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EXHIBIT 10.3
MODIFICATION AGREEMENT
This Modification Agreement ("Agreement") is made as of March 19,
1998, by Pan Pacific Retail Properties, Inc., a Maryland corporation, each of
the "Banks" (as defined in the Credit Agreement described below), and Bank of
America National Trust and Savings Association, a national banking association,
as the Agent.
FACTUAL BACKGROUND
------------------
A. Reference is hereby made to that certain Credit Agreement
dated as of August 13, 1997 (the "Credit Agreement") by and among Pan Pacific
Retail Properties, Inc., a Maryland corporation (the "Company"), Bank of America
National Trust and Savings Association, a national banking association ("BofA"),
U.S. Bank National Association (FKA First Bank National Association) ("U.S.
Bank"), KeyBank National Association ("KeyBank"), The Bank of Nova Scotia ("Bank
of Nova Scotia"), First Union National Bank (as successor to Signet Bank under
the Credit Agreement) ("First Union"), and Sanwa Bank California, a California
corporation ("Sanwa Bank") (collectively, the "Banks") and Bank of America
National Trust and Savings Association, as the Agent ("Agent"). Capitalized
terms used but not otherwise defined herein shall have the meanings used and
defined in the Credit Agreement.
B. Pursuant to the Credit Agreement the Banks agreed, subject to
the terms, conditions, and limitations specified therein, to provide certain
credit facilities to the Company in a Total Aggregate Commitment of not to
exceed $150,000,000. The Company, the Banks and the Agent now wish to increase
the Total Aggregate Commitment under the Credit Agreement to $200,000,000
(allocated between the Banks as provided below), and to otherwise modify the
Credit Agreement as set forth below.
AGREEMENT
---------
Therefore, the Company, the Banks and the Agent agree as follows:
1. Reaffirmation of Loan Documents. The Company hereby reaffirms
all of its obligations under the Loan Documents, and the Company acknowledges
that it has no claims, offsets or defenses with respect to the payment of sums
due under any Note or any other Loan Document.
2. Modification of Credit Agreement. The Credit Agreement is
hereby amended as follows:
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a. The Total Aggregate Commitment is hereby increased from
$150,000,000 to $200,000,000. In light of the foregoing,
in each place that "$150,000,000" appears in the Credit
Agreement (and in any other Loan Document), whether in
verbal or numeric form, "$200,000,000" is hereby inserted
in its place and stead (including on the face page of the
Credit Agreement, and in the definitions of "Loan
Proceeds," "Note," and "Total Aggregate Commitment" set
forth in Section 1.1 of the Credit Agreement).
b. The following additional amendments are hereby made to
Section 1.1 (the definitions section) of the Credit
Agreement:
i. The existing definition of "Commitment" is
hereby deleted in its entirety and is hereby
replaced with the following:
"Commitment" means, with respect to the Loans, the following percentage
obligations and aggregate dollar amounts as to each of the following
Banks:
Percentage Aggregate Dollar
Bank Obligation Amount
---- ---------- ------
1. BofA 25.0 $50,000,000
2. U.S. Bank 17.5 $35,000,000
3. KeyBank 17.5 $35,000,000
4. Bank of Nova Scotia 17.5 $35,000,000
5. First Union Bank 12.5 $25,000,000
6. Sanwa Bank 10.0 $20,000,000
As Banks are added to this Agreement, or withdraw from this Agreement,
and assignments are made by the Banks in accordance with Section 11.6
hereof, the amount of each Bank's Commitment shall change in accordance
with that Bank's Pro Rata Share of the Total Aggregate Commitments. The
Assignment and Acceptances executed by the Banks, and the records
maintained by the Agent, shall be presumptive evidence of each Bank's
Commitment, as each such Bank's Commitment may change from time to time
in accordance with the terms of this Agreement.
ii. The existing definition of "LIBOR Rate Spread"
is hereby deleted in its entirety and is hereby
replaced with the following:
"LIBOR Rate Spread" means the additional component of interest,
expressed as a percentage per annum, to be added to the LIBOR Rate in
determining the applicable rate of interest for LIBOR Borrowings. The
applicable LIBOR Rate Spread shall be based on
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the Company's current senior long term debt ratings (or lack thereof) as
published by Standard & Poors or Xxxxx'x Investor Services as determined
by the following pricing grid and the Leverage Ratio as set forth below:
S&P/Xxxxx'x Senior Debt Rating Applicable LIBOR Rate Spread
------------------------------ ----------------------------
BBB/Baa2 (or better) 1.00%
BBB-/Baa3 1.15%
Less than BBB-/Baa3 1.375% if Leverage (or not
rated) Ratio is .30 to
1.0 or greater; and
1.25% if Leverage
Ratio is less than .30
to 1.0.
In the event of a difference in rating between Standard & Poors
and Xxxxx'x Investor Services, the lower rating shall prevail for purposes of
determining the applicable LIBOR Rate Spread. For purposes of determining the
LIBOR Rate Spread, the Leverage Ratio shall be tested quarterly as of the last
day of the last month of each calendar quarter. If the Leverage Ratio is
significant in determining the applicable LIBOR Rate Spread in accordance with
the foregoing provisions of this definition (i.e., the senior debt rating is
less than BBB-/Baa3, or not rated), any change in the applicable LIBOR Rate
Spread following a change in the Leverage Ratio which would cause a change in
the applicable LIBOR Rate Spread in accordance with the foregoing provisions,
shall be effective on the first day of the third month of each calendar quarter.
For example, if the Leverage Ratio tested as of September 30, 1998 was .35 to 1,
and changed to .28 to 1 as of December 31, 1998, the lower applicable LIBOR Rate
Spread would become effective as of March 1, 1999.
iii. In each place in the definition of "Treasury
Rate" that "10 year" appears "7 year" is hereby
inserted in its place and stead.
c. The following new definitions are hereby added to
Section 1.1. of the Credit Agreement in their proper
alphabetical order:
i. "Total Unsecured Debt Service" means, for each
period of four consecutive calendar quarters, the
Actual Debt Service for such period that is
attributable to Unsecured Indebtedness.
ii. "Unencumbered Assets NOI" means, for each
period of four consecutive calendar quarters, the
aggregate Net Operating Income for such period from
all Unencumbered Assets of the Company. In
calculating Unencumbered Assets NOI, if, with
respect to Unencumbered Assets owned by the Company
less than one quarter, the Company cannot present
operating statements
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satisfactory to the Agent which would allow the
Agent to calculate an annualized Net Operating
Income for such Assets (as contemplated within the
definition of Net Operating Income set forth in
Section 1.1 hereof), the Agent shall calculate an
annualized Net Operating Income for such Assets
based on the Company's "proforma" reports submitted
to Agent, and such additional information and
documentation as the Agent shall require, subject
to such adjustments as the Agent deems appropriate
in its sole discretion to accurately reflect actual
annual operating results for the period.
iii. "Unsecured Indebtedness" means all
Indebtedness that is not secured by real property.
d. Section 3.1(e) of the Credit Agreement is hereby
amended by replacing the word "five (5)" which appears
therein with the word "seven (7)".
e. Section 3.5(b)(i) of the Credit Agreement is hereby
amended by replacing the words "assuming interest at a per
annum rate equal to the greater of (1) 2.5% per annum plus
the Treasury Rate, or (2) 9%" which appears therein, with
the words "assuming interest at a per annum rate equal to
the greater of (1) 2% per annum plus the Treasury Rate or
(2) 8.5%".
f. Section 8.2 of the Credit Agreement is hereby amended
in its entirety to provide as follows:
"8.2 Debt Service Coverage Ratio. The Company shall
not permit, for any calendar quarter, the ratio of
(a) Adjusted EBITDA to (b) Actual Debt Service to
be less than 2.0 to 1.0.
g. By way of clarification, each of the covenants set
forth in Sections 8.1 through 8.5, inclusive, of the
Credit Agreement, shall be tested quarterly as of the end
of each calendar quarter.
h. A new Section 8.33 is hereby added to the Credit
Agreement which shall provide as follows:
"8.33 Unencumbered Assets NOI to Total Unsecured
Debt Service. The Company shall not, at any time,
permit the ratio of Unencumbered Assets NOI to
Total Unsecured Debt Service to be less than 2.0 to
1.0. This covenant shall be tested quarterly as of
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the last day of each calendar quarter, for each
period consisting of four consecutive calendar
quarters (i.e., it shall be tested on a rolling
four calendar quarter basis as of the last day of
each such quarter)."
i. A new Section 7.18 is hereby added to the Credit
Agreement which shall provide as follows:
"7.18 Year 2000 Compliance. The Company has
conducted a comprehensive review and assessment of
the Company's computer applications with respect to
the "year 2000 problem" (that is, the risk that
computer applications may not be able to properly
perform date-sensitive functions after December 31,
1999) and, based on that review and inquiry, the
Company does not believe the year 2000 problem will
result in a material adverse change in the
Company's business conditions (financial or
otherwise), operations, properties or prospects, or
ability to repay the credit."
3. Modification of Notes. The following Notes are hereby modified
as follows:
a. The Note in favor of BofA is hereby amended by
replacing "$35,000,000" (whether in verbal or numeric
form) wherever it appears in the Note with "$50,000,000"
(to reflect the increased Commitment of BofA).
b. The Note in favor of U.S. Bank is hereby amended by
replacing "$25,000,000" (whether in verbal or numeric
form) wherever it appears in the Note with "$35,000,000"
(to reflect the increased Commitment of U.S. Bank).
c. The Note in favor of KeyBank is hereby amended by
replacing "$25,000,000" (whether in verbal or numeric
form) wherever it appears in the Note with "$35,000,000"
(to reflect the increased Commitment of KeyBank).
d. The Note in favor of Bank of Nova Scotia is hereby
amended by replacing "$25,000,000" (whether in verbal or
numeric form) wherever it appears in the Note with
"$35,000,000" (to reflect the increased Commitment of Bank
of Nova Scotia).
e. The Note in favor of First Union Bank (as successor to
Signet Bank) is hereby amended by replacing "$20,000,000"
(whether in verbal
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or numeric form) wherever it appears in the Note with
"$25,000,000" (to reflect the increased Commitment of
First Union Bank).
f. The Note in favor of Sanwa Bank shall remain unmodified
(because Sanwa Bank has not increased its Commitment).
4. Continuing Effectiveness of Loan Documents. Except as
specifically provided in paragraphs 2 and 3 above of this Agreement, the Loan
Documents shall remain unmodified and in full force and effect.
5. Additional Fees. In addition to the fees payable by the
Company under the Credit Agreement and the Fee Letter Agreement described
therein, the Company shall pay to BofA certain commitment fees and other fees
and compensation (collectively, the "Additional Fees")as consideration for
BofA's arranging the increase in the Total Aggregate Commitment described in
this Agreement, and for other consideration, as more fully set forth in the side
letter agreement dated as of the same date as this Agreement between BofA and
the Company (the "Additional Fees Letter Agreement"). The Company covenants and
agrees to pay such Additional Fees at the times and in the manner set forth in
the Additional Fees Letter Agreement. The Additional Fees shall belong solely to
BofA, and BofA shall not be required to share any such Additional Fees or other
compensation specified in the Additional Fees Letter Agreement with any of the
other Banks.
6. Conditions Precedent. Agent may condition the effectiveness of
this Agreement and each Bank's obligations hereunder on all of the following
conditions having been satisfied in a manner acceptable to Agent in the exercise
of Agent's sole judgment (any of which may be waived in writing by Agent in its
sole discretion):
a. Agent shall have received fully executed originals of
this Agreement, the Additional Fees Letter, Resolutions of
the Company authorizing this Agreement and the
modifications specified herein, and any other documents
which Agent may require or request in accordance with this
Agreement or the other Loan Documents.
b. BofA shall have received any Additional Fees then due
and payable to BofA under the Additional Fees Letter
Agreement.
c. The Company shall have provided to the Agent such
additional documents and information as Agent shall
reasonably request.
7. Company's Representations and Warranties. The Company
represents and warrants to the Agent and the Banks as follows:
a. All representations and warranties made and given by
the Company in the Loan Documents are and remain true,
accurate and correct.
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b. No Event of Default, or event that with the giving of
notice and/or the passage of time would constitute an
Event of Default, has occurred and is continuing.
c. The Company is a corporation which is duly organized
and validly existing under the laws of the State of
Maryland. There have been no changes in the organization
or formation documents of the Company since the date the
Credit Agreement was first entered into.
8. Incorporation. This Agreement shall form a part of each Loan
Document, and all references to a given Loan Document shall mean that document
as hereby modified. This Agreement shall be deemed to be a Loan Document for all
purposes (including without limitation for purposes of declaring an Event of
Default should any covenant or agreement set forth herein to be performed by the
Company not be performed as agreed).
9. No Prejudice; Reservation Rights. This Agreement shall not
prejudice any rights or remedies of the Agent or the Banks under the Loan
Documents.
10. Integration. The Loan Documents, including this Agreement:
(a) integrate all the terms and conditions mentioned in or incidental to the
Loan Documents; (b) supersede all oral negotiations and prior and other writings
with respect to their subject matter; and (c) are intended by the parties as the
final expression of the agreement with respect to the terms and conditions set
forth in those documents and as the complete and exclusive statement of the
terms agreed to by the parties. If there is any conflict between the terms,
conditions and provisions of this Agreement and those of any other agreement or
instrument, including any of the other Loan Documents, the terms, conditions and
provisions of this Agreement shall prevail.
11. Miscellaneous. This Agreement and any attached consents or
exhibits requiring signatures may be executed in counterparts, and all
counterparts shall constitute but one and the same document. If any court of
competent jurisdiction determines any provision of this Agreement or any of the
other Loan Documents to be invalid, illegal or unenforceable, that portion shall
be deemed severed from the rest, which shall remain in full force and effect as
thought the invalid, illegal or unenforceable portion had never been a part of
the Loan Documents. This Agreement shall be government by the laws of the State
of California, without regard to the choice of law rules of that State. As used
herein, the word "include(s)" means "include(s), without limitation," and the
word "including" means "including, but not limited to."
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Dated: March 19, 1998
THE COMPANY:
------------
PAN PACIFIC RETAIL PROPERTIES, INC., A MARYLAND
CORPORATION
By: /s/ XXXXXX X. XXXX
-------------------------------------------
Xxxxxx X. Xxxx, Director Chairman, Chief
Executive Officer and President
By: /s/ XXXXX X. XXXXXX
-------------------------------------------
Xxxxx X. Xxxxxx, Executive Vice President
and Chief Financial Officer
Address for notices:
Pan Pacific Retail Properties, Inc.
0000-X Xxxxx Xxxxxxx Xxxxx
Xxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxxx Xxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
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THE BANKS:
----------
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, A NATIONAL BANKING ASSOCIATION
By: /s/ XXXXXX X. XXXXXXX
-------------------------------------------
Xxxxxx X. Xxxxxxx, Vice President
Address for Notices:
Bank of America National
Trust and Savings Association
000 X Xxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxx Xxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
LIBOR Lending Office:
---------------------
Bank of America National
Trust and Savings Association
0 Xxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xx. Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
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U.S. BANK NATIONAL ASSOCIATION,
(FKA: FIRST BANK NATIONAL ASSOCIATION)
By: /s/ XXXXX X. XXXXXXXXXX
-------------------------------------------
Xxxxx X. Xxxxxxxxxx,
Assistant Vice President
Address for Notices:
U.S. Bank National Association,
(FKA: First Bank National Association)
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
LIBOR Lending Office:
---------------------
U.S. Bank National Association,
(FKA: First Bank National Association)
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxx Xxxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
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KEYBANK NATIONAL ASSOCIATION
By: /s/ XXXXX XXXXXXXXX
-------------------------------------------
Xxxxx Xxxxxxxxx, Vice President
Address for Notices:
KeyBank National Association
000 Xxxxxx Xxxxxx
XX-00-00-0000
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxx Xxxxxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
LIBOR Lending Office:
---------------------
KeyBank National Association
000 Xxxxxx Xxxxxx
XX-00-00-0000
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxx Xxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
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00
XXX XXXX XX XXXX XXXXXX
By: /s/ XXXXX XXXXXX
-------------------------------------------
Xxxxx Xxxxxx, Relationship Manager
Address for Notices:
The Bank of Nova Scotia
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
LIBOR Lending Office:
---------------------
The Bank of Nova Scotia
000 Xxxxxxxxx Xxxxxx X.X., Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxxx Veiker
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
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FIRST UNION NATIONAL BANK (AS SUCCESSOR TO
SIGNET BANK)
By: /s/ XXXX XXXXXXXX
-------------------------------------------
Xxxx Xxxxxxxx, Relationship Manager
Address for Notices:
First Union National Bank
One First Union Center, NC 0166
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxx Xxxxxxxx,
Relationship Manager
Telephone: ( )
---------------------------------
Telecopier: (000) 000-0000
LIBOR Lending Office:
---------------------
First Union National Bank
-----------------------------------------------
-----------------------------------------------
Attention:
-----------------------------------
Telephone: ( )
-----------------------------------
Telecopier: ( )
-----------------------------------
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SANWA BANK CALIFORNIA, A CALIFORNIA CORPORATION
By: /s/ XXXXXXX X. XXXXX
-------------------------------------------
Xxxxxxx X. Xxxxx, Vice President
Address for Notices:
Sanwa Bank California
0000 XxxXxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
LIBOR Lending Office:
---------------------
Sanwa Bank California
0000 XxxXxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
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THE AGENT:
----------
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, A NATIONAL BANKING ASSOCIATION,
AS AGENT
By: /s/ XXXXXX X. XXXXXXX
-------------------------------------------
Xxxxxx X. Xxxxxxx, Vice President
Address for Notices:
(Agent's Payment Office)
Bank of America National
Trust and Savings Association
0 Xxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xx. Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
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