayments having been given as
aforesaid, the principal amount of the Notes specified in such
notice, together with interest thereon to the prepayment date and
together with the Prepayment Premium, if any, with respect
thereto, shall become due and payable on such prepayment date.
The Partnership shall, on or before the day on which it gives
written notice of any prepayment pursuant to this Paragraph 4A,
give telephonic notice of the principal amount of the Notes to be
prepaid and the prepayment date to each Significant Holder which
shall have designated a recipient of such notices by notice in
writing to the Partnership.
Upon any partial prepayment of the Notes pursuant to this
Section 4A, the principal amount so prepaid shall be allocated to
all Notes at the time outstanding (including, for the purpose of
this Paragraph 4A only, all Notes prepaid or otherwise retired or
purchased or otherwise acquired by the Partnership, the REIT or
any of their Subsidiaries or Affiliates) in proportion to the
respective outstanding principal amounts thereof.
4B. Prepayment Premium. The Prepayment Premium required
under this Agreement shall be due and payable, except as
otherwise provided in this Agreement or as limited by law, upon
any prepayment of any Note, whether voluntary or involuntary, and
Holder shall not be obligated to accept any prepayment of the
Note unless it is accompanied by the Prepayment Premium, all
accrued interest and all other obligations and indebtedness due
under the Loan Documents. The holders of the Notes shall notify
Partnership of the amount and calculation of the Prepayment
Premium. Partnership and the REIT agree that, in determining the
Prepayment Premium, (a) the holders of the Notes shall not be
obligated to actually reinvest the amount prepaid in any Treasury
obligation and (b) the Prepayment Premium is directly related to
the damages that the holders will suffer as a result of the
prepayment. Notwithstanding the foregoing or anything to the
contrary in this Agreement, no Prepayment Premium shall be due on
the Notes if they are prepaid during the last fourteen (14) days
prior to the Conversion Maturity Date.
5. AFFIRMATIVE COVENANTS. Upon the issuance of the Notes,
and so long as all or any of the Notes remain outstanding:
5A. Financial Statements. The Partnership and the REIT
covenant that they will deliver to each Significant Holder in
triplicate:
(i) as soon as practicable and in any event within
fifty-five (55) days after the end of each quarterly period
(other than the last quarterly period) in each fiscal year,
comparative Consolidated statements of income and cash flows
and changes in financial position for each of (A) the
Partnership and (B) the REIT, for the period from the
beginning of the current fiscal year to the end of such
quarterly period, and a comparative Consolidated balance
sheet for each of (A) the Partnership and (B) the REIT, as
at the end of such quarterly period, setting forth in each
case in comparative form figures for the corresponding
period in the preceding fiscal year, all in reasonable
detail and certified by an authorized financial officer or
general partner (as the case may be) of the Partnership and
the REIT, respectively, subject to changes resulting from
year-end adjustments; provided, however, that delivery
pursuant to clause (iii) below of copies of the Quarterly
Report on Form 10-Q of the REIT for such quarterly period
filed with the Securities and Exchange Commission shall be
deemed to satisfy the requirements of this clause (i) with
respect to the REIT;
(ii) as soon as practicable and in any event within one
hundred twenty (120) days after the end of each fiscal year,
audited comparative Consolidated statements of income, cash
flows and changes in financial position of each of (A) the
Partnership and (B) the REIT, for such year, and a
comparative Consolidated balance sheet of each of (A) the
Partnership and (B) the REIT as at the end of such year,
setting forth in each case in comparative form corresponding
Consolidated figures from the preceding annual audit, all in
reasonable detail and satisfactory in form to the Required
Holder(s) and reported on by independent public accountants
of recognized national standing that are members of the SEC
practice section of the American Institute of Certified
Public Accountants selected by the Partnership or the REIT
whose report shall be without limitation as to the scope of
the audit and reasonably satisfactory in substance to the
Required Holder(s) and, as to the consolidating statements,
certified by an authorized financial officer or general
partner (as the case may be) of the Partnership and the
REIT, respectively; provided, however, that delivery
pursuant to clause (iii) below of copies of the Annual
Report on Form 10-K of the REIT for such fiscal year filed
with the Securities and Exchange Commission shall be deemed
to satisfy the requirements of this clause (ii) with respect
to the REIT;
(iii) promptly upon transmission thereof, copies of
all such financial statements, proxy statements, notices and
reports as the Partnership or the REIT shall send to its
shareholders, and copies of all registration statements
(without exhibits), and all reports which either of them
files with the Securities and Exchange Commission (or any
governmental body or agency succeeding to the functions of
the Securities and Exchange Commission);
(iv) as often as reported to REIT shareholders, such
supplemental financial and property level information, in
the form provided to the shareholders, which includes
property level information regarding all of the REIT's real
estate assets, certified by a financial officer of the REIT;
(v) within fifteen (15) days of delivery thereof, a
copy of each other report submitted to the Partnership or
the REIT by independent accountants in connection with any
annual, interim or special audit made by them of the books
of the Partnership or the REIT;
(vi) with reasonable promptness information on adverse
litigation and ERISA events; the occurrence or announcement
of a Designated Event;
(vii) with reasonable promptness, such other
financial data and other information as the Partnership or
the REIT regularly provides to its other lenders, other
holders of Debt or other creditors;
(viii) with reasonable promptness, and in any event
within thirty (30) days after receipt thereof, a copy of any
notice, summons, citation, directive, letter or other form
of communication from any governmental authority or court in
any way concerning any action or omission on the part of
Partnership or the REIT or any Subsidiary of either in
connection with any Hazardous Material or concerning the
filing of a lien upon, against or in connection with
Partnership or the REIT or any Subsidiary of either or any
of its leased or owned real or personal property, in
connection with a Hazardous Substance Superfund or a Post-
Closure Liability Fund as maintained pursuant to U.S.C.
9507; and
(ix) with reasonable promptness, such other financial
data and property level information or documents as may be
reasonably requested by you, including accountant,
shareholder and Securities and Exchange Commission notices,
reports and filings, rating agency reports and material
correspondence, management letters and material press
releases; and
(x) with reasonable promptness, such other information
and documents any Significant Holder may reasonably request.
Together with each delivery of financial statements required by
clauses (i) and (ii) above, the Partnership and the REIT will
each deliver to each Significant Holder an Officer's Certificate
demonstrating (with computations in reasonable detail) compliance
by the Partnership and the REIT (as the case may be) with the
provisions of paragraphs 6A and 6C and stating that there exists
no Default or Event of Default, or, if any Default or Event of
Default exists, specifying the nature and period of existence
thereof and what action the Partnership or the REIT, as the case
may be, proposes to take with respect thereto. Together with
each delivery of financial statements required by clause
(ii) above, the Partnership and the REIT will deliver to each
Significant Holder a certificate of such accountants stating
that, in making the audit necessary for their report on such
financial statements, they have obtained no knowledge of any
Default or Event of Default, if they have obtained knowledge of
any Default or Event of Default, specifying the nature and period
of existence thereof. Such accountants, however, shall not be
liable to anyone by reason of their failure to obtain knowledge
of any Default or Event of Default, which would not be disclosed
in the course of an audit conducted in accordance with generally
accepted auditing standards.
The Partnership and the REIT also covenant that immediately
and in no event later than ten (10) Business Days after any
Responsible Officer obtains knowledge of a Default or Event of
Default, he or she will deliver to each Significant Holder an
Officer's Certificate specifying the nature and period of
existence thereof and what action the Partnership or the REIT (as
the case may be) has taken, is taking or proposes to take with
respect thereto.
For purposes of paragraphs 3F and 5A, any of the accounting
firms of Coopers & Xxxxxxx, Xxxxxx Xxxxxxxx & Co., Deloitte &
Touche, KPMG Peat Marwick, Price Xxxxxxxxxx, Xxxxx & Xxxxx, and
their respective successor entities, or an independent accounting
firm that is a member in good standing of the SEC Practice
Section (or any successor group or section) of the American
Institute of Certified Public Accountants shall be deemed to be
accountants "of recognized national standing."
5B. Information Required by Rule 144A. The Partnership and
the REIT covenant that they will, upon the request of the holder
of any Note, provide such holder, and any qualified institutional
buyer designated by such holder, such financial and other
information as such holder may reasonably determine to be
necessary in order to permit compliance with the information
requirements of Rule 144A under the Securities Act (or any other
applicable exemption from registration under the Securities Act
similar to such Rule 144A) in connection with the resale of
Notes, except at such times as the Partnership and the REIT are
subject to the reporting requirements of section 13 or 15(d) of
the Exchange Act. For the purpose of this paragraph 5B, the term
"qualified institutional buyer" shall have the meaning specified
in Rule 144A under the Securities Act.
5C. Inspection of Property. The Partnership and the REIT
covenant that they, upon two (2) days prior notice to the
Partnership and the REIT (except in the case of a situation that
any Significant Holder determines, in its sole discretion may
have a negative effect on the health and safety of the tenants or
may have a negative effect on the condition of the improvements
located on the applicable properties of the Partnership, the REIT
and their Subsidiaries) and subject to the rights of tenants and,
unless a Default or Event of Default has occurred and is
continuing, that any Person who inspects the books and records of
the Partnership or REIT, or discusses the same and the finances
of the Partnership or REIT (or any Subsidiary thereof) with any
executive officer thereof, shall execute a confidentiality
agreement in form and substance reasonably satisfactory to the
Partnership and the REIT prior to such inspection or discussion;
provided, however, such confidentiality agreement shall not
preclude a holder from discussing the results thereof with any
other holder of the Notes or with any of its participants or with
any applicable regulatory agency with jurisdiction over such
holder, will permit any Person designated by any Significant
Holder in writing, at such Significant Holder's expense prior to
a Default or Event of Default and at Partnership's and REIT's
expense after a Default or Event of Default, to visit and inspect
any of the properties of the Partnership, the REIT, or any of
their Subsidiaries, to examine the corporate books and financial
records of the Partnership, the REIT or any of their Subsidiaries
and make copies thereof or extracts therefrom and to discuss the
affairs, finances and accounts of any of such Persons with the
principal officers of the Partnership, the REIT, and their
independent public accountants, all at such reasonable times and
as often as such Significant Holder may reasonably request.
5D. Payment of Taxes and Claims. The Partnership and the
REIT will pay, and will cause all of their Subsidiaries to pay,
all taxes, assessments and other governmental charges imposed
upon them or any of their properties or assets or in respect of
any of their franchises, business, income or profits before any
penalty or interest accrues thereon, and all claims (including,
without limitation, claims for labor, services, materials and
supplies) for sums that have become due and payable and which by
law have or might become a Lien upon any of their properties or
assets; provided, that no such charge or claim need be paid if
subject to a Good Faith Contest.
5E. Maintenance of Properties; Compliance with Laws. The
Partnership and the REIT covenant that they will, and will cause
each of their Subsidiaries to (i) maintain or cause to be
maintained in good repair, working order and condition all
equipment and other properties necessary at that time in their
businesses and from time to time will make or cause to be made
all appropriate repairs, renewals and replacements thereof; and
(ii) comply in all material respects with all applicable (A) laws
(including Environmental and Safety Laws), rules, regulations,
decrees and orders of all Federal, state, local or foreign courts
or governmental agencies, authorities, instrumentalities or
regulatory bodies and (B) rules, regulations and requirements
necessary to maintain their operating and business licenses,
authorizations and permits, noncompliance with which could
reasonably be expected to result in a Material Adverse Effect.
5F. Maintenance of Insurance. The Partnership and the REIT
covenant that they will maintain, and will cause each of their
Subsidiaries to maintain, insurance in such amounts and against
such casualties, liabilities, risks, contingencies and hazards as
is customarily maintained by other similarly situated Persons
operating similar businesses and together with each delivery of
financial statements under clause (ii) of paragraph 5A, will
deliver an Officers' Certificate specifying the details of such
insurance in effect. Insurance required by this paragraph 5F
shall be with insurers rated A or better by A.M. Best Company (or
accorded a similar rating by another nationally or
internationally recognized insurance rating agency of similar
standing if A.M. Best Company is not then in the business of
rating insurers or rating foreign insurers) or such other
insurers as may from time to time be reasonably acceptable to the
Required Holders.
5G. Maintenance of Priority. The Partnership and the REIT
will cause the Notes to, at all times, constitute senior
Unsecured Debt of the Partnership that is not subordinated to any
other Unsecured Indebtedness of the Partnership and shall rank
equally or higher with other existing and future senior Unsecured
Debt of the Partnership.
5H. Maintenance of Sole General Partnership. The REIT
shall at all times be the sole general partner in the
Partnership.
5I. Management of Properties. The Partnership and the REIT
shall cause their properties and the properties of their
Subsidiaries to be managed by Persons owned or controlled by the
REIT or the Partnership. The Partnership and the REIT shall
cause all such management agreements to be subordinated to the
obligations of the REIT and the Partnership to you.
5J. Investment of Assets. Without in any way limiting the
restrictions contained in Paragraph 6A(8) hereof, the Partnership
and the REIT shall each keep their assets invested only in the
following types of investments: cash and cash equivalents,
investments in apartment real property and improvements,
development in progress, land held for development, publicly
traded securities, mortgages, and investment in Affiliates.
5K. Stock Exchange Listing; REIT Status. The REIT shall
maintain a listing for its common stock on the New York Stock
Exchange and shall maintain its status as a "real estate
investment trust" under Section 856 of the Code.
5L. Investment Grade Rating. The Partnership and the REIT
shall at all times, and at their expense, take all action
required to maintain, and shall maintain, ratings for the Notes
and the senior unsecured Indebtedness of the Partnership and the
REIT of at least "BBB-" from S&P and at least the equivalent of
S&P's BBB- rating from the other Nationally Recognized Rating
Agency that provided them with such rating in connection with the
issuance of the Notes. Such Nationally Recognized Rating Agency
used must be the same as that used initially unless the original
such Nationally Recognized Rating Agency no longer issues such
ratings, in which case you, the Partnership and the REIT shall
mutually agree on a second Nationally Recognized Rating Agency.
The Partnership and the REIT shall provide letters from S&P and
the other original Nationally Recognized Rating Agency regarding
the ratings of the Notes and of the other senior long term
unsecured Indebtedness of the Partnership and the REIT within one
hundred eighty (180) days following the end of each fiscal year
of the Partnership and the REIT. The Partnership and the REIT
hereby agree to promptly give you notice of any downgrade or
potential downgrade with respect to the Notes or other of their
senior unsecured Indebtedness of the Partnership or the REIT by
S&P or the other original Nationally Recognized Rating Agency.
5M. Covenant Regarding Guarantees. The Partnership and the
REIT covenant that if any Person provides a Guarantee of (i) any
Unsecured Debt of the Partnership or the REIT or (ii) any Debt of
the REIT or the Partnership other than Unsecured Debt and the
amount of such Debt secured by such a Guarantee then exceeds
$25,000,000, they will cause such Person to Guarantee the Notes
equally and ratably with such Debt for so long as such Debt is
guaranteed; provided, that the provision of any such Guarantee
with respect to the Notes shall not in any way limit or modify
the rights of the holders of the Notes to enforce the provisions
of paragraph 6C(2) hereof.
5N. ERISA. The Partnership and the REIT covenant that
they will, and will cause their Subsidiaries to, deliver to you
promptly and in any event within ten (10) days after it knows or
has reason to know of the occurrence of any event of the type
specified in clause (xiv) of paragraph 7A notice of such event
and the likely impact on the Partnership, the REIT and their
Affiliates. In the event the Partnership, the REIT or any
Affiliate of either have participated, now participates or will
participate in any Plan or Multiemployer Plan, the Partnership
and the REIT covenant that they will, and will cause any
Affiliate to, deliver to you: (i) promptly and in any event
within ten (10) Business Days after it knows or has reason to
know of the occurrence of a Reportable Event with respect to a
Plan, a copy of any materials required to be filed with the PBGC
with respect to such Reportable Event, together with an Officer's
Certificate of the Partnership and the REIT setting forth details
as to such Reportable Event and the action which the Partnership
and/or the REIT proposes to take with respect thereto; (ii) at
least ten (10) Business Days prior to the filing by any plan
administrator of a Plan of a notice of intent to terminate such
Plan, a copy of such notice; (iii) promptly upon the reasonable
request of a Significant Holder, and in no event more than ten
(10) Business Days after such request, copies of each annual
report on Form 5500 that is filed with the Internal Revenue
Service, together with certified financial statements for the
Plan (if any) as of the end of such year and actuarial statements
on Schedule B to such Form 5500; (iv) promptly and in any event
within ten (10) Business Days after it knows or has reason to
know of any event or condition which might constitute grounds
under section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan, an Officer's
Certificate of the REIT and the Partnership describing such event
or condition; (v) promptly and in no event more than ten (10)
Business Days after its or any ERISA Affiliate's receipt thereof,
the notice concerning the imposition of any withdrawal liability
under section 4202 of ERISA; and (vi) promptly after receipt
thereof, a copy of any notice the Partnership, the REIT or any
ERISA Affiliate of either may receive from the PBGC or the
Internal Revenue Service with respect to any Plan or
Multiemployer Plan; provided, however, that this paragraph 5N
shall not apply to notices of general application promulgated by
the PBGC or the Internal Revenue Service.
5O. Environmental and Safety Laws. The Partnership and the
REIT covenant that they will, and will cause each of their
Subsidiaries to, deliver promptly to you any notice of (i) any
material enforcement, cleanup, removal or other material
governmental or regulatory actions instituted, completed or, to
the Partnership's and the REIT's best knowledge, threatened
pursuant to any Environmental and Safety Laws; (ii) all material
Environmental Costs and Liabilities against or in respect of any
Property, the Partnership, the REIT or any Subsidiary of either;
and (iii) the Company's, the REIT's or any Subsidiary's discovery
of any occurrence or condition on any real property adjoining or
in the vicinity of any Property that such Partnership, REIT or
Subsidiary has reason to believe could cause such Property or any
material part thereof to be subject to any material restrictions
on its ownership, occupancy, transferability or use under any
Environmental and Safety Laws.
5P. Existence, etc.; Business. The Partnership and the
REIT covenant that they will, and will cause all their
Subsidiaries to, preserve and keep in full force and effect at
all times their corporate or partnership existence, and permits,
licenses, franchises and other rights material to their
businesses, except that the corporate or partnership existence of
any Subsidiary may be terminated if, in the good faith judgment
of the of the Partnership or the REIT (as the case may be), such
termination is in the best interest of the Partnership or the
REIT and is not disadvantageous to the holders of the Notes. The
Partnership and the REIT covenant they will not, and will not
permit any Affiliate to, engage in any business other than the
businesses conducted by the Partnership, the REIT and their
Affiliates on the date of the financial statements described in
paragraph 8B.
5Q. Maintenance of License Agreements. The Partnership and
the REIT covenant that (i) they will maintain and preserve their
current and any future license agreements, and shall not do or
suffer to be done anything that will adversely affect such
license arrangements except to the extent that any such adverse
effect(s) is or are not, in the aggregate, material to the
business, property, prospects, assets, liabilities or financial
position of the Partnership or the REIT; and (ii) they shall give
the Significant Holders notice of any material amendments to
their license agreements currently in existence, such notice to
be given at least five (5) Business Days in advance of the
effectiveness of such amendment.
5R. Books and Accounts. The Partnership and the REIT
covenant that they will, and will cause each of their
Subsidiaries to, maintain proper and accurate books of record and
account in which full, true and correct entries shall be made of
its transactions and set aside on its books from its earnings for
each fiscal period all such proper reserves as in each case shall
be required in accordance with GAAP, consistently applied.
5S. Compensation Committee. The REIT shall continue to
have a compensation committee of its Board of Directors comprised
of a majority of independent directors to set compensation for
its and the Partnership's senior executives.
6. Negative Covenants. Upon the issuance of the Notes,
and so long as any Note or amount owing under the Notes or this
Agreement shall remain unpaid, or you shall have any commitment
hereunder:
6A. Financial Covenants. Neither the Partnership nor the
REIT will, on a Consolidated basis, permit (or, in the case of
clause 6A(8) hereof, make or have exist):
6A(1). Fixed Charge Coverage. The ratio of its
Consolidated Income Available for Debt Service to its Annual Debt
Service Charge to be less than 2.0 to 1.0 for the four (4)
consecutive fiscal quarter periods most recently ended as of the
last day of the fiscal quarter.
6A(2). Debt to Real Property. Its outstanding Debt to be
greater than fifty-five percent (55%) of Undepreciated Real
Estate Assets as of the last day of the fiscal quarter.
6A(3). Secured Debt. Its outstanding Debt or other
Indebtedness secured by total Liens on any of its property or
assets to be greater than thirty-seven percent (37%) of its
Undepreciated Real Estate Assets as of the last day of the
quarter.
6A(4). Unencumbered Assets. Its Total Unencumbered Assets
to be less than one hundred sixty-seven percent (167%) of the
aggregate principal amount of all of its outstanding Unsecured
Debt (on a Consolidated basis) as of the last day of the quarter.
6A(5). Coverage. Its Property Income from its Total
Unencumbered Assets to be less than 1.67 multiplied by its Annual
Debt Service Charge from its Unsecured Debt for the four (4)
consecutive fiscal quarters most recently ended as of the last
day of the fiscal quarter.
6A(6). Sale or Disposal. The sale or disposal of more
than ten percent (10%) of its Total Assets in any twelve (12)
month period unless seventy-five percent (75%) or more of the
proceeds of all such sales or dispositions are reinvested in
other apartment real estate assets or used to pay down/off Debt
within twelve (12) months from the date of such sales or
dispositions.
6A(7) Net Worth. Its Net Worth to be less than $300
million (excluding Minority Interests) or eighty-five percent
(85%) of the Net Worth of the REIT at the quarter end immediately
prior to Conversion, whichever is greater.
6A(8) Investments. As a percentage of its Total Assets,
Investments in the following categories of properties greater
than the following amounts:
(i) Development in progress plus land held for
development: 10%
(ii) Land held for development: 3%
(iii)Publicly traded securities: 5%
(iv) Mortgages: 3%
6B. Restricted Payments. Each of the Partnership and the
REIT covenants that it will not, and will not permit any
Subsidiary to, make, pay or declare, or commit to make, pay or
declare, any Restricted Payment unless no Default or Event of
Default exists or would exist after giving effect to such
Restricted Payment. Notwithstanding in this Paragraph 6B shall
prevent the REIT from making such distributions to its
Shareholders as shall be required to maintain its status as a
"real estate investment trust" under Section 856 of the Code.
6C. Debt, and Other Restrictions. Each of the Partnership
and the REIT will not, and will not permit any Subsidiary to:
6C(1). Debt. Create, incur, assume or suffer to exist any
Debt, except
(i) (A) Debt of any Subsidiary to the Partnership, the
REIT or any Wholly Owned Subsidiary of either, or (B) the
Convertible Loans that are not the Converted Loans.
(ii) Current Debt of the Partnership or the REIT (other than
Current Debt owed to any Subsidiary) in an amount not in excess
of 40% of its total Debt at any time.
(iii) other Funded Debt of the Partnership or the REIT
(other than Debt to any Subsidiary), provided that
(A) the aggregate principal amount of all of its
Funded Debt (including, for the
Partnership, the Notes), including
Priority Debt, on a Consolidated
basis does not cause the
Partnership or the REIT to violate
the limitations set forth in
paragraph 6A hereof; and
(B) the Partnership or the REIT shall not
Guarantee Debt of any Subsidiary except pursuant to a
subordination agreement subordinating the beneficiary
of such Guarantee's rights with respect to payment of
such Debt to the payment of the Notes and otherwise in
form and substance satisfactory to the Required Holders
and only if such Subsidiary unconditionally Guarantees
the Notes pursuant to a guaranty in form and substance
satisfactory to the Required Holders;
(iv) non-recourse mortgage Debt of Subsidiaries secured by
their real property assets, so long as such Debt does not cause a
violation of paragraph 6A hereof.
Notwithstanding the foregoing, no floating rate Debt permitted
under this Agreement (including under Paragraph 6A hereof) shall
be permitted thereunder if, after such Debt is incurred, the
REIT's or the Partnership's total floating rate Debt (on a
Consolidated basis) would exceed 40% of its total Debt.
6C(2). Loans, Advances, Investments and Contingent
Liabilities. Make or permit to remain outstanding any loan or
advance to, or extend credit other than credit extended in the
normal course of business to any Person who is not an Affiliate
of the Partnership or the REIT to, or Guarantee, directly or
indirectly, in connection with the obligations, stock or
dividends of, or own, purchase or acquire any stock, obligations
or securities of, or any other interest in, or make any capital
contribution to, any Person, or commit to do any of the
foregoing, (all of the foregoing collectively being
"Investments"), except for the Investments set forth in clauses
(i) - (xvii) below (collectively, "Permitted Investments"):
(i) loans or advances to any Wholly Owned Subsidiary,
(ii) stock, obligations or other securities of, or capital
contributions to, a Wholly Owned Subsidiary or a corporation
which immediately after the purchase or acquisition of such
stock, obligations or other securities will be a Wholly Owned
Subsidiary;
(iii)obligations backed by the full faith and credit of
the United States Government (whether issued by the United States
Government or an agency thereof), and obligations guaranteed by
the United States Government, in each case which mature within
one (1) year from the date acquired;
(iv) (A) demand and time deposits with, Eurodollar deposits
with or certificates of deposit or other securities or
obligations fully backed by letters of credit issued by or
(B) bankers' acceptances eligible for rediscount under require
ments of The Board of Governors of the Federal Reserve System
that are accepted by, any commercial bank or trust Partnership
(1) organized under the laws of the United States or any of its
states or having branch offices therein, (2) having equity
capital in excess of $250,000,000 and (3) who issues either
(x) senior debt securities rated A or better by S&P, A by Xxxxx'x
or (y) commercial paper rated A-1 by S&P or Prime-1 by Xxxxx'x
(or, in either case, an equivalent rating from another Rating
Agency), in each case payable in the United States in United
States dollars, in each case which mature within one year from
the date acquired;
(v) readily marketable commercial paper rated as A-1 or
better by S&P or Prime-1 or better by Xxxxx'x (or, in either
case, an equivalent rating from another Rating Agency) and
maturing not more than two hundred seventy (270) days from the
date acquired;
(vi) bonds, debentures, notes or similar debt instruments
issued by a state or municipality given a "AA" rating or better
by S&P or an equivalent rating by another Rating Agency and
maturing not more than one (1) year from the date acquired;
(vii) negotiable instruments endorsed for collection in
the ordinary course of business;
(viii) the loans, investments and advances existing as of
the date hereof and listed on Schedule 6C(2) hereto, and
extensions, renewals and/or modifications thereof (so long as the
principal amount thereof is not increased);
(ix) Investments arising from transactions by the
Partnership or the REIT or any Subsidiary of either with
customers or suppliers or otherwise in settlement of debt
(including Investments received in settlement of trade
receivables which trade receivables are fully reserved against on
the books of the Partnership, the REIT or such Subsidiary or are
less than one (1) year overdue) in the ordinary course of
business;
(x) repurchase agreements for terms of less than one (1)
year, provided that such repurchase agreement or undertakings are
secured and collateralized by obligations backed by the full
faith and credit of the United States Government in aggregate
face amount equal to or greater than the obligations so secured;
(xi) money market mutual funds that (A) are denominated in
U.S. Dollars, (B) have average asset maturities not in excess of
three hundred sixty-five (365) days, (C) have total invested
assets in excess of $1,000,000,000 and (D) invest exclusively in
Permitted Investments, as defined hereby;
(xii)readily marketable floating rate cumulative
Preferred Stocks, money market Preferred Stocks or other
equivalent Dutch auction Preferred Stock maturing within three
hundred sixty-five (365) days of the date of acquisition thereof
with a credit rating of A or better from S&P or A2 or better from
Xxxxx'x or a comparable rating from another Rating Agency
acceptable to the Required Holders, or in stocks of investment
companies registered under the Investment Company Act of 1940, as
amended, which invest solely in Preferred Stock of the type just
described;
(xiii)Preferred Stock of industrial or utility
corporations having senior unsecured debt ratings of A or better
from S&P or A2 or better from Xxxxx'x;
(xiv) Investments that do not violate the terms of
Paragraph 6A(8) hereof.
(xv) Investments (including loans to officers, directors,
partners, shareholders and employees of the Partnership and the
REIT) other than those set forth in the preceding clause (i) -
(xvi) of this definition; provided that the aggregate amount of
such Investments, valued at the original cost thereof, shall not
exceed 5% of its Consolidated Tangible Net Worth at any time.
Notwithstanding the foregoing, no Subsidiary of either the
REIT or the Partnership shall make any loan or advance to, or
acquire any stock, obligations or securities of, the Partnership
or the REIT.
6C(3). Sale of Stock and Debt of Subsidiaries. Sell or
otherwise dispose of, or part with control of, any shares of
stock, Debt or partnership or other interests of any Subsidiary,
except (i) to the Partnership, the REIT or a Wholly Owned
Subsidiary of either, (ii) for issuance of Subsidiary Debt in
compliance with paragraph 6C(1) or (iii) that all shares of stock
(or partnership or other interests, as the case may be) and Debt
of any Subsidiary at the time owned by or owed to the
Partnership, the REIT, and/or any Subsidiary may be sold as an
entirety for a cash consideration which represents the fair value
(as determined in good faith by the Partnership or the Board of
Directors of the REIT, as applicable) at the time of sale of the
shares of stock and Debt so sold; provided that(A) such sale or
other disposition is permitted by paragraph 6C(5) and (B) at the
time of such sale, such Subsidiary shall not own, directly or
indirectly, any equity interests in any other Subsidiary (unless
all of the equity interests in such other Subsidiary owned,
directly or indirectly, by the Partnership, the REIT or the
Subsidiaries of either are simultaneously being sold as permitted
by this Paragraph 6C(3));
6C(4). Merger and Consolidation. Merge or consolidate with
or into any other Person, except that:
(i) any Subsidiary thereof may merge or consolidate
with or into the Partnership or the REIT; provided that the
Partnership or the REIT (as the case may be) is the
continuing or surviving entity,
(ii) any Subsidiary of the Partnership or the REIT may
merge or consolidate with or into a Wholly Owned Subsidiary
of the same entity; provided that such Wholly Owned
Subsidiary is the continuing or surviving entity,
(iii)the Partnership or the REIT may consolidate
or merge with any other entity if (A) (1) the Partnership or
the REIT (as the case may be) shall be the continuing or
surviving entity or (2) the continuing or surviving entity
is a solvent corporation, partnership or other limited
liability entity duly organized and existing under the laws
of any state of the United States of America, with
substantially all of its assets located and substantially
all of its operations conducted within the United States of
America, and such continuing or surviving corporation
expressly assumes, by a written agreement satisfactory in
form and substance to the Required Holders (which agreement
may require, in connection with such assumption, the
delivery of such opinions of counsel as the Required Holders
may require), the obligations of the Partnership and the
REIT under this Agreement, the REIT Guaranties and the
Notes, including all covenants herein and therein contained,
and such successor or acquiring entity shall succeed to and
be substituted for the Partnership or the REIT (as the case
may be) with the same effect as if it had been named herein
as a party hereto, and (B) no Default or Event of Default
exists or would exist after giving effect to such merger or
consolidation;
(iv) any Affiliate may merge or consolidate with any
other corporation, provided that, immediately after giving
effect to such merger or consolidation (a) a Wholly Owned
Affiliate shall be the continuing or surviving corporation
and (b) no Default or Event of Default exists or would exist
after giving effect to such merger or consolidation and the
Partnership and the REIT shall each be able to incur at
least $1.00 of additional Debt under clause (iv) of
paragraph 6C(1);
6C(5). Transfer of Assets. Transfer, or agree or otherwise
commit to Transfer, any of its assets or acquire all or
substantially all of the assets of any Person except that:
(i) any Subsidiary may Transfer assets to the Partnership,
the REIT or a Wholly Owned Subsidiary of either;
(ii) the Partnership, the REIT or any Subsidiary may sell
inventory in the ordinary course of business,
(iii) the Partnership, the REIT or any Subsidiary of
either may otherwise Transfer assets, provided that after giving
effect thereto no Default or Event of Default shall occur,
including, without limitation, under paragraph 6A(6) hereof;
6C(6). Lease Rentals. Permit the aggregate of all payments
under operating leases with a term, inclusive of all renewal
options, in excess of one year from the date of inception, to
exceed $750,000 during any fiscal year;
6C(7). Sale and Lease-Back. Enter into any arrangement
with any lender or investor or to which such lender or investor
is a party providing for the leasing by the Partnership, the REIT
or any Subsidiary of either of real or personal property which
has been or is to be Transferred by the Partnership, the REIT or
any Subsidiary of either to such lender or investor or to any
Person to whom funds have been or are to be advanced by such
lender or investor on the security of such property or rental
obligations of the Partnership, the REIT or any Subsidiary of
either;
6C(8). Sale or Discount of Receivables. Sell with
recourse, or discount or otherwise sell for less than the face
value thereof, any of its notes or accounts receivable;
6C(9). Related Party Transactions. Directly or indirectly,
purchase, acquire or lease any property from, or sell, transfer
or lease any property to, or otherwise deal with, in the ordinary
course of business or otherwise any Related Party, except in the
ordinary course of business and upon terms that are no less
favorable to the Partnership, the REIT or an Subsidiary of
either, as the case may be, than those that could be obtained in
an arm's-length transaction with an unrelated third party;
6C(10). Superior Debt. Create, assume or incur, or in any
manner become or be liable in respect of, Indebtedness for money
borrowed, advances made, or goods purchased, if the lender of
such money or the Person making such advances, or the vendor of
such goods (or any Person who guarantees or otherwise becomes
surety for the whole or any part of such Indebtedness or acquires
any right or incurs any obligation to become, either immediately
or upon the occurrence of some future contingency, the owner of
the whole or any part thereof) shall have any right, by reason of
statute (including, without limitation, United States Revised
Statutes 3466, 31 U.S.C.A. 191), or otherwise to have any
claim in respect of such Indebtedness first satisfied out of the
general assets of the Partnership, the REIT or such Subsidiary in
priority to the claims of its general creditors, unless such
Indebtedness constitutes permitted Priority Debt under paragraph
6(C)(1) hereof.
6C(11). Transfer of Assets to Subsidiaries. Transfer any
real property assets (whether developed or undeveloped) to a
Subsidiary;
6C(12). Affiliate Restrictions. Except (x) as set forth in
Schedule 6C(12) attached hereto and (y) in connection with
acquisition (to the extent otherwise permitted under this
Agreement) of Subsidiaries or properties that are, as applicable,
parties to or subject to Debt (A) from or through the Department
of Housing and Urban Development or constituting tax exempt
industrial development bonds under Section 103 (a) of the Code
(provided, in each such case under this clause (y), the amount of
such Debt for each project does not exceed $25,000,000), enter
into, or be otherwise subject to, any contract, agreement or
other binding obligation that directly or indirectly limits the
amount of, or otherwise restricts (i) the payment to the
Partnership or the REIT of dividends or other redemptions or
distributions with respect to its equity interests by any
Affiliate, (ii) the repayment to the Partnership or the REIT by
any Affiliate of intercompany loans or advances, or (iii) other
intercompany transfers to the Partnership or the REIT of property
or other assets by Affiliates.
6C(13). Prudential Debt. Permit the aggregate amount of
the Notes and all other Debt owed to Prudential and its
Affiliates to exceed at any time 25% of the aggregate amount of
all its Debt on a Consolidated basis.
6C(14). ERISA. (A) With respect to any Plan, fail to
satisfy the minimum funding standards of ERISA or the Code for
any plan year or part thereof or seek or have granted a waiver of
such standards or extension of any amortization period under
section 412 of the Code, (B) file, have filed (by it or any other
Person) or permit to be filed, a notice of intent to terminate
any Plan or permit to exist any condition under which it is
reasonably expected that a notice of intent will be filed with
the PBGC, or permit to exist any condition under which the PBGC
shall have instituted proceedings under ERISA section 4042 to
terminate or appoint a trustee to administer any Plan or permit
to exist any condition under which the PBGC shall have notified
the Partnership, the REIT or any ERISA Affiliate of either that a
Plan may become a subject of such proceedings, (C) permit the
aggregate "amount of unfunded benefit liabilities" (within the
meaning of section 4001(a)(18) of ERISA) under all Plans,
determined in accordance with Title IV of ERISA, to exceed $1.00,
(D) incur or permit to exist any condition under which it is
reasonably expected to incur any liability pursuant to Title I or
IV of ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans, (E) withdraw from any
Multiemployer Plan, or (F) establish or amend any employee
welfare benefit plan that provides post-employment welfare
benefits in a manner that would increase the liability of the
Partnership, the REIT or any Subsidiary of either thereunder; and
any such event or events described in clauses (A) through (F)
above, either individually or together with any other such event
or events, could reasonably be expected to have a Material
Adverse Effect.
6D. Issuance of Stock by Subsidiaries. Each of the
Partnership and the REIT covenants that it will not permit any
Subsidiary of either of them (either directly, or indirectly by
the issuance of rights or options for, or securities convertible
into, such shares) to issue, sell or dispose of any equity
interests of any class except to the Partnership, the REIT or a
Wholly Owned Subsidiary of either;
7. EVENTS OF DEFAULT.
7A. Acceleration. If any of the following events shall
occur and be continuing for any reason whatsoever (and whether
such occurrence shall be voluntary or involuntary or come about
or be effected by operation of law or otherwise):
(i) the Partnership defaults in the payment of any
principal of, or Prepayment Premium payable with respect to, any
Note when the same shall become due, either by the terms thereof
or otherwise as herein provided and such default continues for
more than five (5) days after notice of the occurrence of such
default (but with only one such notice and cure period during any
such 12 month period); or
(ii) the Partnership defaults in the payment of
any interest on any Note for more than ten (10) days after notice
of such default (but with only one such notice and cure period
during any such 12 month period); or
(iii) the Partnership, the REIT or any Subsidiary
defaults (whether as primary obligor or as guarantor or other
surety) in any payment of principal of or interest on any other
obligation for money borrowed (or any Capitalized Lease
Obligation, any obligation under a conditional sale or other
title retention agreement, any obligation issued or assumed as
full or partial payment for property whether or not secured by a
purchase money mortgage or any obligation under notes payable or
drafts accepted representing extensions of credit) beyond any
period of grace provided with respect thereto, or the
Partnership, the REIT or any Affiliate fails to perform or
observe any other agreement, term or condition contained in any
agreement under which any such obligation is created (or if any
other event thereunder or under any such agreement shall occur
and be continuing) and the effect of such failure or other event
is to cause, or to permit the holder or holders of such
obligation (or a trustee on behalf of such holder or holders) to
cause, such obligation to become due (or to be repurchased by the
Partnership, the REIT or any Subsidiary of either) prior to any
stated maturity, provided that the aggregate amount of all
obligations as to which such a payment default shall occur and be
continuing or such a failure or other event causing or permitting
acceleration (or resale to the Partnership, the REIT or any
Subsidiary of either) shall occur and be continuing exceeds
$5,000,000 (or, with respect to obligations that are nonrecourse
debt secured by recourse only to specific assets, the
$25,000,000); or
(iv) any representation or warranty made by or on
behalf of the Partnership, the REIT, or any of their general
partners or officers (as the case may be) herein or in any other
writing furnished in connection with or pursuant to this
Agreement or the transactions contemplated hereby shall be false
in any material respect on the date as of which made; or
(v) the Partnership or the REIT fails to perform or
observe any agreement contained in paragraph 5F or 6 and such
failure continues for more than ten (10) days after notice
thereof; or
(vi) the Partnership or the REIT fails to perform or
observe any other agreement, term or condition contained herein
and such failure shall not be remedied within thirty (30) days
after the earlier of (A) any Responsible Officer obtaining actual
knowledge thereof and (B) the Partnership or the REIT (as the
case may be) receiving written notice of such default from any
holder of a Note; or
(vii) the Partnership, the REIT or any Subsidiary
of either makes an assignment for the benefit of creditors or is
generally not paying its debts as such debts become due; or
(viii) any decree or order for relief in respect of
the Partnership, the REIT or any Subsidiary of either is entered
under any bankruptcy, reorganization, compromise, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or
similar law, whether now or hereafter in effect (herein called
the "Bankruptcy Law"), of any jurisdiction; or
(ix) the Partnership, the REIT or any Subsidiary of
either petitions or applies to any tribunal for, or consents to,
the appointment of, or taking possession by, a trustee, receiver,
custodian, liquidator or similar official of the Partnership, the
REIT or any Subsidiary of either, or of any substantial part of
the assets of the Partnership, the REIT or any Subsidiary of
either, or commences a voluntary case under the Bankruptcy Law of
the United States or any proceedings relating to the Partnership
or any Subsidiary under the Bankruptcy Law of any other
jurisdiction; or
(x) any such petition or application is filed, or any
such proceedings are commenced, against the Partnership, the REIT
or any Subsidiary of either, and the Partnership, the REIT or
such Subsidiary by any act indicates its approval thereof,
consents thereto or acquiescences therein, or an order, judgment
or decree is entered appointing any such trustee, receiver,
custodian, liquidator or similar official, or approving the
petition in any such proceedings, and such order, judgment or
decree remains unstayed and in effect for more than sixty (60)
days; or
(xi) any order, judgment or decree is entered in any
proceedings against the Partnership , the REIT or any Subsidiary
of either decreeing the dissolution of the Partnership, the REIT
or such Subsidiary, and such order, judgment or decree remains
unstayed and in effect for more than sixty (60) days; or
(xii) any order, judgment or decree is entered in
any proceedings against the Partnership, the REIT or any
Subsidiary of either decreeing a split-up of the Partnership, the
REIT or any Subsidiary of either which requires the divestiture
of assets representing a substantial part, or the divestiture of
the stock of a Subsidiary whose assets represent a substantial
part, of the consolidated assets of the Partnership, the REIT or
the Subsidiaries of either(determined in accordance with GAAP) or
which requires the divestiture of assets, or stock of a
Subsidiary, which shall have contributed a substantial part of
the Consolidated Net Income of the Partnership, the REIT and its
Subsidiaries (determined in accordance with GAAP) for any of the
three (3) fiscal years then most recently ended, and such order,
judgment or decree remains unstayed and in effect for more than
60 days (as used in this clause (xii), "substantial" shall mean
in excess of 20% of Consolidated Tangible Net Worth or
Consolidated Net Income, as the case may be); or
(xiii) one or more final judgments in an aggregate
amount in excess of $2,000,000 is rendered against the
Partnership, the REIT or any Subsidiary of either and, within
sixty (60) days after entry thereof, a solvent insurance carrier
or carriers have not confirmed in writing that each such judgment
is fully insured or any such judgment is not discharged or
execution thereof stayed pending appeal, or within sixty (60)
days after the expiration of any such stay, any such judgment is
not discharged or a judgment in an amount in excess of $5,000,000
is rendered against the Partnership, the REIT or any Subsidiary
of either, irrespective of whether such judgment is discharged or
stayed pending appeal; or
(xiv) any of the REIT Guaranties, for any reason
other than satisfaction in full of the obligations of the
Partnership hereunder and under the Notes, ceases to be in full
force and effect or is declared null and void, or the validity or
enforceability thereof is contested in a judicial proceeding or
the REIT denies that it has any further liability under any of
the REIT Guaranties or the REIT shall default in the performance
or observance of any of its obligations under any of the REIT
Guaranties, and such default shall not have been remedied within
thirty (30) days;
(xv) any Material Right of the Partnership, the REIT,
or any Subsidiary necessary to own or operate its business is
suspended, withdrawn or revoked or modified in a manner
materially adverse to the rights of the Partnership, the REIT or
such Subsidiary;
(xvi)(i) any Person or two or more Persons (except the
REIT, its sole general partner) acting in concert shall have
acquired beneficial ownership (within the meaning of Rule 13d-3
of the Securities and Exchange Commission under the Securities
Exchange Act of 1934) directly or indirectly, of equity interests
of the Partnership or the REIT (or other interests convertible
into such securities) representing thirty percent (30%) or more
of all equity interests in the Partnership or the REIT (as the
case may be); or (ii) any Person or two or more Persons acting in
concert shall have acquired by contract or otherwise, or shall
have entered into a contract or arrangement which upon
consummation will result in its or their acquisition of, control
over equity interests of the Partnership or the REIT (or other
interests convertible into such interests) representing thirty
percent (30%) or more of all interests of the Partnership or the
REIT; or (iii) (a) during any period of two (2) consecutive
years, Persons who at the beginning of such period constitute the
Partnership's general partners cease for any reason to be general
partners of the Partnership, or (b) during any period of two (2)
consecutive years, individuals who at the beginning of such
period constitute the REIT's Board of Directors (together with
any new director whose election by the REIT's Board of Directors
or whose nomination for election by the REIT's shareholders was
approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the beginning
of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a
majority of the directors then in office;
then (a) if such event is an Event of Default specified in clause
(i) or (ii) of this paragraph 7A which is not cured within any
applicable grace or cure period, the holder of any Note (other
than the Partnership, the REIT or any of their Subsidiaries), the
outstanding principal amount of which at the time exceeds ten
percent (10%) of the outstanding principal amount of all of
Notes, may at its option during the continuance of such Event of
Default, by notice in writing to the Partnership and the REIT,
declare such Note to be, and such Note shall thereupon be and
become, immediately due and payable at par, together with
interest accrued thereon and Prepayment Premium, if any, without
presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Partnership and the REIT, (b) if
such event is an Event of Default specified in clause (viii),
(ix) or (x) of this paragraph 7A, all of the Notes at the time
outstanding shall automatically become immediately due and
payable, together with interest accrued thereon and the
Prepayment Premium, if any, and to the extent permitted by law,
with respect to each Note, without presentment, demand, protest
or notice of any kind, all of which are hereby waived by the
Partnership and the REIT, and(c) with respect to any other event
constituting an Event of Default, the Required Holder(s) may at
its or their option, by notice in writing to the Partnership,
declare all of the Notes to be, and all of the Notes shall
thereupon be and become, immediately due and payable together
with interest accrued thereon and together with the Prepayment
Premium, if any, with respect to each Note, without presentment,
demand, protest or other notice of any kind, all of which are
hereby waived by the Partnership.
The Partnership and the REIT acknowledge, and the parties
hereto agree, that each holder of a Note has the right to
maintain its investment in the Notes free from repayment(except
as herein specifically provided for) and that the provision for
payment of the Prepayment Premium by the Partnership or the REIT
in the event that the Notes are prepaid or are accelerated as a
result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such
circumstances.
Promptly following the acceleration of all of the Notes, the
Computing Holder shall give written notice to the Partnership and
the REIT of the amount of the Prepayment Premium in respect of
the Notes (which notice shall set forth in reasonable detail the
computation of such Prepayment Premium and the assumptions made
in connection therewith). Such notice shall be given within five
(5) Business Days if such Computing Holder has given such notice
of acceleration, and otherwise promptly after such Computing
Holder has knowledge of such acceleration. If any Note has been
accelerated pursuant to clause (i) of this paragraph 7A, then the
holder which has so accelerated such Note shall give written
notice to the Partnership and the REIT of the Prepayment Premium
in respect of such Note promptly after such acceleration. The
failure by a Computing Holder to give notice as aforesaid as to
the computation of the Prepayment Premium in respect of any Note
shall not relieve the Partnership or the REIT of the obligation
as of the date of such acceleration to pay such Prepayment
Premium forthwith after such Prepayment Premium is determined
(and in such case the determination of such Prepayment Premium by
the holder of any Note which has been so accelerated shall be
deemed to be conclusive with respect to such Note absent manifest
error).
7B. Rescission of Acceleration. At any time after any or
all of the Notes shall have been declared immediately due and
payable pursuant to paragraph 7A, the Required Holder(s) may, by
notice in writing to the Partnership and the REIT, rescind and
annul such declaration and its consequences if (i) the
Partnership or the REIT shall have paid all overdue interest on
the Notes, the principal of and the Prepayment Premium, if any,
payable with respect to any Notes which have become due otherwise
than by reason of such declaration, and interest on such overdue
interest and overdue principal and the Prepayment Premium at the
rate specified in the Notes, (ii) the Partnership or the REIT
shall not have paid any amounts which have become due solely by
reason of such declaration, (iii) all Defaults and Events of
Default other than non-payment of amounts which have become due
solely by reason of such declaration, shall have been cured or
waived pursuant to paragraph 11C, and (iv) no judgment or decree
shall have been entered for the payment of any amounts due
pursuant to the Notes or this Agreement. No such rescission or
annulment shall extend to or affect any subsequent Default or
Event of Default, or impair any right arising therefrom.
7C. Notice of Acceleration or Rescission. Whenever any
Note shall be declared immediately due and payable pursuant to
paragraph 7A or any such declaration shall be rescinded and
annulled pursuant to paragraph 7B, the Partnership shall
forthwith give written notice thereof to the holder of each Note
at the time outstanding.
7D. Other Remedies. If any Event of Default or Default
shall occur and be continuing, the holder of any Note may proceed
to protect and enforce its rights under this Agreement and such
Note by exercising such remedies as are available to such holder
in respect thereof under applicable law, either by suit in equity
or by action at law, or both, whether for specific performance of
any covenant or other agreement contained in this Agreement or in
aid of the exercise of any power granted in this Agreement. No
remedy conferred in this Agreement upon the holder of any Note is
intended to be exclusive of any other remedy, and each and every
such remedy shall be cumulative and shall be in addition to every
other remedy conferred herein or now or hereafter existing at law
or in equity or by statute or otherwise.
Without limiting the generality of the immediately preceding
paragraph, the parties hereto agree that the covenants and
agreements contained herein are of a unique nature, the breach of
which either cannot be adequately compensated by monetary damages
or may not necessarily result in the ability of the aggrieved
party to obtain relief. The parties therefore agree that the
breach by one party of its covenants or other agreements
contained herein shall entitle the other, aggrieved party to seek
and obtain specific performance or such other equitable relief as
such party deems appropriate, and each party hereto consents to
the availability of such remedies, and agrees and represents that
this Agreement is a material inducement to its entry into this
Agreement.
8. REPRESENTATIONS AND WARRANTIES. The Partnership and
the REIT represent, covenant and warrant as follows:
8A1. Organization - Partnership. The Partnership is a
limited partnership duly organized and existing in good standing
under the laws of the State of Tennessee, and is duly qualified
as a foreign entity and is in good standing in each jurisdiction
in which such qualification is required by law. Further, each
Subsidiary of the Partnership is duly organized and existing in
good standing under the laws of the jurisdiction in which it was
formed. The Partnership and each Subsidiary of the Partnership
have the corporate or partnership (as the case may be) power and
authority to own or hold under lease the properties it purports
to own or hold under lease, to transact the business it transacts
and proposes to transact, to execute and deliver this Agreement
and the Notes and to perform the provisions hereof and thereof.
8A2. Organization - REIT. The REIT is a corporation duly
organized and existing in good standing under the laws of the
State of Tennessee, and is duly qualified as a foreign
corporation and is in good standing in each jurisdiction in which
such qualification is required by law. The REIT and each
Subsidiary of the REIT is duly organized and existing in good
standing under the laws of the jurisdiction in which it is
incorporated or organized. Each of the REIT and its Subsidiaries
has the corporate or partnership (as the case may be) power and
authority to own or hold under lease the properties it purports
to own or hold under lease, to transact the business it transacts
and proposes to transact, to execute and deliver this Agreement
and the Notes and to perform the provisions hereof and thereof.
8A3. Subsidiaries. Schedule 8A contains (except as noted
therein) complete and correct lists (i) of Subsidiaries of the
Partnership and the REIT, showing, as to each Subsidiary, the
correct name thereof, the jurisdiction of its organization, and
the percentage of shares of each class of its equity interests
outstanding owned by the Partnership and the REIT and each other
Subsidiary, (ii) of the Subsidiaries of the Partnership and the
REIT, and (iii) of the directors, senior officers, general
partners, limited partners, members, Shareholders of the
Partnership and the REIT.
8B. Financial Statements. The Partnership and the REIT
have furnished you with the following financial statements,
identified by a principal financial officer of the Partnership
and the REIT respectively: (i) a consolidated and consolidating
balance sheet of the REIT and its Subsidiaries as at December 31
in each of the years 1994 to 1996, inclusive, and consolidated
and consolidating statements of income, stockholders' equity and
cash flows of the REIT and its Subsidiaries for each such year,
all reported on by KPMG Peat Marwick; and (ii) a consolidated and
consolidating balance sheet of the REIT and its Subsidiaries as
at June 30 1997 and consolidated and consolidating statements of
income, stockholders' equity and cash flows for the six-month
period ended on such date, prepared by the REIT. Such financial
statements (including any related schedules and/or notes) are
true and correct in all material respects (subject, as to interim
statements, to changes resulting from audits and year-end
adjustments), have been prepared in accordance with GAAP
consistently followed throughout the periods involved and show
all liabilities, direct and contingent, of the Partnership, the
REIT and their Subsidiaries required to be shown in accordance
with such principles. The balance sheets fairly present the
condition of the Partnership, the REIT and their Subsidiaries as
and at the dates thereof, and the statements of income,
stockholders' equity and cash flows fairly present the results of
the operations of the Partnership, the REIT and their
Subsidiaries and their cash flows for the periods indicated.
There has been no material adverse change in the business,
condition (financial or otherwise) or operations of the
Partnership, the REIT and their Subsidiaries taken as a whole
since the date of this Agreement.
8C. Actions Pending. There is no action, suit,
investigation or proceeding pending or, to the knowledge of the
Partnership or the REIT, threatened against the Partnership, the
REIT or any of their Subsidiaries, or any properties or rights of
the Partnership, the REIT or any of their Subsidiaries, by or
before any court, arbitrator or administrative or governmental
body which (i) might result in a Material Adverse Effect or
(ii) purports to affect the validity or enforceability of this
Agreement, any Note issued hereunder, the REIT Guaranties, any
document executed or delivered in connection with the Notes or
the REIT Guaranties, or the transactions contemplated hereby or
thereby.
8D. Outstanding Debt. Neither the Partnership, the REIT,
nor any of their Subsidiaries, has outstanding any Debt except as
permitted by paragraph 6A and paragraph 6C(1) hereof. There
exists no default under the provisions of any instrument
evidencing such Debt or of any agreement relating thereto.
8E. Title to Properties. The Partnership, the REIT and
each of their Subsidiaries have good and indefeasible title to
their real properties (other than properties which it leases) and
good title to all of their other properties and assets, including
the properties and assets reflected in the balance sheet as at
the Conversion Date referred to in paragraph 8B (other than
properties and assets disposed of in the ordinary course of
business), subject to no Lien of any kind except Liens permitted
by paragraph 6C(1) All leases necessary in any material respect
for the conduct of the respective businesses of the Partnership,
the REIT and their Subsidiaries are valid and subsisting and are
in full force and effect.
8F. Taxes. The Partnership, the REIT and each of their
Subsidiaries has filed all federal, state and other income tax
returns which, to the knowledge of the officers of the REIT and
the general partner of the Partnership, are required to be filed,
and each has paid all taxes as shown on such returns and on all
assessments received by it to the extent that such taxes have
become due, except such taxes as are subject to a Good Faith
Contest.
8G. Conflicting Agreements and Other Matters. Neither the
Partnership, the REIT or any of their Subsidiaries is a party to
any contract or agreement or subject to any charter or other
corporate restriction which materially and adversely affects its
business, property or assets, or financial condition. Neither
the execution nor delivery of this Agreement, the REIT
Guaranties, or the Notes, nor the offering, issuance and sale of
the Notes or the REIT Guaranties, nor fulfillment of nor
compliance with the terms and provisions hereof, the Notes or the
REIT Guaranties will conflict with, or result in a breach of the
terms, conditions or provisions of, or constitute a default
under, or result in any violation of, or result in the creation
of any Lien upon any of the properties or assets of the
Partnership, the REIT or any of its Subsidiaries pursuant to, the
charter documents of the Partnership, the REIT or any of their
Subsidiaries, any award of any arbitrator or any agreement
(including any agreement with stockholders), instrument, order,
judgment, decree, statute, law, rule or regulation to which the
Partnership, the REIT or any of their Subsidiaries is subject.
Neither the Partnership, the REIT nor any of their Subsidiaries
is a party to, or otherwise subject to any provision contained
in, any instrument evidencing Indebtedness of the Partnership,
the REIT or such Subsidiary of either, any agreement relating
thereto or any other contract or agreement (including its
charter) which limits the amount of, or otherwise imposes
restrictions on the incurring of, Debt of the Partnership or the
REIT of the type to be evidenced by the Notes except as set forth
in the agreements listed in Schedule 8G attached hereto.
8H. Offering of Notes. Neither the Partnership, the REIT,
nor any agent acting on behalf of either or both of them has,
directly or indirectly, offered the Notes or any similar security
of the Partnership for sale to, or solicited any offers to buy
the Notes or any similar security of the Partnership from, or
otherwise approached or negotiated with respect thereto with,
any Person other than you, and neither the Partnership, the REIT
nor any agent acting on behalf of either has taken or will take
any action which would subject the issuance or sale of the Notes
to the provisions of section 5 of the Securities Act or to the
provisions of any securities or Blue Sky law of any applicable
jurisdiction.
8I. Use of Proceeds. Neither the Partnership, the REIT nor
any Subsidiary of either owns or has any present intention of
acquiring any "margin stock" as defined in Regulation G (12 CFR
Part 207) of the Board of Governors of the Federal Reserve System
(herein called "margin stock"). The proceeds of sale of the
Notes will be used to refinance all or a portion of the
Convertible Loans. None of such proceeds will be used, directly
or indirectly, for the purpose, whether immediate, incidental or
ultimate, of purchasing or carrying any margin stock or for the
purpose of maintaining, reducing or retiring any Indebtedness
which was originally incurred to purchase or carry any stock that
is currently a margin stock or for any other purpose which might
constitute this transaction a "purpose credit" within the meaning
of such Regulation G. Neither the Partnership, the REIT or any
of their Subsidiaries are engaged principally, or as one of their
important activities, in the business of extending credit for the
purpose of purchasing or carrying " margin stock" (within the
meaning of Regulation G of the Board of Governors of the Federal
Reserve System), and the aggregate market value of all "margin
stock" owned by the Partnership, the REIT and the Subsidiaries of
both does not exceed twenty-five percent (25%) of the aggregate
value of the assets thereof, as determined by any reasonable
method. Neither the Partnership, the REIT nor any agent acting
on behalf of either of them has taken or will take any action
which might cause this Agreement or the Notes to violate
Regulation G, Regulation T or any other regulation of the Board
of Governors of the Federal Reserve System or to violate the
Exchange Act, in each case as in effect now or as the same may
hereafter be in effect.
8J. ERISA. (i) No accumulated funding deficiency (as
defined in section 302 of ERISA and section 412 of the Code),
whether or not waived, exists with respect to any Plan (other
than a Multiemployer Plan).
(ii) No liability to the PBGC has been or is expected by the
Partnership, the REIT or any ERISA Affiliate of either to be
incurred with respect to any Plan (other than a Multiemployer
Plan) by the Partnership , the REIT or any Subsidiary of either
or any ERISA Affiliate which is or would be materially adverse to
the business, condition (financial or otherwise) or operations of
the Partnership, the REIT and the Subsidiaries of both, taken as
a whole.
(iii) Neither the Partnership, the REIT, any Subsidiary
of either, nor any ERISA Affiliate of either of them has incurred
or presently expects to incur any withdrawal liability under
Title IV of ERISA with respect to any Multiemployer Plan which is
or would be materially adverse to the business, condition
(financial or otherwise) or operations of the Partnership, the
REIT and their Subsidiaries taken as a whole.
(iv) The expected post-retirement benefit obligations
(determined as of the last day of the Partnership's and the
REIT's most recently ended fiscal year in accordance with
Financial Accounting Standards Board Statement 106, without
regard to liabilities attributable to continuation coverage
mandated by Section 4980B of the Code) of the Partnership, the
REIT and their Subsidiaries is not material.
(v) The present value of the aggregate benefit liabilities
under each Plan (other than Multiemployer Plans), determined as
of the end of such Plans' most recently ended Plan year on the
basis of the actuarial assumption specified for funding purposes
in such Plans most recent actuarial valuation report, did not
exceed the aggregate current value of the assets of such plan
allocable to such benefit liabilities. The term "benefit
liabilities" has the meaning specified as section 4001 of ERISA
and the terms "current value" and "present value" have the
meaning specified in Section 3 of ERISA.
(vi) The execution and delivery of this Agreement and the
REIT Guaranties, and the issuance and sale of the Notes, will be
exempt from, or will not involve any transaction which is subject
to, the prohibitions of section 406 of ERISA and will not involve
any transaction in connection with which a penalty could be
imposed under section 502(i) of ERISA or a tax could be imposed
pursuant to section 4975 of the Code. The representation by the
Partnership and the REIT in the next preceding sentence is made
in reliance upon and subject to the accuracy of your
representation in paragraph 9B.
8K. Governmental Consent. No circumstance in connection
with the offering, issuance, sale or delivery of the Notes is
such as to require any authorization, consent, approval,
exemption or other action by or notice to or filing with any
court or administrative or governmental body (other than routine
filings after the date of closing with the Securities and
Exchange Commission and/or state Blue Sky authorities) in
connection with the execution and delivery of this Agreement and
the REIT Guaranties, the offering, issuance, sale or delivery of
the Notes or fulfillment of or compliance with the terms and
provisions hereof, of the REIT Guaranties or of the Notes.
8L. Compliance with Laws. The Partnership, the REIT and
their Subsidiaries and all of their respective properties and
facilities have complied at all times and in all material
respects with all federal, state, local and regional statutes,
laws, ordinances and judicial or administrative orders,
judgments, rulings and regulations, including those relating to
protection of the environment except, in any such case, where
failure to comply would not result in a material adverse effect
on the business, condition (financial or otherwise) or operations
of the Partnership, the REIT and their Subsidiaries taken as a
whole.
8M. Environmental Compliance. Except as disclosed on
Schedule 8M hereto, the Partnership, the REIT and each Subsidiary
of each (i) has complied in all material respects with all
applicable material Environmental and Safety Laws and all laws
regulating or relating to their businesses, and neither the
Partnership, the REIT nor any Subsidiary of either has received
(A) notice of any material failure so to comply, (B) any letter
or request for information under Section 104 of CERCLA or
comparable state laws or (C) any information that would lead it
to believe that it is the subject of any Federal, state or local
investigation concerning Environmental and Safety Laws; (ii) does
not manage, generate, transport, discharge or store any Hazardous
Materials in material violation of any material Environmental and
Safety Laws; (iii) does not own, operate or maintain any
underground storage tanks or surface impoundments; and (iv) is
not aware or any conditions or circumstances associated with
their respective currently or previously owned or leased
Properties or operations (or those of their respective tenants)
which may give rise to any Environmental Costs and Liabilities
which could have a Material Adverse Effect.
8N. Utility Company Status. Neither the Partnership, the
REIT nor any Subsidiary of either is a (i) "holding company," an
"subsidiary company" of a "holding company" or an "affiliate" of
a "holding company" or of an " subsidiary company" of a "holding
company," as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended or (ii) public utility within the
meaning of the Federal Power Act, as amended.
8O. Investment Company Status. Neither the Partnership,
the REIT nor any Subsidiary of either is an "investment company"
or a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, or an
"investment adviser" within the meaning of the Investment
Advisers Act of 1940, as amended.
8P. Bank Holding Company Status. Neither the Partnership,
the REIT nor any Subsidiary of either is a "bank holding company"
within the meaning of the Federal Deposit Insurance Act (12
U.S.C. Section 1811, et. seq.), as amended.
8Q. Possession of Material Rights and Intellectual
Property. The Partnership, the REIT and their Subsidiaries
possess all material franchises, certificates, affiliation
agreements, licenses, approvals, registrations, development and
other permits and authorizations, and easements, rights of way
and similar rights from governmental or political subdivisions,
regulatory authorities or other Persons (collectively, "Material
Rights") and all Intellectual Property, free from burdensome
restriction, that are necessary in the judgement of the
Partnership and the REIT in any material respect for the
ownership, maintenance and operation of their business,
properties and assets, (and those of their Subsidiaries) and
neither the Partnership, the REIT nor any Subsidiary of either is
in violation of any Material Rights in any material respect nor
has infringed upon or violated the Intellectual Property of any
third party. From and after the date hereof, all Material Rights
and Intellectual Property will be validly issued and will be in
full force and effect and will not contain any provision or
restriction which could materially affect or impair their value
or use. No event has occurred which permits, or after notice or
lapse of time or both would permit, the revocation or termination
of any such Material Rights or Intellectual Property, or
materially and adversely affect the rights of the Partnership,
the REIT or any Subsidiary of either thereunder.
8R. Solvency. The fair value of the property and other
assets of the Partnership is greater than the total amount of its
liabilities, including without limitation, contingent
liabilities; the present fair saleable value of the property and
other assets of the Partnership is not less than the amount that
will be required to pay the probable amount of its liabilities as
such liabilities become due and payable; the Partnership does not
intend to, nor does it believe that it will, incur debts or
liabilities beyond its ability to repay as such debts and
liabilities mature; and the Partnership's property and other
assets do not constitute an unreasonably small amount of capital
for the line of business it is engaged in.
The fair value of the property and other assets of the REIT
is greater than the total amount of its liabilities, including
without limitation, contingent liabilities; the present fair
saleable value of the property and other assets of the REIT is
not less than the amount that will be required to pay the
probable amount of its liabilities as such liabilities become due
and payable; the REIT does not intend to, nor does it believe
that it will, incur debts or liabilities beyond its ability to
repay as such debts and liabilities mature; and the REIT's
property and other assets do not constitute an unreasonably small
amount of capital for the line of business it is engaged in.
8S. Labor and Employee Relations Matters. Except as set
forth on Schedule 8S:
(i) Neither the Partnership, the REIT nor any Subsidiary of
either is or expects to be the subject of any union organizing
activity or labor dispute, nor has there been any strike of any
kind called, or, to the knowledge of the company, threatened to
be called against them or any Subsidiary; and neither the
Partnership, the REIT nor any Subsidiary of either has violated
any applicable federal or state law or regulation relating to
labor or labor practices.
(ii) No present or former employees of the Partnership, the
REIT or any Subsidiary of either have advanced claims in writing
against the Partnership, the REIT or any Subsidiary of either
(whether under any foreign, federal, state or common law, through
a government agency, under an employment agreement, collective
bargaining agreement, personal service or independent contractor
agreement or otherwise) that are currently pending for (A)
overtime pay, other than overtime pay for the current period; (B)
wages, salaries or profit sharing (excluding wages, salaries or
profit sharing for the current payroll period); (C) vacations,
time off (including without limitation, potential sick leave) or
pay in lieu of vacation or time off, other than vacation or time
off (or pay in lieu thereof) earned in respect of the current
fiscal year; (D) any violation of any statute, ordinance or
regulation relating to minimum wages or maximum hours of work;
(E) discrimination against employees on any basis; (F) unlawful
employment or termination practices; (G) unfair labor practices
or alleged violations of collective bargaining agreements;
(H) any violation of occupational safety and/or health standards;
(I) benefits under any employee plans or compensation
arrangement; and (J) breach of any employment, personal service
or independent contractor agreement.
(iii)There is not pending against the Partnership, the
REIT or any Subsidiary of either or, to the knowledge of the
Partnership or the REIT threatened, any labor dispute, strike or
work stoppage that materially affects or materially interferes
with, or may materially affect or materially interfere with, the
Partnership's, the REIT's or such Subsidiary's operations after
the date hereof.
(iv) There is not pending or, to the knowledge or the
Partnership or the REIT threatened, any charge or complaint
against the Partnership, the REIT or any Subsidiary of either by
or before the National Labor Relations Board, any representative
thereof, or any comparable foreign or state agency or authority.
(v) All collective bargaining agreements to which the
Partnership, the REIT or any Subsidiary of either is a party are
described in Schedule 8S.
8T. No Improper Payment or Influence. Neither the
Partnership, the REIT nor any Subsidiary of either has directly
or indirectly paid or delivered any fee, commission or other
money or property, or engaged in any lobbying, influencing or
other behavior, however characterized, to any agent, government
official, regulatory body, governmental agency or other Person,
in the United States or any other country, related to the
business or operations of the Partnership, the REIT or any of
their Subsidiaries, and that the Partnership, the REIT or any
Subsidiary knows or has reason to believe to have been illegal
under any Federal, state, or local law of the United States or
any other country having jurisdiction, or to have been for the
purpose of, and to have had the effect of, inducing or
encouraging the breach by the recipient thereof of any legal
duties, whether as an employee or otherwise to another Person.
8U. Foreign Enemies and Regulations.
(i) Neither the issue and sale of the Notes by the
Partnership, its use of the proceeds thereof as contemplated by
this Agreement, or the issuance of the REIT Guaranties by the
REIT will violate (A) any regulations promulgated or
administered by the Office of Foreign Assets Control, United
States Department of the Treasury, including without limitation,
the Foreign Assets Control Regulations, the Transaction Control
Regulations, the Cuban Assets Control Regulations, the Foreign
Funds Control Regulations, the Iranian Assets Control
Regulations, the Nicaraguan Trade Control Regulations, the South
African Transaction Regulations, the Iranian Transactions
Regulations, the Iraqi Sanctions Regulations, the Soviet Gold
Coin Regulations, the Panamanian Transaction Regulations or the
Libyan Sanctions Regulations of the United States Treasury
Department, 31 C.F.R., Subtitle B, Chapter V, as amended, (B) the
Trading with the Enemy Act, as amended, (C) Executive Orders
8389, 9095, 9193, 12543 (Libya), 12544 (Libya), 12722 or 12724
(Iraq), 12775 or 12779 (Haiti), or 12959 (Iran), as amended, of
the President of the United States or (D) any rule, regulation or
executive order issued or promulgated pursuant to the laws or
regulations described in the foregoing clauses (A) -(C).
(ii) None of the transactions contemplated in this Agreement
(including without limitation, the use of the proceeds from the
sale of the Notes) will violate the Comprehensive Anti-Apartheid
Act of 1986, or any rules or regulations promulgated thereunder.
8V. Interstate Commerce Act. Neither the Partnership, the
REIT nor any Subsidiary of either is a "rail carrier" or a person
controlled by or Subsidiary with a "rail carrier" within the
meaning of Title 49, U.S.C., and neither the Partnership, the
REIT nor any Subsidiary of either is a "carrier" to which 49
U.S.C. Section 11301(b)(1) is applicable.
8W. Due Authorization, etc. This Agreement, the REIT
Guaranties, the Notes and the other Loan Documents have been duly
authorized by all necessary corporate action on the part of the
Partnership and the REIT, and this Agreement constitutes, and
upon execution and delivery thereof each Note and each of the
REIT Guaranties will constitute, a legal, valid and binding
obligation of the Partnership and the REIT, enforceable against
the Partnership and the REIT in accordance with their respective
terms, except as such enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights
generally and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in
equity or at law).
8X. Publicly Traded Debt. The Notes and the REIT
Guaranties are not of the same class as securities or other
equity interests of the Partnership or the REIT, if any, listed
on a national securities exchange registered under Section 6 of
the Exchange Act or quoted in a U.S. automated inter-dealer
quotation system.
8Y. Disclosure. Neither this Agreement nor any other
document, certificate or statement furnished to you by or on
behalf of the Partnership or the REIT in connection herewith
contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements
contained herein and therein not misleading. There is no fact
peculiar to the Partnership, the REIT or any of its Subsidiaries
which materially adversely affects or in the future may (so far
as the Partnership or the REIT can now foresee) materially
adversely affect the business, property or assets, or financial
condition of the Partnership, the REIT or any of their
Subsidiaries and which has not been set forth in this Agreement
or in the other documents, certificates and statements furnished
to you by or on behalf of the Partnership and the REIT prior to
the date hereof in connection with the transactions contemplated
hereby.
9. REPRESENTATIONS OF THE PURCHASER. You represent as
follows:
9A. Nature of Purchase. You are not acquiring the Notes to
be purchased by you hereunder with a view to or for sale in
connection with any distribution thereof within the meaning of
the Securities Act, provided that the disposition of your
property shall at all times be and remain within your control.
You understand that the Notes have not been registered under the
Securities Act and may be resold only if registered pursuant to
the provisions of the Securities Act or if an exemption from
registration is available, except under circumstances where
neither such registration nor such an exemption is required by
law, and that the Partnership is not required to register the
Notes.
9B. Source of Funds. No part of the funds being used by
you to pay the purchase price of the Notes being purchased by you
hereunder constitutes assets allocated to any separate account
maintained by you.
The source of funds from which this investment is to be made
is the general account of The Prudential Insurance Company of
America, which is not considered to be plan assets for purposes
of the prohibited transaction rules of Section 406 of ERISA
pursuant to Department of Labor Interpretive Bulletin 75-2.
10. DEFINITIONS; ACCOUNTING MATTERS. For the purpose of
this Agreement, the terms defined in paragraph 10A(or within the
text of any other paragraph) shall have the respective meanings
specified therein and all accounting matters shall be subject to
determination as provided in paragraph 10B.
10A. Terms.
"Affiliate" shall mean, with respect to any Person, any
Person directly or indirectly controlling, controlled by, or
under direct or indirect common control with, that Person. A
Person shall be deemed to control a legal entity if such Person
possesses, directly or indirectly, the power to direct or cause
the direction of the management and policies of such legal
entity, whether through the ownership of voting securities, by
contract or otherwise.
"Annual Debt Service Charge" means, for any period and with
respect to any Person, the principal amortization plus interest
expense for such period, including, without duplication, (i) all
amortization of debt discount, (ii) all accrued interest, (iii)
all capitalized interest, and (iv) the interest component of
Capitalized Lease Obligations.
"Annual Percentage of Earnings Capacity Transferred" shall
mean, with respect to any four (4) consecutive fiscal quarter
period, the sum of a Person's Percentages of Earnings Transferred
for each asset that is Transferred by such Person during such
period.
"Annual Percentage of Net Worth Transferred" shall mean for
any Person, with respect to any four (4) consecutive fiscal
quarter period, the sum of that Person's Percentages of Net Worth
Transferred for each asset that is Transferred by such Person
during such period.
"Bankruptcy Law" shall have the meaning specified in clause
(viii) of paragraph 7A.
"Business Day" shall mean any day except Saturday, Sunday,
or any other day on which banks in Atlanta, Georgia are required
or authorized to close.
"Capitalized Lease Obligation" shall mean any rental obliga
tion which, under GAAP, would be required to be capitalized on
the books of the Person having such obligation, taken at the
amount thereof accounted for as indebtedness (net of interest
expense) in accordance with GAAP.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Collateral" shall mean your interest in real and personal
property of the Converted Borrowers securing the Converted Loans.
"Computing Holder" shall mean, with respect to the Notes, as
of the date of acceleration pursuant to paragraph 7A, the holder
with the highest aggregate unpaid principal amount of Notes,
which holder is willing to act in such capacity. In case two (2)
or more holders of Notes would, by reason of holding Notes in the
same aggregate unpaid principal amount, qualify as the Computing
Holder as aforesaid as of any date of determination, the
Computing Holder shall be the qualifying holder or holders as
mutually determined by all such qualifying holders. For purposes
of such determination, Notes then held by any holder and its
Subsidiaries and Affiliates shall be aggregated.
"Consolidated" shall mean the consolidation of the accounts
of the Partnership or the REIT (as the case may be) and its
Subsidiaries in accordance with GAAP, including principles of
consolidation, consistent with those applied in the preparation
of the Consolidated financial statements referred to in paragraph
8B.
"Consolidated Income Available for Debt Service" for any
period and with respect to any Person means Consolidated Net
Income for such period, plus amounts which have been deducted and
minus amounts which have been added in calculation of such
Person's Consolidated Net Income for (without duplication) (i)
interest expense on debt, (ii) provision for taxes based on
income, (iii) amortization of debt discount and deferred
financing costs, (iv) provisions for gains and losses on
properties, (v) property depreciation and amortization, (vi) the
effect of any non-cash items resulting from a change in
accounting principles in determining Consolidated Net Income, and
(vii) amortization of deferred charges.
"Consolidated Net Income (Loss)" shall mean, as to any
period and with respect to any Person, Consolidated gross
revenues less all operating and non-operating expenses on a
Consolidated basis for such period, including all charges of a
proper character (including current and deferred taxes on income,
provision for taxes on unremitted foreign earnings which are
included in gross revenues, and current additions to reserves),
but not including in gross revenues the following:
(i) any gains (net of expenses and taxes
applicable thereto) in excess of losses resulting
from the Transfer of capital assets (i.e., assets
other than current assets);
(ii) any gains resulting from the write-up of
assets;
(iii) any equity of such Person in the
undistributed earnings (but not losses) of any
corporation which is not a Subsidiary;
(iv) undistributed earnings of any Subsidiary
to the extent that such Subsidiary is not at the
time permitted to (A) make or pay dividends to any
Subsidiary parent thereof or to such Person,
(B) repay intercompany loans or advances to any
Subsidiary parent thereof or to such
Person,(C) convert such earnings into U.S. dollars
or repatriate earnings to any Subsidiary parent
thereof or such Person or (D) otherwise Transfer
property or other assets to any Subsidiary parent
thereof or such Person, whether by the terms of
its charter or any agreement, instrument,
judgment, decree, order, statute, rule or
governmental regulation applicable to such
Subsidiary;
(v) any earnings or losses of any Person
acquired by such Person or any Subsidiary thereof
through purchase, merger, consolidation or
otherwise for any fiscal period prior to the
fiscal period in which the acquisition occurs;
(vi) any deferred credit representing the
excess of equity in any Subsidiary at the date of
acquisition over the cost of the investment in
such Subsidiary;
(vii) gains or losses from the acquisition of
securities or the retirement or extinguishment of
Debt;
(viii) gains on collections from insurance
policies or settlements;
(ix) any income or gain during such period
from any change in accounting principles, from any
discontinued operations or the disposition
thereof, from any extraordinary items or from any
prior period adjustments,
(x) any restoration to income of any
contingency reserve, except to the extent that
provision for such reserve was made out of income
accrued during such period;
(xi) in the case of a successor to such
Person by consolidation or merger or as a
transferee of its assets, any earnings of the
successor corporation prior to such consolidation,
merger or transfer of assets.
If the preceding calculation results in a number less than zero,
such amount shall be considered a Consolidated Net Loss.
"Consolidated Tangible Net Worth" shall mean, as at any
time of determination thereof and with respect to any Person,
such Person's Consolidated equity, less , on a Consolidated basis
(i) the book value of all such Person's Intangibles, (ii) any net
gains or losses attributed to cumulative translation adjustments,
(iii) Minority Interests of such Person.
"Converted Loan Borrowers" shall mean Persons (other
than the Partnership and the REIT) that are obligated on the
Converted Loans.
"Converted Loan Rate" shall mean the interest rate on
the Converted Loans as of the Conversion Date.
"Converted Loans" shall mean those of the Convertible
Loans with respect to which the Partnership provides to you sixty
(60) days written notice of its intention to convert such loans
to unsecured loans through the sale to you of the Notes pursuant
to the terms of this Agreement, provided that (i) at least $43
million in principal amount of Convertible Loans are included in
such notice, (ii) Prudential Loan # 6 100 628 (as further
described in the definition of Convertible Loans) or all five (5)
of Prudential Loans # 6 102 394, 6 102 395, 6 102 395, 6 102 437
and 6 107 438 are included in such notice, (iii) with respect to
any Convertible Loan, the entirety of such loan is indicated as
being converted, and (iv) all of the conditions to conversion
outlined herein have been satisfied.
"Conversion Date" shall mean the day agreed to between
you and the Partnership upon which the purchase and sale of the
Notes will be closed and upon which all of the conditions to
closing shall be either satisfied or waived in writing.
"Conversion Maturity Date" means December 15, 2004.
"Convertible Loans" shall mean the loans from you that
are evidenced by (i) that certain Promissory Note, dated July 18,
1994, from the Partnership to you in an original principal amount
of $43,400,000, and such other documents and instruments executed
and delivered in connection therewith (Prudential Xxxx # 0 000
000), (xx) that certain Promissory Note, dated June 21, 1993,
from the Partnership (as successor by merger) to you in an
original principal amount of $4,700,000, and such other documents
and instruments executed and delivered in connection therewith
(Prudential Loan # 6 100 370), (iii) that certain Promissory
Note, dated August 11, 1993, from Mid-America Apartments of
Texas, L.P. to you in an original principal amount of $8,000,000,
and such other documents and instruments executed and delivered
in connection therewith (Prudential Loan # 6 100 383), and
(iv)(a) that certain Amended and Restated Promissory Note, dated
of even date herewith, from Paddock Club Jacksonville, A Limited
Partnership, to you in an original principal amount of
$6,063,000.00, together with all documents evidencing, securing
or relating to the loan evidenced thereby (Prudential Loan #
6 102 395); (b) that certain Amended and Restated Promissory
Note, dated of even date herewith, from Paddock Club Lakeland, a
Limited Partnership, to you in an original principal amount of
$5,751,000.00, together with all documents evidencing, securing
or relating to the loan evidenced thereby (Prudential Loan # 6
102 396); (c) that certain Amended and Restated Promissory Note,
dated of even date herewith, from Paddock Club Lakeland Phase II,
A Limited Partnership, to you in an original principal amount of
$8,123,000.00, together with all documents evidencing, securing
or relating to the loan evidenced thereby (Prudential Loan # 6
102 437); (d) that certain Promissory Note, dated of even date
herewith, from the Partnership to you in the amount of
$19,510,000.00, together with all documents evidencing, securing
or relating to the loan evidenced thereby (Prudential Loan # 6
102 394); and (e) that certain Consolidated, Amended and Restated
Promissory Note, dated of even date herewith, from Paddock Club
Jacksonville Phase II, A Limited Partnership, to you, in an
original principal amount of $8,053,000.00, together with all
documents evidencing, securing or relating to the loan evidenced
thereby (Prudential Loan # 6 102 395).
"Current Debt" shall mean, with respect to any Person,
all Indebtedness of such Person for borrowed money which by its
terms or by the terms of any instrument or agreement relating
thereto matures on demand or within one (1) year from the date of
the creation thereof and is not directly or indirectly renewable
or extendible at the option of the debtor to a date more than one
(1) year from the date of the creation thereof, provided that
Indebtedness for borrowed money outstanding under a revolving
credit or similar agreement which obligates the lender or lenders
to extend credit over a period of more than one (1) year shall
constitute Funded Debt and not Current Debt, even though such
Indebtedness by its terms matures on demand or within one (1)
year from the date of the creation thereof.
"Debt" shall mean Current Debt and Funded Debt.
"Default" shall mean (i) any of the events specified in
paragraph 7A, whether or not any requirement for such event to
become an Event of Default has been satisfied, and (ii) any
event, act or condition which, with the giving of notice of lapse
of time, or both, would constitute an Event of Default.
"Environmental and Safety Laws" shall mean all laws
relating to pollution, the release or other discharge, handling,
disposition or treatment of Hazardous Materials and other
substances or the protection of the environment or of employee
health and safety, including without limitation, CERCLA, the
Hazardous Materials Transportation Act (49 U.S.C. Section 1801
et. seq.), the Resource Conservation and Recovery Act (42 U.S.C.
Section 7401 et. seq.), the Clean Air Act (42 U.S.C. Section 401
et. seq.), the Toxic Substances Control Act (15 U.S.C. Section
2601 et. seq.), the Occupational Safety and Health Act (29 U.S.C.
Section 651 et. seq.) and the Emergency Planning and Community
Right-To-Know Act (42 U.S.C. Section 11001 et. seq.), each as the
same may be amended and supplemented, and such other similar laws
as may be enacted by the Congress of the United States.
"Environmental Costs and Liabilities" shall mean, as to
any Person, all liabilities, obligations, responsibilities,
remedial actions, losses, damages, punitive damages,
consequential damages, treble damages, contribution, cost
recovery, costs and expenses (including all fees, disbursements
and expenses of counsel, expert and consulting fees, and costs of
investigation and feasibility studies), fines, penalties,
sanctions and interest incurred as a result of any claim or
demand, by any Person, whether based in contract, tort, implied
or express warranty, strict liability, criminal or civil statute,
permit, order or agreement with any Federal, state or local
governmental authority or other Person, arising from
environmental, health or safety conditions, or the release or
threatened release of a contaminant, pollutant or Hazardous
Material into the environment, resulting from the operations of
such person or its Subsidiaries, or breach of any Environmental
and Safety Law or for which such Person or its Subsidiaries is
otherwise liable or responsible.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
"ERISA Affiliate" shall mean any Person which is a
member of the same controlled group of Persons as the Partnership
or the REIT (as the case may be) within the meaning of section
414(b) of the Code, or any trade or business which is under
common control with the Partnership or the REIT within the
meaning of section 414(c) of the Code.
"Event of Default" shall mean any of the events
specified in paragraph 7A, provided that there has been satisfied
any requirement in connection with such event for the giving of
notice, or the lapse of time, or the happening of any further
condition, event or act.
"Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
"Full Rating Category" shall mean (i) with respect to
S&P, any of the following categories: BB, B, CCC and C, (ii) with
respect to Xxxxx'x, any of the following categories: Ba, B, Caa,
Ca and C and (iii) with respect to any other Rating Agency, the
equivalent of any such category of S&P or Xxxxx'x used by such
other Rating Agency. In determining whether the rating of the
Notes has decreased by the equivalent of one Full Rating
Category, gradations within Full Rating Categories (+ and - for
S&P; 1, 2 and 3 for Xxxxx'x; or the equivalent gradation for
another Rating Agency) shall be taken into account (e.g., with
respect to S&P, a decline in a rating from BB+ to B+ will
constitute a decrease of one Full Rating Category).
"Funded Debt" shall mean, with respect to any Person,
all Indebtedness of such Person which by its terms or by the
terms of any instrument or agreement relating thereto matures, or
which is otherwise payable or unpaid, more than one (1) year
from, or is directly or indirectly renewable or extendible at the
option of the debtor to a date more than one year (including an
option of the debtor under a revolving credit or similar
agreement obligating the lender or lenders to extend credit over
a period of more than one year) from, the date of the creation
thereof, including current maturities of long-term debt that
appear as current liabilities in accordance with GAAP.
"GAAP" shall have the meaning set forth in paragraph
10C.
"Good Faith Contest" shall mean, with respect to any
tax, assessment, Lien, obligation, claim, liability, judgment,
injunction, award, decree, order, law, regulation, statute or
similar item, any challenge or contest thereof by appropriate
proceedings timely initiated in good faith for which adequate
reserves therefor have been taken in accordance with GAAP.
"Guarantee" shall mean, with respect to any Person, any
direct or indirect liability, contingent or otherwise, of such
Person with respect to any indebtedness, lease, dividend or other
obligation of another, including, without limitation, any such
obligation directly or indirectly guaranteed, endorsed (otherwise
than for collection or deposit in the ordinary course of
business) or discounted or sold with recourse by such Person, or
in respect of which such Person is otherwise directly or
indirectly liable, including, without limitation, any such
obligation in effect guaranteed by such Person through any
agreement (contingent or otherwise) to:
(i) purchase, repurchase or otherwise acquire such
obligation or any security therefor, or to provide
funds for the payment or discharge of such obligation
(whether in the form of loans, advances, stock
purchases, capital contributions or otherwise),
(ii) maintain the solvency or any balance sheet or
other financial condition of the obligor of such
obligation, or
(iii) make payment for any products, materials or
supplies or for any transportation or services
regardless of the non-delivery or non-furnishing
thereof,
(iv) rent or lease (as lessee) any real or personal
property if such contract (or any related document)
provides that the obligation to make payments
thereunder is absolute and unconditional under
conditions not customarily found in commercial leases
then in general use or requires that the lessee
purchase or otherwise acquire securities or obligations
of the lessor, or
(v) sell or provide materials, supplies or other
property or services, if such agreement (or any related
document) requires that payment for such materials,
supplies or other property or services, shall be
subordinated to any indebtedness (of the purchaser or
user of such materials, supplies or other property or
the Person entitled to the benefit of such services)
owed or to be owed to any Person,
in any such case if the purpose, intent or effect of such
agreement is to provide assurance that such obligation will be
paid or discharged, or that any agreements relating thereto will
be complied with, or that the holders of such obligation will be
protected against loss in respect thereof. The amount of any
Guarantee shall be equal to the outstanding principal amount of
the obligation guaranteed or such lesser amount to which the
maximum exposure of the guarantor shall have been specifically
limited.
"Hazardous Materials" shall mean (i) any material or
substance defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous material," "toxic
substances" or any other formulations intended to define, list or
classify substances by reason of their deleterious properties,
(ii) any oil, petroleum or petroleum derived substance, (iii) any
flammable substances or explosives, (iv) any radioactive
materials, (v) asbestos in any form, (vi) electrical equipment
that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of fifty (50) parts per
million, (vii) pesticides or (viii) any other chemical, material
or substance, exposure to which is prohibited, limited or
regulated by any governmental agency or authority or which may or
could pose a hazard to the health and safety of persons in the
vicinity thereof.
"including" shall mean, unless the context clearly
requires otherwise, "including without limitation".
"Indebtedness" shall mean, with respect to any Person
and without duplication (i) all items (excluding items of
contingency reserves or of reserves for deferred income taxes)
which in accordance with GAAP would be included in determining
total liabilities as shown on the liability side of a balance
sheet of such Person as of the date on which Indebtedness is to
be determined,(ii) all indebtedness secured by any Lien on, or
payable out of the proceeds or production from, any property or
asset owned or held by such Person, whether or not the
indebtedness secured thereby shall have been assumed, (iii) all
indebtedness of third parties, including joint ventures and
partnerships of which such Person is a venturer or general
partner, recourse to which may be had against such Person,
(iv) redemption obligations in respect of mandatorily redeemable
Preferred Stock; and (v) all indebtedness and other obligations
of others with respect to which such Person has become liable by
way of a Guarantee.
"Institutional Investor" shall mean any insurance
company, commercial, investment or merchant bank, finance
company, mutual fund, registered money or asset manager, savings
and loan association, credit union, registered investment
advisor, pension fund, investment company, licensed broker or
dealer, "qualified institutional buyer" (as such term is defined
under Rule 144A promulgated under the Securities Act, or any
successor law, rule or regulation) or "accredited investor" (as
such term is defined under Regulation D promulgated under the
Securities Act, or any successor law, rule or regulation).
"Intangibles" shall mean, without duplication, all
Material Rights, Intellectual Property and operating agreements,
treasury stock, deferred or capitalized research and development
costs, goodwill (including any amounts, however designated,
representing the cost of acquisition of business and investments
in excess of the book value thereof), unamortized debt discount
and expense, any write-up of asset value after he Conversion Date
and any other amounts reflected in contra-equity accounts, and
any other assets treated as intangible assets under GAAP.
"Intellectual Property" shall mean all patents,
trademarks, service marks, trade names, copyrights, brand names,
mechanical or technical processes and paradigms, know-how, and
similar intellectual property and applications, licenses and
similar rights in respect of the same.
"Investment Grade" shall mean BBB- or higher by S&P or
Baa3 or higher by Xxxxx'x or the equivalent of such ratings by
S&P or Moody's or by any other Rating Agency selected as provided
herein.
"Investments" shall have the meaning provided in
paragraph 6C(3).
"Lien" shall mean any mortgage, pledge, security
interest, encumbrance, minimum or compensating deposit
arrangement, lien (statutory or otherwise) or charge of any kind
(including any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, any lease in
the nature thereof, and the filing of or agreement to give any
financing statement under the Uniform Commercial Code of any
jurisdiction) or any other type of preferential arrangement for
the purpose, or having the effect, of protecting a creditor
against loss or securing the payment or performance of an
obligation.
"Loan Documents" shall mean this Agreement, the Notes,
the REIT Guaranties, and all other documents or agreements
executed or delivered in connection with the issuance of the
Notes hereunder and the closing of the transactions contemplated
hereby.
"Material Adverse Effect" shall mean (i) a material
adverse effect on the business, assets, liabilities, operations,
prospects or condition, financial or otherwise, of a Person,
taken as a whole, (ii) material impairment of a Person to perform
any of their obligations under the Agreement, the Notes or the
REIT Guaranties or (iii) material impairment of the validity or
enforceability or the rights of, or the benefits available to,
the holders of any of the Notes under this Agreement, the REIT
Guaranties or the Notes.
"Material Rights" shall have the meaning provided in
paragraph 8Q.
"Minority Interests" shall mean any equity interests in
an Subsidiary that are not owned by the Partnership, the REIT or
a Wholly Owned Subsidiary of either.
"Moody's" shall mean Xxxxx'x Investors Services, Inc.,
including the NCO/Moody's Commercial Division, or any successor
Person.
"Multiemployer Plan" shall mean any Plan which is a
"multiemployer plan" (as such term is defined in section
4001(a)(3) of ERISA).
"Nationally Recognized Rating Agency" shall mean S & P,
Moody's, Duff & Xxxxxx Credit Rating Co., and Fitch Investors
Service, Inc., and if any of those agencies whose rating was
previously used to satisfy the rating covenant ceases to issue
such ratings generally, another rating agency of similar national
status as may be reasonably determined by you.
"Net Worth" shall mean, as of any date and with respect
to any Person, such Person's net worth as determined in
accordance with GAAP and on a Consolidated basis.
"Officer's Certificate" shall mean a certificate signed
(i) in the name of the Partnership by its general partner,
(ii) in the name of the REIT, by its President, Vice President or
Secretary, and (iii) in the name of any Subsidiary, by a general
partner or its President (as the case may be).
"Partnership" shall mean Mid-America Apartments, L.P.
"PBGC" shall mean the Pension Benefit Guaranty
Corporation, or any successor or replacement entity thereto under
ERISA.
"Permitted Investments" shall have the meaning set
forth in paragraph 6C(2).
"Person" shall mean and include an individual, a
partnership, a joint venture, a corporation, a limited liability
company, a limited liability partnership, any other entity having
limited liability for its owners under the law of its creation, a
trust, an unincorporated organization and a government or any
department or agency thereof.
"Plan" shall mean any "employee pension benefit plan"
(as such term is defined in section 3 of ERISA) which is or has
been established or maintained, or to which contributions are or
have been made, by the Partnership, the REIT or any ERISA
Affiliate of either.
"Preferred Stock" shall mean any class of capital stock
of a corporation that is preferred over any other class of
capital stock of such corporation as to the payment of dividends
or the payment of any amount upon liquidation or dissolution of
such corporation.
"Prepayment Premium" means an amount equal to the
greater of (a) one percent (1%) of the principal amount being
prepaid multiplied by the quotient of the number of full months
remaining until the Conversion Maturity Date divided by the
number of full months comprising the original term (on a monthly
basis) of the Note, or (b) the Present Value of the Loan (defined
below) less the amount of principal and accrued interest (if any)
being prepaid, calculated as of the prepayment date; unless
prepayment occurs on an interest payment date for the Note (each,
a "Due Date"), the actual number of days until the next Due Date
will be used to discount during that partial month; the "Present
Value of the Loan" shall be determined by discounting all
scheduled payments remaining to the Conversion Maturity Date
attributable to the amount being prepaid at the Discount Rate
(defined below); the "Discount Rate" is the rate which, when
compounded monthly, is equivalent to the Treasury Rate (defined
below), when compounded semi-annually; the "Treasury Rate" is the
semi-annual yield on the Treasury Constant Maturity Series with
maturity equal to the remaining weighted average life of the loan
evidenced by this Note, for the week prior to the prepayment
date, as reported in Federal Reserve Statistical Release H.15 -
Selected Interest Rates, conclusively determined by Holder
(absent a clear mathematical calculation error) on the prepayment
date, and the rate will be determined by linear interpolation
between the yields reported in Release H.15, if necessary;
provided, if Release H.15 is no longer published, the holders of
the Notes shall select a comparable publication to determine the
Treasury Rate.
"Priority Debt" shall mean, without duplication and as
at any time of determination thereof, the sum of the following
items: (i) Debt of the Partnership or the REIT secured by Liens
(other than as described in clauses (i), (ii), (iii), (iv), (vi),
(viii), (ix)], (x), (xii), (xiii), (xiv), (xv) and (xvii)(but
only to the extent renewing, refunding or extending Liens of the
type specified in this parenthetical)) in the definition of
Permitted Liens); and (ii) Debt or Preferred Stock of any
Subsidiary to any Person other than the Partnership, the REIT or
a Wholly Owned Subsidiary of either.
"Property Income" shall mean as for any date with
respect to any Person such Person's Consolidated revenues from
rents and other direct property operations (excluding interest
income)on a Consolidated basis minus direct operating expenses of
the property (excluding depreciation and interest expense)on a
Consolidated Basis minus a management fee equal to four percent
(4%) of property revenues on a Consolidated basis minus a capital
reserve of three hundred dollars ($300) per unit on a
Consolidated basis.
"Rating Agency" shall mean any of S&P, Moody's, Xxxx &
Xxxxxx Credit Rating Co., and Fitch Investors Service, Inc. or
any other rating agency of similar national status as may be
reasonably determined by you
"REIT" shall mean Mid-America Apartment Communities,
Inc.
"REIT Guaranty" and "REIT Guaranties" shall have the
meaning attributed to them in paragraph 3B(xii) hereof.
"Related Party" shall mean (i) any Shareholder, general
partner or limited partner,(ii) any executive officer, director,
agent, managing agent or employee, (iii) all persons to whom such
Persons are related by blood, adoption or marriage and (iv) all
Subsidiaries of the foregoing Persons.
"Reportable Event" shall mean any of the events set
forth in section 4043(b) of ERISA or the regulation thereunder, a
withdrawal from a plan described in Section 4063 of ERISA, or a
cessation of operations described in section 4062(e) of ERISA.
"Required Holder(s)" shall mean the holder or holders
of at least two-thirds (66-2/3%) of the aggregate principal
amount of the Notes from time to time outstanding.
"Responsible Officer" shall mean (i) with respect to a
limited partnership, a general partner, (ii) with respect to a
limited liability company, a managing agent, (iii) with respect
to a corporation, the chief executive officer, chief operating
officer, chief financial officer or chief accounting officer or
any other officer involved principally in its financial
administration or its controllership function, or (iv) with
respect to any other Person that is a legal entity, a person with
similar responsibilities to those listed in (i) through (iii).
"Restricted Investment" shall mean any Investment other
than a Permitted Investment.
"Restricted Payments" shall mean any of the following:
(i) any dividend on any class of the
Partnership's, the REIT's or any Subsidiary's
equity interests;
(ii) any other distribution on account of any
class of the Partnership's, the REIT's or any
Subsidiary's equity interests;
(iii) any redemption, purchase or other
acquisition, direct or indirect, of any equity
interest of the Partnership, the REIT or any
Subsidiary of either;
(iv) any unscheduled payment of principal or
interest or premium of, or retirement, redemption,
purchase or other acquisition of, any Subordinated
Debt, including convertible subordinated debt;
(v) any Restricted Investment.
"S&P" shall mean Standard & Poor's Ratings Group, a
division of The XxXxxx-Xxxx Companies, or any successor thereto.
"Securities Act" shall mean the Securities Act of 1933,
as amended.
"Shareholder" shall mean and include any Person who
owns, beneficially or of record, directly or indirectly, at any
time during any year with respect to which a computation is being
made, either individually or together with all persons to whom
such Person is related by blood, adoption or marriage, 5% or more
of the outstanding equity interests of a Person.
"Significant Holder" shall mean (i) you, so long as you
shall hold (or be committed under this Agreement to purchase) any
Note, or (ii) any other holder of at least five percent (5%) of
the aggregate principal amount of the Notes from time to time
outstanding.
"Subsidiary" shall mean, with respect to any Person,
any second Person at least fifty percent (50%) of the equity
interests of which shall, at the time as of which any determi
nation is being made, be owned by such Person, either directly or
through Subsidiaries.
"Total Assets" shall mean, as of any date and with
respect to any Person, the sum of (without duplication) such
Person's (i) Undepreciated Real Estate Assets and (ii) all other
assets (excluding accounts receivable and intangibles) of such
Person on a Consolidated basis.
"Total Unencumbered Assets" shall mean, as of any date
and with respect to any Person, the sum of (without duplication)
such Person's (i) Undepreciated Real Estate Assets which are not
subject to a Lien and (ii) all other assets (excluding accounts
receivable and intangibles) of such Person on a Consolidated
basis not subject to a Lien.
"Transfer" shall mean, with respect to any item, the
sale, exchange, conveyance, lease, transfer or other disposition
of such item.
"Transferee" shall mean any direct or indirect
transferee of all or any part of any Note purchased or to be
purchased by you under this Agreement or any interest in your
rights and obligations under this Agreement.
"Undepreciated Real Estate Assets" as of any date shall
mean such Person's cost (original cost plus capital improvements)
of its real estate assets on such date net of any write downs or
impairments before depreciation and amortization, all calculated
on a Consolidated basis.
"Unsecured Debt" means debt which is not secured by a
lien on any property or assets plus the amount of recourse
secured debt (or guaranteed debt) in excess of the undepreciated
book value of the applicable security.
"Wholly Owned Subsidiary" shall mean any Person, all of
the equity interests of every class of which is, at the time as
of which any determination is being made, owned by the
Partnership or the REIT, as the case may be, either directly or
through Wholly Owned Subsidiaries, and which has outstanding no
options, warrants, rights or other rights entitling the holder
thereof (other than the Partnership, the REIT or a Wholly Owned
Subsidiary of either) to acquire any equity interests of such
Person.
10C. Accounting and Legal Principles, Terms and
Determinations. All references in this Agreement to "GAAP" shall
mean generally accepted accounting principles, as in effect in
the United States from time to time. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted,
all determinations with respect to accounting matters hereunder
shall be made, and all unaudited financial statements and
certificates and reports as to financial matters required to be
furnished hereunder shall be prepared, in accordance with GAAP,
applied on a basis consistent with the most recent audited
consolidated financial statements of the Partnership, the REIT
and their Subsidiaries delivered pursuant to paragraph 5A(i) or
(ii) or, if no such statements have been so delivered, the most
recent audited financial statements referred to in clause (i) of
paragraph 8B. Any reference herein to any specific citation,
section or form of law, statute, rule or regulation shall refer
to such new, replacement or analogous citation, section or form
should citation, section or form be modified, amended or
replaced.
11. MISCELLANEOUS.
11A. Note Payments. The Partnership agrees that, so long
as you shall hold any Note, it will make payments of principal
of, interest on and any Prepayment Premium payable with respect
to such Note, which comply with the terms of this Agreement, by
wire transfer of immediately available funds for credit (not
later than 12:00 noon, New York City time, on the date due) to
your account or accounts as specified by the applicable
Noteholder, or such other account or accounts in the United
States as you may designate in writing, notwithstanding any
contrary provision herein or in any Note with respect to the
place of payment. You agree that, before disposing of any Note,
you will make a notation thereon (or on a schedule attached
thereto) of all principal payments previously made thereon and of
the date to which interest thereon has been paid. Upon written
request of the Partnership made concurrently with or reasonably
promptly after payment or prepayment in full of any Note, you
shall surrender such Note for cancellation, reasonably promptly
after any such request, to the Partnership at its principal
executive office. The Partnership agrees to afford the benefits
of this paragraph 11A to any Transferee which shall have made the
same agreement as you have made in this paragraph 11A.
11B. Expenses. The Partnership and the REIT agree, whether
or not the transactions contemplated hereby shall be consummated,
to pay, and save you and any Transferee harmless against
liability for the payment of, all out-of-pocket expenses arising
in connection with such transactions, including:
(i) (A) all stamp and documentary taxes and similar
charges, (B) costs of obtaining a private placement
number for the Notes and (C) reasonable fees and
expenses of brokers, agents, dealers, investment banks
or other intermediaries or placement agents, in each
case as a result of the execution and delivery of this
Agreement or the issuance of the Notes;
(ii) document production and duplication charges and
the reasonable fees and expenses of any special counsel
engaged by you or such Transferee in connection with
(A) this Agreement and the transactions contemplated
hereby (B) and any subsequent proposed waiver,
amendment or modification of, or proposed consent
under, this Agreement, whether or not such the proposed
action shall be effected or granted;
(iii) the reasonable costs and expenses, including
attorneys' and financial advisory fees, incurred by you
or such Transferee in enforcing (or determining whether
or how to enforce) any rights under this Agreement or
the Notes or in responding to any subpoena or other
legal process or informal investigative demand issued
in connection with this Agreement or the transactions
contemplated hereby or by reason of your or such
Transferee's having acquired any Note, including,
without limitation, costs and expenses incurred in any
workout, restructuring or renegotiation proceeding or
bankruptcy case;
(iv) any judgment, liability, claim, order, decree,
cost, fee, expense, action or obligation resulting from
the consummation of the transactions contemplated
hereby, including the use of the proceeds of the Notes
by the Partnership; and
(v) any Environmental Costs and Liabilities
; provided that the Partnership and the REIT shall not be
responsible for (1) any of your expenses or those of a Transferee
incurred solely in connection with any transfer of any Note;
(2) the fees and expenses of more than one counsel for the
holders of the Notes, except to the extent the Required Holders
determine that (a) either legal advice is needed in a
jurisdiction other than that specified in paragraph 11K or
(b) there exists a conflict of interest amongst the holders of
the Notes; and (3) any fees, costs or expenses incurred with
respect to any amendment that is proposed prior to the occurrence
of a Default or Event of Default by a holder of the Notes rather
than the Partnership, unless such holder shall have consulted
with the Partnership and the REIT prior to proceeding with such
amendment. The obligations of the Partnership and the REIT under
this paragraph 11B shall survive the transfer of any Note or
portion thereof or interest therein by you or any Transferee and
the payment of any Note.
11C. Consent to Amendments. This Agreement may be amended,
and the Partnership may take any action herein prohibited, or
omit to perform any act herein required to be performed by it, if
the Partnership shall obtain the written consent to such
amendment, action or omission to act, of the Required Holder(s)
except that, without the written consent of the holder or holders
of all Notes at the time outstanding, no amendment to this
Agreement shall change the maturity of any Note, or change the
principal of, or the rate, method of computation or time of
payment of interest on or any Prepayment Premium payable with
respect to any Note, or affect the time, amount or allocation of
any prepayments, or change the proportion of the principal
amount of the Notes required with respect to any consent,
amendment, waiver or declaration. Each holder of any Note at the
time or thereafter outstanding shall be bound by any consent
authorized by this paragraph 11C, whether or not such Note shall
have been marked to indicate such consent, but any Notes issued
thereafter may bear a notation referring to any such consent. No
course of dealing between the Partnership, the REIT and the
holder of any Note nor any delay in exercising any rights
hereunder or under any Note or the REIT Guaranties shall operate
as a waiver of any rights of any holder of such Note or the REIT
Guaranties. As used herein and in the Notes, the term "this
Agreement" and references thereto shall mean this Agreement as it
may from time to time be amended or supplemented.
11D. Form, Registration, Transfer and Exchange of Notes;
Lost Notes. The Notes are issuable as registered notes without
coupons in denominations of at least $1,000,000, except as may be
necessary to (i) reflect any principal amount not evenly
divisible by $1,000,000 or (ii) enable the registration of
transfer by a holder of its entire holding of Notes. The
Partnership shall keep at its principal office a register in
which the Partnership shall provide for the registration of Notes
and of transfers of Notes. Upon surrender for registration of
transfer of any Note at the principal office of the Partnership,
the Partnership shall, at its expense, execute and deliver one or
more new Notes of like tenor and of a like aggregate principal
amount, registered in the name of such transferee or transferees.
At the option of the holder of any Note, such Note may be
exchanged for other Notes of like tenor and of any authorized
denominations, of a like aggregate principal amount, upon
surrender of the Note to be exchanged at the principal office of
the Partnership. Whenever any Notes are so surrendered for
exchange, the Partnership shall, at its expense, execute and
deliver the Notes which the holder making the exchange is
entitled to receive. Every Note surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by
a written instrument of transfer duly executed, by the holder of
such Note or such holder's attorney duly authorized in writing.
Any Note or Notes issued in exchange for any Note or upon
transfer thereof shall carry the rights to unpaid interest and
interest to accrue which were carried by the Note so exchanged or
transferred, so that neither gain nor loss of interest shall
result from any such transfer or exchange. Upon receipt of
written notice from the holder of any Note of the loss, theft,
destruction or mutilation of such Note and, in the case of any
such loss, theft or destruction, upon receipt of such holder's
indemnity agreement (which shall be unsecured if such holder is
an insurance company rated A or better by A.M. Best Company or is
an Institutional Investor whose senior debt securities are rated
BBB- or Baa3 or better by S&P or Moody's, respectively, and,
otherwise, which shall be unsecured unless the Partnership
requests in writing that such indemnity agreement be secured), or
in the case of any such mutilation upon surrender and cancella
tion of such Note, the Partnership will make and deliver a new
Note, of like tenor, in lieu of the lost, stolen, destroyed or
mutilated Note. The Partnership shall give to any holder of a
Note that is an Institutional Investor promptly upon request
therefor, a complete and correct copy of the names and addresses
of all registered holders of Notes.
11E. Persons Deemed Owners; Participations. Prior to due
presentment for registration of transfer, the Partnership may
treat the Person in whose name any Note is registered as the
owner and holder of such Note for the purpose of receiving
payment of principal of, interest on and any Prepayment Premium
payable with respect to such Note and for all other purposes
whatsoever, whether or not such Note shall be overdue, and the
Partnership shall not be affected by notice to the contrary.
Subject to the preceding sentence, the holder of any Note may
from time to time grant participations in such Note to any Person
on such terms and conditions as may be determined by such holder
in its sole and absolute discretion, provided that any such
participation shall be in a principal amount of at least
$100,000.
Notwithstanding anything to the contrary herein, upon your
sale and transfer from time to time of all or any portion of a
Converted Loan prior to the Conversion Date, such sale shall be
deemed an assignment to and assumption by such purchaser of your
obligation to purchase Notes hereunder in an amount equal to the
principal amount of such Converted Loan so purchased, and you
shall have no further obligation hereunder to purchase those
Notes.
11F. Survival of Representations and Warranties; Entire
Agreement. All representations and warranties contained herein
or made in writing by or on behalf of the Company in connection
herewith shall survive the execution and delivery of this
Agreement, the Notes, and the REIT Guaranties, the transfer by
you of any Note or portion thereof or interest therein and the
payment of any Note, and may be relied upon by any Transferee,
regardless of any investigation made at any time by or on behalf
of you or any Transferee. Subject to the preceding sentence,
this Agreement, the Notes and the REIT Guaranties embody the
entire agreement and understanding between you and the Company
and supersede all prior agreements and understandings relating to
the subject matter hereof. No provision of this Agreement shall
be interpreted for or against any party because that party or its
legal representative drafted the provision.
11G. Successors and Assigns. All covenants and other
agreements in this Agreement contained by or on behalf of either
of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto
(including, without limitation, any Transferee) whether so
expressed or not.
Nothing express or implied in this Agreement is intended,
nor shall be construed, to confer (i) any legal rights, remedies,
obligations, or liabilities, legal or equitable, including the
right to receive funds, on any Person other than the parties to
this Agreement and their permitted successors and assigns, or
(ii) otherwise constitute any Person a third party beneficiary
under or by reason of this Agreement.
11H. Notices. All written communications provided for
hereunder shall be sent by first class mail or nationwide
overnight delivery service (with charges prepaid) and (i) if to
you, addressed to you at your address specified for such
communications at the address specified above, or at such other
address as you shall have specified to the Partnership in
writing, (ii) if to any other holder of any Note, addressed to
such other holder at such address as such other holder shall have
specified to the Partnership in writing or, if any such other
holder shall not have so specified an address to the Partnership,
then addressed to such other holder in care of the last holder of
such Note which shall have so specified an address to the
Partnership, and (iii) if to the Partnership or the REIT,
addressed to it at 0000 Xxxxxx Xxxxxx, Xxxxxxx, XX 00000,
Attention: Xx. Xxxxx X.X. Xxxxxxxxx, or at such other address as
the Partnership or the REIT shall have specified to the holder of
each Note in writing; provided, however, that any such
communication to the Partnership or the REIT may also, at the
option of the holder of any Note, be delivered by any other means
either to the Partnership or the REIT at its address specified
above or to any general partner of the Partnership.
Notice given pursuant to this paragraph 11H shall be deemed
delivered (A) five (5) Business Days after deposit in the U.S.
mail, if by first class mail and (B) so long as the sending party
retains a confirmation or similar number, the date specified by
the delivery service as the promised delivery date, in the case
of overnight delivery.
11I. Payments Due on Non-Business Days. Anything in this
Agreement or the Notes to the contrary notwithstanding, any
payment of principal of or interest on any Note that is due on a
date other than a Business Day shall be made on the next
succeeding Business Day. If the date for any payment is extended
to the next succeeding Business Day by reason of the preceding
sentence, the period of such extension shall be included in the
computation of the interest payable on such Business Day.
11J. Satisfaction Requirement. If any agreement,
certificate or other writing, or any action taken or to be taken,
is by the terms of this Agreement required to be satisfactory to
you or to the Required Holder(s), the determination of such
satisfaction shall be made by you or the Required Holder(s), as
the case may be, in the sole and exclusive judgment (exercised in
good faith) of the Person or Persons making such determination.
11K. Governing Law. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall
be governed by, the law of the State of Georgia.
11L. Consent to Jurisdiction; Waiver or Immunities. The
Partnership and the REIT hereby irrevocably submit to the
jurisdiction of any Georgia state or Federal court sitting in
Atlanta, Georgia, in any action or proceeding arising out of or
relating to this Agreement, and the Partnership and the REIT
hereby irrevocably agree that all claims in respect of such
action or proceeding may be heard and determined in Georgia state
or Federal court. The Partnership and the REIT hereby
irrevocably waive, to the fullest extent it may effectively do
so, the defense of an inconvenient forum to the maintenance of
such action or proceeding. The Partnership and the REIT agree
and irrevocably consent to the service of any and all process in
any such action or proceeding by the mailing, by registered or
certified U.S. mail, or by any other means or mail that requires
a signed receipt, of copies of such process to CT Corporation
System at 0000 Xxxxxxxxx Xxxxxx, XX, Xxxxxxx, Xxxxxxx 00000. The
Partnership and the REIT agree that a final judgement in any such
action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this paragraph 11L shall
affect the right of any holder of the Notes to serve legal
process in any other manner permitted by law or affect the right
of any holder of the Notes to bring any action or proceeding
against the Partnership and/or the REIT or their property in the
courts of any other jurisdiction. To the extent that the
Partnership or the REIT has or hereafter may acquire immunity
from jurisdiction of any court or from any legal process (whether
through service of notice, attachment prior to judgement,
attachment in aid of execution, execution or otherwise) with
respect to itself or its property, the Partnership and the REIT
hereby irrevocably waive such immunity in respect of its
obligations under this agreement.
11M. Severability. Any provision of this Agreement which 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, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
11N. Descriptive Headings. The descriptive headings of the
several paragraphs of this Agreement are inserted for convenience
only and do not constitute a part of this Agreement.
11O. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original but
all of which together shall constitute one instrument.
11P. Independence of Covenants. All covenants hereunder
shall be given independent effect so that if a particular action
or condition is prohibited by any one of such covenants, the fact
that it would be permitted by an exception to, or otherwise be in
compliance within the limitations of, another covenant shall not
(i) avoid the occurrence of a Default or Event of Default if such
action is taken or such condition exists or (ii) in any way
prejudice an attempt by the holders to prohibit (through
equitable action or otherwise) the taking of any action by the
Partnership, the REIT or an Subsidiary of either which would
result in a Default or Event of Default.
11Q. Mandatory Arbitration. The Partnership, the REIT and
you agree that all controversies, claims or disputes between them
arising out of this Agreement or any agreements or instruments
relating hereto or delivered in connection herewith, or relating
to the transaction contemplated by the Agreement, whether
individual, joint or class in nature, including, without
limitation, contract, tort, or other controversies, claims or
disputes shall be arbitrated in accordance with the Commercial
Arbitration Rules of the American Arbitration Association.
No act to take or dispose of any collateral, or to exercise
any right in connection with collateral, or to seek to obtain
provisional or ancillary relief from a court of competent
jurisdiction before, during or after the pendency of any
arbitration proceeding conducted pursuant to this arbitration
agreement, including, without limitation, by judicial
foreclosure, by power of sale on a deed of trust or mortgage,
obtaining or executing a writ of attachment, or the exercise of
any rights relating to personal property, including, without
limitation, taking or disposing of such property with or without
judicial process pursuant to Article 9 of the Uniform Commercial
Code as codified under applicable law, shall constitute a waiver
of this arbitration agreement. Either the Partnership, the REIT
or you may apply to a court of competent jurisdiction for an
injunction, the appointment of a receiver, declaratory relief or
any provisional or ancillary relief referred to in the preceding
sentence. Any statutes of limitations or doctrines of estoppel,
waiver, laches or similar statutes or doctrines, which would
otherwise be applicable in a judicial action brought by a party
shall be applicable in any arbitration proceeding hereunder.
Any controversies, claims or disputes concerning the
lawfulness or reasonableness of any act, or the exercise of any
right concerning collateral, including, without limitation any
claim to rescind, reform or otherwise modify any agreements or
instruments relating hereto or delivered in connection herewith,
shall also be arbitrated; provided however, that no arbitrator
shall have the right or power to enjoin or restrain any act of
any party.
Judgment upon any award rendered by the arbitrator(s) may be
entered in any court having jurisdiction.
The Federal Arbitration Act, U.S.C. 1-14, shall apply to the
construction and interpretation of this arbitration provision.
11R. Waiver of Jury Trial. The Partnership, the REIT and
the holders of the Notes agree to waive their respective rights
to a jury trial of any claim or cause of action based upon or
arising out of this Agreement, the Notes, or any dealings between
them relating to the subject matter of this transaction and the
lender/borrower relationship that is being established. The
scope of this waiver is intended to be all-encompassing of any
and all disputes that may be filed in any court and that relate
to the subject matter of this transaction, including without
limitation, contract claims, tort claims, breach of duty claims,
and all other common law and statutory claims. The holders of
the Notes, the Partnership and the REIT each acknowledge that
this waiver is a material inducement to enter into this business
relationship, that each has already relied on the waiver in
entering into this Agreement, and that each will continue to rely
on the waiver in their related future dealings. The holders of
the Notes, the Partnership and the REIT further warrant and
represent that each has reviewed this waiver with its legal
counsel, and that each knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. THIS
WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENT, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT, THE NOTES, OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO THE NOTES. In the event of litigation,
this Agreement may be filed as a written consent to a trial by
the court.
11S. Reproduction of Documents. This Agreement and all
documents relating thereto, including, without limitation, (a)
consents, waivers and modifications that may hereafter be
executed, (b) documents received by you at the Closing (except
the Notes themselves), and (c) financial statements, certificates
and other information previously or hereafter furnished to you,
may be reproduced by you by any photographic, photostatic,
microfilm, microcard, miniature photographic or other similar
process and you may destroy any original document so reproduced.
The Partnership and the REIT agree and stipulate that, to the
extent permitted by applicable law, any such reproduction shall
be admissible in evidence as the original itself in any judicial
or administrative proceeding (whether or not the original itself
in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was
made by you in the regular course of business) and any
enlargement, facsimile or further reproduction of such
reproduction shall likewise by admissible in evidence. This
paragraph 11S shall not prohibit the Partnership, the REIT or any
other holder of Notes from contesting any such reproduction to
the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such
reproduction.
11T. Severalty of Obligations. The sales of Notes to the
Purchasers are to be several sales, and the obligations of the
Purchasers under this Agreement are several obligations. No
failure by any Purchaser to perform its obligations under this
Agreement shall relieve any other Purchaser or the Partnership of
any of its obligations hereunder, and no Purchaser shall be
responsible for the obligations of, or any action taken or
omitted by, any other Purchaser hereunder.
11U. Independent Investigation. Each Purchaser has made its
own independent investigation of the condition (financial and
otherwise), prospects and affairs of the Partnership, the REIT
and their Subsidiaries in connection with its purchase of the
Notes hereunder and has made and shall continue to make its own
appraisal of the creditworthiness of the Partnership. No Holder
shall have any duty or responsibility to any other Holder, either
initially or on a continuing basis, to make any such
investigation or appraisal or to provide any credit or other
information with respect thereto. No Holder is acting as agent
or in any other fiduciary capacity on behalf of any other Holder.
11V. Directly or Indirectly. Where any provision in this
Agreement refers to action to be taken by any Person, or which
such Person is prohibited from taking, such provision shall be
applicable whether the action in question is taken directly or
indirectly by such Person.
If you are in agreement with the foregoing, please sign the
form of acceptance on the enclosed counterpart of this letter and
return the same to the Partnership, whereupon this letter shall
become a binding agreement between the Partnership, the REIT and
you.
Very truly yours,
MID-AMERICA APARTMENTS, L.P., a
Tennessee limited partnership
By: Mid-America Apartment
Communities, Inc., a Tennessee
corporation, General Partner
By: /s/ Simon X.X. Xxxxxxxxx
Name: Simon X. X. Xxxxxxxxx
Title: CFO
MID-AMERICA APARTMENT COMMUNITIES,
INC., a Tennessee corporation,
General Partner
By: /s/ Simon X. X. Xxxxxxxxx
Name: Simon X. X. Xxxxxxxxx
Title: CFO
[SIGNATURES CONTINUED ON NEXT PAGE]
[SIGNATURE PAGE TO NOTE PURCHASE AGREEMENT]
The foregoing Agreement is
hereby accepted and agreed to
as of the date first above written.
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By: /s/ Xxxxxx X. Xxxxx
Title: Xxxxxx X. Xxxxx
Vice President
[SIGNATURE PAGE TO NOTE PURCHASE AGREEMENT]
List of Schedules for
Note Purchase Agreement
(11/17/97)
Schedule 1A - Form of Note
Schedule 3B(ii) - Opinion Form for Xxxxx, Xxxxxxxx
Schedule 3B(xii) - Form of REIT Guaranty
Schedule 6C(3) - Existing Investments
Schedule 6C(12) - Restrictive Agreements
Schedule 8A - List of Subsidiaries
Schedule 8G - Existing Agreement that Limit Debt
Schedule 8M - Environmental Exceptions
Schedule 8S - Labor Exceptions and List of
Collective Bargaining Agreements
