GUARANTY
This GUARANTY ("Guaranty") is executed as of May 30, 1997, by ERP
Operating Limited Partnership, an Illinois limited partnership ("Guarantor"),
in favor of and for the benefit of Dresdner Bank AG, New York Branch, a
banking corporation organized and existing under the laws of The Federal
Republic of Germany, acting by and through its New York Branch (the "Bank").
W I T N E S S E T H:
WHEREAS, Palomino Park Public Improvements Corporation, a Colorado
nonprofit corporation (the "Bond Issuer"), has issued its Assessment Lien
Revenue Bonds, Series 1995 (the "Bonds") pursuant to the terms of a Trust
Indenture, dated as of September 1, 1995 (the "Bond Indenture"), between the
Bond Issuer and United States Trust Company of New York, as Trustee (the "Bond
Trustee"), the proceeds of which have been or will be used primarily to
finance certain water, sewer, street and park facilities for The Park at
Highlands Ranch, a master-planned community in Xxxxxxx, Colorado, comprising
approximately 182 acres planned for development in five phases (the
"Development"); and
WHEREAS, in order to secure the payment of principal of and interest
on the Bonds, the Bank has issued an irrevocable Letter of Credit (together
with any extensions, renewals or replacements thereof, the "Letter of
Credit"), in accordance with the terms of a Letter of Credit Reimbursement
Agreement, dated as of December 1, 1995 (the "Original Reimbursement
Agreement"), between the Bank, and the Bond Issuer and Wellsford Real Estate
Investment Trust ("Wellsford REIT"), as account parties; and
WHEREAS, Wellsford REIT intends to spin-off Wellsford Real
Properties, Inc. ("WRP," and together with the Bond Issuer, the "Account
Parties") and merge with Equity Residential Properties Trust, a Maryland real
estate investment trust ("ERP REIT"), with Wellsford REIT being the surviving
entity and being renamed Equity Residential Properties Trust; and
WHEREAS, Wellsford REIT has requested that WRP succeed to the
interest of Wellsford REIT under the Reimbursement Agreement, in accordance
with the provisions of that certain First Amendment to Letter of Credit
Reimbursement Agreement, dated as of the date hereof, between the Bank, the
Bond Issuer, Wellsford REIT and WRP (the "First Amendment" and together with
the Original Reimbursement Agreement, the "Reimbursement Agreement"), and that
certain Assignment and Assumption Agreement, dated as of the date hereof, by
and between Wellsford REIT and WRP (the "Assignment Agreement") (capitalized
terms used herein without definition have the meanings given such terms in the
Reimbursement Agreement unless otherwise expressly indicated, provided,
however, that capitalized terms used in section 4.4 and not otherwise defined
in this Guaranty have the meanings given such terms in Annex A attached
hereto); and
WHEREAS, the Bank and the Bond Issuer have been asked to consent to
the Spin Off and the Merger; and
WHEREAS, in order to induce the Bank to consent to the Assignment
Agreement, the Spin Off and the Merger and to enter into the First Amendment,
Guarantor, which is a majority-owned subsidiary of ERP REIT and after the
Merger will be a majority-owned subsidiary of Wellsford REIT (with Wellsford
REIT being renamed "Equity Residential Properties Trust"), has offered to
enter into this Guaranty for the benefit and in favor of the Bank; and
WHEREAS, both through the Merger and accompanying transactions and
through its direct and indirect ownership interests in both WRP and the
Development pursuant to the Spin Off and the Merger, Guarantor will directly
benefit from the transactions contemplated hereby.
NOW, THEREFORE, as an inducement to the Bank to execute the First
Amendment and the Assignment Agreement and for other good and valuable
consideration, the receipt and legal sufficiency of which are hereby
acknowledged, Guarantor hereby agrees as follows:
ARTICLE V
NATURE AND SCOPE OF GUARANTY
5.1 Guaranty of Obligation. Guarantor hereby irrevocably and
unconditionally guarantees to the Bank and its successors and assigns the due
and punctual payment and performance in full of all Guaranteed Obligations (as
herein defined) as and when the same shall become due and payable, whether by
lapse of time, by acceleration of maturity or otherwise (including amounts
that would become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a)).
5.2 Definition of Guaranteed Obligations. The term "Guaranteed
Obligations" is used herein to mean the punctual payment when due, whether at
stated maturity, by acceleration or otherwise, of all obligations of each
Account Party, and both of them, now or hereinafter existing under the
Reimbursement Agreement and the Related Documents, including, subject to the
provisions of Section 2.1, (if applicable), any extensions, modifications,
amendments, substitutions and renewals thereof, whether for principal
(including reimbursement of amounts drawn under the Letter of Credit),
interest, fees, expenses, indemnification, or otherwise.
Notwithstanding anything to the contrary in the Reimbursement
Agreement or the Related Documents, (i) the Bank shall not be deemed to have
waived any right which the Bank may have under Section 506(a), 506(b), 1111(b)
or any other provisions of the U.S. Bankruptcy Code to file a claim for the
full amount of the debt secured by the Deed of Trust or to require that all
collateral shall continue to secure all of the debt owing to the Bank in
accordance with the Reimbursement Agreement and the Related Documents,
provided, however, that the exercise of such rights shall not be a condition
to or a prerequisite for the exercise of any rights or remedies of the Bank
hereunder or under the Reimbursement Agreement or any other Related Document,
and (ii) Guarantor shall be liable for the full amount of the Guaranteed
Obligations as and when due hereunder.
5.3 Nature of Guaranty. This Guaranty is an irrevocable, absolute,
continuing guaranty of payment and not a guaranty of collection. This
Guaranty may not be revoked by Guarantor and shall continue to be effective
with respect to any Guaranteed Obligations arising or created after any
attempted revocation by Guarantor. Subject to the provisions of Section 2.1
hereof, the fact that at any time or from time to time the Guaranteed
Obligations may be increased or reduced shall not release or discharge the
obligation of Guarantor to the Bank with respect to the Guaranteed
Obligations. This Guaranty may be enforced by the Bank and any subsequent
holder of the Promissory Notes and shall not be discharged by the assignment
or negotiation of all or part of any of the Promissory Notes.
5.4 Guaranteed Obligations Not Reduced by Offset. The Guaranteed
Obligations and the liabilities and obligations of Guarantor to the Bank
hereunder, shall not be reduced, discharged or released because or by reason
of any existing or future offset, claim or defense of any Account Party, or
any other party, against the Bank or against payment of the Guaranteed
Obligations, whether such offset, claim or defense arises in connection with
the Guaranteed Obligations (or the transactions creating the Guaranteed
Obligations) or otherwise.
5.5 Payment By Guarantor. Guarantor hereby agrees, in furtherance
of the foregoing and not in limitation of any other right which the Bank or
any other Person may have at law or in equity against Guarantor by virtue
hereof, that upon the failure of any Account Party to pay any of the
Guaranteed Obligations when and as the same shall become due, whether at
stated maturity, by required prepayment, declaration, acceleration, demand or
otherwise, Guarantor will upon demand, without presentment, protest, notice of
protest, notice of non-payment, notice of intention to accelerate the
maturity, notice of acceleration of the maturity, or any other notice
whatsoever, pay, or cause to be paid, in cash, to the Bank, an amount equal to
the sum of the unpaid principal amount of all Guaranteed Obligations then due
as aforesaid, accrued and unpaid interest on such Guaranteed Obligations at
the relevant rate set forth in the Reimbursement Agreement and the Related
Documents (including, without limitation, interest which, but for the filing
of a petition in bankruptcy with respect to WRP or the Bond Issuer, would have
accrued on such Guaranteed Obligations, whether or not a claim is allowed
against WRP or the Bond Issuer for such interest in any such bankruptcy
proceeding) and all other Guaranteed Obligations then owed to the Bank.
5.6 Payment of Expenses. Guarantor agrees to pay, or cause to be
paid, on demand, and to save the Bank harmless against liability for, any and
all costs and expenses (including fees and disbursements of counsel and
reasonable allocated costs of internal counsel) incurred or expended by the
Bank in connection with the enforcement of or preservation of any rights under
this Guaranty. The covenant contained in this Section shall survive the
payment and performance of the Guaranteed Obligations and the termination of
this Guaranty.
5.7 Effect of Bankruptcy. (a) So long as any Guaranteed
Obligations remain outstanding, Guarantor shall not, without the prior written
consent of the Bank, commence or join with any other Person in commencing any
bankruptcy, reorganization or insolvency proceedings of or against either or
both of the Account Parties. The obligations of Guarantor under this Guaranty
shall not be reduced, limited, impaired, discharge, deferred, suspended or
terminated by any proceeding, voluntary or involuntary, involving the
bankruptcy, insolvency, receivership, reorganization, liquidation, or
arrangement of either or both of the Account Parties or by any defense which
either or both of the Account Parties may have by reason of the order, decree
or decision of any court or administrative body resulting from any such
proceeding.
(b) Guarantor acknowledges and agrees that any interest on any
portion of the Guaranteed Obligations which accrues after the commencement of
any proceeding referred to in clause (a) above (or, if interest on any portion
of the Guaranteed Obligations ceases to accrue by operation of law by reason
of the commencement of said proceedings, such interest as would have accrued
on such portion of the Guaranteed Obligations if said proceedings had not been
commenced) shall be included in the Guaranteed Obligations, whether or not a
claim is allowed for such interest in any such bankruptcy proceeding, because
it is the intention of Guarantor and the Bank that the Guaranteed Obligations
which are guaranteed by Guarantor pursuant to this Guaranty should be
determined without regard to any rule of law or order which may relieve either
or both of the Account Parties of any portion of such Guaranteed Obligations.
Guarantor will permit any trustee in bankruptcy, receiver, debtor in
possession, assignee for the benefit of creditors or similar person to pay the
Bank, or allow the claim of the Bank in respect of, any such interest accruing
after the date on which such proceeding is commenced.
(c) In the event that all or any portion of the Guaranteed
Obligations are paid by either or both of the Account Parties, the obligation
of Guarantor hereunder shall continue and remain in full force and effect or
be reinstated, as the case may be, in the event that all or any part of such
payment(s) are rescinded or recovered directly or indirectly from the Bank as
a preference, fraudulent transfer or otherwise, and any such payments which
are so rescinded or recovered shall constitute Guaranteed Obligations for all
purposes under this Guaranty. It is the intention of Guarantor that
Guarantor's obligations hereunder shall not be discharged except by
Guarantor's performance of such obligations and then only to the extent of
such performance.
5.8 Rights Cumulative. The rights, powers and remedies given to
the Bank by this Guaranty are cumulative and shall be in addition to and
independent of all rights, powers and remedies given to the Bank by virtue of
any statue or rule of law or in any of the Reimbursement Agreement, the
Related Documents or any agreement between Guarantor and the Bank or between
an Account Party and the Bank. Any forbearance or failure to exercise, and
any delay by the Bank in exercising, any right, power or remedy hereunder
shall not impair any such right, power or remedy or be construed to be a
waiver thereof, nor shall it preclude the further exercise of any such right,
power or remedy.
5.9 Notice of Events. As soon as Guarantor obtains knowledge
thereof, Guarantor shall give the Bank written notice of any condition or
event which has resulted in (a) a material adverse change in the financial
condition of Guarantor, or (b) a breach of or noncompliance with any term,
condition or covenant contained herein or in any other documents delivered
pursuant hereto.
5.10 Successor. The term "WRP" or "Bond Issuer," as applicable, as
used herein shall include any new or successor corporation, association,
partnership (general or limited), joint venture, trust or other individual or
organization formed as a result of any merger, reorganization, sale, transfer,
devise, gift or bequest of WRP or Bond Issuer, as applicable, or any interest
in WRP or Bond Issuer, as applicable.
ARTICLE VI
EVENTS AND CIRCUMSTANCES NOT REDUCING
OR DISCHARGING GUARANTOR'S OBLIGATIONS
Except as otherwise expressly set forth herein, Guarantor agrees
that its obligations hereunder are irrevocable, absolute, independent and
unconditional and shall not be affected by any circumstance which releases,
diminishes, impairs, reduces or adversely affects its obligations hereunder or
constitutes a legal or equitable discharge of a guarantor or surety other than
payment in full of the Guaranteed Obligations. In furtherance of the
foregoing and without limiting the generality thereof, Guarantor agrees as
follows:
6.1 Modification. Bank, upon such terms as it deems appropriate,
without notice or demand and without affecting the validity or enforceability
of this Guaranty or giving rise to any reduction, limitation, impairment,
discharge or termination of Guarantor's liability hereunder, from time to time
may (i) renew, extend, increase, modify, alter, rearrange, accelerate, or
otherwise change the time, place, manner or terms of payment (including
without limitation the rate of interest) of the Guaranteed Obligations and
(ii) renew, extend, amend, modify, rescind, waive, increase, alter,
supplement, rearrange or otherwise change the Reimbursement Agreement, any
Related Document or any other document, instrument, contract or understanding
between WRP, the Bond Issuer and the Bank, or any other parties, pertaining to
the Guaranteed Obligations, whether or not in accordance with the
Reimbursement Agreement, such Related Document or such other document;
provided, however, that, notwithstanding the foregoing and anything to the
contrary contained in this Section 2.1, so long as no Event of Default has
occurred and is continuing under this Guaranty, if at any time the Bank and
the Account Parties desire to amend, modify, alter or supplement the
Reimbursement Agreement or any Related Document (by a written instrument or
otherwise) in any way, other than extensions of the Letter of Credit through
May 30, 2005 in accordance with Section 9.3 of the Reimbursement Agreement and
Exhibit H of the Letter of Credit, the Bank shall first obtain Guarantor's
consent to the amendment, modification, alteration, or supplement if the
effect thereof is to increase the obligations or impose new obligations upon
Guarantor under this Guaranty. If Guarantor's consent was required by the
preceding sentence and the Bank fails to obtain Guarantor's consent to such
amendment, modification, alteration or supplement, the Bank shall have no
obligation or liability to Guarantor and the only consequence of the Bank's
failure to obtain Guarantor's consent to such amendment, modification,
alteration or supplement shall be that Guarantor shall have no obligation
hereunder with respect to the new, additional or increased obligation, as
applicable.
6.2 Adjustments. The Bank may enforce this Guaranty
notwithstanding any adjustment, indulgence, forbearance or compromise that
might be granted or given by the Bank to any Account Party or the Guarantor.
6.3 Disputes with Account Party. Bank may enforce this Guaranty
upon the occurrence of an Event of Default under the Reimbursement Agreement
or any Related Document notwithstanding the existence of any dispute between
the Bank and an Account Party with respect to the existence of such Event of
Default.
6.4 Independence of Obligations. The obligations of Guarantor
hereunder are independent of the obligations of each of the Account Parties
under the Reimbursement Agreement and the Related Documents and the
obligations of any other guarantor of the obligations of an Account Party
under the Reimbursement Agreement and the Related Documents, and a separate
action or actions may be brought and prosecuted against Guarantor whether or
not any action is brought against an Account Party or any of such other
guarantors and whether or not an Account Party is joined in any such action or
actions. The obligations of Guarantor hereunder are independent of any full
or partial release of the liability of any Account Party on the Guaranteed
Obligations, or any part thereof, or of any co-guarantors, or any other person
or entity now or hereafter liable, whether directly or indirectly, jointly,
severally, or jointly and severally, to pay, perform, guarantee or assure the
payment of the Guaranteed Obligations, or any part thereof, it being
recognized, acknowledged and agreed by Guarantor that Guarantor may be
required to pay the Guaranteed Obligations in full without assistance or
support of any other party, and Guarantor has not been induced to enter into
this Guaranty on the basis of a contemplation, belief, understanding or
agreement that other parties will be liable to pay or perform the Guaranteed
Obligations, or that the Bank will look to other parties to pay or perform the
Guaranteed Obligations. Accordingly, it shall not be necessary for the Bank
(and Guarantor hereby waives any rights which Guarantor may have to require
the Bank), in order to enforce the obligations of Guarantor hereunder, first
to (i) institute suit or exhaust its remedies against any Account Party or
others liable on any Guaranteed Obligations or any other person, (ii) enforce
the Bank's rights against any collateral which shall ever have been given to
secure any indebtedness under the Reimbursement Agreement or the Related
Documents, (iii) enforce the Bank's rights against any other guarantors of the
Guaranteed Obligations, (iv) join any Account Party or any others liable on
the Guaranteed Obligations in any action seeking to enforce this Guaranty,
(v) exhaust any remedies available to the Bank against any collateral which
shall ever have been given to secure any indebtedness under the Reimbursement
Agreement or the Related Documents, or (vi) resort to any other means of
obtaining payment of the Guaranteed Obligations. The Bank shall not be
required to mitigate damages or take any other action to reduce, collect or
enforce the Guaranteed Obligations.
6.5 Partial Payment. Guarantor's payment of a portion, but not
all, of the Guaranteed Obligations shall in no way limit, affect, modify or
abridge Guarantor's liability for any portion of the Guaranteed Obligations
which has not been paid. Without limiting the generality of the foregoing, if
the Bank is awarded a judgement in any suit brought to enforce Guarantor's
covenant to pay a portion of the Guaranteed Obligations, such judgment shall
not be deemed to release Guarantor from its covenant to pay the portion of the
Guaranteed Obligations that is not the subject of such suit.
6.6 Collateral. Bank, upon such terms as it deems appropriate,
without notice or demand and without affecting the validity or enforceability
of this Guaranty or giving rise to any reduction, limitation, impairment,
discharge or termination of Guarantor's liability hereunder, from time to time
may (i) request and accept other guaranties of the Guaranteed Obligations and
take, hold and accept security, collateral or guaranty, or other assurances of
payment, for the payment of all or any part of this Guaranty or the Guaranteed
Obligations; (ii) release, surrender, exchange, substitute, compromise,
settle, rescind, waive, alter, subordinate or modify, with or without
consideration, any security, property or collateral at any time existing in
connection with, or assuring or securing the payment of, all or any part of
the Guaranteed Obligations, any other guaranties of the Guaranteed
Obligations, or any other obligation of any Person with respect to the
Guaranteed Obligations; (iii) allow the waste, deterioration, waste, loss or
impairment (including without limitation negligent, willful, unreasonable or
unjustifiable impairment) of any collateral, property or security at any time
existing in connection with, or assuring or securing payment of, all or any
part of the Guaranteed Obligations; or (iv) enforce and apply any security,
collateral or property now or hereafter held by or for the benefit of the Bank
in respect of this Guaranty or the Guaranteed Obligations and direct the order
or manner of sale thereof, or exercise any other right or remedy that the Bank
may have against any such security, collateral or property, as the Bank in its
discretion may determine consistent with the Reimbursement Agreement and the
Related Documents, including foreclosure on any such security, collateral or
property pursuant to one or more judicial or nonjudicial sales, whether or not
every aspect of any such sale is commercially reasonable, and even though such
action operates to impair or extinguish any right to reimbursement or
subrogation or other right or remedy of Guarantor against either or both of
the Account Parties or any security, collateral or property for the Guaranteed
Obligations.
6.7 Invalidity of Guaranteed Obligations. This Guaranty and the
obligations of Guarantor hereunder shall be valid and enforceable and shall
not be subject to any reduction, limitation, impairment, discharge or
termination as a result of the invalidity, illegality or unenforceability of
all or any part of the Guaranteed Obligations, or any document or agreement
executed in connection with the Guaranteed Obligations, for any reason
whatsoever, including without limitation the fact that (i) the Guaranteed
Obligations, or any part thereof, exceeds the amount permitted by law, (ii)
the obligations of the Guarantor hereunder are, in any respect, more
burdensome than permitted by law, (iii) the act of creating the Guaranteed
Obligations or any part thereof is ultra xxxxx, (iv) the officers or
representatives executing the Promissory Notes, the Reimbursement Agreement or
the other Related Documents or otherwise creating the Guaranteed Obligations
acted in excess of their authority, (v) the Guaranteed Obligations violate
applicable usury laws, (vi) WRP or the Bond Issuer has valid defenses, claims
or offsets (whether at law, in equity or by agreement) which render the
Guaranteed Obligations wholly or partially uncollectible from any Account
Party, including, without limitation, any defense arising by reason of the
incapacity or any disability of an Account Party, (vii) the creation,
performance or repayment of the Guaranteed Obligations (or the execution,
delivery and performance of any document or instrument representing part of
the Guaranteed Obligations or executed in connection with the Guaranteed
Obligations, or given to secure the repayment of the Guaranteed Obligations)
is illegal, uncollectible or unenforceable, (viii) any term of this Guaranty
which is or may be in conflict with any principles or provisions of law,
statutory or otherwise, (ix) the Guarantor's obligations hereunder qualify or
may qualify, for any reason, for any legal or equitable discharge, or (ix) the
Promissory Notes, the Reimbursement Agreement or any of the other Related
Documents have been forged or otherwise are irregular or not genuine or
authentic, it being agreed that Guarantor shall remain liable hereon
regardless of whether any Account Party or any other person be found not
liable on the Guaranteed Obligations or any part thereof for any reason,
whether or not Guarantor shall have had notice of any of the foregoing.
6.8 Notice. Guarantor waives any and all right to notice, demand,
presentment, protest, notice of protest, notice of dishonor or notice of
action or inaction in connection with this Guaranty, the Reimbursement
Agreement, the Related Documents, and any documents or agreements evidencing,
securing or relating to any of the Guaranteed Obligations and the obligations
hereby guaranteed.
6.9 Other Actions Taken or Omitted. Except as expressly provided
in Section 2.1 hereof, this Guaranty and the obligations of Guarantor
hereunder shall be valid and enforceable and shall not be subject to any
reduction, limitation, impairment, discharge or termination for any other
action taken or omitted to be taken with respect to the Reimbursement
Agreement and the Related Documents, the Guaranteed Obligations, or the
security and collateral therefor, whether or not such action or omission
prejudices Guarantor or increases the likelihood that Guarantor will be
required to pay the Guaranteed Obligations pursuant to the terms hereof, it is
the unambiguous and unequivocal intention of Guarantor that Guarantor shall be
obligated to pay the Guaranteed Obligations when due, notwithstanding any
occurrence, circumstance, event, action, or omission whatsoever, whether
contemplated or uncontemplated, and whether or not otherwise or particularly
described herein, which obligation shall be deemed satisfied only upon the
full and final payment and satisfaction of the Guaranteed Obligations.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
In order to induce the Bank to consent to the Spin Off, the Merger
and the accompanying transactions, to accept this Guaranty and to enter into
the First Amendment and to extend credit thereunder, Guarantor represents and
warrants to the Bank that the following statements are true and correct:
7.1 Existence and Power. Guarantor is a limited partnership, duly
formed and validly existing as a limited partnership under the laws of the
State of Illinois and has all powers and all material governmental licenses,
authorizations, consents and approvals required to own its property and assets
and carry on its business as now conducted or as it presently proposes to
conduct and has been duly qualified and is in good standing in every
jurisdiction in which the failure to be so qualified or in good standing is
likely to have a material adverse effect on this Guaranty.
DGA Power and Authority. Guarantor has the partnership power and
authority to execute, deliver and carry out the terms and provisions of this
Guaranty to which it is a party, and has taken all necessary partnership
action, if any, to authorize the execution and delivery on behalf of Guarantor
and the performance by Guarantor of this Guaranty. Guarantor has executed
this Guaranty and each of the documents related thereto to which it is a party
in accordance with the terms of this Guaranty, and this Guaranty and each such
related document constitutes the legal, valid and binding obligation of
Guarantor, enforceable in accordance with its terms, except as enforceability
may be limited by applicable insolvency, bankruptcy or other laws affecting
creditors rights generally, or general principles of equity, whether such
enforceability is considered in a proceeding in equity or at law.
7.3 No Violation. Neither the execution, delivery or performance
by or on behalf of Guarantor of this Guaranty, nor compliance by Guarantor
with the terms and provisions hereof nor the consummation of the transactions
contemplated by this Guaranty, (i) will materially contravene any applicable
provision of any law, statute, rule, regulation, order, writ, injunction or
decree of any court or governmental instrumentality, (ii) will materially
conflict with or result in any breach of, any of the terms, covenants,
conditions or provisions of, or constitute a default under, or result in the
creation or imposition of (or the obligation to create or impose) any lien
upon any of the property or assets of Guarantor or any of its Subsidiaries
pursuant to the terms of any indenture, mortgage, deed of trust, or other
agreement or other instrument to which Guarantor (or of any partnership of
which Guarantor is a partner) or any of its Subsidiaries is a party or by
which it or any of its property or assets is bound or to which it is subject,
or (iii) will cause a material default by Guarantor under any organization
document of any Person in which Guarantor has an interest, or cause a material
default under Guarantor's agreement or certificate of limited partnership, the
consequences of which conflict, breach or default would have a material
adverse effect on this Guaranty or Guarantor's ability to perform its
obligations hereunder or result in or require the creation or imposition of
any lien whatsoever upon any property of the Guaranty or any of its
Affiliates.
7.4 Financial Information. The consolidated balance sheet of
Guarantor and its Subsidiaries, dated as of December 31, 1996, the related
consolidated statements of Guarantor's financial position for the fiscal year
then ended, reported on by Ernst & Young LLP, the consolidated balance sheet
of Guarantor and its Subsidiaries, dated as of March 31, 1997, and the related
consolidated statements of Guarantor's financial position for the fiscal
quarter then ended, copies of which have been delivered to the Bank, fairly
present, in conformity with generally accepted accounting principles, the
consolidated financial position of Guarantor and its Subsidiaries as of such
dates and their consolidated results of operations and cash flows for such
fiscal year and fiscal quarter, respectively.
7.5 Solvency. As of the date hereof, and after giving effect to
the Merger and the transactions related thereto and to this Guaranty and the
contingent obligations evidenced hereby, Guarantor is, and will be, solvent,
and has and will have assets which, fairly valued, exceed its obligations,
liabilities (including contingent liabilities) and debts, and has and will
have property and assets sufficient to satisfy and repay its obligations and
liabilities.
7.6 Governmental Approvals. No order, consent, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption by, any governmental or public body or authority, or any subdivision
thereof, is required to authorize, or is required in connection with the
execution, delivery and performance of this Guaranty or the consummation of
any of the transactions contemplated hereby other than those that have already
been duly made or obtained and remain in full force and effect or those which,
if not made or obtained, would not have a material adverse effect on this
Guaranty or Guarantor's ability to perform its obligations hereunder.
7.7 Benefit. As of the date hereof, (a) Guarantor owns shares of
stock in WRP for which Guarantor has paid consideration in the amount of
$3,500,000 and (b) Guarantor owns a twenty percent (20%) interest in Wellsford
Park Highlands Corp., which holds a ninety-nine percent (99%) interest in the
entities owning the real property in the Development. Moreover, Guarantor
will benefit from the Spin Off and the Merger, the consummation of which
requires the Bank's consent under the Reimbursement Agreement. Accordingly,
Guarantor has received direct benefit from the making of this Guaranty with
respect to the Guaranteed Obligations.
7.8 Familiarity and Reliance. Guarantor is familiar with, and has
independently reviewed books and records regarding, the financial condition of
each of the Account Parties and is familiar with the value of any and all
collateral intended to be created as security for the payment of the Bonds,
the Promissory Notes and the other Guaranteed Obligations; however, Guarantor
is not relying on such financial condition or the collateral as an inducement
to enter into this Guaranty.
7.9 No Representation By the Bank. Neither the Bank nor any other
party has made any representation, warranty or statement to Guarantor in order
to induce Guarantor to execute this Guaranty.
7.10 Legality. The execution, delivery and performance by Guarantor
of this Guaranty and the consummation of the transactions contemplated
hereunder do not, and will not, contravene or conflict with any law, statute
or regulation whatsoever to which Guarantor is subject or constitute a default
(or an event which with notice or lapse of time or both would constitute a
default) under, or result in the breach of, any indenture, mortgage, deed of
trust, charge, lien, or any contract, agreement or other instrument to which
Guarantor is a party or which may be applicable to Guarantor. This Guaranty
is a legal and binding obligation of Guarantor and is enforceable in
accordance with its terms, except as limited by bankruptcy, insolvency or
other laws of general application relating to the enforcement of creditors'
rights.
7.11 Survival. All representations and warranties made by Guarantor
herein shall survive the execution hereof.
ARTICLE IV
AFFIRMATIVE AND NEGATIVE COVENANTS
Guarantor covenants and agrees that, until this Guaranty terminates
pursuant to Section 7.1 below:
4.1 Information. Guarantor will deliver to the Bank copies of all
certificates, reports, financials and other documents to be delivered to the
lenders pursuant to Section 5.1 of that certain Amended and Restated Revolving
Credit Agreement, dated as of December 9, 1996, among Guarantor, the banks
listed therein, Xxxxxx Guaranty Trust Company of New York, as Lead Manager,
Bank of America Illinois, as Co-Lead Manager, The First National Bank of
Chicago, as Co-Agent, First Bank National Association, as Co-Agent, and
Nationsbank of Texas, N.A., as Co-Agent (the "Guarantor Credit Agreement")
within 85 days of the close of the Fiscal Quarter (as defined in Annex A) of
Guarantor for each of the first three Fiscal Quarters of the Fiscal Year (as
defined in Annex A) and within 125 days of the close of the final Fiscal
Quarter of the Fiscal Year. Within 85 days of the close of the Fiscal Quarter
of Guarantor for each of the first three Fiscal Quarters of the Fiscal Year
and within 125 days of the close of the final Fiscal Quarter of the Fiscal
Year, Guarantor shall deliver to the Bank a statement (a "Compliance
Certificate") certified by the principal financial officer of Guarantor in the
form of Exhibit A hereto setting forth in reasonable detail computations
evidencing compliance with the covenants contained in this Article IV.
4.2 Conduct of Business and Maintenance of Existence. Guarantor will
continue to engage in business of the same general type as now conducted, and
will preserve, renew and keep in full force and effect, its partnership
existence and its rights, privileges and franchises necessary for the normal
conduct of business unless the failure to maintain such rights and franchises
does not have a material adverse effect on this Guaranty or Guarantor's
ability to perform its obligations hereunder.
4.3 Existence. Guarantor shall do or cause to be done, all things
necessary to preserve and keep in full force and effect its existence and its
patents, trademarks, servicemarks, tradenames, copyrights, franchises,
licenses, permits, certificates, authorizations, qualifications,
accreditation, easements, rights of way and other rights, consents and
approvals the nonexistence of which is likely to have a material adverse
effect on this Guaranty or Guarantor's ability to perform its obligations
hereunder.
4.4 Financial Covenants.
(a) Definitions. All capitalized terms contained in this
Section 4.4 not otherwise defined in this Guaranty shall have the definitions
assigned to such terms in Annex A hereto.
(b) Total Liabilities to Gross Asset Value. Guarantor shall
not permit the ratio of Total Liabilities to Gross Asset Value of Guarantor
and its Subsidiaries to exceed 0.50:1 at any time.
(c) Unencumbered Pool. Guarantor shall not permit the ratio of
the Unencumbered Asset Value to outstanding Unsecured Debt to be less than
2.5:1 at any time.
(d) EBITDA to Fixed Charges Ratio. Guarantor shall not permit
the ratio of EBITDA for the then most recently completed Fiscal Quarter to
Fixed Charges for the then most recently completed Fiscal Quarter to be less
than 1.8:1.
(e) Unencumbered Net Operating Income to Unsecured Interest
Expense. Guarantor shall not permit the ratio of Unencumbered Net Operating
Income for the then most recently completed Fiscal Quarter to Unsecured
Interest Expense for the then most recently completed Fiscal Quarter to be
less than 2.25:1.
(f) Minimum Consolidated Tangible Net Worth. The Consolidated
Tangible Net Worth of the Guarantor and its Consolidated Subsidiaries will at
no time be less than $1,000,000,000 plus ninety percent (90%) of all Net
Offering Proceeds received by ERP REIT, the surviving trust under the Merger
(i.e., Wellsford REIT as the surviving entity in the Merger, which will be
renamed Equity Residential Properties Trust), or Guarantor on or after
December 9, 1996.
(g) Calculation. Each of the foregoing ratios and financial
requirements shall be calculated as of the last day of each Fiscal Quarter.
(h) Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial
statements required to be delivered hereunder shall be prepared in accordance
with GAAP applied on a basis consistent (except for changes concurred in by
Guarantor's independent public accountants) with the most recent audited
consolidated financial statements of Guarantor and its Consolidated
Subsidiaries delivered to the Bank; provided that for purposes of references
to the financial results and information of "ERP REIT, on a consolidated
basis," ERP REIT shall mean the surviving entity from the Merger and shall be
deemed to own one hundred percent (100%) of the partnership interests in
Guarantor; and provided further that, if Guarantor notifies the Bank that
Guarantor wishes to amend any covenant in this Article IV to eliminate the
effect of any change in GAAP on the operation of such covenant (or if the Bank
notifies Guarantor that it wishes to amend this Article IV for such purpose),
then Guarantor's compliance with such covenant shall be determined on the
basis of GAAP in effect immediately before the relevant change in GAAP became
effective, until either such notice is withdrawn or such covenant is amended
in a manner reasonably satisfactory to Guarantor and the Bank.
4.5 Restriction on Fundamental Changes. (a) Guarantor shall not
enter into any merger or consolidation, unless (i) Guarantor is the surviving
entity, (ii) the entity which is merged into Guarantor is predominantly in the
commercial real estate business, (iii) the credit ratings assigned by Standard
& Poor's Ratings Services and Xxxxx'x Investors Services Inc. (the "Rating
Agencies") to the surviving entity's long term unsecured debt or implied
senior debt, as applicable, are not lower than the credit ratings assigned by
the Rating Agencies to Guarantor's long term unsecured debtor or implied
senior debt, as applicable, two months immediately preceding such merger, and
(iv) in the case of any merger where the then fair market value of the assets
of the entity which is merged into Guarantor is twenty-five percent (25%) or
more of the Gross Asset Value (as defined in Annex A) of the surviving entity
of such Merger and its Consolidated Subsidiaries (as defined in Annex A), the
Bank shall consent thereto in writing, which consent shall not be unreasonably
withheld, conditioned or delayed. Guarantor shall not liquidate, wind-up or
dissolve (or suffer any liquidation or dissolution), discontinue its business
or convey, lease, sell, transfer or otherwise dispose of, in one transaction
or series of transactions, all or substantially all of its business or
property, whether now or hereafter acquired. Nothing in this Section shall be
deemed to prohibit the sale or leasing of portions of the Guarantor's real
property assets in the ordinary course of business.
(b) Guarantor shall not amend its agreement of limited
partnership or other organizational documents in any manner that would have a
material adverse effect on this Guaranty or Guarantor's ability to perform its
obligations hereunder without the Bank's consent, which shall not be
unreasonably withheld.
4.6 Amendments. Guarantor shall not amend, modify, or supplement,
or agree to any amendment or modification of, or supplement to, any of the
Related Documents to which it is a party. Guarantor shall not amend, modify,
or supplement, or agree to any amendment or modification of, or supplement to
any of the Spin Off Agreements which would adversely affect any Account
Party's ability to satisfy its obligations under the Reimbursement Agreement
or any Related Documents, or which would adversely affect Guarantor's ability
to satisfy its obligations under this Guaranty, or which would detract from
Guarantor's obligations hereunder.
ARTICLE V
SUBORDINATION OF CERTAIN INDEBTEDNESS
5.1 Guarantor's Rights of Subrogation, Contribution, Etc. Until
the Guaranteed Obligations shall have been paid in full and the Letter of
Credit shall have expired or been cancelled, Guarantor shall withhold exercise
of (a) any claim, right or remedy, direct or indirect, that Guarantor now has
or may hereafter have against any Account Party or any of its assets in
connection with this Guaranty or the performance by Guarantor of its
obligations hereunder, in each case, whether such claim, right or remedy
arises in equity, under contract, by statute, under common law or otherwise
and including without limitation (i) any right of subrogation, reimbursement
or indemnification that Guarantor now has or may hereafter have against an
Account Party, (ii) any right to enforce, or to participate in, any claim,
right or remedy that the Bank now or may hereafter have against any Account
Party, and (iii) any benefit of, and any right to participate in, any
collateral or security now or hereafter held by the Bank, and (b) any right of
contribution Guarantor may have against any other guarantor of any of the
Guaranteed Obligations. Guarantor further agrees that, to the extent the
agreement to withhold the exercise of its rights of subrogation,
reimbursement, indemnification and contribution as set forth herein is found
by a court of competent jurisdiction to be void or voidable for any reason,
any rights of contribution Guarantor may have against any such other
guarantor, shall be junior to and subordinate to any rights the Bank may have
in any such collateral or security, and to any right the Bank may have against
such other guarantor. The Bank may use, sell or dispose of any item of
collateral or security as it sees fit without regard to any subrogation rights
Guarantor may have, and upon any such disposition or sale any rights of
subrogation Guarantor may have shall terminate. If any amounts shall be paid
to Guarantor on account of any such subrogation, reimbursement or
indemnification rights at any time when all Guaranteed Obligations shall not
have been paid in full, such amount shall be held in trust for the Bank and
shall forthwith be paid over to the Bank to be credited and applied against
the Guaranteed Obligations, whether matured or unmatured, in accordance with
the terms hereof.
5.2 Subordination of Other Obligations.
(a) Any Indebtedness (as defined in Annex A) of an Account
Party or any other Palomino Party (as defined in Annex A) now or hereafter
held by Guarantor is hereby subordinated in right of payment to the prior
payment in full of all obligations then due and owing of such Person now or
hereafter existing under the Reimbursement Agreement and the other Related
Documents, including, subject to the provisions of Section 2.1 hereof (if
applicable), any extensions, modifications, substitutions, amendments and
renewals thereof, whether for principal (including reimbursement of amounts
drawn under any letter of credit), interest, fees, expenses, indemnification
or otherwise (all such obligations by any Palomino Party to the Guarantor
being the "Subordinated Obligations"). Guarantor agrees not to ask, demand,
xxx for, take or receive from any Palomino Party, directly or indirectly, in
cash or other property or by set-off or in any other manner (including without
limitation from or by way of collateral), payment of all or any of the
Subordinated Obligations of such Palomino Party unless and until all
obligations of such Palomino Party then due and owing under the Reimbursement
Agreement and the other Related Documents have been paid and satisfied in
full. Any payment on any Subordinated Obligation collected or received by
Guarantor after an Event of Default has occurred and is continuing shall be
held in trust for the Bank and shall forthwith be paid over to the Bank to be
credited and applied against the Guaranteed Obligations but without affecting,
impairing or limiting in any manner the liability of Guarantor under any other
provision of this Guaranty.
(b) In furtherance and not in limitation of Section 5.2(a):
(i) until the Guaranteed Obligations have been paid in
full, the Letter of Credit has expired, and this Guaranty has terminated in
accordance with Section 7.1, upon any distribution of all or any of the assets
of any Palomino Party indebted to Guarantor to creditors of such Palomino
Party upon the dissolution, winding up, liquidation, arrangement,
reorganization, adjustment, protection, relief, or composition of such
Palomino Party or its debts, whether in any bankruptcy, insolvency,
arrangement, reorganization, receivership, relief or similar proceedings or
upon an assignment for the benefit of creditors or any other marshalling of
the assets and liabilities of such Palomino Party or otherwise, any payment or
distribution of any kind (whether in cash, property or securities) which
otherwise would be payable or deliverable upon or with respect to the
Subordinated Obligations of such Palomino Party to Guarantor, shall be paid or
delivered directly to the Bank to be credited and applied against the
Guaranteed Obligations; and
(ii) Guarantor agrees that, until the Guaranteed
Obligations have been paid in full, the Letter of Credit has expired, and this
Guaranty has terminated in accordance with Section 7.1, it shall not commence,
or join with any creditor other than the Bank in commencing, any proceeding
against any Palomino Party referred to in Section 5.2(b)(i).
5.3 Claims in Bankruptcy. In the event of receivership,
bankruptcy, reorganization, arrangement, debtor's relief, or other insolvency
proceedings involving Guarantor as debtor, the Bank shall have the right to
prove its claim in any such proceeding so as to establish its rights hereunder
and receive directly from the receiver, trustee or other court custodian
dividends and payments which would otherwise be payable on account of any debt
or liability of an Account Party or any other Palomino Party to Guarantor.
Guarantor hereby assigns such dividends and payments to the Bank. Should the
Bank receive, for application upon the Guaranteed Obligations, any such
dividend or payment which is otherwise payable to Guarantor, and which, as
between an Account Party or any other Palomino Party and Guarantor, shall
constitute a credit on account of a claim or liability of such Account Party
or such other Palomino Party to Guarantor, then upon payment to the Bank in
full of all Guaranteed Obligations and the termination of this Guaranty
pursuant to Section 7.1 hereof, Guarantor shall become subrogated to the
rights of the Bank to the extent that such payments to the Bank on account of
such claim or liability have contributed toward the liquidation of the
Guaranteed Obligations, and such subrogation shall be with respect to that
proportion of the Guaranteed Obligations which would have been unpaid if the
Bank had not received dividends or payments on account of such claim or
liability.
ARTICLE VI
EVENTS OF DEFAULT
6.1 Events of Default. The occurrence of any of the following
events (including expiration of any specified time) shall constitute an "Event
of Default," unless waived by the Bank in writing:
(a) failure of Guarantor to pay when due any amount due under
this Guaranty within 3 business days following the making of a demand upon
Guarantor by the Bank pursuant to Section 1.5 hereof;
(b) failure of Guarantor to observe of perform any of the
covenants, conditions or provisions of this Guaranty (other than as specified
in Sections 6.1(a), 6.1(c), 6.1(d), 6.1(e), 6.1(f), 6.1(g), 6.1(h) or 6.1(i)
hereof) and to remedy such failure within 45 days of such failure;
(c) any representation or warranty made by Guarantor herein or
in any certificate, financial or other statement furnished in connection with
this Guaranty or the Amendment shall prove to have been untrue or incomplete
in any material respect when made;
(d) admission by Guarantor of insolvency or bankruptcy or its
inability or failure generally to pay its debts as they become due, or
Guarantor makes an assignment for the benefit of creditors or applies for or
consents to the appointment of a trustee, custodian or receiver for such
Person, or for a major part of its property;
(e) filing of a petition or application for the appointment of
a trustee or other custodian, liquidator or receiver in bankruptcy, custodian
or receiver for Guarantor or all or part of its assets and property or any
thereof or a case or other proceeding shall be commenced against Guarantor
under any bankruptcy, reorganization, arrangement, insolvency, readjustment of
debt, dissolution of liquidation or similar law of any jurisdiction, now or
hereafter in effect, and Guarantor shall indicate its approval thereof,
consent thereto or acquiescence therein or such petition, application, case or
proceeding shall not have been dismissed within 60 days following the
commencement thereof;
(f) institution of bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings for relief under
any bankruptcy law or similar law for the relief of debtors, by or against
Guarantor (other than bankruptcy proceedings instituted by Guarantor against
third parties), and, if instituted against Guarantor, allowance or consent by
Guarantor to such proceedings or failure to obtain dismissal, stay or other
nullification within thirty (30) days after such institution;
(g) entrance of a decree or order appointing any such trustee,
custodian, liquidator or receiver or adjudicating Guarantor bankrupt or
insolvent, or approving a petition in any such case or other proceeding, or a
decree or order for relief is entered in respect of Guarantor, in each case of
the foregoing in an involuntary case under federal bankruptcy laws as now or
hereafter constituted;
(h) cancellation, termination, revocation or rescission of
this Guaranty otherwise than in accordance with the terms thereof or with the
express prior written agreement, consent or approval of the Bank, or any
action at law, suit in equity or other legal proceeding to cancel, revoke or
rescind this Guaranty shall be commenced by or on behalf of Guarantor or any
court or any other governmental or regulatory authority or agency of competent
jurisdiction shall make a determination that, or issue a judgment, order,
decree or ruling to the effect that, this Guaranty is illegal, invalid or
unenforceable in accordance with the terms thereof in any material respect as
determined by the Bank; and
(i) (a) default by Guarantor in the payment of the principal
or the interest on any obligation or Indebtedness under the Guarantor Credit
Agreement (as defined in Section 4.1) or any other Recourse Debt (as defined
in Annex A) of Guarantor in excess of $10 million; or (b) the occurrence or
continuation of any event of default (as defined in the Guarantor Credit
Agreement) under the Guarantor Credit Agreement; or (c) any default under any
document governing any of Guarantor's other Recourse Debt in excess of $10
million which, in the case of this subsection (c) only, is not cured within
the time periods set forth therein.
6.2 Rights and Remedies. Upon the occurrence and continuation of an
Event of Default, the Bank, in its sole discretion, (a) may, by notice to
Guarantor, declare the obligations of Guarantor hereunder to be immediately
due and payable, and the same shall thereupon become immediately due and
payable, (b) may deliver concurrently to the Account Parties and the Bond
Trustee written notice that an Event of Default has been declared under this
Guaranty (and accordingly under the Reimbursement Agreement) and that the
Letter of Credit will terminate ten (10) days after receipt of such notice
together with a written request that the Bonds be accelerated, (c) may cure
any default, event of default or event of nonperformance under this Guaranty
or (d) may exercise any other rights or remedies available under this
Guaranty, any Related Document, any other agreement or at law or in equity.
The rights and remedies of the Bank specified herein are for the sole and
exclusive benefit, use and protection of the Bank, and the Bank is entitled,
but shall have no duty or obligation to Guarantor, either Account Party, the
Bond Trustee, the Bondholders or otherwise, (i) to exercise or refrain from
exercising any right or remedy reserved to the Bank hereunder, or (ii) to
cause the Account Parties or any other party to exercise or to refrain from
exercising any rights or remedy available to it under any of the Related
Documents.
ARTICLE VII
MISCELLANEOUS
7.1 Term. Except for those provisions which by their terms survive
the termination of this Guaranty, this Guaranty shall terminate after the
occurrence of both (i) the expiration of the Letter of Credit (which under the
terms of the Reimbursement Agreement shall not extend beyond May 30, 2005) and
(ii) payment in full of all obligations owed to the Bank under this Guaranty,
the Reimbursement Agreement and all Related Documents.
7.2 Waiver. No failure to exercise, and no delay in exercising, on
the part of Bank, any right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right. The rights of the Bank
hereunder shall be in addition to all other rights provided by law. No
modification or waiver of any provision of this Guaranty, nor consent to
departure therefrom, shall be effective unless in writing and no such consent
or waiver shall extend beyond the particular case and purpose involved. No
notice or demand given in any case shall constitute a waiver of the right to
take other action in the same, similar or other instances without such notice
or demand.
7.3 Notices. Any notice, demand, statement, request or consent
made hereunder shall be in writing and shall be deemed to be received by the
addressee on the third day following the day such notice is deposited with the
United States Postal Service first class certified mail, return receipt
requested, addressed to the address, as set forth below, of the party to whom
such notice is to be given, or to such other address as either party shall in
like manner designate in writing. The addresses of the parties hereto are as
follows:
Guarantor: ERP Operating Limited Partnership
c/o Equity Residential Properties Trust
Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attn: Chief Financial Officer
with a copy to Attn: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Bank: Dresdner Bank AG
New York Branch
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attn:Xxxxxxxx Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
7.4 Governing Law. This Guaranty shall be governed by and
construed in accordance with the laws of the State of New York and the
applicable laws of the United States of America.
7.5 Invalid Provisions. If any provision of this Guaranty is held
to be illegal, invalid, or unenforceable under present or future laws
effective during the term of this Guaranty, such provision shall be fully
severable and this Guaranty shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part of this
Guaranty, and the remaining provisions of this Guaranty shall remain in full
force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance from this Guaranty' unless such
continued effectiveness of this Guaranty, as modified, would be contrary to
the basic understandings and intentions of the parties as expressed herein.
7.6 Amendments. This Guaranty may be amended only by an instrument
in writing executed by Guarantor and the Bank.
7.7 Parties Bound; Assignment. This Guaranty shall be binding upon
and inure to the benefit of the parties hereto and their respective
successors, assigns and legal representatives; provided, however, that
Guarantor may not, without the prior written consent of the Bank, assign any
of its rights, powers, duties or obligations hereunder.
7.8 Headings. Section headings are for convenience of reference
only and shall in no way affect the interpretation of this Guaranty.
7.9 Recitals. The recital and introductory paragraphs hereof are a
part hereof, form a basis for this Guaranty and shall be considered prima
facie evidence of the facts and documents referred to therein.
7.10 Rights and Remedies. If Guarantor becomes liable for any
indebtedness owing by an Account Party to the Bank, by endorsement or
otherwise, other than under this Guaranty, such liability to the Bank shall
not be in any manner impaired or affected hereby and the rights of the Bank
hereunder shall be cumulative of any and all other rights that the Bank may
ever have against Guarantor. The exercise by the Bank of any right or remedy
hereunder or under any other instrument or at law or in equity, shall not
preclude the concurrent or subsequent exercise of any other right or remedy.
7.11 Entirety. THIS GUARANTY EMBODIES THE FINAL, ENTIRE AGREEMENT
OF GUARANTOR AND THE BANK WITH RESPECT TO GUARANTOR'S GUARANTY OF THE
GUARANTEED OBLIGATIONS AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS,
AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THE SUBJECT MATTER HEREOF. THIS GUARANTY IS INTENDED BY GUARANTOR
AND THE BANK AS A FINAL AND COMPLETE EXPRESSION OF THE TERMS OF THE GUARANTY,
AND NO COURSE OF DEALING BETWEEN GUARANTOR AND THE BANK, NO COURSE OF
PERFORMANCE, NO TRADE PRACTICES, AND NO EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC EVIDENCE OF ANY
NATURE SHALL BE USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY ANY TERM OF
THIS GUARANTY AGREEMENT. THERE ARE NO ORAL AGREEMENTS BETWEEN GUARANTOR AND
THE BANK.
7.12 Waiver of Right To Trial By Jury. GUARANTOR HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY FOR ANY TRIAL
RESULTING EITHER DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN CONNECTION WITH
THIS GUARANTY. GUARANTOR FURTHER AGREES THAT, IN THE EVENT OF LITIGATION, IT
WILL NOT PERSONALLY OR THROUGH ITS AGENTS OR ATTORNEYS SEEKS TO REPUDIATE THE
VALIDITY OF THIS SECTION 7.12, AND IT ACKNOWLEDGES THAT IT FREELY AND
VOLUNTARILY ENTERED INTO THIS AGREEMENT TO WAIVE TRIAL BY JURY IN ORDER TO
INDUCE THE BANK TO CONSENT TO THE MERGER AND THE ASSIGNMENT AGREEMENT AND TO
ENTER INTO THE FIRST AMENDMENT.
7.13 Consent to Jurisdiction and Venue, Etc. Guarantor irrevocably
(a) agrees that any suit, action or other legal proceeding arising out of or
relating to this Guaranty may be brought in a court of record in the State of
New York or in the Courts of the United States located in such state, (b)
consents to the jurisdiction of each such court in any such suit, action or
proceeding and (c) waives any objection which it may have to the laying of
venue of any such suit, action or proceeding in any of such courts and any
claim that any such suit, action or proceeding has been brought in an
inconvenient forum. Guarantor agrees that a final judgment in any such suit,
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.
All mailings under this Section 7.13 shall be by certified mail, return
receipt requested.
Nothing in this section 7.13 shall affect the right of the Bank to
serve legal process in any other manner permitted by law or affect that right
of the Bank to bring any suit, actions or proceeding against Guarantor or its
property in the courts of any other jurisdiction.
7.14 Cooperation. Guarantor acknowledges that the Bank and its
successors and assigns may (i) sell this Guaranty, the Promissory Notes, the
Reimbursement Agreement and the Related Documents to one or more investors as
a whole loan, (ii) participate the indebtedness under the Reimbursement
Agreement or Related Documents secured by this Guaranty to one or more
investors, (iii) deposit this Guaranty, the Promissory Notes, the
Reimbursement Agreement and the Related Documents with a trust, which trust
may sell certificates to investors evidencing an ownership interest in the
trust assets, or (iv) otherwise sell any indebtedness under the Reimbursement
Agreement or the Related Documents or interest therein to investors (the
transactions referred to in clauses (i) through (iv) are hereinafter each
referred to as "Secondary Market Transaction"). Guarantor shall cooperate
with the Bank in effecting any such Secondary Market Transaction and shall
cooperate to implement all requirements imposed by any rating agency involved
in any Secondary Market Transaction. Guarantor shall provide such information
and documents relating to Guarantor, any Account Party or the Trust Property
as the Bank may reasonably request in connection with such Secondary Market
Transaction. In addition, Guarantor shall make available to the Bank all
information concerning its business and operations that the Bank may
reasonably request. The Bank shall be permitted to share all such information
with the investment banking firms, rating agencies, accounting firms, law
firms and other third-party advisory firms involved with any indebtedness
incurred under the Reimbursement Agreement or the Related Documents or the
applicable Secondary Market Transaction. It is understood that the
information provided by Guarantor to the Bank may ultimately be incorporated
into the offering documents for the Secondary Market Transaction and thus
various investors may also see some or all of the information. The Bank and
all of the aforesaid third-party advisors and professional firms shall be
entitled to rely on the information supplied by, or on behalf of, Guarantor in
the form as provided by Guarantor. The Bank may publicize the existence of
indebtedness incurred under the Reimbursement Agreement and the Related
Documents in connection with its marketing for a Secondary Market Transaction
or otherwise as part of its business development.
7.15 Assignability to Federal Reserve. The Bank may assign and
pledge all or any portion of the obligations owing to it hereunder to any
Federal Reserve Bank or the United States Treasury as collateral security
pursuant to Regulation A of the Board of Governors of the Federal Reserve
System and any Operating Circular issued by such Federal Reserve Bank,
provided that any payment in respect of such assigned obligations made by
Guarantor to the Bank in accordance with the terms of this Guaranty shall
satisfy Guarantor's obligations hereunder in respect of such assigned
obligation to the extent of such payment. No such assignment shall release
the Bank from its obligations under the Reimbursement Agreement or any other
Related Document.
7.16 Facsimile Execution. This Guaranty shall be considered
executed and delivered by the Guarantor upon delivery of Guarantor's signature
to the Bank by facsimile transmission. Such facsimile signature shall be
treated in all respects as having the same effect as an original signature.
7.17 Reinstatement in Certain Circumstances. If at any time any
payment of the principal of or interest under the Promissory Notes or any
other amount payable by the any Account Party under the Reimbursement
Agreement or the Related Documents is rescinded or must be otherwise restored
or returned upon the insolvency, bankruptcy or reorganization of any Account
Party or otherwise, Guarantor's obligations hereunder with respect to such
payment shall be reinstated as though such payment has been due but not made
at such time.
EXECUTED as of the day and year first above written.
GUARANTOR:
ERP OPERATING LIMITED PARTNERSHIP
By: EQUITY RESIDENTIAL PROPERTIES TRUST, its
general partner
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------
Print Name: Xxxxx X. Xxxxxx
Print Title: Executive Vice President
and General Counsel
ANNEX A
FINANCIAL COVENANTS DEFINITIONS
The following terms, as used in Section 4.4 of the Guaranty and
elsewhere in the Guaranty as expressly provided therein, have the following
meanings:
"Adjusted Asset Value" means, with respect to any Person or
Property, (i) for any Property for which an acquisition or disposition has not
occurred in the Fiscal Quarter most recently ended by Guarantor or a Financing
Partnership, the product of four (4) and a fraction, the numerator of which is
EBITDA for such Fiscal Quarter attributable to such Property in a manner
reasonably acceptable to the Bank for the Fiscal Quarter most recently ended,
and the denominator of which is the FMV Cap Rate, plus (ii) for any Property
which has been acquired by Guarantor or a Financing Partnership in the Fiscal
Quarter most recently ended, the Net Price of the Property paid by Guarantor
or a Financing Partnership for such Property.
"Applicable Interest Rate" means (i) with respect to any Fixed Rate
Indebtedness, the fixed interest rate applicable to such Fixed Rate
Indebtedness at the time in question, and (ii) with respect to any Floating
Rate Indebtedness, either (x) the rate at which the interest rate applicable
to such Floating Rate Indebtedness is actually capped (or fixed pursuant to an
interest rate hedging device), at the time of calculation, if Guarantor has
entered into an interest rate cap agreement or other interest rate hedging
device with respect thereto or (y) if Guarantor has not entered into an
interest rate cap agreement or other interest rate hedging device with respect
to such Floating Rate Indebtedness, the greater of (A) the rate at which the
interest rate applicable to such Floating Rate Indebtedness could be fixed for
the remaining term of such Floating Rate Indebtedness, at the time of
calculation, by Guarantor's entering into any unsecured interest rate hedging
device either not requiring an upfront payment or if requiring an upfront
payment, such upfront payment shall be amortized over the term of such device
and included in the calculation of the interest rate (or, if such rate is
incapable of being fixed by entering into an unsecured interest rate hedging
device at the time of calculation, a fixed rate equivalent reasonably
determined by the Bank) or (B) the floating rate applicable to such Floating
Rate Indebtedness at the time in question.
"Approved Bank" shall mean banks which have (i)(a) a minimum net
worth of $500,000,000 and/or (b) total assets of $10,000,000,000, and (ii) a
minimum long term debt rating of (a) BBB+ or higher by S&P, and (b) Baa1 or
higher by Xxxxx'x.
"Capital Leases" as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is or should be accounted for as a capital lease on the
balance sheet of that Person.
"Capital Reserve" shall mean, for any period, $62.50 for each Fiscal
Quarter to occur during such period.
"Cash and Cash Equivalents" shall mean (i) cash, (ii) direct
obligations of the United States Government, including without limitation,
treasury bills, notes and bonds, (iii) interest bearing or discounted
obligations of Federal agencies and Government sponsored entities or pools of
such instruments offered by Approved Banks and dealers, including without
limitation, Federal Home Loan Mortgage Corporation participation sale
certificates, Government National Mortgage Association modified pass through
certificates, Federal National Mortgage Association bonds and notes, and
Federal Farm Credit System securities, (iv) time deposits, Domestic and
Eurodollar certificates of deposit, bankers acceptances, commercial paper
rated at least A-1 by S&P and P-1 by Xxxxx'x and/or guaranteed by an Aa rating
by Xxxxx'x, a AA rating by S&P or better rated credit, floating rate notes,
other money market instruments and letters of credit each issued by Approved
Banks (provided that the same shall cease to be a "Cash or Cash Equivalent" if
at any time any such bank shall cease to be an Approved Bank), (v) obligations
of domestic corporations, including, without limitation, commercial paper,
bonds, debentures and loan participations, each of which is rated at least AA
by S&P and/or Aa2 by Xxxxx'x and/or guaranteed by an Aa rating by Xxxxx'x, a
AA rating by S&P or better rated credit, (vi) obligations issued by states and
local governments or their agencies, rated at least MIG-1 by Xxxxx'x and/or
SP-1 by S&P and/or guaranteed by an irrevocable letter of credit of an
Approved Bank (provided that the same shall cease to be a "Cash or Cash
Equivalent" if at any time any such bank shall cease to be an Approved Bank),
(vii) repurchase agreements with major banks and primary government security
dealers fully secured by the U.S. Government or agency collateral equal to or
exceeding the principal amount on a daily basis and held in safekeeping, and
(viii) real estate loan pool participations, guaranteed by an AA rating given
by S&P or Aa2 rating given by Xxxxx'x or better rated credit.
"Consolidated Subsidiary" means at any date any Subsidiary or other
entity which is consolidated with Guarantor in accordance with GAAP.
"Consolidated Tangible Net Worth" means at any date the consolidated
partner's capital plus the value of preference units of Guarantor and its
Consolidated Subsidiaries (determined on a book basis), less their
consolidated Intangible Assets, all determined as of such date. For purposes
of this definition "Intangible Assets" means with respect to any such
intangible assets, the amount (to the extent reflected in determining such
consolidated stockholders" equity) of (i) all write-ups (other than write-ups
resulting from foreign currency translations and write-ups of assets of a
going concern business made within twelve months after the acquisition of such
business) subsequent to June 30, 1996 in the book value of any asset (other
than Real Property Assets) owned by Guarantor or a Consolidated Subsidiary and
(ii) goodwill, patents, trademarks, service marks, trade names, anticipated
future benefit of tax loss carry forwards, copyrights, organization or
developmental expenses and other intangible assets.
"Contingent Obligation" as to any Person means, without duplication,
(i) any contingent obligation of such Person required to be shown on such
Person's balance sheet in accordance with GAAP, and (ii) any obligation
required to be disclosed in the footnotes to such Person's financial
statements, guaranteeing partially or in whole any Non-Recourse Indebtedness,
lease, dividend or other obligation, exclusive of contractual indemnities
(including, without limitation, any indemnity or price-adjustment provision
relating to the purchase or sale of securities or other assets) and guarantees
of non-monetary obligations (other than guarantees of completion) which have
not yet been called on or quantified, of such Person or of any other Person.
The amount of any Contingent Obligation described in clause (ii) shall be
deemed to be (a) with respect to a guaranty of interest or interest and
principal, or operating income guaranty, the Net Present Value of the sum of
all payments required to be made thereunder (which in the case of an operating
income guaranty shall be deemed to be equal to the debt service for the note
secured thereby), calculated at the Applicable Interest Rate, through (i) in
the case of an interest or interest and principal guaranty, the stated date of
maturity of the obligation (and commencing on the date interest could first be
payable thereunder), or (ii) in the case of an operating income guaranty, the
date through which such guaranty will remain in effect, and (b) with respect
to all guarantees not covered by the preceding clause (a), an amount equal to
the stated or determinable amount of the primary obligation in respect of
which such guaranty is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as recorded on the balance sheet and on the
footnotes to the most recent financial statements of Guarantor required to be
delivered pursuant to Section 4.4 of the Guaranty. Notwithstanding anything
contained herein to the contrary, guarantees of completion shall not be deemed
to be Contingent Obligations unless and until a claim for payment or
performance has been made thereunder, at which time any such guaranty of
completion shall be deemed to be a Contingent Obligation in an amount equal to
any such claim. Subject to the preceding sentence, (i) in the case of a joint
and several guaranty given by such Person and another Person (but only to the
extent such guaranty is recourse, directly or indirectly to Guarantor), the
amount of the guaranty shall be deemed to be 100% thereof unless and only to
the extent that such other Person has delivered Cash or Cash Equivalents to
secure all or any part of such Person's guaranteed obligations and (ii) in the
case of a guaranty (whether or not joint and several) of an obligation
otherwise constituting Indebtedness of such Person, the amount of such
guaranty shall be deemed to be only that amount in excess of the amount of the
obligation constituting Indebtedness of such Person. Notwithstanding anything
contained herein to the contrary, "Contingent Obligations" shall be deemed not
to include guarantees of Unused Commitments or of construction loans to the
extent the same have not been drawn. All matters constituting "Contingent
Obligations" shall be calculated without duplication.
"Convertible Securities" means evidences of shares of stock, limited
or general partnership interests or other ownership interests, warrants,
options, or other rights or securities which are convertible into or
exchangeable for, with or without payment of additional consideration, shares
of common stock of ERP REIT or partnership interests of Guarantor, as the case
may be, either immediately or upon the arrival of a specified date or the
happening of a specified event.
"Debt Service" means, for any period, Interest Expense for such
period plus scheduled principal amortization (excluding any individual
scheduled principal payment which exceeds 25% of the original principal amount
of an issuance of Indebtedness) for such period on all Indebtedness of ERP
REIT (calculated as provided in Section 4.4(g) of the Guaranty), on a
consolidated basis, plus Guarantor's Share of scheduled principal amortization
for such period on all Indebtedness of Investment Affiliates for which there
is no recourse to ERP REIT or Guarantor (or any Property thereof), plus,
without duplication, ERP REIT's and Guarantor's actual or potential liability
for principal amortization for such period on all Indebtedness of Investment
Affiliates that is recourse to ERP REIT or Guarantor (or any Property
thereof).
"EBITDA" means, for any period (i) Net Income for such period, plus
(ii) depreciation and amortization expense and other non-cash items deducted
in the calculation of Net Income for such period, plus (iii) Interest Expense
deducted in the calculation of Net Income for such period, plus, (iv) Taxes
deducted in the calculation of Net Income for such period, plus (v)
Guarantor's Share of distributed earnings of Investment Affiliates for such
period, minus (vi) the gains (and plus the losses) from extraordinary items or
asset sales or write-ups or forgiveness of indebtedness included in the
calculation of Net Income, for such period, minus (vii) Guarantor's Share of
accrued income and losses of Investment Affiliates for such period minus
(viii) earnings of Subsidiaries for such period distributed to third parties,
all of the foregoing without duplication.
"ERP REIT" means the surviving trust under the Merger (as defined in
the Reimbursement Agreement) (i.e., Wellsford REIT as the surviving entity in
the Merger, which will be renamed Equity Residential Properties Trust).
"Financing Partnerships" means (i) those subsidiary limited
partnerships for which Guarantor is a limited partner with a 1% limited
partnership interest, Guarantor is a general partner with a 98% general
partner interest and a QRS Corporation is a general partner with a 1% general
partner interest, (ii) those limited liability companies for which Guarantor
is a member with a 99% member interest and a QRS Corporation is a member with
a 1% member interest, (iii) those general partnerships in which Guarantor is a
general partner with a 99% partnership interest and a QRS Corporation is a
general partner with a 1% partnership interest, and (iv) those corporations
which are wholly-owned and controlled by Guarantor or an entity described in
clause (i), (ii) or (iii) of this definition.
"Fiscal Quarter" means a fiscal quarter of a Fiscal Year.
"Fiscal Year" means the fiscal year of Guarantor and ERP REIT which
shall be the twelve (12) month period ending on the last day of December in
each year.
"Fixed Charges" for any Fiscal Quarter period means the sum of (i)
Debt Service for such period, (ii) the product of the average number of
apartment units owned (directly or beneficially) by Guarantor or a Financing
Partnership during such period and the Capital Reserve for such period, (iii)
Guarantor's Share of the aggregate sum of the product of the average number of
apartment units owned (directly or beneficially) by each Investment Affiliate
during such period and the Capital Reserve for such period, and (iv) dividends
on preferred units payable by Guarantor for such period.
"Fixed Rate Indebtedness" means all Indebtedness which accrues
interest at a fixed rate.
"Floating Rate Indebtedness" means all Indebtedness which is not
Fixed Rate Indebtedness and which is not a Contingent Obligation or an Unused
Commitment.
"FMV Cap Rate" means 9%.
"GAAP" means generally accepted accounting principles recognized as
such in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and the Financial
Accounting Standards Board or in such other statements by such other entity as
may be approved by a significant segment of the accounting profession, which
are applicable to the circumstances as of the date of determination.
"Gross Asset Value" means, with respect to any Person or Property,
Adjusted Asset Value plus, in the case of any Person, the value of any Cash or
Cash Equivalent owned by such Person and not subject to any Lien.
"Guarantor Credit Agreement" means that certain Amended and Restated
Revolving Credit Agreement, dated as of December 9, 1996, among Guarantor, the
Lenders, Xxxxxx Guaranty Trust Company of New York, as lead agent, Bank of
America Illinois, as co-lead agent, and The First National Bank of Chicago,
First Bank National Association and Nationsbank of Texas, N.A., as co-agents,
or any credit or loan agreement replacing or superseding the same.
"Guarantor's Share" means Guarantor's or ERP REIT's share of the
liabilities of an Investment Affiliate based upon Guarantor's or ERP REIT's
percentage ownership of such Investment Affiliate, as the case may be.
"Indebtedness" as applied to any Person (and with out duplication),
means (a) all indebtedness, obligations or other liabilities of such Person
for borrowed money, (b) all indebtedness, obligations or other liabilities of
such Person evidenced by Securities or other similar instruments, (c) all
Contingent Obligations of such Person, (d) all reimbursement obligations and
other liabilities of such Person with respect to letters of credit or banker's
acceptances issued for such Person's account or other similar instruments for
which a contingent liability exists, (e) all obligations of such Person to pay
the deferred purchase price of Property or services, (f) all obligations in
respect of Capital Leases (including ground leases) of such Person, (g) all
indebtedness obligations or other liabilities of such Person or others secured
by a Lien on any asset of such Person, whether or not such indebtedness,
obligations or liabilities are assumed by, or are a personal liability of such
Person, (h) all indebtedness, obligations or other liabilities (other than
interest expense liability) in respect of Interest Rate Contracts and foreign
currency exchange agreements (other than Interest Rate Contracts purchased to
hedge Indebtedness), (i) ERISA obligations currently due and payable and (j)
all other items which, in accordance with GAAP, would be included as
liabilities on the liability side of the balance sheet of such Person.
"Interest Expense" means, for any period and without duplication,
total interest expense, whether paid, accrued or capitalized (including the
interest component of Capital Leases but excluding interest expense covered by
an interest reserve established under a loan facility) of ERP REIT, on a
consolidated basis, including without limitation all commissions, discounts
and other fees and charges owed with respect to drawn letters of credit,
amortized costs of Interest Rate Contracts incurred on or after December 9,
1996 and the facility fees payable to the lenders under the Guarantor Credit
Agreement in accordance with the Guarantor Credit Agreement, Plus Guarantor's
Share of accrued, paid or capitalized interest with respect to any
Indebtedness of Investment Affiliates for which there is no recourse to ERP
REIT or Guarantor, plus, without duplication, ERP REIT's and Guarantor's
actual or potential liability for accrued, paid or capitalized interest with
respect to Indebtedness of Investment Affiliates that is recourse to ERP REIT
or Guarantor calculated for all Fixed Rate Indebtedness, at the actual
interest rate in effect with respect to all Indebtedness outstanding as of the
last day of such Fiscal Quarter and in the case of all Floating Rate
Indebtedness, the greater of (i) (A) the Treasury Rate plus 1.75% for taxable
Indebtedness and (B) 7.0% for tax-exempt Indebtedness, (ii) the actual rate of
interest in effect with respect to such Floating Rate Indebtedness outstanding
for which no Interest Rate Contract is in effect as of the last day of such
quarter and (iii) if an Interest Rate Contract is in effect with respect to
such Floating Rate Indebtedness, the strike rate payable under such Interest
Rate Contract, all determined on an annualized basis.
"Interest Rate Contracts" means, collectively, interest rate swap,
collar, cap or similar agreements providing interest rate protection.
"Investment Affiliate" means any Person in whom ERP REIT or
Guarantor holds an equity interest, directly or indirectly, whose financial
results are not consolidated under GAAP with the financial results of ERP REIT
or Guarantor on the consolidated financial statements of ERP REIT and
Guarantor.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind, or any other type of
preferential arrangement, in each case that has the effect of creating a
security interest, in respect of such asset. For the purposes of these
definitions, Guarantor or any Consolidated Subsidiary shall be deemed to own
subject to a Lien any asset which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset.
"Xxxxx'x" means Xxxxx'x Investors Services, Inc. or any successor
thereto.
"Net Income" means, for any period, the net earnings (or loss) after
Taxes of Guarantor, on a consolidated basis, for such period calculated in
conformity with GAAP.
"Net Offering Proceeds" means all cash or other assets received by
ERP REIT or Guarantor as a result of the sale of common shares of beneficial
interest, preferred shares of beneficial interest, partnership interests,
limited liability company interests, Convertible Securities or other ownership
or equity interests in ERP REIT or Guarantor less customary costs and
discounts of issuance paid by ERP REIT or Guarantor, as the case may be.
"Net Operating Income" means, for any period with respect to any
Property owned (directly or beneficially) by Guarantor or a Financing
Partnership, the net operating income of such Property (attributed to such
Property in a manner reasonably acceptable to the Bank) for such period (i)
determined in accordance with GAAP, (ii) determined in a manner which is
consistent with the past practices of ERP REIT and Guarantor, and (iii)
inclusive of an allocation of reasonable management fees and administrative
costs to each Property consistent with the past practices of ERP REIT and
Guarantor, except that, for purposes of determining Net Operating Income,
income shall not (a) include security or other deposits, lease termination or
other similar charges, delinquent rent recoveries, unless previously reflected
in reserves, or any other items deemed by the Bank to be of a non-recurring
nature or (b) be reduced by depreciation or amortization.
"Net Price" means, with respect to the purchase and sale of any
Property, without duplication, (i) Cash and Cash Equivalents paid as
consideration for such purchase or sale, plus (ii) the principal amount of any
note received or other deferred payment to be made in connection with such
purchase or sale (except as described in clause (iv) below), plus (iii) the
value of any other considerations delivered in connection with such purchase
or sale (including, without limitation, shares of beneficial interest in ERP
REIT and OP Units or Preferred OP Units (as defined in Guarantor's partnership
agreement)) (as reasonably determined by the Bank), minus (only in the case of
a sale) (iv) the value of any consideration deposited into escrow or subject
to disbursement or claim upon the occurrence of any event, minus (only in the
case of a sale) (v) the value of any consideration required to be paid to any
Person other than Guarantor and its Subsidiaries owning a beneficial interest
in such Property, minus (vi) reasonable costs of sale and taxes paid or
payable in connection with such purchase or sale.
"Net Present Value" shall mean, as to a specified or ascertainable
dollar amount, the present value, as of the date of calculation of any such
amount using a discount rate equal to the base interest rate in effect under
the Guarantor Credit Agreement as of the date of such calculation.
"Non-Recourse Indebtedness" means Indebtedness with respect to which
recourse for payment is limited to (i) specific assets related to a particular
Property or group of Properties encumbered by a Lien securing such
Indebtedness or (ii) any Subsidiary (provided that if a Subsidiary is a
partnership, there is no recourse of Guarantor or ERP REIT as a general
partner of such partnership); provided, however, that personal recourse of
Guarantor or ERP REIT for any such Indebtedness for fraud, misrepresentation,
misapplication of cash, waste, environmental claims and liabilities and other
circumstances customarily excluded by institutional lenders from exculpation
provisions and/or included in separate indemnification agreements in
non-recourse financing of real estate shall not, by itself, prevent such
Indebtedness from being characterized as Non-Recourse Indebtedness.
"Palomino Company" means any limited liability company formed by, or
with the consent of, WRP, Guarantor, WPHC, Highlands and/or Red Canyon (as
such terms are defined in the Reimbursement Agreement) to develop any phase of
the Development that is or will be encumbered by the Assessment and Lien (as
such term is defined in the Reimbursement Agreement).
"Palomino Parties" means, collectively, the Bond Issuer, WRP, WPHC,
Highlands, Red Canyon (as defined in the Reimbursement Agreement), and each
Palomino Company.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Property" means, with respect to any Person, any real or personal
property, building, facility, structure, equipment or unit, or other asset
owned by such Person.
"Qualifying Unencumbered Property" means any Property from time to
time which (i) is an operating multifamily residential property wholly-owned
(directly or beneficially) by Guarantor or a Financing Partnership, (ii) is
not subject (nor are any equity interests in such Property subject) to a Lien
which secures Indebtedness of any Person other than Liens permitted under the
Guarantor Credit Agreement, (iii) is not subject (nor are any equity interests
in such Property subject) to any covenant, condition, or other restriction
which prohibits or limits the creation or assumption of any Lien upon such
Property.
"QRS Corporation" means those qualified ERP REIT subsidiaries wholly
owned by ERP REIT.
"Real Property Assets" means as of any time, the real property
assets (including interests in participating mortgages in which Guarantor's
interest therein is characterized as equity according to GAAP) owned directly
or indirectly by Guarantor and the Consolidated Subsidiaries at such time.
"Recourse Debt" means Indebtedness that is not Non-Recourse
Indebtedness.
"S&P" means Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc., or any successor thereto.
"Secured Debt" means Indebtedness, the payment of which is secured
by a Lien on any Property owned or leased by ERP REIT, Guarantor, or any
Subsidiary.
"Securities" means any stock, partnership interests, shares, shares
of beneficial interest, voting trust certificates, bonds, debentures, notes or
other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as
"securities," or any certificates of interest, shares, or participations in
temporary or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire any of the foregoing, but shall not
include any evidence of the obligations.
"Subsidiary" means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect
a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by Guarantor.
"Taxes" means all federal, state, local and foreign income and gross
receipts taxes.
"Total Liabilities" means, as of the date of determination and
without duplication, all Indebtedness of ERP REIT (calculated as provided in
Section 4.4(g) of the Guaranty), on a consolidated basis, Plus Guarantor's
Share of all Indebtedness of Investment Affiliates for which there is no
recourse to ERP REIT or Guarantor (or any Property thereof) plus the actual or
potential liability of ERP REIT, Guarantor or any Subsidiary for any
Indebtedness of Investment Affiliates that is recourse to ERP REIT or
Guarantor (or Property thereof) plus accounts payable incurred in the ordinary
course of business.
"Treasury Rate" means, as of any date, a rate equal to the annual
yield to maturity on the U.S. Treasury Constant Maturity Series with a ten
year maturity, as such yield is reported in Federal Reserve Statistical
Release H.15 -- Selected Interest Rates, published most recently prior to the
date the applicable Treasury Rate is being determined. Such yield shall be
determined by straight line linear interpolation between the yields reported
in Release H.15, if necessary. In the event Release H.15 is no longer
published, the Bank shall select, in its reasonable discretion, an alternate
basis for the determination of Treasury yield for U.S. Treasury Constant
Maturity Series with ten year maturities.
"Unencumbered Asset Value" means (i) a fraction, the numerator of
which is the product of four (4) and the aggregate Unencumbered Net Operating
Income for the most recently ended Fiscal Quarter which is attributable (in a
manner reasonably acceptable to the Bank) to Qualifying Unencumbered
Properties owned (directly or beneficially) by Guarantor or any Financing
Partnership (exclusive of Unimproved Assets) for the entire Fiscal Quarter and
the denominator of which is the FMV Cap Rate Plus (ii) for all Qualifying
Unencumbered Properties wholly-owned (directly or beneficially) by Guarantor
or any Financing Partnership which have been acquired (directly or indirectly)
by Guarantor or any Financing Partnership in the Fiscal Quarter most recently
ended, the aggregate Net Price of the Qualifying Unencumbered Properties paid
by Guarantor or its Affiliates for such Qualifying Unencumbered Properties.
"Unencumbered Net Operating Income" means for any period for all
Qualifying Unencumbered Properties owned (directly or beneficially) by
Guarantor or any Financing Partnership during the applicable period, Net
Operating Income from each such Qualifying Unencumbered Property minus an
amount equal to the product of the average number of apartment units in such
Qualifying Unencumbered Property during such period and the Capital Reserve
for such period.
"Unimproved Assets" means Real Property Assets upon which no
material improvements have been completed which completion is evidenced by a
certificate of occupancy or its equivalent.
"Unsecured Debt" means Indebtedness of Guarantor and any Financing
Partnership which is not Secured Debt.
"Unsecured Interest Expense" means Interest Expense other than
Interest Expense payable in respect of Secured Debt.
"Unused Commitments" shall mean an amount equal to all unadvanced
funds (other than unadvanced funds in connection with any construction loan)
which any third party is obligated to advance to Guarantor or another Person
or otherwise pursuant to any loan document, written instrument or otherwise.
EXHIBIT A
FORM OF GUARANTOR COMPLIANCE CERTIFICATE
