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EXHIBIT 99.8
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CREDIT AGREEMENT
BETWEEN
AMERICAN INDUSTRIAL PROPERTIES REIT,
AIP-SWAG OPERATING PARTNERSHIP, L.P.
AND
PRUDENTIAL SECURITIES CREDIT CORPORATION
DATED AS OF
OCTOBER 3, 1997
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CREDIT AGREEMENT
TABLE OF CONTENTS
PREAMBLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.01. Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Accounting and Banking Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Section 1.03. Discretion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
ARTICLE 2. THE CREDIT FACILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Section 2.01. The Credit Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Section 2.02. The Loans; Procedure for Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Section 2.03. Rate of Interest; Calculation of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Section 2.04. Indemnity and Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
Section 2.05. Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
Section 2.06. Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
Section 2.07. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Section 2.08. Use of Loan Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Section 2.09. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Section 2.10. Increased Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Section 2.11. LIBOR Alternate Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
Section 2.12. Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
Section 2.13. AIP-SWAG Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
ARTICLE 3. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
Section 3.01. Organization and Powers; REIT Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
Section 3.02. Power and Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
Section 3.03. Permits; Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
Section 3.04. No Legal Bar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
Section 3.05. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
Section 3.06. Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
Section 3.07. The Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Section 3.08. Capitalization and Corporate Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Section 3.09. No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Section 3.10. No Secondary Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Section 3.11. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Section 3.12. Financial Statements and Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Section 3.13. ERISA; Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Section 3.14. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Section 3.15. Correct Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
Section 3.16. Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
Section 3.17. Margin Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
Section 3.18. Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
Section 3.19. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
Section 3.20. Acquisition Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
Section 3.21. Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
ARTICLE 4. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
Section 4.01. Conditions Precedent to Initial Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
Section 4.02. Conditions Precedent to Initial and Subsequent Fundings . . . . . . . . . . . . . . . . . . . . . . .30
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ARTICLE 5. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
Section 5.01. Maintenance of Existence, Properties and REIT Status . . . . . . . . . . . . . . . . . . . . . . . .34
Section 5.02. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
Section 5.03. Punctual Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
Section 5.04. Payment of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
Section 5.05. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
Section 5.06. Payment of Taxes, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
Section 5.07. Financial Statements and Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
Section 5.08. Accounts and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
Section 5.09. Inspection; Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
Section 5.10. UCC Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
Section 5.11. Additional Due Diligence Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
Section 5.12. Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
Section 5.13. Operational Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
Section 5.14. Environmental Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
Section 5.15. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
Section 5.16 Deferred Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
ARTICLE 6. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
Section 6.01. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
Section 6.02. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
Section 6.03. Contingent Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
Section 6.04. Fundamental Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
Section 6.05. Dispositions of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
Section 6.06. Sales and Leasebacks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
Section 6.07. Dividends and Redemptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
Section 6.08. Amendment of Certain Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
Section 6.09. Certain Other Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
Section 6.10. Transactions with Affiliates and Certain Other Persons . . . . . . . . . . . . . . . . . . . . . . .42
Section 6.11. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
Section 6.12. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
Section 6.13. Regulations G, T, U and X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43
Section 6.14. Environmental Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43
ARTICLE 7. FINANCIAL COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43
Section 7.01. Interest Coverage Ratios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43
Section 7.02. Total Liabilities to Net Worth Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43
Section 7.04. Minimum Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
ARTICLE 8. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
Section 8.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
Section 8.02. Remedies Upon an Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
ARTICLE 9. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
Section 9.01. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
Section 9.02. Survival of this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48
Section 9.03. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48
Section 9.04. Costs, Expenses and Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49
Section 9.05. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
Section 9.06. Amendment and Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
Section 9.07. Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
Section 9.08. Marshaling, Recourse to Security: Payments Set Aside . . . . . . . . . . . . . . . . . . . . . . . .51
Section 9.09. Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
Section 9.10. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
Section 9.11. Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
Section 9.12. Consent to Jurisdiction and Service of Process; Waiver of Jury Trial . . . . . . . . . . . . . . . .52
Section 9.13. Inconsistencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
Section 9.14. Performance of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53
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Section 9.15. Assignment; Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53
Section 9.16. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53
Section 9.17. Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53
Section 9.18. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
Section 9.19. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
Section 9.20. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
Section 9.21. Execution of Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
Section 9.22. Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
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EXHIBITS:
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Exhibit A Form of Approved Lease
Exhibit B Form of Assignment of Leases and Rents
Exhibit C Form of Assignment of Management Agreements
Exhibit D Form of Collateral Assignment
Exhibit E Form of Deed of Trust
Exhibit F Form of Environmental Indemnity
Exhibit G Form of Estoppel Certificate
Exhibit H Form of Mortgage
Exhibit I Form of Subordination Agreement
Exhibit J Form of Notice of Borrowing
Exhibit K Form of Note
Exhibit L Form of Notice of Optional Prepayment
Exhibit M Form of Opinion of Counsel
SCHEDULES:
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Schedule 3.05 Litigation
Schedule 3.07 Existing Liens
Schedule 3.08 Capitalization and Corporate Structure
Schedule 3.14 Environmental Matters
Schedule 3.19 Insurance Policies
Schedule 3.20 Acquisition Documents
Schedule 4.02(k) Title Insurance Requirements
Schedule 4.02(l) Survey Requirements
Schedule 5.16 Deferred Maintenance
Schedule 6.01 Existing Indebtedness
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT dated as of October 3, 1997 (this "Agreement")
between American Industrial Properties REIT, a Texas real estate investment
trust (the "REIT Borrower"), and AIP-SWAG Operating Partnership, L.P., a
Delaware limited partnership ("AIP-SWAG"); and AIP-SWAG together with the REIT
Borrower collectively, the Borrower hereunder "Borrower", and Prudential
Securities Credit Corporation, a Delaware corporation (the "Lender"),
W I T N E S S E T H:
WHEREAS, the Borrower has requested that the Lender extend certain
financial accommodations of up to $35,000,000 to the Borrower in connection
with (i) the financing of the acquisition (the "Acquisition") by the Borrower
of the Acquisition Properties (as hereinafter defined) and the related costs,
and (ii) the financing of the Transaction Costs (as hereinafter defined); and
WHEREAS, the Lender is willing to extend the financial accommodations
contemplated hereby to the Borrower on the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
ARTICLE 1. DEFINITIONS
Section 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
"Acquisition" has the meaning set forth in the recitals hereto.
"Acquisition Documents" means each purchase agreement to be entered
into between and among the Borrower and the seller or sellers of each
Acquisition Property in connection with the purchase of such Acquisition
Property and all of the other agreements, documents and instruments entered
into in connection therewith.
"Acquisition Properties" means 100% fee simple ownership interests in
industrial and/or office properties that (i) are acquired by the Borrower with
the proceeds of the Loans, (ii) satisfy the applicable conditions precedent and
covenants set forth in this Agreement, and (iii) are generally consistent with
the Borrower's existing properties.
"Additional Disbursements" has the meaning set forth in Section 2.13
hereof.
"Affiliate" means any (i) officer, director, shareholder, member or
partner of the Borrower, (ii) Person that directly or indirectly controls, is
controlled by, or is under common
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control with the Borrower, and (iii) Person in which 10% or more of the
ownership interest of such Person is owned by a shareholder, member or partner
of the Borrower. For purposes of this definition, "control" of a person means
the possession, directly or indirectly, of the power to direct or cause the
direction of its management and policies, whether through the ownership of
voting capital stock, by contract or otherwise, and the terms "controlled" and
"common control" shall have correlative meanings. In no event shall the Lender
be deemed to be an Affiliate of the Borrower.
"Agreement" and "Credit Agreement" means this Credit Agreement, as the
same from time to time may be amended, modified, supplemented, extended or
restated.
"AIP-SWAG" has the meaning set forth in the recitals hereto, and
includes each successor and assign.
"Applicable Margin" means, two hundred (200) basis points.
"Appraisals" has the meaning set forth in Section 4.02(c) hereof.
"Approved Lease" means a Lease in the form of Exhibit A hereto.
"Assignments of Leases" mean, collectively, (i) the Assignment of
Leases and Rents dated as of the Closing Date between the Borrower and the
Lender, and (ii) the Assignment of Leases and Rents to be entered into between
the Borrower and the Lender, in each case, in the form of Exhibit B hereto, as
the same may from time to time be amended, modified, supplemented or extended.
"Assignments of Management Agreements" mean, collectively, (i) the
Assignment of Property Management Agreements dated as of the Closing Date
between the Borrower and the Lender, and (ii) the Assignment of Property
Management Agreements to be entered into between the Borrower and the Lender,
in each case, in the form of Exhibit C hereto, as the same may from time to
time be amended, modified, supplemented or extended.
"Assignments" mean, collectively, the Assignments of Leases, the
Assignments of Management Agreements and the Collateral Assignments.
"Authorized Person" means Xxxxxxx X. Xxxxxxx or Xxxx X. Xxxxxxx or
such other individual designated in writing by the Borrower as being authorized
by the Borrower to provide the Lender with any and all notices required to be
made hereunder by the Borrower; which authorizations shall remain in full force
and effect, and may be conclusively relied on by the Lender in all
circumstances, until the Lender actually receives a written notice from the
Borrower stating otherwise.
"Available Commitment" means, as at any date at which the same is to
be determined, the amount equal to (i) the Commitment, minus (ii) the aggregate
amount of all Loans then outstanding, minus (iii) the aggregate amount of all
outstanding Reserves.
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"Bankruptcy Code" means Title 11 of the United States Code (11 U.S.C.
101 et seq.), as amended from time to time, and any successor statute.
"Base LIBOR" in respect of each Interest Period means a rate per annum
equal to the rate at which U.S. dollar deposits, in an amount equal to the
aggregate principal amount of the relative Loan or Loans which is to be
outstanding during such Interest Period, for delivery on the first day of such
Interest Period with 30-day maturities, (i) are offered in immediately
available funds in the London Interbank Market to the appropriate office of the
Lender by leading banks in the Eurodollar market, (ii) are quoted on the Dow
Xxxxx Telerate, a division of Dow Xxxxx & Company, Inc., or (iii) are quoted on
any comparable alternative source selected by the Lender, in the case of the
first Interest Period for each Loan, at such time as the Lender elects on the
first Business Day of such Interest Period and, in the case of all other
Interest Periods, at 11:00 a.m., London time, on the first Business Day of such
Interest Period.
"Base Rate" means, for any day, the per annum fluctuating rate of
interest equal to the higher of (i) the interest rate announced by the Lender
as its Dollar base rate from time to time in New York, New York, and (ii) the
Federal Funds Rate plus one-half of one percent (1/2%).
"Borrower" has the meaning set forth in the recitals hereto, and
includes jointly and severally the REIT Borrower, AIP-SWAG and each successor
and assign.
"Borrowing Date" means, with respect to any Loan, the Business Day on
which the Lender makes such Loan pursuant to a Notice of Borrowing given
pursuant to Section 2.02(b)(i) hereof.
"Breakage Fee" means the cost (including any hedging loss), if any, to
the Lender associated with breaking any hedging arrangement entered into by the
Lender to reduce its interest rate risk due to changes in LIBOR in connection
with any prepayment on the Loans or the Borrower failure to borrow.
"Building Condition Report" has the meaning set forth in Section
4.02(e) hereof.
"Business Day" means any day on which dealings in currencies and
exchange (including, without limitation, U.S. dollar deposits in the London
Interbank Market) between banks may be carried on in New York, New York or the
City of London, England, other than a Saturday or Sunday or any other day on
which banks in Xxx Xxxx, Xxx Xxxx xx xxx Xxxx xx Xxxxxx, Xxxxxxx are authorized
or required by law to close.
"Closing Date" means October ___, 1997, the date on which this
Agreement is signed by the parties hereto at the offices of Pryor, Cashman,
Xxxxxxx & Xxxxx, at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 or at such other
place as the Lender may determine.
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"Collateral" means all property and interest in property in or against
which the owner thereof shall have granted, or purported to have granted, a
security interest or Lien in favor of the Lender under the Loan Documents as
security for the Obligations of the Borrower to the Lender and, if such owner
is a Person other than the Borrower, for such owner's obligations to the
Lender, and shall include, without limitation the Collateral Properties.
"Collateral Assignments" mean, collectively, (i) the Collateral
Assignment Agreement dated as of the Closing Date between the Borrower and the
Lender, and (ii) the Collateral Assignment Agreement to be entered into between
the Borrower and the Lender, in each case, in the form of Exhibit D hereto, as
the same may from time to time be amended, modified, supplemented or extended.
"Collateral Documents" mean, collectively, the Mortgages, the Deeds of
Trust, the Assignments and the insurance policies endorsed to name the Lender
as a first mortgagee and/or additional insured required under Section 5.02
hereof and under the Mortgages, and the Deeds of Trust.
"Collateral Properties" mean, collectively, (a) the Acquisition
Properties, and (b) the existing properties of a Borrower that (i) such
Borrower owns a 100% fee simple interest in, (ii) are industrial and/or office
properties that are generally consistent with the Borrower's existing
properties and each other Borrower's then existing properties, (iii) are
pledged to, and encumbered in favor of, the Lender by such Borrower, and (iv)
satisfy the applicable conditions precedent and covenants set forth in this
Agreement and the Collateral Documents.
"Commitment" means $35,000,000.
"Commitment Period" means the period from and including the Closing
Date to but not including the Expiration Date.
"Conversion", "Convert" and "Converted" means the conversion (at the
Lender's sole election as provided herein) of the Loans from variable rate
interest only payment loans maturing on the Expiration Date to fixed rate
conduit loans containing market terms to be determined by the Lender and
requiring monthly principal and interest payments based on a twenty-five (25)
year amortization period maturing on the Conversion Maturity Date.
"Conversion Date" means the date on which the Conversion becomes
effective.
"Conversion Loans" means the Loans that have been Converted on the
Conversion Date.
"Conversion Maturity Date" means the date which is seven (7) years
from the Conversion Date.
"Customary Permitted Liens" means: (a) Liens (other than any Lien
imposed under Environmental Laws or ERISA) arising as a matter of law to secure
payment of taxes, assessments or charges owing to any Governmental Authority
but which are not yet due or which are being contested in good faith by
appropriate proceedings or other appropriate actions and with respect to which
adequate reserves or other appropriate provisions are being maintained in
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accordance with GAAP; (b) statutory Liens of landlords and Liens of carriers,
warehousemen and other Liens (other than any Lien imposed under Environmental
Laws or ERISA) imposed by law, created in the ordinary course of business and
for amounts not yet due (or which are being contested in good faith by
appropriate proceedings or other appropriate actions which are sufficient to
prevent imminent foreclosure of such Liens, are promptly instituted and
diligently conducted) and with respect to which adequate reserves or other
appropriate provisions are being maintained in accordance with GAAP; (c) Liens
(other than any Lien imposed under Environmental Laws or ERISA) incurred or
deposits made in the ordinary course of business (including, without
limitation, security deposits for leases, surety bonds and appeal bonds) in
connection with workers' compensation, unemployment insurance and other types
of social security benefits or to secure the performance of tenders, bids,
contracts (other than for the repayment or guarantee of borrowed money or
purchase money obligations), statutory obligations and other similar
obligations or arising as a result of progress payments under government
contracts; (d) easements (including, without limitation, reciprocal easement
agreements and utility agreements), rights-of-way, covenants, consents,
reservations, encroachments, minor defects or irregularities in title,
variations and other restrictions, charges or encumbrances (whether or not
recorded) affecting the use of real property, which individually or in the
aggregate do not or are not reasonably likely to have a Material Adverse Effect
on the conduct of a Borrower and/or any of its Subsidiaries, its business or on
the use of such real property or on the value to or marketability by such
Borrower or such Subsidiary of its interests in such real property; and (e)
extensions, renewals or replacements of any Lien referred to in clauses (a)
through (d) above; provided, however, that (i) the principal amount of the
obligation secured thereby is not increased, except as otherwise permitted by
such clauses in the first instance, and (ii) any such extension, renewal or
replacement is limited to the property originally encumbered thereby.
"Deeds of Trust" mean, collectively, (i) the Deeds of Trust, Security
Agreements and Assignments of Leases and Rents dated as of the Closing Date
between the Borrower and the Lender, and (ii) the Deeds of Trust, Security
Agreements and Assignments of Leases and Rents to be entered into between the
Borrower and the Lender, in each case, in the form of Exhibit E hereto, as the
same may from time to time be amended, modified, supplemented or extended.
"Default" means any event which is, or with the lapse of time or
giving of notice, or both, would be, an Event of Default.
"Dollars" and "$" means lawful money of the United States of America.
Any reference in this Agreement to payment in "Dollars" or "$" means payment in
Dollar funds immediately available for use by the Lender in New York, New York.
"EBITDA" of any Person means for any period, the sum of the following
(i) Net Income, plus (ii) Interest Expenses and the interest expenses accrued
or paid with respect to the USAA Debt, determined in accordance with GAAP, plus
(iii) income tax expenses, plus (iv) amortization expenses, which were deducted
in determining Net Income, plus (v) depreciation expenses, which were deducted
in determining Net Income, plus (vi) all minority interest expense to the
extent required by GAAP to be deducted in determining Net Income.
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"Engagement Letter" means the Engagement Letter dated as of January 24,
1997 between the REIT Borrower and Prudential Securities Incorporated, pursuant
to which (i) the REIT Borrower engaged Prudential Securities Incorporated to
act as the Borrower's exclusive financial advisor.
"Environmental Claim" means any third party (including, without
limitation, governmental authorities and employees) action, lawsuit,
investigation, claim, proceeding, order, decree, consent agreement, notice of
violation or other legal proceeding (collectively an "Action") (including,
without limitation, any Action under OSHA or any similar law relating to the
safety or health of employees) which seeks to impose liability for (i)
pollution, contamination, protection, clean-up, restoration, destruction, loss
or injury to or of the air, surface water, groundwater, land (including,
without limitation, surface and subsurface strata) or other natural resources;
(ii) solid, gaseous or liquid Waste generation, handling, transportation,
treatment, processing, clean-up, storage, disposal, recycling or reclamation;
(iii) exposure to pollutants, contaminants, hazardous materials, hazardous
substances, toxic materials or substances, or Wastes; (iv) the safety or health
of employees; (v) the manufacture, generation, processing, distribution, use,
treatment, storage, disposal, transport, recycling, reclamation or handling of
chemical substances, pollutants, contaminants, hazardous materials, hazardous
substances, toxic materials or substances, (vi) Wastes or (vii) noise. An
"Environmental Claim" includes, but is not limited to, a common law action, as
well as a legal proceeding initiated or brought by any federal, state or local
executive, legislative, judicial, regulatory or administrative agency, board or
authority or any third party to issue, modify, adopt, terminate or enforce the
provisions of an Environmental Permit or to modify, adopt, terminate or enforce
a Requirement of Environmental Law, to the extent that such a proceeding
attempts to redress violations or alleged violations of the applicable
Environmental Permit or Requirement of Environmental Law.
"Environmental Indemnities" mean, collectively, (i) the Environmental
Indemnity dated as of the Closing Date between the Borrower and the Lender, and
(ii) the Environmental Indemnity to be entered into between the Borrower and
the Lender, in each case, in the form of Exhibit F hereto, as the same may from
time to time be amended, modified, supplemented or extended.
"Environmental Laws" shall mean any federal, state, local and foreign
laws, regulations, codes, ordinances, plans, orders, decrees, judgments,
injunctions, notices or demand letters issued, promulgated or entered
thereunder by any Governmental Authority relating to pollution or protection of
the environment, including, without limitation, laws relating to reclamation of
land or waterways and laws relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants, hazardous materials, hazardous
substances, toxic materials or substances, or Wastes into the environment or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants,
contaminants, hazardous materials, hazardous substances, toxic materials or
substances, or Wastes, or otherwise relating to worker health and safety or
public health and safety to which the Borrower and its Subsidiaries are
subject, including, without limitation, the Clean Air Act, as amended, the
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Comprehensive Environmental Response, Compensation, and Liability Act of 1980
("CERCLA"), as amended, the Federal Water Pollution Control Act, as amended,
the Occupational Safety and Health Act of 1970 ("OSHA"), as amended, the
Resource Conservation and Recovery Act of 1976 ("RCRA"), as amended, the Safe
Drinking Water Act, as amended, the Toxic Substances Control Act, as amended,
the Superfund Amendments and Reauthorization Act of 1986, as amended, and any
other environmental conservation or protection laws.
"Environmental Liabilities" means all costs arising from or related to
any Environmental Claim, Environmental Permit or Requirement of Environmental
Law (including, without limitation, all costs arising under any theory or
process of recovery or relief, at law or in equity), whether based on
negligence, strict liability, RCRA, CERCLA or otherwise, including, but not
limited to, remedial, removal, response, restoration, abatement, investigative,
monitoring, personal injury, death and property damage costs, and any other
related costs, expenses, losses, damages, penalties, fines, liabilities and
obligations, including, without limitation, attorneys' fees, court costs and
interest paid or accrued.
"Environmental Matters" means any and all matters relating to any
Requirement of Environmental Law, Environmental Claim or Environmental Permit.
"Environmental Permit" means any permit, license, notice, order,
approval or other authorization under any applicable law, rule, regulation or
other requirement of the United States or of any state, municipality or other
subdivision thereof relating to (i) pollution or protection of the environment
or safety and health, including, without limitation, all laws, rules,
regulations or other requirements relating to emissions, discharges, releases
or threatened releases of pollutants, contaminants, hazardous materials,
hazardous substances, toxic materials or substances, or Wastes into or on the
air, surface water, groundwater or land (including, without limitation, surface
and subsurface strata), or (ii) the manufacture, generation, processing,
distribution, use, treatment, storage, disposal, transport, recycling,
reclamation or handling of chemical substances, pollutants, contaminants,
hazardous materials, hazardous substances, toxic materials or substances, or
Wastes.
"Environmental Reports" means the Environmental Reports delivered to
the Lender pursuant to Section 4.02(d) hereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
"ERISA Affiliate" means each Person (as defined in Section 3(9) of
ERISA) that is a member of any "controlled group" (as defined in Section
4001(14) of ERISA) that includes the Borrower.
"ERISA Termination Event" means (i) any Reportable Event, (ii) the
withdrawal of the Borrower or any of its ERISA Affiliates from a Plan during a
Plan year in which it was a "substantial employer" as defined in Section
4001(a)(2) of ERISA, (iii) the filing of a notice of intent to terminate a Plan
or to treat any Plan amendment as a termination under Section 4041 of
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ERISA, (iv) any Plan amendment or the occurrence of any event that constitutes
a "partial termination" (within the meaning of Section 411(d)(3) of the IRC)
with respect to any Plan, (v) the institution of proceedings to terminate a
Plan or the appointment of a trustee by the PBGC pursuant to Section 4044 of
ERISA or (vi) any event or condition that might constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee
to administer, any Plan.
"Estoppel Certificates" mean, collectively, (i) the Estoppel
Certificates dated as of the Closing Date by the tenants of the Collateral
Properties in favor of the Lender, and (ii) the Estoppel Certificates to be
entered into by the tenants of the Collateral Properties in favor of the
Lender, in each case, in the form of Exhibit G hereto, as the same may from
time to time be amended, modified, supplemented or extended.
"Event of Default" means any event specified as such in Section 8.01
hereof.
"Expiration Date" means the earlier of the first anniversary of the
first Loan under this Agreement or 365 days from the Closing Date.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted
average of the rates on overnight federal funds transactions with members of
the Federal Reserve System arranged by federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day, provided, that (i) if the day for which such rate is to be
determined is not a Business Day, the Federal Funds Rate for such day shall be
such rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (ii) if such rate is not so
published for any Business Day, the Federal Funds Rate for such Business Day
shall be the average rate charged to the Lender, directly or indirectly, on
such Business Day on such transactions as determined by the Lender.
"Fiscal Quarter" means each of the four periods of three months of
each year, ending on the last day of each March, June, September and December,
which in the aggregate constitute a Fiscal Year.
"Fiscal Year" means the fiscal year ending on December 31.
"GAAP" means generally accepted accounting principles (i) in the
United States of America as in effect from time to time set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of the Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Board, or in such other
statements by such other entity as may be in general use by significant
segments of the accounting profession, which are applicable to the
circumstances as of the date of determination, and (ii) which are consistently
applied in form and substance.
"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.
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"Indebtedness" means (without duplication), with respect to any
Person, all obligations, contingent and otherwise, which, in accordance with
GAAP, would be included in determining total liabilities as shown on the
liabilities side of a balance sheet of such Person as at any date at which the
amount thereof is to be determined, but in any event and as well including, the
Note, all other amounts due under the Loan Documents, any contingent
obligations arising due to all guarantees, endorsements (other than
endorsements for collection or deposits in the ordinary course of business) and
all other contingent obligations whether or not in respect of any Indebtedness
of others, deferred taxes and accrued obligations, all liabilities secured by
any mortgage, pledge or lien existing on property owned or acquired subject to
such mortgage, pledge or lien, whether or not the liability secured thereby
shall have been assumed, and all lease obligations.
"Individual Loan-To-Value Ratio" means, as of the date of
determination, for each Collateral Property the ratio of (i) the sum of the
outstanding Loan, the proceeds of which were used to acquire such Collateral
Property, plus the outstanding Reserve, if any, applicable to such Collateral
Property, to (ii) the market value of such Collateral Properties, as determined
by the Lender.
"Initial Borrowing Date" means the first Borrowing Date on which the
first Loan is made hereunder.
"Interest Expenses" of any Person shall mean, for any period, the
interest expenses incurred, accrued or paid of such Person for such period on
the aggregate principal amount of their Indebtedness, determined in accordance
with GAAP; provided, however, that Interest Expenses shall exclude the interest
expenses accrued or paid with respect to the USAA Debt, determined in
accordance with GAAP.
"Interest Payment Date" means the day in the calendar month following
the Initial Borrowing Date corresponding to such Initial Borrowing Date, and
each corresponding day in each calendar month thereafter (unless such date
falls on a non-Business Day, then the next Business Day, but in no event later
than the Expiration Date).
"Interest Period" means for each Loan, (i) in the case of the first
Interest Period for each Loan, the period beginning on the date thereof and
ending on the first Interest Payment Date occurring thereafter (regardless of
the number of days in such period), and (ii) in the case of all other Interest
Periods for such Loan, the period beginning on the last day of the immediately
preceding Interest Period and ending on the next succeeding Interest Payment
Date; provided, however, that no Interest Period for each Loan shall extend
beyond the Expiration Date.
"IRC" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute.
"knowledge" means, with respect to any Person, what such Person knows
or should have known, in each case, after due inquiry.
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"Leases" mean, collectively, all of the leases now existing or
hereafter entered into in connection with the Collateral Properties.
"Lender" has the meaning given to it in the preamble of this
Agreement, and its successors, participants and assigns (including any Person
who becomes a holder of the Note).
"Lender's Office" means the Lender's principal office at Xxx Xxx Xxxx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000.
"LIBOR" in respect of each Interest Period shall be the rate per annum
equal to the product arrived at by multiplying the Base LIBOR applicable to
such Interest Period by a fraction (expressed as a decimal), the numerator of
which shall be the number one and the denominator of which shall be the number
one minus the aggregate reserve percentages (expressed as a decimal) from time
to time established by the Board of Governors of the United States Federal
Reserve System and any other Governmental Authority to which the Lender is now
or hereafter subject, including, without limitation, any reserve on
"Eurocurrency Liabilities" (as defined in Regulation D of the Board of
Governors of the United States Federal Reserve System) at the ratios provided
in such Regulation from time to time, it being agreed that the Loans shall be
deemed to constitute Eurocurrency Liabilities and it being further agreed that
such Eurocurrency Liabilities shall be deemed to be subject to such reserve
requirements without the benefit of or credit for prorations, exceptions or
offsets that may be available to the Lender from time to time under such
Regulation and irrespective of whether the Lender actually maintain all or any
portion of such reserve.
"Lien" means, with respect to any Person, (i) any lien (including,
without limitation, any statutory lien), mortgage, hypothecation, privilege,
security interest, pledge, encumbrance, charge (general or special, floating or
fixed) or conditional sale or other title retention arrangement (including,
without limitation, the rights of a lessor under a capital lease to the
property leased thereunder) or other security interest of any kind upon any
property or assets of any character of such Person, whether now owned or
hereafter acquired by such Person, or upon the income or profits therefrom,
(ii) the transfer, pledge or assignment by such Person of any of its property
or assets for the purpose of subjecting the same to the payment of any
indebtedness of such Person or others in priority to the payment by such Person
of its general creditors, (iii) any sale, assignment, pledge or other transfer
by such Person of its accounts receivable, contract rights, general intangibles
or chattel paper with recourse, and (iv) any agreement to give or do any of the
foregoing.
"Loan" or "Loans" means the loans made on a joint and several basis
pursuant to Section 2.02(a) hereof.
"Loan Documents" mean, collectively, this Agreement, the Note, the
Collateral Documents, the Estoppel Certificates, the Subordination Agreements,
the Environmental Indemnities, the Engagement Letter and all other documents,
agreements, instruments and
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certificates executed and delivered by, or on behalf of, the Borrower in
connection with the transactions contemplated by this Agreement.
"Material Adverse Change" of the Borrower or its Subsidiaries means a
material adverse change in the business, condition (financial or otherwise),
assets, properties or operations of the Borrower or Subsidiary.
"Material Adverse Effect" means any set of circumstances or events
which (i) would have any material adverse effect whatsoever upon the validity
or enforceability of this Agreement, the Note or any other Related Document,
(ii) is or would reasonably be expected to have a material adverse effect on
the business, condition (financial or other), assets, properties or operations
of the Borrower or its Subsidiaries, as the case may be and as applicable,
(iii) would materially impair the Borrower's or its Subsidiaries' ability to
fulfill their respective obligations under the terms and conditions of this
Agreement or the other Related Documents to which they are a party thereto, or
(iv) would materially impair the Lender's rights in or to, or have a material
adverse effect on, the Collateral.
"Memoranda of Lease" mean, collectively, each memorandum of lease
describing a Lease and recorded in the appropriate filing offices.
"Modifications" has the meaning set forth in Section 4.02(e) hereof.
"Mortgages" mean, collectively, (i) the Mortgages, Security Agreements
and Assignments of Leases and Rents dated as of the Closing Date between the
Borrower and the Lender, and (ii) the Mortgages, Security Agreements and
Assignments of Leases and Rents to be entered into between the Borrower and the
Lender, in each case, in the form of Exhibit I hereto, as the same may from
time to time be amended, modified, supplemented or extended.
"Net Income" of any Person means, for any period taken as one
accounting period, the net income (or loss) of such Person for such period
after eliminating all intercompany items, determined in accordance with GAAP;
provided, however, that there shall be excluded (i) the income (or loss) of
such Person in which any other Person has a joint interest, except to the
extent of the amount of dividends or other distributions actually paid to such
Person by such other Person during such period, (ii) except to the extent
includable pursuant to the foregoing clause (i), the income (or loss) of any
Person accrued prior to the date it becomes a Subsidiary of such Person or is
merged into or consolidated with such Person or that Person's assets are
acquired by such Person, and (iii) any extraordinary gains or losses and gains
or losses from sales of assets (other than sales of inventory in the ordinary
course of business), determined in accordance with GAAP.
"Net Worth" of any Person shall mean, for any period, the excess of
(i) Total Assets, over (ii) Total Liabilities.
"Note" means the promissory note issued by the Borrower, on a joint
and several basis, evidencing the Loans delivered pursuant to Section
2.02(b)(ii) hereof, as the same may be from time to time amended, modified,
supplemented or extended.
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"Notice of Borrowing" has the meaning given to it in Section
2.02(b)(i) hereof.
"Notice of Optional Prepayment" has the meaning given to it in Section
2.06 hereof.
"Obligations" means, as to the Borrower, all liabilities, obligations
and indebtedness of the Borrower to the Lender of any and every kind and nature
(including, without limitation, principal payments, interest, charges,
expenses, attorneys' fees, maintenance, commitment and other fees chargeable to
the Borrower by the Lender and future advances made to or for the benefit of
such Person), whether arising under this Agreement, under any of the Related
Documents, under any refinancing or modification of the credit facilities
provided under this Agreement or any of the Related Documents, pursuant to any
arrangement, agreement or understanding hereafter among the Borrower and the
Lender or otherwise, or acquired by the Lender from any other source, whether
now or hereafter owing, arising, due or payable from the Borrower to the
Lender, whether before or after the filing of a proceeding under the Bankruptcy
Code by or against the Borrower, regardless of how evidenced, created,
incurred, acquired or owing, whether primary, secondary, direct, contingent,
fixed or otherwise, including, without limitation, obligations or guarantees of
performance or payment. Each of the REIT Borrower and AIP-SWAG shall be
jointly and severally liable for all such Obligations on a full-recourse basis.
"Operational Documents" mean, collectively, the Acquisition Documents,
the Leases, the Memoranda of Lease, the Building Condition Reports, the
Environmental Reports and the Service Agreements.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"Permits" shall have the meaning set forth in Section 3.03 hereof.
"Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of whatever
nature.
"Plan" means any "Employee Benefit Plan" (as defined in Section 3(3)
of ERISA) as covered by any provision of ERISA and as maintained, or otherwise
contributed to, or at any time during the five calendar year period immediately
preceding the date of this Agreement was maintained or otherwise contributed
to, by the Borrower, or any ERISA Affiliate of the Borrower for the benefit of
the respective employees of the Borrower or an ERISA Affiliate of the Borrower.
"PML" has the meaning set forth in Section 4.02(e) hereof.
"Prohibited Transaction" means any "prohibited transaction" (within
the meaning of Section 406 of ERISA or Section 4975 of the IRC) with respect to
any Plan for which transaction no statutory exemption is not available.
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"Regulations D, G, T, U and/or X" means Regulations D, G, T, U and/or
X of the Board of Governors of the Federal Reserve System, as in effect from
time to time.
"REIT" means a "real estate investment trust" as defined in Sections
856-860 of the IRC.
"REIT Borrower" has the meaning set forth in the recitals hereto, and
includes each successor and assign.
"Regulatory Change" means the introduction of, or any change in,
United States federal, state or local laws or regulations (including Regulation
D) or treaties or foreign laws or regulations after the Closing Date or the
adoption or making after such date of any interpretations, directives,
guidelines or requests applying generally to a class of banks and/or financial
institutions, including the Lender, of or under any United States federal,
state, or local rules or regulations or any treaties or foreign laws or
regulations (whether or not having the force of law) by any court or monetary
or Governmental Authority charged with the interpretation or administration
thereof. Notwithstanding the foregoing, a "Regulatory Change" shall not
include any change in the aggregate reserve percentages included in the
definition of "LIBOR" which are from time to time established by the Board of
Governors of the United States Federal Reserve System and any other
Governmental Authority to which the Lender is now or hereafter subject
(including, without limitation, any reserve on "Eurocurrency Liabilities" (as
defined in Regulation D of the Board of Governors of the United States Federal
Reserve System)).
"Related Documents" means, collectively, the Loan Documents and the
Operational Documents.
"Repairs" has the meaning set forth in Section 5.16 hereof.
"Reportable Event" means any "reportable event" described in Section
4043(b) of ERISA with respect to which the 30 day notice requirement set forth
in Section 4043(a) of ERISA has not been waived by the PBGC that occurs or has
occurred in connection with any Plan.
"Requirements of Environmental Law" means any and all requirements
imposed by and provisions of any law, rule, regulation, order, decision or
decree of any federal, state or local executive, legislative, judicial,
regulatory or administrative agency, board or authority which relate to (i)
pollution, contamination, protection, clean-up, restoration, destruction, loss
or injury to or of the air, surface water, groundwater, land (including,
without limitation, surface and subsurface strata) or other natural resources;
(ii) solid, gaseous or liquid Waste generation, handling, transportation,
treatment, processing, clean-up, storage, disposal, recycling or reclamation;
(iii) exposure to pollutants, contaminants, hazardous materials, hazardous
substances, toxic materials or substances, or Wastes; (iv) the safety or health
of employees (other than social security laws); (v) the manufacture,
generation, processing, distribution, use, treatment, storage, disposal,
transport, recycling, reclamation or handling of chemical substances,
pollutants, contaminants, hazardous materials, hazardous substances, toxic
materials or substances, or Wastes; or (vi) noise.
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"Reserves" means the reserves, maintained in accordance with GAAP,
established by the Borrower at the closing of each applicable Loan against the
availability under this Agreement in the amount equal to 125% of the costs of
the Modifications.
"Securities" means all shares, options, membership interests,
partnership interests, participations or other equivalents (regardless of how
designated) of or in a corporation, limited liability company, partnership or
equivalent entity, whether voting or non-voting, including, without limitation,
common stock, preferred stock, warrants, convertible debentures and all
agreements, instruments and documents convertible, in whole or in part, into
any one or more of or all of the foregoing.
"Service Agreements" means, collectively, the material management,
operational and service agreements entered into in connection with the
Acquisition Properties.
"Subordination Agreements" mean, collectively, (i) the Subordination,
Non-Disturbance and Attornment Agreements dated as of the Closing Date between
the tenants of the Collateral Properties and the Lender, and (ii) the
Subordination, Non-Disturbance and Attornment Agreements to be entered into
between the tenants of the Collateral Properties and the Lender, in each case,
in the form of Exhibit J hereto, as the same may from time to time be amended,
modified, supplemented or extended.
"Subsidiary" means, with respect to any Person, any corporation,
limited liability company, partnership or equivalent entity of which more than
50% of the outstanding Securities having ordinary voting power to elect or
appoint a majority of the Board of Directors, managers, general partners or
equivalent positions of such corporation, limited liability company,
partnership or equivalent entity is at the time directly or indirectly owned by
such Person, or by one or more other Subsidiaries of such Person.
"Total Assets" of any Person shall mean, at the date of determination,
all assets of such Person which would, determined in accordance with GAAP, be
classified on a balance sheet as an asset.
"Total Liabilities" of any Person shall mean, at the date of
determination, all liabilities of such Person which would, determined in
accordance with GAAP, be classified on a balance sheet as a liabilities;
provided, however, that Total Liabilities shall exclude the funded portions of
the USAA Debt.
"Transaction Costs" means the fees, costs and expenses payable by the
Borrower pursuant to this Agreement or in connection herewith and the fees,
costs and expenses payable by the Borrower in connection with the Loan
Documents, in each case including, but not limited to, attorney's fees and
expenses.
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"USAA Debt" means the purchase by and issuance to USAA Real Estate
Company ("USAA") of up to $5,450,000 in convertible debt securities of the
Borrower issued on February 26, 1997, the proceeds of which will be converted
into equity Securities of the Borrower no later than December 31, 1997.
"Waste" or "Wastes" means any material or substance that is defined,
identified or regulated as a waste, solid waste or hazardous waste pursuant to
any applicable federal, state or local law, rule, regulation, order, decision
or decree, including, without limitation, Section 1004 of the RCRA. As used in
this Agreement the phrase "pollutants, contaminants, hazardous materials,
hazardous substances, toxic materials or substances, or Wastes", includes,
without limitation, in each instance, asbestos, polychlorinated biphenyl's,
radioactive materials, oil, petroleum, petroleum products and waste oils.
Section 1.02. Accounting and Banking Terms. All accounting and
banking terms not specifically defined herein shall be construed in the case of
accounting terms, in accordance with GAAP and, in the case of banking terms, in
accordance with general practice among commercial banks and financial
institutions in New York, New York.
Section 1.03. Discretion. Whenever it is provided in this Agreement
or in any of the Loan Documents that (i) the Lender exercises any right given
to it to approve or disapprove, (ii) any arrangement or term is to be
satisfactory to the Lender, or (iii) any other decision or determination is to
be made by the Lender, the decision of the Lender to approve or disapprove, all
decisions that arrangements or terms are satisfactory or not satisfactory and
all other decisions and determinations made by the Lender, shall be in the sole
and absolute discretion of the Lender and shall be final and conclusive, except
as may be otherwise expressly and specifically provided herein.
ARTICLE 2. THE CREDIT FACILITIES
Section 2.01. The Credit Facilities. At all times prior to the
Expiration Date (or earlier termination of the Commitment Period hereunder),
subject to the terms and conditions hereinafter set forth, the Lender agrees to
make available to the Borrower on a joint and several basis, subject to Article
4 and Sections 2.02, 5.12, 5.14 and 7.04 hereof, one or more Loans in the
aggregate principal amount of up to the amount of the Available Commitment, to
be made to the Borrower upon the request of an Authorized Person in multiple
advances, each on a Borrowing Date. All of the Loans shall be
cross-collateralized and cross-defaulted with full recourse to the Borrower.
Section 2.02. The Loans; Procedure for Borrowing. (a) Subject to
the terms and conditions hereof, the Lender agrees to make Loans to the
Borrower from the Lender's Office, from time to time during the Commitment
Period as provided in this Agreement in an aggregate principal amount at any
one time outstanding which will not exceed the Available Commitment. The Loans
shall mature on the Expiration Date and bear interest for the period from the
Borrowing Date thereof to the date of payment in full thereof on the unpaid
principal amount thereof from time to time outstanding at the applicable
interest rates per annum determined and
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payable as specified in Section 2.03 hereof. The Loans shall be administered
by the Lender; provided, however, that the Lender may elect, at its expense, to
have the Loans administered and serviced by a third party.
(b)(i) Each Loan shall be made upon notice, given by an Authorized
Person of the Borrower to the Lender not later than 11:00 a.m. (New York City
time) on the third (3rd)Business Day prior to the requested Borrowing Date (a
"Notice of Borrowing"). Such notice shall be made by telecopy or telephone,
confirmed immediately in writing, by delivery of a Notice of Borrowing, in the
form of Exhibit K hereto, specifying therein (A) the requested Borrowing Date,
(B) the aggregate amount of the Loans therein requested to be made, which
amount shall not be greater than the Available Commitment or less than $100,000
or an integral multiple of $100,000 in excess thereof. The Notice of Borrowing
shall be irrevocable and shall bind the Borrower to borrow in accordance with
such notice. Upon fulfillment of the applicable conditions set forth herein,
the Lender will make such Loan available to the Borrower by disbursing such
proceeds as an Authorized Person of the Borrower may instruct the Lender in
advance in writing.
(ii) The obligations of the Borrower to pay the principal of and
interest on the Loans shall be evidenced by the Note in favor of the Lender
duly executed and delivered by the Borrower on a joint and several basis in the
form of Exhibit L hereto. The Note shall (A) be payable to the order of the
Lender, (B) be in a stated principal amount equal to the Commitment and be
payable in the principal amount of the Loans evidenced thereby, (C) be stated
to mature (and each Loan shall be repayable) in full on the Expiration Date,
and (D) be entitled to the benefits of this Agreement. At the time of each
Loan, and upon each prepayment of principal of each Loan, the Lender shall, and
is hereby authorized to, make a notation on the schedule annexed to and
constituting a part of the Note, and any such notation shall be conclusive and
binding for all purposes absent manifest error; provided, however, that the
failure by the Lender to make any such notation shall not affect the
obligations of the Borrower under the Note or this Agreement. Although the
Note shall be dated the Closing Date, interest in respect thereof shall be
payable only for the periods during which the Loans evidenced thereby to the
Borrower are outstanding and although the stated amount of the Note shall be
equal to the Commitment, the Note shall be enforceable, with respect to the
obligations of the Borrower to pay the principal amount thereof, only to the
extent of the unpaid principal amount of the Loans to it at the time evidenced
thereby.
Section 2.03. Rate of Interest; Calculation of Interest. (a) Each
Loan shall bear interest on the unpaid principal amount thereof from the
Borrowing Date until such principal amount is paid in full at a rate or rates
per annum determined in accordance with this Section 2.03. The Borrower shall
pay interest on the unpaid amount of each Loan at the rate per annum equal to
the sum of (i) LIBOR in effect from time to time applicable to each Interest
Period for such Loan, plus (ii) the Applicable Margin, payable in arrears on
each Interest Payment Date, commencing with the first of such dates to occur
after the Borrowing Date and ending on the date the principal amount of such
Loan shall be paid or prepaid, to the extent of the interest accrued on the
principal amount of such Loan so paid or prepaid.
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(b) Each Conversion Loan shall bear interest on the unpaid principal
amount thereof from the Borrowing Date until such principal amount is paid in
full at a rate or rates per annum to be determined by the Lender based on the
then current yield on a ten (10) year Treasury note plus a margin determined by
Lender, payable in arrears on the last Business Day of each month, commencing
with the first of such dates to occur after the Conversion Date of such
Conversion Loan and ending on the date the principal amount of such Conversion
Loan shall be paid or prepaid.
(c) From and after the occurrence of any Event of Default under
Section 8.01 hereof, and for so long as such Event of Default shall continue
(after as well as before judgment), the unpaid principal amount of each Loan
and any other amount then due and payable but not yet paid hereunder shall bear
interest at a rate per annum equal to the then interest rate of such
outstanding Loan determined in accordance with clause (a) above plus three
hundred (300) basis points per annum, payable on demand. Overdue interest
shall be compounded and bear interest, to the extent permitted by law, on each
date for payment of interest on the Loans hereunder. The Borrower shall pay a
late charge of five percent (5%) of each monthly payment not paid within ten
(10) days after the date upon which such payment was due (which amount the
Borrower and the Lender agree is a fair and reasonable estimate of the Lender's
damages in light of all of the facts and circumstances as of the date of this
Agreement). Such late charge shall be due and payable by the Borrower
concurrently with the late payment for which such charge is assessed hereunder.
(d) Interest shall be calculated on a basis of a 360-day year for the
actual number of days elapsed during the Interest Period on the balance
outstanding during such Interest Period. To the extent that interest is
required to be calculated at the Base Rate plus the Applicable Margin pursuant
to Section 2.11 hereof, any change in the interest rate on the Loans shall
become effective as of the opening of business on the day on which such change
in the Base Rate becomes effective. The Lender shall, as soon as practicable,
notify the Borrower of the effective date and the amount of each such change in
the Base Rate; provided, however, that any failure by the Lender to give the
Borrower any such notice shall not affect the application of such change in the
Base Rate. Each determination of an interest rate by the Lender pursuant to
any provision of this Agreement shall be, absent manifest error, deemed to be
correct.
(e) Anything herein to the contrary notwithstanding, the obligations
of the Borrower under this Agreement and the Note shall be subject to the
limitation that payments of interest shall not be required to the extent that
receipt thereof would be contrary to provisions of law applicable to the Lender
limiting rates of interest which may be charged or collected by the Lender. If
the Borrower pays the Lender interest in excess of the maximum amount permitted
by applicable law, such excess shall be applied in reduction of the principal
balance of the Note, and any remaining excess shall be refunded to the
Borrower.
Section 2.04. Indemnity and Funding Losses. The Borrower hereby
agrees to indemnify the Lender and to reimburse and hold the Lender harmless
from any Breakage Fees, loss, liability, cost or actual out-of-pocket expense
(including, without limitation, reasonable attorney's fees and expenses for the
Lender incurred in connection with any action or proceeding between
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or among the Borrower and any Lender or between the Lender and any third party
or otherwise) that the Lender may sustain or incur as a consequence of (a) a
default by the Borrower in the payment of principal of, or interest on, any
Loan, (b) a default by the Borrower in borrowing (or in fulfilling on or before
the requested Borrowing Date the applicable conditions set forth in Article 4
hereof with respect to such borrowing), (c) a default by the Borrower in making
any prepayment after notice thereof has been given in accordance with Section
2.05 or 2.06 hereof, or (d) the Borrower making any payment of principal with
respect to any Loan on a day other than the last day of the Interest Period
applicable thereto. The Lender shall deliver to the Borrower a certificate as
to the amount of such loss, liability, cost or expense, which certificate shall
be conclusive in absence of manifest error. This covenant shall survive
payment of the Loans and termination of this Agreement as to claims arising
prior to the indefeasible payment in full of the Loans.
Section 2.05. Mandatory Prepayments. (a) Excess Of
Commitment. If at any time the aggregate unpaid principal amount of the Loans
outstanding exceeds the Commitment, the Borrower shall immediately repay such
Loans, without premium or penalty, in a principal amount at least equal to such
excess and in a minimum amount equal to $10,000 or any larger whole multiple of
$10,000, together with accrued interest on the amount prepaid to the date of
repayment.
(b) Loan-To-Value Ratios. If at any time the loan-to-value ratios
of the Collateral Properties do not comply with the provisions of Section 7.03
hereof; the Borrower shall promptly, but in no event later than the next
Interest Payment Date, at their option, (i) prepay a portion of the applicable
Loans without attendant breakage costs, or (ii) grant the Lender a first and
only mortgage interest, in form and substance satisfactory to the Lender, in
certain of its existing properties which are currently unencumbered and are
otherwise satisfactory to the Lender, in either case in an amount sufficient to
bring the loan-to-value ratios of the Collateral Properties back into
compliance with the provisions of Section 7.03 hereof.
(c) Asset Sales. Subject to Section 6.05 hereof, the Borrower
shall apply all net proceeds of any Collateral sales as a mandatory prepayment
of the Loan without penalty or premium. All such amounts designated for
mandatory prepayment, as aforesaid, shall be applied to the respective
scheduled principal payments outstanding, each in the inverse order of their
maturities.
Section 2.06. Optional Prepayments . (a) The Borrower may, upon at
least two (2) Business Days prior notice to the Lender, voluntarily prepay any
Loan in whole at any time or in part from time to time, with accrued interest
to the date of such prepayment on the amount prepaid but, subject to Section
2.04(d) hereof, without other premiums or penalties, in an amount not less than
$100,000 or an integral multiple of $100,000 in excess thereof. Each such
notice shall be made by an Authorized Person of the Borrower by telecopy or
telephone, confirmed immediately in writing, by delivery of a Notice of
Optional Prepayment, substantially in the form of Exhibit M hereto, specifying
therein (i) the proposed date of such prepayment, and (ii) the aggregate amount
of the particular Loan(s) therein proposed to be prepaid. Each Notice of
Optional Prepayment shall be irrevocable and shall bind the Borrower to make
such prepayment in accordance with such notice.
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Section 2.07. Payments. All payments (including prepayments) to be
made by the Borrower under this Agreement shall be made by wire transfer to the
Lender, in Dollars and in immediately available funds, at such place or places
as the Lender may from time to time designate by written notice to the
Borrower. All payments to be made hereunder by the Borrower shall be made
without setoff, counterclaim or defense. If any payment hereunder becomes due
and payable on a day other than a Business Day, the due date of such payment
shall be extended to the next succeeding Business Day and, with respect to
payments of principal, interest thereon shall be payable at the applicable rate
during such extension; provided, however, that no such payments of each Loan
shall extend beyond the Expiration Date.
Section 2.08. Use of Loan Proceeds. The Borrower shall use the
proceeds of the Loans solely to finance (i) the Acquisition by the Borrower of
the Collateral Properties and the related costs; provided, however, that such
acquisition complies with the provisions of Section 7.04 and Article 4 hereof
and the other covenants contained herein, (ii) the Transaction Costs, and (iii)
the Modifications.
Section 2.09. Fees. (A) A non-refundable, non-creditable funding
fee of one percent (1%) on the amount of each Loan, which shall be payable in
advance on the Borrowing Date.
(B) A non-refundable expense reimbursement fee payable to the
Lender by the Borrower on the Closing Date and on each Borrowing Date
thereafter. Such expense reimbursement fee shall include any fees and
expenses incurred or paid by Lender in connection with the processing,
underwriting or closing of a Loan, including, without limitation, property
inspection fees, appraisal fees, attorney fees, travel expenses of Lender's
personnel or Lender's attorneys, and other out-of-pocket expenses incurred by
Lender. The $15,000 deposit previously paid to the Lender by the Borrower for
the Lender's out-of-pocket expenses, shall be credited against the expense
reimbursement fee on the Closing Date.
(C) A non-refundable, non-creditable facility fee of one percent (1%)
on the amount of each Conversion Loan, which shall be payable in advance on the
Conversion Date.
Section 2.10. Increased Costs. If any Regulatory Change: (a)
subjects the Lender to any tax of any kind whatsoever with respect to this
Agreement, the Note or any Loan or changes the basis of taxation of payments to
the Lender of principal, interest, commitment fees, or any other amount payable
hereunder in any of the foregoing (except for changes in the rate of tax on the
overall net income of the Lender); (b) imposes, modifies or holds applicable to
the Lender (or any corporation controlling the Lender) any reserve or capital
adequacy requirements or liquidity ratios or requires the Lender or any
corporation controlling the Lender) to make special deposits against or in
respect of assets or liabilities of, deposits with or for the account of, or
credit extended by, the Lender; or (c) imposes on the Lender any other
condition affecting this Agreement, the Note or the Loans; and the result of
any of the foregoing is (i) to increase the cost to the Lender of making or
maintaining Loans or to reduce any amount received or receivable by the Lender
hereunder, (ii) to require the Lender (or any corporation controlling the
Lender) to
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make any payment to any fiscal, monetary, regulatory or other authority
calculated on or by reference to any amount received or receivable by the
Lender under this Agreement or the Note, or (iii) to reduce the rate of return
on the Lender's capital as a consequence of its obligations hereunder to a
level below that which the Lender could have achieved but for such adoption,
change or compliance (taking into consideration the Lender's policies with
respect to capital adequacy), in any case by an amount deemed by the Lender to
be material, then, in any such case, the Borrower shall promptly pay the Lender
(or such corporation controlling the Lender), on its written demand, any
additional amount necessary to compensate the Lender (or such corporation) for
such additional cost, reduced amount receivable or reduction in rate of return
with respect to this Agreement, the Note or the Loans, together with interest
on such amount from the date demanded until payment in full thereof at the rate
per annum applicable to Loans, calculated on the basis of a 360-day year for
the actual days elapsed. If the Lender becomes entitled to claim any
additional amount pursuant to this Section 2.10, the Lender shall promptly
submit to the Borrower a certificate as to any additional amount payable
pursuant to the first sentence of this Section 2.10, which amount shall be,
absent manifest error, presumed to be correct; provided, however, that the
determination thereof is made on a reasonable basis. In determining such
amount, the Lender shall use any reasonable averaging and attribution methods.
Section 2.11. LIBOR Alternate Rate In the event, and on each
occasion, that on the day of the commencement of a particular Interest Period,
the Lender determines in good faith (which determination shall be conclusive
and binding upon the Borrower) that (a) U.S. dollar deposits, in an amount
equal to the aggregate principal amount of the Loans which are outstanding
during such Interest Period, for delivery on the first day of such Interest
Period and for the number of days in such Interest Period, are not generally
available in the London Interbank Market or the circumstances affecting the
London Interbank Market make it impractical to determine LIBOR, or (b) any
Regulatory Change shall make it unlawful for the Lender to make or maintain
LIBOR with respect to any Loan or to fund any Loan at LIBOR in the London
Interbank Market or to give effect to its obligations hereunder, then the
outstanding principal amount of the Loans shall bear interest at an interest
rate equal to the Base Rate plus the Applicable Margin, unless and until the
Lender shall have determined in good faith (which determination shall be
conclusive and binding upon the Borrower) that the aforesaid circumstances no
longer exist, whereupon the interest rate applicable to such Loans shall be
converted back to an interest rate equal to LIBOR plus the Applicable Margin,
determined in the manner set forth above as of the commencement of the next
Interest Period.
Section 2.12. Conversion. (A) Upon the earlier to occur of the
Expiration Date or an Event of Default, the Lender may, in its sole discretion
and in addition to its other remedies available to it under this Agreement, the
Loan Documents or applicable law, subject to the payment of the applicable
Breakage Fees, if any, elect to Convert any or all of the Loans into fixed rate
conduit loans containing market terms to be determined by the Lender and
requiring monthly principal and interest payments based on a twenty-five (25)
year amortization period maturing on the Conversion Maturity Date. All of the
Conversion Loans shall be cross-collateralized and cross-defaulted with full
recourse to the Borrower.
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(B) The Borrower acknowledges that the Loan Documents for the Loans
contain numerous terms which will be inapplicable upon Conversion, including,
without limitation, the possible modification of some or all of the Loan
Documents to terminate or partially terminate the cross-collateralization and
cross-default provisions with respect to one or more of the Loans. In
addition, it may be necessary to record a notice that the Conversion has
occurred in order to obtain appropriate title insurance coverage. Therefore,
upon any Conversion, the Borrower shall (i) execute and deliver to the Lender
(a) appropriate documents in recordable form providing notice of Conversion;
and (b) amended and restated loan documents for the Loans containing the
interest, repayment and other terms described herein applicable to the
Conversion Loans following Conversion and otherwise conforming to the standard
loan documents then used by the Lender for commercial conduit real estate loans
with terms and collateral similar to the Conversion Loans, all as determined by
the Lender; (ii) transfer the Collateral Properties to one or more special
purpose bankruptcy-remote subsidiaries; (iii) establish such reserves as the
Lender may require, in its sole discretion, including, without limitation,
reserves for capital repairs and improvements, tenant improvements and leasing
commissions; and provide the Lender with such additional information,
documents, certificates, appraisals, opinions, Estoppel Certificates,
Subordination Agreements, third party and other reports (including, without
limitation, Building Condition Reports and Environmental Reports) and other
information with respect to the Borrower and/or the Collateral Properties as
the Lender may request. Notwithstanding the foregoing, in the event that the
Lender elects to proceed with a Conversion, the Lender shall be entitled to
execute and record, without any approval or execution of the Borrower, a notice
that the Conversion has occurred.
Section 2.13. AIP-SWAG Collateral. (a) Lender has agreed to make
a Loan to Borrower which is, in part, secured by Collateral Properties owned by
AIP-SWAG. On the Borrowing Date of that Loan, Lender has advanced to Borrower
Twenty Million Six Hundred Seventy Five Thousand Dollars ($20,675,000.00).
Borrower may request additional disbursements under that Loan of not more than
Two Million Four Hundred Twenty Five Thousand Dollars ($2,425,000) (the
"Additional Disbursement") subject to the terms of this Section 2.13.
(b) Upon and with a request by Borrower for an Additional
Disbursement, Borrower shall provide evidence in all respects satisfactory to
Lender that: (i) additional rentals which support the Additional Disbursement
are derived from leases under which the lease term has commenced; (ii) the
lessees or tenants under such leases are acceptable to Lender; (iii) assuming
the Additional Disbursement, the requirements set forth in Sections 7.01 and
7.03 hereof are met; and, (iv) no Event of Default has occurred or is
continuing.
(c) Lender shall make no more than two Additional Disbursements
hereunder. Borrower's right to request such Additional Disbursements shall
terminate 180 days from the Borrowing Date. No Additional Disbursement shall
be made by Lender in an amount less than One Hundred Thousand ($100,000.00)
Dollars and the fee required under Section 2.09(A) hereof shall be paid by
Borrower to Lender with each such Additional Disbursement.
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ARTICLE 3. REPRESENTATIONS AND WARRANTIES
In order to induce the Lender to enter into this Agreement and to
extend the financial accommodations hereunder, the Borrower hereby represents
and warrants to the Lender that:
Section 3.01. Organization and Powers; REIT Status. The REIT
Borrower is a real estate investment trust duly organized and validly existing
and in good standing under the laws of the State of Texas. The AIP-SWAG is a
limited partnership duly organized and validly existing and in good standing
under the laws of the State of Delaware. The Borrower is duly qualified to do
business as a foreign corporation or entity and is in good standing in each
jurisdiction (other than the state of its respective incorporation or
organization) in which the conduct of its respective business or the ownership
or operation of its respective properties or assets makes such qualification
necessary, except where the failure to so qualify would not have a Material
Adverse Effect. The Borrower has full power and authority to own its
respective properties and assets and carry on its respective business as now
conducted. The REIT Borrower has not taken any action that would prevent it
from maintaining its qualification as a REIT.
Section 3.02. Power and Authorization. (a) The Borrower has full
power, right and legal authority to execute, deliver and perform its respective
obligations under this Agreement, the Note and such of the other Related
Documents to which it is a party. The Borrower has taken all corporate or
partnership, if applicable, and other actions necessary to authorize the
execution and delivery of, and the performance of its obligations under such
documents and to make borrowings by the Borrower under this Agreement, as the
case may be. This Agreement, the Note and such of the other Related Documents
to which it is a party, constitute legal, valid and binding obligations of the
Borrower enforceable against it in accordance with their respective terms
subject to the effect of any applicable bankruptcy, insolvency, reorganization
or moratorium or similar laws affecting the rights of creditors generally. No
consent of any person, and no consent, license, approval or authorization, or
registration or declaration with, any Governmental Authority, which has not
been obtained, taken or made (other than the financing statements and filings
required to be filed pursuant to this Agreement and the Related Documents,
which have been delivered to the Lender for filing on the Closing Date and on
the date of the closing of each Loan, as the case may be), is required in
connection with the execution, delivery or performance by the Borrower of this
Agreement, the Note or the other Related Documents to which it is a party, or
the making of borrowings by the Borrower under this Agreement.
Section 3.03. Permits; Compliance with Laws. (A) The Borrower has
all permits, licenses and governmental franchises and other authorizations from
all Governmental Authorities (collectively, the "Permits") that are necessary
to own and operate its business as presently being conducted and as
contemplated to be conducted immediately after the Closing Date and the date of
the closing of each Loan. All such Permits are valid and subsisting and in
full force and effect. (B) The Borrower is in compliance with the terms of
such Permits and all statutes, laws, ordinances, governmental rules or
regulations (including Environmental Laws) and all judgments, orders or decrees
(federal, state, local or foreign) to which it is subject, except for
violations of which would not have a Material Adverse Effect.
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Section 3.04. No Legal Bar. The execution, delivery and performance by the
Borrower of this Agreement, the Note and such of the other Related Documents to
which it is a party, and the making of borrowings hereunder by the Borrower, do
not and will not (i) violate or contravene any provisions of any existing law,
statute, rule, regulation or ordinance or charter document, (ii) violate or
contravene any provision of any order or decree of any court or Governmental
Authority to which the Borrower or any of its properties or assets are subject,
(iii) violate or contravene any provision of any mortgage, indenture, security
agreement, contract, undertaking or other agreement or instrument to which the
Borrower is a party or which purports to be binding upon either of it or any of
its properties or assets, except for violations or contravention of which would
not have a Material Adverse Effect, or (iv) result in the creation or imposition
of any Lien on any of the properties of the Borrower (other than as created
pursuant to the Loan Documents) pursuant to the provisions of any mortgage,
indenture, security agreement, contract, undertaking or other agreement or
instrument.
Section 3.05. Litigation. There are no judgments or any litigation or
administrative proceedings of or before any court or Governmental Authority now
pending, nor, to the knowledge of the Borrower, are any such litigation or
proceedings now threatened, against the Borrower or any of its properties,
involving an individual claim in excess of $50,000 or claims in the aggregate in
excess of $100,000, except as disclosed in Schedule 3.05, nor, to the knowledge
of the Borrower, is there a valid basis for the initiation of any such
litigation or proceeding, including those set forth in Schedule 3.05.
Section 3.06. Solvency. Immediately after giving effect to each of
the financing transactions contemplated hereby on and after each Borrowing
Date, the Borrower is solvent. For purposes of this Section 3.06, the term
"solvent" means that, at the time of said determination, (i) the fair value of
such Person's assets exceeds the aggregate sum of its liabilities (including,
without limitation, contingent liabilities), (ii) such Person is able to pay
its debts as they mature, (iii) the property owned by such Person has a value
in excess of the total aggregate sum required to pay its debts, and (iv) such
Person has capital sufficient to carry on its business.
Section 3.07. The Collateral. The chief places of business and chief
executive offices of the Borrower, and the offices where the Borrower keeps its
respective books and records concerning any of the Collateral is located at the
addresses specified in the Collateral Documents. The Borrower owns the
Collateral in which it has granted a security interest and Lien in favor of the
Lender pursuant to the Loan Documents, free and clear of any Lien, security
interest charge or encumbrance, except as otherwise expressly permitted by
Section 6.02 hereof or the Related Documents or as otherwise disclosed in
Schedule 3.07 hereto. All financing statements and filings required to be
filed, and all related required fees and taxes, have been delivered to the
Lender for filing and recording, and all other steps required to be taken have
been taken, so that upon proper filing and recording in the proper offices
Lender shall have, a valid, perfected, first priority continuing and
enforceable security interest in and Lien on the Collateral and such security
interest and Lien ranks prior to any other security interest in or Lien upon
the Collateral.
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Section 3.08. Capitalization and Corporate Structure. (A) As of the
Closing Date, the authorized capital stock or partnership interest, as the case
may be, of the Borrower is validly issued, fully paid and nonassessable. (B)
There are no outstanding subscriptions, warrants, options, convertible
securities or other rights (contingent or other), or commitments therefor, to
subscribe for, purchase or acquire any Securities or to pay any dividends on
any Securities, except in accordance with Section 6.07 hereof or as set forth
in Schedule 3.08, or to distribute to any holders of Securities any properties
or assets of the Borrower. (C) The Borrower does not have any Subsidiaries,
nor is it a partner in any partnership, joint venture or other similar entity.
Section 3.09. No Default. The Borrower is not in default in any
respect in the payment or performance (i) of any of its respective material
obligations for the payment of money, or (ii) under any material franchise,
license or leasehold interest and no default has occurred and is continuing.
Section 3.10. No Secondary Liabilities. There are no outstanding
contracts of guaranty or suretyship made by the Borrower, nor is the Borrower
subject to any other material contingent liability or obligation required to be
shown on the financial statements of the Borrower, except (a) as shown on such
financial statements referred to in Section 3.12 hereof, and (b) the
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business. To the knowledge of the
Borrower, the Borrower is not a party to any materially burdensome contract or
agreement, or subject to any charter or other corporate restriction adversely
affecting in any material manner its respective management, business, assets,
properties, assets, operations, prospects or condition (financial or other).
Section 3.11. Taxes. The Borrower has timely filed, or caused to be
filed, all federal, state, local and foreign tax returns that are required to
be filed by it and has paid, or caused to be paid, all taxes, assessments,
interest and penalties thereon, on or before the due dates thereof, unless such
tax, assessment, charge, levy, claim is actively being contested in good faith
by appropriate proceedings and there has been set aside on the books of such
Person adequate reserves in accordance with GAAP applied with respect thereto.
There are no material claims pending or, to the knowledge of the Borrower,
proposed or threatened against the Borrower for past federal, state or local
taxes, except those, if any, as to which proper reserves, determined in
accordance with GAAP, are reflected in the most recent financial statements.
All such tax reports or returns fairly reflect the taxes of the Borrower for
the periods covered thereby. No Internal Revenue Service or other tax audit of
the Borrower has occurred, is pending or, to the knowledge of the Borrower,
threatened, and the results of any completed audits are properly reflected in
the financial statements.
Section 3.12. Financial Statements and Condition. The audited
consolidated financial statements of the REIT Borrower as of December 31, 1996
prepared by management and audited by a nationally recognized firm of certified
public accountants, true, complete and accurate copies of each of which were
delivered to the Lender on or before the Closing Date, (i) present fairly the
financial position of the Borrower on a consolidated basis as of the dates of
said statements, and the results of operations of the Borrower for the periods
covered by said statements of earnings
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are in accordance with GAAP, except, in each case, as disclosed therein, (ii)
have been prepared in conformity in all material respects with GAAP, and (iii)
disclose all liabilities, direct and contingent, required to be shown in
accordance with such principles. As of December 31, 1996, there were no
material obligations or liabilities, direct or indirect, fixed or contingent,
which are not reflected in such financial statements and that are required to
be so reflected thereon under GAAP. No Material Adverse Change has occurred
since December 31, 1996.
Section 3.13. ERISA; Labor Relations. (A) No Reportable Event has
occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code. The present value of all accrued benefits under each Plan
maintained by the Borrower or any ERISA Affiliate (based on those assumptions
used to fund the Plans) did not, as of the last annual valuation date prior to
the date on which this representation is made or deemed made, exceed the value
of the assets of such Plan allocable to such accrued benefits. There are no
multiemployer plans. Neither the Borrower nor any of its ERISA Affiliates has
had a complete or partial withdrawal from any multiemployer plan. The present
value (determined using actuarial and other assumptions which are reasonable in
respect of the benefits provided and the employees participating) of the
liability of the Borrower and each ERISA Affiliate for post retirement benefits
to be provided to their current and former employees under Plans which are
welfare benefit plans (as defined in Section 3(1) of ERISA) does not, in the
aggregate, exceed the assets under all such Plans allocable to such benefits.
(B) The Borrower is not a party to any collective bargaining agreement. There
are no lockouts, strikes, labor disputes or other material controversies pending
between the Borrower and any of its employees, which in the aggregate, might
have a Material Adverse Effect.
Section 3.14. Environmental Matters. Except as disclosed in Schedule
3.14 hereto, the Borrower and each respective parcel of real property owned or
leased by it are in material compliance with all Environmental Laws and
Requirements of Environmental Law; there are no conditions existing currently
or, to the knowledge of the Borrower, likely to exist that would subject the
Borrower to damages, penalties, injunctive relief or cleanup costs in an
aggregate amount exceeding $50,000 under any Environmental Matters or
assertions thereof, or which require or are likely to require cleanup, removal,
remedial action or other response pursuant to Environmental Laws by the
Borrower; the Borrower is not a party to any Environmental Claim or litigation
or administrative proceedings involving an individual claim in excess of
$50,000 or claims in the aggregate in excess of $50,000, nor so far as is known
by the Borrower, is any such litigation or administrative proceeding threatened
against the Borrower, which asserts or alleges that the Borrower has violated
or is violating Environmental Laws or Environmental Permits in any material
respect or that the Borrower is required to clean up, remove or take remedial
or other responsive action due to the disposal, depositing, storage, discharge,
leaking or other release of any hazardous substances or materials; neither the
Borrower nor any respective parcel of real property owned or leased by it are
subject to any Environmental Claim or judgment, decree, order or citation
related to or arising out of Environmental Matters involving an individual
claim in excess of $50,000 or claims in the aggregate in excess of $50,000 and
the Borrower has not been named or listed as a potentially responsible party by
any Governmental
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Authority in a matter arising under any Environmental Matters involving an
individual claim in excess of $50,000 or claims in the aggregate in excess of
$50,000; the Borrower has obtained all Environmental Permits from governmental
authorities required under Environmental Laws relative to each parcel of real
property owned or leased by it; the Borrower is in compliance in any material
respect with all terms and conditions of Environmental Permits, and is also in
compliance in all material respects with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and
timetables contained in any federal, state or local law or any regulations,
code, plan, order, decree or judgment relating to public health and safety,
worker health and safety and pollution or protection of the environment or any
notice or demand letter issued, entered, promulgated or approved thereunder,
except where the failure to so comply would not have a Material Adverse Effect;
the Borrower has not received notice (whether written or oral), specifying that
certain facts, events or conditions, interfere with or prevent continued
compliance with, or give rise to any liability involving an individual claim in
excess of $50,000 or claims in the aggregate in excess of $50,000 under any
law, common law or regulation, related to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling, or the
emission, discharge, release or threatened release into the environment, of any
pollutant, contaminant, or hazardous or toxic material or Waste; and there are
not now, nor to the knowledge of the Borrower have there ever been, materials
stored, spilled, deposited, treated, recycled or disposed of on, under or at
any parcel of real property owned or leased by the Borrower, or stored,
spilled, deposited, treated, recycled or disposed of at the direction of the
Borrower, present in soils or ground water, that would require cleanup, removal
or some other remedial action under Environmental Laws.
Section 3.15. Correct Information. The information, exhibits and
reports furnished in writing by, or on behalf of, the Borrower to the Lender in
connection with the negotiation and preparation of this Agreement and the other
Loan Documents are true and correct and do not contain any omissions or
misstatements of fact that would make the statements contained therein
misleading or incomplete in any material respect, which omissions or
misstatements could have, individually or in the aggregate, a Material Adverse
Effect. There is no fact now known to the Borrower that has not been disclosed
to the Lender that materially adversely affects the management, business,
assets, properties, operations or condition (financial or other) of the
Borrower.
Section 3.16. Investment Company Act. The Borrower is not an
"investment company" or a company "controlled" by an "investment company"
within the meaning of the Investment Company Act of 1940, as amended, or
subject to any other statute that regulates the incurring of indebtedness for
borrowed money.
Section 3.17. Margin Regulations. The Borrower is not engaged in the
business of extending credit for the purpose of purchasing or carrying "margin
stock" or "margin securities" (within the meaning of Regulation U), none of the
Obligations or liabilities of the Borrower are secured, directly or indirectly,
by "margin stock" or "margin securities", and no part of the proceeds of any
extension of credit hereunder will be used for the purpose, whether immediate,
incidental or ultimate, of purchasing or carrying any margin stock" or "margin
securities", or in a manner which would breach of contravene any of Regulations
G, T, U, or X.
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Section 3.18. Leases. Complete and correct copies of all Leases under
which Borrower is lessor have been delivered to Lender and are the only leases
of real property under which Borrower is a lessor. Each Lease and lease is
valid and subsisting and is not in default in any material respect, nor has the
Borrower received any written notice of its default under the Leases and
leases.
Section 3.19. Insurance. Schedule 3.19 hereto sets forth a summary
of all insurance policies maintained by the Borrower as of the date of closing
of each Loan. In addition to the requirements set forth in the Collateral
Documents, the insurance maintained by the Borrower is in amounts and of a
nature as is customarily maintained by Persons conducting operations similar to
that of the Borrower and is with insurance carriers who are rated by A. M. Best
Company's Rating Service as "A" or better or are otherwise satisfactory to the
Lender.
Section 3.20. Acquisition Documents. (a) The Acquisition Documents
have not been amended, modified or supplemented, except as set forth on
Schedule 3.20 hereto, nor have any conditions precedent to closing or defaults
under such Acquisition Documents been waived by the Borrower without the prior
written consent of the Lender. The obligations of each of the parties to the
Acquisition Documents are the legal, valid and binding obligations of each such
party. The Borrower has not waived any right or default by any party under the
Acquisition Documents. The Acquisition Documents are in full force and effect,
and the Borrower has no knowledge that any party to such agreement is or is
seeking or presently intends to seek to terminate, amend or modify such
agreement.
Section 3.21. Brokers. The Borrower represents that it has not
engaged or authorized any broker, finder or similar agent who would be entitled
to a commission or other fee in respect of the transactions contemplated by the
Acquisitions and/or this Agreement unless (i) such broker and compensation is
approved in writing in advance by the Lender, and (ii) shall be paid solely by
the Borrower.
ARTICLE 4. CONDITIONS PRECEDENT
Section 4.01. Conditions Precedent to Effectiveness. The obligations
of the Lender to execute and deliver this Agreement on the Closing Date are
subject to the fulfillment of the following conditions precedent. The Lender
shall have received on or before the Initial Borrowing Date each of the
following documents and instruments, each dated such date, in form and
substance satisfactory to the Lender:
(a) a certificate of the Borrower's Secretary, trust manager(s) or
other appropriate authorized Persons, dated as of the Closing Date, certifying
(i) that attached thereto are true and complete copies of the resolutions of
the Board of Directors or authorized persons of the Borrower authorizing the
execution, delivery and performance by the Borrower of this Agreement, the
borrowings hereunder by the Borrower and the execution, delivery and
performance by the Borrower of the Note and such of the Related Documents to
which it is a
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party, (ii) that said resolutions are all the resolutions adopted by the Board
of Directors or authorized persons of the Borrower in connection with the
transactions contemplated thereby and are in full force and effect without
modification as of such date, and (iii) as to the incumbency and signatures of
each of its trust managers or other appropriate authorized Persons executing
this Agreement, the Note and such of the Related Documents to which it is a
party;
(b) (i) copies of the applicable charter documents of the Borrower,
certified as of a recent date by the Secretary of State of the State of its
formation and organization; (ii) certificates of said Secretary of State as to
the due organization, existence and good standing of the Borrower, as of a
recent date; (iii) certificates of good standing of the Secretary of State of
each jurisdiction in which the Borrower is qualified to do business; and (iv) a
certificate of the Secretary, trust manager or other appropriate authorized
Person of the Borrower dated the Closing Date, certifying (A) that attached
thereto are true, correct and complete copies of the applicable charter
documents as is in effect on the date of such certification, and (B) that such
charter documents have not been amended since the date of the last amendment
thereto indicated in the certificate of the Secretary of State furnished
pursuant to clause (i) above;
(c) the applicable Related Documents are duly executed by all the
parties thereto (other than the Lender);
(d) the Borrower shall have delivered to the Lender at least ten (10)
Business Days prior to the Closing Date all appropriate Uniform Commercial
Code, tax lien, judgment and bankruptcy searches, dated as of a date that is
within a recent date of the Closing Date;
(e) evidence that all actions necessary or, in the opinion of the
Lender and its counsel, desirable, to create and perfect the security interests
and other Liens granted under the Loan Documents, have been duly taken and that
there are no security interests as senior to the security interests granted in
favor of the Lender;
(f) an opinion of Liddell, Sapp, Zivley, Hill & XxXxxx, L.L.P.,
counsel to the Borrower, substantially in the form of Exhibit N hereto,
including, without limitation, with respect to the qualification of the REIT
Borrower as a REIT;
(g) such consents, approvals or acknowledgments with respect to such
of the transactions hereunder as may be necessary or as the Lender or its
counsel may deem appropriate;
(h) the Borrower shall have delivered to the Lender at least fifteen
(15) Business Days prior to the Closing Date the financial statements set forth
in Section 3.12 hereof;
(i) the Borrower shall have delivered to the Lender at least fifteen
(15) Business Days prior to the Closing Date true, accurate and complete copies
of the Borrower's books and records and material contracts, including, but not
limited to, all Leases and abstracts;
(j) a certificate showing that, at the time of the Closing Date and
after giving effect to the initial funding hereunder and the consummation of
all other transactions contemplated by this
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Agreement and the Loan Documents, (i) the representations and warranties
contained in this Agreement and in the other Related Documents shall be true
and correct on and as of such date and no representation made or information
supplied to the Lender shall have proven to be inaccurate or misleading in any
material respect; and (ii) no Event of Default or Default shall have occurred;
and the Lender shall have received a certificate of the Borrower signed on its
behalf by its president or chief financial officer that (A) no Material Adverse
Change has occurred since December 31, 1996; (B) no material litigation or
administrative proceeding of or before any court or governmental body or agency
is pending or threatened against the Borrower or any of its properties except
as set forth on Schedule 4.01 hereto; and (C) the Borrower is in compliance
with all pertinent federal, state and local laws, rules and regulations,
including, without limitation, those with respect to ERISA, OSHA and all
Environmental Laws, except where the violation of which would not have a
Material Adverse Effect;
(k) evidence that, as of the Closing Date, the Borrower has paid all
past and current premiums due and payable on its existing insurance policies,
and has delivered to the Lender at least ten (10) Business Days prior to the
Closing Date all loss payee/additional insured endorsements, duly executed,
required under Section 5.02 hereof or the Collateral Documents to be delivered
on or before the Closing Date;
(l) payment in full of all amounts then due and payable under the
terms of this Agreement, including, without limitation, (i) all of the fees
payable to the Lender pursuant to this Agreement, and (ii) all of the Lender's
out-of-pocket expenses (including, without limitation, the reasonable fees and
disbursements of the Lender's counsel, subject to the overall limitations
contained in Section 9.04(a) hereof); and
(m) such other and further documents as the Lender and its counsel
may have reasonably requested and all legal matters incident to this Agreement,
the transactions contemplated hereby and the Loans shall be reasonably
satisfactory to the Lender and its counsel.
Section 4.02. Conditions Precedent to Initial and Subsequent
Fundings. The obligation of the Lender to make any Loan (including any Loans
to be made on the Closing Date) shall be subject to the fulfillment of the
following conditions precedent at least fifteen (15) Business Days (unless
otherwise noted below) prior to the relevant Borrowing Date:
(a) the Lender shall have received notice by the Borrower and a
Notice of Borrowing required by Section 2.02(b) hereof within three (3)
Business Days of the relevant Borrowing Date;
(b)(i) the representations and warranties set forth in Article 3
hereof and in the other Related Documents shall be true and correct on and as
of such Borrowing Date as though made on and as of such date and no
representation made or information supplied to the Lender shall have proven to
be inaccurate or misleading in any material respect; (ii) the Borrower shall
then be in compliance with all the terms and provisions of this Agreement, the
Note and the other Related Documents to which it is a party, including, without
limitation, the requirement that the proposed Acquisition Properties satisfy
the Financial Covenants and other criteria set forth herein
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and in the Loan Documents; (iii) no Event of Default or Default shall have
occurred and be continuing; (iv) no Material Adverse Change shall have occurred
since December 31, 1996; (v) the income and expenses of the Collateral
Properties, the Leases, the occupancy of the Collateral Properties and all
other features of the transaction, including the financial condition of the
Borrower, any of its subsidiaries, as represented to the Lender in any loan
application or in any other documents and communications presented to the
Lender in order to induce the Lender to make the Loans shall not have
materially adversely changed; (vi) no material litigation or administrative
proceeding of or before any court or governmental body or agency is pending or
threatened against the Borrower or any of its properties; (vii) the Borrower is
in compliance with all pertinent federal, state and local laws, rules and
regulations, including, without limitation, those with respect to ERISA, OSHA
and all Environmental Laws, except where the violation of which would not have
a Material Adverse Effect; (viii) none of the Collateral Properties shall have
suffered material damage, which has not been repaired to the Lender's
satisfaction; (ix) none of the Collateral Properties shall have been taken in
condemnation or other similar proceeding, nor shall any such proceeding be
pending; (x) there shall have been no material structural change in the
physical condition of any portion of the Collateral Properties; (xi) no notices
of violations of any municipal ordinances shall have been filed against the
Collateral Properties by any municipal department; (xii) none of the Borrower,
its Subsidiaries, any tenant under any Lease deemed by the Lender to be
material to the Lender's security nor any guarantor of any such Lease shall be
the subject of any bankruptcy, reorganization, insolvency or similar
proceeding; and (xiii) the Lender shall have received a certificate of the
Borrower signed on its behalf by its president or its chief financial officer
to such effect;
(c) the Lender shall have received, at the Borrower's expense and in
form and substance satisfactory to the Lender, (i) detailed historical
operating statements (for a minimum of a trailing 12-month period) of each
Collateral Property; (ii) the Borrower's cash flow projections relating to each
Collateral Property; (iii) all applicable detailed rent rolls relating to each
Collateral Property; (iv) true, accurate and complete copies of the Borrower's
books and records relating to each Collateral Property and all material
contracts, including, but not limited to, all Leases and abstracts; (v) the
Borrower's complete underwriting analysis relating to each Collateral Property;
(vi) a breakdown of all uses of proceeds in connection with the proposed Loan,
including fees and expenses; and (vii) appraisals, from an independent
appraiser holding a MAI designation who is satisfactory to the Lender and is
qualified and licensed in the state where such Collateral Property is located,
of the value of each of the Collateral Properties being acquired or pledged in
connection with such Borrowing Date as determined by valuations of such
Collateral Properties made in accordance with the Lender's standard
underwriting practices (collectively, the "Appraisals").
(d) the Lender shall have received, at the Borrower's expense, a
written analysis and environmental report (each an "Environmental Report") with
respect to the following environmental conditions relating to each Collateral
Property, which shall be in form and substance satisfactory to the Lender and
prepared by independent qualified environmental professionals satisfactory to
the Lender, which analysis shall include, without limitation, (i) a Phase I
environmental site assessment assessing the presence of environmental
contaminants and asbestos, PCBs or storage tanks at such Collateral Properties
conducted in accordance with ASTM
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Standard E 1527-93, or any successor thereto published by ASTM, and (ii) such
further site assessments as the Lender may require due to the results obtained
in clause (i) above; the Borrower shall have obtained permission for such
environmental professional to enter upon the Collateral Properties for purposes
of conducting such environmental assessment; such Environmental Report shall
meet the Lender's requirements, shall be certified to the Lender and its
successors and assigns, and the Lender and its successors and assigns shall be
entitled to rely on such environmental assessment and such Environmental
Report; no environmental condition at any Collateral Property shall have been
discovered which is unacceptable to the Lender;
(e) the Lender shall have received an engineer's building condition
report in form and substance satisfactory to the Lender, prepared by an
independent qualified consulting engineer satisfactory to the Lender, and any
additional or supplemental reports that may be required by the Lender
(collectively, the "Building Condition Report"), which reports shall (i)
evaluate the physical condition of the Collateral Properties, identifying
conditions requiring immediate or near term attention and estimate the
approximate cost of remediation, (ii) include, without limitation, information
regarding compliance with the Americans with Disabilities Act, and (iii)
evaluate the seismic condition of each Collateral Property located in an
earthquake zone; with respect to the seismic condition of each Collateral
Property, the engineer shall prepare as part of the Building Condition Report a
seismic analysis of such Collateral Property, including, without limitation, a
detailed probable maximum loss ("PML") study which will identify the PML of
each building located on such Collateral Property in a 50-year, 100-year,
200-year and 500-year earthquake event; if the engineer's estimate of the PML
of each building located on such Collateral Property in a 100-year earthquake
event exceeds 20%, the engineer shall recommend sufficient modifications to
such building or buildings and building structure (collectively, the
"Modifications") such that the PML, after giving effect to such modifications,
shall be less than 20% in a 100-year earthquake event; the Lender shall not
have received any unsatisfactory engineer's report or site inspection conducted
by the Lender or any engineering firm retained by the Lender; such Building
Condition Report shall meet the Lender's requirements, shall be certified to
the Lender and its successors and assigns, and the Lender and its successors
and assigns shall be entitled to rely on such Building Condition Report;
(f) the Lender shall have received, in form and substance
satisfactory to the Lender, true, correct and complete copies (including any
and all amendments or modifications thereto) of (i) all of the Operational
Documents, and (ii) all third party reports requested by the Lender relating to
each Collateral Property, prepared by qualified firms approved by the Lender;
(g) the Lender shall have received all fees payable pursuant to this
Agreement, including, without limitation, (i) all of the fees payable to the
Lender pursuant to this Agreement, and (ii) all of the Lender's out-of-pocket
expenses (including, without limitation, the reasonable fees and disbursements
of the Lender's counsel);
(h) the Lender shall receive a favorable legal opinion of the
Borrower's counsel, in form and substance satisfactory to the Lender and its
counsel in their sole discretion, as to the due execution, authorization and
enforceability of the Loan Documents and as to such other matters, including
due perfection of the Lender's security interests and liens on the Collateral
as the
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Lender may reasonably request, and the Lender shall have received the favorable
opinion of the Lender's local counsel, if necessary, as to such matters as the
Lender may reasonably require;
(i) the Lender shall have received all appropriate Uniform Commercial
Code, tax lien, judgment and bankruptcy searches, dated as of a date that is
within a recent date of the date of the closing of such Loan;
(j) the Lender shall have received evidence that all actions
necessary or, in the opinion of the Lender and its counsel, desirable, to
create and perfect the security interests and other Liens granted under the
Loan Documents, have been duly taken and that there are no security interests
as senior to the security interests granted in favor of the Lender;
(k) the Lender shall have received a pro forma ALTA extended coverage
mortgagee form of title insurance, with a deletion of the creditor's rights
exception and otherwise conforming to the Lender's title insurance requirements
set forth in Schedule 4.02(k) hereto, together with such reinsurance as the
Lender may require from title insurance companies acceptable to the Lender
insuring the first mortgage Liens on the properties, subject only to matters
acceptable to the Lender;
(l) the Lender shall have received a survey of the Collateral
Properties being acquired and/or pledged and mortgaged to the Lender in
connection with the requested Loan dated or re-dated to within 60 days of the
closing of such Loan which (i) was prepared by a surveyor registered or
licensed in the jurisdiction in which such property is located, containing the
legal metes and bounds description of the property and a certification from the
surveyor to the Lender and the title insurance company in form and substance
reasonably satisfactory to the Lender, (ii) substantially conforms to the
Lender's survey requirements set forth in Schedule 4.02(l) hereto, and (iii) is
otherwise in form and substance reasonably satisfactory to the Lender;
(m) the Lender shall have received a duly executed Estoppel
Certificate and Subordination Agreement from all tenants under Leases in the
Collateral Properties;* provided, however, that to the extent that Estoppel
Certificates are not delivered for certain tenants, the Lender may, in its sole
discretion, accept an Estoppel Certificate from the Borrower with respect to
such tenant's occupancy at the Collateral Properties certified by such Borrower
as being true, correct and complete;
(n) the Lender shall have received evidence, in form and substance
satisfactory to the Lender that (i) the Collateral Properties are served by all
utilities required for the current or contemplated use thereof, (ii) all
utility service is provided by public utilities and the Collateral Properties
have accepted or is equipped to accept such utility service, (iii) all public
roads and streets necessary for service of and access to the Collateral
Properties for the current or contemplated use thereof have been completed, are
serviceable and all-weather and are physically
----------------------------
* provided however, that with respect to the Initial Funding, receipt of duly
executed estoppel certificate in the term tendered to Xxxxxxxx West Investment
Corporation prior to the date hereof shall be deemed satisfactory provided
further that Borrower undertake to provide Estoppel Certificates withinthirty
(30) days from the date hereof.
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and legally open for use by the public, and (iv) the Collateral Properties are
served by public water and sewer systems;
(o) the Lender shall have received such consents, approvals or
acknowledgments with respect to such of the transactions hereunder as may be
necessary or as the Lender or its counsel may deem appropriate;
(p) evidence that, as of the date of the closing of such Loan, the
Borrower has paid all past and current premiums due and payable on its existing
insurance policies, and has delivered to the Lender all loss payee/additional
insured endorsements, duly executed, required under Section 5.02 hereof or the
Collateral Documents to be delivered on or before such date of closing;
(q) evidence that the Borrower has satisfied all of the conditions
precedent set forth in the Collateral Documents; and
(r) the Lender shall have received such other and further documents,
certificates, reports and other information with respect to the Borrower as the
Lender may reasonably request.
ARTICLE 5. AFFIRMATIVE COVENANTS
The Borrower hereby covenants and agrees that, from and after the date
of execution of this Agreement and so long as any amount may be borrowed
hereunder or is otherwise due to the Lender under this Agreement or any Loan
Document is not indefeasibly repaid in full, such Borrower shall comply with
each of the following covenants:
Section 5.01. Maintenance of Existence, Properties and REIT Status.
The Borrower shall do or cause to be done all things necessary to preserve and
keep in full force and effect its existence and continue to conduct its
business substantially as now and proposed to be conducted. The Borrower shall
(i) do or cause to be done all things necessary to preserve and keep in full
force and effect all of its other rights and franchises, and comply with all
laws applicable to it, except for violations thereof which would not have a
Material Adverse Effect; (ii) at all times, maintain, preserve and protect all
material franchises and Intellectual Property; and (iii) preserve all the
remainder of its material properties and keep the same in good repair, working
order and condition and from time to time make, or cause to be made, all
necessary and proper repairs, renewals and replacements, betterments and
improvements thereto so that the business carried on in connection therewith
may be properly conducted at all times. The REIT Borrower shall at all times
maintain its status as a REIT and shall not take any action which could lead to
its disqualification as a REIT. The REIT Borrower shall not engage in any
business other than the business of acting as a REIT.
Section 5.02. Insurance. (A) The Borrower will maintain or cause to
be maintained, at its own expense, the insurance required under the Provisions
of Paragraph 3 of the Mortgages with respect to its Collateral Properties and
business. Not later than ten (10) Business Days
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prior to the renewal, replacement or material modification of any policy or
program required to be maintained by this Section 5.02, the Borrower shall
deliver or cause to be delivered to the Lender a detailed schedule setting
forth for each such policy or program: (i) the amount of such policy, (ii) the
risks and amounts (with deductibles) insured against by such policy, (iii) the
name of the insurer and each insured party under such policy, (iv) the policy
number of such policy and (v) a comparison of such policy with the policy so
renewed, replaced or modified. The Borrower will, if so requested by the
Lender, deliver to the Lender the original policy of such insurance and, as
often as the Lender may reasonably request, a report of a reputable insurance
broker with respect to such insurance. Further, the Borrower will, at the
request of the Lender, duly execute and deliver instruments of assignment of
such insurance policies to comply with the requirements of this Section 5.02
and cause the respective insurers to acknowledge notice of such assignment.
(B) The Borrower will use all and any insurance proceeds from
property damage/casualty insurance or condemnation awards it receives in
accordance with the terms of Paragraph 4 of the Mortgages; provided, however,
that in the event that (i) a Default or Event of Default has occurred and is
continuing, or (ii) no Default or Event of Default has occurred and is
continuing and the individual or aggregate amount of any and all such insurance
proceeds or condemnation awards exceeds $250,000, then the Borrower will not
restore or replace such Collateral Property without the prior written consent
of the Lender, and absent such consent, such insurance proceeds or condemnation
awards shall forthwith be paid to the Lender and applied to the permanent
reduction of the Obligations of the Borrower then outstanding, without penalty
or premium but subject to Section 2.04 hereof, in such order as the Lender
shall determine.
(C) Within two (2) Business Days after the occurrence of any damage
to, or loss or taking of, any Collateral Property of the Borrower in excess of
$100,000, the Borrower will, provide to the Lender written notice (or telephone
notice promptly confirmed in writing) thereof and a description of the property
damaged, lost or taken.
Section 5.03. Punctual Payment. The Borrower shall duly and
punctually pay the principal of and interest on the Note and any other amount
due under this Agreement or any of the Related Documents to which it is a
party, including, without limitation, the amounts payable under Section 2.09
hereof.
Section 5.04. Payment of Liabilities. The Borrower will pay and
discharge in the ordinary course of business, where applicable, all of its
obligations and liabilities (including, without limitation, tax liabilities and
other governmental charges), except where the same may be contested in good
faith by appropriate proceedings, and maintain in accordance with GAAP
appropriate reserves for any of the same.
Section 5.05. Compliance with Laws. The Borrower will observe and
comply with all applicable material laws, statutes, rules, regulations or other
requirements having the force of law, including, without limitation, all
Environmental Laws.
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Section 5.06. Payment of Taxes, Etc. The Borrower will pay and
discharge all lawful taxes, assessments, and governmental charges or levies
imposed upon it, or upon its income or profits, or upon any of the Collateral
Property, before the same shall become in default or within ten (10) days
thereafter, as well as all lawful claims for labor, materials, and supplies
which, if unpaid, might become a Lien or charge upon such property or any part
thereof within ten (10) days thereafter, as well as all lawful claims for
labor, materials, and supplies which, if unpaid, might become a Lien or charge
upon any Collateral Property or any part thereof within ten (10) days of such
claims being due and payable; provided, however, that no such tax, assessment,
charge, levy, claim need be paid and discharged so long as the validity thereof
shall be contested in good faith by appropriate proceedings and there shall
have been set aside on the books of such Person adequate reserves in accordance
with GAAP applied with respect thereto, but such tax, assessment, charge, levy,
or claim shall be paid before the property subject thereto shall be sold to
satisfy any Lien which had attached as security therefor.
Section 5.07. Financial Statements and Other Information. The
Borrower shall furnish to the Lender, in form and substance acceptable to the
Lender and at the Borrower's expense:
(a) within 120 days after the end of each Fiscal Year, audited
consolidated balance sheets of the Borrower and its Subsidiaries as at the end
of such Fiscal Year and the related audited consolidated statements of income
and changes in financial position of the Borrower and its Subsidiaries for such
Fiscal Year, prepared in accordance with GAAP, including consolidated financial
reports with all related schedules and notes attached thereto, setting forth,
in each case, in comparative form, corresponding figures from the preceding
Fiscal Year, all in reasonable detail, prepared by management and audited by
and with an unqualified certification of, nationally recognized independent
certified public accountants satisfactory to the Lender, together with a (i)
statement stating whether or not such accountants have any knowledge that any
of the Borrower and its Subsidiaries is then or has been in violation of any
covenants pertaining to this Agreement or pertaining to any other debt covenant
of the Borrower or its Subsidiaries and that, to their knowledge, no event has
occurred which, with the passage of time or the giving of notice or both, would
constitute any such violation, and (ii) a certificate signed by the chief
financial officer of the Borrower (A) setting forth, in each case, in
comparative form, corresponding figures for such Fiscal Year from the annual
budget, all in reasonable detail, (B) calculating and stating each of the
financial covenants contained in Article 7 hereof, and (C) commenting upon the
financial statements to an extent reasonably satisfactory to the Lender, as
requested by the Lender;
(b) within forty-five (45) days after the end of each Fiscal Quarter,
quarterly unaudited consolidated balance sheets of the Borrower and its
Subsidiaries as at the end of such Fiscal Quarter and the related unaudited
consolidated statements of income and changes in financial position of the
Borrower and its Subsidiaries for such Fiscal Quarter, prepared in accordance
with GAAP and accompanied by a certificate signed by the chief financial
officer of the Borrower (i) setting forth in each case, in comparative form,
figures for the corresponding Fiscal Quarter in the annual budget and figures
for the corresponding Fiscal Quarter in the preceding Fiscal Year, all in
reasonable detail, (ii) calculating and stating each of the financial covenants
contained in Article 7 hereof, and (iii) commenting upon the financial
statements to an extent reasonably satisfactory to the Lender, as requested by
the Lender;
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(c) within thirty (30) days after the end of each calendar quarter,
quarterly operating statements for each Collateral Property, all in reasonable
detail, certified by the chief financial officer of the Borrower;
(d) within forty-five (45) days after the end of each Fiscal Quarter,
quarterly rent rolls for each Collateral Property, all in reasonable detail,
and accompanied by a certificate signed by the chief financial officer of the
Borrower in such form as is reasonably satisfactory to Lender;
(e) immediately upon any revision to any of the financial statements
referred to in clauses (a) or (b) above, such financial statements, as revised;
(f) within ten (10) days of filing, true, complete and correct copies
of all federal, state, local and foreign tax returns that are required to be
filed by the Borrower, including, without limitation, all related schedules and
annexes to such tax returns;
(g) as soon as available, a true copy of any "management letter" or
other communication to the Borrower, its officers, general partners, managers,
members or Board of Directors by its accountants regarding matters which arose
or were ascertained during the course of the audit and which said accountants
determined ought to be brought to management's attention;
(h) upon the occurrence and continuation of an Event of Default,
appraisals of any of the assets of the Borrower as the Lender may from time to
time request; provided, however, that nothing herein shall prevent the Lender
from obtaining such appraisals at any time prior to the indefeasible payment in
full of the obligations if such appraisals are at the Lender's expense;
(i) immediately upon any officer, director, general partner, manager
or member of the Borrower obtaining knowledge (i) of any condition or event
which constitutes a Default or Event of Default, (ii) of any condition or event
which, in the opinion of management of the Borrower, would have a Material
Adverse Effect, (iii) that any Person has given any notice to the Borrower or
taken any other action with respect to a claimed default or event or condition
of the type referred to in clause (f) of Section 8 hereof, or (iv) of the
institution of any litigation involving claims against the Borrower equal to or
greater than $50,000 with respect to any single cause of action or $100,000
with respect to the aggregate of all causes of action or any adverse
determination in any litigation involving a potential liability to the Borrower
equal to or greater than $50,000 with respect to any single cause of action or
$100,000 with respect to the aggregate of all causes of action, an officers'
certificate specifying the nature and period of existence of any such condition
or event, or specifying the notice given or action taken by such holder or
Person and the nature of such claimed Default, Event of Default, event or
condition, and what action, if any, the Borrower has taken, is taking or
proposes to take with respect thereto;
(j) immediately upon the Borrower becoming aware, with respect to the
Borrower, of the occurrence of (i) the occurrence or expected occurrence of any
Reportable Event with respect to any Plan, or any withdrawal from, or the
termination, reorganization or insolvency of any
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multiemployer plan or (ii) the institution of proceedings or the taking of any
other action by the PBGC or the Borrower or any ERISA Affiliate or any
multiemployer plan with respect to the withdrawal from, or the terminating,
reorganization or insolvency of, any Plan;
(k) as soon as practicable, such other information concerning the
financial affairs and condition (financial or otherwise) of the Borrower as the
Lender may from time to time reasonably request.
Section 5.08. Accounts and Reports. The Borrower will keep accurate
records and books of account in which complete, accurate and correct entries
will be made of all dealings or transactions in relation to its businesses and
affairs, as applicable, and the Collateral.
Section 5.09. Inspection; Audit. (A) The Borrower, at its own
expense, will permit any authorized representative designated by the Lender,
upon reasonable advance notice, to visit, inspect and audit its properties and
condition, including its books and records, and to discuss their respective
affairs, finances and accounts with its officers, general partners, managers,
members or directors, at such reasonable times and as often as may be
reasonably requested by the Lender. (B) Upon the occurrence and continuation
of an Event of Default, the Borrower, at its own expense, will provide to the
Lender, at the request of the Lender made from time to time, environmental
audit reports in form and substance satisfactory to the Lender. (C) At any time
other than (i) in connection with Sections 2.05(b), 2.12, 4.02(d) or 5.11
hereof, or (ii) upon the occurrence and continuation of an Event of Default,
the Borrower, at the Lender's expense, will provide to the Lender, at the
request of the Lender made from time to time, environmental audit reports in
form and substance satisfactory to the Lender.
Section 5.10. UCC Filings. Within thirty (30) days of the each
Borrowing Date, the Borrower shall deliver to the Lender UCC search reports
evidencing UCC filings made in each jurisdiction required in the Collateral
Documents.
Section 5.11. Additional Due Diligence Materials. If the Lender
Converts the Loans into Conversion Loans, the Borrower shall satisfy, as
determined by the Lender, certain additional commercially reasonable criteria
as determined by the Lender, including, without limitation, providing updates,
in form and substance satisfactory to the Lender, to the Appraisals,
Environmental Reports and Building Condition Reports prepared by qualified
firms approved in advance by the Lender, as the Lender may request at the cost
and expense of Borrower.
Section 5.12. Reserves. The Borrower shall (i) maintain each Reserve
until such time as the applicable Modifications are fully completed, and (ii)
complete such Modifications within 180 days after the closing of such Loan.
All fees and expenses in connection with the Building Condition Report and the
Modifications shall be paid by the Borrower.
Section 5.13. Operational Documents. (A) The Borrower shall deliver
each Operational Document to the Lender for its consent prior to the Borrower
entering into such Operational Document; provided, however, that (i) the
Borrower may enter into any Approved Lease for premises having less than 20,000
square feet that is not modified in any material respect and is
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on terms reasonably considered to be fair market terms without the consent of
the Lender, and (ii) the consent of Lender is not required with respect to
Service Agreements which are terminable upon less than thirty (30) days notice.
(B) Each Operational Document shall be in full force and effect and free from
default by either party. (C) All rights of the Borrower under the Operational
Documents shall be assigned to the Lender, and the Lender, at its option, may
require the parties to any such Operational Document to enter into an agreement
with the Lender which shall provide that (i) copies of all notices given or
received under any such Operational Document shall be sent to the Lender, (ii)
the Lender shall have the right, but not the obligation, to perform any term,
condition or agreement of the Borrower under any such Operational Document and
to cure any default of the Borrower under any such Operational Document within
specified additional time periods, and (iii) such other provisions as the
Lender may require. (D) The Borrower shall deliver each amendment, supplement
or other modification of each Lease, for premises having in excess of 20,000
square feet in each Collateral Property, to the Lender for its consent prior to
the Borrower entering into such amendment, supplement or modification; and
Lender agreed that it will provide its comments to same or its consent or
disapproval of same within five (5) business days of its receipt thereof.
Section 5.14. Environmental Compliance. The Borrower acknowledges
and agrees that, based on any information in any Environmental Report delivered
to the Lender pursuant to Section 4.02(d) hereof or on any uncertainties raised
thereby, the Lender reserves the absolute right, in its sole and exclusive
discretion, to decline to fund any Loan for the acquisition of the Collateral
Properties, to impose additional conditions that must be met prior to or after
the closing of such Loan (including but not limited to requiring additional
investigation into environmental conditions in connection with the Collateral
Properties, testing and sampling of soil, water, air, building materials, or
other substances or materials), and/or to change any terms and conditions of
any Loan, including but not limited to the principal amount thereof, the
interest rate, representations and warranties, covenants, guaranties,
indemnities, and/or other terms and conditions of each Loan.
Section 5.15. Disclosure. The Borrower shall give notice to the
Lender promptly upon the Borrower having knowledge of a specific claim against
the Lender or its officers, directors, employees, agents, Affiliates or any
Person under the Lender's control, by the Borrower, for any action or failure
to act by the Lender, or any officer, director, employee, agent or Affiliate of
the Lender, or any Person under the Lender's control. The failure to disclose
any such specific claim within 180 days shall constitute an irrevocable waiver
and forgiveness of such claim by the Borrower.
Section 5.16. Deferred Maintenance. (a) Attached hereto as
Schedule 5.16 is a list of certain repair items Borrower has agreed to complete
on the Collateral Properties owned by AIP-SWAG within 6 months of the Closing
Date (the "Repairs"). Such Repairs shall be completed in a good and
workmanlike manner and shall in all respects be acceptable to Lender. Evidence
of the completion or progress toward the completion of such repairs as
evidenced by a certificate of completion or other documentation satisfactory to
Lender from the contractor or engineer performing or supervising such Repairs
shall be provided to Lender monthly on the first day of the month beginning on
November 1, 1997.
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(b) Lender reserves the right, in its sole discretion, to waive
the requirement that certain Repairs be completed. Borrower may request a
waiver with respect to certain Repairs and shall submit evidence to Lender in
support of such waiver for review and evaluation by Lender.
(c) Borrower covenants and agrees that each of the Repairs and all
materials, equipment, fixtures, or any other item comprising a part of any
Repair shall be constructed, installed or completed, as applicable, free and
clear of all mechanic's, materialman's or other liens.
(d) All Repairs shall comply with all applicable laws, ordinances,
rules and regulations of all governmental authorities having jurisdiction over
the Collateral Properties and applicable insurance requirements including,
without limitation, applicable building codes, special use permits,
environmental regulations, and requirements of insurance underwriters.
ARTICLE 6. NEGATIVE COVENANTS
The Borrower hereby covenants and agrees that, from and after the date
of execution of this Agreement and so long as any amount may be borrowed
hereunder or is otherwise due to the Lender under this Agreement or any Loan
Document is not indefeasibly repaid in full, the Borrower shall comply with
each of the following covenants:
Section 6.01. Indebtedness. The Borrower shall not directly or
indirectly, create, incur, assume or otherwise become or remain liable with
respect to any Indebtedness, other than: (a) Indebtedness of the Borrower to
the Lender incurred pursuant to this Agreement or the other Loan Documents; (b)
Indebtedness of the Borrower which is secured by the Liens referred to in
Section 6.02(c) hereof and incurred in the normal course of business in
connection with installment purchases or Capitalized Leases of equipment or
fixed assets located on or related to any Collateral Properties, in an
aggregate amount not exceeding $250,000 at any time outstanding; (c)
Indebtedness of the Borrower which is secured by Liens incurred in connection
with the purchase or acquisition of equipment or fixed assets not located on or
related to any Collateral Properties, as security for the deferred purchase or
acquisition price of such equipment or assets, each of which Liens shall (i)
extend only to the equipment or fixed assets so purchased or acquired, (ii)
secure only up to 100% of the deferred purchase or acquisition price thereof,
and (iii) be incurred in the normal course of business;(d) taxes, assessments,
and governmental charges with respect to the Borrower to the extent that
payment thereof shall not at the time be required to be made pursuant to the
provisions of Section 5.06 hereof; (e) current trade accounts payable or
accrued expenses, operating lease obligations, customer deposits and deferred
liabilities other than for borrowed money, all incurred and continuing in the
ordinary course of business, exclusive of trade accounts payable and operating
lease obligations which remain unpaid for a period longer than six months after
the same shall have become due and payable, unless they shall be contested in
good faith and, where appropriate, by appropriate proceedings and there shall
have been set aside on the books of the Borrower adequate reserves in
accordance
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with GAAP; (f) Indebtedness expressly permitted by Section 6.03 hereof; (g)
unsecured Indebtedness in an aggregate amount not to exceed at any time
$25,000,000; (h) Indebtedness secured by a mortgage or deed of trust on real
property that (i) is not a Collateral Property, (ii) secures only up to 100% of
the fair market value of each particular property, and (iii) is incurred in the
normal course of business; or (i) existing Indebtedness, not otherwise listed
in clauses (a) through (h) above, listed on Schedule 6.01 hereto.
Section 6.02. Liens. The Borrower shall not directly or indirectly,
create, incur, assume or permit to exist any Lien on or with respect to any of
the Collateral, whether now owned or hereafter acquired, except (a) Liens
arising under the Loan Documents in favor of the Lender, (b) Customary
Permitted Liens, (c) Liens incurred in connection with the purchase or
acquisition of equipment or fixed assets, as security for the deferred purchase
or acquisition price of such equipment or assets, each of which Liens shall
extend only to the equipment or fixed assets so purchased or acquired and shall
secure only up to 100% of the deferred purchase or acquisition price thereof;
provided, however, that the aggregate amount of all Indebtedness secured by
such Liens shall not exceed at any time the Indebtedness permitted under
Section 6.01(b) hereof minus the aggregate amount of all then outstanding
capitalized leases, (d) other existing Liens disclosed on Schedule 3.07 hereto,
(e) extensions, renewals or replacements of any Lien referred to in clauses
(a), (c) and (d) above; provided, however, that (i) in the case of clause (c)
above, the principal amount of the obligation secured thereby is not increased,
and (ii) any such extension, renewal or replacement is limited to the property
originally encumbered thereby.
Section 6.03. Contingent Obligations. The Borrower shall not
directly or indirectly, create, incur, assume or otherwise become or remain
liable with respect to any contingent Indebtedness or other obligation or
liability of any Person, other than (i) guaranties resulting from endorsement
of negotiable instruments for collection in the ordinary course of business;
and (ii) warranties with respect to performance, and not relating to
Indebtedness of any Person, which have been or are made in the ordinary course
of business of such Person to its customers.
Section 6.04. Fundamental Changes. (A) The Borrower shall not enter
into any merger or consolidation, or liquidate, wind-up or dissolve, or convey,
lease, sell, transfer or otherwise dispose of, in one transaction or a series
of transactions, all or substantially all of its business, property or assets,
whether now or hereafter acquired. (B) The Borrower shall not purchase or
acquire all or substantially all of the business, properties, assets or
Securities of any Person, or create or form any Subsidiary, without the prior
written consent of the Lender. (C) The Borrower shall not change the nature
of its respective business as currently conducted as contemplated hereunder to
be conducted or engage in any new business which is not an integral part of its
business as currently conducted.
Section 6.05. Dispositions of Assets. The Borrower shall not assign,
sell, lease or otherwise dispose of, whether by sale, merger, consolidation,
liquidation, dissolution, abandonment or otherwise, any of the Collateral,
except for (a) if the Loan corresponding to such Collateral Property being
disposed is paid in full and, after giving effect to such disposition, (i) all
of the remaining Collateral Properties comply with Section 7.03 hereof, as
measured as of such disposition date, (ii) the Borrower complies with Sections
7.01 and 7.02 hereof, as
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measured as of such disposition date, or (iii) no Default or Event of Default
shall occur, and (b) dispositions consented to in advance in writing by the
Lender.
Section 6.06. Sales and Leasebacks. The Borrower shall not become
liable directly or indirectly, with respect to any lease, whether a capital
lease or any other lease, of any property (whether real or personal or mixed),
whether now owned or hereafter acquired, which the Borrower has sold or
transferred, or is to sell or transfer, to any other Person.
Section 6.07. Dividends and Redemptions. (A) The Borrower shall
not: (i) declare, pay or make any dividend or other distribution of assets,
properties, cash, rights, obligations or Securities on account of any shares of
its Securities, including, without limitation, by redemption, purchase,
retirement or other acquisition, except (a) dividends or distributions payable
on a quarterly basis in an amount not to exceed eighty percent (80%) of the
total of funds from operations as reported in the Borrower's corresponding Form
10Q filed with the Securities and Exchange Commission, or (b) as otherwise
consented to in advance in writing by the Lender; or (ii) make any payment,
prepayment or retirement of Indebtedness other than (a) payments pursuant to
this Agreement and the other Loan Documents, (b) scheduled payments made in
accordance with the terms of such Indebtedness, and (c) payments of trade debt
made in the ordinary course of business. (B) The Borrower shall not directly
or indirectly, purchase, redeem or retire or otherwise acquire any shares of
its respective Securities.
Section 6.08. Amendment of Certain Agreements. The Borrower shall
not make any amendment or modification to its charter or organizational
documents, or the Related Documents, without the prior written consent of the
Lender, unless, in the case of a Lease, such amendment or modification is an
immaterial departure from the form of Approved Lease and does not result in
terms that would not be reasonably considered to be fair market terms.
Section 6.09. Certain Other Transactions. The Borrower shall not
enter into any transaction that materially adversely affects the Collateral.
Section 6.10. Transactions with Affiliates and Certain Other Persons.
The Borrower shall not directly or indirectly, enter into or permit to exist
any transaction (including, without limitation, the purchase, sale, lease, or
exchange of any property and guarantees and assumptions of obligations of an
Affiliate) with any stockholder, officer, director, employee, partner, member
or Affiliate of the Borrower, other than (i) transactions on an arms-length
basis on terms no less favorable to such party than if such Affiliate was not
an Affiliate of such party; (ii) the payment of salary and other customary
compensation for a similarly situated business of its directors, officers and
employees in the ordinary course of its business; (iii) management and leasing
agreements which are entered into in the ordinary course of the Borrower's
business, are consistent with existing similar agreements of the Borrower and
are customary in the industry; and (iv) transactions consented to in advance in
writing by the Lender, in its sole and absolute discretion.
Section 6.11. Fiscal Year. The Borrower shall not change its Fiscal
Year.
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Section 6.12. ERISA. The Borrower shall not be or become obligated
to PBGC in excess of $100,000 or be or become obligated to the Internal Revenue
Service with respect to excise or other penalty taxes provided for in Section
4975 of the IRC in excess of $100,000. The Borrower shall not seek any waiver
from the minimum funding standard set forth under Section 302 of ERISA or
Section 412 of the IRC or engage in any material Prohibited Transaction with
respect to any Plan.
Section 6.13. Regulations G, T, U and X. The Borrower shall not
apply, directly or indirectly, any part of the proceeds of the Loans for the
purpose, whether immediate, incidental or ultimate, of purchasing or carrying
any "margin security" as defined in Regulation U or for the purpose of reducing
or retiring any Indebtedness which was originally incurred for any such
purpose, or in violation of Regulation G, T, U or X.
Section 6.14. Environmental Compliance. The Borrower shall not
permit its real or personal property to be (a) the site of the disposal or
release of any product or Waste that is now or later regulated by or subject to
any Environmental Law or any other pollutant, contaminant or Waste; (b) the
source of any such contamination of any adjacent property or of any groundwater
or surface water; or (c) the source of any air emissions in excess of any legal
limit now or later in effect.
ARTICLE 7. FINANCIAL COVENANTS
The Borrower covenants and agrees that, from and after the date of
execution of this Agreement and so long as any amount may be borrowed hereunder
or is otherwise due to the Lender under this Agreement or any Loan Document is
not indefeasibly repaid in full, the Borrower shall comply with each of the
following covenants:
Section 7.01. Interest Coverage Ratios. (A) At any time during each
Fiscal Quarter, measured as of the last day of such Fiscal Quarter for the
Fiscal Quarter then ended (commencing with the Fiscal Quarter ending December
31, 1997), the ratio of (i) EBITDA for such period, to (ii) Interest Expense
for the Borrower and its Subsidiaries for such period, on a consolidated basis,
determined in accordance with GAAP, shall be equal to or exceed 1.25 to 1.0.
(B) At any time during each Fiscal Quarter, measured as of the last
day of such Fiscal Quarter for the Fiscal Quarter then ended, the ratio of (i)
EBITDA from each Collateral Property, to (ii) the Interest Expense from the
Loan used to acquire such Collateral Property at the applicable Interest Rate
for such period, determined in accordance with GAAP, shall be equal to or
exceed 1.25 to 1.0.
Section 7.02. Total Liabilities to Net Worth Ratio. At any time
during each Fiscal Quarter, measured as of the last day of such Fiscal Quarter
for the Fiscal Quarter then ended, the ratio of Total Liabilities to Net Worth
for the Borrower and its Subsidiaries, on a consolidated basis, shall not
exceed 2.5 to 1.0.
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Section 7.03. Loan to Value Ratios. At any time during each Fiscal
Quarter, measured as of the last day of such Fiscal Quarter for the Fiscal
Quarter then ended, the Individual Loan-To-Value Ratio of all of each
Collateral Property shall not exceed 70%, based on the Lender's underwriting
standards and determination; provided, however, that if a proposed Acquisition
Property does not satisfy such loan-to-value ratio requirements, the Borrower
may, at their option, grant the Lender a first and only mortgage interest and
Lien, in form and substance satisfactory to the Lender, in certain of its
existing properties which are currently unencumbered in order to satisfy and
maintain such loan-to-value ratio requirement.
Section 7.04. Minimum Net Worth. At any time during each Fiscal
Quarter the Net Worth of the REIT Borrower and its Subsidiaries, on a
consolidated basis, shall not be less than $40,000,000.
ARTICLE 8. EVENTS OF DEFAULT
Section 8.01. Events of Default. Each of the following events or
conditions shall constitute an Event of Default under this Agreement:
(a) the Borrower shall fail to pay when due any principal (including
mandatory prepayments) of any Loan, any interest on any Loan or any other
amount due and payable hereunder or with respect to any Loan;
(b) any representation, warranty or statement given in this Agreement
or in any other Related Document by any party thereto (other than the Lender)
or in any certificate, opinion, report, financial statement or other written
statement furnished at any time pursuant to this Agreement shall prove to be or
have been untrue or misleading in any material respect as of the date on which
it is made or deemed to be made;
(c)(i) the Borrower shall fail to perform, keep or observe in any
respect any covenant or condition contained in Sections 5.01, 5.03, 5.04
(provided such obligations and liabilities referred to in Section 5.04 are
accelerated), 5.06, 5.07, 5.08, 5.09, 5.10, 5.11, 5.12, 5.13, 5.15 and 5.16
hereof or Articles 6 or 7 hereof, or (ii) the Borrower shall fail to perform,
keep or observe in any respect any covenant or condition contained in Sections
5.02, 5.04 (provided such obligations and liabilities referred to in Section
5.04 are not accelerated), 5.05 and 5.14 hereof and such failure shall not be
cured to the Lender's reasonable satisfaction within ten (10) business days
after the occurrence of such failure;
(d) the Borrower or any other party to a Related Document (other than
the Lender) shall fail to perform, keep or observe in any respect any other
term, provision, condition, covenant, waiver, warranty or representation
contained in this Agreement or in any other Related Document to which it is a
party that is required to be performed, kept or observed by the Borrower or any
party to a Related Document, other than the Lender, and the same, if curable,
shall not be cured to the Lender's satisfaction within ten (10) business days
after the occurrence of such failure;
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(e)(i) the Lender shall not have at any time first priority perfected
Liens and security interests in all of the Collateral, (ii) any of the Related
Documents shall at any time for any reason cease to be in full force and effect
or shall be declared to be null and void, or the validity or enforceability
thereof shall be contested by any of the parties thereto (other than the
Lender), or (iii) any of such parties shall deny that it has any or any further
liability or obligation thereunder at a time when it in fact does have such
liabilities or obligations thereunder;
(f) the Borrower shall fail to (i) pay all or any portion of any
Indebtedness in excess of $100,000 (other than the Obligations) when due
(whether by stated maturity, required prepayment, acceleration, demand or
otherwise) after the expiration of any applicable grace periods; or (ii)
perform or observe any term, covenant or condition to be performed on its part
or to be observed under any agreement or instrument relating to such
Indebtedness, when required to be performed or observed;
(g) the Borrower permits either an individual judgment against it in
excess of $50,000 or judgments against it in excess of $100,000 in the
aggregate, to remain unstayed, unbonded or not discharged for a period of more
than thirty (30) days, unless such judgment is being contested in good faith
and the Borrower has established reserves in accordance with GAAP that are
satisfactory to the Lender;
(h) any of the operations or business of the Borrower is suspended,
other than in the ordinary course of its business which has a Material Adverse
Effect;
(i) the Borrower or any Subsidiary commences any case, proceeding or
other action relating to it in bankruptcy or seeking reorganization,
liquidation, dissolution, winding-up, arrangement, composition, compromise,
readjustment of its debts or any other relief under any bankruptcy, insolvency,
reorganization, liquidation, dissolution, arrangement, composition, compromise,
readjustment of debt or similar act or law of any jurisdiction, now or
hereafter existing, or consents to; approves of, or acquiesces in, any such
case, proceeding or other action, or applies for a receiver, trustee or
custodian for itself or for all or a substantial part of its properties or
assets, or makes an assignment for the benefit of creditors, or fails generally
to pay its debts as they mature or admits in writing its inability to pay its
debts as they mature, or is adjudicated insolvent or bankrupt;
(j) there is commenced against the Borrower or any Subsidiary any
case or proceeding or any other action is taken against the Borrower or such
Subsidiary in bankruptcy or seeking reorganization, liquidation, dissolution,
winding-up, arrangement, composition, compromise, readjustment of its debts or
any other relief under any bankruptcy, insolvency, reorganization, liquidation,
dissolution, arrangement, composition, compromise, readjustment of debt or
similar act or law of any jurisdiction, now or hereafter existing; or there is
appointed a receiver, trustee or custodian for the Borrower or such Subsidiary
or for all or a substantial part of their respective properties or assets; or
there is issued a warrant of attachment, execution or similar process against
any substantial part of the properties or assets of the Borrower or such
Subsidiary; and any such event continues for thirty (30) days undismissed,
unstayed, unbonded or undischarged;
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(k) (i) the Borrower engages in any Prohibited Transaction involving
any Plan; (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA) that is not waived exists for more than sixty (60) days with respect
to any Plan; (iii) a Reportable Event occurs with respect to, or proceedings
commence to have a trustee appointed, or a trustee is appointed, to administer
or to terminate, any Plan, which Reportable Event or institution of proceedings
is likely to result in the termination of such Plan for purposes of Title IV of
ERISA and, in the case of a Reportable Event, the continuance of such
Reportable Event unremedied for 10 days after notice of such Reportable Event
pursuant to Section 4043(a), (c) or (d) of ERISA is given or the continuance of
such proceedings for ten (10) days after commencement thereof, as the case may
be; (iv) the Borrower or any of its Subsidiaries fully or partially withdraws
from any multiemployer Plan; provided, however, that any event or condition
described in any of clauses (i) through (iv) of this paragraph (k) shall not
constitute an Event of Default unless such event or condition, together with
all other such events or conditions (if any), is likely to subject such
Borrower to any tax, penalty or other liabilities in the aggregate material in
relation to the management, business, properties, assets, operations or
condition (financial or other) of the Borrower or such Subsidiary; or (v) any
Plan terminates for purposes of Title IV of ERISA, or PBGC institutes
proceedings for the involuntary termination of any Plan, in either case, with a
vested unfunded liability of $100,000 or more;
(l) there shall occur a cessation of a substantial part of the
business of the Borrower for a period which significantly affects the
Borrower's capacity to continue its respective business; or the Borrower shall
suffer the loss or revocation of any license or Permit now held or hereafter
acquired by the Borrower which is necessary to the continued or lawful
operation of a part of its respective business that would have a Material
Adverse Effect; or the Borrower shall be enjoined, restrained or in any way
prevented by court, governmental or administrative order from conducting all or
any part of its respective business affairs for a period of thirty (30) days
which would have a Material Adverse Effect; or any Lease shall be canceled or
terminated by the other party to such Lease prior to the expiration of its
stated term which individually or in the aggregate which would have a Material
Adverse Effect;
(m) the Borrower or any seller fails to perform or observe any
agreement contained in the Acquisition Documents, except for failures which,
individually or in the aggregate, would not have a Material Adverse Effect; or
(n) a Material Adverse Change shall have occurred.
Section 8.02. Remedies Upon an Event of Default. If any Event of
Default shall have occurred and be continuing, the Lender may by notice to the
Borrower (i) declare the commitment of the Lender to make Loans hereunder to be
terminated, whereupon the same shall forthwith terminate, (ii) Convert any or
all of the Loans into Conversion Loans, (iii) sell or dispose of the Loans in a
commercially reasonable manner and/or (iv) declare any or all of the Loans, all
interest thereon, any accrued and unpaid fees and all other amounts payable
hereunder or in respect of such Loans to be forthwith due and payable,
whereupon they shall become and be forthwith due and payable, without
presentment, demand, protest, or further notice of any kind,
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all of which are hereby expressly waived by the Borrower. Notwithstanding the
foregoing, upon the occurrence of any Event of Default described in Sections
8.01(i) or (j) above, the commitment of the Lender to make Loans shall
automatically be terminated and the Loans, all interest thereon and all accrued
and unpaid fees and all other amounts payable hereunder or in respect of the
Loans shall immediately become due and payable, without any requirement on the
part of the Lender to give notice, or make declaration, of any kind regarding
such Event of Default and without presentment, demand, protest or any other
requirement on the part of the Lender, all of which are hereby expressly waived
by the Borrower.
ARTICLE 9. MISCELLANEOUS
Section 9.01. Notices. All notices hereunder shall be in writing and
shall be conclusively deemed to have been received and shall be effective,
except as explicitly otherwise noted, (i) on the day on which delivered if
delivered personally, or transmitted by telecopier (followed by a mailed
written confirmation), (ii) on the next Business Day if delivered by a
nationally recognized overnight courier (such as Federal Express), or (iii)
three (3) Business Days after the date on which the same is mailed by certified
United States mail, postage prepaid, and shall be addressed:
(a) in the case of the Borrower, to:
American Industrial Properties REIT
0000 Xxxxx Xxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxxx,
Xx. Xxxx X. Xxxxxxx
Telecopier No.: (000) 000-0000
With a copy to:
Liddell, Sapp, Zivley, Hill & XxXxxx, L.L.P.
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxxxx, Esq.
Telecopier No.: (000) 000-0000
(b) in the case of the Lender, to:
Prudential Securities Credit Corporation
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. X. Xxxxxx X'Xxxxxx, Jr.
Telecopier No.: (000) 000-0000
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With a copy (other than copies of any Notice of Borrowing) to:
Pryor, Cashman, Xxxxxxx & Xxxxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telecopier No.: (000) 000-0000
or at such other address as the party giving such notice shall have been
advised of in writing for such purpose by the party to which the same is
directed.
Section 9.02. Survival of this Agreement. All covenants, agreements,
representations and warranties made herein, or in the Loan Documents or in any
certificate delivered pursuant hereto or thereto shall survive the execution by
the Borrower and delivery to the Lender of this Agreement, the Note and the
other Loan Documents and the making and repayment of the Loans hereunder, and
shall continue in full force and effect so long as any Obligations of the
Borrower remains outstanding and unpaid or this Agreement remains in effect.
Section 9.03. Indemnity. The Borrower agrees to defend, protect,
indemnify and hold harmless the Lender and each of its Affiliates, officers,
directors, employees, agents, attorneys and consultants (collectively called
the "Indemnitees") from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs, expenses
and disbursements of any kind or nature whatsoever (including, without
limitation, the reasonable fees and disbursements of counsel for such
Indemnitees incurred in connection with any action or proceeding between or
among the Borrower and any Indemnitee or between any Indemnitee and any third
party or otherwise, whether or not relating to any investigative,
administrative or judicial proceeding and whether or not such Indemnitees shall
be designated a party thereto), imposed on, incurred by, or asserted against
such Indemnitees (whether direct, indirect, special, consequential, punitive or
treble and whether based on any federal, state or local, or foreign, laws or
other statutory regulations, including, without limitation, Environmental Laws,
securities and commercial laws and regulations, under common law or at
equitable cause, or on contract or otherwise) in any manner relating to or
arising out of this Agreement or any of the Related Documents, or any act,
event or transaction related or attendant thereto or contemplated hereby, or
any action or inaction by any Indemnitee under or in connection therewith, any
commitment of the Lender hereunder, or the making of the Loans, or the
management of such Loans, or the use or intended use of the proceeds of any
Loan, advance or other financial accommodation provided hereunder, or any ERISA
liabilities, or the use or intended use of the Collateral Properties or any
accident or injury occurring on the Collateral Properties, or any claims
asserted against the Lender by reason of its alleged obligations under any
Lease, or the payment of any brokerage commission to anyone in connection with
funding the Loans, or any misrepresentation made by the Borrower to the Lender
in the Loan Documents, including, in each such case, any allegation of any such
matters, whether meritorious or not (collectively, the "Indemnified Matters");
provided, however, that the Borrower shall not have any obligation to any
Indemnitee hereunder with respect to Indemnified Matters directly caused by or
resulting primarily from the willful misconduct or gross negligence of such
Indemnitee. The covenants of the Borrower
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contained in this Section 9.03 shall survive the payment in full of all amounts
due and payable under this Agreement or any of the Loan Documents and the full
satisfaction of all other Obligations of the Borrower.
Section 9.04. Costs, Expenses and Taxes. (a) The Borrower agrees to pay
on demand (i) all reasonable out-of-pocket costs and expenses incurred by the
Lender in connection with the preparation, execution, delivery, filing,
recording, and administration of this Agreement (including, without limitation,
the Conversion), each of the Related Documents, and any other documents,
instruments or agreements which may be delivered in connection with this
Agreement (including, without limitation, the reasonable fees and out-of-pocket
expenses of counsel for the Lender, and local counsel who may be retained by
said counsel) with respect thereto and with respect to advising the Lender as
to its rights and responsibilities under this Agreement (including, without
limitation, the Conversion), (ii) all costs and expenses in connection with all
third party reports, the audit, appraisal, valuation, investigation, and the
creation, perfection, priority or protection of the Lender's Liens against the
Collateral (including, without limitation, before and after the Conversion),
including, without limitation, all costs and expenses (A) to pay or discharge
taxes, Liens, security interests or other encumbrances levied, placed or
threatened against the Collateral and (B) for title and lien searches, title
insurance premiums, filing and recording fees and taxes, duplication costs and
corporate search fees, including, without limitation, all title and lien
searches, title insurance premiums, filing and recording fees and taxes
incurred in connection with the filing and recording of the Mortgages and the
Deeds of Trust, (iii) all out-of-pocket costs and expenses in connection with
the audits, inspections and investigations conducted pursuant to Section 2.12
and Section 5.09 hereof, and (iv) all costs and expenses (including, without
limitation, the reasonable fees and expenses of the Lender's counsel) of the
Lender in connection with the monitoring, refinancing and/or enforcement of
this Agreement (including, without limitation, the Conversion) and each of the
Related Documents and such other documents, instruments or agreements which may
be delivered in connection with this Agreement.
(b) Any and all payments by the Borrower under this Agreement or
the Note shall be made free and clear of and without deduction for any and all
present or future taxes, levies, imposts, deductions, charges or withholdings,
and all liabilities with respect thereto, excluding, in the case of the Lender,
taxes imposed on or in respect of its income (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 hereunder to the
Lender, (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 9.04), the Lender 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.
(c) The Borrower further agrees to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges, or similar
levies which arise in connection with the execution and delivery of this
Agreement, any of the Related Documents or any of the
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other instruments, documents or agreements executed and/or delivered in
connection herewith or therewith, or any payment made hereunder or in
connection herewith (hereinafter collectively referred to as "Other Taxes").
(d) The Borrower shall indemnify the Lender for the full amount of
Taxes and Other Taxes (including, without limitation, any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable by the Borrower under this
Section 9.04) paid by the Lender 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. This
indemnification shall be made within 30 days from the date the Lender makes
written demand therefor. A certificate as to any additional amount payable to
the Lender under this Section 9.04 submitted to the Borrower by the Lender
shall show in reasonable detail the amount payable and the calculations used to
determine such amount and shall, absent manifest error, be final, conclusive
and binding upon each of the parties hereto.
(e) Without prejudice to the survival of any other agreement of
the Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 9.04 shall survive the payment in full of all amounts
due and payable under this Agreement or any of the Related Documents and the
full satisfaction of all other Obligations of the Borrower.
Section 9.05. Further Assurances. (a) At any time and from time to
time, upon the request of the Lender, the Borrower shall execute, deliver and
acknowledge, or cause to be executed, delivered and acknowledged, such further
documents and instruments and do such other acts and things as the Lender may
reasonably request in order to effect fully the intent and purposes of this
Agreement and the Related Documents, and any other agreements, instruments and
documents delivered pursuant hereto or in connection with the making of the
Loans, in proper form for recording and otherwise in form and substance
reasonably satisfactory to the Lender and its counsel.
(b) The Borrower agrees that from time to time, at its expense, it
shall promptly execute and deliver all further instruments and documents, and
take all further action, that may be necessary or appropriate, or that the
Lender may reasonably request, in order to create, evidence, perfect or
preserve any security interest or Lien granted or purported to be granted
hereby or by any Loan Document or to enable the Lender to exercise and enforce
its rights and remedies hereunder or under any Loan Document with respect to
any Collateral.
Section 9.06. Amendment and Waiver. No amendment or waiver of any
provision of this Agreement or any of the Related Documents to which the Lender
is a party, nor any 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
Lender, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given; provided, however, that no
amendment, waiver or consent, shall, unless in writing and signed by all
holders of the Note do any of the following: (i) increase the Commitment, (ii)
reduce the principal of, or premiums or interest on, the Note or the funding
fee payable in accordance with Section 2.09 hereunder, (iii) postpone any date
fixed for any payment of principal of, or interest on, the Note or such funding
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fee or any other amount due hereunder or under any Loan Document to any holder
of the Note, or waive any default in the payment of principal, interest or any
other amount due hereunder or under any Loan Document to which such holder of
the Note is a party, (iv) release any material portion of the Collateral, or
(v) amend this Section 9.06 or any other provision requiring the consent of all
of the holders of the Note. No failure on the part of the Lender or any holder
of the Note to exercise, and no delay in exercising, any right, power or
privilege hereunder or under any of the Related Documents shall operate as a
waiver thereof, nor shall a single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. No notice to or demand on the Borrower in any case shall entitle
the Borrower to any other or further notice or demand in the same, similar or
other circumstances.
Section 9.07. Remedies Cumulative. This Agreement, the Related
Documents and the Obligations of the Borrower hereunder and thereunder are in
addition to and not in substitution for any other Obligations of the Borrower
or security interests granted by the Borrower now or hereafter held by the
Lender and shall not operate as a merger of any contract or debt or suspend the
fulfillment of or affect the rights, remedies or powers of the Lender in
respect of any such Obligation or security interest held by the Lender for the
fulfillment thereof. The rights and remedies provided in this Agreement and in
any Related Document are cumulative and not exclusive of any other rights or
remedies provided by law.
Section 9.08. Marshaling, Recourse to Security: Payments Set Aside.
The Lender shall not be under any obligation to marshal any assets in favor of
the Borrower or any other party or against or in payment of any or all of the
Obligations of the Borrower to the Lender hereunder or under the Related
Documents or otherwise. Recourse to security shall not be required at any
time. To the extent that the Borrower makes a payment or payments to the
Lender, or the Lender enforces its security interests or exercises its rights
of setoff, and such payment or payments or the proceeds of such enforcement or
setoff or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be repaid to a
trustee, receiver or any other party under any bankruptcy law, state or federal
law, common law or equitable cause, then to the extent of such recovery, the
obligation or part thereof originally intended to be satisfied, and all Liens,
rights and remedies therefor, shall be revived and reinstated and continued in
full force and effect as if such payment had not been made or such enforcement
or setoff had not occurred.
Section 9.09. Setoff. In addition to any rights and remedies of the
Lender now or hereafter provided by law, the Lender shall have the right,
without prior notice to the Borrower, any such notice being expressly waived by
the Borrower to the extent permitted by applicable law, on the occurrence and
during the continuation of any Event of Default to setoff and apply against any
Obligation, whether matured or unmatured, of the Borrower, any amount owing
from the Lender to the Borrower, at or at any time after the happening of any
such Event of Default, and such right of setoff may be exercised by the Lender
against the Borrower or against any trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors, receiver or
execution, judgment or attachment creditor, notwithstanding the fact that such
right of setoff shall not have been exercised by the Lender before the making,
filing or issuance, or service on the Lender of, or of notice of, any such
event or proceeding.
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Section 9.10. Binding Effect. This Agreement shall become effective
when it shall have been executed by the Borrower and the Lender, and thereafter
shall be binding upon and inure to the benefit of the Borrower and the Lender
and their respective successors and assigns; provided, however, that the
Borrower shall not have the right to assign its rights hereunder or any
interest herein without the prior written consent of the Lender. For the
purposes of this Section 9.10, an assignment shall be deemed to include (i) if
the Borrower is a corporation, the voluntary or involuntary sale, conveyance or
transfer of the Borrower's Securities (or the Securities of any corporation
directly or indirectly controlling the Borrower by operation of law or
otherwise) or the creation or issuance of a new stock by which an aggregate of
more than ten percent (10%) of the Borrower's Securities shall be vested in a
party or parties who are not now shareholders, (ii) if the Borrower is a
partnership, the change, removal or resignation of a general partner or
managing partner, or (iii) if the Borrower is a limited liability company, the
change, removal or resignation of a managing member.
Section 9.11. Applicable Law. This Agreement and the rights and
obligations of the parties hereunder shall be governed by, and construed and
interpreted in accordance with, the substantive law of the State of New York,
without regard to its choice of law provisions.
Section 9.12. Consent to Jurisdiction and Service of Process; Waiver
of Jury Trial. All judicial proceedings brought against the Borrower or the
Lender with respect to this Agreement or any Related Document may be brought in
any state or federal court of competent jurisdiction in the State of New York
and, by its execution and delivery of this Agreement, the Borrower accepts, for
itself and in connection with its properties, generally and unconditionally,
the exclusive jurisdiction of the aforesaid courts, and irrevocably agrees to
be bound by any final judgment rendered thereby in connection with this
Agreement or any of the Related Documents from which no appeal has been taken
or is available. The Borrower irrevocably consents to the service of process
of any of the aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified mail, postage prepaid, to
its notice address specified in Section 9.01 hereof, such service to become
effective five (5) days after such mailing. EACH OF THE BORROWER AND THE
LENDER HEREBY KNOWINGLY, INTENTIONALLY AND IRREVOCABLY WAIVE (a) TRIAL BY JURY
IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY RELATED
DOCUMENT, AND (b) ANY OBJECTION (INCLUDING, WITHOUT LIMITATION, ANY OBJECTION
TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING
WITH RESPECT TO THIS AGREEMENT OR ANY RELATED DOCUMENT IN ANY JURISDICTION SET
FORTH ABOVE. Nothing herein shall affect the right of the Lender to serve
process in any other manner permitted by law.
Section 9.13. Inconsistencies. This Agreement and each of the Loan
Documents shall be construed to the extent reasonable to be consistent, one
with the other, but to the extent that the terms and conditions of this
Agreement or any other Loan Document are actually inconsistent with the terms
and conditions of any Loan Document, the terms and conditions of this Agreement
shall govern.
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Section 9.14. Performance of Obligations. The Borrower acknowledges
and agrees that the Lender may, but shall have no obligation to, make any
payment or perform any act required of the Borrower under this Agreement or any
Related Document or take any other action which the Lender in its discretion
deems necessary or desirable to protect or preserve the Collateral, including,
without limitation, any action to pay or discharge taxes, Liens, security
interests or other encumbrances levied or placed on or threaten to be placed on
any Collateral.
Section 9.15. Assignment; Participation. The Lender may assign (by
novation or otherwise) or participate all or a proportionate part of its
rights, obligations and interests in the Loans and its rights hereunder and
under the Related Documents without restriction. The Lender may, prior to or
after the execution of this Agreement syndicate the Loans with one or more
financial institutions, who will become parties to this Agreement, in which
case the Lender will be the sole and exclusive agent for such other financial
institutions upon such terms and conditions as the Lender deems appropriate.
The Borrower hereby agrees to reasonably cooperate with the Lender, at the
Borrower's expense, to effect assignments and/or participations made with
respect hereto.
Section 9.16. Confidentiality. The Lender shall maintain the
confidential nature of, and shall not use or disclose, the Borrower's
confidential financial information, without first obtaining the Borrower's
written consent, which consent shall not be unreasonably withheld or delayed.
Nothing in this Section 9.16 shall require the Lender to obtain the consent of
the Borrower, before exercising any of its rights under the Related Documents
upon the occurrence of a Default or Event of Default. The obligations of the
Lender shall in no event apply to: (i) providing information about the Loans or
any party to any Related Document to any actual or potential assignee or
participant contemplated in Section 9.15 hereof; (ii) any situation in which
the Lender, in the sole discretion of the Lender, is required by law or
required or requested by any governmental, regulatory or supervisory authority
or official to disclose information; (iii) providing information to counsel to
the Lender in connection with the transactions contemplated by the Related
Documents; (iv) providing information to independent auditors retained by the
Lender; (v) any information that is in or becomes part of the public domain
otherwise than through a wrongful act of the Lender or any employees or agents
thereof; (vi) any information that is in the possession of the Lender prior to
receipt thereof from the Borrower or any other Person known to the Lender to be
acting on behalf of the Borrower; (vii) any information that is independently
developed by the Lender; and (viii) any information that is disclosed to the
Lender by a third party that has no obligation of confidentiality with respect
to the information disclosed.
Section 9.17. Construction. The parties hereto acknowledge that each
party and its counsel have reviewed this Agreement and each of the Loan
Documents and that the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Agreement or any of the Loan Documents.
Section 9.18. Entire Agreement; Binding Effect. This Agreement,
taken together with all of the Related Documents and all certificates and other
documents delivered by the Borrower to the Lender, embodies the entire
agreement and, except as otherwise contemplated herein, supersedes all prior
agreements, written and oral, relating to the subject matter hereof.
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Section 9.19. Severability. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
Section 9.20. Headings. Section headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
Section 9.21. Execution of 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 when taken together shall constitute one and the same
agreement.
Section 9.22. Limitation of Liability. No claim may be made by the
Borrower or any other Person against the Lender or its Affiliates, directors,
officers, employees, attorneys or agents for any special, indirect,
consequential, punitive or treble damages in respect of any claim for breach of
contract or any other theory of liability arising out of or related to the
transactions contemplated by this Agreement or any other Related Documents, or
any act, omission or event occurring in connection herewith or therewith; and
the Borrower hereby waives, releases and agrees not to xxx upon any claim for
any and all special, indirect, consequential, punitive or treble damages,
whether or not accrued and whether or not known or suspected to exist in its
favor.
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
BORROWER:
AIP-SWAG OPERATING PARTNERSHIP, L.P.,
a Delaware limited partnership
By: AMERICAN INDUSTRIAL PROPERTIES REIT
A Texas real estate investment trust, its
general partner
By: /s/Xxxx X. Xxxxxxx
-------------------
Name: Xxxx X. Xxxxxxx
----------------
Title: Vice President
---------------
AMERICAN INDUSTRIAL PROPERTIES REIT
A Texas real estate investment trust
By: /s/ Xxxx X. Xxxxxxx
-------------------
Name: Xxxx X. Xxxxxxx
Title: Vice President
LENDER:
PRUDENTIAL SECURITIES CREDIT
CORPORATION,
a Delaware corporation
By: /s/ Xxxxxxxxx Xxxxxxxx
----------------------
Name: Xxxxxxxxx Xxxxxxxx
Title:
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