<PAGE> 1
EXHIBIT INDEX ON PAGE 20
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[XX] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: JUNE 30, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 000-22685
VORNADO REALTY L. P.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3925979
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification Number)
PARK 80 WEST, PLAZA II, SADDLE BROOK, NEW JERSEY 07663
(Address of principal executive offices) (Zip Code)
(201)587-1000
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
[X] Yes [ ] No
Page 1 of 94
<PAGE> 2
VORNADO REALTY L. P.
INDEX
<TABLE>
<CAPTION>
Page Number
-----------
<S> <C>
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements:
Consolidated Balance Sheets as of June 30, 1997
and December 31, 1996........................................................... 3
Consolidated Statements of Income for the Three and Six Months
Ended June 30, 1997 and June 30, 1996........................................... 4
Consolidated Statements of Cash Flows for the Six Months
Ended June 30, 1997 and June 30, 1996........................................... 5
Notes to Consolidated Financial Statements...................................... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................................. 11
PART II. OTHER INFORMATION:
Item 1. Legal proceedings............................................................... 17
Item 6. Exhibits and Reports on Form 8-K................................................ 18
Signatures ................................................................................ 19
Exhibit Index ................................................................................ 20
Exhibit 10 ................................................................................ 21
Exhibit 11 ................................................................................ 93
Exhibit 27 ................................................................................ 94
</TABLE>
Page 2 of 94
<PAGE> 3
VORNADO REALTY L. P.
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
------------ -----------
<S> <C> <C>
ASSETS:
Real estate, at cost:
Land $ 239,370 $ 60,778
Buildings and improvements 785,040 313,885
Leasehold improvements and equipment 8,967 8,535
------------ -----------
Total 1,033,377 383,198
Less accumulated depreciation and
amortization (155,950) (147,549)
----------- ----------
Real estate, net 877,427 235,649
Cash and cash equivalents, including U.S.
government obligations under repurchase
agreements of $6,375 and $17,036 199,826 89,696
Restricted cash 29,434 -
Marketable securities 31,225 27,549
Investment in and advances to Alexander's, Inc. 108,100 107,628
Investments in partnerships 38,275 -
Investment in and advances to
management companies 13,008 5,193
Due from officers 8,652 8,634
Accounts receivable, net of allowance for
doubtful accounts of $631 and $575 15,171 9,786
Officer's deferred compensation expense 10,419 22,917
Mortgage loans receivable 243,001 17,000
Receivable arising from the
straight-lining of rents 19,619 17,052
Other assets 48,539 20,500
------------ ----------
TOTAL ASSETS $1,642,696 $ 561,604
========== =========
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
----------- ---------
<S> <C> <C>
LIABILITIES AND PARTNERS' CAPITAL:
Notes and mortgages payable $ 859,283 $ 228,787
Due for U.S. treasury obligations -- 9,636
Accounts payable and accrued expenses 26,618 9,905
Deferred leasing fee income 10,550 8,373
Officer's deferred compensation payable 25,000 25,000
Other liabilities 3,811 3,646
----------- ---------
Total liabilities 925,262 285,347
----------- ---------
Commitments and contingencies
Partners' capital:
Preferred units of beneficial interest:
no par value per unit; authorized,
20,000,000 units; liquidation
preference $50.00 per unit; issued,
5,750,000 units 276,599 --
General partnership units, 26,553,161 and
26,547,680 outstanding in each period 360,111 359,918
Limited partnership units, 2,841,524
outstanding at June 30, 1997 178,093 --
Partnership deficit (92,340) (77,574)
----------- ---------
722,463 282,344
Unrealized loss on securities
available for sale (2) (998)
Due from officers for purchase of common
units of beneficial interest (5,027) (5,089)
----------- ---------
Total partners' capital 717,434 276,257
----------- ---------
TOTAL LIABILITIES AND
PARTNERS' CAPITAL $ 1,642,296 $ 561,604
=========== =========
</TABLE>
See notes to consolidated financial statements.
<PAGE> 4
VORNADO REALTY L. P.
CONSOLIDATED STATEMENTS OF INCOME
(amounts in thousands except share amounts)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
-------------------------- ------------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Property rentals $ 41,004 $ 21,820 $ 63,471 $ 43,157
Expense reimbursements 8,951 6,820 15,161 13,701
Other income (including fee income from
related parties of $329 and $413
and $643 and $805) 707 605 1,327 997
------------ ------------ ------------ ------------
Total revenues 50,662 29,245 79,959 57,855
------------ ------------ ------------ ------------
Expenses:
Operating 18,151 9,145 26,658 18,059
Depreciation and amortization 5,462 2,897 8,429 5,732
General and administrative 2,903 1,319 4,748 2,508
Amortization of officer's deferred
compensation expense 6,249 -- 12,498 --
------------ ------------ ------------ ------------
Total expenses 32,765 13,361 52,333 26,299
------------ ------------ ------------ ------------
Operating income 17,897 15,884 27,626 31,556
Income (loss) applicable to Alexander's:
Equity in income (loss) 54 16 (7) (120)
Depreciation (150) (157) (300) (314)
Interest income on loan 1,533 1,657 3,149 3,459
Income from investment in management
companies 303 238 520 1,379
Equity in net income of investees 282 -- 282 --
Interest income on mortgage
loans receivable 3,693 656 4,305 1,250
Other interest and dividend income 5,256 902 6,774 1,773
Interest and debt expense (13,272) (4,192) (17,350) (8,415)
Gain on marketable securities 292 116 579 474
------------ ------------ ------------ ------------
Net Income 15,888 15,120 25,578 31,042
Preferred unit distributions (4,855) -- (4,855) --
Preferential allocations (2,100) -- (2,100) --
------------ ------------ ------------ ------------
Net Income applicable to Class A units $ 8,933 $ 15,120 $ 18,623 $ 31,042
============ ============ ============ ============
Net Income per Class A units $ .33 $ .62 $ .70 $ 1.27
============ ============ ============ ============
Weighted average number of Class A
units and Class A unit equivalents
outstanding during period 26,887,984 24,465,345 26,718,841 24,464,922
Cash distributions per Class A unit $ .64 $ .61 $ 1.28 $ 1.22
</TABLE>
See notes to consolidated financial statements.
Page 4 of 94
<PAGE> 5
VORNADO REALTY L. P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in thousands)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
--------------------------
JUNE 30, JUNE 30,
1997 1996
--------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 25,578 $ 31,042
Adjustments to reconcile net income to net
cash provided by operations:
Depreciation and amortization (including debt issuance costs) 8,977 6,242
Amortization of officer's deferred compensation expense 12,498 --
Straight-lining of rental income (1,487) (1,277)
Equity in loss of Alexander's,
including depreciation of $300 and $314 307 434
Equity in net income of investees (282) --
Gain on marketable securities (579) (474)
Changes in assets and liabilities:
Trading securities 339 (1,854)
Accounts receivable (1,861) (2,639)
Accounts payable and accrued expenses 2,746 1,188
Other 4,753 1,114
--------- --------
Net cash provided by operating activities 50,989 33,776
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Mendik acquisition (263,790) --
Investment in mortgage loans receivable (226,000) (17,000)
Cash restricted for tenant improvements (29,434) --
Additions to real estate (107,153) (11,032)
Purchases of securities available for sale (3,436) --
Proceeds from sale or maturity of securities available for sale -- 41,192
--------- --------
Net cash (used in) provided by investing activities (629,813) 13,160
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of preferred stock 276,000 --
Proceeds from borrowings 463,000 10,000
Debt issuance costs (1,857) --
Repayment of borrowings on U.S. treasury obligations (9,636) (40,242)
Proceeds from borrowings on U.S. treasury obligations -- 10,000
Repayments on mortgages (504) (353)
Distributions paid (38,242) (29,627)
Issuance of units 193 907
--------- --------
Net cash provided by (used in) financing activities 688,954 (49,315)
--------- --------
Net increase (decrease) in cash and cash equivalents 110,130 (2,379)
Cash and cash equivalents at beginning of period 89,696 19,127
--------- --------
Cash and cash equivalents at end of period $ 199,826 $ 16,748
========= ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash payments for interest $ 14,001 $ 7,905
========= ========
NON-CASH TRANSACTIONS:
Unrealized gain (loss) on securities available for sale $ 996 $ (143)
========= ========
</TABLE>
The non-cash portion of the consideration for the Mendik acquisition of
$392,272,000 is not reflected in cash flows from investing activities above.
See notes to consolidated financial statements.
Page 5 of 94
<PAGE> 6
VORNADO REALTY L. P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION
On April 15, 1997, Vornado Realty Trust ("Vornado") converted to an
Umbrella Partnership REIT (UPREIT) by transferring all or substantially all of
the interests in its properties and other assets to Vornado Realty L.P. (the
"Operating Partnership"), of which Vornado owns 90.4% and is the sole general
partner. As a result of such conversion, Vornado's activities will be conducted
through the Operating Partnership. The transfer has been accounted for as a
transfer of entities under common control, accordingly the financial statements
have been prepared on the historical cost basis.
2. BASIS OF PRESENTATION
The consolidated balance sheet as of June 30, 1997, the consolidated
statements of income for the three and six months ended June 30, 1997 and June
30, 1996 and the consolidated statements of changes in cash flows for the six
months ended June 30, 1997 and June 30, 1996 are unaudited. In the opinion of
management, all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, results of operations and
changes in cash flows have been made. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted.
These condensed consolidated financial statements should be read in conjunction
with the financial statements and notes thereto included in Vornado's 1996
Annual Report to Shareholders. The results of operations for the period ended
June 30, 1997 are not necessarily indicative of the operating results for the
full year.
The accompanying unaudited consolidated condensed financial statements
include all the accounts of the Operating Partnership. Properties which are
wholly owned or controlled by the Operating Partnership have been consolidated.
All significant intercompany amounts have been eliminated. Equity interests in
certain partnerships and joint ventures, which represent noncontrolling
ownership interests, are accounted for under the equity method of accounting as
the Operating Partnership exercises significant influence. These investments are
recorded initially at cost and subsequently adjusted for net equity in income
(loss) and cash contributions and distributions.
3. THE MENDIK TRANSACTION
Simultaneously with the formation of the Operating Partnership, Vornado
consummated the acquisition of interests in all or a portion of seven Manhattan
office buildings and a management company held by the Mendik Group (Bernard H.
Mendik, David R. Greenbaum and certain entities controlled by them) and certain
of its affiliates (the "Mendik Transaction"), which will be operated as the
Mendik Division. The Mendik properties include (i) wholly owned properties: Two
Penn Plaza, Eleven Penn Plaza, 1740 Broadway and 866 U.N. Plaza and (ii)
partially owned properties: Two Park Avenue (40% interest), 330 Madison Avenue
(24.8% interest) and 570 Lexington Avenue (5.6% interest). The consideration for
the transaction was approximately $656,000,000, including $264,000,000 in cash,
$177,000,000 in the limited partnership units of the Operating Partnership
issued to persons other than Vornado ("Minority Interests") and $215,000,000 in
indebtedness. The acquisition was recorded under the purchase method of
accounting.
Vornado financed the cash portion of this transaction with the proceeds of
a public offering completed on April 9, 1997, of 5,750,000 Convertible Preferred
Shares of Beneficial Interest, liquidation preference $50.00 per share. The
preferred shares bear a coupon of 6-1/2% and are convertible into common shares
at $72-3/4 per share. The offering, net of expenses, generated approximately
$276,000,000.
Page 6 of 94
<PAGE> 7
VORNADO REALTY L. P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The unaudited proforma information set forth below presents the condensed
statement of income for the Operating Partnership for the six months ended June
30, 1997 and 1996, as if the Mendik Transaction and certain related transactions
were consummated and the offering by Vornado of Series A Preferred Shares of
Beneficial Interest, liquidation preference $50.00 per share and the use of
proceeds therefrom had occurred on January 1, 1996.
<TABLE>
<CAPTION>
Proforma
Six Months Six Months
Ended Ended
June 30, 1997 June 30, 1996
------------- -------------
<S> <C> <C>
Revenues $ 120,136,000 $ 110,311,000
============= =============
Net income $ 42,809,000 $ 44,121,000
Preferred unit distributions (9,992,000) (9,992,000)
Preferential allocations (2,100,000) (2,100,000)
------------- -------------
Net income applicable to Class A units $ 30,717,000 $ 32,029,000
============= =============
Net income per Class A unit $ 1.14 $ 1.31
============= =============
</TABLE>
The proforma results for the six months ended June 30, 1997, include
Mendik non-recurring lease cancellation income of $14,357,000, partially
offset by related expenses of $2,776,000. This income and related expenses
are not included in funds from operations as defined in Management's
Discussion and Analysis of Financial Condition and Results of Operations
(see page 14).
4. INVESTMENTS IN AND ADVANCES TO ALEXANDER'S (A RELATED PARTY):
Below are summarized Statements of Operations of Alexander's:
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
June 30, 1997 June 30, 1996
------------- -------------
<S> <C> <C>
Revenues $ 12,759,000 $ 10,370,000
Expenses (7,043,000) (5,698,000)
------------ ------------
Operating income 5,716,000 4,672,000
Interest and debt expense (6,605,000) (6,736,000)
Interest and other income, net 864,000 1,655,000
------------ ------------
Net loss from continuing operations $ (25,000) $ (409,000)
============ ============
Vornado's 29.3% equity in loss $ (7,000) $ (120,000)
============ ============
</TABLE>
The Operating Partnership recognized leasing fee income under a leasing
agreement (the "Leasing Agreement") with Alexander's of $195,000 and $247,000
for the three months ended June 30, 1997 and 1996 and $366,000 and $357,000 for
the six months ended June 30, 1997 and 1996. Subject to the payment of rents by
Alexander's tenants, the Operating Partnership is due $6,946,000 at June 30,
1997 under such agreement. The lease which the Operating Partnership had
previously negotiated with Caldor on behalf of Alexander's for its Fordham Road
property was rejected in June 1997 in Caldor's bankruptcy proceedings, resulting
in $1,254,000 of previously recorded leasing fees receivable and deferred
leasing fee income being reversed in the quarter ended June 30, 1997. In
addition to the leasing fees received by the Operating Partnership, Vornado
Management Corp. receives management fees from Alexander's (see Note 8).
Page 7 of 94
<PAGE> 8
VORNADO REALTY L. P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. DEBT
On July 17, 1997, the Operating Partnership obtained a $600,000,000
unsecured three-year revolving credit facility from a bank group led by Union
Bank of Switzerland. The facility contains customary loan covenants including,
among others, limits on total outstanding indebtedness; maximum loan to value
ratios; minimum debt service coverage and minimum market capitalization
requirements. Interest is at LIBOR plus .70% to 1.00% depending on Vornado's
senior debt rating. The credit facility has a competitive bid option program,
which allows Vornado's to hold auctions among banks participating in the
facility for short term borrowings of up to $300,000,000. Vornado paid a fee of
$1,800,000 at closing and will pay a commitment fee quarterly over the remaining
term of the facility ranging from .15% to .20% on the full facility amount.
Simultaneously with the closing, the Operating Partnership borrowed
$250,000,000 under the facility at a blended interest rate of 6.48% (LIBOR plus
.82%) and used the proceeds, together with working capital, to repay a
$400,000,000 term loan it had obtained in April 1997.
6. OTHER ACQUISITIONS
Puerto Rico Transactions
On April 18, 1997, the Operating Partnership acquired The Montehiedra Town
Center located in San Juan, Puerto Rico, from Kmart Corporation ("Kmart") for
approximately $74,000,000, of which $63,000,000 is newly-issued ten year
indebtedness. The Montehiedra shopping center, which opened in 1994, contains
525,000 square feet, including a 135,000 square foot Kmart store. In addition,
the Operating Partnership agreed to acquire Kmart's 50% interest in the Caguas
Centrum Shopping Center, which is currently under construction, located in
Caguas, Puerto Rico. This acquisition is expected to close in 1998.
Purchase of a Mortgage
On May 7, 1997, the Operating Partnership acquired a mortgage loan from a
bank secured by a mortgage on the office building located at 90 Park Avenue, New
York, New York. The purchase price of the mortgage loan was approximately
$185,000,000. The mortgage loan, which is in default, has a face value of
$193,000,000. Management believes that the underlying fair market value of the
real estate securing the mortgage, based on signed leases in effect, exceeds the
amount of the loan due and that there are no other indications of impariment in
accordance with SFAS No. 114, "Accounting by Creditors for Impairment of a
Loan".
Riese Transactions
On June 27, 1997, the Operating Partnership acquired for approximately
$26,000,000 four properties previously owned by affiliates of the Riese
Organization. These properties are located in Manhattan, New York. The Operating
Partnership also made a $41,000,000 mortgage loan to Riese Affiliates cross
collateralized by ten other Manhattan properties. This increasing rate loan
bears an initial interest rate of 9.75% and has a five year term.
7. MORTGAGE LOANS RECEIVABLE
At June 30, 1997, the Operating Partnership has $288,001,000 of Mortgage
loans receivable, of which $45,000,000 is reflected as part of "Investment in
and Advances to Alexander's, Inc." in the Consolidated Balance Sheets. At least
annually, and more frequently if circumstances warrant, the Operating
Partnership evaluates the collectibility of both interest and principal of each
of its loans to determine whether it is impaired. A loan is considered to be
impaired when, based on current information and events, it is probable that the
Operating Partnership will be unable to collect all amounts due according to the
existing contractual terms. When a loan is considered to be impaired, the amount
of the loss accrual is calculated by comparing the recorded investment to the
value determined by discounting the expected future cash flows at the loan's
effective interest rate. Interest on impaired loans is recognized on the cash
basis.
Page 8 of 94
<PAGE> 9
VORNADO REALTY L. P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8. MANAGEMENT COMPANIES
As part of the Mendik Transaction, the Operating Partnership acquired 100%
of the non-voting preferred stock of the Mendik Management Company for
$7,425,000. The Operating Partnership previously assigned its management and
development agreement (the "Management Agreement") with Alexander's to Vornado
Management Corp. ("VMC"), an affiliate in which it also owns 100% of the
non-voting preferred stock. The Operating Partnership's preferred stock
ownership entitles it to 95% of the economic benefits of the management
companies through distributions. The Common Stock of the management companies is
owned by officers and directors of Vornado. Below are summarized Statements of
Operations of the management companies:
<TABLE>
<CAPTION>
For The Three Months Ended For The Six Months Ended
-------------------------- ------------------------
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
-------- ------- ------- ------
<S> <C> <C> <C> <C>
Revenues:
Management fees from:
Alexander's $ 938,000 $ 938,000 $ 1,875,000 $ 3,368,000
Mendik properties 756,000 -- 756,000 --
----------- ----------- ----------- -----------
1,694,000 938,000 2,631,000 3,368,000
Expenses:
General and administrative (1,422,000) (671,000) (2,126,000) (1,234,000)
Interest, net (217,000) (73,000) (291,000) (142,000)
----------- ----------- ----------- -----------
Income before income taxes 55,000 194,000 214,000 1,992,000
Income taxes (22,000) (79,000) (87,000) (814,000)
----------- ----------- ----------- -----------
Net income 33,000 115,000 127,000 1,178,000
Preferred dividends (31,000) (109,000) (121,000) (1,119,000)
----------- ----------- ----------- -----------
Net income available to
common shareholders $ 2,000 $ 6,000 $ 6,000 $ 59,000
=========== =========== =========== ===========
</TABLE>
The management fee income from Alexander's in the six months ended June 30,
1996, includes $1,343,000 of fees recorded in the first quarter of 1996 related
to the completion of the redevelopment of Alexander's Rego Park I property. In
addition to the preferred dividends the Operating Partnership received, it also
earned interest income on its loans to the management companies of $272,000 and
$129,000 for the three months ended June 30, 1997 and 1996 and $399,000 and
$260,000 for the six months June 30, 1997 and 1996.
9. OTHER RELATED PARTY TRANSACTIONS
The Operating Partnership currently manages and leases the real estate
assets of Interstate Properties pursuant to a management agreement. Management
fees earned by the Operating Partnership pursuant to the management agreement
were $184,000 and $216,000 for the three months ended June 30, 1997 and 1996 and
$377,000 and $547,000 for the six months ended June 30, 1997 and 1996.
The Mendik Group owns an entity which provides cleaning and related
services and security services to office properties. The Operating Partnership
has entered into contracts with the Mendik Group to provide such services in the
seven Manhattan office buildings acquired in the Mendik Transaction. Although
the terms and conditions of the contracts pursuant to which these services are
provided were not negotiated at arms length, the Operating Partnership believes
based upon comparable fees charged to other real estate companies, that the
terms and conditions of such contracts are fair to the Operating Partnership.
The Operating Partnership was charged fees of $2,585,000 in connection with
these contracts for the period from April 15, 1997 to June 30, 1997.
Page 9 of 94
<PAGE> 10
VORNADO REALTY L. P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. PREFERENTIAL ALLOCATIONS
Holders of Class C, D and E Units distributed in connection with the
Mendik Transaction are entitled to preferential distributions. Holders of Class
D and E Units are entitled to a preferential annual distribution rate of $4.03.
Holders of Class C Units are entitled to a preferential annual distribution rate
of $3.38. Class C Units will automatically convert to Class A Units when the
distributions paid to holders of Class A Units equal $.8450 per quarter ($3.38
annually) for four consecutive quarters. Class D and E Units will automatically
convert to Class A Units when the distributions paid to holders of Class A Units
equal $1.0075 per quarter ($4.03 annually) for four consecutive quarters.
Generally, the value of each Class A Unit, equates to one common share of
beneficial interest of Vornado. Preferential distributions aggregated $2,100,000
for the period from April 15, 1997 to June 30, 1997 and will aggregate
$10,370,000 on an annual basis.
11. CONTINGENCIES
Vornado 90 Park Avenue L.L.C., a subsidiary of the Operating Partnership,
is a plaintiff in an action to foreclose the mortgage on the building at 90 Park
Avenue, New York, pending in the Supreme Court of the State of New York, County
of New York. The action was initially brought by Sumitomo Trust & Banking Co.,
Ltd., New York Branch ("Sumitomo"), as the owner of the mortgage. Vornado 90
Park Avenue L.L.C. was substituted as plaintiff after acquiring an assignment of
the mortgage from Sumitomo. The mortgagors and other defendants have asserted
certain defenses to the foreclosure action, including the defense that the
mortgage and underlying note should be deemed void and declared satisfied.
Although there has not yet been any court adjudication and therefore no
assurances can be given, management believes it will ultimately prevail in this
action.
In January 1997, two individual investors in Mendik Real Estate Limited
Partnership ("RELP"), the publicly held limited partnership that indirectly owns
a 60% interest in the Two Park Avenue Property, filed a purported class action
against NY Real Estate Services 1, Inc. ("NY Real Estate"), Mendik RELP Corp.,
B&B Park Avenue, L.P. (an indirect subsidiary of the Operating Partnership which
acquired the remaining 40% interest in Two Park Avenue) and Bernard H. Mendik in
the Supreme Court of the State of New York, County of New York, on behalf of all
persons holding limited partnership interests in RELP. The complaint alleges
that, for reasons which include purported conflicts of interest, the defendants
breached their fiduciary duty to the limited partners, that the then proposed
transfer of the 40% interest in Two Park Avenue would result in a burden on the
operation and management of Two Park Avenue and that the transfer of the 40%
interest violates RELP's right of first refusal to purchase the interest being
transferred and fails to provide limited partners in RELP with a comparable
transfer opportunity. Shortly after the filing of the complaint, another limited
partner represented by the same attorneys filed an essentially identical
complaint in the same court. Both complaints seek unspecified damages, an
accounting and a judgment requiring either the liquidation of RELP and the
appointment of a receiver or an auction of Two Park Avenue. Discussions to
settle the actions have been ongoing, but no settlement has been reached. In
August 1997, a fourth limited partner, represented by separate counsel,
commenced another purported class action in the same court by serving a
complaint essentially identical to the complaints in the two previously
commenced actions. Management believes that the ultimate outcome of these
matters will not have a material adverse affect on the Operating Partnership.
Page 10 of 94
<PAGE> 11
VORNADO REALTY L. P.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Certain statements made in this report may constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 (the "Reform Act"). Such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Operating Partnership to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include,
among others, the following: general economic and business conditions, which
will, among other things, affect demand for retail space or retail goods,
availability and creditworthiness of prospective tenants, lease rents and the
terms and availability of financing; adverse changes in the real estate markets
including, among other things, competition with other companies and technology;
risks of real estate development and acquisition; governmental actions and
initiatives; and environmental/safety requirements.
RESULTS OF OPERATIONS
The Operating Partnership's revenues, which consist of property rentals,
tenant expense reimbursements and other income were $50,662,000 in the quarter
ended June 30, 1997, compared to $29,245,000 in the prior year's quarter, an
increase of $21,417,000 or 73.2%. Revenues were $79,959,000 for the six months
ended June 30, 1997 compared to $57,855,000 in the prior year's six months, an
increase of $22,104,000 or 38.2%. These increases reflect revenues of
$18,917,000 from the properties acquired in the Mendik Transaction.
Property rentals were $41,004,000 in the quarter ended June 30, 1997,
compared to $21,820,000 in the prior year's quarter, an increase of $19,184,000
or 87.9%. Property rentals were $63,471,000 for the six months ended June 30,
1997 compared to $43,157,000 in the prior year's six months, an increase of
$20,314,000 or 47.1%. Of these increases for the quarter and six months,
respectively, (i) $16,424,000 resulted from properties acquired in the Mendik
Transaction, (ii) $316,000 and $885,000 resulted from property rentals
applicable to shopping centers received from new tenants in excess of property
rentals lost from vacating tenants, (iii) $534,000 and $810,000 resulted from
step-ups in shopping center leases which are not subject to the straight-line
method of revenue recognition, (iv) $187,000 and $472,000 resulted from the
Operating Partnership's purchase of an office building in June 1996 and (v)
$1,723,000 resulted from the Operating Partnership's purchase of a shopping
center in San Juan, Puerto Rico in April 1997.
Tenant expense reimbursements, which consist of the tenant's pro-rata share
of common area maintenance expenses (such as snow removal costs, landscaping and
parking lot repairs) real estate taxes and insurance, were $8,951,000 in the
quarter ended June 30, 1997, compared to $6,820,000 in the prior year's quarter,
an increase of $2,131,000. Tenant expense reimbursements were $15,161,000 for
the six months ended June 30, 1997, compared to $13,701,000 in the prior year's
six months, an increase of $1,460,000. These increases reflect tenant expense
reimbursements of $2,072,000 from properties acquired in the Mendik Transaction.
The increase for the six months was offset by lower operating expenses at the
Operating Partnership's other properties.
Operating expenses were $18,151,000 in the quarter ended June 30, 1997, as
compared to $ 9,145,000 in the prior year's quarter, an increase of $9,006,000.
Operating expenses were $26,658,000 in the six months ended June 30, 1997,
compared to $18,059,000 in the prior year's six months, an increase of
$8,599,000. These increases reflect operating expenses of $8,869,000 from
properties acquired in the Mendik Transaction. The increase for the six months
was offset by lower snow removal costs at the Operating Partnership's other
properties.
Depreciation and amortization expense increased in 1997 as compared to
1996, primarily as a result of the Mendik Transaction.
Page 11 of 94
<PAGE> 12
VORNADO REALTY L. P.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General and administrative expenses were $2,903,000 in the quarter ended
June 30, 1997 compared to $1,319,000 in the prior year's quarter, an increase of
$1,584,000. General and administrative expenses were $4,748,000 in the six
months ended June 30, 1997 compared to $2,508,000 in the prior year's six
months, an increase of $2,240,000. The increases resulted primarily from Mendik
division payroll and corporate office expenses of $467,000, cash compensation
attributable to the employment of Vornado's President and higher professional
fees.
The Operating Partnership recognized an expense of $6,249,000 in the
quarter ended June 30, 1997 and $12,498,000 in the six months ended June 30,
1997 representing the amortization of the $25,000,000 deferred payment due to
Vornado's President. The balance of the deferred payment will be amortized in
1997.
Income applicable to Alexander's (loan interest income, equity in income
(loss) and depreciation) was $1,437,000 in the quarter ended June 30, 1997,
compared to $1,516,000 in the prior year's quarter, a decrease of $79,000.
Income applicable to Alexander's was $2,842,000 in the six months ended June 30,
1997, compared to $3,025,000 in the prior year's six months, a decrease of
$183,000. These decreases resulted primarily from the reset of the interest rate
on the loan to Alexander's from 16.43% to 15.60% in March 1997.
Income from investment in management companies was $303,000 in the quarter
ended June 30, 1997, compared to $238,000 in the prior year's quarter, an
increase of $65,000. Income from investment in management companies was $520,000
in the six months ended June 30, 1997, compared to $1,379,000 in the prior
year's six months, a decrease of $859,000. The increase in the current year's
quarter resulted primarily from dividends from the Management Operating
Partnership acquired as part of the Mendik Transaction. The decrease in the
current year's six month period resulted primarily from additional fee income of
$794,000 earned by VMC in the first quarter of the prior year relating to the
substantial completion of the redevelopment of Alexander's Rego Park I property.
Equity in net income of investees of $282,000 in 1997 represents income
from investments in partnerships which own the partially owned properties
acquired as part of the Mendik Transaction.
Investment income (interest income on mortgage loans receivable, other
interest and dividend income and net gains on marketable securities) was
$9,241,000 for the quarter ended June 30, 1997, compared to $1,674,000 in the
prior year's quarter, an increase of $7,567,000. Investment income was
$11,658,000 for the six months ended June 30, 1997, compared to $3,497,000 in
the prior year's six months, an increase of $8,161,000. Of these increases
$3,045,000 resulted from the Operating Partnership's purchase in May 1997 of a
mortgage loan secured by an office building at 90 Park Avenue, New York, New
York. The remaining increases of $4,522,000 and $5,116,000 for the quarter and
six months respectively, resulted primarily from income earned on the proceeds
from the December 1996 public stock offering and the April 1997 term loan.
Interest and debt expense was $13,272,000 for the quarter ended June 30,
1997, compared to $4,192,000 in the prior year's quarter, an increase of
$9,080,000. Interest and debt expense was $17,350,000 for the six months ended
June 30, 1997, compared to $8,415,000 in the prior year's six months, an
increase of $8,935,000. Of these increases, (i) $2,762,000 resulted from debt on
the Mendik properties, (ii) $5,504,000 resulted from $400,000,000 of borrowings
under a term loan and (iii) $1,039,000 resulted from borrowings related to the
acquisition of the Montehiedra Town Center in April 1997.
The preferential allocations to Class C, D and E unit holders in the
Operating Partnership aggregated $2,100,000 for the period from April 15, 1997
to June 30, 1997.
The preferred unit distributions of $4,855,000 is for the period from April
9, 1997 to June 30, 1997 and includes amortization of expenses in connection
therewith of $600,000.
Page 12 of 94
<PAGE> 13
VORNADO REALTY L. P.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Six Months Ended June 30, 1997
Cash flows provided by operating activities of $50,989,000 was comprised of
(i) net income of $25,578,000, (ii) adjustments for non-cash items of
$21,534,000 and (iii) the net change in operating assets and liabilities of
$5,977,000. The adjustments for non-cash items are primarily comprised of (i)
amortization of deferred officer's compensation expense of $12,498,000, (ii)
depreciation and amortization of $8,977,000 and (iii) equity in loss of
Alexander's of $307,000, partially offset by (iv) the effect of straight-lining
of rental income of $1,487,000 and (v) equity in net income of investees of
$282,000.
Net cash used in investing activities of $629,813,000 was primarily
comprised of (i) expenditures of $263,790,000 in connection with the Mendik
Transaction, (ii) investments in mortgage loans receivable of $226,000,000,
(iii) capital expenditures of $107,153,000 (including the acquisition of a
shopping center for $75,587,000 in April 1997 (Puerto Rico Transaction) and the
acquisition of four other properties in June 1997 for $26,000,000 (Riese
Transaction)) and (iv) restricted cash for tenant improvements of $29,434,000.
Net cash provided by financing activities of $688,954,000 was primarily
comprised of proceeds from (i) borrowings of $463,000,000, and (ii) issuance of
preferred shares of $276,000,000, partially offset by (iii) dividends paid of
$38,242,000 and (iv) the repayment of borrowings on U.S. Treasury obligations of
$9,636,000.
Six Months Ended June 30, 1996
Cash flows provided by operating activities of $33,776,000 was comprised of
(i) net income of $31,042,000 and (ii) adjustments for non-cash items of
$4,925,000, less (iii) the net change in operating assets and liabilities of
$2,191,000. The adjustments for non-cash items are primarily comprised of
depreciation and amortization of $6,242,000, plus equity in income (loss) of
Alexander's of $434,000, offset by the effect of straight-lining of rental
income of $1,277,000. Further, during this period in connection with the
rejection of a lease by an Alexander's tenant "Leasing fees and other
receivables" decreased by $1,717,000 and "Deferred leasing fee income"
correspondingly decreased. "Leasing fees and other receivables" of $1,250,000
were collected during this period. These amounts have been included in "Changes
in assets and liabilities: other" in the Consolidated Statements of Cash Flows
and are part of the net change in operating assets and liabilities shown in item
(iii) above.
Net cash provided by investing activities of $13,160,000 was comprised of
(i) proceeds from sale or maturity of securities available for sale of
$41,192,000, offset by (ii) the Operating Partnership's investment in a mortgage
note receivable of $17,000,000 and (iii) capital expenditures of $11,032,000
(including $8,900,000 for the purchase of an office building).
Net cash used in financing activities of $49,315,000 was primarily
comprised of (i) the net repayment of borrowings on U.S. Treasury obligations of
$30,242,000 and (ii) dividends paid of $29,627,000, offset by (iii) the proceeds
from borrowings of $10,000,000.
Funds from Operations for the Three and Six Months Ended June 30, 1997 and
1996
Funds from operations were $14,950,000 in the quarter ended June 30, 1997,
compared to $17,556,000 in the prior year's quarter, a decrease of $2,606,000 or
14.8%. Funds from operations were $27,183,000 in the six months ended June 30,
1997, compared to $35,972,000 in the prior year's six months, a decrease of
$8,789,000 or 24.4%. Funds from operations for the three and six months ended
June 30, 1997 reflect amortization of the deferred payment due to Vornado's
President and related compensation of $6,825,000 and $13,601,000, partially
Page 13 of 94
<PAGE> 14
VORNADO REALTY L. P.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
offset by $2,206,000 from the Mendik operations. The following table reconciles
funds from operations and net income:
<TABLE>
<CAPTION>
For The Three Months Ended For The Six Months Ended
-------------------------- ------------------------
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net income applicable to Class A
units $ 8,933,000 $ 15,120,000 $ 18,623,000 $ 31,042,000
Depreciation and amortization of
real property 5,173,000 2,639,000 7,857,000 5,251,000
Straight-lining of property rentals
for rent escalations (818,000) (635,000) (1,487,000) (1,277,000)
Leasing fees received in excess
of income recognized 849,000 376,000 1,303,000 890,000
Proportionate share of adjustments
to Alexander's income (loss)
to arrive at funds from operations 253,000 56,000 327,000 66,000
Proportionate share of adjustments to
net income of investees to arrive
at funds from operations 560,000 -- 560,000 --
------------ ------------ ------------ ------------
Funds from operations $ 14,950,000 $ 17,556,000 $ 27,183,000 $ 35,972,000
============ ============ ============ ============
</TABLE>
Funds from operations does not represent cash generated from operating
activities in accordance with generally accepted accounting principles and is
not necessarily indicative of cash available to fund cash needs, which is
disclosed in the Consolidated Statements of Cash Flows for the applicable
periods. There are no material legal or functional restrictions on the use of
funds from operations. Funds from operations should not be considered as an
alternative to net income as an indicator of the Operating Partnership's
operating performance or as an alternative to cash flows as a measure of
liquidity. Management considers funds from operations a relevant supplemental
measure of operating performance because it provides a basis for comparison
among REITs; however, funds from operations may not be comparable to similarly
titled measures reported by other REITs since the Operating Partnership's method
of calculating funds from operations is different from that used by NAREIT.
Funds from operations, as defined by NAREIT, represents net income applicable to
common shares before depreciation and amortization, extraordinary items and
gains or losses on sales of real estate. Funds from operations as disclosed
above has been modified to adjust for the effect of straight-lining of property
rentals for rent escalations and leasing fee income. Below are the cash flows
provided by (used in) operating, investing and financing activities:
<TABLE>
<CAPTION>
For The Three Months Ended For The Six Months Ended
-------------------------- ------------------------
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
-------- ------- ------- ------
<S> <C> <C> <C> <C>
Operating activities $ 31,236,000 $ 15,574,000 $ 50,989,000 $ 33,776,000
Investing activities $(629,530,000) $ (9,531,000) $(629,813,000) $ 13,160,000
Financing activities $ 705,693,000 $(14,967,000) $ 688,954,000 $(49,315,000)
</TABLE>
Page 14 of 94
<PAGE> 15
VORNADO REALTY L. P.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Operating Partnership has budgeted approximately $21,000,000 for
capital expenditures over the next year of which $16,000,000 is for tenant
improvements at its office properties and $5,000,000 is for tenant improvements
and renovations at its shopping center properties.
In December 1996, Michael D. Fascitelli became the President of
Vornado and was elected to the Vornado Board. Mr. Fascitelli signed a five year
employment contract under which, in addition to his annual salary, he received a
deferred payment consisting of $5,000,000 in cash and a $20,000,000 convertible
obligation payable at Vornado's option in 459,770 of its Common Shares or the
cash equivalent of their appreciated value. Accordingly, cash of $5,000,000 and
459,770 Common Shares are being held in an irrevocable trust. The deferred
payment obligation to Mr. Fascitelli vests as of December 2, 1997. Further, Mr.
Fascitelli was granted options for 1,750,000 Common Shares of Vornado.
On April 15, 1997, Vornado consummated the acquisition, through an
operating partnership, of interests in all or a portion of seven Manhattan
office buildings and a management company held by the Mendik Group and certain
of its affiliates. Simultaneously with the closing of this transaction, and in
connection therewith, Vornado converted to an Umbrella Partnership REIT (UPREIT)
by transferring (by contribution, merger or otherwise) all or substantially all
of the interests in its properties and other assets to the Operating
Partnership, of which Vornado is the sole general partner. As a result of such
conversion, Vornado's activities will be conducted through the Operating
Partnership.
The consideration for the Mendik transaction was approximately
$656,000,000, including $264,000,000 in cash, $177,000,000 in the limited
partnership units of the Operating Partnership and $215,000,000 in indebtedness.
Vornado financed the cash portion of this transaction with the proceeds of a
public offering completed on April 9, 1997, of 5,750,000 Convertible Preferred
Shares of Beneficial Interest, liquidation preference $50.00 per share. The
preferred shares bear a coupon of 6-1/2% and are convertible into common shares
at $72- 3/4 per share. The offering, net of expenses, generated approximately
$276,000,000.
On April 18, 1997, the Operating Partnership acquired The Montehiedra
Town Center located in San Juan, Puerto Rico, from Kmart Corporation ("Kmart")
for approximately $74,000,000, of which $63,000,000 is newly-issued ten year
indebtedness. The Montehiedra shopping center, which opened in 1994, contains
525,000 square feet, including a 135,000 square foot Kmart store. In addition,
the Operating Partnership agreed to acquire Kmart's 50% interest in the Caguas
Centrum Shopping Center, which is currently under construction, located in
Caguas, Puerto Rico. This acquisition is expected to close in 1998.
On May 7, 1997, the Operating Partnership acquired a mortgage loan
from a bank secured by a mortgage on the office building located at 90 Park
Avenue, New York, New York. The purchase price of the mortgage loan was
approximately $185,000,000. The mortgage loan, which is in default, has a face
value of $193,000,000.
Further, on June 27, 1997, the Operating Partnership acquired for
approximately $26,000,000 four properties previously owned by affiliates of the
Riese Organization. These properties are located in Manhattan, New York. Vornado
also made a $41,000,000 mortgage loan to Riese Affiliates cross collateralized
by ten other Manhattan properties. This increasing rate loan bears an initial
interest rate of 9.75% and has a five year term.
On July 17, 1997, the Operating Partnership obtained a $600,000,000
unsecured three-year revolving credit facility from a bank group led by Union
Bank of Switzerland. The Operating Partnership borrowed $250,000,000 under the
facility at a blended interest rate of 6.48% (LIBOR plus .82%). The Operating
Partnership used the proceeds from the borrowing together with working capital
to repay a $400,000,000 term loan facility it had obtained in April 1997.
Page 15 of 94
<PAGE> 16
VORNADO REALTY L. P.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Operating Partnership anticipates that cash from continuing
operations will be adequate to fund business operations and the payment of
dividends and distributions on an ongoing basis for more than the next twelve
months; however, capital outlays for significant acquisitions may require
funding from borrowings or equity offerings.
RECENTLY ISSUED ACCOUNTING STANDARD
In February 1997, the Financial Accounting Standards Board adopted
Statement No. 128, "Earnings Per Share". The statement is effective for fiscal
years ending after December 15, 1997. The Operating Partnership believes that
this pronouncement will not have a material effect on its net income per share.
Page 16 of 94
<PAGE> 17
VORNADO REALTY L. P.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Vornado 90 Park Avenue L.L.C., a subsidiary of the Operating
Partnership, is a plaintiff in an action to foreclose the
mortgage on the building at 90 Park Avenue, New York, pending in
the Supreme Court of the State of New York, County of New York.
The action was initially brought by Sumitomo Trust & Banking
Co., Ltd., New York Branch ("Sumitomo"), as the owner of the
mortgage. Vornado 90 Park Avenue L.L.C. was substituted as
plaintiff after acquiring an assignment of the mortgage from
Sumitomo. The mortgagors and other defendants have asserted
certain defenses to the foreclosure action, including the
defense that the mortgage and underlying note should be deemed
void and declared satisfied. Although there has not yet been any
court adjudication and therefore no assurances can be given,
management believes it will ultimately prevail in this action.
In January 1997, two individual investors in Mendik Real
Estate Limited Partnership ("RELP"), the publicly held limited
partnership that indirectly owns a 60% interest in the Two Park
Avenue Property, filed a purported class action against NY Real
Estate Services 1, Inc. ("NY Real Estate"), Mendik RELP Corp.,
B&B Park Avenue, L.P. (an indirect subsidiary of the Operating
Partnership which acquired the remaining 40% interest in Two
Park Avenue) and Bernard H. Mendik in the Supreme Court of the
State of New York, County of New York, on behalf of all persons
holding limited partnership interests in RELP. The complaint
alleges that, for reasons which include purported conflicts of
interest, the defendants breached their fiduciary duty to the
limited partners, that the then proposed transfer of the 40%
interest in Two Park Avenue would result in a burden on the
operation and management of Two Park Avenue and that the
transfer of the 40% interest violates RELP's right of first
refusal to purchase the interest being transferred and fails to
provide limited partners in RELP with a comparable transfer
opportunity. Shortly after the filing of the complaint, another
limited partner represented by the same attorneys filed an
essentially identical complaint in the same court. Both
complaints seek unspecified damages, an accounting and a
judgment requiring either the liquidation of RELP and the
appointment of a receiver or an auction of Two Park Avenue.
Discussions to settle the actions have been ongoing, but no
settlement has been reached. In August 1997, a fourth limited
partner, represented by separate counsel, commenced another
purported class action in the same court by serving a complaint
essentially identical to the complaints in the two previously
commenced actions. Management believes that the ultimate outcome
of these matters will not have a material adverse affect on the
Operating Partnership.
Page 17 of 94
<PAGE> 18
VORNADO REALTY L. P.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits: The following exhibits are filed with this
Quarterly Report on Form 10-Q.
10 Revolving Credit Agreement.
11 Statement Re Computation of Per Share Earnings.
27 Financial Data Schedule.
(b) Reports on Form 8-K
None
Page 18 of 94
<PAGE> 19
VORNADO REALTY L. P.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VORNADO REALTY L. P.
--------------------------------
(Registrant)
BY: VORNADO REALTY TRUST
--------------------------------
(General Partner)
Date: August 7, 1997 /s/ Joseph Macnow
-------------------------------
JOSEPH MACNOW
Vice President - Chief Financial
Officer and Chief Accounting Officer
Page 19 of 94
<PAGE> 20
VORNADO REALTY L. P.
EXHIBIT INDEX
<TABLE>
<CAPTION>
PAGE NUMBER IN
SEQUENTIAL
EXHIBIT NO. NUMBERING
----------- ---------
<S> <C>
10 Revolving Credit Agreement dated as of July 17, 1997
among Vornado Realty L.P., as borrower, Vornado
Realty Trust, as General Partner, and Union Bank of
Switzerland, as Bank and Administrative Agent. 21
11 Statement Re Computation of Per Share Earnings. 93
27 Financial Data Schedule. 94
</TABLE>
Page 20 of 94
<PAGE> 1
EXECUTION COPY
REVOLVING CREDIT AGREEMENT
dated as of July 17, 1997
among
VORNADO REALTY L.P.
as Borrower,
VORNADO REALTY TRUST,
as General Partner,
UNION BANK OF SWITZERLAND
(New York Branch),
as Bank,
and
UNION BANK OF SWITZERLAND
(New York Branch),
as Administrative Agent
21
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I. DEFINITIONS; ETC.................................................................................... 1
Section 1.01 Definitions............................................................................. 1
Section 1.02 Accounting Terms........................................................................ 15
Section 1.03 Computation of Time Periods............................................................. 16
Section 1.04 Rules of Construction................................................................... 16
ARTICLE II. THE LOANS.......................................................................................... 16
Section 2.01 Ratable Loans; Bid Rate Loans; Purpose.................................................. 16
Section 2.02 Bid Rate Loans.......................................................................... 17
Section 2.03 Advances, Generally..................................................................... 21
Section 2.04 Procedures for Advances................................................................. 22
Section 2.05 Interest Periods; Renewals.............................................................. 22
Section 2.06 Interest................................................................................ 23
Section 2.07 Fees ................................................................................ 23
Section 2.08 Notes ................................................................................ 24
Section 2.09 Prepayments............................................................................. 24
Section 2.10 Method of Payment....................................................................... 25
Section 2.11 Elections, Conversions or Continuation of
Loans........................................................................... 25
Section 2.12 Minimum Amounts......................................................................... 25
Section 2.13 Certain Notices Regarding Elections,
Conversions and Continuations of Loans.......................................... 26
Section 2.14 Late Payment Premium.................................................................... 26
Section 2.15 Changes of Commitments.................................................................. 26
Section 2.16. Letters of Credit...................................................................... 27
ARTICLE III. YIELD PROTECTION; ILLEGALITY; ETC................................................................. 29
Section 3.01 Additional Costs........................................................................ 29
Section 3.02 Limitation on Types of Loans............................................................ 30
Section 3.03 Illegality.............................................................................. 31
Section 3.04 Treatment of Affected Loans............................................................. 31
Section 3.05 Certain Compensation.................................................................... 31
Section 3.06 Capital Adequacy........................................................................ 32
Section 3.07 Substitution of Banks................................................................... 33
ARTICLE IV. CONDITIONS PRECEDENT............................................................................... 34
Section 4.01 Conditions Precedent to the Loans....................................................... 34
Section 4.02 Conditions Precedent to Advances After the
Initial Advance................................................................. 36
Section 4.03 Deemed Representations.................................................................. 37
ARTICLE V. REPRESENTATIONS AND WARRANTIES...................................................................... 37
Section 5.01 Existence............................................................................... 37
Section 5.02 Corporate/Partnership Powers............................................................ 38
Section 5.03 Power of Officers....................................................................... 38
Section 5.04 Power and Authority; No Conflicts; Compliance
With Laws....................................................................... 38
Section 5.05 Legally Enforceable Agreements.......................................................... 38
Section 5.06 Litigation.............................................................................. 38
Section 5.07 Good Title to Properties................................................................ 39
Section 5.08 Taxes ................................................................................ 39
Section 5.09 ERISA ................................................................................ 39
Section 5.10 No Default on Outstanding Judgments or
Orders.......................................................................... 40
</TABLE>
22
<PAGE> 3
<TABLE>
<CAPTION>
Page
<S> <C>
Section 5.11 No Defaults on Other Agreements......................................................... 40
Section 5.12 Government Regulation................................................................... 40
Section 5.13 Environmental Protection................................................................ 40
Section 5.14 Solvency................................................................................ 40
Section 5.15 Financial Statements.................................................................... 40
Section 5.16 Valid Existence of Affiliates........................................................... 41
Section 5.17 Insurance............................................................................... 41
Section 5.18 Accuracy of Information; Full Disclosure................................................ 41
ARTICLE VI. AFFIRMATIVE COVENANTS.............................................................................. 42
Section 6.01 Maintenance of Existence................................................................ 42
Section 6.02 Maintenance of Records.................................................................. 42
Section 6.03 Maintenance of Insurance................................................................ 42
Section 6.04 Compliance with Laws; Payment of Taxes.................................................. 42
Section 6.05 Right of Inspection..................................................................... 42
Section 6.06 Compliance With Environmental Laws...................................................... 42
Section 6.07 Payment of Costs........................................................................ 43
Section 6.08 Maintenance of Properties............................................................... 43
Section 6.09 Reporting and Miscellaneous Document
Requirements.................................................................... 43
Section 6.10 Management.............................................................................. 45
ARTICLE VII. NEGATIVE COVENANTS................................................................................ 46
Section 7.01 Mergers Etc............................................................................. 46
Section 7.02 Investments............................................................................. 46
Section 7.03 Sale of Assets.......................................................................... 46
Section 7.04 Encumbrance of Certain Assets........................................................... 46
ARTICLE VIII. FINANCIAL COVENANTS.............................................................................. 47
Section 8.01 Equity Value............................................................................ 47
Section 8.02 Relationship of Total Outstanding
Indebtedness to Capitalization Value............................................ 47
Section 8.03 Relationship of Secured Indebtedness to
Capitalization Value............................................................ 47
Section 8.04 Relationship of Combined EBITDA to Interest
Expense......................................................................... 47
Section 8.05 Relationship of Combined EBITDA to Total
Outstanding Indebtedness........................................................ 47
Section 8.06 Unsecured Debt Yield.................................................................... 47
Section 8.07 Relationship of Combined EBITDA to Fixed
Charges......................................................................... 47
Section 8.08 Relationship of Unencumbered Combined EBITDA
to Unsecured Interest Expense................................................... 47
ARTICLE IX. EVENTS OF DEFAULT.................................................................................. 48
Section 9.01 Events of Default....................................................................... 48
Section 9.02 Remedies................................................................................ 50
ARTICLE X. ADMINISTRATIVE AGENT; RELATIONS AMONG BANKS......................................................... 50
Section 10.01 Appointment, Powers and Immunities of
Administrative Agent............................................................ 50
Section 10.02 Reliance by Administrative Agent........................................................ 51
Section 10.03 Defaults................................................................................ 51
Section 10.04 Rights of Administrative Agent as a Bank................................................ 52
Section 10.05 Indemnification of Administrative Agent................................................. 52
</TABLE>
23
<PAGE> 4
<TABLE>
<CAPTION>
Page
<S> <C>
Section 10.06 Non-Reliance on Administrative Agent and
Other Banks..................................................................... 52
Section 10.07 Failure of Administrative Agent to Act.................................................. 53
Section 10.08 Resignation or Removal of Administrative
Agent........................................................................... 53
Section 10.09 Amendments Concerning Agency Function................................................... 54
Section 10.10 Liability of Administrative Agent....................................................... 54
Section 10.11 Transfer of Agency Function............................................................. 54
Section 10.12 Non-Receipt of Funds by Administrative Agent............................................ 54
Section 10.13 Withholding Taxes....................................................................... 55
Section 10.14 Minimum Commitment by UBS............................................................... 55
Section 10.15 Pro Rata Treatment...................................................................... 55
Section 10.16 Sharing of Payments Among Banks......................................................... 55
Section 10.17 Possession of Documents................................................................. 56
ARTICLE XI. NATURE OF OBLIGATIONS.............................................................................. 56
Section 11.01 Absolute and Unconditional Obligations.................................................. 56
Section 11.02 Non-Recourse to VRT Principals.......................................................... 57
ARTICLE XII. MISCELLANEOUS..................................................................................... 58
Section 12.01 Binding Effect of Request for Advance................................................... 58
Section 12.02 Amendments and Waivers.................................................................. 58
Section 12.03 Usury ................................................................................ 59
Section 12.04 Expenses; Indemnification............................................................... 59
Section 12.05 Assignment; Participation............................................................... 59
Section 12.06 Documentation Satisfactory.............................................................. 61
Section 12.07 Notices ................................................................................ 61
Section 12.08 Setoff ................................................................................ 62
Section 12.09 Table of Contents; Headings............................................................. 62
Section 12.10 Severability............................................................................ 62
Section 12.11 Counterparts............................................................................ 62
Section 12.12 Integration............................................................................. 62
Section 12.13 Governing Law........................................................................... 63
Section 12.14 Waivers ................................................................................ 63
Section 12.15 Jurisdiction; Immunities................................................................ 63
Section 12.16 Designated Lender....................................................................... 64
Section 12.17 No Bankruptcy Proceedings............................................................... 65
</TABLE>
24
<PAGE> 5
EXHIBIT A - Authorization Letter
EXHIBIT B - Ratable Loan Note
EXHIBIT C - Bid Rate Loan Note
EXHIBIT D - Solvency Certificate
EXHIBIT E - Assignment and Assumption Agreement
EXHIBIT F - List of Material Affiliates
EXHIBIT G-1 - Bid Rate Quote Request
EXHIBIT G-2 - Invitation for Bid Rate Quotes
EXHIBIT G-3 - Bid Rate Quote
EXHIBIT G-4 - Borrower's Acceptance of Bid Rate Quote
EXHIBIT H - Designation Agreement
25
<PAGE> 6
REVOLVING CREDIT AGREEMENT dated as of July 17, 1997 among
VORNADO REALTY L.P., a limited partnership organized and existing under the laws
of the State of Delaware ("Borrower"), VORNADO REALTY TRUST, a real estate
investment trust organized and existing under the laws of the State of Maryland
and the sole general partner of Borrower ("General Partner"), UNION BANK OF
SWITZERLAND (New York Branch), as agent for the Banks (in such capacity,
together with its successors in such capacity, "Administrative Agent"), and
UNION BANK OF SWITZERLAND (New York Branch) (in its individual capacity and not
as Administrative Agent, "UBS"; UBS and the lenders who from time to time become
Banks pursuant to Section 3.07 or 12.05 and, if applicable, any of the foregoing
lenders' Designated Lender, each a "Bank" and collectively, the "Banks").
Borrower desires that the Banks extend credit as provided
herein, and the Banks are prepared to extend such credit. General
Partner is fully liable for the obligations of Borrower hereunder by
virtue of its status as the sole general partner of Borrower.
Accordingly, Borrower, General Partner, each Bank and Administrative
Agent agree as follows:
ARTICLE I. DEFINITIONS; ETC.
Section I.1 Definitions. As used in this Agreement the
following terms have the following meanings (except as otherwise provided, terms
defined in the singular to have a correlative meaning when used in the plural
and vice versa):
"Additional Costs" has the meaning specified in Section
3.01.
"Administrative Agent" has the meaning specified in the
preamble.
"Administrative Agent's Office" means Administrative Agent's
address located at 299 Park Avenue, New York, NY 10171, or such other address in
the United States as Administrative Agent may designate by written notice to
Borrower and the Banks.
"Affiliate" means, with respect to any Person (the "first
Person"), any other Person: (1) which directly or indirectly controls, or is
controlled by, or is under common control with the first Person; or (2) ten
percent (10%) or more of the beneficial interest in which is directly or
indirectly owned or held by the first Person. The term "control" means the
possession, directly or indirectly, of the power, alone, to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract, or otherwise.
"Agreement" means this Revolving Credit Agreement.
26
<PAGE> 7
"Applicable Lending Office" means, for each Bank and for its
LIBOR Loan, Bid Rate Loan(s) or Base Rate Loan, as applicable, the lending
office of such Bank (or of an Affiliate of such Bank) designated as such on its
signature page hereof or in the applicable Assignment and Assumption Agreement,
or such other office of such Bank (or of an Affiliate of such Bank) as such Bank
may from time to time specify to Administrative Agent and Borrower as the office
by which its LIBOR Loan, Bid Rate Loan(s) or Base Rate Loan, as applicable, is
to be made and maintained.
"Applicable Margin" means, with respect to Base Rate Loans
and LIBOR Loans, the respective rates per annum determined, at any time, based
on Borrower's Credit Rating at the time, in accordance with the following table,
subject to possible adjustment in accordance with the definition of "Borrower's
Credit Rating" set forth in this Section 1.01. 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.
<TABLE>
<CAPTION>
Borrower's Credit Rating Applicable Margin Applicable Margin
(S&P/Moody's/Duff & for Base Rate Loans for LIBOR Loans
Phelps/Fitch Ratings) (% per annum) (% per annum)
- --------------------- ------------- -------------
<S> <C> <C>
A-/A3/A-/A- or higher 0.00 0.70
BBB+/Baal/BBB+/BBB+ 0.00 0.80
BBB/Baa2/BBB/BBB 0.00 0.90
BBB-/Baa3/BBB-/BBB- 0.00 1.00
Below BBB-/Baa3/BBB-/BBB- 0.00 1.25
or unrated
</TABLE>
"Assignee" has the meaning specified in Section 12.05.
"Assignment and Assumption Agreement" means an Assignment and
Assumption Agreement, substantially in the form of EXHIBIT E, pursuant to which
a Bank assigns and an Assignee assumes rights and obligations in accordance with
Section 12.05.
"Authorization Letter" means a letter agreement executed by
Borrower in the form of EXHIBIT A.
"Available Total Loan Commitment" has the meaning
specified in Section 2.01(b).
"Bank" and "Banks" have the respective meanings specified in
the preamble; provided, however, that the term "Bank" shall exclude each
Designated Lender when used in
27
<PAGE> 8
reference to a Ratable Loan, the Loan Commitments or terms relating to the
Ratable Loans and the Loan Commitments.
"Bank Parties" means Administrative Agent and the
Banks.
"Banking Day" means (1) any day on which commercial banks are
not authorized or required to close in New York City and (2) whenever such day
relates to a LIBOR Loan, a Bid Rate Loan, an Interest Period with respect to a
LIBOR Loan or a Bid Rate Loan, or notice with respect to a LIBOR Loan or Bid
Rate Loan, a day on which dealings in Dollar deposits are also carried out in
the London interbank market and banks are open for business in London.
"Base Rate" means, for any day, the higher of (1) the Federal
Funds Rate for such day plus one-half percent (.50%), or (2) the Prime Rate for
such day.
"Base Rate Loan" means all or any portion (as the context
requires) of a Bank's Ratable Loan which shall accrue interest at a rate
determined in relation to the Base Rate.
"Bid Borrowing Limit" means 50% of the Total Loan
Commitment.
"Bid Rate Loan" has the meaning specified in Section
2.01(c).
"Bid Rate Loan Note" has the meaning specified in
Section 2.08.
"Bid Rate Quote" means an offer by a Bank to make a Bid Rate
Loan in accordance with Section 2.02.
"Bid Rate Quote Request" has the meaning specified in
Section 2.02(a).
"Borrower" has the meaning specified in the preamble.
"Borrower's Accountants" means Deloitte & Touche, or such
other accounting firm(s) selected by Borrower and reasonably acceptable to the
Required Banks.
"Borrower's Credit Rating" means the lower of the S&P and
Moody's ratings (if these are the only two (2) ratings) or the lower of the two
(2) highest ratings (if, in addition to S&P and Moody's, there exist ratings by
either or both of Duff & Phelps and Fitch) assigned from time to time to
Borrower's unsecured and unsubordinated long-term indebtedness by, respectively,
S&P, Moody's, Duff & Phelps and Fitch. Unless such indebtedness of Borrower is
rated by at least two (2) of the rating agencies identified above, at least one
(1) of which must
28
<PAGE> 9
be either S&P or Moody's, "Borrower's Credit Rating" shall be considered unrated
for purposes of determining both the Applicable Margin and Commitment Fee Rate.
"Capitalization Value" means, at any time, the sum of (1)
Combined EBITDA, for the most recently ended calendar quarter, annualized (i.e.,
multiplied by four (4)) (except that for purposes of this definition, the
aggregate contribution to Combined EBITDA from leasing commissions and
management and development fees shall not exceed 5% of Combined EBITDA),
capitalized at a rate of 9.25% per annum, (2) Borrower's beneficial share of
unrestricted cash and marketable securities of Borrower and its Consolidated
Businesses and UJVs, at such time, as reflected in VRT's Consolidated Financial
Statements, and (3) without duplication, the cost basis of properties of
Borrower under construction as certified by Borrower, such certificate to be
accompanied by all appropriate documentation supporting such figure.
"Capital Lease" means any lease which has been or should be
capitalized on the books of the lessee in accordance with GAAP.
"Closing Date" means the date this Agreement has been
executed by all parties.
"Code" means the Internal Revenue Code of 1986.
"Combined EBITDA" means, for any period of time, (1) revenues
less operating costs before Interest Expense, income taxes, depreciation and
amortization and extraordinary items (including, without limitation,
non-recurring items such as gains or losses from asset sales) for Borrower and
its beneficial interest in its Consolidated Businesses, plus (2) Borrower's
beneficial interest in revenues less operating costs before Interest Expense,
income taxes, depreciation and amortization and extraordinary items (including,
without limitation, non-recurring items such as gains or losses from asset
sales) applicable to each of the UJVs (to the extent not included above), in
accordance with GAAP, in all cases as reflected in the VRT Consolidated
Financial Statements.
"Commitment Fee Rate" means the rate per annum determined, at
any time, based on Borrower's Credit Rating, in accordance with the following
table. Any change in Borrower's Credit Rating which causes it to move into a
different range on the table shall effect an immediate change in the Commitment
Fee Rate.
29
<PAGE> 10
<TABLE>
<CAPTION>
Borrower's Credit Rating Commitment Fee Rate
(S&P/Moody's/Duff & Phelps/Fitch Ratings) (% per annum)
- ----------------------------------------- -------------
<S> <C>
A-/A3/A-/A- or higher 0.15
BBB+/Baa1/BBB+/BBB+ 0.15
BBB/Baa2/BBB/BBB 0.20
BBB-/Baa3/BBB-/BBB- 0.20
Below BBB-/Baa3/BBB-/BBB- or unrated 0.25
</TABLE>
"Consolidated Businesses" means, collectively each Affiliate
of Borrower who is included in the VRT Consolidated Statements in accordance
with GAAP.
"Consolidated Outstanding Indebtedness" means, as of any
time, all indebtedness and liability for borrowed money, secured or unsecured,
of Borrower and all indebtedness and liability for borrowed money, secured or
unsecured, attributable to Borrower's beneficial interest in its Consolidated
Businesses, including mortgage and other notes payable but excluding any
indebtedness which is margin indebtedness secured by cash and cash equivalent
securities, all as reflected in the VRT Consolidated Financial Statements.
"Contingent Liabilities" means the sum of (1) those
liabilities, as determined in accordance with GAAP, set forth and quantified as
contingent liabilities in the notes to the VRT Consolidated Financial Statements
and (2) contingent liabilities, other than those described in the foregoing
clause (1), which represent direct payment guaranties of Borrower; provided,
however, that Contingent Liabilities shall exclude contingent liabilities which
represent the "Other Party's Share" of "Duplicated Obligations" (as such quoted
terms are hereinafter defined). "Duplicated Obligations" means, collectively,
all those payment guaranties in respect of Debt of UJVs for which Borrower and
another party are jointly and severally liable, where the other party's
unsecured and unsubordinated long-term indebtedness has been assigned a credit
rating of BBB- or better by S&P or Baa3 or better by Moody's. "Other Party's
Share" means such other party's fractional share of the obligation under the UJV
in question.
"Continue", "Continuation" and "Continued" refer to the
continuation pursuant to Section 2.11 of a LIBOR Loan as a LIBOR Loan from one
Interest Period to the next Interest Period.
"Convert", "Conversion" and "Converted" refer to a conversion
pursuant to Section 2.11 of a Base Rate Loan into a LIBOR Loan or a LIBOR Loan
into a Base Rate Loan, each of which may be accompanied by the transfer by a
Bank (at its sole
30
<PAGE> 11
discretion) of all or a portion of its Ratable Loan from one Applicable Lending
Office to another.
"Debt" means: (1) indebtedness or liability for borrowed
money, or for the deferred purchase price of property or services (including
trade obligations); (2) obligations as lessee under Capital Leases; (3) current
liabilities in respect of unfunded vested benefits under any Plan; (4)
obligations under letters of credit issued for the account of any Person; (5)
all obligations arising under bankers' or trade acceptance facilities; (6) all
guarantees, endorsements (other than for collection or deposit in the ordinary
course of business), and other contingent obligations to purchase any of the
items included in this definition, to provide funds for payment, to supply funds
to invest in any Person, or otherwise to assure a creditor against loss; (7) all
obligations secured by any Lien on property owned by the Person whose Debt is
being measured, whether or not the obligations have been assumed; and (8) all
obligations under any agreement providing for contingent participation or other
hedging mechanisms with respect to interest payable on any of the items
described above in this definition.
"Default" means any event which with the giving of notice or
lapse of time, or both, would become an Event of Default.
"Default Rate" means a rate per annum equal to: (1) with
respect to Base Rate Loans, a variable rate three percent (3%) above the rate of
interest then in effect thereon (including the Applicable Margin); and (2) with
respect to LIBOR Loans and Bid Rate Loans, a fixed rate three percent (3%) above
the rate(s) of interest in effect thereon (including the Applicable Margin or
the LIBOR Bid Margin, as the case may be) at the time of Default until the end
of the then current Interest Period therefor and, thereafter, a variable rate
three percent (3%) above the rate of interest for a Base Rate Loan (including
the Applicable Margin).
"Designated Lender" means a special purpose corporation that
(i) shall have become a party to this Agreement pursuant to Section 12.16 and
(ii) is not otherwise a Bank.
"Designating Lender" has the meaning specified in Section
12.16.
"Designation Agreement" means an agreement in substantially
the form of EXHIBIT H, entered into by a Bank and a Designated Lender and
accepted by Administrative Agent.
"Disposition" means a sale (whether by assignment, transfer
or Capital Lease) of an asset.
31
<PAGE> 12
"Dollars" and the sign "$" mean lawful money of the
United States of America.
"Duff & Phelps" means Duff & Phelps Credit Rating
Company.
"Elect", "Election" and "Elected" refer to elections, if any,
by Borrower pursuant to Section 2.11 to have all or a portion of an advance of
the Ratable Loans be outstanding as LIBOR Loans.
"Environmental Discharge" means any discharge or release of
any Hazardous Materials in violation of any applicable Environmental Law.
"Environmental Law" means any applicable Law relating to
pollution or the environment, including Laws relating to noise or to emissions,
discharges, releases or threatened releases of Hazardous Materials into the work
place, the community or the environment, or otherwise relating to the
generation, manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials.
"Environmental Notice" means any written complaint, order,
citation, letter, inquiry, notice or other written communication from any Person
(1) affecting or relating to Borrower's compliance with any Environmental Law in
connection with any activity or operations at any time conducted by Borrower,
(2) relating to the occurrence or presence of or exposure to or possible or
threatened or alleged occurrence or presence of or exposure to Environmental
Discharges or Hazardous Materials at any of Borrower's locations or facilities,
including, without limitation: (a) the existence of any contamination or
possible or threatened contamination at any such location or facility and (b)
remediation of any Environmental Discharge or Hazardous Materials at any such
location or facility or any part thereof; and (3) any violation or alleged
violation of any relevant Environmental Law.
"Equity Value" means, at any time, Capitalization Value less
the Total Outstanding Indebtedness.
"ERISA" means the Employee Retirement Income Security Act of
1974, including the rules and regulations promulgated thereunder.
"ERISA Affiliate" means any corporation or trade or business
which is a member of the same controlled group of organizations (within the
meaning of Section 414(b) of the Code) as Borrower or General Partner or is
under common control (within the meaning of Section 414(c) of the Code) with
Borrower or General Partner or is required to be treated as a single employer
32
<PAGE> 13
with Borrower or General Partner under Section 414(m) or 414(o) of the Code.
"Event of Default" has the meaning specified in Section 9.01.
"Federal Funds Rate" means, for any day, the rate per annum
(expressed on a 360-day basis of calculation) equal to the weighted average of
the rates on overnight federal funds transactions as published by the Federal
Reserve Bank of New York for such day provided that (1) if such day is not a
Banking Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the immediately preceding Banking Day as so published on the
next succeeding Banking Day, and (2) if no such rate is so published on such
next succeeding Banking Day, the Federal Funds Rate for such day shall be the
average of the rates quoted by three Federal Funds brokers to Administrative
Agent on such day on such transactions.
"Fiscal Year" means each period from January 1 to December
31.
"Fitch" means Fitch Investors Service, L.P.
"Fixed Charges" means, for any period of time, (1) Interest
Expense plus (2) preferred dividend expense and regularly scheduled principal
amortization of Borrower and that attributable to Borrower's beneficial interest
in its Consolidated Businesses and UJV's.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect from time to time, applied on a basis
consistent with those used in the preparation of the financial statements
referred to in Section 5.15 (except for changes concurred in by Borrower's
Accountants).
"General Partner" has the meaning specified in the preamble.
"Good Faith Contest" means the contest of an item if: (1) the
item is diligently contested in good faith, and, if appropriate, by proceedings
timely instituted; (2) adequate reserves are established with respect to the
contested item; (3) during the period of such contest, the enforcement of any
contested item is effectively stayed; and (4) the failure to pay or comply with
the contested item during the period of the contest is not likely to result in a
Material Adverse Change.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
33
<PAGE> 14
"Guaranty" means the guaranty(ies) of all or part of
Borrower's obligations to be executed by General Partner.
"Hazardous Materials" means any pollutant, effluents,
emissions, contaminants, toxic or hazardous wastes or substances, as any of
those terms are defined from time to time in or for the purposes of any relevant
Environmental Law, including asbestos fibers and friable asbestos,
polychlorinated biphenyls, and any petroleum or hydrocarbon-based products or
derivatives.
"Initial Advance" means the first advance of proceeds of the
Loans.
"Interest Expense" means, for any period of time, the
consolidated interest expense, whether paid, accrued or capitalized (without
deduction of consolidated interest income) of Borrower and that attributable to
Borrower's beneficial interest in its Consolidated Businesses, including,
without limitation or duplication (or, to the extent not so included, with the
addition of), (1) the portion of any rental obligation in respect of any Capital
Lease obligation allocable to interest expense in accordance with GAAP; (2) the
amortization of Debt discounts; (3) any payments or fees (other than up-front
fees) with respect to interest rate swap or similar agreements; and (4) the
interest expense and items listed in clauses (1) through (3) above applicable to
each of the UJVs (to the extent not included above) multiplied by Borrower's
respective beneficial interests in the UJVs, in all cases as reflected in the
applicable VRT Consolidated Financial Statements.
"Interest Period" means, (1) with respect to any LIBOR Loan,
the period commencing on the date the same is advanced, converted from a Base
Rate Loan or Continued, as the case may be, and ending, as Borrower may select
pursuant to Section 2.05, on the numerically corresponding day in the first,
second or third calendar month thereafter, provided that each such Interest
Period which commences on the last Banking Day of a calendar month (or on any
day for which there is no numerically corresponding day in the appropriate
subsequent calendar month) shall end on the last Banking Day of the appropriate
calendar month; and (2) with respect to any Bid Rate Loan, the period commencing
on the date the same is advanced and ending, as Borrower may select pursuant to
Section 2.02, on the numerically corresponding day in the first, second or third
calendar month thereafter, provided that each such Interest Period which
commences on the last Banking Day of a calendar month (or on any day for which
there is no numerically corresponding day in the appropriate subsequent calendar
month) shall end on the last Banking Day of the appropriate calendar month.
"Invitation for Bid Rate Quotes" has the meaning specified in
Section 2.02(b).
34
<PAGE> 15
"Law" means any federal, state or local statute, law, rule,
regulation, ordinance, order, code, or rule of common law, now or hereafter in
effect, and in each case as amended, and any judicial or administrative
interpretation thereof by a Governmental Authority or otherwise, including any
judicial or administrative order, consent decree or judgment.
"Letter of Credit" has the meaning specified in Section
2.16(a).
"LIBOR Base Rate" means, with respect to any Interest Period
therefor, the rate per annum (rounded upwards if necessary to the nearest 1/16
of 1%) quoted at approximately 11:00 a.m., New York time, by the principal New
York branch of UBS two (2) Banking Days prior to the first day of such Interest
Period for the offering to leading banks in the London interbank market of
Dollar deposits in immediately available funds, for a period, and in an amount,
comparable to such Interest Period and principal amount of the LIBOR Loan or Bid
Rate Loan, as the case may be, in question outstanding during such Interest
Period.
"LIBOR Bid Margin" has the meaning specified in Section
2.02(c)(2).
"LIBOR Bid Rate" means the rate per annum equal to the sum of
(1) the LIBOR Interest Rate for the Bid Rate Loan and Interest Period in
question and (2) the LIBOR Bid Margin.
"LIBOR Interest Rate" means, for any LIBOR Loan or Bid Rate
Loan, a rate per annum (rounded upwards, if necessary, to the nearest 1/100 of
1%) determined by Administrative Agent to be equal to the quotient of (1) the
LIBOR Base Rate for such LIBOR Loan or Bid Rate Loan, as the case may be, for
the Interest Period therefor divided by (2) one minus the LIBOR Reserve
Requirement for such LIBOR Loan or Bid Rate Loan, as the case may be, for such
Interest Period.
"LIBOR Loan" means all or any portion (as the context
requires) of any Bank's Ratable Loan which shall accrue interest at rate(s)
determined in relation to LIBOR Interest Rate(s).
"LIBOR Reserve Requirement" means, for any LIBOR Loan or Bid
Rate Loan, the average maximum rate at which reserves (including any marginal,
supplemental or emergency reserves) are required to be maintained during the
Interest Period for such LIBOR Loan or Bid Rate Loan under Regulation D by
member banks of the Federal Reserve System in New York City with deposits
exceeding One Billion Dollars ($1,000,000,000) against "Eurocurrency
liabilities" (as such term is used in Regulation D). Without limiting the effect
of the foregoing, the LIBOR Reserve Requirement shall also reflect any other
reserves required to be maintained by such member banks by reason of any
35
<PAGE> 16
Regulatory Change against (1) any category of liabilities which includes
deposits by reference to which the LIBOR Base Rate is to be determined as
provided in the definition of "LIBOR Base Rate" in this Section 1.01 or (2) any
category of extensions of credit or other assets which include loans the
interest rate on which is determined on the basis of rates referred to in said
definition of "LIBOR Base Rate".
"Lien" means any mortgage, deed of trust, pledge, security
interest, hypothecation, assignment for collateral purposes, deposit
arrangement, lien (statutory or other), or other security agreement or charge of
any kind or nature whatsoever of any third party (excluding any right of setoff
but including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing, and the filing of any financing statement under the
Uniform Commercial Code or comparable law of any jurisdiction to evidence any of
the foregoing).
"Loan" means, with respect to each Bank, its Ratable Loan and
Bid Rate Loan(s), collectively.
"Loan Commitment" means, with respect to each Bank, the
obligation to make a Ratable Loan in the principal amount set forth below, as
such amount may be reduced from time to time in accordance with the provisions
of Section 2.15:
<TABLE>
<CAPTION>
Loan
Bank Commitment
<S> <C>
UBS $600,000,000
Total $600,000,000
</TABLE>
"Loan Documents" means this Agreement, the Notes, the
Guaranty, the Authorization Letter and the Solvency Certificate.
"Material Adverse Change" means either (1) a material adverse
change in the status of the business, results of operations, financial condition
or property of Borrower or General Partner or (2) any event or occurrence of
whatever nature which is likely to have a material adverse effect on the ability
of Borrower or General Partner to perform their obligations under the Loan
Documents.
"Material Affiliates" means the Affiliates of Borrower
listed on EXHIBIT F.
"Maturity Date" means July 16, 2000.
"Moody's" means Moody's Investors Service, Inc.
36
<PAGE> 17
"Multiemployer Plan" means a Plan defined as such in Section
3(37) of ERISA to which contributions have been made by Borrower or any ERISA
Affiliate and which is covered by Title IV of ERISA.
"Note" and "Notes" have the respective meanings
specified in Section 2.08.
"Obligations" means each and every obligation, covenant and
agreement of Borrower, now or hereafter existing, contained in this Agreement,
and any of the other Loan Documents, whether for principal, reimbursement
obligations, interest, fees, expenses, indemnities or otherwise, and any
amendments or supplements thereto, extensions or renewals thereof or
replacements therefor, including but not limited to all indebtedness,
obligations and liabilities of Borrower to Administrative Agent and any Bank now
existing or hereafter incurred under or arising out of or in connection with the
Notes, this Agreement, the other Loan Documents, and any documents or
instruments executed in connection therewith; in each case whether direct or
indirect, joint or several, absolute or contingent, liquidated or unliquidated,
now or hereafter existing, renewed or restructured, whether or not from time to
time decreased or extinguished and later increased, created or incurred, and
including all indebtedness of Borrower, under any instrument now or hereafter
evidencing or securing any of the foregoing.
"Parent" means, with respect to any Bank, any Person
controlling such Bank.
"PBGC" means the Pension Benefit Guaranty Corporation and any
entity succeeding to any or all of its functions under ERISA.
"Person" means an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated association, joint
venture, limited liability company, Governmental Authority or other entity of
whatever nature.
"Plan" means any employee benefit or other plan established
or maintained, or to which contributions have been made, by Borrower or General
Partner or any ERISA Affiliate and which is covered by Title IV of ERISA or to
which Section 412 of the Code applies.
"presence", when used in connection with any Environmental
Discharge or Hazardous Materials, means and includes presence, generation,
manufacture, installation, treatment, use, storage, handling, repair,
encapsulation, disposal, transportation, spill, discharge and release.
37
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"Prime Rate" means that rate of interest from time to time
announced by UBS at its Principal Office as its prime commercial lending rate.
"Principal Office" means the principal office of UBS in the
United States, presently located at 299 Park Avenue, New York, New York 10171.
"Pro Rata Share" means, for purposes of this Agreement and
with respect to each Bank, a fraction, the numerator of which is the amount of
such Bank's Loan Commitment and the denominator of which is the Total Loan
Commitment.
"Prohibited Transaction" means any transaction set forth in
Section 406 of ERISA or Section 4975 of the Code.
"Ratable Loan" has the meaning specified in Section 2.01(b).
"Ratable Loan Note" has the meaning specified in Section
2.08.
"Regulation D" means Regulation D of the Board of Governors
of the Federal Reserve System, as the same may be amended or supplemented from
time to time, or any similar Law from time to time in effect.
"Regulation U" means Regulation U of the Board of Governors
of the Federal Reserve System, as the same may be amended or supplemented from
time to time, or any similar Law from time to time in effect.
"Regulatory Change" means, with respect to any Bank, any
change after the date of this Agreement in United States federal, state,
municipal or foreign laws or regulations (including Regulation D) or the
adoption or making after such date of any interpretations, directives or
requests applying to a class of banks including such Bank of or under any United
States, federal, state, municipal or foreign laws or regulations (whether or not
having the force of law) by any court or governmental or monetary authority
charged with the interpretation or administration thereof.
"Reportable Event" means any of the events set forth in
Section 4043(c) of ERISA, other than those events as to which the thirty (30)
day notice period is waived under subsections .13, .14, .16, .18, .19 or .20 of
PBGC Reg. Section 2615.
"Required Banks" means at any time the Banks having Pro Rata
Shares aggregating at least 66 2/3%; provided, however, that during the
existence of an Event of Default, the "Required Banks" shall be the Banks
holding at least 66 2/3% of the then aggregate unpaid principal amount of the
Loans.
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"SEC Reports" means the reports required to be delivered to
the Securities and Exchange Commission pursuant to the Securities Exchange Act
of 1934, as amended.
"Secured Indebtedness" means that portion of Total
Outstanding Indebtedness that is secured.
"Solvency Certificate" means a certificate in substantially
the form of EXHIBIT D, to be delivered by Borrower pursuant to the terms of this
Agreement.
"Solvent" means, when used with respect to any Person, that
(1) the fair value of the property of such Person, on a going concern basis, is
greater than the total amount of liabilities (including, without limitation,
contingent liabilities) of such Person; (2) the present fair saleable value of
the assets of such Person, on a going concern basis, is not less than the amount
that will be required to pay the probable liabilities of such Person on its
debts as they become absolute and matured; (3) such Person does not intend to,
and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature; (4) such Person is
not engaged in business or a transaction, and is not about to engage in business
or a transaction, for which such Person's property would constitute unreasonably
small capital after giving due consideration to the prevailing practice in the
industry in which such Person is engaged; and (5) such Person has sufficient
resources, provided that such resources are prudently utilized, to satisfy all
of such Person's obligations. Contingent liabilities will be computed at the
amount that, in light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.
"S&P" means Standard & Poor's Ratings Services, a division of
McGraw-Hill Companies.
"Total Loan Commitment" means an amount equal to the
aggregate amount of all Loan Commitments.
"Total Outstanding Indebtedness" means the sum, without
duplication, of (1) Consolidated Outstanding Indebtedness, (2) VRT's Share of
UJV Outstanding Indebtedness and (3) Contingent Liabilities.
"UJV Outstanding Indebtedness" means, as of any time, all
indebtedness and liability for borrowed money, secured or unsecured, of the
UJV's, including mortgage and other notes payable but excluding any indebtedness
which is margin indebtedness secured by cash and cash equivalent securities, all
as reflected in the balance sheets of each of the UJVs, prepared in accordance
with GAAP.
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<PAGE> 20
"UJVs" means the unconsolidated joint ventures in which
Borrower owns a beneficial interest and which are accounted for under the equity
method in the VRT Consolidated Financial Statements. Alexander's, Inc. shall not
be deemed to be a UJV.
"Unencumbered Assets" means, collectively, assets, reflected
on the VRT Consolidated Financial Statements, wholly owned, directly or
indirectly, by Borrower and not subject to any Lien to secure all or any portion
of Secured Indebtedness and assets of UJVs which are not subject to any Lien to
secure all or any portion of Secured Indebtedness.
"Unencumbered Combined EBITDA" means that portion of Combined
EBITDA attributable to Unencumbered Assets.
"Unfunded Current Liability" of any Plan means the amount, if
any, by which the actuarial present value of accumulated plan benefits as of the
close of its most recent plan year, based upon the actuarial assumptions used by
the Plan's actuary in the most recent annual valuation of the Plan, exceeds the
fair market value of the assets allocable thereto, determined in accordance with
Section 412 of the Code.
"Unsecured Debt Yield" means, at any time, the ratio,
expressed as a percentage, of (1) Unencumbered Combined EBITDA for the most
recently ended calendar quarter, annualized (i.e., multiplied by four (4)) to
(2) Unsecured Indebtedness.
"Unsecured Indebtedness" means that portion of Total
Outstanding Indebtedness that is unsecured.
"Unsecured Interest Expense" means that portion of Interest
Expense attributable to Unsecured Indebtedness.
"VRT Consolidated Financial Statements" means, collectively,
the consolidated balance sheet and related consolidated statement of operations,
accumulated deficiency in assets and cash flows, and footnotes thereto, of
Borrower, in each case prepared in accordance with GAAP.
"VRT Principals" means the trustees, officers and directors
of Borrower (other than General Partner) or General Partner at any applicable
time.
"VRT's Share of UJV Outstanding Indebtedness" means the sum
of the indebtedness of each of the UJVs contributing to UJV Outstanding
Indebtedness multiplied by Borrower's respective beneficial fractional interests
in each such UJV.
Section I.2 Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP, and all
financial data required to be delivered hereunder shall be prepared in
accordance with GAAP.
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<PAGE> 21
Section I.3 Computation of Time Periods. Except as otherwise
provided herein, in this Agreement, in the computation of periods of time from a
specified date to a later specified date, the word "from" means "from and
including" and words "to" and "until" each means "to but excluding".
Section I.4 Rules of Construction. When used in this
Agreement: (1) "or" is not exclusive; (2) a reference to a Law includes any
amendment or modification to such Law; (3) a reference to a Person includes its
permitted successors and permitted assigns; (4) except as provided otherwise,
all references to the singular shall include the plural and vice versa; (5)
except as provided in this Agreement, a reference to an agreement, instrument or
document shall include such agreement, instrument or document as the same may be
amended, modified or supplemented from time to time in accordance with its terms
and as permitted by the Loan Documents; (6) all references to Articles or
Sections shall be to Articles and Sections of this Agreement unless otherwise
indicated; and (7) all Exhibits to this Agreement shall be incorporated into
this Agreement.
ARTICLE II. THE LOANS
Section II.1 Ratable Loans; Bid Rate Loans; Purpose.
(a) Subject to the terms and conditions of this Agreement, the
Banks agree to make loans to Borrower as provided in this Article II.
(b) Each of the Banks severally agrees to make a loan to Borrower (each
such loan by a Bank, a "Ratable Loan") in an amount up to its Loan Commitment
pursuant to which the Bank shall from time to time advance and re-advance to
Borrower an amount equal to its Pro Rata Share of the excess (the "Available
Total Loan Commitment") of the Total Loan Commitment over the sum of (1) all
previous advances (including Bid Rate Loans) made by the Banks which remain
unpaid and (2) the outstanding amount of all Letters of Credit. Within the
limits set forth herein, Borrower may borrow from time to time under this
paragraph (b) and prepay from time to time pursuant to Section 2.09 (subject,
however, to the restrictions on prepayment set forth in said Section), and
thereafter re-borrow pursuant to this paragraph (b). The Ratable Loans may be
outstanding as: (1) Base Rate Loans; (2) LIBOR Loans; or (3) a combination of
the foregoing, as Borrower shall elect and notify Administrative Agent in
accordance with Section 2.13. The LIBOR Loan, Bid Rate Loan and Base Rate Loan
of each Bank shall be maintained at such Bank's Applicable Lending Office.
(c) In addition to Ratable Loans pursuant to paragraph (b) above, so
long as Borrower's Credit Rating is BBB- or better by S&P and Baa3 or better by
Moody's, one or more Banks may, at Borrower's request and in their sole
discretion, make non-ratable
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loans which shall bear interest at the LIBOR Bid Rate in accordance with Section
2.02 (such loans being referred to in this Agreement as "Bid Rate Loans").
Borrower may borrow Bid Rate Loans from time to time pursuant to this paragraph
(c) in an amount up to the Available Total Loan Commitment at the time of the
borrowing (taking into account any repayments of the Loans made simultaneously
therewith) and shall repay such Bid Rate Loans as required by Section 2.08, and
it may thereafter re-borrow pursuant to this paragraph (c) or paragraph (b)
above; provided, however, that the aggregate outstanding principal amount of Bid
Rate Loans at any particular time shall not exceed the Bid Borrowing Limit.
(d) The obligations of the Banks under this Agreement are several, and
no Bank shall be responsible for the failure of any other Bank to make any
advance of a Loan to be made by such other Bank. However, the failure of any
Bank to make any advance of the Loan to be made by it hereunder on the date
specified therefor shall not relieve any other Bank of its obligation to make
any advance of its Loan specified hereby to be made on such date.
(e) Borrower shall use the proceeds of the Loans for general capital
and working capital purposes of Borrower and its Consolidated Businesses and
UJVs, including costs incurred in connection with real estate acquisitions
and/or developments. In no event shall proceeds of the Loans be used for any
illegal purpose or for the purpose, whether immediate, incidental or ultimate,
of buying or carrying "margin stock" within the meaning of Regulation U, or in
connection with any hostile acquisition.
Section II.2 Bid Rate Loans. (a) When Borrower has the
Borrower's Credit Rating required by Section 2.01(c) and wishes to request
offers from the Banks to make Bid Rate Loans, it shall transmit to
Administrative Agent by facsimile a request (a "Bid Rate Quote Request")
substantially in the form of EXHIBIT G-1 so as to be received not later than
10:30 a.m. (New York time) on the fifth Banking Day prior to the date for
funding of the Bid Rate Loan(s) proposed therein, specifying:
(1) the proposed date of funding of the Bid Rate Loan(s),
which shall be a Banking Day;
(2) the aggregate amount of the Bid Rate Loans requested,
which shall be Twenty Five Million Dollars ($25,000,000) or a larger
integral multiple of One Million Dollars ($1,000,000); and
(3) the duration of the Interest Period(s) applicable thereto,
subject to the provisions of the definition of "Interest Period" in
Section 1.01.
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Borrower may request offers to make Bid Rate Loans for more than one (1)
Interest Period in a single Bid Rate Quote Request. No Bid Rate Quote Request
may be submitted by Borrower sooner than thirty (30) days after the submission
of any other Bid Rate Quote Request.
(b) Promptly upon receipt of a Bid Rate Quote Request,
Administrative Agent shall send to the Banks by facsimile an invitation (an
"Invitation for Bid Rate Quotes") substantially in the form of EXHIBIT G-2,
which shall constitute an invitation by Borrower to the Banks to submit Bid Rate
Quotes offering to make Bid Rate Loans to which such Bid Rate Quote Request
relates in accordance with this Section.
(c) (1) Each Bank may submit a Bid Rate Quote containing an
offer or offers to make Bid Rate Loans in response to any Invitation for Bid
Rate Quotes. Each Bid Rate Quote must comply with the requirements of this
paragraph (c) and must be submitted to Administrative Agent by facsimile not
later than 2:00 p.m. (New York time) on the fourth Banking Day prior to the
proposed date of the Bid Rate Loan(s); provided that Bid Rate Quotes submitted
by UBS (or any Affiliate of Administrative Agent) in its capacity as a Bank may
be submitted, and may only be submitted, if UBS or such Affiliate notifies
Borrower of the terms of the offer or offers contained therein not later than
one (1) hour prior to the deadline for the other Banks. Any Bid Rate Quote so
made shall (subject to Borrower's satisfaction of the conditions precedent set
forth in this Agreement to its entitlement to an advance) be irrevocable except
with the written consent of Administrative Agent given on the instructions of
Borrower. Bid Rate Loans to be funded pursuant to a Bid Rate Quote may, as
provided in Section 12.16, be funded by a Bank's Designated Lender. A Bank
making a Bid Rate Quote shall specify in its Bid Rate Quote whether the related
Bid Rate Loans are intended to be funded by such Bank's Designated Lender, as
provided in Section 12.16.
(2) Each Bid Rate Quote shall be in substantially
the form of EXHIBIT G-3 and shall in any case specify:
(i) the proposed date of funding of the Bid Rate Loan(s);
(ii) the principal amount of the Bid Rate Loan(s) for which
each such offer is being made, which principal amount (w) may be
greater than or less than the Loan Commitment of the quoting Bank, (x)
must be in the aggregate Twenty Five Million Dollars ($25,000,000) or a
larger integral multiple of One Million Dollars ($1,000,000), (y) may
not exceed the principal amount of Bid Rate Loans for which offers were
requested and (z) may be subject to an aggregate limitation as to the
principal amount of Bid Rate Loans for which offers being made by such
quoting Bank may be accepted;
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<PAGE> 24
(iii) the margin above or below the applicable LIBOR Interest
Rate (the "LIBOR Bid Margin") offered for each such Bid Rate Loan,
expressed as a percentage per annum (specified to the nearest 1/1,000th
of 1%) to be added to (or subtracted from) the applicable LIBOR
Interest Rate;
(iv) the applicable Interest Period; and
(v) the identity of the quoting Bank.
A Bid Rate Quote may set forth up to three (3) separate offers by the quoting
Bank with respect to each Interest Period specified in the related Invitation
for Bid Rate Quotes.
(3) Any Bid Rate Quote shall be disregarded if it:
(i) is not substantially in conformity with EXHIBIT G-3 or
does not specify all of the information required by sub-paragraph
(c)(2) above;
(ii) contains qualifying, conditional or similar language
(except for an aggregate limitation as provided in sub-paragraph
(c)(2)(ii) above);
(iii) proposes terms other than or in addition to those set
forth in the applicable Invitation for Bid Rate Quotes; or
(iv) arrives after the time set forth in sub-
paragraph (c)(1) above.
(d) Administrative Agent shall on the Banking Day of receipt
thereof notify Borrower in writing of the terms of (x) any Bid Rate Quote
submitted by a Bank that is in accordance with paragraph (c) and (y) any Bid
Rate Quote that amends, modifies or is otherwise inconsistent with a previous
Bid Rate Quote submitted by such Bank with respect to the same Bid Rate Quote
Request. Any such subsequent Bid Rate Quote shall be disregarded by
Administrative Agent unless such subsequent Bid Rate Quote is submitted solely
to correct a manifest error in such former Bid Rate Quote. Administrative
Agent's notice to Borrower shall specify (A) the aggregate principal amount of
Bid Rate Loans for which offers have been received for each Interest Period
specified in the related Bid Rate Quote Request, (B) the respective principal
amounts and LIBOR Bid Margins so offered and (C) if applicable, limitations on
the aggregate principal amount of Bid Rate Loans for which offers in any single
Bid Rate Quote may be accepted.
(e) Not later than 4:00 p.m. (New York time) on the fourth
Banking Day prior to the proposed date of funding of the Bid Rate Loan, Borrower
shall notify Administrative Agent of its acceptance or non-acceptance of the
offers so notified to it
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<PAGE> 25
pursuant to paragraph (d). A notice of acceptance shall be substantially in the
form of EXHIBIT G-4 and shall specify the aggregate principal amount of offers
for each Interest Period that are accepted. Borrower may accept any Bid Rate
Quote in whole or in part; provided that:
(i) the principal amount of each Bid Rate Loan may not
exceed the applicable amount set forth in the related Bid Rate Quote
Request or be less than Five Million Dollars ($5,000,000) and shall be
an integral multiple of One Hundred Thousand Dollars ($100,000);
(ii) acceptance of offers with respect to a particular
Interest Period may only be made on the basis of ascending LIBOR Bid
Margins offered for such Interest Period from the lowest effective
cost; and
(iii) Borrower may not accept any offer that is described in
sub-paragraph (c)(3) or that otherwise fails to comply with the
requirements of this Agreement.
(f) If offers are made by two (2) or more Banks with the same
LIBOR Bid Margins, for a greater aggregate principal amount than the amount in
respect of which such offers are accepted for the related Interest Period, the
principal amount of Bid Rate Loans in respect of which such offers are accepted
shall be allocated by Administrative Agent among such Banks as nearly as
possible (in multiples of One Hundred Thousand Dollars ($100,000), as
Administrative Agent may deem appropriate) in proportion to the aggregate
principal amounts of such offers. Administrative Agent shall promptly (and in
any event within one (1) Banking Day after such offers are accepted) notify
Borrower and each such Bank in writing of any such allocation of Bid Rate Loans.
Determinations by Administrative Agent of the allocation of Bid Rate Loans shall
be conclusive in the absence of manifest error.
(g) In the event that Borrower accepts the offer(s) contained
in one (1) or more Bid Rate Quotes in accordance with paragraph (e), the Bank(s)
making such offer(s) shall make a Bid Rate Loan in the accepted amount (as
allocated, if necessary, pursuant to paragraph (f)) on the date specified
therefor, in accordance with the procedures specified in Section 2.04.
(h) Notwithstanding anything to the contrary contained
herein, each Bank shall be required to fund its Pro Rata Share of the Available
Total Loan Commitment in accordance with Section 2.01(b) despite the fact that
any Bank's Loan Commitment may have been or may be exceeded as a result of such
Bank's making Bid Rate Loans.
(i) A Bank who is notified that it has been selected to make
a Bid Rate Loan as provided above may designate
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<PAGE> 26
its Designated Lender (if any) to fund such Bid Rate Loan on its behalf, as
described in Section 12.16. Any Designated Lender which funds a Bid Rate Loan
shall on and after the time of such funding become the obligee under such Bid
Rate Loan and be entitled to receive payment thereof when due. No Bank shall be
relieved of its obligation to fund a Bid Rate Loan, and no Designated Lender
shall assume such obligation, prior to the time the applicable Bid Rate Loan is
funded.
Section II.3 Advances, Generally. The Initial Advance shall
be in the minimum amount of One Million Dollars ($1,000,000) and in integral
multiples of One Hundred Thousand Dollars ($100,000) above such amount and shall
be made upon satisfaction of the conditions set forth in Section 4.01.
Subsequent advances shall be made no more frequently than weekly thereafter,
upon satisfaction of the conditions set forth in Section 4.02. The amount of
each advance subsequent to the Initial Advance shall be in the minimum amount of
One Million Dollars ($1,000,000) (unless less than One Million Dollars
($1,000,000) is available for disbursement pursuant to the terms hereof at the
time of any subsequent advance, in which case the amount of such subsequent
advance shall be equal to such remaining availability) and in integral multiples
of One Hundred Thousand Dollars ($100,000) above such amount. Additional
restrictions on the amounts and timing of, and conditions to the making of,
advances of Bid Rate Loans are set forth in Section 2.02.
Each advance shall be subject, in addition to the limitations
and conditions applicable to advances of the Loans generally, to Administrative
Agent's receipt, on or immediately prior to the date the request for such
advance is made, of (1) a certificate, of the sort required by paragraph (3)(b)
of Section 6.09, containing covenant compliance calculations that include the
pro-forma adjustments described below, which calculations shall demonstrate
Borrower's compliance (and shall include the computations and details of the
items referred to in paragraph (3)(c) of Section 6.09 confirming such
compliance), on a pro-forma basis, as of the end of the most recently ended
calendar quarter for which financial results are required hereunder to have been
reported by Borrower, with all covenants enumerated in said paragraph (3)(b) and
(2) a certificate by the same officer setting forth the use of the advance, the
income projected to be generated from such advance for purposes of determining
Combined EBITDA and the type of income so generated.
In connection with each advance of Loan proceeds, the
following pro-forma adjustments shall be made to the covenant compliance
calculations required as of the end of the most recently ended calendar quarter
for which financial results are required hereunder to have been reported by
Borrower:
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(i) Total Outstanding Indebtedness and Unsecured Indebtedness
shall be adjusted by adding thereto, respectively, all indebtedness and
unsecured indebtedness that is incurred by Borrower in connection with
the advance;
(ii) Combined EBITDA, for any period, shall be adjusted by
adding the income to be included as provided in Borrower's certificate;
and
(iii) Interest Expense for any period, shall be adjusted by
adding thereto interest expense to be incurred by Borrower in
connection with the advance.
Section II.4 Procedures for Advances. In the case of advances
of Ratable Loans, Borrower shall submit to Administrative Agent a request for
each advance, stating the amount requested and the expected purpose for which
such advance is to be used, no later than 10:00 a.m. (New York time) on the
date, in the case of advances of Base Rate Loans, which is one (1) Banking Day,
and, in the case of advances of LIBOR Loans, which is three (3) Banking Days,
prior to the date the advance is to be made. In the case of advances of Bid Rate
Loans, Borrower shall submit a Bid Rate Quote Request at the time specified in
Section 2.02, accompanied by a statement of the expected purpose for which such
advance is to be used. Administrative Agent, upon its receipt and approval of
the request for advance, will so notify the Banks either by telephone or by
facsimile. Not later than 10:00 a.m. (New York time) on the date of each
advance, each Bank (in the case of Ratable Loans) or the applicable Bank(s) (in
the case of Bid Rate Loans) shall, through its Applicable Lending Office and
subject to the conditions of this Agreement, make the amount to be advanced by
it on such day available to Administrative Agent, at Administrative Agent's
Office and in immediately available funds for the account of Borrower. The
amount so received by Administrative Agent shall, subject to the conditions of
this Agreement, be made available to Borrower, in immediately available funds,
by Administrative Agent's crediting account number 2017537183 of Borrower
maintained at Fleet Bank.
Section II.5 Interest Periods; Renewals. In the case of the
LIBOR Loans, Borrower shall select an Interest Period of any duration in
accordance with the definition of Interest Period in Section 1.01, subject to
the following limitations: (1) no Interest Period may extend beyond the Maturity
Date; (2) if an Interest Period would end on a day which is not a Banking Day,
such Interest Period shall be extended to the next Banking Day, unless such
Banking Day would fall in the next calendar month, in which event such Interest
Period shall end on the immediately preceding Banking Day; and (3) only eight
(8) discrete segments of a Bank's Ratable Loan bearing interest at a LIBOR
Interest Rate for a designated Interest Period pursuant to a particular
Election, Conversion or Continuation, may be outstanding at any one time (each
such segment of each Bank's
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<PAGE> 28
Ratable Loan corresponding to a proportionate segment of each of the other
Banks' Ratable Loans).
Upon notice to Administrative Agent as provided in Section
2.13, Borrower may Continue any LIBOR Loan on the last day of the Interest
Period of the same or different duration in accordance with the limitations
provided above.
Section II.6 Interest. Borrower shall pay interest to
Administrative Agent for the account of the applicable Bank on the outstanding
and unpaid principal amount of the Loans, at a rate per annum as follows: (1)
for Base Rate Loans at a rate equal to the Base Rate plus the Applicable Margin;
(2) for LIBOR Loans at a rate equal to the applicable LIBOR Interest Rate plus
the Applicable Margin; and (3) for Bid Rate Loans at a rate equal to the
applicable LIBOR Bid Rate. Any principal amount not paid when due (when
scheduled, at acceleration or otherwise) shall bear interest thereafter, payable
on demand, at the Default Rate.
The interest rate on Base Rate Loans shall change when the
Base Rate changes. Interest on Base Rate Loans, LIBOR Loans and Bid Rate Loans
shall not exceed the maximum amount permitted under applicable law. Interest
shall be calculated for the actual number of days elapsed on the basis of, in
the case of Base Rate Loans, LIBOR Loans and Bid Rate Loans, three hundred sixty
(360) days.
Accrued interest shall be due and payable in arrears upon and
with respect to any payment or prepayment of principal and, (x) in the case of
both Base Rate Loans and LIBOR Loans, on the first Banking Day of each calendar
month and (y) in the case of Bid Rate Loans, at the expiration of the Interest
Period applicable thereto; provided, however, that interest accruing at the
Default Rate shall be due and payable on demand.
Section II.7 Fees. Borrower shall, during the term of the
Loans, pay to Administrative Agent for the account of each Bank a commitment fee
computed (1) during periods when Borrower's Credit Rating is below BBB- by S&P
or below Baa3 by Moody's or unrated, on the daily unused Loan Commitment of such
Bank and (2) during periods when Borrower's Credit Rating is BBB- or higher by
S&P and Baa3 or higher by Moody's, on the daily Loan Commitment of such Bank, in
either such case at a rate per annum equal to the daily Commitment Fee Rate,
calculated on the basis of a year of three hundred sixty (360) days for the
actual number of days elapsed. The accrued commitment fee shall be due and
payable in arrears on the first day of October, January, April and July of each
year, commencing on the first such date after the Closing Date, and upon the
Maturity Date (as the case may be accelerated) or earlier termination of the
Loan Commitments.
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Section II.8 Notes. The Ratable Loan made by each Bank under
this Agreement shall be evidenced by, and repaid with interest in accordance
with, a promissory note of Borrower in the form of EXHIBIT B duly completed and
executed by Borrower, in the principal amount equal to such Bank's Loan
Commitment, payable to such Bank for the account of its Applicable Lending
Office (each such note, as the same may hereafter be amended, modified,
extended, severed, assigned, substituted, renewed or restated from time to time,
including any substitute note pursuant to Section 3.07 or 12.05, a "Ratable Loan
Note"). The Bid Rate Loans of the Banks shall be evidenced by a single global
promissory note of Borrower in the form of EXHIBIT C, duly completed and
executed by Borrower, in the principal amount of Three Hundred Million Dollars
($300,000,000), payable to Administrative Agent for the account of the
respective Banks making Bid Rate Loans (such note, as the same may hereafter be
amended, modified, extended, severed, assigned, substituted, renewed or restated
from time to time, the "Bid Rate Loan Note"). A particular Bank's Ratable Loan
Note, together with its interest, if any, in the Bid Rate Loan Note, are
referred to collectively in this Agreement as such Bank's "Note"; all such
Ratable Loan Notes and interests are referred to collectively in this Agreement
as the "Notes". The Ratable Loan Notes shall mature, and all outstanding
principal and accrued interest and other sums thereunder shall be paid in full,
on the Maturity Date, as the same may be accelerated. The outstanding principal
amount of each Bid Rate Loan evidenced by the Bid Rate Loan Note, and all
accrued interest and other sums with respect thereto, shall become due and
payable to the Bank making such Bid Rate Loan at the earlier of the expiration
of the Interest Period applicable thereto or the Maturity Date, as the same may
be accelerated.
Each Bank is hereby authorized by Borrower to endorse on the
schedule attached to the Ratable Loan Note held by it, the amount of each
advance, and each payment of principal received by such Bank for the account of
its Applicable Lending Office(s) on account of its Ratable Loan, which
endorsement shall, in the absence of manifest error, be conclusive as to the
outstanding balance of the Ratable Loan made by such Bank. Administrative Agent
is hereby authorized by Borrower to endorse on the schedule attached to the Bid
Rate Loan Note the amount of each Bid Rate Loan, the name of the Bank making the
same, the date of the advance thereof, the interest rate applicable thereto and
the expiration of the Interest Period applicable thereto (i.e., the maturity
date thereof). The failure by Administrative Agent or any Bank to make such
notations with respect to the Loans or each advance or payment shall not limit
or otherwise affect the obligations of Borrower under this Agreement or the
Notes.
Section II.9 Prepayments. Without prepayment premium or
penalty but subject to Section 3.05, Borrower may, upon at least one (1) Banking
Day's notice to Administrative
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Agent in the case of the Base Rate Loans, and at least three (3) Banking Days'
notice to Administrative Agent in the case of LIBOR Loans, prepay the Ratable
Loans in whole or, with respect to Base Rate Loans only, in part, provided that
(1) any partial prepayment under this Section shall be in integral multiples of
One Million Dollars ($1,000,000); and (2) each prepayment under this Section
shall include all interest accrued on the amount of principal prepaid to (but
excluding) the date of prepayment.
Section 2.10 Method of Payment. Borrower shall make each
payment under this Agreement and under the Notes not later than 11:00 a.m. (New
York time) on the date when due in Dollars to Administrative Agent at
Administrative Agent's Office in immediately available funds. Administrative
Agent will thereafter, on the day of its receipt of each such payment, cause to
be distributed to each Bank (1) such Bank's appropriate share (based upon the
respective outstanding principal amounts and interest due under the Notes of the
Banks) of the payments of principal and interest in like funds for the account
of such Bank's Applicable Lending Office; and (2) fees payable to such Bank in
accordance with the terms of this Agreement. Borrower hereby authorizes
Administrative Agent and the Banks, if and to the extent payment by Borrower is
not made when due under this Agreement or under the Notes, to charge from time
to time against any account Borrower maintains with Administrative Agent or any
Bank any amount so due to Administrative Agent and/or the Banks.
Except to the extent provided in this Agreement, whenever any
payment to be made under this Agreement or under the Notes is due on any day
other than a Banking Day, such payment shall be made on the next succeeding
Banking Day, and such extension of time shall in such case be included in the
computation of the payment of interest and other fees, as the case may be.
Section 2.11 Elections, Conversions or Continuation of Loans.
Subject to the provisions of Article III and Sections 2.05 and 2.12, Borrower
shall have the right to Elect to have all or a portion of any advance of the
Ratable Loans be LIBOR Loans, to Convert Base Rate Loans into LIBOR Loans, to
Convert LIBOR Loans into Base Rate Loans, or to Continue LIBOR Loans as LIBOR
Loans, at any time or from time to time, provided that: (1) Borrower shall give
Administrative Agent notice of each such Election, Conversion or Continuation as
provided in Section 2.13; and (2) a LIBOR Loan may be Continued only on the last
day of the applicable Interest Period for such LIBOR Loan. Except as otherwise
provided in this Agreement, each Election, Continuation and Conversion shall be
applicable to each Bank's Ratable Loan in accordance with its Pro Rata Share.
Section 2.12 Minimum Amounts. With respect to the Ratable
Loans as a whole, each Election and each Conversion shall be in an amount at
least equal to Three Million Dollars
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($3,000,000) and in integral multiples of One Hundred Thousand Dollars
($100,000).
Section 2.13 Certain Notices Regarding Elections, Conversions
and Continuations of Loans. Notices by Borrower to Administrative Agent of
Elections, Conversions and Continuations of LIBOR Loans shall be irrevocable and
shall be effective only if received by Administrative Agent not later than 10:00
a.m. (New York time) on the number of Banking Days prior to the date of the
relevant Election, Conversion or Continuation specified below:
Number of
Notice Banking Days Prior
Conversions into Base Rate
Loans one (1)
Elections of, Conversions into
or Continuations as, LIBOR Loans three (3)
Promptly following its receipt of any such notice, Administrative Agent shall so
advise the Banks either by telephone or by facsimile. Each such notice of
Election shall specify the portion of the amount of the advance that is to be
LIBOR Loans (subject to Section 2.12) and the duration of the Interest Period
applicable thereto (subject to Section 2.05); each such notice of Conversion
shall specify the LIBOR Loans or Base Rate Loans to be Converted; and each such
notice of Conversion or Continuation shall specify the date of Conversion or
Continuation (which shall be a Banking Day), the amount thereof (subject to
Section 2.12) and the duration of the Interest Period applicable thereto
(subject to Section 2.05). In the event that Borrower fails to Elect to have any
portion of an advance of the Ratable Loans be LIBOR Loans, the entire amount of
such advance shall constitute Base Rate Loans. In the event that Borrower fails
to Continue LIBOR Loans within the time period and as otherwise provided in this
Section, such LIBOR Loans will be automatically Converted into Base Rate Loans
on the last day of the then current applicable Interest Period for such LIBOR
Loans.
Section 2.14 Late Payment Premium. Borrower shall pay to
Administrative Agent for the account of the Banks a late payment premium in the
amount of 4% of any payments of principal or interest under the Loans made more
than ten (10) days after the due date thereof, which shall be due with any such
late payment.
Section 2.15 Changes of Commitments. (a) At any time,
Borrower shall have the right, without premium or penalty, to terminate any
unused Loan Commitments existing as of the date of such termination, in whole or
in part, from time to time,
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provided that: (1) Borrower shall give notice of each such termination to
Administrative Agent no later then 10:00 a.m. (New York time) on the date which
is fifteen (15) Banking Days prior to the effectiveness of such termination; (2)
the Loan Commitments of each of the Banks must be terminated ratably and
simultaneously with those of the other Banks; and (3) each partial termination
of the Loan Commitments as a whole (and corresponding reduction of the Total
Loan Commitment) shall be in an integral multiple of One Million Dollars
($1,000,000).
(b) The Loan Commitments, to the extent terminated,
may not be reinstated.
Section 2.16. Letters of Credit. (a) Borrower, by notice to
Administrative Agent, may request, in lieu of advances of proceeds of the
Ratable Loans, that Administrative Agent issue unconditional, irrevocable
standby letters of credit (each, a "Letter of Credit") for the account of
Borrower, payable by sight drafts, for such beneficiaries and with such other
terms as Borrower shall specify. Promptly upon issuance of a Letter of Credit,
Administrative Agent shall notify each of the Banks by telephone or by
facsimile.
(b) The amount of any such Letter of Credit shall be limited
to the lesser of (1) One Hundred Million Dollars ($100,000,000) less the amount
of all other Letters of Credit then issued and outstanding or (2) the Available
Total Loan Commitment, it being understood that the amount of each Letter of
Credit issued and outstanding shall effect a reduction, by an equal amount, of
the Available Total Loan Commitment as provided in Section 2.01(b) (such
reduction to be allocated to each Bank's Ratable Loan ratably in accordance with
the Banks' respective Pro Rata Shares).
(c) The amount of each Letter of Credit shall be further
subject to the conditions and limitations applicable to amounts of advances set
forth in Section 2.03 and the procedures for the issuance of each Letter of
Credit shall be the same as the procedures applicable to the making of advances
as set forth in the first sentence of Section 2.04.
(d) Administrative Agent's issuance of each Letter of Credit
shall be subject to Borrower's satisfaction of all conditions precedent to its
entitlement to an advance of proceeds of the Loans.
(e) Each Letter of Credit shall expire no later than the
earlier of (x) one (1) month prior to the Maturity Date or (y) one (1) year
after the date of its issuance.
(f) In connection with, and as a further condition to the
issuance of, each Letter of Credit, Borrower shall execute and deliver to
Administrative Agent an application
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for the Letter of Credit on Administrative Agent's standard form therefor,
together with such other documents, opinions and assurances as Administrative
Agent shall reasonably require.
(g) In connection with each Letter of Credit, Borrower hereby
covenants to pay to Administrative Agent the following fees, each payable
quarterly in arrears (on the first Banking Day of each calendar quarter
following the issuance of the Letter of Credit): (i) a fee, payable to
Administrative Agent for the account of the Banks, computed daily on the amount
of the Letter of Credit issued and outstanding at a rate per annum equal to the
"Banks' L/C Fee Rate" (as hereinafter defined) and (ii) a fee, payable to
Administrative Agent for its own account, computed daily on the amount of the
Letter of Credit issued and outstanding at a rate per annum of 0.125%. For
purposes of this Agreement, the "Banks' L/C Fee Rate" shall mean, at any time, a
rate per annum equal to the Applicable Margin for LIBOR Loans less 0.125% per
annum. It is understood and agreed that the last installment of the fees
provided for in this paragraph (g) with respect to any particular Letter of
Credit shall be due and payable on the first day of the calendar quarter
following the return, undrawn, or cancellation, of such Letter of Credit.
(h) The parties hereto acknowledge and agree that,
immediately upon notice from Administrative Agent of any drawing under a Letter
of Credit, each Bank shall, notwithstanding the existence of a Default or Event
of Default or the non-satisfaction of any conditions precedent to the making of
an advance of the Loans, advance proceeds of its Ratable Loan, in an amount
equal to its Pro Rata Share of such drawing, which advance shall be made to
Administrative Agent to reimburse Administrative Agent, for its own account, for
such drawing. Each of the Banks further acknowledges that its obligation to fund
its Pro Rata Share of drawings under Letters of Credit as aforesaid shall
survive the Banks' termination of this Agreement or enforcement of remedies
hereunder or under the other Loan Documents.
(i) Borrower agrees, upon the occurrence of an Event of
Default and at the request of Administrative Agent, (x) to deposit with
Administrative Agent cash collateral in the amount of all the outstanding
Letters of Credit, which cash collateral shall be held by Administrative Agent
as security for Borrower's obligations in connection with the Letters of Credit
and (y) to execute and deliver to Administrative Agent such documents as
Administrative Agent requests to confirm and perfect the assignment of such cash
collateral to Administrative Agent.
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ARTICLE III. YIELD PROTECTION; ILLEGALITY; ETC.
Section III.1 Additional Costs. Borrower shall pay directly
to each Bank from time to time on demand such amounts as such Bank may
reasonably determine to be necessary to compensate it for any increased costs
which such Bank determines are attributable to its making or maintaining a LIBOR
Loan or a Bid Rate Loan, or its obligation to make or maintain a LIBOR Loan or a
Bid Rate Loan, or its obligation to Convert a Base Rate Loan to a LIBOR Loan
hereunder, or any reduction in any amount receivable by such Bank hereunder in
respect of its LIBOR Loan or Bid Rate Loan(s) or such obligations (such
increases in costs and reductions in amounts receivable being herein called
"Additional Costs"), in each case resulting from any Regulatory Change which:
(1) changes the basis of taxation of any amounts payable to
such Bank under this Agreement or the Notes in respect of any such
LIBOR Loan or Bid Rate Loan (other than (i) changes in the rate of
general corporate, franchise, branch profit, net income or other income
tax imposed on such Bank or its Applicable Lending Office or (ii) a tax
described in Section 10.13); or
(2) (other than to the extent the LIBOR Reserve Requirement
is taken into account in determining the LIBOR Rate at the commencement
of the applicable Interest Period) imposes or modifies any reserve,
special deposit, deposit insurance or assessment, minimum capital,
capital ratio or similar requirements relating to any extensions of
credit or other assets of, or any deposits with or other liabilities
of, such Bank (including any LIBOR Loan or Bid Rate Loan or any
deposits referred to in the definition of "LIBOR Interest Rate" in
Section 1.01), or any commitment of such Bank (including such Bank's
Loan Commitment hereunder); or
(3) imposes any other condition (unrelated to the basis of
taxation referred to in paragraph (1) above) affecting this Agreement
or the Notes (or any of such extensions of credit or liabilities).
Without limiting the effect of the provisions of the first
paragraph of this Section, in the event that, by reason of any Regulatory
Change, any Bank either (1) incurs Additional Costs based on or measured by the
excess above a specified level of the amount of a category of deposits of other
liabilities of such Bank which includes deposits by reference to which the LIBOR
Interest Rate is determined as provided in this Agreement or a category of
extensions of credit or other assets of such Bank which includes loans based on
the LIBOR Interest Rate or (2) becomes subject to restrictions on the amount of
such a category of liabilities or assets which it may hold, then, if such Bank
so elects by notice to Borrower (with a copy to Administrative Agent), the
obligation of such Bank to permit Elections of, to
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Continue, or to Convert Base Rate Loans into, LIBOR Loans shall be suspended (in
which case the provisions of Section 3.04 shall be applicable) until such
Regulatory Change ceases to be in effect.
Determinations and allocations by a Bank for purposes of this
Section of the effect of any Regulatory Change pursuant to the first or second
paragraph of this Section, on its costs or rate of return of making or
maintaining its Loan or portions thereof or on amounts receivable by it in
respect of its Loan or portions thereof, and the amounts required to compensate
such Bank under this Section, shall be included in a calculation of such amounts
given to Borrower and shall be conclusive absent manifest error.
Section III.2 Limitation on Types of Loans. Anything herein
to the contrary notwithstanding, if, on or prior to the determination of the
LIBOR Interest Rate for any Interest Period:
(1) Administrative Agent reasonably determines (which
determination shall be conclusive) that quotations of interest rates
for the relevant deposits referred to in the definition of "LIBOR
Interest Rate" in Section 1.01 are not being provided in the relevant
amounts or for the relevant maturities for purposes of determining
rates of interest for the LIBOR Loans or Bid Rate Loans as provided in
this Agreement; or
(2) a Bank reasonably determines (which determination shall
be conclusive) and promptly notifies Administrative Agent that the
relevant rates of interest referred to in the definition of "LIBOR
Interest Rate" in Section 1.01 upon the basis of which the rate of
interest for LIBOR Loans or Bid Rate Loans for such Interest Period is
to be determined do not adequately cover the cost to such Bank of
making or maintaining such LIBOR Loan or Bid Rate Loan for such
Interest Period;
then Administrative Agent shall give Borrower prompt notice thereof, and so long
as such condition remains in effect, the Banks (or, in the case of the
circumstances described in clause (2) above, the affected Bank) shall be under
no obligation to permit Elections of LIBOR Loans, to Convert Base Rate Loans
into LIBOR Loans or to Continue LIBOR Loans and Borrower shall, on the last
day(s) of the then current Interest Period(s) for the affected outstanding LIBOR
Loans or Bid Rate Loans, either (x) prepay the affected LIBOR Loans or Bid Rate
Loans or (y) Convert the affected LIBOR Loans into Base Rate Loans in accordance
with Section 2.11 or convert the rate of interest under the affected Bid Rate
Loans to the rate applicable to Base Rate Loans by following the same procedures
as are applicable for Conversions into Base Rate Loans set forth in Section
2.11.
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Section III.3 Illegality. Notwithstanding any other provision
of this Agreement, in the event that it becomes unlawful for any Bank or its
Applicable Lending Office to honor its obligation to make or maintain a LIBOR
Loan or Bid Rate Loan hereunder, to allow Elections of a LIBOR Loan or to
Convert a Base Rate Loan into a LIBOR Loan, then such Bank shall promptly notify
Administrative Agent and Borrower thereof and such Bank's obligation to make or
maintain a LIBOR Loan or Bid Rate Loan, or to permit Elections of, to Continue,
or to Convert its Base Rate Loan into, a LIBOR Loan shall be suspended (in which
case the provisions of Section 3.04 shall be applicable) until such time as such
Bank may again make and maintain a LIBOR Loan or Bid Rate Loan.
Section III.4 Treatment of Affected Loans. If the obligations
of any Bank to make or maintain a LIBOR Loan or a Bid Rate Loan, or to permit an
Election of a LIBOR Loan, to Continue its LIBOR Loan, or to Convert its Base
Rate Loan into a LIBOR Loan, are suspended pursuant to Sections 3.01 or 3.03
(each LIBOR Loan or Bid Rate Loan so affected being herein called an "Affected
Loan"), such Bank's Affected Loan shall be automatically Converted into a Base
Rate Loan (or, in the case of an Affected Loan that is a Bid Rate Loan, the
interest rate thereon shall be converted to the rate applicable to Base Rate
Loans) on the last day of the then current Interest Period for the Affected Loan
(or, in the case of a Conversion or conversion required by Sections 3.01 or
3.03, on such earlier date as such Bank may specify to Borrower).
To the extent that such Bank's Affected Loan has been so
Converted (or the interest rate thereon so converted), all payments and
prepayments of principal which would otherwise be applied to such Bank's
Affected Loan shall be applied instead to its Base Rate Loan (or to its Bid Rate
Loan bearing interest at the converted rate) and such Bank shall have no
obligation to Convert its Base Rate Loan into a LIBOR Loan.
Section III.5 Certain Compensation. Other than in connection
with a Conversion of an Affected Loan, Borrower shall pay to Administrative
Agent for the account of the applicable Bank, upon the request of such Bank
through Administrative Agent which request includes a calculation of the
amount(s) due, such amount or amounts as shall be sufficient (in the reasonable
opinion of such Bank) to compensate it for any loss, cost or expense which such
Bank reasonably determines is attributable to:
(1) any payment or prepayment of a LIBOR Loan or Bid Rate
Loan made by such Bank, or any Conversion of a LIBOR Loan (or
conversion of the rate of interest on a Bid Rate Loan) made by such
Bank, in any such case on a date other than the last day of an
applicable Interest Period, whether by reason of acceleration or
otherwise; or
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(2) any failure by Borrower for any reason to Convert or
Continue a LIBOR Loan to be Converted or Continued by such Bank on the
date specified therefor in the relevant notice under Section 2.13; or
(3) any failure by Borrower to borrow (or to qualify for a
borrowing of) a LIBOR Loan or Bid Rate Loan which would otherwise be
made hereunder on the date specified in the relevant Election notice
under Section 2.13 or Bid Rate Quote acceptance under Section 2.02(e)
given or submitted by Borrower.
Without limiting the foregoing, such compensation shall
include an amount equal to the present value (using as the discount rate an
interest rate equal to the rate determined under (2) below) of the excess, if
any, of (1) the amount of interest (less the Applicable Margin) which otherwise
would have accrued on the principal amount so paid, prepaid, Converted or
Continued (or not Converted, Continued or borrowed) for the period from the date
of such payment, prepayment, Conversion or Continuation (or failure to Convert,
Continue or borrow) to the last day of the then current applicable Interest
Period (or, in the case of a failure to Convert, Continue or borrow, to the last
day of the applicable Interest Period which would have commenced on the date
specified therefor in the relevant notice) at the applicable rate of interest
for the LIBOR Loan or Bid Rate Loan provided for herein, over (2) the amount of
interest (as reasonably determined by such Bank) based upon the interest rate
which such Bank would have bid in the London interbank market for Dollar
deposits, for amounts comparable to such principal amount and maturities
comparable to such period. A determination of any Bank as to the amounts payable
pursuant to this Section shall be conclusive absent manifest error.
Section III.6 Capital Adequacy. If any Bank shall have
determined that, after the date hereof, the adoption of any applicable law, rule
or regulation regarding capital adequacy, or any change therein, or any change
in the interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital adequacy
(whether or not having the force of law) of any such Governmental Authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on capital of such Bank (or its Parent) as a consequence of such
Bank's obligations hereunder to a level below that which such Bank (or its
Parent) could have achieved but for such adoption, change, request or directive
(taking into consideration its policies with respect to capital adequacy) by an
amount deemed by such Bank to be material, then from time to time, within
fifteen (15) days after demand by such Bank (with a copy to Administrative
Agent), Borrower shall pay to such Bank such additional amount or amounts as
will compensate such Bank (or its
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Parent) for such reduction. A certificate of any Bank claiming compensation
under this Section, setting forth in reasonable detail the basis therefor, shall
be conclusive absent manifest error.
Section III.7 Substitution of Banks. If any Bank (an
"Affected Bank") (i) makes demand upon Borrower for (or if Borrower is otherwise
required to pay) Additional Costs pursuant to Section 3.01 or (ii) is unable to
make or maintain a LIBOR Loan or Bid Rate Loan as a result of a condition
described in Section 3.03 or clause (2) of Section 3.02, Borrower may, within
ninety (90) days of receipt of such demand or notice (or the occurrence of such
other event causing Borrower to be required to pay Additional Costs or causing
said Section 3.03 or clause (2) of Section 3.02 to be applicable), as the case
may be, give written notice (a "Replacement Notice") to Administrative Agent and
to each Bank of Borrower's intention either (x) to prepay in full the Affected
Bank's Note and to terminate the Affected Bank's entire Loan Commitment or (y)
to replace the Affected Bank with another financial institution (the
"Replacement Bank") designated in such Replacement Notice.
In the event Borrower opts to give the notice provided for in
clause (x) above, and if the Affected Bank shall not agree within thirty (30)
days of its receipt thereof to waive the payment of the Additional Costs in
question or the effect of the circumstances described in Section 3.03 or clause
(2) of Section 3.02, then, so long as no Default or Event of Default shall
exist, Borrower may (notwithstanding the provisions of clause (2) of Section
2.15(a)) terminate the Affected Bank's entire Loan Commitment, provided that in
connection therewith it pays to the Affected Bank all outstanding principal and
accrued and unpaid interest under the Affected Bank's Note, together with all
other amounts, if any, due from Borrower to the Affected Bank, including all
amounts properly demanded and unreimbursed under Sections 3.01 and 3.05.
In the event Borrower opts to give the notice provided for in
clause (y) above, and if (i) Administrative Agent shall, within thirty (30) days
of its receipt of the Replacement Notice, notify Borrower and each Bank in
writing that the Replacement Bank is reasonably satisfactory to Administrative
Agent and (ii) the Affected Bank shall not, prior to the end of such thirty
(30)-day period, agree to waive the payment of the Additional Costs in question
or the effect of the circumstances described in Section 3.03 or clause (2) of
Section 3.02, then the Affected Bank shall, so long as no Default or Event of
Default shall exist, assign its Note and all of its rights and obligations under
this Agreement to the Replacement Bank, and the Replacement Bank shall assume
all of the Affected Bank's rights and obligations, pursuant to an agreement,
substantially in the form of an Assignment and Assumption Agreement, executed by
the Affected Bank and the Replacement Bank. In connection with such
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assignment and assumption, the Replacement Bank shall pay to the Affected Bank
an amount equal to the outstanding principal amount under the Affected Bank's
Note plus all interest accrued thereon, plus all other amounts, if any (other
than the Additional Costs in question), then due and payable to the Affected
Bank; provided, however, that prior to or simultaneously with any such
assignment and assumption, Borrower shall have paid to such Affected Bank all
amounts properly demanded and unreimbursed under Sections 3.01 and 3.05. Upon
the effective date of such assignment and assumption, the Replacement Bank shall
become a Bank Party to this Agreement and shall have all the rights and
obligations of a Bank as set forth in such Assignment and Assumption Agreement,
and the Affected Bank shall be released from its obligations hereunder, and no
further consent or action by any party shall be required. Upon the consummation
of any assignment pursuant to this Section, a substitute Ratable Loan Note shall
be issued to the Replacement Bank by Borrower, in exchange for the return of the
Affected Bank's Ratable Loan Note. The obligations evidenced by such substitute
note shall constitute "Obligations" for all purposes of this Agreement and the
other Loan Documents. If the Replacement Bank is not incorporated under the laws
of the United States of America or a state thereof, it shall, prior to the first
date on which interest or fees are payable hereunder for its account, deliver to
Borrower and Administrative Agent certification as to exemption from deduction
or withholding of any United States federal income taxes in accordance with
Section 10.13. Each Replacement Bank shall be deemed to have made the
representations contained in, and shall be bound by the provisions of, Section
10.13.
Borrower, Administrative Agent and the Banks shall execute
such modifications to the Loan Documents as shall be reasonably required in
connection with and to effectuate the foregoing.
ARTICLE IV. CONDITIONS PRECEDENT
Section IV.1 Conditions Precedent to the Loans. The
obligations of the Banks hereunder and the obligation of each Bank to make the
Initial Advance are subject to the condition precedent that Administrative Agent
shall have received on or before the Closing Date (other than with respect to
paragraph 13 below, which shall be required prior to the Initial Advance) each
of the following documents, and each of the following requirements shall have
been fulfilled:
(1) Fees and Expenses. The payment of all fees and expenses
owed to or incurred by Administrative Agent (including, without
limitation, the reasonable fees and expenses of legal counsel);
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(2) Note. The Ratable Loan Note for UBS and the Bid Rate Loan
Note for Administrative Agent, each duly executed by Borrower;
(3) Financial Statements. (i) Audited VRT Consolidated
Financial Statements as of and for the year ended December 31, 1996 and
(ii) unaudited VRT Consolidated Financial Statements, certified by the
chief financial officer, as and for the quarter ended March 31, 1997,
acceptable to the Banks;
(4) Certificates of Limited Partnership/Incorporation. A copy
of the Certificate of Limited Partnership for Borrower and a copy of
the articles of incorporation of General Partner, each certified by the
appropriate Secretary of State or equivalent state official;
(5) Agreements of Limited Partnership/Bylaws. A copy of the
Agreement of Limited Partnership for Borrower and a copy of the by-laws
of General Partner, including all amendments thereto, each certified by
the Secretary or an Assistant Secretary of General Partner as being in
full force and effect on the Closing Date;
(6) Good Standing Certificates. A certified copy of a
certificate from the Secretary of State or equivalent state official of
the states where Borrower and General Partner are organized, dated as
of the most recent practicable date, showing the good standing or
partnership qualification of (i) Borrower and (ii) General Partner;
(7) Foreign Qualification Certificates. A certified copy of a
certificate from the Secretary of State or equivalent state official of
the state where Borrower and General Partner maintain their principal
place of business, dated as of the most recent practicable date,
showing the qualification to transact business in such state as a
foreign limited partnership or foreign corporation, as the case may be,
for (i) Borrower and (ii) General Partner;
(8) Resolutions. A copy of a resolution or resolutions adopted
by the Board of Directors of General Partner, certified by the
Secretary or an Assistant Secretary of General Partner as being in full
force and effect on the Closing Date, authorizing the Loans provided
for herein and the execution, delivery and performance of the Loan
Documents to be executed and delivered by General Partner hereunder on
behalf of itself and Borrower;
(9) Incumbency Certificate. A certificate, signed by the
Secretary or an Assistant Secretary of General Partner and dated the
Closing Date, as to the incumbency, and containing the specimen
signature or signatures, of the
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Persons authorized to execute and deliver the Loan Documents to be executed and
delivered by it and Borrower hereunder;
(10) Solvency Certificate. A Solvency Certificate, duly
executed, from Borrower;
(11) Opinion of Counsel for Borrower. Favorable opinions,
dated the Closing Date, from counsels for Borrower and General Partner,
as to such matters as Administrative Agent may reasonably request;
(12) Authorization Letter. The Authorization Letter, duly
executed by Borrower;
(13) Guaranty. The Guaranty duly executed by General Partner;
(14) Request for Advance. A request for an advance in
accordance with Section 2.04;
(15) Certificate. The following statements shall be true and
Administrative Agent shall have received a certificate dated the
Closing Date signed by a duly authorized signatory of Borrower stating,
to the best of the certifying party's knowledge, the following:
(a) All representations and warranties contained in this
Agreement and in each of the other Loan Documents are true
and correct on and as of the Closing Date as though made on
and as of such date, and
(b) No Default or Event of Default has occurred and is
continuing, or could result from the transactions
contemplated by this Agreement and the other Loan Documents;
(16) Compliance Certificate. A certificate of the sort
required by paragraph (3) of Section 6.09;
(17) Insurance. Evidence of the insurance described in Section
5.17; and
(18) Repayment of Term Loan. Repayment in full of all
principal, interest and other sums under that certain $400,000,000
Credit Agreement, dated as of April 15, 1997, among Borrower, General
Partner, UBS and Administrative Agent.
Section IV.2 Conditions Precedent to Advances After the
Initial Advance. The obligation of each Bank to make advances of the Loans
subsequent to the Initial Advance shall be subject to satisfaction of the
following conditions precedent:
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(1) No Default or Event of Default shall have occurred and be
continuing as of the date of the advance;
(2) Each of the representations and warranties contained in
this Agreement and in each of the other Loan Documents shall be true
and correct as of the date of the advance; and
(3) Administrative Agent shall have received a request for an
advance in accordance with Section 2.04.
Section IV.3 Deemed Representations. Each request by Borrower
for, and acceptance by Borrower of, an advance of proceeds of the Loans shall
constitute a representation and warranty by Borrower and General Partner that,
as of both the date of such request and the date of the advance (1) no Default
or Event of Default has occurred and is continuing, and (2) each representation
or warranty contained in this Agreement or the other Loan Documents is true and
correct.
ARTICLE V. REPRESENTATIONS AND WARRANTIES
Borrower (and General Partner, if expressly included in
Sections contained in this Article) represents and warrants to Administrative
Agent and each Bank as follows:
Section V.1 Existence. Borrower is a limited partnership duly
organized and existing under the laws of the State of Delaware, with its
principal place of business in the State of New Jersey, and is duly qualified as
a foreign limited partnership, properly licensed, in good standing and has all
requisite authority to conduct its business in each jurisdiction in which it
owns properties or conducts business except where the failure to be so qualified
or to obtain such authority would not constitute a Material Adverse Change. Each
of its Consolidated Businesses is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization and has all
requisite authority to conduct its business in each jurisdiction in which it
owns property or conducts business, except where the failure to be so qualified
or to obtain such authority would not constitute a Material Adverse Change.
General Partner is a real estate investment trust duly organized and existing
under the laws of the State of Maryland, with its principal place of business in
the State of New Jersey, is duly qualified as a foreign corporation and properly
licensed and in good standing in each jurisdiction where the failure to qualify
or be licensed would constitute a Material Adverse Change with respect to
General Partner. The stock of General Partner is listed on the New York Stock
Exchange.
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Section V.2 Corporate/Partnership Powers. The execution,
delivery and performance of the Loan Documents required to be delivered by
Borrower hereunder are within its partnership authority and the corporate power
of General Partner, have been duly authorized by all requisite action, and are
not in conflict with the terms of any organizational instruments of such entity,
or any instrument or agreement to which Borrower or General Partner is a party
or by which Borrower, General Partner or any of their respective assets may be
bound or affected.
Section V.3 Power of Officers. The officers of General
Partner executing the Loan Documents required to be delivered by it on its own
behalf or that of Borrower hereunder have been duly elected or appointed and
were fully authorized to execute the same at the time each such Loan Document
was executed.
Section V.4 Power and Authority; No Conflicts; Compliance
With Laws. The execution and delivery of, and the performance of the obligations
required to be performed by Borrower and General Partner under, the Loan
Documents do not and will not (a) violate any provision of, or require any
filing, registration, consent or approval under, any Law (including, without
limitation, Regulation U), order, writ, judgment, injunction, decree,
determination or award presently in effect having applicability to either of
them, (b) result in a breach of or constitute a default under or require any
consent under any indenture or loan or credit agreement or any other agreement,
lease or instrument to which either of them may be a party or by which either of
them or their properties may be bound or affected except for consents which have
been obtained, (c) result in, or require, the creation or imposition of any
Lien, upon or with respect to any of its properties now owned or hereafter
acquired, or (d) cause either of them to be in default under any such Law,
order, writ, judgment, injunction, decree, determination or award or any such
indenture, agreement, lease or instrument; to the best of their knowledge,
Borrower and General Partner are in compliance with all Laws applicable to them
and their properties where the failure to be in compliance would cause a
Material Adverse Change to occur.
Section V.5 Legally Enforceable Agreements. Each Loan
Document is a legal, valid and binding obligation of Borrower and/or General
Partner, as the case may be, enforceable in accordance with its terms, except to
the extent that such enforcement may be limited by applicable bankruptcy,
insolvency and other similar laws affecting creditors' rights generally.
Section V.6 Litigation. Except as disclosed in General
Partner's SEC Reports existing as of the date hereof, there are no actions,
suits or proceedings pending or, to its knowledge, threatened against Borrower,
General Partner or any of their Affiliates before any court or arbitrator or any
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Governmental Authority reasonably likely to have a material effect on Borrower's
ability to repay the Loans.
Section V.7 Good Title to Properties. Borrower and each of
its Affiliates have good, marketable and legal title to all of the properties
and assets each of them purports to own (including, without limitation, those
reflected in the December 31, 1996 financial statements referred to in Section
5.15) and only with exceptions which do not materially detract from the value of
such property or assets or the use thereof in Borrower's and such Affiliate's
business, and except to the extent that any such properties and assets have been
encumbered or disposed of since the date of such financial statements without
violating any of the covenants contained in Article VII or elsewhere in this
Agreement. Borrower and its Material Affiliates enjoy peaceful and undisturbed
possession of all leased property necessary in any material respect in the
conduct of their respective businesses. All such leases are valid and subsisting
and are in full force and effect.
Section V.8 Taxes. Borrower and General Partner have filed
all tax returns (federal, state and local) required to be filed and have paid
all taxes, assessments and governmental charges and levies due and payable
without the imposition of a penalty, including interest and penalties, except to
the extent they are the subject of a Good Faith Contest.
Section V.9 ERISA. Borrower and General Partner are in
compliance in all material respects with all applicable provisions of ERISA.
Neither a Reportable Event nor a Prohibited Transaction has occurred with
respect to any Plan; no notice of intent to terminate a Plan has been filed nor
has any Plan been terminated within the past five (5) years; no circumstance
exists which constitutes grounds under Section 4042 of ERISA entitling the PBGC
to institute proceedings to terminate, or appoint a trustee to administer, a
Plan, nor has the PBGC instituted any such proceedings; Borrower, General
Partner and the ERISA Affiliates have not completely or partially withdrawn
under Sections 4201 or 4204 of ERISA from a Multiemployer Plan; Borrower,
General Partner and the ERISA Affiliates have met the minimum funding
requirements of Section 412 of the Code and Section 302 of ERISA of each with
respect to the Plans of each and there is no Unfunded Current Liability with
respect to any Plan established or maintained by each; and Borrower, General
Partner and the ERISA Affiliates have not incurred any liability to the PBGC
under ERISA (other than for the payment of premiums under Section 4007 of
ERISA). No part of the funds to be used by Borrower in satisfaction of its
obligations under this Agreement constitute "plan assets" of any "employee
benefit plan" within the meaning of ERISA or of any "plan" within the meaning of
Section 4975(e)(1) of the Code, as interpreted by the Internal Revenue Service
and the U.S. Department of Labor in rules,
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regulations, releases, bulletins or as interpreted under applicable case law.
Section 5.10 No Default on Outstanding Judgments or Orders.
Borrower and General Partner have satisfied all judgments which are not being
appealed and are not in default with respect to any judgment, order, writ,
injunction, decree, rule or regulation of any court, arbitrator or federal,
state, municipal or other Governmental Authority, commission, board, bureau,
agency or instrumentality, domestic or foreign.
Section 5.11 No Defaults on Other Agreements. Except as
disclosed to the Bank Parties in writing or as disclosed in General Partner's
SEC Reports, Borrower or General Partner, to the best of their knowledge, are
not a party to any indenture, loan or credit agreement or any lease or other
agreement or instrument or subject to any partnership, trust or other
restriction which is likely to result in a Material Adverse Change. To the best
of their knowledge, neither Borrower nor General Partner is in default in any
respect in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any agreement or instrument which is likely
to result in a Material Adverse Change.
Section 5.12 Government Regulation. Neither Borrower nor
General Partner is subject to regulation under the Investment Company Act of
1940 or any statute or regulation limiting any such Person's ability to incur
indebtedness for money borrowed as contemplated hereby.
Section 5.13 Environmental Protection. To Borrower's
knowledge, except as disclosed in General Partner's SEC Reports existing as of
the date hereof, none of Borrower's or its Affiliates' properties contains any
Hazardous Materials that, under any Environmental Law currently in effect, (1)
would impose liability on Borrower or General Partner that is likely to result
in a Material Adverse Change, or (2) is likely to result in the imposition of a
Lien on any assets of Borrower, General Partner or any Material Affiliates that
is likely to result in a Material Adverse Change. To Borrower's knowledge,
neither it, General Partner nor any Material Affiliates are in violation of, or
subject to any existing, pending or threatened investigation or proceeding by
any Governmental Authority under any Environmental Law that is likely to result
in a Material Adverse Change.
Section 5.14 Solvency. Borrower and General Partner are, and
upon consummation of the transactions contemplated by this Agreement, the other
Loan Documents and any other documents, instruments or agreements relating
thereto, will be, Solvent.
Section 5.15 Financial Statements. The VRT Consolidated
Financial Statements most recently delivered to the Banks pursuant to the terms
of this Agreement are in all material
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respects complete and correct and fairly present the financial condition of the
subjects thereof as of the dates of and for the periods covered by such
statements, all in accordance with GAAP. There has been no Material Adverse
Change since the date of such most recently delivered VRT Consolidated Financial
Statements.
Section 5.16 Valid Existence of Affiliates. Each Material
Affiliate is an entity duly organized and existing in good standing under the
laws of the jurisdiction of its formation. As to each Material Affiliate, its
correct name, the jurisdiction of its formation, Borrower's direct or indirect
percentage of beneficial interest therein, and the type of business in which it
is primarily engaged, are set forth on said EXHIBIT F. Borrower and each of its
Material Affiliates have the power to own their respective properties and to
carry on their respective businesses now being conducted. Each Material
Affiliate is duly qualified as a foreign corporation to do business and is in
good standing in every jurisdiction in which the nature of the respective
businesses conducted by it or its respective properties, owned or held under
lease, make such qualification necessary and where the failure to be so
qualified would have the effect of a Material Adverse Change on Borrower and its
Consolidated Businesses taken as a whole.
Section 5.17 Insurance. Borrower and each of its Affiliates
has in force paid insurance with financially sound and reputable insurance
companies or associations in such amounts and covering such risks as are usually
carried by companies engaged in the same or a similar business and similarly
situated and reasonably acceptable to Administrative Agent.
Section 5.18 Accuracy of Information; Full Disclosure.
Neither this Agreement nor any documents, financial statements, reports,
notices, schedules, certificates, statements or other writings furnished by or
on behalf of Borrower to Administrative Agent or any Bank in connection with the
negotiation of this Agreement or the consummation of the transactions
contemplated hereby, or required herein to be furnished by or on behalf of
Borrower (other than projections which are made by Borrower in good faith),
contains any untrue or misleading statement of a material fact or omits a
material fact necessary to make the statements herein or therein not misleading.
There is no fact which Borrower has not disclosed to Administrative Agent and
the Banks in writing or which is not included in General Partner's SEC Reports
which materially affects adversely nor, so far as Borrower can now foresee, will
materially affect adversely the business or financial condition of Borrower or
the ability of Borrower to perform this Agreement and the other Loan Documents.
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ARTICLE VI. AFFIRMATIVE COVENANTS
So long as any of the Notes shall remain unpaid or the Loan
Commitments remain in effect, or any other amount is owing by Borrower to any
Bank hereunder or under any other Loan Document, Borrower and General Partner
shall each:
Section VI.1 Maintenance of Existence. Preserve and maintain
its legal existence and, if applicable, good standing in the jurisdiction of
organization and, if applicable, qualify and remain qualified as a foreign
entity in each jurisdiction in which such qualification is required, except to
the extent that failure to so qualify is not likely to result in a Material
Adverse Change.
Section VI.2 Maintenance of Records. Keep adequate records
and books of account, in which complete entries will be made in accordance with
GAAP, reflecting all of its financial transactions.
Section VI.3 Maintenance of Insurance. At all times, maintain
and keep in force, and cause each of its Material Affiliates to maintain and
keep in force, insurance with financially sound and reputable insurance
companies or associations in such amounts and covering such risks as are usually
carried by companies engaged in the same or a similar business and similarly
situated, which insurance may provide for reasonable deductibility from coverage
thereof.
Section VI.4 Compliance with Laws; Payment of Taxes. Comply
in all material respects with all Laws applicable to it or to any of its
properties or any part thereof, such compliance to include, without limitation,
paying before the same become delinquent all taxes, assessments and governmental
charges imposed upon it, General Partner or upon any of their property, except
to the extent they are the subject of a Good Faith Contest.
Section VI.5 Right of Inspection. At any reasonable time and
from time to time upon reasonable notice, permit Administrative Agent or any
Bank or any agent or representative thereof (provided that, at Borrower's
request, Administrative Agent or such Bank, agent or representative must be
accompanied by a representative of Borrower), to examine and make copies and
abstracts from the records and books of account of, and visit the properties of,
Borrower and to discuss the affairs, finances and accounts of Borrower with the
independent accountants of Borrower.
Section VI.6 Compliance With Environmental Laws. Comply in
all material respects with all applicable Environmental Laws and immediately pay
or cause to be paid all costs and
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expenses incurred in connection with such compliance, except to the extent there
is a Good Faith Contest.
Section VI.7 Payment of Costs. Pay all costs and expenses
required for the satisfaction of the conditions of this Agreement.
Section VI.8 Maintenance of Properties. Do all things
reasonably necessary to maintain, preserve, protect and keep its and its
Affiliates' properties in good repair, working order and condition.
Section VI.9 Reporting and Miscellaneous Document
Requirements. Furnish directly to each of the Banks:
(1) Annual Financial Statements. As soon as available and in
any event within ninety (90) days after the end of each Fiscal Year, the VRT
Consolidated Financial Statements as of the end of and for such Fiscal Year, in
reasonable detail and stating in comparative form the respective figures for the
corresponding date and period in the prior Fiscal Year and audited by Borrower's
Accountants;
(2) Quarterly Financial Statements. As soon as available and
in any event within forty-five (45) days after the end of each calendar quarter
(other than the last quarter of the Fiscal Year), the unaudited VRT Consolidated
Financial Statements as of the end of and for such calendar quarter, in
reasonable detail and stating in comparative form the respective figures for the
corresponding date and period in the prior Fiscal Year;
(3) Certificate of No Default and Financial Compliance.
Within fifty (50) days after the end of each of the first three quarters of each
Fiscal Year and within ninety-five (95) days after the end of each Fiscal Year,
a certificate of the chief financial officer or treasurer of General Partner (a)
stating that, to the best of his or her knowledge, no Default or Event of
Default has occurred and is continuing, or if a Default or Event of Default has
occurred and is continuing, specifying the nature thereof and the action which
is proposed to be taken with respect thereto; (b) stating that the covenants
contained in Sections 7.02 and 7.03 and in Article VIII have been complied with
(or specifying those that have not been complied with) and including
computations demonstrating such compliance (or non-compliance); (c) setting
forth the details by property (or by pool of properties where the pool of
properties secures a particular loan) of all items comprising Total Outstanding
Indebtedness (including amount, maturity, interest rate and amortization
requirements), Capitalization Value, Secured Indebtedness, Combined EBITDA,
Unencumbered Combined EBITDA, Interest Expense, Unsecured Interest Expense and
Unsecured Indebtedness; and (d) only at the end of each Fiscal Year stating
Borrower's taxable income;
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(4) Certificate of Borrower's Accountants. Simultaneously
with the delivery of the annual financial statements required by paragraph (1)
of this Section, (a) a statement of Borrower's Accountants who audited such
financial statements comparing the computations set forth in the financial
compliance certificate required by paragraphs (3)(b) and (d) of this Section to
the audited financial statements required by paragraph (1) of this Section and
(b) when the audited financial statements required by paragraph (1) of this
Section have a qualified auditor's opinion, a statement of Borrower's
Accountants who audited such financial statements of whether any Default or
Event of Default has occurred and is continuing;
(5) Notice of Litigation. Promptly after the commencement and
knowledge thereof, notice of all actions, suits, and proceedings before any
court or arbitrator, affecting Borrower or General Partner which, if determined
adversely to Borrower or General Partner is likely to result in a Material
Adverse Change and which would be required to be reported in Borrower's or
General Partner's SEC Reports;
(6) Notices of Defaults and Events of Default. As soon as
possible and in any event within ten (10) days after Borrower becomes aware of
the occurrence of a material Default or any Event of Default a written notice
setting forth the details of such Default or Event of Default and the action
which is proposed to be taken with respect thereto;
(7) Sales or Acquisitions of Assets. Promptly after the
occurrence thereof, written notice of any Disposition or acquisition of assets
(other than acquisitions or Dispositions of investments such as certificates of
deposit, Treasury securities and money market deposits in the ordinary course of
Borrower's cash management) in excess of Fifty Million Dollars ($50,000,000)
together with, in the case of any acquisition of such an asset, copies of the
agreements governing the acquisition and historical financial information and
Borrower's projections with respect to the property acquired;
(8) Material Adverse Change. As soon as is practicable and in
any event within five (5) days after knowledge of the occurrence of any event or
circumstance which is likely to result in or has resulted in a Material Adverse
Change and which would be required to be reported in General Partner's SEC
Reports, written notice thereof;
(9) Bankruptcy of Tenants. Promptly after becoming aware of
the same, written notice of the bankruptcy, insolvency or cessation of
operations of any tenant in any property of Borrower or in which Borrower has an
interest to which four percent (4%) or more of aggregate minimum rent payable to
Borrower directly or through its Consolidated Businesses or UJVs is
attributable;
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(10) Offices. Thirty (30) days' prior written notice of any
change in the chief executive office or principal place of business of Borrower;
(11) Environmental and Other Notices. As soon as possible and
in any event within thirty (30) days after receipt, copies of all Environmental
Notices received by Borrower which are not received in the ordinary course of
business and which relate to a previously undisclosed situation which is likely
to result in a Material Adverse Change;
(12) Insurance Coverage. Promptly, such information
concerning Borrower's insurance coverage as Administrative Agent may reasonably
request;
(13) Proxy Statements, Etc. Promptly after the sending or
filing thereof, copies of all proxy statements, financial statements and reports
which Borrower or its Material Affiliates sends to its shareholders, and copies
of all regular, periodic and special reports, and all registration statements
which Borrower or its Material Affiliates files with the Securities and Exchange
Commission or any Governmental Authority which may be substituted therefor, or
with any national securities exchange;
(14) Rent Rolls. As soon as available and in any event within
ninety (90) days after the end of each Fiscal Year, a rent roll, tenant sales
report and operating statement for each property directly or indirectly owned in
whole or in part by Borrower;
(15) Capital Expenditures. As soon as available and in any
event within ninety (90) days after the end of each Fiscal Year, a schedule of
such Fiscal Year's capital expenditures and a budget for the next Fiscal Year's
planned capital expenditures for each property directly or indirectly owned in
whole or in part by Borrower;
(16) Change in Borrower's Credit Rating. Within two (2)
Banking Days after any change in Borrower's Credit Rating, written notice of
such change; and
(17) General Information. Promptly, such other information
respecting the condition or operations, financial or otherwise, of Borrower or
any properties of Borrower as Administrative Agent may from time to time
reasonably request.
Section 6.10 Management. At all times, cause Borrower or its
Affiliates to provide property management and leasing services for at least
seventy-five percent (75%) of the total square footage of the properties then
owned, directly or indirectly, in whole or in part by Borrower.
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ARTICLE VII. NEGATIVE COVENANTS
So long as any of the Notes shall remain unpaid, or the Loan
Commitments remain in effect, or any other amount is owing by Borrower to
Administrative Agent or any Bank hereunder or under any other Loan Document,
Borrower shall not do any or all of the following:
Section VII.1 Mergers Etc. Merge or consolidate with (except
where Borrower is the surviving entity), or sell, assign, lease or otherwise
dispose of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) (or
enter into any agreement to do any of the foregoing).
Section VII.2 Investments. Make any loan or advance to any
Person or purchase or otherwise acquire any capital stock, assets, obligations
or other securities of, make any capital contribution to, or otherwise invest
in, or acquire any interest in, any Person (any such transaction, an
"Investment") if such Investment constitutes the acquisition of a minority
interest in a Person (a "Minority Interest") and the amount of such Investment,
together with the value of all other Minority Interests acquired after the
Closing Date contributing to Equity Value, would exceed fifteen percent (15%) of
Capitalization Value. A fifty percent (50%) beneficial interest in a Person, in
connection with which the holder thereof exercises joint control over such
Person with the holder(s) of the other fifty percent (50%) beneficial interest,
shall constitute a "Minority Interest" for purposes of this Section.
Section VII.3 Sale of Assets. Effect a Disposition of any of
its now owned or hereafter acquired assets (other than "margin stock" as defined
in Regulation U), including assets in which Borrower owns a beneficial interest
through its ownership of interests in joint ventures, aggregating more than
twenty five percent (25%) of Capitalization Value.
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ARTICLE VIII. FINANCIAL COVENANTS
So long as any of the Notes shall remain unpaid, or the Loan
Commitments remain in effect, or any other amount is owing by Borrower to
Administrative Agent or any Bank under this Agreement or under any other Loan
Document, Borrower shall not permit or suffer:
Section VIII.1 Equity Value. At any time, Equity Value to be
less than Six Hundred Million Dollars ($600,000,000); or
Section VIII.2 Relationship of Total Outstanding Indebtedness
to Capitalization Value. At any time, Total Outstanding Indebtedness to exceed
fifty five percent (55%) of Capitalization Value; or
Section VIII.3 Relationship of Secured Indebtedness to
Capitalization Value. At any time, Secured Indebtedness to exceed thirty percent
(30%) of Capitalization Value (it being understood that, for purposes of this
covenant, all margin debt on cash and cash equivalent securities shall be
excluded from Secured Indebtedness); or
Section VIII.4 Relationship of Combined EBITDA to Interest
Expense. At any time, the ratio of (1) Combined EBITDA to (2) Interest Expense,
each for the most recently ended calendar quarter, to be less than 2.00 to 1.00;
or
Section VIII.5 Relationship of Combined EBITDA to Total
Outstanding Indebtedness. At any time, the ratio (expressed as a percentage) of
(1) Combined EBITDA for the most recently ended calendar quarter, annualized
(i.e., multiplied by four (4), to (2) Total Outstanding Indebtedness as of the
end of such quarter, to be less than fifteen percent (15%); or
Section VIII.6 Unsecured Debt Yield. At any time, Unsecured
Debt Yield to be less than thirteen percent (13%).
Section VIII.7 Relationship of Combined EBITDA to Fixed
Charges. At any time, the ratio of Combined EBITDA to Fixed Charges, each for
the most recently ended calendar quarter, to be less than 1.80 to 1.00.
Section VIII.8 Relationship of Unencumbered Combined EBITDA
to Unsecured Interest Expense. At any time, the ratio of Unencumbered Combined
EBITDA to Unsecured Interest Expense, each for the most recently ended calendar
quarter, to be less than 1.50 to 1.00.
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ARTICLE IX. EVENTS OF DEFAULT
Section IX.1 Events of Default. Any of the following events
shall be an "Event of Default":
(1) If Borrower shall: fail to pay the principal of any Notes
as and when due; or fail to pay interest accruing on any Notes as and when due
and such failure to pay shall continue unremedied for five (5) days after the
due date of such amount; or fail to pay any fee or any other amount due under
this Agreement or any other Loan Document as and when due and such failure to
pay shall continue unremedied for two (2) days after notice by Administrative
Agent of such failure to pay; or
(2) If any representation or warranty made by Borrower or
General Partner in this Agreement or in any other Loan Document or which is
contained in any certificate, document, opinion, financial or other statement
furnished at any time under or in connection with a Loan Document shall prove to
have been incorrect in any material respect on or as of the date made; or
(3) If Borrower shall fail (a) to perform or observe any
term, covenant or agreement contained in Article VII or Article VIII; or (b) to
perform or observe any term, covenant or agreement contained in this Agreement
(other than obligations specifically referred to elsewhere in this Section 9.01)
and such failure shall remain unremedied for thirty (30) consecutive calendar
days after notice thereof; provided, however, that if any such default under
clause (b) above cannot by its nature be cured within such thirty (30) day grace
period and so long as Borrower shall have commenced cure within such thirty (30)
day grace period and shall, at all times thereafter, diligently prosecute the
same to completion, Borrower shall have an additional period to cure such
default; in no event, however, is the foregoing intended to effect an extension
of the Maturity Date; or
(4) If Borrower or General Partner shall fail (a) to pay any
Debt (other than the payment obligations described in paragraph (1) of this
Section) in an amount equal to or greater than Ten Million Dollars ($10,000,000)
when due (whether by scheduled maturity, required prepayment, acceleration,
demand, or otherwise) after the expiration of any applicable grace period, or
(b) to perform or observe any material term, covenant, or condition under any
agreement or instrument relating to any such Debt, when required to be performed
or observed, if the effect of such failure to perform or observe is to
accelerate, or to permit the acceleration of, after the giving of notice or the
lapse of time, or both (other than in cases where, in the judgment of the
Required Banks, meaningful discussions likely to result in (i) a waiver or cure
of the failure to perform or observe, or (ii) otherwise averting such
acceleration are in progress between Borrower and the obligee of such Debt), the
maturity of such
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Debt, or any such Debt shall be declared to be due and payable, or required to
be prepaid (other than by a regularly scheduled or otherwise required
prepayment), prior to the stated maturity thereof; or
(5) If any of Borrower, General Partner or any Affiliate of
Borrower to which One Hundred Million Dollars ($100,000,000) or more of
Capitalization Value is attributable, shall: (a) generally not, or be unable to,
or shall admit in writing its inability to, pay its debts as such debts become
due; or (b) make an assignment for the benefit of creditors, petition or apply
to any tribunal for the appointment of a custodian, receiver or trustee for it
or a substantial part of its assets; or (c) commence any proceeding under any
bankruptcy, reorganization, arrangement, readjustment of debt, dissolution or
liquidation law or statute of any jurisdiction, whether now or hereafter in
effect; or (d) have had any such petition or application filed or any such
proceeding shall have been commenced, against it, in which an adjudication or
appointment is made or order for relief is entered, or which petition,
application or proceeding remains undismissed or unstayed for a period of sixty
(60) days or more; or (e) be the subject of any proceeding under which all or a
substantial part of its assets may be subject to seizure, forfeiture or
divestiture; or (f) by any act or omission indicate its consent to, approval of
or acquiescence in any such petition, application or proceeding or order for
relief or the appointment of a custodian, receiver or trustee for all or any
substantial part of its property; or (g) suffer any such custodianship,
receivership or trusteeship for all or any substantial part of its property, to
continue undischarged for a period of sixty (60) days or more; or
(6) If one or more judgments, decrees or orders for the
payment of money in excess of Ten Million Dollars ($10,000,000) in the aggregate
shall be rendered against Borrower or General Partner, and any such judgments,
decrees or orders shall continue unsatisfied and in effect for a period of
thirty (30) consecutive days without being vacated, discharged, satisfied or
stayed or bonded pending appeal; or
(7) If any of the following events shall occur or exist with
respect to Borrower, General Partner, or any ERISA Affiliate: (a) any Prohibited
Transaction involving any Plan; (b) any Reportable Event with respect to any
Plan: (c) the filing under Section 4041 of ERISA of a notice of intent to
terminate any Plan or the termination of any Plan; (d) any event or circumstance
which might constitute grounds entitling the PBGC to institute proceedings under
Section 4042 of ERISA for the termination of, or for the appointment of a
trustee to administer, any Plan, or the institution by the PBGC of any such
proceedings; or (e) complete or partial withdrawal under Section 4201 or 4204 of
ERISA from a Multiemployer Plan or the reorganization, insolvency, or
termination of any Multiemployer
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Plan; and in each case above, if such event or conditions, if any, could in the
opinion of any Bank subject Borrower, General Partner or any ERISA Affiliate to
any tax, penalty, or other liability to a Plan, Multiemployer Plan, the PBGC or
otherwise (or any combination thereof) which in the aggregate exceeds or may
exceed Fifty Thousand Dollars ($50,000); or
(8) If at any time General Partner is not a qualified real
estate investment trust under Sections 856 through 860 of the Code or is not
listed on the New York Stock Exchange; or
(9) If at any time Borrower or General Partner constitutes
plan assets for ERISA purposes (within the meaning of C.F.R. Section
2510.3-101).
Section IX.2 Remedies. If any Event of Default shall occur
and be continuing, Administrative Agent shall, upon request of the Required
Banks, by notice to Borrower, (1) declare the unpaid balance of the Notes, all
interest thereon, and all other amounts payable under this Agreement to be
forthwith due and payable, whereupon such balance, all such interest, and all
such amounts due under this Agreement shall become and be forthwith due and
payable, without presentment, demand, protest, or further notice of any kind,
all of which are hereby expressly waived by Borrower; and/or (2) exercise any
remedies provided in any of the Loan Documents or by law.
ARTICLE X. ADMINISTRATIVE AGENT; RELATIONS AMONG BANKS
Section X.1 Appointment, Powers and Immunities of
Administrative Agent. Each Bank hereby irrevocably appoints and authorizes
Administrative Agent to act as its agent hereunder and under any other Loan
Document with such powers as are specifically delegated to Administrative Agent
by the terms of this Agreement and any other Loan Document, together with such
other powers as are reasonably incidental thereto. Administrative Agent shall
have no duties or responsibilities except those expressly set forth in this
Agreement and any other Loan Document or required by law, and shall not by
reason of this Agreement be a fiduciary or trustee for any Bank except to the
extent that Administrative Agent acts as an agent with respect to the receipt or
payment of funds (nor shall Administrative Agent have any fiduciary duty to
Borrower nor shall any Bank have any fiduciary duty to Borrower or to any other
Bank). Administrative Agent shall not be responsible to the Banks for any
recitals, statements, representations or warranties made by Borrower or any
officer, partner or official of Borrower or any other Person contained in this
Agreement or any other Loan Document, or in any certificate or other document or
instrument referred to or provided for in, or received by any of them under,
this Agreement or any other Loan Document, or for the value, legality, validity,
effectiveness, genuineness, enforceability or sufficiency of this
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Agreement or any other Loan Document or any other document or instrument
referred to or provided for herein or therein, for the perfection or priority of
any Lien securing the Obligations or for any failure by Borrower to perform any
of its obligations hereunder or thereunder. Administrative Agent may employ
agents and attorneys-in-fact and shall not be responsible, except as to money or
securities received by it or its authorized agents, for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it with
reasonable care. Neither Administrative Agent nor any of its directors,
officers, employees or agents shall be liable or responsible for any action
taken or omitted to be taken by it or them hereunder or under any other Loan
Document or in connection herewith or therewith, except for its or their own
gross negligence or willful misconduct. Borrower shall pay any fee agreed to by
Borrower and Administrative Agent with respect to Administrative Agent's
services hereunder.
Section X.2 Reliance by Administrative Agent. Administrative
Agent shall be entitled to rely upon any certification, notice or other
communication (including any thereof by telephone, telex, telegram or cable)
believed by it to be genuine and correct and to have been signed or sent by or
on behalf of the proper Person or Persons, and upon advice and statements of
legal counsel, independent accountants and other experts selected by
Administrative Agent. Administrative Agent may deem and treat each Bank as the
holder of the Loan made by it for all purposes hereof and shall not be required
to deal with any Person who has acquired a participation in any Loan or
participation from a Bank. As to any matters not expressly provided for by this
Agreement or any other Loan Document, Administrative Agent shall in all cases be
fully protected in acting, or in refraining from acting, hereunder in accordance
with instructions signed by the Required Banks, and such instructions of the
Required Banks and any action taken or failure to act pursuant thereto shall be
binding on all of the Banks and any other holder of all or any portion of any
Loan or participation.
Section X.3 Defaults. Administrative Agent shall not be
deemed to have knowledge of the occurrence of a Default or Event of Default
unless Administrative Agent has received notice from a Bank or Borrower
specifying such Default or Event of Default and stating that such notice is a
"Notice of Default." In the event that Administrative Agent receives such a
notice of the occurrence of a Default or Event of Default, Administrative Agent
shall give prompt notice thereof to the Banks. Administrative Agent, following
consultation with the Banks, shall (subject to Section 10.07) take such action
with respect to such Default or Event of Default which is continuing as shall be
directed by the Required Banks; provided that, unless and until Administrative
Agent shall have received such directions, Administrative Agent may take such
action, or refrain from taking such action, with respect to such Default or
Event of Default as
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it shall deem advisable in the best interest of the Banks; and provided further
that Administrative Agent shall not send a Notice of Default or acceleration to
Borrower without the approval of the Required Banks. In no event shall
Administrative Agent be required to take any such action which it determines to
be contrary to law.
Section X.4 Rights of Administrative Agent as a Bank. With
respect to its Loan Commitment and the Loan provided by it, Administrative Agent
in its capacity as a Bank hereunder shall have the same rights and powers
hereunder as any other Bank and may exercise the same as though it were not
acting as Administrative Agent, and the term "Bank" or "Banks" shall include
Administrative Agent in its capacity as a Bank. Administrative Agent and its
Affiliates may (without having to account therefor to any Bank) accept deposits
from, lend money to (on a secured or unsecured basis), and generally engage in
any kind of banking, trust or other business with Borrower (and any Affiliates
of Borrower) as if it were not acting as Administrative Agent.
Section X.5 Indemnification of Administrative Agent. Each
Bank agrees to indemnify Administrative Agent (to the extent not reimbursed
under Section 12.04 or under the applicable provisions of any other Loan
Document, but without limiting the obligations of Borrower under Section 12.04
or such provisions), for its Pro Rata Share of any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever which may be imposed
on, incurred by or asserted against Administrative Agent in any way relating to
or arising out of this Agreement, any other Loan Document or any other documents
contemplated by or referred to herein or the transactions contemplated hereby or
thereby (including, without limitation, the costs and expenses which Borrower is
obligated to pay under Section 12.04) or under the applicable provisions of any
other Loan Document or the enforcement of any of the terms hereof or thereof or
of any such other documents or instruments; provided that no Bank shall be
liable for (1) any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the party to be indemnified, (2) any loss of
principal or interest with respect to Administrative Agent's Loan or (3) any
loss suffered by Administrative Agent in connection with a swap or other
interest rate hedging arrangement entered into with Borrower.
Section X.6 Non-Reliance on Administrative Agent and Other
Banks. Each Bank agrees that it has, independently and without reliance on
Administrative Agent or any other Bank, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of
Borrower and the decision to enter into this Agreement and that it will,
independently and without reliance upon Administrative Agent or any other Bank,
and based on such documents and information as
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it shall deem appropriate at the time, continue to make its own analysis and
decisions in taking or not taking action under this Agreement or any other Loan
Document. Administrative Agent shall not be required to keep itself informed as
to the performance or observance by Borrower of this Agreement or any other Loan
Document or any other document referred to or provided for herein or therein or
to inspect the properties or books of Borrower. Except for notices, reports and
other documents and information expressly required to be furnished to the Banks
by Administrative Agent hereunder, Administrative Agent shall not have any duty
or responsibility to provide any Bank with any credit or other information
concerning the affairs, financial condition or business of Borrower (or any
Affiliate of Borrower) which may come into the possession of Administrative
Agent or any of its Affiliates. Administrative Agent shall not be required to
file this Agreement, any other Loan Document or any document or instrument
referred to herein or therein, for record or give notice of this Agreement, any
other Loan Document or any document or instrument referred to herein or therein,
to anyone.
Section X.7 Failure of Administrative Agent to Act. Except
for action expressly required of Administrative Agent hereunder, Administrative
Agent shall in all cases be fully justified in failing or refusing to act
hereunder unless it shall have received further assurances (which may include
cash collateral) of the indemnification obligations of the Banks under Section
10.05 in respect of any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action.
Section X.8 Resignation or Removal of Administrative Agent.
Administrative Agent shall have the right to resign at any time. Administrative
Agent may be removed at any time with cause by the Required Banks, provided that
Borrower and the other Banks shall be promptly notified thereof. Upon any such
removal or resignation, the Required Banks shall have the right to appoint a
successor Administrative Agent which successor Administrative Agent, so long as
it is reasonably acceptable to the Required Banks, shall be that Bank then
having the greatest Loan Commitment. If no successor Administrative Agent shall
have been so appointed by the Required Banks and shall have accepted such
appointment within thirty (30) days after the Required Banks' removal of the
retiring Administrative Agent, then the retiring Administrative Agent may, on
behalf of the Banks, appoint a successor Administrative Agent, which shall be
one of the Banks. The Required Banks or the retiring Administrative Agent, as
the case may be, shall upon the appointment of a successor Administrative Agent
promptly so notify Borrower and the other Banks. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and
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the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder. After any retiring Administrative Agent's removal
hereunder as Administrative Agent, the provisions of this Article X shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as Administrative Agent.
Section X.9 Amendments Concerning Agency Function.
Notwithstanding anything to the contrary contained in this Agreement,
Administrative Agent shall not be bound by any waiver, amendment, supplement or
modification of this Agreement or any other Loan Document which affects its
duties, rights, and/or function hereunder or thereunder unless it shall have
given its prior written consent thereto.
Section 10.10 Liability of Administrative Agent.
Administrative Agent shall not have any liabilities or responsibilities to
Borrower on account of the failure of any Bank to perform its obligations
hereunder or to any Bank on account of the failure of Borrower to perform its
obligations hereunder or under any other Loan Document.
Section 10.11 Transfer of Agency Function. Without the
consent of Borrower or any Bank, Administrative Agent may at any time or from
time to time transfer its functions as Administrative Agent hereunder to any of
its offices wherever located in the United States, provided that Administrative
Agent shall promptly notify Borrower and the Banks thereof.
Section 10.12 Non-Receipt of Funds by Administrative Agent.
Unless Administrative Agent shall have received notice from a Bank or Borrower
(either one as appropriate being the "Payor") prior to the date on which such
Bank is to make payment hereunder to Administrative Agent of the proceeds of a
Loan or Borrower is to make payment to Administrative Agent, as the case may be
(either such payment being a "Required Payment"), which notice shall be
effective upon receipt, that the Payor will not make the Required Payment in
full to Administrative Agent, Administrative Agent may assume that the Required
Payment has been made in full to Administrative Agent on such date, and
Administrative Agent in its sole discretion may, but shall not be obligated to,
in reliance upon such assumption, make the amount thereof available to the
intended recipient on such date. If and to the extent the Payor shall not have
in fact so made the Required Payment in full to Administrative Agent, the
recipient of such payment shall repay to Administrative Agent forthwith on
demand such amount made available to it together with interest thereon, for each
day from the date such amount was so made available by Administrative Agent
until the date Administrative Agent recovers such amount, at the customary rate
set by Administrative Agent for the correction of errors among Banks for three
(3) Banking Days and thereafter at the Base Rate.
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Section 10.13 Withholding Taxes. Each Bank represents at all
times during the term of this Agreement that it is entitled to receive any
payments to be made to it hereunder without the withholding of any tax and will
furnish to Administrative Agent and Borrower such forms, certifications,
statements and other documents as Administrative Agent or Borrower may request
from time to time to evidence such Bank's exemption from the withholding of any
tax imposed by any jurisdiction or to enable Administrative Agent or Borrower to
comply with any applicable Laws or regulations relating thereto. Without
limiting the effect of the foregoing, if any Bank is not created or organized
under the laws of the United States of America or any state thereof, such Bank
will furnish to Administrative Agent and Borrower a United States Internal
Revenue Service Form 4224 in respect of all payments to be made to such Bank by
Borrower or Administrative Agent under this Agreement or any other Loan Document
or a United States Internal Revenue Service Form 1001 establishing such Bank's
complete exemption from United States withholding tax in respect of payments to
be made to such Bank by Borrower or Administrative Agent under this Agreement or
any other Loan Document, or such other forms, certifications, statements or
documents, duly executed and completed by such Bank as evidence of such Bank's
exemption from the withholding of U.S. tax with respect thereto. Administrative
Agent shall not be obligated to make any payments hereunder to such Bank in
respect of any Loan or participation or such Bank's Loan Commitment or
obligation to purchase participations until such Bank shall have furnished to
Administrative Agent and Borrower the requested form, certification, statement
or document.
Section 10.14 Minimum Commitment by UBS. Subsequent to the
Closing Date, UBS hereby agrees to maintain a Loan Commitment in an amount no
less than Forty Million Dollars ($40,000,000) for so long as no Event of Default
exists under this Agreement, and further agrees to hold and not to participate
or assign any of such amount other than an assignment to a Federal Reserve Bank
or to the Parent or a majority-owned subsidiary of UBS.
Section 10.15 Pro Rata Treatment. Except to the extent
otherwise provided, (1) each advance of proceeds of the Ratable Loans shall be
made by the Banks, (2) each reduction of the amount of the Total Loan Commitment
under Section 2.15 shall be applied to the Loan Commitments of the Banks and (3)
each payment of the commitment fee accruing under Section 2.07(a) shall be made
for the account of the Banks, ratably according to the amounts of their
respective Loan Commitments.
Section 10.16 Sharing of Payments Among Banks. If a Bank
shall obtain payment of any principal of or interest on any Loan made by it
through the exercise of any right of setoff, banker's lien, counterclaim, or by
any other means (including
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direct payment), and such payment results in such Bank receiving a greater
payment than it would have been entitled to had such payment been paid directly
to Administrative Agent for disbursement to the Banks, then such Bank shall
promptly purchase for cash from the other Banks participations in the Loans made
by the other Banks in such amounts, and make such other adjustments from time to
time as shall be equitable to the end that all the Banks shall share ratably the
benefit of such payment. To such end the Banks shall make appropriate
adjustments among themselves (by the resale of participations sold or otherwise)
if such payment is rescinded or must otherwise be restored. Borrower agrees that
any Bank so purchasing a participation in the Loans made by other Banks may
exercise all rights of setoff, banker's lien, counterclaim or similar rights
with respect to such participation. Nothing contained herein shall require any
Bank to exercise any such right or shall affect the right of any Bank to
exercise, and retain the benefits of exercising, any such right with respect to
any other indebtedness of Borrower.
Section 10.17 Possession of Documents. Each Bank shall keep
possession of its own Ratable Loan Note. Administrative Agent shall hold all the
other Loan Documents and related documents in its possession and maintain
separate records and accounts with respect thereto, and shall permit the Banks
and their representatives access at all reasonable times to inspect such Loan
Documents, related documents, records and accounts.
ARTICLE XI. NATURE OF OBLIGATIONS
Section XI.1 Absolute and Unconditional Obligations. Borrower
and General Partner acknowledge and agree that their obligations and liabilities
under this Agreement and under the other Loan Documents shall be absolute and
unconditional irrespective of: (1) any lack of validity or enforceability of any
of the Obligations, any Loan Documents, or any agreement or instrument relating
thereto; (2) any change in the time, manner or place of payment of, or in any
other term in respect of, all or any of the Obligations, or any other amendment
or waiver of or consent to any departure from any Loan Documents or any other
documents or instruments executed in connection with or related to the
Obligations; (3) any exchange or release of any collateral, if any, or of any
other Person from all or any of the Obligations; or (4) any other circumstances
which might otherwise constitute a defense available to, or a discharge of,
Borrower, General Partner or any other Person in respect of the Obligations.
The obligations and liabilities of Borrower and General
Partner under this Agreement and other Loan Documents shall not be conditioned
or contingent upon the pursuit by any Bank or any other Person at any time of
any right or remedy against Borrower, General Partner or any other Person which
may
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be or become liable in respect of all or any part of the Obligations or against
any collateral or security or guarantee therefor or right of setoff with respect
thereto.
Section XI.2 Non-Recourse to VRT Principals. This Agreement
and the obligations hereunder and under the Loan Documents are fully recourse to
Borrower and General Partner. Notwithstanding anything to the contrary contained
in this Agreement, in any of the other Loan Documents, or in any other
instruments, certificates, documents or agreements executed in connection with
the Loans (all of the foregoing, for purposes of this Section, hereinafter
referred to, individually and collectively, as the "Relevant Documents"), no
recourse under or upon any Obligation, representation, warranty, promise or
other matter whatsoever shall be had against any of the VRT Principals, and each
Bank expressly waives and releases, on behalf of itself and its successors and
assigns, all right to assert any liability whatsoever under or with respect to
the Relevant Documents against, or to satisfy any claim or obligation arising
thereunder against, any of the VRT Principals or out of any assets of the VRT
Principals, provided, however, that nothing in this Section shall be deemed to:
(1) release Borrower or General Partner from any personal liability pursuant to,
or from any of its respective obligations under, the Relevant Documents, or from
personal liability for its fraudulent actions or fraudulent omissions; (2)
release any VRT Principals from personal liability for its or his own fraudulent
actions or fraudulent omissions; (3) constitute a waiver of any obligation
evidenced or secured by, or contained in, the Relevant Documents or affect in
any way the validity or enforceability of the Relevant Documents; or (4) limit
the right of Administrative Agent and/or the Banks to proceed against or realize
upon any collateral hereafter given for the Loans or any and all of the assets
of Borrower or General Partner (notwithstanding the fact that the VRT Principals
have an ownership interest in Borrower or General Partner and, thereby, an
interest in the assets of Borrower or General Partner) or to name Borrower or
General Partner (or, to the extent that the same are required by applicable law
or are determined by a court to be necessary parties in connection with an
action or suit against Borrower, General Partner or any collateral hereafter
given for the Loans, any of the VRT Principals) as a party defendant in, and to
enforce against any collateral hereafter given for the Loans and/or assets of
Borrower or General Partner any judgment obtained by Administrative Agent and/or
the Banks with respect to, any action or suit under the Relevant Documents so
long as no judgment shall be taken (except to the extent taking a judgment is
required by applicable law or determined by a court to be necessary to preserve
Administrative Agent's and/or Banks' rights against any collateral hereafter
given for the Loans or Borrower or General Partner, but not otherwise) or shall
be enforced against the VRT Principals or their assets.
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ARTICLE XII. MISCELLANEOUS
Section XII.1 Binding Effect of Request for Advance. Borrower
agrees that, by its acceptance of any advance of proceeds of the Loans under
this Agreement, it shall be bound in all respects by the request for advance
submitted on its behalf in connection therewith with the same force and effect
as if Borrower had itself executed and submitted the request for advance and
whether or not the request for advance is executed and/or submitted by an
authorized person.
Section XII.2 Amendments and Waivers. No amendment or
material waiver of any provision of this Agreement or any other Loan Document
nor consent to any material departure by Borrower therefrom, shall in any event
be effective unless the same shall be in writing and signed by the Required
Banks and, solely for purposes of its acknowledgment thereof, Administrative
Agent, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given, provided, however, that
no amendment, waiver or consent shall, unless in writing and signed by all the
Banks do any of the following: (1) reduce the principal of, or interest on, the
Notes or any fees due hereunder or any other amount due hereunder or under any
Loan Document; (2) postpone any date fixed for any payment of principal of, or
interest on, the Notes or any fees due hereunder or under any Loan Document; (3)
change the definition of Required Banks; (4) amend this Section or any other
provision requiring the consent of all the Banks; or (5) waive any default under
paragraph (5) of Section 9.01. Any advance of proceeds of the Loans made prior
to or without the fulfillment by Borrower of all of the conditions precedent
thereto, whether or not known to Administrative Agent and the Banks, shall not
constitute a waiver of the requirement that all conditions, including the
non-performed conditions, shall be required with respect to all future advances.
No failure on the part of Administrative Agent or any Bank to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver thereof or
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law. 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 thing as to which such
determination, approval, consent or disapproval is requested and (iii) shall
include Administrative Agent's recommended course of action or determination in
respect thereof. Each Bank shall reply promptly, but in any event within fifteen
(15) Banking Days (or five (5) Banking Days with respect to any decision to
accelerate or stop acceleration of the Loan) after receipt of the request
therefor by Administrative Agent (the "Bank Reply Period"). Unless a Bank shall
give written notice to Administrative Agent that it objects to the
recommendation or
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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 or consented to such recommendation or determination.
Section XII.3 Usury. Anything herein to the contrary
notwithstanding, the obligations of Borrower under this Agreement and the Notes
shall be subject to the limitation that payments of interest shall not be
required to the extent that receipt thereof would be contrary to provisions of
law applicable to a Bank limiting rates of interest which may be charged or
collected by such Bank.
Section XII.4 Expenses; Indemnification. Borrower agrees to
reimburse Administrative Agent on demand for all costs, expenses, and charges
(including, without limitation, all reasonable fees and charges of engineers,
appraisers and external legal counsel) incurred by Administrative Agent in
connection with the Loans and to reimburse each of the Banks for reasonable
legal costs, expenses and charges incurred by each of the Banks in connection
with the performance or enforcement of this Agreement, the Notes, or any other
Loan Documents; provided, however, that Borrower is not responsible for costs,
expenses and charges incurred by the Bank Parties in connection with the
administration or syndication of the Loans (other than any administration fee
payable to Administrative Agent). Borrower agrees to indemnify Administrative
Agent and each Bank and their respective directors, officers, employees and
agents from, and hold each of them harmless against, any and all losses,
liabilities, claims, damages or expenses incurred by any of them arising out of
or by reason of (x) any claims by brokers due to acts or omissions by Borrower,
or (y) any investigation or litigation or other proceedings (including any
threatened investigation or litigation or other proceedings) relating to any
actual or proposed use by Borrower of the proceeds of the Loans, including
without limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation or litigation or other proceedings (but
excluding any such losses, liabilities, claims, damages or expenses incurred by
reason of the gross negligence or willful misconduct of the Person to be
indemnified).
The obligations of Borrower under this Section shall survive
the repayment of all amounts due under or in connection with any of the Loan
Documents and the termination of the Loans.
Section XII.5 Assignment; Participation. This Agreement shall
be binding upon, and shall inure to the benefit of, Borrower, Administrative
Agent, the Banks and their respective successors and permitted assigns. Borrower
may not assign or transfer its rights or obligations hereunder.
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Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its Loan (the
"Participations") with the consent of Administrative Agent, which consent shall
not be unreasonably withheld or delayed. In the event of any such grant by a
Bank of a participating interest to a Participant, whether or not Borrower or
Administrative Agent was given notice, such Bank shall remain responsible for
the performance of its obligations hereunder, and Borrower and Administrative
Agent shall continue to deal solely and directly with such Bank in connection
with such Bank's rights and obligations hereunder. Any agreement pursuant to
which any Bank may grant such a participating interest shall provide that such
Bank shall retain the sole right and responsibility to enforce the obligations
of Borrower hereunder and under any other Loan Document including, without
limitation, the right to approve any amendment, modification or waiver of any
provision of this Agreement or any other Loan Document; provided that such
participation agreement may provide that such Bank will not agree to any
modification, amendment or waiver of this Agreement described in clauses (1)
through (5) of Section 12.02 without the consent of the Participant.
Subject to the provisions of Section 10.14, any Bank may at
any time assign to any bank or other institution with the acknowledgment of
Administrative Agent and the consent of UBS and, provided there exists no Event
of Default, of Borrower, which consents shall not be unreasonably withheld or
delayed (such assignee, a "Consented Assignee"), or to one or more banks or
other institutions which are majority owned subsidiaries of a Bank or to the
Parent of a Bank (each Consented Assignee or subsidiary bank or institution, an
"Assignee") all, or a proportionate part of all, of its rights and obligations
under this Agreement and its Note, and such Assignee shall assume rights and
obligations, pursuant to an Assignment and Assumption Agreement executed by such
Assignee and the assigning Bank, provided that, in each case, after giving
effect to such assignment the Assignee's Loan Commitment and, in the case of a
partial assignment, the assigning Bank's Loan Commitment, each will be equal to
or greater than Fifteen Million Dollars ($15,000,000). Upon (i) execution and
delivery of such instrument, (ii) payment by such Assignee to the Bank of an
amount equal to the purchase price agreed between the Bank and such Assignee and
(iii) payment by such Assignee to Administrative Agent of a fee, for
Administrative Agent's own account, in the amount of Two Thousand Five Hundred
Dollars ($2,500), such Assignee shall be a Bank Party to this Agreement and
shall have all the rights and obligations of a Bank as set forth in such
Assignment and Assumption Agreement, and the assigning Bank shall be released
from its obligations hereunder to a corresponding extent, and no further consent
or action by any party shall be required. Upon the consummation of any
assignment pursuant to this paragraph, substitute Ratable Loan Notes shall be
issued to the assigning Bank (in the case of a
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partial assignment) and Assignee by Borrower, in exchange for the return of the
original Ratable Loan Note of the assigning Bank. The obligations evidenced by
such substitute notes shall constitute "Obligations" for all purposes of this
Agreement and the other Loan Documents. If the Assignee is not incorporated
under the laws of the United States of America or a state thereof, it shall,
prior to the first date on which interest or fees are payable hereunder for its
account, deliver to Borrower and Administrative Agent certification as to
exemption from deduction or withholding of any United States federal income
taxes in accordance with Section 10.13. Each Assignee shall be deemed to have
made the representations contained in, and shall be bound by the provisions of,
Section 10.13.
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.
Borrower recognizes that in connection with a Bank's selling
of Participations or making of assignments, any or all documentation, financial
statements and other data, or copies thereof, relevant to Borrower or the Loans
may be exhibited to and retained by any such Participant or assignee or
prospective Participant or assignee. In connection with a Bank's delivery of any
financial statements and appraisals to any such Participant or assignee or
prospective Participant or assignee, such Bank shall also indicate that the same
are delivered on a confidential basis. Borrower agrees to provide all assistance
reasonably requested by a Bank to enable such Bank to sell Participations or
make assignments of its Loan as permitted by this Section. Each Bank agrees to
provide Borrower with notice of all Participations sold by such Bank.
Section XII.6 Documentation Satisfactory. All documentation
required from or to be submitted on behalf of Borrower in connection with this
Agreement and the documents relating hereto shall be subject to the prior
approval of, and be satisfactory in form and substance to, Administrative Agent,
its counsel and, where specifically provided herein, the Banks. In addition, the
persons or parties responsible for the execution and delivery of, and
signatories to, all of such documentation, shall be acceptable to, and subject
to the approval of, Administrative Agent and its counsel and the Banks.
Section XII.7 Notices. Unless the party to be notified
otherwise notifies the other parties in writing as provided in this Section, and
except as otherwise provided in this Agreement, notices shall be given to
Administrative Agent by telephone, confirmed by writing, and to the Banks and to
Borrower and General Partner by ordinary mail or overnight courier or telecopy,
receipt confirmed, addressed to such party at its address on the signature page
of this Agreement. Notices shall
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<PAGE> 67
be effective: (1) if by telephone, at the time of such telephone conversation,
(2) if given by mail, three (3) days after mailing; (3) if given by overnight
courier, upon receipt; and (4) if given by telecopy, upon receipt.
Section XII.8 Setoff. To the extent permitted or not
expressly prohibited by applicable law, Borrower and General Partner agree that,
in addition to (and without limitation of) any right of setoff, bankers' lien or
counterclaim a Bank may otherwise have, each Bank shall be entitled, at its
option, to offset balances (general or special, time or demand, provisional or
final) held by it for the account of Borrower or General Partner at any of such
Bank's offices, in Dollars or in any other currency, against any amount payable
by Borrower or General Partner to such Bank under this Agreement or such Bank's
Note, or any other Loan Document which is not paid when due (regardless of
whether such balances are then due to Borrower or General Partner), in which
case it shall promptly notify Borrower, General Partner and Administrative Agent
thereof; provided that such Bank's failure to give such notice shall not affect
the validity thereof. Payments by Borrower or General Partner hereunder or under
the other Loan Documents shall be made without setoff or counterclaim.
Section XII.9 Table of Contents; Headings. Any table of
contents and the headings and captions hereunder are for convenience only and
shall not affect the interpretation or construction of this Agreement.
Section 12.10 Severability. The provisions of this Agreement
are intended to be severable. If for any reason any provision of this Agreement
shall be held invalid or unenforceable in whole or in part in any jurisdiction,
such provision shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without in any manner affecting the validity
or enforceability thereof in any other jurisdiction or the remaining provisions
hereof in any jurisdiction.
Section 12.11 Counterparts. This Agreement may be executed in
any number of counterparts, all of which taken together shall constitute one and
the same instrument, and any party hereto may execute this Agreement by signing
any such counterpart.
Section 12.12 Integration. The Loan Documents set forth the
entire agreement among the parties hereto relating to the transactions
contemplated thereby (except with respect to agreements relating solely to
compensation, consideration and the coordinated syndication of the Loan) and
supersede any prior oral or written statements or agreements with respect to
such transactions.
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<PAGE> 68
Section 12.13 Governing Law. This Agreement shall be governed
by, and interpreted and construed in accordance with, the laws of the State of
New York.
Section 12.14 Waivers. To the extent permitted or not
expressly prohibited by applicable law, in connection with the obligations and
liabilities as aforesaid, Borrower and General Partner hereby waive: (1)
promptness and diligence; (2) notice of any actions taken by any Bank Party
under this Agreement, any other Loan Document or any other agreement or
instrument relating thereto except to the extent otherwise provided herein; (3)
all other notices, demands and protests, and all other formalities of every kind
in connection with the enforcement of the Obligations, the omission of or delay
in which, but for the provisions of this Section, might constitute grounds for
relieving Borrower or General Partner of their obligations hereunder; (4) any
requirement that any Bank Party protect, secure, perfect or insure any Lien on
any collateral or exhaust any right or take any action against Borrower, General
Partner or any other Person or any collateral; (5) any right or claim of right
to cause a marshalling of the assets of Borrower or General Partner; and (6) all
rights of subrogation or contribution, whether arising by contract or operation
of law (including, without limitation, any such right arising under the Federal
Bankruptcy Code) or otherwise by reason of payment by Borrower or General
Partner, either jointly or severally, pursuant to this Agreement or other Loan
Documents.
Section 12.15 Jurisdiction; Immunities. Borrower, General
Partner, Administrative Agent and each Bank hereby irrevocably submit to the
jurisdiction of any New York State or United States Federal court sitting in New
York City over any action or proceeding arising out of or relating to this
Agreement, the Notes or any other Loan Document. Borrower, General Partner,
Administrative Agent, and each Bank irrevocably agree that all claims in respect
of such action or proceeding may be heard and determined in such New York State
or United States Federal court. Borrower, General Partner, Administrative Agent,
and each Bank irrevocably consent to the service of any and all process in any
such action or proceeding by the mailing of copies of such process to Borrower,
General Partner, Administrative Agent or each Bank, as the case may be, at the
addresses specified herein. Borrower, General Partner, Administrative Agent and
each Bank agree that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Borrower, General Partner, Administrative
Agent and each Bank further waive any objection to venue in the State of New
York and any objection to an action or proceeding in the State of New York on
the basis of forum non conveniens. Borrower, General Partner, Administrative
Agent and each Bank agree that any action or proceeding brought against
Borrower, General Partner, Administrative Agent or any Bank, as
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<PAGE> 69
the case may be, shall be brought only in a New York State court sitting in New
York City or a United States Federal court sitting in New York City, to the
extent permitted or not expressly prohibited by applicable law.
Nothing in this Section shall affect the right of Borrower,
General Partner, Administrative Agent or any Bank to serve legal process in any
other manner permitted by law.
To the extent that Borrower, General Partner, Administrative
Agent or any Bank have or hereafter may acquire any immunity from jurisdiction
of any court or from any legal process (whether from service or notice,
attachment prior to judgment, attachment in aid of execution, execution or
otherwise) with respect to itself or its property, Borrower, General Partner,
Administrative Agent and each Bank hereby irrevocably waive such immunity in
respect of its obligations under this Agreement, the Notes and any other Loan
Document.
BORROWER, GENERAL PARTNER, ADMINISTRATIVE AGENT AND EACH BANK
WAIVE ANY RIGHT EACH SUCH PARTY MAY HAVE TO JURY TRIAL IN CONNECTION WITH ANY
SUIT, ACTION OR PROCEEDING BROUGHT WITH RESPECT TO THIS AGREEMENT, THE NOTES OR
THE LOAN. IN ADDITION, BORROWER AND GENERAL PARTNER HEREBY WAIVE, IN CONNECTION
WITH ANY SUIT, ACTION OR PROCEEDING BROUGHT BY ADMINISTRATIVE AGENT OR THE BANKS
WITH RESPECT TO THE NOTES, ANY RIGHT BORROWER OR GENERAL PARTNER MAY HAVE TO (1)
TO THE EXTENT PERMITTED OR NOT EXPRESSLY PROHIBITED BY APPLICABLE LAW, INTERPOSE
ANY COUNTERCLAIM THEREIN (OTHER THAN A COUNTERCLAIM THAT IF NOT BROUGHT IN THE
SUIT, ACTION OR PROCEEDING BROUGHT BY ADMINISTRATIVE AGENT OR THE BANKS COULD
NOT BE BROUGHT IN A SEPARATE SUIT, ACTION OR PROCEEDING OR WOULD BE SUBJECT TO
DISMISSAL OR SIMILAR DISPOSITION FOR FAILURE TO HAVE BEEN ASSERTED IN SUCH SUIT,
ACTION OR PROCEEDING BROUGHT BY ADMINISTRATIVE AGENT OR THE BANKS) OR (2) TO THE
EXTENT PERMITTED OR NOT EXPRESSLY PROHIBITED BY APPLICABLE LAW, HAVE THE SAME
CONSOLIDATED WITH ANY OTHER OR SEPARATE SUIT, ACTION OR PROCEEDING. NOTHING
HEREIN CONTAINED SHALL PREVENT OR PROHIBIT BORROWER OR GENERAL PARTNER FROM
INSTITUTING OR MAINTAINING A SEPARATE ACTION AGAINST ADMINISTRATIVE AGENT OR THE
BANKS WITH RESPECT TO ANY ASSERTED CLAIM.
Section 12.16 Designated Lender. Any Bank (other than a Bank
which is such solely because it is a Designated Lender) (each, a "Designating
Lender") may at any time designate one (1) Designated Lender to fund Bid Rate
Loans on behalf of such Designating Lender subject to the terms of this Section
and the provisions in Section 12.05 shall not apply to such designation. No Bank
may designate more than one (1) Designated Lender. The parties to each such
designation shall execute and deliver to Administrative Agent for its acceptance
a Designation Agreement. Upon such receipt of an appropriately completed
Designation Agreement executed by a Designating Lender and a
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<PAGE> 70
designee representing that it is a Designated Lender, Administrative Agent will
accept such Designation Agreement and give prompt notice thereto to Borrower,
whereupon, (i) from and after the "Effective Date" specified in the Designation
Agreement, the Designated Lender shall become a party to this Agreement with a
right to make Bid Rate Loans on behalf of its Designating Lender pursuant to
Section 2.02 after Borrower has accepted the Bid Rate Quote of the Designating
Lender and (ii) the Designated Lender shall not be required to make payments
with respect to any obligations in this Agreement except to the extent of excess
cash flow of such Designated Lender which is not otherwise required to repay
obligations of such Designated Lender which are then due and payable; provided,
however, that regardless of such designation and assumption by the Designated
Lender, the Designating Lender shall be and remain obligated to Borrower,
Administrative Agent and the Banks for each and every of the obligations of the
Designating Lender and its related Designated Lender with respect to this
Agreement, including, without limitation, any indemnification obligations under
Section 10.05. Each Designating Lender shall serve as the administrative agent
of its Designated Lender and shall on behalf of, and to the exclusion of, the
Designated Lender: (i) receive any and all payments made for the benefit of the
Designated Lender and (ii) give and receive all communications and notices and
take all actions hereunder, including, without limitation, votes, approvals,
waivers and consents under or relating to this Agreement and the other Loan
Documents. Any such notice, communication, vote, approval, waiver or consent
shall be signed by the Designating Lender as administrative agent for the
Designated Lender and shall not be signed by the Designated Lender on its own
behalf, but shall be binding on the Designated Lender to the same extent as if
actually signed by the Designated Lender. Borrower, Administrative Agent and the
Banks may rely thereon without any requirement that the Designated Lender sign
or acknowledge the same. No Designated Lender may assign or transfer all or any
portion of its interest hereunder or under any other Loan Document, other than
assignments to the Designating Lender which originally designated such
Designated Lender.
Section 12.17 No Bankruptcy Proceedings. Each of Borrower,
the Banks and Administrative Agent hereby agrees that it will not institute
against any Designated Lender or join any other Person in instituting against
any Designated Lender any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding under any federal or state bankruptcy or similar law, for
one (1) year and one (1) day after the payment in full of the latest maturing
commercial paper note issued by such Designated Lender.
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<PAGE> 71
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
VORNADO REALTY L.P., a
Delaware limited partnership
By: Vornado Realty Trust, a Maryland
real estate investment trust,
general partner
By /s/ Joseph Macnow
--------------------
Name: Joseph Macnow
Title: Vice President
VORNADO REALTY TRUST, a Maryland
real estate investment trust
By /s/ Joseph Macnow
--------------------
Name: Joseph Macnow
Title: Vice President
Address for Notices for both:
Park 80 West
Plaza II
Saddle Brook, New Jersey 07663
Attention: Steven Roth, Chairman
and
Joseph Macnow, Vice
President and Chief Financial Officer
Telephone: (201) 587-1000
Telecopy: (201) 587-0600
with copies to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Patricia A. Ceruzzi
and
Janet Geldzahler
Telephone: (212) 558-4000
Telecopy: (212) 558-3588
91
<PAGE> 72
UNION BANK OF SWITZERLAND
(New York Branch)
(as Bank and Administrative Agent)
By /s/ Joseph Bassil
------------------------
Name: Joseph Bassil
Title: Director
By /s/ Albert Rabil, III
------------------------
Name: Albert Rabil, III
Title: Managing Director
Address for Notices and Applicable
Lending Office for Base Rate Loan and
LIBOR Loan:
299 Park Avenue
38th Floor
New York, New York 10171-0026
Attention: Albert Rabil, III and
Mara Martez
Telephone: (212) 821-3872
Telecopy: (212) 821-3943
with copies to:
Dewey Ballantine
1301 Avenue of the Americas
New York, New York 10019
Attention: George C. Weiss
Telephone: (212) 259-7320
Telecopy: (212) 259-6333
92
<PAGE> 1
EXHIBIT 11
VORNADO REALTY TRUST
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
----------------------------- -----------------------------
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Weighted average number of
common shares outstanding 26,091,927 24,286,981 26,089,919 24,280,517
Common share equivalents for
options after applying
treasury stock method 796,057 178,364 628,922 184,405
----------- ----------- ----------- -----------
Weighted average number of
common shares and common
share equivalents outstanding 26,887,984 24,465,345 26,718,841 24,464,922
=========== =========== =========== ===========
Net income applicable to
Class A units $ 8,933,000 $15,120,000 $18,623,000 $31,042,000
=========== =========== =========== ===========
Net income per common share $ .33 $ .62 $ .70 $ 1.27
=========== =========== =========== ===========
</TABLE>
Page 93 of 94
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
OPERATING PARTNERSHIP'S UNAUDITED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED
JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 199,826
<SECURITIES> 31,225
<RECEIVABLES> 15,171
<ALLOWANCES> 631
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,033,377
<DEPRECIATION> 155,950
<TOTAL-ASSETS> 1,642,696
<CURRENT-LIABILITIES> 0
<BONDS> 859,283
0
276,599
<COMMON> 0
<OTHER-SE> 440,835
<TOTAL-LIABILITY-AND-EQUITY> 1,642,296
<SALES> 0
<TOTAL-REVENUES> 79,959
<CGS> 0
<TOTAL-COSTS> 26,658
<OTHER-EXPENSES> 25,675
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,774
<INCOME-PRETAX> 23,478
<INCOME-TAX> 0
<INCOME-CONTINUING> 23,478
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,623
<EPS-PRIMARY> .70
<EPS-DILUTED> 0
</TABLE>
