<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): October 22, 1997
PRENTISS PROPERTIES TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MARYLAND
(State or Other Jurisdiction of
Incorporation or Organization)
1-14516 75-2661588
- ------------------------------- ------------------------------------
(Commission File Number) (I.R.S. Employer Identification No.)
3890 West Northwest Highway, Suite 400, Dallas, Texas 75220
(Address of Registrant's Principal Executive Office)
(214) 654-0886
(Registrant's Telephone Number, Including Area Code)
N/A
-------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 2. ACQUISITION OF ASSETS
Prentiss Properties Trust owns a limited partnership interest and a sole
general partnership interest in Prentiss Properties Acquisition Partners, L.P.
(the "Operating Partnership") through a wholly-owned subsidiary, Prentiss
Properties I, Inc., a Delaware corporation. Prentiss Properties Trust, as
referred to herein, includes the Company, its majority-owned Operating
Partnership and subsidiaries (collectively, the "Company"). On October 22, 1997,
the Company completed the acquisition of 15 Class "A" suburban office buildings
(the "Terramics Properties"), and the rights to acquire land capable of
supporting up to 1.1 million net rentable square feet of development . The
buildings total 904,207 square feet and are located in suburban markets in
Pennsylvania and New Jersey near Philadelphia, Pennsylvania.
The Terramics Properties were purchased for an aggregate purchase price,
including estimated closing costs, of approximately $134 million, including
approximately $14 million in assumed debt, $106 million in cash and 530,062
units of limited partnership in the Operating Partnership ("Units") valued at
approximately $14 million. The cash portion of the purchase price was paid
primarily through borrowings under a $133 million credit facility (the
"Terramics Bridge Loan").
The Terramics Properties were acquired pursuant to agreements of
contribution and assignment entered into between the Operating Partnership (as
"Purchaser") and various entities controlled by the Terramics Properties
Associates that held ownership interests in the Terramics Properties. The
related agreements were filed as exhibits to the Company's current report on
Form 8-K dated October 16, 1997.
The Company determined the purchase price for the Terramics Properties and
the individually insignificant properties listed in Item 5 of this report on
Form 8-K through an evaluation of the following factors: (i) macro-economic
issues that impact the market in which the property is located; (ii) location
and competition in the property's market; (iii) occupancy of and demand for
properties of a similar type in the same market; (iv) the construction quality
and condition of the property; (v) the potential for increased cash flow after
benefiting from the Company's renovations, refurbishment and upgrades; (vi)
existing tenant base; (vii) purchase price relative to replacement costs; and
(viii) the potential to generate revenue growth at or above levels of economic
growth in the property's market. Other than changes in those factors, the
Company, after reasonable inquiry, is not aware of any material factors relating
to the properties that would cause the historical financial information provided
in Item 7 not to be necessarily indicative of future operating results for the
properties.
ITEM 5. OTHER EVENTS
On July 29, 1997, the Company completed the acquisition, from an unrelated
third-party, of a mortgage note collateralized by one Class "A" suburban office
property (the "World Savings Center"). The property totals 271,055 square feet
and is located in Oakland, California. The Company has negotiated a deed in
lieu of foreclosure transaction, for no consideration, which provides for the
conveyance of the property, currently held by a partnership for which an
affiliated party (Prentiss Properties WSC, Inc.) is the general partner, to be
transferred to the Company in an arms length transaction on or around January 1,
1998. The World Savings Center note was purchased for a purchase price of
approximately $37.5 million which was funded with proceeds from a short-term
acquisition facility provided by an affiliate of Lehman Brothers Inc.
On July 31, 1997, the Company completed the acquisition of three Class "A"
suburban office properties (the "Academy Properties"). The properties total
193,961 square feet and are located in Los Angeles, California. The Academy
Properties were purchased for a purchase price of approximately $23.0 million
which was funded primarily from borrowings under the Company's line of credit.
On September 9, 1997, the Company completed the acquisition of two Class
"A" suburban office properties (the "Research Properties"). The properties
total 286,325 square feet and are located in the metropolitan Washington, D.C.
area. The Research Properties were purchased for a purchase price of
approximately $40.8 million which was funded primarily from borrowings under
Company's line of credit.
2
<PAGE>
On September 15, 1997, the Company completed the acquisition of two Class
"A" suburban office properties (the "Gateway Properties"). The properties total
203,405 square feet and are located in the suburban Baltimore, Maryland area.
The Gateway Properties were purchased for a purchase price of approximately
$22.6 million which was funded primarily from borrowings under the Company's
line of credit.
The acquisitions of the World Savings Center, the Academy Properties, the
Research Properties and the Gateway Properties do not individually constitute
acquisitions of a "significant amount of assets" as defined under Item 2 of Form
8-K or Rule 3-14 of Regulation S-X. Rather, these acquisitions, when aggregated
with the Selected 1997 Acquisitions whose audited combined statements of revenue
and certain operating expenses were filed previously by the Company in its
Registration Statement of Form S-11, declared effective on April 29, 1997,
constitute a mathematical majority of individually insignificant 1997
acquisitions, for which audited combined statements of revenue and certain
operating expenses are required under Rule 3-14 of Regulation S-X. Accordingly,
audited combined statements of revenue and certain operating expenses of the
World Savings Center, the Academy Properties, the Research Properties and the
Gateway Properties are filed herewith.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(A) Financial Statements for Properties Acquired
Combined statements of revenue and certain operating expenses of the
Terramics Properties for the year ended December 31, 1996 are presented as
prescribed by Item 2 of Form 8-K and Rule 3-14 of Regulation S-X.
Combined statements of revenue and certain operating expenses of the World
Savings Center for the years ended December 31, 1996, 1995, and 1994 are
presented as prescribed by Rule 3-14 of Regulation S-X.
Combined statements of revenue and certain operating expenses of the
Selected Properties Acquired Subsequent to June 30, 1997 (comprised of the
Academy Properties, the Research Properties, and the Gateway Properties) for the
year ended December 31, 1996 are presented as prescribed by Rule 3-14 of
Regulation S-X.
(B) Pro Forms Financial Information
Prentiss Properties Trust Pro Forma Balance Sheet at December 31, 1996 and
Pro Forma Statements of Income for the nine months ended September 30, 1997, and
for the year ended December 31, 1996.
(C) Exhibits
23.1 Consent of Coopers & Lybrand L.L.P. Independent Accountants
99.1 Credit Agreement, dated October 6, 1997, among Prentiss Properties
Acquisition Partners, L.P., as Borrower, Nationsbank of Texas, N.A., as
Administrative Agent and Lender, Bank One, Texas, N.A., as Documentation Agent
and Lender, Crestar Bank, as Lender, Comerica Bank, as Lender, and First
National Bank of Chicago, as Lender.
3
<PAGE>
INDEX TO FINANCIAL STATEMENTS
The following represents certain of the properties acquired by the Company
during 1997:
PAGE
NUMBER
SIGNIFICANT ACQUISITION:
The Terramics Properties
Report of Independent Accountants............................. F-1
Combined Statement of Revenues and Certain Operating
Expenses for the Year Ended December 31, 1996............... F-2
Notes to Combined Statement of Revenues and Certain
Operating Expenses.......................................... F-3
INDIVIDUALLY INSIGNIFICANT ACQUISITIONS:
The World Savings Center Property
Report of Independent Accountants............................. F-5
Combined Statements of Revenues and Certain Operating
Expenses for the Years Ended December 31, 1996,
1995 and 1994............................................... F-6
Notes to Combined Statement of Revenues and Certain
Operating Expenses.......................................... F-7
The Academy, Research and Gateway Properties
(the "Selected Properties Acquired Subsequent to June 30, 1997")
Report of Independent Accountants............................. F-9
Combined Statement of Revenues and Certain Operating
Expenses for the Year Ended December 31, 1996............... F-10
Notes to Combined Statement of Revenues and Certain
Operating Expenses.......................................... F-11
PRO FORMA FINANCIAL STATEMENTS:
Prentiss Properties Trust Pro Forma Balance Sheet as
of December 31, 1996........................................ F-13
Prentiss Properties Trust Pro Forma Statements of Income
for the Nine Month Period Ended September 30, 1997 and
for the Year Ended December 31, 1996........................ F-14
4
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of
Prentiss Properties Trust
We have audited the accompanying combined statement of revenues and
certain operating expenses of the Terramics Properties (the "Terramics
Properties") for the year ended December 31, 1996. The combined statement of
revenues and certain operating expenses is the responsibility of the Terramics
Properties' owners. Our responsibility is to express an opinion on the combined
statement of revenues and certain operating expenses based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the combined statement of revenues and
certain operating expenses is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the combined statement of revenues and certain operating expenses. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the combined
statement of revenues and certain operating expenses. We believe that our audit
provides a reasonable basis for our opinion.
The accompanying combined statement of revenues and certain operating
expenses was prepared for the purpose of complying with rules and regulations of
the Securities and Exchange Commission, as described in Note 1, and is not
intended to be a complete presentation of the Terramics Properties' revenues and
expenses and may not be comparable to results from proposed future operations of
the Terramics Properties.
In our opinion, the combined statement of revenues and certain
operating expenses referred to above presents fairly, in all material respects,
the revenues and certain operating expenses described in Note 1 for the year
ended December 31, 1996, in conformity with generally accepted accounting
principles.
Coopers & Lybrand L.L.P.
October 22, 1997
Dallas, Texas
F-1
<PAGE>
THE TERRAMICS PROPERTIES
COMBINED STATEMENT OF REVENUES AND CERTAIN OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Revenues:
<S> <C>
Rental income..................... $16,783
Other income...................... 108
-------
16,891
-------
Certain operating expenses:
Real estate taxes................. 1,634
Repairs and maintenance........... 2,151
Property management............... 825
Utilities......................... 1,611
Insurance......................... 78
-------
6,299
-------
Revenues in excess of certain operating
expenses. $10,592
=======
</TABLE>
The accompanying notes are an integral part of this financial statement.
F-2
<PAGE>
THE TERRAMICS PROPERTIES
NOTES TO COMBINED STATEMENT OF REVENUES
AND CERTAIN OPERATING EXPENSES
(DOLLARS IN THOUSANDS)
1. BASIS OF PRESENTATION
The combined statement of revenues and certain operating expenses for
the year ended December 31, 1996 relate to the operations of the Terramics
properties (the "Terramics Properties" or the "Properties"), which were
acquired, on October 22, 1997, by the Company from an unaffiliated third-party
for an aggregate purchase price of $134.0 million (including estimated closing
costs). The Terramics Properties consist of 15 Class "A" suburban office
buildings totaling approximately 904,207 net rentable square feet located in
suburban markets in Pennsylvania and New Jersey near Philadelphia, Pennsylvania.
The accompanying combined statement excludes certain expenses such as
interest, depreciation and amortization and other costs not directly related to
the future operations of these properties that may not be comparable to the
expenses expected to be incurred in the proposed future operations of these
properties. Management is not aware of any material factors relating to these
properties which would cause the reported financial information not to be
necessarily indicative of future operating results.
The combined statement of revenues and certain operating expenses have
been prepared on the accrual basis of accounting.
REVENUE AND EXPENSE RECOGNITION
Rental income is recorded when due from tenants. The effects of
scheduled rent increases and rental concessions, if any, are recognized on a
straight-line basis over the term of the tenant's lease.
FUTURE RENTAL REVENUES
The properties are leased to tenants under net operating leases.
Minimum lease payments receivable, excluding tenant reimbursement of expenses,
under noncancellable operating leases in effect as of December 31, 1996, are
approximately as follows:
<TABLE>
<S> <C>
1997...................................... $13,485
1998...................................... 12,489
1999...................................... 9,082
2000...................................... 6,820
2001...................................... 5,337
Thereafter................................ 29,601
--------
$76,814
========
</TABLE>
Office space in the Terramics Properties is generally leased to
tenants under lease terms which provide for tenants to pay for increases in
operating expenses in excess of specified amounts.
USE OF ESTIMATES
The preparation of the combined statement of revenues and certain
operating expenses requires management to make estimates and assumptions that
affect the reported amounts, revenues and certain operating expenses during the
reporting period. Actual results could differ from those estimates.
F-3
<PAGE>
2. RELATED PARTY TRANSACTIONS
Under terms of various management agreements, the Terramics Properties
paid $681,428 in management fees during the year ended December 31, 1996 to the
Terramics Management Company, an affiliate of the entities owning the
Properties.
The Terramics Properties received base rents in the amount of $105,456
during the year ended December 31, 1996 from entities affiliated with the
entities owning the Properties.
F-4
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of
Prentiss Properties Trust
We have audited the accompanying combined statements of revenues and
certain operating expenses of the World Savings Center Property for the years
ended December 31, 1996, 1995 and 1994. The statements of revenues and certain
operating expenses are the responsibility of the World Savings Center Property's
owners. Our responsibility is to express an opinion on the combined statements
of revenues and certain operating expenses based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the combined statements of revenues and
certain operating expenses are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the combined statements of revenues and certain operating expenses. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the
combined statements of revenues and certain operating expenses. We believe that
our audit provides a reasonable basis for our opinion.
The accompanying combined statements of revenues and certain operating
expenses were prepared for the purpose of complying with rules and regulations
of the Securities and Exchange Commission, as described in Note 1, and are not
intended to be a complete presentation of the World Savings Center Property's
revenues and expenses and may not be comparable to results from proposed future
operations of the World Savings Center.
In our opinion, the combined statements of revenues and certain
operating expenses referred to above present fairly, in all material respects,
the revenues and certain operating expenses described in Note 1 for the years
ended December 31, 1996, 1995 and 1994 in conformity with generally accepted
accounting principles.
Coopers & Lybrand L.L.P.
October 3, 1997
Dallas, Texas
F-5
<PAGE>
WORLD SAVINGS CENTER
COMBINED STATEMENTS OF REVENUES AND CERTAIN OPERATING EXPENSES
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
1996 1995 1994
--------- -------- -------
<S> <C> <C> <C>
Revenues:
<S>
Rental income.......................... $6,792 $6,995 $6,968
Other income........................... 22 29 26
------ ------ ------
6,814 7,024 6,994
------ ------ ------
Certain operating expenses:
Real estate taxes...................... 446 507 500
Repairs and maintenance................ 981 685 724
Property management.................... 703 966 999
Utilities.............................. 524 587 579
Insurance.............................. 173 128 69
------ ------ ------
2,827 2,873 2,871
------ ------ ------
Revenues in excess of certain operating
expenses................................... $3,987 $4,151 $4,123
====== ====== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
WORLD SAVINGS CENTER
NOTES TO COMBINED STATEMENTS OF REVENUES
AND CERTAIN OPERATING EXPENSES
(DOLLARS IN THOUSANDS)
1. BASIS OF PRESENTATION
The combined statement of revenues and certain operating expenses for
the year ended December 31, 1996 relate to the operations of the World Savings
Center (the "Property"). A mortgage note collateralized by the Property was
acquired by the Company subsequent to June 30, 1997 from an unaffiliated third-
party for an aggregate purchase price of $37.5 million. The Company has
negotiated a deed in lieu of foreclosure transaction, for no consideration,
which provides for the conveyance of the Property, currently held by a
partnership for which an affiliated party (Prentiss Properties WSC, Inc.) is the
general partner, to be transferred to the Operating Partnership in an arms
length transaction on or around January 1, 1998. The World Savings Center
consists of one Class "A" suburban office building in Oakland, California
totaling approximately 271,055 net rentable square feet.
The accompanying combined statements exclude certain expenses such as
interest, depreciation and amortization and other costs not directly related to
the future operations of the Property that may not be comparable to the expenses
expected to be incurred in the proposed future operations of the Property.
Management is not aware of any material factors relating to the Property which
would cause the reported financial information not to be necessarily indicative
of future operating results.
The combined statements of revenues and certain operating expenses
have been prepared on the accrual basis of accounting.
REVENUE AND EXPENSE RECOGNITION
Rental income is recorded when due from tenants. The effects of
scheduled rent increases and rental concessions, if any, are recognized on a
straight-line basis over the term of the tenant's lease.
During the year ended December 31, 1996, two separate tenants
represented 54% and 19%, respectively, of total base rental income.
FUTURE RENTAL REVENUES
The Property is leased to tenants under net operating leases. Minimum
lease payments receivable, excluding tenant reimbursement of expenses, under
noncancellable operating leases in effect as of December 31, 1996, are
approximately as follows:
<TABLE>
<S> <C>
1997...................................... $ 4,169
1998...................................... 3,915
1999...................................... 3,875
2000...................................... 2,583
2001...................................... 105
Thereafter................................ 25
-------
$14,672
=======
</TABLE>
F-7
<PAGE>
Office space in the World Savings Center is generally leased to
tenants under lease terms which provide for tenants to pay for increases in
operating expenses in excess of specified amounts.
USE OF ESTIMATES
The preparation of the combined statements of revenues and certain
operating expenses requires management to make estimates and assumptions that
affect the reported amounts, revenues and certain operating expenses during the
reporting period. Actual results could differ from those estimates.
2. RELATED PARTY TRANSACTIONS
Under terms of the management agreement, the World Savings Center paid
$210,944, $222,141, and $224,287 in management fees during the years ended
December 31, 1996, 1995, and 1994 , respectively, to an affiliate of the entity
owning the Property.
The World Savings Center received base rents in the amount of
$2,530,827 during each of the years ended December 31, 1996, 1995, and 1994
pursuant to a lease agreement with World Savings and Loan which held an
ownership interest in the Property. This lease expires in November 2000.
F-8
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of
Prentiss Properties Trust
We have audited the accompanying combined statement of revenues and
certain operating expenses of the Selected Properties Acquired Subsequent to
June 30, 1997 (see Note 1) for the year ended December 31, 1996. The statement
of revenues and certain operating expenses is the responsibility of the Selected
Properties' Acquired Subsequent to June 30, 1997 owners. Our responsibility is
to express an opinion on the combined statement of revenues and certain
operating expenses based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the combined statement of revenues and
certain operating expenses is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the combined statement of revenues and certain operating expenses. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the combined
statement of revenues and certain operating expenses. We believe that our audit
provides a reasonable basis for our opinion.
The accompanying combined statement of revenues and certain operating
expenses was prepared for the purpose of complying with rules and regulations of
the Securities and Exchange Commission, as described in Note 1, and is not
intended to be a complete presentation of the Selected Properties' Acquired
Subsequent to June 30, 1997 revenues and expenses and may not be comparable to
results from proposed future operations of the Selected Properties Acquired
Subsequent to June 30, 1997.
In our opinion, the combined statement of revenues and certain
operating expenses referred to above presents fairly, in all material respects,
the revenues and certain operating expenses described in Note 1 for the year
ended December 31, 1996, in conformity with generally accepted accounting
principles.
Coopers & Lybrand L.L.P.
October 3, 1997
Dallas, Texas
F-9
<PAGE>
SELECTED PROPERTIES ACQUIRED
SUBSEQUENT TO JUNE 30, 1997
COMBINED STATEMENT OF REVENUES AND CERTAIN OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Revenues:
<S> <C>
Rental income....................... $10,799
Other income........................ 674
11,473
-------
Certain operating expenses:
Real estate taxes................... 946
Repairs and maintenance............. 2,245
Property management................. 860
Utilities........................... 1,209
Insurance........................... 301
5,561
-------
Revenues in excess of certain operating
expenses................................ $ 5,912
=======
</TABLE>
The accompanying notes are an integral part of this financial statement.
F-10
<PAGE>
SELECTED PROPERTIES ACQUIRED
SUBSEQUENT TO JUNE 30, 1997
NOTES TO COMBINED STATEMENT OF REVENUES
AND CERTAIN OPERATING EXPENSES
(DOLLARS IN THOUSANDS)
1. BASIS OF PRESENTATION
The combined statement of revenues and certain operating expenses for
the year ended December 31, 1996 relate to the operations of the Selected
Properties Acquired Subsequent to June 30, 1997 which were acquired by Prentiss
Properties Trust subsequent to June 30, 1997 from unaffiliated third-parties for
an aggregate purchase price of $86.4. The Selected Properties Acquired
Subsequent to June 30, 1997 include The Academy Properties ("Academy"), the
Research Office Center Properties ("Research"), and the Gateway International
Properties ("Gateway"). The Academy Properties consist of three Class "A"
suburban office buildings in Los Angeles, California totaling approximately
193,961 net rentable square feet. The Research Office Center Properties consist
of two Class "A" suburban office buildings in the metropolitan Washington, D.C.
area totaling approximately 286,325 net rentable square feet. The Gateway
International Properties consist of two Class "A" suburban office buildings in
suburban Baltimore, Maryland area totaling approximately 203,405 net rentable
square feet.
The accompanying combined statement excludes certain expenses such as
interest, depreciation and amortization and other costs not directly related to
the future operations of these properties that may not be comparable to the
expenses expected to be incurred in the proposed future operations of these
properties. Management is not aware of any material factors relating to these
properties which would cause the reported financial information not to be
necessarily indicative of future operating results.
The combined statement of revenues and certain operating expenses have
been prepared on the accrual basis of accounting.
REVENUE AND EXPENSE RECOGNITION
Rental income is recorded when due from tenants. The effects of
scheduled rent increases and rental concessions, if any, are recognized on a
straight-line basis over the term of the tenant's lease.
During the year ended December 31, 1996, two separate tenants of
Academy represented 60%, and 28% of total base rental income. Two separate
tenants represented 15% and 12% of the total base rental income, of one of the
Research properties, and one major tenant represented 100% of the total base
rental income of the other. Two separate tenants of Gateway represented 13% and
11% of total base rental income.
FUTURE RENTAL REVENUES
The properties are leased to tenants under net operating leases.
Minimum lease payments receivable, excluding tenant reimbursement of expenses,
under noncancellable operating leases in effect as of December 31, 1996, are
approximately as follows:
<TABLE>
<S> <C>
1997...................................... $ 7,885
1998...................................... 7,559
1999...................................... 7,126
2000...................................... 6,809
2001...................................... 4,978
Thereafter................................ 12,075
-------
$46,432
=======
</TABLE>
F-11
<PAGE>
Office space in the Academy, Research and Gateway properties is
generally leased to tenants under lease terms which provide for tenants to pay
for increases in operating expenses in excess of specified amounts.
USE OF ESTIMATES
The preparation of the combined statement of revenues and certain
operating expenses requires management to make estimates and assumptions that
affect the reported amounts, revenues and certain operating expenses during the
reporting period. Actual results could differ from those estimates.
2. RELATED PARTY TRANSACTIONS
Under terms of their respective management agreements, Research and
Gateway paid $91,022 and $172,724, respectively, in management fees during the
year ended December 31, 1996 to entities affiliated with the ownership of the
properties.
F-12
<PAGE>
PRENTISS PROPERTIES TRUST
PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
The following unaudited pro forma consolidated balance sheet is
presented as if the following transactions had been consummated on September 30,
1997: (i) the acquisition of the Terramics Properties, and (ii) the acquisition
of those assets the Company deems probable acquisitions, (the "Pending
Acquisitions"). This pro forma consolidated balance sheet should be read in
conjunction with the pro forma consolidated statements of income of the Company
for the nine months ended September 30, 1997 and for the year ended December 31,
1996 included elsewhere in this Form 8-K and the historical consolidated and
combined financial statements and notes thereto of the Company and the
Predecessor Company included in the Company's Form 10-K for the year ended
December 31, 1996.
The pro forma consolidated balance sheet is not necessarily indicative
of what the actual financial position would have been had the Company completed
the transactions described above, nor does it purport to represent the future
financial position of the Company.
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
------------------------------------------------------------- PRENTISS
PRENTISS PROPERTIES
PROPERTIES TERRAMICS PENDING OTHER TRUST
TRUST PROPERTIES /(1)/ ACQUISITIONS /(2)/ ADJUSTMENTS /(3)/ PRO FORMA
---------- ---------------- ------------------ ----------------- ----------
<S> <C> <C> <C> <C> <C>
Assets:
Real estate, net.......... $888,055 $132,787 $78,411 $1,099,253
Mortgage note receivable.. 36,378 36,378
Deferred charges and
other assets, net........ 19,457 $538 19,995
Receivables, net.......... 9,234 9,234
Cash and cash equivalents. 3,614 3,614
Escrowed cash and
deposits on
real estate.............. 5,972 (2,750) 3,222
Investments in joint
venture and
unconsolidated
subsidiaries............. 22,559 22,559
-------- -------- ------- ---- ----------
Total Assets.......... $985,269 $130,037 $78,411 $538 $1,194,255
======== ======== ======= ==== ==========
Liabilities:
Debt on real estate....... $432,641 $115,692 $78,411 $538 627,282
Accounts payable and
other liabilities........ 24,016 24,016
Distributions payable..... 11,834 11,834
Other payables
(affiliates)............. 4,755 4,755
-------- -------- ------- ---- ----------
Total Liabilities.............. 473,246 115,692 78,411 538 667,887
-------- -------- ------- ---- ----------
Minority interest.............. 57,955 9,822 67,777
-------- -------- ------- ---- ----------
Shareholders' Equity:
Common shares............. 263 263
Additional paid-in
capital.................. 457,892 4,523 462,415
Distributions in excess
of accumulated
earnings................. (4,087) (4,087)
-------- -------- ------- ---- ----------
Total Shareholders'
Equity............... 454,068 4,523 458,591
-------- -------- ------- ---- ----------
Total Liabilities
and Shareholders'
Equity............... $985,269 $130,037 $78,411 $538 $1,194,255
======== ======== ======= ==== ==========
</TABLE>
(1) The financial information on the Terramics Properties is presented as if
the transaction occurred on September 30, 1997.
(2) The financial information on the Pending Acquisitions includes the Pending
Acquisitions deemed probable by the Company.
(3) The Other Adjustments represent the financing costs incurred in connection
with the borrowings used to close the Terramics Properties and Pending
Acquisitions.
F-13
<PAGE>
PRENTISS PROPERTIES TRUST
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
The following unaudited pro forma consolidated statement of income is
presented as if (i) the acquisition of the assets acquired during 1997, (the
"1997 Acquired Properties"), (ii) the acquisition of the Terramics Properties,
and (iii) the acquisition of the Pending Acquisitions had occurred on January 1,
1997.
This pro forma consolidated statement of income should be read in
conjunction with the pro forma consolidated balance sheet at December 31, 1996
and pro forma consolidated statement of income for the year ended December 31,
1996 included elsewhere in this Form 8-K and the historical consolidated and
combined financial statements and notes thereto of the Company and the
Predecessor Company included in the Company's Form 10-K for the year ended
December 31, 1996.
The pro forma consolidated statement of income is not necessarily
indicative of what actual results would have been had the previously described
transactions actually occurred as of January 1, 1997, nor does it purport to
represent the operations of the Company for future periods.
<TABLE>
<CAPTION>
THE
COMPANY PRO FORMA ADJUSTMENTS
NINE -------------------------------------------------------------------
MONTHS 1997 PRENTISS
ENDED ACQUIRED OTHER TERRAMICS PENDING OTHER PROPERTIES
SEPTEMBER PROPERTIES ADJUSTMENTS PROPERTIES ACQUISITIONS ADJUSTMENTS TRUST
30, 1997 /(1)/ /(2)/ /(3)/ /(4)/ /(2)/ PRO FORMA
--------- ---------- ----------- ---------- ------------ ----------- ----------
Revenues:
<S> <C> <C> <C> <C> <C> <C> <C>
Rental income........... $85,092 $21,116 -- $12,495 $7,151 -- $125,854
Mortgage interest....... 640 1,969 -- -- -- -- 2,609
Management fees......... 690 -- -- -- -- -- 690
Development, leasing,
sale and other fees.... 1,591 1,160 -- 59 182 -- 2,992
------- ------- ------- ------- ------ -------- --------
Total revenues..... 88,013 24,245 12,554 7,333 132,145
------- ------- ------- ------- ------ -------- --------
Expenses:
Property operating
and maintenance........ 19,972 6,844 (389) 3,370 2,388 (856) 31,329
Real estate taxes....... 9,386 2,154 270 1,206 630 265 13,911
General and
administrative......... 2,338 -- -- -- -- 44 2,382
Personnel costs, net.... 2,437 -- -- -- -- 180 2,617
Interest expense........ 12,926 -- 10,245 -- -- 10,590 33,761
Amortization of
deferred
financing costs........ 589 -- 203 -- -- 56 848
Depreciation and
amortization........... 14,669 -- 3,568 -- -- 3,274 21,511
------- ------- ------- ------- ------ -------- --------
Total expenses..... 62,317 8,998 13,897 4,576 3,018 13,553 106,359
------- ------- ------- ------- ------ -------- --------
Equity in income of joint
venture and unconsolidated
subsidiaries................ 4,270 -- -- -- -- 244 4,514
------- ------- ------- ------- ------ -------- --------
Income before gain on
sale, minority interest
and extraordinary item...... 29,966 15,247 (13,897) 7,978 4,315 (13,309) 30,300
Gain on sale of property..... 243 -- -- -- -- -- 243
Minority interest............ (3,753) -- 162 -- -- (364) (3,955)
------- ------- ------- ------- ------ -------- --------
Income before
extraordinary item.......... 26,456 15,247 (13,735) 7,978 4,315 (13,673) 26,588
Extraordinary item........... (111) -- -- -- -- -- (111)
------- ------- ------- ------- ------ -------- --------
Net income................... $26,345 $15,247 (13,735) $ 7,978 $4,315 $(13,673) $ 26,477
------- ------- ------- ------- ------ -------- --------
Net income per common
share....................... $ 1.10 $ 1.01
======= ========
Weighted average number
of common shares
outstanding................. 24,002 26,289
======= ========
</TABLE>
F-14
<PAGE>
/(1)/ In addition to the Terramics Properties, since December 31, 1996, the
Company has acquired 29 office and 13 industrial properties containing
approximately 4.8 million square feet for an approximate purchase price of
$403.5 million (the "1997 Acquired Properties"). The financial information
of the 1997 Acquired Properties reflects the historical results of
operation of the properties for the portion of the period prior to
acquisition.
/(2)/ The Other Adjustments reflect the adjustments that Management considers
necessary to present the results of operations of the 1997 Acquired
Properties, Terramics Properties and Pending Acquisitions as if the
acquisitions had occurred on January 1, 1997.
/(3)/ The financial information of the Terramics Properties reflects the
historical results of operations of the properties for the nine months
ended September 30, 1997.
/(4)/ The financial information of the Pending Acquisitions reflects the
historical results of operations of the properties for the nine months
ended September 30, 1997 that the Company considers probable acquisitions.
F-15
<PAGE>
PRENTISS PROPERTIES TRUST
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
The following unaudited pro forma consolidated statement of income is
presented as if (i) the consummation of the IPO, the Company's Follow-on
Offering and related Formation Transactions, (ii) the acquisition of the 1996
and 1997 Acquired Properties, (iii) the acquisition of the Terramics Properties,
and (iv) the acquisition of the Pending Acquisitions had occurred on January 1,
1996.
This pro forma consolidated statement of income should be read in
conjunction with the pro forma consolidated balance sheet at December 31, 1996
and the pro forma consolidated statement of income for the nine months ended
September 30, 1997 included elsewhere in this Form 8-K and the historical
consolidated and combined financial statements and notes thereto of the Company
and the Predecessor Company included in the Company's Form 10-K for the year
ended December 31, 1996.
The pro forma consolidated statement of income is not necessarily
indicative of what actual results would have been had the previously described
transactions actually occurred as of January 1, 1996 nor does it purport to
represent the operations of the Company for future periods.
<TABLE>
<CAPTION>
COMPANY PREDECESSOR PRO FORMA ADJUSTMENTS
HISTORICAL COMPANY ---------------------------------------------------------------
OCT. 22, JAN. 1, FORMATION
1996 1996 OTHER TRANSACTIONS PRENTISS
THROUGH THROUGH ACQUIRED AND OTHER TERRAMICS PENDING OTHER PROPERTIES
DEC. 31, OCT. 21, PROPERTIES ADJUSTMENTS PROPERTIES ACQUISITIONS ADJUSTMENTS TRUST
1996 1996/(1)/ /(2)/ /(1)/ /(3)/ /(4)/ /(5)/ PRO FORMA
---------- ----------- ---------- ----------- ---------- ------------ ----------- ----------
Revenues:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rental income.......... $13,485 $27,086 $66,776 $ 24,599 $16,783 $9,237 -- $157,966
Mortgage interest...... -- -- 3,376 -- -- -- -- 3,376
Management fees........ 192 7,903 -- (7,127) -- -- -- 968
Development, leasing,
sale and other fees... 110 9,607 2,261 (8,451) 108 131 -- 3,766
------- ------- ------- -------- ------ ------ ------- --------
Total revenues...... 13,787 44,596 72,413 9,021 16,891 9,368 -- 166,076
------- ------- ------- -------- ------ ------ ------- --------
Expenses:
Property operating
and maintenance....... 3,618 7,550 19,740 4,800 4,665 3,082 (1,105) 42,350
Real estate taxes...... 1,162 3,085 7,451 2,112 1,634 791 400 16,635
General and
administrative........ 547 5,304 -- (3,338) -- -- 58 2,571
Personnel costs, net... 505 11,991 -- (10,212) -- -- 240 2,524
Interest expense....... 759 4,549 -- 24,860 -- -- 14,846 45,014
Amortization of
deferred
financing costs....... 87 1,402 -- (433) -- -- 74 1,130
Depreciation and
amortization.......... 2,696 5,993 -- 15,627 -- -- 4,365 28,681
------- ------- ------- -------- ------ ------ ------- --------
Total expenses...... 9,374 39,874 27,191 33,416 6,299 3,873 18,878 138,905
------- ------- ------- -------- ------ ------ ------- --------
Equity in income of joint
venture and
unconsolidated
subsidiaries............ 1,427 18 -- 4,308 -- -- 287 6,040
------- ------- ------- -------- ------ ------ ------- --------
Income before gain on
sale and minority
interest................ 5,840 4,740 45,222 (20,087) 10,592 5,495 (18,591) 33,211
Gain on sale............. -- 378 -- (378) -- -- -- --
Minority interest........ (844) -- -- (3,235) -- -- (240) (4,319)
------- ------- ------- -------- ------ ------ ------- --------
Net income............... $ 4,996 $ 5,118 $45,222 $(23,700) 10,592 $5,495 (18,831) 28,892
======= ======= ======= ======== ====== ====== ======= ========
Net income per common
share................... $ 0.25 $ 1.10
======= ========
Weighted average number
of common shares
outstanding............. 20,002 26,289
======= ========
</TABLE>
F-16
<PAGE>
/(1)/ The pro forma financial information of the Company, for the period January
1, 1996 through October 21, 1996, along with the Formation Transaction
Adjustments reflects the historical results of the Predecessor Company,
adjusted to assume that the initial public offering, follow-on offering
and related formation transaction of the Company had occurred on January
1, 1996.
/(2)/ In addition to the Terramics Properties, since the commencement of
operations of the Company on October 22, 1996, the Company has acquired 34
office and 16 industrial properties containing approximately 5.9 million
square feet for an approximate purchase price of $520.1 million (the
"Other Acquired Properties"). The financial information of the Other
Acquired Properties reflects the historical results of operation of the
properties for the portion of the period prior to acquisition.
/(3)/ The financial information of the Terramics Properties reflects the
historical results of operations of the properties for the year ended
December 31, 1996.
/(4)/ The financial information of the Pending Acquisitions reflects the
historical results of operations of the properties for the year ended
December 31, 1996 that the Company considers probable acquisitions.
/(5)/ The Other Adjustments reflect the adjustments that Management considers
necessary to present the results of operations of the Other Acquired
Properties, Terramics Properties and Pending Acquisitions as if the
acquisitions had occurred on January 1, 1996.
F-17
<PAGE>
SIGNATURE
---------
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.
PRENTISS PROPERTIES TRUST
Date: October 31, 1997 By: /s/ Thomas P. Simon
---------------------------------------
Thomas P. Simon (Vice President)
F-18
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement
of Prentiss Properties Trust on Form S-3 (File No. 333-38079) of our reports
dated (i) October 3, 1997 on our audits of the combined statement of revenues
and certain operating expenses of the World Savings Center Property and the
Selected Properties Acquired Subsequent to June 30, 1997, and (ii) October 22,
1997 on our audits of the combined statement of revenues and certain operating
expenses of Terramics Properties all of which reports are included in this
Current Report on Form 8-K.
Dallas, Texas
October 31, 1997
<PAGE>
EXHIBIT 99.1
CREDIT AGREEMENT
among
PRENTISS PROPERTIES ACQUISITION PARTNERS, L.P.,
as Borrower
NATIONSBANK OF TEXAS, N.A.,
as Administrative Agent
BANK ONE, TEXAS, N.A.,
as Documentation Agent
and
THE LENDERS NAMED HEREIN,
as Lenders
$133,000,000
As of
October 6, 1997
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1 DEFINITIONS AND TERMS 1
1.1 Definitions 1
1.2 Time References 11
1.3 Other References 11
1.4 Accounting Principles 11
SECTION 2 TERM LOANS 11
SECTION 3 TERMS OF PAYMENT 12
3.1 Notes and Payments 12
3.2 Interest and Principal Payments 12
3.3 Interest Options 13
3.4 Selection of Interest Option 13
3.5 Default Rate 14
3.6 Interest Recapture 14
3.7 Interest Calculations 14
3.8 Maximum Rate 14
3.9 Order of Application 15
3.10 Sharing of Payments, Etc. 15
3.11 Booking Borrowings 15
3.12 Basis Unavailable or Inadequate for the Eurodollar Rate 15
3.13 Additional Costs 16
3.14 Change in Governmental Requirement 16
3.15 Funding Loss 17
3.16 Foreign Lenders 17
3.17 Fees. 17
3.18 Extension of Maturity Date 17
SECTION 4 SECURITY 18
4.1 Guaranty 18
4.2 Liens on Pool Properties 18
4.3 Collateral Documents 18
4.4 Leases 18
SECTION 5 CONDITIONS PRECEDENT 18
SECTION 6 REPRESENTATIONS AND WARRANTIES 19
6.1 Purpose of Credit Facility 19
6.2 Existence, Good Standing, Authority and Compliance 20
6.3 Authorization and Contravention 20
6.4 Binding Effect 20
6.5 Financial Statements; Fiscal Year 20
6.6 Litigation 20
6.7 Taxes 20
6.8 Environmental Matters 21
6.9 Employee Plans 21
6.10 Properties; Liens 21
6.11 Locations 21
6.12 Government Regulations 22
<PAGE>
6.13 Transactions with Affiliates 22
6.14 Insurance 22
6.15 Labor Matters 22
6.16 Solvency 22
6.17 Full Disclosure 22
6.18 Exemption from ERISA; Plan Assets 22
SECTION 7 AFFIRMATIVE COVENANTS 22
7.1 Items to be Furnished 22
7.2 Use of Proceeds 24
7.3 Books and Records 24
7.4 Inspections 24
7.5 Taxes 24
7.6 Payment of Obligations 24
7.7 Expenses 24
7.8 Maintenance of Existence, Assets, and Business 24
7.9 Insurance 24
7.10 Preservation and Protection of Rights 25
7.11 Environmental Laws 25
7.12 Indemnification 25
7.13 REIT Status 26
7.14 ERISA Exemptions 26
7.15 Listed Company. 26
SECTION 8 NEGATIVE COVENANTS 26
8.1 Payment of Obligations 26
8.2 Employee Plans 26
8.3 Liens 26
8.4 Transactions with Affiliates 27
8.5 Compliance with Governmental Requirements and Documents 27
8.6 Loans, Advances and Investments 28
8.7 Dividends and Distributions 28
8.8 Sale of Assets 28
8.9 Mergers and Dissolutions 28
8.10 Assignment 28
8.11 Fiscal Year and Accounting Methods 28
8.12 New Businesses 28
8.13 Government Regulations 28
8.14 Pledgors 29
8.15 Amendment of Constituent Documents 29
SECTION 9 FINANCIAL COVENANTS 29
SECTION 10 DEFAULT 29
10.1 Payment of Obligation 29
10.2 Covenants 29
10.3 Debtor Relief 29
10.4 Judgments and Attachments 29
10.5 Government Action 30
10.6 Misrepresentation 30
10.7 Default Under Other Agreements 30
10.8 Validity and Enforceability of Loan Documents 30
<PAGE>
10.9 Management Changes 30
10.10 Change in Control 30
10.11 Plan Assets 31
SECTION 11 RIGHTS AND REMEDIES 31
11.1 Remedies Upon Default 31
11.2 Waivers. 31
11.3 Performance by Administrative Agent 31
11.4 Not in Control 31
11.5 Course of Dealing 31
11.6 Cumulative Rights 31
11.7 Application of Proceeds 32
11.8 Certain Proceedings 32
SECTION 12 AGENTS AND THE LENDERS 32
12.1 Agents 32
12.2 Expenses 34
12.3 Proportionate Absorption of Losses 34
12.4 Delegation of Duties; Reliance 34
12.5 Limitation of Agents' Liability 34
12.6 Default 35
12.7 Collateral Matters 35
12.8 Limitation of Liability 37
12.9 Relationship of Lenders 37
12.10 Benefits of Agreement 37
12.11 Approval of Lenders 37
SECTION 13 MISCELLANEOUS. 38
13.1 Headings 38
13.2 Nonbusiness Days; Time 38
13.3 Communications 38
13.4 Form and Number of Documents 38
13.5 Survival 38
13.6 Governing Law 38
13.7 Invalid Provisions 38
13.8 Venue; Service of Process; Jury Trial 38
13.9 Amendments, Consents, Conflicts and Waivers 39
13.10 Multiple Counterparts 40
13.11 Successors and Assigns; Participations 40
13.12 Discharge Only Upon Payment in Full;
Reinstatement in Certain Circumstances 42
13.13 Entirety 42
13.14 Effectiveness 42
<PAGE>
SCHEDULES AND EXHIBITS
Schedule 1 Parties, Addresses, Term Loans, and Wiring Information
Schedule 2-A Initial Pool Properties
Schedule 2-B Initial Terramics Pool Properties
Schedule 2-C Secondary Terramics Pool Properties
Schedule 5 Conditions Precedent
Schedule 6.2 Jurisdictions of Incorporation, Business, and Jurisdictions
Schedule 6.6 Litigation
Schedule 6.8 Environmental Matters
Schedule 6.11 Chief Executive Office
Schedule 6.13 Affiliates Transactions
Exhibit A Compliance Certificate
Exhibit B Conversion Request
Exhibit C Form of Guaranty
Exhibit D Form of Note
Exhibit E Form of Assignment and Acceptance
<PAGE>
CREDIT AGREEMENT
----------------
THIS CREDIT AGREEMENT is dated as of October 6, 1997, among PRENTISS
PROPERTIES ACQUISITION PARTNERS, L.P., a Delaware limited partnership
("BORROWER"), each of the lenders that are a signatory hereto or that becomes a
signatory hereto as provided in SECTION 13.11(c) (individually, together with
its successors and assigns, a "LENDER" and collectively, the "LENDERS"),
NATIONSBANK OF TEXAS, N.A., as Administrative Agent for the Lenders (in such
capacity, together with its successors and assigns, the "ADMINISTRATIVE AGENT"),
and BANK ONE, TEXAS, N.A., for itself and as Documentation Agent for the Lenders
(in such capacity, together with its successors and assigns, the "DOCUMENTATION
AGENT").
R E C I T A L S:
- - - - - - - -
1. Borrower has requested that the Lenders extend to Borrower, in one or
more advances as described herein, a term loan not to exceed the principal
amount of $133,000,000.00.
2. The Lenders are willing to extend the requested credit on the terms and
subject to the conditions of this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
I. SECTION DEFINITIONS AND TERMS.
A. DEFINITIONS. Unless otherwise indicated, as used in the Loan Documents:
"ACCUMULATED DEPRECIATION" means, for any Person as of any date, the amount
of accumulated depreciation deducted from the amount of assets of such Person,
as reflected in the relevant financial statements of such Person and determined
in accordance with GAAP.
"ADJUSTED NET OPERATING INCOME" means, for the Pool Properties as of any
determination date, (a) any cash rentals, proceeds, expense reimbursements, or
income to be received from the Pool Properties (but excluding security or other
deposits, late fees, early lease termination (to the extent that such
termination payments exceed the rentals otherwise payable during the applicable
measurement period for the applicable lease if the applicable lease had not been
terminated) or other penalties, and other charges of a non-recurring nature)
during the twelve (12) month period following the date of determination, based
upon leases existing and rents in effect on the date of determination where
tenants are paying rent in accordance with the terms of such leases, and which
are not in material default, less (b) all cash costs and expenses that the
Companies incurred as a result of, or in connection with, the development,
operation, or leasing of the Pool Properties (but excluding tenant improvement
costs, commission expenses, and principal and interest payments during such
period) during the twelve (12) month period ending on the date of determination,
less (c) to the extent exceeding the amounts for the applicable cash costs and
expenses incurred by the Companies pursuant to (b) above, appropriate accruals
for items such as taxes, insurance, or other expenses reasonably determined by
Administrative Agent, a management fee at the greater of actual fees paid or two
percent (2%) of rents and a capital improvement reserve of $1.00 per square
foot, all as determined in accordance with accounting principles reasonably
acceptable to Administrative Agent, consistently applied.
"ADMINISTRATIVE AGENT" is defined in the preamble.
<PAGE>
"AFFILIATE" of a Person means any other individual or entity who directly
or indirectly controls, or is controlled by, or is under common control with,
that Person. For purposes of this definition "control," "controlled by," and
"under common control with" mean possession, directly or indirectly, of power to
direct (or cause the direction of) management or policies (whether through
ownership of voting securities or other ownership interests, by contract, or
otherwise).
"AGENTS" means Administrative Agent and Documentation Agent and "AGENT"
means any of the Agents.
"AGREEMENT" means this Credit Agreement, as amended, supplemented, or
restated from time to time.
"APPRAISED VALUE" means, with respect to the Pool Properties, as of any
date, the appraised value of the Pool Properties pursuant to an appraisal
commissioned by and addressed to Administrative Agent (acceptable to
Administrative Agent as to form, substance, and appraisal date), prepared by a
professional appraiser acceptable to Administrative Agent and having the minimum
qualifications required under all applicable regulations governing
Administrative Agent and the Lenders.
"APPROVED COSTS" means, for any Pool Property, the sum of the acquisition
costs of such Pool Property (or the stock, partnership interests, or other
ownership interests in the Pledgor of such Pool Property), whether in the form
of cash, property, liabilities assumed, or other consideration.
"ASSUMED DEBT SERVICE" means, as of any date, the greater of (a) the
product of (i) the Fixed Constant, and (ii) the outstanding principal balance of
the Term Loans as of such date, or (b) the product of (i) the Variable Constant,
and (ii) the outstanding principal balance of the Term Loans as of such date.
"BASE RATE" means, for any day, the greater of (a) the sum of the Federal
Funds Rate plus one-half of one percent (0.5%), or (b) the annual interest rate
most recently announced by Administrative Agent as its prime rate (or, if the
Person then acting as Administrative Agent under this Agreement is not a bank
organized under the Governmental Requirements of the United States or any State,
then the rate announced by NationsBank of Texas, N.A., or any successor thereof,
as its prime rate) in effect at its principal office, automatically fluctuating
upward and downward with and as specified in each announcement without special
notice to Borrower or any other Person (which prime rate may not necessarily
represent the lowest or best rate actually charged to a customer).
"BASE RATE BORROWING" means a Borrowing bearing interest at the Base Rate.
"BORROWING" means (without duplication) any amount disbursed by (a) the
Lenders to or on behalf of Borrower under the Loan Documents, or (b) any Lender
in accordance with, and to satisfy the obligations of Borrower under, any Loan
Document.
"BUSINESS DAY" means (a) for all purposes, any day other than Saturday,
Sunday, and any other day that commercial banks are authorized by any
Governmental Requirement to be closed in Texas or New York, and (b) for purposes
of any Eurodollar Borrowing, a day that satisfies the requirements of clause (a)
and is a day when commercial banks are open for domestic or international
business in London.
<PAGE>
"CAPITAL LEASE" of any Person means any capital lease or sublease that has
been (or under GAAP should be) capitalized on a balance sheet of any Person.
"CHANGE IN CONTROL" means, with respect to Borrower, the transfer of
beneficial ownership of the outstanding partnership interests of Borrower such
that PPT owns, directly or indirectly, less than fifty-one percent (51%) of the
outstanding partnership interests of Borrower.
"CIGNA" means Connecticut General Life Insurance Company.
"CIGNA FINANCING" means a Debt Issuance from CIGNA prior to the Third
Advance, secured by the Secondary Terramics Pool Properties, the Net Proceeds of
which do not exceed $60,000,000.00 in the aggregate.
"CLOSING DATE" means the date this Agreement is fully executed and
delivered.
"CODE" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder.
"COLLATERAL" means any property taken by Administrative Agent as Collateral
under the Collateral Documents.
"COLLATERAL DOCUMENTS" means the deeds of trust, mortgages, indemnity deeds
of trust, assignments of rents and leases, security agreements, financing
statements, and other loan and collateral documents creating, evidencing, and
perfecting Liens in the Pool Properties in favor of Administrative Agent, for
the benefit of the Lenders. The Collateral Documents for the Pool Properties
shall be consistent with the forms used in connection with the Revolving Credit
Agreement and include, without limitation, (a) a Deed of Trust, Assignment,
Security Agreement, and Financing Statement, (b) an Assignment of Leases and
Rents, and (c) Uniform Commercial Code Financing Statements.
"COMPANIES" means, without duplication, (a) PPT, (b) Borrower, and (c) each
of their respective Consolidated Affiliates, and "COMPANY" means any one of the
Companies.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the form of
EXHIBIT A and signed by a Responsible Officer of Borrower and PPT.
"CONSOLIDATED AFFILIATE" means, in respect of any Person, any other Person
in whom such Person holds an equity or ownership interest and whose financial
results would be consolidated under GAAP with the financial results of such
Person on the consolidated financial statements of such Person.
"CONSTANT ANNUAL PERCENT" means the percent of a principal amount of a loan
required to be paid each year in order to amortize such loan at maturity as well
as to pay the amount of interest due at each installment, which installments
shall be equal monthly installments of principal and interest.
"CONSTITUENT DOCUMENTS" means, with respect to any Company, its articles or
certificate of incorporation, bylaws, partnership agreements, organizational
documents, limited liability company agreements, trust agreement, or such other
document as may govern such entity's formation or organization.
"CONVERSION REQUEST" means a request substantially in the form of EXHIBIT
B.
<PAGE>
"Current Financials" means, at any time, the consolidated Financial
Statements of the Companies most recently delivered to Administrative Agent
under SECTION 7.1(a) or 7.1(b), as the case may be.
"DEBT ISSUANCE" means the issuance or incurrence by any Company of any
Liabilities other than (a) accounts payable and other short-term liabilities not
in the nature of indebtedness incurred in the ordinary course of such Company's
business, and (b) a loan to a Company in an amount not to exceed $35,000,000.00
and secured by the World Savings Center and Colonnade II properties owned by
such Company.
"DEBTOR RELIEF LAWS" means Title 11 of the United States Code and all other
applicable state or federal liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, receivership, insolvency, reorganization, suspension
of payments, or similar Governmental Requirements affecting creditors' Rights in
effect from time to time.
"DEFAULT" is defined in SECTION 10.
"DEFAULTING LENDER" means, as of any date, any Lender that has defaulted on
any of its obligations under this Agreement, which default has not been cured or
waived as of such date.
"DEFAULT RATE" means an annual rate of interest equal from day-to-day to
the lesser of (a) the then-existing Base Rate plus four (4%), and (b) the
Maximum Rate.
"DISTRIBUTION" means, with respect to any shares of any capital stock,
equity securities, or other ownership interests issued by a Person, (a) the
retirement, redemption, purchase, or other acquisition for value of such
securities or interests by such Person, (b) the declaration or payment of any
dividend on or with respect to such securities or interests by such Person, (c)
any loan or advance by that Person to, or other investment by that Person in,
the holder of any of such securities or interests, and (d) any other payment by
that Person with respect to such securities or interests.
"DOCUMENTATION AGENT" is defined in the preamble..
"ELIGIBLE ASSIGNEE" means any of the following entities: (a) a commercial
bank organized under the laws of the United States, or any state thereof; (b) a
commercial bank organized under the laws of any other country which is a member
of the Organization for Economic Cooperation and Development, or a political
subdivision of any such country, provided that such bank is acting through a
branch or agency located in the United States, in the country in which it is
organized, or in another country which is also a member of the Organization for
Economic Cooperation and Development; (c) the central bank of any country which
is a member of the Organization for Economic Cooperation and Development; and
(d) any other Person approved by Agents and, so long as no Default or Potential
Default exists, Borrower.
"EMPLOYEE PLAN" means an employee pension benefit plan covered by Title IV
of ERISA and established or maintained by Borrower or any of its Consolidated
Affiliates.
"ENDING CALENDAR MONTH" is defined in SECTION 3.4(a).
"ENVIRONMENTAL LAW" means any and all Governmental Requirements pertaining
to health or the environment in effect in any and all jurisdictions in which
Borrower or any of its Consolidated Affiliates is conducting or at any time has
conducted business, or where any property
<PAGE>
of Borrower or any of its Consolidated Affiliates is located, including, without
limitation, the Oil Pollution Act of 1990, as amended, ("OPA"), the Clean Air
Act, as amended, the Comprehensive Environmental, Response, Compensation, and
Liability Act of 1980, as amended, ("CERCLA"), the Federal Water Pollution
Control Act, as amended, the Occupational Safety and Health Act of 1970, as
amended, the Resource Conservation and Recovery Act of 1976, as amended,
("RCRA"), the Safe Drinking Water Act, as amended, the Toxic Substances Control
Act, as amended, the Superfund Amendments and Reauthorization Act of 1986, as
amended, the Hazardous Materials Transportation Act, as amended, and other
environmental conservation or protection Governmental Requirements. The term
"oil" has the meaning specified in OPA, the terms "hazardous substance" and
"release" (or "threatened release") have the meanings specified in CERCLA, and
the terms "solid waste" and "disposal" (or "disposed") have the meanings
specified in RCRA; provided, however, that (i) in the event either OPA, CERCLA
or RCRA is amended so as to broaden the meaning of any term defined thereby,
such broader meaning shall apply subsequent to the effective date of such
amendment, and (ii) to the extent the Governmental Requirements of the state in
which any property of Borrower or its any of its Consolidated Subsidiaries is
located establish a meaning for "oil," "hazardous substance," "release," "solid
waste" or "disposal" which is broader than that specified in either OPA, CERCLA
or RCRA, such broader meaning shall apply.
"EQUITY ISSUANCE" means the issuance or sale by any Company of any capital
stock, partnership, profits, capital, or member interests, or options, warrants,
or other right to subscribe for or otherwise acquire shares of capital stock or
partnership, profits, capital, or member interests, of such Company, other than
the issuance by Borrower of partnership interests in Borrower to sellers of
properties or non-cash assets as a partial payment of the purchase price of such
assets.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"EURODOLLAR RATE" means, for any Eurodollar Borrowing for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) appearing on Dow Jones Markets Page 3750 (or any successor
page) as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two (2) Business Days prior to the first
(1st) day of such Interest Period for a term comparable to such Interest Period.
If for any reason such rate is not available, then the term "Eurodollar Rate"
shall mean, for any Eurodollar Borrowing for any Interest Period therefor, the
rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Reuters Screen LIBO Page as the London interbank offered rate for
deposits in Dollars at approximately 11:00 a.m. (London time) two (2) Business
Days prior to the first (1st) day of such Interest Period for a term comparable
to such Interest Period; provided, however, if more than one rate is specified
on Reuters Screen LIBO Page, then the applicable rate shall be the arithmetic
mean of all such rates (rounded upwards, if necessary, to the nearest 1/100 of
1%).
"EURODOLLAR BORROWING" means a Borrowing bearing interest at the sum of the
Eurodollar Rate plus one and three-quarters of one percent (1.75%).
"EXTENDED MATURITY DATE" means April 6, 1999.
"EXTENSION REQUEST" is defined in SECTION 3.18.
"FEDERAL FUNDS RATE" means, on any day, the annual rate (rounded upwards,
if necessary, to the nearest 0.01%) determined by Administrative Agent (which
determination is conclusive and binding, absent manifest error) to be equal to
the weighted average of the rates on
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overnight federal funds transactions with member banks of the Federal Reserve
System arranged by federal funds brokers as published by the Federal Reserve
Bank of New York on the next successive Business Day; provided, however, that
(a) if such determination date is not a Business Day, then the Federal Funds
Rate for such day shall be the rate for such transactions on the next preceding
Business Day as published on the next successive Business Day, or (b) if those
rates are not published for any Business Day, then the Federal Funds Rate shall
be the average of the quotations at approximately 10:00 a.m. on such Business
Day received by Administrative Agent from three (3) federal funds brokers of
recognized standing selected by Administrative Agent in its sole discretion.
"FINANCIAL STATEMENTS" of a Person means balance sheets, and statements of
earnings, shareholders' equity and cash flow prepared (a) according to GAAP, (b)
except as stated in SECTION 1.4, in comparative form to prior year-end figures
or corresponding periods of the preceding fiscal year, as applicable, and (c) on
a consolidated basis if that Person had any Consolidated Affiliates during the
applicable period.
"FIXED CONSTANT" means 10.07%.
"FUNDING LOSS" means, without duplication, any loss, expense, or costs
incurred by any Lender (including any loss, expense, or cost incurred by reason
of the liquidation or reemployment of deposits or other funds acquired by such
Lender to make or maintain any portion of any Borrowing as a Eurodollar
Borrowing) when (a) Borrower fails or refuses (for any reason other than any
Lender's failure to comply with this Agreement) to take any Borrowing that it
has requested under this Agreement, or (b) Borrower prepays or pays any
Borrowing or converts any Borrowing to a Borrowing of another Type, in each
case, before the last day of the applicable Interest Period.
"FUNDS FROM OPERATIONS" means, for any Person for any period, Net Income
before such Person's Share of the Net Income or loss of any Unconsolidated
Affiliate, plus any and all cash distributions received by such Person
representing such Person's Share of the Net Income of any Unconsolidated
Affiliate, plus depreciation and amortization (exclusive of amortization of
financing costs), all as determined in accordance with GAAP; provided that there
shall not be included in such calculation (a) any proceeds of any insurance
policy other than rental or business interruption insurance received by such
Person, (b) any gain or loss which is classified as "extraordinary" in
accordance with GAAP, or (c) any capital gains and taxes on capital gains.
"GAAP" means generally accepted accounting principles of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
the Financial Accounting Standards Board that are applicable on the date of this
Agreement, subject to changes permitted by SECTION 1.4.
"GOVERNMENTAL AUTHORITY" means any (a) local, state, or federal judicial,
executive, or legislative instrumentality, (b) private arbitration board or
panel acting through binding arbitration or mediation, or (c) central bank.
"GOVERNMENTAL REQUIREMENT" means all applicable statutes, laws, treaties,
ordinances, rules, regulations, orders, writs, injunctions, decrees, judgments,
opinions, and interpretations of any Governmental Authority.
"GUARANTORS" means PPT and Pledgors, and "GUARANTOR" means any one of the
Guarantors.
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"GUARANTY" means an Unconditional Guaranty of Payment dated of even date
herewith, executed by each Guarantor in favor of Agents and the Lenders, and
substantially in the form of EXHIBIT C.
"HAZARDOUS SUBSTANCE" means any substance (a) the presence of which
requires removal, remediation, or investigation under any Environmental Law, or
(b) that is defined or classified as a hazardous waste, hazardous material,
pollutant, contaminant, or toxic or hazardous substance under any Environmental
Law.
"INITIAL ADVANCE" has the meaning set forth in SECTION 2.
"INITIAL POOL PROPERTIES" means the Pool Properties described in SCHEDULE
2-A.
"INITIAL TERRAMICS POOL PROPERTIES" means the Pool Properties listed in
SCHEDULE 2-B.
"INTEREST PERIOD" has the meaning set forth in SECTION 3.4(a).
"LENDERS" is defined in the preamble.
"LIABILITIES" means (without duplication), for any Person, (a) any
indebtedness, liabilities, or obligations required by GAAP to be classified upon
such Person's balance sheet as liabilities, (b) any liabilities secured (or for
which the holder of the Liability has an existing Right, contingent or
otherwise, to be so secured) by any Lien existing on property owned or acquired
by that Person, (c) any obligations that have been (or under GAAP should be)
capitalized for financial reporting purposes, including all Capital Leases, (d)
any guaranties, endorsements and other contingent obligations with respect to
Liabilities or obligations of others, (e) all indebtedness, obligations, or
other liabilities in respect of interest rate contracts and foreign currency
exchange agreements on a mark-to-market basis, (f) such Person's Share of any
Liabilities of Unconsolidated Affiliates (other than of Broadmoor Austin
Associates), and (g) any minority interests in Consolidated Affiliates (other
than minority interests reflected in the Financial Statements of PPT relating to
units of partnership interests in Borrower), and "LIABILITY" means any of the
Liabilities.
"LIEN" means any lien, mortgage, security interest, pledge, assignment,
charge, title retention agreement, or encumbrance of any kind and any other
substantially similar arrangement for a creditor's claim to be satisfied from
assets or proceeds prior to the claims of other creditors or the owners.
"LITIGATION" means any action by or before any Governmental Authority.
"LOAN DOCUMENTS" means (a) this Agreement, certificates, and reports
delivered under this Agreement, and exhibits and schedules to this Agreement,
(b) the Notes, (c) the Guaranties, (d) the Collateral Documents, if executed,
and (e) all other agreements, documents, and instruments executed by any Obligor
in favor of Administrative Agent, Documentation Agent, or the Lenders (or any
Agent on behalf of the Lenders) ever delivered in connection with or under this
Agreement or otherwise delivered in connection with all or any part of the
Obligation, and (e) all renewals, extensions and restatements of, and amendments
and supplements to, any of the foregoing.
"MATERIAL ADVERSE EVENT" means any circumstance or event that, individually
or collectively with other circumstances or events, reasonably is expected to
result in any (a) material impairment of the ability of any Obligor to perform
any of its payment or other obligations under any Loan Document, (b) material
impairment of the ability of any Agent or any Lender to enforce (i) any of the
obligations of any Obligor under this Agreement or the other Loan Documents, or
(ii)
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any of their respective Rights under the Loan Documents, or (c) material and
adverse effect on the financial condition of Borrower, PPT, or the Companies,
taken as a whole.
"MAXIMUM AMOUNT" and "MAXIMUM RATE" respectively mean, for an Agent or a
Lender, the maximum non-usurious amount and the maximum non-usurious rate of
interest that, under applicable Governmental Requirement, such Agent or Lender
is permitted to contract for, charge, take, reserve, or receive on the
Obligation.
"MOODY'S" means Moody's Investors Service, Inc. or, if Moody's no longer
publishes ratings, another ratings agency acceptable to Administrative Agent.
"MULTIEMPLOYER PLAN" means a multiemployer plan as defined in Sections
3(37) or 4001(a)(3) of ERISA or Section 414(f) of the Code to which Borrower or
any of its Consolidated Affiliates (or any Person that, for purposes of Title IV
of ERISA, is a member of Borrower's controlled group or is under common control
with Borrower within the meaning of Section 414 of the Code) is making, or has
made, or is accruing, or has accrued, an obligation to make contributions.
"NET INCOME" means, for any Person for any period, the net earnings (or
loss) after taxes of such Person, determined in accordance with GAAP.
"NET PROCEEDS" means, with respect to any Equity Issuance or Debt Issuance
by any Company, the amount of cash received by such Company in connection with
such transaction after deducting therefrom the aggregate, without duplication,
of the following amounts to the extent properly attributable to such
transaction: (a) brokerage commissions, attorneys' fees, finder's fees,
financial advisory fees, accounting fees, underwriting fees, investment banking
fees, and other similar commissions and fees (and expenses and disbursements of
any of the foregoing), in each case, to the extent paid or payable by such
Company; (b) printing and related expenses and filing, recording, or
registration fees or charges or similar fees or charges paid by such Company;
and (c) taxes paid or payable by such Company to any Governmental Authority as a
result of such transaction; provided that with respect to any Debt Issuance that
refinances existing Liabilities, "NET PROCEEDS" shall be limited to the excess
of the Net Proceeds of such Debt Issuance over such existing Liabilities;
provided further that, with respect to any Equity Issuance to a Person advised
by Heitman Management Corporation in connection with Borrower's ownership of
Cumberland Office Park in Atlanta, Georgia, "NET PROCEEDS" shall be limited to
the excess of the Net Proceeds of such Equity Issuance over the amount required
to be paid under the Revolving Credit Agreement in order to release such
property from the Borrowing Base defined in the Revolving Credit Agreement.
"NOTES" means one of the promissory notes substantially in the form of the
attached EXHIBIT D, and "NOTE" means any one of the Notes.
"OBLIGATION" means all present and future indebtedness and obligations, and
all renewals, increases, and extensions thereof, or any part thereof, now or
hereafter owed to any Agent or any Lender by Borrower under any Loan Document,
together with all interest accruing thereon, fees, costs, and expenses
(including all reasonable attorneys' fees and expenses incurred in the
enforcement or collection thereof) payable under the Loan Documents or in
connection with the protection of Rights under the Loan Documents.
"OBLIGORS" means Borrower and Guarantors, and "OBLIGOR" means any one of
the Obligors.
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"PARTICIPANT" is defined in SECTION 13.11(b).
"PBGC" means the Pension Benefit Guaranty Corporation, or any successor
thereof, established under ERISA.
"PERMITTED DISTRIBUTIONS" means, for (a) Borrower for any fiscal year of
Borrower, an amount not to exceed ninety-five percent (95%) of Borrower's Funds
from Operations for such fiscal year, and (b) PPT for any fiscal year of PPT, an
amount not to exceed ninety-five percent (95%) of PPT's Funds from Operations
for such fiscal year.
"PERMITTED LIENS" is defined in SECTION 8.3.
"PERSON" means any individual, entity, or Governmental Authority.
"PLEDGORS" means each Company (other than Borrower) that owns one or more
of the Pool Properties, and "PLEDGOR" means any one of the Pledgors.
"POOL PROPERTIES" means (a) prior to the Second Advance, the Initial Pool
Properties, (b) after the Second Advance and before the Third Advance, the
Initial Pool Properties and the Initial Terramics Pool Properties, and (c) after
the Third Advance, the Initial Pool Properties, the Initial Terramics Pool
Properties, and the Secondary Terramics Pool Properties, and "POOL PROPERTY"
means any one of the Pool Properties.
"POST-FORECLOSURE PLAN" is defined in SECTION 12.7 herein.
"POTENTIAL DEFAULT" means the occurrence of any event or the existence of
any circumstance that could, upon notice or lapse of time or both, become a
Default.
"PPT" means Prentiss Properties Trust, a Maryland real estate investment
trust.
"PRO RATA" and "PRO RATA SHARE" means, for any Lender, the percentage
obtained by dividing (a) the aggregate unpaid principal amount of such Lender's
Note by (b) the aggregate unpaid principal amount of all Notes of all Lenders.
"PROTECTIVE ADVANCE" means all sums expensed as reasonably determined by
the Administrative Agent to be necessary: (a) to protect the priority, validity
and enforceability of the Liens in the Collateral and the instruments evidencing
or securing the Collateral and the Obligation; and/or (b) to (i) prevent the
value of the Collateral from being materially diminished (assuming the lack of
such a payment within the necessary time frame could potentially cause the
Collateral to lose value), or (ii) protect the security of any of the Collateral
from being materially impaired, including, without limitation, any amounts
expended in accordance with SECTIONS 12.2 and 12.7 of this Agreement and any
Post-Foreclosure Plan. Administrative Agent agrees to exercise its reasonable
best efforts to notify Borrower at least five (5) days prior to incurring any
such expenditures, except in the case of exigent circumstances.
"PURCHASER" is defined in SECTION 13.11(c).
"REIT" means a "real estate investment trust" for purposes of the Code.
"REPRESENTATIVES" means representatives, officers, directors, employees,
attorneys, and agents.
<PAGE>
"REQUIRED LENDERS" means, as of any date, any combination of Lenders (other
than any Defaulting Lenders) who collectively hold sixty-six and two-thirds
percent (66-2/3%) of the outstanding principal balance of the Term Loans (other
than of any Defaulting Lenders).
"RESERVE REQUIREMENT" means, with respect to any Eurodollar Borrowing for
the relevant Interest Period, the actual aggregate reserve requirements
(including all basic, supplemental, emergency, special, marginal and other
reserves required by applicable Governmental Requirement) applicable to a member
bank of the Federal Reserve System for eurocurrency fundings or liabilities.
"RESPONSIBLE OFFICER" means, for any Person, any chairman, president, chief
executive officer, chief financial officer, controller, secretary, executive
vice president, or senior vice president of such Person.
"REVOLVING CREDIT AGREEMENT" means that certain Credit Agreement dated as
of October 17, 1996 between Borrower, Administrative Agent (as Documentation
Agent), Documentation Agent (as Administrative Agent), and the Lenders named
therein, as modified, amended, renewed, extended, or restated from time to time.
"RIGHTS" means rights, remedies, powers, privileges, and benefits.
"SCHEDULED MATURITY DATE" means April 6, 1998.
"SECOND ADVANCE" has the meaning set forth in SECTION 2.
"SECONDARY TERRAMICS POOL PROPERTIES" means the Pool Properties listed in
SCHEDULE 2-C.
"S & P" means Standard & Poor's Rating Group, a division of McGraw Hill,
Inc., a New York corporation, or, if S & P no longer publishes ratings, then
another ratings agency acceptable to Agent.
"SHARE" means, for any Person, such Person's share of the assets,
liabilities, revenues, income, losses, or expenses of an Unconsolidated
Affiliate based upon such Person's percentage ownership of such Unconsolidated
Affiliate.
"SOLVENT" means, as to a Person, that (a) the aggregate fair market value
of its assets exceeds its Liabilities, (b) it has sufficient cash flow to enable
it to pay its Liabilities as they mature, and (c) it does not have unreasonably
small capital to conduct its businesses.
"TAXES" means, for any Person, taxes, assessments, or other governmental
charges or levies imposed upon it, its income, or any of its properties,
franchises, or assets.
"TERM LOAN" means, for a Lender, the amount (which is subject to reduction
and cancellation as provided in this Agreement) stated beside such Lender's name
on SCHEDULE 1 as most recently amended under this Agreement, as the same may be
increased or decreased from time to time by further assignment pursuant to
SECTION 13.11, and "TERM LOANS" means the Term Loans of all Lenders in the
aggregate maximum amount of $133,000,000.00.
"THIRD ADVANCE" has the meaning set forth in SECTION 2.
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"TOTAL ASSETS" means, for any Person, as of any date, such Person's (a)
consolidated total assets determined in accordance with GAAP, plus (b)
Accumulated Depreciation, minus (c) investments in Unconsolidated Affiliates
(other than of Broadmoor Austin Associates) included in the determination of
Total Assets in (a) above, plus (d) such Person's Share of any total assets
determined in accordance with GAAP of Unconsolidated Affiliates (other than of
Broadmoor Austin Associates).
"TYPE" means any type of Borrowing determined with respect to the
applicable interest option.
"UNCONSOLIDATED AFFILIATE" means any Person in whom Borrower or PPT holds a
voting equity or ownership interest and whose financial results would not be
consolidated under GAAP with the financial results of Borrower or PPT on the
consolidated financial statements of Borrower or PPT.
"VARIABLE CONSTANT" means, as of any date, a variable Constant Annual
Percent utilizing (i) a rate of interest equal to two percent (2%) in excess of
the most recent rate published on such date in the United States Federal Reserve
Statistical Release (H.15) for 10-year Treasury Constant Maturities, and (ii) a
twenty-five (25) year amortization.
A. TIME REFERENCES. Unless otherwise specified in the Loan Documents (a)
time references are to time in Dallas, Texas, and (b) in calculating a period
from one date to another, the word "from" means "from and including" and the
word "to" or "until" means "to but excluding."
A. OTHER REFERENCES. Unless otherwise specified in the Loan Documents
(a) where appropriate, the singular includes the plural and vice versa, and
words of any gender include each other gender, (b) headings and caption
references may not be construed in interpreting provisions, (c) monetary
references are to currency of the United States of America, (d) section,
paragraph, annex, schedule, exhibit, and similar references are to the
particular Loan Document in which they are used, (e) references to "telecopy,"
"facsimile," "fax," or similar terms are to facsimile or telecopy transmissions,
(f) references to "including" mean including without limiting the generality of
any description preceding that word, (g) the rule of construction that
references to general items that follow references to specific items are limited
to the same type or character of those specific items is not applicable in the
Loan Documents, (h) references to any Person include that Person's heirs,
personal representatives, successors, trustees, receivers, and permitted
assigns, (i) references to any Governmental Requirement include every amendment
or supplement to it, rule and regulation adopted under it, and successor or
replacement for it, and (j) references to any Loan Document or other document
include every renewal and extension of it, amendment and supplement to it, and
replacement or substitution for it.
A. ACCOUNTING PRINCIPLES. Under the Loan Documents, unless otherwise
stated, (a) GAAP determines all accounting and financial terms and compliance
with financial covenants, (b) GAAP in effect on the date of this Agreement
determines compliance with financial covenants, (c) otherwise, all accounting
principles applied in a current period must be comparable in all material
respects to those applied during the preceding comparable period, and (d) all
accounting and financial terms and compliance with financial covenants must be
for the Companies, on a consolidated basis, as applicable. If there is a change
in GAAP after the date hereof, the Compliance Certificate shall include
calculations setting forth the adjustments from the relevant financial items as
shown in the Current Financials, based on the then-current GAAP, to the
corresponding financial items based on GAAP as used in the Current Financials
delivered to
<PAGE>
Administrative Agent and the Lenders on or prior to the date hereof, so as to
demonstrate how such financial covenant compliance was derived from the Current
Financials.
I. SECTION TERM LOANS. Subject to the terms and conditions set forth in
this Agreement, the Term Loans shall be funded in (a) one (1) advance, on or
about the date hereof, in an aggregate amount not to exceed $66,305,000.00 (the
"INITIAL ADVANCE"), (b) in one (1) advance, on or before the Scheduled Maturity
Date, in an aggregate amount not to exceed $9,185,000.00 (the "SECOND ADVANCE"),
and (c) in one (1) advance, on or before the Scheduled Maturity Date, in an
aggregate amount not to exceed $57,510,000.00 (the "THIRD ADVANCE").
Notwithstanding the foregoing, (i) the Second Advance shall be reduced by an
amount equal to the excess, if any, of any Net Proceeds of any Debt Issuance
(other than the CIGNA Financing) or Equity Issuance on or after the Closing Date
over the outstanding principal balance of the Notes as of the date of such Debt
Issuance or Equity Issuance, and (ii) the Third Advance shall be reduced by an
amount equal to (A) the excess, if any, of any Net Proceeds of any Debt Issuance
or Equity Issuance on or after the Closing Date over the outstanding principal
balance of the Notes as of the date of such Debt Issuance or Equity Issuance,
less (B) the amount of any reduction in the Second Advance, if any, pursuant to
SUBSECTION (i) above. The Term Loans shall bear interest from time to time in
accordance with selections made by Borrower from time to time pursuant to
SECTION 3.4. Borrower may not reborrow any portion of the Term Loans.
I. SECTION TERMS OF PAYMENT.
A. NOTES AND PAYMENTS.
1. The Term Loans shall be evidenced by the Notes, one payable to each
Lender in the stated principal amount of its Term Loan.
1. Borrower must make each payment and prepayment on the Obligation,
without offset, counterclaim, or deduction, to Administrative Agent's principal
office in Dallas, Texas, in funds that will be available for immediate use by
Administrative Agent by 12:00 noon on the day due. Payments received after such
time shall be deemed received on the next Business Day. Administrative Agent
shall pay to each Lender any payment to which such Lender is entitled on the
same day Administrative Agent receives the funds from Borrower if Administrative
Agent receives the payment or prepayment before 12:00 noon, and otherwise before
12:00 noon on the following Business Day. If and to the extent that
Administrative Agent does not make payments to the Lenders when due, then
Administrative Agent shall be obligated to pay to the Lenders such unpaid
amounts together with interest at the Federal Funds Rate from the due date until
(but not including) the payment date.
A. INTEREST AND PRINCIPAL PAYMENTS.
1. INTEREST PAYMENTS. Accrued interest on the unpaid principal balance of
the Notes is due and payable on the first (1st) day of each calendar month
during the term of this Agreement, commencing on November 1, 1997, and on the
Scheduled Maturity Date or the Extended Maturity Date (if the Scheduled Maturity
Date is extended as provided in SECTION 3.18).
1. PRINCIPAL PAYMENTS.
(i) If the Scheduled Maturity Date is not extended to the Extended Maturity
Date, as provided in SECTION 3.18, then the unpaid principal balance of the
Notes is due and payable on the Scheduled Maturity Date.
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(ii) If the Scheduled Maturity Date is extended to the Extended Maturity
Date, as provided in SECTION 3.18, then Borrower shall repay the unpaid
principal balance of the Notes (A) in three (3) quarterly instalments, on July
1, 1998, October 1, 1998, and January 1, 1999, each in the amount of
$375,000.00, and (ii) in one (1) final installment, on the Extended
Termination Date, in the amount of the unpaid principal balance of the Notes
as of such date.
1. VOLUNTARY PREPAYMENT. Borrower may voluntarily repay or prepay all or
any part of the unpaid principal balance of the Notes at any time without
premium or penalty, subject to the following conditions:
a) Administrative Agent must receive Borrower's written payment notice by
11:00 a.m. on (A) the Business Day preceding the date of payment of a
Eurodollar Borrowing, and (B) the Business Day preceding the date of payment
of a Base Rate Borrowing, which shall specify the payment date and the Type
and amount of the Borrowing(s) to be paid, and which shall constitute an
irrevocable and binding obligation of Borrower to make a repayment or
prepayment on the designated date;
a) each partial repayment or prepayment must be in a minimum amount of at
least $1,000,000.00 or a greater integral multiple of $100,000.00, or, if
less, the unpaid principal balance of the Notes; and
b) Borrower shall pay any related Funding Loss upon demand.
1. MANDATORY PREPAYMENT. Notwithstanding anything contained herein or in
the Notes to the contrary, Borrower shall prepay the unpaid principal balance of
the Notes in an amount equal to the Net Proceeds of any Debt Issuance or Equity
Issuance on or after the Closing Date, other than the CIGNA Financing.
A. INTEREST OPTIONS. Except as specifically otherwise provided, each
Borrowing shall bear interest, if applicable, at an annual rate equal to the
lesser of (a) the Base Rate or the Eurodollar Rate plus one and three-quarters
of one percent (1.75%) (in each case as designated or deemed designated by
Borrower and, in the case of Eurodollar Borrowings, for the Interest Period
designated by Borrower), and (b) the Maximum Rate. Each change in the Base Rate
and the Maximum Rate is effective, without notice to Borrower or any other
Person, upon the effective date of change.
A. SELECTION OF INTEREST OPTION.
(a) When Borrower requests any Eurodollar Borrowing, Borrower shall elect
the applicable interest period (each an "INTEREST PERIOD"), which may be, at
Borrower's option, one (1), two (2), or three (3) months during the period of
time from the date hereof to the Scheduled Maturity Date, and one (1), two (2),
three (3), or six (6) months during the period of time from the Scheduled
Maturity Date to the Extended Maturity Date, if applicable, subject to the
following conditions: (i) each Interest Period applicable to any Borrowing
commences on the day on or after the day when the next preceding applicable
Interest Period expires; (ii) if any Interest Period for a Eurodollar Borrowing
begins on a day for which there exists no numerically corresponding Business Day
in the calendar month at the end of the Interest Period ("ENDING CALENDAR
MONTH"), then the Interest Period ends on the next succeeding Business Day of
the Ending Calendar Month, unless there is no succeeding Business Day in the
Ending Calendar Month in which case the Interest Period ends on the next
preceding Business Day of the Ending Calendar Month; and (iii) no Interest
Period for any portion of Term Loans may extend beyond the scheduled repayment
date for that portion of the Term Loans.
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(b) Borrower may (i) on the last day of the applicable Interest Period (or
at any other time, subject to payment of any Funding Loss) convert all or part
of a Eurodollar Borrowing to a Base Rate Borrowing, (ii) at any time convert all
or part of a Base Rate Borrowing to a Eurodollar Borrowing, and (iii) on the
last day of an Interest Period, elect a new Interest Period for a Eurodollar
Borrowing. Any such conversion may be accomplished by delivering a Conversion
Request to Administrative Agent no later than 11:00 a.m. (A) on the third (3rd)
Business Day before (x) the conversion date for conversion to a Eurodollar
Borrowing, and (y) the last day of the Interest Period, for the election of a
new Interest Period, and (B) one (1) Business Day before the last day of the
Interest Period for conversion to a Base Rate Borrowing. Absent Borrower's
notice of conversion or election of a new Interest Period, a Eurodollar
Borrowing shall be converted to a Base Rate Borrowing when the applicable
Interest Period expires.
(c) Notwithstanding anything to the contrary contained in this SECTION 3.4,
(i) each Eurodollar Borrowing with respect to the Term Loans shall be in a
minimum amount of $1,000,000.00 or a greater integral multiple of $100,000.00,
(ii) no more than five (5) Interest Periods shall be in effect at any one time
with respect to Eurodollar Borrowings, and (iii) Borrower may not request a
Eurodollar Borrowing if the interest rate applicable thereto under SECTION 3.3
would exceed the Maximum Rate in effect on the first day of the Interest Period
applicable to such Borrowing, but may give notice of the rate that it would have
selected, which notice shall be controlling for purposes of SECTION 3.7.
A. DEFAULT RATE. If permitted by applicable law, all past-due principal
and interest accruing on any of the foregoing bears interest from the date due
(stated or by acceleration) at the Default Rate until paid, regardless of
whether payment is made before or after entry of a judgment.
A. INTEREST RECAPTURE. If the designated interest rate applicable to any
Borrowing exceeds the Maximum Rate, then the interest rate on that Borrowing is
limited to the Maximum Rate, provided that any subsequent reductions in the
designated rate shall not reduce the interest rate thereon below the Maximum
Rate until the total amount of accrued interest equals the amount of interest
that would have accrued if that designated rate had always been in effect. If
at maturity (stated or by acceleration), or at final payment of the Notes, the
total interest paid or accrued is less than the interest that would have
accrued if the designated rates had always been in effect, then, at that time
and to the extent permitted by applicable law, Borrower shall pay an amount
equal to the difference between (a) the lesser of the amount of interest that
would have accrued if the designated rates had always been in effect and the
amount of interest that would have accrued if the Maximum Rate had always been
in effect, and (b) the amount of interest actually paid or accrued on the Notes.
A. INTEREST CALCULATIONS.
1. Interest shall be calculated on the basis of actual number of days
elapsed (including the first day but excluding the last day) but computed as if
each calendar year consisted of 360 days for all Borrowings (unless the
calculation would result in an interest rate greater than the Maximum Rate, in
which event interest shall be calculated on the basis of a year of 365 or 366
days, as the case may be). All interest rate determinations and calculations by
Administrative Agent are conclusive and binding absent manifest error.
1. The provisions of this Agreement relating to calculation of the Base
Rate and the Eurodollar Rate are included only for the purpose of determining
the rate of interest or
<PAGE>
other amounts to be paid under this Agreement that are based upon those rates.
Each Lender may fund and maintain its funding of all or any part of each
Borrowing as it selects.
A. MAXIMUM RATE. Regardless of any provision contained in any Loan
Document or any document related thereto, it is the intent of the parties to
this Agreement that no Agent nor any Lender contract for, charge, take, reserve,
receive, or apply, as interest on all or any part of the Obligation any amount
in excess of the Maximum Rate or the Maximum Amount or receive any unearned
interest in violation of any applicable law, and, if any Agent or any Lender
ever does so, then any excess shall be treated as a partial repayment or
prepayment of principal and any remaining excess shall be refunded to Borrower.
In determining if the interest paid or payable exceeds the Maximum Rate,
Borrower, Agents and the Lenders shall, to the maximum extent permitted under
applicable law, (a) treat all Borrowings as but a single extension of credit
(and the Lenders and Borrower agree that is the case and that provision in this
Agreement for multiple Borrowings is for convenience only), (b) characterize any
nonprincipal payment as an expense, fee, or premium rather than as interest, (c)
exclude voluntary repayments or prepayments and their effects, and (d) amortize,
prorate, allocate, and spread the total amount of interest throughout the entire
contemplated term of the Obligation. If, however, the Obligation is paid in
full before the end of its full contemplated term, and if the interest received
for its actual period of existence exceeds the Maximum Amount, then the Lenders
shall refund any excess (and the Lenders may not, to the extent permitted by
applicable law, be subject to any penalties provided by any Governmental
Requirements for contracting for, charging, taking, reserving, or receiving
interest in excess of the Maximum Amount). If the Governmental Requirements of
the State of Texas are applicable for purposes of determining the "Maximum Rate"
or the "Maximum Amount," then those terms mean the "weekly rate ceiling" from
time to time in effect under Article 5069-1.D, Title 79, Revised Civil Statutes
of Texas, as amended.
A. ORDER OF APPLICATION. Any payments (including proceeds from the
exercise of any Rights) shall be applied in the following order: (a) to all
fees and expenses for which any Agent or the Lenders have not been paid or
reimbursed in accordance with the Loan Documents (and if such payment is less
than all unpaid or unreimbursed fees and expenses, then the payment shall be
paid against unpaid and unreimbursed fees and expenses in the order of
incurrence or due date); (b) to accrued interest on the Term Loans; and (c) to
the remaining Obligation in the order and manner as the Required Lenders deem
appropriate. Each payment or prepayment shall be distributed to each Lender in
accordance with its Pro Rata Share of such payment or prepayment.
A. SHARING OF PAYMENTS, ETC. If any Lender obtains any amount (whether
voluntary, involuntary, or otherwise) that exceeds the part of that payment that
such Lender is then entitled to receive under the Loan Documents, then such
Lender shall purchase from the other Lenders participations that will cause the
purchasing Lender to share the excess amount ratably with each other Lender. If
all or any portion of any excess amount is subsequently recovered from the
purchasing Lender, then the purchase shall be rescinded and the purchase price
restored to the extent of the recovery. Borrower agrees that any Lender
purchasing a participation from another Lender under this SECTION may, to the
fullest extent permitted by applicable law, exercise all of its Rights of
payment with respect to that participation as fully as if such Lender were the
direct creditor of Borrower in the amount of that participation.
A. BOOKING BORROWINGS. To the extent permitted by applicable law, any
Lender may make, carry, or transfer its Borrowings at, to, or for the account of
any of its branch offices or the office of any of its Affiliates. However, no
Affiliate is entitled to receive any greater payment under SECTION 3.13 than the
transferor Lender would have been entitled to receive with respect to those
Borrowings, and a transfer may not be made if, as a direct result of it, SECTION
<PAGE>
3.13 or 3.14 would apply to any of the Obligation. If any of the conditions of
SECTIONS 3.13 or 3.14 ever apply to a Lender, then such Lender shall, to the
extent possible, carry or transfer its Borrowings at, to, or for the account of
any of its branch offices or the office or branch of any of its Affiliates so
long as the transfer is consistent with the other provisions of this SECTION,
does not create any burden or adverse circumstance for such Lender that would
not otherwise exist, and eliminates or ameliorates the conditions of SECTIONS
3.13 or 3.14 as applicable.
A. BASIS UNAVAILABLE OR INADEQUATE FOR THE EURODOLLAR RATE.
1. DETERMINATION BY ADMINISTRATIVE AGENT. If Administrative Agent
determines that the basis for determining the applicable rate is not available,
Administrative Agent shall promptly notify Borrower and the Lenders of that
determination (which is conclusive and binding on Borrower absent manifest
error), and all Borrowings shall bear interest at the Base Rate. Until
Administrative Agent notifies Borrower that such circumstances no longer exist,
the Lenders' commitments under this Agreement to make, or to convert to,
Eurodollar Borrowings shall be suspended.
1. DETERMINATION BY LENDER. If any Lender determines that for the Term
Loans made to Borrower hereunder and for other similar loans made by such Lender
to similar borrowers the resulting rate does not accurately reflect the cost to
such Lender of making or converting Borrowings at that rate for the applicable
Interest Period, then such Lender shall promptly notify Administrative Agent and
Borrower, and all Borrowings of such Lender shall bear interest at the Base
Rate. Until Administrative Agent notifies Borrower that such circumstances no
longer exist, such Lender's commitment under this Agreement to make, or to
convert to, Eurodollar Borrowings shall be suspended.
A. ADDITIONAL COSTS.
1. RESERVES. With respect to any Eurodollar Borrowing, if (i) any change
in present Governmental Requirement, any change in the interpretation or
application of any present Governmental Requirement, or any future Governmental
Requirement imposes, modifies, or deems applicable (or if compliance by any
Lender with any such requirement of any Governmental Authority results in) any
such requirement that any reserves (including any marginal, emergency,
supplemental or special reserves) be maintained, and (ii) those reserves reduce
any sums receivable by such Lender under this Agreement or increase the costs
incurred by such Lender in advancing or maintaining any portion of any
Eurodollar Borrowing, then (unless the effect is already reflected in the rate
of interest then applicable under this Agreement) such Lender (through
Administrative Agent) shall deliver to Borrower a certificate setting forth in
reasonable detail the calculation of the amount necessary to compensate it for
its reduction or increase (which certificate is conclusive and binding absent
manifest error), and Borrower shall promptly pay that amount to such Lender upon
demand.
1. CAPITAL ADEQUACY. With respect to any Borrowing, if any change in
present Governmental Requirement or any future Governmental Requirement
regarding capital adequacy or compliance by Administrative Agent or any Lender
with any request, directive or requirement now existing or hereafter imposed by
any Governmental Authority regarding capital adequacy, or any change in its
written policies or in the risk category of this transaction, reduces the rate
of return on its capital as a consequence of its obligations under this
Agreement to a level below that which it otherwise could have achieved (taking
into consideration its policies with respect to capital adequacy) by an amount
deemed by it to be material (and it may, in determining the amount, use
reasonable assumptions and allocations of costs and expenses and use any
reasonable averaging or attribution method), then (unless the effect is already
reflected in the rate
<PAGE>
of interest then applicable under this Agreement) Administrative Agent or such
Lender (through Administrative Agent) shall notify Borrower and deliver to
Borrower a certificate setting forth in reasonable detail the calculation of the
amount necessary to compensate it (which certificate is conclusive and binding
absent manifest error), and Borrower shall promptly pay that amount to
Administrative Agent or such Lender upon demand.
1. TAXES. Any Taxes payable by Administrative Agent or any Lender or ruled
(by a Governmental Authority) payable by Administrative Agent or any Lender in
respect of this Agreement or any other Loan Document shall, if permitted by
Governmental Requirement, be paid by Borrower, together with interest and
penalties, if any (except for Taxes imposed on or measured by the overall net
income of Administrative Agent or such Lender). Administrative Agent or such
Lender (through Administrative Agent) shall notify Borrower and deliver to
Borrower a certificate setting forth in reasonable detail the calculation of the
amount of payable Taxes, which certificate is conclusive and binding (absent
manifest error), and Borrower shall promptly pay that amount to Administrative
Agent for its account or the account of such Lender, as the case may be. If
Administrative Agent or such Lender subsequently receives a refund of the Taxes
paid to it by Borrower, then the recipient shall promptly pay the refund to
Borrower.
1. SURVIVAL. The provisions of this SECTION 3.13 shall survive the
satisfaction and payment of the Obligation and termination of this Agreement.
A. CHANGE IN GOVERNMENTAL REQUIREMENT. If any Governmental Requirement
makes it unlawful for any Lender to make or maintain Eurodollar Borrowings, then
such Lender shall promptly notify Borrower and Administrative Agent, and (a) as
to undisbursed funds, that requested Borrowing shall be made as a Base Rate
Borrowing, and (b), as to any outstanding Borrowing, (i) if maintaining the
Borrowing until the last day of the applicable Interest Period is unlawful, the
Borrowing shall be converted to a Base Rate Borrowing as of the date of notice,
and Borrower shall pay any related Funding Loss, or (ii) if not prohibited by
all Governmental Requirements, the Borrowing shall be converted to a Base Rate
Borrowing as of the last day of the applicable Interest Period, or (iii) if any
conversion will not resolve the unlawfulness, Borrower shall promptly prepay the
Borrowing, without penalty, together with any related Funding Loss.
A. FUNDING LOSS. BORROWER AGREES TO INDEMNIFY EACH LENDER AGAINST, AND
PAY TO IT UPON DEMAND, ANY FUNDING LOSS OF SUCH LENDER. When any Lender demands
that Borrower pay any Funding Loss, such Lender shall deliver to Borrower and
Administrative Agent a certificate setting forth in reasonable detail the basis
for imposing Funding Loss and the calculation of the amount, which calculation
is conclusive and binding absent manifest error. The provisions of this SECTION
3.15 shall survive the satisfaction and payment of the Obligation and
termination of this Agreement.
A. FOREIGN LENDERS. Each Lender that is organized under the Governmental
Requirements of any jurisdiction other than the United States of America or any
State thereof (a) represents to Administrative Agent and Borrower that (i) no
Taxes are required to be withheld by Administrative Agent or Borrower with
respect to any payments to be made to it in respect of the Obligation, and (ii)
it has furnished to Administrative Agent and Borrower two (2) duly completed
copies of U.S. Internal Revenue Service Form 4224, Form 1001, Form W-8, or any
other tax form acceptable to Administrative Agent (wherein it claims entitlement
to complete exemption from U.S. federal withholding tax on all interest payments
under the Loan Documents), and (b) covenants to (i) provide Administrative Agent
and Borrower a new tax form upon the expiration or obsolescence of any
previously delivered form according to Governmental Requirement, duly executed
and completed by it, and (ii) comply from time to time with all Governmental
Requirements with regard
<PAGE>
to the withholding tax exemption. If any of the foregoing is not true or the
applicable forms are not provided, then Borrower or Administrative Agent
(without duplication) may deduct and withhold from interest payments under the
Loan Documents United States federal income tax at the full rate applicable
under the Code.
A. FEES.
1. TREATMENT OF FEES. The fees described in this SECTION 3.17 (i) are not
compensation for the use, detention, or forbearance of money, (ii) are in
addition to, and not in lieu of, interest and expenses otherwise described in
this Agreement, (iii) are payable in accordance with SECTION 3.1(b), (iv) are
non-refundable, (v) to the fullest extent permitted by applicable law, bear
interest, if not paid when due, at the Default Rate, and (vi) are calculated on
the basis of actual number of days (including the first day but excluding the
last day) elapsed, but computed as if each calendar year consisted of 360 days,
unless computation would result in an interest rate in excess of the Maximum
Rate in which event the computation is made on the basis of a year of 365 or 366
days, as the case may be. The fees described in this SECTION 3.17 are in all
events subject to the provisions of SECTION 3.8.
1. AGENT FEES. Borrower shall pay to each Agent, solely for their own
accounts, the fees described in the letter agreement between Borrower and Agents
dated the same date as this Agreement, as such letter agreement may be modified
or amended from time to time.
1. EXTENSION FEE. Upon extension of the Scheduled Maturity Date to the
Extended Maturity Date, as provided in SECTION 3.18, Borrower agrees to pay
Administrative Agent, on or before the Scheduled Maturity Date, for the ratable
account of Lenders, an extension fee equal to one-fourth of one percent (.25%)
of the outstanding principal balance of the Notes as of the Scheduled Maturity
Date.
A. EXTENSION OF MATURITY DATE. If no Default or Potential Default exists,
Borrower may request the extension of the Scheduled Maturity Date to the
Extended Maturity Date by making such request in writing (an "EXTENSION
REQUEST") to Administrative Agent at least forty-five (45) days prior to the
Scheduled Maturity Date. The Scheduled Maturity Date shall be extended to the
Extended Maturity Date only if: (a) all of the conditions precedent set forth in
SECTION 5 have been satisfied as of the Scheduled Maturity Date; (b) Borrower
pays to Administrative Agent the extension fee set forth in SECTION 3.17(c); (c)
Borrower grants to Administrative Agent first priority Liens in the Pool
Properties and provides Administrative Agent with Collateral Documents and such
documentation as Administrative Agent reasonably requests to show that Borrower
has good and marketable title to the Pool Properties; (d) the outstanding
principal balance of the Notes as of the Scheduled Maturity Date do not exceed
sixty-five percent (65%) of either (i) the Appraised Value of the Pool
Properties, or (ii) the Approved Cost of the Pool Properties; (e) as of the
Scheduled Maturity Date, the ratio of (i) Adjusted Net Operating Income, to (ii)
Assumed Debt Service, is not less than 1.25 to 1.0; and (f) as of the Scheduled
Maturity Date, no Material Adverse Event has occurred.
I. SECTION SECURITY.
A. GUARANTY. Each Guarantor shall, pursuant to a Guaranty, unconditionally
guarantee in favor of Agents and the Lenders the full payment and performance of
the Obligation.
A. LIENS ON POOL PROPERTIES. If, on the Scheduled Maturity Date, Borrower
has not repaid the unpaid principal of and interest on the Term Loans, then
Borrower and Pledgors
<PAGE>
shall grant to Administrative Agent, for the benefit of the Lenders, as security
for the payment and performance of the Obligation, a valid, enforceable,
perfected, first priority, and (except for Permitted Liens) only Lien in and to
the Pool Properties.
A. COLLATERAL DOCUMENTS. The Liens described in SECTION 4.2 shall be
granted pursuant to, and more fully described in, the Collateral Documents,
which Administrative Agent can require Borrower to execute pursuant to SECTION
4.2. Borrower shall be liable for, and shall reimburse Administrative Agent
for, all "due diligence" expenses related to the execution of such Collateral
Documents, including, but not limited to, attorneys' fees and recording
expenses. Without limiting the foregoing, Borrower shall provide to
Administrative Agent, at Borrower's expense, a mortgagee policy of title
insurance for the Pool Properties and an appraisal of each Pool Property,
prepared in accordance with written instructions from Administrative Agent by a
third-party appraiser engaged directly by Administrative Agent. If the unpaid
principal balance of the Term Loans has not been paid in full on or before
January __, 1998, then Borrower agrees that Agents may, at Borrower's expense,
commence due diligence with respect to the Pool Properties and preparation of
Collateral Documents.
A. LEASES. If the Liens described in SECTION 4.2 shall be granted
pursuant to, and more fully described in, the Collateral Documents, then all
leases with respect to the Pool Properties shall be subject to the provisions of
SECTION 4.3 of the Revolving Credit Agreement.
I. SECTION CONDITIONS PRECEDENT.
(a) INITIAL ADVANCE. Lenders will not be obligated to fund the Initial
Advance unless: (i) Administrative Agent has timely received all of the items
described on SCHEDULE 5 with respect to Borrower, PPT, and each Pledgor owning
the Initial Pool Properties; (ii) Agents shall have received all applicable
fees; and (iii) Borrower shall have acquired good and indefeasible title to the
Initial Pool Properties, which Initial Pool Properties shall be subject to, and
comply with, the requirements of SECTION 8.3.
(b) SECOND ADVANCE. Lenders shall not be obligated to fund the Second
Advance unless: (i) all of the conditions precedent to the Initial Advance have
been satisfied; (ii) Borrower shall have acquired good and indefeasible title to
the Initial Terramics Pool Properties, which Initial Terramics Pool Properties
shall be subject to, and comply with, the requirements of SECTION 8.3; (iii)
Agents have received property condition reports and environmental assessments
with respect to the Initial Terramics Pool Properties acceptable to, and
approved by, Agents; (iv) Agents have received copies of the acquisition
documents with respect to the Initial Terramics Pool Properties acceptable to
Agents; and (v) Administrative Agent has timely received all of the items
described on SCHEDULE 5 with respect to each Pledgor owning the Initial
Terramics Pool Properties.
(c) THIRD ADVANCE. Lenders shall not be obligated to fund the Third
Advance unless: (i) all of the conditions precedent to the Initial Advance and
the Second Advance have been satisfied; (ii) Borrower shall have acquired good
and indefeasible title to the Secondary Terramics Pool Properties, which
Secondary Terramics Pool Properties shall be subject to, and comply with, the
requirements of SECTION 8.3; (iii) Agents shall have received property condition
reports and environmental assessments with respect to the Secondary Terramics
Pool Properties acceptable to, and approved by, Agents; (iv) Agents shall have
received copies of the acquisition documents with respect to the Secondary
Terramics Pool Properties acceptable to Agents; (v) Administrative Agent has
timely received all of the items described on SCHEDULE 5 with respect to each
Pledgor owning the Secondary Terramics Pool Properties; and (vi) the CIGNA
Financing has not occurred.
<PAGE>
(d) ALL ADVANCES AND BORROWINGS. Lender shall not be obligated to (i) fund
the First Advance, the Second Advance, or the Third Advance, (ii) convert any
Base Rate Borrowing to a Eurodollar Borrowing, (iii) continue any Eurodollar
Borrowing for a successive Interest Period, or (iii) extend the Scheduled
Maturity Date to the Extended Maturity Date (as provided in SECTION 3.18),
unless, as of the date of such advance, Borrowing, or extension: (A) all of the
representations and warranties in the Loan Documents are true and correct in all
material respects (unless they speak to a specific date or are based on facts
which have changed by transactions expressly contemplated or permitted by this
Agreement); (B) no Default, Potential Default, or Material Adverse Event exists;
and (C) such advance, Borrowing, or extension is permitted by all Governmental
Requirements.
(e) GENERALLY. Each condition precedent in this Agreement (including those
on SCHEDULE 5) is material to the transactions contemplated by this Agreement,
and time is of the essence with respect to each condition precedent. Lenders
may fund any Borrowing without all conditions being satisfied, but, to the
extent permitted by Governmental Requirements, such funding shall not be deemed
to be a waiver of the requirement that each condition precedent be satisfied as
a prerequisite for any subsequent funding or issuance, unless Lenders
specifically waive each item in writing.
I. SECTION REPRESENTATIONS AND WARRANTIES. Borrower represents and
warrants to Agents and the Lenders as follows:
A. PURPOSE OF CREDIT FACILITY. Borrower shall use the proceeds of the
Initial Advance to pay a portion of the outstanding principal balance under the
Revolving Credit Agreement. Borrower shall use the proceeds of the Second
Advance to acquire the Initial Terramics Pool Properties (or the stock,
partnership interests, or other ownership interests in one or more Pledgors of
the Initial Terramics Pool Properties). Borrower shall use the proceeds of the
Third Advance to acquire the Secondary Terramics Pool Properties (or the stock,
partnership interests, or other ownership interest in one or more Pledgors of
the Secondary Terramics Pool Properties) or to refinance existing Liabilities
incurred in connection with the acquisition of the Secondary Terramics Pool
Properties (or the stock, partnership interests, or other ownership interest in
one or more Pledgors of the Secondary Terramics Pool Properties). Borrower is
not engaged principally, or as one of its important activities, in the business
of extending credit for the purpose of purchasing or carrying any "margin stock"
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System, as amended. No part of the proceeds of the Term Loans shall be
used, directly or indirectly, for a purpose that violates any Governmental
Requirement, including the provisions of Regulation U.
A. EXISTENCE, GOOD STANDING, AUTHORITY AND COMPLIANCE. Each Obligor is
duly formed, validly existing and in good standing under the Governmental
Requirements of the jurisdiction in which it is incorporated or formed as
identified on the attached SCHEDULE 6.2 (as supplemented from time to time).
Each Obligor (a) is duly qualified to transact business and is in good standing
as a foreign trust, corporation, limited liability company, partnership, or
other entity in each jurisdiction where the nature and extent of its business
and properties require due qualification and good standing, which jurisdictions
are identified on the attached SCHEDULE 6.2 (as supplemented from time to time
to reflect changes as a result of transactions permitted by the Loan Documents),
except where the failure to so qualify could not result in a Material Adverse
Event, (b) possesses all requisite authority, permits, and power to conduct its
business as is now being, or is contemplated by this Agreement to be, conducted,
and (c) is in compliance with all applicable Governmental Requirements.
<PAGE>
A. AUTHORIZATION AND CONTRAVENTION. The execution and delivery by each
Obligor of each Loan Document or related document to which it is a party, and
the performance by it of its obligations thereunder, (a) are within its trust,
corporate, limited liability company, or partnership power, (b) have been duly
authorized by all necessary trust, corporate, limited liability company, or
partnership action of such Person, (c) require no action by or filing with any
Governmental Authority, (d) do not violate any provision of its Constituent
Documents, (e) do not violate any provision of any Governmental Requirement or
order of any Governmental Authority applicable to it, (f) do not violate any
material agreements to which it is a party, or (g) do not result in the creation
or imposition of any Lien on any asset of any Company, other than pursuant to
the Loan Documents.
A. BINDING EFFECT. Upon execution and delivery by all parties thereto,
each Loan Document to which it is a party shall constitute a legal and binding
obligation of each Obligor, enforceable against such Obligor in accordance with
its terms, subject to applicable Debtor Relief Laws and general principles of
equity.
A. FINANCIAL STATEMENTS; FISCAL YEAR. The Current Financials were prepared
in accordance with GAAP and present fairly, in all material respects, the
consolidated financial condition, results of operations, and cash flows of the
Companies as of, and for the portion of the fiscal year ending on the date or
dates thereof (subject only to normal audit adjustments). All material
liabilities of the Companies as of the date or dates of the Current Financials
are reflected therein or in the notes thereto. Except for transactions directly
related to, or specifically contemplated by, the Loan Documents or disclosed in
the Current Financials, no subsequent material adverse changes have occurred in
the consolidated financial condition of the Companies from that shown in the
Current Financials. The fiscal year of each Company ends on December 31.
A. LITIGATION. Except as disclosed on the attached SCHEDULE 6.6, no
Company is subject to, or aware of the threat of, any Litigation that is
reasonably likely to be determined adversely to such Company or the Companies,
taken as a whole or, if so adversely determined, is a Material Adverse Event.
No outstanding and unpaid final and non-appealable judgments against any Company
exist which could result in a Material Adverse Event.
A. TAXES.
1. All Tax returns of each Company required to be filed have been filed
(or extensions have been granted) before delinquency, and all Taxes imposed upon
each Company that are due and payable have been paid before delinquency or are
being contested in good faith by appropriate proceedings diligently conducted
and for which reserves in accordance with GAAP or otherwise reasonably
acceptable to Administrative Agent have been provided.
1. As of the date hereof, no United States federal income tax returns of
the "affiliated group" (as defined in the Code) of which any Company is a member
have been examined and closed. The members of such affiliated group have filed
all United States Federal income tax returns and all other material tax returns
which are required to be filed by them and have paid all taxes due pursuant to
such returns or pursuant to any assessment received by or any of them (except
for taxes being contested in good faith by appropriate proceedings diligently
conducted and for which reserves in accordance with GAAP or otherwise acceptable
to Administrative Agent have been provided). The charges, accruals and reserves
on the books of the Companies in respect of taxes or other governmental charges
are, in the opinion of the Companies, adequate.
<PAGE>
1. PPT qualifies as a REIT.
A. ENVIRONMENTAL MATTERS. Except as disclosed on SCHEDULE 6.8 and as
specifically disclosed to Administrative Agent in a written environmental report
or other writing delivered by Borrower to Administrative Agent prior to the date
of execution hereof, (a) no environmental condition or circumstance exists that
materially and adversely affects any Pool Property, (b) no Obligor has received
any report of any Obligor's violation of any Environmental Law that has not been
remedied, (c) no Obligor knows that any Obligor is under any obligation to
remedy any violation of any Environmental Law, or (d) no Pool Property of any
Obligor is used for, or to the knowledge of Borrower has been used for, storage,
treatment or disposal of any Hazardous Substance, except for (i) the storage and
use of cleaning and maintenance materials, used and stored in commercially
reasonable quantities and in compliance with applicable Environmental Laws, and
(ii) light manufacturing and distribution activities of tenants, in compliance
with applicable Environmental Laws, provided that such tenants are not primarily
engaged in the treatment, processing, recycling or disposal of any Hazardous
Substance, or for any other use that would give rise to the release of any
Hazardous Substance on such facility. Each Obligor has taken prudent steps to
determine that each Pool Property does not violate any Environmental Law.
A. EMPLOYEE PLANS. Except where occurrence or existence could not
reasonably be expected to result in a Material Adverse Event, (a) no Employee
Plan has incurred an "accumulated funding deficiency" (as defined in Section 302
of ERISA or Section 412 of the Code), (b) no Company has incurred liability
under ERISA to the PBGC in connection with any Employee Plan (other than
required insurance premiums, all of which have been paid), (c) no Company has
withdrawn in whole or in part from participation in a Multiemployer Plan, (d) no
Company has engaged in any "prohibited transaction" (as defined in Section 406
of ERISA or Section 4975 of the Code), and (e) no "reportable event" (as defined
in Section 4043 of ERISA) has occurred, excluding events for which the notice
requirement is waived under applicable PBGC regulations.
A. PROPERTIES; LIENS. Each Company has good title to all of its
properties reflected in the Current Financials (except for properties that are
obsolete or that have been disposed in the ordinary course of business or, after
the date of this Agreement, as otherwise permitted by SECTION 8.8 or SECTION
8.9).
A. LOCATIONS. Each Obligor's chief executive office is located at the
address on SCHEDULE 6.11 (as supplemented from time to time). Each such
Company's books and records are located at its chief executive office.
A. GOVERNMENT REGULATIONS. No Company is subject to regulation under the
Investment Company Act of 1940, as amended, or the Public Utility Holding
Company Act of 1935, as amended.
A. TRANSACTIONS WITH AFFILIATES. Except as disclosed on SCHEDULE 6.13
(as supplemented from time to time if the disclosures are approved by
Administrative Agent), no Company is a party to a material transaction with any
of its Affiliates, other than transactions in the ordinary course of business
and upon fair and reasonable terms not materially less favorable than it could
obtain or could become entitled to in an arm's-length transaction with a Person
that was not its Affiliate.
A. INSURANCE. Each Company maintains with financially sound,
responsible, and reputable insurance companies or associations (or, as to
workers' compensation or similar
<PAGE>
insurance, with an insurance fund or by self-insurance authorized by the
jurisdictions in which it operates) insurance concerning its properties and
businesses against casualties and contingencies and of types and in amounts (and
with co-insurance and deductibles) as is customary in the case of similar
businesses.
A. LABOR MATTERS. No actual or, to Borrower's knowledge, threatened
strikes, labor disputes, slow downs, walkouts, or other concerted interruptions
of operations by the employees of any Company that could reasonably be expected
to result in a Material Adverse Event exist. All payments due from any Company
for employee health and welfare insurance have been paid or accrued as a
liability on its books, other than any nonpayments that are not, individually or
collectively, a Material Adverse Event.
A. SOLVENCY. Each Obligor is, and after giving effect to the Term Loans,
will be, Solvent.
A. FULL DISCLOSURE. Each material fact or condition relating to the
financial condition or business of the Companies which could reasonably be
expected to result in a Material Adverse Event has been disclosed to
Administrative Agent. All information previously furnished, furnished on the
date of this Agreement, and furnished in the future, by any Company to
Administrative Agent in connection with the Loan Documents (a) was, is, and will
be, true and accurate in all material respects or based on good faith estimates
on the date the information is stated or certified, and (b) did not, does not,
and will not, fail to state any material fact the existence of which or the
omission of which could be or result in a Material Adverse Event
A. EXEMPTION FROM ERISA; PLAN ASSETS. PPT is a "real estate operating
company" within the meaning of 29 C.F.R. (S) 2510.3-101(e) (or any successor
regulation) and the assets of the Companies would not be deemed "plan assets" as
defined in 29 C.F.R. (S) 2510.3-101(a)(1) (or any successor regulation) of any
Employee Plan or Multiemployer.
I. SECTION AFFIRMATIVE COVENANTS. Until the Obligation is paid in full,
Borrower covenants and agrees as follows:
A. ITEMS TO BE FURNISHED. Borrower shall cause the following to be
furnished to Administrative Agent (with sufficient copies for each Lender):
1. ANNUAL FINANCIAL STATEMENTS.
a) Promptly after preparation, and no later than ninety (90) days after
the last day of each fiscal year of PPT, Financial Statements of PPT showing
the consolidated financial condition and results of operations of PPT as of,
and for the year ended on, that last day, accompanied by: (A) the
unqualified opinion of the firm of an accounting firm of nationally-
recognized independent certified public accountants, based on an audit using
generally accepted auditing standards, that the Financial Statements of PPT
were prepared in accordance with GAAP and present fairly, in all material
respects, the consolidated financial condition and results of operations of
PPT; (B) a certificate from the accounting firm to Administrative Agent
indicating that during its audit it obtained no knowledge of any Default or
Potential Default or, if it obtained knowledge, the nature and period of
existence thereof; and (C) a Compliance Certificate with respect to such
Financial Statements.
a) Promptly after preparation, and no later than ninety (90) days after
the last day of each fiscal year of Borrower, Financial Statements of
Borrower
<PAGE>
showing the consolidated financial condition and results of operations of
Borrower as of, and for the year ended on, that last day, accompanied by:
(A) a certificate of a Responsible Officer of Borrower stating that the
Financial Statements of Borrower were prepared in accordance with GAAP and
present fairly, in all material respects, the consolidated financial
condition and results of operations of Borrower; and (B) a Compliance
Certificate with respect to such Financial Statements.
1. PERIODIC FINANCIAL STATEMENTS. Promptly after preparation, and no later
than forty-five (45) days after the last day of each fiscal quarter (except the
last) of Borrower and PPT: (i) Financial Statements of Borrower and PPT showing
the consolidated financial condition and results of operations of Borrower and
PPT for the fiscal quarter and for the period from the beginning of the current
fiscal year to the last day of the fiscal quarter; and (ii) a Compliance
Certificate with respect to the Financial Statements.
1. OTHER REPORTS.
a) Promptly after receipt, a copy of each interim or special audit
report and management letter issued by independent accountants with respect
to Borrower and PPT or their financial records.
a) Promptly upon its becoming available, each press release and each
regular or periodic report and any registration statement or prospectus in
respect thereof filed by Borrower or PPT with, or received by Borrower or
PPT in connection therewith from, any securities exchange or the Securities
and Exchange Commission, or any successor agency thereof, including, without
limitation, each Form 10-K, 10-Q, and S-8 filed with the Securities and
Exchange Commission.
a) Promptly after the mailing or delivery thereof, copies of all
material reports or other information from Borrower or PPT to its
shareholders or partners (other than reports or other information delivered
only to Responsible Officers or other employees of Borrower or PPT).
1. NOTICES. Notice, promptly after a Responsible Officer of Borrower knows
of (i) the existence and status of any Litigation that, if determined adversely
to any Company, could reasonably be expected to result in a Material Adverse
Event, (ii) any change in any material fact or circumstance represented or
warranted by any Company in any Loan Document which could be or result in a
Material Adverse Event, (iii) the receipt by any Company of notice of any
violation or alleged violation of ERISA or any Environmental Law (which
individually or collectively with other violations or allegations could
reasonably be expected to result in a Material Adverse Event), or (iv) a Default
or Potential Default, specifying the nature thereof and what action Borrower has
taken, is taking, or proposes to take.
1. CHANGE IN CONTROL. Promptly upon any Change in Control, notice of such
event together with a description of the transaction giving rise thereto.
1. OTHER INFORMATION. Promptly upon reasonable request by Administrative
Agent, information (not otherwise required to be furnished under the Loan
Documents) respecting the business affairs, assets, and liabilities of the
Companies and opinions, certifications, and documents in addition to those
mentioned in this Agreement.
A. USE OF PROCEEDS. Borrower shall use the proceeds of Borrowings only
for the purposes represented in this Agreement.
<PAGE>
A. BOOKS AND RECORDS. Borrower shall, and shall cause each Company to,
maintain books, records, and accounts necessary to prepare financial statements
in accordance with GAAP.
A. INSPECTIONS. Upon reasonable notice and during normal business hours,
Borrower shall, and shall cause each Company to, allow Administrative Agent (or
its Representatives) to inspect any of their respective properties (subject to
the inspection rights in any tenant leases), to review reports, files, and other
records and to make and take away copies, and to discuss in the presence of
Borrower or such other Company any of its affairs, conditions and finances with
its other creditors, directors, officers, employees, or representatives from
time to time, during reasonable business hours.
A. TAXES. Borrower shall, and shall cause each Company to, promptly pay
prior to delinquency any and all Taxes, other than Taxes that are being
contested in good faith by lawful proceedings diligently conducted, against
which reserves or other provisions required by GAAP have been made, and in
respect of which levy and execution of any Lien have been and continue to be
stayed.
A. PAYMENT OF OBLIGATIONS. Borrower shall, and shall cause each Company
to, promptly pay (or renew and extend) all of their respective material
obligations as they become due (unless any such obligations are being contested
in good faith by appropriate proceedings).
A. EXPENSES. Borrower shall promptly pay following demand (a) all costs,
fees, and expenses paid or incurred by Agents in connection with the
arrangement, syndication, and negotiation of the loan evidenced by this
Agreement and the other Loan Documents and the negotiation, preparation,
delivery, and execution of the Loan Documents and any related amendment, waiver,
or consent (including in each case the reasonable fees and expenses of Agents'
counsel), and (b) all costs, fees, and expenses of Agents and, after a Default,
the Lenders incurred by any Agent or, after a Default, any Lender in connection
with the enforcement of the obligations of any Obligor arising under the Loan
Documents or the exercise of any Rights arising under the Loan Documents
(including reasonable attorneys' fees, expenses, and costs paid or incurred in
connection with any workout or restructure and any action taken in connection
with any Debtor Relief Laws), all of which shall be a part of the Obligation and
shall bear interest, if not paid upon demand, at the Default Rate until repaid.
A. MAINTENANCE OF EXISTENCE, ASSETS, AND BUSINESS. Each Obligor shall
(a) maintain its trust, partnership, limited liability company, or corporate
existence in good standing in its state of organization, and (b) except where
not a Material Adverse Event (i) maintain its authority to transact business in
good standing in all other states, (ii) maintain all licenses, permits,
franchises, and Governmental Requirements necessary for its business, and (iii)
keep all of its material assets that are useful in and necessary to its business
in good working order and condition (ordinary wear and tear excepted) and make
all necessary repairs and replacements.
A. INSURANCE. Borrower shall, and shall cause each Company to, maintain
with financially sound, responsible, and reputable insurance companies or
associations (or, as to workers' compensation or similar insurance, with an
insurance fund or by self-insurance authorized by the jurisdictions in which it
operates) insurance reasonably acceptable to Administrative Agent concerning its
properties and businesses against casualties and contingencies and of types and
in amounts (and with co-insurance and deductibles) as is customary in the case
of similar businesses. At Administrative Agent's request, Borrower shall, and
shall cause each
<PAGE>
Company to, deliver to Administrative Agent evidence of insurance for each
policy of insurance and evidence of payment of all premiums.
A. PRESERVATION AND PROTECTION OF RIGHTS. Borrower shall, and shall
cause each Company to, perform the acts and duly authorize, execute,
acknowledge, deliver, file, and record any additional writings as any Agent may
reasonably deem necessary or appropriate to preserve and protect the Rights of
Agents and the Lenders under any Loan Document.
A. ENVIRONMENTAL LAWS. Borrower shall, and shall cause each Obligor to, (a)
operate and manage the Pool Properties and otherwise conduct its affairs in
compliance with all Environmental Laws, except to the extent noncompliance could
not reasonably be expected to result in a Material-Adverse Event, (b) promptly
deliver to Administrative Agent a copy of any notice received from any
Governmental Authority alleging that any Pool Property is not in compliance with
any Environmental Law, and (c) promptly deliver to Administrative Agent a copy
of any notice received from any Governmental Authority alleging that any
potential environmental Liability exists with respect to any Pool Property.
A. INDEMNIFICATION.
1. AS USED IN THIS SECTION: (i) "INDEMNITOR" MEANS THE COMPANIES; (ii)
"INDEMNITEE" MEANS EACH AGENT, EACH LENDER, EACH PRESENT AND FUTURE AFFILIATE OF
----------
EACH AGENT OR ANY LENDER, EACH PRESENT AND FUTURE REPRESENTATIVE OF EACH AGENT,
ANY LENDER, OR ANY OF THOSE AFFILIATES, AND EACH PRESENT AND FUTURE SUCCESSOR
AND ASSIGN OF EACH AGENT, ANY LENDER, OR ANY OF THOSE AFFILIATES OR
REPRESENTATIVES; AND (iii) "INDEMNIFIED LIABILITIES" MEANS ALL PRESENT AND
-----------------------
FUTURE, KNOWN AND UNKNOWN, FIXED AND CONTINGENT, ADMINISTRATIVE, INVESTIGATIVE,
JUDICIAL, AND OTHER CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, INVESTIGATIONS,
SUITS, PROCEEDINGS, AMOUNTS PAID IN SETTLEMENT, DAMAGES, JUDGMENTS, PENALTIES,
COURT COSTS, LIABILITIES, AND OBLIGATIONS -- AND ALL PRESENT AND FUTURE COSTS,
EXPENSES, AND DISBURSEMENTS (INCLUDING, WITHOUT LIMITATION, ALL REASONABLE
ATTORNEYS' FEES AND EXPENSES WHETHER OR NOT SUIT OR OTHER PROCEEDING EXISTS OR
ANY INDEMNITEE IS PARTY TO ANY SUIT OR OTHER PROCEEDING) IN ANY WAY RELATED TO
ANY OF THE FOREGOING -- THAT MAY AT ANY TIME BE IMPOSED ON, INCURRED BY, OR
ASSERTED AGAINST ANY INDEMNITEE AND IN ANY WAY RELATING TO OR ARISING OUT OF ANY
(A) LOAN DOCUMENT OR TRANSACTION CONTEMPLATED BY ANY LOAN DOCUMENT, (B)
ENVIRONMENTAL LIABILITY IN ANY WAY RELATED TO ANY COMPANY, OR ANY ACT, OMISSION,
STATUS, OWNERSHIP, OR OTHER RELATIONSHIP, CONDITION, OR CIRCUMSTANCE
CONTEMPLATED BY, CREATED UNDER, OR ARISING PURSUANT TO OR IN CONNECTION WITH ANY
LOAN DOCUMENT, OR (C) INDEMNITEE'S SOLE OR CONCURRENT ORDINARY NEGLIGENCE.
---------------------------------------------------
1. EACH INDEMNITOR SHALL JOINTLY AND SEVERALLY INDEMNIFY EACH INDEMNITEE
FROM AND AGAINST, PROTECT AND DEFEND EACH INDEMNITEE FROM AND AGAINST, HOLD EACH
INDEMNITEE HARMLESS FROM AND AGAINST, AND ON DEMAND PAY OR REIMBURSE EACH
INDEMNITEE FOR, ALL INDEMNIFIED LIABILITIES.
1. THE FOREGOING PROVISIONS (i) ARE NOT LIMITED IN AMOUNT EVEN IF THAT
AMOUNT EXCEEDS THE OBLIGATION, (ii) INCLUDE, WITHOUT LIMITATION, REASONABLE FEES
AND EXPENSES OF ATTORNEYS AND OTHER COSTS AND EXPENSES OF LITIGATION OR
PREPARING FOR LITIGATION AND DAMAGES OR INJURY TO PERSONS, PROPERTY, OR NATURAL
RESOURCES ARISING UNDER ANY STATUTORY OR COMMON LAW, PUNITIVE DAMAGES, FINES,
AND OTHER PENALTIES, AND (iii) ARE NOT AFFECTED BY THE
<PAGE>
SOURCE OR ORIGIN OF ANY HAZARDOUS SUBSTANCE, AND (iv) ARE NOT AFFECTED BY ANY
INDEMNITEE'S INVESTIGATION, ACTUAL OR CONSTRUCTIVE KNOWLEDGE, COURSE OF DEALING,
OR WAIVER.
1. No Indemnitee is entitled to be indemnified under the Loan Documents for
its or any of its Representatives' own fraud, gross negligence, or willful
misconduct.
1. THE PROVISIONS OF AND INDEMNIFICATION AND OTHER UNDERTAKINGS UNDER THIS
SECTION SURVIVE THE FORECLOSURE OF ANY LIEN OR ANY TRANSFER IN LIEU OF THAT
FORECLOSURE, THE SATISFACTION OF THE OBLIGATION, THE TERMINATION OF THE LOAN
DOCUMENTS, AND THE RELEASE OF ANY OR ALL LIENS.
A. REIT STATUS. At all times, PPT (including its organization and method
of operations and those of its Consolidated Affiliates) shall qualify as a REIT.
A. ERISA EXEMPTIONS. PPT shall qualify as a "real estate operating
company" under the 29 C.F.R. (S) 2510.3-101(e) (or any successor regulation) or
other appropriate exemption such that its assets shall not be deemed "plan
assets" as defined in 29 C.F.R. (S) 2510.3-101(a)(1) (or any successor
regulation) of any Employee Plan or Multiemployer Plan.
A. LISTED COMPANY. The common shares of beneficial interest of PPT shall
at all times be listed for trading and be traded on either the New York Stock
Exchange or American Stock Exchange.
I. SECTION NEGATIVE COVENANTS. Until the Obligation is paid in full,
Borrower covenants and agrees as follows:
A. PAYMENT OF OBLIGATIONS. Borrower shall not, and shall not permit any
Company to, voluntarily prepay principal of, or interest on, any Liabilities
other than the Obligation, if a Default exists.
A. EMPLOYEE PLANS. Except where a Material Adverse Event would not
result, Borrower shall not, and shall not permit any Company to, permit any of
the events or circumstances described in SECTION 6.10 to exist or occur.
A. LIENS. Borrower shall not, and shall not permit any Company to, (a)
create, incur, or suffer or permit to be created or incurred or to exist any
Lien upon the Pool Properties, except Permitted Liens, or (b) enter into or
permit to exist any arrangement or agreement that directly or indirectly
prohibits any Company from creating or incurring any Lien on the Pool Properties
except the Loan Documents. The following are "PERMITTED LIENS":
a) Liens granted to Administrative Agent, for the ratable benefit of
the Lenders, to secure the Obligation;
a) pledges or deposits made to secure payment of worker's compensation
(or to participate in any fund in connection with worker's compensation
insurance), unemployment insurance, pensions or social security programs;
a) encumbrances consisting of zoning restrictions, easements,
restrictive covenants, or other restrictions on the use of real property,
provided that such items do not materially impair the use of such property
for the purposes intended and none of which is violated in any material
respect by existing or proposed structures or land use;
<PAGE>
a) Liens imposed by mandatory provisions of any Governmental
Requirement such as for materialmen's, mechanic's, warehousemen's, and other
like Liens arising in the ordinary course of business, securing payment of
any Liability whose payment is not yet due or that is being contested in
good faith by appropriate proceedings diligently conducted, and for which
reserves in accordance with GAAP or other security (and otherwise reasonably
acceptable to Administrative Agent) have been provided;
a) Liens for taxes, assessments and governmental charges or assessments
that are not yet due and payable or that are being contested in good faith
by appropriate proceedings diligently conducted, and for which reserves in
accordance with GAAP or other security (and otherwise reasonably acceptable
to Administrative Agent) have been provided;
a) Liens securing assessments or charges payable to a property owner
association or similar entity, which assessments are not yet due and payable
or that are being contested in good faith by appropriate proceedings
diligently conducted, and for which reserves in accordance with GAAP or
other security (and otherwise reasonably acceptable to Administrative Agent)
have been provided; and
a) Liens in favor of CIGNA securing Liabilities that have been paid in
full and for which Lien releases and other agreements reasonably acceptable
to Administrative Agent have been executed and delivered to Administrative
Agent.
If Lenders make the Third Advance, then, prior to the Scheduled Maturity
Date, Borrower may, in connection with a Debt Issuance secured by the Secondary
Terramics Pool Properties, request that the Lenders release the Secondary
Terramics Pool Properties from the negative pledge set forth in this SECTION 8.3
and release any Guaranty of each Pledgor of the Secondary Terramics Pool
Properties, subject to the following conditions precedent:
(A) no Potential Default or Default exists or would result from such
release or Debt Issuance; and
(B) Borrower prepays the Term Loans in an amount equal to the
greater of (1) sixty-five percent (65%) of the Approved Cost of the
Terramics Pool Properties to be released, or (2) the Net Proceeds of such
Debt Issuance.
A. TRANSACTIONS WITH AFFILIATES. Except as disclosed on SCHEDULE 6.14
(as supplemented from time to time to reflect changes as a result of
transactions permitted by this Agreement or approved by the Required Lenders),
Borrower shall not, and shall not permit any Company to, enter into any material
transaction with any of its Affiliates, other than transactions in the ordinary
course of business and upon fair and reasonable terms not materially less
favorable than it could obtain or could become entitled to in an arm's-length
transaction with a Person that was not its Affiliate.
A. COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS AND DOCUMENTS. Borrower
shall not, and shall not permit any Company to, (a) violate the provisions of
any Governmental Requirements applicable to it or of any material agreement to
which it is a party if that violation alone, or when aggregated with all other
violations, could reasonably be expected to result in Material Adverse Event,
(b) violate the provisions of its trust agreement, partnership agreement,
charter, or bylaws, or (c) repeal, replace or amend any provision of its
Constituent Documents if that action could reasonably be expected to result in a
Material Adverse Event.
<PAGE>
A. LOANS, ADVANCES AND INVESTMENTS. Neither Borrower nor PPT shall,
directly or indirectly, have or make any investments in: (a) properties
consisting of raw land exceeding in the aggregate three percent (3%) of the
Companies' Total Assets; (b) properties under construction having actual and
budgeted costs exceeding in the aggregate twenty percent (20%) of the Companies'
Total Assets; (c) except for Borrower's investment in Broadmoor Austin
Associates, partnerships, joint ventures and similar entities accounted for on
an equity basis (determined in accordance with GAAP) exceeding in the aggregate
twelve and one-half percent (12.5%) of the Companies' Total Assets; (d) loans,
mortgages, advances, and extensions of credit to Persons exceeding in the
aggregate ten percent (10%) of the Companies' Total Assets; (e) the stock of any
Person exceeding in the aggregate five percent (5%) of the Companies' Total
Assets; or (f) the investments described in (a) through (e) above exceeding in
the aggregate thirty-five percent (35%) of the Companies' Total Assets.
A. DIVIDENDS AND DISTRIBUTIONS. Borrower shall not, and shall not permit
any Company to, declare, make, or pay any Distribution other than (a) Permitted
Distributions, and (b) Distributions declared, made, or paid by (i) Borrower or
PPT wholly in the form of its capital stock or partnership interests, (ii) any
Company (other than Borrower) to Borrower or to PPT. Borrower shall not, and
shall not permit any Company to, enter into or permit to exist any arrangement
or agreement (other than this Agreement) that prohibits it from paying
distributions to its shareholders or partners.
A. SALE OF ASSETS. Except as otherwise permitted by the Loan Documents,
Borrower shall not, and shall not permit any Company to, sell, assign, lease,
transfer or otherwise dispose of any of its assets, other than (a) to Borrower
or PPT, (b) occasional sales, leases or other dispositions of immaterial assets
for consideration not less than fair market value, (c) sales, leases or other
dispositions of assets that are obsolete or have negligible fair market value,
(d) sales of equipment for a fair and adequate consideration (but if replacement
equipment is necessary for the proper operation of the business of the seller,
the seller must promptly replace the sold equipment), and (e) sales or other
transfers of assets, so long as both prior to and after giving effect to any
such sale or other transfer, no Material Adverse Event, Potential Default, or
Default exists.
A. MERGERS AND DISSOLUTIONS. Borrower shall not, and shall not permit
any Company to, merge or consolidate with any other Person or liquidate, wind up
or dissolve (or suffer any liquidation or dissolution); provided, however, that
the foregoing shall not operate to prevent mergers or consolidations of any
Company into Borrower or another Company (if such transaction does not reduce
the net worth of the Companies determined in accordance with GAAP).
A. ASSIGNMENT. Borrower shall not, and shall not permit any Company to,
assign or transfer any of its Rights, duties, or obligations under any of the
Loan Documents.
A. FISCAL YEAR AND ACCOUNTING METHODS. Without the prior written consent
of Administrative Agent, Borrower shall not, and shall not permit any Company
to, change its fiscal year or its method of accounting (other than immaterial
changes in methods or as required by GAAP).
A. NEW BUSINESSES. Borrower shall not, and shall not permit any Company
to, engage in any type of business except the types of businesses in which they
are presently engaged and any other reasonably related business.
A. GOVERNMENT REGULATIONS. Borrower shall not, and shall not permit any
Company to, conduct its business in a way that it becomes regulated under the
Investment
<PAGE>
Company Act of 1940, as amended, or the Public Utility Holding Company Act of
1935, as amended.
A. PLEDGORS. No Pledgor shall: (a) create, incur, assume, guarantee, or
suffer to exist any Liabilities, other than (i) the Obligation, (ii) trade
payables created in the ordinary course of business, (iii) endorsements of
negotiable instruments in the ordinary course of business, (iv) contingent
Liabilities covered by reserves or insurance, and (v) equipment leases incurred
in the ordinary course of business; or (b) create, incur, or suffer or permit to
be created or incur or exist any Lien upon any of its Assets, except Permitted
Liens.
A. AMENDMENT OF CONSTITUENT DOCUMENTS. Borrower shall not permit any
amendment of any Company's Constituent Documents, if any, which would materially
and adversely affect Agents or Lenders or their respective Rights under the Loan
Documents.
I. SECTION FINANCIAL COVENANTS. So long as Administrative Agent and
Documentation Agent are obligated to loan money to Borrower under the Revolving
Credit Agreement, Borrower shall comply with the covenants set forth in SECTION
9 of the Revolving Credit Agreement. If either Administrative Agent or
Documentation Agent is no longer a party to the Revolving Credit Agreement,
pursuant to SECTION 13.11 therein or otherwise, or if the Revolving Credit
Agreement is terminated, then Borrower shall comply with the covenants set forth
in SECTION 9 of the Revolving Credit Agreement in effect at the time that either
Administrative Agent or Documentation Agent, as applicable, is no longer a party
to the Revolving Credit Agreement or as of the date of termination of the
Revolving Credit Agreement, as applicable.
I. SECTION DEFAULT. The term "DEFAULT" means the occurrence of any one or
more of the following events:
A. PAYMENT OF OBLIGATION. The failure of Borrower or PPT to pay any
principal of or any interest on the Obligation when it becomes due and payable
under the Loan Documents, and (a) for the first (1st) such failure, if any,
occurring in the first (1st) twelve (12) months of this Agreement, such failure
shall continue for three (3) days after written notice thereof from
Administrative Agent to Borrower, and (b) for any other such failures, such
failure shall continue for five (5) days after such payment became due and
payable.
A. COVENANTS. The failure of Borrower (and, if applicable, any Company) to
punctually and properly perform, observe, and comply with: (a) any covenant or
agreement contained in SECTIONS 7.1; or (b) any other covenant or agreement
contained in any Loan Document (other than the covenants to pay the principal of
and interest on the Obligation and the covenants in (a) preceding), and such
failure shall continue (i) for thirty (30) days after the earlier to occur of
the date (A) Borrower knows of, or (B) Borrower receives notice from
Administrative Agent of, such failure, or (ii) sixty (60) days after such
earlier date if such failure is not capable of being cured within thirty (30)
days and Borrower is diligently pursuing cure thereof.
A. DEBTOR RELIEF. Any Company (a) is not Solvent, (b) fails to pay its
Liabilities generally as they become due, (c) voluntarily seeks, consents to, or
acquiesces in the benefit of any Debtor Relief Law, or (d) becomes a party to or
is made the subject of any proceeding provided for by any Debtor Relief Law,
other than as a creditor or claimant, that could suspend or otherwise adversely
affect the Rights of any Agent or any Lender granted in the Loan Documents
(unless, if the proceeding is involuntary, the applicable petition is dismissed
within sixty (60) days after its filing).
<PAGE>
A. JUDGMENTS AND ATTACHMENTS. Any Company fails, within sixty (60) days
after entry, to pay, bond, or otherwise discharge any judgment or order for the
payment of money in excess of $1,000,000.00 (individually or collectively) or
any warrant of attachment, sequestration, or similar proceeding against such
Company's assets having a value (individually or collectively) of $1,000,000.00
unless such judgment, order for payment, warrant of attachment, sequestration,
or similar proceeding is (a) stayed on appeal, (b) diligently contested in good
faith by appropriate proceedings and adequate reserves have been set aside on
its books in accordance with GAAP, or (c) covered by insurance acceptable to
Administrative Agent.
A. GOVERNMENT ACTION. (a) A final non-appealable order is issued by any
Governmental Authority (including the United States Justice Department)
requiring any Company to divest all or a substantial portion of its assets under
any antitrust, restraint of trade, unfair competition, industry regulation, or
similar Governmental Requirements, or (b) any Governmental Authority seizes or
otherwise appropriates, or takes custody or control of, all or any substantial
portion of the assets of any Company, other than through condemnation
proceeding.
A. MISREPRESENTATION. Any material representation or warranty made by
any Company contained in any Loan Document at any time proves to have been
incorrect in any material respect when made and such misrepresentation shall
continue for thirty (30) days after the earlier to occur of the date (a)
Borrower knows of, or (b) Borrower receives notice from Administrative Agent of,
such misrepresentation.
A. DEFAULT UNDER OTHER AGREEMENTS.
1. Any Company shall fail to make any payment in respect of (i) any
recourse Liability in excess of $1,000,000.00 when due or within any applicable
grace period, or (ii) non-recourse Liability in excess of $25,000,000.00 when
due or within any applicable grace period; or
1. The acceleration of the maturity of (i) any recourse Liability in excess
of $1,000,000.00 of any Company, or (ii) any non-recourse Liability in excess of
$25,000,000.00 of any Company, or default shall occur in the payment of any such
Liabilities of any Company, or in respect of any note or credit agreement
relating to any such Liabilities and such default shall continue for more than
the period of grace, if any, specified therein or otherwise granted by the
lender thereof.
A. VALIDITY AND ENFORCEABILITY OF LOAN DOCUMENTS. Except in accordance
with its terms or as otherwise expressly permitted by this Agreement, any Loan
Document at any time after its execution and delivery ceases to be in full force
and effect in any material respect or is declared by a Governmental Authority to
be null and void or its validity or enforceability is contested by any Company,
or any Company denies that it has any further liability or obligations under any
Loan Document to which it is a party.
A. MANAGEMENT CHANGES. Individuals who were directors or trustees of PPT
on the date hereof shall cease to constitute a majority of the board of
directors of PPT, unless the Term Loans are extended pursuant to SECTION 3.18,
whereupon during any period of twelve (12) consecutive calendar months,
individuals who were directors or trustees of PPT on the first day of such
period shall cease to constitute a majority of the board of directors of PPT;
provided, however, that the directors or trustees of PPT may include new or
replacement directors or trustees that (i) are an officer or employee of an
Affiliate, (ii) are required in order (as a practical matter) for the majority
of the board of directors or trustees of PPT to be independent directors or
trustees,
<PAGE>
or (iii) are independent directors or trustees that are replacing another
independent director or trustee whose term has expired or who has voluntarily
resigned.
A. CHANGE IN CONTROL. A Change in Control shall occur.
A. PLAN ASSETS. The assets of the Companies at any time constitute assets,
within the meaning of ERISA, the Code and the respective regulations promulgated
thereunder, of any Employee Plan or Multiemployer Plan.
I. SECTION RIGHTS AND REMEDIES.
A. REMEDIES UPON DEFAULT.
1. DEBTOR RELIEF. If a Default (i) occurs under SECTION 10.3(c) or (ii)
occurs and is continuing under SECTION 10.3(a), (b) OR (d), then the entire
unpaid balance of the Obligation automatically becomes due and payable without
any action of any kind whatsoever.
1. OTHER DEFAULTS. If a Default occurs and is continuing, subject to the
terms of SECTION 13.9(b), then Administrative Agent, upon the request of the
Required Lenders, may do any one or more of the following: (i) if the maturity
of the Obligation has not already been accelerated under SECTION 11.1(a),
declare the entire unpaid balance of all or any part of the Obligation
immediately due and payable, whereupon it is due and payable; (ii) reduce any
claim to judgment; and (iii) exercise any and all other legal or equitable
Rights afforded by the Loan Documents, the Governmental Requirements of the
State of Texas, or any other applicable jurisdiction.
A. WAIVERS. To the extent permitted by applicable law, each Company
waives presentment and demand for payment, protest, notice of intention to
accelerate, notice of acceleration, and notice of protest and nonpayment, and
agrees that its liability with respect to all or any part of the Obligation is
not affected by any renewal or extension in the time of payment of all or any
part of the Obligation, by any indulgence, or by any release or change in any
security for the payment of all or any part of the Obligation.
A. PERFORMANCE BY ADMINISTRATIVE AGENT. If any covenant, duty, or
agreement of Borrower is not performed in accordance with the terms of the Loan
Documents, Administrative Agent may, while a Default exists, at its option,
perform, or attempt to perform that covenant, duty, or agreement on behalf of
Borrower (and any amount expended by Administrative Agent in its performance or
attempted performance is payable by Borrower to Administrative Agent on demand,
becomes part of the Obligation, and bears interest at the Default Rate from the
date of Administrative Agent's expenditure until paid). However, neither
Administrative Agent nor any Lender assumes or shall have, except by its express
written consent, any liability or responsibility for the performance of any
covenant, duty, or agreement of Borrower.
A. NOT IN CONTROL. None of the covenants or other provisions contained
in any Loan Document shall, or shall be deemed to, give Agents or the Lenders
the Right to exercise control over the assets (including real property),
affairs, or management of any Company.
A. COURSE OF DEALING. The acceptance by Agents or any Lender of any
partial payment on the Obligation shall not be deemed to be a waiver of any
Default then existing. No waiver by any Agent or any Lender of any Default
shall be deemed to be a waiver of any other then-existing or subsequent Default.
No delay or omission by any Agent or any Lender in exercising any Right under
the Loan Documents will impair that Right or be construed as a waiver
<PAGE>
thereof or any acquiescence therein, nor will any single or partial exercise of
any Right preclude other or further exercise thereof or the exercise of any
other Right under the Loan Documents or otherwise.
A. CUMULATIVE RIGHTS. All Rights available to Agents and the Lenders
under the Loan Documents are cumulative of and in addition to all other Rights
granted to Agents and the Lenders at law or in equity, whether or not the
Obligation is due and payable and whether or not Agents or the Lenders have
instituted any suit for collection, foreclosure, or other action in connection
with the Loan Documents.
A. APPLICATION OF PROCEEDS. Any and all proceeds ever received by any
Agent or any Lender from the exercise of any Rights pertaining to the Obligation
shall be applied to the Obligation according to SECTION 3.4.
A. CERTAIN PROCEEDINGS. Borrower shall promptly execute and deliver, or
cause the execution and delivery of, all applications, certificates,
instruments, and all other documents and papers any Agent reasonably requests in
connection with the obtaining of any consent, approval, registration,
qualification, permit, license, or authorization of any Governmental Authority
or other Person necessary or appropriate for the effective exercise of any
Rights under the Loan Documents. Because Borrower agrees that Agents' and the
Lenders' remedies at law for failure of Borrower to comply with the provisions
of this paragraph would be inadequate and that failure would not be adequately
compensable in damages, Borrower agrees that the covenants of this paragraph may
be specifically enforced.
I. SECTION AGENTS AND THE LENDERS.
A. AGENTS.
1. APPOINTMENT. Each Lender appoints Administrative Agent (including,
without limitation, each successor Agent in accordance with this SECTION 12) as
its nominee and agent to act in its name and on its behalf (and Administrative
Agent and each such successor accepts that appointment): (i) to act as its
nominee and on its behalf in and under all Loan Documents; (ii) to arrange the
means whereby its funds are to be made available to Borrower under the Loan
Documents; (iii) to take any action that it properly requests under the Loan
Documents (subject to the concurrence of other Lenders as may be required under
the Loan Documents); (iv) to receive all documents and items to be furnished to
it under the Loan Documents; (v) to promptly distribute to it all Financial
Statements, notices received hereunder, and other items specifically required to
be delivered to it hereunder, and, upon request, such other material
information, requests, documents, and items received under the Loan Documents;
(vi) to promptly distribute to it its ratable part of each payment or prepayment
(whether voluntary or otherwise) in accordance with the terms of the Loan
Documents; and (vii) to deliver to the appropriate Persons requests, demands,
approvals, and consents received from it. However, Administrative Agent may not
be required to take any action that exposes it to personal liability or that is
contrary to any Loan Document or applicable Governmental Requirement.
1. SUCCESSOR. Administrative Agent may assign all of its Rights and
obligations as Administrative Agent under the Loan Documents to any of its
Affiliates, which Affiliate shall then be the successor Administrative Agent
under the Loan Documents. Administrative Agent may also voluntarily resign by
giving thirty (30) days' prior written notice to Borrower and Lenders, and shall
resign upon the request of the Required Lenders for cause (i.e., Administrative
Agent is continuing to fail to perform its responsibilities as Administrative
Agent under the Loan Documents). If the initial or any successor Administrative
Agent ever ceases to be
<PAGE>
a party to this Agreement or if the initial or any successor Administrative
Agent ever resigns (whether voluntarily or at the request of the Required
Lenders), then the Required Lenders shall (which, if no Default or Potential
Default exists, is subject to Borrower's approval that may not be unreasonably
withheld) appoint the successor Administrative Agent from among the Lenders
(other than the resigning Administrative Agent). If the Required Lenders fail to
appoint a successor Administrative Agent within thirty (30) days after the
resigning Administrative Agent has given notice of resignation or the Required
Lenders have removed the resigning Administrative Agent, then the resigning
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent (which, if no Default or Potential Default exists, is
subject to Borrower's approval that may not be unreasonably withheld), which
must be a commercial bank having a combined capital and surplus of at least
$1,000,000,000.00 (as shown on its most recently published statement of
condition) and whose debt obligations (or whose parent's debt obligations) are
rated not less than Baa1 by Moody's or BBB+ by S & P. Upon its acceptance of
appointment as successor Administrative Agent, the successor Administrative
Agent succeeds to and becomes vested with all of the Rights of the prior
Administrative Agent, and the prior Administrative Agent is discharged from its
duties and obligations of Administrative Agent under the Loan Documents, and
each Lender shall execute the documents that any Lender, the resigning or
removed Administrative Agent, or the successor Administrative Agent reasonably
request to reflect the change. After any Administrative Agent's resignation or
removal as Administrative Agent under the Loan Documents, the provisions of this
SECTION inure to its benefit as to any actions taken or not taken by it while it
was Administrative Agent under the Loan Documents. If Borrower fails to respond
to any written request for any consent required in this SECTION 12.1(b) within
ten (10) days after the date that Borrower receives such request, then Borrower
shall be deemed to have given its consent to such request.
1. RIGHTS AS LENDER. Each Agent, in its capacity as a Lender, has the same
Rights under the Loan Documents as any other Lender and may exercise those
Rights as if it were not acting as an Agent. The term "Lender," unless the
context otherwise indicates, includes Agents. Administrative Agent's
resignation or removal does not impair or otherwise affect any Rights that it
has or may have in its capacity as an individual Lender. Each Lender and
Borrower agree that Agents are not a fiduciary for Lenders or for Borrower but
are simply acting in the capacities described in this Agreement to alleviate
administrative burdens for Borrower and Lenders, that Agents have no duties or
responsibilities to Lenders or Borrower except those expressly set forth in the
Loan Documents, and that each Agent in its capacity as a Lender has the same
Rights as any other Lender.
1. OTHER ACTIVITIES. Any Agent or any Lender may now or in the future be
engaged in one or more loan, letter of credit, leasing, or other financing
transactions with Borrower or another Company, act as trustee or depositary for
Borrower or another Company, or otherwise be engaged in other transactions with
Borrower (collectively, the "OTHER ACTIVITIES") not the subject of the Loan
Documents. Without limiting the Rights of Lenders specifically set forth in the
Loan Documents, no Agent nor any Lender is responsible to account to the other
Lenders for those other activities, and no Lender shall have any interest in any
other Lender's activities, any present or future guaranties by or for the
account of Borrower that are not contemplated by or included in the Loan
Documents, any present or future offset exercised by any Agent or any Lender in
respect of those other activities, any present or future property taken as
security for any of those other activities, or any property now or hereafter in
any Agent's or any other Lender's possession or control that may be or become
security for the obligations of Borrower arising under the Loan Documents by
reason of the general description of indebtedness secured or of property
contained in any other agreements, documents, or instruments related to any of
those other activities (but, if any payments in respect of those guaranties or
that property or the proceeds thereof is applied by any
<PAGE>
Agent or any Lender to reduce the Obligation, then each Lender is entitled to
share ratably in the application as provided in the Loan Documents).
1. DOCUMENTATION AGENT. Documentation Agent shall have no rights, duties,
or obligations hereunder, except as specifically provided in this Agreement.
Documentation Agent (a) may voluntarily resign by notice to Administrative
Agent, the Lenders, and Borrower, and (b) shall resign upon the request of the
Required Lenders for cause. Upon the resignation of Documentation Agent, the
Required Lenders may elect to designate a successor Documentation Agent (which,
if no Default or Potential Default exists, is subject to Borrower's approval
that may not be unreasonably withheld), which must be a Lender who is a
commercial bank having a combined capital and surplus of at least
$1,000,000,000.00 (as shown on its most recently published statement of
condition) and whose debt obligations (or whose parent's debt obligations) are
rated not less than Baa1 by Moody's or BBB+ by S & P.
B. EXPENSES. Should Administrative Agent commence any proceeding or in
any way seek to enforce its Rights under the Loan Documents, each Lender, upon
demand therefor from time to time, shall contribute its share (based on its Pro
Rata Share) of the reasonable costs and/or expenses of any such enforcement or
acquisition, including, but not limited to, fees of receivers or trustees, court
costs, title company charges, filing and recording fees, appraisers' fees and
fees and expenses of attorneys to the extent not otherwise reimbursed by
Borrower. Without limiting the generality of the foregoing, each Lender shall
contribute its share (based on its Pro Rata Share) of all reasonable costs and
expenses incurred by Administrative Agent (including reasonable attorneys' fees
and expenses) if Administrative Agent employs counsel for advice or other
representation (whether or not any suit has been or shall be filed) with respect
to any of the Loan Documents, or to enforce any rights of Administrative Agent
or any of Borrower's or any other Company's obligations under any of the Loan
Documents, but not with respect to any dispute between Administrative Agent and
any other Lender(s). Any loss of principal and interest resulting from any
Default shall be shared by Lenders in accordance with their respective Pro Rata
Shares. It is understood and agreed that Administrative Agent determines that it
is necessary to engage counsel for the Lenders from and after the occurrence of
a Potential Default or Default, said counsel shall be selected by Administrative
Agent and written notice of the same shall be delivered to the Lenders.
A. PROPORTIONATE ABSORPTION OF LOSSES. Except as otherwise provided in
the Loan Documents, nothing in the Loan Documents gives any Lender any advantage
over any other Lender insofar as the Obligation is concerned or relieves any
Lender from ratably absorbing any losses sustained with respect to the
Obligation (except to the extent unilateral actions or inactions by any Lender
result in Borrower or any other obligor on the Obligation having any credit,
allowance, setoff, defense, or counterclaim solely with respect to all or any
part of that Lender's Pro Rata Share of the Obligation).
A. DELEGATION OF DUTIES; RELIANCE. Lenders may perform any of their
duties or exercise any of their Rights under the Loan Documents by or through
Administrative Agent, and Lenders and Administrative Agent may perform any of
their duties or exercise any of their Rights under the Loan Documents by or
through their respective Representatives. Administrative Agent, Lenders, and
their respective Representatives (a) are entitled to rely upon (and shall be
protected in relying upon) any written or oral statement believed by it or them
to be genuine and correct and to have been signed or made by the proper Person
and, with respect to legal matters, upon opinion of counsel selected by
Administrative Agent or that Lender (but nothing in this CLAUSE (a) permits
Administrative Agent to rely on (i) oral statements if a writing is required by
this Agreement or (ii) any other writing if a specific writing is required by
this Agreement), (b) are entitled to deem and treat each Lender as the owner and
holder of its portion of the Obligation for all purposes until, written notice
of the assignment or transfer is given to and received by Administrative Agent
(and
<PAGE>
any request, authorization, consent, or approval of any Lender is conclusive and
binding on each subsequent holder, assignee, or transferee of or Participant in
that Lender's portion of the Obligation until that notice is given and
received), (c) are not deemed to have notice of the occurrence of a Default
unless a Responsible Officer of Administrative Agent, who handles matters
associated with the Loan Documents and transactions thereunder, has actual
knowledge or Administrative Agent has been notified by a Lender or Borrower, and
(d) are entitled to consult with legal counsel (including counsel for Borrower),
independent accountants, and other experts selected by Administrative Agent and
are not liable for any action taken or not taken in good faith by it in
accordance with the advice of counsel, accountants, or experts.
A. LIMITATION OF AGENTS' LIABILITY.
1. EXCULPATION. No Agent nor any of their Affiliates or Representatives
will be liable for any action taken or omitted to be taken by it or them under
the Loan Documents in good faith and believed by it or them to be within the
discretion or power conferred upon it or them by the Loan Documents or be
responsible for the consequences of any error of judgment (except for fraud,
gross negligence, or willful misconduct), and no Agent nor any of its Affiliates
or Representatives has a fiduciary relationship with any Lender by virtue of the
Loan Documents (but nothing in this Agreement negates the obligation of
Administrative Agent to account for funds received by it for the account of any
Lender).
1. INDEMNITY. Unless indemnified to its satisfaction against loss, cost,
liability, and expense, no Agent may be compelled to do any act under the Loan
Documents or to take any action toward the execution or enforcement of the
powers thereby created or to prosecute or defend any suit in respect of the Loan
Documents. If an Agent requests instructions from the Lenders, or the Required
Lenders, as the case may be, with respect to any act or action in connection
with any Loan Document, such Agent is entitled to refrain (without incurring any
liability to any Person by so refraining) from that act or action unless and
until it has received instructions. In no event, however, may any Agent or any
of its Representatives be required to take any action that it or they determine
could incur for it or them criminal or onerous civil liability. Without
limiting the generality of the foregoing, no Lender has any right of action
against any Agent as a result of such Agent's acting or refraining from acting
under this Agreement in accordance with instructions of the Required Lenders.
1. RELIANCE. No Agent is not responsible to any Lender or any Participant
for, and each Lender represents and warrants that it has not relied upon any
Agent in respect of, (i) the creditworthiness of Borrower or PPT and the risks
involved to that Lender, (ii) the effectiveness, enforceability, genuineness,
validity, or the due execution of any Loan Document (except by such Agent),
(iii) any representation, warranty, document, certificate, report, or statement
made therein (except by such Agent) or furnished thereunder or in connection
therewith, (iv) observation of or compliance with any of the terms, covenants,
or conditions of any Loan Document on the part of any Company. EACH LENDER
AGREES TO INDEMNIFY EACH AGENT AND ITS REPRESENTATIVES AND HOLD THEM HARMLESS
FROM AND AGAINST (BUT LIMITED TO SUCH LENDER'S PRO RATA SHARE OF) ANY AND ALL
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS,
COSTS, REASONABLE EXPENSES, AND REASONABLE DISBURSEMENTS OF ANY KIND OR NATURE
WHATSOEVER THAT MAY BE IMPOSED ON, ASSERTED AGAINST, OR INCURRED BY THEM IN ANY
WAY RELATING TO OR ARISING OUT OF THE LOAN DOCUMENTS OR ANY ACTION TAKEN OR
OMITTED BY THEM UNDER THE LOAN DOCUMENTS IF SUCH AGENT AND ITS REPRESENTATIVES
ARE NOT REIMBURSED FOR SUCH AMOUNTS BY ANY COMPANY. ALTHOUGH EACH AGENT AND
ITS REPRESENTATIVES HAVE THE RIGHT TO BE INDEMNIFIED UNDER THIS AGREEMENT FOR
ITS OR THEIR OWN ORDINARY NEGLIGENCE, EACH AGENT
<PAGE>
AND ITS REPRESENTATIVES DO NOT HAVE THE RIGHT TO BE INDEMNIFIED UNDER THIS
AGREEMENT FOR ITS OR THEIR OWN FRAUD, GROSS NEGLIGENCE, OR WILLFUL MISCONDUCT.
A. DEFAULT. While a Default exists, the Lenders agree to promptly confer
in order that the Required Lenders or the Lenders, as the case may be, may agree
upon a course of action for the enforcement of the Rights of the Lenders.
Administrative Agent is entitled to act or refrain from taking any action
(without incurring any liability to any Person for so acting or refraining)
unless and until it has received instructions from Required Lenders. In actions
with respect to any Company's property, Administrative Agent is acting for the
ratable benefit of each Lender.
A. COLLATERAL MATTERS. So long as Borrower grants to Administrative
Agent, for the benefit of Lenders, a Lien in the Pool Properties as provided in
SECTION 4.2 herein:
(a) Each Lender authorizes and directs Administrative Agent to enter into
the Loan Documents and agrees that any action taken by Administrative Agent
concerning the Collateral (with the consent or at the request of the Required
Lenders) in accordance with any Loan Document, that Administrative Agent's
exercise (with the consent or at the request of the Required Lenders) of powers
concerning the Collateral in any Loan Document, and that all other reasonably
incidental powers are authorized and binding upon all Lenders.
(b) Administrative Agent is authorized on behalf of all Lenders, without
the necessity of any notice to or further consent from any Lender, from time to
time before a Default or Potential Default, to take any action with respect to
any Collateral or Loan Documents related to the Collateral that may be necessary
to perfect and maintain Administrative Agent's Liens in the Collateral,
including, without limitation, making Protective Advances; provided, however,
Administrative Agent shall not, without the consent of the Required Lenders,
make any Protective Advances during any one (1) calendar year in excess of the
sum of (i) amounts expended to pay real estate taxes, assessments, and
governmental charges or levies imposed upon the Collateral, (ii) amounts
expended to pay insurance premiums for policies of insurance related to the
Collateral, and (iii) $250,000.00.
(c) Except to use the same standard of care that it ordinarily uses for
collateral for its sole benefit, Administrative Agent has no obligation
whatsoever to any Lender or to any other Person to assure that the Collateral
exists or is owned by any Company or is cared for, protected, or insured or has
been encumbered or that Administrative Agent's Liens, if applicable, have been
or will be properly or sufficiently or lawfully created, perfected, protected,
or enforced or are entitled to any particular priority.
(d) Administrative Agent shall exercise the same care and prudent judgment
with respect to the Collateral and the Loan Documents as it normally and
customarily exercises in respect of similar collateral and security documents.
(e) Lenders irrevocably authorize Administrative Agent, at its option and
in its discretion, to release any Liens upon any Collateral (i) constituting
property being disposed of as permitted under any Loan Document or (ii) if
approved, authorized, or ratified in writing by the Required Lenders. Upon
request by Administrative Agent at any time, Lenders shall confirm in writing
Administrative Agent's authority to release particular Collateral under this
CLAUSE (e).
(f) In the event any or all of the Collateral is acquired by Administrative
Agent as the result of a foreclosure or the acceptance of a deed or assignment
in lieu of foreclosure, or is
<PAGE>
retained in satisfaction of all or any part of the Obligation, title to any such
Collateral or any portion thereof shall be held in the name of Administrative
Agent or a nominee or subsidiary of Administrative Agent (which in any case is
authorized to do business in the state in which such Collateral is located), as
agent, for the ratable benefit of Administrative Agent and the Lenders.
Administrative Agent shall prepare a recommended course of action for such
Collateral (the "POST-FORECLOSURE PLAN"), which shall be subject to the approval
of the Required Lenders, or shall take such action as directed by the Required
Lenders. Administrative Agent shall manage, operate, repair, administer,
complete, construct, restore, or otherwise deal with the Collateral acquired and
administer all transactions relating thereto, including, without limitation,
employing a management agent and other agents, contractors, and employees,
including agents of the sale of such Collateral, and the collecting of rents and
other sums from such Collateral and paying the expenses of such Collateral. Upon
demand therefor from time to time, each Lender will contribute its share (based
on its Pro Rata Share) of all reasonable costs and expenses incurred by
Administrative Agent pursuant to the Post-Foreclosure Plan in connection with
the construction, operation, management, maintenance, leasing and sale of such
Collateral. In addition, Administrative Agent shall render or cause to be
rendered by the managing agent, to each of the Lenders, monthly, an income and
expense statement for such Collateral, and each of the Lenders shall promptly
contribute its Pro Rata Share of any operating loss for such Collateral, and
such other expenses and operating reserves as Administrative Agent shall deem
reasonably necessary pursuant to and in accordance with the Post-Foreclosure
Plan. To the extent there is net operating income from such Collateral,
Administrative Agent shall, in accordance with the Post-Foreclosure Plan,
determine the amount and timing of distributions to the Lenders. All such
distributions shall be made to the Lenders in accordance with their respective
Pro Rata Shares. The Lenders acknowledge that if title to any Collateral is
obtained by Administrative Agent or its nominee, such Collateral will not be
held as a permanent investment but will be liquidated as soon as practicable.
Administrative Agent shall undertake to sell such Collateral, at such price and
upon such terms and conditions as the Required Lenders shall reasonably
determine to be most advantageous. Any purchase money mortgage or deed of trust
taken in connection with the disposition of such Collateral in accordance with
the immediately preceding sentence shall name Administrative Agent, as agent for
the Lenders, as the beneficiary or mortgagee. In such case, Administrative Agent
and the Lenders shall enter into an agreement with respect to such purchase
money mortgage defining the rights of the Lenders in the same Pro Rata Shares as
provided hereunder, which agreement shall be in all material respects similar to
this Agreement insofar as this Agreement is appropriate or applicable.
A. LIMITATION OF LIABILITY. No Lender or any Participant will incur any
liability to any other Lender or Participant except for acts or omissions in bad
faith, and neither Administrative Agent nor any Lender or Participant will incur
any liability to any other Person for any act or omission of any other Lender or
any Participant.
A. RELATIONSHIP OF LENDERS. The Loan Documents do not create a
partnership or joint venture among Agents and the Lenders or among the Lenders.
A. BENEFITS OF AGREEMENT. None of the provisions of this SECTION inure
to the benefit of any Company or any other Person except Agents and the Lenders.
Therefore, no Company nor any other Person is responsible or liable for,
entitled to rely upon, or entitled to raise as a defense -- in any manner
whatsoever -- the failure of any Agent or any Lender to comply with these
provisions.
<PAGE>
A. APPROVAL OF LENDERS.
1. All communications from Administrative Agent to the Lenders requesting
the Lenders' determination, consent, approval, or disapproval (i) shall be given
in the form of a written notice to each Lender, (ii) shall be accompanied by a
description of the matter or thing as to which such determination, approval,
consent, or disapproval is requested, or shall advise each Lender where such
matter or thing may be inspected, or shall otherwise describe the matter or
issue to be resolved, (iii) shall include, if reasonably requested by a Lender
and to the extent not previously provided to such Lender, written materials and
a summary of all oral information provided to Administrative Agent by Borrower
in respect of the matter or issue to be resolved, and (iv) shall include
Administrative Agent's recommended course of action or determination in respect
thereof. Each Lender shall reply promptly, but in any event (x) within thirty
(30) days (or such lesser period as may be required under the Loan Documents for
Administrative Agent to respond) for those matters requiring the consent by all
Lenders, and (y) within fifteen (15) Business Days (or such lesser period as may
be required under the Loan Documents for Administrative Agent to respond) for
those matters requiring the consent by the Required Lenders, in each instance,
after receipt of the request therefore by Administrative Agent (in either event,
the "LENDER REPLY PERIOD").
1. Unless a Lender shall give written notice to Administrative Agent that
it objects to the recommendation or determination of Administrative Agent
(together with a written explanation of the reasons behind such objection)
within the Lender Reply Period, such Lender shall be deemed to have approved of
or consented to such recommendation or determination.
I. SECTION MISCELLANEOUS.
A. HEADINGS. The headings, captions and arrangements used in any of the
Loan Documents are, unless specified otherwise, for convenience only and shall
not be deemed to limit, amplify or modify the terms of the Loan Documents, nor
affect the meaning thereof.
A. NONBUSINESS DAYS; TIME. Any payment or action that is due under any
Loan Document on a non-Business Day may be delayed until the next-succeeding
Business Day (but interest shall continue to accrue on any applicable payment
until payment is in fact made) unless the payment concerns a Eurodollar
Borrowing, in which case if the next-succeeding Business Day is in the next
calendar month, then such payment shall be made on the next-preceding Business
Day.
A. COMMUNICATIONS. Unless otherwise specifically provided, whenever any
Loan Document requires or permits any consent, approval, notice, request, demand
or other communication from one party to another, communication must be in
writing (which may be by telex or telecopy) to be effective and shall be deemed
to have been given (a) if by telex, when transmitted to the appropriate telex
number and the appropriate answerback is received, (b) if by telecopy, when
transmitted to the appropriate telecopy number (and all communications sent by
telecopy must be confirmed promptly thereafter by telephone; but any requirement
in this parenthetical shall not affect the date when the telecopy shall be
deemed to have been delivered), (c) if by mail, on the fifth (5th) Business Day
after it is enclosed in an envelope and properly addressed, stamped, sealed,
certified mail, return receipt requested, and deposited in the appropriate
official postal service, or (d) if by any other means, when actually delivered.
Until changed by notice pursuant to this Agreement, the address (and telecopy
number) for each party to a Loan Document is set forth on the attached SCHEDULE
1.
<PAGE>
A. FORM AND NUMBER OF DOCUMENTS. The form, substance, and number of
counterparts of each writing to be furnished under this Agreement must be
satisfactory to Agents and their counsel.
A. SURVIVAL. All covenants, agreements, undertakings, representations
and warranties made in any of the Loan Documents survive all closings under the
Loan Documents and, except as otherwise indicated, are not affected by any
investigation made by any party.
A. GOVERNING LAW. Except as expressly provided in a Loan Document, the
Governmental Requirements (other than conflict-of-laws provisions) of the State
of Texas and of the United States of America govern the Rights and duties of the
parties to the Loan Documents and the validity, construction, enforcement and
interpretation of the Loan Documents.
A. INVALID PROVISIONS. Any provision in any Loan Document held to be
illegal, invalid or unenforceable is fully severable; the appropriate Loan
Document shall be construed and enforced as if that provision had never been
included; and the remaining provisions shall remain in full force and effect and
shall not be affected by the severed provision. Agents, the Lenders, and
Borrower agree to negotiate, in good faith, the terms of a replacement provision
as similar to the severed provision as may be possible and be legal, valid and
enforceable. However, if the provision held to be illegal, invalid or
unenforceable is a material part of this Agreement, such invalid, illegal or
unenforceable provision shall be, to the extent permitted by applicable law,
replaced by a clause or provision judicially construed and interpreted to be as
similar in substance and content to the original terms of such illegal, invalid
or unenforceable clause or provision as the context thereof would reasonably
allow, so that such clause or provision would thereafter be legal, valid and
enforceable.
A. VENUE; SERVICE OF PROCESS; JURY TRIAL. EACH PARTY TO ANY LOAN
DOCUMENT, IN EACH CASE FOR ITSELF, ITS SUCCESSORS AND ASSIGNS (AND IN THE CASE
OF BORROWER, FOR EACH OF ITS CONSOLIDATED AFFILIATES), (a) IRREVOCABLY SUBMITS
TO THE NONEXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS OF THE STATE OF
TEXAS, (b) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
LITIGATION ARISING OUT OF OR IN CONNECTION WITH THE LOAN DOCUMENTS AND THE
OBLIGATION BROUGHT IN DISTRICT COURTS OF DALLAS COUNTY, TEXAS, OR IN THE UNITED
STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS, DALLAS DIVISION, (c)
IRREVOCABLY WAIVES ANY CLAIMS THAT ANY LITIGATION BROUGHT IN ANY OF THE
AFOREMENTIONED COURTS HAS BEEN BROUGHT IN AN INCONVENIENT FORUM, (d) IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THOSE COURTS IN ANY LITIGATION
BY THE MAILING OF COPIES THEREOF BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED,
POSTAGE PREPAID, BY HAND-DELIVERY, OR BY DELIVERY BY A NATIONALLY RECOGNIZED
COURIER SERVICE, AND SERVICE SHALL BE DEEMED COMPLETE UPON DELIVERY OF THE LEGAL
PROCESS AT ITS ADDRESS SET FORTH IN THIS AGREEMENT, (e) IRREVOCABLY AGREES THAT
ANY LEGAL PROCEEDING AGAINST ANY PARTY TO ANY LOAN DOCUMENT ARISING OUT OF OR IN
CONNECTION WITH THE LOAN DOCUMENTS OR THE OBLIGATION MAY BE BROUGHT IN ONE OF
THE AFOREMENTIONED COURTS, AND (f) IRREVOCABLY WAIVES TO THE FULLEST EXTENT
PERMITTED BY LAW, ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF ANY LOAN DOCUMENT. The scope of each of the
foregoing waivers is intended to be all-encompassing of any and all disputes
that may
<PAGE>
be filed in any court and that relate to the subject matter of this transaction,
including contract claims, tort claims, breach of duty claims, and all other
common law and statutory claims. Borrower (for itself and on behalf of each of
its Consolidated Affiliates) acknowledges that these waivers are a material
inducement to Administrative Agent's and each Lender's agreement to enter into a
business relationship, that Administrative Agent and each Lender has already
relied on these waivers in entering into this Agreement, and that Administrative
Agent and each Lender will continue to rely on each of these waivers in related
future dealings. Borrower (for itself and on behalf of each of its Consolidated
Affiliates) further warrants and represents that it has reviewed these waivers
with its legal counsel, and that it knowingly and voluntarily agrees to each
waiver following consultation with legal counsel. THE WAIVERS IN THIS SECTION
13.8 ARE IRREVOCABLE, MEANING THAT THEY MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THESE WAIVERS SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
SUPPLEMENTS, OR REPLACEMENTS TO OR OF THIS OR ANY OTHER LOAN DOCUMENT. In the
event of Litigation, this Agreement may be filed as a written consent to a trial
by the court.
A. AMENDMENTS, CONSENTS, CONFLICTS AND WAIVERS.
1. REQUIRED LENDERS. Unless otherwise specifically provided, (i) the
provisions of this Agreement may be amended, modified, or waived, only by an
instrument in writing executed by Borrower and the Required Lenders and
supplemented only by documents delivered or to be delivered in accordance with
the express terms of this Agreement, and (ii) the Collateral Documents may only
be the subject of an amendment, modification, or waiver that has been approved
by Administrative Agent and Borrower.
1. ALL LENDERS. Except as specifically otherwise provided in this SECTION
13.9, any amendment to or consent or waiver under this Agreement or any Loan
Document that purports to accomplish any of the following must be by an
instrument in writing executed by Borrower and executed (or approved, as the
case may be) by each Lender: (i) extends the Scheduled Maturity Date or the
Extended Maturity Date; (ii) extends the due date or decreases the amount of any
scheduled payment or amortization of the Obligation beyond the date specified in
the Loan Documents; (iii) decreases any rate or amount of interest, fees, or
other sums payable to Agents or Lenders under this Agreement (except such
reductions as are contemplated by this Agreement); (iv) changes the definition
of "TERM LOAN," "TERM LOANS," "REQUIRED LENDERS," or "PRO RATA SHARE"; (v)
increases any one or more Lenders' Loans; (vi) waives compliance with, amends,
or fully or partially releases any Guaranty or any Collateral except as set
forth in SECTION 8.3; (vii) permits any Obligor to assign any of its Rights or
obligations hereunder or under any of the Loan Documents; (viii) waives or
amends any of the conditions precedent to the extension of the Scheduled
Maturity Date to the Extended Maturity Date set forth in SECTION 3.18(c); or
(ix) changes this CLAUSE (b) or any other matter specifically requiring the
consent of all Lenders under this Agreement.
1. AGENTS. No amendment, modification, consent or waiver which modifies
the rights, duties, or obligations of any Agent shall be effective without the
consent of such Agent.
1. CONFLICTS. Any conflict or ambiguity between the terms and provisions
of this Agreement and terms and provisions in any other Loan Document is
controlled by the terms and provisions of this Agreement.
1. COURSE OF DEALING. No course of dealing or any failure or delay by any
Agent, any Lender, or any of their respective Representatives with respect to
exercising any Right of any Agent or any Lender under this Agreement operates as
a waiver thereof. A waiver must be
<PAGE>
in writing and signed by the Required Lenders or the Lenders, as appropriate, to
be effective, and a waiver will be effective only in the specific instance and
for the specific purpose for which it is given.
A. MULTIPLE COUNTERPARTS. Any Loan Document may be executed in a number
of identical counterparts, each of which shall be deemed an original for all
purposes and all of which constitute, collectively, one agreement; but, in
making proof of thereof, it shall not be necessary to produce or account for
more than one counterpart. Each Lender need not execute the same counterpart of
this Agreement so long as identical counterparts are executed by Borrower, each
Lender, and each Agent. This Agreement shall become effective when counterparts
of this Agreement have been executed and delivered to Administrative Agent by
each Lender, each Agent, and Borrower, or, in the case only of the Lenders, when
Administrative Agent has received telecopied, telexed or other evidence
satisfactory to it that each Lender has executed and is delivering to
Administrative Agent a counterpart of this Agreement.
A. SUCCESSORS AND ASSIGNS; PARTICIPATIONS.
1. Each Loan Document binds and inures to the benefit of the parties
thereto, any intended beneficiary thereof, and each of their respective
successors and permitted assigns. No Lender may transfer, pledge, assign, sell
any participation in, or otherwise encumber its portion of the Obligation,
except as permitted by this SECTION 13.4.
1. Subject to the provisions of this SECTION and in accordance with
applicable law, any Lender may, in the ordinary course of its commercial banking
business, at any time sell to one or more Eligible Assignees (each a
"PARTICIPANT") participating interests in its portion of the Obligation;
provided that each such participation is not less than $10,000,000.00. The
selling Lender shall remain a "Lender" under this Agreement (and the Participant
shall not constitute a "Lender" under this Agreement) and its obligations under
this Agreement shall remain unchanged. The selling Lender shall remain solely
responsible for the performance of its obligations under the Loan Documents and
shall remain the holder of its share of the Term Loans for all purposes under
this Agreement. Borrower and Administrative Agent shall continue to deal solely
and directly with the selling Lender in connection with such Lender's Rights and
obligations under the Loan Documents. Participants have no Rights under the
Loan Documents, other than certain voting Rights as provided below. Subject to
the following, each Lender may obtain (on behalf of its Participants) the
benefits of SECTION 3 with respect to all participations in its part of the
Obligation outstanding from time to time so long as Borrower is not obligated to
pay any amount in excess of the amount that would be due to such Lender under
SECTION 3 calculated as though no participations have been made. No Lender may
sell any participating interest under which the Participant has any Rights to
approve any amendment, modification or waiver of any Loan Document, except to
the extent the amendment, modification or waiver extends the due date for
payment of any principal, interest or fees due under the Loan Documents, or
reduces the interest rate or the amount of principal or fees applicable to the
Obligation (except reductions contemplated by this Agreement). However, if a
Participant is entitled to the benefits of SECTION 3 or a Lender grants Rights
to its Participants to approve amendments to or waivers of the Loan Documents
respecting the matters described in the previous sentence, then such Lender must
include a voting mechanism in the relevant participation agreement whereby a
majority of its portion of the Obligation (whether held by it or participated)
shall control the vote for all of such Lender's portion of the Obligation.
Except in the case of the sale of a participating interest to another Lender,
the relevant participation agreement shall prohibit the Participant from
transferring, pledging, assigning, selling participations in, or otherwise
encumbering its portion of the Obligation.
<PAGE>
1. Subject to the provisions of this SECTION, any Lender having a Term Loan
equal to or greater than $10,000,000.00 may at any time, in the ordinary course
of its commercial banking business, (i) without the consent of Borrower or
Agents, assign all or any part of its Rights and obligations under the Loan
Documents to any of its Affiliates (each a "PURCHASER"), and (ii) upon the prior
written consent of Agents, and so long as no Default or Potential Default
exists, Borrower, such consents not to be unreasonably withheld, assign to any
Eligible Assignee (each of which is also a "PURCHASER") a proportionate part
(not less than $10,000,000.00 and an integral multiple of $1,000,000.00) of all
or any part of its Rights and obligations under the Loan Documents; provided
that unless the Lender granting such assignment is assigning all of its Term
Loan and Note hereunder, after giving effect to such assignment, the Lender
granting such assignment shall retain a Term Loan of at least $10,000,000.00.
Notwithstanding the foregoing, each Agent shall, at all times prior to its
resignation or replacement as an Agent hereunder, retain a minimum Term Loan of
$25,000,000.00. In each case, the Purchaser shall assume those Rights and
obligations under an assignment agreement substantially in the form of the
attached EXHIBIT E. Upon (i) delivery of an executed copy of the assignment
agreement to Borrower and Administrative Agent and (ii) payment of a fee of
$3,000.00 from the transferor to Administrative Agent, from and after the
assignment's effective date (which shall be after the date of delivery), the
Purchaser shall for all purposes be a Lender party to this Agreement and shall
have all the Rights and obligations of a Lender under this Agreement to the same
extent as if it were an original party to this Agreement with commitments as set
forth in the assignment agreement, and the transferor Lender shall be released
from its obligations under this Agreement to a corresponding extent, and, except
as provided in the following sentence, no further consent or action by Borrower,
the Lenders or Administrative Agent shall be required. Upon the consummation of
any transfer to a Purchaser under this CLAUSE (c), the then-existing SCHEDULE 1
shall automatically be deemed to reflect the name, address, and Term Loan of
such Purchaser, Administrative Agent shall deliver to Borrower and the Lenders
an amended SCHEDULE 1 reflecting those changes, Borrower shall execute and
deliver to each of the transferor Lender and the Purchaser a Note in the face
amount of its respective Term Loan following transfer, and, upon receipt of its
new Note, the transferor Lender shall return to Borrower the Note previously
delivered to it under this Agreement. A Purchaser is subject to all the
provisions in this SECTION as if it were a Lender signatory to this Agreement as
of the date of this Agreement.
1. Any Lender may at any time, without the consent of Borrower or
Administrative Agent, assign all or any part of its Rights under the Loan
Documents to a Federal Reserve Bank without releasing the transferor Lender from
its obligations thereunder.
1. Until the Scheduled Maturity Date, each Agent shall identify and solicit
prospective Purchasers or Participants to be assignees of or participants in the
Rights and obligations of each Agent under this Agreement (in such capacity,
"SYNDICATING LENDERS") in an amount of up to $73,000,000.00. During such period,
the Syndicating Lenders shall (i) not solicit or enter into any such assignment
or participation except as provided in this SECTION 13.11(e), and (ii) refer
each prospective Purchaser or Participant that expresses an interest in
purchasing or acquiring any such assignment or participation to the other
Syndicating Lender. Each Syndicating Lender, upon identifying any prospective
Purchaser or Participant desiring to be an assignee of or participant in any
portion of the Rights and obligations of the Syndicating Lenders under this
Agreement, shall deliver written notice to the other Syndicating Lender of the
terms of such transaction ("PROPOSED SYNDICATION TRANSACTION"). Each
Syndicating Lender shall have the right to participate in such Proposed
Syndication Transaction on the terms set forth in such notice by so notifying
the other Syndicating Lender within five (5) days of receiving such notice. The
assignment or participation effected by such Proposed Syndication Transaction
shall be allotted equally to each participating Syndicating Lender.
Notwithstanding anything contained to the contrary in SECTION 13.11(c), the
aggregate assignments to a Purchaser by the Syndicating Lenders
<PAGE>
shall be in an aggregate amount of not less $10,000,000.00 or a greater integral
multiple of $1,000,000.00.
1. No Lender may assign or participate all or any portion of its Rights or
obligations under this Agreement to any Company or any Affiliate of any Company.
1. Borrower acknowledges that the Syndicating Lenders may use their
Affiliates (other than a real estate development or management company) (and in
the case of Documentation Agent, may use NationsBanc Capital Markets, Inc.) to
assist in the syndication of their Rights and obligations under this Agreement.
Borrower acknowledges and consents that the Syndicating Lenders may share
information relating to Borrower, PPT, and the other Companies or the
transactions contemplated hereby with their respective Affiliates (other than a
real estate development or management company), and that such Affiliates may
likewise share information relating to Borrower, PPT, and the other Companies or
such transactions with the Syndicating Lenders.
A. DISCHARGE ONLY UPON PAYMENT IN FULL; REINSTATEMENT IN CERTAIN
CIRCUMSTANCES. Borrower's obligations under the Loan Documents remain in full
force and effect until the Obligation is paid in full (except for provisions
under the Loan Documents which by their terms expressly survive payment of the
Obligation and termination of the Loan Documents). If at any time any payment
of the principal of or interest on any Note or any other amount payable by
Borrower or any other obligor on the Obligation under any Loan Document is
rescinded or must be restored or returned upon the insolvency, bankruptcy or
reorganization of Borrower or otherwise, the obligations of Borrower under the
Loan Documents with respect to that payment shall be reinstated as though the
payment had been due but not made at that time.
A. ENTIRETY. THIS AGREEMENT AND THE OTHER WRITTEN LOAN DOCUMENTS (EACH
AS AMENDED IN WRITING FROM TIME TO TIME) EXECUTED BY BORROWER, ANY LENDER OR ANY
AGENT REPRESENT THE FINAL AGREEMENT AMONG BORROWER, THE LENDERS AND AGENTS AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS BY THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE
PARTIES.
A. EFFECTIVENESS. This Agreement is executed on October 6, 1997, but
shall not be effective until executed by all parties hereto and delivered to and
accepted by Administrative Agent, and the other conditions set forth in SECTION
5 have been satisfied or waived by the Lenders in writing.
<PAGE>
SIGNATURE PAGE TO CREDIT AGREEMENT DATED AS OF OCTOBER 6, 1997
BETWEEN PRENTISS PROPERTIES ACQUISITION PARTNERS, L.P.,
NATIONSBANK OF TEXAS, N.A., AS ADMINISTRATIVE AGENT,
BANK ONE, TEXAS, N.A., AS DOCUMENTATION AGENT,
AND THE LENDERS DEFINED THEREIN
EXECUTED as of the day and year first mentioned.
PRENTISS PROPERTIES ACQUISITION PARTNERS, L.P.,
a Delaware limited partnership,
as Borrower
By: PRENTISS PROPERTIES I, INC.,
General Partner
By:
Name:
Title:
<PAGE>
SIGNATURE PAGE TO CREDIT AGREEMENT DATED AS OF OCTOBER 6, 1997
BETWEEN PRENTISS PROPERTIES ACQUISITION PARTNERS, L.P.,
NATIONSBANK OF TEXAS, N.A., AS ADMINISTRATIVE AGENT,
BANK ONE, TEXAS, N.A., AS DOCUMENTATION AGENT,
AND THE LENDERS DEFINED THEREIN
NATIONSBANK OF TEXAS, N.A.,
as Administrative Agent and a Lender
By:
Rick C. Bower
Vice President
<PAGE>
SIGNATURE PAGE TO CREDIT AGREEMENT DATED AS OF OCTOBER 6, 1997
BETWEEN PRENTISS PROPERTIES ACQUISITION PARTNERS, L.P.,
NATIONSBANK OF TEXAS, N.A., AS ADMINISTRATIVE AGENT,
BANK ONE, TEXAS, N.A., AS DOCUMENTATION AGENT,
AND THE LENDERS DEFINED THEREIN
BANK ONE, TEXAS, N.A.,
as Documentation Agent and a Lender
By:
Roderick Washington
Vice President
<PAGE>
SIGNATURE PAGE TO CREDIT AGREEMENT DATED AS OF OCTOBER 6, 1997
BETWEEN PRENTISS PROPERTIES ACQUISITION PARTNERS, L.P.,
NATIONSBANK OF TEXAS, N.A., AS ADMINISTRATIVE AGENT,
BANK ONE, TEXAS, N.A., AS DOCUMENTATION AGENT,
AND THE LENDERS DEFINED THEREIN
CRESTAR BANK, as a Lender
By:
Name:
Title:
<PAGE>
SIGNATURE PAGE TO CREDIT AGREEMENT DATED AS OF OCTOBER 6, 1997
BETWEEN PRENTISS PROPERTIES ACQUISITION PARTNERS, L.P.,
NATIONSBANK OF TEXAS, N.A., AS ADMINISTRATIVE AGENT,
BANK ONE, TEXAS, N.A., AS DOCUMENTATION AGENT,
AND THE LENDERS DEFINED THEREIN
COMERICA BANK - TEXAS, as a Lender
By:
Name:
Title:
<PAGE>
SIGNATURE PAGE TO CREDIT AGREEMENT DATED AS OF OCTOBER 6, 1997
BETWEEN PRENTISS PROPERTIES ACQUISITION PARTNERS, L.P.,
NATIONSBANK OF TEXAS, N.A., AS ADMINISTRATIVE AGENT,
BANK ONE, TEXAS, N.A., AS DOCUMENTATION AGENT,
AND THE LENDERS DEFINED THEREIN
THE FIRST NATIONAL BANK OF CHICAGO, as a Lender
By:
Name:
Title:
