<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995.
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to _________.
Commission File Number 1-10272
SECURITY CAPITAL PACIFIC TRUST
--------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 74-6056896
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7777 Market Center Avenue, El Paso, Texas 79912
---------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(915) 877-3900
----------------------------------------------------
(Registrant's telephone number, including area code)
----------------------------------------------------
(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 for the
past 90 days.
Yes X No
_____ _____
The number of shares outstanding of the Registrant's common stock as of October
20, 1995 was:
Shares of Beneficial Interest, $1 par value - 72,210,923 shares
<PAGE>
SECURITY CAPITAL PACIFIC TRUST
INDEX
Page
Number
PART I. Financial Information
Item 1. Financial Statements
Balance Sheets - September 30, 1995 and
December 31, 1994.................................. 3
Statements of Earnings - Three and nine months
ended September 30, 1995 and 1994.................. 4
Statements of Cash Flows - Nine months ended
September 30, 1995 and 1994........................ 5
Notes to Financial Statements...................... 7
Independent Auditors' Review Report................ 14
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................ 15
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K........................... 22
2
<PAGE>
SECURITY CAPITAL PACIFIC TRUST
BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
ASSETS
------
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1994
------------ -----------
(unaudited)
<S> <C> <C>
Real estate........................................................ $1,744,343 $1,296,288
Less accumulated depreciation...................................... 72,119 46,199
---------- ----------
1,672,224 1,250,089
Mortgage notes receivable.......................................... 18,706 22,597
---------- ----------
Total investments................................................ 1,690,930 1,272,686
Cash and cash equivalents.......................................... 12,102 8,092
Accounts receivable................................................ 2,788 1,657
Other assets....................................................... 18,142 13,343
---------- ----------
Total assets..................................................... $1,723,962 $1,295,778
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Liabilities:
Line of credit.................................................... $ 25,000 $ 102,000
Long term debt.................................................... 200,000 200,000
Mortgages payable................................................. 151,305 93,624
Distributions payable............................................. - 14,506
Accounts payable.................................................. 17,522 17,230
Accrued expenses and other liabilities............................ 30,631 27,776
---------- ----------
Total liabilities................................................ 424,458 455,136
---------- ----------
Shareholders' Equity:
Series A Preferred shares (9,200,000 convertible shares issued;
stated liquidation preference of $25 per share).................. 230,000 230,000
Series B Preferred shares (4,200,000 shares issued; stated
liquidation preference of $25 per share)......................... 105,000 -
Common shares (shares issued - 72,375,819
in 1995 and 50,620,516 in 1994).................................. 72,376 50,621
Additional paid-in capital........................................ 952,692 622,161
Distributions in excess of net earnings........................... (58,627) (60,211)
Treasury shares (164,896 in 1995 and 164,478 in 1994)............. (1,937) (1,929)
---------- ----------
Total shareholders' equity........................................ 1,299,504 840,642
---------- ----------
Total liabilities and shareholders' equity...................... $1,723,962 $1,295,778
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
SECURITY CAPITAL PACIFIC TRUST
STATEMENTS OF EARNINGS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
-------------------- --------------------
1995 1994 1995 1994
------- ------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Rental income.................................. $70,176 $50,299 $189,412 $131,103
Interest....................................... 610 585 1,884 2,093
------- ------- -------- --------
70,786 50,884 $191,296 $133,196
------- ------- -------- --------
Expenses:
Rental expenses................................ 28,459 21,966 76,075 56,662
Depreciation................................... 9,611 6,621 26,162 17,411
Interest....................................... 3,271 5,762 14,400 14,021
General and administrative, including REIT
management fee................................ 5,709 3,627 15,256 9,965
Provision for possible loss on investments..... 100 - 220 1,600
Other.......................................... 433 181 635 533
------- ------- -------- --------
47,583 38,157 132,748 100,192
------- ------- -------- --------
Net earnings.................................... 23,203 12,727 58,548 33,004
Less Preferred Share dividends.................. 6,387 4,025 15,435 12,075
------- ------- -------- --------
Net earnings attributable to common shares.... $16,816 $ 8,702 $ 43,113 $ 20,929
======= ======= ======== ========
Weighted average common shares outstanding.... 72,211 47,051 65,315 45,490
======= ======= ======== ========
Per common share amounts:
Net earnings attributable to common shares..... $ 0.23 $ 0.18 $ 0.66 $ 0.46
======= ======= ======== ========
Distributions paid............................. $0.2875 $ 0.25 $ 0.8625 $ 0.75
======= ======= ======== ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
SECURITY CAPITAL PACIFIC TRUST
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------
1995 1994
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES:
Net earnings................................................... $ 58,548 $ 33,004
Items not requiring cash:
Depreciation and amortization................................ 27,092 19,025
Provision for possible loss on investments................... 220 1,600
Increase (decrease) in accounts payable........................ (1,533) 792
Increase in accrued real estate taxes.......................... 3,876 7,355
Increase (decrease) in accrued interest on long term debt...... (3,594) 1,797
Increase in accrued expenses and other liabilities............. 2,573 5,413
Net change in other operating assets........................... (4,388) (2,239)
--------- ---------
Net cash flow provided by operating activities................ 82,794 66,747
--------- ---------
INVESTING ACTIVITIES:
Real estate investments......................................... (198,055) (319,268)
Sale of real estate property, net............................... - 12,041
Mortgage notes receivable, net.................................. 3,891 71
--------- ---------
Net cash flow used in investment activities.................... (194,164) (307,156)
--------- ---------
FINANCING ACTIVITIES:
Proceeds from sale of shares, net of expenses.................. 317,591 101,807
Proceeds from line of credit................................... 171,000 216,250
Proceeds from dividend reinvestment
and share purchase plan....................................... 1,002 2,896
Proceeds from long term debt................................... - 200,000
Cash distributions paid on common shares....................... (56,035) (33,970)
Cash dividends paid on Preferred Shares........................ (15,435) (12,075)
Debt issuance costs incurred................................... (1,351) (3,581)
Principal payments on mortgages payable........................ (1,203) (1,131)
Prepayments of mortgages payable............................... (303) (8,370)
Principal payments on line of credit........................... (248,000) (214,250)
Payment of PACIFIC's line of credit............................ (51,900) -
Other.......................................................... 14 (217)
--------- ---------
Net cash flow provided by financing activities................ 115,380 247,359
--------- ---------
</TABLE>
5
<PAGE>
SECURITY CAPITAL PACIFIC TRUST
STATEMENTS OF CASH FLOWS (Continued)
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
------------------
1995 1994
-------- -------
<S> <C> <C>
Net increase in cash and cash equivalents.................... $ 4,010 $ 6,950
Cash and cash equivalents at beginning of period............. 8,092 5,525
-------- -------
Cash and cash equivalents at end of period................... $ 12,102 $12,475
======== =======
Non-cash investing and financing activities:
Purchase money notes given and mortgage notes assumed
upon purchase of multifamily properties..................... $ 4,784 $56,829
======== =======
Multifamily properties and other net assets acquired in
connection with the Merger which were funded by:
PTR common shares exchanged for all of the
outstanding shares of PACIFIC's common stock (Note 2)... $138,671 $ -
Mortgage notes assumed................................... 54,403 -
Repayment of the outstanding balance on PACIFIC's line
of credit............................................... 51,900 -
-------- -------
Net increase in net assets related to Merger............. $244,974 $ -
======== =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
SECURITY CAPITAL PACIFIC TRUST
NOTES TO FINANCIAL STATEMENTS
September 30, 1995
(1) General
The financial statements of SECURITY CAPITAL PACIFIC TRUST ("PTR"),
formerly Property Trust of America, are unaudited and certain information
and footnote disclosures normally included in financial statements have
been omitted. Certain amounts in the financial statements for 1994 have
been reclassified to conform to the 1995 presentation. While management of
PTR believes that the disclosures presented are adequate, these interim
financial statements should be read in conjunction with the financial
statements and notes included in PTR's 1994 Annual Report on Form 10-K.
In the opinion of management, the accompanying unaudited financial
statements contain all adjustments consisting of normal recurring
adjustments necessary for a fair presentation of PTR's financial statements
for the interim period. The results of operations for the three and nine
month periods ended September 30, 1995 are not necessarily indicative of
the results to be expected for the entire year.
Per share data is computed by using the weighted average of common
shares outstanding during the period. The assumed conversion of the
Cumulative Convertible Series A Preferred Shares of Beneficial Interest,
("Series A Preferred Shares") was antidilutive for the three and nine
months ended September 30, 1995 and 1994.
(2) Merger of Security Capital Pacific Incorporated and Concurrent Subscription
Offering
On March 23, 1995, PTR consummated a merger (the Merger) of Security
Capital Pacific Incorporated (PACIFIC), a Maryland corporation, with and
into PTR. Pacific was a private multifamily REIT controlled by Security
Capital Group Incorporated ("Security Capital Group"), PTR's principal
shareholder. In the Merger, each outstanding share of PACIFIC common stock
was converted into 0.611 of a PTR common share ("Common Share"). As a
result, 8,468,460 Common Shares were issued in the Merger in exchange for
all of the outstanding shares of PACIFIC common stock. The Merger has been
accounted for as a purchase and, accordingly, the results of operations of
PACIFIC have been included in PTR's financial statements from March 23,
1995.
In connection with the Merger, PTR paid off the balance outstanding
($51.9 million) on PACIFIC's line of credit and assumed $54.4 million in
mortgages.
The following summarized pro forma (unaudited) information assumes the
Merger occurred on January 1, 1994. The weighted average Common Shares
outstanding have been adjusted to reflect the Merger conversion rate (.611
of a Common Share for each PACIFIC common share). The pro forma financial
information does not necessarily reflect the results of operations that
would have occurred had PACIFIC and PTR constituted a single entity during
such period (in thousands, except per share amounts).
7
<PAGE>
SECURITY CAPITAL PACIFIC TRUST
NOTES TO FINANCIAL STATEMENTS (Continued)
September 30, 1995
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -------------------
1995 1994 1995 1994
------- ------- -------- --------
(actual)
<S> <C> <C> <C> <C>
Rental Income................................. $70,176 $55,922 $198,030 $143,738
======= ======= ======== ========
Net earnings attributable to common shares.... $16,816 $10,522 $ 44,769 $ 24,783
======= ======= ======== ========
Weighted average common shares outstanding.... 72,211 54,392 67,813 50,807
======= ======= ======== ========
Per common share amounts:
Net earnings attributable to common shares.. $ 0.23 $ 0.19 $ 0.66 $ 0.49
======= ======= ======== ========
Concurrently with the consummation of the Merger, PTR completed a subscription offering pursuant to which PTR received
net proceeds of $216.3 million (13.2 million Common Shares issued). The subscription offering was designed to allow
shareholders of PTR to purchase Common Shares at the same price at which PACIFIC shareholders acquired Common Shares in the
Merger ($16.375 per Common Share). Security Capital Group purchased $50 million (3.1 million Common Shares issued) in the
subscription offering pursuant to the oversubscription privilege.
(3) Real Estate
Investments in real estate, at cost, were as follows (dollar amounts in thousands):
September 30, 1995 December 31, 1994
--------------------------- ---------------------------
Investment Units Investment Units
---------- ------ ---------- -----
<S> <C> <C> <C> <C>
Multifamily:
Operating properties....................... $1,511,170 40,306 $1,121,301 31,640
Developments under construction............ 146,592 6,045 100,401 4,526
Developments in planning................... 47,376 4,916 33,194 4,306
Land held for future development........... 6,145 - 7,977 -
---------- ------ ---------- ------
Total multifamily............................ 1,711,283 51,267 1,262,873 40,472
====== ======
Non-multifamily.............................. 33,060 33,415
---------- ----------
Total real estate............................ $1,744,343 $1,296,288
========== ==========
</TABLE>
8
<PAGE>
SECURITY CAPITAL PACIFIC TRUST
NOTES TO FINANCIAL STATEMENTS (Continued)
September 30, 1995
The change in investments in real estate, at cost, from December 31, 1994
to September 30, 1995 consisted of the following (in thousands):
<TABLE>
<S> <C>
Balance at December 31, 1994 ..................... $1,296,288
Acquisitions and renovation expenditures ......... 321,297
Development expenditures, including land
acquisitions ................................... 120,987
Capital improvements ............................. 3,651
Acquisition of land held for future development .. 1,595
Provision for possible loss on investments ....... (220)
Other ............................................ 745
----------
Balance at September 30, 1995 .................... $1,744,343
==========
</TABLE>
At October 20, 1995, PTR had contingent contracts or letters of intent,
subject to PTR's final due diligence, to acquire land for the near term
development of 5,531 multifamily units with an aggregate estimated development
cost of $274.9 million. At the same date, PTR also had contingent contracts or
letters of intent, subject to final due diligence, for the acquisition of
510 additional multifamily units with an aggregate investment cost of $38.9
million, including planned renovations.
At October 20, 1995, PTR had unfunded development commitments for
developments under construction of $151.5 million.
PTR's strategy is to focus on the ownership of multifamily properties.
Periodic sales of multifamily and non-multifamily assets may occur as
opportunities arise or investment objectives change. Properties are periodically
evaluated for impairment and provisions for possible losses are made
if required. Statement of Financial Accounting Standards No. 121 entitled
"Accounting For The Impairment Of Long-Lived Assets And For Long-Lived Assets To
Be Disposed Of" will be adopted by PTR, as required by the Statement, effective
January 1, 1996. In the opinion of management, the adoption of the Statement is
not expected to have a material impact on the financial statements at the date
of adoption.
PTR is a minority partner with a 40% interest in a partnership which owns
and operates an office building near Dallas, Texas. During the first quarter of
1994, the partnership adopted a strategy of disposing of the property rather
than continuing to hold the property as a long term investment. As a result, the
managing partner evaluated the building for net realizable value which resulted
in a provision for possible loss of $4 million in the first quarter of 1994.
PTR's share of the loss provisions was $1.6 million as reflected in the
statement of earnings for September 30, 1994. During the nine months ended
September 30, 1995, the partnership approved the sale of the property in the
amount of $6.2 million, scheduled to close during the fourth quarter of 1995. As
a result, PTR recorded an additional loss provision of $220,000 as reflected in
the statement of earnings for September 30, 1995. PTR's net carrying value after
the provisions is $2.3 million. This provision has no impact on cash flow from
operating activities nor does PTR have any further financial obligation to the
partnership.
9
<PAGE>
SECURITY CAPITAL PACIFIC TRUST
NOTES TO FINANCIAL STATEMENTS (Continued)
September 30, 1995
To enhance its flexibility in developing and acquiring multifamily
properties, PTR has and will enter into presale agreements with third party
developers to acquire properties developed by such developers where the
developments meet PTR's investment criteria. PTR has and will fund such
developments through development loans to such developers. In addition, to
provide greater flexibility for the use of land acquired for development
and to dispose of excess parcels, PTR will make mortgage loans to PTR
Development Services Incorporated ("PTR Development Services") to purchase
land for development. PTR owns all of the preferred stock of PTR
Development Services, which entitles PTR to substantially all of the net
operating cash flow (95%) of PTR Development Services. Security Capital
Group owns all of the common stock of PTR Development Services and is in
negotiations to transfer such stock at cost to an unrelated third party.
The common stock is entitled to receive the remaining 5% of net operating
cash flow. As of September 30, 1995, the outstanding balance of development
and mortgage loans made by PTR to third party developers and PTR
Development Services aggregated $18.6 and $6.2 million, respectively. The
activities of PTR Development Services and development loans are
consolidated with PTR's activities and all intercompany transactions have
been eliminated in consolidation.
(4) Distributions
PTR's current policy is to pay distributions to shareholders based
upon funds from operations and aggregating annually at least 95% of its
taxable income. Funds from operations is not to be construed as a
substitute for "net earnings" in evaluating operating results nor as a
substitute for "cash flow" in evaluating liquidity. In July 1994, PTR
changed to a more conservative policy of expensing the amortization of loan
costs in determining funds from operations. For comparability, funds from
operations for the nine months ended September 30, 1994 has been restated
to give effect to this policy as if it had been in effect since January
1994. Funds from operations for the three and nine months ended September
30, 1995 and 1994 were as follows (in thousands):
10
<PAGE>
SECURITY CAPITAL PACIFIC TRUST
NOTES TO FINANCIAL STATEMENTS (Continued)
September 30, 1995
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
1995 1994 1995 1994
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net earnings attributable to Common Shares .......... $16,816 $ 8,702 $43,113 $20,929
Add:
Depreciation .................................... 9,611 6,621 26,162 17,411
Provision for possible loss on investments ...... 100 -- 220 1,600
------- ------- ------- -------
Funds for operations attributable to Common
Shares ............................................ 26,527 15,323 69,495 39,940
Distributions paid to common shareholders ........... 20,768 11,635 56,035 33,970
------- ------- ------- -------
Excess of funds from operations after
distributions ..................................... $ 5,759 $ 3,687 $13,460 $ 5,970
======= ======= ======= =======
Weighted average common shares outstanding .......... 72,211 47,051 65,315 45,490
======= ======= ======= =======
</TABLE>
On October 23, 1995, the Trustees declared a cash distribution of
$.2875 per Common Share to be paid on November 16, 1995 to shareholders of
record on November 3, 1995.
(5) Borrowings
Concurrent with the Merger (See Note 2), PTR increased its unsecured
revolving line of credit facility with Texas Commerce Bank, National
Association, as agent bank for a group of lenders ("TCB") to $350 million
and received a reduction in the interest rate to the greater of prime or
the federal funds rate plus 0.50%, or at PTR's option, LIBOR plus 1.375%
(which can vary from LIBOR plus 1.0% to LIBOR plus 1.75% based upon the
rating of PTR's senior unsecured debt). Additionally, there is a commitment
fee on the average unfunded line of credit balance. In addition, Wells
Fargo Realty Advisors Funding, Incorporated was added as co-agent.
The TCB line matures August 1997 and may annually be extended for an
additional year with the approval of TCB and the other participating
lenders. All debt incurrences are subject to covenants, as more fully
described in the loan agreement.
At September 30, 1995, PTR was in compliance with all debt covenants.
11
<PAGE>
SECURITY CAPITAL PACIFIC TRUST
NOTES TO FINANCIAL STATEMENTS (Continued)
September 30, 1995
Interest paid on all borrowings for the nine months ended September
30, 1995 was $25,686,000 including $8,597,000 of interest capitalized
during construction. Interest paid on all borrowings for the nine months
ended September 30, 1994 was $14,861,000 including $4,254,000 of interest
capitalized during construction.
Amortization of loan costs included in interest expense for the nine
months ended September 30, 1995 and 1994 was $930,000 and $1,614,000,
respectively.
(6) Series B Cumulative Redeemable Preferred Shares
On May 11, 1995, the Board of Trustees authorized PTR to classify
and issue the Series B Cumulative Redeemable Preferred Shares ("Series B
Preferred Shares"). The net proceeds to PTR from the sale of the Series
B Preferred Shares were $101.4 million. The net proceeds were used for
the development and acquisition of additional multifamily properties, for
the repayment of indebtedness under PTR's revolving line of credit and
for working capital purposes.
On and after May 24, 2000, the Series B Preferred Shares may be
redeemed for cash at the option of PTR, in whole or in part at a
redemption price of $25.00 per share plus accrued and unpaid
distributions, if any, thereof. The redemption price (other than the
portion thereof consisting of accrued and unpaid distributions) is
payable solely out of the sale proceeds of other capital shares of PTR,
which may include shares of other series of preferred shares. The holders
of the Series B Preferred Shares have no preemptive rights with respect
to any shares of the capital securities of PTR or any other securities of
PTR convertible into or carrying rights or options to purchase any such
shares. The Series B Preferred Shares have no stated maturity and are not
subject to any sinking fund or other obligation of PTR to redeem or
retire the Series B Preferred Shares and are not convertible into any
other securities of PTR. In addition, holders of the Series B Preferred
Shares are entitled to receive, when and as declared by the Board of
Trustees, out of funds legally available for the payment of
distributions, cumulative preferential cash distributions at the rate of
9% of the liquidation preference per annum (equivalent to $2.25 per
share). Such distributions are cumulative from the date of original issue
and are payable quarterly in arrears on the last day of each March, June,
September and December.
The Series A Preferred Shares and the Series B Preferred Shares will
rank on a parity as to distributions and liquidation proceeds. Series A
Preferred Shares and Series B Preferred Shares are collectively referred
to as "Preferred Shares."
(7) REIT Management and Property Management Agreements
In June 1995, PTR renewed and amended its REIT Management agreement
with Security Capital Pacific Incorporated (the "REIT Manager"), formerly
Security Capital (Southwest) Incorporated
12
<PAGE>
SECURITY CAPITAL PACIFIC TRUST
NOTES TO FINANCIAL STATEMENTS (Continued)
September 30, 1995
to provide REIT Management services to PTR. The REIT Manager is a subsidiary of
Security Capital Group which owns approximately 37.9% of PTR's Common Shares.
The REIT Management fee for the nine months ended September 30, 1995 was
$14,676,000 and $9,443,000 for the nine months ended September 30, 1994.
SCG Realty Services Incorporated ("SCG Realty Services") has managed and
currently manages a substantial majority of PTR's operating multifamily
properties. For the nine months ended September 30, 1995 and 1994, PTR paid SCG
Realty Services aggregate fees of $5,722,000 and $4,663,000 respectively. In
addition to property management, SCG Realty Services has performed certain due
diligence services for PTR's acquisitions. Effective October 1, 1994, SCG Realty
Services no longer performed due diligence services for PTR. Security Capital
Group is the sole shareholder of SCG Realty Services. Rates for services
performed by SCG Realty Services are subject to annual approval by PTR's
independent Trustees (who receive an annual review from an independent third
party) and are at rates prevailing in the markets in which PTR operates.
13
<PAGE>
Independent Auditors' Review Report
-----------------------------------
The Board of Trustees and Shareholders
SECURITY CAPITAL PACIFIC TRUST:
We have reviewed the accompanying balance sheet of SECURITY CAPITAL PACIFIC
TRUST as of September 30, 1995, and the related statements of earnings for the
three- and nine-month periods ended September 30, 1995 and 1994 and the
statements of cash flows for the nine-month periods ended September 30, 1995
and 1994. These financial statements are the responsibility of the Trust's
management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical review procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the financial statements referred to above for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet of SECURITY CAPITAL PACIFIC TRUST as of December
31, 1994, and the related statements of earnings, shareholders' equity, and cash
flow for the year then ended (not presented herein); and in our report dated
February 28, 1995, except as to Note 10, which is as of March 23, 1995, we
expressed an unqualified opinion on those financial statements. In our opinion,
the information set forth in the accompanying balance sheet as of December 31,
1994 is fairly presented, in all material respects, in relation to the balance
sheet from which it has been derived.
KPMG PEAT MARWICK LLP
Chicago, Illinois
October 20, 1995
14
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview
Security Capital Pacific Trust's ("PTR") operating results depend primarily
upon income from multifamily properties, which is substantially influenced by
(i) the demand for and supply of multifamily units in PTR's target market and
submarkets, (ii) rental expense levels, (iii) the effectiveness of property
level operations and (iv) the pace and price at which PTR can develop and
acquire additional multifamily properties. Capital and credit market conditions
which affect PTR's cost of equity and debt capital also influence operating
results.
PTR's target market and submarkets have benefitted substantially in recent
periods from demographic trends (including job and population growth) that
increase the demand for multifamily units. Rental rates for multifamily units
have increased more than the inflation rate for the last two years and are
expected to continue experiencing such increases for 1995. Expense levels also
influence operating results, and rental expenses (other than real estate taxes)
for multifamily properties have generally increased at approximately the same
rate as rents for 1994 but are expected to increase at a lower rate for 1995.
Merger and Concurrent Subscription Offering
On March 23, 1995, PTR consummated a merger (the "Merger") of Security
Capital Pacific Incorporated (PACIFIC), a Maryland corporation, with and into
PTR. In the Merger, each outstanding share of PACIFIC common stock was converted
into 0.611 of a PTR Common Share. As a result, 8,468,460 common shares were
issued in the Merger in exchange for all of the outstanding shares of PACIFIC
common stock. Additionally, PTR changed its name from Property Trust of America
to Security Capital Pacific Trust to more accurately reflect its newly expanded
target market. The Merger expands PTR's target market to include a six-state
region of the western United States with 129 submarkets. As a result, PTR is
well-positioned to deploy capital in the geographic areas of the United States
that it believes are expected to provide some of the most attractive multifamily
growth opportunities.
Concurrently with the consummation of the Merger, PTR completed a
subscription offering pursuant to which PTR received net proceeds of $216.3
million (13.2 million Common Shares issued). The subscription offering was
designed to allow shareholders of PTR to purchase Common Shares at the same
price PACIFIC shareholders were acquiring Common Shares in the Merger ($16.375
per Common Share). Security Capital Group Incorporated (Security Capital Group)
purchased $50 million (3.1 million Common Shares issued) in the subscription
offering pursuant to the oversubscription privilege.
Results of Operations
Interim Period Comparison
During the nine months ended September 30, 1995, PTR acquired 22
multifamily properties aggregating 6,833 units for a total purchase price,
including planned renovations, of approximately $305.9 million (acquisitions
from the Merger represented 17 operating multifamily properties, aggregating
5,579 units, for a total purchase price, including planned renovations, of
approximately $246.1 million), and completed development of 11 multifamily
properties aggregating 1,842 units with
15
<PAGE>
a completed cost of $74.4 million. At September 30, 1995, PTR had 6,045
multifamily units under construction with a budgeted completion cost of $295.9
million and had in the final planning stages an estimated 4,916 multifamily
units with an aggregate expected investment of $263.7 million. During the nine
months ended September 30, 1994, PTR acquired 17 multifamily properties
aggregating 6,203 units for a total purchase price, including planned
renovations, of approximately $252.1 million and completed development of 10
multifamily properties aggregating 2,378 units with a completed cost of $109.2
million. At September 30, 1994, PTR had 3,629 multifamily units under
construction with a budgeted completion cost of $148.7 million and had in the
final planning stages an estimated 5,327 multifamily units with an aggregate
budgeted completion cost of $264.3 million.
Property Operations
Property operations contributed to increased net earnings primarily due to
property rental income increases of $58.3 million (44.5%), partially offset by
higher rental expenses, which increased by $19.4 million (34.3%) for the nine
months ended September 30, 1995 over 1994. Depreciation expense increased $8.8
million (50.3%) for the nine months ended September 30, 1995 over 1994. These
increases are due primarily to additional operating multifamily properties
placed in service. For operating multifamily properties, rental expenses were
40.6% and 43.8% of rental revenue during the nine months ended September 30,
1995 and 1994, respectively. At September 30, 1995, 82.3% of PTR's operating
multifamily properties, based on cost, were classified by PTR as stabilized. At
September 30, 1995, PTR's operating multifamily properties were 96.5% leased and
PTR's stabilized multifamily properties were 97.1% leased.
Multifamily Properties Fully Operating throughout Both Periods
For the 80 multifamily properties that were fully operating throughout the
nine months ended September 30, 1995 and 1994 (including 5 properties acquired
in the Merger), property level earnings before interest, income taxes,
depreciation and amortization ("EBITDA") as a percentage of PTR's aggregate
investment in these properties increased to 10.8% in 1995 from 10.2% in 1994.
EBITDA is not to be construed as a substitute for "net earnings" in evaluating
operating results, nor as a substitute for "cash flow" in evaluating liquidity.
This increase in return on investment, which is a function of rental rate
growth, occupancy levels, expense rate growth and capital expenditure levels, is
attributable primarily to growth in rental rates. This increase in return on
investment was achieved at the same time that PTR increased its investment in
these properties by $10.4 million (1.4% of total investment in these properties)
as a result of renovation and other capital expenditures. Rental income
increased 4.0% (the majority resulting from 3.0% rental rate increase) for such
properties for the nine months ended September 30, 1995 as compared to the nine
months ended September 30, 1994. Performance of these properties was further
enhanced by decreases in the core operating expenses which were offset by
turnover expense as the properties achieved stabilization.
16
<PAGE>
Interest Income
Interest income for the nine months ended September 30, 1995 decreased
$209,000 (10%) compared to 1994, primarily resulting from a decrease in interest
income from a $4.6 million mortgage note receivable which was paid off in April
1995 and from bank accounts due to lower average cash balances in 1995 ($11.9
million) as compared to 1994 ($14.8 million). The higher average cash balances
in 1994 resulted from the proceeds of the long term debt offering of $200
million which was closed in February 1994, as more fully discussed under
"Liquidity and Capital Resources."
Interest Expense
Interest expense increased $379,000 (2.7%) for the nine months ended
September 30, 1995 when compared to 1994. The increase is primarily attributable
to the increase in interest expense of $1.5 million resulting from the issuance
of $200 million of long term notes in February 1994, as more fully discussed
under "Liquidity and Capital Resources".
Mortgage interest expense increased $3.4 million (75.6%) for the nine months
ended September 30, 1995 when compared to 1994 as a result of the addition of
mortgages aggregating $59.2 million in connection with the Merger and other
acquisitions.
Line of credit interest expense decreased $220,000 (5%) resulting
primarily from lower outstanding balances offset by higher interest rates
relating to PTR's revolving credit facility. Average borrowings on the line of
credit were approximately $51.0 million (with an average interest rate of 8.96%)
during the nine months ended September 30, 1995, as compared to average
borrowings of $54.9 million (with an average interest rate of 7.24%) during
1994.
The increases in interest expense were offset by an increase of $4.3 million
(102.1%) in capitalized interest. The increase in capitalized interest is
attributable to increased multifamily development activity for the nine months
ended September 30, 1995 as compared to 1994.
General and Administrative Expense Including REIT Management Fee
The REIT management fee paid by PTR fluctuates with the level of PTR's
pre-REIT management fee cash flow, as defined in the REIT management agreement,
and therefore increased by $5.2 million (55.4%) during the nine months ended
September 30, 1995 as compared to 1994 because cash flow increased substantially
(see "REIT Management Agreement"). With the issuance in February 1994 of $200
million of amortizing, long term debt as more fully described under "Liquidity
and Capital Resources," the REIT management fee effectively declines in
proportion to PTR's earnings from operations because actual or assumed regularly
scheduled principal and interest payments, as defined in the agreement,
associated with the long term debt will be deducted from the cash flow amount on
which the REIT management fee is based. In addition, the REIT Management
Agreement was modified to provide that distributions paid in respect of
non-convertible preferred shares, such as the Series B Preferred Shares,
described below in "Liquidity and Capital Resources", will be deducted from the
cash flow amount on which the REIT management fee is based.
17
<PAGE>
Provision for Possible Loss
PTR is a minority partner with a 40% interest in a partnership which owns
and operates an office building near Dallas, Texas. During the first quarter of
1994, the partnership adopted a strategy of disposing of the property rather
than continuing to hold the property as a long term investment. As a result, the
managing partner evaluated the building for net realizable value which resulted
in provisions for possible loss of $4 million in the first quarter of 1994.
PTR's share of the loss provisions was $1.6 million as reflected in the
statement of earnings for September 30, 1994. During the nine months ended
September 30, 1995, the partnership approved the sale of the property in the
amount of $6.2 million, scheduled to close during the fourth quarters of 1995.
As a result, PTR recorded an additional loss provision of $220,000 as reflected
in the statement of earnings for September 30, 1995. PTR's net carrying value
after the provisions is $2.3 million. These provisions have no impact on cash
flow from operating activities nor does PTR have any further financial
obligation to the partnership.
Other
Property revenues, operating expenses, income from property operations
before depreciation, income from property operations and net earnings for the
three months ended September 30, 1995 compared to the three months ended
September 30, 1994 reflect changes similar to those discussed in the preceding
paragraphs for the comparison of the nine months ended on the same dates. The
changes are substantially attributable to the same reasons discussed in the
preceding paragraphs for the nine month periods ended September 30, 1995 and
1994.
Environmental Matters
PTR is not aware of any environmental condition on any of its properties
which is likely to have a material adverse effect upon its results of operations
or financial position.
Liquidity and Capital Resources
The REIT Manager considers PTR's liquidity and ability to generate cash to
be adequate and expects it to continue to be adequate to meet PTR's development,
acquisition, operating, debt service and shareholder distribution requirements.
Net cash flow provided by operating activities increased by $16.1 million
(24.0%) for the nine months ended September 30, 1995 compared to 1994. The
increase is due primarily to increased cash flow from property operations offset
partially by changes in the timing of the payment of accounts payable and
accrued expenses in 1995 as compared to 1994.
Investing Activities
During the nine months ended September 30, 1995, PTR invested $389.1
million for the development, acquisition (including properties acquired in the
Merger), and renovation of multifamily properties, net of $59.2 million in
mortgages assumed. During the first nine months of 1994, PTR invested $319.3
million for the development, acquisition, and renovation of multifamily
properties, net of $56.8 million in mortgages assumed. Except for the properties
acquired in the Merger, which were financed with the issuance of Common Shares,
these developments, acquisitions, and renovations were
18
<PAGE>
financed with cash on hand and borrowings under PTR's revolving line of credit,
which were repaid with the proceeds from PTR's equity and debt offerings.
At September 30, 1995, PTR had unfunded development commitments for
developments under construction of $151.5 million. Additionally, the land PTR
owned or controlled through letters of intent or contingent contracts at such
date, subject to PTR's final due diligence, will allow for the development of
additional multifamily units, which will be an important generator of growth for
PTR in 1996 and beyond. The foregoing transactions are subject to a number of
conditions, and PTR cannot predict with certainty that any of them will be
consummated.
Financing Activities
PTR's financing activities for the nine months ended September 30, 1995
provided $115.4 million as compared to $247.4 million for the same period in
1994. In addition, PTR issued $138.7 million in Common Shares in March 1995 in
exchange for all of PACIFIC's Common Stock. The decrease in cash flow provided
by financing activities is primarily due to the repayment of revolving credit
balances ($299.9 million during the nine months ended September 30, 1995 as
compared to $214.3 million during the same period in 1994) and an increase in
distributions to shareholders ($71.5 million during the nine months ended
September 30, 1995 compared to $46.1 million for the same period in 1994)
offset by more offering proceeds received during the nine months ended September
30, 1995 as compared to long term debt proceeds received during the same period
in 1994. Proceeds from the offerings were used for acquisition, development and
renovation of multifamily properties, to repay revolving credit balances
incurred for such purposes, and for working capital purposes. Pending additional
investment in multifamily properties, PTR has invested the remaining net
proceeds in short term money market instruments.
On March 23, 1995, PTR increased its unsecured revolving line of credit
facility to $350 million. The line of credit expires August 1997 and may
annually be extended for an additional year with the approval of TCB and the
other participating lenders. Borrowings bear interest at the greater of prime
or the federal funds rate plus 0.5% or, at PTR's option, LIBOR plus 1.375%
(which can vary from LIBOR plus 1.0% to LIBOR plus 1.75% based upon the rating
of PTR's senior unsecured debt). Additionally, there is a commitment fee on the
average unfunded line of credit balance. All debt incurrences are subject to
covenants that PTR maintain (i) an interest coverage ratio of not less than 2:1,
(ii) a debt to tangible net worth ratio no greater than 1:1, (iii) a fixed
charge ratio of no less than 1:4 and (iv) an unencumbered pool of real estate
properties of which certain properties must meet certain occupancy requirements
and which have an aggregate historical cost of at least 175% of unsecured
indebtedness. PTR is in compliance with all debt covenants. At October 20, 1995
there were $31 million outstanding under the line of credit.
PTR expects to finance developments, acquisitions and renovations with cash
an hand and borrowings under its line of credit prior to arranging long term
capital in order to efficiently respond to market opportunities while minimizing
the amount of cash invested in short term investments at lower yields. PTR
believes that its current conservative ratio of long term debt to total long
term capitalization, the sum of long term debt and shareholders' equity after
adding back accumulated depreciation (20.4% at September 30, 1995), provides
considerable flexibility to prudently utilize long term debt as a future
financing tool. PTR intends to limit the sum of long term debt and line of
credit debt to less than 40% (debt covenants permit up to 50%) of the sum of
total book capitalization. PTR expects primarily to fund additional growth for
the foreseeable future primarily through further issuances of unsecured long
term, fixed rate amortizing debt securities similar to the $200 million long
term debt issued in February 1994 and through its asset optimization strategy.
To a lesser extent, under certain circumstances, PTR may arrange for debt with
different maturities in order to optimize its debt maturities.
19
<PAGE>
Based on the Merger, the concurrent subscription offering, debt issuance
capacity, asset optimization strategy and current real estate and debt market
conditions, PTR believes it has reached an optimal level of common equity
capitalization. Hence, PTR has no current plans to raise additional capital
through the common equity markets. No assurance can be given that changes in
market conditions or other factors will not affect these plans.
On May 11, 1995, the Board of Trustees authorized PTR to classify and issue
Series B Cumulative Redeemable Preferred Shares ("Series B Preferred Shares").
The net proceeds to PTR from the sale of the Series B Preferred Shares were
$101.4 million. The net proceeds were used for the development and acquisition
of additional multifamily properties, for the repayment of indebtedness under
PTR's revolving line of credit and for working capital purposes.
On March 23, 1995, PTR raised $216.3 million of net proceeds from a
subscription offering of 13.2 million Common Shares at a price of $16.375 per
Common Share, which was the same price per Common Share on which the exchange
ratio for the Merger was based. The subscription offering closed concurrently
with the consummation of the Merger. The subscription offering was designed to
allow shareholders the opportunity to purchase Common Shares at the same price
at which PACIFIC shareholders acquired Common Shares in the Merger and to
maintain PTR's balance sheet ratios. Security Capital Group acquired $50 million
(3.1 million Common Shares) of the subscription offering pursuant to the
oversubscription privilege.
On August 16, 1994, PTR raised $101.8 million of net proceeds from a rights
offering of 5,593,718 Common Shares at a price of $18.25 per Common Share.
Security Capital Group exercised in full its rights to acquire Common Shares in
the offering at the same price paid by the public ($18.25 per Common Share) and
acquired additional rights in the open market. Proceeds from the offering were
used to fund developments and to invest in additional multifamily properties in
PTR's target market and to repay borrowings under PTR's line of credit.
On February 8, 1994, PTR issued $100 million of 6.875% Senior Notes due
2008 (the "2008 Notes") and $100 million of 7.5% Senior Notes due 2014 (the
"2014 Notes"), collectively referred to as the "Notes". The 2008 Notes bear
interest at 6.875% per annum and require annual principal payments of $12.5
million, commencing February 15, 2001. The 2014 Notes bear interest at 7.5% per
annum and require aggregate annual principal payments of $10 million in 2009,
$12.5 million in 2010, $15 million in 2011, $17.5 million in 2012, $20 million
in 2013, and $25 million in 2014. Collectively, the Notes have an average life
to maturity of 14.25 years and an average effective interest cost, inclusive of
offering discounts, issuance costs, and the interest rate protection agreement,
of 7.37% per annum. The Notes are redeemable any time at the option of PTR, in
whole or in part, at a redemption price equal to the sum of the principal amount
of the Notes being redeemed plus accrued interest thereon to the redemption date
plus an adjustment, if any, based on the yield to maturity relative to market
yields available at redemption. The Notes are governed by the terms and
provisions of an indenture agreement (the "Indenture") between PTR and State
Street Bank and Trust Company, as trustee.
Under the terms of the Indenture, PTR can incur additional debt only if,
after giving effect to the debt being incurred and application of proceeds
therefrom, (i) the ratio of debt to total assets, as defined in the Indenture,
does not exceed 60%, (ii) the ratio of secured debt to total assets, as defined
in the Indenture, does not exceed 40%, and (iii) PTR's pro forma interest
coverage ratio, as defined in the Indenture, for the four preceding fiscal
quarters is not less than 1.5.
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Distributions
PTR's current distribution policy is to pay quarterly distributions to
holders of Common Shares based upon what it believes to be a prudent percentage
of cash flow. Because depreciation is a non-cash expense, cash flow typically
will be greater than net earnings attributable to Common Shares. Therefore,
quarterly distributions paid will generally be higher than quarterly net
earnings.
Distributions paid on Common Shares exceeded net earnings attributable to
Common Shares by $12.9 million and $13 million for the nine months ended
September 30, 1995 and 1994, respectively.
Pursuant to the terms of the Preferred Shares, PTR is restricted from
declaring or paying any distribution with respect to its Common Shares unless
all cumulative distributions with respect to the Preferred Shares have been paid
and sufficient funds have been set aside for distributions that have been
declared for the then current distribution period with respect to the Preferred
Shares.
Funds from operations represents PTR's net earnings computed in accordance
with GAAP, excluding gains (or losses) plus depreciation and provision for
possible loss on investments. PTR believes that funds from operations is
helpful in understanding a property portfolio in that such calculation reflects
cash flow from operating activities and the properties' ability to support
interest payments and general operating expenses before the impact of certain
activities, such as gains or losses from property sales and changes in accounts
receivable and accounts payable. In July 1994, PTR changed to a more
conservative policy of expensing the amortization of loan costs in determining
funds from operations. For comparability, funds from operations for the nine
months ended September 30, 1994 has been restated to give effect to this policy
as if it had been in effect since January 1, 1994. As a result, funds from
operations attributable to Common Shares increased $29.6 million (74%) to $69.5
million for the nine months ended September 30, 1995 from $39.9 million for
1994. The increase resulted primarily from increased properties in operation.
Funds from operations is not to be construed as a substitute for "net earnings"
in evaluating operating results nor as a substitute for "cash flow" in
evaluating liquidity.
21
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
3.1 -- First Articles of Amendment to Articles Supplementary dated May
17, 1995 of Security Capital Pacific Trust.
Sequentially numbered page __
3.2 -- Articles of Merger merging Pacific into PTR dated March 23,
1995.
10.1 -- Amended and Restated Credit Agreement between PTR, the banks
party thereto and Texas Commerce Bank National Association, as
agent, and Wells Fargo Realty Advisors Funding, Incorporated, as
co-agent, dated August 11, 1995.
Sequentially numbered page __
15 -- Letter from KPMG Peat Marwick LLP dated October 23, 1995
regarding unaudited financial information.
Sequentially numbered page __
27 -- Financial Data Schedule
Sequentially numbered page __
(b) Reports on Form 8-K: - none
22
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: October 23, 1995 SECURITY CAPITAL PACIFIC TRUST
/s/ William Kell
-------------------------------
William Kell, Vice President
and Duly Authorized Officer
and Principal Financial Officer
<PAGE>
Exhibit 3.1
FIRST ARTICLES OF AMENDMENT
to
Articles Supplementary dated May 17, 1995
of
SECURITY CAPITAL PACIFIC TRUST
The undersigned, being all of the members of the Board of Trustees of
Security Capital Pacific Trust, a Maryland real estate investment trust (the
"Trust"), do hereby certify pursuant to the provisions of Section 1 of the
Articles Supplementary dated as of May 17, 1995 (the "Articles Supplementary"),
and Title 8 of the Corporations and Associations Article of the Annotated Code
of Maryland, that the Board of Trustees of the Trust has adopted a resolution
to amend the Articles Supplementary as hereafter set forth and that the Trustees
have approved such amendments by unanimous written consent.
Therefore, the Articles Supplementary are hereby amended by amending and
restating Section 1 thereof in its entirety as follows:
Section 1. Number of Shares and Designation. This class of Preferred
Shares shall be designated as Series B Cumulative Redeemable Preferred
Shares of Beneficial Interest (the "Series B Preferred Shares'' and the
number of shares which shall constitute such series shall not be more than
4,200,000 shares, par value $1.00 per share, which number may be decreased
(but not below the number thereof then outstanding plus the number required
to fulfill the Trust's obligations under options, warrants or similar
rights issued by the Trust) from time to time by the Board of Trustees.
Each undersigned Trustee acknowledges these First Articles of Amendment to
be the act of the Trust and further, as to all matters or facts required to be
verified under oath, each such Trustee acknowledges that to the best of his
knowledge, information and belief, these matters and fact are true in all
material respects and that this statement is made under the penalties of
perjury.
<PAGE>
IN WITNESS WHEREOF, the undersigned, being all of the members of the Board
of Trustees of the Trust, have hereunto set their hand as of this 31st day of
June, 1995.
/s/ C. Ronald Blankenship
-------------------------
C. Ronald Blankenship, Trustee
/s/ Calvin K. Kessler
---------------------
Calvin K. Kessler, Trustee
/s/ James H. Polk III
---------------------
James H. Polk III, Trustee
/s/ John C. Schweitzer
----------------------
John C. Schweitzer, Trustee
/s/ William G. Myers
--------------------
William G. Myers, Trustee
/s/ John T. Kelley, III
-----------------------
John T. Kelley, III, Trustee
/s/ James A. Cardwell
---------------------
James A. Cardwell, Trustee
<PAGE>
Exhibit 3.2
ARTICLES OF MERGER
Merging
SECURITY CAPITAL PACIFIC INCORPORATED
(a corporation of the State of Maryland)
Into
PROPERTY TRUST OF AMERICA
(a real estate investment trust of the State of Maryland)
Security Capital Pacific Incorporated, a corporation organized and existing
under the laws of the State of Maryland ("PACIFIC"), and Property Trust of
America, a real estate investment trust organized and existing under the laws of
the State of Maryland ("PTR"), agree that PACIFIC shall be merged with and into
PTR. The terms and conditions of the merger and the mode of carrying the same
into effect are as herein set forth in these Articles of Merger.
FIRST: The parties to these Articles of Merger are Property Trust of
America, a real estate investment trust organized and existing under the laws of
the State of Maryland, and Security Capital Pacific Incorporated, a corporation
organized and existing under the laws of the State of Maryland.
SECOND: PACIFIC shall be merged with and into PTR in accordance with the
Corporations and Associations Article of the Annotated Code of Maryland (the
"Maryland Code"), and PTR shall survive the merger and continue under the name
"Security Capital Pacific Trust" (the "Surviving Entity"). At the effective time
of the merger (the "Effective Time"), the separate existence of PACIFIC shall
cease in accordance with the provisions of the Maryland Code. From and after the
Effective Time, the Surviving Entity shall continue its existence under the name
"Security Capital Pacific Trust," shall succeed to all of the properties,
liabilities and other assets and shall be subject to all of the liabilities and
obligations of PACIFIC without further action by either of the parties hereto,
and will continue to be governed by the laws of the State of Maryland, including
the Maryland Code. At the Effective Time, the bylaws of PTR in effect
immediately prior to the Effective Time shall become the bylaws of the Surviving
Entity and the trustees and officers in office of PTR immediately prior to the
Effective Time shall be the trustees and officers of the Surviving Entity, all
of whom shall hold their trusteeships and offices until the election and
qualification of their respective successors or until their tenure is otherwise
terminated in accordance with the declaration of trust and bylaws of the
Surviving Entity.
THIRD: The resident agent and office of each of PACIFIC and PTR is located
at 11 East Chase Street, Baltimore, State of Maryland 21202. The principal
office of each of PACIFIC and PTR is located at 7777 Market Center Avenue, City
of El Paso, State of Texas 79912. Neither PACIFIC nor PTR owns any interest in
land in any county in the State of Maryland.
FOURTH: The terms and conditions of the transaction set forth in these
Articles of Merger were advised, authorized and approved by each party to these
Articles of Merger in the manner and by the vote required by PACIFIC's articles
of incorporation or PTR's declaration of trust, as the case may be, and the laws
of the State of Maryland.
FIFTH: The merger was duly (a) advised by the board of directors of PACIFIC
by the adoption of a resolution declaring that the merger set forth in these
Articles of Merger was advisable on substantially the terms and conditions set
forth or referred to in the resolution and directing that the proposed merger be
submitted for consideration at a special meeting of the shareholders of PACIFIC
and (b) approved by the shareholders of PACIFIC by the vote required by its
articles of incorporation and the Maryland Code.
<PAGE>
SIXTH: The merger was duly (a) advised by the board of trustees of PTR
by the adoption of a resolution declaring that the merger set forth in these
Articles of Merger was advisable on substantially the terms and conditions set
forth or referred to in the resolution and directing that the proposed merger be
submitted for consideration at a special meeting of the shareholders of PTR and
(b) approved by the shareholders of PTR by the vote required by its declaration
of trust and the Maryland Code.
SEVENTH: At the Effective Time, Article 1, Section 1 of the declaration
of trust of PTR shall be amended to read in its entirety as follows and such
declaration of trust, as so amended, shall become the declaration of trust of
the Surviving Entity:
Section 1. Name. The Trust created by this Declaration of Trust is
herein referred to as the "Trust" and shall be known by the name "Security
Capital Pacific Trust." So far as may be practicable, legal and convenient,
the affairs of the Trust shall be conducted and transacted under that name,
which name shall not refer to the Trustees individually or personally or to
the beneficiaries or Shareholders of the Trust, or to any officers,
employees or agents of the Trust.
Under circumstances in which the Trustees determine that the use of
the name "Security Capital Pacific Trust" is not practicable, legal or
convenient, they may as appropriate use their names with suitable reference
to their trustee status, or some other suitable designation, or they may
adopt another name under which the Trust may hold property or operate in
any jurisdiction which name shall not, to the knowledge of the Trustees,
refer to beneficiaries or Shareholders of the Trust. Legal title to all the
properties subject from time to time to this Declaration of Trust shall be
transferred to, vested in, and held by the Trust in its own name or by the
Trustees as joint tenants with right of survivorship as Trustees of this
Trust, except that the Trustees shall have the power to cause legal title
to any property of this Trust to be held by and/or in the name of one or
more of the Trustees, or any other person as nominee, on such terms, in
such manner, and with such powers as the Trustees may determine, provided
that the interest of the Trust therein is appropriately protected.
The Trust shall have the authority to operate under an assumed name
or names in such state or states or any political subdivision thereof where
it would be legal, practical or convenient to operate in the name of the
Trust. The Trust shall have the authority to file such assumed name
certificates or other instruments in such places as may be required by
applicable law to operate under such assumed name or names.
If for any reason neither Security Capital (Southwest) Incorporated, a
Delaware corporation, nor any affiliate thereof, nor any other affiliate of
Security Capital Realty Incorporated, a Maryland corporation, shall any
longer be rendering to the Trust the services of Advisor, as defined in
Article 4, Section 7 hereof, to be rendered pursuant to the contract
referred to in Article 4, Section 7 hereof, and any renewal or extension of
such contract, then, if requested in writing by Security Capital Realty
Incorporated or its successor to do so, the Trustees shall forthwith and
are hereby required and authorized, without further vote or consent of the
Shareholders, to (a) cease to use the name "Security Capital" or any name
or names similar thereto, (b) amend this Article 1, Section 1 to change the
name of the Trust to one which does not include the name "Security Capital"
or any name or names similar thereto, and (c) cause to be executed and
delivered all instruments necessary to evidence such change of name in each
public registry where the name of the Trust shall have been registered and
to disclaim any right, title or interest in or to the name "Security
Capital."
These amendments do not increase the authorized capital of PTR.
EIGHTH: The total number of shares of beneficial interest of all
classes which PTR has authority to issue is one hundred fifty million
(150,000,000) shares of beneficial interest, of the par value of one dollar
($1.00) each, all such shares having an aggregate par value of one hundred fifty
million dollars ($150,000,000). Of such one hundred fifty million shares of
beneficial interest, nine million two hundred thousand have been classified as
Cumulative Convertible Series A Preferred Shares of Beneficial Interest.
<PAGE>
The total number of shares of stock of all classes which PACIFIC has
authority to issue is two hundred fifty million (250,000,000) shares of common
stock, of the par value of one cent ($0.01) each, all such shares having an
aggregate par value of two million five hundred thousand dollars ($2,500,000).
NINTH: At the Effective Time, each issued share of common stock of
PACIFIC shall automatically and without further action by either of the parties
hereto be converted into 0.611 common shares of beneficial interest of PTR. At
the Effective Time, each right, option or warrant to acquire a share of common
stock of PACIFIC shall automatically be converted into a right, option or
warrant to acquire 0.611 common shares of beneficial interest of PTR. At the
Effective Time, each issued share of beneficial interest of PTR issued
immediately prior to the Effective Time shall not be converted or exchanged in
any manner but shall remain issued.
TENTH: The parties hereto intend that the execution of these Articles
of Merger constitutes the adoption of a "plan of reorganization" within the
meaning of Treasury Regulations [Section] 1.368-1(c).
<PAGE>
IN WITNESS WHEREOF, Security Capital Pacific Incorporated, a Maryland
corporation, and Property Trust of America, a Maryland real estate investment
trust, the entities parties to the merger, have caused these Articles of Merger
to be signed in their respective names and on their behalf and witnessed or
attested all as of the 23rd day of March 1995. Each of the individuals signing
these Articles of Merger on behalf of Security Capital Pacific Incorporated or
Property Trust of America acknowledges these Articles of Merger to be the act of
such respective entity and, as to all other matters or facts required to be
verified under oath, that to the best of his or her knowledge, information and
belief, these matters are true in all material respects, and that this statement
is made under the penalties of perjury.
SECURITY CAPITAL PACIFIC INCORPORATED,
a Maryland corporation
By:
-------------------------------
David C. Dressler, Jr.
Managing Director
Attest:
- ----------------------------
Paul E. Szurek, Secretary
PROPERTY TRUST OF AMERICA,
a Maryland real estate investment trust
By:
-------------------------------
C. Ronald Blankenship, Trustee
By:
-------------------------------
Calvin K. Kessler, Trustee
By:
-------------------------------
James H. Polk, III, Trustee
By:
-------------------------------
John C. Schweitzer, Trustee
By:
-------------------------------
William G. Myers, Trustee
By:
-------------------------------
John T. Kelly, III, Trustee
By:
-------------------------------
James A. Cardwell, Trustee
<PAGE>
Exhibit 10.1
AMENDED AND RESTATED CREDIT AGREEMENT
-------------------------------------
THIS AMENDED AND RESTATED CREDIT AGREEMENT (the "Agreement") is made and
entered into as of August 11, 1995, by and among SECURITY CAPITAL PACIFIC TRUST,
a Maryland real estate investment trust (the "Borrower"), the financial
institutions (including TCB and Wells Fargo Realty Advisors Funding,
Incorporated, the "Lenders") which are now or may hereafter become signatory
hereto, TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a national banking association
("TCB"), as administrative agent for Lenders (in such capacity, "Agent"), and
WELLS FARGO REALTY ADVISORS FUNDING, INCORPORATED, as co-agent for Lenders (in
such capacity, "Co-Agent").
W I T N E S E T H:
------------------
WHEREAS, the Borrower, the Agent and some of the Lenders (the "Existing
Lenders") entered into an Amended and Restated Credit Agreement dated as of
March 23, 1995 (the "Original Credit Agreement"); and
WHEREAS, the Borrower, the Agent, the Co-Agent, and the Lenders desire to
amend and restate the Original Credit Agreement upon the terms and conditions
hereinafter set forth;
NOW, THEREFORE in consideration of the mutual covenants, agreements and
undertakings herein contained, the parties hereto agree as follows:
1. Definitions.
-----------
Unless a particular word or phrase is otherwise defined or the context
otherwise requires, capitalized words and phrases used in Credit Documents have
the meanings provided below.
Accounts, Equipment and Inventory shall have the respective meanings assigned
to them in the Texas Business and Commerce Code in force on the date the
document using such term was executed.
Adjusted Eurodollar Interbank Rate shall mean, with respect to each Interest
Period applicable to a Eurodollar Rate Borrowing, a rate per annum equal to the
quotient, expressed as a percentage, of (a) the Eurodollar Interbank Rate with
respect to such Interest Period divided by (b) 1.0000 minus the Eurodollar
Reserve Requirement in effect on each day during such Interest Period.
Affiliate shall mean any Person controlling, controlled by or under common
control with any other Pers on. For purposes of this definition, "control"
(including "controlled by" and "under common control with") means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or otherwise.
Annual Audited Financial Statements shall mean the annual financial statements
of a Person, including all notes thereto, which statements shall include a
balance sheet as of the end of such fiscal year and an income statement and a
statement of cash flows, all setting forth in comparative form the corresponding
figures from the previous fiscal year, all prepared in conformity with Generally
Accepted Accounting Principles and accompanied by a report and opinion of
independent certified public accountants satisfactory to the Agent, which shall
state that such financial statements, in the opinion of such accountants,
present fairly the financial position of such Person as of the date thereof and
the results of its operations for the period covered thereby in
<PAGE>
conformity with Generally Accepted Accounting Principles. Such statements shall
be accompanied by a certificate of such accountants that in making the
appropriate audit and/or investigation in connection with such report and
opinion, such accountants did not become aware of any Default or, if in the
opinion of such accountant any such Default exists, a description of the nature
and status thereof. The Annual Audited Financial Statements shall be prepared
on a consolidated basis in accordance with Generally Accepted Accounting
Principles.
Applicable Margin shall mean (a) from the date hereof through and including
one (1) year after the Conversion Date, if any, the following percentage which
will be in effect whenever and for so long as the Borrower has received the
corresponding S&P Rating or Moody's Rating, whichever is lower:
<TABLE>
<CAPTION>
APPLICABLE MARGIN
S&P RATING/ -----------------------------
MOODY'S RATING EURODOLLAR RATE BASE RATE
- -------------- BORROWING BORROWING
------------------ ---------
<S> <C> <C>
A/A2 or better 1.000% 0
A-/A3 1.125% 0
BBB+/Baa1 1.250% 0
BBB/Baa2 1.375% 0
BBB-/Baa3 1.500% 0
Worse than BBB-/Baa3 1.750% .25%;
</TABLE>
and (b) after the date one (1) year after the Conversion Date, if any, the
following percentage which will be in effect whenever and for so long as the
Borrower has received the corresponding S&P Rating or Moody's Rating, whichever
is lower:
<TABLE>
<CAPTION>
APPLICABLE MARGIN
S&P RATING/ -----------------------------
MOODY'S RATING EURODOLLAR RATE BASE RATE
- -------------- BORROWING BORROWING
------------------ ---------
<S> <C> <C>
A/A2 or better 1.250% 0
A-/A3 1.375% 0
BBB+/Baa1 1.500% 0
BBB/Baa2 1.625% 0
BBB-/Baa3 1.750% .25%
Worse than BBB-/Baa3 2.000% .50%
</TABLE>
Base Rate shall mean for any day a rate per annum equal to the Applicable
Margin on that day plus the greater on a daily basis of (a) the Prime Rate for
that day, or (b) the Federal Funds Effective Rate for that day plus one-half of
one percent (1/2%).
Base Rate Borrowing shall mean that portion of the principal balance of the
Loans at any time bearing interest at the Base Rate.
Borrower's REIT Manager shall mean Security Capital Pacific Incorporated,
manager to the Borrower, or any successor manager to the Borrower permitted by
this Agreement.
Business Day shall mean a day other than (a) a day when the main office of the
Agent is not open for business, or (b) a day that is a federal banking holiday
in the United States of America.
Ceiling Rate shall mean, on any day, the maximum nonusurious rate of interest
permitted for that day by whichever of applicable federal or Texas laws permits
the higher interest rate, stated as a rate per annum. On each day, if any, that
Chapter One establishes the Ceiling Rate, the Ceiling Rate shall be the
"indicated rate ceiling" (as defined in Chapter One) for that day. The Agent
may from time to time, as to current and future balances, implement any
-2-
<PAGE>
other ceiling under Chapter One by notice to the Borrower, if and to the extent
permitted by Chapter One. Without notice to the Borrower or any other person or
entity, the Ceiling Rate shall automatically fluctuate upward and downward as
and in the amount by which such maximum nonusurious rate of interest permitted
by applicable law fluctuates.
Chapter One shall mean Chapter One of Title 79, Texas Revised Civil Statutes,
1925, as amended.
Code shall mean the Internal Revenue Code of 1986, as amended, as now or
hereafter in effect, together with all regulations, rulings and interpretations
thereof or thereunder by the Internal Revenue Service.
Commitment shall mean the commitment of the Lenders to lend funds under
Section 2.1 of this Agreement, other than Swing Loans.
Construction Interest shall mean Borrower's interest expense for the
construction of projects, which is capitalized in accordance with Generally
Accepted Accounting Principles; provided, however, that notwithstanding
Generally Accepted Accounting Principles, interest applicable to each building
under construction shall be capitalized as to such building only until
substantial completion thereof and such building is ready for its intended use
and thereafter interest attributable thereto shall be expensed.
Conversion Date has the meaning given to it in Section 2.2 hereof.
Coverage Ratio shall mean the ratio of (a) the Borrower's Funds From
Operations plus all of the Borrower's Interest Expense for the period used to
calculate Funds From Operations, to (b) dividends of any kind or character or
other proceeds paid or payable with respect to any Disqualified Stock plus all
of the Borrower's Interest Expense, in each case for the period used to
calculate the Funds From Operations.
Credit Documents shall mean this Agreement, the Notes, all instruments,
certificates and agreements now or hereafter executed or delivered to the Agent
or the Lenders pursuant to any of the foregoing, and all amendments,
modifications, renewals, extensions, increases and rearrangements of, and
substitutions for, any of the foregoing.
Debt to Tangible Net Worth Ratio shall mean the ratio of Indebtedness to
Tangible Net Worth.
Debt to Total Asset Value Ratio shall mean the ratio (expressed as a
percentage) of Indebtedness to Total Asset Value.
Determination Date shall mean one (1) year prior to the then existing
Revolving Credit Termination Date.
Disqualified Stock shall mean any of the Borrower's capital stock which by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable or exercisable) (a) matures or is subject to mandatory
redemption, pursuant to a sinking fund obligation or otherwise, (b) is
convertible into or exchangeable or exercisable for Indebtedness or
Disqualified Stock, (c) is redeemable at the option of the holder of such stock,
or (d) otherwise requires any payments by Borrower, in each case on or before
the Maturity Date.
-3-
<PAGE>
Eligible Institution shall mean a commercial bank or a finance company,
insurance company or other financial institution which is regularly engaged in
making, purchasing or investing in loans, but shall not include any Person which
is an Affiliate of the Borrower or of the Borrower's REIT Manager.
Equity Percentage shall mean the following percentage for each Unconsolidated
Affiliate which will be in effect whenever and for so long as the Unconsolidated
Affiliate Ratio for that Unconsolidated Affiliate equals the corresponding
amount:
Unconsolidated Affiliate Ratio Equity Percentage
------------------------------ -----------------
1.5:1.0 or less 100%
Greater than 1.5:1.0 but less 50%
than or equal to 1.86:1.0
Greater than 1.86:1.0 0%
Eurodollar Business Day shall mean a Business Day on which transactions in
United States dollar deposits between banks may be carried on in the London
Eurodollar interbank market.
Eurodollar Interbank Rate shall mean, for each Interest Period, the rate of
interest per annum, rounded, if necessary, to the next highest whole multiple of
one-sixteenth percent (1/16%), quoted by Agent at or before 11:00 a.m., London
time (or as soon thereafter as practicable), on the date two (2) Eurodollar
Business Days before the first day of such Interest Period, to be the arithmetic
average of the prevailing rates per annum at the time of determination and in
accordance with the then existing practice in the applicable market, for the
offering to Agent by one or more prime banks selected by Agent in its sole
discretion, in whatever Eurodollar interbank market may be selected by Agent in
its sole discretion, of deposits in United States dollars for delivery on the
first day of such Interest Period and having a maturity equal to the length of
such Interest Period and in an amount equal (or as nearly equal as may be) to
the Eurodollar Rate Borrowing to which such Interest Period relates. Each
determination by Agent of the Eurodollar Interbank Rate shall be prima facie
evidence thereof.
Eurodollar Rate shall mean for any day a rate per annum equal to the sum of
the Applicable Margin for that day plus the Adjusted Eurodollar Interbank Rate
in effect on the first day of the Interest Period for the applicable Eurodollar
Rate Borrowing. Each Eurodollar Rate is subject to adjustments for reserves,
insurance assessments and other matters as provided for in Section 3.5 hereof.
Eurodollar Rate Borrowing shall mean that portion of the principal balance of
the Loans at any time bearing interest at a Eurodollar Rate.
Eurodollar Reserve Requirement shall mean, on any day, that percentage
(expressed as a decimal fraction and rounded, if necessary, to the next highest
one ten thousandth) which is in effect on such day for determining all reserve
requirements (including, without limitation, basic, supplemental, marginal and
emergency reserves) applicable to "Eurocurrency liabilities," as currently
defined in Regulation D, all as specified by any Governmental Authority,
including but not limited to those imposed
-4-
<PAGE>
under Regulation D. Each determination of the Eurodollar Reserve Requirement by
Agent shall be prima facie evidence thereof.
Event of Default shall mean any of the events specified as an event of default
in Section 7 of this Agreement, and Default shall mean any of such events,
whether or not any requirement for notice, grace or cure has been satisfied.
Federal Funds Effective Rate shall to the extent necessary be determined by
the Agent separately for each day and shall for each such day be a rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published for each such day (or if any such day is not a
Business Day, for the next immediately preceding Business Day) by the Federal
Reserve Bank of New York, or if the weighted average of such rates is not so
published for any such day which is a Business Day, the average of the
quotations for any such day on such transactions received by the Agent from
three Federal funds brokers of recognized standing selected by the Agent.
Fixed Charge Coverage Ratio shall mean the ratio of (a) the Borrower's Funds
From Operations plus all of the Borrower's Interest Expense for the period used
to calculate Funds From Operations, less Unit Capital Expenditures, to (b)
dividends of any kind or character or other proceeds paid or payable with
respect to any Disqualified Stock, plus all of the principal payable and
principal paid on the Borrower's Indebtedness other than (i) in the case of the
Borrower, any scheduled principal payments on the Term Loans and (ii) any
regularly scheduled principal payments on any Indebtedness which pays such
Indebtedness in full, to the extent the amount of such final scheduled principal
payment is greater than the scheduled principal payment immediately preceding
such final scheduled principal payment, plus all of the Borrower's Interest
Expense, in each case for the period used to calculate the Funds From
Operations.
Funding Loss shall mean, with respect to (a) Borrower's payment or prepayment
of principal of a Eurodollar Rate Borrowing on a day other than the last day of
the applicable Interest Period; (b) Borrower's failure to borrow a Eurodollar
Rate Borrowing on the date specified by Borrower; (c) Borrower's failure to make
any prepayment of the Loans (other than Base Rate Borrowings) on the date
specified by Borrower, or (d) any cessation of a Eurodollar Rate to apply to the
Loans or any part thereof pursuant to Section 3.5, in each case whether
voluntary or involuntary, any direct loss, expense, penalty, premium or
liability incurred by any Lender (including but not limited to any loss or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by a Lender to fund or maintain a Loan).
Funds From Operations shall mean gross cash revenues (excluding unforfeited
security deposits) actually received by the Borrower, less all cash
disbursements characterized as expenses and all proper charges against income,
plus depreciation of Property and deferred taxes, reserves and other non-cash
charges, all determined in accordance with Generally Accepted Accounting
Principles; provided, that there shall not be included in such revenues (i) any
proceeds of any insurance policy other than rental or business interruption
insurance received by the Borrower, (ii) any gain which is classified as
"extraordinary" in accordance with Generally Accepted Accounting Principles, or
(iii) any capital gains. Funds From Operations will be calculated, on an
annualized basis, on the four (4) calendar quarters immediately preceding the
-5-
<PAGE>
date of the calculation. Funds From Operations shall not be increased or
decreased by gains or losses from sales of Property. Funds From Operations
shall be calculated on a consolidated basis in accordance with Generally
Accepted Accounting Principles.
Generally Accepted Accounting Principles shall mean, as to a particular
Person, such accounting practice as, in the opinion of the independent
accountants of recognized national standing regularly retained by such Person
and acceptable to the Agent, conforms at the time to generally accepted
accounting principles, consistently applied. Generally Accepted Accounting
Principles means those principles and practices (a) which are recognized as such
by the Financial Accounting Standards Board, (b) which are applied for all
periods after the date hereof in a manner consistent with the manner in which
such principles and practices were applied to the most recent audited financial
statements of the relevant Person furnished to the Lenders or where a change
therein has been concurred in by such Person's independent auditors, and (c)
which are consistently applied for all periods after the date hereof so as to
reflect properly the financial condition, and results of operations and changes
in financial position, of such Person. If there is a change in such accounting
practice as to the Borrower that could affect the Borrower's ability to comply
with the terms of this Agreement, the parties hereto agree to review and discuss
such changes in accounting practice and the terms of this Agreement for a period
of no more than thirty (30) days with a view to amending this Agreement so that
the financial measures of the Borrower's operating performance and financial
condition are substantially the same after such change as they were immediately
before such change.
Governmental Authority shall mean any foreign governmental authority, the
United States of America, any State of the United States and any political
subdivision of any of the foregoing, and any agency, department, commission,
board, bureau, court or other tribunal having jurisdiction over the Agent, any
Lender or the Borrower or their respective Property.
Historical Value shall mean the purchase price of Property (including
improvements) and ordinary related purchase transaction costs, plus the cost of
subsequent capital improvements made by the Borrower, less any provision for
losses, all determined in accordance with Generally Accepted Accounting
Principles. If the Property is purchased as a part of a group of properties,
the Historical Value shall be calculated based upon a reasonable allocation of
the aggregate purchase price by the Borrower for all purposes, and consistent
with Generally Accepted Accounting Principles.
Indebtedness shall mean and include, without duplication (1) all obligations
for borrowed money, (2) all obligations evidenced by bonds, debentures, notes or
other similar agreements, (3) all obligations to pay the deferred purchase price
of Property or services, except trade accounts payable arising in the ordinary
course of business (unless included in (6) below), (4) all guaranties,
endorsements and other contingent obligations in respect of, or any obligations
to purchase or otherwise acquire, Indebtedness of others, (5) all Indebtedness
secured by any Lien existing on any interest of the Person with respect to which
Indebtedness is being determined in Property owned subject to such Lien whether
or not the Indebtedness secured thereby shall have been assumed, and (6)
accounts payable, dividends of any kind or character or other proceeds payable
with respect to any stock and accrued expenses which in the aggregate are in
excess of four percent (4%) of the
-6-
<PAGE>
value of the assets of the Borrower, in each case including Non-recourse Debt.
Indebtedness shall be calculated on a consolidated basis in accordance with
Generally Accepted Accounting Principles.
Interest Expense shall mean all of a Person's paid, accrued or capitalized
interest expense on such Person's Indebtedness (whether direct, indirect or
contingent, and including, without limitation, interest on all convertible
debt), but excluding Construction Interest.
Interest Options shall mean the Base Rate and the Eurodollar Rate, and
"Interest Option" means either of them.
Interest Payment Dates shall mean (a) for Base Rate Borrowings, the first
(1st) day of each calendar month and the Maturity Date; and (b) for Eurodollar
Rate Borrowings, the first (1st) day of each calendar month, the end of the
applicable Interest Period, and the Maturity Date.
Interest Period shall mean, for each Eurodollar Rate Borrowing, a period
commencing on the date such Eurodollar Rate Borrowing was made and ending on the
numerically corresponding day which is, subject to availability, one (1), two
(2), three (3) or six (6) months thereafter; provided, (v) any Interest Period
which would otherwise end on a day which is not a Eurodollar Business Day shall
be extended to the next succeeding Eurodollar Business Day, unless such
Eurodollar Business Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Eurodollar Business Day; (w) any
Interest Period which begins on the last Eurodollar Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the last
Eurodollar Business Day of the appropriate calendar month; (x) no Interest
Period shall ever extend beyond the Maturity Date; and (y) Interest Periods
shall be selected by Borrower in such a manner that the Interest Period with
respect to any portion of the Loans which shall become due shall not extend
beyond such due date.
Legal Requirement shall mean any law, statute, ordinance, decree, requirement,
order, judgment, rule, regulation (or interpretation of any of the foregoing)
of, and the terms of any license or permit issued by, any Governmental
Authority.
Lender Commitment means, for any Lender, the amount set forth opposite such
Lender's name on its signature page of this Agreement, or as may hereafter
become a signatory hereto.
Lien shall mean any mortgage, pledge, charge, encumbrance, security interest,
collateral assignment or other lien or restriction of any kind, whether based on
common law, constitutional provision, statute or contract, and shall include
reservations, exceptions, encroachments, easements, rights of way, covenants,
conditions, restrictions, leases and other title exceptions.
Loans shall mean the Loans described in Sections 2.1 and 2.2 hereof. Loan
shall mean any such Loan.
Majority Lenders shall mean the Lenders with an aggregate amount of at least
sixty-six and 67/100 percent (66.67%) of the amount of the Commitment then
outstanding.
Material Adverse Change shall mean a change which could reasonably be expected
to have a Material Adverse Effect.
-7-
<PAGE>
Material Adverse Effect means a material adverse effect on (a) the financial
condition, or results of operations of Borrower and its Subsidiaries taken as a
whole, (b) the ability of Borrower to perform its obligations under any Credit
Document to which it is a party, (c) the validity or enforceability of any of
such Credit Documents, or (d) the rights and remedies of Lenders and Agent under
any of the Credit Documents.
Maturity Date shall mean (a) the Revolving Credit Termination Date prior to
any conversion of the Loans to the Term Loans, and (b) the Termination Date as
to the Term Loans.
Moody's Rating shall mean the senior unsecured debt rating from time to time
received by the Borrower from Moody's Investor Service.
Net Operating Income shall mean, for any income producing operating
properties, the difference between (a) any cash rentals, proceeds and other
income received from such Property (but excluding security or other deposits,
late fees, early lease termination or other penalties, or other income of a non-
recurring nature) during the determination period, less (b) all cash costs and
expenses (excluding interest expense and any expenditures that are capitalized
in accordance with Generally Accepted Accounting Principles) incurred as a
result of, or in connection with, or properly allocated to, the operation or
leasing of such Property during the determination period. Net Operating Income
shall be calculated on a consolidated basis in accordance with Generally
Accepted Accounting Principles.
Non-recourse Debt shall mean any Indebtedness the payment of which the
Borrower or any of its Subsidiaries is not obligated to make other than to the
extent of any security therefor.
Notes shall mean the promissory notes of the Borrower described in Section 2.1
hereof, including the Swing Loan Note, any and all renewals, extensions,
modifications, rearrangements and replacements thereof and any and all
substitutions therefor, and Note shall mean any one of them.
Obligations shall mean, as at any date of determination thereof, the sum of
(a) the aggregate amount of Loans outstanding hereunder plus (b) all other
liabilities, obligations and Indebtedness of any Parties under any Credit
Document.
Officer's Certificate shall mean a certificate in the form attached hereto as
Exhibit A.
Operating Sub-Pool Value means, with respect to properties in the Operating
Sub-Pool (as defined in Section 5.15 hereof), the lesser of (a) the aggregate
Historical Value of such properties; and (b) the sum of (i) the aggregate Net
Operating Income of such properties owned for three (3) or more months (based on
the immediately preceding twelve (12) month period, or based on the annualized
Net Operating Income during the Borrower's ownership if owned less than twelve
(12) months on the date of determination) divided by nine and one-fourth percent
(9.25%), plus (ii) for properties in the Operating Sub-Pool owned for less than
three (3) months the Historical Value of such properties.
Organizational Documents shall mean, with respect to a corporation, the
certificate of incorporation, articles of incorporation and bylaws of such
corporation; with respect to a partnership, the partnership agreement
establishing such
-8-
<PAGE>
partnership; with respect to a joint venture, the joint venture agreement
establishing such joint venture, and with respect to a trust, the instrument
establishing such trust; in each case including any and all modifications
thereof as of the date of the Credit Document referring to such Organizational
Document and any and all future modifications thereof which are consented to by
the Lenders.
Opinion Letters shall mean the opinion letters of independent counsel for the
Borrower, each in Proper Form.
Parties shall mean all Persons other than the Agent, the Co-Agent or any
Lender executing any Credit Document.
Past Due Rate shall mean, on any day, a rate per annum equal to the Ceiling
Rate for that day, or only if applicable law imposes no maximum nonusurious rate
of interest for that day, then the Past Due Rate for that day shall be a rate
per annum equal to the Base Rate plus an additional three percent (3%) per
annum, but in any event not to exceed the Ceiling Rate.
Percentage shall mean the amount, expressed as a percentage, of each Lender
Commitment as compared to the Commitment, set forth opposite the Lender's name
on its signature page of this Agreement, or as may hereafter become signatory
hereto.
Permitted Encumbrances shall mean (a) encumbrances consisting of zoning
restrictions, easements, or other restrictions on the use of real property,
provided that such items do not materially impair the use of such property for
the purposes intended and none of which is violated in any material respect by
existing or proposed structures or land use; (b) the following: (i) Liens for
taxes not yet due and payable, or being diligently contested in good faith, or
where no Material Adverse Effect could reasonably be expected to result from
such nonpayment or the imposition of such Lien; or (ii) materialmen's,
mechanic's, warehousemen's and other like Liens arising in the ordinary course
of business, securing payment of Indebtedness whose payment is not yet due, or
that are being contested in good faith by appropriate proceedings diligently
conducted, and for or against which the Borrower has established adequate
reserves in accordance with Generally Accepted Accounting Principles; (c) Liens
for taxes, assessments and governmental charges or assessments that are being
contested in good faith by appropriate proceedings diligently conducted, and for
or against which the Borrower has established adequate reserves in accordance
with Generally Accepted Accounting Principles; (d) Liens on real property which
are insured around or against by title insurance; (e) Liens securing assessments
or charges payable to a property owner association or similar entity which
assessments are not yet due and payable or are being diligently contested in
good faith; and (f) Liens securing this Agreement and Indebtedness hereunder.
Person shall mean any individual, corporation, trust, unincorporated
organization, Governmental Authority or any other form of entity.
Prime Rate shall mean, as of a particular date, the prime rate of interest per
annum most recently determined by the Agent and thereafter entered in the
minutes of the Agent's Loan and Discount Committee, automatically fluctuating
upward or downward with and at the time specified in each such determination
without notice to Borrower or any other Person; each change in the Prime Rate
shall be effective on the date such change is determined; which Prime
-9-
<PAGE>
Rate may not necessarily represent the Agent's lowest or best rate actually
charged to a customer.
Proper Form shall mean in form and substance satisfactory to the Lenders.
Property shall mean any interest in any kind of property or asset, whether
real, personal or mixed, tangible or intangible.
Quarterly Unaudited Financial Statements shall mean the quarterly financial
statements of a Person, including all notes thereto, which statements shall
include a balance sheet as of the end of such quarter and an income statement
for such fiscal quarter, and for the fiscal year to date, a statement of cash
flows for such quarter and for the fiscal year to date, subject to normal year-
end adjustments, and a detailed listing of the Borrower's Property and the
Historical Value thereof, all setting forth in comparative form the
corresponding figures for the corresponding fiscal period of the preceding year
(or, in the case of the balance sheet, the end of the preceding fiscal year),
prepared in accordance with Generally Accepted Accounting Principles except that
the Quarterly Unaudited Financial Statements may contain condensed footnotes as
permitted by regulations of the United States Securities and Exchange
Commission, and certified as true and correct by a managing director or vice
president of Borrower's REIT Manager. The Quarterly Unaudited Financial
Statements shall be prepared on a consolidated basis in accordance with
Generally Accepted Accounting Principles.
Rate Designation Date shall mean 12:00 noon, Houston, Texas time, on the date
three (3) Eurodollar Business Days preceding the first day of any proposed
Interest Period.
Rate Designation Notice shall mean a written notice substantially in the form
of Exhibit B.
Regulation D shall mean Regulation D of the Board of Governors of the Federal
Reserve System from time to time in effect and shall include any successor or
other regulation relating to reserve requirements applicable to member lenders
of the Federal Reserve System.
Revolving Credit Termination Date shall mean the earlier to occur of (a)
August 13, 1997 as the same may hereafter be accelerated pursuant to the
provisions of any of the Credit Documents, and (b) the Conversion Date.
S&P Rating shall mean the senior unsecured debt rating from time to time
received by the Borrower from Standard & Poor's Corporation.
Stated Rate shall, on any day, mean whichever of the Base Rate or the
Eurodollar Rate has been designated and provided pursuant to this Agreement;
provided that, if on any day such rate shall exceed the Ceiling Rate for that
day, the Stated Rate shall be fixed at the Ceiling Rate on that day and on each
day thereafter until the total amount of interest accrued at the Stated Rate on
the unpaid principal balance of the Notes equals the total amount of interest
which would have accrued if there had been no Ceiling Rate. If the Notes mature
(or are prepaid) before such equality is achieved, then, in addition to the
unpaid principal and accrued interest then owing pursuant to the other
provisions of the Credit Documents, Borrower promises to pay on demand to the
order of the holders of the Notes interest in an amount equal to the excess (if
any) of (a)
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the lesser of (i) the total interest which would have accrued on the Notes if
the Stated Rate had been defined as equal to the Ceiling Rate from time to time
in effect and (ii) the total interest which would have accrued on the Notes if
the Stated Rate were not so prohibited from exceeding the Ceiling Rate, over (b)
the total interest actually accrued on the Notes to such maturity (or
prepayment) date.
Subsidiary shall mean, as to a particular parent entity, any entity of which
more than fifty percent (50%) of the indicia of voting equity or ownership
rights (whether outstanding capital stock or otherwise) is at the time directly
or indirectly owned by, such parent entity, or by one or more of its other
Subsidiaries.
Swing Loan shall mean a Loan made pursuant to Section 2.1(c) hereof.
Swing Loan Note shall mean that certain promissory note dated of even date
herewith in the original principal amount of $200,000,000.00 executed by the
Borrower payable to the order of TCB.
Tangible Net Worth shall mean total assets (valued at cost without deduction
for depreciation, and including the book value of equity investments in each
Unconsolidated Affiliate multiplied by the Equity Percentage for that
Unconsolidated Affiliate), less (1) all intangibles and (2) all liabilities
(including contingent and indirect liabilities), all determined in accordance
with Generally Accepted Accounting Principles. The term "intangibles" shall
include, without limitation, (i) deferred charges, (ii) the amount of any write-
up in the book value of any assets contained in any balance sheet resulting from
revaluation thereof or any write-up in excess of the cost of such assets
acquired, and (iii) the aggregate of all amounts appearing on the assets side of
any such balance sheet for franchises, licenses, permits, patents, patent
applications, copyrights, trademarks, trade names, goodwill, treasury stock,
experimental or organizational expenses and other like intangibles. The term
"liabilities" shall include, without limitation, (i) Indebtedness secured by
Liens on Property of the Person with respect to which Tangible Net Worth is
being computed whether or not such Person is liable for the payment thereof,
(ii) deferred liabilities, and (iii) obligations under leases which have been
capitalized. Tangible Net Worth shall be calculated on a consolidated basis in
accordance with Generally Accepted Accounting Principles.
Taxes shall mean any tax, levy, impost, duty, charge or fee.
Term Loan has the meaning given it in Section 2.2 hereof.
Termination Date shall mean the date three (3) years after the Conversion
Date, as the same may hereafter be accelerated pursuant to the provisions of any
of the Credit Documents.
Total Asset Value shall mean the sum of (a) the Borrower's aggregate Net
Operating Income (based on the immediately preceding calendar quarter and
annualized, and adjusted to exclude the Net Operating Income from any properties
not owned for the full quarter and the properties described in (iii) below)
divided by eight and three-fourths percent (8.75%), plus (b) the total book
value of (i) properties acquired during the immediately preceding calendar
quarter, (ii) land not yet being developed, and (iii) land (and any improvements
being constructed thereon) on which the construction of new income producing
improvements has been commenced and is
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continuing and for up to six (6) months after completion of all improvements
thereon, plus (c) the amount of any cash and cash equivalents, excluding tenant
security and other restricted deposits, plus (d) the total book value of all of
the Borrower's other assets not described in (a), (b) or (c) above, excluding
all intangibles and all equity investments in Unconsolidated Affiliates, plus
(e) the total book value of the Borrower's equity investments in each
Unconsolidated Affiliate multiplied by the Equity Percentage for that
Unconsolidated Affiliate. Total Asset Value shall be calculated on a
consolidated basis in accordance with Generally Accepted Accounting Principles.
Unconsolidated Affiliate shall mean, in respect of any Person, any other
Person in whom such Person holds a voting equity or ownership interest and whose
financial results would not be consolidated under Generally Accepted Accounting
Principles with the financial results of such Person on the consolidated
financial statements of such Person.
Unconsolidated Affiliate Ratio shall mean, for each Unconsolidated Affiliate,
the ratio of the Indebtedness of the Unconsolidated Affiliate to the Tangible
Net Worth of the Unconsolidated Affiliate.
Unit Capital Expenditure shall mean, on an annual basis, an amount equal to
the product of (a) the number of apartment units contained in each completed,
operating Property owned by Borrower and any Subsidiary as of the last day of
each of the immediately preceding five (5) calendar quarters, divided by five
(5); and multiplied by (b) $200.00.
The following terms shall have the respective meanings ascribed to them in the
Uniform Commercial Code as enacted and in force in the State of Texas on the
date hereof:
accessions, continuation statement, fixtures, general intangibles,
proceeds, security interest and security agreement.
2. The Loans.
2.1 Advances. (a) Subject to the terms and conditions of this Agreement,
each Lender severally agrees to make Loans (other than Swing Loans) prior to the
Revolving Credit Termination Date to the Borrower not to exceed an amount (in
the aggregate, the "Commitment") at any one time outstanding equal to the
Lender's Lender Commitment. Each such request for a Loan by Borrower shall be
deemed a request for a Loan from each Lender equal to such Lender's Percentage
of the aggregate amount so requested, and such aggregate amount shall be in an
amount at least equal to $1,000,000.00 and equal to a multiple of $250,000.00,
or the difference between the Commitment and the aggregate principal balance of
the Notes, whichever is less. Each repayment of the Loans shall be deemed a
repayment of each Lender's Loan equal to such Lender's Percentage of the amount
so repaid. The obligations of the Lenders hereunder are several and not joint,
and the preceding two sentences will give rise to certain inappropriate results
if special provisions are not made to accommodate the failure of a Lender to
fund a Loan as and when required by this Agreement; therefore, notwithstanding
anything herein to the contrary, (A) no Lender shall be required to make Loans
at any one time outstanding in excess of such Lender's Percentage of the
Commitment and (B) if a Lender fails to make a Loan as and when required
hereunder and Borrower subsequently makes a repayment on
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the Loans, such repayment shall be split among the non-defaulting Lenders
ratably in accordance with their respective Percentages until each Lender has
its Percentage of all of the outstanding Loans, and the balance of such
repayment shall be divided among all of the Lenders in accordance with their
respective Percentages. Notwithstanding the foregoing, borrowings and payments
of Swing Loans shall be for TCB's own account. The Loans (other than Swing
Loans) shall be evidenced by the Notes substantially in the form of Exhibit C
attached hereto. The Borrower, the Agent and the Lenders agree that Chapter 15
of the Texas Credit Code shall not apply to this Agreement, the Notes or any
Loan.
(b) The Borrower shall give the Agent notice of each borrowing to be made
hereunder as provided in Section 3.1 hereof, and the Agent shall deliver same to
each Lender promptly thereafter. Not later than 11:00 a.m., Houston, Texas
time, on the date specified for each such borrowing hereunder other than Swing
Loans, each Lender shall make available the amount of the Loan, if any, to be
made by it on such date to the Agent at the Agent's principal office in Houston,
Texas, in immediately available funds, for the account of the Borrower. Such
amounts received by the Agent will be held in Agent's general ledger account.
The amounts so received by the Agent shall, subject to the terms and conditions
of this Agreement, be made available to the Borrower by wiring or otherwise
transferring, in immediately available funds not later than 12:00 noon, Houston,
Texas time, such amount to an account designated by the Borrower and maintained
with Texas Commerce Bank National Association in El Paso, Texas or any other
account or accounts which the Borrower may from time to time designate to the
Agent by a written notice as the account or accounts to which borrowings
hereunder are to be wired or otherwise transferred. TCB shall make available
the amount of each Swing Loan by depositing the same in immediately available
funds, in the foregoing account by 12:00 noon, Houston, Texas time, on the date
of the borrowing.
(c) Subject to the terms and conditions hereof, if necessary to meet the
Borrower's funding deadlines, TCB agrees to make Swing Loans to the Borrower at
any time on or prior to the Revolving Credit Termination Date, not to exceed an
amount at any one time outstanding equal to the lesser of (i) $200,000,000.00,
or (ii) the difference between the Commitment and the unpaid principal balance
of all Loans. Swing Loans shall constitute "Loans" for all purposes hereunder,
except that Swing Loans shall not be considered a utilization of any Lender's
Lender Commitment. Notwithstanding the foregoing, the aggregate amount of all
Loans (including, without limitation, all Swing Loans) shall not at any time
exceed the Commitment. Each request for a Swing Loan shall be in an amount
equal to a multiple of $250,000.00. If necessary to meet the Borrower's funding
deadlines, the Agent may treat any Request for Loan as a request for a Swing
Loan from TCB and TCB may fund it as a Swing Loan. Within two (2) Business Days
after each Swing Loan is funded, TCB shall request that each Lender, and each
Lender shall, on the first Business Day after such request is made, purchase a
portion of any one or more Swing Loans in an amount equal to that Lender's
Percentage of such Swing Loans by funding under such Lender's Note, such
purchase to be made in accordance with the terms of Section 2.1(b) of this
Agreement just as if the Lender were funding directly to the Borrower under its
Note (such that all Lenders other than TCB shall fund only under their
respective Note and not under the Swing Loan Note). Unless the Agent knew or
should have known when TCB funded a Swing Loan that the Borrower had not
satisfied the conditions in this Agreement to obtain a Loan, each Lender's
obligation to purchase an interest in the Swing Loans shall be absolute and
unconditional and shall not
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be affected by any circumstance, including, without limitation, (i) any set-off,
counterclaim, recoupment, defense or other right which such Lender or any other
Person may have against TCB or any other Person for any reason whatsoever; (ii)
the occurrence or continuance of a Default or Event of Default or the
termination of any Lender Commitment; (iii) any adverse change in the condition
(financial or otherwise) of the Borrower or any of its Subsidiaries; (iv) any
breach of this Agreement or any other Credit Documents by the Borrower, any of
its Subsidiaries, the Agent or any other Lender; or (v) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing.
Any portion of a Swing Loan not so purchased and converted may be treated by TCB
as a Loan which was not funded by the non-purchasing Lenders as contemplated in
Section 2.1(a) of this Agreement, and as a funding by TCB under the Commitment
in excess of TCB's Percentage. Each Swing Loan, once so sold, shall cease to be
a Swing Loan for the purposes of this Agreement, but shall be a Loan made under
the Commitment and each Lender's Lender Commitment. The Swing Loans shall be
evidenced by the Swing Loan Note substantially in the form of Exhibit C-1
attached hereto.
2.2 Term Loan Conversion.
(a) Subject to the terms and conditions of this Agreement, if any
Extension Request (as defined in Section 9) shall be denied, the Borrower may
elect to convert the aggregate unpaid principal amount of the Loans (other than
the Swing Loans) outstanding on the date (if the conversion election is chosen,
the "Conversion Date") one (1) year prior to the then existing Revolving Credit
Termination Date into a term loan owing to each of the Lenders (each a "Term
Loan"), so long as (i) the Borrower has given the Agent at least fifteen (15)
days prior written notice of the Borrower's intention to so convert the Loans,
(ii) no amounts remain unpaid under the Swing Loan Note, and (iii) the
conditions to make a Loan set forth in Section 3 are satisfied as of the
Conversion Date. After the Conversion Date, the Borrower shall have no further
right to receive, and no Lender shall have the obligation to make, any advances
of Loans.
(b) The Borrower shall repay the principal balance of each Term Loan in
quarterly installments due on November 13 first following the Conversion Date,
and continuing on the thirteenth (13th) day of each subsequent February, May,
August and November until the Termination Date. The amount of each quarterly
principal installment shall be equal to the following amount during the
corresponding period:
PERIOD PAYMENT AMOUNT
------ --------------
During the first year after Quarterly amount necessary to
the Conversion Date amortize the unpaid principal balance of
the Term Loan on the Conversion Date over a
seven (7) year period
During the second year after Quarterly amount necessary to
the Conversion Date amortize the unpaid principal balance of
the Term Loan on the Conversion Date over a
five (5) year period
During the third year after Quarterly amount necessary to
the Conversion Date amortize the unpaid principal balance of
the Term Loan on the
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Conversion Date over a three (3) year
period.
Accrued and unpaid interest on the unpaid principal balance of the Term Loans
shall continue to be due and payable on the Interest Payment Dates. The entire
unpaid principal balance, and all accrued and unpaid interest thereon, of the
Term Loans, together with all other amounts due under this Agreement, shall be
due and payable in full on the Termination Date.
2.3 Payments. (a) Except to the extent otherwise provided herein, all
payments of principal, interest and other amounts to be made by the Borrower
hereunder, under the Notes and under the other Credit Documents shall be made in
immediately available funds to the Agent at its principal office in Houston,
Texas (or in the case of a successor Agent, at the principal office of such
successor Agent in the United States), not later than 12:00 noon Houston, Texas
time on the date on which such payment shall become due (each such payment made
after such time on such due date to be deemed to have been made on the next
succeeding Business Day).
(b) The Borrower may, at the time of making each payment hereunder, under any
Note or under any other Credit Document, specify to the Agent the Loans or other
amounts payable by the Borrower hereunder or thereunder to which such payment is
to be applied (and in the event that it fails so to specify, such payment shall
be applied to the Loans (first to the Swing Loans) or, if no Loans are
outstanding, to other amounts then due and payable, provided that if no Loans or
other amounts are then due and payable or an Event of Default has occurred and
is continuing, the Agent may apply such payment to the Obligations in such order
as it may elect in its sole discretion, but subject to the other terms and
conditions of this Agreement, including without limitation Section 2.4 hereof).
Each payment received by the Agent hereunder, under any Note or under any other
Credit Document for the account of a Lender shall be paid promptly to such
Lender, in immediately available funds. If the Agent receives a payment for the
account of a Lender prior to 12:00 noon Houston, Texas time, such payment must
be delivered to the Lender on that same day and if it is not so delivered due to
the fault of the Agent, the Agent shall pay to the Lender entitled to the
payment the interest accrued on the amount of the payment pursuant to said
Lender's Note from the date the Agent receives the payment to the date the
Lender received the payment. The Agent may apply payments received from the
Borrower to pay any unpaid principal and interest on the Swing Loans before
making payment to each Lender of amounts due under the Notes other than the
Swing Loan Note.
(c) If the due date of any payment hereunder or under any Note falls on a day
which is not a Business Day or a Eurodollar Business Day, as the case may be,
the due date for such payments shall be extended to the next succeeding Business
Day or Eurodollar Business Day, respectively, and interest shall be payable for
any principal so extended for the period of such extension; provided, however,
that with respect to Eurodollar Rate Borrowings if such extension would cause
the Eurodollar Business Day of payment to fall in another calendar month, the
payment shall be due on the Eurodollar Business Day next preceding the due date
of the payment.
(d) The Borrower shall give the Agent at least one (1) Business Day's prior
written notice of the Borrower's intent to make any payment of principal or
interest under the Credit Documents not scheduled to be paid under the Credit
Documents. Any such notification of payment shall be irrevocable after it is
made
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by the Borrower. Upon receipt by the Agent of such notification of payment, it
shall deliver same to the other Lenders.
2.4 Pro Rata Treatment. Except to the extent otherwise provided herein: (a)
each borrowing from the Lenders under Section 2.1(a) hereof shall be made
ratably from the Lenders on the basis of their respective Percentages, each
payment of the Fee (hereinafter defined) shall be made for the account of the
Lenders, and shall be applied, pro rata, according to the Lenders' respective
Lender Commitment; and (b) each payment by the Borrower of principal or
interest on the Loans other than the Swing Loans, of any other sums advanced by
the Lenders pursuant to the Credit Documents, and of any other amount owed to
the Lenders other than the Fee, payments of Swing Loans, or any other sums
designated by this Agreement as being owed to a particular Lender, shall be made
to the Agent for the account of the Lenders pro rata in accordance with the
respective unpaid principal amounts of the Loans (other than Swing Loans) held
by the Lenders. Payments of Swing Loans shall be for TCB's own account.
2.5 Non-Receipt of Funds by the Agent. Unless the Agent shall have been
notified by a Lender or the Borrower (the "Payor") prior to the date on which
such Lender is to make payment to the Agent of the proceeds of a Loan (or
purchase of a portion of a Swing Loan) to be made by it hereunder or the
Borrower is to make a payment to the Agent for the account of one or more of the
Lenders, as the case may be (such payment being herein called the "Required
Payment"), which notice shall be effective upon receipt, that the Payor does not
intend to make the Required Payment to the Agent, the Agent may assume that the
Required Payment has been made and may, in reliance upon such assumption (but
shall not be required to), make the amount thereof available to the intended
recipient on such date and, if the Payor has not in fact made the Required
Payment to the Agent, the recipient of such payment shall, on demand, pay to the
Agent the amount made available by the Agent together with interest thereon in
respect of the period commencing on the date such amount was so made available
by the Agent until the date the Agent recovers such amount at a rate per annum
equal to (a) the Past Due Rate for such period if the recipient returning a
Required Payment is the Borrower, or (b) the Federal Funds Effective Rate for
such period if the recipient returning a Required Payment is the Agent or a
Lender.
2.6 Sharing of Payments, Etc. The Borrower agrees that, in addition to (and
without limitation of) any right of set-off, bankers' lien or counterclaim a
Lender may otherwise have, each Lender shall be entitled, at its option, to
offset balances held by it for the account of the Borrower at any of its
offices, against any principal of or interest on any of such Lender's Loans to
the Borrower hereunder, or other Obligations of the Borrower hereunder, which is
not paid (regardless of whether such balances are then due to the Borrower), in
which case it shall promptly notify the Borrower and the Agent thereof, provided
that such Lender's failure to give such notice shall not affect the validity
thereof. If a Lender shall obtain payment of any principal of or interest on
any Loan made by it under this Agreement (other than Swing Loans made by TCB),
or other Obligation then due to such Lender hereunder, through the exercise of
any right of set-off, banker's lien, counterclaim or similar right, or
otherwise, it shall promptly purchase from the other Lenders portions of the
Loans made or other Obligations held (other than Swing Loans made by TCB), by
the other Lenders in such amounts, and make such other adjustments from time to
time as shall be equitable to the end that all the Lenders shall share the
benefit of such payment (net of any expenses which may be
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incurred by such Lender in obtaining or preserving such benefit) pro rata in
accordance with the unpaid principal and interest on the Obligations then due to
each of them. To such end all the Lenders shall make appropriate adjustments
among themselves (by the resale of participations sold or otherwise) if such
payment is rescinded or must otherwise be restored. Nothing contained herein
shall require any Lender to exercise any such right or shall affect the right of
any Lender to exercise, and retain the benefits of exercising, any such right
with respect to any other indebtedness or obligation of the Borrower.
2.7 Fees. The Borrower shall pay to the Agent for the account of each Lender
fees (collectively, the "Fee") equal to (a) an amount payable as a commitment
fee by the Borrower to the Agent for the account of each Lender equal to the
portion of the daily unused amount of the Commitment listed below multiplied by
the corresponding rate per annum applicable to that portion:
Unused Commitment Rate
----------------- ----
Up to but not including $115,000,000 0.1250%
$115,000,000 up to and including
$230,000,000 0.1875%
Over $230,000,000 0.2500%
such commitment fee to be payable in arrears on or before the tenth (10th) day
of each April, July, October and January, (b) if the Revolving Credit
Termination Date is extended pursuant to Section 9 of this Agreement, an amount
payable as an extension fee by the Borrower to the Agent for the account of each
Lender that extends its Loans equal to one-fourth of one percent (1/4%) of each
Lender's Lender Commitment at that time payable on the Determination Date, and
(c) if the Loans are converted to the Term Loans pursuant to Section 2.2 of this
Agreement, an amount payable as a conversion fee by the Borrower to the Agent
for the account of each Lender that converts its Loans equal to one-fourth of
one percent (1/4%) of the aggregate unpaid principal balance of each Loan on the
Conversion Date payable to each Lender on the Conversion Date, plus one-fourth
of one percent (1/4%) of the aggregate unpaid principal balance of each Loan on
the Conversion Date payable to each Lender on the date two (2) years after the
Conversion Date if any portion of the Term Loan is unpaid on that date. The Fee
shall not be refundable (except as required by Section 3.1(c) of this
Agreement). Any portion of the Fee which is not paid by the Borrower when due
shall bear interest at the Past Due Rate from the date due until the date paid
by the Borrower. The Fee shall be calculated on the actual number of days
elapsed in a year deemed to consist of 360 days.
3. Conditions.
-----------
3.1 All Loans. The obligation of any Lender to make any Loan is subject to
the accuracy of all representations and warranties of the Borrower on the date
of such Loan, to the performance by the Borrower of its obligations under the
Credit Documents and to the satisfaction of the following further conditions:
(a) the Agent shall have received the following, all of which shall be duly
executed and in Proper Form: (1) a Request for Loan, substantially in the form
of Exhibit D (i) by 11:00 a.m., Houston, Texas time, one (1) Business Day before
the date (which shall also be a Business Day) of the proposed Loan which is to
be a Base Rate Borrowing (other than Swing Loans), (ii) by 9:00 a.m., Houston,
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Texas time, on the same Business Day of any proposed Swing Loan, provided that
prior to 5:00 p.m., Houston, Texas time one (1) Business Day before the date of
the proposed Swing Loan, Borrower shall have notified TCB, in writing or by
telephone, of its intent to submit a request for a Swing Loan, or (iii) by the
Rate Designation Date of the proposed Loan which is to be a Eurodollar Rate
Borrowing; and (2) such other documents as the Agent may reasonably require to
satisfy itself or the request of any Lender; (b) no Default or Event of Default
shall have occurred and be continuing; (c) the making of the Loan shall not be
prohibited by any Legal Requirement (in which event the applicable portion of
the Fee will not be charged to the Borrower); (d) the Borrower shall have paid
all legal fees and expenses of the type described in Section 5.10 hereof through
the date of such Loan; and (e) in the case of a Loan other than a Swing Loan,
all Swing Loans then outstanding shall have been paid or shall be paid with the
proceeds of such Loan.
3.2 First Loan. In addition to the matters described in Section 3.1 hereof,
the obligation of the Lenders to make the first Loan under this Agreement is
subject to the receipt by the Lenders of each of the following, in Proper Form:
(a) the Notes, executed by the Borrower; (b) a certificate executed by the
Secretary of the Borrower dated as of the date hereof; (c) a certificate from
the Secretary of State or other appropriate public official of Maryland as to
the continued existence and good standing of the Borrower; (d) a certificate
from the appropriate public official of every state where the location of the
Borrower's Property requires it to be qualified to do business as to the due
qualification and good standing of the Borrower; (e) a legal opinion from
independent counsel for the Borrower as to the matters set forth on Exhibit E
acceptable to the Lenders; (f) policies of insurance addressed to the Agent
reflecting the insurance required by Section 5.7 hereof; and (g) an Officer's
Certificate in the form of Exhibit A; and to the further condition that, at the
time of the initial Loan, all legal matters incident to the transactions herein
contemplated shall be satisfactory to Liddell, Sapp, Zivley, Hill & LaBoon,
L.L.P., counsel for the Agent.
3.3 Options Available. The outstanding principal balance of the Notes shall
bear interest at the Base Rate; provided, that (1) all past due amounts, both
principal and accrued interest, shall bear interest at the Past Due Rate, and
(2) subject to the provisions hereof, Borrower shall have the option of having
all or any portion of the principal balance of the Notes, other than the Swing
Loan Note, from time to time outstanding bear interest at a Eurodollar Rate.
The records of the Lenders with respect to Interest Options, Interest Periods
and the amounts of Loans to which they are applicable shall be prima facie
evidence thereof. Interest on the Loans shall be calculated at the Base Rate
except where it is expressly provided pursuant to this Agreement that a
Eurodollar Rate is to apply.
3.4 Designation and Conversion. Borrower shall have the right to designate or
convert its Interest Options in accordance with the provisions hereof. Provided
no Event of Default has occurred and is continuing and subject to the provisions
of Section 3.5, Borrower may elect to have a Eurodollar Rate apply or continue
to apply to all or any portion of the principal balance of the Notes, other than
the Swing Loan Note. Each change in Interest Options shall be a conversion of
the rate of interest applicable to the specified portion of the Loans, but such
conversion shall not change the respective outstanding principal balance of the
Notes.
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The Interest Options shall be designated or converted in the manner provided
below:
(a) Borrower shall give Agent telephonic notice, promptly confirmed by a Rate
Designation Notice. Each such telephonic and written notice shall specify the
amount of Loan which is the subject of the designation, if any; the amount of
borrowings into which such borrowings are to be converted or for which an
Interest Option is designated; the proposed date for the designation or
conversion and the Interest Period, if any, selected by Borrower. Such
telephonic notice and the Rate Designation Notice shall be irrevocable and shall
be given to Agent no later than the applicable Rate Designation Date. The Agent
shall promptly deliver the Rate Designation Notice to the Lenders.
(b) No more than twelve (12) Eurodollar Rate Borrowings with twelve (12)
Interest Periods shall be in effect at any time.
(c) Each designation or conversion of a Eurodollar Rate Borrowing shall occur
on a Eurodollar Business Day.
(d) Except as provided in Section 3.5 hereof, no Eurodollar Rate Borrowing
shall be converted on any day other than the last day of the applicable Interest
Period.
(e) Unless a Rate Designation Notice to the contrary is received as provided
in this Agreement, each Eurodollar Rate Borrowing will convert to a Base Rate
Borrowing after the expiration of the Interest Period.
3.5 Special Provisions Applicable to Eurodollar Rate Borrowings.
(a) Options Unlawful. If the adoption of any applicable Legal Requirement or
any change in any applicable Legal Requirement or in the interpretation or
administration thereof by any Governmental Authority or compliance by the
Lenders with any request or directive (whether or not having the force of law)
of any central bank or other Governmental Authority shall at any time make it
unlawful or impossible for any Lender to permit the establishment of or to
maintain any Eurodollar Rate Borrowing, the commitment of the Lenders to
establish or maintain such Eurodollar Rate Borrowing shall forthwith be
suspended until such condition shall cease to exist and Borrower shall
forthwith, upon demand by Agent to Borrower, (1) convert the Eurodollar Rate
Borrowing with respect to which such demand was made to a Base Rate Borrowing;
(2) pay all accrued and unpaid interest to date on the amount so converted; and
(3) pay any amounts required to compensate the Lenders for any additional cost
or expense which the Lenders may incur as a result of such adoption of or change
in such Legal Requirement or in the interpretation or administration thereof and
any Funding Loss which the Lenders may incur as a result of such conversion.
If, when Agent so notifies Borrower, Borrower has given a Rate Designation
Notice specifying a Eurodollar Rate Borrowing but the selected Interest Period
has not yet begun, such Rate Designation Notice shall be deemed to be of no
force and effect, as if never made, and the balance of the Loans specified in
such Rate Designation Notice shall bear interest at the Base Rate until a
different available Interest Option shall be designated in accordance herewith.
(b) Increased Cost of Borrowings. If the adoption of any applicable Legal
Requirement or any change in any applicable Legal Requirement or in the
interpretation or administration thereof by any Governmental Authority or
compliance by any Lender with any
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request or directive of general applicability (whether or not having the force
of law) of any central bank or Governmental Authority shall at any time as a
result of any portion of the principal balance of the Notes being maintained on
the basis of a Eurodollar Rate:
(1) subject any Lender (or make it apparent that any Lender is subject) to
any Taxes, or any deduction or withholding for any Taxes, on or from
any payment due under any Eurodollar Rate Borrowing or other amount
due hereunder, other than income and franchise taxes of the United
States and its political subdivisions; or
(2) change the basis of taxation of payments due from Borrower to any
Lender under any Eurodollar Rate Borrowing (otherwise than by a change
in the rate of taxation of the overall net income of a Lender); or
(3) impose, modify, increase or deem applicable any reserve requirement
(excluding that portion of any reserve requirement included in the
calculation of the applicable Eurodollar Rate), special deposit
requirement or similar requirement (including, but not limited to,
state law requirements and Regulation D) imposed, modified, increased
or deemed applicable by any Governmental Authority against assets held
by any Lender, or against deposits or accounts in or for the account
of any Lender, or against loans made by any Lender, or against any
other funds, obligations or other property owned or held by any
Lender; or
(4) impose on any Lender any other condition regarding any Eurodollar Rate
Borrowing;
and the result of any of the foregoing is to increase the cost to any
Lender of agreeing to make or of making, renewing or maintaining such
Eurodollar Rate Borrowing, or reduce the amount of principal or interest
received by any Lender, then, upon demand by Agent, Borrower shall pay to
such Lender, from time to time as specified by such Lender, additional
amounts which shall compensate such Lender for such increased cost or
reduced amount. Agent will promptly notify Borrower in writing of any
event which will entitle any Lender to additional amounts pursuant to this
paragraph. A Lender's determination of the amount of any such increased
cost, increased reserve requirement or reduced amount shall be prima facie
evidence thereof. Borrower shall have the right, if it receives from Agent
any notice referred to in this paragraph, upon three Business Days' notice
to Agent, either (i) to repay in full (but not in part) any borrowing with
respect to which such notice was given, together with any accrued interest
thereon, or (ii) to convert the Eurodollar Rate Borrowing which is the
subject of the notice to a Base Rate Borrowing; provided, that any such
repayment or conversion shall be accompanied by payment of (x) the amount
required to compensate a Lender for the increased cost or reduced amount
referred to in the preceding paragraph; (y) all accrued and unpaid interest
to date on the amount so repaid or
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converted, and (z) any Funding Loss which any Lender may incur as a result
of such repayment or conversion.
(c) Inadequacy of Pricing and Rate Determination. If for any reason with
respect to any Interest Period Agent shall have determined (which
determination shall be prima facie evidence thereof) that:
(1) Agent is unable through its customary general practices to determine
any applicable Eurodollar Rate, or
(2) by reason of circumstances affecting the applicable market generally,
Agent is not being offered deposits in United States dollars in such
market, for the applicable Interest Period and in an amount equal to
the amount of any applicable Eurodollar Rate Borrowing requested by
Borrower, or
(3) any applicable Eurodollar Rate will not adequately and fairly reflect
the cost to the Lenders of making and maintaining such Eurodollar Rate
Borrowing hereunder for any proposed Interest Period,
then Agent shall give Borrower notice thereof and thereupon, (A) any Rate
Designation Notice previously given by Borrower designating the applicable
Eurodollar Rate Borrowing which has not commenced as of the date of such
notice from Agent shall be deemed for all purposes hereof to be of no force
and effect, as if never given, and (B) until Agent shall notify Borrower
that the circumstances giving rise to such notice from Agent no longer
exist, each Rate Designation Notice requesting the applicable Eurodollar
Rate shall be deemed a request for a Base Rate Borrowing, and any
applicable Eurodollar Rate Borrowing then outstanding shall be converted,
without any notice to or from Borrower, upon the termination of the
Interest Period then in effect with respect to it, to a Base Rate
Borrowing.
(d) Funding Losses. Borrower shall indemnify the Agent and each Lender
against and hold the Agent and each Lender harmless from any Funding Loss. This
agreement shall survive the payment of the Notes. A certificate as to any
additional amounts payable pursuant to this subsection and setting forth the
reasons for the Funding Loss submitted by Agent to Borrower shall be prima facie
evidence thereof.
3.6 Funding Offices; Adjustments Automatic. Any Lender may, if it so elects,
fulfill its obligation as to any Eurodollar Rate Borrowing by causing a branch
or affiliate of such Lender to make such Loan and may transfer and carry such
Loan at, to, or for the account of, any branch office or affiliate of such
Lender; provided, that in such event for the purposes of this Agreement such
Loan shall be deemed to have been made by such Lender and the obligation of
Borrower to repay such Loan shall nevertheless be to such Lender and shall be
deemed held by it for the account of such branch or affiliate. Without notice
to Borrower or any other person or entity, each rate required to be calculated
or determined under this Agreement shall automatically fluctuate upward and
downward in accordance with the provisions of this Agreement.
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3.7 Funding Sources, Payment Obligations. Notwithstanding any provision of
this Agreement to the contrary, each Lender shall be entitled to fund and
maintain its funding of all or any part of the Loans in any manner it sees fit,
it being understood, however, that for the purposes of this Agreement all
determinations hereunder shall be made as if each Lender had actually funded and
maintained each Eurodollar Rate Borrowing during each Interest Period through
the purchase of deposits having a maturity corresponding to such Interest Period
and bearing an interest rate equal to the Eurodollar Rate for such Interest
Period. Notwithstanding the foregoing, Funding Losses, increased costs and
other obligations relating to Eurodollar Rate Borrowings described in Section
3.5 of this Agreement will only be paid by the Borrower as and when actually
incurred by the Lenders.
3.8 Mitigation, Non-Discrimination. (a) Each Lender will notify the Borrower
through the Agent of any event occurring after the date of this Agreement which
will require or enable such Lender to take the actions described in Sections
3.5(a) or (b) of this Agreement as promptly as practicable after it obtains
knowledge thereof and determines to request such action, and (if so requested by
the Borrower through the Agent) will designate a different lending office of
such Lender for the applicable Eurodollar Rate Borrowing or will take such other
action as the Borrower reasonably requests if such designation or action is
consistent with the internal policy of such Lender and legal and regulatory
restrictions, can be undertaken at no additional cost, will avoid the need for,
or reduce the amount of, such action and will not, in the sole opinion of such
Lender, be disadvantageous to such Lender (provided that such Lender will have
no obligation to designate a different lending office which is located in the
United States of America).
(b) None of the Lenders shall be able to pass through to the Borrower
changes and costs under Section 3.5 of this Agreement on a discriminating basis,
such that such changes and costs are not also passed through by each Lender to
other customers of such Lender similarly situated where such customer is subject
to documents providing for such pass through.
(c) If any Lender elects under Section 3.5 of this Agreement to suspend or
terminate the availability of Eurodollar Rate Borrowings for any material period
of time, and the event giving rise to such election is not generally applicable
to all of the Lenders, the Borrower may within sixty (60) days after
notification of such Lender's election, and so long as no Event of Default is
then in existence, either (i) demand that such Lender, and upon such demand,
such Lender shall promptly, assign its Lender Commitment to another financial
institution subject to and in accordance with the provisions of Section 10.6 of
this Agreement for a purchase price equal to the unpaid balance of principal,
accrued interest, the unpaid balance of the Fee and expenses owing to such
Lender pursuant to this Agreement, or (ii) pay such Lender the unpaid balance of
principal, accrued interest, the unpaid balance of the Fee and expenses owing to
such Lender pursuant to this Agreement, whereupon, such Lender shall no longer
be a party to this Agreement or have any rights or obligations hereunder or
under any other Credit Documents, and the Commitment shall immediately and
permanently be reduced by an amount equal to the Lender Commitment of such
Lender.
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4. Representations and Warranties.
------------------------------
To induce the Lenders to enter into this Agreement and to make the Loans, the
Borrower represents and warrants to the Agent and the Lenders as follows:
4.1. Organization. The Borrower is duly organized, validly existing and in
good standing as a real estate investment trust under the laws of the state of
Maryland; has all power and authority to conduct its business as presently
conducted; and is duly qualified to do business and in good standing in every
state where the location of its Property requires it to be qualified to do
business, unless the failure to be so qualified could not reasonably be expected
to have a Material Adverse Effect.
4.2 Financial Statements. The financial statements delivered to the Agent
fairly present, in accordance with Generally Accepted Accounting Principles
(provided, however, that the Quarterly Unaudited Financial Statements are
subject to normal year-end adjustments and may contain condensed footnotes as
permitted by regulations of the United States Securities and Exchange
Commission), the financial condition and the results of operations of the
Borrower as at the dates and for the periods indicated. No Material Adverse
Change has occurred since the dates of such financial statements. The Borrower
is not subject to any instrument or agreement which would materially prevent it
from conducting its business as it is now conducted or as it is contemplated to
be conducted.
4.3 Enforceable Obligations; Authorization. The Credit Documents are legal,
valid and binding obligations of the Parties, enforceable in accordance with
their respective terms, except as may be limited by bankruptcy, insolvency and
other laws affecting creditors' rights generally and by general equitable
principles. The execution, delivery and performance of the Credit Documents
have all been duly authorized by all necessary action; are within the power and
authority of the Parties; do not and will not contravene or violate any Legal
Requirement or the Organizational Documents of the Parties; do not and will not
result in the breach of, or constitute a default under, any agreement or
instrument by which the Parties or any of their respective Property may be bound
or affected, except where such breach or default could not reasonably be
expected to have a Material Adverse Effect; and do not and will not result in
the creation of any Lien upon any Property of any of the Parties except as
expressly contemplated therein. All necessary permits, registrations and
consents for such making and performance have been obtained except where the
lack thereof could not reasonably be expected to have a Material Adverse Effect.
4.4 Other Debt. The Borrower is not in default in the payment of any other
Indebtedness or under any agreement, mortgage, deed of trust, security agreement
or lease to which it is a party which default could reasonably be expected to
have a Material Adverse Effect.
4.5 Litigation. There is no litigation or administrative proceeding pending
or, to the knowledge of the Borrower, threatened against, or any outstanding
judgment, order or decree affecting, the Borrower before or by any Governmental
Authority which is not adequately covered by insurance or which, if determined
adversely to the Borrower could reasonably be expected to have a Material
Adverse Effect. The Borrower is not in default with respect to any judgment,
order or decree of any Governmental Authority which
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default could reasonably be expected to have a Material Adverse Effect.
4.6 Taxes. The Borrower has filed all tax returns required to have been filed
and paid all taxes shown thereon to be due, except those for which extensions
have been obtained, those which are being contested in good faith and those for
which the Borrower's failure to file a return or pay could not reasonably be
expected to have a Material Adverse Effect.
4.7 Regulation U. None of the proceeds of any Loan will be used for the
purpose of purchasing or carrying directly or indirectly any margin stock or for
any other purpose that would constitute this transaction a "purpose credit"
within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System.
4.8 Subsidiaries. The Borrower has no Subsidiaries which individually or in
the aggregate own more than twenty-five percent (25%) in value of the Borrower's
and the Subsidiaries' consolidated assets determined in accordance with
Generally Accepted Accounting Principles. Each of the Borrower's Subsidiaries
is a "qualified REIT subsidiary" under Section 856 of the Code.
4.9 Securities Act of 1933. Other than the Agent's efforts in syndicating the
Loans (for which the Agent is responsible) neither the Borrower nor any agent
acting for it has offered the Notes or any similar obligation of the Borrower
for sale to or solicited any offers to buy the Notes or any similar obligation
of the Borrower from any Person other than the Agent or any Lender, and neither
the Borrower nor any agent acting for it will take any action which would
subject the sale of the Note to the provisions of Section 5 of the Securities
Act of 1933, as amended.
4.10 No Contractual or Corporate Restrictions. The Borrower is not a party
to, or bound by, any contract, agreement or charter or other corporate
restriction materially and adversely affecting its business, Property, assets,
operations or condition, financial or otherwise.
4.11 Investment Company Act Not Applicable. The Borrower is not an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended.
4.12 Public Utility Holding Company Act Not Applicable. The Borrower is not
a "holding company", or a "subsidiary company" of a "holding company", or an
"affiliate" of a "holding company", or an affiliate of a "subsidiary company" of
a "holding company", as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended.
4.13 ERISA Not Applicable. The Borrower is not subject to any requirements
of the Employee Retirement Income Security Act of 1974 as amended from time to
time, or any rules, regulations, rulings or interpretations adopted by the
Internal Revenue Service or the Department of Labor thereunder.
5. Affirmative Covenants.
---------------------
The Borrower covenants and agrees with the Agent and the Lenders that prior to
the termination of this Agreement it will do, and if necessary cause to be done,
each and all of the following:
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5.1 Taxes, Insurance, Existence, Regulations, Property, etc. At all times (a)
pay when due all taxes and governmental charges of every kind upon it or against
its income, profits or Property, unless and only to the extent that the same
shall be contested in good faith and reserves which are adequate under Generally
Accepted Accounting Principles have been established therefor, or unless such
failure to pay could not reasonably be expected to have a Material Adverse
Effect; (b) do all things necessary to preserve its existence, qualifications,
rights and franchises in all States where such qualification is necessary or
desirable, except where failure to obtain the same could not reasonably be
expected to have a Material Adverse Effect; (c) comply with all applicable Legal
Requirements in respect of the conduct of its business and the ownership of its
Property except where failure to so comply could not reasonably be expected to
have a Material Adverse Effect; and (d) cause its Property to be protected,
maintained and kept in good repair (reasonable wear and tear excepted) and make
all replacements and additions to its Property as may be reasonably necessary to
conduct its business.
5.2 Financial Statements and Information. Furnish to the Agent each of the
following: (a) as soon as available and in any event within 90 days after the
end of each fiscal year of the Borrower, Annual Audited Financial Statements of
the Borrower (which shall include an unaudited statement of Funds From
Operations); (b) as soon as available and in any event within 45 days after the
end of each quarter (except the last quarter) of each fiscal year of the
Borrower, Quarterly Unaudited Financial Statements of the Borrower (which shall
include a statement of Funds From Operations); (c) concurrently with the
financial statements provided for in Subsections 5.2(a) and (b) hereof, an
Officer's Certificate, together with such schedules, computations and other
information (including, without limitation, if provided to Borrower information
as to Unconsolidated Affiliates of the Borrower), in reasonable detail, as may
be required by the Agent to demonstrate compliance with the covenants set forth
herein or reflecting any non-compliance therewith as of the applicable date, all
certified as true, correct and complete by a managing director, vice president
or controller of Borrower's REIT Manager; (d) promptly after the filing thereof,
all reports to or filings made by the Borrower or any of its Subsidiaries with
the Securities and Exchange Commission, including, without limitation,
registration statements and reports on Forms 10-K, 10-Q and 8-K (or their
equivalents); (e) within two (2) Business Days after the receipt thereof, a copy
of the notification to the Borrower of the Borrower's S&P Rating or Moody's
Rating, or change therein, and (f) such other information relating to the
financial condition and affairs of the Borrower as from time to time may be
reasonably requested by any Lender. The Agent will send to each Lender the
information received by the Agent pursuant to this Section 5.2 promptly after
the receipt thereof by Agent.
5.3 Financial Tests. Have and maintain, on a consolidated basis in accordance
with Generally Accepted Accounting Principles: (a) a Debt to Tangible Net Worth
Ratio no greater than 1.0:1.0 at all times; (b) a Coverage Ratio of not less
than 2.0:1.0 at all times; (c) a Fixed Charge Coverage Ratio of not less than
1.4:1.0 at all times; (d) a Tangible Net Worth of at least One Billion Dollars
($1,000,000,000.00) at all times; and (e) a Debt to Total Asset Value Ratio no
greater than (i) fifty-five percent (55%) during the first year after the
Conversion Date, if any, and (ii) fifty percent (50%) thereafter.
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5.4 Inspection. In order to permit the Agent to ascertain compliance with the
Credit Documents, during normal business hours permit the Agent to inspect its
Property, to examine its files, books and records and make and take away copies
thereof, and to discuss its affairs with its officers and accountants, all at
such times and intervals and to such extent as a Lender may reasonably desire.
5.5 Further Assurances. Promptly execute and deliver any and all other and
further instruments which may be requested by the Agent to cure any defect in
the execution and delivery of any Credit Document or more fully to describe
particular aspects of the Borrower's agreements set forth in the Credit
Documents or so intended to be.
5.6 Books and Records. Maintain books of record and account in accordance
with Generally Accepted Accounting Principles.
5.7 Insurance. Maintain insurance with such insurers, on such of its
properties, in such amounts and against such risks as is consistent with
insurance maintained by businesses of comparable type and size in the industry,
and furnish the Agent satisfactory evidence thereof promptly upon request.
5.8 Notice of Certain Matters. Notify the Agent promptly upon acquiring
knowledge of the occurrence of any of the following: the institution or
threatened institution of any lawsuit or administrative proceeding affecting the
Borrower in which the claim exceeds $250,000.00 and if determined adversely
could have a Material Adverse Effect; when the Borrower believes that there has
been a Material Adverse Change; or the occurrence of any Event of Default or any
Default. The Borrower will notify the Agent in writing at least thirty (30)
Business Days prior to the date that the Borrower changes its name or the
location of its chief executive office or principal place of business or the
place where it keeps its books and records.
5.9 Use of Proceeds. The proceeds of the Loans will be used for general
business purposes including (without limitation) for acquisition of multi-family
real estate properties, for the development and enhancement of multi-family real
estate properties, or for the costs of construction of multi-family real estate
projects owned or to be acquired by the Borrower. Notwithstanding the
foregoing, none of the proceeds of the Loans will be used to finance, fund or
complete any hostile acquisition of any Person.
5.10 Expenses of and Claims Against the Agent and the Lenders. To the
extent not prohibited by applicable law, the Borrower will pay all reasonable
costs and expenses incurred to third parties and reimburse the Agent and each
Lender, as the case may be, for any and all reasonable expenditures of every
character incurred or expended from time to time, in connection with (a)
regardless of whether a Default or Event of Default shall have occurred, the
Agent's preparation, negotiation and completion of the Credit Documents, and (b)
during the continuance of an Event of Default, all costs and expenses relating
to the Agent's and such Lender's exercising any of its rights and remedies under
this or any other Credit Document, including, without limitation, attorneys'
fees, legal expenses, and court costs; provided, that no rights or option
granted by the Borrower to the Agent or any Lender or otherwise arising pursuant
to any provision of this or any other instrument shall be deemed to impose or
admit a duty on the Agent or any Lender to supervise, monitor or control any
aspect of the character or condition of any property or any operations conducted
in
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connection with it for the benefit of the Borrower or any other person or entity
other than the Agent or such Lender. Notwithstanding the foregoing, the
Borrower shall not be charged with any cost or expense incurred by the Agent or
any Lender relating to disputes or claims among or between the Agent, the
Lenders, or any of them unless during the continuance of an Event of Default and
related to details of enforcement of the Lenders' rights under the Credit
Documents.
5.11 Legal Compliance; Indemnification. The Borrower shall operate its
Property and businesses in full compliance with all Legal Requirements. It
shall not constitute an Event of Default if there is a failure to comply with
any Legal Requirement which failure could not reasonably be expected to have a
Material Adverse Effect. The Borrower shall indemnify the Agent and each
Lender, their directors, officers, employees and shareholders (the "Indemnified
Parties") for and defend and hold the Indemnified Parties harmless against any
and all claims, demands, liabilities, causes of action, penalties, obligations,
damages, judgments, deficiencies, losses, costs or expenses (including, without
limitation, interest, penalties, attorneys' fees, and amounts paid in
settlement) threatened or incurred by reason of, arising out of or in any way
related to any failure of the Borrower to so comply with the provisions of any
Legal Requirement, this Agreement or the other Credit Documents, and any and all
matters arising out of any act, omission, event or circumstance, regardless of
whether the act, omission, event or circumstance constituted a violation of any
such Legal Requirement, this Agreement or the other Credit Documents at the time
of its existence or occurrence. THE BORROWER SHALL INDEMNIFY THE AGENT AND EACH
LENDER PURSUANT TO THIS SECTION REGARDLESS OF WHETHER THE ACT, OMISSION, FACTS,
CIRCUMSTANCES OR CONDITIONS GIVING RISE TO SUCH INDEMNIFICATION WERE CAUSED IN
WHOLE OR IN PART BY THE AGENT'S OR SUCH LENDER'S NEGLIGENCE (SIMPLE, BUT NOT
GROSS NEGLIGENCE). The Borrower will comply with all Legal Requirements to
maintain, and will at all times qualify as and maintain, its status as a real
estate investment trust under Section 856(c)(1) of the Code.
5.12 Borrower's Performance. If the Borrower should fail to comply with any
of the agreements, covenants or obligations of the Borrower under this Agreement
or any other Credit Document, then the Agent (in the Borrower's name or in
Agent's name) may perform them or cause them to be performed for the account of
the Borrower and at the Borrower's sole expense, but shall not be obligated to
do so. Any and all expenses thus incurred or paid by the Agent and by any
Lender shall be the Borrower's demand obligations to the Agent or such Lender
and shall bear interest from the date of demand therefor until the date that the
Borrower repays it to the Agent or the applicable Lender at the Past Due Rate.
Upon making any such payment or incurring any such expense, the Agent or the
applicable Lender shall be fully subrogated to all of the rights of the Person
receiving such payment. Any amounts owing by the Borrower to the Agent or any
Lender pursuant to this provision or any other provision of this Agreement shall
automatically and without notice be secured by any collateral provided by the
Credit Documents. The amount and nature of any such expense and the time when
paid shall, absent manifest error, be fully established by the affidavit of the
Agent or the applicable Lender or any of the Agent's or the applicable Lender's
officers or agents.
5.13 Professional Services. Promptly upon the Agent's request to satisfy
itself or the request of any Lender, the Borrower, at the Borrower's sole cost
and expense, provided, however, that so long as no Event of Default has occurred
and is continuing, such
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items will not be at the Borrower's expense, shall: (a) allow an inspection
and/or appraisal of the Borrower's Property to be made by a Person approved by
the Agent in its sole discretion; and (b) if the Agent believes that an Event of
Default has occurred or is about to occur, cause to be conducted or prepared any
other written report, summary, opinion, inspection, review, survey, audit or
other professional service relating to the Borrower's Property or any operations
in connection with it (all as designated in the Agent's request), including,
without limitation, any accounting, auctioneering, architectural, consulting,
engineering, design, legal, management, pest control, surveying, title
abstracting or other technical, managerial or professional service relating to
such property or its operations.
5.14 Capital Adequacy. (a) If after the date of this Agreement, the Agent or
any Lender shall have determined that the adoption or effectiveness of any
applicable law, rule or regulation regarding capital adequacy of general
applicability, 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 compliance
by the Agent or any Lender with any request or directive regarding capital
adequacy of general applicability (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 the Agent's or any Lender's
capital as a consequence of its obligations hereunder to a level below that
which the Agent or such Lender could have achieved but for such adoption, change
or compliance (taking into consideration the Agent's or such Lender's policies
with respect to capital adequacy) by an amount deemed by the Agent or such
Lender to be material, then from time to time, the Borrower shall pay to the
Agent or such Lender such additional amount or amounts as will compensate the
Agent or such Lender for such reduction.
(b) A certificate of the Agent or such Lender setting forth such amount or
amounts as shall be necessary to compensate the Agent or such Lender as
specified in Section 5.14(a) hereof and making reference to the applicable law,
rule or regulation shall be delivered as soon as practicable to the Borrower and
shall be prima facie evidence thereof. The Borrower shall pay the Agent or such
Lender the amount shown as due on any such certificate within fourteen (14)
Business Days after the Agent or such Lender delivers such certificate. In
preparing such certificate, the Agent or such Lender may employ such assumptions
and allocations of costs and expenses as it shall in good faith deem reasonable
and may use any reasonable averaging and attribution method.
5.15 Property Pool. The Borrower will at all times own fee simple title to
real estate properties that are not mortgaged, pledged, hypothecated, or
encumbered in any manner other than Permitted Encumbrances (the "Pool") with an
aggregate Historical Value of at least one hundred seventy-five percent (175%)
of the Borrower's unsecured Indebtedness outstanding from time to time, with the
following characteristics: (a) the Pool must include income producing operating
properties (the "Operating Sub-Pool") with an aggregate Operating Sub-Pool Value
of at least one hundred fifty percent (150%) of the Borrower's unsecured
Indebtedness outstanding from time to time, (b) each individual property in the
Operating Sub-Pool must have an occupancy level of at least eighty percent
(80%), where such occupancy level is the average of the actual occupancy level
for each of the immediately preceding three (3) months, (c) any properties added
to the Operating Sub-Pool after the date of this Agreement must be multifamily
properties,
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and (d) the Borrower must have received from third party independent
environmental consultants, written assessments for each property in, or to be
added to, the Operating Sub-Pool that do not disclose any material environmental
conditions or risks related to such properties. If requested by the Agent
and\or the Co-Agent, the Borrower will provide to the Agent and the Co-Agent
written assessments from third party independent environmental consultants for
all real estate properties acquired after the date of this Agreement. If the
Agent determines that there are material environmental conditions existing on or
risks to such properties, the properties will be excluded from the Pool.
6. Negative Covenants.
The Borrower covenants and agrees with the Agent and the Lenders that prior to
the termination of this Agreement it will not do any of the following:
6.1 Indebtedness. Create, incur, suffer or permit to exist, or assume or
guarantee, directly or indirectly, contingently or otherwise, or become or
remain liable with respect to any Indebtedness with a final maturity of five (5)
years or less (not including any renewal or extension options) in excess of
$400,000,000.00 in the aggregate, in all cases whether direct, indirect,
absolute, contingent or otherwise; except (a) Non-recourse Debt, (b)
Indebtedness in the final five (5) years or less of a full payment amortization
schedule providing for periodic payments over the remaining life where no more
than fifty percent (50%) of the original loan amount is amortized in said final
five (5) year or less period, (c) credit enhancement provided by or on behalf of
the Borrower for tax exempt bonds if said credit enhancement has an expiration
date or a maturity date of one (1) year or more, and (d) Indebtedness incurred
by Borrower under its medium term note program consisting of fixed rate,
unsecured, recourse notes issued under the Indenture described in Section 7.1(b)
of this Agreement not to exceed $100,000,000.00 in the aggregate. For the
purposes of the foregoing calculation under (b) above, simultaneously issued
tranches of Indebtedness under the same indenture shall be combined and treated
as a single debt issuance.
6.2 Mergers, Consolidations and Acquisitions of Assets. In any single
transaction or series of related transactions, directly or indirectly: (a)
liquidate or dissolve; (b) other than a merger or consolidation in which the
Borrower is the surviving entity and the value of the assets of the other party
to such merger or consolidation is less than twenty percent (20%) of the value
of the assets of the Borrower on a consolidated basis (in accordance with
Generally Accepted Accounting Principles) after such merger or consolidation, be
a party to any merger or consolidation; (c) other than an acquisition in which
the Borrower acquires all or substantially all of the assets of another Person
and the value of the assets acquired is less than twenty percent (20%) of the
value of the assets of the Borrower on a consolidated basis (in accordance with
Generally Accepted Accounting Principles) after such acquisition, acquire all or
substantially all of the assets of any Person; or (d) except for periodic sales
not exceeding twenty-five percent (25%) of the Borrower's total assets on a
consolidated basis (in accordance with Generally Accepted Accounting Principles)
in any calendar year, or sales or leases executed in the ordinary course of
business, sell, convey or lease all or any substantial part of its assets.
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6.3 Redemption. At any time redeem, retire or otherwise acquire, directly or
indirectly, any shares of its capital stock if such action would cause the
Borrower to not be in compliance with this Agreement.
6.4 Nature of Business; Management. Change the nature of its business or
enter into any business which is substantially different from the business in
which it is presently engaged; amend the Borrower's agreements with Borrower's
REIT Manager if such amendments would materially increase amounts payable
thereunder to Borrower's REIT Manager or which would violate any provision of
the Credit Documents; or terminate or allow the termination (whether voluntary
or involuntary) of the Borrower's agreements with Borrower's REIT Manager unless
within thirty (30) days thereafter Borrower's REIT Manager is replaced by an
advisor or management team pursuant to an agreement which is in compliance with
the requirements of the North American Security Administrators Association's
Statement of Policy for Real Estate Investment Trusts and which is otherwise
satisfactory to the Agent and the Majority Lenders.
6.5 Transactions with Related Parties. Enter into any transaction or
agreement with any officer, director, or holder of more than five percent (5%)
(based on voting rights) of the issued and outstanding capital stock of the
Borrower (or any Affiliate of the Borrower), unless the same is upon terms
substantially similar to those obtainable from qualified wholly unrelated
sources, or complies with the requirements of the Statement of Policy for Real
Estate Investment Trusts promulgated by the North American Security
Administrators Association, as amended from time to time.
6.6 Loans and Investments. Make any loan, advance, extension of credit or
capital contribution to, or make or have any investment in, any Person, or make
any commitment to make any such extension of credit or investment, except (a)
travel advances in the ordinary course of business to officers, employees and
agents; (b) readily marketable securities issued or fully guaranteed by the
United States of America (or investments or money market accounts consisting of
the same); (c) commercial paper rated "Prime 1" by Moody's Investors Service,
Inc. or A-1 by Standard and Poor's Corporation (or investments or money market
accounts consisting of the same); (d) certificates of deposit or repurchase
certificates issued by financial institutions acceptable to the Agent (or
investments or money market accounts consisting of the same), all of the
foregoing b, c and d not having a maturity of more than one (1) year from the
date of issuance thereof; (e) securities received in settlement of liabilities
created in the ordinary course of business, or securities in other real estate
investment trusts received in exchange for Property sold to such real estate
investment trusts so long as the market value of such securities does not exceed
ten percent (10%) of the value of the assets of the Borrower on a consolidated
basis (in accordance with Generally Accepted Accounting Principles) prior to
such investment; (f) investments in Subsidiaries through which the Borrower
invests in real estate assets and acquisition and/or construction loans
encumbered by Property of or to be acquired by the Borrower; (g) the Borrower's
existing forty percent (40%) joint venture interest investment in KP/M PTA Joint
Venture I and investments in Unconsolidated Affiliates that are engaged
primarily in the business of investment in and operation of multifamily real
estate properties, so long as the aggregate amount of such investments described
in this (g) does not exceed fifteen percent (15%) of the value of the assets of
the Borrower on a consolidated basis (in accordance with Generally Accepted
Accounting Principles) after giving effect to such
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investments; (h) equity investments or capital contributions in, and loans,
advances, and extensions of credit to, PTR Development Services, so long as (1)
the equity investments or capital contributions do not exceed $10,000,000.00,
(2) the loans, advances and extensions of credit are secured by valid and
enforceable first priority liens on real estate, (3) the Borrower shall at all
times beneficially own at least ninety percent (90%) of the economic interest in
PTR Development Services, and (4) the financial condition and results of
operations of PTR Development Services shall be consolidated with those of the
Borrower for purposes of the Borrower's financial statements; (i) loans,
advances, and extensions of credit to Persons (who are not Affiliates of the
Borrower) secured by valid and enforceable first priority liens on real estate
for the purpose of acquiring and developing multifamily properties for eventual
ownership by, or to be acquired by, the Borrower prior to, or within a
reasonable period of time consistent with a business purpose after, the
completion of construction or development of such multifamily property; and (j)
investments permitted under Section 6.2 of this Agreement. The Borrower will
not mortgage, pledge, hypothecate or encumber in any manner the loans, advances
or extensions of credit made pursuant to Sections 6.6(h) or (i).
6.7 Limiting Agreements. Without affecting the provisions of Section 5.15 of
this Agreement, but cumulative of and in addition thereto:
(a) Except for the Indenture dated February 1, 1994 between the Borrower and
Morgan Guaranty Trust Company of New York, as Trustee, neither Borrower nor any
of its Subsidiaries has entered into, and after the date hereof, neither
Borrower nor any of its Subsidiaries shall enter into, any agreement, instrument
or transaction which has or may have the effect of prohibiting or limiting
Borrower's ability to pledge to Agent as security for the Loans assets now or
hereafter owned by Borrower up to the value described in this Section 6.7.
Borrower shall take, and shall cause its Subsidiaries to take, such actions as
are necessary (including, without limitation, otherwise limiting the amount of
secured indebtedness of the Borrower and its Subsidiaries) to preserve the right
and ability of Borrower to pledge assets up to the value described in this
Section 6.7 as security for the Loans without any such pledge after the date
hereof causing or permitting the acceleration (after the giving of notice or the
passage of time, or otherwise) of any other indebtedness of Borrower or any of
its Subsidiaries. For the purpose of this paragraph, the Historical Value of
the assets to be kept available by Borrower to be pledged as security for the
Loans shall be assets having an aggregate Historical Value of not less than one
hundred thirty-three percent (133%) of the Commitment; provided however that the
foregoing shall not be construed as a maximum amount of collateral which could
be required or accepted by the Lenders under any other agreement or in any
proceeding.
(b) Borrower shall, upon demand, provide to the Lenders such evidence as the
Lenders may reasonably require to evidence Borrower's compliance with this
covenant, which evidence shall include, without limitation (i) copies of any
agreements or instruments which would in any way restrict or limit Borrower's
ability to pledge assets as security for indebtedness, or which provide for the
occurrence of a default (after the giving of notice or the passage of time, or
otherwise) if assets are pledged in the future as security for indebtedness of
the Borrower or any of its Subsidiaries, (ii) a summary of the total debt of
Borrower and its Subsidiaries, and (iii) a summary of any of such debt which is
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secured by any mortgage, pledge, lien, charge, encumbrance or other security
interest.
(c) Nothing in this covenant shall be construed as an obligation of Borrower
to, or request by the Lenders that Borrower, grant any mortgage, pledge or
security interest in any of its properties.
6.8 Nature of Assets. (a) In its own name or the name of any of its
Subsidiaries, own or lease, directly or indirectly, land not improved for
multifamily use, other than land that is either under development or planned for
commencement of development within one (1) year from the date it was acquired,
with an aggregate Historical Value in excess of ten percent (10%) of the value
of the assets of the Borrower on a consolidated basis (in accordance with
Generally Accepted Accounting Principles), or (b) allow the Historical Value of
the income producing properties owned or leased, directly or indirectly, by the
Borrower and its Subsidiaries which are not multifamily properties, to exceed
five percent (5%) of the value of the assets of the Borrower on a consolidated
basis (in accordance with Generally Accepted Accounting Principles).
7. Events of Default and Remedies.
7.1. Events of Default. If any of the following events shall occur, then, as
to the events described in Sections 7.1(b), (c), and (d), if the event has not
been waived, cured or remedied within twenty (20) days after the Agent gives the
Borrower notice of such event, at any time thereafter, and as to all of the
other events described herein, at any time, the Agent may do any or all of the
following: (1) without notice to the Borrower, declare the Notes to be, and
thereupon the Notes shall forthwith become, immediately due and payable,
together with all accrued interest thereon, without notice of any kind, notice
of acceleration or of intention to accelerate, presentment and demand or
protest, all of which are hereby expressly waived; (2) without notice to the
Borrower, terminate the Commitment; (3) exercise, as may any other Lender, its
rights of offset against each account and all other Property of the Borrower in
the possession of the Agent or any such Lender, which right is hereby granted by
the Borrower to the Agent and each Lender; and (4) exercise any and all other
rights pursuant to the Credit Documents:
(a) The Borrower shall fail to pay or prepay any principal of or interest
on the Notes or any fee or any other obligation hereunder within five (5)
days after it was due; or
(b) The Borrower shall (i) fail to pay when due, or within any applicable
period of grace, any principal of or interest on any other Indebtedness other
than Non-recourse Debt or Disqualified Stock in excess of $5,000,000.00 in
principal amount, or Non-recourse Debt in excess of $10,000,000.00 in
principal amount; or (ii) fail to comply with Section 1004 of the Indenture
dated February 1, 1994 between the Borrower and Morgan Guaranty Trust Company
of New York, as Trustee, as said Section 1004 may be amended with the consent
of the Majority Lenders; or
(c) Any written representation or warranty made in any Credit Document by
or on behalf of the Borrower, when taken as a whole shall prove to have been
incorrect, false or misleading in any material respect; or
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(d) Default shall occur in the punctual and complete performance of any
covenant of the Borrower or any other Person other than the Agent or the
Lenders contained in any Credit Document not specifically set forth in this
Section; or
(e) A final judgment or judgments in the aggregate for the payment of
money in excess of $5,000,000.00 shall be rendered against the Borrower and
the same shall remain undischarged for a period of thirty (30) days during
which execution shall not be effectively stayed; or
(f) Any court shall finally determine, that the Agent or any Lender does
not have a valid Lien as provided for herein on any security which may have
been provided to the Agent or any Lender by the Borrower under the Credit
Documents, or such other Person; or
(g) Any order shall be entered in any proceeding against the Borrower
decreeing the dissolution, liquidation or split-up thereof, and such order
shall remain in effect for more than thirty (30) days; or
(h) The Borrower shall make a general assignment for the benefit of
creditors or shall petition or apply to any tribunal for the appointment of a
trustee, custodian, receiver or liquidator of all or any substantial part of
its business, estate or assets or shall commence any proceeding under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction, whether now or hereafter
in effect; or
(i) Any such petition or application shall be filed or any such proceeding
shall be commenced against the Borrower and the Borrower by any act or
omission shall indicate approval thereof, consent thereto or acquiescence
therein, or an order shall be entered appointing a trustee, custodian,
receiver or liquidator of all or any substantial part of the assets of the
Borrower or granting relief to the Borrower or approving the petition in any
such proceeding, and such order shall remain in effect for more than ninety
(90) days; or
(j) The Borrower shall fail generally to pay its debts as they become due
or suffer any writ of attachment or execution or any similar process to be
issued or levied against it or any substantial part of its Property which is
not released, stayed, bonded or vacated within thirty (30) days after its issue
or levy; or
(k) The Borrower shall have concealed, removed, or permitted to be
concealed or removed, any part of its Property, with intent to hinder, delay or
defraud its creditors or any of them, or made or suffered a transfer of any of
its Property which may be fraudulent under any bankruptcy, fraudulent
conveyance or similar law; or shall have made any transfer of its Property to
or for the benefit of a creditor at a time when other creditors similarly
situated have not been paid.
7.2 Remedies Cumulative. No remedy, right or power conferred upon the Agent
or the Lenders is intended to be exclusive of any other remedy, right or power
given hereunder or now or hereafter existing at law, in equity, or otherwise,
and all such remedies, rights and powers shall be cumulative.
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8. The Agent.
8.1 Appointment, Powers and Immunities. (a) Each Lender hereby irrevocably
appoints and authorizes the Agent to act as its agent hereunder and under the
other Credit Documents with such powers as are specifically delegated to the
Agent by the terms hereof and thereof, together with such other powers as are
reasonably incidental thereto. The Agent (i) shall not have any duties or
responsibilities except those expressly set forth in this Agreement and the
other Credit Documents, and shall not by reason of this Agreement or any other
Credit Document be a trustee for any Lender; (ii) shall not be responsible to
any Lender for any recitals, statements, representations or warranties contained
in this Agreement or any other Credit Document, or in any certificate or other
document referred to or provided for in, or received by any of them under, this
Agreement or any other Credit Document, or for the value, validity,
effectiveness, genuineness, enforceability, execution, filing, registration,
collectibility, recording, perfection, existence or sufficiency of this
Agreement or any other Credit Document or any other document referred to or
provided for herein or therein or any property covered thereby or for any
failure by any Party or any other Person to perform any of its obligations
hereunder or thereunder, and shall not have any duty to inquire into or pass
upon any of the foregoing matters; (iii) shall not be required to initiate or
conduct any litigation or collection proceedings hereunder or any other Credit
Document except to the extent requested by the Majority Lenders; (iv) SHALL NOT
BE RESPONSIBLE FOR ANY MISTAKE OF LAW OR FACT OR ANY ACTION TAKEN OR OMITTED TO
BE TAKEN BY IT HEREUNDER OR UNDER ANY OTHER CREDIT DOCUMENT OR ANY OTHER
DOCUMENT OR INSTRUMENT REFERRED TO OR PROVIDED FOR HEREIN OR THEREIN OR IN
CONNECTION HEREWITH OR THEREWITH, INCLUDING, WITHOUT LIMITATION, PURSUANT TO ITS
OWN NEGLIGENCE, BUT NOT INCLUDING AND EXCEPT FOR THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF THE AGENT; (v) shall not be bound by or obliged to recognize any
agreement among or between the Borrower, the Agent, and any Lender other than
this Agreement and the other Credit Documents, regardless of whether the Agent
has knowledge of the existence of any such agreement or the terms and provisions
thereof; (vi) shall not be charged with notice or knowledge of any fact or
information not herein set out or provided to the Agent in accordance with the
terms of this Agreement or any other Credit Document; (vii) shall not be
responsible for any delay, error, omission or default of any mail, telegraph,
cable or wireless agency or operator, and (viii) shall not be responsible for
the acts or edicts of any Governmental Authority. The Agent may employ agents
and attorneys-in-fact and shall not be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it with
reasonable care.
(b) Without the prior written consent of Agent and all of the Lenders, Agent
shall not (i) modify or amend in any respect whatsoever the interest rate
provisions of the Credit Documents, (ii) increase the Commitment above
$350,000,000.00, (iii) extend the Maturity Date other than in accordance with
the express provisions of the Credit Documents, (iv) extend or reduce the due
date for or the amount of the scheduled payments of principal or interest on the
Loans or the Fee, (v) amend the definition of Majority Lenders or any
requirement that certain actions be taken only with the consent of a certain
number of the Lenders, or (vi) amend Section 5.15 of this Agreement. From time
to time upon Agent's request, each Lender shall execute and deliver such
documents and instruments as may be reasonably necessary to enable Agent to
effectively administer and service the Loan in its
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capacity as lead lender and servicer and in the manner contemplated by the
provisions of this Agreement.
(c) All information provided to the Agent under or pursuant to the Credit
Documents, and all rights of the Agent to receive or request information, or to
inspect information or Property, shall be by the Agent on behalf of the Lenders.
If any Lender requests that it be able to receive or request such information,
or make such inspections, in its own right rather than through the Agent, the
Borrower will cooperate with the Agent and such Lender in order to obtain such
information or make such inspection as such Lender may reasonably require.
(d) The Borrower shall be entitled to rely upon a written notice or a written
response from the Agent as being pursuant to concurrence or consent of the
Majority Lenders unless otherwise expressly stated in the Agent's notice or
response.
8.2 Reliance. The Agent shall be entitled to rely upon any certification,
notice or other communication (including any thereof by telephone, telex,
telecopy, 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 (which may be counsel for the
Borrower), independent accountants and other experts selected by the Agent. The
Agent shall not be required in any way to determine the identity or authority of
any Person delivering or executing the same. As to any matters not expressly
provided for by this Agreement or any other Credit Document, the Agent shall in
all cases be fully protected in acting, or in refraining from acting, hereunder
and thereunder in accordance with instructions of the Majority Lenders, and any
action taken or failure to act pursuant thereto shall be binding on all of the
Lenders. If any order, writ, judgment or decree shall be made or entered by any
court affecting the rights, duties and obligations of the Agent under this
Agreement or any other Credit Document, then and in any of such events the Agent
is authorized, in its sole discretion, to rely upon and comply with such order,
writ, judgment or decree which it is advised by legal counsel of its own
choosing is binding upon it under the terms of this Agreement, the relevant
Credit Document or otherwise; and if the Agent complies with any such order,
writ, judgment or decree, then it shall not be liable to any Lender or to any
other Person by reason of such compliance even though such order, writ, judgment
or decree may be subsequently reversed, modified, annulled, set aside or
vacated.
8.3 Defaults. The Agent shall not be deemed to have constructive knowledge
of the occurrence of a Default (other than the non-payment of principal of or
interest on Loans) unless it has received notice from a Lender or the Borrower
specifying such Default and stating that such notice is a "Notice of Default".
In the event that the Agent receives such a notice of the occurrence of a
Default, or whenever the Agent has actual knowledge of the occurrence of a
Default, the Agent shall give prompt written notice thereof to the Lenders (and
shall give each Lender prompt notice of each such non-payment). The Agent shall
(subject to Section 8.7 hereof) take such action with respect to such Default as
shall be directed by the Majority Lenders and within its rights under the Credit
Documents and at law or in equity, provided that, unless and until the Agent
shall have received such directions, the Agent may (but shall not be obligated
to) take such action, or refrain from taking such action, permitted hereby with
respect to such Default as it shall deem advisable in the best interests of the
Lenders and within its rights under the Credit Documents in order to preserve,
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protect or enhance the collectibility of the Loans, at law or in equity.
Provided, however, that if there is an occurrence of an Event of Default, then
in no event or under any circumstances shall any of the actions described in
Section 8.1(b)(i) through (vi) of this Agreement be taken, without in each
instance the written consent of Agent and all of the Lenders.
8.4 Rights as a Lender. With respect to the Commitment and the Loans made,
Agent, in its capacity as a Lender hereunder shall have the same rights and
powers hereunder as any other Lender and may exercise the same as though it were
not acting in its agency capacity, and the term "Lender" or "Lenders" shall,
unless the context otherwise indicates, include the Agent in its individual
capacity. The Agent may (without having to account therefor to any other
Lender) as a Lender, and to the same extent as any other Lender, accept deposits
from, lend money to and generally engage in any kind of banking, trust, letter
of credit, agency or other business with the Borrower (and any of its
Affiliates) as if it were not acting as the Agent but solely as a Lender. The
Agent may accept fees and other consideration from the Borrower (in addition to
the fees heretofore agreed to between the Borrower and the Agent) for services
in connection with this Agreement or otherwise without having to account for the
same to the Lenders.
8.5 Indemnification. The Lenders agree to indemnify the Agent, its officers,
directors, agents and Affiliates, ratably in accordance with each Lender's
respective Percentage, for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind and nature whatsoever (INCLUDING BUT NOT LIMITED TO, THE
CONSEQUENCES OF THE NEGLIGENCE OF THE AGENT) which may be imposed on, incurred
by or asserted against the Agent in any way relating to or arising out of this
Agreement or any other Credit Document or any other documents contemplated by or
referred to herein or therein, or the transactions contemplated hereby or
thereby (including, without limitation, interest, penalties, reasonable
attorneys' fees and amounts paid in settlement in accordance with the terms of
this Section 8, but excluding, unless a Default has occurred and is continuing,
normal administrative costs and expenses incident to the performance of its
agency duties hereunder) or the enforcement of any of the terms hereof or
thereof or of any such other documents, INCLUDING BUT NOT LIMITED TO THE
NEGLIGENCE OF THE AGENT, provided that no Lender shall be liable for any of the
foregoing to the extent they arise from the gross negligence or willful
misconduct of the party to be indemnified, or from the Agent's default in the
express obligations of the Agent to the Lenders provided for in this Agreement.
The obligations of the Lenders under this Section 8.5 shall survive the
termination of this Agreement and the repayment of the Obligations.
8.6 Non-Reliance on Agent and Other Lenders. Each Lender agrees that it has
received current financial information with respect to the Borrower and that it
has, independently and without reliance on the Agent or any other Lender and
based on such documents and information as it has deemed appropriate, made its
own credit analysis of the Borrower and decision to enter into this Agreement
and that it will, independently and without reliance upon the Agent or any other
Lender, and based on such documents and information as 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 of the other Credit Documents. The
Agent shall not be required to keep itself informed as to the performance or
observance by any Party of this Agreement or any of the other Credit Documents
or any other document referred to or
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provided for herein or therein or to inspect the properties or books of the
Borrower or any Party except as specifically required by the Credit Documents.
Except for notices, reports and other documents and information expressly
required to be furnished to the Lenders by the Agent hereunder or the other
Credit Documents, the Agent shall not have any duty or responsibility to provide
any Lender with any credit or other information concerning the affairs,
financial condition or business of the Borrower or any other Party (or any of
their affiliates) which may come into the possession of the Agent. Each Lender
assumes all risk of loss in connection with its Percentage in the Loans to the
full extent of its Percentage therein. The Agent assumes all risk of loss in
connection with its Percentage in the Loans to the full extent of its Percentage
therein.
8.7 Failure to Act. Except for action expressly required of the Agent, as
the case may be, hereunder, or under the other Credit Documents, the Agent shall
in all cases be fully justified in failing or refusing to act hereunder and
thereunder unless it shall receive further assurances to its satisfaction by the
Lenders of their indemnification obligations under Section 8.5 hereof against
any and all liability and expense which may be incurred by it by reason of
taking or continuing to take any such action.
8.8 Resignation of Agent. Subject to the appointment and acceptance of a
successor Agent as provided below, the Agent may resign at any time by giving
notice thereof to the Lenders and the Borrower. Upon any such resignation, (i)
the Majority Lenders without the consent of the Borrower shall have the right to
appoint a successor Agent so long as such successor Agent is also a Lender at
the time of such appointment and (ii) the Majority Lenders shall have the right
to appoint a successor Agent that is not a Lender at the time of such
appointment so long as the Borrower consents to such appointment (which consent
shall not be unreasonably withheld). If no successor Agent shall have been so
appointed by the Majority Lenders and accepted such appointment within 30 days
after the retiring Agent's giving of notice of resignation, then the retiring
Agent may, on behalf of the Lenders, and with the consent of the Borrower which
shall not be unreasonably withheld, appoint a successor Agent. Any successor
Agent shall be a bank which has an office in the United States and a combined
capital and surplus of at least $250,000,000.00. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations as Agent thereafter arising hereunder and under
any other Credit Documents, but shall not be discharged from any liabilities for
its actions as Agent prior to the date of discharge. Such successor Agent shall
promptly specify by notice to the Borrower its principal office referred to in
Section 2.1 and Section 2.3 hereof. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Section 8 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 the Agent.
8.9 No Partnership. Neither the execution and delivery of this Agreement nor
any of the other Credit Documents nor any interest the Lenders, the Agent or any
of them may now or hereafter have in all or any part of the Obligations shall
create or be construed as creating a partnership, joint venture or other joint
enterprise between the Lenders or among the Lenders and the Agent. The
relationship between the Lenders, on the one hand, and the Agent, on the other,
is and shall be that of principals and agent
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only, and nothing in this Agreement or any of the other Credit Documents shall
be construed to constitute the Agent as trustee or other fiduciary for any
Lender or to impose on the Agent any duty, responsibility or obligation other
than those expressly provided for herein and therein.
9. Renewal and Extension.
Neither the Agent nor any Lenders have any agreement or obligation to extend
or renew the Revolving Credit Termination Date. But in the event such an
extension is requested by the Borrower and any Lender decides to consider such
renewal and extension request, such request and consideration will be governed
by the following terms and conditions:
9.1 Procedure for Consideration of Renewal and Extension Requests.
(a) The Borrower may request the Agent and the Lenders to extend the current
Revolving Credit Termination Date by successive one (1) year intervals by
executing and delivering to the Agent a written request for extension (the
"Extension Request") at least seventy-five (75) days (but not more than ninety
(90) days) prior to the Determination Date. If all of the Lenders shall have
notified the Agent on or prior to the date which is forty-five (45) days prior
to the Determination Date that they accept such Extension Request, the Revolving
Credit Termination Date shall be extended for one (1) year. If any Lender shall
not have notified Agent on or prior to the date which is forty-five (45) days
prior to the Determination Date that it accepts such Extension Request, the
Revolving Credit Termination Date shall not be extended. The Agent shall
promptly notify the Borrower whether the Extension Request has been accepted or
rejected as well as which Lender or Lenders rejected the Borrower's Extension
Request (each such Lender a "Rejecting Lender").
(b) Notwithstanding the preceding subsection (a), within thirty (30) days
after notification from the Agent that the Extension Request has been rejected
(a "Notice of Rejection"), and provided that the aggregate amount of Lender
Commitments of the Rejecting Lenders does not exceed twenty percent (20%) of the
Commitment, the Borrower may either (i) demand that the Rejecting Lender, and
upon such demand the Rejecting Lender shall promptly, assign its Lender
Commitment to another financial institution subject to and in accordance with
the provisions of Section 10.6 of this Agreement for a purchase price equal to
the unpaid balance of principal, accrued interest, the unpaid balance of the Fee
and expenses owing to the Rejecting Lender pursuant to this Agreement, or (ii)
pay to the Rejecting Lender the unpaid balance of principal, accrued interest,
the unpaid balance of the Fee and expenses owing to the Rejecting Lender
pursuant to this Agreement, whereupon the Rejecting Lender shall no longer be a
party to this Agreement or have any rights or obligations hereunder or under any
other Credit Documents, and the Commitment shall immediately and permanently be
reduced by an amount equal to the Lender Commitment of the Rejecting Lender. If
all Rejecting Lenders have either assigned their Lender Commitments to other
financial institutions as contemplated by the preceding clause (i) or have been
paid the amounts specified in the preceding clause (ii), then the Borrower's
Extension Request which was initially rejected shall be deemed to have been
granted and accordingly the Revolving Credit Termination Date shall be extended
by one (1) year, otherwise the Revolving Credit Termination Date shall not be
extended. If the aggregate of Lender Commitments of the Rejecting Lenders
exceeds twenty percent
-38-
<PAGE>
(20%) of the Commitment, the Revolving Credit Termination Date shall not be
extended.
9.2 Conditions to Renewal and Extension. Any agreement of the Lenders to
extend the Revolving Credit Termination Date under Section 9.1 of this Agreement
shall be conditioned upon, among other things, the following terms and
conditions (which shall be in addition to those required by Sections 2.7, 3 and
9.1 of this Agreement):
(a) Execution by the Borrower of a renewal and extension agreement for
each Note in Proper Form.
(b) Such other documents, instruments and items as Agent or any Lender
shall require in its sole discretion.
9.3 No Obligation to Renew and Extend. Notwithstanding the procedures and
terms and conditions for any renewal and extension of the Revolving Credit
Termination Date, neither the Agent nor any Lender has any obligation,
commitment or present intent to extend the Revolving Credit Termination Date,
and the Revolving Credit Termination Date may not be extended except in
accordance with a written agreement signed by the Agent, the Lenders, the
Borrower and any other Person to be charged with compliance therewith.
10. Miscellaneous.
10.1. No Waiver, Amendments. No waiver of any Default shall be deemed to
be a waiver of any other Default. No failure to exercise or delay in exercising
any right or power under any Credit Document shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power preclude any
further or other exercise thereof or the exercise of any other right or power.
Except as may be prohibited by Section 8.1 hereof, no amendment, modification or
waiver of any Credit Document shall be effective unless the same is in writing
and signed by the Borrower, the Agent and the Majority Lenders. No notice to or
demand on the Borrower or any other Person shall entitle the Borrower or any
other Person to any other or further notice or demand in similar or other
circumstances.
10.2 Notices. All notices under the Credit Documents shall be in writing and
either (i) delivered against receipt therefor, or (ii) mailed by registered or
certified mail, return receipt requested, in each case addressed as set forth
herein, or to such other address as a party may designate. Notices shall be
deemed to have been given (whether actually received or not) when delivered (or,
if mailed, on the next Business Day). Provided, however, that as between the
Agent and the Lenders and among the Lenders, notice may be given by telecopy or
facsimile effective upon the earlier of actual receipt or confirmation of
receipt by telephone.
10.3 Venue. HARRIS COUNTY, TEXAS SHALL BE A PROPER PLACE OF VENUE TO ENFORCE
PAYMENT OR PERFORMANCE OF THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS, UNLESS
THE AGENT SHALL GIVE ITS PRIOR WRITTEN CONSENT TO A DIFFERENT VENUE. THE
BORROWER HEREBY IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE
STATE AND FEDERAL COURTS IN THE STATE OF TEXAS AND AGREES AND CONSENTS THAT
SERVICE OF PROCESS MAY BE MADE UPON IT IN ANY PROCEEDING ARISING OUT OF ANY OF
THE CREDIT DOCUMENTS BY SERVICE OF PROCESS AS PROVIDED BY TEXAS LAW. THE
BORROWER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT,
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY OF THE CREDIT
-39-
<PAGE>
DOCUMENTS IN THE DISTRICT COURTS OF HARRIS COUNTY, TEXAS, OR IN THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS, HOUSTON DIVISION, AND
HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIMS THAT ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
THE BORROWER (A) AGREES TO DESIGNATE AND MAINTAIN AN AGENT FOR SERVICE OF
PROCESS IN THE STATE OF TEXAS IN CONNECTION WITH ANY SUCH SUIT, ACTION OR
PROCEEDING AND TO DELIVER TO THE AGENT EVIDENCE THEREOF AND (B) IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN
ANY SUCH SUIT, ACTION OR PROCEEDING BY NOTICE GIVEN AS PROVIDED FOR IN THIS
AGREEMENT. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT OR THE LENDERS TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE BORROWER IN ANY
JURISDICTION OR TO SERVE PROCESS IN ANY MANNER PERMITTED BY APPLICABLE LAW. THE
BORROWER HEREBY IRREVOCABLY AGREES THAT ANY LEGAL ACTION OR PROCEEDING AGAINST
THE AGENT OR ANY LENDER ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR
THE OTHER CREDIT DOCUMENTS SHALL BE BROUGHT AND MAINTAINED IN THE DISTRICT
COURTS OF HARRIS COUNTY, TEXAS, OR THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF TEXAS, HOUSTON DIVISION.
10.4 Choice of Law. THIS AGREEMENT, THE NOTES AND THE OTHER CREDIT DOCUMENTS
HAVE BEEN NEGOTIATED, EXECUTED AND DELIVERED IN THE STATE OF TEXAS AND SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF TEXAS, INCLUDING ALL APPLICABLE FEDERAL LAW, FROM TIME TO TIME IN FORCE
IN THE STATE OF TEXAS.
10.5 DTPA Waiver. The Borrower hereby waives all rights, remedies, claims,
demands and causes of action based upon or related to the Texas Deceptive Trade
Practices-Consumer Protection Act as described in the Texas Business & Commerce
Code, Sections 17.41 et. seq. as the same pertains or may pertain to this
Agreement, any of the other Credit Documents, or any of the transactions
contemplated herein or therein. In furtherance of said waiver, the Borrower
hereby represents and warrants to the Agent and the Lenders that (a) the
Borrower is represented by legal counsel in connection with the negotiations,
execution and delivery of this Agreement and the other Credit Documents; (b)
the Borrower has a choice other than to enter into said waiver in that it can
obtain the Loan from another institution; and (c) the Borrower does not consider
itself to be in a significantly disparate bargaining position relative to the
Agent and the Lenders with respect to this Agreement and the other Credit
Documents.
10.6 Survival; Parties Bound; Successors and Assigns. (a) All
representations, warranties, covenants and agreements made by or on behalf of
the Borrower in connection herewith shall survive the execution and delivery of
the Credit Documents, shall not be affected by any investigation made by any
Person, and shall bind the Borrower and its successors, trustees, receivers and
assigns and inure to the benefit of the successors and assigns of the Agent and
the Lenders; provided, however, that the Borrower may not assign or transfer any
of its rights or obligations hereunder without the prior written consent of the
Agent and all of the Lenders, and any such assignment or transfer without such
consent shall be null and void.
(b) Subject to Section 10.6(d) of this Agreement, a Lender may assign part
of its Lender Commitment to an Eligible Institution so long as such assignment
shall (1) include the voting rights and all other rights and obligations
attributable thereto, and include a written assumption by the assignee of the
assigning Lender's obligations under the Credit Documents, (2) require the
-40-
<PAGE>
written consent of the Borrower and the Agent, such consent not to be
unreasonably withheld, (3) be in a minimum amount of $15,000,000.00 if assigned
to a Person not already a Lender, (4) not reduce the Lender's Lender Commitment
to an amount less than $15,000,000.00, and (5) include payment to the Agent by
the Lender of a service fee for each assignment equal to $3,000.00.
(c) Subject to Section 10.6(d) of this Agreement, a Lender may sell
participating interests in any of its Loans to an Eligible Institution so long
as such participation shall (1) limit the voting rights of the participant, if
any, to the ability to vote for changes in the amount of the Commitment, the
interest rate on the Loans, and the Maturity Date, (2) require the written
consent of the Borrower and the Agent, such consent not to be unreasonably
withheld, (3) be in a minimum principal amount of at least $10,000,000.00 if
participated to a Person not already a Lender, and (4) not reduce the Lender's
Lender Commitment which has not been participated to less than $10,000,000.00.
In connection with any sale of a participating interest made in compliance with
this Agreement, (i) the participating Lender shall continue to be liable for its
Lender Commitment and its other obligations under the Credit Documents, (ii) the
Agent, the Borrower and the other Lenders shall continue to deal solely and
directly with the participating Lender in connection with such Lender's rights
and obligations under the Credit Documents, and (iii) the participant may not
require the participating Lender to take or refrain from taking any action under
the Credit Documents that is in conflict with the terms and provisions of the
Credit Documents.
(d) A Lender may assign or participate all or any part of its Loans or its
Lender Commitment to an Affiliate of the Lender with written notice to the Agent
and the Borrower but without the consent of the Agent, the Borrower or any other
Lender.
(e) Notwithstanding any provision hereof to the contrary, (i) any Lender
may assign and pledge all or any portion of its Lender Commitment and Loans to a
Federal Reserve Bank; provided, however, that any such assignment or pledge
shall not relieve such Lender from its obligations under the Credit Documents;
and (ii) the Agent may not assign or participate $30,000,000.00 of its Lender
Commitment to any Person other than an Affiliate of the Agent without the prior
written consent of all of the Lenders and the Borrower.
(f) The term of this Agreement shall be until the final maturity of the
Notes and the payment of all amounts due under the Credit Documents.
10.7 Counterparts. This Agreement may be executed in several identical
counterparts, and by the parties hereto on separate counterparts, and each
counterpart, when so executed and delivered, shall constitute an original
instrument, and all such separate counterparts shall constitute but one and the
same instrument.
10.8. Usury Not Intended; Refund of Any Excess Payments. It is the intent of
the parties in the execution and performance of this Agreement to contract in
strict compliance with the usury laws of the State of Texas and the United
States of America from time to time in effect. In furtherance thereof, the
Agent, the Lenders and the Borrower stipulate and agree that none of the terms
and provisions contained in this Agreement or the other Credit Documents shall
ever be construed to create a contract to pay for the use, forbearance or
detention of money with interest at a rate in excess of the Ceiling Rate and
that for purposes hereof
-41-
<PAGE>
"interest" shall include the aggregate of all charges which constitute interest
under such laws that are contracted for, reserved, taken, charged or received
under this Agreement. In determining whether or not the interest paid or
payable, under any specific contingency, exceeds the Ceiling Rate, the Borrower,
the Agent and the Lenders shall, to the maximum extent permitted under
applicable law, (a) characterize any nonprincipal payment as an expense, fee or
premium rather than as interest, (b) exclude voluntary prepayments and the
effects thereof, and (c) "spread" the total amount of interest throughout the
entire contemplated term of the Loans. The provisions of this paragraph shall
control over all other provisions of the Credit Documents which may be in
apparent conflict herewith.
10.9 Captions. The headings and captions appearing in the Credit Documents
have been included solely for convenience and shall not be considered in
construing the Credit Documents.
10.10 Severability. If any provision of any Credit Documents shall be
invalid, illegal or unenforceable in any respect under any applicable law, the
validity, legality and enforceability of the remaining provisions shall not be
affected or impaired thereby.
10.11 Disclosures. Every reference in the Credit Documents to disclosures of
the Borrower to the Agent and the Lenders in writing, to the extent that such
references refer to disclosures at or prior to the execution of this Agreement,
shall be deemed strictly to refer only to written disclosures delivered to the
Agent and the Lenders in an orderly manner concurrently with the execution
hereof.
10.12 NO NOVATION. THE PARTIES HERETO HAVE ENTERED INTO THIS AGREEMENT AND
THE OTHER CREDIT DOCUMENTS SOLELY TO AMEND, RESTATE AND RESTRUCTURE THE TERMS
OF, AND THE OBLIGATIONS TO THE EXISTING LENDERS OWING UNDER AND IN CONNECTION
WITH, THE ORIGINAL CREDIT AGREEMENT. THE PARTIES DO NOT INTEND THIS AGREEMENT
NOR THE TRANSACTIONS CONTEMPLATED HEREBY TO BE, AND THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED HEREBY SHALL NOT BE CONSTRUED TO BE, A NOVATION OF ANY
OF THE OBLIGATIONS OWING BY THE BORROWER UNDER OR IN CONNECTION WITH THE
ORIGINAL CREDIT AGREEMENT.
10.13 LIMITATION OF LIABILITY. NO OBLIGATION OR LIABILITY WHATSOEVER OF THE
BORROWER WHICH MAY ARISE AT ANY TIME UNDER THIS AGREEMENT OR ANY OBLIGATION OR
LIABILITY WHICH MAY BE INCURRED BY IT PURSUANT TO ANY OTHER CREDIT DOCUMENT
SHALL BE PERSONALLY BINDING UPON, NOR SHALL RESORT FOR THE ENFORCEMENT THEREOF
BE HAD TO THE PRIVATE PROPERTY OF, ANY OF THE BORROWER'S TRUSTEES OR
SHAREHOLDERS REGARDLESS OF WHETHER SUCH OBLIGATION OR LIABILITY IS IN THE NATURE
OF CONTRACT, TORT OR OTHERWISE.
10.14 ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS
TOGETHER CONSTITUTE A WRITTEN AGREEMENT AND REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
-42-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date set forth above.
SECURITY CAPITAL PACIFIC TRUST
By:_________________________________
Name:_______________________________
Title:______________________________
Address:
7777 Market Center Avenue
El Paso, Texas 79912
Attention: Secretary
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<PAGE>
Lender Commitment: $50,000,000.00 TEXAS COMMERCE BANK
Percentage: 14.285714% NATIONAL ASSOCIATION,
as Agent and as a Lender
By:______________________________
Name:____________________________
Title:___________________________
Address:
712 Main Street
Houston, Texas 77002
Attention: Manager,
Real Estate Group
Telecopy No.: 713-216-7713
Telephone No.: Brian Kouns
713-216-5133
Lender Commitment: $50,000,000.00 WELLS FARGO REALTY ADVISORS
Percentage: 14.285714% FUNDING, INCORPORATED, as
Co-Agent and as a Lender
By:______________________________
Name:____________________________
Title:___________________________
By:______________________________
Name:____________________________
Title:___________________________
Address:
2859 Paces Ferry Road
Suite 1210
Atlanta, Georgia 30339
Attention: Bob Belson
Telecopy No: 404-435-2262
Telephone No. Bob Belson
404-435-3800
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<PAGE>
Lender Commitment: $30,000,000.00 GUARANTY FEDERAL BANK, F.S.B.
Percentage: 8.571429%
By:______________________________
Name:____________________________
Title:___________________________
Address:
301 Congress, Suite 1075
Austin, Texas 78701
Attention: Phyllis Milstead
Telecopy No.: 512-320-1041
Telephone No.: Phyllis Milstead
512-320-1007
Lender Commitment: $20,000,000.00 NORWEST BANK NEW MEXICO,
Percentage: 5.714286% NATIONAL ASSOCIATION
By:______________________________
Name:____________________________
Title:___________________________
Address:
1048 Paseo de Peralta
Santa Fe, New Mexico 87501
Attention: Bill Synnamon
Telecopy No.: 505-983-6232
Telephone No.: Bill Synnamon
505-984-8500
Lender Commitment: $30,000,000.00 THE FIRST NATIONAL BANK OF
Percentage: 8.571429% BOSTON
By:______________________________
Name:____________________________
Title:___________________________
Address:
700 North Pearl
Suite 1840
Dallas, Texas 75201
Attention: Helen Delph
Telecopy No.: 214-871-7328
Telephone No.: Helen Delph
214-720-3836
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<PAGE>
Lender Commitment: $25,000,000.00 BANK OF AMERICA NATIONAL TRUST
Percentage: 7.142857% AND SAVINGS ASSOCIATION
By:______________________________
Name:____________________________
Title:___________________________
Address:
555 South Flower Street
6th Floor
Los Angeles, California 90071
Attention: Kelly M. Allred
Telecopy No.: 213-228-5389
Telephone No.: Kelly M. Allred
213-228-4027
Lender Commitment: $25,000,000.00 FIRST INTERSTATE BANK OF TEXAS,
Percentage: 7.142857% N.A.
By:______________________________
Name:____________________________
Title:___________________________
Address:
1000 Louisiana
3rd Floor - Real Estate
Houston, Texas 77002
Attention: Todd C. Graham
Telecopy No: 713-250-4894
Telephone No. Todd C. Graham
713-250-1621
Lender Commitment: $25,000,000.00 FLEET NATIONAL BANK
Percentage: 7.142857%
By:______________________________
Name:____________________________
Title:___________________________
Address:
111 Westminster, Suite 800
Providence, Rhode Island 02903
Attention: John Christensen
Telecopy No: 401-278-3674
Telephone No. John Christensen
401-278-6328
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<PAGE>
Lender Commitment: $20,000,000.00 THE NIPPON CREDIT BANK, LTD.
Percentage: 5.714286%
By:______________________________
Name:____________________________
Title:___________________________
Address:
245 Park Avenue
30th Floor
New York, New York 10167
Attention: Neil Crawford
Telecopy No: 212-490-3895
Telephone No. Neil Crawford
212-984-1319
Lender Commitment: $20,000,000.00 BANK HAPOALIM, B.M.,
Percentage: 5.714286% Los Angeles Branch
By:______________________________
Name:____________________________
Title:___________________________
By:______________________________
Name:____________________________
Title:___________________________
Address:
6222 Wilshire Blvd.
Los Angeles, California 90048
Attention: Shohre Afshar or
Lori Lake
Telecopy No: 213-937-1439
Telephone No. Shohre Afshar or
Lori Lake
213-937-2322
Lender Commitment: $20,000,000.00 CORESTATES BANK, N.A.
Percentage: 5.714286%
By:______________________________
Name:____________________________
Title:___________________________
Address:
1339 Chestnut Street
Real Estate Department
Philadelphia, Pennsylvania 19107
Attention: R. Scott Relick
Telecopy No: 215-786-6381
Telephone No. R. Scott Relick
215-786-4224
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<PAGE>
Lender Commitment: $17,500,000.00 BANK ONE, ARIZONA, NA
Percentage: 5.000000%
By:______________________________
Name:____________________________
Title:___________________________
Address:
Real Estate Banking Group
241 N. Central, 20th Floor
Phoenix, Arizona 85004
Attention: Debbie Bliss
Telecopy No: 602-221-2977
Telephone No. Debbie Bliss
602-221-2342
Lender Commitment: $17,500,000.00 UNION BANK
Percentage: 5.000000%
By:______________________________
Name:____________________________
Title:___________________________
By:______________________________
Name:____________________________
Title:___________________________
Address:
Real Estate Capital Markets
Division
99 Almaden Boulevard
San Jose, California 95113
Attention: Kathy Ormseth
Telecopy No: 408-294-6631
Telephone No. Kathy Ormseth
408-279-7204
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<PAGE>
The undersigned legal counsel for the Borrower signs this Agreement not as a
party hereto but solely for the purpose of complying with the provisions of
Section 17.42(a)(3) of the Texas Deceptive Trade Practices-Consumer Protection
Act described in Section 10.5.
MAYER, BROWN & PLATT
By:______________________________
Name:____________________________
EXHIBITS
- --------
A - Officer's Certificate
B - Rate Designation Notice
C - Note Form
C-1 - Swing Loan Note
D - Request for Loan
E - Legal Opinion
-49-
<PAGE>
OFFICER'S CERTIFICATE
---------------------
Security Capital Pacific Trust (the "Borrower"), Texas Commerce Bank
National Association, as Agent (the "Agent") and certain other Lenders (the
"Lenders") entered into that certain Amended and Restated Credit Agreement (as
amended, supplemented and restated from time to time, the "Agreement") dated as
of _________________, 1995. Any term used herein and not otherwise defined
shall have the meaning ascribed to it in the Agreement.
The undersigned hereby certifies that:
I. I am the ________________ of the Borrower.
II. The attached financial statements were prepared in conformity with
generally accepted accounting principles consistently applied (except for the
omission of footnote disclosures and appropriately disclosed consistency
exceptions) and present fairly the financial position of the Borrower as of the
date thereof and the results of its operations for the period covered thereby
subject to normal year-end adjustments.
III. As of the end of the period covered by the attached financial
statements dated ______________________:
1. Tangible Net Worth Calculation:
(a) Assets $___________
(b) Liabilities $___________
(c) Tangible Net Worth (must equal at $___________
at least $1,000,000,000)
2. Ratio of Debt to Tangible Net Worth Ratio Calculation:
(a) Indebtedness $___________
(b) Tangible Net Worth $___________
(c) Debt to Tangible Net Worth Ratio $_____ : 1.0
3. Coverage Ratio Calculation:
(a) Borrower's Funds From Operations $___________
(b) Borrower's interest incurred $___________
(c) Construction Interest $___________
(d) Interest Expense ((b) - (c)) $___________
(e) Payments and payables on Disqualified $___________
Stock
(f) Coverage Ratio _____ : 1.0
4. Fixed Charge Coverage Ratio Calculation:
(a) Borrower's Funds From Operations $___________
(b) Borrower's Interest Expense $___________
(c) Unit Capital Expenditures $___________
(d) Payments and payables on Disqualified
Stock $___________
(e) Principal paid and payable $___________
(f) Fixed Charge Coverage Ratio _____ : 1.0
5. Maximum Recourse Indebtedness Calculation:
(a) Indebtedness with a final maturity
of 5 years or less $___________
(b) Non-recourse Debt included in 4(a) $___________
(c) Amortizing debt included in 4(a) $___________
(d) Credit enhancement included in 4(a) $___________
EXHIBIT A
---------
Page 1 of 5 Pages
<PAGE>
(e) Medium Term Notes included in 4(a)
(exclusion may not exceed $100,000,000) $___________
(f) Recourse Indebtedness as calculated using
(a) through (e) (may not exceed
$400,000,000) $___________
6. Asset Maintenance Calculation as of quarter-end:
(a) Historical Value of Pool
(attach list of each Property)
(must equal at least 5(c)) $___________
(b) Outstanding unsecured Indebtedness $___________
x 1.75
-----------
(c) Minimum Historical Value of Pool $___________
(d) Historical Value of Operating Sub-Pool $___________
(e) Net Operating Income of Operating Sub-Pool
properties owned 3 months or more $___________
/ .0925
-----------
(f) Value of (e) $___________
(g) Historical Value of Operating Sub-Pool
properties owned less than 3 months $___________
(h) (f)+(g) $___________
(i) Operating Sub-Pool Value (lesser of $___________
(d) and (h) (must equal at least 5(k))
(j) Outstanding Unsecured Indebtedness $___________
x 1.50
-----------
(k) Minimum Operating Sub-Pool Value $___________
7. Debt to Total Asset Value Ratio Calculation:
(only required after the Conversion Date)
(a) Indebtedness $___________
(b) Net Operating Income for properties $___________
owned during the preceding quarter / .0875
-----------
(c) Value of (b) $___________
(d) Book value of properties acquired during $___________
the preceding quarter
(e) Book value of undeveloped land $___________
(f) Book value of land under development $___________
for up to 6 months after completion
(g) Cash and cash equivalents excluding $___________
restricted deposits
(h) Book value of all other assets not $___________
included in (b) through (g) above,
excluding intangibles and equity
investments in Unconsolidated Affiliates
(i) Book value of equity investments in $___________
Unconsolidated Affiliates multiplied by
the Equity Percentage
EXHIBIT A
---------
Page 2 of 5 Pages
<PAGE>
(j) Total Asset Value ((c)+(d)+(e)+(f)+ $___________
(g)+(h)+(i))
(k) Debt to Total Asset Value Ratio ___________%
(as a percentage, (a)/(j))
IV. Attached hereto is a statement of Funds From Operations for the
Borrower as of the most recent date required by the Agreement.
V. A review of the activities of the Borrower during the period covered
by the attached financial statements has been made under my supervision and with
a view to determining whether during such period the Borrower has kept,
observed, performed and fulfilled all of its obligations under the Agreement.
VI. (Check either (a) or (b) )
[ ] (a) The Borrower has kept, observed, performed and fulfilled each and
every one of its obligations under the Agreement during the period covered by
the attached financial statements.
[ ] (b) The Borrower has kept, observed, performed and fulfilled each and
every one of its obligations under the Agreement during the period covered by
the attached financial statements except for the following matters: [Describe
all such defaults,
EXHIBIT A
---------
Page 3 of 5 Pages
<PAGE>
specifying the nature, duration and status thereof and what action the Borrower
has taken or proposes to take with respect thereto.]
VII. With regard to Section 1004 of the Indenture dated as of February 1,
1994 between the Borrower and Morgan Guaranty Trust Company of New York, as
Trustee (and using the terms defined therein), a certificate required thereunder
showing compliance with Section 1004 is attached, and as at the end of the
period covered by the attached financial statements:
1. (a) Sum of Total Assets, aggregate
purchase price of real estate assets
or mortgages receivable acquired,
and securities offering proceeds
received to purchase said assets $___________
x.60
-----------
(b) Maximum amount of Debt $___________
(c) Debt $___________
2. (a) Consolidated Income Available
for Debt Service $___________
(b) Annual Service Charge $___________
(c) Ratio of Consolidated Income
Available for Debt Service to
Annual Service Charge (must be
equal to or greater than 1.5:1.0) ______: 1.0
3. (a) Total Assets $___________
x.40
-----------
(b) Maximum secured Debt $___________
(c) Secured Debt $___________
Date:__________________, 199_ ______________________________
Name:_________________________
EXHIBIT A
---------
Page 4 of 5 Pages
<PAGE>
POOL PROPERTY LIST
List each property separately showing the Historical Value and the
components, the Operating Sub-Pool Value and components, and the occupancy level
for the past 3 months.
EXHIBIT A
---------
Page 5 of 5 Pages
<PAGE>
RATE DESIGNATION NOTICE
Security Capital Pacific Trust, Texas Commerce Bank National Association,
as Agent, and certain other Lenders executed and delivered that certain Amended
and Restated Credit Agreement dated as of ___________________, 1995 (as may be
amended, supplemented and restated, the "Credit Agreement"). Any term used
herein and not otherwise defined herein shall have the meaning ascribed to it in
the Credit Agreement.
In accordance with the Credit Agreement, Borrower hereby notifies Agent of
a new borrowing which is, or the conversion to, a Eurodollar Rate Borrowing.
A. Current borrowings
------------------
1. Amount of Eurodollar Rate Borrowing(s)
now in effect: $_____________________
2. Number of Eurodollar Rate Borrowing(s)
now in effect: ______________________
(cannot exceed 12)
B. Proposed election
-----------------
1. New advance
a. Amount: $______________________
b. Interest Period: ___________________________
c. Date Eurodollar Rate Borrowing is to be
effective: __________________________
2. Rollover of existing Eurodollar Rate Borrowing
a. Expiration of current interest
period: _________________________
b. Amount: $________________________
c. Interest Period: ____________________________
Borrower represents and warrants that the Interest Option and Interest
Period selected above comply with all provisions of the Credit Agreement and
that there exists no Event of Default or any event which, with the passage of
time, the giving of notice or both, would be an Event of Default.
Date:_____________________________
SECURITY CAPITAL PACIFIC TRUST
By:______________________________
Name:____________________________
Title:___________________________
EXHIBIT B
---------
<PAGE>
$[________________] [_____________], 1995
FOR VALUE RECEIVED SECURITY CAPITAL PACIFIC TRUST, a Maryland real estate
investment trust (herein called "Maker") promises to pay to the order of
[_______________________________________________________________________________
___], a [______________________________] ("Payee"), at the offices of Texas
Commerce Bank National Association, a national banking association, as "Agent"
under the Credit Agreement, at 712 Main Street, Houston, Texas 77002, or at such
other place as the holder (the "Holder", whether or not Payee is such holder) of
this note may hereafter designate in writing, in immediately available funds and
in lawful money of the United States of America, the principal sum of
[_____________________________________________] Dollars ($[___________________])
(or the unpaid balance of all principal advanced against this note, if that
amount is less), together with interest on the unpaid principal balance of this
note from time to time outstanding at the Stated Rate and interest on all past
due amounts, both principal and accrued interest, at the Past Due Rate;
provided, that for the full term of this note the interest rate produced by the
aggregate of all sums paid or agreed to be paid to the Holder of this note for
the use, forbearance or detention of the debt evidenced hereby (including, but
not limited to, all interest on this note at the Stated Rate) shall not exceed
the Ceiling Rate.
1. Definitions. Any terms not defined herein shall have the meaning given
to them in the Amended and Restated Credit Agreement dated of even date herewith
among the Maker, the Payee, the Agent and certain other Lenders (as the same may
be amended or modified the "Credit Agreement").
2. Rates Change Automatically and Without Notice. Without notice to Maker
or any other person or entity and to the full extent allowed by applicable law
from time to time in effect, the Prime Rate and the Ceiling Rate shall each
automatically fluctuate upward and downward as and in the amount by which
Agent's said prime rate, and such maximum nonusurious rate of interest permitted
by applicable law, respectively, fluctuate.
3. Calculation of Interest. Interest shall be computed for the actual
number of days elapsed in a year (up to 365, or 366 in a leap year) deemed to
consist of 360 days, unless the Ceiling Rate would thereby be exceeded, in which
event, to the extent necessary to avoid exceeding the Ceiling Rate, interest
shall be computed on the basis of the actual number of days elapsed in the
applicable calendar year in which it accrued.
4. Excess Interest Will be Refunded or Credited. If, for any reason
whatever, the interest paid or received on this note during its full term
produces a rate which exceeds the Ceiling Rate, the Holder of this note shall
refund to the payor or, at the Holder's option, credit against the principal of
this note such portion of that interest as shall be necessary to cause the
interest paid on this note to produce a rate equal to the Ceiling Rate.
5. Interest Will be Spread. All sums paid or agreed to be paid to the
Holder of this note for the use, forbearance or detention of the indebtedness
evidenced hereby, to the extent permitted by applicable law and to the extent
necessary to avoid violating applicable usury laws, shall be amortized,
prorated, allocated and spread in equal parts throughout the
INITIALLED FOR
IDENTIFICATION:__________
Page 1 of 5 Pages
EXHIBIT C
---------
<PAGE>
full term of this note, so that the interest rate is uniform throughout the full
term of this note.
6. Payment Schedule. The principal of this note shall be due and payable
on the Maturity Date. Accrued and unpaid interest shall be due and payable on
each Interest Payment Date. All payments shall be applied first to accrued
interest, the balance to principal.
7. Prepayment. Maker may prepay this note only as provided in the Credit
Agreement.
8. Revolving Credit. Upon and subject to the terms and conditions of the
Credit Agreement and the other provisions of this note, Maker may borrow, repay
and reborrow against this note at any time unless and until a default (however
designated) or event (an "Event of Potential Default") which, if not cured after
notice or before the lapse of time (or both) would develop into a default under
this note, the Credit Agreement or any other Credit Documents has occurred which
the Holder has not declared to have been fully cured or waived, and (except as
the Credit Agreement or any of the other Credit Documents may otherwise provide)
there is no limit on the number of advances against this note so long as the
total unpaid principal of this note at any time outstanding does not exceed the
Payee's Lender Commitment. Interest on the amount of each advance against this
note shall be computed on the amount of the unpaid balance of that advance from
the date it is made until the date it is repaid. If Maker's right (if any) to
borrow against this note shall ever lapse because of the occurrence of any
default, it shall not be reinstated (or construed from any course of conduct or
otherwise to have been reinstated) unless and until the Holder shall declare in
a signed writing that it has been cured or waived. The unpaid principal balance
of this note at any time shall be the total of all principal lent against this
note to Maker or for Maker's account less the sum of all principal payments and
permitted prepayments on this note received by the Holder. Absent manifest
error, the Holder's computer records shall on any day conclusively evidence the
unpaid balance of this note and its advances and payments history posted up to
that day. All loans and advances and all payments and permitted prepayments
made on this note may be (but are not required to be) endorsed by the Holder on
the schedule attached hereto (which is hereby made a part hereof for all
purposes) or otherwise recorded in the Holder's computer or manual records;
provided, that any Holder's failure to make notation of (a) any principal
advance or accrual of interest shall not cancel, limit or otherwise affect
Maker's obligations or any Holder's rights with respect to that advance or
accrual, or (b) any payment or permitted prepayment of principal or interest
shall not cancel, limit or otherwise affect Maker's entitlement to credit for
that payment as of the date of its receipt by the Holder. Maker and Payee
expressly agree, as expressly allowed by Article 15.10(b) of Chapter 15
("Chapter 15") of the Texas Credit Code, that Chapter 15 (which relates to open-
end line of credit revolving loan accounts) shall not apply to this note or to
any loan evidenced by this note and that neither this note nor any such loan
shall be governed by Chapter 15 or subject to its provisions in any manner
whatsoever.
9. Credit Agreement. This note has been issued pursuant to the terms of
the Credit Agreement, to which reference is made for all purposes. Advances
against this note by Payee or other Holder hereof shall be governed by the
Credit Agreement. Payee is entitled to the benefits of the Credit Agreement.
As additional security for this note, Maker hereby grants to Payee
INITIALLED FOR
IDENTIFICATION:__________
Page 2 of 5 Pages
EXHIBIT C
---------
<PAGE>
and all other present and future Holders an express lien against, security
interest in and contractual right of setoff in and to, all property and any and
all deposits (general or special, time or demand, provisional or final) at any
time held by the Payee or other Holder for any Maker's credit or account.
10. Defaults and Remedies. Time is of the essence. Maker's failure to
pay any principal or accrued interest owing on this note when due and after
expiration of any applicable period for notice and right to cure such a default
which is specifically provided for in the Credit Agreement or any other
provision of this note, or the occurrence of any default under the Credit
Agreement or any other Credit Documents shall constitute default under this
note, whereupon the Holder may elect to exercise any or all rights, powers and
remedies afforded (a) under the Credit Agreement and all other papers related to
this note and (b) by law, including the right to accelerate the maturity of this
entire note.
In addition to and cumulative of such rights, the Holder is hereby
authorized at any time and from time to time after any such default, at Holder's
option, without notice to Maker or any other person or entity (all rights to any
such notice being hereby waived), to set off and apply any and all of any
Maker's deposits at any time held by the Holder, and any other debt at any time
owing by the Holder to or for the credit or account of any Maker, against the
outstanding balance of this note, in such order and manner as Holder may elect
in its sole discretion.
The Holder's right to accelerate this note on account of any late payment
or other default shall not be waived or deemed waived by the Holder by reason of
the Holder's having previously accepted one or more late payments or by reason
of any Holder's otherwise not accelerating this note or exercising other
remedies for any default, and no Holder shall ever be obligated or deemed
obligated to notify Maker or any other person that Holder is requiring strict
compliance with this note or any papers securing or otherwise relating to it
before such Holder may accelerate this note or exercise any other remedy.
Nothing in this Section or elsewhere shall be construed as diminishing
Holder's absolute right to demand payment of all or any part of this note at any
time.
11. Legal Costs. If any Holder of this note retains an attorney in
connection with any such default or to collect, enforce or defend this note or
any papers intended to secure or guarantee it in any lawsuit or in any probate,
reorganization, bankruptcy or other proceeding, or if Maker sues any Holder in
connection with this note or any such papers and does not prevail, then Maker
agrees to pay to each such Holder, in addition to principal and interest, all
reasonable costs and expenses incurred by such Holder in trying to collect this
note or in any such suit or proceeding, including reasonable attorneys' fees.
12. Waivers. Except only for any notices which are specifically required
by the Credit Agreement, Maker and any and all co-makers, endorsers, guarantors
and sureties severally waive notice (including, but not limited to, notice of
intent to accelerate and notice of acceleration, notice of protest and notice of
dishonor), demand, presentment for payment, protest, diligence in collecting and
the filing of suit for the purpose of fixing liability and consent that the time
of payment hereof may be extended and re-extended from time to time without
INITIALLED FOR
IDENTIFICATION:__________
Page 3 of 5 Pages
EXHIBIT C
---------
<PAGE>
notice to any of them. Each such person agrees that his, her or its liability
on or with respect to this note shall not be affected by any release of or
change in any guaranty or security at any time existing or by any failure to
perfect or maintain perfection of any lien against or security interest in any
such security or the partial or complete unenforceability of any guaranty or
other surety obligation, in each case in whole or in part, with or without
notice and before or after maturity.
13. Rate of Return Maintenance Covenant. If at any time after the date of
this note, any Holder determines that (a) any applicable law, rule or regulation
regarding capital adequacy of general applicability has been adopted or changed,
or (b) its interpretation or administration by any governmental authority,
central bank or comparable agency has changed, and determines that such change
or the Holder's compliance with any request or directive regarding capital
adequacy of general applicability (whether or not having the force of law) of
any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on the Holder's capital as a consequence
of its obligations under this note or any related papers to a level below that
which the Holder could have achieved but for such adoption, change or compliance
(taking into consideration the Holder's own capital adequacy policies) by an
amount the Holder deems to be material, then Maker promises to pay from time to
time to the order of the Holder such additional amount or amounts as will
compensate the Holder for such reduction. A certificate of any Holder setting
forth the amount or amounts necessary to compensate the Holder as specified
above shall be given to Maker as soon as practicable after the Holder has made
such determination and shall be conclusive and binding, absent manifest error.
Maker shall pay the Holder the amount shown as due on any such certificate
within 15 days after the Holder gives it. In preparing such certificate, the
Holder may employ such assumptions and make such allocations of costs and
expenses as the Holder in good faith deems reasonable and may use any reasonable
averaging and attribution method.
14. Governing Law, Jurisdiction and Venue. This note shall be governed by
and construed in accordance with the laws of the State of Texas and the United
States of America from time to time in effect.
15. General Purpose of Loan. Maker warrants and represents to Payee and
all other Holders that all loans evidenced by this note are and will be for
business, commercial, investment or other similar purpose and not primarily for
personal, family, household or agricultural use, as such terms are used in
Chapter One.
16. Participations and Assignments. Payee and each other Holder reserves
the right, exercisable in such Holder's discretion and without notice to Maker
or any other person, to sell participations, assign interests or both, in all or
any part of this note or the debt evidenced by this note, in accordance with the
Credit Agreement.
17. Limitation of Liability. No obligation or liability whatsoever of
Maker which may arise at any time under this promissory note or any obligation
or liability which may be incurred by it pursuant to any other instrument,
transaction or undertaking contemplated hereby shall be personally binding upon,
nor shall resort for the enforcement thereof be had to the private property of,
any of Maker's trustees or
INITIALLED FOR
IDENTIFICATION:
--------
Page 4 of 5 Pages
EXHIBIT C
---------
<PAGE>
shareholders regardless of whether such obligation or liability is in the nature
of contract, tort or otherwise.
SECURITY CAPITAL PACIFIC TRUST
By:
---------------------------
Name:
-------------------------
Title:
------------------------
Page 5 of 5 Pages
EXHIBIT C
---------
<PAGE>
SWING LOAN NOTE
---------------
$200,000,000.00 _____________, 1995
FOR VALUE RECEIVED SECURITY CAPITAL PACIFIC TRUST, a Maryland real estate
investment trust (herein called "Maker") promises to pay to the order of TEXAS
COMMERCE BANK NATIONAL ASSOCIATION, a national banking association, at 712 Main
Street, Houston, Texas 77002, or at such other place as the holder (the
"Holder", whether or not Payee is such holder) of this note may hereafter
designate in writing, in immediately available funds and in lawful money of the
United States of America, the principal sum of Two Hundred Million Dollars
($200,000,000.00) (or the unpaid balance of all principal advanced against this
note, if that amount is less), together with interest on the unpaid principal
balance of this note from time to time outstanding at the Stated Rate and
interest on all past due amounts, both principal and accrued interest, at the
Past Due Rate; provided, that for the full term of this note the interest rate
produced by the aggregate of all sums paid or agreed to be paid to the Holder of
this note for the use, forbearance or detention of the debt evidenced hereby
(including, but not limited to, all interest on this note at the Stated Rate)
shall not exceed the Ceiling Rate.
1. Definitions. Any terms not defined herein shall have the meaning given
to them in the Amended and Restated Credit Agreement dated of even date herewith
among the Maker, the Payee and certain other Lenders (as the same may be amended
or modified the "Credit Agreement").
2. Rates Change Automatically and Without Notice. Without notice to Maker
or any other person or entity and to the full extent allowed by applicable law
from time to time in effect, the Prime Rate and the Ceiling Rate shall each
automatically fluctuate upward and downward as and in the amount by which
Holder's said prime rate, and such maximum nonusurious rate of interest
permitted by applicable law, respectively, fluctuate.
3. Calculation of Interest. Interest shall be computed for the actual
number of days elapsed in a year (up to 365, or 366 in a leap year) deemed to
consist of 360 days, unless the Ceiling Rate would thereby be exceeded, in which
event, to the extent necessary to avoid exceeding the Ceiling Rate, interest
shall be computed on the basis of the actual number of days elapsed in the
applicable calendar year in which it accrued.
4. Excess Interest Will be Refunded or Credited. If, for any reason
whatever, the interest paid or received on this note during its full term
produces a rate which exceeds the Ceiling Rate, the Holder of this note shall
refund to the payor or, at the Holder's option, credit against the principal of
this note such portion of that interest as shall be necessary to cause the
interest paid on this note to produce a rate equal to the Ceiling Rate.
5. Interest Will be Spread. All sums paid or agreed to be paid to the
Holder of this note for the use, forbearance or detention of the indebtedness
evidenced hereby, to the extent permitted by applicable law and to the extent
necessary to avoid violating applicable usury laws, shall be amortized,
prorated, allocated and spread in equal parts throughout the full term of this
note, so that the interest rate is uniform throughout the full term of this
note.
INITIALLED FOR
IDENTIFICATION:_______
Page 1 of 5 Pages
EXHIBIT C-1
-----------
<PAGE>
6. Payment Schedule. The principal of this note shall be due and payable
on the Revolving Credit Termination Date. Accrued and unpaid interest shall be
due and payable on each Interest Payment Date. All payments shall be applied
first to accrued interest, the balance to principal.
7. Prepayment. Maker may prepay this note only as provided in the Credit
Agreement.
8. Revolving Credit. Upon and subject to the terms and conditions of the
Credit Agreement and the other provisions of this note, Maker may borrow, repay
and reborrow against this note at any time unless and until a default (however
designated) or event (an "Event of Potential Default") which, if not cured after
notice or before the lapse of time (or both) would develop into a default under
this note, the Credit Agreement or any other Credit Documents has occurred which
the Holder has not declared to have been fully cured or waived, and (except as
the Credit Agreement or any of the other Credit Documents may otherwise provide)
there is no limit on the number of advances against this note so long as the
total unpaid principal of this note at any time outstanding does not exceed
$200,000,000.00. Interest on the amount of each advance against this note shall
be computed on the amount of the unpaid balance of that advance from the date it
is made until the date it is repaid. If Maker's right (if any) to borrow
against this note shall ever lapse because of the occurrence of any default, it
shall not be reinstated (or construed from any course of conduct or otherwise to
have been reinstated) unless and until the Holder shall declare in a signed
writing that it has been cured or waived. The unpaid principal balance of this
note at any time shall be the total of all principal lent against this note to
Maker or for Maker's account less the sum of all principal payments and
permitted prepayments on this note received by the Holder. Absent manifest
error, the Holder's computer records shall on any day conclusively evidence the
unpaid balance of this note and its advances and payments history posted up to
that day. All loans and advances and all payments and permitted prepayments
made on this note may be (but are not required to be) endorsed by the Holder on
the schedule attached hereto (which is hereby made a part hereof for all
purposes) or otherwise recorded in the Holder's computer or manual records;
provided, that any Holder's failure to make notation of (a) any principal
advance or accrual of interest shall not cancel, limit or otherwise affect
Maker's obligations or any Holder's rights with respect to that advance or
accrual, or (b) any payment or permitted prepayment of principal or interest
shall not cancel, limit or otherwise affect Maker's entitlement to credit for
that payment as of the date of its receipt by the Holder. Maker and Payee
expressly agree, as expressly allowed by Article 15.10(b) of Chapter 15
("Chapter 15") of the Texas Credit Code, that Chapter 15 (which relates to open-
end line of credit revolving loan accounts) shall not apply to this note or to
any loan evidenced by this note and that neither this note nor any such loan
shall be governed by Chapter 15 or subject to its provisions in any manner
whatsoever.
9. Credit Agreement. This note has been issued pursuant to the terms of
the Credit Agreement, to which reference is made for all purposes. Advances
against this note by Payee or other Holder hereof shall be governed by the
Credit Agreement. Payee is entitled to the benefits of the Credit Agreement.
As additional security for this note, Maker hereby grants to Payee and all other
present and future Holders an express lien against, security interest in and
contractual right of setoff in and to, all property and any and all deposits
(general or
INITIALLED FOR
IDENTIFICATION:_________
Page 2 of 5 Pages
EXHIBIT C-1
-----------
<PAGE>
special, time or demand, provisional or final) at any time held by the Payee or
other Holder for any Maker's credit or account.
10. Defaults and Remedies. Time is of the essence. Maker's failure to
pay any principal or accrued interest owing on this note when due and after
expiration of any applicable period for notice and right to cure such a default
which is specifically provided for in the Credit Agreement or any other
provision of this note, or the occurrence of any default under the Credit
Agreement or any other Credit Documents shall constitute default under this
note, whereupon the Holder may elect to exercise any or all rights, powers and
remedies afforded (a) under the Credit Agreement and all other papers related to
this note and (b) by law, including the right to accelerate the maturity of this
entire note.
In addition to and cumulative of such rights, the Holder is hereby
authorized at any time and from time to time after any such default, at Holder's
option, without notice to Maker or any other person or entity (all rights to any
such notice being hereby waived), to set off and apply any and all of any
Maker's deposits at any time held by the Holder, and any other debt at any time
owing by the Holder to or for the credit or account of any Maker, against the
outstanding balance of this note, in such order and manner as Holder may elect
in its sole discretion.
The Holder's right to accelerate this note on account of any late payment
or other default shall not be waived or deemed waived by the Holder by reason of
the Holder's having previously accepted one or more late payments or by reason
of any Holder's otherwise not accelerating this note or exercising other
remedies for any default, and no Holder shall ever be obligated or deemed
obligated to notify Maker or any other person that Holder is requiring strict
compliance with this note or any papers securing or otherwise relating to it
before such Holder may accelerate this note or exercise any other remedy.
Nothing in this Section or elsewhere shall be construed as diminishing
Holder's absolute right to demand payment of all or any part of this note at any
time.
11. Legal Costs. If any Holder of this note retains an attorney in
connection with any such default or to collect, enforce or defend this note or
any papers intended to secure or guarantee it in any lawsuit or in any probate,
reorganization, bankruptcy or other proceeding, or if Maker sues any Holder in
connection with this note or any such papers and does not prevail, then Maker
agrees to pay to each such Holder, in addition to principal and interest, all
reasonable costs and expenses incurred by such Holder in trying to collect this
note or in any such suit or proceeding, including reasonable attorneys' fees.
12. Waivers. Except only for any notices which are specifically required
by the Credit Agreement, Maker and any and all co-makers, endorsers, guarantors
and sureties severally waive notice (including, but not limited to, notice of
intent to accelerate and notice of acceleration, notice of protest and notice of
dishonor), demand, presentment for payment, protest, diligence in collecting and
the filing of suit for the purpose of fixing liability and consent that the time
of payment hereof may be extended and re-extended from time to time without
notice to any of them. Each such person agrees that his, her or its liability
on or with respect to this note shall not be affected by any release of or
change in any guaranty or
INITIALLED FOR
IDENTIFICATION:_________
Page 3 of 5 Pages
EXHIBIT C-1
-----------
<PAGE>
security at any time existing or by any failure to perfect or maintain
perfection of any lien against or security interest in any such security or the
partial or complete unenforceability of any guaranty or other surety obligation,
in each case in whole or in part, with or without notice and before or after
maturity.
13. Rate of Return Maintenance Covenant. If at any time after the date of
this note, any Holder determines that (a) any applicable law, rule or regulation
regarding capital adequacy of general applicability has been adopted or changed,
or (b) its interpretation or administration by any governmental authority,
central bank or comparable agency has changed, and determines that such change
or the Holder's compliance with any request or directive regarding capital
adequacy of general applicability (whether or not having the force of law) of
any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on the Holder's capital as a consequence
of its obligations under this note or any related papers to a level below that
which the Holder could have achieved but for such adoption, change or compliance
(taking into consideration the Holder's own capital adequacy policies) by an
amount the Holder deems to be material, then Maker promises to pay from time to
time to the order of the Holder such additional amount or amounts as will
compensate the Holder for such reduction. A certificate of any Holder setting
forth the amount or amounts necessary to compensate the Holder as specified
above shall be given to Maker as soon as practicable after the Holder has made
such determination and shall be conclusive and binding, absent manifest error.
Maker shall pay the Holder the amount shown as due on any such certificate
within 15 days after the Holder gives it. In preparing such certificate, the
Holder may employ such assumptions and make such allocations of costs and
expenses as the Holder in good faith deems reasonable and may use any reasonable
averaging and attribution method.
14. Governing Law, Jurisdiction and Venue. This note shall be governed by
and construed in accordance with the laws of the State of Texas and the United
States of America from time to time in effect.
15. General Purpose of Loan. Maker warrants and represents to Payee and
all other Holders that all loans evidenced by this note are and will be for
business, commercial, investment or other similar purpose and not primarily for
personal, family, household or agricultural use, as such terms are used in
Chapter One.
16. Participations and Assignments. Payee and each other Holder reserves
the right, exercisable in such Holder's discretion and without notice to Maker
or any other person, to sell participations, assign interests or both, in all or
any part of this note or the debt evidenced by this note.
17. Limitation of Liability. No obligation or liability whatsoever of
Maker which may arise at any time under this promissory note or any obligation
or liability which may be incurred by it pursuant to any other instrument,
transaction or undertaking contemplated hereby shall be personally binding upon,
nor shall resort for the enforcement thereof be had to the private property of,
any of Maker's trustees or
INITIALLED FOR
IDENTIFICATION:_________
Page 4 of 5 Pages
EXHIBIT C-1
-----------
<PAGE>
shareholders regardless of whether such obligation or liability is in the nature
of contract, tort or otherwise.
SECURITY CAPITAL PACIFIC TRUST
By:___________________________
Name:_________________________
Title:________________________
Page 5 of 5 Pages
EXHIBIT C-1
-----------
<PAGE>
REQUEST FOR LOAN
----------------
Date: _______________, 199__
Texas Commerce Bank
National Association, as Agent
712 Main Street
Houston, Texas 77002
("Lender")
RE: Request for Loan Under Amended and Restated Credit Agreement (as
amended from time to time, the "Credit Agreement") dated as of
__________________, 1995, among Security Capital Pacific Trust
(the "Borrower"), the Agent and the Lenders as signatory to the
Credit Agreement
Gentlemen:
Borrower hereby requests an advance under the Credit Agreement in
connection with ___________________, which is allowed pursuant to Section 5.9 of
the Credit Agreement, in the amount of $____________ [minimum of $1,000,000.00
and in multiples of $250,000.00].
Maximum Principal Amount $350,000,000.00
Less the amount outstanding under the
Credit Agreement (including Swing Loans) ($__________.__)
Available amount $__________.__
Less amount requested ($__________.__)
Amount remaining to be advanced $__________.__
Borrower hereby represents and warrants that the amounts set forth above
are true and correct, that the amount above requested has actually been
incurred, that the representations and warranties contained in the Credit
Agreement are true and correct as if made as of this date, and that Borrower has
kept, observed, performed and fulfilled each and every one of its obligations
under the Credit Agreement as of the date hereof [except as follows: ]
Very truly yours,
SECURITY CAPITAL PACIFIC TRUST
By:_______________________________
Name:_____________________________
Title:____________________________
EXHIBIT D
---------
<PAGE>
OPINION OF COUNSEL
------------------
1. The Borrower (a) is duly organized, validly existing and in good
standing under the laws of the states of Maryland and Texas; (b) has all
requisite power and authority and all material governmental licenses,
authorizations, permits and approvals to own its Property and to carry on its
business as, and in the places where, such Property is owned or such business is
now conducted, and (c) is duly qualified to do business and is in good standing
in every jurisdiction in which such qualification is necessary or desirable.
2. The execution, delivery and performance of the Credit Agreement
and the other Credit Documents (a) have all been duly authorized by all
necessary action by the Borrower; (b) are within the power and authority of the
Borrower; (c) will not contravene or violate any Legal Requirement or the
Organizational Documents of the Borrower; (d) to the best of our knowledge, will
not result in the breach of, or constitute a default under, any agreement,
instrument, judgment, license, order or permit to which the Borrower is a party
or by which the Borrower or any of its Property may be bound or affected, and
(e) to the best of our knowledge, do not result in the creation of any Lien upon
any Property of the Borrower except as expressly contemplated by the Credit
Documents.
3. All authorizations, consents, approvals, licenses, permissions and
registrations, if any, of or with any Governmental Authority, or to the best of
our knowledge, any other Person, required in connection with the execution,
delivery and performance of the Credit Agreement, the Note and the other Credit
Documents have been obtained.
4. The Credit Documents are legal, valid and binding obligations of
the Borrower, enforceable in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, moratorium and other
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles.
5. To the best of our knowledge and except as heretofore disclosed to
the Agent, there is no litigation or administrative proceeding pending or
threatened against, or any outstanding judgment, order decree or award
affecting, the Borrower before or by any Governmental Authority or arbitral body
which in the aggregate have, or if adversely determined could have, any material
adverse effect on the condition, business or prospects, financial or otherwise,
of the Borrower.
6. The Borrower is not an "investment company", or a copy
"controlled" by an "investment company", within the meaning of the Investment
Company Act of 1940, as amended.
EXHIBIT E
---------
<PAGE>
Exhibit 15
Board of Trustees and Shareholders
Security Capital Pacific Trust
Gentlemen:
Re: Registration Statement Nos. 33-86444, 33-78402, 33-71040, 33-44631
and 33-2517
With respect to the subject registration statements, we acknowledge our
awareness of the use therein of our report dated October 20, 1995 related
to our review of interim financial information.
Pursuant to Rule 436(c) under the Securities Act of 1933, such report is not
considered a part of a registration statement prepared or certified by an
accountant, or a report prepared or certified by an accountant within the
meaning of sections 7 and 11 of the Act.
KPMG PEAT MARWICK LLP
Chicago, Illinois
October 23, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Form 10-Q
for the nine months ended September 30, 1995 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 12,102
<SECURITIES> 0
<RECEIVABLES> 21,494
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 1,744,343
<DEPRECIATION> 72,119
<TOTAL-ASSETS> 1,723,962
<CURRENT-LIABILITIES> 0
<BONDS> 151,305
<COMMON> 72,376
0
335,000
<OTHER-SE> 892,128
<TOTAL-LIABILITY-AND-EQUITY> 1,723,962
<SALES> 189,412
<TOTAL-REVENUES> 191,296
<CGS> 0
<TOTAL-COSTS> 76,075
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 220
<INTEREST-EXPENSE> 14,400
<INCOME-PRETAX> 58,548
<INCOME-TAX> 0
<INCOME-CONTINUING> 58,548
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 58,548
<EPS-PRIMARY> 0.66
<EPS-DILUTED> 0.66
</TABLE>
