Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to ______________
Commission file number 1-12193
ARDEN REALTY, INC.
(Exact name of registrant as specified in its charter)
Maryland 95-4578533
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
9100 Wilshire Bouelvard
East Tower, Suite 700
Beverly Hills, California 90212
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 271-8600
Indicate by check mark whether the registrant: (1) has
filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the
registrant was required to file such reports); and (2) has
been subject to such filing requirements for the past 90
days.
Yes X No
The number of shares of the registrant's common stock, $.01
par value, outstanding as of May 14, 1997: 21,692,833
shares.
Part I - Financial Information
Item 1. Financial Statements
<TABLE>
Arden Realty, Inc.
Consolidated Balance Sheets
(in thousands, except share amounts)
<S> <C> <C>
March 31, December 31,
Assets 1997 1996
Commercial Office Properties: (Unaudited)
Land $ 131,238 $ 116,513
Buildings and improvements 456,495 417,970
Tenant improvements 13,413 12,224
601,146 546,707
Less: accumulated depreciation (20,510) (17,139)
580,636 529,568
Cash and cash equivalents 822 7,632
Rent and other receivables 2,093 2,293
Deferred rent 6,609 6,069
Leasing commissions, net of
accumulated amortization of
$957 and $766, respectively 3,680 3,160
Prepaid financing costs, net of
accumulated amortization of
$143, and $93, respectively 805 853
Prepaid expenses and other assets 4,693 1,681
Total assets $ 599,338 $ 551,256
Liabilities
Mortgage loans payable $ 137,800 $ 104,000
Unsecured lines of credit 60,000 51,000
Accounts payable and accrued expenses 9,243 6,178
Security deposits 3,958 3,590
Dividends and distributions payable 8,677 8,844
Total liabilities 219,678 173,612
Minority interests in
Operating Partnership 47,563 45,667
Stockholders' Equity
Preferred stock, $.01 par value,
20,000,000 shares
authorized, none issued -- --
Common stock, $.01 par value,
100,000,000 shares authorized,
21,692,833 and 21,679,500
issued and outstanding 217 217
Additional paid-in capital 331,880 337,432
Accumulated deficit -- (5,672)
Total stockholders' equity 332,097 331,977
Total liabilities and
stockholders' equity $ 599,338 $ 551,256
</TABLE>
See accompanying notes.
<TABLE>
Arden Realty, Inc. Consolidated Statement of Operations
and
Arden Predecessors Combined Statement of Operations
(Unaudited)
(in thousands except per share amounts)
<S> <C> <C>
Arden Realty Inc. Arden Predecessors
For the quarter For the quarter
ended ended
March 31, 1997 March 31, 1996
Revenues
Revenues from rental operations:
Rental $ 21,892 $ 8,607
Tenant reimbursements 958 638
Parking, net of expenses 1,490 879
Other rental operations 576 280
24,916 10,404
Other income 54 415
Total revenues 24,970 10,819
Expenses
Property expenses:
Repairs and maintenance 2,841 930
Utilities 2,423 706
Real estate taxes 1,378 702
Insurance 384 781
Ground rent 51 44
Marketing and other 817 452
Total property expenses 7,894 3,615
General and administrative 918 364
Interest 3,024 6,662
Depreciation and amortization 3,562 1,582
Total expenses 15,398 12,223
Equity in net loss of noncombined entities -- (84)
Income (loss) before minority interests 9,572 (1,488)
Minority interests' share of loss of
Arden Predecessors -- 187
Minority interests in Operating Partnership (1,134) --
Net income (loss) $ 8,438 $ (1,301)
Net income per common share $ .38
Weighted average common shares outstanding 21,921,256
Cash dividends declared $ .40
</TABLE>
See accompanying notes.
<TABLE>
Arden Realty, Inc. Consolidated Statement of Cash Flows
and
Arden Predecessors Combined Statement of Cash Flows
(Unaudited)
(in thousands)
<S> <C> <C>
Arden Realty, Inc. Arden Predecessors
For the quarter For the quarter
ended ended
March 31, 1997 March 31, 1996
OPERATING ACTIVITIES:
Net income (loss) $ 8,438 $ (1,301)
Adjustments to reconcile net
income (loss) to net cash
provided by operating activities:
Minority interests in
operating partnership 1,134 --
Equity in net loss of noncombined
entities -- 84
Loss allocable to minority
interests of Arden Predecessors -- (187)
Depreciation and amortization 3,562 1,582
Amortization of loan costs and fees 50 30
Decrease (increase) in rents and
other receivables 200 (640)
Increase in deferred rent (540) (496)
(Increase) decrease in prepaid
financing and leasing costs (745) 38
Increase in prepaid expenses and
other assets (2,887) (225)
Increase in accounts payable and
accrued expenses 3,065 640
Increase in deferred interest -- 2,046
Increase in security deposits 368 460
Net cash provided by operating activities 12,645 2,031
INVESTING ACTIVITIES:
Acquisitions and improvements to
commercial office properties (53,677) (95,157)
FINANCING ACTIVITIES:
Proceeds from mortgage loans 33,800 100,036
Repayment of mortgage loans -- (1,311)
Proceeds from unsecured lines of credit 9,000 26
Repayments of unsecured lines of credit -- (250)
Proceeds from issuance of common stock,
net of offering costs 267 --
Increase in restricted cash -- (8,018)
Contributions from minority interests -- 1,000
Distributions to minority interests -- (13)
Owners' contributions -- 2,500
Owners' distributions -- (549)
Dividends and distributions paid (8,845) --
Net cash provided by financing activities 34,222 93,421
Net (decrease) increase in cash and
cash equivalents (6,810) 295
Cash and cash equivalents at
beginning of period 7,632 790
Cash and cash equivalents at
end of period $ 822 $ 1,085
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Cash paid during the period for
interest, net of interest
capitalized $ 2,860 $ 4,260
</TABLE>
See accompanying notes.
Arden Realty, Inc.
and
Arden Predecessors
Notes to Financial Statements
(Unaudited)
The consolidated financial statements of Arden Realty,
Inc., (the "Company") and the combined financial statements
of the Arden Predecessors (defined below) included herein
have been prepared in accordance with Securities and
Exchange Commission Regulations and therefore do not include
all disclosures required under generally accepted accounting
principles. Reference is made to the audited financial
statements filed with Form 10-K for the period October 9,
1996 to December 31, 1996 for the Company and for the period
January 1, 1996 to October 8, 1996 for the Arden
Predecessors with respect to significant accounting and
financial reporting policies as well as other pertinent
information of the Company and the Arden Predecessors. The
financial statements reflect all adjustments which are, in
the opinion of management, of a normal recurring nature and
necessary for a fair statement of the results for the
interim periods. Interim results of operations are not
necessarily indicative of the results to be expected for the
full year.
1. Organization and Formation of the Company
The Company, through its controlling interest in Arden
Realty Limited Partnership (the "Operating Partnership"), is
engaged in the ownership, acquisition, renovation, leasing
and management of commercial office properties located in
Southern California. As of March 31, 1997 the Company's
portfolio of properties included 37 office properties
(collectively the "Properties").
The Company was incorporated in Maryland in May 1996
and formed to continue and expand the real estate business
of Arden Realty Group, Inc. and a group of affiliated
entities (the "Arden Predecessors"). On October 9, 1996,
the Company completed an initial public offering (the
"Offering") of 18,847,500 shares of $.01 par value common
stock (the "Common Stock"). The Offering price was $20.00
per share resulting in gross proceeds of $376,950,000. Also
on October 9, 1996, the underwriters exercised their over
allotment option and, accordingly, the Company issued an
additional 2,827,000 shares of Common Stock and received
gross proceeds of $56,540,000. The aggregate proceeds to
the Company, net of underwriters' discount, advisory fee and
offering costs aggregating $36,181,000, were approximately
$397,309,000.
Concurrently with the consummation of the Offering, the
Company and the Operating Partnership, together with the
partners and members of the Arden Predecessors, engaged in
certain formation transactions (the "Formation
Transactions") which, among other things, resulted in the
acquisition by the Company and Operating Partnership of 24
of the 37 Properties (the "Initial Properties").
The Formation Transactions included the following:
Pursuant to separate option agreements (the "Option
Agreements"), the Company acquired for cash from
certain participants in the Formation Transactions (the
"Cash Participants") the interests owned by such Cash
Participants in certain of the Arden Predecessors and
in certain of the Initial Properties. The Company paid
approximately $26.8 million from the net proceeds of
the Offering for such interests, which represented
31.7% of the ownership interests in the Initial
Properties acquired by the Company.
The Company contributed (i) the interests in the Arden
Predecessors and in the Initial Properties acquired
pursuant to the Option Agreements and (ii) the net
proceeds from the Offering (after payment of the cash
consideration to the Cash Participants as described
above) to the Operating Partnership in exchange for an
88.2% general partner interest in the Operating
Partnership, representing the sole general partnership
interest.
Pursuant to separate contribution agreements (the
"Contribution Agreements"), the following additional
contributions were made by certain other participants
in the Formation Transactions (the "Unit Participants")
to the Operating Partnership in exchange for limited
partner interests in the Operating Partnership ("OP
Units"): (i) the remaining interests in the Arden
Predecessors and in certain of the Initial Properties
(i.e., all interests not acquired by the Company
pursuant to the Option Agreements) and (ii) certain
assets, including management contracts relating to
certain of the Initial Properties and the contract
rights to purchase two properties (303 Glenoaks and
12501 East Imperial Highway). The Unit Participants
making such contributions (a total of seven individuals
and entities including Arden Realty Group, Inc.,
Richard Ziman, Victor Coleman, and Arthur Gilbert),
received an aggregate of 2,889,071 OP Units, with a
value of approximately $57.8 million based on the
initial public offering price of the Common Stock.
The Company, through the Operating Partnership,
borrowed, from an affiliate of Lehman Brothers, $57
million aggregate principal amount under a one year
interim loan (the "Interim Financing") which is non-
recourse to the Company and the Operating Partnership
and was secured by cross-collateralized and cross-
defaulted first mortgage liens on nine of the Initial
Properties.
Approximately $33 million of the net proceeds of the
Offering were used by the Operating Partnership to
purchase two properties, 303 Glenoaks and 12501 East
Imperial Highway.
The Company used a portion of the proceeds of the
Offering and the Interim Financing to repay
approximately $370 million of mortgage debt secured by
the Initial Properties and indebtedness outstanding
under lines of credit assumed by the Operating
Partnership in the Formation Transactions.
2. Basis of Presentation and Summary of Other Significant
Accounting Policies
Arden Realty, Inc.
The accompanying consolidated financial statements of
the Company include the accounts of the Company and the
Operating Partnership. All significant intercompany
balances and transactions have been eliminated in
consolidation.
The minority interests at March 31, 1997 represent a
limited partnership interest in the Operating Partnership of
approximately 12%.
Arden Predecessors
The Arden Predecessors were not a single legal entity
but rather a combination of partnerships and an affiliated
real estate management corporation (each an "Arden
Predecessor entity"). All of the Arden Predecessor entities
and the properties held by such entities were managed by
Richard Ziman and Victor Coleman. The Arden Predecessor
entities in which Messrs. Ziman, Coleman and Gilbert or
their affiliates held controlling interests have been
combined in the accompanying financial statements. Minority
interests have been recorded, however, for those Arden
Predecessor entities that were controlled but not wholly-
owned by Messrs. Ziman, Coleman and Gilbert or their
affiliates. The Arden Predecessor entities in which Messrs.
Ziman, Coleman and Gilbert or their affiliates did not hold
controlling interests or have the unilateral right to
refinance the debt on such entities' properties, were
accounted for as investments in noncombined entities
utilizing the equity method of accounting.
3. Mortgage Notes Payable
The Company has replaced the Interim Financing with a
new mortgage loan (the "Amended Interim Financing") with a
total commitment of $175 million from an affiliate of
Lehman Brothers. The Amended New Interim Financing dated
March 17, 1997 matures on September 30, 1997 and bears
interest at a floating rate equal to LIBOR plus 1.50% on or
before March 31, 1997 and LIBOR plus 2.00% for any
subsequent period through maturity. The Amended Interim
Financing is secured by fully cross-collateralized and
cross-defaulted first mortgage liens on 12 of the Properties
and requires monthly payments of interest only, with all
principal due at maturity. On March 31, 1997, the aggregate
outstanding balance was $137,800,000 and the undisbursed
portion was $37,200,000.
The LIBOR rate was 5.8% and 5.6% at March 31, 1997 and
December 31, 1996, respectively.
The Company has a line of credit with a total
commitment of $150,000,000 (the "Credit Facility") from a
group of banks led by Wells Fargo Bank (the "Lenders"). The
Credit Facility allows the Company to borrow $75,000,000 on
an unsecured basis at LIBOR plus 1.75%, and any additional
draws to the Credit Facility accrue interest at LIBOR plus
1.5% and must be secured by real property. On March 31,
1997, the aggregate outstanding balance under the Credit
Facility was $51,000,000 (unsecured).
The Company has accepted a term sheet from Wells Fargo
Bank for an amendment to its Credit Facility (the "Amended
Credit Facility"). The Amended Credit Facility will be
unsecured, with a total commitment of $300,000,000, for a
term of three years. The interest rate for the Amended
Credit Facility will range from LIBOR plus 1.2% to LIBOR
plus 1.45%, depending upon the Company's leverage ratio as
defined in the Amended Credit Facility documentation. The
amendment to the Credit Facility is contingent upon the
execution of loan documents, which will be based upon the
existing Credit Facility documentation and will contain
indemnities, financial and other covenants, representations
and warranties, events of default and other provisions that
are customary for facilities of this type.
As of May 5, 1997, the Company entered into a revolving
credit agreement with Wells Fargo Bank (the "Bridge
Facility"). The Bridge Facility is unsecured, with a total
commitment of $110,000,000, with a maturity date of the
earlier to occur of June 30, 1997 or completion of
documentation of the Amended Credit Facility. The interest
rate for the Bridge Facility ranges from LIBOR plus 1.2% to
LIBOR plus 1.45%, depending upon the Company's leverage
ratio as defined in the Bridge Facility agreement. The
initial interest rate is LIBOR plus 1.3%. The Bridge
Facility documentation contains indemnities, financial and
other covenants, representations and warranties, events of
default and other provisions that are customary for
facilities of this type.
The Company also has an unsecured line of credit with a
total commitment of $10,000,000 from City National Bank (the
"City National Credit Facility"). On March 31, 1997 the
aggregate outstanding balance thereunder was $9,000,000.
The City National Credit Facility accrues interest at the
City National Bank Prime Rate less 0.875%, and is scheduled
to mature on August 1, 1998. The City National Credit
Facility is used, among other things, to provide funds for
tenant improvements and capital expenditures and provide for
working capital and other corporate purposes.
The City National Bank Prime Rate was 8.5% at March 31,
1997.
4. Commercial Office Properties and Furniture, Fixtures and
Equipment
In March 1997, the Company completed a series of
transactions to acquire four office properties located in
California, including a 109,187 square foot building located
in Glendale from a related party for $10.0 million, an
80,014 square foot building in Woodland Hills for $7.5
million, a 135,415 square foot building in Whittier for
$14.3 million, and a 155,189 square foot building in
Bakersfield for $19.5 million. The Company plans to spend
approximately $4.0 million on renovations over the next 15
months on the property located in Glendale. These
acquisitions were funded with existing working capital,
proceeds from the Amended Interim Financing and the
unsecured lines of credit. In addition, 26,880 OP Units
valued at approximately $763,000 were issued in
conjunction with the purchase of the property located in
Bakersfield.
In April 1997, the Company purchased an additional four
office properties located in California, including a 43,063
square foot building located in Woodland Hills for $5.2
million, a 51,828 square foot building in Sherman Oaks for
approximately $6.7 million, a 92,486 square foot building in
West Los Angeles for approximately $10.6 million and a
202,830 square foot building in Gardena for $19.1 million.
These acquisitions were funded with proceeds from the
Amended Interim Financing and draws from the unsecured lines
of credit.
In May 1997, the Company purchased a 417,463 square
foot office building in Beverly Hills, California for $59.0
million. This acquisition was funded with proceeds from the
Bridge Facility.
5. Stockholders Equity
In March 1997, options to purchase 13,333 shares of
Common Stock were exercised.
On March 28, 1997, the Operating Partnership issued
26,880 OP Units valued at approximately $763,000 in
connection with the acquisition of the property located in
Bakersfield, California.
Net income per share was calculated using the weighted
average number of shares of Common Stock outstanding of
21,921,256 for the three months ended March 31, 1997.
In February 1997, the Financial Accounting Standards
Board (FASB), issued Statement of Financial Accounting
Standards No. 128 "Earnings Per Share" which is required to
be adopted on December 31, 1997. At that time the Company
will be required to change the method currently used to
compute earnings per share and to restate all prior periods.
Under the new requirements for calculating primary earnings
per share, the dilutive effect of stock options will be
excluded. This will not have a material impact on primary
earnings per share for the first quarter ended March 31,
1997. The Company has not yet determined what the impact of
Statement 128 will be on the calculation of fully diluted
earnings per share.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Overview
The following discussion relates to the consolidated
financial statements of the Company and the combined
financial statements of the Arden Predecessors, and should
be read in conjunction with the financial statements and
related notes thereto included in the Form 10-K of the
Company for the year ended December 31, 1996.
During the first three months of 1997, the Company
acquired four office properties for approximately $51.3
million, encompassing approximately 480,000 square feet.
Through these acquisitions, the Company increased total
assets to $599.3 million, including real estate assets of
$580.6 million (net of accumulated depreciation) at March
31, 1997.
Income is derived primarily from rental revenue
(including tenant reimbursements) and parking revenue from
commercial office properties, and to a lesser extent, from
the management of certain properties owned by third parties.
As a result of the Company's and the Arden Predecessors'
aggressive acquisition program, the financial data shows
significant increases in total revenue from quarter to
quarter, largely attributable to the acquisitions made
during 1996 and 1997, and the benefit of a full period of
effective rental and other revenue for properties acquired
in the preceding year. For the foregoing reasons,
management does not believe the year to year and quarter to
quarter financial data are comparable.
The Company expects that the more significant part of
its revenue growth in the next one to two years will come
from additional acquisitions rather than from occupancy and
market rent increases in its current portfolio. On the
other hand, the Company believes that if the Southern
California office rental market continues to improve, then
rental rate increases will become a more substantial part of
its revenue growth over time.
Results of Operations
Comparison of the three months ended March 31, 1997 to
the three months ended March 31, 1996. The Company's
management believes that in order for a meaningful analysis
of the financial statements to be made, certain transactions
which occurred in 1996 should be considered in a manner
which makes each accounting period comparable. Accordingly,
the revenue and expenses for the noncombined entities for
the three months ended March 31, 1996 have been included as
though they were combined, with intercompany management fees
relating to the noncombined entities of $203,000 eliminated
in 1996 in the following discussion. The following section
discusses the results of operations, as adjusted and in
thousands.
Three months ended March 31, 1997 Compared to three months
ended March 31, 1996
Three Months Ended March 31,
1997 1996
Revenue
Rental $ 21,892 $ 12,471
Tenant reimbursements 958 758
Parking, net of expense 1,490 1,142
Other 630 557
Total revenues 24,970 14,928
Expenses
Repairs and maintenance 2,841 1,440
Utilities 2,423 1,137
Real estate taxes 1,378 957
Insurance 384 872
Ground rent 51 47
Marketing and other 817 732
Total property expenses 7,894 5,185
General and administrative 918 364
Interest 3,024 8,832
Depreciation and amortization 3,562 2,396
Total expenses $ 15,398 $ 16,777
Rental revenue increased by $9.4 million or 76% for the
three months ended March 31, 1997 compared to the three
months ended March 31, 1996. The increase in rental revenue
resulted principally from a full three months of rental
revenue from properties acquired during 1996. Rental
revenue from the properties acquired in 1996 increased to
$11.2 million for the three months ended March 31, 1997,
representing a full three months of rental revenue, from
$2.2 million in the prior period. Rental revenue associated
with properties acquired in the first three months of 1997
added an additional $123,000 to rental revenue for the three
months ended March 31, 1997. The remaining increase in
revenue resulted primarily from an increase in occupancy.
Tenant reimbursements and other revenue increased by
$273,000 or 21% for the three months ended March 31, 1997,
compared to the three months ended March 31, 1996. The
increase in tenant reimbursements and other revenue resulted
principally from a full three months of tenant
reimbursements from properties acquired during 1996. Tenant
reimbursements associated with the properties acquired in
1996 increased to approximately $442,000 for the three
months ended March 31, 1997 from approximately $141,000 for
the three months ended March 31, 1996. This increase was
partially offset by the decrease in tenant reimbursements
resulting from a reset in the base year for leases that were
renewed or retenanted. Other revenue, consisting primarily
of interest income and miscellaneous tenant charges, such as
after hours utility and HVAC charges, increased by 13.6% for
the three months ended March 31, 1997 compared to the prior
year.
Parking revenue increased by $348,000 or 30% for the
three months ended March 31, 1997 compared to the three
months ended March 31, 1996. The increase resulted
principally from a full three months of parking revenue
from properties acquired during 1996. Parking revenue
associated with the properties acquired in 1996 increased to
approximately $374,000 for the three months ended March 31,
1997 from approximately $77,000 for the three months ended
March 31, 1996.
The following is a comparison of certain expenses for
the three months ended March 31, 1997 and March 31, 1996:
<TABLE>
<S> <C> <C> <C> <C>
Three Months Ended
March 31, Dollar Percent
1997 1996 Change Change
Certain expenses:
Repairs and maintenance $ 2,841 $ 1,440 $ 1,401 97%
Utilities 2,423 1,137 1,286 113%
Real estate taxes 1,378 957 421 4.4%
Insurance 384 872 (488) (56)%
Ground rent 51 47 4 9%
Marketing and other 817 732 85 12%
Total certain expenses $ 7,894 $ 5,185 $ 2,709 52.2%
</TABLE>
For the three months ended March 31, 1997 and 1996,
total certain expenses were $7.9 million, or 35% of rental
revenue and tenant reimbursements, and $5.2 million or 39%
of rental revenue and tenant reimbursements, respectively.
The increase in total certain expenses is primarily
attributable to the properties acquired during 1996 and 1997
and the expenses associated with the absorption of vacant
rentable space. The increase in total certain expenses from
the three months ended March 31, 1996 to the three months
ended March 31, 1997 resulting from the properties acquired
during 1996 was approximately $2.7 million.
General and administrative expenses increased by
$554,000 or 152% for the three months ended March 31, 1997
compared to the three months ended March 31, 1996. The
increase resulted principally from the increase in portfolio
size and the increase in management and administration costs
associated with the Company's infrastructure relative to the
Arden Predecessors'.
Interest expense includes interest at the contractual
current pay rate of the mortgage loans, amortization of the
loan fees paid at origination, and accrual of additional
interest due upon the retirement of the debt. Interest
expense for the three months ended March 31, 1997 was
approximately $3.0 million. Interest expense decreased by
approximately $5.8 million or 66% for the three months ended
March 31, 1997 compared to the three months ended March 31,
1996, primarily as a result of the decrease in mortgage
loans payable during the applicable periods.
Depreciation and amortization increased by
approximately $1.2 million or 49% primarily due to 1996
acquisitions.
The following is a comparison of property operating data for
the properties ("Same Store Properties") that were owned for
the entire three months ended March 31, 1997 and March 31,
1996 (in thousands):
March 31,
1997 1996
Revenue:
Rental $10,561 $10,242
Tenant reimbursements 516 617
Parking 1,116 1,064
Other 298 170
Total revenue $12,491 $12,093
Expenses:
Property operating, taxes,
insurance, and ground rent$ 4,122 $ 4,064
Rental revenues increased slightly during the first
three months of 1997 compared to 1996 primarily due to an
increase in occupancy. Tenant reimbursements decreased by
$101,000 during the same period, primarily resulting from a
reset in the base year for leases that were renewed or
retenanted. For the three months ended March 31, 1997,
parking income increased by $52,000 over the same period in
1996. Other income increased by $128,000 in 1997 compared
to 1996 due to increased recurring and non-recurring income
relating to miscellaneous tenant charges. Property
operating expenses, taxes, and ground rent, increased
slightly in the three months ended March 31, 1997 compared
to the three months ended March 31, 1996 primarily due to an
increase in occupancy. This was partially offset by a
decrease in insurance due to a more favorable insurance
policy.
Liquidity and Capital Resources
Amended Interim Financing. The Company has replaced
the Interim Financing with the Amended Interim Financing
with a total commitment of $175 million from an affiliate of
Lehman Brothers. The Amended Interim Financing, dated March
17, 1997 matures on September 30, 1997 and bears interest at
a floating rate equal to LIBOR plus 1.50% on or before March
31, 1997 and LIBOR plus 2.00% for any subsequent period
through maturity. The Amended Interim Financing is secured
by fully cross-collateralized and cross-defaulted first
mortgage liens on 12 of the Properties and requires monthly
payments of interest only, with all principal due at
maturity. As of March 31, 1997, the aggregate outstanding
balance was $137,800,000 and the undisbursed portion was
$37,200,000. Currently, the aggregate outstanding balance
is $175,000,000.
The Company intends to refinance the Amended Interim
Financing through an offering of commercial mortgage-backed
securities (the "CMBS Offering") to be made by a financing
subsidiary which the Company intends to form for that
purpose in an amount of approximately $175 million with a
term of seven years. The CMBS Offering is expected to bear
interest at a floating rate based on LIBOR plus a fixed
spread. Effective January 2, 1997, the Company entered into
interest rate floor and cap transactions with a notional
amount of $155 million. The Company entered into these
agreements to convert floating rate liabilities to fixed
rate liabilities. These agreements fix the LIBOR portion of
the interest rate at 6.6% through March 2004. The CMBS
Offering is expected to require monthly payments of interest
only with all principal due in a balloon payment at
maturity. The Company expects to pursue the CMBS Offering
during 1997, although there can be no assurance that the
Company will complete the CMBS Offering.
Credit Facilities. The Company's current Credit Facility, with
a total commitment of $150,000,000 from a group of banks led
by Wells Fargo Bank (the "Credit Facility"), allows the
Company to borrow $75,000,000 on an unsecured basis at LIBOR
plus 1.75% and any additional draws on the Credit Facility
will accrue interest at LIBOR plus 1.5% and must be secured
by real property. On March 31, 1997, the aggregate
outstanding balance under the Credit Facility was
$51,000,000 (unsecured). Currently, the aggregate
outstanding balance is $54,200,000.
The Company has accepted a term sheet from Wells Fargo
Bank for an amendment to its Credit Facility (the "Amended
Credit Facility"). The Amended Credit Facility will be
unsecured, with a total commitment of $300,000,000, for a
term of three years. The interest rate for the Amended
Credit Facility will range from LIBOR plus 1.2% to LIBOR
plus 1.45%, depending upon the Company's leverage ratio as
defined in the Amended Credit Facility documentation. The
amendment to the Credit Facility is contingent upon the
execution of loan documents, which will be based upon the
existing Credit Facility documentation and will contain
indemnities, financial and other covenants, representations
and warranties, events of default and other provisions that
are customary for facilities of this type.
As of May 5, 1997, the Company entered into a revolving
credit agreement with Wells Fargo Bank (the "Bridge
Facility"). The Bridge Facility is unsecured, with a total
commitment of $110,000,000, with a maturity date of the
earlier to occur of June 30, 1997 or completion of
documentation of the Amended Credit Facility. the interest
rate for the Bridge Facility ranges from LIBOR plus 1.2% to
LIBOR plus 1.45%, depending upon the Company's leverage
ratio as defined in the Bridge Facility agreement. The
initial interest rate is LIBOR plus 1.3%. The Bridge
Facility documentation contains indemnities, financial and
other covenants, representations and warranties, events of
default and other provisions that are customary for
facilities of this type.
The Company also has an unsecured line of credit with a
total commitment of $10,000,000 from City National Bank (the
"City National Credit Facility"). On March 31, 1997 the
aggregate outstanding balance thereunder was $9,000,000.
Currently, the aggregate outstanding balance is $10,000,000
The City National Credit Facility accrues interest at the
Prime Rate of City National Bank less 0.875%, and is
scheduled to mature on August 1, 1998. The City National
Credit Facility is used, among other things, to provide
funds for tenant improvements and capital expenditures and
provide for working capital and other corporate purposes.
PART II - Other Information
Item 1. Legal Proceedings - None
Item 2. Changes in Securities
In March 1997, the Operating Partnership issued 26,880
OP Units as partial consideration in the acquisition of the
property located in Bakersfield, California. The holder of
the OP Unitsissued in this acquisition may redeem part or
all of its OP Units for
cash, or at the election of the Company, exchange such OP
Units for shares of Common Stock on a one-for-one basis;
however, such redemption/exchange right may not be exercised
prior to the first anniversary of the date such OP Units
were issued.
The issuance of OP Units in the above described
acquisition constitutes a private placement of securities
which is exempt from the registration requirements of the
Securities Act of 1933, as amended, pursuant to Section 4(2)
and Rule 506 of Regulation D promulgated thereunder.
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a vote of Securities
Holders - None
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Description
3.1 Amended and Restated Articles of Incorporation as
filed as an exhibit to Registration Statement on
Form S-11 (No. 333-8163) and incorporated herein
by reference.
3.2 By-Laws of Registrant as filed as an exhibit to
Registration Statement on Form S-11 (No. 333-8163)
and incorporated herein by reference.
10.1 Amended and Restated Agreement of Limited
Partnership of the Operating Partnership as filed
as an exhibit to Registration Statement on Form S-
11 (No. 333-8163) and incorporated herein by
reference.
10.2 1996 Stock Option and Incentive Plan as filed as
an exhibit to Registration Statement on Form S-11
(No. 333-8163) and incorporated herein by
reference.
10.3 Form of Officers and Directors Indemnification
Agreement as filed as an exhibit to Registration
Statement on Form S-11 (No. 333-8163) and
incorporated herein by reference.
10.4 Employment Agreement between the Company and Mr.
Ziman as filed as an exhibit to Registration
Statement on Form S-11 (No. 333-8163) and
incorporated herein by reference.
10.5 Employment Agreement between the Company and Mr.
Coleman as filed as an exhibit to Registration
Statement on Form S-11 (No. 333-8163) and
incorporated herein by reference.
10.6 Employment Agreement between the Company and Ms.
Laing as filed as an exhibit to Registration
Statement on Form S-11 (No. 333-8163) and
incorporated herein by reference.
10.7 Miscellaneous Rights Agreement among the Company,
the Operating Partnership, NAMIZ, Inc. and Mr.
Ziman as filed as an exhibit to Registration
Statement on Form S-11 (No. 333-8163) and
incorporated herein by reference.
10.8 Second Loan Modification Agreement, Modification
to Deed of Trust, Assignment of Rents and Leases,
Security Agreement and Fixture Filing and
Modification to Assignment of Leases and Rents
between Arden Realty Limited Partnership and
Lehman Brothers Holdings, Inc.
10.9 Revolving Credit Agreement Between Arden Realty
Limited Partnership as Borrower and Wells Fargo
Bank as Lender
11.1 Computation of Fully-Diluted Earnings Per Share.
27 Financial Data Schedule
(b) Reports on Form 8-K
None
Signatures
Pursuant to the requirements of the Securities and
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned
thereunto duly authorized.
ARDEN REALTY, INC.
By: /s/ Diana M. Laing
Diana M. Laing
Chief Financial Officer
(Principal Financial and
Accounting Officer)
Date: May 15, 1997
25
SECOND LOAN MODIFICATION AGREEMENT, MODIFICATION TO
DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES,
SECURITY AGREEMENT AND FIXTURE FILING AND
MODIFICATION TO ASSIGNMENT OF LEASES AND RENTS
THIS SECOND LOAN MODIFICATION AGREEMENT, MODIFICATION TO
DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES, SECURITY AGREEMENT AND
FIXTURE FILING AND MODIFICATION TO ASSIGNMENT OF LEASES AND RENTS
(this "Modification Agreement") is entered into as of April 1, 1997,
by and between ARDEN REALTY LIMITED PARTNERSHIP, a Maryland limited
partnership having an office at 9100 Wilshire Boulevard, Beverly
Hills, California 90212 (the "Borrower"), and LEHMAN BROTHERS
HOLDINGS INC., D/B/A LEHMAN CAPITAL, A DIVISION OF LEHMAN BROTHERS
HOLDINGS INC., a Delaware corporation having an office at Three World
Financial Center, 200 Vesey Street, New York, New York 10285 (the
"Lender").
WHEREAS, the Lender previously has made a loan to the
Borrower in the original principal amount of One Hundred Thirty-Seven
Million Eight Hundred Thousand Dollars ($137,800,000) (the "Loan")
pursuant to that certain Loan Agreement between the Borrower and the
Lender dated as of October 9, 1996 as amended by that certain First
Amendment to Loan Agreement dated as of December 17, 1996 and as
further amended by that certain Loan Modification Agreement,
Modification to Deed of Trust, Assignment of Rents and Leases,
Security Agreement and Fixture Filing and Modification to Assignment
of Leases and Rents (the "First Modification Agreement") made and
entered into as of March 17, 1997 (collectively, the "Loan
Agreement");
WHEREAS, the Borrower's obligation to repay the Loan is
evidenced by that certain Amended and Restated Mortgage Note (the
"Note") dated as of March 17, 1997 by the Borrower to the order of
Lender and its successors and assigns in the original principal amount
of One Hundred Thirty-Seven Million Eight Hundred Thousand Dollars
($137,800,000);
WHEREAS, the Borrower's obligation to repay the Loan is
secured by, among other things, a certain Deed of Trust, Assignment of
Rents and Leases, Security Agreement, and Fixture Filing dated as of
October 9, 1996, by the Borrower to the Trustee named therein for the
benefit of the Lender which Deed of Trust, Assignment of Rents and
Leases, Security Agreement and Fixture Filing was recorded (i) among
the land records of Los Angeles County, California on October 15,
1996, as Instrument No. 96-166943, (ii) among the land records of San
Diego County, California on October 14, 1996, as Instrument No. 1996-
0520877, and (iii) among the land records of Orange County California
on October 11, 1996, as Instrument No. 19960520239 and was modified by
the First Modification Agreement (said Deed of Trust, Assignment of
Rents and Leases, Security Agreement and Fixture Filing, as modified
by the First Modification Agreement, shall be known as the
"Mortgage");
WHEREAS, pursuant to the Mortgage, the Borrower granted
first priority liens on nine (9) parcels of real property and the
improvements thereon, which real property is more particularly
described on Exhibit A-1 through Exhibit A-9 to the Mortgage
(collectively, the "Initial Mortgaged Properties");
WHEREAS, the Borrower's obligation to repay the Loan is also
secured by, among other things, a certain Assignment of Leases and
Rents, dated as of October 9, 1996, by the Borrower to the Lender
which Assignment of Leases and Rents was recorded (i) among the land
records of Los Angeles County, California on October 15, 1996, as
Instrument No. 96-166944, (ii) among the land records of San Diego
County, California on October 14, 1996, as Instrument No. 1996-
0520878, and (iii) among the land records of Orange County California
on October 11, 1996, as Instrument No. 19960520240 and was modified by
the First Modification Agreement (said Assignment of Leases and Rents,
as modified by the First Modification Agreement, shall be known as the
"Assignment");
WHEREAS, the First Modification Agreement was recorded (i)
among the land records of Los Angeles County, California on March 24,
1997, as Instrument No. 97-436529, (ii) among the land records of San
Diego County on March 24, 1997 as Instrument No. 1997-0129368 and
(iii) among the land records of Orange County, California on March 24,
1997 as Instrument No. 199701305942;
WHEREAS, the Borrower has requested and the Lender has
agreed to increase the outstanding principal balance of the Loan to
One Hundred Seventy-Five Million Dollars ($175,000,000) on the terms
and conditions set forth herein;
WHEREAS, the Lender's agreement to increase the amount of
the Loan as provided in the foregoing paragraph is conditioned, among
other things, on the Borrower granting to the Lender first priority
liens on three (3) additional parcels of real property, which real
property is more particularly described on Attachment 1 attached
hereto and made a part hereof, and the improvements thereon
(collectively, the "New Mortgaged Properties") and associated personal
property, as provided below, as additional security for the Borrower's
obligation to repay the Loan; and
WHEREAS, the Borrower and the Lender desire to modify the
Loan Agreement and the other Loan Documents (as defined in the Loan
Agreement) to increase the amount of the Loan as provided above and to
make such other modifications to the Loan Documents as are set forth
herein.
NOW THEREFORE, in consideration of the foregoing and of
other good and valuable consideration, the receipt and sufficiency of
which hereby are acknowledged, the Borrower and the Lender hereby
agree as follows:
1. All capitalized terms not otherwise defined herein
shall have the meanings ascribed to such terms in the Loan Agreement.
2. Section 1.1 of the Loan Agreement hereby is amended by
the deletion of the definition of "Assignment of Leases and Rents" in
its entirety and the insertion, in lieu thereof, of the following:
"Assignment of Leases and Rents" means
collectively (i) that certain Assignment of
Leases and Rents dated as of October 9, 1996 made
by Borrower to Lender and recorded in the land
records of Los Angeles, San Diego and Orange
Counties, California with respect to the Initial
Mortgaged Properties, as from time to time
amended and (ii) that certain Assignment of
Leases and Rents dated as of April 1, 1997 and to
be recorded in the land records of Los Angeles
County, California made by Borrower to Lender
with respect to the New Mortgaged Properties.
3. Section 1.1 of the Loan Agreement hereby is further
amended by the deletion of the definition of "Land" in its entirety
and the insertion, in lieu thereof, of the following:
"Land" means collectively (i) the parcels of land on which
the Initial Mortgaged Properties are located, as more fully
described on Schedule B attached hereto, together with (ii)
the parcels of land on which the Additional Mortgaged
Properties are located, as more fully described on
Schedule C attached hereto.
4. Section 1.1 of the Loan Agreement hereby is further
amended by the deletion from the definition of "Loan Amount" of the
phrase "One Hundred Thirty-Seven Million Eight Hundred Thousand and
No/100 Dollars ($137,800,000)" and the insertion, in lieu thereof, of
the phrase "One Hundred Seventy-Five Million Dollars ($175,000,000)."
5. Section 1.1 of the Loan Agreement hereby is further
amended by the deletion from the definition of "Mortgaged Properties"
of the phrase "on Schedule A hereto" and the insertion, in lieu
thereof, of the following:
as "Initial Mortgaged Properties" on Schedule A
hereto together with the 3 office properties
identified as "Additional Mortgaged Properties"
on Schedule A hereto.
6. Section 1.1 of the Loan Agreement hereby is further
amended by the deletion of the definition of "Mortgage" in its
entirety and the insertion, in lieu thereof, of the following:
"Mortgage" means, collectively, (i) that certain
Deed of Trust, Assignment of Rents and Leases,
Security Agreement and Fixture Filing, dated as
of October 9, 1996 by Borrower to the trustee
named therein for the benefit of Lender and
recorded in the land records of Los Angeles, San
Diego and Orange Counties, California with
respect to the Initial Mortgaged Properties, as
from time to time amended and (ii) that certain
Deed of Trust, Assignment of Rents and Leases,
Security Agreement and Fixture Filing dated as of
April 1, 1997 and to be recorded among the land
records of Los Angeles County, California with
respect to the Additional Mortgaged Properties.
7. Section 1.1 of the Loan Agreement hereby is further
amended by the deletion of the definition of "Security Agreement" in
its entirety and the insertion, in lieu thereof, of the following:
"Security Agreement" means, collectively, (i)
that certain Security Agreement dated as of
October 9, 1996 between Borrower and Lender, as
from time to time amended and (ii) that certain
Security Agreement dated as of April 1, 1997
between Borrower and Lender
8. Section 1.1 of the Loan Agreement hereby is further
amended by the insertion therein of the following definitions:
"Initial Mortgaged Properties" means the 9 office
buildings identified on Schedule A hereto as
Initial Mortgaged Properties.
"Additional Mortgaged Properties" means the 3
office properties identified on Schedule A hereto
as Additional Mortgaged Properties.
9. Schedule A to the Loan Agreement hereby is deleted in
its entirety and in lieu thereof is substituted Attachment 2 to this
Modification Agreement.
10. The Loan Agreement hereby is further amended by the
addition thereto, as Schedule C thereto, of Attachment 1 to this
Modification Agreement.
11. On the date hereof, but only upon satisfaction of all
of the conditions set forth in Paragraph 16 below, the Lender shall
make an Additional Advance to the Borrower in the amount of Thirty-
Seven Million Two Hundred Thousand Dollars ($37,200,000). The
Borrower hereby acknowledges that upon the funding of said Additional
Advance, the entire Loan Amount shall have been advanced to the
Borrower and that the Lender shall have no further obligation to
advance any loan proceeds or other amount under the Loan Agreement or
under any of the other Loan Documents.
12. The Mortgage hereby is amended by the insertion at the
end of Recital A thereof of the following:
; the amount of said Loan was increased to One
Hundred Seventy-Five Million Dollars
($175,000,000) by that certain Second Loan
Modification Agreement, Modification to Deed of
Trust, Assignment of Rents and Leases, Security
Agreement and Fixture Filing and Modification to
Assignment of Leases and Rents entered into as of
April 1, 1997, between Grantor and Beneficiary
(the "Second Modification Agreement") and, in
connection therewith, the Mortgage Note was
amended and restated in its entirety by that
certain Second Amended and Restated Mortgage Note
dated April 1, 1997 (the "Second Restated Note").
All references herein to the Mortgage Note
hereinafter shall be deemed to be a reference to
the Mortgage Note as amended and restated by the
Second Restated Note. All references herein to
the Loan Agreement and the other Loan Documents
hereinafter shall be deemed a reference to the
Loan Agreement and the other Loan Documents as
amended by the Second Modification Agreement.
All references herein to the Loan Documents shall
include any documents and instruments executed
and delivered by Grantor pursuant to Paragraph
16(vi) of the Second Modification Agreement.
13. The Section 3.15 of the Mortgage hereby is amended by
the insertion at the end of the first sentence of said Section 3.15,
of the following:
, including without limitation, a certain Deed of
Trust, Assignment of Rents and Leases, Security
Agreement and Fixture Filing dated as of April 1,
1997 made by the Grantor to the Trustee for the
benefit of the Beneficiary, a certain Assignment
of Leases and Rents dated as of April 1, 1997 by
the Grantor to the Beneficiary and a certain
Security Agreement dated as of April 1, 1997
between the Borrower and the Lender, each of
which relates to the Additional Mortgaged
Properties (as defined in the Loan Agreement) and
associated real and personal property and each of
which is a Security Document (as defined herein).
14. The Assignment hereby is amended by the insertion at
the end of the first sentence of the Paragraph that begins "THIS
ASSIGNMENT" on the bottom of page 1 thereof of the following:
; the amount of said Loan was increased to One
Hundred Seventy-Five Million Dollars
($175,000,000) by that certain Second Loan
Modification Agreement, Modification to Deed of
Trust, Assignment of Rents and Leases, Security
Agreement and Fixture Filing and Modification to
Assignment of Leases and Rents entered into as
of April 1, 1997, between Assignor and Assignee
(the "Second Modification Agreement") and, in
connection therewith, the Mortgage Note was
amended and restated in its entirety by that
certain Second Amended and Restated Mortgage
Note dated April 1, 1997 (the "Second Restated
Note"). All references herein to the Mortgage
Note hereinafter shall be deemed to be a
reference to the Mortgage Note as amended and
restated by the Second Restated Note. All
references herein to the Loan Agreement and the
other Loan Documents hereinafter shall be deemed
a reference to the Loan Agreement and the other
Loan Documents as amended by the Second
Modification Agreement. All references herein
to the Loan Documents shall include any
documents and instruments executed and delivered
pursuant to Paragraph 16 (vi) of the Second
Modification Agreement.
15. The Security Agreement entered into as of October 9,
1996 between the Borrower and the Lender, as modified by the First
Modification Agreement, hereby is amended by the insertion at the end
of the first "WHEREAS" clause thereof of the following:
; the amount of said Loan was increased to One
Hundred Seventy-Five Million Dollars
($175,000,000) by that certain Second Loan
Modification Agreement, Modification to Deed of
Trust, Assignment of Rents and Leases, Security
Agreement and Fixture Filing and Modification to
Assignment of Leases and Rents dated as of April
1, 1997, between Debtor and Secured Party (the
"Second Modification Agreement") and, in
connection therewith, the Mortgage Note was
amended and restated in its entirety by that
certain Second Amended and Restated Mortgage Note
dated April 1, 1997 (the "Second Restated Note").
All references herein to the Mortgage Note
hereinafter shall be a reference to the Mortgage
Note as amended and restated by the Second
Restated Note. All references herein to the Loan
Agreement and the other Loan Documents
hereinafter shall be deemed a reference to the
Loan Agreement and the other Loan Documents as
amended by the Second Modification Agreement.
All references herein to the Loan Documents shall
include any documents and instruments executed
and delivered pursuant to Paragraph 16 (vi) of
the Second Modification Agreement.
16. The obligation of the Lender to make the Additional
Advance referenced in Paragraph 11 above on the date hereof is subject
to the satisfaction on or before the date hereof of each and all of
the following conditions:
(i) the Borrower shall have delivered to the Lender
endorsements to the Title Insurance Policies that
relate to the Initial Mortgaged Properties (or the
commitment of the Title Company to issue said
endorsements, which commitment may be subject to
payment of the Title Company's premiums only) (i)
insuring that the Mortgage that relates to the Initial
Mortgaged Properties, as modified by this Modification
Agreement, constitutes a valid first priority mortgage
on, and security interest in, the Land and the
Improvements relating to the Initial Mortgaged
Properties and all rights appurtenant thereto
described therein, in each case free and clear of all
defects and encumbrances other than as set forth in
Schedule B to the Title Insurance Policies that relate
to the Initial Mortgaged Properties or on said
endorsements and (ii) increasing the aggregate amount
of the Title Insurance Policies that relate to the
Initial Mortgaged Properties to not less than the Loan
Amount (as increased hereby);
(ii) the Borrower shall have delivered to the Lender
mortgagee's forms of title insurance policies or
marked-up commitments evidencing such policies
relating to the Additional Mortgaged Properties, in
form and content reasonably acceptable to the Lender,
and in an aggregate amount not less than the Loan
Amount (which commitments may be subject to payment of
the Title Company's premiums only) insuring that (i)
the New Mortgage constitutes a valid first priority
mortgage or similar lien on, and security interest in,
the Land and the Improvements relating to the
Additional Mortgaged Properties and all rights
appurtenant thereto described therein, in each case
free and clear of all defects and encumbrances other
than as set forth in Schedule B to the applicable
title insurance policy, and containing, to the extent
such coverage is available in the state in which the
Additional Mortgaged Properties are located, (A) full
coverage (by affirmative insurance) against liens of
mechanics, materialmen, laborers, and any other
Persons who might claim statutory or other common law
liens relating to services performed prior to the date
hereof; (B) no survey exceptions other than those set
forth in Schedule B to such title insurance policies;
(C) such other endorsements as Lender may deem
reasonably necessary to insure that any off-site
easements benefiting any of the Additional Mortgaged
Properties are valid and enforceable in accordance
with their terms; (D) a "tie-in" endorsement
aggregating the insurance amount indicated for the
applicable Additional Mortgaged Property with the
amounts indicated for all other Mortgaged Properties;
and (E) such other endorsements as the Lender shall
require; such title insurance policies shall be issued
by the Title Company and shall be deemed "Title
Insurance Policies" under the Loan Agreement;
(iii) the Borrower shall have delivered to the Lender a
written opinion addressed to the Lender, from Latham &
Watkins, counsel to the Borrower, in form and
acceptable substance to the Lender;
(iv) the Borrower shall have executed and delivered to the
Lender an amended and restated mortgage note (the
"Second Restated Note") in the form agreed to between
the Borrower and the Lender;
(v) the Borrower shall have delivered to the Lender
certificates of good standing for the Borrower and the
General Partner from the states of Maryland and
California in each case dated no earlier than March
10, 1997.
(vi) the Borrower shall have executed and delivered to the
Lender the following:
(a) a deed of trust, assignment of rents and leases,
security agreement and fixture filing relating to
the Additional Mortgaged Properties in the form
agreed to between the Borrower and the Lender
(the "New Mortgage");
(b) an assignment of leases and rents relating to the
Additional Mortgaged Properties in the form
agreed to between the Borrower and the Lender
(the "New Assignment of Leases and Rents");
(c) a security agreement relating to personal
property associated with the Additional Mortgaged
Properties in the form agreed to between the
Borrower and the Lender (the "New Security
Agreement");
(d) a UCC-1 Financing Statement for filing in the
Office of the Secretary of State of the State of
California (the "New Financing Statement"); and
(vii) a written notice of borrowing in which the Borrower
(i) requests disbursement of the sum of Thirty-Seven
Million Two Hundred Thousand Dollars ($37,200,000) and
(ii) sets forth one or more accounts (not to exceed 2
accounts) into which said funds are to be disbursed by
wire transfer.
17. To induce the Lender to enter into this Agreement and
to fund the Additional Advance pursuant to Paragraph 11 hereof, the
Borrower hereby makes the following representations and warranties:
(i) This Modification Agreement, the Second Restated Note,
the New Mortgage, the New Assignment of Leases and
Rents, the New Security Agreement and the New
Financing Statement (collectively, the "Modification
Documents") have been duly executed and delivered on
behalf of the Borrower. The Modification Documents
and the Loan Documents, as modified herein, constitute
the valid and binding obligations of the Borrower,
enforceable in accordance with their terms, subject to
the effects of applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium, and
similar laws relating to or affecting creditor's
rights generally and general principles of equity
(whether considered in a proceeding in equity or at
law).
(ii) The execution, delivery and performance by the
Borrower and the General Partner of the Modification
Documents have been duly authorized by all requisite
actions by and on behalf of the Borrower and the
General Partner and are within the partnership or
corporate power of the Borrower and the General
Partner, as the case may be.
(iii) Except for consents and approvals that have already
been obtained and are in full force and effect, no
consent, license, approval or authorization of, or
registration or declaration with, any Governmental
Authority, commission, bureau, agency or other Person
is required in connection with the execution, delivery
and performance by the Borrower of the Modification
Documents or the consummation by the Borrower of the
transactions contemplated hereby and thereby. Neither
the execution and delivery by the Borrower or the
General Partner of the Modification Documents, the
consummation of the transactions contemplated hereby
or thereby, nor the fulfillment by the Borrower or the
General Partner of, or compliance by the Borrower or
the General Partner with, the terms and conditions of
the Modification Documents:
(a) will result in a breach or violation of any of
the terms or provisions of, or constitute a
default under, any Laws or any judgment, decree
or order binding on the Borrower or the General
Partner or their respective properties or assets;
(b) will conflict with or result in any breach or
violation of any of the terms, conditions or
provisions of the organizational documents of the
Borrower or the General Partner; or
(c) will result in a breach or violation of or
constitute a default under any existing material
agreement or instrument to which the Borrower or
the General Partner or their respective assets
are a party or by which the Borrower or the
General Partner are bound.
(iv) The representations and warranties made by the
Borrower in the Loan Documents, including, without
limitation, Article 3 of the Loan Agreement, are true
and correct on the date hereof as if made on the date
hereof and as if fully set forth herein.
(v) The Borrower has no offsets, claims, counterclaims or
defenses against the Lender with respect to the Loan
evidenced and/or secured by the Loan Documents.
(vi) There have been no material amendments to the
certificate of limited partnership or the agreement of
limited partnership of the Borrower or the articles of
incorporation or bylaws of the General Partner since
October 9, 1996.
(vii) The representations and warranties made by the
Borrower in Sections 3.4, 3.6, 3.7, 3.8, 3.10, 3.11,
3.16, 3.19, 3.20, 3.21, 3.22, 3.23, 3.24, 3.26 and
3.27 are true and correct with respect to the
Additional Mortgaged Properties as if fully set forth
herein.
18. It is hereby acknowledged and agreed that any and all
references, in any of the Loan Documents evidencing, securing or
otherwise relating to the Loan, to the "Loan Agreement, "Mortgage
Note" (or "Note"), "Mortgage," the "Loan Documents," "thereunder,"
"thereof," or words of like import referring thereto shall mean the
Loan Agreement, the Mortgage or the Loan Documents, as amended by this
Modification Agreement or, (i) in the case of the Note, to the Note as
amended and restated by the Second Restated Note, (ii) in the case of
the Mortgage, to the Mortgage as amended by this Modification
Agreement together with the New Mortgage, (iii) in the case of the
Assignment of Leases and Rents, to the Assignment of Leases and Rents
as amended by this Modification Agreement together with the New
Assignment of Leases and Rents and (iv) in the case of the Security
Agreement, to the Security Agreement as amended by this Modification
Agreement together with the New Security Agreement. It is hereby
further acknowledged and agreed that any and all references, in any of
the Loan Documents evidencing, securing or otherwise relating to the
Loan, to the "Loan Documents" shall be deemed to include the New
Mortgage, the New Assignment of Leases and Rents and the New Security
Agreement.
19. The execution and delivery hereof and of the other
Modification Documents shall not extinguish any obligations or the
Debt evidenced by the Note, as amended and restated by the Second
Restated Note, nor will it impair the lien of the Mortgage or the
Assignment or the Lender's security interest in any other collateral
securing the obligations of the Borrower pursuant to the Note, as
amended and restated by the Second Restated Note, and the other Loan
Documents, and no part of the same shall be disturbed, discharged,
canceled or impaired by the execution of this instrument or the
execution and delivery of the other Modification Documents or of any
further instruments evidencing or securing the Debt or said
obligations and any other indebtedness of the Borrower to the Lender
now or hereafter existing.
20. In addition to any and all fees, costs, taxes,
expenses and other payments required in connection with the execution,
recordation and delivery of this Modification Agreement, the Borrower
shall pay to Lender upon demand from time to time all of the fees,
costs, taxes and expenses incurred by the Lender in connection
herewith (including, without limitation, the costs and expenses of the
attorneys for the Lender and the premiums for the endorsements to the
Title Insurance Policies to be delivered to the Lender by Section
16(i) hereof and the premiums for the new Title Insurance Policies to
be delivered to the Lender pursuant to Section 16(ii) hereof).
21. Except as expressly modified by the provisions of this
Modification Agreement and the Second Restated Note, the terms and
conditions of the Loan Documents shall continue in full force and
effect and are hereby ratified and confirmed in full force and effect.
22. No failure on the part of the Lender or any of its
agents to exercise, and no course of dealing with respect to, and no
delay in exercising, any right, power or remedy hereunder or under the
Loan Documents shall operate as a waiver thereof.
23. This Modification Agreement may only be amended or
revised by a written instrument or instruments executed by the Lender
and the Borrower.
24. In the event that any provision of this Modification
Agreement or the application thereof to the Borrower, or any
circumstance in any jurisdiction governing this Modification Agreement
shall, to any extent, be invalid or unenforceable under any applicable
statute, regulation or rule of law, then such provision shall be
deemed modified to conform to such statute, regulation or rule of law,
and the remainder of this Modification Agreement and the application
of any such invalid or unenforceable provision to parties,
jurisdictions or circumstances other than to whom or to which it is
held invalid or unenforceable shall not be affected thereby, nor shall
same affect the validity or enforceability of any other provision of
this Modification Agreement.
25. The Borrower shall, on the request of the Lender and
at the expense of the Borrower: (a) promptly execute, acknowledge,
deliver and record or file such instruments and promptly do such acts
as may be necessary, desirable or proper to carry out more effectively
the purposes of this Modification Agreement and the Loan Documents and
(b) promptly execute, acknowledge, deliver, procure and record or file
any document or instrument deemed advisable by the Lender to protect,
continue or perfect the liens or the security interests created under
the Loan Documents against the rights or interests of third persons.
26. This Modification Agreement shall be binding upon
Borrower and its successors and assigns and shall inure to the benefit
of the Lender and its successors and assigns.
27. This Modification Agreement may be executed in
separate counterparts, none of which need contain the signatures of
all parties, each of which shall be deemed to be an original and all
of which taken together shall constitute one and the same instrument.
It shall not be necessary in making proof of this Modification
Agreement to produce or account for more than the number of
counterparts containing the respective signatures of, or on behalf of,
all of the parties hereto. In the event the parties hereto exchange
signature pages of this Modification Agreement by facsimile, they
agree to send the original executed counterparts of this Modification
Agreement to one another by overnight delivery service.
[SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the parties hereto have executed this
Modification Agreement or have caused this Modification Agreement to
be executed on their behalf as of the day and year first above
written.
BORROWER:
ARDEN REALTY LIMITED PARTNERSHIP
ATTEST/WITNESS: By: ARDEN REALTY, INC.
general partner
/s/ Sandra J. Uhlar By: /s/ Diana M. Laing
Its: Chief Financial Officer
LENDER:
ATTEST/WITNESS: LEHMAN BROTHERS HOLDINGS INC., D/B/A
LEHMAN CAPITAL, A DIVISION OF LEHMAN
BROTHERS HOLDINGS INC.
By:/s/ Mike Mazzi
Its:
Recording Requested By:
First American Title
Insurance Company
When recorded mail document to:
Hogan & Hartson L.L.P.
Suite 1100
8300 Greensboro Drive
McLean, Virginia 22102
Attention: Lee E. Berner, Esq.
______________________________________________________________________
______________
SPACE ABOVE THIS LINE RESERVED FOR
RECORDER'S USE
_______________________________________________________________
_______________________________________________________________
REVOLVING
CREDIT AGREEMENT
BETWEEN
ARDEN REALTY LIMITED PARTNERSHIP,
A MARYLAND LIMITED PARTNERSHIP,
AS BORROWER,
AND
WELLS FARGO BANK, NATIONAL ASSOCIATION,
AS LENDER
Dated as of May 5, 1997
_______________________________________________________________
_______________________________________________________________
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . .1
1.1 Certain Defined Terms . . . . . . . . . . . . .1
1.2 Computation of Time Periods . . . . . . . . . 27
1.3 Terms . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 2 ADVANCES. . . . . . . . . . . . . . . . . . . 28
2.1 Loan Advances and Repayment . . . . . . . . . 28
2.2 Authorization to Obtain Advances. . . . . . . 30
2.3 Lender's Accounting . . . . . . . . . . . . . 31
2.4 Interest on the Advances. . . . . . . . . . . 31
2.5 Fees. . . . . . . . . . . . . . . . . . . . . 36
2.6 Payments. . . . . . . . . . . . . . . . . . . 37
ARTICLE 3 CONDITIONS TO ADVANCES. . . . . . . . . . . . 38
3.1 Conditions to Initial Advances. . . . . . . . 38
3.2 Conditions Precedent to All Advances. . . . . 39
ARTICLE 4 REPRESENTATIONS AND WARRANTIES. . . . . . . . 41
4.1 Representations and Warranties as to
Borrower, Etc. . . . . . . . . . . . . . . . 41
4.2 Representations and Warranties as to the
REIT. . . . . . . . . . . . . . . . . . . . . 47
ARTICLE 5 REPORTING COVENANTS . . . . . . . . . . . . . 51
5.1 Financial Statements and Other Financial
and Operating Information . . . . . . . . . . 51
5.2 Environmental Notices . . . . . . . . . . . . 57
5.3 Confidentiality . . . . . . . . . . . . . . . 58
ARTICLE 6 AFFIRMATIVE COVENANTS . . . . . . . . . . . . 58
6.1 With Respect to Borrower. . . . . . . . . . . 59
6.2 With Respect to the REIT. . . . . . . . . . . 61
ARTICLE 7 NEGATIVE COVENANTS. . . . . . . . . . . . . . 62
7.1 With Respect to all Parties . . . . . . . . . 63
7.2 Amendment of Constituent Documents. . . . . . 64
7.3 Minimum Ownership Interest of Richard
Ziman . . . . . . . . . . . . . . . . . . . . 65
7.4 Management. . . . . . . . . . . . . . . . . . 65
7.5 Margin Regulations. . . . . . . . . . . . . . 65
7.6 Organization of Borrower, Etc . . . . . . . . 65
7.7 With Respect to the REIT. . . . . . . . . . . 66
ARTICLE 8 FINANCIAL COVENANTS . . . . . . . . . . . . . 66
8.1 Distributions . . . . . . . . . . . . . . . . 66
8.2 Investments; Asset Mix. . . . . . . . . . . . 67
8.3 Minimum Unencumbered Pool . . . . . . . . . . 68
8.4 Secured Debt. . . . . . . . . . . . . . . . . 68
8.5 Financial Covenants in 1996 Revolving
Credit Agreement. . . . . . . . . . . . . . . 68
ARTICLE 9 EVENTS OF DEFAULT; RIGHTS AND REMEDIES. . . . 69
9.1 Events of Default . . . . . . . . . . . . . . 69
9.2 Rights and Remedies . . . . . . . . . . . . . 72
ARTICLE 10 MISCELLANEOUS . . . . . . . . . . . . . . . . 73
10.1 Expenses. . . . . . . . . . . . . . . . . . . 73
10.2 Indemnity . . . . . . . . . . . . . . . . . . 74
10.3 Change in Accounting Principles and
"Funds from Operations" Definition. . . . . . 75
10.4 Amendments and Waivers. . . . . . . . . . . . 75
10.5 Independence of Covenants . . . . . . . . . . 76
10.6 Notices and Delivery. . . . . . . . . . . . . 76
10.7 Survival of Warranties, Indemnities and
Agreements . . . . . . . . . . . . . . . . 76
10.8 Failure or Indulgence Not Waiver;
Remedies Cumulative . . . . . . . . . . . . . 76
10.9 Marshaling; Payments Set Aside. . . . . . . . 77
10.10 Severability. . . . . . . . . . . . . . . . . 77
10.11 Headings. . . . . . . . . . . . . . . . . . . 77
10.12 Governing Law; Waiver . . . . . . . . . . . . 77
10.13 Limitation of Liability . . . . . . . . . . . 77
10.14 Successors and Assigns. . . . . . . . . . . . 78
10.15 Consent to Jurisdiction and Service of
Process: Waiver of Jury Trial . . . . . . . . 78
10.16 Counterparts; Effectiveness;
Inconsistencies . . . . . . . . . . . . . . . 79
10.17 Performance of Obligations. . . . . . . . . . 79
10.18 Construction. . . . . . . . . . . . . . . . . 79
10.19 Entire Agreement. . . . . . . . . . . . . . . 79
LIST OF EXHIBITS AND SCHEDULES
Exhibits:
A - Form of Compliance Certificate
B - Form of Fixed Rate Notice
C - Form of Guaranty
D - Form of Note
E - Form of Notice of Borrowing
F - Form of Solvency Certificate
Schedules:
1.1A - Applicable Spread
1.1B - List of Predecessor Entity Properties
2.2 - Employees Authorized to Sign Notices of
Borrowing
4.1(c) - Ownership of Borrower
4.1(j) - List of Litigation
4.1(s) - Environmental Matters
4.1(v) - Management Agreements
4.2(l) - Benefit Plans
8.3 - List of Unencumbered Assets
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT, dated as of May 5,
1997 (as amended, supplemented or modified from time to time,
the "Agreement"), is made and entered into by and between ARDEN
REALTY LIMITED PARTNERSHIP, a Maryland limited partnership
("Borrower"), and WELLS FARGO BANK, NATIONAL ASSOCIATION
("Lender").
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Certain Defined Terms. The following terms used in
this Agreement shall have the following meanings (such meanings
to be applicable, except to the extent otherwise indicated in a
definition of a particular term, both to the singular and the
plural forms of the terms defined):
"Accountants" means any (i) "big six" accounting firm
or (ii) another firm of certified public accountants of
recognized national standing selected by Borrower and
acceptable to Lender.
"Acquisition Price" means the aggregate purchase
price for an asset, including bona fide purchase money
financing provided by the seller and all other Indebtedness
encumbering such asset at the time of acquisition.
"Advance" means each of the advances made or to be
made to Borrower pursuant to Section 2.1, and includes each
Base Rate Advance and each LIBOR Advance.
"Affiliates" as applied to any Person, means any
other Person directly or indirectly controlling, controlled by,
or under common control with, that Person. For purposes of
this definition, "control" (including, with correlative mean-
ings, the terms "controlling", "controlled by" and "under
common control with"), as applied to any Person, means (a) the
possession, directly or indirectly, of the power to vote ten
percent (10%) or more of the Securities having voting power for
the election of directors of such Person or otherwise to direct
or cause the direction of the management and policies of that
Person, whether through the ownership of voting Securities or
by contract or otherwise, or (b) the ownership of ten percent
(10%) or more of the outstanding general partnership or other
ownership interests of such Person.
"Applicable Spread" means the percent per annum
figure applicable pursuant to Schedule 1.1A as determined by
Lender on the basis of an Applicable Spread Notice;
notwithstanding the foregoing, immediately after the initial
Advance is made, the Applicable Spread shall be 1.30%.
"Applicable Spread Event" means any event or events
which would increase or decrease Total Liabilities and/or Gross
Asset Value by an amount sufficient to cause the then existing
Applicable Spread to change.
"Applicable Spread Notice" means written notice from
Borrower to Lender of an Applicable Spread Event. Each
Applicable Spread Notice shall set forth in such reasonable
detail as Lender may require (i) the nature of the Applicable
Spread Event, (ii) the date or dates of the Applicable Spread
Event and (iii) the amount of the increase or decrease in Total
Liabilities and/or Gross Asset Value caused or to be caused by
such Applicable Spread Event.
"Base Rate" means, on any day, the higher of (a) the
rate of interest per annum established from time to time by
Lender at its principal office in San Francisco, California,
and designated as its prime rate as in effect on such day and
(b) the Federal Funds Rate in effect on such day plus one-half
of one percent (0.5%) per annum.
"Base Rate Advance" means an Advance bearing interest
at the Base Rate.
"Benefit Plan" means any employee pension benefit
plan as defined in Section 3(2) of ERISA (other than a
Multiemployer Plan) in respect of which a Person or an ERISA
Affiliate is, or within the immediately preceding five (5)
years was, an "employer" as defined in Section 3(5) of ERISA.
"Borrower" means Arden Realty Limited Partnership, a
Maryland limited partnership.
"Business Day" means (a) with respect to any Advance,
payment or rate determination of LIBOR Advances, a day, other
than a Saturday or Sunday, on which Lender is open for business
in San Francisco and on which dealings in Dollars are carried
on in the London interbank market, and (b) for all other pur-
poses any day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of the State of California, or is
a day on which banking institutions located in California are
required or authorized by law or other governmental action to
close.
"Capital Lease" means, as applied to any Person, any
lease of any property (whether real, personal or mixed) by that
Person as lessee which, in conformity with GAAP, is or should
be accounted for as a capital lease on the balance sheet of
that Person.
"Capital Lease Obligations" means all monetary
obligations of a Person under any Capital Lease.
"Capitalized Loan Fees" means, with respect to the
REIT and any Consolidated Entity, and with respect to any
period, (a) any up-front, closing or similar fees paid by such
Person in connection with the incurring or refinancing of
Indebtedness during such period and (b) all other costs
incurred in connection with the incurring or refinancing of
Indebtedness during such period, including, without limitation,
appraisal fees paid to lenders, costs and expenses incurred in
connection with Swap Agreements, phase 1 environmental report
review fees paid to lenders and legal fees, in each of the
foregoing cases, that are capitalized on the balance sheet of
such Person and amortized over the term of such Indebtedness.
"Capital Stock" means, with respect to any Person,
all (i) shares, interests, participations or other equivalents
(howsoever designated) of capital stock or partnership or other
equity interests of such Person and (ii) rights (other than
debt securities convertible into capital stock or other equity
interests), warrants or options to acquire any such capital
stock or partnership or other equity interests of such Person.
The term "Capital Stock" includes the Partnership Units of the
Borrower.
"Cash" means, when used in connection with any
Person, all monetary and nonmonetary items owned by that Person
that are treated as cash in accordance with GAAP, consistently
applied, less all liabilities for tenant deposits held by that
Person.
"Cash Equivalents" means (a) marketable direct
obligations issued or unconditionally guaranteed by the
United States Government or issued by an agency thereof and
backed by the full faith and credit of the United States, in
each case maturing within one (1) year after the date of
acquisition thereof; (b) marketable direct obligations issued
by any state of the United States of America or any political
subdivision of any such state or any public instrumentality
thereof maturing within ninety (90) days after the date of
acquisition thereof and, at the time of acquisition, having one
of the two highest ratings obtainable from any two of
Standard & Poor's Ratings Services, a division of The McGraw-
Hill Companies, Moody's Investors Service, Inc., Duff and
Phelps, or Fitch Investors Service, Inc. (or, if at any time no
two of the foregoing shall be rating such obligations, then
from such other nationally recognized rating services as may be
acceptable to Lender) and not listed for possible down-grade in
Credit Watch published by Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies; (c) commercial paper,
other than commercial paper issued by Borrower or any of its
Affiliates, maturing no more than ninety (90) days after the
date of creation thereof and, at the time of acquisition,
having a rating of at least A-1 or P-1 from either Standard &
Poor's Ratings Services, a division of The McGraw-Hill
Companies, or Moody's Investors Service, Inc. (or, if at any
time neither Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, nor Moody's Investors Service, Inc.
shall be rating such obligations, then the highest rating from
such other nationally recognized rating services as may be
acceptable to Lender); and (d) domestic and Eurodollar
certificates of deposit or time deposits or bankers'
acceptances maturing within ninety (90) days after the date of
acquisition thereof, overnight securities repurchase
agreements, or reverse repurchase agreements secured by any of
the foregoing types of securities or debt instruments issued,
in each case, by any commercial bank organized under the laws
of the United States of America or any state thereof or the
District of Columbia or Canada which at the time of acquisition
(A) has (or, in the case of a bank which is a subsidiary, such
bank's parent has) a rating of its senior unsecured debt
obligations of not less than Baa-2 by Moody's Investors
Service, Inc. or a comparable rating by a rating agency
acceptable to Lender and (B) has total assets in excess of
Ten Billion Dollars ($10,000,000,000).
"City National Bank Loan" means revolving loans to
be made by City National Bank to Borrower in an aggregate
committed principal amount which shall not exceed $10,000,000
pursuant to the terms of that certain Loan Agreement dated
March 12, 1997 between Borrower and City National Bank.
"Closing Date" means the date on which the applicable
conditions contained in Sections 3.1 and 3.2 are satisfied or
waived. Within five (5) Business Days of the occurrence
thereof, Lender shall deliver written notice to the Borrower
confirming the date on which the Closing Date occurs.
"CMBS Entities" means, collectively, one or more
entities formed or to be formed by the REIT or Borrower in
connection with the issuance of commercial mortgage-backed
securities.
"Code" means the Internal Revenue Code of 1986, as
amended from time to time.
"Commission" means the Securities and Exchange
Commission.
"Commitment" means $110,000,000.
"Compliance Certificate" means a certificate in the
form of Exhibit A hereto delivered to Lender by Borrower
pursuant to Section 5.1(d) or other provision of this Agreement
and covering compliance with the covenants contained in
Section 7.3 and Article 8.
"Consolidated Entity" means, collectively, (i) the
Borrower and (ii) any other Person the accounts of which are
consolidated with those of the REIT in the consolidated
financial statements of the REIT in accordance with GAAP.
"Construction in Progress" means land on which
Borrower has commenced, and is diligently proceeding with, the
construction of an Office Property. If, after Borrower has
commenced the construction of an Office Property, such
construction ceases for 45 or more consecutive days, such land
shall cease to be Construction in Progress and shall become
Land until Borrower starts construction of the Office Property
again.
"Contaminant" means any pollutant (as that term is
defined in 42 U.S.C. 9601(33)) or toxic pollutant (as that term
is defined in 33 U.S.C. 1362(13)), hazardous substance (as that
term is defined in 42 U.S.C. 9601(14)), hazardous chemical (as
that term is defined by 29 CFR Section 1910.1200(c)), toxic
substance, hazardous waste (as that term is defined in
42 U.S.C. 6903(5)), radioactive material, special waste,
petroleum (including crude oil or any petroleum-derived
substance, waste, or breakdown or decomposition product
thereof), any constituent of any such substance or waste,
including, but not limited to, polychlorinated biphenyls and
asbestos, or any other substance or waste deleterious to the
environment the release, disposal or remediation of which is
now or at any time becomes subject to regulation under any
Environmental Law.
"Contractual Obligation" as applied to any Person,
means any provision of any Securities issued by that Person or
any indenture, mortgage, deed of trust, lease, contract, under-
taking, document or instrument to which that Person is a party
or by which it or any of its properties is bound, or to which
it or any of its properties is subject (including, without
limitation, any restrictive covenant affecting such Person or
any of its properties).
"Contribution Agreement" means (i) that certain
Contribution Agreement made as of October 9, 1996, by and among
Richard S. Ziman, an individual, Montour Realty Associates, a
California general partnership, Metropolitan Falls Partners, a
California general partnership, Intercity Building Associates,
a California general partnership, Victor J. Coleman, an indivi-
dual, Coleman Enterprises, Inc., a California corporation,
Ziman Realty Partners, a California general partnership, Broad
Base Investments II, LLC, a Nevada limited liability company,
Michele Byer, individually and as trustee of the Michele Byer
Trust, a revocable inter vivos trust dated September 20, 1996,
Anaheim Properties LLC, a California limited liability company,
Arden Century Associates, a California general partnership,
Arden Sawtelle Associates, a California general partnership,
the REIT and Borrower and (ii) any other agreement between the
Borrower and a CMBS Entity providing for contribution by the
Borrower of certain contributions it receives from its limited
partners with respect to Debt of the CMBS Entity and on
substantially similar terms as the Contribution Agreement
described in the foregoing clause (i). Borrower shall deliver
to Lender a copy of each Contribution Agreement entered into
after the date of this Agreement.
"Court Order" means any judgment, writ, injunction,
decree, rule or regulation of any court or Governmental
Authority binding upon the Person in question.
"Debt" means, with respect to any Person, without
duplication, the principal amount of (a) its liabilities for
borrowed money, (b) its liabilities for the deferred purchase
price of property acquired by such Person (excluding accounts
payable in the ordinary course of business, but including,
without limitation, all liabilities created or arising under
any conditional sale or other title retention agreement with
respect to any property), (c) its Capitalized Lease
Obligations, (d) any liabilities for borrowed money secured by
a Lien with respect to any property owned by such Person
(whether or not it is assumed by such Person or such Person
otherwise becomes liable for such liabilities), (e) all
liabilities with respect to any unreimbursed draws on letters
of credit and (f) any Guaranty of such Person with respect to
any of the foregoing.
"Debt Service" means, for any period, Interest
Expense for such period plus scheduled principal amortization
(excluding any balloon or bullet payment due at maturity) for
such period on all Debt of the REIT and Consolidated Entities
and on the REIT's and each Consolidated Entity's pro rata share
of all Debt of each Unconsolidated Joint Venture. For purposes
of the foregoing definition, the REIT's and such Consolidated
Entity's pro rata share of such Debt shall be deemed to be
equal to the product of (i) such Debt, multiplied by (ii) the
percentage of the total outstanding Capital Stock of such
Unconsolidated Joint Venture held by the REIT or such
Consolidated Entity, expressed as a decimal.
"Depreciation and Amortization Expense" means
(without duplication), for any period, the sum for such period
of (i) total depreciation and amortization expense, whether
paid or accrued, of the REIT and the Consolidated Entities,
plus (ii) the REIT's and any Consolidated Entity's pro rata
share of depreciation and amortization expenses of Unconsoli-
dated Joint Ventures. For purposes of this definition, the
REIT's pro rata share of depreciation and amortization expense
of any Unconsolidated Joint Venture shall be deemed equal to
the product of (i) the depreciation and amortization expense of
such Unconsolidated Joint Venture, multiplied by (ii) the
percentage of the total outstanding Capital Stock of such
Unconsolidated Joint Venture held by the REIT or any
Consolidated Entity, expressed as a decimal.
"Designated Market" means, with respect to any LIBOR
Advance, the London interbank LIBOR market or such other
interbank LIBOR market as may be designated in writing from
time to time by Lender.
"Disqualified Stock" means any capital stock,
warrants, options or other rights to acquire capital stock (but
excluding any debt security which is convertible, or
exchangeable, for capital stock), which, by its terms (or by
the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event,
matures or is mandatorily redeemable prior to the Maturity
Date, pursuant to a sinking fund obligation or otherwise, or is
or may be redeemable at the option of the holder thereof, in
whole or in part, prior to the Maturity Date. Borrower's
Partnership Units shall not be considered Disqualified Stock.
"DOL" means the United States Department of Labor and
any successor department or agency.
"Dollars" and "$" means the lawful money of the
United States of America.
"EBITDA" means, for any period, Net Income, plus
(without duplication) (a) Interest Expense, (b) Tax Expense,
(c) Depreciation and Amortization Expense and (d) cash
dividends and distributions actually received by the REIT or
any Consolidated Entity from any Unconsolidated Joint Venture,
in each case for such period.
"Environmental Laws" has the meaning set forth in
Section 4.1(s).
"Environmental Lien" means a Lien in favor of any
Governmental Authority for (a) any liability under Environ-
mental Laws, or (b) damages arising from, or costs incurred by
such Governmental Authority in response to, a Release or
threatened Release of a Contaminant into the environment.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time, and any successor
statute.
"ERISA Affiliate" means, with respect to any Person,
any (a) corporation which is, becomes, or is deemed to be a
member of the same controlled group of corporations (within the
meaning of Section 414(b) of the Code) as such Person,
(b) partnership, trade or business (whether or not
incorporated) which is, becomes or is deemed to be under common
control (within the meaning of Section 414(c) of the Code) with
such Person, (c) solely for purposes of potential liability
under Section 302(c)(11) of ERISA and Section 412(c)(11) of the
Code and the lien created under Section 302(f) of ERISA and
Section 412(n) of the Code, Person which is, becomes or is
deemed to be a member of the same "affiliated service group"
(as defined in Section 414(m) of the Code) as such Person, or
(d) solely for purposes of potential liability under
Section 302(c)(11) of ERISA and Section 412(c)(11) of the Code
and the lien created under Section 302(f) of ERISA and
Section 412(n) of the Code, other organization or arrangement
described in Section 414(o) of the Code which is, becomes or is
deemed to be required to be aggregated pursuant to regulations
issued under Section 414(o) of the Code with such Person
pursuant to Section 414(o) of the Code.
"Event of Default" means any of the occurrences so
defined in Article 9.
"FDIC" means the Federal Deposit Insurance
Corporation or any successor thereto.
"Federal Funds Rate" means, as of any date of deter-
mination, the rate set forth in the weekly statistical release
designated as H.15(519), or any successor publication,
published by the Federal Reserve Board (including any such
successor, "H.15(519)") for such date opposite the caption
"Federal Funds (Effective)". If for any relevant date such
rate is not yet published in H.15(519), the rate for such date
will be the rate set forth in the daily statistical release
designated as the Composite 3:30 p.m. Quotations for
U.S. Government Securities, or any successor publication,
published by the Federal Reserve Bank of New York (including
any such successor, the "Composite 3:30 p.m. Quotations") for
such date under the caption "Federal Funds Effective Rate". If
on any relevant date the appropriate rate for such date is not
yet published in either H.15(519) or the Composite 3:30 p.m.
Quotations, the rate for such date will be the arithmetic mean
of the rates for the last transaction in overnight Federal
funds arranged prior to 9:00 a.m. (New York City time) on that
date by each of three leading brokers of Federal Funds trans-
actions in New York City selected by the Lender. For purposes
of this Agreement, any change in the Base Rate due to a change
in the Federal Funds Rate shall be effective as of the opening
of business on the effective date of such change.
"Federal Reserve Board" means the Board of Governors
of the Federal Reserve System or any governmental authority
succeeding to its functions.
"FIRREA" means the Financial Institutions Recovery,
Reform and Enforcement Act of 1989, as amended from time to
time.
"Fiscal Quarter" means each three-month period ending
on March 31, June 30, September 30 and December 31; provided,
however, that notwithstanding the foregoing, the first "Fiscal
Quarter" of the REIT and the Consolidated Entities shall be the
period commencing on October 9, 1996 and ending on December 31,
1996.
"Fiscal Year" means the fiscal year of Borrower which
shall be the twelve (12) month period ending on the last day of
December in each year.
"Fixed Rate Notice" means, with respect to a LIBOR
Advance pursuant to Section 2.1(b), a notice substantially in
the form of Exhibit B.
"Fixed Rate Price Adjustment" has the meaning given
to such term in Section 2.4(h)(iii).
"Funding Date" means, with respect to any Advance,
the date of the funding of such Advance.
"Funds from Operations" shall be interpreted
consistently with the NAREIT Definition and, subject to
Section 10.3, shall mean, for any period, net income for such
period excluding gains (or losses) from debt restructuring and
sales of Real Property, plus the portion of Depreciation and
Amortization Expenses during such period which is attributable
to Real Property, and after adjustments for Unconsolidated
Joint Ventures. (Adjustments for Unconsolidated Joint Ventures
shall be calculated to reflect funds from operations on the
same basis.)
"GAAP" means generally accepted accounting principles
set forth in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial
Accounting Standards Board, or in such other statements by such
other entity as may be in general use by significant segments
of the accounting profession, which are applicable to the
circumstances as of the date of determination.
"Governmental Authority" means any nation or govern-
ment, any federal, state, local, municipal or other political
subdivision thereof or any entity exercising executive,
legislative, judicial, regulatory or administrative functions
of or pertaining to government.
"Gross Asset Value" means, as of the date of
determination, the sum of (without duplication):
(i) the product of (x) EBITDA of the REIT and the
Consolidated Entities for the fiscal period consisting of the
Fiscal Quarter most recently ended (less EBITDA attributable to
Real Property acquired during such Fiscal Quarter from persons
other than Predecessor Entities), multiplied by 4, multiplied
by (y) 9.1743;
(ii) Cash and Cash Equivalents held by the REIT and
the Consolidated Entities on the last day of such most recently
ended Fiscal Quarter; and
(iii) ninety percent (90%) of the Acquisition Price
for Real Property acquired (from persons other than Predecessor
Entities) during such Fiscal Quarter.
"Guaranty" means a guaranty of payment in the form of
Exhibit C.
"Guaranty Obligation" means, as to any Person, any
(a) guarantee by that Person of Indebtedness of, or other
obligation performable by, any other Person or (b) assurance
given by that Person to an obligee of any other Person with
respect to the performance of an obligation by, or the
financial condition of, such other Person, whether direct,
indirect or contingent, including any purchase or repurchase
agreement covering such obligation or any collateral security
therefor, any agreement to provide funds (by means of loans,
capital contributions or otherwise) to such other Person, any
agreement to support the solvency or level of any balance sheet
item of such other Person or any "keep-well" or other
arrangement of whatever nature given for the purpose of
assuring or holding harmless such obligee against loss with
respect to any obligation of such other Person; provided,
however, that the term Guaranty Obligation shall not include
endorsements of instruments for deposit or collection in the
ordinary course of business. The amount of any Guaranty
Obligation in respect of Indebtedness shall be deemed to be an
amount equal to the stated or determinable amount of the
related Indebtedness (unless the Guaranty Obligation is limited
by its terms to a lesser amount, in which case to the extent of
such amount) or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as
determined by the Person in good faith. The amount of any
other Guaranty Obligation shall be deemed to be zero unless and
until the amount thereof has been (or in accordance with
Financial Accounting Standards Board Statement No. 5 should be)
quantified and reflected or disclosed in the consolidated
financial statements (or notes thereto) of such Person.
"Indebtedness" means, as to any Person (without
duplication), (a) all indebtedness, obligations or other
liabilities of such Person for borrowed money, whether or not
subordinated and whether with or without recourse beyond any
collateral security, (b) all indebtedness, obligations or other
liabilities of such Person evidenced by Securities or other
similar instruments, (c) all reimbursement obligations and
other liabilities of such Person with respect to letters of
credit or banker's acceptances issued for such Person's
account, (d) all obligations of such Person to pay the deferred
purchase price of Property or services, (e) the principal
portion of Capital Lease Obligations of such Person set forth
in the financial statements of such Person and, with respect to
each operating lease, including all ground leases to the extent
not treated as Capital Leases, the present value of all rental
payments due over the remaining term of such lease (using a
discount rate of 10%), provided, however, that, to the extent
any ground lease payment has been deducted in determining Net
Income, then such present value shall not be counted as
Indebtedness in calculating the ratio set forth in Section 9.2
of the 1996 Revolving Credit Agreement (which Section Borrower
is obligated to comply with, for purposes of this Agreement, by
Section 8.5 of this Agreement), (f) all Guaranty Obligations of
such Person, (g) all Contractual Obligations of such Person,
(h) all indebtedness, obligations or other liabilities of such
Person or others secured by a Lien on any asset of such Person,
whether or not such indebtedness, obligations or liabilities
are assumed by, or are a personal liability of, such Person
(including, without limitation, the principal amount of any
assessment or similar indebtedness encumbering any property),
(i) all indebtedness, obligations or other liabilities (other
than interest expense liability) in respect of foreign currency
exchange agreements, (j) ERISA obligations currently due and
payable, (k) as applied to the REIT and the Consolidated
Entities, all indebtedness, obligations or other liabilities of
Unconsolidated Joint Ventures which are recourse to the REIT
and/or any of the Consolidated Entities, (l) the REIT's and
Consolidated Entities' pro rata share of Nonrecourse Debt of
Unconsolidated Joint Ventures, (m) the amount which would be
owed by such Person to any counterparty under any Swap
Agreement(s) in the event such Swap Agreement(s) were
terminated as of any date of determination of Indebtedness,
(n) improvement and assessment district taxes (including,
without limitation, taxes under the Mello-Roos Community
Facilities Act of 1982) assessed or otherwise due with respect
to any Property of such Person, and (o) without duplication or
limitation, all liabilities and other obligations included in
the financial statements (or notes thereto) of such Person as
prepared in accordance with GAAP. For purposes of clause (l),
the REIT's and the Consolidated Entities' pro rata share of
Nonrecourse Debt of any Unconsolidated Joint Venture shall be
deemed to be equal to the product of (i) the Nonrecourse Debt
of such Unconsolidated Joint Venture, multiplied by (ii) the
percentage of the total outstanding Capital Stock of such Joint
Venture held by the REIT or any Consolidated Entity, expressed
as a decimal. With respect to any agreement entered into by
such Person to purchase Real Property, "Indebtedness" shall not
include any amount in excess of the amount (if any) which such
Person is obligated to pay as liquidated damages under such
agreement in the event such Person breaches its obligation to
purchase such Real Property.
"Intangible Assets" means assets that are considered
intangible assets under GAAP, including customer lists, good-
will, computer software, copyrights, trade names, trademarks,
patents and Capitalized Loan Fees (other than capitalized
interest with respect to construction in progress).
"Interest Expense" means, for any period, the sum
(without duplication) for such period of (i) total interest
expense, whether paid or accrued, of the REIT and the
Consolidated Entities and the portion of any Capitalized Lease
Obligations allocable to interest expense during such period,
including the REIT's and each Consolidated Entity's share of
interest expenses in Unconsolidated Joint Ventures but exclud-
ing amortization or writeoff of debt discount and expense
(except as provided in clause (ii) below), (ii) amortization of
costs related to Swap Agreements, (iii) capitalized interest,
(iv) amortization of Capitalized Loan Fees, (v) to the extent
not included in clauses (i), (ii), (iii) and (iv), the REIT's
and each Consolidated Entity's pro rata share of interest
expense and other amounts of the type referred to in such
clauses of the Unconsolidated Joint Ventures, and (vi) interest
incurred on any liability or obligation that constitutes a
Guaranty Obligation of the REIT or any Consolidated Entity.
For purposes of clause (v), the REIT's and such Consolidated
Entity's pro rata share of interest expense or other amount of
any Unconsolidated Joint Venture shall be deemed equal to the
product of (a) the interest expense or other relevant amount of
such Unconsolidated Joint Venture, multiplied by (b) the
percentage of the total outstanding Capital Stock of such
Unconsolidated Joint Venture held by the REIT or such
Consolidated Entity, expressed as a decimal.
"Interest Period" means, with respect to each LIBOR
Advance, a period commencing on a Business Day and ending
one (1) or two (2) months thereafter, as specified by the
Borrower pursuant to Section 2.1(b), provided that any such
period that would otherwise end on a day that is not a Business
Day shall be extended to the next succeeding Business Day
unless such Business Day falls in another calendar month, in
which case such period shall end on the immediately preceding
Business Day.
"Investment" means, with respect to any Person, (i)
any direct or indirect purchase or other acquisition by that
Person of stock or securities, or any beneficial interest in
stock or other securities, of any other Person, any partnership
interest (whether general or limited) in any other Person, or
all or any substantial part of the business or assets of any
other Person, (ii) any direct or indirect loan, advance or
capital contribution by that Person to any other Person,
including all indebtedness and accounts receivable from that
other Person that are not current assets or did not arise from
sales to that other Person in the ordinary course of business.
The amount of any Investment shall be the original cost of such
Investment, plus the cost of all additions thereto, without any
adjustments for increases or decreases in value, or write-ups,
write-downs or write-offs with respect to such Investment.
"Investment Mortgages" mean mortgages or deeds of
trust securing indebtedness owned by Borrower.
"IRS" means the Internal Revenue Service and any
Person succeeding to the functions thereof.
"Joint Venture" means a joint venture, partnership,
limited liability company, business trust or similar arrange-
ment, whether in corporate, partnership or other legal form;
provided that, as to any such arrangement in corporate form,
such corporation shall not, as to any Person of which such
corporation is a Subsidiary, be considered to be a Joint
Venture to which such Person is a party.
"Land" means unimproved (except as otherwise provided
in the definition of "Construction in Progress") land. "Land"
does not include Construction in Progress.
"Lender Taxes" has the meaning given to such term in
Section 2.4(g).
"Liabilities and Costs" means all claims, judgments,
liabilities, obligations, responsibilities, losses, damages
(including lost profits), punitive or treble damages, costs,
disbursements and expenses (including, without limitation,
reasonable attorneys', experts' and consulting fees and costs
of investigation and feasibility studies), fines, penalties and
monetary sanctions, interest, direct or indirect, known or
unknown, absolute or contingent, past, present or future.
"LIBOR Advance" means an Advance bearing interest at
a fixed rate of interest determined by reference to the LIBOR
Rate.
"LIBOR Office" means the office of Lender designated
as such on the signature pages hereto or such other office of
Lender as designated from time to time by notice from Lender to
Borrower, whether or not outside the United States, which shall
be making or maintaining LIBOR Advances of Lender.
"LIBOR Rate" means, with respect to any LIBOR
Advance, the rate per annum (determined solely by the Lender
and rounded upward to the next 1/16th of one percent ) at which
deposits in Dollars are offered by the Lender in the Designated
Market at approximately 9:00 a.m. (California time) two (2)
Business Days prior to the first day of the applicable Interest
Period in an amount approximately equal to such LIBOR Advance,
and for a period of time comparable to the number of days in
the applicable Interest Period. The determination of the LIBOR
Rate by the Lender shall be conclusive in the absence of
manifest error. The foregoing rate of interest shall be
reserve adjusted by dividing LIBOR by one (1.00) minus the
LIBOR Reserve Percentage, with such quotient to be rounded
upward to the nearest whole multiple of one-hundredth of one
percent (0.01%). All references in this Agreement or other
Loan Documents to LIBOR include the aforesaid reserve
adjustment.
"LIBOR Reserve Percentage" means, relative to any
Interest Period for LIBOR Advances made by the Lender, the
reserve percentage (expressed as a decimal) equal to the actual
aggregate reserve requirements (including all basic, emergency,
supplemental, marginal and other reserves and taking into
account any transactional adjustments or other scheduled
changes in reserve requirements) announced within the Lender as
the reserve percentage applicable to the Lender as specified
under regulations issued from time to time by the Federal
Reserve Board. The LIBOR Reserve Percentage shall be based on
Regulation D of the Federal Reserve Board or other regulations
from time to time in effect concerning reserves for
"Eurocurrency Liabilities" from related institutions as though
the Lender were in a net borrowing position.
"Lien" means any mortgage, deed of trust, pledge,
negative pledge, hypothecation, collateral assignment, deposit
arrangement, security interest, encumbrance (including, but not
limited to, easements, rights-of-way, zoning restrictions and
the like), lien (statutory or other), preference, priority or
other security agreement or preferential arrangement of any
kind or nature whatsoever, including without limitation any
conditional sale or other title retention agreement, the
interest of a lessor under a Capital Lease, any financing lease
having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement or
document having similar effect (other than a financing
statement filed by a "true" lessor pursuant to 9408 of the
Uniform Commercial Code) naming the owner of the asset to which
such Lien relates as debtor, under the Uniform Commercial Code
or other comparable law of any jurisdiction.
"Loan Account" has the meaning given to such term in
Section 2.3.
"Loan Documents" means this Agreement, the Note, the
Guaranty, and all other agreements, instruments and documents
(together with amendments and supplements thereto and
replacements thereof) now or hereafter executed by the REIT or
Borrower which evidence, guarantee or secure the Obligations,
in each case either as originally executed or as the same may
from time to time be supplemented, modified, amended, renewed,
extended or supplanted.
"Major Agreement" means, with respect to any Real
Property included within the Unencumbered Pool or which
Borrower proposes for inclusion within the Unencumbered Pool,
(a) a lease of such Real Property with respect to 25,000 square
feet or more of gross leasable area, and (b) each ground lease
affecting such Real Property.
"Material Adverse Effect" means, with respect to a
Person, a material adverse effect upon the condition (financial
or otherwise), operations, performance or properties of such
Person. The phrase "has a Material Adverse Effect" or "will
result in a Material Adverse Effect" or words substantially
similar thereto shall in all cases be intended to mean "has
resulted, or will or could reasonably be anticipated to result,
in a Material Adverse Effect", and the phrase "has no (or does
not have a) Material Adverse Effect" or "will not result in a
Material Adverse Effect" or words substantially similar thereto
shall in all cases be intended to mean "does not or will not or
could not reasonably be anticipated to result in a Material
Adverse Effect".
"Maturity Date" has the meaning given to such term in
Section 2.1(d).
"Minority Interests" means that portion of "minority
interests" as set forth in the REIT's financial statements
which is attributable to the ownership interest in Borrower of
Persons other than the REIT.
"Multiemployer Plan" means an employee benefit plan
defined in Section 4001(a)(3) of ERISA which is, or within the
immediately preceding six (6) years was, contributed to by a
Person or an ERISA Affiliate.
"NAREIT Definition" has the meaning given to such
term in Section 10.3.
"Net Income" means, for any period, total net income
(or loss) of the REIT and the Consolidated Entities for such
period, provided that there shall be excluded therefrom (i) any
charge attributable to, or otherwise on account of, the
Minority Interests, (ii) any income or loss attributable to
extraordinary items (including, without limitation, any income
or loss attributable to restructuring of Indebtedness),
(iii) gains and losses from sales of assets, (iv) the REIT's
pro rata share of the income (or loss) of any Unconsolidated
Joint Venture for such period, and (v) except to the extent
otherwise included hereunder, the income (or loss) of any
Person accrued prior to the date it becomes a Consolidated
Entity or is merged with the REIT or any Consolidated Entity or
such Person's assets are acquired by the REIT or any Consoli-
dated Entity. For purposes of this definition, the REIT's pro
rata share of income (or loss) of any Unconsolidated Joint
Venture shall be deemed equal to the product of (i) the income
(or loss) of such Unconsolidated Joint Venture, multiplied by
(ii) the percentage of the total outstanding Capital Stock of
such Person held by the REIT or any Consolidated Entity,
expressed as a decimal.
"Net Offering Proceeds" means (a) all cash proceeds
received by the REIT as a result of the sale of common,
preferred or other classes of stock of the REIT (if and only to
the extent reflected in stockholders' equity on the
consolidated balance sheet of the REIT prepared in accordance
with GAAP) less customary costs, expenses and discounts of
issuance paid by the REIT, all of which proceeds shall have
been concurrently contributed by the REIT to Borrower as
additional capital, plus (b) all cash and the fair market value
of the net equity of all properties contributed to Borrower by
one or more Persons in exchange for limited partnership
interests in Borrower.
"1996 Revolving Credit Agreement" means that certain
Revolving Credit Agreement, dated as of December 17, 1996, by
and among Borrower, as borrower, and Lender, Commerzbank AG,
Los Angeles Branch, Dresdner Bank AG, New York Branch and Grand
Cayman Branch, Fleet National Bank, Keybank National
Association, Manufacturers Bank, Union Bank of
California, N.A., The First National Bank of Chicago, and PNC
Bank, NA, as lenders, and Lender, as agent, as from time to
time amended, supplemented or otherwise modified.
"Nonrecourse Debt" means any Debt: (a) under the
terms of which the payee's remedies upon the occurrence of a
default are limited to specific, identified assets of the payor
which secure such Debt; and (b) for the repayment of which the
payor has no personal liability beyond the loss of such
specified assets, except for liability for fraud, material
misrepresentations or misuse or misapplication of insurance
proceeds, condemnation awards or rents, existence of hazardous
waste or other customary exceptions to nonrecourse provisions.
"Note" means the Promissory Note made by Borrower to
Lender evidencing the Advances, either as originally executed
or as the same may from time to time be supplemented, modified,
amended, renewed, extended or supplanted. The Note shall be
substantially in the form of Exhibit D.
"Notice of Borrowing" means, with respect to a
proposed Advance pursuant to Section 2.1(b), a notice
substantially in the form of Exhibit E.
"Obligations" means all present and future
obligations and liabilities of the Borrower of every type and
description arising under or in connection with this Agreement,
the Note and the other Loan Documents due or to become due to
the Lender or any Person entitled to indemnification, or any of
their respective successors, transferees or assigns, whether
for principal, interest, fees, expenses, indemnities or other
amounts (including attorneys' fees and expenses) and whether
due or not due, direct or indirect, joint and/or several,
absolute or contingent, voluntary or involuntary, liquidated or
unliquidated, determined or undetermined, and whether now or
hereafter existing, renewed or restructured, whether or not
from time to time decreased or extinguished and later
increased, created or incurred, whether or not arising after
the commencement of a proceeding under the Bankruptcy Code
(including post-petition interest) and whether or not allowed
or allowable as a claim in any such proceeding, and whether or
not recovery of any such obligation or liability may be barred
by a statute of limitations or such obligation or liability may
otherwise be unenforceable.
"Office Property" means any Real Property that is an
office building and any related parking facility.
"Officer's Certificate" means a certificate signed by
a specified officer of a Person certifying as to the matters
set forth therein.
"Partnership Units" has the meaning established for
that term in the Partnership Agreement of the Borrower.
"PBGC" means the Pension Benefit Guaranty Corporation
or any Person succeeding to the functions thereof.
"Permit" means any permit, approval, authorization,
license, variance or permission required from a Governmental
Authority under an applicable Requirement of Law.
"Permitted Liens" mean:
(a) Liens (other than Environmental Liens and any
Lien imposed under ERISA) for taxes, assessments or
charges of any Governmental Authority or claims not yet
due and any such taxes, assessments, charges or claims
which are due if they are being contested by Borrower in
accordance with Section 6.1(d);
(b) Liens (other than any Lien imposed under ERISA)
incurred or deposits made in the ordinary course of
business (including without limitation surety bonds and
appeal bonds) in connection with workers' compensation,
unemployment insurance and other types of social security
benefits or to secure the performance of tenders, bids,
leases, contracts (other than for the repayment of
Indebtedness), or statutory obligations;
(c) Liens imposed by laws, such as mechanics' liens
and other similar liens arising in the ordinary course of
business which secure payment of obligations not more than
thirty (30) days past due or are being contested as
permitted under this Agreement;
(d) any Liens which are approved by Lender; and
(e) rights of lessees under leases and the rights of
lessors under Capital Leases.
"Person" means any natural person, corporation,
limited partnership, general partnership, joint stock company,
limited liability company, limited liability partnership, joint
venture, association, company, trust, bank, trust company, land
trust, business trust or other organization, whether or not a
legal entity, or any other nongovernmental entity, or any
Governmental Authority.
"Plan" means an employee benefit plan defined in
Section 3(3) of ERISA (other than a Multiemployer Plan) in
respect of which Borrower or an ERISA Affiliate, as applicable,
is an "employer" as defined in Section 3(5) of ERISA.
"Predecessor Entity" means Arden Realty Group, Inc.,
a California corporation ("Arden Realty California"), or any
Person who was at any time an Affiliate of Arden Realty
California or any Person that owned any of the Real Properties
listed on Schedule 1.1B contributed such Real Properties to the
REIT or the Borrower.
"Price Adjustment Date" has the meaning given to such
term in Section 2.4(h)(iii).
"Proceedings" means, collectively, all actions, suits
and proceedings before, and investigations commenced or
threatened by or before, any court or Governmental Authority
with respect to a Person.
"Property" means, as to any Person, any real or
personal property, building, facility, structure, equipment or
unit, or other asset owned and operated by such Person in the
ordinary course of its business.
"Property Expenses" means, for any Office Property,
all operating expenses relating to such Office Property,
including the following items (provided, however, that Property
Expenses shall not include Debt Service, tenant improvement
costs, leasing commissions, capital improvements, Depreciation
and Amortization Expenses and any extraordinary items not
considered operating expenses under GAAP):
(i) all expenses for the operation of such
Office Property, including any management fees payable
under management contracts, landscaping costs, janitorial
costs, costs for trash pickup and security costs and all
insurance expenses, but not including any expenses
incurred in connection with a sale or other capital or
interim capital transaction;
(ii) water charges, property taxes, sewer rents
and other impositions, other than fines, penalties,
interest or such impositions (or portions thereof) that
are payable by reason of the failure to pay an imposition
timely;
(iii) the cost of routine maintenance, repairs
and minor alterations, to the extent they can be expensed
under GAAP; and
(iv) if Borrower's interest in such Office
Property is a ground leasehold interest, rents paid by
Borrower under the ground lease for such Office Property.
"Property Income" means, for any Office Property, all
gross revenue from the ownership and/or operation of such
Office Property (but excluding income from a sale or other
capital item transaction), service fees and charges, all tenant
expense reimbursement income payable with respect to such
Office Property (but not such reimbursement for expenditures
not deducted as a Property Expense), and proceeds of business
interruption insurance specifically allocable to such Office
Property.
"Property Information" means the following informa-
tion and other items with respect to each Real Property which
Borrower intends to designate as an Unencumbered Asset to be
added to the Unencumbered Pool:
(i) A physical description of such Real
Property, the date upon which such Real Property was
acquired or is proposed to be acquired by Borrower, the
Acquisition Price of such Real Property, if the building
located on such Real Property or the use of such building
does not conform to applicable zoning ordinances and laws,
whether such building or use is a legal nonconforming use,
a copy of any reports delivered to Borrower with respect
to the structural integrity of improvements located on
such Real Property and Borrower's preliminary budget for
nonrevenue enhancing capital expenditures for such Real
Property for the next succeeding eight (8) Fiscal
Quarters;
(ii) A current operating statement for such
Real Property, audited or certified by Borrower as being
true and correct in all material respects and prepared in
accordance with GAAP, and comparative operating statements
for the current interim fiscal period and for the previous
two (2) Fiscal Years (or such lesser period as it has been
operating); provided, however, that, if Borrower shall
have owned such Real Property for less than the period to
be covered by such operating statements and comparative
operating statements, then the audit and certification
requirements shall extend only to the period of ownership
by Borrower, and Borrower shall provide to Lender complete
copies of any operating statements prepared by former
owner(s) of such Real Property with respect to the
remainder of the periods required hereunder, if the same
are available to Borrower;
(iii) A current Rent Roll for such Real
Property, certified by Borrower as being true and correct
(or if Borrower does not presently own the Property, a
copy of the Rent Roll prepared by the seller thereof);
(iv) A "Phase I" environmental assessment of
such Real Property not more than twelve (12) months old,
prepared by an environmental engineering firm reasonably
acceptable to Lender;
(v) Copies of all Major Agreements affecting
such Real Property;
(vi) A copy of Borrower's most recent Owner's
or Leasehold Policy of Title Insurance, if any, covering
such Real Property; and
(vii) If Borrower's interest in such Real
Property is a ground leasehold interest, a copy of the
ground lease pursuant to which Borrower leases such Real
Property and all amendments thereto and memoranda thereof.
"Property NOI" means, for any Office Property for any
period, (i) all Property Income for such period, minus (ii) all
Property Expenses for such period.
"Real Property" means each lot or parcel (or portions
thereof) of real property, improvements and fixtures thereon
and appurtenances thereto now or hereafter owned or leased by
the Borrower or any other Consolidated Entity.
"Regulations G, T, U and X" mean such Regulations of
the Federal Reserve Board as in effect from time to time.
"REIT" means Arden Realty, Inc., a Maryland
corporation.
"Release" means the release, spill, emission,
leaking, pumping, injection, deposit, disposal, discharge,
dispersal, leaching or migration into the indoor or outdoor
environment or into or out of any Property, including the
movement of Contaminants through or in the air, soil, surface
water, groundwater or property.
"Remedial Action" means any action required by
applicable Environmental Laws to (a) clean up, remove, treat or
in any other way address Contaminants in the indoor or outdoor
environment; (b) prevent the Release or threat of Release or
minimize the further Release of Contaminants so they do not
migrate or endanger or threaten to endanger public health or
welfare or the indoor or outdoor environment; or (c) perform
pre-remedial studies and investigations and post-remedial
monitoring and care.
"Rent Roll" means, with respect to any Real Property,
a rent roll for such Real Property stating for each tenancy
within such Real Property the identity of the lessee, the suite
designation of the space leased, the gross leasable area
included within such space, the date of commencement and the
date of termination of such tenancy, the periods of any options
to extend or terminate such tenancy, the base rent and any
escalations or operating expense reimbursement payable in
respect of such tenancy and the type of lease (i.e., gross or
degree to which net of expenses, taxes and other items).
"Reportable Event" means any of the events described
in Section 4043(b) of ERISA, other than an event for which the
thirty (30) day notice requirement is waived by regulations.
"Requirements of Law" means, as to any Person, the
charter and by-laws, partnership agreement or other organiza-
tional or governing documents of such Person, and any law, rule
or regulation, Permit, or determination of an arbitrator or a
court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to
which such Person or any of its property is subject, including
without limitation, the Securities Act, the Securities Exchange
Act, Regulations G, T, U and X, FIRREA and any certificate of
occupancy, zoning ordinance, building, environmental or land
use requirement or Permit or occupational safety or health law,
rule or regulation.
"Responsible Official" means (a) when used with
reference to a Person other than an individual, any corporate
officer of such Person, general partner of such Person,
corporate officer of a corporate general partner of such
Person, or corporate officer of a corporate general partner of
a partnership that is a general partner of such Person, or any
other responsible official thereof acting on behalf thereof,
and (b) when used with reference to a Person who is an
individual, such Person.
"S-11" means the Form S-11 Registration Statement
under the Securities Act filed by the REIT with the Commission
on July 16, 1996, as amended.
"Securities" means any stock, shares, voting trust
certificates, bonds, debentures, notes or other evidences of
indebtedness, secured or unsecured, convertible, subordinated
or otherwise, or in general any instruments commonly known as
"securities", or any certificate of interest, shares, or
participations in temporary or interim certificates for the
purchase or acquisition of, or any right to subscribe to,
purchase or acquire any of the foregoing, but shall not include
any evidence of the Obligations, provided that Securities shall
not include Cash Equivalents, Investment Mortgages or equity
investments in Unconsolidated Joint Ventures.
"Securities Act" means the Securities Act of 1933, as
amended to the date hereof and from time to time hereafter, and
any successor statute.
"Securities Exchange Act" means the Securities
Exchange Act of 1934, as amended to the date hereof and from
time to time hereafter, and any successor statute.
"Solvency Certificate" means a certificate in the
form of Exhibit F.
"Solvent" means, as to any Person at the time of
determination, that such Person (a) owns Property the value of
which (both at fair valuation and at present fair saleable
value) is greater than the amount required to pay all of such
Person's liabilities (including the probable amount of
contingent liabilities and debts); (b) is able to pay all of
its debts as such debts mature (including through refinancing
on commercially reasonable terms); and (c) has capital
sufficient to carry on its business and transactions and all
business and transactions in which it is about to engage.
"Stockholders' Equity" means, as of any date of
determination, the consolidated Stockholders' Equity of the
REIT as of that date determined in accordance with GAAP and
shown in the financial statements of the REIT and the
Consolidated Entities; provided that there shall be excluded
from Stockholders' Equity any amount attributable to
Disqualified Stock.
"Subsidiary" means, as of any date of determination
and with respect to any Person, any corporation, limited
liability company or partnership (whether or not, in either
case, characterized as such or as a "joint venture"), whether
now existing or hereafter organized or acquired: (a) in the
case of a corporation or limited liability company, of which a
majority of the Securities having ordinary voting power for the
election of directors or other governing body (other than
Securities having such power only by reason of the happening of
a contingency) are at the time beneficially owned by such
Person and/or one or more Subsidiaries of such Person, or
(b) in the case of a partnership, of which a majority of the
partnership or other ownership interests are at the time
beneficially owned by such Person and/or one or more of its
Subsidiaries.
"Swap Agreement" means a written agreement between
Borrower and one or more financial institutions providing for
"swap", "cap", "collar", "floor," "buy down" or other interest
rate protection with respect to any Indebtedness.
"Tax Expense" means (without duplication), for any
period, total tax expense (if any) attributable to income and
franchise taxes based on or measured by income, whether paid or
accrued, of the REIT and the Consolidated Entities, including
the REIT's and each Consolidated Entity's pro rata share of tax
expenses in each Unconsolidated Joint Venture. For purposes of
this definition, the REIT's and such Consolidated Entity's pro
rata share of any such tax expense of such Unconsolidated Joint
Venture shall be deemed equal to the product of (i) such tax
expense of such Unconsolidated Joint Venture, multiplied by
(ii) the percentage of the total outstanding Capital Stock of
such Unconsolidated Joint Venture held by the REIT or such
Consolidated Entity, expressed as a decimal.
"Termination Event" means (a) any Reportable Event,
(b) the withdrawal of a Person or an ERISA Affiliate of such
Person from a Benefit Plan during a plan year in which it was a
"substantial employer" as defined in Section 4001(a)(2) of
ERISA, (c) the occurrence of an obligation arising under
Section 4041 of ERISA of a Person or an ERISA Affiliate of such
Person to provide affected parties with a written notice of an
intent to terminate a Benefit Plan in a distress termination
described in Section 4041(c) of ERISA, (d) the institution by
the PBGC of proceedings to terminate any Benefit Plan under
Section 4042 of ERISA, (e) any event or condition which
constitutes grounds under Section 4042 of ERISA for the
appointment of a trustee to administer a Benefit Plan, (f) the
partial or complete withdrawal of such Person or any ERISA
Affiliate of such Person from a Multiemployer Plan, or (g) the
adoption of an amendment by any Person or any ERISA Affiliate
of such Person to terminate any Benefit Plan.
"Total Liabilities" means, at any time, without
duplication, the aggregate amount of (i) all Indebtedness and
other liabilities of the REIT and the Consolidated Entities
reflected in the financial statements of the REIT or disclosed
in the financial notes thereto, plus (ii) all liabilities of
all Unconsolidated Joint Ventures that are recourse to the REIT
or any Consolidated Entity or any of its assets or that
otherwise constitute Indebtedness of the REIT or any
Consolidated Entity, plus (iii) the REIT's pro rata share of
all Indebtedness and other liabilities of any Unconsolidated
Joint Venture not otherwise constituting Indebtedness of the
REIT or any Consolidated Entity, plus (iv) all Guaranty
Obligations of the REIT and the Consolidated Entities. For
purposes of clause (iii), the REIT's pro rata share of all
Indebtedness and other liabilities of any Unconsolidated Joint
Venture shall be deemed equal to the product of (a) such
Indebtedness or other liabilities, multiplied by (b) the
percentage of the total outstanding Capital Stock of such
Person held by the REIT or any Consolidated Entity, expressed
as a decimal. Total Liabilities shall not include Minority
Interests.
"to the best knowledge of" means, when modifying a
representation, warranty or other statement of any Person, that
the fact or situation described therein is known by the Person
(or, in the case of a person other than a natural person, known
by a Responsible Official of that Person) making the
representation, warranty or other statement, or with the
exercise of reasonable due diligence under the circumstances
(in accordance with the standard of what a reasonable Person in
similar circumstances would have done) would have been known by
the Person (or, in the case of a Person other than a natural
Person, would have been known by a Responsible Official of that
Person).
"Unconsolidated Joint Venture" means any Joint
Venture of the REIT or any Consolidated Entity in which the
REIT or such Consolidated Entity holds any Capital Stock but
which would not be combined with the REIT in the consolidated
financial statements of the REIT in accordance with GAAP.
"Unencumbered Asset Value" means, at any time, with
respect to a specified Unencumbered Asset, (i) for Unencumbered
Assets that have been Wholly-Owned by the Borrower or a
Predecessor Entity for at least one full Fiscal Quarter at such
time, the product of the Property NOI of such Unencumbered
Assets during the period of the full Fiscal Quarter ended most
recently multiplied by 4, divided by 10.0% (expressed as a
decimal), or (ii) for Unencumbered Assets that have been
Wholly-Owned by the Borrower or a Predecessor Entity for less
than one full Fiscal Quarter at such time, an amount equal to
ninety percent (90%) of the Acquisition Price for such
Unencumbered Assets.
"Unencumbered Asset" means any Real Property
designated by Borrower that satisfies all of the following
conditions:
(i) is an Office Property;
(ii) is free and clear of any Lien, other than
(a) easements, covenants, and other restrictions, charges or
encumbrances not securing Indebtedness that do not interfere
materially with the ordinary operations of such Real Property
and do not materially detract from the value of such Real
Property; (b) building restrictions, zoning laws and other
Requirements of Law, and (c) leases and subleases of such Real
Property in the ordinary course of business, and (d) Permitted
Liens;
(iii) is Wholly-Owned;
(iv) such Real Property is not less than 70%
leased;
(v) after adding such Real Property to the
Unencumbered Pool, the Real Properties in the Unencumbered Pool
shall not be less than 85% leased; and
(vi) the Real Property has been expressly approved
by Lender in writing as an Unencumbered Asset.
As of the date hereof all Unencumbered Assets are
described on Schedule 8.3, provided that if any Unencumbered
Asset (including any of the properties listed on Schedule 8.3)
no longer satisfies any of the conditions set forth in the
foregoing clauses (i) through (v), inclusive, Lender shall have
the right, at any time and from time to time, to notify the
Borrower that, effective upon the giving of such notice, such
asset shall no longer be considered an Unencumbered Asset. If
the Borrower intends to designate a Property as an Unencumbered
Asset to be added to the Unencumbered Pool from time to time,
it will notify the Lender of such intention, which notice will
include, with respect to such Property, the Property Informa-
tion with respect to such Property, and such other information
and items as may be reasonably requested by Lender with respect
to such Property. If the Borrower at any time intends to
withdraw any Property from the Unencumbered Pool, it shall
(i) notify the Lender of its intention, and (ii) deliver to the
Lender a certificate of its chief financial officer, chief
executive officer or chief operating officer setting forth the
calculations establishing that the Borrower will be in
compliance with Section 8.3 with giving effect to such with-
drawal (and any concurrent addition of Properties to the
Unencumbered Pool), which calculations shall be in such detail,
and otherwise in such form and substance, as Lender reasonably
requires. Effective automatically upon receipt of such notice
and certificate by the Lender (or upon any later date stated in
such notice), such Real Property shall no longer constitute an
Unencumbered Asset.
"Unencumbered Pool" means the pool of Unencumbered
Assets.
"Unencumbered Pool Statements" has the meaning given
to such term in Section 5.1(f).
"Unmatured Event Of Default" means an event which,
with the giving of notice or the lapse of time, or both, would
constitute an Event of Default.
"Unused Facility Fee" has the meaning given to such
term in Section 2.5(b).
"WFB Swap Agreement" means any Swap Agreement entered
into between Wells Fargo and Borrower , including, without
limitation, that certain ISDA Master Agreement, dated as of
December 17, 1996, between Borrower and Lender.
"Wholly-Owned" means, with respect to any Real
Property, that title to such Real Property is held in fee
directly by the Borrower or that Borrower is the lessee under a
ground lease approved by Lender.
1.2 Computation of Time Periods. In this Agreement, in
the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and
including" and the words "to" and "until" each mean "to and
including". Periods of days referred to in this Agreement
shall be counted in calendar days unless Business Days are
expressly prescribed.
1.3 Terms.
(a) Any accounting terms used in this Agreement
which are not specifically defined shall be construed in
conformity with, and all financial data required to be
submitted by this Agreement shall be prepared in conformity
with, GAAP, except as otherwise specifically prescribed in this
Agreement.
(b) In each case where the consent or approval of
Lender is required, or its non-obligatory action is requested
by Borrower, such consent, approval or action shall be in the
sole and absolute discretion of Lender, unless otherwise
specifically indicated.
(c) Any time the word "or" is used herein, unless
the context otherwise clearly requires, it has the inclusive
meaning represented by the phrase "and/or". The words
"hereof", "herein", "hereby", "hereunder" and similar terms
refer to this Agreement as a whole and not to any particular
provision of this Agreement. Article, section, subsection,
clause, exhibit and schedule references are to this Agreement
unless otherwise specified. Any reference in this Agreement to
this Agreement or to any other Loan Document includes any and
all amendments, modifications, supplements, renewals or
restatements thereto or thereof, as applicable.
ARTICLE 2
ADVANCES
2.1 Loan Advances and Repayment.
(a) Loan Availability.
(i) Subject to the terms and conditions set
forth in this Agreement, Lender hereby agrees to make
Advances to Borrower from time to time during the period
from the Closing Date to the Business Day next preceding
the Maturity Date, subject to the following:
(x) The aggregate principal amount of
all outstanding Advances shall not at any time
exceed One Hundred Ten Million Dollars
($110,000,000); and
(y) the aggregate principal amount of
all outstanding Advances shall not at any time
exceed the lesser of (1) the Commitment or (2) the
amount which, when combined with all components of
the unsecured Total Liabilities of the REIT and
the Consolidated Entities (including, without
limitation, all outstanding "Line B Advances" as
defined in the 1996 Revolving Credit Agreement)
other than outstanding Advances as of the date of
determination, is equal to fifty percent (50%) of
the aggregate Unencumbered Asset Value of the
Unencumbered Pool as of such date.
Advances may be voluntarily prepaid pursuant to
Section 2.6(a) and, subject to the provisions of this
Agreement, any amounts so prepaid may be reborrowed under
this Section 2.1(a)(i). Interest shall accrue and be
payable on outstanding Advances as provided in
Section 2.4. The principal balance of the Advances shall
be payable in full on the Maturity Date. The obligation
of Borrower to repay Advances will be evidenced by the
Note.
(b) Notice of Borrowing.
(i) Whenever Borrower desires to borrow
under this Section 2.1, but in no event more than six (6)
times during any one (1) calendar month, Borrower shall
give Lender, at Wells Fargo Real Estate Group Disbursement
Center, 2120 East Park Place, Suite 100, El Segundo,
California 90245, Attention: Ms. Rosalind McCall
(telephone: (310) 335-9451; telecopier: (310) 615-1014),
with a copy to: Wells Fargo Bank, Real Estate Group,
333 South Grand Avenue, 12th Floor, Los Angeles,
California 90071, Attention: Andrew Downs, or such other
addresses as Lender shall designate, an original or
facsimile Notice of Borrowing no later than 9:00 A.M.
(San Francisco time), with respect to LIBOR Advances, not
less than one (1) nor more than five (5) Business Days
prior to the proposed Funding Date of each such Advance,
and, with respect to Base Rate Advances, on the proposed
Funding Date of each such Advance but not more than five
(5) Business Days prior to such proposed Funding Date.
Each Notice of Borrowing shall specify (A) the Funding
Date (which shall be a Business Day) of the proposed
Advance, (B) the amount of the proposed Advance, provided
that the aggregate amount of such proposed Advance shall,
if such Advance is a LIBOR Advance, equal One Million
Dollars ($1,000,000) or integral multiples of Fifty
Thousand Dollars ($50,000) in excess thereof, and provided
further that the aggregate amount of such proposed Advance
shall, if such Advance is a Base Rate Advance, be equal to
or greater than Two Hundred Fifty Thousand Dollars
($250,000), (C) whether the Advance to be made thereunder
will be a Base Rate Advance or a LIBOR Advance and, if a
LIBOR Advance, the Interest Period, and (D) the proposed
use of such Advance. Any Notice of Borrowing pursuant to
this Section 2.1(b) shall be irrevocable.
(ii) Borrower may elect (A) to convert LIBOR
Advances or any portion thereof into Base Rate Advances,
or (B) to convert Base Rate Advances or any portion
thereof to LIBOR Advances, or (C) to convert LIBOR
Advances or any portion thereof into new LIBOR Advances,
provided, however, that the aggregate amount of the
Advances being converted into or continued as LIBOR
Advances shall, in the aggregate, equal One Million
Dollars ($1,000,000) or an integral multiple of Fifty
Thousand Dollars ($50,000) in excess thereof. The
conversion of a LIBOR Advance to a Base Rate Advance or to
a new LIBOR Advance shall only occur on the last Business
Day of the Interest Period relating to such LIBOR Advance.
Each election under clause (B) above shall be made by
Borrower giving Lender an original or facsimile Notice of
Borrowing no later than 9:00 A.M. (San Francisco time),
not less than three (3) nor more than five (5) Business
Days prior to the date of proposed conversion to a LIBOR
Advance. Each election under clause (C) above shall be
made by Borrower giving Lender an original or facsimile
Notice of Borrowing no later than 9:00 A.M. (San Francisco
time), not less than three (3) nor more than five (5)
Business Days prior to the last day of the Interest Period
for the LIBOR Advance in question. Each Notice of
Borrowing delivered pursuant to this Section 2.1(b)(ii)
shall specify (1) the amount of the new LIBOR Advance or
Base Rate Advance, as the case may be, (2) if a LIBOR
Advance, the Interest Period therefor, and (3) the date of
the effectiveness of the LIBOR Rate or Base Rate, as the
case may be (which date shall be a Business Day).
(iii) Upon receipt of a Notice of Borrowing
in proper form requesting LIBOR Advances under
subparagraph (i) or (ii) above, Lender shall determine the
LIBOR Rate applicable to the Interest Period for such
LIBOR Advances, and shall, two (2) Business Days prior to
the beginning of such Interest Period, give (by facsimile)
a Fixed Rate Notice in respect thereof to Borrower;
provided, however, that failure to give such notice to
Borrower shall not affect the validity of such rate. Each
determination by Lender of the LIBOR Rate shall be
conclusive and binding upon the parties hereto in the
absence of manifest error.
(iv) If Borrower does not make a timely
election to convert all or a portion of a LIBOR Advance
into a new LIBOR Advance in accordance with
Section 2.1(b)(ii), such LIBOR Advance shall be
automatically converted to a Base Rate Advance upon
expiration of the Interest Period applicable to such LIBOR
Advance.
(c) Making of Advances. Except as otherwise
provided herein, Lender shall deposit the proceeds of each
Advance in Borrower's account number 4600-598-411 at the
Los Angeles main office of Lender.
(d) Term. The outstanding balance of the
Advances shall be payable in full on the earlier to occur of,
(i) June 30, 1997 or (ii) the acceleration of the Advances
pursuant to Section 9.2(a) (said earlier date referred to
herein as the "Maturity Date").
2.2 Authorization to Obtain Advances. Schedule 2.2 sets
forth the names of those employees of Borrower authorized by
Borrower to sign Notices of Borrowing, and Lender shall be
entitled to rely on such Schedule until notified in writing by
Borrower of any change(s) of the persons so authorized. Lender
shall be entitled to act on the instructions of anyone
identifying himself or herself as one of the Persons authorized
to execute a Notice of Borrowing, and Borrower shall be bound
thereby in the same manner as if such Person were actually so
authorized. Borrower agrees to indemnify, defend and hold
Lender harmless from and against any and all Liabilities and
Costs which may arise or be created by the acceptance of
instructions in any Notice of Borrowing, unless caused by the
gross negligence or willful misconduct of Lender.
2.3 Lender's Accounting. Lender shall maintain a loan
account (the "Loan Account") on its books in which shall be
recorded (a) the principal amount of Advances owing to Lender
from time to time, and (b) all repayments of principal and
payments of accrued interest, as well as payments of fees
required to be paid pursuant to this Agreement. All entries in
the Loan Account shall be made in accordance with Lender's
customary accounting practices as in effect from time to time.
Monthly or at such other interval as is customary with Lender's
practice, Lender will render a statement of the Loan Account to
Borrower. Each such statement shall be deemed final, binding
and conclusive upon Borrower in all respects as to all matters
reflected therein (absent manifest error), unless Borrower
delivers to Lender written notice of any objections which
Borrower may have to any such statement on or before the first
to occur of (a) thirty (30) days after the date such statement
is mailed or otherwise delivered to Borrower, or (b) ten
(10) days after discovery by Borrower of an error with respect
to which Borrower had no knowledge and which could not have
been determined after reasonable inquiry during said 30-day
period. In the event that Borrower gives timely notice of
objection, only those items expressly objected to in such
notice shall be deemed to be disputed by Borrower.
2.4 Interest on the Advances.
(a) Base Rate Advances. Subject to
Section 2.4(d), all Base Rate Advances shall bear interest on
the daily unpaid principal amount thereof from the date made
until paid in full at a fluctuating rate per annum equal to the
Base Rate. Base Rate Advances shall be made in minimum amounts
of Two Hundred Fifty Thousand Dollars ($250,000).
(b) LIBOR Advances. Subject to Sections 2.4(d)
and 2.4(h), LIBOR Advances shall bear interest on the unpaid
principal amount thereof during the Interest Period applicable
thereto at a rate per annum equal to the sum of the LIBOR Rate
for such Interest Period plus the Applicable Spread. Not less
than 3 days prior to the occurrence of an Applicable Spread
Event, Borrower shall give Lender an Applicable Spread Notice
with respect thereto. Thereafter, Borrower shall give Lender
written notice of the occurrence of such Applicable Spread
Event within 3 days after such occurrence, which notice shall
state whether any of the information set forth in the
Applicable Spread Notice delivered with respect to such
Applicable Spread Event changed since the date of such Notice
and, if so, shall describe such change or changes. The
Applicable Spread shall be automatically changed to reflect
such Applicable Spread Event as of the date Lender receives
such notice. Lender shall promptly thereafter confirm in
writing to Borrower the new Applicable Spread and the effective
date thereof. LIBOR Advances shall be in amounts of One
Million Dollars ($1,000,000) or Fifty Thousand Dollar ($50,000)
increments in excess thereof. No more than six (6) LIBOR
Advances shall be outstanding at any one time. Notwithstanding
anything to the contrary contained herein and subject to the
default interest provisions contained in Section 2.4(d), if an
Event of Default occurs and as a result thereof the Commitment
is terminated, all LIBOR Advances will convert to Base Rate
Advances upon the expiration of the applicable Interest Periods
therefor or the date all Advances become due, whichever occurs
first.
(c) Interest Payments. Subject to
Section 2.4(d), interest accrued on all Advances shall be
payable by Borrower, in the manner provided in Section 2.6(b),
in arrears on the first Business Day of the first calendar
month following the Closing Date, the first Business Day of
each succeeding calendar month thereafter, and on the Maturity
Date.
(d) Default Interest. Notwithstanding the rates
of interest specified in Sections 2.4(a) and 2.4(b) and the
payment dates specified in Section 2.4(c), effective at the
option of Lender following the occurrence and during the
continuance of any Event of Default, the principal balance of
all Advances then outstanding and, to the extent permitted by
applicable law, any interest payments not paid when due, shall
bear interest, payable upon demand, at a rate which is five
percent (5%) per annum in excess of the rate(s) of interest
otherwise payable from time to time under this Agreement.
Notwithstanding anything to the contrary in any of the other
Loan Documents, all other amounts due Lender (whether directly
or for reimbursement) under this Agreement or any of the other
Loan Documents if not paid when due, or if no time period is
expressed, if not paid within ten (10) days after demand, shall
bear interest from and after demand at the rate set forth in
this Section 2.4(d).
(e) Late Fee. Borrower acknowledges that late
payment to Lender will cause Lender to incur costs not
contemplated by this Agreement. Such costs include, without
limitation, processing and accounting charges. Therefore, if
Borrower fails timely to pay any sum due and payable hereunder
through the Maturity Date, unless waived by Lender, a late
charge of four cents ($.04) for each dollar of any such
principal payment, interest or other charge which is due hereon
and which is not paid within fifteen (15) days after such
payment is due, shall be charged by Lender and paid by Borrower
for the purpose of defraying the expense incident to handling
such delinquent payment. Borrower and Lender agree that this
late charge represents a reasonable sum considering all of the
circumstances existing on the date hereof and represents a fair
and reasonable estimate of the costs that Lender will incur by
reason of late payment. Borrower and Lender further agree that
proof of actual damages would be costly and inconvenient.
Acceptance of any late charge shall not constitute a waiver of
the default with respect to the overdue installment, and shall
not prevent Lender from exercising any of the other rights
available hereunder or any other Loan Document. Such late
charge shall be paid without prejudice to any other rights of
Lender. Lender agrees that, notwithstanding the foregoing, no
such late charge shall be charged by Lender if the outstanding
Advances are then bearing interest at the default rate of
interest set forth in Section 2.4(d).
(f) Computation of Interest. Interest shall be
computed on the basis of the actual number of days elapsed in
the period during which interest or fees accrue and a year of
three hundred sixty (360) days. In computing interest on any
Advance, the date of the making of the Advance shall be
included and the date of payment shall be excluded; provided,
however, that if an Advance is repaid on the same day on which
it is made, one (1) day's interest shall be paid on that
Advance. Notwithstanding any provision in this Section 2.4,
interest in respect of any Advance shall not exceed the maximum
rate permitted by applicable law.
(g) Changes; Legal Restrictions. In the event
that, after the Closing Date, (i) the adoption of or any change
in any law, treaty, rule, regulation, guideline or
determination of a court or Governmental Authority or any
change in the interpretation or application thereof by a court
or Governmental Authority, or (ii) compliance by Lender with
any request or directive made or issued after the Closing Date
(whether or not having the force of law and whether or not the
failure to comply therewith would be unlawful) from any central
bank or other Governmental Authority or quasi-governmental
authority:
(A) subjects Lender to any tax, duty or
other charge of any kind with respect to the Commitment,
this Agreement or any of the other Loan Documents,
including the Note, or the Advances or changes the basis
of taxation of payments to Lender of principal, fees,
interest or any other amount payable hereunder, except for
net income, gross receipts, gross profits or franchise
taxes imposed by any jurisdiction and not specifically
based upon loan transactions (all such non-excepted taxes,
duties and other charges being hereinafter referred to as
"Lender Taxes");
(B) imposes, modifies or holds applicable,
in the determination of Lender, any reserve, special
deposit, compulsory loan, FDIC insurance, capital
allocation or similar requirement against assets held by,
or deposits or other liabilities in or for the account of,
advances or loans by, or other credit extended by, or any
other acquisition of funds by, Lender or any applicable
lending office (except to the extent that the reserve and
FDIC insurance requirements are reflected in the "Base
Rate" or in determining the LIBOR Rate); or
(C) imposes on Lender any other condition
materially more burdensome in nature, extent or
consequence than those in existence as of the Closing
Date,
and the result of any of the foregoing is to increase the cost
to Lender of making, renewing, maintaining or participating in
the Advances or to reduce any amount receivable thereunder;
then, in any such case, Borrower shall promptly pay to Lender,
within seven (7) days after Borrower's receipt of written
demand, such amount or amounts (based upon a reasonable
allocation thereof by Lender to the financing transactions
contemplated by this Agreement and affected by this
Section 2.4(g)) as may be necessary to compensate Lender for
any such additional cost incurred or reduced amounts received.
Lender shall deliver to Borrower a written statement of the
claimed additional costs incurred or reduced amounts received
and the basis therefor as soon as reasonably practicable after
Lender obtains knowledge thereof. If Lender subsequently
recovers any amount of Lender Taxes previously paid by Borrower
pursuant to this Section 2.4(g), whether before or after
termination of this Agreement, then, upon receipt of good funds
with respect to such recovery, Lender will refund such amount
to Borrower if no Event of Default or Unmatured Event of
Default then exists or, if an Event of Default or Unmatured
Event of Default then exists, such amount will be credited to
the Obligations in the manner determined by Lender.
(h) Certain Provisions Regarding LIBOR Advances.
(i) LIBOR Lending Unlawful. If Lender shall
determine (which determination shall, upon notice thereof
to Borrower, be conclusive and binding on the parties
hereto) that after the Closing Date the introduction of or
any change in or in the interpretation of any law makes it
unlawful, or any central bank or other Governmental
Authority asserts that it is unlawful, for Lender to make
or maintain any Advance as a LIBOR Advance, (A) the
obligations of Lender to make or maintain any Advances as
LIBOR Advances shall, upon such determination, forthwith
be suspended until Lender shall notify Borrower that the
circumstances causing such suspension no longer exist (and
Lender shall give notice if such circumstances no longer
exist), and (B) if required by such law or assertion, the
existing LIBOR Advances shall automatically convert into
Base Rate Advances.
(ii) Deposits Unavailable. If Lender shall
have determined in good faith that adequate means do not
exist for ascertaining the interest rate applicable
hereunder to LIBOR Advances, then, upon notice from Lender
to Borrower the obligations of Lender to make or maintain
Advances as LIBOR Advances shall forthwith be suspended
until Lender shall notify Borrower that the circumstances
causing such suspension no longer exist. Lender will give
such notice when it determines, in good faith, that such
circumstances no longer exist; provided, however, that
Lender shall not have any liability to any Person with
respect to any delay in giving such notice.
(iii) Fixed Rate Price Adjustment. Borrower
acknowledges that prepayment or acceleration of a LIBOR
Advance during an Interest Period shall result in Lender
incurring additional costs, expenses and/or liabilities
and that it is extremely difficult and impractical to
ascertain the extent of such costs, expenses and/or
liabilities. (For all purposes of this subpara-
graph (iii), any Advance not being made as a LIBOR Advance
in accordance with the Notice of Borrowing therefor, as a
result of Borrower's cancellation thereof, shall be
treated as if such LIBOR Advance had been prepaid.)
Therefore, on the date a LIBOR Advance is prepaid or the
date all sums payable hereunder become due and payable, by
acceleration or otherwise ("Price Adjustment Date"),
Borrower shall pay to Lender (in addition to all other
sums then owing), an amount ("Fixed Rate Price
Adjustment") equal to the then present value of (A) the
amount of interest that would have accrued on the LIBOR
Advance for the remainder of the Interest Period at the
rate applicable to such LIBOR Advance, less (B) the amount
of interest that would accrue on the same LIBOR Advance
for the same period if the LIBOR Rate were set on the
Price Adjustment Date. The present value shall be
calculated by using as a discount rate the LIBOR Rate
quoted on the Price Adjustment Date.
By initialing this provision where indicated
Borrower waives any right Borrower may have under
California Civil Code Section 2954.10 to repay any
LIBOR Advances, in whole or in part, without
payment of the Fixed Rate Price Adjustment upon
acceleration of the maturity date of such
Advances, and Borrower further confirms that
Lender's agreement to make LIBOR Advances at the
interest rates and on the other terms set forth
herein constitutes adequate and valuable
consideration, given individual weight by
Borrower, for this waiver and agreement.
BORROWER'S INITIALS:/s/ DML
Within seven (7) days after Borrower's receipt of written
notice from Lender, Borrower shall immediately pay to
Lender the Fixed Rate Price Adjustment as calculated by
Lender. Such written notice (which shall include
calculations in reasonable detail) shall, in the absence
of manifest error, be conclusive and binding on the
parties hereto.
(iv) Borrower understands, agrees and
acknowledges the following: (A) Lender has no obligation
to purchase, sell and/or match funds in connection with
the use of the LIBOR Rate as a basis for calculating the
rate of interest on a LIBOR Rate Advance or a Fixed Rate
Price Adjustment; (B) the LIBOR Rate is used merely as a
reference in determining such rate and/or Fixed Rate Price
Adjustment; and (C) Borrower has accepted the LIBOR Rate
as a reasonable and fair basis for calculating such rate
and a Fixed Rate Price Adjustment. Borrower further
agrees to pay the Fixed Rate Price Adjustment and Lender
Taxes, if any, whether or not Lender elects to purchase,
sell and/or match funds.
2.5 Fees.
(a) Commitment Fee. Borrower shall pay to Lender
a commitment fee pursuant to a separate agreement between
Lender and Borrower.
(b) Unused Facility Fee. From and after the
Closing Date and until the Obligations are paid in full and
this Agreement is terminated or, if sooner, the date the
Commitment terminates, Borrower shall pay to Lender a fee (the
"Unused Facility Fee") accruing at the "Unused Facility Fee
Rate" (as that term is hereinafter defined) upon an amount
equal to the average daily difference between (x) the
Commitment and (y) the aggregate amount of all Advances
outstanding hereunder during the Fiscal Quarter in question.
The Unused Facility Fee Rate shall be computed as follows:
(1) For any Fiscal Quarter in which the average
daily principal balance of all outstanding
Advances is less than or equal to
$55,000,000, the Unused Facility Fee Rate
shall be one-quarter of one percent (0.25%)
per annum;
(2) For any Fiscal Quarter in which the average
daily principal balance of all outstanding
Advances is greater than $55,000,000, the
Unused Facility Fee Rate shall be one-eighth
of one percent (0.125%) per annum.
The Unused Facility Fee shall be payable, in the manner
provided in Section 2.5(c), in arrears on the first Business
Day in each Fiscal Quarter, beginning with the first Fiscal
Quarter after the Closing Date, and ending on the date of
payment in full of all Obligations or, if sooner, the date the
Commitment terminates, with the Unused Facility Fee to be
prorated for any period of less than a Fiscal Quarter.
(c) Payment of Fees. The fees described in this
Section 2.5 represent compensation for services rendered and to
be rendered separate and apart from the lending of money or the
provision of credit and do not constitute compensation for the
use, detention or forbearance of money, and the obligation of
Borrower to pay the fees described herein shall be in addition
to, and not in lieu of, the obligation of Borrower to pay
interest, other fees and expenses otherwise described in this
Agreement. All fees shall be payable when due in immediately
available funds and shall be nonrefundable when paid. If
Borrower fails to make any payment of fees or expenses
specified or referred to in this Agreement due to Lender,
including without limitation those referred to in this
Section 2.5, in Section 10.1, or otherwise under this Agreement
or any separate fee agreement between Borrower and Lender
relating to this Agreement, when due, the amount due shall bear
interest until paid at the Base Rate and after ten (10) days at
the rate specified in Section 2.4(d) (but not to exceed the
maximum rate permitted by applicable law), and shall constitute
part of the Obligations.
2.6 Payments.
(a) Voluntary Prepayments. Borrower may, upon
not less than three (3) Business Days prior written notice to
Lender not later than 11:00 A.M. (San Francisco time) on the
date given, at any time and from time to time, prepay any
Advances in whole or in part. Any notice of prepayment given
to Lender under this Section 2.6(a) shall specify the date of
prepayment and the aggregate principal amount of the
prepayment. In the event of a prepayment of LIBOR Advances,
Borrower shall pay any Fixed Rate Price Adjustment payable in
respect thereof in accordance with Section 2.4(h).
(b) Manner and Time of Payment. All payments of
principal, interest and fees hereunder payable to Lender shall
be made without condition or reservation of right and free of
set-off or counterclaim, in Dollars and by wire transfer
(pursuant to Lender's written wire transfer instructions) of
immediately available funds, to Lender not later than
11:00 A.M. (San Francisco time) on the date due; and funds
received by Lender after that time and date shall be deemed to
have been paid on the next succeeding Business Day.
(c) Payments on Non-Business Days. Whenever any
payment to be made by Borrower hereunder shall be stated to be
due on a day which is not a Business Day, payments shall be
made on the next succeeding Business Day and such extension of
time shall be included in the computation of the payment of
interest hereunder and of any of the fees specified in
Section 2.5, as the case may be.
ARTICLE 3
CONDITIONS TO ADVANCES
3.1 Conditions to Initial Advances. The obligation of
Lender to make the initial Advance shall be subject to the
satisfaction or waiver by Lender of each of the following
conditions precedent on or before May 15, 1997:
(a) Borrower Loan Documents. Borrower shall have
executed and delivered to Lender each of the following, in form
and substance acceptable to Lender:
(i) this Agreement;
(ii) the Note;
(iii) all other documents which Lender
reasonably requires to be executed by or on behalf of
Borrower.
(b) REIT Loan Documents. The REIT shall have
executed and delivered to Lender each of the following, in form
and substance acceptable to Lender:
(i) the Guaranty; and
(ii) all other documents which Lender
reasonably requires to be executed by or on behalf of the
REIT.
(c) Corporate and Partnership Documents. Lender
shall have received the corporate and partnership formation and
other governing documents of the Borrower and the REIT, and a
certificate of each such entity's Secretary or an officer
comparable thereto with respect to authorization, incumbency
and all organizational documents.
(d) Solvency. Each of the REIT and Borrower
shall be Solvent and shall have delivered to Lender a Solvency
Certificate to that effect.
(e) Fees and Expenses. Lender shall have
received all fees then due to Lender and shall have received
reimbursement for all costs and expenses for which Borrower is
obligated pursuant to Section 10.1 and for which Borrower has
received an invoice, and Borrower shall have performed all of
its other obligations as set forth in the Loan Documents to
make payments to Lender on or before the Closing Date and all
expenses of Lender incurred prior to such Closing Date and for
which Borrower has received an invoice shall have been paid by
Borrower.
(f) Opinion of Counsel. Lender shall have
received favorable opinions of counsel for Borrower and the
REIT dated as of the Closing Date, in form and substance
reasonably satisfactory to Lender and its counsel.
(g) Consents and Approvals. All material
licenses, permits, consents, regulatory approvals and corporate
action necessary to enter into the financing transactions
contemplated by this Agreement shall have been obtained by
Borrower and the REIT.
3.2 Conditions Precedent to All Advances. The obligation
of Lender to make any Advance (including the initial Advance)
requested to be made by it, on any date, is subject to the
satisfaction or waiver by Lender of the following conditions
precedent as of such date:
(a) Notice of Borrowing. With respect to a
request for an Advance, Lender shall have received, on or
before the Funding Date and in accordance with the provisions
of Section 2.1(b), an original and duly executed Notice of
Borrowing.
(b) Additional Matters. As of the Funding Date
for any Advance and after giving effect to the Advance being
requested:
(i) No Default. After giving effect to the
requested Advance, no Event of Default or Unmatured Event
of Default shall have occurred and be continuing or would
result from the making of the requested Advance (it being
intended that Lender shall have no obligation to fund any
Advance during the period allowed under this Agreement for
cure of any event or condition which, if not cured during
such period, would become an Event of Default), and all of
the covenants contained in Sections 7.3 and 7.4 and
Article 8 shall be satisfied;
(ii) Representations and Warranties. All of
the representations and warranties contained in this
Agreement and in any other Loan Document (other than those
representations and warranties which expressly provide
that they speak as of a certain date (e.g., "as of the
Closing Date")) shall be true and correct in all material
respects on and as of such Funding Date, as though made on
and as of such date, and Borrower shall so certify;
(iii) No Material Adverse Change (Borrower
and REIT). No change shall have occurred which shall have
a Material Adverse Effect on Borrower or the REIT, as
determined by Lender;
(iv) Material Adverse Effect (Unencumbered
Asset). If a change shall have occurred which shall have
a Material Adverse Effect on any Unencumbered Asset or the
operating performance thereof, as determined by Lender,
the Unencumbered Asset Value of such Unencumbered Asset
shall not be included in the aggregate Unencumbered Asset
Value of the Unencumbered Pool for purposes of
Section 2.1(a)(i)(y); and
(v) Litigation Proceedings. There shall not
have been instituted or threatened any litigation or
proceeding in any court or before any Governmental
Authority affecting or threatening to affect Borrower or
the REIT which has a Material Adverse Effect on Borrower
or the REIT, as reasonably determined by Lender.
(vi) Compliance with Section 8.3. Borrower
shall be in compliance with Section 8.3 after such Advance
is made.
Each submission by Borrower to Lender of a Notice of Borrowing
with respect to an Advance and the acceptance by Borrower of
the proceeds of such Advance shall constitute a representation
and warranty by Borrower as of the Funding Date in respect of
such Advance that all the conditions contained in this
Section 3.2 have been satisfied.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties as to Borrower, Etc.
In order to induce Lender to make the Advances, Borrower hereby
represents and warrants to Lender as follows:
(a) Organization; Partnership Powers. Borrower
(i) is a limited partnership duly organized, validly existing
and in good standing under the laws of Maryland, (ii) is duly
qualified to do business as a foreign limited partnership and
in good standing under the laws of California and each other
jurisdiction in which it owns or leases real property or in
which the nature of its business requires it to be so quali-
fied, except for those jurisdictions where failure to so
qualify and be in good standing would not have a Material
Adverse Effect on Borrower, and (iii) has all requisite
partnership power and authority to own, operate and encumber
its Property and assets and to conduct its business as
presently conducted and as proposed to be conducted in
connection with and following the consummation of the
transactions contemplated by the Loan Documents.
(b) Authority. Borrower has the requisite
partnership power and authority to execute, deliver and perform
each of the Loan Documents to which it is or will be a party.
The execution, delivery and performance thereof, and the
consummation of the transactions contemplated thereby, have
been duly authorized by all necessary actions. Each of the
Loan Documents to which Borrower is a party has been duly and
validly executed and delivered by Borrower and constitutes its
legal, valid and binding obligation, enforceable against it in
accordance with its terms, subject to bankruptcy, insolvency
and other laws affecting creditors' rights generally and
general equitable principles.
(c) Ownership of Borrower. All of the
Partnership Units of the Borrower are validly issued and non-assessable and
as of the Closing Date are owned of record in
the percentage amounts and by the Persons set forth on
Schedule 4.1(c), as amended from time to time. As of the
Closing Date, the REIT owns 21,692,833 Partnership Units of the
Borrower, free and clear of any Liens. Such Partnership Units
were offered and sold in compliance in all material respects
with all Requirements of Law (including, without limitation,
federal and state securities laws). Except as set forth in
Schedule 4.1(c), there are no outstanding securities
convertible into or exchangeable for Partnership Units of the
Borrower, or options, warrants or rights to purchase any such
Partnership Units, or commitments of any kind for the issuance
of additional Partnership Units or any such convertible or
exchangeable securities or options, warrants or rights to
purchase such Partnership Units. The REIT is the sole general
partner of the Borrower.
(d) No Conflict. The execution, delivery and
performance by Borrower of the Loan Documents to which it is or
will be a party, and each of the transactions contemplated
thereby, do not and will not (i) conflict with or violate
Borrower's limited partnership agreement or certificate of
limited partnership or other organizational documents, as the
case may be, or (ii) conflict with, result in a breach of or
constitute (with or without notice or lapse of time or both) a
default under any Requirement of Law, Contractual Obligation or
Court Order of or binding upon Borrower, which would have a
Material Adverse Effect on Borrower or (iii) require termina-
tion of any Contractual Obligation, which termination would
have a Material Adverse Effect on Borrower or (iv) result in or
require the creation or imposition of any Lien whatsoever upon
any of the Properties or assets of Borrower (other than
Permitted Liens).
(e) Consents and Authorizations. Borrower has
obtained all consents and authorizations required pursuant to
its Contractual Obligations with any other Person, and shall
have obtained all consents and authorizations of, and effected
all notices to and filings with, any Governmental Authority, as
may be necessary to allow Borrower to lawfully execute, deliver
and perform its obligations under the Loan Documents to which
Borrower is a party, except to the extent that failure to
obtain any such consent or authorization or to effect such
notice or filing would not have a Material Adverse Effect on
Borrower.
(f) Governmental Regulation. Neither Borrower
nor the REIT is subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, the Investment Company Act of 1940 or
any other federal or state statute or regulation such that its
ability to incur indebtedness is limited or its ability to
consummate the transactions contemplated by the Loan Documents
is materially impaired.
(g) Financial Statements; Projections and
Forecasts. Each of the financial statements to be delivered to
Lender pursuant to Section 5.1(b) and (c) (i) has been, or will
be, as applicable, prepared in accordance with the books and
records of the REIT and the Consolidated Entities on a
consolidated basis, and (ii) either fairly present in all
material respects, or will fairly present in all material
respects, as applicable, the financial condition of the REIT
and the Consolidated Entities on a consolidated basis, at the
dates thereof (and, if applicable, subject to normal year-end
adjustments) and the results of its operations and cash flows,
on a consolidated basis, for the period then ended. Each of
the projections delivered to Lender prior to the date hereof
and each of the projected consolidated cash flows to be
delivered to Lender pursuant to Section 5.1(e), (A) has been,
or will be, as applicable, prepared by the REIT in light of the
past business and performance of the REIT or its predecessors
in interest on a consolidated basis and (B) represent, or will
represent, as of the date thereof, the reasonable good faith
estimates of the REIT's financial personnel as of their
respective dates.
(h) Prior Operating Statements. Each of the
operating statements pertaining to each of the Unencumbered
Assets in the Unencumbered Pool prepared by Borrower and
delivered to Lender prior to the date hereof was prepared in
accordance with GAAP in effect on the date such operating
statement of each Unencumbered Asset was prepared and fairly
presents the results of operations of such Unencumbered Asset
for the period then ended; provided, however, that no
representation is made with respect to any period prior to the
ownership of such Unencumbered Asset by Borrower or a
Predecessor Entity.
(i) Unencumbered Pool Statements and Projections.
Each of the Unencumbered Pool Statements to be delivered to
Lender pursuant to Section 5.1(f) (i) has been or will be, as
applicable, prepared in accordance with the books and records
of the applicable Unencumbered Asset and (ii) fairly presents
or will fairly present in all material respects, as applicable,
the results of operations of such Unencumbered Asset for the
period then ended; provided, however, that no representation is
made with respect to any period prior to the ownership of such
Unencumbered Asset by Borrower or a Predecessor Entity.
(j) Litigation; Adverse Effects.
(i) Except as otherwise disclosed on
Schedule 4.1(j), there is no action, suit, proceeding,
governmental investigation or arbitration, at law or in
equity, or before or by any Governmental Authority,
pending or, to the best of Borrower's knowledge,
threatened against Borrower or any Property of Borrower
which will result in a Material Adverse Effect on
Borrower.
(ii) Borrower is not (A) in violation of any
applicable law, which violation has a Material Adverse
Effect on Borrower, or (B) subject to or in default with
respect to any Court Order which has a Material Adverse
Effect on Borrower. There are no material Proceedings
pending or, to the best of Borrower's knowledge,
threatened against Borrower or any Unencumbered Asset,
which, if adversely decided, would have a Material Adverse
Effect on Borrower.
(k) No Material Adverse Change. Since the "Closing
Date" (as defined in the 1996 Revolving Credit Agreement),
there has occurred no event which has a Material Adverse Effect
on Borrower, and no material adverse change in Borrower's
ability to perform its obligations under the Loan Documents to
which it is a party or the transactions contemplated thereby.
(l) Payment of Taxes. All tax returns and reports
to be filed by Borrower have been timely filed, and all taxes,
assessments, fees and other governmental charges shown on such
returns or otherwise payable by Borrower have been paid when
due and payable (other than real property taxes, which may be
paid prior to delinquency so long as no penalty or interest
shall attach thereto), except such taxes, if any, as are
reserved against in accordance with GAAP and are being
contested in good faith by appropriate proceedings or such
taxes, the failure to make payment of which when due and
payable will not have, in the aggregate, a Material Adverse
Effect on Borrower. Borrower has no knowledge of any proposed
tax assessment against Borrower that will have a Material
Adverse Effect on Borrower, which is not being actively
contested in good faith by Borrower.
(m) Material Adverse Agreements. Borrower is not a
party to or subject to any Contractual Obligation or other
restriction contained in its limited partnership agreement,
certificate of limited partnership or similar governing
documents which has a Material Adverse Effect on Borrower.
(n) Performance. Borrower is not in default in the
performance, observance or fulfillment of any of the obliga-
tions, covenants or conditions contained in any Contractual
Obligation applicable to it, and no condition exists which,
with the giving of notice or the lapse of time or both, would
constitute a default under such Contractual Obligation, except
where the consequences, direct or indirect, of such default or
defaults, if any, will not have a Material Adverse Effect on
Borrower.
(o) Federal Reserve Regulations. No part of the
proceeds of the Advances hereunder will be used to purchase or
carry any "margin security" as defined in Regulation G or for
the purpose of reducing or retiring any indebtedness which was
originally incurred to purchase or carry any margin security or
for any other purpose which might constitute this transaction a
"purpose credit" within the meaning of said Regulation G.
Neither Borrower nor the REIT is engaged primarily in the
business of extending credit for the purpose of purchasing or
carrying any "margin stock" as defined in Regulation U. No
part of the proceeds of the Advances hereunder will be used for
any purpose that violates, or which is inconsistent with, the
provisions of Regulation X or any other regulation of the
Federal Reserve Board.
(p) Disclosure. The representations and warranties
of Borrower contained in the Loan Documents and all certifi-
cates, financial statements and other documents delivered to
Lender in connection therewith, do not contain any untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements contained herein or
therein, in light of the circumstances under which they were
made, not misleading; provided no representation is made as to
any information in the financial reports for any Real Property
prior to its ownership by Borrower. The factual information in
any document, certificate or written statement (including,
without limitation, the S-11) furnished to the Lender by or on
behalf of the REIT or any other Consolidated Entity with
respect to the business, assets, prospects, results of opera-
tions or financial condition of the REIT, the Borrower or any
other Consolidated Entity, including operating statements and
Rent Rolls for periods when the Real Property covered by such
statements or Rent Rolls is owned by Borrower, for use in
connection with the transactions contemplated by this Agreement
is true and correct in all material respects. There is no fact
known to the REIT, Borrower or any Consolidated Entity that has
a Material Adverse Effect on Borrower, the REIT and/or any such
Consolidated Entity or could reasonably be expected to have a
Material Adverse Effect on Borrower, the REIT and/or any such
Consolidated Entity, which has not been disclosed herein or in
such other documents, certificates and statements. Borrower
has given to Lender true, correct and complete copies of all
Major Agreements, organizational documents, financial state-
ments of the REIT and the Consolidated Entities, Unencumbered
Pool Statements and all other documents and instruments
referred to in the Loan Documents as having been delivered to
Lender. Borrower has not intentionally withheld any material
fact from Lender in regard to any matter raised in the Loan
Documents which would cause its representations and warranties
to be misleading. Notwithstanding the foregoing, with respect
to projections of Borrower's future performance such represen-
tations and warranties are made in good faith and to the best
judgment of Borrower as of the date thereof.
(q) Requirements of Law. The REIT and the
Consolidated Entities are in compliance with all Requirements
of Law (including without limitation the Securities Act and the
Securities Exchange Act, and the applicable rules and
regulations thereunder, state securities law and "Blue Sky"
laws) applicable to it and its respective businesses, in each
case, where the failure to so comply will have a Material
Adverse Effect on any such Person. The REIT has made all
filings with and obtained all consents of the Commission
required under the Securities Act and the Securities Exchange
Act in connection with the execution, delivery and performance
by the REIT of the Loan Documents.
(r) Patents, Trademarks, Permits, etc. The REIT and
the Consolidated Entities own, are licensed or otherwise have
the lawful right to use, or have, all permits and other
governmental approvals, patents, trademarks, trade names,
copyrights, technology, know-how and processes used in or
necessary for the conduct of each such Person's business as
currently conducted, the absence of which would have a Material
Adverse Effect upon such Person. The use of such permits and
other governmental approvals, patents, trademarks, trade names,
copyrights, technology, know-how and processes by each such
Person does not infringe on the rights of any Person, subject
to such claims and infringements as do not, in the aggregate,
give rise to any liability on the part of any such Person which
would have a Material Adverse Effect on any such Person.
(s) Environmental Matters. Except as set forth on
Schedule 4.1(s) or in any Phase I or other reports delivered to
Lender, to the best knowledge of Borrower (i) the operations of
the REIT and Borrower comply in all material respects with all
applicable, local, state and federal environmental, health and
safety Requirements of Law ("Environmental Laws"); (ii) none of
the Unencumbered Assets or operations thereon are subject to
any Remedial Action or other Liabilities and Costs arising from
the Release or threatened Release of a Contaminant into the
environment in violation of any Environmental Laws, which
Remedial Action or other Liabilities and Costs would have a
Material Adverse Effect on Borrower and/or the REIT;
(iii) neither the REIT nor the Borrower has filed any notice
under applicable Environmental Laws reporting a Release of a
Contaminant into the environment in violation of any Environ-
mental Laws, except as the same may have been heretofore
remedied; (iv) there is not now on or in any Unencumbered
Assets (except in compliance in all material respects with all
applicable Environmental Laws): (A) any underground storage
tanks, (B) any asbestos-containing material, or (C) any
polychlorinated biphenyls (PCB's) used in hydraulic oils,
electrical transformers or other equipment owned by such
Person; and (v) neither the REIT nor Borrower has received any
notice or claim to the effect that it is or may be liable to
any Person as a result of the Release or threatened Release of
a Contaminant into the environment which would have a Material
Adverse Effect on the REIT or any of the Consolidated Entities.
(t) Solvency. Borrower is and will be Solvent after
giving effect to the disbursements of the Advances and the
payment and accrual of all fees then payable.
(u) Title to Assets; No Liens. Borrower has good,
indefeasible and merchantable title to all Properties owned or
leased by it.
(v) Management Agreements. Except as disclosed on
Schedule 4.1(v) (as amended from time to time), Borrower is not
a party or subject to any management or "ground" leasing
agreement with respect to any of the Properties included within
the Unencumbered Pool.
4.2 Representations and Warranties as to the REIT. In
order to induce Lender to make the Advances, Borrower hereby
represents and warrants to Lender as follows:
(a) Organization; Corporate Powers. The REIT (i) is
a corporation duly organized, validly existing and in good
standing under the laws of Maryland, (ii) is duly qualified to
do business as a foreign corporation and in good standing under
the laws of each jurisdiction in which it owns or leases real
property or in which the nature of its business requires it to
be so qualified, except for those jurisdictions where failure
to so qualify and be in good standing will not have a Material
Adverse Effect on the REIT, and (iii) has all requisite
corporate power and authority to own, operate and encumber its
property and assets and to conduct its business as presently
conducted and as proposed to be conducted in connection with
and following the consummation of the transactions contemplated
by the Loan Documents.
(b) Authority. The REIT has the requisite corporate
power and authority to execute, deliver and perform each of the
Loan Documents to which it is or will be a party. The execu-
tion, delivery and performance thereof, and the consummation of
the transactions contemplated thereby, have been duly
authorized by the Board of Directors of the REIT, and no other
corporate proceedings on the part of the REIT are necessary to
consummate such transactions. Each of the Loan Documents to
which the REIT is a party has been duly executed and delivered
by the REIT and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its
terms, subject to bankruptcy, insolvency and other laws
affecting creditors' rights generally and general equitable
principles.
(c) No Conflict. The execution, delivery and
performance by the REIT of the Loan Documents to which it is
party, and each of the transactions contemplated thereby, do
not and will not (i) conflict with or violate its articles of
incorporation, by-laws or other organizational documents,
(ii) conflict with, result in a breach of or constitute (with
or without notice or lapse of time or both) a default under any
Requirement of Law, Contractual Obligation or Court Order of or
binding upon the REIT, which would have a Material Adverse
Effect on the REIT, (iii) require termination of any
Contractual Obligation, which termination would have a Material
Adverse Effect on the REIT, (iv) result in or require the
creation or imposition of any Lien whatsoever upon any of the
Properties or assets of the REIT, or (v) require any approval
of the stockholders of the REIT.
(d) Consents and Authorizations. The REIT has
obtained all consents and authorizations required pursuant to
its Contractual Obligations with any other Person, and shall
have obtained all consents and authorizations of, and effected
all notices to and filings with, any Governmental Authority, as
may be necessary to allow the REIT to lawfully execute, deliver
and perform its obligations under the Loan Documents to which
the REIT is a party.
(e) Capitalization. All of the capital stock of the
REIT has been issued in compliance in all material respects
with all applicable Requirements of Law.
(f) Litigation; Adverse Effects.
(i) There is no action, suit, proceeding,
governmental investigation or arbitration, at law or in
equity, by or before any Governmental Authority, pending
or, to best of Borrower's knowledge, threatened, against
the REIT or any Property of the REIT, which will
(A) result in a Material Adverse Effect on the REIT,
(B) materially and adversely affect the ability of any
party to any of the Loan Documents to perform its
obligations thereunder, or (C) materially and adversely
affect the ability of the REIT to perform its obligations
as contemplated in the Loan Documents.
(ii) The REIT is not (A) in violation of any
applicable law, which violation has a Material Adverse
Effect on the REIT, or (B) subject to or in default with
respect to any Court Order which has a Material Adverse
Effect on the REIT. There are no Proceedings pending or,
to the best of Borrower's knowledge, threatened against
the REIT, which, if adversely decided, would have a
Material Adverse Effect on the REIT or Borrower.
(g) No Material Adverse Change. Since the "Closing
Date" (as defined in the 1996 Revolving Credit Agreement),
there has occurred no event which has a Material Adverse Effect
on the REIT, and no material adverse change has occurred in the
REIT's ability to perform its obligations under the Loan
Documents to which it is a party or the transactions
contemplated thereby.
(h) Payment of Taxes. All tax returns and reports
to be filed by the REIT have been timely filed, and all taxes,
assessments, fees and other governmental charges shown on such
returns have been paid when due and payable, except such taxes,
if any, as are reserved against in accordance with GAAP and are
being contested in good faith by appropriate proceedings or
such taxes, the failure to make payment of which when due and
payable would not have, in the aggregate, a Material Adverse
Effect on the REIT. The REIT has no knowledge of any proposed
tax assessment against the REIT that would have a Material
Adverse Effect on the REIT, which is not being actively
contested in good faith by the REIT.
(i) Material Adverse Agreements. The REIT is not a
party to or subject to any Contractual Obligation or other
restriction contained in its charter, by-laws or similar
governing documents which has a Material Adverse Effect on the
REIT or the ability of the REIT to perform its obligations
under the Loan Documents to which it is a party.
(j) Performance. The REIT is not in default in the
performance, observance or fulfillment of any of the obliga-
tions, covenants or conditions contained in any Contractual
Obligation applicable to it, and no condition exists which,
with the giving of notice or the lapse of time or both, would
constitute a default under such Contractual Obligation, except
where the consequences, direct or indirect, of such default or
defaults, if any, would not have a Material Adverse Effect on
the REIT.
(k) Disclosure. The representations and warranties
of the REIT contained in the Loan Documents, and all certifi-
cates, financial statements and other documents delivered to
Lender in connection therewith, do not contain any untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements contained herein or
therein, in light of the circumstances under which they were
made, not misleading. The REIT has not intentionally withheld
any material fact from Lender in regard to any matter raised in
the Loan Documents which would cause its representations and
warranties to be misleading. Notwithstanding the foregoing,
with respect to projections of the REIT's future performance
such representations and warranties are made in good faith and
to the best judgment of the management of the REIT as of the
date thereof.
(l) ERISA. Neither the REIT nor any ERISA Affiliate
thereof (including, for all purposes under this Section 4.2(1),
Borrower and the other Consolidated Entities) has in the past
five (5) years maintained or contributed to or currently
maintains or contributes to any Benefit Plan other than the
Benefit Plans identified on Schedule 4.2(1) (as such Schedule
may be amended from time to time). Neither the REIT nor any
ERISA Affiliate thereof has during the past five (5) years
maintained or contributed to or currently maintains or
contributes to any employee welfare benefit plan within the
meaning of Section 3(1) of ERISA which provides benefits to
retirees other than benefits required to be provided under
Section 4980B of the Code and Sections 601 through 608 of ERISA
(or any successor provisions thereto) or applicable state law.
Neither the REIT nor any ERISA Affiliate thereof is now
contributing nor has it ever contributed to or been obligated
to contribute to any Multiemployer Plan, no employees or former
employees of the REIT, or such ERISA Affiliate, have been
covered by any Multiemployer Plan in respect of their employ-
ment by the REIT, and no ERISA Affiliate of the REIT has or is
likely to incur any withdrawal liability with respect to any
Multiemployer Plan which would have a Material Adverse Effect
on the REIT.
(m) Solvency. The REIT is and will be Solvent after
giving effect to the disbursements of the Advances and the
payment and accrual of all fees then payable.
(n) Status as a REIT. The REIT (i) shall for its
first taxable year elect to qualify (but has not so elected as
of the Closing Date), and for each subsequent taxable year
shall maintain its classification, as a real estate investment
trust as defined in Section 856 of the Code, (ii) has not
engaged in any "prohibited transactions" as defined in Section
856(b)(6)(iii) of the Code, (iii) for its current "tax year"
(as defined in the Code) is, and for all taxable years
subsequent to its election to be a real estate investment trust
shall remain, entitled to a dividends paid deduction which
meets the requirements of Section 857 of the Code and (iv) its
ownership and method of operation enable it to meet the
requirements for taxation as a real estate investment trust
under the Code.
(o) Ownership. As of the Closing Date, the REIT
does not own or have any direct interest in any other Person,
other than its ownership of the general partnership interests
in Borrower.
(p) NYSE Listing. The common stock of the REIT is,
and is reasonably expected to be, listed for trading and traded
on the New York Stock Exchange.
ARTICLE 5
REPORTING COVENANTS
Borrower covenants and agrees that, on and after the
date hereof, until payment in full of all of the Obligations,
the expiration of the Commitment and termination of this
Agreement:
5.1 Financial Statements and Other Financial and
Operating Information. Borrower shall maintain or cause to be
maintained a system of accounting established and administered
in accordance with sound business practices and consistent with
past practice to permit preparation of quarterly and annual
financial statements in conformity with GAAP, and each of the
financial statements described below shall be prepared on a
consolidated basis for the REIT and the other Consolidated
Entities from such system and records. Borrower shall deliver
or cause to be delivered to Lender (and delivery of any of the
following to the Agent under the 1996 Credit Agreement shall
constitute delivery hereunder):
(a) Commission Filings. Promptly following their
filing with the Commission, copies of all required reports and
filings filed with the Commission, including, without
limitation, the Annual Report on Form 10-K, the Quarterly
Reports on Form 10-Q, registration statements, proxy statements
and the annual reports delivered to the shareholders of the
REIT and the Consolidated Entities.
(b) Annual Financial Statements. Within ninety
(90) days after the close of each Fiscal Year, consolidated
balance sheets, statements of operations, stockholders' equity
and cash flows for the REIT and the Consolidated Entities (in
the form provided to the Commission on the REIT's Form 10-K),
audited and certified without qualification by the Accountants
and accompanied by a statement that, in the course of their
audit (conducted in accordance with generally accepted auditing
standards), the Accountants obtained no knowledge that an Event
of Default or Unmatured Event of Default occurred. To the
extent Lender desires additional details or supporting informa-
tion with respect to Unconsolidated Joint Ventures or
individual Properties which are not Unencumbered Assets within
the Unencumbered Pool and which details and information are not
contained in the REIT's Form 10-K, Borrower shall provide
Lender with such details or supporting information as Lender
requests which is reasonably available to Borrower. Without
limiting the foregoing, at Lender's request, within ninety
(90) days after the end of each Fiscal Year, Borrower, with
respect to Real Property which is not included within the
Unencumbered Pool, shall provide to Lender operating statements
and a schedule setting forth the percentage of leasable area
leased to tenants in occupancy, with footnotes indicating which
leases are in default in rent payments by more than forty-five
(45) days (other than technical, nonmaterial disputes
concerning percentage rentals due) and any other material
provisions in respect to which Borrower has issued a notice of
default, for each such Real Property.
(c) Quarterly Financial Statements Certified by CFO.
As soon as practicable, and in any event within forty-five
(45) days after the end of each Fiscal Quarter, consolidated
balance sheets, statements of operations, stockholders' equity
and statements of cash flow for the REIT and the Consolidated
Entities, which may, in the case of the first three Fiscal
Quarters, be in the form provided to the Commission on the
REIT's Form 10-Q, and certified by the REIT's chief executive
officer, chief operating officer, chief financial officer or
chief accounting officer.
(d) Officer's Certificate of Borrower. (i) Together
with each delivery of any financial statement pursuant to
subsection (c) above, an Officer's Certificate of the REIT,
stating that the executive officer who is the signatory thereto
(which officer shall be the chief executive officer, the chief
operating officer, the chief financial officer or the chief
accounting officer of the REIT) has reviewed, or caused under
his or her supervision to be reviewed, the terms of this
Agreement and the other principal Loan Documents, and has made,
or caused to be made under his or her supervision, a review in
reasonable detail of the transactions and condition of the REIT
and the Consolidated Entities during the accounting period
covered by such financial statements of the REIT and the
Consolidated Entities, and that such review has not disclosed
the existence at the end of such accounting period, and that
the signers do not have knowledge of the existence as of the
date of the Officer's Certificate, of any condition or event
which constitutes an Event of Default or Unmatured Event of
Default, or, if any such condition or event exists, specifying
the nature and period of existence thereof and what action has
been taken, is being taken and is proposed to be taken with
respect thereto; and (ii) together with each delivery pursuant
to subsection (c), above, a Compliance Certificate demonstrat-
ing in reasonable detail (which detail shall include actual
calculations and such supporting information as Lender may
reasonably require) compliance at the end of such accounting
periods with the covenants contained in Section 7.3 and
Article 8.
(e) Cash Flow Projections. As soon as practicable,
and in any event, within one hundred twenty (120) days after
the end of each Fiscal Year projected consolidated cash flows
for the REIT and the Consolidated Entities for such Fiscal
Year. Borrower shall also provide such additional supporting
details as Lender may reasonably request.
(f) Unencumbered Pool Statements and Operating
Results. As soon as practicable, and in any event within
forty-five (45) days after the end of each Fiscal Quarter,
quarterly operating statements, in a form approved by Lender,
which operating statements shall include actual quarterly and
year-to-date operating income results, Rent Rolls for each
Unencumbered Asset within the Unencumbered Pool dated as of the
last day of such Fiscal Quarter (the "Quarterly Unencumbered
Pool Statements"), in form and substance satisfactory to
Lender, certified as being true and correct in all material
respects by the REIT's chief financial officer, chief
accounting officer, chief executive officer or chief operating
officer. In addition, as soon as practicable, and in any event
within forty-five (45) days after the end of the fourth Fiscal
Quarter, a year-end operating statement, in form approved by
Lender, which operating statement shall include year-to-date
net operating income and net cash flow results for each
Unencumbered Asset within the Unencumbered Pool dated as of the
last day of such Fiscal Quarter (collectively, with the
Quarterly Unencumbered Pool Statements, the "Unencumbered Pool
Statements"). Lender shall have the right to request the
foregoing information with respect to any Real Property owned
by the REIT or any Consolidated Entity.
(g) Budgets for Unencumbered Pool. Not later than
one (1) day prior to the beginning of each Fiscal Year, annual
operating budgets (including, without limitation, overhead
items and capital expenditures) for each Unencumbered Asset in
the Unencumbered Pool for the immediately following Fiscal
Year, prepared on an annual basis, in a form approved by
Lender, together with all supporting details reasonably
requested by Lender, and certified by the chief executive
officer, chief operating officer, chief financial officer or
chief accounting officer of the REIT as being based upon the
REIT's reasonable good faith estimates, upon information and
assumptions at the time.
(h) [Intentionally Left Blank.]
(i) Knowledge of Event of Default. Promptly upon a
Responsible Official of Borrower obtaining knowledge (i) of any
condition or event which constitutes an Event of Default or
Unmatured Event of Default or (ii) of any condition or event
which has a Material Adverse Effect on Borrower or the REIT, an
Officer's Certificate specifying the nature and period of
existence of any such condition or event and what action
Borrower and/or the REIT has taken, is taking and proposes to
take with respect thereto.
(j) Litigation, Arbitration or Government
Investigation. Promptly upon a Responsible Official of
Borrower or the REIT obtaining knowledge of (i) the institution
of, or threat of, any material action, suit, proceeding,
governmental investigation or arbitration against or affecting
Borrower or the REIT not previously disclosed in writing by
Borrower to Lender pursuant to this Section 5.1(j), or (ii) any
material development in any action, suit, proceeding,
governmental investigation or arbitration already disclosed,
which, in either case, has a Material Adverse Effect on
Borrower or the REIT, a notice thereof to Lender and such other
information as may be reasonably available to it to enable
Lender and its counsel to evaluate such matters.
(k) ERISA Termination Event. As soon as possible,
and in any event within thirty (30) days after a Responsible
Official of Borrower or the REIT knows that a Termination Event
has occurred, a written statement of the chief financial
officer of the REIT describing such Termination Event and the
action, if any, which Borrower, the REIT or any ERISA Affiliate
of any of them has taken, is taking or proposes to take, with
respect thereto, and, when known, any action taken or
threatened by the IRS, the DOL or the PBGC with respect
thereto.
(l) Prohibited ERISA Transaction. As soon as
possible, and in any event within thirty (30) days, after a
Responsible Official of Borrower, the REIT or any ERISA
Affiliate of any of them knows that a prohibited transaction
(defined in Section 406 of ERISA and Section 4975 of the Code
and which is not subject to a statutory or prohibited
transaction class exemption) has occurred, a statement of the
chief financial officer of the REIT describing such
transaction.
(m) Benefit Plan Annual Report. On request of
Lender, within thirty (30) days after the filing thereof with
the DOL, the IRS or the PBGC, copies of each annual report,
including Schedule B thereto, filed with respect to each
Benefit Plan of Borrower, the REIT or any ERISA Affiliate of
any of them.
(n) Benefit Plan Funding Waiver Request. Within
thirty (30) days after the filing thereof with the IRS, a copy
of each funding waiver request filed with respect to any
Benefit Plan of Borrower, the REIT or any ERISA Affiliate of
any of them and all communications received by Borrower, the
REIT or any ERISA Affiliate of any of them with respect to such
request.
(o) Establishment of Benefit Plan and Increase in
Contributions to the Benefit Plan. Not less than ten (10) days
prior to the effective date thereof, a notice to Lender of the
establishment of a Benefit Plan (or the incurrence of any
obligation to contribute to a Multiemployer Plan) by Borrower,
the REIT or any ERISA Affiliate of any of them. Within thirty
(30) days after the first to occur of an amendment of any then
existing Benefit Plan of Borrower, the REIT or any ERISA
Affiliate of any of them which will result in an increase in
the benefits under such Benefit Plan or a notification of any
such increase, or the establishment of any new Benefit Plan by
Borrower, the REIT or any ERISA Affiliate of any of them or the
commencement of contributions to any Benefit Plan to which
Borrower, the REIT or any ERISA Affiliate of any of them was
not previously contributing, a copy of said amendment,
notification or Benefit Plan.
(p) Qualification of ERISA Plan. Promptly upon, and
in any event within thirty (30) days after, receipt by
Borrower, the REIT or any ERISA Affiliate of any of them of an
unfavorable determination letter from the IRS regarding the
qualification of a Plan under Section 401(a) of the Internal
Revenue Code, a copy of said determination letter, if such
disqualification would have a Material Adverse Effect on
Borrower or the REIT.
(q) Multiemployer Plan Withdrawal Liability.
Promptly upon, and in any event within thirty (30) days after
receipt by Borrower, the REIT or any ERISA Affiliate of any of
them of a notice from a Multiemployer Plan regarding the
imposition of material withdrawal liability, a copy of said
notice.
(r) Failure to Make Section 412 Payment. Promptly
upon, and in any event within thirty (30) days after, Borrower,
the REIT or any ERISA Affiliate of any of them fails to make a
required installment under subsection (m) of Section 412 of the
Internal Revenue Code or any other payment required under
Section 412 of the Internal Revenue Code on or before the due
date for such installment or payment, a notification of such
failure, if such failure could result in either the imposition
of a Lien under said Section 412 or otherwise have or could
reasonably be anticipated to have a Material Adverse Effect on
Borrower or the REIT.
(s) Failure of the REIT to Qualify as Real Estate
Investment Trust. Promptly upon, and in any event within
forty-eight (48) hours after a Responsible Official of Borrower
first has actual knowledge of (i) the REIT failing to continue
to qualify as a real estate investment trust as defined in
Section 856 of the Internal Revenue Code (or any successor
provision thereof), (ii) any act by the REIT causing its
election to be taxed as a real estate investment trust to be
terminated, (iii) any act causing the REIT to be subject to the
taxes imposed by Section 857(b)(6) of the Internal Revenue Code
(or any successor provision thereto), or (iv) the REIT failing
to be entitled to a dividends paid deduction which meets the
requirements of Section 857 of the Internal Revenue Code, a
notice of any such occurrence or circumstance.
(t) Asset Acquisitions and Dispositions, Indebted-
ness, Merger, Etc. Without limiting any restriction in the
Loan Documents, concurrently with notice to Borrower's priority
mailing list and in all events not later than any public
disclosure, written notice of any material investments (other
than in Cash Equivalents), material acquisitions, asset
purchases, dispositions, disposals, divestitures or similar
transactions involving Property, the raising of additional
equity or the incurring or repayment of material Debt, or any
material merger, by or with Borrower or the REIT, and, promptly
upon consummation of such transaction, a Compliance Certifi-
cate, in form and substance reasonably acceptable to Lender,
demonstrating in reasonable detail (which detail shall include
actual calculations and such supporting information as Lender
may reasonably require) compliance, after giving effect to such
proposed transaction(s), with the covenants contained in
Section 7.3 and Article 8. For purposes of this
Section 5.1(t), any investment, acquisition, asset purchase,
disposition, disposal, divestiture, merger or similar
transaction shall be considered "material" if it involves
assets exceeding five percent (5%) of the Borrower's assets (as
existing prior to giving effect to such transaction) or if it
involves the acquisition or disposition of Real Property.
Borrower's written notice of each Real Property acquisition or
disposition shall contain a description of all improvements
which are a part of such Real Property, the square footage of
such improvements, the acquisition or disposition price and
such other information with respect thereto reasonably
requested by the Lender.
(u) Other Information. Such other information,
reports, contracts, schedules, lists, documents, agreements and
instruments in the possession of the REIT or Borrower with
respect to (i) the Unencumbered Assets or any other assets of
the REIT or Borrower (either on an individual or an aggregate
basis), (ii) any material change in the REIT's investment,
finance or operating policies, or (iii) the REIT's, the
Borrower's or any other Consolidated Entity's business,
condition (financial or otherwise), operations, performance,
properties or prospects as Lender may from time to time
reasonably request, including, without limitation, annual
information with respect to cash flow projections, budgets,
operating statements (current year and immediately preceding
year), Rent Rolls, lease expiration reports, leasing status
reports, note payable summaries, bullet note summaries, equity
funding requirements, contingent liability summaries, line of
credit summaries, line of credit collateral summaries, wrap
note or note receivable summaries, schedules of outstanding
letters of credit, summaries of cash and Cash Equivalents,
projections of leasing fees and overhead budgets. Provided
that Lender gives Borrower reasonable prior notice and an
opportunity to participate, Borrower hereby authorizes Lender
to communicate with the Accountants and authorizes the
Accountants to disclose to Lender any and all financial
statements and other information of any kind, including copies
of any management letter or the substance of any oral informa-
tion, that such accountants may have with respect to the
Unencumbered Assets or Borrower's or the REIT's condition
(financial or otherwise), operations, properties, performance
and prospects. Concurrently therewith, Lender will notify
Borrower of any such communication at Lender's request,
Borrower shall deliver a letter addressed to the Accountants
instructing them to disclose such information in compliance
with this Section 5.1(u).
(v) Press Releases; SEC Filings and Financial
Statements. Telephonic or telecopy notice to Lender
concurrently with or prior to issuance of any material press
release concerning the REIT or Borrower and, as soon as
practicable after filing with the Commission, all reports and
notices, proxy statements, registration statements and
prospectuses of the REIT. All materials sent or made available
generally by the REIT to the holders of its publicly-held
Securities or filed with the Commission, including all periodic
reports required to be filed with the Commission, will be
delivered to Lender as soon as available.
(w) Accountant Reports. Copies of all reports
prepared by the Accountants and submitted to Borrower or the
REIT in connection with each annual, interim or special audit
or review of the financial statements or practices of Borrower
or the REIT, including the comment letter submitted by the
Accountants in connection with their annual audit.
5.2 Environmental Notices. Borrower shall notify Lender,
in writing; as soon as practicable, and in any event within ten
(10) days after a Responsible Official of Borrower's or the
REIT's learning thereof, of any: (a) written notice or claim to
the effect that Borrower or the REIT is or may be liable to any
Person as a result of any material Release or threatened
Release of any Contaminant into the environment (b) written
notice that Borrower or the REIT is subject to investigation by
any Governmental Authority evaluating whether any Remedial
Action is needed to respond to the Release or threatened
Release of any Contaminant into the environment; (c) written
notice that any Property is subject to an Environmental Lien;
(d) written notice of violation to Borrower or the REIT or
awareness of a condition which might reasonably result in a
notice of violation of any Environmental Laws by Borrower or
the REIT; (e) commencement or written threat of any judicial or
administrative proceeding alleging a violation of any
Environmental Laws; (f) written notice from a Governmental
Authority of any changes to any existing Environmental Laws
that will have a Material Adverse Effect on the operations of
Borrower or the REIT; or (g) any proposed acquisition of stock,
assets, real estate or leasing of property, or any other action
by Borrower that, to the best of Borrower's knowledge, could
subject Borrower or the REIT to environmental, health or safety
Liabilities and Costs that will have a Material Adverse Effect
on Borrower or the REIT. With regard to the matters referred
to in clauses (a) through (e) above, the same shall apply in
respect of each Unencumbered Asset only if the matter will have
a Material Adverse Effect on such Uncumbered Asset and, in the
case of other Real Property of Borrower or the REIT, only if
the matter will have a Material Adverse Effect on Borrower or
the REIT.
5.3 Confidentiality. Confidential information obtained
by Lender pursuant to this Agreement or in connection with the
Advances shall not be disseminated by Lender and shall not be
disclosed to third parties except to regulators, taxing
authorities and other Governmental Authorities having
jurisdiction over Lender or otherwise in response to
Requirements of Law, to its auditors and legal counsel and in
connection with regulatory, administrative and judicial
proceedings as necessary or relevant including enforcement
proceedings relating to the Loan Documents. In connection with
disclosures of confidential information to any non-governmental
third-party, Lender shall, to the extent feasible and
permitted, give prior notice of such request to Borrower;
however, Lender shall not incur any liability to Borrower for
failure to do so. For purposes hereof, "confidential
information" shall mean all nonpublic information obtained by
Lender, unless and until such information becomes publicly
known, other than as a result of unauthorized disclosure by
Lender of such information.
ARTICLE 6
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, on and after the
date hereof, until payment in full of all of the Obligations,
the expiration of the Commitment and termination of this
Agreement:
6.1 With Respect to Borrower:
(a) Existence. Borrower shall at all times maintain
its existence as a limited partnership and preserve and keep in
full force and effect its rights and franchises unless the
failure to maintain such rights and franchises does not have a
Material Adverse Effect on Borrower.
(b) Qualification, Name. Borrower shall qualify and
remain qualified to do business in each jurisdiction in which
the nature of its business requires it to be so qualified
except for those jurisdictions where failure to so qualify does
not have a Material Adverse Effect on Borrower. Borrower will
transact business solely in its own name.
(c) Compliance with Laws, Etc. Borrower shall
(i) comply with all Requirements of Law, and all restrictive
covenants affecting Borrower or the Properties, performance,
prospects, assets or operations of Borrower, and (ii) obtain as
needed all Permits necessary for its operations and maintain
such in good standing, except in each of the foregoing cases
where the failure to do so will not have a Material Adverse
Effect on Borrower.
(d) Payment of Taxes and Claims. Borrower shall pay
(i) all taxes, assessments and other governmental charges
imposed upon it or on any of its properties or assets or in
respect of any of its franchises, business, income or Property
before any penalty or interest accrues thereon, the failure to
make payment of which will have a Material Adverse Effect on
Borrower, and (ii) all claims (including, without limitation,
claims for labor, services, materials and supplies) for sums,
material in the aggregate to Borrower, which have become due
and payable and which by law have or may become a Lien other
than a judgment lien upon any of Borrower's Properties or
assets, prior to the time when any penalty or fine shall be
incurred with respect thereto. Notwithstanding the foregoing,
Borrower may contest, by appropriate legal proceedings
conducted in good faith and with due diligence, the amount,
validity or application, in whole or in part, of any taxes,
assessments, other governmental charges or claims described
above, provided that Borrower shall provide such security as
may be reasonably required by Lender to insure ultimate payment
of the same and to prevent any sale or forfeiture of any of
Borrower's Property (or any portion thereof or interest
therein), provided however, that the provisions of this
Section 6.1(d) shall not be construed to permit Borrower to
contest the payment of any obligations or any other sums
payable by Borrower to Lender hereunder or under any other Loan
Document. Notwithstanding any of the foregoing, Borrower shall
indemnify, defend and save Lender harmless from and against any
liability, cost or expense of any kind that may be imposed on
Lender in connection with any such contest and any loss
resulting therefrom.
(e) Maintenance of Properties; Insurance. Borrower
shall maintain in good repair, working order and condition,
excepting ordinary wear and tear, all of its Property and will
make or cause to be made all appropriate repairs, renewals and
replacements thereof. Borrower shall maintain: (a) insurance
with responsible companies in such amounts and against such
risks as is usually carried by companies engaged in similar
businesses and owning similar properties in the same general
areas in which Borrower operates, (b) insurance required by any
Governmental Authority having jurisdiction over Borrower, and
(c) all other insurance reasonably required by Lender from time
to time.
(f) Inspection of Property; Books and Records;
Discussion. Borrower shall permit, and shall cause the REIT to
permit, any authorized representatives designated by Lender to
visit and inspect, upon reasonable prior notice, any of its
Properties (subject to rights of tenants), including all
Unencumbered Assets, to inspect financial and accounting
records and leases, and to make copies and take extracts
therefrom, all at such times during normal business hours and
as often as Lender may reasonably request. In connection
therewith, Borrower shall pay all expenses required by
Section 10.1. Borrower will keep proper books of record and
account in which entries, in conformity with GAAP and as
otherwise required by this Agreement and applicable
Requirements of Law, shall be made of all dealings and
transactions in relation to its businesses and activities and
as otherwise required under Section 5.1.
(g) Maintenance of Permits, Etc. Borrower will
maintain in full force and effect all Permits, franchises,
patents, trademarks, trade names, copyrights, authorizations or
other rights necessary for the operation of its business,
except where the failure to obtain any of the foregoing would
not have a Material Adverse Effect on Borrower; and notify
Lender in writing, promptly after learning thereof, of the
suspension, cancellation, revocation or discontinuance of or of
any pending or threatened action or proceeding seeking to
suspend, cancel, revoke or discontinue any material Permit,
patent, trademark, trade name, copyright, governmental
approval, franchise authorization or right.
(h) Conduct of Business. Except for Investments
expressly permitted pursuant to Section 8.2 and investments in
Cash and Cash Equivalents, Borrower shall engage only in the
business of acquiring, developing, owning, operating and
managing income producing Office Properties within the
continental United States and any business activities and
investments of Borrower incidental thereto.
(i) Use of Proceeds. Borrower shall use the
proceeds of the Advances only for pre-developments costs,
development costs, acquisition costs, capital improvements,
working capital, equity investments, repayment of Indebtedness,
including required interest and/or principal payments thereon
and for any other general corporate purposes, including
distributions permitted hereunder.
6.2 With Respect to the REIT:
(a) Corporate Existence. The REIT shall at all
times maintain its corporate existence and preserve and keep in
full force and effect its rights and franchises unless the
failure to maintain such rights and franchises will not have a
Material Adverse Effect on the REIT.
(b) Qualification, Name. The REIT shall qualify and
remain qualified to do business in each jurisdiction in which
the nature of its business requires it to be so qualified
except for those jurisdictions where failure to so qualify does
not have a Material Adverse Effect on the REIT. The REIT will
transact business solely in its own name.
(c) Securities Law Compliance. The REIT shall
comply in all material respects with all rules and regulations
of the Commission and file all reports required by the
Commission relating to the REIT's publicly-held Securities.
(d) Continued Status a REIT; Prohibited
Transactions. The REIT (i) will continue to be a real estate
investment trust as defined in Section 856 of the Internal
Revenue Code (or any successor provision thereto), (ii) will
not revoke its election (once made) to be a real estate
investment trust, (iii) will not engage in any "prohibited
transactions" as defined in Section 856(b)(6)(iii) of the
Internal Revenue Code (or any successor provision thereto), and
(iv) will continue to be entitled to a dividend paid deduction
meeting the requirements of Section 857 of the Internal Revenue
Code.
(e) NYSE Listed Company. The common stock of the
REIT shall at all times be listed for trading on the New York
Stock Exchange.
(f) Compliance with Laws, Etc. The REIT shall
(i) comply with all Requirements of Law and restrictive
covenants affecting the REIT and (ii) obtain as needed all
Permits necessary for its operations and maintain such in good
standing, except in each of the foregoing cases where the
failure to do so will not have a Material Adverse Effect on the
REIT.
(g) Payment of Taxes and Claims. The REIT shall pay
(i) all taxes, assessments and other governmental charges
imposed upon it or on any of its properties or assets or in
respect of any of its franchises, business, income or Property
before any penalty or interest accrues thereon, the failure to
make payment of which will have a Material Adverse Effect on
the REIT, and (ii) all claims (including, without limitation,
claims for labor, services, materials and supplies) for sums,
material in the aggregate to the REIT, which have become due
and payable and which by law have or may become a lien other
than a judgment lien upon any of the REIT's Properties or
assets, prior to the time when any penalty or fine shall be
incurred with respect thereto. Notwithstanding the foregoing,
REIT may contest by appropriate legal proceedings conducted in
good faith and with due diligence, the amount, validity or
application, in whole or in part, of any taxes, assessments,
other governmental charges or claims described above, provided
that REIT shall provide such security as may be required by
Lender to insure ultimate payment of the same and to prevent
any sale or forfeiture of any of the REIT's Property (or any
portion thereof or interest therein), provided, however, that
the provisions of this Section 6.2(g) shall not be construed to
permit REIT to contest the payment of any Obligations or any
other sums payable by REIT to Lender hereunder or under any
other Loan Document. Notwithstanding any of the foregoing,
REIT shall indemnify, defend and save Lender harmless from and
against any liability, cost or expense of any kind that may be
imposed on Lender in connection with any such contest and any
loss resulting therefrom.
(h) Net Offering Proceeds. Unless otherwise agreed
in writing by Lender, the REIT shall immediately contribute any
Net Offering Proceeds to Borrower.
ARTICLE 7
NEGATIVE COVENANTS
Borrower covenants and agrees that, on and after the
date hereof, until payment in full of all of the Obligations,
the expiration of the Commitment and termination of this
Agreement:
7.1 With Respect to all Parties. Neither Borrower nor
the REIT shall:
(a) Restrictions on Fundamental Changes.
(i) The REIT and Consolidated Entities shall
not enter into any merger, consolidation or reorganization
or any sale of all or a substantial portion of the assets
of the REIT and the Consolidated Entities, taken as a
whole, or liquidate, wind up or dissolve, except that
(1) any Person engaged in the development and operation of
class A suburban Office Properties may merge or
consolidate with and into the REIT, the Borrower or any
other Consolidated Entity, provided (A) no Event of
Default or event which, with the giving of notice or the
passage of time or both, could become an Event of Default,
then exists or would result therefrom, (B) the REIT,
Borrower or such Consolidated Entity, as the case may be,
is the surviving entity, (C) Lender reasonably determines
that such merger or consolidation will not have a Material
Adverse Effect on the Borrower or the REIT and (D) the
Borrower delivers to Lender, prior to the REIT, the
Borrower or such Consolidated Entity becoming obligated
(conditionally or otherwise) to proceed with such
transaction, a certificate, in form and substance and in
such detail as Lender may reasonably require, of the
REIT's chief financial officer, chief executive officer or
chief operating officer demonstrating compliance with this
Agreement on a proforma basis giving effect to such
transaction, and (2) Borrower and the REIT may acquire
interests in the CMBS Entities and Borrower may contribute
assets to such CMBS Entities;
(ii) Change its Fiscal Year; or
(iii) Engage in any line of business other than
as expressly permitted under Section 6.1(h).
(b) ERISA. Permit any ERISA Affiliates to do any of
the following to the extent that such act or failure to act
would result in the aggregate, after taking into account any
other such acts or failure to act, in a Material Adverse Effect
on Borrower or the REIT:
(i) Engage, or knowingly permit an ERISA
Affiliate to engage, in any prohibited transaction
described in Section 406 of ERISA or Section 4975 of the
Code which is not exempt under Section 407 or 408 of ERISA
or Section 4975(d) of the Code for which a class exemption
is not available or a private exemption has not been
previously obtained from the DOL;
(ii) Permit to exist any accumulated funding
deficiency (as defined in Section 302 of ERISA and
Section 412 of the Code), whether or not waived;
(iii) Fail, or permit an ERISA Affiliate to
fail, to pay timely required contributions or annual
installments due with respect to any waived funding
deficiency to any Plan if such failure could result in the
imposition of a Lien or otherwise would have a Material
Adverse Effect on Borrower or the REIT;
(iv) Terminate, or permit an ERISA Affiliate to
terminate, any Benefit Plan which would result in any
liability of Borrower or an ERISA Affiliate under Title IV
of ERISA or the REIT; or
(v) Fail, or permit any ERISA Affiliate to
fail, to pay any required installment under section (m) of
Section 412 of the Internal Revenue Code or any other
payment required under Section 412 of the Internal Revenue
Code on or before the due date for such installment or
other payment, if such failure could result in the
imposition of a Lien or otherwise would have a Material
Adverse Effect on Borrower or the REIT.
(c) Debt and Guaranty Obligations. Create, incur or
assume any Debt or Guaranty Obligations except:
(i) Subject to Section 8.4, below, Debt from
financial institutions which are not Affiliates of the
Borrower or any Consolidated Entity which is secured by
Real Property;
(ii) the City National Bank Loan;
(iii) Guaranty Obligations which do not exceed
Five Hundred Thousand Dollars ($500,000);
(iv) publicly-issued indebtedness or privately-placed unsecured
fixed rate term Debt;
(v) the Contribution Agreement;
(vi) the WFB Swap Agreement; or
(vii) Debt under the 1996 Revolving Credit
Agreement.
7.2 Amendment of Constituent Documents. The Borrower
shall not materially amend its partnership agreement or
certificate of limited partnership without the prior written
consent of Lender, except as may be required by applicable law
or to comply with Section 6.2(d). The REIT shall not
materially amend its articles of incorporation or by-laws
without the prior written consent of Lender, except (i) as
required by applicable law or (ii) as may be required to comply
with Section 6.2(d).
7.3 Minimum Ownership Interest of Richard Ziman. Richard
Ziman shall at all times retain directly or indirectly
ownership (the "Ownership Interest"), in the aggregate, of no
less than sixty-five percent (65%) of the Capital Stock of the
REIT and Partnership Units of Borrower owned, directly or
indirectly, by Richard Ziman upon completion of the offering of
the REIT's common stock as set forth in the S-11; provided,
however, that Partnership Units may be exchanged for Capital
Stock of the REIT; and provided further, however, that Richard
Ziman may transfer some or all of his Capital Stock of the REIT
and Partnership Units of Borrower to an inter vivos trust over
which he holds the power of revocation or to his wife or his
children or a trust for the benefit of his wife or children;
and provided further, however, that neither any such trust, his
wife nor any of his children (collectively, together with
Richard Ziman, the "Family") may transfer any interest in such
Capital Stock or Partnership Units to any Person other than
another Family member.
7.4 Management. Richard Ziman shall not cease to be
active on a full-time, continuing basis in the senior
management of Borrower and the REIT; provided, however, that,
if due to death or incapacity, Richard Ziman is unable to act
in such capacity, Borrower shall have one hundred twenty
(120) days to obtain the approval of Lender with respect to the
new management. In the event Borrower shall fail to obtain
approval of Lender within such 120-day period, then Borrower
shall, at the election and upon the demand of Lender pay in
full all Obligations under the Loan Documents not later than
sixty (60) days after the end of such 120-day period, whereupon
this Agreement and all Commitments shall be terminated. No
further Advances shall be permitted until Borrower shall have
obtained approval of Lender under this Section 7.4.
7.5 Margin Regulations. No portion of the proceeds of
any Advances shall be used in any manner which might cause the
extension of credit or the application of such proceeds to
violate Regulation G, U or X or any other regulation of the
Federal Reserve Board or to violate the Securities Exchange Act
or the Securities Act, in each case as in effect on the
applicable Funding Date.
7.6 Organization of Borrower, Etc. Borrower shall remain
a Maryland limited partnership with the REIT as its sole
general partner. At no time shall Borrower be taxed as an
association under the Internal Revenue Code.
7.7 With Respect to the REIT:
(a) The REIT shall not own any material assets or
engage in any line of business other than the ownership of the
partnership interests described in Section 4.2(o) and as
otherwise permitted under Section 7.1(a) and Section 8.2.
(b) The REIT shall not directly or indirectly
create, incur, assume or otherwise become or remain directly or
indirectly liable with respect to, any Debt, except the
obligations and other Indebtedness of Borrower, and
Indebtedness constituting obligations of its Consolidated
Entities or Unconsolidated Joint Ventures and obligations under
the Guaranty.
(c) The REIT shall not directly or indirectly
create, incur, assume or permit to exist any Lien on or with
respect to any of its Property or assets except Liens in favor
of Lender securing the Obligations.
(d) The REIT will not directly or indirectly convey,
sell, transfer, assign, pledge or otherwise encumber or dispose
of any of its partnership interests in Borrower held as of the
Closing Date, except to secure the Obligations.
ARTICLE 8
FINANCIAL COVENANTS
Borrower covenants and agrees that, on and after the
date of this Agreement and until payment in full of all the
Obligations, the expiration of the Commitment and the
termination of this Agreement:
8.1 Distributions.
(a) Subject to subsection (b) below, aggregate
distributions to shareholders of the REIT and all limited
partners of Borrower shall not exceed, for any four (4)
consecutive Fiscal Quarters, ninety-five percent (95%) of Funds
from Operations. For purposes of this Section 8.1, the term
"distributions" shall mean all dividends and other
distributions to, and the repurchase of stock or limited
partnership interests from, the holder of any equity interests
in Borrower or the REIT (other than the redemption of limited
partnership interests in Borrower in exchange for REIT stock).
(b) Aggregate distributions during the continuance
of any Event of Default shall not exceed the lesser of (i) the
aggregate amount permitted to be made during the continuance
thereof under subsection (a) above, and (ii) the minimum amount
that the REIT must distribute to its shareholders in order to
avoid federal tax liability and to remain qualified as a real
estate investment trust as defined in Section 856 of the Code.
8.2 Investments; Asset Mix.
(a) The REIT shall not at any time make or own any
Investment in any Person, or purchase, lease or own any other
asset or property, except (i) any Investment in the Borrower,
(ii) any Investment in the CMBS Entities, (iii) any Capital
Stock in the Consolidated Entities (other than the Borrower),
and (iv) any cash or other property that is being distributed
to the shareholders of the REIT substantially contemporaneously
with the REIT's receipt of such cash or other property.
(b) Except as permitted under Section 7.1(a), the
Borrower shall not at any time make or own any Investment in
any Person, or purchase, lease or own any Real Property or
other asset, except that the Borrower may own or lease the
following, subject to the limitations set forth below:
Asset Type Limitation on Value
for Each Asset Type
at the Time of
Determination
1. Wholly-Owned Office Property
and related Property Unlimited
2. Wholly-Owned Land 5% of Gross Asset Value
3. Wholly-Owned Real Property
(other than Office Properties
or Land referred to in
clause 2) 10% of Gross Asset Value
4. Wholly-owned Capital Stock of
any corporation 10% of Gross Asset Value
5. Investment Mortgages 15% of Gross Asset Value
6. Wholly-owned Capital Stock of
Joint Ventures (other than
corporations) 15% of Gross Asset Value
7. Construction in Progress
(exclusive of tenant
improvements) 12.5% of all Office Properties
(based on the total gross
leasable area, measured in square
feet) (provided that
this category shall
not, with respect to
any construction in
progress (for any
Office Property) which
is not pre-leased on a
basis consistent with
the leasing criteria
set forth in this
Agreement, exceed 7%
of the total gross
leasable area,
measured in square
feet, of all Office
Properties)
Notwithstanding the foregoing, Investments and other
assets in the foregoing categories 2 through 6 may not, in the
aggregate exceed, at any time, 25% of Gross Asset Value. All
values of Investments and other assets shall be the original
cost of such Investments and assets, except as otherwise
expressly provided.
8.3 Minimum Unencumbered Pool. The aggregate
Unencumbered Asset Value of the Unencumbered Pool shall not, at
any time, be less than 200% of the unsecured Total Liabilities
(including, without limitation, all "Line B Advances" as
defined in the 1996 Revolving Credit Agreement) of the REIT and
the Consolidated Entities.
8.4 Secured Debt. The aggregate amount of all Debt
secured by Real Property shall not, at any time, exceed 35% of
Gross Asset Value.
8.5 Financial Covenants in 1996 Revolving Credit
Agreement. Borrower shall comply (subject to any applicable
cure period) with the covenants contained in Sections 9.1, 9.2,
9.3, 9.4 and 9.6 of the 1996 Revolving Credit Agreement without
regard to whether the 1996 Revolving Credit Agreement has been
terminated.
ARTICLE 9
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
9.1 Events of Default. Each of the following occurrences
shall constitute an Event of Default under this Agreement:
(a) Failure to Make Payments When Due. Borrower
shall fail to pay (i) any amount due on the Maturity Date,
(ii) any principal when due, or (iii) any interest on any
Advance, or any fee or other amount payable under any Loan
Documents within three (3) days after the same becomes due.
(b) Distributions. Borrower or the REIT shall
breach any covenant set forth in Section 6.2(d) or 8.1.
(c) Borrower shall fail to satisfy any financial
covenant set forth in Article 8.
(d) Other Defaults. Borrower or the REIT shall fail
duly and punctually to perform or observe any agreement,
covenant or obligation binding on Borrower or the REIT under
this Agreement or under any of the other Loan Documents (other
than as described in any other provision of this Section 9.1),
and such failure shall continue for thirty (30) days after
Borrower or the REIT knew of such failure (or such lesser
period of time as is mandated by applicable Requirements of
Law).
(e) Breach of Representation or Warranty. Any
representation or warranty made or deemed made by Borrower or
the REIT to Lender herein or in any of the other Loan Documents
or in any statement, certificate or financial statements at any
time given by Borrower pursuant to any of the Loan Documents
shall be false or misleading in any material respect on the
date as of which made.
(f) Default as to Other Debt. The REIT or Borrower
or any other Consolidated Entity shall have defaulted (beyond
any applicable grace period) under any Debt of such party
(other than the Obligations) if the aggregate amount of such
other Debt is One Million Dollars ($1,000,000) or more and such
default shall not have been cured or waived; provided, however,
that the foregoing $1,000,000 limitation shall be increased to
Ten Million Dollars ($10,000,000) in the case of Nonrecourse
Debt.
(g) Involuntary Bankruptcy; Appointment of Receiver, etc.
(i) An involuntary case shall be commenced
against the REIT or Borrower or any other Consolidated
Entity and the petition shall not be dismissed within
sixty (60) days after commencement of the case, or a court
having jurisdiction shall enter a decree or order for
relief in respect of any such Person in an involuntary
case, under any applicable bankruptcy, insolvency or other
similar law now or hereinafter in effect; or any other
similar relief shall be granted under any applicable
federal, state or foreign law; or
(ii) A decree or order of a court having
jurisdiction for the appointment of a receiver,
liquidator, sequestrator, trustee, custodian or other
officer having similar powers over the REIT or Borrower or
any other Consolidated Entity, or over all or a
substantial part of the property of any such Person, shall
be entered; or an interim receiver, trustee or other
custodian of any such Person or of all or a substantial
part of the property of any such Person, shall be
appointed or a warrant of attachment, execution or similar
process against any substantial part of the property of
any such Person, shall be issued and any such event shall
not be stayed, vacated, dismissed, bonded or discharged
within sixty (60) days of entry, appointment or issuance.
(h) Voluntary Bankruptcy; Appointment of Receiver,
Etc. The REIT or Borrower or any other Consolidated Entity
shall have an order for relief entered with respect to it or
commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or
shall consent to the entry of an order for relief in an
involuntary case, or to the conversion of an involuntary case
to a voluntary case, under any such law, or shall consent to
the appointment of or taking of possession by a receiver,
trustee or other custodian for all or a substantial part of its
property; any such Person shall make any assignment for the
benefit of creditors or shall be unable or fail, or admit in
writing its inability, to pay its debts as such debts become
due; or the general partner of Borrower or any other
Consolidated Entity or the REIT's Board of Directors (or any
committee thereof) adopts any resolution or otherwise
authorizes any action to approve any of the foregoing.
(i) Judgments and Attachments. (i) Any money
judgment (other than a money judgment covered by insurance but
only if the insurer has admitted liability with respect to such
money judgment), writ or warrant of attachment, or similar
process involving in any case an amount in excess of
One Million Dollars ($1,000,000) shall be entered or filed
against the REIT, Borrower, any other Consolidated Entity or
their respective assets and shall remain undischarged,
unvacated, unbonded or unstayed for a period of thirty (30)
days, or (ii) any judgment or order of any court or administra-
tive agency awarding material damages shall be entered against
any such Person in any action under the Federal securities laws
seeking rescission of the purchase or sale of, or for damages
arising from the purchase or sale of, any Securities, such
judgment or order shall have become final after exhaustion of
all available appellate remedies and, in Lender's judgment, the
payment of such judgment or order would have a Material Adverse
Effect on such Person.
(j) Dissolution. Any order, judgment or decree
shall be entered against the REIT, Borrower or any other
Consolidated Entity decreeing its involuntary dissolution or
split up and such order shall remain undischarged and unstayed
for a period in excess of thirty (30) days; or the REIT or
Borrower shall otherwise dissolve or cease to exist.
(k) Loan Documents. If for any reason any Loan
Document shall cease to be in full force and effect and such
condition or event shall continue for fifteen (15) days after
Borrower or the REIT knew of such condition or event.
(l) ERISA Liabilities. Any Termination Event occurs
which will or is reasonably likely to subject Borrower or the
REIT or any ERISA Affiliate of any of them to a liability which
Lender reasonably determines will have a Material Adverse
Effect on Borrower or the REIT, or the plan administrator of
any Benefit Plan applies for approval under Section 412(d) of
the Internal Revenue Code for a waiver of the minimum funding
standards of Section 412(a) of the Internal Revenue Code and
Lender reasonably determines that the business hardship upon
the Section 412(d) waiver was based will or would reasonably be
anticipated to subject Borrower or the REIT to a liability
which Lender determines will have a Material Adverse Effect on
Borrower or the REIT.
(m) Environmental Liabilities. Borrower or the REIT
becomes subject to any Liabilities and Costs which Lender
reasonably deems to have a Material Adverse Effect on such
Person arising out of or related to (i) the Release or
threatened Release at any Property of any Contaminant into the
environment, or any Remedial Action in response thereto, or
(ii) any violation of any Environmental Laws.
(n) Solvency. Borrower or the REIT shall cease to
be Solvent.
(o) Breach of Guaranty. The REIT shall fail to duly
and punctually perform or observe any agreement, covenant or
obligation under its Guaranty.
(p) Sole General Partner. The REIT shall cease to
be the sole general partner of Borrower or cease to own 51% or
more of the Partnership Units of Borrower.
(q) 1996 Revolving Credit Agreement. An "Event of
Default" occurs under the 1996 Revolving Credit Agreement
and/or an "Event of Default" occurs under any "Loan Document"
(as defined in the 1996 Revolving Credit Agreement), which has
not been waived or cured.
An Event of Default shall be deemed "continuing"
until cured or waived in writing in accordance with
Section 10.4.
9.2 Rights and Remedies.
(a) Acceleration, Etc. Upon the occurrence of any
Event of Default described in the foregoing Section 9.1(g) or
9.1(h) with respect to the REIT or Borrower or any other
Consolidated Entity, the Commitment shall automatically and
immediately terminate and the unpaid principal amount of and
any and all accrued interest on the Advances shall
automatically become immediately due and payable, with all
additional interest, fees, costs and expenses from time to time
accrued thereon and/or payable hereunder, and without
presentment, demand or protest or other requirements of any
kind (including, without limitation, valuation and appraise-
ment, diligence, presentment, notice of intent to demand or
accelerate or notice of acceleration), all of which are hereby
expressly waived by Borrower, and the obligation of Lender to
make any Advances hereunder shall thereupon terminate; and upon
the occurrence and during the continuance of any other Event of
Default, Lender may, by written notice to Borrower, (i) declare
that the Commitment is terminated, whereupon the Commitment and
the obligation of Lender to make any Advance hereunder shall
immediately terminate, and/or (ii) declare the unpaid principal
amount of, any and all accrued and unpaid interest on the
Advances and all of the other Obligations to be, and the same
shall thereupon be, immediately due and payable with all
additional interest from time to time accrued thereon and
without presentment, demand, or protest or other requirements
of any kind (including without limitation, valuation and
appraisement, diligence, presentment, notice of intent to
demand or accelerate and of acceleration), all of which are
hereby expressly waived by Borrower. Without limiting Lender's
authority hereunder, on or after the Maturity Date, Lender may
exercise any or all rights and remedies under the Loan
Documents or applicable law.
(b) Access to Information. Notwithstanding anything
to the contrary contained in the Loan Documents, upon the
occurrence of and during the continuance of an Event of
Default, Lender shall be entitled to request and receive, by or
through Borrower or appropriate legal process, any and all
information concerning the REIT, Borrower, or any Property of
any of them, which is reasonably available to or obtainable by
Borrower.
(c) Waiver of Demand. Demand, presentment, protest
and notice of nonpayment are hereby waived by Borrower.
Borrower also waives, to the extent permitted by law, the
benefit of all valuation, appraisal and exemption laws.
(d) Waivers, Amendments and Remedies. No delay or
omission of Lender to exercise any right under any Loan
Document shall impair such right or be construed to be a waiver
of any Event of Default or an acquiescence therein, and any
single or partial exercise of any such right shall not preclude
other or further exercise thereof or the exercise of any other
right, and no waiver, amendment or other variation of the
terms, conditions or provisions of the Loan Documents whatso-
ever shall be valid unless in a writing signed by Lender, and
then only to the extent in such writing specifically set forth.
All remedies contained in the Loan Documents or by law afforded
shall be cumulative and all shall be available to Lender until
the Obligations have been paid in full, the Commitment has
expired or terminated and this Agreement has been terminated.
ARTICLE 10
MISCELLANEOUS
10.1 Expenses.
(a) Generally. Borrower agrees to pay, or reimburse
Lender for, within seven (7) days after receipt of written
demand, all of Lender's external audit, legal, appraisal,
valuation and investigation expenses and for all other
reasonable out-of-pocket costs and expenses of every type and
nature (including, without limitation, the fees and charges of
outside appraisers and reasonable fees, expenses and
disbursements of Lender's internal appraisers, environmental
advisors or legal counsel) incurred by Lender at any time
(whether prior to, on or after the date of this Agreement) in
connection with (i) its own audit and investigation of Borrower
and the REIT; (ii) the negotiation, preparation and execution
of this Agreement (including, without limitation, the
satisfaction or attempted satisfaction of any of the conditions
set forth in Article 3), and the other Loan Documents and the
making of the Advances; (iii) review and investigation of Real
Property which is proposed for inclusion within the
Unencumbered Pool and Unencumbered Assets within the
Unencumbered Pool; (iv) administration of this Agreement, the
other Loan Documents, and the Advances, including, without
limitation, consultation with attorneys in connection
therewith; and (v) the protection, collection or enforcement of
any of the Obligations.
(b) After Event of Default. Borrower further agrees
to pay, or reimburse Lender, for all reasonable out-of-pocket
costs and expenses, including, without limitation, the
reasonable attorneys' fees and disbursements of one law firm
incurred by Lender after the occurrence and during the
continuance of an Event of Default (i) in enforcing any
Obligation or exercising or enforcing any other right or remedy
available by reason of such Event of Default; (ii) in connec-
tion with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a
"work-out" or in any insolvency or bankruptcy proceeding;
(iii) in commencing, defending or intervening in any litigation
or in filing a petition, complaint, answer, motion or other
pleadings in any legal proceeding relating to Borrower or the
REIT and related to or arising out of the transactions
contemplated hereby; or (iv) in taking any other action in or
with respect to any suit or proceeding (whether in bankruptcy
or otherwise).
10.2 Indemnity. Borrower further agrees to defend,
protect, indemnify and hold harmless Lender, its Affiliates and
its officers, directors, employees, agents, attorneys and
consultants (including, without limitation, those retained in
connection with the satisfaction or attempted satisfaction of
any of the conditions set forth in Article 3) (collectively
called the "Indemnitees") from and against any and all
Liabilities and Costs imposed on, incurred by, or asserted
against such Indemnitees (whether based on any federal or state
laws or other statutory regulations, including, without
limitation, securities and commercial laws and regulations,
under common law or in equity, and based upon contract or
otherwise, including any liability and costs arising as a
result of a "prohibited transaction" under ERISA to the extent
arising from or in connection with the past, present or future
operations of the REIT or Borrower or their respective
predecessors in interest) in any manner relating to or arising
out of this Agreement, or the other Loan Documents, or any act,
event or transaction related or attendant thereto, the making
of the Advances and the management of the Advances, or the use
or intended use of the proceeds of the Advances (collectively,
the "Indemnified Matters"); provided, however, that Borrower
shall have no obligation to an Indemnitee hereunder with
respect to (a) matters for which such Indemnitee has been
compensated pursuant to or for which an exemption is provided
in Section 2.4(g) or any other provision of this Agreement, and
(b) Indemnified Matters to the extent caused by or resulting
from the willful misconduct or gross negligence of that
Indemnitee, as determined by a court of competent jurisdiction.
To the extent that the undertaking to indemnify, pay and hold
harmless set forth in the preceding sentence may be
unenforceable because it is violative of any law or public
policy, Borrower shall contribute the maximum portion which it
is permitted to pay and satisfy under applicable law, to the
payment and satisfaction of, all Indemnified Matters incurred
by the Indemnitees.
10.3 Change in Accounting Principles and "Funds from
Operations" Definition. Except as otherwise provided herein,
if any changes in accounting principles from those used in the
preparation of the most recent financial statements delivered
to Lender pursuant to the terms hereof are hereafter required
or permitted by the rules, regulations, pronouncements and
opinions of the Financial Accounting Standards Board or the
American Institute of Certified Public Accountants (or
successors thereto or agencies with similar functions) and are
adopted by the REIT or Borrower with the agreement of its
Accountants and such changes result in a change in the method
of calculation of any of the financial covenants, standards or
terms found herein, the parties hereto agree to enter into
negotiations in order to amend such provisions so as to
equitably reflect such changes with the desired result that the
criteria for evaluating the financial condition of the REIT and
the Consolidated Entities shall be the same after such changes
as if such changes had not been made. The definition of "Funds
from Operations" set forth in Article 1 is based upon the
definition of "Funds From Operations" promulgated by the
National Association of Real Estate Investment Trusts and
effective as of January 1, 1996 (the "NAREIT Definition"). If
the NAREIT Definition is modified after the date of this
Agreement, the parties hereto agree to enter into negotiations
if any party so requests in order to amend the definition of
"Funds from Operations" set forth in this Agreement to make it
consistent with the modified NAREIT Definition; provided
however, that if the effect of such change in the definition of
"Funds from Operations" is to restrict the amount of
distributions permitted under this Agreement to amounts less
than what are required to maintain the REIT's status as a real
estate investment trust under the Code, then Borrower shall be
permitted to make the minimum distribution necessary to
maintain the REIT's status as a real estate investment trust
under the Code so long as such distribution would have been
permitted under the "Funds from Operations" definition in
effect as of the Closing Date.
10.4 Amendments and Waivers. (a) No amendment or
modification of any provision of this Agreement shall be
effective without the written agreement of Lender, and (b) no
termination or waiver of any provision of this Agreement, or
consent to any departure by Borrower therefrom, shall in any
event be effective without the written agreement of Lender,
which Lender shall have the right to grant or withhold at its
sole discretion. Any waiver or consent shall be effective only
in the specific instance and for the specific purpose for which
it was given. No notice to or demand on Borrower in any case
shall entitle Borrower to any other further notice or demand in
similar or other circumstances.
10.5 Independence of Covenants. All covenants hereunder
shall be given independent effect so that if a particular
action or condition is not permitted by any of such covenants,
the fact that it would be permitted by an exception to, or be
otherwise within the limitations of, another covenant shall not
avoid the occurrence of an Event of Default or Unmatured Event
of Default if such action is taken or condition exists, and if
a particular action or condition is expressly permitted under
any covenant, unless expressly limited to such covenant, the
fact that it would not be permitted under the general
provisions of another covenant shall not constitute an Event of
Default or Unmatured Event of Default if such action is taken
or condition exists.
10.6 Notices and Delivery. Unless otherwise specifically
provided herein, any consent, notice or other communication
herein required or permitted to be given shall be in writing
and may be personally served, telecopied or sent by courier
service or United States mail and shall be deemed to have been
given when delivered in person or by courier service, upon
receipt of a telecopy (or on the next Business Day if such
telecopy is received on a non-Business Day or after 5:00 p.m.
on a Business Day) or four (4) Business Days after deposit in
the United States mail (registered or certified, with postage
prepaid and properly addressed). Notices to Lender pursuant to
Article 2 shall not be effective until received by Lender. For
the purposes hereof, the addresses of the parties hereto (until
notice of a change thereof is delivered as provided in this
Section 10.6) shall be as set forth below each party's name on
the signature pages hereof, or, as to each party, at such other
address as may be designated by such party in a written notice
to all of the other parties.
10.7 Survival of Warranties, Indemnities and Agreements.
All agreements, representations, warranties and indemnities
made or given herein shall survive the execution and delivery
of this Agreement and the other Loan Documents and the making
and repayment of the Advances hereunder and such indemnities
shall survive termination hereof.
10.8 Failure or Indulgence Not Waiver; Remedies
Cumulative. No failure or delay on the part of Lender in the
exercise of any power, right or privilege under any of the Loan
Documents shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such
power, right or privilege preclude other or further exercise
thereof or of any other right, power or privilege. All rights
and remedies existing under the Loan Documents are cumulative
to and not exclusive of any rights or remedies otherwise
available.
10.9 Marshaling; Payments Set Aside. Lender shall not be
under any obligation to marshall any assets in favor of
Borrower or any other party or against or in payment of any or
all of the Obligations. To the extent that Borrower makes a
payment or payments to Lender or Lender exercises its right of
setoff, and such payment or payments or the proceeds of such
setoff or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver or any other party
under any bankruptcy law, state or federal law, common law or
equitable cause, then to the extent of such recovery, the
Obligation or part thereof originally intended to be satisfied,
and all rights and remedies therefor, shall be revived and
continued in full force and effect as if such payment had not
been made or such enforcement or setoff had not occurred.
10.10 Severability. In case any provision in or
obligation under this Agreement or the other Loan Documents
shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation
in any other jurisdiction, shall not in any way be affected or
impaired thereby, provided, however, that if the rates of
interest or any other amount payable hereunder, or the
collectibility thereof, are declared to be or become invalid,
illegal or unenforceable, Lender's obligation to make Advances
shall not be enforceable.
10.11 Headings. Section headings in this Agreement are
included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be
given any substantive effect.
10.12 Governing Law; Waiver. THIS AGREEMENT SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF CALIFORNIA.
10.13 Limitation of Liability. To the extent permitted
by applicable law, no claim may be made by Borrower or any
other Person against Lender, or the affiliates, directors,
officers, employees, attorneys or agents of Lender, for any
special, indirect, consequential or punitive damages in respect
of any claim for breach of contract or any other theory of
liability arising out of or related to the transactions
contemplated by this Agreement, or any act, omission or event
occurring in connection therewith; and Borrower and Lender
hereby waive, release and agree not to sue upon any claim for
any such damages, whether or not accrued and whether or not
known or suspected to exist in its favor.
10.14 Successors and Assigns. This Agreement and the
other Loan Documents shall be binding upon the parties hereto
and their respective successors and assigns and shall inure to
the benefit of the parties hereto and the successors and
permitted assigns of Lender. Borrower's rights and interests
hereunder and under the other Loan Documents, and Borrower's
duties and Obligations hereunder and under the other Loan
Documents, shall not be assigned or otherwise transferred
without the prior written consent of Lender. Without first
obtaining the written consent of Borrower, which consent shall
not be unreasonably withheld, Lender shall not assign all or
any portion of its rights and obligations under this Agreement
or any other Loan Document.
10.15 Consent to Jurisdiction and Service of Process:
Waiver of Jury Trial. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST
BORROWER WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT MAY BE AND ALL JUDICIAL PROCEEDINGS BROUGHT BY
BORROWER WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT SHALL BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION HAVING SITUS WITHIN THE BOUNDARIES OF
THE FEDERAL COURT DISTRICT OF THE SOUTHERN DISTRICT OF
CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
BORROWER ACCEPTS, FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF
THE AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY
FINAL JUDGMENT RENDERED THEREBY FROM WHICH NO APPEAL HAS BEEN
TAKEN OR IS AVAILABLE. BORROWER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY
SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ITS NOTICE
ADDRESS SPECIFIED ON THE SIGNATURE PAGES HEREOF. BORROWER AND
LENDER IRREVOCABLY WAIVE (A) TRIAL BY JURY IN ANY ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, AND (B) ANY OBJECTION (INCLUDING, WITHOUT LIMITATION,
ANY OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY JURISDICTION SET
FORTH ABOVE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE
RIGHT OF LENDER TO BRING PROCEEDINGS AGAINST BORROWER IN THE
COURTS OF ANY OTHER JURISDICTION.
10.16 Counterparts; Effectiveness; Inconsistencies. This
Agreement and any amendments, waivers, consents or supplements
hereto may be executed in counterparts, each of which when so
executed and delivered shall be deemed an original, but all of
which, taken together, shall constitute but one and the same
instrument. This Agreement shall become effective when
(i) Borrower and Lender have duly executed and delivered
signature pages of this Agreement to each other and (ii) Lender
has received all fees due under this Agreement. Lender shall
send written confirmation of the Closing Date to Borrower
promptly following the occurrence thereof. This Agreement and
each of the other Loan Documents shall be construed to the
extent reasonable to be consistent one with the other, but to
the extent that the terms and conditions of this Agreement are
actually and directly inconsistent with the terms and
conditions of any other Loan Document, this Agreement shall
govern.
10.17 Performance of Obligations. Borrower agrees that
Lender may, but shall have no obligation to, make any payment
or perform any act required of Borrower under any Loan Document
which Borrower has failed to make or do.
10.18 Construction. The parties to this Agreement
acknowledge that each party and its counsel have reviewed and
revised this Agreement and that the normal rule of construction
to the effect that any ambiguities are to be resolved against
the drafting party shall not be employed in the interpretation
of this Agreement or any amendments or exhibits hereto.
10.19 Entire Agreement. This Agreement, taken together
with all of the other Loan Documents and all certificates and
other documents delivered by Borrower to Lender, embodies the
entire agreement and supersede all prior agreements, written
and oral, relating to the subject matter hereof.
IN WITNESS WHEREOF, this Agreement has been duly
executed as of the date set forth above.
BORROWER: ARDEN REALTY LIMITED PARTNERSHIP,
a Maryland limited partnership
By: ARDEN REALTY, INC.,
a Maryland corporation,
Its sole general partner
By /s/ Diana M. Laing
Diana Laing
Its Chief Financial Officer
ADDRESS FOR NOTICE AND DELIVERY:
Arden Realty Limited Partnership
9100 Wilshire Boulevard, Suite 700
Beverly Hills, CA 90212
Attention: Ms. Diana Laing
Tel: (310) 271-8600
Fax: (310) 274-6218
LENDER: WELLS FARGO BANK, NATIONAL ASSOCIATION,
as a Lender
By /s/ Andrew Downs
Andrew Downs
Its Vice President
ADDRESS FOR NOTICE AND DELIVERY:
Wells Fargo Bank, N.A.
Real Estate Group
MAC 2064-129
333 South Grand Avenue, 12th Floor
Los Angeles, California 90071
Attention: Mr. Andrew Downs
Tel: (213) 253-7344
Fax: (213) 620-1460
LIBOR OFFICE:
Real Estate Group Disbursement Center
2120 East Park Place, Suite 100
El Segundo, California 90245
Attention: Ms. Ann Colvin
Tel: (310) 335-9458
Fax: (310) 615-1014
Schedule 1.1A
Applicable Spread
Total Liabilities to Gross Asset Value Applicable Spread
Less than or equal to 35% 1.20%
Greater than 35%, but less than 45% 1.30%
Equal to or greater than 45% 1.45%
Schedule 4.1(j)
Litigation
None.
Schedule 4.1(s)
Environmental Matters
None.
Schedule 4.1(v)
Management Agreements
None.
Schedule 4.2(l)
Benefit Plans
Arden Realty 401(k) Plan and Trust, pursuant to Agreement dated
December 30, 1996, by and between Arden Realty Limited Partnership
and Victor J. Coleman
Exhibit 11.1
Computation of fully-diluted earnings per share, using 21,921,256 weighted
average shares outstanding.
Amount Per Share
Net income $ 8,438,000 $ .38
Calculation of number of weighted average
fully-diluted shares:
Proceeds from assumed exercise of options $18,184,055
Divided by quarter ended March 31, 1997
average closing price of common stock $27.51
Equals number of shares assumed purchased
under treasury stock method 660,998
Number of shares assumed purchased through
exercise of options 900,000
Less number of shares assumed purchased
under treasury stock method 660,998
Equals additional shares assumed outstanding
for fully-diluted earnings per share computation 239,002
Plus weighted average number of shares
outstanding, primary EPS calculation 21,682,254
Equals weighted average number of shares
outstanding, fully-diluted EPS calculations 21,921,256
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 822
<SECURITIES> 0
<RECEIVABLES> 2,093
<ALLOWANCES> 0
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<CURRENT-ASSETS> 7,608
<PP&E> 601,146
<DEPRECIATION> (20,510)
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<BONDS> 197,800
0
0
<COMMON> 217
<OTHER-SE> 331,880
<TOTAL-LIABILITY-AND-EQUITY> 599,338
<SALES> 0
<TOTAL-REVENUES> 24,970
<CGS> 0
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<OTHER-EXPENSES> 15,398
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<INCOME-PRETAX> 8,438
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