<PAGE>
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 8, 1997
SECURITY CAPITAL PACIFIC TRUST
(Exact name of registrant as specified in its charter)
Maryland 1-10272 74-6056896
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
7670 South Chester Street, Suite 100 80112
Englewood, Colorado (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (303) 708-5959
Not Applicable
(Former name or former address, if changed since last report)
===============================================================================
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Pro forma financial information (unaudited):
Pro Forma Condensed Balance Sheet as of June 30, 1997
Pro Forma Condensed Statement of Earnings for the six months ended
June 30, 1997
Pro Forma Condensed Statement of Earnings for the year ended December 31,
1996
Notes to Pro Forma Condensed Financial Statements
(c) Exhibit:
10.1 Amended and Restated Credit Agreement, dated as of August 13,
1997, among Security Capital Pacific Trust, Texas Commerce Bank,
National Association and Wells Fargo Bank, National Association
and the other lenders party thereto
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SECURITY CAPITAL PACIFIC TRUST
Dated: September 8, 1997 By: /s/ Bryan J. Flanagan
---------------------------------------
Bryan J. Flanagan
Senior Vice President and Principal
Financial Officer
By: /s/ Ash K. Atwood
---------------------------------------
Ash K. Atwood
Vice President and Principal
Accounting Officer
<PAGE>
SECURITY CAPITAL PACIFIC TRUST
INDEX TO PRO FORMA CONDENSED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Pro Forma Condensed Balance Sheet as of June 30, 1997 (unaudited)......... F-3
Pro Forma Condensed Statement of Earnings for the six months ended June
30, 1997 (unaudited)..................................................... F-4
Pro Forma Condensed Statement of Earnings for the year ended December 31,
1996 (unaudited)......................................................... F-5
Notes to Pro Forma Condensed Financial Statements (unaudited)............. F-6
</TABLE>
F-1
<PAGE>
SECURITY CAPITAL PACIFIC TRUST
PRO FORMA CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
The accompanying pro forma condensed financial statements for PTR reflect the
Merger pursuant to which PTR will acquire its REIT Manager and Property Manager
currently owned by Security Capital Group Incorporated ("Security Capital"), in
exchange for PTR common shares. The Merger will result in PTR becoming an
internally managed REIT. The Merger does not meet the significance tests of the
Securities and Exchange Commission that require pro forma financial statements
and financial statements of the acquired companies. However, pro forma financial
statements have been included because management believes that presenting the
pro forma effects of the Merger will help shareholders evaluate and understand
the Merger.
In addition to the Merger, the pro forma condensed financial statements also
reflect:
(i) the October 1996 contribution of PTR's Homestead Village(R) properties
to a newly formed company, Homestead Village Incorporated ("Homestead"), in
exchange for Homestead securities (the "Homestead Transaction");
(ii) the acquisitions and dispositions by PTR of the multifamily
communities reported in previously filed Form 8-K's dated August 1, 1996,
October 14, 1996, February 20, 1997 and July 21, 1997 (the "Community
Acquisitions and Dispositions").
The pro forma condensed financial statements have been prepared based on
certain pro forma adjustments to the historical financial statements of PTR.
The accompanying pro forma condensed balance sheet as of June 30, 1997 has
been prepared as if the Merger and certain community acquisitions and
dispositions had been completed as of the balance sheet date. The accompanying
pro forma condensed statements of earnings for the six-months ended June 30,
1997 and the year ended December 31, 1996, have been prepared as if the Merger,
the Homestead Transaction and the Community Acquisitions and Dispositions had
occurred on January 1, 1996. However, it does not give effect to the fully
stabilized results of operations related to PTR communities under construction
or in planning and owned at June 30, 1997 with a total budgeted completion cost
of $642.7 million or 1996 development completions with a total budgeted cost of
$208.3 million. Management believes there will be sufficient depth of management
and personnel such that additional assets can be acquired, developed and managed
without a significant increase in personnel or other costs. As a result,
management of PTR believes that the accretion in funds from operations reflected
from the Merger in the pro forma condensed statements of earnings is not
indicative of the full accretion that is expected to occur under an internally
managed structure.
The pro forma condensed financial statements do not purport to be indicative
of the financial position or results of operations which would actually have
been obtained had the transactions described above been completed on the dates
indicated or which may be obtained in the future. The pro forma condensed
financial statements should be read in conjunction with the historical financial
statements of PTR as set forth in PTR's June 30, 1997 Form 10-Q and 1996 Form
10-K. In management's opinion, all material adjustments necessary to reflect the
effects of these transactions have been made.
F-2
<PAGE>
SECURITY CAPITAL PACIFIC TRUST
PRO FORMA CONDENSED BALANCE SHEET
JUNE 30, 1997
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
COMMUNITY
ACQUISITIONS
PTR AND THE
HISTORICAL(a) DISPOSITIONS (b) MERGER PRO FORMA
-------------- ---------------- -------- ----------
ASSETS
------
<S> <C> <C> <C> <C>
Real estate............. $2,391,165 $7,200 $ -- $2,398,365
Less accumulated
depreciation.......... 104,330 -- -- 104,330
---------- ------ -------- ----------
2,286,835 7,200 -- 2,294,035
Homestead Notes......... 246,453 -- -- 246,453
Other mortgage notes
receivable............ 12,861 -- -- 12,861
---------- ------ -------- ----------
Net investments.... 2,546,149 7,200 -- 2,553,349
Other fixed assets...... -- -- 3,308 (c) 3,308
Cash and cash
equivalents........... 5,570 -- 385 (d) 5,255
(700)(e)
Accounts receivable and
accrued interest...... 5,382 -- 377 (d) 5,759
Restricted cash in tax-
deferred exchange
escrow................ 19,707 (3,674) -- 16,033
Other assets............ 29,008 -- 395 (d) 29,403
---------- ------ -------- ----------
Total assets....... $2,605,816 $3,526 $ 3,765 $2,613,107
========== ====== ======== ==========
LIABILITIES AND
SHAREHOLDERS' EQUITY
--------------------
Liabilities:
Credit facilities..... $ 203,015 $ -- $ -- $ 203,015
Long-term debt........ 630,000 -- -- 630,000
Mortgages payable..... 278,619 3,526 -- 282,145
Accounts payable...... 29,984 -- 265 (d) 30,249
Due to (from) Security
Capital.............. 2,692 -- (3,097)(f) (405)
Accrued expenses and
other liabilities.... 64,182 -- 3,989 (d) 68,171
---------- ------ -------- ----------
Total liabilities.. 1,208,492 3,526 1,157 1,213,175
---------- ------ -------- ----------
Shareholders' equity:
Series A Preferred
Shares............... 139,350 -- -- 139,350
Series B Preferred
Shares............... 105,000 -- -- 105,000
Common shares
(79,375,582
historical,
82,671,115 pro
forma)............... 79,376 -- 3,296 82,672
Additional paid-in
capital.............. 993,602 -- 71,842 (e) 1,065,444
Unrealized holding
gain on Homestead
Notes................ 103,142 -- -- 103,142
Distributions in
excess of net
earnings............. (23,146) -- (72,530)(g) (95,676)
---------- ------ -------- ----------
Total shareholders'
equity............. 1,397,324 -- 2,608 1,399,932
---------- ------ -------- ----------
Total liabilities
and shareholders'
equity............. $2,605,816 $3,526 $ 3,765 $2,613,107
========== ====== ======== ==========
</TABLE>
See accompanying notes to pro forma condensed financial statements.
F-3
<PAGE>
SECURITY CAPITAL PACIFIC TRUST
PRO FORMA CONDENSED STATEMENT OF EARNINGS
SIX MONTHS ENDED JUNE 30, 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
COMMUNITY
ACQUISITIONS
PTR AND THE
HISTORICAL(h) DISPOSITIONS(i) SUBTOTAL MERGER PRO FORMA
------------- --------------- --------- ------ ---------
<S> <C> <C> <C> <C> <C>
Revenues:
Rental revenues........ $ 161,362 $1,705 $ 163,067 $ -- $ 163,067
Interest income on
Homestead Notes....... 6,974 -- 6,974 -- 6,974
Other interest income.. 1,338 -- 1,338 -- 1,338
--------- ------ --------- ------ ---------
Total revenues..... 169,674 1,705 171,379 -- 171,379
--------- ------ --------- ------ ---------
Expenses:
Rental expenses........ 54,151 (627) 53,524 6,772 (j) 60,296
Property management
fees:
Paid to affiliate.... 5,503 (21) 5,482 (5,482)(k) --
Paid to third
parties............. 457 -- 457 -- 457
Depreciation........... 24,688 883 25,571 510 (l) 26,081
Interest expense....... 29,759 1,504 31,263 -- 31,263
REIT management fee
paid to affiliate..... 9,323 136 9,459 (9,459)(k) --
General and
administrative........ 588 -- 588 5,472 (m) 6,060
Other.................. 1,864 -- 1,864 -- 1,864
--------- ------ --------- ------ ---------
Total expenses..... 126,333 1,875 128,208 (2,187) 126,021
--------- ------ --------- ------ ---------
Earnings from
operations............. 43,341 (170) 43,171 2,187 45,358
Less preferred share
dividends.............. 9,840 -- 9,840 -- 9,840
--------- ------ --------- ------ ---------
Earnings from operations
attributable to Common
Shares................. 33,501 $ (170) $ 33,331 $2,187 (n) $ 35,518
========= ====== ========= ====== =========
Weighted average Common
Shares outstanding..... 76,639 -- 76,639 3,296 (o) 79,935
========= ====== ========= ====== =========
Earnings from operations
attributable to Common
Shares per Common
Share.................. $ 0.44 $(0.01) $ 0.43 $ 0.01 $ 0.44
========= ====== ========= ====== =========
Reconciliation of
earnings from
operations attributable
to Common Shares to
funds from operations
attributable to Common
Shares:
Earnings from
operations
attributable to
Common Shares......... $ 33,501 $ (170) $ 33,331 $2,187 $ 35,518
Add (Deduct):
Depreciation of real
estate............... 24,688 883 25,571 138 25,709
Provision for possi-
ble loss on invest-
ments................ 1,500 -- 1,500 -- 1,500
Amortization of
warrants and
conversion feature
on Homestead Notes... (528) -- (528) -- (528)
--------- ------ --------- ------ ---------
Funds from operations
attributable to
Common Shares(p)...... $ 59,161 $ 713 $ 59,874 $2,325 $ 62,199
========= ====== ========= ====== =========
Weighted average Common
Shares outstanding..... 76,639 -- 76,639 3,296 79,935
========= ====== ========= ====== =========
Cash Flow Summary:
Net cash provided by
operating activities.. $ 70,118 $ 713 $ 70,831 $2,697 $ 73,528
Net cash used in
investing activities.. (187,379) -- (187,379) (4,076) (191,455)
Net cash provided by
financing activities.. $ 117,230 $ -- $ 117,230 $ -- $ 117,230
</TABLE>
See accompanying notes to pro forma condensed financial statements.
F-4
<PAGE>
SECURITY CAPITAL PACIFIC TRUST
PRO FORMA CONDENSED STATEMENT OF EARNINGS
YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
COMMUNITY
ACQUISITIONS
HOMESTEAD AND
PTR (h) TRANSACTION DISPOSITIONS THE
HISTORICAL (q) SUBTOTAL (i) SUBTOTAL MERGER PRO FORMA
---------- ----------- --------- ------------ --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Rental revenues........ $ 322,046 $(25,367) $ 296,679 $ 43,419 $ 340,098 $ -- $ 340,098
Interest on Homestead
Notes................. 2,035 4,751 6,786 -- 6,786 -- 6,786
Other interest income.. 2,165 1 2,166 -- 2,166 -- 2,166
--------- -------- --------- -------- --------- -------- ---------
Total revenues....... 326,246 (20,615) 305,631 43,419 349,050 -- 349,050
--------- -------- --------- -------- --------- -------- ---------
Expenses:
Rental expenses........ 116,512 (10,202) 106,310 $ 13,695 120,005 13,191 (r) 133,196
Property management
fees paid to
affiliates............ 11,610 (1,871) 9,739 1,202 10,941 (10,941)(k) --
Depreciation........... 44,887 (3,176) 41,711 8,132 49,843 695 (s) 50,538
Interest expense....... 35,288 2,706 37,994 28,050 66,044 -- 66,044
REIT management fee
paid to affiliate..... 22,191 (2,757) 19,434 76 19,510 (19,510)(k) --
General and
administrative........ 1,077 (1) 1,076 -- 1,076 9,820 (t) 10,896
Other.................. 592 (33) 559 -- 559 -- 559
--------- -------- --------- -------- --------- -------- ---------
Total expenses....... 232,157 (15,334) 216,823 51,155 267,978 (6,745) 261,233
--------- -------- --------- -------- --------- -------- ---------
Earnings from
operations............. 94,089 (5,281) 88,808 (7,736) 81,072 6,745 87,817
Less preferred share
dividends.............. 24,167 -- 24,167 -- 24,167 -- 24,167
--------- -------- --------- -------- --------- -------- ---------
Earnings from operations
attributable to Common
Shares................. $ 69,922 (5,281) 64,641 (7,736) 56,905 6,745 (n) 63,650
========= ======== ========= ======== ========= ======== =========
Weighted average Common
Shares outstanding..... 73,057 -- 73,057 -- 73,057 3,296 (o) 76,353
========= ======== ========= ======== ========= ======== =========
Earnings from operations
attributable to Common
Shares per Common
Share.................. $ 0.96 (.08) 0.88 (0.10) 0.78 0.05 $ 0.83
========= ======== ========= ======== ========= ======== =========
Reconciliation of
earnings from
operations attributable
to Common Shares to
funds from operations
attributable to Common
Shares:
Earnings from operations
attributable to Common
Shares................. $ 69,922 (5,281) 64,641 (7,736) 56,905 6,745 $ 63,650
Add (Deduct):
Depreciation of real
estate................ 44,887 (3,176) 41,711 8,132 49,843 113 49,956
Amortization of
warrants and
conversion feature on
Homestead Notes....... (141) (658) (799) -- (799) -- (799)
Amortization of early
extinguishment of
debt cost............. (131) -- (131) -- (131) -- (131)
--------- -------- --------- -------- --------- -------- ---------
Funds from operations
attributable to Common
Shares(p).............. $ 114,537 $ (9,115) $ 105,422 $ 396 $ 105,818 $ 6,858 $ 112,676
========= ======== ========= ======== ========= ======== =========
Weighted average Common
Shares outstanding..... 73,057 -- 73,057 -- 73,057 3,296 76,353
========= ======== ========= ======== ========= ======== =========
Cash Flow Summary:
Net cash provided by
operating activities.. $ 143,939 $ (9,115) $ 134,824 $ 396 $ 135,220 $ 7,440 $ 142,660
Net cash used in
investing activities.. (360,935) -- (360,935) (87,525) (448,460) (7,248) (455,708)
Net cash provided by
(used in) financing
activities............ $ 195,720 $ -- $ 195,720 $ 87,525 $ 283,245 (700) $ 282,545
</TABLE>
See accompanying notes to pro forma condensed financial statements
F-5
<PAGE>
SECURITY CAPITAL PACIFIC TRUST
NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(a) Reflects the historical balance sheet of PTR as of June 30, 1997.
(b) Reflects the pro forma balance sheet adjustments related to the post
June 30, 1997 acquisition of Carrington Place Apartments as previously
reported in the Form 8-K dated July 21, 1997. The $7.2 million purchase price
was funded through the assumption of a $3.5 million mortgage note and $3.7
million in proceeds from a community disposition held in a tax-deferred
exchange escrow account.
(c) Reflects the historical cost of fixed assets (primarily computer
equipment and software) being acquired from the REIT Manager and the Property
Manager as of June 30, 1997. Assets and liabilities, consisting primarily of
intercompany and related accounts, which are not being acquired in the Merger
have not been reflected as they will have no impact on the financial position
of PTR.
(d) Reflects the historical operating assets and liabilities of the REIT
Manager and Property Manager for which Security Capital will reimburse PTR, as
more fully discussed in note (f).
(e) Reflects (i) the adjustments to Common Shares and additional paid-in
capital to record the issuance of Common Shares in exchange for the common
stock of the REIT Manager and the Property Manager, and (ii) the deduction
from additional paid-in capital of the estimated costs of the Merger, as
follows:
<TABLE>
<S> <C> <C>
Assumed market value of Common Shares issued.............. $75,838
Assumed market value per Common Share..................... $23.0125
Common Shares issued to Security Capital.................. 3,296
Par value of Common Shares issued......................... (3,296)
Estimated costs of the Merger............................. (700)
-------
Net increase to additional paid-in capital................ $71,842
=======
</TABLE>
(f) In accordance with the terms of the Merger Agreement, reflects the
amount due to PTR from Security Capital as reimbursement for the net
historical operating liabilities (as discussed in note (d)) acquired from the
REIT Manager and the Property Manager as of June 30, 1997.
(g) Represents the difference between the assumed market value of Common
Shares issued on the Merger date, and the fair value of the net tangible assets
acquired which has been accounted for as costs incurred in acquiring the
management companies from a related party because the management companies do
not qualify as "businesses" for purposes of applying APB Opinion No. 16,
"Business Combinations." Such difference is as calculated below.
<TABLE>
<S> <C>
Assumed market value of Common Shares issued.................... $75,838
Net tangible assets acquired.................................... (3,308)
-------
Costs incurred in acquiring management companies from a related
party.......................................................... $72,530
=======
</TABLE>
Since the intent of the accompanying pro forma condensed statement of earnings
for the year ended December 31, 1996 is to reflect the expected continuing
impact of the Merger on PTR, the one-time adjustment discussed above has been
excluded. Upon consummation of the Merger, this expense will be recorded as an
operating expense on PTR's statement of earnings, however, PTR will not deduct
this expense for purposes of calculating funds from operations, due to the
non-recurring and non-cash nature of the expense.
F-6
<PAGE>
SECURITY CAPITAL PACIFIC TRUST
NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(h) Reflects PTR's historical statement of earnings for the period indicated.
(i) For those multifamily community acquisitions previously reported on the
Form 8-Ks referenced on page F-2, reflects the predecessor's historical
revenues and certain expenses and certain pro forma adjustments from the
beginning of the period to the earlier of the respective dates of acquisition
or the end of the respective period indicated. The historical revenues and
certain expenses exclude amounts which would not be comparable to the proposed
future operations of the communities such as certain interest expense (unless
mortgage debt was assumed), interest income, income taxes and depreciation.
This column also reflects the elimination of the historical revenues and
expenses for the period indicated related to the multifamily community
dispositions which funded these acquisitions as previously reported on the Form
8-K dated July 21, 1997. The following table reconciles the historical amounts
and pro forma adjustments to the accompanying pro forma condensed statements of
earnings, followed by footnotes explaining the pro forma adjustments.
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1997
--------------------------------------------------------
HISTORICAL
-------------------------------- PRO FORMA
ACQUISITIONS(i) DISPOSITIONS(ii) ADJUSTMENTS TOTAL
--------------- ---------------- ----------- -------
<S> <C> <C> <C> <C>
Rental revenues.. $10,937 $(9,232) -- $ 1,705
Rental expenses.. (3,441) 4,068 -- 627
Property
management fees. (379) 363 $ 37 (iii) 21
Depreciation..... -- 999 (1,882)(iv) (883)
Interest expense. (1,845) 283 58 (v) (1,504)
REIT management
fees............ -- -- (136)(vi) (136)
------- ------- ------- -------
Earnings (loss)
from operations. $ 5,272 $(3,519) $(1,923) $ (170)
Reconciliation to
funds from
operations:
Add:
Depreciation.... -- (999) 1,882 (iv) 883
------- ------- ------- -------
Funds from
operations...... $ 5,272 $(4,518) $ (41) $ 713
======= ======= ======= =======
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
-----------------------------------------------------------
HISTORICAL
-------------------------------- PRO FORMA
ACQUISITIONS(i) DISPOSITIONS(ii) ADJUSTMENTS TOTAL
--------------- ---------------- ---------------- ---------
<S> <C> <C> <C> <C>
Rental revenues.. $ 70,747 $(27,328) -- $ 43,419
Rental expenses.. (24,305) 10,610 -- (13,695)
Property
management fees. (2,709) 997 $ 510 (iii) (1,202)
Depreciation..... -- 3,419 (11,551)(iv) (8,132)
Interest expense. (12,174) 1,653 (17,529)(v) (28,050)
REIT management
fees............ -- -- (76)(vi) (76)
--------------- ---------------- ---------------- ---------
Earnings (loss)
from operations. $ 31,559 $(10,649) $(28,646) $ (7,736)
Reconciliation to
funds from
operations:
Add:
Depreciation.... -- (3,419) 11,551 (iv) 8,132
--------------- ---------------- ---------------- ---------
Funds from
operations...... $ 31,559 $(14,068) $(17,095) $ 396
=============== ================ ================ =========
</TABLE>
(i) Represents predecessor historical revenues and certain expenses,
including mortgage interest if applicable, recorded from the beginning of
the period to the earlier of the respective dates of acquisition or the end
of the respective period indicated.
(ii) Reflects the elimination of the historical revenues and expenses for
the period indicated related to the community dispositions which funded the
community acquisitions.
(iii) Reflects the difference between predecessor's historical property
management fee expenses and the fee which would have been charged by PTR's
property manager, SCG Realty Services Incorporated.
(iv) Reflects pro forma depreciation expense adjustment from the
beginning of the period to the earlier of the respective dates of
acquisition or the end of the respective period indicated based on the
depreciable
F-7
<PAGE>
SECURITY CAPITAL PACIFIC TRUST
NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
basis of PTR's acquisition cost, assuming asset lives ranging from 10 to 40
years. The pro forma depreciation expense adjustment amounts by community
are as follows:
<TABLE>
<CAPTION>
DEPRECIATION EXPENSE
-----------------------
SIX MONTHS YEAR ENDED
ACQUISITION ACQUISITION ENDED JUNE DECEMBER 31,
COMMUNITY DATE COST 30, 1997 1996
--------- ----------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Westcourt Village......... 3/27/96 $12,762 -- $ 61
Ocean Crest............... 3/29/96 15,600 -- 77
Timberline................ 4/17/96 7,043 -- 40
Club Pacifica............. 4/23/96 14,300 -- 88
The Crossing.............. 5/21/96 14,850 -- 116
Mission Springs........... 5/31/96 38,500 -- 321
Quail Ridge............... 6/13/96 17,550 -- 159
Newpointe................. 7/10/96 9,400 -- 99
Brighton.................. 8/16/96 11,150 -- 140
El Dorado................. 8/30/96 29,350 -- 391
Woodsong Village.......... 8/28/96 12,300 -- 162
Redwood................... 9/20/96 37,000 -- 535
Ashton Place.............. 9/16/96 64,800 -- 923
Summertree................ 10/29/96 10,000 -- 166
Fox Creek................. 12/17/96 7,900 -- 153
Telegraph Hill............ 10/10/96 8,100 -- 126
Villa Marseilles.......... 11/12/96 13,125 -- 239
Palisades................. 11/27/96 31,600 -- 575
Clubhouse................. 12/19/96 8,030 -- 156
Harborside................ 12/31/96 21,385 -- 427
Newport Crossing.......... 1/10/97 11,290 6 226
Reflections............... 1/27/97 52,100 77 1,042
Marina Lakes.............. 2/19/97 39,500 108 790
River Meadows............. 3/20/97 13,925 60 278
Folsom Ranch.............. 3/31/97 23,150 114 462
Sierra Hills.............. 4/17/97 18,700 110 373
Los Padres................ 4/23/97 30,500 189 609
La Jolla Point............ 4/24/97 30,600 191 611
Cambrian.................. 6/03/97 41,125 347 822
Pelican Point............. 6/26/97 29,200 282 583
Le Club................... 6/30/97 33,000 327 659
Carrington Place.......... 8/29/97 7,200 71 142
------ -------
Total................... $1,882 $11,551
====== =======
</TABLE>
F-8
<PAGE>
SECURITY CAPITAL PACIFIC TRUST
NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
(v) Represents the pro forma interest expense adjustments related to
utilization of line of credit borrowings that would have been required if
the community acquisitions had occurred at January 1, 1996, net of the pro
forma reduction in line of credit borrowings associated with excess
proceeds from dispositions:
<TABLE>
<CAPTION>
SIX TWELVE
MONTHS MONTHS
ENDED ENDED
6/30/97 12/31/96
------- --------
<S> <C> <C>
Pro forma line of credit borrowings required for
operating communities acquired or under contract to
be acquired, subsequent to the end of the
respective period.................................. $ -- $116,365
Weighted average line of credit borrowings required
for acquisitions made prior to the end of the
respective period (net of mortgages assumed)....... 14,231 170,046
Less: Pro forma reduction in line of credit
borrowings associated with weighted average excess
disposition proceeds............................... (16,033) (29,110)
------- --------
Net pro forma line of credit borrowings............. (1,802) 257,301
Current interest rate............................... 6.4375% 6.8125%
Proration factor.................................... .50 1.0
------- --------
Pro forma interest expense adjustment............... $ (58) $ 17,529
======= ========
</TABLE>
(vi) Reflects adjustment to PTR's REIT management fee expense related to
the net pro forma increase in cash flow resulting from the acquisitions and
dispositions.
(j) Reflects the historical operating expenses of the Property Manager
including charges for administrative services provided by Security Capital
(see note (m)) which were directly related to providing services to PTR for
the six months ended June 30, 1997.
(k) Reflects the elimination of PTR's expenses related to REIT management
fees and property management fees. The corresponding fee revenue recognized by
the REIT Manager and the Property Manager have not been reflected as they
would be eliminated in consolidation.
(l) Reflects the historical depreciation expense of the REIT Manager and the
Property Manager ($372) directly related to the fixed assets (primarily
computer equipment and software) being acquired in the Merger for the six
months ended June 30, 1997, as adjusted for the estimated increase that would
result from the capitalization of acquisition and development-related costs
($138) discussed in note (m). These capitalized costs will be depreciated
utilizing the same lives and methods currently utilized by PTR.
(m) Reflects the historical general and administrative costs of the REIT
Manager ($9,548 including charges for administrative services provided by
Security Capital) which were associated with providing services to PTR for the
six months ended June 30, 1997, reduced for the pro forma adjustment to
capitalize qualifying direct and incremental costs relating primarily to the
acquisition and development of real estate investments ($4,076) that would
have been capitalized by PTR under GAAP, had the Merger occurred on January 1,
1996. Under the current management structure, PTR pays a REIT management fee
which is based upon 16% of cash flow, as defined. The entire fee is expensed
in accordance with GAAP since the underlying costs of service are not directly
incurred by PTR and the fee does not represent a reimbursement of such costs.
Upon consummation of the Merger, all such costs will be incurred directly by
PTR and to the extent that they are qualifying costs, they will be
capitalized in accordance with GAAP.
F-9
<PAGE>
SECURITY CAPITAL PACIFIC TRUST
NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
In connection with the Merger, it is expected that PTR will enter into a
proposed Administrative Services Agreement (ASA) with Security Capital. Under
the ASA, Security Capital will provide PTR with administrative services such as
payroll, accounts payable, cash management, risk management, internal audit,
tax and legal administration, systems development and systems support. Such
services are currently provided by Security Capital to PTR through the REIT
Manager and Property Manager. The fees payable to Security Capital will be
equal to Security Capital's cost of providing such services, plus 20%. Based
upon a review of the terms of the agreement, it was determined that the costs
that would have been incurred under the ASA for the six months ended June 30,
1997 and the year ended December 31, 1996 would not differ materially from the
actual costs charged to the REIT Manager and Property Manager by Security
Capital and therefore no pro forma adjustments are required.
(n) No income tax adjustment is reflected in the accompanying pro forma
condensed statement of earnings as the operations of the REIT Manager and the
Property Manager will be merged into a qualified REIT subsidiary which, under
federal income tax laws, would not be subject to income taxes.
(o) Reflects the increase in weighted average common shares outstanding that
would result from the issuance of Common Shares in exchange for the common
stock of the REIT Manager and the Property Manager as if the Merger had
occurred on January 1, 1996. The number of shares shown is based on the assumed
market value of Common Shares issued of $75.8 million at an assumed market
value per Common Share of $23.0125.
(p) Funds from operations represents PTR's net earnings computed in
accordance with GAAP, excluding gains (or losses) from real estate
transactions, provisions for possible losses, extraordinary items, significant
non-recurring items and depreciation of real estate. Funds from operations
should not be considered as an alternative to net earnings or any other GAAP
measurement of performance as an indicator of PTR's operating performance or as
an alternative to cash flows from operating, investing or financing activities
as a measure of liquidity. Furthermore, the funds from operations measure
presented by PTR will not be comparable to similarly titled measures of other
REITs who do not compute funds from operations in a manner consistent with PTR.
PTR believes that funds from operations is helpful to a reader as a measure of
the performance of an equity REIT because, along with cash flow from operating
activities, financing activities and investing activities, it provides a reader
with an indication of the ability of PTR to incur and service debt, to make
capital expenditures and to fund other cash needs. Furthermore, management
believes that an understanding of funds from operations will enhance the
reader's comprehension of the impact of the Merger to PTR which was a specific
consideration of PTR's Special Committee in recommending approval of the
Merger to the Board of Trustees.
F-10
<PAGE>
SECURITY CAPITAL PACIFIC TRUST
NOTES TO PRO FORMA CONDENSED FINANCIAL STATEMENTS--(CONCLUDED)
(UNAUDITED)
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
(q) On October 17, 1996, PTR contributed its Homestead Village(R) properties
to a newly formed company, Homestead, in exchange for Homestead common stock,
warrants and Homestead convertible mortgage notes. The Homestead common stock
and warrants were distributed to PTR shareholders on November 12, 1996. Further
details of the Homestead Transaction are set forth in PTR's 1996 Form 10-K.
Following is a summary of the pro forma adjustments giving effect to the
Homestead Transaction as if it had occurred on January 1, 1996:
<TABLE>
<S> <C>
Elimination of Homestead-related historical rental income...... $(25,367)
Elimination of Homestead-related historical rental expenses and
property management fees...................................... 12,073
Elimination of Homestead-related historical depreciation
expense....................................................... 3,176
Increase in interest income on Homestead notes received........ 4,751
Decrease in REIT Management fee resulting from the pro forma
adjustments herein............................................ 2,757
Increase in interest expense incurred as a result of higher
line of credit balances resulting from assumed elimination of
Homestead-related cash flow................................... (460)
Reclassification of historical interest cost capitalized on
Homestead developments to interest expense.................... (2,246)
Other.......................................................... 35
--------
Pro Forma reduction in earnings from operations................ $ (5,281)
========
Reconciliation to pro forma reduction in funds from operations:
Add (Deduct):
Depreciation of real estate.................................. (3,176)
Interest income on Homestead notes (non-cash portion)........ (658)
--------
Pro Forma reduction in funds from operations................... $ (9,115)
========
</TABLE>
(r) Reflects the historical operating expenses of the Property Manager
($12,355 including charges for administrative services provided by Security
Capital--see note (m)) which were directly related to providing services to PTR
for the year ended December 31, 1996, as adjusted for the estimated increase to
historical operating expenses of the Property Manager ($836) resulting from the
net pro forma acquisitions discussed in note (i).
(s) Reflects the historical depreciation expense of the REIT Manager and the
Property Manager ($582) directly related to the fixed assets (primarily
computer equipment and software) being acquired in the Merger for the year
ended December 31, 1996, as adjusted for the estimated increase that would
result from the capitalization of acquisition and development-related costs
($113) discussed in note (t). These capitalized costs will be depreciated
utilizing the same lives and methods currently utilized by PTR.
(t) Reflects the historical general and administrative costs of the REIT
Manager ($17,068 including charges for administrative services provided by
Security Capital--See note (m)) which were associated with providing services
to PTR for the year ended December 31, 1996, reduced for the pro forma
adjustment to capitalize qualifying direct and incremental costs relating
primarily to the acquisition and development of real estate investments
($7,248) that would have been capitalized by PTR under GAAP, had the Merger
occurred on January 1, 1996 (See note (m)).
Historical general and administrative costs of the REIT Manager relating to
the operations of Homestead Village properties which were contributed to
Homestead (as discussed in note (q)), have not been reflected as they would not
impact the ongoing operations of PTR.
<TABLE>
<S> <C> <C>
=== ===
</TABLE>
F-11
<PAGE>
EXHIBIT 10.1
AMENDED AND RESTATED CREDIT AGREEMENT
Dated
August 13, 1997
among
SECURITY CAPITAL PACIFIC TRUST
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Administrative Agent
WELLS FARGO BANK, NATIONAL ASSOCIATION
as Co-Agent
and
the Lenders
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<C> <S> <C> <C>
1. Definitions....................................................... 1
2. The Loans......................................................... 15
2.1 Advances.................................................... 15
2.2 Term Loan Conversion........................................ 17
2.3 Payments.................................................... 18
2.4 Pro Rata Treatment.......................................... 19
2.5 Non-Receipt of Funds by the Agent........................... 19
2.6 Sharing of Payments, Etc.................................... 20
2.7 Fees........................................................ 20
3. Conditions........................................................ 21
3.1 All Loans................................................... 21
3.2 First Loan.................................................. 21
3.3 Options Available........................................... 22
3.4 Designation and Conversion.................................. 22
3.5 Special Provisions Applicable to Eurodollar Rate Borrowings. 23
3.6 Funding Offices; Adjustments Automatic...................... 25
3.7 Funding Sources, Payment Obligations........................ 25
3.8 Mitigation, Non-Discrimination.............................. 26
4. Representations and Warranties.................................... 27
4.1. Organization................................................ 27
4.2 Financial Statements........................................ 27
4.3 Enforceable Obligations; Authorization...................... 27
4.4 Other Debt.................................................. 27
4.5 Litigation.................................................. 28
4.6 Taxes....................................................... 28
4.7 Regulation U................................................ 28
4.8 Subsidiaries................................................ 28
4.9 Securities Act of 1933...................................... 28
4.10 No Contractual or Corporate Restrictions.................... 28
4.11 Investment Company Act Not Applicable....................... 28
4.12 Public Utility Holding Company Act Not Applicable........... 28
4.13 ERISA Not Applicable........................................ 29
5. Affirmative Covenants............................................. 29
5.1 Taxes, Insurance, Existence, Regulations, Property, etc..... 29
5.2 Financial Statements and Information........................ 29
5.3 Financial Tests............................................. 30
5.4 Inspection.................................................. 30
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C> <C>
5.5 Further Assurances........................................... 30
5.7 Insurance.................................................... 30
5.8 Notice of Certain Matters.................................... 30
5.9 Use of Proceeds.............................................. 31
5.10 Expenses of and Claims Against the Agent and the Lenders..... 31
5.11 Legal Compliance; Indemnification............................ 31
5.12 Borrower's Performance....................................... 32
5.13 Professional Services........................................ 32
5.14 Capital Adequacy............................................. 32
5.15 Property Pool................................................ 33
6. Negative Covenants................................................. 34
6.1 Indebtedness................................................. 34
6.2 Mergers, Consolidations and Acquisitions of Assets........... 34
6.3 Redemption................................................... 35
6.4 Nature of Business; Management............................... 35
6.5 Transactions with Related Parties............................ 35
6.6 Loans and Investments........................................ 36
6.7 Limiting Agreements.......................................... 37
6.8 Nature of Assets............................................. 37
7. Events of Default and Remedies..................................... 38
7.1. Events of Default............................................ 38
7.2 Remedies Cumulative.......................................... 39
8. The Agent.......................................................... 40
8.1 Appointment, Powers and Immunities........................... 40
8.2 Reliance..................................................... 41
8.3 Defaults..................................................... 42
8.4 Rights as a Lender........................................... 42
8.5 Indemnification.............................................. 42
8.6 Non-Reliance on Agent and Other Lenders...................... 43
8.7 Failure to Act............................................... 43
8.8 Resignation of Agent......................................... 43
8.9 No Partnership............................................... 44
9. Renewal and Extension.............................................. 44
9.1 Procedure for Consideration of Renewal
and Extension Requests.................................... 44
9.2 Conditions to Renewal and Extension.......................... 45
9.3 No Obligation to Renew and Extend............................ 45
10. Miscellaneous...................................................... 46
</TABLE>
(ii)
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C> <C>
10.1 No Waiver, Amendments....................................... 46
10.2 Notices..................................................... 46
10.3 Venue....................................................... 46
10.4 Choice of Law............................................... 47
10.5 Survival; Parties Bound; Successors and Assigns............. 47
10.6 Counterparts................................................ 48
10.7 Usury Not Intended; Refund of Any Excess Payments........... 48
10.8 Captions.................................................... 49
10.9 Severability................................................ 49
10.10 Disclosures................................................. 49
10.11 No Novation................................................. 49
10.12 Limitation of Liability..................................... 49
10.13 Entire Agreement............................................ 50
</TABLE>
EXHIBITS
A - Officer's Certificate
B - Request for Loan
C - Note
C-1 - Swing Loan Note
D - Legal Opinion
(iii)
<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT
-------------------------------------
THIS AMENDED AND RESTATED CREDIT AGREEMENT (the "Agreement") is made and
entered into as of August 13, 1997, by and among SECURITY CAPITAL PACIFIC TRUST,
a Maryland real estate investment trust (the "Borrower"), the financial
institutions (including TCB and Wells Fargo Bank, National Association, the
"Lenders") which are now or may hereafter become signatories hereto, TEXAS
COMMERCE BANK NATIONAL ASSOCIATION, a national banking association ("TCB"), as
administrative agent for Lenders (in such capacity, "Agent"), and WELLS FARGO
BANK, NATIONAL ASSOCIATION, as co-agent for Lenders (in such capacity, "Co-
Agent").
W I T N E S S E T H:
-------------------
WHEREAS, the Borrower, the Agent, the Co-Agent and certain Lenders (the
"Existing Lenders") entered into an Amended and Restated Credit Agreement dated
as of August 16, 1996 (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 Person. For purposes of this definition,
"control" (including "controlled by" and "under
<PAGE>
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
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) if the S&P Rating and the Moody's Rating
differ by only one step, 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, or (b) if the S&P Rating and the
Moody's Rating differ by more than one step, the following percentage
corresponding to the rating one step above the lower rating which will be in
effect whenever and for so long as the Borrower has received the S&P Rating or
Moody's Rating:
<TABLE>
<CAPTION>
APPLICABLE MARGIN
-----------------
S&P RATING/ EURODOLLAR RATE BASE RATE
----------- --------------- ---------
MOODY'S RATING BORROWING BORROWING
-------------- --------- ---------
<S> <C> <C>
A/A2 or better 0.500% 0
A-/A3 0.625% 0
BBB+/Baa1 0.750% 0
BBB/Baa2 0.875% 0
BBB-/Baa3 1.000% 0
Worse than BBB-/Baa3 1.500% .25%;
</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%).
-2-
<PAGE>
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 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
-3-
<PAGE>
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 the date that is 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.
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 and which has base capital of at least
$500,000,000.00, 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:
-4-
<PAGE>
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
interbank dollar 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 London interbank dollar
market, for the offering to Agent by one or more prime banks selected by Agent
in its sole discretion, in the London interbank dollar market, 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 under Regulation D. Each
determination of the Eurodollar Reserve Requirement by Agent shall be prima
facie evidence thereof.
-5-
<PAGE>
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, (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 and (iii) scheduled principal payments on the
Borrower's Indebtedness incurred prior to March 31, 1997 (which date shall be
extended by one (1) year if the Revolving Credit Termination Date is extended by
one (1) year as provided in this Agreement) which has an S&P Rating of BBB-or
better and a Moody's Rating of Baa3 or better at the time of issuance, 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
-6-
<PAGE>
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 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.
Homestead Loans shall mean loans, advances and extensions of credit by the
Borrower to Homestead Village Incorporated evidenced by the Homestead Notes and
secured by Homestead Mortgages.
-7-
<PAGE>
Homestead Mortgage Amount shall mean the amount funded under the Homestead
Loans (irrespective of the face amount of the Homestead Notes).
Homestead Mortgages shall mean mortgages issued to the Borrower on
Homestead Property securing the Homestead Loans.
Homestead Notes shall mean promissory notes payable to the Borrower and
convertible into common stock of Homestead Village Incorporated and secured by
Homestead Mortgages.
Homestead Property shall mean the real estate properties subject to the
Homestead Mortgages.
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 five percent (5%) of the undepreciated 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 the first (1st) day of each calendar
month and the Maturity Date, for both Base Rate Borrowings and Eurodollar Rate
Borrowings.
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, (a) one (1),
two (2), three (3) or six (6) months thereafter, or (b) seven (7), fourteen (14)
or twenty-one (21) days thereafter for no more than three (3) time periods each
calendar year in connection with payments of the Loans because of debt and/or
equity sales by
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<PAGE>
the Borrower, changes in the Lender Commitments in connection with an extension
pursuant to Section 9.1 hereof or sales of major assets by the Borrower;
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.
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 material
obligations under the Credit Documents to which it is a party taken as a whole,
(c) the validity or enforceability of such Credit Documents taken as a whole, or
(d) the material rights and remedies of Lenders and Agent under the Credit
Documents taken as a whole.
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.
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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.
Occupancy Period shall mean the immediately preceding calendar quarter for
initial inclusion of a Homestead Property in the Operating Sub-Pool, and then
for the second quarter such Homestead Property is included the immediately
preceding two (2) calendar quarters, for the third quarter such Homestead
Property is included the immediately preceding three (3) calendar quarters, and
for the fourth quarter such Homestead Property is included and thereafter the
immediately preceding four (4) calendar quarters.
Officer's Certificate shall mean a certificate in the form attached hereto
as Exhibit A.
Operating Sub-Pool Value means the sum of :
(a) with respect to the Sub-Pool Real Estate (as defined in Section
5.15 hereof), for the period being measured, the lesser of (i) the aggregate
Historical Value of such properties; and (ii) the sum of (1) the aggregate Net
Operating Income of such properties that during such measurement period have
reached the beginning of the first full calendar quarter after the Stabilization
Date (the "Calculation Date") ((x) beginning with the Calculation Date until the
end of the third full calendar quarter after the Stabilization Date, based on
the annualized Net Operating
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Income from the Calculation Date until the time of measurement, and (y)
beginning with the fourth full calendar quarter after the Stabilization Date,
based on the immediately preceding four (4) calendar quarter period) divided by
nine percent (9.0%), plus (2) the Historical Value of such properties that have
not reached the Calculation Date during the measurement period; plus
(b) with respect to the Homestead Loans, for the Occupancy Period the
lesser of (i) the aggregate Homestead Mortgage Amount; and (ii) the aggregate
Net Operating Income of the Homestead Property (which must meet the requirements
of Section 5.15 (e)) during the Occupancy Period on an annualized basis divided
by eleven percent (11.0%).
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 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
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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 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 reasonably satisfactory to the
Agent and the Majority 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, senior
vice president, controller, co-controller or vice president of Borrower's REIT
Manager or Borrower. The Quarterly Unaudited Financial Statements shall be
prepared on a consolidated basis in accordance with Generally Accepted
Accounting Principles.
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<PAGE>
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.
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.
Request for Loan shall mean a written request substantially in the form of
Exhibit B.
Revolving Credit Termination Date shall mean the earlier to occur of (a)
August 13, 1999 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.
Stabilization Date shall mean, with respect to a property, the earlier of
(a) twelve (12) months from the date of acquisition of an income producing
property by the Borrower or twelve (12) months after substantial completion of
construction or development of a new construction or development property, and
(b) the date on which the occupancy level is at least ninety-three percent
(93%).
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) 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.
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Swing Loan Note shall mean that certain promissory note dated of even date
herewith in the original principal amount of $75,000,000.00 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 (other than the unrealized
gain on the Homestead Loans) 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 aggregate Net Operating
Income of properties that have reached the Calculation Date (as defined in the
definition of Operating Sub-Pool Value) ((i) beginning with the Calculation Date
until the end of the third full calendar quarter after the Stabilization Date,
based on the annualized Net Operating Income from the Calculation Date until the
time of measurement, and (ii) beginning with the fourth full calendar quarter
after the Stabilization Date, based on the immediately preceding four (4)
calendar quarter period) divided by eight and three-fourths percent (8.75%),
plus (b) the total book value of properties that have not reached the
Calculation Date, 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.
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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 $100,000.00,
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 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
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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 2:00 p.m., 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) $75,000,000.00, or
(ii) the difference between the Commitment and the unpaid principal balance of
all Loans. Swing Loans shall constitute "Loans" for all purposes hereunder.
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 at least equal
to $1,000,000.00 and equal to a multiple of $100,000.00. 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 be affected by any circumstance, including, without
limitation, (i) any set-off, counterclaim, recoupment, defense or
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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:
<TABLE>
<CAPTION>
PERIOD PAYMENT AMOUNT
------ --------------
<S> <C>
During the first year after Quarterly amount necessary to amortize
the Conversion Date the unpaid principal balance of the
Term Loan on the Conversion Date over
a seven (7) year period
</TABLE>
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During the second year after Quarterly amount necessary to amortize
the Conversion Date 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 amortize
the Conversion Date the unpaid principal balance of the
Term Loan on the 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.
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(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 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.
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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 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 (Swing Loans shall
be deemed to be a utilization of the Commitment solely for the purposes of this
Section 2.7(a)) listed below multiplied by the corresponding rate per annum
applicable to that portion:
Unused Commitment Rate
----------------- ----
Up to but not including $115,000,000 0.125%
$115,000,000 up to and including
$230,000,000 0.150%
Over $230,000,000 0.200%
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
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account of each Lender that extends its Loans equal to 0.1000% 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
date one (1) year after the Conversion Date payable to each Lender on the date
one (1) year after the Conversion Date, plus one-fourth of one percent (1/4%) of
the aggregate unpaid principal balance of each Loan on the date (2) years after
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 (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 11:00 a.m., Houston, Texas time, on the same Business Day of any
proposed Swing Loan, provided that by 11:00 a.m., Houston, Texas time on the
date of the proposed Swing Loan, Borrower shall also have notified TCB by
telephone of its 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
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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 D 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. The Interest Options shall be designated or converted in
the manner provided below:
(a) Borrower shall give Agent a Request for Loan. Each such 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.
The Request for Loan shall be irrevocable and shall be given to Agent no later
than the applicable Rate Designation Date. The Agent shall promptly deliver the
Request for Loan 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.
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(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 Request for Loan 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 Request for Loan
specifying a Eurodollar Rate Borrowing but the selected Interest Period has not
yet begun, such Request for Loan shall be deemed to be of no force and effect,
as if never made, and the balance of the Loans specified in such Request for
Loan 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 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
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(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 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:
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(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
Request for Loan 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 Request for Loan 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.
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
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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 10.5 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 would 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 would 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 would reasonably be expected to
have a Material Adverse Effect.
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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 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
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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:
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 50 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,
senior vice president, controller, a co-controller of Borrower's REIT Manager or
Borrower; (d) promptly after
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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 1.75:1.00 at all times; (d) a Tangible Net Worth of at least One
Billion One Hundred Million Dollars ($1,100,000,000.00) 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.
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 $1,000,000.00 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
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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, for investment in Homestead Loans and Homestead
Mortgages 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 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
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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 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
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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
a pool (the "Pool") of assets that are not mortgaged, pledged, hypothecated, or
encumbered in any manner other than Permitted Encumbrances consisting of
Homestead Loans and Homestead Mortgages, and real estate properties (the "Pool
Real Estate") with an aggregate value equal to the aggregate Homestead Mortgage
Amount plus the aggregate Historical Value of the Pool Real Estate (plus all
cash balances held by the Borrower if and whenever the unpaid balance of the
Loans is zero), 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 "Sub-Pool Real Estate") and Homestead Loans (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 Sub-Pool Real Estate 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 Sub-Pool Real Estate properties
added to the Operating Sub-Pool after the date of this Agreement must be
multifamily properties, (d) the Borrower must have received from third party
independent environmental consultants, written assessments for each Sub-Pool
Real Estate 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, and (e) each individual Homestead Property used to calculate
Operating Sub-Pool Value must be completed, in full operation, and have an
occupancy level of at least seventy percent (70%) based on the average during
the Occupancy Period. If requested by the Agent and/or the Co-
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Agent, the Borrower will provide to the Agent and the Co-Agent written
assessments from third party independent environmental consultants for all Sub-
Pool 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.
Notwithstanding the foregoing, the maximum value of the Pool or of the
Operating Sub-Pool Value that can be attributable to the Homestead Loans, the
Homestead Mortgages and the Homestead Property is ten percent (10%) of the value
of the Pool or of the Operating Sub-Pool Value before adding the effect of the
Homestead Loans, the Homestead Mortgages and the Homestead Property.
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
$500,000,000.00 in the aggregate, in all cases whether direct, indirect,
absolute, contingent or otherwise; except (a) Indebtedness incurred by Borrower
which has an S&P Rating of BBB- or better and a Moody's Rating of Baa3 or better
at the time of issuance, (b) Non-recourse Debt, (c) 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, (d) 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 (e) Indebtedness secured by multifamily real
estate properties and assumed by Borrower in connection with the purchase of
said properties by Borrower (but not incurred or assumed in anticipation of such
purchase) not to exceed $50,000,000.00 in the aggregate. For the purposes of the
foregoing calculation under (c) 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
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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.
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; provided, however, that
Borrower may terminate the agreements with Borrower's REIT Manager in connection
with the following (the "Management Transactions"): (a) acquisition by Borrower
of Security Capital Pacific Incorporated, Borrower's REIT Manager, and SCG
Realty Services Incorporated, Borrower's property manager, from Security Capital
Group in exchange for common stock of Borrower with an approximate value of
$75,838,457.00; and (b) execution of an Administrative Services Agreement with
Security Capital Group or an Affiliate thereof to provide real estate research,
management information services, human resources, legal and tax administration,
shareholder communications and other administrative services formerly provided
through Borrower's REIT Manager. Said Administrative Services Agreement may not
be amended if such amendments would materially increase amounts payable
thereunder by Borrower or which would violate any provisions of the Credit
Documents.
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. Agent and each Lender
hereby consent to (a) the Management Transactions, and (b) the retention by
Borrower of Homestead Loans and Homestead Mortgages with an aggregate Homestead
Mortgage Amount
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which does not exceed $230,000,000.00, in each case to the extent not on terms
substantially similar to those obtainable from unrelated sources.
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 Persons engaged
primarily in the business of investment in and operation of commercial real
estate properties received in exchange for Property sold to such Persons 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 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; (j) investments permitted under Section 6.2 of this
Agreement, and (k) Homestead Loans secured by Homestead Mortgages, so long as
the aggregate Homestead Mortgage Amount does not exceed the lesser of
$230,000,000.00 or 20% of the value of the assets of the Borrower on a
consolidated basis (in accordance with Generally Accepted Accounting
Principles). The Borrower will not mortgage,
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pledge, hypothecate or encumber in any manner the loans, advances or extensions
of credit made pursuant to Sections 6.6(h), (i) or (k).
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
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
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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 and not corporate
affordable or extended stay lodging properties (such as Homestead Village or the
Homestead Mortgages), 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 $10,000,000.00 in principal amount, or Non-recourse Debt in excess of
$25,000,000.00 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
(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
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(e) A final judgment or judgments in the aggregate for the payment of
money in excess of $10,000,000.00 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
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hereafter existing at law, in equity, or otherwise, and all such remedies,
rights and powers shall be cumulative.
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)
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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 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.
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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,
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
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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 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
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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 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
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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 10.5 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 (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.
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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 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
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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 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 Sections 10.5(d) and (e) 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 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 10.5(d) and (e) of this Agreement, a Lender
may sell participating interests in any of its Loans to an Eligible Institution
so long as such participation shall
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(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) if the participant is not an Affiliate of the
participating Lender, require the written consent of the Borrower and the Agent,
such consent not to be unreasonably withheld and, if the participant is an
Affiliate of the participating Lender, require written notice to the Agent and
the Borrower but not any consent of the Agent, the Borrower or any other Lender,
(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 all or any part of its Loans or its Lender
Commitment to an Affiliate of the Lender with written consent of the Agent and
the Borrower, such consent not to be unreasonably withheld.
(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; (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; and (iii) TCB may
assign, sell or participate all or any portion of the Swing Loan without the
consent of the Agent, the Borrower or any other Lender.
(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.
10.6 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.
10.7 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
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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 "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.
10.8 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.
10.9 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.
10.10 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.
10.11 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.
10.12 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
-49-
<PAGE>
SHAREHOLDERS REGARDLESS OF WHETHER SUCH OBLIGATION OR LIABILITY IS IN THE NATURE
OF CONTRACT, TORT OR OTHERWISE.
10.13 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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date set forth above.
SECURITY CAPITAL PACIFIC TRUST
By: /s/ Thomas L. Poe
Name: Thomas L. Poe
Title: Vice President
Address:
7670 South Chester Street
Suite 100
Englewood, Colorado 80112
Attention: Secretary
-50-
<PAGE>
Lender Commitment: $45,000,000.00 TEXAS COMMERCE BANK
Percentage: 12.857142857%
as Agent and as a Lender
By: /s/ Kent Kaiser
----------------------------------
Name: Kent Kaiser
---------------------------------
Title: Sr. Vice President
--------------------------------
Address:
712 Main Street
Houston, Texas 77002
Attention: Manager, Real Estate Group
Telecopy No.: 713-216-7713
Telephone No.: Kent Kaiser
713-216-8699
-51-
<PAGE>
Lender Commitment: $45,000,000.00 WELLS FARGO BANK, NATIONAL
Percentage: 12.857142857% ASSOCIATION,
Co-Agent and as a Lender
By: /s/ Mary Ann Kelly
-----------------------------------
Name: Mary Ann Kelly
----------------------------------
Title: Vice President
---------------------------------
Address:
2859 Paces Ferry Road
Suite 1805
Atlanta, Georgia 30339
Attention: Mary Ann Kelly
Telecopy No.: 770-435-2262
Telephone No.: Mary Ann Kelly
770-435-3800
-52-
<PAGE>
Lender Commitment: $30,000,000.00 GUARANTY FEDERAL BANK, F.S.B.
Percentage: 8.571428571%
By: /s/ Lesa B. Balsley
-----------------------------------
Name: Lesa B. Balsley
----------------------------------
Title: Division Manager/Vice President
---------------------------------
Address:
8333 Douglas Avenue
Dallas, Texas 75225
Attention: Lesa Balsley
Telecopy No.: 214-360-8910
Telephone No.: Lesa Balsley
214-360-2726
-53-
<PAGE>
Lender Commitment: $15,000,000.00 NORWEST BANK NEW MEXICO,
Percentage: 4.285714286% NATIONAL ASSOCIATION
By: /s/ Dan Shannon
-----------------------------------
Name: Dan Shannon
----------------------------------
Title: President & Managing Officer
---------------------------------
Address:
1048 Paseo de Peralta
Santa Fe, New Mexico 87501
Attention: Dan Shannon
Telecopy No.: 505-983-6232
Telephone No.: Dan Shannon
505-984-8500
-54-
<PAGE>
Lender Commitment: $25,000,000.00 COMMERZBANK
Percentage: 7.142857143% AKTIENGESELLSCHAFT, LOS ANGELES
BRANCH
By: /s/ Douglas P. Traynor
-----------------------------------
Name: Douglas P. Traynor
----------------------------------
Title: Vice President
---------------------------------
By: /s/ Christine H. Finkel
-----------------------------------
Name: Christine H. Finkel
----------------------------------
Title: Assistant Vice President
---------------------------------
Address:
(1) 633 West Fifth Street, Suite 6600
Los Angeles, California 90071
Attention: Steven F. Larsen
Telecopy No.: 213-623-0039
Telephone No.: Steven F. Larsen
213-623-8223
(2) Commerzbank Aktiengesellschaft
New York Branch
2 World Financial Center
New York, New York 10281-1050
Attention: David Schwarz
Telecopy No.: 212-266-7530
Telephone No.: David Schwarz
212-266-7632
-55-
<PAGE>
Lender Commitment: $30,000,000.00 BANK OF AMERICA NATIONAL TRUST
Percentage: 8.571428571% AND SAVINGS ASSOCIATION
By: /s/ Robert Allen
--------------------------
Name: Robert N. Allen
------------------------
Title: Vice President
-----------------------
Address:
555 South Flower Street
6th Floor
Los Angeles, California 90071
Attention: Mary Bowman
Telecopy No.: 213-228-5389
Telephone No.: Mary Bowman
213-228-4888
-56-
<PAGE>
Lender Commitment: $30,000,000.00 FLEET NATIONAL BANK
Percentage: 8.571428571%
By: /s/ Mark E. Dalton
--------------------------
Name: Mark E. Dalton
--------------------------
Title: Vice President
--------------------------
Address:
111 Westminster, Suite 800
Providence, Rhode Island 02903
Attention: Mark Dalton
Telecopy No.: 401-278-5166
Telephone No.: Mark Dalton
401-278-5605
-57-
<PAGE>
Lender Commitment: $20,000,000.00 SIGNET BANK
Percentage: 5.714285714%
By: /s/ Kevin McCullough
----------------------------
Name: Kevin McCullough
--------------------------
Title: Assistant Vice President
-------------------------
Address:
7799 Leesburg Pike
Falls Church, Virginia 22043
Attention: Kevin McCullough
Telecopy No.: 703-506-0284
Telephone No.: Kevin McCullough
703-714-5145
-58-
<PAGE>
Lender Commitment: $25,000,000.00 BANK HAPOALIM, B.M.,
Percentage: 7.142857143% San Francisco Branch
By: /s/ Shohre Afshar
--------------------------
Name: Shohre Afshar
------------------------
Title: Vice President
-----------------------
By: /s/ John Rice
--------------------------
Name: John Rice
------------------------
Title: VP
-----------------------
Address:
250 Montgomery Street, Suite 700
San Francisco, California 94104
Attention: Shohre Afshar
Telecopy No.: 415-989-9948
Telephone No.: Shohre Afshar
415-989-9940
-59-
<PAGE>
Lender Commitment: $25,000,000.00 CORESTATES BANK, N.A.
Percentage: 7.142857143%
By: /s/ R. S. Relick
-----------------------------------
Name: R. Scott Relick
----------------------------------
Title: VP
---------------------------------
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
-60-
<PAGE>
Lender Commitment: $20,000,000.00 BANK ONE, ARIZONA, NA
Percentage: 5.714285714%
By: /s/ Todd Popovich
-----------------------------------
Name: Todd Popovich
----------------------------------
Title: Officer
---------------------------------
Address:
Commercial Real Estate
241 N. Central, 19th Floor
Phoenix, Arizona 85004
Attention: Todd Popovich
Telecopy No.: 602-221-4435
Telephone No.: Todd Popovich
602-221-2375
-61-
<PAGE>
Lender Commitment: $20,000,000.00 UNION BANK OF CALIFORNIA, N.A.
Percentage: 5.714285714%
By: /s/ G. L. Roberts
-----------------------------------
Name: Gary L. Roberts
----------------------------------
Title: Vice President
---------------------------------
By: /s/ Diana Giacomini
-----------------------------------
Name: Diana Giacomini
----------------------------------
Title: Vice President
---------------------------------
Address:
Capital Markets Division
350 California, 7th Floor
San Francisco, California 94104
Attention: Annette Billingsley
Telecopy No.: 415-705-7367
Telephone No.: Annette Billingsley
415-705-5075
-62-
<PAGE>
Lender Commitment: $20,000,000.00 BANK OF MONTREAL, CHICAGO
Percentage: 5.714285714% BRANCH
By: /s/ Maureen T. Mills
------------------------------------
Name: Maureen T. Mills
----------------------------------
Title: Director
---------------------------------
Address:
115 S. LaSalle Street, 12W
Chicago, Illinois 60603
Attention: David A. Mazujian
Telecopy No.: 312-750-4352
Telephone No.: David A. Mazujian
312-750-4386
-63-
<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
August __, 1997, among Security Capital Pacific Trust (the
"Borrower"), the Agent and the Lenders as signatory to the Credit
Agreement
Gentlemen:
Borrower hereby requests [check as applicable] [_] a conversion of an
existing Loan as provided below, and/or [_] an advance under the Credit
Agreement, 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
$100,000.00].
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 $___________.__
The advance or conversion is to be made as follows:
A. Base Rate Borrowing.
1. Amount of Base Rate Borrowing: $___________.__
2. Date of Base Rate Borrowing _________, 199_
EXHIBIT B
---------
Page 1 of 2 Pages
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C>
B. Eurodollar Rate Borrowing:
1. Amount of Eurodollar Rate Borrowing: $ ___________.___
2. Amount of conversion of existing Loan
to Eurodollar Rate Borrowing: $ ___________.___
3. Number of Eurodollar Rate Borrowing(s)
now in effect: [cannot exceed 12] _______________
4. Date of Eurodollar Rate Borrowing
or conversion: ________, 199__
5. Interest Period: _______________
6. Expiration date of current Interest
Period as to this conversion: ________, 199__
C. Swing Loan.
1. Amount of Swing Loan: $ ___________.___
[minimum of $1,000,000.00 and in
multiples of $100,000.00]
2. Date of Swing Loan: ________, 199___
</TABLE>
Borrower hereby represents and warrants that the amounts set forth 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 B
---------
Page 2 of 2 Pages
<PAGE>
$[ ] [ ], 1997
FOR VALUE RECEIVED SECURITY CAPITAL PACIFIC TRUST, a Maryland real
estate investment trust (herein called "Maker") promises to pay to the order of
[
], a [ ]
("Payee"), at the offices of Texas Commerce Bank National Association, a
national banking association, as "Agent" under the Credit Agreement, at 712 Main
Street, Houston, Texas 77002, or at such other place as the holder (the
"Holder", whether or not Payee is such holder) of this note may hereafter
designate in writing, in immediately available funds and in lawful money of the
United States of America, the principal sum of [
] Dollars ($ [ ]) (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 nonsurious 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
INITIALLED FOR
IDENTIFICATION:
----------
Page 1 of 6 Pages
EXHIBIT C
<PAGE>
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.
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)
INITIALLED FOR
IDENTIFICATION:
----------
Page 2 of 6 Pages
EXHIBIT C
<PAGE>
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 as 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 special, time or demand, provisional or final) at any time held by
the Payee or other Holder for any Maker's credit or account.
INITIALLED FOR
IDENTIFICATION:
----------
Page 3 of 6 Pages
EXHIBIT C
<PAGE>
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
INITIALLED FOR
IDENTIFICATION: _____
Page 4 of 6 Pages
EXHIBIT C
<PAGE>
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 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
INITIALLED FOR
IDENTIFICATION:__________
Page 5 of 6 Pages
EXHIBIT C
---------
<PAGE>
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 or 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 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 6 of 6 Pages
EXHIBIT C
<PAGE>
SWING LOAN NOTE
---------------
$75,000,000.00 August ___, 1997
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 Seventy-Five Million Dollars
($75,000,000.00) (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.
INITIALLED FOR
IDENTIFICATION: ______
Exhibit C-1
Page 1 of 6 Pages
<PAGE>
4. Excess Interest Will be Refunded or Credited. If, for any reason
whatsoever, 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.
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 any prepay this not 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 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
$75,000,000.00. 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
INITIALLED FOR
IDENTIFICATION:___________
Exhibit C-1
Page 2 of 6 Pages
<PAGE>
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 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
INITIALED FOR
IDENTIFICATION: __________
Exhibit C-1
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<PAGE>
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
INITIALLED FOR
IDENTIFICATION:____
Exhibit C-1
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Page 4 of 6 Pages
<PAGE>
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 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
INITIALLED FOR
IDENTIFICATION:________
Exhibit C-1
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Page 5 of 6 Pages
<PAGE>
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 shareholders regardless of whether such obligation or
liability is in the nature of contract, tort or otherwise.
SECURITY CAPITAL PACIFIC TRUST
By:
--------------------------
Name:
------------------------
Title:
-----------------------
INSTALLED FOR
IDENTIFICATION:________
Exhibit C-1
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Page 6 of 6 Pages
<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 D
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