<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report: March 30, 1998
(Date of earliest event reported)
KILROY REALTY CORPORATION
(exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
MARYLAND COMMISSION FILE: 95-4598246
(State or other jurisdiction 1-12675 (I.R.S. Employer Identification No.)
of incorporation or
organization)
</TABLE>
2250 EAST IMPERIAL HIGHWAY
SUITE 1200
EL SEGUNDO, CALIFORNIA 90245
(Address of Principal executive offices, including zip code)
(310) 563-5500
(Registrant's telephone number, including area code)
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<PAGE>
ITEM 5. OTHER EVENTS
On March 30, 1998, Kilroy Realty Corporation (the "Registrant") completed a
public offering of 546,697 shares of its common stock, par value $.01 per share,
resulting in net proceeds to the Registrant of approximately $14.2 million.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits.
The Registrant hereby files as an exhibit its Revolving Credit Agreement,
dated February 24, 1998.
* * * * *
2
<PAGE>
ITEM 7. FINANCIAL STATEMENT AND EXHIBITS.
<TABLE>
<CAPTION>
Exhibit
No. Description
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<S> <C>
1.1 Underwriting Agreement, dated as of March 25,
1998, by and among Kilroy Realty Corporation,
Kilroy Realty, L.P. and Everen Securities, Inc.
10.71 Revolving Credit Agreement dated as of February
24, 1998, among Kilroy Realty, L.P., Morgan
Guaranty Trust Company of New York, as Lead Agent
for the Banks and the Banks listed therein.
</TABLE>
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
KILROY REALTY CORPORATION
Date: March 30, 1998 By /s/ ANN MARIE WHITNEY
---------------------------------------
Name: Ann Marie Whitney
Title: Vice President and Controller
4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
No. Description Page
- ------- ----------- -------------
<S> <C> <C>
1.1 Underwriting Agreement, dated
as of March 25, 1998, by and
among Kilroy Realty
Corporation, Kilroy Realty,
L.P. and Everen Securities, Inc.
10.71 Revolving Credit Agreement
dated as of February 24, 1998,
among Kilroy Realty, L.P.,
Morgan Guaranty Trust Company
of New York, as Lead Agent for
the Banks and the Banks listed
therein.
</TABLE>
II-1
<PAGE>
EXHIBIT 1.1
546,697 SHARES
COMMON STOCK
($.01 PAR VALUE)
UNDERWRITING AGREEMENT
March 25, 1998
EVEREN SECURITIES, INC.
77 West Wacker Drive
Chicago, Illinois 60601
The undersigned, Kilroy Realty Corporation, a Maryland corporation (the
"Company"), the sole general partner and a limited partner of Kilroy Realty,
L.P., a Delaware limited partnership (the "Operating Partnership"), hereby
confirms its agreement with you (the "Underwriter") as follows:
1. Description of Shares. The Company proposes to issue and sell to you
546,697 shares (the "Shares") of its common stock, par value $.01 per share (the
"Common Stock"). The Shares are more fully described in the Prospectus
hereinafter defined.
2. Purchase, Sale and Delivery of Shares. On the basis of the
representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the Company agrees to sell to you,
and you agree to purchase from the Company at a purchase price of $26.0656 per
share, the Shares.
The Company will deliver definitive certificates for the Shares at the office
of Everen Securities, Inc., New York, New York ("Everen's Office"), or such
other place as you and the Company may mutually agree upon (the "Place of
Closing"), for your account against payment to the Company of the purchase price
for the Shares sold to you by wire transfer of immediately available funds, at
10:00 a.m., Chicago time, on March 30, 1998, or at such other time and date not
later than three full business days thereafter as you and the Company may agree,
such time and date of payment and delivery being herein called the "Closing
Date."
The certificates for the Shares so to be delivered will be made available to
you for inspection at Everen's Office (or such other place as you and the
Company may mutually agree upon) at least one full business day prior to the
Closing Date and will be in such names and denominations as you may request at
least one full business day prior to the Closing Date.
3. Representations, Warranties and Agreements of the Company and the
Operating Partnership. The Company and the Operating Partnership, jointly and
severally, represent and warrant to and agree with you that:
(a) The Company meets the requirements for use of Form S-3 under the
Securities Act of 1933, as amended (the "Act"); a registration statement
(Registration No. 333-45097) on Form S-3, including a prospectus relating
to the registration of the Shares and such other securities which may be
offered from time to time in accordance with Rule 415 under the Act, and
such amendments to such registration statement as may have been required to
the date of this Agreement, has been prepared by the Company and the
Operating Partnership pursuant to and in conformity with the requirements
of the Act, and the Rules and Regulations (the "Rules and Regulations") of
the Securities and Exchange Commission (the "Commission") thereunder, was
filed with the Commission under the Act and was declared effective on
February 11, 1998. Copies of such registration statement, including any
amendments thereto, each related preliminary prospectus contained therein,
the exhibits, financial statements and schedules have heretofore been
delivered by the Company to you. A prospectus supplement (the "Prospectus
Supplement") setting forth the terms of the offering, sale and plan of
distribution of the Shares and additional information concerning the
Company, the Operating Partnership and their subsidiaries (the
"Subsidiaries") and their business has been or will be so prepared and will
be filed pursuant to Rule 424(b) of the Rules and
<PAGE>
Regulations on or before the second business day after the date hereof (or
such earlier time as may be required by the Rules and Regulations). The
term "Registration Statement" as used herein means the registration
statement, and the base prospectus included therein, as amended at the time
it or any amendment thereto became effective under the Act, or at any time
any Annual Report on Form 10-K is filed by the Company with the Commission
(the "Effective Date"), including financial statements and all exhibits and
all documents incorporated by reference therein pursuant to Item 12 of Form
S-3 under the Act. Any document filed by the Company under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") after the effective
date of the Registration Statement or the date of the Prospectus Supplement
and incorporated by reference in the Prospectus shall be deemed to be
included in the Registration Statement and the Prospectus as of the date of
such filing. The term "Prospectus" as used herein means (i) the base
prospectus included in the Registration Statement at the Effective Date, as
supplemented by the Prospectus Supplement as first filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations, except
that, if such base prospectus is amended or supplemented subsequent to the
Effective Date, the term "Prospectus" shall refer to the base prospectus as
so amended or supplemented and as further supplemented by the Prospectus
Supplement, (ii) if no such filing is required, the form of final
prospectus included in the Registration Statement at the Effective Date or
(iii) if a Term Sheet or Abbreviated Term Sheet (as such terms are defined
in Rule 434(b) and 434(c), respectively, of the Rules and Regulations) is
filed with the Commission pursuant to Rule 424(b)(7) of the Rules and
Regulations, the Term Sheet or Abbreviated Term Sheet and the last
Preliminary Prospectus filed with the Commission prior to the time the
Registration Statement became effective, taken together (including, in each
case, the documents incorporated by reference therein pursuant to Item 12
of Form S-3 under the Act). The term "Preliminary Prospectus" as used
herein shall mean a preliminary prospectus included at any time in the
Registration Statement.
(b) The Commission has not issued, and is not to the knowledge of the
Company or the Operating Partnership threatening to issue, an order
preventing or suspending the use of any Preliminary Prospectus or the
Prospectus nor instituted proceedings for that purpose. Each Preliminary
Prospectus at its date of issue, the Registration Statement at the
Effective Date, and the Prospectus at its date of issue and any amendments
or supplements thereto contained, as the case may be, all statements which
are required to be stated therein by, and in all material respects conform
or will conformed to the requirements of, the Act and the Rules and
Regulations. Neither the Registration Statement nor any amendment thereto,
as of the applicable effective date, and neither the Prospectus nor any
supplement thereto, as of its applicable issue date or the Closing Date,
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the Company and the Operating
Partnership make no representation or warranty as to information contained
in or omitted from the Registration Statement or the Prospectus, or any
such amendment or supplement, in reliance upon, and in conforming with,
written information furnished to the Company by you specifically for use in
the preparation thereof.
(c) The documents incorporated by reference in the Prospectus pursuant to
Item 12(a) of Form S-3 under the Act, at the time they were filed with the
Commission, complied in all material respects with the requirements of the
Exchange Act, and the rules and regulations adopted by the Commission
thereunder (the "1934 Act Rules and Regulations"), and, when read together
and with the other information in the Prospectus, at the time the
Registration Statement became effective did not contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
(d) The filing of the Registration Statement and the execution and
delivery of this Agreement by the Company and the Operating Partnership
have been duly authorized by the Board of Directors of the Company; this
Agreement constitutes a valid and legally binding obligation of the Company
and the Operating Partnership enforceable in accordance with its terms
(except to the extent the enforceability of the indemnification and
contribution provisions of Section 6 hereof may be limited by public policy
considerations as expressed in the Act as construed by courts of competent
jurisdiction, and except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other laws
-2-
<PAGE>
affecting creditors' rights generally and by general principles of equity);
the issue and sale of the Shares by the Company and the performance of this
Agreement and the consummation of the transactions herein contemplated will
not result in a violation of the Company's articles of incorporation or
bylaws or the Operating Partnership's Second Amended and Restated Agreement
of Limited Partnership, each as amended, or result in a breach or violation
of any of the terms and provisions of, or constitute a default under, or
result in the creation or imposition of any lien, charge or encumbrance
upon any properties or assets of the Company, the Operating Partnership or
the Subsidiaries under, any statute, or under any indenture, mortgage, deed
of trust, note, loan agreement, sale and leaseback arrangement or other
agreement or instrument to which any of the Company, the Operating
Partnership or the Subsidiaries is a party or by which they are bound or to
which any of the properties or assets of the Company, the Operating
Partnership or the Subsidiaries is subject, or any order, rule or
regulation of any court or governmental agency or body having jurisdiction
over the Company, the Operating Partnership or the Subsidiaries or their
properties, except in each case for such violations and breaches which
would not reasonably be expected to, individually or in the aggregate,
materially adversely affect the condition (financial or other), net worth,
business, affairs, management or results of operations of the Company, the
Operating Partnership and the Subsidiaries taken as a whole; no consent,
approval, authorization, order, registration or qualification of or with
any court or governmental agency or body is required for the consummation
of the transactions herein contemplated, except such as may be required by
the National Association of Securities Dealers, Inc. (the "NASD") or under
the Act or Rules and Regulations or any state securities laws.
(e) None of the Company, the Operating Partnership or any of the
Subsidiaries has sustained since the date of the latest audited financial
statements included or incorporated by reference in the Prospectus any
material loss or interference with its business from fire, explosion, flood
or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree. Except as
described in or as contemplated in the Prospectus, subsequent to the
respective dates as of which information is given in the Registration
Statement and the Prospectus, the Company, the Operating Partnership and
the Subsidiaries taken as a whole have not incurred any material
liabilities or material obligations, direct or contingent, other than in
the ordinary course of business, or entered into any material transactions
not in the ordinary course of business, and there has not been any material
change in the capital stock or long-term debt of the Company and the units
of partnership interest (the "Units") or long-term debt of the Operating
Partnership and the Subsidiaries taken as a whole or any material adverse
change in the condition (financial or other), net worth, business, affairs,
management, or results of operations of the Company, the Operating
Partnership and the Subsidiaries taken as a whole. The Company, the
Operating Partnership and the Subsidiaries have filed all required federal,
state and foreign income and franchise tax returns and paid all taxes shown
as due thereon except in any case in which the failure so to file would not
reasonably be excepted to, individually or in the aggregate, materially
adversely affect the condition (financial or other), net worth, business,
affairs, management or results of operations of the Company, the Operating
Partnership and the Subsidiaries, taken as a whole; all tax liabilities are
adequately provided for on the books of the Company, the Operating
Partnership and the Subsidiaries except to such extent as would not
reasonably be expected to materially adversely affect the condition
(financial or other), net worth, business, affairs, management or results
of operations of the Company, the Operating Partnership and the
Subsidiaries taken as a whole; the Company, the Operating Partnership and
the Subsidiaries have made all required payroll tax payments except for any
such payment that is currently being contested in good faith or the
nonpayment of which would otherwise not reasonably be excepted to,
individually or in the aggregate, materially adversely affect the condition
(financial or other), net worth, business, affairs, management or results
of operations of the Company, the Operating Partnership and the
Subsidiaries, taken as a whole as of the date of this Agreement; and the
Company, the Operating Partnership and the Subsidiaries have no knowledge
of any tax proceeding or action pending or threatened against the Company,
the Operating Partnership or the Subsidiaries which would not reasonably be
excepted to, individually or in the aggregate, materially adversely affect
the condition (financial or other), net worth, business, affairs,
management or results of operations of the Company, the Operating
Partnership and the Subsidiaries, taken as a whole.
-3-
<PAGE>
(f) Except as described in the Prospectus, there is not now pending or,
to the knowledge of the Company or the Operating Partnership, threatened or
contemplated, any action, suit or proceeding to which any of the Company,
the Operating Partnership or the Subsidiaries is a party before or by any
court or public, regulatory or governmental agency or body which would
reasonably be excepted to, individually or in the aggregate, materially
adversely affect the condition (financial or other), net worth, business,
affairs, management or results of operations of the Company, the Operating
Partnership and the Subsidiaries, taken as a whole, and there are no
contracts or documents of the Company, the Operating Partnership and the
Subsidiaries which would be required to be filed as exhibits to the
Registration Statement by the Act or by the Rules and Regulations which
have not been filed as exhibits to the Registration Statement or
incorporated by reference therein.
(g) The Company has duly and validly authorized capital stock as
described in the Prospectus; all outstanding shares of capital stock of the
Company conform, and the Shares when issued will conform, to the
description thereof in the Prospectus and have been, or, when issued and
paid for will be, duly authorized, validly issued, fully paid and
nonassessable; and the issuance of the Shares to be purchased from the
Company hereunder is not subject to preemptive rights.
(h) Each of the Company, the Operating Partnership and the Subsidiaries
have been duly incorporated or formed, as the case may be, and is a validly
existing corporation or limited partnership, as the case may be, in good
standing under the laws of the state or other jurisdiction in which it is
incorporated or formed, as the case may be. The Company, the Operating
Partnership and the Subsidiaries have full power and authority (corporate
and other) to own, lease and operate their properties and conduct their
businesses as described in the Prospectus; each of the Company, the
Operating Partnership and the Subsidiaries is duly qualified or registered
to do business and is in good standing in each state or other jurisdiction
in which its ownership or leasing of property or conduct of business
legally requires such qualification, except where the failure to be so
qualified would not have a material adverse effect on the ability of the
Company and the Operating Partnership to conduct its or their business as
described in the Prospectus; and the outstanding shares of capital stock or
ownership interests of the Subsidiaries have been duly authorized and
validly issued, are, in the case of shares of capital stock, fully paid and
nonassessable and are owned by the Company or Operating Partnership, as the
case may be, free and clear of any mortgage, pledge, lien, encumbrance,
charge or adverse claim.
(i) Deloitte & Touche LLP, the accounting firm which has certified the
financial statements filed with or incorporated by reference in and as a
part of the Registration Statement, is an independent public accounting
firm within the meaning of the Act and the Rules and Regulations.
(j) The consolidated financial statements of the Company together with
the related schedules and notes thereto, set forth or included or
incorporated by reference in the Registration Statement and Prospectus
fairly present the consolidated financial condition of the Company as of
the dates indicated and the consolidated results of operations,
shareholders' equity and cash flows for the periods therein specified, in
conformity with generally accepted accounting principles consistently
applied throughout the periods involved (except as otherwise stated
therein). The summary and selected financial and statistical data included
or incorporated by reference in the Registration Statement and the
Prospectus present fairly the information shown therein and, to the extent
based upon or derived from the financial statements, have been compiled on
a basis consistent with the financial statements presented therein. In
addition, the pro forma financial statements of the Company, and the
related notes thereto, included or incorporated by reference in the
Registration Statement and the Prospectus present fairly the information
shown therein, have been prepared in accordance with the Commission's rules
and guidelines with respect to pro forma financial statements and have been
compiled on the basis described therein, and the assumptions used in the
preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions and circumstances referred
to therein. Furthermore, all financial statements required by Rule 3-14 of
Regulation S-X ("Rule 3-14") have been included or incorporated by
reference in the Registration Statement and the Prospectus and any such
financial statements are in conformity with the requirements of Rule 3-14.
No other financial statements are required to be set forth or to be
incorporated by reference in the Registration Statement or the Prospectus
under the Act or the Rules and Regulations thereunder.
-4-
<PAGE>
(k) None of the Company, the Operating Partnership or any of the
Subsidiaries is in default with respect to any contract or agreement to
which it is a party except for such defaults which would not reasonably be
excepted to, individually or in the aggregate, materially adversely affect
the condition (financial or other), net worth, business, affairs,
management or results of operations of the Company, the Operating
Partnership and the Subsidiaries, taken as a whole.
(l) None of the Company, the Operating Partnership or the Subsidiaries is
in violation of any other laws, ordinances or governmental rules or
regulations to which it is subject, including, without limitation, Section
13 of the Exchange Act, and none of the Company, the Operating Partnership
or any of the Subsidiaries has failed to obtain any license, permit,
franchise, easement, consent, or other governmental authorization necessary
to the ownership, leasing and operation of its properties or to the conduct
of its business, which violation or failure would reasonably be excepted to
materially adversely affect the condition (financial or other), net worth,
business, affairs, management or results of operations of the Company, the
Operating Partnership and the Subsidiaries taken as a whole. None of the
Company, the Operating Partnership or the Subsidiaries has, at any time
since their respective date of organization, (A) made any unlawful
contributions to any candidate for any political office, or failed fully to
disclose any contribution in violation of law, or (B) made any payment to
any state, federal or foreign government official, or other person charged
with similar public or quasi-public duty (other than payment required or
permitted by applicable law).
(m) There are no holders of securities of the Company having rights to
registration thereof or preemptive rights to purchase Common Stock except
as disclosed in the Prospectus.
(n) The Company, the Operating Partnership and each of the Subsidiaries
has good and marketable title to all properties and assets described in the
Prospectus as owned by it, free and clear of all liens, charges,
encumbrances or restrictions, except (i) with respect to land held pursuant
to ground lease or subject to an air space lease, (ii) as otherwise
described in the Prospectus and (iii) such as are not material to the
business of the Company, the Operating Partnership and the Subsidiaries,
taken as a whole. The Company, the Operating Partnership and each of the
Subsidiaries has valid, subsisting and enforceable leases for the
properties described in the Prospectus as leased by it, with such
exceptions as are not material and do not materially interfere with the use
made and proposed to be made of such properties by the Company, the
Operating Partnership and such Subsidiaries; no tenant under any of the
leases pursuant to which the Company or the Operating Partnership leases
its properties has an option or right of first refusal to purchase the
premises demised under such lease except for an such agreements which, if
exercised, would not reasonably be excepted to, individually or in the
aggregate, materially adversely affect the condition (financial or other),
net worth, business, affairs, management or results of operations of the
Company, the Operating Partnership and the Subsidiaries, taken as a whole;
the use and occupancy of each of the properties of the Company and the
Operating Partnership complies in all material respects with all applicable
codes and zoning laws and regulations; each of the Company and the
Operating Partnership has no knowledge of any pending or threatened
condemnation or zoning change that will in any material respect affect the
size of, use of, improvements of, construction on, or access to any of the
properties of the Company and the Operating Partnership and no knowledge of
any pending or threatened proceeding or action that will in any manner
affect the size of, use of, improvements on, construction on, or access to
any of the properties of the Company and the Operating Partnership.
(o) Title insurance in favor of the Company or the Operating Partnership
(or the subsidiary which holds title to such property) is maintained with
respect to each of the properties owned by the Company or the Operating
Partnership in an amount at least equal to the greater of (i) the cost of
acquisition of such property or (ii) the cost of construction by the
Company or the Operating Partnership of the improvements located on such
property (measured at the time of such construction), except, in each case,
where the failure to maintain such title insurance would not reasonably be
expected to, individually or in the aggregate, materially adversely affect
the condition (financial or other), net worth, business, affairs,
management or results of operations of the Company and the Operating
Partnership taken as a whole. Title insurance in favor of the mortgagee is
maintained in an amount equal to the maximum commitment of the related
loan.
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<PAGE>
(p) (i) Except as disclosed in the Prospectus, each of the Company and
the Operating Partnership has no knowledge of (A) the presence of any
Hazardous Materials (as defined below) on any of its properties, except
that which is in compliance with all Environmental Laws (as hereinafter
defined) or (B) any spills, releases, discharges or disposals of Hazardous
Materials that have occurred or are presently occurring on or from its
properties, which presence or occurrence would reasonably be expected to,
individually or in the aggregate materially adversely affect the condition
(financial or other), net worth, business, affairs, management or results
of operations of the Company, the Operating Partnership and the
Subsidiaries taken as a whole.
(ii) Except as disclosed in the Prospectus, each of the Company, the
Operating Partnership and the Subsidiaries and their properties (A) are in
compliance with any and all Environmental Laws, (B) have received all
permits, licenses or other approvals required under applicable
Environmental Laws to conduct its business and (C) are in compliance with
all terms and conditions of any such permit, license or approval, except
where such noncompliance with Environmental Laws, failure to receive
required permits, licenses or other approvals or failure to comply with the
terms and conditions of such permits, licenses or approvals would not
reasonably be expected to, individually or in the aggregate materially
adversely affect the condition (financial or other), net worth, business,
affairs, management or results of operations of the Company, the Operating
Partnership and the Subsidiaries taken as a whole.
(iii) The Operating Partnership or the Company engages environmental
consultants to perform Phase I environmental site assessments in general
accordance with the ASTM Standard to identify any environmental conditions
prior to the purchase of properties by the Operating Partnership or the
Company. On the basis of such Phase I environmental site assessments, or
such additional investigations as may have been performed based on the
findings of a Phase I assessment, and, except as described in the
Prospectus, the Company and the Operating Partnership have reasonably
concluded that no such environmental conditions exist which would
reasonably be expected to, individually or in the aggregate, materially
adversely affect the condition (financial or other), net worth, business,
affairs, management or results of operations of the Company, the Operating
Partnership and the Subsidiaries taken as a whole.
(iv) As used herein, "Hazardous Material" shall include, without
limitation any flammable explosives, radioactive materials, hazardous
materials, hazardous wastes, hazardous or toxic substances, or related
materials, asbestos, polychlorinated biphenyls, petroleum products and by-
products and substances defined or listed as "hazardous substances," "toxic
substances," "hazardous waste," or "hazardous materials" in any Federal.
(v) As used herein, "Environmental Law" shall mean all laws, regulations
or ordinances of any federal, state or local governmental authority having
or claiming jurisdiction over any of their properties that are designed to
protect public health and the environment or regulate the handling of
Hazardous Materials, including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended
(42 U.S.C. Section 9601 et seq.) ("CERCLA"), the Hazardous Material
Transportation Act, as amended (49 U.S.C. Section 1801 et seq.), the
Resource Conservation and Recovery Act, as amended (42 U.S.C. Section 6901
et seq.), the Federal Water Pollution Control Act, as amended (33 U.S.C.
Section 1251 et seq.), and the Clean Air Act, as amended (42 U.S.C. Section
7401 et seq.), and any and all analogous federal, state or local laws.
(q) The Company has not taken and will not take, directly or indirectly,
any action designed to or which might reasonably be expected to cause or
result in stabilization or manipulation of the price of the Common Stock,
and the Company is not aware of any such action taken or to be taken by
affiliates of the Company.
(r) Neither the Company nor the Operating Partnership is an "investment
company" or a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(s) The mortgages and deeds of trust encumbering the properties and
assets described in the Prospectus are not convertible nor does the Company
or the Operating Partnership hold a participating interest therein except
as described in the Prospectus.
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<PAGE>
(t) Property and casualty insurance in favor of the Company or the
Operating Partnership is maintained with respect to each of the properties
owned by it in an amount and on such terms as is reasonable and customary
based on industry standards.
(u) The Company has been organized and operated in conformity with the
requirements for qualification as a real estate investment trust under the
Internal Revenue Code of 1986, as amended (the "Code") for all taxable
years commencing with its taxable year ended December 31, 1997. The Company
will elect to be taxed as a real estate investment trust for such taxable
year and all subsequent taxable years. The Company's proposed method of
operation will permit it to continue to meet the requirements for taxation
as a real estate investment trust under the Code. The Company intends to
continue to operate in a manner which would permit it to qualify as a real
estate investment trust under the Code beginning with the tax year ended
December 31, 1997.
(v) Except as disclosed in the Prospectus, each entity identified in the
Prospectus as a tenant of any property, or a subtenant thereof, has entered
into a lease or a sublease, if applicable, for the possession of such
property and, except as disclosed in the Prospectus, each such lease is in
full force and effect, except for such leases which would not reasonably be
expected to, individually or in the aggregate, materially adversely affect
the condition (financial or other), net worth, business, affairs,
management or results of operations of the Company, the Operating
Partnership and the Subsidiaries, taken as a whole. Neither the Company nor
the Operating Partnership has notice of any defense to the obligations of
the tenant thereunder or any claim asserted or threatened by any person or
entity, which claim, if sustained, would reasonably be expected to,
individually or in the aggregate, materially adversely affect the condition
(financial or other), net worth, business, affairs, management or results
of operations of the Company, the Operating Partnership and the
Subsidiaries taken as a whole; and except as disclosed in the Prospectus,
the lessor under each lease has complied with its obligations under such
lease in all material respects and neither the Company nor the Operating
Partnership has notice of any default by the tenant under such lease which,
individually or in the aggregate with other such defaults, would materially
adversely effect the business, operations, affairs, properties, prospects,
profits or condition (financial or other) of the Company, the Operating
Partnership and the Subsidiaries taken as a whole.
(w) Any certificate signed by officers of the Company or by the Company
as General Partner of the Operating Partnership and delivered to you or to
your counsel shall be deemed a representation and warranty by the Company
or the Operating Partnership, as the case may be, to you as to the matters
covered thereby.
The Shares have been listed on the New York Stock Exchange, subject to
notice of issuance or sale of the Shares, as the case may be.
4. Additional Covenants. The Company covenants and agrees with you that:
(a) The Company will (i) prepare a Prospectus Supplement relating to the
Shares, setting forth their terms not otherwise specified in the
Prospectus, the name of the Underwriter, the price at which the Shares are
to be purchased by the Underwriter from the Company and such other
information as the Underwriter and the Company deem appropriate in
connection with the offering of the Shares, and file the Prospectus in a
form approved by you pursuant to Rule 424(b) under the Act no later than
the Commission's close of business on the second business day following the
date of the determination of the offering price of the Shares; (ii) not
file (and the Operating Partnership will not so file) any amendment to the
Registration Statement or supplement to the Prospectus of which you shall
not previously have been advised and furnished with a copy or to which you
shall have reasonably objected in writing or which is not in compliance
with the Rules and Regulations; and (iii) promptly notify you after it
shall have received notice thereof of the time when any amendment to the
Registration Statement becomes effective or when any supplement to the
Prospectus has been filed.
(b) The Company or the Operating Partnership, as the case may be, will
advise you promptly, after it shall receive notice or obtain knowledge
thereof, of any request of the Commission for amendment of the Registration
Statement or for supplement to the Prospectus or for any additional
information, or of the
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issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or the use of the Prospectus or of the
institution or threatening of any proceedings for that purpose, and the
Company and the Operating Partnership will use their best efforts to
prevent the issuance of any such stop order preventing or suspending the
use of the Prospectus and to obtain as soon as possible the lifting
thereof, if issued.
(c) The Company will cooperate with you and your counsel in endeavoring
to qualify the Shares for sale under the securities laws of such
jurisdictions as you may have designated and will make such applications,
file such documents, and furnish such information as may be necessary for
that purpose, provided the Company shall not be required to qualify as a
foreign corporation or to file a general consent to service of process in
any jurisdiction where it is not now so qualified or required to file such
a consent or to subject itself to taxation as doing business in any
jurisdiction where it is not now so taxed. The Company will, from time to
time, file such statements, reports, and other documents, as are or may be
required to continue such qualifications in effect for so long a period as
you may reasonably request.
(d) The Company will deliver to you, without charge as many copies of the
Prospectus (including all documents incorporated by reference therein), or
as it thereafter may be amended or supplemented, as you may from time to
time reasonably request. The Company consents to the use of such Prospectus
by you, both in connection with the offering or sale of the Shares and for
such other purposes and for such period of time thereafter as the
Prospectus is required by law to be delivered in connection with the
offering or sale of the Shares. The Company will deliver to you at or
before the Closing Date two conformed copies of the Registration Statement
and all amendments thereto including all exhibits filed therewith or
incorporated by reference therein and all documents incorporated by
reference in the Prospectus and will deliver to you such number of copies
of the Registration Statement, without exhibits, and of all amendments
thereto, as you may reasonably request.
(e) If, during the period in which a prospectus is required by law to be
delivered by an underwriter or dealer, any event shall occur as a result of
which, in the judgment of the Company or in your judgment or in the opinion
of your counsel, it becomes necessary to amend or supplement the Prospectus
in order to make the statements therein, in light of the circumstances
existing at the time the Prospectus is delivered to a purchaser, not
misleading, or, if it is necessary at any time to amend or supplement the
Prospectus to comply with any applicable law, the Company promptly will
prepare and file with the Commission an appropriate amendment to the
Registration Statement or supplement to the Prospectus so that the
Prospectus as so amended or supplemented will not, in the light of the
circumstances when it is so delivered, be misleading, or so that the
Prospectus will comply with such law.
(f) The Company will make generally available to its shareholders and
will file as an exhibit in a report pursuant to the Exchange Act, as soon
as it is practicable to do so, but in any event not later than 15 months
after the effective date of the Registration Statement, an earnings
statement in reasonable detail, covering a period of at least 12
consecutive months beginning after the effective date of the Registration
Statement, which earnings statement shall satisfy the requirements of
Section 11(a) of the Act and Rule 158 of the Rules and Regulations and will
advise you in writing when such statement has been so made available.
(g) The Company will apply the proceeds from the sale of the Shares as
set forth in the description under "Use of Proceeds" in the Prospectus,
which description complies in all respects with the requirements of Item
504 of Regulation S-K.
(h) The Company will supply you with copies of all correspondence to and
from, and all documents issued to and by, the Commission in connection with
the registration of the Shares under the Act.
(i) Prior to the Closing Date, the Company will furnish to you, as soon
as they have been prepared, copies of any unaudited interim consolidated
financial statements of the Company and its subsidiaries for any periods
subsequent to the periods covered by the financial statements appearing in
the Registration Statement and the Prospectus.
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(j) Prior to the Closing Date, the Company will notify you in advance of
any press conferences, releases or other communications, to be held or
issued by the Company, with respect to the Company or any of its
subsidiaries, the financial condition, results of operations, business,
properties, assets or liabilities of the Company or any of its
subsidiaries, or the offering of the Shares.
(k) The Company will use its best efforts to obtain approval for, and
maintain the listing of the Shares on, the New York Stock Exchange.
(l) The Company and the Operating Partnership will maintain and keep
accurate books and records reflecting their assets and maintain internal
accounting controls which provide reasonable assurance that
(1) transactions are executed in accordance with management's
authorization, (2) transactions are recorded as necessary to permit the
preparation of the Company's consolidated financial statements and to
maintain accountability for the assets of the Company, the Operating
Partnership and the Subsidiaries, (3) access to the assets of the Company,
the Operating Partnership and the Subsidiaries is permitted only in
accordance with management's authorization, and (4) the recorded accounts
of the assets of the Company, the Operating Partnership and the
Subsidiaries are compared with existing assets at reasonable intervals.
(m) During any period in which a prospectus is required by law to be
delivered by an Underwriter or dealer, the Company will promptly file all
documents required to be filed with the Commission pursuant to Sections 13,
14 or 15(d) of the Exchange Act.
(n) The Company will continue to elect to qualify as a "real estate
investment trust" under the Code, and will use its best efforts to continue
to meet the requirements to qualify as a "real estate investment trust."
5. Conditions of Underwriter's Obligations. Your obligations, as Underwriter
to purchase and pay for the Shares, as provided herein, shall be subject to
the accuracy in all material respects, as of the date hereof and as of the
Closing Date, of the representations and warranties of the Company and the
Operating Partnership contained herein, to the performance in all material
respects by the Company and the Operating Partnership of their covenants and
obligations hereunder, and to the following additional conditions:
(a) All filings required by Rule 424 of the Rules and Regulations shall
have been made. No stop order suspending the effectiveness of the
Registration Statement, as amended from time to time, shall have been
issued and no proceeding for that purpose shall have been initiated or, to
your knowledge or the knowledge of the Company or the Operating
Partnership, threatened or contemplated by the Commission, and any request
of the Commission for additional information (to be included in the
Registration Statement or the Prospectus or otherwise) shall have been
complied with to your reasonable satisfaction.
(b) You shall not have disclosed in writing to the Company on or prior to
the Closing Date, that the Registration Statement or Prospectus or any
amendment or supplement thereto contains an untrue statement of fact which,
in the opinion of your counsel, is material, or omits to state a fact
which, in the opinion of such counsel, is material and is required to be
stated therein or is necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(c) On the Closing Date, you shall have received (i) the opinion of
Latham & Watkins, counsel for the Company, addressed to you and dated the
Closing Date, as to the matters set forth in Schedule I attached hereto and
(ii) the opinion of Ballard Spahr Andrews & Ingersoll, counsel for the
Company, addressed to you and dated the Closing Date, as to the matters set
forth in Schedule II attached hereto.
(d) You shall have received on the Closing Date, from Chapman and Cutler,
your counsel, such opinion or opinions, dated the Closing Date with respect
to the incorporation of the Company, the validity of the Shares, the
Registration Statement, the Prospectus and other related matters as you may
reasonably require; the Company shall have furnished to such counsel such
documents as they reasonably request for the purpose of enabling them to
pass on such matters.
(e) You shall have received at or prior to the Closing Date from Chapman
and Cutler a memorandum or memoranda, in form and substance satisfactory to
you, with respect to the qualification for offering and
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sale by you of the Shares under state securities or Blue Sky laws of such
jurisdictions as you may have designated to the Company.
(f) On the date of this Agreement and on the Closing Date, you shall have
received from Deloitte & Touche LLP, a letter or letters, dated the date of
this Agreement and the Closing Date, respectively, in form and substance
satisfactory to you, confirming that they are independent public
accountants with respect to the Company within the meaning of the Act and
the published Rules and Regulations, and stating to the effect set forth in
Schedule III hereto.
(g) Except as contemplated in the Prospectus, (i) none of the Company,
the Operating Partnership nor any of the Subsidiaries shall have sustained
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any loss or interference with
its business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree; and (ii) subsequent to the respective dates as of
which information is given in the Registration Statement and the
Prospectus, none of the Company, the Operating Partnership nor any of the
Subsidiaries shall have incurred any liability or obligation, direct or
contingent, or entered into transactions, and there shall not have been any
change in the capital stock, the Units or long-term debt of the Company,
the Operating Partnership and the Subsidiaries or any change in the
condition (financial or other), net worth, business, affairs, management
taken as a whole, or results of operations of the Company, the Operating
Partnership and the Subsidiaries, the effect of which, in any such case
described in clause (i) or (ii), is in your judgment so material or adverse
as to make it impracticable or inadvisable to proceed with the offering or
the delivery of the Shares being delivered on the Closing Date on the terms
and in the manner contemplated in the Prospectus.
(h) There shall not have occurred any of the following: (i) a suspension
or material limitation in trading in securities generally on the New York
Stock Exchange or the American Stock Exchange or the establishing on such
exchanges by the Commission or by such exchanges of minimum or maximum
prices which are not in force and effect on the date hereof; (ii) a general
moratorium on commercial banking activities declared by either federal or
state authorities; (iii) the outbreak or escalation of hostilities
involving the United States or the declaration by the United States of a
national emergency or war, if the effect of any such event specified in
this clause (iii) in your judgment makes it impracticable or inadvisable to
proceed with the offering or the delivery of the Shares in the manner
contemplated in the Prospectus; (iv) any calamity or crisis, change in
national, international or world affairs, act of God, change in the
international or domestic markets, or change in the existing financial,
political or economic conditions in the United States or elsewhere, if the
effect of any such event specified in this clause (iv) makes it
impracticable or inadvisable to proceed with the offering or the delivery
of the Shares in the manner contemplated in the Prospectus; or (v) the
enactment, publication, decree, or other promulgation of any federal or
state statute, regulation, rule, or order of any court or other
governmental authority, or the taking of any action by any federal, state
or local government or agency in respect of fiscal or monetary affairs, if
the effect of any such event specified in this clause (v) in your judgment
makes it impracticable or inadvisable to proceed with the offering or the
delivery of the Shares in the manner contemplated in the Prospectus.
(i) You shall have received a certificate, dated the Closing Date and
signed by the President and the Chief Financial Officer of the Company
stating that (i) they have carefully examined the Registration Statement
and the Prospectus as amended or supplemented and all documents
incorporated by reference therein and nothing has come to their attention
that would lead them to believe that either the Registration Statement or
the Prospectus, or any amendment or supplement thereto or any documents
incorporated by reference therein as of their respective effective, issue
or filing dates, contained, and the Prospectus as amended or supplemented
and all documents incorporated by reference therein and when read together
with the documents incorporated by reference therein, at the Closing Date,
contains any untrue statement of a material fact, or omits to state a
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading, and, that (ii) all representations and warranties
made herein by the Company and the Operating Partnership are true and
correct in all material respects at the Closing Date, with the same effect
as if made on and as of the
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Closing Date, and all agreements herein to be performed by the Company on
or prior to the Closing Date have been duly performed in all material
respects.
(j) The Company and the Operating Partnership shall not have failed,
refused, or been unable, at or prior to the Closing Date to have performed
in all material respects any agreement on their part to be performed or any
of the conditions herein contained and required to be performed or
satisfied by them at or prior to the Closing Date.
(k) The Company and the Operating Partnership shall have furnished to you
at the Closing Date such other certificates as you may have reasonably
requested as to the accuracy, on and as of the Closing Date, of the
representations and warranties of the Company and the Operating Partnership
herein and as to the performance by the Company and the Operating
Partnership of their obligations hereunder.
(l) The Shares shall have been approved for trading upon official notice
of issuance on the New York Stock Exchange.
All such opinions, certificates, letters and documents will be in compliance
with the provisions hereof only if they are reasonably satisfactory to you and
to Chapman and Cutler, your counsel. The Company and the Operating Partnership
will furnish you with such conformed copies of such opinions, certificates,
letters and documents as you may request.
If any of the conditions specified above in this Section 5 shall not have
been satisfied as of the Closing Date or waived by you in writing, this
Agreement may be terminated by you on written notice to the Company.
6. Indemnification. (a) The Company and the Operating Partnership will
indemnify and hold you harmless and each person, if any, who controls you
within the meaning of the Act, against any losses, claims, damages or
liabilities, joint or several, to which you or such controlling person may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon an untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus, or any amendment or supplement thereto, or in any blue sky
application or other document executed by the Company or the Operating
Partnership or based on any information furnished in writing by the Company or
the Operating Partnership, filed in any jurisdiction in order to qualify any
or all of the Shares under the securities laws thereof ("Blue Sky
Application"), or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; and will reimburse you and each such
controlling person for any legal or other expenses reasonably incurred by you
or such controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
Company and the Operating Partnership shall not be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement, such Preliminary
Prospectus or the Prospectus, or such amendment or supplement, or any Blue Sky
Application in reliance upon and in conformity with written information
furnished to the Company by you, specifically for use in the preparation
thereof; and provided, further, that if any Preliminary Prospectus or the
Prospectus contained any alleged untrue statement or allegedly omitted to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading and such statement or omission
shall have been corrected in a revised Preliminary Prospectus or in the
Prospectus or in an amended or supplemented Prospectus, the Company and the
Operating Partnership shall not be liable to you or controlling persons under
this subsection (a) with respect to such alleged untrue statement or alleged
omission to the extent that any such loss, claim, damage or liability of such
person results from the fact that you sold Shares to a person to whom there
was not sent or given, at or prior to the written confirmation of such sale,
such revised Preliminary Prospectus or Prospectus or amended or supplemented
Prospectus. In addition to its other obligations under this Section 6(a), the
Company and the Operating Partnership agree that, as an interim measure during
the pendency of any claim, action, investigation, inquiry or other proceeding
arising out of or based upon any statement or omission, or any alleged
statement or omission, described in this Section 6(a), it will reimburse you
on a monthly
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basis for all reasonable legal and other expenses incurred pursuant to Section
6(c) hereof in connection with investigating or defending any such claim,
action, investigation, inquiry or other proceeding, notwithstanding the
absence of a judicial determination as to the propriety and enforceability of
the obligation of the Company and the Operating Partnership to reimburse you
for such expenses and the possibility that such payments might later be held
to have been improper by a court of competent jurisdiction. This indemnity
agreement shall be in addition to any liabilities which the Company and the
Operating Partnership may otherwise have.
(b) You will indemnify and hold harmless the Company and the Operating
Partnership, each of its directors, each of its officers who have signed the
Registration Statement and each person, if any, who controls the Company or
the Operating Partnership within the meaning of the Act, against any losses,
claims, damages or liabilities, joint or several, to which the Company, the
Operating Partnership or any such director, officer or controlling person may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus, any amendment or supplement thereto, or any Blue Sky Application
or arise out of or are based upon the omission or the alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged
omission was made in the Registration Statement, such Preliminary Prospectus
or the Prospectus, such amendment or supplement, or any Blue Sky Application
in reliance upon and in conformity with written information furnished to the
Company by you specifically for use in the preparation thereof; and will
reimburse any legal or other expenses reasonably incurred by the Company, the
Operating Partnership or any such director, officer or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action. In addition to your other obligations under this Section
6(b), you agree that, as an interim measure during the pendency of any claim,
action, investigation, inquiry or other proceeding arising out of or based
upon any statement or omission, or any alleged statement or omission,
described in this Section 6(b), you will reimburse the Company and the
Operating Partnership on a monthly basis for all reasonable legal and other
expenses incurred pursuant to Section 6(c) hereof in connection with
investigating or defending any such claim, action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial determination as
to the propriety and enforceability of your obligation to reimburse the
Company and the Operating Partnership for such expenses and the possibility
that such payments might later be held to have been improper by a court of
competent jurisdiction. This indemnity agreement shall be in addition to any
liabilities which you may otherwise have.
(c) Any party which proposes to assert the right to be indemnified under
this Section 6 shall, within ten days after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a
claim is to be made against an indemnifying party under this Section 6, notify
each such indemnifying party of the commencement of such action, suit or
proceeding, enclosing a copy of all papers served, but the omission so to
notify such indemnifying party of any such action, suit or proceeding shall
not relieve such indemnifying party from any liability which it may have to
any indemnified party otherwise than under this Section 6. In case any such
action, suit or proceeding shall be brought against any indemnified party and
it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in, and, to the extent
that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory
to such indemnified party, and after notice from the indemnifying party to
such indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses, other than reasonable costs of investigation, subsequently
incurred by such indemnified party in connection with the defense thereof. The
indemnified party shall have the right to employ its own counsel in any such
action, but the fees and expenses of such counsel shall be at the expense of
such indemnified party (it being understood, however, that in connection with
such action the indemnifying party shall not be liable for the expenses of
more than one separate counsel (in addition to local counsel) in any one
action or separate but substantially similar actions in the same jurisdiction
arising our of the same general allegations or circumstances) unless (i) the
employment of counsel by such indemnified
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party at the expense of the indemnifying party has been authorized by the
indemnifying party, (ii) the indemnified party shall have been advised by such
counsel in a written opinion that there may be a conflict of interest between
the indemnifying party and the indemnified party in the conduct of the
defense, or certain aspects of the defense, of such action (in which case the
indemnifying party shall not have the right to direct the defense of such
action with respect to those matters or aspects of the defense on which a
conflict exists or may exist on behalf of the indemnified party) or (iii) the
indemnifying party shall not in fact have promptly employed counsel to assume
the defense of such action, in any of which events such fees and expenses to
the extent applicable shall be borne by the indemnifying party. An
indemnifying party shall not be liable for any settlement of any action or
claim effected without its consent. Each indemnified party, as a condition of
such indemnity, shall cooperate in good faith with the indemnifying party in
the defense of any such action or claim.
(d) If the indemnification provided for in this Section 6 is for any reason,
other than pursuant to the terms thereof, judicially determined (by the entry
of a final judgment or decree by a court of competent jurisdiction and the
expiration of time to appeal or the denial of the last right to appeal) to be
unavailable to an indemnified party under subsections (a) or (b) above in
respect of any losses, claims, damages or liabilities (or actions in respect
thereof) referred to therein, then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable
by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Operating Partnership and you from the offering of the Shares. If, however,
the allocation provided by the immediately preceding sentence is not permitted
by applicable law, then each indemnifying party shall contribute to such
amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault, as applicable, of the Company and the Operating Partnership and you in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as
other relevant equitable considerations. The relative benefits received by, as
applicable, the Company and the Operating Partnership taken together and you
shall be deemed to be in the same proportion as the total net proceeds from
the offering (before deducting expenses) received by the Company bear to the
total underwriting discounts and commissions received by you equal to the
difference between the last reported sales price per share on the New York
Stock Exchange on the date of this Agreement and the purchase price per share
paid by you pursuant to Section 2 hereof, and as set forth on the cover of the
Prospectus, multiplied by the number of shares of Common Stock purchased by
you pursuant to Section 1 hereof. The relative fault shall be determined by
reference to, among other things, whether the untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Operating Partnership or you and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Company, the Operating
Partnership and you agree that it would not be just and equitable if
contributions pursuant to this subsection (d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above in this subsection (d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to
above in this subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), you shall not be required to contribute any
amount in excess of the underwriting discounts and commissions applicable to
the Shares purchased by you. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
7. Representations and Agreements to Survive Delivery. All representations,
warranties, and agreements of the Company and the Operating Partnership
contained herein or in certificates delivered pursuant hereto, and your
agreements contained in Section 6 hereof, shall remain operative and in full
force and effect regardless of any termination or cancellation of this
Agreement or any investigation made by or on behalf of you or any controlling
person, the Company and the Operating Partnership or any of their officers,
directors or any controlling persons, and shall survive delivery of the Shares
to you hereunder.
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<PAGE>
8. Effective Date and Termination. (a) This Agreement shall become effective
upon execution.
(b) This Agreement may be terminated by you at any time at or prior to the
Closing Date by notice to the Company if any condition specified in Section 5
hereof shall not have been satisfied as of the Closing Date. Any such
termination shall be without liability of any party to any other party except
as provided in Sections 6 and 9 hereof.
If you terminate this Agreement as provided in Sections 8(b), you shall
notify the Company by telephone or telegram, confirmed by letter.
9. Cost and Expenses. The Company will bear and pay the costs and expenses
incident to the registration of the Shares and public offering thereof,
including, without limitation, (a) the fees and expenses of the Company's
accountants and the fees and expenses of counsel for the Company, (b) the
preparation, printing, filing, delivery and shipping of the Registration
Statement, each Preliminary Prospectus, the Prospectus, and any amendments or
supplements thereto (c) the furnishing of copies of such documents to you, (d)
the registration or qualification of the Shares for offering and sale under
the securities laws of the various states, including the reasonable fees and
disbursements of your counsel relating to such registration or qualification,
(e) the fees payable to the NASD (if any) and the Commission in connection
with their review of the proposed offering of the Shares, (f) all printing and
engraving costs related to preparation of the certificates for the Shares,
including transfer agent and registrar fees, (g) all initial transfer taxes,
if any, (h) all fees and expenses relating to the authorization of the Shares
for trading on the New York Stock Exchange, (i) all travel expenses, including
air fare and accommodation expenses, of representatives of the Company in
connection with the offering of the Shares and (j) all of the other costs and
expenses incident to the performance by the Company of the registration and
offering of the Shares; provided, however, that you will bear and pay the fees
and expenses of your counsel (other than fees and disbursements relating to
the registration or qualification of the Shares for offering and sale under
the securities laws of the various states), your out-of-pocket expenses, and
any advertising costs and expenses incurred by you incident to the public
offering of the Shares.
If this Agreement is terminated by you in accordance with the provisions of
Section 8(c), the Company shall reimburse you for all of your out-of-pocket
expenses, including the reasonable fees and disbursements of your counsel.
10. Notices. All notices or communications hereunder, except as herein
otherwise specifically provided, shall be in writing and if sent to you shall
be mailed, delivered, sent by facsimile transmission, or telegraphed and
confirmed to Everen Securities, Inc. at 77 West Wacker Drive, Chicago, Illinois
60601, Attention: Jon K. Haahr, facsimile number (312) 574-8920, or if sent to
the Company shall be mailed, delivered, sent by facsimile transmission, or
telegraphed and confirmed to the Company at 2250 E. Imperial Highway, El
Segundo, California 90245, Attention: Chief Financial Officer, facsimile number
(310) 322-5981.
11. Parties. This Agreement shall inure to the benefit of and be binding
upon you and the Company and the Operating Partnership and each of your and
their respective successors and assigns. Nothing expressed or mentioned in
this Agreement is intended or shall be construed to give any person,
corporation or other entity, other than the parties hereto and their
respective successors and assigns and the controlling persons, officers and
directors referred to in Section 6, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision herein contained;
this Agreement and all conditions and provisions hereof being intended to be
and being for the sole and exclusive benefit of the parties hereto and their
respective successors and assigns and said controlling persons and said
officers and directors, and for the benefit of no other person, corporation or
other entity. No purchaser of any of the Shares from you shall be construed a
successor or assign by reason merely of such purchase.
12. Counterparts. This Agreement may be executed by any one or more of the
parties hereto in any number of counterparts, each of which shall be deemed to
be an original, but all such counterparts shall together constitute one and
the same instrument.
-14-
<PAGE>
13. Pronouns. Whenever a pronoun of any gender or number is used herein, it
shall, where appropriate, be deemed to include any other gender and number.
14. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of New York.
If the foregoing is in accordance with your understanding, please so
indicate in the space provided below for that purpose, whereupon this letter
shall constitute a binding agreement between the Company, the Operating
Partnership and you.
KILROY REALTY CORPORATION
By: /s/ Tyler H. Rose
_________________________________
Tyler H. Rose
Senior Vice President and
Treasurer
KILROY REALTY, L.P.
By: Kilroy Realty Corporation, as
General Partner
By: /s/ Tyler H. Rose
_________________________________
Tyler H. Rose
Senior Vice President and
Treasurer
Accepted in Chicago,
Illinois as of the date
first above written.
Everen Securities, Inc.
By: /s/ Jon K. Haahr
________________________________
Jon K. Haahr
Managing Director
-15-
<PAGE>
____________________________________________________________________________
____________________________________________________________________________
REVOLVING CREDIT AGREEMENT
dated as of February 24, 1998
among
KILROY REALTY, L.P.
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Bank and as Lead Agent for the Banks,
BANK OF MONTREAL, as Bank and as Co-Agent,
COMMERZBANK AKTIENGESELLSCHAFT, LOS ANGELES BRANCH, as Bank and as Co-Agent,
DRESDNER BANK AG, NEW YORK BRANCH and GRAND CAYMAN BRANCH,
as Bank and as Co-Agent
PNC BANK, NATIONAL ASSOCIATION, as Bank and as Co-Agent,
UNION BANK OF CALIFORNIA, as Bank and as Co-Agent
and
THE BANKS LISTED HEREIN
____________________________________________________________________________
____________________________________________________________________________
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
DEFINITIONS......................... 1
Section 1.1. Definitions............................. 1
Section 1.2. Accounting Terms and Determinations..... 27
Section 1.3. Types of Borrowings..................... 27
ARTICLE II
THE CREDITS......................... 28
Section 2.1. Commitments to Lend..................... 28
Section 2.2. Notice of Committed Borrowing........... 29
Section 2.3. Money Market Borrowings................. 31
Section 2.4. Notice to Banks; Funding of Loans....... 36
Section 2.5. Notes................................... 38
Section 2.6. Maturity of Loans....................... 39
Section 2.7. Interest Rates.......................... 39
Section 2.8. Fees.................................... 41
Section 2.9. Mandatory Termination................... 43
Section 2.10. Mandatory Prepayment.................... 44
Section 2.11. Optional Prepayments.................... 45
Section 2.12. General Provisions as to Payments....... 47
Section 2.13. Funding Losses.......................... 48
Section 2.14. Computation of Interest and Fees........ 48
Section 2.15. Method of Electing Interest Rates....... 49
Section 2.16. Letters of Credit....................... 50
Section 2.17. Letter of Credit Usage Absolute......... 54
ARTICLE III
CONDITIONS....................... 55
Section 3.1. Closing................................. 55
Section 3.2. Borrowings.............................. 58
Section 3.3. New Acquisitions and Additional
Real Property Assets................... 59
ARTICLE IV
REPRESENTATIONS AND WARRANTIES.............. 60
Section 4.1. Existence and Power..................... 60
Section 4.2. Power and Authority..................... 61
Section 4.3. No Violation............................ 61
Section 4.4. Financial Information................... 62
Section 4.5. Litigation.............................. 62
Section 4.6. Compliance with ERISA................... 62
Section 4.7. Environmental Compliance................ 63
Section 4.8. Taxes................................... 65
Section 4.9. Full Disclosure......................... 65
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
Section 4.10. Solvency............................... 65
Section 4.11. Use of Proceeds; Margin Regulations.... 66
Section 4.12. Governmental Approvals................. 66
Section 4.13. Investment Company Act; Public
Utility Holding Company Act........... 66
Section 4.14. Closing Date Transactions.............. 66
Section 4.15. Representations and Warranties
in Loan Documents..................... 67
Section 4.16. Patents, Trademarks, etc............... 67
Section 4.17. No Default............................. 67
Section 4.18. Licenses, etc.......................... 67
Section 4.19. Compliance With Law.................... 67
Section 4.20. No Burdensome Restrictions............. 68
Section 4.21. Brokers' Fees.......................... 68
Section 4.22. Labor Matters.......................... 68
Section 4.23. Organizational Documents............... 68
Section 4.24. Principal Offices...................... 68
Section 4.25. REIT Status............................ 69
Section 4.26. Ownership of Property.................. 69
Section 4.27. Insurance.............................. 69
ARTICLE V
AFFIRMATIVE AND NEGATIVE COVENANTS............ 69
Section 5.1. Information............................ 69
Section 5.2. Payment of Obligations................. 73
Section 5.3. Maintenance of Property; Insurance..... 73
Section 5.4. Conduct of Business.................... 74
Section 5.5. Compliance with Laws................... 74
Section 5.6. Inspection of Property, Books and
Records............................... 74
Section 5.7. Existence.............................. 74
Section 5.8. Financial Covenants.................... 75
Section 5.9. Restriction on Fundamental Changes;
Operation and Control................. 76
Section 5.10. Changes in Business.................... 77
Section 5.11. Sale of Unencumbered Asset Pool
Properties............................ 77
Section 5.12. Fiscal Year; Fiscal Quarter............ 77
Section 5.13. Margin Stock........................... 78
Section 5.14. Development Activities................. 78
Section 5.15. Interest Rate Protection............... 78
Section 5.16. Joint Ventures......................... 78
Section 5.17. Investments in Unimproved Real
Property.............................. 79
Section 5.18. Use of Proceeds........................ 79
Section 5.19. Borrower Status........................ 79
Section 5.20. Restriction on Material Lease
Modifications......................... 79
Section 5.21. Certain Requirements for the
Unencumbered Asset Pool............... 79
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
ARTICLE VI
DEFAULTS.......................... 80
Section 6.1. Events of Default....................... 80
Section 6.2. Rights and Remedies..................... 83
Section 6.3. Notice of Default....................... 85
Section 6.4. Actions in Respect of Letters
of Credit.............................. 85
ARTICLE VII
THE LEAD AGENT...................... 88
Section 7.1. Appointment and Authorization........... 88
Section 7.2. Lead Agent and Affiliates............... 88
Section 7.3. Action by Lead Agent.................... 88
Section 7.4. Consultation with Experts............... 88
Section 7.5. Liability of Lead Agent................. 89
Section 7.6. Indemnification......................... 89
Section 7.7. Credit Decision......................... 89
Section 7.8. Successor Lead Agent.................... 90
Section 7.9. Lead Agent's Fee........................ 90
Section 7.10. Copies of Notices....................... 90
ARTICLE VIII
CHANGE IN CIRCUMSTANCES.................. 91
Section 8.1. Basis for Determining Interest Rate
Inadequate or Unfair................... 91
Section 8.2. Illegality.............................. 92
Section 8.3. Increased Cost and Reduced Return....... 93
Section 8.4. Taxes................................... 94
Section 8.5. Base Rate Loans Substituted for
Affected Euro-Dollar Loans............. 97
ARTICLE IX
MISCELLANEOUS........................ 98
Section 9.1. Notices................................. 98
Section 9.2. No Waivers.............................. 98
Section 9.3. Expenses; Indemnification............... 99
Section 9.4. Sharing of Set-Offs..................... 100
Section 9.5. Amendments and Waivers.................. 101
Section 9.6. Successors and Assigns.................. 102
Section 9.7. Governing Law; Submission to
Jurisdiction........................... 106
Section 9.8. Marshaling; Recapture................... 106
Section 9.9. Counterparts; Integration;
Effectiveness.......................... 107
Section 9.10. WAIVER OF JURY TRIAL.................... 107
Section 9.11. Survival................................ 107
Section 9.12. Domicile of Loans....................... 107
Section 9.13. Limitation of Liability................. 107
</TABLE>
iii
<PAGE>
<TABLE>
<S> <C>
Section 9.14. No Bankruptcy Proceedings................ 108
Exhibit A - Form of Note
Exhibit B - Unencumbered Asset Pool Properties
(Fee Interests)
Exhibit C - Unencumbered Asset Pool Properties
(Leasehold Interests)
Exhibit D - Assignment and Assumption Agreement
Exhibit E - Form of Money Market Quote Request
Exhibit F - Form of Invitation for Money Market
Quotes
Exhibit G - Form of Money Market Quote
Exhibit H - Form of Designation Agreement
Schedule 4.22- Labor Matters
</TABLE>
iv
<PAGE>
REVOLVING CREDIT AGREEMENT
REVOLVING CREDIT AGREEMENT dated as of February 24, 1998, among KILROY
REALTY, L.P. (the "Borrower"), MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
--------
Bank and as Lead Agent for the Banks and the BANKS listed on the signature pages
hereof (the "Banks").
-----
W I T N E S S E T H:
- - - - - - - - - -
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. The following terms, as used herein, have
-----------
the following meanings:
"Absolute Rate Auction" means a solicitation of Money Market Quotes
---------------------
setting forth Money Market Absolute Rates pursuant to Section 2.3.
"Adjusted London Interbank Offered Rate" has the meaning set forth in
--------------------------------------
Section 2.7(b).
"Adjustment Date" shall mean the date that the Borrower receives an
---------------
Investment Grade Rating for its unsecured senior long term indebtedness from at
least two (2) Rating Agencies, at least one (1) of which shall be either S&P or
Moody's.
"Administrative Questionnaire" means, with respect to each Bank, an
----------------------------
administrative questionnaire in the form prepared by the Lead Agent and
submitted to the Lead Agent (with a copy to the Borrower) duly completed by such
Bank.
"Agreement" means this Revolving Credit Agreement as the same may from
---------
time to time hereafter be modified, supplemented or amended.
<PAGE>
"Annual EBITDA" means, measured as of the last day of each calendar
-------------
quarter, an amount derived from (i) total revenues relating to all Real Property
Assets of the Borrower, the General Partner and their Consolidated Subsidiaries
or to the Borrower's or the General Partner's interest in Minority Holdings for
the previous four consecutive calendar quarters including the quarter then
ended, on an accrual basis with adjustments for the straight-lining of rents,
plus (ii) interest and other income of the Borrower, the General Partner and
- ----
their Consolidated Subsidiaries, including, without limitation, real estate
service revenues, for such period, less (iii) total operating expenses and other
----
expenses relating to such Real Property Assets and to the Borrower's and the
General Partner's interest in Minority Holdings for such period (other than
interest, taxes, depreciation, amortization, and other non-cash items), less
----
(iv) total corporate operating expenses (including general overhead expenses)
and other expenses of the Borrower, the General Partner, their Consolidated
Subsidiaries and the Borrower's and the General Partner's interest in Minority
Holdings (other than interest, taxes, depreciation, amortization and other non-
cash items), for such period.
"Applicable Interest Rate" means the lesser of (x) the rate at which
------------------------
the interest rate applicable to any floating rate Debt could be fixed, at the
time of calculation, by the Borrower entering into an unsecured interest rate
swap agreement (or, if such rate is incapable of being fixed by entering into an
unsecured interest rate swap agreement at the time of calculation, a reasonably
determined fixed rate equivalent), and (y) the rate at which the interest rate
applicable to such floating rate Debt is actually capped, at the time of
calculation, if the Borrower has entered into an interest rate cap agreement
with respect thereto or if the documentation for such Debt contains a cap.
"Applicable Lending Office" means, with respect to any Bank, (i) in
-------------------------
the case of its Base Rate Loans, its Domestic Lending Office, (ii) in the case
of its Euro-Dollar Loans, its Euro-Dollar Lending Office, and (iii) in the case
of its Money Market Loans, its Money Market Lending Office.
"Applicable Margin" means, prior to the Adjustment Date, with respect
-----------------
to each Euro-Dollar Loan, the
2
<PAGE>
respective percentages per annum determined, at any time, based on the range
into which the Total Debt Ratio then falls, in accordance with the table set
forth below:
<TABLE>
<CAPTION>
Total Debt Ratio Applicable Margin for
Euro-Dollar Loans (% per annum)
- --------------------------------------------------------------
<S> <C>
less than 25% 1.00%
equal to or greater than 25% 1.125%
but less than 35%
equal to or greater than 35% 1.25%
but less than 50%
- --------------------------------------------------------------
</TABLE>
From and after the Adjustment Date, the Applicable Margin with respect to each
Euro-Dollar Loan shall mean the respective percentages per annum determined, at
any time, based on the range into which the Borrower's Credit Rating (if any)
then falls, in accordance with the table set forth below. Any change in the
Borrower's Credit Rating shall be effective immediately as of the date on which
any of the Rating Agencies announces a change in the Borrower's Credit Rating or
the date on which the Borrower (or, as applicable, the General Partner) has no
credit rating, whichever is applicable. In the event that the Borrower (or, as
applicable, the General Partner) receives two (2) credit ratings that are not
equivalent, the Applicable Margin shall be determined by the lower of such two
(2) credit ratings. In the event that Borrower (or, as applicable, the General
Partner) receives more than two (2) credit ratings and such credit ratings are
not equivalent, the Applicable Margin shall be determined by the lower of the
two (2) highest ratings, provided that each of said two (2) highest ratings
shall be Investment Grade Ratings and at least one of which shall be an
Investment Grade Rating from S&P or Moody's.
3
<PAGE>
<TABLE>
<CAPTION>
Borrower's Credit Rating Applicable Margin for
(S&P/Moody's Ratings) Euro-Dollar Loans (% per annum)
<S> <C>
BBB+/Baa1 0.65%
BBB/Baa2 (or better) 0.75%
BBB-/Baa3 0.90%
Less than Investment Grade 1.125%
Rating or no rating
- ---------------------------------------------------------------
</TABLE>
"Assignee" has the meaning set forth in Section 9.6(c).
--------
"Bank" means each bank listed on the signature pages hereof, each Assignee
----
which becomes a Bank pursuant to Section 9.6(c), and their respective successors
and each Designated Lender; provided, however, that the term "Bank" shall
----
exclude each Designated Lender when used in reference to a Committed Loan, the
Commitments or terms relating to the Committed Loans and the Commitments and
shall further exclude each Designated Lender for all other purposes hereunder
except that any Designated Lender which funds a Money Market Loan shall, subject
to Section 9.6(d), have the rights (including the rights given to a Bank
contained in Section 9.3 and otherwise in Article 9) and obligations of a Bank
associated with holding such Money Market Loan.
"Bankruptcy Code" means Title 11 of the United States Code, entitled
---------------
"Bankruptcy", as amended from time to time, and any successor statute or
statutes.
"Base Rate" means, for any day, a rate per annum equal to the higher of (i)
---------
the Prime Rate for such day and (ii) the sum of the Federal Funds Rate plus
.50%.
"Base Rate Borrowing" means a Borrowing comprised of Base Rate Loans.
-------------------
"Base Rate Loan" means a Committed Loan to be made by a Bank as a Base Rate
--------------
Loan in accordance with the applicable Notice of Borrowing or pursuant to
Article VIII.
4
<PAGE>
"Benefit Arrangement" means at any time an employee benefit plan within the
-------------------
meaning of Section 3(3) of ERISA which is not a Plan or a Multiemployer Plan and
which is maintained or otherwise contributed to by any member of the ERISA
Group.
"Borrower" means Kilroy Realty, L.P. and its successors.
--------
"Borrower's Credit Rating" means the rating assigned by the Rating Agencies
------------------------
to the General Partner's or the Borrower's senior unsecured long term
indebtedness.
"Borrowing" has the meaning set forth in Section 1.3.
---------
"Capital Expenditures" means, for any period, the sum of all expenditures
--------------------
(whether paid in cash or accrued as a liability) by the Borrower which are
capitalized on the consolidated balance sheet of the Borrower in conformity with
GAAP, but less (i) all expenditures made with respect to the acquisition by the
Borrower and its Consolidated Subsidiaries of any interest in real property
within nine months after the date such interest in real property is acquired and
(ii) capital expenditures made from the proceeds of insurance or condemnation
awards (or payments in lieu thereof) or indemnity payments received during such
period by Borrower or any of its Consolidated Subsidiaries from third parties.
"Cash or Cash Equivalents" means (i) cash, (ii) direct obligations of the
------------------------
United States Government, including, without limitation, treasury bills, notes
and bonds, (iii) interest bearing or discounted obligations of Federal agencies
and Government sponsored entities or pools of such instruments offered by banks
rated AA or better by S&P or Aa2 by Moody's and dealers, including, without
limitation, Federal Home Loan Mortgage Corporation participation sale
certificates, Government National Mortgage Association modified pass-through
certificates, Federal National Mortgage Association bonds and notes, Federal
Farm Credit System securities, (iv) time deposits, domestic and Eurodollar
certificates of deposit, bankers acceptances, commercial paper rated at least A-
1 by S&P and P-1 by Moody's, and/or guaranteed by an Aa rating by Moody's, an AA
rating by S&P, or better rated
5
<PAGE>
credit, floating rate notes, other money market instruments and letters of
credit each issued by banks which have a long-term debt rating of at least AA by
S&P or Aa2 by Moody's, (v) obligations of domestic corporations, including,
without limitation, commercial paper, bonds, debentures, and loan
participations, each of which is rated at least AA by S&P, and/or Aa2 by
Moody's, and/or unconditionally guaranteed by an AA rating by S&P, an Aa2 rating
by Moody's, or better rated credit, (vi) obligations issued by states and local
governments or their agencies, rated at least MIG-1 by Moody's and/or SP-1 by
S&P and/or guaranteed by an irrevocable letter of credit of a bank with a long-
term debt rating of at least AA by S&P or Aa2 by Moody's, (vii) repurchase
agreements with major banks and primary government securities dealers fully
secured by U.S. Government or agency collateral equal to or exceeding the
principal amount on a daily basis and held in safekeeping, (viii) real estate
loan pool participations, guaranteed by an entity with an AA rating given by S&P
or an Aa2 rating given by Moody's, or better rated credit, and (ix) shares of
any mutual fund that has its assets primarily invested in the types of
investments referred to in clauses (i) through (v).
"Closing Date" means the date on which the Lead Agent shall have received
------------
the documents specified in or pursuant to Section 3.1.
"Commitment" means, with respect to each Bank, the amount committed by such
----------
Bank pursuant to this Agreement with respect to any Loans, as such amount may be
reduced from time to time pursuant to Sections 2.9 and 2.10.
"Committed Loan" means a Loan made by a Bank pursuant to Section 2.1;
--------------
provided that, if any such Loan or loans (or portions thereof) are combined or
- --------
subdivided pursuant to a Notice of Interest Rate Election, the term "Committed
Loan" shall refer to the combined principal amount resulting from such
combination or to each of the separate principal amounts resulting from such
subdivision, as the case may be.
"Consolidated Subsidiary" means at any date any Subsidiary or other entity
-----------------------
which is consolidated with the Borrower in accordance with GAAP.
"Consolidated Tangible Net Worth" means at any date the consolidated
-------------------------------
stockholders' equity of the Borrower (determined on a book basis), less its
consolidated Intangible Assets, all determined as of such date. For purposes of
this definition "Intangible Assets" means with respect to any such intangible
-----------------
assets, the amount
6
<PAGE>
(to the extent reflected in determining such consolidated stockholders' equity)
of (i) all write-ups subsequent to December 31, 1997 in the book value of any
asset owned by the Borrower or a Consolidated Subsidiary and (ii) goodwill,
patents, trademarks, service marks, trade names, anticipated future benefit of
tax loss carry forwards, copyrights, organization or developmental expenses and
other intangible assets.
"Contingent Obligation" as to any Person means, without duplication, (i)
---------------------
any contingent obligation of such Person required to be shown on such Person's
balance sheet in accordance with GAAP, and (ii) any obligation required to be
disclosed in the footnotes to such Person's financial statements, guaranteeing
partially or in whole any non-recourse Debt, lease, dividend or other
obligation, exclusive of contractual indemnities (including, without limitation,
any indemnity or price-adjustment provision relating to the purchase or sale of
securities or other assets) and guarantees of non-monetary obligations (other
than guarantees of completion) which have not yet been called on or quantified,
of such Person or of any other Person. The amount of any Contingent Obligation
described in clause (ii) shall be deemed to be (a) with respect to a guaranty of
interest or interest and principal, or operating income guaranty, the sum of all
payments required to be made thereunder (which in the case of an operating
income guaranty shall be deemed to be equal to the debt service for the note
secured thereby), calculated at the Applicable Interest Rate, through (i) in the
case of an interest or interest and principal guaranty, the stated date of
maturity of the obligation (and commencing on the date interest could first be
payable thereunder), or (ii) in the case of an operating income guaranty, the
date through which such guaranty will remain in effect, and (b) with respect to
all guarantees not covered by the preceding clause (a), an amount equal to the
stated or determinable amount of the primary obligation in respect of which such
guaranty is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such Person is required to
perform thereunder) as recorded on the balance sheet and on the footnotes to the
most recent financial statements of the Borrower required to be delivered
pursuant to Section 4.4 hereof. Notwithstanding anything contained herein to
the contrary, guarantees of completion shall not be deemed to be
7
<PAGE>
Contingent Obligations unless and until a claim for payment or performance has
been made thereunder, at which time any such guaranty of completion shall be
deemed to be a Contingent Obligation in an amount equal to any such claim.
Subject to the preceding sentence, (i) in the case of a joint and several
guaranty given by such Person and another Person (but only to the extent such
guaranty is recourse, directly or indirectly to the Borrower), the amount of the
guaranty shall be deemed to be 100% thereof unless and only to the extent that
such other Person has delivered Cash or Cash Equivalents to secure all or any
part of such Person's guaranteed obligations, (ii) in the case of joint and
several guarantees given by a Person in whom the Borrower owns an interest
(which guarantees are non-recourse to the Borrower), to the extent the
guarantees, in the aggregate, exceed 15% of total real estate investments, the
amount in excess of 15% shall be deemed to be a Contingent Obligation of the
Borrower, and (iii) in the case of a guaranty (whether or not joint and several)
of an obligation otherwise constituting Debt of such Person, the amount of such
guaranty shall be deemed to be only that amount in excess of the amount of the
obligation constituting Debt of such Person. Notwithstanding anything contained
herein to the contrary, "Contingent Obligations" shall not be deemed to include
guarantees of Unused Commitments or of construction loans to the extent the same
have not been drawn.
"Debt" of any Person (including Minority Holdings) means, without
----
duplication, (A) as shown on such Person's consolidated balance sheet (i) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property and, (ii) all indebtedness of such Person evidenced by a note,
bond, debenture or similar instrument (whether or not disbursed in full in the
case of a construction loan), (B) the face amount of all letters of credit
issued for the account of such Person and, without duplication, all unreimbursed
amounts drawn thereunder, (C) all Contingent Obligations of such Person, (D) all
payment obligations of such Person under any interest rate protection agreement
(including, without limitation, any interest rate swaps, caps, floors, collars
and similar agreements) and currency swaps and similar agreements which were not
entered into specifically in connection with Debt set forth in clauses (A), (B)
or (C) hereof. For purposes of this Agreement, Debt (other than Contingent
Obligations) of the Borrower shall
8
<PAGE>
be deemed to include only the Borrower's pro rata share (such share being based
upon the Borrower's percentage ownership interest as shown on the Borrower's
annual audited financial statements) of the Debt of any Person in which the
applicable Borrower, directly or indirectly, owns an interest, provided that
such Debt is nonrecourse, both directly and indirectly, to the applicable
Borrower.
"Default" means any condition or event which constitutes an Event of
-------
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Designated Lender" means a special purpose corporation that (i) shall have
-----------------
become a party to this Agreement pursuant to Section 9.6(d), and (ii) is not
otherwise a Bank.
"Designated Lender Notes" means promissory notes of the Borrower,
-----------------------
substantially in the form of Exhibit A-1 hereto, evidencing the obligation of
the Borrower to repay Money Market Loans made by Designated Lenders, and
"Designated Lender Note" means any one of such promissory notes issued under
Section 9.6(d) hereof.
"Designating Lender" shall have the meaning set forth in Section 9.6(d)
------------------
hereof.
"Designation Agreement" means a designation agreement in substantially the
---------------------
form of Exhibit H attached hereto, entered into by a Bank and a Designated
Lender and accepted by the Lead Agent.
"Domestic Business Day" means any day except a Saturday, Sunday or other
---------------------
day on which commercial banks in New York City and Los Angeles are authorized by
law to close.
"Domestic Lending Office" means, as to each Bank, its office located within
-----------------------
the United States at its address set forth in its Administrative Questionnaire
(or identified in its Administrative Questionnaire as its Domestic Lending
Office) or such other office within the United States as such Bank may hereafter
designate as its Domestic Lending Office by notice to the Borrower and the Lead
Agent; provided that no Bank shall be permitted to change its Domestic Lending
Office if as a result of such
9
<PAGE>
change either (i) pursuant to the provisions of Section 8.1 or Section 8.2,
Borrower would be unable to maintain any Loans as Euro-Dollar Loans; or (ii)
Borrower would be required to make any payment to such Bank pursuant to the
provisions of Section 8.3 or Section 8.4.
"Due Diligence Package" has the meaning provided in Section 3.3.
---------------------
"Duff & Phelps" means Duff & Phelps Credit Rating Co. or any successor
-------------
thereto.
"Environmental Affiliate" means any partnership, or joint venture, trust or
-----------------------
corporation in which an equity interest is owned by the Borrower, either
directly or indirectly.
"Environmental Approvals" means any permit, license, approval, ruling,
-----------------------
variance, exemption or other authorization required under applicable
Environmental Laws.
"Environmental Claim" means, with respect to any Person, any notice, claim,
-------------------
demand or similar communication (written or oral) by any other Person alleging
potential liability for investigatory costs, cleanup costs, governmental
response costs, natural resources damage, property damage, personal injuries,
fines or penalties arising out of, based on or resulting from (i) the presence,
or release into the environment, of any Material of Environmental Concern at any
location, whether or not owned by such Person or (ii) circumstances forming the
basis of any violation, or alleged violation, of any Environmental Law, in each
case as to which could reasonably be expected to have a Material Adverse Effect.
"Environmental Laws" means any and all federal, state, local and foreign
------------------
statutes, laws, judicial decisions, regulations, ordinances, rules, judgments,
orders, decrees, plans, injunctions, permits, concessions, grants, franchises,
licenses, agreements and other governmental restrictions relating to the
environment, the effect of the environment on human health or to emissions,
discharges or releases of pollutants, contaminants, Material of Environmental
Concern or hazardous wastes into the environment including, without limitation,
ambient air, surface water, ground water, or land,
10
<PAGE>
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants, contaminants,
Material of Environmental Concern or hazardous wastes or the clean-up or other
remediation thereof.
"Environmental Report" has the meaning set forth in Section 4.7.
--------------------
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended, or any successor statute.
"ERISA Group" means the Borrower, any Subsidiary and all members of a
-----------
controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Borrower or any
Subsidiary, are treated as a single employer under Section 414 of the Internal
Revenue Code.
"Euro-Dollar Borrowing" has the meaning set forth in Section 1.3.
---------------------
"Euro-Dollar Business Day" means any Domestic Business Day on which
------------------------
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Bank, its office, branch or
--------------------------
affiliate located at its address set forth in its Administrative Questionnaire
(or identified in its Administrative Questionnaire as its Euro-Dollar Lending
Office) or such other office, branch or affiliate of such Bank as it may
hereafter designate as its Euro-Dollar Lending Office by notice to the Borrower
and the Lead Agent; provided that no Bank shall be permitted to change its Euro-
Dollar Lending Office if as a result of such change either (i) pursuant to the
provisions of Section 8.1 or Section 8.2, Borrower would be unable to maintain
any Loans as Euro-Dollar Loans; or (ii) Borrower would be required make any
payment to such Bank pursuant to the provisions of Sections 8.3 or Section 8.4.
"Euro-Dollar Loan" means a Committed Loan to be made by a Bank as a Euro-
----------------
Dollar Loan in accordance with
11
<PAGE>
the applicable Notice of Committed Borrowing or Notice of Interest Rate
Election.
"Euro-Dollar Reserve Percentage" has the meaning set forth in Section
------------------------------
2.7(b).
"Event of Default" has the meaning set forth in Section 6.1.
----------------
"Federal Funds Rate" means, for any day, the rate per annum (rounded
------------------
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Domestic Business Day
next succeeding such day; provided that (i) if such day is not a Domestic
--------
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Domestic Business Day as so published on the
next succeeding Domestic Business Day, and (ii) if no such rate is so published
on such next succeeding Domestic Business Day, the Federal Funds Rate for such
day shall be the average rate quoted to Morgan on such day on such transactions
as determined by the Lead Agent.
"Federal Reserve Board" means the Board of Governors of the Federal Reserve
---------------------
System as constituted from time to time.
"Financeable Ground Lease" means either (x) a ground lease reasonably
------------------------
satifactory to the Required Banks, or (y) a ground lease which provides (i) for
a remaining term of not less than 25 years (including options and renewals) from
the date that such Real Property Asset shall become an Unencumbered Asset Pool
Property, (ii) that the ground lease will not be terminated until any leasehold
mortgagee shall have received notice of a default and has had a reasonable
opportunity to cure the same or complete foreclosure, and has failed to do so,
(iii) for a new lease on substantially the same terms to any leasehold mortgagee
recognized under such ground lease as tenant if the ground lease is terminated
for any reason, (iv) for non-merger of the fee and leasehold estates, and (v)
transferability of the tenant's interest under the ground lease, subject only to
the landlord's reasonable approval. Notwithstanding the foregoing, it is
12
<PAGE>
hereby agreed that the ground lease with respect to the Real Property Asset
commonly known as "Kilroy Airport Center, Long Beach, California", shall be
deemed to be a "Financeable Ground Lease".
"FFO" means "funds from operations," defined to mean net income (or loss)
---
(computed in accordance with GAAP), excluding gains (or losses) from debt
restructurings and sales of properties, plus depreciation and amortization,
after adjustments for Minority Holdings. Adjustments for Minority Holdings will
be calculated to reflect FFO on the same basis as above.
"Fitch" means Fitch Investors Services, L.P. or any successor thereto.
-----
"FMV Cap Rate" means 9%.
------------
"Fronting Bank" shall mean Morgan or such other Bank which Borrower is
-------------
notified by the Lead Agent may be a Fronting Bank and which is designated by
Borrower in its Notice of Borrowing as the Bank which shall issue a Letter of
Credit with respect to such Notice of Borrowing.
"GAAP" means generally accepted accounting principles recognized as such in
----
the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, which are applicable to the circumstances as of the
date of determination.
"General Partner" means Kilroy Realty Corporation, a Maryland corporation.
---------------
"Governmental Authority" means any Federal, state or local government or
----------------------
any other political subdivision thereof or agency exercising executive,
legislative, judicial, regulatory or administrative functions having
jurisdiction over the Borrower or any Mortgaged Property.
"Group of Loans" means, at any time, a group of Loans consisting of (i) all
--------------
Committed Loans which are Base Rate Loans at such time, or (ii) all Committed
Loans which are Euro-Dollar Loans having the same Interest Period at such time;
provided that, if a Loan of any particular Bank is converted to or made as a
- --------
Base Rate
13
<PAGE>
Loan pursuant to Section 8.2 or 8.4, such Loan shall be included in the same
Group or Groups of Loans from time to time as it would have been in if it had
not been so converted or made.
"Guaranty" means the Guaranty of Payment, dated as of even date herewith,
--------
made by the General Partner.
"Indemnitee" has the meaning set forth in Section 9.3(b).
----------
"Interest Period" means: (i) with respect to each Euro-Dollar Borrowing,
---------------
the period commencing on the date of such Committed Borrowing or of any Notice
of Interest Election with respect to such Committed Borrowing and ending one,
two, three or six months thereafter, as the Borrower may elect in the applicable
Notice of Committed Borrowing or Notice of Interest Election; provided that:
--------
(a) any Interest Period which would otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case such Interest Period shall end on the
next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Euro-Dollar Business Day of a
calendar month.
(ii) with respect to each Base Rate Borrowing, the period commencing on
the date of such Committed Borrowing or Notice of Interest Rate Election and
ending 30 days thereafter; provided that any Interest Period which would
--------
otherwise end on a day which is not a Euro-Dollar Business Day shall be extended
to the next succeeding Euro-Dollar Business Day.
(iii) with respect to each Money Market LIBOR Loan, the period commencing
on the date of borrowing specified in the applicable Notice of Borrowing and
ending 1, 2, 3 or 6 months thereafter, as the Borrower
14
<PAGE>
may elect in the applicable Notice of Money Market Borrowing in accordance with
Section 2.3; provided that:
--------
(a) any Interest Period which would otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day falls in
another calendar month, in which case such Interest Period shall end on the
next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall, subject to clause (c) below, end on the last Euro-Dollar Business
Day of a calendar month;
(c) if any Interest Period includes a date on which a payment of
principal of Loans is required to be made under Section 2.10 but does not
end on such date, then (i) the principal amount (if any) of each Money
Market LIBOR Loan required to be repaid on such date and (ii) the remainder
(if any) of each such Money Market LIBOR Loan shall have an Interest Period
determined as set forth above; and
(d) any Interest Period which would otherwise end after the Maturity
Date shall end on the Maturity Date.
(iv) with respect to each Money Market Absolute Rate Loan, the period
commencing on the date of borrowing specified in the applicable Notice of
Borrowing and ending such number of days thereafter (but not less than 14 days)
as the Borrower may elect in accordance with Section 2.3; provided that:
--------
(a) any Interest Period which would otherwise end on a day which is
not a Euro-Dollar Business Day shall be extended to the next succeeding
Euro-Dollar Business Day; and
(b) if any Interest Period includes a date on which a payment of
principal of Loans is required to be made under Section 2.10 but does not
15
<PAGE>
end on such date, then (i) the principal amount (if any) of each Money
Market Absolute Rate Loan required to be repaid on such date and (ii) the
remainder (if any) of each such Money Market Absolute Rate Loan shall have
an Interest Period determined as set forth above; and
(c) any Interest Period which would otherwise end after the Maturity
Date shall end on the Maturity Date.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
---------------------
amended, or any successor statute.
"Investment Grade Rating" means a rating for a Person's senior long-term
-----------------------
unsecured debt, or if no such rating has been issued, a "shadow" rating, of BBB-
or better from S&P, and a rating or "shadow" rating of Baa3 or better from
Moody's or a rating or "shadow" rating equivalent to the foregoing from either
Duff & Phelps or Fitch. Any such "shadow" rating shall be evidenced by a letter
from the applicable Rating Agency or by such other evidence as may be reasonably
acceptable to the Lead Agent (as to any such other evidence, the Lead Agent
shall present the same to, and discuss the same with, the Banks).
"Lead Agent" means Morgan Guaranty Trust Company of New York in its
----------
capacity as Lead Agent for the Banks hereunder, and its successors in such
capacity.
"Letter(s) of Credit" has the meaning provided in Section 2.2(b).
-------------------
"Letter of Credit Collateral" has the meaning provided in Section 6.4.
---------------------------
"Letter of Credit Collateral Account" has the meaning provided in Section
-----------------------------------
6.4.
"Letter of Credit Documents" has the meaning provided in Section 2.17.
--------------------------
"Letter of Credit Usage" means at any time the sum of (i) the aggregate
----------------------
maximum amount available to be drawn under the Letters of Credit then
outstanding,
16
<PAGE>
assuming compliance with all requirements for drawing referred to therein, and
(ii) the aggregate amount of the Borrower's unpaid obligations under this
Agreement in respect of the Letters of Credit.
"LIBOR Auction" means a solicitation of Money Market Quotes setting forth
-------------
Money Market Margins based on the London Interbank Offered Rate pursuant to
Section 2.3.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
----
charge, security interest or encumbrance of any kind, or any other type of
preferential arrangement that has the practical effect of creating a security
interest, in respect of such asset. For the purposes of this Agreement, each of
the Borrower and any Subsidiary shall be deemed to own subject to a Lien any
asset which it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease or other title
retention agreement relating to such asset.
"Loan" means a Base Rate Loan, a Euro-Dollar Loan or a Money Market Loan
----
and "Loans" means Base Rate Loans, Euro-Dollar Loans or Money Market Loans or
-----
any combination of the foregoing.
"Loan Amount" has the meaning set forth in Section 2.1(a).
-----------
"Loan Documents" means this Agreement, the Notes, the Guaranty, the
--------------
Letter(s) of Credit, the Letter of Credit Documents and any related documents.
"London Interbank Offered Rate" has the meaning set forth in Section
-----------------------------
2.8(b).
"Margin Stock" shall have the meaning provided such term in Regulation U
------------
and Regulation G of the Federal Reserve Board.
"Material Adverse Effect" means a material adverse effect upon (i) the
-----------------------
business, operations, properties or assets of the Borrower or (ii) the ability
of the Borrower to perform its obligations hereunder in all material respects,
including to pay interest and principal.
17
<PAGE>
"Material Lease" means, with respect to any Real Property Asset, any lease,
--------------
underletting, concession agreement or license affecting such Real Property
Asset, which represents more than 15% of the gross leasable area of such Real
Property Asset.
"Material of Environmental Concern" means and includes pollutants,
---------------------------------
contaminants, hazardous wastes, and toxic, radioactive, caustic or otherwise
hazardous substances, including petroleum, its derivatives, by-products and
other hydrocarbons, or any substance having any constituent elements displaying
any of the foregoing characteristics.
"Material Plan" means at any time a Plan having aggregate Unfunded
-------------
Liabilities in excess of $5,000,000.
"Maturity Date" has the meaning set forth in Section 2.9.
-------------
"Minority Holdings" means partnerships, limited liability companies and
-----------------
corporations held or owned by the Borrower which are not consolidated with the
Borrower on its financial statements.
"Money Market Absolute Rate" has the meaning set forth in Section
--------------------------
2.3(d)(ii)(4).
"Money Market Absolute Rate Loan" means a loan to be made by a Bank
-------------------------------
pursuant to an Absolute Rate Auction.
"Money Market Lending Office" means, as to each Bank, its Domestic Lending
---------------------------
Office or such other office, branch or affiliate of such Bank as it may hereaf
ter designate as its Money Market Lending Office by notice to the Borrower and
the Lead Agent; provided that any Bank may from time to time by notice to the
--------
Borrower and the Lead Agent designate separate Money Market Lending Offices for
its Money Market LIBOR Loans, on the one hand, and its Money Market Absolute
Rate Loans, on the other hand, in which case all references herein to the Money
Market Lending Office of such Bank shall be deemed to refer to either or both of
such offices, as the context may require.
18
<PAGE>
"Money Market LIBOR Loan" means a loan to be made by a Bank pursuant to a
-----------------------
LIBOR Auction (including such a loan bearing interest at the Base Rate pursuant
to Section 2.3).
"Money Market Loan" means a Money Market LIBOR Loan or a Money Market
-----------------
Absolute Rate Loan.
"Money Market Margin" has the meaning set forth in Section 2.3(d)(ii)(3).
-------------------
"Money Market Quote" means an offer by a Bank to make a Money Market Loan
------------------
in accordance with Section 2.3.
"Moody's" means Moody's Investors Service, Inc. or any successor thereto.
-------
"Morgan" means Morgan Guaranty Trust Company of New York, in its individual
------
capacity.
"Multiemployer Plan" means at any time an employee pension benefit plan
------------------
within the meaning of Section 4001(a)(3) of ERISA to which any member of the
ERISA Group is then making or accruing an obligation to make contributions or
has within the preceding five plan years made contributions, including for these
purposes any Person which ceased to be a member of the ERISA Group during such
five year period.
"Net Offering Proceeds" means all cash received by the Borrower or the
---------------------
General Partner as a result of the sale of common shares of beneficial interest,
preferred shares of beneficial interest (including perpetual preferred),
partnership interests, limited liability company interests, or other ownership
or equity interests in the Borrower or the General Partner (or evidence of
indebtedness of the Borrower or the General Partner convertible into any of the
foregoing) less customary costs and discounts of issuance paid by the Borrower
----
or the General Partner, as the case may be.
"Net Operating Cash Flow" means, with respect to any Real Property Asset,
-----------------------
the Property Income, calculated on an annualized basis, for the period during
which such Real Property Asset shall have been owned by the Borrower, the
General Partner or any of their Subsidiar-
19
<PAGE>
ies, less Property Expenses, calculated on an estimated, pro forma (i.e., the
results for the period during which such Real Property Asset shall have been
owned shall be annualized, with appropriate adjustments for items of income and
expense which are not earned or incurred in equal monthly amounts) basis.
"New Acquisitions" shall mean any Real Property Asset acquired after the
----------------
date hereof.
"Non-Recourse Debt" means Debt of the Borrower [or the General Partner] on
-----------------
a consolidated basis for which the right of recovery of the obligee thereof is
limited to recourse against the Real Property Assets securing such Debt (subject
to such limited exceptions to the non-recourse nature of such Debt such as
fraud, misappropriation, misapplication and environmental indemnities, as are
usual and customary in like transactions at the time of the incurrence of such
Debt).
"Notes" means, collectively, the promissory notes of the Borrower, each
-----
substantially in the form of Exhibit A hereto, evidencing the obligation of the
---------
Borrower to repay the Loans, together with any Designated Lender Notes, and
"Note" means any one of such promissory notes issued hereunder.
- -----
"Notice of Borrowing" means a Notice of Committed Borrowing or a Notice of
-------------------
Money Market Borrowing.
"Notice of Committed Borrowing" has the meaning set forth in Section 2.2.
-----------------------------
"Notice of Interest Election" has the meaning set forth in Section 2.15(a).
---------------------------
"Notice of Money Market Borrowing" has the meaning set forth in Section
--------------------------------
2.3(f).
"Obligations" means all obligations, liabilities and indebtedness of every
-----------
nature of the Borrower from time to time owing to any Bank under or in
connection with this Agreement or any other Loan Document, including, without
limitation, (i) the outstanding principal amount of the Committed Loans at such
time, plus (ii) the Letter of Credit Usage at such time, plus (iii)
20
<PAGE>
the outstanding principal amount of any Money Market Loans at such time.
"Outstanding Balance" means the sum of (i) the aggregate outstanding and
-------------------
unpaid principal balance of all Loans and (ii) the Letter of Credit Usage.
"Parent" means, with respect to any Bank, any Person controlling such Bank.
------
"Participant" has the meaning set forth in Section 9.6(b).
-----------
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
----
succeeding to any or all of its functions under ERISA.
"Permitted Liens" means (a) Liens in favor of the Borrower or the General
---------------
Partner on all or any part of the assets of Subsidiaries of the Borrower or the
General Partner, as applicable, provided that (i) the Debt to which such Lien
relates is held by the Borrower, (ii) such Debt is not otherwise pledged or
encumbered, and (iii) no more than 5% of the Unencumbered Asset Pool Properties
Value may be subject to any such Liens; (b) Liens to secure the performance of
statutory obligations, surety or appeal bonds, performance bonds, completion
bonds, government contracts or other obligations of a like nature, including
Liens in connection with workers' compensation, unemployment insurance and other
types of statutory obligations or to secure the performance of tenders, bids,
leases, contracts (other than for the repayment of Debt) and other similar
obligations incurred in the ordinary course of business; (c) Liens for taxes,
assessments or governmental charges or claims that are not yet delinquent or
that are being contested in good faith by appropriate proceedings promptly
instituted and diligently concluded; provided, that any reserve or other
appropriate provision as shall be required in conformity with GAAP shall have
been made therefor; (d) Liens on property of the Borrower, the General Partner
or any Subsidiary thereof in favor of the Federal or any state government to
secure certain payments pursuant to any contract, statute or regulation; (e)
easements (including, without limitation, reciprocal easement agreements and
utility agreements), rights of way, covenants, consents, reservations,
encroachments, variations and zoning
21
<PAGE>
and other restrictions, charges or encumbrances (whether or not
recorded), which do not interfere materially with the ordinary conduct of the
business of the Borrower, the General Partner or any Subsidiary thereof and
which do not materially detract from the value of the property to which they
attach or materially impair the use thereof by the Borrower, the General Partner
or any Subsidiary thereof; (f) statutory Liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen or other Liens imposed by law and
arising in the ordinary course of business, for sums due and payable which are
not then past due (or which, if past due, are being contested in good faith and
with respect to which adequate reserves are being maintained to the extent
required by GAAP); (g) Liens not otherwise permitted by this definition and
incurred in the ordinary course of business of any or all of the Borrower, the
General Partner or any Subsidiary thereof with respect to obligations which do
not exceed $500,000 in principal amount in the aggregate at any one time
outstanding; (h) the interests of lessees and lessors under leases of real or
personal property made in the ordinary course of business which would not have a
Material Adverse Effect; and (i) Liens with respect to the security interests
granted to Morgan Guaranty Trust Company of New York, as lead agent, pursuant
to, and in connection with, the Revolving Credit Agreement, dated as of May 21,
1997 (as amended, restated, supplemented or otherwise modified from time to
time), provided, however, that the same shall be removed of record no later than
thirty (30) days from the Closing Date.
"Person" means an individual, a corporation, a partnership, a limited
------
liability company, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Plan" means at any time an employee pension benefit plan (other than a
----
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the
22
<PAGE>
ERISA Group for employees of any Person which was at such time a member of the
ERISA Group.
"Prime Rate" means the rate of interest publicly announced by Morgan in New
----------
York City from time to time as its Prime Rate.
"Pro-Forma Debt Service" means, for any calendar quarter, the greater of
----------------------
(x) the interest actually payable on the Loans, and (y) the amount of debt
service payments determined by applying a 30-year mortgage style amortization
schedule to the Loans outstanding as of the last day of such calendar quarter,
using an interest rate equal to the Treasury Rate plus 1.75%.
"Property Expenses" means, when used with respect to any Real Property
-----------------
Asset, the costs of maintaining such Real Property Asset which are the
responsibility of the owner thereof and that are not paid directly by the tenant
thereof, including, without limitation, taxes, insurance, repairs and
maintenance, but provided that if such tenant is more than 60 days in arrears in
the payment of base or fixed rent, then such costs will also constitute
"Property Expenses", but excluding depreciation, amortization and interest
costs.
"Property Income" means, when used with respect to any Real Property Asset,
---------------
cash rents and other cash revenues received in the ordinary course therefrom,
including, without limitation, revenues from any parking leases and lease
termination fees amortized over the remaining term of the lease for which such
termination fee was received (other than pre-paid rents and revenues and
security deposits except to the extent applied in satisfaction of tenants'
obligations for rent).
"Rating Agencies" means, collectively, S&P, Moody's, Duff & Phelps and
---------------
Fitch.
"Real Property Assets" means as of any time, the real property assets owned
--------------------
directly or indirectly by the Borrower at such time.
"Recourse Debt" shall mean Debt of the Borrower, the General Partner or any
-------------
Consolidated Subsidiary that is not Non-Recourse Debt.
23
<PAGE>
"Reference Bank" means the principal London offices of Morgan.
--------------
"Regulation U" means Regulation U of the Board of Governors of the Federal
------------
Reserve System, as in effect from time to time.
"Release" means any release, spill, emission, leaking, pumping, pouring,
-------
dumping, emptying, deposit, discharge, leaching or migration.
"Request to Extend" has the meaning set forth in Section 2.8(b).
-----------------
"Required Banks" means, at any time, Banks having at least two-thirds of
--------------
the aggregate amount of the Commitments or, if the Commitments shall have been
terminated, holding Notes evidencing at least two-thirds of the aggregate unpaid
principal amount of the Loans.
"Requirements" means all present and future laws, statutes, codes,
------------
ordinances, orders, judgments, decrees, injunctions, rules, regulations and
requirements of every Governmental Authority having jurisdiction over any
Mortgaged Property and all restrictive covenants applicable to any Mortgaged
Property.
"Secured Debt" means all Debt secured by a Lien on real property.
------------
"Separate Parcel" means a Real Estate Asset that is a single, legally
---------------
subdivided, separately zoned parcel that can be legally transferred or conveyed
separate and distinct from any other Real Estate Asset without benefit of any
other Real Estate Asset.
"Solvent" means, with respect to any Person, that the fair saleable value
-------
of such Person's assets exceeds the Debts of such Person.
"Subsidiary" means any corporation or other entity of which securities or
----------
other ownership interests representing either (i) ordinary voting power to elect
a majority of the board of directors or other persons performing similar
functions or (ii) a majority of the economic interest therein, are at the time
directly or indirectly owned by the Borrower.
24
<PAGE>
"Term" has the meaning set forth in Section 2.9.
----
"Total Asset Value" means, the sum of (x) with respect to those Real
-----------------
Property Assets owned for at least the two previous consecutive quarters, the
quotient of (i) Annual EBITDA with respect thereto for the previous four (4)
consecutive quarters (or, if owned for only two or three quarters, the Annual
EBITDA for such period, annualized), including the quarter then ended, but less
reserves for Capital Expenditures of (A) $0.30 per square foot per annum for
each Real Property Asset that is an office property, and (B) $0.15 per square
foot per annum for each Real Property Asset that is an industrial property,
divided by (ii) the FMV Cap Rate, (y) with respect to those Real Property Assets
owned for less than the two previous consecutive quarters, the lesser of (i) the
quotient of Net Operating Cash Flow applicable to each such Real Property Asset,
calculated on an annualized basis, based upon (A) the actual amount of Net
Operating Cash Flow for the period of the Borrower's, the General Partner's or
their Subsidiary's ownership of such Real Property Asset, less replacement
reserves of (1) $.30 per square foot per annum for each such Unencumbered Asset
Pool Property which is an office building and (2) $.15 per square foot per annum
for each such Unencumbered Asset Pool Property which is an industrial building,
divided by (B) the FMV Cap Rate, and (ii) the purchase price actually paid by
the Borrower, the General Partner or any of their Subsidiaries (as applicable)
for such Real Property, and (z) Cash or Cash Equivalents of the Borrower, the
General Partner and their Subsidiaries as of the date of determination.
"Total Debt Ratio" means the ratio, as of the date of determination, of (i)
----------------
the sum of (x) the Total Liabilities of the Borrower, the General Partner and
their Consolidated Subsidiaries and (y) the Borrower's and the General Partner's
pro rata share of the Total Liabilities of any Minority Holdings of the Borrower
or the General Partner to (ii) Total Asset Value.
"Total Debt Service" means, as of the last day of each calendar quarter, an
------------------
amount equal to the sum of (i) interest (whether accrued, paid or capitalized)
actually payable by Borrower on its Debt for the previous four consecutive
quarters including the quarter then
25
<PAGE>
ended, plus (ii) scheduled payments of principal on such Debt, whether or not
paid by the Borrower (excluding balloon payments) for the previous four
consecutive quarters including the quarter then ended.
"Total Liabilities" means the sum of the balance sheet amount of all Debt
-----------------
of the Borrower, the General Partner and their Consolidated Subsidiaries and all
accounts payable and all other liabilities of such Person, all as determined in
accordance with GAAP.
"Treasury Rate" means, as of any date, a rate equal to the annual yield to
-------------
maturity on the U.S. Treasury Constant Maturity Series with a ten-year maturity,
as such yield is reported in Federal Reserve Statistical Release H.15 --
Selected Interest Rates, published most recently prior to the date the
applicable Treasury Rate is being determined. Such yield shall be determined by
straight line linear interpolation between the yields reported in Release H.15,
if necessary. In the event Release H.15 is no longer published, the Lead Agent
shall select, in its reasonable discretion, an alternate basis for the
determination of Treasury yield for U.S. Treasury Constant Maturity Series with
ten-year maturities.
"Unencumbered Asset Pool Net Operating Cash Flow" means, as of any date of
-----------------------------------------------
determination with respect to the Unencumbered Asset Pool Properties, Property
Income with respect to the Unencumbered Asset Pool Properties for the previous
four (4) consecutive quarters (except as provided below), including the quarter
then ended, but less (x) Property Expenses with respect to the Unencumbered
Asset Pool Properties for the previous four (4) consecutive quarters (except as
provided below), including the quarter then ended, and (y) the greater of (i)
Capital Expenditures which are not related to new construction for the previous
four (4) consecutive quarters, including the quarter then ended, and (ii)
reserves for Capital Expenditures of $.70 per square foot per annum for each
Unencumbered Asset Pool Property that is an office property, and $.40 per square
foot per annum for each Unencumbered Asset Pool Property that is an industrial
property. Notwithstanding the foregoing, with respect to any Unencum-
26
<PAGE>
bered Asset Pool Property owned by the Borrower, the General Partner or any of
their Consolidated Subsidiaries for a period of less four (4) fiscal quarters,
but more than one (1) fiscal quarter, Unencumbered Asset Pool Net Operating Cash
Flow shall be determined in a manner consistent with the foregoing calculation
utilizing annualized Property Income, Property Expenses and Capital Expenditures
(or, if greater, reserves for Capital Expenditures) for the relevant period of
the Borrower's, the General Partner's or any of their Consolidated Subsidiaries'
ownership of such Unencumbered Asset Pool Property, provided such period shall
be at least one fiscal quarter.
"Unencumbered Asset Pool Properties" means, as of any date, the Real
----------------------------------
Property Assets listed in Exhibit B attached hereto and made a part hereof, each
---------
of which is 100% owned in fee (or leasehold pursuant to a Financeable Ground
Lease in the case of assets listed on Exhibit C as leaseholds) (other than the
---------
Real Property Asset commonly known as Walnut Park Business Center, which is
87.744% owned by the Borrower, as tenant-in-common) by the Borrower, the General
Partner or any of their Consolidated Subsidiaries and each of which is not
subject to any Lien (other than Permitted Liens), subject to adjustment as set
forth herein, together with all Real Property Assets which have become part of
the Unencumbered Asset Pool Properties as of such date in accordance with
Section 3.3.
"Unencumbered Asset Pool Properties Value" means:
----------------------------------------
(i) with respect to the Unencumbered Asset Pool Properties owned by the
Borrower, the General Partner or any of their Consolidated Subsidiaries for a
period of at least six (6) calendar months, the quotient of (x) the Unencumbered
Asset Pool Net Operating Cash Flow less replacement reserves of $.30 per square
foot per annum for each such Unencumbered Asset Pool Property which is an office
building and $.15 per square foot per annum for each such Unencumbered Asset
Pool Property which is an industrial building, divided by (y) the FMV Cap Rate,
and
(ii) with respect to Unencumbered Asset Pool Properties owned by the
Borrower, the General Partner or any of their Consolidated Subsidiaries for a
period of less than six (6) calendar months, the lesser of (A) the quotient of
(x) the Unencumbered Asset Pool Net Operating Cash Flow on an annualized basis
based upon
27
<PAGE>
the Unencumbered Asset Pool Net Operating Cash Flow for the period of such
Person's ownership of the Unencumbered Asset Pool Property in question less
replacement reserves of $.30 per square foot per annum for each such
Unencumbered Asset Pool Property which is an office building and $.15 per square
foot per annum for each such Unencumbered Asset Pool Property which is an
industrial building, divided by (y) the FMV Cap Rate and (B) the purchase price
actually paid by the Borrower, the General Partner or any of their Consolidated
Subsidiaries (as applicable) for such Unencumbered Asset Pool Property
(provided, however, that if any such Unencumbered Asset Pool Property shall have
been purchased as part of a portfolio of properties and no purchase price shall
have been specifically allocated thereto, then the purchase price therefore
shall be deemed to be equal to that percentage of the total purchase price for
such portfolio as is equal to the percentage of the total Net Operating Cash
Flow with respect to such portfolio that the Net Operating Cash Flow
attributable to the applicable Unencumbered Asset Pool Property bears.
"Unfunded Liabilities" means, with respect to any Plan at any time, the
--------------------
amount (if any) by which (i) the value of all benefit liabilities under such
Plan, determined on a plan termination basis using the assumptions prescribed by
the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the fair market
value of all Plan assets allocable to such liabilities under Title IV of ERISA
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.
"United States" means the United States of America, including the States
-------------
and the District of Columbia, but excluding its territories and possessions.
"Unsecured Debt" means Debt not secured by a Lien on real property.
--------------
"Unsecured Debt Ratio" means, as of any date of determination, the ratio of
--------------------
the Unencumbered Asset Pool Properties Value as of the date of determination to
the aggregate amount of Unsecured Debt of the Borrower, the
28
<PAGE>
General Partner and their Consolidated Subsidiaries outstanding as of such date
of determination.
"Unused Commitments" means an amount equal to all unadvanced funds (other
------------------
than unadvanced funds in connection with any construction loan) which any third
party is obligated to advance to the Borrower or otherwise, pursuant to any Loan
Document, written instrument or otherwise.
Section 1.2. Accounting Terms and Determinations. Unless otherwise
-----------------------------------
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with GAAP,
applied on a basis consistent (except for changes concurred in by the Borrower's
independent public accountants) with the most recent audited consolidated
financial statements of the Borrower delivered to the Lead Agent and the Banks;
provided that, if the Borrower notifies the Lead Agent and the Banks that the
- --------
Borrower wishes to amend any covenant in Article V to eliminate the effect of
any change in GAAP on the operation of such covenant (or if the Lead Agent
notifies the Borrower that the Required Banks wish to amend Article V for such
purpose), then the Borrower's compliance with such covenant shall be determined
on the basis of GAAP in effect immediately before the relevant change in GAAP
became effective, until either such notice is withdrawn or such covenant is
amended in a manner satisfactory to the Borrower and the Required Banks.
Section 1.3. Types of Borrowings. The term "Borrowing" denotes the
------------------- ---------
aggregation of Loans of one or more Banks to be made to the Borrower pursuant to
Article II on the same date, all of which Loans are of the same type (subject to
Article VIII) and, except in the case of Base Rate Loans, have the same Interest
Period. Borrowings are classified for purposes of this Agreement either by
reference to the pricing of Loans comprising such Borrowing (e.g., a "Euro-
----
Dollar Borrowing" is a Borrowing comprised of Euro-Dollar Loans) or by reference
to the provisions of Article II under which participation therein is determined
(i.e., a "Committed Borrowing" is a Borrowing under Section 2.1 in which all
----
Banks partici-
29
<PAGE>
pate in proportion to their Commitments, while a "Money Market Borrowing" is a
Borrowing under Section 2.3).
ARTICLE II
THE CREDITS
Section 2.1. Commitments to Lend.
-------------------
(a) Each Bank severally agrees, on the terms and conditions set
forth in this Agreement, to make Committed Loans to the Borrower and participate
in Letters of Credit issued by the Fronting Bank on behalf of the Borrower
pursuant to this Section from time to time during the Term in amounts such that
the aggregate principal amount of Committed Loans by such Bank at any one time
outstanding together with such Bank's pro rata share of the Letter of Credit
--- ----
Usage shall not exceed the amount of its Commitment. The aggregate amount of
Committed Loans to be made hereunder together with the Letter of Credit Usage
and outstanding Money Market Loans shall not exceed Three Hundred Fifty Million
Dollars ($350,000,000) (the "Loan Amount"). Each Borrowing under this subsection
-----------
(a) shall be in an aggregate principal amount of at least $2,500,000, or an
integral multiple of $500,000 in excess thereof and shall be made from the
several Banks ratably in proportion to their respective Commitments. Subject to
the limitations set forth herein, any amounts repaid may be reborrowed.
Notwithstanding anything to the contrary, the number of new Borrowings shall be
limited to ten (10) Borrowings per month.
(b) Notwithstanding anything in the preceding subparagraph (a) to
the contrary, the loan amount shall in no event exceed (and no Bank shall be
deemed to have have committed to fund its pro rata share of an amount which
--- ----
exceeds) an amount that would cause (A) the ratio of (i) Unencumbered Asset Pool
Net Operating Cash Flow to (ii) Pro-Forma Debt Service to be less than 2.0:1 or
(B) the Unsecured Debt Ratio to be less than 2.0:1 or (C) an amount which would
result in the violation of any provision of Section 5.8.
Section 2.2 Notice of Committed Borrowing. (a) The Borrower shall
-----------------------------
give the Lead Agent notice (a "Notice of Committed Borrowing") not later than
-----------------------------
11:30
30
<PAGE>
a.m. (New York City time) (x) one Domestic Business Day before each Base Rate
Borrowing or (y) the third Euro-Dollar Business Day before each Euro-Dollar
Borrowing, specifying:
(1) the date of such Borrowing, which shall be a Domestic Business
Day in the case of a Domestic Borrowing or a Euro-Dollar Business Day in
the case of a Euro-Dollar Borrowing,
(2) the aggregate amount of such Borrowing,
(3) whether the Loans comprising such Borrowing are to be Base Rate
Loans or Euro-Dollar Loans,
(4) in the case of a Euro-Dollar Borrowing, the duration of the
Interest Period applicable thereto, subject to the provisions of the
definition of Interest Period,
(5) the intended use for the proceeds of such Borrowing, and
(6) that no Default or Event of Default has occurred or is
continuing.
Notwithstanding the time frame set forth in clause (a)(x) above, in the event
that the Money Market Quotes submitted by the Banks pursuant to Section 2.3(c)
below are, in the aggregate, in an amount less than the principal amount
requested by the Borrower in the related Money Market Quote Request, then the
Borrower shall be permitted to give the Lead Agent notice of its intent to make
a Base Rate Borrowing, in the amount of the difference between accepted Money
Market Quotes and the principal amount requested by Borrower in the related
Money Market Quote Request, no later than 12:00 Noon (New York City time) on the
date of such Borrowing.
(b) Borrower shall give the Lead Agent, and the designated Fronting Bank,
written notice in the event that it desires to have Letters of Credit (each, a
"Letter of Credit") issued hereunder no later than 10:00 a.m., New York City
----------------
time, at least four (4) Domestic Business Days prior to the date of such
issuance. Each
31
<PAGE>
such notice shall specify (i) the designated Fronting Bank, (ii)
the aggregate amount of the requested Letters of Credit, (iii) the individual
amount of each requested Letter of Credit and the number of Letters of Credit to
be issued, (iv) the date of such issuance (which shall be a Domestic Business
Day), (v) the name and address of the beneficiary, (vi) the expiration date of
the Letter of Credit (which in no event shall be later than twelve (12) months
after the issuance of such Letter of Credit or the Maturity Date, whichever is
earlier), (vii) the purpose and circumstances for which such Letter of Credit is
being issued and (viii) the terms upon which each such Letter of Credit may be
drawn down (which terms shall not leave any discretion to Fronting Bank). Each
such notice may be revoked telephonically by the Borrower to the applicable
Fronting Bank and the Lead Agent any time prior to the date of issuance of the
Letter of Credit by the applicable Fronting Bank, provided such revocation is
confirmed in writing by the Borrower to the Fronting Bank and the Lead Agent
within one (1) Domestic Business Day by facsimile. No later than 10:00 a.m., New
York City time, on the date that is four (4) Domestic Business Days prior to the
date of issuance, the Borrower shall specify a precise description of the
documents and the verbatim text of any certificate to be presented by the
beneficiary of such Letter of Credit, which if presented by such beneficiary
prior to the expiration date of the Letter of Credit would require the Fronting
Bank to make a payment under the Letter of Credit; provided, that Fronting Bank
--------
may, in its reasonable judgment, require changes in any such documents and
certificates only in conformity with changes in customary and commercially
reasonable practice or law and, provided further, that no Letter of Credit
-------- -------
shall require payment against a conforming draft to be made thereunder on the
following Domestic Business Day that such draft is presented if such
presentation is made later than 10:00 A.M. New York City time (except that if
the beneficiary of any Letter of Credit requests at the time of the issuance of
its Letter of Credit that payment be made on the same Domestic Business Day
against a conforming draft, such beneficiary shall be entitled to such a same
day draw, provided such draft is presented to the applicable Fronting Bank no
later than 10:00 A.M. New York City time and provided further the Borrower shall
have requested to the Fronting Bank and the Lead Agent that such beneficiary
shall be entitled to a same day draw). In determining whether to pay on such
32
<PAGE>
Letter of Credit, the Fronting Bank shall be responsible only to determine that
the documents and certificates required to be delivered under the Letter of
Credit have been delivered and that they comply on their face with the
requirements of that Letter of Credit.
Section 2.3 Money Market Borrowings.
-----------------------
(a) The Money Market Option. In addition to Committed Borrowings
-----------------------
pursuant to Section 2.1, at such time as the Borrower's Credit Rating is an
Investment Grade Rating from at least two Rating Agencies, one of which shall be
S&P or Moody's, the Borrower may, as set forth in this Section 2.3, request the
Banks during the Term to make offers to make Money Market Loans to the Borrower,
not to exceed, at such time, the lesser of (i) the Committed Loans and (ii)
$150,000,000. The Banks may, but shall have no obligation to, make such offers
and the Borrower may, but shall have no obligation to, accept any such offers in
the manner set forth in this Section.
(b) Money Market Quote Request. When the Borrower wishes to request
--------------------------
offers to make Money Market Loans under this Section, it shall transmit to the
Lead Agent by telex or facsimile transmission a Money Market Quote Request
substantially in the form of Exhibit D hereto so as to be received not later
---------
than 11:30 A.M. (New York City time) on (x) the fourth Euro-Dollar Business Day
prior to the date of Borrowing proposed therein, in the case of a LIBOR Auction,
or (y) the Domestic Business Day next preceding the date of Borrowing proposed
therein, in the case of an Absolute Rate Auction (or, in either case, such other
time or date as the Borrower and the Lead Agent shall have mutually agreed and
shall have notified to the Banks not later than the date of the Money Market
Quote Request for the first LIBOR Auction or Absolute Rate Auction for which
such change is to be effective) specifying:
(i) the proposed date of Borrowing, which shall be a Euro-Dollar
Business Day in the case of a LIBOR Auction or a Domestic Business Day
in the case of an Absolute Rate Auction,
33
<PAGE>
(ii) the aggregate amount of such Borrowing, which shall be
$10,000,000 or a larger multiple of $500,000,
(iii) the duration of the Interest Period applicable thereto, subject
to the provisions of the definition of Interest Period, and
(iv) whether the Money Market Quotes requested are to set forth a
Money Market Margin or a Money Market Absolute Rate.
The Borrower may request offers to make Money Market Loans for more than one
Interest Period in a single Money Market Quote Request. No Money Market Quote
Request shall be given within thirty days (or such other number of days as the
Borrower and the Lead Agent may agree) of any other Money Market Quote Request.
(c) Invitation for Money Market Quotes. Promptly upon receipt of a Money
----------------------------------
Market Quote Request, the Lead Agent shall send to the Banks by telex or
facsimile transmission an Invitation for Money Market Quotes substantially in
the form of Exhibit F hereto, which shall constitute an invitation by the
---------
Borrower to each Bank to submit Money Market Quotes offering to make the Money
Market Loans to which such Money Market Quote Request relates in accordance with
this Section 2.3.
(d) Submission and Contents of Money Market Quotes. (i) Each Bank may
----------------------------------------------
submit a Money Market Quote containing an offer or offers to make Money Market
Loans in response to any Invitation for Money Market Quotes. Each Money Market
Quote must comply with the requirements of this subsection (d) and must be
submitted to the Lead Agent by telex or facsimile transmission at its offices
specified in or pursuant to Section 9.1 not later than (x) 10:00 A.M. (New York
City time) on the third Euro-Dollar Business Day prior to the proposed date of
Borrowing, in the case of a LIBOR Auction, or (y) 10:00 A.M. (New York City
time) on the proposed date of Borrowing, in the case of an Absolute Rate Auction
(or, in either case, such other time or date as the Borrower and the Lead Agent
shall have mutually agreed and shall have notified to the Banks not later than
the date of the Money Market Quote Request for the first LIBOR Auction or
Absolute Rate Auction for which such change is to be
34
<PAGE>
effective); provided that Money Market Quotes submitted by the Lead Agent (or
--------
any affiliate of the Lead Agent) in the capacity of a Bank may be submitted, and
may only be submitted, if the Lead Agent or such affiliate notifies the
Borrower of the terms of the offer or offers contained therein not later than
thirty (30) minutes prior to the applicable deadline for the other Banks.
Subject to Articles III and VI, any Money Market Quote so made shall be
irrevocable except with the written consent of the Lead Agent given on the
instructions of the Borrower. Such Money Market Loans may be funded by such
Bank's Designated Lender (if any) as provided in Section 9.6(d); however such
Bank shall not be required to specify in its Money Market Quote whether such
Money Market Loans will be funded by such Designated Lender.
(ii) Each Money Market Quote shall be in substantially the form of Exhibit
-------
E hereto and shall in any case specify:
- -
(1) the proposed date of Borrowing,
(2) the principal amount of the Money Market Loan for which each such
offer is being made, which principal amount (w) may be greater than or less
than the Commitment of the quoting Bank, (x) must be $10,000,000 or a
larger multiple of $500,000, (y) may not exceed the principal amount of
Money Market Loans for which offers were requested and (z) may be subject
to an aggregate limitation as to the principal amount of Money Market Loans
for which offers being made by such quoting Bank may be accepted,
(3) in the case of a LIBOR Auction, the margin above or below the
applicable London Interbank Offered Rate (the "Money Market Margin")
offered for each such Money Market Loan, expressed as a percentage
(specified to the nearest 1/10,000th of 1%) to be added to or subtracted
from such base rate,
(4) in the case of an Absolute Rate Auction, the rate of interest per
annum (specified to the nearest 1/10,000th of 1%) (the "Money Market
Absolute Rate") offered for each such Money Market Loan, and
35
<PAGE>
(5) the identity of the quoting Bank.
A Money Market Quote may set forth up to five separate offers by the quoting
Bank with respect to each Interest Period specified in the related Invitation
for Money Market Quotes.
(iii) Any Money Market Quote shall be disregarded if it:
(1) is not substantially in conformity with Exhibit F hereto or does
---------
not specify all of the information required by subsection (d)(ii) above;
(2) contains qualifying, conditional or similar language;
(3) proposes terms other than or in addition to those set forth in
the applicable Invitation for Money Market Quotes; or
(4) arrives after the time set forth in subsection (d)(i).
(e) Notice to Borrower. The Lead Agent shall promptly notify the
-------------------
Borrower (x) with respect to each Money Market Quote submitted in accordance
with subsection (d), of the terms of such Money Market Quote and the identity of
the Bank submitting such Money Market Quote and (y) of any Money Market Quote
that amends, modifies or is otherwise inconsistent with a previous Money Market
Quote submitted by such Bank with respect to the same Money Market Quote
Request. Any such subsequent Money Market Quote shall be disregarded by the Lead
Agent unless such subsequent Money Market Quote is submitted solely to correct a
manifest error in such former Money Market Quote. The Lead Agent's notice to the
Borrower shall specify (A) the aggregate principal amount of Money Market Loans
for which offers have been received for each Interest Period specified in the
related Money Market Quote Request, (B) the respective principal amounts and
Money Market Margins or Money Market Absolute Rates, as the case may be, so
offered and (C) if applicable, limitations on the aggregate principal amount of
Money Market Loans for which offers in any single Money Market Quote may be
accepted.
36
<PAGE>
(f) Acceptance and Notice by Borrower. Not later than 1:00 p.m. (New York
---------------------------------
City time) on (x) the third Euro-Dollar Business Day prior to the proposed date
of Borrowing, in the case of a LIBOR Auction, or (y) the proposed date of
Borrowing, in the case of an Absolute Rate Auction (or, in either case, such
other time or date as the Borrower and the Lead Agent shall have mutually agreed
and shall have notified to the Banks not later than the date of the Money Market
Quote Request for the first LIBOR Auction or Absolute Rate Auction for which
such change is to be effective), the Borrower shall notify the Lead Agent of its
acceptance or non-acceptance of the offers so notified to it pursuant to
subsection (e). In the case of acceptance, such notice (a "Notice of Money
---------------
Market Borrowing") shall specify the aggregate principal amount of offers for
- ----------------
each Interest Period that are accepted. The Borrower may accept any Money Market
Quote in whole or in part; provided that:
--------
(i) the aggregate principal amount of each Money Market Borrowing
may not exceed the applicable amount set forth in the related Money Market
Quote Request;
(ii) the principal amount of each Money Market Borrowing must be
$10,000,000 or a larger multiple of $500,000;
(iii) acceptance of offers may only be made on the basis of ascending
Money Market Margins or Money Market Absolute Rates, as the case may be;
and
(iv) the Borrower may not accept any offer that is described in
subsection (d)(iii) or that otherwise fails to comply with the requirements
of this Agreement.
(g) Allocation by Lead Agent. If offers are made by two or more Banks
------------------------
with the same Money Market Margins or Money Market Absolute Rates, as the case
may be, for a greater aggregate principal amount than the amount in respect of
which such offers are accepted for the related Interest Period, the principal
amount of Money Market Loans in respect of which such offers are accepted shall
be allocated by the Lead Agent among such Banks as nearly as possible (in
multiples of $500,000, as
37
<PAGE>
the Lead Agent may deem appropriate) in proportion to the aggregate principal
amounts of such offers. Determinations by the Lead Agent of the amounts of Money
Market Loans shall be conclusive in the absence of manifest error.
(h) Notification by Lead Agent. Upon receipt of the Borrower's Notice of
--------------------------
Money Market Borrowing in accordance with Section 2.3(f) hereof, the Lead Agent
shall, on the date such Notice of Money Market Borrowing is received by the Lead
Agent, notify each Bank of the principal amount of the Money Market Borrowing
accepted by the Borrower and of such Bank's share (if any) of such Money Market
Borrowing and such Notice of Money Market Borrowing shall not thereafter be
revocable by the Borrower. A Bank who is notified that it has been selected to
make a Money Market Loan may designate its Designated Lender (if any) to fund
such Money Market Loan on its behalf, as described in Section 9.6(d). Any
Designated Lender which funds a Money Market Loan shall on and after the time of
such funding become the obligee under such Money Market Loan and be entitled to
receive payment thereof when due. No Bank shall be relieved of its obligation to
fund a Money Market Loan, and no Designated Lender shall assume such obligation,
prior to the time the applicable Money Market Loan is funded.
Section 2.4 Notice to Banks; Funding of Loans.
---------------------------------
(a) Upon receipt of a Notice of Committed Borrowing, the Lead Agent shall
notify each Bank on the same day as it receives the Notice of Committed
Borrowing of the contents thereof and of such Bank's share of such Borrowing and
such Notice of Committed Borrowing shall not thereafter be revocable by the
Borrower.
(b) Not later than 2:00 P.M. (New York City time) on the date of each
Committed Borrowing, each Bank shall make available its share of such Committed
Borrowing, in Federal or other funds immediately available in New York City, to
the Lead Agent at its address referred to in Section 9.1. The Lead Agent will
make the funds so received from the Banks available to the Borrower at the Lead
Agent's aforesaid address. If the Borrower has requested the issuance of a
Letter of Credit, no later than 12:00 Noon (New York City time) on the date of
such
38
<PAGE>
issuance as indicated in the notice delivered pursuant to Section 2.2(b), the
Fronting Bank shall issue such Letter of Credit in the amount so requested and
deliver the same to the Borrower with a copy thereof to the Lead Agent. At the
request of any Bank, the Lead Agent promptly shall deliver copies thereof to
such Bank. Immediately upon the issuance of each Letter of Credit by the
Fronting Bank, such Fronting Bank shall be deemed to have sold and transferred
to each other Bank, and each such other Bank shall be deemed, and hereby agrees,
to have irrevocably and unconditionally purchased and received from the Fronting
Bank, without recourse or warranty, an undivided interest and a participation in
such Letter of Credit, any drawing thereunder, and the obligations of the
Borrower hereunder with respect thereto, and any security therefor or guaranty
pertaining thereto, in an amount equal to such Bank's ratable share thereof
(based upon the ratio its Commitment bears to the aggregate of all Commitments).
Upon any change in any of the Commitments in accordance herewith, there shall be
an automatic adjustment to such participations to reflect such changed shares.
The Fronting Bank shall have the primary obligation to fund any and all draws
made with respect to such Letter of Credit notwithstanding any failure of a
participating Bank to fund its ratable share of any such draw. The Lead Agent
will instruct the Fronting Bank to make such Letter of Credit available to the
Borrower and the Fronting Bank shall make such Letter of Credit available to the
Borrower at the Borrower's aforesaid address or at such address in the United
States as Borrower shall request on the date of the Borrowing.
(c) Unless the Lead Agent shall have received notice from a Bank prior to
the date of any Borrowing that such Bank will not make available to the Lead
Agent such Bank's share of such Borrowing, the Lead Agent may assume that such
Bank has made such share available to the Lead Agent on the date of such
Borrowing in accordance with subsection (b) of this Section 2.4 and the Lead
Agent may, in reliance upon such assumption, make available to the Borrower on
such date a corresponding amount. If and to the extent that such Bank shall not
have so made such share available to the Lead Agent, such Bank and the Borrower
severally agree to repay to the Lead Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the Borrower until
39
<PAGE>
the date such amount is repaid to the Lead Agent, at (i) in the case of the
Borrower, a rate per annum equal to the higher of the Federal Funds Rate and the
interest rate applicable thereto pursuant to Section 2.7 and (ii) in the case of
such Bank, the Federal Funds Rate. If such Bank shall repay to the Lead Agent
such corresponding amount, such amount so repaid shall constitute such Bank's
Loan included in such Borrowing for purposes of this Agreement.
Section 2.5 Notes.
-----
(a) The Loans shall be evidenced by the Notes, each of which shall be
payable to the order of each Bank for the account of its Applicable Lending
Office in an amount equal to each such Bank's Commitment.
(b) Each Bank may, by notice to the Borrower and the Lead Agent, request
that its Loans of a particular type be evidenced by a separate Note in an amount
equal to the aggregate unpaid principal amount of such Loans. Each such Note
shall be in substantially the form of Exhibit A hereto, with appropriate
---------
modifications to reflect the fact that it evidences solely Loans of the relevant
type. Each reference in this Agreement to the "Note" of such Bank shall be
----
deemed to refer to and include any or all of such Notes, as the context may
require.
(c) Upon receipt of each Bank's Note, the Lead Agent shall forward such
Note to such Bank. Each Bank shall record the date, amount, type and maturity of
each Loan made by it and the date and amount of each payment of principal made
by the Borrower with respect thereto, and may, if such Bank so elects in
connection with any transfer or enforcement of its Note, endorse on the schedule
forming a part thereof appropriate notations to evidence the foregoing
information with respect to each such Loan then outstanding; provided that the
--------
failure of any Bank to make any such recordation or endorsement shall not affect
the obligations of the Borrower hereunder or under the Notes. Each Bank is
hereby irrevocably authorized by the Borrower so to endorse its Note and to
attach to and make a part of its Note a continuation of any such schedule as and
when required.
40
<PAGE>
(d) There shall be no more than ten (10) Euro-Dollar Borrowings
outstanding at any one time pursuant to this Agreement.
Section 2.6 Maturity of Loans. The Loans shall mature, and the
-----------------
principal amount thereof shall be due and payable, on the Maturity Date.
Section 2.7 Interest Rates.
--------------
(a) Each Base Rate Loan shall bear interest on the outstanding principal
amount thereof, for each day from the date such Loan is made until it becomes
due, at a rate per annum equal to the sum of twenty-five (25) basis points plus
the Base Rate for such day. Such interest shall be payable for each Interest
Period on the last day thereof.
(b) Each Euro-Dollar Loan shall bear interest on the outstanding principal
amount thereof, for each day during the Interest Period applicable thereto, at a
rate per annum equal to the sum of the Applicable Margin plus the Adjusted
London Interbank Offered Rate for such day.
Such interest shall be payable for each Interest Period on the last
day thereof and, if such Interest Period is longer than three months, at
intervals of three months after the first day thereof.
"Adjusted London Interbank Offered Rate" applicable to any Interest
--------------------------------------
Period means a rate per annum equal to the quotient obtained (rounded upward, if
necessary, to the next higher 1/100 of 1%) by dividing (i) the applicable London
Interbank Offered Rate by (ii) 1.00 minus the Euro-Dollar Reserve Percentage.
"Euro-Dollar Reserve Percentage" means for any day that percentage
------------------------------
(expressed as a decimal) which is in effect on such day, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement for a member bank of the Federal
Reserve System in New York City with deposits exceeding five billion dollars in
respect of "Eurocurrency liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which the interest rate on
Euro-Dollar Loans is determined or any category of extensions of credit or
41
<PAGE>
other assets which includes loans by a non-United States office of any Bank to
United States residents). The Adjusted London Interbank Offered Rate shall be
adjusted automatically on and as of the effective date of any change in the
Euro-Dollar Reserve Percentage.
"London Interbank Offered Rate" applicable to any Interest Period
-----------------------------
means the average (rounded upward, if necessary, to the next higher 1/16 of 1%)
of the respective rates per annum at which deposits in dollars are offered to
the Reference Bank in the London interbank market at approximately 11:00 a.m.
(London time) two Euro-Dollar Business Days before the first day of such
Interest Period in an amount approximately equal to the principal amount of the
Euro-Dollar Loan of such Reference Bank to which such Interest Period is to
apply and for a period of time comparable to such Interest Period.
(c) Subject to Section 8.1, each Money Market LIBOR Loan shall bear
interest on the outstanding principal amount thereof, for the Interest Period
applicable thereto, at a rate per annum equal to the sum of the London Interbank
Offered Rate for such Interest Period (determined in accordance with Section
2.7(b) as if the related Money Market LIBOR Borrowing were a Committed Euro-
Dollar Borrowing) plus (or minus) the Money Market Margin quoted by the Bank
making such Loan in accordance with Section 2.3. Each Money Market Absolute Rate
Loan shall bear interest on the outstanding principal amount thereof, for the
Interest Period applicable thereto, at a rate per annum equal to the Money
Market Absolute Rate quoted by the Bank making such Loan in accordance with
Section 2.3. Such interest shall be payable for each Interest Period on the last
day thereof and, if such Interest Period is longer than ninety days, at
intervals of ninety days after the first day thereof.
(d) In the event that, and for so long as, any Event of Default shall have
occurred and be continuing, the outstanding principal amount of the Loans, and,
to the extent permitted by law, overdue interest in respect of all Loans, shall
bear interest at the annual rate of the sum of the Prime Rate and four percent
(4%).
(e) The Lead Agent shall determine each interest rate applicable to the
Loans hereunder. The Lead Agent shall give prompt notice to the Borrower and the
42
<PAGE>
Banks of each rate of interest so determined, and its determination thereof
shall be conclusive in the absence of manifest error.
(f) The Reference Bank agrees to use its best efforts to furnish
quotations to the Lead Agent as contemplated by this Section. If the Reference
Bank does not furnish a timely quotation, the provisions of Section 8.1 shall
apply.
Section 2.8 Fees.
----
(a) Commitment/Facility Fee. During the Term, the Borrower shall pay to
-----------------------
the Lead Agent for the account of the Banks ratably in proportion to their
respective Commitments, a commitment fee on the daily average undrawn and
uncancelled Commitments in any given quarter determined as follows:
(i) prior to the Adjustment Date, the Borrower shall pay to the Lead Agent
for the account of the Banks ratably in proportion to their respective
Commitments, a commitment fee on the daily average undrawn and uncancelled
Commitments in any given quarter at the respective percentages per annum based
upon the range into which the Total Debt Ratio then falls in accordance with the
following table:
<TABLE>
<CAPTION>
- --------------------------------------------------------------
Total Debt Ratio Applicable Commitment Fee
(% per annum)
- --------------------------------------------------------------
<S> <C>
less than 25% 0.15%
- --------------------------------------------------------------
equal to or greater than 25% 0.20%
but less than 35%
- --------------------------------------------------------------
equal to or greater than 35% 0.20%
but less than 50%
- --------------------------------------------------------------
</TABLE>
(ii) from and after the Adjustment Date, the Borrower shall pay to the
Lead Agent for the account of the Banks ratably in proportion to their
respective Commitments, a facility fee on the daily average Commitments in any
given quarter at the respective percentages per annum based upon the Borrower's
Credit Rating in accordance with the following table:
43
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------
Borrower's Credit Rating Applicable Facility Fee (%
per annum)
- ---------------------------------------------------------------
<S> <C>
BBB+/Baa1 0.15%
- ---------------------------------------------------------------
BBB/Baa2 0.20%
- ---------------------------------------------------------------
BBB-/Baa3 0.20%
- ---------------------------------------------------------------
Below Investment Grade 0.25%
Rating or no rating
- ---------------------------------------------------------------
</TABLE>
The commitment/facility fee shall be payable quarterly, in arrears, on each
January 1, April 1, July 1, and October 1 during the Term and any extensions
thereof. Any change in the Borrower's Credit Rating causing it to move into a
different range on the table shall effect an immediate change in the applicable
percentage per annum. In the event that the Borrower's (or the General
Partner's) Credit Rating is such that the Rating Agencies' ratings are split
between a higher and a lower rating, the applicable percentage per annum shall
be based upon the lower of such two (2) Credit Ratings. In the event that
Borrower (or, as applicable, the General Partner) receives more than two (2)
credit ratings and such credit ratings are not equivalent, the applicable fee
shall be determined by the lower of the two (2) highest ratings, provided that
each of said two (2) highest ratings shall be Investment Grade Ratings and at
least one of which shall be an Investment Grade Rating from S&P or Moody's.
(b) Letter of Credit Fee. During the Term, the Borrower shall pay to the
--------------------
Lead Agent, for the account of the Banks in proportion to their interests in
respect of undrawn issued Letters of Credit, a fee (a "Letter of Credit Fee") in
--------------------
an amount, provided that no Event of Default shall have occurred and be
continuing, equal to a rate per annum equal to the Applicable Margin with
respect to Euro-Dollar Loans on the daily average of such issued and undrawn
Letters of Credit, which fee shall be payable, in arrears, on each January 1,
April 1, July 1 and October 1 during the Term. From the occurrence, and during
the continuance, of an Event of Default, such fee shall be increased to be equal
to four percent (4%) per annum on the daily average of such issued and undrawn
Letters of Credit.
44
<PAGE>
(c) Fronting Bank Fee. The Borrower shall pay any Fronting Bank, for its
-----------------
own account, a fee (a "Fronting Bank Fee") at a rate per annum equal to .15% of
-----------------
the issued and undrawn amount of such Letter of Credit, which fee shall be in
addition to and not in lieu of, the Letter of Credit Fee. The Fronting Bank Fee
shall be payable in arrears on each January 1, April 1, July 1 and October 1
during the Term.
(d) Extension Fee. Within one week of the notification by the Lead Agent
-------------
to the Borrower that a Request to Extend has been accepted pursuant to Section
2.9(b), the Borrower shall pay to the Lead Agent for the account of the Banks
ratably in proportion to their Commitments an extension fee of .15% of the
Commitments then outstanding.
(e) Fees Non-Refundable. All fees set forth in this Section 2.8 shall be
-------------------
deemed to have been earned on the date payment is due in accordance with the
provisions hereof and shall be non-refundable. The obligation of the Borrower to
pay such fees in accordance with the provisions hereof shall be binding upon the
Borrower and shall inure to the benefit of the Lead Agent and the Banks
regardless of whether any Loans are actually made.
Section 2.9 Mandatory Termination. (a) The term (the "Term") of the
--------------------- ----
Commitments shall terminate and expire, and the Borrower shall return or cause
to be returned all Letters of Credit to the Fronting Bank, on February 24, 2000
(the "Maturity Date").
-------------
(b) The Borrower may request a one-year extension of the Maturity Date by
delivering a written request therefor to the Lead Agent not more than eight
months or less than six months prior to the Maturity Date (a "Request to
----------
Extend"). The Lead Agent shall notify the Banks of the receipt of such request
- ------
and each Bank shall give notice in writing to the Lead Agent not less than five
months prior to the Maturity Date of such Bank's acceptance or rejection of such
request. If all the Banks shall have notified the Lead Agent on or prior to the
date which is five months prior to the Maturity Date that they accept such
request, the Maturity Date shall be extended for one year. If any Bank shall not
have notified the Lead Agent on or prior to the date which is five months prior
to the Maturity Date that it accepts such
45
<PAGE>
request, the Maturity Date shall not be extended. The Lead Agent shall notify
the Borrower whether the Request to Extend has been accepted or rejected as well
as which Bank or Banks rejected the Borrower's Request to Extend.
Section 2.10 Mandatory Prepayment.
--------------------
(a) In the event that an Unencumbered Asset Pool Property (or any Separate
Parcel that originally formed a part of an Unencumbered Asset Pool Property) is
sold, transferred or released from the restrictions of Section 5.16 hereof, the
Borrower shall, simultaneously with such sale, transfer or release, prepay the
Loans in an amount equal to 100% of the net proceeds of such sale or transfer,
in the event of a sale or transfer, or such lesser amount as shall be required
for the Borrower to remain in compliance with this Agreement, in the event of
such a sale, transfer or release. Notwithstanding the foregoing, a simultaneous
like-kind exchange under Section 1031 of the Internal Revenue Code will not be
subject to the provisions of this Section 2.10(a), provided that the exchanged
property has qualified as a New Acquisition and any cash "boot" associated
therewith shall be applied to prepayment of the Loans. Sale of an Unencumbered
Asset Pool Property (or any Separate Parcel that originally formed a part of a
Unencumbered Asset Pool Property) in violation of this Section 2.10 shall
constitute an Event of Default.
(b) Simultaneously with the closing of any sale of common shares of
beneficial interest, preferred shares of beneficial interest, partnership
interests, limited liability company interests, or other ownership or equity
interests in the Borrower or the General Partner, the Borrower shall,
simultaneously with such sale, prepay the Loans in an amount equal to 100% of
the Net Offering Proceeds.
(c) in the event that the Unsecured Debt Ratio is not maintained as of the
last day of a calendar quarter, either (i) the Borrower will add a Real Property
Asset to the Unencumbered Asset Pool Properties in accordance with this
Agreement which, on a pro forma basis (i.e. the Unsecured Debt Ratio shall be
--------- ---
recalculated to include such Real Property Asset as though the same had been an
Unencumbered Asset Pool Property for the entire applicable period) would result
in compliance with the
46
<PAGE>
Unsecured Debt Ratio, or (ii) the Borrower shall prepay to the Lead Agent, for
the account of the Banks, an amount necessary to cause the Unsecured Debt Ratio
to be in compliance within ninety (90) days of the date on which the Unsecured
Debt Ratio failed to be maintained. Failure by the Borrower to comply with the
Unsecured Debt Ratio within ninety (90) days of the date of such non-compliance
shall be an Event of Default.
Section 2.11 Optional Prepayments.
--------------------
(a) The Borrower may, upon at least one Domestic Business Day's notice to
the Lead Agent, prepay to the Lead Agent, for the account of the Banks, any Base
Rate Borrowing in whole at any time, or from time to time in part in amounts
aggregating One Million Dollars ($1,000,000), or an integral multiple of One
Million Dollars ($1,000,000) in excess thereof or, if less, the outstanding
principal balance, by paying the principal amount to be prepaid together with
accrued interest thereon to the date of prepayment. Each such optional
prepayment shall be applied to prepay ratably the Loans of the several Banks
included in such Borrowing.
(b) Except as provided in Section 8.2, the Borrower may not prepay all or
any portion of the principal amount of any Euro-Dollar Loan prior to the
maturity thereof unless the Borrower shall also pay any applicable expenses
pursuant to Section 2.13. Any such prepayment shall be upon at least three (3)
Euro-Dollar Business Days' notice to the Lead Agent. Any notice of prepayment
delivered pursuant to this Section 2.11(b) shall set forth the amount of such
prepayment which is applicable to any Loan made for working capital purposes.
Each such optional prepayment shall be in the amounts set forth in Section
2.11(a) above and shall be applied to prepay ratably the Loans of the Banks
included.
(c) The Borrower may not prepay any Money Market Loan.
(d) The Borrower may, upon at least one (1) Domestic Business Day's notice
to the Lead Agent (by 11:00 a.m New York time on such Domestic Business Day),
reimburse the Lead Agent for the benefit of the Fronting Bank for the amount of
any drawing under a Letter of Credit in whole or in part in any amount.
47
<PAGE>
(e) The Borrower may at any time return any undrawn Letter of Credit to
the Fronting Bank in whole, but not in part, and the Fronting Bank shall give
the Lead Agent and each of the Banks notice of such return.
(f) The Borrower may at any time and from time to time cancel all or any
part of the Commitments in amounts aggregating One Million Dollars ($1,000,000),
or an integral multiple of One Million Dollars ($1,000,000) in excess thereof,
by the delivery to the Lead Agent and the Banks of a notice of cancellation upon
at least three (3) Domestic Business Days' notice to Lead Agent and the Banks,
whereupon, all or such portion of the Commitments shall terminate as to the
Banks, pro rata on the date set forth in such notice of cancellation, and, if
--- ----
there are any Loans then outstanding in an aggregate amount which exceeds the
aggregate Commitments (after giving effect to any such reduction), the Borrower
shall prepay to the Lead Agent, for the account of the Banks, all or such
portion of Loans outstanding on such date in accordance with the requirements of
Sections 2.11(a) and (b). In no event shall the Borrower be permitted to cancel
Commitments for which a Letter of Credit has been issued and is outstanding
unless the Borrower returns (or causes to be returned) such Letter of Credit to
the Fronting Bank. The Borrower shall be permitted to designate in its notice of
cancellation which Loans, if any, are to be prepaid.
(g) Upon receipt of a notice of prepayment or cancellation or a return of
a Letter of Credit pursuant to this Section, the Lead Agent shall promptly, and
in any event within one (1) Domestic Business Day, notify each Bank of the
contents thereof and of such Bank's ratable share (if any) of such prepayment or
cancellation and such notice shall not thereafter be revocable by the Borrower.
(h) Any amounts so prepaid pursuant to this Section 2.11 may be reborrowed
subject to the other terms of this Agreement. In the event that the Borrower
elects to cancel all or any portion of the Commitments pursuant to Section
2.11(c) hereof, such amounts may not be reborrowed.
48
<PAGE>
Section 2.12 General Provisions as to Payments.
---------------------------------
(a) The Borrower shall make each payment of principal of, and interest on,
the Loans and of fees hereunder, not later than 12:00 Noon (New York City time)
on the date when due, in Federal or other funds immediately available in New
York City, to the Lead Agent at its address referred to in Section 9.1. The Lead
Agent will distribute to each Bank its ratable share of each such payment
received by the Lead Agent for the account of the Banks on the same day as
received by the Lead Agent if received by the Lead Agent by 1:00 p.m. (New York
City time), or, if received by the Lead Agent after 1:00 p.m. (New York City
time), on the immediately following Domestic Business Day. If the Lead Agent
shall fail to distribute to a Bank its ratable share of a payment on the same
day it is received or the immediately following Domestic Business Day, as
applicable in accordance with the immediately preceding sentence, the Lead Agent
shall pay to such Bank the interest accrued on such payment at the Federal Funds
Rate, commencing on the day the Lead Agent should have made the payment to such
Bank and ending on the day prior to the date payment is actually made. Whenever
any payment of principal of, or interest on, the Base Rate Loans or of fees
shall be due on a day which is not a Domestic Business Day, the date for payment
thereof shall be extended to the next succeeding Domestic Business Day. Whenever
any payment of principal of, or interest on, the Euro-Dollar Loans shall be due
on a day which is not a Euro-Dollar Business Day, the date for payment thereof
shall be extended to the next succeeding Euro-Dollar Business Day unless such
Euro-Dollar Business Day falls in another calendar month, in which case the date
for payment thereof shall be the next preceding Euro-Dollar Business Day. If the
date for any payment of principal is extended by operation of law or otherwise,
interest thereon shall be payable for such extended time.
(b) Unless the Lead Agent shall have received notice from the Borrower
prior to the date on which any payment is due to the Banks hereunder that the
Borrower will not make such payment in full, the Lead Agent may assume that the
Borrower has made such payment in full to the Lead Agent on such date and the
Lead Agent may, in reliance upon such assumption, cause to be distribed to
49
<PAGE>
each Bank on such due date an amount equal to the amount then due such Bank. If
and to the extent that the Borrower shall not have so made such payment, each
Bank shall repay to the Lead Agent forthwith on demand such amount distributed
to such Bank together with interest thereon, for each day from the date such
amount is distributed to such Bank until the date such Bank repays such amount
to the Lead Agent, at the Federal Funds Rate.
Section 2.13 Funding Losses. If the Borrower makes any payment of
--------------
principal with respect to any Euro-Dollar Loan (pursuant to Article II, VI or
VIII or otherwise, and specifically including any payments made pursuant to
Sections 2.10 or 2.11) on any day other than the last day of the Interest Period
applicable thereto, or if the Borrower fails to borrow any Euro-Dollar Loans,
after notice has been given to any Bank in accordance with Section 2.4(a), the
Borrower shall reimburse each Bank within 15 days after demand for any resulting
loss or expense incurred by it (or by an existing Participant in the related
Loan; provided that no Participant shall be entitled to receive more than the
Bank with respect to which such Participant is a Participant would be entitled
to receive under this Section 2.13), including (without limitation) any loss
incurred in obtaining, liquidating or employing deposits from third parties, but
excluding loss of margin for the period after any such payment or failure to
borrow, provided that such Bank shall have delivered to the Borrower a
--------
certificate as to the amount of such loss or expense and the calculation
thereof, which certificate shall be conclusive in the absence of manifest error.
Section 2.14 Computation of Interest and Fees. Interest based on the
--------------------------------
Prime Rate hereunder shall be computed on the basis of a year of 365 days (or
366 days in a leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All other interest and
fees shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding the last
day).
50
<PAGE>
Section 2.15 Method of Electing Interest Rates.
---------------------------------
(a) The Loans included in each Borrowing shall bear interest initially at
the type of rate specified by the Borrower in the applicable Notice of Committed
Borrowing. Thereafter, the Borrower may from time to time elect to change or
continue the type of interest rate borne by each Group of Loans (subject in each
case to the provisions of Article VIII), as follows:
(i) if such Loans are Base Rate Loans, the Borrower may elect to convert
such Loans to Euro-Dollar Loans as of any Euro-Dollar Business Day;
(ii) if such Loans are Euro-Dollar Loans, the Borrower may elect to convert
such Loans to Base Rate Loans or elect to continue such Loans as Euro-
Dollar Loans for an additional Interest Period, in each case effective on
the last day of the then current Interest Period applicable to such Loans.
Each such election shall be made by delivering a notice (a "Notice of Interest
------------------
Rate Election") to the Lead Agent at least three (3) Euro-Dollar Business Days
- -------------
before the conversion or continuation selected in such notice is to be effective
(unless the relevant Loans are to be continued as Base Rate Loans, in which case
such notice shall be delivered to the Lead Agent no later than 12:00 Noon (New
York City time) at least one (1) Domestic Business Day before such continuation
is to be effective). A Notice of Interest Rate Election may, if it so
specifies, apply to only a portion of the aggregate principal amount of the
relevant Group of Loans; provided that (i) such portion is allocated ratably
--------
among the Loans comprising such Group, (ii) the portion to which such notice
applies, and the remaining portion to which it does not apply, are each
$1,000,000 or any larger multiple of $1,000,000, (iii) there shall be no more
than ten (10) Borrowings comprised of Euro-Dollar Loans outstanding at any time
under this Agreement, (iv) no Loan may be continued as, or converted into, a
Euro-Dollar Loan when any Event of Default has occurred and is continuing, and
(v) no Interest Period shall extend beyond the Maturity Date.
51
<PAGE>
(b) Each Notice of Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which such notice applies;
(ii) the date on which the conversion or continuation selected in such
notice is to be effective, which shall comply with the applicable clause of
subsection (a) above;
(iii) if the Loans comprising such Group are to be converted, the new type
of Loans and, if such new Loans are Euro-Dollar Loans, the duration of the
initial Interest Period applicable thereto; and
(iv) if such Loans are to be continued as Euro-Dollar Loans for an
additional Interest Period, the duration of such additional Interest
Period.
Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of Interest Period.
(c) Upon receipt of a Notice of Interest Rate Election from the Borrower
pursuant to subsection (a) above, the Lead Agent shall notify each Bank on the
same day as it receives such Notice of Interest Rate Election of the contents
thereof and such notice shall not thereafter be revocable by the Borrower. If
the Borrower fails to deliver a timely Notice of Interest Rate Election to the
Lead Agent for any Group of Euro-Dollar Loans, such Loans shall be converted
into Base Rate Loans on the last day of the then current Interest Period
applicable thereto.
Section 2.16 Letters of Credit. Subject to the terms contained in
-----------------
this Agreement and the other Loan Documents, upon the receipt of a notice in
accordance with Section 2.2(b) requesting the issuance of a Letter of Credit,
the Fronting Bank shall issue a Letter of Credit or Letters of Credit in such
form as is reasonably acceptable to the Borrower in an amount or amounts equal
to the amount or amounts requested by the Borrower.
52
<PAGE>
(b) Each Letter of Credit shall be issued in the minimum amount of One
Million Dollars ($1,000,000).
(c) The Letter of Credit Usage shall be no more than Twenty-Five Million
Dollars ($25,000,000) at any one time.
(d) There shall be no more than three (3) Letters of Credit outstanding at
any one time.
(e) In the event of any request for a drawing under any Letter of Credit
by the beneficiary thereunder, the Fronting Bank shall endeavor to notify the
Borrower and the Lead Agent (and the Lead Agent shall endeavor to notify each
Bank thereof) on or before the date on which the Fronting Bank intends to honor
such drawing, and, except as provided in this subsection (e), the Borrower shall
reimburse the Fronting Bank, in immediately available funds, on the same day on
which such drawing is honored in an amount equal to the amount of such drawing.
Notwithstanding anything contained herein to the contrary, however, unless the
Borrower shall have notified the Lead Agent, and the Fronting Bank prior to
11:00 a.m. (New York time) on the Domestic Business Day immediately prior to the
date of such drawing that the Borrower intends to reimburse the Fronting Bank
for the amount of such drawing with funds other than the proceeds of the Loans,
the Borrower shall be deemed to have timely given a Notice of Committed
Borrowing pursuant to Section 2.2 to the Lead Agent, requesting a Borrowing of
Base Rate Loans on the date on which such drawing is honored and in an amount
equal to the amount of such drawing. Each Bank (other than the Fronting Bank)
shall, in accordance with Section 2.4(b), make available its share of such
Borrowing to the Lead Agent, the proceeds of which shall be applied directly by
the Lead Agent to reimburse the Fronting Bank for the amount of such draw. In
the event that any such Bank fails to make available to the Fronting Bank the
amount of such Bank's participation on the date of a drawing, the Fronting Bank
shall be entitled to recover such amount on demand from such Bank together with
interest at the Federal Funds Rate commencing on the date such drawing is
honored.
(f) If, after the date hereof, any change in any law or regulation or in
the interpretation thereof by any court or administrative or governmental
authority
53
<PAGE>
charged with the administration thereof shall either (i) impose, modify or deem
applicable any reserve, special deposit or similar requirement against letters
of credit issued by, or assets held by, or deposits in or for the account of, or
participations in any letter of credit, upon any Bank (including the Fronting
Bank) or (ii) impose on any Bank any other condition regarding this Agreement or
such Bank (including the Fronting Bank) as it pertains to the Letters of Credit
or any participation therein and the result of any event referred to in the
preceding clause (i) or (ii) shall be to increase, by an amount deemed by the
Fronting Bank or such Bank to be material, the cost to the Fronting Bank or any
Bank of issuing or maintaining any Letter of Credit or participating therein
then the Borrower shall pay to the Fronting Bank or such Bank, within 15 days
after written demand by such Bank (with a copy to the Lead Agent), which demand
shall be accompanied by a certificate showing, in reasonable detail, the
calculation of such amount or amounts, such additional amounts as shall be
required to compensate the Fronting Bank or such Bank for such increased costs
or reduction in amounts received or receivable hereunder.
(g) The Borrower hereby agrees to protect, indemnify, pay and save the
Fronting Bank harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
attorneys' fees and disbursements) which the Fronting Bank may incur or be
subject to as a result of (i) the issuance of the Letters of Credit, other than
as a result of the gross negligence or wilful misconduct of the Fronting Bank or
(ii) the failure of the Fronting Bank to honor a drawing under any Letter of
Credit as a result of any act or omission, whether rightful or wrongful, of any
present or future de jure or de facto government or Governmental Authority
-- ---- -- -----
(collectively, "Governmental Acts"), other than as a result of the gross
-----------------
negligence or wilful misconduct of the Fronting Bank. As between the Borrower
and the Fronting Bank, the Borrower assumes all risks of the acts and omissions
of, or misuses of, the Letters of Credit issued by the Fronting Bank, by the
beneficiaries of such Letters of Credit. In furtherance and not in limitation of
the foregoing, the Fronting Bank shall not be responsible (i) for the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connec-
54
<PAGE>
tion with the application for and issuance of such Letters of Credit, even if it
should in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (ii) for the validity or insufficiency of any
instrument transferring or assigning or purporting to transfer or assign any
such Letter of Credit or the rights or benefits thereunder or proceeds thereof,
in whole or in part, which may prove to be invalid or ineffective for any
reason; (iii) for failure of the beneficiary of any such Letter of Credit to
comply fully with conditions required in order to draw upon such Letter of
Credit; (iv) for errors, omissions, interruptions or delays in transmission or
delivery of any message, by mail, cable, telegraph, telex, facsimile
transmission, or otherwise; (v) for errors in interpretation of any technical
terms; (vi) for any loss or delay in the transmission or otherwise of any
documents required in order to make a drawing under any such Letter of Credit or
of the proceeds thereof; (vii) for the misapplication by the beneficiary of any
such Letter of Credit of the proceeds of such Letter of Credit; and (viii) for
any consequence arising from causes beyond the control of the Fronting Bank,
including any Government Acts, in each case other than as a result of the gross
negligence or willful misconduct of the Fronting Bank. None of the above shall
affect, impair or prevent the vesting of the Fronting Bank's rights and powers
hereunder. In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by the Fronting
Bank under or in connection with the Letters of Credit issued by it or the
related certificates, if taken or omitted in good faith, shall not put the
Fronting Bank under any resulting liability to the Borrower.
(h) If the Fronting Bank or the Lead Agent is required at any time,
pursuant to any bankruptcy, insolvency, liquidation or reorganization law or
otherwise, to return to the Borrower any reimbursement by the Borrower of any
drawing under any Letter of Credit, each Bank shall pay to the Fronting Bank or
the Lead Agent, as the case may be, its share of such payment, but without
interest thereon unless the Fronting Bank or the Lead Agent is required to pay
interest on such amounts to the person recovering such payment, in which case
with interest thereon, computed at the same rate, and on the same
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basis, as the interest that the Fronting Bank or the Lead Agent is required to
pay.
Section 2.17. Letter of Credit Usage Absolute. The obligations of the
-------------------------------
Borrower under this Agreement in respect of any Letter of Credit shall be
unconditional and irrevocable, and shall be paid strictly in accordance with the
terms of this Agreement (as the same may be amended from time to time) and any
Letter of Credit Documents (as hereinafter defined) under all circumstances,
including, without limitation, to the extent permitted by law, the following
circumstances:
(a) any lack of validity or enforceability of any Letter of Credit or any
other agreement or instrument relating thereto (collectively, the "Letter of
---------
Credit Documents") or any Loan Document;
- ----------------
(b) any change in the time, manner or place of payment of, or in any other
term of, all or any of the obligations of the Borrower in respect of the Letters
of Credit or any other amendment or waiver of or any consent by the Borrower to
departure from all or any of the Letter of Credit Documents or any Loan
Document; provided, that the Fronting Bank shall not consent to any such change
--------
or amendment unless previously consented to in writing by the Borrower;
(c) any exchange, release or non-perfection of any collateral, or any
release or amendment or waiver of or consent to departure from any guaranty, for
all or any of the obligations of the Borrower in respect of the Letters of
Credit;
(d) the existence of any claim, set-off, defense or other right that the
Borrower may have at any time against any beneficiary or any transferee of a
Letter of Credit (or any Persons for whom any such beneficiary or any such
transferee may be acting), the Lead Agent, the Fronting Bank or any Bank (other
than a defense based on the gross negligence or wilful misconduct of the Lead
Agent, the Fronting Bank or such Bank) or any other Person, whether in
connection with the Loan Documents, the transactions contemplated hereby or by
the Letters of Credit Documents or any unrelated transaction;
56
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(e) any draft or any other document presented under or in connection with
any Letter of Credit or other Loan Document proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect; provided, that payment by the Fronting Bank under
--------
such Letter of Credit against presentation of such draft or document shall not
have constituted gross negligence or wilful misconduct of the Fronting Bank;
(f) payment by the Fronting Bank against presentation of a draft or
certificate that does not comply with the terms of the Letter of Credit;
provided, that such payment shall not have constituted gross negligence or
- --------
wilful misconduct of the Fronting Bank; and
(g) any other circumstance or happening whatsoever other than the payment
in full of all obligations hereunder in respect of any Letter of Credit or any
agreement or instrument relating to any Letter of Credit, whether or not similar
to any of the foregoing, that might otherwise constitute a defense available to,
or a discharge of, the Borrower; provided, that such other circumstance or
--------
happening shall not have been the result of gross negligence or wilful
misconduct of the Fronting Bank.
ARTICLE III
CONDITIONS
Section 3.1 Closing. The closing hereunder shall occur on the date
-------
(the "Closing Date") when each of the following conditions is satisfied (or
------------
waived by the Lead Agent, such waiver to be evidenced by the continuation or
funding after the date hereof of Loans and notice of such waiver to be given to
the Banks by the Lead Agent), each document to be dated the Closing Date unless
otherwise indicated:
(a) the Borrower shall have executed and delivered to the Lead Agent a
Note for the account of each Bank dated on or before the Closing Date complying
with the provisions of Section 2.5;
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(b) the Borrower shall have executed and delivered to the Lead Agent a
duly executed original of this Agreement;
(c) the General Partner shall have executed and delivered to the Lead
Agent a duly executed original of the Guaranty
(d) the Lead Agent shall have received an opinion of Latham & Watkins
counsel for the Borrower and the General Partner, acceptable to the Lead Agent,
the Banks and their counsel;
(e) the Lead Agent shall have received all documents the Lead Agent may
reasonably request relating to the existence of the Borrower, the General
Partner, the authority for and the validity of this Agreement and the other Loan
Documents, and any other matters relevant hereto, all in form and substance
reasonably satisfactory to the Lead Agent. Such documentation shall include,
without limitation, the articles of incorporation and by-laws or the partnership
agreement and limited partnership certificate, as applicable, of the Borrower
and the General Partner, as amended, modified or supplemented to the Closing
Date, each certified to be true, correct and complete by a senior officer of the
Borrower as of a date not more than forty-five (45) days prior to the Closing
Date, together with a good standing certificate from the Secretary of State (or
the equivalent thereof) of the State of Delaware with respect to the Borrower
and of the State of [Maryland] with respect to the General Partner, and a good
standing certificate from the Secretary of State (or the equivalent thereof) of
each other State in which the Borrower and the General Partner is required to be
qualified to transact business, each to be dated not more than forty-five (45)
days prior to the Closing Date;
(f) the Lead Agent shall have received all certificates, agreements and
other documents and papers referred to in this Section 3.1 and Section 3.2,
unless otherwise specified, in sufficient counterparts, satisfactory in form and
substance to the Lead Agent in its sole discretion;
(g) the Borrower and the General Partner shall have taken all actions
required to authorize the execution and delivery of this Agreement and the
other Loan
58
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Documents and the performance thereof by the Borrower and the General Partner;
(h) the Lead Agent and the Banks shall have received an unaudited
consolidated balance sheet and income statement of the Borrower for the fiscal
quarter ended December 31, 1997;
(i) the Lead Agent shall be satisfied that neither the Borrower nor the
General Partner is subject to any present or contingent environmental liability
which could reasonably be expected to have a Material Adverse Effect;
(j) the Lead Agent shall have received wire transfer instructions in
connection with the Loans to be made on the Closing Date;
(k) the Lead Agent shall have received, for its and any other Bank's
account, all fees due and payable pursuant to Section 2.8 hereof on or before
the Closing Date, and the reasonable fees and expenses accrued through the
Closing Date of Skadden, Arps, Slate, Meagher & Flom LLP;
(l) the Lead Agent shall have received copies of all consents, licenses
and approvals, if any, required in connection with the execution, delivery and
performance by the Borrower, and the validity and enforceability against the
Borrower, of the Loan Documents, or in connection with any of the transactions
contemplated thereby to occur on or prior to the Closing Date, and such
consents, licenses and approvals shall be in full force and effect;
(m) the representations and warranties of the Borrower contained in this
Agreement shall be true and correct in all material respects on and as of the
Closing Date both before and after giving effect to the making of any Loans;
(n) receipt by the Lead Agent and the Banks of a certificate of the chief
financial officer or the chief accounting officer of the Borrower certifying
that the Borrower is in compliance with all covenants of the Borrower contained
in this Agreement, including, without
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limitation, the requirements of Section 5.8, as of the Closing Date; and
(o) the General Partner shall intend to continue to qualify as a real
estate investment trust under the Internal Revenue Code.
The Lead Agent shall promptly notify the Borrower and the Banks of the
Closing Date, and such notice shall be conclusive and binding on all parties
hereto.
Section 3.2. Borrowings. The obligation of any Bank to make a Loan on
----------
the occasion of any Borrowing or to participate in any Letter of Credit issued
by the Fronting Bank and the obligation of the Fronting Bank to issue a Letter
of Credit on the occasion of any Borrowing is subject to the satisfaction of the
following conditions:
(a) the Closing Date shall have occurred on or prior to February 28, 1998;
(b) receipt by the Lead Agent of a Notice of Borrowing as required by
Section 2.2 or 2.3;
(c) immediately after such Borrowing, the Outstanding Balance will not
exceed the aggregate amount of the Commitments and with respect to each Bank,
such Bank's pro rata portion of the Committed Loans and Letter of Credit Usage
--------
will not exceed such Bank's Commitment;
(d) immediately before and after such Borrowing, no Default or Event of
Default shall have occurred and be continuing both before and after giving
effect to the making of such Loans;
(e) the representations and warranties of the Borrower contained in this
Agreement (other than representations and warranties which speak as of a
specific date) shall be true and correct in all material respects on and as of
the date of such Borrowing both before and after giving effect to the making of
such Loans;
(f) no law or regulation shall have been adopted, no order, judgment or
decree of any governmental authority shall have been issued, and no litigation
shall be pending or threatened, which does or, with respect to
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any threatened litigation, seeks to enjoin, prohibit or restrain, the making or
repayment of the Loans, the issuance of any Letter of Credit or any
participations therein or the consummation of the transactions contemplated
hereby; and
(g) no event, act or condition shall have occurred after the Closing Date
which, in the reasonable judgment of the Lead Agent or the Required Banks, as
the case may be, has had or is likely to have a Material Adverse Effect.
Each Borrowing hereunder shall be deemed to be a representation and
warranty by the Borrower on the date of such Borrowing as to the facts specified
in clauses (c) through (g) of this Section (except that with respect to clause
(f), such representation and warranty shall be deemed to be limited to laws,
regulations, orders, judgments, decrees and litigation affecting the Borrower
and not solely the Banks).
Section 3.3. New Acquisitions and Additional Real Property Assets.
----------------------------------------------------
(a) Any New Acquisition or Real Property Asset desired by the Borrower to
be included as a Unencumbered Asset Pool Property, prior to the Adjustment Date,
will require the approval of the Required Banks. The Borrower shall submit to
the Lead Agent the materials set forth below (the "Due Diligence Package")
---------------------
relating to each New Acquisition or Real Property Asset that the Borrower
desires to be added to the Unencumbered Asset Pool Properties. The Due Diligence
Package shall include (i) a description of the Real Property Asset, (ii) two
years of historical cash flow operating statements, if available, (iii) five
years of cash flow projections (including capital expenditures), (iv) the credit
history of each existing tenant which occupies more than 15% of such Real
Property Asset, (v) a map and site plan, including an existing survey of the
property dated not more than twelve (12) months prior to such submission, (vi)
copies of all lease agreements and abstracts thereof with each existing tenant
which occupies more than 15% of such Real Property Asset, (vii) a satisfactory
environmental report indicating that (A) the Real Property Asset complies with
all Environmental Laws in all material respects, (B) is free of all Material of
Environmental Concern in all
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material respects and (C) is not subject to any Environmental Claim, (viii) an
engineer's inspection report satisfactory to the Lead Agent (provided, however,
the Lead Agent shall not deem an engineer's inspection report satisfactory
unless the Required Banks shall find such engineer's inspection report
satisfactory), (ix) a title report, (ix) a final investment memorandum prepared
by the Borrower in connection with the Real Property Asset, and (x) a statement
with respect to the purchase price of such Real Property Asset or, if such Real
Property Asset was purchased as part of a portfolio and there was no allocation
of purchase price, of the purchase price of the portfolio of Real Property
Assets of which it formed a part. The Borrower shall permit the Lead Agent at
all reasonable times and upon reasonable prior notice to make an inspection of
such New Acquisition or Real Property Asset.
(b) The Borrower shall distribute a copy of each item constituting the Due
Diligence Package by overnight mail to each of the Banks for their review and
approval. Failure to respond to the Lead Agent in writing by any Bank within ten
(10) Domestic Business Days after receipt of the Due Diligence Package shall be
deemed to be an approval by such Bank of such New Acquisition or Real Property
Asset for inclusion as a Unencumbered Asset Pool Property.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Lead Agent and each of the other Banks which
may become a party to this Agreement to make the Loans, the Borrower makes the
following representations and warranties as of the date hereof. Such
representations and warranties shall survive the effectiveness of this
Agreement, the execution and delivery of the other Loan Documents and the making
of the Loans.
Section 4.1. Existence and Power. The Borrower is duly organized,
-------------------
validly existing and in good standing as a limited partnership under the laws of
the State of Delaware and has all powers and all material governmental licenses,
authorizations, consents and
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<PAGE>
approvals required to own its property and assets and carry on its business as
now conducted or as it presently proposes to conduct and has been duly qualified
and is in good standing in every jurisdiction in which the failure to be so
qualified and/or in good standing is likely to have a Material Adverse Effect.
Section 4.2. Power and Authority. The Borrower has the organizational
-------------------
power and authority to execute, deliver and carry out the terms and provisions
of each of the Loan Documents to which it is a party and has taken all necessary
action to authorize the execution and delivery on behalf of the Borrower and the
performance by the Borrower of such Loan Documents. The Borrower has duly
executed and delivered each Loan Document to which it is a party, and each such
Loan Document constitutes the legal, valid and binding obligation of the
Borrower, enforceable in accordance with its terms, except as enforceability
may be limited by applicable insolvency, bankruptcy or other laws affecting
creditors rights generally, or general principles of equity, whether such
enforceability is considered in a proceeding in equity or at law.
Section 4.3. No Violation. Neither the execution, delivery or
------------
performance by or on behalf of the Borrower of the Loan Documents, nor
compliance by the Borrower with the terms and provisions thereof nor the
consummation of the transactions contemplated by the Loan Documents, (i) will
contravene any applicable provision of any law, statute, rule, regulation,
order, writ, injunction or decree of any court or governmental instrumentality
applicable to Borrower or (ii) will conflict with or result in any breach of,
any of the terms, covenants, conditions or provisions of, or constitute a
default under, or result in the creation or imposition of (or the obligation to
create or impose) any Lien upon any of the property or assets of the Borrower
pursuant to the terms of any material indenture, mortgage, deed of trust, or
other agreement or other instrument to which the Borrower (or of any partnership
of which the Borrower is a partner) is a party or by which it or any of its
property or assets is bound or to which it is subject or (iii) will cause a
default by the Borrower under any organizational document of any Subsidiary, or
cause a default under the General Partner's articles of incorporation or by-
laws.
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Section 4.4. Financial Information.
---------------------
(a) The unaudited consolidated balance sheets of the Borrower and the
General Partner as of December 31, 1997, when delivered to Lead Agent and to the
Banks shall fairly present, in conformity with GAAP, the consolidated financial
position of the Borrower and the General Partner as of such date and their
consolidated results of operations for such fiscal year.
(b) Since December 31, 1997, (i) there has been no material adverse change
in the business, financial position or results of operations of the Borrower or
the General Partner and (ii) except as previously disclosed to the Lead Agent
and to the Banks, neither the Borrower nor the General Partner has incurred any
material indebtedness or guaranty.
Section 4.5. Litigation.
----------
(a) There is no action, suit or proceeding pending against, or to the
knowledge of the Borrower, threatened against or affecting, (i) the Borrower,
the General Partner or any of their Subsidiaries, (ii) the Loan Documents or any
of the transactions contemplated by the Loan Documents or (iii) any of their
assets, in any case before any court or arbitrator or any governmental body,
agency or official which could reasonably be expected to have a Material Adverse
Effect or which in any manner draws into question the validity of this Agreement
or the other Loan Documents.
(b) There are no final nonappealable judgments or decrees in an aggregate
amount of One Million Dollars ($1,000,000) or more entered by a court or courts
of competent jurisdiction against the Borrower or the General Partner (other
than any judgment as to which, and only to the extent, a reputable insurance
company has acknowledged coverage of such claim in writing).
Section 4.6. Compliance with ERISA.
---------------------
(a) Except as previously disclosed to the Lead Agent in writing, each
member of the ERISA Group has fulfilled its obligations under the minimum
funding standards of ERISA and the Internal Revenue Code with respect to each
Plan and is in compliance in all material
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<PAGE>
respects with the presently applicable provisions of ERISA and the Internal
Revenue Code with respect to each Plan. No member of the ERISA Group has (i)
sought a waiver of the minimum funding standard under Section 412 of the
Internal Revenue Code in respect of any Plan, (ii) failed to make any
contribution or payment to any Plan or Multiemployer Plan or in respect of any
Benefit Arrangement, or made any amendment to any Plan or Benefit Arrangement,
which has resulted or could result in the imposition of a Lien or the posting of
a bond or other security under ERISA or the Internal Revenue Code or (iii)
incurred any liability under Title IV of ERISA other than a liability to the
PBGC for premiums under Section 4007 of ERISA.
(b) Except for each "employee benefit plan" (as such term is defined in
Section 3(3) of ERISA) that is maintained, or contributed to, by one or more
members of the ERISA Group, no member of the ERISA Group is a "party in
interest" (as such term is defined in Section 3(14) of ERISA or a "disqualified
person" (as such term is defined in Section 4975(e)(2) of the Code) with respect
to any funded employee benefit plan and none of the assets of any such plans
have been invested in a manner that would cause the transactions contemplated by
the Loan Documents to constitute a nonexempt prohibited transaction (as such
term is defined in Section 4975 of the Code or Section 406 of ERISA).
Section 4.7. Environmental Compliance. To the best of Borrower's
------------------------
knowledge, except as set forth in the Phase I environmental report(s) delivered
to and accepted by the Lead Agent with respect to each of the Unencumbered Asset
Pool Properties (as supplemented or amended, the "Environmental Reports"), (i)
---------------------
there are in effect all Environmental Approvals which are required to be
obtained under all Environmental Laws with respect to the Property, except for
such Environmental Approvals the absence of which would not have a Material
Adverse Effect, (ii) the Borrower is in compliance in all material respects with
the terms and conditions of all such Environmental Approvals, and is also in
compliance in all material respects with all other Environmental Laws or any
plan, order, decree, judgment, injunction, notice or demand letter issued,
entered or approved thereunder, except to the extent failure to comply would not
have a Material Adverse Effect.
65
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Except as set forth in the Environmental Reports or otherwise
disclosed to the Lead Agent as of the Closing Date, to Borrower's actual
knowledge:
(i) There are no Environmental Claims or investigations pending or
threatened by any Governmental Authority with respect to any alleged
failure by the Borrower to have any Environmental Approval required in
connection with the conduct of the business of the Borrower on any of the
Unencumbered Asset Pool Properties, or with respect to any generation,
treatment, storage, recycling, transportation, Release or disposal of any
Material of Environmental Concern generated by the Borrower or any lessee
on any of the Unencumbered Asset Pool Properties;
(ii) No Material of Environmental Concern has been Released at the
Property to an extent that it may reasonably be expected to have a Material
Adverse Effect;
(iii) No PCB (in amounts or concentrations which exceed those set by
applicable Environmental Laws) is present at any of the Unencumbered Asset
Pool Properties;
(iv) No friable asbestos is present at any of the Unencumbered Asset
Pool Properties;
(v) There are no underground storage tanks for Material of
Environmental Concern, active or abandoned, at any of the Unencumbered
Asset Pool Properties;
(vi) No Environmental Claims have been filed with a Governmental
Authority with respect to any of the Unencumbered Asset Pool Properties,
and none of the Unencumbered Asset Pool Properties is listed or proposed
for listing on the National Priority List promulgated pursuant to CERCLA,
on CERCLIS or on any similar state list of sites requiring investigation or
clean-up;
(vii) There are no Liens arising under or pursuant to any Environmental
Laws on any of the Unencumbered Asset Pool Properties, and no govern-
66
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ment actions have been taken or are in process which could subject any of
the Unencumbered Asset Pool Properties to such Liens; and
(viii) There have been no environmental investigations, studies, audits,
tests, reviews or other analyses conducted by, or which are in the
possession of, the Borrower in relation to any of the Unencumbered Asset
Pool Properties which have not been made available to the Lead Agent.
Section 4.8. Taxes. The initial tax year of the Borrower for federal
-----
income tax purposes was 1996. The federal income tax returns of the Borrower and
its Consolidated Subsidiaries for the fiscal year ended December 31, 1996 have
been filed. The Borrower and its Subsidiaries have filed all United States
Federal income tax returns and all other material tax returns which are required
to be filed by them and have paid all taxes due pursuant to such returns or
pursuant to any assessment received by the Borrower or any Subsidiary except
those being contested in good faith. The charges, accruals and reserves on the
books of the Borrower and its Subsidiaries in respect of taxes or other
governmental charges are, in the opinion of the Borrower, adequate.
Section 4.9. Full Disclosure. All information heretofore furnished by
---------------
the Borrower to the Lead Agent or any Bank for purposes of or in connection with
this Agreement or any transaction contemplated hereby is true and accurate in
all material respects on the date as of which such information is stated or
certified. The Borrower has disclosed to the Banks in writing any and all facts
known to the Borrower which materially and adversely affect or are likely to
materially and adversely affect (to the extent the Borrower can now reasonably
foresee), the business, operations or financial condition of the Borrower
considered as one enterprise or the ability of the Borrower to perform its
obligations under this Agreement or the other Loan Documents.
Section 4.10. Solvency. On the Closing Date and after giving effect to
--------
the transactions contemplated by the Loan Documents occurring on the Closing
Date, the Borrower is Solvent.
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Section 4.11. Use of Proceeds; Margin Regulations. All proceeds of the
-----------------------------------
Loans will be used by the Borrower only in accordance with the provisions
hereof. No part of the proceeds of any Loan will be used by the Borrower to
purchase or carry any Margin Stock or to extend credit to others for the purpose
of purchasing or carrying any Margin Stock. Neither the making of any Loan nor
the use of the proceeds thereof will violate or be inconsistent with the
provisions of Regulations G, T, U or X of the Federal Reserve Board.
Section 4.12. Governmental Approvals. No order, consent, approval,
----------------------
license, authorization, or validation of, or filing, recording or registration
with, or exemption by, any governmental or public body or authority, or any
subdivision thereof, is required to authorize, or is required in connection with
the execution, delivery and performance of any Loan Document or the consummation
of any of the transactions contemplated thereby other than those that have
already been duly made or obtained and remain in full force and effect.
Section 4.13. Investment Company Act; Public Utility Holding Company Act.
----------------------------------------------------------
The Borrower is not (x) an "investment company" or a company "controlled" by an
------------------ ----------
"investment company", within the meaning of the Investment Company Act of 1940,
------------------
as amended, (y) a "holding company" or a "subsidiary company" of a "holding
--------------- ------------------
company" or an "affiliate" of either a "holding company" or a "subsidiary
company" within the meaning of the Public Utility Holding Company Act of 1935,
as amended, or (z) subject to any other federal or state law or regulation which
purports to restrict or regulate its ability to borrow money.
Section 4.14. Closing Date Transactions. On the Closing Date and
-------------------------
immediately prior to or concurrently with the making of the Loans, the
transactions (other than the making of the Loans) intended to be consummated on
the Closing Date will have been consummated in accordance with all applicable
laws. On or prior to the Closing Date, all consents and approvals of, and
filings and registrations with, and all other actions by, any Person required in
order to make or consummate such transactions have been obtained, given, filed
or taken and are in full force and effect.
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Section 4.15. Representations and Warranties in Loan Documents. All
------------------------------------------------
representations and warranties made by the Borrower in the Loan Documents are
true and correct in all material respects.
Section 4.16. Patents, Trademarks, etc. The Borrower has obtained and
------------------------
holds in full force and effect all patents, trademarks, service marks, trade
names, copyrights and other such rights, free from burdensome restrictions,
which are necessary for the operation of its business as presently conducted,
the impairment of which is likely to have a Material Adverse Effect. To the
Borrower's knowledge, no material product, process, method, substance, part or
other material presently sold by or employed by the Borrower in connection with
such business infringes any patent, trademark, service mark, trade name,
copyright, license or other such right owned by any other Person. There is not
pending or, to the Borrower's knowledge, threatened any claim or litigation
against or affecting the Borrower contesting its right to sell or use any such
product, process, method, substance, part or other material.
Section 4.17. No Default. No Default or Event of Default exists under or
----------
with respect to any Loan Document. The Borrower is not in default in any
material respect beyond any applicable grace period under or with respect to any
other material agreement, instrument or undertaking to which it is a party or by
which it or any of its property is bound in any respect, the existence of which
default is likely (to the extent that the Borrower can now reasonably foresee)
to result in a Material Adverse Effect.
Section 4.18. Licenses, etc. The Borrower has obtained and holds in full
-------------
force and effect, all franchises, licenses, permits, certificates,
authorizations, qualifications, accreditations, easements, rights of way and
other consents and approvals which are necessary for the operation of its
businesses as presently conducted, the absence of which is likely (to the extent
that the Borrower can now reasonably foresee) to have a Material Adverse Effect.
Section 4.19. Compliance With Law. The Borrower is in compliance with all
-------------------
laws, rules, regulations, orders, judgments, writs and decrees, including,
without
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limitation, all building and zoning ordinances and codes, the failure to
comply with which is likely (to the extent that the Borrower can now reasonably
foresee) to have a Material Adverse Effect.
Section 4.20. No Burdensome Restrictions. The Borrower is not a party to
--------------------------
any agreement or instrument or subject to any other obligation or any charter or
corporate or partnership restriction, as the case may be, which, individually or
in the aggregate, is likely (to the extent that the Borrower can now reasonably
foresee) to have a Material Adverse Effect.
Section 4.21. Brokers' Fees. The Borrower has not dealt with any broker
-------------
or finder with respect to the transactions contemplated by the Loan Documents
(except with respect to the acquisition or disposition of Real Property Assets)
or otherwise in connection with this Agreement, and the Borrower has not done
any acts, had any negotiations or conversation, or made any agreements or
promises which will in any way create or give rise to any obligation or
liability for the payment by the Borrower of any brokerage fee, charge,
commission or other compensation to any party with respect to the transactions
contemplated by the Loan Documents (except with respect to the acquisition or
disposition of Real Property Assets), other than the fees payable hereunder.
Section 4.22. Labor Matters. Except as set forth on Schedule 4.22
------------- -------------
attached hereto and made a part hereof, there are no collective bargaining
agreements or Multiemployer Plans covering the employees of the Borrower and the
Borrower has not suffered any strikes, walkouts, work stoppages or other
material labor difficulty within the last five (5) years.
Section 4.23. Organizational Documents. The documents delivered pursuant
------------------------
to Section 3.1(c) constitute, as of the Closing Date, all of the organizational
documents (together with all amendments and modifications thereof) of the
Borrower. The Borrower represents that it has delivered to the Lead Agent true,
correct and complete copies of each of the documents set forth in this Section
Section 4.24. Principal Offices. The principal office, chief executive
-----------------
office and principal place of
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business of the Borrower is 2250 East Imperial Highway, Suite 1200, El Segundo,
California 90245.
Section 4.25. REIT Status. For the fiscal year ended December 31, 1998,
-----------
the General Partner will qualify, and the General Partner intends to continue to
qualify as a real estate investment trust under the Code.
Section 4.26. Ownership of Property. The Borrower owns fee simple title
---------------------
to or a ground leasehold interest in each of the Unencumbered Asset Pool
Properties, other than the Real Property Asset commonly known as Walnut Park
Business Center, in which the Borrower owns an 87.744% tenancy-in-common
interest.
Section 4.27. Insurance. The Borrower currently maintains insurance
---------
at 100% replacement cost insurance coverage in respect of each of the Real
Property Assets, as well as comprehensive general liability insurance (including
"builders' risk") against claims for personal, and bodily injury and/or death,
to one or more persons, or property damage, as well as workers' compensation
insurance, in each case with respect to the Real Property Assets with insurers
having an A.M. Best policyholders' rating of not less than A-VIII in amounts
that prudent owner of assets such as the Real Property Assets would maintain.
ARTICLE V
AFFIRMATIVE AND NEGATIVE COVENANTS
The Borrower covenants and agrees that, so long as any Bank has any
Commitment hereunder or any Obligations remain unpaid:
Section 5.1. Information. The Borrower will deliver to the Lead Agent
-----------
and to each of the Banks:
(a) as soon as available and in any event within 105 days after the end of
each fiscal year of the Borrower, an audited consolidated balance sheet of the
Borrower as of the end of such fiscal year and the related consolidated
statements of cash flow and operations for such fiscal year, setting forth in
each case in comparative form the figures for the previous fiscal
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year, audited by Delloite & Touche or other independent public accountants of
similar standing;
(b) as soon as available and in any event within sixty (60) days after the
end of each quarter of each fiscal year (other than the last quarter in any
fiscal year) of the Borrower, a statement of the Borrower, prepared in
accordance with GAAP, setting forth the operating income and operating expenses
of the Borrower, in sufficient detail so as to calculate Unencumbered Asset Pool
Net Operating Cash Flow of the Borrower for the immediately preceding quarter;
(c) simultaneously with the delivery of each set of financial statements
referred to in clauses (a) and (b) above, a certificate of the chief financial
officer or the chief accounting officer of the Borrower (i) setting forth in
reasonable detail the calculations required to establish whether the Borrower
was in compliance with the requirements of Section 5.8 on the date of such
financial statements;(ii) stating whether any Default exists on the date of such
certificate and, if any Default then exists, setting forth the details thereof
and the action which the Borrower is taking or proposes to take with respect
thereto; and (iii) certifying (x) that such financial statements fairly present
the financial condition and the results of operations of the Borrower as of the
dates and for the periods indicated, in accordance with GAAP, subject, in the
case of interim financial statements, to normal year-end adjustments, and (y)
that such officer has reviewed the terms of the Loan Documents and has made, or
caused to be made under his or her supervision, a review in reasonable detail of
the business and condition of the Borrower during the period beginning on the
date through which the last such review was made pursuant to this Section 5.1(c)
and ending on a date not more than ten (10) Domestic Business Days prior to the
date of such delivery and that on the basis of such review of the Loan Documents
and the business and condition of the Borrower, to the best knowledge of such
officer, no Default or Event of Default under any other provision of Section 6.1
occurred or, if any such Default or Event of Default has occurred, specifying
the nature and extent thereof and, if continuing, the action the Borrower
proposes to take in respect thereof;
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(d) simultaneously with the delivery of each set of financial statements
referred to in clause (a) above, a statement of a firm of independent public
accountants confirming the calculations set forth in the officer's certificate
delivered simultaneously therewith pursuant to clause (c) above;
(e) (i) within five (5) days after the president, chief financial officer,
treasurer, controller or other executive officer of the Borrower obtains
knowledge of any Default, if such Default is then continuing, a certificate of
the chief financial officer or the president of the Borrower setting forth the
details thereof and the action which the Borrower is taking or proposes to take
with respect thereto; (ii) promptly and in any event within ten (10) days after
the Borrower obtains knowledge thereof, notice of (x) any litigation or
governmental proceeding pending or threatened against the Borrower which is
likely to individually or in the aggregate, result in a Material Adverse Effect,
and (y) any other event, act or condition which is likely to result in a
Material Adverse Effect;
(f) if and when any member of the ERISA Group (i) gives or is required to
give notice to the PBGC of any "reportable event" (as defined in Section 4043 of
ERISA) with respect to any Plan which might constitute grounds for a termination
of such Plan under Title IV of ERISA, or knows that the plan administrator of
any Plan has given or is required to give notice of any such reportable event, a
copy of the notice of such reportable event given or required to be given to the
PBGC; (ii) receives notice of complete or partial withdrawal liability under
Title IV of ERISA or notice that any Multiemployer Plan is in reorganization, is
insolvent or has been terminated, a copy of such notice; (iii) receives notice
from the PBGC under Title IV of ERISA of an intent to terminate, impose
liability (other than for premiums under Section 4007 of ERISA) in respect of,
or appoint a trustee to administer any Plan, a copy of such notice; (iv) applies
for a waiver of the minimum funding standard under Section 412 of the Internal
Revenue Code, a copy of such application; (v) gives notice of intent to
terminate any Plan under Section 4041(c) of ERISA, a copy of such notice and
other information filed with the PBGC; (vi) gives notice of withdrawal from any
Plan pursuant to Section 4063 of ERISA, a copy of such notice; or (vii)
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fails to make any payment or contribution to any Plan or Multiemployer Plan or
in respect of any Benefit Arrangement or makes any amendment to any Plan or
Benefit Arrangement which has resulted or could result in the imposition of a
Lien or the posting of a bond or other security, a certificate of the chief
financial officer or the chief accounting officer of the Borrower setting forth
details as to such occurrence and action, if any, which the Borrower or
applicable member of the ERISA Group is required or proposes to take;
(g) promptly and in any event within five (5) Domestic Business Days after
the Borrower obtains actual knowledge of any of the following events, a
certificate of the Borrower executed by an officer of the Borrower specifying
the nature of such condition and the Borrower's, and if the Borrower has actual
knowledge thereof, the Environmental Affiliate's proposed initial response
thereto: (i) the receipt by the Borrower, or, if the Borrower has actual
knowledge thereof, any of the Environmental Affiliates, of any communication
(written or oral), whether from a governmental authority, citizens group,
employee or otherwise, that alleges that the Borrower, or, if the Borrower has
actual knowledge thereof, any of the Environmental Affiliates, is not in
compliance with applicable Environmental Laws, and such noncompliance is likely
to have a Material Adverse Effect, (ii) the Borrower shall obtain actual
knowledge that there exists any Environmental Claim which is likely to have a
Material Adverse Effect pending or threatened against the Borrower or any
Environmental Affiliate or (iii) the Borrower obtains actual knowledge of any
release, emission, discharge or disposal of any Material of Environmental
Concern that is likely to form the basis of any Environmental Claim against the
Borrower or any Environmental Affiliate;
(h) promptly and in any event within five (5) Domestic Business Days after
receipt of any material notices or correspondence from any company or agent for
any company providing insurance coverage to the Borrower relating to any
material loss or loss of the Borrower with respect to any of the Unencumbered
Asset Pool Properties, copies of such notices and correspondence; and
(i) promptly upon the mailing thereof to the shareholders or partners of
the Borrower, copies of all
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financial statements, reports and proxy statement so mailed;
(j) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements on
Form S-8 or its equivalent) and reports on Forms 10-K, 10-Q and 8-K (or their
equivalents) which the Borrower shall have filed with the Securities and
Exchange Commission;
(k) simultaneously with delivery of the information required by Sections
5.1(a) and (b), a statement of Unencumbered Asset Pool Net Operating Cash Flow
with respect to each Mortgaged Property and a list of all Unencumbered Asset
Pool Properties; and
(l) from time to time such additional information regarding the financial
position or business of the Borrower as the Lead Agent, at the request of any
Bank, may reasonably request.
Section 5.2. Payment of Obligations. The Borrower will pay and
----------------------
discharge, at or before maturity, all its material obligations and liabilities
including, without limitation, any obligation pursuant to any agreement by which
it or any of its properties is bound and any tax liabilities, in any case, where
failure to do so will likely result in a Material Adverse Effect except (i) such
tax liabilities may be contested in good faith by appropriate proceedings, and
will maintain in accordance with GAAP, appropriate reserves for the accrual of
any of the same; or (ii) such obligation or liability as may be contested in
good faith by appropriate proceedings.
Section 5.3. Maintenance of Property; Insurance.
----------------------------------
(a) The Borrower will keep each of the Unencumbered Asset Pool Properties
in good repair, working order and condition, subject to ordinary wear and tear.
(b) The Borrower shall (a) maintain insurance as specified in Section 4.27
hereof with insurers meeting the qualifications described therein, which
insurance shall in any event not provide for materially less coverage than the
insurance in effect on the Closing Date, and
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(b) furnish to each Bank from time to time, upon written request, copies of the
policies under which such insurance is issued, certificates of insurance and
such other information relating to such insurance as such Bank may reasonably
request. The Borrower will deliver to the Banks (i) upon request of any Bank
through the Lead Agent from time to time, full information as to the insurance
carried, (ii) within five (5) days of receipt of notice from any insurer, a copy
of any notice of cancellation or material change in coverage from that existing
on the date of this Agreement and (iii) forthwith, notice of any cancellation or
nonrenewal of coverage by the Borrower.
Section 5.4. Conduct of Business. The Borrower's primary business will
-------------------
continue to be acquiring, owning, operating, managing, developing (to the extent
permitted in this Agreement), and leasing office and industrial properties.
Section 5.5. Compliance with Laws. The Borrower will comply in all
--------------------
material respects with all applicable laws, ordinances, rules, regulations, and
requirements of governmental authorities (including, without limitation,
Environmental Laws, all zoning and building codes and ERISA and the rules and
regulations thereunder) except where the necessity of compliance therewith is
contested in good faith by appropriate proceedings.
Section 5.6. Inspection of Property, Books and Records. The Borrower
-----------------------------------------
will keep proper books of record and account in which full, true and correct
entries shall be made of all dealings and transactions in relation to its
business and activities; and will permit representatives of any Bank at such
Bank's expense to visit and inspect any of its properties to examine and make
abstracts from any of its books and records and to discuss its affairs, finances
and accounts with its officers and employees, all at such reasonable times, upon
reasonable notice, and as often as may reasonably be desired.
Section 5.7. Existence.
---------
(a) The Borrower shall do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence or its
partnership existence, as applicable.
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(b) The Borrower shall do or cause to be done all things necessary to
preserve and keep in full force and effect its patents, trademarks,
servicemarks, tradenames, copyrights, franchises, licenses, permits,
certificates, authorizations, qualifications, accreditations, easements, rights
of way and other rights, consents and approvals the nonexistence of which is
likely to have a Material Adverse Effect.
Section 5.8. Financial Covenants.
-------------------
(a) Total Liabilities to Total Asset Value. As of the last day of each
--------------------------------------
calendar quarter, the Total Debt Ratio will not be greater than 50%.
(b) EBITDA Debt Service Coverage. As of the last day of each calendar
----------------------------
quarter, the ratio of (i) Annual EBITDA to (ii) Total Debt Service, will not be
less than 2.0:1.
(c) Fixed Charge Coverage. As of the last day of each calendar quarter,
---------------------
the ratio of (x) Annual EBITDA, less reserves for Capital Expenditures of $.70
per square foot per annum for each Real Property Asset that is an office
property and $.40 per square foot per annum for each Real Property Asset that is
an industrial property to (y) the sum of (i) Total Debt Service, and (ii)
dividends or other payments payable by the General Partner with respect to any
preferred stock issued by the General Partner and distributions or other
payments payable by the Borrower with respect to any preferred partnership units
of the Borrower, will not be less than 1.5:1.
(d) Limitation on Secured Debt. Secured Debt of the Borrower, the General
--------------------------
Partner and their Consolidated Subsidiaries shall at no time exceed twenty
percent (20%) of Total Asset Value.
(e) Unsecured Debt Ratio. As of each of (x) the last day of each calendar
--------------------
quarter, and (y) any Borrowing, the Unsecured Debt Ratio shall exceed 2.0:1.
(f) Unencumbered Debt Service Coverage. As of the last day of each
----------------------------------
calendar quarter and as of the date of any sale or secured financing of any
Unencumbered Asset Pool Property, the ratio of (i) Unencumbered Asset
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Pool Net Operating Cash Flow to (ii) Pro-Forma Debt Service will not be less
than 2.0:1.
(g) Dividends. The Borrower will not, as determined on an aggregate
---------
annual basis, pay any partnership distributions in excess of the greater of (i)
95% of its consolidated FFO for such year, and (ii) an amount which results in
distributions to the General Partner in an amount sufficient to permit the
General Partner to pay dividends to its shareholders which it reasonably
believes are necessary for it to (A) maintain its qualification as a real estate
investment trust for federal and state income tax purposes, and (B) avoid the
payment of federal or state income or excise tax. During the continuance of an
Event of Default under Section 6.1(a), the Borrower shall make only those
partnership distributions necessary to make distributions to the General Partner
to pay dividends to its shareholders which it reasonably believes are necessary
to maintain its status as a real estate investment trust for federal and state
income tax purposes.
(h) Minimum Consolidated Tangible Net Worth. The Consolidated Tangible
---------------------------------------
Net Worth will at no time be less than the sum of (i) $502,000,000 plus (ii) 90%
of all Net Offering Proceeds.
(i) Debt. Prior to the date on which the Borrower receives an Investment
----
Grade Rating from either S&P or Moody's, neither the Borrower nor the General
Partner shall, at any time, create, incur, assume, guaranty, suffer to exist or
otherwise become or remain directly or indirectly liable with respect to any
Debt other than Non-Recourse Debt. Notwithstanding the provisions of the
sentence immediately foregoing, the Borrower shall have the right to incur
Recourse Debt up to an aggregate maximum of $5,000,000 which is either (i)
unsecured or (ii) incurred with respect to assets which are not Unencumbered
Asset Pool Properties and is subject to a purchase money security interest or
security interest under a conditional sale agreement.
Section 5.9 Restriction on Fundamental Changes; Operation and Control.
---------------------------------------------------------
(a) The Borrower shall not enter into any merger or consolidation, unless
the Borrower is the surviving entity, or liquidate, wind-up or dissolve (or
suffer any liquidation or dissolution),
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discontinue its business or convey, lease, sell, transfer or otherwise dispose
of, in one transaction or series of transactions, any substantial part of its
business or property, whether now or hereafter acquired, hold an interest in any
subsidiary which is not controlled by the Borrower or the General Partner or
enter into other business lines, without the prior written consent of the Lead
Agent, which consent shall not be given unless the Required Banks so consent.
(b) The Borrower shall not amend its articles of incorporation, by-laws or
agreement of limited partnership, as applicable, in any material respect,
without the Lead Agent's consent, which shall not be unreasonably withheld or
delayed.
Section 5.10. Changes in Business. The Borrower shall not enter into any
-------------------
business which is substantially different from that conducted by the Borrower on
the Closing Date after giving effect to the transactions contemplated by the
Loan Documents.
Section 5.11. Sale of Unencumbered Asset Pool Properties. Prior to the
------------------------------------------
sale or transfer of any Unencumbered Asset Pool Property, the Borrower shall (i)
deliver prior written notice to the Lead Agent, (ii) deliver to the Lead Agent a
certificate from its chief financial officer or chief accounting officer
certifying that at the time of such sale or other disposal (based on pro-forma
calculations for the previous period assuming that such Unencumbered Asset Pool
Property was not a Unencumbered Asset Pool Property for the relevant period) all
of the covenants contained in Sections 5.8, 5.14, 5.16, 5.17 and 5.20 are and
after giving effect to the transaction shall continue to be true and accurate in
all respects, and (iii) pay to the Lead Agent an amount equal to that required
pursuant to Section 2.10(a). In the event that a Separate Parcel that originally
formed a part of a Unencumbered Asset Pool Property is to be sold or
transferred, the value of the remaining portion of the Unencumbered Asset Pool
Property will be determined by Lead Agent at the time of sale or transfer in its
sole discretion.
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Section 5.12. Fiscal Year; Fiscal Quarter. The Borrower shall not change
---------------------------
its fiscal year or any of its fiscal quarters without the Lead Agent's consent,
which shall not be unreasonably withheld or delayed.
Section 5.13. Margin Stock. None of the proceeds of the Loan will be
------------
used, directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of buying or carrying any Margin Stock.
Section 5.14. Development Activities. The Borrower shall not engage in
----------------------
any development activities except for development in connection with the
expansion and/or repositioning or restoration following a casualty or
condemnation of existing improvements on Real Property Assets. Notwithstanding
the foregoing, the Borrower may engage in all other development activities where
there is construction completion risk provided that in no event shall the value
(determined in accordance with the book value thereof, in accordance with GAAP)
of the Real Property Assets under such other type of development exceed twenty
percent (20%) of the Borrower's Total Asset Value.
Section 5.15. Interest Rate Protection. On or before the date that is the
------------------------
six (6) month anniversary of the date hereof, the Borrower and the General
Partner shall maintain Interest Rate Hedges on a notional amount of the Debt
under clause (A) of the definition of Debt of the Borrower, the General Partner
and their Subsidiaries which, when added to the aggregate principal amount of
the Debt under clause (A) of the definition of Debt of the Borrower, the General
Partner and their Subsidiaries which bears interest at a fixed rate, equals or
exceeds 50% of the aggregate principal amount of all Debt under clause (A) of
the definition of Debt of the Borrower, the General Partner and their
Subsidiaries. "Interest Rate Hedges" shall mean interest rate exchange, collar,
--------------------
cap, swap, adjustable strike cap, adjustable strike corridor or similar
agreements having terms, conditions and tenors reasonably acceptable to the Lead
Agent entered into by the Borrower, the General Partner and/or their
Subsidiaries in order to provide protection to, or minimize the impact upon, the
Borrower, the General Partner and/or their Subsidiaries of increasing floating
rates of interest applicable to Debt under clause (A) of the definition of Debt.
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Section 5.16. Joint Ventures. The value of the Borrower's and the General
--------------
Partner's interest in any joint venture, whether consolidated or unconsolidated,
shall at no time exceed 25% of Total Asset Value.
Section 5.17. Investments in Unimproved Real Property. The aggregate
---------------------------------------
amount of the investments of the Borrower, the General Partner and their
Consolidated Subsidiaries in unimproved real property, will at no time exceed
7.5% of Total Asset Value.
Section 5.18. Use of Proceeds. The Borrower shall use the proceeds of the
---------------
Loans solely to finance the acquisition of additional Unencumbered Asset Pool
Properties or other Real Property Assets which are industrial or office
properties and for its general business purposes.
Section 5.19. Borrower Status. The General Partner shall at all times
---------------
(i) maintain its status as a self-directed and self-administered real estate
investment trust under the Code, and (ii) remain a publicly traded company
listed on the New York Stock Exchange.
Section 5.20. Certain Requirements for the Unencumbered Asset Pool. (a) At
----------------------------------------------------
all times, (i) the Real Property Assets in the Unencumbered Asset Pool shall be
on average during any consecutive twelve-month period (tested quarterly) at
least 85% leased to tenants and (ii) any Real Property Asset that is a part of
the Unencumbered Asset Pool less than 85% leased to tenants for more than twelve
months shall not account for more than ten percent (10%) of the Unencumbered
Asset Pool Properties Value.
(b) Any Subsidiary which owns any of the Real Property Assets in the
Unencumbered Asset Pool shall not at any time incur any Debt, nor shall the
Borrower pledge its interest in such Subsidiary nor shall the Borrower or such
Subsidiary enter into any negative pledge with respect thereto.
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ARTICLE VI
DEFAULTS
Section 6.1. Events of Default. Each of the following shall
-----------------
constitute an event of default under this Agreement (an "Event of Default") :
----------------
(a) the Borrower shall fail to pay when due any principal of any Loan, or
the Borrower shall fail to pay when due any interest on any Loan; provided,
--------
however, that the Borrower shall be entitled to a three (3) Domestic Business
- -------
Day grace period with respect thereto but only as to two (2) payments of
interest during the Term, or the Borrower shall fail to pay within three (3)
Domestic Business Days after the same is due any fees or other amounts payable
hereunder;
(b) the Borrower shall fail to observe or perform any covenant contained
in Sections 5.8 to 5.20, inclusive, subject to any applicable grace periods set
forth therein;
(c) the Borrower shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by clause (a) or
(b) above) for 30 days after written notice thereof has been given to the
Borrower by the Lead Agent;
(d) any representation, warranty, certification or statement made by the
Borrower in this Agreement or in any certificate, financial statement or other
document delivered pursuant to this Agreement shall prove to have been incorrect
in any material respect when made (or deemed made);
(e) the Borrower or the General Partner shall default in the payment when
due (whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise) of any amount owing in respect of any Recourse Debt or Debt
guaranteed by the Borrower or the General Partner (other than the Obligations)
and such default shall continue beyond the giving of any required notice and the
expiration of any applicable grace period (as the same may be extended by the
applicable lender) and such default shall not be waived by the applicable lender
(which waiver shall serve to reinstate the applicable
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loan), or the Borrower or the General Partner shall default in the performance
or observance of any obligation or condition with respect to any such Debt or
any other event shall occur or condition exist beyond the giving of any required
notice and the expiration of any applicable grace period (as the same may be
extended by the applicable lender), if in any such case as a result of such
default, event or condition, the lender thereof shall accelerate the maturity of
any such Debt or to permit (without any further requirement of notice or lapse
of time) the holder or holders thereof, or any trustee or agent for such
holders, to accelerate the maturity of any such Debt and such default shall not
be waived by the applicable lender (which waiver shall serve to reinstate the
applicable loan), or any such Debt shall become or be declared to be due and
payable prior to its stated maturity other than as a result of a regularly
scheduled payment;
(f) the Borrower or the General Partner shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as they
become due, or shall take any corporate action to authorize any of the
foregoing;
(g) an involuntary case or other proceeding shall be commenced against the
Borrower or the General Partner seeking liquidation, reorganization or other
relief with respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of 60 days; or an order for
relief shall be entered against the Borrower or
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the General Partner under the federal bankruptcy laws as now or hereafter in
effect;
(h) the Borrower shall default in its obligations under any Loan Document
other than this Agreement beyond any applicable notice and grace periods;
(i) the General Partner shall default in its obligations under the
Guaranty beyond any applicable notice and grace periods;
(j) any member of the ERISA Group shall fail to pay when due an amount or
amounts aggregating in excess of $1,000,000 which it shall have become liable to
pay under Title IV of ERISA, or notice of intent to terminate a Material Plan
shall be filed under Title IV of ERISA by any member of the ERISA Group, any
plan administrator or any combination of the foregoing, or the PBGC shall
institute proceedings under Title IV of ERISA to terminate, to impose liability
(other than for premiums under Section 4007 of ERISA) in respect of, or to cause
a trustee to be appointed to administer any Material Plan, or a condition shall
exist by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any Material Plan must be terminated, or there shall occur a
complete or partial withdrawal from, or a default, within the meaning of Section
4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which
could cause one or more members of the ERISA Group to incur a current payment
obligation in excess of $1,000,000;
(k) one or more final nonappealable judgments or decrees in an aggregate
amount of $10,000,000 as of such date shall be entered by a court or courts of
competent jurisdiction against the Borrower or the General Partner (other than
any judgment as to which, and only to the extent, a reputable insurance company
has acknowledged coverage of such claim in writing) and (i) any such judgments
or decrees shall not be stayed, discharged, paid, bonded or vacated within
thirty (30) days (or bonded, vacated or satisfied within thirty (30) after any
stay is lifted) or (ii) enforcement proceedings shall be commenced by any
creditor on any such judgments or decrees;
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(l) (i) any Environmental Claim shall have been asserted against the
Borrower or any Environmental Affiliate, (ii) any release, emission, discharge
or disposal of any Material of Environmental Concern shall have occurred, and
such event is reasonably likely to form the basis of an Environmental Claim
against the Borrower or any Environmental Affiliate, or (iii) the Borrower or
the Environmental Affiliates shall have failed to obtain any Environmental
Approval necessary for the ownership, or operation of its business, property or
assets or any such Environmental Approval shall be revoked, terminated, or
otherwise cease to be in full force and effect, in the case of clauses (i), (ii)
or (iii) above, if the existence of such condition has had or is reasonably
likely to have a Material Adverse Effect;
(m) during any consecutive two year period commencing on or after the date
hereof, individuals who at the beginning of such period constituted the Board of
Directors of the General Partner of the Borrower (together with any new
directors whose election by the Board of Directors or whose nomination for
election by the General Partner stockholders was approved by a vote of at least
a majority of the members of the Board of Directors then in the office who
either were members of the Board of Directors at the beginning of such period or
whose election or nomination for election was previously so approved) cease for
any reason to constitute a majority of the members of the Board of Directors
then in office;
(n) the General Partner shall cease at any time to qualify as a real
estate investment trust under the Internal Revenue Code; and
(n) at any time, for any reason the Borrower seeks to repudiate its
obligations under any Loan Document.
Section 6.2. Rights and Remedies. (a) Upon the occurrence of any
-------------------
Event of Default described in Sections 6.1(f) or (g), the unpaid principal
amount of, and any and all accrued interest on, the Loans and any and all
accrued fees and other Obligations hereunder shall automatically become
immediately due and payable, with all additional interest from time to time
accrued thereon and without presentation, demand, or protest or other
requirements of any kind (including, without limi-
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tation, valuation and appraisement, diligence, presentment, notice of intent to
demand or accelerate and notice of acceleration), all of which are hereby
expressly waived by the Borrower; and upon the occurrence and during the
continuance of any other Event of Default, the Lead Agent may exercise any of
its rights and remedies hereunder and by written notice to the Borrower, declare
the unpaid principal amount of and any and all accrued and unpaid interest on
the Loans and any and all accrued fees and other Obligations hereunder to be,
and the same shall thereupon be, immediately due and payable with all additional
interest from time to time accrued thereon and without presentation, demand, or
protest or other requirements of any kind other than as provided in the Loan
Documents (including, without limitation, valuation and appraisement, diligence,
presentment, and notice of intent to demand or accelerate), all of which are
hereby expressly waived by the Borrower.
(b) Notwithstanding the foregoing, upon the occurrence and during the
continuance of any Event of Default other than any Event of Default described in
Sections 6.1(f) or (g), the Lead Agent shall not exercise any of its rights and
remedies hereunder nor declare the unpaid principal amount of and any and all
accrued and unpaid interest on the Loans and any and all accrued fees and other
Obligations hereunder to be immediately due and payable, until such time as the
Lead Agent shall have delivered a notice to the Banks specifying the Event of
Default which has occurred and whether Lead Agent recommends the acceleration of
the Obligations due hereunder or the exercise of other remedies hereunder. The
Banks shall notify the Lead Agent if they approve or disapprove of the
acceleration of the Obligations due hereunder or the exercise of such other
remedy recommended by Lead Agent within five (5) Domestic Business Days after
receipt of such notice. If any Bank shall not respond within such five (5)
Domestic Business Day period, then such Bank shall be deemed to have accepted
Lead Agent's recommendation for acceleration of the Obligations due hereunder or
the exercise of such other remedy. If the Required Banks shall approve the
acceleration of the Obligations due hereunder or the exercise of such other
remedy, then Lead Agent shall declare the unpaid principal amount of and any and
all accrued and unpaid interest on the Loans and any and all accrued fees and
other Obligations hereunder to be immediately due and payable
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or exercise such other remedy approved by the Required Banks. If the Required
Banks shall neither approve nor disapprove the acceleration of the Obligations
due hereunder or such other remedy recommended by Lead Agent, then Lead Agent
may accelerate the Obligations due hereunder or exercise any of its rights and
remedies hereunder in its sole discretion. If the Required Banks shall
disapprove the acceleration of the Obligations due hereunder or the exercise of
such other remedy recommended by Lead Agent, but approve of another remedy, then
to the extent permitted hereunder, Lead Agent shall exercise such remedy. In the
event the Lead Agent exercises any remedy provided in any of the Loan Documents,
the Lead Agent shall act as a collateral agent for the Banks.
Section 6.3. Notice of Default. If the Lead Agent shall not already
-----------------
have given any notice to the Borrower under Section 6.1, the Lead Agent shall
give notice to the Borrower under Section 6.1 promptly upon being requested to
do so by the Required Banks and shall thereupon notify all the Banks thereof.
Section 6.4. Actions in Respect of Letters of Credit. (a) If, at any
---------------------------------------
time and from time to time, any Letter of Credit shall have been issued
hereunder and an Event of Default shall have occurred and be continuing, then,
upon the occurrence and during the continuation thereof, the Lead Agent may,
whether in addition to the taking by the Lead Agent of any of the actions
described in this Article or otherwise, make a demand upon the Borrower to, and
forthwith upon such demand (but in any event within ten (10) days after such
demand) the Borrower shall, pay to the Lead Agent, on behalf of the Banks, in
same day funds at the Lead Agent's office designated in such demand, for deposit
in a special cash collateral account (the "Letter of Credit Collateral Account")
-----------------------------------
to be maintained in the name of the Lead Agent (on behalf of the Banks) and
under its sole dominion and control at such place as shall be designated by the
Lead Agent, an amount equal to the amount of the Letter of Credit Usage under
the Letters of Credit. Interest shall accrue on the Letter of Credit Collateral
Account at a rate equal to the rate on overnight funds.
(b) The Borrower hereby pledges, assigns and grants to the Lead Agent, as
administrative agent for its benefit and the ratable benefit of the Banks a lien
on
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and a security interest in, the following collateral (the "Letter of Credit
----------------
Collateral"):
- ----------
(i) the Letter of Credit Collateral Account, all cash deposited therein
and all certificates and instruments, if any, from time to time
representing or evidencing the Letter of Credit Collateral Account;
(ii) all notes, certificates of deposit and other instruments from time to
time hereafter delivered to or otherwise possessed by the Lead Agent for or
on behalf of the Borrower in substitution for or in respect of any or all
of the then existing Letter of Credit Collateral;
(iii) all interest, dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of the then existing Letter of Credit
Collateral; and or all of the foregoing Letter of Credit Collateral.
(iv) to the extent not covered by the above clauses, all proceeds of any of
Credit Collateral or (ii) create or permit to exist any lien, security
interest or other charge or encumbrance upon or with respect to any of the
Letter of Credit Collateral, except for the security interest created by
this Section 6.4.
The lien and security interest granted hereby secures the payment of all
obligations of the Borrower now or hereafter existing hereunder and under any
other Loan Document.
(c) The Borrower hereby authorizes the Lead Agent for the ratable benefit
of the Banks to apply, from time to time after funds are deposited in the Letter
of Credit Collateral Account, funds then held in the Letter of Credit Collateral
Account to the payment of any amounts, in such order as the Lead Agent may
elect, as shall have become due and payable by the Borrower to the Banks in
respect of the Letters of Credit.
(d) Neither the Borrower nor any Person claiming or acting on behalf of or
through the Borrower shall have any right to withdraw any of the funds held in
the Letter of Credit Collateral Account, except as provided in Section 6.4(h)
hereof.
(e) The Borrower agrees that it will not (i) sell or otherwise dispose of
any interest in the Letter
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of Credit Collateral or (ii) create or permit to exist any lien, security
interest or other charge or encumbrance upon or with respect to any of the
Letter of Credit Collateral, except for the security interest created by this
Section 6.4.
(f) If any Event of Default shall have occurred and be continuing:
(i) The Lead Agent may, in its sole discretion, without notice to the
Borrower except as required by law and at any time from time to time,
charge, set off or otherwise apply all or any part of first, (x) amounts
-----
previously drawn on any Letter of Credit that have not been reimbursed by
the Borrower and (y) any Letter of Credit Usage described in clause (ii) of
the definition thereof that are then due and payable and second, any other
------
unpaid Obligations then due and payable against the Letter of Credit
Collateral Account or any part thereof, in such order as the Lead Agent
shall elect. The rights of the Lead Agent under this Section 6.4 are in
addition to any rights and remedies which any Bank may have.
(ii) The Lead Agent may also exercise, in its sole discretion, in respect
of the Letter of Credit Collateral Account, in addition to the other rights
and remedies provided herein or otherwise available to it, all the rights
and remedies of a secured party upon default under the Uniform Commercial
Code in effect in the State of New York at that time.
(g) The Lead Agent shall be deemed to have exercised reasonable care in
the custody and preservation of the Letter of Credit Collateral if the Letter of
Credit Collateral is accorded treatment substantially equal to that which the
Lead Agent accords its own property, it being understood that, assuming such
treatment, the Lead Agent shall not have any responsibility or liability with
respect thereto.
(h) At such time as all Events of Default have been cured or waived in
writing, all amounts remaining in the Letter of Credit Collateral Account shall
be promptly returned to the Borrower. Absent such cure or written
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waiver, any surplus of the funds held in the Letter of Credit Collateral Account
and remaining after payment in full of all of the Obligations of the Borrower
hereunder and under any other Loan Document after the Maturity Date shall be
paid to the Borrower or to whomsoever may be lawfully entitled to receive such
surplus.
ARTICLE VII
THE LEAD AGENT
Section 7.1. Appointment and Authorization. Each Bank irrevocably
-----------------------------
appoints and authorizes the Lead Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement and the other Loan
Documents as are delegated to the Lead Agent by the terms hereof or thereof,
together with all such powers as are reasonably incidental thereto.
Section 7.2. Lead Agent and Affiliates. Morgan shall have the same
-------------------------
rights and powers under this Agreement as any other Bank and may exercise or
refrain from exercising the same as though it were not the Lead Agent, and
Morgan and its affiliates may accept deposits from, lend money to, and generally
engage in any kind of business with the Borrower or any subsidiary or affiliate
of the Borrower as if it were not the Lead Agent hereunder, and the term "Bank"
and "Banks" shall include Morgan in its individual capacity.
Section 7.3. Action by Lead Agent. The obligations of the Lead Agent
--------------------
hereunder are only those expressly set forth herein. Without limiting the
generality of the foregoing, the Lead Agent shall not be required to take any
action with respect to any Default, except as expressly provided in Article VI.
Section 7.4. Consultation with Experts. The Lead Agent may consult
-------------------------
with legal counsel (who may be counsel for the Borrower), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
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Section 7.5. Liability of Lead Agent. Neither the Lead Agent nor any of
-----------------------
its affiliates nor any of their respective directors, officers, agents or
employees shall be liable for any action taken or not taken by it in connection
herewith (i) with the consent or at the request of the Required Banks or, where
required by the terms of this Agreement, all of the Banks, or (ii) in the
absence of its own gross negligence or willful misconduct. Neither the Lead
Agent nor any of its directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into or verify (i) any
statement, warranty or representation made in connection with this Agreement or
any borrowing hereunder; (ii) the performance or observance of any of the
covenants or agreements of the Borrower; (iii) the satisfaction of any condition
specified in Article III, except receipt of items required to be delivered to
the Lead Agent; or (iv) the validity, effectiveness or genuineness of this
Agreement, the other Loan Documents or any other instrument or writing furnished
in connection herewith. The Lead Agent shall not incur any liability by acting
in reliance upon any notice, consent, certificate, statement, or other writing
(which may be a bank wire, telex or similar writing) believed by it in good
faith to be genuine or to be signed by the proper party or parties.
Section 7.6. Indemnification. Each Bank shall, ratably in accordance
---------------
with its Commitment, indemnify the Lead Agent, its affiliates and their
respective directors, officers, agents and employees (to the extent not
reimbursed by the Borrower) against any cost, expense (including counsel fees
and disbursements), claim, demand, action, loss or liability (except such as
result from such indemnitees' gross negligence or willful misconduct) that such
indemnitees may suffer or incur as a result of, or in connection with, the Lead
Agent's capacity as Lead Agent in connection with this Agreement, the other Loan
Documents or any action taken or omitted by such indemnitees in accordance with
this Agreement.
Section 7.7. Credit Decision. Each Bank acknowledges that it has,
---------------
independently and without reliance upon the Lead Agent or any other Bank, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently and without reliance upon the
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Lead Agent or any other Bank, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking any action under this Agreement.
Section 7.8. Successor Lead Agent. The Lead Agent may resign at any
--------------------
time by giving notice thereof to the Banks and the Borrower. In addition, if the
Lead Agent at any time shall have been finally determined to have committed
gross negligence or willful misconduct in connection with its performance of its
duties as Lead Agent hereunder, then, upon notice from the Required Banks, the
Lead Agent shall resign. Upon any such resignation, the Required Banks shall
have the right to appoint a successor Lead Agent with the consent of the
Borrower provided that no Event of Default shall have occurred and be
continuing. If no successor Lead Agent shall have been so appointed by the
Required Banks, and shall have accepted such appointment, within 30 days after
the retiring Lead Agent gives notice of resignation, then the retiring Lead
Agent may, on behalf of the Banks, appoint a successor Lead Agent, which shall
be a commercial bank organized or licensed under the laws of the United States
of America or of any State thereof and having a combined capital and surplus of
at least $50,000,000. Upon the acceptance of its appointment as the Lead Agent
hereunder by a successor Lead Agent, such successor Lead Agent shall thereupon
succeed to and become vested with all the rights and duties of the retiring Lead
Agent, and the retiring Lead Agent shall be discharged from its duties and
obligations hereunder first accruing or arising after the effective date of such
retirement. After any retiring Lead Agent's resignation hereunder as Lead Agent,
the provisions of this Article shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was the Lead Agent.
If, at any time during the Term, the Lead Agent shall no longer have
any Commitment under this Agreement, the Lead Agent shall give notice of its
offer to resign to the Banks and the Borrower. Upon any such offer of
resignation, the Required Banks shall have the right to appoint a successor Lead
Agent or to retain the Lead Agent with the consent of the Borrower, provided
that no Event of Default shall be outstanding.
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Section 7.9. Lead Agent's Fee. The Borrower shall pay to the Lead
----------------
Agent for its own account fees in the amounts and at the times previously agreed
upon between the Borrower and the Lead Agent.
Section 7.10. Copies of Notices. Lead Agent shall deliver to each
-----------------
Bank a copy of any notice sent to the Borrower by Lead Agent in connection with
the performance of its duties as Lead Agent hereunder; and Lead Agent shall
deliver to each Bank a copy of any notice sent to the Lead Agent by the Borrower
in connection with any Default or Event of Default hereunder.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
Section 8.1. Basis for Determining Interest Rate Inadequate or Unfair.
--------------------------------------------------------
If on or prior to the first day of any Interest Period for any Euro-Dollar
Borrowing or Money Market Borrowing:
(a) the Lead Agent is advised by the Reference Bank that deposits in
dollars (in the applicable amounts) are not being offered to the Reference Bank
in the relevant market for such Interest Period, or
(b) Banks having 50% or more of the aggregate amount of the affected Loans
advise the Lead Agent that the Adjusted London Interbank Offered Rate as
determined by the Lead Agent will not adequately and fairly reflect the cost to
such Banks of funding their Euro-Dollar Loans for such Interest Period, the Lead
Agent shall forthwith give notice thereof to the Borrower and the Banks,
whereupon until the Lead Agent notifies the Borrower that the circumstances
giving rise to such suspension no longer exist, the obligations of the Banks to
make Euro-Dollar Loans, or to continue or convert outstanding Loans as or into
Euro-Dollar Loans, as the case may be, shall be suspended, and each outstanding
Euro-Dollar Loan shall be converted into a Base Rate Loan on the last day of the
then current Interest Period applicable thereto. Unless the Borrower notifies
the Lead Agent at least two Domestic Business Days before the date of any Euro-
Dollar Borrowing or Money Market LIBOR Borrowing for which a Notice of Borrowing
has previously been given that it
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elects not to borrow on such date, (i) if such Borrowing is a Committed
Borrowing, such Borrowing shall instead be made as a Base Rate Borrowing, and
(ii) if such Borrowing is a Money Market LIBOR Borrowing, the Money Market LIBOR
Loans comprising such Borrowing shall bear interest for each day from and
including the first day to but excluding the last day of the Interest Period
applicable thereto at the Base Rate for such day.
Section 8.2. Illegality. If, after the date of this Agreement, the
----------
adoption of any applicable law, rule or regulation, or any change in any
existing applicable law, rule or regulation, or any change in the interpretation
or administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Bank (or its Euro-Dollar Lending Office) with any request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency shall make it unlawful or impossible for any
Bank (or its Euro-Dollar Lending Office) to make, maintain or fund its Euro-
Dollar Loans or Money Market Loans or to participate in any Letter of Credit
issued by the Fronting Bank, or, with respect to the Fronting Bank, to issue any
Letter of Credit, and such Bank shall so notify the Lead Agent, the Lead Agent
shall forthwith give notice thereof to the other Banks and the Borrower,
whereupon until such Bank notifies the Borrower and the Lead Agent that the
circumstances giving rise to such suspension no longer exist, the obligation of
such Bank to make or convert Euro-Dollar Loans or Money Market Loans, or to
participate in any Letter of Credit issued by the Fronting Bank or, with respect
to the Fronting Bank, to issue any Letter of Credit, shall be suspended. Before
giving any notice to the Lead Agent pursuant to this Section, such Bank shall
designate a different Euro-Dollar Lending Office if such designation will avoid
the need for giving such notice and will not, in the judgment of such Bank, be
otherwise disadvantageous to such Bank. If such Bank shall determine that it may
not lawfully continue to maintain and fund any of its outstanding Euro-Dollar
Loans or Money Market Loans (as the case may be) to maturity and shall so
specify in such notice, the Borrower shall immediately prepay in full the then
outstanding principal amount of each such Euro-Dollar Loan or Money Market Loan,
together with accrued interest thereon. Concurrently with prepaying each such
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Euro-Dollar Loan, the Borrower shall borrow a Base Rate Loan in an equal
principal amount from such Bank (on which interest and principal shall be
payable contemporaneously with the related Euro-Dollar Loans or Money Market
Loans of the other Banks), and such Bank shall make such a Base Rate Loan.
Section 8.3 Increased Cost and Reduced Return.
---------------------------------
(a) If, after (x) the date hereof, in the case of any Committed Loan or
any obligation to make Committed Loans or (y) the date of the related Money
Market Quote, in the case of any Money Market Loan, the adoption of any
applicable law, rule or regulation, or any change in any applicable law, rule or
regulation, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank (or its
Applicable Lending Office) with any request or directive (whether or not having
the force of law) of any such authority, central bank or comparable agency shall
impose, modify or deem applicable any reserve (including, without limitation,
any such requirement imposed by the Board of Governors of the Federal Reserve
System (but excluding with respect to any Euro-Dollar Loan any such requirement
reflected in an applicable Euro-Dollar Reserve Percentage)), special deposit,
insurance assessment or similar requirement against assets of, deposits with or
for the account of, or credit extended by, any Bank (or its Applicable Lending
Office) or shall impose on any Bank (or its Applicable Lending Office) or on the
London interbank market any other condition affecting its Euro-Dollar Loans or
Money Market LIBOR Loans, its Note, or its obligation to make Euro-Dollar Loans,
and the result of any of the foregoing is to increase the cost to such Bank (or
its Applicable Lending Office) of making or maintaining any Euro-Dollar Loan, or
to reduce the amount of any sum received or receivable by such Bank (or its
Applicable Lending Office) under this Agreement or under its Note with respect
thereto, by an amount deemed by such Bank to be material, then, within 15 days
after demand by such Bank (with a copy to the Lead Agent), which demand shall be
accompanied by a certificate showing, in reasonable detail, the calculation of
such amount or amounts, the Borrower shall pay to such Bank such
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additional amount or amounts as will compensate such Bank for such increased
cost or reduction.
(b) If any Bank shall have determined that, after the date hereof, the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change in any such law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on capital
of such Bank (or its Parent) as a consequence of such Bank's obligations
hereunder to a level below that which such Bank (or its Parent) could have
achieved but for such adoption, change, request or directive (taking into
consideration its policies with respect to capital adequacy) by an amount deemed
by such Bank to be material, then from time to time, within 15 days after demand
by such Bank (with a copy to the Lead Agent), which demand shall be accompanied
by a certificate showing, in reasonable detail, the calculation of such amount
or amounts, the Borrower shall pay to such Bank such additional amount or
amounts as will compensate such Bank (or its Parent) for such reduction.
(c) Each Bank will promptly notify the Borrower and the Lead Agent of any
event of which it has knowledge, occurring after the date hereof, which will
entitle such Bank to compensation pursuant to this Section and will designate a
different Applicable Lending Office if such designation will avoid the need for,
or reduce the amount of, such compensation and will not, in the judgment of such
Bank, be otherwise disadvantageous to such Bank. A certificate of any Bank
claiming compensation under this Section and setting forth the additional amount
or amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error. In determining such amount, such Bank may use any reasonable
averaging and attribution methods.
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Section 8.4 Taxes.
-----
(a) Any and all payments by the Borrower to or for the account of any Bank
or the Lead Agent hereunder or under any other Loan Document shall be made free
and clear of and without deduction for any and all present or future taxes,
duties, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each Bank and the
---------
Lead Agent, taxes imposed on its income, and franchise taxes imposed on it, by
the jurisdiction under the laws of which such Bank or the Lead Agent (as the
case may be) is organized or any political subdivision thereof and, in the case
of each Bank, taxes imposed on its income, and franchise or similar taxes
imposed on it, by the jurisdiction of such Bank's Applicable Lending Office or
any political subdivision thereof (and, if different from the jurisdiction of
such Bank's Applicable Lending Office, the jurisdiction of the domicile of its
Loans either established by the Bank pursuant to Section 9.12 or determined by
the applicable taxing authorities)(all such non-excluded taxes, duties, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to as "Taxes"). If the Borrower shall be required by law to deduct any
-----
Taxes from or in respect of any sum payable hereunder or under any Note or
Letter of Credit or participation therein to any Bank or the Lead Agent, (i) the
sum payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 8.4) such Bank, the Fronting Bank or the Lead Agent (as the case
may be) receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions, (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law and (iv) the Borrower shall
furnish to the Lead Agent, at its address referred to in Section 9.1, the
original or a certified copy of a receipt evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any present or future stamp or
documentary taxes and any other excise or property taxes, or charges or similar
levies which arise from any payment made hereunder or under any Note or Letter
of Credit or participation therein or from the execution or delivery of, or
other-
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wise with respect to, this Agreement or any Note or Letter of Credit or
participation therein (hereinafter referred to as "Other Taxes").
-----------
(c) The Borrower agrees to indemnify each Bank, the Fronting Bank and the
Lead Agent for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed or asserted by any jurisdiction on
amounts payable under this Section 8.4) paid by such Bank, the Fronting Bank or
the Lead Agent (as the case may be) and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto. Any payment
required under this indemnification shall be made within 15 days from the date
such Bank, the Fronting Bank or the Lead Agent (as the case may be) makes demand
therefor.
(d) Each Bank organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Bank listed on the signature pages hereof and on
or prior to the date on which it becomes a Bank in the case of each other Bank,
and from time to time thereafter if requested in writing by the Borrower (but
only so long as such Bank remains lawfully able to do so), shall provide the
Borrower with Internal Revenue Service form 1001 or 4224, as appropriate, or any
successor form prescribed by the Internal Revenue Service, certifying that such
Bank is entitled to benefits under an income tax treaty to which the United
States is a party which reduces the rate of withholding tax on payments of
interest or certifying that the income receivable pursuant to this Agreement is
effectively connected with the conduct of a trade or business in the United
States. If the form provided by a Bank at the time such Bank first became a
party to this Agreement or at any time thereafter (other than solely by reason
of a change in United States law or a change in the terms of any treaty to which
the United States is a party after the date hereof) indicates a United States
interest withholding tax rate in excess of zero (or would have indicated such a
withholding tax rate if such form had been submitted and completed accurately
and completely and either was not submitted or was not completed accurately and
completely), or if a Bank otherwise is subject to United States interest
withholding tax at a rate in excess of zero at any time for any reason (other
than solely by
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reason of a change in United States law or regulation or a change in any treaty
to which the United States is a party after the date hereof), withholding tax at
such rate shall be considered excluded from "Taxes" as defined in Section
8.4(a). In addition, any amount that otherwise would be considered "Taxes" or
"Other Taxes" for purposes of this Section 8.4 shall be excluded therefrom if
the Bank either has transferred the domicile of its Loans pursuant to Section
9.12 or changed the Applicable Lending Office with respect to such Loans and
such amount would not have been incurred had such transfer or change not been
made.
(e) For any period with respect to which a Bank has failed to provide the
Borrower with the appropriate form pursuant to Section 8.4(d) (unless such
failure is due to a change in treaty, law or regulation occurring subsequent to
the date on which a form originally was required to be provided), such Bank
shall not be entitled to indemnification under Section 8.4(a) with respect to
Taxes imposed by the United States; provided, however, that should a Bank, which
-------- -------
is otherwise exempt from or subject to a reduced rate of withholding tax, become
subject to Taxes because of its failure to deliver a form required hereunder,
the Borrower shall take such steps as such Bank shall reasonably request to
assist such Bank to recover such Taxes.
(f) If the Borrower is required to pay additional amounts to or for the
account of any Bank pursuant to this Section 8.4, then such Bank will change the
jurisdiction of its Applicable Lending Office so as to eliminate or reduce any
such additional payment which may thereafter accrue if such change, in the
judgment of such Bank, is not otherwise disadvantageous to such Bank.
Section 8.5 Base Rate Loans Substituted for Affected Euro-Dollar Loans.
----------------------------------------------------------
If (i) the obligation of any Bank to make, or convert outstanding Loans to,
Euro-Dollar Loans has been suspended pursuant to Sections 8.1 or 8.2 or (ii)
any Bank has demanded compensation under Section 8.3 or 8.4 with respect to its
Euro-Dollar Loans and the Borrower shall, by at least five Euro-Dollar Business
Days' prior notice to such Bank through the Lead Agent, have elected that the
provisions of this Section shall apply to such Bank, then, unless and until such
Bank notifies the Borrower that the circumstances giving
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rise to such suspension or demand for compensation no longer exist:
(a) all Loans which would otherwise be made by such Bank as Euro-Dollar
Loans shall be made instead as Base Rate Loans (on which interest and principal
shall be payable contemporaneously with the related Euro-Dollar Loans of the
other Banks), and
(b) after each of its Euro-Dollar Loans has been repaid, all payments of
principal which would otherwise be applied to repay such Euro-Dollar Loans shall
be applied to repay its Base Rate Loans instead.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Notices. All notices, requests and other communications to
-------
any party hereunder shall be in writing (including bank wire, telex, facsimile
transmission or similar writing) and shall be given to such party: (x) in the
case of the Borrower or the Lead Agent, at its address or telecopy number set
forth on the signature pages hereof, together with copies thereof, in the case
of the Borrower, to Latham & Watkins, 633 West Fifth Street, Suite 4000, Los
Angeles, CA 90071, Attention: Glen B. Collyer, Esq., Telephone: (213) 485-1234,
Telecopy: (213) 891-8763, and in the case of the Lead Agent, to Skadden, Arps,
Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New York 10022,
Attention: Martha Feltenstein, Esq., Telephone: (212) 735-2272, Telecopy: (212)
735-2000, (y) in the case of any Bank, at its address or telecopy number set
forth on the signature pages hereof or in its Administrative Questionnaire or
(z) in the case of any party, such other address or telecopy number as such
party may hereafter specify for the purpose by notice to the Lead Agent, the
Banks and the Borrower. Each such notice, request or other communication shall
be effective (i) if given by telecopy, when such telecopy is transmitted to the
telecopy number specified in this Section, (ii) if given by mail, 72 hours after
such communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iii) if given by any other means, when delivered at
the address specified in this Section; provided that
--------
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notices to the Lead Agent under Article II or Article VIII shall not be
effective until received.
Section 9.2 No Waivers. No failure or delay by the Lead Agent or any
----------
Bank in exercising any right, power or privilege hereunder or under any Note
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided shall
be cumulative and not exclusive of any rights or remedies provided by law.
Section 9.3 Expenses; Indemnification.
-------------------------
(a) The Borrower shall pay (i) all reasonable out-of-pocket expenses of
the Lead Agent (including, without limitation, reasonable fees and disbursements
of special counsel Skadden, Arps, Slate, Meagher & Flom LLP, local counsel for
the Lead Agent, and travel, site visits, third party reports (including
Appraisals), mortgage recording taxes, environmental and engineering expenses),
in connection with the preparation and administration of this Agreement, the
Loan Documents and the documents and instruments referred to therein, the
syndication of the Loans, any waiver or consent hereunder or any amendment or
modification hereof or any Default or alleged Default hereunder and (ii) if an
Event of Default occurs, all out-of-pocket expenses incurred by the Lead Agent
and each Bank, including, without limitation, reasonable fees and disbursements
of counsel for the Lead Agent, in connection with the enforcement of the Loan
Documents and the instruments referred to therein and such Event of Default and
collection, bankruptcy, insolvency and other enforcement proceedings resulting
therefrom.
(b) The Borrower agrees to indemnify the Lead Agent and each Bank, their
respective affiliates and the respective directors, officers, agents and
employees of the foregoing (each an "Indemnitee") and hold each Indemnitee
----------
harmless from and against any and all liabilities, losses, damages, costs and
expenses of any kind, including, without limitation, the reasonable fees and
disbursements of counsel and settlements and settlement costs, which may be
incurred by such Indemnitee in connection with any investigative, administrative
or judicial proceeding (whether or not such Indemnitee shall be
101
<PAGE>
designated a party thereto) that may at any time (including, without limitation,
at any time following the payment of the Obligations) be imposed on, asserted
against or incurred by any Indemnitee as a result of, or arising out of, or in
any way related to or by reason of, (i) any of the transactions contemplated by
the Loan Documents or the execution, delivery or performance of any Loan
Document (including, without limitation, the Borrower's actual or proposed use
of proceeds of the Loans, whether or not in compliance with the provisions
hereof), (ii) any violation by the Borrower or the Environmental Affiliates of
any applicable Environmental Law, (iii) any Environmental Claim arising out of
the management, use, control, ownership or operation of property or assets by
the Borrower or any of the Environmental Affiliates, including, without
limitation, all on-site and off-site activities involving Material of
Environmental Concern, (iv) the breach of any environmental representation or
warranty set forth herein, (v) the grant to the Lead Agent and the Banks of any
Lien in any property or assets of the Borrower or any stock or other equity
interest in the Borrower, and (vi) the exercise by the Lead Agent and the Banks
of their rights and remedies (including, without limitation, foreclosure) under
any agreements creating any such Lien (but excluding, as to any Indemnitee, any
such losses, liabilities, claims, damages, expenses, obligations, penalties,
actions, judgments, suits, costs or disbursements incurred solely by reason of
(i) the gross negligence or willful misconduct of such Indemnitee as finally
determined by a court of competent jurisdiction or (ii) any investigative,
administrative or judicial proceeding imposed or asserted against any Indemnitee
by any bank regulatory agency or by any equity holder of such Indemnitee). The
Borrower's obligations under this Section shall survive the termination of this
Agreement and the payment of the Obligations.
(c) The Borrower shall pay, and hold the Lead Agent and each of the Banks
harmless from and against, any and all present and future U.S. stamp, recording,
transfer and other similar foreclosure related taxes with respect to the
foregoing matters and hold the Lead Agent and each Bank harmless from and
against any and all liabilities with respect to or resulting from any delay or
omission (other than to the extent attributable to such Bank) to pay such taxes.
102
<PAGE>
Section 9.4 Sharing of Set-Offs. In addition to any rights now or
-------------------
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence and during the continuance of
any Event of Default, each Bank is hereby authorized at any time or from time to
time, without presentment, demand, protest or other notice of any kind to the
Borrower or to any other Person, any such notice being hereby expressly waived,
to set off and to appropriate and apply any and all deposits (general or
special, time or demand, provisional or final), other than deposits held for the
benefit of third parties, and any other indebtedness at any time held or owing
by such Bank (including, without limitation, by branches and agencies of such
Bank wherever located) to or for the credit or the account of the Borrower
against and on account of the Obligations of the Borrower then due and payable
to such Bank under this Agreement or under any of the other Loan Documents,
including, without limitation, all interests in Obligations purchased by such
Bank. Each Bank agrees that if it shall, by exercising any right of set-off or
counterclaim or otherwise, receive payment of a proportion of the aggregate
amount of principal and interest due with respect to any Note held by it or
Letter of Credit participated in by it, or, in the case of the Fronting Bank,
Letter of Credit issued by it, which is greater than the proportion received by
any other Bank or Letter of Credit issued or participated in by such other Bank,
in respect of the aggregate amount of principal and interest due with respect to
any Note held by such other Bank, the Bank receiving such proportionately
greater payment shall purchase such participations in the Notes held by the
other Banks or Letter of Credit issued or participated in by such other Bank,
and such other adjustments shall be made, as may be required so that all such
payments of principal and interest with respect to the Notes held by the Banks
or Letter of Credit issued or participated in by such other Banks shall be
shared by the Banks pro rata; provided that nothing in this Section shall impair
--------
the right of any Bank to exercise any right of set-off or counterclaim it may
have and to apply the amount subject to such exercise to the payment of
indebtedness of the Borrower other than its indebtedness under the Notes or the
Letters of Credit. The Borrower agrees, to the fullest extent that it may
effectively do so under applicable law, that any holder of a participation in a
Note, whether or not acquired pursuant to the foregoing
103
<PAGE>
arrangements, may exercise rights of set-off or counterclaim and other rights
with respect to such participation as fully as if such holder of a participation
were a direct creditor of the Borrower in the amount of such participation.
Section 9.5 Amendments and Waivers. Any provision of this Agreement
----------------------
(including any of the financial covenants given by the Borrower pursuant to
Section 5.8), the Notes, the Letters of Credit or other Loan Documents may be
amended or waived if, but only if, such amendment or waiver is in writing and is
signed by the Borrower and the Required Banks (and, if the rights or duties of
the Lead Agent are affected thereby, by the Lead Agent); provided that no such
--------
amendment or waiver shall, unless signed by all the Banks, (i) increase or
decrease the Commitment of any Bank (except for a ratable decrease in the
Commitments of all Banks) or subject any Bank to any additional obligation, (ii)
reduce the principal of or rate of interest on any Loan or any fees specified
herein, (iii) postpone the date fixed for any payment of principal of or
interest on any Loan or any fees hereunder or for any reduction or termination
of any Commitment, (iv) release the Guaranty or otherwise release any other
collateral, or (v) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Notes, or the number of Banks, which shall be
required for the Banks or any of them to take any action under this Section or
any other provision of this Agreement. Notwithstanding the foregoing, no
amendment, waiver or consent shall, unless in writing and signed by the
Designating Lender on behalf of its Designated Lender affected thereby, (a)
subject such Designated Lender to any additional obligations, (b) reduce the
principal of, interest on, or other amounts due with respect to, the Designated
Lender Note made payable to such Designated Lender, or (c) postpone any date
fixed for any payment of principal of, or interest on, or other amounts due with
respect to the Designated Lender Note made payable to the Designated Lender.
Section 9.6 Successors and Assigns.
----------------------
(a) The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns,
except that the Borrower may not assign or otherwise
104
<PAGE>
transfer any of its rights under this Agreement or the other Loan Documents
without the prior written consent of all Banks.
(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its Commitment or
-----------
any or all of its Loans. In the event of any such grant by a Bank of a
participating interest to a Participant, whether or not upon notice to the
Borrower and the Lead Agent, such Bank shall remain responsible for the
performance of its obligations hereunder, and the Borrower and the Lead Agent
shall continue to deal solely and directly with such Bank in connection with
such Bank's rights and obligations under this Agreement. Any agreement pursuant
to which any Bank may grant such a participating interest shall provide that
such Bank shall retain the sole right and responsibility to enforce the
obligations of the Borrower hereunder including, without limitation, the right
to approve any amendment, modification or waiver of any provision of this
Agreement; provided that such participation agreement may provide that such Bank
--------
will not agree to any modification, amendment or waiver of this Agreement
described in clause (i), (ii), (iii) or (iv) of Section 9.5 without the consent
of the Participant. The Borrower agrees that each Participant shall, to the
extent provided in its participation agreement, be entitled to the benefits of
Article VIII with respect to its participating interest. An assignment or other
transfer which is not permitted by subsection (c) or (d) below shall be given
effect for purposes of this Agreement only to the extent of a participating
interest granted in accordance with this subsection (b).
(c) Any Bank may at any time assign to one or more banks or other
institutions (each an "Assignee") all, or a proportionate part of all, of its
--------
rights and obligations under this Agreement, the Notes and the other Loan
Documents, and such Assignee shall assume such rights and obligations, pursuant
to an Assignment and Assumption Agreement in substantially the form of Exhibit D
---------
attached hereto executed by such Assignee and such transferor Bank, with (and
subject to) the subscribed consent of the Lead Agent, which consent shall not be
unreasonably withheld, and, provided no Event of Default shall have occurred and
be continuing, the Borrower, which consent shall not be unreasonably withheld or
105
<PAGE>
delayed. Upon execution and delivery of such instrument and payment by such
Assignee to such transferor Bank of an amount equal to the purchase price agreed
between such transferor Bank and such Assignee, such Assignee shall be a Bank
party to this Agreement and shall have all the rights and obligations of a Bank
with a Commitment as set forth in such instrument of assumption, and the
transferor Bank shall be released from its obligations hereunder to a
corresponding extent, and no further consent or action by any party shall be
required. Upon the consummation of any assignment pursuant to this subsection
(c), the transferor Bank, the Lead Agent and the Borrower shall make appropriate
arrangements so that, if required, a new Note or Notes are issued to the
Assignee. In connection with any such assignment, the transferor Bank shall pay
to the Lead Agent an administrative fee for processing such assignment in the
amount of $2,500. If the Assignee is not incorporated under the laws of the
United States of America or a state thereof, it shall deliver to the Borrower
and the Lead Agent certification as to exemption from deduction or withholding
of any United States federal income taxes in accordance with Section 8.4.
(d) Any Bank (each, a "Designating Lender") may at any time designate one
------------------
Designated Lender to fund Money Market Loans on behalf of such Designating
Lender subject to the terms of this Section 9.6(d) and the provisions in Section
9.6(b) and (c) shall not apply to such designation. No Bank may designate more
than one (1) Designated Lender. The parties to each such designation shall
execute and deliver to the Lead Agent for its acceptance a Designation
Agreement. Upon such receipt of an appropriately completed Designation Agreement
executed by a Designating Lender and a designee representing that it is a
Designated Lender, the Lead Agent will accept such Designation Agreement and
will give prompt notice thereof to the Borrower, whereupon, (i) the Borrower
shall execute and deliver to the Designating Bank a Designated Lender Note
payable to the order of the Designated Lender, (ii) from and after the effective
date specified in the Designation Agreement, the Designated Lender shall become
a party to this Agreement with a right (subject to the provisions of Section
2.3(b)) to make Money Market Loans on behalf of its Designating Lender pursuant
to Section 2.3 after the Borrower has accepted a Money Market Loan (or portion
thereof) of the
106
<PAGE>
Designating Lender, and (iii) the Designated Lender shall not be required to
make payments with respect to any obligations in this Agreement except to the
extent of excess cash flow of such Designated Lender which is not otherwise
required to repay obligations of such Designated Lender which are then due and
payable; provided, however, that regardless of such designation and assumption
by the Designated Lender, the Designating Lender shall be and remain obligated
to the Borrower and the Banks for each and every of the obligations of the
Designating Lender and its related Designated Lender with respect to this
Agreement, including, without limitation, any indemnification obligations under
Section 7.6 hereof and any sums otherwise payable to the Borrower by the
Designated Lender. Each Designating Lender shall serve as the administrative
agent of the Designated Lender and shall on behalf of, and to the exclusion of,
the Designated Lender: (i) receive any and all payments made for the benefit of
the Designated Lender and (ii) give and receive all communications and notices
and take all actions hereunder, including, without limitation, votes, approvals,
waivers, consents and amendments under or relating to this Agreement and the
other Loan Documents. Any such notice, communication, vote, approval, waiver,
consent or amendment shall be signed by the Designating Lender as administrative
agent for the Designated Lender and shall not be signed by the Designated Lender
on its own behalf and shall be binding upon the Designated Lender to the same
extent as if signed by the Designated Lender on its own behalf. The Borrower,
the Lead Agent, and the Banks may rely thereon without any requirement that the
Designated Lender sign or acknowledge the same. No Designated Lender may assign
or transfer all or any portion of its interest hereunder or under any other Loan
Document, other than assignments to the Designating Lender which originally
designated such Designated Lender or otherwise in accordance with the provisions
of Section 9.6(b) and (c).
(e) Any Bank may at any time assign all or any portion of its rights under
this Agreement and its Note and the Letter(s) of Credit participated in by such
Bank or, in the case of the Fronting Bank, issued by it, to a Federal Reserve
Bank. No such assignment shall release the transferor Bank from its obligations
hereunder.
107
<PAGE>
(f) No Assignee, Participant or other transferee of any Bank's rights
shall be entitled to receive any greater payment under Section 8.3 or 8.4 than
such Bank would have been entitled to receive with respect to the rights
transferred, unless such transfer is made with the Borrower's prior written
consent or by reason of the provisions of Section 8.2, 8.3 or 8.4 requiring such
Bank to designate a different Applicable Lending Office under certain
circumstances or at a time when the circumstances giving rise to such greater
payment did not exist.
Section 9.7 Governing Law; Submission to Jurisdiction.
-----------------------------------------
(a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT
GIVING EFFECT TO THE PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW).
(b) Any legal action or proceeding with respect to this Agreement or any
other Loan Document and any action for enforcement of any judgment in respect
thereof may be brought in the courts of the State of New York or of the United
States of America for the Southern District of New York, and, by execution and
delivery of this Agreement, the Borrower hereby accepts for itself and in
respect of its property, generally and unconditionally, the non-exclusive
jurisdiction of the aforesaid courts and appellate courts from any thereof. The
Borrower irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the hand delivery, or
mailing of copies thereof by registered or certified mail, postage prepaid, to
the Borrower at its address set forth below. The Borrower hereby irrevocably
waives any objection which it may now or hereafter have to the laying of venue
of any of the aforesaid actions or proceedings arising out of or in connection
with this Agreement or any other Loan Document brought in the courts referred to
above and hereby further irrevocably waives and agrees not to plead or claim in
any such court that any such action or proceeding brought in any such court has
been brought in an inconvenient forum. Nothing herein shall affect the right of
the Lead Agent, any Bank or any holder of a Note to serve process in any other
manner permitted by law or
108
<PAGE>
to commence legal proceedings or otherwise proceed against the Borrower in any
other jurisdiction.
Section 9.8 Marshaling; Recapture. Neither the Lead Agent nor any Bank
---------------------
shall be under any obligation to marshal any assets in favor of the Borrower or
any other party or against or in payment of any or all of the Obligations. To
the extent any Bank receives any payment by or on behalf of the Borrower, which
payment or any part thereof is subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to the Borrower
or its estate, trustee, receiver, custodian or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then to the
extent of such payment or repayment, the Obligation or part thereof which has
been paid, reduced or satisfied by the amount so repaid shall be reinstated by
the amount so repaid and shall be included within the liabilities of the
Borrower to such Bank as of the date such initial payment, reduction or
satisfaction occurred.
Section 9.9 Counterparts; Integration; Effectiveness. This Agreement
----------------------------------------
may be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement constitutes the entire agreement and understanding
among the parties hereto and supersedes any and all prior agreements and
understandings, oral or written, relating to the subject matter hereof. This
Agreement shall become effective upon receipt by the Lead Agent of counterparts
hereof signed by each of the parties hereto (or, in the case of any party as to
which an executed counterpart shall not have been received, receipt by the Lead
Agent in form satisfactory to it of telegraphic, telex or other written
confirmation from such party of execution of a counterpart hereof by such
party).
Section 9.10 WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE LEAD AGENT
--------------------
AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
Section 9.11 Survival. All indemnities set forth herein shall survive
--------
the execution and delivery of
109
<PAGE>
this Agreement and the other Loan Documents and the making and repayment of the
Loans hereunder.
Section 9.12 Domicile of Loans. Subject to the provisions of Article
-----------------
VIII, each Bank may transfer and carry its Loans at, to or for the account of
any domestic or foreign branch office, subsidiary or affiliate of such Bank.
Section 9.13 Limitation of Liability. No claim may be made by the
-----------------------
Borrower or any other Person against the Lead Agent or any Bank or the
affiliates, directors, officers, employees, attorneys or agent of any of them
for any 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 by the other Loan Documents, or
any act, omission or event occurring in connection therewith; and the Borrower
hereby waives, releases and agrees 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.
Section 9.14 No Bankruptcy Proceedings. Each of the Borrower, the Banks,
-------------------------
and the Lead Agent hereby agrees that it will not institute against any
Designated Lender or join any other Person in instituting against any Designated
Lender any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding under any federal or state bankruptcy or similar law, until the later
to occur of (i) one year and one day after the payment in full of the latest
maturing commercial paper note issued by such Designated Lender and (ii) the
Maturity Date.
110
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
KILROY REALTY, L.P., a Delaware limited partnership
By: Kilroy Realty Corporation, a Maryland corporation,
its general partner
By: /s/ Tyler H. Rose
______________________
Name: Tyler H. Rose
Title: Senior Vice President and Treasurer
Commitments
$60,000,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: /s/ Timothy V. O'Donovan
___________________________
Name: Timothy V. O'Donovan
Title: Vice President
$35,000,000 BANK OF MONTREAL, as Bank and Co-Agent
By: /s/ Catherine Sahagian Moussaau
__________________________________
Name: Catherine Sahagian Moussaau
Title: Director
$35,000,000 DRESDNER BANK AG, NEW YORK BRANCH AND GRAND CAYMAN
BRANCH, as Bank and Co-Agent
By: /s/ John W. Sweeney
___________________________
Name: John W. Sweeney
Title: Assistant Vice President
By: /s/ Beverly G. Cason
___________________________
Name: Beverly G. Cason
Title: Vice President
111
<PAGE>
$35,000,000 PNC BANK, NATIONAL ASSOCIATION, as Bank and as
Agent
By: [SIGNATURE ILLEGIBLE]
___________________________
Name: [COPY ILLEGIBLE]
Title: [COPY ILLEGIBLE]
$35,000,000 COMMERZBANK AKTIENGESELLSCHAFT,
LOS ANGELES BRANCH, as Bank and as Agent
By: /s/ Douglas P. Traynor
___________________________
Name: Douglas P. Traynor
Title: Vice President
By: /s/ Christine H. Finkel
___________________________
Name: Christine H. Finkel
Title: Assistant Vice President
$35,000,000 UNION BANK OF CALIFORNIA, as Bank and as Agent
By: /s/ Sharon Fisher
___________________________
Name: Sharon Fisher
Title: Vice President
$25,000,000 KEYBANK NATIONAL ASSOCIATION
By: /s/ Mary Ellen Fowler
___________________________
Name: Mary Ellen Fowler
Title: Vice President
$25,000,000 CORESTATES BANK, N.A.
By: /s/ Mark A. Duffy
___________________________
Name: Mark A. Duffy
Title: Vice President
112
<PAGE>
$25,000,000 MELLON BANK, N.A.
By: /s/ Allan O. Kirkman
___________________________
Name: Allan O. Kirkman
Title: [COPY ILLEGIBLE]
$25,000,000 SUMMIT BANK
By: /s/ Amy L. Brown
___________________________
Name: Amy L. Brown
Title: Regional Vice President
$15,000,000 KREDIETBANK, N.V.
By: /s/ Robert Snauffer
___________________________
Name: Robert Snauffer
Title: Vice President
By: [SIGNATURE ILLEGIBLE]
___________________________
Name: [COPY ILLEGIBLE]
Title: Vice President
Total Commitments
- -----------------
$350,000,000.00
113
<PAGE>
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Lead Agent
By: /s/ Timothy V. O'Donovan
___________________________
Name: Timothy V. O'Donovan
Title: Vice President
60 Wall Street
New York, New York 10260-0060
Attention: Tim O'Donovan
Telephone number: (212) 648-8127
Telecopy number: (212) 648-5336
Domestic and Euro-Currency
Lending Office:
Nassau, Bahamas Office
c/o J.P. Morgan Services Inc.
500 Stanton Christiana Road
Newark, Delaware 19173-2107
Attention: Nancy K. Dunbar
Telecopy number: (302) 634-4222
114
<PAGE>
EXHIBIT A
---------
NOTE
_____________ New York, New York
February__, 1998
For value received, KILROY REALTY, L.P., a Delaware limited
partnership (the "Borrower") promises to pay to the order of _______________
--------
(the "Bank"), for the account of its Applicable Lending Office, the unpaid
----
principal amount of each Loan made by the Bank to the Borrower pursuant to the
Credit Agreement referred to below on the Maturity Date. The Borrower promises
to pay interest on the unpaid principal amount of each such Loan on the dates
and at the rate or rates provided for in the Credit Agreement. All such
payments of principal and interest shall be made in lawful money of the United
States in Federal or other immediately available funds at the office of Lead
Agent under the Credit Agreement (as defined below).
All Loans made by the Bank, the respective types and maturities
thereof and all repayments of the principal thereof shall be recorded by the
Bank and, if the Bank so elects in connection with any transfer or enforcement
hereof, appropriate notations to evidence the foregoing information with respect
to each such Loan then outstanding may be endorsed by the Bank on the schedule
attached hereto, or on a continuation of such schedule attached to and made a
part hereof; provided that the failure of the Bank to make any such recordation
--------
or endorsement shall not affect the obligations of the Borrower hereunder or
under the Credit Agreement.
This Note is one of the Notes referred to in the Revolving Credit
Agreement, dated as of February __, 1998, among the Borrower, the Banks party
thereto, Morgan Guaranty Trust Company of New York, as Lead Agent, and Bank of
Montreal, Commerzbank Aktiengesellschaft, Los Angeles Branch, Dresdner Bank AG,
New York Branch and Grand Cayman Branch, PNC Bank, National Association and
Union Bank of California, as Co-Agents (as the same may be amended from time to
time, the "Credit Agreement").
----------------
A-1
<PAGE>
Terms defined in the Credit Agreement are used herein with the same
meanings. Reference is made to the Credit Agreement for provisions for the
prepayment hereof and the acceleration of the maturity hereof.
KILROY REALTY, L.P., a Delaware limited partnership
By: Kilroy Realty Corporation, a Maryland corporation,
its general partner
By: ________________________
Name: Tyler H. Rose
Title: Senior Vice President and Treasurer
A-2
<PAGE>
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
_______________________________________________________________
Amount of
Amount of Type of Principal Maturity Notation
Date Loan Loan Repaid Date Made By
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
______________________________________________________________
______________________________________________________________
_______________________________________________________________
________________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
A-3
<PAGE>
EXHIBIT A-1
-----------
NOTE
$150,000,000______________ New York, New York
February , 1998
For value received, KILROY REALTY, L.P., a Delaware limited
partnership (the "Borrower") promises to pay to the order of _______________
--------
(the "Bank"), for the account of its Applicable Lending Office, the unpaid
----
principal amount of each Loan made by the Bank to the Borrower pursuant to the
Credit Agreement referred to below on the Maturity Date. The Borrower promises
to pay interest on the unpaid principal amount of each such Loan on the dates
and at the rate or rates provided for in the Credit Agreement. All such
payments of principal and interest shall be made in lawful money of the United
States in Federal or other immediately available funds at the office of Lead
Agent under the Credit Agreement (as defined below).
All Loans made by the Bank, the respective types and maturities
thereof and all repayments of the principal thereof shall be recorded by the
Bank and, if the Bank so elects in connection with any transfer or enforcement
hereof, appropriate notations to evidence the foregoing information with respect
to each such Loan then outstanding may be endorsed by the Bank on the schedule
attached hereto, or on a continuation of such schedule attached to and made a
part hereof; provided that the failure of the Bank to make any such recordation
--------
or endorsement shall not affect the obligations of the Borrower hereunder or
under the Credit Agreement.
This Note is one of the Designated Lender Notes referred to in the
Revolving Credit Agreement, dated as of February __, 1998, among the Borrower,
the Banks party thereto, and Morgan Guaranty Trust Company of New York, as Lead
Agent, and Bank of Montreal, Commerzbank Aktiengesellschaft, Los Angeles Branch,
Dresdner Bank AG, New York Branch and Grand Cayman Branch, PNC Bank, National
Association and Union Bank of California, as Co-Agents (as the same may be
amended from time to time, the "Credit Agreement").
----------------
A-1-1
<PAGE>
Terms defined in the Credit Agreement are used herein with the same
meanings. Reference is made to the Credit Agreement for provisions for the
prepayment hereof and the acceleration of the maturity hereof.
KILROY REALTY, L.P., a Delaware limited partnership
By: Kilroy Realty Corporation, a Maryland corporation,
its general partner
By: ________________________
Name: Tyler H. Rose
Title: Senior Vice President and Treasurer
A-1-2
<PAGE>
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
_______________________________________________________________
Amount of
Amount of Type of Principal Maturity Notation
Date Loan Loan Repaid Date Made By
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
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A-1-3
<PAGE>
EXHIBIT B
---------
Unencumbered Asset Pool Properties
(Fee Interests)
PROPERTY LOCATION
-------- --------
821 S. Rockefeller Ontario, CA
Walmart Las Vegas, NV
ValPak Las Vegas, NV
199 & 201 N. Sunrise Ave (PM) Roseville, CA
1961 Concourse Dr. (PM) San Jose, CA
1710 Fortune Dr. (Radius) (PM) San Jose, CA
Giltspur Building Garden Grove, CA
1951 E. Carnegie Ave. Santa Ana, CA
3125 E. Coronado (SPM) Anaheim, CA
Miraloma Anaheim, CA
1675 MacArthur Cosa Mesa, CA
14831 Franklin Ave (PM) Tustin, CA
2055 SE Main Street (PM) Irvine, CA
Gothard Business Park Huntington Beach, CA
184-20 Technology Drive Irvine Spectrum, CA
Dimension Business Park El Toro, CA
Garden Grove Industrial
Properties Garden Grove, CA
Brea Industrial Properties Brea, CA
9451 Toledo Way (Mazda) Irvine, CA
17150 Von Karman Irvine, CA
7421 Orangewood (Perkin-Elmer) Garden Grove, CA
5325 E. Hunder Ave.
(Clothestime Bldg.) Anaheim, CA
12400 Industry Street Garden Grove, CA
FFF Enterprises San Diego, CA
6828 Nancy Ridge Dr. (PM) San Diego, CA
Walnut Park Bus. Ctr. Diamond Bar, CA
4880 Colt Street Ventura, CA
4351 Latham (Hutton) Riverside, CA
4361 Latham (Hutton) Riverside, CA
601 Valencia (Hutton) Brea, CA
Anaheim Corp. Center Anaheim, CA
Pacific Park Aliso Viejo, CA
9401 Toledo Way (Mazda) Irvine, CA
2501 Pullman (Caltrans) Santa Ana, CA
111 Pacifica Irvine Spectrum, CA
701 - 741 E. Ball Road
(Occidental) Anaheim, CA
Applied Micro Circuits San Diego, CA
Arrowhead San Diego, CA
Industrial Computer San Diego, CA
23600 - 610 Telo Avenue Torrance, CA
525 North Brand Glendale, CA
5151 - 5155 Camino Ruiz Camarillo, CA
26541 Agoura Road (ARC) Calabasas, CA
3130 Wilshire Blvd. Santa Monica, CA
2100 Colorado Avenue (Sony) Santa Monica, CA
1633 26/th/ Street (Fujita) Santa Monica, CA
Alton Business Center Irvine, CA
Fullerton Business Center Fullerton, CA
501 Santa Monica Santa Monica, CA
12150 Olympic Blvd. Los Angeles, CA
B-1
<PAGE>
EXHIBIT C
---------
Unencumbered Asset Pool Properties
(Leasehold Interests)
Kilroy Airport Center,
3900, 3880, 3760, 3780
and 3750 Kilroy Airport Way
(Long Beach) Long Beach, CA
C-1
<PAGE>
EXHIBIT D
---------
FORM OF ASSIGNMENT AND ASSUMPTION
ASSIGNMENT AND ASSUMPTION AGREEMENT
-----------------------------------
AGREEMENT dated as of __________, 199__ among [ASSIGNOR] (the
"Assignor"), [ASSIGNEE] (the "Assignee"), KILROY REALTY, L.P. (the "Borrower")
and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Lead Agent (the "Agent").
W I T N E S S E T H
-------------------
WHEREAS, this Assignment and Assumption Agreement (the "Assignment")
relates to the Revolving Credit Agreement dated as of ________ __, 199__ (the
"Loan Agreement") among the Borrower, the Assignor and the other Banks party
thereto, as Banks, and the Agent;
WHEREAS, as provided under the Loan Agreement, the Assignor has a
Commitment to make Loans to the Borrower in an aggregate principal amount at any
time outstanding not to exceed $__________;
WHEREAS, Loans made to the Borrower by the Assignor under the Loan
Agreement in the aggregate principal amount of $____________ are outstanding at
the date hereof; and
WHEREAS, the Assignor proposes to assign to the Assignee all of the
rights of the Assignor under the Loan Agreement in respect of a portion of its
Commitment thereunder in an amount equal to $__________ (the "Assigned Amount"),
together with a corresponding portion of its outstanding Loans, and the Assignee
proposes to accept assignment of such rights and assume the corresponding
obligations from the Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. Definitions. All capitalized terms not otherwise defined
-----------
herein shall have the respective meanings set forth in the Loan Agreement.
SECTION 2. Assignment. The Assignor hereby assigns and sells to the
----------
Assignee all of the rights of the Assignor under the Loan Agreement to the
extent of the Assigned Amount, and the Assignee hereby accepts such assignment
from the Assignor and assumes all of the obligations of the Assignor under the
Loan Agreement to the extent of the Assigned Amount, including the purchase from
the Assignor of the corresponding portion of the
D-1
<PAGE>
principal amount of the Loans made by the Assignor outstanding at the date
hereof. Upon the execution and delivery hereof by the Assignor, the Assignee,
the Borrower and the Agent and the payment of the amounts specified in Section 3
required to be paid on the date hereof (i) the Assignee shall, as of the date
hereof, succeed to the rights and be obligated to perform the obligations of a
Bank under the Loan Agreement with a Commitment in an amount equal to the
Assigned Amount, and (ii) the Commitment of the Assignor shall, as of the date
hereof, be reduced by a like amount and the Assignor released from its
obligations under the Loan Agreement to the extent such obligations have been
assumed by the Assignee. The assignment provided for herein shall be without
recourse to the Assignor.
SECTION 3. Payments. As consideration for the assignment and sale
--------
contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the
date hereof in Federal funds the amount heretofore agreed between them./1/ It is
understood that Commitment Fees accrued to the date hereof are for the account
of the Assignor and such fees accruing from and including the date hereof are
for the account of the Assignee. Each of the Assignor and the Assignee hereby
agrees that if it receives any amount under the Loan Agreement which is for the
account of the other party hereto, it shall receive the same for the account of
such other party to the extent of such other party's interest therein and shall
promptly pay the same to such other party.
SECTION 4. Consent of the Borrower and the Agent. This Agreement is
-------------------------------------
conditioned upon the written consent of the Borrower and the consent of the
Agent pursuant to section 9.6(c) of the Loan Agreement. The execution of this
Agreement by the Borrower and the Agent is evidence of the required consents.
Pursuant to Section 9.6(c) the Borrower agrees to execute and deliver a Note
payable to the order of the Assignee to evidence the assignment and assumption
provided for herein.
SECTION 5. Non-Reliance on Assignor. The Assignor makes no
------------------------
representation or warranty in connection with, and shall have no responsibility
with respect to, the solvency, financial condition, or statements of the
Borrower, or the validity and enforceability of the obligations of the Borrower
in respect of the Loan Agreement or any Note. The Assignee acknowledges that it
has, independently and without reliance on the Assignor, and based on such
documents
- ----------------
/1/ The amount should combine principal together with accrued interest and
breakage compensation, if any, to be paid by the Assignee, net of any
portion of any upfront fee to be paid by the Assignor to the Assignee. It
may be preferable in an appropriate case to specify these amounts
generically or by formula rather than as a fixed sum.
D-2
<PAGE>
and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and will continue to be
responsible for making its own independent appraisal of the business, affairs
and financial condition of the Borrower.
SECTION 6. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the external laws of the State of New York
D-3
<PAGE>
SECTION 7. Counterparts. This Agreement may be signed in any number
------------
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
[ASSIGNOR]
By:_______________________
Name:
Title:
[ASSIGNEE]
By:________________________
Name:
Title:
MORGAN GUARANTY TRUST COMPANY OF NEW
YORK
By:________________________
Name:
Title:
CONSENTED TO:
KILROY REALTY, L.P.
D-4
<PAGE>
EXHIBIT E
Form of Money Market Quote Request
----------------------------------
[Date]
To: Morgan Guaranty Trust Company of New York (the "Lead Agent")
From: Kilroy Realty, L.P.
Re: Revolving Credit Agreement (the "Credit Agreement") dated as of
February , 1998 among Kilroy Realty, L.P., the Banks parties thereto
and the Lead Agent
We hereby give notice pursuant to Section 2.3 of the Credit Agreement
that we request Money Market Quotes for the following proposed Money Market
Borrowing(s):
Date of Borrowing: __________________
Principal Amount/2/ Interest Period/3/
- ------------------- ------------------
$
Such Money Market Quotes should offer a Money Market [Margin]
[Absolute Rate]. [The applicable base rate is the London Interbank Offered
Rate.]
The funding of Money Market Loans made in connection with this Money
Market Quote Request [may/may not] be made by Designated Lenders.
Terms used herein have the meanings assigned to them in the Credit
Agreement.
Kilroy Realty, L.P.
By: Kilroy Realty Corporation
By:________________________
- ----------------
/2/ Amount must be $10,000,000 or a larger multiple of $500,000.
/3/ Not less than one month (LIBOR Auction) or not less than 30 days (Absolute
Rate Auction), subject to the provisions of the definition of Interest
Period.
E-1
<PAGE>
By:________________________________________
Name:
Title:
E-2
<PAGE>
EXHIBIT F
Form of Invitation for Money Market Quotes
------------------------------------------
To: [Name of Bank]
Re: Invitation for Money Market Quotes to Kilroy Realty, L.P. (the "Borrower")
Pursuant to Section 2.3 of the Revolving Credit Agreement dated as of
February , 1998 among Kilroy Realty, L.P., the Banks parties thereto and the
undersigned, as Lead Agent, we are pleased on behalf of the Borrower to invite
you to submit Money Market Quotes to the Borrower for the following proposed
Money Market Borrowing(s):
Date of Borrowing: __________________
Principal Amount Interest Period
- ---------------- ---------------
$
Such Money Market Quotes should offer a Money Market [Margin]
[Absolute Rate]. [The applicable base rate is the London Interbank Offered
Rate.]
Please respond to this invitation by no later than 10:00 A.M. (New
York City time) on [date].
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Lead Agent
By______________________
Authorized Officer
F-1
<PAGE>
EXHIBIT G
Form of Money Market Quote
--------------------------
To: Morgan Guaranty Trust Company of New York, as Lead Agent
Re: Money Market Quote to Kilroy Realty, L.P. (the "Borrower")
In response to your invitation on behalf of the Borrower dated
_____________, 19__, we hereby make the following Money Market Quote on the
following terms:
1. Quoting Bank: ________________________________
2. Person to contact at Quoting Bank:
_____________________________
3. Date of Borrowing: ____________________*
4. We hereby offer to make Money Market Loan(s) in the following principal
amounts, for the following Interest Periods and at the following rates:
Principal Interest Money Market
Amount** Period*** [Margin****] [Absolute Rate*****]
- -------- --------- ---------------------------------
$
$
[Provided, that the aggregate principal amount of Money Market Loans for
which the above offers may be accepted shall not exceed $____________.]**
We understand and agree that the offer(s) set forth above, subject to
the satisfaction of the applicable conditions set forth in the Revolving
Credit Agreement dated as of February , 1998 among Kilroy Realty, L.P.,
the Banks parties thereto and yourselves, as Lead Agent, irrevocably
obligates us to make the Money Market Loan(s) for which any offer(s) are
accepted, in whole or in part.
Very truly yours,
[NAME OF BANK]
Dated:_______________ By:__________________________
Authorized Officer
G-1
<PAGE>
EXHIBIT H
FORM OF DESIGNATION AGREEMENT
-----------------------------
Dated _____________, 199___
Reference is made to that certain Revolving Credit Agreement dated as of
February , 1998 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement") among KILROY REALTY, L.P., the banks parties
thereto, and MORGAN GUARANTY TRUST COMPANY OF NEW YORK (the "Lead Agent"), as
----------
Lead Agent. Terms defined in the Credit Agreement are used herein with the same
meaning.
[NAME OF DESIGNOR] (the "Designor"), [NAME OF DESIGNEE] (the "Designee")
and the Lead Agent agree as follows:
1. The Designor hereby designates the Designee, and the Designee hereby
accepts such designation, to have a right to make Money Market Loans pursuant to
Article III of the Credit Agreement. Any assignment by Designor to Designee of
its rights to make a Money Market Loan pursuant to such Article III shall be
effective at the time of the funding of such Money Market Loan and not before
such time.
2. Except as set forth in Section 7 below, the Designor makes no
representation or warranty and assumes no responsibility pursuant to this
Designation Agreement with respect to (a) any statements, warranties or
representations made in or in connection with any Loan Document or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of any Loan Document or any other instrument and document furnished pursuant
thereto and (b) the financial condition of the Borrower or the performance or
observance by the Borrower of any of its obligations under any Loan Document or
any other instrument or document furnished pursuant thereto.
3. The Designee (a) confirms that it has received a copy of each Loan
Document, together with copies of the financial statements referred to in
Articles IV and V of the Credit Agreement and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Designation Agreement; (b) agrees that it will
independently and without reliance upon the Lead Agent, the Designor or any
other Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under any Loan Document; (c) confirms that it is a Designated
Lender; (d) appoints and authorizes the Lead Agent to take such action as agent
on its behalf and to exercise such powers and discretion under any Loan Document
as are delegated to the Lead Agent by the terms
H-1
<PAGE>
thereof, together with such powers and discretion as are reasonably incidental
thereto; and (e) agrees to be bound by each and every provision of each Loan
Document and further agrees that it will perform in accordance with their terms
all of the obligations which by the terms of any Loan Document are required to
be performed by it as a Bank.
4. The Designee hereby appoints Designor as Designee's agent and attorney in
fact, and grants to Designor an irrevocable power of attorney, to receive
payments made for the benefit of Designee under the Credit Agreement, to deliver
and receive all communications and notices under the Credit Agreement and other
Loan Documents and to exercise on Designee's behalf all rights to vote and to
grant and make approvals, waivers, consents of amendments to or under the Credit
Agreement or other Loan Documents. Any document executed by the Designor on the
Designee's behalf in connection with the Credit Agreement or other Loan
Documents shall be binding on the Designee. The Borrower, the Lead Agent and
each of the Banks may rely on and are beneficiaries of the preceding provisions.
5. Following the execution of this Designation Agreement by the Designor and
its Designee, it will be delivered to the Lead Agent for acceptance and
recording by the Lead Agent. The effective date for this Designation Agreement
(the "Effective Date") shall be the date of acceptance hereof by the Lead Agent,
unless otherwise specified on the signature page thereto.
6. The Lead Agent hereby agrees that it will not institute against any
Designated Lender or join any other Person in instituting against any Designated
Lender any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding under any federal or state bankruptcy or similar law, until the later
to occur of (i) one year and one day after the payment in full of the latest
maturing commercial paper note issued by such Designated Lender and (ii) the
Maturity Date.
7. The Designor unconditionally agrees to pay or reimburse the Designee and
save the Designee harmless against all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed or asserted by any of the
parties to the Loan Documents against the Designee, in its capacity as such, in
any way relating to or arising out of this Agreement or any other Loan Documents
or any action taken or omitted by the Designee hereunder or thereunder, provided
--------
that the Designor shall not be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements if the same results from the Designee's gross
negligence or willful misconduct.
8. Upon such acceptance and recording by the Lead Agent, as of the Effective
Date, the Designee shall be a party to the
H-2
<PAGE>
Credit Agreement with a right (subject to the provisions of Section 2.3(b)) to
make Money Market Loans as a Bank pursuant to Section 2.3 of the Credit
Agreement and the rights and obligations of a Bank related thereto; provided,
---------
however, that
- --------
the Designee shall not be required to make payments with respect to such
obligations except to the extent of excess cash flow of such Designee which is
not otherwise required to repay obligations of such Designated Lender which are
then due and payable. Notwithstanding the foregoing, the Designor, as
administrative agent for the Designee, shall be and remain obligated to the
Borrower, the Co-Agents and the Banks for each and every of the obligations of
the Designee and its Designor with respect to the Credit Agreement, including,
without limitation, any indemnification obligations under Section 7.6 of the
Credit Agreement and any sums otherwise payable to the Borrower by the Designee.
9. This Designation Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
10. This Designation Agreement may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement. Delivery of an executed counterpart of a
signature page to this Designation Agreement by facsimile transmission shall be
effective as delivery of a manually executed counterpart of this Designation
Agreement.
H-3
<PAGE>
1. IN WITNESS WHEREOF, the Designor and the Designee, intending to be
legally bound, have caused this Designation Agreement to be executed by their
officers thereunto duly authorized as of the date first above written.
2.
3. Effective Date: ________________________, 199__
[NAME OF DESIGNOR], as Designor
By:
Title:
[NAME OF DESIGNEE] as Designee
By:
Title:
Applicable Lending Office (and address
for notices):
[ADDRESS]
Accepted this _____ day
of ________, 19__
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Lead Agent
By:
----------------------
Title:
-------------------
H-4
<PAGE>
SCHEDULE 4.22
-------------
LABOR MATTERS
Agreement between Building Owners and Managers Association of Greater Los
Angeles, Inc., and International Union of Operating Engineers, Local No. 501,
AFL-CIO (November 1, 1996-October 31, 2001)
