Document:

Exhibit 4.2

GABLES REALTY LIMITED
PARTNERSHIP

Issuer

to

WACHOVIA BANK, NATIONAL
ASSOCIATION

Trustee

_________________________

Supplemental Indenture
No. 8

Dated as of March 14,
2005

_________________________

$150,000,000

of

5.00% Senior Notes Due
2010

 

SUPPLEMENTAL
INDENTURE NO. 8, dated as of March 14, 2005 (the "Supplemental Indenture"),
between GABLES REALTY LIMITED PARTNERSHIP, a limited partnership organized
under the laws of the State of Delaware (herein called the "Partnership"), and
WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association and
successor to First Union National Bank, as Trustee (herein called the "Trustee").

RECITALS
OF THE PARTNERSHIP

The Partnership has
heretofore delivered to the Trustee an Indenture dated as of March 23, 1998, as
supplemented by Supplemental Indenture No. 1, dated as of March 23, 1998,
Supplemental Indenture No. 4, dated as of February 22, 2001, Supplemental
Indenture No. 5, dated as of July 8, 2002, Supplemental Indenture No. 6, dated
as of September 27, 2002 and Supplemental Indenture No. 7, dated as of
September 27, 2002 (the "Senior Indenture"), which has been filed with the
Securities and Exchange Commission under the Securities Act of 1933, as
amended, as an exhibit to the Partnership's Registration Statement on Form S‐3
(Registration No. 333-68359), providing for the issuance by the Partnership
from time to time of its senior debt securities evidencing its unsecured and
unsubordinated indebtedness (the "Securities").

Section 301 of the
Senior Indenture provides for various matters with respect to any series of
Securities issued under the Senior Indenture to be established in an indenture
supplemental to the Senior Indenture.

Section 901(7) of the
Senior Indenture provides for the Partnership and the Trustee to enter into an
indenture supplemental to the Senior Indenture to establish the form or terms
of Securities of any series as provided by Sections 201 and 301 of the Senior
Indenture.

The Board of
Directors of Gables GP, Inc., the general partner of the Partnership, has duly
adopted resolutions authorizing the Partnership to execute and deliver this
Supplemental Indenture.

All of the conditions
and requirements necessary to make this Supplemental Indenture, when duly
executed and delivered, a valid and binding agreement in accordance with its
terms and for the purposes herein expressed, have been performed and fulfilled.

NOW, THEREFORE, THIS
SUPPLEMENTAL INDENTURE WITNESSETH:

For and in consideration of the
premises and the purchase of the series of Securities provided for herein by
the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of Securities of such series, as follows:

 

ARTICLE ONE 

RELATION TO SENIOR INDENTURE; DEFINITIONS

SECTION 1.1.  Relation to Senior Indenture.

This
Supplemental Indenture constitutes an integral part of the Senior Indenture.

2

 

SECTION 1.2. 
Definitions.

For all purposes of this Supplemental Indenture, except as otherwise
expressly provided for or unless the context otherwise requires:

            (1) 
Capitalized terms used but not defined herein shall have the respective
meanings assigned to them in the Senior Indenture; and

            (2) 
All references herein to Articles and Sections, unless otherwise specified,
refer to the corresponding Articles and Sections of this Supplemental
Indenture.

"Acquired Debt" means
Debt of a Person (i) existing at the time such Person becomes a Subsidiary or
(ii) assumed in connection with the acquisition of assets from such Person, in
each case, other than Debt incurred in connection with, or in contemplation
of, such Person becoming a Subsidiary or such acquisition.  Acquired Debt shall
be deemed to be incurred on the date of the related acquisition of assets from
any Person or the date the acquired Person becomes a Subsidiary.

"Adjusted Total
Assets" as of any date means the sum of (i) the amount determined by
multiplying the price at which the Common Shares of Gables were offered in the
initial public offering (the "IPO") of Common Shares of Gables by the sum of
(A) the Common Shares issued in the IPO and (B) the Units of the Partnership
not held by Gables that were issued in connection with the IPO, (ii) the
principal amount of outstanding Debt of the Partnership immediately following
the IPO and (iii) the purchase price or cost of any real estate assets or
mortgages receivable (or interests therein) acquired (including the value of
any Units issued in connection therewith) or developed after the IPO and the
amount of any securities offering proceeds and other proceeds of Debt received
after the IPO (to the extent such proceeds were not used to acquire real estate
assets or mortgages receivable or used to reduce Debt), adjusted for the
proceeds of any real estate assets disposed of by the Partnership.  This
definition of "Adjusted Total Assets" values the assets owned by the
Partnership at the time of the IPO at the market capitalization of the
Partnership at that time, which the Partnership believes to be a more
appropriate measure of the value of those assets than undepreciated book value,
which reflects their pre-IPO cost before accumulated depreciation.

"Annual Debt Service
Charge" as of any date means the amount of any interest expensed during the
four consecutive fiscal quarters most recently ended prior to such date.

"Common Shares" means
the common shares of beneficial interest, par value $0.01 per share, of Gables.

"Consolidated Income
Available for Debt Service" for any period means Consolidated Net Income of the
Partnership and its Subsidiaries plus amounts which have been deducted for: 
(i) interest on Debt of the Partnership and its Subsidiaries, (ii) provision
for taxes of the Partnership and its Subsidiaries based on income, (iii)
amortization of debt discount, (iv) provisions for gains and losses on
properties, (v) depreciation and amortization, (vi) the effect of any noncash
charge resulting from a change in accounting principles in determining Consolidated
Net Income for such period and (vii) amortization of deferred charges.

3

 

"Consolidated Net
Income" for any period means the amount of net income (or loss) of the
Partnership and its Subsidiaries for such period determined on a consolidated
basis in accordance with GAAP.

"Corporate Trust
Office", including for purposes of the Place of Payment provisions of Sections
305 and 1002 of the Senior Indenture, means the office of the Trustee at which,
at any particular time, its corporate trust business shall be principally
administered, which office at the date hereof is located at 999 Peachtree Street, N.E., Atlanta, Georgia 30309.

"Debt" of the
Partnership or any Subsidiary means any indebtedness of the Partnership or any
Subsidiary, whether or not contingent, in respect of (i) borrowed money
evidenced by bonds, notes, debentures or similar instruments, (ii) indebtedness
secured by any mortgage, pledge, lien, charge, encumbrance or any security
interest existing on property owned by the Partnership or any Subsidiary, (iii)
reimbursement obligations in connection with any letters of credit actually
issued or amounts representing the balance deferred and unpaid of the purchase
price of any property except any such balance that constitutes an accrued
expense or trade payable or (iv) any lease of property by the Partnership or
any Subsidiary as lessee which is reflected on the Partnership's consolidated
balance sheet as a capitalized lease in accordance with GAAP; in the case of
items of indebtedness incurred under (i) through (iii) above to the extent that
any such items (other than letters of credit) would appear as a liability on
the Partnership's consolidated balance sheet in accordance with GAAP; and also
includes, to the extent not otherwise included, any obligation of the
Partnership or any Subsidiary to be liable for, or to pay, as obligor,
guarantor or otherwise (other than for purposes of collection in the ordinary
course of business), indebtedness of another Person (other than the Partnership
or any Subsidiary).

"Exchange Act" means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder by the Commission.

"Gables" means Gables
Residential Trust, a Maryland real estate investment trust.

"Make-Whole Amount"
means, in connection with any optional redemption or accelerated payment of
any Note, the excess, if any, of (i) the aggregate present value as of the date
of such redemption or accelerated payment of each dollar of principal being
redeemed or paid and the amount of interest (exclusive of interest accrued to
the date of redemption or accelerated payment) that would have been payable in
respect of such dollar if such redemption or accelerated payment had not been
made, determined by discounting, on a semi-annual basis, such principal and
interest at the Reinvestment Rate (determined on the third Business Day
preceding the date such notice of redemption is given or declaration of
acceleration is made) from the respective dates on which such principal and
interest would have been payable if such redemption or accelerated payment had
not been made, over (ii) the aggregate principal amount of the Notes being redeemed
or paid.  Any Make-Whole Amount shall be determined by the Partnership, when
owing, in an Officers' Certificate to be filed with the Trustee, which
certificate shall set out the computation of such Make Whole Amount.

 "Notes" has the
meaning specified in Section 2.1 hereof.

4

 

"Reinvestment Rate"
means the yield on Treasury securities at a constant maturity corresponding to
the remaining life (as of the date of redemption, and rounded to the nearest
month) to stated maturity of the principal being redeemed (the "Treasury
Yield"), plus 0.20%.  For purposes hereof, the Treasury Yield shall be equal to
the arithmetic mean of the yields published in the Statistical Release (as defined
below) under the heading "Week Ending" for the "U.S. Government
Securities-Treasury Constant Maturities" with a maturity equal to such
remaining life; provided, that if no published maturity exactly corresponds to
such remaining life, then the Treasury Yield shall be interpolated or
extrapolated on a straight-line basis from the arithmetic means of the yields
for the next shortest and next longest published maturities.  For purposes of
calculating the Reinvestment Rate, the most recent Statistical Release
published prior to the date of determination of the Make-Whole Amount shall be
used.  If the format or content of the Statistical Release changes in a manner
that precludes determination of the Treasury Yield in the above manner, then
the Treasury Yield shall be determined in the manner that most closely
approximates the above manner, as reasonably determined by the Partnership.

"Statistical Release"
means the statistical release designated "H.15(519)" or any successor
publication which is published weekly by the Federal Reserve System and which
establishes yields on actively traded United States government securities
adjusted to constant maturities or, if such statistical release is not
published at the time of any determination of the Make-Whole Amount, then such
other reasonably comparable index which shall be designated by the Partnership.

"Subsidiary" means,
with respect to any Person, any corporation or other entity of which a majority
of (i) the voting power of the voting equity securities or (ii) the
outstanding equity interests of which are owned, directly or indirectly, by
such Person.  For the purposes of this definition, "voting equity securities"
means equity securities having voting power for the election of directors,
whether at all times or only so long as no senior class of security has such
voting power by reason of any contingency.

"Unencumbered Total
Asset Value" as of any date means the sum of (i) the portion of Adjusted Total
Assets allocable to the Partnership's real estate assets and (ii) the value of
all other assets of the Partnership and its Subsidiaries on a consolidated
basis determined in accordance with GAAP (but excluding intangibles and
accounts receivable), in each case which are unencumbered by any mortgage,
lien, charge, pledge or security interest.

"Units" means units
of limited partnership of the Partnership.

ARTICLE TWO 

THE NOTES

                        SECTION 2.1.  Title of the Securities.

There shall
be a series of Securities designated the "5.00% Senior Notes Due 2010" (the
"Notes").

5

 

SECTION 2.2  Limitation on Aggregate Principal Amount.

The aggregate principal amount
of the Notes initially shall be limited to $150,000,000.  The Partnership may,
subject to Section 2.4 of this Supplemental Indenture and applicable law, issue
additional Notes under this Supplemental Indenture without the consent of the
Holders of outstanding Notes.  The initially issued Notes and any additional
Notes subsequently issued shall be treated as a single class for all purposes
of this Supplemental Indenture.

Nothing contained in this
Section 2.2 or elsewhere in this Supplemental Indenture, or in the Notes, is
intended to or shall limit execution by the Partnership or authentication or
delivery by the Trustee of Notes under the circumstances contemplated by
Sections 303, 304, 305, 306, 906, 1107 and 1305 of the Senior Indenture.

                        SECTION 2.3
 Interest
and Interest Rates; Maturity Date of Notes.

The Notes will bear interest at
5.00% per annum from March 14, 2005 or from the immediately preceding Interest
Payment Date (as defined below) to which interest has been paid, payable
semi-annually in arrears on March 15 and September 15 of each year, commencing
September 15, 2005 (each, an "Interest Payment Date"), to the persons (the
"Holders") in whose name the applicable Notes are registered in the Security Register
at the close of business 15 calendar days prior to such Interest Payment Date, i.e.
February 28 and August 31, respectively (regardless of whether such day is a
Business Day, as defined below), as the case may be (each, a "Regular Record
Date").  Interest on the Notes will be computed on the basis of a 360-day year
of twelve 30-day months.  Any interest not punctually paid or duly provided
for on any Interest Payment Date with respect to a Note ("Defaulted Interest")
will forthwith cease to be payable to the Holder on the applicable Regular
Record Date and may either be paid to the person in whose name such Note is
registered at the close of business on a special record date (the "Special
Record Date") for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to the Holder of such Note not less than
ten days prior to such Special Record Date, or may be paid at any time in any
other lawful manner, as more particularly described in the Indenture.

If any Interest Payment Date or
Maturity falls on a day that is not a Business Day, the required payment shall
be on the next Business Day as if it were made on the date such payment was due
and no interest shall accrue on the amount so payable for the period from and after
such Interest Payment Date or Maturity, as the case may be.

The Notes
will mature on March 15, 2010.

                        SECTION 2.4.  Limitations
on Incurrence of Debt.

6

 

 

(1)       
The Partnership will not, and will not permit any Subsidiary to, incur
any Debt, other than intercompany Debt (representing Debt to which the only
parties are Gables, the Partnership or any of its Subsidiaries, but only so
long as such Debt is held solely by any of the foregoing), if, immediately
after giving effect to the incurrence of such additional Debt and the application
of the proceeds thereof, the aggregate principal amount of all outstanding
Debt of the Partnership and its Subsidiaries on a consolidated basis determined
in accordance with GAAP is greater than 60% of the sum of (without duplication)
(i) the Partnership's Adjusted Total Assets as of the end of the calendar
quarter covered in the Partnership's Annual Report on Form 10-K or Quarterly
Report on Form 10-Q, as the case may be, most recently filed with the
Commission (or, if such filing is not permitted under the Exchange Act, filed
with the Trustee) prior to the incurrence of such additional Debt, (ii) the
purchase price of any real estate assets or mortgages receivable (or interests
therein) acquired by the Partnership or any Subsidiary since the end of such
calendar quarter, including those obtained in connection with the incurrence of
such additional Debt and (iii) the amount of any securities offering proceeds
received by the Partnership or any Subsidiary since the end of such calendar
quarter (to the extent that such proceeds were not used to acquire such real
estate assets or mortgages receivable or used to reduce Debt).

(2)        
In addition to the limitation set forth in subsection (1) of this
Section 2.4, the Partnership will not, and will not permit any Subsidiary to,
incur any Debt if the ratio of Consolidated Income Available for Debt Service
to the Annual Service Charge for the four consecutive fiscal quarters most
recently ended prior to the date on which such additional Debt is to be
incurred shall have been less than 1.5:1, on a pro forma basis after
giving effect thereto and to the application of the proceeds therefrom, and
calculated on the assumption that (i) such Debt  and any other Debt incurred by
the Partnership and its Subsidiaries since the first day of such four-quarter
period and the application of the proceeds therefrom, including to refinance
other Debt , had occurred at the beginning of such period; (ii) the repayment
or retirement of any other Debt by the Partnership and its Subsidiaries since
the first day of such four-quarter period had been repaid or retired at the
beginning of such period (except that, in making such computation, the amount
of Debt under any revolving credit facility shall be computed based upon the
average daily balance of such Debt during such period); (iii) in the case of
Acquired Debt or Debt incurred in connection with any acquisition since the
first day of such four-quarter period, the related acquisition had occurred as
of the first day of such period with the appropriate adjustments with respect
to such acquisition being included in such pro forma calculation; and
(iv) in the case of any acquisition or disposition by the Partnership or its
Subsidiaries of any asset or group of assets since the first day of such
four-quarter period, whether by merger, stock purchase or sale, or asset
purchase or sale, such acquisition or disposition or any related repayment of
Debt had occurred as of the first day of such period with the appropriate
adjustments with respect to such acquisition or disposition being included in
such pro forma calculation.

7

              
 

(3)       
In addition to the limitations set forth in subsections (1) and (2) of
this Section 2.4, the Partnership will not, and will not permit any Subsidiary
to, incur any Debt secured by any mortgage, lien, charge, pledge, encumbrance
or security interest of any kind upon any of the property of the Partnership
or any Subsidiary ("Secured Debt"), whether owned at the date hereof or
thereafter acquired, if, immediately after giving effect to the incurrence of
such Secured Debt and the application of the proceeds therefrom, the aggregate
principal amount of all outstanding Secured Debt of the Partnership and its
Subsidiaries on a consolidated basis is greater than 40% of the sum of (without
duplication) (i) the Partnership's Adjusted Total Assets as of the end of the
calendar quarter covered in the Partnership's Annual Report on Form 10‐K
or Quarterly Report on Form 10‐Q, as the case may be, most recently
filed with the Commission (or, if such filing is not permitted under the
Exchange Act, filed with the Trustee) prior to the incurrence of such
additional Debt, (ii) the purchase price of any real estate assets or mortgages
receivable (or interests therein) acquired by the Partnership or any Subsidiary
since the end of such calendar quarter, including those proceeds obtained in
connection with the incurrence of such additional Debt and (iii) the amount of
any securities offering proceeds received by the Partnership or any Subsidiary
since the end of such calendar quarter (to the extent that such proceeds were
not used to acquire such real estate assets or mortgages receivable or used to
reduce Debt).

(4)       
The Partnership and its Subsidiaries will at all times maintain an
Unencumbered Total Asset Value in an amount not less than 150% of the aggregate
principal amount of all outstanding unsecured Debt of the Partnership and its
Subsidiaries on a consolidated basis.

(5)       
For purposes of this Section 2.4, Debt shall be deemed to be "incurred"
by the Partnership or a Subsidiary whenever the Partnership or such Subsidiary
shall create, assume, guarantee or otherwise become liable in respect thereof.

                        SECTION 2.5.  Redemption.

The Notes may be redeemed at any
time at the option of the Partnership, in whole or in part, at a redemption
price equal to the sum of (i) the principal amount of the Notes being redeemed
plus accrued interest thereon to the Redemption Date and (ii) the Make-Whole
Amount, if any, with respect to such Notes (the "Redemption Price").

                        SECTION 2.6.  Places
of Payment.

The Places of Payment where the
Notes may be presented or surrendered for payment, where the Notes may be
surrendered for registration of transfer or exchange and where notices and
demands to and upon the Partnership in respect of the Notes and the Senior
Indenture may be served shall be in the City of Atlanta, Georgia, and the
office or agency for such purpose shall initially be located at c/o Wachovia
Bank, National Association, Corporate Trust Department, 999 Peachtree Street,
N.E., Atlanta, Georgia 30309.

                        SECTION 2.7.  Method
of Payment.

Payment of the principal of and
interest on the Notes will be made at the office or agency of the Partnership
maintained for that purpose in the City of Atlanta, Georgia (which shall
initially be an office or agency of the Trustee), in such coin or currency of
the United States of America as at the time of payment is legal tender for
payment of public and private debts; provided, however, that at
the option of the Partnership, payments of principal and interest on the Notes
(other than payments of principal and interest due at Maturity) may be made (i)
by check mailed to the address of the Person entitled thereto as such address
shall appear in the Security Register or (ii) by wire transfer to an account
maintained by the Person entitled thereto located within the United States.

8

 

                       
SECTION 2.8. Currency.Principal and interest on the Notes shall be payable in Dollars.

                        SECTION 2.9.        
 Registered Securities; Global Form.

The Notes shall be issuable and
transferable in fully registered form as Registered Securities, without
coupons.  The Notes shall be issued in the form of one or more permanent Global
Securities.  The depository for the Notes shall be The Depository Trust
Company.  The Notes shall not be issuable in definitive form except as provided
in Section 305 of the Senior Indenture.

                        SECTION 2.10.      
Form of Notes.

The Notes
shall be substantially in the form attached as Exhibit A hereto. 

                        SECTION 2.11.      
Registrar and Paying Agent.

The Trustee shall initially
serve as Security Registrar and Paying Agent for the Notes.

                        SECTION 2.12.        Defeasance.

 The provisions of Sections 1402
and 1403 of the Senior Indenture, together with the other provisions of Article
Fourteen of the Senior Indenture, shall be applicable to the Notes.  The
provisions of Section 1403 of the Senior Indenture shall apply to the covenants
set forth in Sections 2.4 and 2.13 of this Supplemental Indenture and to
those covenants specified in Section 1403 of the Senior Indenture.

                        SECTION 2.13.        Provision
of Financial Information.

Whether or not the Partnership
is subject to Section 13 or 15(d) of the Exchange Act, the Partnership will, to
the extent permitted under the Exchange Act, file with the Commission the
annual reports, quarterly reports and other documents which the Partnership
would have been required to file with the Commission pursuant to such Section
13 or 15(d) if the Partnership were so subject, such documents to be filed with
the Commission on or prior to the respective dates (the "Required Filing
Dates") by which the Partnership would have been required so to file such
documents if the Partnership were so subject.

9

 

The Partnership will also in any
event (x) within 15 days of each Required Filing Date (i) if the Partnership is
not then subject to Section 13 or 15(d) of the Exchange Act, transmit by mail
to all Holders, as their names and addresses appear in the Security Register,
without cost to such Holders, copies of the annual reports and quarterly
reports which the Partnership would have been required to file with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act if the Partnership were
subject to such Sections, and (ii) file with the Trustee copies of annual
reports, quarterly reports and other documents which the Partnership would have
been required to file with the Commission pursuant to Section 13 or 15(d) of
the Exchange Act if the Partnership were subject to such Sections and (y) if
filing such documents by the Partnership with the Commission is not permitted
under the Exchange Act, promptly upon written request and payment of the
reasonable cost of duplication and delivery, supply copies of such documents to
any prospective Holder.

                        SECTION 2.14.    Waiver of Certain Covenants.

Notwithstanding the provisions
of Section 1010 of the Senior Indenture, the Partnership may omit in any
particular instance to comply with any term, provision or condition set forth
in Sections 1004 to 1007, inclusive, of the Senior Indenture, with Sections 2.4
and 2.13 of this Supplemental Indenture and with any other term, provision or
condition with respect to the Notes or either series thereof (except any such
term, provision or condition which could not be amended without the consent of
all Holders of the Notes or such series thereof, as applicable), if before or
after the time for such compliance the Holders of at least a majority in
principal amount of all outstanding Notes or such series thereof, as
applicable, by Act of such Holders, either waive such compliance in such
instance or generally waive compliance with such covenant or condition. 
Except to the extent so expressly waived, and until such waiver shall become
effective, the obligations of the Partnership and the duties of the Trustee in
respect of any such term, provision or condition shall remain in full force and
effect.

ARTICLE
THREE 

MISCELLANEOUS
PROVISIONS

                        SECTION 3.1.      
Ratification of Senior
Indenture

Except as expressly modified or
amended hereby, the Senior Indenture continues in full force and effect and is
in all respects confirmed and preserved.

                        SECTION 3.2.      
Governing Law.

This Supplemental Indenture and
each Note shall be governed by and construed in accordance with the laws of the
State of New York.  This Supplemental Indenture is subject to the provisions
of the Trust Indenture Act of 1939, as amended, and shall, to the extent
applicable, be governed by such provisions.

                        SECTION 3.3.      
Counterparts.

This Supplemental Indenture may
be executed in any number of counterparts, each of which so executed shall be
deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument.

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IN WITNESS WHEREOF,  the parties
hereto have caused this Supplemental Indenture to be duly executed by their
respective officers hereunto duly authorized, all as of the day and year first
written above.

GABLES REALTY LIMITED PARTNERSHIP

                        By:   Gables
GP, Inc.,

                                its
general partner

 

                        By:   /s/ Dawn H. Severt

                                Dawn
H. Severt

                                Senior
Vice President

                    WACHOVIA
BANK, NATIONAL ASSOCIATION, as
Trustee

                    By:   /s/
Paul L. Henderson

                    Name:    Paul
L. Henderson

                    Title:     Assistant
Vice President

EXHIBIT
A

FORM
OF SENIOR SECURITY

[Face
of Security]

Unless this Security is
presented by an authorized representative of The Depository Trust Company, a
New York corporation ("DTC"), to the issuer or its agent for registration of
transfer, exchange or payment, and such Security issued is registered in the
name of CEDE & CO., or such other name as requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such
other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, CEDE & CO., has an
interest herein.

This Security is a Global
Security within the meaning set forth in the Indenture hereinafter referred to
and is registered in the name of DTC or a nominee of DTC.  This Security is
exchangeable for Securities registered in the name of a person other than DTC
or its nominee only in the limited circumstances described in the Indenture,
and may not be transferred except as a whole by DTC to a nominee of DTC or by a
nominee of DTC to DTC or another nominee of DTC or by DTC or its nominee to a
successor Depository or its nominee.

GABLES
REALTY LIMITED PARTNERSHIP

5.00%
Senior Notes Due 2010

Register No. 1                                                                                                                                                            Principal
Amount

CUSIP No. 362415 AJ 0                                                                                                                                            $150,000,000

A-1

 

GABLES REALTY LIMITED
PARTNERSHIP, a Delaware limited partnership (herein referred to as the
"Partnership", which term includes any successor entity under the Indenture
referred to on the reverse hereof), for value received, hereby promises to pay
to Cede & Co. or registered assigns the principal sum of $150,000,000
Dollars on March 15, 2010 (the "Stated Maturity Date") or earlier at the option
of the Partnership (the "Redemption Date", and together with the Stated
Maturity Date with respect to principal repayable on such date, the "Maturity
Date") and to pay interest thereon from March 14, 2005 or from the most recent
Interest Payment Date to which interest has been paid or duly provided for,
semi-annually on March 15 and September 15 in each year (each, an "Interest
Payment Date"), commencing September 15, 2005, at the rate of 5.00% per annum,
until the principal hereof is paid or duly provided for.  The interest so
payable, and punctually paid or duly provided for, on any Interest Payment Date
will, as provided in such Indenture, be paid to the Holder in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest, which shall be February
28 or August 31 (whether or not a Business Day), as the case may be, next
preceding such Interest Payment Date at the office or agency of the Partnership
maintained for such purpose; provided, however, that such
interest may be paid, at the Partnership's option, by mailing a check to such
Holder at its registered address or by wire transfer of funds to an account
maintained by such Holder within the United States.  Any such interest not so
punctually paid or duly provided for shall forthwith cease to be payable to the
Holder on such Regular Record Date, and may be paid to the Holder in whose name
this Security (or one or more Predecessor Securities) is registered at the
close of business on a Special Record Date for the payment of such Defaulted
Interest to be fixed by the Trustee, notice whereof shall be given to Holders
of Securities of this series not less than 10 days prior to such Special Record
Date, or may be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Securities of
this series may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in the Indenture.  Interest will be computed
on the basis of a 360-day year of twelve 30-day months.

The principal of this Security
payable on the Stated Maturity Date or the principal of, Make-Whole Amount, if
any, and, if the Redemption Date is not an Interest Payment Date, interest on
this Security payable on the Redemption Date will be paid against presentation
of this Security at the office or agency of the Partnership maintained for that
purpose in the City of Atlanta, Georgia (which initially shall be an office or
agency of the Trustee), in such coin or currency of the United States of
America as at the time of payment is legal tender for the payment of public and
private debts.

Interest payable on this
Security on any Interest Payment Date and on the Stated Maturity Date or
Redemption Date, as the case may be, will include interest accrued from and
including the next preceding Interest Payment Date in respect of which interest
has been paid or duly provided for (or from and including March 14, 2005, if no
interest has been paid on this Security) to but excluding such Interest Payment
Date or the Stated Maturity Date or Redemption Date, as the case may be.  If
any Interest Payment Date or the Stated Maturity Date or Redemption Date falls
on a day that is not a Business Day, as defined below, principal, Make-Whole
Amount, if any, and/or interest payable with respect to such Interest Payment
Date or Stated Maturity or Redemption Date, as the case may be, will be paid on
the next succeeding Business Day with the same force and effect as if it were
paid on the date such payment was due, and no interest shall accrue on the
amount so payable for the period from and after such Interest Payment Date or
Stated Maturity Date or Redemption Date, as the case may be.  "Business Day"
means any day, other than a Saturday or Sunday, that is neither a legal holiday
nor a day on which banking institutions in the City of New York are authorized
by law, regulation or executive order to close.

All payments of principal,
Make-Whole Amount, if any, and interest in respect of this Security will be
made by the Partnership in immediately available funds.

Reference is hereby made to the
further provisions of this Security set forth on the reverse hereof, which
further provisions shall for all purposes have the same effect as if set forth
at this place.

A-2

 

Pursuant to a recommendation
promulgated by the Committee on Uniform Security Identification Procedures, the
Partnership has caused "CUSIP" numbers to be printed on the Securities of this
series as a convenience to the Holders of such Securities.  No representation
is made as to the correctness or accuracy of such CUSIP numbers as printed on
the Securities, and reliance may be placed only on the other identification
numbers printed hereon.

Unless the Certificate of
Authentication hereon has been executed by the Trustee by manual signature of
one of its authorized signatories, this Security shall not be entitled to any
benefit under the Indenture, or be valid or obligatory for any purpose.

*         
*          *

A-3

 

IN WITNESS
WHEREOF, the Partnership has caused this instrument to be duly executed under
the facsimile corporate seal of its general partner.

Dated:  March 14, 2005                                               GABLES
REALTY LIMITED PARTNERSHIP

            By:   Gables
GP, Inc., 

              its general partner

By:   __________________________

                                                                                            Dawn H. Severt

                                                                                            Senior Vice President

 

Attest:  ______________________________

            Name:

            Title:

TRUSTEE'S CERTIFICATE OF AUTHENTICATION:

This is one of Securities of the series
designated therein referred to in the within-mentioned Indenture.

WACHOVIA BANK, NATIONAL ASSOCIATION,

                                                                                     as Trustee

By:                                                    

                                                                                            Name:

                                                                                            Title:

A-4

[Reverse of Security]

GABLES REALTY LIMITED
PARTNERSHIP

This Security is one of a duly authorized issue of
securities of the Partnership (herein called the "Securities"), issued and to
be issued in one or more series under an Indenture, dated as of March 23, 1998,
as supplemented by Supplemental Indenture No. 1, dated as of March 23, 1998,
Supplemental Indenture No. 4, dated as of February 22, 2001, Supplemental Indenture
No. 5, dated as of July 8, 2002, Supplemental Indenture No. 6, dated as of
September 27, 2002, Supplemental Indenture No. 7, dated as of September 27,
2002 and Supplemental Indenture No. 8, dated as of March 14, 2005 (as so
supplemented, herein called the "Indenture") between the Partnership and
Wachovia Bank, National Association, successor to First Union National Bank, as
Trustee (herein called the "Trustee", which term includes any successor
trustee under the Indenture with respect to the series of which this Security
is a part), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Partnership, the Trustee
and the Holders of the Securities, and of the terms upon which the Securities
are, and are to be, authenticated and delivered.  This Security is one of the
duly authorized series of Securities designated on the face hereof
(collectively, the "Securities"), and the aggregate principal amount of the
Securities to be issued under such series as limited to $150,000,000 (except
for Securities authenticated and delivered upon transfer of, or in exchange
for, or in lieu of other Securities).  All capitalized terms used in this
Security which are defined in the Indenture shall have the meanings assigned to
them in the Indenture.

If an Event of Default with respect to the Securities,
as defined in the Indenture, shall occur and be continuing, the principal of
the Securities of this series may be declared due and payable in the manner and
with the effect provided in the Indenture.

The Securities are subject to redemption at any time,
as a whole or in part, at the election of the Partnership, at a Redemption
Price equal to the sum of (i) the principal amount of the Securities being
redeemed plus accrued interest thereon to the Redemption Date and (ii) the
Make-Whole Amount, if any, with respect to such Securities.

Notice of redemption will be given by mail to Holders
of Securities, not less than 30 nor more than 60 days prior to the Redemption
Date, all as provided in the Indenture.

The Indenture contains provisions for defeasance at any
time of (a) the entire indebtedness of the Partnership on this Security and (b)
certain restrictive covenants and the related defaults and Events of Default
applicable to the Partnership, in each case, upon compliance by the Partnership
with certain conditions set forth in the Indenture, which provisions apply to
this Security.

In the event of redemption of this Security in part
only, a new Security or Securities for the unredeemed portion hereof shall be
issued in the name of the Holder hereof upon the cancellation hereof.

A-5

 

The Indenture permits, with certain exceptions as
therein provided, the amendment thereof and the modification of the rights and
obligations of the Partnership and the rights of the Holders of the Securities
under the Indenture at any time by the Partnership and the Trustee with the
consent of the Holders of not less than a majority of the aggregate principal
amount of all Securities issued under the Indenture at the time Outstanding and
affected thereby.  The Indenture also contains provisions permitting the
Holders of not less than a majority of the aggregate principal amount of the
Outstanding Securities, on behalf of the Holders of all such Securities, to
waive compliance by the Partnership with certain provisions of the Indenture. 
Furthermore, provisions in the Indenture permit the Holders of not less than a
majority of the aggregate principal amount, in certain instances, of the
Outstanding Securities of any series to waive, on behalf of all of the Holders
of Securities of such series, certain past defaults under the Indenture and
their consequences.  Any such consent or waiver by the Holder of this Security
shall be conclusive and binding upon such Holder and upon all future Holders of
this Security and other Securities issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of
such consent or waiver is made upon this Security.

No reference herein to the Indenture and no provision
of this Security or of the Indenture shall alter or impair the obligation of
the Partnership, which is absolute and unconditional, to pay the principal of
(and Make-Whole Amount, if any) and interest on this Security at the times,
places and rate, and in the coin or currency, herein prescribed.

As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is registrable in
the Security Register of the Partnership upon surrender of this Security for
registration of transfer at the office or agency of the Partnership in any
place where the principal of (and Make-Whole Amount, if any) and interest on
this Security are payable, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Partnership and the Security
Registrar duly executed by, the Holder hereof or by his attorney duly
authorized in writing, and thereupon one or more new Securities, of authorized
denominations and for the same aggregate principal amount, will be issued to
the designated transferee or transferees.

As provided in the Indenture and subject to certain
limitations therein set forth, this Security is exchangeable for a like
aggregate principal amount of Securities of different authorized denominations
but otherwise having the same terms and conditions, as requested by the Holder
hereof surrendering the same.

The Securities of this series are issuable only in
registered form without coupons in denominations of $1,000 and any integral
multiple thereof.

No service charge shall be made for any such
registration of transfer or exchange, but the Partnership may require payment
of a sum sufficient to cover any tax or other governmental charge payable in
connection therewith.

Prior to due presentment of this Security for
registration of transfer, the Partnership, the Trustee and any agent of the
Partnership or the Trustee may treat the Person in whose name this Security is
registered as the owner hereof for all purposes, whether or not this Security
be overdue, and neither the Partnership, the Trustee nor any such agent shall
be affected by notice to the contrary.

A-6

Notwithstanding anything contained herein to the
contrary, no recourse under or upon any obligation, covenant or agreement
contained in the Indenture or in this Security, or because of any indebtedness
evidenced hereby or thereby, or for any claim based thereon or otherwise in
respect hereof, shall be had for the payment of the principal of or Make-Whole
Amount, if any, or the interest on this Security, or for any claim based
hereon, or otherwise in respect hereof, or based on or in respect of the
Indenture or any indenture supplemental thereto, against (i) the Company or any
other past, present or future partner in the Partnership, (ii) against any
other Person which owns an interest, directly or indirectly, in any partner of
the Partnership or (iii) against any past, present or future stockholder,
employee, officer or director, as such, of the Company, or of any successor,
either directly or through the Partnership or the Company or any successor,
under any rule of law, statute or constitutional provision or by the
enforcement of any assessment or by any legal or equitable proceeding or
otherwise, all such liability being, by the acceptance hereof and as part of
the consideration for the issue hereof, expressly waived and released.

The Indenture and the
Securities shall be governed by and construed in accordance with the laws of
the State of New York applicable to agreements made and to be performed
entirely in such State. 

A-7

 

ASSIGNMENT FORM

FOR VALUE RECEIVED, the
undersigned hereby

sells, assigns and
transfers unto

PLEASE INSERT SOCIAL

SECURITY OR OTHER IDENTIFYING

NUMBER OF ASSIGNEE

________________________________________

. . . . . . . . . . . . . . . . . . . . . . . . . . . .  . .
.. . . . . . . . . . . . . . . . . . . . . . . . . .  . . . . . . . . . . . . .
.. . . . . . . . 

(Please Print or
Typewrite Name and Address including

Zip Code of Assignee)

. . . . . . . . . . . . . . . . . . . . . . . . . . . .  . .
.. . . . . . . . . . . . . . . . . . . . . . . . . .  . . . . . . . . . . . . .
.. . . . . . . .

the within Security of Gables Realty Limited Partnership and
hereby does irrevocably constitute and appoint

. . . . . . . . . . . . . . . . . . . . . . . . . . . .  . .
.. . . . . . . . . . . . . . . . . . . . . . . . . .  . . . . . . . . . . . . .
..Attorney

to transfer said Security on the books of the within-named
Partnership with full power of substitution in the premises.

Dated: . . . . .  . . . . . . . . .                                                        
.. . . . . . . . . . . . . . . . . . . . . . . . . . .   

                        . . . . .
.. . . . . . . . . . . . . . . . . . . . . . .  

NOTICE:  The signature to this assignment must correspond
with the name as it appears on the first page of the within Security in every
particular, without alteration or enlargement or any change whatever.

A-8<PAGE>

                                                                    EXHIBIT 4.35

December 28, 1999

Pascal Spothelfer
3570 Mathers Avenue
West Vancouver, B.C.
V7V 2L1

Dear Pascal

RE:   OFFER AND TERMS OF EMPLOYMENT

Position/Start Date/Salary

This letter is an offer of a full-time, permanent position as President and CEO,
with Spectrum Signal Processing Inc. ("Spectrum"). Your employment with Spectrum
will start January 1st, 2000. Compensation will be reviewed annually by the
compensation committee of the Board of Directors. Your base salary for the year
2000 will be $250,000. In addition to base salary you will be entitled to a
bonus according to an annual executive incentive plan which is open to all
executives, based on achievement of personal and corporate objectives developed
and reviewed annually in consultation with the compensation committee. For the
year 2000 the target bonus will be $125,000. The parameters of the bonus will be
set in January, when all the executive bonuses are set.

Benefits

Your coverage under the company benefits plan will begin as soon as possible.
This plan includes:

      -     Extended Medical Coverage, Including Eye Care

      -     Basic, Restorative and Orthodontic Dental Care

      -     Short and Long Term Disability Insurance

      -     Life and Accident Insurance

Retirement

We match up to 5% of your base salary into a mutually agreeable retirement
benefit plan.

Stock Options

We will grant you 400,000 options. The exercise price will be set at the closing
market price on the Toronto Stock Exchange for the last trading day of December,
1999. This is in accordance with the regulations of the Toronto Stock Exchange.
Your stock options will begin vesting from the date granted. They will vest in
1/5 annual allotments on the anniversary of your start date for five years
providing you are still employed by Spectrum. The stock options will be for a
ten (10) year term.

THE FOLLOWING SHOULD BE READ CAREFULLY AS IT IS YOUR CONTRACT OF EMPLOYMENT WITH
SPECTRUM. EACH PARAGRAPH OF THIS AGREEMENT IS TO BE ENFORCED INDEPENDENTLY OF
ANY OTHER.

    Vacation

1.0  Full-time Spectrum employees are entitled to 3 weeks (or 15 working days of
     vacation for the first seven years of employment, and 4 weeks afterwards.
     Vacation time may be carried forward a maximum period of one year, after
     which time unutilized time must be taken off. Except in

                                                                     Page 1 of 3
<PAGE>

     extraordinary circumstances and at the sole discretion of Spectrum, money
     shall not be paid in substitution of vacation time.

     Assignment of Rights and Non-Disclosure

2.0  Since Spectrum deals with proprietary and confidential information, as a
     condition of your employment you are required to sign our standard
     Assignment of Rights and Non-Disclosure Agreement (enclosed).

     Documentation

3.0  Any future change in your conditions of employment at Spectrum must be
     documented in writing and are not official or binding until this document
     is properly authorized by the Chair of the Board of Directors. Changes in
     conditions of employment which alter the terms of this Agreement will be
     documented in writing. Unless specifically changed in writing, each
     individual term of this agreement is binding for the full term of an
     employee's tenure at Spectrum.

     Termination

4.0  By signing this Agreement, you agree that any one of the following actions
     on your part constitutes just cause of dismissal, enabling Spectrum to
     terminate your employment immediately without further notice to you:

      4.1   serious conflict of interest, such as appropriating a Spectrum
            business opportunity to your own benefit (if such opportunity has
            not been previously rejected by Spectrum);

      4.2   theft from Spectrum or any of its employees;

      4.3   breach of Assignment of Rights and Non-Disclosure; or

      4.4   serious misrepresentation of your credentials.

     Notice - Spectrum

5.0  If, for any reason other than just cause, Spectrum must terminate our
     association, the notice period is as follows:

                  6 months if you are terminated in the first year

                  9 months if you are terminated in the second year

                  After the end of the second year, 12 months notice up to ten
                  years' service; and 6 weeks per year of additional service
                  beyond ten, to a maximum of 24 months.

                  Payment in lieu of notice will include the following:

                    Base salary, paid month-to-month;

                    The average of the annual non-discretionary bonuses paid to
                    the executive for the three full fiscal years ended prior to
                    the date of termination, such amount to be divided into 12
                    equal amounts and paid month-to-month in addition to base
                    salary;

                    Vacation pay; paid within 5 days of notice of termination;

                    Non-discretionary bonuses and incentive compensation related
                    to the current fiscal year in which termination occurs: you
                    will be entitled to the pro rata portion of such bonus based
                    upon the number of whole months you were employed out of the
                    total 12 months in that fiscal year. Such bonus will be paid
                    within 60 days of the end of the fiscal year in which the
                    executive was terminated; e.g. if you are terminated April
                    30 and the total bonus earned for that year turns out to be
                    $48K, you will be paid 1/3 of $48K or $16K at the end of the
                    following February.

                                                                     Page 2 of 3
<PAGE>

All stock options which have vested at the date of termination will expire on
the earlier of their expiry date and 90 days after the date notice is given to
the executive.

In cases where Spectrum has chosen payment in lieu of working notice, monies
will be paid out on a month-to-month basis, except for vacation and current
fiscal year bonus pay as outlined above. You will have an obligation to mitigate
your loss as a result of termination by finding alternate employment. Upon
successful location of replacement employment, Spectrum will pay as a lump sum,
50% of the then remaining balance of the base salary and average annual
non-discretionary bonus.

Notice - Employee

6.0  Should you choose to leave Spectrum, you will provide a minimum of four
     weeks notice, none of which may contain vacation days. Spectrum reserves
     the right to reduce the notice period. Employment time spent on leave or
     disability will not count into the calculation.

This offer letter is to be read in conjunction with the Change In Control
agreement between Mr. Spothelfer and Spectrum, dated December 28, 1999.

If you have any questions concerning this document, I would be pleased to
discuss them with you. In general, the terms and conditions above are intended
to make our employment relationship clear and to ensure fair treatment for all
employees.

Yours truly,

SPECTRUM SIGNAL PROCESSING INC.

         /s/ Ken Spencer

Per:     Ken Spencer,
         Chair of the Board

In order to indicate your formal acceptance of this offer and the terms of
employment as outlined herein, please return the original document bearing your
signature in the space provided below.

                                                     /s/ Pascal Spothelfer
                                                     ---------------------
                                                     Pascal Spothelfer

                                                                     Page 3 of 3
<PAGE>

THIS AGREEMENT made the 28th day of December 1999.

BETWEEN:

            SPECTRUM SIGNAL PROCESSING INC., a corporation incorporated pursuant
            to the laws of the Province of British Columbia and having an
            address at One Spectrum Court, #200 - 2700 Production Way, Burnaby,
            British Columbia

                  (herein called "Company")

                                                               OF THE FIRST PART

AND:

            PASCAL SPOTHELFER, a businessman having an address at 3570 Mathers
            Avenue, West Vancouver, B.C. V7V 2L1

            (herein called "Employee")

                                                              OF THE SECOND PART

WHEREAS:

A.          The Employee is employed by the Company under a letter of employment
(hereafter the "Employment Contract");

B.          The Company and the Employee are desirous of having certain rights
 and benefits in the event that the Employee's employment with the Company is
terminated in a manner set forth hereinafter;

C.          The Company wishes to retain the benefit of the Employee's services
and to ensure that the Employee is able to carry out his responsibilities with
the Company free from any distractions associated with any potential change in
the ownership or control of the Company or its assets;

D.    In consideration of the rights and benefits conferred on the Employee by
this Agreement, the Employee has agreed to provide certain restrictive covenants
in favour of the Company;

<PAGE>

                                       -2-

NOW THEREFORE in consideration of the premises and the mutual covenants and
agreements hereinafter contained, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged by each of the
Employee and the Company, it is agreed by and between the Employee and the
Company as follows:

1.          DEFINITIONS AND INTERPRETATION

1.1         Definitions

            In this Agreement, the following words and terms with the initial
letter or letters thereof capitalized shall have the meanings set forth below:

      (a)   "Accrued Compensation" means an amount equal to amounts earned or
            accrued up to and including the date on which the Employee's
            employment is terminated but not paid as of that date, including (i)
            base salary, (ii) vacation pay, and (iii) non-discretionary bonuses
            and incentive compensation;

      (b)   "Agreement" means this agreement as amended from time to time;

      (c)   "Average Bonus" means the average of the annual non-discretionary
            bonuses paid to the Employee during the three full fiscal years
            ended prior to the termination of the employment of the Employee as
            provided hereunder;

      (d)   "Change in Control" means a transaction or series of transactions
            whereby directly or indirectly:

            (i)   any person or combination of persons acting in concert
                  acquires a sufficient number of securities of the Company to
                  affect the control of the Company, whether by way of
                  acquisition of previously issued securities or as a result of
                  issuances from treasury, or a combination thereof, and for the
                  purposes of this Agreement, a person or combination of persons
                  acting in concert holding shares or other securities in excess
                  of the number which,

<PAGE>

                                      -3-

                  directly or following the conversion or exercise thereof,
                  would entitle the holders thereof to cast more than 40% of the
                  votes attached to all shares of the Company which may be cast
                  to elect directors of the Company, shall be deemed to be in a
                  position to affect the control of the Company;

            (ii)  the Company shall consolidate or merge with or into,
                  amalgamate with, or enter into a statutory arrangement with
                  any other person, or any other person shall consolidate or
                  merge with or into, or amalgamate with or enter into a
                  statutory arrangement with the Company, and, in connection
                  therewith, all or part of the outstanding shares of the
                  Company which have voting rights attached thereto shall be
                  changed in any way, reclassified or converted into, exchanged
                  or otherwise acquired for shares or other securities of the
                  Company or any other person or for cash or any other property
                  (other than a transaction which has been approved by the
                  directors of the Company, a majority of whom are directors of
                  the Company holding office at the date of this Agreement); or

            (iii) the Company shall sell or otherwise transfer, including by way
                  of the grant of a leasehold interest (or one or more
                  subsidiaries of the Company shall sell or otherwise transfer,
                  including by way of the grant of a leasehold interest)
                  property or assets (A) aggregating more than 50% of the
                  consolidated assets (measured by either book value or fair
                  market value) of the Company and its subsidiaries as at the
                  end of the most recently completed financial year of the
                  Company or (B) which during the most recently completed
                  financial year of the Company generated, or during the then
                  current financial year of the Company are expected to
                  generate, more than 50% of the consolidated revenue or cash
                  flow of the Company and its subsidiaries, to any other person
                  or persons (other than the Company or one or more subsidiaries
                  of the Company); other than a transaction or series of
                  transactions which involves a sale of securities or assets of
                  the Company with which the Employee is involved as a purchaser
                  in any

<PAGE>

                                      -4-

                  manner, whether directly or indirectly, and whether by way of
                  participation in a corporation or partnership that is a
                  purchaser or by provision of debt, equity or
                  purchase-leaseback financing;

      (e)   "Company's Business" means the development and commercialization of
            signal processing boards, sub-systems, systems and related products
            and services;

      (f)   "Expiry Date" means the date which is 12 months after a Change in
            Control occurs;

      (g)   "Restricted Period" means the period of 18 months commencing upon
            the date of termination of the Employee's employment pursuant to
            Section 2.1 or Section 2.2;

      (h)   "Triggering Event" means any one of the following events which
            occurs following a Change of Control without the express agreement
            in writing of the Employee:

            (i)   an adverse change in any of the duties, powers, rights,
                  discretion, working conditions or compensation of the Employee
                  as they exist immediately prior to the Change of Control which
                  would constitute constructive dismissal at law; or

            (ii)  a change in the location of the Employee's place of employment
                  by more than 80 kilometres.

<PAGE>

                                      -5-

1.2        Plural and Gender

            Whenever used in this Agreement, words importing the singular number
only shall include the plural and vice versa and words importing the masculine
gender shall include the feminine gender.

1.3         Binding Effect

            This Agreement shall be binding on the successors and assigns of the
Company and shall enure to the benefit of the heirs, executors, personal
representatives and permitted assigns of the Employee.

2.          RIGHTS OF EMPLOYEE

2.1         Right Upon Occurrence of Triggering Event

      (a)   Right: If a Change in Control occurs and if, in respect of the
            Employee, a Triggering Event occurs on or before the Expiry Date,
            the Employee shall be entitled, on at least 30 days written notice
            to the Company given within six months after the Triggering Event,
            to elect to terminate his employment with the Company and to receive
            from the Company in lieu of any amount he would have been entitled
            to receive on the termination of his employment pursuant to the
            provisions of the Employment Contract:

           (i)   all Accrued Compensation;

           (ii)  a sum equivalent to one and one-half (1.5) times the base
                 salary of the Employee for the period specified in the
                 Employment Contract upon Spectrum terminating the Employees
                 employment without cause;

           (iii) a sum equivalent to the Average Bonus multiplied by one and
                 one-half (1.5); and

<PAGE>

                                      -6-

           (iv)  all stock options provided for in the Employment Contract or
                 otherwise allotted to the Employee, save and except that such
                 options, if not already vested, shall vest forthwith, and all
                 options shall expire upon the earlier of their expiry date and
                 120 days after the election to terminate by the Employee.

      (b)   Assistance: Should the Employee elect to terminate his employment
            with the Company as provided in Section 2.1(a), the Employee shall,
            at the request of the Company, provide the Company with all
            information and assistance relating to his or her employment with
            the Company as may be reasonably requested by the Company in order
            to transfer the Employee's duties and responsibilities to another
            employee.

2.2         Right Upon Termination

            The Employee shall be entitled to a payment from the Company in the
amount calculated in accordance with Section 2.1(a) hereof if his employment
with the Company is terminated by the Company within 12 months after a Change of
Control other than for cause.

2.3         Benefits

            If the Employee is entitled to a payment pursuant to Section 2.1 or
2.2 hereof, then regardless of the Employee's country of residence, the Company
shall also continue to pay the Employee's health insurance premiums and other
benefits as outlined in the Employment Contract and as permitted by the relevant
insurers for a period which is the lesser of eighteen months from termination or
until the Employee has otherwise secured comparable benefits.

<PAGE>

                                      -7-

3.          PAYMENTS AND REVIEW

3.1         Payments under this Agreement

            Subject to any arrangements made pursuant to Section 5.3 hereof, any
payment to be made by the Company pursuant to the terms of this Agreement shall
be paid by the Company, less all statutory deductions, as follows:

      (a)   the amounts payable under Sections 2.1(a)(i) (excluding bonuses),
            2.1(a)(ii) and 2.1(a)(iii) within five business days of the last day
            of the Employee's employment by the Company;

      (b)   the bonus component of the Accrued Compensation payable under
            Section 2.1(a)(i) within sixty business days of the end of the
            current fiscal year of the Company.

Any such payment shall be calculated, in the case of Section 2.1, at the date of
giving notice pursuant to Section 2.1, and in the case of Section 2.2 hereof, at
the date of termination of the Employee's employment.

The Company covenants and agrees to assist the Employee to receive all payments
made under this Agreement in a tax effective manner so long as such assistance
is not adverse to the interests of the Company.

4.          RESTRICTIVE COVENANTS

4.1         Non-Competition

            During the term of employment, the Employee shall not directly or
indirectly carry on or be engaged in or be concerned with or interested in or
advise, lend money to, guarantee the debts or obligations of or permit his name
to be used by any person engaged in or concerned with or interested in any
business similar to or competitive with the Company's Business.

<PAGE>

                                      -8-

4.2         Post-employment Non-Competition

            During the period of 12 months commencing upon the date of
termination of the Employee's employment, whether the termination is pursuant to
Section 2.1 or Section 2.2 of this Agreement or termination is voluntary by
Employee of for cause by the Company, the Employee shall not directly or
indirectly carry on or be engaged in or be concerned with or interested in or
advise, lend money to, guarantee the debts or obligations of or permit his name
to be used by any person engaged in or concerned with or interested in any
business similar to and competitive with the Company's Business.

4.3         Non-Solicitation of Customers

            During the Restricted Period, the Employee shall not directly or
indirectly solicit or aid in the solicitation of any customers of the Company or
any prospective customers of the Company with whom the Employee had contact
during his employment.

4.4        Non-Solicitation of Employees

           During the Restricted Period, the Employee shall not directly or
indirectly solicit or aid in the solicitation for employment any person who is,
at the time of such solicitation, employed by the Company and the Employee shall
not directly or indirectly induce any person to leave his or her employment with
the Company.

4.5         Remedies

            The Employee acknowledges and agrees that any breach of this
Agreement could cause irreparable damage to the Company and that in the event of
a breach by the Employee, the Company shall have in addition to any and all
other remedies at law or in equity, the right to an injunction, specific
performance or other equitable relief to prevent any violation by the Employee
of any of the provisions of this Agreement including without limitation, the
provisions of Sections 4.1, 4.2, 4.3 and 4.4. In the event of any dispute under
any of Sections 4.1 to 4.4, the Employee agrees that the Company shall be
entitled, without showing actual damages, to a

<PAGE>

                                      -9-

temporary or permanent injunction restraining the conduct of the Employee
pending a determination of such dispute and that no bond or other security shall
be required from the Company in connection therewith.

5.         MISCELLANEOUS

5.1        Agreement Supplemental

           This Agreement shall be supplemental to the Employment Contract
except insofar as the Employment Contract relates to the termination of the
Employee's employment after a Change in Control, in which case this Agreement
shall supersede the termination provisions of the Employee Contract. To the
extent that the terms of the Employment Contract are not inconsistent with this
Agreement, such terms shall continue to apply, and the Employment Agreement is
hereby ratified and confirmed.

5.2         Assignment and Assumption

            This Agreement shall be assigned by the Company to any successor
corporation of the Company and shall be binding upon such successor corporation.
For the purposes of this Section 5.2, "successor corporation" shall include any
person referred to in paragraphs 1.1(d)(ii) or (iii) hereof. The Company shall
use its best efforts to ensure that the successor corporation shall continue the
provisions of this Agreement as if it were the original party in place of the
Company; provided however that the Company shall not thereby be relieved of any
obligation to the Employee pursuant to this Agreement.

5.3         Further Assurances

            Each of the Company and the Employee agrees to make, do and execute
or cause to be made, done and executed, all such further and other things, acts,
deeds, documents, assignments and assurances as may be necessary or reasonably
required to carry out the intent and purpose of this Agreement fully and
effectually. Without limiting the generality of the foregoing, the Company shall
take all reasonable steps in order to structure the payment or

<PAGE>

                                      -10-

payments provided for in this Agreement in the manner most advantageous to the
Employee with respect to the provisions of the Income Tax Act (Canada).

5.4         Notice

      (a)   Any notice required or permitted to be given under this Agreement
            will be in writing and may be given by delivering, sending by
            telecopier, or sending by prepaid registered mail the notice to the
            following address or telecopier number:

            If to the Company:

            Spectrum Signal Processing Inc.
            One Spectrum Court
            #200 - 2700 Production Way
            Burnaby, British Columbia  V5A 4X1

            Attention:  Chief Executive Officer and Chair of the Board of
                        Directors
            Telecopier No.: (604) 421-1764

            If to the Employee:

            as set out in the Employment Contract.

           (or to such other address or telecopier number as any party may
           specify by notice in writing to another party).

      (b)   Any notice delivered or sent by telecopier on a business day will be
            deemed conclusively to have been effectively given on the day the
            notice was delivered, or the telecopy transmission was sent
            successfully to the telecopier number set out above, as the case may
            be.

      (c)   Any notice sent by prepaid registered mail will be deemed
            conclusively to have been effectively given on the third business
            day after posting; but if at the time of posting or between the time
            of posting and the third business day thereafter there

<PAGE>

                                      -11-

            is a strike, lockout, or other labour disturbance affecting postal
            service, then the notice will not be effectively given until
            actually delivered.

5.5         Independent Legal Advice

            The Employee acknowledges having been advised to obtain independent
legal advice with respect to this Agreement.

5.6         Governing Law

            This Agreement shall be governed by and be construed in accordance
with the laws of British Columbia.

5.7         Severability

            Any provision of this Agreement which contravenes any applicable law
or which is found to be unenforceable shall, to the extent of such contravention
or unenforceability, be deemed severable and shall not cause this Agreement to
be held invalid or unenforceable or affect any other provision or provisions of
this Agreement.

IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed
as of the date first above written.

SPECTRUM SIGNAL PROCESSING INC.

By:  /s/ Kenneth Spencer
KENNETH SPENCER, CHAIR, BOARD OF DIRECTORS

By:  /s/ Pascal E. Spothelfer
PASCAL E. SPOTHELFER, PRESIDENT & CEO

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