<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-5305
BRE PROPERTIES, INC.
- --------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Maryland 94-1722214
- ----------------------------------- ---------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
One Montgomery Street
Telesis Tower, Suite 2500
San Francisco, CA 94104-5525
- ----------------------------------- ---------------------
(ADDRESS OF PRINCIPAL OFFICE) (ZIP CODE)
(415) 445-6530
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(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
N/A
- --------------------------------------------------------------------------------
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR,
IF CHANGED SINCE LAST REPORT)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X . No .
--------- ------
Number of shares of common stock
outstanding as of July 28, 1997 37,009,645
-------------------------
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BRE PROPERTIES, INC.
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PART I FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
BALANCE SHEETS (unaudited)
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(Dollar amounts in thousands) June 30, December 31,
1997 1996
--------- ------------
ASSETS
Investments in rental properties
Multifamily $794,393 $710,240
Commercial and retail 35,229 103,528
Less: Accumulated depreciation and amortization (43,515) (49,690)
--------- ------------
786,107 764,078
Investments in limited partnerships 2,666 2,621
--------- ------------
Real estate portfolio 788,773 766,699
Mortgage loans, net 9,420 9,716
Cash and short-term investments 17,621 184
Other 11,569 7,115
--------- ------------
TOTAL ASSETS $827,383 $783,714
--------- ------------
--------- ------------
LIABILITIES AND
SHAREHOLDERS' EQUITY
Liabilities
Mortgage loans $114,125 $114,985
Unsecured notes (Note F) 123,000 73,000
Unsecured lines of credit - 124,000
Accounts payable and accrued expenses 7,950 7,615
--------- ------------
Total liabilities 245,075 319,600
--------- ------------
Shareholders' equity
Preferred stock, $.01 par value, 10,000,000 shares
authorized. No shares outstanding at June 30,
1997 or December 31, 1996. - -
Common stock, $.01 par value, 100,000,000 shares
authorized at June 30, 1997; 50,000,000 shares
authorized at December 31, 1996. Shares issued
and outstanding: 37,004,436 at June 30, 1997;
32,879,741 at December 31, 1996.
(Notes D and E) 370 329
Additional paid-in capital 581,938 463,785
--------- ------------
Total shareholders' equity 582,308 464,114
--------- ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $827,383 $783,714
--------- ------------
--------- ------------
See notes to financial statements.
2
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BRE PROPERTIES, INC.
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STATEMENTS OF INCOME (unaudited)
- --------------------------------------------------------------------------------
(Amounts in thousands, except per share data)
For the Quarter Ended For the Six Months Ended
June 30, June 30,
--------------------- ------------------------
1997 1996 1997 1996
------ ------ ------ ------
REVENUE
Rental income:
Multifamily $28,797 $19,277 $55,597 $31,939
Commercial and retail 1,194 5,136 4,255 8,821
Other income 2,215 2,436 4,081 4,914
---------- -------- -------- --------
Total revenue 32,206 26,849 63,933 45,674
---------- -------- -------- --------
EXPENSES
Real estate expenses:
Multifamily 10,340 7,152 19,707 11,873
Commercial and retail 84 757 332 1,801
Depreciation and amortization 4,128 3,536 8,296 5,725
Interest expense 4,850 4,460 10,739 6,913
General and administrative 1,128 1,092 2,242 2,126
---------- -------- -------- --------
Total expenses 20,530 16,997 41,316 28,438
---------- -------- -------- --------
Net income before gain on sales
of real estate investments 11,676 9,852 22,617 17,236
Net gain on sales of real
estate investments 25,603 226 25,603 226
---------- -------- -------- --------
Net income $37,279 $10,078 $48,220 $17,462
---------- -------- -------- --------
---------- -------- -------- --------
Income per share:
Before gains on sales of real
estate investments $.34 $.30 $.67 $.61
Gains on sales of real estate
investments $.74 $.01 $.76 $.01
---------- -------- -------- --------
Net income per share $1.08 $.31 $1.43 $.62
---------- -------- -------- --------
---------- -------- -------- --------
Dividends declared and paid per
share $.35 $.33 $.69 $.67
---------- -------- -------- --------
---------- -------- -------- --------
Weighted average shares
outstanding 34,520 32,670 33,770 28,080
---------- -------- -------- --------
---------- -------- -------- --------
See notes to financial statements
3
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BRE PROPERTIES, INC.
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STATEMENT OF CASH FLOWS (UNAUDITED)
- --------------------------------------------------------------------------------
(Dollar amounts in thousands)
<TABLE>
<CAPTION>
For the Six Months Ended June 30,
---------------------------------
1997 1996
-------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $48,220 $17,462
Non-cash revenues and expenses included in income:
Provision for depreciation and amortization 8,296 5,725
(Gain) on sales of investments (25,603) (226)
Increase in accounts payable and other liabilities 335 3,908
(Increase) decrease in other assets (4,499) 1,942
-------------- ----------------
Net cash flows generated by operating activities 26,749 28,811
-------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Multifamily properties purchased (84,912) (60,284)
Capital expenditures-multifamily (735) (172)
Capital expenditures-commercial and retail (414) (295)
Capital expenditures-rehabilitation and other (1,776) -
Advances on mortgage loans receivable - (3,214)
Payments on mortgage loans receivable 296 434
Proceeds from sales of property, net 83,115 -
-------------- ----------------
Net cash flows used in investing activities (4,426) (63,531)
-------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on mortgage loans (860) (728)
Issuance of unsecured notes 50,000 -
Lines of credit:
Advances 37,500 47,000
Principal repayments (161,500) (9,200)
Proceeds from equity offering, net (Note E) 90,999 -
Proceeds from exercises of stock options 3,125 413
Dividends paid (24,150) (18,121)
-------------- ----------------
Net cash flows (used in) generated by financing activities (4,886) 19,364
-------------- ----------------
Increase (decrease) in cash and short-term investments 17,437 (15,356)
Balance at beginning of period 184 16,057
-------------- ----------------
BALANCE AT END OF PERIOD $17,621 $701
-------------- ----------------
-------------- ----------------
</TABLE>
See notes to financial statements
4
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BRE PROPERTIES, INC.
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NOTES TO FINANCIAL STATEMENTS (unaudited)
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June 30, 1997
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance
with the instructions to Form 10-Q and should be read in conjunction with the
Annual Report of BRE Properties, Inc., (the "Company"), on Form 10-K for the
year ended December 31, 1996, as amended. In the opinion of management, all
adjustments (consisting of normal recurring adjustments only) have been made
which are necessary for a fair statement of the results for the interim periods
presented herein.
NOTE B - NET INCOME PER SHARE
Net income per share is based upon the average weighted number of shares
outstanding during the periods. In February 1997, the Financial Accounting
Standards Board issued Statement No.128, "Earnings per share," which is required
to be adopted on December 31, 1997. The impact of the adoption of Statement No.
128 is not expected to be material.
NOTE C - LITIGATION
BRE is defending various claims and legal actions that arise from its normal
course of business. While it is not feasible to predict or determine the
ultimate outcome of these matters, in the opinion of management, none of these
actions will have a material adverse effect on BRE's results of operations or
financial position.
NOTE D - INCREASE IN AUTHORIZED SHARES
On April 21, 1997, the number of authorized shares of the Company's common stock
was increased from 50,000,000 to 100,000,000.
NOTE E - ISSUANCE OF ADDITIONAL COMMON SHARES
In May, 1997, the Company issued 3,950,000 shares of common stock to the public
at $24.50 per share (the "Equity Offering"). Net proceeds to the Company after
underwriting discounts and other expenses were approximately $91 million.
NOTE F - ISSUANCE OF UNSECURED NOTES
In June, 1997 the Company issued $50,000,000 in unsecured notes due June 2007 at
a coupon rate of 7.20%. Net proceeds to the Company after underwriting
discounts and other expenses were approximately $49,443,000.
5
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BRE PROPERTIES, INC.
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NOTE G - SUBSEQUENT EVENTS
On July 2, 1997, the Company sold the Coast Auto property for $1,375,000.
On July 8, 1997 the Company renewed and extended its $120,000,000 line of
credit. The amount available was reduced to $115,000,000, the interest rate was
decreased from LIBOR plus 1.125% to LIBOR plus .80% and the unuse fee was
eliminated. Additionally, the term was extended to July 2000.
On July 17, 1997, the Company renewed and extended its $30,000,000 line of
credit. The amount available was increased to $35,000,000, and the interest
rate was reduced from LIBOR plus 1.0% to LIBOR plus .80%. The term was extended
to April 2000. Additionally, an annual unuse fee of .125% on balances not drawn
was added.
On August 1, 1997 the Company purchased the Park at Dashpoint, a 280 unit
apartment community in Federal Way, Washington. The purchase price was
$15,300,000 and the seller was not related to the Company. The Company used
its cash and cash equivalent balance to fund this acquisition.
6
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BRE PROPERTIES, INC.
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ITEM 2 - Management's Discussion and Analysis of Financial
Condition and Results of OperationsJune 30, 1997
- --------------------------------------------------------------------------------
June 30, 1997
Overview
BRE Properties, Inc. (the "Company") is a regionally focused, self-administered
equity real estate investment trust ("REIT") which primarily owns and manages a
portfolio of apartment communities in nine major markets of the Western United
States. The Company also owns 12 commercial and retail properties, including
three partnership interests. The Company's revenues consist primarily of rental
income (93% of total revenues in the quarter ended June 30, 1997 and 91% in the
quarter ended June 30, 1996) derived from its portfolio of income-producing
properties. Other income includes interest from notes receivable and, to a
lesser extent, income from partnership investments. The policy of the Company is
to emphasize cash flows from operations rather than the realization of capital
gains through property dispositions. As dispositions of real estate assets are
made, the Company typically seeks to reinvest net proceeds from sales in
income-producing real estate.
Although the Company has embarked upon a strategic initiative to redeploy its
real estate investments into multifamily assets, no time frame has been
established for completion of this activity and ultimate dispositions of
commercial and retail assets are dependent upon offers with acceptable prices
and terms including satisfactory completion of potential buyer due diligence
procedures. For example, it is reasonably possible that the holding period for
remaining commercial and retail assets could extend well beyond one year.
Furthermore, changes to the plan are not unlikely (which would result in
extended holding periods for the existing properties) as market conditions could
result in a lack of acceptable offers and it is possible some properties could
be held indefinitely. Real estate is not classified as "held for sale" until it
is likely, in the opinion of management, that a property will be disposed of in
the near term, even if sales negotiations for such property are currently under
way; no properties were considered "held for sale" for this purpose as of June
30, 1997 or December 31, 1996 and therefore depreciation continues to be
provided on these assets.
The following discussion should be read in conjunction with the consolidated
financial statements and notes thereto appearing elsewhere in this form 10-Q.
Certain statements in this "Management's Discussion and Analysis of Financial
Condition and Results of Operations," including statements regarding the
Company's beliefs, expectations or strategies regarding the future, constitute
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although the
Company believes that the expectations reflected in such forward-looking
statements are based on reasonable assumptions, such statements are subject to
risks and uncertainties, including those discussed under the heading "Risk
Factors" in the Company's Annual Report on Form 10-K for the year ended December
31, 1996, as amended (the "1996 Form 10-K"), that could cause actual results to
differ materially from those projected.
7
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BRE PROPERTIES, INC.
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RESULTS OF OPERATIONS
Comparison of the quarters ended June 30, 1997 and 1996
Revenues
Total revenues were $32,206,000 for the three months ended June 30, 1997
compared to $26,849,000 for the same period in 1996. This increase was
primarily due to an increase in multifamily rental revenues resulting from
property acquisitions, including ten direct apartment investments, which
contributed approximately $10,301,000 and $1,390,000 to rental revenue for the
three months ended June 30, 1997 and 1996, respectively. Multifamily rental
revenue for this period also benefited from an increase in average physical
occupancy (calculated as shown below), and an average increase in rental rates
of approximately 5%, when compared to the earlier quarter for properties held
during both periods.
Rental revenues from commercial and retail properties decreased 77% in the
quarter ended June 30, 1997 when compared to the same period in 1996 due largely
to the sale of 21 properties in these categories (which properties contributed
approximately $122,000 and $4,050,000 in revenues during the quarters ended June
30, 1997 and 1996, respectively).
THREE MONTHS ENDED THREE MONTHS ENDED
(Dollars in 000s) JUNE 30, 1997 JUNE 30, 1996
--------------------- --------------------
% CHANGE
% OF TOTAL % OF TOTAL FROM 1996
REVENUES REVENUES REVENUES REVENUES TO 1997
-------- ---------- -------- -------- ---------
REVENUES:
Multifamily $28,797 89% $19,277 72% 49%
Commercial and retail 1,194 4% 5,136 19% (77%)
Other income 2,215 7% 2,436 9% (9%)
-------- ---------- -------- -------- ---------
Total revenue $32,206 100% $26,849 100% 20%
-------- ---------- -------- -------- ---------
-------- ---------- -------- -------- ---------
Portfolio physical occupancy rates as of June 30, 1997 and 1996 were as follows:
1997 1996
-------------------------------------------------------------------------
Multifamily 97% 94%
-------------------------------------------------------------------------
Commercial and retail 93% 96%
-------------------------------------------------------------------------
For multifamily properties, portfolio occupancy is calculated by dividing the
total occupied units by the total units in the portfolio. For commercial and
retail properties, portfolio occupancy is calculated by dividing the total
occupied square footage by the total square footage in the portfolio.
Expenses
REAL ESTATE EXPENSES
Real estate expenses for multifamily properties (which include maintenance and
repairs, utilities, on-site staff payroll, property taxes, insurance,
advertising and other direct operating expenses) for the quarter ended June 30,
1997 increased 45% to $10,340,000 from the comparable period in 1996 primarily
due to expenses of ten new multifamily property acquisitions. Real estate
expenses
8
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BRE PROPERTIES, INC.
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for commercial and retail properties decreased from $757,000 in the quarter
ended June 30, 1996 to $84,000 in the same period in 1997 due primarily to the
sale of 21 such properties during 1996 and 1997. Real estate expenses for
multifamily properties as a percentage of multifamily rental revenues decreased
from 37.1% for the second quarter in 1996 to 35.9% for the second quarter ended
1997. Although not measurable with precision, management believes that this
decrease resulted in part from the full internalization of property management
during 1997 and economies of scale derived from increased concentration of
assets in the Company's markets during 1997.
PROVISION FOR DEPRECIATION AND AMORTIZATION
The provision for depreciation and amortization increased by $592,000 to
$4,128,000 for the quarter ended June 30, 1997 from the comparable period of
1996. The increase in 1997 resulted primarily from multifamily property
acquisitions and was offset in part by dispositions of commercial and retail
properties.
INTEREST EXPENSE
Interest expense was $4,850,000 for the quarter ended June 30, 1997, up from
$4,460,000 for the same period in 1996. This increase was due largely to
interest on higher average borrowing levels on the Company's lines of credit
in the quarter ended June 30, 1997
GENERAL AND ADMINISTRATIVE
General and administrative costs were $1,128,000 or 3.5% of total revenues
for the second quarter in 1997 and $1,092,000 or 4.1% of total revenues for
the second quarter in 1996. The decrease in these costs as a percent of
total revenue is primarily from economies of scale in administering a much
larger portfolio in the quarter ended June 30, 1997, with total revenues
approximately 20% greater than in the quarter ended June 30, 1996.
NET GAINS ON SALES OF REAL ESTATE INVESTMENTS
The net gains on sales of real estate investments for 1997 were primarily due to
the sale of three shopping center properties for $69,600,000 and the Villa Serra
land lease for $10,900,000.
IMPACT OF INFLATION
Nearly 90% of the Company's total revenues for the quarter ended June 30, 1997
were derived from apartment properties. Due to the short-term nature of most
apartment leases (typically one year or less), the Company may seek to adjust
rents to help counter the impact of inflation upon renewal of existing leases or
commencement of new leases, although there can be no assurance that the Company
will be able to adjust rents in response to inflation. In addition, occupancy
rates may fluctuate due to short-term leases, which permit apartment residents
to leave at the end of each lease term at minimal cost to the resident.
9
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BRE PROPERTIES, INC.
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Comparison of the six months ended June 30, 1997 and 1996
Revenues
Total revenues were $63,933,000 for the six months ended June 30, 1997 compared
to $45,674,000 for the same period in 1996. This increase was primarily due to
an increase in multifamily rental revenues resulting from property acquisitions,
including the 22 apartment communities acquired in the merger with Real Estate
Investment Trust of California (the "Merger") on March 15, 1996 and ten other
direct apartment investments, which contributed approximately $33,373,000 and
$10,312,000, respectively, to rental revenue for the six months ended June 30,
1997 and 1996. Multifamily rental revenue for this period also benefited from an
increase in average occupancy, and an average increase in rental rates of
approximately 5%, when compared to the earlier period for properties held during
both periods.
Rental revenues from commercial and retail properties decreased in the six
months ended June 30, 1997 when compared to the same period in 1996 due to the
sale of 21 properties in these categories (which properties contributed
approximately $1,996,000 and $7,068,000 in revenues during the six months ended
June 30, 1997 and 1996, respectively) offset in part by the commercial and
retail properties acquired in the Merger which were held for the entire six
months during 1997.
SIX MONTHS ENDED SIX MONTHS ENDED
(Dollars in 000s) JUNE 30, 1997 JUNE 30, 1996
---------------------- ------------------
% CHANGE
% OF TOTAL % OF TOTAL FROM 1996
REVENUES REVENUES REVENUES REVENUES TO 1997
----------- ---------- ---------- -------- ---------
REVENUES:
Multifamily $55,597 87% $31,939 70% 74%
Commercial and retail 4,255 7% 8,821 19% (52%)
Other income 4,081 6% 4,914 11% (17%)
----------- ---------- ---------- -------- ---------
Total revenue $63,933 100% $45,674 100% 40%
----------- ---------- ---------- -------- ---------
----------- ---------- ---------- -------- ---------
Expenses
REAL ESTATE EXPENSES
Real estate expenses for multifamily properties (which include maintenance and
repairs, utilities, on-site staff payroll, property taxes, insurance,
advertising and other direct operating expenses) for the six months ended June
30, 1997 increased 66% to $19,707,000 from the comparable period in 1996
primarily due to expenses of the 22 properties acquired in the Merger and ten
new multifamily property acquisitions. Real estate expenses for commercial and
retail properties decreased from $1,801,000 in the six months ended June 30,
1996 to $332,000 in the same period in 1997 due to the sale of 21 such
properties during 1996 and 1997. Real estate expenses for multifamily
properties as a percentage of multifamily rental revenues decreased from 37.2%
for the six months ended June 30,1996 to 35.4% for the same period in 1997.
Although not measurable with precision, management believes that this
10
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BRE PROPERTIES, INC.
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decrease resulted in part from the internalization of property management and
economies of scale derived from increased concentration of assets in the
Company's markets.
PROVISION FOR DEPRECIATION AND AMORTIZATION
The provision for depreciation and amortization increased by $2,571,000 to
$8,296,000 for the six months ended June 30, 1997 from the comparable period of
1996. The increase in 1997 resulted from properties acquired in the Merger and
additional multifamily property acquisitions, offset in part by dispositions of
commercial and retail properties.
INTEREST EXPENSE
Interest expense was $10,739,000 for the six months ended June 30, 1997, up from
$6,913,000 in the comparable period in 1996. This increase was due primarily to
interest on indebtedness assumed in the Merger totaling $95,400,000 and interest
on subsequent borrowings on the Company's lines of credit to fund multifamily
property acquisitions.
GENERAL AND ADMINISTRATIVE
General and administrative costs were $2,242,000 or 3.5% of total revenues
for the six months ended June 30, 1997 and $2,126,000 or 4.7% of total
revenues for the same period in 1996. The decrease in these costs as a
percent of total revenue is primarily from economies of scale in
administering a much larger portfolio in the six months ended June 30, 1997,
with total revenues approximately 40% greater than in the six months ended
June 30, 1996.
NET GAINS ON SALES OF REAL ESTATE INVESTMENTS
The net gains on sales of real estate investments for 1997 were primarily due to
the sale of three shopping center properties for $69,600,000 and the Villa Serra
land lease for $10,900,000.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1997, the Company's cash and cash equivalents totaled $17,621,000,
up from $184,000 at December 31, 1996. There were no borrowings under the
Company's lines of credit at June 30, 1997, compared to $124,000,000 at December
31, 1996. Lines of credit are available to pay dividends to shareholders, fund
capital improvements and operating expenses and fund new acquisitions. The
Company typically reduces lines of credit with cash balances as available.
Borrowings of up to $150,000,000 are available under the Company's lines of
credit, with $150,000,000 available at June 30, 1997. Subsequent to June 30,
1997, the lines of credit were amended and restated and bear interest at LIBOR
plus .80%. Costs of the lines of credit are 0.125% per annum on the total
commitment amount and an unuse fee of 0.125% per annum as to amounts not
outstanding on the $35,000,000 line. (See Note G to the financial statements
contained herein.)
Additionally, the Company had $73,000,000 of unsecured indebtedness at June 30,
1997, which bears interest at 7.44% per annum as to $55,000,000 and 7.88% per
annum as to $18,000,000. This indebtedness is to be repaid through scheduled
principal payments in the years from 2000 to 2005. During the quarter, the
Company also completed a $50,000,000 issue of ten year unsecured notes priced at
99.786% of par with a coupon rate of 7.20% and an effective rate, reflecting the
11
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BRE PROPERTIES, INC.
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settlement of a Treasury Lock Swap Agreement, underwriting fees and other
costs, of approximately 7.8%. Net proceeds from this offering were used to
pay down line of credit balances and to maintain cash balances. At June 30,
1997, the Company also had outstanding mortgage indebtedness of $114,125,000
at interest rates ranging from 6.5% to 8.4%, with remaining terms of from
less than one to 31 years.
For additional information regarding the Company's lines of credit, unsecured
notes payable and mortgage loans payable, including scheduled principal payments
over the next five years, see Notes 5 and 6 to Notes to Financial Statements
contained in the Company's 1996 Form 10-K. Certain of the Company's
indebtedness contains financial covenants as to minimum net worth, interest
coverage ratios, maximum secured debt and total debt to capital, among others.
The Company was in compliance with all such covenants during the quarter ended
June 30, 1997.
During the quarter ended June 30, 1997, the Company completed a public offering
of 4,600,000 shares of its common stock, 650,000 of which were sold by a
non-management shareholder and the remainder of which were sold by the Company.
Net proceeds to the Company from this offering totaled approximately $91,000,000
and were used to repay then-outstanding balances under the Company's lines of
credit.
The Company believes that its cash flow and cash available from lines of credit
will be sufficient to meet its short-term liquidity needs during 1997, which
include normal recurring expenses, debt service requirements, budgeted
expenditures for improvements to certain properties and distributions required
to maintain the Company's REIT qualification under the Internal Revenue Code.
However, the Company anticipates that it will continue to require outside
sources of financing to meet its long-term liquidity needs, such as scheduled
debt repayments and property acquisitions.
DIVIDENDS
A cash dividend has been paid to shareholders each quarter since the Company's
inception in 1970. On February 24, 1997, the Company increased its dividend from
$1.32 per year to $1.38 per year. Total dividends paid to shareholders for the
six months ended June 30, 1997 and 1996 were $24,150,000 and $18,121,000,
respectively.
12
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BRE PROPERTIES, INC.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Annual Meeting of shareholders held on April 10, 1997, the
shareholders elected three Directors for the three-year terms, and approved
three other corporate actions by the following votes:
<TABLE>
<CAPTION>
BROKER
WITH- NON-
FOR AGAINST HELD VOTE
-------------------------------- ------- ------- ------
% of
Shares
Voted % of
on this Out- No. of No. of No. of
No. of shares Item standing Shares Shares Shares
------------- ------- -------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
ITEM NO. 1
(Election of
Directors)
Class III
Frank C. McDowell 29,746,055 99% 90% 296,640
C. Preston Butcher 29,750,619 99% 90% 292,076
William E. Borsari 29,730,780 99% 90% 311,915
ITEM NO. 2
Approval of
increasing the
authorized
common stock 26,972,000 95% 82% 1,730,914 343,025 996,756
ITEM NO. 3
Approval of
increasing the 1992
amended and
restated employee
stock plan 26,885,587 98% 81% 2,586,448 570,659
</TABLE>
13
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BRE PROPERTIES, INC.
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BROKER
WITH- NON-
FOR AGAINST HELD VOTE
--------------------------------- -------- ------ ------
% of
Shares
Voted % of
on this Out- No. of No. of No. of
No. of shares Item standing Shares Shares Shares
------------- ------- -------- ------ ------ ------
ITEM NO. 4
(Approval of
Auditors) 29,774,927 99% 90% 92,646 175,122
The terms of office of the Company's six other directors continued after the
Annual meeting, as follows:
Term Expires Class
------------- ------
Arthur G. von Thaden 1998 I
Malcolm R. Riley 1998 I
Roger P. Kuppinger 1998 I
L. Michael Foley 1999 II
John McMahan 1999 II
Gregory M. Simon 1999 II
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
10.37 Fourth Amendment to Loan Agreement by and between The Prudential
Insurance Company of America and BRE Properties, Inc., dated
February 25, 1997
10.38 Third Amendment to Loan Agreement by and between The Prudential
Insurance Company of America and BRE Properties, Inc., dated
February 25, 1997
10.39 Fifth Amendment to Loan Agreement by and between The Prudential
Insurance Company of America and BRE Properties, Inc., dated June
30, 1997
10.40 Fourth Amendment to Loan Agreement by and between The Prudential
Insurance Company of America and BRE Properties, Inc., dated June
30, 1997
10.41 Second Amendment to Sanwa Bank California Credit Agreement, dated
July 17, 1997
10.42 Amended and Restated Unsecured Line of Credit Loan Agreement by
and between BRE Properties, Inc., as Borrower and Bank of America
National Trust and Savings Association, as Lender, dated July 8,
1997
14
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BRE PROPERTIES, INC.
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10.43 Amended and Restated Modification Agreement to Syndicate Loan to
BRE Properties, Inc. made by various financial institutions with
Bank of America NT & SA as Agent
11 Primary and Fully Diluted Earnings per Share
27 Financial Data Schedule
(b) Reports on Form 8-K:
The Company filed a current report on Form 8-K/A on April 23,
1997, which amended the Report on Form 8-K filed March 15, 1996.
Included in the amendment was certain additional proforma
information.
The Company filed a current report on Form 8-K/A on April 23,
1997, which amended the Report on Form 8-K filed October 15, 1996.
Included in the amendment was certain additional proforma
information.
The Company filed a current report on Form 8-K/A on April 23,
1997, which amended the Report on Form 8-K filed January 14, 1997.
Included in the amendment was certain additional proforma
information.
The Company filed a current report under Item 2 with financial
statements on Form 8-K on April 25, 1997 concerning the purchase
of Red Hawk Ranch Apartments.
The Company filed a current report under Item 5 on Form 8-K on
June 19, 1997 concerning the public offering of 4,600,000 shares
of its common stock.
The Company filed a current report under item 5 on Form 8-K on
June 20, 1997 concerning its public offering of $50,000,000
aggregate principal amount of it 7.20% notes due 2007.
15
<PAGE>
BRE PROPERTIES, INC.
- --------------------------------------------------------------------------------
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BRE PROPERTIES, INC.
(Registrant)
Date August 12, 1997 /s/LeRoy E. Carlson
- ----------------------- -------------------
LeRoy E. Carlson
Executive Vice President,
Chief Financial Officer and Secretary
16
<PAGE>
FOURTH AMENDMENT TO LOAN AGREEMENT
[$55,000,000]
THIS FOURTH AMENDMENT TO LOAN AGREEMENT (this "Amendment"), is dated as of
February 25, 1997 by and between THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a
New Jersey corporation ("Lender"), and BRE PROPERTIES, INC., a Maryland
corporation ("Borrower"), as ultimate successor-in-interest by merger to Real
Estate Investment Trust of California, a California real estate investment trust
("Original Borrower").
RECITALS:
A. Lender has made a loan (the "Loan") to Original Borrower in the
original principal amount of $55,000,000, which loan is governed by that certain
Loan Agreement dated as of January 31, 1994, as amended by that certain First
Amendment to Loan Agreement dated as of July 7, 1995 by and between Original
Borrower and Lender, as further amended by that certain Second Amendment to Loan
Agreement dated as of April 30, 1996 by and between Borrower and Lender, as
further amended by that certain Third Amendment to Loan Agreement dated as of
November 20, 1996 by and between Borrower and Lender (collectively, the "Loan
Agreement") and evidenced by that certain Promissory Note dated as of January
31, 1994 executed by Original Borrower in favor of Lender (the "Note").
B. Pursuant to a series of mergers, Original Borrower merged into Real
Estate Investment Trust of Maryland, a Maryland real estate investment trust,
which in turn merged into BRE Properties Inc., a Delaware corporation, which in
turn merged into Borrower (which was then and formerly known as BRE Maryland,
Inc., a Maryland corporation).
C. Pursuant to the terms of that certain Assumption Agreement dated as of
even date herewith by and between Borrower and Lender, Borrower absolutely and
irrevocably assumed the Loan, the Loan Agreement, the Note and the other Loan
Documents and the obligations of Original Borrower thereunder.
D. Borrower and Lender have agreed to modify and amend the Loan Agreement
as provided herein.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, Borrower and Lender hereby agree as follows:
AGREEMENT:
1. DEFINITIONS. All capitalized terms used in this Amendment, unless otherwise
defined, shall have the meanings given thereto in the Loan Agreement.
2. AMENDMENTS TO LOAN AGREEMENT. Borrower and Lender agree that the Loan
Agreement shall be amended as provided in this Paragraph 2.
2.1. Section 1.1 of the Loan Agreement shall be amended by replacing the
definition of Bank of America Line of Credit, in its entirety, with the
following revised definition therefor:
"BANK OF AMERICA LINE OF CREDIT" means that certain
unsecured line of credit in the maximum amount of
$120,000,000 provided to Borrower by Bank of America, NT&SA;
provided, however, that during the period of time commencing
on February 1, 1997 through and including October 31, 1997,
the maximum amount of such line of credit shall be increased
to $170,000,000.
3. REPRESENTATIONS AND WARRANTIES. Borrower makes the following
representations and warranties to Lender all of which are material and are
<PAGE>
made to induce Lender to enter into this Amendment.
3.1. All representations and warranties in the Loan
Documents were true, accurate and complete in every material
respect as of the date made and are true, accurate and
complete in every respect as of the date hereof, and do not
fail to disclose any material fact necessary to make the
representations not misleading.
3.2. Borrower has full power, legal capacity and
authority to execute and deliver this Amendment.
3.3. This Amendment has been duly authorized, executed
and delivered by Borrower.
4. NO OTHER MODIFICATIONS. Except as provided herein, the Loan Agreement shall
remain unchanged and in full force and effect.
5. GOVERNING LAW. This Amendment shall be governed by and construed in
accordance with the laws of the State of California.
6. SEVERABILITY. If any term, provision, covenant or condition of this
Amendment or any application thereof should be held by a court of competent
jurisdiction to be invalid, void or unenforceable, all terms, provisions,
covenants and conditions hereof and all applications thereof not held invalid,
void or unenforceable shall continue in full force and effect and shall in no
way be affected, impaired or invalidated thereby.
7. SUCCESSOR AND ASSIGNS. The provisions of this Amendment shall be binding
upon and inure solely to the benefit of Lender and Borrower, and their
respective heirs, legal representatives, successors and assigns.
2
<PAGE>
8. COUNTERPARTS. This Amendment may be executed in any number of counterparts
and by different parties hereto on separate counterparts, each of which
counterparts, when so executed and delivered, shall be deemed to be an original,
and all of which counterparts, taken together, shall constitute but one and the
same Amendment.
IN WITNESS WHEREOF, Borrower and Lender have caused this Amendment to be
executed as of the day and year first above written.
BORROWER:
BRE PROPERTIES, INC., a Maryland corporation
By:
---------------------------------------------
Name:
---------------------------------------------
Title:
---------------------------------------------
By:
---------------------------------------------
Name:
---------------------------------------------
Title:
---------------------------------------------
LENDER:
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By:
-----------------------------------------------
Its:
-----------------------------------------------
3
<PAGE>
THIRD AMENDMENT TO LOAN AGREEMENT
[$18,000,000]
THIS THIRD AMENDMENT TO LOAN AGREEMENT (this "Amendment"), is dated as of
February 25, 1997 by and between THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a
New Jersey corporation ("Lender"), and BRE PROPERTIES, INC., a Maryland
corporation ("Borrower"), as ultimate successor-in-interest by merger to Real
Estate Investment Trust of California, a California real estate investment trust
("Original Borrower").
RECITALS:
A. Lender has made a loan (the "Loan") to Original Borrower in the
original principal amount of $18,000,000, which loan is governed by that certain
Loan Agreement dated as of July 7, 1995 by and between Original Borrower and
Lender, as amended by that certain First Amendment to Loan Agreement dated as of
April 30, 1996, as further amended by that certain Second Amendment to Loan
Agreement dated as of November 20, 1996 (collectively, the "Loan Agreement"),
and evidenced by that certain Promissory Note dated as of July 7, 1995 executed
by Original Borrower in favor of Lender (the "Note").
B. Pursuant to a series of mergers, Original Borrower merged into Real
Estate Investment Trust of Maryland, a Maryland real estate investment trust,
which in turn merged into BRE Properties Inc., a Delaware corporation, which in
turn merged into Borrower (which was then and formerly known as BRE Maryland,
Inc., a Maryland corporation).
C. Pursuant to the terms of that certain Assumption Agreement dated as of
April 30, 1996 by and between Borrower and Lender, Borrower absolutely and
irrevocably assumed the Loan, the Loan Agreement, the Note and the other Loan
Documents and the obligations of Original Borrower thereunder.
D. Borrower and Lender have agreed to modify and amend the Loan Agreement
as provided herein.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, Borrower and Lender hereby agree as follows:
AGREEMENT:
1. DEFINITIONS. All capitalized terms used in this Amendment, unless otherwise
defined, shall have the meanings given thereto in the Loan Agreement.
2. AMENDMENTS TO LOAN AGREEMENT. Borrower and Lender agree that the Loan
Agreement shall be amended as provided in this Paragraph 2.
2.1. Section 1.1 of the Loan Agreement shall be amended by replacing the
definition of Bank of America Line of Credit, in its entirety, with the
following revised definition therefor:
"BANK OF AMERICA LINE OF CREDIT" means that certain
unsecured line of credit in the maximum amount of
$120,000,000 provided to Borrower by Bank of America, NT&SA;
provided, however, that during the period of time commencing
on February 1, 1997 through and including October 31, 1997,
the maximum amount of such line of credit shall be increased
to $170,000,000.
3. REPRESENTATIONS AND WARRANTIES. Borrower makes the following
representations and warranties to Lender all of which are material and are made
to induce Lender to enter into this Amendment.
<PAGE>
3.1. All representations and warranties in the Loan
Documents were true, accurate and complete in every material
respect as of the date made and are true, accurate and
complete in every respect as of the date hereof, and do not
fail to disclose any material fact necessary to make the
representations not misleading.
3.2. Borrower has full power, legal capacity and authority
to execute and deliver this Amendment.
3.3. This Amendment has been duly authorized, executed and
delivered by Borrower.
4. NO OTHER MODIFICATIONS. Except as provided herein, the Loan Agreement shall
remain unchanged and in full force and effect.
5. GOVERNING LAW. This Amendment shall be governed by and construed in
accordance with the laws of the State of California.
6. SEVERABILITY. If any term, provision, covenant or condition of this
Amendment or any application thereof should be held by a court of competent
jurisdiction to be invalid, void or unenforceable, all terms, provisions,
covenants and conditions hereof and all applications thereof not held invalid,
void or unenforceable shall continue in full force and effect and shall in no
way be affected, impaired or invalidated thereby.
7. SUCCESSOR AND ASSIGNS. The provisions of this Amendment shall be binding
upon and inure solely to the benefit of Lender and Borrower, and their
respective heirs, legal representatives, successors and assigns.
8. COUNTERPARTS. This Amendment may be executed in any number of counterparts
and by different parties hereto on separate counterparts, each of which
counterparts, when so executed and delivered, shall be deemed to be an original,
and all of which counterparts, taken together, shall constitute but one and the
same Amendment.
IN WITNESS WHEREOF, Borrower and Lender have caused this Amendment to be
executed as of the day and year first above written.
BORROWER:
BRE PROPERTIES, INC., a Maryland corporation
By:
------------------------------------------
Name:
------------------------------------------
Title:
------------------------------------------
By:
------------------------------------------
Name:
------------------------------------------
Title:
------------------------------------------
LENDER:
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
2
<PAGE>
By:
-------------------------------------------
Its:
-------------------------------------------
<PAGE>
FIFTH AMENDMENT TO LOAN AGREEMENT
[$55,000,000]
THIS FIFTH AMENDMENT TO LOAN AGREEMENT (this "Amendment"), is dated as of
June 30, 1997 by and between THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New
Jersey corporation ("Lender"), and BRE PROPERTIES, INC., a Maryland corporation
("Borrower"), as ultimate successor-in-interest by merger to Real Estate
Investment Trust of California, a California real estate investment trust
("Original Borrower").
RECITALS:
A. Lender has made a loan (the "Loan") to Original Borrower in the
original principal amount of $55,000,000, which loan is governed by that certain
Loan Agreement dated as of January 31, 1994, as amended by that certain First
Amendment to Loan Agreement dated as of July 7, 1995 by and between Original
Borrower and Lender, as further amended by that certain Second Amendment to Loan
Agreement dated as of April 30, 1996 by and between Borrower and Lender, as
further amended by that certain Third Amendment to Loan Agreement dated as of
November 20, 1996 by and between Borrower and Lender, as further amended by that
certain Fourth Amendment to Loan Agreement dated as of February 25, 1997 by and
between Borrower and Lender (collectively, the "Loan Agreement") and evidenced
by that certain Promissory Note dated as of January 31, 1994 executed by
Original Borrower in favor of Lender (the "Note").
B. Pursuant to a series of mergers, Original Borrower merged into Real
Estate Investment Trust of Maryland, a Maryland real estate investment trust,
which in turn merged into BRE Properties Inc., a Delaware corporation, which in
turn merged into Borrower (which was then and formerly known as BRE Maryland,
Inc., a Maryland corporation).
C. Pursuant to the terms of that certain Assumption Agreement dated as of
April 30, 1996 by and between Borrower and Lender, Borrower absolutely and
irrevocably assumed the Loan, the Loan Agreement, the Note and the other Loan
Documents and the obligations of Original Borrower thereunder.
D. Borrower and Lender have agreed to modify and amend the Loan Agreement
as provided herein.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, Borrower and Lender hereby agree as follows:
AGREEMENT:
1. DEFINITIONS. All capitalized terms used in this Amendment, unless
otherwise defined, shall have the meanings given thereto in the Loan Agreement.
<PAGE>
2. AMENDMENTS TO LOAN AGREEMENT. Borrower and Lender agree that the Loan
Agreement shall be amended as provided in this Paragraph 2.
2.1. Section 1.1 of the Loan Agreement shall be amended by replacing the
definition of Approved Indebtedness, in its entirety, with the following revised
definition therefor:
"APPROVED INDEBTEDNESS" means collectively, (i) this Loan, (ii)
the 955 Prudential Loan, (iii) the Sanwa Line of Credit (including
amounts borrowed thereunder after the Closing Date in compliance with
the terms hereof), (iv) the PruExpress Loans, (v) the Tango Loan,
(vi) the Bank of America Line of Credit (including amounts borrowed
thereunder after the Closing Date in compliance with the terms
hereof), (vii) the Public Unsecured BRE Debt, (viii) debt incurred in
the ordinary course of business to acquire goods, supplies, services
or merchandise on normal trade credit, (ix) surety bonds which are
obtained in the ordinary course of business, (x) Indebtedness secured
by New Purchase Money Liens, (xi) Existing BRE Secured Debt, and
(xii) Capital Lease Obligations in an amount not to exceed, at any
time, $1,000,000; provided, however, that in any and all events, such
Approved Indebtedness shall be subject to, and included within the
calculations relating to, the financial covenants set forth in
Section 6.9 hereof.
2.2. Section 1.1 of the Loan Agreement shall be amended by replacing the
definition of Indebtedness, in its entirety, with the following revised
definition therefor:
"INDEBTEDNESS" at any date of determination means: (i) all
obligations of Borrower and the Consolidated Partnership (including,
without limitation, all indebtedness of Borrower to Lender and all
Approved Indebtedness) which in accordance with GAAP would be shown
on the balance sheet of Borrower and/or the Consolidated Partnership
as a liability (including, without limitation, obligations for
borrowed money and for the deferred purchase price of property or
services, trade debt payable, accruals and other liabilities, and
obligations evidenced by bonds, debentures, notes or other similar
instruments); (ii) all Capitalized Lease Obligations; (iii) all
Contingent Obligations of Borrower and or the Consolidated
Partnership in respect of, or obligations to purchase or otherwise
acquire or to assure payment of, Indebtedness of others; and (iv) all
Indebtedness of others secured by any Lien upon property owned by
Borrower or the Consolidated Partnership, whether or not assumed.
2.3. Section 1.1 of the Loan Agreement shall be amended by adding the
following definition to be inserted therein in alphabetical order:
"PUBLIC UNSECURED BRE DEBT" means the indebtedness evidenced by
the unsecured debt securities issued by Borrower from time to time
provided that the maximum principal amount of such Public Unsecured
BRE Debt shall at no time exceed $150,000,000.
2.4. Clause (y) of the parenthetical found in the second grammatical
sentece of Section 6.1 of the Loan Agreement shall be amended, in its entirety,
to provide as follows:
(y) forward commitments to acquire new construction projects which
will be at least 80% leased pursuant to market rate leases as of the
date of acquisition thereof and the cost of which do not
2
<PAGE>
exceed $30,000,000 per project; provided, however, that at no time
shall the aggregate amount of such commitments exceed more than
twenty-five percent (25%) of Tangible Net Worth)
2.5. Section 7.2.A of the Loan Agreement shall be amended, in its entirety,
to provide as follows:
A. FAILURE TO MAKE PAYMENTS. Failure of Borrower or the
Consolidated Partnership to pay when due any principal or interest
on any Indebtedness (including, without limitation, the Tango Loan,
the Sanwa Line of Credit, the Bank of America Line of Credit, the
Public Unsecured BRE Debt, and/or the Existing BRE Secured Debt)
(other than Indebtedness referred to in Section 7.1 and Section
7.2.C) or Contingent Obligation; or
2.6. Section 7.12.A of the Loan Agreement shall be amended, in its
entirety, to provide as follows:
A. Any Person shall have (i) acquired beneficial ownership
(within the meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934) directly or
indirectly, of shares or securities of Borrower (or other securities
convertible into such securities), or (ii) acquired by contract or
otherwise, or shall have entered into a contract or arrangement which
upon consummation will result in its acquisition of or control over
shares or securities of Borrower (or other securities convertible into
such securities), in either case, (x) representing twenty percent
(20%) or more of the outstanding shares or securities of Borrower, or
(y) representing ten percent (10%) or more of the outstanding shares
or securities of Borrower and resulting in any change of the board of
directors of Borrower and/or any change in the management of Borrower
or any of its assets; or
3. REPRESENTATIONS AND WARRANTIES. Borrower makes the following
representations and warranties to Lender all of which are material and are made
to induce Lender to enter into this Amendment.
3.1. All representations and warranties in the Loan Documents were
true, accurate and complete in every material respect as of the date
made and are true, accurate and complete in every respect as of the
date hereof, and do not fail to disclose any material fact necessary
to make the representations not misleading.
3.2. Borrower has full power, legal capacity and authority to execute
and deliver this Amendment.
3.3. This Amendment has been duly authorized, executed and delivered
by Borrower.
4. NO OTHER MODIFICATIONS. Except as provided herein, the Loan Agreement
shall remain unchanged and in full force and effect.
5. GOVERNING LAW. This Amendment shall be governed by and construed in
accordance with the laws of the State of California.
6. SEVERABILITY. If any term, provision, covenant or condition of this
Amendment or any application thereof should be held by a court of competent
jurisdiction to be invalid, void or unenforceable, all terms, provisions,
covenants and conditions hereof and all applications thereof not held invalid,
void or unenforceable shall continue in full force and effect and shall in no
way be affected, impaired or invalidated thereby.
3
<PAGE>
7. SUCCESSOR AND ASSIGNS. The provisions of this Amendment shall be
binding upon and inure solely to the benefit of Lender and Borrower, and their
respective heirs, legal representatives, successors and assigns.
8. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties hereto on separate counterparts, each of
which counterparts, when so executed and delivered, shall be deemed to be an
original, and all of which counterparts, taken together, shall constitute but
one and the same Amendment.
9. FEE. In connection with this Amendment, Borrower shall pay Lender a
service fee equal to $2,500 and will also pay all of Lender's costs and expenses
relating hereto (including, without limitation, the fees and expenses of its
outside counsel).
IN WITNESS WHEREOF, Borrower and Lender have caused this Amendment to be
executed as of the day and year first above written.
BORROWER:
BRE PROPERTIES, INC., a Maryland corporation
By:
------------------------------------------
Name:
------------------------------------------
Title:
------------------------------------------
By:
------------------------------------------
Name:
------------------------------------------
Title:
------------------------------------------
LENDER:
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By:
------------------------------------------
Its:
------------------------------------------
4
<PAGE>
FOURTH AMENDMENT TO LOAN AGREEMENT
[$18,000,000]
THIS FOURTH AMENDMENT TO LOAN AGREEMENT (this "Amendment"), is dated as of
June 30, 1997 by and between THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New
Jersey corporation ("Lender"), and BRE PROPERTIES, INC., a Maryland corporation
("Borrower"), as ultimate successor-in-interest by merger to Real Estate
Investment Trust of California, a California real estate investment trust
("Original Borrower").
RECITALS:
A. Lender has made a loan (the "Loan") to Original Borrower in the
original principal amount of $18,000,000, which loan is governed by that certain
Loan Agreement dated as of July 7, 1995 by and between Original Borrower and
Lender, as amended by that certain First Amendment to Loan Agreement dated as of
April 30, 1996, as further amended by that certain Second Amendment to Loan
Agreement dated as of November 20, 1996, as further amended by that certain
Third Amendment to Loan Agreement dated as of February 25, 1997 (collectively,
the "Loan Agreement"), and evidenced by that certain Promissory Note dated as of
July 7, 1995 executed by Original Borrower in favor of Lender (the "Note").
B. Pursuant to a series of mergers, Original Borrower merged into Real
Estate Investment Trust of Maryland, a Maryland real estate investment trust,
which in turn merged into BRE Properties Inc., a Delaware corporation, which in
turn merged into Borrower (which was then and formerly known as BRE Maryland,
Inc., a Maryland corporation).
C. Pursuant to the terms of that certain Assumption Agreement dated as of
April 30, 1996 by and between Borrower and Lender, Borrower absolutely and
irrevocably assumed the Loan, the Loan Agreement, the Note and the other Loan
Documents and the obligations of Original Borrower thereunder.
D. Borrower and Lender have agreed to modify and amend the Loan Agreement
as provided herein.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, Borrower and Lender hereby agree as follows:
AGREEMENT:
1. DEFINITIONS. All capitalized terms used in this Amendment, unless
otherwise defined, shall have the meanings given thereto in the Loan Agreement.
<PAGE>
2. AMENDMENTS TO LOAN AGREEMENT. Borrower and Lender agree that the Loan
Agreement shall be amended as provided in this Paragraph 2.
2.1. Section 1.1 of the Loan Agreement shall be amended by replacing the
definition of Approved Indebtedness, in its entirety, with the following revised
definition therefor:
"APPROVED INDEBTEDNESS" means collectively, (i) this Loan, (ii)
the 525 Prudential Loan, (iii) the Sanwa Line of Credit (including
amounts borrowed thereunder after the Closing Date in compliance with
the terms hereof), (iv) the PruExpress Loans, (v) the Tango Loan,
(vi) the Bank of America Line of Credit (including amounts borrowed
thereunder after the Closing Date in compliance with the terms
hereof), (vii) the Public Unsecured BRE Debt, (viii) debt incurred in
the ordinary course of business to acquire goods, supplies, services
or merchandise on normal trade credit, (ix) surety bonds which are
obtained in the ordinary course of business, (x) Indebtedness secured
by New Purchase Money Liens, (xi) Existing BRE Secured Debt, and
(xii) Capital Lease Obligations in an amount not to exceed, at any
time, $1,000,000; provided, however, that in any and all events, such
Approved Indebtedness shall be subject to, and included within the
calculations relating to, the financial covenants set forth in
Section 6.9 hereof.
2.2. Section 1.1 of the Loan Agreement shall be amended by replacing the
definition of Indebtedness, in its entirety, with the following revised
definition therefor:
"INDEBTEDNESS" at any date of determination means: (i) all
obligations of Borrower and the Consolidated Partnership (including,
without limitation, all indebtedness of Borrower to Lender and all
Approved Indebtedness) which in accordance with GAAP would be shown on
the balance sheet of Borrower and/or the Consolidated Partnership as a
liability (including, without limitation, obligations for borrowed
money and for the deferred purchase price of property or services,
trade debt payable, accruals and other liabilities, and obligations
evidenced by bonds, debentures, notes or other similar instruments);
(ii) all Capitalized Lease Obligations; (iii) all Contingent
Obligations of Borrower and or the Consolidated Partnership in respect
of, or obligations to purchase or otherwise acquire or to assure
payment of, Indebtedness of others; and (iv) all Indebtedness of
others secured by any Lien upon property owned by Borrower or the
Consolidated Partnership, whether or not assumed.
2.3. Section 1.1 of the Loan Agreement shall be amended by adding the
following definition to be inserted therein in alphabetical order:
"PUBLIC UNSECURED BRE DEBT" means the indebtedness evidenced by
the unsecured debt securities issued by Borrower from time to time
provided that the maximum principal amount of such Public Unsecured
BRE Debt shall at no time exceed $150,000,000.
2.4. Clause (y) of the parenthetical found in the second grammatical
sentence of Section 6.1 of the Loan Agreement shall be amended, in its entirety,
to provide as follows:
(y) forward commitments to acquire new construction projects which
will be at least 80% leased pursuant to market rate leases as of the
date of acquisition thereof and the cost of which do not
2
<PAGE>
exceed $30,000,000 per project; provided, however, that at no time
shall the aggregate amount of such commitments exceed more than
twenty-five percent (25%) of Tangible Net Worth)
2.5. Section 7.2.A of the Loan Agreement shall be amended, in its entirety,
to provide as follows:
A. FAILURE TO MAKE PAYMENTS. Failure of Borrower or the
Consolidated Partnership to pay when due any principal or interest on
any Indebtedness (including, without limitation, the Tango Loan, the
Sanwa Line of Credit, the Bank of America Line of Credit, the Public
Unsecured BRE Debt, and/or the Existing BRE Secured Debt) (other than
Indebtedness referred to in Section 7.1 and Section 7.2.C) or
Contingent Obligation; or
2.6. Section 7.12.A of the Loan Agreement shall be amended, in its
entirety, to provide as follows:
A. Any Person shall have (i) acquired beneficial ownership
(within the meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934) directly or
indirectly, of shares or securities of Borrower (or other securities
convertible into such securities), or (ii) acquired by contract or
otherwise, or shall have entered into a contract or arrangement which
upon consummation will result in its acquisition of or control over
shares or securities of Borrower (or other securities convertible into
such securities), in either case, (x) representing twenty percent
(20%) or more of the outstanding shares or securities of Borrower, or
(y) representing ten percent (10%) or more of the outstanding shares
or securities of Borrower and resulting in any change of the board of
directors of Borrower and/or any change in the management of Borrower
or any of its assets; or
3. REPRESENTATIONS AND WARRANTIES. Borrower makes the following
representations and warranties to Lender all of which are material and are made
to induce Lender to enter into this Amendment.
3.1. All representations and warranties in the Loan Documents were
true, accurate and complete in every material respect as of the date
made and are true, accurate and complete in every respect as of the
date hereof, and do not fail to disclose any material fact necessary
to make the representations not misleading.
3.2. Borrower has full power, legal capacity and authority to execute
and deliver this Amendment.
3.3. This Amendment has been duly authorized, executed and delivered
by Borrower.
4. NO OTHER MODIFICATIONS. Except as provided herein, the Loan Agreement
shall remain unchanged and in full force and effect.
5. GOVERNING LAW. This Amendment shall be governed by and construed in
accordance with the laws of the State of California.
6. SEVERABILITY. If any term, provision, covenant or condition of this
Amendment or any application thereof should be held by a court of competent
jurisdiction to be invalid, void or unenforceable, all terms, provisions,
covenants and conditions hereof and all applications thereof not held invalid,
void or unenforceable shall continue in full force and effect and shall in no
3
<PAGE>
way be affected, impaired or invalidated thereby.
7. SUCCESSOR AND ASSIGNS. The provisions of this Amendment shall be
binding upon and inure solely to the benefit of Lender and Borrower, and their
respective heirs, legal representatives, successors and assigns.
8. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties hereto on separate counterparts, each of
which counterparts, when so executed and delivered, shall be deemed to be an
original, and all of which counterparts, taken together, shall constitute but
one and the same Amendment.
4
<PAGE>
IN WITNESS WHEREOF, Borrower and Lender have caused this Amendment to be
executed as of the day and year first above written.
BORROWER:
BRE PROPERTIES, INC., a Maryland corporation
By:
------------------------------------------
Name:
------------------------------------------
Title:
------------------------------------------
By:
------------------------------------------
Name:
------------------------------------------
Title:
------------------------------------------
LENDER:
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By:
------------------------------------------
Its:
------------------------------------------
5
<PAGE>
SECOND AMENDMENT TO CREDIT AGREEMENT
This SECOND AMENDMENT TO CREDIT AGREEMENT (the "Second Amendment") is made
and entered into as of the 17 day of July 1997 by and between Sanwa Bank
California, a California banking corporation (the "Bank"), and BRE Properties,
Inc., a Maryland corporation (the "Borrower").
RECITALS
A. Pursuant to a Credit Agreement dated as of the 9th day of April, 1996
(as amended by that certain First Amendment to Credit Agreement dated as of the
12th day of December, 1996, as further modified or waived from time to time, the
"Credit Agreement"), the Bank agreed to extend credit to the Borrower on the
terms and conditions contained therein.
B. The parties desire to amend the Credit Agreement, as more particularly
described below.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
AGREEMENT
1. AMENDMENTS.
1(a) CREDIT LIMIT. To increase the Credit Limit (as such term is defined
in and as all other capitalized terms used in this Second Amendment but not
otherwise defined herein are defined in the Credit Agreement), the definition of
"Credit Limit" in Section 1.1 is amended to read as follows:
"'CREDIT LIMIT' shall mean $35,000,000, as such amount shall be
modified from time to time pursuant to this Agreement."
1(b) EXPIRATION DATE. To extend the Expiration Date, the definition of
"Expiration Date" in Section 1.1 is amended to read as follows:
"'EXPIRATION DATE' shall mean April 30, 2000, as such date may be
extended in the sole discretion of the Bank."
1(c) INTEREST RATE. To change the interest rate payable by the Borrower on
Loans, the definition of "LIBOR Rate Spread" is amended to read as follows:
1
<PAGE>
"'LIBOR RATE SPREAD' shall mean, until June 30, 1998, .0.80% and,
thereafter, on any date, the applicable percentage set forth below
based upon the Ratings in effect on such date:
"Category LIBOR Rate Spread
------------- --------------------
A+ or higher by S&P 0.60%
A1 or higher by Moody's
A+ or higher by D&P
A by S&P 0.65%
A2 by Moody's
A by D&P
A- by S&P 0.70%
A3 by Moody's
A- by D&P
BBB+ by S&P 0.80%
Baa1 by Moody's
BBB+ by D&P
BBB by S&P 0.95%
Baa2 by Moody's
BBB by D&P
BBB- by S&P 1.10%
Baa3 by Moody's
BBB- by D&P
Lower than BBB- by S&P 1.40%
Lower than Baa3 by Moody's
Lower than BBB- by D&P
"For purposes of the foregoing, if any Rating established or deemed to
have been established by any Rating Agency shall be changed (other
than as a result of a change in the rating system of such Rating
Agency), such change shall be effective as of the date on which such
change is first announced by the Rating Agency making such change.
Each change in the LIBOR Rate Spread shall apply to all LIBOR Rate
Loans that are outstanding at any time during the period commencing
on the effective date of such change and ending on the date
immediately preceding the effective date of such change. If the rating
system of any Rating Agency shall change, or if either such Rating
Agency shall cease rating the corporate debt obligations of the
Borrower (other than by reason of any action or
2
<PAGE>
nonaction by the Borrower following or in anticipation of a ratings
downgrade), the parties hereto shall negotiate in good faith to amend
the references to specific ratings in this definition (including by
way of substituting another Rating Agency mutually acceptable to the
Borrower for the Rating Agency with respect to which the rating system
has changed or for which no Rating is then in effect) to reflect such
changed rating system or the nonavailability of Ratings from such
Rating Agency, and pending agreement on such amendment, the Rating in
effect immediately prior to such change or cessation will be used in
determining the LIBOR Rate Spread. If any Rating Agency shall not
have a rating in effect by reason of any action or nonaction by the
Borrower following or in anticipating of a ratings downgrade, then
such Rating Agency shall be deemed to have established a Rating in the
lowest category with the highest interest rate.
"If the Borrower's senior long-term debt has only one Rating, then
LIBOR Rate Spread shall be determined by reference solely to such
Credit Rating.
"If the Borrower's long-term unsecured debt has two or more Ratings,
(i) if the Ratings are in the same Category, then the related LIBOR
Rate Spread shall apply; (ii) if the Ratings differ, then the highest
applicable LIBOR Rate Spread resulting shall apply.
"If the Borrower's long-term unsecured debt has no Rating, then the
highest LIBOR Rate Spread shall apply.
"For purposes of this definition, the following terms shall have the
following meanings:
"'D&P' shall mean Duff & Phelps Rating Agency
"'MOODY`S' shall mean Moody's Investors Service, Inc.
"'RATING AGENCIES' shall mean D&P, Moody's and S&P and any substitute
rating agencies agreed upon by the Borrower and the Bank.
"'RATINGS' shall mean the rating from time to time established by the
Rating Agencies by the Borrower's long term unsecured debt.
"'S&P' shall mean Standard and Poor's Ratings Group."
1(d) UNUSED FEES. To change the fees payable by the Borrower to the Bank,
Section 3.8(1) is amended to read as follows:
"(1) UNUSED FEES. The Borrower shall pay to the Bank an unused
credit fee on the average daily amount by which the Credit Limit
exceeds
3
<PAGE>
the sum of outstanding Loans and Letter of Credit Obligations,
computed on a quarterly basis in arrears on the last Business Day of
each calendar quarter, based upon the daily utilization for such
quarter, equal to .125% per annum. Such fee shall accrued from the
date of the Second Amendment to this Agreement and shall be due and
payable quarterly in arrears on the last Business Day of each calendar
quarter, commencing on September 30, 1997 with the final payment to be
made on the Maturity Date."
1(e) REPORTING. To delete certain reporting requirements, Section 6.1(d)
is deleted in its entirety.
1(f) FINANCIAL COVENANTS.
(1) To change Indebtedness permitted under the Agreement, Section 7.6
is amended to read as follows:
"7.6 INDEBTEDNESS. Not create, incur, assume or suffer to
exist, or otherwise come or liable or, with respect to Indebtedness
not secured by a Lien, accept a commitment for, or cause any
Subsidiary to liable in respect of any Indebtedness or accept any such
commitment except:
"(a) The Obligations;
"(b) Trade debt incurred in the ordinary course of
business and outstanding less than thirty (30) days after the
same has become due and payable or which is being contested in
good faith, provided provision is made to the satisfaction of
the Bank for the eventual payment thereof in the event it is
found that such contested trade debt is payable by the Borrower
or Subsidiary;
"(c) Indebtedness secured by Liens permitted under
Section 7.5 above;
"(d) Unsecured Indebtedness which is incurred under lines
of credit with financial institutions with an aggregate amount of
unused commitments and outstandings not to exceed $150,000,000;
"(e) Non-revolving, non-amortizing Indebtedness with a
maturity or call date not earlier than five (5) years after the
date incurred;
"(f) Non-revolving, amortizing Indebtedness in favor of
the Prudential Insurance Company."
4
<PAGE>
(2) To replace the financial covenants of the Borrower, Section 7.13
is amended to read as follows:
"7.13 FINANCIAL COVENANTS. Not, on a consolidated basis for the
Borrower and its Subsidiaries:
"(a) As at the end of any fiscal quarter of the Borrower
permit its Effective Tangible Net Worth to be less than
$400,000,000 plus 85% of the Net Proceeds of Capital Stock.
"(b) As at the end of any fiscal quarter, permit the Net
Operating Income of Unencumbered Real Property, for the preceding
four fiscal quarters, to be less than 175% of the Unsecured
Interest Expense for such period.
"(c) At any time, permit aggregate Indebtedness to exceed
50% of Total Assets.
"(d) As at the end of any fiscal quarter, permit the ratio
of EBITDA to Debt Service for the preceding four fiscal quarters
to be less than 1.80 to 1.00.
"(e) Permit the ratio of (i) Aggregate Distributions to
Shareholders for any consecutive four (4) fiscal quarter to (ii)
FFO for such four (4) fiscal quarters to exceed .95 to 1.00.
"(f) At any time, permit the number of Development Units
to exceed 20% of the number of Wholly-Owned Units (disregarding
all Wholly-Owned Units which are Under Construction)."
(3) To change the definition of "Permitted Liens" which may be
secured by Liens, clause (iv) of the definition of "Permitted Liens" is amended
to read as follows:
"(iv) Liens on real estate securing Indebtedness in an aggregate
amount outstanding at any one time not to exceed 30% of the Borrower's
and its Subsidiaries' Total Assets."
(4) In connection with the foregoing change in the financial
covenants, the following definitions are added to Section 1.1 in their correct
alphabetical order:
"'Aggregate Distributions to Shareholders' shall mean (a) any
Dividend Payments in respect of the Borrower or any Subsidiary of the
Borrower (other than on account of capital stock or other equity
interests of a Subsidiary of the Borrower or another Subsidiary of the
Borrower), including, without limitation, any Dividend Payments
resulting in the
5
<PAGE>
acquisition by the Borrower of securities which would constitute
treasury stock, and (b) any payment, repayment, redemption,
retirement, repurchase or other acquisition, direct or indirect, by
the Borrower or any Subsidiary of, on account of, or in respect of,
the principal of any subordinated debt (or any installment thereof)
prior to the regularly scheduled maturity date thereof (as in effect
on the date such subordinated debt was originally incurred). For
purposes of this Agreement, the amount of any Aggregate Distributions
to Shareholders made in property shall be the greater of (x) the fair
market value of such property (as determined in good faith by the
board of directors (or equivalent governing body) of the Person making
such distribution) and (y) the net book value thereof on the books of
such Person, in each case determined as of the date on which such
distribution is made.
"'Debt Service' shall mean, with respect to any period, the sum
of the following (a) Interest Charges for such period and (b) all
payments of principal in respect of Debt of the Borrower and its
Subsidiaries (including the principal component of any payments in
respect of capital lease obligations) paid or payable during such
period after eliminating all offsetting debits and credits between the
Borrower and its Subsidiaries and all other items required to be
eliminated in the course of the preparation of consolidated financial
statements of the Borrower and its Subsidiaries in accordance with
GAAP.
"'Interest Charges' shall mean, with respect to any period, the
sum (without duplication) of the following (in each case, eliminating
all offsetting debits and credits between the Borrower and its
Subsidiaries, all other items required to be eliminated in the course
of the preparation of consolidated financial statements of the
Borrower and its Subsidiaries in accordance with GAAP) (a) all
interest in respect of Debt of the Company and its Subsidiaries
deducted in determining Net Income for such period and (b) all debt
discount and expense with respect to Debt amortized or required to be
amortized in the determination of Net Income for such period.
"'Net Proceeds of Capital Stock' shall mean, with respect to any
period ending on or after March 31, 1997, cash proceeds (net of all
costs and out-of-pocket expenses in connection therewith, including,
without limitation, placement, underwriting and brokerage fees and
expenses), received by the Borrower and its Subsidiaries during such
period, from the sale of all capital stock of the Borrower, including
in such net proceeds (i) the net amount paid upon issuance and
exercise during such period of any right to acquire any capital stock,
or paid during such period to convert a convertible debt security to
capital stock and (ii) any amount paid to the Borrower upon issuance
of any convertible debt securities and thereafter converted to capital
stock during such period.
6
<PAGE>
"'Swap' shall mean, with respect to any Person, payment
obligations with respect to interest rate swaps, currency swaps and
similar obligations obligating such Person to make payments, whether
periodically or upon the happening of a contingency. For the purposes
of this Agreement, the amount of the obligation under any Swap shall
be the amount determined in respect thereof as of the end of the then
most recently ended fiscal quarter of such Person, based on the
assumption that such Swap had terminated at the end of such fiscal
quarter, and in making such determination, if any agreement relating
to such Swap provides for the netting of amounts payable by and to
such Person thereunder or if any such agreement provides for the
simultaneous payment of amounts by and to such Person, then in each
such case, the amount of such obligation shall be the net amount so
determined.
"'Total Assets' shall mean the total assets of the Borrower and
its Subsidiaries which would be shown as assets on a consolidated
balance sheet of the Borrower and its Subsidiaries determined on a
current value basis.
"'Unsecured Interest Expense' shall mean, with respect to any
period, the Interest Charges calculated for Unsecured Debt.
"'Unsecured Debt' shall mean Debt not secured directly or
indirectly by a Lien, including, without limitation, Debt under (i)
this Agreement and (ii) that certain Credit Agreement dated as of
___________, 199_ between the Borrower and Bank of America National
Trust and Savings Association."
2. EFFECTIVE DATE. This Second Amendment shall be effective as of
the date first written above, provided that as of such date the Borrower shall
have delivered to Bank:
(a) Duly executed copies of this Second Amendment;
(b) Certified copies of resolutions of the Board of Directors of the
Borrower approving the execution and delivery of this Second Amendment;
(c) A certificate of the Secretary or an Assistant Secretary of the
Borrower certifying the names and the signatures of the Officers of the Borrower
authorized to sign this Second Amendment; and
(d) Such other documents, certificates and agreements that the Bank
may reasonably request.
7
<PAGE>
3. NO OTHER AMENDMENT. Except as expressly amended herein, the
Credit Agreement and all documents, instruments and agreements relating thereto
or executed in connection therewith shall remain in full force and effect as
currently written.
4. REPRESENTATIONS AND WARRANTIES. As of the effective date of this
Second Amendment, the Borrower hereby represents and warrants to the Bank as
follows:
(a) The Borrower has the corporate power and authority and the
legal right to execute, deliver and perform this Second Amendment and has taken
all necessary corporate action to authorize the execution, delivery and
performance of this Second Amendment and the Credit Agreement as amended hereby.
This Second Amendment has been duly executed and delivered on behalf of the
Borrower and constitutes the legal, valid and binding obligations of the
Borrower, enforceable against the Borrower in accordance with its respective
terms.
(b) At and as of the date of execution hereof and at and as of
the effective date of this Second Amendment and both prior to and after giving
effect to this Second Amendment: (1) the representations and warranties of the
Borrower contained in the Credit Agreement are accurate and complete in all
respects, and (2) there has not occurred an Event of Default or Potential Event
of Default under the Credit Agreement.
5. MISCELLANEOUS.
(a) COUNTERPARTS. This Second Amendment may be executed in
any number of counterparts, each of which when so executed shall be deemed to be
an original and all of which when taken together shall constitute one and the
same agreement.
(b) GOVERNING LAW. This Second Amendment shall be governed
by and construed in accordance with the laws of the State of California, without
giving effect to choice of law rules.
8
<PAGE>
IN WITNESS WHEREOF, this Second Amendment has been executed by the parties
hereto as of the date first hereinabove written.
BANK: BORROWER:
SANWA BANK CALIFORNIA BRE PROPERTIES, INC.
By: By: Frank McDowell
----------------------------------
Title: Title: President
---------------------------------
By: By: LeRoy Carlson
---------------------------------
Title: Title: Executive Vice President
------------------------------- and Secretary
9
<PAGE>
AMENDED AND RESTATED
UNSECURED LINE OF CREDIT LOAN AGREEMENT
By and Between
BRE PROPERTIES, INC.,
as Borrower,
and
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION,
as Lender
Dated as of July 8, 1997
<PAGE>
TABLE OF CONTENTS
PAGE
----
CERTAIN DEFINITIONS......................................................... 1
1. LINE OF CREDIT AMOUNT AND TERMS......................................... 7
1.1 LINE OF CREDIT AMOUNT.............................................. 7
1.2 AVAILABILITY PERIOD................................................ 7
1.3 INTEREST RATE...................................................... 8
1.4 LOAN DOCUMENTS..................................................... 8
2. FEES, EXPENSES.......................................................... 9
2.1 FEES............................................................... 9
2.2 EXPENSES AND COSTS................................................. 9
3. DISBURSEMENTS, PAYMENTS AND COSTS....................................... 9
3.1 REQUESTS FOR CREDIT................................................ 9
3.2 DISBURSEMENT AND PAYMENT RECORD.................................... 10
3.3 AUTHORIZATION...................................................... 10
3.4 BANKING DAYS....................................................... 10
4. CONDITIONS.............................................................. 10
4.1 AUTHORIZATIONS..................................................... 10
4.2 GOVERNING DOCUMENTS; GOOD STANDING CERTIFICATES.................... 10
4.3 LOAN DOCUMENTS..................................................... 11
4.4 PAYMENT OF FEES.................................................... 11
4.5 OTHER ITEMS........................................................ 11
5. REPRESENTATIONS AND WARRANTIES.......................................... 11
5.1 ORGANIZATION OF THE BORROWER; GOOD STANDING........................ 11
5.2 AUTHORIZATION; ENFORCEABLE AGREEMENT............................... 11
5.3 FINANCIAL INFORMATION.............................................. 12
5.4 LAWSUITS........................................................... 12
5.5 TITLE TO ASSETS.................................................... 12
5.6 PERMITS, FRANCHISES................................................ 13
5.7 INCOME TAX RETURNS................................................. 13
5.8 ERISA PLANS........................................................ 13
5.9 OTHER OBLIGATIONS.................................................. 13
5.10 EVENT OF DEFAULT................................................... 13
5.11 STATUS AS A REIT................................................... 14
6. COVENANTS............................................................... 14
6.1 USE OF PROCEEDS.................................................... 14
6.2 FINANCIAL INFORMATION.............................................. 14
6.3 OTHER INFORMATION.................................................. 15
6.4 FINANCIAL COVENANTS................................................ 16
6.5 TAXES AND OTHER LIABILITIES........................................ 18
6.6 NOTICES TO THE BANK................................................ 18
6.7 AUDITS; BOOKS AND RECORDS.......................................... 19
6.8 COMPLIANCE WITH LAWS............................................... 19
6.9 PRESERVATION OF RIGHTS............................................. 19
6.10 MAINTENANCE OF PROPERTIES.......................................... 19
i
<PAGE>
TABLE OF CONTENTS
(continued)
PAGE
----
6.11 INSURANCE.......................................................... 19
6.12 ERISA PLANS........................................................ 20
6.13 ADDITIONAL NEGATIVE COVENANTS...................................... 20
6.14 CONTINUED STATUS AS A REIT; PROHIBITED
TRANSACTIONS....................................................... 21
6.15 NYSE LISTED COMPANY................................................ 21
6.16 CONDUCT OF BUSINESS................................................ 21
6.17 COOPERATION........................................................ 21
7. COLLATERAL.............................................................. 21
8. DEFAULT................................................................. 21
8.1 FAILURE TO PAY..................................................... 21
8.2 FALSE INFORMATION.................................................. 22
8.3 BANKRUPTCY......................................................... 22
8.4 RECEIVERS.......................................................... 22
8.5 LAWSUITS........................................................... 22
8.6 JUDGMENTS.......................................................... 22
8.7 ERISA PLANS........................................................ 22
8.8 GOVERNMENT ACTION.................................................. 23
8.9 MATERIAL ADVERSE CHANGE............................................ 23
8.10 OTHER BREACH UNDER THIS AGREEMENT OR OTHER LOAN
DOCUMENTS.......................................................... 23
8.11 CROSS-DEFAULT...................................................... 23
9. ENFORCING THIS AGREEMENT; MISCELLANEOUS................................. 23
9.1 REMEDIES........................................................... 23
9.2 CALIFORNIA LAW..................................................... 23
9.3 ARBITRATION........................................................ 24
9.4 PRESENTMENT, DEMANDS AND NOTICE.................................... 24
9.5 INDEMNIFICATION.................................................... 24
9.6 ATTORNEYS' FEES.................................................... 25
9.7 NOTICES............................................................ 25
9.8 SUCCESSORS AND ASSIGNS............................................. 25
9.9 NO THIRD PARTIES BENEFITED......................................... 25
9.10 AMENDMENT AND RESTATEMENT; INTEGRATION; RELATION
TO ANY LOAN COMMITMENT; HEADINGS................................... 26
9.11 INTERPRETATION..................................................... 26
9.12 SEVERABILITY; WAIVERS; AMENDMENTS.................................. 27
9.13 COUNTERPARTS....................................................... 27
EXHIBIT A
BORROWING NOTICE
Schedule 1 to Borrowing Notice (Requested Advance)
ii
<PAGE>
AMENDED AND RESTATED
UNSECURED
LINE OF CREDIT LOAN AGREEMENT
This Amended and Restated Unsecured Line of Credit Loan Agreement (the
"Agreement"), dated as of July 8, 1997 is between BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION (the "Bank") and BRE PROPERTIES, INC., a Maryland
corporation (the "Borrower").
A. The Bank, Manufacturers Bank ("Manufacturers"), The Industrial Bank of
Japan, Limited, Los Angeles Agency ("IBJ"), and Commerzbank AG, Los Angeles
Branch ("Commerzbank") have agreed to make advances (the "Line of Credit") to
the Borrower in accordance with an Unsecured Line of Credit Loan Agreement
between the Borrower and the Bank dated April 4, 1996, as amended by the
Modification Agreement to Syndicate Loan, dated as of April 4, 1996 (the "First
Modification"), by the Second Modification Agreement, dated as of October 22,
1996 ("Second Modification"), and by a letter agreement dated February 7, 1997
(as so amended, the "Loan Agreement"). Advances under the Line of Credit are
currently evidenced by an Amended and Restated Promissory Note dated as of April
4, 1996 in the stated principal amount of $120,000,000 (the "Prior Note"). The
Line of Credit is a revolving and unsecured line of credit.
B. Borrower, the Bank, Manufacturers, IBJ and Commerzbank desire to amend
the Loan Documents, among other things, to decrease the Commitment from
$120,000,000 to $115,000,000, to extend the Maturity Date of the Line of Credit,
to change the Applicable Margin and fees applicable to the Line of Credit, to
provide for the availability of advances on a bid basis, and to make certain
related modifications to the Loan Documents.
C. In connection with the foregoing modifications to the terms of the
Line of Credit, the Borrower and the Bank, with the consent of Manufacturers,
IBJ and Commerzbank, wish to amend and restate the Loan Agreement, all as set
forth herein.
NOW, THEREFORE, the Loan Agreement is hereby amended and restated to read
in its entirety as follows:
CERTAIN DEFINITIONS
The following terms used in this Agreement shall have the following
meanings (such meanings to be applicable, except to the extent otherwise
indicated in a definition of a particular term, both to the singular and the
plural forms of the terms defined; other terms are defined elsewhere in the
Agreement):
<PAGE>
"ACCOMMODATION OBLIGATIONS", as applied to any Person, means any
Indebtedness or other Contractual Obligation or liability, contingent or
otherwise, of another Person in respect of which that Person is liable,
including, without limitation, any such indebtedness, obligation or liability
directly or indirectly guaranteed, endorsed (otherwise than for collection or
deposit in the ordinary course of business), co-made or discounted or sold with
recourse by that Person, or in respect of which that Person is otherwise
directly or indirectly liable, including in respect of any partnership in which
that Person is a general partner, Contractual Obligations (contingent or
otherwise) arising through any agreement to purchase, repurchase or otherwise
acquire such indebtedness, obligation or liability or any security therefor, or
to provide funds for the payment or discharge thereof (whether in the form of
loans, advances, stock purchases, capital contributions or otherwise), or to
maintain solvency, assets, level of income, or other financial condition, or to
make payment other than for value received.
"AFFILIATE" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, membership interests, by contract,
or otherwise.
"APPLICABLE FACILITY FEE PERCENTAGE" means, as of any date of
determination, (i) if no Rating is then in effect, 0.20%; OR (ii) effective on
the first day of the fiscal quarter following the Borrower's obtaining a Rating
(or a change in the then-effective Rating) and giving written notice thereof to
the Bank, the Applicable Facility Fee Percentage set forth below in the
definition of "Applicable Margin" opposite the then Rating (as determined in
accordance with the definition of "Applicable Margin") of the Borrower. As of
the date of this Agreement, the Borrower has obtained Ratings of (x) BBB from
Standard & Poor's, (y) Baa2 from Moody's Investor's Service, and (z) BBB+ from
Duff & Phelps, Inc., and the Applicable Facility Fee Percentage for the current
calendar quarter is 0.15%.
"APPLICABLE MARGIN" means, as of any date of determination, (i) if no
Rating is then in effect, 1.40%; OR (ii) effective on the first day of the
fiscal quarter following the Borrower's obtaining a Rating (or a change in the
then-effective Rating) and giving written notice thereof to the Bank, the
Applicable Margin set forth below opposite the then Rating (as hereinbelow
determined) of the Borrower:
2
<PAGE>
Applicable
Rating Facility Fee
(S&P/Moody's) Applicable Margin Percentage
----------------- ------------------- -----------------
A-/A3 or better 0.70% 0.10%
BBB+/Baal 0.80% 0.15%
BBB/Baa2 0.95% 0.15%
BBB-/Baa3 1.10% 0.20%
below BBB-/Baa3 1.40% 0.20%
PROVIDED, HOWEVER, that: (1) until the (a) first anniversary of the date of
this Agreement, (b) the date on which any change in, or reaffirmation of, any
Rating in effect as of the date of this Agreement takes effect, or (c) the date
on which any additional Rating (I.E., other than those noted in the definition
of Applicable Facility Fee Percentage as having already been obtained by the
Borrower) is issued, whichever first occurs (the "GRID APPLICATION DATE"), the
"Applicable Margin" shall be 0.80%; and (2) on and as of the Grid Application
Date and until a new Applicable Margin takes effect as provided above, the
"Applicable Margin" shall be the Applicable Margin set forth above opposite the
Rating in effect (or taking effect, as the case may be) on the Grid Application
Date. As used herein, the term "Rating" shall mean the rating of the Borrower's
senior long-term unsecured debt obligations, as determined by one or more Rating
Agencies. If two Ratings are obtained by the Borrower, then the lower Rating
shall control for purposes of determining the Applicable Margin; provided,
however, that if the difference between the two Ratings is greater than two
levels, then the Bank shall reasonably determine the average of such Ratings,
which shall control (and, if such average is greater than one of the rating
levels specified in the foregoing table but less than the next higher rating
level, the lower of the two rating levels shall be deemed the average of the two
Ratings for purposes of determining the Applicable Margin). If three or more
Ratings are obtained by the Borrower, then all but the two highest Ratings shall
be disregarded, and the Applicable Margin shall be determined in accordance with
the preceding sentence as if such two highest Ratings were the only two Ratings
obtained. If the Borrower shall obtain a Rating from a Rating Agency other than
Standard & Poor's Corporation or Moody's Investor's Service, Inc., then the Bank
shall reasonably determine the rating-level equivalents of such other Rating
Agency for purposes of determining the Applicable Margin in accordance with the
matrix above.
"CONTRACTUAL OBLIGATION," as applied to any Person, means any
provision of any securities issued by that Person or any indenture, mortgage,
deed of trust, lease, contract, undertaking, document or instrument to which
that Person is a party or by which it or any of its properties is bound, or to
which it or any of its properties is subject.
"CPA" means Ernst & Young, LLP, any other "big six"
3
<PAGE>
accounting firm or another firm of certified public accountants of national
standing selected by the Borrower and acceptable to the Bank.
"CURRENT VALUE METHOD" means, with respect to each Real Property as of
any date: (i) if such Real Property has not been operated under the Borrower's
(or a controlled Affiliate of the Borrower's) ownership for at least three (3)
months, on a cost basis, as reflected in the Borrower's books in accordance with
GAAP; and (ii) in any other case, capitalization of the Net Operating Income for
such Real Property for the four (4) most recent calendar quarters (or, if the
Borrower has owned a Real Property for less than such time period, then the
annualized Net Operating Income for such Real Property based on the period of
ownership by the Borrower), as certified by the Borrower to the Bank, at an
annual rate equal to (A) 9.5% for each Real Property improved with an apartment
project, (B) 10.0% for each Real Property improved with a shopping center or
similar retail project, and (C) 10.5% for each Real Property improved with an
industrial or other commercial project and for each Real Property (including
apartment and retail projects) which is subject to a land lease by the Borrower.
(All references in this Agreement to "apartment project" shall be understood to
mean multi-family residential properties held for rental.)
"DEBT SERVICE" means, for the most recent three (3) month period,
Interest Expense for such period PLUS scheduled principal amortization (I.E.,
excluding any balloon payment due at maturity) for such period on all of the
Borrower's Indebtedness.
"EBITDA" means, for the most recent three (3) month period, the sum of
(i) the Borrower's net income as determined in accordance with GAAP, (ii)
depreciation and amortization expense and other non-cash items deducted on the
Borrower's financial statements in determining such net income, (iii) interest
expense (as it appears on the Borrower's income statement in accordance with
GAAP), and (iv) taxes imposed by any jurisdiction upon the Borrower's net
income, absent the effect of extraordinary items or asset sales or write-ups or
forgiveness of Indebtedness.
"EFFECTIVE DATE" means the date on which all conditions precedent set
forth in Section 4 are satisfied or waived by the Bank.
"FUNDS FROM OPERATIONS" means, for any period, the Borrower's net
income (computed in accordance with GAAP), excluding gains (or losses) from debt
restructuring and sales of property, plus depreciation and amortization, and
after adjustments for unconsolidated partnerships and joint ventures.
(Adjustments for unconsolidated partnerships and joint ventures shall be
calculated to reflect funds from operations on the same basis.)
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"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board, or in such other statements by such
other entity as may be in general use by significant segments of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
"GROSS OFFERING PROCEEDS" means all cash proceeds received by the
Borrower as a result of the sale of common, preferred or other classes of stock
in the Borrower (if and only to the extent reflected in stockholders' equity on
the consolidated balance sheet of the Borrower prepared in accordance with
GAAP), WITHOUT DEDUCTION for any costs and discounts of issuance paid by the
Borrower.
"INDEBTEDNESS", as applied to any Person (and without duplication),
means (i) all indebtedness, obligations or other liabilities for borrowed money,
(ii) all indebtedness, obligations or other liabilities evidenced by notes,
bonds, debentures or other similar instruments, (iii) all reimbursement
obligations and other liabilities with respect to letters of credit, banker's
acceptances, surety bonds or similar instruments issued for such Person's
account, (iv) all obligations to pay the deferred purchase price of property or
services, (v) all obligations in respect of capital leases, (vi) all
Accommodation Obligations, and (vii) all indebtedness, obligations or other
liabilities of such Person or others secured by a Lien on any asset of such
Person, whether or not such indebtedness, obligations or liabilities are assumed
by, or are a personal liability of, such Person (including, without limitation,
the principal amount of any assessment or similar indebtedness encumbering any
asset).
"INTEREST EXPENSE" means, for any period, total interest expense of
the Borrower, whether paid, accrued or capitalized (including the interest
component of capital leases).
"LIEN" means any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, security interest, encumbrance, preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever, including without limitation any conditional sale or other
title retention agreement, the interest of a lessor under a capital lease, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement or document having similar
effect (other than a financing statement filed by a "true" lessor pursuant to
Section 9408 of the Uniform Commercial Code) naming the owner of the asset to
which such Lien relates as debtor, under the Uniform Commercial Code or other
comparable law of any jurisdiction.
"LINE OF CREDIT" means the line of credit described in
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Section 1.1.
"MATERIAL ADVERSE EFFECT" means, with respect to a Person, a material
adverse effect upon the condition (financial or otherwise), operations,
performance or properties of such Person. The phrase "has a Material Adverse
Effect" or "will result in a Material Adverse Effect" or words substantially
similar thereto shall in all cases be intended to mean "has resulted, or will or
could reasonably be anticipated to result, in a Material Adverse Effect", and
the phrase "has no (or does not have a) Material Adverse Effect" or "will not
result in a Material Adverse Effect" or words substantially similar thereto
shall in all cases be intended to mean "does not or will not or could not
reasonably be anticipated to result in a Material Adverse Effect".
"NET OPERATING INCOME" means, at any time with respect to each Real
Property, the cash-basis net operating income of such Real Property determined
on a basis consistent with the operating statements provided by the Borrower to
the Bank prior to the Effective Date.
"PERSON" means any natural person, employee, corporation, limited
partnership, general partnership, joint stock company, limited liability
company, joint venture, association, company, trust, bank, trust company, land
trust, business trust or other organization, whether or not a legal entity, or
any other non-governmental entity, or any governmental authority.
"PRUDENTIAL INDEBTEDNESS" means the unsecured Indebtedness of the
Borrower to The Prudential Life Insurance Company of America in the original
principal amount of $73,000,000.
"RATING AGENCY" means each of Standard & Poor's Corporation, Moody's
Investor's Service, Inc., Duff and Phelps and Fitch Investors or such other
nationally recognized rating service or services as may be mutually agreed upon
by the Borrower and the Bank.
"REAL PROPERTY" means all improved, income-producing real property
owned in fee entirely by the Borrower or a consolidated, controlled Affiliate of
the Borrower.
"SECURED INDEBTEDNESS" means all the Borrower Indebtedness that is
secured by a Lien on any real property asset of the Borrower.
"TANGIBLE NET WORTH" means, at any time, shareholders' equity, as
shown on the Borrower's financial statements prepared in accordance with GAAP,
MINUS intangible assets.
"TOTAL ASSETS" means, at any time, the book value (net
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of any applicable reserves) of all tangible assets of the Borrower as shown on
its most recent quarterly financial statements prepared in accordance with GAAP.
"TOTAL LIABILITIES" means (i) all Indebtedness of the Borrower,
whether or not such Indebtedness would be included as a liability on the balance
sheet of the Borrower in accordance with GAAP, PLUS (ii) all other liabilities
of every nature and kind of the Borrower that would be included as liabilities
on the balance sheet of the Borrower in accordance with GAAP.
"TOTAL REAL PROPERTY MARKET VALUE" means, at any time, the aggregate
value of all Real Properties as determined using the Current Value Method.
"UNENCUMBERED REAL PROPERTY" means all Real Property as to which
neither such real property, nor any interest in the Person owning such real
property, is subject to any Lien (other than Liens in respect of nondelinquent
real estate taxes or assessments) or to any agreement (other than this Agreement
or any other Loan Document) that prohibits the creation of any Lien thereon as
security for Indebtedness of the Person owning such real property.
"UNSECURED INDEBTEDNESS" means Indebtedness of the Borrower not
secured by a Lien.
1. LINE OF CREDIT AMOUNT AND TERMS
1.1 LINE OF CREDIT AMOUNT.
(a) During the Availability Period described below, the Bank will
provide a line of credit (also referred to as the "Loan") to the Borrower. The
amount of the Line of Credit is One Hundred Fifteen Million Dollars
($115,000,000) (the "Commitment" or the "Maximum Loan Amount").
(b) This is a revolving line of credit. During the Availability
Period, the Borrower may from time to time repay principal amounts (subject to
the provisions of Exhibit B to the Note referred to below) and reborrow such
principal, subject to compliance with the terms and conditions of the Loan
Documents referenced in Section 1.4 below.
(c) Each advance under the Line of Credit must be for at least Five
Hundred Thousand Dollars ($500,000), or for the amount of the remaining
available Line of Credit if less.
(d) The Borrower agrees not to permit the aggregate principal amount
of all advances under the Loan Documents outstanding at any time to exceed the
Commitment.
1.2 AVAILABILITY PERIOD.
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The Line of Credit is available (the "Availability Period") between
the date of this Agreement and the Maturity Date (as defined in the Note),
subject to the provisions of Section 3.1 below. If there is an Event of
Default, then, in addition to the Bank's other remedies, the Bank may terminate
the Availability Period and may require the Borrower to repay any amounts
outstanding under the Line of Credit, or any other credit facilities provided by
the Bank pursuant to the Loan Documents, immediately.
1.3 INTEREST RATE.
Borrower is executing an amended and restated promissory note (the
"Note") in the amount of the Commitment evidencing advances made under the Loan
Documents and payable to the Bank. The Note sets forth certain provisions
regarding the interest rate and certain other terms and conditions applicable to
the credit facilities provided pursuant to the Loan Documents. Promptly
following the Effective Date, the Bank shall mark the Prior Note "superseded"
and return it to the Borrower. Until the Effective Date, interest shall
continue to accrue on outstanding advances at the rate or rates provided in the
Prior Note; such interest shall be due and payable on the first date on which
interest is due under the Note. All principal outstanding under the Prior Note
as of the Effective Date shall for all purposes be deemed outstanding under the
Note, and all of Borrower's obligations under the Prior Note shall for all
purposes be incorporated into the Note.
1.4 LOAN DOCUMENTS.
The "Loan Documents" are the documents indicated below, each dated as
of the date of this Agreement unless indicated otherwise. A capitalized term
used in this Agreement but not defined herein has the meaning given to such term
in the other Loan Documents.
(a) This Agreement;
(b) The Note;
(c) The Amended and Restated Modification Agreement to Syndicate Loan
entered into concurrently herewith;
(d) The supplemental commitment fee, agency fee and deposit letter
executed by the Borrower in favor of the Bank (the "Supplemental Letter"); and
(e) Corporate Resolution to borrow, certified by the Corporate
Secretary of the corporation. The Corporate Resolution shall also contain a
Certificate of Incumbency for the authorized signing officers, containing their
specimen signatures and certified by the Corporate Secretary.
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2. FEES, EXPENSES
2.1 FEES.
(a) COMMITMENT FEE. The Borrower agrees to pay, in advance, a
commitment fee in the amount provided for in the Supplemental Letter. This fee
is due on the Effective Date.
(b) FACILITY FEE. The Borrower agrees to pay, in quarterly
installments, in arrears, a facility fee in an amount equal to one quarter of
the Applicable Facility Fee Percentage of the Commitment as of the first day of
each calendar quarter during the term hereof and as of the last day of the
Availability Period (prorated for partial quarters on the basis of a year of 360
days for the actual number of days elapsed). This fee shall be due and payable
not later than fifteen (15) days following the rendering of an invoice therefor
by the Bank.
2.2 EXPENSES AND COSTS.
(a) Borrower shall pay all costs and expenses incurred by the Bank in
connection with the making, disbursement and administration of the Line of
Credit and other credit facilities, if any, made available pursuant to the Loan
Documents, and in the exercise of any of the Bank's rights or remedies under the
Loan Documents. Such costs and expenses include legal fees and expenses of the
Bank's counsel and any other reasonable fees and costs for services, regardless
of whether such services are furnished by the Bank's employees or by independent
contractors. The Borrower acknowledges that the other fees payable to the Bank
do not include amounts payable by the Borrower under this Section 2.2.
(b) The Borrower agrees to indemnify the Bank from and hold it
harmless against any transfer or documentary taxes, assessments or charges
imposed by any governmental authority by reason of the execution, delivery and
performance of the Loan Documents. The Borrower's obligations under this
Section 2.2 shall survive payment of the advances made pursuant to the Loan
Documents and assignment of any rights hereunder.
3. DISBURSEMENTS, PAYMENTS AND COSTS
3.1 REQUESTS FOR CREDIT.
(a) Each request for an extension of credit shall be made in writing
in a manner acceptable to the Bank.
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(b) BORROWING NOTICE. Except as otherwise provided in the Loan
Documents, each draw request shall be made upon the irrevocable written notice
of the Borrower (including notice via facsimile confirmed by a mailed copy)
pursuant to a Borrowing Notice in the form attached hereto as EXHIBIT A. Each
Borrowing Notice shall be submitted to and received by the Bank prior to 9:00
a.m. (California time) at least two (2) Banking Days prior to the specified
borrowing date. The truth and accuracy of each statement made in the Borrowing
Notice shall be a condition precedent to the advance requested thereunder.
3.2 DISBURSEMENT AND PAYMENT RECORD.
Each disbursement by the Bank and each payment by the Borrower will be
evidenced by records kept by the Bank.
3.3 AUTHORIZATION.
(a) The Bank may honor facsimile instructions for advances or
repayments (or for the designation of any optional interest rates that may be
permitted by the Note) given by any one of the individuals authorized to sign
loan documents on behalf of the Borrower, or any other individual designated by
any one of such authorized signers.
(b) Advances will be deposited in the Borrower's account number
00333 02 305 at the Bank, or such other of the Borrower's accounts with the Bank
as designated in writing by the Borrower.
(c) The Borrower indemnifies and releases the Bank (including its
officers, employees, and agents) from all liability, loss, and costs in
connection with any act resulting from any instructions the Bank reasonably
believes are made by any individual authorized by the Borrower to give such
instructions. This indemnity and release shall survive this Agreement's
termination.
3.4 BANKING DAYS.
A Banking Day is defined in the Note. All payments and disbursements
which would be due on a day which is not a Banking Day will be due on the next
Banking Day. All payments received on a day which is not a Banking Day will be
applied to amounts due under the Loan Documents on the next Banking Day.
4. CONDITIONS
The Bank must receive the following items, in form and content acceptable
to the Bank, before it is required to extend any credit to the Borrower under
this Agreement or any other Loan Document:
4.1 AUTHORIZATIONS.
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Evidence that the execution, delivery and performance by the Borrower
of the Loan Documents have been duly authorized.
4.2 GOVERNING DOCUMENTS; GOOD STANDING CERTIFICATES.
A copy of the Borrower's articles of incorporation and bylaws,
together with a certificate of good standing for the Borrower from the state
where formed and, at the Bank's request, from any other state in which the
Borrower is required to qualify to conduct its business.
4.3 LOAN DOCUMENTS.
Duly executed Loan Documents.
4.4 PAYMENT OF FEES.
Payment of all accrued and unpaid fees and expenses due the Bank as
provided for by the Loan Documents and all other accrued and unpaid fees and
expenses provided for under the Loan Documents as heretofore in effect (other
than the Unused Commitment Fee provided for under the Loan Agreement for the
period ending on the Effective Date, which will payable in accordance with
Section 9.10).
4.5 OTHER ITEMS.
Any other documents and other items the Bank may reasonably require as
conditions precedent to this Agreement or any advance.
5. REPRESENTATIONS AND WARRANTIES
When the Borrower signs this Agreement, and until the Bank is repaid in
full, the Borrower makes the following representations and warranties. Each
request for an extension of credit constitutes a restatement of each such
representation and warranty.
5.1 ORGANIZATION OF THE BORROWER; GOOD STANDING.
The Borrower is duly formed and existing under the laws of the state
where organized. In each state in which the Borrower does business, it is
properly licensed, in good standing, and, where required, in compliance with any
fictitious name statute.
5.2 AUTHORIZATION; ENFORCEABLE AGREEMENT.
This Agreement and the other Loan Documents are within the Borrower's
powers, have been duly authorized and do not conflict with any of its
organizational documents. The Loan Documents do not conflict with any law,
agreement or obligation
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by which the Borrower is bound. This Agreement is a legal, valid and binding
agreement of the Borrower, enforceable against the Borrower in accordance with
its terms, and any instrument or document required hereunder, when executed and
delivered, will be similarly legal, valid, binding and enforceable.
5.3 FINANCIAL INFORMATION.
(a) All financial statements and data submitted in writing by the
Borrower to the Bank pursuant to the Loan Agreement are true and correct, and
all such financial statements present fairly the financial condition of the
Borrower as at the date thereof and the results of the operations of the
Borrower for the period(s) covered thereby, and have been prepared in accordance
with generally accepted accounting principles on a basis consistently applied.
The Borrower has no knowledge of any liabilities, contingent or otherwise, not
reflected in said financial statements, and the Borrower has not entered into
any material commitments or material contracts which are not reflected in said
balance sheet which may have a Material Adverse Effect on the Borrower. Since
said date there have been no changes in the assets or liabilities or financial
condition of the Borrower other than changes in the ordinary course of business,
and no such changes have been materially adverse changes.
(b) All financial and other information that has been or will be
supplied to the Bank, including the financial statements of the Borrower:
(i) is sufficiently complete to give the Bank accurate knowledge
of the subject's financial condition;
(ii) is in form and content as required by the Bank;
(iii) is in compliance with any government regulations that
apply; and
(iv) does not fail to state any material facts necessary to make
the information contained therein not misleading.
All such information (other than Funds From Operations) was and will be prepared
in accordance with GAAP, unless otherwise noted.
5.4 LAWSUITS.
There is no lawsuit, arbitration, claim or other dispute pending or
threatened against the Borrower which, if lost, would impair the Borrower's
financial condition or ability to repay advances made, and other amounts due,
under the Loan Documents, except as has been previously disclosed in writing to
the Bank.
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5.5 TITLE TO ASSETS.
The Borrower has good and clear title to its assets, and the same are
not subject to any Liens other than those disclosed to the Bank in writing.
5.6 PERMITS, FRANCHISES.
The Borrower possesses all permits, franchises, contracts and licenses
required and all trademark rights, trade name rights, and fictitious name rights
necessary to enable it to conduct the business in which it is now engaged.
5.7 INCOME TAX RETURNS.
Borrower has filed all tax returns and reports required to be filed
and has paid all applicable federal, state and local franchise, income and
property taxes which are due and payable. The Borrower has no knowledge of any
pending assessments or adjustments of its income taxes or property taxes for any
year, except as have been disclosed in writing to the Bank. The Borrower is not
a "foreign person" within the meaning of Section 1445(f)(3) of the Internal
Revenue Code of 1986, as amended (the "Code").
5.8 ERISA PLANS.
(a) As used herein, (i) "ERISA" means the Employee Retirement Income
Act of 1974, as amended; (ii) "PBGC" means the Pension Benefit Guaranty
Corporation established pursuant to ERISA; and (iii) "Plan" means any employee
pension benefit plan maintained or contributed to by the Borrower and insured by
the PBGC.
(b) The Borrower has fulfilled its obligations, if any, under the
minimum funding standards of ERISA and the Code with respect to each Plan and is
in compliance in all material respects with the presently applicable provisions
of ERISA and the Code, and has not incurred any liability with respect to any
Plan under Title IV of ERISA.
(c) No reportable event has occurred under Section 4043(b) of ERISA
for which the PBGC requires 30 day notice. No action by the Borrower to
terminate or withdraw from any Plan has been taken and no notice of intent to
terminate a Plan has been filed under Section 4041 of ERISA. No proceeding has
been commenced with respect to a Plan under Section 4042 of ERISA, and no event
has occurred or condition exists which might constitute grounds for the
commencement of such a proceeding.
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5.9 OTHER OBLIGATIONS.
The Borrower is not in default on any Indebtedness or Contractual
Obligation of the Borrower except as has been previously disclosed in writing to
the Bank.
5.10 EVENT OF DEFAULT.
There is no event which is, or with notice or lapse of time or both
would be, an Event of Default hereunder.
5.11 STATUS AS A REIT.
The Borrower (i) is a real estate investment trust as defined in
Section 856 of the Code (or any successor provision thereto), (ii) has not
revoked its election to be a real estate investment trust, (iii) has not engaged
in any "prohibited transactions" as defined in Section 856(b)(6)(iii) of the
Code (or any successor provision thereto), and (iv) for its current "tax year"
(as defined in the Code) is and for all prior tax years subsequent to its
election to be a real estate investment trust has been entitled to a dividends
paid deduction which meets the requirements of Section 857 of the Code.
6. COVENANTS
The Borrower agrees, so long as credit is available under this
Agreement or any other Loan Document and until the Bank is repaid in full:
6.1 USE OF PROCEEDS.
Borrower shall use the proceeds of the advances under the Loan
Documents only for (a) the funding of costs directly related to the acquisition
of apartment projects, or (b) up to a maximum of Fifteen Million Dollars
($15,000,000) at any one time outstanding, general working capital purposes of
the Borrower. In complying with the provisions of the foregoing clause (a), the
Borrower shall not be required to apply advances under the Loan Documents in
direct payment of acquisition costs, but shall be permitted to request and
obtain such advances by way of reimbursement of acquisition costs previously
incurred and funded out of the Borrower's cash reserves.
6.2 FINANCIAL INFORMATION.
The Borrower shall provide the following financial information and
statements and such additional information as requested by the Bank from time to
time:
(a) As soon as available but not later than ninety (90) days after
the Borrower's fiscal year end, the Borrower's annual financial statements
including balance sheet, income statement, statement of cash flows and statement
of shareholders'
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equity. These financial statements must be audited (with an unqualified
opinion) by the Borrower's CPA and certified by the Borrower's Chief Financial
Officer (or other officer acceptable to the Bank).
(b) As soon as available but not later than sixty (60) days after
each fiscal quarter end, the Borrower's Form 10-Q Quarterly Report, including
balance sheet, income statement, statement of cash flows and statement of
shareholders' equity. These financial statements must be certified by the
Borrower's Chief Financial Officer (or other officer acceptable to the Bank).
(c) As soon as available but not later than ninety (90) days after
the Borrower's fiscal year end, the Borrower's annual two-year financial
projection, including balance sheet and income statement, in a format and with
such detail as the Bank may require. These projections must be certified by the
Borrower's Chief Financial Officer (or other officer acceptable to the Bank).
(d) Copies of the Borrower's Form 10-K Annual Report, Form 8-K
Current Report and all other filings within fifteen (15) days after the date of
filing with the Securities and Exchange Commission, and copies of all press
releases made by the Borrower.
(e) As soon as available but not later than sixty (60) days after
each fiscal quarter end, the Borrower's quarterly internal management reports
(including (i) a schedule of all Debt Service for the prior quarter, (ii) a
schedule of Net Operating Income for each Real Property for the preceding four
(4) fiscal quarters, (iii) a schedule listing all Indebtedness secured by a Lien
on any real property assets of the Borrower, and (iv) a statement of the number
of apartment units (by project and location) under development (as defined in
Section 6.4(g)) at fiscal quarter-end. These reports must be certified by the
Borrower's Chief Financial Officer (or other officer acceptable to the Bank).
(f) At the time of the delivery of the financial statements provided
for in Sections 6.2(a) and (b), a certificate executed by the Chief Financial
Officer of the Borrower certifying compliance with all financial covenants
herein, including appropriate supporting schedules, and certifying that to the
best of the such officer's knowledge, no Event of Default has occurred and is
continuing or would result after notice or passage of time or both or, if any
Event of Default has occurred and is continuing or would result after notice or
passage of time or both, specifying the nature and extent thereof.
Notwithstanding anything to the contrary contained herein and without limiting
the Bank's other rights and remedies, if any certificate required under this
Section 6.2 is not provided on or before the due date therefor, the Borrower
shall be prohibited
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from any further borrowing under the Line of Credit until such certificate is
provided.
6.3 OTHER INFORMATION.
The Borrower shall provide the Bank:
(a) Promptly upon, and in any event within forty-eight (48) hours
after the Borrower first has actual knowledge of (i) its failing to continue to
qualify as a real estate investment trust as defined in Section 856 of the Code
(or any successor provision thereof), (ii) any act by the Borrower causing its
election to be taxed as a real estate investment trust to be terminated, (iii)
any act causing the Borrower to be subject to the taxes imposed by Section
857(b)(6) of the Code (or any successor provision thereto), or (iv) the Borrower
failing to be entitled to a dividends paid deduction which meets the
requirements of Section 857 of the Code, a notice of any such occurrence or
circumstance.
(b) Such additional financial and other information as the Bank may
reasonably request from time to time.
6.4 FINANCIAL COVENANTS.
(a) MINIMUM NET WORTH. The Borrower will maintain a Tangible Net
Worth of not less than (i) Four Hundred Eighty-Two Million Two Hundred
Fifty-Nine Thousand Dollars ($482,259,000), plus (ii) eighty-five percent (85%)
of Gross Offering Proceeds received by the Borrower after the Effective Date.
(b) TOTAL LIABILITIES TO TOTAL ASSETS. The ratio of the Borrower's
Total Liabilities to the sum of (i) Total Real Property Market Value PLUS (ii)
Total Assets (excluding Real Property) shall not exceed 0.50:1.
(c) SECURED INDEBTEDNESS TO TOTAL ASSETS. The ratio of Secured
Indebtedness to the sum of (i) Total Real Property Market Value PLUS (ii) Total
Assets (excluding Real Property) shall not exceed shall not exceed 0.30:1.
(d) UNENCUMBERED REAL PROPERTY TO UNSECURED INDEBTEDNESS;
UNENCUMBERED REAL PROPERTY NOI TO UNSECURED INTEREST EXPENSE.
(i) The ratio of (A) Total Real Property Market Value of all
Unencumbered Real Property to (B) total commitments (disbursed and undisbursed)
under Unsecured Indebtedness shall not be less than 1.75:1.
(ii) The ratio of (A) the aggregate NOI of all Unencumbered Real
Property to (B) Interest Expense under Unsecured Indebtedness for the period
being tested shall not be less than 1.75:1.
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(e) EBITDA TO DEBT SERVICE. The ratio of EBITDA to Debt Service
shall not be less than 1.80:1.
(f) DISTRIBUTIONS.
(i) Subject to subparagraph (ii) below, aggregate distributions
to shareholders of the Borrower shall not exceed the following, as reported
in accordance with GAAP (other than Funds From Operations):
(A) as of the end of any fiscal year, distributions shall
not exceed ninety-five percent (95%) of the Borrower's Funds From
Operations for such period; AND
(B) at the end of the first, second and third fiscal
quarters, distributions shall not exceed, more than once during any
fiscal year, one hundred percent (100%), but in no event in excess
of one hundred fifteen percent (115%), of the Borrower's Funds From
Operations for such period (calculated on a year-to-date basis).
For purposes of this Section 6.4(f), the term "distributions" shall mean
and include all dividends and other distributions to, and the repurchase of
shares from, the holder of any equity interests in the Borrower.
(ii) No distributions shall be made during the continuance of any
Event of Default arising out of the Borrower's failure to pay any monetary
obligation when due under any Loan Document (a "Monetary Default").
Aggregate distributions during the continuance of any Event of Default
other than a Monetary Default shall not exceed the lesser of (A) the
aggregate amount permitted to be made during the continuance thereof under
subparagraph (i) above, or (B) the minimum amount that the Borrower must
distribute to its shareholders in order to maintain compliance with Section
6.14 below.
(g) DEVELOPMENT. At no time shall the Borrower have under development
apartment units totaling in excess of twenty percent (20%) of the total number
of apartment units (excluding such units under development) then owned by the
Borrower. For purposes of the foregoing covenant, "development" shall mean all
units under construction, at or beyond the foundation stage, within a particular
apartment project, until the construction of all units (or discreet phase(s)
thereof, if applicable) shall have been completed, certificates of occupancy
shall have been issued with respect to such units, and such units shall be
available for immediate lease and occupancy in the normal course of business.
17
<PAGE>
(h) MAXIMUM UNSECURED LINES OF CREDIT. The Borrower shall not permit
total commitments (disbursed and undisbursed) with respect to Unsecured
Indebtedness under lines of credit to exceed One Hundred Fifty Million Dollars
($150,000,000), plus the total commitments (disbursed and undisbursed) made
available to the Borrower under any and all other lines of credit from time to
time provided to the Borrower by (i) the Bank or (ii) a group of lenders,
consisting of the Bank and one or more other lenders, for whom the Bank serves
as agent at the time such line of credit is first made available. Further, the
Borrower shall not enter into any commitment for Unsecured Indebtedness under
lines of credit other than under (x) this Agreement, (y) any other lines of
credit from time to time provided to the Borrower by the Bank or by a group of
lenders, consisting of the Bank and one or more other lenders, for whom the Bank
serves as agent at the time such line of credit is first made available, and (z)
the existing line of credit established by Sanwa Bank in favor of the Borrower
in the maximum principal amount of Thirty-Five Million Dollars ($35,000,000).
(i) UNSECURED INDEBTEDNESS. The Borrower shall not incur any
Unsecured Indebtedness other than (i) Indebtedness under revolving lines of
credit to the extent permitted under Section 6.4(h) above, and (ii)
non-revolving, non-amortizing Indebtedness with a maturity or call date not
earlier than five (5) years after the Maturity Date under the Note in effect at
the time such Indebtedness is incurred; provided, however, that the foregoing
amortization restriction shall not apply to amortization required, as of the
date of this Agreement, under the Prudential Indebtedness.
(j) CALCULATION. Each of the foregoing ratios and financial
requirements shall be calculated as of the last day of each fiscal quarter, but
shall be satisfied at all times.
6.5 TAXES AND OTHER LIABILITIES.
The Borrower shall pay and discharge, before the same become
delinquent and before penalties accrue thereon, all taxes, assessments and
governmental charges upon or against it or any of its properties, and all its
other liabilities at any time existing, except to the extent and so long as:
(a) The same are being contested in good faith and by appropriate
proceedings in such manner as not to cause any Material Adverse Effect on the
Borrower or the loss of any right of redemption from any sale thereunder; and
(b) The Borrower shall have set aside on its books reserves
(segregated to the extent required by generally accepted accounting principles)
adequate with respect thereto.
6.6 NOTICES TO THE BANK.
18
<PAGE>
The Borrower shall promptly notify the Bank in writing of:
(a) any Event of Default hereunder or any event which would become an
Event of Default hereunder upon the giving of notice, the lapse of time, or
both;
(b) any single lawsuit or arbitration claiming over Two Hundred Fifty
Thousand Dollars ($250,000), and lawsuits or arbitrations collectively claiming
over One Million Dollars ($1,000,000), against the Borrower, provided that the
foregoing shall not apply to the litigation disclosed in the Form S-4 referred
to in Section 5.3(a) above;
(c) any significant dispute between the Borrower and any government
authority;
(d) Borrower's receipt of any notice relating to (i) any change in or
reaffirmation of, or proposed change in or reaffirmation of, the rating of
Borrower's senior long-term unsecured debt obligations by any Rating Agency, or
(ii) the issuance of any Rating by a Rating Agency as to which no Rating is then
in effect; and
(e) any event, circumstance or condition which may have a Material
Adverse Effect on the Borrower.
6.7 AUDITS; BOOKS AND RECORDS.
The Borrower shall maintain adequate books and records and allow the
Bank and its agents to inspect the Borrower's properties and examine, audit and
make copies of books and records at any reasonable time. If any of the
Borrower's properties, books or records are in the possession of a third party,
the Borrower hereby authorizes that third party to permit the Bank or its agents
to have access to perform inspections or audits and to respond to the Bank's
requests for information concerning such properties, books and records.
6.8 COMPLIANCE WITH LAWS.
The Borrower shall comply with the laws (including any fictitious name
statute), regulations, and orders of any government body with authority over the
Borrower's business.
6.9 PRESERVATION OF RIGHTS.
The Borrower shall maintain and preserve all rights, privileges, and
franchises the Borrower now has.
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<PAGE>
6.10 MAINTENANCE OF PROPERTIES.
The Borrower shall make repairs, renewals, or replacements to keep the
Borrower's properties in good working condition.
6.11 INSURANCE.
The Borrower shall maintain insurance in such amounts and covering
such risks as is usually carried by companies engaged in similar businesses and
owning similar properties in the same general areas in which the Borrower and
each of its Affiliates operate and maintain such other insurance and coverages
as may be reasonably required by the Bank. All such insurance shall be in form
and amount and with companies satisfactory to the Bank. Upon the Bank's
request, the Borrower shall furnish the Bank with a copy of the policy or binder
of all such insurance and continuing evidence that such insurance remains in
force at applicable renewal dates.
6.12 ERISA PLANS.
The Borrower shall give prompt written notice to the Bank of the
occurrence of any reportable event under Section 4043(b) of ERISA for which the
PBGC requires 30 day notice; any action by the Borrower to terminate or
withdraw from a Plan or the filing of any notice of intent to terminate under
Section 4041 of ERISA; any notice of noncompliance made with respect to a Plan
under Section 4041(b) of ERISA; or the commencement of any proceeding with
respect to a Plan under Section 4042 of ERISA.
6.13 ADDITIONAL NEGATIVE COVENANTS.
The Borrower shall not, without the Bank's written consent:
(a) Merge or dissolve into, or consolidate with, any Person, except
mergers and consolidations (i) which result in the Borrower being the surviving
entity, (ii) which do not have a Material Adverse Effect on the Borrower, and
(iii) which do not result in the Borrower, following the consummation of such
merger or consolidation, being in default under any term or condition of this
Agreement. The Borrower shall not sell, lease, transfer, encumber or otherwise
dispose of all or any substantial part of its properties or assets, whether in a
single transaction or series of transactions, if such sale, lease, transfer,
encumbrance or other disposition would cause a Material Adverse Effect on the
Borrower;
(b) Except for any such amendment that is required under any
requirement of law imposed by any governmental authority or in order to maintain
compliance with Section 6.14, amend its articles of incorporation or by-laws
except (i) upon at
20
<PAGE>
least ten (10) Banking Days' prior written notice to the Bank, AND (ii) if the
Bank notifies the Borrower within such 10-day period that such amendment is, in
Bank's reasonable judgment, a material amendment, with the prior written consent
of the Bank;
(c) suspend its business activity for more than two days; or
(d) use any proceeds of any advance under the Loan Documents,
directly or indirectly, to purchase or carry, or reduce or retire any loan
incurred to purchase or carry any "Margin Stock" (within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System) or to
extend credit to others for the purpose of purchasing or carrying any Margin
Stock.
6.14 CONTINUED STATUS AS A REIT; PROHIBITED TRANSACTIONS.
The Borrower (i) will continue to be a real estate investment trust as
defined in Section 856 of the Code (or any successor provision thereto), (ii)
will not revoke its election to be a real estate investment trust, (iii) will
not engage in any "prohibited transactions" as defined in Section 856(b)(6)(iii)
of the Code (or any successor provision thereto), and (iv) will continue to be
entitled to a dividend paid deduction meeting the requirements of Section 857 of
the Code.
6.15 NYSE LISTED COMPANY.
The common stock of the Borrower shall at all times be listed for
trading and be traded on the New York Stock Exchange.
6.16 CONDUCT OF BUSINESS.
The Borrower shall engage primarily in the business of direct
ownership, operation and acquisition or development for its own account of
apartment projects located in the Western United States (which shall be
understood to mean Colorado and States westward); provided, however, that the
foregoing shall not restrict either the Borrower's continued ownership and
operation of assets owned as of the Effective Date or other business activities
of the Borrower reasonably incidental to business activities otherwise permitted
under this Section 6.16.
6.17 COOPERATION.
The Borrower shall take any action reasonably requested by the Bank to
carry out the intent of the Loan Documents.
7. COLLATERAL
This Line of Credit is unsecured.
8. DEFAULT
21
<PAGE>
If any of the following events occurs (an "Event of Default"), the Bank may
declare the Borrower in default, stop making any additional credit available to
the Borrower, and require the Borrower to repay its entire debt immediately and
without prior notice. However, if a bankruptcy petition is filed with respect
to the Borrower, the entire debt outstanding under the Loan Documents shall
automatically be due immediately.
8.1 FAILURE TO PAY.
The Borrower fails to make any payment due under the Loan Documents
(i) within fifteen (15) days after the date when due, or (ii) within such other
period, or no period, as may expressly be provided in any other Loan Document to
constitute an Event of Default.
8.2 FALSE INFORMATION.
The Borrower has given the Bank false or misleading information or
representations.
8.3 BANKRUPTCY.
The Borrower files a bankruptcy petition or makes a general assignment
for the benefit of creditors, or a bankruptcy petition is filed against the
Borrower. The default will be deemed cured if any bankruptcy petition filed
against the Borrower is dismissed within a period of forty-five (45) days after
the filing; provided, however, that the Bank will not be obligated to extend any
additional credit to the Borrower during that period.
8.4 RECEIVERS.
A receiver or similar official is appointed for the Borrower's
business, or the business is terminated.
8.5 LAWSUITS.
Any lawsuit(s) or arbitration(s) are initiated against the Borrower
involving claims exceeding in the aggregate Fifty Million Dollars ($50,000,000)
or more at any one time in excess of any insurance coverage.
8.6 JUDGMENTS.
Any judgment or arbitration award is entered against the Borrower, or
the Borrower enters into any settlement agreement with respect to any
litigation, claim or arbitration, in an aggregate amount of Ten Million Dollars
($10,000,000) or more in excess of any insurance coverage.
8.7 ERISA PLANS.
22
<PAGE>
The occurrence of any of the following event(s) with respect to the
Borrower, provided such event(s) could reasonably be expected, in the judgment
of the Bank, to subject the Borrower to any tax, penalty or liability (or any
combination of the foregoing) which in the aggregate could have a Material
Adverse Effect on the Borrower with respect to a Plan:
(a) A reportable event occurs with respect to a Plan which in the
reasonable judgment of the Bank may result in the termination of such Plan for
purposes of ERISA.
(b) Any Plan termination (or commencement of proceedings to terminate
a Plan) or the Borrower's full or partial withdrawal from a Plan.
8.8 GOVERNMENT ACTION.
Any government authority takes action that the Bank believes could
have a Material Adverse Effect on the Borrower.
8.9 MATERIAL ADVERSE CHANGE.
Any event, circumstance or condition shall occur which the Bank
believes could have a Material Adverse Effect on the Borrower.
8.10 OTHER BREACH UNDER THIS AGREEMENT OR OTHER LOAN DOCUMENTS.
The Borrower fails to meet the conditions of or fails to perform any
obligation under any term of this Agreement or any other Loan Document not
specifically referred to in this Article 8. If, in the Bank's opinion, the
breach is capable of being remedied, the breach will not be considered an Event
of Default under this Agreement for a period of thirty (30) days after the date
on which the Bank gives written notice of the breach to the Borrower; provided,
however, that the Bank will not be obligated to extend any additional credit to
the Borrower during that period.
8.11 CROSS-DEFAULT.
Any default occurs under any agreement in connection with any credit
the Borrower or any of the Borrower's related entities or Affiliates has
obtained from the Bank or any other creditor, or which the Borrower or any of
the Borrower's related entities or Affiliates has guaranteed, if the default
consists of a failure to make a payment when due or gives the creditor the right
to accelerate the obligation.
9. ENFORCING THIS AGREEMENT; MISCELLANEOUS
9.1 REMEDIES.
23
<PAGE>
If an Event of Default occurs under the Loan Documents, the Bank may
exercise any right or remedy which it has under any of the Loan Documents or
which is otherwise available at law or in equity. All of Bank's rights and
remedies shall be cumulative. At Bank's option, exercisable in its sole
discretion, all of the Borrower's obligations under the Loan Documents will
become immediately due and payable without notice of default, presentment or
demand for payment, protest or notice of nonpayment or dishonor, or other
notices or demands of any kind.
9.2 CALIFORNIA LAW.
This Agreement is governed by California law but without regard to the
choice of law rules of California.
9.3 ARBITRATION.
(a) MANDATORY ARBITRATION. Except as provided below, any controversy
or claim between or among the parties, including those arising out of or
relating to this Agreement or the other Loan Documents and any claim based on or
arising from an alleged tort, shall at the request of any party be determined by
arbitration. The arbitration shall be conducted in accordance with the United
States Arbitration Act (Title 9, U.S. Code), notwithstanding any choice of law
provision in this Agreement, and under the Commercial Rules of the American
Arbitration Association ("AAA"). The arbitrator(s) shall give effect to
statutes of limitation in determining any claim. Any controversy concerning
whether an issue is arbitrable shall be determined by the arbitrator(s).
Judgment upon the arbitration award may be entered in any court having
jurisdiction. The institution and maintenance of an action for judicial relief
or pursuit of a provisional or ancillary remedy shall not constitute a waiver of
the right of any party, including the plaintiff, to submit the controversy or
claim to arbitration if any other party contests such action for judicial
relief.
(b) PROVISIONAL REMEDIES, SELF-HELP AND FORECLOSURE. No provision of
this Agreement shall limit the right of any party to this Agreement to exercise
self-help remedies such as setoff, or obtaining provisional or ancillary
remedies from a court of competent jurisdiction before, after, or during the
pendency of any arbitration or other proceeding. The exercise of a remedy does
not waive the right of either party to resort to arbitration.
9.4 PRESENTMENT, DEMANDS AND NOTICE.
The Bank shall be under no duty or obligation to make or give any
presentment, demands for performances, notices of nonperformance, protests,
notices of protest or notices of dishonor in connection with any obligation or
indebtedness under
24
<PAGE>
the Loan Documents.
9.5 INDEMNIFICATION.
The Borrower shall indemnify, save, and hold harmless the Bank and its
directors, officers, agents and employees (collectively the "Indemnitees") from
and against:
(a) Any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, charges, expenses or disbursements
(including attorneys' fees) of any kind with respect to the execution, delivery,
enforcement, performance and administration of this Agreement and the other Loan
Documents, and the transactions contemplated hereby, and with respect to any
investigation, litigation or proceeding related to this Agreement, the other
Loan Documents, advances made pursuant to the Loan Documents or the use of the
proceeds thereof, whether or not any Indemnitee is a party thereto (all the
foregoing, collectively, the "Indemnified Liabilities"); provided, that the
Borrower shall have no obligation hereunder to any Indemnitee with respect to
Indemnified Liabilities arising from the gross negligence or willful misconduct
of such Indemnitee.
(b) Any and all writs, subpoenas, claims, demands, actions, or causes
of action that are served on or asserted against any Indemnitee (if directly or
indirectly related to a writ, subpoena, claim, demand, action, or cause of
action against the Borrower or any Affiliate of the Borrower); and any and all
liabilities, losses, costs, or expenses (including attorneys' fees) that any
Indemnitee suffers or incurs as a result of any of said matters.
The obligations of the Borrower under this Section 9.5 shall survive
payment of the advances made pursuant to the Loan Documents and assignment of
any rights hereunder.
9.6 ATTORNEYS' FEES.
In the event of a lawsuit or arbitration proceeding, including any
tort proceeding, between or among the parties hereto, the prevailing party is
entitled to recover costs and reasonable attorneys' fees (including any
allocated costs of in-house counsel) incurred in connection with the lawsuit or
arbitration proceeding, as determined by the court or arbitrator.
9.7 NOTICES.
All notices required under this Agreement shall be personally
delivered, sent by facsimile or sent by first class mail, postage prepaid, to
the addresses on the signature page of this Agreement, or to such other
addresses as the Bank and the Borrower may specify from time to time in writing.
9.8 SUCCESSORS AND ASSIGNS.
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<PAGE>
This Agreement is binding on the Borrower's and the Bank's successors
and assignees. The Borrower agrees that it may not assign this Agreement or the
other Loan Documents without the Bank's prior consent. The Bank may sell
participations in or assign this Loan, and may provide financial information
about the Borrower to actual or potential participants or assignees, without
notice to or consent of the Borrower. Concurrent with any assignment or
participation by the Bank, the Borrower will, at the Bank's request, deliver an
opinion of counsel in form and substance reasonably satisfactory to the Bank.
9.9 NO THIRD PARTIES BENEFITED.
This Agreement is made and entered into for the sole protection and
benefit of the Bank and the Borrower and their successors and assigns. No trust
fund is created by this Agreement and no other persons or entities shall have
any right of action under this Agreement or any right to the proceeds of
advances made pursuant to the Loan Documents.
9.10 AMENDMENT AND RESTATEMENT; INTEGRATION; RELATION TO ANY LOAN
COMMITMENT; HEADINGS.
(a) This Agreement fully amends and restates the Loan Agreement, and
all of the Borrower's obligations under the Loan Agreement shall for all
purposes be incorporated into this Agreement. The Unused Commitment Fee under
the Loan Agreement as heretofore in effect, for the period ending on the
Effective Date, shall be due and payable not later than fifteen (15) days
following the rendering of an invoice therefor by the Bank
(b) The Loan Documents (i) integrate all the terms and conditions in
or incidental to this Agreement, (ii) supersede all oral negotiations and prior
writings with respect to their subject matter, including any loan commitment to
the Borrower, and (iii) 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. No representation, understanding, promise or condition shall be
enforceable against any party unless it is contained in the Loan Documents.
(c) If there is any conflict between the terms, conditions and
provisions of this Agreement and those of any other agreement or instrument,
including any other Loan Document, the terms, conditions and provisions of this
Agreement shall prevail.
(d) Headings and captions are for reference only and shall not affect
the interpretation or meaning of any provisions of this Agreement.
(e) The exhibit(s) to this Agreement are hereby
26
<PAGE>
incorporated in this Agreement.
9.11 INTERPRETATION.
(a) Time is of the essence in the performance of this Agreement by
the Borrower.
(b) The word "include(s)" means "include(s), without limitation," and
the word "including" means "including but not limited to." No listing of
specific instances, items or matters in any way limits the scope or generality
of any language of this Agreement.
(c) Any accounting terms used in this Agreement which are not
specifically defined shall have the meanings customarily given them in
accordance with GAAP. All references herein to the Borrower or any other
Person, in connection with any financial or related covenant, representation or
calculation, shall be understood to mean and refer to the Borrower and such
other Person on a consolidated basis in accordance with GAAP, unless otherwise
specifically provided and subject in all events to any adjustments herein set
forth.
(d) Any time the phrase "to the best of the Borrower's knowledge" or
a phrase similar thereto is used herein, it means: "to the actual knowledge of
the then officers of the Borrower, after reasonable inquiry of those agents,
employees or contractors of the Borrower who could reasonably be anticipated to
have knowledge with respect to the subject matter or circumstances in question
and after review of those documents or instruments which could reasonably be
anticipated to be relevant to the subject matter or circumstances in question."
(e) In each case where the consent or approval of the Bank is
required, or Bank's non-obligatory action is requested by the Borrower, such
consent, approval or action shall be in the sole and absolute discretion of the
Bank, unless otherwise specifically indicated.
(f) Any time the word "or" is used herein, unless the context
otherwise clearly requires, it has the inclusive meaning represented by the
phrase "and/or". The words "hereof", "herein", "hereby", "hereunder" and
similar terms refer to this Agreement as a whole and not to any particular
provision of this Agreement. Article, section, subsection, clause, exhibit and
schedule references are to this Agreement unless otherwise specified. Any
reference in this Agreement to this Agreement or to any other Loan Document
includes any and all amendments, modifications, supplements, renewals or
restatements thereto or thereof, as applicable.
9.12 SEVERABILITY; WAIVERS; AMENDMENTS.
This Agreement may not be modified or amended except by
27
<PAGE>
a written agreement signed by the parties. Any consent or waiver under this
Agreement must be in writing. If any part of this Agreement is not enforceable,
the rest of the Agreement may be enforced. If the Bank waives a default, it may
enforce a later default. No waiver shall be construed as a continuing waiver.
No waiver shall be implied from Bank's delay in exercising or failure to
exercise any right or remedy against the Borrower. Consent by the Bank to any
act or omission by the Borrower shall not be construed as a consent to any other
or subsequent act or omission or as a waiver of the requirement for Bank's
consent to be obtained in any future or other instance. The Bank retains all of
its rights and remedies, even if it makes an advance after a default.
9.13 COUNTERPARTS.
This Agreement may be executed in counterparts each of which, when
executed, shall be deemed an original, and all such counterparts shall
constitute one and the same agreement.
This Agreement is executed as of the date stated at the top of the first page.
Bank: Borrower:
BANK OF AMERICA NATIONAL BRE PROPERTIES, INC., a
TRUST AND SAVINGS ASSOCIATION Maryland corporation
By By
--------------------------- ----------------------------
Donna Chiaro Jay W. Pauly
Vice President Senior Executive Vice President and
Chief Operating Officer
By
----------------------------
LeRoy E. Carlson
Executive Vice President and Chief
Financial Officer
Address where notices to Address where notices to
the Bank are to be sent: the Borrower are to be sent:
Bank of America National Trust BRE Properties, Inc.
and Savings Association One Montgomery Street
Commercial Real Estate Telesis Tower, Suite 2500
Services/National San Francisco, CA 94104
Accounts 9105 Attn: LeRoy E. Carlson
50 California Street Phone: (415) 445-6561
11th Floor Fax: (415) 445-6505
San Francisco, CA 94111
Attention: Laurence Hughes
Phone: (415) 445-4404
28
<PAGE>
Fax: (415) 445-4154
29
<PAGE>
EXHIBIT A
BORROWING NOTICE
___________________, 199__
Bank of America National Trust
and Savings Association
Commercial Real Estate
Services Group 9105
50 California Street
11th Floor
San Francisco, CA 94111
Attention: Neeta Seletsky
Re: Amended and Restated Unsecured Line of Credit Loan Agreement dated as of
July 8, 1997 (the "Agreement") between BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION ("Bank") and BRE PROPERTIES, INC. ("Borrower")
Dear ________________:
Reference is made to the Agreement. Capitalized terms used in this
Borrowing Notice without definition have the meanings specified in the
Agreement.
Pursuant to the Agreement, notice is hereby given that the Borrower
desires that the Bank make the advance described in attached SCHEDULE 1 (the
"Advance"). The Borrower and the undersigned Officer of the Borrower hereby
certify that:
(1) COMMITMENT. The outstanding amount of the Line of Credit,
together with any other amounts required by the Loan Documents to be charged
against the availability of advances under the Line of Credit, shall not, after
giving effect to the making of the Advance, exceed the Commitment;
(2) REPRESENTATIONS AND WARRANTIES. All representations and
warranties of the Borrower contained in the Agreement and the other Loan
Documents are true and correct as of the date hereof and shall be true and
correct on the date of the Advance, both before and after giving effect to the
Advance; provided, however, that the representations and warranties of the
Borrower set forth in the Agreement regarding financial statements shall be
deemed to be made with respect to the financial statements most recently
delivered to the Bank pursuant to the Agreement;
(3) NO EVENT OF DEFAULT. No Event of Default exists as of the date
hereof or will result from the making of the Advance or would result after
notice or passage of time or both;
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<PAGE>
(4) USE OF PROCEEDS. The proceeds of the Advance will be used only
as permitted by the Agreement; and
(5) NO MATERIAL ADVERSE EFFECT. No event, circumstance or condition,
which could have a Material Adverse Effect on the Borrower, has occurred since
the date of the Agreement.
Enclosed are the documents and information, if any, requested by the
Bank with respect to use of proceeds as a condition to this Advance.
BRE PROPERTIES, INC., a Maryland corporation
By:
--------------------------------
Its:
--------------------------------
2
<PAGE>
SCHEDULE 1
to Borrowing Notice
REQUESTED ADVANCE
1. AMOUNT OF REQUESTED ADVANCE: $
(must be $500,000 or more) ---------------
2. PURPOSE OF ADVANCE 1/:
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
3. EFFECTIVE DATE OF REQUESTED ADVANCE:
--------,-----
- --------------------------
1/ See Section 6.1; specify acquisition costs for designated apartment
project or general working capital purposes.
<PAGE>
AMENDED AND RESTATED
MODIFICATION AGREEMENT
TO SYNDICATE LOAN
TO
BRE PROPERTIES, INC.
MADE BY VARIOUS
FINANCIAL INSTITUTIONS
WITH
BANK OF AMERICA NT & SA
AS AGENT
<PAGE>
TABLE OF CONTENTS
Page
----
Agreement.................................................................... 1
1. RECITALS........................................................... 1
2. DEFINITIONS........................................................ 1
3. MODIFICATION OF LOAN DOCUMENTS..................................... 5
4. THE CREDIT FACILITIES.............................................. 5
5. APPOINTMENT AND AUTHORIZATION OF AGENT............................. 7
6. LOAN ACCOUNTS...................................................... 8
7. PROCEDURE FOR BORROWING............................................ 9
8. CONTRACT RATE ELECTIONS WITH RESPECT TO COMMITTED LOANS............ 13
9. FEES............................................................... 13
10. PAYMENTS BY THE BORROWER........................................... 13
11. PREPAYMENTS........................................................ 14
12. USURY.............................................................. 15
13. INCREASED COSTS AND REDUCTION OF RETURN............................ 15
14. COSTS AND EXPENSES................................................. 16
15. INDEMNIFICATION BY THE BORROWER.................................... 16
16. ASSIGNMENTS, PARTICIPATIONS, ETC................................... 16
17. PUBLICITY.......................................................... 20
18. CONDITIONS PRECEDENT............................................... 20
19. CONDITIONS TO ALL BORROWINGS....................................... 20
20. AUTHORIZATION AND ENFORCEABILITY REPRESENTATIONS................... 20
21. CONSENT TO JURISDICTION............................................ 20
22. INCORPORATION...................................................... 20
23. NO IMPAIRMENT...................................................... 21
24. EFFECTIVENESS; ALLOCATION OF CERTAIN PAYMENTS; INTEGRATION......... 21
25. ELECTRONIC NOTICES................................................. 21
26. NOTICES............................................................ 21
27. NO BANKRUPTCY PROCEEDINGS AGAINST DESIGNATED BID LENDERS........... 22
28. MISCELLANEOUS...................................................... 23
i
<PAGE>
AMENDED AND RESTATED
MODIFICATION AGREEMENT
TO SYNDICATE LOAN
This Amended and Restated Modification Agreement ("Agreement") is made as
of July 8, 1997, by BRE PROPERTIES, INC., a Maryland corporation (the
"Borrower"); BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a national
banking association ("BofA"); the several financial institutions from time to
time party to this Agreement (collectively, the "Banks", and individually a
"Bank"); and such entities as may from time to time hereafter become Designated
Bid Lenders (as defined below) in accordance with the provisions hereof.
FACTUAL BACKGROUND
A. Bank of America National Trust and Savings Association ("BofA"),
Manufacturers Bank ("Manufacturers"), The Industrial Bank of Japan, Limited, Los
Angeles Agency ("IBJ"), and Commerzbank AG, Los Angeles Branch ("Commerzbank")
have agreed to make a loan (the "Loan") to the Borrower in accordance with an
Unsecured Line of Credit Loan Agreement dated April 4, 1996, as amended by the
Modification Agreement to Syndicate Loan, dated as of April 4, 1996 (the "First
Modification"), by the Second Modification Agreement, dated as of October 22,
1996 ("Second Modification"), and by a letter agreement dated February 7, 1997
(as so amended, and as at any time further amended (including, without
limitation, pursuant to the amendment and restatement referred to below), the
"Loan Agreement"). IBJ acquired its interest in the Loan pursuant to an
Assignment and Assumption Agreement dated as of June 19, 1996 between BofA and
IBJ (the "IBJ Assignment"). Capitalized terms used herein without definition
have the meanings given to them in the Loan Agreement or in the Note, as
applicable. The Loan is currently evidenced by an Amended and Restated
Promissory Note dated as of April 4, 1996 in the stated principal amount of
$120,000,000.
B. The Borrower and the Banks desire to amend the Loan Documents, among
other things, to decrease the Commitment from $120,000,000 to $115,000,000 (and,
in connection therewith, to decrease BofA's share of the Commitment from
$55,000,000 to $50,000,000), to extend the Maturity Date of the Line of Credit,
to change the Applicable Margin and fees applicable to the credit facilities
provided for under the Loan Documents, to provide for the availability of
advances on a bid basis, and to make certain related modifications to the Loan
Documents.
C. In connection with the foregoing modifications, (i) the Borrower and
BofA have entered into an Amended and Restated Unsecured Line of Credit Loan
Agreement dated as of July 8, 1997, and (ii) the Borrower, the Agent and the
Banks wish to amend and restate the Modification Agreement to Syndicate Loan,
all as set forth herein.
AGREEMENT
Therefore, the Borrower and Banks agree as follows:
1. RECITALS. The recitals set forth above in the Factual Background are
correct.
2. DEFINITIONS. As used herein, the following words have the meanings
indicated.
"ABSOLUTE RATE" means, in connection with any Absolute Rate Auction,
the rate of interest per annum (expressed in multiples of 1/1000th of one
basis point) offered for any Bid Loan to be made pursuant thereto.
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"ABSOLUTE RATE AUCTION" means a solicitation of Competitive Bids
setting forth Absolute Rates pursuant to Section 7(b).
"ABSOLUTE RATE BID LOAN" means a Bid Loan that bears interest at an
Absolute Rate.
"ADVANCE" means any advance of proceeds, whether of a Committed Loan
or a Bid Loan, made pursuant to the terms of the Loan Documents.
"AFFILIATE" means, as to any Person, any other Person, which, directly
or indirectly, is in control of, is controlled by, or is under common
control with, such Person. A Person shall be deemed to control another
Person if the controlling Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of
the other Person, whether through the ownership of voting securities,
membership interests, by contract or otherwise.
"AGENT" means BofA in its capacity as agent for the Banks hereunder,
and any successor agent.
"AGENT-RELATED PERSONS" means BofA and any successor agent hereunder,
together with their respective Affiliates and the officers, directors,
employees and agents of such Persons.
"AGENT'S PAYMENT OFFICE" means the address for payments set forth
herein for the Agent, or such other address as the Agent may specify.
"BANK" has the meaning specified in the introductory sentence of this
Agreement; BofA in its capacity as a lender hereunder is one of the Banks.
"BID LOAN" means an Advance by a Bank or its Designated Bid Lender
pursuant to the Bid Loan Facility, and may be either an Absolute Rate Bid
Loan or a LIBOR Bid Loan.
"BID LOAN FACILITY" means the credit facility for the requesting and
making of Bid Loans described in Section 7(b).
"BID LOAN RATE PERIOD" means (i) with respect to a LIBOR Bid Loan, the
period, commencing on the date of such LIBOR Bid Loan and ending on a date
(determined by the Agent in accordance with the practices of the London
U.S. dollar inter-bank market) that is one, two, three or six months later,
but not extending beyond the Maturity Date; and (ii) with respect to an
Absolute Rate Bid Loan, commencing on the date of such Absolute Rate Bid
Loan and ending on a Banking Day that is at least 14, but no more than 180
days, later (but not extending beyond the Maturity Date), as specified by
the Borrower in the relevant Competitive Bid Request.
"BID LOAN FACILITY LIMIT" means, at any time, an amount equal to fifty
percent (50%) of the Maximum Loan Amount.
"BofA" means Bank of America National Trust and Savings Association, a
national banking association.
"BORROWING" means a borrowing hereunder consisting of Advances of the
same type (I.E., Committed Loans, Absolute Rate Bid Loans, or LIBOR Bid
Loans) made to the Borrower on the same day and (except in the case of
Committed Loans accruing interest at the Reference-based Rate) having the
same Rate Period or Bid Loan Rate Period, as the case may be.
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"CAPITAL ADEQUACY REGULATION" means any guideline or directive of any
central bank or other Governmental Authority, or any other law, rule or
regulation regarding capital adequacy of a Bank or of any corporation
controlling a Bank.
"COMMITTED LOAN" means an Advance made by the Banks pursuant to the
Line of Credit described in Section 1.1 of the Loan Agreement.
"COMMITTED LOAN AVAILABILITY" means, at any time, the Maximum Loan
Amount less the aggregate principal amount of all Bid Loans then
outstanding.
"COMMITMENT" means the amount of the Line of Credit for which each
Bank is obligated.
"COMPETITIVE BID" means an offer by a Bank to make a Bid Loan in
response to a Competitive Bid Request.
"COMPETITIVE BID REQUEST" means a notice, in substantially the form of
Exhibit C, requesting that the Banks submit bids for a Bid Loan.
"DESIGNATED BID LENDER" means a special purpose corporation, organized
under the laws of the United States or any subdivision thereof, that is
engaged in making, purchasing or otherwise investing in commercial loans in
the ordinary course of its business and that (i) shall have become a party
to this Agreement and the Co-Lender Agreement pursuant to Section 16(e),
and (ii) is not otherwise a Bank. References herein to a Bank's Designated
Bid Lender or a Designating Bank's Designated Bid Lender mean the
Designated Bid Lender party to a Designation Agreement with such Bank or
Designating Bank.
"DESIGNATING BANK" means a Bank that has entered into a Designation
Agreement with a Designated Bid Lender pursuant to Section 16(e).
"DESIGNATION AGREEMENT" means a designation agreement, in
substantially the form of Exhibit E, entered into by a Bank and a
Designated Bid Lender and accepted by the Borrower and the Agent.
"ELIGIBLE ASSIGNEE" means (i) a commercial bank or investment bank
organized under the laws of the United States, or any state thereof, and
having a combined capital and surplus of at least $100,000,000; (ii) a
Person that is primarily engaged in the business of commercial banking and
is an Affiliate of a Bank; and (iii) any other Person approved by Majority
Banks and the Agent.
"FEDERAL FUNDS RATE" means, for any day, the rate published by the
Federal Reserve Bank of New York for the preceding Banking Day as "Federal
Funds (Effective)"; (or, if not published, the arithmetic mean of the rates
for overnight Federal funds arranged prior to 9:00 a.m. (New York City
time) on that day quoted by three brokers of Federal Funds in New York City
as determined by the Agent).
"INDEMNIFIED LIABILITIES" has the meaning given in Section 15 entitled
"Indemnification by the Borrower".
"INDEMNIFIED PERSON" has the meaning given in Section 15 entitled
"Indemnification by the Borrower".
"GAAP" means generally accepted accounting principles set forth in
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the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board, or in such
other statements by such other entity as may be in general use by
significant segments of the accounting profession, which are applicable
to the circumstances as of the date of determination.
"GOVERNMENTAL AUTHORITY" means any government, state or other
political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any entity owned or controlled through
capital ownership or otherwise by any of the foregoing.
"LENDING OFFICE" means, as to any Bank or Designated Bid Lender, the
office specified as its Lending Office on Schedule I or as such Person may
designate to the Borrower and the Agent.
"LIBOR AUCTION" means a solicitation of Competitive Bids setting forth
LIBOR Bid Margins pursuant to Section 7(b).
"LIBOR BID LOAN" means a Bid Loan that bears interest at the relevant
LIBOR Bid Margin above (or below, as the case may be) the LIBOR Rate
(determined as described in the definition of "LIBOR Bid Margin").
"LIBOR BID MARGIN" means, in connection with any LIBOR Auction, a
margin (expressed in multiples of 1/1000th of one basis point) above or
below the LIBOR Rate (determined, with respect to any LIBOR Bid Loan, in
the same manner as the LIBOR Rate is determined under the Note, except
based on the principal amount and Bid Loan Rate Period of the relevant
LIBOR Bid Loan) offered for any Bid Loan to be made pursuant thereto.
"LIQUIDITY PROVIDER" means, for any Designated Bid Lender and at any
time, on a collective basis, the financial institutions that at such date
are providing liquidity or credit support facilities to or for the account
of such Designated Bid Lender to fund such Designated Bid Lender's
obligations hereunder or to support the securities, if any, issued by such
Designated Bid Lender to fund such obligations.
"LOAN DOCUMENTS" means the Loan Agreement, the Note and any other
documents designated as "Loan Documents" in the Loan Agreement. This
Agreement is a Loan Document.
"MAJORITY BANKS" means, at any time, a Bank or Banks then having in
excess of 66 2/3% of the Commitments (or, if the Commitments have been
terminated pursuant to the Loan Documents, holding in excess of 66 2/3% of
the then aggregate unpaid principal amount of the Advances, determined as
if each Designating Bank held (in addition to outstanding Committed Loans
and Bid Loans made for its own account) all outstanding Bid Loans made by
its Designated Bid Lender).
"NOTE" means the Amended and Restated Promissory Note executed by the
Borrower in favor of the Agent pursuant to the amendment and restatement of
the Loan Agreement referred to above.
"OBLIGATIONS" means all advances, debts, liabilities, obligations and
covenants arising under any Loan Document owing by the Borrower to any Bank
or Designated Bid Lender, the Agent or any Indemnified Person, whether
absolute or contingent, due or to become due, now existing or hereafter
arising.
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"PERSON" means any natural person, employee, corporation, limited
partnership, general partnership, joint stock company, limited liability
company, joint venture, association, company, trust, bank, trust company,
land trust, business trust or other organization, whether or not a legal
entity, or any other non-governmental entity, or any Governmental
Authority.
"PRO RATA SHARE" means, as to any Bank at any time, the percentage
equivalent (expressed as a decimal rounded to the eleventh decimal place)
at such time of such Bank's share of the Maximum Loan Amount.
"SUBSIDIARY" of a Person means any other Person of which 50% or more
of the voting stock, membership interests or other equity interests is
owned or controlled directly or indirectly by the Person, or one or more of
the Subsidiaries of the Person, or a combination thereof.
3. MODIFICATION OF LOAN DOCUMENTS. The Loan Documents are hereby amended
as follows, subject to the terms and conditions hereof:
(a) The Note is modified so that:
(i) "Bank" means the Agent acting as agent for the Banks, except
that each reference to "Bank" in Sections 6, 7 and 18 of the Note and in
Paragraph 5 of Exhibit B to the Note is modified to mean "Banks and
Designated Bid Lenders", or "each Bank or Designated Bid Lender", as the
context requires;
(ii) "Banking Day" means, with respect to any LIBOR Bid Loan, the
same as "Banking Day" with respect to the LIBOR Alternative;
(iii) "Rate Period" means, in any context relating to a Bid
Loan, the applicable Bid Loan Rate Period; and
The Note shall evidence all Advances, and, except to the extent
inconsistent with the express provisions of this Agreement, the terms of
the Note (including, without limitation, the provisions relating to the
Default Rate) shall apply to Bid Loans in addition to Committed Loans.
(b) The Loan Agreement is modified so that "Bank" means the Agent
acting as agent for the Banks, except that (i) in Sections 1.4(d) and 6.4(h),
the reference to "Bank" is modified to mean "BofA", (ii) each reference to
"Bank" in Section 5 (all subsections) and Section 9.8 of the Loan Agreement is
modified to mean "Banks" or "each Bank", as the context requires, and (iii) the
reference to "Bank" in Section 9.9 of the Loan Agreement is modified to mean
"Banks and Designated Bid Lenders".
4. THE CREDIT FACILITIES.
(a) LINE OF CREDIT.
(i) Subject to the terms and conditions hereof, each Bank agrees
to fund its Pro Rata Share of each Committed Loan under the Line of Credit
from time to time during the Availability Period; PROVIDED, HOWEVER, that
at no time shall the aggregate principal amount of all Committed Loans then
outstanding exceed the Committed Loan Availability. The proceeds of each
such Advance shall be delivered to the Borrower in accordance with the
provisions of the Loan Documents.
(ii) The Borrower and each Bank acknowledge that, as of the
Effective Date, the Loan, the principal amount outstanding thereunder, and
each Bank's Pro Rata Share and Commitment (by dollar amount) are:
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<PAGE>
(A) The Loan: $115,000,000
(B) Total Current Outstanding Principal
(as of the date of this Agreement): $ 0.00
(C) Each Bank's Pro Rata Share of the Loan:
BofA: 43.47826086957%
Manufacturers: 13.04347826087%
IBJ: 21.73913043478%
Commerzbank: 21.73913043478%
----------------
100.00000000000%
(D) Each Bank's Commitment:
BofA: $50,000,000
Manufacturers: $15,000,000
IBJ: $25,000,000
Commerzbank: $25,000,000
----------------
$115,000,000
(b) BID LOAN FACILITY.
(i) In addition to its agreement to make Committed Loans under
the Line of Credit, each Bank severally agrees that, subject to the
conditions that at the time of the Borrower's submission of the relevant
Competitive Bid Request (X) the Borrower's Rating (as determined for
purposes of the definition of "Applicable Margin") is at least BBB/Baa2 or
the equivalent, and (Y) no Event of Default or event that, with the giving
of notice or the lapse of time, or both, has occurred and is continuing,
the Borrower may, in accordance with this Section 4(b) and the other
relevant provisions of the Loan Documents, from time to time request that
the Banks, during the Availability Period, submit offers to make Bid Loans
to the Borrower; PROVIDED, HOWEVER, that the Banks may, but shall not be
obligated to, submit such offers, and the Borrower may, but shall not be
obligated to, accept any such offers; and PROVIDED FURTHER that (A) at no
time shall the aggregate principal amount of all Advances (whether
Committed Loans or Bid Loans) at any time outstanding exceed the Maximum
Loan Amount; (B) at no time shall the aggregate principal amount of all Bid
Loans exceed the Bid Loan Facility Limit; and (C) at no time may the number
of Bid Loan Rate Periods then outstanding plus the number of Rate Periods
for Committed Loans then outstanding exceed eight. The obligation of a
Bank to fund its Pro Rata Share of Committed Loans shall be unaffected by
its (or its Designated Bid Lender's) making of any Bid Loans,
notwithstanding that the sum of such Bank's Pro Rata Share of the aggregate
principal amount of the outstanding Committed Loans, plus the aggregate
amount of such Bank's (and its Designated Bid Lender's) outstanding Bid
Loans, may exceed such Bank's Commitment.
(ii) On the last day of each Bid Loan Rate Period, the Borrower
shall pay to the Agent, for the respective accounts of the Banks and
Designated Bid Lenders making Bid Loans ending thereon, the full amount of
the principal of, and accrued and unpaid interest on, each Bid Loan ending
thereon. The Borrower's failure to pay such amount in full on such date
shall constitute an Event of Default without notice or right to cure.
(c) CERTAIN GENERAL PROVISIONS.
(i) Each Bank subsequently acquiring an interest in the
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Committed Loans shall become vested with its Pro Rata Share of Committed
Loans upon execution and delivery of the required documents and upon
payment of its Pro Rata Share of the principal balance of the outstanding
Committed Loans and any other fees, costs or expenses due hereunder or
pursuant to another agreement. Upon such payment, the respective interests
of each Bank in the Loan Documents and the other rights and claims with
respect to the Line of Credit shall be of equal priority with one another,
except as otherwise expressly provided.
(ii) A complete set of Loan Documents shall be held by the
Agent.
(iii) No Bank other than a Bank that is also the Agent, and no
Designated Bid Lender, shall have any interest in any (A) property taken as
security for any other loan or financial accommodation made or furnished to
the Borrower by the Agent (in which such Bank or Designated Bid Lender has
not acquired an interest); (B) property now or hereafter in the Agent's
possession or under the Agent's control other than by reason of the Loan
Documents; or (C) deposits which may be or might become security for the
Borrower's Obligations by reason of the general description contained in
any instrument not a Loan Document held by the Agent or by reason of any
right of setoff, counterclaim, banker's lien or otherwise. If, however,
such property shall actually be applied to the payment of amounts owing by
the Borrower in connection with the Advances, then each Bank and Designated
Bid Lender shall be entitled to a pro rata share, if any, of such
application to amounts due in connection with the Advances, based on the
ratio of the outstanding principal amount of all Advances made by such Bank
(whether under the Line of Credit or the Bid Loan Facility) or Designated
Bid Lender to the outstanding principal amount of all Advances.
(iv) All the parties agree that, except as may be otherwise
expressly provided, all of the interest rates for the Advances are those of
and are calculated in accordance with the requirements and any applicable
assessments of the Agent, regardless of which Bank or Designated Bid Lender
is making an Advance or receiving a payment thereon.
(v) If, at any time or for any reason whatsoever, (A) the
aggregate principal amount of all outstanding Committed Loans shall exceed
the Committed Loan Availability, or (B) the aggregate amount of all
outstanding Bid Loans shall exceed the Bid Loan Facility Limit, or (C) the
aggregate amount of all outstanding Advances (whether Committed Loans or
Bid Loans) shall exceed the Maximum Loan Amount, then the Borrower shall
immediately pay to the Banks (for their own account and for the accounts of
their respective Designated Bid Lenders, as applicable), the amount of such
excess, to be applied to repayment of the affected Advances in such order
as the Agent may determine, in its sole discretion.
5. APPOINTMENT AND AUTHORIZATION OF AGENT.
(a) Each Bank hereby irrevocably appoints, designates and authorizes
the Agent to take such action on its behalf under the provisions of this
Agreement and each other Loan Document and to exercise such powers and perform
such duties as are expressly delegated to it by the terms of this Agreement or
any other Loan Document, together with such powers as are reasonably incidental
thereto and as further provided in the Co-Lender Agreement described below.
(b) Subject to the limitations set forth in the Loan Documents
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and Co-Lender Agreement, Agent's powers include but are not limited to the
power: (i) to administer, manage and service the Line of Credit and the Bid
Loan Facility; (ii) to enforce the Loan Documents; (iii) to make all decisions
under the Loan Documents in connection with the day-to-day administration of the
Line of Credit and Bid Loan Facility, any inspections authorized by the Loan
Documents, and other routine administration and servicing matters; (iv) to
collect and receive from the Borrower or any third persons all payments of
amounts due under the terms of the Loan Documents and to distribute the amounts
thereof to the Banks, for their own account and for the respective accounts of
their Designated Bid Lenders; (v) to collect and distribute or disburse all
other amounts due under the Loan Documents; (vi) to grant or withhold consents,
approvals or waivers, and make any other determinations in connection with the
Loan Documents; and (vii) to exercise all such powers as are incidental to any
of the foregoing matters. The Agent shall furnish to Banks, for their own use
and for transmittal to their Designated Bid Lenders, copies of material
documents, including confidential ones, received from the Borrower regarding the
Line of Credit or the Bid Loan Facility, the Loan Documents and the transactions
contemplated thereby. The Agent shall have no responsibility with respect to
the authenticity, validity, accuracy or completeness of the information
provided.
(c) Notwithstanding any provision to the contrary contained in any
Loan Document, the Agent shall not have any duties or responsibilities, except
those expressly set forth in the Loan Documents or the Co-Lender Agreement, nor
shall the Agent have any fiduciary relationship with any Bank or Designated Bid
Lender, and no implied covenants, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document against
the Agent.
(d) The Borrower acknowledges that the Banks (and each Designated Bid
Lender at any time party to a Designation Agreement) have executed a Co-Lender
Agreement (as amended from time to time, the "Co-Lender Agreement") to
supplement the Loan Documents with respect to the relationship of the Banks, the
Designated Bid Lenders and the Agent among themselves in connection with the
credit facilities provided under the Loan Documents. The Co-Lender Agreement is
not a Loan Document.
(e) The Agent may, and at the request of the Majority Banks shall,
resign as Agent upon 30 days' notice to the Banks. If the Agent resigns under
this Agreement, the Majority Banks shall appoint from among the Banks a
successor agent. If no successor agent is appointed prior to the effective date
of the resignation of the Agent, the Agent may appoint, after consulting with
the Banks, a successor agent from among the Banks. Upon the acceptance of
appointment as successor agent hereunder, such successor agent shall succeed to
all the rights, powers and duties of the retiring Agent and the term "Agent"
shall mean such successor agent, and the retiring Agent's appointment, powers
and duties as Agent shall terminate. After any retiring the Agent's resignation
hereunder as Agent, the provisions regarding payment of costs and expenses and
indemnification of the Agent shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was the Agent under this Agreement. If no
successor agent has accepted appointment as the Agent by the date which is 30
days following a retiring Agent's notice of resignation, the retiring Agent's
resignation shall nevertheless thereupon become effective, and the Banks shall
perform all of the duties of the Agent hereunder until such time, if any, as the
Majority Banks appoint a successor agent.
6. LOAN ACCOUNTS. The Advances made by each Bank or Designated Bid
Lender shall be evidenced by one or more loan accounts or records maintained by
such Bank, Designated Bid Lender (and its Designating Bank) or the Agent, as the
case may be, in the ordinary course of business. The loan accounts or
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<PAGE>
records maintained by the Agent and each Bank or Designated Bid Lender (and its
Designating Bank) shall be conclusive absent manifest error of the amount of the
Advances made by the Banks or Designated Bid Lenders to the Borrower and the
interest and payments thereon. Any failure so to record or any error in doing
so shall not, however, limit or otherwise affect the obligation of the Borrower
hereunder to pay any amount owing with respect to Advances made under the Loan
Documents.
7. PROCEDURE FOR BORROWING.
(a) COMMITTED LOANS.
(i) Each Borrowing under the Line of Credit shall be made upon
the Borrower's irrevocable written notice delivered to the Agent in
accordance with the Loan Agreement.
(ii) The Agent will promptly notify each Bank of any Notice of
Borrowing and of the amount of such Bank's Pro Rata Share of that
Borrowing. The Banks, acting through the Agent, shall disburse the
requested Advance as provided in the Loan Agreement.
(b) BID LOANS.
(i) When the Borrower desires to effect a Borrowing (or
Borrowings) consisting of one or more Bid Loans, but not more often than
twice in any calendar month, the Borrower shall notify the Agent by
telephone, followed promptly by facsimile of a Competitive Bid Request in
the form of Exhibit C (to be received no later than 10:00 a.m., San
Francisco time, (x) in the case of a LIBOR Auction, four Banking Days prior
to the date of the proposed Borrowing(s), or (y) in the case of an Absolute
Rate Auction, two Banking Days prior to the date of the proposed
Borrowing(s)), specifying (among the other information required by Exhibit
C):
(A) the date of such Borrowing(s), which shall be a Banking
Day;
(B) the aggregate amount of such Borrowing(s), which shall
be in an amount (subject to the limitations set forth in other provisions
of the Loan Documents) equal to $10,000,000 or an integral multiple of
$1,000,000 in excess thereof;
(C) whether the requested Borrowing(s) is/are to be made as
either (1) one or more LIBOR Bid Loans or (2) one or more Absolute Rate Bid
Loans; and
(D) the duration of the requested Bid Loan Rate Period
(subject to the limitations that the Borrower may request no more than
three Bid Loan Rate Periods in any single Competitive Bid Request and that
each Bid Loan Rate Period must relate to at least $5,000,000 in principal)
and, if more than one Bid Loan Rate Period is requested, the requested
principal amount of the related Borrowing.
The Borrower's right to request Competitive Bids for LIBOR Bid Loans, and
each Bank's or Designated Bid Lender's obligation to fund any LIBOR Bid Loan
pursuant to any Competitive Bid accepted by the Borrower, shall be subject
in all respects to the provisions of Section 2.2(d) of Exhibit A to the
Note, applied as if each reference therein to the "LIBOR Alternative"
referred as well to LIBOR Bid Loans.
(ii) Upon receipt of a Competitive Bid Request, the Agent
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shall promptly send a copy thereof to each of the Banks by facsimile,
attaching thereto notice of the date and time by which responses must be
received in order to be considered by the Borrower. The Competitive Bid
Request shall not constitute an offer by the Borrower, but merely an
invitation to the Banks to submit Competitive Bids with respect to the
requested Borrowing(s).
(iii) (A) Each Bank may, in its discretion, submit a Competitive
Bid containing an offer or offers to make Bid Loans in response to any
Competitive Bid Request. Each Competitive Bid must comply with the
provisions of this Section 7(b)(iii) and must be submitted to the Agent
(or, in the case of a Competitive Bid being submitted by the Agent in its
capacity as a Bank, to the Borrower), by facsimile, no later than 6:30 a.m.
(or, in the case of a Competitive Bid by the Agent, 6:15 a.m.), San
Francisco time, (1) in the case of a LIBOR Auction, three Banking Days
prior to the date of the proposed Borrowing(s), or (2) in the case of an
Absolute Rate Auction, on the date of the proposed Borrowing(s). Each
Competitive Bid so submitted (subject only to the provisions of Section
2.2(d) of Exhibit A to the Note, as described above, and to the
satisfaction of all conditions precedent to the requested Advance) shall be
irrevocable, unless the Borrower otherwise agrees in writing.
(B) Each Competitive Bid shall be in substantially the form
of Exhibit D hereto, shall identify the submitting Bank and the date of the
proposed Borrowing(s) specified in the Competitive Bid Request to which the
submitting Bank is responding and shall specify:
(1) the principal amount of each Bid Loan for which
the Competitive Bid is being made (which shall not be limited by the
submitting Bank's Commitment, but which shall be in an amount, no greater
than the amount of the requested Borrowing, equal to $5,000,000 or an
integral multiple of $1,000,000 in excess thereof); and
(2) (a) in the case of a LIBOR Auction, the LIBOR Bid
Margin offered by the submitting Bank, or (b) in the case of an Absolute
Rate Auction, the Absolute Rate offered by the submitting Bank.
A Competitive Bid may include up to three separate offers by the submitting
Bank with respect to each Bid Loan Rate Period specified in the Competitive
Bid Request to which it responds. Any Competitive Bid that (X) does not
include all the information required by this Section 7(b)(iii)(B), (Y)
contains language that qualifies or conditions the submitting Bank's offer
to make the Bid Loan(s) described therein or proposes terms other than (or
in addition to) the terms proposed in the relevant Competitive Bid Request
OTHER THAN to set an aggregate limit on the principal amount of Bid Loans
for which offers being made by the submitting Bank may be accepted, or (Z)
is received by the Agent (or the Borrower, as applicable) after the time
set forth in Section 7(b)(ii)(A) (unless amended to bring it into
compliance prior to the time set forth in Section 7(b)(ii)(A)), shall be
disregarded.
(iv) Promptly upon receipt, but not later than 7:00 a.m. on
the date by which Competitive Bids are required to have been submitted with
respect to a Competitive Bid Request, the Agent shall notify the Borrower
of (A) the terms of each Competitive Bid (other than one that is to be
disregarded as described above) received in response to the Competitive Bid
Request, and (B) (1) the aggregate principal amount of Bid Loans for which
Competitive Bids have been received for each Rate Period requested in the
Competitive Bid Request, and (2) the
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respective principal amounts and LIBOR Bid Margins or Absolute Rates, as
the case may be, so offered.
(v) No later than 7:30 a.m. on the date by which
Competitive Bids are required to have been submitted with respect to a
Competitive Bid Request, the Borrower shall notify the Agent of its
acceptance or rejection of the offers notified to it as provided in Section
7(b)(iv). The Borrower shall have no obligation to accept any such offer,
and may choose to reject all of them. If the Borrower has failed to timely
notify the Agent of its acceptance or rejection of any one or more offers
by the time specified in the preceding sentence, the Borrower shall be
deemed to have rejected such offer(s). The Borrower may accept any
Competitive Bid (other than one that is to be disregarded as provided
above) in whole or in part, PROVIDED THAT:
(A) the aggregate principal amount of the Competitive
Bids so accepted may not exceed the aggregate amount of the Borrowing(s)
requested in the relevant Competitive Bid Request;
(B) (1) subject to the provisions set forth below with
respect to multiple offers at the same LIBOR Bid Margin or Absolute Rate,
the principal amount of each accepted Competitive Bid must be in an amount
equal to $5,000,000 or an integral multiple of $1,000,000 in excess
thereof, and (2) Competitive Bids must be accepted with respect to an
aggregate principal amount of at least $10,000,000; and
(C) with respect to each Bid Loan Rate Period for
which Competitive Bids were requested, the Borrower may accept offers
solely on the basis of ascending LIBOR Bid Margins or Absolute Rates, as
the case may be (provided that the Borrower may, to the extent necessary to
comply with the preceding paragraph (B) or to accept offers in an aggregate
principal amount equal to the aggregate amount of the Borrowing(s)
requested in the relevant Competitive Bid Request, accept only part of an
offer at a particular LIBOR Bid Margin or Absolute Rate and accept all or
part of one or more offers at a higher LIBOR Bid Margin or Absolute Rate).
If the Borrower chooses to accept one or more offers, the Borrower's notice
to the Agent shall specify the aggregate principal amount of offers with
respect to each requested Bid Loan Rate Period that it chooses to accept.
If two or more Banks offer the same LIBOR Bid Margin or Absolute Rate for
an aggregate principal amount greater than the amount for which such offers
were requested with respect to any requested Bid Loan Rate Period, then,
notwithstanding that in all other cases no Bid Loan may be made in an
amount less than $5,000,000, the Agent shall allocate the principal amount
of the affected Bid Loan among such Banks as nearly as possible (in such
multiples, not less than $1,000,000, as the Agent may deem appropriate) in
proportion to the aggregate principal amounts to which their respective
offers related. The Agent's allocation, in the absence of manifest error,
shall be conclusive.
(vi) The Agent shall promptly notify each Bank having
submitted a Competitive Bid whether its offer has been accepted and, if its
offer has been accepted, of the amount of the Bid Loan(s) to be made by it
(or its Designated Bid Lender) on the date of the relevant Borrowing(s).
Each Bid Loan shall bear interest, from and including the date it is made
to but excluding the last day of the Bid Loan Rate Period applicable
thereto, at a rate per annum equal to (A) in the case of an Absolute Rate
Bid Loan, the Absolute Rate specified by the Bank
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making (or whose Designated Bid Lender makes) such Absolute Rate Bid Loan
in its accepted Competitive Bid, and (B) in the case of a LIBOR Bid Loan,
the sum of (1) the LIBOR Bid Margin specified by the Bank making (or whose
Designated Bid Lender makes) such LIBOR Bid Loan in its accepted
Competitive Bid, plus (2) the LIBOR Rate (determined in the same manner as
the LIBOR Rate is determined under the Note, except based on the principal
amount and Bid Loan Rate Period of such LIBOR Bid Loan).
(vii) Upon the request of any Bank, the Agent shall notify
such Bank, following a Borrowing of one or more Bid Loans, of the ranges of
bids submitted and the highest and lowest bids accepted for each Bid Loan
Rate Period requested by the Borrower and of the aggregate amount of the
Bid Loans made pursuant to such Borrowing. From time to time, the Borrower
and the Banks (for themselves and for their respective Designated Bid
Lenders) shall furnish such information to the Agent as the Agent may
reasonably request relating to the Bid Loans, including the amounts,
interest rates, dates of Borrowing and last days of the applicable Bid Loan
Rate Periods, for the purpose of enabling the Agent to allocate amounts
received from the Borrower to payment of amounts due and owing under the
Loan Documents.
(viii) All notices or other communications required or desired
to be delivered by the Borrower pursuant to this Section 7(b) shall be
given by an individual authorized to do so pursuant to Section 3.9 of
Exhibit A to the Note in a writing delivered to the Agent by the Borrower
pursuant thereto.
(ix) Any Bid Loan that would otherwise be made by a Bank
that is a Designating Bank may from time to time be made by its Designated
Bid Lender, in such Designated Bid Lender's sole discretion. Nothing
herein shall constitute a commitment to make Bid Loans by such Designated
Bid Lender; PROVIDED, HOWEVER, if such Designating Bank's Designated Bid
Lender elects not to, or fails to, make any such Bid Loan, for any reason
whatsoever, such Designating Bank shall make such Bid Loan pursuant to the
terms hereof, it being the obligation of each Designating Bank to make each
Bid Loan with respect to a Competitive Bid submitted by such Designating
Bank and accepted by Borrower, in whole or in part, pursuant hereto, except
to the extent that such Bid Loan is in fact funded by its Designated Bid
Lender.
(c) CERTAIN GENERAL PROVISIONS.
(i) (A) Each Bank shall make the aggregate amount of its
Pro Rata Share of each Committed Loan,
(B) each Bank having a Competitive Bid accepted will
make the aggregate amount of the Bid Loan(s) with respect to which its
Competitive Bid was accepted, and
(C) each Designated Bid Lender electing to fund one or
more Bid Loans that would otherwise have been made by its Designating Bank
with respect to an accepted Competitive Bid (or, if such Designated Bid
Lender fails to do so, its Designating Bank) will make the aggregate amount
of such Bid Loan(s),
available to the Agent for the account of the Borrower at the Agent's
Payment Office by 11:00 a.m. (San Francisco time) on the date of the
relevant Borrowing and in funds immediately available to the Agent. The
proceeds of all such Advances will then be made available to the Borrower
by the Agent by wire transfer in accordance with written
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instructions provided to the Agent by the Borrower. If any Bid Loan is
funded by a Designated Bid Lender, its Designating Bank shall provide the
Agent with notice to that effect on the date of such Borrowing.
(ii) Unless the Agent receives notice from any Bank at least
one Banking Day prior to the date of a Borrowing that such Bank (or such
Bank's Designated Bid Lender, in the case of a Bid Loan) will not make
available to the Agent when required (A) its Pro Rata Share of the
Committed Loan to be made thereon, or (B) the amount of the Bid Loans to be
made by such Bank (or its Designated Bid Lender) thereon, as the case may
be, the Agent may assume that such Bank (or, if applicable, its Designated
Bid Lender) has made such amount available to the Agent in immediately
available funds on the date of such Borrowing.
(iii) The failure of any Bank or Designated Bid Lender to
make available to the Agent any amount it is required to make so available
in respect of any Borrowing shall not relieve any other Bank or Designated
Bid Lender of any obligation hereunder to make an Advance on the date of
such Borrowing, but, except to the extent expressly provided (A) in Section
7(b)(ix) with respect to the obligation of any Designating Bank to fund Bid
Loans that are not funded by its Designated Bid Lender or (B) in Section
16(e)(ii), no Bank or Designated Bid Lender shall be responsible for the
failure of any other Bank or Designated Bid Lender to make any amount so
available.
8. CONTRACT RATE ELECTIONS WITH RESPECT TO COMMITTED LOANS.
(a) The Borrower may elect interest rates applicable to the Committed
Loans in accordance with the requirements, terms and conditions set forth in the
Note upon irrevocable written notice to the Agent to be received by the Agent on
the appropriate day not later than 9:30 a.m. (San Francisco time).
(b) The Agent will promptly notify each Bank of receipt of an
election of the Contract Rate. If no timely notice is provided by the Borrower,
the Agent will promptly notify each Bank of any automatic conversion to the
Reference-based Rate. All rate elections and conversions with respect to
Committed Loans shall be made ratably according to the respective outstanding
principal amounts of the Committed Loan held by each Bank with respect to which
the notice was given.
9. FEES.
(a) AGENCY FEE. The Borrower shall pay an agency fee to the Agent
for the Agent's own account, as set forth in a separate letter understanding
between the Agent and the Borrower.
(b) AUCTION FEE. Together with the Borrower's submission of each
Competitive Bid Request, the Borrower shall pay to the Agent an auction fee in
the amount of $2,500, which fee shall be fully earned and nonrefundable upon the
Agent's transmittal of the Competitive Bid Request to the Banks, regardless of
whether the request is subsequently cancelled by the Borrower, any Bid Loans are
made by any Bank or Designated Bid Lender in response thereto or any Competitive
Bids are accepted by the Borrower.
(c) OTHER FEES. The Borrower shall pay to the Agent for the account
of each Bank, as provided in separate letter agreements between the Agent and
each Bank, the Commitment Fee and the facility fee as set forth in Section 2.1
of the Loan Agreement and any extension fee payable under Section 22 of the
Note.
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10. PAYMENTS BY THE BORROWER.
(a) All payments to be made by the Borrower shall be made without
set-off, recoupment or counterclaim. Except as otherwise provided, all payments
by the Borrower shall be made to the Agent for the account of the Banks and the
Designated Bid Lenders, as applicable, at the Agent's Payment Office, and shall
be made in U.S. dollars and in immediately available funds, in accordance with
the Loan Documents. The Agent will promptly distribute to each Bank (including,
to the extent applicable, for the account of its Designated Bid Lender, in
accordance with Section 16(e)), in like funds as received: (i) its Pro Rata
Share (or other applicable share as may be agreed by a Bank) of each payment in
respect of the Line of Credit and (ii) its (or, if applicable, its Designated
Bid Lender's) pro rata share of each payment in respect of any one or more Bid
Loans (based on the proportion of the outstanding principal amount of such
Bank's (or Designated Bid Lender's) Bid Loans in respect of which such payment
is made to all the outstanding principal amount of all Bid Loans in respect of
which such payment is made); PROVIDED THAT if any payment is received or
otherwise realized by the Agent at a time when the Availability Period has ended
and all outstanding Advances have become, or have been declared, due and
payable, then the Agent shall distribute to each Bank (including, to the extent
applicable, for the account of its Designated Bid Lender, in accordance with
Section 16(e)) its (or its Designated Bid Lender's) pro rata share thereof,
based on the proportion of the aggregate principal amount of such Bank's (or its
Designated Bid Lender's) outstanding Advances to the aggregate principal amount
of all outstanding Advances. Any payment received by the Agent later than 11:00
a.m. (San Francisco time) shall be deemed to have been received on the following
Banking Day and any applicable interest or fee shall continue to accrue.
(b) To the extent that the Borrower makes a payment to the Agent or
the Banks or Designated Bid Lenders, or the Agent or (notwithstanding any
provision of the Co-Lender Agreement to the contrary) the Banks exercise the
right of set-off, and such payment or the proceeds of such set-off or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside or required (including by any settlement) to be repaid to a trustee,
receiver, the Borrower or any other party, in connection with any Insolvency
Proceeding or otherwise, then (i) to the extent of such recovery the obligation
or part thereof originally intended to be satisfied shall be revived and
continued in full force and effect as if such payment had not been made or such
set-off had not occurred; and (ii) each Bank severally agrees to pay to the
Agent upon demand (A) in the case of an amount received in respect of a Bid
Loan, its allocable share of any amount so recovered from or repaid by the
Agent, and (B) in the case of any other amount received under the Loan
Documents, its Pro Rata Share of any amount so recovered from or repaid by the
Agent; and (iii) each Designated Bid Lender agrees to pay such Designated Bid
Lender's allocable share of any amount so recovered from or repaid by the Agent
in respect of any Bid Loan made by such Designated Bid Lender; PROVIDED,
HOWEVER, that the foregoing clause shall not prohibit any Designating Bank from
agreeing with its Designated Bid Lender that, as between such Designating Bank
and Designated Bid Lender, such Designating Bank shall pay to the Agent any
amount that would otherwise be due to the Agent under this Section 10(b), and
such Designated Bid Lender shall not be liable for any payment of any such
amount to the extent that its Designating Bank makes such payment.
(c) Agent shall have the exclusive right to collect on the Loan from
the Borrower or any guarantors, third parties, or otherwise including principal,
interest, fees or any prepayment premiums, whether such amounts are received
directly from the Borrower, any guarantors, or other persons, or are collected
by offset by Agent against the money or other property of the Borrower or any
guarantors deposited at or held by Agent, or other enforcement
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of the Loan Documents. No Bank or Designated Bid Lender shall independently
initiate any judicial action or equivalent action or other proceeding against
the Borrower with respect to the Loan.
11. PREPAYMENTS.
(a) In the event the Borrower elects to prepay the Committed Loans in
whole or in part in accordance with the Loan Documents, the Agent will promptly
notify each Bank of such notice and of each Bank's Pro Rata Share of such
prepayment.
(b) Notwithstanding any other provision of this Agreement or of any
other Loan Document, the Borrower shall have no right to prepay any Bid Loan
prior to the last day of the applicable Bid Loan Rate Period.
(c) In the event of any prepayment by the Borrower of a Bid Loan
prior to the last day of the Bid Loan Rate Period applicable thereto (by reason
of acceleration or for any other reason), the Borrower shall pay to each Bank
holding an interest therein, or whose Designated Bid Lender holds an interest
therein, a prepayment premium equal to the sum of
(i) $250; and
(ii) the sum of such losses and expenses as such Bank or its
Designated Bid Lender, as applicable, may incur by reason of such
prepayment, including without limitation any losses or expenses
incurred in obtaining, liquidating or employing deposits from third
parties, but excluding loss of margin for the period after such
prepayment.
The prepayment premium provided for herein shall be due and payable not later
than fifteen (15) days after delivery to the Borrower, by or on behalf of the
affected Bank or Designated Bid Lender, of a demand for payment accompanied by a
calculation, in reasonable detail, of such losses and expenses, which shall be
conclusive in the absence of manifest error.
(d) Each of the waivers and acknowledgments of the Borrower set forth
in Paragraphs 4 and 5 of Exhibit B to the Note shall apply to the Borrower's
covenants set forth in this Section 11 as if set forth herein.
12. USURY. If a court ultimately determines that the Loan (or any
Advance) violates applicable usury law, then (a) the Borrower shall not be
required to pay to or for the account of any Bank or Designated Bid Lender
interest on the Loan (or such Advance) at a rate in excess of the maximum rate
that may be lawfully charged under applicable law; and (b) in the event that any
Bank or Designated Bid Lender shall collect interest or other monies which are
deemed to constitute interest which would increase the effective interest rate
on the Loan (or any Advance) to a rate in excess of that permitted by applicable
law, such excess interest shall, at the option of said Bank or Designated Bid
Lender, be returned to the Borrower or credited against the principal balance of
the Loan (or such Advance) then outstanding; (c) provided, however, that if a
usury law applies to one or more but not all Banks and Designated Bid Lenders,
then the Banks and Designated Bid Lenders not affected by the usury law shall be
entitled to the full amount of interest from the Borrower under the Loan
Documents even though other Banks or Designated Bid Lenders may receive or
retain less due to the usury law.
13. INCREASED COSTS AND REDUCTION OF RETURN. If any Bank shall have
determined that a change in or compliance with any Capital Adequacy Regulation
affects the amount of capital required to be maintained by the Bank, or by any
Person controlling the Bank, and such Bank determines that the amount of such
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<PAGE>
required capital is increased as a consequence of the Line of Credit or other
obligations under the Loan Documents taking into consideration such Bank's or
controlling Person's policies with respect to capital adequacy and desired
return on capital, then, upon demand of such Bank to the Borrower through the
Agent, the Borrower shall pay to the Bank an additional amount sufficient to
compensate the Bank for such increase.
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14. COSTS AND EXPENSES. The Borrower shall:
(a) pay or reimburse the Agent within five Banking Days after demand
for all costs and expenses (including legal fees) incurred by it in connection
with the preparation, administration and execution of any Loan Document and any
amendment, supplement, waiver or modification and any other documents prepared
in connection herewith or therewith, (whether or not the particular Loan,
transaction or document is consummated), including reasonable legal fees
incurred by BofA (including as Agent) with respect thereto; and
(b) pay or reimburse the Agent and each Bank within five Banking Days
after demand for all costs and expenses (including legal fees) incurred by them
in connection with the enforcement or preservation of any rights or remedies
under any Loan Document with respect to an Event of Default (including any
"workout" or restructuring of the Line of Credit or other obligations under the
Loan Documents, and any Insolvency Proceeding, judicial proceeding or
arbitration).
15. INDEMNIFICATION BY THE BORROWER. The Borrower shall indemnify, defend
and hold the Agent-Related Persons and each Bank, and each of their respective
officers, directors, employees and agents (each, an "Indemnified Person")
harmless from and against any and all liabilities, obligations, losses, damages,
actions, judgments, costs and expenses (including legal fees) which may be
incurred by or asserted against any such Person arising out of or relating to
the Line of Credit, the Bid Loan Facility, Advances under the Loan Documents or
the Loan Documents or any document or transaction or action taken or not by any
such Person in connection with any of the foregoing, including any
investigation, arbitration, litigation, Insolvency Proceeding or other
proceeding whether or not any Indemnified Person is a party thereto (all the
foregoing, collectively, the "Indemnified Liabilities"); provided, that the
Borrower shall have no obligation hereunder to any Indemnified Person with
respect to Indemnified Liabilities resulting solely from the gross negligence or
willful misconduct of such Indemnified Person; nor shall the Borrower have any
obligation to indemnify any Designating Bank in respect of any matter with
respect to which the Borrower is entitled to be indemnified pursuant to Section
16(e) or in respect of any act or omission by such Designating Bank or its
Designated Bid Lender under their Designation Agreement or any other agreement
entered into between them in connection therewith. The agreements in this
Section 15 shall survive payment of all other Obligations.
16. ASSIGNMENTS, PARTICIPATIONS, ETC.
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(a) A Bank may at any time assign to one or more Eligible Assignees
(each an "Assignee") with the written consent of the Borrower (other than during
the existence of an Event of Default) and of the Agent (at all times), which
consent shall not be unreasonably withheld (provided that no written consent
shall be required for an Eligible Assignee that is an Affiliate of such assignor
Bank) all or part of its Pro Rata Share of the Line of Credit and the other
rights and obligations of such assignor Bank hereunder with respect to the
Committed Loans and the Line of Credit (excluding, however, its interest in any
outstanding Bid Loans), in a minimum amount (with respect to such Bank's
Commitment) of $5,000,000; provided, however, that no such assignment shall be
permitted if the effect thereof is to cause the remaining Commitment of the
assignor Bank to be less than $15,000,000, and no assignment may be made of any
outstanding Committed Loan except in connection with an assignment of a
corresponding proportional share of the assignor Bank's Commitment. However,
such assignment shall be conditioned on, and the Borrower and the Agent may
continue to deal solely and directly with such assignor Bank until, (i) written
notice of such assignment, substantially in the form of the attached Exhibit A
shall have been given to the Borrower and the Agent by such Bank and the
Assignee; (ii) such Bank and its Assignee shall have delivered to the Agent and
the Borrower an Assignment and Assumption Agreement substantially in the form of
the attached Exhibit B ("Assignment and Assumption Agreement") (together with
any Note(s) subject to such assignment); and (iii) the Assignee has paid to the
Agent a processing fee in the amount of $5,000.
(b) From the date that the Agent notifies the assignor Bank that all
conditions and requirements of the assignment have been met, then to the extent
that rights and obligations hereunder have been assigned (i) the Assignee
thereunder shall be a party hereto and shall have the rights and obligations of
a Bank under the Loan Documents and the Co-Lender Agreement, (ii) the assignor
Bank shall relinquish such assigned rights and be released from such assigned
obligations under the Loan Documents, (iii) this Agreement shall be deemed to be
amended to the extent necessary to reflect the addition of the Assignee and the
resulting adjustment of the Pro Rata Shares of the Loan arising therefrom, and
(iv) the Pro Rata Share allocated to an Assignee shall reduce the Pro Rata Share
of the assigning Bank.
(c) A Bank or Designated Bid Lender (the "originating Lender") may
sell to one or more Persons not Affiliates of the Borrower (a "Participant")
participating interests in the Line of Credit or in any Bid Loans made by the
originating Lender; provided that (i) the originating Lender's obligations under
the Loan Documents and the Co-Lender Agreement shall remain unchanged, (ii) the
originating Lender shall remain solely responsible for the performance of such
obligations, (iii) the Borrower and the Agent shall continue to deal solely and
directly with the originating Lender (or, in the case of a Designated Bid
Lender, its Designating Bank) in connection with the Advances and Loan
Documents, (iv) (A) no Bank shall transfer or grant any participating interest
under which the Participant has rights to approve any amendment, consent or
waiver with respect to any Loan Document, except (1) in the case of a
participation that includes an interest in the originating Lender's Commitment,
to the extent such amendment, consent or waiver would require unanimous consent
of the Banks under Section 7(a) of the Co-Lender Agreement, or (2) in the case
of a participation that is limited to an interest in one or more Bid Loans, to
the extent such amendment, consent or waiver would take effect while such Bid
Loan(s) remained outstanding and would require the unanimous consent of the
Banks under any of the following clauses of Section 7(a) of the Co-Lender
Agreement: clause (ii), to the extent that the proposed action would affect Bid
Loans or any amount payable with respect to Bid Loans; clause (iii), to the
extent that the proposed action would affect any amount payable in connection
with Bid Loans; clause (iv); clause (v); and clause (vi); and (B) no Designated
Bid Lender shall
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<PAGE>
transfer or grant any participating interest under which the Participant has
rights to approve any amendment, consent or waiver with respect to any Loan
Document greater that the lesser of (1) such rights of approval as may have been
granted to such Designated Bid Lender in connection with its entry into the
relevant Designation Agreement, or (2) as described in Section 7(e)(i) as being
permitted to Designated Bid Lenders, (v) with respect to the sale of
participating interests in the Line of Credit (it being understood that the
limitations of this clause (v) shall not apply with respect to the sale of a
participating interest in all or any portion of a Bid Loan), each participating
interest in a Bank's Commitment shall be in a minimum amount of $5,000,000, and
no such participation shall be permitted if the non-participated interest of the
originating Lender in its Commitment would thereafter be less than $15,000,000.
A Participant shall not have any rights under the Loan Documents or the
Co-Lender Agreement, and all amounts payable by the Borrower hereunder shall be
determined as if the originating Lender had not sold such participation.
(d) Notwithstanding any other provision of this Agreement, any other
Loan Document or the Co-Lender Agreement: (i) a Bank or Designated Bid Lender
may pledge its interest in the Borrower's obligations under the Loan Documents
in favor of any Federal Reserve Bank in accordance with Federal law; and (ii) a
Designated Bid Lender may pledge its interest in the Borrower's obligations
under the Loan Documents in respect of any Bid Loan in favor of any Liquidity
Provider qualifying as such with respect to the Bid Loan so pledged.
(e) (i) Any Bank may at any time, with the prior written consent of
the Borrower and the Agent, which consent shall not be unreasonably
withheld, designate one Designated Bid Lender to fund Bid Loans on behalf
of such Designating Bank subject to the terms of this Section 16(e), and
the provisions of Sections 16(a), (b) and (c) shall not apply to such
designation, EXCEPT THAT no Designating Bank shall enter into any agreement
under which its Designated Bid Lender has rights to approve any amendment,
consent or waiver with respect to any Loan Document, except to the extent
such amendment, consent or waiver would amend any right of Designated Bid
Lenders or would require the unanimous consent of the Banks under any of
the following clauses of Section 7(a) of the Co-Lender Agreement: clause
(ii), to the extent that the proposed action would affect Bid Loans or any
amount payable with respect to Bid Loans; clause (iii), to the extent that
the proposed action would affect any amount payable in connection with Bid
Loans; clause (iv); clause (v), if the proposed action would take effect
while any Bid Loans made by such Designated Bid Lender were outstanding;
and clause (vi). No Bank may designate more than one Designated Bid Lender
at any one time, and, following the termination of a designation with
respect to one Designated Bid Lender, no new Designated Bid Lender may be
designated until all outstanding Bid Loans made by the prior Designated Bid
Lender have been paid in full. The parties to each such designation shall
execute and deliver to the Borrower and the Agent for their acceptance a
Designation Agreement, and, upon the Agent's receipt of (A) an
appropriately completed Designation Agreement (1) executed by a Designating
Bank and a designee representing that it is a Designated Bid Lender and (2)
accepted by the Borrower, and (B) a processing fee in the amount of $2,500,
the Agent shall accept such Designation Agreement and register such
Designated Bid Lender as a Designated Bid Lender, and give prompt notice
thereof to the Borrower, whereupon: from and after the effective date
specified in the Designation Agreement, the Designated Bid Lender shall
become a party to this Agreement and to the Co-Lender Agreement, as a
Designated Bid Lender, with (X) a right to make Bid Loans on behalf of its
Designating Bank pursuant to Section 7(b)(ix) with respect to any
Competitive Bid of such Designating Bank
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that is accepted in whole or in part by the Borrower, and (Y) the other
rights, and the obligations, provided herein and therein, SUBJECT TO THE
LIMITATION, however, that, notwithstanding the assumption by a Designated
Bid Lender of certain of the obligations of its Designating Bank (but
without limiting the Designating Bank's obligations under the following
paragraph (ii)), no Designated Bid Lender shall be required to make
payments with respect to any of its obligations under this Agreement or any
other Loan Document, or under the Co-Lender Agreement, except to the extent
of excess cash flow of such Designated Bid Lender (I.E., cash that is not
otherwise required to repay obligations of such Designated Bid Lender that
are then due and payable).
(ii) Notwithstanding any other provision of this Agreement, any
other Loan Document or the Co-Lender Agreement: regardless of any
designation of a Designated Bid Lender hereunder, the Designating Bank
making such designation (A) shall be and remain obligated to the Borrower,
the Agent and each of the other Banks and other Designated Bid Lenders for
each and every one of the obligations of the Designating Bank and its
Designated Bid Lender with respect to this Agreement, any other Loan
Document or the Co-Lender Agreement (including, without limitation, any
indemnification obligations under the Co-Lender Agreement and other
obligation to pay any amount otherwise payable to the Borrower by the
Designated Bid Lender); and (B) shall indemnify, defend and hold the Agent,
the Borrower, each Bank and each Designated Bid Lender harmless from and
against any and all losses, costs, expenses (including reasonable
attorneys' fees and the cost of any services of in-house counsel) and
liabilities incurred by any such Person in connection with or arising from
(1) (a) the non-performance by such Designating Bank's Designated Bid
Lender of any obligation assumed by the Designated Bid Lender under its
Designation Agreement, (b) any other act or omission of the Designated Bid
Lender committed in violation of the provisions of any Loan Document or the
Co-Lender Agreement, or (c) the failure of any representation or warranty
made by such Designating Bank's Designated Bid Lender for the benefit of
the Agent, the Borrower, any other Bank or any other Designated Bid Lender
to be true and correct in all material respects, or (2) such Designating
Bank's nonperformance of any obligation owed to its Designated Bid Lender
under the Designation Agreement or any other agreement between such
Designating Bank and its Designated Bid Lender with respect to the
transactions contemplated hereby.
(iii) Notwithstanding any designation hereunder, the Borrower and
the Agent shall continue to deal solely and directly with the Designating
Bank in connection with the Advances (including any Bid Loans made by such
Designating Bank's Designated Bid Lender), the Loan Documents and the
Co-Lender Agreement. Each Designating Bank shall serve as the
administrative agent of its Designated Bid Lender and shall on behalf of
the Designated Bid Lender: (A) receive any and all payments made for the
benefit of the Designated Bid Lender (and Borrower's and Agent's obligation
to make any payment to the Designated Bid Lender shall be satisfied upon
payment of such amount to its Designating Bank for the benefit of such
Designated Bid Lender, without any duty to see to the application thereof
by such Designating Bank), and (B) give and receive all communications and
notices and take all actions under any Loan Document or the Co-Lender
Agreement, including, without limitation, votes, approvals, waivers,
consents and amendments under or relating to this Agreement, the other Loan
Documents and the Co-Lender Agreement; and any notice or other
communication so delivered to a Designating Bank shall be deemed validly
delivered to its Designated Bid Lender, without any duty on the part of the
Borrower or the Agent to verify whether such notice or other communication
is
20
<PAGE>
actually delivered by such Designating Bank to its Designated Bid Lender.
The Agent shall have no responsibility for, and shall not incur liability
to any Designated Bid Lender arising out of, the disposition by such
Designated Bid Lender's Designating Bank of any funds or notice or other
communication delivered to such Designating Bank for the account of such
Designated Bid Lender in accordance herewith. Any notice, communication,
vote, approval, waiver, consent or amendment of or with respect to any Loan
Document or the Co-Lender Agreement that is delivered or executed on behalf
of any Designated Bid Lender shall be signed by its Designating Bank as
administrative agent for the Designated Bid Lender (whether or not noted as
such thereon), and shall not be signed by the Designated Bid Lender on its
own behalf. The Borrower, the Agent, the Banks and the other Designated
Bid Lenders may rely thereon without any requirement that the Designated
Bid Lender sign or acknowledge the same. No Designated Bid Lender may
assign or transfer all or any portion of its interest hereunder or under
any other Loan Documents, other than (X) an assignment to the Designating
Bank which originally designated such Designated Bid Lender, or (Y) in
accordance with the provisions of Section 16(c) or (d).
(iv) A Designated Bid Lender shall not have any right to the
payment of any amount under the Loan Documents or the Co-Lender Agreement
OTHER THAN with respect to (i) principal of and interest (including, to the
extent, interest at the Default Rate) on Bid Loans made by such Designated
Bid Lender, (ii) late charges with respect to Bid Loans made by such
Designated Bid Lender that are not paid when due, and (iii) compensatory
amounts payable by the Borrower in respect of Bid Loans made by such
Designated Bid Lender that are paid prior to the last day of the Bid Rate
Interest Period applicable thereto; and all other amounts payable by the
Borrower hereunder, under any other Loan Document or under the Co-Lender
Agreement shall be determined as if such Designated Bid Lender's
Designating Bank had not made such designation.
17. PUBLICITY. Each Bank and Designated Bid Lender may refer to the
credit facilities provided pursuant to the Loan Documents in its own promotional
and advertising materials. The Borrower shall not identify a Bank or Designated
Bid Lender as a lender, except with such Bank's or Designated Bid Lender's prior
written consent, provided through the Agent in each instance.
18. CONDITIONS PRECEDENT. In addition to the conditions precedent set
forth in Section 4 of the Loan Agreement, the obligation of each Bank and
Designated Bid Lender under the Loan Documents to make any Advances on or after
the Effective Date is subject to the further condition that the Agent has
received reimbursement of all costs and expenses incurred by the Agent in
connection with this Agreement, including legal fees and expenses of the Agent's
counsel, and the costs for services of the Agent's in-house staff, such as legal
services. Such costs and expenses are in addition to the amounts payable by the
Borrower under this Section 18.
19. CONDITIONS TO ALL BORROWINGS. The obligation of each Bank and
Designated Bid Lender to make any Advance (including its initial disbursement on
or after the Effective Date) under the Loan Documents is subject to the
satisfaction on the date of the relevant Borrowing of the conditions set forth
in the Loan Documents, and, in the case of a Bid Loan, shall be subject to the
further condition that each of the statements made in the applicable Competitive
Bid Request shall be true and accurate in all material respects as if made on
and as of the date of such Bid Loan.
20. AUTHORIZATION AND ENFORCEABILITY REPRESENTATIONS. Each Bank, each
Designated Bid Lender, the Agent and the Borrower hereby represents to the
21
<PAGE>
other parties hereto that all necessary action has been taken to authorize it to
execute and to perform its obligations under the Loan Documents, and that the
Loan Documents are binding and enforceable against it.
21. CONSENT TO JURISDICTION. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT
TO ANY LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA, OR
OF THE UNITED STATES FOR THE NORTHERN OR CENTRAL DISTRICTS OF CALIFORNIA, AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT (OR ASSIGNMENT AND ASSUMPTION OR
DESIGNATION AGREEMENT, AS THE CASE MAY BE), THE BORROWER, THE AGENT, EACH BANK
AND EACH DESIGNATED BID LENDER CONSENTS, FOR ITSELF AND ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE BORROWER, THE AGENT, EACH BANK
AND EACH DESIGNATED BID LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING BASED
ON VENUE OR FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN CONNECTION WITH THE
LOAN OR OTHER ADVANCES MADE UNDER THE LOAN DOCUMENTS. THE BORROWER, THE AGENT,
EACH BANK AND EACH DESIGNATED BID LENDER WAIVES PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS WHICH MAY BE MADE BY OTHER MEANS UNDER APPLICABLE
LAW.
22. 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.
23. NO IMPAIRMENT. As specifically hereby amended, the Loan Documents
shall remain in full force and effect. This Agreement shall not prejudice any
rights or remedies of Banks under the Loan Documents. Banks and Designated Bid
Lenders reserve, without limitation, all rights which they have against any
guarantor or indemnitor.
24. EFFECTIVENESS; ALLOCATION OF CERTAIN PAYMENTS; INTEGRATION.
(a) This Agreement shall become effective on the Effective Date under
the Loan Agreement, PROVIDED THAT IBJ, Commerzbank and Manufacturers shall have
funded to the Agent, in the manner set forth in the Loan Documents, and the
Agent shall have allocated and paid such funds to BofA, in each case in the
amounts specified to the Banks by the Agent, as necessary in order to balance
outstanding advances under the Loan to the Pro Rata Shares of the Banks as set
in Section 2(a) above.
(b) Upon payment by the Borrower, the Agent shall allocate (i) the
unused commitment fee and interest on the Committed Loans, for the period to but
not including the Effective Date, to the Banks in accordance with their
respective Pro Rata Shares in effect under the Loan Documents prior to the
effectiveness of this Agreement, and (ii) interest on the Committed Loans, from
and including the Effective Date, to the Banks in accordance with their Pro Rata
Shares as set forth in this Agreement.
(c) The Loan Documents, including this Agreement: (i) integrate all
the terms and conditions incidental to the Loan Documents; (ii) supersede all
oral negotiations and prior and other writings with respect to their subject
matter; and (iii) are intended by the parties as the final expression of their
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. The Co-Lender Agreement addresses matters among the
Banks, the Designated Bid Lenders and the Agent and is intended by the Banks,
the Designated Bid Lenders and the Agent to supplement and be compatible with
and not abrogate the Loan Documents, and the Borrower's rights, obligations and
liabilities shall not be diminished or increased by
22
<PAGE>
the Co-Lender Agreement.
25. ELECTRONIC NOTICES. Any agreement of the Agent to receive certain
notices from the Borrower or the Banks (in their own capacities or in their
capacities as administrative agent for any Designated Bid Lender) by telephone
or facsimile is solely for their convenience and at their request. The Agent
shall be entitled to rely on the authority of any Person giving such notice and
the Agent shall not have any liability to the Borrower, any Bank, any Designated
Bid Lender or other Persons on account of any action taken or not taken by the
Agent in reliance upon such telephonic or facsimile notice.
26. NOTICES.
Notices shall be sent to the following addresses:
To the Borrower:
BRE Properties, Inc.
One Montgomery Street
Telesis Tower, Suite 2500
San Francisco, CA 94104
Attn: LeRoy E. Carlson
Phone: (415) 445-6561
Fax: (415) 445-6505
To BofA as Bank:
Bank of America National Trust
and Savings Association
Commercial Real Estate Services/
National Accounts 9105
50 California Street
11th Floor
San Francisco, CA 94111
Attention: Laurence Hughes
Phone: (415) 445-4404
Fax: (415) 445-4154
To BofA as Agent:
Bank of America National Trust
and Savings Association
Commercial Real Estate Services/
National Accounts 9105
50 California Street
11th Floor
San Francisco, CA 94111
Attention: Laurence Hughes
Phone: (415) 445-4404
Fax: (415) 445-4154
To Manufacturers Bank:
Manufacturers Bank
16255 Ventura Blvd.
Encino, CA 91436
Attention: Roslyn Druyan
Phone: (818) 380-0912
Fax: (818) 380-0906
23
<PAGE>
To IBJ:
The Industrial Bank of Japan, Limited,
Los Angeles Agency
350 South Grand Avenue, Suite #1500
Los Angeles, California 90071
Attn: Takeshi Kubo
Tel: (213) 623-7241
Fax: (213) 488-9840
To Commerzbank:
Commerzbank AG
Los Angeles Branch
633 West Fifth Street, Suite 6660
Los Angeles, California 90017
Attn: Steve Larsen, Vice President
Telephone: (213) 683-5412
Facsimile: (213) 623-0039
As provided in Section 16(e), any notice or other communication to a Designated
Bid Lender shall be sent to its Designating Bank.
27. NO BANKRUPTCY PROCEEDINGS AGAINST DESIGNATED BID LENDERS. Each of the
Borrower, the Banks, and the Agent hereby agrees that it will not institute
against any Designated Bid Lender, or join with any other Person in instituting
against any Designated Bid Lender, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceeding under any federal or state bankruptcy or
similar law, at any time prior to the date that is one year and one day after
payment in full of the latest maturing commercial paper note issued by such
Designated Bid Lender.
28. MISCELLANEOUS. This Agreement shall be governed by the laws of the
State of California, without regard to the choice of law rules of that State.
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 illegal or
unenforceable, that portion shall be deemed severed from the rest which shall
remain in full force and effect. As used herein, the word "include(s)" means
"includes(s), without limitation," and the word "including" means "including,
but not limited to." Schedule I and Exhibits A (form of Notice of
Assignment), B (form of Assignment and Assumption Agreement), C (form of
Competitive Bid Request), D (form of Competitive Bid) and E (form of Designation
Agreement) are attached to this Agreement and are incorporated in this Agreement
by this reference.
24
<PAGE>
IN WITNESS WHEREOF, THE PARTIES HAVE EXECUTED THIS AGREEMENT.
BRE PROPERTIES, INC., A MARYLAND CORPORATION
By:
---------------------------------
Jay W. Pauly
Senior Executive Vice President & Chief
Operating Officer
By:
----------------------------------
LeRoy E. Carlson
Executive Vice President & Chief Financial
Officer
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, AS A BANK
By:
----------------------------------
Donna Chiaro
Vice President
MANUFACTURERS BANK, AS A BANK
By:
---------------------------------
Title:
-------------------------------
THE INDUSTRIAL BANK OF JAPAN, LIMITED
LOS ANGELES AGENCY, AS A BANK
By:
---------------------------------
Title:
-------------------------------
COMMERZBANK AG,
LOS ANGELES BRANCH, AS A BANK
By:
---------------------------------
Title:
-------------------------------
By:
---------------------------------
Title:
-------------------------------
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, AS AGENT
By:
---------------------------------
Donna Chiaro
25
<PAGE>
Vice President
26
<PAGE>
SCHEDULE I
LENDING OFFICES OF BANKS
BOFA:
Bank of America National Trust
and Savings Association
Commercial Real Estate Services/
National Accounts 9105
50 California Street
11th Floor
San Francisco, CA 94111
Attention: Laurence Hughes
Phone: (415) 445-4404
Fax: (415) 445-4154
MANUFACTURERS BANK:
Manufacturers Bank
16255 Ventura Blvd.
Encino, CA 91436
Attention: Roslyn Druyan
Phone: (818) 380-0912
Fax: (818) 380-0906
THE INDUSTRIAL BANK OF JAPAN, LIMITED:
The Industrial Bank of Japan,
Limited, Los Angeles Agency
350 South Grand Avenue, Suite #1500
Los Angeles, California 90071
Tel: (213) 623-7241
Fax: (213) 488-9840
COMMERZBANK AG:
Commerzbank AG
Los Angeles Branch
633 West Fifth Street, Suite 6660
Los Angeles, California 90017
Attn: Steve Larsen, Vice President
Telephone: (213) 683-5412
Facsimile: (213) 623-0039
<PAGE>
BRE PROPERTIES, INC.
- --------------------------------------------------------------------------------
EXHIBIT 11 - COMPUTATION OF EARNINGS PER SHARE
- --------------------------------------------------------------------------------
STATEMENT OF EARNINGS PER SHARE
(amounts in thousands, except per share)
Average shares outstanding are computed by adding the shares outstanding at each
month end and dividing that result by the number of months elapsed in the
year-to-date period.
Primary Earnings per Share:
<TABLE>
<CAPTION>
For the Quarter Ended For the Six Months Ended
June 30, June 30,
------------------------ -------------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net income before gain on sale
of real estate investments (a) $11,676 $9,852 $22,617 $17,236
-------- -------- -------- --------
-------- -------- -------- --------
Weighted average shares
outstanding 34,520 32,670 33,770 28,080
-------- -------- -------- --------
-------- -------- -------- --------
Computation $.34 $.30 $.67 $.61
Net gain on sales of real estate
investments (a) $25,603 $226 $25,603 $226
-------- -------- -------- --------
-------- -------- -------- --------
Computation $.74 $.01 $.76 $.01
Net income $37,279 $10,078 $48,220 $17,462
-------- -------- -------- --------
-------- -------- -------- --------
EARNINGS PER SHARE (a) $1.08 $.31 $1.43 $.62
-------- -------- -------- --------
-------- -------- -------- --------
Additional Primary Computation:
<CAPTION>
For the Quarter Ended For the Six Months Ended
June 30, June 30,
------------------------ -------------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net income (a) $37,279 $10,078 $48,220 $17,462
-------- -------- -------- --------
-------- -------- -------- --------
Weighted average shares
outstanding 34,520 32,670 33,770 28,080
Additional adjustment for
dilutive effect of outstanding
options (as determined by
the application of the
treasury stock method) 543 250 647 201
-------- -------- -------- --------
Weighted average number of
shares outstanding, as
adjusted 35,063 32,920 34,417 28,281
-------- -------- -------- --------
-------- -------- -------- --------
Primary earnings per share, as
adjusted (b) $1.06 $.31 $1.40 $.62
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
17
<PAGE>
BRE PROPERTIES, INC.
- --------------------------------------------------------------------------------
Fully Diluted Earnings per Share:
<TABLE>
<CAPTION>
For the Quarter Ended For the Six Months Ended
June 30, June 30,
------------------------ --------------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net income (a) $37,279 $10,078 $48,220 $17,462
-------- -------- -------- --------
-------- -------- -------- --------
Weighted average shares
outstanding 34,520 32,670 33,770 28,080
Additional adjustment for
dilutive effect of
outstanding
options (as determined by
the application of the
treasury stock method) 567 327 660 267
-------- -------- -------- --------
Weighted average number of
shares, as adjusted 35,087 32,997 34,430 28,347
-------- -------- -------- --------
-------- -------- -------- --------
Fully diluted earnings per share
as adjusted (b) $1.06 $.31 $1.40 $.62
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
(a) These amounts agree with the related amounts in the Statements of Income.
(b) This calculation is submitted in accordance with Regulation S-K, item
601(b)11 although not required by footnote 2 to paragraph 14 of APB Opinion
No. 15 because it results in dilution of less than 3%.
18
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 17,621
<SECURITIES> 0
<RECEIVABLES> 20,989
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 38,610
<PP&E> 832,288
<DEPRECIATION> (43,515)
<TOTAL-ASSETS> 827,383
<CURRENT-LIABILITIES> 7,950
<BONDS> 237,125
0
0
<COMMON> 370
<OTHER-SE> 581,938
<TOTAL-LIABILITY-AND-EQUITY> 827,383
<SALES> 63,933<F1>
<TOTAL-REVENUES> 63,933
<CGS> 20,039<F2>
<TOTAL-COSTS> 20,039
<OTHER-EXPENSES> 10,538<F3>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,739
<INCOME-PRETAX> 22,617
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 25,603<F4>
<CHANGES> 0
<NET-INCOME> 48,220
<EPS-PRIMARY> 1.43
<EPS-DILUTED> 1.43
<FN>
<F1>RENTAL AND OTHER INCOME
<F2>REAL ESTATE EXPENSES
<F3>INCLUDES 8,296 OF DEPRECIATION, A NON CASH CHARGE
<F4>NET GAIN ON SALE OF REAL ESTATE INVESTEMENTS
</FN>
</TABLE>
