CREDIT AGREEMEENT
THIS CREDIT AGREEMENT, dated as of July 25, 1997 (the "Agreement"), by and
between WASHINGTON REAL ESTATE INVESTMENT TRUST, a Maryland real estate
investment trust (the "Borrower"), CRESTAR BANK, a Virginia banking corporation,
SIGNET BANK, a Virginia banking corporation, and any other banks that are
parties to this Agreement at any time (the "Banks"), and CRESTAR BANK, a
Virginia banking corporation, in its capacity as agent for the Banks (the
"Agent"), recites and provides:
RECITALS
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The Borrower has requested that the Banks extend credit to the Borrower.
The Banks are willing to do so upon the terms and subject to the conditions set
forth below. Accordingly, the Borrower, the Banks and the Agent agree as
follows:
ARTICLE 1
DEFINITIONS
As used in this Agreement, the following terms have the following
meanings, which shall be equally applicable to both the singular and plural
forms of the defined terms.
"Advances" has the meaning assigned to such term in Section 2.1.
"Agreement" means this Credit Agreement, as the same may be amended,
modified or supplemented from time to time.
"Business Day" means a day of the year on which banks are not required or
authorized to close in New York City, or Richmond, Virginia, and which dealings
are carried on in the London interbank market.
"Capital Stock" means any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a corporation)
and any and all warrants or options to purchase any of the foregoing.
"Cash Flow to Debt Service Ratio" means, as of any date for any period,
the ratio calculated by dividing (a) actual EBITDA for such period, by (b)
Consolidated Debt Service for such period.
"Closing Date" has the meaning assigned to such term in Section 2.2(d).
"Commitment" has the meaning assigned to such term in Section 2.1.
"Commitment Percentage" means, with respect to any Bank, the percentage of
the aggregate Commitments represented by such Bank's Commitment.
"Commitment Schedule" has the meaning assigned to such term in Section
2.1.
"Consolidated Debt Service" for any period means (a) Consolidated Interest
Expense for such period plus (b) the aggregate amount of scheduled principal
payments of Indebtedness (excluding optional prepayments and scheduled principal
payments in respect of any Indebtedness which is payable in a single installment
at final maturity) required to be made during such period by the Borrower or any
of its consolidated Subsidiaries.
"Consolidated Interest Expense" for any period means the amount of
interest expense of the Borrower and its Subsidiaries for such period on the
aggregate principal amount of their Indebtedness, determined on a consolidated
basis in accordance with GAAP plus any capitalized interest which accrued during
such period.
"Consolidated Secured Indebtedness, " as of any date of determination,
means the sum of (a) the aggregate principal amount of all Indebtedness of the
Borrower and its Subsidiaries outstanding at such date which does not constitute
Unsecured Indebtedness and (b) the excess, if any, of (i) the aggregate
principal amount of all Unsecured Indebtedness of the Subsidiaries of the
Borrower over (ii) $10,000,000, determined on a consolidated basis in accordance
with GAAP.
"Consolidated Senior Unsecured Indebtedness," as of any date of
determination, means the sum of (a) the aggregate principal amount of all
Indebtedness of the Borrower and its Subsidiaries outstanding at such date which
constitutes Unsecured Indebtedness (excluding (i) Indebtedness which is
contractually subordinated to the Indebtedness of the Borrower and its
Subsidiaries under the Loan Documents on customary terms acceptable to the
Agent, (ii) Indebtedness of the Borrower and its Subsidiaries under the Loan
Documents and (iii) Indebtedness incurred pursuant to any commitment referred to
in clause (c) below), (b) the aggregate Commitments then in effect under this
Agreement, and (c) the aggregate commitments then in effect with respect to any
other unsecured committed line of credit extended to the Borrower or any of its
Subsidiaries, determined on a consolidated basis in accordance with GAAP.
"Consolidated Tangible Net Worth," at any date of determination, means an
amount equal to (a) Total Capitalization Value as of such date minus (b)
Consolidated Total Indebtedness as of such date.
"Consolidated Total Indebtedness," as of any date of determination, means
all Indebtedness of the Borrower and its Subsidiaries outstanding at such date,
determined on a consolidated basis in accordance with GAAP.
"Defaulting Bank" has the meaning assigned to such term in Section 2.10.
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"EBITDA" means earnings before interest, taxes (other than real estate
taxes), depreciation and amortization expense, all as determined in accordance
with GAAP.
"ERISA" has the meaning assigned to such term in Section 5.1 (a).
"Event of Default" has the meaning assigned to such term in Section 6.1.
"Existing Credit Agreement" has the meaning assigned to such term in
Section 2.2(d).
"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 Richmond, or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"Financing Lease" means any lease of property, real or personal, the
obligations of the lessee in respect of which are, in accordance with GAAP,
capitalized on a balance sheet of the lessee.
"First Chicago Agreement" means the Credit Agreement, dated as of March 1,
1995, between the Borrower and First National Bank of Chicago, as amended from
time to time.
"Funding Bank" has the meaning assigned to such term in Section 2.10.
"GAAP" means generally accepted accounting principles consistent with
those applied in the preparation of the Borrower's financial statements for the
fiscal year ended on December 31, 1996.
"Guarantee Obligation" means, as to any Person (the "guaranteeing
person"), any obligation (determined without duplication) of (a) the
guaranteeing person or (b) another Person (including, without limitation, any
bank under any letter of credit) to induce the creation of which the
guaranteeing person has issued a reimbursement, counterindemnity or similar
obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the "primary obligations")
of any other third Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any obligation of the
guaranteeing person, whether or not contingent, (i) to purchase any such primary
obligation or any property constituting direct or indirect security therefore,
(ii) to advance or supply funds (1) for the purchase or payment of any such
primary obligation or (2) to maintain working capital or equity capital of the
primary obligor or otherwise maintain the net worth or solvency of the primary
obligor, (iii) to purchase
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property, securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor to make
payment of such primary obligation or (iv) otherwise to assure or hold harmless
the owner of any such primary obligation against loss in respect thereof;
provided, however, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing person
shall be deemed to be the maximum stated amount of the primary obligation
relating to such Guarantee Obligation (or, if less, the maximum stated liability
set forth in the instrument embodying such Guarantee Obligation), provided, that
in the absence of any such stated amount or stated liability, the amount of such
Guarantee Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by the Borrower in good
faith.
"Indebtedness" of any Person at any date means without duplication, (a)
all indebtedness of such Person for borrowed money (including liabilities
arising under Financing Leases), (b) all obligations of such Person for the
deferred purchase price of property or services (other than current trade
liabilities incurred in the ordinary course of business and payable in
accordance with customary practices), to the extent such obligations constitute
indebtedness for the purposes of GAAP, (c) any other indebtedness of such Person
which is evidenced by a note, bond, debenture or similar instrument, (d) all
obligations of such Person in respect of acceptances issued or created for the
account of such Person, (e) all Guarantee Obligations of such Person (excluding,
in the case of the Borrower, Guarantee Obligations of the Borrower in respect of
primary obligations of any Subsidiary), and (f) all liabilities secured by any
lien (other than liens for taxes not yet due and payable) on any property owned
by such Person even though such Person has not assumed or otherwise become
liable for the payment thereof.
"Indemnified Liabilities" has the meaning assigned to such term in Section
8.5.
"Interest Period" means, for each Advance or Term Loan, the period
commencing on the date of such Advance or Term Loan and ending on the last day
of the period selected by the Borrower pursuant to the provisions below and,
thereafter, each subsequent period commencing on the last day of the immediately
preceding Interest Period and ending on the last day of the period selected by
the Borrower pursuant to the provisions below. When interest is based on the
Prime Rate, the duration of each such Interest Period may be any period of time
of up to 30 days selected by the Borrower. In all other cases, the duration of
each such Interest Period shall be one, two, three, six, nine or twelve months
for the Advances, or any period of more than 90 days for the Term Loans, as the
Borrower may select, upon notice given by the Agent not later than 11:00 A.M.
(Eastern time) on the third Business Day prior to the first day of such Interest
Period (prompt written notice of which shall be given by the Agent to the
Banks); provided, however, that (1) whenever the last day of any Interest Period
for an Advance would otherwise occur on a day other than a Business Day, the
last day of such Interest Period shall be extended to occur on the next
succeeding Business Day, unless such extension would cause the last day of such
Interest Period to occur
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in the next following calendar month, in which case the last day of such
Interest Period shall occur on the next preceding Business Day, (2) if no
Interest Period is selected by the Borrower, the Interest Period shall be one
month for Advances and 90 days for Term Loans, (3) no Interest Period for
Advances shall expire later than the Termination Date, and (4) no Interest
Period for Term Loans shall expire later than the Maturity Date.
"LIBOR" means, with respect to each day during each Interest Period
pertaining to an Advance, the rate of interest determined on the basis of the
rate for deposits in dollars for a period equal to such Interest Period
commencing on the first day of such Interest Period appearing on Page 3750 of
the Telerate Service as of 11:00 A.M., London time, two Business Days prior to
the beginning of such Interest Period. In the event that such rate does not
appear on Page 3750 of the Telerate Service (or otherwise on such service),
"LIBOR" shall be determined by reference to such other publicly available
service for displaying eurodollar rates as may be agreed upon by the Agent and
the Borrower or, in the absence of such agreement, "LIBOR" shall instead be the
rate per annum equal to the rate at which Crestar Bank is offered dollar
deposits at or about 10:00 A.M., New York City time, two (2) Business Days prior
to the beginning of such Interest Period in the interbank eurodollar market
where the eurodollar and foreign currency and exchange operations in respect of
its Advance are then being conducted for delivery on the first day of such
Interest Period for the number of days comprised therein and in an amount
comparable to the amount of its Advance to be outstanding during such Interest
Period.
"LIBOR Advances" means any Advance or portion thereof with respect to
which the interest rate is calculated by reference to LIBOR.
"LIBOR Spread" has the meaning assigned to such term in Section 2.4(c).
"Lien" has the meaning assigned to such term in Section 5.2(a).
"Loan Documents" means this Agreement, the Notes, each Subsidiary
Guaranty, and any guarantees, security agreements, notes, or any other document
now or hereafter executed or delivered in connection with the Loans, in evidence
thereof or as security therefor, as any of the same may be amended, modified or
supplemented from time to time.
"Loans" means the Advances and the Term Loans.
"Majority Banks" has the meaning assigned to such term in Section 2.1.
"Market Area" has the meaning assigned to such term in Section 2.1.
"Maturity Date" has the meaning assigned to such term in Section 2.3(b).
"Moody's" means Xxxxx'x Investors Service, Inc. and its successors.
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"Non-Usage Fee Rate" has the meaning assigned to such term in Section 2.7.
"Note" has the meaning assigned to such term in Section 2.8.
"Partial Loan" has the meaning assigned to such term in Section 2.10.
"Participant" has the meaning assigned to such term in Section 8.12.
"Permitted Liens" means those Liens which do not violate Section 5.2 (a)
hereof.
"Person" means any natural person, corporation, firm, joint venture,
partnership, association, enterprise, trust or other entity or organization, or
any government or political subdivision or any agency, department or
instrumentality thereof.
"Prime Rate" means the rate established from time to time by the Agent as
its prime rate, which rate is recorded in the Agent's Central Credit
Administration Division and used as a reference for fixing the lending rate on
commercial loans. The Borrower acknowledges that the prime rate is not
necessarily the lowest rate of interest charged by the Bank. For purposes of
this Agreement, any change in the Prime Rate shall be effective on the date such
change in the Prime Rate is announced.
"Prime Rate Advance" means any Advance or portion thereof with respect to
which the interest rate is calculated by reference to the Prime Rate.
"Prime Rate Spread" has the meaning assigned to such term in Section
2.4(c).
"Pro Forma EBITDA" means, for any Person for any period, EBITDA calculated
as if the Property then owned by such Person had been owned by such Person for
the entire period.
"Property" of a Person means any and all property, whether real, personal,
tangible, intangible, or mixed, of such Person, or other assets owned, leased or
operated by such Person.
"Recovery Bank" has the meaning assigned to such term in Section 2.11.
"S&P" means Standard & Poor's Ratings Group and its successors.
"Subsidiary," as to any Person, means a corporation, partnership, limited
partnership, limited liability company or other entity of which shares of stock
or other ownership interests having ordinary voting power (other than stock or
such other ownership interests having such power only by reason of the happening
of a contingency) to elect a majority of the board of directors or other
managers of such entity are at the time owned, or the management of which is
otherwise controlled, directly or indirectly through one or more intermediaries,
or
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both, by such Person. Unless otherwise qualified, all references to a
"Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a Subsidiary
or Subsidiaries of the Borrower.
"Subsidiary Guaranty " has the meaning assigned to such term in Section
5.1 (c).
"Termination Date" has the meaning assigned to such term in Section 2.1.
"Term Loans" has the meaning assigned to such term in Section 2.3(a).
"Total Capitalization Value" means for any Person for any quarter, the
product of (a) annualized EBITDA for such Person during such quarter (which
annualized EBITDA shall be calculated by annualizing Pro Forma EBITDA for the
most recently ended fiscal quarter), and (b) ten (10).
"Total Tangible Assets," of any Person on any date, means the current book
value of the total assets of such Person other than that portion of such
Person's assets that constitute intangible assets as determined in accordance
with GAAP plus accumulated depreciation on. the depreciable assets (excluding
intangible assets) from such Person's original book value of such assets which
is reflected in the current book value of such assets.
"Transferee Bank" has the meaning assigned to such term in Section 8.13.
"Treasury Rate" means, for any Interest Period, the rate per annum,
rounded upwards, if necessary, to the next higher 1/100th of 1%, which is the
average yield on United States Treasury Securities, adjusted to a constant
maturity corresponding to the length of the applicable Interest Period, as
reported for the most recent weekly reporting period covered in the weekly
statistical release (currently entitled "Weekly Summary of Banking and Credit
Measures") published by the Board of Governors of the Federal Reserve System for
the Friday immediately preceding the first day of such Interest Period (or as
reasonably established by the Agent for an Interest Period for which no such
yield is published).
"Treasury Rate Spread" has the meaning assigned to such term in Section
2.4(c).
"Unencumbered Asset," with respect to any asset, at any date of
determination, means the circumstance that such asset on such date (a) is not
subject to any Liens of any kind, other than Permitted Liens, (b) is not subject
to any agreement (including (i) any agreement governing Indebtedness incurred in
order to finance or refinance the acquisition of such asset, and (ii) if
applicable, the organizational documents of any Subsidiary) (other than the
First Chicago Agreement, the terms of which restrict the Borrower's and its
Subsidiaries' ability to encumber certain assets) which prohibits or limits the
ability of the Borrower or any of its Subsidiaries to create, incur, assume or
suffer to exist any Lien upon any assets or Capital Stock of the Borrower or any
of its Subsidiaries (excluding any agreement which limits generally the amount
of secured Indebtedness which may be incurred by the Borrower and its
Subsidiaries), and (c) is not subject to any agreement (including any agreement
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governing Indebtedness incurred in order to finance or refinance the acquisition
of such asset, but excluding the terms of the First Chicago Agreement) which
entitles any Person to the benefit of any Lien (other than Permitted Liens) on
any assets or Capital Stock of the Borrower or any of its Subsidiaries, or would
entitle any Person to the benefit of any Lien (other than Permitted Liens) on
such assets or Capital Stock upon the occurrence of any contingency (including,
without limitation, pursuant to an "equal and ratable" clause). For the purposes
of this Agreement, any Property of a Subsidiary which is not a Wholly-Owned
Subsidiary shall not be deemed to be unencumbered unless both (i) such Property
and (ii) all Capital Stock of such Subsidiary held by, the Borrower is
unencumbered.
"Unsecured Indebtedness" means all Indebtedness of any Person that is not
secured by a Lien on any income, Capital Stock, Property or any other asset of
such Person.
"Value of Unencumbered Assets," as of any date, means the gross book
value, as determined in accordance with GAAP, of all Unencumbered Assets owned
by the Borrower or any of its Subsidiaries as of such date.
"Wholly-Owned Subsidiary" of a Person means (i) any Subsidiary all of the
outstanding voting securities of which shall at the time be owned or controlled,
directly or indirectly, by such Person or one or more Wholly-Owned Subsidiaries
of such Person, or by such Person and one or more Wholly-Owned Subsidiaries of
such Person, or (ii) any partnership, association, joint venture or similar
business organization 100% of the ownership interests having ordinary voting
power of which shall at the time be so owned or controlled.
"WRIT LP" means WRIT Limited Partnership, a Delaware limited partnership.
ARTICLE 2
LOANS
SECTION 2.1 Advances. Subject to the terms and conditions and relying upon
the representations and warranties set forth in this Agreement, each Bank
severally agrees to make advances (the "Advances") to the Borrower, from time to
time on any Business Day (as defined below) during the period from the date
hereof until July 25, 1998 (the "Termination Date") in an aggregate amount not
to exceed at any time outstanding the commitment of such Bank (as to each Bank,
its "Commitment") as set forth on the Commitment schedule attached as Schedule
2.1 (as amended from time to time, the "Commitment Schedule"), provided that at
no time shall the outstanding Advances and Term Loans (as defined below) exceed
$50,000,000. If no Event of Default has occurred and is continuing on July 25,
1998, the Banks agree to extend, at the Borrower's option, the Termination Date
to July 25, 1999. The Advances made on any Business Day shall be in an amount
not less than $1,000,000 or an integral multiple thereof. The Advances shall be
used only for the purpose of refinancing existing Indebtedness of the Borrower
to the Banks and purchasing income producing real estate in the Market Area (as
defined below) and to make
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capital improvements to real property owned by the Borrower and located in the
Market Area. "Market Area" means Washington D.C., Virginia, Maryland, Delaware
and southeastern Pennsylvania. Advances may not be used to prepay or refinance
outstanding Advances. (The Banks agree that establishing a new Interest Period
for an Advance at the expiration of the current Interest Period shall not
constitute a refinancing of an Advance.) Advances may be used to purchase income
producing real estate outside of the Market Area with the prior written consent
of the Majority Banks, which shall not be unreasonably withheld. "Majority
Banks" means, as of any date, Banks whose aggregate Commitments total at least
66 2/3% of all Commitments.
SECTION 2.2 Making Advances
(a) Advances shall be made on written request, given not later than 11:00
A.M. (Eastern time) at least three Business Days prior to the date of the
proposed Advances, from the Borrower to the Agent, identifying the real estate
to be purchased or the capital improvements to be made, specifying the date and
amount of the Advances and selecting the initial Interest Period for such
Advances. The Agent shall give prompt written notice of each borrowing request
to the Banks. Not later than 1:00 P.M. (Eastern time) on the date of such
Advances and upon fulfillment of the applicable conditions set forth in Article
Error! Reference source not found, each Bank will make its ratable share of such
Advances available to the Agent in same day funds in accordance with such Banks
Commitment Percentage. Upon the Agent's receipt of such funds, it shall credit
the proceeds to the Borrower's operating account with the Agent.
(b) Each written request from the Borrower to the Agent for Advances shall
be irrevocable and binding on the Borrower. The Borrower shall indemnify each
Bank against any loss, cost or expense incurred by such Bank as a result of any
failure to fulfill on or before the date specified in such request for such
Advances the applicable conditions set forth in Article Error! Reference source
not found, including, without limitation, any loss (including loss of
anticipated profits), cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Bank to fund the
Advance when the Advance, as a result of such failure, is not made on such date.
(c) The Advances shall be repaid on the Termination Date, unless converted
into Term Loans as provided in Section Error! Reference source not found below.
(d) On the date of the closing of this Agreement (the "Closing Date"), all
indebtedness outstanding under the July 27, 1995 Credit Agreement between the
Borrower, Crestar Bank and Signet Bank/Virginia (the "Existing Credit
Agreement") shall be repaid with Advances under this Agreement and the Existing
Credit Agreement shall be terminated as of the Closing Date.
(e) Unless the Agent shall have received notice from a Bank prior to the
date of any Advances that such Bank will not make available to the Agent such
Bank's
9
ratable portion of such Advances, the Agent may assume that such Bank has made
such portion available to the Agent on the date of such Advances in accordance
with Section 2.2(a) and the Agent may, in reliance upon such assumption, make
available to the Borrower on such date a corresponding amount. If and to the
extent that such Bank shall not have so made such ratable portion available to
the Agent, such Bank and the Borrower severally agree to repay to the Agent
forthwith on demand such corresponding amount together with interest thereon,
for each day from the date such amount is made available to the Borrower until
the date such amount is repaid to the Agent, at (1) in the case of the Borrower,
the interest rate applicable at the time to such Advances, and (2) in the case
of such Bank, the Federal Funds Rate. If such Bank shall repay to the Agent such
corresponding amount, such amount so repaid shall constitute such Bank's Advance
for purposes of this Agreement.
(f) The failure of any Bank to make the Advances to be made by such Bank
shall not relieve the other Banks of their obligations, if any, hereunder to
make their Advances, but none of the Banks shall be responsible for the failure
of the other Banks to make Advances.
SECTION 2.3 Term Loans.
(a) The Borrower may convert the Advances or portions thereof into a term
loan (the "Term Loans") at any time after January 25, 1998 and prior to the
Termination Date, provided, however, that any such conversion must be made on
the last day of the current Interest Period for each Advance to be converted (as
defined below). Each election to convert Advances or portions thereof into Term
Loans shall be in an aggregate amount not less than $1,000,000 or an integral
multiple thereof and shall be made on written notice, given to the Agent not
later than 11:00 A.M. (Eastern time) three Business Days prior to the date of
the proposed conversion. The Agent shall give prompt written notice of each such
conversion request to the Banks. Not later than 1:00 P.M. (Eastern time) on the
date of such conversion and upon fulfillment of the applicable conditions set
forth in Article 2, the Term Loans will be deemed to be applied to the
prepayment of the Advances ratably in accordance with the Banks' respective
Commitment Percentages made by such Bank.
(b) The principal amount of each Term Loan shall be repaid on July 25,
2001 (the "Maturity Date"), or on such earlier date as may be selected by the
Borrower at its option. The term of any individual Term Loan shall not exceed
forty-two (42) months.
SECTION 2.4 Interest.
(a) The Borrower shall pay interest on the unpaid principal amount of each
Advance from the date of such Advance until such principal amount shall be paid
in full, monthly in arrears, on the first day of each calendar month, at the sum
of (1) in the case of an Interest Period of one month or more, LIBOR for the
applicable Interest Period
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plus the applicable LIBOR Spread, and (2) in the case of an Interest Period of
less than one month, the Prime Rate plus the applicable Prime Rate Spread,
adjusted daily when and as the Prime Rate is changed.
(b) The Borrower shall pay interest on the unpaid principal amount of
each Term Loan from the date on which such Term Loan is made until such
principal amount shall be paid in full, monthly in arrears, on the first day of
each calendar month, at the sum of (1) in the case of an Interest Period of one
month or more, the Treasury Rate for the applicable Interest Period plus the
applicable Treasury Rate Spread, and (2) in the case of an Interest Period of
less than one month, the Prime Rate plus the Prime Rate Spread, adjusted daily
when and as the Prime Rate is changed.
(c) Initially, the "LIBOR Spread" shall be 0.70%,the"Treasury Rate
Spread" shall be 1.30% and the "Prime Rate Spread" shall be 0%. Thereafter the
applicable LIBOR Spread, Treasury Rate Spread and Prime Rate Spread applicable
to the Advances and Term Loans shall be subject to change at any time as
determined based upon the lower (i.e. less desirable) of the Borrower's Moody's
debt rating, and the Borrower's S&P's debt rating, as the case may be. The
applicable Spreads shall be adjusted effective on the next Business Day
following any change in the Borrower's Moody's debt rating and/or S&P's debt
rating, as the case may be. The applicable debt ratings and corresponding LIBOR
Spreads, Treasury Rate Spreads and Prime Rate Spreads are as follows:
Advances Term Loans Advances/
-------- ---------- ---------
Term Loans
----------
S&P Rating Xxxxx'x Rating LIBOR Treasury Rate Prime Rate
---------- -------------- ----- ------------- ----------
Spread Spread Spread
------ ------ ------
A or higher A2 or higher .50% 1.10% 0%
A- A3 .625% 1.225% 0%
BBB+ Baa1 .70% 1.30% 0%
BBB Baa2 1.00% 1.60% 0%
BBB- Baa3 1.25% 1.85% 0%
Less than BBB- Less than Baa3 2.25% 2.85% .50%
No Rating No Rating 2.25% 2.85% .50%
(d) After maturity or upon the occurrence and during the continuance
of an Event of Default hereunder, the Prime Rate Spread shall be 2.50%, the
LIBOR Spread shall be 4.25% and the Treasury Rate Spread shall be 4.8%.
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SECTION 2.5 Prepayments. The Borrower shall have the right to prepay any
Advances or Term Loans at any time subject to the payment of the prepayment
penalty described below with respect to any Term Loan; provided, however, that
each partial prepayment shall be in an aggregate principal amount of not less
than $1,000,000 or an integral multiple thereof. No prepayment penalty will be
imposed with respect to the Advances. The prepayment penalty for a Term Loan
will be equal to the present value of the difference between the amount that
would have been realized by the Banks for the remaining term of the applicable
Interest Period, and any lesser amount that would have been realized by the
Banks by reinvesting the prepaid amount at the Treasury Rate with a maturity
most closely equal to, but not longer than, the remaining term of the applicable
Interest Period. To determine such present value, the foregoing difference shall
be discounted to its present value at a discount rate equal to the applicable
Treasury Rate. The Borrower shall give the Agent at least three Business Days'
prior written notice of prepayment (prompt written notice of which shall be
given to the Banks by the Agent) and in such notice specify the prepayment date
and the principal amount of each Advance or Term Loan to be prepaid. Such notice
of prepayment shall be irrevocable and shall commit the Borrower to prepay in
the amount stated therein. All prepayments under this Section shall be
accompanied by accrued interest on the principal amount being prepaid to the
date of prepayment. Amounts prepaid shall be available to be reborrowed from the
Banks hereunder in accordance with the terms of this Agreement.
SECTION 2.6 Funding Provisions.
(a) Increased Costs. If, due to either (1) the introduction of or any
change (other than any change by way of imposition or increase of reserve
requirements, referred to in subsection (b) below) in any law or regulation or
(2) the compliance with any guideline or request from any central bank or other
governmental authority (whether or not having the force of law), there shall be
any increase in the cost to a Bank of agreeing to make or making, funding or
maintaining the Advances or the Term Loans, then the Borrower shall from time to
time, within 20 Business Days after written demand by such Bank, pay to such
Bank additional amounts sufficient to compensate such Bank for such increased
cost. A certificate as to the amount of such increased cost shall be submitted
to the Borrower by such Bank with such demand, and such certificate shall be
presumed to be correct.
(b) Additional Interest. The Borrower shall pay to each Bank, so long
as such Bank shall be required under regulations of the Board of Governors of
the Federal Reserve System to maintain reserves with respect to liabilities or
assets consisting of or including Eurocurrency liabilities (as such term is
defined in Regulation D of the Board of Governors of the Federal Reserve System,
as in effect from time to time), additional interest on the unpaid principal
amount of each Advance made by such Bank, from the date of such Advance until
such principal amount is paid in full, at an interest rate per annum equal at
all times to the remainder obtained by subtracting (1) LIBOR for the Interest
Period for such Advance from (2) the rate obtained by dividing such LIBOR by a
percentage equal to 100% minus the reserve percentage applicable during such
Interest Period (or if more than one such
12
percentage shall be so applicable, the daily average of such percentages for
those days in such Interest Period during which any such percentage shall be so
applicable) under regulations issued from time to time by the Board of Governors
of the Federal Reserve System (or any successor) for determining the maximum
reserve requirement (including, without limitation, any emergency, supplemental
or other marginal reserve requirement) for such Bank with respect to liabilities
or assets consisting of or including Eurocurrency liabilities having a term
equal to such Interest Period, payable on each date on which interest is payable
on such Advance. Such additional interest shall be determined by such Bank and
notified to the Borrower. The Agent acknowledges that as of the date hereof,
banks are not required to maintain reserves with respect to Eurocurrency
liabilities.
(c) Increased Capital. If a Bank reasonably determines that
compliance with any law or regulation or any guideline or request from any
central bank or other governmental authority (whether or not having the force of
law) reasonably affects or would affect the amount of capital required or
expected to be maintained by such Bank or any corporation controlling such Bank
and that the amount of such capital is increased by or based upon the existence
of such Bank's commitment to lend hereunder and other commitments of this type,
then, within 20 Business Days after written demand by such Bank, the Borrower
shall pay to such Bank, from time to time as specified by such Bank, additional
amounts sufficient to compensate such Bank or such corporation in the light of
such circumstances, to the extent that such Bank reasonably determines such
increase in capital to be allocable to the existence of such Bank's commitment
to lend hereunder. A certificate as to such amounts shall be submitted to the
Borrower by such Bank with such demand, and such certificate shall be presumed
to be correct.
(d) Illegality. Notwithstanding any other provision of this
Agreement, if a Bank shall notify the Borrower that the introduction of or any
change in or in the interpretation of any law or regulation makes it unlawful,
or any central bank or other governmental authority asserts that it is unlawful,
for such Bank to perform its obligations hereunder to make, fund or maintain
Advances hereunder based on LIBOR, or if such Bank notifies the Borrower that
such Bank in good faith has determined that LIBOR will not adequately reflect
the cost to the Bank of making or maintaining Advances, such Bank shall provide
the Borrower with a comparable interest rate option for the Advances.
SECTION 2.7 Non-Usage Fee. The Borrower agrees to pay to the Banks a fee
on the daily Unused Amount from the date hereof until the Termination Date, as
extended from time to time, at the rate per annum set forth in the schedule
below (the "Non-Usage Fee Rate"), payable in arrears on the first Business Day
of each January, April, July and October, during the term of the Commitments of
the Banks, beginning on October 1, 1997, and on the Termination Date, as
extended from time to time. The "Unused Amount" means, on a daily basis, the
amount by which $50,000,000 exceeds the aggregate outstanding balances of
Advances and Term Loans. The Agent shall submit a quarterly statement for such
fee to the Borrower.
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S&P Rating Xxxxx'x Rating Non-Usage Fee Rate
---------- -------------- ------------------
A or higher A2 or higher .15%
A- A3 .175%
BBB+ Baa1 .175%
BBB Baa2 .20%
BBB- Baa3 .20%
Less than BBB- Less than Baa3 .25%
No Rating No Rating .25%
The Non-Usage Fee Rate shall be determined in the same manner as the
determination of the LIBOR Spread pursuant to Section 2.4(c) hereof (e.g., if
the Borrower's Xxxxx'x debt rating is Baa 1 and its S&P debt rating is A, the
Applicable Percentage shall be based on the Xxxxx'x debt rating), with
adjustments becoming effective on the next Business Day following any change in
the applicable debt rating. As of the date hereof, the Non-Usage Fee Rate is
.175%.
SECTION 2.8 Note. The Borrower's obligation to repay the Advances and the
Term Loans made by a Bank, together with accrued interest thereon, shall be
evidenced by a single promissory note in the amount of such Bank's Commitment,
in the form of Exhibit A attached hereto, duly executed on behalf of the
Borrower and payable to such Bank (as amended from time to time, the "Notes").
SECTION 2.9 Payments and Computations.
(a) The Borrower shall make each payment hereunder and under the
Notes not later than 12:00 noon (Eastern time) on the day when due in U.S.
dollars to the Agent at its address at 0000 Xxxxx Xxxxxxxxx, 0xx Xxxxx, Xxxxxx,
Xxxxxxxx 00000, Attention: Xxxxxxx X. Xxxxx, in same day funds. The Agent will
promptly thereafter cause to be distributed in like funds relating to the
payment of principal, interest or fees ratably (other than amounts payable to a
particular Bank pursuant to Section 2.6) to the Banks in accordance with wire
transfer instructions provided to the Agent by the Banks from time to time.
(b) The Borrower shall establish an account with the Agent into which
the proceeds of the Advances will be deposited. The Borrower hereby authorizes
the Agent, if and to the extent payment is not made when due hereunder or under
the Notes, to charge from time to time against such account with the Agent any
amount so due.
(c) All computations of interest and non-usage fees shall be made by
the Agent on the basis of a year of 360 days, in each case for the actual number
of days
14
(including the first day but excluding the last day) occurring in the period for
which such interest or fee is payable. Each determination by the Agent of an
interest rate hereunder shall be conclusive and binding for all purposes, absent
manifest error.
(d) Whenever any payment hereunder or under the Notes shall be stated
to be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest and fees, as the case may be;
provided, however, if such extension would cause the payment of principal or
interest of the Advances bearing interest based on LIBOR to be made in the next
following calendar month, such payment should be made on the next preceding
Business Day.
SECTION 2.10 Sharing of Payments, etc. Except to the extent otherwise
expressly provided herein, (a) Advances and Term Loans shall be made by the
Banks PRO RATA IN accordance with their respective Commitment Percentages, and
(b) each payment of the principal of or interest on the Advances and Term Loans
or of fees shall be made for the account of the Banks PRO RATA in accordance
with their respective amounts thereof then due and payable. If any Bank shall
obtain any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) on account of the Advances made by it or on
account of its share of the Term Loans (other than pursuant to Sections 2.6 or
8.5(b)) in excess of its ratable share of payments on account of the Advances or
the Term Loans obtained by all the Banks, such Bank shall forthwith purchase
from the other Banks such participations in the Advances made by them or in the
Term Loans as shall be necessary to cause such purchasing Bank to share the
excess payment ratably with each of them; provided, however, that if all or any
portion of such excess payment is thereafter recovered from such purchasing
Bank, such purchase from each Bank shall be rescinded and such Bank shall repay
to the purchasing Bank the purchase price to the extent of such recovery
together with an amount equal to such Bank's ratable share (according to the
proportion of (1) the amount of such Bank's required repayment to (2) the total
amount so recovered from the purchasing Bank) of any interest or other amount
paid or payable by the purchasing Bank in respect of the total amount so
recovered. The Borrower agrees that any Bank so purchasing a participation from
another Bank pursuant to this Section 2.10 may, to the fullest extent permitted
by law, exercise all of its rights of payment (including the right of set-off)
with respect to such participation as fully as if such Bank were the direct
creditor of the Borrower in the amount of such participation. If a Bank shall
default in its obligation to fund any Advance or Term Loan hereunder (a
"Defaulting Bank"), then simultaneously with any funding by any of the remaining
Banks (each, a "Funding Bank"), of their respective Commitment Percentages of
such Advance or Term Loan (such an Advance or Term Loan is sometimes referred to
as a "Partial Loan"), the respective PRO RATA payments to be received by each
Funding Bank shall be adjusted to correspond to the aggregate percentage of all
then outstanding Advances and Term Loans (including all Partial Loans) made by
such Funding Bank. Following any adjustment of each Bank's PRO RATA share
pursuant to the preceding sentence, such Bank's PRO RATA share shall be
readjusted only upon the first to occur of (i) a Defaulting Bank subsequently
funding its Commitment Percentage of any such Partial Loan,
15
or (ii) the repayment in full (including all interest thereon) to each Bank of
its Commitment Percentage of any such Partial Loan. Notwithstanding anything
contained herein to the contrary, in no event shall any Defaulting Bank be
entitled to receive any repayment of its Commitment Percentage of any Advances
or Term Loans (or any interest earned thereon) until such time as the Funding
Banks have received repayment in full of the amount of any Partial Loan,
together with all interest thereon. The Borrower shall have the right to replace
a Defaulting Bank in the manner set forth in Section 2.11 below, and upon the
replacement of any Defaulting Bank, such Defaulting Bank shall refund to the
Borrower the PRO RATA share of all commitment fees paid to such Defaulting Bank
which have not been earned by such Defaulting Bank as of the date of such
replacement, determined by multiplying the amount of all commitment fees paid by
the Borrower to or for the benefit of such Defaulting Bank by a fraction, the
numerator of which is the number of months (it being understood and agreed that
for purposes of this provision a portion of any month shall constitute a
complete "month") which have elapsed in the term of the Commitment, and the
denominator of which is 24.
SECTION 2.11 Replacement of Bank by Reason of Change in Circumstances. In
the event that any Bank (a "Recovery Bank") requires the Borrower to make any
payment to such Recovery Bank in accordance with the provisions of Section 2.6,
then upon written notice from the Borrower to Agent, the Borrower and the Agent
shall mutually use their respective best efforts to find another lender to
replace the Recovery Bank. If a replacement lender is found then the Borrower
shall pay to the Recovery Bank all amounts owed to such Recovery Bank under this
Agreement and the Note (including, without limitation, any amounts owed under
Section 2.6), such Recovery Bank shall no longer be a "Bank" hereunder, and
concurrently therewith the remaining parties hereto shall execute such
instruments as shall be necessary to have the replacement lender become a "Bank"
hereunder having a Commitment equal to that of the Recovery Bank.
ARTICLE 3
CONDITIONS OF LENDING
SECTION 3.1 Condition Precedent to Initial Advance. The obligation of the
Banks to make the initial Advance under this Agreement is subject to the
condition precedent that the Agent shall have received on or before the day of
such Advance the following, each dated such day, in form and substance
satisfactory to the Agent:
(a) The Notes and a Subsidiary Guaranty from each Subsidiary;
(b) Certified copies of the declaration of trust and bylaws of the
Borrower, together with resolutions of the Board of Trustees of the Borrower
approving this Agreement and the Notes, and of all documents evidencing other
necessary trust action and governmental approvals, if any, with respect to this
Agreement or the Notes;
16
(c) Current good standing certificates as to the Borrower's existence
in the State of Maryland as a real estate investment trust and as to the
existence of each Subsidiary in the jurisdiction in which it is organized;
(d) A certificate of a duly authorized officer of the Borrower
certifying the incumbency names and true signatures of the officers of the
Borrower authorized to sign this Agreement, the Notes, and the other documents
to be delivered hereunder;
(e) Certified copies of the organizational documents and resolutions
of each Subsidiary authorizing the Subsidiary Guaranty, and a certificate of a
duly authorized representative of such Subsidiary certifying the incumbency,
names and true signatures of the representatives of such Subsidiary authorized
to sign the Subsidiary Guaranty; and
(f) A favorable opinion of Arent Fox Xxxxxxx Xxxxxxx & Xxxx, counsel
for the Borrower and the Subsidiaries, as to such matters as the Banks may
reasonably request.
SECTION 3.2 Conditions Precedent to All Advances and Term Loans. The
obligation of the Banks to make each Advance (including the initial Advance) and
each Term Loan shall be subject to the further conditions precedent that on the
date of such Advance or such Term Loan the following statements shall be true
(and each of the giving of the applicable notice requesting such Advance or Term
Loan and the acceptance by the Borrower of the proceeds of such Advance or Term
Loan shall constitute a representation and warranty by the Borrower that on the
date of such Advance or Term Loan such statements are true):
(a) The representations and warranties contained in Section 4.1 are
correct on and as of the date of such Loan, before and after giving effect to
such Loan and to the application of the proceeds therefrom, as though made on
and as of such date, except that the representation made in Section 4.1 (a)
shall be deemed to be made with respect to any Subsidiaries acquired or formed
in accordance with Section 5.1 (b) and the representations made in Section 4(e)
shall be deemed to be made with respect to the financial statements most
recently delivered in accordance with Section 5.1 (e); and
(b) No event has occurred and is continuing, or would result from
such Loan or from the application of the proceeds therefrom, which constitutes
an Event of Default or would constitute an Event of Default but for the
requirement that notice be given or time elapse or both.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
SECTION 4.1 Representations and Warranties of the Borrower. The Borrower
represents and warrants as follows:
17
(a) The Borrower is a real estate investment trust duly formed,
validly existing and in good standing under the laws of the State of Maryland,
and is qualified to do business in each jurisdiction where such qualification is
required. The only Subsidiary of the Borrower as of the date of this Agreement
is WRIT LP.
(b) The execution, delivery and performance by the Borrower of this
Agreement and the Notes are within the Borrower's trust powers, have been duly
authorized by all necessary trust action, and do not contravene (1) the
Borrower's declaration of trust or bylaws or (2) law or any contractual
restriction binding on or affecting the Borrower.
(c) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by the Borrower of this Agreement or
the Notes.
(d) This Agreement and the Notes when delivered hereunder will be
legal, valid and binding obligations of the Borrower enforceable against the
Borrower in accordance with their respective terms.
(e) The consolidated balance sheet of the Borrower and its
Subsidiaries reported on SEC Form 10-Q for the fiscal quarter ended on March 31,
1997, and the related consolidated statements of income, equity and cash flows
of the Borrower and its Subsidiaries for the fiscal quarter then ended, copies
of which have been furnished to the Bank, fairly present the financial condition
of the Borrower and its Subsidiaries as of such date and the results of the
operations of the Borrower and its Subsidiaries for the period ended on such
date, all in accordance with generally accepted accounting principles
consistently applied, and since March 31, 1997, there has been no material
adverse change in such condition or operations.
(f) To the best of the Borrower's knowledge, there is no pending or
threatened action or proceeding affecting the Borrower before any court,
governmental agency or arbitrator, which may materially adversely affect the
financial condition or operations of the Borrower or which purports to affect
the legality, validity or enforceability of this Agreement or the Notes.
(g) No proceeds of any Loan will be used to acquire any equity
security of a class which is registered pursuant to Section 12 of the Securities
Exchange Act of 1934.
(h) The Borrower is not engaged in the business of extending credit
for the purpose of purchasing or carrying margin stock (within the meaning of
Regulation U issued by the Board of Governors of the Federal Reserve System),
and no proceeds of any Loan will be used to purchase or carry any margin stock
or to extend credit to others for the purpose of purchasing or carrying any
margin stock.
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(i) The Borrower is not an "investment company" within the meaning
of, or is exempt from, the provisions of the Investment Company Act of 1940, as
amended.
(j) The Borrower is qualified as a real estate investment trust under
Sections 856 to 860 of the Internal Revenue Code.
ARTICLE 5
COVENANTS OF THE BORROWER
SECTION 5.1 Affirmative Covenants. So long as the Notes shall remain
unpaid or any Bank shall have any Commitment hereunder, the Borrower will,
unless the Majority Banks shall otherwise consent in writing:
(a) Compliance with Laws. Comply, and cause each Subsidiary to
comply, in all material respects with all applicable laws, rules, regulations
and orders, such compliance to include, without limitation, (1) paying before
the same become delinquent all taxes, assessments and governmental charges
imposed upon it or upon its property except to the extent contested in good
faith, (2) maintaining all employee benefit plans subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") in conformity with
the provisions thereof, including the minimum funding requirements of ERISA, and
(3) the treatment, disposal, removal, storage and release of hazardous or toxic
substances in accordance with applicable environmental laws and regulations.
(b) Reporting Requirements. Furnish to each Bank:
(1) as soon as available and in any event within 45 days after
the end of each of the first three quarters of each fiscal year of the Borrower,
the SEC Form 10-Q of the Borrower filed for such quarter;
(2) as soon as available and in any event within 90 days after
the end of each fiscal year of the Borrower, a copy of the SEC Form 10-K of the
Borrower for such year for the Borrower, containing audited financial statements
for such year certified by independent public accountants reasonably acceptable
to the Banks, accompanied by an operating statement for such year for each real
estate project owned by the Borrower or a Subsidiary setting forth a breakdown
of revenues, expenses, net operating income and occupancy for each such project,
and an itemization of any lease of space of 10,000 square feet or more that will
expire within 12 months after the date of such operating statement. The
operating statements and the information contained therein shall be confidential
information and, unless required by applicable law, shall not be provided to any
person except each Bank's regulators and accountants;
(3) Within 45 days after the end of each fiscal quarter, a
certificate of the chief financial officer of the Borrower to the effect that no
Event of Default, and no event which, with the giving of notice or lapse of
time, or both, would constitute an Event of
19
Default, occurred during the prior quarter and containing calculations of the
financial covenants set forth in Section 5.2(d); and
(4) as soon as possible and in any event within five days
after an officer of the Borrower has knowledge of the occurrence of each Event
of Default and each event which, with the giving of notice or lapse of time, or
both, would constitute an Event of Default, continuing on the date of such
statement, a statement of the chief financial officer of the Borrower setting
forth details of such Event of Default or event and the action which the
Borrower has taken and proposes to take with respect thereto;
(5) promptly after the sending or filing thereof, copies of
all other reports which the Borrower sends to any of its security holders or
regulators, and copies of all reports and registration statements which the
Borrower or any Subsidiary files with the Securities and Exchange Commission or
any national securities exchange; and
(6) such other information respecting the condition or
operations, financial or otherwise, of the Borrower, the Subsidiaries or any of
their Properties as the Banks may from time to time reasonably request.
(c) Delivery of Subsidiary Guaranties. Payment of all Indebtedness of
the Borrower arising under this Agreement and the Notes shall be guaranteed by
WRIT LP and each other Subsidiary of the Borrower formed or acquired after the
date of this Agreement. The Borrower shall promptly notify the Agent of any
planned formation or acquisition of any Subsidiary. Within 10 days after the
Borrower forms or acquires any Subsidiary, the Borrower shall cause such
Subsidiary to execute and deliver to the Banks a valid and enforceable guaranty
agreement (as "Subsidiary Guaranty") together with such other documents as the
Banks shall reasonably request. Each Subsidiary Guaranty and such other
documents each shall be in form and substance satisfactory to the Banks. Such
documents shall include, without limitation:
(1) an opinion of counsel to the Subsidiary, addressed to the Agent,
covering such matters as the Agent may reasonably request;
(2) copies of evidence of all actions taken by the Subsidiary to
authorize the execution, delivery and performance of the
Subsidiary Guaranty;
(3) certified copies of the organizational documents of the
Subsidiary;
(4) a certificate as to the authority, incumbency and signatures of
the representatives of the Subsidiary authorized to execute the
Subsidiary Guaranty; and
(5) a current certificate of good standing or formation (or similar
instrument) issued by the appropriate state official of the state
of organization of the Subsidiary.
20
SECTION 5.2 Negative Covenants. So long as the Notes shall remain unpaid
or any Bank shall have any Commitment hereunder, the Borrower will not, without
the written consent of the Majority Banks:
(a) Liens. Create or permit to exist, or permit any of its
Subsidiaries to create or permit to exist, any lien, security interest or other
charge or encumbrance or any other type of preferential arrangement
(collectively, a "Lien"), upon or with respect to any of its Properties, whether
now owned or hereafter acquired, or assign, or permit any of its Subsidiaries to
assign, any right to receive income, in each case to secure or provide for the
payment of any Indebtedness of any person or entity, other than (1) the lien for
real estate taxes and any similar assessments or charges which are not yet due
and payable (2) mechanics' liens and/or judgments which the Borrower will have
released or bonded off, or otherwise provide adequate security for, within 60
days, (3) liens or security interests existing on income producing Property at
the time of its acquisition by the Borrower, and any refinancings thereof that
do not increase the amount of such liens, and (4) liens in an aggregate amount
not to exceed $500,000 at any time outstanding. In case any Property is
subjected to a Lien in violation of this, Section 5.2(a), the Borrower and the
applicable Subsidiary will make or cause to be made provision whereby the Notes
will be secured equally and ratably with all other obligations secured thereby,
and in any case the Banks shall have the benefit, to the full extent that and
with such priority as the Banks may be entitled thereto under applicable law, of
an equitable lien on such property securing the Notes. Such violation shall
constitute an Event of Default hereunder, however, whether or not such provision
for an equal and ratable lien is made.
(b) Financial Covenants. Allow or permit to exist, or permit any of
its Subsidiaries to permit to exist, on a consolidated basis together with its
Subsidiaries: (1) a Cash Flow to Debt Service Ratio of less than 2.5, as
determined at the end of each fiscal quarter, based upon annualized results for
the preceding two fiscal quarters; (2) a Consolidated Tangible Net Worth of less
than $225,000,000; (3) Consolidated Total Indebtedness greater than forty-five
percent (45%) of Total Capitalization Value; (4) Consolidated Secured
Indebtedness greater than fifteen percent (15%) of Total Capitalization Value;
(5) the Value of Unencumbered Assets to be less than 2.25 times the Consolidated
Senior Unsecured Indebtedness; or (6) annualized EBITDA (determined by
multiplying by two (2) the sum of EBITDA for the two (2) most recently ended
fiscal quarters) to be less than twenty percent (20%) of Consolidated Total
Indebtedness.
(c) Mergers. Merge or consolidate with or into, or convey, transfer,
lease or otherwise dispose of (or permit any Subsidiary to do so), whether in
one transaction or in a series of transactions all or substantially all of its
assets (whether now owned or hereafter acquired) to, or acquire all or
substantially all of the assets of, any person or entity, except (1) for real
estate assets acquired in the ordinary course of business, (2) the Borrower may
form and acquire "qualified REIT subsidiaries" (as such term is defined in the
Internal Revenue Code) and may transfer assets to such Subsidiary, provided that
each such Subsidiary complies with the provisions of Section 5.1 (c), and (3)
that the Borrower may
21
merge or consolidate with or into any other person or entity, provided that,
immediately after giving effect to such proposed transaction, no Event of
Default or event which, with the giving of notice or lapse of time, or both,
would constitute an Event of Default would exist and the Borrower is the
surviving entity.
(d) Acquisition of Non-Income Producing Property. Acquire, or permit
any Subsidiary to acquire, any undeveloped or unimproved real estate unless it
is contiguous to income producing real estate (1) already owned by the Borrower
or Subsidiary, or (2) being acquired by the Borrower or the Subsidiary
simultaneously with the acquisition of income producing real estate.
(e) Asset Sales. During any fiscal year sell assets that in the
aggregate generated 10% or more of consolidated EBITDA for the Borrower and its
Subsidiaries for the immediately preceding fiscal year.
ARTICLE 6
EVENTS OF DEFAULT
SECTION 6.1 Events of Default. If any of the following events ("Events of
Default") shall occur and be continuing, the Agent shall, at the request of the
Majority Banks, be entitled to exercise the remedies provided for in Section
6.2:
(a) The Borrower shall fail to pay any principal of any Note when the
same becomes due and payable and such failure continues for a period of five
days after written notice to the Borrower from the Agent; or
(b) The Borrower shall fail to pay any interest on the Notes when the
same shall become due and payable and such failure continues for a period of ten
days after written notice from the Agent to the Borrower; or
(c) Any representation or warranty made by the Borrower or a
Subsidiary in any Loan Document or by the Borrower or any Subsidiary (or any of
its officers or representatives) in connection with this Agreement shall prove
to have been incorrect in any material respect when made; or
(d) The Borrower or a Subsidiary shall fail to perform or observe any
term, covenant or agreement contained in this Agreement or in the Subsidiary
Guaranty on its part to be performed or observed if such failure shall remain
unremedied for 30 days after written notice thereof shall have been given to the
Borrower or such Subsidiary, as applicable, by the Agent, provided that the
Borrower or such Subsidiary, as applicable, shall be entitled such additional
time, as may be reasonably approved by the Banks, but not more than 90 days, to
cure a default under Section 5.1 (a) which cannot reasonably be cured within 30
days so long as the Borrower or such Subsidiary, as applicable, commences such
cure promptly and proceeds diligently with such cure; or
22
(e) The Borrower shall fail to pay any principal of or interest on
any Indebtedness which is outstanding in a principal amount of at least $100,000
in the aggregate (but excluding Indebtedness evidenced by the Notes) of the
Borrower (as the case may be), when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise,
provided that a demand instrument issued by the Borrower shall not be deemed to
be due and payable until demand is made by the holder thereof), and such failure
shall continue after the applicable grace period, if any, specified in the
agreement or instrument relating to such Indebtedness; or any other event shall
occur or condition shall exist under any agreement or instrument relating to any
such Indebtedness and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such event or
condition is to accelerate, or to permit the acceleration of, the maturity of
such Indebtedness; or any such Indebtedness shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled required
prepayment), redeemed, purchased or defeased, or an offer to prepay, redeem,
purchase or defease such Indebtedness shall be required to be made, in each case
prior to the stated maturity thereof; or
(f) The Borrower shall generally not pay its debts as such debts
become due, or shall admit in writing its inability to pay its debts generally,
or shall make a general assignment for the benefit of creditors; or any
proceeding shall be instituted by or against the Borrower seeking to adjudicate
it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee, custodian or other similar official for it or for any
substantial part of its property and, in the case of any such proceeding
instituted against it (but not instituted by it), either such proceeding shall
remain undismissed or unstayed for a period of 60 days, or any of the actions
sought in such proceeding (including, without limitation, the entry of an order
for relief against, or the appointment of a receiver, trustee, custodian or
other similar official for, it or for any substantial part of its property)
shall occur; or the Borrower shall take any action to authorize any of the
actions set forth above in this subsection (f); or
(g) The Borrower shall fail to qualify as a real estate investment
trust under Sections 856 to 860 of the Internal Revenue Code; or
(h) Any judgment or order for the payment of money in excess of
$1,000,000 shall be rendered against the Borrower and either (1) enforcement
proceedings shall have been commenced by any creditor upon such judgment or
order or (2) there shall be any period of 10 consecutive days during which a
stay of enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or
(i) The occurrence of an event described in Sections 6.1(e) or (h)
shall occur with respect to any Subsidiary or the occurrence of an event
described in Section 6.1(f)
23
with respect to a Subsidiary or Subsidiaries with aggregate Total Tangible
Assets of more than $10,000,000.
SECTION 6.2 REMEDIES. Upon the occurrence of any Event of Default, the
Agent shall, at the request of the Majority Banks:
(a) by notice to the Borrower, declare the obligation of each Bank to
make Loans to be terminated, whereupon the same shall forthwith terminate; and
(b) by notice to the Borrower, declare the Notes, all interest
thereon and all other amounts payable under this Agreement to be forthwith due
and payable, whereupon the Notes, all such interest and all such amounts shall
become and be forthwith due and payable, without presentment, demand, protest,
or further notice of any kind, all of which are hereby expressly waived by the
Borrower; provided, however, that in the event of an actual or deemed entry of
an order for relief with respect to the Borrower under the Federal Bankruptcy
Code, (1) the obligation of each Bank to make Loans shall automatically be
terminated and (2) the Loans, the Notes, all such interest and all such amounts
shall automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived by
the Borrower.
ARTICLE 7
THE AGENT
SECTION 7.1 Authorization and Action. Each Bank hereby appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
hereof, together with such powers as are reasonably incidental thereto. As to
any matters not expressly provided for by this Agreement (including, without
limitation, enforcement or collection of the Notes), the Agent shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Banks, and such
instructions shall be binding upon all Banks and all holders of Notes; provided,
however, that the Agent shall not be required to take any action that exposes
the Agent to personal liability or that is contrary to this Agreement, any Note
or applicable law. The Agent agrees to give to each Bank prompt notice of each
notice given to it by the Borrower pursuant to the terms of this Agreement.
SECTION 7.2 Agent's Reliance, etc. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in connection with this Agreement,
except for its or their own gross negligence or willful misconduct. Without
limitation of the generality of the foregoing, the Agent: (1) may treat the
payee of any Note as the holder thereof, subject to the provisions of Section
8.13; (2) may consult with legal counsel (including counsel for the Borrower),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such
24
counsel, accountants or experts; (3) makes no warranty or representation to any
Bank and shall not be responsible to any Bank for any statements, warranties or
representations (whether written or oral) made by the Borrower or another Bank
in or in connection with this Agreement; (4) shall not have any duty to
ascertain or to inquire as to the performance or observance of any of the terms,
covenants or conditions of this Agreement on the part of the Borrower or to
inspect the property (including the books and records) of the Borrower; (5)
shall not be responsible to any Bank for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement, any Note or
any other instrument or document furnished pursuant hereto; and (6) shall incur
no liability under or in respect of this Agreement by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telecopier,
telegram, cable or telex) reasonably believed by it to be genuine and signed or
sent by the proper party or parties.
SECTION 7.3 Agent and Affiliates. With respect to its Commitment, the
Loans made by it, the Note issued to it and the Indebtedness due to it, the
Agent shall have the same ri .ghts and powers under this Agreement as any other
Bank and may exercise the same as though it were not the Agent, and the term
"Bank" or "Banks" shall, unless otherwise expressly indicated, include Crestar
Bank in its individual capacity. Crestar Bank and its affiliates may accept
deposits from, lend money to, act as trustee under indentures of, and generally
engage in any kind of business with, the Borrower and any person or entity who
may do business with or own common stock of the Borrower, all as if Crestar Bank
were not the Agent and without any duty to account therefor to the Banks.
SECTION 7.4 Bank Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank and based on
the financial statements referred to in Section 4. 1 (e) and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Bank also acknowledges
that it will, independently and without reliance upon the Agent or any other
Bank 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.
SECTION 7.5 Indemnification. The Banks agree to indemnify the Agent (to
the extent not reimbursed by the Borrower), ratably according to their
respective Commitment Percentages, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever that may be imposed
on, incurred by, or asserted against the Agent in any way relating to or arising
out of this Agreement or any action taken or omitted by the Agent under this
Agreement, provided that no Bank shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Agent's gross negligence or
willful misconduct. Without limitation of the foregoing, each Bank agrees to
reimburse the Agent promptly upon demand for its ratable share of any
out-of-pocket expenses (including counsel fees) incurred by the Agent in
connection with the preparation, execution, delivery, administration,
modification,
25
amendment or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities under,
this Agreement, to the extent that the Agent is not reimbursed for such expenses
by the Borrower.
SECTION 7.6 Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Banks and the Borrower. Upon any such resignation,
the Banks shall have the right to appoint a successor Agent. If no successor
Agent shall have been so appointed by the Banks, and shall have accepted such
appointment, within 30 days after the retiring Agent's giving of notice of
resignation, then the retiring Agent, on behalf of the Banks, may appoint a
successor Agent, which shall be a commercial bank organized under the laws of
the United States of America or of any State thereof and having a combined
capital and surplus of at least $50,000,000. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations under this Agreement. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Article 7 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement.
SECTION 7.7 Borrower's Reliance. The Borrower shall be entitled to rely
upon written confirmation from the Agent as to the consent of the Banks to any
action by the Borrower for which such consent is required. Crestar Bank agrees
with the Borrower that it shall use good faith efforts to remain the Agent under
this Agreement.
ARTICLE 8
MISCELLANEOUS
SECTION 8.1 Amendments. No amendment or waiver of any provision of this
Agreement or the Note, nor consent to any departure by the Borrower therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Borrower, the Agent and the Majority Banks, or where unanimous consent is
required, by all Banks, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given. The
unanimous consent of all Banks will be required for any amendment, waiver or
consent, the effect of which is to (a) reduce any amount payable hereunder or
under the Note, or (b) extend the time of payment of any amount payable
hereunder or under the Note, (c) increase the amount of any Commitment, (d)
release the Borrower from any liabilities hereunder or under the Note, (e)
change the definition of Majority Banks, or (f) amend the provisions of this
Section 8.1.
SECTION 8.2 Notices. All notices and other communications provided for
hereunder shall be in writing and mailed, by certified mail, postage prepaid, or
delivered by reputable overnight courier service, if to the Borrower, at its
address at 00000 Xxxxxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attention:
Xxxxx X. Finger, with a copy of any notice of an Event of Default to Xxxxx X.
Xxxxx, Esq., at Arent Fox Xxxxxxx Xxxxxxx & Xxxx at
26
0000 Xxxxxxxxxxx Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000, if to the Agent, at its
address at 0000 Xxxxx Xxxxxxxxx, 0xx Xxxxx, Xxxxxx, Xxxxxxxx 00000, Attention:
Xxxxxxx X. Xxxxx; and if to the Banks, at their respective addresses set forth
on the Commitment Schedule attached hereto or any updates thereof; or, as to
each party, at such other address as shall be designated by such party in a
written notice to the other party. All such notices and communications shall be
effective upon receipt.
SECTION 8.3 No Waiver; Remedies. No failure on the part of the Agent or
the Banks to exercise, and no delay in exercising, any right hereunder or under
the Notes shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 8.4 Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP.
SECTION 8.5 Costs, Expenses and Taxes. The Borrower agrees (a) to pay or
reimburse the Agent on demand for all its costs and expenses incurred in
connection with the preparation, execution and delivery of, and any amendment,
supplement or modification to, this Agreement, the Notes and any other documents
prepared in connection herewith or therewith, and the consummation of the
transactions contemplated hereby and thereby, including, without limitation, the
reasonable fees and disbursements of counsel to the Agent; (b) to pay or
reimburse the Agent and each Bank for all of their respective costs and expenses
incurred in connection with the enforcement or preservation of any rights under
this Agreement, the Notes and any such other documents, including, without
limitation, reasonable fees and disbursements of counsel to the Agent and each
Bank, except that the Borrower shall not be responsible for any costs or
expenses attributable to disputes among the Banks or among the Agent and any
Bank; (c) to pay, indemnify and hold each Bank and the Agent harmless from any
and all recording and filing fees and any and all liabilities with respect to,
or resulting from any delay in paying, stamp, excise and other taxes, if any,
that may be payable or determined to be payable in connection with the execution
and delivery or consummation of any of the transactions contemplated by, or any
amendment, supplement or modification to, or any waiver or consent under or in
respect of, this Agreement, the Notes and any such other documents; and (d) to
pay, indemnify and hold each Bank and the Agent harmless from and against any
and all other liabilities, obligations, losses, damages, penalties, actions,
judgements, suits, costs, expenses or disbursements of any kind or nature
whatsoever arising out of or relating to the making or maintaining of the Loans,
or the enforcement, performance and administration of this Agreement, the Notes
and any such other documents, or expenses or other liabilities arising out of
any bankruptcy or insolvency proceeding of the Borrower (all of the foregoing,
collectively, the "indemnified liabilities"), provided, that the Borrower shall
not have any obligations hereunder to the Agent or any Bank with respect to
indemnified liabilities arising from the gross negligence or willful misconduct
of the Agent or any such Bank. The agreements in this Section 8.5 shall survive
repayment of the Notes. The Borrower shall not be responsible for the fees and
expenses
27
incurred by any Participant, any Transferee Bank (as such terms are defined
below), the Agent or any Bank in connection with any acquisition of any interest
in the Loans, other than the fees and expenses of counsel to the Agent in
connection with the execution and delivery of this Agreement.
SECTION 8.6 Survival of Agreements, Representations and Warranties. All
warranties, representations and covenants made by the Borrower herein or in any
certificate or other instrument delivered by it or on its behalf in connection
with this Agreement shall be considered to have been relied upon by the Agent
and the Banks and shall survive the making of the Loans herein contemplated and
the issuance and delivery to the Banks of the Notes regardless of any
investigation made by the Banks or on their behalf and shall continue in full
force and effect so long as any amount due or to become due hereunder is
outstanding and unpaid. All statements in any such certificate or other
instrument shall constitute representations and warranties by the Borrower
hereunder.
SECTION 8.7 Binding Effect. This Agreement and the Notes issued hereunder,
shall be binding upon and inure to the benefit of the Borrower, the Agent and
the Banks and their respective successors and assigns, except that the Borrower
shall not have the right to assign its rights hereunder or any interest herein
without the prior written consent of the Banks.
SECTION 8.8 Entire Agreement. Except for the other loan documents
expressly referred to in this Agreement, this Agreement represents the entire
agreement between the Agent, the Banks and the Borrower and supersedes all prior
commitments.
SECTION 8.9 Severability. In case any one or more of the provisions
contained in this Agreement or the Notes shall be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby. The parties shall endeavor in good faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions, the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.
SECTION 8.10 Section Headings. The section headings used herein are for
convenience of reference only, are not part of this Agreement and are not to
affect the construction of or be taken into consideration in interpreting this
Agreement.
SECTION 8.11 No Assignment. The Borrower may not assign its rights or
obligations under this Agreement.
SECTION 8.12 Participations by Banks. Any Bank may at any time sell to
one or more financial institutions (each of such financial institutions being
herein called a "Participant") participating interests in any of the Loans held
by such Bank and its Commitment, provided, however, that:
28
(a) No participation contemplated by this Section 8.12 shall relieve
such Bank from its obligations hereunder;
(b) Such Bank shall remain solely responsible for the performance of
such obligations; and
(c) The Borrower, the Agent, and the other Banks shall continue to
deal solely and directly with such Bank in connection with such Bank's rights
and obligations under this Agreement.
SECTION 8.13 Assignments by Banks. Any Bank, with the prior written
consent of the Agent, may at any time agree to assign a portion of such Bank's
Commitment to another financial institution (a "Transferee Bank") provided that,
after giving effect to such assignment, such Bank must continue to hold a
Commitment of not less than $7,500,000 and unless the Borrower's written consent
is first obtained, there will not be more than five Banks at anytime. Crestar
Bank agrees that unless an Event of Default has occurred and is continuing, it
shall not hold a Commitment of less than $12,500,000. In such event the Bank and
the Transferee Bank shall so notify the Agent and the Borrower of the date on
which such assignment is to be effective. On such effective date:
(a) The Agent shall deliver to the Borrower and each of the Banks a
Commitment Schedule as of such effective date, reflecting the Commitments of the
Banks after giving effect to such assignment.
(b) The Agent, the assigning Bank and the Transferee Bank shall
execute and deliver an assignment agreement, in Form and substance acceptable to
the Agent, which shall constitute an amendment to this Agreement to the extent
necessary to reflect such transfer.
(c) Upon request by any Bank following an assignment made in
accordance with this Section 8.13, the Borrower shall issue, in exchange for the
existing Note held by such Bank, new Notes to the assignor and assignee
reflecting the assignment.
SECTION 8.14 Governing Law. This Agreement and the Notes shall be governed
by, and construed in accordance with, the laws of the Commonwealth of Virginia.
SECTION 8.15 No Officer, Etc., Liability. No trustee, officer or agent of
the trust shall be held to any personal liability whatsoever, in tort, contract
or otherwise, in connection with the transactions contemplated by this
Agreement.
[SIGNATURES ON FOLLOWING PAGE]
29
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
BORROWER:
---------
WASHINGTON REAL ESTATE
INVESTMENT TRUST
By: /s/ Xxxxxx X. Xxxxxx, Xx.
__________________________________
Name: Xxxxxx X. Xxxxxx, Xx.
________________________________
Title: President
________________________________
AGENT:
------
CRESTAR BANK
By: /s/ Xxxxxxx X. Xxxxx
__________________________________
Xxxxxxx X. Xxxxx
Vice President
BANKS:
------
CRESTAR BANK
By: /s/ Xxxxxxx X. Xxxxx
__________________________________
Xxxxxxx X. Xxxxx
Vice President
SIGNET BANK
By: /s/ Xxxx X. Xxxxxxxx
__________________________________
Xxxx X. Xxxxxxxx
Senior Vice President
