Property and/or
Encumbered Property Subsidiary would not have a Material Adverse Effect.
SECTION 5.3
FINANCIAL AND REIT STATUS COVENANTS.
(A)
BORROWER SHALL MAINTAIN AT ALL TIMES A FIXED CHARGE COVERAGE RATIO
OF NOT LESS THAN 1.25 TO 1.00.
THE FIXED CHARGE COVERAGE RATIO SHALL BE
CALCULATED AS THE QUOTIENT OF (I) THE TRAILING TWELVE-MONTH NET OPERATING INCOME
AT OWNED STUDENT HOUSING PROJECTS NET OF A MANAGEMENT FEE REPRESENTING 3% OF
AGGREGATE STUDENT HOUSING REVENUE AND A TURNOVER EXPENSE OF THE GREATER OF (A)
$125 PER BED OR (B) ACTUAL TURNOVER EXPENSES INCURRED PER BED, LESS A CAPITAL
RESERVE OF $125 PER BED IN AGGREGATE, AND (II) THE SUM OF CONSOLIDATED INTEREST
CHARGES (EXCLUDING UNAMORTIZED UPFRONT FEES THAT SHALL BE RECORDED IN RESPECT TO
THE CREDIT AGREEMENT AND UPFRONT FEES THAT SHALL BE RECORDED PERTAINING TO THE
LOAN), PRINCIPAL AMORTIZATION AND PREFERRED DIVIDENDS OF THE BORROWER AND ANY OF
ITS SUBSIDIARY ENTITIES, AS CALCULATED OVER THE SAME TIME PERIOD. FOR ANY
PROPERTY OWNED LESS THAN ONE (1) YEAR THE TURNOVER EXPENSES AND CAPITAL RESERVE
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CALCULATION WILL BE PRORATED FOR THE NUMBER OF DAYS THE PROPERTY HAS BEEN OWNED
BY THE BORROWER OR ITS SUBSIDIARY.
(B)
BORROWER SHALL NOT PERMIT CONSOLIDATED TANGIBLE NET WORTH TO BE
LESS THAN $455,000,000.
(C)
BORROWER SHALL MAINTAIN A QUARTERLY MINIMUM AGGREGATE ADJUSTED
MANAGEMENT EBITDA OF $5,000,000.
(D)
AT ALL TIMES, THE TRUST (INCLUDING ITS ORGANIZATION AND METHOD OF
OPERATIONS AND THOSE OF ITS SUBSIDIARIES) SHALL QUALIFY AS A REIT.
All calculations of financial covenants shall be in accordance with GAAP and
shall be reported quarterly.
SECTION 5.4
LIMITATION ON INDEBTEDNESS. BORROWER AND ITS
SUBSIDIARIES SHALL NOT CREATE, INCUR, ASSUME OR SUFFER TO EXIST ANY INDEBTEDNESS
OR ISSUE ANY SHARES OR INTERESTS OF PREFERRED CAPITAL STOCK, EXCEPT:
(A)
INDEBTEDNESS OF THE BORROWER AND THE GUARANTORS UNDER THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS;
(B)
INDEBTEDNESS OF ANY GUARANTOR TO THE BORROWER;
(C)
INDEBTEDNESS OF AN ENTITY WHICH BECOMES A SUBSIDIARY AFTER THE
DATE HEREOF, PROVIDED THAT (I) SUCH INDEBTEDNESS EXISTED AT THE TIME SUCH ENTITY
BECAME A SUBSIDIARY AND WAS NOT CREATED IN ANTICIPATION THEREOF AND (II)
IMMEDIATELY AFTER GIVING EFFECT TO THE ACQUISITION OF SUCH CORPORATION BY THE
BORROWER NO DEFAULT OR EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING;
(D)
INDEBTEDNESS RELATING TO FUTURE PROPERTY ACQUISITIONS OR
REFINANCINGS OR EQUITY COMMITMENTS AS MAY BE BUDGETED ON A LENDER APPROVED
BASIS;
(E)
INDEBTEDNESS RELATING TO FINANCINGS OR REFINANCINGS RELATING TO
MILITARY HOUSING PROJECTS THAT ARE NON-RECOURSE TO BORROWER OR ITS SUBSIDIARIES
AND SUBJECT ONLY TO CUSTOMARY "BAD ACTS" GUARANTEES PROVIDED IN CONNECTION WITH
SUCH PROJECTS;
(F)
INDEBTEDNESS EXISTING AS OF THE DATE HEREOF RELATING TO STUDENT
HOUSING PROJECTS;
(G)
INDEBTEDNESS RELATING TO EXISTING EQUITY COMMITMENTS RELATED TO
MILITARY HOUSING PROJECTS NONE OF WHICH WILL BECOME PAYABLE PRIOR TO PAYMENT IN
FULL OF THE OBLIGATIONS; AND
(H)
INDEBTEDNESS RELATING TO ACQUISITIONS AND FINANCINGS
(INCLUDING
AMOUNTS) AND EQUITY COMMITMENTS (INCLUDING AMOUNTS) SPECIFIED ON
THE SOURCES
AND USES ATTACHED HERETO AS SCHEDULE E.
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ARTICLE