1
EXHIBIT 10.1
[EXECUTION COPY]
================================================================================
CREDIT AGREEMENT
DATED AS OF MARCH 27, 1998
Among
SUMMIT PROPERTIES PARTNERSHIP, L.P.
As Borrower
SUMMIT PROPERTIES, INC.
As Parent Guarantor
THE BANKS NAMED HEREIN
FIRST UNION NATIONAL BANK
As Administrative Agent and Arranger
WACHOVIA BANK N.A.
As Syndication Agent
And
NATIONSBANK, N.A.
As Documentation Agent
================================================================================
2
TABLE OF CONTENTS
PAGE
PRELIMINARY STATEMENT
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.1. Certain Defined Terms.................................1
Section 1.2. Computation of Time Periods..........................20
Section 1.3. Accounting Terms.....................................21
Section 1.4. Computations of Outstandings.........................21
ARTICLE II
THE COMMITMENTS
Section 2.1. The Commitments......................................21
Section 2.2. Reduction of the Commitments.........................22
Section 2.3. Extension of the Termination Date....................22
Section 2.4. Use of Proceeds......................................23
ARTICLE III
REVOLVING, SWING LINE AND COMPETITIVE ADVANCES
Section 3.1. Revolving Advances...................................23
Section 3.2. The Swing Line Advances..............................24
Section 3.3. Competitive Advances.................................26
Section 3.4. Making of Advances...................................30
Section 3.5. Repayment of Advances................................31
Section 3.6. Interest.............................................32
Section 3.7. Conversion...........................................33
Section 3.8. Continuation.........................................33
ARTICLE IV
LETTERS OF CREDIT
Section 4.1. The Letter of Credit Facility........................34
Section 4.2. Request for Issuances of Letters of Credit...........34
Section 4.3. Drawing and Reimbursement............................35
Section 4.4. Obligations Absolute.................................36
Section 4.5. Compensation.........................................37
i
3
ARTICLE V
GUARANTY
Section 5.1. Guarantee of the Parent Guarantor....................37
ARTICLE VI
PAYMENTS
Section 6.1. Payments and Computations............................39
Section 6.2. Prepayments..........................................41
Section 6.3. Fees.................................................41
Section 6.4. Yield Protection.....................................42
Section 6.5. Sharing of Payments, Etc.............................45
Section 6.6. Taxes................................................46
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.1. Conditions Precedent to Effectiveness................48
Section 7.2. Conditions Precedent to Certain Advances and
Each Issuance........................................50
Section 7.3. Reliance on Certificates.............................51
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
Section 8.1. Representations and Warranties.......................51
ARTICLE IX
COVENANTS OF THE BORROWER AND PARENT GUARANTOR
Section 9.1. Affirmative Covenants................................58
Section 9.2. Negative Covenants...................................62
Section 9.3. Financial Covenants..................................65
Section 9.4. Reporting Obligations................................66
ARTICLE X
DEFAULTS
Section 10.1. Events of Default...................................69
Section 10.2. Remedies Upon Events of Default.....................71
Section 10.3. Actions in Respect of the Letters of
Credit Upon Default.................................72
ii
4
ARTICLE XI
THE AGENT
Section 11.1. Authorization and Action............................72
Section 11.2. Administrative Agent's Reliance, Etc................72
Section 11.3. FUNB and Affiliates.................................73
Section 11.4. Lender Credit Decision..............................73
Section 11.5. Indemnification.....................................73
Section 11.6. Successor Administrative Agent......................74
ARTICLE XII
MISCELLANEOUS
Section 12.1. Amendments, Etc.....................................75
Section 12.2. Notices, Etc........................................75
Section 12.3. No Waiver of Remedies...............................77
Section 12.4. Costs, Expenses and Indemnification.................77
Section 12.5. Right of Set-off....................................78
Section 12.6. Binding Effect......................................78
Section 12.7. Assignments and Participation.......................79
Section 12.8. Confidentiality.....................................82
Section 12.9. Waiver of Jury Trial................................82
Section 12.10. Governing Law......................................83
Section 12.11. Arbitration........................................83
Section 12.12. Preservation and Limitation of Remedies............83
Section 12.13. Release of Subsidiary Guaranty.....................84
Section 12.14. Relation of the Parties; No Beneficiary............84
Section 12.15. Execution in Counterparts..........................84
SCHEDULES
Schedule I - Lending Offices
Schedule II - Liens
Schedule III - Subsidiaries
Schedule IV - Debt
Schedule V - Material Contracts
Schedule VI - Environmental Matters
EXHIBITS
Exhibit 1.1A - Form of Competitive Note
Exhibit 1.1B - Form of Revolving Note
Exhibit 1.1C - Form of Subsidiary Guaranty
Exhibit 1.1D - Form of Designation Agreement
iii
5
Exhibit 3.1 - Form of Notice of Revolving Borrowing
Exhibit 3.2 - Form of Notice of Swing Line Borrowing
Exhibit 3.3A-1 - Form of Competitive Bid Request for Eurodollar
Competitive Borrowing
Exhibit 3.3B - Form of Notice of Competitive Bid Request
Exhibit 3.3C-1 - Form of Competitive Bid for Eurodollar Competitive
Advance
Exhibit 3.3C-2 - Form of Competitive Bid for Fixed Rate Competitive
Advance
Exhibit 3.3D-1 - Form of Competitive Bid Acceptance for Eurodollar
Competitive Borrowing
Exhibit 3.3D-2 - Form of Competitive Bid Acceptance for Fixed Rate
Competitive Borrowing
Exhibit 3.7A - Form of Notice of Conversion
Exhibit 3.8A - Form of Notice of Continuation
Exhibit 7.1A - Form of Opinion of ▇▇▇▇▇▇▇, Procter & ▇▇▇▇ LLP,
Counsel to the Loan Parties
Exhibit 7.1B - Form of Opinion of Kennedy, Covington, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ LLP, Special North Carolina counsel to the
Loan Parties
Exhibit 7.1C - Form of Opinion of Parker, Poe, ▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇ L.L.P., Special North Carolina Counsel to
the Administrative Agent
Exhibit 9.4A - Form of Compliance Certificate
Exhibit 12.7 - Form of Assignment and Acceptance
iv
6
CREDIT AGREEMENT
Dated as of March 27, 1998
This CREDIT AGREEMENT is made by and among SUMMIT PROPERTIES
PARTNERSHIP, L.P., a limited partnership organized under the laws of the State
of Delaware (the "BORROWER"), SUMMIT PROPERTIES, INC., a corporation organized
under the laws of the State of Maryland (the "PARENT GUARANTOR"), the financial
institutions (the "BANKS") listed on the signature pages hereof and the other
Lenders (as hereinafter defined) from time to time party hereto, and FIRST UNION
NATIONAL BANK ("FUNB"), as Administrative Agent for the Lenders hereunder.
PRELIMINARY STATEMENT
The Borrower has requested the Banks to provide the unsecured revolving
credit facility hereinafter described in the amounts and on the terms and
conditions set forth herein. The Parent Guarantor has agreed to guaranty the
facility. The Banks have so agreed on the terms and conditions set forth herein,
and the Administrative Agent has agreed to act as agent for the Lenders on such
terms and conditions.
Based upon the foregoing and subject to the terms and conditions set
forth in this Agreement, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be
applicable to the singular and plural forms of the terms defined):
"ADMINISTRATIVE AGENT" means FUNB in its capacity as
administrative agent hereunder or any successor thereto as provided
herein.
"ADMINISTRATIVE AGENT'S ACCOUNT" means the account of the
Administrative Agent at the office of the Administrative Agent.
"ADVANCE" means a Revolving Advance, a Competitive Advance, a
Swing Line Advance or a Letter of Credit Advance (each of which shall
be a "CLASS" of Advance).
"AFFILIATE" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under
direct or indirect common control with such Person. A Person shall be
deemed to control another entity if such Person possesses, directly or
indirectly, the power to direct or cause the direction of the
management and policies of such entity, whether through the ownership
of voting securities, by contract or otherwise.
7
"AGGREGATE OUTSTANDING AMOUNT" means, at any time, the sum of
(i) the aggregate principal amount of all Advances outstanding at such
time plus (ii) the aggregate Available Amount of all Letters of Credit
outstanding at such time. With respect to any Lender at any time, such
Lender's Aggregate Outstanding Amount shall be such Lender's Percentage
of the Aggregate Outstanding Amount.
"AGREEMENT" means this Credit Agreement, as the same may be
modified, amended and/or supplemented pursuant to the terms hereof.
"APPLICABLE MARGIN" means, as applicable, for any day (i) for
any outstanding Revolving Advance, Swing Line Advance or Letter of
Credit Advance, the applicable percentage per annum set forth below in
effect on such day for such Advance, and (ii) with respect to any
Letter of Credit for purposes of Section 4.5 hereof only, the
percentage per annum set forth below in effect on such day for
Eurodollar Rate Advances, determined on the basis of the Applicable
Rating Level of the Borrower:
================================================================================
APPLICABLE MARGIN (PERCENTAGE %)
================================================================================
APPLICABLE RATING LEVEL
EURODOLLAR RATE ADVANCES BASE RATE ADVANCES
--------------------------------------------------------------------------------
BBB+ /Baal or higher 0.675 0
--------------------------------------------------------------------------------
BBB/Baa2 0.80 0
--------------------------------------------------------------------------------
BBB-/Baa3 0.90 0
--------------------------------------------------------------------------------
less than BBB-/Baa3 1.15 0
================================================================================
Any change in the Applicable Margin caused by a change in the
Applicable Rating Level shall take effect at the time such change in
the Applicable Rating Level shall occur. As used herein, the
"APPLICABLE RATING LEVEL" means (i) if the Borrower receives only two
credit ratings, the lower of the two ratings (if these are the only two
ratings), provided that at least one of the two ratings shall be from
S&P or ▇▇▇▇▇'▇, or (ii) if the Borrower receives three credit ratings,
the lower of the two highest ratings, provided that each of the two
highest ratings shall be Investment Grade and one of the two highest of
such ratings shall be from S&P or ▇▇▇▇▇'▇.
"APPLICABLE RATE" means:
(a) in the case of each Fixed Eurodollar Rate Advance
comprising part of the same Borrowing, a rate per annum during each
Interest Period equal at all times to the sum of the Eurodollar Rate
for such Interest Period plus the Applicable Margin in effect from time
to time during such Interest Period;
(b) in the case of each Floating Eurodollar Rate Advance
comprising part of the same Borrowing, a rate per annum during each
Interest Period equal at all times to the sum of the Floating
Eurodollar Rate in effect from time to time during such Interest Period
plus the Applicable Margin in effect from time to time during such
Interest Period;
2
8
(c) in the case of each Base Rate Advance, a rate per annum
equal at all times to the sum of the Base Rate in effect from time to
time plus the Applicable Margin in effect from time to time;
(d) in the case of each Eurodollar Competitive Advance, a rate
per annum during the Interest Period therefor equal at all times to the
sum of the Eurodollar Rate for such Interest Period plus or minus, as
the case may be, the Competitive Margin in effect during such Interest
Period; and
(e) in the case of each Fixed Rate Competitive Advance, a rate
per annum during the Interest Period therefor equal at all times to the
rate specified by such Lender in its Competitive Bid and accepted by
the Borrower for such Competitive Advance in accordance with Section
3.3(b)(iv) hereof.
"AVAILABLE AMOUNT" means, with respect to any Letter of Credit
outstanding at any time, the maximum amount available to be drawn under
such Letter of Credit at such time (assuming compliance at such time
with all conditions to drawing).
"AVAILABLE COMMITMENT" means, for each Lender, the difference
between such Lender's Commitment and such Lender's Aggregate
Outstanding Amount. "AVAILABLE COMMITMENTS" shall refer to the
aggregate of the Lenders' Available Commitments hereunder.
"BANKS" has the meaning assigned to that term in the caption
to this Agreement.
"BASE RATE" means, for any period, a fluctuating interest rate
per annum as shall be in effect from time to time which rate per annum
shall at all times be equal to the highest of:
(a) the rate of interest announced publicly by the
Administrative Agent at its principal lending office, from time to
time, as the Administrative Agent's base rate; and
(b) 1/2 of one percent per annum above the Federal Funds Rate
in effect from time to time.
If the Administrative Agent shall have determined (which determination
shall be conclusive absent manifest error) that it is unable to
ascertain the Federal Funds Rate for any reason, including the
inability or failure of the Administrative Agent to obtain sufficient
quotations in accordance with the terms thereof, the Base Rate shall be
determined without regard to clause (b) of the first sentence of this
definition until the circumstances giving rise to such inability no
longer exist. Any change in the Base Rate due to a change in the
Administrative Agent's base rate, or the Federal Funds Rate shall be
effective on the effective date of such change in the Administrative
Agent's base rate or the Federal Funds Rate, respectively.
"BASE RATE ADVANCE" means a Revolving Advance, a Swing Line
Advance or Letter of Credit Advance which the Borrower has selected in
accordance with Article III hereof, or this Agreement provides for,
interest to be computed on the basis of the Base Rate.
3
9
"BOND FINANCED PROPERTIES" means any Property financed with
tax-exempt bonds.
"BORROWER" has the meaning assigned to that term in the
caption to this Agreement.
"BORROWING" means a Revolving Borrowing, a Competitive
Borrowing or a Swing Line Borrowing (each of which shall be a "CLASS"
of Borrowing).
"BORROWER'S ACCOUNT" means the account of the Borrower at the
office of the Administrative Agent.
"BUSINESS DAY" means a day of the year on which banks are not
required or authorized to close in Charlotte, North Carolina and, if
the applicable Business Day relates to any Eurodollar Rate Advances or
Eurodollar Competitive Advances, on which dealings are carried on in
the London interbank market.
"CAPITALIZATION RATE" means 9.00% per annum.
"CAPITALIZED LEASES" means all leases that have been or should
be, in accordance with GAAP, recorded as capitalized leases.
"CASH EQUIVALENTS" means: (a) securities issued, guaranteed or
insured by the United States of America or any of its agencies with
maturities of not more than one year from the date acquired; (b)
certificates of deposit with maturities of not more than one year from
the date acquired issued by a United States federal or state chartered
commercial bank of recognized standing, which has capital and
unimpaired surplus in excess of $100,000,000 and which bank or its
holding company has a short-term commercial paper rating of at least
A-2 or the equivalent by S&P or at least P-2 or the equivalent by
▇▇▇▇▇'▇; (c) commercial paper issued by any Person incorporated under
the laws of the United States of America or any State thereof and rated
at least A-2 or the equivalent thereof by S&P or at least P-2 or the
equivalent thereof by ▇▇▇▇▇'▇, in each case with maturities of not more
than one year from the date acquired; and (d) investments in money
market funds registered under the Investment Company Act of 1940, which
have net assets of at least $100,000,000 and at least 85% of whose
assets consist of securities and other obligations of the type
described in clauses (a) through (c) above.
"CLASS" has the meaning assigned to such term (i) in the
definition of "ADVANCE" when used in such context and (ii) in the
definition of "BORROWING" when used in such context.
"CLOSING DATE" means March 27, 1998.
"CODE" means the Internal Revenue Code of 1986, as amended
from time to time.
"COMMITMENT" means, for each Lender, the aggregate amount set
forth opposite such Lender's name on the signature pages hereof or, if
such Lender has entered into one or more Lender Assignments in
accordance with the terms of this Agreement, set forth for such Lender
in the Register maintained by the Administrative Agent pursuant to
Section 12.7(c),
4
10
in each such case as such amount may be reduced from time to time
pursuant to Sections 2.2 or 2.3 hereof or, increased pursuant to
Section 2.1(d) hereof. Any Competitive Advance actually funded by a
Designated Lender shall constitute a utilization of the Commitment of
the Designating Lender for all purposes hereunder.
"COMMITMENTS" shall refer to the aggregate of the Lenders'
Commitments hereunder. On the Closing Date, the Commitments shall equal
$175,000,000 and may be increased after the Closing Date in accordance
with Section 2.1(d) hereof to $200,000,000 or reduced from time to time
in accordance with Sections 2.2 or 2.3 hereof.
"COMPETITIVE ADVANCE" means an advance by a Lender to the
Borrower as part of a Competitive Borrowing and refers to a Fixed Rate
Competitive Advance or a Eurodollar Competitive Advance (each of which
shall be a "TYPE" of Competitive Advance).
"COMPETITIVE BID" means the offer by a Lender to make a
Competitive Advance to the Borrower under the competitive bidding
procedure described in Section 3.3(b) hereof.
"COMPETITIVE BID ACCEPTANCE" means a notice given by the
Borrower to the Administrative Agent pursuant to Section 3.3(b)(iv)
confirming the Borrower's acceptance of one or more Competitive Bids,
such notice to be substantially in the form of Exhibit 3.3D-1 hereto,
in the case of Competitive Bids for Eurodollar Competitive Advances, or
substantially in the form of Exhibit 3.3D-2 hereto, in the case of
Competitive Bids for Fixed Rate Competitive Advances.
"COMPETITIVE BID RATE" means, as to any Competitive Bid made
by a Lender pursuant to Section 3.3(b)(ii), (i) in the case of a
Eurodollar Competitive Advance, the Competitive Margin and (ii) in the
case of a Fixed Rate Competitive Advance, the fixed rate of interest
offered by such Lender making such Competitive Bid.
"COMPETITIVE BID REQUEST" means a request for Competitive
Advances made by the Borrower to the Administrative Agent pursuant to
Section 3.3(b)(i), which request shall be substantially in the form of
Exhibit 3.3A-1 hereto, in the case of a request for Competitive
Eurodollar Advances, or, substantially in the form of Exhibit 3.3A-2
hereto, in the case of a request for Fixed Rate Competitive Advances .
"COMPETITIVE BORROWING" means a Borrowing consisting of one or
more Competitive Advances of the same Type and Interest Period made to
the Borrower on the same day by each of the Lenders whose Competitive
Bid to make one or more Competitive Advances as part of such Borrowing
has been accepted by the Borrower under the competitive bidding
procedure described in Section 3.3(b). A Competitive Borrowing may be
referred to herein as being a "TYPE" of Competitive Borrowing,
corresponding to the Type of Competitive Advances comprising such
Borrowing.
"COMPETITIVE MARGIN" means, with respect to any Eurodollar
Competitive Advance, the percentage per annum (expressed in the form of
a decimal to no more than four decimal places) to be added to or
subtracted from the Eurodollar Rate in order to determine the
5
11
interest rate applicable to such Advance, as specified in the
Competitive Bid relating to such Advance.
"COMPETITIVE NOTE" means a promissory note of the Borrower
payable to the order of a Lender, in substantially the form of Exhibit
1.1A hereto, evidencing the indebtedness of the Borrower to such Lender
from time to time resulting from Competitive Advances made by such
Lender.
"COMPLETED PROPERTY" means any Multi-Family Property for which
a final certificate of occupancy has been issued by the appropriate
Governmental Authority and is effective.
"COMPLETED BUT UNSTABILIZED PROPERTIES" means, as of any date
of determination, Completed Properties whose (i) Occupancy Rate is less
than 85% and (ii) final certificate of occupancy was issued 180 days or
less from the date of determination.
"CONFIDENTIAL INFORMATION" has the meaning assigned to that
term in Section 12.8 hereof.
"CONSOLIDATED" OR "CONSOLIDATED" means, with reference to any
term defined in this Agreement, that term as applied to the accounts of
the Parent Guarantor and its Subsidiaries or the Borrower and its
Subsidiaries, as the case may be, consolidated in accordance with GAAP.
"CONSTRUCTION IN PROGRESS" means, with respect to any Person
for any period, the aggregate, good faith estimated cost of
construction of improvements (including land acquisition costs) for
Property on which construction has begun (as evidenced by initiation of
site work) but has not yet been completed (excluding rehabilitation and
redevelopment costs associated with existing Properties). For purposes
of this definition only, "completed" shall be determined on a building
by building basis and is signified by the issuance of a final
certificate of occupancy for any such building.
"CONTINUE", "CONTINUATION" and "CONTINUED" each refers to the
continuation of an Advance from one Interest Period to another Interest
Period pursuant to Section 3.8.
"CONTROLLED GROUP" means all trades or businesses (whether or
not incorporated) under common control that, together with the
Borrower, are treated as a single employer under Section 414(b) or
414(c) of the Code or Section 4001 of ERISA.
"CONVERT", "CONVERSION" and "CONVERTED" each refers to the
conversion of an Advance of one Type into a an Advance of another Type
pursuant to Section 3.7 hereof.
"CREDIT PARTY" means the Borrower and the Parent Guarantor.
"DEBT" means, with respect to any Person at any time (without
duplication): (i) indebtedness for borrowed money, or for the deferred
purchase price of property or services; (ii) obligations of such Person
evidenced by notes, bonds, debentures or other similar instruments;
(iii) obligations as lessee under Capitalized Leases; (iv) obligations
under letters
6
12
of credit issued for the account of any Person; (v) obligations arising
under bankers' or trade acceptance facilities; (vi) current or accrued
obligations under any agreement providing for contingent participation
or other hedging mechanisms with respect to interest payable on any of
the items described above in this definition; (vii) all guarantees,
endorsements (other than for collection or deposit in the ordinary
course of business) and other contingent obligations to pay obligations
of the types described in clause (i) through (vi) above; (viii)
obligations of any other Person of the types described in clauses (i)
through (vii) above which are recourse to such Person; (ix) all
obligations of such Person as a general partner of a partnership that
has incurred any Debt of the types described in clauses (i) through
(vii) above; and (x) such Person's beneficial share of non-recourse
Debt of Unconsolidated Joint Ventures of such Person of the types
described in clauses (i) through (vii) above.
"DEFAULT RATE" means, with respect to any Advance, a rate per
annum equal at all times to (A) for the remaining term of such Advance,
if any, of the Interest Period for such Advance, 4% per annum above the
Applicable Rate for such Advance for such Interest Period, and (B)
thereafter, 4% per annum above the Applicable Rate in effect from time
to time for Base Rate Advances.
"DESIGNATED LENDER" means any Person who has been designated
by a lender to fund Competitive Advances on behalf of such Lender.
"DESIGNATING LENDER" has the meaning ascribed to that term in
Section 12.7(h) hereof.
"DESIGNATION AGREEMENT" means a designation agreement entered
into by Lender (other than a Designated lender) and a Designated
Lender, and accepted by the Administrative Agent, in substantially the
form of Exhibit 1.1D hereto.
"DISCLOSURE DOCUMENTS" means the Parent Guarantor's Annual
Report on Form 10-K for the year ended December 31, 1996, its Quarterly
Reports on Form 10-Q for the quarters ended March 31, 1997, June 30,
1997, September 30, 1997, and any Current Report on Form 8-K delivered
to the Lenders not less than five Business Days prior to the Closing
Date.
"DIVIDEND" or "DIVIDENDS" means the payment of any dividend or
other distribution in respect of the capital stock of a corporation or
equity interest in partnership, as applicable, in cash or other
property (excepting distribution in the form of such stock or equity
interest) or the redemption or acquisition of any capital stock or
security of a corporation or equity interest or security of a
partnership, as applicable (exclusive of any conversion of such an
equity interest in Borrower into stock of the Parent Guarantor).
"EBITDA" means, with respect to any Person for any period, the
sum of (without duplication):
(i) (1) net income before extraordinary
items plus (A) depreciation and amortization, (B)
interest expense, (C) income taxes, and (D) its
beneficial interest in any non-cash losses of any
Unconsolidated Joint
7
13
Ventures minus (2) its beneficial interest in
non-cash earnings of any Unconsolidated Joint
Ventures of such Person; and
(ii) with respect to any Property acquired
during such period, such Property's projected Net
Operating Income for such period.
The projected Net Operating Income from such Property acquired
during such period shall not exceed the actual Net Operating Income of
such Property for the prior Fiscal Quarter without the prior written
approval of the Majority Lenders which approval shall not be
unreasonably withheld or delayed and shall, with respect to any such
Properties acquired by an Unconsolidated Joint Venture, only include
said Person's beneficial interest in such Unconsolidated Joint Venture.
"ELIGIBLE ASSIGNEE" means (a) a commercial bank or trust
company organized under the laws of the United States, or any State
thereof; (b) a commercial bank organized under the laws of any other
country that is a member of the OECD, or a political subdivision of any
such country, provided that such bank is acting through a branch or
agency located in the United States; (c) the central bank of any
country that is a member of the OECD; and (d) any other commercial bank
or other financial institution engaged generally in the business of
extending credit or purchasing debt instruments; provided, however,
that (A) any such Person shall also (i) have outstanding unsecured
indebtedness that is rated A- or better by S&P or A3 or better by
Moody's (or an equivalent rating by another nationally-recognized
credit rating agency of similar standing if neither of such
corporations is then in the business of rating unsecured indebtedness
of entities engaged in such businesses) or (ii) have combined capital
and surplus (as established in its most recent report of condition to
its primary regulator) of not less than $500,000,000 (or its equivalent
in foreign currency), (B) any Person described in clause (b), (c), or
(d) above, shall, on the date on which it is to become a Lender
hereunder, (1) be entitled to receive payments hereunder without
deduction or withholding of any United States Federal income taxes (as
contemplated by Section 6.6) and (2) not be incurring any losses, costs
or expenses of the type for which such Person could demand payment
under Section 6.4(a), (b) or (c) (except to the extent that, in the
absence of the making of an assignment to such Person, the assigning
Lender would have incurred an equal or greater amount of such losses,
costs or expenses and such losses, costs or expenses would have been
payable by the Borrower to such assigning Lender hereunder) and (C) any
Person described in clause (d) above shall, in addition, be acceptable
to the Administrative Agent.
"ELIGIBLE STABILIZED UNENCUMBERED PROPERTY" means any
Stabilized Property that is not subject to a Lien securing Total Funded
Debt and is owned 100% directly by the Borrower or a Subsidiary
Guarantor.
"ELIGIBLE UNSTABILIZED UNENCUMBERED PROPERTY" means any
Completed Property that (a) is not a Stabilized Property, (b) is not
subject to a Lien securing Total Funded Debt and (c) is 100% owned
directly by the Borrower or a Subsidiary Guarantor.
"ENVIRONMENTAL LAWS" means any and all laws, statutes, common
law, ordinances, rules, regulations, orders, or determinations of any
Federal, state or local governmental body,
8
14
instrumentality or agency pertaining to human health and safety or the
environment, including without limitation, the Clean Water Act, the
Clean Air Act, as amended, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986 ("▇▇▇▇"), and as may be
further amended (all together herein called "CERCLA"), the Federal
Water Pollution Control Amendments, the Resource Conservation and
Recovery Act of 1976, as amended ("RCRA"), the Hazardous Materials
Transportation Act of 1975, as amended, the Safe Drinking Water Act, as
amended, the Toxic Substances Control Act, as amended, the Occupational
Safety and Health Act of 1970, as amended, and any comparable or
similar environmental laws of any state in which any Loan Party or any
of their respective Affiliates maintains business premises. Likewise,
the term "hazardous substance," shall have the meaning specified in
CERCLA and the terms "solid waste" and "dispose" or "disposed" shall
have the meanings specified in RCRA; provided, however, in the event
either CERCLA or RCRA is amended so as to broaden the meaning of any
term defined therein, such broader meaning shall apply subsequent to
the effective date of such amendment, and provided further that, to the
extent the laws of any state which are applicable to a specific
Property and which establish a meaning for "hazardous substance,"
"release," "solid waste" or "disposal" which is broader than that
specified in either CERCLA or RCRA, such broader meaning shall apply
with respect to such Property.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA AFFILIATE" means, with respect to any Person, any trade
or business (whether or not incorporated) which is a "commonly
controlled entity" of such Person within the meaning of the regulations
under Section 414 of the Internal Revenue Code of 1986, as amended from
time to time.
"ERISA MULTIEMPLOYER PLAN" means a "multiemployer plan" as
defined in Section 3(37) of ERISA subject to Title IV of ERISA.
"ERISA PLAN" means an employee benefit plan (other than a
ERISA Multiemployer Plan) maintained for employees of any Loan Party or
any Loan Party's ERISA Affiliate and covered by Title IV of ERISA.
"ERISA PLAN TERMINATION EVENT" means (a) a Reportable Event
described in Section 4043 of ERISA and the regulations issued
thereunder (other than a Reportable Event not subject to the provision
for 30-day notice to the PBGC under such regulations) or an event
described in Section 4062(e) of ERISA with respect to an ERISA Plan or
an ERISA Multiemployer Plan, or (b) the withdrawal or partial
withdrawal of any Loan Party or any of their respective ERISA
Affiliates from an ERISA Plan or an ERISA Multiemployer Plan during a
plan year in which it was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA, or (c) the filing of a notice of intent to
terminate an ERISA Plan or an ERISA Multiemployer Plan or the treatment
of an ERISA Plan or an ERISA Multiemployer Plan under Section 4041 of
ERISA, or (d) the institution of proceedings to terminate an ERISA Plan
or an ERISA Multiemployer Plan by the PBGC, or (e) any other event or
condition
9
15
which might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any
ERISA Plan or ERISA Multiemployer Plan.
"EUROCURRENCY LIABILITIES" has the meaning assigned to that
term in Regulation D of the Board of Governors of the Federal Reserve
System, as in effect from time to time.
"EURODOLLAR COMPETITIVE ADVANCE" means a Competitive Advance
in respect of which the Borrower has selected in accordance with
Section 3.3(b) hereof, and this Agreement provides, interest to be
computed on the basis of the Eurodollar Rate.
"EURODOLLAR RATE" means, for each Interest Period for each
Eurodollar Rate Advance or Eurodollar Competitive Advance comprising
part of the same Borrowing, an interest rate per annum equal to the
average (rounded upward to the nearest whole multiple of 1/16 of 1% per
annum, if such average is not such a multiple) of the rates per annum
at which deposits in U.S. dollars are offered by the principal office
of the Administrative Agent in London, England to prime banks in the
London interbank market at 11:00 A.M. (London time) two Business Days
before the first day of such Interest Period in the amount of such
Eurodollar Advance and for a period equal to such Interest Period.
"EURODOLLAR ADVANCE" means a Fixed Eurodollar Rate Advance and
a Floating Eurodollar Rate Advance.
"EURODOLLAR RESERVE PERCENTAGE" of any Lender for each
Interest Period for each Eurodollar Rate Advance means the reserve
percentage applicable during such Interest Period (or if more than one
such percentage shall be so applicable, the daily average of such
percentages for those days in such Interest Period during which any
such percentage shall be so applicable) under Regulation D or other
regulations issued from time to time by the Board of Governors of the
Federal Reserve System (or any successor) for determining the maximum
reserve requirement (including, without limitation, any emergency,
supplemental or other marginal reserve requirement, without benefit of
or credit for proration, exemptions or offsets) for such Lender with
respect to liabilities or assets consisting of or including
Eurocurrency Liabilities having a term equal to such Interest Period.
"EVENT OF DEFAULT" has the meaning specified in Section 10.1
hereof.
"EXISTING CREDIT FACILITY" means that certain $150,000,000
Credit Agreement dated November 18, 1996 among the Borrower and FUNB
and Wachovia Bank of North Carolina, N.A., as lenders, and First Union
National Bank of North Carolina, as agent, as amended, modified or
supplemented to the date hereof.
"FACILITY FEE" means, with respect to any Lender, .10% per
annum of such Lender's Commitment.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the
weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds
brokers, as published on the next succeeding Business Day by the
Federal Reserve
10
16
Bank of New York, or, if such rate is not so published for any day
which is a Business Day, the average of the quotations for such day on
such transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by it.
"FEE LETTER" means that certain Fee Letter dated January 8,
1998 among FUNB and the Borrower, as amended, supplemented or restated.
"FISCAL QUARTER" means a period of three calendar months
ending on the last day of March, June, September or December, as the
case may be.
"FISCAL YEAR" means a period of twelve calendar months ending
on the last day of December.
"FIXED CHARGES" means, with respect to any period, the sum of
(a) Interest Expense, (b) Replacement Reserves, (c) preferred dividend
expense and regularly scheduled principal amortization payments
(excluding balloon payments payable at maturity) of Borrower and its
Subsidiaries and that attributable to Borrower's beneficial interest in
its Unconsolidated Joint Ventures and (d) regularly scheduled payments
under Capitalized Leases (excluding balloon payments payable at
maturity).
"FIXED EURODOLLAR RATE ADVANCE" means a Revolving Advance in
respect of which the Borrower has selected in accordance with Article
III hereof, and this Agreement provides for, interest to be computed on
the basis of the Eurodollar Rate.
"FIXED RATE COMPETITIVE ADVANCE" means a Competitive Advance
in respect of which the Borrower has selected in accordance with
Section 3.3(b)(iv) hereof, and this Agreement provides, interest to be
computed on the basis of a fixed percentage rate per annum (expressed
in the form of a decimal to no more than four decimal places) specified
by the Lender making such Advance in its Competitive Bid.
"FLOATING EURODOLLAR RATE" means at any time a floating rate
per annum of interest equal to the Eurodollar Rate which at such time
would be quoted to apply to a Fixed Eurodollar Rate Advance having an
Interest Period of one month if such Fixed Eurodollar Rate Advance were
made two Business Days following such time. Any change in Floating
Eurodollar Rate resulting from a change in such Eurodollar Rate shall
become effective as of 12:01 A.M. on the Business Day on which each
such change occurs. No Advances other than Swing Line Advances shall
bear interest at the Floating Eurodollar Rate.
"FLOATING EURODOLLAR RATE ADVANCE" means a Swing Line Advance
bearing interest at a rate based on the Floating Eurodollar Rate.
"FORMATION DOCUMENTS" means with respect to any Person that is
(a) a corporation, its articles of incorporation and by-laws, (b) a
general or limited partnership, its certificate of formation and
partnership or limited partnership agreement, (c) a limited liability
company, its certificate of organization or formation and operating
agreement and (d) any other person, its analogous documents of
formation and operation.
11
17
"FUNB" means First Union National Bank and its permitted
successors and assigns.
"FUNDS FROM OPERATIONS" means, with respect to any Person, for
any period, all Funds from Operations (as defined as of the Closing
Date by the Board of Governors of the National Association of Real
Estate Investment Trusts).
"GAAP" has the meaning assigned to such term in Section 1.3.
"GOOD FAITH CONTEST" means the contest of an item if: (i) the
item is diligently contested in good faith, and, if appropriate, by
proceedings timely instituted; (ii) adequate reserves are established
with respect to the contested item; (iii) during the period of such
contest, the enforcement of any contested item is effectively stayed;
and (iv) the failure to pay or comply with the contested item during
the period of the contest is not likely to result in a Material Adverse
Effect.
"GOVERNMENTAL APPROVAL" means any authorization, consent,
approval, license, permit, application, certificate, waiver, exemption
of, or filing or registration with, any Governmental Authority
(including, without limitation, the Securities and Exchange Commission,
required in connection with either (i) the execution, delivery or
performance of any Loan Document, or (ii) the nature of any Loan
Party's or any of their respective subsidiary's business as conducted
or the nature of the property owned or leased by any Loan Party or any
of their respective subsidiaries.
"GOVERNMENTAL AUTHORITY" means any nation or government, any
state or other political subdivision thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including, without
limitation, the Securities and Exchange Commission, in each case having
authority over the matter in question.
"GUARANTOR" means the Parent Guarantor and each Subsidiary
Guarantor, individually. "Guarantors" means, the Parent Guarantor and
the Subsidiary Guarantors, collectively.
"HAZARDOUS MATERIALS" means (i) any chemical, compound,
material, mixture or substance that is now or hereafter defined as or
included in the definition of "hazardous substances", "hazardous
wastes", "hazardous materials", "extremely hazardous waste",
"restricted hazardous waste", or "toxic substances" or terms of similar
import under any Environmental Laws; (ii) any oil, petroleum or
petroleum derived substance, any drilling fluids, produced waters and
other wastes associated with the exploration, development or production
of crude oil, any flammable substances or explosives, any radioactive
materials, any hazardous wastes or substances, any toxic wastes or
substances or any other materials or pollutants which (a) could pose a
hazard to human health or the environment or (b) could cause any of any
properties or assets of the Borrower or its Affiliates to be in
violation of any Environmental Laws; (iii) asbestos in any form, urea
formaldehyde foam insulation, electrical equipment which contains any
oil or dielectric fluid containing levels of polychlorinated biphenyls
in excess of fifty (50) parts per million; (iv) to the extent
prohibited or required to be mitigated by any Environmental Laws, lead
in paint, plaster or
12
18
other accessible materials and (v) any other chemical, material or
substance with respect to which the exposure to or disposal of such
substance is now or hereafter prohibited, limited or regulated by any
Federal, state or local governmental body, instrumentality or agency.
"IMPLIED CAPITALIZATION VALUE" means, with respect to the
Borrower for any Fiscal Quarter the sum of (without duplication):
(a) the product of (i) the Borrower's Consolidated
EBITDA from Stabilized Properties, annualized (i.e. multiplied
by four (4)) less Replacement Reserves for such Stabilized
Properties divided by (ii) the Capitalization Rate;
(b) Borrower's beneficial share of unrestricted Cash
Equivalents of the Borrower and its Subsidiaries;
(c) 100% of the cost basis of Completed but
Unstabilized Properties, as certified by the Borrower, such
certification to be accompanied by all appropriate
documentation supporting such figure; and
(d) 100% of the cost basis of Properties of the
Borrower and its Subsidiaries and Borrower's beneficial
interest in Unconsolidated Joint Ventures under construction
as certified by Borrower, such certification to be accompanied
by all appropriate documentation supporting such figure;
provided, however, the aggregate costs under this clause (d)
shall not exceed 15% of the total Implied Capitalization
Value.
"INDEMNIFIED PERSON" has the meaning assigned to that term in
Section 12.4(b) hereof.
"INTEREST EXPENSE" means, with respect to the Borrower for any
period, the consolidated interest expense, whether paid or accrued (but
excluding capitalized interest) of Borrower and its Subsidiaries and
the Borrower's beneficial interest in such interest expense of any
Unconsolidated Joint Ventures, with respect to any Total Funded Debt,
including, without limitation, subordinated debt; in each case, as
determined in accordance with GAAP.
"INTEREST EXPENSE ON UNSECURED DEBT" means, with respect to
any Person for any period, the Consolidated Interest Expense of such
Person for such period on Unsecured Total Funded Debt of such Person.
"INTEREST PERIOD" has the meaning assigned to that term in
Section 3.6(a) hereof.
"INVESTMENT GRADE" means a credit rating of BBB- or higher by
S&P, Baa3 or higher by Moody's, or the equivalent or higher of either
such rating by another nationally recognized securities rating agency
selected by the Borrower and acceptable to the Majority Lenders.
13
19
"ISSUING BANK" means FUNB, as issuer of a Letter of Credit or
any successor thereto as provided herein.
"KNOWN DEFAULT" means an Unmatured Default which is actually
known by any executive officer of a Credit Party to have occurred.
"L/C CASH COLLATERAL ACCOUNT" means that certain account of
the Borrower maintained at the office of the Administrative Agent
pledged to the Administrative Agent for the benefit of the Lenders.
"L/C RELATED DOCUMENTS" has the meaning specified in Section
4.4(a).
"LENDER ASSIGNMENT" means an assignment and acceptance entered
into by a Lender and an assignee, and accepted by the Administrative
Agent and (if required in accordance with Section 12.7) the Borrower,
in substantially the form of Exhibit 12.7 hereto.
"LENDERS" means the Banks listed on the signature pages hereof
and each Eligible Assignee that shall become a party hereto pursuant to
Section 12.7 and, when used in reference to a Competitive Advance or
Competitive Bids, each Designated Lender.
"LENDING OFFICE" means, with respect to each Lender:
(a) such Lender's "Lending Office" specified opposite such
Lender's name on Schedule I hereto or in the Lender Assignment pursuant
to which it became a Lender; or
(b) in each case, such other office or, office of an
Affiliate, of such Lender in the continental United States as such
Lender may from time to time specify in writing to the Borrower and the
Administrative Agent.
"LETTER OF CREDIT" has the meaning specified in Section 4.1.
"LETTER OF CREDIT ADVANCE" means an advance made pursuant to
Section 4.3.
"LETTER OF CREDIT FACILITY" means the aggregate amount of
Letters of Credit that may be issued pursuant to Section 4.1.
"LIEN" means any mortgage, pledge, hypothecation, assignment,
deposit, arrangement, security interest, encumbrance, lien (statutory
or otherwise), preference, priority or charge of any kind (including
any agreement to give any of the foregoing, any conditional sale or
other title retention agreement, any financing or similar statement or
notice filed under the Uniform Commercial Code as adopted and in effect
in the relevant jurisdiction or other similar recording or notice
statute, and any lease, including, without limitation, Capitalized
Leases, in the nature thereof).
"LOAN DOCUMENTS" means this Agreement, the Notes, each Letter
of Credit, each L/C Related Document and when executed and delivered,
each Subsidiary Guaranty.
14
20
"LOAN PARTY" shall mean, collectively the Borrower and the
Guarantors.
"MAJORITY LENDERS" means on any date of determination, Lenders
who, collectively, on such date (a) have Percentages in the aggregate
of at least 66-2/3% and (b) if the Commitments have been terminated,
hold at least 66-2/3% of the sum of (a) then aggregate unpaid principal
amount of the Advances owing to the Lenders and (b) the aggregate
Available Amount of all Letters of Credit then outstanding.
Determination of those Lenders satisfying the criteria specified above
for action by the Majority Lenders shall be made by the Administrative
Agent and shall be conclusive and binding on all parties absent
manifest error.
"MATERIAL ADVERSE EFFECT" means a (a) materially adverse
effect on the business, conditions (financial or otherwise),
operations, performance, properties or prospects of (i) the Borrower,
(ii) the Parent Guarantor or, (iii) the Parent Guarantor and its
Subsidiaries, in each case, taken as a whole, or (b) a non-frivolous
challenge to the validity or enforceability of any Loan Document or the
rights and remedies of any Lender or the Administrative Agent under any
Loan Document.
"MATERIAL CONTRACT" means any contract or other arrangement
(other than a Loan Document), whether written or oral, to which any
Loan Party, any Subsidiary or any Unconsolidated Joint Venture is a
party as to which the breach, nonperformance, cancellation or failure
to renew by any party thereto could have a Material Adverse Effect.
"MATERIAL SUBSIDIARY" means a Subsidiary, whether owned
directly or indirectly by the Borrower, which, with respect to the
Borrower and its Subsidiaries taken as a whole, represents at least ten
percent (10%) of the Borrower's consolidated assets or the Borrower's
consolidated net income (or loss).
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service, Inc., or any
successor thereto.
"MULTIFAMILY PROPERTIES" means, with respect to any Person,
(i) any apartment Property comprised of no less than one hundred (100)
individual units which Property can be operated as a single residential
rental facility without necessity for sharing amenities, (i.e., leasing
offices, tennis courts, swimming pools and the like) with any other
residential rental facility and (ii) any apartment Property comprised
of no less than fifty (50) units which Property can be operated as a
single residential rental facility as a result of the sharing of
amenities (i.e., leasing offices, tennis courts, swimming pools and the
like) with any other adjoining apartment Property of such Person
comprised of no less than fifty (50) units.
"NET OPERATING INCOME" means, with respect to any Person for
any Property for any period, the result of: (a) rents and other
revenues received in the ordinary course from such Property (including
proceeds of rent loss insurance) during such period minus (b) all
expenses paid or accrued related to the ownership, operation or
maintenance of such Property during such period, including but not
limited to taxes, assessments and the like, insurance, utilities,
payroll costs, maintenance, repair and landscaping expenses and on-site
marketing expenses (but excluding corporate overhead and management
fees allocated to such Property, if any, paid or accrued in respect of
such Property during such period).
15
21
"NOTE" means a Revolving Note or a Competitive Note, as each
may be amended, supplemented or otherwise modified from time to time in
accordance with its terms.
"NOTICE OF REVOLVING BORROWING" has the meaning assigned to
that term in Section 3.1 hereof.
"NOTICE OF SWING LINE BORROWING" has the meaning specified in
Section 3.2.
"NYSE" means the New York Stock Exchange.
"OCCUPANCY RATE" means, with respect to a Completed Property
at any time, the ratio, expressed as a percentage, of (a) the number of
units of such Completed Property actually occupied by tenants paying
rent pursuant to binding leases as to which no monetary default has
occurred and is continuing to (b) the aggregate number of units of such
Completed Property.
"OECD" means the Organization for Economic Cooperation and
Development.
"OFFERING MEMORANDUM" means the confidential Offering
Memorandum, dated February, 1998 regarding the Borrower, as distributed
to the Administrative Agent and the Lenders, including, without
limitation, all schedules and attachments hereto.
"PARENT GUARANTOR" has the meaning associated to that term in
caption to this Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor entity) established under ERISA.
"PERCENTAGE" means, in respect of any Lender on any date of
determination, the percentage obtained by dividing such Lender's
Commitment on such day by the total of the Commitments on such day, and
multiplying the quotient so obtained by 100%.
"PERMITTED LIENS" means, as to any Person:
(a) Liens securing taxes, assessments and other charges or
levies imposed by any Governmental Authority or the claims of
materialmen, mechanics, carriers, warehousemen or landlords for labor,
materials, supplies or rentals incurred in the ordinary course of
business, which are not at the time required to be paid or discharged
under Section 9.1(e);
(b) Liens consisting of deposits or pledges made, in the
ordinary course of business, in connection with, or to secure payment
of, obligations under workmen's compensation, unemployment insurance,
old age pensions, social security or retirement benefits or similar
applicable laws; and
(c) Liens whether now existing or hereafter created consisting
of encumbrances in the nature of building restrictions, zoning
restrictions, easements, and rights or restrictions
16
22
of record on the use of real property, which do not materially detract
from the value of such property or impair the use thereof in the
business of such Person.
"PERSON" means an individual, partnership (limited or
general), corporation (including a business trust), limited liability
company, joint stock company, trust, unincorporated association, joint
venture or other entity, or a government or any political subdivision
or agency thereof.
"PROPERTY" means the real property of the Borrower, its
Subsidiaries and its Unconsolidated Joint Ventures, its Affiliates, now
or hereafter acquired, directly or indirectly, together with all
buildings and improvements thereon.
"RECIPIENT" has the meaning assigned to that term in Section
12.8 hereof.
"REIT" means a "real estate investment trust" as such term is
defined in Section 856 of the Code.
"RELEASE" means, with respect to any Person, any spill, leak,
deposit, discharge, emission, disposal, leaching, or migration into the
environment of any Hazardous Materials (including, without limitation,
the abandonment or disposal of any barrels, containers, or other open
or closed receptacles containing any Hazardous Materials), or into out
of or from any property owned, occupied or used by such Person or any
of its Affiliates.
"REPLACEMENT RESERVES" means, with respect to any Person for
any period, an allowance for a normal level of recurring capital
expenditures and lease commissions equal to the following: (a) for any
Completed Properties (as determined from the date of the issuance of
the final certificate of occupancy for such Completed Property) that
have been completed for a period of five years or less, an amount equal
to $150 multiplied by (i) in the case such Completed Property is owned
by the Borrower or a Subsidiary of the Borrower, the number of
apartment units on such Completed Property and (ii) in the case such
Completed Property is owned by an Unconsolidated Joint Venture of the
Borrower, the product of (x) the Borrower's pro-rata beneficial
interest in such Unconsolidated Joint Venture and (y) the number of
apartment units on such Completed Property and (b) for Completed
Properties (as determined from the date of the issuance of the final
certificate of occupancy for such Completed Property) that have been
completed for a period of greater than 5 years, an amount equal to $200
multiplied by (i) in the case such Completed Property is owned by the
Borrower or a Subsidiary of the Borrower, the number of apartment units
on such Completed Property and (ii) in the case such Completed Property
is owned by an Unconsolidated Joint Venture of the Borrower, the
product of (x) Borrower's pro-rata beneficial interest in such
unconsolidated Affiliate and (y) the number of apartment units on such
Completed Property.
"REVOLVING ADVANCE" means an Advance made by a Lender to the
Borrower pursuant to Section 3.2 hereof, and refers to a Fixed
Eurodollar Rate Advance or a Base Rate Advance (each of which shall be
a "TYPE" of Revolving Advance). For purposes of this Agreement, all
Revolving Advances of a Lender (or portions thereof) of the same Type
and Interest
17
23
Period, if any, made on the same day to the Borrower shall be deemed to
be a single Advance by such Lender until repaid.
"REVOLVING BORROWING" means a borrowing consisting of one or
more Revolving Advances of the same Type and Interest Period, if any,
made to the Borrower on the same Business Day by the Lenders, ratably
in accordance with their respective Commitments. A Revolving Borrowing
may be referred to herein as being a "TYPE" of Revolving Borrowing,
corresponding to the Type of Revolving Advances comprising such
Borrowing. For purposes of this Agreement, all Revolving Advances of
the same Type and Interest Period, if any, made on the same day to the
Borrower shall be deemed a single Revolving Borrowing hereunder until
repaid.
"REVOLVING NOTE" means a promissory note of the Borrower
payable to the order of a Lender, in substantially the form of Exhibit
1.1B hereto, evidencing the aggregate indebtedness of the Borrower to
such Lender resulting from Revolving Advances, Swing Line Advances and
Letter of Credit Advances made by such Lender to the Borrower.
"S&P" means Standard and Poor's Rating Group, or any successor
thereto.
"SECURED TOTAL FUNDED DEBT" shall mean any Total Funded Debt
subject to a Lien.
"SHAREHOLDER'S EQUITY" means , with respect to the Borrower
for any period, the sum of the Borrower's shareholders equity and
minority interests as reported on the Borrower's most recent financial
statements delivered to the Administrative Agent pursuant to Section
9.4(b) or (c) hereof, as determined in accordance with GAAP.
"SOLVENT" means, when used with respect to any Person, that
(i) the fair value of the property of such Person, on a going concern
basis, is greater than the total amount of liabilities (including,
without limitation, contingent liabilities) of such Person; (ii) the
present fair saleable value of the assets of such Person, on a going
concern basis, is not less than the amount that will be required to pay
the probable liabilities of such Person on its debts as they become
absolute and matured; (iii) such Person does not intend to, and does
not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature; (iv) such
Person is not engaged in business or a transaction, and is not about to
engage in business or a transaction, for which such Person's property
would constitute unreasonably small capital after giving due
consideration to the prevailing practice in the industry in which such
Person is engaged; and (v) such Person has sufficient resources,
provided that such resources are prudently utilized, to satisfy all of
such Person's obligations. Contingent liabilities will be computed at
the amount that, in light of all the facts and circumstances existing
at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
"STABILIZED PROPERTIES" means those certain Completed
Properties designated by the Borrower at the end of each Fiscal Quarter
that have a weighted average Occupancy Rate of 85% or greater,
provided, however, each such Completed Property (i) shall have prior to
the date of determination achieved an Occupancy Rate of 85% or greater
and (ii) as of the date of determination, shall have a Occupancy Rate
of not less than 70%.
18
24
"SUBSIDIARY" means, with respect to any Person, any
corporation, association or other business entity of which securities
or other ownership interests representing 50% or more of the ordinary
voting power are, at the time as of which any determination is being
made, owned or controlled by such Person or one or more Subsidiaries of
such Person or such Person and one or more Subsidiaries of such Person.
"SUBSIDIARY GUARANTEES" means those certain Subsidiary
Guarantees executed by a Subsidiary from time to time in favor of the
Administrative Agent on behalf of the Lenders, in substantially the
form of Exhibit 1.1C, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with its terms.
"SUBSIDIARY GUARANTOR" means a Subsidiary which has executed
and delivered a Subsidiary Guaranty and maintains as of the date of
determination a Subsidiary Guaranty.
"SWING LINE ADVANCE" means an advance made by any Swing Line
Bank pursuant to Section 3.2.
"SWING LINE BANK" means the Administrative Agent in its
capacity as Swing Line Bank hereunder or any successor thereto as
provided herein.
"SWING LINE BORROWING" means a borrowing consisting of a Swing
Line Advance made by the Swing Line Bank.
"TERMINATION DATE" means the earlier to occur of (i) March 27,
2001, or such later date set pursuant to Section 2.4, or (ii) the date
of termination or reduction in whole of the Commitments pursuant
Section 2.2 or 10.2.
"TOTAL FUNDED DEBT" means, with respect to any Person for any
period, all Debt of such Person on a fully consolidated basis other
than trade obligations incurred in the ordinary course of business and
accrued but unpaid expenses incurred in the ordinary course of
business.
"TYPE" has the meaning assigned to such term (a) in the
definition of "Revolving Advance" when used in the such context and (b)
in the definition of "Revolving Borrowing" when used in such context.
"UNCONSOLIDATED JOINT VENTURE" means, with respect to any
Person, any corporation, association or other business entity of which
securities or other ownership interests representing less than 50% of
the ordinary voting power are, at the time as of which any
determination is being made, owned or controlled by such Person or one
or more Subsidiaries of such Person.
"UNENCUMBERED ASSET" means any Multifamily Property owned 100%
directly by the Borrower or a Subsidiary Guarantor that is not subject
to a Lien (other than Permitted Liens).
19
25
"UNENCUMBERED ASSET VALUE" means, with respect to any Person
for any Fiscal Quarter, the sum of (without duplication):
(a) the sum of (i) (A) the difference between (x) Net
Operating Income for each Eligible Stabilized Unencumbered
Property, for such period, annualized (i.e. multiplied by four
(4)), less (y) the applicable Replacement Reserves of such
Person for each such Eligible Stabilized Unencumbered Property
divided by (B) the Capitalization Rate, plus (ii) 100% of
development cost for each Eligible Unstabilized Unencumbered
Property for such period; provided, however, the costs
associated with clause (ii) above shall not exceed 10% of the
combined Unencumbered Asset Value; and
(b) with respect to any Eligible Stabilized
Unencumbered Property acquired during such period, such
Property's projected Net Operating Income for such period less
applicable Replacement Reserves of such Person for each such
Eligible Stabilized Unencumbered Property, provided, however,
the projected Net Operating Income from any such Property
during such period shall not exceed the actual Net Operating
Income of such Property for the prior Fiscal Quarter without
the prior written consent of the Majority Lenders which
consent shall not be unreasonably withheld or delayed.
"UNENCUMBERED ASSETS CASH FLOW" means, with respect to any
Person for any period, the sum of (without duplication):
(a) the Net Operating Income from each Eligible
Stabilized Unencumbered Property and Eligible Unstabilized
Unencumbered Property during such period less, in each case,
the applicable Replacement Reserves of such Person for each
such Eligible Stabilized Unencumbered Property and Eligible
Unstabilized Unencumbered Property; and
(b) with respect to any Eligible Stabilized
Unencumbered Property or Eligible Unstabilized Unencumbered
Property acquired during such period, such Property's
projected Net Operating Income for such period less the
applicable Replacement Reserves for such Property; provided,
however, the projected Net Operating Income from any such
Property during such period shall not exceed the actual Net
Operating Income of such Property for the prior Fiscal Quarter
without the prior written approval of the Majority Lenders
which approval shall not be unreasonably withheld or delayed.
"UNMATURED DEFAULT" means the occurrence and continuance of an
event which, with the giving of notice or lapse of time or both, would
constitute an Event of Default.
"UNSECURED TOTAL FUNDED DEBT" means any Total Funded Debt not
subject to a Lien.
SECTION 1.2. COMPUTATION OF TIME PERIODS. In the computation of periods
of time under this Agreement any period of a specified number of days shall be
computed by including the first day
20
26
occurring during such period and excluding the last such day. In the case of a
period of time "from" a specified date "to" or "until" a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
means "to but excluding".
SECTION 1.3. ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles applied on a basis consistent with the application
employed in the preparation of the financial statements referred to in Section
8.1(k) ("GAAP").
SECTION 1.4. COMPUTATIONS OF OUTSTANDINGS. Whenever reference is made
in this Agreement to the principal amount of Advances outstanding under this
Agreement on any date, such reference shall refer to the aggregate principal
amount of all such Advances outstanding on such date after giving effect to (i)
all Advances to be made and Letters of Credit to be issued on such date and the
application of the proceeds thereof and (ii) any repayment or prepayment of
Advances on such date by the Borrower and any terminations of or drawdowns
under, Letters of Credit.
ARTICLE II
THE COMMITMENTS
SECTION 2.1. THE COMMITMENTS.
(a) Each Lender severally agrees, on the terms and conditions
hereinafter set forth, to make Advances to the Borrower from time to
time on any Business Day during the period from the Closing Date until
the Termination Date, in an aggregate outstanding amount not to exceed
on any day such Lender's Available Commitment; provided, however,
subject to subsection (b) below, a Lender may make Competitive Advances
in an amount not to exceed on any day the Commitments. Within the
limits of such Lender's Available Commitment, the Borrower may request
Advances hereunder, repay or prepay Advances and utilize the resulting
increase in the Available Commitments for further Advances and/or
issuances of Letters of Credit in accordance with the terms hereof.
(b) In no event shall the Borrower be entitled to request or
receive any Advance under subsection (a) that would cause the Aggregate
Outstanding Amount to exceed the Commitments.
(c) In addition to each Lender's Commitment under subsection
(a) above, but subject nevertheless to the provisions of subsection (b)
above, the Borrower may request (i) Swing Line Advances to be made by
the Swing Line Bank in accordance with Section 3.2 and (ii) Competitive
Advances to be made in accordance with Section 3.3 hereof.
(d) The Commitments hereunder may be increased without the
consent of the Lenders to an amount not to exceed $200,000,000;
provided, no Lender shall be required to increase its Commitment and
any new Lender(s) becoming a party to this Agreement shall be an
Eligible Assignee. In the event a new Lender or Lenders become a party
to this Agreement, or if any existing Lender agrees to increase its
Commitment, such Lender shall on the date it becomes a Lender hereunder
(or increases its Commitment, in the case of an
21
27
existing Lender) (and as a condition hereto) purchase from the other
Lenders its Lender's Percentage (as determined after giving effect to
the increase of Commitments) of any outstanding Advances (other than
Competitive Advances and Swing Line Advances), by making available for
the account of its Lending Office to the Administrative Agent for the
account of such other Lenders, by deposit to the Administrative Agent's
Account, in same day funds, an amount equal to the sum of (A) the
portion of the outstanding principal amount of such Advances to be
purchased by such Lender plus (B) interest accrued and unpaid to and as
of such date on such portion of the outstanding principal amount of
such Advances. Upon any such assignment, the assigning Lender
represents and warrants to such other Lender that such assigning Lender
is the legal and beneficial owner of such interest being assigned by
it, but makes no other representation or warranty and assumes no
responsibility with respect to such Advance being assigned, the Loan
Documents or any Loan Party.
(e) Notwithstanding anything to the contrary set forth in
subsection (d) above, the Borrower, prior to requesting an increase in
the Commitments pursuant to subsection (d) above, hereby agrees to
offer in writing each Lender the right to increase its Commitment by an
amount so that such Lender's Percentage shall not be decreased as a
result of the increase in the Commitments pursuant to subsection (d)
above. In the event a Lender does not accept the Borrower's offer to
increase its Commitment as provided in the preceding sentence within
ten Business Days of the receipt of such offer, such offer shall be
deemed rejected.
SECTION 2.2. REDUCTION OF THE COMMITMENTS. (a) The Borrower may, upon
at least five Business Days' notice to the Administrative Agent, terminate in
whole or reduce ratably in part the Commitments of the respective Lenders;
provided that, (i) any such partial reduction shall be in an aggregate amount of
$25,000,000 or an integral multiple of $5,000,000 in excess thereof, and (ii) in
no event shall the Commitments be reduced to an amount less than the Aggregate
Outstanding Amount.
SECTION 2.3. EXTENSION OF THE TERMINATION DATE.
(a) Unless the Termination Date shall have previously occurred
in accordance with its terms, at least 90 days but not more than 120
days before the Termination Date, as then in effect, the Borrower may,
by notice to the Administrative Agent (any such notice being
irrevocable), request the Administrative Agent and the Lenders to
extend the Termination Date for a period of one year. The Borrower may
only extend the Termination Date pursuant to this Section 2.3 for a
period of two years. If the Borrower shall make such request, the
Administrative Agent shall promptly inform the Lenders thereof and, no
later than 30 days after the date of such request by the Borrower as
then in effect, the Administrative Agent shall notify the Borrower in
writing if the Lenders consent to such request and the conditions of
such consent (including conditions relating to legal documentation (if
any)). The granting of any such consent shall be in the sole and
absolute discretion of each Lender, and, if any Lender shall not so
notify the Administrative Agent or, if the Administrative Agent shall
not so notify the Borrower, such lack of notification shall be deemed
to be a determination not to consent to such request. Subject to clause
(b) below, no such extension shall occur unless all of the Lenders
consent in writing thereto (or if less than all the Lenders consent
thereto, unless one or more other existing Lenders, or one or
22
28
more other Eligible Assignees acceptable to the Borrower and the
Administrative Agent, agree to assume all of the Commitments of the
non-consenting Lenders).
(b) In the event less than all of the Lenders consent to such
extension request, but the Majority Lenders approve such extension
request, the Borrower may, with the consent of the Majority Lenders, on
the then scheduled Termination Date pay to each non-consenting Lender
an amount equal to the aggregate principal amount of Advances owed to
such non-consenting Lenders, plus any accrued but unpaid interest
thereon and accrued but unpaid fees owing to such non-consenting
Lender. Such non-consenting Lender thereafter shall no longer be a
party hereto or have any rights or obligations hereunder or under any
of the other Loan Documents. Furthermore, the Commitments hereunder
shall automatically be reduced by the aggregate amount of the
Commitments of such non-consenting Lenders. If the Borrower fails to
comply with any provision of this subsection, the Termination Date
shall not be extended.
(c) The Borrower shall pay on the Termination Date (prior to
giving effect to any extension) to each Lender that has agreed to
extend, and so extends, its Commitments, an extension fee equal to .10%
of each such Lender's Commitment
SECTION 2.4. USE OF PROCEEDS. The Borrower shall use the proceeds of
the Advances and request issuances of Letters of Credit solely (i) to repay to
Existing Credit Facility, (ii) to finance the acquisition, development,
construction and/or rehabilitation of apartment properties owned by the Borrower
or its Affiliates, and (iii) for working capital and general corporate purposes.
ARTICLE III
REVOLVING, SWING LINE AND COMPETITIVE ADVANCES
SECTION 3.1. REVOLVING ADVANCES.
(a) Each Revolving Borrowing shall consist of Revolving
Advances of the same Type and Interest Period made on the same Business
Day by the Lenders ratably according to their respective Commitments.
Each Revolving Borrowing shall be made on notice in substantially the
form of Exhibit 3.1 hereto (a "NOTICE OF REVOLVING BORROWING"),
delivered by the Borrower to the Administrative Agent, by hand,
telecopy or telex, not later than 11:00 A.M. (Charlotte, North Carolina
time) (i) in the case of Fixed Eurodollar Rate Advances, on the third
Business Day prior to the proposed Borrowing and (ii) in the case of
Base Rate Advances, on the first Business Day prior to the proposed
Borrowing. Upon receipt of a Notice of Revolving Borrowing, the
Administrative Agent shall notify the Lenders thereof promptly on the
day so received. Each Notice of Revolving Borrowing shall specify
therein: (i) the date of such Borrowing, (ii) the principal amount and
Type of Advances comprising such Borrowing and (iii) the Interest
Period for such Advances. Each Notice of Revolving Borrowing shall be
irrevocable and binding on the Borrower. Each proposed Borrowing shall
be subject to the provisions of Sections 3.1(b), 6.4 and Article VII
hereof.
23
29
(b) TERMS RELATING TO THE MAKING OF REVOLVING ADVANCES.
(i) Notwithstanding anything in Section 3.1(a) above
to the contrary:
(A) at no time shall more than seven (7)
different Revolving Borrowings which are
Fixed Eurodollar Rate Advances be
outstanding hereunder at any time; and
(B) each Revolving Borrowing hereunder shall be
in an aggregate principal amount of not less
than $1,000,000 or an integral multiple of
$500,000 in excess thereof, or such lesser
amount as shall be equal to the total amount
of the Available Commitments on such date;
and
(ii) no more than two Revolving Borrowing may be
made on the same Business Day.
SECTION 3.2. THE SWING LINE ADVANCES.
(a) Each Swing Line Borrowing shall be made on notice in
substantially the form of Exhibit 3.2 hereto (a "NOTICE OF SWING LINE
BORROWING"), delivered by the Borrower to the Swing Line Bank and the
Administrative Agent by hand, telecopier or telex not later than 2:00
P.M. (Charlotte, North Carolina time) on the date of the proposed Swing
Line Borrowing. Each Notice of Swing Line Borrowing shall specify
therein the (i) the date of such Borrowing, (ii) the amount of such
Borrowing and (iii) the maturity of such Borrowing (which maturity
shall be no later than the fifth day after the requested date of such
Borrowing). Each Notice of Swing Line Borrowing shall be irrevocable
and binding on the Borrower. The Swing Line Bank will make the amount
thereof available to the Administrative Agent at the Administrative
Agent's Account, in same day funds. After the Administrative Agent's
receipt of such funds and upon fulfillment of the applicable conditions
set forth in Article VII, the Administrative Agent will make such funds
available to the Borrower by crediting the Borrower's Account. Each
Swing Line Advance will reduce the Available Commitments of all Lenders
pro rata as provided in the definition of "Available Commitments".
Promptly after each Swing Line Borrowing, the Administrative Agent will
notify each Lender of the amount of the Swing Line Borrowing, the
amount by which such Lender's Available Commitment has been reduced,
the date of the Swing Line Borrowing and the Interest Period with
respect thereto. Swing Line Advances shall bear interest at the
Floating Eurodollar Rate and shall be a Floating Eurodollar Rate
Advance; provided, however, if an Event of Default has occurred and is
continuing, each Swing Line Advance shall automatically on the date
such Event of Default occurs bear interest at the Base Rate in effect
on such date.
(b) Terms relating to making of Swing Line Advances.
(i) Notwithstanding anything in Section 3.2(a) above
to the contrary:
24
30
(A) The aggregate amount of Swing Line Advances
outstanding at any time shall not exceed 10%
of the Commitments at such time;
(B) No Swing Line Advance shall be used for the
purpose of funding the payment of principal
of any other Advance;
(C) At no time shall more than two different
Swing Line Borrowings be outstanding
hereunder at any time; and
(D) Each Swing Line Borrowing hereunder shall be
in an aggregate principal amount of not less
than $1,000,000 or an integral multiple
amount of $500,000 in excess thereof, or
such lesser amount as shall be equal to the
total amount of the Available Commitments on
such date; and
(ii) No more than one (1) Swing Line Borrowing may be
made on the same Business Day.
(c) Upon demand by the Swing Line Bank with an outstanding
Swing Line Advance and so long as such Swing Line Advance shall bear
interest at the Base Rate, each other Lender shall purchase from such
Swing Line Bank, and the Swing Line Bank shall sell and assign to each
such other Lender, such other Lender's Percentage of such outstanding
Swing Line Advance as of the date of such demand, by making available
for the account of its Lending Office to the Administrative Agent for
the account of such Swing Line Bank, by deposit to the Administrative
Agent's Account, in same day funds, an amount equal to the sum of (A)
the portion of the outstanding principal amount of such Swing Line
Advance to be purchased by such Lender plus (B) interest accrued and
unpaid to and as of such date on such portion of the outstanding
principal amount of such Swing Line Advance. Each Lender agrees to
purchase its Percentage of an outstanding Swing Line Advance upon
notice given not later than one Business Day prior to the Business Day
of proposed purchase. Upon any such assignment by the Swing Line Bank
to any other Lender of a portion of a Swing Line Advance, the Swing
Line Bank represents and warrants to such other Lender that the Swing
Line Bank is the legal and beneficial owner of such interest being
assigned by it, but makes no other representation or warranty and
assumes no responsibility with respect to such Swing Line Advance, the
Loan Documents or any Loan Party. If and to the extent that any Lender
shall not have so made the amount of such Swing Line Advance available
to the Administrative Agent, such Lender agrees to pay to the
Administrative Agent forthwith on demand such amount together with
interest thereon, for each day from the date of demand by the Swing
Line Bank until the date such amount is paid to the Administrative
Agent, at the Federal Funds Rate. If such Lender shall pay to the
Administrative Agent such amount for the account of the Swing Line
Bank, such amount so paid in respect of principal shall constitute a
Swing Line Advance by such Lender for purposes of this Agreement, and
the outstanding principal amount of the Swing Line Advance made by the
Swing Line Bank shall be reduced by such amount.
25
31
(d) The Swing Line Bank may resign at any time by giving
written notice thereof to the Lenders and the Borrower, with any such
resignation to become effective only upon the appointment of a
successor Swing Line Bank pursuant to this Section 3.2(d). Upon any
such resignation, the Majority Lenders shall have the right to appoint
a successor Swing Line Bank, which shall be a Lender or an Eligible
Assignee acceptable to the Borrower. If no successor Swing Line Bank
shall have been so appointed by the Majority Lenders, and shall have
accepted such appointment, within 30 days after the retiring Swing Line
Advance's giving of notice of resignation, then the retiring Swing Line
Bank may, on behalf of the Lenders, appoint a successor Swing Line
Bank, which shall be Lender or an Eligible Assignee. Upon the
acceptance of any appointment as Swing Line Bank hereunder by a
successor Swing Line Bank, such successor Swing Line Bank shall
thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Swing Line Bank.
SECTION 3.3. COMPETITIVE ADVANCES.
(a) GENERAL. Each Competitive Borrowing shall consist of
Competitive Advances of the same Type and Interest Period made by the
Lenders in accordance with this Section 3.3 and shall be in a minimum
aggregate principal amount of $5,000,000 or an integral multiple of
$500,000 in excess thereof, except as otherwise provided pursuant to
Section 3.3(b)(iv) hereof. Competitive Advances shall be made in the
amounts accepted by the Borrower in accordance with Section 3.3(b)(iv).
Each Competitive Advance, regardless of which Lender makes such
Advance, will reduce the Available Commitments of all Lenders pro rata
as provided in the definition of "Available Commitments". Promptly
after each Competitive Borrowing, the Administrative Agent will notify
each Lender of the amount of the Competitive Borrowing, the amount by
which such Lender's Available Commitment has been reduced, the date of
the Competitive Borrowing and the Interest Period with respect thereto.
(b) COMPETITIVE BID PROCEDURES.
(i) COMPETITIVE BID REQUESTS. In order to
request Competitive Advances: (A) in the case of any request
for Eurodollar Competitive Advances, the Borrower shall hand
deliver, telex or telecopy to the Administrative Agent a duly
completed Competitive Bid Request substantially in the form of
Exhibit 3.3A-1 hereto to be received by the Administrative
Agent not later than 10:00 A.M. (Charlotte, North Carolina
time), four Business Days prior to the proposed Eurodollar
Competitive Borrowing and (B) in the case of any request for
Fixed Rate Competitive Advances, the Borrower shall hand
deliver, telex or telecopy to the Administrative Agent a duly
completed Competitive Bid Request substantially in the form of
Exhibit 3.3A-2 hereto to be received by the Administrative
Agent not later than 10:00 A.M. (Charlotte, North Carolina
time), one Business Day prior to the proposed Fixed Rate
Competitive Borrowing. Each such Competitive Bid Request shall
refer to this Agreement and specify: (1) the date of such
Competitive Borrowing (which shall be a Business Day), (2) the
principal amount thereof (which shall not be less than
$5,000,000 or an integral multiple of $500,000 in excess
thereof), (3) the Interest Period with respect thereto and the
last day of such Interest Period (which
26
32
shall be at least 30 days from the date of such Competitive
Borrowing, but not more than 180 days from such date and shall
fall on or prior to the Termination Date) and any additional
interest payment date or dates relating to such Competitive
Borrowing, (4) whether the Borrowing then being requested is
to consist of Eurodollar Competitive Advances or Fixed Rate
Competitive Advances or a combination thereof (and if a
combination thereof, the relative percentages of Eurodollar
Competitive Advances and Fixed Rate Competitive Advances) and
(5) any other terms applicable to such Competitive Bid
Borrowing. No Revolving Advances shall be requested in or made
pursuant to a Competitive Bid Request. A Competitive Bid
Request that does not conform substantially to the form of
Exhibit 3.3A-1 or Exhibit 3.3A-2, as the case may be, may be
rejected in the Administrative Agent's sole discretion, and
the Administrative Agent shall promptly notify the Borrower of
such rejection by hand delivery, telex or telecopier. Promptly
after its receipt of a Competitive Bid Request that is not
rejected as aforesaid, the Administrative Agent shall by hand
delivery, telex or telecopier (in the form of Exhibit 3.3B
hereto) invite the Lenders to bid to make Competitive Bids in
accordance with such Competitive Bid Request.
(ii) MAKING COMPETITIVE OFFERS. Each Lender
may, in its sole discretion, make one or more Competitive
Bids, which Competitive Bids shall be responsive to the
Competitive Bid Request. Each Competitive Bid by such Lender
must be received by the Administrative Agent (A) in the case
of a proposed Competitive Borrowing to consist of Eurodollar
Competitive Advances, by hand delivery, telex or telecopier
(in the form of Exhibit 3.3C-1 hereto) not later than 9:30
A.M. (Charlotte, North Carolina time) three Business Days
prior to a proposed Competitive Borrowing and (B) in the case
of a proposed Competitive Borrowing to consist of Fixed Rate
Competitive Advances, by hand delivery, telex or telecopier
(in the form of Exhibit 3.3C-2 hereto) not later than 9:30
A.M. (Charlotte, North Carolina time) on the day of a proposed
Competitive Borrowing. Multiple bids will be accepted by the
Administrative Agent. Each Competitive Bid shall refer to this
Agreement and specify (W) the principal amount (which may be
up to the aggregate amount of the proposed Competitive
Borrowing regardless of the Commitment of the Lender) of the
Competitive Advance that the Lender is willing to make to the
Borrower requesting such Competitive Bid (X) the minimum
principal amount of such Competitive Bid (which shall be a
minimum principal amount of $5,000,000 and in an integral
multiple of $500,000 in excess thereof) which may be accepted
by the Borrower, (Y) the Competitive Bid Rate or Rates at
which the Lender is prepared to make the Competitive Advances,
and (Z) whether the Eurodollar Competitive Bid or Fixed Rate
Competitive Bid, as the case may be subject to such
Competitive Bid, may be prepaid without penalty, and any
conditions relating thereto. A Competitive Bid submitted by a
Lender pursuant to this subsection (ii) shall be irrevocable
absent manifest error (i.e. a typographical error).
(iii) NOTIFICATION OF BORROWER OF
COMPETITIVE BIDS. The Administrative Agent shall (A) in the
case of a proposed Borrowing to consist of Eurodollar
Competitive Advances, promptly (but in no event later than
10:00 A.M. (Charlotte, North Carolina time) on the third
Business Day prior to the proposed
27
33
Competitive Borrowing notify the Borrower by hand delivery,
telex or telecopier and (B) in the case of a proposed
Borrowing to consist of Fixed Rate Competitive Advances,
notify the Borrower by hand delivery, telex or telecopier not
later than 10:00 A.M. (Charlotte, North Carolina time) on the
day of such proposed Competitive Borrowing of the Competitive
Bids made, of the Competitive Bid Rate and the principal
amount of each Competitive Bid and the identity of the Lender
that made such Competitive Bid.
(iv) ACCEPTANCE/REJECTIONS OF COMPETITIVE
BIDS. The Borrower may, in its sole and absolute discretion,
subject only to the provisions of this subsection (iv), accept
or reject any Competitive Bid. The Borrower shall notify the
Administrative Agent by telephone whether and to what extent
it has decided to accept or reject any or all of the
Competitive Bids (specifying each Lender selected by it to
make Competitive Advances, the principal amount of such
Advances and the Competitive Bid Rate): (A) in the case of a
Borrowing to consist of Eurodollar Competitive Advances, by
not later than 10:30 A.M. (Charlotte, North Carolina time)
three Business Days before a proposed Competitive Borrowing
(promptly confirmed by a Competitive Bid Acceptance in the
form of Exhibit 3.3D-1 hereto, hand delivered, telexed or
telecopied by the Borrower to the Administrative Agent), and
(B) in the case of a Borrowing to consist of Fixed Rate
Competitive Advances, not later than 10:30 A.M. (Charlotte,
North Carolina time) on the day of a proposed Competitive
Borrowing (promptly confirmed by a Competitive Bid Acceptance
in the form of Exhibit 3.3D-2 hereto, hand delivered, telexed
or telecopied by the Borrower to the Administrative Agent);
provided, however, that (1) the failure by the Borrower to
give such notice shall be deemed to be a rejection of all the
bids referred to in subsection (iii) above, (2) the Borrower
shall not accept a bid made at a particular Competitive Bid
Rate if the Borrower has decided to reject a bid made at a
lower Competitive Bid Rate which lower Competitive Bid Rate is
otherwise on comparable terms and conditions, (3) the
aggregate amount of the Competitive Bids accepted by the
Borrower shall not exceed the principal amount specified in
the Competitive Bid Request, (4) if the Borrower shall
determine to accept Competitive Bids made at a particular
Competitive Bid Rate but the aggregate amount of all
Competitive Bids made at such Competitive Bid Rate, when added
to the aggregate amount of all Competitive Bids at lower
Competitive Bid Rates, would cause the total amount of
Competitive Bids to be accepted by the Borrower to exceed the
principal amount specified in the Competitive Bid Request,
then the Borrower shall accept all such Competitive Bids at
such Competitive Bid Rate in an aggregate amount reduced to
eliminate such excess, which acceptance, in the case of
multiple Competitive Bids at such Competitive Bid Rate, shall
be made ratably in accordance with the amount of each such
Competitive Bid (subject to clause (5) below), and (5) no
Competitive Bid shall be accepted for a Competitive Advance
unless such Competitive Advance is in a minimum principal
amount of $5,000,000 and an integral multiple of $500,000 in
excess thereof; provided further, however, that if a
Competitive Advance must be in an amount of less than
$5,000,000 because of the provisions of (4) above, such
Competitive Advance may be for a minimum of $1,000,000 or any
integral multiple thereof, and in calculating the pro rata
allocation of acceptances of portions of multiple bids at a
particular Competitive Bid Rate
28
34
pursuant to (4) above, the amounts shall be rounded to
integral multiples of $100,000 in a manner which shall be in
the discretion of the Borrower. Notice given by the Borrower
pursuant to this subsection (iv) shall be irrevocable.
(v) NOTIFICATION OF LENDERS OF
ACCEPTANCES/REJECTIONS OF COMPETITIVE BIDS. (1) The
Administrative Agent shall notify each bidding Lender whether
or not its Competitive Bid has been accepted (and if so, in
what principal amount and at what Competitive Bid Rate): (A)
in the case of a proposed Borrowing to consist of Eurodollar
Competitive Advances, promptly (and in no event later than the
2:00 P.M. (Charlotte, North Carolina time) on the day the
Borrower delivers notice to the Administrative Agent in
accordance with Section 3.3(b)(iv)(A) above) by hand delivery,
telex or telecopier and (B) in the case of a proposed
Borrowing to consist of Fixed Rate Competitive Advances, by
telephone (such information to be confirmed in writing by the
Administrative Agent to the bidding Lenders not later than
12:00 noon (Charlotte, North Carolina time) on such day), not
later than 11:00 A.M. (Charlotte, North Carolina time) on the
day of the Competitive Borrowing and each successful bidder
will thereupon become bound, subject to the other applicable
conditions hereof, to make the Competitive Advance in respect
of which its bid has been accepted. The Administrative Agent
shall promptly notify each Lender of the terms of each
Competitive Bid that has been accepted by the Borrower.
(2) Any Competitive Bid for which a
Lender was the successful bidder may be funded by such
Lender's Designated Lender; provided, however, that the
Designated Lender shall not be required to make payments with
respect to such Competitive Advances or make payments with
respect to other obligations hereunder except to the extent of
excess cash flow of such Designated Lender which is not
otherwise required to repay obligations of such Designated
Lender which are then due and payable. A Lender shall not be
required to disclose in its Competitive Bid whether such
Competitive Advance will be funded by its Designated Lender.
Any Designated Lender which funds a Competitive Advance shall
on and after the time of such funding become the obligee under
such Competitive Advance and be entitled to receive payment
thereof when due.
(3) Notwithstanding any designation
of a Designated Lender, no Designating Lender shall be
relieved of its obligation to fund a Competitive Advance, and
no Designated Lender shall assume such obligation, prior to
the time such Competitive Advance is funded.
(vi) INDEMNIFICATION. Neither the
Administrative Agent nor any Lender shall be responsible to
the Borrower for (A) a failure to fund a Competitive Advance
on the date such Advance is requested or (B) the funding of
such Advance at a Competitive Bid Rate or in an amount other
than that confirmed pursuant to subsections (iv) and (v) above
due in each case to delays in communications,
miscommunications (including, without limitation, any variance
between telephonic bids or acceptances and the written notice
provided by the Administrative Agent to the Lenders pursuant
to subsection (v) above or the written confirmation supplied
by
29
35
the Borrower pursuant to subsection (iv) above) and the like
among the Borrower, the Administrative Agent and the Lenders,
and the Borrower agrees to indemnify each Lender for all
reasonable costs and expenses incurred by it in accordance
with the terms of Section 6.4(d) hereof, as a result of any
such delay, miscommunication or the like that results in a
failure to fund a Competitive Advance or the funding of a
Competitive Advance at a Competitive Bid Rate or in an amount
other than that set forth in the written notice provided by
the Administrative Agent to the Lenders pursuant to subsection
(v) above or the written confirmation supplied by the Borrower
pursuant to subsection (iv) above, except if such delay,
miscommunication, failure to fund or such erroneous funding
was a result of the Administrative Agent's or any Lender's
gross negligence or wilful misconduct.
(vii) MISCELLANEOUS.
(A) If the Administrative Agent has
elected to submit a Competitive Bid
in its capacity as Lender, such bid
must be submitted directly to the
Borrower one half of an hour earlier
than the latest time at which the
other Lenders are required to submit
their bids to the Administrative
Agent pursuant to subsection (ii)
above.
(B) A Competitive Bid Request for
Eurodollar Competitive Advances
shall not be made within five
Business Days after the date of any
previous Competitive Bid Request for
Eurodollar Competitive Advances.
(C) Notwithstanding anything in this
Section 3.3 to the contrary, the
aggregate amount of Competitive
Advances outstanding at any time
shall not exceed 50% of the
Commitments at such time.
(D) All notices required by this Section
3.3 must be made in accordance with
Section 12.2.
(E) To facilitate the administration of
this Agreement and the processing
of Competitive Bids, each Lender
has submitted, or will submit upon
becoming a Lender pursuant to
Section 12.7 hereof, to the
Administrative Agent a completed
administrative questionnaire in the
form specified by the
Administrative Agent, and each
Lender agrees to promptly notify
the Administrative Agent in writing
of any change in the information so
provided.
SECTION 3.4. MAKING OF ADVANCES.
(a) Each Lender shall, before 1:00 P.M. (Charlotte, North
Carolina time) on the date of such Borrowing, make available for the
account of its Lending Office to the
30
36
Administrative Agent at the Administrative Agent's Account, in same day
funds, such Lender's portion of such Borrowing. Swing Line Advances
shall be made by the Swing Line Bank. Revolving Advances shall be made
by the Lenders ratably in accordance with their several Commitments and
Competitive Advances shall be made by the Lender or Lenders whose
Competitive Bids therefor have been accepted pursuant to Section
3.3(b)(iv) in the amounts so accepted. After the Administrative Agent's
receipt of such funds and upon fulfillment of the applicable conditions
set forth in Section 7.2, the Administrative Agent will make such funds
available to the Borrower at the Borrower's Account, provided, however,
that in the case of any Revolving Borrowing or Competitive Bid
Borrowing the Administrative Agent shall first make a portion of such
funds equal to the aggregate principal amount of any Swing Line
Advances available, plus interest accrued and unpaid thereon, to and as
of such date, to the Swing Line Bank for the repayment of such Swing
Line Advances.
(b) Unless the Administrative Agent shall have received notice
from a Lender prior to the time of any Borrowing that such Lender will
not make available to the Administrative Agent such Lender's ratable
portion of such Borrowing, the Administrative Agent may assume that
such Lender has made such portion available to the Administrative Agent
on the date of such Borrowing in accordance with subsection (a) of this
Section 3.4, and the Administrative Agent may, in reliance upon such
assumption, make available to the Borrower a corresponding amount on
such date. If and to the extent that any such Lender (a "NON-PERFORMING
LENDER") shall not have so made such ratable portion available to the
Administrative Agent, the non-performing Lender and the Borrower
severally agree to repay to the Administrative Agent forthwith on
demand such corresponding amount together with interest thereon, for
each day from the date such amount is made available to the Borrower
until the date such amount is repaid to the Administrative Agent, at
(i) in the case of the Borrower, the interest rate applicable at the
time to Advances comprising such Borrowing and (ii) in the case of such
Lender, the Federal Funds Rate. Nothing herein shall in any way limit,
waive or otherwise reduce any claims that any party hereto may have
against any non-performing Lender.
(c) The failure of any Lender to make the Advance to be made
by it as part of any Borrowing shall not relieve any other Lender of
its obligation, if any, hereunder to make its Advance on the date of
such Borrowing, but no Lender shall be responsible for the failure of
any other Lender to make the Advance to be made by such other Lender on
the date of any Borrowing.
SECTION 3.5. REPAYMENT OF ADVANCES.
(a) REVOLVING ADVANCES. Subject to subsection (e) below, the
Borrower shall pay to the Administrative Agent for the account of the
Lenders the outstanding principal amount of each Revolving Advance made
to it hereunder on the Termination Date, which day shall be the
maturity date of such Advance.
(b) COMPETITIVE BID ADVANCES. Subject to subsection (e) below,
the Borrower shall repay to the Administrative Agent for the account of
the Lenders the outstanding principal amount of each Competitive Bid
Advance made to it hereunder on the last day of
31
37
the Interest Period for such Advance, which last day shall be the
maturity date for such Advance.
(c) SWING LINE ADVANCES. Subject to subsection (e) below, the
Borrower shall repay to the Administrative Agent for the account of the
Swing Line Bank and each other Lender which has made a Swing Line
Advance the outstanding principal amount of each Swing Line Advance
made by each of them on the earlier of the maturity date specified in
the applicable Notice of Swing Line Borrowing (which maturity shall be
no later than the fifth day after the requested date of such Borrowing)
and the Termination Date.
(d) LETTER OF CREDIT ADVANCES. Subject to subsection (e)
below, the Borrower shall repay to the Administrative Agent for the
account of the Issuing Bank and each other Lender which has made a
Letter of Credit Advance the outstanding principal amount of each
Letter of Credit Advance made by each of them on demand.
(e) REPAYMENT THROUGH CONVERSIONS/CONTINUATIONS. The Borrower
shall have deemed to have repaid the Advances as required by
subsections (a), (b), (c) and (d) above by Converting or Continuing an
Advance pursuant to Sections 3.7 and 3.8, as the case may be.
SECTION 3.6. INTEREST.
(a) INTEREST PERIODS. The period commencing on the date of
each Advance and ending on the last day of the period selected by the
Borrower with respect to such Advance pursuant to the provisions of
this Section 3.6 is referred to herein as an "INTEREST PERIOD". The
duration of each Interest Period shall be (i) in the case of any Fixed
Eurodollar Rate Advance or Eurodollar Competitive Advance, 1, 2, 3 or 6
months, (ii) in the case of any Base Rate Advance, any number of days,
not extending beyond the Termination Date, (iii) in the case of any
Floating Eurodollar Rate Advance, any number of days, but not more than
five days; and (iv) in the case of any Fixed Rate Competitive Advance,
any number of days, but no less than 30 days or more than 180 days;
provided, however, that no Interest Period may be selected by any
Borrower if such Interest Period would end after the Termination Date.
(b) INTEREST RATES. The Borrower shall pay interest on the
unpaid principal amount of each Advance from the date of such Advance
until such principal amount shall be paid in full, at the Applicable
Rate for such Advance (except as otherwise provided in this subsection
(b)), payable as follows:
(i) EURODOLLAR RATE ADVANCES AND EURODOLLAR
COMPETITIVE ADVANCES. If such Advance is a Eurodollar Rate
Advance or Eurodollar Competitive Advance, interest thereon
shall be payable on the last day of the Interest Period
therefor and, if any such Interest Period has a duration of
more than three months, also on the day of the third month
during such Interest Period which corresponds to the first day
of such Interest Period (or, if any such month does not have a
corresponding day, then on the last day of such third month);
provided that during the continuance of any Event of Default,
such Advance shall bear interest at the Default Rate.
32
38
(ii) BASE RATE ADVANCES. If such Advance is
a Base Rate Advance, interest thereon shall be payable
quarterly on the last day of each March, June, September and
December and on the date such Base Rate Advance shall be paid
in full; provided that during the continuance of any Event of
Default, such Advance shall bear interest at the Default Rate
(iii) FIXED RATE COMPETITIVE ADVANCES. If
such Advance is a Fixed Rate Competitive Advance, interest
thereon shall be payable on the last day of the Interest
Period therefor and, if any Interest Period has a duration of
more than 90 days, on each day which occurs during such
Interest Period every 90 days from the first day of such
Interest Period, provided that during the continuance of any
Event of Default, such Advance shall bear interest at the
Default Rate.
(iv) OTHER AMOUNTS. Any other amounts
payable hereunder that are not paid when due shall (to the
fullest extent permitted by law) bear interest, from the date
when due until paid in full, at a rate per annum equal at all
times to 4% per annum above the Applicable Rate in effect from
time to time for Base Rate Advances, payable on demand.
(c) INTEREST RATE DETERMINATIONS. The Administrative Agent
shall give prompt notice to the Borrower and the Lenders of the
Applicable Rate determined from time to time by the Administrative
Agent for each Advance.
SECTION 3.7. CONVERSION. So long as no Event of Default shall have
occurred and be continuing, the Borrower may on any Business Day subject to the
terms and conditions provided herein, upon the Borrower's giving of a Notice of
Conversion in substantially the form attached hereto as Exhibit 3.7A (a "NOTICE
OF CONVERSION") to the Administrative Agent, Convert all or a portion of an
Advance of one Type into a Fixed Eurodollar Rate Advance or a Base Rate Advance.
Any Conversion of a Eurodollar Rate Advance or Competitive Advance into a Base
Rate Advance shall be made on, and only on, the last day of the Interest Period
for such Eurodollar Rate Advance or Competitive Advance, as the case may be.
Each such Notice of Conversion shall be given by the Borrower not later than
11:00 A.M. (Charlotte, North Carolina time) (a) on the Business Day prior to the
date of any proposed Conversion into Base Rate Advances or (b) on the third
Business Day prior to the date of any proposed Conversion into Fixed Eurodollar
Rate Advances. Promptly upon receipt of a Notice of Conversion, the
Administrative Agent shall notify each Lender by hand, telecopy or telex, of the
proposed Conversion. Subject to the restrictions specified above, each Notice of
Conversion shall be delivered by hand, telecopy or telex, and specify (a) the
requested date of such Conversion, (b) the Type of Advance to be Converted, (c)
the portion of such Type of Advance to be Converted, (d) the Type of Advance
such Advance is to be Converted into, and (e) if such Conversion is into a Fixed
Eurodollar Rate Advance, the requested duration of the Interest Period of such
Advance all of which will be specified in a manner as is necessary to comply
with all limitations on Advances outstanding hereunder. Each Notice of
Conversion shall be irrevocable and shall be binding on the Borrower once given.
In addition to the foregoing, the Borrower may Convert any Advance on the last
day of the Interest Period for such Advance into a Competitive Advance by
complying with the requirements of Section 3.3 and Section 7.2.
33
39
SECTION 3.8. CONTINUATION.
(a) So long as no Event of Default shall have occurred and be
continuing, the Borrower may on any Business Day subject to the terms
and conditions provided herein, with respect to any Fixed Eurodollar
Rate Advance, elect to maintain such Fixed Eurodollar Rate Advance or
any portion thereof as a Fixed Eurodollar Rate Advance by selecting a
new Interest Period for such Advance. Each new Interest Period selected
under this Section shall commence on the last day of the immediately
preceding Interest Period. Each selection of a new Interest Period
shall be made by the Borrower giving to the Administrative Agent a
Notice of Continuation in substantially the form of a Notice of
Continuation attached hereto as Exhibit 3.8A (a "NOTICE OF
CONTINUATION") not later than 11:00 A.M. (Charlotte, North Carolina
time) on the third Business Day prior to the date of any such
Continuation. Such notice by the Borrower of a Continuation shall be
delivered by hand, telecopy or telex, and specify (a) the proposed date
of such Continuation, (b) the Fixed Eurodollar Rate Advance and portion
thereof subject to such Continuation and (c) the duration of the
selected Interest Period, all of which shall be specified in such
manner as is necessary to comply with all limitations on Advances
outstanding hereunder. Each Notice of Continuation shall be irrevocable
and shall be binding on the Borrower once given. Promptly after receipt
of a Notice of Continuation, the Administrative Agent shall notify each
Lender by hand, telecopy or telex of the proposed Continuation. In
addition to the foregoing, the Borrower may Continue any Competitive
Advance on the last day of the Interest Period for such Competitive
Advance, as a Competitive Advance by complying with the requirements of
Section 3.3 and Section 7.2.
(b) If the Borrower shall fail to select in a timely manner a
new Interest Period for (i) any Advance which is to be Continued as a
Fixed Eurodollar Rate Advance in accordance with this Section 3.8 or
(ii) any Advance, including without limitation, any Competitive Advance
or Swing Line Advance, which is to be Converted pursuant to Section
3.7, each such Advance will automatically, on the last day of the then
current Interest Period therefore, Convert into or be Continued as, as
the case may be, a Base Rate Advance.
ARTICLE IV
LETTERS OF CREDIT
SECTION 4.1. THE LETTER OF CREDIT FACILITY. The Issuing Bank agrees, on
the terms and conditions hereinafter set forth, to issue letters of credit (the
"LETTERS OF CREDIT") for the account of the Borrower from time to time on any
Business Day during the period from the Closing Date until the Termination Date
in an aggregate Available Amount for all Letters of Credit issued by the Issuing
Bank not to exceed at any time 10% of the Commitments at such time. In no event
shall the Borrower be entitled to request the Issuing Bank to issue any Letter
of Credit if such issuance would cause the Aggregate Outstanding Amount to
exceed the Commitments. No Letter of Credit shall have an expiration date
(including all rights of the Borrower or the beneficiary to require renewal)
later than the Termination Date. Within the limits of the Letter of Credit
Facility, and subject to the limits referred to above, the Borrower may request
the issuance of Letters of Credit under this Section 4.1, repay any Letter of
Credit Advances resulting from drawings thereunder pursuant to Section 4.3 and
request the issuance of additional Letters of Credit under this Section
34
40
SECTION 4.2. REQUEST FOR ISSUANCES OF LETTERS OF CREDIT.
(a) Each Letter of Credit shall be issued upon notice, given
not later than 11:00 A.M. (Charlotte, North Carolina time) on the tenth
Business Day prior to the date of the proposed issuance of such Letter
of Credit, by the Borrower to the Issuing Bank, which shall give to the
Administrative Agent and each Lender prompt notice thereof by hand
delivery, telex or telecopier. Each such notice of issuance of a Letter
of Credit (a "NOTICE OF ISSUANCE") shall be by hand delivery, telex or
telecopier, specifying therein the requested (A) the date of such
issuance (which shall be a Business Day), (B) the Available Amount of
such Letter of Credit, (C) the expiration date of such Letter of
Credit, (D) the name and address of the beneficiary of such Letter of
Credit and (E) the form of such Letter of Credit. If (x) the requested
form of such Letter of Credit is reasonably acceptable to the Issuing
Bank and (y) the applicable conditions to such issuance set forth in
Section 7.2 have been satisfied, such Issuing Bank will make such
Letter of Credit available to the Borrower at its office referred to in
Section 12.2 or as otherwise agreed with the Borrower in connection
with such issuance.
(b) The Issuing Bank shall furnish (A) to the Administrative
Agent on the first Business Day of each month a written report
summarizing issuance and expiration dates of Letters of Credit issued
by the Issuing Bank during the previous month and drawings during such
month under all Letters of Credit issued by the Issuing Bank, and (B)
to the Administrative Agent and each Lender on the first Business Day
of each Fiscal Quarter a written report (x) summarizing issuance and
expiration dates of Letters of Credit issued by the Issuing Bank during
the Fiscal Quarter and drawings during such Fiscal Quarter under all
Letters of Credit issued by the Issuing Bank (y) setting forth the
average daily aggregate Available Amount during the preceding Fiscal
Quarter of all Letters of Credit issued by the Issuing Bank.
SECTION 4.3. DRAWING AND REIMBURSEMENT. The payment by the Issuing Bank
of a draft drawn under any Letter of Credit shall constitute for all purposes of
this Agreement the making by the Issuing Bank of a Letter of Credit Advance,
which shall be a Base Rate Advance, in the amount of such draft. Upon demand by
the Issuing Bank with an outstanding Letter of Credit Advance, each other Lender
shall purchase from the Issuing Bank, and the Issuing Bank shall sell and assign
to each such other Lender, such other Lender's Percentage of such outstanding
Letter of Credit Advance as of the date of such purchase, by making available
for the account of its Lending Office to the Administrative Agent for the
account of the Issuing Bank, by deposit to the Administrative Agent's Account,
in same day funds, an amount equal to the sum of (A) the portion of the
outstanding principal amount of such Letter of Credit Advance to be purchased by
such Lender plus (B) interest accrued and unpaid to and as of such date on such
portion of the outstanding principal amount of such Letter of Credit Advance.
Each Lender agrees to purchase its Percentage of an outstanding Letter of Credit
Advance upon notice given not later than 11:00 A.M. (Charlotte, North Carolina
time) one Business Day prior to the Business Day of the proposed purchase. Upon
any such assignment by the Issuing Bank to any other Lender of a portion of a
Letter of Credit Advance, the Issuing Bank represents and warrants to such other
Lender that the Issuing Bank is the legal and beneficial owner of such interest
being assigned by it, but makes no other representation or warranty and assumes
no responsibility with respect to such Letter of Credit Advance, the Loan
Documents or any Loan Party. If and to the extent that any Lender shall not have
so made the amount of such
35
41
Letter of Credit Advance available to the Administrative Agent, such Lender
agrees to pay to the Administrative Agent forthwith on demand such amount
together with interest thereon, for each day from the date of demand by the
Issuing Bank until the date such amount is paid to the Administrative Agent, at
the Federal Funds Rate. If such Lender shall pay to the Administrative Agent
such amount for the account of the Issuing Bank, such amount so paid in respect
of principal shall constitute a Letter of Credit Advance by such Lender for
purposes of this Agreement, and the outstanding principal amount of the Letter
of Credit Advance made by the Issuing Bank shall be reduced by such amount.
SECTION 4.4. OBLIGATIONS ABSOLUTE. The Obligations of the Borrower
under this Agreement and any other agreement or instrument relating to any
Letter of Credit shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement, such other agreement or
instrument under all circumstances, including, without limitation, the following
circumstances:
(a) any lack of validity or enforceability of this Agreement,
any Letter of Credit or any other agreement or instrument relating
thereto (this Agreement and all of the other foregoing being,
collectively, the "L/C RELATED DOCUMENTS");
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the obligations of the Borrower in
respect of any L/C Related Document or any other amendment or waiver of
or any consent to departure from all or any of the L/C Related
Documents;
(c) the existence of any claim, set-off, defense or other
right that the Borrower may have at any time against any beneficiary or
any transferee of a Letter of Credit (or any Persons for whom any such
beneficiary or any such transferee may be acting), any Issuing Bank or
any other Person, whether in connection with the transactions
contemplated by the L/C Related Documents or any unrelated transaction;
(d) any statement or any other document presented under a
Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(e) payment by any Issuing Bank under a Letter of Credit
against presentation of a draft or certificate that does not comply
with the terms of such Letter of Credit;
(f) any exchange, release or non-perfection of any collateral,
or any release or amendment or waiver of or consent to departure from
any Guaranty or any other guarantee, for all or any of the Obligations
of the Borrower in respect of the L/C Related Documents; or
(g) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing, including, without limitation, any
other circumstance that might otherwise constitute a defense available
to, or a discharge of, the Borrower or a guarantor.
36
42
SECTION 4.5. COMPENSATION.
(a) On the date of issuance of each Letter of Credit, the
Borrower shall pay to the Administrative Agent for the account of each
Lender a commission on such Lender's Percentage of the Available Amount
of each such Letter of Credit issued on such date at a rate equal to
the Applicable Margin.
(b) The Borrower shall pay to the Issuing Bank, for its own
account, such commissions, issuance fees, transfer fees and other fees
and charges in connection with the issuance or administration of each
Letter of Credit as the Borrower and the Issuing Bank shall agree.
SECTION 4.6. SUCCESSOR ISSUING BANK. The Issuing Bank may resign at any
time by giving written notice thereof to the Lenders and the Borrower, with any
such resignation to become effective only upon the appointment of a successor
Issuing Bank pursuant to this Section 4.6. Upon any such resignation, the
Majority Lenders shall have the right to appoint a successor Issuing Bank, which
shall be a Lender or an Eligible Assignee that is another commercial bank or
trust company reasonably acceptable to the Borrower organized or licensed under
the laws of the United States, or of any State thereof. If no successor Issuing
Bank shall have been so appointed by the Majority Lenders, and shall have
accepted such appointment, within 30 days after the retiring Issuing Bank's
giving of notice of resignation, then the retiring Issuing Bank may, on behalf
of the Lenders, appoint a successor Issuing Bank, which shall be a Lender or
shall be an Eligible Assignee that is another commercial bank or trust company
organized or licensed under the laws of the United States or of any State
thereof reasonably acceptable to the Borrower. Upon the acceptance of any
appointment as Issuing Bank hereunder by a successor Issuing Bank, such
successor Issuing Bank shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Issuing Bank.
ARTICLE V
GUARANTY
SECTION 5.1. GUARANTEE OF THE PARENT GUARANTOR. The Parent Guarantor
hereby agrees with each Bank and the Administrative Agent as follows:
(a) THE GUARANTEE. The Parent Guarantor hereby guarantees to
each Lender and the Administrative Agent and their respective
successors and assigns the prompt payment in full when due (whether at
stated maturity, by acceleration or otherwise) of the principal of and
interest on the Advances made by the Lenders to, and the Notes held by
each Lender of, the Borrower and all other amounts from time to time
owing to the Lender or the Administrative Agent by the Borrower
hereunder, under the Notes or under the other Loan Documents and
interest thereon, in each case strictly in accordance with the terms
thereof (such obligations being herein collectively called the
"GUARANTEED OBLIGATIONS"). The Parent Guarantor hereby further agrees
that if the Borrower shall fail to pay in full when due (whether at
stated maturity, by acceleration or otherwise) any of the Guaranteed
Obligations, the Parent Guarantor will promptly pay the same, without
any demand or notice whatsoever, and that in the case of any extension
of time of payment or renewal of any of the Guaranteed
37
43
Obligations, the same will be promptly paid in full when due (whether
at extended maturity, by acceleration or otherwise) in accordance with
the terms of such extension or renewal.
(b) OBLIGATIONS UNCONDITIONAL. The obligations of the Parent
Guarantor under Section 5.1(a) hereof are absolute and unconditional
irrespective of the value, genuineness, validity, regularity or
enforceability of this Agreement, the Notes or any other Loan Document
or instrument referred to herein or therein, or any substitution,
release or exchange of any other guarantee of or security for any of
the Guaranteed Obligations, and, to the fullest extent permitted by
applicable law, irrespective of any other circumstance whatsoever which
might otherwise constitute a legal or equitable discharge or defense of
a surety or guarantor (other than the defense of payment and
performance in full of all of the Guaranteed Obligations), it being the
intent of this Section 5.1(b) that the obligations of the Parent
Guarantor hereunder shall be absolute and unconditional under any and
all circumstances. Without limiting the generality of the foregoing, it
is agreed that the occurrence of any one or more of the following shall
not alter or impair the liability of the Parent Guarantor hereunder
which shall remain absolute and unconditional as described above:
(i) at any time or from time to time,
without notice to the Parent Guarantor, the time for any
performance of or compliance with any of the Guaranteed
Obligations shall be extended, or such performance or
compliance shall be waived;
(ii) any of the acts mentioned in any of the
provisions of this Agreement, the Notes or any other Loan
Document or instrument referred to herein or therein shall be
done or omitted;
(iii) the maturity of any of the Guaranteed
Obligations shall be accelerated, or any of the Guaranteed
Obligations shall be modified, supplemented or amended in any
respect, or any right under this Agreement, the Notes or any
other Loan Document or instrument referred to herein or
therein shall be waived or any other guarantee of any of the
Guaranteed Obligations or any security therefor shall be
released or exchanged in whole or in part or otherwise dealt
with; or
(iv) any lien or security interest granted
to, or in favor of, the Administrative Agent or any Lender as
security for any of the Guaranteed Obligations shall fail to
be perfected.
The Parent Guarantor, to the maximum extent permitted by law,
hereby expressly waives diligence, presentment, demand of
payment, protest and all notices whatsoever, and any
requirement that the Administrative Agent or any Lender
exhaust any right, power or remedy or proceed against the
Borrower under this Agreement, the Notes or any other Loan
Document or instrument referred to herein or therein, or
against any other Person under any other Person under any
other guarantee of, or security for, any of the Guaranteed
Obligations.
(c) REINSTATEMENT. The obligations of the Parent Guarantor
under this Section 5.1 shall be automatically reinstated in and to the
extent that for any reason any payment by or on behalf of the Borrower
in respect of the Guaranteed Obligations is rescinded or must
38
44
be otherwise restored by any holder of any of the Guaranteed
Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and the Parent Guarantor agrees that it
will indemnify the Administrative Agent and each Lender on demand for
all reasonable costs and expenses (including, without limitation, fees
of counsel) incurred by the Administrative Agent or such Lender in
connection with such rescission or restoration, including any such
costs and expenses incurred in defending against any claim alleging
that such payment constituted a preference, fraudulent transfer or
similar payment under any bankruptcy, insolvency or similar law.
(d) SUBROGATION. The Parent Guarantor hereby agrees that until
the payment and satisfaction in full of all Guaranteed Obligations and
the expiration or termination of the Commitments, the Parent Guarantor
shall not exercise any right or remedy arising by reason of any
performance by it of its guarantee in Section 5.1(a) hereof, whether by
subrogation or otherwise, against the Borrower or any other guarantor
of any of the Guaranteed Obligations or any security for any of the
Guaranteed Obligations.
(e) REMEDIES. The Parent Guarantor agrees that, as between the
Parent Guarantor and the Lenders, the obligations of the Borrower under
this Agreement and the Notes may be declared to be forthwith due and
payable as provided in Article X hereof (and shall be deemed to have
become automatically due and payable in the circumstances provided in
Article X hereof) for purposes of Section 5.1(a) hereof notwithstanding
any stay, injunction or other prohibition preventing such declaration
(or such obligations from becoming automatically due and payable) as
against the Borrower and that, in the event of such declaration (or
such obligations being deemed to have become automatically due and
payable), such obligations (whether or not due and payable by the
Borrower) shall forthwith become due and payable by the Parent
Guarantor for purposes of Section 5.1(a) hereof.
(f) CONTINUING GUARANTEE. The guarantee in this Article V is a
continuing guarantee, and shall apply to all Guaranteed Obligations
whenever arising.
ARTICLE VI
PAYMENTS
SECTION 6.1. PAYMENTS AND COMPUTATIONS.
(a) The Borrower shall make each payment hereunder and under
the other Loan Documents not later than 12:00 noon (Charlotte, North
Carolina time) on the day when due in U.S. Dollars to the
Administrative Agent's Account, in same day funds. The Administrative
Agent will promptly thereafter cause to be distributed like funds
relating to the payment of principal, interest, fees or other amounts
payable, to the respective Lenders to whom the same are payable, for
the account of their respective Lending Offices, in each case to be
applied in accordance with the terms of this Agreement. If and to the
extent the Administrative Agent shall not have distributed such funds
on the same day and the applicable Lender shall not have received such
funds on such same day, the Administrative Agent shall forthwith on
demand cause to be distributed such funds, together with interest
thereon for each day from the date such funds were made available to
the Administrative
39
45
Agent until such funds are distributed to the applicable Lender, at the
Federal Funds Rate. Upon its acceptance of a Lender Assignment and
recording of the information contained therein in the Register pursuant
to Section 12.7, from and after the effective date specified in such
Lender Assignment, the Administrative Agent shall make all payments
hereunder and under the other Loan Documents in respect of the interest
assigned thereby to the Lender assignee thereunder, and the parties to
such Lender Assignment shall make all appropriate adjustments in such
payments for periods prior to such effective date directly between
themselves.
(b) Each Loan Party hereby authorizes the Administrative Agent
and each Lender, if and to the extent payment owed to the
Administrative Agent or such Lender, as the case may be, is not made
when due hereunder or under the other Loan Documents (or, in the case
of a Lender, under the Note held by such Lender), to charge upon at
least one Business Day's prior written notice from time to time against
any or all of such Loan Party's accounts with the Administrative Agent
or such Lender, as the case may be, any amount so due; provided,
however, each Loan Party agrees not to initiate any withdrawals from
such account within three Business Days after receipt of such notice.
(c) All computations of interest, including computations of
interest based on the Eurodollar Rate, the Base Rate and any interest
on Fixed Rate Competitive Advances, and all computations of fees and
other amounts payable hereunder, shall be made by the Administrative
Agent on the basis of a year of 360 days. All computations of interest
and other amounts payable pursuant to Section 6.4 shall be made by the
Lender claiming such interest or other amount, on the basis of a year
of 360 days. In each such case, such computation shall be made for the
actual number of days (including the first day but excluding the last
day) occurring in the period for which such interest, fees or other
amounts are payable. Each such determination by the Administrative
Agent or a Lender shall be conclusive and binding for all purposes,
absent manifest error.
(d) Whenever any payment under any Loan Document shall be
stated to be due, or the last day of an Interest Period hereunder shall
be stated to occur, on a day other than a Business Day, such payment
shall be made and the last day of such Interest Period shall occur on
the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of payment of interest and
fees hereunder; provided, however, that if such extension would cause
payment of interest on or principal of Eurodollar Rate Advances or
Eurodollar Competitive Advances to be made, or the last day of an
Interest Period for a Eurodollar Rate Advance or a Eurodollar
Competitive Advance to occur, in the next following calendar month,
such payment shall be made on the next preceding Business Day and such
reduction of time shall in such case be included in the computation of
payment of interest hereunder.
(e) Unless the Administrative Agent shall have received notice
from the Borrower prior to the date on which any payment (other than
payments deemed to be made pursuant to Section 3.5(e)) is due to the
Lenders hereunder that the Borrower will not make such payment in full,
the Administrative Agent may assume that the Borrower has made such
payment in full to the Administrative Agent on such date and the
Administrative Agent may, in reliance upon such assumption, cause to be
distributed to each Lender on such due
40
46
date an amount equal to the amount then due such Lender. If and to the
extent the Borrower shall not have so made such payment in full to the
Administrative Agent, such Lender shall repay to the Administrative
Agent forthwith on demand such amount distributed to such Lender,
together with interest thereon, for each day from the date such amount
is distributed to such Lender until the date such Lender repays such
amount to the Administrative Agent, at the Federal Funds Rate.
SECTION 6.2. PREPAYMENTS.
(a) The Borrower shall not have any right to prepay any
Revolving Advances, Swing Line Advances or Letter of Credit Advances
except in accordance with subsections (b) and (c), below. The Borrower
shall not have any right to prepay any Competitive Advance of any
Lender except (i) if permitted pursuant to the terms of the Competitive
Bid of such Lender and (ii) as required by subsection (c), below.
(b) The Borrower may, in the case of Fixed Eurodollar Rate
Advances, upon at least three Business Day's written notice to the
Administrative Agent (such notice being irrevocable) and in the case of
Floating Eurodollar Rate Advances and Base Rate Advances, upon notice
not later than 11:00 A.M. (Charlotte, North Carolina time) on the first
Business Day prior to the proposed prepayment to the Administrative
Agent (such notice being irrevocable), stating the proposed date and
aggregate principal amount of the prepayment, and if such notice is
given, such Borrower shall, prepay such Advances comprising part of the
same Borrowing, in whole or ratably in part, together with accrued
interest to the date of such prepayment on the principal amount prepaid
and, with respect to Fixed Eurodollar Rate Advances, any amounts owing
in connection therewith pursuant to Section 6.4(d); provided, however,
that each partial prepayment shall be in an aggregate principal amount
not less than $1,000,000 or an integral multiple of $500,000 in excess
thereof.
(c) If at any time, the aggregate principal amount of Advances
outstanding shall exceed the Commitments, the Borrower shall forthwith
prepay Advances in a principal amount equal to such excess. All
prepayments pursuant to this subsection (c) shall be effected first,
from outstanding Swing Line Advances, second, from outstanding Letter
of Credit Advances comprising part of the same Borrowing or Borrowings,
third, from outstanding Revolving Advances comprising part of the same
Borrowing or Borrowings, fourth, from outstanding Eurodollar
Competitive Advances and fifth, from outstanding Fixed Rate Competitive
Advances, and shall be accompanied by payment of accrued interest to
the date of such prepayment on the principal amount prepaid and, with
respect to Eurodollar Rate Advances (other than Floating Eurodollar
Rate Advances), any amounts owing in connection therewith pursuant to
Section 6.4(d); provided, however, that any Lender holding a
Competitive Advance may waive prepayment of such Competitive Advance
held by such Lender.
SECTION 6.3. FEES.
(a) The Borrower agrees to pay to the Administrative Agent for
the account of each Lender a Facility Fee on the amount of such
Lender's Commitment (whether used or unused) from the Closing Date
until the Termination Date. The Facility Fee shall be payable
41
47
in advance on (i) the Closing Date for the period from the Closing Date
until March 31, 1999 and (ii) thereafter quarterly on the last day of
March, June, September and December for the next Fiscal Quarter.
(b) The Borrower further agrees to pay the fees specified in
the Fee Letter (without duplication of amounts payable under this
Agreement, including amounts under Section 6.3(a) above), together with
such other fees as may be separately agreed to by the Borrower and the
Administrative Agent.
SECTION 6.4. YIELD PROTECTION.
(a) CHANGE IN CIRCUMSTANCES. Notwithstanding any other
provision herein, if after the date hereof, the adoption of or any
change in applicable law or regulation or in the interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof (whether or not having the
force of law) shall change the basis of taxation of payments to any
Lender of the principal of or interest on any Eurodollar Rate Advance
or Competitive Advance made by such Lender or any fees or other amounts
payable under the Loan Documents (other than changes in respect of
taxes imposed on the overall net income of such Lender or its Lending
Office by the jurisdiction in which such Lender has its principal
office or in which such Lending Office is located or by any political
subdivision or taxing authority therein), or shall impose, modify or
deem applicable any reserve, special deposit or similar requirement
against Commitments or assets of, deposits with or for the account of,
or credit extended by, such Lender, or shall impose on such Lender or
the London interbank market any other condition affecting this
Agreement or the other Loan Documents or Eurodollar Rate Advances or
Competitive Advances made by such Lender, and the result of any of the
foregoing shall be to increase the cost to such Lender, of agreeing to
make, making or maintaining any Advance or of agreeing to issue or of
issuing or maintaining Letters of Credit or to reduce the amount of any
sum received or receivable by such Lender under any Loan Document or
under the Notes (whether of principal, interest or otherwise), then the
Borrower will pay to such Lender within five days of demand such
additional amount or amounts as will compensate such Lender for such
additional costs incurred or reduction suffered.
(b) CAPITAL. If any Lender shall have determined that any
change after the date hereof in any law, rule, regulation or guideline
adopted pursuant to or arising out of the July 1988 report of the Basle
Committee on Banking Regulations and Supervisory Practices entitled
"International Convergence of Capital Measurement and Capital
Standards", or the adoption after the date hereof of any law, rule,
regulation or guideline regarding capital adequacy, or any change in
any of the foregoing or in the interpretation or administration of any
of the foregoing by any governmental authority, central bank or
comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or any Lending Office of such
Lender) or any Lender's holding company with any request or directive
regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on such Lender's capital
or on the capital of such Lender's holding company, if any, as a
consequence of this Agreement, the other Loan Documents the Commitment
of such Lender hereunder or the Advances made by such Lender pursuant
hereto or the Letters
42
48
of Credit issued hereunder, to a level below that which such Lender or
such Lender's holding company could have achieved, but for such
applicability, adoption, change or compliance (taking into
consideration such Lender's policies and the policies of such Lender's
holding company with respect to capital adequacy), or of increasing or
otherwise determining the amount of capital required or expected to be
maintained by such Lender or such Lender's holding company based upon
the existence of this Agreement, the other Loan Documents, the
Commitment of such Lender hereunder, the Advances made by such Lender
pursuant hereto, the Letters of Credit issued or to be issued or
maintained hereunder and other similar such commitments, agreements or
assets, then from time to time the Borrower shall pay to such Lender
within five days of demand such additional amount or amounts as will
compensate such Lender or such Lender's holding company for any such
reduction or allocable capital cost suffered.
(c) EURODOLLAR RESERVES. The Borrower shall pay to each Lender
upon demand, so long as such Lender shall be required under regulations
of the Board of Governors of the Federal Reserve System to maintain
reserves with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities, additional interest on the unpaid
principal amount of each Eurodollar Rate Advance of such Lender to the
Borrower, from the date of such Advance until such principal amount is
paid in full, at an interest rate per annum equal at all times to the
remainder obtained by subtracting the Eurodollar Rate for the Interest
Period for such Advance from the rate obtained by dividing such
Eurodollar Rate by a percentage equal to 100% minus the Eurodollar
Reserve Percentage of such Lender for such Interest Period. Such
additional interest shall be determined by such Lender and notified to
the Borrower and the Administrative Agent. Each Lender, with respect to
itself only, represents and warrants to the Borrower that as of the
date of this Agreement, the Eurodollar Reserve Percentage with respect
to such Lender is zero (0.0%).
(d) BREAKAGE INDEMNITY. The Borrower shall indemnify each
Lender against any loss, cost or reasonable expense which such Lender
may sustain or incur as a consequence of (i) any failure by the
Borrower to fulfill on the date of any Borrowing hereunder of Fixed
Eurodollar Rate Advances or Competitive Advances the applicable
conditions precedent set forth in Section 7.2 or, Section 7.1 in the
case of the initial Borrowing, (ii) any failure by the Borrower to
borrow any Fixed Eurodollar Rate Advance hereunder after a Notice of
Revolving Borrowing has been delivered pursuant to Section 3.1 hereof
or to borrow any Competitive Advance hereunder after a Competitive Bid
Acceptance in respect thereof has been delivered pursuant to Section
3.3(b)(iv) hereof, (iii) any payment or prepayment of a Fixed
Eurodollar Rate Advance or Competitive Advance made to the Borrower
required or permitted by any other provision of this Agreement or any
other Loan Document or otherwise made or deemed made on a date other
than the last day of the Interest Period applicable thereto, (iv) any
default in payment or prepayment of the principal amount of any Fixed
Eurodollar Rate Advance or Competitive Advance made to the Borrower or
any part thereof or interest accrued thereon, as and when due and
payable (at the due date thereof, by irrevocable notice of prepayment
or otherwise) or (v) the occurrence of any Event of Default with
respect to the Borrower, including, in each such case, any loss or
reasonable expense sustained or incurred or to be sustained or incurred
in liquidating or employing deposits from third parties acquired to
effect or maintain such Advance or any part thereof as a Fixed
Eurodollar Rate Advance or Competitive Advance. Such loss, cost or
reasonable expense
43
49
shall include an amount equal to the excess, if any, as reasonably
determined by such Lender, of (A) its cost of obtaining the funds for
the Fixed Eurodollar Rate Advance or Competitive Advance being paid,
prepaid or not borrowed for the period from the date of such payment,
prepayment or failure to borrow to the last day of the Interest Period
for such Advance (or, in the case of a failure to borrow, the Interest
Period for such Advance which would have commenced on the date of such
failure) over (B) the amount of interest (as reasonably determined by
such Lender) that would be realized by such Lender in reemploying the
funds so paid, prepaid or not borrowed for such period or Interest
Period, as the case may be. For purposes of this subsection (d), it
shall be presumed that in the case of any Fixed Eurodollar Rate Advance
or Eurodollar Competitive Advance, each Lender shall have funded each
such Advance with a fixed-rate instrument bearing the rates and
maturities designated in the determination of the Applicable Rate for
such Advance.
(e) NOTICES. A certificate of each Lender setting forth such
Lender's claim for compensation hereunder and the amount necessary to
compensate such Lender or its holding company pursuant to subsections
(a) through (d) of this Section 6.4 shall be submitted to the Borrower
and the Administrative Agent and shall be conclusive and binding for
all purposes, absent manifest error. The Borrower shall pay each Lender
directly the amount shown as due on any such certificate within 10 days
after its receipt of the same. The failure of any Lender to provide
such notice or to make demand for payment under this Section 6.4 shall
not constitute a waiver of such Lender's rights hereunder; provided
that such Lender shall not be entitled to demand payment pursuant to
subsections (a) through (d) of this Section 6.4, in respect of any
loss, cost, expense, reduction or reserve, if such demand is made more
than one year following the later of such Lender's incurrence or
sufferance thereof or such Lender's actual knowledge of the event
giving rise to such Lender's rights pursuant to such subsections. Each
Lender shall use reasonable efforts to ensure the accuracy and validity
of any claim made by it hereunder, but the foregoing shall not obligate
any Lender to assert any possible invalidity or inapplicability of the
law, rule, regulation, guideline or other change or condition which
shall have occurred or been imposed.
(f) CHANGE IN LEGALITY. Notwithstanding any other provision
herein, if after the date hereof, the adoption of or any change in any
law or regulation or in the interpretation or administration thereof by
any governmental authority charged with the administration or
interpretation thereof shall make it unlawful for any Lender to make or
maintain any Eurodollar Rate Advance or any Lender who has made a
Eurodollar Competitive Advance to maintain such Eurodollar Rate Advance
or to give effect to its obligations as contemplated hereby with
respect to any Eurodollar Rate Advance or Eurodollar Competitive
Advance, then, by written notice to the Borrower and the Administrative
Agent, such Lender may:
(i) declare that Eurodollar Rate Advances
and Eurodollar Competitive Advances will not thereafter be
made by such Lender hereunder, whereupon the right of the
Borrower to select Eurodollar Rate Advances for any Borrowing
and any Competitive Borrowing consisting of Eurodollar
Competitive Advances with respect to such Lender only shall be
forthwith suspended until such Lender shall withdraw such
notice as provided hereinbelow (it being acknowledged that
such affected Lender shall make its pro rata share of any such
Advances as Base
44
50
Rate Advances and the Borrower will pay interest on such
Lender's Advances at the Base Rate); and
(ii) require that all outstanding Eurodollar
Rate Advances and Eurodollar Competitive Advances made by it
be repaid or at Borrower's option, Converted to a Base Rate
Advance as of the effective date of such notice as provided
herein below.
Upon receipt of any such notice, the Administrative Agent shall
promptly notify the other Lenders. Promptly upon becoming aware that
the circumstances that caused such Lender to deliver such notice no
longer exist, such Lender shall deliver notice thereof to the Borrower
and the Administrative Agent withdrawing such prior notice (but the
failure to do so shall impose no liability upon such Lender). Promptly
upon receipt of such withdrawing notice from such Lender, the
Administrative Agent shall deliver notice thereof to the Borrower and
the Lenders and such suspension shall terminate. Prior to any Lender
giving notice to the Borrower under this subsection (f), such Lender
shall use reasonable efforts to change the jurisdiction of its Lending
Office, if such change would avoid such unlawfulness and would not, in
the sole determination of such Lender, be otherwise disadvantageous to
such Lender. Any notice to the Borrower by any Lender shall be
effective as to each Eurodollar Rate Advance and Eurodollar Competitive
Advance on the last day of the Interest Period currently applicable to
such Eurodollar Rate Advance or Eurodollar Competitive Advance;
provided that if such notice shall state that the maintenance of such
Advance until such last day would be unlawful, such notice shall be
effective on the date of receipt by the Borrower and the Administrative
Agent.
(g) MARKET RATE DISRUPTIONS. If the Majority Lenders shall
notify the Administrative Agent that the Eurodollar Rate will not
adequately reflect the cost to such Majority Lenders of making, funding
or maintaining their respective Eurodollar Rate Advances, the right of
the Borrower to select or receive Eurodollar Rate Advances for any
Borrowing shall be forthwith suspended until the Administrative Agent
shall notify the Borrower and the Lenders that the circumstances
causing such suspension no longer exist, and until such notification
from the Administrative Agent each requested Borrowing of Eurodollar
Rate Advances hereunder shall be deemed to be a request for Base Rate
Advances.
SECTION 6.5. SHARING OF PAYMENTS, ETC. If any Lender shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise, but excluding any proceeds received by assignments or
sales of participation in accordance with Section 12.7 hereof to a Person that
is not an Affiliate of the Borrower) on account of the Advances owing to it
(other than pursuant to Section 6.4 hereof) in excess of its ratable share (as
determined for purposes of this Section 6.5 by dividing the amount of
outstanding Advances owing to such Lender by the aggregate amount of Advances
outstanding to all Lenders) of payments on account of the Advances obtained by
all the Lenders, such Lender shall forthwith purchase from the other Lenders
such participation in the Advances owing to them as shall be necessary to cause
such purchasing Lender to share the excess payment ratably with each of them;
provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each Lender
shall be rescinded and such Lender shall repay to the purchasing Lender the
purchase price
45
51
to the extent of such recovery together with an amount equal to such Lender's
ratable share (according to the proportion of the amount of such Lender's
required repayment to the total amount so recovered from the purchasing Lender)
of any interest or other amount paid or payable by the purchasing Lender in
respect of the total amount so recovered. The Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to this Section 6.5 may,
to the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Lender were the direct creditor of the Borrower in the amount of such
participation. Notwithstanding the foregoing, if any Lender shall obtain any
such excess payment involuntarily, such Lender may, in lieu of purchasing
participation from the other Lenders in accordance with this Section 6.5, on the
date of receipt of such excess payment, return such excess payment to the
Administrative Agent for distribution in accordance with Section 6.1(a).
SECTION 6.6. TAXES.
(a) All payments by or on behalf of the Borrower under any
Loan Document shall be made in accordance with Section 6.1, free and
clear of and without deduction for all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding, in the case of each Lender and the
Administrative Agent, taxes imposed on its overall net income, and
franchise taxes imposed on it, by the jurisdiction under the laws of
which such Lender or the Administrative Agent (as the case may be) is
organized or any political subdivision thereof and, in the case of each
Lender, taxes imposed on its overall net income, and franchise taxes
imposed on it, by the jurisdiction of such Lender's Lending Office or
any political subdivision thereof (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "TAXES"). If the Borrower shall be required
by law to deduct any Taxes from or in respect of any sum payable under
any Loan Document to any Lender or the Administrative Agent, (i) the
sum payable shall be increased as may be necessary so that after making
all required deductions (including deductions applicable to additional
sums payable under this Section 6.6) such Lender or the Administrative
Agent (as the case may be) receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the Borrower shall
make such deductions and (iii) the Borrower shall pay the full amount
deducted to the relevant taxation authority or other authority in
accordance with applicable law.
(b) In addition, the Borrower agrees to pay any present or
future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies that arise from any payment made by
the Borrower under any Loan Document or from the execution, delivery or
registration of, or otherwise with respect to, any Loan Document
(hereinafter referred to as "OTHER TAXES").
(c) The Borrower hereby indemnifies each Lender and the
Administrative Agent for the full amount of Taxes and Other Taxes
(including, without limitation, any Taxes and any Other Taxes imposed
by any jurisdiction on amounts payable under this Section 6.6) paid by
such Lender or the Administrative Agent (as the case may be) and any
liability (including penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or Other
Taxes were correctly or legally asserted. A Lender's claim for such
indemnification shall be set forth in a certificate of such Lender
setting forth in reasonable
46
52
detail the amount necessary to indemnify such Lender pursuant to this
subsection (c) and shall be submitted to the Borrower and the
Administrative Agent and shall be conclusive and binding for all
purposes, absent manifest error. The Borrower shall pay each Lender
directly the amount shown as due on any such certificate within 30 days
after the receipt of same. If any Taxes or Other Taxes for which a
Lender or the Administrative Agent has received payments from the
Borrower hereunder shall be finally determined to have been incorrectly
or illegally asserted and are refunded to such Lender or the
Administrative Agent, such Lender or the Administrative Agent, as the
case may be, shall promptly forward to the Borrower any such refunded
amount. The Borrower's, the Administrative Agent's and each Lender's
obligations under this Section 6.6 shall survive the payment in full of
the Advances.
(d) Within 30 days after the date of any payment of Taxes, the
Borrower will furnish to the Administrative Agent, at its address
referred to in Section 12.2, the original or a certified copy of a
receipt evidencing payment thereof.
(e) Each Lender that is not incorporated under the laws of the
United States of America or any state thereof shall, on or prior to the
date it becomes a Lender hereunder, deliver to the Borrower and the
Administrative Agent such certificates, documents or other evidence, as
required by the Internal Revenue Code of 1986, as amended from time to
time (the "CODE"), or treasury regulations issued pursuant thereto,
including Internal Revenue Service Form 4224 and any other certificate
or statement of exemption required by Treasury Regulation Section
1.1441-1 or Section 1.1441-6 or any subsequent version thereof,
properly completed and duly executed by such Lender establishing that
it is (i) not subject to withholding under the Code or (ii) totally
exempt from United States of America tax under a provision of an
applicable tax treaty. Each Lender shall promptly notify the Borrower
and the Administrative Agent of any change in its Lending Office and
shall deliver to the Borrower and the Administrative Agent together
with such notice such certificates, documents or other evidence
referred to in the immediately preceding sentence. Each Lender will use
good faith efforts to apprise the Borrower and the Administrative Agent
as promptly as practicable of any impending change in its tax status
that would give rise to any obligation by the Borrower to pay any
additional amounts pursuant to this Section 6.6. Unless the Borrower
and the Administrative Agent have received forms or other documents
satisfactory to them indicating that payments under the Loan Documents
are not subject to United States of America withholding tax or are
subject to such tax at a rate reduced by an applicable tax treaty, the
Borrower or the Administrative Agent shall withhold taxes from such
payments at the applicable statutory rate in the case of payments to or
for any Lender organized under the laws of a jurisdiction outside the
United States of America. Each Lender represents and warrants that each
such form supplied by it to the Administrative Agent and the Borrower
pursuant to this Section 6.6, and not superseded by another form
supplied by it, is or will be, as the case may be, complete and
accurate.
(f) Any Lender claiming any additional amounts payable
pursuant to this Section 6.6 shall use reasonable efforts (consistent
with legal and regulatory restrictions) to file any certificate or
document requested by the Borrower or to change the jurisdiction of its
Lending Office if the making of such a filing or change would avoid the
need for or reduce the amount of any such additional amounts which may
thereafter accrue and would not, in the sole determination of such
Lender, be otherwise disadvantageous to such Lender.
47
53
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.1. CONDITIONS PRECEDENT TO EFFECTIVENESS. The effectiveness
of this Agreement is subject to the fulfillment of the following conditions
precedent:
(a) The Administrative Agent shall have received on or before
the Closing Date the following, each dated the Closing Date, in form
and substance satisfactory to the Administrative Agent and in
sufficient copies for each Lender (except for the Notes):
(i) Counterparts of this Agreement, duly executed by
the Borrower and the Guarantor.
(ii) Revolving Notes of the Borrower, duly made to
the order of each Lender in the amount of such Lender's
Commitment.
(iii) Competitive Notes of the Borrower, duly made to
the order of each Lender in the amount of such Lender's
Commitment.
(iv) A certificate from the chief financial officer
of the Borrower certifying that, after giving effect to the
transactions contemplated by the Loan Documents, the Borrower
and the Guarantor are Solvent on the Closing Date.
(v) A certificate of the Secretary or Assistant
Secretary of each Loan Party certifying:
(A) the names and true signatures of
the officers of such Loan Party
authorized to sign the Loan
Documents to which such Loan Party
is a party and the other documents
to be delivered by such Loan Party
hereunder;
(B) that attached thereto are true and
correct copies of: (1) its
Formation Documents, and (2) in the
case such Loan Party is (i) a
corporation, the resolutions of its
board of directors, and (ii) a
partnership, a limited partnership
or a limited liability company, the
necessary consents of its partners
or members, as the case may be, in
each case, approving the Loan
Documents to which such Loan Party
is a party; and (3) all other
documents evidencing other
necessary corporate or other
action, if any, with respect to the
execution, delivery and performance
by such Loan Party of the Loan
Documents to which such Loan Party
is a party; and
(C) that the resolutions or consents,
as the case may be, referred to in
the foregoing clause (B)(2) have
not been modified,
48
54
revoked or rescinded and are in
full force and effect on such date.
(vi) A certificate signed by the Chief Financial
Officer, Treasurer+ or Assistant Treasurer of the Parent
Guarantor and the Borrower, certifying as to:
(A) the delivery to each of the
Lenders, prior to the Closing Date,
of true, correct and complete
copies (other than exhibits
thereto) of all of the Disclosure
Documents; and
(B) the absence of any material adverse
change in the business, condition
(financial or otherwise),
operations, performance, properties
or prospects of the Parent
Guarantor, the Borrower or, the
Parent Guarantor and its
Subsidiaries taken as a whole since
September 30, 1997, except as
disclosed in the Disclosure
Documents.
(vii) A certificate of a duly authorized officer of
each Credit Party stating that the representations and
warranties contained in Section 8.1 of such Credit Party are
correct, in all material respects, on and as of the Closing
Date before and after giving effect to the Advances and
issuances to be made on such date and the application of the
proceeds thereof, and no event has occurred and is continuing
which constitutes an Event of Default or Unmatured Default, or
would result from such initial Advances or issuances or the
application of the proceeds thereof.
(ix) A certificate(s) issued by the appropriate tax
departments or agencies of North Carolina and Delaware with
respect to the Borrower and North Carolina and Maryland with
respect to the Parent Guarantor, to the effect that the
Borrower and the Parent Guarantor, as applicable, have paid
all income, sales and applicable taxes.
(x) A certificate issued by the offices of the
Secretary of State of the state of the Borrower's and the
Parent Guarantor's formation to the effect that each is
legally existing and in good standing under the laws of such
state.
(xi) Certificates issued by the office of the
Secretary of State of North Carolina and Delaware with respect
to the Borrower, and North Carolina and Maryland with respect
to the Parent Guarantor, to the effect that such entities are
duly qualified and in good standing under the laws of such
states.
(xii) Favorable opinions of:
(A) ▇▇▇▇▇▇▇, Procter & ▇▇▇▇ LLP,
counsel to the Loan Parties, in
substantially the form of Exhibit
7.1A hereto and as to each other
matters as the Administrative Agent
may reasonably request;
49
55
(B) ▇▇▇▇▇▇▇, Covington, Lobdell, &
▇▇▇▇▇▇▇ LLP, Special North Carolina
counsel to the Loan Parties, in
substantially the form of Exhibit
7.1B hereto and as to each other
matters as the Administrative Agent
may reasonably request; and
(C) Parker, Poe, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
L.L.P., special counsel to the
Administrative Agent, in
substantially the form of Exhibit
7.1C hereto and as to such other
matters as the Administrative Agent
may reasonably request.
(xiii) Such financial, business and other information
regarding each Loan Party and its Subsidiaries, as the
Administrative Agent shall have reasonably requested.
(b) The Existing Credit Facility shall have been (or will have
been, upon the first Advance and the application of the proceeds
thereof) paid in full and the "Commitments" thereunder terminated.
(c) All fees and other amounts payable pursuant to Section 6.3
hereof or pursuant to the Fee Letter shall have been paid (to the
extent then due and payable).
(d) The Administrative Agent shall have received such other
approvals, opinions and documents as the Majority Lenders, through the
Administrative Agent, shall have reasonably requested as to the
legality, validity, binding effect or enforceability of the Loan
Documents or the financial condition, operations, properties or
prospects of each Loan Party and their respective Principal
Subsidiaries.
SECTION 7.2. CONDITIONS PRECEDENT TO CERTAIN ADVANCES AND EACH
ISSUANCE. The obligation of any Lender to make any Revolving Advance that would
increase the aggregate principal amount of Advances made by the Lenders (as
determined immediately prior to and after giving effect to the making of such
Revolving Advance), including the initial Revolving Advance, or to make any
Swing Line Advance or Competitive Advance or to issue any Letter of Credit, that
would increase the aggregate principal amount of Advances made by the Lenders
(as determined immediately prior to and after giving effect to the making of
such Revolving Advance) shall be subject to the conditions precedent that, on
the date of such Revolving Advance, Swing Line Advance or Competitive Advance or
issuance of any Letter of Credit and after giving effect thereto:
(a) the following statements shall be true (and each of the
giving of the applicable Notice of Revolving Borrowing, Notice of Swing
Line Borrowing, Competitive Bid Request or Notice of Issuance with
respect to such Advance or issuance and the acceptance of the proceeds
of such Advance or of such Letter of Credit without prior correction by
or on behalf of the Borrower shall constitute a representation and
warranty by the Borrower that on the date of such Advance or issuance
such statements are true):
(i) the representations and warranties of
the Borrower contained in each Loan Document are correct, in
all material respects (subject to the last grammatical
paragraph in Article XIII) , on and as of the date of such
Advance or
50
56
issuance, before and after giving effect to such Advance or
issuance, as the case may be, and to the application of the
proceeds therefrom, as though made on and as of such date; and
(ii) no Event of Default or Unmatured
Default has occurred and is continuing or would result from
such Advance or issuance or from the application of the
proceeds thereof.
(b) The Borrower shall have furnished to the Administrative
Agent such other approvals, opinions or documents as any Lender may
reasonably and customarily request through the Administrative Agent as
to the legality, validity, binding effect or enforceability of any Loan
Document.
SECTION 7.3. RELIANCE ON CERTIFICATES. The Lenders and the
Administrative Agent shall be entitled to rely conclusively upon the
certificates delivered from time to time by officers of the Borrower as to the
names, incumbency, authority and signatures of the respective persons named
therein until such time as the Administrative Agent may receive a replacement
certificate, in form acceptable to the Administrative Agent, from an officer of
the Borrower identified to the Administrative Agent as having authority to
deliver such certificate, setting forth the names and true signatures of the
officers and other representatives of the Borrower thereafter authorized to act
on behalf of the Borrower and, in all cases, the Lenders and the Administrative
Agent may rely on the information set forth in any such certificate.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
SECTION 8.1. REPRESENTATIONS AND WARRANTIES. Each Loan Party represents
and warrants that:
(a) EXISTENCE. (i) The Parent Guarantor, the Borrower and (to
the extent non-compliance would have a Material Adverse Effect) its
Subsidiaries are each a corporation or limited partnership duly
organized or formed, as the case may be, validly existing and in good
standing under the laws of the jurisdiction of its organization or
formation, as the case may be; has the requisite corporate or other
power and authority to own its property and assets and to carry on its
business as now conducted, and is qualified to do business in every
jurisdiction in which the properties and assets owned, leased or
operated by it, or of the nature of the business conducted by it, make
such qualification necessary and required, except where the failure to
so qualify would not have a Material Adverse Effect; (ii) the Parent
Guarantor is a self-directed, self-managed REIT; and (iii) the Parent
Guarantor is the sole general partner of the Borrower.
(b) AUTHORITY. The execution, delivery and performance of this
Agreement, the Notes and the other Loan Documents, the consummation of
the transactions herein and therein contemplated, the fulfillment of
and compliance with the terms and provisions hereof and thereof have
been duly authorized by all necessary corporate or other action of each
Loan
51
57
Party, and is within their respective corporate or other power and will
not result in a violation of the Formation Documents of any Loan Party.
(c) BINDING OBLIGATIONS. This Agreement, the Notes and the
other Loan Documents constitute the legal, valid and binding
obligations of each Loan Party thereto enforceable in accordance with
their respective terms, except as the same may be limited by bankruptcy
or general principles of equity.
(d) NONCONTRAVENTION. The execution, delivery and performance
by the Loan Parties of this Agreement, the Notes and the other Loan
Documents will not (i) violate any existing law, ordinance, rule,
regulation or order of any Federal, state or local governmental body,
instrumentality or agency in any manner that would have a Material
Adverse Effect, (ii) result in a breach of any of the terms of, or
constitute a default under, any indenture, mortgage, deed of trust,
lease, agreement, document, or instrument to which such Loan Party is a
party or by which such Loan Party or any of their respective properties
or assets are bound in any manner that would have a Material Adverse
Effect or (iii) result in or require the imposition of any Liens on any
of their respective properties or assets except for Liens permitted
pursuant to Section 9.2(a).
(e) NO CONSENTS; GOVERNMENTAL APPROVALS. The execution,
delivery and performance of this Agreement, the Notes and the Loan
Documents does not require any approval, consent or waiver under any
material agreement, document, or instrument to which any Loan Party is
a party or by which any Loan Party, Subsidiary, or their respective
properties or assets may be bound or effected other than any approval,
consent or waiver which has previously been obtained or which the
failure to obtain would not have a Material Adverse Effect. No
Governmental Approval, is required in connection with the transactions
contemplated by this Agreement, the Notes or the other Loan Documents.
(f) CAPITALIZATION. The outstanding shares of capital stock or
other equity interests of each Loan Party have been duly issued and are
fully-paid and non-assessable. Except as set forth in the Disclosure
Documents, as of the Closing Date there are outstanding no options,
warrants or other securities exercisable or exchangeable for or
convertible into shares of capital stock of the Parent Guarantor. Set
forth on Schedule III hereto is a true and correct list as of the
Closing Date of each direct and indirect Subsidiary and Unconsolidated
Joint Venture of each Credit Party and such schedule sets forth, each
such Subsidiaries and Unconsolidated Joint Ventures correct legal name,
its jurisdiction of formation, the Persons holding equity interests in
such Person, their respective percentage equity or voting interest in
such Person.
(g) STATUTORY COMPLIANCE. Each Loan Party and each of their
respective Affiliates is in compliance with all laws, ordinances,
rules, regulations and orders of all Federal, state or local
governmental bodies, instrumentalities or agencies applicable to it,
its properties and assets and the business conducted by it, including,
without limitation, (i) with respect to the Parent Guarantor only, the
provisions of the Code (Sections 856 through 860) relating to the
organization of REIT's and their qualification and maintenance as such,
(ii) all SEC and state "blue sky" laws, (iii) ERISA, and (iv) all
Environmental Laws, except where noncompliance would not have a
Material Adverse Effect.
52
58
(h) LITIGATION. There are no actions, suits, proceedings or
other Litigation by or before any Federal, state or local governmental
body, instrumentality or agency or any arbitration or alternate dispute
resolution proceeding, pending or, to the knowledge of the Borrower or
any of its officers, threatened against any Loan Party or any Affiliate
or their properties or assets, which if adversely determined, would,
together with all other such litigation and proceedings if similarly
determined, have a Material Adverse Effect.
(i) PERMITS. Each Loan Party possesses all necessary or
required permits, authorizations, licenses, approvals, waivers and
consents, without unusual restrictions or limitations, the failure of
which to possess would have a material adverse effect on such Loan
Party's ability to own and/or lease its properties and assets and to
conduct the business in which it is presently engaged, all of which are
in full force and effect. Each Affiliate of the Borrower possesses all
permits, authorizations, licenses, approvals, waivers and consents,
without unusual restrictions or limitations, the failure of which to
possess would have a Material Adverse Effect.
(j) SOLVENCY. Each Loan Party is currently Solvent and is not
contemplating either the filing of a petition by it under any Federal
or state bankruptcy or insolvency law or the liquidating of all or a
major portion of its properties and assets, and the Borrower has no
knowledge of any Person contemplating the filing of any such petition
against any Loan Party.
(k) FINANCIAL STATEMENTS.
(i) (A) The consolidated balance sheet of
the Parent Guarantor and its Subsidiaries as at December 31,
1996, and the related consolidated statements of income,
retained earnings and cash flows of the Parent Guarantor and
its Subsidiaries for the Fiscal Year then ended, together with
the opinion thereon of the Accountants included in the Parent
Guarantor's Annual Report on Form 10-K for the Fiscal Year
ended December 31, 1996, and the unaudited consolidated
balance sheet of the Parent Guarantor and its Subsidiaries as
at September 30, 1997, and the related unaudited consolidated
statements of income, retained earnings and cash flows for the
nine-month period then ended, copies of each of which have
been furnished to each Lender, fairly present (subject, in the
case of such balance sheets and statements of income for the
nine months ended September 30, 1997, to year-end adjustments)
the financial condition of the Parent Guarantor and its
Subsidiaries as at such dates and the results of operation of
the Parent Guarantor and its Subsidiaries for the periods
ended on such dates, all in accordance with GAAP consistently
applied;
(B) Since September 30, 1997, there has
been no Material Adverse Change;
and
(C) The Parent Guarantor has no
material liabilities or obligations
except as reflected in the
foregoing financial statements, as
evidenced by the Loan Documents and
as may be incurred, in accordance
with the terms of this Agreement,
in the ordinary
53
59
course of business (as presently
conducted) following the date of
this Agreement.
(ii) (A) The consolidated balance sheet of
the Borrower and its Subsidiaries as at December 31, 1996, and
the related consolidated statements of income, retained
earnings and cash flows of the Borrower and its Subsidiaries
for the Fiscal Year then ended, together with the opinion
thereon of the Accountants for the Fiscal Year ended December
31, 1996, and the unaudited consolidated balance sheet of the
Borrower and its Subsidiaries as at September 30, 1997, and
the related unaudited consolidated statements of income,
retained earnings and cash flows for the nine-month period
then ended, copies of each of which have been furnished to
each Lender, fairly present (subject, in the case of such
balance sheets and statements of income for the nine months
ended September 30, 1997, to year-end adjustments) the
financial condition of the Borrower and its Subsidiaries as at
such dates and the results of operations of the Borrower and
its Subsidiaries for the periods ended on such dates, all in
accordance with GAAP consistently applied;
(B) since September 30, 1997, there has been no
Material Adverse Change.
(C) The Borrower has no material liabilities or
obligations except as reflected in the
foregoing financial statements, as evidenced
by the Loan Documents and as may be
incurred, in accordance with the terms of
this Agreement, in the ordinary course of
business (as presently conducted) following
the date of this Agreement.
(l) INDEBTEDNESS. Schedule IV is, as of the Closing Date, a
complete and correct listing of all Debt of the Parent Guarantor and
its Subsidiaries, including all guaranties of the Parent Guarantor and
its Subsidiaries and all letters of credit and acceptance facilities
extended to the compliance with all of the terms of such Debt and all
instruments and agreement relating thereto, and no default or event of
default, or event or condition which with the giving of notice, the
lapse of time, a determination of materiality, the satisfaction of any
other condition or any combination of the foregoing, would constitute
such a default or event of default, exists with respect to any such
Debt other than defaults or events of defaults that (i) would not
constitute an Event of Default under Section 10.1 or (ii) would not
have a Material Adverse Effect.
(m) MATERIAL CONTRACTS. Schedule V is a true, correct and
complete listing of all Material Contracts as of Closing Date. Each of
the Loan Parties and their respective Subsidiaries that are parties to
any Material Contract has performed and is in compliance with all of
the terms of such Material Contract, and no default or event of
default, or event or condition which with the giving of notice, the
lapse of time, a determination of materiality, the satisfaction of any
other condition or any combination of the foregoing, would constitute
such a default or event of default, exists with respect to any such
Material Contract other than defaults or events of defaults that (i)
would not constitute an Event of Default under Section 10.1 or (ii)
would not have a Material Adverse Effect.
54
60
(n) INVESTMENT COMPANY ACT; ETC. No Loan Party is an
"investment company," or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended (15 U.S.C.
ss.ss.80(a)(1) et seq.). The making of the Advances and issuances of
the Letters of Credit, the application of the proceeds and repayment
thereof by the Borrower and the performance of the transactions
contemplated by the Loan Documents will not violate any provision of
said Act, or any rule, regulation or order issued by the Securities and
Exchange Commission thereunder. No Loan Party owns any margin security
as that term is defined in Regulation U of the Board of Governors of
the Federal Reserve System. None of the proceeds of the Advances or
Letters of Credit will be used, or have been used, directly or
indirectly, for the purpose of reducing or retiring any Debt which was
originally incurred to purchase or carry any margin security or for any
other purpose which might constitute any of the Advances a "Purpose
Credit" within the meaning of said Regulation U or Regulations G or X
of the Federal Reserve Board. No Loan Party will take, or permit any
Person acting on its behalf to take, any action which might cause the
Loan Documents to violate any regulation of the Federal Reserve Board.
(o) TAXES. Each Loan Party and its Affiliates have filed all
tax returns and reports required to be filed by them with any and all
Federal, state or local governmental bodies, instrumentalities or
agencies and has paid in full, or made adequate provisions or
established adequate reserves for, the payment of all taxes, interest,
penalties, assessments or deficiencies shown to be due or claimed to be
due on or in respect to such tax returns and reports.
(p) DEFAULTS. No Event of Default and no Unmatured Default has
occurred and/or is continuing.
(q) ENVIRONMENTAL PROTECTION.
(i) The business operations and Properties
of each Loan Party and all its Affiliates comply and have at
all times complied in all material respects with all
Environmental Laws;
(ii) Neither any Loan Party, nor any of its
Affiliates has received (i) any notice or claim of any
violation of or liability under Environmental Law or to the
effect that it is or may be liable to any Person as a result
of the Release or threatened Release of any Hazardous
Materials or (ii) any letter or request for information under
CERCLA or any other Environmental Laws, and the operations of
any Loan Party and its Affiliates are not the subject of any
investigation by a Federal, state or local governmental
instrumentality, body or agency evaluating whether any
remedial action is needed to respond to a Release or
threatened Release of any Hazardous Material, or of any
lawsuit or claim, or threatened lawsuit or claim, arising
under or related to any Environmental Law;
(iii) Each Loan Party and each of its
Affiliates is not and their respective properties, assets and
operations are not subject to any outstanding written order,
agreement, injunction, directive or notice with or by any
Federal, state or local
55
61
governmental instrumentality, body or agency or private party
respecting any Environmental Laws;
(iv) Neither any Loan Party nor any of its
Affiliates has filed any notice under any Environmental Law
indicating past or present presence, release, treatment or
disposal of Hazardous Materials;
(v) No condition exists, and no event has
occurred, with respect to any of the Loan Parties or
Affiliates or the Properties which, with the passing of time
or the giving of notice or both, would (i) constitute a
material violation of any Environmental Laws or (ii) otherwise
give rise to costs, liabilities or obligations under any
Environmental Laws or (iii) to the need for investigation or
corrective action that, in the case of subsections (ii) and
(iii) above, would reasonably likely have a Material Adverse
Effect;
(vi) Except as set forth on Schedule VI, as
of the Closing Date none of the Properties, including any
improvements thereon, contain any (i) Hazardous Materials;
(ii) septic tanks; (iii) underground injection or monitoring
▇▇▇▇▇; or (v) underground storage tanks;
(vii) None of the Loan Parties or Affiliates
have agreed to assume, defend, undertake, guarantee, or
provide indemnification for any liability, including without
limitation any obligation for corrective or remedial action,
of any other person under any Environmental Laws for
environmental matters or conditions;
(viii) None of the Loan Parties or
Affiliates have transported or disposed of, or arranged for
the transportation or disposal of, any Hazardous Material to
any location whatsoever, including without limitation any
location (i) which is listed on the National Priorities List
or the CERCLA list under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended,
(ii) which is listed on any similar federal, state, or local
list, (iii) which is or may become the subject of federal,
state, or local enforcement action or other investigation; or
(iv) about which any of the Loan Parties or Affiliates have
received or have reason to expect that they would receive a
Potentially Responsible Party notice or similar notice under
any Environmental Law;
(ix) None of the Properties is listed on the
National Priorities List, the CERCLA list or any similar
federal, state, or local list; and
(x) No Hazardous Material exists on, under
or about any of the Properties, real or personal, in a manner
that could be reasonably expected to give rise to any claim or
suit against any Loan Party or any Affiliate, and neither any
Loan Party nor any Affiliate has filed any notice or report of
a Release of any Hazardous Materials that could give rise to
any such claim or suit against the Borrower or any Affiliate.
56
62
(r) TITLE TO PROPERTIES. Each Loan Party and its Affiliates
has good and marketable title (except to the extent the same would not
have a Material Adverse Effect) to all of the properties, assets and
rights of every name and nature now purported to be owned by it,
including, without limitation, such properties, assets and rights as
are reflected in the financial statements referred to in Section 8.1(k)
free from all Liens other than Permitted Liens and Liens permitted
pursuant to Section 9.2(a) hereof. Each Loan Party and each of its
Affiliates possesses all trademarks, service marks, trade names, trade
service styles, copyrights and patents that may be necessary to own its
properties and assets and to conduct its business as it is presently
conducted or as it intends to conduct such business hereafter without
any infringement or conflict with the rights of any other Person or any
applicable law, (except to the extent the same would not have a
Material Adverse Effect).
(s) ERISA.
(i) No ERISA Plan Termination Event has occurred nor
is reasonably expected to occur with respect to any ERISA Plan which
would materially adversely affect the financial condition, properties,
prospects or operations of the Borrower and its Subsidiaries taken as a
whole, except as disclosed to the Lenders and consented to by the
Majority Lenders in writing. Since the date of the most recent Schedule
B (Actuarial Information) to the annual report of each such ERISA Plan
(Form 5500 Series), there has been no material adverse change in the
funding status of the ERISA Plans referred to therein, and no
"prohibited transaction" (as defined in ERISA) has occurred with
respect thereto that, singly or in the aggregate with all other
"prohibited transactions" and after giving effect to all likely
consequences thereof, would be reasonably expected to have a material
adverse effect on the financial condition, properties, prospects or
operations of the Borrower and its Subsidiaries taken as a whole.
Neither the Borrower nor any of its ERISA Affiliates has incurred nor
reasonably expects to incur any material withdrawal liability under
ERISA to any ERISA Multiemployer Plan, except as disclosed to and
consented by the Majority Lenders in writing.
(ii) The Borrower and each member of the Controlled
Group have fulfilled their obligations under the minimum funding
standards of ERISA and the Code with respect to each Plan and are in
compliance in all material respects with the applicable provisions of
ERISA and the Code, and have not incurred any liability to the PBGC or
a Plan under Title IV of ERISA; and no "prohibited transaction" or
"reportable event" (as such terms are defined in ERISA) has occurred
with respect to any Plan.
(t) LABOR RELATIONS. No Loan Party is a party to any
collective bargaining or other agreement with any union and there are
no material grievances, disputes or controversies with any union or
other organization of employees, or threats of strikes, work stoppages
or demands by any union or such other organization, which would have a
Material Adverse Effect.
(u) NYSE LISTING. The Parent Guarantor's common stock is duly
listed on the NYSE and the Parent Guarantor's has timely filed all
reports required to be filed by it with the NYSE.
57
63
(v) BROKERS. No broker or finder has brought about the
obtaining, making or closing of, and no broker's or finder's fees or
commissions will be payable by any Loan Party to any Person in
connection with, the transactions contemplated by the Loan Documents,
and each Loan Party shall indemnify and hold the Administrative Agent
and the Lenders harmless from and against any and all cost, claim,
liability, damage or expense (including but not limited to reasonable
attorneys' fees) in connection therewith.
(w) FINANCIAL INFORMATION. No exhibit, schedule, report or
other written information provided by or on behalf of the Loan Parties
or its agents to the Administrative Agent or the Lenders in connection
with the negotiation, execution and closing of the Loan Documents
(including, without limitation, the Offering Memorandum, but excluding
the projections contained therein) knowingly contained when made any
material misstatement of fact or knowingly omitted to state any
material fact necessary to make the statements contained therein not
misleading in light of the circumstances under which they were made.
The projections included in the Offering Memorandum were prepared in
good faith on the basis of reasonable assumptions, it being understood
that such projections do not constitute a warranty or binding assurance
of future performance. Except as has been disclosed to the
Administrative Agent and each Lender, nothing has come to the attention
of the responsible officers of any Loan Party that would indicate that
any of such assumptions, to the extent material to such projections,
has ceased to be reasonable in light of subsequent developments or
events.
A breach of any of the representations and warranties contained in this
Article VIII with respect to a Property or any Person (other than the Borrower,
any Material Subsidiary and the Parent Guarantor, but only to the extent such
representations and warranty relates to such Borrower, Material Subsidiary or
Parent Guarantor and not to their respective Properties) shall, if applicable,
disqualify such Property (or the Property owned by such Person) from being a
Property included in the definition of Unencumbered Assets for so long as such
breach continues (unless otherwise approved by the Majority Lenders) but shall
not constitute an Unmatured Default or an Event of Default or be the basis of an
Event of Default (unless such breach or the disqualification of such Property
results in an Unmatured Default or Event of Default under Section 9.3 or an
Event of Default under Section 10.1 of this Agreement). Notwithstanding,
anything to the contrary set forth above, if any such breach would be reasonably
likely to have a Material Adverse Effect, such breach shall constitute an
Unmatured Default or Event of Default, as the case may be.
ARTICLE IX
COVENANTS OF THE BORROWER AND PARENT GUARANTOR
SECTION 9.1. AFFIRMATIVE COVENANTS. On and after the Closing Date, so
long as any Note shall remain unpaid or any Lender shall have any Commitment
hereunder, the Borrower and the Parent Guarantor, jointly and severally, shall,
and shall cause each Subsidiary to, unless the Majority Lenders shall otherwise
consent in writing:
(a) PRESERVATION OF EXISTENCE, ETC. Preserve and maintain its
existence, corporate or otherwise, material rights (statutory and
otherwise) and franchises except where the failure to maintain and
preserve such rights and franchises would not have a Materially
58
64
Adverse Effect; and maintain the primary business of the Borrower and
its Affiliates to be the acquisition, renovation, construction,
management and/or development of multi-family apartment properties in
the United States and activities incidental thereto.
(b) PRESERVATION OF PROPERTIES; LOCATION OF PROPERTIES. (i)
Preserve and maintain each of its Properties in good repair, working
order and operating condition consistent with a first class apartment
project, normal wear and tear excepted, and the Borrower shall
immediately notify the Administrative Agent of any event causing
material loss or unusual depreciation in the value of any Property;
locate each of its Properties in the continental United States; and
(ii) locate each of its Properties within the continental United
States.
(c) REIT STATUS. Maintain the qualification of the Parent
Guarantor as a REIT for federal income tax purposes.
(d) HAZARD AND LIABILITY INSURANCE.
(i) Keep each Property insured against fire
and other hazards (so-called "ALL RISK COVERAGE") to the same
extent and covering such risks as is customary and prudent for
a business of similar size of the same type and nature for
similar business, but in no event in an aggregate amount less
than the full replacement value thereof; maintain public
liability coverage against claims for personal injuries or
death, business interruption, worker's compensation,
employment or similar insurance with coverage and in amounts
customary and prudent for a business of similar size of the
same type and nature and as may be required by applicable Law.
(ii) Maintain (a) All Risk Coverage written
on a builder's risk, completed value, non-reporting form; (b)
flood insurance, if the improvements are located in any
federally designated "special hazard area"; (c) commercial
general liability insurance and owner's contingent or
protective liability insurance; (d) employer's liability
insurance; (e) umbrella liability insurance; (f) rent loss,
insurance and (g) workmen's compensation insurance.
(iii) In the event of any loss or damage in
excess of $500,000 to any Property, give immediate written
notice to the Administrative Agent and to its insurers of such
loss or damage and shall promptly file proof of loss with the
insurers.
(e) TAXES AND OTHER ASSESSMENTS. Pay and discharge, and
maintain adequate reserves for the payment and discharge of, all taxes,
assessments, government charges or levies, or claims for labor,
supplies, rent or other obligations made against it or its properties
and assets which, if unpaid, might become a Lien against any Loan
Party, any of their respective Affiliates or their respective
properties and assets, except liabilities which are being contested in
a Good Faith Contest or which if not so paid or contested would not
have a Material Adverse Effect; file, and cause each of their
respective Subsidiaries to file, all federal, state and local tax
returns and other reports required by law to file; promptly notify or
cause notice to be given to the Administrative Agent of any pending or
future audits of any
59
65
Loan Party's or any of their respective Subsidiaries income, sales or
other tax returns by the Internal Revenue Service or by any state in
which such person conducts business operations and the results of each
such audit.
(f) MAINTENANCE OF BOOKS AND RECORDS. Keep adequate books and
records of account, in which true and complete entries will be made
reflecting all of such persons business and financial transactions, and
such entries will be made in accordance with GAAP including the
maintenance of adequate reserves for depreciation of property, if such
reserves are required by GAAP.
(g) INSPECTION. Permit the Administrative Agent, the Lenders
and their respective designees, at any time during normal business
hours and upon reasonable prior notice (or if an Event of Default shall
have occurred and is continuing, at any time and without prior notice),
to (i) subject to reasonable rights of tenants, visit and inspect the
properties and assets of each Loan Party and their respective
Affiliates (including any Property); (ii) examine and make copies of
and take abstracts from the book and records of each Loan Party and
their respective Affiliates; and (iii) discuss the affairs, finances
and accounts of each Loan Party and their respective Affiliates with
their respective appropriate officers, employees and accountants; and
cooperate and assist in such inspections, including furnishing all
plans, shop drawings and specifications in any Loan Party's or any
Affiliate's possession relating to the improvements.
(h) MAINTENANCE OF PERMITS. Obtain and/or maintain in full
force and effect all material permits, authorizations, licenses,
approvals, waivers and consents which it presently possesses and are
advisable to maintain or which may become necessary in the future to
conduct its business operations and operate the Properties, except to
the extent that the failure to so obtain or maintain would not have a
Material Adverse Effect.
(i) USE OF PROCEEDS. Use the proceeds of the Advances and
request the issuances of Letters of Credit, solely for the purposes set
forth in Section 2.4.
(j) PAYMENT OF INDEBTEDNESS. Promptly pay and discharge, when
due and payable (or within applicable grace periods) all Debt due to
any Person, except when the amount thereof is being contested in a Good
Faith Contest, or which, if not so paid, would not have a Material
Adverse Effect or constitute an Event of Default under Section 10.1.
(k) COMPLIANCE WITH LAWS AND MATERIAL CONTRACT. Comply, with
(i) the requirements of all applicable laws, including, Environmental
Laws, ordinances, rules, regulations and orders of any Governmental
Authority, and (ii) all terms and conditions of all Material Contracts
to which any Loan Party or Subsidiary is a party, except in each case
if such non compliance shall not have a Material Adverse Effect.
(l) ERISA. Make prompt payments of contributions required to
meet the minimum funding standards set forth under ERISA with respect
to each and every ERISA Plan and, promptly after the filing thereof,
furnish to the Administrative Agent copies of each annual report
required to be filed under ERISA in connection with each and every Plan
for each and every Plan year.
60
66
(m) COMPLIANCE WITH ENVIRONMENTAL LAWS.
(i) Promptly advise the Administrative Agent
in writing and in reasonable detail of (1) any material
violation of or material liability arising under any
Environmental Law; (2) any presence, Release or threatened
Release of any Hazardous Material on any of the Properties;
(3) any and all written communications with respect to claims
or suits under such laws or any presence, Release or
threatened Release of Hazardous Materials; (4) any remedial
action taken by any Loan Party, any Affiliate of any Loan
Party or any other Person in response to any Hazardous
Materials on, under or about the properties or assets of any
Loan Party or any Affiliate of any Loan Party; (5) the
discovery of any occurrence or condition on any real property
adjoining or in the vicinity of any Loan Party or any
Affiliate's business premises that could reasonably be
expected to cause such premises or any part thereof to be
classified as "border-zone property" or to be otherwise
subject to any restrictions on the ownership, occupancy,
transferability or use thereof under any Environmental Laws;
and (6) any notice, claim or request for information from any
federal, state or local governmental authority,
instrumentality or agency, or any other Person, that indicates
such authority, instrumentality, agency or person is claiming
that or investigating whether any Loan Party or any Affiliate
may be potentially responsible for a Release or threatened
Release of Hazardous Materials or for any other violation of
or liability arising under any Environmental Law.
(ii) Provide, at its own expense, copies of
such documents or information as the Agent may reasonably
request in relation to any matters disclosed pursuant to this
Section 9.1(m).
(iii) Comply in all material respects with
all Environmental Laws and establish and maintain policies and
procedures to ensure and monitor continued compliance with all
Environmental Laws; promptly take any and all necessary
investigative, removal and remedial action in connection with
the presence, storage, use, disposal, transportation, Release
or threatened Release of any Hazardous Materials on, under or
about any of the Properties. If any Loan Party or any
Affiliate undertakes any remedial action with respect to any
Hazardous Materials on, under or about business premises, such
Loan Party and such Affiliate shall conduct and complete such
remedial action in compliance with the policies, orders and
directives of any and all applicable federal, state and local
governmental authorities, instrumentalities or agencies except
when and only to the extent that such Loan Party's or such
Affiliate's liability for such presence storage, use,
disposal, transportation or discharge of any Hazardous
Material is contested in a Good Faith Contest, of if such
liability would not have a Material Adverse Effect.
(n) NYSE LISTING. Cause Parent Guarantor's common stock to be
duly listed on the NYSE at all times and timely file all reports
required to be filed with the NYSE.
61
67
(o) NOTIFICATION OF SIGNIFICANT TRANSACTIONS. Promptly notify
the Administrative Agent of the sale(s) or other disposition(s) of
Properties of value aggregating to $25,000,000 or more in any given
Fiscal Year.
(p) SUBSIDIARY GUARANTY.
(i) Cause each Subsidiary which Borrower
elects to become a Subsidiary Guarantor (and is acceptable to
the Administrative Agent) to promptly deliver to the
Administrative Agent a duly executed Subsidiary Guaranty,
together with such opinions, including, without limitation,
opinion of legal counsel, and certificates that the
Administrative Agent may reasonably request.
(ii) Cause each Material Subsidiary (as
defined below) which has incurred, or otherwise holds,
Unsecured Total Funded Debt, to within 15 days of the earlier
of (a) the incurrence of such Unsecured Total Funded Debt and
(b) the date on which such Material Subsidiary becomes a
Material Subsidiary as determined by the Parent Guarantor's
most recent financial statements, deliver to the
Administrative Agent a duly executed Subsidiary Guaranty,
together with such opinions, including, without limitation,
opinion of legal counsel, and certificates that the
Administrative Agent may reasonably request. As used herein
"MATERIAL SUBSIDIARY" shall mean a subsidiary of the Parent
Guarantor that constitutes 10% or more of the Consolidated
Implied Capitalization Value of the Parent Guarantor and its
Subsidiaries, taken as a whole.
(q) YEAR 2000 COMPATIBILITY. Take all action necessary to
ensure that key operational software of the computer based systems of
the Loan Parties and their respective Subsidiaries are able to operate
and effectively process data including dates on and after January 1,
2000. At the request of the Administrative Agent, each Loan Party shall
provide to the Administrative Agent assurance reasonably acceptable to
the Administrative Agent of the Year 2000 compatibility of the Loan
Parties and their respective Subsidiaries.
(r) FURTHER ASSURANCES. Promptly execute and deliver all
further instruments and documents, and take all further action, that
may be necessary or that any Lender through the Administrative Agent
may reasonably request in order to fully give effect to the interests
and properties purported to be covered by the Loan Documents.
SECTION 9.2. NEGATIVE COVENANTS. On and after the Closing Date, and so
long as any Note shall remain unpaid or any Lender shall have any Commitment
hereunder, the Borrower and the Guarantor shall not, and shall not permit any
Subsidiary to, without the written consent of the Majority Lenders:
62
68
(a) LIENS; AGREEMENTS REGARDING LIENS; OTHER MATTERS.
(i) Create, assume, or incur, or permit any
Lien (other than Permitted Liens) upon any of its properties,
assets, income or profits of any character whether now owned
or hereafter acquired if immediately prior to the creation,
assumption or incurring of such Lien, or immediately
thereafter, an Unmatured Default or Event of Default is or
would be in existence;
(ii) Enter into, assume or otherwise be
bound by, or permit any Subsidiary to enter into, assume or
otherwise be bound by, any agreement (other than the Loan
Documents) prohibiting the creation or assumption of any Lien
upon its properties or assets, whether now owned or hereafter
acquired, but only if and to the extent that, if such
agreement was deemed to be a Lien, an Unmatured Default would
exist under Section 9.3 or an Event of Default would exist
under Section 10.1;
(iii) Create or otherwise cause or suffer to
exist or become effective, any consensual encumbrance or
restriction of any kind on the ability of any Subsidiary to:
(a) pay Dividends or make any other distribution on any of
such Subsidiary's capital stock or other equity interests
owned by the Borrower or any other Subsidiary of the Borrower;
(b) pay any Debt owed to the Borrower or any other Subsidiary;
(c) make loans or advances to the Borrower or any other
Subsidiary; or (d) transfer any of its property or assets to
the Borrower or any other Subsidiary;
(iv) Liens existing as of the Closing Date
and set forth in Schedule II;
(v) Liens in favor of the Administrative
Agent for the benefit of the Lenders;
(vi) Liens of any Subsidiary in favor of the
Borrower or any Guarantor; and
(vii) Liens arising in connection with any
Debt permitted hereunder to the extent such Lien will not
result in a violation of any of the other provision of this
Agreement.
(b) DIVIDENDS. Pay Dividends on any class of its capital stock
or equity interests, as applicable, and make any other distribution or
payment on account of or in redemption, retirement or purchase of such
capital stock or equity interest; provided, however, so long as no
Event of Default has occurred and is continuing under Section 10.1(a)
hereof, the Borrower and the Parent Guarantor may each pay Dividends as
long as such Dividends in any Fiscal Year do not exceed 90% of the
Consolidated Funds From Operations of the Parent Guarantor for such
Fiscal Year.
(c) ERISA. (i) Engage in any "prohibited transaction" (as
defined in ERISA or in Section 4975 of the Code); (ii) incur any
"accumulated funding deficiency" (as defined
63
69
in Section 302 of ERISA) whether or not waived; (iii) terminate any
Plan in a manner that could result in the imposition of an Lien on the
Property and assets of any Loan Party or any of their respective
Affiliates pursuant to Section 4068 of ERISA; or (iv) adopt, become a
sponsor of, or contribute to (or have any ERISA Affiliate adopt, become
a sponsor of, or contribute to) any ERISA Plan or ERISA Multiemployer
Plan.
(d) COMPLIANCE WITH ENVIRONMENTAL LAWS. (a) Use any of the
Properties or any portion thereof for the disposal of any Hazardous
Materials; (b) cause or permit to be located on any of the Properties
any underground tank or other underground storage receptacle for
Hazardous Materials (except only any such underground tank or
receptacle as is listed on Schedule VI as of the Closing Date which
shall, in all events, remain in compliance with all applicable
Environmental Laws); (c) handle, process, store or generate any
Hazardous Material on any of the Properties, except as necessary for
the ordinary operation of their respective business and in compliance
with all applicable Environmental Laws; (d) conduct any activity at any
Properties or use any Properties in any manner so as to cause a Release
or threatened Release of Hazardous Materials on, upon or in the
Properties except as may be allowed by any permit issued by an
appropriate Governmental Authority and in compliance with all
applicable Environmental Laws; or (e) otherwise conduct its business
operations in a manner that would result in a violation of any
Environmental Law or bring such Properties into violation of any
Environmental Law which could have a Material Adverse Effect.
(e) NO MERGERS OR CONSOLIDATIONS. Neither the Borrower nor the
Parent Guarantor shall enter into any transaction of merger or
consolidation, or acquisition or disposition of all or substantially
all of the assets of any Person (including, without limitation, the
Borrower or the Parent Guarantor) without the prior written consent of
the Majority Lenders unless (a) (i) the Borrower or the Parent
Guarantor is the surviving entity in the transaction of merger,
acquisition or consolidation, as applicable, (ii) it is the acquisition
of a majority interest of all equity interests in an entity whose sole
asset is a property (or properties) the direct acquisition of which
would not be prohibited under this Agreement, or (iii) the merger or
consolidation is with a wholly-owned subsidiary of the Borrower and the
Parent Guarantor; provided, however, the Borrower or the Parent
Guarantor must be the surviving entity in any merger or consolidation
involving either of them, and (b) both before and after giving effect
to the transaction, there exists no Event of Default or Unmatured
Default.
(f) NO ADDITIONAL RECOURSE DEBT. Incur any Debt secured by a
Lien on any Property pursuant to which any creditor shall have recourse
against the Borrower or the Parent Guarantor, other than Debt incurred
in connection with Bond Financed Properties not to exceed $55,600,000
in the aggregate at any time.
(g) ACCOUNTING CHANGES. Make any change in its accounting
policies or reporting practices except as required or permitted by the
Securities and Exchange Commission, the Financial Accounting Standards
Board or any other generally recognized accounting authority.
(h) TRANSACTIONS WITH AFFILIATES. Not engage in any
transaction with any Affiliate except on terms no less favorable to the
Borrower, the Guarantor or Affiliate, as the
64
70
case may be, than if the transaction had been negotiated in good faith
on an arms-length basis with a non-Affiliate and on commercially
reasonable terms or pursuant to a binding agreement in effect on the
Closing Date (except for construction and management loans with Summit
Management Company and Summit Apartment Builders, Inc.).
SECTION 9.3. FINANCIAL COVENANTS. On and after the Closing Date, so
long as any Note shall remain unpaid or any Lender shall have any Commitment
hereunder, the Borrower and the Parent Guarantor shall, unless the Majority
Lenders shall otherwise consent in writing:
(a) TOTAL FUNDED DEBT TO IMPLIED CAPITALIZATION VALUE.
Maintain at the end of each Fiscal Quarter a ratio of Consolidated
Total Funded Debt of the Parent Guarantor to the Consolidated Implied
Capitalization Value of the Parent Guarantor of less than 0.55:1.0.
(b) FIXED CHARGE COVERAGE. Maintain at the end of each Fiscal
Quarter a ratio of Consolidated EBITDA of the Parent Guarantor to
Consolidated Fixed Charges of the Parent Guarantor of not less than
1.75:1.0 for the four Fiscal Quarter period then ending.
(c) SECURED TOTAL FUNDED DEBT TO IMPLIED CAPITALIZATION VALUE.
Maintain at the end of each Fiscal Quarter a ratio of Consolidated
Secured Total Funded Debt of the Parent Guarantor to Consolidated
Implied Capitalization Value of the Parent Guarantor of not greater
than .40:1.0.
(d) UNENCUMBERED ASSETS. Maintain at end of each Fiscal
Quarter a ratio of Consolidated Unencumbered Asset Value of the
Borrower to Consolidated Unsecured Total Funded Debt of the Borrower of
not less than 1.75:1.0.
(e) UNENCUMBERED ASSETS CASH FLOW COVERAGE. Maintain at the
end of each Fiscal Quarter a ratio of Consolidated Unencumbered Assets
Cash Flow of the Borrower to Consolidated Interest Expense on Unsecured
Total Funded Debt of the Borrower of not less than 2.0:1.0 (provided,
however, that Consolidated Interest Expense shall be calculated for the
four Fiscal Quarter period then ending).
(f) MINIMUM SHAREHOLDERS' EQUITY. Maintain at end of each
Fiscal Quarter a minimum Shareholders' Equity of the Parent Guarantor
equal to the sum of (i) $265,000,000, (ii) 75% of all net proceeds from
future equity offerings by any Loan Party and (iii) 100% of the value
generated by the issuance of operating partnership units by any Loan
Party.
(g) DEVELOPMENT RATIO. Maintain at end of each Fiscal Quarter
a ratio of the Construction in Progress of the Parent Guarantor and its
Subsidiaries to Consolidated Implied Capitalization Value of the Parent
Guarantor of not greater than .25:1.0.
(h) INVESTMENTS. Not permit the aggregate investment of the
Parent Guarantor and its Subsidiaries in non-Multifamily Properties to
exceed 10% of the Parent Guarantor's Consolidated Implied
Capitalization Value, determined as of the end of each Fiscal Quarter.
65
71
SECTION 9.4. REPORTING OBLIGATIONS. So long as any Note shall remain
unpaid or any Lender shall have any Commitment hereunder, the Credit Parties
shall, unless the Majority Lenders shall otherwise consent in writing, furnish
or cause to be furnished to the each Lender (or to the Administrative Agent if
so provided below) the following:
(a) as soon as possible and in any event within five days
after the occurrence of each Event of Default or Known Default
continuing on the date of such statement, a statement of the chief
financial officer of the Borrower setting forth details of such Event
of Default or Known Default and the action which the Borrower proposes
to take with respect thereto;
(b) as soon as available and in any event within forty-five
(45) days after the end of each of the first three Fiscal Quarters of
each Fiscal Year:
(i) a copy of the Parent Guarantor's
Quarterly Report on Form 10-Q submitted to the Securities and
Exchange Commission with respect to such quarter, or, if the
Parent Guarantor ceases to be required to submit such report,
a consolidated balance sheet of the Parent Guarantor and its
Subsidiaries as of the end of such Fiscal Quarter and
consolidated statements of income and retained earnings and of
cash flows of the Parent Guarantor and its Subsidiaries for
the period commencing at the end of the previous Fiscal Year
and ending with the end of such Fiscal Quarter, all in
reasonable detail and duly certified (subject to year-end
audit adjustments) by the Chief Financial Officer of the
Parent Guarantor as having been prepared in accordance with
GAAP consistent with those applied in the preparation of the
financial statements referred to in Section 8.1(k); and
(ii) a consolidated balance sheet of the
Borrower and its Subsidiaries as of the end of such Fiscal
Quarter and the consolidated statements of income and retained
earnings and of cash flows of the Borrower and its
Subsidiaries for the period commencing at the end of the
previous Fiscal Year and ending with the end of such Fiscal
Quarter, all in reasonable detail and duly certified (subject
to year-end adjustments) by the Chief Financial Officer of the
Borrower as having been prepared in accordance with GAAP
consistent with those applied in the preparation of the
financial statements referred to in Section 8.1(k);
(iii) concurrently therewith, a certificate
of the Chief Financial Officer of the Borrower:
(A) stating that no Event of Default or
Known Default has occurred and is
continuing or, if an Event of
Default or Known Default has
occurred and is continuing,
describing the nature thereof and
the action which the Borrower
proposes to take with respect
thereto, and
(B) demonstrating the Borrower's
compliance with Section 9.3(a)
through (h) for and as of the end of
such Fiscal Quarter, in each case
such demonstrations to be reasonably
satisfactory
66
72
(in form) to the Administrative
Agent and to set forth in reasonable
detail the computations used in
determining such compliance (in
substantially the form of Exhibit
9.4A).
(c) as soon as available and in any event within 90 days after
the end of each Fiscal Year:
(i) a copy of the Parent Guarantor's report
on Form 10-K and Annual Report submitted to the Securities and
Exchange Commission with respect to such Fiscal Year, or, if
the Parent Guarantor ceases to be required to submit such
report, a copy of the annual consolidated financial statements
of the Parent Guarantor and its subsidiaries for such year
including therein a consolidated balance sheet as of the end
of such Fiscal Year and consolidated statements of income and
retained earnings and of cash flows of the Parent Guarantor
and its subsidiaries for such Fiscal Year, all in reasonable
detail and together with an unqualified opinion of the
Accountants,
(ii) a copy of the annual consolidated
financial statements of the Borrower and its Subsidiaries for
such Fiscal Year including therein a consolidated balance
sheet as of the end of such Fiscal Year and consolidated
statements of income and retained earnings and of cash flows
of the Borrower and its Subsidiaries for such Fiscal Year, all
in reasonable detail and together with an unqualified opinion
of the Accountants, and
(iii) concurrently with the delivery of the
financial statements described in the foregoing clause (B), a
certificate of the Chief Financial Officer of the Borrower:
(A) to the effect that such financial
statements were prepared in
accordance with GAAP consistent with
those applied in the preparation of
the financial statements referred to
in Sections 8.1(k), and
(B) stating that no Event of Default or
Known Default has occurred and is
continuing, or if an Event of
Default or Known Default has
occurred and is continuing,
describing the nature thereof and
the action which the Borrower
proposes to take with respect
thereto, and
(C) demonstrating the Borrower's
compliance with Section 9.3(a)
through (h) hereof, for and as of
the end of such Fiscal Year, in each
case such demonstrations to be
reasonably satisfactory (in form) to
the Administrative Agent and to set
forth in reasonable detail the
computations used in determining
such compliance;
67
73
(d) as soon as possible and in any event (A) within 30 days
after the Borrower knows or has reason to know that any ERISA Plan
Termination Event described in clause (i) of the definition of ERISA
Plan Termination Event with respect to any ERISA Plan or ERISA
Multiemployer Plan has occurred and (B) within 10 days after the
Borrower knows or has reason to know that any other ERISA Plan
Termination Event with respect to any ERISA Plan or ERISA Multiemployer
Plan has occurred, a statement of the Chief Financial Officer, of the
Borrower describing such ERISA Plan Termination Event and the action,
if any, which the Borrower proposes to take with respect thereto;
(e) promptly after receipt thereof by the Parent Guarantor or
any of its ERISA Affiliates from the PBGC, copies of each notice
received by the Parent Guarantor or any such ERISA Affiliate of the
PBGC's intention to terminate any ERISA Plan or ERISA Multiemployer
Plan or to have a trustee appointed to administer any ERISA Plan or
ERISA Multiemployer Plan;
(f) promptly after receipt thereof by the Parent Guarantor or
any of its ERISA Affiliates from an ERISA Multiemployer Plan sponsor, a
copy of each notice received by the Parent Guarantor or any of its
ERISA Affiliates concerning the imposition or amount of withdrawal
liability in an aggregate principal amount of at least $1,000,000
pursuant to Section 4202 of ERISA in respect of which the Parent
Guarantor may be liable;
(g) promptly after the filing thereof, copies of each
prospectus (excluding any prospectus contained in any Form S-8) and
final Current Report on Form 8-K, if any, which the Parent Guarantor
files with, the Securities and Exchange Commission or any governmental
authority which may be substituted therefor;
(h) Within forty-five (45) days after the end of each Fiscal
Quarter, a list of all Eligible Stabilized Unencumbered Properties as
of the end of such Fiscal Quarter, which list shall include on a
property by property basis: the respective apartment project name and
location; average rent per occupied apartment for such Fiscal Quarter;
average physical occupancy for such Fiscal Quarter; and Net Operating
Income for such Fiscal Quarter.
(i) As soon as available and in any event no later than 10
days before the end of any Fiscal Year, (i) the Borrower's three-year
business plan for the next three Fiscal Years and (ii) forecasts
prepared by management of the Borrower, in form satisfactory to the
Lenders, of balance sheets, income statements and cash flow statements
on a quarterly basis for the next three Fiscal Years following such
Fiscal Year.
(j) NOTICES. Each Loan Party shall promptly upon becoming
aware of the occurrence of any Event of Default notify the
Administrative Agent thereof in writing. Each Loan Party shall also
promptly advise the Administrative Agent of:
(i) any labor controversy resulting in or threatening
to result in a strike or work stoppage against the Borrower or
its Affiliates;
(ii) any change of Accountants together with the name
of the new accountants; or
68
74
(iii) any other matter which has resulted or may have
a Material Adverse Effect.
(k) LITIGATION. Each Loan Party shall promptly inform the
Administrative Agent in writing of any action, suit, or proceeding by
or before any federal, state or local governmental instrumentality,
body or agency, or arbitration or alternate dispute resolution
proceeding, which might have a Material Adverse Effect.
(l) REIT. Promptly after receipt or distribution, copies of
all material correspondence to or from the IRS relating to the Parent
Guarantor's status as a REIT;
(m) SUBSIDIARIES. Promptly after the formation of any
Subsidiary or any Unconsolidated Joint Venture, the information with
respect to such Subsidiary and/or Unconsolidated Joint Venture set
forth in Section 8.1(f).
(n) ADDITIONAL INFORMATION. Promptly after requested, such
other information respecting the financial condition, operations,
properties, prospects or otherwise, of any of the Loan Parties or their
respective Affiliates as the Administrative Agent or the Majority
Lenders through the Administrative Agent may from time to time
reasonably request in writing.
ARTICLE X
DEFAULTS
SECTION 10.1. EVENTS OF DEFAULT. The following events shall each
constitute an "Event of Default", if the same shall occur and be continuing
after the grace period and notice requirement (if any) applicable thereto:
(a) The Borrower shall fail to pay any principal of any
Advance when due or shall fail to pay any interest thereon or fees
within three days after the same becomes due or any Loan Party shall
fail to make any other payment under any Loan Document, within three
days after the same becomes due; or
(b) Subject to the last grammatical paragraph of Article VIII,
any representation or warranty made by any Loan Party (or any of its
officers or agents) under or in connection with any Loan Document, any
certificate or other writing delivered pursuant hereto or thereto shall
prove to have been incorrect in any material respect when made or
deemed made; or
(c) Any Loan Party shall fail to perform or observe any term
or covenant on its part to be performed or observed contained in
Sections 9.1(c), 9.1(i), Section 9.2(a), (b), (c), (e) and (f), Section
9.3 or Section 9.4(a) hereof; or
(d) Any Loan Party shall fail to perform or observe any other
term or covenant on its part to be performed or observed contained in
this Agreement or any other Loan Document and if such failure is
curable, any such failure shall remain unremedied for a
69
75
period of 30 days (or 60 days, if such Loan Party shall diligently and
continuously and in good faith attempt to remedy such failure) after
the earlier of (i) written notice of such failure having been given to
the Borrower by the Administrative Agent or (ii) the Borrower having
obtained actual knowledge of such failure; or
(e) Any Loan Party or any Subsidiary of any Loan Party shall
fail to pay any of its Debt when due (including any interest or premium
thereon but excluding Debt evidenced by its respective Notes and
excluding other Debt aggregating in no event more than $5,000,000 in
principal amount at any one time) whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise, and such
failure shall continue after the applicable grace period, if any,
specified in any agreement or instrument relating to such Debt; or any
other default under any agreement or instrument relating to any such
Debt, or any other event, shall occur and shall continue after the
applicable grace period, if any, specified in such agreement or
instrument, if the effect of such default or event is to accelerate, or
to permit the acceleration of, the maturity of such Debt; or any such
Debt shall be declared to be due and payable, or required to be prepaid
(other than by a regularly scheduled required prepayment or as a result
of any Loan Party's or Subsidiary's exercise of a prepayment option)
prior to the stated maturity thereof; or
(f) Any Loan Party, Material Subsidiary, Subsidiary Guarantor
or other Subsidiary of any Loan Party (but with respect to such other
Subsidiaries only, if the same would have a Material Adverse Effect)
shall generally not pay its debts as such debts become due, or shall
admit in writing its inability to pay its debts generally, or shall
make an assignment for the benefit of creditors; or any proceeding
shall be instituted by or against any Loan Party, Material Subsidiary,
Subsidiary Guarantor or other Subsidiary of any Loan Party (but with
respect to such other Subsidiaries only, if the same would have a
Material Adverse Effect) seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of its
debts under any law relating to bankruptcy, insolvency, or
reorganization or relief of debtors, or seeking the entry of an order
for relief or the appointment of a receiver, trustee, or other similar
official for it or for any substantial part of its property and, in the
case of a proceeding instituted against any Loan Party, Material
Subsidiary, Subsidiary Guarantor or other Subsidiary of any Loan Party
(but with respect to such other Subsidiaries only, if the same would
have a Material Adverse Effect) either such Loan Party, Material
Subsidiary, Subsidiary Guarantor or other Subsidiary (but with respect
to such other Subsidiaries only, if the same would have a Material
Adverse Effect) shall consent thereto or such proceeding shall remain
undismissed or unstayed for a period of 90 days or any of the actions
sought in such proceeding (including without limitation the entry of an
order for relief against such Loan Party, Material Subsidiary,
Subsidiary Guarantor or other Subsidiary or the appointment of a
receiver, trustee, custodian or other similar official for such Loan
Party, Material Subsidiary, Subsidiary Guarantor or other Subsidiary
(but with respect to such other Subsidiaries only, if the same would
have a Material Adverse Effect) or any of its property) shall occur; or
such Loan Party, Material Subsidiary, Subsidiary Guarantor or other
Subsidiary (but with respect to such other Subsidiaries only, if the
same would have a Material Adverse Effect) shall take any corporate or
other action to authorize any of the actions set forth above in this
subsection (f); or
70
76
(g) Any judgments or orders for the payment of money in excess
of $5,000,000 (or aggregating more than $5,000,000 at any one time)
shall be rendered against any Loan Party or its properties, or any
Subsidiary of any Loan Party or its properties, and either (A)
enforcement proceedings shall have been commenced by any creditor upon
such judgment or order and shall not have been stayed or (B) there
shall be any period of 30 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or
(h) The Parent Guarantor shall cease to the sole managing
general partner of the Borrower; or
(i) Any material provision of any Loan Document of any Loan
Party shall at any time for any reason cease to be valid and binding on
any Loan Party, or shall be determined to be invalid or unenforceable
by any court, governmental agency or authority having jurisdiction over
any Loan Party, or any Loan Party shall deny that it has any further
liability or obligation under any Loan Document; or
(j) Any Loan Party shall fail to pay when due an amount or
amounts aggregating in excess of $1,000,000 that it shall have become
liable to pay to the PBGC or to a plan under Title IV of ERISA; intent
to terminate a plan or plans shall be filed under Title IV of ERISA by
Any Loan Party, any member of the Controlled Group, any plan
administrator or any combination of the foregoing; the PBGC shall
institute proceedings under Title IV of ERISA to terminate or to cause
a trustee to be appointed to administer any such plan or plans; a
proceeding shall be instituted by a fiduciary of any such plan or plans
against Any Loan Party and such proceedings shall not have been
dismissed within thirty (30) days thereafter; or a condition shall
exist by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any such plan or plans must be terminated.
SECTION 10.2. REMEDIES UPON EVENTS OF DEFAULT. Upon the occurrence and
during the continuance of any Event of Default then, and in any such event, the
Administrative Agent shall at the request, or may with the consent, of the
Lenders entitled to make such request, upon notice to the Borrower (a) declare
the obligation of each Lender to make Advances, or to issue Letters of Credit,
to the Borrower to be terminated, whereupon such obligation of each Lender shall
forthwith terminate, provided, that any such request or consent pursuant to this
clause (i) shall be made solely by Lenders having Percentages in the aggregate
of not less than 66-2/3%; and (b) declare the Notes of the Borrower, all
interest thereon and all other amounts payable by the Borrower under this
Agreement and the other Loan Documents to be forthwith due and payable,
whereupon such Notes, all such interest and all such amounts shall become and be
forthwith due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by each Borrower,
provided, that any such request or consent pursuant to this clause (ii) shall be
made solely by the Lenders having Percentages in the aggregate of at least
66-2/3% of the then aggregate unpaid principal amount of the Advances owing to
such Borrower; and provided further, however, that in the event of an actual or
deemed entry of an order for relief with respect to the Borrower under the
Federal Bankruptcy Code, (A) the obligation of each Lender to make Advances, or
to issue Letters of Credit to the Borrower shall automatically be terminated and
(B) the Notes of such Borrower, all such interest and all such amounts shall
automatically become and be due and
71
77
payable, without presentment, demand, protest or any notice of any kind, all of
which are hereby expressly waived by each Borrower.
SECTION 10.3. ACTIONS IN RESPECT OF THE LETTERS OF CREDIT UPON DEFAULT.
If any Event of Default shall have occurred and be continuing, the
Administrative Agent may, irrespective of whether it is taking any of the
actions described in Section 10.2 or otherwise, make demand upon the Borrower
to, and forthwith upon such demand the Borrower will, pay to the Administrative
Agent on behalf of the Lenders in same day funds at the Administrative Agent's
office designated in such demand, for deposit in the L/C Cash Collateral
Account, an amount equal to the aggregate Available Amount of all Letters of
Credit then outstanding. If at any time the Administrative Agent determines that
any funds held in the L/C Cash Collateral Account are subject to any right or
claim of any Person other than the Administrative Agent and the Lenders or that
the total amount of such funds is less than the aggregate Available Amount of
all Letters of Credit, the Borrower will, forthwith upon demand by the
Administrative Agent, pay to the Administrative Agent, as additional funds to be
deposited and held in the L/C Cash Collateral Account, an amount equal to the
excess of (a) such aggregate Available Amount over (b) the total amount of
funds, if any, then held in the L/C Cash Collateral Account that the
Administrative Agent determines to be free and clear of any such right and
claim.
ARTICLE XI
THE AGENT
SECTION 11.1. AUTHORIZATION AND ACTION. Each Lender hereby appoints and
authorizes the Administrative Agent to take such action as agent on its behalf
and to exercise such powers under this Agreement as are delegated to the
Administrative Agent by the terms hereof, together with such powers as are
reasonably incidental thereto. As to any matters not expressly provided for by
the Loan Documents (including, without limitation, enforcement or collection
thereof), the Administrative Agent shall not be required to exercise any
discretion or take any action, but shall be required to act or to refrain from
acting (and shall be fully protected in so acting or refraining from acting)
upon the instructions of the Majority Lenders, and such instructions shall be
binding upon all Lenders; provided, however, that the Administrative Agent shall
not be required to take any action which exposes the Administrative Agent to
personal liability or which is contrary to this Agreement or applicable law. The
Administrative Agent agrees to deliver promptly to each Lender notice of each
notice given to it by the Borrower pursuant to the terms of this Agreement.
SECTION 11.2. ADMINISTRATIVE AGENT'S RELIANCE, ETC. Neither the
Administrative Agent nor any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with any Loan Document, except for its or their own gross
negligence or wilful misconduct. Without limitation of the generality of the
foregoing, the Administrative Agent: (a) may treat the payee of any Note as the
holder thereof until the Administrative Agent receives and accepts a Lender
Assignment entered into by the Lender which is the payee of such Note, as
assignor, and an assignee, as provided in Section 12.7; (b) may consult with
legal counsel (including counsel for the Borrower), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (c) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for the
Information
72
78
Memorandum or any other statements, warranties or representations made in or in
connection with any Loan Document; (d) shall not have any duty to ascertain or
to inquire as to the performance or observance of any of the terms, covenants or
conditions of any Loan Document on the part of the Borrower to be performed or
observed, or to inspect any property (including the books and records) of the
Borrower; (e) shall not be responsible to any Lender for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of any
Loan Document or any other instrument or document furnished pursuant hereto; and
(f) shall incur no liability under or in respect of any Loan Document by acting
upon any notice, consent, certificate or other instrument or writing (which may
be by telegram, cable or telex) believed by it to be genuine and signed or sent
by the proper party or parties.
SECTION 11.3. FUNB AND AFFILIATES. With respect to its Commitment and
the Note issued to it, FUNB shall have the same rights and powers under the Loan
Documents as any other Lender and may exercise the same as though FUNB were not
the Administrative Agent and the term "Lender" or "Lenders" shall, unless
otherwise expressly indicated, include FUNB in its individual capacity. FUNB and
its Affiliates may accept deposits from, lend money to, act as trustee under
indentures of, and generally engage in any kind of business with, any Loan
Party, any of their respective subsidiaries and any Person who may do business
with or own securities of any Loan Party or any such subsidiary, all as if FUNB
were not the Administrative Agent and without any duty to account therefor to
the Lenders.
SECTION 11.4. LENDER CREDIT DECISION. Each Lender acknowledges that it
has, independently and without reliance upon the Administrative Agent or any
other Lender and based on the Information Memorandum and other financial
information referred to in Sections 8.1(k) and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and the other Loan Documents. Each Lender
also acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement or the
other Loan Documents.
SECTION 11.5. INDEMNIFICATION. The Lenders agree to indemnify the
Administrative Agent (to the extent not reimbursed by the Borrower), ratably
according to the respective percentages, (if any Notes or Commitments are held
by any Borrower or Affiliates thereof, any ratable apportionment hereunder shall
exclude the principal amount of the Notes held by, and Available Amount of any
Letter of Credit issued by, the Borrower or Affiliates of the Borrower or their
respective Commitments (if any) hereunder), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against the Administrative Agent in its
capacity as such in any way relating to or arising out of any Loan Document or
any action taken or omitted by the Administrative Agent in its capacity as such
under any Loan Document, provided that no Lender shall be liable for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the
Administrative Agent's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender agrees to reimburse the Administrative
Agent promptly upon demand for such Lender's ratable share of any out-of-pocket
expenses (including counsel fees) incurred by the Administrative Agent in
connection with the preparation, execution, delivery, administration,
modification,
73
79
amendment or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities under,
the Loan Documents to the extent that the Administrative Agent is entitled to
reimbursement for such expenses pursuant to Section 12.4 but is not reimbursed
for such expenses by the Borrower.
SECTION 11.6. SUCCESSOR ADMINISTRATIVE AGENT.
(a) The Administrative Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower, with any such
resignation to become effective only upon the appointment of a
successor Administrative Agent pursuant to this Section 11.6. Upon any
such resignation, the Majority Lenders shall have the right to appoint
a successor Administrative Agent, which shall be a Lender or another
commercial bank or trust company reasonably acceptable to the Borrower
organized or licensed under the laws of the United States, or of any
State thereof. If no successor Administrative Agent shall have been so
appointed by the Majority Lenders and accepted by the Borrower, and
shall have accepted such appointment, within 30 days after the retiring
Administrative Agent's giving of notice of resignation, then the
retiring Administrative Agent may, on behalf of the Lenders, appoint a
successor Administrative Agent, which shall be a Lender or shall be
another commercial bank or trust company organized or licensed under
the laws of the United States or of any State thereof reasonably
acceptable to the Borrower. In addition to the foregoing right of the
Administrative Agent to resign, the Majority Lenders may remove the
Administrative Agent at any time, with cause, concurrently with the
appointment by the Majority Lenders of a successor Administrative
Agent. Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent and the execution and
delivery by the Borrower and the successor Administrative Agent of an
agreement relating to the fees to be paid to the successor
Administrative Agent under Section 6.3(b) hereof in connection with its
acting as Administrative Agent hereunder, such successor Administrative
Agent shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Administrative Agent, and
the retiring Administrative Agent shall be discharged from its duties
and obligations under this Agreement and the other Loan Documents.
After any retiring Administrative Agent's resignation or removal
hereunder as Administrative Agent, the provisions of this Article XI
shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Administrative Agent under the Loan Documents.
(b) In the event FUNB shall fail to hold directly (not subject
to any participations) a Commitment (or if the Commitments shall have
been terminated, Advances) in an amount equal to or in excess of each
other Lender, then, if no Event of Default has occurred and is
continuing, the Borrower may request FUNB to (and FUNB shall) resign as
Administrative Agent in accordance with subsection (a) above.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1. AMENDMENTS, ETC. No amendment or waiver of any provision
of any Loan Document, nor consent to any departure by the Borrower therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Majority Lenders, and then such waiver or
74
80
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no amendment, waiver or consent
shall, unless in writing and signed by all the Lenders, do any of the following:
(a) waive, modify or eliminate any of the conditions specified in Article VII,
(b) increase the Commitment of any Lender hereunder or increase the Commitments
of the Lenders that may be maintained hereunder or subject the Lenders to any
additional obligations; provided, however, the Commitments of the Lenders may be
increased to $200,000,000 with the consent of the Administrative Agent and the
Borrower and without the consent of the Lenders in accordance with Section
2.1(d); provided, however, no Lender shall be required to increase its
Commitment (c) reduce the principal of, or interest on, the Notes, any
Applicable Margin or any fees or other amounts payable hereunder (other than
fees payable to the Administrative Agent pursuant to Section 6.3 hereof), (d)
postpone any date fixed for any payment of principal of, or interest on, the
Notes or any fees or other amounts payable under the Loan Documents (other than
fees payable to the Administrative Agent pursuant to Section 6.3 hereof), (e)
except as a result of an increase in the Commitments as provided in Section
2.1(d), change the percentage of the Commitments or of the aggregate unpaid
principal amount of the Notes, or the number of Lenders which shall be required
for the Lenders or any of them to take any action under the Loan Documents, (f)
amend any Loan Document in a manner intended to prefer one or more Lenders over
any other Lenders, (g) release any Subsidiary Guaranty except as provided for in
Section 12.13 or the guaranty of the Parent Guarantor under Article V hereof or
(h) amend this Section 12.1; and provided, further, that no amendment, waiver or
consent shall, unless in writing and signed by the Administrative Agent in
addition to the Lenders required above to take such action, affect the rights or
duties of the Administrative Agent under any Loan Document.
SECTION 12.2. NOTICES, ETC. Except as otherwise expressly provided
herein, all notices and other communications provided for under the Loan
Documents shall be in writing (including telecopy or telex communication) and
mailed, telecopied or hand delivered:
(a) If to the Borrower or the Parent Guarantor:
Summit Properties Partnership, L.P.
c/o Summit Properties, Inc.
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Senior Vice President
& General Counsel
with a copy to:
▇▇▇▇▇▇▇, Procter & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
(b) If to FUNB:
75
81
First Union National Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Managing Director
with a copy to:
Parker, Poe, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
(c) If to Administrative Agent:
First Union Capital Markets Group
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇-▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
(d) if to any Bank, at its Lending Office specified opposite
its name on Schedule I hereto; and
(e) if to any Lender other than a Bank, at its Lending Office
specified in the Lender Assignment pursuant to which it became a
Lender.
or, as to each party, at such other address as shall be designated by such party
in a written notice to the other parties. All such notices and communications
shall, when mailed, telecopied, telexed or hand delivered, be effective five
days after when deposited in the mails, or when telecopied, or when confirmed by
telex answerback, or when delivered, respectively. With respect to any telephone
notice given or received by the Administrative Agent pursuant to Section 3.3
hereof, the records of the Administrative Agent shall be conclusive for all
purposes.
SECTION 12.3. NO WAIVER OF REMEDIES. No failure on the part of any
Lender to exercise, and no delay in exercising, any right under any Loan
Document shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 12.4. COSTS, EXPENSES AND INDEMNIFICATION.
76
82
(a) The Borrower agrees to pay in accordance with the terms
hereof: (i) on the Closing Date, all costs and expenses of the
Administrative Agent in connection with the preparation, negotiation,
execution and delivery of the Loan Documents, (ii) within five days
after notification that the same is due, all costs and expenses of the
Administrative Agent relating to the administration of the Loan
Documents, and any proposed modification, amendment, or consent
relating thereto (including, in each case, the reasonable fees and
expenses of counsel to the Administrative Agent), or (iii) any
Subsidiary Guaranty delivered to the Lenders in accordance with Section
9.1(p) or release thereof in accordance with Section 12.13, and (iv)
upon notification that the same is due, all costs and expenses of the
Administrative Agent and each Lender (including all fees and expenses
of counsel for the Lender) in connection with the enforcement, whether
through negotiations, legal proceedings or otherwise, of the Loan
Documents.
(b) The Borrower hereby agrees to indemnify and hold the
Administrative Agent and each Lender and its officers, directors,
employees, professional advisors and affiliates (each, an "INDEMNIFIED
PERSON") harmless from and against any and all claims, damages, losses,
liabilities, costs or expenses (including reasonable attorney's fees
and expenses, whether or not such Indemnified Person is named as a
party to any proceeding or investigation or is otherwise subjected to
judicial or legal process arising from any such proceeding or
investigation) which any of them may incur or which may be claimed
against any of them by any person or entity (except to the extent such
claims, damages, losses, liabilities, costs or expenses arise from the
gross negligence or willful misconduct of the Indemnified Person):
(i) by reason of or in connection with the
execution, delivery or performance of the Loan Documents or
any transaction contemplated thereby, or the use by the
Borrower of the proceeds of any Advance or Letter of Credit;
(ii) in connection with or resulting from
any actual or alleged violation of or liability arising in any
manner under any Environmental Law, and related in any manner,
directly or indirectly, to the Loan Parties, any of the
Affiliates, the Properties or the transactions contemplated by
this Agreement, including without limitation the utilization,
storage, disposal, treatment, generation, transportation,
release or ownership of any Hazardous Substance (1) at, upon
or under any property of the Borrower or any of its Affiliates
or (2) by or on behalf of the Borrower or any of its
Affiliates at any time and in any place; or
(iii) in connection with any documentary taxes,
assessments or charges made by any governmental authority by
reason of the execution and delivery of the Loan Documents.
(c) The Borrower's obligations under this Section 12.4 shall
survive the assignment by any Lender pursuant to Section 12.7 hereof
and shall survive as well the repayment of all amounts owing to the
Lenders under the Loan Documents and the termination of the
Commitments. If and to the extent that the obligations of the Borrower
under this Section 12.4 are unenforceable for any reason, the Borrower
agrees to make the
77
83
maximum contribution to the payment and satisfaction thereof which is
permissible under applicable law.
SECTION 12.5. RIGHT OF SET-OFF.
(a) Upon (i) the occurrence and during the continuance of any
Event of Default with respect to the Borrower, and (ii) the making of
the request or the granting of the consent specified by Section 10.2 to
authorize the Administrative Agent to declare the Notes and Advances
due and payable pursuant to the provisions of Section 10.2, each Lender
is hereby authorized at any time and from time to time, to the fullest
extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Lender to or for
the credit or the account of the Borrower against any and all of the
obligations of the Borrower now or hereafter existing under the Loan
Documents held by such Lender, irrespective of whether or not such
Lender shall have made any demand under the Loan Documents or such
Notes and although such obligations may be unmatured. Each Lender
agrees promptly to notify the Borrower after any such set-off and
application made by such Lender, provided that the failure to give such
notice shall not affect the validity of such set-off and application.
The rights of each Lender under this Section are in addition to other
rights and remedies (including, without limitation, other rights of
set-off) which such Lender may have.
(b) The Borrower and the Parent Guarantor each agrees that it
shall have no right of off-set, deduction or counterclaim in respect of
its obligations under the Loan Documents, and that the obligations of
the Lenders hereunder are several and not joint. Nothing contained
herein shall constitute a relinquishment or waiver of the Borrower's or
Parent Guarantor's rights to any independent claim that the Borrower or
the Parent Guarantor may have against the Administrative Agent or any
Lender, but no Lender (in its capacity as a Lender) shall be liable for
the conduct of the Administrative Agent or any other Lender, and the
Administrative Agent shall not be liable for the conduct of any Lender.
SECTION 12.6. BINDING EFFECT. This Agreement shall become effective
when it shall have been executed by each Loan Party, the Administrative Agent
and when the Administrative Agent shall have been notified by each Bank that
such Bank has executed it and thereafter shall be binding upon and inure to the
benefit of the Borrower, the Parent Guarantor, the Administrative Agent and each
Lender and their respective permitted successors and assigns, except that the
Borrower shall not have the right to assign its rights under the Loan Documents
or any interest herein without the prior written consent of the Lenders.
SECTION 12.7. ASSIGNMENTS AND PARTICIPATION.
(a) Each Lender may assign to one or more banks or other
entities all or a portion of its rights and obligations under the Loan
Documents, including, without limitation, all or a portion of its
Commitment, the Advances owing to it and the Note or Notes held by it
(with the prior written consent of the Borrower if the assignee
thereunder is not then a Lender or an Affiliate of a Lender, which
consent shall not be unreasonably withheld or delayed if such an
assignee is an Eligible Assignee); provided, however, that each such
assignment shall be of a constant, and not a varying, percentage of all
of the assigning Lender's rights and
78
84
obligations under the Loan Documents, if the assignee thereunder is not
then a Lender or an Affiliate of a Lender, the amount of the
Commitment, Advance or Note being assigned pursuant to each such
assignment shall in no event be less than the lesser of (i) the amount
of the assigning Lender's Commitment, and (ii) $10,000,000 and integral
multiples of $5,000,000 in excess thereof, and the parties to each such
assignment shall execute and deliver to the Administrative Agent, for
its acceptance and recording in the Register, an assignment and
acceptance in substantially the form of Exhibit 12.7 hereto (the
"LENDER ASSIGNMENT"), together with any Note or Notes subject to such
assignment and a processing and recordation fee of $3,000. Upon such
execution, delivery, acceptance and recording, from and after the
effective date specified in each Lender Assignment (which date shall
not be prior to the acceptance (if required) by the Borrower of such
Lender), which effective date shall be at least five Business Days
after the execution thereof, (x) the assignee thereunder shall be a
party hereto and, to the extent that rights and obligations under the
Loan Documents have been assigned to it pursuant to such Lender
Assignment, have the rights and obligations of a Lender under the Loan
Documents and (y) the Lender assignor thereunder shall, to the extent
that rights and obligations under the Loan Documents have been assigned
by it to an assignee pursuant to such Lender Assignment, relinquish its
rights and be released from its obligations under this Agreement (and,
in the case of a Lender Assignment covering all or the remaining
portion of an assigning Lender's rights and obligations under the Loan
Documents, such Lender shall cease to be a party hereto); provided,
however, (i) if an Event of Default shall have occurred and be
continuing a Lender may assign all or a portion of its rights and
obligations without the prior written consent of the Borrower but
otherwise in accordance with this Section and (ii) any Designated
Lender may assign all or a portion of its Competitive Advance to the
applicable Designating Lender without the consent of the Borrower or
the Administrative Agent. Notwithstanding anything to the contrary set
forth above, a Designated Lender may not assign its Competitive Advance
to any Person other than to its Designating Lender.
(b) By executing and delivering a Lender Assignment, the
Lender assignor thereunder and the assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (i)
other than as provided in such Lender Assignment, such assigning Lender
makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with the Loan Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Loan
Documents or any other instrument or document furnished pursuant
thereto; (ii) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition
of the Borrower or the performance or observance by the Borrower of any
of its obligations under the Loan Documents or any other instrument or
document furnished pursuant thereto; (iii) such assignee confirms that
it has received a copy of the Loan Documents, together with copies of
the financial statements referred to in Section 8.1(k) and such other
documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Lender Assignment; (iv)
such assignee will, independently and without reliance upon the
Administrative Agent, such assigning Lender or any other Lender and
based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or not
taking action under the Loan Documents; (v) such assignee appoints and
authorizes the Administrative Agent to take such action as agent on its
behalf
79
85
and to exercise such powers under the Loan Documents as are delegated
to the Administrative Agent by the terms thereof, together with such
powers as are reasonably incidental thereto; and (vi) such assignee
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender.
(c) The Administrative Agent shall maintain at its address
referred to in Section 12.2 a copy of each Lender Assignment delivered
to and accepted by it and a register for the recordation of the names
and addresses of the Lenders and the Commitment of, and principal
amount of the Advances owing to, and the Available Amount of each
Letter of Credit issued by, each Lender from time to time (the
"REGISTER"). The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and the Borrower, the
Administrative Agent and the Lenders may treat each Person whose name
is recorded in the Register as a Lender hereunder for all purposes of
this Agreement. The Register shall be available for inspection by the
Borrower or any Lender at any reasonable time and from time to time
upon reasonable prior notice.
(d) Upon its receipt of a Lender Assignment executed by an
assigning Lender and an assignee and the acceptance thereof (if
required) by the Borrower, together with any Note or Notes subject to
such assignment, the Administrative Agent shall, if such Lender
Assignment has been completed and is in substantially the form of
Exhibit 12.7 hereto, (i) accept such Lender Assignment, (ii) record the
information contained therein in the Register and (iii) give prompt
notice thereof to the Borrower. Within five Business Days after its
receipt of such notice, the Borrower, at its own expense, shall execute
and deliver to the Administrative Agent in exchange for the surrendered
Note or Notes a new Note or Notes to the order of such assignee in an
amount equal to the Commitment assumed by it pursuant to such Lender
Assignment and, if the assigning Lender has retained a Commitment
hereunder, a new Note or Notes to the order of the assigning Lender in
an amount equal to the Commitment retained by it hereunder. Such new
Note or Notes shall be in an aggregate principal amount equal to the
aggregate principal amount of such surrendered Note or Notes of the
Borrower, shall be dated the effective date of such Lender Assignment
and shall otherwise be in substantially the form of Exhibit 1.1A or
Exhibit 1.1B hereto, as the case may be.
(e) Each Lender may sell participations to one or more banks
or other entities in or to all or a portion of its rights and
obligations under the Loan Documents (including, without limitation,
all or a portion of its Commitment, the Advances owing to it and the
Note or Notes held by it); provided, however, that (i) such Lender's
obligations under this Agreement (including, without limitation, its
Commitment hereunder) and the other Loan Documents shall remain
unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii)
such Lender shall remain the holder of any such Note for all purposes
of this Agreement, (iv) the Borrower, the Administrative Agent and the
other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under
the Loan Documents, and (v) the holder of any such participation, other
than an Affiliate of such Lender, shall not be entitled to require such
Lender to take or omit to take any action under the Loan Documents,
except action (vi) reducing the principal of, or interest on, the
Notes,
80
86
any Applicable Margin or any fees or other amounts payable under the
Loan Documents (other than fees payable to the Administrative Agent
pursuant to Section 6.3 hereof), (vii) release any Guaranty except as
provided for in Section 12.13 hereof, or (viii) postponing any date
fixed for any payment of principal of, or interest on, the Notes or any
fees or other amounts payable under the Loan Documents (other than fees
payable pursuant to Section 6.3(b) hereof). Notwithstanding anything to
the contrary set forth on this subsection (e), each Lender must hold
directly for its own account, not subject to any participations,
Commitments of at least $10,000,000.
(f) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this
Section 12.7, disclose to the assignee or participant or proposed
assignee or participant, any information relating to the Borrower
furnished to such Lender by or on behalf of the Borrower; provided
that, prior to any such disclosure, the assignee or participant or
proposed assignee or participant shall agree, in accordance with the
terms of Section 12.8, to preserve the confidentiality of any
Confidential Information received by it from such Lender.
(g) Anything in this Section 12.7 to the contrary
notwithstanding, any Lender may assign and pledge all or any portion of
its Commitment and the Advances owing to it to any Federal Reserve Bank
(and its transferees) 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. No such
assignment shall release the assigning Lender from its obligations
hereunder.
(h) Each Lender (other than the Designated Lenders) may
designate one or more Designated Lenders to fund Competitive Advances
which such Lender is required to fund pursuant to Section 3.3 hereof.
The parties to each such designation shall execute and deliver to the
Administrative Agent, for its acceptance, a Designation Agreement. Upon
its receipt of an appropriately completed Designation Agreement
executed by the designating Lender (a "DESIGNATING LENDER") and a
designee representing that it is a Designated Lender, the
Administrative Agent will accept such Designation Agreement and give
prompt notice thereof to the Borrower, whereupon, from and after the
effective date specified in the Designation Agreement, the Designated
Lender shall become a party to this Agreement with a right to make
Competitive Advances on behalf of the Lender which made such
designation pursuant to Section 3.3 after the Borrower has accepted a
Competitive Bid (or a portion thereof) of the Designating Lender. Each
Designating Lender shall serve as the agent (in its capacity as a
Designating Lender) of the Designated Lender and shall on behalf of the
Designated Lender give and receive all communications and notices and
take all actions hereunder, including without limitation, votes,
approvals, waivers, consents and amendments under or relating to this
Agreement or the other Loan Documents. Any such notice, communication,
vote approval, waiver, consent or amendment shall be signed by the
Designating Lender, as agent for the Designated Lender and shall not be
signed by the Designated Lender. The Borrower, the Administrative Agent
and the Lenders may rely thereon without any requirement that the
Designated Lender sign or acknowledge the same. Notwithstanding
anything to the contrary set forth below, a Lender shall not be a
Designated Lender.
81
87
(i) Neither the Borrower nor the Administrative Agent shall
institute or join any other Person in instituting against any
Designated Lender any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceeding, or other proceeding under any
federal or state bankruptcy or similar law, for one year and a day
after the Termination Date.
SECTION 12.8. CONFIDENTIALITY. In connection with the negotiation and
administration of the Loan Documents, the Borrower has furnished or caused to be
furnished and will from time to time furnish or cause to be furnished to the
Administrative Agent and the Lenders (each, a "RECIPIENT") written information
which when delivered to the Recipient will be deemed to be confidential (such
information, other than any such information which (i) was publicly available,
or otherwise known to the Recipient (and not also subject to a confidentiality
agreement) at the time of disclosure, (ii) subsequently becomes publicly
available other than through any act or omission by the Recipient or (iii)
otherwise subsequently becomes known to the Recipient other than through a
Person whom the Recipient knows to be acting in violation of his or its
obligations to the Borrower, being hereinafter referred to as "CONFIDENTIAL
INFORMATION"). The Recipient will not knowingly disclose any such Confidential
Information to any third party (other than to those persons who have a
confidential relationship with the Recipient), and will take all reasonable
steps to restrict access to such information in a manner designed to maintain
the confidential nature of such information, in each case until such time as the
same ceases to be Confidential Information or as the Borrower may otherwise
instruct. It is understood, however, that the foregoing will not restrict the
Recipient's ability to freely exchange such Confidential Information with its
Designated Lender, prospective participants in or assignees of the Recipient's
position herein, but the Recipient's ability to so exchange Confidential
Information shall be conditioned upon any such prospective participant's
entering into an understanding as to confidentiality similar to this provision.
Notwithstanding, anything to the contrary set forth above, a Designated Lender
may freely exchange Confidential Information to any rating agency, commercial
paper dealer, or provider of a surety, guaranty or credit or liquidity
enhancement to such Designated Lender (each, an "ADDITIONAL RECIPIENT"), but the
Designated Lender's ability to so exchange shall be conditioned upon any such
Additional Recipient entering into an understanding as to confidentiality as set
forth in the preceding sentence. It is further understood that the foregoing
will not prohibit the disclosure of any or all Confidential Information if and
to the extent that such disclosure may be required (i) by a regulatory agency or
otherwise in connection with an examination of the Recipient's records by
appropriate authorities, (ii) pursuant to court order, subpoena or other legal
process or (iii) otherwise, as required by law; in the event of any required
disclosure under clause (ii) or (iii), above, the Recipient agrees to use
reasonable efforts to inform the Borrower as promptly as practicable unless the
Lender is prohibited from doing so by court order, subpoena or other legal
process.
SECTION 12.9. WAIVER OF JURY TRIAL. THE BORROWER, THE PARENT GUARANTOR,
THE ADMINISTRATIVE AGENT, AND THE LENDERS EACH HEREBY IRREVOCABLY WAIVE ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF
OR RELATING TO THE LOAN DOCUMENTS, OR ANY OTHER INSTRUMENT OR DOCUMENT DELIVERED
HEREUNDER OR THEREUNDER.
SECTION 12.10. GOVERNING LAW. THIS AGREEMENT, THE NOTES AND THE OTHER
LOAN DOCUMENTS, AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND
THEREUNDER, SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NORTH
82
88
CAROLINA. THE BORROWER AND THE PARENT GUARANTOR EACH HEREBY AGREES THAT ANY SUIT
FOR THE ENFORCEMENT OF THIS AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS MAY
BE BROUGHT IN THE COURTS OF THE STATE OF NORTH CAROLINA OR ANY FEDERAL COURT
SITTING THEREIN AND CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF SUCH COURT AND
TO SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER OR THE
PARENT GUARANTOR, AS THE CASE MAY BE, BY MAIL AT THE ADDRESS REFERRED TO IN
SECTION 12.2. HEREOF.
SECTION 12.11. ARBITRATION. (a) Upon demand of any party hereto,
whether made before or after institution of any judicial proceeding, any
dispute, claim or controversy arising out of, connected with or relating to this
Agreement, the Notes or any of the other Loan Documents ("DISPUTES") between or
among parties to this Agreement and other Loan Documents shall be resolved by
binding arbitration as provided herein. Institution of a judicial proceeding by
a party does not waive the right of that party to demand arbitration hereunder.
Disputes may include, without limitation, tort claims, counterclaims, claims
brought as class actions, claims arising from documents executed in the future,
or claims arising out of or connected with the transaction reflected by this
Agreement, the Notes or any of the other Loan Documents.
(b) Arbitration shall be conducted under and governed by the Commercial
Financial Disputes Arbitration Rules (the "ARBITRATION RULES") of the American
Arbitration Association (the "AAA") and Title 9 of the U.S. Code. All
arbitration hearings shall be conducted in the city in which the office of the
Administrative Agent is located. The expedited procedures set forth in Rule 51,
et seq., of the Arbitration Rules shall be applicable to claims of less than
$1,000,000. All applicable statutes of limitation shall apply to any Dispute. A
judgment upon the award may be entered in any court having jurisdiction. The
panel from which all arbitrators are selected shall be comprised of licensed
attorneys. The single arbitrator selected for expedited procedure shall be a
retired judge from the highest court of general jurisdiction, state or federal,
of the state where the hearing will be conducted.
SECTION 12.12. PRESERVATION AND LIMITATION OF REMEDIES. (a)
Notwithstanding the preceding binding arbitration provisions, the Administrative
Agent, the Lenders and the Borrower agree to preserve, without diminution,
certain remedies that any party hereto may employ or exercise freely, either
along, in conjunction with or during a Dispute. The Administrative Agent, the
Lenders and the Borrower shall have the right to proceed in any court of proper
jurisdiction or by self-help to exercise or prosecute the following remedies, as
applicable: (i) obtaining provisional or ancillary remedies including injunctive
relief, sequestration, garnishment, attachment, appointment of receiver and
filing an involuntary bankruptcy proceeding; and (ii) when applicable, a
judgment by confession of judgment. Preservation of these remedies does not
limit the power of an arbitrator to grant similar remedies that may be requested
by a party in a Dispute.
(b) The Administrative Agent, the Borrower and the Lenders agree that
they shall not have a remedy of punitive or exemplary damages against one
another in any Dispute and hereby waive any right or claim to punitive or
exemplary damages they have now or which may arise in the future in connection
with any Dispute whether the Dispute is resolved by arbitration or judicially.
SECTION 12.13. RELEASE OF SUBSIDIARY GUARANTY. At the request of the
Borrower, the Administrative Agent shall release from time to time (and each
Lender hereby authorizes the Administrative Agent to release), one or more
Subsidiary Guarantees (other than a Subsidiary
83
89
Guaranty of a Material Subsidiary (as defined in Section 9.1(p) hereof), and
required under Section 9.1(p)), provided, (i) no Unmatured Default or Event of
Default shall have occurred and be continuing, (ii) the Borrower shall have
provided to the Administrative Agent a certificate in reasonably detail
satisfactory to the Administrative Agent that the Borrower is in compliance with
the financial covenants contained in Section 9.3 before and after giving effect
to the requested release or releases, as the case may be, and (iii)
substantially all of the assets of the Subsidiary Guarantor being released are
used in the ordinary course of such Subsidiary Guarantor's business and such
Subsidiary Guarantor's primary business is as set forth in Section 9.1(a)
hereof.
SECTION 12.14. RELATION OF THE PARTIES; NO BENEFICIARY. No term,
provision or requirement, whether express or implied, of any Loan Document, or
actions taken or to be taken by any party thereunder, shall be construed to
create a partnership, association, or joint venture between such parties or any
of them. No term or provision of any Loan Document shall be construed to confer
a benefit upon, or grant a right or privilege to, any Person other than the
parties hereto.
SECTION 12.15. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
84
90
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
BORROWER:
SUMMIT PROPERTIES PARTNERSHIP, L.P.,
doing business in North Carolina as
Summit Properties Partnership, Limited
Partnership, as Borrower
By: SUMMIT PROPERTIES INC., doing business in
North Carolina as Summit Properties Real Estate, Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President and General Counsel
PARENT GUARANTOR:
SUMMIT PROPERTIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President and General Counsel
FIRST UNION NATIONAL BANK, as Administrative Agent
By: /s/ ▇.▇. ▇▇▇▇▇▇▇
----------------------------------------------------
Name: ▇.▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
S-1
91
THE BANKS:
Commitment:
$35,000,000 FIRST UNION NATIONAL BANK
By: /s/ ▇.▇. ▇▇▇▇▇▇▇
------------------------------------------------
Name: ▇.▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
S-2
92
THE BANKS:
Commitment:
$35,000,000 WACHOVIA BANK, N. A.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
S-3
93
THE BANKS:
Commitment:
$30,000,000 NATIONSBANK, N. A.
By /s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Senior Vice President
S-4
94
THE BANKS:
Commitment:
$25,000,000 COMMERZBANK, A. G.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
By /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Assistant Vice President
S-5
95
THE BANKS:
Commitment:
$25,000,000 PNC BANK, NATIONAL ASSOCIATION
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Assistant Vice President
S-6
96
THE BANKS:
Commitment:
$25,000,000 AMSOUTH BANK
By /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
S-7
97
SCHEDULE I
LENDING OFFICES
Name of Bank Lending Office
First Union National Bank One First Union Center, DC-6
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Wachovia Bank, N.A. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. Vice President
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ fax
NationsBank, N.A. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇-▇▇▇-▇▇-▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Real Estate Loan Administration
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ fax
Commerzbank A.G. ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ fax
PNC Bank, National Association One PNC Plaza
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Mail Stop P1-▇▇▇▇-19-2
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Real Estate Banking
with a copy to:
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Asst. Vice President
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ fax
AmSouth Bank ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Vice President
(▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇ fax