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CREDIT AGREEMENT
(Revolver)
AMONG
GLENBOROUGH PROPERTIES, L.P.,
A CALIFORNIA LIMITED PARTNERSHIP,
AS BORROWER,
AND
XXXXX FARGO BANK, NATIONAL ASSOCIATION,
and
IMPERIAL BANK, A CALIFORNIA CORPORATION,
TOGETHER WITH THOSE ASSIGNEES
BECOMING PARTIES HERETO PURSUANT
TO SECTION 12.20, AS LENDERS,
AND
XXXXX FARGO BANK, NATIONAL ASSOCIATION,
AS AGENT
Dated as of July 11, 1996
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
1.01 Certain Defined Terms.......................................... 1
1.02 Computation of Time Periods.................................... 23
1.03 Terms.......................................................... 23
ARTICLE II
LOANS
2.01 Loan Advances and Repayment; Letters of Credit ................ 24
2.02 Authorization to Obtain Loans.................................. 30
2.03 Lenders' Accounting............................................ 30
2.04 Interest on the Loans.......................................... 31
2.05 Fees........................................................... 37
2.06 Payments....................................................... 38
2.07 Increased Capital.............................................. 39
2.08 Notice of Increased Costs...................................... 39
ARTICLE III
BORROWING BASE PROPERTIES
3.01 Acceptance of Borrowing Base Properties........................ 40
3.02 Release of Borrowing Base Properties........................... 42
3.03 Borrowing Base Determinations.................................. 43
3.04 Covenants Relating to Borrowing Base Properties................ 44
ARTICLE IV
CONDITIONS TO LOANS
4.01 Conditions to Initial Disbursement of Loans.................... 47
4.02 Conditions Precedent to All Loans.............................. 51
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 Representations and Warranties as to Borrower, Etc............. 52
5.02 Representations and Warranties as to the REIT.................. 58
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ARTICLE VI
REPORTING COVENANTS
6.01 Financial Statements and Other Financial and
Operating Information.......................................... 62
6.02 Environmental Notices.......................................... 68
6.03 Confidentiality................................................ 69
ARTICLE VII
AFFIRMATIVE COVENANTS
7.01 With Respect to Borrower....................................... 70
7.02 With Respect to the REIT....................................... 72
ARTICLE VIII
NEGATIVE COVENANTS
8.01 With Respect to all Parties.................................... 74
8.02 Amendment of Constituent Documents............................. 75
8.03 Disposal of Guarantor Subpartnership Interests................. 76
8.04 Margin Regulations............................................. 76
8.05 Minimum Ownership Interest of Xxxxxx Xxxxxxxxxx................ 76
8.06 Management..................................................... 76
8.07 Organization of Borrower, Etc.................................. 76
8.08 REIT Board of Directors........................................ 77
8.09 With Respect to the REIT....................................... 77
ARTICLE IX
FINANCIAL COVENANTS
9.01 Minimum Net Worth.............................................. 77
9.02 Total Liabilities to Gross Asset Value Ratio................... 78
9.03 EBITDA to Interest Expense Ratio............................... 78
9.04 EBITDA to Debt Service and Capital Expenditures
Ratio.......................................................... 78
9.05 Distributions.................................................. 78
9.06 Restrictions on Certain Investments............................ 78
9.07 Floating Rate Debt............................................. 79
9.08 Calculation.................................................... 79
ARTICLE X
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
10.01 Events of Default.............................................. 79
10.02 Rights and Remedies............................................ 83
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10.03 Rescission..................................................... 85
ARTICLE XI
AGENCY PROVISIONS
11.01 Appointment.................................................... 85
11.02 Nature of Duties............................................... 86
11.03 Loan Disbursements............................................. 86
11.04 Distribution and Apportionment of Payments..................... 87
11.05 Rights, Exculpation, Etc....................................... 89
11.06 Reliance....................................................... 90
11.07 Indemnification................................................ 90
11.08 Agent Individually............................................. 90
11.09 Successor Agent; Resignation of Agent; Removal of
Agent......................................................... 91
11.10 Consent and Approvals.......................................... 91
11.11 Agency Provisions Relating to Collateral....................... 93
11.12 Lender Actions Against Collateral.............................. 96
11.13 Ratable Sharing................................................ 96
11.14 Delivery of Documents.......................................... 97
11.15 Notice of Events of Default.................................... 97
ARTICLE XII
MISCELLANEOUS
12.01 Expenses....................................................... 97
12.02 Indemnity...................................................... 98
12.03 Change in Accounting Principles................................ 99
12.04 Amendments and Waivers......................................... 99
12.05 Independence of Covenants......................................101
12.06 Notices........................................................101
12.07 Survival of Warranties, Indemnities and
Agreements....................................................102
12.08 Failure or Indulgence Not Waiver; Remedies
Cumulative....................................................102
12.09 Marshalling; Recourse to Security; Payments Set
Aside.........................................................102
12.10 Severability...................................................102
12.11 Headings.......................................................102
12.12 Governing Law; Waiver..........................................103
12.13 Limitation of Liability........................................103
12.14 Successors and Assigns.........................................103
12.15 Consent to Jurisdiction and Service of Process;
Waiver of Jury Trial..........................................103
12.16 Counterparts; Effectiveness; Inconsistencies...................104
12.17 Performance of Obligations.....................................104
12.18 Construction...................................................105
12.19 Entire Agreement...............................................105
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12.20 Assignments and Participations.................................105
iv
LIST OF EXHIBITS AND SCHEDULES
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Exhibits:
A - Form of Assignment and Assumption
B - Form of Borrowing Base Certificate
C - Closing Checklist
D - Form of Compliance Certificate
E - Form of Loan Notes
F - Form of Notice of Borrowing
G - Form of Fixed Rate Notice
H - Form of Solvency Certificate
Schedules:
1 - List of Borrowing Base Properties
2 - Normalized Capital Expenditures
3 - List of Major BBP Leases on Closing Date
5.01(c) - Ownership of Borrower, each Guarantor
Subpartnership, the Associated Companies and the
borrowers under the Assigned Mortgages
5.01(u) - Environmental Matters
5.01(v) - Contractual Obligations Not Terminable in 30 Days
5.01(z) - Management Agreements
5.02(e) - Benefit Plans
5.02(q) - Xxxxxx Xxxxxxxxxx Ownership
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT is dated as of July 11, 1996 (as amended,
supplemented or modified from time to time, the "Agreement") and is among
GLENBOROUGH PROPERTIES, L.P., a California limited partnership ("Borrower"),
each of the Lenders, as hereinafter defined, and XXXXX FARGO BANK, NATIONAL
ASSOCIATION ("Xxxxx Fargo"), in its capacity as agent acting in the manner
described in Article XI and as a Lender.
RECITALS
WHEREAS, Borrower has previously entered into a $10,000,000
revolving credit facility (the "Imperial Bank Facility") with Imperial Bank
secured by a variety of Borrower's properties;
WHEREAS, Borrower desires to increase the amount of revolving credit
available to it and has determined to replace the Imperial Bank Facility with
the revolving credit facility contemplated by this Agreement; and
WHEREAS, various properties which secured the Imperial Bank Facility will
secure the revolving credit facility contemplated by this Agreement and Imperial
Bank is one of the Lenders under the revolving credit facility contemplated by
this Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.01 Certain Defined Terms. The following terms used in this
Agreement shall have the following meanings (such meanings to be applicable,
except to the extent otherwise indicated in a definition of a particular term,
both to the singular and the plural forms of the terms defined):
"Accommodation Obligations", as applied to any Person, means any
Indebtedness or other contractual obligation or liability, contingent or
otherwise, of another Person in respect of which that Person is liable,
including, without limitation, any such Indebtedness, obligation or liability
directly or indirectly guaranteed, endorsed (otherwise than for collection or
deposit in the ordinary course of business), co-made or discounted or sold with
recourse by that Person, or in respect of which that Person is otherwise
directly or indirectly liable, (including, in respect of Borrower, each
Investment Partnership), Contractual Obligations (contingent or otherwise)
arising through any agreement to purchase, repurchase or otherwise acquire such
Indebtedness, obligation or liability or any security therefor, or to provide
funds for the payment or discharge thereof (whether in the form of loans,
advances, stock purchases, capital
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contributions or otherwise), or to maintain solvency, assets, level of income,
or other financial condition, or to make payment other than for value received.
"Accountants" means Xxxxxx Xxxxxxxx LLP, any other "big six"
accounting firm or another firm of certified public accountants of national
standing selected by Borrower and acceptable to Agent.
"Acquisition Price" means the aggregate purchase price (or
Borrower's Share thereof, as applicable) for an asset, including bona fide
purchase money financing provided by the seller and all prior Indebtedness
encumbering such asset at the time of acquisition.
"Adjusted Net Worth" means, at any time, stockholders' equity as
shown on the Financial Statements prepared in accordance with GAAP, plus
minority interests in Borrower, plus cumulative net additions to depreciation
and amortization reflected in statements of operation after March 31, 1996,
minus intangible assets.
"Affiliates" as applied to any Person, means any other Person
directly or indirectly controlling, controlled by, or under common control with,
that Person. For purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means (a) the possession, directly or
indirectly, of the power to vote ten percent (10%) or more of the Securities
having voting power for the election of directors of such Person or otherwise to
direct or cause the direction of the management and policies of that Person,
whether through the ownership of voting Securities or by contract or otherwise,
or (b) the ownership of a general partnership interest or a limited partnership
interest representing ten percent (10%) or more of the outstanding limited
partnership interests of such Person.
"Agent" means Xxxxx Fargo in its capacity as agent for the Lenders
under this Agreement, and shall include any successor Agent appointed pursuant
hereto and shall be deemed to refer to Xxxxx Fargo in its individual capacity as
a Lender where the context so requires.
"Appraisal" means a written appraisal prepared by an independent MAI
appraiser acceptable to Agent and subject to Agent's customary independent
appraisal requirements and prepared in compliance with all applicable regulatory
requirements, including FIRREA.
"Appraised Value" means, as to any Borrowing Base Property, the fair
market value of such Borrowing Base Property as reflected in the then most
recent Appraisal of such Borrowing Base Property as the same may have been
adjusted by Agent based
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upon its internal review of such Appraisal, which review shall be conducted
prior to approval of such Appraisal by Lenders and in any event within thirty
(30) days after receipt by Agent of such Appraisal.
"Assigned Mortgage" means the promissory note, deed of trust or
mortgage, loan agreement, policy of title insurance and all other documents,
instruments or undertakings, evidencing, securing or otherwise executed and
delivered by any Person in connection with said promissory note, all as more
particularly set forth in the Assignment of Mortgages.
"Assignment of Mortgages" means the Assignment of Mortgages and all
related documents or instruments executed by Borrower in favor of Agent in
respect of the Assigned Mortgages.
"Assignment and Assumption" means an Assignment and Assumption in
the form of Exhibit A hereto (with blanks appropriately filled in) delivered
to Agent in connection with each assignment of a Lender's interest under this
Agreement pursuant to Section 12.20.
"Associated Companies" means Glenborough Corporation, a California
corporation, Glenborough Inland Realty Corporation, a California corporation,
and Glenborough Hotel Group, a Nevada corporation.
"Base Rate" means, on any day, the higher of (a) the base rate of
interest per annum established from time to time by Agent at its principal
office in San Francisco, California, and designated as its prime rate as in
effect on such day plus one- half percent (0.5%) and (b) the Federal Funds Rate
in effect on such day plus one percent (1.0%) per annum.
"Base Rate Loans" means those Loans bearing interest at the
Base Rate.
"BBP" when used herein refers to a Borrowing Base Property.
"BBP Lease" means a tenant lease of a Borrowing Base Property.
"Benefit Plan" means any employee pension benefit plan as defined in
Section 3(2) of ERISA (other than a Multiemployer Plan) in respect of which a
Person or an ERISA Affiliate is, or within the immediately preceding five (5)
years was, an "employer" as defined in Section 3(5) of ERISA.
"Borrower" means Glenborough Properties, L.P., together with, in the
case of each representation (unless the context herein otherwise specifically
refers solely to Glenborough Properties, L.P.) and covenant (including all
financial covenants) in this Agreement, all Subsidiaries.
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"Borrower's Share" means Borrower's percentage ownership interest in
the Unconsolidated Entity in question.
"Borrowing" means a borrowing under the Facility.
"Borrowing Base" means the sum of the Borrowing Base Values of the
Borrowing Base Properties; provided, however, that no Borrowing Base credit will
be given for the Borrowing Base Value of any Borrowing Base Property (other than
University Club Tower), to the extent such Borrowing Base Value exceeds
twenty-five percent (25%) of the Borrowing Base.
"Borrowing Base Certificate" means a report in the form of
Exhibit B.
"Borrowing Base Fee" has the meaning given to such term in Section
2.05(c).
"Borrowing Base Properties" means the real properties and Assigned
Mortgages listed on Schedule 1, as such Schedule 1 may be amended from time to
time to reflect the addition and deletion of Borrowing Base Properties pursuant
to Article III. In the case of each Assigned Mortgage, unless otherwise noted
each reference herein to "Borrowing Base Property" shall include the underlying
real property encumbered by the Assigned Mortgage.
"Borrowing Base Property Statements" has the meaning given to such
term in Section 6.01(a).
"Borrowing Base Value" means, at any time as to any Borrowing Base
Property other than an Assigned Mortgage, the lower of:
(a) either (i) fifty-five percent (55%) of the Appraised
Value of such Borrowing Base Property in the case of hotel
properties, (ii) sixty percent (60%) of the Appraised Value of such
Borrowing Base Property in the case of retail, industrial and office
properties, or (iii) sixty-five percent (65%) of the Appraised
Value of such Borrowing Base Property in the case of multifamily
residential properties, minus, in each case, the then unpaid
principal amount of all senior liens approved by Lenders in their
sole discretion pursuant to Section 3.1, and any assessments or
similar obligations imposed upon such Borrowing Base Property
(provided that there shall be no deduction for assessments or
similar obligations if and to the extent the amount thereof has been
appropriately deducted in the determination of Appraised Value); and
(b) An amount equal to seventy-four percent (74%) (being
the quotient of 1.00 divided by 1.35) of the Net Operating Income
(less Capital Expenditures) of such Borrowing Base Property for the
four most recently ended Fiscal Quarters (subject to adjustment as
provided in the
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definition of Net Operating Income) preceding the date of
determination, divided by the constant annual percentage (expressed
as a decimal) which would then be applicable to a loan bearing
interest during the term thereof at a fixed rate equal to two and
one-half percent (2.50%) in excess of the greater of six and
one-half percent (6.50%) or the then prevailing yield (as published
in The Wall Street Journal) for on the run (i.e., the most recently
auctioned) 10-year United States Treasury Notes and amortizing in
equal annual payments of principal and interest over a period of
twenty-five (25) years, provided that if the regular quarterly
auction of 10-year United States Treasury Notes is changed so that
such auctions are less frequent or discontinued, then the aforesaid
rate will be the yield for United States Treasury obligations having
a constant maturity of 10 years as published in the Federal Reserve
Statistical Release H.15 (519) Selected Interest Rates or successor
publication.
With respect to each Assigned Mortgage, "Borrowing Base Value" means the lowest
of (i) the outstanding principal balance of the promissory note included within
such Assigned Mortgage, (ii) the adjusted value at which each such promissory
note is carried on Borrower's Financial Statements, and (iii) the Borrowing Base
Value of the real property securing such promissory note, as determined in
accordance with subparagraphs (a) and (b) above.
"Business Day" means (a) with respect to any Borrowing, payment or
rate determination of LIBOR Loans, a day, other than a Saturday or Sunday, on
which Agent is open for business in San Francisco and on which dealings in
Dollars are carried on in the London interbank market, and (b) for all other
purposes any day excluding Saturday, Sunday and any day which is a legal holiday
under the laws of the State of California, or is a day on which banking
institutions located in California are required or authorized by law or other
governmental action to close.
"Capital Expenditures" means, as applied to any Person for any
period, a sum determined for all properties of such Person based upon the
normalized annual capital expenditures, by property type, as set forth on
Schedule 2 attached hereto (prorated if the relative period is shorter or longer
than one year). For any property type not described on Schedule 2, Agent shall
determine a reasonable estimate of normalized recurring capital expenditures for
such property type. Schedule 2 shall be subject to adjustment from time to time
at Agent's reasonable discretion.
"Capital Leases", as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is or should be accounted for as a capital lease on the
balance sheet of that Person.
5
"Cash Equivalents" means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States Government or issued by an
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one (1) year after the date of acquisition thereof;
(b) marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within ninety (90) days after the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from any two of Standard & Poor's Corporation,
Xxxxx'x Investors Services, Inc., Duff and Xxxxxx, or Fitch Investors (or, if at
any time no two of the foregoing shall be rating such obligations, then from
such other nationally recognized rating services as may be acceptable to Agent)
and not listed for possible down-grade in Credit Watch published by Standard &
Poor's Corporation; (c) commercial paper, other than commercial paper issued by
Borrower or any of its Affiliates, maturing no more than ninety (90) days after
the date of creation thereof and, at the time of acquisition, having a rating of
at least A-1 or P-1 from either Standard & Poor's Corporation or Moody's
Investor's Service, Inc. (or, if at any time neither Standard & Poor's
Corporation nor Moody's Investor's Service, Inc. shall be rating such
obligations, then the highest rating from such other nationally recognized
rating services as may be acceptable to Agent); and (d) domestic and Eurodollar
certificates of deposit or time deposits or bankers' acceptances maturing within
ninety (90) days after the date of acquisition thereof, overnight securities
repurchase agreements, or reverse repurchase agreements secured by any of the
foregoing types of securities or debt instruments issued, in each case, by (i)
any commercial bank organized under the laws of the United States of America or
any state thereof or the District of Columbia or Canada having combined capital
and surplus of not less than Two Hundred Fifty Million Dollars ($250,000,000) or
(ii) any Lender.
"Closing Checklist" means the Closing Checklist attached hereto as
Exhibit C, as the same may be amended by the parties.
"Closing Date" means the date on which the funds for the initial
Loan under this Agreement are disbursed by Lenders into Chicago Title Insurance
Company's escrow account (Escrow Number 0000000-X47) at Bank of America, 0000
Xxxxxxx Xxxxxxxxx, Xxxxxxx, Xxxxxxxxxx, Account Number 12351-50737.
"Collateral" means all Property and interests in Property now owned
or hereafter acquired by Borrower or any Guarantor Subpartnership in or upon
which a security interest, pledge, lien or mortgage is granted or of which a
collateral assignment is made under this Agreement, the Mortgage Documents or
any other Loan Document.
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"Commission" means the Securities and Exchange Commission.
"Commitment" means, with respect to any Lender, such Lender's Pro
Rata Share of the Facility, which amount shall not exceed the principal amount
set out under such Lender's name under the heading "Loan Commitment" on the
signature pages attached to this Agreement or as set forth on an Assignment and
Assumption executed by such Lender, as assignee.
"Compliance Certificate" means a certificate in the form of Exhibit
D hereto delivered to Agent by Borrower pursuant to Section 6.01(d) or other
provision of this Agreement and covering Borrower's compliance with the
financial covenants contained in Sections 8.05 and 8.06 and Article IX.
"Contaminant" means any pollutant (as that term is defined in 42
U.S.C. 9601(33)) or toxic pollutant (as that term is defined in 33 U.S.C.
1362(13)), hazardous substance (as that term is defined in 42 U.S.C. 9601(14)),
hazardous chemical (as that term is defined by 29 CFR Section 1910.1200(c)),
toxic substance, hazardous waste (as that term is defined in 42 U.S.C. 6903(5)),
radioactive material, special waste, petroleum (including crude oil or any
petroleum-derived substance, waste, or breakdown or decomposition product
thereof), any constituent of any such substance or waste, including, but not
limited to, polychlorinated biphenyls and asbestos, or any other substance or
waste deleterious to the environment the release, disposal or remediation of
which is now or at any time becomes subject to regulation under any
Environmental Law.
"Contractual Obligation," as applied to any Person, means any
provision of any Securities issued by that Person or any indenture, mortgage,
deed of trust, lease, contract, undertaking, document or instrument to which
that Person is a party or by which it or any of its properties is bound, or to
which it or any of its properties is subject (including, without limitation, any
restrictive covenant affecting such Person or any of its properties).
"Court Order" means any judgment, writ, injunction, decree, rule or
regulation of any court or Governmental Authority binding upon or applicable the
Person in question.
"Debt Service" means, for any period, Interest Expense for such
period plus scheduled principal amortization (i.e., excluding any balloon or
bullet payment due at maturity) for such period on all Indebtedness of Borrower
and Borrower's Share of all Indebtedness of each Other Investment Entity.
"Defaulting Lender" means any Lender which fails or refuses to
perform its obligations under this Agreement within the time period specified
for performance of such obligation or, if no time frame is specified, if such
failure or refusal
7
continues for a period of five (5) Business Days after notice from Agent.
"DOL" means the United States Department of Labor and any successor
department or agency.
"Dollars" and "$" means the lawful money of the United States
of America.
"EBITDA" means, for any Person and at any time, for the most
recently ended Fiscal Quarter, (i) the sum of the following, as determined in
accordance with GAAP (A) Net Income (excluding Net Income or related items
attributable to any unconsolidated Person), (B) depreciation and amortization
expense and other non-cash items deducted in determining such Net Income, (C)
interest expense, (D) Taxes and (E) an amount equal to such Person's prorata
share (based upon ownership interest) of the EBITDA of each unconsolidated
Person for the most recently ended Fiscal Quarter; minus (ii) in the case of
Borrower, that portion of Net Income attributable to an investment interest in
the Associated Companies, except to the extent of preferred dividends received
by Borrower from the Associated Companies during such period; and (iii) minus
gains (and plus losses) from extraordinary items or asset sales or write-ups or
forgiveness of indebtedness.
"Environmental Laws" has the meaning set forth in Section 5.01(u).
"Environmental Lien" means a Lien in favor of any Governmental
Authority for (a) any liability under Environmental Laws, or (b) damages arising
from, or costs incurred by such Governmental Authority in response to, a Release
or threatened Release of a Contaminant into the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor statute.
"ERISA Affiliate" means any (a) corporation which is, becomes, or is
deemed to be a member of the same controlled group of corporations (within the
meaning of Section 414(b) of the Internal Revenue Code) as a Person, (b)
partnership, trade or business (whether or not incorporated) which is, becomes
or is deemed to be under common control (within the meaning of Section 414(c) of
the Internal Revenue Code) with such Person, (c) is, becomes or is deemed to be
a member of the same "affiliated service group" (as defined in Section 414(m) of
the Internal Revenue Code) as such Person, or (d) any other organization or
arrangement described in Section 414(o) of the Internal Revenue Code which is,
becomes or is deemed to be required to be aggregated pursuant to regulations
issued under Section 414(o) of the Internal Revenue Code with such Person
pursuant to Section 414(o) of the Internal Revenue Code.
8
"Event of Default" means any of the occurrences set forth in Article
X after the expiration of any applicable grace period expressly provided
therein.
"Extension Fee" has the meaning given to such term in
Section 2.01(d).
"Facility" means the loan facility of Fifty Million Dollars
($50,000,000) described in Section 2.01(a).
"FDIC" means the Federal Deposit Insurance Corporation or any
successor thereto.
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted average of
the rates on overnight Federal Funds transactions with members of the Federal
Reserve System arranged by Federal Funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by Agent from three Federal Funds brokers of recognized
standing selected by Agent.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any governmental authority succeeding to its functions.
"Financial Statements" has the meaning given to such term in Section
6.01(b).
"FIRREA" means the Financial Institutions Recovery, Reform and
Enforcement Act of 1989, as amended from time to time.
"Fiscal Quarter" means each three-month period ending on March 31,
June 30, September 30 and December 31.
"Fiscal Year" means the fiscal year of Borrower which shall be the
twelve (12) month period ending on the last day of December in each year.
"Fixed Rate Notice" means, with respect to a Libor Loan pursuant to
Section 2.01(b), a notice substantially in the form of Exhibit G.
"Fixed Rate Price Adjustment" has the meaning given to such term in
Section 2.04(h)(iii).
"Floating Rate Debt" means any outstanding Indebtedness of Borrower
which bears interest at a rate which is subject to periodic adjustment (either
automatically by reference to a fluctuating base or market rate of interest or
at the option of the lender) at any time prior to the earlier of (a) the then
9
effective Maturity Date and (b) the maturity date or termination date of such
Indebtedness. In determining Floating Rate Debt, the effects of any Interest
Rate Contracts held by the obligor under such Indebtedness shall be considered
on a basis consistent with the foregoing.
"Funding Date" means, with respect to any Loan made after the
Closing Date, the date of the funding of such Loan.
"Funds from Operations" means, for any period, Borrower's Net Income
excluding gains (or losses) from debt restructuring and sales of property, plus
depreciation and amortization of real estate assets, and after adjustments for
Unconsolidated Entities. (Adjustments for Unconsolidated Entities shall be
calculated to reflect funds from operations on the same basis.)
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and 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.
"GF III" means Glenborough Fund III, L.P., a Georgia limited
partnership.
"Governmental Authority" means any nation or government, any
federal, state, local, municipal or other political subdivision thereof or any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Gross Asset Value" means, as of the date of determination, the sum
(without duplication of any item) of (i) an amount equal to (A) Borrower EBITDA
for the most recently ended Fiscal Quarter (excluding Net Income or related
items attributable to any Unconsolidated Entity or any asset referred to in
clause (ii) through (iv) below), times (B) four (4), divided by (C) 0.11; (ii)
in the case of Borrower, the Acquisition Price paid by Borrower for any Property
acquired during the most recently ended Fiscal Quarter; (iii) cash and Cash
Equivalents owned by Borrower as of the most recently ended Fiscal Quarter (but
excluding any tenant deposits); (iv) with respect to each Investment Mortgage
held by Borrower, the lesser of the book value thereof or an amount equal to
ninety percent (90%) of (A) net operating income (less Capital Expenditures)
(determined on a basis consistent with the definition of "Net Operating Income"
in this Agreement) for the most recently ended Fiscal Quarter attributable to
the Property securing such mortgage receivable, times (B) four (4), divided by
(C) 0.11; (v) an amount equal to the Borrower's Share of (A) the EBITDA of each
10
Unconsolidated Entity (other than the Associated Companies) for the most
recently ended Fiscal Quarter (excluding EBITDA attributable to any Property not
owned by any such Unconsolidated Entity for the entire most recently ended
Fiscal Quarter), times (B) four (4), divided by (C) 0.11; (vi) the Borrower's
Share of the Acquisition Price paid for any Property acquired by an
Unconsolidated Entity during the most recently ended Fiscal Quarter; and (vii)
an amount equal to (A) preferred dividends received by Borrower from the
Associated Companies during the most recently ended Fiscal Quarter, times (B)
four (4), divided by (C) 0.20.
"Guarantor Subpartnership" means UCT Associates and each other
limited partnership whose sole general partner is either the REIT or a qualified
real estate investment trust subsidiary wholly-owned by the REIT and whose sole
limited partner is Borrower, provided that (i) the applicable partnership
agreement shall have been approved by Agent, and (ii) each Guarantor
Subpartnership shall have executed and delivered a Guaranty and Mortgage
Documents encumbering one or more Borrowing Base Properties.
"Guaranty" means each guaranty of payment and performance executed
by the REIT or a Guarantor Subpartnership in favor of Agent and the Lenders.
"Indebtedness", as applied to any Person (and without duplication),
means (a) all indebtedness, obligations or other liabilities of such Person for
borrowed money, whether or not subordinated and whether with or without recourse
beyond any collateral security, (b) all indebtedness, obligations or other
liabilities of such Person evidenced by Securities or other similar instruments,
(c) all reimbursement obligations and other liabilities of such Person with
respect to letters of credit or banker's acceptances issued for such Person's
account, (d) all obligations of such Person to pay the deferred purchase price
of Property or services, (e) all obligations in respect of both operating and
Capital Leases of such Person, (f) all Accommodation Obligations of such Person,
(g) all indebtedness, obligations or other liabilities of such Person or others
secured by a Lien on any asset of such Person, whether or not such indebtedness,
obligations or liabilities are assumed by, or are a personal liability of, such
Person (including, without limitation, the principal amount of any assessment or
similar indebtedness encumbering any property), (h) all indebtedness,
obligations or other liabilities (other than interest expense liability) in
respect of Interest Rate Contracts and foreign currency exchange agreements, (i)
ERISA obligations currently due and payable, and (j) without duplication or
limitation, all liabilities and other obligations included in the financial
statements (or notes thereto) of such Person as prepared in accordance with
GAAP.
11
"Interest Expense" means, for any period, the sum of (without
redundancy) (i) total interest expense, whether paid, accrued or capitalized
(including the interest component of Capital Leases and capitalized interest
covered by an interest reserve established under a loan facility) in respect of
Indebtedness of Borrower, including, without limitation, all commissions,
discounts and other fees and charges owed with respect to letters of credit, net
costs under Interest Rate Contracts, and fees payable to Lenders pursuant to
Section 2.01(d) and Section 2.05, (ii) Borrower's Share of total interest
expense, whether paid, accrued or capitalized (including the interest component
of Capital Leases and capitalized interest covered by an interest reserve
established under a loan facility) in respect of Indebtedness of Other
Investment Entities (other than the Associated Companies), and (iii) any other
accrued, paid or capitalized interest incurred on any obligation for which
Borrower is wholly or partially liable under repayment, interest carry or
performance guarantees, or other relevant liabilities.
"Interest Period" means, relative to any LIBOR Loans comprising part
of the same Borrowing, the period beginning on (and including) the date on which
such LIBOR Loans are made as, or converted into, LIBOR Loans, and ending on (but
excluding) the day which numerically corresponds to such date thirty (30), sixty
(60), ninety (90) or one hundred eighty (180) days thereafter, in each case as
Borrower may select in its relevant Notice of Borrowing pursuant to Section
2.01(b); provided, however, that:
(a) if such Interest Period would otherwise end on a day which is
not a Business Day, such Interest Period shall end on the next following
Business Day; and
(b) no Interest Period may end later than the then applicable
Maturity Date.
"Interest Rate Contracts" means, collectively, interest rate swap,
collar, cap or similar agreements providing interest rate protection (including
any reserve or cost adjustments), in form and substance acceptable to Agent.
"Interim Period" means the period commencing on April 1, 1996 and
ending on the Closing Date.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time hereafter, and any successor statute.
"Investment Mortgages" mean mortgages securing indebtedness directly
or indirectly owned by Borrower, including certificates of interest in real
estate mortgage investment conduits.
"Investment Partnership" means any general or limited
partnership (or joint venture) in which Borrower has a general
12
partnership interest, whose financial results are not consolidated under GAAP in
the Financial Statements.
"IRS" means the Internal Revenue Service and any Person
succeeding to the functions thereof.
"Land" means unimproved real estate, including future phases of a
partially completed project, owned or leased by Borrower for the purpose of
future development of improvements. For purposes of the foregoing definition,
"unimproved" shall mean Land on which the construction of building improvements
has not commenced or has been discontinued for a continuous period longer than
sixty (60) days prior to completion.
"Lender Taxes" has the meaning given to such term in
Section 2.04(g).
"Lenders" means Xxxxx Fargo and any other bank, finance company,
insurance or other financial institution which is or becomes a party to this
Agreement by execution of a counterpart signature page hereto or an Assignment
and Assumption, as assignee. At all times that there are no Lenders other than
Xxxxx Fargo, the terms "Lender" and "Lenders" means Xxxxx Fargo in its
individual capacity. With respect to matters requiring the consent to or
approval of all Lenders at any given time, all then existing Defaulting Lenders
will be disregarded and excluded, and, for voting purposes only, "all Lenders"
shall be deemed to mean "all Lenders other than Defaulting Lenders".
"Letter of Credit Documents" has the meaning given to such term in
Section 2.01(e)(ii).
"Letter of Credit Obligations" mean, collectively, (a) all
reimbursement and other obligations of Borrower in respect of Letters of Credit,
and (b) all amounts advanced by Lenders in respect of draws paid by Xxxxx Fargo
under Letters of Credit.
"Letters of Credit" mean the standby letters of credit issued from
time to time by Xxxxx Fargo, for the account of Borrower, pursuant to Section
2.01(e), as the same may be drawn on, advanced, replaced or modified from time
to time.
"Liabilities and Costs" means all claims, judgments, liabilities,
obligations, responsibilities, losses, damages (including lost profits),
punitive or treble damages, costs, disbursements and expenses (including,
without limitation, reasonable attorneys', experts' and consulting fees and
costs of investigation and feasibility studies), fines, penalties and monetary
sanctions, interest, direct or indirect, known or unknown, absolute or
contingent, past, present or future.
"LIBOR" means, relative to any Interest Period for any LIBOR Loan
included in any Borrowing, the per annum rate (reserve adjusted as hereinbelow
provided) of interest quoted by Agent,
13
rounded upwards, if necessary, to the nearest one-sixteenth of one percent
(0.0625%) at which Dollar deposits in immediately available funds are offered by
Agent to leading banks in the Eurodollar interbank market at approximately 9:00
A.M. San Francisco time two (2) Business Days prior to the beginning of such
Interest Period, for delivery on the first day of such Interest Period for a
period approximately equal to such Interest Period and in an amount equal or
comparable to the LIBOR Loan to which such Interest Period relates. The
foregoing rate of interest shall be reserve adjusted by dividing LIBOR by a one
(1.00) minus the LIBOR Reserve Percentage, with such quotient to be rounded
upward to the nearest whole multiple of one-hundredth of one percent (0.01%).
All references in this Agreement or other Loan Documents to LIBOR include the
aforesaid reserve adjustment.
"LIBOR Loan" means a Loan bearing interest, at all times during an
Interest Period applicable to such Loan, at a fixed rate of interest determined
by reference to LIBOR.
"LIBOR Office" means, relative to any Lender, the office of such
Lender designated as such on the counterpart signature pages hereto or such
other office of a Lender as designated from time to time by notice from such
Lender to Agent, whether or not outside the United States, which shall be making
or maintaining LIBOR Loans of such Lender.
"LIBOR Reserve Percentage" means, relative to any Interest Period
for LIBOR Loans made by any Lender, the reserve percentage (expressed as a
decimal) equal to the actual aggregate reserve requirements (including all
basic, emergency, supplemental, marginal and other reserves and taking into
account any transactional adjustments or other scheduled changes in reserve
requirements) announced within Agent as the reserve percentage applicable to
Agent as specified under regulations issued from time to time by the Federal
Reserve Board. The LIBOR Reserve Percentage shall be based on Regulation D of
the Federal Reserve Board or other regulations from time to time in effect
concerning reserves for "Eurocurrency Liabilities" from related institutions as
though Agent were in a net borrowing position.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, security interest, encumbrance (including, but
not limited to, easements, rights-of-way, zoning restrictions and the like),
lien (statutory or other), preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever, including without
limitation any conditional sale or other title retention agreement, the interest
of a lessor under a Capital Lease, any financing lease having substantially the
same economic effect as any of the foregoing, and the filing of any financing
statement or document having similar effect (other than a financing statement
filed by a "true" lessor pursuant to 9408 of the Uniform Commercial Code) naming
the owner of the asset to
14
which such Lien relates as debtor, under the Uniform Commercial Code or other
comparable law of any jurisdiction.
"Loan Account" has the meaning given to such term in
Section 2.03.
"Loan Availability" means the lesser of (a) the Borrowing Base and
(b) the amount of the Facility from time to time.
"Loan Documents" means this Agreement, the Loan Notes, the Mortgage
Documents, the Guaranties, the Letter of Credit Documents and all other
agreements, instruments and documents (together with amendments and supplements
thereto and replacements thereof) now or hereafter executed by the REIT,
Borrower or any Guarantor Subpartnership, which evidence, guaranty or secure the
Obligations.
"Loan Notes" means the promissory notes evidencing the Loans in the
aggregate original principal amount of Fifty Million Dollars ($50,000,000)
executed by Borrower in favor of Lenders, as they may be amended, supplemented,
replaced or modified from time to time. The initial Loan Notes and any
replacements thereof shall be substantially in the form of Exhibit E.
"Loans" means the loans made pursuant to the Facility.
"Major Agreements" means, at any time, (a) each Major BBP Lease, (b)
each cross-easement, restrictions or similar agreement encumbering or affecting
a Borrowing Base Property and any adjoining property, (c) each management or
leasing agreement with respect to a Borrowing Base Property, (d) each ground
lease affecting a Borrowing Base Property, and (e) any other agreement,
contract, indenture or other document or instrument material to the operation,
management and/or maintenance of a Borrowing Base Property or to the security
afforded thereby.
"Major BBP Lease" means (a) any BBP Lease shown on Schedule 3, and
(b) any BBP Lease with respect to ten thousand (10,000) or more square feet of
the net rentable space of any Borrowing Base Property.
"March 31, 1996 Financials" has the meaning given to such term in
Section 5.01(g).
"Material Adverse Effect" means, with respect to a Person, a
material adverse effect upon the condition (financial or otherwise), operations,
performance or properties of such Person. The phrase "has a Material Adverse
Effect" or "will result in a Material Adverse Effect" or words substantially
similar thereto shall in all cases be intended to mean "has resulted, or will or
could reasonably be anticipated to result, in a Material Adverse Effect", and
the phrase "has no (or does not have a) Material Adverse Effect" or "will not
result in a
15
Material Adverse Effect" or words substantially similar thereto shall in all
cases be intended to mean "does not or will not or could not reasonably be
anticipated to result in a Material Adverse Effect".
"Maturity Date" has the meaning given to such term in
Section 2.01(d).
"Minimum Net Worth" means the sum of (i) Fifty Million Two Hundred
Ninety Thousand Dollars ($50,290,000) and (ii) ninety percent (90%) of Net
Offering Proceeds following the Closing Date.
"Mortgage Documents" means each Assignment of Mortgage, Mortgage,
security agreement and other document executed by Borrower or a Guarantor
Subpartnership and evidencing or creating Agent's Liens against a Borrowing Base
Property, and all related appurtenances, fixtures or other property rights or
interests, as security for the Obligations, as each of the foregoing may be
amended, supplemented or modified from time to time.
"Mortgages" means the mortgages, deeds of trust or trust deeds with
assignments of leases and rents, security agreements and fixture filings
encumbering the Borrowing Base Properties executed by Borrower or a Guarantor
Subpartnership in favor of Agent.
"Multiemployer Plan" means an employee benefit plan defined in
Section 4001(a)(3) of ERISA which is, or within the immediately preceding six
(6) years was, contributed to by a Person or an ERISA Affiliate.
"Net Income" means, for any Person and any period, the net earnings
(or loss), after Taxes and minority interests, calculated for such period on a
consolidated basis in conformity with GAAP. Notwithstanding the foregoing, in
determining "Net Income" for REIT, minority interests in Borrower shall be added
back.
"Net Offering Proceeds" means (a) all cash proceeds received by the
REIT as a result of the sale of common, preferred or other classes of stock in
the REIT (if and only to the extent reflected in stockholders' equity on the
consolidated balance sheet of the REIT prepared in accordance with GAAP) less
customary costs and discounts of issuance paid by the REIT, all of which
proceeds shall have been concurrently contributed by the REIT to Borrower as
additional capital, plus (b) all cash and the fair market value of the net
equity of all properties contributed to Borrower by one or more Persons in
exchange for limited partnership interests in Borrower.
"Net Operating Income" means, with respect to a Borrowing Base
Property, the net operating income of such Property determined in accordance
with GAAP, except that, for
16
purposes of determining Net Operating Income, (a) income shall be calculated on
a stabilized basis and shall not include security or other deposits, late fees,
lease termination or other similar charges, delinquent rent recoveries, unless
previously reflected in reserves, or any other items of a non-recurring nature,
(b) such income shall be subject to adjustment, on a basis consistent with the
determination of the Appraised Value for such Borrowing Base Property, in
respect of management or similar fees, vacancy factor, anticipated property tax
reassessment or other appropriate items, and (c) to the extent any Borrowing
Base Property is not owned by Borrower or the Guarantor Subpartnership for the
entire four most recently ended Fiscal Quarters preceding the date of
determination, then the Net Operating Income for such Borrowing Base Property
shall be subject to such adjustment as Agent determines to be appropriate.
Notwithstanding the limitations in clause (a) above, Net Operating Income may
include collected lease termination charges (amortized monthly over the
remaining term of the lease) and delinquent rent recoveries so long as (1) any
such charge or recovery does not relate to a date earlier than twelve (12)
months prior to the end of the period for which Net Operating Income is
determined and (2) no such recovery shall be made for any month during or after
which the space to which such charge or recovery relates has been re-leased to
another Person and such Person has an obligation to pay rent for such month(s).
"Non Pro Rata Loan" means a Loan with respect to which fewer than
all Lenders have funded their respective Pro Rata Shares of such Loans and the
failure of the non-funding Lender or Lenders to fund its or their respective Pro
Rata Shares of such Loan constitutes a breach of this Agreement.
"Non-Disturbance Agreement" has the meaning given to such term in
Section 3.04(c).
"Notice of Borrowing" means, with respect to a proposed Borrowing
pursuant to Section 2.01(b), a notice substantially in the form of Exhibit F.
"Obligations" means, from time to time, all Indebtedness of Borrower
owing to Agent, any Lender or any Person entitled to indemnification pursuant to
Section 12.02, or any of their respective successors, transferees or assigns, of
every type and description, whether or not evidenced by any note, guaranty or
other instrument, arising under or in connection with this Agreement or any
other Loan Document, whether or not for the payment of money, whether direct or
indirect (including those acquired by assignment), absolute or contingent, due
or to become due, now existing or hereafter arising and however acquired. The
term includes, without limitation, all interest, charges, expenses, fees,
reasonable attorneys' fees and disbursements, reasonable fees and disbursements
of expert witnesses and other consultants, and any other sum now or hereinafter
chargeable to Borrower under or in connection with this Agreement or any other
17
Loan Document. (Notwithstanding the foregoing definition of "Obligations",
Borrower's obligations under any environmental indemnity agreement constituting
a Loan Document, or any environmental representation, warranty, covenant,
indemnity or similar provision in this Agreement or any other Loan Document,
shall be secured by the Collateral only to the extent, if any, specifically
provided in the Mortgage Documents.)
"Officer's Certificate" means a certificate signed by a specified
officer of a Person certifying as to the matters set forth therein.
"Other Investment Entity" means each corporation (including the
Associated Companies), limited partnership in which Borrower has a limited
partnership interest only, joint stock company, limited liability company,
business trust or other organization of any type or kind in respect of whose
debts and other obligations Borrower has no personal liability (beyond its
investment therein) and whose financial results are not consolidated under GAAP
in the Financial Statements.
"Partnership Interest Security Agreements" means the Partnership
Interest Security Agreements executed by Borrower and GRT Corporation, a Georgia
corporation ("GRT Corp.") in favor of Agent and the Lenders pertaining to
Borrower's and GRT Corp's collective pledge of (i) their respective limited
partnership and general partnership ownership interests in UCT Associates (as
set forth on Schedule 5.01(c)) to Agent and Lenders as security for the Loans
and all of the Obligations related thereto and (ii) their respective limited
partnership and general partnership ownership interests in GF III (as set forth
on Schedule 5.01(c)) to Agent and Lenders as security for the term loan of Six
Million One Hundred Twenty Thousand Dollars ($6,120,000) provided pursuant to
the Credit Agreement (Term Loan) by and among Glenborough Properties, L.P., a
California limited partnership, as Borrower, Xxxxx Fargo Bank, National
Association, in its capacity as Agent and Lender, and various other Lenders
party thereto, dated as of July 11, 1996, and all of the Obligations related
thereto.
"PBGC" means the Pension Benefit Guaranty Corporation or any Person
succeeding to the functions thereof.
"Permit" means any permit, approval, authorization, license,
variance or permission required from a Governmental Authority under an
applicable Requirement of Law.
"Permitted Liens" mean:
(a) Liens (other than Environmental Liens and any Lien imposed under
ERISA) for taxes, assessments or charges of any Governmental Authority or
claims not yet due;
18
(b) Liens (other than any Lien imposed under ERISA) incurred or
deposits made in the ordinary course of business (including without
limitation 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, leases, contracts
(other than for the repayment of Indebtedness), statutory obligations;
(c) any laws, ordinances, easements, rights of way, restrictions,
exemptions, reservations, conditions, limitations, covenants or other
matters described as exceptions on Schedule B of the title insurance
policies described in Section 4.01(d)(ii) which are delivered to and
accepted by Agent in satisfaction of the applicable condition to the first
Loan disbursement;
(d) Liens imposed by laws, such as mechanics' liens and other
similar liens arising in the ordinary course of business which secure
payment of obligations not more than thirty (30) days past due; and
(e) any other laws, ordinances, easements, rights of way,
restrictions, exemptions, reservations, conditions, limitations, covenants
or other matters described as exceptions on Schedule B of the title
insurance policies described in Section 3.01 pertaining to proposed
additional Borrowing Base Properties or any other Liens which are
unanimously accepted by Lenders.
"Person" means any natural person, employee, corporation, limited
partnership, general partnership, joint stock company, limited liability
company, joint venture, association, company, trust, bank, trust company, land
trust, business trust or other organization, whether or not a legal entity, or
any other non-governmental entity, or any Governmental Authority.
"Plan" means an employee benefit plan defined in Section 3(3) of
ERISA (other than a Multiemployer Plan) in respect of which Borrower or an ERISA
Affiliate, as applicable, is an "employer" as defined in Section 3(5) of ERISA.
"Post-Foreclosure Plan" has the meaning given to such term in
Section 11.11(e).
"Price Adjustment Date" has the meaning given to such term in
Section 2.04(h)(iii).
"Pro Rata Share" means, with respect to any Lender, a fraction
(expressed as a percentage), the numerator of which shall be the amount of such
Lender's Commitment and the denominator of which shall be the aggregate amount
of all of the Lenders' Commitments.
19
"Proceedings" means, collectively, all actions, suits and
proceedings before, and investigations commenced or threatened by or before, any
court or Governmental Authority with respect to a Person.
"Property" means, as to any Person, any real or personal property,
building, facility, structure, equipment or unit, or other asset owned and
operated by such Person in the ordinary course of its business.
"Property Release" has the meaning given to such term
in Section 3.02.
"Protective Advance" means all sums expended as determined by Agent
to be necessary to: (a) protect the priority, validity and enforceability of the
Liens on, and security interests in, any Collateral and the instruments
evidencing or securing the Obligations, or (b) prevent the value of any
Collateral from being materially diminished (assuming the lack of such a payment
within the necessary time frame could potentially cause such Collateral to lose
value), or (c) protect any of the Collateral from being materially damaged,
impaired, mismanaged or taken, including, without limitation, any amounts
expended in accordance with Section 12.01 or post-foreclosure ownership,
maintenance, operation or marketing of any Borrowing Base Property.
"Regulations G, T, U and X" mean such Regulations of the Federal
Reserve Board as in effect from time to time.
"REIT" means Glenborough Realty Trust Incorporated, a Maryland
corporation.
"Release" means the release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment or into or out of any property, including the
movement of Contaminants through or in the air, soil, surface water, groundwater
or property.
"Remedial Action" means any action required by applicable
Environmental Laws to (a) clean up, remove, treat or in any other way address
Contaminants in the indoor or outdoor environment; (b) prevent the Release or
threat of Release or minimize the further Release of Contaminants so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment; or (c) perform pre-remedial studies and
investigations and post-remedial monitoring and care.
"Reportable Event" means any of the events described in Section
4043(b) of ERISA, other than an event for which the thirty (30) day notice
requirement is waived by regulations.
20
"Requirements of Law" mean, as to any Person, the charter and
by-laws, partnership agreement or other organizational or governing documents of
such Person, and any law, rule or regulation, Permit, or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject, including without limitation, the Securities
Act, the Securities Exchange Act, Regulations G, T, U and X, FIRREA and any
certificate of occupancy, zoning ordinance, building, environmental or land use
requirement or Permit or occupational safety or health law, rule or regulation.
"Requisite Lenders" mean, collectively, Lenders whose Pro Rata
Shares, in the aggregate, are at least sixty-six and two-thirds percent
(66-2/3%), provided that, (i) in determining such percentage at any given time,
all then existing Defaulting Lenders will be disregarded and excluded and the
Pro Rata Shares of Lenders shall be redetermined, for voting purposes only, to
exclude the Pro Rata Shares of such Defaulting Lenders, and (ii) notwithstanding
the foregoing, at all times when two or more Lenders are party to this
Agreement, the term Requisite Lenders shall in no event mean less than two
Lenders.
"Secretary's Certificate" has the meaning given to such term in
Section 4.01(e).
"Securities" means any stock, shares, voting trust certificates,
bonds, debentures, notes or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or in general any instruments
commonly known as "securities", or any certificates of interest, shares, or
participations in temporary or interim certificates for the purchase or
acquisition of, or any right to subscribe to, purchase or acquire any of the
foregoing, but shall not include any evidence of the Obligations, provided that
Securities shall not include Cash Equivalents, Investment Mortgages or equity
investments in Unconsolidated Entities.
"Securities Act" means the Securities Act of 1933, as amended to the
date hereof and from time to time hereafter, and any successor statute.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended to the date hereof and from time to time hereafter, and any successor
statute.
"Senior Loans" has the meaning given to such term in Section
11.04(b).
"Solvency Certificate" means a certificate in the form of Exhibit H.
21
"Solvent" means, as to any Person at the time of determination, that
such Person (a) owns property the value of which (both at fair valuation and at
present fair saleable value) is greater than the amount required to pay all of
such Person's liabilities (including contingent liabilities and debts); (b) is
able to pay all of its debts as such debts mature; and (c) has capital
sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage.
"Subsidiary" means each Person in which Borrower has an ownership
interest, whose financial results are consolidated under GAAP in the Financial
Statements. Each Guarantor Subpartnership shall be a "Subsidiary".
"Taxes" means all federal, state and local net income taxes.
"Term Loan" has the meaning given to such term in Section 2.01(d).
"Termination Event" means (a) any Reportable Event, (b) the
withdrawal of a Person, or an ERISA Affiliate from a Benefit Plan during a plan
year in which it was a "substantial employer" as defined in Section 4001(a)(2)
of ERISA, (c) the occurrence of an obligation arising under Section 4041 of
ERISA of a Person or an ERISA Affiliate to provide affected parties with a
written notice of an intent to terminate a Benefit Plan in a distress
termination described in Section 4041(c) of ERISA, (d) the institution by the
PBGC of proceedings to terminate any Benefit Plan under Section 4042 of ERISA,
(e) any event or condition which constitutes grounds under Section 4042 of ERISA
for the appointment of a trustee to administer a Benefit Plan, (f) the partial
or complete withdrawal of such Person or any ERISA Affiliate from a
Multiemployer Plan, or (g) the adoption of an amendment by any Person or any
ERISA Affiliate to terminate any Benefit Plan.
"Total Liabilities" means the sum of (i) all Indebtedness of
Borrower, and (ii) Borrower's Share of the Indebtedness of each Other Investment
Entity (other than the Associated Companies).
"Unconsolidated Entity" means each Investment Partnership and Other
Investment Entity.
"Uniform Commercial Code" means the Uniform Commercial Code as in
effect on the date hereof in the State of California, provided that if by reason
of mandatory provisions of law, the perfection or the effect of perfection or
non-perfection of any security interest in any Collateral or the availability of
any remedy hereunder is governed by the Uniform Commercial Code as in effect on
or after the date hereof in any other jurisdiction, "Uniform Commercial Code"
means the Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions
22
hereof relating to such perfection or effect of perfection or non-perfection or
availability of such remedy.
"Unmatured Event of Default" means an event which, with the giving
of notice or the lapse of time, or both, would constitute an Event of Default.
"Unused Facility Fee" has the meaning given to such term in
Section 2.05(a).
"UCT Associates" means UCT Associates, a California limited
partnership.
1.02 Computation of Time Periods. In this Agreement, in the computation
of periods of time from a specified date to a later specified date, the word
"from" means "from and including" and the words "to" and "until" each mean "to
and including". Periods of days referred to in this Agreement shall be counted
in calendar days unless Business Days are expressly prescribed.
1.03 Terms.
(a) Any accounting terms used in this Agreement which are not
specifically defined shall have the meanings customarily given them in
accordance with GAAP.
(b) Any time the phrase "to the best of Borrower's knowledge" or a
phrase similar thereto is used herein, it means: "to the actual knowledge of the
then executive or senior officers of Borrower and the REIT, after reasonable
inquiry of those agents, employees or contractors of the REIT or Borrower who
could reasonably be anticipated to have knowledge with respect to the subject
matter or circumstances in question and after review of those documents or
instruments which could reasonably be anticipated to be relevant to the subject
matter or circumstances in question."
(c) In each case where the consent or approval of Agent, all Lenders
and/or Requisite Lenders is required, or their non-obligatory action is
requested by Borrower, such consent, approval or action shall be in the sole and
absolute discretion of Agent and, as applicable, each Lender, unless otherwise
specifically indicated.
(d) Any time the word "or" is used herein, unless the context
otherwise clearly requires, it has the inclusive meaning represented by the
phrase "and/or". The words "hereof", "herein", "hereby", "hereunder" and similar
terms refer to this Agreement as a whole and not to any particular provision of
this Agreement. Article, section, subsection, clause, exhibit and schedule
references are to this Agreement unless otherwise specified. Any reference in
this Agreement to this Agreement or to any other Loan Document includes any and
all amendments,
23
modifications, supplements, renewals or restatements thereto or thereof, as
applicable.
(e) Any time the defined term "Borrower", or any other defined term
incorporating the defined term "Borrower" within its definition, is used in
Article IX, it has the inclusive meaning of "REIT, Borrower and any other
Affiliate of REIT or Borrower which is consolidated within REIT's Financial
Statements".
ARTICLE II
LOANS
2.01 Loan Advances and Repayment; Letters of Credit.
(a) Loan Availability.
(i) Subject to the terms and conditions set forth in this
Agreement, Lenders hereby agree to make Loans to Borrower from time to
time during the period from the Closing Date to the Business Day next
preceding the Maturity Date (but in no event later than the conversion of
the Facility to the Term Loan in accordance with subparagraph (d) below),
in an aggregate amount which shall not exceed Loan Availability. All Loans
under this Agreement shall be made by Lenders simultaneously and
proportionately to their respective Pro Rata Shares, it being understood
that no Lender shall be responsible for any failure by any other Lender to
perform its obligation to make a Loan hereunder and that the Commitment of
any Lender shall not be increased or decreased as a result of the failure
by any other Lender to perform its obligation to make a Loan. Loans may be
voluntarily prepaid pursuant to Section 2.06(a) and, subject to the
provisions of this Agreement, any amounts so prepaid may be reborrowed
under this Section 2.01(a)(i). The principal balance of the Loans shall be
payable in full on the Maturity Date. The Loans will be evidenced by the
Loan Notes.
(ii) If at any time the outstanding principal balance of the
Loans exceeds the Borrowing Base as a result of a reduction in any
Borrowing Base Value, Borrower shall submit to Agent, not later than
thirty (30) days following written notice from Agent to Borrower (a copy
of which shall be sent promptly by Agent to each Lender) of the existence
of such excess borrowing condition, a written plan pursuant to which
Borrower shall cause such excess borrowing condition to be eliminated not
later than sixty (60) days following such notice, through one or both of
the following means: Borrower shall (A) pay to Agent such amounts and/or
(B) mortgage to Agent such additional Borrowing Base Property(-ies) as
Lenders may accept under Section 3.01 as are necessary so that the
outstanding principal balance of
24
the Loans does not exceed the Borrowing Base. Failure by Borrower to have
complied with the foregoing in a timely manner shall constitute an Event
of Default without further notice or grace period hereunder. No further
Borrowings, or release of any Borrowing Base Property, shall be permitted
so long as such excess borrowing condition shall continue to exist.
Nothing in this subparagraph (ii) shall excuse Borrower's compliance with
all terms, conditions, covenants and other obligations imposed upon it
under the Loan Documents during the period of such excess borrowing, nor
in any manner condition or impair Agent's or Lenders' rights thereunder in
respect of any such breach thereof by Borrower.
(b) Notice of Borrowing.
(i) Whenever Borrower desires to borrow under this Section
2.01, but in no event more than three (3) times during any one (1)
calendar month, Borrower shall give Agent, at Xxxxx Fargo Real Estate
Group Disbursement Center, 0000 Xxxx Xxxx Xxxxx, Xxxxx 000, Xx Xxxxxxx,
Xxxxxxxxxx 00000, with a copy to: Xxxxx Fargo Bank, Real Estate Capital
Markets, 000 Xxxxxxxxxx Xxxxxx, Xxxxxxxxxxx Xxxxx, Xxx Xxxxxxxxx,
Xxxxxxxxxx 00000, Attention: Xxxx Xxxxxxxx, or such other address(es) as
Agent shall designate, an original or facsimile Notice of Borrowing no
later than 9:00 A.M. (San Francisco time), not less than three (3) nor
more than five (5) Business Days prior to the proposed Funding Date of
each Loan. Each Notice of Borrowing shall specify (A) the Funding Date
(which shall be a Business Day) in respect of the Loan, (B) the amount of
the proposed Loan, provided that the aggregate amount of such proposed
Loan shall equal One Million Dollars ($1,000,000) or integral multiples of
Fifty Thousand Dollars ($50,000) in excess thereof, (C) whether the Loan
to be made thereunder will be a Base Rate Loan or a LIBOR Loan and, if a
LIBOR Loan, the Interest Period, (D) to which account of Borrower the
funds are to be directed, and (E) the proposed use of such Loan. Any
Notice of Borrowing pursuant to this Section 2.01(b) shall be irrevocable.
(ii) Borrower may elect (A) to convert LIBOR Loans or any
portion thereof into Base Rate Loans, (B) to convert Base Rate Loans or
any portion thereof to LIBOR Loans, or (C) to continue any LIBOR Loans or
any portion thereof for an additional Interest Period, provided, however,
that the aggregate amount of the Loans being converted into or continued
as LIBOR Loans shall, in the aggregate, equal One Million Dollars
($1,000,000) or an integral multiple of Fifty Thousand Dollars ($50,000)
in excess thereof. The applicable Interest Period for the continuation of
any LIBOR Loan
25
shall commence on the day on which the next preceding Interest Period
expires. The conversion of a LIBOR Loan to a Base Rate Loan shall only
occur on the last Business Day of the Interest Period relating to such
LIBOR Loan; such conversion shall occur automatically in the absence of an
election under Clause (C) above. Each election under Clause (B) or Clause
(C) above shall be made by Borrower giving Agent an original or facsimile
Notice of Borrowing no later than 9:00 A.M. (San Francisco time), not less
than three (3) nor more than five (5) Business Days prior to the date of a
conversion to or continuation of a LIBOR Loan, specifying, in each case
(1) the amount of the conversion or continuation, (2) the Interest Period
therefor, and (3) the date of the conversion or continuation (which date
shall be a Business Day).
(iii) Upon receipt of a Notice of Borrowing in proper form
requesting LIBOR Loans under subparagraph (i) or (ii) above, Agent shall
determine the LIBOR applicable to the Interest Period for such LIBOR
Loans, and shall, two (2) Business Days prior to the beginning of such
Interest Period, give (by facsimile) a Fixed Rate Notice in respect
thereof to Borrower and Lenders; provided, however, that failure to give
such notice to Borrower shall not affect the validity of such rate. Each
determination by Agent of the LIBOR shall be conclusive and binding upon
the parties hereto in the absence of manifest error.
(c) Making of Loans. Subject to Section 11.03 or as otherwise
provided herein, on the Closing Date, Agent shall deposit by wire transfer of
immediately available funds the net proceeds of the initial Loan to Chicago
Title Insurance Company's escrow account (Escrow Number 0000000-X47) at Bank of
America, 0000 Xxxxxxx Xxxxxxxxx, Xxxxxxx, Xxxxxxxxxx, Account Number
12351-50737, to be released to or for the account of Borrower in accordance with
Agent's and Borrower's escrow instructions with respect thereto. Agent shall
deposit by wire transfer of immediately available funds the proceeds of
subsequent Loans on the applicable Funding Date either (i) into an escrow
account to be released to or for the account of Borrower in accordance with
Agent's and Borrower's escrow instructions with respect thereto, or (ii) if
acceptable to Agent, to such other account specified in Borrower's Notice of
Borrowing. All Loans made hereunder shall bear interest from the date of
Lenders' initial deposit into the applicable escrow account or other specified
bank account.
(d) Term. The outstanding balance of the Loans shall be payable in
full on the earliest to occur of (i) the second anniversary of the Closing Date,
(ii) the acceleration of the Loans pursuant to Section 10.02(a), or (iii)
Borrower's written notice to Agent (pursuant to Section 2.06(a)) of Borrower's
election to prepay all accrued Obligations and terminate all
26
Commitments (said earliest date referred to herein as the "Maturity Date");
provided, however, that Borrower shall have the right to request an extension of
the date referred to in clause (i) above for one (1) year, effective on the
second anniversary of the Closing Date and on each successive anniversary of the
Closing Date, as follows: (A) Borrower shall give Agent written notice of
Borrower's request for an extension of the Maturity Date (a copy of which notice
shall be sent promptly by Agent to each other Lender) not earlier than one
hundred eighty (180 days), nor later than one hundred fifty (150) days, prior to
the applicable anniversary of the Closing Date, and (B) Borrower's request for
an extension must be unanimously approved by all Lenders in their sole
discretion. Agent shall notify Borrower in writing, not later than ninety (90)
days prior to the subject anniversary of the Closing Date, as to whether or not
such request for extension has been approved by Lenders; any such approval shall
be deemed conditioned upon there existing no Unmatured Event of Default or Event
of Default on the Maturity Date in effect prior to any such extension being
approved. Not later than the commencement of the extension year, Borrower shall
pay to Agent (for the benefit of all Lenders, subject to Section 11.04(b)) in
the manner provided in Section 2.06(b) a non-refundable extension fee (the
"Extension Fee") in an amount equal to three-eighths percent (0.375%) of the
amount of the Facility. If Borrower's request to extend the Maturity Date is not
approved, or if Borrower shall have determined not to request an extension of
the Facility on a revolving credit basis, then in either case, not later than
the subject anniversary date of the Closing Date, Borrower may elect to convert
the Facility into a three-year amortizing term loan ("Term Loan"). If Borrower
so elects, then (1) effective upon such anniversary date of the Closing Date
(the "Term Loan Conversion Date"), the Facility shall cease to revolve and (2)
the entire outstanding principal balance of the Facility as of such anniversary
date (the "Beginning Term Loan Balance") shall be fully amortized as described
below over the three (3) years following the Term Loan Conversion Date (subject
to earlier termination pursuant to clause (ii) or (iii) above), with the first
payment due ninety (90) days after the Term Loan Conversion Date and the
succeeding eleven principal payments due quarterly thereafter until the
Beginning Term Loan Balance has been repaid in full. Each quarterly principal
payment during the first year of the Term Loan shall equal twelve and one-half
percent (12.5%) of the Beginning Term Loan Balance; each quarterly principal
payment during the second year of the Term Loan shall equal ten percent (10.0%)
of the Beginning Term Loan Balance; and each quarterly principal payment during
the third year of the Term Loan shall equal two and one-half percent (2.5%) of
the Beginning Term Loan Balance. Not later than the Term Loan Conversion Date
and the first and second anniversary thereof, Borrower shall pay to Agent (for
the benefit of Lenders, subject to Section 11.04(b)) in the manner provided in
Section 2.06(b) a non-refundable extension fee equal to three-eighths percent
(0.375%) of the principal balance of the Term Loan outstanding on the date such
payment is due.
27
(e) Letters of Credit.
(i) Subject to the terms and conditions set forth in this
Agreement, at any time and from time to time through the day that is
ninety (90) days prior to the Maturity Date, Agent shall cause Xxxxx Fargo
to issue such Letters of Credit for the account of Borrower as Borrower
may request; provided that (A) upon issuance of such Letters of Credit,
the sum of the aggregate outstanding principal amount of all Loans plus
the aggregate face amount of all outstanding Letters of Credit shall not
exceed Loan Availability; (B) the aggregate face amount of all outstanding
Letters of Credit shall not exceed One Million Dollars ($1,000,000); and
(C) unless all Lenders otherwise consent in writing, the term of any
Letter of Credit (including any automatic extension or renewal clause)
shall not extend beyond the date thirty (30) days preceding the Maturity
Date. All references herein to "the outstanding principal balance of the
Loans" or similar references shall be deemed to include, for all purposes,
the aggregate undrawn face amount of all outstanding Letters of Credit;
unless the context otherwise requires, each reference herein to "Loan" or
"Borrowing" shall include the issuance of a Letter of Credit, the payment
of any draw thereunder by Xxxxx Fargo and/or advances by Lenders to
reimburse Xxxxx Fargo, as appropriate.
(ii) Borrower shall deliver to Agent and Xxxxx Fargo a duly
executed request for Letter of Credit not later than 9:00 A.M. (San
Francisco time), at least five (5) Business Days prior to the date upon
which the requested Letter of Credit is to be issued. Borrower shall
further execute and/or deliver to Agent and Xxxxx Fargo such additional
instruments and documents as Agent and/or Xxxxx Fargo may require, in
conformity with the then standard practices of Xxxxx Fargo's letter of
credit department, in connection with the issuance of such Letter of
Credit (collectively, the "Letter of Credit Documents").
(iii) Agent shall, if it approves of the content of the
request for a Letter of Credit, and subject to the conditions set forth in
Section 4.02, cause the issuance of the Letter of Credit on or before 5:00
P.M. (San Francisco time), on or before the day five (5) Business Days
following receipt of the documents last due pursuant to subsection (ii)
above. Upon issuance of a Letter of Credit, Agent shall promptly provide a
copy thereof to each Lender and shall notify Lenders promptly of all
payments, reimbursements, expirations, negotiations, transfers and other
activity with respect to outstanding Letters of Credit.
(iv) Upon the issuance of a Letter of Credit, each Lender
shall be deemed to have purchased a pro rata issuer
28
participation therein from Xxxxx Fargo in an amount equal to such Lender's
Pro Rata Share of the face amount of the Letter of Credit.
(v) If and to the extent that any amounts are drawn under any
Letter of Credit, the amount so drawn shall be considered a Loan for all
purposes hereunder as of the date of such draw. Promptly after payment by
Xxxxx Fargo of any amount drawn under a Letter of Credit, Agent shall,
without notice to or the consent of Borrower, direct Lenders to advance to
Agent their Pro Rata Share of the amount so drawn, whether or not there
then exists an Unmatured Event of Default or Event of Default, and whether
or not any other condition precedent to the making of such Loan under
Section 4.02 shall be satisfied. The proceeds of such advances shall be
applied by Agent to reimburse Xxxxx Fargo for the payment made by it under
the Letter of Credit. Such Loan by Lenders pursuant to this Section
2.01(e)(v) shall be deemed to be a Base Rate Loan.
(vi) Upon the occurrence of the Maturity Date prior to the
expiration of all Letters of Credit, Borrower shall immediately provide to
Agent a standby letter of credit issued by a bank satisfactory to Agent,
in form and substance satisfactory to Agent, in favor of Agent in a face
amount equal to outstanding Letters of Credit on that date, or shall
immediately make other provisions satisfactory to Agent for the full
collateralization, by cash or cash equivalent, of all such outstanding
Letters of Credit. Upon the failure of Borrower to comply with the
foregoing requirements, such portion of the face amount of all outstanding
Letters of Credit as to which Borrower has failed to comply shall be
deemed to be immediately due and payable.
(vii) The issuance of any supplement, modification, amendment,
renewal or extension to or of any Letter of Credit shall be treated in all
respects the same as the issuance of a new Letter of Credit.
(viii) Borrower assumes all risks as to the acts or omissions
of any beneficiary or transferee of any Letter of Credit with respect to
its use of such Letter of Credit. Neither Xxxxx Fargo, Agent, any Lender
nor any of their respective officers or directors shall be liable or
responsible for, nor shall Borrower's obligations hereunder in respect of
any Letter of Credit be impaired as a result of:
(A) any lack of validity or enforceability of any Letter
of Credit or any Letter of Credit Documents;
29
(B) the use that may be made of any Letter of Credit or
any acts or omissions of any beneficiary or transferee in connection
therewith;
(C) any statement or any other document presented under
a Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(D) the existence of any claim, set-off, defense or
other right that Borrower may have at any time against any beneficiary or
any transferee of a Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), Xxxxx Fargo or any
other Person, whether in connection with the transactions contemplated by
the Letter of Credit Documents or any unrelated transaction;
(E) payment by Xxxxx Fargo against presentation of
documents that do not comply with the terms of a Letter of Credit,
including failure of any documents to bear any reference or adequate
reference to the Letter of Credit; or
(F) any other circumstance whatsoever in making or
failing to make payment under any Letter of Credit.
In furtherance and not in limitation of the foregoing, Xxxxx Fargo may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary.
2.02 Authorization to Obtain Loans. Borrower shall provide Agent with
documentation satisfactory to Agent indicating the names of those employees of
Borrower authorized by Borrower to sign Notices of Borrowing, and Agent and
Lenders shall be entitled to rely on such documentation until notified in
writing by Borrower of any change(s) of the persons so authorized. Agent shall
be entitled to act on the instructions of anyone identifying himself or herself
as one of the Persons authorized to execute a Notice of Borrowing, and Borrower
shall be bound thereby in the same manner as if such Person were actually so
authorized. Borrower agrees to indemnify, defend and hold Lenders and Agent
harmless from and against any and all Liabilities and Costs which may arise or
be created by the acceptance of instructions in any Notice of Borrowing, unless
caused by the gross negligence or willful misconduct of the Person to be
indemnified.
2.03 Lenders' Accounting. Agent shall maintain a loan account (the "Loan
Account") on its books in which shall be recorded (a) the names and addresses
and the Commitments of Lenders, and principal amount of Loans owing to each
Lender from
30
time to time, and (b) all advances and repayments of principal and payments of
accrued interest under the Loans, as well as payments of the Unused Facility
Fee, as provided in this Agreement. All entries in the Loan Account shall be
made in accordance with Agent's customary accounting practices as in effect from
time to time. Monthly or at such other interval as is customary with Agent's
practice, Agent will render a statement of the Loan Account to Borrower and will
deliver a copy thereof to each Lender. Each such statement shall be deemed
final, binding and conclusive upon Borrower in all respects as to all matters
reflected therein (absent manifest error), unless Borrower, within thirty (30)
days after the date such statement is mailed or otherwise delivered to Borrower,
delivers to Agent written notice of any objections which Borrower may have to
any such statement, or within ten (10) days after discovery by Borrower of an
error with respect to which Borrower had no knowledge and which could not have
been determined after reasonable inquiry during said 30-day period. In that
event, only those items expressly objected to in such notice shall be deemed to
be disputed by Borrower. In the event that any such objection cannot be settled
by Agent and Borrower within thirty (30) days after Agent receives notice
thereof from Borrower, Agent shall notify all Lenders of such objection.
Notwithstanding the foregoing, Agent's entries in the Loan Account evidencing
Loans and other financial accommodations made from time to time shall be final,
binding and conclusive upon Borrower (absent manifest error) as to the existence
and amount of the Obligations recorded in the Loan Account.
2.04 Interest on the Loans.
(a) Base Rate Loans. Subject to Section 2.04(d), all Base Rate Loans
shall bear interest on the daily unpaid principal amount thereof from the date
made until paid in full at a fluctuating rate per annum equal to the Base Rate.
Except as to Letters of Credit, Base Rate Loans shall be made in minimum amounts
of One Million Dollars ($1,000,000) or an integral multiple of Fifty Thousand
Dollars ($50,000) in excess thereof.
(b) LIBOR Loans. Subject to Sections 2.04(d) and 2.04(h), all LIBOR
Loans shall bear interest on the unpaid principal amount thereof during the
Interest Period applicable thereto at a rate per annum equal to the sum of LIBOR
for such Interest Period plus two and three-eighths percent (2.375%). LIBOR
Loans shall be in tranches of One Million Dollars ($1,000,000) or Fifty Thousand
Dollar ($50,000) increments in excess thereof. No more than four (4) LIBOR Loan
tranches shall be outstanding at any one time. Notwithstanding anything to the
contrary contained herein and subject to the Default Interest provisions
contained in Section 2.04(d), if an Event of Default occurs and as a result
thereof the Commitments are terminated, all LIBOR Loans will convert to Base
Rate Loans upon the expiration of the applicable Interest Periods therefor or
the date all Loans become due, whichever occurs first.
31
(c) Interest Payments. Subject to Section 2.04(d), interest accrued
on all Loans shall be payable by Borrower, in the manner provided in Section
2.06(b), in arrears on the first Business Day of the first calendar month
following the Closing Date, the first Business Day of each succeeding calendar
month thereafter, and on the Maturity Date.
(d) Default Interest. Notwithstanding the rates of interest
specified in Sections 2.04(a) and 2.04(b) and the payment dates specified in
Section 2.04(c), effective immediately upon the occurrence and during the
continuance of any Event of Default, the principal balance of all Loans then
outstanding and, to the extent permitted by applicable law, any interest
payments on the Loans not paid when due shall bear interest payable upon demand
at a rate which is five percent (5%) per annum in excess of the rate(s) of
interest otherwise payable from time to time under this Agreement. All other
amounts due Agent or Lenders (whether directly or for reimbursement) under this
Agreement or any of the other Loan Documents if not paid when due, or if no time
period is expressed, if not paid within ten (10) days after demand, shall bear
interest from and after demand at the rate set forth in this Section 2.04(d).
(e) Late Fee. Borrower acknowledges that late payment to Agent will
cause Agent and Lenders to incur costs not contemplated by this Agreement. Such
costs include, without limitation, processing and accounting charges. Therefore,
if Borrower fails timely to pay any sum due and payable hereunder through the
Maturity Date (other than (i) payment of the entire outstanding balance of the
Loans on the Maturity Date, or (ii) any quarterly principal payments due after
conversion of the Facility to a Term Loan, to which this subsection regarding
late fees shall not apply), unless waived by Agent or Requisite Lenders pursuant
to Section 11.11(a), a late charge of four cents ($.04) for each dollar of any
such principal payment, interest or other charge due hereon and which is not
paid within fifteen (15) days after such payment is due, shall be charged by
Agent (for the benefit of Lenders) and paid by Borrower for the purpose of
defraying the expense incident to handling such delinquent payment. Borrower and
Agent agree that this late charge represents a reasonable sum considering all of
the circumstances existing on the date hereof and represents a fair and
reasonable estimate of the costs that Agent and Lenders will incur by reason of
late payment. Borrower and Agent further agree that proof of actual damages
would be costly and inconvenient. Acceptance of any late charge shall not
constitute a waiver of the default with respect to the overdue installment, and
shall not prevent Agent from exercising any of the other rights available
hereunder or any other Loan Document. Such late charge shall be paid without
prejudice to any other rights of Agent.
(f) Computation of Interest. Interest shall be computed on the basis
of the actual number of days elapsed in the period during which interest or fees
accrue and a year of three
32
hundred sixty (360) days. In computing interest on any Loan, the date of the
making of the Loan shall be included and the date of payment shall be excluded;
provided, however, that if a Loan is repaid on the same day on which it is made,
one (1) day's interest shall be paid on that Loan. Notwithstanding any provision
in this Section 2.04, interest in respect of any Loan shall not exceed the
maximum rate permitted by applicable law.
(g) Changes; Legal Restrictions. In the event that after the Closing
Date (i) the adoption of or any change in any law, treaty, rule, regulation,
guideline or determination of a court or Governmental Authority or any change in
the interpretation or application thereof by a court or Governmental Authority,
or (ii) compliance by Agent or any Lender with any request or directive made or
issued after the Closing Date (whether or not having the force of law and
whether or not the failure to comply therewith would be unlawful) from any
central bank or other Governmental Authority or quasi-governmental authority:
(A) subjects Agent or any Lender to any tax, duty or other charge
of any kind with respect to the Facility, this Agreement or any of the
other Loan Documents, including the Mortgages, or the Loans or changes the
basis of taxation of payments to Agent or such Lender of principal, fees,
interest or any other amount payable hereunder, except for net income,
gross receipts, gross profits or franchise taxes imposed by any
jurisdiction and not specifically based upon loan transactions (all such
non-excepted taxes, duties and other charges being hereinafter referred to
as "Lender Taxes");
(B) imposes, modifies or holds applicable, in the determination
of Agent or any Lender, any reserve, special deposit, compulsory loan, FDIC
insurance, capital allocation or similar requirement against assets held
by, or deposits or other liabilities in or for the account of, advances or
loans by, or other credit extended by, or any other acquisition of funds
by, Agent or such Lender or any applicable lending office (except to the
extent that the reserve and FDIC insurance requirements are reflected in
the "Base Rate" or in determining LIBOR); or
(C) imposes on Agent or any Lender any other condition materially
more burdensome in nature, extent or consequence than those in existence as
of the Closing Date,
and the result of any of the foregoing is to increase the cost to Agent or any
Lender of making, renewing, maintaining or participating in the Loans or to
reduce any amount receivable
33
thereunder; then, in any such case, Borrower shall promptly pay to Agent or such
Lender, as applicable, upon demand, such amount or amounts (based upon a
reasonable allocation thereof by Agent or such Lender to the financing
transactions contemplated by this Agreement and affected by this Section
2.04(g)) as may be necessary to compensate Agent or such Lender for any such
additional cost incurred or reduced amounts received; provided, however, that
(i) neither Agent nor any Lender may claim under this Section 2.04(g) any such
additional amount attributable to any period preceding the date that is ninety
(90) days prior to the date of its demand, (ii) before making any such demand,
Agent, and each Lender, agrees to use reasonable efforts (consistent with its
internal policy and legal and regulatory restrictions) to designate a different
lending office as its lending office for purposes of the Loans and its
Commitment, if (1) the making of such a designation would avoid the need for, or
reduce the amount of, such demand and (2) would not, in the reasonable judgment
of Agent or such Lender, as the case may be, be otherwise disadvantageous to it,
and (iii) if the payment of such compensation may not be legally made whether by
modification of the applicable interest rate or otherwise, then Lenders shall
have no further obligation to make Loans that cause Agent or any Lender to incur
such increased cost, and all affected Loans shall become immediately due and
payable by Borrower. Agent or such Lender shall deliver to Borrower and in the
case of a delivery by Lender, such Lender shall also deliver to Agent, a written
statement of the claimed additional costs incurred or reduced amounts received
and the basis therefor as soon as reasonably practicable after such Lender
obtains knowledge thereof. If Agent or any Lender subsequently recovers any
amount of Lender Taxes previously paid by Borrower pursuant to this Section
2.04(g), whether before or after termination of this Agreement, then, upon
receipt of good funds with respect to such recovery, Agent or such Lender will
refund such amount to Borrower if no Event of Default or Unmatured Event of
Default then exists or, if an Event of Default or Unmatured Event of Default
then exists, such amount will be credited to the Obligations in the manner
determined by Agent or such Lender.
(h) Certain Provisions Regarding LIBOR Loans.
(i) LIBOR Lending Unlawful. If any Lender shall determine (which
determination shall, upon notice thereof to Borrower and Agent, be
conclusive and binding on the parties hereto) that the introduction of or
any change in or in the interpretation of any law makes it unlawful, or any
central bank or other Governmental Authority asserts that it is unlawful,
for such Lender to make or maintain any Loan as a LIBOR Loan, (A) the
obligations of such Lenders to make or maintain any Loans as LIBOR Loans
shall, upon such determination, forthwith be suspended until such Lender
shall notify Agent that the circumstances causing such suspension no longer
exist, and (B) if required by such
34
law or assertion, the LIBOR Loans of such Lender shall automatically
convert into Base Rate Loans.
(ii) Deposits Unavailable. If Agent shall have determined in good
faith that adequate means do not exist for ascertaining the interest rate
applicable hereunder to LIBOR Loans, then, upon notice from Agent to
Borrower the obligations of all Lenders to make or maintain Loans as LIBOR
Loans shall forthwith be suspended until Agent shall notify Borrower that
the circumstances causing such suspension no longer exist. Agent will give
such notice when it determines, in good faith, that such circumstances no
longer exist; provided, however, that Agent shall not have any liability to
any Person with respect to any delay in giving such notice.
(iii) Fixed Rate Price Adjustment. Borrower acknowledges that
prepayment or acceleration of a LIBOR Loan during an Interest Period shall
result in Lenders incurring additional costs, expenses and/or liabilities
and that it is extremely difficult and impractical to ascertain the extent
of such costs, expenses and/or liabilities. (For all purposes of this
subparagraph (iii), any Loan not being made as a LIBOR Loan in accordance
with the Notice of Borrowing therefor, as a result of Borrower's
cancellation thereof, shall be treated as if such LIBOR Loan had been
prepaid.) Therefore, on the date a LIBOR Loan is prepaid or the date all
sums payable hereunder become due and payable, by acceleration or otherwise
("Price Adjustment Date"), Borrower will pay to Agent, for the account of
each Lender, (in addition to all other sums then owing), an amount ("Fixed
Rate Price Adjustment") equal to the then present value of (A) the amount
of interest that would have accrued on the LIBOR Loan for the remainder of
the Interest Period at the rate applicable to such LIBOR Loan, less (B) the
amount of interest that would accrue on the same LIBOR Loan for the same
period if LIBOR were set on the Price Adjustment Date. The present value
shall be calculated by using as a discount rate LIBOR quoted on the Price
Adjustment Date.
By initialling this provision where indicated below, Borrower waives
any right Borrower may have under California Civil Code Section
2954.10 to repay any LIBOR Loans, in whole or in part, without payment
of the Fixed Rate Price Adjustment upon acceleration of the maturity
date of such Loans, and Borrower further confirms that Lenders'
agreement to make LIBOR Loans at the interest rates and on the other
terms set forth herein constitutes
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adequate and valuable consideration, given individual weight by
Borrower, for this waiver and agreement.
BORROWER'S INITIALS: [initialed: AB]
Upon the written notice to Borrower from Agent, Borrower shall immediately
pay to Agent, for the account of Lenders, the Fixed Rate Price Adjustment
as calculated by Agent. Such written notice (which shall include
calculations in reasonable detail) shall, in the absence of manifest error,
be conclusive and binding on the parties hereto.
(iv) Borrower understands, agrees and acknowledges the following: (A)
no Lender has any obligation to purchase, sell and/or match funds in
connection with the use of LIBOR as a basis for calculating the rate of
interest on a LIBOR Loan or a Fixed Rate Price Adjustment; (B) LIBOR is
used merely as a reference in determining such rate and/or Fixed Rate Price
Adjustment; and (C) Borrower has accepted LIBOR as a reasonable and fair
basis for calculating such rate and a Fixed Rate Price Adjustment. Borrower
further agrees to pay the Fixed Rate Price Adjustment and Lender Taxes, if
any, whether or not a Lender elects to purchase, sell and/or match funds.
(i) Withholding Tax Exemption. At least five (5) Business Days prior
to the first day on which interest or fees are payable hereunder for the account
of any Lender, each Lender that is not incorporated under the laws of the United
States of America, or a state thereof, agrees that it will deliver to Agent and
Borrower two (2) duly completed copies of United States Internal Revenue Service
Form 1001 or Form 4224, certifying in either case that such Lender is entitled
to receive payments under this Agreement without deduction or withholding of any
United States federal income taxes. Each Lender which so delivers a Form 1001 or
Form 4224 further undertakes to deliver to Agent and Borrower two (2) additional
copies of such form (or any applicable successor form) on or before the date
that such form expires (currently, three (3) successive calendar years for Form
1001 and one (1) calendar year for Form 4224) or becomes obsolete or after the
occurrence of any event requiring a change in the most recent forms so delivered
by it, and such amendments thereto or extensions or renewals thereof as may be
reasonably requested by Agent or Borrower, in each case certifying that such
Lender is entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes, unless an event
(including without limitation any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Lender from duly completing and delivering any such form with
36
respect to it and such Lender advises Agent that it is not capable of receiving
payments without any deduction or withholding of United States federal income
taxes. If any Lender cannot deliver such form, then Borrower may withhold from
such payments such amounts as are required by the Internal Revenue Code.
2.05 Fees.
(a) Unused Facility Fee. From and after the Closing Date and until the
Obligations are paid in full and this Agreement is terminated or, if sooner, the
date the Commitments terminate (but in no event later than the conversion of the
Facility to the Term Loan in accordance with Section 2.01(d) above), and subject
to Section 11.04(b), Borrower shall pay to Agent, for the account of each
Lender, a fee (the "Unused Facility Fee") accruing at the rate of one-quarter
percent (0.25%) per annum upon an amount equal to (i) the amount of the Facility
minus (ii) the average daily principal balance of all Loans (including, without
limitation, the aggregate undrawn face amount of all outstanding Letters of
Credit) as determined for each Fiscal Quarter. The Unused Facility Fee shall be
payable, in the manner provided in Section 2.06(b), in arrears on the first
Business Day in each Fiscal Quarter, beginning with the first Fiscal Quarter
after the Closing Date, and ending on the date of payment in full of all
Obligations to Lenders or all Obligations to a Lender pursuant to Section
2.01(d) or, if sooner, the date the Commitments terminate (but in no event later
than the conversion of the Facility to the Term Loan in accordance with
subparagraph 2.01(d) above), with the Unused Facility Fee to be prorated to the
date of such final payment.
(b) Agency Fees. Borrower shall pay Agent such fees as are provided for
in the agency fee agreement between Agent and Borrower, as in existence from
time to time.
(c) Borrowing Base Fee. From and after the Closing Date and until the
Obligations are paid in full and this Agreement is terminated or, if sooner, the
date the Commitments terminate, and subject to Section 11.04(b), Borrower shall
pay to Agent, for the account of each Lender, a fee (the "Borrowing Base Fee")
each time any additional or substitution property is accepted by Lenders as
Borrowing Base Property in accordance with Section 3.01. The Borrowing Base Fee
shall equal the product of (i) the additional or substitution property's
Borrowing Base Value (excluding, however, any Borrowing Base Value for which
Borrower receives no Borrowing Base credit because such Borrowing Base Value
(other than with respect to University Club Tower) exceeds twenty-five percent
(25%) of the Borrowing Base) times (ii) one-quarter percent (0.25%). The
Borrowing Base Fee shall be payable in the manner provided in Section 2.06(b).
(d) Letter of Credit Fees. As additional consideration for the
issuance of Letters of Credit pursuant to
37
Section 2.01(e), Borrower agrees to pay to Agent, for the account of each
Lender, a Letter of Credit fee equal to two and three- eighths percent (2.375%)
per annum of the face amount of the Letters of Credit (but in no event less than
$2,500 in respect of any Letter of Credit), payable upon issuance. In addition,
Borrower shall pay directly to Xxxxx Fargo for its sole account all processing,
administrative, transfer, amendment and similar fees normally charged by Xxxxx
Fargo in connection with the issuance of standby letters of credit.
(e) Payment of Fees. The fees described in Sections 2.01(d) and
4.01(o) and this Section 2.05 represent compensation for services rendered and
to be rendered separate and apart from the lending of money or the provision of
credit and do not constitute compensation for the use, detention or forbearance
of money, and the obligation of Borrower to pay the fees described herein shall
be in addition to, and not in lieu of, the obligation of Borrower to pay
interest, other fees and expenses otherwise described in this Agreement. All
fees shall be payable when due in immediately available funds and shall be
non-refundable when paid. If Borrower fails to make any payment of fees or
expenses specified or referred to in this Agreement due to Agent or Lenders,
including without limitation those referred to in this Section 2.05, in Section
12.01, or otherwise under this Agreement or any separate fee agreement between
Borrower and Agent or any Lender relating to this Agreement, when due, the
amount due shall bear interest until paid at the Base Rate and, after ten (10)
days at the rate specified in Section 2.04(d) (but not to exceed the maximum
rate permitted by applicable law), and shall constitute part of the Obligations,
secured by all of the Collateral. The Unused Facility Fee and all Letter of
Credit fees shall be calculated on the basis of the actual number of days
elapsed in a three hundred sixty (360) day year.
2.06 Payments.
(a) Voluntary Prepayments. Borrower may, upon not less than three
(3) Business Days prior written notice to Agent not later than 11:00 A.M. (San
Francisco time) on the date given, at any time and from time to time (including,
without limitation, from and after the Term Loan Conversion Date), prepay any
Loans in whole or in part. Any notice of prepayment given to Agent under this
Section 2.06(a) shall specify the date of prepayment and the aggregate principal
amount of the prepayment. In the event of a prepayment of LIBOR Loans, Borrower
shall concurrently pay any Fixed Rate Price Adjustment payable in respect
thereof. Agent shall provide to each Lender a confirming copy of such notice on
the same Business Day such notice is received.
(b) Manner and Time of Payment. All payments of principal, interest
and fees hereunder payable to Agent or the Lenders shall be made without
condition or reservation of right and free of set-off or counterclaim, in
Dollars and by wire transfer (pursuant to Agent's written wire transfer
instructions)
38
of immediately available funds, to Agent, for the account of each Lender, not
later than 11:00 A.M. (San Francisco time) on the date due; and funds received
by Agent after that time and date shall be deemed to have been paid on the next
succeeding Business Day.
(c) Payments on Non-Business Days. Whenever any payment to be made
by Borrower hereunder shall be stated to be due on a day which is not a Business
Day, payments shall be made on the next succeeding Business Day and such
extension of time shall be included in the computation of the payment of
interest hereunder and of any of the fees specified in Section 2.05, as the case
may be.
2.07 Increased Capital. If either (a) the introduction of or any change in
or in the interpretation of any law or regulation or (b) compliance by Agent or
any Lender with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law and whether or
not the failure to comply therewith would be unlawful) made or issued after the
Closing Date affects or would affect the amount of capital required or expected
to be maintained by Agent or such Lender or any corporation controlling Agent or
such Lender, and Agent or such Lender determines that the amount of such capital
is increased by or based upon the existence of Agent's obligations hereunder or
such Lender's Commitment, then, upon demand by Agent or such Lender, Borrower
shall immediately pay to Agent or such Lender, from time to time as specified by
Agent or such Lender, additional amounts sufficient to compensate Agent or such
Lender in the light of such circumstances, to the extent that Agent or such
Lender determines such increase in capital to be allocable to the existence of
Agent's obligations hereunder or such Lender's Commitment; provided, however,
that (i) neither Agent nor any Lender may claim under this Section 2.07 any such
additional amount attributable to any period preceding the date that is ninety
(90) days prior to the date of its demand, and (ii) before making any such
demand, Agent, and each Lender, agrees to use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) to designate a
different lending office as its lending office for purposes of the Loans and its
Commitment, if (1) the making of such a designation would avoid the need for, or
reduce the amount of, such demand and (2) would not, in the reasonable judgment
of Agent or such Lender, as the case may be, be otherwise disadvantageous to it.
A certificate as to such amounts submitted to Borrower by Agent or such Lender
shall, in the absence of manifest error, be conclusive and binding for all
purposes.
2.08 Notice of Increased Costs. Each Lender agrees that, as promptly as
reasonably practicable after it becomes aware of the occurrence of an event or
the existence of a condition which would cause it to be affected by any of the
events or conditions described in Section 2.04(g) or (h) or Section 2.07, it
will
39
notify Borrower, and provide a copy of such notice to Agent, of such event and
the possible effects thereof, provided that the failure to provide such notice
shall not affect Lender's rights to reimbursement provided for herein.
ARTICLE III
BORROWING BASE PROPERTIES
3.01 Acceptance of Borrowing Base Properties. Subject to compliance with
the terms and conditions of Section 4.01 and this Section 3.01, Lenders have
accepted the properties listed on Schedule 1 as of the Closing Date as Borrowing
Base Properties. The acceptance of the Assigned Mortgages as Borrowing Base
Property is conditional, and each Assigned Mortgage shall only remain qualified
as Borrowing Base Property so long as, (i) no default occurs under any of the
loan documents which is not cured within any applicable cure period pertaining
to the Assigned Mortgage which would permit acceleration of such loan,
including, without limitation, failure to make any payments when due, breach of
covenants, representations or warranties, breach of any guarantees pertaining to
such loan, or the bankruptcy or insolvency of the borrower or any guarantor with
respect to such loan, (ii) no dispute occurs involving the nature or
enforceability of the applicable loan obligations, and (iii) no loss of lien
priority occurs with respect to the applicable mortgage, whether due to
attachments, judgments or otherwise. If any single Assigned Mortgage executed by
AFP Partners, a California limited partnership ("AFP"), as mortgagor, shall be
disqualified as a Borrowing Base Property pursuant to the preceding, then all
other Assigned Mortgages executed by AFP, as mortgagor, shall be disqualified as
Borrowing Base Property concurrently therewith. Upon disqualification of any
Assigned Mortgage, the Borrowing Base shall be reduced accordingly and any
outstanding principal balance of the Loans in excess of the Borrowing Base,
after giving effect to such Assigned Mortgage disqualification, shall be
immediately due and payable unless Borrower provides additional or replacement
Borrowing Base Property (acceptable to Agent and Lenders in accordance with this
Section 3.01) concurrently with such Assigned Mortgage disqualification.
If Borrower desires that Lenders accept an additional property as a
Borrowing Base Property, Borrower shall so notify Agent, and Agent shall
promptly notify each other Lender; provided, however, that no additional
Investment Mortgages shall be admitted as Borrowing Base Property. No such
additional property will be evaluated by Lenders as a potential Borrowing Base
Property unless Borrower delivers to Agent the following:
(a) A current operating statement for such property audited or
certified by Borrower as being true and correct in all material respects
and prepared in
40
accordance with GAAP and comparative operating statements (in the general
form of Borrowing Base Property Statements) for the current period and for
the previous two (2) Fiscal Years; provided, however, that, if Borrower
shall have owned such property for less than the period to be covered by
such operating statements, then the audit and certification requirements
shall extend only to the period of ownership by Borrower, so long as
Borrower provides operating statements prepared and certified by the former
owner(s) for the remainder of the period required hereunder, if available;
(b) A current rent roll for such property and a three (3) year
operating and occupancy history of such property, if available, in form
satisfactory to Agent, and certified by Borrower to be true and correct;
(c) A copy of Borrower's most recent Owner's Policy of Title Insurance
and a current preliminary report covering such property and showing the
identity of the fee titleholder thereto (and any ground lessee) and all
matters of record, together with copies of all such matters of record;
(d) A survey of such property certified by a surveyor licensed in the
applicable jurisdiction to have been prepared in accordance with the then
effective Minimum Standard Detail Requirements for ALTA/ACSM Land Title
Surveys, including a certification that such property is not located in a
Special Flood Hazard Area as defined by the Federal Insurance
Administration;
(e) A "Phase I" environmental assessment of such property not more
than twelve (12) months old;
(f) Copies of all Major Agreements affecting such property;
(g) Copies of engineering, mechanical, structural or maintenance
studies performed (if not previously performed, such studies as shall be
required by Agent) with respect to such property;
(h) A schedule of all personal property, including intangible personal
property owned by Borrower or the Guarantor Subpartnership, as applicable,
and used in connection with the maintenance or operation of such property;
and
(i) Such other information as may be reasonably requested by Agent in
order to evaluate the potential Borrowing Base Property.
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If, after receipt and review of the foregoing documents and information, Agent
is prepared to proceed with acceptance of such property as a Borrowing Base
Property, Agent will so notify Borrower, and Agent will obtain an Appraisal of
such property in order to determine the Appraised Value thereof. After obtaining
such Appraised Value, Agent will submit the foregoing documents, information and
the Appraised Value to the Lenders for their review. Lenders will provide
written notice to Agent of their acceptance or rejection of such property within
thirty (30) days after receipt of the foregoing documents, information and the
Appraised Value. Such acceptance or rejection shall be in Lenders' sole
discretion. Only upon unanimous acceptance by Lenders of such property
(including, unanimous acceptance by Lenders of any Liens thereon), execution and
delivery of documents and completion of all other closing requirements imposed
by Agent, and such other items or documents as may be appropriate under the
circumstances, including updates of any documents described in this Section
3.01, shall such property shall become a Borrowing Base Property.
3.02 Release of Borrowing Base Properties. Upon repayment and satisfaction
in full of all Obligations and the termination of all Commitments and this
Agreement, Agent will release the Mortgage Documents with respect to each of the
Borrowing Base Properties. From time to time Borrower may request, upon not less
than thirty (30) days' prior written notice to Agent (which shall promptly send
a copy thereof to each other Lender), that a Borrowing Base Property be released
from the Liens created by the Mortgage Documents applicable thereto, which
release ("Property Release") shall be delivered by Agent if all of the following
conditions are satisfied as of the date of such Property Release:
(a) no Unmatured Event of Default or Event of Default has occurred and
is then continuing or will occur after giving effect to such Property
Release and the reduction in the Borrowing Base by reason of the release of
such Borrowing Base Property;
(b) the Maturity Date has not occurred;
(c) Borrower shall have delivered to Agent a Borrowing Base
Certificate reflecting the Borrowing Base after giving effect to such
Property Release;
(d) Agent shall have determined that the outstanding principal balance
of the Loans will not exceed the Borrowing Base after giving effect to such
Property Release and any prepayment to be made and/or the acceptance of any
property as additional or replacement Borrowing Base Property to be given
concurrently with such Property Release;
(e) the title insurance policy or policies issued in favor of Agent
shall, at the request of Agent, be
42
endorsed to reflect such release of Collateral, and Borrower shall pay all
costs and expenses incurred by or for the account of Agent in connection
with such Property Release;
(f) Agent shall have determined that no single Borrowing Base Property
(other than University Club Tower) will comprise more than twenty-five
percent (25%) of the then Borrowing Base after giving effect to such
Property Release and any prepayment to be made and/or the acceptance of any
property as additional or replacement Borrowing Base Property to be given
concurrently with such Property Release, or Lenders provide their unanimous
consent to such release after notice that such Collateral concentration
limit will be exceeded as a result of such release; and
(g) Agent shall have determined that the Assigned Mortgages will
comprise no more than forty percent (40%) of the then Borrowing Base after
giving effect to such Property Release and any prepayment to be made and/or
the acceptance of any property as additional or replacement Borrowing Base
Property to be given concurrently with such Property Release.
Notwithstanding the preceding, no single Assigned Mortgage executed
by AFP, as mortgagor, shall be released unless all other Assigned Mortgages
executed by AFP, as mortgagor, are released in accordance with this Agreement
concurrently therewith.
3.03 Borrowing Base Determinations.
(a) Appraisals. The Appraised Value of a Borrowing Base Property or
Properties shall be determined or redetermined, as applicable, under each of the
following circumstances:
(i) Upon initial acceptance of a property as a Borrowing Base
Property Agent will determine the Appraised Value thereof;
(ii) From time to time a Borrowing Base Property may be
reappraised, at Borrower's reasonable request, upon notice by Borrower to
Agent to reappraise a Borrowing Base Property, in which event Agent shall
cause an Appraisal thereof to be made;
(iii) The Agent shall have the right to have the Appraised
Value of each Borrowing Base Property redetermined at least every two
years after inclusion in the Borrowing Base and more frequently as
provided below; and
(iv) At any time and from time to time, upon five (5) Business
Days' prior written notice to
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Borrower, Agent may (and shall at the direction of Requisite Lenders)
redetermine the Appraised Value of a Borrowing Base Property or Properties
in any of the following circumstances:
(A) if a material adverse change occurs, as determined
by Agent in its discretion, with respect to a Borrowing Base Property,
including, without limitation, a material deterioration in the Net
Operating Income of a Borrowing Base Property (including the actual or
anticipated loss without replacement of a Major BBP Lease), or a major
casualty, condemnation, contamination or violation of any Requirements
of Law; or
(B) if necessary in order to comply with Requirements of
Law applicable to any Lender.
Any Appraised Value so determined or redetermined shall be submitted by Agent to
Lenders for approval by Lenders. Agent shall notify Borrower of any approved
change in Appraised Value.
(b) Borrowing Base Value. Borrowing Base Values will be adjusted
downward as of the end of a Fiscal Quarter if application of the formula
described in clause (b) of the definition of Borrowing Base Value justifies such
adjustment. In the event the Borrowing Base Value of any Borrowing Base Property
is increased, such increase shall not become effective until Borrower delivers
to Agent an endorsement, if necessary, to Agent's title insurance policy
increasing the amount thereof as related to such Borrowing Base Property to not
less than one hundred percent (100%) of the adjusted Borrowing Base Value.
(c) Borrowing Base Determination. The Borrowing Base will be
recalculated at the end of each Fiscal Quarter.
3.04 Covenants Relating to Borrowing Base Properties.
(a) Insurance, Casualty. Borrower shall maintain or cause to be
maintained insurance covering the Borrowing Base Properties in such amounts and
covering such risks as is required pursuant to the Mortgage Documents or
otherwise as required from time to time by Agent.
(b) BBP Leases; Major Agreements. Unless otherwise consented to by
Agent in writing, all BBP Leases entered into after the date of this Agreement
shall (i) be to third parties (except any BBP Leases approved by Agent to
Glenborough Hotel Group) under market terms, (ii) provide for uses of such
Borrowing Base Property that are consistent with first-class management thereof,
and (iii) contain provisions regarding insurance, waiver of claims, damage and
destruction, condemnation, notice to mortgagee and subordination and
44
attornment and other material matters in substantial conformity with the
standard form(s) of space lease utilized by Borrower for each Borrowing Base
Property, all of which standard forms (including revisions thereto) shall be
submitted by Borrower to Agent for approval in writing. Borrower shall only
enter into a Major BBP Lease after the date of this Agreement if (i) Borrower
has received Agent's prior written approval of the terms thereof, or (ii) Agent
has not notified Borrower of its disapproval of such proposed BBP Lease within
thirty (30) days after Agent's receipt of such proposed Major BBP Lease and a
transmittal letter requesting that Agent review such proposed BBP Lease and
approve or disapprove such proposed Major BBP Lease within thirty (30) days
after receipt thereof in accordance with this Section 3.04(b). Upon request by
Agent, Borrower shall provide to Agent an executed copy of each BBP Lease,
including all amendments, estoppel certificates and related documentation. In
addition, promptly following the execution of any Major Agreement (or the
termination or material modification thereof), Borrower shall provide a copy
thereof to Agent, and Agent shall promptly provide a copy thereof to each other
Lender. Upon the execution of any Major Agreement (or the termination or
material modification thereof) not approved in writing by Agent prior to such
execution, Agent may (and shall at the direction of Requisite Lenders)
redetermine the Appraised Value for the subject Borrowing Base Property; such
reappraisal right shall be in addition to the rights to reappraise set forth in
Section 3.03(a)(iv).
(c) Non-Disturbance Agreements. Borrower or, as applicable, the
Guarantor Subpartnership, shall obtain, prior to Closing, from all tenants under
those Major BBP Leases heretofore specified by Agent an estoppel, subordination,
acknowledgement of lease assignment, non-Disturbance and/or attornment agreement
in a form approved by Agent (each, as well as the estoppel certificates referred
to below, a "Non-Disturbance Agreement"). In addition, Borrower or, as
applicable, the Guarantor Subpartnership, shall use its best efforts to obtain
prior to Closing, or as soon thereafter as possible, from certain additional
tenants heretofore specified by Agent an estoppel certificate in a form approved
by Agent. If any Non-Disturbance Agreement asserts a material claim or setoff
right by the tenant, is materially inconsistent with the rent roll for such
Borrowing Base Property, or is delivered in a form materially different from the
Non-Disturbance Agreement, then, in any such circumstance, Agent shall have the
right to establish an appropriate reserve against Loan Availability until Agent
determines that the circumstance leading to such reserve as aforesaid has been
favorably resolved. Borrower or, as applicable, a Guarantor Subpartnership,
shall obtain, from each tenant under a Major BBP Lease entered into after the
Closing Date, a Non-Disturbance Agreement in a form approved by Agent as a part
of the approval of such Major BBP Lease. Notwithstanding the preceding, Agent
and Lenders agree that with respect to Hovpark, Borrower shall only be obligated
to obtain such Non-
45
Disturbance Agreements and estoppel certificates as Borrower is entitled to
obtain as lender under the Assigned Mortgage with respect to Hovpark; provided,
however, that Borrower shall nevertheless make its best efforts to obtain such
Non-Disturbance Agreements and estoppel certificates prior to Closing, or as
soon as possible thereafter.
(d) Management Agreements. From and after the Closing Date, neither
Borrower nor any Guarantor Subpartnership shall enter into, or thereafter amend
in any material manner or terminate, a management agreement with respect to any
Borrowing Base Property, except upon thirty (30) days' prior written notice to
and approval by Agent. Borrower shall timely provide to Agent a copy of any
proposed management agreement, and Agent shall promptly provide a copy thereof
to each other Lender. Any proposed management agreement submitted to Agent for
approval and not disapproved by Agent within thirty (30) days after receipt
thereof, shall be deemed to be approved by Agent. Without limiting in any way
Agent's approval rights with respect thereto, each proposed management agreement
shall include an absolute right of Borrower or the Guarantor Subpartnership to
terminate same upon thirty (30) days' notice to the property manager and shall
provide for management fees, reimbursements or other payments to the property
manager at levels not in excess of applicable market levels.
(e) Major Construction. If Borrower or any Guarantor Subpartnership
intends to engage in (or permit any obligor under an Assigned Mortgage to engage
in) any construction, remodeling or demolition project or series of related
projects with respect to a Borrowing Base Property, the aggregate cost of which
will exceed One Million Dollars ($1,000,000), Borrower shall first notify Agent,
and such construction project shall be subject to Agent's approval, which
approval shall not be unreasonably withheld. Any proposed construction project
submitted to Agent for approval and not disapproved by Agent within thirty (30)
days after receipt thereof, shall be deemed to be approved by Agent.
(f) Property Taxes. Not later than sixty (60) days following payment of
real property taxes or assessments applicable to a Borrowing Base Property,
Borrower shall provide to Agent written evidence (including canceled checks) of
the payment thereof. Upon any breach of the foregoing covenant, and in addition
to any other right or remedy set forth in this Agreement, Agent may require that
Borrower obtain, at its expense, a tax service agreement covering any or all
Borrowing Base Properties.
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ARTICLE IV
CONDITIONS TO LOANS
4.01 Conditions to Initial Disbursement of Loans. The obligation of Lenders
to make the initial disbursement of the Loans shall be subject to satisfaction
of each of the following conditions precedent on or before the Closing Date:
(a) Borrower Loan Documents. Borrower shall have executed and
delivered to Agent each of the following, in form and substance acceptable to
Agent and each other Lender:
(i) this Agreement;
(ii) the Loan Notes;
(iii) all Uniform Commercial Code financing statements as shall be
requested by Lenders;
(iv) all applicable Mortgage Documents;
(v) an environmental indemnification; and
(vi) all other documents to be executed by or on behalf of Borrower
as listed on the Closing Checklist.
(b) Guarantor Subpartnership Loan Documents. Each Guarantor
Subpartnership shall have executed and delivered to Agent each of the following,
in form and substance acceptable to Agent and each other Lender:
(i) a Guaranty;
(ii) all applicable Mortgage Documents;
(iii) all Uniform Commercial Code financing statements as shall be
requested by Lenders;
(iv) an environmental indemnification; and
(v) all other documents to be executed by or on behalf of each
Guarantor Subpartnership as listed on the Closing Checklist.
(c) REIT Loan Documents. The REIT shall have executed and delivered to
Agent each of the following, in form and substance acceptable to Agent and each
other Lender:
(i) a Guaranty;
(ii) an environmental indemnification; and
47
(iii) all other documents to be executed by or on behalf of the REIT
as listed on the Closing Checklist.
(d) Borrowing Base Property Documents. Agent shall have received the
following documents with respect to each Borrowing Base Property in form and
substance acceptable to Agent and each other Lender:
(i) an Appraisal;
(ii) American Land Title Association extended coverage Lender's
policies of title insurance or a commitments to issue such policies, from
a title company acceptable to Agent, each in the amount of the Facility
(or other amount approved by Agent), insuring the respective Mortgage or
Assigned Mortgage as a first mortgage subject only to Permitted Liens,
with endorsements and otherwise in form and substance acceptable to Agent
and Agent's counsel;
(iii) if required to obtain acceptable title insurance, a survey in
the form described in Section 3.01(d), certified to Agent;
(iv) such opinions of Borrower's local counsel pertaining to such
Borrowing Base Property as Agent shall require, in form and substance
satisfactory to Agent and Agent's counsel;
(v) Non-Disturbance Agreements pursuant to Section 3.04(c);
(vi) a rent roll, in form satisfactory to Agent, certified by
Borrower to be true, correct and complete in all material respects;
(vii) an environmental audit for each Borrowing Base Property,
conducted by an environmental engineering firm acceptable to Lenders, and
satisfactory evidence that Borrower, each Guarantor Subpartnership and all
Borrowing Base Properties are in compliance in all material respects with
all Environmental Laws, the violation of which could have a Material
Adverse Effect on Borrower, any Guarantor Subpartnership, any Borrowing
Base Property or the REIT; and
(viii) such other documents with respect to each Borrowing Base
Property as are listed on the Closing Checklist or as Agent shall
otherwise reasonably require.
48
(e) Corporate and Partnership Documents. Agent shall have received the
corporate and partnership documents with respect to Borrower, the REIT and each
Guarantor Subpartnership (and corporate general partner thereof) as listed on
the Closing Checklist, including a certificate of each such entity's Secretary
or an officer comparable thereto (a "Secretary's Certificate") with respect to
authorization, incumbency and all organizational documents.
(f) Borrowing Base and Compliance Certificates. Borrower shall have
delivered to Agent a Borrowing Base Certificate evidencing sufficient Loan
Availability to support the Loans being requested and a Compliance Certificate.
(g) Notice of Borrowing. Borrower shall have delivered to Agent a
Notice of Borrowing and, if applicable, Agent shall have delivered to Borrower a
Fixed Rate Notice, in each case in compliance with Section 2.01(b).
(h) Performance. Borrower, the REIT and each Guarantor Subpartnership
shall have performed in all material respects all agreements and covenants
required by Agent to be performed by them on or before the Closing Date.
(i) Solvency. Each of the REIT, Borrower and each Guarantor
Subpartnership shall be Solvent and shall have delivered to Agent a Solvency
Certificate to that effect.
(j) Material Adverse Changes. No change, as determined by Agent and
Lenders, shall have occurred, during the Interim Period, which has a Material
Adverse Effect on Borrower, any Guarantor Subpartnership, any Borrowing Base
Property, the REIT or the operating performance of any Borrowing Base Property.
(k) Litigation Proceedings. There shall not have been instituted or
threatened, during the Interim Period, any litigation or proceeding in any court
or Governmental Authority affecting or threatening to affect Borrower, any
Guarantor Subpartnership, any Borrowing Base Property or the REIT which has a
Material Adverse Effect, as reasonably determined by Agent.
(l) Perfection of Liens. All Mortgages and financing statements shall
have been recorded or filed, as applicable, and Agent shall have a valid,
perfected first priority lien on all of the Borrowing Base Properties and other
Collateral.
(m) Indefeasible Title. Borrower and the Guarantor Subpartnerships, as
applicable, shall have good, indefeasible and merchantable title to the
Collateral, free and clear of all Liens other than Permitted Liens.
(n) No Event of Default; Satisfaction of Financial Covenants. On the
Closing Date and after giving effect to the initial disbursements of the Loans,
no Event of Default or
49
Unmatured Event of Default shall exist and all of the financial covenants
contained in Sections 8.05 and 8.06 and Article IX shall be satisfied.
(o) Fees. Agent shall have received for the account of Lenders all fees
then due, including any fees payable in accordance with Section 12.16, and
Borrower shall have performed all of its other obligations as set forth in the
Loan Documents to make payments to Agent on or before the Closing Date and all
expenses of Agent or Lenders incurred prior to such Closing Date (excluding
Lenders' direct legal expenses) shall have been paid by Borrower.
(p) Opinion of Counsel. Agent shall have received, on behalf of Agent
and Lenders, favorable opinions of counsel (which may, as to certain matters, be
rendered by in-house counsel) for Borrower, each Guarantor Subpartnership and
the REIT dated as of the Closing Date, in form and substance satisfactory to
Agent, Lenders and their respective counsel.
(q) Consents and Approvals. All material licenses, permits, consents,
regulatory approvals and corporate action necessary to enter into the financing
transactions contemplated by this Agreement shall have been obtained by
Borrower, each Guarantor Subpartnership and the REIT.
(r) Insurance. Agent shall have received evidence that Borrower and
each Guarantor Subpartnership have property, casualty and liability insurance
satisfactory to Agent, and loss payable endorsements in form and substance
satisfactory to Agent naming Agent as loss payee with respect to property and
casualty insurance shall have been executed and delivered to Agent, together
with such certificates of insurance and binders as are requested by Agent naming
Agent and Lenders as additional insureds with respect to liability insurance,
all in substantial compliance with the provisions of Section 3.04(a).
(s) Leases. Agent shall have completed its review of the Major BBP
Leases and basic lease forms in use in relevant Borrowing Base Properties and
shall be satisfied therewith.
(t) Due Diligence. Agent shall have obtained and completed its review
of Appraisals of the Borrowing Base Properties and determination of Appraised
Values therefor and its review of the other Collateral, and Lenders shall have
completed such due diligence investigations as they deem necessary, and such
review and investigations shall provide Lenders with results and information
which, in each Lender's determination, are satisfactory to permit such Lender to
enter into this Agreement and fund the Loans.
(u) Representations and Warranties. All representations and
warranties contained in this Agreement and
50
the other Loan Documents shall be true and correct in all material respects.
(v) Interest Rate Contracts. Borrower shall have obtained appropriate
Interest Rate Contracts, if then required by Section 9.07, and copies of such
Interest Rate Contracts shall have been provided to Agent.
(w) REIT Financial Statements. Agent shall have received audited REIT
Financial Statements, dated December 31, 1995 and unaudited REIT Financial
Statements, dated March 31, 1996 (including the consolidating financial
statements of each of the Associated Companies).
4.02 Conditions Precedent to All Loans. The obligation of each Lender to
make any Loan requested to be made by it, on any date, is subject to
satisfaction of the following conditions precedent as of such date:
(a) Documents. With respect to a request for a Loan, Agent shall have
received, on or before the Funding Date and in accordance with the provisions of
Section 2.01(b), an original and duly executed Notice of Borrowing.
(b) Additional Matters. As of the Funding Date for any Loan and after
giving effect to the Loans being requested:
(i) Representations and Warranties. All of the representations and
warranties contained in this Agreement and in any other Loan Document
(other than representations and warranties which expressly speak only as
of a different date and other than for changes permitted or contemplated
by this Agreement) shall be true and correct in all material respects on
and as of such Funding Date, as though made on and as of such date;
(ii) No Default. No Event of Default or Unmatured Event of Default
shall have occurred and be continuing or would result from the making of
the requested Loan, and all of the financial covenants contained in
Sections 8.05 and 8.06 and Article IX shall be satisfied; and
(iii) No Material Adverse Change. No change shall have occurred
which shall have a Material Adverse Effect on Borrower, any Guarantor
Subpartnership, any Borrowing Base Property or the REIT or the operating
performance of any Borrowing Base Property, as determined by Agent.
Each submission by Borrower to Agent of a Notice of Borrowing with respect to a
Loan and the acceptance by Borrower of the proceeds of each such Loan made
hereunder shall constitute a
51
representation and warranty by Borrower as of the Funding Date in respect of
such Loan that all the conditions contained in this Section 4.02(b) have been
satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01 Representations and Warranties as to Borrower, Etc.. In order to
induce Lenders to make the Loans, Borrower hereby represents and warrants to
Lenders as follows:
(a) Organization; Partnership Powers. Borrower (i) is a limited
partnership duly organized, validly existing and in good standing under the laws
of the jurisdiction of its formation, (ii) is duly qualified to do business as a
foreign limited partnership and in good standing under the laws of each
jurisdiction in which it owns or leases real property or in which the nature of
its business requires it to be so qualified, except for those jurisdictions
where failure to so qualify and be in good standing would not have a Material
Adverse Effect on Borrower, and (iii) has all requisite partnership power and
authority to own, operate and encumber its property and assets and to conduct
its business as presently conducted and as proposed to be conducted in
connection with and following the consummation of the Loans contemplated by the
Loan Documents.
(b) Authority. Borrower has the requisite partnership power and
authority to execute, deliver and perform each of the Loan Documents to which it
is or will be a party. The execution, delivery and performance thereof, and the
consummation of the transactions contemplated thereby, have been duly approved
by the general partner of Borrower, and no other partnership proceedings or
authorizations on the part of Borrower or its general or limited partners are
necessary to consummate such transactions. Each of the Loan Documents to which
Borrower is a party has been duly executed and delivered by Borrower and
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms, subject to bankruptcy, insolvency and other laws
affecting creditors' rights generally.
(c) Ownership of Borrower, each Guarantor Subpartnership, the
Associated Companies and Borrowers under Assigned Mortgages. Schedule 5.01(c)
sets forth the owners of Borrower, each Guarantor Subpartnership, the Associated
Companies and the borrowers under the Assigned Mortgages (other than Hovpark)
and the owners' respective ownership percentages therein, and there are no other
ownership interests outstanding. Except as set forth or referred to in the
partnership agreement, articles of incorporation or bylaws, as applicable, of
Borrower, each Guarantor Subpartnership and the Associated Companies, no
ownership interest (or any securities, instruments, warrants, option or purchase
rights, conversion or exchange rights, calls,
52
commitments or claims of any character convertible into or exercisable for any
ownership interest) of any such Person is subject to issuance under any
security, instrument, warrant, option or purchase rights, conversion or exchange
rights, call, commitment or claim of any right, title or interest therein or
thereto. All of the ownership interests in Borrower, each Guarantor
Subpartnership and the Associated Companies have been issued in compliance with
all applicable Requirements of Law.
(d) No Conflict. The execution, delivery and performance by Borrower
of the Loan Documents to which it is or will be a party, and each of the
transactions contemplated thereby, do not and will not (i) conflict with or
violate Borrower's limited partnership agreement or certificate of limited
partnership or other organizational documents, as the case may be, or (ii)
conflict with, result in a breach of or constitute (with or without notice or
lapse of time or both) a default under any Requirement of Law, Contractual
Obligation or Court Order of or binding upon Borrower, or (iii) require
termination of any Contractual Obligation, or (iv) result in or require the
creation or imposition of any Lien whatsoever upon any of the properties or
assets of Borrower (other than Liens in favor of Agent arising pursuant to the
Loan Documents or Permitted Liens).
(e) Consents and Authorizations. Borrower has obtained all consents
and authorizations required pursuant to its Contractual Obligations with any
other Person, and shall have obtained all consents and authorizations of, and
effected all notices to and filings with, any Governmental Authority, as may be
necessary to allow Borrower to lawfully execute, deliver and perform its
obligations under the Loan Documents to which Borrower is a party.
(f) Governmental Regulation. Neither Borrower, the REIT nor any
Guarantor Subpartnership is subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act,
the Investment Company Act of 1940 or any other federal or state statute or
regulation such that its ability to incur indebtedness is limited or its ability
to consummate the transactions contemplated by the Loan Documents is materially
impaired.
(g) Prior Financials. The March 31, 1996 Consolidated Balance Sheet,
Statement of Operations and Statement of Cash Flows of the REIT contained in the
REIT's Form 10Q (the "March 31, 1996 Financials") delivered to Agent prior to
the date hereof were prepared in accordance with GAAP and fairly present the
assets, liabilities and financial condition of the REIT on a consolidated basis,
at such date and the results of its operations and its cash flows, on a
consolidated basis, for the period then ended.
(h) Financial Statements; Projections and Forecasts. Each of the
Financial Statements to be delivered to Agent
53
pursuant to Sections 6.01(b) and (c), (i) has been, or will be, as applicable,
prepared in accordance with the books and records of the REIT on a consolidated
basis, and (ii) either fairly present, or will fairly present, as applicable,
the financial condition of the REIT on a consolidated basis, at the dates
thereof (and, if applicable, subject to normal year-end adjustments) and the
results of its operations and cash flows, on a consolidated basis, for the
period then ended. Each of the projections delivered to Agent prior to the date
hereof and the financial plans and projections to be delivered to Agent pursuant
to Section 6.01(e), (A) has been, or will be, as applicable, prepared by the
REIT in light of the past business and performance of the REIT on a consolidated
basis and (B) represent, or will represent, as of the date thereof, the
reasonable good faith estimates of the REIT's financial personnel.
(i) Prior Operating Statements. Each of the operating statements
pertaining to each of the Borrowing Base Properties delivered to Agent prior to
the date hereof was prepared in accordance with GAAP in effect on the date such
operating statement of each Borrowing Base Property was prepared and fairly
presents the results of operations of such Borrowing Base Property for the
period then ended.
(j) Borrowing Base Property Statements and Projections. Each of the
Borrowing Base Property Statements to be delivered to Agent pursuant to Section
6.01(a) (i) has been or will be, as applicable, prepared in accordance with the
books and records of the applicable Borrowing Base Property, and (ii) fairly
presents or will fairly present, as applicable, the results of operations of
such Borrowing Base Property for the period then ended. Each of the projections,
financial plans and budgets delivered to Agent prior to the date hereof and the
projections and budgets to be delivered to Agent pursuant to Sections 6.01(e)
and 6.01(g) (A) has been, or will be, as applicable, prepared for each Borrowing
Base Property in light of the past business and performance of such Borrowing
Base Property and (B) represents or will represent, as of the date thereof, the
reasonable good faith estimates of the REIT's financial personnel.
(k) Litigation; Adverse Effects.
(i) There is no action, suit, proceeding, governmental investigation
or arbitration, at law or in equity, or before or by any Governmental
Authority, pending or, to the best of Borrower's knowledge, threatened
against Borrower or any Property of Borrower (including any Borrowing Base
Property), which if adversely determined would (A) result in a Material
Adverse Effect on Borrower or any Borrowing Base Property, (B) materially
and adversely affect the ability of any party to any of the Loan Documents
to perform its obligations thereunder, or (C) materially
54
and adversely affect the ability of Borrower to perform its obligations
contemplated in the Loan Documents.
(ii) Borrower is not (A) in violation of any applicable law, which
violation has a Material Adverse Effect on Borrower or any Borrowing Base
Property, or (B) subject to or in default with respect to any Court Order
which has a Material Adverse Effect on Borrower or any Borrowing Base
Property. There are no material Proceedings pending or, to the best of
Borrower's knowledge, threatened against Borrower or any Borrowing Base
Property, which, if adversely decided, would have a Material Adverse
Effect on Borrower or any Borrowing Base Property.
(l) No Material Adverse Change. Since March 31, 1996, there has
occurred no event which has a Material Adverse Effect on Borrower, and no
material adverse change in Borrower's ability to perform its obligations under
the Loan Documents to which it is a party or the transactions contemplated
thereby.
(m) Payment of Taxes. All tax returns and reports to be filed by
Borrower have been timely filed, and all taxes, assessments, fees and other
governmental charges shown on such returns or otherwise payable by Borrower have
been paid when due and payable (other than real property taxes, which may be
paid prior to delinquency so long as no penalty or interest shall attach
thereto), except such taxes, if any, as are reserved against in accordance with
GAAP and are being contested in good faith by appropriate proceedings or such
taxes, the failure to make payment of which when due and payable will not have,
in the aggregate, a Material Adverse Effect on Borrower. Borrower has no
knowledge of any proposed tax assessment against Borrower that will have a
Material Adverse Effect on Borrower, which is not being actively contested in
good faith by Borrower.
(n) Material Adverse Agreements. Borrower is not a party to or subject
to any Contractual Obligation or other restriction contained in its limited
partnership agreement, certificate of limited partnership or similar governing
documents which has a Material Adverse Effect on Borrower.
(o) Performance. Borrower is not in default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any Contractual Obligation applicable to it, and no condition
exists which, with the giving of notice or the lapse of time or both, would
constitute a default under such Contractual Obligation in each case, except
where the consequences, direct or indirect, of such default or defaults, if any,
will not have a Material Adverse Effect on Borrower.
(p) Federal Reserve Regulations. No part of the proceeds of the Loan
hereunder will be used to purchase or carry
55
any "margin security" as defined in Regulation G or for the purpose of reducing
or retiring any indebtedness which was originally incurred to purchase or carry
any margin security or for any other purpose which might constitute this
transaction a "purpose credit" within the meaning of said Regulation G. Neither
Borrower, the REIT nor any Guarantor Subpartnership is engaged primarily in the
business of extending credit for the purpose of purchasing or carrying out any
"margin stock" as defined in Regulation U. No part of the proceeds of the Loan
hereunder will be used for any purpose that violates, or which is inconsistent
with, the provisions of Regulation X or any other regulation of the Federal
Reserve Board.
(q) Disclosure. The representations and warranties of Borrower
contained in the Loan Documents and all certificates, financial statements and
other documents delivered to Agent in connection therewith, do not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading. Borrower has given to
Agent true, correct and complete copies of all BBP Leases, organizational
documents, Financial Statements, Borrowing Base Property Statements, and all
other documents and instruments referred to in the Loan Documents as having been
delivered to Agent. Borrower has not intentionally withheld any material fact
from Agent in regard to any matter raised in the Loan Documents. Notwithstanding
the foregoing, with respect to projections of Borrower's future performance such
representations and warranties are made in good faith and to the best judgment
of Borrower.
(r) Requirements of Law. Borrower, the REIT and each Guarantor
Subpartnership are in compliance with all Requirements of Law (including without
limitation the Securities Act and the Securities Exchange Act, and the
applicable rules and regulations thereunder, state securities law and "Blue Sky"
laws) applicable to it and its respective businesses, in each case, where the
failure to so comply will have a Material Adverse Effect on any such Person. The
REIT has made all filings with and obtained all consents of the Commission
required under the Securities Act and the Securities Exchange Act in connection
with the execution, delivery and performance by the REIT of the Loan Documents.
(t) Patents, Trademarks, Permits, Etc. Borrower, the REIT and each
Guarantor Subpartnership own, are licensed or otherwise have the lawful right to
use, or have all permits and other governmental approvals, patents, trademarks,
trade names, copyrights, technology, know-how and processes used in or necessary
for the conduct of each such Person's business as currently conducted, the
absence of which would have a Material Adverse Effect upon such Person. The use
of such permits and other governmental approvals, patents, trademarks, trade
names, copyrights, technology, know-how and processes by each such Person does
not infringe on the rights of any Person, subject to
56
such claims and infringements as do not, in the aggregate, give rise to any
liability on the part of any such Person which would have a Material Adverse
Effect on any such Person.
(u) Environmental Matters. Except as set forth on Schedule 5.01(u), to
the best of Borrower's knowledge, (i) the operations of Borrower, the REIT and
each Guarantor Subpartnership comply in all material respects with all
applicable local, state and federal environmental, health and safety
Requirements of Law ("Environmental Laws"); (ii) none of Borrower's or any
Guarantor Subpartnership's present Property or operations are subject to any
Remedial Action or other Liabilities and Costs arising from the Release or
threatened Release of a Contaminant into the environment in violation of any
Environmental Laws, which Remedial Action or other Liabilities and Costs would
have a Material Adverse Effect on any such Person; (iii) neither Borrower, the
REIT nor any Guarantor Subpartnership has filed any notice under applicable
Environmental Laws reporting a Release of a Contaminant into the environment in
violation of any Environmental Laws, except as the same may have been heretofore
remedied; (iv) there is not now on or in the Property of Borrower or any
Guarantor Subpartnership (except in compliance in all material respects with all
applicable Environmental Laws): (A) any underground storage tanks, (B) any
asbestos-containing material, or (C) any poly-chlorinated biphenyls (PCB's)
used in hydraulic oils, electrical transformers or other equipment owned by such
Person; and (v) neither Borrower, the REIT nor any Guarantor Subpartnership has
received any notice or claim to the effect that it is or may be liable to any
Person as a result of the Release or threatened Release of a Contaminant into
the environment.
(v) Major Agreements; BBP Leases. With respect to each Borrowing Base
Property, Agent has received true, complete and correct copies of each Major
Agreement. All such Major Agreements are in full force and effect and have not
been and will not be modified or terminated (except for modifications which
comply with the requirements of clauses (i) through (iii) of Section 3.04(b) and
terminations by reason of a material default), and no default or event of
default (or event or occurrence which upon with the passage of time or the
giving of notice, or both, will constitute a default or event of default) exists
or will exist under such Major Agreements as a result of the consummation of the
transactions contemplated by the Loan Documents. Agent has received the form BBP
Lease used for each Borrowing Base Property, and the BBP Leases for each
Borrowing Base Property, taken as a whole, do not and will not vary materially
from the requirements of clauses (i) through (iii) of Section 3.04(b). All BBP
Leases contain provisions pursuant to which the tenant thereunder agrees to
attorn to a mortgagee in the event of a foreclosure, subject only to customary
conditions. Except as reflected on the most current rent rolls delivered to
Agent, all BBP Leases are in full force and effect and no default or event or
default (or event or occurrence which upon with the
57
passage of time or the giving of notice, or both, will constitute a default or
event of default) exists or will exist thereunder as a result of the
consummation of the transactions contemplated by the Loan Documents. Except as
set forth on Schedule 5.01(v), other than BBP Leases and Permitted Liens there
are no Contractual Obligations relating to the maintenance, occupancy, use or
operation of any of the Borrowing Base Properties which are not terminable by
Borrower or a mortgagee-in-possession upon thirty (30) days or less notice.
(w) Solvency. Borrower is and will be Solvent after giving effect to
the disbursements of the Loans and the payment and accrual of all fees then
payable.
(x) Title to Assets; No Liens. Borrower has good, indefeasible and
merchantable title to all Properties owned or leased by it, including, without
limitation, any Borrowing Base Properties owned or leased by Borrower, and all
of the Collateral is free and clear of all Liens, except Permitted Liens.
(y) Use of Proceeds. Borrower's use of the proceeds of the Loans are,
and will continue to be, legal and proper uses (and to the extent necessary,
duly authorized by Borrower's partners) and such uses are consistent with all
applicable laws and statutes and Section 7.01(j).
(z) Management Agreements. Except as disclosed on Schedule 5.01(z),
Borrower is not a party or subject to any management or leasing agreement with
respect to any of the fee properties included within the Borrowing Base
Properties and has delivered to Agent true, correct and complete copies of any
management or leasing agreements with respect to the real properties encumbered
by the Assigned Mortgages.
5.02 Representations and Warranties as to the REIT. In order to induce
Lenders to make the Loans, Borrower hereby represents and warrants to Lenders as
follows:
(a) Organization; Corporate Powers. The REIT (i) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Maryland, (ii) is duly qualified to do business as a foreign corporation and in
good standing under the laws of each jurisdiction in which it owns or leases
real property or in which the nature of its business requires it to be so
qualified, except for those jurisdictions where failure to so qualify and be in
good standing will not have a Material Adverse Effect on the REIT, and (iii) has
all requisite corporate power and authority to own, operate and encumber its
property and assets and to conduct its business as presently conducted and as
proposed to be conducted in connection with and following the consummation of
the transactions contemplated by the Loan Documents.
58
(b) Authority. The REIT has the requisite corporate power and
authority to execute, deliver and perform each of the Loan Documents to which it
is or will be a party. The execution, delivery and performance thereof, and the
consummation of the transactions contemplated thereby, have been duly approved
by the Board of Directors of the REIT, and no other corporate proceedings on the
part of the REIT are necessary to consummate such transactions. Each of the Loan
Documents to which the REIT is a party has been duly executed and delivered by
Borrower and constitutes its legal, valid and binding obligation, enforceable
against it in accordance with its terms, subject to bankruptcy, insolvency and
other laws affecting creditors' rights generally.
(c) No Conflict. The execution, delivery and performance by the REIT
of the Loan Documents to which it is party, and each of the transactions
contemplated thereby, do not and will not (i) conflict with or violate its
articles of incorporation, by-laws or other organizational documents, (ii)
conflict with, result in a breach of or constitute (with or without notice or
lapse of time or both) a default under any Requirement of Law, Contractual
Obligation or Court Order of the REIT, (iii) require termination of any
Contractual Obligation, (iv) result in or require the creation or imposition of
any Lien whatsoever upon any of the properties or assets of the REIT (other than
Liens in favor of Agent arising pursuant to the Loan Documents), or (v) require
any approval of the stockholders of the REIT.
(d) Consents and Authorizations. The REIT has obtained all consents
and authorizations required pursuant to its Contractual Obligations with any
other Person, and shall have obtained all consents and authorizations of, and
effected all notices to and filings with, any Governmental Authority, as may be
necessary to allow the REIT to lawfully execute, deliver and perform its
obligations under the Loan Documents to which the REIT is a party.
(e) Capitalization. All of the capital stock of the REIT has been
issued in compliance with all applicable Requirements of Law.
(f) Litigation; Adverse Effects.
(i) There is no action, suit, proceeding, governmental investigation
or arbitration, at law or in equity, or before or by any Governmental
Authority, pending or, to best of Borrower's knowledge, threatened against
the REIT or any Property of the REIT, which will (A) result in a Material
Adverse Effect on the REIT, (B) materially and adversely affect the
ability of any party to any of the Loan Documents to perform its
obligations thereunder, or (C) materially and adversely affect the ability
of the REIT to perform its obligations as contemplated in the Loan
Documents.
59
(ii) The REIT is not (A) in violation of any applicable law, which
violation has a Material Adverse Effect on the REIT, or (B) subject to or
in default with respect to any Court Order which has a Material Adverse
Effect on the REIT. There are no Proceedings pending or, to the best of
Borrower's knowledge, threatened against the REIT, which, if adversely
decided, would have a Material Adverse Effect on the REIT, Borrower or any
Borrowing Base Property.
(g) No Material Adverse Change. Since March 31, 1996, there has
occurred no event which has a Material Adverse Effect on the REIT, and no
material adverse change in the REIT's ability to perform its obligations under
the Loan Documents to which it is a party or the transactions contemplated
thereby.
(h) Payment of Taxes. All tax returns and reports to be filed by the
REIT have been timely filed, and all taxes, assessments, fees and other
governmental charges shown on such returns have been paid when due and payable,
except such taxes, if any, as are reserved against in accordance with GAAP and
are being contested in good faith by appropriate proceedings or such taxes, the
failure to make payment of which when due and payable would not have, in the
aggregate, a Material Adverse Effect on the REIT. The REIT has no knowledge of
any proposed tax assessment against the REIT that would have a Material Adverse
Effect on the REIT, which is not being actively contested in good faith by the
REIT.
(i) Material Adverse Agreements. The REIT is not a party to or subject
to any Contractual Obligation or other restriction contained in its charter,
by-laws or similar governing documents which has a Material Adverse Effect on
the REIT or the ability of the REIT to perform its obligations under the Loan
Documents to which it is a party.
(j) Performance. The REIT is not in default in the performance,
observance or fulfillment of any of the obligations, covenants or conditions
contained in any Contractual Obligation applicable to it, and no condition
exists which, with the giving of notice or the lapse of time or both, would
constitute a default under such Contractual Obligation in each case, except
where the consequences, direct or indirect, of such default or defaults, if any,
would not have a Material Adverse Effect on the REIT.
(k) Disclosure. The representations and warranties of the REIT
contained in the Loan Documents, and all certificates, financial statements and
other documents delivered to Agent in connection therewith, do not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading. The REIT has not
intentionally withheld any material fact from
60
Agent in regard to any matter raised in the Loan Documents. Notwithstanding the
foregoing, with respect to projections of the REIT's future performance such
representations and warranties are made in good faith and to the best judgment
of the management of the REIT.
(l) ERISA. Neither the REIT nor any ERISA Affiliate thereof
(including, for all purposes under this Section 5.02(l), Borrower and each
Guarantor Partnership) has in the past five (5) years maintained or contributed
to or currently maintains or contributes to any Benefit Plan other than the
Benefit Plans identified on Schedule 5.02(l). No Investment Partnership has or
is likely to incur any liability with respect to any Benefit Plan maintained or
contributed to by such Investment Partnership or its ERISA Affiliates, which
would have a Material Adverse Effect on Borrower. Neither the REIT nor any ERISA
Affiliate thereof has during the past five (5) years maintained or contributed
to or currently maintains or contributes to any employee welfare benefit plan
within the meaning of Section 3(1) of ERISA which provides benefits to retirees
other than benefits required to be provided under Section 4980B of the Internal
Revenue Code and Sections 601 through 608 of ERISA (or any successor provisions
thereto). Neither the REIT nor any ERISA Affiliate thereof is now contributing
nor has it ever contributed to or been obligated to contribute to any
Multiemployer Plan, no employees or former employees of the REIT, or such ERISA
Affiliate have been covered by any Multiemployer Plan in respect of their
employment by the REIT, and no ERISA Affiliate of the REIT has or is likely to
incur any withdrawal liability with respect to any Multiemployer Plan which
would have a Material Adverse Effect on the REIT.
(m) Solvency. The REIT is and will be Solvent, in each case after
giving effect to the disbursement of the Loans, and the payment and accrual of
all fees then payable.
(n) Status as a REIT. The REIT (i) is a real estate investment trust
as defined in Section 856 of the Internal Revenue Code (or any successor
provision thereto), (ii) has not revoked its election to be a real estate
investment trust, (iii) has not engaged in any "prohibited transactions" as
defined in Section 856(b)(6)(iii) of the Internal Revenue Code (or any successor
provision thereto), and (iv) for its current "tax year" (as defined in the
Internal Revenue Code) is and for all prior tax years subsequent to its election
to be a real estate investment trust has been entitled to a dividends paid
deduction which meets the requirements of Section 857 of the Internal Revenue
Code.
(o) Ownership. The REIT does not own or have any direct interest in
any other Person, other than its ownership of (i) one hundred percent (100%) of
the common shares of (A) GRT Industrial Corporation, a Delaware corporation, (B)
GRT Financial Corporation, a Delaware corporation and (C) GRT Corporation, a
Georgia corporation, (ii) one hundred percent (100%) of the non-
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voting preferred shares of the Associated Companies, and (iii) the general
partnership interest and Eighty-Five and 37/100 Percent (85.37%) of the limited
partnership interests in Borrower.
(p) NYSE Listing. The common stock of the REIT is and will continue to
be listed for trading and traded on the New York Stock Exchange.
(q) Executive Officer Ownership. Schedule 5.02(q) sets forth the
direct and indirect ownership interests of Xxxxxx Xxxxxxxxxx in Borrower and the
REIT, indicating the actual names of such owners, the actual ownership interests
of each such owner in Borrower and the REIT and the percentage ownership
interests of each such owner in Borrower and the REIT in the aggregate.
ARTICLE VI
REPORTING COVENANTS
Borrower covenants and agrees that, on and after the date hereof, until
payment in full of all of the Obligations, the expiration of the Commitments and
termination of this Agreement:
6.01 Financial Statements and Other Financial and Operating Information.
Borrower shall maintain or cause to be maintained a system of accounting
established and administered in accordance with sound business practices and
consistent with past practice to permit preparation of quarterly and annual
financial statements in conformity with GAAP, and each of the financial
statements described below shall be prepared on a consolidated basis for the
REIT from such system and records. Borrower shall deliver or cause to be
delivered to Agent (with copies sufficient for each Lender):
(a) Borrowing Base Property Statements and Operating Results. As soon
as practicable, and in any event within twenty (20) days after the end of the
each Fiscal Quarter, quarterly operating statements, in a form approved by
Agent, which operating statements shall include actual quarterly and
year-to-date net operating income and net cash flow results, rent rolls (on
Borrower's detailed form of rent roll), cash flow projections, lease status
reports and occupancy summaries in the form customarily generated by Borrower
for each Borrowing Base Property dated as of the last day of such Fiscal Quarter
(the " Quarterly Borrowing Base Property Statements"), in form and substance
satisfactory to Agent, certified by the REIT's chief financial officer or chief
accounting officer. In addition, as soon as practicable, and in any event within
twenty (20) days after the end of the fourth Fiscal Quarter, a year-end
operating statement, in a form approved by Agent, which operating statement
shall include actual year-to-date net operating income and net cash flow results
for each Borrowing Base Property dated as of
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the last day of such Fiscal Quarter (collectively with the Quarterly Borrowing
Base Property Statements, the "Borrowing Base Property Statements").
(b) Quarterly Financial Statements Certified by CFO. As soon as
practicable, and in any event within forty-five (45) days after the end of each
Fiscal Quarter, consolidated and consolidating balance sheets, statements of
operations and statements of cash flow for the REIT ("Financial Statements"),
which may, in the case of the first three Fiscal Quarters, be in the form
provided to the Commission on the REIT's Form 10Q, and certified by the REIT's
chief financial officer or chief accounting officer. In addition, as soon as
practicable, and in any event within forty-five (45) days after the end of each
Fiscal Quarter, balance sheets, statements of operations and statements of cash
flow for each of the Associated Companies and any Affiliate of Borrower from
time to time specified by Agent.
(c) Annual Financial Statements. Within ninety (90) days after the
close of each Fiscal Year, annual Financial Statements of the REIT, on a
consolidated and consolidating basis (in the form provided to the Commission on
the REIT's Form 10K), audited and certified without qualification by the
Accountants and accompanied by a statement that, in the course of their audit
(conducted in accordance with generally accepted auditing standards), the
Accountants obtained no knowledge that an Event of Default or Unmatured Event of
Default occurred. In addition, as soon as practicable, and in any event within
ninety (90) days after the end of each Fiscal Year, year-end balance sheets and
annual statements of operations and statements of cash flow for each of the
Associated Companies. To the extent Agent desires additional details or
supporting information with respect to Investment Partnerships, the Associated
Companies or individual Properties which are not Borrowing Base Properties not
contained in the REIT's Form 10K, Borrower shall provide Agent with such details
or supporting information as Agent requests which is reasonably available to
Borrower. Without limiting the foregoing, at Agent's request, within ninety (90)
days after the end of each Fiscal Year, Borrower shall provide to Agent
operating statements and a schedule setting forth the percentage of leasable
area leased to tenants in occupancy, with footnotes indicating which leases are
in default in rent payments by more than forty-five (45) days (other than
technical, nonmaterial disputes concerning percentage rentals due) any other
material provisions in respect to which landlord has issued a notice of default,
for each Property which is not a Borrowing Base Property.
(d) Officer's Certificate of Borrower. (i) Together with each delivery
of any Borrowing Base Property Statement or Financial Statement pursuant to
clauses (a), (b) and (c) above, an Officer's Certificate of the REIT, stating
that the executive officer who is the signatory thereto (which officer shall be
the chief executive officer, the chief operating officer, the chief
63
financial officer or the chief accounting officer of the REIT) has reviewed, or
caused under his supervision to be reviewed, the terms of this Agreement and the
other principal Loan Documents, and has made, or caused to be made under his
supervision, a review in reasonable detail of the transactions and condition of
Borrower, the REIT and each Guarantor Subpartnership, during the accounting
period covered by such Borrowing Base Property Statements or Financial
Statements, and that such review has not disclosed the existence during or at
the end of such accounting period, and that the signers do not have knowledge of
the existence as of the date of the Officer's Certificate, of any condition or
event which constitutes an Event of Default or Unmatured Event of Default, or,
if any such condition or event existed or exists, specifying the nature and
period of existence thereof and what action has been taken, is being taken and
is proposed to be taken with respect thereto; and (ii) together with each
delivery pursuant to clauses (a), (b) and (c) above, a Compliance Certificate
demonstrating in reasonable detail (which detail shall include actual
calculation and supporting information) compliance during and at the end of such
accounting periods with the financial covenants contained in Sections 8.05 and
8.06 and Article IX.
(e) Cash Flow Projections. Not later than fifteen (15) days prior to
the beginning of each Fiscal Year, projections of Borrower, on a consolidated
basis, detailing expected sources and uses of cash for the next Fiscal Year.
Borrower shall also provide such additional supporting details as Agent may
reasonably request, and with respect to Hovpark, to the extent available to
Borrower.
(f) Borrowing Base Certificate. As soon as practicable, and in any
event within twenty (20) days after the end of each Fiscal Quarter (and more
often if so requested by Agent), a Borrowing Base Certificate, certified as
being true and correct by the REIT's chief executive officer, chief operating
officer, chief financial officer or chief accounting officer. Each Borrowing
Base Certificate shall set forth Borrowing Base calculations since the date of
the last prior Borrowing Base Certificate, and shall reflect any material
adverse changes in the Net Operating Income or other condition of a Borrowing
Base Property of which such officer has knowledge and which is not reflected in
the most recent Borrowing Base Property Statement.
(g) Budgets For Borrowing Base Properties. Not later than fifteen (15)
days prior to the beginning of each Fiscal Year, annual operating budgets for
each Borrowing Base Property for the immediately following Fiscal Year, prepared
on an annual basis, in a form approved by Agent, together with all supporting
details reasonably requested by Agent, and certified by the chief executive
officer, chief operating officer, chief financial officer or chief accounting
officer of the REIT as being based upon the REIT's reasonable good faith
estimates, upon information and assumptions at the time. Notwithstanding the
preceding, with
64
respect to Hovpark, Borrower shall only be obligated to provide such operating
budget information as is available to Borrower.
(h) Knowledge of Event of Default. Promptly upon Borrower obtaining
knowledge (i) of any condition or event which constitutes an Event of Default or
Unmatured Event of Default, or becoming aware that any Lender has given notice
or taken any other action with respect to a claimed Event of Default or
Unmatured Event of Default or (ii) of any condition or event which has a
Material Adverse Effect on Borrower, any Guarantor Subpartnership, the REIT or
any Borrowing Base Property, an Officer's Certificate specifying the nature and
period of existence of any such condition or event, or specifying the notice
given or action taken by such Lender and the nature of such claimed Event of
Default, Unmatured Event of Default, event or condition, and what action
Borrower, the Guarantor Subpartnership and/or the REIT has taken, is taking and
proposes to take with respect thereto.
(i) Litigation, Arbitration or Government Investigation. Promptly upon
Borrower, any Guarantor Subpartnership or the REIT obtaining knowledge of (i)
the institution of, or threat of, any material action, suit, proceeding,
governmental investigation or arbitration against or affecting Borrower, any
Guarantor Subpartnership, the REIT or any Borrowing Base Property not previously
disclosed in writing by Borrower to Agent pursuant to this Section 6.01(i),
including any eminent domain or other condemnation proceedings affecting any
Borrowing Base Property, or (ii) any material development in any action, suit,
proceeding, governmental investigation or arbitration already disclosed, which,
in either case, has a Material Adverse Effect on Borrower, any Guarantor
Subpartnership, the REIT or any Borrowing Base Property, a notice thereof to
Agent and such other information as may be reasonably available to it to enable
Agent, Lenders and their counsel to evaluate such matters.
(j) ERISA Termination Event. As soon as possible, and in any event
within thirty (30) days after Borrower, any Guarantor Subpartnership or the REIT
knows that a Termination Event has occurred, a written statement of the chief
financial officer of the REIT describing such Termination Event and the action,
if any, which Borrower, any Guarantor Subpartnership, the REIT or any ERISA
Affiliate of any of them has taken, is taking or proposes to take, with respect
thereto, and, when known, any action taken or threatened by the IRS, the DOL or
the PBGC with respect thereto.
(k) Prohibited ERISA Transaction. As soon as possible, and in any
event within thirty (30) days, after Borrower, any Guarantor Subpartnership, the
REIT or any ERISA Affiliate of any of them knows that a prohibited transaction
(defined in Section 406 of ERISA and Section 4975 of the Internal
65
Revenue Code) has occurred, a statement of the chief financial officer of the
REIT describing such transaction.
(l) Benefit Plan Annual Report. Within thirty (30) days after the
filing thereof with the DOL, the IRS or the PBGC, copies of each annual report,
including Schedule B thereto, filed with respect to each Benefit Plan of
Borrower, any Guarantor Subpartnership, the REIT or any ERISA Affiliate of any
of them.
(m) Benefit Plan Funding Waiver Request. Within thirty (30) days after
the filing thereof with the IRS, a copy of each funding waiver request filed
with respect to any Benefit Plan of Borrower, any Guarantor Subpartnership, the
REIT or any ERISA Affiliate of any of them and all communications received by
Borrower, any Guarantor Subpartnership, the REIT or any ERISA Affiliate of any
of them with respect to such request.
(n) Establishment of Benefit Plan and Increase in Contributions to the
Benefit Plan. Not less than ten (10) days prior to the effective date thereof, a
notice to Agent of the establishment of a Benefit Plan (or the incurrence of any
obligation to contribute to a Multiemployer Plan) by Borrower, any Guarantor
Subpartnership, the REIT or any ERISA Affiliate of any of them. Within thirty
(30) days after the first to occur of an amendment of any then existing Benefit
Plan of Borrower, any Guarantor Subpartnership, the REIT or any ERISA Affiliate
of any of them which will result in an increase in the benefits under such
Benefit Plan or a notification of any such increase, or the establishment of any
new Benefit Plan by Borrower, any Guarantor Subpartnership, the REIT or any
ERISA Affiliate of any of them or the commencement of contributions to any
Benefit Plan to which Borrower, any Guarantor Subpartnership, the REIT or any
ERISA Affiliate of any of them was not previously contributing, a copy of said
amendment, notification or Benefit Plan.
(o) Qualification of ERISA Plan. Promptly upon, and in any event
within thirty (30) days after, receipt by Borrower, any Guarantor
Subpartnership, the REIT or any ERISA Affiliate of any of them of an unfavorable
determination letter from the IRS regarding the qualification of a Plan under
Section 401(a) of the Internal Revenue Code, a copy of said determination
letter, if such disqualification would have a Material Adverse Effect on
Borrower, any Guarantor Subpartnership or the REIT.
(p) Multiemployer Plan Withdrawal Liability. Promptly upon, and in any
event within thirty (30) days after receipt by Borrower, any Guarantor
Subpartnership, the REIT or any ERISA Affiliate of any of them of a notice from
a Multiemployer Plan regarding the imposition of withdrawal liability, a copy of
said notice.
(q) Failure to Make Section 412 Payment. Promptly upon, and in any
event within thirty (30) days after, Borrower, any Guarantor Subpartnership, the
REIT or any ERISA Affiliate of
66
any of them fails to make a required installment under subsection (m) of Section
412 of the Internal Revenue Code or any other payment required under Section 412
of the Internal Revenue Code on or before the due date for such installment or
payment, a notification of such failure, if such failure could result in either
the imposition of a Lien under said Section 412 or otherwise have or could
reasonably be anticipated to have a Material Adverse Effect on Borrower, any
Guarantor Subpartnership or the REIT.
(r) Failure of the REIT to Qualify as Real Estate Investment Trust.
Promptly upon, and in any event within forty-eight (48) hours after Borrower
first has actual knowledge of (i) the REIT failing to continue to qualify as a
real estate investment trust as defined in Section 856 of the Internal Revenue
Code (or any successor provision thereof), (ii) any act by the REIT causing its
election to be taxed as a real estate investment trust to be terminated, (iii)
any act causing the REIT to be subject to the taxes imposed by Section 857(b)(6)
of the Internal Revenue Code (or any successor provision thereto), or (iv) the
REIT failing to be entitled to a dividends paid deduction which meets the
requirements of Section 857 of the Internal Revenue Code, a notice of any such
occurrence or circumstance.
(s) Asset Acquisitions and Dispositions, Indebtedness, Merger, Etc.
Without limiting Article VIII or any other restriction in the Loan Documents,
concurrent with notice to Borrower's priority mailing list and in all events not
later than any public disclosure, prior written notice of any material
investments (other than in Cash Equivalents), material acquisitions, asset
purchases, dispositions, disposals, divestitures or similar transactions
involving Property, the raising of additional equity or the incurring or
repayment of material Indebtedness, or any material merger, by or with Borrower,
any Guarantor Subpartnership or the REIT, and, promptly upon consummation of
such transaction, a Compliance Certificate demonstrating in reasonable detail
(which detail shall include actual calculations) compliance, after giving effect
to such proposed transaction(s), with the covenants contained in Sections 8.05
and 8.06 and Article IX. For purposes of this Section 6.01(s), any investment,
acquisition, asset purchase, disposition, disposal, divestiture, merger or
similar transaction shall be considered "material" if it involves assets
exceeding thirty-five percent (35%) of the Borrower's assets (as existing prior
to giving effect to such transaction).
(t) Other Information. Such other information, reports, contracts,
schedules, lists, documents, agreements and instruments in the possession of the
REIT, Borrower or a Guarantor Subpartnership with respect to (i) the Collateral,
(ii) any material change in the REIT's investment, finance or operating
policies, or (iii) Borrower's, any Guarantor Subpartnership's or the REIT's
business, condition (financial or
67
otherwise), operations, performance, properties or prospects as Agent may from
time to time reasonably request, including, without limitation, annual
information with respect to cash flow projections, budgets, operating statements
(current year and immediately preceding year), rent rolls, lease expiration
reports, leasing status reports, note payable summaries, bullet note summaries,
equity funding requirements, contingent liability summaries, line of credit
summaries, line of credit collateral summaries, wrap note or note receivable
summaries, schedules of outstanding letters of credit, summaries of cash and
Cash Equivalents, projections of leasing fees and overhead budgets. Provided
that Agent gives Borrower reasonable prior notice and an opportunity to
participate, Borrower hereby authorizes Agent to communicate with the
Accountants and authorizes the Accountants to disclose to Agent any and all
financial statements and other information of any kind, including copies of any
management letter or the substance of any oral information, that such
accountants may have with respect to the Collateral or Borrower's, any Guarantor
Subpartnership's or the REIT's condition (financial or otherwise), operations,
properties, performance and prospects. Concurrently therewith, Agent will notify
Borrower of any such communication. At Agent's request, Borrower shall deliver a
letter addressed to the Accountants instructing them to disclose such
information in compliance with this Section 6.01(t).
(u) Press Releases; SEC Filings and Financial Statements. Telephonic
or telecopy notice to Agent concurrent with or prior to issuance of any material
press release concerning the REIT or Borrower and, as soon as practicable after
filing with the Commission, all reports and notices, proxy statements,
registration statements and prospectuses of the REIT. All materials sent or made
available generally by the REIT to the holders of its publicly-held Securities
or to a trustee under any indenture or filed with the Commission, including all
periodic reports required to be filed with the Commission, will be delivered to
Agent as soon as available.
(v) Accountant Reports. Copies of all reports prepared by the
Accountants and submitted to Borrower or the REIT in connection with each
annual, interim or special audit or review of the financial statements or
practices of Borrower or the REIT, including the comment letter submitted by the
Accountants in connection with their annual audit.
6.02 Environmental Notices. Borrower shall notify Agent, in writing, as
soon as practicable, and in any event within ten (10) days after Borrower's, any
Guarantor Subpartnership's or the REIT's learning thereof, of any: (a) written
notice or claim to the effect that Borrower, any Guarantor Subpartnership or the
REIT is or may be liable to any Person as a result of any material Release or
threatened Release of any Contaminant into the environment; (b) written notice
that Borrower, any Guarantor Subpartnership or the REIT is subject to
investigation by any
68
Governmental Authority evaluating whether any Remedial Action is needed to
respond to the Release or threatened Release of any Contaminant into the
environment; (c) written notice that any Property is subject to an Environmental
Lien; (d) written notice of violation to Borrower, any Guarantor Subpartnership
or the REIT or awareness of a condition which might reasonably result in a
notice of violation of any Environmental Laws by Borrower, any Guarantor
Subpartnership or the REIT; (e) commencement or written threat of any judicial
or administrative proceeding alleging a violation of any Environmental Laws; (f)
written notice from a Governmental Authority of any changes to any existing
Environmental Laws that will have a Material Adverse Effect on the operations of
Borrower, any Guarantor Subpartnership or the REIT; or (g) any proposed
acquisition of stock, assets, real estate or leasing of property, or any other
action by Borrower that, to the best of Borrower's knowledge, could subject
Borrower, any Guarantor Subpartnership or the REIT to environmental, health or
safety Liabilities and Costs that will have a Material Adverse Effect on
Borrower, any Guarantor Subpartnership or the REIT. With regard to the matters
referred to in Clauses (a) through (e) above, the same shall apply in respect of
each Borrowing Base Property and, in the case of other Property of Borrower, any
Guarantor Subpartnership or the REIT, only if the matter will have a Material
Adverse Effect on Borrower, any Guarantor Subpartnership or the REIT.
6.03 Confidentiality. Confidential information obtained by Agent or
Lenders pursuant to this Agreement or in connection with the Facility shall not
be disseminated by Agent or Lenders and shall not be disclosed to third parties
except to regulators, taxing authorities and other governmental agencies having
jurisdiction over Agent or such Lender or otherwise in response to Requirements
of Law, to their respective auditors and legal counsel and in connection with
regulatory, administrative and judicial proceedings as necessary or relevant
including enforcement proceedings relating to the Loan Documents, and to any
prospective assignee of or participant in a Lender's interest under this
Agreement or any prospective purchaser of the assets or a controlling interest
in any Lender, provided that such prospective assignee, participant or purchaser
first agrees to be bound by the provisions of this Section 6.03. In connection
with disclosures of confidential information to any non-governmental
third-party, the Lender(s) from whom the same has been requested shall, to the
extent feasible and permitted, give prior notice of such request to Borrower;
however, neither Agent nor any such Lender shall incur any liability to Borrower
for failure to do so. For purposes hereof, "confidential information" shall mean
all nonpublic information obtained by Agent or Lenders, unless and until such
information becomes publicly known, other than as a result of unauthorized
disclosure by Agent or Lenders of such information.
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ARTICLE VII
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, on and after the date hereof, until
payment in full of all of the Obligations, the expiration of the Commitments and
termination of this Agreement:
7.01 With Respect to Borrower:
(a) Existence. Borrower shall at all times maintain its existence as a
limited partnership and preserve and keep in full force and effect its rights
and franchises unless the failure to maintain such rights and franchises does
not have a Material Adverse Effect on Borrower.
(b) Qualification, Name. Borrower shall qualify and remain qualified
to do business in each jurisdiction in which the nature of its business requires
it to be so qualified except for those jurisdictions where failure to so qualify
does not have a Material Adverse Effect on Borrower. Borrower will transact
business solely in its own name or in the name of a Guarantor Subpartnership.
(c) Compliance with Laws, Etc. Borrower shall (i) comply with all
Requirements of Law, and all restrictive covenants affecting Borrower or the
properties, performance, prospects, assets or operations of Borrower, and (ii)
obtain as needed all Permits necessary for its operations and maintain such in
good standing, except in each of the foregoing cases where the failure to do so
will not have a Material Adverse Effect on Borrower.
(d) Payment of Taxes and Claims. Borrower shall pay (i) all taxes,
assessments and other governmental charges imposed upon it or on any of its
properties or assets or in respect of any of its franchises, business, income or
property before any penalty or interest accrues thereon, the failure to make
payment of which will have a Material Adverse Effect on Borrower, and (ii) all
claims (including, without limitation, claims for labor, services, materials and
supplies) for sums, material in the aggregate to Borrower, which have become due
and payable and which by law have or may become a Lien other than a judgment
lien upon any of Borrower's properties or assets, prior to the time when any
penalty or fine shall be incurred with respect thereto. Notwithstanding the
foregoing, Borrower may contest by appropriate legal proceedings conducted in
good faith and with due diligence, the amount, validity or application, in whole
or in part, of any taxes, assessments, other governmental charges or claims
described above, provided that Borrower shall provide such security as may be
required by Agent to insure ultimate payment of the same and to prevent any sale
or forfeiture of any of the Collateral (or any portion thereof or interest
therein), or any other of Borrower's Property (or any portion thereof or
interest
70
therein), provided, however, that the provisions of this Section 7.01(d) shall
not be construed to permit Borrower to contest the payment of any Obligations or
any other sums payable by Borrower to Agent or Lenders hereunder or under any
other Loan Document. Notwithstanding any of the foregoing, Borrower shall
indemnify, defend and save Agent and Lenders harmless from and against any
liability, cost or expense of any kind that may be imposed on Agent or Lenders
in connection with any such contest and any loss resulting therefrom.
(e) Maintenance of Properties; Insurance. Borrower shall maintain in
good repair, working order and condition, excepting ordinary wear and tear, all
of its Property and will make or cause to be made all appropriate repairs,
renewals and replacements thereof. Borrower shall maintain commercially
reasonable and appropriate amounts of fire and extended coverage and liability
insurance.
(f) Inspection of Property; Books and Records; Discussions. Borrower
shall permit, and shall cause the REIT and each Guarantor Subpartnership to
permit, any authorized representative(s) designated by any Lender to visit and
inspect any of its properties, including all Borrowing Base Properties, to
inspect financial and accounting records and leases, and to make copies and take
extracts therefrom, all at such times during normal business hours and as often
as any Lender may reasonably request. In connection therewith, Borrower shall
pay all expenses of the types described in Section 12.01. Borrower will keep
proper books of record and account in which entries, in conformity with GAAP and
as otherwise required by this Agreement and applicable Requirements of Law,
shall be made of all dealings and transactions in relation to its businesses and
activities and as otherwise required under Section 6.01.
(g) Maintenance of Permits, Etc. Borrower will maintain in full force
and effect all Permits, franchises, patents, trademarks, trade names,
copyrights, authorizations or other rights necessary for the operation of its
business, except where the failure to obtain any of the foregoing would not have
a Material Adverse Effect on Borrower; and notify Agent in writing, promptly
after learning thereof, of the suspension, cancellation, revocation or
discontinuance of or of any pending or threatened action or proceeding seeking
to suspend, cancel, revoke or discontinue any material Permit, patent,
trademark, trade name, copyright, governmental approval, franchise authorization
or right.
(h) Required Interest Rate Contracts. To the extent necessary to
ensure compliance with the provisions of Section 9.07, Borrower shall maintain
one or more Interest Rate Contracts on terms reasonably acceptable to Agent and
with any Lender (or other counterparties determined by Borrower and acceptable
to Agent). Borrower shall determine to its own satisfaction whether such
Interest Rate Contracts are sufficient to provide protection
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and to meet its needs, and (notwithstanding any approval, or failure to approve,
by Agent) neither Agent nor any Lender shall have any obligation or
accountability with respect thereto or any obligation to propose, quote or enter
into any Interest Rate Contract.
(i) Conduct of Business. Except for investments expressly permitted
pursuant to Section 9.06 and investments in cash and Cash Equivalents, Borrower
shall engage only in the business of acquiring, developing, owning and operating
income-producing properties within the continental United States and any
business activities and investments of Borrower incidental thereto.
(j) Use of Proceeds. Borrower shall use the proceeds of the Loans only
for pre-developments costs, development costs, acquisitions, working capital,
equity investments, repayment of Indebtedness, including required interest
and/or principal payments thereon and for any other general corporate purposes.
(k) AFP Assigned Mortgages. On or prior to June 15, 1997, Borrower
shall have delivered a written notice to Agent in accordance with Section 3.02
requesting a Property Release with respect to the three Assigned Mortgages
executed by AFP, as mortgagor, and within thirty (30) days of such notice,
Borrower shall have satisfied all conditions listed in Section 3.02 prerequisite
to Agent's delivery of a Property Release with respect to the three Assigned
Mortgages executed by AFP, as mortgagor.
7.02 With Respect to the REIT:
(a) Corporate Existence. The REIT shall at all times maintain its
corporate existence and preserve and keep in full force and effect its rights
and franchises unless the failure to maintain such rights and franchises will
not have a Material Adverse Effect on the REIT.
(b) Qualification, Name. The REIT shall qualify and remain qualified
to do business in each jurisdiction in which the nature of its business requires
it to be so qualified except for those jurisdictions where failure to so qualify
does not have a Material Adverse Effect on the REIT. The REIT will transact
business solely in its own name.
(c) Securities Law Compliance. The REIT shall comply in all material
respects with all rules and regulations of the Commission and file all reports
required by the Commission relating to the REIT's publicly-held Securities.
(d) Continued Status as a REIT; Prohibited Transactions. The REIT (i)
will continue to be a real estate investment trust as defined in Section 856 of
the Internal Revenue Code (or any successor provision thereto), (ii) will not
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revoke its election to be a real estate investment trust, (iii) will not engage
in any "prohibited transactions" as defined in Section 856(b)(6)(iii) of the
Internal Revenue Code (or any successor provision thereto), and (iv) will
continue to be entitled to a dividend paid deduction meeting the requirements of
Section 857 of the Internal Revenue Code.
(e) NYSE Listed Company. The common stock of the REIT shall at all
times be listed for trading and be traded on the New York Stock Exchange.
(f) Compliance with Laws, Etc. The REIT shall (i) comply with all
Requirements of Law and restrictive covenants affecting the REIT and (ii) obtain
as needed all Permits necessary for its operations and maintain such in good
standing, except in each of the foregoing cases where the failure to do so will
not have a Material Adverse Effect on the REIT.
(g) Payment of Taxes and Claims. The REIT shall pay (i) all taxes,
assessments and other governmental charges imposed upon it or on any of its
properties or assets or in respect of any of its franchises, business, income or
property before any penalty or interest accrues thereon, the failure to make
payment of which will have a Material Adverse Effect on the REIT, and (ii) all
claims (including, without limitation, claims for labor, services, materials and
supplies) for sums, material in the aggregate to the REIT, which have become due
and payable and which by law have or may become a Lien other than a judgment
lien upon any of the REIT's properties or assets, prior to the time when any
penalty or fine shall be incurred with respect thereto. Notwithstanding the
foregoing, REIT may contest by appropriate legal proceedings conducted in good
faith and with due diligence, the amount, validity or application, in whole or
in part, of any taxes, assessments, other governmental charges or claims
described above, provided that REIT shall provide such security as may be
required by Agent to insure ultimate payment of the same and to prevent any sale
or forfeiture of any of the Collateral (or any portion thereof or interest
therein), or any other of REIT's Property (or any portion thereof or interest
therein), provided, however, that the provisions of this Section 7.02(g) shall
not be construed to permit REIT to contest the payment of any Obligations or any
other sums payable by REIT to Agent or Lenders hereunder or under any other Loan
Document. Notwithstanding any of the foregoing, REIT shall indemnify, defend and
save Agent and Lenders harmless from and against any liability, cost or expense
of any kind that may be imposed on Agent or Lenders in connection with any such
contest and any loss resulting therefrom.
(h) Net Offering Proceeds. Unless otherwise agreed in writing by
Agent, the REIT shall immediately contribute any Net Offering Proceeds to
Borrower.
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ARTICLE VIII
NEGATIVE COVENANTS
Borrower covenants and agrees that, on and after the date hereof, until
payment in full of all of the Obligations, the expiration of the Commitments and
termination of this Agreement:
8.01 With Respect to all Parties: Neither Borrower, the REIT nor any
Guarantor Subpartnership shall:
(a) Liens. Directly or indirectly create, incur, assume or permit to
exist (i) any Lien on or with respect to any Collateral, except (A) Liens
in favor of Agent securing the Obligations and (B) Permitted Liens, or (ii)
any Liens which collectively encumber assets (other than the Collateral)
representing greater than twenty percent (20%) of Borrower's Gross Asset
Value, if the Indebtedness secured by such Lien contains a provision
providing that it may not be repaid for a period of greater than five (5)
years.
(b) Transfers of Collateral. Transfer, directly or indirectly, all or
any interest in any Borrowing Base Property or other Collateral.
(c) Restrictions on Fundamental Changes.
(i) Enter into any merger or consolidation in which the Borrower,
REIT or Guarantor Subpartnership, as applicable, is not the surviving
entity without the unanimous prior written consent of the Lenders or
liquidate, wind-up or dissolve (or suffer any liquidation or
dissolution);
(ii) Change its Fiscal Year; or
(iii) Engage in any line of business other than as expressly
permitted under Section 7.01(i).
(d) ERISA. Permit any ERISA Affiliates to, do any of the following to
the extent that such act or failure to act would result in the aggregate,
after taking into account any other such acts or failure to act, in a
Material Adverse Effect on Borrower or the REIT:
(i) Engage, or knowingly permit an ERISA Affiliate to engage, in
any prohibited transaction described in Section 406 of the ERISA or
Section 4975 of the Internal Revenue Code which is not exempt under
Section 407 or 408 of ERISA or Section 4975(d) of the Internal Revenue
Code for which a class exemption is not available or a private
exemption has not been previously obtained from the DOL;
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(ii) Permit to exist any accumulated funding deficiency (as
defined in Section 302 of ERISA and Section 412 of the Internal
Revenue Code), whether or not waived;
(iii) Fail, or permit an ERISA Affiliate to fail, to pay timely
required contributions or annual installments due with respect to any
waived funding deficiency to any Plan if such failure could result in
the imposition of a Lien or otherwise would have a Material Adverse
Effect on Borrower or the REIT;
(iv) Terminate, or permit an ERISA Affiliate to terminate, any
Benefit Plan which would result in any liability of Borrower or an
ERISA Affiliate under Title IV of ERISA or the REIT; or
(v) Fail, or permit any ERISA Affiliate to fail, to pay any
required installment under section (m) of Section 412 of the Internal
Revenue Code or any other payment required under Section 412 of the
Internal Revenue Code on or before the due date for such installment
or other payment, if such failure could result in the imposition of a
Lien or otherwise would have a Material Adverse Effect on Borrower or
the REIT.
(e) Restrictions on Guaranties, Loans, etc. Make any loans to, or
enter into any guaranty of, or otherwise become personally liable for, any
obligations of, the Associated Companies, any Person advised or managed
(including as a general partner) by an Associated Company or any Affiliate
of any of the foregoing, which collectively exceed One Million Dollars
($1,000,000).
(f) Restrictions on Property Management. Enter into, or permit any
Borrower under an Assigned Mortgage to enter into, any property management,
leasing or similar agreement with respect to any Borrowing Base Property
except on arms'-length terms and subject to a right to terminate at will
upon not more than 30 days' notice, and as approved by Agent. Any such
proposed agreement shall be deemed approved by Agent for purposes of this
subsection if (i) approved by Agent in writing, or (ii) submitted to Agent
for approval and not disapproved by Agent within thirty (30) days after
receipt thereof.
8.02 Amendment of Constituent Documents. Neither Borrower nor any Guarantor
Subpartnership shall amend its partnership agreement or certificate of limited
partnership (including, without limitation, as to the admission of any new
partner, directly or indirectly). The REIT shall not amend its articles of
incorporation or by-laws without the prior written consent of Requisite Lenders,
except (i) to increase authorized capital or to authorize preferred stock, (ii)
as required by applicable law
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or applicable tax requirements or (iii) as prudent to maintain
qualification as a REIT.
8.03 Disposal of Guarantor Subpartnership Interests. Neither Borrower nor
the REIT will directly or indirectly convey, sell, transfer, assign, pledge or
otherwise encumber or dispose of any of its partnership interests in any
Guarantor Subpartnership at any time when Agent has a Lien on Property owned by
such Guarantor Subpartnership other than pursuant to the Partnership Interest
Security Agreements.
8.04 Margin Regulations. No portion of the proceeds of any Loans shall be
used in any manner which might cause the extension of credit or the application
of such proceeds to violate Regulation G, U or X or any other regulation of the
Federal Reserve Board or to violate the Securities Exchange Act or the
Securities Act, in each case as in effect on the applicable Funding Date.
8.05 Minimum Ownership Interest of Xxxxxx Xxxxxxxxxx. Xxxxxx Xxxxxxxxxx
shall at all times retain ownership of no less than seventy-five percent (75%)
of the total common shares of REIT and partnership units of Borrower
beneficially owned by Xxxxxx Xxxxxxxxxx, directly or indirectly, as of the
Closing Date as set forth on Schedule 5.02(g).
8.06 Management. Xxxxxx Xxxxxxxxxx shall not cease to be active on a full
time, continuous basis in the senior management of Borrower and the REIT
pursuant to a written employment contract having a termination date no earlier
than the Maturity Date, as it may be extended pursuant to Section 2.01(d);
provided that, if due to death or incapacity, Xxxxxx Xxxxxxxxxx is unable to act
in such capacity, Borrower shall have up to one hundred twenty (120) days to
obtain the approval of Requisite Lenders to additional executive(s), such that
the remaining and new management executives, as a group, have substantial and
sufficient knowledge, experience and capabilities in the management of a
publicly-held company engaged in the operation of a multi-asset real estate
business of the type engaged in by Borrower. In the event Borrower shall fail to
obtain approval of Requisite Lenders as aforesaid within said 120-day period,
then Borrower shall, at the election and upon the demand of Requisite Lenders
pay in full all Obligations under the Loan Documents not later than thirty (30)
days after the end of such 120-day period, whereupon this Agreement and all
Commitments hereunder shall be terminated. No further Borrowings shall be
permitted until Borrower shall have obtained approval of Requisite Lenders under
this Section 8.06.
8.07 Organization of Borrower, Etc. Borrower shall remain a California
limited partnership with the REIT as its sole general partner. At no time shall
Borrower be taxed as an association under the Internal Revenue Code.
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8.08 REIT Board of Directors. At least sixty percent (60%) of the
membership of the REIT's board of directors shall remain outside directors who
shall have no material affiliation with the REIT or any of its Affiliates other
than such board position.
8.09 With Respect to the REIT:
(a) The REIT shall not own any material assets or engage in any line
of business other than the ownership of the common shares, preferred shares
and partnership interests described in Section 5.02(o).
(b) The REIT shall not directly or indirectly create, incur, assume or
otherwise become or remain directly or indirectly liable with respect to,
any Indebtedness, except the Obligations and other Indebtedness of
Borrower.
(c) The REIT shall not directly or indirectly create, incur, assume or
permit to exist any Lien on or with respect to any of its Property or
assets except Liens in favor of Agent securing the Obligations.
(d) The REIT shall at no time (i) cease to be a listed company on the
New York Stock Exchange, or (ii) cease to be a qualified real estate
investment trust in the manner referred to in Section 5.02(n).
(e) The REIT will not directly or indirectly convey, sell, transfer,
assign, pledge or otherwise encumber or dispose of any of its partnership
interests in Borrower or any of its other interests in commons shares and
preferred shares described in Section 5.02(o) held as of the Closing Date,
except to secure the Obligations.
(f) The REIT will not become a guarantor of, or otherwise become
personally liable for, any obligation of the Associated Companies or any
subsidiaries thereof or make any loans to the Associated Companies or any
subsidiaries thereof, which collectively exceed One Million Dollars
($1,000,000).
ARTICLE IX
FINANCIAL COVENANTS
Borrower covenants and agrees that, on and after the date of this
Agreement and until payment in full of all the Obligations, the expiration of
all Commitments and the termination of this Agreement:
9.01 Minimum Net Worth. Borrower will maintain an Adjusted Net Worth
of not less than the Minimum Net Worth.
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9.02 Total Liabilities to Gross Asset Value Ratio. The ratio of Total
Liabilities to Gross Asset Value shall not exceed 0.50:1.
9.03 EBITDA to Interest Expense Ratio. The ratio of Borrower's EBITDA to
Interest Expense shall not be less than 2.50:1.
9.04 EBITDA to Debt Service and Capital Expenditures Ratio. The ratio of
Borrower's EBITDA to the sum of Debt Service and Borrower's Capital Expenditures
shall not be less than 2.25:1.
9.05 Distributions.
(a) Subject to subsection (b) below, aggregate distributions to
shareholders of the REIT and all limited partners of Borrower shall not
exceed ninety percent (90%) of Funds From Operations for any four (4)
consecutive Fiscal Quarters. For purposes of this Section 9.05, the term
"distributions" shall mean and include all dividends and other
distributions to, and the repurchase of stock or limited partnership
interests from, the holder of any equity interests in Borrower or the REIT
(other than the redemption of limited partnership interests in Borrower in
exchange for REIT stock).
(b) Aggregate distributions during the continuance of any Event of
Default shall not exceed the lesser of (i) the aggregate amount permitted
to be made during the continuance thereof under subsection (a) above, and
(ii) the minimum amount that the REIT must distribute to its shareholders
in order to avoid federal tax liability and to remain qualified as a real
estate investment trust as defined in Section 856 of the Internal Revenue
Code (or any successor provision thereto).
9.06 Restrictions on Certain Investments. Borrower may make the
following investments only so long as (a) the aggregate amount of all such
investments does not exceed, at any time, twenty-five percent (25%) of
Gross Asset Value, and (b) the aggregate amount of each enumerated category
of investment does not exceed the specified percentage of Gross Asset
Value, in each case as of the date made:
Maximum Percentage
of Gross Asset
Restricted Investments Value
---------------------- ------------------
Land: 5%
Securities: 5%
Investment Mortgages: 15%
Holdings in Unconsolidated Entities: 10%
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For purposes of calculating compliance with the foregoing, (i) the amount of
each investment in (A) Land, Securities or Investment Mortgages will be deemed
to be the lesser of the original Acquisition Price thereof or the amount at
which such asset is carried on Borrower's books, and (B) Holdings in
Unconsolidated Entities will be deemed to be an amount equal to (1) the
Borrower's Share of the EBITDA of each Unconsolidated Entity (other than the
Associated Companies) for the most recently ended Fiscal Quarter (excluding
EBITDA attributable to any Property not owned by any such Unconsolidated Entity
for the entire most recently ended Fiscal Quarter), times four (4), divided by
0.11; plus (2) the Borrower's Share of the Acquisition Price paid for any
Property acquired by an Unconsolidated Entity during the most recently ended
Fiscal Quarter; (ii) in the case of each investment in Land, Investment
Mortgages and Unconsolidated Entities, the nature of the underlying real
property asset and the conduct of business in respect thereof shall in all
respects comply with the limitations set forth in Section 7.01(i); (iii) the
amount of Borrower's investment in the Associated Companies as of the Closing
Date shall not be subject to the above limitation on investments in
Unconsolidated Entities, and shall not be included in such calculation; and (iv)
any Land that is planned for development within twelve months from the date of
acquisition by Borrower shall not be subject to the above limitation on
investments in Land, and shall not be included in such calculation, provided
that such exclusion shall cease to apply in the event that such Land remains
unimproved at the end of such 12-month period.
9.07 Floating Rate Debt. Borrower shall at no time incur or maintain
aggregate Floating Rate Debt in excess of Fifty-Six Million One Hundred Twenty
Thousand Dollars ($56,120,000).
9.08 Calculation. Each of the foregoing ratios and financial requirements
shall be calculated as of the last day of each Fiscal Quarter, but shall be
satisfied at all times. For purposes of determining compliance with Sections
9.03 and 9.04, the period covered thereby shall be the most recently ended
Fiscal Quarter preceding the date on which the coverage calculation is
determined.
ARTICLE X
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
10.01 Events of Default. Each of the following occurrences shall constitute
an Event of Default under this Agreement:
(a) Failure to Make Payments When Due. Borrower shall fail to pay
(i) any amount due on the Maturity Date, (ii) any principal when due, or (iii)
any interest on any Loan, or any fee or other amount payable under any Loan
Documents, within five (5) days after the same becomes due.
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(b) Distributions. Borrower or the REIT shall breach any covenant
set forth in Section 7.02(d) or 9.05.
(c) Breach of Financial Covenants. Borrower shall fail to satisfy
any financial covenant set forth in Article IX (other than the requirement in
Section 9.05) and such failure shall continue for thirty (30) days.
(d) Other Defaults. Borrower, the REIT or any Guarantor
Subpartnership shall fail duly and punctually to perform or observe any
agreement, covenant or obligation binding on Borrower, the REIT or any Guarantor
Subpartnership under this Agreement or under any of the other Loan Documents
(other than as described in any other provision of this Section 10.01), and with
respect to agreements, covenants or obligations for which no time period for
performance is otherwise provided, such failure shall continue for fifteen (15)
days after Borrower, the REIT or any Guarantor Subpartnership knew of such
failure (or such lesser period of time as is mandated by applicable Requirements
of Law); provided, however, if such failure is not capable of cure within such
fifteen (15) day period, then if Borrower promptly undertakes action to cure
such failure and thereafter diligently prosecutes such cure to completion within
forty-five (45) days after Borrower, the REIT or any Guarantor Subpartnership
knew of such failure, then Borrower shall not be in default hereunder.
(e) Breach of Representation or Warranty. Any representation or
warranty made or deemed made by Borrower, the REIT or any Guarantor
Subpartnership to Agent or any Lender herein or in any of the other Loan
Documents or in any statement, certificate or financial statements at any time
given by Borrower pursuant to any of the Loan Documents shall be false or
misleading in any material respect on the date as of which made.
(f) Default as to Other Indebtedness. (i) Borrower, the REIT, any
Guarantor Subpartnership, Subsidiary or Investment Partnership shall have
defaulted (beyond any applicable grace period) under (A) the Credit Agreement
(Term Loan) by and among Glenborough Properties, L.P., a California limited
partnership, as Borrower, Xxxxx Fargo Bank, National Association, in its
capacity as Agent and Lender, and various other Lenders party thereto, dated as
of July 11, 1996, providing for a term loan of Six Million One Hundred Twenty
Thousand Dollars ($6,120,000), as the same may be amended from time to time, or
any of the loan documents relating thereto, or (B) any other Indebtedness of
such party other than the Obligations if the aggregate amount of such other
Indebtedness is One Million Dollars ($1,000,000) or more; or (ii) the holder(s)
of any Lien, in any amount, commence foreclosure of such Lien upon any Property
owned by Borrower, the REIT, any Guarantor Subpartnership, Subsidiary or
Investment Partnership having an aggregate value in excess of One Million
Dollars ($1,000,000); provided, however, that the foregoing $1,000,000
limitation shall be increased to Five Million Dollars
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($5,000,000) in the case of non-recourse Indebtedness, so long as such default
under or foreclosure on such non-recourse Indebtedness shall not give rise to an
Event of Default under Section 10.01(n).
(g) Involuntary Bankruptcy; Appointment of Receiver, etc.
(i) An involuntary case shall be commenced against the REIT,
Borrower, any Guarantor Subpartnership, Subsidiary or Investment
Partnership and the petition shall not be dismissed within sixty
(60) days after commencement of the case, or a court having
jurisdiction shall enter a decree or order for relief in respect
of any such Person in an involuntary case, under any applicable
bankruptcy, insolvency or other similar law now or hereinafter in
effect; or any other similar relief shall be granted under any
applicable federal, state or foreign law; or
(ii) A decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator,
sequestrator, trustee, custodian or other officer having similar
powers over the REIT, Borrower, any Guarantor Subpartnership,
Subsidiary or Investment Partnership, or over all or a
substantial part of the property of any such Person, shall be
entered; or an interim receiver, trustee or other custodian of
any such Person or of all or a substantial part of the property
of any such Person, shall be appointed or a warrant of
attachment, execution or similar process against any substantial
part of the property of any such Person, shall be issued and any
such event shall not be stayed, vacated, dismissed, bonded or
discharged within sixty (60) days of entry, appointment or
issuance.
(h) Voluntary Bankruptcy; Appointment of Receiver, Etc. The REIT,
Borrower, any Guarantor Subpartnership, Subsidiary, or Investment Partnership
shall have an order for relief entered with respect to it or commence a
voluntary case under any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, or shall consent to the entry of an order for relief
in an involuntary case, or to the conversion of an involuntary case to a
voluntary case, under any such law, or shall consent to the appointment of or
taking of possession by a receiver, trustee or other custodian for all or a
substantial part of its property; any such Person shall make any assignment for
the benefit of creditors or shall be unable or fail, or admit in writing its
inability, to pay its debts as such debts become due; or the general partner of
Borrower, any Guarantor Subpartnership, Subsidiary or Investment Partnership or
the REIT's Board of Directors (or any committee thereof) adopts any
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resolution or otherwise authorizes any action to approve any of the foregoing.
(i) Judgments and Attachments. (i) Any money judgment (other than a
money judgment covered by insurance but only if the insurer has admitted
liability with respect to such money judgment), writ or warrant of attachment,
or similar process involving in any case an amount in excess of One Million
Dollars ($1,000,000) shall be entered or filed against the REIT, Borrower, any
Guarantor Subpartnership, Subsidiary or Investment Partnership or their
respective assets and shall remain undischarged, unvacated, unbonded or unstayed
for a period of thirty (30) days, or (ii) any judgment or order of any court or
administrative agency awarding material damages shall be entered against any
such Person in any action under the Federal securities laws seeking rescission
of the purchase or sale of, or for damages arising from the purchase or sale of,
any Securities, such judgment or order shall have become final after exhaustion
of all available appellate remedies and, in Agent's judgment, the payment of
such judgment or order would have a Material Adverse Effect on such Person.
(j) Dissolution. Any order, judgment or decree shall be entered
against the REIT, Borrower, any Guarantor Subpartnership, Subsidiary or
Investment Partnership decreeing its involuntary dissolution or split up and
such order shall remain undischarged and unstayed for a period in excess of
thirty (30) days; or the REIT, Borrower or any Guarantor Subpartnership shall
otherwise dissolve or cease to exist.
(k) Loan Documents; Failure of Security or Subordination. Except as
provided in Section 3.02, if for any reason any Loan Document shall cease to be
in full force and effect or any Lien intended to be created thereby shall cease
to be or is not valid or perfected; or any Lien in favor of Agent contemplated
by this Agreement or any Loan Document shall, at any time, be invalidated or
otherwise cease to be in full force and effect; or any such Lien or any
Obligation shall be subordinated or shall not have the priority contemplated by
this Agreement or the Loan Documents for any reason, and, in the case of any of
the foregoing, such condition or event shall continue for fifteen (15) days
after Borrower, the REIT or any Guarantor Subpartnership knew of such condition
or event.
(l) ERISA Liabilities. Any Termination Event occurs which will or is
reasonably likely to subject Borrower, the REIT or any Guarantor Subpartnership
or any ERISA Affiliate of any of them to a liability which Agent reasonably
determines will have a Material Adverse Effect on Borrower, the REIT or any
Guarantor Subpartnership, or the plan administrator of any Benefit Plan applies
for approval under Section 412(d) of the Internal Revenue Code for a waiver of
the minimum funding standards of Section 412(a) of the Internal Revenue Code and
Agent reasonably determines that the business hardship upon which the Section
82
412(d) waiver was based will or would reasonably be anticipated to subject
Borrower, the REIT or any Guarantor Subpartnership to a liability which Agent
determines will have a Material Adverse Effect on Borrower, the REIT or any
Guarantor Subpartnership.
(m) Environmental Liabilities. Borrower, the REIT or any Guarantor
Subpartnership becomes subject to any Liabilities and Costs which Agent
reasonably deems to have a Material Adverse Effect on such Person arising out of
or related to (i) the Release or threatened Release at any Property of any
Contaminant into the environment, or any Remedial Action in response thereto, or
(ii) otherwise any violation of any Environmental Laws.
(n) Solvency; Material Adverse Change. Borrower, any Guarantor
Subpartnership or the REIT shall cease to be Solvent, or there shall have
occurred any material adverse change in the business, operations, properties,
assets or condition (financial or otherwise) of Borrower, the REIT or any
Guarantor Subpartnership.
(o) Breach of Guaranty. The REIT shall fail to duly and punctually
perform or observe any agreement, covenant or obligation under its Guaranty, or
any Guarantor Subpartnership shall fail to duly and punctually perform or
observe any agreement, covenant or obligation under its Guaranty or any Mortgage
Document.
An Event of Default shall be deemed "continuing" until cured or
waived in writing in accordance with Section 12.04.
10.02 Rights and Remedies.
(a) Acceleration, Etc.. Upon the occurrence of any Event of Default
described in the foregoing Section 10.01(g) or 10.01(h) with respect to the
REIT, Borrower or any Guarantor Subpartnership, the Commitments shall
automatically and immediately terminate and the unpaid principal amount of and
any and all accrued interest on the Loans shall automatically become immediately
due and payable, with all additional interest from time to time accrued thereon
and without presentment, demand or protest or other requirements of any kind
(including, without limitation, valuation and appraisement, diligence,
presentment, notice of intent to demand or accelerate or notice of
acceleration), all of which are hereby expressly waived by Borrower, and the
obligations of Lenders to make any Loans hereunder shall thereupon terminate;
and upon the occurrence and during the continuance of any other Event of
Default, Agent shall, at the request, or may, with the consent of Requisite
Lenders, by written notice to Borrower, (i) declare that the Commitments are
terminated, whereupon the Commitments and the obligation of Lenders to make any
Loan hereunder shall immediately terminate, and/or (ii) declare the unpaid
principal amount of, any and all accrued and unpaid interest on the Loans and
all of the other Obligations to be, and the same shall
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thereupon be, immediately due and payable with all additional interest from time
to time accrued thereon and without presentment, demand, or protest or other
requirements of any kind (including without limitation, valuation and
appraisement, diligence, presentment, notice of intent to demand or accelerate
and of acceleration), all of which are hereby expressly waived by Borrower.
Without limiting Agent's authority hereunder, on or after the Maturity Date,
Agent shall, at the request, or may, with the consent, of Requisite Lenders
exercise any or all rights and remedies under the Loan Documents or applicable
law, including, without limitation, foreclosure upon all or any part of the
Collateral.
(b) Access to Information. If an Event of Default then exists, Agent
shall have, in addition to and not by way of a limitation of any other rights
and remedies contained in this Agreement or in the other Loan Documents, the
right within forty-eight (48) hours after notice to Borrower to obtain access to
Borrower's, the REIT's and each Guarantor Subpartnership's records (including
computerized information, files and supporting software) relating to the
Borrowing Base Properties and the other Collateral, and its accounting
information relating to the Borrowing Base Properties and the other Collateral,
and to use all of the foregoing and the information contained therein in any
manner Agent deems appropriate which is related to the preservation or
disposition of the Borrowing Base Properties and the other Collateral or to the
collection of the Obligations. Borrower hereby authorizes any accountant or
management agent employed by Borrower or any Guarantor Subpartnership to deliver
such items and information to Agent. Notwithstanding anything to the contrary
contained in the Loan Documents, upon the occurrence of and during the
continuance of an Event of Default, Agent shall be entitled to request and
receive, by or through Borrower or appropriate legal process, any and all
information concerning the REIT, Borrower, any Guarantor Subpartnership or any
property of any of them, which is reasonably available to or obtainable by
Borrower.
(c) Use of Intangibles. To the extent Borrower has the power,
without violating the terms of any agreement existing as of the Closing Date, to
grant such a license, Agent (on behalf of all Lenders) is hereby granted a
license or other right to use, without charge, Borrower's and each Guarantor
Subpartnership's copyrights, rights of use of any name, trade secrets, trade
names, tradestyles, trademarks, service marks and advertising matter, or any
property of a similar nature, as it pertains to the Collateral.
(d) Waiver of Demand. Demand, presentment, protest and notice of
nonpayment are hereby waived by Borrower. Borrower also waives, to the extent
permitted by law, the benefit of all valuation, appraisal and exemption laws.
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(e) Waivers, Amendments and Remedies. No delay or omission of Agent
or Lenders to exercise any right under any Loan Document shall impair such right
or be construed to be a waiver of any Event of Default or an acquiescence
therein, and any single or partial exercise of any such right shall not preclude
other or further exercise thereof or the exercise of any other right, and no
waiver, amendment or other variation of the terms, conditions or provisions of
the Loan Documents whatsoever shall be valid unless in a writing signed by Agent
after obtaining written approval thereof or the signature thereon of those
Lenders required to approve such waiver, amendment or other variation, and then
only to the extent in such writing specifically set forth. All remedies
contained in the Loan Documents or by law afforded shall be cumulative and all
shall be available to Agent and Lenders until the Obligations have been paid in
full, the Commitments have expired or terminated and this Agreement has been
terminated.
10.03 Rescission. If at any time after acceleration of the maturity of the
Loans, Borrower shall pay all arrears of interest and all payments on account of
principal of the Loans which shall have become due otherwise than by
acceleration (with interest on principal and, to the extent permitted by law, on
overdue interest, at the rates specified in this Agreement) and all Events of
Default and Unmatured Events of Default (other than nonpayment of principal of
and accrued interest on the Loans due and payable solely by virtue of
acceleration) shall be remedied or waived pursuant to Section 12.04, then by
written notice to Borrower, Requisite Lenders may elect, in their sole
discretion, to rescind and annul the acceleration and its consequences; but such
action shall not affect any subsequent Event of Default or Unmatured Event of
Default or impair any right or remedy consequent thereon. The provisions of the
preceding sentence are intended merely to bind Lenders to a decision which may
be made at the election of Requisite Lenders; they are not intended to benefit
Borrower and do not give Borrower the right to require Lenders to rescind or
annul any acceleration hereunder, even if the conditions set forth herein are
met.
ARTICLE XI
AGENCY PROVISIONS
11.01 Appointment.
(a) Each Lender hereby (i) designates and appoints Xxxxx Fargo as
Agent of such Lender under this Agreement and the Loan Documents, (ii)
authorizes and directs Agent to enter into the Loan Documents other than this
Agreement for the benefit of Lenders, and (iii) authorizes Agent to take such
action on its behalf under the provisions of this Agreement and the Loan
Documents and to exercise such powers as are set forth herein or therein,
together with such other powers as are reasonably inci-
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dental thereto, subject to the limitations referred to in Sections 11.10(a) and
11.10(b). Agent agrees to act as such on the express conditions contained in
this Article XI.
(b) The provisions of this Article XI are solely for the benefit of
Agent and Lenders, and Borrower shall not have any rights to rely on or enforce
any of the provisions hereof (other than as expressly set forth in Sections
11.03, 11.09 and 12.20, provided, however, that the foregoing shall in no way
limit Borrower's obligations under this Article XI. In performing its functions
and duties under this Agreement, Agent shall act solely as Agent of Lenders and
does not assume and shall not be deemed to have assumed any obligation toward or
relationship of agency or trust with or for Borrower or any other Person.
11.02 Nature of Duties. Agent shall not have any duties or responsibilities
except those expressly set forth in this Agreement or in the Loan Documents. The
duties of Agent shall be administrative in nature. Subject to the provisions of
Sections 11.05 and 11.07, Agent shall administer the Loans in the same manner as
it administers its own loans. Promptly following the effectiveness of this
Agreement, Agent shall send to each Lender its originally executed Note and the
executed original, to the extent the same are available in sufficient numbers,
of each other Loan Document other than the Notes in favor of other Lenders and
filed or recorded security document or instruments, with the latter to be held
and retained by Agent for the benefit of all Lenders. Agent shall not have by
reason of this Agreement a fiduciary relationship in respect of any Lender.
Nothing in this Agreement or any of the Loan Documents, expressed or implied, is
intended or shall be construed to impose upon Agent any obligation in respect of
this Agreement or any of the Loan Documents except as expressly set forth herein
or therein. Each Lender shall make its own independent investigation of the
financial condition and affairs of the REIT, Borrower, each Guarantor
Subpartnership and each Borrowing Base Property in connection with the making
and the continuance of the Loans hereunder and shall make its own appraisal of
the creditworthiness of the REIT, Borrower, each Guarantor Subpartnership and
each Borrowing Base Property, and, except as specifically provided herein, Agent
shall not have any duty or responsibility, either initially or on a continuing
basis, to provide any Lender with any credit or other information with respect
thereto, whether coming into its possession before the Closing Date or at any
time or times thereafter.
11.03 Loan Disbursements.
(a) Not later than the next Business Day following receipt of a
Notice of Borrowing, Agent shall send a copy thereof by facsimile to each other
Lender and shall otherwise notify each Lender of the proposed Borrowing and the
Funding Date. Each Lender shall make available to Agent (or the funding bank or
entity designated by Agent), the amount of such Lender's Pro Rata
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Share of such Borrowing in immediately available funds not later than the times
designated in Section 11.03(b). Unless Agent shall have been notified by any
Lender not later than the close of business (San Francisco time) on the Business
Day immediately preceding the Funding Date in respect of any Borrowing that such
Lender does not intend to make available to Agent such Lender's Pro Rata Share
of such Borrowing, Agent may assume that such Lender shall make such amount
available to Agent. If any Lender does not notify Agent of its intention not to
make available its Pro Rata Share of such Borrowing as described above, but does
not for any reason make available to Agent such Lender's Pro Rata Share of such
Borrowing, such Lender shall pay to Agent forthwith on demand such amount,
together with interest thereon at the Federal Funds Rate. In any case where a
Lender does not for any reason make available to Agent such Lender's Pro Rata
Share of such Borrowing, Agent, in its sole discretion, may, but shall not be
obligated to, fund to Borrower such Lender's Pro Rata Share of such Borrowing.
If Agent funds to Borrower such Lender's Pro Rata Share of such Borrowing and if
such Lender subsequently pays to Agent such corresponding amount, such amount so
paid shall constitute such Lender's Pro Rata Share of such Borrowing. Nothing in
this Section 11.03(a) shall alter the respective rights and obligations of the
parties hereunder in respect of a Defaulting Lender or a Non-Pro Rata Loan.
(b) Requests by Agent for funding by Lenders of Loans will be made
by telecopy. Each Lender shall make the amount of its Loan available to Agent in
Dollars and in immediately available funds, to such bank and account, in El
Segundo, California as Agent may designate, not later than 9:00 A.M. (San
Francisco time) on the Funding Date designated in the Notice of Borrowing with
respect to such Loan, but in no event earlier than two (2) Business Days
following Lender's receipt of the applicable Notice of Borrowing.
(c) Nothing in this Section 11.03 shall be deemed to relieve any
Lender of its obligation hereunder to make its Pro Rata Share of Loans on any
Funding Date, nor shall any Lender be responsible for the failure of any other
Lender to perform its obligations to make any Loan hereunder, and the Commitment
of any Lender shall not be increased or decreased as a result of the failure by
any other Lender to perform its obligation to make a Loan.
11.04 Distribution and Apportionment of Payments.
(a) Subject to Section 11.04(b), payments actually received by Agent
for the account of Lenders shall be paid to them promptly after receipt thereof
by Agent, but in any event within one (1) Business Day, provided that Agent
shall pay to Lenders interest thereon, at the Federal Funds Rate from the
Business Day following receipt of such funds by Agent until such funds are paid
in immediately available funds to Lenders. Subject to Section 11.04(b), all
payments of principal and
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interest in respect of outstanding Loans, all payments of the fees described in
this Agreement, and all payments in respect of any other Obligations shall be
allocated among such other Lenders as are entitled thereto, in proportion to
their respective Pro Rata Shares or otherwise as provided herein. Agent shall
promptly distribute, but in any event within one (1) Business Day, to each
Lender at its primary address set forth on the appropriate signature page hereof
or on the Assignment and Assumption, or at such other address as a Lender may
request in writing, such funds as it may be entitled to receive, provided that
Agent shall in any event not be bound to inquire into or determine the validity,
scope or priority of any interest or entitlement of any Lender and may suspend
all payments and seek appropriate relief (including, without limitation,
instructions from Requisite Lenders or all Lenders, as applicable, or an action
in the nature of interpleader) in the event of any doubt or dispute as to any
apportionment or distribution contemplated hereby. The order of priority herein
is set forth solely to determine the rights and priorities of Lenders as among
themselves and may at any time or from time to time be changed by Lenders as
they may elect, in writing in accordance with Section 12.04, without necessity
of notice to or consent of or approval by Borrower or any other Person. All
payments or other sums received by Agent for the account of Lenders (including,
without limitation, principal and interest payments, the proceeds of any and all
insurance maintained with respect to any of the Collateral, and any and all
condemnation proceeds with respect to any of the Collateral) shall not
constitute property or assets of the Agent and shall be held by Agent, solely in
its capacity as agent for itself and the other Lenders, subject to the Loan
Documents.
(b) Notwithstanding any provision hereof to the contrary, until such
time as a Defaulting Lender has funded its Pro Rata Loan which was previously a
Non Pro Rata Loan, or all other Lenders have received payment in full (whether
by repayment or prepayment) of the principal and interest due in respect of such
Non Pro Rata Loan, all of the Obligations owing to such Defaulting Lender
hereunder shall be subordinated in right of payment, as provided in the
following sentence, to the prior payment in full of all principal, interest and
fees in respect of all Non Pro Rata Loans in which the Defaulting Lender has not
funded its Pro Rata Share (such principal, interest and fees being referred to
as "Senior Loans"). All amounts paid by Borrower and otherwise due to be applied
to the Obligations owing to the Defaulting Lender pursuant to the terms hereof
shall be distributed by Agent to the other Lenders in accordance with their
respective Pro Rata Shares (recalculated for purposes hereof to exclude the
Defaulting Lender's Commitment), until all Senior Loans have been paid in full.
This provision governs only the relationship among Agent, each Defaulting
Lender, and the other Lenders; nothing hereunder shall limit the obligation of
Borrower to repay all Loans in accordance with the terms of this Agreement. The
provisions of this section shall apply and be
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effective regardless of whether an Event of Default occurs and is then
continuing, and notwithstanding (i) any other provision of this Agreement to the
contrary, (ii) any instruction of Borrower as to its desired application of
payments or (iii) the suspension of such Defaulting Lender's right to vote on
matters which are subject to the consent or approval of Requisite Lenders or all
Lenders. No Unused Facility Fee shall accrue in favor of, or be payable to, such
Defaulting Lender from the date of any failure to fund Loans or reimburse Agent
for any Liabilities and Costs as herein provided until such failure has been
cured, and Agent shall be entitled to (A) withhold or setoff, and to apply to
the payment of the defaulted amount and any related interest, any amounts to be
paid to such Defaulting Lender under this Agreement, and (B) bring an action or
suit against such Defaulting Lender in a court of competent jurisdiction to
recover the defaulted amount and any related interest. In addition, the
Defaulting Lender shall indemnify, defend and hold Agent and each of the other
Lenders harmless from and against any and all Liabilities and Costs, plus
interest thereon at the Default Rate, which they may sustain or incur by reason
of or as a direct consequence of the Defaulting Lender's failure or refusal to
abide by its obligations under this Agreement.
11.05 Rights, Exculpation, Etc. Neither Agent, any Affiliate of Agent, nor
any of their respective officers, directors, employees, agents, attorneys or
consultants, shall be liable to any Lender for any action taken or omitted by
them hereunder or under any of the Loan Documents, or in connection herewith or
therewith, except that Agent shall be liable for its gross negligence or willful
misconduct. In the absence of gross negligence or willful misconduct, Agent
shall not be liable for any apportionment or distribution of payments made by it
in good faith pursuant to Section 11.04, and if any such apportionment or
distribution is subsequently determined to have been made in error the sole
recourse of any Person to whom payment was due, but not made, shall be to
recover from the recipients of such payments any payment in excess of the amount
to which they are determined to have been entitled. Agent shall not be
responsible to any Lender for any recitals, statements, representations or
warranties herein or for the execution, effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement, any of the
Mortgage Documents or any of the other Loan Documents, or any of the
transactions contemplated hereby and thereby; or for the financial condition of
the REIT, Borrower, any Guarantor Subpartnership or any of their Affiliates.
Agent shall not be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or conditions of this
Agreement or any of the Loan Documents or the financial condition of the REIT,
Borrower, any Guarantor Subpartnership or any of their Affiliates, or the
existence or possible existence of any Unmatured Event of Default or Event of
Default.
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11.06 Reliance. Agent shall be entitled to rely upon any written notices,
statements, certificates, orders or other documents, telecopies or any telephone
message believed by it in good faith to be genuine and correct and to have been
signed, sent or made by the proper Person, and with respect to all matters
pertaining to this Agreement or any of the Loan Documents and its duties
hereunder or thereunder, upon advice of legal counsel (including counsel for
Borrower), independent public accountant and other experts selected by it.
11.07 Indemnification. To the extent that Agent is not reimbursed and
indemnified by Borrower, Lenders will reimburse, within ten (10) Business Days
after notice from Agent, and indemnify and defend Agent for and against any and
all Liabilities and Costs which may be imposed on, incurred by, or asserted
against it in any way relating to or arising out of this Agreement, the Mortgage
Documents or any of the other Loan Documents or any action taken or omitted by
Agent or under this Agreement, the Mortgage Documents or any of the other Loan
Documents, in proportion to each Lender's Pro Rata Share; provided that no
Lender shall be liable for any portion of such Liabilities and Costs resulting
from Agent's gross negligence or willful misconduct. The obligations of Lenders
under this Section 11.07 shall survive the payment in full of all Obligations
and the termination of this Agreement. In the event that after payment and
distribution of any amount by Agent to Lenders, any Lender or third party,
including Borrower, any creditor of Borrower or a trustee in bankruptcy,
recovers from Agent any amount found to have been wrongfully paid to Agent or
disbursed by Agent to Lenders, then Lenders, in proportion to their respective
Pro Rata Shares, shall reimburse Agent for all such amounts. Notwithstanding the
foregoing, Agent shall not be obligated to advance Liabilities and Costs and may
require the deposit by each Lender of its Pro Rata Share of any material
Liabilities and Costs anticipated by Agent before they are incurred or made
payable.
11.08 Agent Individually. With respect to its Pro Rata Share of the
Commitments hereunder and the Loans made by it, Agent shall have and may
exercise the same rights and powers hereunder and is subject to the same
obligations and liabilities as and to the extent set forth herein for any other
Lender. The terms "Lenders", "Requisite Lenders" or any similar terms may
include Agent in its individual capacity as a Lender or one of the Requisite
Lenders, but Requisite Lenders shall not include Agent solely in its capacity as
Agent and need not necessarily include Agent in its capacity as a Lender. Agent
and any Lender and its Affiliates may accept deposits from, lend money to, and
generally engage in any kind of banking, trust or other business with Borrower
or any of its Affiliates as if it were not acting as Agent or Lender pursuant
hereto.
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11.09 Successor Agent; Resignation of Agent; Removal of Agent.
(a) Agent may resign from the performance of all its functions and
duties hereunder at any time by giving at least thirty (30) Business Days' prior
written notice to Lenders and Borrower, and shall automatically cease to be
Agent hereunder in the event a petition in bankruptcy shall be filed by or
against Agent or the Federal Deposit Insurance Corporation or any other
Governmental Authority shall assume control of Agent or Agent's interests under
the Facility. Further, Lenders (other than Agent) may unanimously remove Agent
at any time for good cause by giving at least thirty (30) Business Days' prior
written notice to Agent, Borrower and all other Lenders. Such resignation or
removal shall take effect upon the acceptance by a successor Agent of
appointment pursuant to clause (b) or (c).
(b) Upon any such notice of resignation by or removal of Agent,
Requisite Lenders shall appoint a successor Agent which appointment shall be
subject to Borrower's consent (other than upon the occurrence and during the
continuance of any Event of Default), which shall not be unreasonably withheld
or delayed. Any successor Agent must be a bank (i) the senior debt obligations
of which (or such bank's parent's senior unsecured debt obligations) are rated
not less than Baa-2 by Xxxxx'x Investors Services, Inc. or a comparable rating
by a rating agency acceptable to Requisite Lenders and (ii) which has total
assets in excess of Ten Billion Dollars ($10,000,000,000). Such successor Agent
shall separately confirm in writing with Borrower the fee to be paid to such
Agent pursuant to Section 2.05(b).
(c) If a successor Agent shall not have been so appointed within
said thirty (30) Business Day period, the retiring or removed Agent, with the
consent of Borrower (other than upon the occurrence and during the continuance
of any Event of Default)(which may not be unreasonably withheld or delayed),
shall then appoint a successor Agent who shall meet the requirements described
in subsection (b) above and who shall serve as Agent until such time, if any, as
Requisite Lenders, with the consent of Borrower (other than upon the occurrence
and during the continuance of any Event of Default), appoint a successor Agent
as provided above.
11.10 Consent and Approvals.
(a) Each consent, approval, amendment, modification or waiver
specifically enumerated in this Section 11.10(a) shall require the consent of
Requisite Lenders:
(i) Approval of any material amendment of organizational
documents (Section 8.02);
(ii) Approval of certain changes in the executive officer(s)
(Section 8.06);
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(iii) Acceleration following an Event of Default (Section
10.02(a)) or rescission of such acceleration (Section 10.03);
(iv) Approval of the exercise of rights and remedies under
the Loan Documents following an Event of Default (Section
10.02(a));
(v) Approval of certain Protective Advances (Section
11.11(a));
(vi) Approval of a Post-Foreclosure Plan and related matters
(Section 11.11(e));
(vii) Approval of a change in the method of calculation of
any financial covenants, standards or terms as a result a change
in accounting principal (Section 12.03); and
(viii) Except as referred to in subsection (b) below,
approval of any amendment, modification or termination of this
Agreement, or waiver of any provision herein (Section 12.04).
(b) Each consent, approval, amendment, modification or waiver
specifically enumerated in Section 12.04 shall require the consent of all
Lenders.
(c) In addition to the required consents or approvals referred to in
subsection (a) above, Agent may at any time request instructions from Requisite
Lenders with respect to any actions or approvals which, by the terms of this
Agreement or of any of the Loan Documents, Agent is permitted or required to
take or to grant without instructions from any Lenders, and if such instructions
are promptly requested, Agent shall be absolutely entitled to refrain from
taking any action or to withhold any approval and shall not be under any
liability whatsoever to any Person for refraining from taking any action or
withholding any approval under any of the Loan Documents until it shall have
received such instructions from Requisite Lenders. Without limiting the
foregoing, no Lender shall have any right of action whatsoever against Agent as
a result of Agent acting or refraining from acting under this Agreement, the
Mortgage Documents or any of the other Loan Documents in accordance with the
instructions of Requisite Lenders or, where applicable, all Lenders. Agent shall
promptly notify each Lender at any time that the Requisite Lenders have
instructed Agent to act or refrain from acting pursuant hereto.
(d) Each Lender agrees that any action taken by Agent at the
direction or with the consent of Requisite Lenders in accordance with the
provisions of this Agreement or any Loan Document, and the exercise by Agent at
the direction or with the consent of Requisite Lenders of the powers set forth
herein or
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therein, together with such other powers as are reasonably incidental thereto,
shall be authorized and binding upon all Lenders, except for actions
specifically requiring the approval of all Lenders. All communications from
Agent to Lenders requesting Lenders' determination, consent, approval or
disapproval (i) shall be given in the form of a written notice to each Lender,
(ii) shall be accompanied by a description of the matter or thing as to which
such determination, approval, consent or disapproval is requested, or shall
advise each Lender where such matter or thing may be inspected, or shall
otherwise describe the matter or issue to be resolved, (iii) shall include, if
reasonably requested by a Lender and to the extent not previously provided to
such Lender, written materials and a summary of all oral information provided to
Agent by Borrower in respect of the matter or issue to be resolved, and (iv)
shall include Agent's recommended course of action or determination in respect
thereof. Each Lender shall reply promptly, but in any event within ten (10)
Business Days (the "Lender Reply Period"). Unless a Lender shall give written
notice to Agent that it objects to the recommendation or determination of Agent
(together with a written explanation of the reasons behind such objection)
within the Lender Reply Period, such Lender shall be deemed to have approved of
or consented to such recommendation or determination. With respect to decisions
requiring the approval of Requisite Lenders or all Lenders, Agent shall submit
its recommendation or determination for approval of or consent to such
recommendation or determination to all Lenders and upon receiving the required
approval or consent shall follow the course of action or determination
recommended to Lenders by Agent or such other course of action recommended by
Requisite Lenders, and each non-responding Lender shall be deemed to have
concurred with such recommended course of action.
11.11 Agency Provisions Relating to Collateral.
(a) Agent is hereby authorized on behalf of all Lenders, without
the necessity of any notice to or further consent from any Lender, from time to
time prior to an Event of Default, to take any action with respect to any
Collateral or Loan Document which may be necessary to perfect and maintain
perfected Agent's Liens upon the Collateral granted pursuant to the Loan
Documents. Agent may make, and shall be reimbursed by Lenders (in accordance
with their Pro Rata Shares), to the extent not reimbursed by Borrower, for,
Protective Advance(s) during any one calendar year with respect to each
Borrowing Base Property up to the sum of (i) amounts expended to pay real estate
taxes, assessments and governmental charges or levies imposed upon such
Borrowing Base Property, (ii) amounts expended to pay insurance premiums for
policies of insurance related to such Borrowing Base Property, and (iii) One
Hundred Thousand Dollars ($100,000). Protective Advances in excess of said sum
during any calendar year for any Borrowing Base Property shall require the
consent of Requisite Lenders. In addition, Agent is hereby authorized on behalf
of all Lenders, without the necessity of any notice to or
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further consent from any Lender, to waive the imposition of the late fees
provided for in Section 2.04(e) up to a maximum of two (2) times per calendar
year, including any extensions.
(b) Lenders hereby irrevocably authorize Agent, at its option and
in its discretion, to release any Lien granted to or held by Agent upon any
Collateral (i) upon termination of the Commitments and repayment and
satisfaction of all Loans, and all other Obligations and the termination of this
Agreement, or (ii) constituting property being released in compliance with
Section 3.02, or (iii) if approved, authorized or ratified in writing by Agent
at the direction of all Lenders. Without in any manner limiting Agent's
authority to act without any specific or further authorization or consent, upon
request by Agent at any time, Requisite Lenders will confirm in writing Agent's
authority to release the Mortgage Documents with respect to any Borrowing Base
Property pursuant to Section 3.02. Agent shall not be required to execute any
document to evidence the release of the Liens granted to Agent for the benefit
of Lenders herein or pursuant hereto upon any Collateral if, in Agent's opinion,
such document would expose Agent to liability or create any obligation or entail
any consequence other than the release of such Liens without recourse or
warranty, and such release shall not in any manner discharge, affect or impair
the Obligations or any Liens upon (or obligations of Borrower in respect of) any
Property which shall continue to constitute part of the Collateral.
(c) Except as provided in this Agreement, Agent shall have no
obligation whatsoever to any Lender or to any other Person to assure that the
Collateral exists or is owned by Borrower or is cared for, protected or insured
or has been encumbered or that the Liens granted to Agent herein or in any of
the other Loan Documents or pursuant hereto or thereto have been properly or
sufficiently or lawfully created, perfected, protected or enforced or are
entitled to any particular priority.
(d) Should Agent (i) employ counsel for advice or other
representation (whether or not any suit has been or shall be filed) with respect
to any Collateral or any part thereof, or any of the Loan Documents, or the
attempt to enforce any security interest or Lien on any of the Collateral, or
(ii) commence any proceeding or in any way seek to enforce its rights or
remedies under the Loan Documents, irrespective of whether as a result thereof
Agent shall acquire title to any Collateral, either through foreclosure, deed in
lieu of foreclosure or otherwise, each Lender, upon demand therefor from time to
time, shall contribute its share (based on its Pro Rata Share) of the reasonable
costs and/or expenses of any such advice or other representation, enforcement or
acquisition, including, but not limited to, fees of receivers or trustees, court
costs, title company charges, filing and recording fees, appraisers' fees and
fees and expenses of attorneys to the extent not otherwise reimbursed by
Borrower; provided that Agent shall not be entitled to reimbursement of its
attorneys' fees and expenses incurred in
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connection with the resolution of disputes between Agent and other Lenders
unless Agent shall be the prevailing party in any such dispute. Any loss of
principal and interest resulting from any Event of Default shall be shared by
Lenders in accordance with their respective Pro Rata Shares. It is understood
and agreed that in the event Agent determines it is necessary to engage counsel
for Lenders from and after the occurrence of an Event of Default, said counsel
shall be selected by Agent.
(e) In the event that all or any portion of the Collateral is
acquired by Agent as the result of a foreclosure or the acceptance of a deed or
assignment in lieu of foreclosure, or is retained in satisfaction of all or any
part of Borrower's or any Guarantor Subpartnership's obligations, title to any
such Collateral or any portion thereof shall be held in the name of Agent or a
nominee or subsidiary of Agent, as agent, for the ratable benefit of Agent and
Lenders. Agent shall prepare a recommended course of action for such Collateral
(the "Post-Foreclosure Plan"), which shall be subject to the approval of the
Requisite Lenders. In the event that Requisite Lenders do not approve such
Post-Foreclosure Plan, any Lender shall be permitted to submit an alternative
Post-Foreclosure Plan to Agent, and Agent shall submit any and all such
additional Post-Foreclosure Plans to the Lenders for evaluation and the
approval of Requisite Lenders. In accordance with the approved Post-Foreclosure
Plan, Agent shall manage, operate, repair, administer, complete, construct,
restore or otherwise deal with the Collateral acquired and administer all
transactions relating thereto, including, without limitation, employing a
management agent, leasing agent and other agents, contractors and employees,
including agents of the sale of such Collateral, and the collecting of rents and
other sums from such Collateral and paying the expenses of such Collateral;
actions taken by Agent with respect to the Collateral, which are not provided
for in the approved Post-Foreclosure Plan or reasonably incidental thereto,
shall require the consent of Requisite Lenders by way of supplement to such
Plan. Upon demand therefor from time to time, each Lender will contribute its
share (based on its Pro Rata Share) of all reasonable costs and expenses
incurred by Agent pursuant to the Post-Foreclosure Plan in connection with the
construction, operation, management, maintenance, leasing and sale of such
Collateral. In addition, Agent shall render or cause to be rendered by the
managing agent, to each of the Lenders, monthly, an income and expense statement
for such Collateral, and each of the Lenders shall promptly contribute its Pro
Rata Share of any operating loss for such Collateral, and such other expenses
and operating reserves as Agent shall deem reasonably necessary pursuant to and
in accordance with the Post-Foreclosure Plan. To the extent there is net
operating income from such Collateral, Agent shall, in accordance with the
Post-Foreclosure Plan, determine the amount and timing of distributions to
Lenders. All such distributions shall be made to Lenders in accordance with
their respective Pro Rata Shares. Lenders acknowledge that if title to any
Collateral is obtained
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by Agent or its nominee, such Collateral will not be held as a permanent
investment but will be liquidated as soon as practicable. Agent shall undertake
to sell such Collateral, at such price and upon such terms and conditions as the
Requisite Lenders shall reasonably determine to be most advantageous. Any
purchase money mortgage or deed of trust taken in connection with the
disposition of such Collateral in accordance with the immediately preceding
sentence shall name Agent, as agent for Lenders, as the beneficiary or
mortgagee. In such case, Agent and Lenders shall enter into an agreement with
respect to such purchase money mortgage defining the rights of Lenders in the
same Pro Rata Shares as provided hereunder, which agreement shall be in all
material respects similar to this Article XI insofar as the same is appropriate
or applicable.
11.12 Lender Actions Against Collateral. Each Lender agrees that it will
not take any action, nor institute any actions or proceedings, against Borrower,
the REIT, any Guarantor Subpartnership or any other obligor hereunder, under the
Mortgage Documents or under any other Loan Documents with respect to exercising
claims against or rights in any Collateral without the consent of Requisite
Lenders.
11.13 Ratable Sharing. Subject to Sections 11.03 and 11.04, Lenders agree
among themselves that (i) with respect to all amounts received by them which are
applicable to the payment of the Obligations, equitable adjustment will be made
so that, in effect, all such amounts will be shared among them ratably in
accordance with their Pro Rata Shares, whether received by voluntary payment, by
counterclaim or cross action or by the enforcement of any or all of the
Obligations, or the Collateral, (ii) if any of them shall by voluntary payment
or by the exercise of any right of counterclaim or otherwise, receive payment of
a proportion of the aggregate amount of the Obligations held by it which is
greater than its Pro Rata Share of the payments on account of the Obligations,
the one receiving such excess payment shall purchase, without recourse or
warranty, an undivided interest and participation (which it shall be deemed to
have done simultaneously upon the receipt of such payment) in such Obligations
owed to the others so that all such recoveries with respect to such Obligations
shall be applied ratably in accordance with their Pro Rata Shares; provided,
that if all or part of such excess payment received by the purchasing party is
thereafter recovered from it, those purchases shall be rescinded and the
purchase prices paid for such participations shall be returned to that party to
the extent necessary to adjust for such recovery, but without interest except to
the extent the purchasing party is required to pay interest in connection with
such recovery. Borrower agrees that any Lender so purchasing a participation
from another Lender pursuant to this Section 11.13 may, to the fullest extent
permitted by law, exercise all its rights of payment with respect to such
participation as fully as if such Lender were the direct creditor of Borrower in
the amount of such participation. No Lender shall exercise any setoff,
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banker's lien or other similar right in respect to any Obligations without the
prior written approval by Agent.
11.14 Delivery of Documents. Agent shall as soon as reasonably practicable
distribute to each Lender at its primary address set forth on the appropriate
counterpart signature page hereof, or at such other address as a Lender may
request in writing, (i) copies of all documents to which such Lender is a party
or of which such Lender is a beneficiary set forth on the Closing Checklist
attached hereto as Exhibit C, (ii) all documents of which Agent receives copies
from Borrower pursuant to Sections 6.01 and 12.06, (iii) all other documents or
information which Agent is required to send to Lenders pursuant to the terms of
this Agreement, (iv) other information or documents received by Agent at the
request of any Lender, and (v) all notices received by Agent pursuant to Section
6.02. In addition, within fifteen (15) Business Days after receipt of a request
in writing from a Lender for written information or documents provided by or
prepared by Borrower, the REIT or any Guarantor Subpartnership or Investment
Partnership, Agent shall deliver such written information or documents to such
requesting Lender if Agent has possession of such written information or
documents in its capacity as Agent or as a Lender.
11.15 Notice of Events of Default. Agent shall not be deemed to have
knowledge or notice of the occurrence of any Unmatured Event of Default or Event
of Default (other than nonpayment of principal of or interest on the Loans)
unless Agent has received notice in writing from a Lender or Borrower referring
to this Agreement or the other Loan Documents, describing such event or
condition and expressly stating that such notice is a notice of an Unmatured
Event of Default or Event of Default. Should Agent receive such notice of the
occurrence of an Unmatured Event of Default or Event of Default, or should Agent
send Borrower a notice of Unmatured Event of Default or Event of Default, Agent
shall promptly give notice thereof to each Lender.
ARTICLE XII
MISCELLANEOUS
12.01 Expenses.
(a) Generally. Borrower agrees upon demand to pay, or reimburse
Agent for, all of Agent's external audit, legal (to the extent incurred
following the Closing Date and not relating to the closing of this Agreement),
appraisal, valuation and investigation expenses and for all other reasonable
out-of-pocket costs and expenses of every type and nature (excluding Lenders'
travel expenses, but including, without limitation, the reasonable fees,
expenses and disbursements of Agent's internal appraisers, environmental
advisors or legal counsel) incurred by Agent at any time (whether prior to, on
or after the date of this
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Agreement) in connection with (i) its own audit and investigation of Borrower
and the Borrowing Base; (ii) the negotiation, preparation and execution of this
Agreement (including, without limitation, the satisfaction or attempted
satisfaction of any of the conditions set forth in Article IV), the Mortgage
Documents and the other Loan Documents and the making of the Loans; (iii) the
review and, if applicable, acceptance of additional Borrowing Base Properties,
including appraisal fees, title charges, recording fees and reasonable
attorneys' fees and costs incurred in connection therewith; (iv) any appraisals
performed pursuant to Section 3.03(a); (v) the creation, perfection or
protection of Agent's Liens on the Collateral (including, without limitation,
any fees and expenses for title and lien searches, local counsel in various
jurisdictions, filing and recording fees and taxes, duplication costs and
corporate search fees); (vi) administration of this Agreement, the other Loan
Documents, the Loans and the Collateral, including, without limitation,
consultation with attorneys in connection therewith and obtaining periodic
Appraisals of the Borrowing Base Properties; and (vii) the protection,
collection or enforcement of any of the Obligations or the Collateral, including
Protective Advances.
(b) After Event of Default. Borrower further agrees to pay, or
reimburse Agent and Lenders, for all reasonable out-of-pocket costs and
expenses, including without limitation reasonable attorneys' fees and
disbursements incurred by Agent or Lenders after the occurrence of an Event of
Default (i) in enforcing any Obligation or in foreclosing against the Collateral
or exercising or enforcing any other right or remedy available by reason of such
Event of Default; (ii) in connection with any refinancing or restructuring of
the credit arrangements provided under this Agreement in the nature of a
"work-out" or in any insolvency or bankruptcy proceeding; (iii) in commencing,
defending or intervening in any litigation or in filing a petition, complaint,
answer, motion or other pleadings in any legal proceeding relating to Borrower,
the REIT or any Guarantor Subpartnership and related to or arising out of the
transactions contemplated hereby; (iv) in taking any other action in or with
respect to any suit or proceeding (whether in bankruptcy or otherwise); (v) in
protecting, preserving, collecting, leasing, selling, taking possession of, or
liquidating any of the Collateral; or (vi) in attempting to enforce or enforcing
any Lien in any of the Collateral or any other rights under the Mortgage
Documents.
12.02 Indemnity. Borrower further agrees to defend, protect, indemnify and
hold harmless Agent, each and all of the Lenders, each of their respective
Affiliates and participants and each of the respective officers, directors,
employees, agents, attorneys and consultants (including, without limitation,
those retained in connection with the satisfaction or attempted satisfaction of
any of the conditions set forth in Article IV) of each of the foregoing
(collectively called the "Indemnitees") from and against any and all Liabilities
and Costs imposed on,
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incurred by, or asserted against such Indemnitees (whether based on any federal
or state laws or other statutory regulations, including, without limitation,
securities and commercial laws and regulations, under common law or in equity,
and based upon contract or otherwise, including any liability and costs arising
as a result of a "prohibited transaction" under ERISA to the extent arising from
or in connection with the past, present or future operations of the REIT,
Borrower or any Guarantor Subpartnership or their respective predecessors in
interest) in any manner relating to or arising out of this Agreement, the
Mortgage Documents or the other Loan Documents, or any act, event or transaction
related or attendant thereto, the making of and participation in the Loans and
the management of the Loans, or the use or intended use of the proceeds of the
Loans (collectively, the "Indemnified Matters"); provided, however, that
Borrower shall have no obligation to an Indemnitee hereunder with respect to (a)
matters for which such Indemnitee has been compensated pursuant to or for which
an exemption is provided in Section 2.04(g) or any other provision of this
Agreement, and (b) Indemnified Matters to the extent caused by or resulting from
the willful misconduct or gross negligence of that Indemnitee, as determined by
a court of competent jurisdiction. To the extent that the undertaking to
indemnify, pay and hold harmless set forth in the preceding sentence may be
unenforceable because it is violative of any law or public policy, Borrower
shall contribute the maximum portion which it is permitted to pay and satisfy
under applicable law, to the payment and satisfaction of all Indemnified Matters
incurred by the Indemnitees.
12.03 Change in Accounting Principles. Except as otherwise provided
herein, if any changes in accounting principles from those used in the
preparation of the most recent financial statements delivered to Agent pursuant
to the terms hereof are hereinafter required or permitted by the rules,
regulations, pronouncements and opinions of the Financial Accounting Standards
Board or the American Institute of Certified Public Accountants (or successors
thereto or agencies with similar functions) and are adopted by the REIT,
Borrower or any Guarantor Subpartnership with the agreement of its independent
certified public accountants and such changes result in a change in the method
of calculation of any of the financial covenants, standards or terms found
herein, the parties hereto agree to enter into negotiations in order to amend
such provisions so as to equitably reflect such changes with the desired result
that the criteria for evaluating the financial condition of Borrower shall be
the same after such changes as if such changes had not been made; provided,
however, that no change in GAAP that would affect the method of calculation of
any of the financial covenants, standards or terms shall be given effect in such
calculations until such provisions are amended, in a manner satisfactory to
Agent and Requisite Lenders, to so reflect such change in accounting principles.
12.04 Amendments and Waivers. (a) No amendment or modification of any
provision of this Agreement shall be effective
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without the written agreement of Requisite Lenders (after notice to all Lenders)
and Borrower (except for amendments to Section 11.04(a) which do not require the
consent of Borrower), and (b) no termination or waiver of any provision of this
Agreement, or consent to any departure by Borrower therefrom (except as
expressly provided in Section 11.11(a) with respect to waivers of late fees),
shall in any event be effective without the written concurrence of Requisite
Lenders (after notice to all Lenders), which Requisite Lenders shall have the
right to grant or withhold at their sole discretion, except that the following
amendments, modifications or waivers shall require the consent of all Lenders:
(i) increasing the Commitments or Lender's Commitments;
(ii) changing the principal amount or final maturity of the Loans
including pursuant to Section 2.01(d);
(iii) reducing the interest rates applicable to the Loans;
(iv) reducing the rates on which fees payable pursuant hereto are
determined;
(v) forgiving or delaying any amount payable or receivable under
Article II (other than late fees in accordance with Section 11.11(a));
(vi) those consents requiring unanimous approval of Lenders pursuant
to Article III (Borrowing Base Properties), including, without limitation,
approval of each Appraised Value pursuant to Section 3.03(a) and approval
of each new Borrowing Base Property and any Permitted Liens pursuant to
Section 3.01;
(vii) changing the definition of "Requisite Lenders", "Loan
Availability", "Pro Rata Shares" or "Borrowing Base Value";
(viii) changing any provision contained in Section 9.02 or Section
9.04;
(ix) removal of Agent and appointment of a successor pursuant to
Section 11.09;
(x) changing any provision contained in this Section 12.04;
(xi) releasing any obligor under any Loan Document or any
Collateral, unless such release is otherwise required or permitted by the
terms of this Agreement, including Section 11.11(b); or
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(xii) consent to assignment by Borrower of all of its duties and
Obligations hereunder pursuant to Section 12.14.
No amendment, modification, termination or waiver of any provision of Article XI
or any other provision referring to Agent shall be effective without the written
concurrence of Agent, but only if such amendment, modification, termination or
waiver alters the obligations or rights of Agent. Any waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it was given. No notice to or demand on Borrower in any case shall entitle
Borrower to any other further notice or demand in similar or other
circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this Section 12.04 shall be binding on each
assignee, transferee or recipient of Agent's or any Lender's Commitment under
this Agreement or the Loans at the time outstanding.
12.05 Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or be otherwise within the limitations of, another covenant shall not avoid
the occurrence of an Event of Default or Unmatured Event of Default if such
action is taken or condition exists, and if a particular action or condition is
expressly permitted under any covenant, unless expressly limited to such
covenant, the fact that it would not be permitted under the general provisions
of another covenant shall not constitute an Event of Default or Unmatured Event
of Default if such action is taken or condition exists.
12.06 Notices and Delivery. Unless otherwise specifically provided herein,
any consent, notice or other communication herein required or permitted to be
given shall be in writing and may be personally served, telecopied or sent by
courier service or United States mail and shall be deemed to have been given
when delivered in person or by courier service, upon receipt of a telecopy (or
on the next Business Day if such telecopy is received on a non-Business Day or
after 5:00 p.m. on a Business Day) or four (4) Business Days after deposit in
the United States mail (registered or certified, with postage prepaid and
properly addressed). Notices to Agent pursuant to Article II shall not be
effective until received by Agent. For the purposes hereof, the addresses of the
parties hereto (until notice of a change thereof is delivered as provided in
this Section 12.06) shall be as set forth below each party's name on the
signature pages hereof, or, as to each party, at such other address as may be
designated by such party in a written notice to all of the other parties. All
deliveries to be made to Agent for distribution to the Lenders shall be made to
Agent at the addresses specified for notice on the signature page hereto and in
addition, a sufficient number of copies of each such delivery shall be delivered
to Agent for delivery to each Lender at the address specified for deliveries
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on the signature page hereto or such other address as may be designated by Agent
in a written notice.
12.07 Survival of Warranties, Indemnities and Agreements. All agreements,
representations, warranties and indemnities made or given herein shall survive
the execution and delivery of this Agreement and the other Loan Documents and
the making and repayment of the Loans hereunder and such indemnities shall
survive termination hereof.
12.08 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or
delay on the part of Agent or any Lender in the exercise of any power, right or
privilege under any of the Loan Documents shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other right, power or
privilege. All rights and remedies existing under the Loan Documents are
cumulative to and not exclusive of any rights or remedies otherwise available.
12.09 Marshalling; Recourse to Security; Payments Set Aside. Neither any
Lender nor Agent shall be under any obligation to xxxxxxxx any assets in favor
of Borrower or any other party or against or in payment of any or all of the
Obligations. Recourse to security shall not be required at any time. To the
extent that Borrower makes a payment or payments to Agent or the Lenders or
Agent or the Lenders enforce their Liens or exercise their 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 continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred.
12.10 Severability. In case any provision in or obligation under this
Agreement or the other Loan Documents shall be invalid, illegal or unenforceable
in any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby, provided,
however, that if the rates of interest or any other amount payable hereunder, or
the collectibility thereof, are declared to be or become invalid, illegal or
unenforceable, Lenders' obligations to make Loans shall not be enforceable.
12.11 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 or be given any substantive effect.
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12.12 Governing Law; Waiver. THIS AGREEMENT SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA. BORROWER EXPRESSLY WAIVES ANY AND ALL BENEFITS OR DEFENSES WHICH
MIGHT OTHERWISE BE AVAILABLE TO BORROWER UNDER CALIFORNIA CODE OF CIVIL
PROCEDURE SECTIONS 580A, 580B, 580D AND 726, OR ANY OF SUCH SECTIONS OR ANY
SIMILAR OR CORRESPONDING "ONE ACTION" OR "ANTI-DEFICIENCY" LAWS OR STATUTES, NOW
OR HEREAFTER IN EFFECT, IN ANY STATE OTHER THAN CALIFORNIA IN WHICH ANY OF THE
COLLATERAL MAY BE LOCATED.
12.13 Limitation of Liability. To the extent permitted by applicable law,
no claim may be made by Borrower, any Lender or any other Person against Agent
or any Lender, or the affiliates, directors, officers, employees, attorneys or
agents of any of them, for any special, indirect, consequential or punitive
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 act, omission or event occurring in connection therewith; and
Borrower and each Lender hereby waive, release and agree not to xxx upon any
claim for any such damages, whether or not accrued and whether or not known or
suspected to exist in its favor, provided that if a Lender refuses to fund a
Loan and a court of competent jurisdiction finds that such refusal was without
justification and in bad faith, such Lender may be liable to Borrower for
Borrower's reasonable and foreseeable damages resulting from such refusal to
fund.
12.14 Successors and Assigns. This Agreement and the other Loan Documents
shall be binding upon the parties hereto and their respective successors and
assigns and shall inure to the benefit of the parties hereto and the successors
and permitted assigns of Agent and Lenders. The terms and provisions of this
Agreement shall inure to the benefit of any assignee or transferee of the Loans
and the Commitments of Lenders under this Agreement, and in the event of such
transfer or assignment, the rights and privileges herein conferred upon Agent
and Lenders shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions hereof. Borrower's rights or
any interest therein hereunder, and Borrower's duties and Obligations hereunder,
shall not be assigned without the consent of all Lenders.
12.15 Consent to Jurisdiction and Service of Process; Waiver of Jury
Trial. EXCEPT WITH RESPECT TO FORECLOSURE PROCEEDINGS AGAINST ANY COLLATERAL
WHICH BY REQUIREMENT OF LAW MUST BE BROUGHT IN THE JURISDICTION WHERE SUCH
COLLATERAL IS LOCATED, ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST BORROWER WITH
RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE AND ALL JUDICIAL
PROCEEDINGS BROUGHT BY BORROWER WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT SHALL BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION HAVING SITUS WITHIN THE BOUNDARIES OF THE FEDERAL COURT DISTRICT OF
THE NORTHERN DISTRICT OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT,
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BORROWER ACCEPTS, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY
AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY
AGREES TO BE BOUND BY ANY FINAL JUDGMENT RENDERED THEREBY FROM WHICH NO APPEAL
HAS BEEN TAKEN OR IS AVAILABLE. 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 ON THE SIGNATURE PAGES HEREOF. BORROWER, AGENT
AND LENDERS IRREVOCABLY WAIVE (A) TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, AND (B) ANY OBJECTION
(INCLUDING, WITHOUT LIMITATION, ANY OBJECTION OF 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
OTHER LOAN DOCUMENT IN ANY JURISDICTION SET FORTH ABOVE. NOTHING HEREIN SHALL
AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL
LIMIT THE RIGHT OF AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST BORROWER IN
THE COURTS OF ANY OTHER JURISDICTION.
12.16 Counterparts; Effectiveness; Inconsistencies. This Agreement and any
amendments, waivers, consents or supplements may be executed in counterparts,
each of which when so executed and delivered shall be deemed an original, but
all such together shall constitute but one and the same instrument. This
Agreement shall become effective when (i) Borrower, the initial Lenders and
Agent have duly executed and delivered signature pages of this Agreement to each
other (delivery by Borrower to Lenders and by any Lender to Borrower and any
other Lender being deemed to have been made by delivery to Agent) and (ii) Agent
has received the upfront agency fee. Agent shall send written confirmation of
the Closing Date to Borrower and each other Lender promptly following the
occurrence thereof. This Agreement and each of the other 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 are actually and
directly inconsistent with the terms and conditions of any other Loan Document,
this Agreement shall govern.
12.17 Performance of Obligations. Borrower agrees that Agent may, but
shall have no obligation to, make any payment or perform any act required of
Borrower or any Guarantor Subpartnership under any Loan Document or take any
other action which Agent in its discretion deems necessary or desirable to
protect or preserve the Collateral, including without limitation, any action to
(i) pay or discharge taxes, liens, security interests or other encumbrances
levied or placed on or threatened against any Collateral, and (ii) effect any
repairs or obtain any insurance called for by the terms of any of the Loan
Documents and to pay all or any part of the premiums therefor and the costs
thereof.
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12.18 Construction. The parties acknowledge that each party and its
counsel have reviewed and revised this Agreement 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 amendments or exhibits hereto.
12.19 Entire Agreement. This Agreement, taken together with all of the
other Loan Documents and all certificates and other documents delivered by
Borrower to Agent, embodies the entire agreement and supersede all prior
agreements, written and oral, relating to the subject matter hereof.
12.20 Assignments and Participations.
(a) After first obtaining the approval of Agent and Borrower (other
than upon the occurrence and during the continuance of any Event of Default),
which approval will not be unreasonably withheld, each Lender may assign to one
or more banks or financial institutions, all or a portion of its rights and
obligations under this Agreement (including without limitation all or a portion
of its Commitment and the Loans owing to it) and other Loan Documents; provided,
however, that (i) each such assignment shall be of a constant, and not a
varying, percentage of the assigning Lender's rights and obligations under this
Agreement and other Loan Documents, and the assignment shall cover the same
percentage of such Lender's Commitment and Loans, (ii) the aggregate amount of
the Commitment of the assigning Lender being assigned pursuant to each such
assignment (determined as of the date of the Assignment and Assumption with
respect to such assignment) shall in no event be less than Ten Million Dollars
($10,000,000) and shall be an integral multiple of One Million Dollars
($1,000,000), (iii) after giving effect to such assignment, the aggregate amount
of the Commitment retained by the assigning Lender shall in no event be less
than Five Million Dollars ($5,000,000), (iv) at all times prior to its
resignation or replacement or an Event of Default, Agent's Commitment shall be
equal to or exceed the Commitment of each other Lender, (v) the parties to each
such assignment shall execute and deliver to Agent, for its approval and
acceptance, an Assignment and Assumption, and (vi) Agent shall receive from the
assignor a processing fee of Three Thousand Dollars ($3,000). Without
restricting the right of Borrower or Agent to reasonably object to any bank or
financial institution becoming an assignee of an interest of a Lender hereunder,
each proposed assignee must be an existing Lender or a bank or financial
institution which (A) has (or, in the case of a bank which is a subsidiary, such
bank's parent has) a rating of its senior unsecured debt obligations of not less
than Baa-2 by Xxxxx'x Investors Services, Inc. or a comparable rating by a
rating agency acceptable to Agent and (B) has total assets in excess of Ten
Billion Dollars ($10,000,000,000). Unless Agent or Borrower gives written notice
to the assigning Lender that it objects to the proposed assignment (together
with a written explanation of the reasons
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behind such objection) within ten (10) Business Days following receipt of the
assigning Lender's written request for approval of the proposed assignment,
Agent or Borrower, as the case may be, shall be deemed to have approved such
assignment. Upon such execution, delivery, approval and acceptance, and upon the
effective date specified in the applicable Assignment and Assumption, (X) the
assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Assumption, have the rights and obligations of a Lender hereunder, and (Y) the
assigning Lender thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Assumption,
relinquish its rights and be released from its obligations under this Agreement.
(b) By executing and delivering an Assignment and Assumption, the
assigning Lender thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Assumption, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any other Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
Loan Document or any other instrument or document furnished pursuant hereto;
(ii) such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the REIT, Borrower or
any Guarantor Subpartnership or the performance or observance by the REIT,
Borrower or any Guarantor Subpartnership of any of their respective obligations
under any Loan Document or any other instrument or document furnished pursuant
hereto; (iii) such assignee confirms that it has received a copy of this
Agreement, together with copies of the financial statements referred to in
Article V or delivered pursuant to Article VI to the date of such assignment and
such other Loan Documents and other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Assumption; (iv) such assignee will, independently and without
reliance upon Agent, such assigning Lender or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement; (v) such assignee appoints and authorizes Agent to take such action
as Agent on its behalf and to exercise such powers under this Agreement and the
other Loan Documents as are delegated to Agent by the terms hereof and thereof,
together with such powers as are reasonably incidental thereto; and (vi) such
assignee agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Lender.
106
(c) Agent shall maintain, at its address referred to on the
counterpart signature pages hereof, a copy of each Assignment and Assumption
delivered to and accepted by it and shall record in the Loan Account the names
and addresses of each Lender and the Commitment of, and principal amount of the
Loans owing to, such Lender from time to time. Borrower, Agent and Lenders may
treat each Person whose name is recorded in the Loan Account as a Lender
hereunder for all purposes of this Agreement.
(d) Upon its receipt of an Assignment and Assumption executed by an
assigning Lender and an assignee, Agent shall, if such Assignment and Assumption
has been properly completed and is in substantially the form of Exhibit A, (i)
accept such Assignment and Assumption, (ii) record the information contained
therein in the Loan Account, and (iii) give prompt notice thereof to Borrower.
Upon request, Borrower will execute and deliver to Agent an appropriate
replacement promissory note or replacement promissory notes in favor of each
assignee (and assignor, if such assignor is retaining a portion of its
Commitment and Loans) reflecting such assignee's (and assignor's) Pro Rata
Share(s) of the Facility. Upon execution and delivery of such replacement
promissory notes the original promissory note or notes evidencing all or a
portion of the Commitments and Loans being assigned shall be canceled and
returned to Borrower.
(e) Each Lender may sell participations to one or more banks or
other entities in or to all or a portion of its rights and obligations under
this Agreement (including without limitation all or a portion of its Commitment
and the Loans owing to it) and other Loan Documents; provided, however, that (i)
such Lender's obligations under this Agreement (including without limitation its
Commitment to Borrower hereunder) shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (iii) Borrower, Agent and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement and with regard to any and all
payments to be made under this Agreement, and (iv) the holder of any such
participation shall not be entitled to voting rights under their participation
agreement except for voting rights with respect to (A) increases in the
Facility; (B) extensions of the Maturity Date; (C) decreases in the interest
rates or fees described in this Agreement; and (D) the release of all or
substantially all of the Collateral, except as specifically authorized in
Sections 3.02 and 11.11. No participant shall be entitled to vote on any matter
until the Lender with which such participant is participating in the Facility
and the Loans confirms such participant's status as a participant hereunder.
(f) Borrower will use reasonable efforts to cooperate with Agent
and Lenders in connection with the assignment of interests under this Agreement
or the sale of participations herein.
107
(g) Anything in this Agreement to the contrary notwithstanding, and
without the need to comply with any of the formal or procedural requirements of
this Agreement, including Section 12.20, any Lender may at any time and from
time to time pledge and assign all or any portion of its rights under all or any
of the Loan Documents to a Federal Reserve Bank; provided that no such pledge or
assignment shall release such Lender from its obligations thereunder. To
facilitate any such pledge or assignment, Agent shall, at the request of such
Lender, enter into a letter agreement with the Federal Reserve Bank in
substantially the form of the exhibit to Appendix C to the Federal Reserve Bank
of New York Operating Circular No. 12.
(h) Anything in this Agreement to the contrary notwithstanding, any
Lender may assign all or any portion of its rights and obligations under this
Agreement to another branch or Affiliate of such Lender without first obtaining
the approval of Agent and Borrower, provided that (i) at the time of such
assignment such Lender is not a Defaulting Lender, (ii) such Lender gives Agent
and Borrower at least fifteen (15) days' prior written notice of any such
assignment, (iii) the parties to each such assignment execute and deliver to
Agent an Assignment and Assumption, and (iv) Agent receives from assignor a
processing fee of Three Thousand Dollars ($3,000).
(i) No assignee of any rights and obligations under this Agreement
shall be permitted to subassign such rights and obligations.
(j) No Lender shall be permitted to assign or sell all or any
portion of its rights and obligations under this Agreement to Borrower or any
Affiliate of Borrower.
108
IN WITNESS WHEREOF, this Agreement has been duly executed on the
date set forth above.
BORROWER: GLENBOROUGH PROPERTIES, L.P., a
California limited partnership
By: GLENBOROUGH REALTY TRUST
INCORPORATED, a Maryland
corporation, its general
partner
By /s/ XXXXXX XXXXXXXXXX
-----------------------------------------
Xxxxxx Xxxxxxxxxx
Its Executive Vice President
and Chief Operating Officer
ADDRESS FOR NOTICE AND DELIVERY:
Glenborough Properties, L.P.
000 Xxxxx Xx Xxxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx Xxxxxxxxxx
President
Tel: (000) 000-0000
Fax: (000) 000-0000
109
AGENT/LENDER: XXXXX FARGO BANK, NATIONAL
ASSOCIATION
By /s/ XXXXX X. XXXXX
---------------------------------------
Xxxxx X. Xxxxx
Its Senior Vice President
ADDRESS FOR NOTICE AND DELIVERY:
Real Estate Capital Markets Group
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxx
Senior Vice President
Tel: (000) 000-0000
Fax: (000) 000-0000
Pro Rata Share: 80%
Loan Commitment: $40,000,000
LIBOR OFFICE:
Address: Real Estate Group
Disbursement Center
0000 Xxxx Xxxx Xxxxx,
Xxxxx 000
Xx Xxxxxxx, XX 00000
Attn: Xxx Xxxx
Telephone: (000)000-0000
Telecopy: (000)000-0000
110
OTHER LENDERS: IMPERIAL BANK
By /s/ XXXXXXXX XXXXXX
--------------------------------------
Its Vice President
ADDRESS FOR NOTICE AND DELIVERY:
Address: Imperial Bank
000 Xxxxxxx Xxxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attn: Commercial Loans
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Pro Rata Share: 20%
Loan Commitment: $10,000,000
LIBOR OFFICE:
Address: Imperial Bank
000 Xxxxxxx Xxxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attn: Commercial Loans
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
111
