<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the Period Ended JUNE 30, 1999.
-------------
or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ____________ to ____________.
Commission File Number: 0-22569 (Irvine Apartment Communities, L.P.)
1-13721 (IAC Capital Trust)
IRVINE APARTMENT COMMUNITIES, L.P.
IAC CAPITAL TRUST
----------------------------------------------------------
(Exact Name of Registrants as Specified in Their Charters)
Delaware 33-0587829
Delaware 91-6452946
-------- ----------
(State of Incorporation) (I.R.S. Employer Identification Number)
550 Newport Center Drive, Suite 300, Newport Beach, California 92660
--------------------------------------------------------------------
(Address of principal executive offices)
(949) 720-5500
--------------
(Registrants' telephone number, including area code)
Not Applicable
--------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrants (1) have filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter time as
required), and (2) have been subject to such filing requirements for the past 90
days.
Irvine Apartment Communities, L.P.: Yes X No
----- -----
IAC Capital Trust: Yes X No
----- -----
Indicate the number of units outstanding of each of the issuer's classes
of common partnership units, as of the latest practical date. Irvine Apartment
Communities, L.P.: units of common partnership interest - 45,202,827 units as of
August 10, 1999.
================================================================================
<PAGE> 2
IRVINE APARTMENT COMMUNITIES, L.P.
IAC CAPITAL TRUST
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements - Irvine Apartment Communities, L.P.
- Consolidated Balance Sheets as of June 30, 1999 and December 31, 1998 1
- Consolidated Statements of Operations for the three and six months ended
June 30, 1999 and 1998 2
- Consolidated Statements of Changes in Partners' Capital for the
six months ended June 30, 1999 and 1998 3
- Consolidated Statements of Cash Flows for the six months ended
June 30, 1999 and 1998 4
Financial Statements - IAC Capital Trust
- Balance Sheets as of June 30, 1999 and December 31, 1998 5
- Statements of Operations and Equity for the three months ended
June 30, 1999 and 1998, the six months ended June 30, 1999
and for the period January 20, 1998 (commencement of
operations) to June 30, 1998 6
- Statements of Cash Flows for the six months ended June 30, 1999 and
for the period January 20, 1998 (commencement of operations) to
June 30, 1998 7
Notes to Consolidated Financial Statements 8 to 12
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 13 to 23
Item 3. Quantitative and Qualitative Disclosures About Market Risk 24
PART II OTHER INFORMATION
Item 1. Legal Proceedings 24
Item 2. Changes in Securities and Use of Proceeds 24
Item 3. Defaults Upon Senior Securities 24
Item 4. Submission of Matters to a Vote of Security Holders 24
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
Item 5. Other Information 24
Item 6. Exhibits and Reports on Form 8-K 24
SIGNATURES 26
</TABLE>
ii
<PAGE> 4
Irvine Apartment Communities, L.P.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
(in thousands) 1999 1998
- -----------------------------------------------------------------------------------------
ASSETS (unaudited)
<S> <C> <C>
Real estate assets, at cost
Land $ 392,050 $ 248,105
Buildings and improvements 1,595,747 1,172,877
- -----------------------------------------------------------------------------------------
1,987,797 1,420,982
Accumulated depreciation (300,458) (281,449)
- -----------------------------------------------------------------------------------------
1,687,339 1,139,533
Under development, including land 226,068 205,371
- -----------------------------------------------------------------------------------------
1,913,407 1,344,904
Cash and cash equivalents 10,335 4,888
Restricted cash 1,827 1,653
Deferred financing costs, net 11,301 12,159
Other assets 12,573 11,020
- -----------------------------------------------------------------------------------------
$ 1,949,443 $ 1,374,624
=========================================================================================
LIABILITIES
Mortgages and notes payable $ 749,860 $ 751,818
Accounts payable and accrued liabilities 39,376 38,871
Advance from affiliate 46,000
Security deposits 10,299 9,467
- -----------------------------------------------------------------------------------------
845,535 800,156
REDEEMABLE PREFERRED INTERESTS
Redeemable Series A preferred limited partner units,
6,000 preferred partnership units outstanding 144,117 144,097
Redeemable Series B preferred limited partner units,
2,000 preferred partnership units outstanding 48,693 48,692
- -----------------------------------------------------------------------------------------
192,810 192,789
- -----------------------------------------------------------------------------------------
PARTNERS' CAPITAL
General partner, 20,176 common partnership units
at June 30, 1999 and 20,164 at December 31, 1998 681,503 195,858
Common limited partners, 25,027 common partnership
units at June 30, 1999 and December 31, 1998 229,595 185,821
- -----------------------------------------------------------------------------------------
911,098 381,679
- -----------------------------------------------------------------------------------------
$ 1,949,443 $ 1,374,624
=========================================================================================
</TABLE>
See accompanying notes.
Page 1
<PAGE> 5
Irvine Apartment Communities, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Six Months Ended June 30, Three Months Ended June 30,
(unaudited, in thousands, except per unit amounts) 1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES
Rental income $ 117,914 $ 101,115 $59,894 $ 51,528
Other income 3,333 2,648 1,704 1,437
Interest income 312 1,113 183 344
- ------------------------------------------------------------------------------------------------------------------------
121,559 104,876 61,781 53,309
- ------------------------------------------------------------------------------------------------------------------------
EXPENSES
Property expenses 25,770 23,913 13,396 11,930
Real estate taxes 9,290 8,158 4,720 4,154
Interest expense, net 14,243 13,412 7,295 6,300
Amortization of deferred financing costs 927 956 474 465
Depreciation and amortization 19,335 16,301 10,121 8,260
General and administrative 8,941 4,327 4,593 2,169
- ------------------------------------------------------------------------------------------------------------------------
78,506 67,067 40,599 33,278
- ------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE EXTRAORDINARY ITEM AND REDEEMABLE
PREFERRED INTERESTS 43,053 37,809 21,182 20,031
Extraordinary item related to debt extinguishment (42,451) (42,451)
- ------------------------------------------------------------------------------------------------------------------------
INCOME (LOSS) BEFORE REDEEMABLE PREFERRED INTERESTS 43,053 (4,642) 21,182 (22,420)
Redeemable preferred interests 8,375 5,534 4,187 3,093
- ------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) $ 34,678 ($ 10,176) $16,995 ($25,513)
- ------------------------------------------------------------------------------------------------------------------------
ALLOCATION OF NET INCOME (LOSS):
General Partner $ 15,478 ($ 4,544) $ 7,587 ($11,359)
Common Limited Partners $ 19,200 ($ 5,632) $ 9,408 ($14,154)
========================================================================================================================
EARNINGS PER COMMON UNIT:
Basic and diluted $ 0.77 ($ 0.23) $ 0.38 ($ 0.57)
========================================================================================================================
WEIGHTED AVERAGE NUMBER OF COMMON UNITS OUTSTANDING:
Basic and diluted 45,201 44,917 45,203 44,971
========================================================================================================================
</TABLE>
See accompanying notes
Page 2
<PAGE> 6
Irvine Apartment Communities, L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
<TABLE>
<CAPTION>
Irvine Apartment Irvine Apartment
(unaudited, in thousands) Communities LLC Communities, Inc. Limited Partners Total
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PARTNERS' CAPITAL
Balance at January 1, 1998 $ 210,920 $210,307 $421,227
Net loss (4,544) (5,632) (10,176)
Contributions 4,007 2,049 6,056
Distributions (14,959) (18,702) (33,661)
- --------------------------------------------------------------------------------------------------------------
Balance at June 30, 1998 $ 195,424 $188,022 $383,446
- --------------------------------------------------------------------------------------------------------------
Balance at January 1, 1999 $ 195,858 $185,821 $381,679
Net income $ 1,321 14,157 19,200 34,678
Contributions 394 394
Distributions (7,768) (9,636) (17,404)
Merger Transaction (Note 6) 680,182 (202,641) 34,210 511,751
- --------------------------------------------------------------------------------------------------------------
Balance at June 30, 1999 $681,503 $ -- $229,595 $911,098
- --------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
Page 3
<PAGE> 7
Irvine Apartment Communities, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended June 30,
(unaudited, in thousands) 1999 1998
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 34,678 $ (10,176)
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Write-off of deferred financing costs 8,314
Amortization of deferred financing costs 927 956
Depreciation and amortization 19,335 16,301
Redeemable preferred interest 8,375 5,534
Increase (decrease) in cash attributable to changes in assets and
liabilities:
Restricted cash (174) (88)
Other assets (1,858) 5,152
Accounts payable and accrued liabilities 1,885 3,130
Security deposits 832 1,097
- -------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities 64,000 30,220
- -------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital improvements to operating real estate assets (3,231) (1,944)
Capital investments in real estate assets (73,486) (103,157)
- -------------------------------------------------------------------------------------------------------------------
Net Cash Used in Investing Activities (76,717) (105,101)
- -------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings under unsecured line of credit 64,000 44,000
Payments on unsecured line of credit (64,000) (83,000)
Proceeds from unsecured tax-exempt bond financings 334,190
Payments on tax-exempt mortgage bond financings (325,644)
Principal payments (1,988) (1,841)
Advance from affiliate 46,000
Additions to deferred financing costs (69) (2,893)
Net proceeds from issuance of redeemable preferred limited partner units 143,985
Distributions to redeemable preferred limited partner unit holders (8,375) (5,534)
Contributions from partners 5,815
Distributions to partners (17,404) (33,661)
- -------------------------------------------------------------------------------------------------------------------
Net Cash Provided by Financing Activities 18,164 75,417
- -------------------------------------------------------------------------------------------------------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 5,447 536
Cash and Cash Equivalents at Beginning of Period 4,888 4,624
- -------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 10,335 $ 5,160
- -------------------------------------------------------------------------------------------------------------------
Supplemental Disclosure of Cash Flow Information
Interest paid, net of amounts capitalized $ 14,240 $ 14,662
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes.
Page 4
<PAGE> 8
IAC Capital Trust
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
(dollars in thousands) 1999 1998
- -------------------------------------------------------------------------------------------------------------
ASSETS (unaudited)
<S> <C> <C>
Cash $ 5 $ 5
Investment in Subsidiary 150,000 150,000
- -------------------------------------------------------------------------------------------------------------
$150,005 $150,005
- -------------------------------------------------------------------------------------------------------------
LIABILITIES AND EQUITY
Redeemable Preferred Securities, 25,000,000 securities authorized
Redeemable Series A Preferred Securities,
6,900,000 securities authorized,
6,000,000 securities issued and outstanding $150,000 $150,000
Equity
Common Securities, 20,000 securities authorized,
200 securities issued and outstanding 5 5
- -------------------------------------------------------------------------------------------------------------
$150,005 $150,005
=============================================================================================================
</TABLE>
See accompanying notes.
Page 5
<PAGE> 9
IAC Capital Trust
STATEMENTS OF OPERATIONS AND EQUITY
<TABLE>
<CAPTION>
For the Period
January 20, 1998
(commencement
Six Months Ended of operations) Three Months Ended June 30,
(unaudited, in thousands, except per security amounts) June 30, 1999 to June 30, 1998 1999 1998
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUE
Income from investment in subsidiary $6,188 $5,534 $3,094 $3,093
- -------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE REDEEMABLE PREFERRED INTEREST 6,188 5,534 3,094 3,093
Redeemable preferred interest 6,188 5,534 3,094 3,093
- -------------------------------------------------------------------------------------------------------------------------------
NET INCOME $0 $0 $0 $0
- -------------------------------------------------------------------------------------------------------------------------------
EARNINGS PER SECURITY:
Basic and diluted $0.00 $0.00 $0.00 $0.00
- -------------------------------------------------------------------------------------------------------------------------------
Equity - beginning of period $5
Issuance of common securities $5
Net income 0 0
- -------------------------------------------------------------------------------------------------------------------------------
EQUITY - END OF PERIOD $5 $5
===============================================================================================================================
</TABLE>
See accompanying notes.
Page 6
<PAGE> 10
IAC Capital Trust
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Period
January 20, 1998
(commencement
Six Months Ended of operations)
(unaudited, in thousands) June 30, 1999 to June 30, 1998
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 0 $ 0
Adjustments to reconcile net income to net cash
provided by operating activities:
Redeemable preferred interest 6,188 5,534
- -----------------------------------------------------------------------------------------------------------
Net Cash Provided by Operating Activities 6,188 5,534
- -----------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in subsidiary (150,000)
- -----------------------------------------------------------------------------------------------------------
Net Cash Used in Investing Activities 0 (150,000)
- -----------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common securities 5
Proceeds from issuance of redeemable preferred securities 150,000
Distributions to preferred securities holders (6,188) (5,534)
- -----------------------------------------------------------------------------------------------------------
Net Cash Provided by Financing Activities (6,188) 144,471
- -----------------------------------------------------------------------------------------------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 0 5
Cash and Cash Equivalents at beginning of period 5 0
- -----------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 5 $ 5
===========================================================================================================
</TABLE>
See accompanying notes.
Page 7
<PAGE> 11
IRVINE APARTMENT COMMUNITIES, L.P.
IAC CAPITAL TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - ORGANIZATION
Irvine Apartment Communities, L.P., a Delaware limited partnership (the
"Partnership"), was formed on November 15, 1993. In connection with an initial
public offering of common shares on December 8, 1993, Irvine Apartment
Communities, Inc. ("IAC, Inc.") obtained a general partnership interest in and
became the sole managing general partner of the Partnership. The Irvine Company
("TIC") transferred 42 apartment communities and a 99% interest in a limited
partnership which owns one apartment community to the Partnership. On June 7,
1999, IAC, Inc. was merged with and into TIC Acquisition LLC (the "Acquiror"), a
Delaware limited liability company indirectly wholly owned by TIC (the
"Merger"), with the Acquiror remaining as the surviving entity and renamed
Irvine Apartment Communities LLC ("IACLLC"). As a result of the Merger and a
related transaction in which TIC acquired an additional 74,523 common limited
partnership units, TIC and certain of its affiliates beneficially own and
control all of the outstanding common partnership units in the Partnership and
IACLLC became the sole general partner of the Partnership. At June 30, 1999,
IACLLC had a 44.6% general partnership interest and TIC and certain of its
affiliates had a 55.4% common limited partnership interest in the Partnership.
The Partnership's management and operating decisions are under the unilateral
control of IACLLC.
The Partnership owns, operates and develops apartment communities in Orange
County, California and, beginning in 1997, other locations in California. As of
June 30, 1999, the Partnership owned 65 apartment communities representing
16,878 operating apartment units and 2,603 units under development
(collectively, the "Properties"). In May 1997, the Partnership broke ground on
its first property outside of the Irvine Ranch, an apartment community located
in Northern California's Silicon Valley. In March 1998, the Partnership and
Western National Property Management announced the formation of a strategic
alliance that, in April 1998, assumed all property management responsibilities
for the Partnership's Southern California portfolio. The new entity, Irvine
Apartment Management Company ("IAMC"), is owned 51% by the Partnership and 49%
by Western National Property Management. Effective January 1, 1999, IAMC's
property management responsibilities were expanded to include the Partnership's
entire portfolio.
IAC Capital Trust, a Delaware business trust (the "Trust"), was formed on
October 31, 1997. The Trust is a limited purpose financing vehicle established
by the Partnership. The Trust exists for the sole purpose of issuing preferred
securities and investing the proceeds in preferred limited partner units of the
Partnership.
NOTE 2 - BASIS OF PRESENTATION
The accompanying financial statements of the Partnership include the
consolidated accounts of its financially controlled subsidiaries. All
intercompany accounts and transactions have been eliminated in consolidation.
The Trust's investment in subsidiary relates to the redeemable Series A
preferred limited partner units in the Partnership. The Trust has less than a
controlling interest in the Partnership and accounts for its investment using
the equity method.
Page 8
<PAGE> 12
During the fourth quarter of 1998, the Partnership adopted the Financial
Accounting Standards Board's Statement of Financial Accounting Standards No.
131, Disclosures About Segments of an Enterprise and Related Information
("Statement No. 131"). Statement No. 131 superseded FASB Statement No. 14,
Financial Reporting for Segments of a Business Enterprise. Statement No. 131
establishes standards for the way that public business enterprises report
information regarding reportable operating segments. The adoption of Statement
No. 131 did not affect the results of operations or financial position of the
Partnership.
The Partnership operates and develops apartment communities in California which
generate rental and other income through the leasing of apartment units to a
diverse base of renters. The Partnership separately evaluates the performance of
each of its apartment communities. However, because each of the apartment
communities has similar economic characteristics, facilities, services and
tenants, the apartment communities have been aggregated into a single dominant
apartment communities segment.
The Partnership evaluates performance and allocates resources primarily based on
the net operating income ("NOI") of individual apartment communities. NOI is
defined by the Partnership as rental and other income less property expenses and
real estate taxes. Accordingly, NOI excludes certain expenses included in the
determination of net income. NOI from apartment communities totaled $86,187,000
and $71,692,000 for the six months ended June 30, 1999 and 1998, respectively,
and $43,482,000 and $36,881,000 for the three months ended June 30, 1999 and
1998, respectively. All other segment disclosures are included in the
Partnership's Annual Report on Form 10-K/A for the year ended December 31, 1998.
Profits and losses of the Partnership are generally allocated to the general
partner and to the common limited partners based on their respective ownership
interests in the Partnership. The holders of the Series A redeemable preferred
limited partner units and redeemable preferred securities are entitled to
distributions/dividends at an annual rate of 8 1/4% of the stated value per
unit/security. The stated value of each unit/security is $25. The holders of the
Series B redeemable preferred limited partner units are entitled to
distributions at an annual rate of 8 3/4% of the stated value per unit. The
stated value of each unit is $25.
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities as of
June 30, 1999 and December 31, 1998, and the revenues and expenses for the three
and six months ended June 30, 1999 and 1998. Actual results could differ from
those estimates.
Certain amounts in the 1998 financial statements have been reclassified to
conform with financial statement presentations in 1999.
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles ("GAAP") for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by GAAP for complete financial statements. In the opinion of
management, all adjustments considered necessary for a fair presentation have
been included. All such adjustments are of a normal, recurring nature. Operating
results for the three and six months ended June 30, 1999 are not necessarily
indicative of the results that may be expected for the year ending December 31,
1999. These financial statements should be read in conjunction with the
Consolidated Financial Statements and Notes thereto included in the
Partnership's and the Trust's Annual Report on Form 10-K/A for the year ended
December 31, 1998.
Page 9
<PAGE> 13
NOTE 3 - MORTGAGES AND NOTES PAYABLE
The Partnership's unsecured revolving credit facility and $100 million
unsecured term loan were amended in June 1999. The unsecured revolving credit
facility and unsecured term loan were amended and restated to accommodate the
Merger and to allow TIC and certain of its affiliates to beneficially own and
control all of the outstanding common partnership units in the Partnership and
IACLLC to become the sole general partner of the Partnership.
Unsecured Line of Credit: The Partnership's amended $125 million unsecured
revolving credit facility currently bears interest at LIBOR plus 0.65% or prime
and matures in June 2001. The interest rates under the credit facility are
adjusted up or down based on credit ratings on the Partnership's senior
unsecured long-term indebtedness. The Partnership may also enter into letters of
credit under the facility. Borrowings under the credit facility, which are
guaranteed by the general partner, are available to finance the Partnership's
ongoing rental property development and for general working capital needs. The
general partner and the Partnership must comply with certain affirmative and
negative covenants, including limitations on distributions, and the maintenance
of certain net worth, cash flow and financial ratios. At June 30, 1999, the
general partner and the Partnership were in compliance with all of these
covenants. At June 30, 1999, the general partner had letters of credit under the
facility totaling $31.1 million related to land and building purchases (see
"Capital Investments in New Development"). The letters of credit reduce the
remaining amount available under the line of credit. As of June 30, 1999, there
was no outstanding balance under the line of credit and $93.9 million was
available.
Shelf Registration Statement: On May 14, 1997, the Partnership filed a shelf
registration statement with the Securities and Exchange Commission providing for
the issuance from time to time of up to $350 million of debt securities. On
October 1, 1997, the Partnership issued $100 million aggregate principal amount
of 7% senior unsecured notes pursuant to its shelf registration statement. In
June 1999, the Partnership cancelled the remaining availability of $250 million
under the shelf registration statement, including the Prospectus Supplement
dated April 9, 1998 filed for the future issuance of Medium-Term Notes. The
Partnership no longer plans to issue additional securities under the shelf
registration statement.
NOTE 4 - PARTNERS' CAPITAL
The Partnership paid cash distributions of $0.385 per common partnership unit on
February 28, 1999. During each of the first and second quarters of 1998, the
Partnership paid a cash dividend of $0.375 per common partnership unit.
RECONCILIATION OF COMMON PARTNERSHIP UNITS OUTSTANDING
<TABLE>
<CAPTION>
(in thousands, except percentages) Six Months Ended June 30, 1999 Six Months Ended June 30, 1998
- -----------------------------------------------------------------------------------------------------------------------------
TIC TIC
and certain and certain
IAC, of its IAC, of its
IACLLC Inc. affiliates Other Total Inc. affiliates Other Total
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at beginning of period 20,164 24,952 75 45,191 19,901 24,844 75 44,820
- -----------------------------------------------------------------------------------------------------------------------------
Stock awards issued and options
exercised 12 12 32 32
Dividend reinvestment and
additional cash investment plan 114 68 182
Merger Transaction (Note 6) 20,176 (20,176) 75 (75)
- -----------------------------------------------------------------------------------------------------------------------------
Balance at end of period 20,176 25,027 45,203 20,047 24,912 75 45,034
- -----------------------------------------------------------------------------------------------------------------------------
Ownership interest at end of period 44.6% 55.4% 100% 44.5% 55.3% 0.2% 100%
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 10
<PAGE> 14
NOTE 5 - MINORITY REDEEMABLE PREFERRED INTERESTS
In January 1998, the Trust issued 6.0 million of 8 1/4% Series A Preferred
Securities. The proceeds of $150 million were used to purchase an equivalent
amount of 8 1/4% Series A Preferred Limited Partner Units in the Partnership.
The Partnership used the $150 million of proceeds, net of costs and offering
expenses, all of which were paid by the Partnership, to repay the outstanding
balance on the Partnership's unsecured credit facility and to fund development.
In November 1998, the Partnership issued 2.0 million of 8 3/4% Series B
Preferred Limited Partner Units. The Partnership used the net proceeds to reduce
the outstanding balance on its unsecured line of credit.
The Partnership and the Trust paid cash distributions/dividends of $0.52 per
Series A preferred limited partner unit (or preferred security) on March 31,
1999 and June 30, 1999, respectively. The Partnership paid cash distributions of
$0.55 per Series B preferred limited partner unit on March 31, 1999 and June 30,
1999, respectively. During each of the first and second quarters of 1998, the
Partnership and the Trust each paid cash distributions/dividends of $0.42 and
$0.52, respectively, per Series A preferred limited partner unit (or preferred
security).
NOTE 6 - MERGER BETWEEN IAC, INC. AND THE ACQUIROR
On June 7, 1999, pursuant to the Merger, each outstanding share of IAC, Inc.'s
common stock was converted into the right to receive $34 in cash. The Merger and
related transactions were accounted for using the purchase method of accounting
in accordance with GAAP. Accordingly, the assets and liabilities of the
Partnership were adjusted to fair value. The step-up in basis related to
IACLLC's and TIC's investment in the Partnership of $511.8 million approximates
the fair value of the net assets acquired and was allocated to the assets of the
Partnership using push-down accounting based on the excess of their estimated
fair value over their historical carrying amount. Accordingly, $131.9 million of
the step-up in basis was allocated to land and $379.9 million was allocated to
buildings and improvements.
In conjunction with the Merger, IAC, Inc. and the Partnership entered into a
separate agreement whereby IAC, Inc. agreed to reimburse the Partnership for all
costs of the Merger incurred on IAC, Inc.'s behalf during 1999. In June 1999,
the Partnership was reimbursed for $6.6 million of Merger costs, of which $2.6
million had been incurred and expensed during the first quarter of 1999 and $4.0
million was incurred during the second quarter of 1999. Additionally, the
Partnership agreed to pay in cash the difference between $34 per share and the
exercise price of the vested stock options of IAC, Inc. which were outstanding
at the time of the Merger. During the second quarter of 1999, the Partnership's
cash payments related to vested stock options totaled $4.1 million, of which
$1.8 million was capitalized to real estate under development and $2.3 million
was charged to operations as general and administrative expenses.
A more detailed description of the Merger is included in the Partnership's
Current Report on Form 8-K filed with the Securities and Exchange Commission on
June 22, 1999.
NOTE 7 - CERTAIN TRANSACTIONS WITH RELATED PARTIES
Included in general and administrative expenses are charges from TIC pursuant to
an administrative services agreement covering services for risk management,
income taxes, human resources and other services totaling $99,000 and $100,000
for the six months ended June 30, 1999 and 1998, respectively, and $27,000 and
$33,000 for the three months ended June 30, 1999 and 1998, respectively. TIC and
the Partnership jointly purchase employee health care insurance and property and
casualty insurance. The Partnership incurred rent totaling $290,000 and
Page 11
<PAGE> 15
$243,000 for the six months ended June 30, 1999 and 1998, respectively, and
$140,000 and $114,000 for the three months ended June 30, 1999 and 1998,
respectively, related to leases with TIC that expire at the end of 2003. IAMC
incurred rent totaling $51,000 and $95,000 for the three and six months ended
June 30, 1999, respectively, related to a lease with TIC. For the three and six
months ended June 30, 1998, TIC contributed $1,431,000 and $2,470,000,
respectively, in connection with common limited partnership unit and stock
issuances under the dividend reinvestment and additional cash investment plan.
The Irvine Company made no contributions under the dividend reinvestment and
additional cash investment plan in 1999.
In June 1999, all preacquisition costs which had been incurred by the
Partnership related to future development sites were transferred at book value
to TIC for the development and eventual operation of the sites. TIC reimbursed
the Partnership for all of the costs incurred to date totaling approximately $13
million.
Included in accounts payable and accrued liabilities at June 30, 1999 is
approximately $782,000 due to TIC. The amount represents a payable to TIC for
the reimbursement by TIC of development costs in excess of the amount incurred
by the Partnership, net of amounts owed to the Partnership for general and
administrative costs incurred by the Partnership on behalf of TIC.
In June 1999, TIC advanced the Partnership $46 million for the repayment of the
outstanding balance on the Partnership's unsecured line of credit. The advance
accrues interest at 4.87%. Through June 30, 1999, the Partnership incurred
approximately $147,000 of interest costs related to the advance.
Prior to the Merger, one of IAC, Inc.'s directors was president and chief
executive officer of a bank which participates in the Partnership's credit
facility and acts as trustee for the unsecured notes payable. Based on the
bank's percentage participation in the credit facility, the amount of interest
and fees paid to the bank totaled $122,000 and $101,000 for the six months ended
June 30, 1999 and 1998, respectively, and $93,000 and $14,000 for the three
months ended June 30, 1999 and 1998, respectively.
Page 12
<PAGE> 16
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following discussion compares the activities of the Partnership for the
three and six month periods ended June 30, 1999 (unaudited) with the activities
of the Partnership for the three and six month periods ended June 30, 1998
(unaudited). The Trust is a limited purpose financing vehicle established by the
Partnership and exists for the sole purpose of issuing preferred securities and
investing the proceeds thereof in preferred limited partnership units of the
Partnership.
The following discussion should be read in conjunction with all the financial
statements appearing elsewhere in this report, as well as the information
presented in the Partnership's and the Trust's Annual Report on Form 10-K/A for
the year ended December 31, 1998.
Certain information set forth below is forward looking and involves various
risks and uncertainties. Such information is based upon a number of estimates
and assumptions that inherently are subject to business, economic and
competitive uncertainties and contingencies, many of which are beyond the
Partnership's control.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1999 COMPARED TO THREE MONTHS ENDED JUNE 30, 1998.
The Partnership's income after payment of minority redeemable preferred
interests but before extraordinary item was $17.0 million for the three months
ended June 30, 1999, up slightly from $16.9 million for the same period of 1998.
The Partnership's financial results improved slightly in 1999 due to the
contributions of newly delivered rental units from its development program,
properties that stabilized during 1999 and 1998 and an acquisition in 1998, as
well as an increase in rental rates within its stabilized portfolio and a slight
increase in physical occupancy. These improvements were offset, in part, by an
increase in minority redeemable preferred interest due to the issuance of
preferred securities in November 1998 and an increase in general and
administrative expenses due to the payment of vested stock options in
conjunction with the Merger.
Page 13
<PAGE> 17
REVENUE AND EXPENSE DATA
<TABLE>
<CAPTION>
Three Months Ended June 30,
(dollars in thousands) 1999 1998
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMUNITIES STABILIZED BEFORE 1998 (MORE THAN TWO YEARS)(a)
Number of communities 51 51
Number of units at end of period 14,991 14,991
Operating revenues $53,313 $50,174
Property expenses $11,511 $11,335
Real estate taxes $ 3,983 $ 3,904
Depreciation and amortization of real estate assets $ 8,465 $ 7,655
COMMUNITIES STABILIZED IN 1998 (LESS THAN TWO YEARS)(b)(c)
Number of communities 4
Number of units at end of period 984
Operating revenues $ 4,817
Property expenses $ 940
Real estate taxes $ 410
Depreciation and amortization of real estate assets $ 934
LEASE-UP COMMUNITIES(c)(d)
Number of communities 4
Number of units at end of period 903
Operating revenues $ 3,468
Property expenses $ 945
Real estate taxes $ 327
Depreciation and amortization of real estate assets $ 565
- ------------------------------------------------------------------------------------------------------
</TABLE>
(a) Represents "same store" communities.
(b) Represents three communities (768 units) that reached stabilized occupancy
(95%) at different dates in 1998 and a 216-unit property acquired during
1998.
(c) No year to year comparison is provided since the properties were not all
stabilized for comparable periods.
(d) Represents two communities that started lease-up at different dates in 1998
and two properties that started lease-up in 1999.
OPERATING REVENUES (rental and other income) increased by 16.3% to $61.6 million
in the second quarter of 1999, up from $53.0 million in the same period of 1998.
Operating revenues rose in 1999 because of higher rental rates and a larger
average number of rental units in service, primarily as a result of new
development. Newly delivered units along with unit growth in the Partnership's
portfolio stabilized less than two years added $8.3 million to operating
revenues from eight properties in the second quarter of 1999. Operating revenues
generated by communities stabilized more than two years increased 6.3% in 1999
due to an improvement in the portfolio's average rental rate and an increase in
average physical occupancy to 94.2% from 93.8%. The average monthly rental rate
for these communities increased 5.1% to $1,229 in the second quarter of 1999,
from $1,169 in the second quarter of 1998.
PROPERTY EXPENSES increased by 12.3% to $13.4 million in the second quarter of
1999, up from $11.9 million in the same period of 1998. The 1999 increase
reflects incremental expenses from newly delivered rental units and communities
stabilized during 1998. Property expenses for communities stabilized more than
two years increased slightly by $0.2 million to $11.5 million in the second
quarter of 1999. Newly delivered units and communities stabilized less than two
years added $1.9 million to property expenses from eight properties in the
second quarter of 1999. To improve operating efficiency and reduce operating
costs, the Partnership formed IAMC in April 1998 to manage the Partnership's
properties. The personnel and office costs of IAMC are included in property
expenses. For comparative purposes, management fees prior to the formation of
IAMC have been included in property expenses.
Page 14
<PAGE> 18
REAL ESTATE TAXES totaled $4.7 million in the second quarter of 1999 and $4.2
million in the same period of 1998. Real estate taxes increased in the second
quarter of 1999 due primarily to the addition of new rental units.
NET INTEREST EXPENSE increased to $7.3 million in the second quarter of 1999
compared to $6.3 million in the same period of 1998. Total interest incurred was
$11.6 million in the second quarter of 1999 and $9.4 million in the same period
of 1998. Total interest incurred increased due to the impact of the
Partnership's unsecured term loan which was outstanding for the entire quarter
and increased borrowings on the unsecured line of credit during the quarter,
partially offset by lower interest rates in 1999. Capitalized interest totaled
$4.3 million in the second quarter of 1999 and $3.1 million in the same period
of 1998. The increase in capitalized interest in the second quarter of 1999 was
due to the increase in the average qualifying asset balance for projects under
development. The Partnership capitalizes interest on projects actively under
development using qualifying asset balances and applicable weighted average
interest rates.
AMORTIZATION OF DEFERRED FINANCING COSTS was $0.5 million in the second quarter
of 1999 and 1998.
DEPRECIATION AND AMORTIZATION EXPENSE increased 22.5% to $10.1 million in the
second quarter of 1999, up from $8.3 million in the same period of 1998. The
increase primarily reflects the completion and delivery of newly developed
rental units.
GENERAL AND ADMINISTRATIVE EXPENSE increased to $4.6 million in the second
quarter of 1999, up from $2.2 million in the same period of 1998. The increase
in 1999 was the result of the payment of vested stock options in conjunction
with the Merger, increased salary expenses due to personnel changes and the
write-off of certain abandoned costs, net of the reimbursement of Merger costs
incurred during the first quarter of 1999.
EXTRAORDINARY ITEM of $42.5 million in the second quarter of 1998 represents
charges associated with the Partnership's June 1998 debt refinancing
transaction. The charges consisted of the write-off of deferred financing costs,
prepayment costs and costs relating to the unwinding of certain swap agreements.
SIX MONTHS ENDED JUNE 30, 1999 COMPARED TO SIX MONTHS ENDED JUNE 30, 1998
The Partnership's income after payment of minority redeemable preferred
interests but before extraordinary item was $34.7 million for the six months
ended June 30, 1999, up from $32.3 million for the same period of 1998. The
Partnership's financial results improved in 1999 due to the contributions of
newly delivered rental units from its development program, properties that
stabilized during 1999 and 1998 and an acquisition in 1998, as well as an
increase in rental rates within its stabilized portfolio and a slight increase
in physical occupancy. These improvements were offset, in part, by an increase
in minority redeemable preferred interest due to the issuance of preferred
securities in January and November 1998 and an increase in general and
administrative expenses due to the payment of vested stock options in
conjunction with the Merger.
Page 15
<PAGE> 19
REVENUE AND EXPENSE DATA
<TABLE>
<CAPTION>
Six Months Ended June 30,
(dollars in thousands) 1999 1998
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMUNITIES STABILIZED BEFORE 1998 (MORE THAN TWO YEARS)(a)
Number of communities 51 51
Number of units at end of period 14,991 14,991
Operating revenues $105,706 $99,698
Property expenses $ 22,414 $22,761
Real estate taxes $ 7,880 $ 7,859
Depreciation and amortization of real estate assets $ 16,200 $15,337
COMMUNITIES STABILIZED IN 1998 (LESS THAN TWO YEARS)(b)(c)
Number of communities 4
Number of units at end of period 984
Operating revenues $ 9,597
Property expenses $ 1,845
Real estate taxes $ 821
Depreciation and amortization of real estate assets $ 1,826
LEASE-UP COMMUNITIES(c)(d)
Number of communities 4
Number of units at end of period 903
Operating revenues $ 5,944
Property expenses $ 1,511
Real estate taxes $ 589
Depreciation and amortization of real estate assets $ 983
- ---------------------------------------------------------------------------------------------------
</TABLE>
(a) Represents "same store" communities.
(b) Represents three communities (768 units) that reached stabilized occupancy
(95%) at different dates in 1998 and a 216-unit property acquired during
1998.
(c) No year to year comparison is provided since the properties were not all
stabilized for comparable periods.
(d) Represents two communities that started lease-up at different dates in 1998
and two properties that started lease-up in 1999.
OPERATING REVENUES (rental and other income) increased by 16.8% to $121.2
million in the first half of 1999, up from $103.8 million in the same period of
1998. Operating revenues rose in 1999 because of higher rental rates and a
larger average number of rental units in service, primarily as a result of new
development. Newly delivered units along with unit growth in the Partnership's
portfolio stabilized less than two years added $15.5 million to operating
revenues from eight properties in the first half of 1999. Operating revenues
generated by communities stabilized more than two years increased 6.0% in 1999
due to an improvement in the portfolio's average rental rate and an increase in
average physical occupancy to 94.3% from 93.9%. The average monthly rental rate
for these communities increased 5.3% to $1,226 in the first half of 1999, from
$1,164 in the first half of 1998.
PROPERTY EXPENSES increased by 7.8% to $25.8 million in the first half of 1999,
up from $23.9 million in the same period of 1998. The 1999 increase reflects
incremental expenses from newly delivered rental units and communities
stabilized during 1998. Property expenses for communities stabilized more than
two years decreased slightly by $0.3 million to $22.4 million in the first half
of 1999. Average monthly property expenses generated by these communities
decreased to $249 per unit in the first half of 1999 from $253 per unit in the
first half of 1998. Newly delivered units and communities stabilized less than
two years added $3.4 million to property expenses from eight properties in the
first half of 1999. To improve operating efficiency and reduce operating costs,
the Partnership formed IAMC in April 1998 to manage the Partnership's
properties. The personnel and office costs of IAMC are
Page 16
<PAGE> 20
included in property expenses. For comparative purposes, management fees prior
to the formation of IAMC have been included in property expenses.
REAL ESTATE TAXES totaled $9.3 million in the first half of 1999 and $8.2
million in the same period of 1998. Real estate taxes increased in the first
half of 1999 due primarily to the addition of new rental units.
NET INTEREST EXPENSE increased to $14.2 million in the first half of 1999
compared to $13.4 million in the same period of 1998. Total interest incurred
was $22.6 million in the first half of 1999 and $19.2 million in the same period
of 1998. The increase in interest incurred in the first half of 1999 was
primarily due to the unsecured term loan which was outstanding for the entire
period and increased borrowings on the unsecured line of credit during the first
half of 1999, partially offset by lower interest rates in 1999. Capitalized
interest totaled $8.4 million in the first half of 1999 and $5.8 million in the
same period of 1998. The increase in capitalized interest in the first half of
1999 was due to the increase in the average qualifying asset balance for
projects under development. The Partnership capitalizes interest on projects
actively under development using qualifying asset balances and applicable
weighted average interest rates.
AMORTIZATION OF DEFERRED FINANCING COSTS decreased slightly to $0.9 million in
the first half of 1999 compared to $1.0 million in the same period of 1998.
DEPRECIATION AND AMORTIZATION EXPENSE increased 18.6% to $19.3 million in the
first half of 1999, up from $16.3 million in the same period of 1998. The
increase primarily reflects the completion and delivery of newly developed
rental units.
GENERAL AND ADMINISTRATIVE EXPENSE increased to $8.9 million in the first half
of 1999, up from $4.3 million in the same period of 1998. The increase in 1999
was the result of payments of vested stock options in conjunction with the
Merger, increased salary expenses due to personnel changes and the write-off of
certain abandoned costs.
EXTRAORDINARY ITEM of $42.5 million in the first half of 1998 represents charges
associated with the Partnership's June 1998 debt refinancing transaction. The
charges consisted of the write-off of deferred financing costs, prepayment costs
and costs relating to the unwinding of certain swap agreements.
LIQUIDITY AND CAPITAL RESOURCES
The Partnership believes that cash provided by operations will be adequate to
meet both operating requirements and payment of distributions by the Partnership
to the preferred limited partners in both the short and long term.
LIQUIDITY: The Partnership expects to meet its short-term and long-term
liquidity requirements, such as construction costs and scheduled debt
maturities, through the refinancing of long-term debt or borrowings from
financial institutions. The Partnership's unsecured revolving credit facility
and $100 million unsecured term loan were amended in June 1999. The unsecured
revolving credit facility and unsecured term loan were amended and restated to
accommodate the Merger and to allow TIC and certain of its affiliates to
beneficially own and control all of the outstanding common partnership units in
the Partnership and IACLLC to become the sole general partner of the
Partnership. The Partnership's amended $125 million unsecured revolving credit
facility currently bears interest at LIBOR plus 0.65% or prime and matures in
June 2001. The interest rates under the credit facility are adjusted up or down
based on the credit ratings on the Partnership's senior unsecured long-term
indebtedness. Availability under the credit facility was $93.9 million at June
30, 1999.
SHELF REGISTRATION STATEMENTS: On May 14, 1997, the Partnership filed a shelf
registration statement with the Securities and Exchange Commission providing for
the issuance from time to time of up to $350 million of debt securities. On
October 1, 1997, the Partnership issued $100 million aggregate principal amount
of 7% senior unsecured notes pursuant to its shelf registration statement. In
June 1999, the Partnership cancelled the remaining
Page 17
<PAGE> 21
availability of $250 million under the shelf registration statement, including
the Prospectus Supplement dated April 9, 1998 filed for the future issuance of
Medium-Term Notes. The Partnership no longer plans to issue additional
securities under the shelf registration statement.
PREFERRED INTERESTS: In January 1998, the Trust issued 6.0 million 8 1/4% Series
A Preferred Securities. The proceeds of $150 million were used to purchase an
equivalent amount of 8 1/4% Series A Preferred Limited Partner Units in the
Partnership. The Partnership used the $150 million of proceeds, net of costs and
expenses, all of which where paid by the Partnership, to repay all outstanding
borrowings under the credit facility and to fund development and an acquisition.
In November 1998, the Partnership issued 2.0 million of 8 3/4% Series B
Preferred Limited Partner Units. The Partnership used the net proceeds to reduce
the outstanding balance on its unsecured line of credit.
DEBT: The Partnership's conventional debt bears interest at fixed interest
rates. Interest rates on conventional mortgage debt were reduced to then-current
market rates at the time of IAC, Inc.'s December 1993 initial public offering
through interest rate buy-down agreements that are scheduled to expire at
various dates prior to loan maturity that range from 2000 to 2008. The weighted
average effective interest rate on the Partnership's debt, including the
non-cash charges of amortization of deferred financing costs, was 6.12% at June
30, 1999. In June 1998, the Partnership completed a $334 million offering of
unsecured tax-exempt debt at an average interest rate of 4.93% in three tranches
ranging from 10 to 15 years. Proceeds from the offering were used to repay the
Partnership's existing tax-exempt mortgage debt and to pay costs associated with
prepayment penalties and the unwinding of certain swap agreements.
DEBT STRUCTURE AT JUNE 30, 1999
<TABLE>
<CAPTION>
Debt Weighted Average
(dollars in millions) Balance Interest Rate
- ----------------------------------------------------------------------------------
<S> <C> <C>
Fixed rate debt
Conventional mortgage financings $128.1 7.12%
Mortgage notes payable to The Irvine Company 49.1 5.75%
Tax-exempt assessment district debt 5.3 6.29%
Unsecured tax-exempt bond financings 334.2 4.93%
Unsecured notes payable 99.3 7.10%
Unsecured term loan 100.0 6.51%
- ----------------------------------------------------------------------------------
Total fixed rate debt 716.0 5.91%
- ----------------------------------------------------------------------------------
Variable rate debt
Tax-exempt mortgage bond financings 18.0 4.28%
Tax-exempt assessment district debt 15.9 5.53%
Unsecured line of credit
- ----------------------------------------------------------------------------------
Total variable rate debt 33.9 4.87%
- ----------------------------------------------------------------------------------
Total debt $749.9 5.86%
==================================================================================
</TABLE>
OPERATING ACTIVITIES: Cash provided by operating activities was $64.0 million
and $30.2 million in the first half of 1999 and 1998, respectively. Cash
provided by operating activities increased in the first half of 1999 compared to
the same period in 1998 due to an extraordinary item related to debt
extinguishment in the first half of 1998, higher revenues from newly developed
and acquired apartment units, as well as an increase in revenues within the
Partnership's stabilized portfolio achieved through higher rental rates and
occupancy.
Page 18
<PAGE> 22
INVESTING ACTIVITIES: Cash used in investing activities was $76.7 million and
$105.1 million in the first half of 1999 and 1998, respectively. This decrease
reflects decreased development activity in the first half of 1999 as compared to
1998.
FINANCING ACTIVITIES: Cash provided by financing activities was $18.2 million
and $75.4 million in the first half of 1999 and 1998, respectively. The
Partnership received net proceeds of $144 million from the issuance of 8 1/4%
Series A Preferred Limited Partner Units in the first quarter of 1998. These
proceeds were used to pay all outstanding borrowings under the credit facility
and for development. The Partnership received proceeds of $334.2 million from
the issuance of tax-exempt bonds in June 1998. These proceeds were used to repay
existing tax-exempt mortgage bonds and to pay costs associated with the
offering. The Partnership received an advance from TIC of $46 million in June
1999. These proceeds were used to pay all outstanding borrowings under the
credit facility. The Partnership (and the Trust) made distributions of $6.2
million to holders of the Trust's Series A Preferred Securities in the first
half of 1999 compared to $5.5 million in the first of 1998. In addition, the
Partnership made distributions of $2.2 million to holders of the Partnership's
Series B Preferred Limited Partner interests in the first half of 1999.
CAPITAL EXPENDITURES
Capital expenditures consist of capital improvements and investments in real
estate assets. Capital improvements to operating real estate assets totaled $3.2
million and $1.9 million in the first half of 1999 and 1998, respectively.
Capital investments in real estate assets totaled $73.5 million and $103.2
million in the first half of 1999 and 1998, respectively. These investments
consisted of new development and nonrecurring capital replacements.
RECURRING CAPITAL IMPROVEMENTS WITHIN ALL STABILIZED COMMUNITIES: The following
table details expenditures for recurring capital improvements for all stabilized
communities for the first half of 1999.
<TABLE>
<CAPTION>
Six Months Ended
(dollars in thousands) June 30, 1999
- -------------------------------------------------------------------------------
<S> <C>
Carpet replacements $ 838
Exterior building enhancements, siding and stucco 389
Upgrades, renovations and major building items 84
Appliances, water heaters and air conditioning 172
Roofing, concrete and pavement 659
Equipment and other 1,089
- -------------------------------------------------------------------------------
Total $3,231
===============================================================================
</TABLE>
RECURRING CAPITAL IMPROVEMENTS WITHIN COMMUNITIES STABILIZED BEFORE 1998:
Expenditures for recurring capital improvements within communities stabilized
before 1998 totaled $3.1 million and $1.9 million in the first half of 1999 and
1998, respectively. Average recurring capital improvements per unit were $209
and $129 in the first half of 1999 and 1998, respectively. Expenditures for
recurring capital improvements for the full year 1999 are expected to be similar
to full year 1998 levels. The Partnership has a policy of capitalizing
expenditures related to new assets, acquisitions, the material enhancement of
the value of an existing asset, or the substantial extension of an existing
asset's useful life.
Page 19
<PAGE> 23
RECURRING CAPITAL IMPROVEMENTS WITHIN COMMUNITIES STABILIZED IN OR AFTER 1998:
Expenditures for recurring capital improvements within communities stabilized in
or after 1998 totaled $96,000 for the first half of 1999. Expenditures for
recurring capital improvements are expected to be $144,000 for the full year
1999.
NONRECURRING CAPITAL REPLACEMENTS: Nonrecurring capital replacements consist of
special programs to upgrade and enhance a community to achieve higher rental
rates. Expenditures for nonrecurring capital replacements totaled $2.8 million
in the first half of 1999. These expenditures were made at six properties. Costs
to complete the special programs at the six properties are expected to be
approximately $8.5 million which will be spent over the next two years.
CAPITAL INVESTMENTS IN NEW DEVELOPMENT: Currently, the Partnership has eight
apartment communities under development or construction that will require total
expenditures of approximately $587 million, of which $260 million had been
incurred as of June 30, 1999. Funding for these developments is expected to come
from borrowings from financial institutions, including the Partnership's $125
million unsecured revolving credit facility (of which $93.9 million was
available as of June 30, 1999), and refinancing of long-term debt. The
Partnership has no plans for future development beyond the eight apartment
communities currently under development.
CONSTRUCTION INFORMATION
<TABLE>
<CAPTION>
Commencement Total
Commencement of Leasing Estimated Costs
Apartment Community Location Units of Construction Activity (in millions)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
On Ranch:
Brittany at Oak Creek(1) Irvine 393 12/97 1/99 $ 45
Park Place Irvine 1,226 9/98 219
- ---------------------------------------------------------------------------------------------------------------
1,619 264
- ---------------------------------------------------------------------------------------------------------------
Off Ranch:
Arcadia at Stonecrest(1) San Diego 336 4/98 2/99 44
La Jolla Palms La Jolla 232 5/98 50
The Villas at Bair Island Marina Redwood City 155 6/98 40
1221 Ocean Avenue Santa Monica 120 8/98 82
Lonestar Redwood City 206 11/98 49
Olson Ranch Sunnyvale 300 11/98 58
- ---------------------------------------------------------------------------------------------------------------
1,349 323
- ---------------------------------------------------------------------------------------------------------------
Total 2,968 $587
===============================================================================================================
</TABLE>
(1) These two properties were in lease-up at June 30, 1999, with 365 units
delivered and 268 units occupied.
The timing of future commencement and completion of construction, the
commencement of leasing activity and initial stabilized occupancy and estimated
costs of apartment communities that are in development are only estimates.
Actual results will depend on numerous factors, many of which are beyond the
control of the Partnership. These include the extent and timing of economic
growth in the Partnership's rental markets; future trends in the pricing of
construction materials and labor; product design changes; entitlement decisions
by local government authorities; weather patterns; changes in interest rate
levels; and other changes in capital markets. No assurance can be given that the
timing or estimates set forth in the foregoing table will not vary substantially
from actual results.
IRVINE RANCH MASTER PLAN
The Irvine Company is a real estate investment and community development firm
engaged in the long-term development of the Irvine Ranch. The urbanization of
the Irvine Ranch began in the 1960s with the adoption of the
Page 20
<PAGE> 24
pioneering comprehensive Master Plan for future community development which
originally constituted a large map of the Irvine Ranch and a series of
supporting maps detailing land uses. Subsequently, The Irvine Company worked
closely with the various local jurisdictions which govern the Irvine Ranch to
adopt general plans for the future development of their jurisdictions. The
Irvine Company's overall Master Plan was refined to accord with the approved
general plans and the residential, commercial, industrial, environmental and
aesthetic balance desired by each jurisdiction. As a result, today the Irvine
Ranch Master Plan is a compilation of the various interlocking general plans
described above. The Irvine Company continuously engages in planning activities
and the Master Plan refinement process is ongoing. The Irvine Company works
closely with local government representatives, community residents and other
civic and environmental groups to obtain the necessary local support and
entitlement for its developments. The goal of the Master Plan was and remains to
create innovative urban and suburban environments through the well-planned,
coordinated development of residential communities and employment centers (which
include major business and retail centers, and research and development and
industrial parks) as well as civic, cultural, recreational, educational and
other supportive facilities, all with an emphasis on improving the quality of
life and achieving long-term balanced regional economic growth.
The success of the Irvine Ranch as a master-planned development is, in the large
part, attributable to the early creation of a broad employment base. The Irvine
Company has emphasized the promotion of job creation on the Irvine Ranch and has
been involved in creating four major employment centers on the Irvine Ranch,
each easily accessible by apartment residents and the surrounding area. The
Irvine Company has been the sole developer of the Irvine Spectrum, a 5,000-acre
research, technology and employment center which houses more than 2,200
companies and approximately 44,000 employees and includes 25 million square feet
of research and development and office space. The Irvine Business Complex, which
surrounds the John Wayne airport, houses over 100,000 employees and includes
more than 24 million square feet of office and other commercial space and over
14 million square feet of industrial space. Newport Center contains over 4.5
million square feet of office space, a 1.3 million square-foot regional mall
(Fashion Island), a tennis club and two country clubs. In addition, The Irvine
Company donated land to the University of California at Irvine, a 1,489-acre
campus which currently has more than 17,700 students and 6,200 employees. The
proximity of the Irvine Ranch properties to these employment centers makes them
attractive residential locations.
YEAR 2000 PROJECT
GENERAL: As is the case with many computer and microprocessor-based systems,
certain of the Partnership's system use two digit date fields which recognize
dates using the assumption that the first two digits are "19" (i.e., the number
"99" is recognized as the year "1999"). Because of the nature of its operations,
the Partnership does not believe that its business, results of operations or
financial condition will be materially adversely affected by a failure of these
systems. Nonetheless, the Partnership has initiated a plan to assess (and
remediate, as necessary) its computer and microprocessor-based systems.
STATE OF YEAR 2000 READINESS: The Partnership's Year 2000 project is divided
into four general exposure types--infrastructure, applications software,
third-party suppliers and customers ("third parties"), and process control and
instrumentation ("PC&I"). The general resolution phases common to all sections
are: (1) compiling potential Year 2000-sensitive items; (2) assigning priorities
to identified items; (3) assessing the Year 2000 compliance of items determined
to be material to the Partnership; (4) repairing or replacing material items
that are determined not to be Year 2000 compliant; and (5) testing material
items.
The completion percentages of the general resolution phases are based on the
level of effort expended to date versus the level of effort estimated to be
necessary to complete the task.
Page 21
<PAGE> 25
The infrastructure and applications software sections consist of hardware and
systems software. As of June 30, 1999, all infrastructure requiring repair has
been repaired or replaced and is believed to be Year 2000 compliant. As of June
30, 1999, approximately 95% of the Partnership's applications software had been
confirmed to be Year 2000 compliant. The Partnership expects to complete the
remaining assessment and repair or replacement, including testing, during the
third quarter of 1999.
The third parties section consists of identifying and prioritizing critical
suppliers and communicating with them about their plans and progress in
addressing the Year 2000 issue. The state of readiness of the Partnership's
third parties is based primarily on representations from such parties. The
Partnership has queried 100% of its significant suppliers and subcontractors
that do not share information systems with the Partnership. The Partnership has
received written Year 2000 status letters from all of the significant suppliers
and subcontractors queried. Of the significant suppliers and subcontractors
queried, 100% had a plan to remediate any Year 2000 issues and 100% had begun
assessing their systems, but none had completed their plan or were Year 2000
compliant. Follow-up inquiries are scheduled through the remainder of 1999, at
which time the Partnership will implement contingency plans or other
alternatives, as necessary, depending on the third parties' Year 2000 readiness.
To date, the Partnership is not aware of any third parties with a Year 2000
issue that would materially impact the Partnership's results of operations,
liquidity, or capital resources. However, the Partnership has no means of
ensuring that third parties will be Year 2000 ready.
Plans detailing the tasks and resources required for the PC&I section are in
place. This section includes the hardware, software and associated embedded
computer chips that are used in the operation of all facilities operated by the
Partnership. PC&I equipment includes security systems, lighting systems, HVAC
systems and sprinkler systems. As of June 30, 1999, the Partnership had assessed
the Year 2000 readiness in approximately 90% of its PC&I systems. The
Partnership believes that the repair or replacement and testing of PC&I
equipment is approximately 25% complete. The Partnership expects to complete the
repair or replacement of its PC&I systems requiring repair by the third quarter
of 1999, with all testing scheduled to be completed by year-end 1999.
COSTS: The Partnership has incurred less than $50,000 in connection with its
Year 2000 remediation efforts. The Partnership estimates its future costs
related to its Year 2000 remediation efforts to be less than $50,000. Overall,
the Partnership does not expect its Year 2000 expenditures to be material to the
Partnership's business, results of operations or financial condition.
RISK AND CONTINGENCY PLANNING: Management of the Partnership believes it has a
program in place to adequately resolve the Year 2000 issue in a timely manner.
As noted above, the Partnership has not yet completed all necessary resolution
phases of the Year 2000 project. In the event that the Partnership does not
complete any additional phases related to its infrastructure, applications
software or PC&I, the Partnership does not believe that there will be a material
adverse effect on its business, results of operations or financial condition. A
Year 2000 failure by an important third party could materially disrupt the
Partnership's operations. For example, a Year 2000 failure by one or more of the
financial institutions or utility companies with which the Partnership does
business could cause the Partnership to lose access to its funds or could
restrict the Partnership's ability to borrow or operate a property. A Year 2000
failure by a trustee or transfer agent or by The Depository Trust Company could
restrict the Partnership's ability to pay interest on its bonds or to pay
dividends or distributions on its preferred securities. In addition, disruption
in the economy generally resulting from Year 2000 issues could also materially
adversely affect the Partnership. The Partnership could be subject to litigation
relating to the adverse effects resulting from the Year 2000 issue. The amount
of potential liability and lost revenue cannot be reasonably estimated at this
time. The Partnership currently has no contingency plans in place in the event
it does not complete all resolution phases of the Year 2000 project. The
Partnership plans to periodically evaluate the status of completion and
determine whether such a plan is necessary.
Page 22
<PAGE> 26
The Partnership's assessment of its risks, and its expectations as to future
Year 2000 compliance, are forward-looking statements.
IMPACT OF INFLATION
The Partnership's business is affected by general economic conditions, including
the impact of inflation and interest rates. Substantially all of the
Partnership's leases allow, at time of renewal, for adjustments in the rent
payable thereunder, and thus may enable the Partnership to seek increases in
rents. Substantially all leases are for a period of one year or less. The
short-term nature of these leases generally serves to minimize the risk to the
Partnership of the adverse effects of inflation. For construction, the
Partnership enters into various contracts for the development and construction
of new apartment communities. These are fixed-fee contracts and thus partially
insulate the Partnership from inflationary risk.
Page 23
<PAGE> 27
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Refer to the Partnership's Annual Report on Form 10-K/A for the year
ended December 31, 1998 for detailed disclosure about quantitative and
qualitative disclosures about market risk. Quantitative and qualitative
disclosures about market risk have not materially changed since December
31, 1998.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Not applicable.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
During the second quarter of 1999, TIC Acquisition LLC, a Delaware
limited liability company indirectly wholly owned by The Irvine Company,
was merged with and into Irvine Apartment Communities, Inc. with TIC
Acquisition LLC remaining as the surviving entity and renamed Irvine
Apartment Communities LLC. As a result of the Merger and a related
transaction, an aggregate of 20,175,892 common shares were purchased on
June 7, 1999 for $686.0 million in cash at $34 per common share and an
aggregate of 74,523 common limited partnership units were purchased for
$2.5 million in cash at $34 per common limited partnership unit.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The following occurred during the second quarter of 1999:
On June 7, 1999 at Irvine Apartment Communities, Inc.'s Special Meeting
of Shareholders, the Merger of Irvine Apartment Communities, Inc. with
and into TIC Acquisition LLC was approved by the shareholders, with
15,782,695 votes cast for the Merger, 591,650 votes cast against the
Merger, 48,538 abstentions and 286,672 broker non-votes.
ITEM 5. OTHER INFORMATION.
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
Exhibit No. 10.1: First Amended and Restated Revolving Credit Agreement
dated as of June 7, 1999
Exhibit No. 10.2: Amended and Restated Unsecured Loan Agreement dated
as of June 7, 1999 by and among the Partnership, the
Banks listed therein, Wells Fargo Bank, N.A., as
Co-Arranger and Administrative Agent, and U.S. Bank
National Association, as Co-Arranger.
Page 24
<PAGE> 28
Exhibit No. 27.1: Financial Data Schedule for Irvine Apartment
Communities, L.P.
Exhibit No. 27.2: Financial Data Schedule for IAC Capital Trust.
(b) During the second quarter of 1999, the Partnership filed the
following current report on Form 8-K:
1. On June 22, 1999, the Partnership filed a Current Report
on Form 8-K relating to the merger of Irvine Apartment
Communities, Inc. with and into TIC Acquisition LLC on
June 7, 1999, which included pro forma information as of
and for the three months ended March 31, 1999 and for the
year ended December 31, 1998.
Page 25
<PAGE> 29
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrants have duly caused this report to be signed on their behalf by the
undersigned thereunto duly authorized.
IRVINE APARTMENT COMMUNITIES, L.P.
By: Irvine Apartment Communities LLC
its sole general partner
Date: August 10, 1999 By: /s/ Michael D. McKee
-------------------------------------
Michael D. McKee
Executive Vice President,
Chief Financial Officer and Secretary
IAC CAPITAL TRUST
Date: August 10, 1999 By: /s/ David A. Patty
-------------------------------------
David A. Patty
Regular Trustee
Page 26
<PAGE> 30
EXHIBIT INDEX
Exhibit
Number Description
------ -----------
Exhibit No. 10.1: First Amended and Restated Revolving Credit Agreement
dated as of June 7, 1999
Exhibit No. 10.2: Amended and Restated Unsecured Loan Agreement dated
as of June 7, 1999 by and among the Partnership, the
Banks listed therein, Wells Fargo Bank, N.A., as
Co-Arranger and Administrative Agent, and U.S. Bank
National Association, as Co-Arranger.
Exhibit No. 27.1: Financial Data Schedule for Irvine Apartment
Communities, L.P.
Exhibit No. 27.2: Financial Data Schedule for IAC Capital Trust.
<PAGE> 1
================================================================================
EXHIBIT 10.1
FIRST AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
dated as of June 7, 1999
among
IRVINE APARTMENT COMMUNITIES, L.P.,
THE BANKS LISTED HEREIN,
BANK OF AMERICA NT&SA,
as Administrative Agent,
and
WELLS FARGO BANK, N.A.,
as Documentation Agent
with
J.P. MORGAN SECURITIES, INC.,
as Syndication Agent
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I. DEFINITIONS...................................................................1
SECTION 1.1. Definitions........................................................1
SECTION 1.2. Accounting Terms and Determinations...............................26
SECTION 1.3. Types of Borrowings...............................................27
ARTICLE II. THE CREDITS.................................................................27
SECTION 2.1. Commitments to Lend and Original Loans............................27
SECTION 2.2. Notice of Borrowing...............................................27
SECTION 2.3. Reserved..........................................................28
SECTION 2.4. Notice to Banks; Funding of Loans.................................28
SECTION 2.5. Notes.............................................................29
SECTION 2.6. Method of Electing Interest Rates.................................29
SECTION 2.7. Interest Rates....................................................31
SECTION 2.8. Reserved..........................................................32
SECTION 2.9. Fees..............................................................32
SECTION 2.10. Maturity Date....................................................33
SECTION 2.11. Optional Prepayments.............................................33
SECTION 2.12. General Provisions as to Payments................................34
SECTION 2.13. Funding Losses...................................................35
SECTION 2.14. Computation of Interest and Fees.................................36
SECTION 2.15. Use of Proceeds..................................................36
SECTION 2.16. Letters of Credit................................................36
ARTICLE III. CONDITIONS.................................................................39
SECTION 3.1. Closing...........................................................39
SECTION 3.2. Borrowings........................................................41
ARTICLE IV. REPRESENTATIONS AND WARRANTIES..............................................42
SECTION 4.1. Existence and Power...............................................42
SECTION 4.2. Power and Authority...............................................42
SECTION 4.3. No Violation......................................................43
SECTION 4.4. Financial Information.............................................43
SECTION 4.5. Litigation........................................................44
SECTION 4.6. Compliance with ERISA.............................................44
SECTION 4.7. Environmental Matters.............................................44
SECTION 4.8. Taxes.............................................................45
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 4.9. Full Disclosure...................................................45
SECTION 4.10. Solvency.........................................................45
SECTION 4.11. Use of Proceeds; Margin Regulations..............................45
SECTION 4.12. Governmental Approvals...........................................45
SECTION 4.13. Investment Company Act; Public Utility Holding Company Act.......46
SECTION 4.14. Principal Offices................................................46
SECTION 4.15. Reserved.........................................................46
SECTION 4.16. Patents, Trademarks, etc.........................................46
SECTION 4.17. Qualifying Unencumbered Properties...............................46
SECTION 4.18. No Default.......................................................47
SECTION 4.19. Licenses, etc....................................................47
SECTION 4.20. Compliance With Law..............................................47
SECTION 4.21. No Burdensome Restrictions.......................................47
SECTION 4.22. Brokers' Fees....................................................47
SECTION 4.23. Labor Matters....................................................47
SECTION 4.24. Insurance........................................................48
SECTION 4.25. Organizational Documents.........................................48
SECTION 4.26. Year 2000 Compliance..............................................48
ARTICLE V. AFFIRMATIVE AND NEGATIVE COVENANTS...........................................48
SECTION 5.1. Financial Information.............................................48
SECTION 5.2. Other Information.................................................50
SECTION 5.3. Payment of Obligations............................................52
SECTION 5.4. Maintenance of Property; Insurance; Leases........................52
SECTION 5.5. Conduct of Business and Maintenance of Existence..................52
SECTION 5.6. Compliance with Laws..............................................53
SECTION 5.7. Inspection of Property, Books and Records.........................53
SECTION 5.8. Existence.........................................................53
SECTION 5.9. Financial Covenants...............................................54
SECTION 5.10. Restriction on Fundamental Changes...............................54
SECTION 5.11. Changes in Business..............................................55
SECTION 5.12. Margin Stock.....................................................56
SECTION 5.13. Hedging Requirements.............................................56
SECTION 5.14. General Partner Status...........................................56
SECTION 5.15. Environmental Matters............................................57
SECTION 5.16. Cooperation......................................................58
SECTION 5.17. Distributions....................................................58
ARTICLE VI. DEFAULTS....................................................................58
SECTION 6.1. Events of Default.................................................58
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 6.2. Rights and Remedies...............................................61
SECTION 6.3. Notice of Default.................................................62
SECTION 6.4. Distribution of Proceeds after Default............................62
ARTICLE VII. THE AGENTS.................................................................63
SECTION 7.1. Appointment and Authorization.....................................63
SECTION 7.2. Agency and Affiliates.............................................63
SECTION 7.3. Action by Administrative Agent....................................63
SECTION 7.4. Consultation with Experts.........................................63
SECTION 7.5. Liability of Administrative Agent.................................64
SECTION 7.6. Indemnification...................................................64
SECTION 7.7. Credit Decision...................................................64
SECTION 7.8. Successor Administrative Agent....................................65
SECTION 7.9. Consents and Approvals............................................65
ARTICLE VIII. CHANGE IN CIRCUMSTANCES...................................................66
SECTION 8.1. Basis for Determining Interest Rate Inadequate or Unfair..........66
SECTION 8.2. Illegality........................................................67
SECTION 8.3. Increased Cost and Reduced Return.................................68
SECTION 8.4. Taxes.............................................................69
SECTION 8.5. Base Rate Loans Substituted for Affected LIBOR Loans..............72
ARTICLE IX. MISCELLANEOUS...............................................................72
SECTION 9.1. Notices...........................................................72
SECTION 9.2. No Waivers........................................................73
SECTION 9.3. Expenses; Indemnification.........................................73
SECTION 9.4. Sharing of Set-Offs...............................................75
SECTION 9.5. Amendments and Waivers............................................76
SECTION 9.6. Successors and Assigns............................................76
SECTION 9.7. Collateral........................................................78
SECTION 9.8. Governing Law; Submission to Jurisdiction.........................79
SECTION 9.9. Counterparts; Integration; Effectiveness..........................79
SECTION 9.10. WAIVER OF JURY TRIAL.............................................80
SECTION 9.11. Survival.........................................................80
SECTION 9.12. Domicile of Loans................................................80
SECTION 9.13. Limitation of Liability..........................................80
SECTION 9.14. Recourse Obligation..............................................80
SECTION 9.15. Bank's Failure to Fund...........................................80
SECTION 9.16. Dispute Resolution...............................................86
</TABLE>
-iii-
<PAGE> 5
Schedule 1 - Commitments
Schedule 4.6 - Borrower and General Partner ERISA Plans
Schedule 4.17 - Initial Qualified Unencumbered Property
Schedule 5.14(c)(i) - General Partner Investments
Schedule 5.14(c)(2) - General Partner Property
Exhibit A - Notice of Borrowing (Section 2.2)
Exhibit B - Reserved
Exhibit C - Reserved
Exhibit D - Reserved
Exhibit E - Reserved
Exhibit F - Reserved
Exhibit G - Form of Notice of Notice of Interest Rate Election
(Section 2.6(a)(ii))
Exhibit H - Reserved
Exhibit I - Reserved
Exhibit J - Transfer Supplement (Section 9.6(c))
Exhibit K - Request for Letter of Credit (Section 2.16)
Exhibit L - Form of L/C Application (Section 2.16)
-iv-
<PAGE> 6
FIRST AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
THIS FIRST AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT (this
"Agreement") dated as of June 7, 1999 among IRVINE APARTMENT COMMUNITIES, L.P.,
a Delaware limited partnership (the "Borrower"), the BANKS listed on Schedule 1
hereof, BANK OF AMERICA NT&SA, as Administrative Agent, and WELLS FARGO BANK,
N.A., as Documentation Agent.
RECITALS
(a) Pursuant to the Original Credit Agreement, the Original
Banks made the Original Loan to Borrower.
(b) Borrower, the Banks, the Administrative Agent and the
Documentation Agent desire to amend and restate the Original Credit Agreement
and certain of the Original Loan Documents, all as more particularly set forth
below.
(c) This Agreement is being executed by Borrower and the
Required Banks (in accordance with Section 9.5 of the Original Credit Agreement)
and Administrative Agent and Documentation Agent.
NOW, THEREFORE, Borrower, the Banks, the Administrative Agent
and the Documentation Agent do hereby amend and restate the Original Credit
Agreement as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.1. Definitions. The following terms, as used herein,
have the following meanings:
"Adjusted London Interbank Offered Rate" has the meaning set
forth in Section 2.7(b).
"Administrative Agent" shall mean Bank of America NT&SA in its
capacity as Administrative Agent hereunder, and its permitted successors in such
capacity in accordance with the terms of this Agreement.
"Administrative Questionnaire" means, with respect to each Bank,
an administrative questionnaire in the form prepared by the Administrative Agent
and
-1-
<PAGE> 7
submitted to the Administrative Agent (with a copy to the Borrower) duly
completed by such Bank.
"Aggregate Commitment" shall mean the aggregate of all of the
Commitments hereunder, for a total of $125,000,000 unless and until such time as
the Commitments are reduced pursuant hereto.
"Agreement" shall mean this First Amended and Restated Revolving
Credit Agreement as the same may from time to time hereafter be modified,
supplemented or amended.
"Applicable Interest Rate" means (i) with respect to any Fixed
Rate Indebtedness, the fixed interest rate applicable to such Fixed Rate
Indebtedness at the time in question, and (ii) with respect to any Floating Rate
Indebtedness, either (x) the rate at which the interest rate applicable to such
Floating Rate Indebtedness is actually capped (or fixed pursuant to an interest
rate hedging device), at the time of calculation, if Borrower has entered into
an interest rate cap agreement or other interest rate hedging device with
respect thereto or (y) if Borrower has not entered into an interest rate cap
agreement or other interest rate hedging device with respect to such Floating
Rate Indebtedness, the greater of (A) the rate at which the interest rate
applicable to such Floating Rate Indebtedness could be fixed for the remaining
term of such Floating Rate Indebtedness, at the time of calculation, by
Borrower's entering into any unsecured interest rate hedging device either not
requiring an upfront payment or if requiring an upfront payment, such upfront
payment shall be amortized over the term of such device and included in the
calculation of the interest rate (or, if such rate is incapable of being fixed
by entering into an unsecured interest rate hedging device at the time of
calculation, a fixed rate equivalent reasonably determined by Administrative
Agent) or (B) the floating rate applicable to such Floating Rate Indebtedness at
the time in question.
"Applicable Lending Office" means, with respect to any Bank, (i)
in the case of its Base Rate Loans, its Domestic Lending Office, and (ii) in the
case of its LIBOR Loans, its LIBOR Lending Office.
"Applicable Margin" means, with respect to each Loan, the
respective percentages per annum determined, at any time, based on the range
into which Borrower's Credit Rating then falls, in accordance with the table set
forth below. Any change in Borrower's Credit Rating causing it to move to a
different range on the table shall effect an immediate change in the Applicable
Margin (including existing Loans). Promptly after learning of a change in the
Borrower's Credit Rating, Administrative Agent shall give notice of such change
to the Banks and include in such notice the new Applicable Margin and the
effective date of such change. In the event that two (2) different Credit
Ratings have been
-2-
<PAGE> 8
assigned, the lower of the two Credit Ratings will prevail unless such Credit
Ratings are more than one Level (as shown in the table below) apart, in which
case the average of the margins corresponding to the two Credit Ratings will
constitute the Applicable Margin. In the event that three (3) different Credit
Ratings have been assigned, the average of the margins corresponding to the two
highest Credit Ratings will constitute the Applicable Margin. For purposes of
illustration only, if (i) two (2) different Credit Ratings were assigned and one
was Level I and the other was Level III, the Applicable Margin for LIBOR Loans
would be 0.700 (i.e., the average of Level I (0.650) and Level III (0.750)); or
(ii) three (3) different Credit Ratings had been assigned and such levels were
Level I, Level III and Level IV, the Applicable Margin for LIBOR Loans would be
0.700 (i.e., the average of Level I and Level III).
<TABLE>
<CAPTION>
Applicable
Margin for Applicable
Range of Base Rate Margin for
Borrower's Loans LIBOR Loans
Credit Rating (% per annum) (% per annum)
------------- ------------- -------------
<S> <C> <C> <C>
Level I A-/A3
or better 0.0 0.650
Level II BBB+/Baa1 0.0 0.650
Level III BBB/Baa2 0.0 0.750
Level IV BBB-/Baa3 0.0 0.950
Level V Below Investment
Grade 0.50 1.25
</TABLE>
"Acquired Asset" means a Qualifying Unencumbered Property which
has been acquired by Borrower (directly or indirectly) after the date of this
Agreement.
"Acquired Stabilized Asset" means a Qualifying Unencumbered
Property which had an Occupancy Rate greater than or equal to 85% on the date
acquired by Borrower.
"Approved Financial Institutions" shall mean financial
institutions which have (i)(a) a minimum net worth of $500,000,000 or (b) total
assets of $10,000,000,000, and (ii) a minimum long term debt rating of (a) BBB+
or higher by S&P, and (b) Baa1 or higher by Moody's.
-3-
<PAGE> 9
"Assignee" has the meaning set forth in Section 9.6(c).
"Bank" means each bank listed on Schedule 1 hereof, each
Assignee which becomes a Bank pursuant to Section 9.6(c), and their respective
successors and assigns.
"Bank of America" means Bank of America NT&SA, in its individual
capacity, or any successor to Bank of America NT&SA by merger, acquisition of
assets or otherwise.
"Bankruptcy Code" shall mean 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
greater of (i) the rate of interest most recently publicly announced by the
Administrative Agent in San Francisco, California from time to time as its rate
for domestic commercial loans for such day minus 0.25% and (ii) the sum of 0.50%
plus the Federal Funds Rate for such day.
"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.
"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 Irvine Apartment Communities, L.P., a Delaware
limited partnership.
"Borrower Party" means the Borrower and any Subsidiary of the
Borrower. "Borrower Parties" shall mean each of the foregoing Persons
individually, and all of the foregoing Persons collectively.
"Borrower's Share" means Borrower's share of the liabilities of
an Investment Affiliate based upon Borrower's percentage ownership of such
Investment Affiliate.
"Borrowing" has the meaning set forth in Section 1.3.
"Capital Leases" as applied to any Person, means any lease of
any property (whether real, personal or mixed) by that Person as lessee which,
in conformity with
-4-
<PAGE> 10
GAAP, is or should be accounted for as a capital lease on the balance sheet of
that Person.
"Cap Rate" means the Treasury Rate plus 2.8%.
"Capital Reserve" shall mean, for any period, $50.00 for each
Fiscal Quarter to occur during such period.
"Capital Stock" means, with respect to any Person, all (i)
shares, interests, participations or other equivalents (however designated) of
capital stock and other equity interests of such Person and (ii) rights (other
than debt securities convertible into capital stock or other equity interests),
warrants or options to acquire any such capital stock or other equity interests.
"Cash and Cash Equivalents" shall mean (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 Approved Financial Institutions 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, and 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, a AA rating by S&P or better rated credit, floating rate
notes, other money market instruments and letters of credit each issued by
Approved Financial Institutions (and in the case of a letter of credit, an
Approved Financial Institution which is a bank) (provided that the same shall
cease to be a "Cash or Cash Equivalent" if at any time any such bank shall cease
to be an Approved Financial Institution), (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 guaranteed by an Aa rating by Moody's, a AA rating by S&P 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 an Approved Financial
Institution, which is a bank (provided that the same shall cease to be a "Cash
or Cash Equivalent" if at any time any such financial institution shall cease to
be an Approved Financial Institution), (vii) repurchase agreements with major
financial institutions and primary government security dealers fully secured by
the U.S. Government or agency collateral equal to or exceeding the principal
amount on a daily basis and held in safekeeping, and (viii) real estate loan
pool participations, guaranteed by an AA rating given by S&P or Aa2 rating given
by Moody's or better rated credit.
-5-
<PAGE> 11
"Certifying Officer" has the meaning set forth in Section
5.1(c).
"Closing Date" means the date on or after the Effective Date on
which the conditions set forth in Section 3.1 shall have been satisfied to the
satisfaction of the Administrative Agent.
"Code" shall mean the Internal Revenue Code of 1986, as amended,
and as it may be further amended from time to time, any successor statutes
thereto, and applicable U.S. Department of Treasury regulations issued pursuant
thereto in temporary or final form.
"Committed Borrowing" has the meaning set forth in Section 1.3.
"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.
"Commitment" means, with respect to each Bank, the amount set
forth in Schedule 1 attached hereto and incorporated herein by this reference
(and, for each Bank which is an Assignee, the amount set forth in the Transfer
Supplement entered into pursuant to Section 9.6(c) as the Assignee's
Commitment), as such amount may be reduced from time to time pursuant to Section
2.11(c) or in connection with an assignment to an Assignee.
"Consolidated Subsidiary" means at any date any Subsidiary or
other entity which is consolidated with Borrower in accordance with GAAP.
"Consolidated Tangible Net Worth" means at any date the
consolidated partners' capital (determined on a book basis and without
duplication), less their consolidated Intangible Assets and loans to officers
and directors of Borrower or its Consolidated Subsidiaries, all determined as of
such date. For purposes of this definition "Intangible Assets" means the amount
(to the extent reflected in determining such consolidated partners' capital) of
(i) unamortized deferred charges and debt discount; (ii) all write-ups (other
than write-ups resulting from foreign currency translations and write-ups of
assets of a going concern business made within twelve months after the
acquisition of such business) subsequent to December 31, 1996 in the book value
of any asset owned by the Borrower or a Consolidated Subsidiary and (iii)
goodwill, patents, trademarks, service marks, trade names, anticipated future
benefit of tax loss carry forwards, copyrights, organization or developmental
expenses and other intangible assets.
-6-
<PAGE> 12
"Contingent Obligation" means, as to any Person, without
duplication, any obligation, direct or indirect, contingent or otherwise, of
such Person (i) with respect to any Indebtedness or other obligation of another
Person, including any direct or indirect guarantee of such Indebtedness (other
than any endorsement for collection in the ordinary course of business) or any
other direct or indirect obligation, by agreement or otherwise, to purchase or
repurchase any such Indebtedness or obligation or any security therefor, or to
provide funds for the payment or discharge of any such Indebtedness or
obligation (whether in the form of loans, advances, stock purchases, capital
contributions or otherwise), (ii) to provide funds to maintain the financial
condition of any other Person, (iii) otherwise to assure or hold harmless the
holders of Indebtedness or other obligations of another Person against loss in
respect thereof, or (iv) under Hedging Contracts. The amount of any Contingent
Obligation under clause (i) or (ii) shall be the lesser of (a) the amount of
such Indebtedness or obligation guaranteed or otherwise supported thereby, or
(b) the maximum amount so guaranteed or supported. The amount of any obligation
under a Hedging Contract shall be determined in accordance with standard methods
of calculating credit exposure under similar arrangements as prescribed by the
Administrative Agent from time to time, taking into account potential movements
in interest rates, exchange rates or other relevant indices and the notional
principal amount, term and termination provisions of the arrangement. For the
purposes of this definition only, "Indebtedness" shall be deemed not to include
subclause (c) of the definition of "Indebtedness" set forth in this Agreement.
"Contractual Obligation," as applied to any Person, means any
provision of any Securities issued by that Person or any indenture, mortgage,
deed of trust, lease, contract, undertaking, document or instrument to which
that Person is a party or by which it or any of its properties is bound, or to
which it or any of its properties is subject (including without limitation any
restrictive covenant affecting such Person or any of its properties).
"Convertible Securities" means evidences of shares of stock,
limited or general partnership interests or other ownership interests, warrants,
options, or other rights or securities which are convertible into or
exchangeable for, with or without payment of additional consideration,
partnership interests of Borrower, either immediately or upon the arrival of a
specified date or the happening of a specified event.
"Credit Rating" means the rating(s) assigned by the Rating
Agencies to Borrower's senior unsecured long term indebtedness.
"Debt Restructuring" means a restatement of, or material change
in, the amortization or other financial terms of any Indebtedness of the
Borrower or any Investment Affiliate.
-7-
<PAGE> 13
"Debt Service" means, for any period, Interest Expense for such
period plus scheduled principal amortization (excluding any individual scheduled
principal payment which exceeds 25% of the original principal amount of an
issuance of Indebtedness) for such period on all Indebtedness of General Partner
(calculated as provided in Section 1.2), on a consolidated basis, plus
Borrower's Share of scheduled principal amortization for such period on all
Indebtedness of Investment Affiliates for which there is no recourse to General
Partner or Borrower (or any Property thereof), plus, without duplication,
General Partner's and Borrower's actual or potential liability for principal
amortization for such period on all Indebtedness of Investment Affiliates that
is recourse to General Partner or Borrower (or any Property thereof).
"Default" means any condition or event which with the giving of
notice or lapse of time or both would, unless cured or waived, become an Event
of Default.
"Default Rate" has the meaning set forth in Section 2.7(d).
"Documentation Agent" shall mean Wells Fargo Bank, N.A. in its
capacity as Documentation Agent hereunder, and its successors in such capacity.
"Domestic Business Day" means any day except a Saturday, Sunday
or other day on which commercial banks in San Francisco, California are
authorized by law to close.
"Domestic Lending Office" means, as to each Bank, its office
located at its address in the United States set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its Domestic
Lending office) or such other office as such Bank may hereafter designate as its
Domestic Lending Office by notice to the Borrower and the Administrative Agent.
"EBITDA" means, for any period, (i) Net Income for such period,
plus (ii) depreciation and amortization expense and other non-cash items
deducted in the calculation of Net Income for such period, plus (iii) Interest
Expense deducted in the calculation of Net Income for such period, plus (iv)
Taxes deducted in the calculation of Net Income for such period, plus (v)
Borrower's Share of distributed earnings of Investment Affiliates for such
period, minus (vi) the gains (and plus the losses) from extraordinary items or
asset sales or write-ups or forgiveness of indebtedness included in the
calculation of Net Income, for such period, minus (vii) Borrower's Share of
accrued income and losses of Investment Affiliates for such period minus (viii)
earnings of Subsidiaries for such period distributed to third parties, all of
the foregoing without duplication.
-8-
<PAGE> 14
"Effective Date" means the date this Agreement becomes effective
in accordance with Section 9.9.
"Environmental Affiliate" means any partnership, joint venture,
trust or corporation for which Borrower or General Partner is liable
contractually or under applicable law for Environmental Claims against such
entity.
"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 of such Person for investigatory costs,
cleanup costs, governmental response costs, natural resources damage, property
damages, personal injuries, fines or penalties arising out of, based on or
resulting from (i) the presence, or release into the environment, of any
Materials 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.
"Environmental Laws" means any and all federal, state, and local
statutes, laws, judicial decisions, regulations, ordinances, rules, judgments,
orders, decrees, plans, injunctions, permits, concessions, grants, licenses,
agreements and other governmental restrictions relating to the environment, or
to emissions, discharges or releases of Materials of Environmental Concern into
the environment including, without limitation, ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern or the clean up or other remediation thereof.
"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 Code.
"Estimated Environmental Cost" shall have the meaning set forth
in Section 5.15 hereof.
"Event of Default" has the meaning set forth in Section 6.1.
-9-
<PAGE> 15
"Existing Letter of Credit" means the following letter of
credit: that certain Standby Letter of Credit Number 3010442, dated June 12,
1998, issued by Bank of America in favor of California Statewide Communities
Development Authority as the beneficiary, in the amount of $2,000,000, in which
Borrower is the applicant.
"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 the Administrative Agent on
such day on such transactions as determined by the Administrative Agent.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System as constituted from time to time.
"Fiscal Quarter" means a fiscal quarter of a Fiscal Year.
"Fiscal Year" means the fiscal year of Borrower and its
Consolidated Subsidiaries which shall be the twelve (12) month period ending on
the last day of December in each year.
"Fitch" means Fitch Investors Service, or any successor thereto.
"Fixed Charges" for any Fiscal Quarter period means the sum of
(i) Debt Service for such period, plus (ii) the greater of (a) the product of
the number of apartment units owned (directly or beneficially) by Borrower at
the beginning of the applicable period and the Capital Reserve for such period
or (b) the average quarterly amount of recurring capital expenditures of the
Borrower based upon the actual recurring capital expenditures of Borrower and
Consolidated Subsidiaries over the immediately preceding four calendar quarters,
plus (iii) Borrower's Share of the aggregate sum of the product of the number of
apartment units owned (directly or beneficially) by each Investment Affiliate at
the beginning of the applicable period and the Capital Reserve for such period,
plus (iv) dividends on preferred units payable by Borrower for such period.
"Fixed Rate Borrowing" has the meaning set forth in Section 1.3.
-10-
<PAGE> 16
"Fixed Rate Indebtedness" means all Indebtedness which accrues
interest at a fixed rate.
"Floating Rate Indebtedness" means all Indebtedness which is not
Fixed Rate Indebtedness and which is not a Contingent Obligation or an Unused
Commitment.
"FMV Cap Rate" means 8.0%.
"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 the Financial
Accounting Standards 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 TICALLC.
"Gross Asset Value" means, with respect to any Person or
Property, (i) the product of four (4) and a fraction, the numerator of which is
EBITDA for such Fiscal Quarter (exclusive of EBITDA from any Property which has
been acquired or been disposed of by the Borrower in the Fiscal Quarter most
recently ended) and the denominator of which is the FMV Cap Rate, plus (ii) for
any Property which has been acquired by the Borrower in the Fiscal Quarter most
recently ended, the Net Price of the Property paid by Borrower for such
Property, plus (iii) in the case of any Person, the value of any Cash or Cash
Equivalents owned by such Person and not subject to any Lien, plus (iv) the
value of all construction in process (including, without limitation, the value
of the land owned by the Borrower or any Subsidiary upon which construction has
commenced, at the lower of cost or fair market value determined in accordance
with GAAP) plus (v) the value of all land owned by the Borrower or any
Subsidiary for which construction has not commenced, as of the end of the most
recently concluded Fiscal Quarter, calculated at the lower of cost or fair
market value (in each case determined in accordance with GAAP).
"Guaranty" means the Second Amended and Restated General
Continuing Repayment Guaranty, dated of the same date as this Agreement,
executed by TICALLC in favor of Administrative Agent and the Banks.
"Hedging Contract" means, for any Person, any interest rate,
commodity, foreign exchange or other hedging agreement (including swaps,
collars, caps and forward contracts) between such Person and one or more
counterparties providing for the transfer or mitigation of fluctuations of
interest rates, exchange rates or other prices either generally or under
specific contingencies.
-11-
<PAGE> 17
"IAC" means Irvine Apartment Communities, Inc., a Maryland
corporation.
"Indebtedness" as applied to any Person (and without
duplication), means (a) all indebtedness, obligations or other liabilities of
such Person for borrowed money, (b) all indebtedness, obligations or other
liabilities of such Person evidenced by Securities or other similar instruments,
(c) all Contingent Obligations of such Person exclusive of all indebtedness,
obligations and other liabilities in respect of Hedging Contracts purchased to
hedge Indebtedness, (d) all reimbursement obligations and other liabilities of
such Person with respect to letters of credit or banker's acceptances issued for
such Person's account or other similar instruments for which a contingent
liability exists, (e) all obligations of such Person to pay the deferred
purchase price of Property or services, (f) all obligations in respect of
Capital Leases (including ground leases) of such Person, (g) all indebtedness
obligations or other liabilities of such Person or others secured by a Lien on
any asset of such Person, whether or not such indebtedness, obligations or
liabilities are assumed by, or are a personal liability of such Person, (h) all
indebtedness, obligations or other liabilities (other than interest expense
liability) in respect of Interest Rate Contracts and foreign currency exchange
agreements (other than Interest Rate Contracts purchased to hedge Indebtedness),
(i) ERISA obligations currently due and payable, and (j) all trade payables for
construction in progress. As used herein, "Indebtedness" shall not include
assessment district or community facilities district indebtedness not shown on
the Borrower's balance sheet.
"Indemnitee" has the meaning set forth in Section 9.3(b).
"Initial Closing Date" means June 27, 1997.
"Interest Expense" means, for any period, the sum (without
duplication) for such period of (i) total interest expense, whether paid or
accrued, of the Borrower and the Consolidated Subsidiaries, including without
limitation the portion of any obligations under any Capital Lease allocable to
interest expense, and the Borrower's Share of interest expenses in
Unconsolidated Joint Ventures but excluding amortization or write-off of debt
discount and expense, (ii) capitalized interest, (iii) to the extent not
included in clauses (i) and (ii) the Borrower's pro rata share of interest
expense and other amounts of the type referred to in such clauses of the
Unconsolidated Joint Ventures, and (iv) interest incurred on any liability or
obligation that constitutes a contingent Obligation of Borrower or any
Consolidated Subsidiary, and in each case taking into account the benefit of any
Hedging Contract and the amortized cost therefor for the applicable period. For
purposes of clause (iii), Borrower's pro rata share of interest expense or other
amount of any Unconsolidated Joint Venture shall be deemed equal to the product
of (a) the interest expense or other relevant amount of such Unconsolidated
Joint Venture, multiplied by (b) the percentage of
-12-
<PAGE> 18
the total outstanding Capital Stock of such Person held by Borrower or any
Consolidated Subsidiary, expressed as a decimal.
"Interest Period" means, with respect to each LIBOR Borrowing,
the period commencing on the date of such Borrowing specified in the Notice of
Borrowing or on the date specified in the applicable Notice of Interest Rate
Election and ending 1, 2, 3, or 6 months thereafter, as the Borrower may elect
in the applicable Notice of Borrowing or Notice of Interest Rate Election;
provided that: (a) any Interest Period which would otherwise end on a day which
is not a LIBOR Business Day shall be extended to the next succeeding LIBOR
Business Day unless such LIBOR Business Day falls in another calendar month, in
which case such Interest Period shall end on the next preceding LIBOR Business
Day; (b) any Interest Period which begins on the last LIBOR 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 LIBOR Business Day of a calendar month; and
(c) any Interest Period which would otherwise end after the Maturity Date shall
end on the Maturity Date.
"Interest Rate Contracts" means, collectively, interest rate
swap, collar, cap or similar agreements providing interest rate protection.
"Interest Rate Hedges" has the meaning set forth in Section
5.13.
"Investment" means, with respect to any Person, (i) any direct
or indirect purchase or other acquisition by that Person of stock or securities,
or any beneficial interest in stock or other securities, of any other Person,
any partnership interest (whether general or limited) in any other Person, or
all or any substantial part of the business or assets of any other Person, (ii)
any direct or indirect loan, advance or capital contribution by that Person to
any other Person, including all indebtedness and accounts receivable from that
other Person that are not current assets or did not arise from sales to that
other Person in the ordinary course of business. The amount of any Investment
shall be the original cost of such Investment plus the cost of all additions
thereto, without any adjustments for increases or decreases in value, or
write-ups, write-downs or write-offs with respect to such Investment.
"Investment Affiliate" means any Person in whom Borrower holds
an equity interest, directly or indirectly, whose financial results are not
consolidated under GAAP with the financial results of Borrower on the
consolidated financial statements of Borrower.
"Joint Venture" means a joint venture, partnership or similar
arrangement, whether in corporate, partnership or other legal form.
-13-
<PAGE> 19
"L/C Agreement" means (a) so long as Bank of America is the
Administrative Agent and issuer of Letters of Credit pursuant to Section 2.16, a
letter of credit application and reimbursement agreement in the form of Exhibit
"L"; and (b) if Bank of America ceases to be the Administrative Agent or the
Agreement is amended to provide for a Bank other than Bank of America to be the
issuer of Letters of Credit pursuant to Section 2.16, a letter of credit
application in form and content reasonably satisfactory to the successor
Administrative Agent or such Bank, as the case may be.
"Letter of Credit" means a standby or direct pay letter of
credit issued for the account of Borrower pursuant to this Agreement, either as
originally issued as the same may from time to time be supplemented, modified,
amended, renewed or extended.
"Letter of Credit Fee" means, with respect to each Letter of
Credit issued, a fee equal to the face amount of the applicable Letter of Credit
multiplied by the Letter of Credit Margin. The Letter of Credit Fee shall be
payable in advance as follows: (i) the first installment of the Letter of Credit
Fee shall be due upon the issuance, supplementation, modification, amendment,
renewal or extension, as the case may be, of any Letter of Credit; and (ii)
subsequent installments shall be due quarterly thereafter. The amount of each
installment pursuant to clause (i) above shall be one quarter of the product of
(y) the applicable Letter of Credit Fee for the date the payment is due and (z)
the face amount of the Letter of Credit issued, supplemented, modified, amended,
renewed or extended. The amount of each installment pursuant to clause (ii)
above shall be one quarter of the product of (y) the applicable Letter of Credit
Fee for the date the payment is due and (z) the face amount of the Letter of
Credit then outstanding.
"Letter of Credit Margin" means, with respect to each Letter of
Credit, the respective percentages per annum determined, at any time, based on
the range into which Borrower's Credit Rating falls on the date of issuance of
the applicable Letter of Credit, in accordance with the table set forth below
(the percentage set forth in the Letter of Credit Margin column is inclusive of
the percentage set forth in the Override to Administrative Agent column). In the
event that two (2) different Credit Ratings have been assigned, the lower of the
two Credit Ratings will prevail unless such Credit Ratings are more than one
Level (as shown in the table below) apart, in which case the average of the
margins corresponding to the two Credit Ratings will constitute the Letter of
Credit Margin. In the event that three (3) different Credit Ratings have been
assigned, the average of the margins corresponding to the two highest Credit
Ratings will constitute the
-14-
<PAGE> 20
Letter of Credit Margin. For purposes of illustration only, if (i) two (2)
different Credit Ratings were assigned and one was Level I and the other was
Level III, the Letter of Credit Margin would be 0.700 (i.e., the average of
Level I (0.650) and Level III (0.750)); or (ii) three (3) different Credit
Ratings had been assigned and such levels were Level I, Level III and Level IV,
the Letter of Credit Margin would be 0.700 (i.e., the average of Level I and
Level III).
<TABLE>
<CAPTION>
Range of Letter of Override to
Borrower's Credit Margin Administrative Agent
Credit Rating (% per annum) (% per annum)
------------- ------------- -------------
<S> <C> <C> <C>
Level I A-/A3
or better 0.650 0.100
Level II BBB+/Baa1 0.650 0.100
Level III BBB/Baa2 0.750 0.100
Level IV BBB-/Baa3 0.950 0.100
Level V Below Investment
Grade 1.250 0.100
</TABLE>
"LIBOR Borrowing" has the meaning set forth in Section 1.3.
"LIBOR Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"LIBOR 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 LIBOR
Lending Office) or such other office, branch or affiliate of such Bank as it may
hereafter designate as its LIBOR Lending Office by notice to the Borrower and
the Administrative Agent.
"LIBOR Loan" means a Committed Loan to be made by a Bank as a
LIBOR Loan in accordance with the applicable Notice of Borrowing.
"LIBOR Reserve Percentage" has the meaning set forth in Section
2.7(b).
-15-
<PAGE> 21
"Lien" means with respect to any Property, any mortgage, pledge,
negative pledge, charge, security interest or encumbrance of any kind, or any
other type of preferential arrangement, in each case that has the effect of
creating a security interest, in respect of such Property, including without
limitation, all assessment district and community facility district debt shown
on the balance sheet of the owner of such Property. For the purposes of this
Agreement, the Borrower or any Consolidated Subsidiary shall be deemed to own
subject to a Lien any Property 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 Property.
"Loan" means a Base Rate Loan or a LIBOR Loan and "Loans" means
Base Rate Loans, LIBOR Loans or any combination of the foregoing.
"Loan Documents" means this Agreement, the Notes and the
Guaranty, as each of them may from time to time hereafter be modified,
supplemented or amended.
"London Interbank Offered Rate" or "LIBOR" has the meaning set
forth in Section 2.7(b).
"Mandate Letter" means that certain letter dated June 4, 1997,
as amended or supplemented from time to time, between Borrower and the
Administrative Agent.
"Margin Stock" shall have the meaning provided such term in
Regulation U and Regulation G of the Federal Reserve Board.
"Material Adverse Effect" means an effect resulting from any
circumstance or event or series of circumstances or events, of whatever nature
(but excluding general economic conditions), which does or could reasonably be
expected to, materially and adversely (i) effect the business, operations,
properties, assets or financial condition of the Borrower and its Consolidated
Subsidiaries taken as a whole, or (ii) impair the ability of the Borrower and
its Consolidated Subsidiaries, taken as a whole, to perform their respective
obligations under the Loan Documents.
"Materials of Environmental Concern" means any chemical
substance (i) the presence of which requires investigation or remediation under
any Environmental Laws; or (ii) that is or becomes defined as a "hazardous
waste" or "hazardous substance" under any Environmental Laws, including the
Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
Section 9601 et seq.) or the Resource Conservation and Recovery Act (42 U.S.C.
Section 6901 et seq.); or (iii) that is toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic, or otherwise hazardous and is
or becomes regulated by any governmental authority; or (iv)
-16-
<PAGE> 22
the presence of which on any Real Property Asset causes a nuisance upon the Real
Property Asset or to adjacent properties or poses a hazard to any Real Property
Asset or to the health or safety of Persons on or about any Real Property Asset;
or (v) without limitation, which contains gasoline, diesel fuel or other
petroleum hydrocarbons; or (vi) without limitation which contains
polychlorinated biphenyls (PCBs) or asbestos.
"Maturity Date" shall mean the date when all of the Obligations
hereunder shall be due and payable which shall be June 27, 2001, unless
accelerated pursuant to the terms hereof.
"Merger" means the merger of IAC into TICALLC.
"Merger Date" means the date upon which the Merger is legally
effective.
"Moody's" means Moody's Investors Services, 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.
"Multiple Employer Plan" means a Plan to which Section 413(c) of
the Code applies.
"Net Income" means, for any period, the net earnings (or loss)
after Taxes of the Borrower, on a consolidated basis for such period, calculated
in conformity with GAAP.
"Net Offering Proceeds" means all cash or other assets received
by Borrower as a result of the sale or issuance of common shares of beneficial
interest, preferred shares of beneficial interest, partnership interests,
limited liability company interests, Convertible Securities or other ownership
or equity interests in Borrower less customary costs and discounts of issuance
paid by Borrower, as the case may be.
"Net Operating Income" means, for any period with respect to any
Property owned (directly or beneficially) by Borrower, the net operating income
of such Property for such period (i) determined in accordance with GAAP, (ii)
determined in a manner
-17-
<PAGE> 23
which is consistent with the past practices of Borrower, and (iii) inclusive of
an allocation of reasonable management fees and administrative costs to each
Property, consistent with the past practices of Borrower, except that, for
purposes of determining Net Operating Income, income shall not (a) include any
items reasonably deemed by Administrative Agent to be of a non-recurring nature
or (b) be reduced by depreciation or amortization.
"Net Price" means, with respect to the purchase and sale of any
Property, without duplication, (i) Cash and Cash Equivalents paid as
consideration for such purchase or sale (after adjusting for the proration of
taxes, assessments, utility and security deposits and other items prorated or
adjusted) plus (ii) the principal amount of any note received or other deferred
payment to be made in connection with such purchase or sale (except as described
in clause (iv) below), plus (iii) the value of any other considerations
delivered in connection with such purchase or sale (as reasonably determined by
Administrative Agent), minus (only in the case of a sale) (iv) until actually
received, the value of any consideration deposited into escrow or subject to
disbursement or claim upon the occurrence of any event, minus (only in the case
of a sale), (v) the value of any consideration required to be paid to any Person
other than the Borrower and its Subsidiaries owning a beneficial interest in
such Property, minus (vi) reasonable costs of sale and taxes paid or payable in
connection with such purchase or sale.
"Net Present Value" shall mean, as to a specified or
ascertainable dollar amount, the present value, as of the date of calculation of
any such amount using a discount rate equal to the Base Rate in effect as of the
date of such calculation.
"Non-Recourse Indebtedness" means Indebtedness with respect to
which recourse is limited to (i) specific assets related to a particular
Property or group of Properties encumbered by a Lien securing such Indebtedness
or (ii) any Subsidiary (provided that if a Subsidiary is a partnership, there is
no recourse to Borrower or General Partner); provided, however, that personal
recourse of Borrower or General Partner for any such Indebtedness for fraud,
misrepresentation, misapplication of cash, waste, environmental claims and
liabilities and other circumstances customarily excluded by institutional
lenders from exculpation provisions and/or included in separate indemnification
agreements in non-recourse financing of real estate shall not, by itself,
prevent such Indebtedness from being characterized as Non-Recourse Indebtedness.
"Notes" means the "Notes" as defined in the Original Credit
Agreement, and "Note" means any one of such "Notes".
"Notice of Borrowing" means a Notice of Borrowing (as defined in
Section 2.4).
-18-
<PAGE> 24
"Notice of Interest Rate Election" has the meaning set forth in
Section 2.6.
"Obligations" means all obligations, liabilities, indemnity
obligations and Indebtedness of every nature of the Borrower, from time to time
owing to Administrative Agent or any Bank under or in connection with this
Agreement or any other Loan Document.
"Occupancy Rate" with respect to any Real Property Asset, shall
mean the ratio of (a) apartment units in such Real Property Asset which are
physically occupied by tenants paying rent pursuant to a lease to (b) the number
of apartment units in such Real Property Asset, expressed as a percentage.
"Other Indebtedness" means all Indebtedness other than the
Obligations.
"Original Banks" means the "Banks" listed on the signature pages
of the Original Credit Agreement.
"Original Credit Agreement" means that certain Revolving Credit
Agreement, dated as of June 27, 1997, by and among Borrower, the Banks listed
therein, Bank of America NT&SA, as Administrative Agent, and Wells Fargo Bank,
N.A., as Documentation Agent, as amended by (a) that certain First Amendment to
Revolving Credit Agreement, dated as of July 10, 1998, by and among Borrower,
the Banks listed therein, Bank of America NT&SA, as Administrative Agent, and
Wells Fargo Bank, N.A., as Documentation Agent, and (b) that certain Second
Amendment to Revolving Credit Agreement, dated as of August 4, 1998, by and
among Borrower, the Banks listed therein, Bank of America NT&SA, as
Administrative Agent, and Wells Fargo Bank, N.A., as Documentation Agent.
"Original Guarantor" means the "Guarantor" as defined in the
Original Credit Agreement.
"Original Guaranty" means the "Guaranty" as defined in the
Original Credit Agreement.
"Original Loan Documents" means that the "Loan Documents" as
defined in the Original Credit Agreement.
"Original Notes" means the "Notes", the "Money Market Notes" and
the "Swing Line Notes", all as defined in the Original Credit Agreement.
-19-
<PAGE> 25
"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 for Taxes, assessments or other governmental
charges not yet due and payable or which are being contested in good
faith by appropriate proceedings promptly instituted and diligently
conducted in accordance with the terms hereof;
b. statutory liens of carriers, warehousemen, mechanics,
materialmen and other similar liens imposed by law, which are incurred
in the ordinary course of business for sums not more than sixty (60)
days delinquent or which are being contested in good faith in accordance
with the terms hereof;
c. deposits made in the ordinary course of business to
secure liabilities to insurance carriers;
d. liens for purchase money obligations for equipment;
provided that (i) the Indebtedness secured by any such Lien does not
exceed the purchase price of such equipment, and (ii) any such Lien
encumbers only the asset so purchased and the proceeds upon sale,
disposition, loss or destruction thereof;
e. easements, rights-of-way, zoning restrictions, other
similar charges or encumbrances and all other items listed on Schedule B
to Borrower's owner's title insurance policies, except in connection
with any Indebtedness, for any of Borrower's Real Property Assets, so
long as the foregoing do not interfere in any material respect with the
use or ordinary conduct of the business of Borrower and do not diminish
in any material respect the value of the Property to which it is
attached or for which it is listed;
f. liens and judgments which have been or will be bonded or
released of record within thirty (30) days after the date such Lien or
judgment is entered or filed against General Partner, Borrower, or any
Subsidiary;
-20-
<PAGE> 26
g. liens on Property of the Borrower or its Subsidiaries
(other than Qualifying Unencumbered Property) securing Indebtedness
which may be incurred or remain outstanding without resulting in an
Event of Default hereunder; and
h. assessment or community facilities district
indebtedness, in each case not then in default, building restrictions,
zoning laws and the like, and residential leases entered into in the
ordinary course of business.
"Person" means an individual, a corporation, a partnership,
joint venture, 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 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 ERISA Group for employees of any Person which was at such time a
member of the ERISA Group.
"Property" means, with respect to any Person, any real or
personal property, building, facility, structure, equipment or unit, or other
asset owned by such Person.
"Qualifying Unencumbered Property" means, as of the Initial
Closing Date, the Real Property Assets set forth on Schedule 4.17 hereto (the
"Initial Qualifying Unencumbered Properties") and thereafter any other Real
Property Assets (without duplication) as designated by Borrower from time to
time; provided, however that each such Real Property Asset, including the
Initial Qualifying Unencumbered Property, must: (v) be a Real Property Asset
upon which an apartment project and related improvements has been, or is being,
constructed; (w) be wholly-owned (directly or beneficially) by Borrower; (x) not
be subject (nor may any equity interests in such Property be subject) to a Lien
(other than Permitted Liens) which secures Indebtedness of any Person; (y) not
be subject (nor may any equity interests in such Property be subject) to any
covenant, condition, or other restriction which prohibits the creation or
assumption of any Lien upon such Real Property Asset; and (z) to the best
knowledge of Borrower, not have Materials of Environmental Concern located on,
under or above such Real Property Asset, which are reasonably expected, pursuant
to Section 5.15, to involve an expenditure of Significant Environmental Cost.
The Borrower may designate, in its sole discretion and at any time, the Real
Property Assets which satisfy the requirements set forth herein and are thus
Qualifying Unencumbered Properties. If, at any time, a Real Property Asset
-21-
<PAGE> 27
does not satisfy the requirements of subclauses (v) through (z) above, then it
shall not be a Qualifying Unencumbered Property.
"Rating Agencies" means, collectively, S&P, Moody's and Fitch;
other nationally recognized rating agencies shall be "Rating Agencies" following
approval thereof by the Administrative Agent.
"Real Property Asset(s)" means as of any time, the real property
asset(s) owned directly or indirectly by the Borrower and the Consolidated
Subsidiaries at such time.
"Recourse Debt" shall mean Indebtedness that is not Non-Recourse
Indebtedness.
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"Required Banks" means at any time Banks having at least 61% of
the Aggregate Commitments or, if the Commitments shall have been terminated,
holding Notes evidencing at least 61% of the aggregate unpaid principal amount
of the Loans.
"Restricted Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any Capital Stock of any
Borrower Party now or hereafter outstanding, except (a) a dividend or other
distribution payable solely in shares or equivalents of the same class of
Capital Stock and (b) the issuance of equity interests upon the exercise of
outstanding warrants, options or other rights, or (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any Capital Stock of any Borrower Party now or
hereafter outstanding.
"S&P" means Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc., or any successor thereto.
"Secured Debt" means Indebtedness, the payment of which is
secured by a Lien on any Property owned or leased by General Partner, Borrower,
or any Subsidiary.
"Securities" means any stock, partnership interests, shares,
shares of beneficial interest, voting trust certificates, bonds, debentures,
notes or other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as
"securities," or any certificates of interest, shares, or participations in
temporary or interim certificates for the purchase or acquisition of, or any
-22-
<PAGE> 28
right to subscribe to, purchase or acquire any of the foregoing, but shall not
include any evidence of the obligations.
"Series A Preferred Securities" means the 8 1/4% Series A REIT
Trust Originated Preferred Securities sold by IAC Capital Trust, a Delaware
business trust.
"Series B Preferred Securities" means the Series B Preferred
Limited Partner Units issued by Borrower pursuant to the Designation Instrument
for such Series B Preferred Limited Partner Units.
"Significant Environmental Costs" means, as to any Real Property
Asset, Estimated Environmental Costs determined pursuant to Section 5.15 hereof,
to exceed one and one-half percent (1.5%) of (i) the Gross Asset Value of such
Real Property Asset in the case of a Real Property Asset that has been fully
constructed, or (ii) the sum of land cost (at the lower of cost or fair market
value) plus Borrower's estimated construction cost in the case of any other Real
Property Asset.
"Stabilized Asset" means any Qualifying Unencumbered Property
which, while owned by Borrower achieved (i) an average Occupancy Rate greater
than or equal to 85% during a calendar month and (ii) an Occupancy Rate of at
least 85% on the last day of such month. As used herein, "Stabilized Asset"
means any Qualifying Unencumbered Property which, while owned by Borrower, at
one time satisfied the foregoing requirements, regardless of whether such
Property subsequently fails to maintain such Occupancy Rates.
"Solvent" means, with respect to any Person, that the fair
saleable value of such Person's assets exceeds the Indebtedness of such Person.
"Subsidiary" means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned by the Borrower.
"Super-Majority Banks" means at any time Banks having at least
66 of the Aggregate Commitment or, if the Commitments shall have been
terminated, holding Notes evidencing at least 66 2/3% of the aggregate unpaid
principal amount of the Loans.
"Syndication Agent" shall mean J.P. Morgan Securities, Inc.
"Taxes" means all federal, state, local and foreign income and
gross receipts taxes.
-23-
<PAGE> 29
"Term" has the meaning set forth in Section 2.10.
"Termination Event" shall mean (i) a "reportable event", as such
term is described in Section 4043 of ERISA (other than a "reportable event" not
subject to the provision for 30-day notice to the PBGC), or an event described
in Section 4062(e) of ERISA, (ii) the withdrawal by any member of the ERISA
Group from a Multiple Employer Plan during a plan year in which it is a
"substantial employer" (as defined in Section 4001(a)(2) of ERISA), or the
incurrence of liability by any member of the ERISA Group under Section 4064 of
ERISA upon the termination of a Multiple Employer Plan, (iii) the filing of a
notice of intent to terminate any Plan under Section 4041 of ERISA, other than
in a standard termination within the meaning of Section 4041 of ERISA, or the
treatment of a Plan amendment as a distress termination under Section 4041 of
ERISA, (iv) the institution by the PBGC of proceedings to terminate, impose
liability (other than for premiums under Section 4007 of ERISA) in respect of,
or cause a trustee to be appointed to administer, any Plan or (v) any other
event or condition that might reasonably constitute grounds for the termination
of, or the appointment of a trustee to administer, any Plan or the imposition of
any liability or encumbrance or Lien on the Real Property Assets or any member
of the ERISA Group under ERISA.
"TIC" means The Irvine Company, a Delaware corporation.
"TICALLC" means TIC Acquisition LLC, a Delaware limited
liability company.
"Total Liabilities" means, as of the date of determination and
without duplication, all Indebtedness of General Partner (calculated as provided
in Section 1.2), on a consolidated basis, plus Borrower's Share of all
Indebtedness of Investment Affiliates for which there is no recourse to General
Partner or Borrower (or any Property thereof) plus the actual or potential
liability of General Partner, Borrower or any Subsidiary for any Indebtedness of
Investment Affiliates that is recourse to General Partner or Borrower (or
Property thereof) plus accounts payable incurred in the ordinary course of
business, plus all other items which, in accordance with GAAP, would be included
as liabilities on the liability side of the balance sheet of such Person.
"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 Administrative Agent shall select, in its reasonable discretion, an
alternate basis for the
-24-
<PAGE> 30
determination of Treasury yield for U.S. Treasury Constant Maturity Series with
ten year maturities.
"Unconsolidated Joint Venture" means (i) any Joint Venture of
Borrower or any Consolidated Subsidiary in which Borrower or such Consolidated
Subsidiary holds any Capital Stock but which would not be combined with Borrower
or such Consolidated Subsidiary in the consolidated financial statements of
Borrower in accordance with GAAP, and (ii) any Investment of Borrower or any
Consolidated Subsidiary in any Person that is not a Joint Venture.
"Unencumbered Asset Pool Value" means, without duplication, the
sum of the following with respect to Qualifying Unencumbered Properties:
(i) the Net Price of any Acquired Asset that was acquired
(directly or indirectly) by the Borrower during the most recent Fiscal Quarter;
plus
(ii) the aggregate Unencumbered Net Operating Income for the
three (3) calendar months most recently ended multiplied by four (4) and divided
by the FMV Cap Rate with respect to (v) any Acquired Stabilized Asset that was
acquired (directly or indirectly) by the Borrower during one of the four (4)
consecutive Fiscal Quarters most recently ended (other than the most recent
Fiscal Quarter), (w) any Acquired Asset which was not an Acquired Stabilized
Asset and which has not become a Stabilized Asset during one of the four (4)
consecutive Fiscal Quarters most recently ended, (x) any Acquired Asset which
was not an Acquired Stabilized Asset but which has become a Stabilized Asset
during one of the four (4) consecutive Fiscal Quarters most recently ended, (y)
any Qualifying Unencumbered Property which became a Stabilized Asset during the
four (4) consecutive Fiscal Quarters most recently ended, and (z) any Qualifying
Unencumbered Property which is not a Stabilized Asset (provided, however, that
the Unencumbered Asset Pool Value attributable to the Qualifying Unencumbered
Properties included in subclauses (w) and (z) above, together with Acquired
Assets in (i) above which were not Acquired Stabilized Assets, may not exceed
twenty-five percent (25%) of the aggregate Unencumbered Asset Pool Value); and
(iii) the aggregate Unencumbered Net Operating Income for the
four (4) consecutive Fiscal Quarters most recently ended divided by the FMV Cap
Rate with respect to (x) any Acquired Stabilized Asset which has been owned
(directly or beneficially) by the Borrower for more than four (4) consecutive
Fiscal Quarters and which is a Qualifying Unencumbered Property, and (y) any
Qualifying Unencumbered Property which became a Stabilized Asset prior to the
beginning of the four (4) consecutive Fiscal Quarters most recently ended and
which has been owned (directly or indirectly) by the Borrower for more than four
(4) consecutive Fiscal Quarters.
-25-
<PAGE> 31
Notwithstanding the foregoing, in the event that Borrower or Administrative
Agent has determined that there is a Significant Environmental Cost with respect
to any Real Property Asset referred to in this definition (and only for so long
as Borrower or Administrative Agent has made such determination), then the value
attributed to such asset shall be reduced, but not below zero, by the amount of
such Significant Environmental Cost.
"Unencumbered Net Operating Income" means for any period for all
Qualifying Unencumbered Properties owned (directly or beneficially) by the
Borrower during the applicable period, Net Operating Income from each such
Qualifying Unencumbered Property.
"United States" means the United States of America, including
the fifty states and the District of Columbia.
"Unsecured Debt" means Indebtedness of Borrower which is not
Secured Debt, including without limitation the aggregate amount of all Loans
outstanding hereunder.
"Unsecured Interest Expense" means Interest Expense other than
Interest Expense payable in respect of Secured Debt.
"Unused Commitments" shall mean 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 Borrower or
another Person or otherwise pursuant to any loan document, written instrument or
otherwise.
"Wells Fargo" means Wells Fargo Bank, N.A., in its individual
capacity, or any successor to Wells Fargo Bank, N.A., by merger, acquisition of
assets 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 Ernst & Young LLP) with the most recent audited consolidated financial
statements of the Borrower and its Consolidated Subsidiaries delivered to the
Administrative Agent; provided that for purposes of references to the financial
results and information of "General Partner, on a consolidated basis," General
Partner shall be deemed to own one hundred percent (100%) of the partnership
interests in Borrower; and provided further that, if the Borrower notifies the
Administrative Agent that the Borrower wishes to amend any covenant in Article V
to
-26-
<PAGE> 32
eliminate the effect of any change in GAAP on the operation of such covenant (or
if the Administrative 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 reasonably 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 2 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 initial Interest Period. Borrowings are classified for purposes of this
Agreement either by reference to the pricing of Loans comprising such Borrowing
(e.g., a "Fixed Rate Borrowing" is a LIBOR Borrowing, and a "LIBOR Borrowing" is
a Borrowing comprised of LIBOR Loans) or by reference to the provisions of
Article 2 under which participation therein is determined (i.e., a "Committed
Borrowing" is a Borrowing under Section 2.1 in which all Banks participate in
proportion to their Commitments).
ARTICLE II.
THE CREDITS
SECTION 2.1. Commitments to Lend and Original Loans. (a) Each
Bank severally agrees, on the terms and conditions set forth in this Agreement,
to make Loans to the Borrower pursuant to this Article from time to time during
the term hereof in amounts such that the aggregate principal amount of Committed
Loans by such Bank at any one time outstanding shall not exceed the amount of
its Commitment. Each Borrowing outstanding under this Section 2.1 shall be in an
aggregate principal amount of $3,000,000 for LIBOR Loans or $500,000 for Base
Rate Loans, or an integral multiple of $100,000 in excess thereof (except that
any such Borrowing may be in the aggregate amount available in accordance with
Section 3.2(c)) 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.
(b) As of the Effective Date, the "Loans" outstanding under
the Original Credit Agreement shall be deemed Loans hereunder.
SECTION 2.2. Notice of Borrowing. The Borrower shall give
Administrative Agent notice, in the form set forth as Exhibit "A" attached
hereto and incorporated herein by this reference ("Notice of Borrowing"), not
later than 11:00 a.m.
-27-
<PAGE> 33
(San Francisco time) (x) one Domestic Business Day before each Base Rate
Borrowing, or (y) three LIBOR Business Days before each LIBOR Borrowing,
specifying:
(i) the date of such Borrowing, which shall be a
Domestic Business Day in the case of a Base Rate Borrowing or a LIBOR Business
Day in the case of a LIBOR Borrowing;
(ii) the aggregate amount of such Borrowing;
(iii) whether the Loans comprising such Borrowing are
to be Base Rate Loans or LIBOR Loans; and
(iv) in the case of a LIBOR Borrowing, the duration
of the Interest Period applicable thereto, subject to the provisions of the
definition of Interest Period.
SECTION 2.3. Reserved.
SECTION 2.4. Notice to Banks; Funding of Loans.
(a) Upon receipt of a notice from Borrower in accordance
with Section 2.2 hereof (each such notice being a "Notice of Borrowing"), the
Administrative Agent shall, on the date such Notice of Borrowing is received by
the Administrative Agent, notify each Bank of the contents thereof and of such
Bank's share of such Borrowing, of the interest rate determined pursuant thereto
and the Interest Period(s) and such Notice of Borrowing shall not thereafter be
revocable by the Borrower.
(b) Not later than 12:00 Noon (San Francisco time) on the
date of each Borrowing as indicated in the Notice of Borrowing, each Bank shall
(except as provided in subsection (c) of this Section) make available its share
of such Borrowing in Federal funds immediately available in San Francisco, to
the Administrative Agent at its address referred to in Section 9.1.
(c) Unless the Administrative Agent shall have received
notice from a Bank prior to the date of any Borrowing that such Bank will not
make available to the Administrative Agent such Bank's share of such Borrowing,
the Administrative Agent may assume that such Bank has made such share available
to the Administrative Agent on the date of such Borrowing in accordance with
subsection (b) of this Section 2.4 and the Administrative Agent may, in reliance
upon such assumption, but shall not be obligated to, make available to the
Borrower on such date a corresponding amount on behalf of such Bank. If and to
the extent that such Bank shall not have so made such share available to the
Administrative Agent, such Bank and the Borrower severally agree to
-28-
<PAGE> 34
repay to the Administrative Agent forthwith on demand, and in the case of the
Borrower two (2) Domestic Business Days after demand, such corresponding amount
together with interest thereon, for each day from the date such amount is made
available to the Borrower until the date such amount is repaid to the
Administrative Agent, at (i) in the case of the Borrower, a rate per annum equal
to 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
Administrative 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 of each Bank shall be evidenced by such Bank's
Note.
(b) Reserved.
(c) 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 appropriate schedule 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.
(d) The Committed Loans shall mature, and the principal
amount thereof shall be due and payable, on the Maturity Date.
(e) Reserved.
(f) There shall be no more than five (5) LIBOR Loans
outstanding at any one time.
SECTION 2.6. Method of Electing Interest Rates. (a) The Loans
included in each Committed Borrowing shall bear interest initially at the type
of rate specified by the Borrower in the applicable Notice of Borrowing.
Thereafter, the Borrower may from time to time elect to change or continue the
type of interest rate borne by each Loan (subject in each case to the provisions
of Article VIII), as follows:
-29-
<PAGE> 35
(i) if such Loans are Base Rate Loans, the Borrower
may elect to convert all or any portion of such Loans to LIBOR Loans as of any
LIBOR Business Day;
(ii) if such Loans are LIBOR Loans, the Borrower may
elect to convert all or any portion of such Loans to Base Rate Loans and/or
elect to continue all or any portion of such Loans as LIBOR Loans for an
additional Interest Period or additional Interest Periods, in each case
effective on the last day of the then current Interest Period applicable to such
Loans, or on such other date designated by Borrower in the Notice of Interest
Rate Election provided Borrower shall pay any losses pursuant to Section 2.13.
Each such election shall be made by delivering a notice in the
form of Exhibit "G" (a "Notice of Interest Rate Election") to the Administrative
Agent by 11:00 A.M. (San Francisco time) at least three (3) LIBOR Business Days
before the conversion or continuation selected in such notice 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 Loans; provided
that (i) such portion is allocated ratably among such Loans, (ii) the portion to
which such Notice applies, and the remaining portion to which it does not apply,
are each $3,000,000 or any larger multiple of $100,000, (iii) there shall be no
more than five (5) LIBOR Loans outstanding at any time, (iv) no Committed Loan
may be continued as, or converted into, a LIBOR Loan when any Event of Default
has occurred and is continuing, and (v) no Interest Period shall extend beyond
the Maturity Date.
(b) Each Notice of Interest Rate Election shall specify:
(i) the 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 are to be converted, the new type
of Loans and, if such new Loans are LIBOR Loans, the duration of the initial
Interest Period applicable thereto; and
(iv) if such Loans are to be continued as LIBOR Loans
for an additional Interest Period, the duration of such additional Interest
Period.
-30-
<PAGE> 36
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 Administrative Agent shall
notify each Bank the same day as it receives such Notice of Interest Rate
Election of the contents thereof and the Interest Periods (if different from
those requested by the Borrower) 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 Administrative Agent for any LIBOR Loans, such
Loans shall be converted into Base Rate Loans on the last day of the then
current Interest Period applicable thereto. Within one LIBOR Business Day after
receipt of a Notice of Interest Rate Election from the Borrower pursuant to
subsection (a) above, the Administrative Agent shall notify each Bank of the
interest rates determined pursuant thereto.
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 the date it is repaid or converted into a LIBOR Loan pursuant to
Section 2.6 or at the Maturity Date, at a rate per annum, equal to the Base Rate
plus the Applicable Margin for Base Rate Loans for such day. Such interest shall
be payable for each Interest Period on the first day of each calendar month.
(b) Each LIBOR 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 for LIBOR
Loans for such day plus the Adjusted London Interbank Offered Rate applicable to
such Interest Period. Such interest shall be payable for each Interest Period on
the first day of each calendar month.
The "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 London
Interbank Offered Rate applicable during such Interest Period by (ii) 1.00 minus
the LIBOR Reserve Percentage.
The "London Interbank Offered Rate" applicable to any Interest
Period means the respective per annum U.S. Dollar rates listed on page 3750
(i.e., the LIBOR page) of the Telerate News Services titled "British Banker
Association Interest Settlement Rates" (rounded upward, if necessary, to the
next highest 1/100 of 1%) determined at approximately 11:00 a.m. (London time)
two LIBOR Business Days before the first day
-31-
<PAGE> 37
of such Interest Period in an amount approximately equal to the principal amount
of the LIBOR Borrowing or Loans or portion thereof to be converted into or
continued as LIBOR Loans to which such Interest Period is to apply and for a
period of time comparable to such Interest Period. If the Telerate News Services
ceases to publish the "London Interbank Offered Rate", then such rate shall be
determined from such substitute financial reporting service as the
Administrative Agent in its reasonable discretion shall determine.
"LIBOR 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) under
Regulation D, as Regulation D may be amended, modified or supplemented, 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
LIBOR Loans is determined or any category of extensions of credit or 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 LIBOR Reserve
Percentage.
(c) Reserved.
(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 applicable law, overdue interest
in respect of all Loans, shall bear interest at a rate per annum equal to the
sum of four percent (4%) plus the Base Rate (the "Default Rate").
(e) The Administrative Agent shall determine each interest
rate applicable to the Loans hereunder. The Administrative Agent shall give
prompt notice to the Borrower and the Banks of each rate of interest so
determined, and its determination thereof shall be conclusive in the absence of
demonstrable error.
SECTION 2.8. Reserved.
SECTION 2.9. Fees.
(a) Facility Fee. The Borrower shall pay to the
Administrative Agent for the account of the Banks ratably in proportion to their
respective Commitments a facility fee (the "Facility Fee") on the Aggregate
Commitment. The Facility Fee shall be
-32-
<PAGE> 38
payable in arrears in quarterly installments which shall be due on each January
1, April 1, July 1 and October 1 during the Term. The amount of each installment
(which shall be prorated by the Administrative Agent if due with respect to a
period which is less than a full quarter) shall be one quarter of the product of
(A) for the period commencing on the Effective Date and ending on June 30, 2000,
(i) 0.200% and (ii) the Aggregate Commitment , and (B) for the period commencing
on July 1, 2000, (i) 0.250% and (ii) the Aggregate Commitment.
(b) Other Fees. From the period commencing on the Effective
Date and ending on the Maturity Date, the Borrower shall pay to the
Administrative Agent, for the benefit of the Administrative Agent and
Documentation Agent, the fees specified in the letter agreement, dated as of the
same date as this Agreement, between Borrower and the Administrative Agent with
respect to fees.
(c) Fees Non-Refundable. All fees set forth in this Section
2.9 shall be deemed to have been earned on the earlier of when accrued or when
payable hereunder and shall be non-refundable. The obligation of the Borrower to
pay such fees in accordance with provisions hereof shall be binding upon the
Borrower and shall inure to the benefit of the Administrative Agent, and the
Documentation Agent, the Syndication Agent and the Banks regardless of whether
any Loans are actually made.
SECTION 2.10. Maturity Date.
The term (the "Term") of the Commitments (and each Bank's
obligations to make Loans hereunder) shall terminate and expire on the Maturity
Date. Upon the date of the termination of the Term, any Loans then outstanding
(together with accrued interest thereon and all other Obligations) shall be due
and payable on such date.
SECTION 2.11. Optional Prepayments.
(a) The Borrower may, upon at least one (1) Domestic
Business Day's notice to the Administrative Agent, prepay any Base Rate Loans,
in whole or in part at any time, or from time to time in part in amounts
aggregating Five Hundred Thousand Dollars ($500,000) or any larger multiple of
One Hundred Thousand Dollars ($100,000), by paying the principal amount thereof.
Each such optional prepayment shall be applied to prepay ratably the Loans of
the several Banks included in such Borrowing.
(b) The Borrower may, upon at least three (3) LIBOR Business
Days' notice to the Administrative Agent, prepay any LIBOR Loan as of the last
day of the Interest Period applicable thereto. Except as provided in Article
VIII and except with respect to any LIBOR Loan which has been converted to a
Base Rate Loan pursuant to
-33-
<PAGE> 39
Section 8.2, 8.3 or 8.4 hereof, the Borrower may not prepay all or any portion
of the principal amount of any LIBOR Loan prior to the end of the Interest
Period applicable thereto unless the Borrower shall also pay any applicable
expenses pursuant to Section 2.13. Each such optional prepayment shall be in the
amounts set forth in Section 2.11(a) above, except that any LIBOR Loan which has
been converted to a Base Rate Loan pursuant to Section 8.2, 8.3 or 8.4 hereof
may be prepaid without ratable payment of other Loans which have not been so
converted.
(c) The Borrower may at any time and from time to time
cancel all or any part of the Commitments by the delivery to the Administrative
Agent of a notice of cancellation within the applicable time periods set forth
in Sections 2.11(a) and (b) if there are Loans then outstanding or, if there are
no Loans outstanding at such time as to which the Commitments with respect
thereto are being canceled, upon at least one (1) Domestic Business Day's notice
to the Administrative Agent, whereupon, in either event, all or such portion of
the Commitments, as applicable, 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, Borrower shall prepay, as applicable, all or such portion of Loans
outstanding on such date in accordance with the requirements of Section 2.11(a)
and (b). Borrower shall be required to designate in its notice of cancellation
which Loans, if any, are to be prepaid.
(d) Any amounts so prepaid pursuant to Section 2.11(a) or
(b) may be reborrowed. In the event Borrower elects to cancel all or any portion
of the Commitments pursuant to Section 2.11(c) hereof, such amounts may not be
reborrowed.
SECTION 2.12. General Provisions as to Payments.
(a) The Borrower shall make each payment of interest and
principal on the Loans and of fees hereunder, not later than 10:00 A.M. (San
Francisco time) on the date when due, in Federal or other funds immediately
available in San Francisco, to the Administrative Agent at its address referred
to in Section 9.1. The Administrative Agent will promptly (and in any event
within one (1) Domestic Business Day after receipt thereof) distribute to each
Bank its ratable share of each such payment received by the Administrative Agent
for the account of the Banks. If and to the extent that the Administrative Agent
shall receive any such payment for the account of the Banks on or before 10:00
A.M. (San Francisco time) on any Domestic Business Day, and Administrative Agent
shall not have distributed to any Bank its applicable share of such payment on
such Domestic Business Day, Administrative Agent shall distribute such amount to
such Bank together with interest thereon, for each day from the date such amount
should have been distributed to such Bank until the date Administrative Agent
distributes such amount to such Bank, at the Federal Funds Rate. Whenever any
payment
-34-
<PAGE> 40
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 LIBOR Loans shall be due on a day which is not
a LIBOR Business Day, the date for payment thereof shall be extended to the next
succeeding LIBOR Business Day unless such LIBOR Business Day falls in another
calendar month, in which case the date for payment thereof shall be the next
preceding LIBOR 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 Administrative 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
Administrative Agent may assume that the Borrower has made such payment in full
to the Administrative Agent on such date and the Administrative Agent may, in
reliance upon such assumption, cause to be distributed to 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
Administrative 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
Administrative Agent, at the Federal Funds Rate.
SECTION 2.13. Funding Losses. If the Borrower makes any payment
of principal with respect to any LIBOR Loan (pursuant to Article II, VI or VIII
or otherwise) on any day other than the last day of the Interest Period
applicable thereto, or if the Borrower fails to borrow any LIBOR Loans after
notice has been given to any Bank in accordance with Section 2.4(a), or if
Borrower shall deliver a Notice of Interest Rate Election specifying that a
LIBOR Loan shall be converted on a date other than the first (1st) day of the
then current Interest Period applicable thereto, the Borrower shall reimburse
each Bank within fifteen (15) days after certification of such Bank of such loss
or expense (which shall be delivered by each such Bank to Administrative Agent
for delivery to Borrower) for any resulting loss or expense incurred by it (or
by an existing Participant in the related Loan), 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
Administrative Agent and Administrative Agent shall have delivered to the
Borrower a certification as to the amount of such loss or expense, which
certification shall set forth in reasonable detail the basis for and calculation
of such loss or expense and shall be conclusive in the absence of demonstrable
error.
-35-
<PAGE> 41
SECTION 2.14. Computation of Interest and Fees. All 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).
SECTION 2.15. Use of Proceeds. The Borrower shall use the
proceeds of the Loans for general corporate purposes, including, without
limitation, the acquisition of multifamily apartment projects and real property
to be used in connection with construction, management, development, acquisition
and operation of multifamily apartment projects and for general working capital
needs of the Borrower.
SECTION 2.16. Letters of Credit.
(a) Subject to the terms and conditions set forth in this
Agreement, at any time and from time to time from the Effective Date through the
day that is five (5) days prior to the Maturity Date, the Administrative Agent
shall, as soon as reasonably practical, issue such Letters of Credit as the
Borrower may request by submitting to Administrative Agent a properly completed
and executed Request for Letter of Credit in the form attached hereto as Exhibit
K, provided that, (i) upon issuance of such Letters of Credit, the sum of all
outstanding Loans plus outstanding Letters of Credit shall not exceed the
Aggregate Commitment, (ii) the aggregate face amount of all outstanding Letters
of Credit shall not at any time exceed Fifty Million Dollars ($50,000,000) and
(iii) in no event shall Letters of Credit be issued for the benefit of any of
the Banks or for purposes of securing repayment of loans extended to the
Borrower or any Subsidiary thereof. Notwithstanding anything to the contrary
with respect to the foregoing sentence, it is not the intention thereof to
restrict the issuance of Letters of Credit in connection with bond indebtedness
and/or the enhancement thereof. No Letter of Credit shall have an expiration
date later than the earlier of (i) twelve (12) months after the date of the
issuance of such Letter of Credit or (ii) the Maturity Date. Letters of Credit
may contain automatic extension or renewal clauses, provided that any such
automatic extension or renewal shall be subject to the right of the
Administrative Agent to give written notice to the beneficiary under any such
Letter of Credit not less than thirty (30) days prior to the expiration date of
such Letter of Credit that Administrative Agent will not extend or renew such
Letter of Credit. As of the Effective Date, the Existing Letter of Credit shall
be a Letter of Credit for all purposes of this Agreement.
(b) Each Request for Letter of Credit shall be submitted to
the Administrative Agent, together with an L/C Agreement duly executed on behalf
of the Borrower by a Certifying Officer and addressed to the Administrative
Agent, not later than 9:00 a.m., California time, at least three (3) Domestic
Business Days prior to the date upon which the requested Letter of Credit is to
be issued. The Borrower shall further deliver to the Administrative Agent such
additional instruments and documents as
-36-
<PAGE> 42
the Administrative Agent may reasonably require, in conformity with the then
standard practices of its letter of credit department, in connection with the
issuance of such Letter of Credit; provided that in no event shall the Letter of
Credit Fee or Letter of Credit Margin be altered or increased other than
pursuant to an amendment of the Credit Agreement.
(c) The Administrative Agent shall, if it approves of the
proposed wording of the Letter of Credit as set forth in the Request for Letter
of Credit and L/C Agreement (which approval shall not be unreasonably withheld),
and subject to the satisfaction of the conditions set forth in this Agreement,
issue the Letter of Credit on or before 5:00 p.m., California time, on or before
the day three (3) Domestic Business Days following receipt of the documents last
due pursuant to Section 2.16(b). Upon issuance of a Letter of Credit, the
Administrative Agent shall promptly notify the Banks of the amount and terms of
such Letter of Credit. The Administrative Agent shall deliver copies of Letters
of Credit to the Banks promptly following issuance thereof, and shall notify the
Banks of payments, reimbursements, expirations, negotiations, transfers and
other activity with respect to outstanding Letters of Credit promptly following
receipt of the same.
(d) Upon the issuance of a Letter of Credit, each Bank shall
be deemed to have purchased a pro rata participation therein from the
Administrative Agent in an amount equal to that Bank's pro rata share of such
Letter of Credit.
(e) If and to the extent that any amounts are drawn upon any
Letters of Credit, the amounts so drawn shall, from the date of payment thereof
by the Administrative Agent, be considered Base Rate Loans for all purposes
hereunder.
(f) Promptly after payment by the Administrative Agent of
any amount drawn upon any Letter of Credit, the Administrative Agent shall,
without notice to or the consent of the Borrower, direct the Banks to remit
funds to the Administrative Agent pursuant to Section 2.4(b) of this Agreement,
pro rata in accordance with their respective pro rata shares, in an aggregate
amount equal to the amount so paid by the Administrative Agent. Such funds shall
be paid to the Administrative Agent to reimburse it for the payment made by it
under the Letter of Credit. The Administrative Agent shall give prompt written
notice to the Banks of any reduction in the amount available to be drawn under
any Letter of Credit and of any extension of the term of any Letter of Credit.
(g) On or before the Maturity Date or any earlier
termination of this Agreement, the Borrower shall provide to the Administrative
Agent a standby letter of credit issued by a bank or other financial institution
reasonably satisfactory to the Administrative Agent, in form and substance
reasonably satisfactory to the Administrative Agent, in favor of the
Administrative Agent, in a face amount equal to outstanding
-37-
<PAGE> 43
Letters of Credit issued for the account of the Borrower on that date, or shall
make other provisions satisfactory to the Administrative Agent for the full
collateralization, by Cash or Cash Equivalent, of such outstanding Letter of
Credit. In the event that Borrower makes a Cash or Cash Equivalent deposit
pursuant to the requirements of this Section 2.16(g), (i) Borrower's cash
deposit shall earn the rate of interest then currently paid by the
Administrative Agent on comparable deposits, taking into account the amount
deposited and the term of the deposit and (ii) promptly following the expiration
of the outstanding Letter of Credit for which the Cash or Cash Equivalent
deposit was made, Administrative Agent shall, to the extent the Letter of Credit
has not been drawn, return such deposit, together with any interest earned
thereon, to Borrower. In the event of failure of the Borrower to comply with the
requirements of this Section 2.16(g), such portion of the face amount of all
outstanding Letters of Credit as to which the Borrower has failed to comply
shall be deemed to be advanced and due and payable in accordance with the terms
hereof.
(h) The issuance of any supplement, modification, amendment,
renewal or extension to or of any Letter of Credit shall be treated in all
respects the same as the issuance of a new Letter of Credit.
(i) Borrower shall pay Administrative Agent, on written
demand, commissions and fees for amendments to the Letter of Credit, payments
under the Letter of Credit, extensions of the Letter of Credit, cancellation of
the Letter of Credit, and other services in the amounts Borrower and
Administrative Agent may agree, or, in the absence of such agreement, in the
amounts customarily charged by Administrative Agent to other similarly-rated
borrowers under corporate unsecured facilities similar to this Agreement, on the
date of Administrative Agent's demand.
(j) Upon the occurrence of any of the following events,
Borrower shall deposit with Administrative Agent, on written demand and as cash
security for Borrower's obligations to Administrative Agent under this
Agreement, an amount equal to the undrawn amount of the Letter of Credit:
(i) Any Event of Default occurs under this
Agreement; or
(ii) Any court order, injunction or other legal
process is issued restraining or seeking to restrain drawing or payment under
the Letter of Credit.
(k) Borrower authorizes Administrative Agent to charge any
of Borrower's accounts with Administrative Agent for all amounts then due and
payable to Administrative Agent under this Agreement.
-38-
<PAGE> 44
(l) Borrower shall pay, on written demand, all actual costs,
expenses and reasonable attorneys' fees (including allocated costs for in-house
legal services) incurred by Administrative Agent in connection with (a) any
dispute concerning the Letter of Credit or this Agreement or (b) the enforcement
of this Agreement.
(m) Subject to the laws, customs and practices of the trade
in the area where the beneficiary is located, the Letter of Credit will be
subject to, and performance under the Letter of Credit by Administrative Agent,
its correspondents, and the beneficiary will be governed by, the "Uniforms
Customs and Practice for Documentary Credits (1993 Revision), International
Chamber of Commerce, Publication No. 500," or by later Uniform Customs and
Practice fixed by later Congresses of the International Chamber of Commerce as
in effect on the date the Letter of Credit is issued.
ARTICLE III.
CONDITIONS
SECTION 3.1. Closing. The closing hereunder shall occur on the
date when each of the following conditions is satisfied (or waived by the
Administrative Agent and the Banks).
(a) The Merger Date shall have occurred and the
Administrative Agent shall have received such evidence of the occurrence of the
Merger Date as the Administrative Agent may reasonably require;
(b) the Borrower, the Administrative Agent and each of the
Banks shall have executed and delivered to the Borrower and the Administrative
Agent a duly executed original of this Agreement;
(c) TICALLC shall have executed and delivered to the
Administrative Agent the duly executed original of the Guaranty;
(d) the Administrative Agent shall have received an opinion
of O'Melveny & Myers, LLP, counsel for the Borrower, acceptable to the
Administrative Agent, and its counsel;
(e) Reserved;
(f) the Administrative Agent shall have received all
documents the Administrative Agent may reasonably request relating to the
existence of the Borrower and General Partner, the authority for and the
validity of this Agreement and the other
-39-
<PAGE> 45
Loan Documents, and any other matters relevant hereto, all in form and substance
satisfactory to the Administrative Agent. Such documentation shall include,
without limitation, the agreement of limited partnership of the Borrower, as
well as the certificate of limited partnership of the Borrower, both as amended,
modified or supplemented prior to the Closing Date, certified to be true,
correct and complete by a senior officer of the Borrower as of a date not more
than ten (10) days prior to the Closing Date, together with a long-form
certificate of good standing as to the Borrower from the Secretary of State (or
the equivalent thereof) of Delaware, a good standing certificate issued by the
Secretary of State of the State of California, each to be dated not more than
thirty (30) days prior to the Closing Date, as well as the certificate of
formation and limited liability company agreement of General Partner, as
amended, modified or supplemented prior to the Closing Date, certified to be
true, correct and complete by the managing member of General Partner as of a
date not more than ten (10) days prior to the Closing Date, together with a good
standing certificate as to General Partner from the Secretary of State (or the
equivalent thereof) of Delaware, to be dated not more than thirty (30) days
prior to the Closing Date;
(g) the Administrative Agent shall have received all
certificates, agreements and other documents and papers referred to in this
Section 3.1 and the Notice of Borrowing referred to in Section 3.2, if
applicable, unless otherwise specified, in sufficient counterparts, satisfactory
in form and substance to the Administrative Agent in its sole discretion;
(h) the Borrower shall have taken all actions required to
authorize the execution and delivery of this Agreement and the other Loan
Documents and the performance thereof by the Borrower;
(i) the Administrative Agent shall be satisfied that none of
the Borrower, General Partner nor any Consolidated Subsidiary is subject to any
present or contingent environmental liability which could have a Material
Adverse Effect;
(j) the Administrative Agent shall have received, for its
and any other Bank's account, all fees due and payable pursuant to Section 2.9
hereof on or before the Closing Date;
(k) the Administrative 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, General Partner and the
applicable Consolidated Subsidiaries, and the validity and enforceability, of
the Loan Documents, or in connection with any of the transactions contemplated
thereby, and such consents, licenses and approvals shall be in full force and
effect;
-40-
<PAGE> 46
(l) the Administrative Agent shall have received the audited
financial statements of the Borrower and its Consolidated Subsidiaries and of
IAC for the Fiscal Year ending December 31, 1998; and
(m) no Default or Event of Default shall have occurred.
SECTION 3.2. Borrowings. The obligation of any Bank to make a
Loan is subject to the satisfaction of the following conditions:
(a) the Closing Date shall have occurred on or prior to June
30, 1999;
(b) receipt by the Administrative Agent of a Notice of
Borrowing as required by Section 2.2, signed by (i) a Certifying Officer or (ii)
such other Person as may be designated in writing from time to time in a written
notice delivered to Administrative Agent which has been signed by a Certifying
Officer;
(c) immediately after such Borrowing, the aggregate
outstanding principal amount of the Loans together with the aggregate face
amount of all outstanding Letters of Credit, to the extent the Letters of Credit
have not been drawn, will not exceed the Aggregate Commitments;
(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
expressly speak as of a different 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, which does or seeks to enjoin, prohibit or
restrain, the making or repayment of the Loans or the consummation of the
transactions contemplated by this Agreement; and
(g) no event, act or condition shall have occurred after the
Closing Date which, in the reasonable judgment of the Super-Majority Banks has
had or is reasonably expected to have a Material Adverse Effect.
-41-
<PAGE> 47
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), (d), (e), (f), and (g) (to the extent that Borrower is or should have been
aware of any Material Adverse Effect) of this Section, except as otherwise
disclosed in writing by Borrower to the Banks.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
In order to induce the Administrative Agent and each of the
other Banks which is or may become a party to this Agreement to make the Loans,
the Borrower makes the following representations and warranties as of the
Closing Date. 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 a limited
partnership, duly formed and validly existing as a limited partnership under the
laws of the State of Delaware and has all powers and all material governmental
licenses, authorizations, consents and 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 the
State of California and in every other jurisdiction in which the failure to be
so qualified and/or in good standing is likely to have a Material Adverse
Effect. General Partner is a limited liability company, duly formed, validly
existing and in good standing as a limited liability company under the laws of
the State of Delaware and has all powers and all material governmental licenses,
authorizations, consents and 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
reasonably expected to have a Material Adverse Effect.
SECTION 4.2. Power and Authority. The Borrower has the
partnership 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 partnership action, if any, 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 in accordance with the terms of this Agreement, 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
-42-
<PAGE> 48
enforceability is considered in a proceeding in equity or at law. General
Partner has the power and authority to execute, deliver and carry out the terms
and provisions of each of the Loan Documents on behalf of the Borrower to which
the Borrower 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.
SECTION 4.3. No Violation. Neither the execution, delivery or
performance by or on behalf of the Borrower of the Loan Documents to which it is
a party, 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,
(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 or any of its Consolidated
Subsidiaries pursuant to the terms of any 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) or any of its Consolidated Subsidiaries 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 Person in which the Borrower has an interest, or cause a default
under the Borrower's agreement or certificate of limited partnership, the
consequences of any such contravention, conflict, breach or default described in
clauses (i), (ii) or (iii) is reasonably expected to have a Material Adverse
Effect, or result in or require the creation or imposition of any Lien
whatsoever upon any Property (except as contemplated herein).
SECTION 4.4. Financial Information.
(a) The consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries, dated as of December 31, 1998, and the related
consolidated statements of Borrower's financial position for the Fiscal Year
then ended, reported on by Ernst & Young LLP, a copy of which has been delivered
to each of the Banks, fairly present, in conformity with GAAP, the consolidated
financial position of the Borrower and its Consolidated Subsidiaries as of such
date and their consolidated results of operations and cash flows for such Fiscal
Year.
(b) Reserved.
(c) Reserved.
-43-
<PAGE> 49
(d) Since December 31, 1998, (i) except as may have been
disclosed in writing to the Banks, nothing has occurred having a Material
Adverse Effect, and (ii) except as previously disclosed to the Banks, neither
the Borrower nor General Partner has incurred any material indebtedness or
guaranty on or before the Closing Date.
SECTION 4.5. Litigation. Except as previously disclosed by the
Borrower in writing to the Banks, there is no action, suit or proceeding pending
against, or to the knowledge of the Borrower threatened against or affecting,
(i) the Borrower, General Partner or any of their Consolidated Subsidiaries,
(ii) the Loan Documents or any of the transactions contemplated by the Loan
Documents or (iii) any of their assets, before any court or arbitrator or any
governmental body, agency or official in which there is a reasonable possibility
of an adverse decision which actions, suits or proceedings described in clauses
(i), (ii) or (iii) would, individually, or in the aggregate have a Material
Adverse Effect or which in any manner draws into question the validity of this
Agreement or the other Loan Documents.
SECTION 4.6. Compliance with ERISA.
(a) Except as set forth on Schedule 4.6 attached hereto,
neither Borrower nor General Partner is a member of any Plan or Multiemployer
Plan or any other Benefit Arrangement.
(b) The transactions contemplated by the Loan Documents will
not constitute a nonexempt prohibited transaction (as such term is defined in
Section 4975 of the Code or Section 406 of ERISA) which would, individually or
in the aggregate, have a Material Adverse Effect on Borrower or that could
subject the Administrative Agent or the Banks to any tax or penalty or
prohibited transactions imposed under Section 4975 of the Code or Section 502(i)
of ERISA.
SECTION 4.7. Environmental Matters. The Borrower conducts
reviews of the effect of Environmental Laws on the business, operations and
properties of the Borrower and its Consolidated Subsidiaries when necessary in
the course of which it identifies and evaluates associated liabilities and costs
(including, without limitation, any capital or operating expenditures required
for clean-up or closure of properties presently owned, any capital or operating
expenditures required to achieve or maintain compliance with environmental
protection standards imposed by law or as a condition of any license, permit or
contract, any related constraints on operating activities, and any actual or
potential liabilities to third parties, including employees, and any related
costs and expenses). On the basis of this review, the Borrower has reasonably
concluded that no such associated liabilities and costs, including the costs of
compliance with Environmental Laws, (i) are, as of the date hereof, Significant
Environmental Costs, or
-44-
<PAGE> 50
(ii) would have a Material Adverse Effect on the Borrower, General Partner and
their Consolidated Subsidiaries.
SECTION 4.8. Taxes. United States Federal income tax returns of
the Borrower, General Partner and their Consolidated Subsidiaries have been
prepared and filed through the Fiscal Year ended December 31, 1998. The
Borrower, General Partner and their Consolidated 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, General
Partner or any Consolidated Subsidiary, except such taxes, if any, as are
reserved against in accordance with GAAP, such taxes as are being contested in
good faith by appropriate proceedings or such taxes, the failure to make payment
of which when due and payable will not have, in the aggregate, a Material
Adverse Effect. The charges, accruals and reserves on the books of the Borrower,
General Partner and their Consolidated Subsidiaries in respect of taxes or other
governmental charges are, in the opinion of the Borrower, adequate.
SECTION 4.9. Full Disclosure. All factual information heretofore
prepared by the Borrower and furnished by the Borrower to the Administrative
Agent or any Bank for purposes of or in connection with this Agreement or any
transaction contemplated hereby or thereby is true and accurate in all material
respects as of the date as of which such information is stated or certified.
There is no fact known to the Borrower (other than matters of a general economic
nature) that has had or could reasonably be expected to have a Material Adverse
Effect and that has not been disclosed herein or in such other documents,
certificates or statements executed or delivered in connection herewith.
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 will be Solvent.
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 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
-45-
<PAGE> 51
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 or those which,
if not made or obtained, would not have a Material Adverse Effect.
SECTION 4.13. Investment Company Act; Public Utility Holding
Company Act. Neither the Borrower, General Partner nor any Consolidated
Subsidiary is (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. Principal Offices. As of the Closing Date, the
principal office, chief executive office and principal place of business of the
Borrower is 550 Newport Center Drive, Newport Beach, California 92660.
SECTION 4.15. Reserved.
SECTION 4.16. Patents, Trademarks, etc. The Borrower has
obtained and holds in full force and effect all patents, trademarks,
servicemarks, 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 reasonably expected to have a
Material Adverse Effect.
SECTION 4.17. Qualifying Unencumbered Properties. Schedule 4.17
attached hereto and made a part hereof sets forth all the Qualifying
Unencumbered Property owned by the Borrower, directly or indirectly, as of the
Closing Date. As of the Closing Date, all of the Properties set forth in
Schedule 4.17 are Qualifying Unencumbered Properties.
Borrower represents and warrants that, as of the Closing Date,
the Borrower has good and insurable fee title to the Qualifying Unencumbered
Property, free of all Liens other than Permitted Liens and that to its best
knowledge, except as disclosed in writing to the Administrative Agent in
connection with the extension of credit contemplated hereby or hereafter
disclosed in writing to the Administrative Agent from time to time, no Materials
of Environmental Concern are located on, under, over or about such real
property.
SECTION 4.18. No Default. As of the date hereof, no Event of
Default or Default exists under or with respect to any Indebtedness of the
Borrower and the Borrower
-46-
<PAGE> 52
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 in any such case, the existence of which default is reasonably expected
to result in a Material Adverse Effect.
SECTION 4.19. Licenses, etc. The Borrower has obtained and does
hold in full force and effect, all franchises, licenses, permits, certificates,
authorizations, qualifications, accreditation, 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 reasonably expected
to have a Material Adverse Effect.
SECTION 4.20. Compliance With Law. The Borrower and each of the
Real Property Assets are in compliance with all laws, rules, regulations,
orders, judgments, writs and decrees, including, without limitation, all
building and zoning ordinances and codes, the failure to comply with which is
reasonably expected to have a Material Adverse Effect.
SECTION 4.21. No Burdensome Restrictions. Except as may have
been disclosed by the Borrower in writing to the Banks, 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 reasonably expected to have a Material Adverse Effect.
SECTION 4.22. Brokers' Fees. The Borrower has not dealt with any
broker or finder with respect to the transactions contemplated by this Agreement
or otherwise in connection with this Agreement, and the Borrower has not done
any act, 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, other than the fees payable to the
Administrative Agent, the Documentation Agent and the Banks, and certain other
Persons as previously disclosed in writing to the Administrative Agent.
SECTION 4.23. Labor Matters. As of the date hereof, there are no
collective bargaining agreements or Multiemployer Plans covering the employees
of the Borrower. As of the date hereof, the Borrower is not suffering any
strikes, walkouts, work stoppages or other material labor difficulty which are
reasonably expected to result in a Material Adverse Effect.
SECTION 4.24. Insurance. The Borrower currently maintains 100%
replacement cost insurance coverage (subject to customary deductibles) in
respect of each of the Real Property Assets, as well as commercial general
liability insurance (including
-47-
<PAGE> 53
"builders' risk" where applicable) 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 liability and
casualty insurance with insurers having an A.M. Best policyholders, rating of
not less than A-VII (or such lesser rating satisfactory to Administrative Agent
in its reasonable discretion) in amounts that prudent owner of assets such as
the Real Property Assets would maintain.
SECTION 4.25. Organizational Documents. The documents delivered
pursuant to Section 3.1(f) constitute, as of the Closing Date, all of the
material organizational documents (together with all amendments and
modifications thereof) of the Borrower and General Partner. The Borrower
represents that it has delivered to the Administrative Agent true, correct and
complete copies of each of the documents set forth in Section 3.1(f).
SECTION 4.26. Year 2000 Compliance. The Borrower and General
Partner have each conducted a comprehensive review and assessment of the
Borrower's and General Partner's computer applications and made inquiry of the
Borrower's and General Partner's key suppliers, vendors and customers with
respect to the "year 2000 problem" (that is the risk that computer applications
may not be able to properly perform date-sensitive functions after December 31,
1999) and, based on that review and inquiry, neither the Borrower nor General
Partner believes the year 2000 problem will result in a material adverse change
in the Borrower's or General Partner's ability to repay the Loans.
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. Financial Information. The Borrower will deliver to
Administrative Agent (with sufficient copies to distribute to all of the Banks):
(a) as soon as available, but in no event later than
ninety-five (95) days after the end of each Fiscal Year of the Borrower, an
audited consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of the end of such Fiscal Year and the related consolidated
statements of Borrower's operations and consolidated statements of Borrower's
cash flow for such Fiscal Year, setting forth in each case in comparative form
the figures for the previous Fiscal Year, all reported on by Ernst & Young LLP
or other independent public accountants of nationally recognized standing;
-48-
<PAGE> 54
(b) as soon as available, but in no event later than sixty
(60) days after the end of each of the first three Fiscal Quarters of the
Borrower, (i) a consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of the end of such quarter and the related consolidated
statements of Borrower's operations and consolidated statements of Borrower's
cash flow for such Fiscal Quarter and for the portion of the Borrower's Fiscal
Year ended at the end of such Fiscal Quarter, all reported on by Ernst & Young
LLP or other independent public accountants of nationally recognized standing,
and (ii) and such other information reasonably requested by the Administrative
Agent or any Bank;
(c) forty-five (45) days after the end of each Fiscal
Quarter, a certificate of the chief financial officer or the chief accounting
officer of the Borrower or its general partner (the "Certifying Officer") (i)
setting forth in reasonable detail the calculations required to establish
whether the Borrower was in compliance with the requirements of Section 5.9 on
the date of such financial statements; (ii) certifying (x) that such financial
statements fairly present the financial condition and the results of operations
of the Borrower on the dates and for the periods indicated, on the basis of
GAAP, with respect to the Borrower subject, in the case of interim financial
statements, to normally recurring 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) (or,
in the case of the first certification pursuant to this Section 5.1(c), the
Closing Date) and ending on a date not more than ten (10) Domestic Business Days
prior to the date of such delivery and that (1) on the basis of such financial
statements and such review of the Loan Documents, no Event of Default existed
under Section 6.1(b) with respect to Sections 5.9 and 5.10 at or as of the date
of said financial statements, and (2) 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, as of the last day of the period covered by such certificate no
Default or Event of Default under any other provision of Section 6.1 occurred
and is continuing or, if any such Default or Event of Default has occurred and
is continuing, specifying the nature and extent thereof and, the action the
Borrower proposes to take in respect thereof. Such certificate shall set forth
the calculations required to establish the matters described in clause (1) above
and shall attach as exhibits thereto the following: escrow closing statements,
certified by the Certifying Officer, for each Qualifying Unencumbered Property
which was acquired during the preceding Fiscal Quarter; an occupancy report
setting forth the average Occupancy Rate for each Qualifying Unencumbered
Property during the preceding Fiscal Quarter; and a report stating the Net
Operating Income for each Qualifying Unencumbered Property during the preceding
Fiscal Quarter with reasonable detail as to all property expenses and capital
expenditures.
-49-
<PAGE> 55
(d) not less frequently than annually, and in any event
within fifteen (15) days after adoption by Borrower's Board of Directors, the
Borrower's business plan, any subsequent material revisions thereto, and a
statement of projected cash flow of the Borrower and its Consolidated
Subsidiaries for the twelve (12) month period following the date of such
Business Plan.
SECTION 5.2. Other Information. The Borrower will deliver to the
Administrative Agent (with sufficient copies to distribute to all of the Banks):
(a) (i) within five (5) Domestic Business Days after any
executive officer of the Borrower or its general partner obtains knowledge of
any Default, if such Default is then continuing, a certificate of a Certifying
Officer, or other executive officer of the Borrower or its general partner
setting forth the details thereof and the action which the Borrower is taking or
proposes to take with respect thereto; and (ii) promptly and in any event within
five (5) Domestic Business Days after an executive officer of the Borrower or
its general partner obtains knowledge thereof, notice of (y) any litigation or
governmental proceeding pending or threatened against the Borrower or the Real
Property Assets as to which there is a reasonable possibility of an adverse
determination and which, if adversely determined, would individually or in the
aggregate, result in a Material Adverse Effect and (z) any other event, act or
condition which is reasonably expected to result in a Material Adverse Effect;
(b) Reserved.
(c) Reserved.
(d) promptly and in any event within thirty (30) days after
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 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
-50-
<PAGE> 56
copy of such notice; or (vii) 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, and in
the case of clauses (i) through (vii) above, which event could result in a
Material Adverse Effect, 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;
(e) promptly and in any event within ten (10) days after an
executive officer of the Borrower or its general partner obtains actual
knowledge of any of the following events, a certificate of the Borrower,
executed by a Certifying Officer of the Borrower or its general partner,
specifying the nature of such condition, and the Borrower's or, if the Borrower
has actual knowledge thereof, the Environmental Affiliate's proposed initial
response thereto: (i) the receipt by an executive officer of the Borrower or its
general partner, 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 reasonably expected to have a Material Adverse
Effect, (ii) the Borrower shall obtain actual knowledge that there exists any
Environmental Claim pending against the Borrower or any Environmental Affiliate
and such Environmental Claim is reasonably expected to have a Material Adverse
Effect or is reasonably expected to involve an expenditure of Significant
Environmental Cost 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 which in any such event is likely to
have a Material Adverse Effect or is reasonably expected to involve an
expenditure of Significant Environmental Cost;
(f) 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 loss which is reasonably expected to result in a Material
Adverse Effect, copies of such notices and correspondence;
(g) promptly and in any event within five (5) days after an
executive officer of the Borrower or its general partner obtains actual
knowledge of a change in the Credit Rating, a certificate of the Borrower,
executed by a Certifying Officer of the Borrower or its general partner,
specifying the new Credit Rating, and
-51-
<PAGE> 57
(h) from time to time such additional information regarding
the financial position or business of the Borrower, General Partner and their
Subsidiaries as the Administrative Agent, at the request of any Bank, may
reasonably request in writing.
SECTION 5.3. Payment of Obligations. The Borrower, General
Partner and their Consolidated Subsidiaries will pay and discharge, at or before
maturity, all its respective material obligations and liabilities including,
without limitation, Taxes and any obligation pursuant to any agreement by which
it or any of its properties is bound, in each case where the failure to so pay
or discharge such obligations or liabilities is reasonably expected to result in
a Material Adverse Effect, and will maintain in accordance with GAAP,
appropriate reserves for the accrual of any of the same.
SECTION 5.4. Maintenance of Property; Insurance; Leases.
(a) The Borrower will keep, and will cause each Consolidated
Subsidiary to keep, all property useful and necessary in its business, including
without limitation the Real Property Assets (for so long as it constitutes Real
Property Assets), in good repair, working order and condition, ordinary wear and
tear excepted, in each case where the failure to so maintain and repair will
have a Material Adverse Effect.
(b) The Borrower shall maintain, or cause to be maintained,
insurance comparable to that described in Section 4.24 hereof with insurers
meeting the qualifications described therein, which insurance shall in any event
not provide for less coverage than insurance customarily carried by owners of
properties similar to, and in the same locations as, the Real Property Assets.
The Borrower will deliver to the Administrative Agent (i) upon the reasonable
request of the Administrative Agent from time to time full information as to the
insurance carried, and (ii) forthwith, notice of any cancellation or nonrenewal
of coverage by any insurer of the Borrower (other than any cancellation or
non-renewal due to Borrower's placement of replacement coverage with new
insurers meeting the requirements of this Section 5.4(b)).
SECTION 5.5. Conduct of Business and Maintenance of Existence.
The Borrower and General Partner will continue to engage in business of the same
general type as now conducted by the Borrower and General Partner and each will
preserve, renew and keep in full force and effect, its partnership and limited
liability company existence and its respective rights, privileges and franchises
necessary for the normal conduct of business unless the failure to maintain such
rights and franchises does not have a Material Adverse Effect.
SECTION 5.6. Compliance with Laws. The Borrower will and will
cause its Subsidiaries to comply in all material respects with all applicable
laws, ordinances, rules,
-52-
<PAGE> 58
regulations, and requirements of governmental authorities (including, without
limitation, Environmental Laws, and all zoning and building codes with respect
to the Real Property Assets and ERISA and the rules and regulations thereunder
and all federal securities laws) except where the necessity of compliance
therewith is contested in good faith by appropriate proceedings or where the
failure to do so will not have a Material Adverse Effect or expose
Administrative Agent or Banks to any material liability therefor.
SECTION 5.7. Inspection of Property, Books and Records. The
Borrower (i) 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 in conformity with GAAP, modified as required by
this Agreement and applicable law; (ii) will permit representatives of any Bank
at such Bank's expense to visit any of its properties, including without
limitation the Real Property Assets, without notice; provided that the Bank
shall not unreasonably interfere with the operation of such properties or any
tenants thereon and such visitation shall occur within normal business hours;
(iii) will permit the representatives of any Bank, at such Bank's expense, to
inspect its properties, examine and make abstracts from any of its books and
records and to discuss its affairs, finances and accounts with its executive
officers, property managers and independent public accountants, in each such
case under this subclause (iii) all at such reasonable times during normal
business hours, upon reasonable prior notice and as often as may reasonably be
desired. Administrative Agent shall coordinate any such visit or inspection to
arrange for review by any Bank requesting any such visit or inspection.
SECTION 5.8. Existence. The Borrower shall do or cause to be
done, all things necessary to preserve and keep in full force and effect its,
General Partner's and their Consolidated Subsidiaries' existence and its
patents, trademarks, servicemarks, tradenames, copyrights, franchises, licenses,
permits, certificates, authorizations, qualifications, accreditation, easements,
rights of way and other rights, consents and approvals the nonexistence of which
is reasonably expected to have a Material Adverse Effect.
SECTION 5.9. Financial Covenants.
(a) Total Liabilities to Gross Asset Value. Borrower shall
not permit the ratio of Total Liabilities to Gross Asset Value of Borrower and
its Subsidiaries to exceed 0.55:1 at any time.
(b) Secured Debt to Gross Asset Value. Borrower shall not
permit the ratio of Secured Debt to Gross Asset Value of Borrower and its
Subsidiaries to exceed 0.45:1 at any time.
-53-
<PAGE> 59
(c) Unencumbered Pool. Borrower shall not permit the ratio
of the Unencumbered Asset Pool Value to outstanding Unsecured Debt to be less
than 1.75:1 at any time.
(d) EBITDA to Fixed Charges Ratio. Borrower shall not permit
the ratio of EBITDA for the then most recently completed Fiscal Quarter to Fixed
Charges for the then most recently completed Fiscal Quarter to be less than
1.75:1.
(e) Interest Coverage Ratio. Borrower shall not permit the
ratio of EBITDA for the then most recently completed Fiscal Quarter to Interest
Expense for the then most recently completed Fiscal Quarter to be less than
2.25:l.
(f) Reserved.
(g) Minimum Consolidated Tangible Net Worth. The
Consolidated Tangible Net Worth of the Borrower and its Consolidated
Subsidiaries will at no time be less than $200,000,000 plus ninety percent (90%)
of all Net Offering Proceeds received by General Partner (or General Partner's
predecessor in interest) or Borrower after December 31, 1996.
SECTION 5.10. Restriction on Fundamental Changes.
(a) Neither the Borrower, the General Partner nor any
Consolidated Subsidiary shall directly or indirectly enter into any merger or
consolidation without the prior written consent of the Required Banks which
consent may be withheld in its respective sole and absolute discretion unless
(i) (A) the entity with which or into which the Borrower or General Partner is
merged is TIC or a wholly-owned (directly or indirectly) subsidiary of TIC or
(B) the Borrower or the General Partner is the surviving entity, (ii) the entity
which is merged into the Borrower or the General Partner is not engaged in any
substantial business other than the management, development, ownership or
operation of multifamily residential apartment communities, and (iii) the gross
fair market value of the assets of the entity which is merged into the Borrower
or the General Partner is not in excess of ten percent (10%) of Borrower's
aggregate Gross Asset Value immediately prior to such merger or consolidation.
Neither the Borrower, the General Partner, nor any Consolidated Subsidiary shall
directly or indirectly enter into any reorganization or recapitalization,
reclassify its Capital Stock, liquidate, wind up or dissolve or sell, lease,
transfer or otherwise dispose of, in one transaction or a series of
transactions, all or substantially all of its or their business or assets,
whether now owned or hereafter acquired. Nothing in this Section shall be deemed
to prohibit the sale or leasing of portions of the Real Property Assets in the
ordinary course of business.
-54-
<PAGE> 60
(b) The Borrower shall not amend its agreement of limited
partnership or other organizational documents in any manner that would have a
Material Adverse Effect. General Partner shall not amend its certificate of
formation, limited liability company agreement, or other organizational
documents in any manner that would have a Material Adverse Effect.
(c) The Borrower shall deliver to Administrative Agent
copies of all amendments to its agreement of limited partnership or to General
Partner's certificate of formation, limited liability company agreement or other
organizational documents (other than amendments solely reflecting changes in
ownership interests occurring in the ordinary course of business) no less than
ten (10) Domestic Business Days after the effective date of any such amendment.
(d) The Banks hereby approve the Merger and the replacement
of IAC by TICALLC as the general partner of Borrower.
SECTION 5.11. Changes in Business.
(a) The Borrower shall carry on its business operations
through the Borrower and its Subsidiaries.
(b) All or substantially all of Borrower's assets shall be
multifamily residential properties, unimproved land held for the development of
multifamily residential property, or equity interests in companies whose primary
business is the ownership, operation, development or management of multifamily
residential property. Borrower shall not engage in any line of business other
than ownership, operation and development of multifamily residential property
and the provision of services incidental thereto, whether directly or through
its Subsidiaries and Investment Affiliates.
SECTION 5.12. 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 5.13. Hedging Requirements. Within five (5) Domestic
Business Days after the last day of each calendar quarter, commencing March 31,
1998 the Borrower shall have in effect "Interest Rate Hedges" on Borrower's
Indebtedness so that such Indebtedness, together with all Fixed Rate
Indebtedness of Borrower, shall constitute at least fifty percent (50%) of the
then aggregate Indebtedness of the Borrower. "Interest Rate Hedges" shall mean
interest rate exchange, collar, cap, swap, adjustable strike cap, adjustable
strike corridor or similar agreements, each of which (i) shall have a minimum
term of two (2) years, or, in the case of loans pursuant to which interest shall
accrue at a
-55-
<PAGE> 61
rate other than a fixed rate, a term equal to the term of such floating rate
loan (to the extent the term of such floating rate loan is less than two (2)
years), (ii) shall have the effect of capping the interest rates covered thereby
at a rate equal to or lower than the Cap Rate at the time of purchase or
execution, and (iii) shall be with an Approved Financial Institution as the
counterparty. It is acknowledged and agreed that the Borrower shall have no
obligation to replace any Interest Rate Hedge even if the counterparty thereto
shall cease to be an Approved Financial Institution. The Borrower shall certify
its compliance with Interest Rate Hedges to the Administrative Agent in the
certificate required to be delivered by the Borrower pursuant to Section 5.1(c).
SECTION 5.14. General Partner Status.
(a) Status. TICALLC shall at all times (i) maintain its
status as a wholly-owned (directly or through one or more subsidiaries)
subsidiary of TIC, and (ii) engage in no business other than functioning as the
general partner of Borrower.
(b) Indebtedness. General Partner shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, create, incur, assume
or otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except:
(1) The Obligations; and
(2) Indebtedness which, after giving effect thereto, may be
incurred or may remain outstanding without giving rise to an Event of
Default or Default under any provision of this Article V.
(c) Restriction on Fundamental Changes.
(1) General Partner shall not have an Investment in any
Person other than Borrower and the interests identified on Schedule
5.14(c)(1) as being owned by General Partner.
(2) General Partner shall not acquire an interest in any
Property other than Securities issued by Borrower and the interests
identified on Schedule 5.14(c)(2).
(d) Disposal of Partnership Interests. General Partner shall
not directly or indirectly convey, sell, transfer, assign, pledge or otherwise
encumber or dispose of any of its partnership interests in Borrower.
-56-
<PAGE> 62
(e) General Partner shall have the right to change its name
provided that it shall give Administrative Agent not less than 15 days prior
written notice before any such name change becomes effective.
SECTION 5.15. Environmental Matters.
(a) Promptly upon the discovery of any Environmental Claim
or of any violation or alleged violation of Environmental Laws with respect to
any Qualifying Unencumbered Asset, the Borrower shall attempt in good faith, as
soon as practicable, to determine all costs it reasonably expects any party to
expend in connection with the investigation and resolution of such Environmental
Claim or of such violation or alleged violation of Environmental Laws. The
Borrower shall thereupon notify the Administrative Agent in writing of the
Borrower's reasonable, good faith estimate of the cost to investigate and
resolve such Environmental Claim or such violation or alleged violation if such
cost is equal to or greater than $250,000. Such good faith estimate of such
costs, as revised from time to time pursuant hereto, shall be deemed to be the
"Estimated Environmental Cost" of such Environmental Claim or such violation or
alleged violation of Environmental Laws. After the end of each Fiscal Quarter,
the Borrower shall review and update all Estimated Environmental Costs and shall
deliver, with the Borrower's quarterly reports delivered in accordance with
Section 5.1 hereof, a written report to the Administrative Agent, setting forth,
in reasonable detail, each Estimated Environmental Cost which is in excess of
$250,000, the basis for the determination of such Estimated Environmental Cost,
and the Borrower's plans with respect to such Environmental Claim or such
violation or alleged violation of Environmental Laws. If the Borrower at any
time is not diligently and in good faith pursuing a determination of or an
update of a Estimated Environmental Cost which exceeds $250,000, the
Administrative Agent may, in reliance upon the opinions and judgments of
environmental consultants (either independent or employed by the Administrative
Agent), estimate or update, in good faith, the cost to investigate and resolve
an Environmental Claim or alleged or actual violation of Environmental Laws. In
the event that the Administrative Agent makes any such determination, the
Estimated Environmental Cost of investigating and resolving such Environmental
Claim or such alleged or actual violation of Environmental Laws shall be the
Administrative Agent's estimate, until such time as Borrower again diligently
pursues in good faith the determination or update of Estimated Environmental
Cost, and upon Borrower's determination of a Estimated Environmental Cost in
compliance herewith the Estimated Environmental Cost shall thereafter be
Borrower's estimate thereof, as set forth herein.
(b) The Borrower shall, at all times, diligently and in good
faith pursue resolution of all Environmental Claims, and all violations or
alleged violations of Environmental Laws, with respect to its Properties.
-57-
<PAGE> 63
SECTION 5.16. Cooperation. The Borrower shall take any action
reasonably requested by the Administrative Agent to carry out the intent of the
Loan Documents.
SECTION 5.17. Distributions. Unless waived by the Required
Banks, no Borrower Party shall make any Restricted Payments after the occurrence
of and during the continuation of an Event of Default under Section 6.1(a),
other than Restricted Payments with respect to the Series A Preferred Securities
and the Series B Preferred Securities.
ARTICLE VI.
DEFAULTS
SECTION 6.1. Events of Default. If one or more of the following
events ("Events of Default") shall have occurred and be continuing:
(a) (i) the Borrower shall fail to pay when due any
principal of any Loan; or (ii) the Borrower shall fail to pay when due interest
on any Loan or any fees or any other amount payable hereunder, under the Mandate
Letter or under the letter agreement referred to in Section 2.9(b) and the same
shall continue for a period of ten (10) calendar days after the same becomes
due;
(b) the Borrower shall fail to observe or perform any
covenant contained in Section 5.9, Section 5.10(a) or (b), or Sections 5.11,
5.12, and 5.14;
(c) the Borrower shall fail to observe or perform any
covenant or agreement contained in this Agreement (other than those covered by
clause (a), (b), (e), (f), (g), (h), (l) or (m) of this Section 6.1) for 30 days
after written notice thereof has been given to the Borrower by the
Administrative Agent, or if such default is of such a nature that it cannot with
reasonable effort be completely remedied within said period of thirty (30) days
such additional period of time as may be reasonably necessary to cure same,
provided Borrower commences such cure within said thirty (30) day period and
diligently prosecutes same, until completion, but in no event shall such
extended period exceed ninety (90) days;
(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) and the
defect causing such representation or warranty to be incorrect when made (or
deemed made) is not removed within thirty (30) days after written notice thereof
from Administrative Agent to Borrower, or if such default is of such a nature
that it cannot with reasonable effort be completely removed within said period
of thirty (30) days such additional period of time as may be reasonably
necessary to
-58-
<PAGE> 64
remove same, provided Borrower commences such removal within said thirty (30)
day period and diligently prosecutes same, until completion, but in no event
shall such extended period exceed ninety (90) days;
(e) the Borrower, General Partner, any Subsidiary or any
Investment Affiliate 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 (other than the Obligations) for which the
aggregate outstanding principal amount exceeds $10,000,000 and such default
shall continue beyond the giving of any required notice and the expiration of
any applicable grace period and such default has not been waived, in writing, by
the holder of any such Debt; or the Borrower, General Partner, any Subsidiary or
any Investment Affiliate shall default in the performance or observance of any
other obligation or condition with respect to any such Recourse 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, if the effect of such
other default, event or condition is to accelerate the maturity of any such
indebtedness 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 indebtedness;
(f) the Borrower or 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 action to authorize any of the foregoing;
(g) an involuntary case or other proceeding shall be
commenced against the Borrower or 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 90 days; or an order for relief shall be entered against the Borrower
or General Partner under the federal bankruptcy laws as now or hereafter in
effect;
(h) one or more final, non-appealable judgments or decrees
in an aggregate amount of Ten Million Dollars ($10,000,000) or more shall be
entered by a court or courts of competent jurisdiction against the Borrower,
General Partner or its
-59-
<PAGE> 65
Consolidated Subsidiaries (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 (ii) enforcement proceedings
shall be commenced by any creditor on any such judgments or decrees and such
enforcement proceedings shall not immediately be stayed;
(i) TIC shall cease to be the managing member of General
Partner;
(j) any Termination Event with respect to a Plan shall occur
as a result of which Termination Event or Events any member of the ERISA Group
has incurred or may incur any liability to the PBGC or any other Person and the
sum (determined as of the date of occurrence of such Termination Event) of the
insufficiency of such Plan and the insufficiency of any and all other Plans with
respect to which such a Termination Event shall occur and be continuing (or, in
the case of a Multiple Employer Plan with respect to which a Termination Event
described in clause (ii) of the definition of Termination Event shall occur and
be continuing, the liability of the Borrower) is equal to or greater than
$10,000,000 and which the Administrative Agent reasonably determines will have a
Material Adverse Effect;
(k) any member of the ERISA Group shall commit a failure
described in Section 302(f)(1) of ERISA or Section 412(n)(1) of the Code and the
amount of the lien determined under Section 302(f)(3) of ERISA or Section
412(n)(3) of the Code that could reasonably be expected to be imposed on any
member of the ERISA Group or their assets in respect of such failure shall be
equal to or greater than $10,000,000 and which the Administrative Agent
reasonably determines will have a Material Adverse Effect;
(l) at any time, for any reason the Borrower seeks to
repudiate its obligations under any Loan Document; or
(m) a default beyond any applicable notice and grace period
under any of the other Loan Documents.
SECTION 6.2. Rights and Remedies.
(a) Upon the occurrence of any Event of Default described in
Sections 6.1(f) or (g), the Commitment shall immediately terminate and 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
-60-
<PAGE> 66
limitation, 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 Administrative Agent upon the
demand of the Required Banks shall, by written notice to the Borrower, in
addition to the exercise of all of the rights and remedies permitted the
Administrative Agent and the Banks at law or equity or under any of the other
Loan Documents, 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
(except as otherwise as provided in the Loan Documents) without presentation,
demand, or protest or other requirements of any kind (including, without
limitation, valuation and appraisement, diligence, presentment, notice of intent
to demand or accelerate and notice of acceleration), all of which are hereby
expressly waived by the Borrower.
(b) Notwithstanding anything to the contrary contained in
this Agreement or in any other Loan Document, the Administrative Agent, and the
Banks each agree that any exercise or enforcement of the rights and remedies
granted to the Administrative Agent or the Banks under this Agreement or at law
or in equity with respect to this Agreement or any other Loan Documents shall be
commenced and maintained by the Administrative Agent on behalf of the
Administrative Agent and/or the Banks. The Administrative Agent shall act at the
direction of the Required Banks in connection with the exercise of any and all
remedies at law, in equity or under any of the Loan Documents or, if the
Required Banks are unable to reach agreement on the exercise of remedies, then,
from and after Administrative Agent shall have declared the Loan immediately due
and payable, the Administrative Agent may pursue such rights and remedies as it
may determine.
SECTION 6.3. Notice of Default. The Administrative Agent shall
give notice to the Borrower under Section 6.1(c) promptly upon being requested
to do so by the Required Banks and shall thereupon notify all the Banks thereof.
The Administrative Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default (other than nonpayment of
principal of or interest on the Loans) unless the Administrative Agent has
received notice in writing from a Bank or Borrower referring to this Agreement
or the other Loan Documents, describing such event or condition. Should
Administrative Agent receive notice of the occurrence of a Default or Event of
Default expressly stating that such notice is a notice of a Default or Event of
Default, or should Administrative Agent send Borrower a notice of Default or
Event of Default, Administrative Agent, shall promptly give notice thereof to
each Bank.
SECTION 6.4. Distribution of Proceeds after Default. Subject to
Section 7.6, from and after an Event of Default, to the extent proceeds are
received by
-61-
<PAGE> 67
Administrative Agent, such proceeds will be distributed to the Banks pro rata in
accordance with the unpaid principal amount of the Loans. Regardless of how each
Bank may treat payments received by it pursuant to this Agreement and the Notes
delivered to evidence debt hereunder for the purpose of its own accounting, for
the purpose of computing the Borrower's obligations under this Agreement and
under such Notes, the payments shall be applied first, to the costs and expenses
(including attorneys' fees and disbursements and the allocated costs and
expenses of in-house legal and other professional services) of the
Administrative Agent, acting as Administrative Agent, and of the Banks as set
forth herein, second, to the payment of accrued and unpaid interest on all Notes
to and including the date of such application (ratably according to the accrued
and unpaid interest on the Notes), third, to the ratable payment of the unpaid
principal of all the Notes, and fourth, to the payment of all other amounts
(including fees) then owing to the Administrative Agents or the Banks under the
Loan Documents. No application of the payments will cure any Event of Default or
prevent acceleration, or continued acceleration, of amounts payable under the
Loan Documents or prevent the exercise, or continued exercise, of rights or
remedies of the Banks under this Agreement or under law.
ARTICLE VII.
THE AGENTS
SECTION 7.1. Appointment and Authorization. Each Bank
irrevocably appoints and authorizes the Administrative 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 Administrative Agent by the terms
hereof or thereof, together with all such powers as are reasonably incidental
thereto. Except as set forth in Sections 7.8 and 7.9 hereof, the provisions of
this Article VII are solely for the benefit of Administrative Agent and the
Banks, and Borrower shall not have any rights to rely on or enforce any of the
provisions hereof. In performing its functions and duties under this Agreement,
the Administrative Agent shall act solely as an agent of the Banks and shall not
assume and shall not be deemed to have assumed any obligation toward or
relationship of agency or trust with or for the Borrower.
SECTION 7.2. Agency and Affiliates. Bank of America, Wells Fargo
and 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 Administrative Agent, Documentation Agent or an affiliate of the
Syndication Agent, respectively, and Bank of America, Wells Fargo, Morgan and
their affiliates may accept deposits from, lend money to, and generally engage
in any kind of business with the Borrower, General Partner or any Subsidiary or
affiliate of the Borrower as if they were not the Administrative Agent,
Documentation Agent or an affiliate of the Syndication Agent, respectively,
hereunder, and
-62-
<PAGE> 68
the term "Bank" and "Banks" shall include Bank of America, Wells Fargo and
Morgan in their individual capacities.
SECTION 7.3. Action by Administrative Agent. The obligations of
the Administrative Agent hereunder are only those expressly set forth herein.
Without limiting the generality of the foregoing, the Administrative Agent shall
not be required to take any action with respect to any Default or Event of
Default, except as expressly provided in Article VI. The duties of
Administrative Agent shall be administrative in nature. Subject to the
provisions of Sections 7.1, 7.5 and 7.6, Administrative Agent shall administer
the Loans in the same manner as it administers its own loans.
SECTION 7.4. Consultation with Experts. As between
Administrative Agent and the Banks, the Administrative 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.
SECTION 7.5. Liability of Administrative Agent. As between
Administrative Agent and the Banks, none of the Administrative Agent nor any of
their 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 (ii) in
the absence of its own gross negligence or willful misconduct. As between
Administrative Agent and the Banks, none of the Administrative 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
Administrative 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. As between Administrative Agent and the Banks, the
Administrative 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 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 Administrative Agent and its
affiliates and its 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 indemnitee's gross negligence or willful
misconduct) that such indemnitee may suffer or incur in connection with its
duties
-63-
<PAGE> 69
as Administrative Agent under this Agreement, the other Loan Documents or any
action taken or omitted by such indemnitee hereunder. In the event that the
Administrative Agent shall, subsequent to its receipt of indemnification
payment(s) from Banks in accordance with this Section, recoup any amount from
the Borrower, or any other party liable therefor in connection with such
indemnification, the Administrative Agent shall reimburse the Banks which
previously made the payment(s) pro rata, based upon the actual amounts which
were theretofore paid by each Bank. The Administrative Agent shall reimburse
such Banks so entitled to reimbursement within two (2) Domestic Business Days of
its receipt of such funds from the Borrower or such other party liable therefor.
SECTION 7.7. Credit Decision. Each Bank acknowledges that it
has, independently and without reliance upon the Administrative 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 Administrative 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 Administrative Agent. The Administrative
Agent may resign at any time by giving notice thereof to the Banks and the
Borrower and the Administrative Agent shall resign in the event its Commitment
is reduced to below six percent (6%) of the Aggregate Commitment. Upon any such
resignation, the Required Banks shall have the right to appoint a successor
Administrative Agent, which successor Administrative Agent shall, provided no
Event of Default has occurred and is then continuing, be subject to Borrower's
approval, which approval shall not be unreasonably withheld or delayed (except
that Borrower shall, in all events, be deemed to have approved Wells Fargo as a
successor Administrative Agent). If no successor Administrative Agent shall have
been so appointed by the Required Banks and approved by the Borrower, and shall
have accepted such appointment, within 30 days after the retiring Administrative
Agent gives notice of resignation, then the retiring Administrative Agent may,
on behalf of the Banks, appoint a successor Administrative Agent, who shall act
until the Required Banks shall appoint a Administrative Agent. Upon the
acceptance of its appointment as the Administrative Agent hereunder by a
successor Administrative Agent, such successor Administrative Agent shall
thereupon succeed to and become vested with all the rights and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder. After any retiring
Administrative Agent's resignation hereunder, 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 Administrative Agent. For gross negligence or willful
misconduct, as determined by the Super-Majority Banks (excluding for such
determination Administrative Agent in its capacity as a Bank),
-64-
<PAGE> 70
Administrative Agent may be removed at any time by giving at least thirty (30)
Domestic Business Days prior written notice to Administrative Agent and
Borrower. Such resignation or removal shall take effect upon the acceptance of
appointment by a successor Administrative Agent, in accordance with the
provisions of this Section 7.8.
SECTION 7.9. Consents and Approvals. All communications from
Administrative Agent to the Banks requesting the Banks' determination, consent,
approval or disapproval (i) shall be given in the form of a written notice to
each Bank (ii) shall be accompanied by a description of the matter or item as to
which such determination, approval, consent or disapproval is requested, or
shall advise each Bank where such matter or item may be inspected, or shall
otherwise describe the matter or issue to be resolved, (iii) shall include, if
reasonably requested by a Bank and to the extent not previously provided to such
Bank, written materials and a summary of all oral information provided to
Administrative Agent by Borrower in respect of the matter or issue to be
resolved, and (iv) shall include Administrative Agent's recommended course of
action or determination in respect thereof. Each Bank shall reply promptly, but
in any event within ten (10) Domestic Business Days after receipt of the request
therefor from Administrative Agent (the "Bank Reply Period"). Unless a Bank
shall give written notice to Administrative Agent that it objects to the
recommendation or determination of Administrative Agent (together with a written
explanation of the reasons behind such objection) within the Bank Reply Period,
such Bank shall be deemed to have approved of or consented to such
recommendation or determination. With respect to decisions requiring the
approval of the Required Banks or all the Banks, Administrative Agent shall
submit its recommendation or determination for approval of or consent to such
recommendation or determination to all Banks and upon receiving the required
approval or consent shall follow the course of action or determination of the
Required Banks (and each non-responding Bank shall be deemed to have concurred
with such recommended course of action) or all the Banks, as the case may be.
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 LIBOR
Borrowing:
(a) the Administrative Agent has determined in good faith
that deposits in dollars (in the applicable amounts) are not being offered in
the relevant market for such Interest Period, or
-65-
<PAGE> 71
(b) Banks having 50% or more of the Aggregate Commitment
advise the Administrative Agent that the Adjusted London Interbank Offered Rate,
as determined by the Administrative Agent, will not adequately and fairly
reflect the cost to such Bank of funding its LIBOR Loans for such Interest
Period, the Administrative Agent shall forthwith give notice thereof to the
Borrower and the Banks, whereupon until the Administrative Agent notifies the
Borrower that the circumstances giving rise to such suspension no longer exist,
the obligations of the Banks to make LIBOR Loans shall be suspended. Unless the
Borrower notifies the Administrative Agent at least two Domestic Business Days
before the date of any LIBOR Borrowing for which a Notice of Borrowing has
previously been given that it elects not to borrow on such date, such Borrowing
shall instead be made as a Base Rate Borrowing. For purposes of this Section
8.1(b), in determining whether the Adjusted London Interbank Offered Rate, as
determined by Administrative Agent, will not adequately and fairly reflect the
cost to any Bank of funding its LIBOR Loans for such Interest Period, such
determination will be based solely on the ability of such Bank to obtain
matching funds in the London interbank market at a reasonably equivalent rate.
SECTION 8.2. Illegality. If, on or after the date of this
Agreement, 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 LIBOR Lending Office) with any request or
directive (whether or not having the force of law) made after the Closing Date
of any such authority, central bank or comparable agency shall make it unlawful
for any Bank (or its LIBOR Lending Office) to make, maintain or fund its LIBOR
Loans, the Administrative Agent shall forthwith give notice thereof to the other
Banks and the Borrower, whereupon until such Bank notifies the Borrower and the
Administrative Agent that the circumstances giving rise to such suspension no
longer exist, the obligation of such Bank to make LIBOR Loans shall be
suspended. With respect to LIBOR Loans, before giving any notice to the
Administrative Agent pursuant to this Section, such Bank shall designate a
different LIBOR 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 LIBOR Loans to
maturity and shall so specify in such notice, the Borrower shall be deemed to
have delivered a Notice of Interest Rate Election and such LIBOR Loan shall be
converted as of such date to a Base Rate Loan (without payment of any amounts
that Borrower would otherwise be obligated to pay pursuant to Section 2.13
hereof with respect to Loans converted pursuant to this Section 8.2) in an equal
principal amount from such Bank (on which interest and principal shall be
payable contemporaneously with the related LIBOR Loans of the other Banks), and
such Bank shall make such a Base Rate Loan.
-66-
<PAGE> 72
If at any time, it shall be unlawful for any Bank to make,
maintain or fund its LIBOR Loans, the Borrower shall have the right, upon five
(5) Domestic Business Day's notice to the Administrative Agent, to either (x)
cause a bank, reasonably acceptable to the Administrative Agent, to offer to
purchase the Commitments of such Bank for an amount equal to such Bank's
outstanding Loans, and to become a Bank hereunder, or obtain the agreement of
one or more existing Banks to offer to purchase the Commitments of such Bank for
such amount, which offer such Bank is hereby required to accept, or (y) to repay
in full all Loans then outstanding of such Bank, together with interest and all
other amounts due thereon, upon which event, such Bank's Commitments shall be
deemed to be canceled pursuant to Section 2.11(c).
SECTION 8.3. Increased Cost and Reduced Return.
(a) If, on or after the date hereof in the case of Committed
Loans made pursuant to Section 2.1, 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)
made at the Closing Date 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 LIBOR Loan any such
requirement reflected in an applicable LIBOR 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 materially more burdensome
in nature, extent or consequence than those in existence as of the Closing Date
affecting such Bank's LIBOR Loans, its Note, or its obligation to make LIBOR
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 LIBOR 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
to such LIBOR Loans, by an amount deemed by such Bank to be material, then,
within fifteen (15) days after demand by such Bank (with a copy to the
Administrative Agent), the Borrower shall pay to such Bank such additional
amount or amounts (based upon a reasonable allocation thereof by such Bank to
the LIBOR Loans made by such Bank hereunder) as will compensate such Bank for
such increased cost or reduction to the extent such Bank generally imposes such
additional amounts on other borrowers of such Bank in similar circumstances.
-67-
<PAGE> 73
(b) If any Bank shall have reasonably 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) made after the Closing
Date 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 reasonably deemed by such Bank to be
material, then from time to time, within fifteen (15) days after demand by such
Bank (with a copy to the Administrative Agent), the Borrower shall pay to such
Bank such additional amount or amounts as will compensate such Bank (or its
Parent) for such reduction to the extent such Bank generally imposes such
additional amounts on other borrowers of such Bank in similar circumstances.
(c) Each Bank will promptly notify the Borrower and the
Administrative 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 reasonable judgment of such Bank, be otherwise
disadvantageous to such Bank. If such Bank shall fail to notify Borrower of any
such event within ninety (90) days following the end of the month during which
such event occurred, then Borrower's liability for any amounts described in this
Section incurred by such Bank as a result of such event shall be limited to
those attributable to the period occurring subsequent to the ninetieth (90th)
day prior to the date upon which such Bank actually notified Borrower of the
occurrence of such event. A certificate of any Bank claiming compensation under
this Section and setting forth a reasonably detailed calculation of the
additional amount or amounts to be paid to it hereunder shall be conclusive in
the absence of demonstrable error. In determining such amount, such Bank may use
any reasonable averaging and attribution methods.
(d) If at any time, any Bank shall be owed amounts pursuant
to this Section 8.3, the Borrower shall have the right, upon five (5) Domestic
Business Day's notice to the Administrative Agent to either (x) cause a bank,
reasonably acceptable to the Administrative Agent, to offer to purchase the
Commitments of such Bank for an amount equal to such Bank's outstanding Loans,
and to become a Bank hereunder, or to obtain the agreement of one or more
existing Banks to offer to purchase the Commitments of such Bank for such
amount, which offer such Bank is hereby required to accept, or (y) to repay in
full all Loans then outstanding of such Bank, together with interest and all
other amounts
-68-
<PAGE> 74
due thereon, upon which event, such Bank's Commitment shall be deemed to be
canceled pursuant to Section 2.11(c).
SECTION 8.4. Taxes.
(a) Any and all payments by the Borrower to or for the
account of any Bank or the Administrative 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 Administrative Agent, taxes imposed on its income, and
franchise taxes imposed on it, by the jurisdiction under the laws of which such
Bank or the Administrative 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 or by
any other jurisdiction (or any political subdivision thereof) as a result of a
present or former connection between such Bank or Administrative Agent and such
other jurisdiction or by the United States (all such non-excluded taxes, duties,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Non-Excluded Taxes"). If the Borrower shall be
required by law to deduct any Non-Excluded Taxes from or in respect of any sum
payable hereunder or under any Note, (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 or the
Administrative 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 Administrative 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 from the execution or delivery of, or otherwise with respect to,
this Agreement or any Note (hereinafter referred to as "Other Taxes").
(c) The Borrower agrees to indemnify each Bank and the
Administrative Agent for the full amount of Non-Excluded Taxes or Other Taxes
(including, without limitation, any Non-Excluded Taxes or Other Taxes imposed or
asserted by any jurisdiction on amounts payable under this Section 8.4) paid by
such Bank or the Administrative Agent (as the case may be) and, so long as such
Bank or Administrative Agent has promptly paid
-69-
<PAGE> 75
any such Non-Excluded Taxes or Other Taxes, any liability for penalties and
interest arising therefrom or with respect thereto. This indemnification shall
be made within fifteen (15) days from the date such Bank or the Administrative
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, shall provide the Borrower with (a) two duly completed copies of Internal
Revenue Service form 1001 or 4224, as appropriate, or any successor form
prescribed by the Internal Revenue Service, and (b) an Internal Revenue Service
Form W-8 or W-9, or any successor form prescribed by the Internal Revenue
Service, and shall provide Borrower with two further copies of any such form or
certification on or before the date that any such form or certification expires
or becomes obsolete and after the occurrence of any event requiring a change in
the most recent form previously delivered by it to Borrower, certifying (i) in
the case of a Form 1001 or 4224, 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, and (ii) in the case of a Form W-8
or W-9, that it is entitled to an exemption from United States backup
withholding tax. If the form provided by a Bank at the time such Bank first
becomes a party to this Agreement indicates a United States interest withholding
tax rate in excess of zero, withholding tax at such rate shall be considered
excluded from "Non-Excluded Taxes" as defined in Section 8.4(a).
(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(c) with
respect to Non-Excluded 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 Non-Excluded 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 so long
as Borrower shall incur no cost or liability as a result thereof.
(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
-70-
<PAGE> 76
additional payment which may thereafter accrue if such change, in the judgment
of such Bank, is not otherwise disadvantageous to such Bank.
(g) If at any time, any Bank shall be owed amounts pursuant
to this Section 8.4, the Borrower shall have the right, upon five (5) Domestic
Business Day's notice to the Administrative Agent to either (x) cause a bank,
reasonably acceptable to the Administrative Agent, to offer to purchase the
Commitments of such Bank for an amount equal to such Bank's outstanding Loans,
and to become a Bank hereunder, or to obtain the agreement of one or more
existing Banks to offer to purchase the Commitments of such Bank for such
amount, which offer such Bank is hereby required to accept, or (y) to repay in
full all Loans then outstanding of such Bank, together with interest and all
other amounts due thereon, upon which event, such Bank's Commitment shall be
deemed to be canceled pursuant to Section 2.11(c).
SECTION 8.5. Base Rate Loans Substituted for Affected LIBOR
Loans. If (i) the obligation of any Bank to make LIBOR Loans has been suspended
pursuant to Section 8.2 or (ii) any Bank has demanded compensation under Section
8.3 or 8.4 with respect to its LIBOR Loans and the Borrower shall, by at least
five LIBOR Business Days' prior notice to such Bank through the Administrative
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 rise to such suspension or demand for compensation no
longer exist:
(a) Borrower shall be deemed to have delivered a Notice of
Interest Rate Election with respect to such affected LIBOR Loans and thereafter
all Loans which would otherwise be made by such Bank as LIBOR Loans shall be
made instead as Base Rate Loans (on which interest and principal shall be
payable contemporaneously with the related LIBOR Loans of the other Banks), and
(b) after each of its LIBOR Loans has been repaid, all
payments of principal which would otherwise be applied to repay such LIBOR Loans
shall be applied to repay its Base Rate Loans instead, and
(c) Borrower will not be required to make any payment which
would otherwise be required by Section 2.12 with respect to such LIBOR Loans
converted to Base Rate Loans pursuant to clause (a) above.
-71-
<PAGE> 77
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 followed by telephonic confirmation or similar
writing) and shall be given to such party: (x) in the case of the Borrower or
the Administrative Agent, at its address, telex number or facsimile number set
forth on the signature pages hereof with a duplicate copy thereof, in the case
of the Borrower, to the Borrower, at Irvine Apartment Communities, L.P. c/o TIC
Acquisition LLC, 550 Newport Center Drive, Newport Beach, California 92660,
Attn: Vice President, Corporate Finance, and to O'Melveny & Myers, LLP, 610
Newport Center Drive, 17th Floor, Newport Beach, California 92660, Attn:
Patricia Frobes, Esq., (y) in the case of any Bank, at its address, telex number
or facsimile number set forth on the signature pages hereof or (z) in the case
of any party, such other address, telex number or facsimile number as such party
may hereafter specify for the purpose by notice to the Administrative Agent and
the Borrower. Each such notice, request or other communication shall be
effective (i) if given by telex or facsimile transmission, when such telex or
facsimile is transmitted to the telex number or facsimile number specified in
this Section and the appropriate answerback or facsimile confirmation is
received (provided, however, if the date of such transmission and confirmation
is not a Domestic Business Day, then the next succeeding Domestic Business Day),
(ii) if given by certified registered mail, return receipt requested, with first
class postage prepaid, addressed as aforesaid, upon receipt or refusal to accept
delivery, (iii) if given by a nationally recognized overnight carrier, 24 hours
after such communication is deposited with such carrier with postage prepaid for
next day delivery, or (iv) if given by any other means, when delivered at the
address specified in this Section; provided that notices to the Administrative
Agent under Article II or Article VIII shall not be effective until received.
SECTION 9.2. No Waivers. No failure or delay by the
Administrative 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.
-72-
<PAGE> 78
SECTION 9.3. Expenses; Indemnification.
(a) The Borrower shall pay within thirty (30) days after
written notice from the Administrative Agent all reasonable out-of-pocket costs
and expenses of the Administrative Agent (including the fees and disbursements
of outside counsel as well as the allocated cost of Administrative Agent's
internal legal services), in connection with the preparation of this Agreement,
the Loan Documents and the documents and instruments referred to therein, and
any waiver, consent hereunder and any amendment hereof, the administration
hereof and any Default or alleged Default hereunder, (ii) in connection with the
syndication of the Loans and (iii) if an Event of Default occurs, all reasonable
out-of-pocket expenses incurred by the Administrative Agent and the Banks as a
group, including fees and disbursements of counsel for the Administrative Agent
and each of the Banks, 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; provided, however, that the attorneys' fees and disbursements for
which Borrower is obligated under this subsection (a)(iii) shall be limited to
the reasonable non-duplicative fees and disbursements of (a) counsel for
Administrative Agent and (b) counsel for all of the Banks as a group. For
purposes of this Section 9.3(a)(iii), (1) counsel for Administrative Agent shall
mean a single outside law firm representing Administrative Agent together with
the allocated cost of Administrative Agent's internal legal services, and (2)
counsel for all of the Banks as a group shall mean a single outside law firm
representing such Banks as a group (which law firm may or may not be the same
law firm representing Administrative Agent).
(b) The Borrower agrees to indemnify the Administrative
Agent, each Bank and 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, which may be incurred by such
Indemnitee in connection with any investigative, administrative or judicial
proceeding that may at any time (including, without limitation, at any time
following the payment of the Obligations) be asserted against any Indemnitee, as
a result of, or arising out of, or 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, (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
of Borrower or any Environmental Affiliate involving Materials of Environmental
Concern, (iv) the breach of any environmental representation or warranty set
forth herein, but in all cases excluding those liabilities, losses, damages,
costs and expenses (a) for which such
-73-
<PAGE> 79
Indemnitee has been compensated pursuant to the terms of this Agreement, (b)
incurred solely by reason of the gross negligence, willful misconduct, bad faith
or fraud of any Indemnitee as finally determined by a court of competent
jurisdiction, (c) violations of Environmental Laws relating to a Property which
are caused by the act or omission of such Indemnitee after such Indemnitee takes
possession or control (but in no event shall appointment of a receiver or a
trustee be deemed control) of such Property or (d) any liability of such
Indemnitee to any third party based upon Contractual Obligations of such
Indemnitee owing to such third party which are not expressly set forth in the
Loan Documents. In addition, the indemnification set forth in this Section
9.3(b) in favor of any director, officer, agent or employee of Administrative
Agent or any Bank shall be solely in their respective capacities as such
director, officer, agent or employee. The Borrower's obligations under this
Section shall survive the termination of this Agreement and the payment of the
Obligations.
(c) Each Indemnitee will promptly notify the Borrower of
each event of which it has knowledge that may give rise to a claim under clause
(b) of Section 9.3, provided that the failure to so notify the Borrower shall in
no way impair the Borrower's obligations under this Section 9.3 (except to the
extent that such failure to so notify arises from the gross negligence or
willful misconduct of such Indemnitee and has an adverse effect on the
Borrower). If any investigative, judicial or administrative proceeding is
brought against any Indemnitee indemnified or intended to be indemnified
pursuant to this Section 9.3, the Borrower, to the extent and in the manner
directed by the Indemnitee, will resist and defend such proceeding with counsel
designated by the Borrower (which counsel shall be reasonably satisfactory to
the Indemnitee). Each Indemnitee will use its best efforts to cooperate in the
defense of any such action, writ, or proceeding. The Borrower shall keep such
Indemnitee advised of the status of such defense and consult with such
Indemnitee prior to taking any material position with respect thereto. Such
Indemnitee shall, however, be entitled to employ counsel separate from counsel
for the Borrower and from any other party in such proceeding if such Indemnitee
shall reasonably determine that a conflict of interest or other circumstance
exists that makes representation by counsel chosen by the Borrower not
advisable. The fees and disbursements of such separate counsel shall be paid by
the Borrower. Such Indemnitee shall not agree to the settlement of any such
claim without the consent of the Borrower, unless the Borrower shall have been
given notice of the commencement of an action and shall have failed to provide
the defense thereof as herein provided or an Event of Default shall have
occurred.
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, and after acceleration of the Obligations, 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
-74-
<PAGE> 80
waived, but subject to the prior consent of the Administrative Agent, to set off
and to appropriate and apply any and all deposits (general or special, time or
demand, provisional or final) 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 shall notify the Borrower in writing promptly after any such
set-off and the application thereof made by such Bank; provided however that the
failure to give such notice shall not affect the validity of such set-off and
application. 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 which is greater than the proportion received by any other Bank, the Bank
receiving such proportionately greater payment shall purchase such
participations in the Notes held by the other Banks, 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 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 setoff or counterclaim it may have to any
deposits not received in connection with the Loans and to apply the amount
subject to such exercise to the payment of indebtedness of the Borrower other
than its indebtedness under the Notes. The Borrower agrees, to the fullest
extent 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
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.
Notwithstanding anything to the contrary contained herein, any Bank may, by
separate agreement with the Borrower, waive its right to set off contained
herein or granted by law and any such written waiver shall be effective against
such Bank under this Section 9.4.
SECTION 9.5. Amendments and Waivers. Any provision of this
Agreement, the Notes or any 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; provided that no such amendment or waiver with
respect to this Agreement, the Notes or any other Loan Documents shall, unless
signed by all the Banks, (i) except as contemplated by this Agreement, increase
or decrease the Commitment of any Bank (except for a ratable decrease in the
Commitments of all Banks by election of Borrower pursuant to Section 2.11(c)) or
subject any Bank to any additional obligation, (ii) reduce the principal of or
rate of interest on any Loan or any fees hereunder, (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) except as
contemplated by this Agreement, change the percentage of the Commitments or of
the aggregate unpaid principal amount of the Notes,
-75-
<PAGE> 81
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, (v)
release the Guaranty or (vi) modify the provisions of this Section 9.5. No
amendment or waiver shall be binding against the Administrative Agent until it
shall have been notified thereof in writing.
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 transfer any
of its rights under this Agreement or the other Loan Documents without the prior
written consent of all Banks and the Administrative Agent and a Bank may not
assign or otherwise transfer any of its interest under this Agreement except as
permitted in subsection (b) and (c) of this Section 9.6.
(b) Any Bank may at any time grant to any Person in any
amount, participating interests in any Loans made pursuant to this Agreement. In
addition, any Bank may at any time grant to any existing Bank or one or more
banks, finance companies, insurance or other financial institutions which (A)
has (or, in the case of a bank which is a subsidiary, such bank's parent has) a
rating of its senior debt obligations of not less than Baa-1 by Moody's, BBB by
S&P or a comparable rating by a rating agency acceptable to Administrative Agent
and (B) has total assets in excess of Ten Billion Dollars ($10,000,000,000),
participating interests in its Commitment, in an amount not less than
$10,000,000; provided that such Bank retains at least one-half of its Commitment
free and clear of any participation interest. If any Bank sells or grants an
interest to a Person described above (in each case, a "Participant"), (i) such
Bank shall make and receive all payments for the account of its Participant,
(ii) such Bank's obligations under this Agreement shall remain unchanged, (iii)
such Bank shall continue to be the sole holder of its Note and other Loan
Documents subject to the participation and shall have the sole right to enforce
its rights and remedies under the Loan Documents, (iv) the Borrower, the
Administrative Agent and the Banks shall continue to deal solely and directly
with such Bank in connection with such Bank's rights and obligations under the
Loan Documents, and (v) the participation agreement shall not restrict such
Bank's ability to agree to any amendment of the terms of the Loan Documents, or
to exercise or refrain from exercising any powers or rights that such Bank may
have under or in respect of the Loan Documents, except that the Participant may
be granted the right to consent to any (A) reduction of the rate or amount, or
any extension of the stated maturity or due date, of any principal, interest or
fees payable by the Borrower and subject to the participation, (B) increase in
the amount or extension of the stated termination or any reduction date of the
affected Commitment, or (C) release the Guaranty, except to the extent otherwise
provided in the Loan Documents. The Borrower agrees that each Participant shall,
to the extent provided in its
-76-
<PAGE> 82
participation agreement, be entitled to the benefits of Article VIII with
respect to its participating interest.
(c) Subject to the requirement that each Bank continues to
hold a minimum of six percent (6%) of the Aggregate Commitment for so long as it
is a Bank hereunder, any Bank may at any time assign, prior to the occurrence of
an Event of Default, to an existing Bank or one or more banks, finance
companies, insurance or other financial institutions which (A) has (or, in the
case of a bank which is a subsidiary, such bank's parent has) a rating of its
senior debt obligations of not less than Baa-1 by Moody's, BBB by S&P or a
comparable rating by a rating agency acceptable to Administrative Agent and (B)
has total assets in excess of Ten Billion Dollars ($10,000,000,000), in minimum
amounts of not less than six percent (6%) of the Aggregate Commitment and
integral multiples of One Million Dollars ($1,000,000) thereafter (or any lesser
amount in the case of assignments to an existing Bank) so long as such
assignment is made with (and subject to) the consent of the Administrative
Agent, which shall not be unreasonably withheld or delayed; provided that if an
Assignee is an affiliate of such transferor Bank or was a Bank immediately prior
to such assignment, no such consent shall be required. After the occurrence and
during the continuance of an Event of Default, any Bank may at any time assign
to any Person in any amount, all or a proportionate part of all, of its rights
and obligations under this Agreement, the Notes and the other Loan Documents. In
either case, such Person (in each case, an "Assignee") shall assume such rights
and obligations, pursuant to a Transfer Supplement in substantially the form of
Exhibit "J" hereto executed by such Assignee and such transferor Bank, and a
copy thereof shall be promptly furnished to the Administrative Agent. Upon
execution and delivery of a Transfer Supplement 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 a Transfer Supplement, and no further consent or
action by any party shall be required and the transferor Bank shall be released
from its obligations hereunder to a corresponding extent. Upon the consummation
of any assignment pursuant to this subsection (c), the transferor Bank, the
Administrative Agent and the Borrower shall make appropriate arrangements so
that, if required, a new Note is issued to the Assignee. In connection with any
such assignment, the transferor Bank shall pay to the Administrative 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 Administrative
Agent certification as to exemption from deduction or withholding of any United
States federal, income taxes in accordance with Section 8.4. Any assignment,
made during the continuation of an Event of Default shall not be affected by any
subsequent cure of such Event of Default.
-77-
<PAGE> 83
(d) Any Bank may at any time assign all or any portion of
its rights under this Agreement and its Note to a Federal Reserve Bank. No such
assignment shall release the transferor Bank from its obligations hereunder.
(e) 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. Collateral. Each of the Banks represents to the
Administrative Agent and each of the other Banks that it in good faith is not
relying upon any "margin stock" (as defined in Regulation U) as collateral in
the extension or maintenance of the credit provided for in this Agreement.
SECTION 9.8. 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 CALIFORNIA EXCEPT TO THE EXTENT PREEMPTED
BY FEDERAL LAW (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
California or of the United States of America located in Orange County,
California, and, by execution and delivery of this Agreement, the Banks and the
Borrower each 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 Banks and the Borrower
irrevocably consent 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 Banks
and the Borrower at their respective addresses set forth below. The Banks and
the Borrower hereby irrevocably waive 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 waive and agree 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
-78-
<PAGE> 84
Borrower or Administrative Agent to serve process in any other manner permitted
by law or to commence legal proceedings or otherwise proceed against any other
party in any other jurisdiction.
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 Administrative
Agent and the Borrower 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 Administrative 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), and the date on which such
receipt occurs shall be the "Effective Date."
SECTION 9.10. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE
ADMINISTRATIVE AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVE 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 this Agreement and the other Loan
Documents and the making and repayment of the Loans hereunder.
SECTION 9.12. Domicile of Loans. 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 acting by or through Borrower against the
Administrative 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.
-79-
<PAGE> 85
SECTION 9.14. Recourse Obligation. This Agreement and the
Obligations hereunder are fully recourse to the Borrower. Notwithstanding the
foregoing, no recourse under or upon any obligation, covenant, or agreement
contained in this Agreement shall be had against any limited partner of
Borrower, or any of their or Borrower's or General Partner's respective
officers, directors, or employees except in the event of fraud or
misappropriation of funds on the part of such officer, director, shareholder or
employee.
SECTION 9.15. Bank's Failure to Fund.
(a) Unless the Administrative Agent shall have received
notice from a Bank prior to the date of any Borrowing that such Bank will not
make available to the Administrative Agent such Bank's share of such Borrowing,
the Administrative Agent may assume that such Bank has made such share available
to the Administrative Agent on the date of such Borrowing in accordance with
subsection (b) of Section 2.4 hereof, and the Administrative Agent may, in
reliance upon such assumption, make available to 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 Administrative Agent, such Bank and Borrower
severally agree to repay to the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon, in accordance with the
provisions of Section 2.4(c) hereof. If such Bank shall repay to the
Administrative Agent such corresponding amount, such amount so repaid shall
constitute such Bank's Loan included in such Borrowing for purposes of this
Agreement. Nothing contained in this Section or Section 2.4(c) shall be deemed
to reduce the Commitment of any Bank or in any way affect the rights of Borrower
with respect to any defaulting Bank or Administrative Agent. The failure of any
Bank to make available to the Administrative Agent such Bank's share of any
Borrowing in accordance with Section 2.4(b) hereof shall not relieve any other
Bank of its obligations to fund its Commitment, in accordance with the
provisions hereof.
(b) If a Bank does not advance to Administrative Agent such
Bank's pro rata share of a Loan in accordance herewith, then neither
Administrative Agent nor the other Banks shall be required or obligated to fund
such Bank's pro rata share of such Loan.
(c) As used herein, the following terms shall have the
meanings set forth below:
(i) "Defaulting Bank" shall mean any Bank which (x)
does not advance to the Administrative Agent such Bank's pro rata share of a
Loan in accordance herewith for a period of five (5) Domestic Business Days
after notice of such failure from Administrative Agent, (y) shall otherwise fail
to perform such Bank's obligations under the Loan Documents for a period of five
(5) Domestic Business Days after notice of such failure from Administrative
Agent, or (z) shall fail to pay the Administrative Agent or any
-80-
<PAGE> 86
other Bank, as the case may be, upon demand, such Bank's pro rata share of any
costs, expenses or disbursements incurred or made by the Administrative Agent
pursuant to the terms of the Loan Documents for a period of five (5) Domestic
Business Days after notice of such failure from Administrative Agent, and in all
cases, such failure is not as a result of a good faith dispute as to whether
such advance is properly required to be made pursuant to the provisions of this
Agreement, or as to whether such other performance or payment is properly
required pursuant to the provisions of this Agreement.
(ii) "Junior Creditor" means any Defaulting Bank
which has not (x) fully cured each and every default on its part under the Loan
Documents and (y) unconditionally tendered to the Administrative Agent such
Defaulting Bank's pro rata share of all costs, expenses and disbursements
required to be paid or reimbursed pursuant to the terms of the Loan Documents.
(iii) "Payment in Full" means, as of any date, the
receipt by the Banks who are not Junior Creditors of an amount of cash, in
lawful currency of the United States, sufficient to indefeasibly pay in full all
Senior Debt.
(iv) "Senior Debt" means (x) collectively, any and
all indebtedness, obligations and liabilities of the Borrower to the Banks who
are not Junior Creditors from time to time, whether fixed or contingent, direct
or indirect, joint or several, due or not due, liquidated or unliquidated,
determined or undetermined, arising by contract, operation of law or otherwise,
whether on open account or evidenced by one or more instruments, and whether for
principal, premium, interest (including, without limitation, interest accruing
after the filing of a petition initiating any proceeding referred to in Section
6.1(f) or (g)), reimbursement for fees, indemnities, costs, expenses or
otherwise, which arise under, in connection with or in respect of the Loans or
the Loan Documents, and (y) any and all deferrals, renewals, extensions and
refundings of, or amendments, restatements, rearrangements, modifications or
supplements to, any such indebtedness, obligation or liability.
(v) "Subordinated Debt" means (x) any and all
indebtedness, obligations and liabilities of Borrower to one or more Junior
Creditors from time to time, whether fixed or contingent, direct or indirect,
joint or several, due or not due, liquidated or unliquidated, determined or
undetermined, arising by contract, operation of law or otherwise, whether on
open account or evidenced by one or more instruments, and whether for principal,
premium, interest (including, without limitation, interest accruing after the
filing of a petition initiating any proceeding referred to in Section 6.1(f) or
(g)), reimbursement for fees, indemnities, costs, expenses or otherwise, which
arise under, in connection with or in respect of the Loans or the Loan
Documents, and (y) any and all deferrals, renewals, extensions and refundings
of, or amendments, restatements,
-81-
<PAGE> 87
rearrangements, modifications or supplements to, any such indebtedness,
obligation or liability.
(d) No Junior Creditor shall, prior to Payment in Full of
all Senior Debt:
(i) accelerate, demand payment of, sue upon,
collect, or receive any payment upon, in any manner, or satisfy or otherwise
discharge, any Subordinated Debt, whether for principal, interest and otherwise;
(ii) take or enforce any Liens to secure Subordinated
Debt or attach or levy upon any assets of Borrower, to enforce any Subordinated
Debt;
(iii) enforce or apply any security for any
Subordinated Debt; or
(iv) incur any debt or liability, or the like, to, or
receive any loan, return of capital, advance, gift or any other property, from,
the Borrower.
(e) In the event of:
(i) any insolvency, bankruptcy, receivership,
liquidation, dissolution, reorganization, readjustment, composition or other
similar proceeding relating to Borrower;
(ii) any liquidation, dissolution or other winding-up
of the Borrower, voluntary or involuntary, whether or not involving insolvency,
reorganization or bankruptcy proceedings;
(iii) any assignment by the Borrower for the benefit
of creditors;
(iv) any sale or other transfer of all or
substantially all assets of the Borrower; or
(v) any other marshaling of the assets of the
Borrower;
each of the Banks shall first have received Payment in Full of all Senior Debt
before any payment or distribution, whether in cash, securities or other
property, shall be made in respect of or upon any Subordinated Debt. Any payment
or distribution, whether in cash, securities or other property that would
otherwise be payable or deliverable in respect of Subordinated Debt to any
Junior Creditor but for this Agreement shall be paid or delivered directly to
the Administrative Agent for distribution to the Banks in accordance with this
Agreement until Payment in Full of all Senior Debt. If any Junior Creditor
receives any
-82-
<PAGE> 88
such payment or distribution, it shall promptly pay over or deliver the same to
the Administrative Agent for application in accordance with the preceding
sentence.
(f) Each Junior Creditor shall file in any bankruptcy or
other proceeding of Borrower in which the filing of claims is required by law,
all claims relating to Subordinated Debt that such Junior Creditor may have
against Borrower and assign to the Banks who are not Junior Creditors all rights
of such Junior Creditor thereunder. If such Junior Creditor does not file any
such claim prior to forty-five (45) days before the expiration of the time to
file such claim, Administrative Agent, as attorney-in-fact for such Junior
Creditor, is hereby irrevocably authorized to do so in the name of such Junior
Creditor or, in Administrative Agent's sole discretion, to assign the claim to a
nominee and to cause proof of claim to be filed in the name of such nominee. The
foregoing power of attorney is coupled with an interest and cannot be revoked.
The Administrative Agent shall, to the exclusion of each Junior Creditor, have
the sole right, subject to Section 9.5 hereof, to accept or reject any plan
proposed in any such proceeding and to take any other action that a party filing
a claim is entitled to take. In all such cases, whether in administration,
bankruptcy or otherwise, the Person or Persons authorized to pay such claim
shall pay to Administrative Agent the amount payable on such claim and, to the
full extent necessary for that purpose, each Junior Creditor hereby transfers
and assigns to the Administrative Agent all of the Junior Creditor's rights to
any such payments or distributions to which Junior Creditor would otherwise be
entitled.
(g) (i) If any payment or distribution of any character
or any security, whether in cash, securities or other property, shall be
received by any Junior Creditor in contravention of any of the terms hereof,
such payment or distribution or security shall be received in trust for the
benefit of, and shall promptly be paid over or delivered and transferred to,
Administrative Agent for application to the payment of all Senior Debt, to the
extent necessary to achieve Payment in Full. In the event of the failure of any
Junior Creditor to endorse or assign any such payment, distribution or security,
Administrative Agent is hereby irrevocably authorized to endorse or assign the
same as attorney-in-fact for such Junior Creditor.
(ii) Each Junior Creditor shall take such action
(including, without limitation, the execution and filing of a financing
statement with respect to this Agreement and the execution, verification,
delivery and filing of proofs of claim, consents, assignments or other
instructions that Administrative Agent may require from time to time in order to
prove or realize upon any rights or claims pertaining to Subordinated Debt or to
effectuate the full benefit of the subordination contained herein) as may, in
Administrative Agent's sole and absolute discretion, be necessary or desirable
to assure the effectiveness of the subordination effected by this Agreement.
-83-
<PAGE> 89
(h) (i) Each Bank that becomes a Junior Creditor
understands and acknowledges by its execution hereof that each other Bank is
entering into this Agreement and the Loan Documents in reliance upon the
absolute subordination in right of payment and in time of payment of
Subordinated Debt to Senior Debt as set forth herein.
(ii) Only upon the Payment in Full of all Senior Debt
shall any Junior Creditor be subrogated to any remaining rights of the Banks
which are not Defaulting Banks to receive payments or distributions of assets of
the Borrower made on or applicable to any Senior Debt.
(iii) Each Junior Creditor agrees that it will deliver
all instruments or other writings evidencing any Subordinated Debt held by it to
Administrative Agent, promptly after request therefor by the Administrative
Agent.
(iv) No Junior Creditor may at any time sell, assign
or otherwise transfer any Subordinated Debt, or any portion thereof, including,
without limitation, the granting of any Lien thereon, unless and until
satisfaction of the requirements of Section 9.6 above and the proposed
transferee shall have assumed in writing the obligation of the Junior Creditor
to the Banks under this Agreement, in a form acceptable to the Administrative
Agent.
(v) If any of the Senior Debt, should be
invalidated, avoided or set aside, the subordination provided for herein
nevertheless shall continue in full force and effect and, as between the Banks
which are not Defaulting Banks and all Junior Creditors, shall be and be deemed
to remain in full force and effect.
(vi) Each Junior Creditor hereby irrevocably waives,
in respect of Subordinated Debt, all rights (x) under Sections 361 through 365,
502(e) and 509 of the Bankruptcy Code (or any similar sections hereafter in
effect under any other Federal or state laws or legal or equitable principles
relating to bankruptcy, insolvency, reorganizations, liquidations or otherwise
for the relief of debtors or protection of creditors), and (y) to seek or obtain
conversion to a different type of proceeding or to seek or obtain dismissal of a
proceeding, in each case in relation to a bankruptcy, reorganization, insolvency
or other proceeding under similar laws with respect to the Borrower. Without
limiting the generality of the foregoing, each Junior Creditor hereby
specifically waives (A) the right to seek to give credit (secured or otherwise)
to the Borrower in any way under Section 364 of the Bankruptcy Code unless the
same is subordinated in all respects to Senior Debt in a manner acceptable to
Administrative Agent in its sole and absolute discretion and (B) the right to
receive any collateral security (including any "super priority" or equal or
"priming" or replacement Lien) for any Subordinated Debt unless the Banks which
are not Defaulting Banks have received a senior position acceptable to the Banks
in
-84-
<PAGE> 90
their sole and absolute discretion to secure all Senior Debt (in the same
collateral to the extent collateral is involved).
(i) (i) In addition to and not in limitation of the
subordination effected by this Section 9.15, the Administrative Agent and each
of the Banks which are not Defaulting Banks may in their respective sole and
absolute discretion, also exercise any and all other rights and remedies
available at law or in equity in respect of a Defaulting Bank; and
(ii) The Administrative Agent shall give each of the
Banks notice of the occurrence of a default under this Section 9.15 by a
Defaulting Bank and if the Administrative Agent and/or one or more of the other
Banks shall, at their option, fund any amounts required to be paid or advanced
by a Defaulting Bank, the other Banks who have elected not to fund any portion
of such amounts shall not be liable for any reimbursements to the Administrative
Agent and/or to such other funding Banks.
(j) Notwithstanding anything to the contrary contained or
implied herein, a Defaulting Bank shall not be entitled to vote on any matter as
to which a vote by the Banks is required hereunder, including, without
limitation, any actions or consents on the part of the Administrative Agent as
to which the approval or consent of all the Banks or the Required Banks is
required under Article VIII, Section 9.5 or elsewhere, so long as such Bank is a
Defaulting Bank; provided, however, that in the case of any vote requiring the
unanimous consent of the Banks, if all the Banks other than the Defaulting Bank
shall have voted in accordance with each other, then the Defaulting Bank shall
be deemed to have voted in accordance with such Banks.
(k) Each of the Administrative Agent and any one or more of
the Banks which are not Defaulting Banks may, at their respective option, (i)
advance to the Borrower such Bank's pro rata share of the Loans not advanced by
a Defaulting Bank in accordance with the Loan Documents, or (ii) pay to the
Administrative Agent such Bank's pro rata share of any costs, expenses or
disbursements incurred or made by the Administrative Agent pursuant to the terms
of this Agreement not theretofore paid by a Defaulting Bank. Immediately upon
the making of any such advance by the Administrative Agent or any one of the
Banks, such Bank's pro rata share and the pro rata share of the Defaulting Bank
shall be recalculated to reflect such advance. All payments, repayments and
other disbursements of funds by the Administrative Agent to Banks shall
thereupon and, at all times thereafter be made in accordance with such Bank's
recalculated pro rata share unless and until a Defaulting Bank shall fully cure
all defaults on the part of such Defaulting Bank under the Loan Documents or
otherwise existing in respect of the Loans or this Agreement, at which time the
pro rata share of the Bank(s) which advanced sums on behalf of the Defaulting
Bank and of the Defaulting Bank shall be restored to their original percentages.
-85-
<PAGE> 91
SECTION 9.16. Dispute Resolution.
(a) Mandatory Arbitration
(i) If requested by any party thereto, any
controversy or claim between the parties hereto arising out of or relating to
this Agreement or any of the other Loan Documents (including any controversy or
claim regarding the arbitrability of such controversy or claim or based on or
arising out of an alleged tort) shall be determined by arbitration to be held in
Orange County, California in accordance with Title 9 of the U.S. Code and the
Commercial Arbitration Rules of the American Arbitration Association (the "AAA")
and the AAA's Supplementary Procedures for Large, Complex Disputes.
(ii) Any arbitration hereunder shall be held before a
single arbitrator mutually agreed to by the parties thereto, except that, if the
parties shall fail to agree to such an arbitrator within ten (10) days from the
date on which the claimant's request for arbitration is delivered to the other
party to the arbitration, such arbitration shall be held before a panel of three
arbitrators and each party shall appoint one arbitrator. The arbitrator(s) must
be either a retired judge from the California Superior or Appellate Courts or
the United States District Courts located in California or a member of the AAA
panel for hearing large, complex cases in Orange County, California. If a party
fails to nominate an arbitrator within 10 days from the date on which the
claimant's request for arbitration has been communicated to the other party, the
appointment shall be made by the AAA. The two arbitrators so appointed shall
attempt to agree upon the third arbitrator to act as chairman. If the two
arbitrators fail to nominate the chairman within 10 days from the date of
appointment of the later appointed arbitrator, the chairman shall be selected by
the AAA.
(iii) Discovery may be taken in the arbitration
proceedings pursuant to the provisions of California Code of Civil Procedure
Section 1283.05, which are incorporated herein by reference and made applicable
to any arbitration held pursuant to this Section.
(iv) The award of the arbitrator(s) shall be final,
and the parties agree to waive their right to any form of appeal, to the
greatest extent allowed by law, and to share equally the fees and expenses of
the arbitrators. Judgment upon any award of the arbitrators may be entered in
any court having jurisdiction or application may be made to such court for the
judicial acceptance of the award and for order of enforcement. All statutes of
limitation and waivers that would otherwise be applicable shall apply to any
arbitration proceeding under this Section 9.16(a).
-86-
<PAGE> 92
(b) Judicial Reference
If any such controversy or claim is not submitted to arbitration
as provided in subsection (a), but becomes the subject of a judicial action, it
shall be resolved solely and exclusively pursuant to the provisions for
reference and trial by referee set forth in California Code of Civil Procedure
Section 638 et seq., or any statute containing reasonably similar provisions
that replaces such sections, except as expressly modified by the provisions
hereof. The referee shall be a retired or former Superior Court judge practicing
in Orange County, California, who is either (i) agreed to by the parties within
ten (10) days of the notice by any party to the other of the intention to invoke
this Section to resolve the dispute, or (ii) failing such agreement, is
appointed pursuant to California Code of Civil Procedure Section 638.l (or any
statute containing reasonably similar provisions that replaces such section) in
an action filed in the Superior Court of Orange County, California. The parties
agree that any party may file (and, if necessary, the other party shall join in
such filing) with the Clerk of the Orange County Superior Court, or with the
appropriate judge of such Court, any and all petitions, motions, applications or
other documents necessary to obtain the appointment of such a referee
immediately upon the commencement of any action or proceeding to resolve any
such dispute and to conduct all necessary discovery and to proceed to a trial as
expeditiously as possible. All proceedings, including trial, before the referee
shall be conducted at a neutral location (unless otherwise stipulated by the
parties) within five miles of the Orange County Superior Court. The parties
agree that the referee shall be a judge for all purposes (including (i) ruling
on any and all discovery matters and motions and any and all pretrial or trial
motions, (ii) setting a schedule of pretrial proceedings, and (iii) making any
other orders or rulings a sitting judge of the Superior Court would be empowered
to make in any action or proceeding in the Superior Court). Any matter before
the referee shall be governed by the California Code of Civil Procedure, the
California Rules of Court, the California Evidence Code and the Local Rules of
the Orange County Superior Court. Any decision of the referee shall be
appealable to the same extent and in the same manner that such decisions would
be appealable if rendered by a judge of the Orange County Superior Court. The
Referee shall in his or her statement of decision set forth his or her findings
of fact and conclusions of law. The parties intend this reference agreement to
be specifically enforceable in accordance with Section 638.l of the California
Code of Civil Procedure.
(c) Provisional Remedies, Self-Help
Subject to Section 9.4, nothing herein shall limit the right of
any party to exercise self-help remedies such as setoff or to obtain provisional
or ancillary remedies, including an order of attachment, a temporary restraining
order, preliminary injunction or other interim relief from any court of
competent jurisdiction if such is necessary to
-87-
<PAGE> 93
preserve that party's rights before, during or after the pendency of any
arbitration, reference or bankruptcy proceeding.
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.
IRVINE APARTMENT COMMUNITIES, L.P.,
a Delaware limited partnership
By: TIC Acquisition LLC, a
Delaware limited liability company,
Its general partner
By: The Irvine Company,
a Delaware corporation,
Its managing member
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
Facsimile number: (949) 720-9453
Address:
c/o TIC Acquisition LLC
550 Newport Center Drive
Newport Beach, California 92260
Attn: Vice President, Corporate Finance
-88-
<PAGE> 94
Commitment Amount
$25,000,000
LIBOR Lending Office: BANK OF AMERICA NT & SA
5 Park Plaza, Suite 500
Irvine, California 92614 By:
-------------------------------------
Name: Russell Ruhnke
Attn: Toni Fishel Title: Vice President
Telecopy: (949) 260-5637
Domestic Lending Office:
5 Park Plaza, Suite 500
Irvine, California 92614
Attn: Toni Fishel
Telecopy: (949) 260-5637
-89-
<PAGE> 95
Commitment Amount
$25,000,000
LIBOR Lending Office: WELLS FARGO BANK, NA
Wells Fargo Bank, NA By:
-------------------------------------
Disbursement and Operations Center Name:
2120 East Park Place, Suite 100 -----------------------------------
El Segundo, California 90245 Title:
----------------------------------
Attn: Cathy Lambert
Telecopy: (310) 615-1014
Domestic Lending Office:
Wells Fargo Bank, NA
2030 Main Street, Suite 800
Irvine, California 92614
Attn: Office Manager
Telecopy: (714) 851-9728
-90-
<PAGE> 96
Commitment Amount
$22,500,000
LIBOR Lending Office: MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
Morgan Guaranty Trust Company
of New York
Nassau, Bahamas Office By:
c/o J.P. Morgan Services, Inc. -------------------------------------
500 Stanton Christiana Road Name:
Newark, DE 19713-2107 -----------------------------------
Attention: Kevin M. McCann Title:
Telecopy: (302) 634-1852/1872 ----------------------------------
Morgan Guaranty Trust Company
Domestic Lending Office: of New York
c/o J.P. Morgan Services, Inc.
Morgan Guaranty Trust Company 500 Stanton Christiana Road
of New York Newark, DE 19713-2107
Nassau, Bahamas Office Attention: Nancy K. Dunbar
c/o J.P. Morgan Services, Inc. Telecopy: (302) 634-4222
500 Stanton Christiana Road
Newark, DE 19713-2107
Attention: Kevin M. McCann
Telecopy: (302) 634-1852/1872
-91-
<PAGE> 97
Commitment Amount U.S. BANK NATIONAL ASSOCIATION
$20,000,000 By:
-------------------------------------
Name: Stephen Bailey
LIBOR Lending Office: Title: Senior Vice President
U.S. Bank National Association
601 2nd Avenue S.
MPFP0509
Minneapolis, MN 55402
Attn: Missy Schmidt
Telecopy: (612) 973-0830
Domestic Lending Office:
- -----------------------------------
- -----------------------------------
Attn:
- ---------------- --------------
____________Telecopy: (_____)______
- -------------------------
-92-
<PAGE> 98
Commitment Amount COMMERZBANK AG LOS ANGELES
BRANCH
$12,500,000
By:
-------------------------------------
Name: David M. Schwartz
Libor Lending Office : Title: Vice President
COMMERZBANK AG By:
Grand Cayman Branch -------------------------------------
c/o COMMERZBANK AG Name: Christine H. Finkel
New York Branch Title: Assistant Vice President
2 World Financial Center
New York, NY 10281-1050
Attn: Christine Hunermund
Telecopy: (212) 266-7593
Domestic Lending Office:
COMMERZBANK AG
Grand Cayman Branch
c/o COMMERZBANK AG
New York Branch
2 World Financial Center
New York, NY 10281-1050
Attn: Christine Hunermund
Telecopy: (212) 266-7593
-93-
<PAGE> 99
Commitment Amount
$10,000,000
LIBOR Lending Office: FIRST UNION NATIONAL BANK
First Union National Bank
301 S. College Street NC-0166 By:
Charlotte, North Carolina 28288 -------------------------------------
Attn: Daniel Sullivan Name:
Telecopy: (704) 383-6205 Title:
Domestic Lending Office:
First Union National Bank
301 S. College Street NC-0166
Charlotte, North Carolina 28288
Attn: Daniel Sullivan
Telecopy: (704) 383-6205
-94-
<PAGE> 100
Address: BANK OF AMERICA NT & SA,
as Administrative Agent
Bank of America NT & SA
5 Park Plaza, Suite 500 By:
Irvine, California 92614 -------------------------------------
Attn: Toni Fishel Name: Russell Ruhnke
Telecopy: (949) 260-5637 Title: Vice President
-95-
<PAGE> 101
Address: WELLS FARGO BANK, N.A.,
as Documentation Agent
Wells Fargo Bank, NA
2030 Main Street, Suite 800 By:
Irvine, California 92614 -------------------------------------
Attn: Office Manager Name:
Telecopy: (714) 851-9728 Title:
-96-
<PAGE> 102
SCHEDULE 1
Bank Commitments
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
SHARE OF AGGREGATE
BANK COMMITMENT COMMITMENT
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
Bank of America NT & SA $ 25,000,000 20.00%
- ---------------------------------------------------------------------------------------------------
Wells Fargo Bank, NA $ 25,000,000 20.00%
- ---------------------------------------------------------------------------------------------------
Morgan Guaranty Trust $ 22,500,000 18.00%
Company of New York
- ---------------------------------------------------------------------------------------------------
U.S. Bank $ 20,000,000 16.00%
- ---------------------------------------------------------------------------------------------------
Commerzbank AG Los $ 12,500,000 10.00%
Angeles Branch
- ---------------------------------------------------------------------------------------------------
First Union Bank, N.A. $ 10,000,000 8.00%
- ---------------------------------------------------------------------------------------------------
Fleet National Bank $ 10,000,000 8.00%
- ---------------------------------------------------------------------------------------------------
Total $125,000,000 100.00%
- ---------------------------------------------------------------------------------------------------
</TABLE>
-97-
<PAGE> 103
SCHEDULE 4.6
Borrower and General Partner ERISA Plans
Irvine Apartment Communities, Inc. Savings Plan
Customary health, life and disability plans for active employees
-98-
<PAGE> 104
Schedule 4.17
Qualifying Unencumbered Properties
Amherst Court
Newport Ridge
Orchard Park
Rancho Monterey
San Carlo
San Mateo
Santa Clara
Santa Rosa
Sierra Vista
Villa Coronado
Windwood Knoll
Woodbridge Oaks
Woodbridge Villas
Baypointe
Cupertino
Santa Fe
Santa Maria
Santa Rosa II
The Colony
-99-
<PAGE> 105
SCHEDULE 5.14(c)(1)
San Rafael Limited Partnership, L.P.
IAC Management, Inc.
-100-
<PAGE> 106
SCHEDULE 5.14(c)(2)
None
-101-
<PAGE> 107
EXHIBIT A
FORM OF
NOTICE OF BORROWING
TO: BANK OF AMERICA, NATIONAL
TRUST AND SAVINGS ASSOCIATION
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
Attention:
---------------------------
Loan No.:
----------------------------
Accounting Unit No.:
-----------------
Reference is hereby made to the First Amended and Restated
Revolving Credit Agreement dated as of June 7, 1999 (as amended, supplemented,
replaced, renewed or otherwise modified from time to time, the "Credit
Agreement") among IRVINE APARTMENT COMMUNITIES, L.P., a Delaware limited
partnership (the "Borrower"), the banks listed on the signature pages thereof,
Bank of America NT&SA, as Administrative Agent, and Wells Fargo Bank, N.A., as
Documentation Agent. Terms with initial capital letters used but not defined
herein have the meanings assigned to them in the Credit Agreement.
Pursuant to Article 2 of the Credit Agreement:
1. The Borrower hereby requests a Loan in the amount of
$___________________ on _____________________, ____(1) in the form of a
______________________________(2) [with an interest period of ________](3); and
- --------
(1) Must be a Business Day.
(2) Insert form of Loan (Base Rate Loan or Fixed Rate Loan).
(3) Insert Fixed Rate Period in the case of a Fixed Rate Loan.
A-1
<PAGE> 108
2. The Borrower hereby represents and warrants as follows:
(a) All of the representations and warranties contained in
the Credit Agreement are true and correct in all material respects on and as of
the date hereof as though made on and as of this date (except to the extent that
such representations and warranties expressly were made only as of a specific
date);
(b) No Default or Event of Default exists or would result
from the making of the Loan; and
(c) All other conditions to borrowing set forth in the
Credit Agreement are satisfied.
Date: ____________________, ____
IRVINE APARTMENT COMMUNITIES,
L.P., a Delaware limited partnership
By: TIC Acquisition LLC, a
Delaware limited liability company,
Its general partner
By: The Irvine Company,
a Delaware corporation,
Its managing member
By:
-----------------------------
[Certifying Officer]
Name:
---------------------------
Title:
--------------------------
A-2
<PAGE> 109
Exhibit G
EXHIBIT G
[FORM OF NOTICE OF CONTINUATION/ CONVERSION]
NOTICE OF CONTINUATION/CONVERSION
Pursuant to that certain First Amended and Restated Revolving
Credit Agreement dated as of June 7, 1999 among Irvine Apartment Communities,
L.P., a Delaware limited partnership (the "Borrower"), the banks listed on the
signature pages thereof, Bank of America NT&SA, as Administrative Agent, and
Wells Fargo Bank, N.A., as Documentation Agent (as the same may be amended,
supplemented, replaced, renewed or otherwise modified from time to time, the
"Credit Agreement"), this represents Borrower's request to [SELECT A OR B WITH
APPROPRIATE INSERTIONS AND DELETIONS: [A: convert $_______ in principal amount
of presently outstanding Loans that are [Base/LIBOR] Rate Loans [having an
Interest Period that expires on ___________, ____] to [Base/LIBOR] Rate Loans on
___________, ____. [The initial Interest Period for such LIBOR Rate Loans is
requested to be a ________ month period.]] [B: continue as LIBOR Rate Loans
$_____ in principal amount of presently outstanding Loans having an Interest
Period that expires on ____________, ____. The Interest Period for such LIBOR
Rate Loans commencing on _________, ____ is requested to be a _______ month
period.]] Terms with initial capital letters used but not defined herein have
the meanings assigned to them in the Credit Agreement.
G-1
<PAGE> 110
The undersigned Certifying Officer, to the best of his or her
knowledge, and Borrower certify that no Event of Default or Default has occurred
and is continuing under the Credit Agreement.
IRVINE APARTMENT COMMUNITIES, L.P.,
a Delaware limited partnership
By: TIC Acquisition LLC, a
Delaware limited liability company,
Its general partner
By: The Irvine Company,
a Delaware corporation,
Its managing member
By:
-----------------------------
[Certifying Officer]
Name:
---------------------------
Title:
--------------------------
G-2
<PAGE> 111
Exhibit J
EXHIBIT J
TRANSFER SUPPLEMENT
TRANSFER SUPPLEMENT (this "Transfer Supplement") dated as of
_______________, 199_ between _________________ (the "Assignor") and
____________________ having an address at ____________________________ (the
"Purchasing Bank").
W I T N E S S E T H:
WHEREAS, the Assignor has made loans to Irvine Apartment Communities,
L.P., a Delaware limited partnership (the "Borrower"), pursuant to the First
Amended and Restated Revolving Credit Agreement, dated as of June 7, 1999 (as
the same may be amended, supplemented, replaced, renewed or otherwise modified
from time to time through the date hereof, the "Credit Agreement"), among the
Borrower, the banks listed on the signature pages thereof, Bank of America
NT&SA, as Administrative Agent, and Wells Fargo Bank, N.A., as Documentation
Agent. All capitalized terms used and not otherwise defined herein shall have
the respective meanings set forth in the Credit Agreement;
WHEREAS, the Purchasing Bank desires to purchase and assume from the
Assignor, and the Assignor desires to sell and assign to the Purchasing Bank,
certain rights, title, interest and obligations under the Credit Agreement.
NOW, THEREFORE, IT IS AGREED:
1. In consideration of the amount set forth in the receipt (the
"Receipt") given by Assignor to Purchasing Bank of even date herewith, and
transferred by wire to Assignor, the Assignor hereby assigns and sells, without
recourse, representation or warranty except as specifically set forth herein, to
the Purchasing Bank, and the Purchasing Bank hereby purchases and assumes from
the Assignor, a ___% interest (the "Purchased Interest") of the Loans
constituting a portion of the Assignor's rights and obligations under the Credit
Agreement as of the Effective Date (as defined below) including, without
limitation, such percentage interest of the Assignor in any Loans owing to the
Assignor, and Note held by the Assignor, any Loan Commitment of the Assignor and
any other interest of the Assignor under any of the Loan Documents.
2. The Assignor (i) represents and warrants that as of the date
hereof the aggregate outstanding principal amount of its share of the Loans
owing to it (without giving effect to assignments thereof which have not yet
become effective) is
J-1
<PAGE> 112
$______________; (ii) represents and warrants that it is the legal and
beneficial owner of the interests being assigned by it hereunder and that such
interests are free and clear of any adverse claim; (iii) represents and warrants
that it has not received any notice of Default or Event of Default from the
Borrower; (iv) represents and warrants that it has full power and authority to
execute and deliver, and perform under, this Transfer Supplement, and all
necessary corporate and/or partnership action has been taken to authorize, and
all approvals and consents have been obtained for, the execution, delivery and
performance thereof; (v) represents and warrants that this Transfer Supplement
constitutes its legal, valid and binding obligation enforceable in accordance
with its terms; (vi) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations (or
the truthfulness or accuracy thereof) made in or in connection with the Credit
Agreement, or the other Loan Documents or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit Agreement, or
the other Loan Documents or any other instrument or document furnished pursuant
thereto; and, (vii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its obligations under the
Credit Agreement or the other Loan Documents or any other instrument or document
furnished pursuant thereto. Except as specifically set forth in this Paragraph
2, this assignment shall be without recourse to Assignor.
3. The Purchasing Bank (i) confirms that it has received a copy of
the Credit Agreement, and the other Loan Documents, together with such financial
statements and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into this Transfer
Supplement and to become a party to the Credit Agreement, and has not relied on
any statements made by Assignor or Gibson, Dunn & Crutcher LLP; (ii) agrees that
it will, independently and without reliance upon any of the Administrative
Agent, the Assignor or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
appraisal of and investigation into the business, operations, property,
prospects, financial and other conditions and creditworthiness of the Borrower
and will make its own credit analysis, appraisals and decisions in taking or not
taking action under the Credit Agreement, and the other Loan Documents; (iii)
appoints and authorizes the Administrative Agent to take such action as agent on
its behalf and to exercise such powers under the Credit Agreement, and the other
Loan Documents as are delegated to the Agent by the terms thereof, together with
such powers as are incidental thereto; (iv) agrees that it will be bound by and
perform in accordance with their terms all of the obligations which by the terms
of the Credit Agreement are required to be performed by it as a Bank; (v)
specifies as its address for notices and lending office, the office set forth
beneath its name on the signature page hereof; (vi) it has full power and
authority to execute and deliver, and perform under, this Transfer Supplement,
and all necessary corporate and/or partnership action has been taken to
authorize, and all
J-2
<PAGE> 113
approvals and consents have been obtained for, the execution, delivery and
performance thereof; (vii) this Transfer Supplement constitutes its legal, valid
and binding obligation enforceable in accordance with its terms; and (viii) the
interest being assigned hereunder is being acquired by it for its own account,
for investment purposes only and not with a view to the public distribution
thereof and without any present intention of its resale in either case that
would be in violation of applicable securities laws.
4. This Transfer Supplement shall be effective on the date (the
"Effective Date") on which all of the following have occurred (i) it shall have
been executed and delivered by the parties hereto, (ii) copies hereof shall have
been delivered to the Administrative Agent and the Borrower, (iii) Purchasing
Bank shall have received an original Note and (iv) the Purchasing Bank shall
have paid to the Assignor the agreed purchase price as set forth in the Receipt.
5. On and after the Effective Date, (i) the Purchasing Bank shall
be a party to the Credit Agreement and, to the extent provided in this Transfer
Supplement, have the rights and obligations of a Bank thereunder and be entitled
to the benefits and rights of the Banks thereunder and (ii) the Assignor shall,
to the extent provided in this Transfer Supplement as to the Purchased Interest,
relinquish its rights and be released from its obligations under the Credit
Agreement.
6. From and after the Effective Date, the Assignor shall cause the
Administrative Agent to make all payments under the Credit Agreement, and the
Notes in respect of the Purchased Interest assigned hereby (including, without
limitation, all payments of principal, fees and interest with respect thereto
and any amounts accrued but not paid prior to such date) to the Purchasing Bank.
7. This Transfer Supplement may be executed in any number of
counterparts which, when taken together, shall be deemed to constitute one and
the same instrument.
8. Assignor hereby represents and warrants to Purchasing Bank that
it has made all payments demanded to date by Bank of America, NT&SA ("Bank of
America") as Administrative Agent in connection with the Assignor's pro rata
share of the obligation to reimburse the Agent for its expenses and made all
Loans required. In the event Bank of America, as Administrative Agent, shall
demand reimbursement for fees and expenses from Purchasing Bank for any period
prior to the Effective Date, Assignor hereby agrees to promptly pay Bank of
America, as Administrative Agent, such sums directly, subject, however, to
Paragraph 12 hereof.
9. Assignor will, at the cost of Assignor, and without expense to
Purchasing Bank, do, execute, acknowledge and deliver all and every such further
acts,
J-3
<PAGE> 114
deeds, conveyances, assignments, notices of assignments, transfers and
assurances as Purchasing Bank shall, from time to time, reasonably require, for
the better assuring conveying, assigning, transferring and confirming unto
Purchasing Bank the property and rights hereby given, granted, bargained, sold,
aliened, enfeoffed, conveyed, confirmed, assigned and/or intended now or
hereafter so to be, on which Assignor may be or may hereafter become bound to
convey or assign to Purchasing Bank, or for carrying out the intention or
facilitating the performance of the terms of this Agreement or for filing,
registering or recording this Agreement.
10. The parties agree that no broker or finder was instrumental in
bringing about this transaction. Each party shall indemnify, defend the other
and hold the other free and harmless from and against any damages, costs or
expenses (including, but not limited to, reasonable attorneys, fees and
disbursements) suffered by such party arising from claims by any broker or
finder that such broker or finder has dealt with said party in connection with
this transaction.
11. Subject to the provisions of Paragraph 12 hereof, if, with
respect to the Purchased Interest only, Assignor shall on or after the Effective
Date receive (a) any cash, note, securities, property, obligations or other
consideration in respect of or relating to the Loan or the Loan Documents or
issued in substitution or replacement Loan or the Loan Documents, (b) any cash
or non-cash consideration in any form whatsoever distributed, paid or issued in
any bankruptcy proceeding in connection with the Loan or the Loan Documents or
(c) any other distribution (whether by means of repayment, redemption,
realization of security or otherwise), Assignor shall accept the same as
Purchasing Bank's agent and hold the same in trust on behalf of and for the
benefit of Purchasing Bank, and shall deliver the same forthwith to Purchasing
Bank in the same form received, with the endorsement (without recourse) of
Assignor when necessary or appropriate. If the Assignor shall fail to deliver
any funds received by it within the same Business Day of receipt, unless such
funds are received by Assignor after 4:00 p.m., Pacific Standard Time, then the
following business day after receipt, said funds shall accrue interest at the
federal funds interest rate and in addition to promptly remitting said amount,
Assignor shall remit such interest from the date received to the date such
amount is remitted to the Purchasing Bank.
12. Assignor and Purchasing Bank each hereby agree to indemnify and
hold harmless the other, each of its directors and each of its officers in
connection with any claim or cause of action based on any matter or claim based
on the acts of either while acting as a Bank under the Credit Agreement.
Promptly after receipt by the indemnified party under this Section of notice of
the commencement of any action, such indemnified party shall notify the
indemnifying party in writing of the commencement thereof. If any such action is
brought against any indemnified party and that party notifies the indemnifying
party of the commencement thereof, the indemnifying party shall be
J-4
<PAGE> 115
entitled to participate therein, and to the extent that it may elect by written
notice delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof, with counsel
satisfactory to such indemnified party, and after receipt of notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof. In no event
shall the indemnified party settle or consent to a settlement of such cause of
action or claim without the consent of the indemnifying party.
13. THIS TRANSFER SUPPLEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAWS OF THE STATE OF CALIFORNIA.
Wire Transfer Instructions:
- ----------------------------------
- ----------------------------------
- ----------------------------------
- ----------------------------------
By:
-------------------------------------
Name:
-----------------------------------
Title
-----------------------------------
By:
-------------------------------------
Name:
-----------------------------------
Title
-----------------------------------
J-5
<PAGE> 116
Receipt and Consent acknowledged this
_________ day of ____________, 199_:
BANK OF AMERICA, NT&SA,
as Administrative Agent
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
[IF REQUIRED ADD THE
FOLLOWING:]
IRVINE APARTMENT COMMUNITIES, L.P.,
a Delaware limited partnership
By: TIC Acquisition LLC,
a Delaware limited liability company,
Its general partner
By: The Irvine Company,
a Delaware corporation,
Its managing member
By:
-----------------------
[Certifying Officer]
Name:
---------------------
Title:
--------------------
J-6
<PAGE> 117
Exhibit K
EXHIBIT K
REQUEST FOR LETTER OF CREDIT
1. This REQUEST FOR LETTER OF CREDIT is executed and delivered
pursuant to that certain FIRST AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
dated as of June 7, 1999 among IRVINE APARTMENT COMMUNITIES, L.P., a Delaware
limited partnership (the "Borrower"), the banks listed on the signature pages
thereof, BANK OF AMERICA NT&SA, as Administrative Agent, and WELLS FARGO BANK,
N.A., as Documentation Agent (as the same may be amended, supplemented,
replaced, renewed or otherwise modified from time to time, the "Credit
Agreement"). Terms defined in the Credit Agreement are used herein with the same
meanings.
2. The Borrower hereby requests that Administrative Agent issue a
Letter of Credit in accordance with the L/C Application accompanying this
request.
3. In connection with the Letter of Credit requested herein, the
Borrower hereby represents, warrants and certifies to the Banks that, as of the
date of the Letter of Credit requested herein, each representation and warranty
made by the Borrower in Article IV of the Credit Agreement will be true and
correct, both immediately before and after such Letter of Credit is issued, as
though such representation and warranty was made on and as of the date of such
issuance. (If the foregoing statement is not true and correct, attach a
statement specifying in detail the circumstances thereof and the actions the
Borrower is taking or proposes to take with respect thereto.)
4. This Request for Letter of Credit is executed on
________________, 19__, by a Certifying Officer of the Borrower on behalf of the
Borrower. The undersigned in such capacity, hereby certifies each and every
matter contained herein to be true and correct.
Dated:
----------------------------------------
K-1
<PAGE> 118
Exhibit L
EXHIBIT L
FORM OF L/C APPLICATION
APPLICATION AND AGREEMENT
FOR STANDBY LETTER OF CREDIT
To: Bank of America National Trust and Savings Association ("Bank")
For Bank Use Only
L/C No. ______________________
A. APPLICATION.
__________________ ("Customer") requests Bank to issue an irrevocable letter of
credit ("Letter of Credit") as follows: [ ] Full text teletransmission [ ]
Airmail with brief preliminary teletransmission advise [ ] Airmail [ ] Courier
For account of (Customer Name and Address)
- --------------------------------------------
- --------------------------------------------
- --------------------------------------------
Advising Bank
- --------------------------------------------
- --------------------------------------------
- --------------------------------------------
- --------------------------------------------
Amount ( )
--------------------------- ---------
(in words and figures)
Currency
------------------------------------
- --------------------------------------------
- --------------------------------------------
- --------------------------------------------
In favor of (Beneficiary Name and Address)
- --------------------------------------------
- --------------------------------------------
- --------------------------------------------
- --------------------------------------------
- --------------------------------------------
- --------------------------------------------
- --------------------------------------------
Expiration Date: Drafts to be drawn on and
presented at Bank's issuing
unit on or before:
---------------------------
19__
- --------------------------------------------
- --------------------------------------------
Available by drafts drawn at sight on Bank's issuing unit when accompanied by
the following documentation
1. The original standby letter of credit.
2. The signed statement of the beneficiary worded as follows (state exact
wording that is to appear in the statement accompanying the draft):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
L-1
<PAGE> 119
Special Instructions:
-----------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
L-2
<PAGE> 1
EXHIBIT 10.2
AMENDED AND RESTATED
UNSECURED LOAN AGREEMENT
dated as of June 7, 1999
by and among
IRVINE APARTMENT COMMUNITIES, L.P.,
THE BANKS LISTED HEREIN,
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Co-Arranger and Administrative Agent
and
U.S. BANK NATIONAL ASSOCIATION,
as Co-Arranger
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1 DEFINITIONS........................................................ 1
SECTION 1.1 Definitions............................................. 1
SECTION 1.2 Accounting Terms and Determinations..................... 18
SECTION 1.3 Borrowings.............................................. 18
ARTICLE 2 THE CREDITS........................................................ 19
SECTION 2.1 Loans................................................... 19
SECTION 2.2 Funding of Loans........................................ 19
SECTION 2.3 Notes................................................... 19
SECTION 2.4 Interest Rates.......................................... 20
SECTION 2.5 Fees.................................................... 20
SECTION 2.6 Maturity Date........................................... 21
SECTION 2.7 First Option To Extend.................................. 21
SECTION 2.8 Second Option To Extend................................. 21
SECTION 2.9 Lockout; Optional Prepayments........................... 22
SECTION 2.10 General Provisions as to Payments...................... 22
SECTION 2.11 Funding Losses......................................... 23
SECTION 2.12 Computation of Interest and Fees....................... 23
SECTION 2.13 Use of Proceeds........................................ 23
SECTION 2.14 Method of Electing Interest Rates...................... 24
ARTICLE 3 CONDITIONS......................................................... 25
SECTION 3.1 Closing................................................. 25
SECTION 3.2 Borrowings.............................................. 26
</TABLE>
i
<PAGE> 3
TABLE OF CONTENTS (Continued)
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 4 REPRESENTATIONS AND WARRANTIES..................................... 26
SECTION 4.1 Existence and Power..................................... 27
SECTION 4.2 Power and Authority..................................... 27
SECTION 4.3 No Violation............................................ 27
SECTION 4.4 Financial Information................................... 28
SECTION 4.5 Litigation.............................................. 28
SECTION 4.6 Compliance with ERISA................................... 28
SECTION 4.7 Environmental Matters................................... 28
SECTION 4.8 Taxes................................................... 29
SECTION 4.9 Full Disclosure......................................... 29
SECTION 4.10 Solvency............................................... 29
SECTION 4.11 Use of Proceeds, Margin Regulations.................... 29
SECTION 4.12 Governmental Approvals................................. 29
SECTION 4.13 Investment Company Act, Public Utility Holding
Company Act............................................ 30
SECTION 4.14 Principal Offices...................................... 30
SECTION 4.15 Patents, Trademarks, etc............................... 30
SECTION 4.16 Qualifying Unencumbered Properties..................... 30
SECTION 4.17 No Default............................................. 30
SECTION 4.18 Licenses, etc.......................................... 30
SECTION 4.19 Compliance With Law.................................... 31
SECTION 4.20 No Burdensome Restrictions............................. 31
SECTION 4.21 Brokers' Fees.......................................... 31
SECTION 4.22 Labor Matters.......................................... 31
SECTION 4.23 Insurance.............................................. 31
SECTION 4.24 Organizational Documents............................... 31
SECTION 4.25 Year 2000 Compliance................................... 31
</TABLE>
ii
<PAGE> 4
TABLE OF CONTENTS (Continued)
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 5 AFFIRMATIVE AND NEGATIVE COVENANTS................................. 32
SECTION 5.1 Financial Information................................... 32
SECTION 5.2 Other Information....................................... 33
SECTION 5.3 Payment of Obligations.................................. 34
SECTION 5.4 Maintenance of Property; Insurance, Leases.............. 35
SECTION 5.5 Conduct of Business and Maintenance of Existence........ 35
SECTION 5.6 Compliance with Laws.................................... 35
SECTION 5.7 Inspection of Property, Books and Records............... 35
SECTION 5.8 Existence............................................... 36
SECTION 5.9 Financial Covenants..................................... 36
SECTION 5.10 Restriction on Fundamental Changes..................... 37
SECTION 5.11 Changes in Business.................................... 37
SECTION 5.12 General Partner Status................................. 38
SECTION 5.13 Environmental Matters.................................. 38
SECTION 5.14 Cooperation............................................ 39
SECTION 5.15 Distributions.......................................... 39
ARTICLE 6 DEFAULTS........................................................... 39
SECTION 6.1 Events of Default....................................... 39
SECTION 6.2 Rights and Remedies..................................... 41
SECTION 6.3 Notice of Default....................................... 42
SECTION 6.4 Distribution of Proceeds after Default.................. 42
</TABLE>
iii
<PAGE> 5
TABLE OF CONTENTS (Continued)
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 7 THE AGENTS......................................................... 43
SECTION 7.1 Appointment and Authorization........................... 43
SECTION 7.2 Agency and Affiliates................................... 43
SECTION 7.3 Action by Administrative Agent.......................... 43
SECTION 7.4 Consultation with Experts............................... 43
SECTION 7.5 Liability of Administrative Agent....................... 44
SECTION 7.6 Indemnification......................................... 44
SECTION 7.7 Credit Decision......................................... 44
SECTION 7.8 Successor Administrative Agent.......................... 44
SECTION 7.9 Consents and Approvals.................................. 45
ARTICLE 8 CHANGE IN CIRCUMSTANCES............................................ 45
SECTION 8.1 Basis for Determining, Interest Rate Inadequate
or Unfair............................................... 46
SECTION 8.2 Illegality.............................................. 46
SECTION 8.3 Increased Cost and Reduced Return....................... 47
SECTION 8.4 Taxes................................................... 48
SECTION 8.5 Base Rate Loans Substituted for Affected LIBOR Loans.... 50
ARTICLE 9 MISCELLANEOUS...................................................... 51
SECTION 9.1 Notices................................................. 51
SECTION 9.2 No Waivers.............................................. 51
SECTION 9.3 Expenses; Indemnification............................... 51
SECTION 9.4 Sharing of Set-Offs..................................... 53
SECTION 9.5 Amendments and Waivers.................................. 54
SECTION 9.6 Successors and Assigns.................................. 54
SECTION 9.7 Collateral.............................................. 56
SECTION 9.8 Governing Law; Submission to Jurisdiction............... 56
SECTION 9.9 Counterparts', Integration, Effectiveness............... 56
SECTION 9.10 WAIVER OF JURY TRIAL................................... 57
SECTION 9.11 Survival............................................... 57
SECTION 9.12 Domicile of Loans...................................... 57
SECTION 9.13 Limitation of Liability................................ 57
SECTION 9.14 Recourse Obligation.................................... 57
SECTION 9.15 Bank's Failure to Fund................................. 57
SECTION 9.16 Dispute Resolution..................................... 62
</TABLE>
iv
<PAGE> 6
Schedule 1 - Commitments
Schedule 4.6 - Borrower ERISA Plans
Schedule 4.17 - Initial Qualifying Unencumbered Properties
Schedule 5.14(c)(i) - General Partner Investments Schedule
5.14(c)(ii) - General Partner Property
Exhibit A - Reserved
Exhibit B - Transfer Supplement (Section 9.6(c))
Exhibit C - Form of Notice of Interest Period Election (Section 2.14(a))
Exhibit D - Form of Compliance Certificate (Section 5. 1 (c))
v
<PAGE> 7
AMENDED AND RESTATED
UNSECURED LOAN AGREEMENT
THIS AMENDED AND RESTATED UNSECURED LOAN AGREEMENT (this "Agreement")
dated as of June 7, 1999 is made by and among IRVINE APARTMENT COMMUNITIES,
L.P., a Delaware limited partnership (the "Borrower"), the BANKS listed on the
signature pages hereof, WELLS FARGO BANK, NATIONAL ASSOCIATION, as Co-Arranger
and Administrative Agent, and U.S. BANK NATIONAL ASSOCIATION, as Co-Arranger.
ARTICLE 1
DEFINITIONS
SECTION 1.1 Definitions. The following terms, as used herein, have the
following meanings:
"Acquired Asset" means a Qualifying Unencumbered Property which has
been acquired by Borrower (directly or indirectly) after June 27, 1997.
"Acquired Stabilized Asset" means a Qualifying Unencumbered Property
which had an Occupancy Rate greater than or equal to 85% on the date acquired by
Borrower.
"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 London Interbank
Offered Rate applicable during such Interest Period by (ii) 1.00 minus the LIBOR
Reserve Percentage.
"Administrative Agent" shall mean Wells Fargo Bank, National
Association in its capacity as Administrative Agent hereunder, and its permitted
successors in such capacity in accordance with the terms of this Agreement.
"Administrative Questionnaire" means, with respect to each Bank, an
administrative questionnaire in the form prepared by the Administrative Agent
and submitted to the Administrative Agent (with a copy to the Borrower) duly
completed by such Bank.
"Aggregate Commitments" shall mean the aggregate of all of the
Commitments hereunder, for a total of $ 100,000,000 unless and until such time
as the Commitments are reduced pursuant hereto.
"Agreement" shall mean this Amended and Restated Unsecured Loan
Agreement as the same may from time to time hereafter be modified, supplemented
or amended.
"Applicable Interest Rate" means (i) with respect to any Fixed Rate
Indebtedness, the fixed interest rate applicable to such Fixed Rate Indebtedness
at the time in question, and (ii) with respect to any Floating Rate
Indebtedness, either (x) the rate at which the interest rate applicable to such
Floating Rate Indebtedness is actually capped (or fixed pursuant to an interest
rate hedging device), at the time of calculation, if Borrower has entered into
an interest rate cap
<PAGE> 8
agreement or other interest rate hedging device with respect thereto or (y) if
Borrower has not entered into an interest rate cap agreement or other interest
rate hedging device with respect to such Floating Rate Indebtedness, the greater
of (A) the rate at which the interest rate applicable to such Floating Rate
Indebtedness could be fixed for the remaining term of such Floating Rate
Indebtedness, at the time of calculation, by Borrower's entering into any
unsecured interest rate hedging device either not requiring an upfront payment
or if requiring an upfront payment, such upfront payment shall be amortized over
the term of such device and included in the calculation of the interest rate
(or, if such rate is incapable of being fixed by entering into an unsecured
interest rate hedging device at the time of calculation, a fixed rate equivalent
reasonably determined by Administrative Agent) or (B) the floating rate
applicable to such Floating Rate Indebtedness at the time in question.
"Applicable Lending Office" means, with respect to any Bank, (i) in the
case of a Base Rate Loan, its Domestic Lending Office, and (ii) in the case of a
LIBOR Loan, its LIBOR Lending Office.
"Applicable Margin" means, with respect to each Loan, the respective
percentages per annum determined, at any time, in accordance with the table set
forth below.
APPLICABLE MARGIN
FOR LOANS
TIME PERIOD (M PER ANNUM)
- ----------- -----------------
From the Closing Date until the
Original Maturity Date 1.50
From the Original Maturity Date until 1.50
the First Extended Maturity Date
From the First Extended Maturity Date until 1.525
the Second Extended Maturity Date
"Approved Financial Institutions" shall mean financial institutions
which have (i)(a) a minimum net worth of $500,000,000 or (b) total assets of
$10,000,000,000, and (ii) a minimum long term debt rating of (a) BBB+ or higher
by S&P, and (b) Baa1 or higher by Moody's.
"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 assigns.
"Bankruptcy Code" shall mean Title II 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 greater
of (i) the rate of interest most recently publicly announced by the
Administrative Agent in San Francisco, California from time to time as its rate
for domestic commercial loans for such day and (ii) the sum of 0.5% plus the
Federal Funds Rate for such day.
2
<PAGE> 9
"Base Rate Loan" means a Loan made by a Bank which accrues interest at
an interest rate based on the Base Rate.
"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 Irvine Apartment Communities, L.P., a Delaware limited
partnership.
"Borrower Party" means the Borrower and any Subsidiary of the Borrower.
"Borrower Parties" shall mean each of the foregoing Persons individually, and
all of the foregoing Persons collectively.
"Borrower's Share" means Borrower's share of the liabilities of an
Investment Affiliate based upon Borrower's percentage ownership of such
Investment Affiliate.
"Borrowing" has the meaning set forth in Section 1.3.
"Capital Leases" as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is or should be accounted for as a capital lease on the
balance sheet of that Person.
"Cap Rate" means the Treasury Rate plus 2.8%.
"Capital Reserve" shall mean, for any period, $50.00 for each Fiscal
Quarter to occur during such period.
"Capital Stock" means, with respect to any Person, all (i) shares,
interests, participations or other equivalents (however designated) of capital
stock and other equity interests of such Person and (ii) rights (other than debt
securities convertible into capital stock or other equity interests), warrants
or options to acquire any such capital stock or other equity interests.
"Cash and Cash Equivalents" shall mean (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 Approved Financial Institutions 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, and Federal Farm Credit System securities, (iv) time deposits,
Domestic and Eurodollar certificates of deposit, bankers acceptances, commercial
paper rated at least A- I by S&P and P- I by Moody's and/or guaranteed by an Aa
rating by Moody's, a AA rating by S&P or better rated credit, floating rate
notes, other money market instruments and letters of credit each issued by
Approved Financial Institutions (and in the case
3
<PAGE> 10
of a letter of credit, an Approved Financial Institution which is a bank)
(provided that the same shall cease to be a "Cash or Cash Equivalent" if at any
time any such bank shall cease to be an Approved Financial Institution), (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 guaranteed by an Aa rating by
Moody's, a AA rating by S&P or better rated credit, (vi) obligations issued by
states and local governments or their agencies, rated at least MIG- I by Moody's
and/or SP- I by S&P and/or guaranteed by an irrevocable letter of credit of an
Approved Financial Institution, which is a bank (provided that the same shall
cease to be a "Cash or Cash Equivalent" if at any time any such financial
institution shall cease to be an Approved Financial Institution), (vii)
repurchase agreements with major financial institutions and primary government
security dealers fully secured by the U.S. Government or agency collateral equal
to or exceeding the principal amount on a daily basis and held in safekeeping,
and (viii) real estate loan pool participations, guaranteed by an AA rating
given by S&P or Aa2 rating given by Moody's or better rated credit.
"Certifying Officer" has the meaning set forth in Section 5. 1 (c).
"Closing Date" means the date on or after the Effective Date on which
the conditions set forth in Section 2.1 shall have been satisfied to the
satisfaction of Administrative Agent.
"Co-Arranger" shall mean each of Wells Fargo Bank, National Association
and U.S. Bank National Association.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and as
it may be further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.
"Commitment" means, with respect to each Bank, the amount set forth in
Schedule I attached hereto and incorporated herein by this reference (and, for
each Bank which is an Assignee, the amount set forth in the Transfer Supplement
entered into pursuant to Section 9.6(c) as the Assignee's Commitment), as such
amount may be reduced from time to time in connection with an assignment to an
Assignee.
"Consolidated Subsidiary" means at any date any Subsidiary which is
consolidated with Borrower in accordance with GAAP.
"Consolidated Tangible Net Worth" means at any date the consolidated
partners' capital (determined on a book basis and without duplication), less
77their consolidated Intangible Assets and loans to officers and directors of
Borrower or its Consolidated Subsidiaries, all determined as of such date. For
purposes of this definition "Intangible Assets" means the amount (to the extent
reflected in determining such consolidated partners' capital) of (i) unamortized
deferred charges and debt discount; (ii) all write-ups (other than write-ups
resulting from foreign currency translations and write-ups of assets of a going
concern business made within twelve months after the acquisition of such
business) subsequent to December 31, 199__ in the book value of any asset owned
by the Borrower or a Consolidated Subsidiary and (iii) goodwill, patents,
trademarks, service marks, trade names, anticipated future benefit of tax loss
carry forwards, copyrights, organization or developmental expenses and other
intangible assets.
4
<PAGE> 11
"Contingent Obligation" means, as to any Person, without duplication,
any obligation, direct or indirect, contingent or otherwise, of such Person (i)
with respect to any Indebtedness or other obligation of another Person,
including any direct or indirect guarantee of such Indebtedness (other than any
endorsement for collection in the ordinary course of business) or any other
direct or indirect obligation, by agreement or otherwise, to purchase or
repurchase any such Indebtedness or obligation or any security therefor, or to
provide funds for the payment or discharge of any such Indebtedness or
obligation (whether in the form of loans, advances, stock purchases, capital.
contributions or otherwise), (ii) to provide funds to maintain the financial
condition of any other Person, (iii) otherwise to assure or hold harmless the
holders of Indebtedness or other obligations of another Person against loss in
respect thereof, or (iv) under Hedging Contracts. The amount of any Contingent
Obligation under clause (i) or (ii) shall be the lesser of (a) the amount of
such Indebtedness or obligation guaranteed or otherwise supported thereby, or
(b) the maximum amount so guaranteed or supported. The amount of any obligation
under a Hedging Contract shall be determined in accordance with standard methods
of calculating credit exposure under similar arrangements as prescribed by the
Administrative Agent from time to time, taking into account potential movements
in interest rates, exchange rates or other relevant indices and the notional
principal amount, term and termination provisions of the arrangement. For the
purposes of this definition only, "Indebtedness" shall be deemed not to include
subclause (c) of the definition of "Indebtedness" set forth in this Agreement.
"Contractual Obligation" as applied to any Person, means any provision
of any Securities issued by that Person or any indenture, mortgage, deed of
trust, lease, contract, undertaking, document or instrument to which that Person
is a party or by which it or any of its properties is bound, or to which it or
any of its properties is subject (including without limitation any restrictive
covenant affecting such Person or any of its properties).
"Convertible Securities" means evidences of shares of stock, limited or
general partnership interests or other ownership interests, warrants, options,
or other rights or securities which are convertible into or exchangeable for,
with or without payment of additional consideration, partnership interests of
Borrower, either immediately or upon the arrival of a specified date or the
happening of a specified event.
"Credit Rating" means the rating(s) assigned by the Rating Agencies to
Borrower's senior unsecured long term indebtedness.
"Debt Restructuring" means a restatement of, or material change in, the
amortization or other financial terms of any Indebtedness of the Borrower or any
Investment Affiliate.
"Debt Service" means, for any period, Interest Expense for such period
plus scheduled principal amortization (excluding an individual scheduled
principal payment which exceeds 25% of the original principal amount of an
issuance of Indebtedness) for such period on all Indebtedness of General Partner
(calculated as provided in Section 1.2), on a consolidated basis, plus
Borrower's Share of scheduled principal amortization for such period on all
5
<PAGE> 12
Indebtedness of Investment Affiliates for which there is no recourse to General
Partner or Borrower (or any Property thereof), plus without duplication, General
Partner's and Borrower's actual or potential liability for principal
amortization for such period on all Indebtedness of Investment Affiliates that
is recourse to General Partner or Borrower (or any Property thereof). "Default"
means any condition or event which with the giving of notice or lapse of time-or
both would, unless cured or waived, become an Event of Default.
"Default Rate" shall mean a rate per annum equal to the sum of four
percent (4%) plus the Base Rate.
"Domestic Business Day" means any day except a Saturday, Sunday or
other day on which commercial banks in San Francisco, California are authorized
by law to close.
"Domestic Lending Office" means, as to each Bank, its office located at
its address in the United States set forth in its Administrative Questionnaire
(or identified in its Administrative Questionnaire as its Domestic Lending
office) or such other office as such Bank may hereafter designate as its
Domestic Lending Office by notice to the Borrower and the Administrative Agent.
"EBITDA" means, for any period, (i) Net Income for such period, plus
(ii) depreciation and amortization expense and other non-cash items deducted in
the calculation of Net Income for such period, plus (iii) Interest Expense
deducted in the calculation of Net Income for such period, plus (iv) Taxes
deducted in the calculation of Net Income for such period, plus (v) Borrower's
Share of distributed earnings of Investment Affiliates for such period, minus
(vi) the gains (and plus the losses) from extraordinary items or asset sales or
write-ups or forgiveness of indebtedness included in the calculation of Net
Income, for such period, minus (vii) Borrower's Share of accrued income and
losses of Investment Affiliates for such period minus (viii) earnings of
Subsidiaries for such period distributed to third parties, all of the foregoing
without duplication.
"Effective Date" means the date this Agreement becomes effective in
accordance with Section 9.9.
"Environmental Affiliate" means any partnership, joint venture, trust
or corporation for which Borrower or General Partner is liable contractually or
under applicable law for Environmental Claims against such entity.
"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 of such Person for investigatory costs, cleanup
costs, governmental response costs, natural resources damage, property damages,
personal injuries, fines or penalties arising out of, based on or resulting from
(i) the presence, or release into the environment, of any Materials 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.
6
<PAGE> 13
"Environmental Laws" means any and all federal, state, and local
statutes, laws, judicial decisions, regulations, ordinances, rules, judgments,
orders, decrees, plans, injunctions, permits, concessions, grants, licenses,
agreements and other governmental restrictions relating to the environment, or
to emissions, discharges or releases of Materials of Environmental Concern into
the environment including, without limitation, ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern or the clean up or other remediation thereof.
"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 Code.
"Estimated Environmental Cost" shall have the meaning set forth in
Section 5.15 hereof.
"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 the Administrative Agent on such day on
such transactions as determined by the Administrative Agent.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System as constituted from time to time.
"First Extended Maturity Date" means May 19, 2000.
"First Option To Extend" means the Borrower's option, subject to the
terms and conditions of Section 2.7 hereof, to extend the term of the Loans from
the Original Maturity Date to the First Extended Maturity Date.
"Fiscal Quarter" means a fiscal quarter of a Fiscal Year.
7
<PAGE> 14
"Fiscal Year" means the fiscal year of Borrower and its Consolidated
Subsidiaries which shall be the twelve (12) month period ending on the last day
of December in each year.
"Fitch" means Fitch Investors Service, or any successor thereto.
"Fixed Charges" for any Fiscal Quarter period means the sum of (i) Debt
Service for such period, plus (ii) the greater of (a) the product of the number
of apartment units owned (directly or beneficially) by Borrower at the beginning
of the applicable period and the Capital Reserve for such period or (b) the
average quarterly amount of recurring capital expenditures of the Borrower based
upon the actual recurring capital expenditures of Borrower and Consolidated
Subsidiaries over the immediately preceding four calendar quarters, plus (iii)
Borrower's Share of the aggregate sum of the product of the number of apartment
units owned (directly or beneficially) by each Investment Affiliate at the
beginning of the applicable period and the Capital Reserve for such period, plus
(iv) dividends on preferred units payable by Borrower for such period.
"Fixed Rate Indebtedness" means all Indebtedness which accrues interest
at a fixed rate.
"Floating Rate Indebtedness" means all Indebtedness which is not Fixed
Rate Indebtedness and which is not a Contingent Obligation or an Unused
Commitment.
"FMV Cap Rate" means 8.0%.
"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 the Financial
Accounting Standards 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 TICALLC.
"Gross Asset Value" means, with respect to any Person or Property, (i)
the product of four (4) and a fraction, the numerator of which is EBITDA for
such Fiscal Quarter (exclusive of EBITDA from any Property which has been
acquired or been disposed of by the Borrower in the Fiscal Quarter most recently
ended) and the denominator of which is the FMV Cap Rate, plus (ii) for any
Property which has been acquired by the Borrower in the Fiscal Quarter most
recently ended, the Net Price of the Property paid by Borrower for such
Property, plus (iii) in the case of any Person, the value of any Cash or Cash
Equivalents owned by such Person and not subject to any Lien, plus (iv) the
value of all construction in process (including, without limitation, the value
of the land owned by the Borrower or any Subsidiary upon which construction has
commenced, at the lower of cost or fair market value determined in accordance
with GAAP) plus (v) the value of all land owned by the Borrower or any
Subsidiary for which construction has not commenced, as of the end of the most
recently concluded Fiscal Quarter, calculated at the lower of cost or fair
market value (in each case determined in accordance with GAAP).
8
<PAGE> 15
"Guaranty" means the First Amended and Restated General Continuing
Repayment Guaranty, dated as of the Closing Date, executed by General Partner in
favor of Administrative Agent and the Banks.
"Hedging Contract" means, for any Person, any interest rate, commodity,
foreign exchange or other hedging agreement (including swaps, collars, caps and
forward contracts) between such Person and one or more counterparties providing
for the transfer or mitigation of fluctuations of interest rates, exchange rates
or other prices either generally or under specific contingencies.
"IAC" means Irvine Apartment Communities, Inc., a Maryland corporation.
"Indebtedness" as applied to any Person (and without duplication),
means (a) all indebtedness, obligations or other liabilities of such Person for
borrowed money, (b) all indebtedness, obligations or other liabilities of such
Person evidenced by Securities or other similar instruments, (c) all Contingent
Obligations of such Person exclusive of all indebtedness, obligations and other
liabilities in respect of Hedging Contracts purchased to hedge Indebtedness, (d)
all reimbursement obligations and other liabilities of such Person with respect
to letters of credit or banker's acceptances issued for such Person's account or
other similar instruments for which a contingent liability exists, (e) all
obligations of such Person to pay the deferred purchase price of Property or
services, (f) all obligations in respect of Capital Leases (including ground
leases) of such Person, (g) all indebtedness obligations or other liabilities of
such Person or others secured by a Lien on any asset of such Person, whether or
not such indebtedness, obligations or liabilities are assumed by, or are a
personal liability of such Person, (h) all indebtedness, obligations or other
liabilities (other than interest expense liability) in respect of Interest Rate
Contracts and foreign currency exchange agreements (other than Interest Rate
Contracts purchased to hedge Indebtedness), (i) ERISA obligations currently due
and payable, and (j) all trade payables for construction in progress. As used
herein, "Indebtedness" shall not include assessment district or community
facilities district indebtedness not shown on the Borrower's balance sheet.
"Indemnitee" has the meaning set forth in Section 9.3(b).
"Initial Closing Date" means November 20, 1998.
"Initial Term" means the period commencing as of the Closing Date and
ending as of the Original Maturity Date
"Interest Expense" means, for any period, the sum (without duplication)
for such period of (i) total interest expense, whether paid or accrued, of the
Borrower and the Consolidated Subsidiaries, including without limitation the
portion of any obligations under any Capital Lease allocable to interest
expense, and the Borrower's Share of interest expenses in Unconsolidated Joint
Ventures but excluding amortization or write-off of debt discount and expense,
(ii) capitalized interest, (iii) to the extent not included in clauses (i) and
(ii) the Borrower's pro rata share of interest expense and other amounts of the
type referred to in such clauses of the Unconsolidated Joint Ventures, and (iv)
interest incurred on any liability or obligation that constitutes a contingent
Obligation of Borrower or any Consolidated Subsidiary,
9
<PAGE> 16
and in each case taking into account the benefit of any Hedging Contract and the
amortized cost therefor for the applicable period. For purposes of clause (iii),
Borrower's pro rata share of interest expense or other amount of any
Unconsolidated Joint Venture shall be deemed equal to the product of (a) the
interest expense or other relevant amount of such Unconsolidated Joint Venture,
multiplied by (b) the percentage of the total outstanding Capital Stock of such
Person held by Borrower or any Consolidated Subsidiary, expressed as a decimal.
"Interest Period" means, with respect to each LIBOR Borrowing the
period commencing on the date of such Borrowing as specified in the applicable
Notice of Interest Period Election and ending 1, 2, 3, or 6 months thereafter,
as the Borrower may elect in the applicable Notice of Interest Period Election;
provided that:
(a) any Interest Period which would otherwise end on a day
which is not a LIBOR Business Day shall be extended to the next
succeeding LIBOR Business Day unless such LIBOR Business Day falls in
another calendar month, in which case such Interest Period shall end on
the next preceding LIBOR Business Day;
(b) any Interest Period which begins on the last LIBOR
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
LIBOR Business Day of a calendar month; and
(c) any Interest Period which would otherwise end after the
Maturity Date shall end on the Maturity Date.
"Interest Rate Contracts" means, collectively, interest rate swap,
collar, cap or similar agreements providing interest rate protection.
"Interest Rate Hedges" has the meaning set forth in Section 5.13.
"Investment" means, with respect to any Person, (i) any direct or
indirect purchase or other acquisition by that Person of stock or securities, or
any beneficial interest in stock or other securities, of any other Person, any
partnership interest (whether general or limited) in any other Person, or all or
any substantial part of the business or assets of any other Person, (ii) any
direct or indirect loan, advance or capital contribution by that Person to any
other Person, including all indebtedness and accounts receivable from that other
Person that are not current assets or did not arise from sales to that other
Person in the ordinary course of business. The amount of any Investment shall be
the original cost of such Investment plus the cost of all additions thereto,
without any adjustments for increases or decreases in value, or write-ups,
write-downs or write-offs with respect to such Investment.
"Investment Affiliate" means any Person in whom Borrower holds an
equity interest, directly or indirectly, whose financial results are not
consolidated under GAAP with the financial results of Borrower on the
consolidated financial statements of Borrower.
"Joint Venture" means a joint venture, partnership or similar
arrangement, whether in corporate, partnership or other legal form.
10
<PAGE> 17
"LIBOR Borrowing" has the meaning set forth in Section 1.3.
"LIBOR Business Day" means any Domestic Business Day on which
commercial banks are open for international business (including dealings in
dollar deposits) in London.
"LIBOR 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 LIBOR Lending Office)
or such other office, branch or affiliate of such Bank as it may hereafter
designate as its LIBOR Lending Office by notice to the Borrower and the
Administrative Agent.
"LIBOR Loan" means a Loan made by a Bank which accrues interest at an
interest rate based on the Adjusted London Interbank Offered Rate.
"LIBOR 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) under Regulation D,
as Regulation D may be amended, modified or supplemented, 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 LIBOR Loans
is determined or any category of extensions of credit or 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 LIBOR Reserve
Percentage.
"Lien" means with respect to any Property, any mortgage, pledge,
negative pledge, charge, security interest or encumbrance of any kind, or any
other type of preferential arrangement, in each case that has the effect of
creating a security interest, in respect of such Property, including without
limitation, all assessment district and community facility district debt shown
on the balance sheet of the owner of such Property. For the purposes of this
Agreement, the Borrower or any Consolidated Subsidiary shall be deemed to own
subject to a Lien any Property 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 Property.
"Loan" means, with respect to any Bank, the principal sum in the amount
of such Bank's Commitment that such Bank agrees to lend and Borrower agrees to
borrow pursuant to Section 2.1 hereof, and "Loans" means, collectively, the
Loans made by all Banks.
"Loan Documents" means this Agreement, the Guaranty and the Notes as
each of them may from time to time hereafter be modified, supplemented or
amended.
"London Interbank Offered Rate" or "LIBOR" applicable to any Interest
Period means the rate of interest (rounded upward, if necessary, to the next
highest 1/100 of 1%) quoted by the Administrative Agent as the London Inter-Bank
Offered Rate for deposits in U.S. Dollars at approximately 11:00 a.m. (London
time) two (2) LIBOR Business Days before the first day of such Interest Period
in an amount approximately equal to the principal amount of the Loans or portion
thereof to which such Interest Period is to apply and for a period of time
comparable to such Interest Period.
11
<PAGE> 18
"Margin Stock" shall have the meaning provided such term in Regulation
U and Regulation G of the Federal Reserve Board.
"Material Adverse Effect" means an effect resulting from any
circumstance or event or series of circumstances or events, of whatever nature
(but excluding general economic conditions), which does or could reasonably be
expected to, materially and adversely (i) effect the business, operations,
properties, assets or financial condition of the Borrower and its Consolidated
Subsidiaries taken as a whole, or (ii) impair the ability of the Borrower and
its Consolidated Subsidiaries, taken as a whole, to perform their respective
obligations under the Loan Documents.
"Materials of Environmental Concern" means any chemical substance (i)
the presence of which requires investigation or remediation under any
Environmental Laws; or (ii) that is or becomes defined as a "hazardous waste" or
"hazardous substance" under any Environmental Laws, including the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9601
et seq.) or the Resource Conservation and Recovery Act (42 U.S.C. Section 6901
et seq.); or (iii) that is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic, or otherwise hazardous and is or becomes
regulated by any governmental authority; or (iv) the presence of which on any
Real Property Asset causes a nuisance upon the Real Property Asset or to
adjacent properties or poses a hazard to any Real Property Asset or to the
health or safety of Persons on or about any Real Property Asset; or (v) without
limitation, which contains gasoline, diesel fuel or other petroleum
hydrocarbons; or (vi) without limitation which contains polychlorinated
biphenyls (PCBs) or asbestos.
"Maturity Date" shall mean the date when all of the Obligations
hereunder shall be due and payable which shall be: (i) the Original Maturity
Date, unless accelerated pursuant to the terms hereof or extended in accordance
with the terms of Section 2.7 hereof, (ii) the First Extended Maturity Date, if
extended in accordance with the terms of Section 2.7 hereof, unless accelerated
pursuant to the terms hereof or extended in accordance with the terms of Section
2.8 hereof, or (iii) the Second Extended Maturity Date, if extended in
accordance with the terms of Section 2.8 hereof, unless accelerated pursuant to
the terms hereof.
"Merger" means the merger of IAC into TICALLC.
"Merger Date" means the date upon which the Merger is legally
effective.
"Moody's" means Moody's Investors Services, Inc. or any successor
thereto.
"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.
12
<PAGE> 19
"Multiple Employer Plan" means a Plan to which Section 413(c) of the
Code applies.
"Net Income" means, for any period, the net earnings (or loss) after
Taxes of the Borrower, on a consolidated basis for such period, calculated in
conformity with GAAP.
"Net Offering Proceeds" means all cash or other assets received by
Borrower as a result of the sale or issuance of common shares of beneficial
interest, preferred shares of beneficial interest, partnership interests,
limited liability company interests, Convertible Securities or other ownership
or equity interests in Borrower less customary costs and discounts of issuance
paid by Borrower, as the case may be.
"Net Operating Income" means, for any period with respect to any
Property owned (directly or beneficially) by Borrower, the net operating income
of such Property for such period (i) determined in accordance with GAAP, (ii)
determined in a manner which is consistent with the past practices of Borrower,
and (iii) inclusive of an allocation of reasonable management fees and
administrative costs to each Property, consistent with the past practices of
Borrower, except that, for purposes of determining Net Operating Income, income
shall not (a) include any items reasonably deemed by Administrative Agent to be
of a non-recurring nature or (b) be reduced by depreciation or amortization.
"Net Price" means, with respect to the purchase and sale of any
Property, without duplication, (i) Cash and Cash Equivalents paid as
consideration for such purchase or sale (after adjusting for the proration of
taxes, assessments, utility and security deposits and other items prorated or
adjusted) plus (ii) the principal amount of any note received or other deferred
payment to be made in connection with such purchase or sale (except as described
in clause (iv) below), plus (iii) the value of any other considerations
delivered in connection with such purchase or sale (as reasonably determined by
Administrative Agent), minus (only in the case of a sale) (iv) until actually
received, the value of any consideration deposited into escrow or subject to
disbursement or claim upon the occurrence of any event, minus (only in the case
of a sale), (v) the value of any consideration required to be paid to any Person
other than the Borrower and its Subsidiaries owning a beneficial interest in
such Property, minus (vi) reasonable costs of sale and taxes paid or payable in
connection with such purchase or sale.
"Net Present Value" shall mean, as to a specified or ascertainable
dollar amount, the present value, as of the date of calculation of any such
amount using a discount rate equal to the Base Rate in effect as of the date of
such calculation.
"Non-Recourse Indebtedness" means Indebtedness with respect to which
recourse is limited to (i) specific assets related to a particular Property or
group of Properties encumbered by a Lien securing such Indebtedness or (ii) any
Subsidiary (provided that if a Subsidiary is a partnership, there is no recourse
to Borrower or General Partner); provided, however, that personal recourse of
Borrower or General Partner for any such Indebtedness for fraud,
misrepresentation, misapplication of cash, waste, environmental claims and
liabilities and other circumstances customarily excluded by institutional
lenders from exculpation provisions and/or included in separate indemnification
agreements in non-recourse financing of real estate shall not, by itself,
prevent such Indebtedness from being characterized as Non-Recourse Indebtedness.
13
<PAGE> 20
"Notes" means the "Notes" as defined in the Original Loan Agreement,
and "Note" means any one of the "Notes."
"Notice of Interest Period Election" has the meaning set forth in
Section 2.14.
"Obligations" means all obligations, liabilities, indemnity obligations
and Indebtedness of every nature of the Borrower, from time to time owing to
Administrative Agent or any Bank under or in connection with this Agreement or
any other Loan Document.
"Occupancy Rate" with respect to any Real Property Asset, shall mean
the ratio of (a) apartment units in such Real Property Asset which are
physically occupied by tenants paying rent pursuant to a lease to (b) the number
of apartment units in such Real Property Asset, expressed as a percentage.
"Original Guarantor" means the Guarantor under the Original Guaranty.
"Original Guaranty" means the "Guaranty" as defined in the Original
Loan Agreement.
"Original Loan Agreement" has the meaning set forth in Section 2.1.
"Original Maturity Date" means November 19,1999.
"Other Indebtedness" means all Indebtedness other than the Obligations.
"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 for Taxes, assessments or other governmental charges
not yet due and payable or which are being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted in
accordance with the terms hereof;
b. statutory liens of carriers, warehousemen, mechanics,
materialmen and other similar liens imposed by law, which are incurred
in the ordinary course of business for sums not more than sixty (60)
days delinquent or which are being contested in good faith in
accordance with the terms hereof;
c. deposits made in the ordinary course of business to secure
liabilities to insurance carriers;
14
<PAGE> 21
d. liens for purchase money obligations for equipment;
provided that (i) the Indebtedness secured by any such Lien does not
exceed the purchase price of such equipment, and (ii) any such Lien
encumbers only the asset so purchased and the proceeds upon sale,
disposition, loss or destruction thereof;
e. easements, rights-of-way, zoning restrictions, other
similar charges or encumbrances and all other items listed on Schedule
B to Borrower's owner's title insurance policies, except in connection
with any Indebtedness, for any of Borrower's Real Property Assets, so
long as the foregoing do not interfere in any material respect with the
use or ordinary conduct of the business of Borrower and do not diminish
in any material respect the value of the Property to which it is
attached or for which it is listed;
f. liens and judgments which have been or will be bonded or
released of record within thirty (30) days after the date such Lien or
judgment is entered or filed against General Partner, Borrower, or any
Subsidiary;
g. liens on Property of the Borrower or its Subsidiaries
(other than Qualifying Unencumbered Property) securing Indebtedness
which may be incurred or remain outstanding without resulting in an
Event of Default hereunder; and
h. assessment or community facilities district indebtedness,
in each case not then in default, building restrictions, zoning laws
and the like, and residential leases entered into in the ordinary
course of business.
"Person" means an individual, a corporation, a partnership, joint
venture, 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 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 ERISA Group for employees of any Person which was at such time a
member of the ERISA Group.
"Property" means, with respect to any Person, any real or personal
property, building, facility, structure, equipment or unit, or other asset owned
by such Person.
"Qualifying Unencumbered Property" means, as of the Initial Closing
Date, the Real Property Assets set forth on Schedule 4.17 hereto (the "Initial
Qualifying Unencumbered Properties") and thereafter any other Real Property
Assets (without duplication) as designated by Borrower from time to time;
provided, however that each such Real Property Asset, including the Initial
Qualifying Unencumbered Property, must: (v) be a Real Property Asset upon which
an apartment project and related improvements has been, or is being,
constructed; (w) be wholly-owned (directly or beneficially) by Borrower; (x) not
be subject (nor may any equity interests in such Property be subject) to a Lien
(other than Permitted Liens) which secures Indebtedness of any Person; (y) not
be subject (nor may any equity interests in such Property be
15
<PAGE> 22
subject) to any covenant, condition, or other restriction which prohibits the
creation or assumption of any Lien upon such Real Property Asset; and (z) to the
best knowledge of Borrower, not have Materials of Environmental Concern located
on, under or above such Real Property Asset, which are reasonably expected,
pursuant to Section 5.15, to involve an expenditure of Significant Environmental
Cost. The Borrower may designate, in its sole discretion and at any time, the
Real Property Assets which satisfy the requirements set forth herein and are
thus Qualifying Unencumbered Properties. If, at any time, a Real Property Asset
does not satisfy the requirements of subclauses (v) through (z) above, then it
shall not be a Qualifying Unencumbered Property.
"Rating Agencies" means, collectively, S&P, Moody's and Fitch; other
nationally recognized rating agencies shall be "Rating Agencies" following
approval thereof by the Administrative Agent.
"Real Property Asset(s)" means as of any time, the real property
asset(s) owned directly or indirectly by the Borrower and the Consolidated
Subsidiaries at such time.
"Recourse Debt" shall mean Indebtedness that is not Non-Recourse
Indebtedness.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Required Banks" means at any time Banks having at least sixty-six and
two thirds percent (66 2/3%) of the Aggregate Commitments, but in no event less
than two (2) Banks. "Restricted Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any Capital Stock of any
Borrower Party now or hereafter outstanding, except (a) a dividend or other
distribution payable solely in shares or equivalents of the same class of
Capital Stock and (b) the issuance of equity interests upon the exercise of
outstanding warrants, options or other rights, or (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any Capital Stock of any Borrower Party now or
hereafter outstanding.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., or any successor thereto.
"Second Extended Maturity Date" means November 17, 2000.
"Secured Debt" means Indebtedness, the payment of which is secured by a
Lien on any Property owned or leased by General Partner, Borrower, or any
Subsidiary.
"Securities" means any stock, partnership interests, shares, shares of
beneficial interest, voting trust certificates, bonds, debentures, notes or
other evidences of indebtedness, secured or unsecured, convertible, subordinated
or otherwise, or in general any instruments commonly known as "securities," or
any certificates of interest, shares, or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire any of the foregoing, but shall not include any evidence of
the obligations.
16
<PAGE> 23
"Series A Preferred Securities" means the 8 1/4% Series A REIT Trust
Originated Preferred Securities sold by IAC Capital Trust, a Delaware business
trust.
"Series B Preferred Securities" means the Series B Preferred Limited
Partner Units issued by Borrower pursuant to the Designation Instrument for such
Series B Preferred Limited Partner Units.
"Significant Environmental Costs" means, as to any Real Property Asset,
Estimated Environmental Costs determined pursuant to Section 5.15 hereof, to
exceed one and one-half percent (1.5%) of (i) the Gross Asset Value of such Real
Property Asset in the case of a Real Property Asset that has been fully
constructed, or (ii) the sum of land cost (at the lower of cost or fair market
value) plus Borrower's estimated construction cost in the case of any other Real
Property Asset.
"Stabilized Asset" means any Qualifying Unencumbered Property which,
while owned by Borrower achieved (i) an average Occupancy Rate greater than or
equal to 85% during a calendar month and (ii) an Occupancy Rate of at least 85%
on the last day of such month. As used herein, "Stabilized Asset" means any
Qualifying Unencumbered Property which, while owned by Borrower, at one time
satisfied the foregoing requirements, regardless of whether such Property
subsequently fails to maintain such Occupancy Rates.
"Solvent" means, with respect to any Person, that the fair saleable
value of such Person's assets exceeds the Indebtedness of such Person.
"Subsidiary" means any corporation or other entity of which securities
or other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are at the
time directly or indirectly owned by the Borrower.
"Taxes" means all federal, state, local and foreign income and gross
receipts taxes.
"Termination Event" shall mean (i) a "reportable event", as such term
is described in Section 4043 of ERISA (other than a "reportable event" not
subject to the provision for 30-day notice to the PBGC), or an event described
in Section 4062(e) of ERISA, (ii) the withdrawal by any member of the ERISA
Group from a Multiple Employer Plan during a plan year in which it is a
"substantial employer" (as defined in Section 4001 (a)(2) of ERISA), or the
incurrence of liability by any member of the ERISA Group under Section 4064 of
ERISA upon the termination of a Multiple Employer Plan, (iii) the filing of a
notice of intent to terminate any Plan under Section 4041 of ERISA, other than
in a standard termination within the meaning of Section 4041 of ERISA, or the
treatment of a Plan amendment as a distress termination under Section 4041 of
ERISA, (iv) the institution by the PBGC of proceedings to terminate, impose
liability (other than for premiums under Section 4007 of ERISA) in respect of,
or cause a trustee to be appointed to administer, any Plan or (v) any other
event or condition that might reasonably constitute grounds for the termination
of, or the appointment of a trustee to administer, any Plan or the imposition of
any liability or encumbrance or Lien on the Real Property Assets or any member
of the ERISA Group under ERISA.
17
<PAGE> 24
"TIC" means The Irvine Company, a Delaware corporation.
"TICALLC" means TIC Acquisition LLC, a Delaware limited liability
company.
"Total Liabilities" means, as of the date of determination and without
duplication, all Indebtedness of General Partner (calculated as provided in
Section 1.2), on a consolidated basis, plus Borrower's Share of all Indebtedness
of Investment Affiliates for which there is no recourse to General Partner or
Borrower (or any Property thereof) plus the actual or potential liability of
General Partner, Borrower or any Subsidiary for any Indebtedness of Investment
Affiliates that is recourse to General Partner or Borrower (or Property thereof)
plus accounts payable incurred in the ordinary course of business, plus all
other items which, in accordance with GAAP, would be included as liabilities on
the liability side of the balance sheet of such Person.
"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
Administrative 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.
"Unconsolidated Joint Venture" means (i) any Joint Venture of Borrower
or any Consolidated Subsidiary in which Borrower or such Consolidated Subsidiary
holds any Capital Stock but which would not be combined with Borrower or such
Consolidated Subsidiary in the consolidated financial statements of Borrower in
accordance with GAAP, and (ii) any Investment of Borrower or any Consolidated
Subsidiary in any Person that is not a Joint Venture.
"Unencumbered Asset Pool Value" means, without duplication, the sum of
the following with respect to Qualifying Unencumbered Properties:
(i) the Net Price of any Acquired Asset that was acquired
(directly or indirectly) by the Borrower during the most recent Fiscal
Quarter; plus
(ii) the aggregate Unencumbered Net Operating Income for the
three (3) calendar months most recently ended multiplied by four (4)
and divided by the FMV Cap Rate with respect to (v) any Acquired
Stabilized Asset that was acquired (directly or indirectly) by the
Borrower during one of the four (4) consecutive Fiscal Quarters most
recently ended (other than the most recent Fiscal Quarter), (w) any
Acquired Asset which was not an Acquired Stabilized Asset and which has
not become a Stabilized Asset during one of the four (4) consecutive
Fiscal Quarters most recently ended, (x) any Acquired Asset which was
not an Acquired Stabilized Asset but which has become a Stabilized
Asset during one of the four (4) consecutive Fiscal Quarters most
recently ended, (y) any Qualifying Unencumbered Property which became a
Stabilized Asset during the four (4) consecutive Fiscal Quarters most
recently ended, and (z) any Qualifying Unencumbered Property which is
not a Stabilized Asset (provided, however, that the Unencumbered Asset
Pool Value attributable to the Qualifying Unencumbered Properties
included in subclauses (w) and (z) above, together with Acquired Assets
in (i) above which were not Acquired Stabilized Assets, may not exceed
twenty-five percent (25%) of the aggregate Unencumbered Asset Pool
Value); and
18
<PAGE> 25
(iii) the aggregate Unencumbered Net Operating Income for the
four (4) consecutive Fiscal Quarters most recently ended divided by the
FMV Cap Rate with respect to (x) any Acquired Stabilized Asset which
has been owned (directly or beneficially) by the Borrower for more than
four (4) consecutive Fiscal Quarters and which is a Qualifying
Unencumbered Property, and (y) any Qualifying Unencumbered Property
which became a Stabilized Asset prior to the beginning of the four (4)
consecutive Fiscal Quarters most recently ended and which has been
owned (directly or indirectly) by the Borrower for more than four (4)
consecutive Fiscal Quarters. Notwithstanding the foregoing, in the
event that Borrower or Administrative Agent has determined that there
is a Significant Environmental Cost with respect to any Real Property
Asset referred to in this definition (and only for so long as Borrower
or Administrative Agent has made such determination), then the value
attributed to such asset shall be reduced, but not below zero, by the
amount of such Significant Environmental Cost.
"Unencumbered Net Operating Income" means for any period for all
Qualifying Unencumbered Properties owned (directly or beneficially) by the
Borrower during the applicable period, Net Operating Income from each such
Qualifying Unencumbered Property.
"United States" means the United States of America, including the fifty
states and the District of Columbia.
"Unsecured Debt" means Indebtedness of Borrower which is not Secured
Debt, including without limitation the aggregate amount of all Loans outstanding
hereunder.
"Unsecured Interest Expense" means Interest Expense other than Interest
Expense payable in respect of Secured Debt.
"Unused Commitments" shall mean 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 Borrower or another Person or otherwise
pursuant to any loan document, written instrument or otherwise.
"Wells Fargo" means Wells Fargo Bank, National Association, in its
individual capacity.
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 Ernst & Young
LLP) with the most recent audited consolidated financial statements of the
Borrower and its Consolidated Subsidiaries delivered to the Administrative
Agent; provided that for purposes of references to the financial results and
information of "General Partner, on a consolidated basis," General Partner shall
be deemed to own one hundred percent (100%) of the partnership interests in
Borrower; and provided further that, if the Borrower notifies the Administrative
Agent that the Borrower wishes to amend any
19
<PAGE> 26
covenant in Article V to eliminate the effect of any change in GAAP on the
operation of such covenant (or if the Administrative 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
reasonably satisfactory to the Borrower and the Required Banks.
SECTION 1.3 Borrowings. The term "Borrowing" denotes the aggregation of
Loans of one or more Banks made to the Borrower pursuant to Article 2 on the
same date. In the event that the First Option To Extend and/or the Second Option
To Extend are exercised in accordance with the terms of Sections 2.7 and/or 2.8
hereof, respectively, the continuation of the Loans into the applicable
extension term shall be deemed to constitute a new Borrowing as of the first day
of the Interest Period applicable to such extension term (notwithstanding the
fact that no new Loans are actually being funded). The term "LIBOR Borrowing"
shall mean a Borrowing comprised of LIBOR Loans. The term "Base Rate Borrowing"
shall mean a Borrowing comprised of Base Rate Loans.
ARTICLE 2
THE CREDITS
SECTION 2.1 Loans. By and subject to the terms and conditions set forth
in this Agreement, each Bank severally agrees to lend to the Borrower and
Borrower agrees to borrow from each Bank on the Closing Date an amount equal to
such Bank's Commitment. Notwithstanding anything to the contrary herein, no
Bank, subsequent to funding its Loan in the amount of its Commitment, shall have
any further commitment or obligation to fund any Loans under this Agreement and
in no event shall any Bank be obligated to lend an amount exceeding such Bank's
Commitment. Effective as of the Closing Date, the outstanding principal balance
of that certain term loan made by the Banks to Borrower pursuant to that certain
Unsecured Loan Agreement dated November 20, 1998, by and among Borrower and the
Banks (the "Original Loan Agreement") shall be deemed to be the outstanding
principal balance of the Loan and all accrued but unpaid interest under the
Original Loan Agreement, if any, shall be deemed to be accrued interest
hereunder.
SECTION 2.2 Funding of Loans.
(a) Not later than 12:00 Noon (San Francisco time) on the Closing Date,
each Bank shall make available an amount equal to its Commitment in Federal
funds immediately available in San Francisco, to the Administrative Agent at its
address referred to in Section 9. 1.
(b) Unless the Administrative Agent shall have received notice from a
Bank prior to the Closing Date that such Bank will not make available to the
Administrative Agent such Bank's share of the initial Borrowing, the
Administrative Agent may assume that such Bank has made such share available to
the Administrative Agent on the date of such Borrowing in accordance with
subsection (a) of this Section 2.2 and the Administrative Agent may, in reliance
upon such assumption, but shall not be obligated to, make available to the
Borrower on such date a corresponding amount on behalf of such Bank. If and to
the extent that such Bank
20
<PAGE> 27
shall not have so made such share available to the Administrative Agent, such
Bank and the Borrower severally agree to repay to the Administrative Agent
forthwith on demand, and in the case of the Borrower two (2) Domestic Business
Days after demand, such corresponding amount together with interest thereon, for
each day from the date such amount is made available to the Borrower until the
date such amount is repaid to the Administrative Agent, at (i) in the case of
the Borrower, a rate per annum. equal to the interest rate applicable thereto
pursuant to Section 2.4 and (ii) in the case of such Bank, the Federal Funds
Rate. If such Bank shall repay to the Administrative Agent such corresponding
amount, such amount so repaid shall constitute such Bank's Loan included in such
Borrowing for purposes of this Agreement.
SECTION 2.3 Notes.
(a) The Loan of each Bank shall be evidenced by such Bank's Note.
(b) Reserved.
(c) The Loans shall mature, and the principal amount thereof shall be
due and payable, on the Maturity Date.
SECTION 2.4 Interest Rates.
(a) Each Base Rate Loan shall bear interest on the outstanding
principal amount hereof, or each day from the date such Loan is made until the
date it is repaid or converted into a LIBOR Loan pursuant to Section 2.14 or at
the Maturity Date, at a rate per annum, equal to the Base Rate plus the
Applicable Margin for Base Rate Loans for such day. Such interest shall be
payable for each Interest Period on the first day of each calendar month.
(b) Each LIBOR 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 for LIBOR Loans for
such day plus the Adjusted London Interbank Offered Rate applicable to such
Interest Period. Such interest shall be payable for each Interest Period on the
first day of each calendar month.
(c) 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 applicable law, overdue interest in respect of
all Loans, shall bear interest at the Default Rate.
(d) The Administrative Agent shall determine each interest rate
applicable to the Loans hereunder. The Administrative Agent shall give prompt
notice to the Borrower and the Banks of each rate of interest so determined, and
its determination thereof shall be conclusive in the absence of demonstrable
error.
SECTION 2.5 Intentionally Omitted.
SECTION 2.6 Maturity Date. The entire principal balance of the Loans
(together with accrued and unpaid interest thereon) and all other Obligations
hereunder shall be due and payable on the Maturity Date. All payments due to the
Administrative Agent under this Agreement, whether at the Maturity Date or
otherwise, shall be paid in immediately available funds.
21
<PAGE> 28
SECTION 2.7 First Option To Extend.
The Borrower shall have the option to extend the term of the Loans from
the Maturity Date (for purposes of this Section, "Original Maturity Date"), to
the First Extended Maturity Date, upon satisfaction of each of the following
conditions precedent:
(a) The Borrower shall provide the Administrative Agent with written
notice of the Borrower's request to exercise the First Option to Extend not more
than ninety (90) days but not less than thirty (30) days prior to the Original
Maturity Date;
(b) As of the date of the Borrower's delivery of notice of request to
exercise the First Option to Extend, and as of the Original Maturity Date, no
Event of Default shall have occurred and be continuing, and the Borrower shall
so certify in writing; and
(c) On or before the Original Maturity Date, the Borrower shall pay to
the Administrative Agent on behalf of the Banks an extension fee in the amount
of One Hundred Fifty Thousand Dollars ($150,000.00).
SECTION 2.8 Second Option To Extend.
The Borrower shall have the option to extend the term of the Loans from
the Maturity Date (for purposes of this Section, "First Extended Maturity
Date"), to the Second Extended Maturity Date, upon satisfaction of each of the
following conditions precedent:
(a) The Borrower shall provide the Administrative Agent with written
notice of the Borrower's request to exercise the Second Option to Extend not
more than ninety (90) days but not less than thirty (30) days prior to the First
Extended Maturity Date;
(b) As of the date of the Borrower's delivery of notice of request to
exercise the Second Option to Extend, and as of the First Extended Maturity
Date, no Event of Default shall have occurred and be continuing, and the
Borrower shall so certify in writing;
(c) On or before the First Extended Maturity Date, the Borrower shall
pay to the Administrative Agent on behalf of the Banks an extension fee in the
amount of One Hundred Fifty Thousand Dollars ($150,000.00); and
(d) The Borrower shall have previously exercised the First Option to
Extend in accordance with the terms of Section 2.7 hereof.
SECTION 2.9 Lockout; Optional Prepayments.
(a) During the Initial Term, the Borrower shall have no right to prepay
all or any portion of the principal amount of any Loan (excluding payment in
full on the Maturity Date). After the Initial Term, if the Maturity Date is
extended as herein provided, the Borrower may prepay the Loans in accordance
with Sections 2.9(b) and (c) below.
22
<PAGE> 29
(b) The Borrower may, upon at least one (1) Domestic Business Day's
notice to the Administrative Agent, prepay any Base Rate Loans, in whole or in
part at any time, or from time to time in part in amounts aggregating Five
Hundred Thousand Dollars ($500,000) or any larger multiple of One Hundred
Thousand Dollars ($100,000), by paying the principal amount thereof. Each such
optional prepayment shall be applied to prepay ratably the Loans of the several
Banks included in such Borrowing.
(c) Except as provided in Article VIII and except with respect to any
LIBOR Loan which has been converted to a Base Rate Loan pursuant to Sections
8.1, 8.2 or 8.5 hereof, the Borrower may not prepay all or any portion of the
principal amount of any LIBOR Loan prior to the end of the Interest Period
applicable thereto unless the Borrower shall also pay any applicable expenses
pursuant to Section 2.11. The Borrower shall provide at least three (3) LIBOR
Business Days' notice to the Administrative Agent prior to any such optional
prepayment. Each such optional prepayment shall be in the amounts set forth in
Section 2.9(b) above, except that any LIBOR Loan which has been converted to a
Base Rate Loan pursuant to Sections 8.1, 8.2 or 8.5 hereof may be prepaid
without ratable payment of other Loans which have not been so converted.
(d) In no event shall any amounts prepaid be reborrowed.
SECTION 2.10 General Provisions as to Payments.
(a) The Borrower shall make each payment of interest and principal on
the Loans and of fees hereunder, not later than 10:00 A.M. (San Francisco time)
on the date when due, in Federal or other funds immediately available in San
Francisco, to the Administrative Agent at its address referred to in Section 9.
1. The Administrative Agent will promptly (and in any event within one (1)
Domestic Business Day after receipt thereof) distribute to each Bank its ratable
share of each such payment received by the Administrative Agent for the account
of the Banks. If and to the extent that the Administrative Agent shall receive
any such payment for the account of the Banks on or before 10:00 A.M. (San
Francisco time) on any Domestic Business Day, and Administrative Agent shall not
have distributed to any Bank its applicable share of such payment on such
Domestic Business Day, Administrative Agent shall distribute such amount to such
Bank together with interest thereon, for each day from the date such amount
should have been distributed to such Bank until the date Administrative Agent
distributes such amount to such Bank, at the Federal Funds Rate. 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 LIBOR Loans shall be due on a day
which is not a LIBOR Business Day, the date for payment thereof shall be
extended to the next succeeding LIBOR Business Day unless such LIBOR Business
Day falls in another calendar month, in which case the date for payment thereof
shall be the next preceding LIBOR 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 Administrative 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 Administrative Agent
may assume that the
23
<PAGE> 30
Borrower has made such payment in full to the Administrative Agent on such date
and the Administrative Agent may, in reliance upon such assumption, cause to be
distributed to 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 Administrative 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 Administrative Agent, at the Federal Funds Rate.
SECTION 2.11 Funding Losses. If the Borrower makes any payment of
principal with respect to any LIBOR Loan (pursuant to Articles 2, 6 or 8 or
otherwise) on any day other than the last day of the Interest Period applicable
thereto, or if the Borrower shall deliver a Notice of Interest Period Election
specifying that a LIBOR Loan shall be converted on a date other than the last
day of the then current Interest Period applicable thereto, the Borrower shall
reimburse each Bank within fifteen (15) days after certification of such Bank of
such loss or expense (which shall be delivered by each such Bank to
Administrative Agent for delivery to Borrower) for any resulting loss or expense
incurred by it (or by an existing Participant in the related Loan), 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, provided that such Bank shall have delivered to Administrative
Agent and Administrative Agent shall have delivered to the Borrower a
certification as to the amount of such loss or expense, which certification
shall set forth in reasonable detail the basis for and calculation of such loss
or expense and shall be conclusive in the absence of demonstrable error.
SECTION 2.12 Computation of Interest and Fees. All 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).
SECTION 2.13 Use of Proceeds. The Borrower shall use the proceeds of
the Loans for general corporate purposes, including, without limitation, the
acquisition of multifamily apartment projects and real property to be used in
connection with construction, management, development, acquisition and operation
of multifamily apartment projects and for general working capital needs of the
Borrower.
SECTION 2.14 Method of Electing Interest Rates. (a) The Loans included
in the initial Borrowing shall bear interest initially at the interest rate(s)
applicable thereto pursuant to Section 2.4 hereof during the Interest Period(s)
specified by the Borrower in the initial Notice of Interest Period Election.
Thereafter, the Borrower may from time to time elect to change or continue the
Interest Period(s) applicable to the LIBOR Loans, or the applicable portions
thereof (subject in each case to the provisions of Article VIII), as follows:
(i) if such Loans are LIBOR Loans, the Borrower may elect to continue,
all or any portion of such Loans as LIBOR Loans for an additional Interest
Period or additional Interest Periods, in each case effective on the last day of
the then current Interest Period applicable to such Loans, or on such other date
designated by Borrower in the Notice of Interest Period Election provided
Borrower shall pay any losses pursuant to Section 2.11.
24
<PAGE> 31
Each such election shall be made by delivering a notice in the form of
Exhibit "C" (a "Notice of Interest Period Election") to the Administrative Agent
by 11:00 A.M. (San Francisco time) at least three (3) LIBOR Business Days before
the continuation is to be effective. A Notice of Interest Period Election may,
if it so specifies, apply to only a portion of the aggregate principal amount of
the LIBOR Loans; provided that (i) such portion is allocated ratably among all
LIBOR Loans, (ii) there shall be no more than five (5) LIBOR fixings outstanding
at any time, and (iii) no Interest Period shall extend beyond the Maturity Date.
(b) Each Notice of Interest Period Election shall specify:
(i) the portion of the LIBOR Loans to which such notice
applies;
(ii) the date on which the continuation is to be effective,
which shall comply with the terms of subsection (a) above; and
(iii) if such Loans are to be continued as LIBOR Loans for an
additional Interest Period, the duration of such additional Interest Period,
which shall comply with the terms of subsection (a) above.
Each Interest Period specified in a Notice of Interest Period Election shall
comply with the provisions of the definition of Interest Period; provided that
the Borrower may request an additional Interest Period of less than one (1)
month if and only if all of the Banks, in their sole and absolute discretion,
approve of such request.
(c) Upon receipt of a Notice of Interest Period Election from the
Borrower pursuant to subsection (a) above, the Administrative Agent shall notify
each Bank the same day as it receives such Notice of Interest Period Election of
the contents thereof and the Interest Periods (if different from those requested
by the Borrower) and such notice shall not thereafter be revocable by the
Borrower. If the Borrower fails to deliver a timely Notice of Interest Period
Election to the Administrative Agent for the LIBOR Loans (or the relevant
portions thereof), such Loans (or the relevant portions thereof) shall be
continued as LIBOR Loans on the last day of the then current Interest Period
applicable thereto for an additional Interest Period of one (1) month; provided,
however, that if such additional Interest Period would extend beyond the
Maturity Date, then such Loans (or the relevant portions thereof) shall be
converted into Base Rate Loans on the last day of the then current Interest
Period applicable thereto. Within one LIBOR Business Day after receipt of a
Notice of Interest Period Election from the Borrower pursuant to subsection (a)
above, the Administrative Agent shall notify each Bank of the interest rates
determined pursuant thereto.
25
<PAGE> 32
ARTICLE 3
CONDITIONS
SECTION 3.1 Closing. The closing hereunder shall occur on the date when
each of the following conditions is satisfied (or waived by the Administrative
Agent and the Banks) (provided that if not all of the conditions are satisfied
or waived until after 9:00 A.M. P.S.T. on a particular date, then the closing
hereunder shall occur on the LIBOR Business Day next succeeding such date) (the
"Closing Date"):
(a) the Merger Date shall have occurred and the Administrative
Agent shall have received such evidence of the occurrence of the Merger Date as
Administrative Agent may reasonably require;
(b) the Borrower, the Administrative Agent and each of the
Banks shall have executed and delivered to the Borrower and the Administrative
Agent a duly executed original of this Agreement;
(c) the General Partner shall have executed and delivered to
the Administrative Agent a duly executed original of the Guaranty;
(d) the Administrative Agent shall have received an opinion of
O'Melveny & Myers, LLP, counsel for the Borrower and the General Partner,
acceptable to the Administrative Agent, and its counsel;
(e) the Administrative Agent shall have received all documents
the Administrative Agent may reasonably request relating to the existence of the
Borrower and 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 satisfactory to the Administrative Agent. Such
documentation shall include, without limitation, the agreement of limited
partnership of the Borrower, as well as the certificate of limited partnership
of the Borrower, both as amended, modified or supplemented to the Closing Date,
certified to be true, correct and complete by a senior officer of the Borrower
as of a date not more than ten (10) days prior to the Closing Date, together
with a long-form certificate of good standing as to the Borrower from the
Secretary of State (or the equivalent thereof) of Delaware, a good standing
certificate issued by the Secretary of State of the State of California, each to
be dated not more than thirty (30) days prior to the Closing Date, as well as
the certificate of formation and limited liability company agreement of General
Partner, as amended, modified or supplemented prior to the closing date,
certified to be true, correct and complete by the managing member of General
Partner as of a date not more than ten (10) days prior to the Closing Date,
together with a good standing certificate as to General Partner from the
Secretary of State (or equivalent thereof) of Delaware, to be dated not more
than thirty (30) days prior to the Closing Date;
(f) the Administrative Agent shall have received all
certificates, agreements and other documents and papers referred to in this
Section 3. 1, unless otherwise specified, in sufficient counterparts,
satisfactory in form and substance to the Administrative Agent in its sole
discretion;
(g) the Borrower shall have taken all actions required to
authorize the execution and delivery of this Agreement and the other Loan
Documents and the performance thereof by the Borrower;
(h) the Administrative Agent shall be satisfied in its
reasonable discretion that none of the Borrower, General Partner nor any
Consolidated Subsidiary is subject to any present or contingent environmental
liability which could have a Material Adverse Effect;
(i) intentionally omitted.
26
<PAGE> 33
(j) the Administrative 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, General Partner and the
applicable Consolidated Subsidiaries, and the validity and enforceability, of
the Loan Documents, or in connection with any of the transactions contemplated
thereby, and such consents, licenses and approvals shall be in full force and
effect;
(k) the Administrative Agent shall have received the audited
financial statements of the Borrower, its Consolidated Subsidiaries and IAC for
the Fiscal Year ending December 31, 1998; and
(l) no Default or Event of Default shall have occurred.
SECTION 3.2 Borrowings. The obligation of any Bank to make a Loan on
the Closing Date in the amount of its Commitment is subject to the satisfaction
of each of the following conditions:
(a) each of the conditions in Section 3.1 shall have been
satisfied (or waived by the Administrative Agent and the Banks) on or before
9:00 A.M. P.S.T. on the Closing Date;
(b) the representations and warranties of the Borrower
contained in this Agreement (other than representations and warranties that
expressly speak as of a different date) 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 such Loans;
(c) 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, which does or seeks to enjoin, prohibit or
restrain, the making or repayment of the Loans or the consummation of the
transactions contemplated by this Agreement;
(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; and
(e) the Borrower shall have delivered to the Administrative
Agent the initial Notice of Interest Period Election at least two (2) LIBOR
Business Days prior to the Closing Date.
Each Borrowing hereunder (including, without limitation, any deemed Borrowing
upon an extension of the term hereof) 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 (a), (b) and (c) of this section, except as otherwise disclosed in
writing by Borrower to the Banks.
27
<PAGE> 34
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
In order to induce the Administrative Agent and each of the other Banks
which is or may become a party to this Agreement to make the Loans, the Borrower
makes the following representations and warranties as of the Closing Date. 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 a limited partnership,
duly formed and validly existing as a limited partnership under the laws of the
State of Delaware and has all powers and all material governmental licenses,
authorizations, consents and 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 the State of
California and in every other jurisdiction in which the failure to be so
qualified and/or in good standing is likely to have a Material Adverse Effect.
General Partner is a limited liability company, duly formed, validly existing
and in good standing as a limited liability company under the laws of the State
of Delaware and has all powers and all material governmental licenses,
authorizations, consents and 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
reasonably expected to have a Material Adverse Effect.
SECTION 4.2 Power and Authority. The Borrower has the partnership 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
partnership action, if any, 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 in accordance with the terms of this Agreement, 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. General Partner has the power
and authority to execute, deliver and carry out the terms and provisions of each
of the Loan Documents on behalf of the Borrower to which the Borrower 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.
SECTION 4.3 No Violation. Neither the execution, delivery or
performance by or on behalf of the Borrower of the Loan Documents to which it is
a party, 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,
(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 or any of its Consolidated
Subsidiaries pursuant to the terms of any 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) or any of its Consolidated Subsidiaries 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
28
<PAGE> 35
a default by the Borrower under any organizational document of any Person in
which the Borrower has an interest, or cause a default under the Borrower's
agreement or certificate of limited partnership, the consequences of any such
contravention, conflict, breach or default described in clauses (i), (ii) or
(iii) is reasonably expected to have a Material Adverse Effect, or result in or
require the creation or imposition of any Lien whatsoever upon any Property
(except as contemplated herein).
SECTION 4.4 Financial Information.
(a) The consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries, dated as of December 31, 1998, and the related consolidated
statements of Borrower's financial position for the Fiscal Year then ended,
reported on by Ernst & Young LLP, a copy of which has been delivered to each of
the Banks, fairly present, in conformity with GAAP, the consolidated financial
position of the Borrower and its Consolidated Subsidiaries as of such date and
their consolidated results of operations and cash flows for such Fiscal Year.
(b) Since December 31, 1998, (i) except as may have been disclosed in
writing to the Banks, nothing has occurred having a Material Adverse Effect, and
(ii) except as previously disclosed to the Banks, neither the Borrower nor
General Partner has incurred any material indebtedness or guaranty on or before
the Closing Date.
SECTION 4.5 Litigation. Except as previously disclosed by the Borrower
in writing to the Banks, there is no action, suit or proceeding pending against,
or to the knowledge of the Borrower threatened against or affecting, (i) the
Borrower, General Partner or any of their Consolidated Subsidiaries, (ii) the
Loan Documents or any of the transactions contemplated by the Loan Documents or
(iii) any of their assets, before any court or arbitrator or any governmental
body, agency or official in which there is a reasonable possibility of an
adverse decision which actions, suits or proceedings described in clauses (i),
(ii) or (iii) would, individually, or in the aggregate have a Material Adverse
Effect or which in any manner draws into question the validity of this Agreement
or the other Loan Documents.
SECTION 4.6 Compliance with ERISA.
(a) Except as set forth on Schedule 4.6 attached hereto, neither
Borrower nor General Partner is a member of any Plan or Multiemployer Plan or
any other Benefit Arrangement.
(b) The transactions contemplated by the Loan Documents will not
constitute a nonexempt prohibited transaction (as such term is defined in
Section 4975 of the Code or Section 406 of ERISA) which would, individually or
in the aggregate, have a Material Adverse Effect on Borrower or that could
subject the Administrative Agent or the Banks to any tax or penalty or
prohibited transactions imposed under Section 4975 of the Code or Section 502(i)
of ERISA.
SECTION 4.7 Environmental Matters. The Borrower conducts reviews of the
effect of Environmental Laws on the business, operations and properties of the
Borrower and its Consolidated Subsidiaries when necessary in the course of which
it identifies and evaluates associated liabilities and costs (including, without
limitation, any capital or operating expenditures required for clean-up or
closure of properties presently owned, any capital or operating
29
<PAGE> 36
expenditures required to achieve or maintain compliance with environmental
protection standards imposed by law or as a condition of any license, permit or
contract, any related constraints on operating activities, and any actual or
potential liabilities to third parties, including employees, and any related
costs and expenses). On the basis of this review, the Borrower has reasonably
concluded that no such associated liabilities and costs, including the costs of
compliance with Environmental Laws, (i) are, as of the date hereof, Significant
Environmental Costs, or (ii) would have a Material Adverse Effect on the
Borrower, General Partner and their Consolidated Subsidiaries.
SECTION 4.8 Taxes. United States Federal income tax returns of the
Borrower, General Partner and their Consolidated Subsidiaries have been prepared
and filed through the Fiscal Year ended December 31, 1997, and an extension has
been filed for the Fiscal Year ended December 31, 1998. The Borrower, General
Partner and their Consolidated 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, General Partner or any Consolidated
Subsidiary, except such taxes, if any, as are reserved against in accordance
with GAAP, such taxes as are being contested in good faith by appropriate
proceedings or such taxes, the failure to make payment of which when due and
payable will not have, in the aggregate, a Material Adverse Effect. The charges,
accruals and reserves on the books of the Borrower, General Partner and their
Consolidated Subsidiaries in respect of taxes or other governmental charges are,
in the opinion of the Borrower, adequate.
SECTION 4.9 Full Disclosure. All factual information heretofore
prepared by the Borrower and furnished by the Borrower to the Administrative
Agent or any Bank for purposes of or in connection with this Agreement or any
transaction contemplated hereby or thereby is true and accurate in all material
respects as of the date as of which such information is stated or certified.
There is no fact known to the Borrower (other than matters of a general economic
nature) that has had or could reasonably be expected to have a Material Adverse
Effect and that has not been disclosed herein or in such other documents,
certificates or statements executed or delivered in connection herewith.
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 will be Solvent.
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 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
30
<PAGE> 37
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 or those which, if not made or
obtained, would not have a Material Adverse Effect.
SECTION 4.13 Investment Company Act, Public Utility Holding Company
Act. Neither the Borrower, General Partner nor any Consolidated Subsidiary is
(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 Principal Offices. As of the Closing Date, the principal
office, chief executive office and principal place of business of the Borrower
is 550 Newport Center Drive, Newport Beach, California 92660.
SECTION 4.15 Intentionally Omitted
SECTION 4.16 Patents, Trademarks, etc. The Borrower has obtained and
holds in full force and effect all patents, trademarks, servicemarks, 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 reasonably expected to have a Material Adverse
Effect.
SECTION 4.17 Qualifying Unencumbered Properties. Schedule 4.17 attached
hereto and made a part hereof sets forth all the Qualifying Unencumbered
Property owned by the Borrower, directly or indirectly, as of the Closing Date.
As of the Closing Date, all of the Properties set forth in Schedule 4.17 are
Qualifying Unencumbered Properties.
Borrower represents and warrants that, as of the Closing Date, the
Borrower has good and insurable fee title to the Qualifying Unencumbered
Property, free of all Liens other than Permitted Liens and that to its best
knowledge, except as disclosed in writing to the Administrative Agent in
connection with the extension of credit contemplated hereby or hereafter
disclosed in writing to the Administrative Agent from time to time, no Materials
of Environmental Concern are located on, under, over or about such real
property.
SECTION 4.18 No Default. As of the date hereof, no Event of Default or
Default exists under or with respect to any Indebtedness of the Borrower and 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 in any such case, the existence of which default is
reasonably expected to result in a Material Adverse Effect.
SECTION 4.19 Licenses, etc. The Borrower has obtained and does hold in
full force and effect, all franchises, licenses, permits, certificates,
authorizations, qualifications, accreditation, 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 reasonably expected
to have a Material Adverse Effect.
31
<PAGE> 38
SECTION 4.20 Compliance With Law. The Borrower and each of the Real
Property Assets are in compliance with all laws, rules, regulations, orders,
judgments, writs and decrees, including, without limitation, all building and
zoning ordinances and codes, the failure to comply with which is reasonably
expected to have a Material Adverse Effect.
SECTION 4.21 No Burdensome Restrictions. Except as may have been
disclosed by the Borrower in writing to the Banks, 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 reasonably expected to have a Material Adverse Effect.
SECTION 4.22 Brokers' Fees. The Borrower has not dealt with any broker
or finder with respect to the transactions contemplated by this Agreement or
otherwise in connection with this Agreement, and the Borrower has not done any
act, 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, other than the fees payable to the Administrative Agent and the
Banks, and certain other Persons as previously disclosed in writing to the
Administrative Agent.
SECTION 4.23 Labor Matters. As of the date hereof, there are no
collective bargaining agreements or Multiemployer Plans covering the employees
of the Borrower. As of the date hereof, the Borrower is not suffering any
strikes, walkouts, work stoppages or other material labor difficulty which are
reasonably expected to result in a Material Adverse Effect.
SECTION 4.24 Insurance. The Borrower currently maintains 100%
replacement cost insurance coverage (subject to customary deductibles) in
respect of each of the Real Property Assets, as well as commercial general
liability insurance (including "builders' risk" where applicable) 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 liability and casualty insurance with insurers having an A.M. Best
policyholders, rating of not less than A-VII (or such lesser rating satisfactory
to Administrative Agent in its reasonable discretion) in amounts that prudent
owner of assets such as the Real Property Assets would maintain.
SECTION 4.25 Organizational Documents. The documents delivered pursuant
to Section 3. 1 (e) constitute, as of the Closing Date, all of the material
organizational documents (together with all amendments and modifications
thereof) of the Borrower. The Borrower represents that it has delivered to the
Administrative Agent true, correct and complete copies of each of the documents
set forth in Section 3. 1 (e).
SECTION 4.26 Year 2000 Compliance. The Borrower and General Partner
have each conducted a comprehensive review and assessment of the Borrower's and
General Partner's computer applications and made inquiry of the Borrower's and
General Partner's key
32
<PAGE> 39
suppliers, vendors and customers with respect to the "year 2000 problem" (that
is the risk that computer applications may not be able to properly perform
date-sensitive functions after December 31, 1999) and, based on that review and
inquiry, neither the Borrower nor General Partner believes the year 2000 problem
will result in a material adverse change in the Borrower's or General Partner's
ability to repay the Loans.
ARTICLE 5
AFFIRMATIVE AND NEGATIVE COVENANTS
The Borrower covenants and agrees that, so long as any Obligations
remain unpaid:
SECTION 5.1 Financial Information. The Borrower will deliver to
Administrative Agent (with sufficient copies to distribute to all of the Banks):
(a) as soon as available, but in no event later than ninety-five (95)
days after the end of each Fiscal Year of the Borrower, an audited consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries as of the end of
such Fiscal Year and the related consolidated statements of Borrower's
operations and consolidated statements of Borrower's cash flow for such Fiscal
Year setting forth in each case in comparative form the figure for the previous
Fiscal Year, all reported on by Ernst & Young LLP or other independent public
accountants of nationally recognized standing;
(b) as soon as available, but in no event later than sixty (60) days
after the end of each of the first three Fiscal Quarters of the Borrower, (i) a
consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as
of the end of such quarter and the related consolidated statements of Borrower's
operations and consolidated statements of Borrower's cash flow for such Fiscal
Quarter and for the portion of the Borrower's Fiscal Year ended at the end of
such Fiscal Quarter, all reported on by Ernst & Young LLP or their independent
public accountants of nationally recognized standing, and (ii) such other
information reasonably requested by the Administrative Agent or any Bank;
(c) within forty-five (45) days after the end of each Fiscal Quarter, a
certificate in the form of Exhibit D attached hereto of the chief financial
officer or the chief accounting officer of the Borrower or its general partner
(the "Certifying Officer") (i) setting forth in reasonable detail the
calculations required to establish whether the Borrower was in compliance with
the requirements of Section 5.9 on the date of such financial statements; (ii)
certifying (x) that such financial statements fairly present the financial
condition and the results of operations of the Borrower on the dates and for the
periods indicated, on the basis of GAAP, with respect to the Borrower subject,
in the case of interim financial statements, to normally recurring 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) (or, in the case of the first certification
pursuant to this Section 5. 1 (c), the Closing Date) and ending on a date not
more than ten (10) Domestic Business Days prior to the date of such delivery and
that
33
<PAGE> 40
(1) on the basis of such financial statements and such review of the Loan
Documents, no Event of Default existed under Section 6. 1 (b) with respect to
Sections 5.9 and 5. 10 at or as of the date of said financial statements, and
(2) 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, as of the last
day of the period covered by such certificate no Default or Event of Default
under any other provision of Section 6.1 occurred and is continuing or, if any
such Default or Event of Default has occurred and is continuing, specifying the
nature and extent thereof and, the action the Borrower proposes to take in
respect thereof. Such certificate shall set forth the calculations required to
establish the matters described in clause (1) above and shall attach as exhibits
thereto the following: escrow closing statements, certified by the Certifying
Officer, for each Qualifying Unencumbered Property which was acquired during the
preceding Fiscal Quarter; an occupancy report setting forth the average
Occupancy Rate for each Qualifying Unencumbered Property during the preceding
Fiscal Quarter; and a report stating the Net Operating Income for each
Qualifying Unencumbered Property during the preceding Fiscal Quarter with
reasonable detail as to all property expenses and capital expenditures.
(d) not less frequently than annually, and in any event within fifteen
(15) days after adoption by Borrower's Board of Directors, the Borrower's
business plan, any subsequent material revisions thereto, and a statement of
projected cash flow of the Borrower and its Consolidated Subsidiaries for the
twelve (12) month period following the date of such Business Plan.
SECTION 5.2 Other Information. The Borrower will deliver to the
Administrative Agent (with sufficient copies to distribute to all of the Banks):
(a) (i) within five (5) Domestic Business Days after any executive
officer of the Borrower or its general partner obtains knowledge of any Default,
if such Default is then continuing, a certificate of a Certifying Officer, or
other executive officer of the Borrower or its general partner setting forth the
details thereof and the action which the Borrower is taking or proposes to take
with respect thereto; and (ii) promptly and in. any event within five (5)
Domestic Business Days after an executive officer of the Borrower or its general
partner obtains knowledge thereof, notice of (y) any litigation or governmental
proceeding pending or threatened against the Borrower or the Real Property
Assets as to which there is a reasonable possibility of an adverse determination
and which, if adversely determined, would individually or in the aggregate,
result in a Material Adverse Effect and (z) any other event, act or condition
which is reasonably expected to result in a Material Adverse Effect;
(b) intentionally omitted;
(c) intentionally omitted;
(d) promptly and in any event within thirty (30) days after 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
34
<PAGE> 41
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 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) 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, and in
the case of clauses (i) through (vii) above, which event could result in a
Material Adverse Effect, 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;
(e) promptly and in any event within ten (10) days after an executive
officer of the Borrower or its general partner obtains actual knowledge of any
of the following events, a certificate of the Borrower, executed by a Certifying
Officer of the Borrower or its general partner, specifying the nature of such
condition, and the Borrower's or, if the Borrower has actual knowledge thereof,
the Environmental Affiliate's proposed initial response thereto: (i) the receipt
by an executive officer of the Borrower or its general partner, 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 reasonably expected to have a Material Adverse Effect, (ii) the Borrower
shall obtain actual knowledge that there exists any Environmental Claim pending
against the Borrower or any Environmental Affiliate and such Environmental Claim
is reasonably expected to have a Material Adverse Effect or is reasonably
expected to involve an expenditure of Significant Environmental Cost 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 which in any such event is likely to have a Material Adverse Effect or
is reasonably expected to involve an expenditure of Significant Environmental
Cost;
(f) 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 loss which is reasonably expected to result in a Material Adverse Effect,
copies of such notices and correspondence;
(g) promptly and in any event within five (5) days after an executive
officer of the Borrower or its general partner obtains actual knowledge of a
change in the Credit Rating, a certificate of the Borrower, executed by a
Certifying Officer of the Borrower or its general partner, specifying the new
Credit Rating, and
35
<PAGE> 42
(h) from time to time such additional information regarding the
financial position or business of the Borrower, General Partner and their
Subsidiaries as the Administrative Agent, at the request of any Bank, may
reasonably request in writing.
SECTION 5.3 Payment of Obligations. The Borrower, General Partner and
their Consolidated Subsidiaries will pay and discharge, at or before maturity,
all its respective material obligations and liabilities including, without
limitation, Taxes and any obligation pursuant to any agreement by which it or
any of its properties is bound, in each case where the failure to so pay or
discharge such obligations or liabilities is reasonably expected to result in a
Material Adverse Effect, and will maintain in accordance with GAAP, appropriate
reserves for the accrual of any of the same.
SECTION 5.4 Maintenance of Property; Insurance, Leases
(a) The Borrower will keep, and will cause each Consolidated Subsidiary
to keep, all property useful and necessary in its business, including without
limitation the Real Property Assets (for so long as it constitutes Real Property
Assets), in good repair, working order and condition, ordinary wear and tear
excepted, in each case where the failure to so maintain and repair will have a
Material Adverse Effect.
(b) The Borrower shall maintain, or cause to be maintained, insurance
comparable to that described in Section 4.24 hereof with insurers meeting the
qualifications described therein, which insurance shall in any event not provide
for less coverage than insurance customarily carried by owners of properties
similar to, and in the same locations as, the Real Property Assets. The Borrower
will deliver to the Administrative Agent (i) upon the reasonable request of the
Administrative Agent from time to time full information as to the insurance
carried, and (ii) forthwith, notice of any cancellation or nonrenewal of
coverage by any insurer of the Borrower (other than any cancellation or
non-renewal due to Borrower's placement of replacement coverage with new
insurers meeting the requirements of this Section 5.4(b)).
SECTION 5.5 Conduct of Business and Maintenance of Existence. The
Borrower and General Partner will continue to engage in business of the same
general type as now conducted by the Borrower and General Partner, and each will
preserve, renew and keep in full force and effect, its partnership and limited
liability company existence and its respective rights, privileges and franchises
necessary for the normal conduct of business unless the failure to maintain such
rights and franchises does not have a Material Adverse Effect.
SECTION 5.6 Compliance with Laws. The Borrower will and will cause its
Subsidiaries to comply in all material respects with all applicable laws,
ordinances, rules, regulations, and requirements of governmental authorities
(including, without limitation, Environmental Laws, and all zoning and building
codes with respect to the Real Property Assets and ERISA and the rules and
regulations thereunder and all federal securities laws) except where the
necessity of compliance therewith is contested in good faith by appropriate
proceedings or where the failure to do so will not have a Material Adverse
Effect or expose Administrative Agent or Banks to any material liability
therefor.
36
<PAGE> 43
SECTION 5.7 Inspection of Property, Books and Records. The Borrower (i)
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 in conformity with GAAP, modified as required by this
Agreement and applicable law; (ii) will permit representatives of any Bank at
such Bank's expense to visit any of its properties, including without limitation
the Real Property Assets, without notice; provided that the Bank shall not
unreasonably interfere with the operation of such properties or any tenants
thereon and such visitation shall occur within normal business hours; (iii) will
permit the representatives of any Bank, at such Bank's expense, to inspect its
properties, examine and make abstracts from any of its books and records and to
discuss its affairs, finances and accounts with its executive officers, property
managers and independent public accountants, in each such case under this
subclause (iii) all at such reasonable times during normal business hours, upon
reasonable prior notice and as often as may reasonably be desired.
Administrative Agent shall coordinate any such visit or inspection to arrange
for review by any Bank requesting any such visit or inspection.
SECTION 5.8 Existence. The Borrower shall do or cause to be done, all
things necessary to preserve and keep in full force and effect its, General
Partner's and their Consolidated Subsidiaries' existence and its patents,
trademarks, servicemarks, tradenames, copyrights, franchises, licenses, permits,
certificates, authorizations, qualifications, accreditation, easements, rights
of way and other rights, consents and approvals the nonexistence of which is
reasonably expected to have a Material Adverse Effect.
SECTION 5.9 Financial Covenants.
(a) Total Liabilities to Gross Asset Value. Borrower shall not permit
the ratio of Total Liabilities to Gross Asset Value of Borrower and its
Subsidiaries to exceed 0.55:1 at any time.
(b) Secured Debt to Gross Asset Value. Borrower shall not permit the
ratio of Secured Debt to Gross Asset Value of Borrower and its Subsidiaries to
exceed 0.45:1 at any time.
(c) Unencumbered Pool. Borrower shall not permit the ratio of the
Unencumbered Asset Pool Value to outstanding Unsecured Debt to be less than
1.75:1 at any time.
(d) EBITDA to Fixed Charges Ratio. Borrower shall not permit the ratio
of EBITDA for the then most recently completed Fiscal Quarter to Fixed Charges
for the then most recently completed Fiscal Quarter to be less than 1.75: 1.
(e) Interest Coverage Ratio. Borrower shall not permit the ratio of
EBITDA for the then most recently completed Fiscal Quarter to Interest Expense
for the then most recently completed Fiscal Quarter to be less than 2.25:1.
(f) intentionally omitted;
(g) Minimum Consolidated Tangible Net Worth. The Consolidated Tangible
Net Worth of the Borrower and its Consolidated Subsidiaries will at no time be
less than $200,000,000 plus ninety percent (90%) of all Net Offering Proceeds
received by General Partner (or General Partner's predecessor in interest) or
Borrower after December 31, 1996.
37
<PAGE> 44
SECTION 5.10 Restriction on Fundamental Changes.
(a) Neither the Borrower, General Partner, nor any Consolidated
Subsidiary shall directly or indirectly enter into any merger or consolidation
without the prior written consent of the Required Banks which consent may be
withheld in its respective sole and absolute discretion unless (A) the entity
with which or into which the Borrower or General Partner is merged is TIC or a
wholly owned (directly or indirectly) subsidiary of TIC or (B)(i) the Borrower
or General Partner is the surviving entity, (ii) the entity which is merged into
the Borrower or General Partner is not engaged in any substantial business other
than the management, development, ownership or operation of multifamily
residential apartment communities, and (iii) the gross fair market value of the
assets of the entity which is merged into the Borrower or General Partner is not
in excess of ten percent (10%) of Borrower's aggregate Gross Asset Value
immediately prior to such merger or consolidation. Neither the Borrower, General
Partner nor any Consolidated Subsidiary shall directly or indirectly enter into
any reorganization or recapitalization, reclassify its Capital Stock, liquidate,
wind up or dissolve or sell, lease, transfer or otherwise dispose of, in one
transaction or a series of transactions, all or substantially all of its or
their business or assets, whether now owned or hereafter acquired. Nothing in
this Section shall be deemed to prohibit the sale or leasing of portions of the
Real Property Assets in the ordinary course of business.
(b) The Borrower shall not amend its agreement of limited partnership
or other organizational documents in any manner that would have a Material
Adverse Effect.
(c) The Borrower shall deliver to Administrative Agent copies of all
amendments to its agreement of limited partnership or to General Partner's
certificate of formation, limited liability company agreement, or to other
organizational documents (other than amendments solely reflecting changes in
ownership interests occurring in the ordinary course of business) no less than
ten (10) Domestic Business Days after the effective date of any such amendment.
(d) The Banks hereby approve the Merger and the replacement of IAC by
TICALLC as the general partner of Borrower.
SECTION 5.11 Changes in Business.
(a) The Borrower shall carry on its business operations through the
Borrower and its Subsidiaries.
(b) All or substantially all of Borrower's assets shall be multifamily
residential properties, unimproved land held for the development of multifamily
residential property, or equity interests in companies whose primary business is
the ownership, operation, development or management of multifamily residential
property. Borrower shall not engage in any line of business other than
ownership, operation and development of multifamily residential property and the
provision of services incidental thereto, whether directly or through its
Subsidiaries and Investment Affiliates.
38
<PAGE> 45
(c) 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.
(d) Hedging Requirements. Within five (5) Domestic Business Days after
the last day of each calendar quarter, commencing December 31, 1998, the
Borrower shall have in effect "Interest Rate Hedges" on Borrower's Indebtedness
so that such Indebtedness, together with all Fixed Rate Indebtedness of
Borrower, shall constitute at least fifty percent (50%) of the then aggregate
Indebtedness of the Borrower. "Interest Rate Hedges" shall mean, interest rate
exchange, collar, cap, swap, adjustable strike cap, adjustable strike corridor
or similar agreements, each of which (A) shall have a minimum term of two (2)
years, or, in the case of loans pursuant to which interest shall accrue at a
rate other than a fixed rate, a term equal to the term of such floating rate
loan (to the extent the term of such floating rate loan is less than two (2)
years), (B) shall have the effect of capping the interest rates covered thereby
at a rate equal to or lower than the Cap Rate at the time of purchase or
execution, and (C) shall be with an Approved Financial Institution as the
counterparty. It is acknowledged and agreed that the Borrower shall have no
obligation to replace any Interest Rate Hedge even if the counterparty thereto
shall cease to be an Approved Financial Institution. The Borrower shall certify
its compliance with Interest Rate Hedges to the Administrative Agent in the
certificate required to be delivered by the Borrower pursuant to Section 5. 1
(c), which certificate shall be in the form of Exhibit D attached hereto.
SECTION 5.12 General Partner Status.
(a) Status. TICALLC shall at all times (i) maintain its status as a
wholly owned (directly or through one or more subsidiaries) subsidiary of TIC,
and (ii) engage in no business other than functioning as the general partner of
Borrower.
(b) Indebtedness. General Partner shall not, and shall not permit any
of its Subsidiaries to, directly or indirectly, create, incur, assume or
otherwise become or remain directly or indirectly liable with respect to any
Indebtedness, except: (i) the Obligations; and (ii) Indebtedness which, after
giving effect thereto, may be incurred or may remain outstanding without giving
rise to an Event of Default or Default under any provision of this Article V.
(c) Restriction on Fundamental Changes. General Partner shall not (i)
have an Investment in any Person other than Borrower and the interests
identified on Schedule 5.14(c)(i).as being owned by General Partner, or (ii)
General Partner shall not acquire an interest in any Property other than
Securities issued by Borrower and the interests identified on Schedule
5.14(c)(ii).
(d) Disposal of Partnership Interests: General Partner will not
directly or indirectly convey, sell, transfer, assign, pledge or otherwise
encumber or dispose of any of its partnership interests in Borrower.
(e) General Partner shall have the right to change its name provided
that it shall give Administrative Agent not less than 15 days prior written
notice before any such name change becomes effective.
39
<PAGE> 46
SECTION 5.13 Environmental Matters.
(1) Promptly upon the discovery of any Environmental Claim or of any
violation or alleged violation of Environmental Laws with respect to any
Qualifying Unencumbered Asset, the Borrower shall attempt in good faith, as soon
as practicable, to determine all costs it reasonably expects any party to expend
in connection with the investigation and resolution of such Environmental Claim
or of such violation or alleged violation of Environmental Laws. The Borrower
shall thereupon notify the Administrative Agent in writing of the Borrower's
reasonable, good faith estimate of the cost to investigate and resolve such
Environmental Claim or such violation or alleged violation if such cost is equal
to or greater than $250,000. Such good faith estimate of such costs, as revised
from time to time pursuant hereto, shall be deemed to be the "Estimated
Environmental Cost" of such Environmental Claim or such violation or alleged
violation of Environmental Laws. After the end of each Fiscal Quarter, the
Borrower shall review and update all Estimated Environmental Costs and shall
deliver, with the Borrower's quarterly reports delivered in accordance with
Section 5.1 hereof, a written report to the Administrative Agent, setting forth,
in reasonable detail, each Estimated Environmental Cost which is in excess of
$250,000, the basis for the determination of such Estimated Environmental Cost,
and the Borrower's plans with respect to such Environmental Claim or such
violation or alleged violation of Environmental Laws. If the Borrower at any
time is not diligently and in good faith pursuing a determination of or an
update of a Estimated Environmental Cost which exceeds $250,000, the
Administrative Agent may, in reliance upon the opinions and judgments of
environmental consultants (either independent or employed by the Administrative
Agent), estimate or update, in good faith, the cost to investigate and resolve
an Environmental Claim or alleged or actual violation of Environmental Laws. In
the event that the Administrative Agent makes any such determination, the
Estimated Environmental Cost of investigating and resolving such Environmental
Claim or such alleged or actual violation of Environmental Laws shall be the
Administrative Agent's estimate, until such time as Borrower again diligently
pursues in good faith the determination or update of Estimated Environmental
Cost, and upon Borrower's determination of a Estimated Environmental Cost in
compliance herewith the Estimated Environmental Cost shall thereafter be
Borrower's estimate thereof, as set forth herein.
(b) The Borrower shall, at all times, diligently and in good faith
pursue resolution of all Environmental Claims, and all violations or alleged
violations of Environmental Laws, with respect to its Properties.
SECTION 5.14 Cooperation. The Borrower shall take any action reasonably
requested by the Administrative Agent to carry out the intent of the Loan
Documents.
SECTION 5.15 Distributions. Unless waived by the Required Banks, no
Borrower Party shall make any Restricted Payments after the occurrence of and
during the continuation of an Event of Default under Section 6. 1 (a) other than
Restricted Payments with respect to the Series A Preferred Securities and the
Series B Preferred Securities.
40
<PAGE> 47
ARTICLE 6
DEFAULTS
SECTION 6.1 Events of Default. If one or more of the following events
("Events of Default") shall have occurred and be continuing:
(a) (i) the Borrower shall fail to pay when due any principal of any
Loan; or (ii) the Borrower shall fail to pay when due interest on any Loan or
any fees or any other amount payable hereunder and the same shall continue for a
period of ten (10) calendar days after the same becomes due;
(b) the Borrower shall fail to observe or perform any covenant
contained in Section 5.9, Section 5. 1 0(a) or (b), or Sections 5.11, 5.12, and
5.14;
(c) the Borrower shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by clause (a),
(b), (e), (f), (g), (h), (l), (m) or (n) of this Section 6. 1) for 30 days after
written notice thereof has been given to the Borrower by the Administrative
Agent, or if such default is of such a nature that it cannot with reasonable
effort be completely remedied within said period of thirty (30) days such
additional period of time as may be reasonably necessary to cure same, provided
Borrower commences such cure within said thirty (30) day period and diligently
prosecutes same, until completion, but in no event shall such extended period
exceed ninety (90) days;
(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) and the defect
causing such representation or warranty to be incorrect when made (or deemed
made) is not removed within thirty (30) days after written notice thereof from
Administrative Agent to Borrower, or if such default is of such a nature that it
cannot with reasonable effort be completely removed within said period of thirty
(30) days such additional period of time as may be reasonably necessary to
remove same, provided Borrower commences such removal within said thirty (30)
day period and diligently prosecutes same, until completion, but in no event
shall such extended period exceed ninety (90) days;
(e) the Borrower, General Partner, any Subsidiary or any Investment
Affiliate 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 (other than the Obligations) for which the
aggregate outstanding principal amount exceeds Ten Million Dollars ($10,000,000)
and such default shall continue beyond the giving of any required notice and the
expiration of any applicable grace period and such default has not been waived,
in writing, by the holder of any such Debt; or the Borrower, General Partner,
any Subsidiary or any Investment Affiliate shall default in the performance or
observance of any other obligation or condition with respect to any such
Recourse 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,
if the effect of such other default, event or condition is to accelerate the
maturity of any such indebtedness 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 indebtedness;
41
<PAGE> 48
(f) the Borrower or 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 action to authorize any of the foregoing;
(g) an involuntary case or other proceeding shall be commenced against
the Borrower or 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 90 days; or an order for
relief shall be entered against the Borrower or General Partner under the
federal bankruptcy laws as now or hereafter in effect;
(h) one or more final, non-appealable judgments or decrees in an
aggregate amount of Ten Million Dollars ($ 10,000,000) or more shall be entered
by a court or courts of competent jurisdiction against the Borrower, General
Partner or its Consolidated Subsidiaries (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 (ii)
enforcement proceedings shall be commenced by any creditor on any such judgments
or decrees and such enforcement proceedings shall not immediately be stayed;
(i) TIC shall cease to be the managing member of General Partner;
(j) if any Termination Event with respect to a Plan shall occur as a
result of which Termination Event or Events any member of the ERISA Group has
incurred or may incur any liability to the PBGC or any other Person and the sum
(determined as of the date of occurrence of such Termination Event) of the
insufficiency of such Plan and the insufficiency of any and all other Plans with
respect to which such a Termination Event shall occur and be continuing (or, in
the case of a Multiple Employer Plan with respect to which a Termination Event
described in clause (ii) of the definition of Termination Event shall occur and
be continuing, the liability of the Borrower) is equal to or greater than $
10,000,000 and which the Administrative Agent reasonably determines will have a
Material Adverse Effect;
(k) if, any member of the ERISA Group shall commit a failure described
in Section 302(f)(1) of ERISA or Section 412(n)(1) of the Code and the amount of
the lien determined under Section 302(f)(3) of ERISA or Section 412(n)(3) of the
Code that could reasonably be expected to be imposed on any member of the ERISA
Group or their assets in respect of such failure shall be equal to or greater
than $ 10,000,000 and which the Administrative Agent reasonably determines will
have a Material Adverse Effect;
42
<PAGE> 49
(l) at any time, for any reason the Borrower seeks to repudiate its
obligations under any Loan Document;
(m) a default beyond any applicable notice and grace period under any
of the other Loan Documents; or
(n) a default beyond any applicable notice and grace period shall have
occurred under that certain Revolving Credit Agreement dated as of June 27, 1997
among the Borrower, the banks listed therein, Bank of America NT&SA, as
Administrative Agent, and Wells Fargo Bank, National Association, as
Documentation Agent, with J.P. Morgan Securities, Inc., as Syndication Agent, as
amended by that certain First Amendment To Revolving Credit Agreement dated as
of July 10, 1998, as further amended by that certain Second Amendment To
Revolving Credit Agreement dated as of August 4, 1998, and as further amended
and restated by that certain First Amended and Restated Revolving Credit
Agreement dated as of June ___, 1999, as it may be amended hereafter from time
to time.
SECTION 6.2 Rights and Remedies.
(a) Upon the occurrence of any Event of Default described in Sections
6. 1 (f) or (g), the Commitment shall immediately terminate and 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 limitation, 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 Administrative Agent upon the demand of the Required Banks
shall, by written notice to the Borrower, in addition to the exercise of all of
the rights and remedies permitted the Administrative Agent and the Banks at law
or equity or under any of the other Loan Documents, 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 (except as otherwise as provided in the Loan
Documents) without presentation, demand, or protest or other requirements of any
kind (including, without limitation, valuation and appraisement, diligence,
presentment, notice of intent to demand or accelerate and notice of
acceleration), all of which are hereby expressly waived by the Borrower.
(b) Notwithstanding anything to the contrary contained in this
Agreement or in any other Loan Document, the Administrative Agent, and the Banks
each agree that any exercise or enforcement of the rights and remedies granted
to the Administrative Agent or the Banks under this Agreement or at law or in
equity with respect to this Agreement or any other Loan Documents shall be
commenced and maintained by the Administrative Agent on behalf of the
Administrative Agent and/or the Banks. The Administrative Agent shall act at the
direction of the Required Banks in connection with the exercise of any and all
remedies at law, in equity or under any of the Loan Documents or, if the
Required Banks are unable to reach agreement on the exercise of remedies, then,
from and after Administrative Agent shall have declared the Loan immediately due
and payable, the Administrative Agent may pursue such rights and remedies as it
may determine.
43
<PAGE> 50
SECTION 6.3 Notice of Default. The Administrative Agent shall give
notice to the Borrower under Section 6. 1 (c) promptly upon being requested to
do so by the Required Banks and shall thereupon notify all the Banks thereof.
The Administrative Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default (other than nonpayment of
principal of or interest on the Loans) unless the Administrative Agent has
received notice in writing from a Bank or Borrower referring to this Agreement
or the other Loan Documents, describing such event or condition. Should
Administrative Agent receive notice of the occurrence of a Default or Event of
Default expressly stating that such notice is a notice of a Default or Event of
Default, or should Administrative Agent send Borrower a notice of Default or
Event of Default, Administrative Agent, shall promptly give notice thereof to
each Bank.
SECTION 6.4 Distribution of Proceeds after Default. Subject to Section
7.6, from and after an Event of Default, to the extent proceeds are received by
Administrative Agent, such proceeds will be distributed to the Banks pro rata in
accordance with the unpaid principal amount of the Loans. Regardless of how each
Bank may treat payments received by it pursuant to this Agreement and the Notes
delivered to evidence debt hereunder for the purpose of its own accounting, for
the purpose of computing the Borrower's and the General Partner's obligations
under this Agreement and under such Notes, the payments shall be applied fully,
to the costs and expenses (including attorneys' fees and disbursements and the
allocated costs and expenses of in-house legal and other professional services)
of the Administrative Agent, acting as Administrative Agent, and of the Banks as
set forth herein, second to the payment of accrued and unpaid interest on all
Notes to and including the date of such application (ratably according to the
accrued and unpaid interest on the Notes), third, to the ratable payment of the
unpaid principal of all the Notes, and fourth to the payment of all other
amounts (including fees) then owing to the Administrative Agents or the Banks
under the Loan Documents. No application of the payments will cure any Event of
Default or prevent acceleration, or continued acceleration, of amounts payable
under the Loan Documents or prevent the exercise, or continued exercise, of
rights or remedies of the Banks under this Agreement or under law.
ARTICLE 7
THE AGENTS
SECTION 7.1 Appointment and Authorization. Each Bank irrevocably
appoints and authorizes the Administrative 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 Administrative Agent by the terms hereof or
thereof, together with all such powers as are reasonably incidental thereto.
Except as set forth in Sections 7.8 and 7.9 hereof, the provisions of this
Article VII are solely for the benefit of Administrative Agent and the Banks,
and Borrower shall not have any rights to rely on or enforce any of the
provisions hereof. In performing its functions and duties under this Agreement,
the Administrative Agent shall act solely as an agent of the Banks and shall not
assume and shall not be deemed to have assumed any obligation toward or
relationship of agency or trust with or for the Borrower.
44
<PAGE> 51
SECTION 7.2 Agency and Affiliates. Wells Fargo 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 Administrative Agent.
Wells Fargo (and its affiliates) may accept deposits from, lend money to, and
generally engage in any kind of business with the Borrower, General Partner or
any Subsidiary or affiliate of the Borrower as if it were not the Administrative
Agent hereunder, and the term "Bank" and "Banks" shall include Wells Fargo in
its individual capacity.
SECTION 7.3 Action by Administrative Agent. The obligations of the
Administrative Agent hereunder are only those expressly set forth herein.
Without limiting the generality of the foregoing, the Administrative Agent shall
not be required to take any action with respect to any Default or Event of
Default, except as expressly provided in Article VI. The duties of
Administrative Agent shall be administrative in nature. Subject to the
provisions of Sections 7.1, 7.5 and 7.6, Administrative Agent shall administer
the Loans in the same manner as it administers its own loans.
SECTION 7.4 Consultation with Experts. As between Administrative Agent
and the Banks, the Administrative 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.
SECTION 7.5 Liability of Administrative Agent. As between
Administrative Agent and the Banks, none of the Administrative 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 (ii) in
the absence of its own gross negligence or willful misconduct. As between
Administrative Agent and the Banks, none of the Administrative 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 111, except receipt of items required to be delivered to the
Administrative 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. As between Administrative Agent and the Banks, the
Administrative 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 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 Administrative Agent and its affiliates and
its 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 indemnitee's gross negligence or willful misconduct) that such
indemnitee may suffer or incur in connection with its duties as Administrative
Agent under this Agreement, the other Loan Documents or any action taken or
omitted by such indemnitee hereunder. In the event that the Administrative Agent
shall, subsequent to its receipt
45
<PAGE> 52
of indemnification payment(s) from Banks in accordance with this Section, recoup
any amount from the Borrower, or any other party liable therefor in connection
with such indemnification, the Administrative Agent shall reimburse the Banks
which previously made the payment(s) pro rata based upon the actual amounts
which were theretofore paid by each Bank. The Administrative Agent shall
reimburse such Banks so entitled to reimbursement within two (2) Domestic
Business Days of its receipt of such funds from the Borrower or such other party
liable therefor.
SECTION 7.7 Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Administrative 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
Administrative 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 Administrative Agent. The Administrative Agent
may resign at any time by giving notice thereof to the Banks and the Borrower
and the Administrative Agent shall resign in the event its Commitment is reduced
to below five percent (5%) of the Aggregate Commitments. Upon any such
resignation, the Required Banks shall have the right to appoint a successor
Administrative Agent, which successor Administrative Agent shall, provided no
Event of Default has occurred and is then continuing, be subject to Borrower's
approval, which approval shall not be unreasonably withheld or delayed. If no
successor Administrative Agent shall have been so appointed by the Required
Banks and approved by the Borrower, and shall have accepted such appointment,
within 30 days after the retiring Administrative Agent gives notice of
resignation, then the retiring Administrative Agent may, on behalf of the Banks,
appoint a successor Administrative Agent, who shall act until the Required Banks
shall appoint a Administrative Agent. Upon the acceptance of its appointment as
the Administrative Agent hereunder by a successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested with
all the rights and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. After any retiring Administrative Agent's resignation hereunder, 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 Administrative Agent. For gross
negligence or willful misconduct, as determined by the Required Banks (excluding
for such determination Administrative Agent in its capacity as a Bank, but in no
event shall such determination be made by less than two (2) Banks),
Administrative Agent may be removed at any time by giving at least thirty (30)
Domestic Business Days prior written notice to Administrative Agent and
Borrower. Such resignation or removal shall take effect upon the acceptance of
appointment by a successor Administrative Agent, in accordance with the
provisions of this Section 7.8.
SECTION 7.9 Consents and Approvals. All communications from
Administrative Agent to the Banks requesting the Banks' determination, consent,
approval or disapproval (i) shall be given in the form of a written notice to
each Bank (ii) shall be accompanied by a description of the matter or item as to
which such determination, approval, consent or disapproval is requested, or
shall advise each Bank where such matter or item may be inspected, or shall
otherwise describe the matter or issue to be resolved, (iii) shall include, if
46
<PAGE> 53
reasonably requested by a Bank and to the extent not previously provided to such
Bank, written materials and a summary of all oral information provided to
Administrative Agent by Borrower in respect of the matter or issue to be
resolved, and (iv) shall include Administrative Agent's recommended course of
action or determination in respect thereof. Each Bank shall reply promptly, but
in any event within ten (10) Domestic Business Days after receipt of the request
therefor from Administrative Agent (the "Bank Reply Period"). Unless a Bank
shall give written notice to Administrative Agent that it objects to the
recommendation or determination of Administrative Agent (together with a written
explanation of the reasons behind such objection) within the Bank Reply Period,
such Bank shall be deemed to have approved of or consented to such
recommendation or determination. With respect to decisions requiring the
approval of the Required Banks or all the Banks, Administrative Agent shall
submit its recommendation or determination for approval of or consent to such
recommendation or determination to all Banks and upon receiving the required
approval or consent shall follow the course of action or determination of the
Required Banks (and each non-responding Bank shall be deemed to have concurred
with such recommended course of action) or all the Banks, as the case may be.
ARTICLE 8
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 LIBOR Borrowing
or any continuation of the LIBOR Loans (or portions thereof) comprising such
Borrowing:
(a) the Administrative Agent has determined in good faith that deposits
in dollars (in the applicable amounts) are not being offered in the relevant
market for such Interest Period, or
(b) Banks having 50% or more of the Aggregate Commitments advise the
Administrative Agent that the Adjusted London Interbank Offered Rate, as
determined by the Administrative Agent, will not adequately and fairly reflect
the cost to such Banks of continuing their Loans as LIBOR Loans for such
Interest Period, the Administrative Agent shall forthwith give notice thereof to
the Borrower and the Banks, whereupon until the Administrative Agent notifies
the Borrower that the circumstances giving rise to such suspension no longer
exist, the obligations of the Banks to continue their Loans as LIBOR Loans for
such Interest Period shall be suspended. With respect to any Borrowing to be
made upon the commencement of an extension term, unless the Borrower notifies
the Administrative Agent at least two Domestic Business Days before the date of
such Borrowing that it elects not to exercise the First Option To Extend or the
Second Option To Extend, as applicable, the Borrowing shall instead be made as a
Base Rate Borrowing and the 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. For
purposes of this Section 8. 1 (b), in determining whether the Adjusted London
Interbank Offered Rate, as determined by Administrative Agent, will not
adequately and fairly reflect the cost to any Bank of continuing its Loans as
LIBOR Loans for such Interest Period, such determination will be based solely on
the ability of such Bank to obtain matching funds in the London interbank market
at a reasonably equivalent rate.
47
<PAGE> 54
SECTION 8.2 Illegality. If, on or after the date of this Agreement, 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 LIBOR Lending Office) with any request or directive (whether
or not having the force of law) made after the Closing Date of any such
authority, central bank or comparable agency shall make it unlawful for any Bank
(or its LIBOR Lending Office) to make, maintain or fund its LIBOR Loans, the
Administrative Agent shall forthwith give notice thereof to the other Banks and
the Borrower, whereupon until such Bank notifies the Borrower and the
Administrative Agent that the circumstances giving rise to such suspension no
longer exist, the obligation of such Bank, if any, to continue its Loan as a
LIBOR Loan for any subsequent Interest Period shall be suspended and, to the
extent such Bank has an obligation to continue its Loan after the expiration of
the then current Interest Period, such Loan shall be continued as a Base Rate
Loan as set forth below. With respect to any such LIBOR Loan, before giving any
notice to the Administrative Agent pursuant to this Section, such Bank shall
designate a different LIBOR 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. Notwithstanding anything in the
foregoing to the contrary, if such Bank shall determine that it may not lawfully
continue to maintain any of its outstanding LIBOR Loans to maturity and shall so
specify in such notice, such LIBOR Loan shall be converted as of such date to a
Base Rate Loan (without payment of any amounts that Borrower would otherwise be
obligated to pay pursuant to Section 2.11 hereof with respect to Loans converted
pursuant to this Section 8.2) in an equal principal amount from such Bank (on
which interest and principal shall be payable contemporaneously with the related
LIBOR Loans of the other Banks), and such Bank shall make such a Base Rate Loan.
If at any time, it shall be unlawful for any Bank to make, maintain or
continue its LIBOR Loan, the Borrower shall have the right, upon five (5)
Domestic Business Day's notice to the Administrative Agent, to either (x) cause
a bank, reasonably acceptable to the Administrative Agent, to offer to purchase
the Commitments of such Bank for an amount equal to such Bank's outstanding
Loan, and to become a Bank hereunder, or obtain the agreement of one or more
existing Banks to offer to purchase the Commitments of such Bank for such
amount, which offer such Bank is hereby required to accept, or (y) to repay in
full all Loans then outstanding of such Bank, together with interest and all
other amounts due thereon, upon which event, the Aggregate Commitments shall be
reduced by the amount of such Bank's Commitment and such Bank shall cease to be
a Bank hereunder.
SECTION 8.3 Increased Cost and Reduced Return.
(a) If, on or after the date hereof, 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
48
<PAGE> 55
the force of law) made at the Closing Date 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 LIBOR
Loan any such requirement reflected in an applicable LIBOR 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 materially
more burdensome in nature, extent or consequence than those in existence as of
the Closing Date affecting such Bank's LIBOR Loan, its Note, or its obligation
to make LIBOR 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 LIBOR 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 to such LIBOR Loan, by an amount deemed by such Bank to be
material, then, within fifteen (15) days after demand by such Bank (with a copy
to the Administrative Agent), the Borrower shall pay to such Bank such
additional amount or amounts (based upon a reasonable allocation thereof by such
Bank to the LIBOR Loan made by such Bank hereunder) as will compensate such Bank
for such increased cost or reduction to the extent such Bank generally imposes
such additional amounts on other borrowers of such Bank in similar
circumstances.
(b) If any Bank shall have reasonably 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) made after the Closing Date 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 reasonably deemed by such Bank to be material,
then from time to time, within fifteen (15) days after demand by such Bank (with
a copy to the Administrative Agent), the Borrower shall pay to such Bank such
additional amount or amounts as will compensate such Bank (or its Parent) for
such reduction to the extent such Bank generally imposes such additional amounts
on other borrowers of such Bank in similar circumstances.
(c) Each Bank will promptly notify the Borrower and the Administrative
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
reasonable judgment of such Bank, be otherwise disadvantageous to such Bank. If
such Bank shall fail to notify Borrower of any such event within ninety (90)
days following the end of the month during which such event occurred, then
Borrower's liability for any amounts described in this Section incurred by such
Bank as a result of such event shall be limited to those attributable to the
period occurring subsequent to the ninetieth (90th) day prior to the date upon
which such Bank actually notified Borrower of the occurrence of such event. A
certificate of any Bank claiming compensation under this Section
49
<PAGE> 56
and setting forth a reasonably detailed calculation of the additional amount or
amounts to be paid to it hereunder shall be conclusive in the absence of
demonstrable error. In determining such amount, such Bank may use any reasonable
averaging and attribution methods.
(d) If at any time, any Bank shall be owed amounts pursuant to this
Section 8.3, the Borrower shall have the right, upon five (5) Domestic Business
Day's notice to the Administrative Agent to either (x) cause a bank, reasonably
acceptable to the Administrative Agent, to offer to purchase the Commitment of
such Bank for an amount equal to such Bank's outstanding Loan, and to become a
Bank hereunder, or to obtain the agreement of one or more existing Banks to
offer to purchase the Commitment of such Bank for such amount, which offer such
Bank is hereby required to accept, or (y) to repay in full all Loans then
outstanding of such Bank, together with interest and all other amounts due
thereon, upon which event, the Aggregate Commitments shall be reduced by the
amount of such Bank's Commitment and such Bank shall cease to be a Bank
hereunder.
SECTION 8.4 Taxes.
(a) Any and all payments by the Borrower to or for the account of any
Bank or the Administrative 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
Administrative Agent, taxes imposed on its income, and franchise taxes imposed
on it, by the jurisdiction under the laws of which such Bank or the
Administrative 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 or by any other
jurisdiction (or any political subdivision thereof) as a result of a present or
former connection between such Bank or Administrative Agent and such other
jurisdiction or by the United States (all such non-excluded taxes, duties,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Non-Excluded Taxes"). If the Borrower shall be
required by law to deduct any Non-Excluded Taxes from or in respect of any sum
payable hereunder or under any Note, (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 or the
Administrative 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 Administrative 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
from the execution or delivery of, or otherwise with respect to, this Agreement
or any Note (hereinafter referred to as "Other Taxes").
50
<PAGE> 57
(c) The Borrower agrees to indemnify each Bank and the Administrative
Agent for the full amount of Non-Excluded Taxes or Other Taxes (including,
without limitation, any Non-Excluded Taxes or Other Taxes imposed or asserted by
any jurisdiction on amounts payable under this Section 8.4) paid by such Bank or
the Administrative Agent (as the case may be) and, so long as such Bank or
Administrative Agent has promptly paid any such Non-Excluded Taxes or Other
Taxes, any liability for penalties and interest arising therefrom or with
respect thereto. This indemnification shall be made within fifteen (15) days
from the date such Bank or the Administrative 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,
shall provide the Borrower with (a) two duly completed copies of Internal
Revenue Service form 1001 or 4224, as appropriate, or any successor form
prescribed by the Internal Revenue Service, and (b) an Internal Revenue Service
Form W-8 or W-9, or any successor form prescribed by the Internal Revenue
Service, and shall provide Borrower with two further copies of any such form or
certification on or before the date that any such form or certification expires
or becomes obsolete and after the occurrence of any event requiring a change in
the most recent form previously delivered by it to Borrower, certifying (i) in
the case of a Form 1001 or 4224, 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, and (ii) in the case of a Form W-8
or W-9, that it is entitled to an exemption from United States backup
withholding tax. If the form provided by a Bank at the time such Bank first
becomes a party to this Agreement indicates a United States interest withholding
tax rate in excess of zero, withholding tax at such rate shall be considered
excluded from "Non-Excluded Taxes" as defined in Section 8.4(a).
(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(c) with respect to
Non-Excluded 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 Non-Excluded 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 so long as Borrower
shall incur no cost or liability as a result thereof
(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.
(g) If at any time, any Bank shall be owed amounts pursuant to this
Section 8.4, the Borrower shall have the right, upon five (5) Domestic Business
Day's notice to the
51
<PAGE> 58
Administrative Agent to either (x) cause a bank, reasonably acceptable to the
Administrative Agent, to offer to purchase the Commitment of such Bank for an
amount equal to such Bank's outstanding Loan, and to become a Bank hereunder, or
to obtain the agreement of one or more existing Banks to offer to purchase the
Commitment of such Bank for such amount, which offer such Bank is hereby
required to accept, or (y) to repay in full all Loans then outstanding of such
Bank, together with interest and all other amounts due thereon, upon which
event, the Aggregate Commitments shall be reduced by the amount of such Bank's
Commitment and such Bank shall cease to be a Bank hereunder.
SECTION 8.5 Base Rate Loans Substituted for Affected LIBOR Loans. If
(i) the obligation of any Bank to continue its Loan as a LIBOR Loan has been
suspended pursuant to Section 8.2 or (ii) any Bank has demanded compensation
under Section 8.3 or 8.4 with respect to its LIBOR Loan and the Borrower shall,
by at least five LIBOR Business Days' prior notice to such Bank through the
Administrative Agent, have elected that the provisions of this Section 8.5 shall
apply to such Bank, then, unless and until such Bank notifies the Borrower that
the circumstances giving rise to such suspension or demand for compensation no
longer exist:'
(a) any Loan which would otherwise be continued by such Bank as a LIBOR
Loan shall be continued instead as a Base Rate Loan (on which interest and
principal shall be payable contemporaneously with the related LIBOR Loans of the
other Banks), and
(b) all payments of principal which would otherwise be applied to repay
such LIBOR Loan shall be applied to repay its Base Rate Loan instead, and
(c) Borrower will not be required to make any payment which would
otherwise be required by Section 2. 11 with respect to such LIBOR Loan converted
to a Base Rate Loan pursuant to clause (a) above.
ARTICLE 9
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 followed by telephonic confirmation or similar writing) and shall
be given to such party: (x) in the case of the Borrower or the Administrative
Agent, at its address, telex number or facsimile number set forth on the
signature pages hereof with a duplicate copy thereof, in the case of the
Borrower, to the Borrower, at Irvine Apartment Communities, L.P. c/o TIC
Acquisition LLC, 550 Newport Center Drive, Newport Beach, California 92660,
Attn: Vice President, Corporate Finance and Controller, and to O'Melveny &
Myers, LLP, 610 Newport Center Drive, 17th Floor, Newport Beach, California
92660, Attn: Patricia Frobes, Esq., (y) in the case of any Bank, at its address,
telex number or facsimile number set forth on the signature pages hereof or (z)
in the case of any party, such other address, telex number or facsimile number
as such party may hereafter specify for the purpose by notice to the
Administrative Agent and the Borrower. Each such notice, request or other
communication shall be effective (i) if given by telex or facsimile
transmission, when such telex or facsimile is transmitted to the telex number or
facsimile number specified in this Section and the appropriate answerback or
facsimile confirmation is received
52
<PAGE> 59
(provided, however, if the date of such transmission and confirmation is not a
Domestic Business Day, then the next succeeding Domestic Business Day), (ii) if
given by certified registered mail, return receipt requested, with first class
postage prepaid, addressed as aforesaid, upon receipt or refusal to accept
delivery, (iii) if given by a nationally recognized overnight carrier, 24 hours
after such communication is deposited with such carrier with postage prepaid for
next day delivery, or (iv) if given by any other means, when delivered at the
address specified in this Section; provided that notices to the Administrative
Agent under Article II or Article VIII shall not be effective until received.
SECTION 9.2 No Waivers. No failure or delay by the Administrative 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 within thirty (30) days after written notice
from the Administrative Agent all reasonable out-of-pocket costs and expenses of
the Administrative Agent (including the fees and disbursements of outside
counsel as well as the allocated cost of Administrative Agent's internal legal
services), in connection with the preparation of this Agreement, the Loan
Documents and the documents and instruments referred to therein, and any waiver,
consent hereunder and any amendment hereof, the administration hereof and any
Default or alleged Default hereunder, (ii) in connection with the syndication of
the Loans and (iii) if an Event of Default occurs, all reasonable out-of-pocket
expenses incurred by the Administrative Agent and the Banks as a group,
including fees and disbursements of counsel for the Administrative Agent and
each of the Banks, 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;
provided, however, that the attorneys' fees and disbursements for which Borrower
is obligated under this subsection (a)(iii) shall be limited to the reasonable
non-duplicative fees and disbursements of (a) counsel for Administrative Agent
and (b) counsel for all of the Banks as a group. For purposes of this Section
9.3(a)(iii), (1) counsel for Administrative Agent shall mean a single outside
law firm representing Administrative Agent together with the allocated cost of
Administrative Agent's internal legal services, and (2) counsel for all of the
Banks as a group shall mean a single outside law firm representing such Banks as
a group (which law firm may or may not be the same law firm representing
Administrative Agent).
(b) The Borrower agrees to indemnify the Administrative Agent, each
Bank and 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, which may be incurred by such Indemnitee in
connection with any investigative, administrative or judicial proceeding that
may at any time (including, without limitation, at any time following the
payment of the Obligations) be asserted against any Indemnitee, as a result of,
or arising out of, or related to or by reason of, (i) any of
53
<PAGE> 60
the transactions contemplated by the Loan Documents or the execution, delivery
or performance of any Loan Document, (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
of Borrower or any Environmental Affiliate involving Materials of Environmental
Concern, (iv) the breach of any environmental representation or warranty set
forth herein, but in all cases excluding those liabilities, losses, damages,
costs and expenses (a) for which such Indemnitee has been compensated pursuant
to the terms of this Agreement, (b) incurred solely by reason of the gross
negligence, willful misconduct, bad faith or fraud of any Indemnitee as finally
determined by a court of competent jurisdiction, (c) violations of Environmental
Laws relating to a Property which are caused by the act or omission of such
Indemnitee after such Indemnitee takes possession or control (but in no event
shall appointment of a receiver or a trustee be deemed control) of such Property
or (d) any liability of such Indemnitee to any third party based upon
Contractual Obligations of such Indemnitee owing to such third party which are
not expressly set forth in the Loan Documents. In addition, the indemnification
set forth in this Section 9.3(b) in favor of any director, officer, agent or
employee of Administrative Agent or any Bank shall be solely in their respective
capacities as such director, officer, agent or employee. The Borrower's
obligations under this Section shall survive the termination of this Agreement
and the payment of the Obligations.
(c) Each Indemnitee will promptly notify the Borrower of each event of
which it has knowledge that may give rise to a claim under clause (b) of Section
9.3, provided that the failure to so notify the Borrower shall in no way impair
the Borrower's obligations under this Section 9.3 (except to the extent that
such failure to so notify arises from the gross negligence or willful misconduct
of such Indemnitee and has an adverse effect on the Borrower). If any
investigative, judicial or administrative proceeding is brought against any
Indemnitee indemnified or intended to be indemnified pursuant to this Section
9.3, the Borrower, to the extent and in the manner directed by the Indemnitee,
will resist and defend such proceeding with counsel designated by the Borrower
(which counsel shall be reasonably satisfactory to the Indemnitee). Each
Indemnitee will use its best efforts to cooperate in the defense of any such
action, writ, or proceeding. The Borrower shall keep such Indemnitee advised of
the status of such defense and consult with such Indemnitee prior to taking any
material position with respect thereto. Such Indemnitee shall, however, be
entitled to employ counsel separate from counsel for the Borrower and from any
other party in such proceeding if such Indemnitee shall reasonably determine
that a conflict of interest or other circumstance exists that makes
representation by counsel chosen by the Borrower not advisable. The fees and
disbursements of such separate counsel shall be paid by the Borrower. Such
Indemnitee shall not agree to the settlement of any such claim without the
consent of the Borrower, unless the Borrower shall have been given notice of the
commencement of an action and shall have failed to provide the defense thereof
as herein provided or an Event of Default shall have occurred.
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, and after acceleration of the Obligations, 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, but subject to the prior
consent of
54
<PAGE> 61
the Administrative Agent, to set off and to appropriate and apply any and all
deposits (general or special, time or demand, provisional or final) 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 shall
notify the Borrower in writing promptly after any such set-off and the
application thereof made by such Bank; provided however that the failure to give
such notice shall not affect the validity of such set-off and application. 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 which is greater
than the proportion received by any other Bank, the Bank receiving such
proportionately greater payment shall purchase such participations in the Notes
held by the other Banks, 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 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 setoff or counterclaim it may have to any deposits not received in connection
with the Loans and to apply the amount subject to such exercise to the payment
of indebtedness of the Borrower other than its indebtedness under the Notes. The
Borrower agrees, to the fullest extent 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 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. Notwithstanding anything to the contrary contained
herein, any Bank may, by separate agreement with the Borrower, waive its right
to set off contained herein or granted by law and any such written waiver shall
be effective against such Bank under this Section 9.4.
SECTION 9.5 Amendments and Waivers. Any provision of this Agreement,
the Notes or any 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; provided that no such amendment or waiver with respect to this
Agreement, the Notes or any other Loan Documents shall, unless signed by all the
Banks, (i) subject any Bank to any additional obligation, (ii) reduce the
principal of or rate of interest on any Loan or any fees hereunder, (iii)
postpone the date fixed for any payment of principal of or interest on any Loan
or any fees hereunder, (iv) except as contemplated by this Agreement, 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, (v) release the Guaranty or (vi) modify the provisions of this
Section 9.5. No amendment or waiver shall be binding against the Administrative
Agent until it shall have been notified thereof in writing.
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 transfer any of its rights
under this Agreement or the other Loan Documents without the prior written
consent of all Banks and the Administrative Agent and a Bank may not assign or
otherwise transfer any of its interest under this Agreement except as permitted
in subsection (b) and (c) of this Section 9.6.
55
<PAGE> 62
(b) Any Bank may at any time grant to any Person in any amount,
participating interests in any Loans made pursuant to this Agreement. In
addition, any Bank may at any time grant to any existing Bank or one or more
banks, finance companies, insurance or other financial institutions which (A)
has (or, in the case of a bank which is a subsidiary, such bank's parent has) a
rating of its senior debt obligations of not less than Baa-1 by Moody's, BBB by
S&P or a comparable rating by a rating agency acceptable to Administrative Agent
and (B) has total assets in excess of Ten Billion Dollars ($ 10,000,000,000),
(C) as a result of such grant, has participating interests in its Commitment, in
an amount not less than $10,000,000; provided that such Bank retains at least
one-half of its interest in its Commitment free and clear of any participation
interest. If any Bank sells or grants an interest to a Person described above
(in each case, a "Participant"), (i) such Bank shall make and receive all
payments for the account of its Participant, (ii) such Bank's obligations under
this Agreement shall remain unchanged, (iii) such Bank shall continue to be the
sole holder of its Notes and other Loan Documents subject to the participation
and shall have the sole right to enforce its rights and remedies under the Loan
Documents, (iv) the Borrower, the Administrative Agent and the Banks shall
continue to deal solely and directly with such Bank in connection with such
Bank's rights and obligations under the Loan Documents, and (v) the
participation agreement shall not restrict such Bank's ability to agree to any
amendment of the terms of the Loan Documents, or to exercise or refrain from
exercising any powers or rights that such Bank may have under or in respect of
the Loan Documents, except that the Participant may be granted the right to
consent to any (A) reduction of the rate or amount, or any extension of the
stated maturity or due date (except as to any extension of the Maturity Date
provided for in this Agreement), of any principal, interest or fees payable by
the Borrower and subject to the participation, or (B) release of the Guaranty,
except to the extent otherwise provided in the Loan Documents. 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.
(c) Subject to the requirement that each Bank continues to hold a
minimum of five percent (5%) of the Aggregate Commitments for so long as it is a
Bank hereunder, any Bank may at any time assign, prior to the occurrence of an
Event of Default, to an existing Bank or one or more banks, finance companies,
insurance or other financial institutions which (A) has (or, in the case of a
bank which is a subsidiary, such bank's parent has) a rating of its senior debt
obligations of not less than Baa-1 by Moody's, BBB by S&P or a comparable rating
by a rating agency acceptable to Administrative Agent and (B) has total assets
in excess of Ten Billion Dollars ($10,000,000,000), in minimum amounts of not
less than five percent (5%) of the Aggregate Commitments and integral multiples
of One Million Dollars ($1,000,000) thereafter (or any lesser amount in the case
of assignments to an existing Bank) so long as such assignment is made with (and
subject to) the consent of the Administrative Agent, which shall not be
unreasonably withheld or delayed; provided that if an Assignee is an affiliate
of such transferor Bank or was a Bank immediately prior to such assignment, no
such consent shall be required. After the occurrence and during the continuance
of an Event of Default, any Bank may at any time assign to any Person in any
amount, all or a proportionate part of all, of its rights and obligations under
this Agreement, the Notes and the other Loan Documents. In either case, such
Person (in each case, an "Assignee") shall assume such rights and obligations,
pursuant to a
56
<PAGE> 63
Transfer Supplement in substantially the form of Exhibit "B" attached hereto
executed by such Assignee and such transferor Bank, and a copy thereof shall be
promptly furnished to the Administrative Agent. Upon execution and delivery of a
Transfer Supplement 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
Transfer Supplement, and no further consent or action by any party shall be
required and the transferor Bank shall be released from its obligations
hereunder to a corresponding extent. Upon the consummation of any assignment
pursuant to this subsection (c), the transferor Bank, the Administrative Agent
and the Borrower shall make appropriate arrangements so that, if required, new
Notes are issued to the Assignee and to the transferor Bank in replacement of
its old Note. In connection with any such assignment, the transferor Bank shall
pay to the Administrative 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 Administrative Agent certification as to exemption from
deduction or withholding of any United States federal, income taxes in
accordance with Section 8.4. Any assignment, made during the continuation of an
Event of Default shall not be affected by any subsequent cure of such Event of
Default.
(d) Any Bank may at any time assign all or any portion of its rights
under this Agreement and its Note to a Federal Reserve Bank. No such assignment
shall release the transferor Bank from its obligations hereunder.
(e) 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 Collateral. Each of the Banks represents to the
Administrative Agent and each of the other Banks that it in good faith is not
relying upon any "margin stock" (as defined in Regulation U) as collateral in
the extension or maintenance of the credit provided for in this Agreement.
SECTION 9.8 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 CALIFORNIA EXCEPT TO THE EXTENT PREEMPTED
BY FEDERAL LAW (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 California or of
the United States of America located in
57
<PAGE> 64
Orange County, California, and, by execution and delivery of this Agreement, the
Banks and the Borrower each 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 Banks and the
Borrower irrevocably consent 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 Banks and the Borrower at their respective addresses set forth below. The
Banks and the Borrower hereby irrevocably waive 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 waive and agree 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 Borrower or
Administrative Agent to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against any other party in any
other jurisdiction.
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 Administrative Agent and
the Borrower 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 Administrative 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), and the date on which such receipt occurs
shall be the "Effective Date."
SECTION 9.10 WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE
ADMINISTRATIVE AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVE 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 this Agreement and the other Loan Documents and
the making and repayment of the Loans hereunder.
SECTION 9.12 Domicile of Loans. 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 acting by or through Borrower against the
Administrative 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
58
<PAGE> 65
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 Recourse Obligation. This Agreement and the Obligations
hereunder are fully recourse to the Borrower. Notwithstanding the foregoing, no
recourse under or upon any obligation, covenant, or agreement contained in this
Agreement shall be had against any limited partner of Borrower or any of their
or Borrower's or General Partner's respective officers, directors, or employees
except in the event of fraud or misappropriation of funds on the part of such
officer, director, shareholder or employee.
SECTION 9.15 Bank's Failure to Fund.
(a) Unless the Administrative Agent shall have received notice from a
Bank prior to the Closing Date that such Bank will not make available to the
Administrative Agent such Bank's share of the initial Borrowing, the
Administrative Agent may assume that such Bank has made such share available to
the Administrative Agent on the date of such Borrowing in accordance with
subsection (a) of Section 2.2 hereof, and the Administrative Agent may, in
reliance upon such assumption, make available to 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 Administrative Agent, such Bank and Borrower
severally agree to repay to the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon, in accordance with the
provisions of Section 2.2(b) hereof. If such Bank shall repay to the
Administrative Agent such corresponding amount, such amount so repaid shall
constitute such Bank's Loan included in such Borrowing for purposes of this
Agreement. Nothing contained in this Section or Section 2.2(b) shall be deemed
to reduce the Commitment of any Bank or in any way affect the rights of Borrower
with respect to any defaulting Bank or Administrative Agent. `Me failure of any
Bank to make available to the Administrative Agent such Bank's share of the
initial Borrowing in accordance with Section 2.2(a) hereof shall not relieve any
other Bank of its obligations to fund its Commitment, in accordance with the
provisions hereof.
(b) If a Bank does not advance to Administrative Agent such Bank's pro
rata share of the initial Borrowing in accordance herewith, then neither
Administrative Agent nor the other Banks shall be required or obligated to fund
such Bank's pro rata share of such initial Borrowing.
(c) As used herein, the following terms shall have the meanings set
forth below:
(i) "Defaulting Bank" shall mean any Bank which (x) does not
advance to the Administrative Agent such Bank's pro rata share of the initial
Borrowing in accordance herewith for a period of five (5) Domestic Business Days
after notice of such failure from Administrative Agent, (y) shall otherwise fail
to perform such Bank's obligations under the Loan Documents for a period of five
(5) Domestic Business Days after notice of such failure from Administrative
Agent, or (z) shall fail to pay the Administrative Agent or any other Bank, as
the case may be, upon demand, such Bank's pro rata share of any costs, expenses
or disbursements incurred or made by the Administrative Agent pursuant to the
terms of the Loan
59
<PAGE> 66
Documents for a period of five (5) Domestic Business Days after notice of such
failure from Administrative Agent, and in all cases, such failure is not as a
result of a good faith dispute as to whether such advance is properly required
to be made pursuant to the provisions of this Agreement, or as to whether such
other performance or payment is properly required pursuant to the provisions of
this Agreement.
(ii) "Junior Creditor" means any Defaulting Bank which has not (x)
fully cured each and every default on its part under the Loan Documents and (y)
unconditionally tendered to the Administrative Agent such Defaulting Bank's pro
rata share of all costs, expenses and disbursements required to be paid or
reimbursed pursuant to the terms of the Loan Documents.
(iii) "Payment in Full" means, as of any date, the receipt by the
Banks who are not Junior Creditors of an amount of cash, in lawful currency of
the United States, sufficient to indefeasibly pay in full all Senior Debt.
(iv) "Senior Debt" means (x) collectively, any and all
indebtedness, obligations and liabilities of the Borrower to the Banks who are
not Junior Creditors from time to time, whether fixed or contingent, direct or
indirect, joint or several, due or not due, liquidated or unliquidated,
determined or undetermined, arising by contract, operation of law or otherwise,
whether on open account or evidenced by one or more instruments, and whether for
principal, premium, interest (including, without limitation, interest accruing
after the filing of a petition initiating any proceeding referred to in Section
6. 1 (f) or (g)), reimbursement for fees, indemnities, costs, expenses or
otherwise, which arise under, in connection with or in respect of the Loans or
the Loan Documents, and (y) any and all deferrals, renewals, extensions and
refundings of, or amendments, restatements, rearrangements, modifications or
supplements to, any such indebtedness, obligation or liability.
(v) "Subordinated Debt" means (x) any and all indebtedness,
obligations and liabilities of Borrower to one or more Junior Creditors from
time to time, whether fixed or contingent, direct or indirect, joint or several,
due or not due, liquidated or unliquidated, determined or undetermined, arising
by contract, operation of law or otherwise, whether on open account or evidenced
by one or more instruments, and whether for principal, premium, interest
(including, without limitation, interest accruing after the filing of a petition
initiating any proceeding referred to in Section 6. 1 (f) or (g)), reimbursement
for fees, indemnities, costs, expenses or otherwise, which arise under, in
connection with or in respect of the Loans or the Loan Documents, and (y) any
and all deferrals, renewals, extensions and refundings of, or amendments,
restatements, rearrangements, modifications or supplements to, any such
indebtedness, obligation or liability.
(d) No Junior Creditor shall, prior to Payment in Full of all
Senior Debt:
(i) accelerate, demand payment of, sue upon, collect, or
receive any payment upon, in any manner, or satisfy or otherwise discharge, any
Subordinated Debt, whether for principal, interest and otherwise;
60
<PAGE> 67
(ii) take or enforce any Liens to secure Subordinated Debt or
attach or levy upon any assets of Borrower, to enforce any Subordinated Debt;
(iii) enforce or apply any security for any Subordinated Debt;
or
(iv) incur any debt or liability, or the like, to, or receive
any loan, return of capital, advance, gift or any other property, from, the
Borrower.
(e) In the event of:
(i) any insolvency, bankruptcy, receivership, liquidation,
dissolution, reorganization, readjustment, composition or other similar
proceeding relating to Borrower;
(ii) any liquidation, dissolution or other winding-up of the
Borrower, voluntary or involuntary, whether or not involving insolvency,
reorganization or bankruptcy proceedings;
(iii) any assignment by the Borrower for the benefit of
creditors;
(iv) any sale or other transfer of all or substantially all
assets of the Borrower; or
(v) any other marshaling of the assets of. the Borrower;
each of the Banks shall first have received Payment in Full of all Senior Debt
before any payment or distribution, whether in cash, securities or other
property, shall be made in respect of or upon any Subordinated Debt. Any payment
or distribution, whether in cash, securities or other property that would
otherwise be payable or deliverable in respect of Subordinated Debt to any
Junior Creditor but for this Agreement shall be paid or delivered directly to
the Administrative Agent for distribution to the Banks in accordance with this
Agreement until Payment in Full of all Senior Debt. If any Junior Creditor
receives any such payment or distribution, it shall promptly pay over or deliver
the same to the Administrative Agent for application in accordance with the
preceding sentence.
(f) Each Junior Creditor shall file in any bankruptcy or other
proceeding of Borrower in which the filing of claims is required by law, all
claims relating to Subordinated Debt that such Junior Creditor may have against
Borrower and assign to the Banks who are not Junior Creditors all rights of such
Junior Creditor thereunder. If such Junior Creditor does not file any such claim
prior to forty-five (45) days before the expiration of the time to file such
claim, Administrative Agent, as attorney-in-fact for such Junior Creditor, is
hereby irrevocably authorized to do so in the name of such Junior Creditor or,
in Administrative Agent's sole discretion, to assign the claim to a nominee and
to cause proof of claim to be filed in the name of such nominee. The foregoing
power of attorney is coupled with an interest and cannot be revoked. The
Administrative Agent shall, to the exclusion of each Junior Creditor, have the
sole right, subject to Section 9.5 hereof, to accept or reject any plan proposed
in any such proceeding and to take any other action that a party filing a claim
is entitled to take. In all such cases, whether in administration, bankruptcy or
otherwise, the Person or Persons authorized to pay such claim shall pay to
Administrative Agent the amount payable on such claim and, to the full extent
necessary for that purpose, each Junior Creditor hereby transfers and assigns to
the Administrative Agent all of the Junior Creditor's rights to any such
payments or distributions to which Junior Creditor would otherwise be entitled.
61
<PAGE> 68
(g) (i) If any payment or distribution of any character or any
security, whether in cash, securities or other property, shall be received by
any Junior Creditor in contravention of any of the terms hereof, such payment or
distribution or security shall be received in trust for the benefit of, and
shall promptly be paid over or delivered and transferred to, Administrative
Agent for application to the payment of all Senior Debt, to the extent necessary
to achieve Payment in Full. In the event of the failure of any Junior Creditor
to endorse or assign any such payment, distribution or security, Administrative
Agent is hereby irrevocably authorized to endorse or assign the same as
attorney-in-fact for such Junior Creditor.
(ii) Each Junior Creditor shall take such action (including,
without limitation, the execution and filing of a financing statement with
respect to this Agreement and the execution, verification, delivery and filing
of proofs of claim, consents, assignments or other instructions that
Administrative Agent may require from time to time in order to prove or realize
upon any rights or claims pertaining to Subordinated Debt or to effectuate the
full benefit of the subordination contained herein) as may, in Administrative
Agent's sole and absolute discretion, be necessary or desirable to assure the
effectiveness of the subordination effected by this Agreement.
(h) (i) Each Bank that becomes a Junior Creditor understands and
acknowledges by its execution hereof that each other Bank is entering into this
Agreement and the Loan Documents in reliance upon the absolute subordination in
right of payment and in time of payment of Subordinated Debt to Senior Debt as
set forth herein.
(ii) Only upon the Payment in Full of all Senior Debt shall any
Junior Creditor be subrogated to any remaining rights of the Banks which are not
Defaulting Banks to receive payments or distributions of assets of the Borrower
made on or applicable to any Senior Debt.
(iii) Each Junior Creditor agrees that it will deliver all
instruments or other writings evidencing any Subordinated Debt held by it to
Administrative Agent, promptly after request therefor by the Administrative
Agent.
(iv) No Junior Creditor may at any time sell, assign or
otherwise transfer any Subordinated Debt, or any portion thereof, including,
without limitation, the granting of any Lien thereon, unless and until
satisfaction of the requirements of Section 9.6 above and the proposed
transferee shall have assumed in writing the obligation of the Junior Creditor
to the Banks under this Agreement, in a form acceptable to the Administrative
Agent.
(v) If any of the Senior Debt, should be invalidated, avoided
or set aside, the subordination provided for herein nevertheless shall continue
in full force and effect and, as between the Banks which are not Defaulting
Banks and all Junior Creditors, shall be and be deemed to remain in full force
and effect.
62
<PAGE> 69
(vi) Each Junior Creditor hereby irrevocably waives, in respect
of Subordinated Debt, all rights (x) under Sections 361 through 365, 502(e) and
509 of the Bankruptcy Code (or any similar sections hereafter in effect under
any other Federal or state laws or legal or equitable principles relating to
bankruptcy, insolvency, reorganizations, liquidations or otherwise for the
relief of debtors or protection of creditors), and (y) to seek or obtain
conversion to a different type of proceeding or to seek or obtain dismissal of a
proceeding, in each case in relation to a bankruptcy, reorganization, insolvency
or other proceeding under similar laws with respect to the Borrower. Without
limiting the generality of the foregoing, each Junior Creditor hereby
specifically waives (A) the right to seek to give credit (secured or otherwise)
to the Borrower in any way under Section 364 of the Bankruptcy Code unless the
same is subordinated in all respects to Senior Debt in a manner acceptable to
Administrative Agent in its sole and absolute discretion and (B) the right to
receive any collateral security (including any "super priority" or equal or
"priming" or replacement Lien) for any Subordinated Debt unless the Banks which
are not Defaulting Banks have received a senior position acceptable to the Banks
in their sole and absolute discretion to secure all Senior Debt (in the same
collateral to the extent collateral is involved).
(i) (i) In addition to and not in limitation of the subordination
effected by this Section 9.15, the Administrative Agent and each of the Banks
which are not Defaulting Banks may in their respective sole and absolute
discretion, also exercise any and all other rights and remedies available at law
or in equity in respect of a Defaulting Bank; and
(ii) The Administrative Agent shall give each of the Banks
notice of the occurrence of a default under this Section 9.15 by a Defaulting
Bank and if the Administrative Agent and/or one or more of the other Banks
shall, at their option, fund any amounts required to be paid or advanced by a
Defaulting Bank, the other Banks who have elected not to fund any portion of
such amounts shall not be liable for any reimbursements to the Administrative
Agent and/or to such other funding Banks.
(j) Notwithstanding anything to the contrary contained or implied
herein, a Defaulting Bank shall not be entitled to vote on any matter as to
which a vote by the Banks is required hereunder, including, without limitation,
any actions or consents on the part of the Administrative Agent as to which the
approval or consent of all the Banks or the Required Banks is required under
Article VIII, Section 9.5 or elsewhere, so long as such Bank is a Defaulting
Bank; provided, however, that in the case of any vote requiring the unanimous
consent of the Banks, if all the Banks other than the Defaulting Bank shall have
voted in accordance with each other, then the Defaulting Bank shall be deemed to
have voted in accordance with such Banks.
(k) Each of the Administrative Agent and any one or more of the
Banks which are not Defaulting Banks may, at their respective option, (i)
advance to the Borrower such Bank's pro rata share of the portion of the initial
Borrowing not advanced by a Defaulting Bank in accordance with the Loan
Documents, or (ii) pay to the Administrative Agent such Bank's pro rata share of
any costs, expenses or disbursements incurred or made by the Administrative
Agent pursuant to the terms of this Agreement not theretofore paid by a
Defaulting Bank. Immediately upon the making of any such advance by the
Administrative Agent or any one of the Banks, such Bank's pro rata share and the
pro rata share of the Defaulting Bank shall be recalculated to reflect such
advance. All payments, repayments and other disbursements of funds by the
63
<PAGE> 70
Administrative Agent to Banks shall thereupon and, at all times thereafter be
made in accordance with such Bank's recalculated pro rata share unless and until
a Defaulting Bank shall fully cure all defaults on the part of such Defaulting
Bank under the Loan Documents or otherwise existing in respect of the Loans or
this Agreement, at which time the pro rata share of the Bank(s) which advanced
sums on behalf of the Defaulting Bank and of the Defaulting Bank shall be
restored to their original percentages.
SECTION 9.16 Dispute Resolution.
(a) Mandatory Arbitration.
(i) If requested by any party thereto, any controversy or claim
between the parties hereto arising out of or relating to this Agreement or any
of the other Loan Documents (including any controversy or claim regarding the
arbitrability of such controversy or claim or based on or arising out of an
alleged tort) shall be determined by arbitration to be held in Orange County,
California in accordance with Title 9 of the U.S. Code and the Commercial
Arbitration Rules of the American Arbitration Association (the "AAA") and the
AAA's Supplementary Procedures for Large, Complex Disputes.
(ii) Any arbitration hereunder shall be held before a single
arbitrator mutually agreed to by the parties thereto, except that, if the
parties shall fail to agree to such an arbitrator within ten (10) days from the
date on which the claimant's request for arbitration is delivered to the other
party to the arbitration, such arbitration shall be held before a panel of three
arbitrators and each party shall appoint one arbitrator. The arbitrator(s) must
be either a retired judge from the California Superior or Appellate Courts or
the United States District Courts located in California or a member of the AAA
panel for hearing large, complex cases in Orange County, California. If a party
fails to nominate an arbitrator within 10 days from the date on which the
claimant's request for arbitration has been communicated to the other party, the
appointment shall be made by the AAA. The two arbitrators so appointed shall
attempt to agree upon the third arbitrator to act as chairman. If the two
arbitrators fail to nominate the chairman within 10 days from the date of
appointment of the later appointed arbitrator, the chairman shall be selected by
the AAA.
(iii) Discovery may be taken in the arbitration proceedings
pursuant to the provisions of California Code of Civil Procedure Section
1283.05, which are incorporated herein by reference and made applicable to any
arbitration held pursuant to this Section.
(iv) The award of the arbitrator(s) shall be final, and the parties
agree to waive their right to any form of appeal, to the greatest extent allowed
by law, and to share equally the fees and expenses of the arbitrators. Judgment
upon any award of the arbitrators may be entered in any court having
jurisdiction or application may be made to such court for the judicial
acceptance of the award and for order of enforcement. All statutes of limitation
and waivers that would otherwise be applicable shall apply to any arbitration
proceeding under this Section 9-16(a).
64
<PAGE> 71
(b) Judicial Reference.
If any such controversy or claim is not submitted to arbitration as
provided in subsection (a), but becomes the subject of a judicial action, it
shall be resolved solely and exclusively pursuant to the provisions for
reference and trial by referee set forth in California Code of Civil Procedure
Section 638 et seq., or any statute containing reasonably similar provisions
that replaces such sections, except as expressly modified by the provisions
hereof. The referee shall be a retired or former Superior Court judge practicing
in Orange County, California, who is either (i) agreed to by the parties within
ten (10) days of the notice by any party to the other of the intention to invoke
this Section to resolve the dispute, or (ii) failing such agreement, is
appointed pursuant to California Code of Civil Procedure Section 638.1 (or any
statute containing reasonably similar provisions that replaces such section) in
an action filed in the Superior Court of Orange County, California. The parties
agree that any party may file (and, if necessary, the other party shall join in
such filing) with the Clerk of the Orange County Superior Court, or with the
appropriate judge of such Court, any and all petitions, motions, applications or
other documents necessary to obtain the appointment of such a referee
immediately upon the commencement of any action or proceeding to resolve any
such dispute and to conduct all necessary discovery and to proceed to a trial as
expeditiously as possible. All proceedings, including trial, before the referee
shall be conducted at a neutral location (unless otherwise stipulated by the
parties) within five miles of the Orange County Superior Court. The parties
agree that the referee shall be a judge for all purposes (including (i) ruling
on any and all discovery matters and motions and any and all pretrial or trial
motions, (ii) setting a schedule of pretrial proceedings, and (iii) making any
other orders or rulings a sitting judge of the Superior Court would be empowered
to make in any action or proceeding in the Superior Court). Any matter before
the referee shall be governed by the California Code of Civil Procedure, the
California Rules of Court, the California Evidence Code and the Local Rules of
the Orange County Superior Court. Any decision of the referee shall be
appealable to the same extent and in the same manner that such decisions would
be appealable if rendered by a judge of the Orange County Superior Court. The
Referee shall in his or her statement of decision set forth his or her findings
of fact and conclusions of law. The parties intend this reference agreement to
be specifically enforceable in accordance with Section 638.1 of the California
Code of Civil Procedure.
(c) Provisional Remedies, Self-Help
Subject to Section 9.4, nothing herein shall limit the right of any
party to exercise self-help remedies such as setoff or to obtain provisional or
ancillary remedies, including an order of attachment, a temporary restraining
order, preliminary injunction or other interim relief from any court of
competent jurisdiction if such is necessary to preserve that party's rights
before, during or after the pendency of any arbitration, reference or bankruptcy
proceeding.
65
<PAGE> 72
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
IRVINE APARTMENT COMMUNITIES, L.P.,
a Delaware limited partnership
By: TIC ACQUISITION LLC,
a Delaware limited liability company,
its general partner
By: THE IRVINE COMPANY,
a Delaware corporation,
its managing member
By: /s/ THOMAS B. ROGERS
------------------------------------
Thomas B. Rogers
Senior Vice President and Treasurer
By: /s/ NANCY H. BARLEY
------------------------------------
Nancy H. Barley
Vice President, Corporate Finance
Address:
c/o The Irvine Company
550 Newport Center Drive
Newport Beach, California 92660
Attn: Vice President, Corporate Finance
Telecopy: (949) 720-9453
Signature Page
<PAGE> 73
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as a Bank
By: ___________________________________
Name: _________________________________
Title: ________________________________
Commitment Amount:
$66,000,000
LIBOR Lending Office:
Wells Fargo Bank, National Association
Disbursement and Operations Center
2120 East Park Place, Suite 100
El Segundo, California 90245
Attn: ________________________
Telecopy: (310) 615-1014
Domestic Lending Office:
Wells Fargo Bank, National Association
2030 Main Street, Suite 800
Irvine, California 92614
Attn: Office Manager
Telecopy: (949) 851-9728
Signature Page
<PAGE> 74
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Co-Arranger and Administrative Agent
By: ___________________________________
Name:__________________________________
Title: ________________________________
Address:
Wells Fargo Bank, National Association
2030 Main Street, Suite 800
Irvine, California 92614
Attn: Office Manager
Telecopy: (949) 851-9728
Signature Page
<PAGE> 75
U.S. BANK NATIONAL ASSOCIATION,
as a Bank
By: ___________________________________
Name:__________________________________
Title: ________________________________
Commitment Amount:
$34,000,000
LIBOR Lending Office:
U.S. Bank National Association
601 2nd Avenue South
Minneapolis, Minnesota 55402
Attention:_____________
Telecopy: (612) 973-0830
Domestic Lending Office:
U.S. Bank National Association
601 2nd Avenue South
Minneapolis, Minnesota 55402
Attention:_____________
Telecopy: (612) 973-0830
Signature Page
<PAGE> 76
U.S. BANK NATIONAL ASSOCIATION,
as Co-Arranger
By: ___________________________________
Name:__________________________________
Title: ________________________________
Address:
601 2nd Avenue South
Minneapolis, Minnesota 55402
Attention:_____________
Telecopy: (612) 973-0830
<PAGE> 77
SCHEDULE 1
Bank Commitments
Share of Aggregate
Bank Commitment Commitments
---- ------------ ------------------
Wells Fargo Bank, N.A. $ 66,000,000 66.00%
U.S. Bank National Association $ 34,000,000 34.00%
------------ -------
Total $100,000,000 100.00%
============ =======
Schedule 1 -- Page 1
<PAGE> 78
SCHEDULE 4.6
BORROWER AND GENERAL PARTNER ERISA PLANS
Irvine Apartment Communities, Inc. Savings Plan
Customary health, life and disability plans for active employees
Schedule 4.6 -- Page 1
<PAGE> 79
SCHEDULE 4.17
INITIAL QUALIFYING UNENCUMBERED PROPERTIES
Amherst Court San Carlo
Arcadia at Stonecrest San Leon
Baypointe San Marco
Berkeley Court San Marino
Brittany San Mateo
Cedar Creek San Remo
Champagne Towers (1221 Ocean Avenue) Santa Clara
Columbia Court Santa Maria
Cornell Court Santa Rosa
Cross Creek Santa Rosa II
Dartmouth Court Sierra Vista
Deerfield II Sonoma
Harvard Court Stanford Court
Lonestar The Colony
Newport North The Colony at Aventine
Newport Ridge The Hamptons
Northwood Park The Villas at Bair Island Marina
Northwood Place Turtle Rock Canyon
Orchard Park Villa Coronado
Park Place (land) Villas of Renaissance
Rancho Alisal Windwood Glen
Rancho Maderas Windwood Knoll
Rancho Monterey Woodbridge Oaks
Rancho Santa Fe Woodbridge Villas
Rancho Tierra Woodbridge Willows
Schedule 4.17 - Page 1
<PAGE> 80
SCHEDULE 5.14(c)(i)
San Rafael Limited Partnership, L.P.
IAC Management, Inc.
IAC Capital Trust
IAC Park Place, LLC
Schedule 5.14(c)(1) - Page 1
<PAGE> 81
SCHEDULE 5.14(c)(ii)
None
Schedule 5.14(c)(ii) - Page 2
<PAGE> 82
EXHIBIT A
RESERVED
Exhibit A-1
<PAGE> 83
EXHIBIT B
TRANSFER SUPPLEMENT
TRANSFER SUPPLEMENT (this ("Transfer Supplement") dated as of ________,
199___ between ________________ (the "Assignor") and _________________________
having an address at __________________________________ (the "Purchasing Bank").
W I T N E S S E T H
WHEREAS, the Assignor has made a loan to Irvine Apartment Communities,
L.P., a Delaware limited partnership (the "Borrower), pursuant to the Amended
and Restated Unsecured Loan Agreement, dated as of June ___, 1999 (as the same
may be amended, supplemented, replaced, renewed or otherwise modified from time
to time through the date hereof, the "Loan Agreement"), by and among the
Borrower, the banks listed on the signature pages thereof, Wells Fargo Bank,
N.A., as Co-Arranger and Administrative Agent, and U.S. Bank National
Association as Co-Arranger. All capitalized terms used and not otherwise defined
herein shall have the respective meanings set forth in the Loan Agreement;
WHEREAS, the Purchasing Bank desires to purchase and assume from the
Assignor, and the Assignor desires to sell and assign to the Purchasing Bank,
certain rights, title, interests and obligations under the Loan Agreement.
NOW, THEREFORE, IT IS AGREED:
1. In consideration of the amount set forth in the receipt (the
"Receipt") given by the Assignor to the Purchasing Bank of even date herewith,
and transferred by wire to the Assignor, the Assignor hereby assigns and sells,
without recourse, representation or warranty except as specifically set forth
herein, to the Purchasing Bank, and the Purchasing Bank hereby purchases and
assumes from the Assignor, a ___% interest (the "Purchased Interest") of the
Loan owing to the Assignor and constituting a portion of the Assignor's rights
and obligations under the Loan Agreement as of the Effective Date (as defined
below) including, without limitation, such percentage interest of the Assignor
in any Loan owing to the Assignor, and Note held by the Assignor, any Commitment
of the Assignor and any other interest of the Assignor under any of the Loan
Documents.
2. The Assignor (i) represents and warrants that as of the date hereof
the aggregate outstanding principal amount of its share of the Loan owing to it
(without giving effect to assignments thereof which have not yet become
effective) is $___________; (ii) represents and warrants that it is the legal
and beneficial owner of the interests being assigned by it hereunder and that
such interests are free and clear of any adverse claim; (iii) represents and
warrants that it has not received any notice of Default or Event of Default from
the Borrower; (iv) represents and warrants that it has full power and authority
to execute and deliver, and perform under, this Transfer Supplement, and all
necessary corporate and/or partnership action has been taken to authorize, and
all approvals and consents have been obtained for, the execution, delivery and
performance thereof; (v) represents and warrants that
Exhibit B-1
<PAGE> 84
this Transfer Supplement constitutes its legal, valid and binding obligation
enforceable in accordance with its terms; (vi) makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations (or the truthfulness or accuracy thereof) made in
or in connection with the Loan Agreement, or the other Loan Documents or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Loan Agreement, or the other Loan Documents or any other instrument or
document furnished pursuant thereto; and (vii) makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Borrower or the performance or observance by the Borrower of any of its
obligations under the Loan Agreement or the other Loan Documents or any other
instrument or document furnished pursuant thereto. Except as specifically set
forth in this Paragraph 2, this assignment shall be without recourse to
Assignor.
3. The Purchasing Bank (i) confirms that it has received a copy of the
Loan Agreement, and the other Loan Documents, together with such financial
statements and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into this Transfer
Supplement and to become a party to the Loan Agreement, and has not relied on
any statements made by Assignor or O'Melveny & Myers LLP; (ii) agrees that it
will, independently and without reliance upon any of the Administrative Agent,
the Assignor or any other Bank and based on such documents and information as it
shall deem appropriate at the time, continue to make its own appraisal of and
investigation into the business, operations, property, prospects, financial and
other conditions and creditworthiness of the Borrower and will make its own
credit analysis, appraisals and decisions in taking or not taking action under
the Loan Agreement, and the other Loan Documents; (iii) appoints and authorizes
the Administrative Agent to take such action as agent on its behalf and to
exercise such powers under the Loan Agreement, and the other Loan Documents, as
are delegated to the Agent by the terms thereof, together with such powers as
are incidental thereto; (iv) agrees that it will be bound and perform in
accordance with their terms all of the obligations which by the terms of the
Loan Agreement are required to be performed by it as a Bank; (v) specifies as
its address for notices and lending office, the office set forth beneath its
name on the signature page hereof; (vi) it has full power and authority to
execute and deliver, and perform under, this Transfer Supplement, and all
necessary corporate and/or partnership action has been taken to authorize, and
all approvals and consents have been obtained for, the execution, delivery and
performance thereof; (vii) this Transfer Supplement constitutes its legal, valid
and binding obligation enforceable in accordance with its terms; and (viii) the
interest being assigned hereunder is being acquired by it for its own account,
for investment purposes only and not with a view to the public distribution
thereof and without any present intention of its resale in either case that
would be in violation of the applicable securities laws.
4. This Transfer Supplement shall be effective on the date (the
"Effective Date") on which all of the following have occurred (i) it shall have
been executed and delivered by the parties hereto, (ii) copies hereof shall have
been delivered to the Administrative Agent and the Borrower, (iii) the
Purchasing Bank shall have received an original Note and (iv) the Purchasing
Bank shall have paid to the Assignor the agreed purchase price as set forth in
the Receipt.
5. On and after the Effective Date, (i) the Purchasing Bank shall be a
party to the Loan Agreement and, to the extent provided in this Transfer
Supplement, have the rights and obligations of a Bank thereunder and be entitled
to the benefits and rights of the Banks thereunder and (ii) the
Exhibit B-2
<PAGE> 85
Assignor shall, to the extent provided in this Transfer Supplement as to the
Purchased Interest, relinquish its rights and be released from its obligations
under the Loan Agreement.
6. From and after the Effective Date, the Assignor shall cause the
Administrative Agent to make all payments under the Loan Agreement, and the
Notes in respect of the Purchased Interest assigned hereby (including, without
limitation, all payments of principal, fees and interest with respect thereto
and any amounts accrued but not paid prior to such date) to the Purchasing Bank.
7. This Transfer Supplement may be executed in any number of
counterparts which, when taken together, shall be deemed to constitute one and
the same instrument.
8. The Assignor hereby represents and warrants to the Purchasing Bank
that it has made all payments demanded to date by the Administrative Agent in
connection with the Assignor's pro rata share of the obligation to reimburse the
Administrative Agent for its expenses and made all Loans required. In the event
that the Administrative Agent shall demand reimbursement for fees and expenses
from the Purchasing Bank for any period prior to the Effective Date, Assignor
hereby agrees to promptly pay the Administrative Agent such sums directly,
subject, however, to Paragraph 12 hereof.
9. The Assignor will, at the cost of the Assignor, and without expense
to the Purchasing Bank, do, execute, acknowledge and deliver all and every such
further acts, deeds, conveyances, assignments, notices of assignments, transfers
and assurances as the Purchasing Bank shall, from time to time, reasonably
require, for the better assuring conveying, assigning, transferring and
confirming unto the Purchasing Bank the property and rights hereby given,
granted, bargained, sold, aliened, enfeoffed, conveyed, confirmed, assigned
and/or intended nor or hereafter so to be, on which the Assignor may be or may
hereafter become bound to convey or assign to the Purchasing Bank, or for
carrying out the intention or facilitating the performance of the terms of this
Agreement or for filing, registering or recording this Agreement.
10. The parties agree that no broker or finder was instrumental in
bringing about this transaction. Each party shall indemnify, defend the other
and hold the other free and harmless from and against any damages, costs or
expenses (including, but not limited to, reasonable attorneys' fees and
disbursements) suffered by such party arising from claims by any broker or
finder that such broker or finder has dealt with said party in connection with
this transaction.
11. Subject to the provisions of Paragraph 12 hereof, if, with respect
to the Purchased Interest only, the Assignor shall on or after the Effective
Date receive (a) any cash, note, securities, property, obligations or other
consideration in respect of or relating to the Loan or the Loan Documents or
issued in substitution or replacement of the Loan or the Loan Documents, (b) any
cash or non-cash consideration in any form whatsoever distributed, paid or
issued in any bankruptcy proceeding in connection with the Loan or the Loan
Documents or (c) any other distribution (whether by means of repayment,
redemption, realization of security or otherwise), the Assignor shall accept the
same as the Purchasing Bank's agent and hold the same in trust on behalf of and
for the benefit of the Purchasing Bank, and shall deliver the same forthwith to
the Purchasing Bank in the same form received, with the endorsement (without
recourse) of the Assignor when necessary or appropriate. If the Assignor shall
fail to deliver any funds received by it within the same business day of
receipt, unless such funds are
Exhibit B-3
<PAGE> 86
received by the Assignor after 4:00 p.m., Pacific Standard Time, then the
following business day after receipt, said funds shall accrue interest at the
Federal Funds Rate and in addition to promptly remitting said amount, the
Assignor shall remit such interest from the date received to the date such
amount is remitted to the Purchasing Bank.
12. The Assignor and the Purchasing Bank each hereby agree to indemnify
and hold harmless the other, each of its directors and each of its officers in
connection with any claim or cause of action based on any matter or claim based
on the acts of either while acting as a Bank under the Loan Agreement. Promptly
after receipt by the indemnified party under this Section of notice of the
commencement of any action, such indemnified party shall notify the indemnifying
party in writing of the commencement thereof. In any such action is brought
against any indemnified party and that party notifies the indemnifying party of
the commencement thereof, the indemnifying party shall be entitled to
participate therein, and to the extent that it may elect by written notice
delivered to the indemnified party promptly after receiving the aforesaid notice
from such indemnified party, to assume the defense thereof, with counsel
satisfactory to such indemnified party, and after receipt of notice from the
indemnifying party to such indemnifying party of its election to so assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof. In no event
shall the indemnified party settle or consent to a settlement of such cause of
action or claim without the consent of the indemnifying party.
13. THIS TRANSFER SUPPLEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAWS OF THE STATE OF CALIFORNIA.
Wire Transfer Instructions:
_______________________________
_______________________________
_______________________________
_______________________________
By: __________________________________
Name: ____________________________
Title: ___________________________
By: __________________________________
Name: ____________________________
Title: ___________________________
Exhibit B-4
<PAGE> 87
Receipt and Consent acknowledged this
________ day of _____________, 199____:
WELLS FARGO BANK, N.A.,
as Administrative Agent
By: __________________________________
Name: ____________________________
Title: ___________________________
[IF REQUIRED ADD THE FOLLOWING:]
IRVINE APARTMENT COMMUNITIES, L.P.,
By: TIC Acquisition LLC,
its general partner
By: The Irvine Company,
its managing member
By: [Certifying Officer]
Name: _________________________
Title:_________________________
Exhibit B-5
<PAGE> 88
EXHIBIT C
[FORM OF NOTICE OF INTEREST PERIOD ELECTION]
NOTICE OF INTEREST PERIOD ELECTION
Pursuant to that certain Amended and Restated Unsecured Loan Agreement
dated as of June____, 1999 by and among Irvine Apartment Communities, L.P., a
Delaware limited partnership (the "Borrower"), the banks listed on the signature
pages thereof, Wells Fargo Bank, N.A., as Co-Arranger and Administrative Agent,
and U.S. Bank National Association, as Co-Arranger (as the same may be amended,
supplemented, replaced, renewed or otherwise modified from time to time, the
"Loan Agreement"), this represents Borrower's request to continue as LIBOR Loans
$__________ in principal amount of presently outstanding Loans having an
Interest Period that expires on __________, _____. The Interest Period for such
LIBOR Loans commencing on __________, ______ is requested to be a __________
[Select a 1, 2, 3 or 6 month period] month period. Terms with initial capital
letters used but not defined herein have the meanings assigned to them in the
Loan Agreement.
The undersigned Certifying Officer, to the bets of his or her
knowledge, and Borrower certify that no Event of Default or Default has occurred
and is continuing under the Loan Agreement.
IRVINE APARTMENT COMMUNITIES, L.P.,
a Delaware limited partnership
By: TIC Acquisition LLC,
a Delaware limited liability company,
its general partner
The Irvine Company,
a Delaware corporation,
its managing member
By: [Certifying Officer]
Name: ________________________________
Title: _______________________________
Exhibit C-1
<PAGE> 89
EXHIBIT D
[FORM OF COMPLIANCE CERTIFICATE]
COMPLIANCE CERTIFICATE
TO: Wells Fargo Bank, N.A.
Reference is hereby made to the Amended and Restated Unsecured Loan Agreement,
dated as of June ___, 1999 (as the same may be amended, supplemented, replaced,
renewed or otherwise from time to time, the "Loan Agreement"), by and among
IRVINE APARTMENT COMMUNITIES, L.P., a Delaware limited partnership (the
"Borrower"), the Banks listed therein, WELLS FARGO BANK, N.A., as Co-Arranger
and Administrative Agent, and U.S. BANK NATIONAL ASSOCIATION, as Co-Arranger.
Terms with initial capital letters used but not defined herein have the meanings
assigned to them in the Loan Agreement.
This Compliance Certificate is being delivered by the Borrower pursuant to
Section 5.1(c) of the Loan Agreement and relates to certain financial statements
of the Borrower (the "Financial Statements") as of and or periods ended
________________, _________ (the "Financial Statement Date"). The undersigned is
the ______________________[insert title of Certifying Officer] of the managing
member of the sole general partner of the Borrower, and hereby further certifies
as of the date hereof, in his capacity as an officer of the general partner of
the Borrower, as follows:
1. I have reviewed the terms of the Loan Documents and have made, or
have caused to be made under my supervisions, a review in
reasonable detail of the transactions and condition of the Borrower
Parties during the accounting period covered by the Financial
Statements.
2. Such review has not disclosed the existence of any Default or Event
of Default during such accounting period or as of the Financial
Statement Date and I do not have knowledge of the existence, as at
the date of this certificate, of any Default or Event of Default.
3. Attached as Appendix A hereto are calculations by which I have
determined that the Borrower is in compliance with the requirements
of Section 5.9 of the Loan Agreement as of the Financial Statement
Date.
4. The Financial Statements fairly present the financial condition and
the results of operations of the Borrower on the dates and for the
periods indicated, on the basis of GAAP.
Exhibit D-1
<PAGE> 90
5. The Borrower is in compliance with the Interest Rate Hedge
requirements set forth in Section 5.13 of the Loan Agreement.
DATE: ___________________ IRVINE APARTMENT COMMUNITIES, L.P.,
a Delaware limited partnership
By: TIC Acquisition LLC,
a Delaware limited liability
company,
By: The Irvine Company,
a Delaware corporation
By: ________________________
Name: __________________
Title: _________________
Exhibit D-2
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
ACCOMPANYING FINANCIAL STATEMENTS OF IRVINE APARTMENT COMMUNITIES, L.P. FOR THE
SIX MONTHS ENDED JUNE 30, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001038358
<NAME> Irvine Apartment Communities, L.P.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 10,335
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10,335
<PP&E> 1,987,797
<DEPRECIATION> 300,458
<TOTAL-ASSETS> 1,949,443
<CURRENT-LIABILITIES> 39,376
<BONDS> 749,860
0
192,810
<COMMON> 0
<OTHER-SE> 911,098
<TOTAL-LIABILITY-AND-EQUITY> 1,949,443
<SALES> 0
<TOTAL-REVENUES> 121,559
<CGS> 0
<TOTAL-COSTS> 54,395
<OTHER-EXPENSES> 8,941
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,170
<INCOME-PRETAX> 43,053
<INCOME-TAX> 0
<INCOME-CONTINUING> 43,053
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 34,678
<EPS-BASIC> 0.77
<EPS-DILUTED> 0.77
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
ACCOMPANYING FINANCIAL STATEMENTS OF IAC CAPITAL TRUST FOR THE SIX MONTHS ENDED
JUNE 30, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CIK> 0001048922
<NAME> IAC Capital Trust
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 5
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 150,005
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
150,000
<COMMON> 5
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 150,005
<SALES> 0
<TOTAL-REVENUES> 6,188
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 6,188
<INCOME-TAX> 0
<INCOME-CONTINUING> 6,188
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-BASIC> 0.00
<EPS-DILUTED> 0.00
</TABLE>
