TYPE 10-Q
SEQUENCE: 1
DESCRIPTION: THIRD QUARTER REPORT FOR 1998
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended September 30, 1998
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 001-13915
---------
UNITED INVESTORS REALTY TRUST
(Exact name of Registrant as Specified in its Charter)
TEXAS 76-0265701
------------------------ ----------------------
(State of Incorporation) (IRS Employer
Identification Number)
5847 San Felipe, Suite 850
Houston, TX 77057
-----------------------------------------------------
(Address of Principal Executive Offices and Zip Code)
(713) 781-2860
---------------------------------------------------
(Registrant's Telephone Number Including Area Code)
Number of shares outstanding of the issuer's Common Share, no par value, as of
October 30, 1998: 9,481,889 shares.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes __X__ No_____
<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
United Investors Realty Trust
Consolidated Balance Sheets
ASSETS
September 30,
1998 December 31,
(Unaudited) 1997
------------- -------------
<S> <C> <C>
Operating properties, at cost
Land ......................................................... $ 35,698,499 $ 8,118,723
Buildings and improvements ................................... 97,313,647 31,616,008
------------- -------------
133,012,146 39,734,731
Less accumulated depreciation .................................... (6,813,992) (4,861,957)
------------- -------------
126,198,154 34,872,774
Cash and cash equivalents ........................................ 7,106,483 346,149
Accounts receivable, net of allowance ............................ 1,781,504 797,696
Prepaid expenses and other assets ................................ 3,018,834 3,270,350
------------- -------------
Total Assets ................................................. $ 138,104,975 $ 39,286,969
============= =============
LIABILITIES, MINORITY INTEREST, REDEEMABLE
PREFERED SHARES, AND COMMON SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable ........................................... $ 48,312,043 $ 24,926,499
Redeemable convertible subordinated notes ........................ -- 212,400
Short-term notes and lines of credit ............................. -- 3,225,000
Accounts payable, accrued expenses, and other liabilities ........ 3,350,611 1,429,233
------------- -------------
Total liabilities ................................................ 51,662,654 29,793,132
------------- -------------
Minority interest in consolidated partnerships. .................. 2,434,464 1,571,018
------------- -------------
Redeemable preferred shares of beneficial interest,$100 par value;
50,000,000 shares authorized;10,737 shares issued and outstanding
at December 31, 1997 ............................................. -- 1,068,226
------------- -------------
Common shareholders' equity: common shares of beneficial interest,
no par value; 500,000,000 shares authorized; 9,514,889 and 914,889
shares issued; and 9,504,889 and 914,889 shares outstanding in 1998
and 1997....................................... .................. 87,081,264 8,345,077
Accumulated deficit .............................................. (3,073,407) (1,490,484)
------------- -------------
Total common shareholders' equity ................................ 84,007,857 6,854,593
------------- -------------
Total liabilities, minority interest,redeemable preferred shares,
and common shareholders' equity .................................. $ 138,104,975 $ 39,286,969
============= =============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
United Investors Realty Trust
Consolidated Statements of Operations
(unaudited)
Three Months Ended Nine Months Ended
--------------------------------------------------------
30-Sept-98 30-Sept-97 30-Sept-98 30-Sept-97
<S> <C> <C> <C> <C>
Revenues:
Rental $ 3,835,777 $ 1,268,430 $ 9,262,001 $ 3,725,857
Recoveries from tenants 1,118,663 272,618 2,610,559 873,054
Interest and other income 73,180 4,313 364,826 20,870
----------- ----------- ----------- -----------
Total revenues 5,027,620 1,545,361 12,237,386 4,619,781
Property operating 553,722 164,402 1,282,944 423,565
Property taxes 682,127 188,566 1,637,342 565,698
Property management fees 85,150 42,144 212,098 133,410
General and administrative 326,194 102,782 696,947 322,770
Advisory fees (FCA) 223,624 78,000 545,609 258,750
Depreciation and amortization 854,964 298,721 2,043,550 870,972
Interest (including write-off of $2,240,652
in unamortized bridge financing costs in
March, 1998) 1,018,714 606,837 5,009,675 1,825,810
----------- ----------- ----------- -----------
Total expenses 3,744,495 1,481,452 11,428,165 4,400,975
----------- ----------- ----------- -----------
Income before minority interest,
extraordinary item,and preferred share
distribution requirement 1,283,125 63,909 809,221 218,806
Minority interest in income of consolidated
partnerships (31,033) (16,626) (92,494) (38,482)
----------- ----------- ----------- -----------
Income before extraordinary item and
preferred share distribution requirement 1,252,092 47,283 716,727 180,324
Extraordinary item-prepayment penalties incurred on
early extinguishment of debt -- -- (232,532) --
----------- ----------- ----------- -----------
Net income 1,252,092 47,283 484,195 180,324
Preferred share distribution requirement -- (24,158) (20,670) (72,474)
----------- ----------- ----------- -----------
Net income available
for common shareholders $ 1,252,092 $ 23,125 $ 463,525 $ 107,850
=========== =========== =========== ===========
Basic and diluted per share amounts:
Income before extraordinary item
and preferred share distribution requirement $ 0.13 $ 0.05 $ 0.10 $ 0.20
Extraordinary item - prepayment penalties
incurred on early extinguishment of debt -- -- (0.03) --
Preferred share distribution requirement -- (0.03) - (0.08)
----------- ----------- ----------- -----------
Net income available for common
shareholders $ 0.13 $ 0.02 $ 0.07 0.12
=========== =========== =========== ===========
Weighted average shares outstanding:
Basic 9,513,639 912,489 7,102,747 912,489
Diluted 9,513,639 912,489 7,102,747 912,489
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
United Investors Realty Trust
Consolidated Statements of Cash Flows
(unaudited)
Nine Months Ended
-----------------------
30-Sept-98 30-Sept-97
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 484,195 180,324
Adjustments to reconcile net income to net cash
provided by operating
activities:
Depreciation 1,952,035 812,653
Amortization 91,515 58,319
Extraordinary item 232,532 -
Amortization of bridge financing costs 2,240,652 -
Minority interest in income of consolidated partnerships 92,494 51,188
Equity in income of investment in real estate venture - 4,668
Changes in operating assets and liabilities (750,528) (239,679)
------------ ------------
Net cash provided by operating activities 4,342,895 867,473
------------ ------------
Cash flows from investing activities:
Purchase of and capital improvements to investment
real estate (50,232,910) (343,805)
Application of escrow deposits 1,493,389 -
------------ ------------
Net cash used in investing activities (48,739,521) (343,805)
------------ ------------
Cash flows from financing activities:
Proceeds from bridge financing 53,689,913 -
Payments on bridge financing (53,689,913) -
Proceeds from borrowings - 133,859
Proceeds from short-term notes payable 50,000 250,000
Principal payments on mortgage notes payable (16,738,923) (607,444)
Principal payments on short-term notes payable (3,275,000) (40,000)
Preferred share retirement (1,068,226) -
Convertible note retirement (212,400) -
Net proceeds from public offering 78,810,250 -
Payment of prepayment penalty (232,532) -
Payment of bridge financing costs (2,240,652) -
Preferred share distributions (20,670) (72,474)
Payment of distributions (2,046,166) -
Distribution to holders of minority interests (1,646,869) (50,442)
Purchase of treasury shares (74,063) -
Payment of loan acquisition costs (147,789) -
------------ ------------
Net cash provided by (used in) financing
activities 51,156,960 (386,501)
------------ ------------
Increase in cash and cash equivalents 6,760,334 137,167
Cash and cash equivalents at beginning of period 346,149 119,316
------------ ------------
Cash and cash equivalents at end of period $ 7,106,483 $ 256,483
============ ============
Supplemental disclosures:
Cash paid for for interest (including $2,240,652
in cash paid in 1998 for bridge financing costs) $ 5,009,675 $ 1,825,810
Assumption of mortgage debt in connection with
acquisition of properties 40,124,467 -
Assumption of property tax and security deposit
liabilities in connection with acquisition of
properties 641,834 -
Purchase price adjustments held by third party 172,356 -
Issuance of downREIT units for property acquisition 2,385,940 -
</TABLE>
<PAGE>
United Investors Realty Trust
Notes to Consolidated Financial Statements
1. Organization and Basis of Presentation
Organization
United Investors Realty Trust (the "Company") was organized on December 1,1988
as a Massachusetts business trust and subsequently converted to a Texas real
estate investment trust ("REIT"). The Company operates community shopping
centers in the sun belt states of Texas, Arizona, Florida and Tennessee. On
March 13, 1998, the Company completed an initial public offering (the "IPO") of
7,600,000 common shares of beneficial interest (the "Common Shares").
Basis of Presentation
These unaudited consolidated financial statements include the accounts of the
Company, its subsidiaries and partnerships in which it owns controlling
interests. The accompanying consolidated financial statements have been prepared
by the Company's management in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-Q and do not include all information and footnotes necessary for a fair
presentation of financial position, results of operations and cash flows in
conformity with generally accepted accounting principles for complete financial
statements. These statements should be read in conjunction with the Company's
audited financial statements and notes thereto included in the Company's
Prospectus dated March 6, 1998 associated with its IPO. In the opinion of
management, the financial statements contain all adjustments (which consist of
normal and recurring adjustments) necessary for a fair presentation of financial
results for the interim periods.
On May 21, 1998, the EITF reached a consensus decision on Issue No. 98-9,
"Accounting for Contingent Rent In Interim Financial Periods" which provides
that recognition of rental income in interim periods must be deferred until the
specified target that triggers the contingent rental income is achieved. This
consensus is effective May 21, 1998 and will require the Company to defer
recognition of this income until the date that the tenant's sales exceed the
breakpoint set forth in the lease agreement. This consensus is not expected to
have a material impact on the Company's results of operations.
2. Investment in Properties
At December 31, 1997, the Company owned eight shopping center properties
containing approximately 754,563 square feet of gross leasable area ("GLA").
During the nine months ended September 30, 1998, the Company acquired 11
properties for a total purchase price of approximately $93,000,000 including
assumed debt of approximately $40,000,000. These acquisition properties include
approximately 1,694,000 square feet of GLA, of which 488,350 square feet are
anchors that are owned by third parties. As of September 30, 1998, the
geographic diversification of the Company's portfolio on the basis of GLA owned
reflected 24% in the Houston, Texas area, 27% throughout the balance of Texas,
24% in Florida, 17% in Arizona, and 8% in Tennessee.
During the third quarter ended September 30, 1998, the Company acquired the
following neighborhood shopping centers.
Colony Plaza Shopping Center
Colony Plaza is located in Sugar Land, Texas, a southern suburb of Houston, and
includes approximately 26,800 square feet. An approximately 53,000 square foot
Albertson's Grocery Store, which is owned by a third party, anchors the center.
The Company acquired Colony Plaza with cash and the assumption of debt. As of
September 30, 1998, the center is approximately 84% leased.
Highland Village Shopping Center
Highland Village is located in Sugar Land, Texas, a southern suburb of Houston,
and includes approximately 64,200 square feet. Major tenants, which include The
Education Station, Half Price Books and Mattress Giant, occupy approximately
16,600 square feet. The Company acquired Highland Village with cash and the
assumption of debt. As of September 30, 1998, the center was approximately 99%
leased.
The following properties were acquired in the three months ended June 30, 1998.
Town `N Country Plaza
Town `N Country Plaza is a 158,104 square foot shopping center located in Tampa,
Florida. The center is anchored by Big Lots (30,000 square feet) and T.J. Maxx
(24,000 square feet). As of September 30, 1998, the center is 100% leased.
<PAGE>
The Company acquired the center on May 15, 1998 through a "downREIT"
partnership. The downREIT partnership, in which the Company is the 1% sole
general and a 98% limited partner, issued partnership units to the sellers and
assumed existing mortgage debt on the shopping center. Holders of the
partnership units are paid a distribution equivalent to distributions paid on
the Company's Common Shares, and may convert their partnership units
(aggregating 239,594 units) to REIT shares after one year.
Rosemeade Park Shopping Center
Rosemeade Park is a 49,554 square foot shopping center located in Carrollton,
Texas, a northern suburb of Dallas. The center is adjacent to a 58,900 square
foot Kroger Supermarket, which is owned by a third party. The center was
acquired with cash and assumption of debt, and as of September 30, 1998 is
approximately 58% leased.
Big Curve Shopping Center
Big Curve Shopping Center is located in Yuma, Arizona and includes approximately
226,400 square feet of GLA. The center is anchored by a 28,000 square-foot
Walgreens, as well as by Miller's Outpost, Albertson's and Michaels. The latter
two stores occupy an aggregate GLA of approximately 100,000 square feet that are
owned by third parties. The center is approximately 94% leased at September 30,
1998. The Company acquired Big Curve with cash and the assumption of debt.
The following properties were acquired in the three months ended March 31, 1998.
Mason Park
Mason Park is a 218,847 square foot community shopping center located in
Houston, and is anchored by Kroger Supermarket, Walgreen's Drug Store, Palais
Royal, Cinemark and Petco. A third party owns the 58,800 square foot Kroger
store. As of September 30, 1998, the center is approximately 97% leased.
The Market at First Colony
The Market at First Colony is a 156,241 square foot community shopping center
located in Houston, and is anchored by a 62,000 square foot Kroger Supermarket,
which is owned by a third party. Major tenants in the Company's space include
T.J. Maxx, Home Savings, and Eckerd Drugs. A Taco Bell is also part of the
center and is owned by the Company. As of September 30, 1998, the center is
approximately 97% leased.
Hedwig Shopping Centers
Hedwig Shopping Centers is a 225,204 square foot shopping center located in
Houston, and is anchored by Target (120,000 square feet) and Marshall's (35,650
square feet), each of which is owned by third parties. The three separate
buildings owned by the Company include approximately 69,500 square feet. As of
September 30, 1998, the center is approximately 98% leased.
Benchmark Crossing
Benchmark Crossing is a 58,384 square foot neighborhood shopping center located
in Houston, and is anchored by Bally's Total Fitness, which occupies almost
41,000 square feet. The balance of the center is occupied by Click's Billiards,
the International House of Pancakes, Burger King and Jack in the Box. The center
is 100% leased as of September 30, 1998.
Southwest/Walgreen's Shopping Center
Southwest/Walgreen's Shopping Center is an 83,698 square foot neighborhood
shopping center anchored by Southwest Supermarkets and Walgreen's Drug Store.
The center is located in Phoenix, Arizona. As of September 30, 1998, the center
is 98% leased.
University Mall Shopping Center
The University Mall Shopping Center is s 315,596 square foot shopping center
located in Pembroke Pines, Florida (an independent municipality near Ft.
Lauderdale). The center is anchored by Uptons, Sports Authority, Ross Stores,
Office Max and Eckerd Drugs. Separate buildings are also leased to TGI Fridays,
WAG's and Taco Bell. Additionally, Pollo Tropical and Red Lobster are situated
on out parcels that are owned by third parties. As of September 30, 1998, the
center is approximately 98% leased.
Pending Acquisitions
As of September 30, 1998, the Company was under contract to purchase one
additional shopping center, the Twelve Oaks Plaza located in Tampa, Florida.
3. Financing Activities
On January 30, and February 18, 1998, the Company received proceeds from a
bridge loan with Nomura Asset Capital Corporation for approximately $53,700,000.
The loan was collateralized by five of the properties owned at December 31, 1997
and three of the acquisition properties (see Note 2) and carried an interest
rate of 8.1875%. The terms of the loan included a 1% loan origination fee and a
1.75% loan break-up fee. The proceeds of the loan were used to pay off the
mortgages on five original properties, to purchase four acquisition properties,
and for working capital. The loan was repaid out of the IPO proceeds on March
13, 1998. All bridge loan costs were amortized to interest expense in the first
quarter of 1998.
On February 2, 1998 the Company retired mortgage loans secured by its Autobahn,
Bandera, Centennial, El Campo and Twin Lakes properties with funds from the
bridge loan. The total refinancing was approximately $16.1 million and included
approximately $232,000 in prepayment fees. All refinancing costs and unamortized
loan costs for these loans were written off in the first quarter of 1998 and are
reflected as an extraordinary item in the accompanying statements of operations.
On March 13, 1998, the Company completed its IPO of 7,600,000 shares of the
Company's Common Shares at a price of $10.00 per share. The net proceeds from
the offering, after deducting the related issuance costs, amounted to
approximately $69.4 million. The proceeds of the offering were applied to pay
off the bridge loan, acquire properties, purchase all but 3.6% of the
outstanding limited partners' interests in the partnership that owns the
University Park Shopping Center, purchase the minority interest in
Centennial/Park Northern, L.P., repurchase existing short-term and convertible
debt, repurchase all outstanding preferred share, and for working capital.
During the second quarter of 1998, the Company purchased the minority interest
in Centennial/Park Northern, L.P. for approximately $900,000. In addition, the
Company completed the acquisitions of all but 3.6% of the minority interests in
University Park, L.P.
Effective April 6, 1998, the Company completed the sale of 1,000,000 Common
Shares to the Underwriters in connection with the exercise of their
overallotment option. The sale of these 1,000,000 shares at $10.00 per share
provided net proceeds to the Company of $9,300,000, which were used for
acquisitions and working capital.
<PAGE>
4. Notes and Mortgages Payable
The following table sets forth certain information regarding the indebtedness of
the Company as of September 30, 1998:
<TABLE>
<CAPTION>
Projected
Annual
Interest
Balance As of
September 30, Interest Maturity September 30,
DESCRIPTION 1998 Rate Date 1998
- ---------------------------- ------- ----------- -------- ----------
MORTGAGE PAYABLE:
<S> <C> <C> <C> <C>
University Park $ 4,728,992 9.30% 4/1/18 $ 435,915
McMinn Plaza I 344,942 8.25% 7/1/03 25,785
McMinn Plaza W 613,208 7.63% 11/1/02 42,107
Park Northern 2,692,473 8.37% 12/1/06 222,868
Hedwig Village II 1,247,588 10.75% 6/10/99 89,165
Hedwig III 2,303,589 10.75% 6/10/99 164,637
Benchmark 3,657,170 9.25% 8/1/05 345,183
University Mall 13,254,587 8.44% 12/1/06 1,114,103
Rosemeade 3,464,204 8.295% 12/1/07 289,589
Town 'N Country 2,462,713 7.50% 12/10/02 181,998
Big Curve 5,934,381 9.19% 10/1/06 534,490
Colony Plaza 3,181,333 7.54% 1/1/08 242,256
Highland Square 4,426,863 8.87% 12/1/06 390,238
----------- ----- -------- -----------
Total $48,312,043 8.76% $ 4,078,334
=========== ==== ===========
</TABLE>
The Company's indebtedness has interest rates ranging from 7.50% to 10.75%, with
a weighted average interest rate of 8.76%, and will mature between 1999 and
2018, with a weighted average remaining term to maturity of 8.47 years.
The Company has executed an agreement with a bank for a $30,000,000 revolving
line-of-credit at 150 basis points over LIBOR. The term is for two years, with a
one year extension. The line will be secured by first liens on the Market at
First Colony, Mason Park, Autobahn, Bandera and Centennial shopping centers.
5. Per Share Data
The Company has adopted Statement of Financial Accounting Standards No. 128
"Earnings Per Share" ("Statement 128"), which specifies the computation,
presentation and disclosure requirements for basic earnings per share and
diluted earnings per share. Basic earnings per share is computed based upon the
weighted average number of common shares outstanding during the period
presented. Diluted earnings per share is computed based upon the weighted
average number of common shares and dilutive common share equivalents
outstanding during the periods presented. The number of diluted shares related
to outstanding share options is computed by application of the Treasury share
method. The following table sets forth the computation of basic and diluted
earnings per share:
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
---------------------------- --------------------------
Weighted Average Shares 1998 1997 1998 1997
- ----------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Basic EPS 9,513,639 912,489 7,102,747 912,489
Effect of dilutive securities:
Employee share options -- -- -- --
--------- ------- --------- -------
Diluted EPS 9,513,639 912,489 7,102,747 912,489
========= ======= ========= =======
Distributions per share declared $ 0.215 $ 0.047 $ 0.430 $ 0.445
========= ======= ========= =======
</TABLE>
The computations above do not assume the conversion of the Company's redeemable
debt and redeemable preferred shares in 1997 as they would be antidilutive to
earnings per share.
6. Advisory Agreement
The Company is managed and advised by an entity ("FCA Corp"), affiliated with
one of the trust managers (the "Advisor"). The advisory agreement currently
provides for a fee based on 6.8% of adjusted funds from operations, as defined.
During the three and nine months ended September 30, 1998, the Company incurred
fees to the Advisor in the amounts of $224,000 and $545,000, respectively. For
the corresponding periods in 1997, the Advisor fees were $103,000 and $259,000,
respectively.
7. Incentive Share Option Plan
In connection with the completion of its IPO, the Company granted options (the
"Options") to purchase 300,000 Common Shares to the trust managers, certain
executive officers, and to the Advisor for the benefit of certain Advisor
employees, including the Company's executive officers. These Options are
exercisable at $10.00 per share and will vest evenly over a four-year period
commencing January 1, 1999. These Options may also be assigned, in whole or in
part, directly to the beneficiaries for whom the Advisor is holding them.
8. Pro Forma Financial Information
The following unaudited pro forma condensed consolidated statement of operations
is presented as if each of the acquisitions described in Note 2 and the
financing activities described in Note 3 had all occurred as of January 1, 1997.
<TABLE>
<CAPTION>
Nine Months Ended
-----------------
9/30/98 9/30/97
------- -------
<S> <C> <C>
Revenue $15,641,000 $15,225,000
=========== ===========
Income before extraordinary item $ 1,583,000 $ 3,232,000
=========== ===========
Net income $ 1,583,000 $ 3,232,000
=========== ===========
Basic and diluted net income per share
amounts $ 0.15 $ 0.34
=========== ==========
</TABLE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion should be read in conjunction with the accompanying
condensed consolidated financial statements and notes thereto. Historical
results and trends which might appear should not be taken as indicative of
future operations.
The Company has been operating since 1989 as a Texas REIT engaged in the
acquisition, ownership, management, leasing and redevelopment of community
shopping centers in the Sunbelt region of the United States. The Company focuses
on purchasing properties anchored primarily by supermarkets, drug stores and
major retail tenants located in this region.
United Investors Realty Trust owned 19 community and neighborhood shopping
centers at September 30, 1998. Of the Company's properties, 12 are located in
Texas (including seven in Houston). The remaining properties are located in
Arizona (three), Florida (two), and Tennessee (two). The Company has
approximately 350 leases and 315 different tenants. Leases for the Company's
properties range from less than a year for smaller spaces to over 25 years for
larger tenants. Leases generally provide for minimum lease payments plus
payments for the tenants' portion of taxes, insurance, and common area
maintenance expenses; some leases also provide for contingent payments based on
a tenant's sales volume. Most of the Company's properties are anchored by
grocery stores, drug stores, or other national or regional credit tenants.
RESULTS OF OPERATIONS
QUARTER ENDED SEPTEMBER 30, 1998
Net income was $1,252,000 or $.013 per share for the third quarter of 1998, up
from $23,000, or $.02 per share, for the same quarter of 1997. The increase in
net income from 1997 to 1998 is due primarily to the Company's acquisitions
since December 31, 1997.
Rental revenues were $4,954,000 for the third quarter of 1998, as compared to
$1,541,000 for the third quarter of 1997. This increase relates almost totally
to acquisitions.
Interest expense increased by $412,000 from $607,000 in 1997 to $1,019,000 in
1998. This increase was due mainly to the increase in the average debt
outstanding between periods, from $25,000,000 for 1997 to $44,500,000 for 1998.
The increase in debt outstanding is primarily a result of expenditures for
acquisitions since December 31, 1997. The increases in depreciation and
amortization, operating expenses, and property taxes were primarily the result
of the Company's acquisitions.
NINE MONTHS ENDED SEPTEMBER 30, 1998
Net income was $464,000 or $0.10 per share in 1998, compared to net income in
1997 of $108,000, or $0.12 per share. Included in net income for 1998 is
$2,241,000 in non-recurring amortization of bridge financing costs and $232,000
of extraordinary charges, or an aggregate $0.35 per share in non-recurring and
extraordinary expenses. Earnings in 1998 before such charges were $2,936,709 or
$0.41 per share. There were no non-recurring or extraordinary charges in 1997.
The increase in earnings before non-recurring and extraordinary charges is
primarily a result of operating income generated by properties acquired since
December 31, 1997.
Rental revenues increased 156% to $11,873,000 in 1998, compared with $4,599,000
for the same period of the prior year. This increase relates almost totally to
acquisitions since December 31, 1997.
Interest expense, before non-recurring amortization of bridge financing costs,
increased by $943,000 from $1,826,000 in 1997 to $2,769,000 in 1998. Weighted
average debt outstanding increased from $25,000,000 for 1997 to $40,000,000 for
1998. The increase in weighted average debt outstanding is primarily a result of
expenditures for acquisitions, including the amounts borrowed and repaid under
the bridge financing arrangement.
The increases in depreciation and amortization, operating expenses and property
taxes were primarily the result of the Company's acquisitions since December 31,
1997.
Liquidity and Capital Resources
The Company acquired four shopping centers for approximately $35,000,000 and
refinanced approximately $16,000,000 in mortgage debt in February 1998 with the
proceeds of a $53,700,000 bridge financing arrangement. In March and April 1998,
the Company sold 8,600,000 Common Shares through the IPO and raised
approximately $79,000,000 net of offering costs. Such proceeds were used to
repay the bridge financing, acquire partnership units from minority interest
holders, retire preferred shares and convertible debt, and acquire five
additional properties for approximately $45,000,000 (including $32,000,000 in
assumed debt). At September 30, 1998, cash and cash equivalents of approximately
$7,106,000 were comprised of remaining IPO proceeds and cash flow from
operations for the nine months then ended.
Cash flows provided by operations for the nine months ended September 30, 1998
were $4,343,000 versus $867,000 for the year earlier period. Substantially all
of the year to year difference is the result of operating income from properties
acquired since December 31, 1997 and the effect of changes in the amounts of and
interest rates on mortgage debt as a result of the refinancing (described below)
and the assumption of debt in connection with the acquisitions.
The 11 properties acquired since December 31, 1997 comprise approximately
1,206,000 square feet of GLA, and were acquired subject to approximately
$40,000,000 in mortgage debt. In addition, one of the properties was acquired by
a limited partnership in which the Company is the sole general and a majority
limited partner; the limited partnership issued limited partnership units to the
sellers of the property in consideration of the sellers contributing the
property to the partnership. Such limited partnership units were valued at
approximately $2,386,000, and are convertible to 238,600 Common Shares after one
year.
In connection with its intention to continue to qualify as a REIT for Federal
income tax purposes, the Company expects to continue paying regular dividends to
its shareholders. These distributions will be paid from operating cash flows
that are expected to increase due to property acquisitions and growth in rental
revenues in the existing portfolio and from other sources. Since cash used to
pay distributions reduces amounts available for capital investment, the Company
generally intends to maintain a conservative distributions payout ratio,
reserving such amounts as it considers necessary for the expansion and
renovation of shopping centers in its portfolio, debt reduction, and the
acquisition of interests in new properties as suitable opportunities arise.
It is management's intention that the Company continually have access to the
capital resources necessary to expand and develop its business. Accordingly, the
Company may seek to obtain funds through additional equity offerings or debt
financing in a manner consistent with its intention to operate with a
conservative debt capitalization policy. The Company anticipates that adequate
cash will be available from operations to fund its operating and administrative
expenses, regular debt service obligations and the payment of distributions in
accordance with REIT requirements in both the short-term and long-term.
During the third quarter of 1998, the Company's Board of Directors approved a
plan to repurchase 75,000 shares of the Company's common shares of beneficial
interest. As of September 30, 1998 the Company had repurchased 10,000 shares at
the market price on the date of repurchase. Subsequent to the end of the quarter
the Company has repurchased an additional 18,000 shares.
The Company executed a revolving line of credit agreement during the third
quarter of 1998. The line of credit, which initially will be collateralized by
five existing Texas properties, will provide for borrowings of up to $30,000,000
at approximately 150 basis points over a London Interbank Offered Rate.
The Year 2000 Issue
Many computer systems were designed and programmed in such a manner as to be
unable to recognize dates beyond December 31, 1999. In such cases, computer
applications could fail or create erroneous results by or at the year 2000 (the
"Year 2000 Issue").
Management has completed its evaluation of the risks of a material effect on the
Company's results of operations and financial condition with respect to its
management information systems and the Year 2000 Issue. The Company uses
application software, including its accounting and property management software,
which has been certified by vendors as being Year 2000-compliant. Accordingly,
management does not believe that the Company's results of operations or
financial condition will be materially affected by any future costs to make its
management information systems Year 2000-compliant.
In addition to management information systems, the Company's Year 2000 risks
include those related to "embedded technology," such as micro-controllers, and
to the Year 2000 Issues of third parties with which the Company has material
relationships. The Company has recently begun the initial phase of assessing
these risks.
With respect to embedded technology, this phase includes surveying each of the
Company's properties to determine which systems may be subject to disruptions.
These systems may include climate control, lighting, security, and
telecommunications. Management will also survey its major vendors, service
providers, and tenants to assess their Year 2000 readiness, and the potential
effects, if any, their Year 2000 Issues may have on the Company. Subsequent to
completion of these surveys, which is expected in the fourth quarter of 1998,
management will develop plans to minimize the risk of any adverse effect of the
Year 2000 Issue.
Management is not presently aware of any Year 2000 Issues related to embedded
technology or third parties that may adversely affect the Company. Based on the
relatively small number of properties and a low level of reliance on technology
for property operations, management does not expect that the results of the
surveys will indicate a need for material future expenditures. Management
expects to complete the development of any necessary action plans, including
cost estimates, in the fourth quarter of 1998.
Funds From Operations
The Company considers funds from operations to be an alternate measure of the
performance of an equity REIT since such measure does not recognize depreciation
and amortization of real estate assets as operating expenses. Management
believes that reductions for these charges are not meaningful in evaluating
income-producing real estate, which historically has not depreciated. The
National Association of Real Estate Investment Trusts defines funds from
operations as net income plus depreciation and amortization of real estate
assets, less gains and losses on sales of properties. Funds from operations does
not represent cash flows from operations as defined by generally accepted
accounting principles and should not be considered as an alternative to net
income as an indicator of the Company's operating performance or to cash flows
as a measure of liquidity. Funds from operations increased to $2,205,000 for the
third quarter of 1998, as compared to $284,000 for the same period of 1997. For
the nine months ended September 30, 1997, funds from operations totaled
$5,023,000, up $4,179,000 from the same period of the prior year. This increase
relates almost totally to the impact of the Company's acquisitions since
December 31,1997. <PAGE> <TABLE> <CAPTION>
United Investors Realty Trust
Calculation of Funds From Operations
and Funds Available for Distribution
Three Months Ended Nine Months Ended
30-Sept-98 30-Sept-97 30-Sept-98 30-Sept-97
--------------------------------------------------------------------
Funds from operations:
<S> <C> <C> <C> <C>
Net income $ 1,252,092 $ 23,125 $ 463,525 $ 107,850
Plus depreciation expense 808,468 260,883 1,922,346 736,854
Plus write-off of costs associated with
unsuccessful acquisition 115,000 -- 115,000 --
Plus loss on early extinguishment of debt -- -- 232,532 --
Plus write-off of unamortized bridge
financing costs -- -- 2,240,652 --
Plus minority interest
(Town 'N Country) 29,280 -- 49,280 --
--------- ------- --------- -------
Funds from operations $ 2,204,840 $ 284,008 $ 5,023,335 $ 844,704
========= ======= ========= =======
Funds from operations per share and downReit
unit $ 0.23 $ 0.31 $ 0.70 $ 0.93
========= ======= ========= =======
Funds available for distribution:
Funds from operations $ 2,204,840 $ 284,008 $ 5,023,335 $ 844,704
Plus amortization of financing costs and
leasing costs 45,014 18,341 91,258 47,394
Less tenant improvements (60,379) (138,820) (124,366) (306,286)
Less leasing commissions (43,581) (27,163) (71,320) (95,853)
Less capital improvements (49,440) -- (67,470) --
Less straight line rents (42,472) (44,933) (176,823) (68,581)
Other 57,352 -- 91,915 --
----------- ----------- ----------- -----------
Funds available for distribution $ 2,111,334 $ 91,433 $ 4,766,529 $ 421,378
========= ======= ========= ===========
Funds available for distribution per share
and downReit unit $ 0.22 $ 0.10 $ 0.66 $ 0.46
========= ======= ========= ===========
Basic and diluted weighted average number of
shares and downReit partnership units 9,752,233 912,489 7,223,355 912,489
</TABLE>
PART II - Other Information
Item 1 - Legal Proceedings - None
Item 2 - Changes in Securities
On March 13, 1998, the Company completed its IPO of 7,600,000 of the
Company's Common Shares at a price of $10.00 per share. Net proceeds from the
offering, after deducting the related issuance costs, amounted to approximately
$69.3 million. On March 18, 1998, the Company repurchased all outstanding
preferred shares at a 3% premium, plus accrued dividends. The total repurchase
cost was $1.138 million. The following information is furnished pursuant to Item
701 (f) of Regulation S-K in connection with the Company's IPO:
The effective date of the Securities Act registration: March 6, 1998.
The commission file number assigned to the subject registration statement:
333-29475.
The date on which the offering commenced: February 17, 1998
The date on which the offering terminated: March 10, 1998
The name of the underwriters: Morgan Keegan & Company, Inc., Dain, Rauscher
Incorporated, Scott & Stringfellow, Inc. and Southwest Securities, Inc.
The title of the securities registered: Common shares of beneficial
interest, no par value.
The number of shares registered: 8,740,000 shares (including 1,140,000
shares subject to the underwriters' overallotment option).
Aggregate price of the offering amount registered: $87,400,000.
The number of shares sold: 7,600,000. (in addition, 1,000,000 shares
subject to the underwriters' overallotment option were sold in April 1998 and
the offering terminated prior to the sale of the remaining 140,000 shares which
were subject to the overallotment option.)
Aggregate offering price of the securities sold: $76,000,000 (upon the sale
of the underwriters' overallotment option in April 1998, an additional
$10,000,000 of securities were sold.)
From the effective date of the Securities Act registration statement to the
ending date of the current reporting period, the amount of expenses incurred for
the Company's account in connection with the issuance and distribution of the
securities registered:
Underwriters' discounts and commissions $ 5,320,000
Accounting fees 446,453
Attorney's fees 230,815
Printing expenses 291,646
Miscellaneous filing fees and other expenses 387,191
-----------
$ 6,676,105
Such payments referred to above were not direct or indirect payments to
officers, directors, trust managers or general partners of the issuer or the
associates or affiliates of the issuer or any person owning 10% or more of any
class of equity securities of the issuer, nor were such payments referred to
above direct or indirect payments to others, except as indicated.
Net offering proceeds excluding the overallotment were: $69,323,895
Net offering proceeds including the overallotment were: $78,819,001
<PAGE>
From the effective date of the Securities Act registration to the end of
the current reporting period, the amount of net offering proceeds used for any
purpose for which at least 5% of the issuer's total offering proceeds has been
used, were:
Repay Bridge loan $53,683,912
Break-up fee on bridge loan 939,468
Cash portion of University Mall (1) 4,891,837
Cash portion of Benchmark Crossing 1,979,876
Cash portion of Rosemeade 1,118,383
Cash portion of Town 'N Country 203,489
Cash portion of Big Curve 2,884,871
Cash portion of Colony Plaza 872,241
Cash portion of Highland Square 3,209,287
Purchase of University Park minority interests (2) 891,800
Purchase preferred share 1,138,210
Repay 10% and 11% short-term notes 700,000
Repay unsecured lines-of-credit 300,000
Repay 9% Redeemable Convertible Subordinated Notes 218,004
Fee to Southwest Securities, Inc. 184,000
Working Capital 190,045
-----------
$73,405,423
(1) Of this amount, $1,400,000 was applied to the repayment of a loan from
First Commonwealth Mortgage Trust ("FCMT"), a mortgage trust that is also
externally advised by FCA Corp, the Company's advisor. The loan had been used to
facilitate the acquisition of the University Mall shopping center.
(2) The Company acquired all but 3.6% of the outstanding limited partner
interests and now holds an undivided 96.4% interest in the partnership that
holds title to the University Park shopping center.
Except as described in the following sentence, such payments referred to above
were not direct or indirect payments to officers, directors, trust managers or
general partners of the issuer or the associates or affiliates of the issuer or
any person owning 1 0% or more of any class of equity securities of the issuer,
nor were such payments referred to above direct or indirect payments to others,
except as indicated. Three of the Company's trust managers own interests (each
less than 1%) in FCMT, to which the Company made the $1,400,000 loan repayment
referred to in footnote 1 above.
Certain statements in this document constitute "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933 and section 21E
of the Securities Acts of 1934, and the Company intends that such
"forward-looking statements" be subject to the safe harbors created thereby. The
words "believe", "expect" and "anticipate" and similar expressions identify
forward-looking statements. These forward-looking statements reflect the
Company's current views with respect to future events and financial performance,
but are subject to many uncertainties and factors relating to the Company's
operations and business environment that may cause the actual results of the
Company to be materially different from any future results expressed or implied
by such forward-looking statements. Examples of such uncertainties include, but
are not limited to, changes in interest rates, increased competition for
acquisition of new properties, unanticipated expenses and delays in acquiring
properties or increasing occupancy rates and regional economic and business
conditions.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not Applicable.
Item 4. Submisson of Matters to a Vote of Security Holders-None
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
INDEX TO EXHIBITS
10.1 Contract of Sale dated October 15, 1997 by and between the Company,
Town N' Country Plaza of Tampa, Ltd. and trustee,James H. Shimberg on
behalf of land owner (incorporated by reference to Exhibit 10.30 to
Company's Quarterly Report on Form 10-Q dated August 14, 1998)
10.2 Promissory Note Dated December 16, 1997 between South Trust Bank,
National Association and Town 'N Country Plaza of Tampa, Ltd.
(incorporated by reference to Exhibit 10.31 to Company's Quarterly
Report on Form 10-Q dated August 14, 1998)
10.3 Amended and Restated Partnership Agreement dated May 15, 1998 of UIRT
Town 'N Country, L.P.(incorporated by reference to Exhibit 10.32 to
Company's Quarterly Report on Form 10-Q dated August 14, 1998)
10.4 Contract of Sale dated March 23, 1998, by and between the Company and
Dermot Big Curve, LLC (incorporated by reference to Exhibit 10.28 to
the Company's Current Report on Form 8-K dated June 11, 1998)
10.5 Promissory Note dated as of September 20, 1996 made by Dermot Big
Curve, LLC to Liberty Mortgage Acceptance Corporation, as beneficiary
in the principal amount of $6,072,000 (incorporated by reference to
Exhibit 10.29 to the Company's Current Report on Form 8-K dated June
11, 1998)
10.6 Contract of Sale dated June 4, 1998, by and between the Company and
Highland Square Partners Ltd. (incorporated by reference to Exhibit
10.35 to the Company's Current Report on Form 8-K dated October 7,
1998)
10.7 Promissory note dated as of November 26, 1996 made by Highland Square
Partners, Ltd. to Belgravia Capital Corporation, as beneficiary in the
principal amount of $4,525,000. (incorporated by reference to Exhibit
10.36 to the Company's Current Report on Form 8-K dated October 7,
1998)
**10.8 Contract of Sale dated April 17, 1998 by and between the Company and
Veriquest Colony Plaza One 1997.
**10.9 Promissory note dated November 26, 1997 made by Veriquest Colony Plaza
One 1997 to Holliday Fenoglio, L.P., as beneficiary in the principal
amount of $3,200,000.
**10.10 Revolving Credit Agreement dated August 25, 1998 made by and among
the Company and Wells Fargo Bank, National Association.
27.1 Financial Data Schedule (filed herewith)
(b) Reports on 8-K
The Company's Current Report on Form 8-K dated July 31, 1998 and
filed on August 4, 1998 for the purpose of reporting the
acquisition of the Colony Plaza Shopping Center.
The Company's Current Report on Form 8-K/A for the purpose of
providing financial statements and pro forma financial information
with respect to the acquisition of the Colony Plaza Shopping
Center.
The Company's Current Report on Form 8-K dated October 7, 1998 for
the purpose of reporting the acquisition of the Highland Square
Shopping Center.
** Filed as an exhibit hereto.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNITED INVESTORS REALTY TRUST
Dated: November 10, 1998 /s/ R. Steven Hamner
----------------------------
R. Steven Hamner,
Vice President,Chief Financial Officer
INDEX TO EXHIBITS
10.1 Contract of Sale dated October 15, 1997 by and between the Company,
Town N' Country Plaza of Tampa, Ltd. and trustee,James H. Shimberg on
behalf of land owner (incorporated by reference to Exhibit 10.30 to
Company's Quarterly Report on Form 10-Q dated August 14, 1998)
10.2 Promissory Note Dated December 16, 1997 between South Trust Bank,
National Association and Town 'N Country Plaza of Tampa, Ltd.
(incorporated by reference to Exhibit 10.31 to Company's Quarterly
Report on Form 10-Q dated August 14, 1998)
10.3 Amended and Restated Partnership Agreement dated May 15, 1998 of UIRT -
Town 'N Country, L.P. (incorporated by reference to Exhibit 10.32 to
Company's Quarterly Report on Form 10-Q dated August 14, 1998)
10.4 Contract of Sale dated March 23, 1998, by and between the Company and
Dermot Big Curve, LLC (incorporated by reference to Exhibit 10.28 to
the Company's Current Report on Form 8-K dated June 11, 1998)
10.5 Promissory Note dated as of September 20, 1996 made by Dermot Big
Curve, LLC to Liberty Mortgage Acceptance Corporation, as beneficiary
in the principal amount of $6,072,000 (incorporated by reference to
Exhibit 10.29 to the Company's Current Report on Form 8-K dated June
11, 1998)
10.6 Contract of Sale dated June 4, 1998, by and between the Company and
Highland Square Partners Ltd. (incorporated by reference to Exhibit
10.35 to the Company's Current Report on Form 8-K dated October 7,
1998)
10.7 Promissory note dated as of November 26, 1996 made by Highland Square
Partners, Ltd. to Belgravia Capital Corporation, as beneficiary in the
principal amount of $4,525,000. (incorporated by reference to Exhibit
10.36 to the Company's Current Report on Form 8-K dated October 7,
1998)
**10.8 Contract of Sale dated April 17, 1998 by and between the Company and
Veriquest Colony Plaza One 1997.
**10.9 Promissory note dated November 26, 1997 made by Veriquest Colony Plaza
One 1997 to Holliday Fenoglio, L.P., as beneficiary in the principal
amount of $3,200,000.
**10.10 Revolving Credit Agreement dated August 25, 1998 made by and among
the Company and Wells Fargo Bank, National Association.
27.1 Financial Data Schedule (filed herewith)
** Filed as an exhibit hereto.
<PAGE>
CONTRACT OF SALE
between
VERIQUEST COLONY PLAZA ONE 1997
SELLER
AND
UNITED INVESTORS REALTY TRUST
BUYER
pertaining to the sale and purchase of
Colony Plaza Shopping Center
Missouri City, Texas
<PAGE>
CONTRACT OF SALE
This Contract of Sale (the "Contract") is made and entered into by and
between VERIQUEST-COLONY PLAZA ONE 1997, a Texas joint venture having its
principal office at 7676 Woodway, Suite 280, Houston, Texas 77067 ("Seller"),
and UNITED INVESTORS REALTY TRUST, a Texas real estate investment trust having
its principal office at 5847 San Felipe, Suite 850, Houston, Texas 77057
("Buyer").
ARTICLE I
DEFINED TERMS
1.1 Definitions. As used herein, the following terms shall have the
meanings set forth below:
"Business Day" means any day other than a Saturday or Sunday on which
Federal Savings Banks in Houston, Texas are open for business.
"Closing" means consummation of the purchase of the Project by Buyer
from Seller in accordance with the terms and conditions of Article VIII.
"Closing Date" means the date specified in Section 8.1 on which the
closing will be held.
"Contract Date" means the later of the two dates set forth immediately
above each of the signatures of the parties hereto, on the signature page
hereof.
"Delivery Date" means the date on which the last to be received of the
(1) Title Commitment in accordance with paragraph 4.1 herein; (2) the Existing
Survey in accordance with paragraph 4.2 herein; and (3) the Ownership Documents
required by paragraph 5.2(a) herein, are received by Buyer.
"Earnest Money Deposit" means the moneys deposited by Buyer in escrow
with the Title Company at the time and in the amount specified in Section 3.2.
,
"Improvements" means the neighborhood shopping center (the "Shopping
Center") known as Colony Plaza Shopping Center, containing approximately 26,513
square feet of improved retail space, located in Missouri City, Texas, the
fixtures and other improvements now or hereafter situated upon the tract of land
described on Exhibit "A".
"Inspection Period" means the period commencing on the Delivery Date
and ending 15 days thereafter.
"Land" means that certain tract of land located in Fort Bend County,
Texas, and being more fully described on Exhibit "A", together with all rights
appurtenant thereto.
"Leases" means all currently effective leases for space in the
Improvements, including all amendments and modifications thereto and any and all
other agreements with Tenants.
<PAGE>
"Permitted Exceptions" means those exceptions or conditions that affect
or may affect title to the Project that are approved or deemed to be approved by
Buyer in accordance with Section 4.3 or Section 4.4.
"Personal Property" means (a) all tangible personal property owned by
Seller and located on, attached to, or used in connection with, the operation of
the Real Property (but not including any tangible personal property owned or
leased by Tenants), (b) Seller's interest in all personal property leases,
licenses, permits, plans, studies, and utility arrangements with respect to the
Real Property, (c) Seller's interest in all service, maintenance, management or
other contracts relating to the ownership or operation of the Real Property, and
(d) Seller's interest in all warranties and guaranties, if any, relating to the
Real Property.
"Project" means, collectively, the Real Property, the Leases, and the
Personal Property for the Shopping Center.
"Purchase Price" means the total consideration to be paid by Buyer to
Seller for the purchase of the Project.
"Real Property" means the Land and the Improvements for the Shopping
Center.
"Rent Roll" means a schedule for the Project identifying the Tenants at
the Project and providing certain information with respect to the Leases in
accordance with Section 5.2 (a)(iii).
"Tenants" means those persons holding rights as tenants of the
Shopping Center.
"Title Company" means Safeco Land Title Company, having its
principal office at 8080 North Central Expressway, Suite 500,
Dallas, Texas 75206, Attention: Maggie Fielding, Executive Vice President and
Escrow Officer.
"Title Underwriter" means Lawyer's Title Insurance Corporation.
"Trade Name" means the name "Colony Plaza Shopping Center", as well as
any other name utilized in conjunction with the operation of the Project.
1.2 Other Defined Terms. Certain other defined terms shall have the
respective meanings assigned to them elsewhere in this Contract.
ARTICLE II
AGREEMENT OF PURCHASE AND SALE
On the terms and conditions stated in this Contract, Seller hereby
agrees to sell and convey to Buyer, and Buyer hereby agrees to purchase and
acquire from Seller, the Project.
ARTICLE III
PURCHASE PRICE
<PAGE>
3.1 Purchase Price. The Purchase Price (herein so called) to be paid by
Buyer to Seller equals Four Million Two Hundred Thousand and No/100 Dollars
($4,200,000.00). The Purchase Price, net of all prorations set forth in this
Contract, shall be payable to Seller through the Title Company at the Closing as
follows:
(a) The agreement of Buyer to assume (except for the matters described
in Section 5.3 hereof), the then current balance of that certain first lien
promissory note (the "Existing Note") as of the Closing Date, which is described
below, which note is secured by the following described existing first lien
created by that certain deed of trust (the "Existing Lien") of even date
therewith, to-wit:
Promissory Note in the original principal sum of $3,200,000.00,
executed by VeriQuest-Colony Plaza One 1997, a Texas joint venture,
made payable to the order of Holliday Fenoglio, L.P. (the "Lender"),
dated as of November 26, 1997, secured by a deed of trust to William
Campbell, Trustee, also dated as of November 26, 1997, against the
Project, such deed of trust having been recorded in the Deed of Trust
Records of Fort Bend County, Texas.
Seller represents that the unpaid principal balance of the Existing Note equals
approximately $3,200,000.00 as of the Closing Date.
(b) The difference between the Purchase Price and the aggregate unpaid
principal balance of the Existing Note as of the Closing Date shall be paid in
cash to Seller at the Closing, subject to prorations and other credits provided
for in this Contract. The cash portion of the Purchase Price, net of all
prorations set forth in this Contract, shall be payable to Seller through the
Title Company at the Closing in cash or in good federal funds.
3.2 Earnest Money Deposit. Within three (3) business days after the
Contract Date, Buyer shall deliver the sum of One Hundred Thousand and No/100
Dollars ($100,000.00) as an earnest money deposit (the "Earnest Money Deposit")
in cash to the Title Company. The Earnest Money Deposit shall thereafter be held
by the Title Company in escrow to be applied or disposed of by it as is provided
in this Contract. The Earnest Money Deposit shall be invested in short-term
commercial paper having a maturity of thirty (30) days or less and rated P-1 by
Moody's Investor Service, Inc. or A-1 by Standard & Poor's Corp., or in some
other interest-bearing investment acceptable to the Buyer. All interest earned
thereon shall become part of the Earnest Money Deposit. If the purchase and sale
hereunder are consummated in accordance with the terms and conditions hereof,
the Earnest Money Deposit shall be applied to the Purchase Price at the Closing.
In all other events, the Earnest Money Deposit shall be disposed of by the Title
Company as provided elsewhere in this Contract.
ARTICLE IV
TITLE AND SURVEY AND INSPECTION
4.1 Title Commitment. Within three (3) days after the Contract Date,
Seller agrees to order, at the sole cost and expense of Buyer, a current
commitment for Title Insurance for the Project (the "Title Commitment")
countersigned by the Title Company, as agent for the Title Underwriter, which
Title Commitment shall be furnished to Buyer. The Title Commitment shall contain
the express commitment of the Title Company to issue a Texas Form T-1 Owner's
Policy of Title Insurance to the extent permitted by Texas law for the Project,
which shall otherwise be in form and content consistent with Section 4.5 below.
The Title Commitment shall be accompanied by legible copies of all instruments
that create or evidence title exceptions affecting the Real Property.
<PAGE>
4.2 Survey. Within three (3) days after the Contract Date, Seller
agrees to furnish to Buyer a copy of the boundary and improvement survey for the
Project, dated November 19, 1997, in its possession prepared by Gary Boles of
Clark Surveyors (the "Existing Survey"). Buyer has the right to obtain, at
Buyer's sole cost and expense, an update of the Existing Survey to a date
subsequent to the Contract Date as certified to Buyer and the Title Company (the
"Survey"). The Survey certification shall be in such form as Buyer may require.
The metes and bounds description of the Land contained in the Survey, if
different from that attached as Exhibit "A" hereto, shall be used for purposes
of describing the Real Property in the Special Warranty Deed conveying title to
the Real Property from Seller to Buyer.
4.3 Review of Title Commitment and Survey. Buyer shall have a period of
fifteen (15) days (the "Title Review Period") after delivery to Buyer of both
the Title Commitment and the Existing Survey in accordance with paragraphs 4.1
and 4.2 above in which to review the Title Commitment and the Survey and give
written notice to Seller specifying Buyer's objections (the "Objections"), if
any, to the Title Commitment and the Survey. If Buyer shall fail to give written
notice of Objections to Seller prior to the expiration of the Title Review
Period, then all exceptions to title shown on Schedules B and C of the Title
Commitment shall be deemed to be Permitted Exceptions.
4.4 Seller's Obligation to Cure; Buyer's Right to Terminate. If Buyer
shall have timely notified Seller in writing of Objections to the Title
Commitments or the Survey, then Seller may, but shall not be obligated to, at
any time prior to the expiration of the Inspection Period (the "Cure Period"),
give written notice ("Seller's Title Cure Notice") to Buyer of Seller's
intention to satisfy the Objections prior to the Closing Date. If Seller fails
to timely give Buyer the Seller's Title Cure Notice, then Buyer shall have the
option, prior to Closing, to either (i) waive the unsatisfied Objections, in
which event those unsatisfied Objections shall become Permitted Exceptions, or
(ii) terminate this Contract, in which event the Earnest Money Deposit shall be
returned to Buyer and Seller and Buyer shall have no further obligations, one to
the other, with respect to the subject matter of this Contract.
4.5 Title Policy. At the Closing, Seller shall cause, provided that
Buyer pays the cost thereof, a standard T-1 form Owner's Policy of Title
Insurance (the "Owner's Title Policy") to be furnished to Buyer by the Title
Company. The Owner's Title Policy shall be issued by the Title Underwriter and
shall insure that Buyer has good and indefeasible fee simple title to the
Project, subject only to the Permitted Exceptions. The Owner's Title Policy
shall contain no exceptions other than (i) rights of tenants in possession, as
tenants only, (ii) visible and apparent easements, as shown on the Survey, and
(iii) Permitted Exceptions. At Buyer's option and cost, the "survey exception"
in the Owner's Title Policy shall be modified to read "shortages in area only".
The tax exception shall be limited to taxes for the year of Closing and
subsequent years not yet due and payable and subsequent assessments for prior
years due to change in land usage or ownership.
4.6 Inspection.
<PAGE>
(a) Buyer shall have the right, during the Inspection Period, to make
such examinations, studies, tenant credit checks, appraisals, inspections,
engineering, environmental and insurance underwriting tests and investigations
(the "Inspections") of the Project as Buyer may deem advisable. Such Inspections
shall include, without limitation, review of current operating statements,
operating statements for the year 1997 and year-to-date 1998, current rent roll,
true copies of the latest real estate tax bills, true and complete copies of all
service contracts affecting the Project, and any and all other contracts and
agreements relating to the Project. Seller shall cooperate with Buyer in making
available the Project for Buyer's Inspections, including any and all books and
records relating thereto. Buyer may also reinspect the Project prior to Closing
to verify that the Project has remained in the same physical shape, ordinary
wear and tear excepted, as the Project was during the Inspection Period.
(b) If Buyer elects for this Contract to remain in full force and
effect beyond the Inspection Period, then Buyer, at its sole option, shall
deliver written notice (the "Notice to Continue") thereof to Seller and Title
Company, on or before the expiration of the Inspection Period. Once the Notice
to Continue has been given, the Earnest Money Deposit shall become at risk. If,
however, Buyer does not timely deliver the Notice to Continue prior to the
expiration of the Inspection Period, or if Buyer notifies Seller and Title
Company that Buyer has no further interest in purchasing the Project, then, in
either event, the Earnest Money Deposit shall be returned to Buyer, and
thereafter Seller and Buyer shall have no further obligations, one to the other,
with respect to the subject matter of this Contract. Failure to deliver the
notice to the Seller herein prior to the expiration of the inspection period
shall be deemed to be Buyer's election to terminate the contract.
(c) Buyer shall indemnify and hold harmless the Seller from and against
all loss, liability, damage, injury and claims resulting from Buyer's testing or
inspection of the Project; provided, however, this indemnity shall not include,
and shall specifically exclude, any loss, liability, damage etc. arising out of
or resulting from Seller's negligence, gross negligence or willful misconduct
and the discovery of any condition that may require remediation under applicable
environmental laws. This indemnity shall survive the Closing or termination of
this Contract for a period of six months, after which this indemnity shall
automatically terminate.
4.7 Additional Delivery Requirements. Buyer has advised Seller that it
is a "reporting" company under the Securities Exchange Act of 1934, and by
reason thereof, Buyer is required to conduct an audit of the Project in
conformity with the rules and regulations promulgated by the Securities and
Exchange Commission. To this end, Seller agrees to cooperate with Buyer to grant
access to Buyer's auditors and authorized representatives in order to permit
them to conduct an audit of the books and records of the Project and to furnish
to Buyer and its authorized agents financial statements, rent rolls and federal
income tax returns associated with the Project for the last three fiscal years,
or since its completion date, if less than three years. Upon completion of the
audit, Seller also agrees to sign a representation letter to Buyer that, to
Seller's best information, all information furnished to Buyer in this regard is
true and complete in all material respects.
ARTICLE V
REPRESENTATIONS, WARRANTIES, COVENANTS,
AND AGREEMENTS OF SELLER
5.1 Representations and Warranties of Seller. Seller's representations
and warranties set forth in this Contract are true and correct in all material
respects as of the Contract Date and will be true and correct in all material
respects on the Closing Date. Such representations and warranties shall survive
for a period of six months after the Closing Date and shall not be merged
therein. Seller hereby represents and warrants to Buyer as follows:
(a) Seller has the full right, power, and authority to sell and convey
to Buyer the Project as provided in this Contract and to carry out Seller's
obligations hereunder, and all requisite action necessary to authorize Seller to
enter into this Contract and to carry out Seller's obligations hereunder has
been, or on the Closing Date will have been, taken;
<PAGE>
(b) There are no adverse or other parties in possession of the Project,
or of any part thereof as lessees, tenants at sufferance, or trespassers, except
Tenants referenced in the Rent Roll to be delivered pursuant to Section 5.2(a);
(c) Seller has not received written notice from any governmental or
quasi-governmental agency or insurance underwriter requiring or suggesting that
Seller should correct any condition with respect to the Project, which condition
remains uncorrected;
(d) Seller has not received written notice of any pending condemnation
action with respect to all or any portion of the Project and there are no
existing condemnation or other legal proceedings affecting the existing use of
the Project by any governmental authority having jurisdiction over or affecting
all or any part of the Project;
(e) There is no litigation pending or threatened, affecting the Project
other than as incurred in the normal course of business and with respect to
which Seller's insurance underwriter(s) is responsible or with respect to which
Seller shall indemnify and hold harmless Buyer from and after the Closing Date;
(f) There are no unpaid assessments (governmental or otherwise) for
sewers, water, paving, electrical power or otherwise affecting the Project
(matured or unmatured) and no such assessments are threatened;
(g) This Contract constitutes a valid and binding obligation of the
Seller, enforceable in accordance with its terms;
(h) The Seller has good and indefeasible title to the Project, free and
clear of any claim, lien, encumbrance, easement, restriction or other charge,
other than the Permitted Exceptions;
(i) The current use of the Project complies with all currently
applicable zoning ordinances and governmental requirements;
(j) Except as expressly referred to herein, there are no licenses or
security interest against the Land, the Improvements, or the Personal Property
or against any other portion of the Project, nor are there any liens or actions
pending which would result in the creation of any lien against the Land, the
Improvements or against any other portion of the Project, including, but not
limited to water, sewage, street paving, electrical or power improvements, which
give rise to any lien completed or in progress. At the Closing, there will be no
unpaid bills or claims in connection with any repair of the Improvements or
other work performed or material purchased in connection with the Improvements;
(k) The Service Contracts, Leases and other agreements delivered to
Buyer pursuant to this Contract constitute all contracts, leases or agreements
affecting the Project (and the ownership and use thereof); the Ownership
Documents delivered pursuant to Section 5.2 herein are true and correct copies
of the originals and no other amendments or modifications exist thereto; and no
defaults, or events which with notice and/or passage of time would constitute
default, exist thereunder; and each of the Service Contracts (as that term is
defined in Section 5.2(a)(vi)) pertaining to the Project is terminable without
cause prior to the Closing Date;
<PAGE>
(l) To Seller's best information, there are no circumstances existing
that would adversely affect the use or value of the Project as a shopping
center;
(m) No permission, approval or consent by any other person, including
any of partners, shareholders, directors or officers of any of the Seller, or
governmental authorities is required in order for Seller to consummate this
Contract, except the holder of the Existing Note;
(n) The existing water, sewer, gas and electricity lines, storm sewer
and other utility systems on the Land as of the date hereof are not impaired and
are sufficient to serve the Project for its current uses. All existing utilities
enter the Land through adjoining public streets or private land in accordance
with valid public or private easements that will inure to the benefit of Seller
and its successors and assigns. All of said utilities have been installed and
are operating, with all installation and connection charges paid in full;
(o) Based on currently applicable taxes, Seller has paid all taxes,
charges, and assessments (special or otherwise) required to be paid to any
taxing authority with respect to the Project (except for taxes and assessments
for the current year not yet due and payable); and no action or proceeding
currently exists by a governmental agency or authority for the assessment or
collection of currently applicable taxes, charges, or assessments with respect
to the Project;
(p) The executed Leases, which are to be delivered by Seller to Buyer
at Buyer's principal office in accordance with the terms of this Contract, are
and shall be true and correct copies, and no Tenants are or shall be entitled to
any rebates, allowances, rent concessions or free rent for any period subsequent
to the Closing. All obligations and items of an inducement nature to be
performed by the Seller as landlord under any of the Leases or to which Seller
otherwise agreed to perform have been fully performed and no commitments have
been made to any Tenant for repairs or improvements other than a general
landlord requirement for normal maintenance in the future. No Leases shall be
further modified or amended without the prior written consent of Buyer, which
consent shall not be unreasonably withheld. Except as reflected on the current
Rent Roll to be delivered to Buyer pursuant to the provisions of Section 5.2
below, no Tenant has given Seller notice of its intention to vacate its leased
premises prior to the end of the primary term (or any current renewal or
extended term). All of the Leases are in full force and effect without current
default by Seller or the respective Tenants. There are no pending claims
asserted by any past or present Tenants for offsets against rent or any other
claims (whether monetary or otherwise) made against Seller, as landlord, under
the Leases or otherwise. There are no fees or commissions payable to any person
or entity in regard to the Leases or the Project, except as specifically set out
in the Rent Roll;
(q) All financial and operating statements, rent rolls, contracts,
agreements and books and records delivered by Seller to Buyer relating to Seller
and its business are true and correct in all respects; and there are no
omissions of any material facts relating thereon;
(r) The Project is not in violation of any applicable laws, rules,
regulations, ordinances, contracts or agreements, including, without limitation,
any and all state, local, city or federal environmental laws, rules and
regulations, any restrictive use agreements, or reciprocal easement or other
similar agreements filed of record in Fort Bend County, Texas and applicable to
the Project;
<PAGE>
(s) Seller has full right, title and authority to enter into this
Contract, without the joinder or consent of any other party, and that no other
party has any right, option, interest, or claim to all or any part of the
Project, whether subject to earnest money contract, option agreement, right of
first refusal, reversionary or future interests, or right of reverter; and
(t) Seller is not a foreign person or entity pursuant to the Foreign
Investment in Real Property Tax Act or the Tax Reform Act of 1986, and Buyer is
not obligated to withhold any portion of the Purchase Price for the benefit of
the Internal Revenue Service.
5.2 Covenants and Agreements of Seller. Seller covenants and agrees
with Buyer as follows:
(a) Within five (5) business days following the Contract Date, Seller
shall deliver to Buyer the following items (the "Ownership Documents") with
respect to the Project:
(i) To the extent that Seller has in its possession, copies of
"as-built" plans and specifications for the Improvements and
copies of the results of all physical inspections, all
structural, mechanical, engineering reports, soil reports and
traffic studies that have been prepared with respect to the
Real Property, and a zoning verification letter from the
authorities of Missouri City, Texas with copies of all
applicable zoning ordinances then in effect which apply to the
Project;
(ii) Current certificates of occupancy in the name of the
Seller and building permits (if available) for each building
within the Project, and, to the extent that Seller has in its
possession, a current phase I environmental report and ADA
study;
(iii) Current Rent Roll for the Project, which Rent Roll shall
set forth with respect to each Tenant the following;
(A) the name and street or unit number of the
Tenant;
(B) the term of the Tenant's Lease, its commencement
and expiration dates, any renewal terms or extensions
and the base rent and percentage rent, if any,
payable thereunder;
(C) the amount of monthly base rent and percentage
rent, if any, payable by and portion of the Project's
CAM and real estate taxes and insurance premiums
recoverable from each Tenant and any other payments
for which such Tenant is liable;
(D) amount of prepaid rent and the amount of security
and other deposits due under the Lease and held by
Landlord;
(E) the amount of any ongoing Lease commission
obligations, if any, and to whom such commission is
owed and copies of all brokerage commission
agreements relating to the Leases;
(F) any uncured defaults and the amounts of any
unpaid rents, percentage rents, and other payments
past due thereunder;
(G) the amount of any offsets or credits
against rental, if any; and
<PAGE>
(H) any concessions granted to the Tenant, including,
without limitation, free rent, rental rebates or
credits, lease take-over arrangements, cash payments,
and moving allowances;
(iv) Copy of the most recent or current real estate and
personal property tax bills or other documentation showing the
amount of current real property taxes and the assessed value
of the Project;
(v) A schedule setting forth property and liability insurance
coverage on or affecting the Project and the current premiums
therefor together with a written summary of all claims made
against the Project's insurance policies since January 1,
1997.
(vi) Copies of all existing service, maintenance, operations,
and management and other contracts relating to the management,
operation or maintenance of the Project (the "Service
Contracts"), and any commission agreements affecting the
Project;
(vii) Copies of true and correct operating income and expense
statements with respect to the Project, accurately reflecting
the operating history of the Project for calendar year 1997
and for year-to-date 1998, together with operating budgets for
calendar years 1997 and 1998, if available, for the Project;
(viii) A detailed summary of all capital expenditures for the
calendar years 1997 and for year-to-date 1998, together with
the capital expenditure budgets for calendar years 1997 and
1998, if available, for the Project;
(ix) All warranties and guaranties currently in force, if any,
relating to the Project or any equipment, appliances or other
personalty located in or used on the Real Property and in the
possession of Seller or its agents;
(x) True and complete copies of all Leases, including all
amendments, extensions and modifications thereof; and
(xi) Such other information and/or documentation as Buyer
shall reasonably request, and which is in Seller's possession
or control; provided the delivery of such documents shall not
postpone the Delivery Date.
All materials delivered by Seller to Buyer pursuant to this Sections
4.6, 4.7 and Section 5.2(a) shall be held in confidence by Buyer and disclosed
only to its attorneys, accountants, and prospective lenders and securities
underwriters and their respective attorneys. If the parties fail to consummate
the transaction described herein for any reason other than the Seller's default,
Buyer shall return to Seller all materials delivered by or on behalf of Seller
pursuant to or in connection with this Contract.
(b) From the Contract Date until the Closing Date, Seller undertakes
and agrees, with respect to the Project, that it will:
(i) Operate and maintain the Project in a good and
workmanlike manner and in accordance with all applicable
laws;
<PAGE>
(ii) Promptly notify Buyer in writing of any litigation,
arbitration or administrative hearing before any court or
governmental agency concerning or affecting the Project which
is instituted or threatened after the Contract Date;
(iii) Following the expiration of the Inspection Period, not
terminate or modify any Lease or commence any judicial action
against any Tenant other than in the normal course of business
without the prior written consent of Buyer, which consent
shall not be unreasonably withheld;
(iv) Following the expiration of the Inspection Period, not
execute any new lease or agree to the terms of any lease
renewal without the prior written consent of the Buyer, which
consent shall not be unreasonably withheld;
(v) Promptly notify Buyer in writing of any notice received
from a Tenant of its election to vacate its leased premises or
terminate its Lease, or of any election by Seller to terminate
any Lease or commence any judicial action against any Tenant;
(vi) Not sell, exchange, transfer, assign, convey or encumber
or otherwise dispose of all or any part of the Project or any
interest therein, nor shall Seller remove any Personal
Property unless Seller shall replace the removed items with
similar items of comparable quality;
(vii) Maintain the Project in good condition and repair,
except for normal wear and tear, and Seller shall not in any
manner neglect the Project;
(viii) There will be no rental or other concessions of any
nature granted to any Tenant other than those set forth in the
Leases and on the Rent Roll delivered to Buyer pursuant to
Section 5.2 (a)(iii), above;
(ix) Promptly notify Buyer in writing if Seller discovers any
defect, error or omission in any of the Ownership Documents,
detailing the nature of the defect, error or omission;
(x) Not, without the prior written consent of the Buyer, enter
into or modify any Service Contracts which are not terminable
without cause on or before the Closing Date; or
(xi) Not, without the prior written consent of Buyer, consent
to any assignment or sublease or other encumbrance by a Tenant
of its interest, or any part thereof, in its Lease, except as
may be required by the terms of the Lease.
5.3 Agreements Concerning Existing Note.
(a) Notwithstanding anything to the contrary contained in this
Contract, the Existing Note, the Existing Lien, or in any other document or
agreement made or executed in connection herewith or therewith, it is agreed
that Buyer shall assume payment of the Existing Note and performance of the
agreements of the Existing Liens and any other instrument securing the payment
of the Existing Note which accrue or arise after the Closing Date.
<PAGE>
(b) At the Closing, Seller agrees to use its best efforts to obtain
from the holder of the Existing Note (the "Lender") a Lender's Consent and
Estoppel (herein so called) signed by the Lender, confirming that it has no
objection to the sale to Buyer of the Project, subject to the unpaid principal
balance of the Existing Note as of the Closing Date, provided that Buyer assumes
liability for the payment of the Existing Note and the other instruments
securing the Existing Note, which accrue or arise after the Closing Date.
Further, the Lender's Consent and Estoppel shall state as of the date not
earlier than the first day of the month in which this Contract is closed, the
following:
(i) The unpaid balance of principal and accrued interest
on the Existing Note;
(ii) That there are no past due payments either of principal
or interest owing on the Existing Note;
(iii) That to the current actual knowledge of the Lender
(without any investigation), there are no uncured defaults
under the Existing Lien or any other instrument securing the
Existing Note;
(iv) That the Existing Note, the Existing Lien and all other
instruments securing the Existing Note are, to the current
actual knowledge of Lender (without any investigation),
presently in full force and effect;
(v) The amount of any impounds held by the Lender for payment
of insurance premiums or ad valorem taxes or other expenses
related to the Project and the Existing Lien securing same;
and
(vi) The amount of each monthly payment and the amount of
monthly impounds.
Buyer agrees to provide Lender with all available information
reasonably needed to obtain the Lender's Consent and Estoppel from the Lender.
(c) Seller agrees to pay to Lender any transfer fee or other costs
charged by the Lender, in connection with its agreement to permit the transfer
of the Project to the Buyer and obtaining the Lender's Consent and Estoppel.
(d) Seller shall not, at any time, either prior to or after Closing,
alter, renew, rearrange, restructure or refinance any indebtedness evidenced by
the Existing Note or modify the Existing Note or any instrument securing the
Existing Note, without the prior written consent of Buyer; and Seller shall
neither accept nor request any extension, postponement, indulgence or
forgiveness of the Existing Note or the indebtedness evidenced thereby, without
the prior written consent of Buyer.
5.4 Survival Beyond Closing. The representations, warranties,
undertakings and agreements of Seller contained herein shall survive for a
period of six months after the Closing and shall not be merged therein.
<PAGE>
ARTICLE VI
REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS OF BUYER
Buyer represents, warrants, covenants, and agrees with, Seller
as of the Contract Date, that, except as otherwise hereinafter expressly
provided, Buyer has the full right, power, and authority to purchase the Project
from Seller as provided in this Contract and to carry out Buyer's obligations
under this Contract, and all requisite action necessary to authorize Buyer to
enter into this Contract and to carry out Buyer's obligations hereunder has
been, or on the Closing Date will have been, taken.
ARTICLE VII
CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE
7.1 Conditions Precedent to Buyer's Obligations. Buyer shall not be obligated
to consummate the transaction described in this Contract unless:
(a) Seller shall have furnished or caused to be furnished to Buyer all
of the items required to be furnished by Seller under Section 5.2(a);
(b) Seller shall have furnished or caused to be furnished to Buyer the
Lender's Consent and Estoppel described in Section 5.3;
(c) Seller shall have performed in all material respects all of the
agreements, covenants and obligations contained in this Contract to be performed
or complied with by Seller on or prior to the Closing Date;
(d) All representations and warranties made by Seller hereunder shall
be true, complete and accurate in all material respects as of the Closing Date;
(e) The Title Company shall be prepared to deliver at Closing the
Owner's Title Policy described in Section 4.5;
(f) UCC searches conducted by the Title Company within five (5) days
prior to the Closing Date shall show that none of the Personal Property has been
pledged, encumbered or transferred;
(g) Tenant Estoppel Certificates shall have been received by Buyer from
at least 80% of the tenants in number and gross revenues of the Project, which
Estoppel Certificates shall confirm the information set forth on the Rent Roll
delivered (A) as part of the Ownership Documents, as modified to reflect any
non-substantive changes thereto, or (B) with respect to Tenants who have
executed new leases since the Contract Date, as reflected on the Rent Roll to be
delivered in connection with the Closing;
(h) If the Project is subject to any reciprocal easement agreements,
agreement of covenants, conditions and restrictions or similar documents
pertaining to the Project and any adjoining properties, Buyer shall have
received an estoppel certificate from all parties to such instruments, which
estoppel certificate shall be dated not more than 30 days prior to the Closing
Date and shall state, inter alia, that there are no defaults by Seller or claims
against Seller arising out of such documents and shall otherwise be in form and
substance reasonably acceptable to Buyer;
<PAGE>
(i) There shall be no material change in the matters reflected in the
Title Commitment or Survey and all municipal and utility services shall be
available to the Project;
(j) No material changes shall have occurred or be threatened with
respect to the Project which would adversely affect the findings made during the
Inspection Period;
(k) The Improvements and Personal Property at the Project shall be in
the same condition as they were during the Inspection Period, ordinary wear and
tear excepted;
(l) There shall be no litigation pending or threatened that could
materially adversely affect the Project; and
(m) No Tenants (other than Einstein Bagels) occupying space under
Leases covering in the aggregate 6,000 square feet of space, have filed a
petition under any section of the Bankruptcy Code, as amended, or under any
similar law or statute of the United States or any State thereof; nor shall any
Tenants occupying space under Leases covering in the aggregate 6,000 square feet
of space have been adjudged bankrupt or insolvent and no receiver or trustee
shall have been appointed for any such Tenants or any of the assets of any such
Tenants; and any Tenants occupying space under Leases covering in the aggregate
6,000 square feet of space shall not "have gone dark" with respect to their
space at the Project or shall have notified Seller of their intention to do so.
7.2 Termination if Conditions Precedent not Satisfied or Waived. If any
of the conditions precedent to the performance of Seller's obligations under
this Contract have not been satisfied, waived, or deemed waived by the Buyer
within the time frame established herein or otherwise by the Closing Date, then
the Buyer may, at its option, by written notice delivered to the obligated party
and Title Company, terminate this Contract, in which event the Earnest Money
Deposit shall be returned to Buyer and thereafter Buyer and Seller shall have no
further obligations, one to the other, with respect to the subject matter of
this Contract.
ARTICLE VIII
CLOSING
8.1 Date and Place of Closing. Provided that all of the conditions of
this Contract shall have been satisfied prior to or on the Closing Date (herein
so called), the Closing (herein so called) of this transaction shall take place
at the offices of the Title Company in Dallas, Texas, thirty (30) days after the
expiration of the Inspection Period or the Title Review Period, whichever is
later, or such earlier date as may be specified by Buyer by not less than five
(5) days advance written notice to Seller.
8.2 Items to be Delivered at or Prior to the Closing
(a) Seller. At the Closing, Seller shall deliver or cause to be
delivered to Buyer or the Title Company, the following items fully executed and
acknowledged where so indicated by all necessary parties in respect to the
Project:
<PAGE>
(i) The Owner's Title Policy to Buyer, at Buyer's expense, in
the form specified in Section 4.5 (unless waived by Buyer in
accordance with the provisions of Section 4.5);
(ii) A Special Warranty Deed with Assumption, duly executed
and acknowledged by Seller, in the form of Exhibit "C",
subject only to the Permitted Exceptions;
(iii) The original Leases, or, if any original Leases are not
available, copies of any such Leases certified by Seller as
being true, correct and complete;
(iv) Duplicate originals of an assignment and assumption of
leases (the "Assignment of Leases") in the form attached
hereto as Exhibit "D", duly executed by Seller;
(v) A bill of sale and assignment in the form, attached hereto
as Exhibit "E", duly executed by Seller;
(vi) Duplicate originals of an assignment and assumption of
Service Contracts (the "Assignment of Service Contracts") in
the form or substantially the form, attached hereto as Exhibit
"F", duly executed by Seller;
(vii) An affidavit, in the form, or substantially in the form,
attached as Exhibit "G", in compliance with Section 1445 of
the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder, stating under penalty of
perjury the Seller's United States identification number and
that Seller is not a "foreign person" as that term is defined
in Section 1445, duly executed and acknowledged by Seller;
(viii) A notice of sale in the form, or substantially in the
form, attached hereto as Exhibit "H", (the "Tenant Notice
Letter") for each of the Tenants, duly executed by Seller and
Buyer;
(ix) A tenant estoppel letter in the form attached hereto as
Exhibit "I" from each Tenant at the Project, as prescribed in
Section 7.1(g), which estoppel letters shall be signed and
dated by each Tenant not more than 30 days prior to the
Closing Date;
(x) All keys or other access devices in the possession
of Seller or its agents to all locks located at the
Project;
(xi) Originals of all Service Contracts, plans, governmental
approvals, and other contracts and agreements in Seller's
possession relating to the ownership and operation of the
Project;
(xii) Originals, to the extent available, and, if not
available, true and correct copies of all books and records
pertaining to the operation of the Project for the calendar
year 1997 and for year-to-date 1998, in the possession of
Seller or Seller's agent;
(xiii) Appropriate evidence of authorization and opinion of
Seller's counsel reasonably satisfactory to the Title Company
(if required by the Title Company) regarding the consummation
of the transaction contemplated by this Contract;
<PAGE>
(xiv) Unless waived by Buyer, notices of cancellation, to be
effective within thirty days of the Closing Date, of all
Service Contracts affecting the Project;
(xv) A reaffirmation certificate executed by Seller wherein
Seller reaffirms and confirms that the representations and
warranties of Seller set forth in this Contract are true and
such representations and warranties of Seller remain true and
correct as of the Closing Date;
(xvi) Letters to all utility companies advising of the change
of ownership of the Project and an assignment of any deposits
currently held by the utility company for the benefit of the
Seller;
(xvii) Any other items reasonably requested by the Title
Company as administrative requirements for consummating the
Closing.
(b) Buyer. At the Closing, Buyer shall deliver or cause to be
delivered to Seller or the Title Company, the following items:
(i) The cash sum required by Section 3.1 and the
Assumption Deed of Trust in the form of Exhibit "C";
(ii) Duplicate originals of the Assignment of Leases duly
executed by Buyer;
(iii) Duplicate originals of the Assignment of Service
Contracts duly executed by Buyer;
(iv) Appropriate evidence of authorization reasonably
satisfactory to Seller and the Title Company for the
consummation of the transaction contemplated by this Contract;
and
(v) Any other items reasonably requested by the Title Company
as administrative requirements for consummating the Closing.
8.3 Adjustments at Closing. Notwithstanding anything to the contrary
contained in this Contract or applicable law, the provisions of this Section 8.3
shall survive for a period of six months following the Closing. All income and
obligations attributable to days preceding the Closing Date shall be allocated
to Seller, and all income and obligations attributable to days from and after
the Closing Date shall be allocated to Buyer. Without limitation upon the
foregoing, the following items shall be adjusted or prorated between Seller and
Buyer as set forth below:
<PAGE>
(a) Ad valorem and personal property taxes relating to the Project for
the calendar year in which the Closing occurs shall be prorated between Seller
and Buyer as of the Closing Date based upon taxes actually paid by Seller for
the calendar year in which the Closing occurs, if Seller has paid such taxes
prior to Closing, and otherwise upon the ad valorem and personal property taxes
due assuming payment in December of the year of Closing. If the actual amount of
taxes for the calendar year in which the Closing shall occur is not known as of
the Closing Date, the proration shall be based on the amount of taxes due and
payable with respect to the Project using the latest assessed value and tax
rate. All other assessments affecting the Project, if any, assessed and due
prior to Closing Date, shall be paid by the Seller and if assessed after the
Closing Date, shall be paid by the Buyer.
(b) Base rents, escalation or reimbursement payments for real estate
and personal property taxes, insurance premiums, CAM or other operating expenses
and charges, payable with respect to the Project for the then current month
shall be prorated as of the Closing Date. In respect to those tenant leases with
AAA, Roxie's and Vision Source, Buyer shall be entitled to a credit at Closing
an amount equal to the difference between the higher rental rate which become
payable by the Tenant under terms of such leases and the actual rate payable by
such Tenant as of the Closing Date and for the period of time expiring when such
rent increases takes effect. Percentage rents for each Tenant obligated therefor
shall be pro-rated on the basis of the number of days lapsed during the Tenant's
percentage rent period as of the Closing Date and not on the basis of the amount
of the Tenant's sales which accrued during such percentage rent period as of the
Closing Date. Such proration may not be capable of determination at the Closing
Date, in which event, such prorations shall be made post-Closing. Any rent
concessions granted by the Seller to Tenants for free rent, concessions or
abatements, which apply to periods after the Closing Date shall not be prorated
but shall be credited to the Buyer. With respect to any Tenant ("Delinquent
Tenant") who owes rents and other charges which at Closing are past due, such
past due rents and other charges ("Delinquencies") shall not be prorated. Buyer
shall remit such Delinquencies, if any, if, as and when collected by Buyer,
provided, however, that if a payment is received by Buyer from a Delinquent
Tenant, such payment may be applied by Buyer first to any rents or other sums
that are past due by such Delinquent Tenant from and after the Closing Date. The
right to receive and collect all rents and profits, delinquent or otherwise,
shall be assigned by Seller to Buyer at Closing.
(c) All other income and ordinary operating expenses of the Project,
including, without limitation, public utility charges, maintenance, management,
and other service charges, and all other normal operating charges shall be
prorated at the Closing effective as of the Closing Date based upon the best
available information. The obligation of the parties to adjust, post-Closing,
and any operating expenses as of the Closing Date, shall, to the extent unknown
or not provided for at Closing, survive the Closing and shall be paid by the
party responsible therefor within ten (10) days after written demand therefor
has been made. Such demand shall include a copy of the invoice(s) for which
payment or reimbursement is sought.
8.4 Deferred Leasing Commissions. The amount of any unpaid leasing
commissions payable on account and over the term of existing Leases or Leases
entered into between the date hereof and the Closing Date shall either be paid
by the Seller or treated as a credit to Buyer. Commissions payable on account of
Leases which are subject to renewal at the option of the Tenant and with respect
to which the options have not been exercised prior to the Closing Date shall not
be covered by the preceding sentence.
8.5 Possession. Possession of the Project shall be delivered to Buyer
by Seller at the Closing, subject to the rights of the Tenants.
<PAGE>
8.6 Costs of Closing. Each party shall be responsible for paying the
legal fees of its counsel in negotiating, preparing, and closing the transaction
contemplated by this Contract. Seller shall pay for real estate tax searches and
current UCC searches. Buyer shall pay cost of the title insurance premium, its
own engineering and environmental inspections as well as for the charges
attributable to recording the warranty deed and Tenant credit checks. The
parties shall split the cost of any title company escrow fees. Any other
expenses that are incurred by either party that are expressly identified herein
as being the responsibility of a particular party shall be paid by such party.
All other expenses shall be allocated between the parties in the customary
manner for sales of real property similar to the Project in Houston, Texas.
8.7 Provisions of Article VIII to Survive Closing. The
provisions of this Article VIII shall survive for a period of six months
following the Closing.
ARTICLE IX
DEFAULTS AND REMEDIES
9.1 Default of Buyer. If Buyer fails or refuses to consummate
the transaction contemplated by this Contract, for any reason other than
termination of this Contract by Buyer pursuant to a right to do so expressly set
forth in this Contract, then such event shall constitute a default by Buyer
hereunder and the Seller may, as the Seller's sole and exclusive remedy for such
default, either (i) bring an action against the Buyer for specific performance
of the Buyer's obligations under this Contract, or (ii) terminate this Contract
by giving written notice thereof to Buyer and the Title Company at or prior to
the Closing Date, whereupon the Title Company shall deliver the Earnest Money
Deposit (including the interest earned thereon) to the Seller which shall
constitute liquidated damages hereunder and thereafter neither party hereto
shall have any further rights or obligations hereunder. It is agreed that the
Earnest Money Deposit is a reasonable forecast of just compensation for the harm
that would be caused by such default, which the parties agree is one that is
incapable or very difficult of accurate estimation, and that payment of the
Earnest Money Deposit upon such default shall constitute full satisfaction of
Buyer's obligations hereunder.
9.2 Default of Seller. If Seller fails or refuses to
consummate the sale of the Project to Buyer pursuant to this Contract at the
Closing or fails to perform any of Seller's other obligations hereunder for any
reason other than Buyer's failure to perform Buyer's obligations under this
Contract, then Buyer may, as Buyer's sole and exclusive remedy for such default,
either (i) bring an action against the Seller for specific performance of the
Seller's obligations under this Contract, (ii) terminate this Contract by giving
written notice thereof to Seller and the Title Company at or prior to the
Closing Date, whereupon the Title Company shall deliver the Earnest Money
Deposit (including the interest earned thereon) to Buyer and thereafter neither
party hereto shall have any further rights or obligations hereunder, or (iii)
receive the return of the Earnest Money Deposit and prosecute an action for
damages if Seller has conveyed or hypothecated the Project to a third party in
violation of the terms hereof.
<PAGE>
9.3 Earnest Money. In the event either Seller or Buyer becomes
entitled to the Earnest Money Deposit upon cancellation of this Contract in
accordance with its terms, such party may deliver a letter of instruction to the
Title Company directing disbursement of the Earnest Money Deposit to the party
entitled thereto. The party delivering such notice to the Title Company shall
concurrently deliver a copy of the notice to the other party hereto. Upon the
expiration of three (3) business days after its receipt of the letter of
instructions, the Title Company may deliver the Earnest Money Deposit to the
party as specified in the letter of instructions unless, within such three (3)
business day period, the Title Company shall have received a written objection
to such delivery from the other party hereto. In such event, the Title Company
shall not deliver the Earnest Money Deposit to either party unless it has a
written authorization to do so signed by both parties or a court order has been
issued by a court of competent jurisdiction to deliver the Earnest Money Deposit
to one of the parties hereto. The Title Company may deposit the Earnest Money
Deposit into a court of competent jurisdiction and thereafter shall have no
further interest in or responsibility for this Contract or for the Earnest Money
Deposit.
9.4 Indemnification of Title Company. Each party hereto hereby
indemnifies and holds harmless the Title Company from any loss, damage or claim
therefor arising out of or in connection with the receipt and disposition of the
Earnest Money Deposit in accordance with the instructions set forth in this
Contract. These indemnities shall survive the termination of this Contract or a
closing pursuant hereto.
ARTICLE X
BROKERAGE COMMISSIONS
10.1 Amount. If, and only if Closing occurs, Seller hereby
agrees to pay a real estate brokerage commission in the amount of $120,000 to
Bill Lovejoy and Ewing King (the "Brokers") to be divided as they may agree.
There is no other broker or agent entitled to commissions under this agreement.
10.2 Indemnity. Seller hereby represents and warrants to Buyer
that it has not contacted or entered into any agreement with any other real
estate broker, agent, finder, or any other party in connection with this
transaction, and that Seller has not taken any action which would result in any
real estate broker's, finder's, or other fees or commissions being due or
payable to any other party with respect to the transaction contemplated hereby.
Buyer hereby represents and warrants to Seller that Buyer has not contracted or
entered into any agreement with any real estate broker, agent, finder, or other
party in connection with this transaction, other than as identified in Section
10.1, and that Buyer has not taken any action which would result in any real
estate broker's, finder's, or other fees or commissions being due or payable to
any other party with respect to the transaction contemplated hereby. Each party
hereby indemnifies and agrees to hold the other party harmless from any loss,
liability, damage, cost, or expense (including, but not limited to, reasonable
attorneys' fees) resulting to the other party by reason of a breach of the
representation and warranty made by such party in this Section 10.2. The
indemnities set forth in this Section 10.2 shall survive the Closing.
ARTICLE XI
CASUALTY OR CONDEMNATION
(a) Seller agrees to give Buyer and Title Company prompt
notice of any fire or other casualty affecting the Project or of any actual or
threatened taking or condemnation of all or any portion of the Project. If,
prior to the Closing, there shall occur:
(i) damage to the Project caused by fire or
other casualty; or
(ii) a threatened or actual taking or
condemnation of all or any portion of the
Project,
<PAGE>
then, Buyer shall have the right to terminate this Contract by written
notice delivered to Seller within ten (10) days after Buyer has received notice
from Seller of that event or the date on which Buyer learns of that event,
whichever shall last occur. If Buyer terminates this Contract, the Earnest Money
Deposit shall be returned to Buyer and the parties shall have no further
obligations under this Contract, or to each other with respect to the subject
matter of this Contract. Notwithstanding the foregoing, in the event that the
cost of repairing or restoring such damage shall be covered by available
insurance and such cost shall be less than $100,000, then Buyer shall proceed to
Closing and Seller shall assign at Closing to Buyer its right, title and
interest in the insurance proceeds available to repair or restore the damage or
destruction and to any applicable rent loss insurance and, in addition, Seller
shall credit the Purchase Price with the amount of any deductible under such
insurance policy(s).
(b) In the event of damage or destruction to the Project,
Buyer may postpone the Closing Date pending a determination of the nature and
extent of such damage or destruction and the availability and adequacy of
insurance proceeds. Such postponement shall be by written notice from Buyer to
Seller and Title Company and shall remain in effect for a period of ten (10)
days (the "Damages Determination Period") following Buyer's determination of the
nature and extent of the damage or destruction and the availability and adequacy
of insurance proceeds for repair or restoration.
(c) If the cost to repair or replace the damage is reasonably
estimated by the Seller's insurance adjuster to exceed $100,000, then at Buyer's
election and in its sole discretion, Buyer may elect to proceed with the Closing
and at the Closing, Seller shall assign to Buyer its right, title and interest
in the insurance proceeds available to repair or restore the damage or
destruction and to any applicable rent loss proceeds, and Seller shall credit
the Purchase Price with the amount of any deductible under such insurance
policy(s).
(d) In the event that Buyer fails to notify Seller and Title
Company of its intention to proceed to Closing and accept as assignment of the
insurance proceeds prior to the expiration of the Damage Determination Period,
the Contract shall automatically terminate and the Earnest Money Deposit shall
be returned to Buyer forthwith.
ARTICLE XII
MISCELLANEOUS
12.1 Notices. All notices, demands, requests, and other
communications required or permitted hereunder shall be in writing, and shall be
deemed to be delivered on receipt if delivered by hand, overnight delivery, or
by facsimile, or whether actually received or not, three (3) days after having
been deposited in a regularly maintained receptacle for the United States mail,
registered or certified, return receipt requested, postage prepaid, addressed as
follows:
If to Seller: Veriquest Colony Plaza One 1997
7676 Woodway, Suite 280
Houston, Texas 77067
With Copy to: Leo A. Kissner, Esq.
Kissner & Sandvig, P.C.
4265 San Felipe
Suite 550
Houston, Texas 77027-2974
Telephone: (713) 850-0004
Telecopy: (713) 850-1515
<PAGE>
If to Buyer: United Investors Realty Trust
5847 San Felipe
Suite 850
Houston, Texas 77057
Attention: Randall Keith
Chief Operating Officer
Telephone: (713) 781-2858
Telecopy: (713) 268-6005
With a Copy to: Lewis H. Sandler, Esq.
United Investors Realty Trust
8080 North Central Expressway
Suite 400
Dallas, Texas 75206
Telephone: (214) 360-3665
Telecopy: (214) 360-3696
James, Goldman & Haugland, P.C.
Attn: Merton B. Goldman, Esq.
8th Floor Texas Commerce Bank Bldg.
201 East Main
El Paso, Texas 79901
(915) 532-3911
FAX: (915) 541-6440
12.2 Governing Law. This Contract is being executed and delivered, and
is intended to be performed, in the State of Texas, and the laws of Texas shall
govern the validity, construction, enforcement, and interpretation of this
Contract. This Contract is performable in, and the exclusive venue for any
action brought with respect hereto, shall lie in Harris County, Texas.
12.3 Entirety and Amendments. This Contract embodies the entire
agreement between the parties and supersedes all prior agreements and
understandings, if any, relating to the Project, and may be amended or
supplemented only by an instrument in writing executed by the party against whom
enforcement is sought.
12.4 Parties Bound. This Contract shall be binding upon and inure to
the benefit of Seller and Buyer, and their respective heirs, personal
representatives, successors and permitted assigns, but shall not inure to the
benefit of another party.
12.5 Saturday, Sunday or Legal Holiday. If any date set forth in this
Contract for the performance of any obligation by Buyer or Seller or for the
delivery of any instrument or notice should be on other than a Business Day, the
compliance with such obligations or delivery shall be deemed acceptable on the
next following Business Day.
12.6 Time is of the Essence. It is expressly agreed by Seller and
Buyer that time is of the essence with respect to this
Contract.
<PAGE>
12.7 Exhibits. The Exhibits which are referenced in, and attached to,
this Contract are incorporated in, and made a part of, this Contract for all
purposes. If one or more exhibits to be attached to this Agreement according to
the terms hereof are not so attached or are incomplete upon the actual date of
execution hereof, then all such missing or incomplete exhibits must be prepared
or completed by the Buyer prior to the expiration of the Inspection Period; on
or before the expiration of the Inspection Period, Seller has the right to
approve, in its sole discretion, the form and contents of each such exhibit
supplied by the Buyer pursuant to this paragraph and such approval by Seller is
a condition precedent to Buyer to the Closing.
12.8 Attorney's Fees. If either party hereto shall be required to
employ an attorney to enforce or defend the rights of such party hereunder, the
prevailing party shall be entitled to recover its reasonable attorney's fees and
costs.
12.9 Expiration of Offer. The execution by one party hereto and
delivery to the other party hereto of an executed counterpart of this Contract
shall constitute an offer to sell or purchase the Project, as may be the case,
upon the terms stated herein. If a counterpart of this Contract executed by one
party hereto without modification is not received by the other party hereto
within three (3) business days after the time and date of the execution by the
first, as indicated below, the offer contained in this Contract shall be null
and void.
12.10 Multiple Counterparts. This Contract may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same agreement, and either of the parties hereto may execute this Contract by
signing any such counterpart.
12.11 Severability. If any provision of this Contract shall, for any
reason, is held to violate any applicable law, and so much of this Contract is
held to be unenforceable, then the invalidity of such specific provision shall
not be held to invalidate any other provision of this Contract which shall
remain in full force and effect.
12.12 Assignment. This Contract may be assigned by Buyer to any
affiliated entity without the prior written consent of Seller.
EXECUTED by Buyer on the ______ day of April, 1998.
BUYER: UNITED INVESTORS REALTY TRUST,
a Texas real estate investment trust
By:______________________________________
Randall Keith, Chief Operating Officer
<PAGE>
EXECUTED by Seller on the ___________ day of April, 1998
SELLER: VERIQUEST-COLONY PLAZA ONE 1997,
a Texas joint venture
By: VeriQuest-Colony Plaza One, Ltd., a Texas
limited partnership, a Joint Venturer
By: Veriquest Companies, Inc., a Texas
corporation, its General Partner
By:___________________________
Jerry E. Allgood, President
By: Colony Six CD, Ltd., a Texas limited
partnership, a Joint Venturer
By: CD-GP, Inc., its General Partner
By:__________________________
S. Jay Williams, President
Receipt of a fully executed copy of the Contract and a check, subject to
collection for the Earnest Money Deposit received this _________day of April,
1998.
TITLE COMPANY: SAFECO LAND TITLE COMPANY
By:________________________
Name:______________________
Title:_____________________
EXECUTED BY BROKERS this______day of April, 1998.
_________________
BILL LOVEJOY
_________________
EWING KING
<PAGE>
List of Attachments
Exhibit "A" - Description of Land
Exhibit "B" - Survey Requirements
Exhibit "C" - Form of Special Warranty Deed and
Assumption Deed of Trust
Exhibit "D" - Form of Assignment of Leases
Exhibit "E" - Form of Bill of Sale and Assignment
Exhibit "F" - Form of Assignment of Service Contracts
Exhibit "G" - Non-Foreign Affidavit
Exhibit "H" - Form of Tenant Notice Letter
Exhibit "I" - Form of Tenant Estoppel Letter
COLONE~1.WPD
EXHIBIT "A"
LEGAL DESCRIPTION OF PROJECT
<PAGE>
EXHIBIT "B"
SURVEY REQUIREMENTS
1. Legend.
(a) Show on the Survey the dates of any and all revisions to the
Survey.
(b) Include in the legend on the Survey designations as necessary to
include all easements, or other like encumbrances, that will be
exceptions to tile.
(c) Date the Survey the same date as your Certificate.
2. Vicinity Map. Include with or on the Survey a sketch or map of the
general vicinity of the property.
3. Signature. Deliver to Buyer five (5) originals of the Survey, and to
the Title Company one (i) original of the Survey, each bearing your original
signature and clearly showing your original seal and registration number.
4. Field Notes. Determine whether field notes ought to be shown on the
Survey.
5. Basis of Bearings. Include a note on the Survey explaining the basis
of bearings used.
6. Points of Reference. Indicate in the description of the
property and on the Survey the "true point of beginning."
7. Flood Zone. Determine whether the property appears on any flood
insurance boundary map. If the property appears in such a map, the Survey should
show the map number and locate that portion of the property that is located in
the "flood hazard area".
8. Improvements.
(a) Show all improvements, including extensions, abutments and roof
overhangs, in their proper locations and with their measurements
indicated.
(b) Show the distance from each structure to the property line and to
applicable building setback lines at all locations.
(c) Show the Street address of each building.
(d) Show clearly and indicate on the Survey the location of all curb
cuts, driveways, and other points of ingress and egress. Walkways,
planters and similar items, if any, should also be indicated.
(f) Delineate clearly on the Survey the total number of parking
spaces at the property.
<PAGE>
9. Utilities.
(a) Show on the Survey all manholes, catch basins, valve vaults or
other surface indications of substructures, pipelines (surface or
buried) including abandoned lines, roadways, footpaths, or other
features that may indicate usage.
(b) Show on the Survey all wires and cables (including their function);
all wire bearing or guy poles on or within ten (10) feet of the
Project, together with pole numbers; and the amount (by dimensions) of
crossarm or wire overhang affecting the Project, all anchors and guy
wires located on the Project and utility company owned installations on
the Project, such as transformer banks or industrial substations.
(c) Note on the Survey whether each utility is above or below ground.
(d) Indicate all points of connection to public utility systems.
10. Building Setback Lines. Show any setback lines defined by
applicable zoning codes, plat maps, or other restrictions.
11. Encroachments. Show on the Survey all encroachments on or from the
Project.
12. Easements. Show on the Survey the location and dimensions of, and
recording information for, all easements, covenants and restrictions affecting
the Project.
13. Streets.
(a) Show on the Survey the right of way, right of way width, center
line and name for all streets abutting the property; and
(b) Indicate on the Survey whether each street is a public or private
way.
14. Certification. Certify the revised Survey as follows:
<PAGE>
The undersigned hereby certifies to United Investors Realty Trust and
to Lawyers Title Company, as of the date hereof, that this Survey correctly
shows, on the basis of a field survey and in accordance with the current Minimum
Standard Detail Requirements for Land Title Surveys established and adopted by
ALTA: (1) a fixed and determinable position and location of the land described
thereon (including the position of the point of beginning); (2) the location of
all buildings, structures, and other improvements situated on the land; and (3)
all driveways or other cuts in the curbs along any street on which the land
abuts. Except as shown on said print or survey there are no visible easements or
rights of way of which the undersigned has been advised or which are of record,
nor, except as shown, are there any building restrictions or setback lines,
party walls, encroachments, or overhangs of any improvements on any easements,
rights of way or adjacent land, or encroachments by improvements located on
adjacent land on the described land. The print of survey reflects boundary lines
of the described land which "close" by engineering calculation.
Signature
[Registered Surveyor Number or
Registered Civil Engineer
Number]
<PAGE>
EXHIBIT "C"
FORM OF
ASSUMPTION SPECIAL WARRANTY DEED
AND
ASSUMPTION DEED OF TRUST
<PAGE>
EXHIBIT "D"
ASSIGNMENT OF LEASES
STATE OF TEXAS )ss.
)ss. KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF FORT BEND )ss.
WHEREAS, by special warranty deed of even date herewith,
VERIQUEST-COLONY PLAZA ONE 1997, a Texas joint venture ("Assignor"), conveyed to
UNITED INVESTORS REALTY TRUST, a Texas real estate investment trust
("Assignee"), whose mailing address is 5847 San Felipe, Suite 850, Houston,
Texas 77057, that certain tract of land more particularly described in Exhibit
"A", attached hereto and made a part hereof, together with all improvements
located thereon (the "Real Property"); and
WHEREAS, in connection with the above described conveyance, Assignor
desires to sell, transfer and assign to Assignee all of its right, title and
interest in and to the leases and commission agreements hereinafter described.
NOW, THEREFORE, in consideration of the receipt of TEN AND NO/100
DOLLARS ($10.00) and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Assignor and Assignee hereby agree
as follows:
1. Assignment of Leases and Commission Agreements. Assignor hereby
GRANTS, BARGAINS, SELLS, CONVEYS, ASSIGNS, SETS OVER, TRANSFERS and DELIVERS to
Assignee, all of its right, title and interest in and to the leases, including
all rent (including any and all claims against tenants currently occupying the
Real Property for past due rent) security deposits and guaranties thereunder
(collectively, the "Leases") more particularly described in Exhibit "B",
attached hereto and made a part hereof by reference. In consideration of the
foregoing assignment, Assignee hereby assumes and agrees to perform, all of the
obligations of Assignor under the Leases arising or accruing on and after the
date hereof, and Assignee agrees to indemnify and hold Assignor harmless from
and against any loss, damage, liability, cost and expense suffered or incurred
by Assignor by reason of the failure of Assignee to perform any of the
obligations assumed hereunder.
2. Miscellaneous. This Assignment and the obligations of the parties
hereunder shall survive the conveyance of the Real Property and shall be binding
upon and inure to the benefit of the parties hereto and their respective legal
representatives, successors and assigns.
<PAGE>
EXECUTED as of the _____ day of ____, 1998.
ASSIGNOR: VERIQUEST-COLONY PLAZA ONE 1997,
a Texas joint venture
By: VeriQuest-Colony Plaza One, Ltd., a Texas
limited partnership, a Joint Venturer
By: Veriquest Companies, Inc., a Texas
corporation, its General Partner
By: ___________________________
Jerry E. Allgood, President
By: Colony Six CD, Ltd., a Texas limited
partnership, a Joint Venturer
By: CD-GP, Inc., its General Partner
By: ___________________________
S. Jay Williams, President
ASSIGNEE: UNITED INVESTORS REALTY TRUST
By: __________________________
Name: __________________________
Title: __________________________
<PAGE>
EXHIBIT "E"
BILL OF SALE AND ASSIGNMENT
STATE OF TEXAS )s
)s KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF FORT BEND )s
WHEREAS, by special warranty deed of even date herewith,
VERIQUEST-COLONY PLAZA ONE 1997, a Texas joint venture ("Seller"), conveyed to
UNITED INVESTORS REALTY TRUST, a Texas real estate investment trust, whose
mailing address is 5847 San Felipe, Suite 850, Houston, Texas 77057 ("Buyer"),
that certain tract of land more particularly described in Exhibit "A", attached
hereto and made a part hereof, together with all improvements located thereon
(the "Real Property"); and
WHEREAS, in connection with the above described conveyance, Seller
desires to sell, transfer and assign to Buyer certain items of personal property
as hereinafter described.
NOW, THEREFORE, in consideration of the receipt of TEN AND NO/100
DOLLARS ($10.00) and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Seller has GRANTED, SOLD,
TRANSFERRED, SET OVER and DELIVERED and by these presents does hereby GRANT,
SELL, TRANSFER, SET OVER and DELIVER to Buyer, and its successors and assigns,
all of its right, title and interest in and to all items of tangible personal
property owned by Seller and located on, attached to, or used in connection
with, the operation of the Real Property, if any, together with the Assignor's
right, title and interest in the names of the project located on the Real
Property and the telephone number(s) used in connection with the Real Property
(the "Personal Property"), to have and to hold, all and singular, the Personal
Property unto Buyer forever.
EXCEPT AS MAY BE SPECIFICALLY STATED IN THAT CERTAIN CONTRACT OF SALE
BETWEEN SELLER AS SELLER THEREIN AND BUYER AS BUYER THEREIN, DATED APRIL__,
1998, THE CONVEYANCE OF THE PERSONAL PROPERTY IS MADE ON AN "AS-IS" BASIS, AND
BUYER EXPRESSLY ACKNOWLEDGES THAT, IN CONSIDERATION OF THE AGREEMENTS OF SELLER
HEREIN, EXCEPT AS OTHERWISE SPECIFIED HEREIN OR THE OTHER CLOSING DOCUMENTS,
SELLER MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, OR ARISING BY
OPERATION OF LAW, INCLUDING, BUT IN NO WAY LIMITED TO, ANY WARRANTY OF
CONDITION, TENANTABILITY, HABITABILITY, MERCHANTABILITY, OR FITNESS FOR A
PARTICULAR PURPOSE OF THE PERSONAL PROPERTY.
<PAGE>
COLONE~1.WPD
- [PG NUMBER] -
Seller does hereby bind itself, and its successors and assigns, to
WARRANT and FOREVER DEFEND title to the Personal Property unto Buyer, and its
successors and assigns, against every person whomsoever lawfully claiming or to
claim the same or any part thereof, by, through or under Seller, but not
otherwise.
For the same consideration, Seller does hereby ASSIGN, SET OVER and
TRANSFER to Buyer, to the extent assignable, and without recourse or warranty of
any kind, all of its right, title and interest in and to all licenses, permits,
plans, studies, utility arrangements, trade names and warranties and guaranties,
if any, relating to the Real Property.
EXECUTED as of the _______ day of___, 1998.
SELLER: VERIQUEST-COLONY PLAZA ONE 1997,
a Texas joint venture
By: VeriQuest-Colony Plaza One, Ltd., a Texas
limited partnership, a Joint Venturer
By: Veriquest Companies, Inc., a Texas
corporation, its General Partner
By: _____________________________
Jerry E. Allgood, President
By: Colony Six CD, Ltd., a Texas limited
partnership, a Joint Venturer
By: CD-GP, Inc., its General Partner
By: _________________________
S. Jay Williams, President
<PAGE>
EXHIBIT "F"
ASSIGNMENT OF SERVICE CONTRACTS
STATE OF TEXAS )s
)s KNOW ALL MEN BY THESE PRESENTS:
COUNTY OF FORT BEND )s
WHEREAS, by warranty deed of even date herewith, VERIQUEST-COLONY PLAZA
ONE 1997, a Texas joint venture ("Assignor"), conveyed to UNITED INVESTORS
REALTY TRUST, a Texas real estate investment trust ("Assignee"), whose address
is 5847 San Felipe, Suite 850, Houston, Texas 77057, that certain tract of land
more particularly described in Exhibit "A", attached hereto and made a part
hereof, together with all improvements located thereon (the "Real Property");
and
WHEREAS, in connection with the above described conveyance, Assignor
desires to sell, transfer and assign to Assignee all of its right, title and
interest in and to the contracts hereinafter described.
NOW, THEREFORE, in consideration of the receipt of TEN AND NO/100
DOLLARS ($10.00) and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Assignor and Assignee hereby agree
as follows:
1. Assignment of Contracts. Assignor hereby ASSIGNS, SETS OVER and
TRANSFERS to Assignee, all of its right, title and interest in and to the
contracts (the "Contracts") more particularly described in Exhibit "B" attached
hereto and made a part hereof by reference. In consideration of the foregoing
assignment, Assignee hereby assumes and agrees to perform, all of the
obligations of Assignor under the Contracts arising or accruing on and after the
date hereof and Assignee does further agree to defend, indemnify and hold
Assignor harmless from and against all loss, cost, claims, liability, expense or
demand of whatever nature suffered or incurred by Assignor by reason of the
failure of Assignee to perform any of the obligations assumed hereunder.
2. Miscellaneous. This Assignment and the obligations of the parties
hereunder shall survive the conveyance of the Real Property and shall be binding
upon and inure to the benefit of the parties hereto and their respective legal
representatives, successors and assigns.
<PAGE>
EXECUTED on the_______ day of _______, 1998.
ASSIGNOR: VERIQUEST-COLONY PLAZA ONE 1997,
a Texas joint venture
By: VeriQuest-Colony Plaza One, Ltd.,a Texas
limited partnership, a Joint Venturer
By: Veriquest Companies, Inc., a Texas
corporation, its General Partner
By:_________________________________
Jerry E. Allgood, President
By: Colony Six CD, Ltd., a Texas limited
partnership, a Joint Venturer
By: CD-GP, Inc., its General Partner
By:_________________________________
S. Jay Williams, President
ASSIGNEE: UNITED INVESTORS REALTY TRUST
By:_____________________________________
Name:___________________________________
Title:__________________________________
<PAGE>
EXHIBIT "G"
NON-FOREIGN CERTIFICATION
Section 1445 of the Internal Revenue Code of 1986, as amended,
provides that a transferee of a U.S. real property interest must withhold tax if
the transferor is a foreign person. To inform the transferee that withholding of
tax is not required upon the disposition of a U. S. real property interest by
VERIQUEST-COLONY PLAZA ONE 1997, a Texas joint venture ("Transferor"), the
undersigned hereby certifies the following on behalf of the Transferor:
(1) The Transferor is not a foreign corporation, foreign trust or
foreign estate (as those terms are defined in the Internal Revenue Code and
Income Tax Regulations);
(2) The Transferor's U.S. employer identification number is
_________________, and
(3) Transferor's office address is c/o
The Transferor understands that this certification may be disclosed to
the Internal Revenue Service by the transferee and that any false statement
contained herein could be punished by fine, imprisonment, or both.
Under penalties of perjury, I declare that I have examined this certification
and to the best of my knowledge and belief it is true, correct and complete, and
I further declare that I have authority to sign this document on behalf of the
Transferor.
Dated the____day of April, 1998.
TRANSFEROR: VERIQUEST-COLONY PLAZA ONE 1997, a Texas joint venture
By: VeriQuest-Colony Plaza One, Ltd., a Texas limited partnership, a Joint
Venturer
By: Veriquest Companies, Inc., a Texas corporation, its General Partner By:
Jerry E. Allgood, President
<PAGE>
By: Colony Six CD, Ltd., a Texas
limited partnership, a Joint
Venturer
By: CD-GP, Inc., its General Partner
By: ________________________________
S. Jay Williams, President
STATE OF TEXAS s
s
COUNTY OF _____________ s
This instrument was acknowledged before me on _____________________, 1998,
by Jerry E. Allgood, known to me (or proved to me on the oath of
___________________________ or by other identification____________________
[specify]), President of Veriquest Companies, Inc., a Texas corporation,
General Partner of VeriQuest-Colony Plaza One, Ltd., Texas limited
partnership, a Joint Venturer in Veriquest-Colony Plaza One, a Texas
joint venture, on behalf of said joint venture.
____________________________________
Notary Public in and for the
State of Texas
My commission expires:_____________
STATE OF TEXAS s
s
COUNTY OF _____________ s
This instrument was acknowledged before me on _____________________, 1998,
by S. Jay Williams, known to me (or proved to me on the oath of or by other
identification [specify]), President of CD-GP, Inc., a Texas corporation,
General Partner of Colony Six CD, Ltd., a Texas limited partnership, a
Joint Venturer in Veriquest-Colony Plaza One , a Texas joint venture, on
behalf of said joint venture.
Notary Public in and for the State of Texas My commission expires:
<PAGE>
COLONE~1.WPD
EXHIBIT "H"
TENANT NOTICE LETTER
Dated: ________
(Name and Address of Tenant]
Re: Colony Plaza Shopping Center ("Project")
Space or Unit # ______________
Monthly Rent: ________________
Security Deposit: ______________
Lease Expires On: _____________
Ladies and Gentlemen:
This is to notify you that the above referenced Project in which you
are a tenant has been acquired by United Investors Realty Trust, a Texas real
estate investment trust ("UIRT"). All rental and other payments as well as other
communications regarding your lease should be directed to "UIRT" at the office
of UIRT's leasing agent, ______________________________
______________________________________, or at such other address as UIRT may
designate from time to time in writing. If you have any questions, please
contact the new owner at its principal place of business, 5847 San Felipe, Suite
850, Houston, Texas 77057.
Your security deposit, if any, in the amount reflected above, has been
transferred to UIRT, who shall henceforth have the responsibility for its return
in accordance with your lease provisions.
Our records reflect that your monthly rent, security deposit and lease
expiration date are as set forth at the top of this notice. If your records do
not conform to ours, please contact UIRT at your early convenience with proof of
the variance.
We look forward to serving you at our newest project.
United Investors Realty Trust
By: ______________________________________
Randall Keith, Chief Operating Officer
Notice Confirmed By Seller:
Veriquest-Colony Plaza One 1997, a Texas joint venture
<PAGE>
EXHIBIT I
ESTOPPEL CERTIFICATE
Re: Shopping Center: Colony Plaza Shopping Center (the "Property");
Lease Date: , 19 between
("Landlord") and _______________("Tenant")
doing business as ; Net Rentable Square Footage Leased ;
Store Number and Address: (the "Premises")
Gentlemen:
We, the undersigned Tenant, under the Lease described above (the
"Lease"), certify to United Investors Realty Trust and its successors and
assigns as the prospective purchaser of the Property ("Purchaser"), the
following:
1. Attached hereto as Exhibit "A" is a true, correct, and complete copy
of the Lease, including all amendments, exhibits, and Addenda thereto.
2. There has not been a cancellation, modification, assignment,
renewal, extension, or amendment to the Lease, except the following (true and
correct copies of all of which are attached hereto and initialed by Tenant): .
3. All of the Base or Minimum Rent provided in the Lease to be paid has
been paid through _______________ , 19_. Tenant has paid the percentage rental
payable for the prior Lease Year (or Fiscal Year) ending _______________ , which
percentage rental was in the amount of $ _________. The amount of rent prepaid,
if any, is $______________ , and the security deposit made, if any, is $_______.
4. Other than the Lease, there are no other agreements, written or
oral, between Landlord and Tenant regarding the Premises or Tenant's obligation
to pay rentals under the Lease, and Tenant does not claim a right to any
concessions, free rent, or rental abatement other than as set forth in the
Lease.
5. Tenant acknowledges that the current monthly rental payable to
Landlord (exclusive of Percentage Rent) is as follows:
Minimum Rental $_________________________
Common Area Payment $_____________/(mo.)(yr.)___
Tax Payment $_____________/(mo.)(yr.)___
Insurance Payment $_____________/(mo.)(yr.)___
Merchants Association $_________________________
Other (Please Specify) $_________________________
6. Tenant currently pays for utilities used in the Premises by making
payments to: ____________________________________. If to Landlord, such payments
are $_______________ /month and are fixed/subject to adjustment. (Please circle
the correct answer.)
<PAGE>
7. The Lease commenced on _______________, 19___ , and the payment of
rent commenced on ____________________, 19___. The Lease terminates on
_______________, 19___ , and Tenant is not entitled to any renewal options
except ________ options to extend, of ______________ months each. By the
exercise of all such renewal options, Tenant may extend the Lease until
__________, 19___.
8. The Lease is in full force and effect and Tenant does not have any
presently existing claims against Landlord or any offsets against rent due under
the Lease. There are no (i) defaults of Landlord under the Lease, (ii) existing
circumstances which with the passage of time, or notice, or both, would give
rise to a default under the Lease, (iii) existing rights to abate, reduce or
offset sums against rent or terminate this Lease because of any other condition,
or (iv) existing circumstances which with the passage of time, or notice, or
both, would give rise to a right to abate, reduce or offset sums against rent or
terminate the Lease.
9. The Premises have been completed and accepted and are in conformity
with the terms of the Lease. Tenant has been paid all sums (if any) with respect
to allowances for construction performed at the Premises by Tenant.
10. Neither the Tenant nor any general partners of Tenant (in the case
of a partnership tenant), or any guarantor or other person or entity liable on
the Lease has filed a petition in bankruptcy that has not been dismissed as of
the date hereof, has been subject to an involuntary petition in bankruptcy which
has not been dismissed, has made an assignment for the benefit of any
creditor(s), or has been adjudged to be bankrupt or insolvent by a court of
competent jurisdiction.
11. The Tenant has not received any option to purchase any portion of
the Premises or the Property, or any option or right of first refusal relative
to the Premises or additional space on the Property, except as follows:
___________________________________________
12. Any notices which may or shall be given to Tenant under the terms
of the Lease are to be sent to Tenant at the following
address______________________________________________________
13. The undersigned has all requisite authority to execute this
Estoppel Certificate on behalf of Tenant. The undersigned acknowledges that
Purchaser has requested the information contained herein for purposes of
confirming and clarifying certain provisions of the Lease and is relying (and
will rely) on the truth and accuracy of the representations made herein and upon
the authority of the undersigned to execute this Estoppel Certificate on behalf
of Tenant, in connection with purchaser's decision to purchase (or not to
purchase) the Property.
Very truly yours,
By: _______________________________________
Name:_______________________________________
Title:______________________________________
Date:____________________, 19_____
"Tenant"
The undersigned guarantors of the Lease join in this estoppel to ratify
and confirm that the guaranty of Lease is and remains in full force and effect.
__________________________
(NAME) (NAME)
Date:_________________________ Date:_____________________
ASSIGNEE: UNITED INVESTORS REALTY TRUST
By:________________________
Name:______________________
Title:_____________________
<PAGE>
PROMISSORY NOTE
$3,200,000.00 November 26,1997
FOR VALUE RECEIVED VERIQUEST-COLONY PLAZA ONE 1997, a Texas Joint Venture,
as maker, having an address at c/o VeriQuest Colony Plaza One, Ltd., a Texas
limited partnership, 24 Greenway Plaza, Suite 1600, Houston, Texas 77046,
Attention: Jerry E. Allgood and c/o Colony Six CD, Ltd., a Texas limited
partnership, 1800 Bering Drive, Suite 500, Houston, Texas 77057, Attention: S.
Jay Williams ("Borrower"), hereby unconditionally promises to pay to the order
of HOLLIDAY FENOGLIO, L.P., a Delaware limited partnership, having an address at
3003 West Alabama, Houston, Texas 77098 ("Lender"), or at such other place as
the holder hereof may from time to time designate in writing, the principal sum
of THREE MILLION TWO HUNDRED THOUSAND AND NO/100 DOLLARS (S3,200,000.00), or so
much thereof as may be advanced hereunder, in lawful money of the United States
of America with interest thereon to be computed from the date of this Note at
the Applicable Interest Rate (defined below), and to be paid in installments as
provided herein.
1. CERTAIN DEFINED TERMS
As used herein the following terms shall have the meanings set forth
below:
(a) "Applicable Interest Rate" shall mean an interest rate equal to
7.59% per annum.
(b) "Constant Monthly Payment" shall mean a payment equal to
$19,398.16, provided that in the event that Borrower shall obtain the Earn Out
Advance (as defined in that certain letter agreement entered into by Lender and
Borrower dated the date hereof entered into by the Lender and Borrower [the
"Earn Out Letter"]), upon said Earn Out Advance, the amount of the Constant
Monthly Payment shall mean the Constant Monthly Payment as recalculated pursuant
to the Earn Out Letter.
(c) "Loan" shall mean the loan evidenced by this Note.
(d) "Loan Documents" shall mean this Note, the Security Instrument, and
any other documents or instruments which now or shall hereafter wholly or
partially secure or guarantee payment of this Note or which have otherwise been
executed by Borrower and/or any other person in connection with the Loan.
(e) "Lockout Period Expiration Date" shall mean the fourth (4th)
anniversary of (i) the date hereof, if this Note is dated as of the first day of
a calendar month; or (ii) otherwise, the first day of the next succeeding
calendar month after the date hereof.
<PAGE>
(f) "Maturity Date" shall mean January 1, 2008.
(g) "Monthly Payment Date" shall mean the first day of each calendar
month prior to the Maturity Date commencing on February 1, 1998.
(h) "Security Instrument" shall mean the Deed of Trust and Security
Agreement dated the date hereof in the principal sum of Three Million Two
Hundred Thousand and no/100 Dollars ($3,200,000.00) given by Borrower to (or for
the benefit of) Lender covering the fee estate of Borrower in certain premises
located in Fort Bend County, State of Texas, and other property, as more
particularly described therein (collectively, the "Property").
2. PAYMENT TERMS
(a) A payment shall be due from Borrower to Lender on the date hereof
on account of all interest scheduled to accrue on the principal sum from and
after the date hereof through and including December 31, 1997. The Constant
Monthly Payment shall be due from Borrower to Lender on each Monthly Payment
Date, with each Constant Monthly Payment to be applied as follows: (i) first, to
the payment of interest which has accrued during the preceding calendar month
computed at the Applicable Interest Rate, and (ii) the balance toward the
reduction of the principal sum. The balance of the principal sum and all
interest thereon shall be due and payable on the Maturity Date. Interest on the
principal sum of this Note shall be calculated by multiplying the actual number
of days elapsed in the period for which interest is being calculated by a daily
rate based on a 360-day year.
(b) Unless payments are made in the required amount in immediately
available funds at the place where this Note is payable, remittances in payment
of all or any part of the Debt (defined below) shall not, regardless of any
receipt or credit issued therefor, constitute payment until the required amount
is actually received by Lender in funds immediately available at the place where
this Note is payable (or any other place as Lender, in Lender's sole discretion,
may have established by delivery of written notice thereof to Borrower) and
shall be made and accepted subject to the condition that any check or draft may
be handled for collection in accordance with the practice of the collecting bank
or banks.
(c) Notwithstanding anything to the contrary contained herein, in the
event an Earn Out Advance (as defined in the Earn Out Letter) is made by Lender
to Borrower on a date other than the first day of a calendar month, the Constant
Monthly Payment that would have been due hereunder on the first day of the first
calendar month succeeding the Earn Out Advance Date (had the Earn Out Advance
not been made) shall be paid by Borrower to Lender on the Earn Out Advance Date
(as defined in the Earn Out Letter) together with the interest scheduled to
accrue on the Earn Out Advance from and after the Earn Out Advance Date through
and including the last day of the month in which the Earn Out Advance is made
(the "Earn Out Prepaid Interest Amount"), provided that said Constant Monthly
Payment and Earn Out Prepaid Interest Amount shall have been deemed to have been
applied on the first day of the first calendar month succeeding the Earn Out
Date.
<PAGE>
3. DEFAULT AND ACCELERATION
(a) The whole of the principal sum of this Note, (b) interest, default
interest, late charges and other sums, as provided in this Note, the Security
Instrument or the other Loan Documents, (c) all other monies agreed or provided
to be paid by Borrower in this Note, the Security Instrument or the other Loan
Documents, (d) all sums advanced pursuant to the Security Instrument to protect
and preserve the Property (defined below) and the lien and the security interest
created thereby, and (e) all sums advanced and costs and expenses incurred by
Lender in connection with the Debt (defined below) or any part thereof, any
renewal, extension, or change of or substitution for the Debt or any part
thereof, or the acquisition or perfection of the security therefor, whether made
or incurred at the request of Borrower or Lender (all the sums referred to in
(a) through (e) above shall collectively be referred to as the "Debt") shall
without notice become immediately due and payable at the option of Lender if any
payment required in this Note prior to the Maturity Date is not paid prior to
the fifth (5th) day after the date when due or on the happening of any other
default, after the expiration of any applicable notice and grace 2 periods,
herein or under the terms of the Security Instrument or any of the other Loan
Documents (collectively, an "Event of Default").
4. DEFAULT INTEREST
Borrower does hereby agree that upon the occurrence of an Event of
Default, Lender shall be entitled to receive and Borrower shall pay interest on
the entire unpaid principal sum at a rate (the "Default Rate") equal to (i) the
greater of (a) the Applicable Interest Rate plus three percent (3%) and (b) the
Prime Rate (as hereinafter defined) plus four percent (4%) or (ii) the maximum
interest rate that Borrower may by law pay, whichever is lower. The Default Rate
shall be computed from the occurrence of the Event of Default until the earlier
of the date upon which the Event of Default is cured or the date upon which the
Debt is paid in full. Interest calculated at the Default Rate shall be added to
the Debt, and shall be deemed secured by the Security Instrument. This clause,
however, shall not be construed as an agreement or privilege to extend the date
of the payment of the Debt, nor as a waiver of any other right or remedy
accruing to Lender by reason of the occurrence of any Event of Default.
The "Prime Rate" shall mean the annual rate of interest publicly announced
by Citibank, N.A. in New York, New York, as its base rate, as such rate shall
change from time to time. If Citibank, N.A. ceases to announce a base rate,
Prime Rate shall mean the rate of interest published in The Wall Street Journal
from time to time as the Prime Rate. If more than one Prime Rate is published in
The Wall Street Journal for a day, the average of the Prime Rates shall be used,
and such average shall be rounded up to the nearest one-quarter of one percent
(.25%). If The Wall Street Journal ceases to publish the "Prime Rate", the
Lender shall select an equivalent publication that publishes such "Prime Rate",
and if such prime rates are no longer generally published or are limited,
regulated or administered by a governmental or quasi-governmental body, then
Lender shall select a comparable interest rate index.
<PAGE>
5. PREPAYMENT
Borrower shall not have the right or privilege to prepay all or any
portion of the unpaid principal balance of this Note until the Lockout Period
Expiration Date. From and after the Lockout Period Expiration Date, provided no
Event of Default exists, the principal balance of this Note may be prepaid, in
whole but not in part, upon: (i) not less than 30 days and not more than 60 days
prior written notice (the "Prepayment Notice") to Lender specifying the
scheduled payment date on which prepayment is to be made (the "Prepayment
Date"); (ii) payment of all accrued and unpaid interest on the outstanding
principal balance of this Note to and including the Prepayment Date together
with a payment of all interest which would have accrued on the principal balance
of this Note to and including the first day of the calendar month immediately
following the Prepayment Date, if such prepayment occurs on a date which is not
the first day of a calendar month (the "Shortfall-interest Payment"); (iii)
payment of all other sums then due under this Note, the Security Instrument and
the other Loan Documents and (iv) if the Prepayment Date occurs prior to the
date which is six months prior to the Maturity Date, payment of a prepayment
consideration (the "Prepayment Consideration") in an amount equal to the greater
of: (A) one ( I %) percent of the principal amount of this Note being prepaid;
and (B) the present value of a series of payments each equal to the Payment
Differential (hereinafter defined) and payable on each Monthly Payment Date over
the remaining original term of this Note and on the Maturity Date discounted at
the Reinvestment Yield (hereinafter defined) for the number of months remaining
from the Prepayment Date to each such Monthly Payment Date and the Maturity
Date. The term "Reinvestment Yield" as used herein shall be equal to the lesser
of (a) the yield on the U.S. Treasury issue (primary issue) with a maturity date
closest to the Maturity Date, or (b) the yield on the U.S. Treasury issue
(primary issue) with a term equal to the remaining average life of the Debt,
with each such yield being based on the bid price for such issue as published in
The Wall Street Journal on the date that is 14 days prior to the Prepayment Date
set forth in the Prepayment Notice (or, if such bid price is not published on
that date, the next preceding date on which such bid price is so published) and
converted to a monthly compounded nominal yield. The term "Payment Differential"
as used herein shall be equal to (x) the Applicable Interest Rate minus the
Reinvestment Yield, divided by (y) 12 and multiplied by (z) the principal sum
outstanding on such Prepayment Date after application of the Constant Monthly
Payment (if any) due on such Prepayment Date, provided that the Payment
Differential shall in no event be less than zero. In no event, however, shall
Lender be required to reinvest any prepayment proceeds in U.S. Treasury
obligations or otherwise. Lender shall notify Borrower of the amount, and the
basis of determination, of the required Prepayment Consideration. If a
Prepayment Notice is given by Borrower to Lender pursuant to this Article 5, the
principal balance of this Note and the other sums required under this Article
shall be due and payable on the Prepayment Date.
<PAGE>
Lender shall not be obligated to accept any prepayment of the principal
balance of this Note unless it is accompanied by all sums due in connection
therewith. Notwithstanding anything contained herein to the contrary, provided
no Event of Default exists, no Prepayment Consideration shall be due in
connection with a complete or partial prepayment resulting from the application
of insurance proceeds or condemnation awards pursuant to Sections 3.2 and 3.5 of
the Security Instrument. In the event of any permitted partial prepayment of the
principal balance of this Note, the amount of principal prepaid (but not
including any Prepayment Consideration or interest) shall be applied to the
principal last due under this Note and shall not release Borrower from the
obligation to pay the Constant Monthly Payments next becoming due under this
Note and the Constant Monthly Payment shall not be adjusted or recalculated as a
result of such partial prepayment.
If a Default Prepayment (defined herein) occurs prior to the date which
is six months prior to the Maturity Date, Borrower shall pay to Lender the
entire Debt, including, without limitation, the Prepayment Consideration.
For purposes of this Note, the term "Default Prepayment" shall mean a
prepayment of the principal amount of this Note made during the continuance of
any Event of Default or after an acceleration of the Maturity Date under any
circumstances, including, without limitation, a prepayment occurring in
connection with reinstatement of the Security Instrument provided by statute
under foreclosure proceedings or exercise of a power of sale, any statutory
right of redemption exercised by Borrower or any other party having a statutory
right to redeem or prevent foreclosure, any sale in foreclosure or under
exercise of a power of sale or otherwise.
Notwithstanding any provision of this Article 5 to the contrary, Lender may
require Borrower, in lieu of a prepayment as contemplated in the first paragraph
of this Article 5, to deliver to Lender the Defeasance Collateral (hereinafter
defined) in the manner contemplated herein. After Lender's receipt of the
Prepayment Notice, Lender shall, if it so elects, advise Borrower that, in lieu
of a prepayment, the Defeasance Collateral shall be required, in which event
Borrower shall be entitled to a release of the Property (hereinafter defined)
from the lien of the Security Instrument and any liens created by the other Loan
Documents upon satisfaction of the following:
I. Lender shall have received written confirmation from the
rating agencies that have rated the REMIC "real estate mortgage investment
conduit" (defined in Section 860D of the Internal Revenue Code of 1 1986], as
amended from time to time or any successor statute (the "Code")) ("REMIC")
related to the Securities (as defined in the Security Instrument) that such
substitution of Defeasance Collateral will not result in a downgrade, withdrawal
or qualification of the ratings then assigned to any of the Securities;
provided, however, that in the event that Lender or its agent is unable to
obtain such confirmation, the Lender or its agent shall so advise Borrower and
Borrower will then be subject to the other provisions of this Article 5 set
forth above;
11. all accrued and unpaid interest and all other sums due
under this Note, the Security Instrument and other Loan Documents up to the date
of the delivery of the Defeasance Collateral (the "Release Date"), including,
without limitation, all costs and expenses incurred by Lender or its agents in
connection with such release (including, without limitation, the review of the
proposed Defeasance Collateral and the preparation of the Defeasance Security
Agreement (as hereinafter defined) and the related documentation), shall be
fully paid by Borrower on or before the Release Date; and
<PAGE>
111. Borrower shall have delivered to Lender on or before the
Release Date:
(a) a pledge and security agreement, in form and substance satisfactory
to Lender in its sole discretion, creating a first priority security interest in
favor of Lender in the Defeasance Collateral (the "Defeasance Security
Agreement"), which shall provide, among other things, that any excess received
by Lender from the Defeasance Collateral over the amount payable by Borrower
hereunder shall be refunded to Borrower promptly following each Monthly Payment
Date and the Maturity Date;
(b) direct, non-callable obligations of the United States of America
that provide for payments prior, but as close as possible, to all successive
Monthly Payment Dates occurring after the Release Date and the Maturity Date,
with each such payment being equal to or greater than the amount of the
corresponding Constant Monthly Payment required to be paid under this Note for
the balance of the term hereof and the amount required to be paid on the
Maturity Date (the "Defeasance Collateral"), each of which shall be duly
endorsed by the holder thereof as directed by Lender or accompanied by a written
instrument of transfer in form and substance wholly satisfactory to Lender
(including, without limitation, such instruments as may be required by the
depository institution holding such securities or the issuer thereof, as the
case may be, to effectuate book-entry transfers and pledges through the
book-entry facilities of such institution) in order to perfect upon the delivery
of the Defeasance Security Agreement the first priority security interest
therein in favor of the Lender in conformity with all applicable state and
federal laws governing the granting of such security interests;
(c) a certificate by Borrower's independent public accountant
certifying that all of the requirements set forth in this Clause 111 have been
fully satisfied;
(d) an opinion of counsel acceptable to Lender, dated as of the Release
Date, in form reasonably satisfactory to Lender stating, among other things,
that the Defeasance Collateral has been duly and validly assigned and delivered
to Lender and Lender has a valid, perfected, first priority lien and security
interest in the Defeasance Collateral; and
(e) such other certificates, documents or instruments as Lender may
reasonably require.
Upon compliance with the foregoing requirements relating to the
delivery of the Defeasance Collateral, the Property shall be released from the
lien of the Security Instrument and the other Loan Documents and the Defeasance
Collateral shall constitute collateral which shall secure this Note and the
Debt. Lender will, at Borrower's expense, execute and deliver any agreements
reasonably requested by Borrower to release the lien of the Security Instrument
from the Property. Upon the delivery of the Defeasance Collateral to Lender in
accordance with this Article, Borrower shall have no further right to prepay
this Note pursuant to the other provisions of this Article 5 or otherwise.
<PAGE>
Lender shall have the right in connection with the exercise of its
rights under this Article 5 to require delivery of the Defeasance Collateral in
lieu of a cash prepayment, to require an entity designated by Lender to acquire
the Defeasance Collateral and to assume that portion of the obligations of
Borrower which is secured by such Defeasance Collateral, in which event Borrower
shall thereafter be released from such obligations.
6. SECURITY
This Note is secured by the Security Instrument and the other Loan
Documents. The Security Instrument intended to be duly recorded in the public
records of the county where the Property is located. All of the terms, covenants
and conditions contained in the Security Instrument and the other Loan Documents
are hereby made part of this Note to the same extent and with the same force as
if they were fully set forth herein.
7. SAVINGS CLAUSE
Notwithstanding anything to the contrary contained in this Note,
neither the Applicable Interest Rate nor the Default Rate shall at any time
exceed the Maximum Rate. The term "Maximum Rate," as used herein, shall mean, on
any day, the highest nonusurious rate of interest (if any) permitted by
applicable law on such day. For purposes of Tex. Rev. Civ. Stat Ann., Art. 5069-
1.04(a) as it may from time to time be amended, the Maximum Rate shall be the
"indicated rate ceiling" referred to in and determined under Art.
5069-1.04(a)(1), from time to time in effect; provided, however, that to the
extent permitted by applicable law, Lender reserves the right to change, from
time to time by further notice and disclosure to Borrower, the ceiling on which
the Maximum Rate is based under Art. 5069-1.04; and, provided further, that the
"highest nonusurious rate of interest permitted by applicable law" for purposes
of this Note shall not be limited to the applicable rate ceiling under Art.
5069-1.04 if federal laws or other state laws now or hereafter in effect and
applicable to this Note (and the interest contracted for, charged and collected
hereunder) shall permit a higher rate of interest.
<PAGE>
It is the intention of the parties hereto to comply with the usury laws
of the state of Texas and of the United States of America. The parties hereto do
not intend to contract for, charge or receive any interest or other charge which
is usurious, and by execution of this Note, Borrower agrees that Lender has no
such intent. This Note, the Security Instrument, the Loan Documents and all
other agreements between Borrower and Lender or any other holder hereof, which
are now existing or hereafter arising, whether written or oral, are hereby
expressly limited so that in no event whatsoever, whether by reason of
acceleration of maturity hereof, or otherwise, shall the amount paid, or agreed
to be paid, to Lender or any other holder hereof for the use, forbearance or
detention of the money to be due hereunder or otherwise, or for the payment or
performance of any covenant or obligation contained herein or in any other
document evidencing, securing or pertaining to the Debt, exceed the Maximum
Rate. If from any circumstance whatsoever fulfillment of any provisions hereof
or other document, at the time performance of such provisions shall be due,
shall involve transcending the valid limits prescribed by law, then ipso facto,
the obligation to be fulfilled shall be reduced to the Maximum Rate, and if from
any such circumstance Lender or any other holder shall ever receive as interest
or otherwise an amount which will exceed the Maximum Rate, such amount which
would be excessive interest shall be applied to the reduction of the principal
amount owing hereunder or on account of any other principal indebtedness of
Borrower to the holder and not to the payment of interest, or if such excessive
interest exceeds the unpaid balance of principal hereof and such other
indebtedness, such excess shall be refunded to Borrower. All sums paid and
agreed to be paid to Lender or any other holder for use, forbearance or
detention of the indebtedness of Borrower shall, to the extent permitted by
applicable law, be amortized, prorated, allocated, and spread throughout the
period until payment in full on this Note (or any renewals, extensions and
rearrangement hereof) so that the actual rate of interest on account of the Debt
is uniform throughout the term of this Note (and all renewals, extensions and
rearrangements hereof) and does not exceed the Maximum Rate. The terms and
provisions of this Article 7 shall control and supersede any other provision of
this Note.
8. LATE CHARGE
If any sum payable under this Note is not paid prior to the fifth (5th)
day after the date on which it is due, Borrower shall pay to Lender upon demand
an amount equal to the lesser of five percent (5%) of the unpaid sum or the
maximum amount permitted by applicable law to defray the expenses incurred by
Lender in handling and processing the delinquent payment and to compensate
Lender for the loss of the use of the delinquent payment and the amount shall be
secured by the Security Instrument and the other Loan Documents.
9. NO ORAL CHANGE
This Note may not be modified, amended, waived, extended, changed,
discharged or terminated orally or by any act or failure to act on the part of
Borrower or Lender, but only by an agreement in writing signed by the party
against whom enforcement of any modification, amendment, waiver, extension,
change, discharge or termination is sought.
10. JOINT AND SEVERAL LIABILITY
If Borrower consists of more than one person or party, the obligations
and liabilities of each person or party shall be joint and several.
11. WAIVERS
<PAGE>
Borrower and all others who may become liable for the payment of all or
any part of the Debt do hereby severally waive presentment and demand for
payment, notice of dishonor, protest and notice of protest and non-payment and
all other notices of any kind, except notices specifically required by the terms
of the Loan Documents. No release of any security for the Debt or extension of
time for payment of this Note or any installment hereof, and no alteration,
amendment or waiver of any provision of this Note, the Security Instrument or
the other Loan Documents made by agreement between Lender or any other person or
party shall release, modify, amend, waive, extend, change, discharge, terminate
or affect the liability of Borrower, and any other person or entity who may
become liable for the payment of all or any part of the Debt, under this Note,
the Security Instrument or the other Loan Documents. No notice to or demand on
Borrower shall be deemed to be a waiver of the obligation of Borrower or of the
right of Lender to take further action without further notice or demand as
provided for in this Note, the Security Instrument or the other Loan Documents.
In addition, acceptance by Lender of any payment in an amount less than the
amount then due shall be deemed an acceptance on account only, and the failure
to pay the entire amount then due shall be and continue to be an Event of
Default. If Borrower is a partnership, the agreements herein contained shall
remain in force and applicable, notwithstanding any changes in the individuals
comprising the partnership, and the term "Borrower," as used herein, shall
include any alternate or successor partnership, but any predecessor partnership
and their partners shall not thereby be released from any liability. If Borrower
is a corporation or limited liability company, the agreements contained herein
shall remain in full force and applicable notwithstanding any changes in the
shareholders or members comprising, or the officers and directors or managers
relating to, the corporation or limited liability company, and the term
"Borrower" as used herein, shall include any alternative or successor
corporation or limited liability company, but any predecessor corporation or
limited liability company shall not be relieved of liability hereunder. (Nothing
in the foregoing sentence shall be construed as a consent to, or a waiver of,
any prohibition or restriction on transfers of interests in a partnership,
corporation or limited liability company which may be set forth in the Security
Instrument or any other Loan Document.)
12. TRANSFER
Upon the transfer of this Note, Borrower hereby waiving notice of any
such transfer, Lender may deliver all the collateral mortgaged, granted, pledged
or assigned pursuant to the Security Instrument and the other Loan Documents, or
any part thereof, to the transferee who shall thereupon become vested with all
the rights herein or under applicable law given to Lender with respect thereto,
and Lender shall thereafter forever be relieved and fully discharged from any
liability or responsibility in the matter; but Lender shall retain all rights
hereby given to it with respect to any liabilities and the collateral not so
transferred.
13. WAIVER OF TRIAL BY JURY
BORROWER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN
CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN, THE
APPLICATION FOR THE LOAN, THIS NOTE, THE SECURITY INSTRUMENT OR THE OTHER LOAN
DOCUMENTS OR ANY ACTS OR OMISSIONS OF LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS
OR AGENTS IN CONNECTION THEREWITH.
<PAGE>
14. EXCULPATION
(a) Except as otherwise provided herein, in the Security Instrument or
in the other Loan Documents, Lender shall not enforce the liability and
obligation of Borrower to perform and observe the obligations contained in this
Note or the Security Instrument by any action or proceeding wherein a money
judgment shall be sought against Borrower, except that Lender may bring a
foreclosure action, action for specific performance or other appropriate action
or proceeding to enable Lender to enforce and realize upon this Note, the
Security Instrument, the other Loan Documents, and the interest in the Property,
the Rents (as defined in the Security Instrument) and any other collateral given
to Lender created by this Note, the Security Instrument and the other Loan
Documents; provided, however, that any judgment in any such action or proceeding
shall be enforceable against Borrower only to the extent of Borrower's interest
in the Property, in the Rents and in any other collateral given to Lender.
Lender, by accepting this Note and the Security Instrument, agrees that it shall
not, except as otherwise provided in Section 10.10 of the Security Instrument,
sue for, seek or demand any deficiency judgment against Borrower in any such
action or proceeding, under or by reason of or under or in connection with this
Note, the other Loan Documents or the Security Instrument. The provisions of
this Article shall not, however, (i) constitute a waiver, release or impairment
of any obligation evidenced or secured by this Note, the other Loan Documents or
the Security Instrument; (ii) Intentionally Deleted; (iii) impair the right of
Lender to name Borrower as a party defendant in any action or suit for judicial
foreclosure and sale under the Security Instrument; (iv) affect the validity or
enforceability of any indemnity, guaranty, master lease or similar instrument
made in connection with this Note, the Security Instrument, or the other Loan
Documents; (v) impair the right of Lender to obtain the appointment of a
receiver; (vi) impair the enforcement of the Assignment of Leases and Rents
executed in connection herewith; (vii) impair the right of Lender to obtain a
deficiency judgment or judgment on the Note against Borrower if necessary to
obtain any insurance proceeds or condemnation awards to which Lender would
otherwise be entitled under the Security Instrument; provided however, Lender
shall only enforce such judgment against the insurance proceeds and/or
condemnation awards; or (viii) impair the right of Lender to enforce the
provisions of Sections 10. 10, 1 1.2 and 11.3 of the Security Instrument.
(b) Notwithstanding the provisions of this Article 14 to the contrary,
Borrower shall be personally liable to Lender for the Losses (as defined in the
Security Instrument) it incurs due to: (i) fraud or intentional
misrepresentation by Borrower, its agents or principals in connection with the
execution and the delivery of this Note, the Security Instrument or the other
Loan Documents, (ii) Borrower's misapplication or misappropriation of (A) Rents
received by Borrower after the occurrence of an Event of Default, (B) tenant
security deposits or Rents collected in advance, or (C) insurance proceeds or
condemnation awards, (iii) Borrower's failure to pay Taxes (as defined in the
Security Instrument), Insurance Premiums (as defined in the Security
Instrument), Other Charges (as defined in the Security Instrument) (except to
the extent that sums sufficient to pay such amounts have been deposited in
escrow with Lender pursuant to the terms of the Security Instrument), charges
for labor or materials or other charges that can create liens on the Property,
provided that Borrower's liability under this clause (iii) shall not exceed an
amount equal to the net operating income of the Property for the twelve (12)
month period preceding the related failure to pay, less the amount of all
Constant Monthly Payments and required reserve payments made by Borrower in
accordance with this Note, the Security Instrument and the other Loan Documents
during such twelve (12) month period, (iv) Borrower's failure to comply with the
provisions of Section 3.10 or Section 5.9 of the Security Instrument, or (v)
Borrower's or any other Indemnitor's failure to comply with the provisions of
the Environmental Indemnity (as defined in the Security Instrument).
<PAGE>
(c) Notwithstanding the foregoing, the agreement of Lender not to
pursue recourse liability as set forth in Subsection (a) above SHALL BECOME NULL
AND VOID and shall be of no further force and effect in the event of Borrower's
default under Sections 4.2 or 8.2 of the Security Instrument, or if the Property
or any part thereof shall become an asset in (i) a voluntary bankruptcy or
insolvency proceeding, or (ii) an involuntary bankruptcy or insolvency
proceeding (A) which is commenced by any party controlling, controlled by or
under common control with Borrower (the "Borrowing Group") or (B) in which any
member of the Borrowing Group objects to a motion by Lender for relief from any
stay or injunction from the foreclosure of this Security Instrument or any other
remedial action permitted hereunder or under the Note or the other Loan
Documents.
(d) Nothing herein shall be deemed to be a waiver of any right which
Lender may have under Sections 506(a), 506(b), 1111(b) or any other provisions
of the U.S. Bankruptcy Code to file a claim for the full amount of the Debt or
to require that all collateral shall continue to secure all of the Debt owing to
Lender in accordance with this Note, the Security Instrument and the other Loan
Documents.
15. AUTHORITY
Borrower (and the undersigned representative of Borrower, if any)
represents that Borrower has full power, authority and legal right to execute
and deliver this Note, the Security Instrument and the other Loan Documents and
that this Note, the Security Instrument and the other Loan Documents constitute
valid and binding obligations of Borrower.
16. APPLICABLE LAW
This Note shall be governed, construed, applied and enforced in
accordance with the laws of the state in which the Property is located and the
applicable laws of the United States of America.
17. COUNSEL FEES
In the event that it should become necessary to employ counsel to
collect the Debt or to protect or foreclose the security therefor, Borrower also
agrees to pay all reasonable fees and expenses of Lender, including, without
limitation, reasonable attorney's fees for the services of such counsel whether
or not suit be brought.
<PAGE>
18. NOTICES
All notices or other written communications hereunder shall be deemed
to have been properly given (i) upon delivery, if delivered in person or by
facsimile transmission with receipt acknowledged by the recipient thereof, (ii)
one (1) Business Day (defined below) after having been deposited for overnight
delivery with any reputable overnight courier service, or (iii) three
(3)Business Days after having been deposited in any post office or mail
depository regularly maintained by the U.S. Postal Service and sent by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
If to Borrower:
VeriQuest-Colony Plaza One 1997
c/o Colony Six CD, Ltd.
1800 Bering Drive
Suite 500
Houston, Texas 77057
Attention: S. Jay Williams
Facsimile No. (713) 975-2810
With a copy to: Kissner & Sandvig, P.C.
4265 San Felipe,
Suite 550
Houston, Texas 77027
Attention: Leo A. Kissner, Esq.
Facsimile No. (713) 850- 1515
If to Lender: Holliday Fenoglio, L.P.
3003 West Alabama
Houston, Texas 77098
Attention: John Fenoglio
Facsimile No. (713) 527-8725
With a copy to: Lehman Brothers Holdings Inc.
3 World Financial Center
200 Vesey Street
New York, New York 10285
Attention: John Herman
Facsimile No. (212) 528-6659
<PAGE>
With a copy to: Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, New York 10038
Attention: William Campbell, Esq.
Facsimile No. (212) 806-6006
or addressed as such party may from time to time designate by written notice to
the other parties.
Either party by notice to the other may designate additional or
different addresses for subsequent notices or communications.
"Business Day" shall mean a day upon which commercial banks are not
authorized or required by law to close in New York, New York.
19. MISCELLANEOUS
(a) Wherever pursuant to this Note (i) Lender exercises any right given to
it to approve or disapprove, (ii) any arrangement or term is to be satisfactory
to Lender, or (iii) any other decision or determination is to be made by Lender,
the decision of Lender to approve or disapprove, all decisions that arrangements
or terms are satisfactory or not satisfactory and all other decisions and
determinations made by Lender, shall be in the sole and absolute discretion of
Lender and shall be final and conclusive, except as may be otherwise expressly
and specifically provided herein.
(b) Whenever used, the singular shall include the plural, the plural shall
include the singular, and the words "Lender" and "Borrower" shall include their
respective successors, assigns, heirs, executors and administrators.
<PAGE>
IN WITNESS WHEREOF, Borrower has duly executed this Note as of the day
and year first above written.
BORROWER:
VERIQUEST-COLONY PLAZA ONE 1997, a Texas
joint venture
By: VERIQUEST COLONY PLAZA ONE, LTD., a
Texas limited partnership, a Joint Venturer
By: VERIQUEST COMPANIES, INC., a Texas
corporation, its General Partner
By:_______________________________________
Jerry E. Allgood, President
By: COLONY SIX ~ CD, LTD., a Texas limited
partnership, a JointVenturer
By: CD-GP, INC., a Texas corporation, its General
Partner
By:_____________________________________
S. Jay Williams, President
STATE OF _______________ )
)s
COUNTY OF _____________ )
The foregoing instrument was acknowledged before me this _____ day of
_____________, 1998, by Jerry E. Allgood, as the President of VeriQuest
Companies, Inc., a Texas corporation, which is the sole general partner of
VeriQuest Colony Plaza One, Ltd., a Texas limited partnership, which is a Joint
Venturer of VeriQuest-Colony Plaza One 1997, a Texas loins Venture, on behalf of
said corporation, limited partnership and joint venture. He is personally known
to me or has produced_________________________ as identification.
________________________________
Print Name:_____________________
Notary Public
Commission No.__________________
My Commission Expires: ____________
<PAGE>
STATE OF _______________ )
) s
COUNTY OF _____________ )
The foregoing instrument was acknowledged before me this ______ day of
________________, 1998, by S. Jay Williams, as the President of CD-GP, Inc., a
Texas corporation, which is the sole general partner of Colony Six CD, Ltd., a
Texas limited partnership, which is a Joint Venturer of VeriQuest-Colony Plaza
One 1997, a Texas Joint Venture, on behalf of said corporation, limited
partnership and joint venture. He is personally known to me or has produced
____________________________ as identification.
Print Name:_________________________________
Notary Public
Commission No.______________________________
My Commission Expires: ____________
<PAGE>
REVOLVING CREDIT AGREEMENT
dated as of August 25, 1998
by and among
UNITED INVESTORS REALTY TRUST
as Borrower
THE FINANCIAL INSTITUTIONS PARTY HERETO
AND THEIR ASSIGNEES UNDER SECTION 11.8. HEREOF
as Lenders
and
WELLS FARGO BANK, NATIONAL ASSOCIATION
as Agent
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I.DEFINITIONS.......................................................1
SECTION 1.1. Definitions..........................................1
SECTION 1.3. Subsidiaries.........................................17
SECTION 1.4. Interpretation Generally; Times......................17
ARTICLE II.CREDIT FACILITY.................................................18
SECTION 2.1. Making of Revolving Loans............................18
SECTION 2.2. Requests for Revolving Loans.........................19
SECTION 2.3. Funding..............................................19
SECTION 2.4. Continuation.........................................19
SECTION 2.5. Conversion...........................................20
SECTION 2.6. Interest Rate........................................20
SECTION 2.7. Special Provisions for LIBOR Loans...................21
SECTION 2.8. Capital Adequacy.....................................23
SECTION 2.9. Repayment of Loans...................................24
SECTION 2.10. Voluntary Reductions of the Commitments..............25
SECTION 2.11. Extension of Revolving Credit Termination Date.......25
SECTION2.12. Notes................................................26
SECTION 2.13. Liens on Collateral..................................26
SECTION 2.14. Letters of Credit....................................26
ARTICLE III.GENERAL LOAN PROVISIONS.........................................31
SECTION 3.1. Fees.................................................31
SECTION 3.2. Computation of Interest and Fees.....................31
SECTION 3.3. Pro Rata Treatment...................................31
SECTION 3.4. Sharing of Payments, Etc.............................32
SECTION 3.5. Defaulting Lenders...................................33
SECTION 3.6. Purchase of Defaulting Lender's Pro Rata Share.......33
SECTION 3.7. Limitation of Interest...............................34
SECTION 3.8. Statements of Account................................36
SECTION 3.9. Agent's Reliance.....................................36
ARTICLE IV.POOL PROPERTIES..................................................36
SECTION 4.1. Acceptance of Pool Properties........................36
SECTION 4.2. Termination of Designation as Pool Property;
Release..............................................39
SECTION 4.3. Additional Requirements of Pool Properties...........39
ARTICLE V.CONDITIONS........................................................39
SECTION 5.1. Conditions Precedent to Effectiveness................39
SECTION 5.2. Conditions Precedent to Loans and Issuance of
Letters of Credit....................................41
ARTICLE VI.REPRESENTATIONS AND WARRANTIES...................................44
SECTION 6.1. Existence and Power..................................44
SECTION 6.2. Ownership Structure..................................45
SECTION 6.3. Authorization of Agreement, Notes, Loan Documents
and Borrowings.....................................................45
SECTION 6.4. Compliance of Agreement, Notes, Loan Documents
and Borrowing with Laws, etc.......................................45
SECTION 6.5. Compliance with Law; Governmental Approvals..........45
SECTION 6.6. Indebtedness and Guarantees..........................46
SECTION 6.7. Property Management Agreements and Other Major
Agreements...........................................46
SECTION 6.8. Absence of Defaults..................................46
SECTION 6.9. Financial Information................................46
SECTION 6.10. Litigation..........................................47
SECTION 6.11. ERISA...............................................47
SECTION 6.12. Taxes...............................................47
SECTION 6.13. Investment Company Act; Public Utility Holding
Company Act.........................................47
SECTION 6.14. Full Disclosure.....................................47
SECTION 6.15. Insurance...........................................48
SECTION 6.16. Not Plan Assets.....................................48
SECTION 6.17. Title and Liens.....................................48
SECTION 6.18. Pool Properties.....................................48
SECTION 6.19. Margin Stock........................................48
SECTION 6.20. Solvency............................................48
ARTICLE VII.COVENANTS.......................................................49
SECTION 7.1. Information..........................................49
SECTION 7.2. Payment of Obligations...............................51
SECTION 7.3. Maintenance of Property; Insurance...................51
SECTION 7.4. Conduct of Business; Maintenance of Existence;
Qualification;
Amendment of Declaration of Trust..................................52
SECTION 7.5. Compliance with Laws.................................52
SECTION 7.6. Inspection of Property, Books and Records............53
SECTION 7.7. Consolidations, Mergers, Acquisitions and Sales
of Assets............................................53
SECTION 7.8. Use of Proceeds and Letters of Credit................54
SECTION 7.9. Major Agreements.....................................54
SECTION 7.10. Major Construction..................................54
SECTION 7.11. ERISA...............................................55
SECTION 7.12. ERISA Exemptions....................................55
SECTION 7.13. Negative Pledge.....................................55
SECTION 7.14. REIT Status.........................................55
SECTION 7.15. Agreements with Affiliates..........................55
SECTION 7.16. New Subsidiaries....................................56
SECTION 7.17. Investment Manager; Advisory Agreement..............56
SECTION 7.18. Borrower Securities Listed..........................57
SECTION 7.19. Management..........................................57
SECTION 7.20. Year 2000...........................................57
ARTICLE VIII.FINANCIAL COVENANTS............................................57
SECTION 8.1. Minimum Net Worth....................................58
SECTION 8.2. Ratio of Total Liabilities to Gross Asset Value......58
SECTION 8.3. Distributions........................................58
SECTION 8.4. Ratio of EBITDA to Interest Expense..................58
SECTION 8.5. Ratio of EBITDA to Debt Service and
Capital Expenditures Reserve.......................................58
SECTION 8.6. Permitted Investments................................59
SECTION 8.7. Floating Rate Debt...................................59
SECTION 8.8. Other Secured Indebtedness...........................59
ARTICLE IX.DEFAULTS.........................................................60
SECTION 9.1. Events of Default....................................60
SECTION 9.2. Remedies Upon an Event of Default....................61
SECTION 9.3. Additional Remedies Upon Certain Default.............62
SECTION 9.4. Rescission of Acceleration by Majority Lenders.......62
SECTION 9.5. Allocation of Proceeds...............................62
SECTION 9.6. Collateral Account...................................63
ARTICLE X.THE AGENT.........................................................64
SECTION 10.1. Appointment and Authorization.......................64
SECTION 10.2. Agent and Affiliates................................64
SECTION 10.3. Collateral Matters; Protective Advances.............65
SECTION 10.4. Post-Foreclosure Plans............................66
SECTION 10.5. Approvals of Lenders................................67
SECTION 10.6. Consultation with Experts...........................67
SECTION 10.7. Liability of Agent..................................67
SECTION 10.8. Indemnification of Agent............................68
SECTION 10.9. Credit Decision.....................................68
SECTION 10.10. Successor Agent....................................69
SECTION 10.11. Approvals and Other Actions by Majority Lenders....69
ARTICLE XI.MISCELLANEOUS....................................................70
SECTION 11.1. Notices.............................................70
SECTION 11.2. No Waivers..........................................71
SECTION 11.3. Expenses............................................72
SECTION 11.4. Stamp, Intangible and Recording Taxes...............73
SECTION 11.5. Indemnification.....................................73
SECTION 11.6. Setoff..............................................74
SECTION 11.7. Amendments..........................................74
SECTION 11.8. Successors and Assigns..............................75
SECTION 11.9. Governing Law.......................................77
SECTION 11.10. Litigation.........................................77
SECTION 11.11. Counterparts; Integration..........................78
SECTION 11.12. Invalid Provisions.................................78
SECTION 11.13. Limitation of Liability of Trustees, Etc...........78
<PAGE>
i
Exhibit A Form of Assignment and Acceptance Agreement
Exhibit B Form of Guaranty
Exhibit C Form of Note
Exhibit D Form of Notice of Borrowing
Exhibit E Form of Notice of Continuation
Exhibit F Form of Notice of Conversion
Exhibit G Form of Extension Request
Exhibit H Form of Opinion of Borrower's Counsel
Exhibit I Form of Pool Certificate
Exhibit J Form of Eligibility Certificate
Exhibit K Form of Mortgage
Exhibit L Form of Assignment of Rents and Leases
Exhibit M Form of Estoppel Certificate
Exhibit N Form of Subordination and Non-Disturbance Agreement
Exhibit O Form of Reaffirmation of Guaranty
Exhibit P Form of Environmental Indemnity Agreement
Exhibit Q Form of Property Management Contract Assignment
Schedule 4.1 Pool Properties as of Agreement Date
Schedule 6.2 Ownership Structure
Schedule 6.6 Indebtedness and Guarantees
Schedule 6.7 Management Agreements and Other Major Agreements
Schedule 6.15 Insurance
<PAGE>
REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT (this "Agreement") dated as of August 25, 1998
by and among UNITED INVESTORS REALTY TRUST, a Texas real estate investment trust
("Borrower"), each of the financial institutions initially a signatory hereto
together with their assignees pursuant to Section 11.8. ("Lenders"), and WELLS
FARGO BANK, NATIONAL ASSOCIATION, as contractual representative for Lenders to
the extent and in the manner provided in Article X. below (in such capacity
"Agent").
WHEREAS, in order to refinance certain retail shopping centers currently owned
by Borrower or its Wholly Owned Subsidiaries, to finance future acquisitions by
Borrower or its Wholly Owned Subsidiaries of additional retail shopping centers
and for other purposes permitted by this Agreement, Borrower desires to borrow
from Lenders, on a secured revolving credit basis, loans in an aggregate
principal sum outstanding from time to time not exceeding Thirty Million Dollars
($30,000,000.00); and
WHEREAS, Lenders are willing to make loans to Borrower on such basis
for such purposes, subject to the terms and conditions hereof.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I.
DEFINITIONS
SECTION I.1. Definitions.
The following terms, as used herein, have the following meanings:
"Adjusted Asset Value" means, as of a given date, (a) EBITDA of
Borrower and its Consolidated Subsidiaries for the fiscal quarter most recently
ended multiplied by (b) 4 and divided by (c) the Capitalization Rate. For
purposes of determining Adjusted Asset Value, EBITDA shall be adjusted by the
Agent in its reasonable discretion to take into account acquisitions and
dispositions of property by Borrower and its Consolidated Subsidiaries and shall
exclude any EBITDA from property upon which construction is then in progress.
"Adjusted LIBO Rate" means, with respect to any Interest Period, an
interest rate per annum equal to the lesser of (a) the sum of (1) the LIBO Rate
with respect to such Interest Period plus (2) 1.5% or (b) the Maximum Lawful
Rate.
"Advisory Agreement" means the Amended and Restated Advisory Agreement
dated as of June 9, 1997, by and between the Borrower and the Investment
Manager.
<PAGE>
"Affiliate" means any Person which controls, is controlled by or is
under common control with Borrower. As used herein, the term "control" means
possession, directly or indirectly, of the power to vote ten percent (10%) or
more of any class of voting securities of a Person or to direct or otherwise
cause the direction of the management or policies of a Person, whether through
the ownership of voting securities, by contract or otherwise.
"Applicable Law" means all applicable provisions of local, state,
federal and foreign constitutions, statutes, rules, regulations, ordinances,
decrees, permits, concessions and orders of all governmental bodies and all
orders and decrees of all courts, tribunals and arbitrators.
"Appraisal" means, in respect of any Pool Property or proposed Pool
Property, an M.A.I. appraisal commissioned by and addressed to Agent (acceptable
to Agent as to form, substance and appraisal date), prepared by a professional
appraiser acceptable to Agent, having at least the minimum qualifications
required under Applicable Law governing Agent, including FIRREA, and determining
the "as is" market value of such Property as between a willing buyer and a
willing seller.
"Appraised Value" means as to each Pool Property or proposed Pool
Property the "as is" market value of such Property as reflected in the then most
recent Appraisal of such Property as the same may have been adjusted by Agent
based upon its internal review of such Appraisal which is based on criteria and
factors then generally used and considered by Agent in determining the value of
similar projects, which review shall be conducted prior to acceptance of such
Appraisal by Agent and in any event within 30 days after receipt by Agent of
such Appraisal.
"Assignee" has the meaning given that term in Section 11.8.(c).
"Assignment and Acceptance Agreement" means an Assignment and
Acceptance Agreement between a Lender and an Assignee substantially in the form
of Exhibit A.
"Assignment of Rents" means each assignment of rents and leases
encumbering each Pool Property, each substantially in the form of Exhibit L and
incorporating such modifications as may be necessary, appropriate or customary
in Agent's determination under the law of the State where the Property is
located, and as otherwise originally executed or as the same may thereafter from
time to time be supplemented, amended, modified or extended as security for the
Obligations.
"Base Rate" means a rate of interest equal to the lesser of (a) the
greater of (1) the rate of interest per annum established from time to time by
Wells Fargo Bank, National Association, San Francisco, California and designated
as its prime rate (which rate of interest may not be the lowest rate charged by
such bank, Agent or any of Lenders on similar loans) and (2) the Federal Funds
Rate plus one-half of one percent (0.5%) or (b) the Maximum Lawful Rate. Each
change in the Base Rate shall become effective without prior notice to Borrower
or Lenders automatically as of the opening of business on the date of such
change in the Base Rate.
"Base Rate Loan" means any Revolving Loan hereunder with respect to
which the interest rate is calculated by reference to the Base Rate.
<PAGE>
"Business Day" means (a) any day except a Saturday, Sunday or other day
on which commercial banks in Houston, Texas or San Francisco, California are
authorized or required to close and (b) with reference to LIBOR Loans, any day
(except a Saturday, Sunday or other day on which commercial banks in Houston,
Texas or San Francisco, California are authorized or required to close) on which
dealings in Dollar deposits are carried out in the London interbank market.
"Capital Expenditures Reserve" means, for any period and with respect
to any Property, an amount equal to the greater of (a) the aggregate square
footage of all completed space of such Property times $0.15, times a fraction,
the numerator of which is the number of days of such period, and the denominator
of which is 365 and (b) the amount of capital expenditures actually made in
respect of such Property, excluding non-reoccurring capital expenditures for
such period.
"Capital Stock" means any common stock, preferred stock, other capital
stock or other equity interest in a Person that is a corporation.
"Capitalization Rate" means ten percent (10.00%).
"Capitalized Lease Obligation" means Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, and the amount of such Indebtedness
shall be the capitalized amount of such obligations determined in accordance
with GAAP.
"Collateral" means any real or personal property securing any of the
Obligations and includes all "Mortgaged Property" as defined in each Mortgage
and all other property subject to a lien created by a Collateral Document.
"Collateral Account" means a special interest-bearing deposit account
maintained by Agent under its sole dominion and control.
"Collateral Documents" means the Mortgages, Assignments of Rents,
Property Management Contract Assignments, financing statements, and other loan
and collateral documents creating, evidencing and perfecting Lenders' Liens in
any of the Collateral.
"Commitment" means, as to each Lender, such Lender's obligation to make
Revolving Loans pursuant to Section 2.1. and to participate in Letters of Credit
pursuant to Section 2.14.(f) in an amount up to, but not exceeding, the amount
set forth for such Lender on its signature page hereto as such Lender's
"Commitment Amount" or as set forth in any Assignment and Assumption Agreement
for such Lender, as the same may be reduced from time to time pursuant to
Section 2.10. or as a result of an assignment pursuant to Section 11.8.(c).
"Compliance Certificate" means the certificate described in Section
7.1.(c).
<PAGE>
"Consequential Loss" means, for any Lender with respect to (a)
Borrower's payment of all or any portion of the then-outstanding principal
amount of a LIBOR Loan on a day other than the last day of the Interest Period
related thereto or (b) any of the circumstances specified in Section 2.7.(d)
upon which a Consequential Loss may be incurred, any loss (excluding loss of
anticipated profits), cost or expense incurred by such Lender as a result of the
timing of such payment or Loan or in the redepositing, redeploying or
reinvesting the principal amount so paid or affected by the timing of such Loan
or the circumstances described in such Section, including without limitation,
the sum of (i) the interest which, but for the payment or timing of the Loan,
such Lender would have earned in respect of such principal amount, reduced, if
such Lender is able to redeposit, redeploy, or reinvest such principal amount by
the interest earned by such Lender as a result of so redepositing, redeploying
or reinvesting such principal amount and (ii) any expense or penalty incurred by
such Lender on redepositing, redeploying or reinvesting such principal amount.
All determinations of Consequential Loss shall be made by the Agent exercising
its reasonable judgment.
"Consolidated Subsidiary" means, with respect to a Person at any date,
any Subsidiary or other entity the accounts of which would be consolidated with
those of such Person in its consolidated financial statements in accordance with
GAAP, if such statements were prepared as of such date.
"Contingent Obligation" means, for any Person, any commitment,
undertaking, Guarantee or other obligation constituting a contingent liability
that must be accrued under GAAP.
"Continue", "Continuation" and "Continued" each refers to the
continuation of a LIBOR Loan from one Interest Period to the next Interest
Period pursuant to Section 2.4.
"Convert", "Conversion" and "Converted" each refers to the conversion
of a Loan of one Type into a Loan of another Type pursuant to Section 2.5.
"Debt Service" means, with respect to any Person and for any period,
the sum of (a) Interest Expense of such Person for such period plus (b)
regularly scheduled principal payments on Indebtedness of such Person during
such period other than any regularly scheduled principal payment payable on any
Indebtedness which repays 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.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Defaulting Lender" has the meaning given that term in Section 3.5.
"Dollars" or "$" means the lawful currency of the United States of
America.
<PAGE>
"EBITDA" means, with respect to any Person and for any period and
without duplication, the sum of (a) net earnings (loss) of such Person for such
period (excluding equity in net earnings or net loss of Unconsolidated
Affiliates) plus (b) depreciation and amortization expense and other non-cash
charges of such Person for such period (but only to the extent deducted in
determining net income (loss) for such period) plus (c) interest expense of such
Person for such period (but only to the extent deducted in determining net
income (loss) for such period) plus (d) income and franchise tax expense of such
Person in respect of such period (but only to the extent deducted in determining
net income (loss) for such period) minus or plus (e) extraordinary gains or
losses of such Person and gains and losses from sales of assets of such Person
for such period plus (f) such Person's pro rata share of EBITDA of each of such
Person's Unconsolidated Affiliates (determined in a manner consistent with the
calculation of such Person's EBITDA).
"Effective Date" means the date this Agreement becomes effective in
accordance with Section 5.1.
"Eligible Property" means a Property which satisfies all of the
following requirements as determined by Agent: (a) such Property is owned in fee
simple by Borrower or a Wholly Owned Subsidiary of Borrower; (b) neither such
Property, nor any interest of Borrower or such Wholly Owned Subsidiary therein,
is subject to any Lien other than Permitted Liens or to any agreement (other
than this Agreement or any other Loan Document) that prohibits the creation of
any Lien thereon as security for Indebtedness; (c) if such Property is owned by
a Wholly Owned Subsidiary: (i) none of Borrower's direct or indirect ownership
interest in such Wholly Owned Subsidiary is subject to any Lien other than
Permitted Liens or to any agreement (other than this Agreement or any other Loan
Document) that prohibits the creation of any Lien thereon as security for
Indebtedness and (ii) neither such Wholly Owned Subsidiary, nor any other Wholly
Owned Subsidiary through which Borrower holds any indirect interest in such
Wholly Owned Subsidiary, is subject to any restriction of any kind which would
limit its ability to pay or perform its obligations under the Guaranty required
to be delivered hereunder prior to its obligation to pay dividends or make any
other distribution on any of such Wholly Owned Subsidiary's capital stock or
other securities owned by Borrower or any other Wholly Owned Subsidiary of
Borrower; (d) such Property has an Occupancy Rate of at least 80%; and (e) such
Property is free of all structural defects, title defects, environmental
conditions or other adverse matters except for defects, conditions or matters
individually or collectively which are not material to the profitable operation
of such Property.
"Eligibility Certificate" means the certificate described in Section
4.1.(b)(iii).
"Environmental Indemnity Agreement" means an Environmental Indemnity
Agreement executed by Borrower in favor of Agent and Lenders substantially in
the form of Exhibit P.
<PAGE>
"Environmental Laws" means any and all Applicable Laws relating to the
environment and that are applicable to Borrower and its assets or properties,
the effect of the environment on human health or to emissions, discharges or
releases of pollutants, contaminants, Hazardous Substances or wastes into the
environment including, without limitation, ambient air, surface water, ground
water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, Hazardous Substances or wastes or the clean-up or
other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA Group" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
that are treated as a single employer under Section 414 of the Internal Revenue
Code.
"ERISA Plan" means any employee benefit plan subject to Title I of
ERISA.
"Event of Default" means the occurrence of any of the events specified
in Section 9.1., whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
governmental or nongovernmental body; provided that any requirement for notice
or lapse of time or any other condition has been satisfied.
"Executive Investment Summary" means, to the extent available, the set
of information provided to the investment committee of the Borrower's board of
trustees in connection with the purchase or acquisition of a Property. The
Executive Investment Summary shall include, at a minimum, the following
information relating to such Property: (a) a description of such Property, such
description to include the age, location, site plan, color photographs and
current occupancy rate of such Property; and (b) the purchase price paid or to
be paid for such Property.
"Extension Fee" has the meaning given that term in Section 3.1(b).
"Extension Request" has the meaning given that term in Section 2.11.
"Federal Funds Rate" means, on any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day, provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is published on such next succeeding Business Day, the
Federal Funds Rate for such day shall be the average rate quoted to Agent on
such day on such transactions as reasonably determined by Agent.
"FIRREA" means the Financial Institution Recovery Reform and
Enforcement Act of 1989, as amended.
<PAGE>
"Funds from Operations" means, as of any period for a Person, gross
revenues (excluding unforfeited security deposits) of such Person, less all
disbursements of such Person characterized as expenses and all proper charges
against income, plus depreciation and deferred taxes, reserves and other
non-cash charges (except for amortization of deferred finance costs) of such
Person; provided, that there shall not be included in such revenues (a) any
proceeds of any insurance policy other than rental or business interruption
insurance received by such Person, (b) any gain which is classified as
"extraordinary" in accordance with GAAP, or (c) any capital gains. The
components of 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 for Borrower and any of its Subsidiaries in accordance with
GAAP. Adjustments for Unconsolidated Affiliates will be calculated to reflect
funds from operations on the same basis.
"GAAP" means, 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 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 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 Borrower that could affect 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 Borrower's operating
performance and financial condition are substantially the same after such change
as they were immediately before such change.
"Governmental Approvals" means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.
"Governmental Authority" means any government (or any political
subdivision or jurisdiction thereof), court, bureau, agency or other
governmental authority having jurisdiction over Borrower or any Subsidiary, or
any of its or their business, operations or properties.
"Gross Asset Value" means, at a given time, the sum of (a) Adjusted
Asset Value at such time, plus (b) all cash and cash equivalents of Borrower and
its Consolidated Subsidiaries at such time (excluding tenant deposits and other
cash and cash equivalents the disposition of which is restricted in any way
(excluding restrictions in the nature of early withdrawal penalties), plus the
current book value of all real property of Borrower and its Consolidated
Subsidiaries held for development or upon which construction is then in
progress.
<PAGE>
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Indebtedness
or other obligation of any other Person and, without limiting the generality of
the foregoing, any obligation, direct or indirect, contingent or otherwise, of
such Person (a) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness or other obligation (whether arising by virtue
of partnership arrangements, by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (b) entered into for the purpose of
assuring in any other manner the obligee of such Indebtedness or other
obligation of the payment thereof or to protect such obligee against loss in
respect thereof (in whole or in part), provided that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
"Guarantor" means all Subsidiaries of Borrower and each other Person
who has executed and delivered the Guaranty; provided a Guaranty will not be
required from a Subsidiary now existing or hereafter established for the
exclusive purpose of obtaining permanent financing from a lender which has
prohibited the Subsidiary from providing such a Guaranty.
"Guaranty" means the Guaranty executed by each Guarantor in favor of
Agent and Lenders and substantially in the form of Exhibit B.
"Hazardous Substances" means any toxic, radioactive, caustic or
otherwise hazardous substance, waste or contaminant, including asbestos and
petroleum, its derivatives, by-products and other hydrocarbons, or any substance
or material having any constituent elements displaying any of the foregoing
characteristics, which are defined in or identified or regulated by any
Environmental Laws.
"Indebtedness" of any Person means at any date, without duplication,
(a) all obligations of such Person for borrowed money, (b) all obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(c) all obligations of such Person to pay the deferred purchase price of
property or services, (d) all Capitalized Lease Obligations of such Person, (e)
all Indebtedness secured by a Lien on any asset of such Person, whether or not
such Indebtedness is otherwise an obligation of such Person, (f) all
reimbursement obligations of such Person under any letters of credit or
acceptances (whether or not the same have been presented for payment); (g) such
Person's proportionate share of Indebtedness of any Unconsolidated Affiliate of
such Person, which Indebtedness such Person is obligated on a non-recourse
basis; (h) all indebtedness of any other Person of which such Person is a
general partner; and (i) all Indebtedness of any such Unconsolidated Affiliate,
which Indebtedness such Person has Guaranteed or is otherwise obligated on a
recourse basis.
<PAGE>
"Intangible Assets" means, with respect to any Person (to the extent
reflected in determining shareholders' equity of such Person) (a) deferred
charges, (b) 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 (c) 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.
"Interest Expense" means, for any Person and for any period, all paid
or accrued interest expense of such Person for such period and shall include (a)
all paid or accrued interest expense in respect of Indebtedness and other
liabilities which such Person has Guaranteed or is otherwise obligated whether
or not on a recourse basis (b) such Person's proportionate share of all paid or
accrued interest expense for such period of Unconsolidated Affiliates of such
Person, (c) costs related to Interest Rate Agreements, but shall not include
capitalized interest on Reserved Construction Loans for such period and (d) fees
and other expenses related to the issuance of letters of credit.
"Interest Period" means with respect to any LIBOR Loan, the period
commencing on the date of the borrowing, Conversion or Continuation of such Loan
and ending on the last day of the period selected by Borrower pursuant to the
provisions below. The duration of each Interest Period shall be one, two, three
or six months (and if approved by all Lenders, twelve months), in each case
Borrower may, in an appropriate Notice of Borrowing, Notice of Continuation or
Notice of Conversion, select. In no event shall an Interest Period of a
Revolving Loan extend beyond the Maturity Date. Whenever the last day of any
Interest Period would otherwise occur on a day other than a Business Day, the
last day of such Interest Period shall be extended to occur on the next
succeeding Business Day; provided, however, that if such extension would cause
the last day of such Interest Period to occur in the next following calendar
month, the last day of such Interest Period shall occur on the next preceding
Business Day.
"Interest Rate Agreement" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
contractual agreement or arrangement entered into by Borrower or any Subsidiary
with a nationally recognized then rated investment grade financial institution
for the purpose of protecting Borrower or such Subsidiary against fluctuations
in interest rates.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"Investment" means, with respect to any Person and whether or not such
investment constitutes a controlling interest in such Person: (a) the purchase
or other acquisition of any share of capital stock or other equity interest,
evidence of Indebtedness or other security issued by any other Person; (b) any
loan, advance or extension of credit to, or contribution to the capital of, any
other Person; (c) any Guarantee of the Indebtedness of any other Person; (d) the
subordination of any claim against a Person to other Indebtedness of such
Person; and (e) any other investment in any other Person.
"Investment Manager" means FCA Corp., a Texas corporation, which
provides investment and management services to the Borrower pursuant to the
terms of the Advisory Agreement.
<PAGE>
"Issuing Bank" means Agent or an affiliate of Agent, as the issuer of
Letters of Credit hereunder.
"Issuing Bank Fees" means the Fees payable to the Issuing Bank pursuant
to the last sentences of Section 3.1.(c) and (d).
"L/C Commitment Amount" means an amount equal to $10,000,000.00
"Lending Office" means, for each Lender and for each Type of Loan, the
office of such Lender specified as such on its signature page hereto, or in any
applicable Assignment or Acceptance Agreement or such other office of such
Lender as such Lender may notify the Agent from time to time.
"Letter of Credit" has the meaning set forth in Section 2.14.(a).
"Letter of Credit Documents" means, with respect to any Letter of
Credit, collectively, any application therefor, any certificate or other
document presented in connection with a drawing under such Letter of Credit and
any other agreement, instrument or other document governing or providing for (a)
the rights and obligations of the parties concerned or at risk with respect to
such Letter of Credit or (b) any collateral security for any of such
obligations.
"Letter of Credit Liabilities" shall mean, without duplication, at any
time and in respect of any Letter of Credit, the sum of (a) the Stated Amount of
such Letter of Credit plus (b) the aggregate unpaid principal amount of all
Reimbursement Obligations of Borrower at such time due and payable in respect of
all drawings made under such Letter of Credit. For purposes of this Agreement, a
Lender shall be deemed to hold a Letter of Credit Liability in an amount equal
to its participation interest in the related Letter of Credit under Section
2.14.(f).
"LIBO Rate" means, with respect to each Interest Period, the average
rate of interest per annum (rounded upwards, if necessary, to the next highest
1/16th of 1%) at which deposits in immediately available funds in Dollars are
offered to Agent (at approximately 10:00 a.m., two Business Days prior to the
first day of such Interest Period) by first class banks in the interbank
Eurodollar market, for delivery on the first day of such Interest Period, such
deposits being for a period of time equal or comparable to such Interest Period
and in an amount equal to or comparable to the principal amount of the LIBOR
Loan to which such Interest Period relates. Each determination of the LIBO Rate
by Agent shall, in absence of demonstrable error, be conclusive and binding.
"LIBOR Loan" means any Revolving Loan hereunder with respect to which
the interest rate is calculated by reference to the LIBO Rate for a particular
Interest Period.
<PAGE>
"Lien" as applied to the property of any Person means: (a) any
mortgage, deed to secure debt, deed of trust, pledge, lien, charge or lease
constituting a Capitalized Lease Obligation, conditional sale or other title
retention agreement, or other security interest, security title or encumbrance
of any kind in respect of any property of such Person, or upon the income or
profits therefrom; (b) any arrangement, express or implied, under which any
property of such Person is transferred, sequestered or otherwise identified for
the purpose of subjecting the same to the payment of Indebtedness or performance
of any other obligation in priority to the payment of the general, unsecured
creditors of such Person; and (c) the filing of, or any agreement to give, any
financing statement under the Uniform Commercial Code or its equivalent in any
jurisdiction.
"Loan" means a Revolving Loan.
"Loan Document" means this Agreement, each of the Notes, each Letter of
Credit, each of the Environmental Indemnity Agreements, each of the Guaranties,
each Collateral Document, any agreement evidencing the fees referred to in
Section 3.1.(c) and each other document or instrument executed and delivered by
any Loan Party in connection with this Agreement or any of the other foregoing
documents.
"Loan Party" means each of Borrower, each Guarantor, and each other
Person who guarantees all or a portion of the Obligations and/or who pledges any
collateral security to secure all or a portion of the Obligations.
"Major Agreements" means, at any time, (a) each Property Management
Agreement with respect to a Pool Property and (b) any other agreement which in
any way relates to the use, occupancy, operation, maintenance, enjoyment or
ownership of a Pool Property, the breach or loss of which would have a
Materially Adverse Effect.
"Major Space Lease" means a lease of space in any Real Property which
represents more than fifteen percent (15%) of the net rentable space in such
Pool Property.
"Majority Lenders" means, as at any time, Lenders having at least
66-2/3% of the aggregate amount of the Commitments or, if the Commitments have
been terminated or reduced to zero, Lenders holding at least 66-2/3% of the
principal amount of the Loans and Letter of Credit Liabilities.
"Materially Adverse Effect" means a materially adverse effect on (a)
the business, assets, liabilities, financial condition, or results of operations
of Borrower and its Consolidated Subsidiaries taken as a whole, (b) the ability
of any Loan Party to perform its obligations under any Loan Document to which it
is a party, (c) the validity or enforceability of any of such Loan Documents,
(d) the rights and remedies of Lenders and Agent under any of such Loan
Documents or (e) the timely payment of the principal of or interest on the Loans
or other amounts payable in connection therewith. Except with respect to
representations made or deemed made by Borrower under Article VI. or in any of
the other Loan Documents to which any Loan Party is a party, all determinations
of materiality shall be made by Agent in its reasonable judgment unless
expressly provided otherwise.
<PAGE>
"Maturity Date" means August 25, 2000, or such earlier date that the
entire unpaid principal balance of all Loans together with all accrued and
unpaid interest thereon shall become due and payable in accordance with the
terms of this Agreement or the Notes.
"Maximum Loan Availability" means, at any time, the lesser of (a) sixty
percent (60%) of the aggregate Appraised Value of the Pool Properties and (b)
the aggregate Permanent Loan Estimate of all Pool Properties.
"Mortgage(s)" means each mortgage, deed of trust or deed to secure debt
encumbering a Pool Property, each substantially in the form of Exhibit K and
incorporating such modifications as may be necessary, appropriate or customary
in Agent's determination under the law of the State where the Pool Property is
located, and as otherwise originally executed or as the same may thereafter from
time to time be supplemented, amended, modified or extended by one or more
indentures supplemental thereto granted by Borrower to Lenders as security for
the Obligations.
"Net Operating Income" means, for any Property for the period in
question, but without duplication, the sum of (a) rents and other revenues
received in the ordinary course from such Property (including amounts received
from tenants as reimbursements for common area maintenance, taxes and insurance
and proceeds of rent loss insurance but excluding pre-paid rents and revenues
and security deposits except to the extent applied in satisfaction of tenants'
obligations for rent) minus (b) all expenses paid or accrued related to the
ownership, operation or maintenance of such property, including but not limited
to taxes, assessments and the like, insurance, utilities, payroll costs,
maintenance, repair and landscaping expenses, marketing expenses, and general
and administrative expenses (including an appropriate allocation for legal,
accounting, advertising, marketing and other expenses incurred in connection
with such property, but specifically excluding general overhead expenses of
Borrower and any property management fees) minus (c) the Capital Expenditures
Reserve for such Property as of the end of such period minus (d) the greater of
(i) the actual property management fee paid during such period and (ii) an
imputed management fee in the amount of three percent (3.0%) of the gross
revenues for such Property for such period, in each case determined in
accordance with GAAP.
"Net Worth" means, for any Person and as of a given date, (a) ninety
percent (90%) of such Person's total stockholder's equity plus (b) all
depreciation and amortization of such Person after June 30, 1998 minus (c) all
Intangible Assets of such Person, all as determined in accordance with GAAP.
"Non-ERISA Plan" means any Plan subject to Section 4975 of the Internal
Revenue Code.
"Note" means a Revolving Note.
"Notice of Borrowing" means a notice in the form of Exhibit D to be
delivered to Agent pursuant to Section 2.2. evidencing Borrower's request
for a Borrowing of Revolving Loans.
<PAGE>
"Notice of Continuation" means a notice in the form of Exhibit E to be
delivered to Agent pursuant to Section 2.4.evidencing Borrower's request for the
Continuation of a Borrowing of Revolving Loans.
"Notice of Conversion" means a notice in the form of Exhibit F to be
delivered to Agent pursuant to Section 2.5. evidencing Borrower's request for
the Conversion of a Borrowing of Revolving Loans.
"Obligations" means, individually and collectively: (a) all Loans; (b)
all Reimbursement Obligations and all other Letter of Credit Liabilities; (c)
any and all renewals and extensions of any of the foregoing and (d) all other
indebtedness, liabilities, obligations, covenants and duties of Borrower owing
to Agent and/or Lenders and/or the Issuing Bank of every kind, nature and
description, under or in respect of this Agreement or any of the other Loan
Documents, whether direct or indirect, absolute or contingent, due or not due,
contractual or tortious, liquidated or unliquidated, and whether or not
evidenced by any promissory note.
"Occupancy Rate" means, with respect to a Property at any time, the
ratio, expressed as a percentage, of (a) the net rentable square footage of such
Property actually occupied by tenants paying rent pursuant to binding leases as
to which no monetary default has occurred and has been continuing for a period
of 90 or more days to (b) the aggregate net rentable square footage of such
Property.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permanent Loan Estimate" means as of any date and with respect to any
Pool Property, an amount equal to (a) the Net Operating Income of such Property
for the immediately preceding six-month period divided by (b) the product of (i)
1.25 and (ii) the percent of a principal amount of a loan required to be paid
each year in order to repay the principal amount of such loan in full based on a
25-year amortization and to pay the amount of interest due at each installment,
utilizing a rate of interest equal to the greater of (x) the rate most recently
published in the United States Federal Reserve Statistical Release (H.15) for
10-year Treasury Constant Maturities plus 2.00% or (y) 8.0%, in equal monthly
installments of principal and interest.
"Permitted Distributions" means an amount not exceeding 95% of
Borrower's Funds from Operations for any fiscal quarter during the twelve month
period following the Effective Date and during any consecutive four-fiscal
quarter period thereafter.
<PAGE>
"Permitted Liens" means (a) Liens granted to Agent to secure the
Obligations, (b) pledges or deposits made to secure payment of worker's
compensation (or to participate in any fund in connection with worker's
compensation insurance), unemployment insurance, pensions or social security
programs, (c) 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, (d) the following to the extent no Lien has been filed in any
jurisdiction or agreed to: (i) Liens for taxes not yet due and payable; or (ii)
Liens imposed by mandatory provisions of Applicable Law such as for
materialmen's, mechanic's, warehousemen's and other like Liens arising in the
ordinary course of business, securing payment of Indebtedness the payment of
which is not yet due, (e) Liens for taxes, assessments and governmental charges
or assessments that are being contested in good faith by appropriate proceedings
diligently conducted, and for which reserves acceptable to Agent have been
provided, (f) Liens expressly permitted under the terms of the Loan Documents,
and (g) any extension, renewal or replacement of the foregoing to the extent
such Lien as so extended, renewed or replaced would otherwise be permitted
hereunder.
"Person" means an individual, a corporation, a partnership, a limited
liability company, an association, a trust or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Plan" means at any time an employee pension benefit plan which is
covered by Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Internal Revenue Code.
"Pool Certificate" means the certificate described in Section 4.1(b)
(ii).
"Pool Properties" means those Eligible Properties that have been
approved pursuant to Article IV. for inclusion when calculating the Maximum Loan
Availability and which are subject to the Lien of the Mortgages.
"Pro Rata Share" means, with respect to any Lender, the percentage
obtained by dividing (a) the amount of such Lender's Commitment by (b) the
aggregate amount of Commitments of all Lenders, or, if the Commitments shall
have been terminated, the percentage obtained by dividing (i) the aggregate
unpaid principal amount of Loans and Letter of Credit Liabilities owing to such
Lender by (ii) the aggregate unpaid principal amount of all Loans and Letter of
Credit Liabilities.
"Property" means real property improved with one or more operating
retail shopping centers owned directly or indirectly by Borrower.
"Property Management Agreements" means, collectively, all agreements
entered into by Borrower with a Property Manager pursuant to which Borrower
engages such Property Manager to advise Borrower with respect to the management
of a Pool Property.
"Property Management Contract Assignment" means a Property Management
Contract Assignment executed by Borrower in favor of Agent for the benefit of
Lenders substantially in the form of Exhibit Q.
"Property Manager" means any Person engaged by Borrower under a
Property Management Agreement to advise Borrower with respect to the management
of a Pool Property.
<PAGE>
"Protective Advance" means all sums expended as determined by Agent to
be necessary or appropriate to: (a) protect the priority, validity and
enforceability of the Liens on, and security interests in, any Collateral and
the instruments evidencing the Obligations; or (b) (i) prevent the value of any
Collateral from being materially diminished (assuming the lack of such a payment
within the necessary time frame could potentially cause such Collateral to lose
value), or (ii) protect any of the Collateral from being materially damaged,
impaired, mismanaged or taken, including, without limitation, any amounts
expended in accordance with Section 10.3.
"Regulations T, U and X" means Regulations T, U and X of the Board of
Governors of the Federal Reserve System, as in effect from time to time.
"Reimbursement Obligation" means the absolute, unconditional and
irrevocable obligation of Borrower to reimburse the Issuing Bank for any drawing
honored by the Issuing Bank under a Letter of Credit.
"REIT" means a Person qualifying for treatment as a "real estate
investment trust" under the Internal Revenue Code.
"Reserved Construction Loan" shall mean a construction loan extended to
Borrower or any Subsidiary for the purpose of financing construction of a
Property in respect of which: (a) no default or event of default exists; (b)
interest on such loan has been budgeted to accrue at a rate of not less than the
Base Rate at the time the interest reserve account is established; (c) the
amount of such budgeted interest has been (i) included in the principal amount
of such loan and (ii) segregated into an interest reserve account (which shall
include any arrangement whereby loan proceeds equal to such budgeted interest
are reserved and only disbursed to make interest payments in respect of such
loan); (d) absent an event of default or default, such interest can be paid out
of such interest reserve account only for the purpose of making interest
payments on such loan; and (e) the amount held in such interest reserve account
in respect of such loan, together with the net income, if any, from such
Property projected by Agent will be sufficient, as determined by Agent, to pay
all Interest Expense on such loan until the date that the Net Operating Income
of such Property is anticipated to be sufficient to pay all Interest Expense on
such loan.
"Restricted Payment" means cash payment or other distributions on, or
in respect of, any class of stock of, or other equity interest in, a Person, or
other payments or transfers made in respect of the redemption, repurchase or
acquisition of such stock or equity interest, other than any distribution or
other payment payable solely in capital stock of such Person.
"Revolving Credit Termination Date" means the earlier to occur of (a)
August 25, 2000, or such later date to which such date may be extended in
accordance with Section 2.11. or (b) the date on which the Commitments are
terminated pursuant to Section 9.2.
"Revolving Loan" means a loan made by a Lender to Borrower under
Section 2.1.
<PAGE>
"Revolving Note" means a promissory note executed by Borrower, payable
to the order of a Lender, in an amount equal to such Lender's Commitment and
substantially in the form of Exhibit C.
"Secured Indebtedness" means, with respect to any Person, any
Indebtedness of such Person that is secured in any manner by any Lien on any
real property and shall include such Person's pro rata share of the Secured
Indebtedness of any of such Person's Unconsolidated Affiliates.
"Share" means a transferable unit of beneficial interest in Borrower.
"Solvent" means, when used with respect to any Person, that (a) the
fair value and the fair salable value of its assets (excluding any Indebtedness
due from any Affiliate of such Person) are each in excess of the fair valuation
of its total liabilities (including all contingent liabilities); (b) such Person
is able to pay its debts or other obligations in the ordinary course as they
mature and (c) that the Person has capital not unreasonably small to carry on
its business and all business in which it proposes to be engaged.
"Stated Amount" means the amount available to be drawn by a beneficiary
under a Letter of Credit from time to time, as such amount may be increased or
reduced from time to time in accordance with the terms of such Letter of Credit.
"Subsidiary" means, for any Person, any corporation, partnership or
other entity of which at least a majority of the securities or other ownership
interests having by the terms thereof ordinary voting power to elect a majority
of the board of directors or other persons performing similar functions of such
corporation, partnership or other entity (without regard to the occurrence of
any contingency) is at the time directly or indirectly owned or controlled by
such Person or one or more Subsidiaries of such Person or by such Person and one
or more Subsidiaries of such Person. "Wholly Owned Subsidiary" means any such
corporation, partnership or other entity of which all of the equity securities
or other ownership interests (other than, in the case of a corporation,
directors' qualifying shares) are so owned or controlled.
"Substantial Amount" means, at the time of determination thereof, an
amount greater than or equal to 25% of the sum of (a) total consolidated assets
of Borrower and its Consolidated Subsidiaries at such time plus (b) consolidated
accumulated depreciation of Borrower and its Consolidated Subsidiaries at such
time.
<PAGE>
"Total Liabilities" means, as to any Person, at a particular date, all
liabilities which would, in conformity with GAAP, be properly classified as a
liability on the balance sheet of such Person as at such date, and in any event
shall include (without duplication): (a) all Indebtedness of such Person; (b)
all accounts payable of such Person; (c) all reimbursement obligations of such
Person under any letters of credit or banker's acceptances (whether or not the
same have been presented for payment); (d) all lease obligations (including
without limitation, ground leases) of such Person; (e) all purchase and
repurchase obligations and forward commitments of such Person; (f) all unfunded
obligations of such Person and (g) all Contingent Obligations of such Person.
"Type" with respect to any Loan, refers to whether such Loan is a LIBOR
Loan or a Base Rate Loan.
"Unconsolidated Affiliate" shall mean, in respect of any Person, any
other Person in whom such Person holds an Investment, which Investment is
accounted for in the financial statements of such Person on an equity basis of
accounting and whose financial results would not be consolidated under GAAP with
the financial results of such Person on the consolidated financial statements of
such Person.
"Unprotected Floating Rate Debt" means all Indebtedness of Borrower and
its Subsidiaries (including, without limitation, Indebtedness of Unconsolidated
Affiliates of Borrower or any Subsidiary which Indebtedness is recourse to
Borrower or such Subsidiary) which bears interest at fluctuating rates and for
which Borrower or such Subsidiary has not obtained Interest Rate Agreements
which effectively cause such variable rates to be equivalent to fixed rates or
to not otherwise exceed 9.5% per annum.
SECTION I.2. Accounting Terms and Determinations; Covenant
Calculations.
Unless otherwise specified herein, all accounting terms used herein
shall be interpreted, all accounting determinations hereunder shall be made, and
all financial statements required to be delivered hereunder shall be prepared in
accordance with GAAP.
SECTION I.3. Subsidiaries.
Unless explicitly set forth to the contrary, a reference to
"Subsidiary" shall mean a Subsidiary of Borrower and a reference to an
"Affiliate" shall mean a reference to an Affiliate of Borrower.
SECTION I.4. Interpretation Generally; Times.
References in this Agreement to "Sections", "Articles", "Exhibits" and
"Schedules" are to sections, articles, exhibits and schedules herein and hereto
unless otherwise indicated. References in this Agreement or any other Loan
Document to any document, instrument or agreement (a) shall include all
exhibits, schedules and other attachments thereto, as updated from time to time,
(b) shall include all documents, instruments or agreements issued or executed in
replacement thereof, and (c) shall mean such document, instrument or agreement,
or replacement or predecessor thereto, as amended, modified or supplemented from
time to time in accordance with its terms and in effect at any given time.
Wherever from the context it appears appropriate, each term stated in either the
singular or plural shall include the singular and plural, and pronouns stated in
the masculine, feminine or neuter gender shall include the masculine, the
feminine and the neuter. Unless otherwise indicated, all references to time are
references to San Francisco, California time.
<PAGE>
ARTICLE II.
CREDIT FACILITY
SECTION II.1. Making of Revolving Loans.
(ai Subject to the terms and conditions set forth in this Agreement
including, without limitation, Section 2.15., each Lender severally agrees to
make Revolving Loans to Borrower during the period from and including the
Effective Date to but excluding the Revolving Credit Termination Date, in an
aggregate principal amount at any one time outstanding up to, but not exceeding,
the lesser of (a) such Lender's Pro Rata Share of the Maximum Loan Availability
and (b) such Lender's Commitment. Each borrowing of Revolving Loans hereunder
shall be in an aggregate principal amount of $100,000.00 and integral multiples
of $50,000.00 in excess of that amount (except that any such borrowing of
Revolving Loans may be in the aggregate amount of the unused Commitments).
Within the foregoing limits and subject to the other terms of this Agreement,
Borrower may borrow, repay and reborrow Revolving Loans.
(bi Upon initial acceptance of a Pool Property by Lenders, Agent will
determine the Appraised Value of such Property. Thereafter, Agent will not
redetermine the Appraised Value of the Pool Properties prior to the initial
Revolving Credit Termination Date unless (i) required under Applicable Law or
(ii) with respect to a particular Pool Property, there has been change in the
Property which, in Agent's reasonable judgment, has had or could have a
Materially Adverse Effect on such Property, including, without limitation, loss
of a material tenant, a material adverse change since the Effective Date in the
Occupancy Rate or Net Operating Income, a major casualty at such Property that
is not fully covered by insurance, a material condemnation of such Property or a
material adverse change in the market conditions affecting such Property. Agent
will redetermine the Appraised Value of the Pool Properties upon exercise by
Borrower of its right under Section 2.11 to extend the Revolving Credit
Termination Date. Any redetermination of Appraised Value of the Pool Properties
under this Section 2.1(b) shall be based on current Appraisals.
(ci If there is any reduction in the Maximum Loan Availability during a
fiscal quarter, such reduction shall become effective as of the end of such
fiscal quarter. If there is any increase in the Maximum Loan Availability during
a fiscal quarter, then such increase shall become effective as of the first
Business Day of the Borrower's next succeeding fiscal quarter, provided that
prior to such date (a) either (i) all Lenders approve the increase, if such
increase is the result of an increase in the aggregate Appraised Value of the
Pool Properties or (ii) if such increase is the result of an increase in the
aggregate Permanent Loan Estimate of the Pool Properties, Borrower delivers a
Pool Certificate to Agent which substantiates such increase and (b) Borrower
delivers to Agent an endorsement to the title insurance policy in favor of Agent
with respect to any Pool Property as to which the Appraised Value has increased
increasing the amount thereof as related to such Pool Property to not less than
the current Appraised Value (excluding the value of personal property) for such
Pool Property, but only if such an endorsement is then available.
<PAGE>
(di Notwithstanding any other term of this Agreement or any other Loan
Document, at no time may the aggregate principal amount of all outstanding
Revolving Loans, together with the aggregate amount of all Letter of Credit
Liabilities, exceed the lesser of (a) Maximum Loan Availability at such time or
(b) the aggregate amount of the Lenders' Commitments.
SECTION II.2. Requests for Revolving Loans.
Not later than 10:00 a.m. at least one Business Day prior to a
borrowing of Base Rate Loans and not later than 10:00 a.m. at least three
Business Days prior to a borrowing of LIBOR Loans, Borrower shall deliver to
Agent a Notice of Borrowing. Each Notice of Borrowing shall specify the
principal amount of the Revolving Loans to be borrowed, the date such Revolving
Loans are to be borrowed (which must be a Business Day), the use of the proceeds
of such Revolving Loans, the Type of the requested Revolving Loans and if such
Revolving Loans are to be LIBOR Loans, the initial Interest Period for such
Revolving Loans. Each Notice of Borrowing shall be irrevocable once given and
binding on Borrower. Prior to delivering a Notice of Borrowing, Borrower may
(without specifying whether a Revolving Loan will be a Base Rate Loan or a LIBOR
Loan) request that Agent provide Borrower with the most recent LIBO Rate
available to Agent. Agent shall provide such quoted rate to Borrower and to
Lenders on the date of such request or as soon as possible thereafter.
SECTION II.3. Funding.
(ai Promptly after receipt of a Notice of Borrowing under Section 2.2.,
Agent shall notify each Lender by telex or telecopy, or other similar form of
transmission of the proposed borrowing. Each Lender shall deposit an amount
equal to the Revolving Loan to be made by it with Agent at Agent's Lending
Office, in immediately available funds not later than 10:00 a.m. on the date of
such proposed Revolving Loans. Upon and subject to fulfillment of all applicable
conditions set forth herein, Agent shall make available to Borrower at Agent's
Lending Office, not later than 11:00 a.m. on the date of the requested Revolving
Loans, the proceeds of such amounts received by Agent. The failure of any Lender
to deposit the amount described above with Agent shall not relieve any other
Lender of its obligations hereunder to make its Revolving Loan.
(bi Unless Agent shall have been notified by any Lender that such
Lender will not make available to Agent the Revolving Loan to be made by such
Lender on such date, Agent may in its discretion assume that such Lender will
make the proceeds of such Revolving Loan available to Agent on the date of the
requested borrowing as set forth in the Notice of Borrowing and Agent may (but
shall not be obligated to), in reliance upon such assumption, make available to
Borrower the amount of such Revolving Loan to be provided by such Lender.
SECTION II.4. Continuation.
<PAGE>
So long as no Event of Default shall have occurred and be continuing,
Borrower may on any Business Day, with respect to any LIBOR Loan, elect to
maintain such LIBOR Loan or any portion thereof as a LIBOR Loan by selecting a
new Interest Period for such LIBOR Loan. Each new Interest Period selected under
this Section shall commence on the last day of the immediately preceding
Interest Period. Each selection of a new Interest Period shall be made by
Borrower's giving of a Notice of Continuation not later than 10:00 a.m. on the
third Business Day prior to the date of any such Continuation by Borrower to
Agent. Promptly after receipt of a Notice of Continuation, Agent shall notify
each Lender by telex or telecopy, or other similar form of transmission of the
proposed Continuation. Such notice by Borrower of a Continuation shall be by
telephone or telecopy, confirmed immediately in writing if by telephone, in the
form of a Notice of Continuation, specifying (a) the date of such Continuation,
(b) the LIBOR Loan and portion thereof subject to such Continuation and (c) the
duration of the selected Interest Period, all of which shall be specified in
such manner as is necessary to comply with all limitations on Loans outstanding
hereunder. Each Notice of Continuation shall be irrevocable by and binding on
Borrower once given. If Borrower shall fail to select in a timely manner a new
Interest Period for any LIBOR Loan in accordance with this Section, such Loan
will automatically, on the last day of the current Interest Period therefore,
Convert into a Base Rate Loan notwithstanding failure of Borrower to comply with
Section 2.5.
SECTION II.5. Conversion.
So long as no Event of Default shall have occurred and be continuing,
Borrower may on any Business Day, upon Borrower's giving of a Notice of
Conversion to Agent, Convert the entire amount of all or a portion of a Loan of
one Type into a Loan of another Type. Promptly after receipt of a Notice of
Conversion, Agent shall notify each Lender by telex or telecopy, or other
similar form of transmission of the proposed Conversion. Any Conversion of a
LIBOR Loan into a Base Rate Loan shall be made on, and only on, the last day of
an Interest Period for such LIBOR Loan. Each such Notice of Conversion shall be
given not later than 10:00 a.m. on the Business Day prior to the date of any
proposed Conversion into Base Rate Loans and on the third Business Day prior to
the date of any proposed Conversion into LIBOR Loans. Subject to the
restrictions specified above, each Notice of Conversion shall be by telephone or
telecopy confirmed immediately in writing if by telephone in the form of a
Notice of Conversion specifying (a) the requested date of such Conversion, (b)
the Type of Loan to be Converted, (c) the portion of such Type of Loan to be
Converted, (d) the Type of Loan such Loan is to be Converted into and (e) if
such Conversion is into a LIBOR Loan, the requested duration of the Interest
Period of such Loan. Each Notice of Conversion shall be irrevocable by and
binding on Borrower once given. Each Conversion from a Base Rate Loan to a LIBOR
Loan shall be in an aggregate amount for the Loans of all Lenders of not less
than $2,000,000.00 or integral multiples of $50,000.00 in excess of that amount.
SECTION II.6. Interest Rate.
<PAGE>
(ai All Loans. The unpaid principal of each Base Rate Loan shall bear
interest from the date of the making of such Loan to but not including the date
of repayment thereof at a rate per annum equal to the Base Rate in effect from
day to day. The unpaid principal of each LIBOR Loan shall bear interest from the
date of the making of such Loan to but not including the date of repayment
thereof at a rate per annum equal to the Adjusted LIBO Rate for the Interest
Period therefor.
(bi Default Rate. Notwithstanding the immediately preceding subsection
(a), effective immediately upon the occurrence and during the continuance of any
Event of Default, the outstanding principal balance of the Loans and all
Reimbursement Obligations, and to the extent permitted by Applicable Law any
interest payments on the Loans not paid when due, shall bear interest payable on
demand until paid at the Base Rate from time to time in effect plus four percent
(4.0%).
SECTION II.7. Special Provisions for LIBOR Loans.
(ai Inadequacy of LIBOR Pricing. Anything herein to the contrary
notwithstanding, if, on or prior to the determination of any LIBO Rate for any
Interest Period:
(i0 Agent reasonably determines, which determination shall be
conclusive, that quotations of interest rates for the relevant deposits
referred to in the definition of LIBO Rate are not being provided in
the relevant amounts or for the relevant maturities for purposes of
determining rates of interest for LIBOR Loans as provided herein; or
(ii0 any Lender reasonably determines, which determination
shall be conclusive, and notifies Agent that the relevant rates of
interest referred to in the definition of LIBO Rate upon the basis of
which the rate of interest for LIBOR Loans for such Interest Period is
to be determined are not likely adequately to cover the cost to such
Lender of making or maintaining LIBOR Loans for such Interest Period;
then Agent shall give Borrower and each Lender prompt notice thereof and, so
long as such condition remains in effect, Lenders shall be under no obligation
to, and shall not, make additional LIBOR Loans, Continue LIBOR Loans or Convert
Base Rate Loans into LIBOR Loans and Borrower shall, on the last day of each
current Interest Period for each outstanding LIBOR Loan, either prepay such Loan
or Convert such Loan into a Base Rate Loan in accordance with Section 2.5.
(bi Number of Interest Periods. Anything herein to the contrary
notwithstanding, there shall not be outstanding at any one time more than six
(6) Interest Periods.
<PAGE>
(ci Illegality of LIBOR Loans. If, after the date of this Agreement,
the adoption of any Applicable Law, rule or regulation, or any change therein,
or any change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall make it unlawful or
impossible for any Lender to make, maintain or fund LIBOR Loans, such Lender
shall forthwith give notice thereof to Agent and Borrower. Before giving any
notice pursuant to this subsection, such Lender shall designate a different
LIBOR lending office if such designation will avoid the need for giving such
notice and will not be otherwise materially disadvantageous to any such Lender
(as determined in the reasonable judgment of such Lender). Upon receipt of such
notice, Borrower shall either (i) exercise its rights under Section 2.14. with
respect to such Lender, or (ii) Convert such Lender's LIBOR Loans to Base Rate
Loans, on either (A) the last day of the then-current Interest Period applicable
to such LIBOR Loan if such Lender may lawfully continue to maintain and fund
such LIBOR Loan to such day or (B) immediately if such Lender may not lawfully
continue to fund and maintain such LIBOR Loan to such day.
(di Consequential Losses. Borrower shall indemnify Agent and each
Lender against any Consequential Loss incurred by Agent and each Lender as a
result of (i) any failure to fulfill, on or before the date specified for such
Loan in the applicable Notice of Borrowing, the conditions to such Loan set
forth herein, or (ii) Borrower's requesting that a Base Rate Loan not be
Converted into a LIBOR Loan on the date specified for such Conversion in a
Notice of Conversion, (iii) Borrower's requesting that a LIBOR Loan not be
Continued on the date specified for such Continuation in a Notice of
Continuation or (iv) Borrower's requesting that a LIBOR Loan not be made on the
date specified for such LIBOR Loan in the Notice of Borrowing. A certificate of
Agent and each Lender establishing the amount due from Borrower according to the
preceding sentence, together with a description in reasonable detail of the
manner in which such amount has been calculated, shall be prima facie evidence
thereof.
(ei Increased Costs for LIBOR Loans. If, after the date hereof, any
Governmental Authority, central bank or other comparable authority, shall at any
time impose, modify or deem applicable any reserve (including, without
limitation, any imposed by the Board of Governors of the Federal Reserve
System), special deposit or similar requirement against assets of, deposits with
or for the account of, or credit extended by, any Lender, or shall impose on any
Lender (or its eurodollar lending office) or the interbank eurodollar market any
other condition affecting its LIBOR Loans, such Lender's Note or its obligation
to make LIBOR Loans; and the result of any of the foregoing is to increase the
cost to such Lender of making or maintaining its LIBOR Loans, or to reduce the
amount of any sum received or receivable by such Lender under this Agreement, or
under such Lender's Note, by an amount reasonably deemed by such Lender to be
material, then, within five days after demand by such Lender, Borrower shall pay
to such Lender such additional amount or amounts as will compensate such Lender
for such increased cost or reduction. Such Lender will (i) notify Agent and
Borrower of any event occurring after the date of this Agreement which will
entitle such Lender to compensation pursuant to this subsection as promptly as
practicable (but in any event within 120 days) after such Lender obtains actual
knowledge of such event, and Borrower shall not be liable for any such increased
costs that accrue between the date such notification is required to be given and
the date it was actually given and (ii) use good faith and reasonable efforts to
designate a different lending office for such Lender's LIBOR Loans if such
designation will avoid the need for, or reduce the amount of, such compensation
and will not, in the reasonable opinion of such Lender, be materially
disadvantageous to such Lender (provided that any such foreign Lender shall have
no obligation to so designate a lending office located in the United States of
America). A certificate of such Lender claiming compensation under this Section
and setting forth in reasonable detail the calculation of the additional amount
or amounts to be paid to it hereunder shall be prima facie evidence thereof.
<PAGE>
(fi Effect on Base Rate Loans. If notice has been given pursuant to
Section 2.7.(a) or (c) requiring LIBOR Loans of a Lender to be repaid or
Converted, then unless and until Agent notifies Borrower that the circumstances
giving rise to such repayment no longer apply, all Loans shall be Base Rate
Loans. If Agent notifies Borrower that the circumstances giving rise to such
repayment no longer apply, Borrower may thereafter select Loans from such Lender
to be LIBOR Loans.
(gi Payments Not at End of Interest Period. If Borrower makes any
payment of principal with respect to any LIBOR Loan of a Lender on any day other
than the last day of an Interest Period applicable to such LIBOR Loan, then
Borrower shall reimburse such Lender on demand the Consequential Loss incurred
by such Lender as a result of the timing of such payment. A certificate of Agent
setting forth in reasonable detail the basis for the determination of the amount
of Consequential Loss shall be delivered to Borrower by Agent and shall, in the
absence of demonstrable error, be conclusive and binding. Any Conversion of a
LIBOR Loan to a Base Rate Loan on any day other than the last day of the
Interest Period for such LIBOR Loan shall be deemed a payment for purposes of
this subsection.
SECTION II.8. Capital Adequacy.
If, after the date hereof, any Lender shall have determined that either
(a) the adoption of any law, rule, regulation or guideline of general
applicability regarding capital adequacy, or any change therein, or any change
in the interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or (b) compliance by such Lender (or any lending office
of such Lender) with any request or directive of general applicability regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing the
rate of return on such Lender's capital as a consequence of its or Borrower's
obligations hereunder to a level below that which such Lender could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's policies with respect to capital adequacy) by an amount reasonably
deemed by such Lender to be material, then from time to time, within ten days
after demand by such Lender, which demand shall include a calculation and a
reference to the law, rule or regulation, Borrower shall pay to such Lender such
additional amount or amounts as will adequately compensate such Lender for such
reduction. Such Lender will notify Agent and Borrower of any such determination
which will entitle such Lender to compensation pursuant to this subsection as
promptly as practicable (but in any event within 120 days) after such Lender
obtains actual knowledge of the event or condition prompting such Lender to make
such determination, and Borrower shall not be liable for any such amount or
amounts that accrue between the date such notification is required to be given
and the date it was actually given. A certificate of such Lender claiming
compensation under this Section and setting forth the additional amount or
amounts to be paid to it hereunder, together with the description of the manner
in which such amounts have been calculated, shall be prima facie evidence
thereof. In determining such amount, such Lender may use any reasonable
averaging and attribution methods.
<PAGE>
SECTION II.9. Repayment of Loans.
(ai Payment of Interest. All accrued and unpaid interest on the unpaid
principal amount of each Loan shall be payable (i) monthly in arrears on the
first day of each month, commencing with the first full calendar month occurring
after the Effective Date, (ii) on the Maturity Date and (iii) on any date on
which the principal balance of such Loan is due and payable in full. Borrower
shall receive an invoice for each monthly interest payment on or about the 10th
day of each month.
(bi Payment of Principal of Revolving Loans. The aggregate
outstanding principal balance of all Revolving Loans shall be due and payable
in full on the Maturity Date.
(ci Optional Prepayments. Borrower may, upon at least one Business
Day's prior notice to Agent, prepay any Loan in whole at any time, or from time
to time in part in an amount equal to $100,000.00 or integral multiples of
$50,000.00 in excess of that amount, by paying the principal amount to be
prepaid. If Borrower shall prepay the principal of any LIBOR Loan on any date
other than the last day of the Interest Period applicable thereto, Borrower
shall pay the amounts, if any, due under Section 2.7.(d).
(di Mandatory Prepayments. If at any time the aggregate principal
amount of all outstanding principal balances of Revolving Loans, together with
the aggregate amount of Letter of Credit Liabilities, exceeds the aggregate
amount of the Commitments in effect at such time, Borrower shall promptly upon
demand pay to Agent for the accounts of the Lenders the amount of such excess.
If at any time the aggregate outstanding principal balances of Revolving Loans
together with the aggregate amount of all Letter of Credit Liabilities, exceeds
the Maximum Loan Availability, then Borrower shall, within 10 days of Borrower
obtaining actual knowledge of the occurrence of such excess, deliver to Agent
and each Lender a written plan acceptable to Lenders to eliminate such excess
(whether by designation of additional Properties as Pool Properties, by Borrower
repaying an appropriate amount of Loans, or otherwise). If such excess is not
eliminated within 30 days of Borrower obtaining actual knowledge of the
occurrence thereof, then the entire outstanding principal balance of all Loans
and all accrued interest thereon, together with an amount equal to all Letter of
Credit Liabilities for deposit into the Collateral Account, shall be immediately
due and payable in full.
<PAGE>
(ei General Provisions as to Payments. Except to the extent otherwise
provided herein, all payments of principal, interest and other amounts to be
made by Borrower under this Agreement, the Notes or any other Loan Document
shall be made in Dollars, in immediately available funds, without setoff,
deduction or counterclaim, to Agent at its Lending Office, not later than 11:00
a.m. 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). All payments to be made by Borrower to the Issuing
Bank under this Agreement or any other Loan Document shall be made in Dollars,
in immediately available funds, without setoff, deduction or counterclaim, to
the Issuing Bank, not later than 11:00 a.m. 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). The parties agree
that if Borrower makes any payment due hereunder after 11:00 a.m. but before
5:00 p.m. on the date such payment is due, such late payment shall not
constitute a Default under Section 9.1.(a) but shall nevertheless for all other
purposes, including but not limited to, the calculation of interest and any fees
payable pursuant to Section 3.1.(a), be deemed to have been paid as of the next
succeeding Business Day as provided in the applicable parenthetical phrase of
the preceding sentences. Each payment received by Agent for the account of a
Lender under this Agreement or any Note shall be paid to such Lender, by wire
transfer of immediately available funds in accordance with the wiring
instructions provided by such Lender to the Agent from time to time, for the
account of such Lender at the applicable Lending Office of such Lender. In the
event Agent fails to pay such amounts to such Lender within one Business Day of
receipt by Agent, Agent shall pay interest on such amount at a rate per annum
equal to the Federal Funds Rate from time to time in effect. If the due date of
any payment under this Agreement or any other Loan Document would otherwise fall
on a day which is not a Business Day such date shall be extended to the next
succeeding Business Day and interest shall be payable for the period of such
extension.
SECTION II.10. Voluntary Reductions of the Commitments.
Borrower may terminate or reduce the aggregate unused amount of the
Commitments (for which purpose use of the Commitments shall be deemed to include
the aggregate amount of all Letter of Credit Liabilities) at any time and from
time to time without penalty or premium upon not less than three Business Days
prior notice to Agent of each such termination or reduction, which notice shall
specify the effective date thereof and the amount of any such reduction (which
in the case of any partial reduction of the Commitments shall not be less than
$100,000.00 and integral multiples of $50,000.00 in excess of that amount) and
shall be irrevocable once given and effective only upon receipt by Agent;
provided, however, that if Borrower seeks to reduce the aggregate amount of the
Commitments below $2,000,000.00, then the Commitments shall be reduced to zero
and except as otherwise provided herein, the provisions of this Agreement shall
terminate. The Commitments, once reduced pursuant to this Section, may not be
increased. Borrower shall pay all interest and other costs on the Revolving
Loans accrued to the date of such reduction or termination of the Commitments to
Agent for the account of Lenders.
SECTION II.11. Extension of Revolving Credit Termination Date.
<PAGE>
Borrower may request Agent and Lenders to extend the current Revolving
Credit Termination Date for one one-year period by executing and delivering to
Agent at least 90 days but no more than 120 days prior to the then-current
Revolving Credit Termination Date, a written request in the form of Exhibit G
(an "Extension Request"). Agent shall forward to each Lender and the Issuing
Bank a copy of any Extension Request delivered to Agent promptly upon receipt
thereof. So long as no Event of Default shall have occurred and be continuing at
the time such Extension Request is received by the Agent and Borrower shall
concurrently with delivery of the Extension Request pay to Agent the Extension
Fee in accordance with Section 3.1(b), the Revolving Credit Termination Date
shall thereupon be extended for one year. At the Agent's option, the Appraised
Value of all Pool Properties may be re-determined by re-appraising the Pool
Properties as a further condition to extension of the Revolving Credit
Termination Date. Any such new Appraisals shall be ordered by Agent within three
(3) Business Days after receipt by Agent of the Extension Request. Agent shall
promptly report to Borrower the results of such re-appraisal. If Borrower is not
satisfied with such appraisals, it may withdraw the Extension Request, in which
case the Extension Fee, less Agent's cost in obtaining the Appraisals, shall be
refunded to Borrower.
SECTION II.12. Notes.
The obligation of Borrower to repay the Revolving Loans shall, in
addition to this Agreement, be evidenced by the Revolving Notes.
SECTION II.13. Liens on Collateral.
Pursuant to the terms of the Collateral Documents, Borrower has granted
to Agent, for the benefit of Lenders and the Issuing Bank, a valid, enforceable,
perfected, and (except for Permitted Liens) first priority and only security
interest and Lien in and to the Collateral as security for the Obligations.
SECTION II.14. Letters of Credit.
(ai Letters of Credit. Subject to the terms and conditions of this
Agreement including, without limitation, Section 2.15., Agent agrees to cause
the Issuing Bank, on behalf of Lenders, to issue for the account of Borrower
during the period from and including the Effective Date to, but excluding, the
Revolving Credit Termination Date one or more letters of credit (each a "Letter
of Credit") in such form and containing such terms as may be requested from time
to time by Borrower and acceptable to the Issuing Bank and Agent, up to a
maximum aggregate Stated Amount at any one time outstanding not to exceed the
L/C Commitment Amount.
(bi Terms of Letters of Credit. At the time of issuance, the amount,
terms and conditions of each Letter of Credit, and of any drafts or acceptances
thereunder, shall be subject to approval by the Issuing Bank, Agent and
Borrower. Notwithstanding the foregoing, in no event may (i) the expiration date
of any Letter of Credit extend beyond the Revolving Credit Termination Date,
(ii) a Letter of Credit have an initial duration in excess of one year, (iii) a
Letter of Credit contain an automatic renewal clause or (iv) a Letter of Credit
be issued within 30 days of the Revolving Credit Termination Date. The initial
Stated Amount of each Letter of Credit shall be at least $100,000.00.
<PAGE>
(ci Requests for Issuance of Letters of Credit. In connection with the
proposed issuance of a Letter of Credit, Borrower shall give Agent written
notice (or telephonic notice promptly confirmed in writing) prior to the
requested date of issuance of a Letter of Credit, such notice to describe in
reasonable detail the proposed terms of such Letter of Credit and the nature of
the transactions or obligations proposed to be supported by such Letter of
Credit, and in any event shall set forth with respect to such Letter of Credit
(i) the proposed initial Stated Amount, (ii) the beneficiary, (iii) whether such
Letter of Credit is a commercial or standby letter of credit and (iv) the
proposed expiration date. Borrower shall also execute and deliver such customary
applications and agreements for standby letters of credit, standby letter of
credit agreements, applications for amendment to letter of credit, and other
forms as requested from time to time by Agent or the Issuing Bank. Provided
Borrower has given the notice prescribed by the first sentence of this
subsection and Borrower has executed and delivered to Agent and the Issuing Bank
the agreements, applications and other forms as required by the immediately
preceding sentence of this subsection, and subject to the terms and conditions
of this Agreement, including the satisfaction of any applicable conditions
precedent set forth in Article V., Agent agrees to cause the Issuing Bank to
issue the requested Letter of Credit on the requested date of issuance for the
benefit of the stipulated beneficiary but in no event prior to the date five (5)
Business Days following the date after which each of Agent and the Issuing Bank
received the items required to be delivered to it under this subsection. Upon
the written request of Borrower Agent shall deliver to Borrower a copy of (i)
any Letter of Credit proposed to be issued hereunder prior to the issuance
thereof and (ii) each issued Letter of Credit within a reasonable time after the
date of issuance thereof. To the extent any term of a Letter of Credit Document
is inconsistent with a term of any Loan Document, the term of the Letter of
Credit Document shall control.
(di Reimbursement Obligations. Upon receipt by the Issuing Bank from
the beneficiary of a Letter of Credit of any demand for payment under such
Letter of Credit, Agent shall promptly notify Borrower of the amount to be paid
by the Issuing Bank as a result of such demand and the date on which payment is
to be made by the Issuing Bank to such beneficiary in respect of such demand.
Borrower hereby unconditionally and irrevocably agrees to pay and reimburse the
Issuing Bank for the amount of each demand for payment under such Letter of
Credit at or prior to the date on which payment is to be made by the Issuing
Bank to the beneficiary thereunder, without presentment, demand, protest or
other formalities of any kind. Upon receipt by the Issuing Bank of any payment
in respect of any Reimbursement Obligation, Agent agrees to cause the Issuing
Bank to pay to each Lender that has acquired a participation therein under the
second sentence of Section 2.14.(f) such Lender's Pro Rata Share of such
payment.
(ei Manner of Reimbursement. Unless Borrower shall elect to otherwise
satisfy such Reimbursement Obligation, such reimbursement shall, subject to
satisfaction of the conditions in Section 5.1 and Section 5.2 hereof and to the
Maximum Loan Availability (after adjustment to reflect elimination of the
corresponding Reimbursement Obligation), automatically be made by the borrowing
of Revolving Loans. If Borrower fails to reimburse the Issuing Bank for a demand
for payment under a Letter of Credit by the date of such payment, Agent shall
give each Lender prompt notice thereof and of the amount of the demand for
payment, specifying such Lender's Pro Rata Share of the amount of the related
demand for payment.
<PAGE>
(fi Lenders' Participation in Letters of Credit. Immediately upon the
issuance by the Issuing Bank of any Letter of Credit each Lender shall be deemed
to have irrevocably and unconditionally purchased and received from the Issuing
Bank, without recourse or warranty, an undivided interest and participation to
the extent of such Lender's Pro Rata Share of the liability of the Issuing Bank
with respect to such Letter of Credit and each Lender thereby shall absolutely,
unconditionally and irrevocably assume, as primary obligor and not as surety,
and shall be unconditionally obligated to the Issuing Bank to pay and discharge
when due, such Lender's Pro Rata Share of the Issuing Bank's liability under
such Letter of Credit. In addition, upon the making of each payment by a Lender
to Agent for the benefit of the Issuing Bank in respect of any Letter of Credit
pursuant to the immediately following subsection (g), such Lender shall,
automatically and without any further action on the part of the Issuing Bank or
such Lender, acquire (i) a participation in an amount equal to such payment in
the Reimbursement Obligation owing to the Issuing Bank by Borrower in respect of
such Letter of Credit and (ii) a participation in a percentage equal to such
Lender's Pro Rata Share in any interest or other amounts payable by Borrower in
respect of such Reimbursement Obligation (other than Issuing Bank Fees).
(gi Payment Obligation of Lenders. Each Lender severally agrees to pay
to Agent for the benefit of the Issuing Bank on demand in immediately available
funds in Dollars the amount of such Lender's Pro Rata Share of each drawing paid
by the Issuing Bank under each Letter of Credit to the extent such amount is not
reimbursed by Borrower pursuant to Section 2.14.(d) and (e) or the other Letter
of Credit Documents. Each such Lender's obligation to make such payments to
Agent for the benefit of the Issuing Bank under this subsection, and the Issuing
Bank's right to receive the same, shall be absolute, irrevocable and
unconditional and shall not be affected in any way by any circumstance
whatsoever, including without limitation, (i) the failure of any other Lender to
make its payment under this subsection, (ii) the financial condition of
Borrower, (iii) the existence of any Default or Event of Default, including any
Event of Default described in Section 9.1.(h) or (i) or (iv) the termination of
the Commitments. Each such payment to Agent for the benefit of the Issuing Bank
shall be made without any offset, abatement, withholding or deduction
whatsoever.
<PAGE>
(hi Issuing Bank's Duties Regarding Letters of Credit; Unconditional
Nature of Reimbursement Obligation. In examining documents presented in
connection with drawings under Letters of Credit and making payments under such
Letters of Credit against such documents, the Issuing Bank shall only be
required to use the same standard of care as it uses in connection with
examining documents presented in connection with drawings under letters of
credit in which it has not sold participations and making payments under such
letters of credit. Borrower assumes all risks of the acts and omissions of, or
misuse of the Letters of Credit by, the respective beneficiaries of such Letters
of Credit. In furtherance and not in limitation of the foregoing, neither the
Issuing Bank, Agent nor any of Lenders shall be responsible (i) for the form,
validity, sufficiency, accuracy, genuineness or legal effects of any document
submitted by any party in connection with the application for and issuance of or
any drawing honored under any Letter of Credit even if it should in fact prove
to be in any or all respects invalid, insufficient, inaccurate, fraudulent or
forged; (ii) for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign any Letter of Credit, or the
rights or benefits thereunder or proceeds thereof, in whole or in part, which
may prove to be invalid or ineffective for any reason; (iii) for failure of the
beneficiary of any Letter of Credit to comply fully with conditions required in
order to draw upon such Letter of Credit; (iv) for errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail,
cable, telex, telecopy or otherwise, whether or not they be in cipher; (v) for
errors in interpretation of technical terms; (vi) for any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any Letter of Credit, or of the proceeds thereof; (vii) for the
misapplication by the beneficiary of any such Letter of Credit, or the proceeds
of any drawing under such Letter of Credit; and (viii) for any consequences
arising from causes beyond the control of the Issuing Bank, Agent or Lenders.
None of the above shall affect, impair or prevent the vesting of any of the
Issuing Bank's rights or powers hereunder. Any action taken or omitted to be
taken by the Issuing Bank under or in connection with any Letter of Credit, if
taken or omitted in the absence of gross negligence or willful misconduct, shall
not create against the Issuing Bank any liability to Borrower, Agent or any
Lender. In this connection, the obligation of Borrower to reimburse the Issuing
Bank for any drawing made under any Letter of Credit shall be absolute,
unconditional and irrevocable and shall be paid strictly in accordance with the
terms of this Agreement or any other applicable Letter of Credit Document under
all circumstances whatsoever, including without limitation, the following
circumstances: (i) any lack of validity or enforceability of any Letter of
Credit Document or any term or provisions therein; (ii) any amendment or waiver
of or any consent to departure from all or any of the Letter of Credit
Documents; (iii) the existence of any claim, setoff, defense or other right
which Borrower may have at any time against the Issuing Bank, Agent, any Lender,
any beneficiary of a Letter of Credit or any other Person, whether in connection
with this Agreement, the transactions contemplated hereby or in the Letter of
Credit Documents or any unrelated transaction; (iv) any breach of contract or
dispute between Borrower, the Issuing Bank, Agent, any Lender or any other
Person; (v) any demand, statement or any other document presented under a Letter
of Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein or made in connection therewith being untrue or
inaccurate in any respect whatsoever; (vi) any non-application or misapplication
by the beneficiary of a Letter of Credit of the proceeds of any drawing under
such Letter of Credit; (vii) payment by the Issuing Bank under the Letter of
Credit against presentation of a draft or certificate which does not strictly
comply with the terms of the Letter of Credit; and (viii) any other act,
omission to act, delay or circumstance whatsoever that might, but for the
provisions of this Section, constitute a legal or equitable defense to or
discharge of Borrower's Reimbursement Obligations.
(ii Amendments, Etc. The issuance by the Issuing Bank of any amendment,
supplement or other modification to any Letter of Credit shall be subject to the
same conditions applicable under this Agreement to the issuance of new Letters
of Credit (including, without limitation, that the request therefor be made
through the Issuing Bank), and no such amendment, supplement or other
modification shall be issued unless either (i) the respective Letter of Credit
affected thereby would have complied with such conditions had it originally been
issued hereunder in such amended, supplemented or modified form or (ii) the
Majority Lenders shall have consented thereto.
<PAGE>
(ji Information to Lenders. Promptly following the end of each calendar
month in which any Letters of Credit are outstanding, Agent shall deliver to
Borrower, and each Lender a notice describing the aggregate amount of all
Letters of Credit outstanding at the end of such month. Upon the request of any
Lender from time to time, Agent shall deliver any other information reasonably
requested by such Lender with respect to each Letter of Credit then outstanding.
Other than as set forth in this subsection, Agent shall have no duty to notify
Lenders regarding the issuance or other matters regarding Letters of Credit
issued hereunder. The failure of Agent to perform its requirements under this
subsection shall not relieve any Lender from its obligations under Section
2.14.(g).
(ki Effect of Letters of Credit on Commitments. Upon the issuance by
the Issuing Bank of any Letter of Credit and until such Letter of Credit shall
have expired or been terminated, the Commitment of each Lender shall be deemed
to be utilized for all purposes of this Agreement in an amount equal to such
Lender's Pro Rata Share of the Stated Amount of such Letter of Credit plus any
related Reimbursement Obligations then outstanding.
(li Termination of Agreement Prior to Expiration of Letters of Credit;
Letter of Credit Obligations in Excess of L/C Commitment Amount. If on the date
(the "Facility Termination Date") this Agreement is terminated (whether
voluntarily, by reason of the occurrence of an Event of Default or otherwise)
any Letters of Credit are outstanding, Borrower shall, on the Facility
Termination Date, pay to Agent an amount of money equal to the Stated Amount of
such Letter(s) of Credit, together with the amount of any fees which would
otherwise be payable by Borrower to Agent, Lenders or the Issuing Bank in
respect of such Letters of Credit but for the occurrence of the Facility
Termination Date for deposit into the Collateral Account. If at any time the
aggregate Stated Amount of all outstanding Letters of Credit shall exceed the
L/C Commitment Amount then in effect, Borrower shall pay to Agent for deposit
into the Collateral Account an amount equal to such excess. If a drawing
pursuant to any such Letter of Credit occurs on or prior to the expiration date
of such Letter of Credit, Borrower authorizes Agent to disburse to the Issuing
Bank the monies deposited in the Collateral Account to make payment to the
beneficiary with respect to such drawing. If no drawing occurs on or prior to
the expiration date of any such Letter of Credit, Agent shall return to Borrower
the monies deposited in the Collateral Account with respect to such outstanding
Letter of Credit on or before the date 10 Business Days after the expiration
date with respect to the Letter of Credit.
(mi Additional Costs in Respect of Letters of Credit. If as a result of
the adoption of any Applicable Law or guideline of general applicability
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or if as a result of any risk-based capital guideline or other
requirement heretofore or hereafter issued by any Governmental Authority, there
shall be imposed, modified or deemed applicable any tax, reserve, special
deposit, capital adequacy or similar requirement against or with respect to or
measured by reference to Letters of Credit and the result shall be to increase
the cost to the Issuing Bank of issuing (or any Lender purchasing participations
in) or maintaining its obligation hereunder to issue (or purchase participations
in) any Letter of Credit or reduce any amount receivable by the Issuing Bank or
any Lender hereunder in respect of any Letter of Credit, then, upon demand by
the Issuing Bank or such Lender, Borrower shall pay immediately to the Issuing
Bank or such Lender, as applicable, from time to time as specified by the
Issuing Bank or a Lender, such additional amounts as shall be sufficient to
compensate the Issuing Bank or such Lender for such increased costs or
reductions in amount.
<PAGE>
ARTICLE III.
GENERAL LOAN PROVISIONS
SECTION III.1. Fees.
(ai On the Effective Date, Borrower shall pay to the Agent for the
account of the Lenders an amount equal to three-eights of one percent (0.375%)
of the aggregate amount of all Lenders' Commitments.
(bi If, pursuant to Section 2.11., Borrower requests an extension of
the Revolving Credit Termination Date, Borrower shall pay to Agent for the
account of Lenders an extension fee (the "Extension Fee") equal to two-tenths of
one percent (0.20%) of the aggregate amount of the Commitments at such time.
Such fee shall be payable on the date on which Borrower delivers its Extension
Request.
(ci Borrower agrees to pay to Agent such fees for services rendered by
Agent as shall be separately agreed upon between Borrower and Agent. Borrower
agrees to pay to the Issuing Bank such fees for services rendered by the Issuing
Bank as shall be separately agreed upon between Borrower and the Issuing Bank
from time to time.
(di Borrower agrees to pay to Agent for account of each Lender a letter
of credit fee at a rate per annum equal to one and one-half percent (1.5%) of
the Stated Amount of each Letter of Credit on the date of issuance of such
Letter of Credit and on each anniversary of the date of issuance thereof until
such Letter of Credit has expired. The fee provided for in the immediately
preceding sentence shall be nonrefundable. Borrower shall pay directly to the
Issuing Bank from time to time on demand all commissions, charges, costs and
expenses in the amounts customarily charged by the Issuing Bank from time to
time in like circumstances with respect to the issuance of each Letter of
Credit, drawings, amendments and other transactions relating thereto.
SECTION III.2. Computation of Interest and Fees.
Interest on the Loans and the Letter of Credit Liabilities and all fees
shall be computed on the basis of a year of 360 days and paid for the actual
number of days elapsed (including the first day but excluding the last day of a
period).
SECTION III.3. Pro Rata Treatment.
<PAGE>
Except to the extent otherwise provided herein: (a) each borrowing from
Lenders under Section 2.1. shall be made from Lenders, each payment of the Fees
under Sections 3.1.(a) and (b) shall be made for account of Lenders, and each
termination or reduction of the amount of the Commitments under Section 2.10.
shall be applied to the respective Commitments of Lenders, pro rata according to
the amounts of their respective Commitments; (b) each payment or prepayment of
principal of Loans shall be made for account of Lenders pro rata in accordance
with the respective unpaid principal amounts of the Loans held by them, provided
that if immediately prior to giving effect to any such payment in respect of any
Revolving Loans the outstanding principal amount of the Revolving Loans shall
not be held by Lenders pro rata in accordance with their respective Commitments
in effect at the time such Loans were made, then such payment shall be applied
to the Revolving Loans in such manner as shall result, as nearly as is
practicable, in the outstanding principal amount of the Revolving Loans being
held by Lenders pro rata in accordance with their respective Commitments; (c)
each payment of interest on Loans shall be made for account of Lenders pro rata
in accordance with the amounts of interest on such Loans then due and payable to
the respective Lenders; (d) the making, Conversion and Continuation of Revolving
Loans of a particular Type (other than Conversions provided for by Section
2.7.(c) shall be made pro rata among Lenders according to the amounts of their
respective Commitments (in the case of making of Loans) or their respective
Loans (in the case of Conversions and Continuations of Loans) and the then
current Interest Period for each Lender's portion of each Loan of such Type
shall be coterminous; and (e) the Lenders' participation in, and payment
obligations in respect of, Letters of Credit under Section 2.15., shall be pro
rata in accordance with their respective Commitments. The fees referred to in
Section 3.1.(c) shall be for the account of only Agent.
SECTION III.4. Sharing of Payments, Etc.
<PAGE>
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 but subject to receipt of Agent's
prior written consent, to offset balances held by it for the account of Borrower
at any of such Lender's offices, in Dollars or in any other currency, against
any principal of, or interest on, any of such Lender's Loans hereunder (or other
Obligations owing to such Lender hereunder) which is not paid when due
(regardless of whether such balances are then due to Borrower), in which case
such Lender shall promptly notify Borrower, all other Lenders and Agent thereof;
provided, however, such Lender's failure to give such notice shall not affect
the validity of such offset. If a Lender shall obtain payment of any principal
of, or interest on, any Loan under this Agreement, or shall obtain payment on
any other Obligation owing by Borrower through the exercise of any right of
set-off, banker's lien or counterclaim or similar right or otherwise or through
voluntary prepayments directly to a Lender or other payments made by Borrower to
a Lender not in accordance with the terms of this Agreement and such payment,
pursuant to the immediately preceding Section, should be distributed to Lenders
in accordance with their Pro Rata Shares, such Lender shall promptly purchase
from the other Lenders participations in (or, if and to the extent specified by
such Lender, direct interests in) the Loans made by the other Lenders or other
Obligations owed to such other Lenders in such amounts, and make such other
adjustments from time to time as shall be equitable, to the end that all 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) in accordance
with their respective Pro Rata Shares. To such end, all 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.
Borrower agrees that any Lender so purchasing a participation (or direct
interest) in the Loans or other Obligations owed to such other Lenders may
exercise all rights of set-off, bankers' lien, counterclaim or similar rights
with respect to such participation as fully as if such Lender were a direct
holder of Loans in the amount of such participation. 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 Borrower.
SECTION III.5. Defaulting Lenders.
If for any reason any Lender (a "Defaulting Lender") shall fail or
refuse to perform its obligations under this Agreement or any other Loan
Document to which it is a party within the time period specified for performance
of such obligation or, if no time period is specified, if such failure or
refusal continues for a period of five Business Days after notice from Agent,
then, in addition to the rights and remedies that may be available to Agent or
Borrower under this Agreement or Applicable Law, such Defaulting Lender's right
to participate in the administration of the Loans, this Agreement and the other
Loan Documents, including without limitation, any right to vote in respect of,
to consent to or to direct any action or inaction of Agent or to be taken into
account in the calculation of Majority Lenders or all Lenders, shall be
suspended during the pendency of such failure or refusal. If for any reason a
Lender fails to make timely payment to Agent of any amount required to be paid
to Agent hereunder (without giving effect to any notice or cure periods), in
addition to other rights and remedies which Agent or Borrower may have under the
immediately preceding provisions or otherwise, Agent shall be entitled (i) to
collect interest from such Defaulting Lender on such delinquent payment for the
period from the date on which the payment was due until the date on which the
payment is made at the Federal Funds Rate, (ii) to withhold or setoff and to
apply in satisfaction of the defaulted payment and any related interest, any
amounts otherwise payable to such Lender under this Agreement or any other Loan
Document and (iii) to bring an action or suit against such Lender in a court of
competent jurisdiction to recover the defaulted amount and any related interest.
Any amounts received by Agent in respect of a Defaulting Lender's Pro Rata Share
of the Loans shall not be paid to such Defaulting Lender and shall be held by
Agent and applied against the purchase price of such Pro Rata Share of the Loans
under Section 3.6. or (b) paid to such Defaulting Lender upon the Defaulting
Lender's curing of its default.
SECTION III.6. Purchase of Defaulting Lender's Pro Rata Share.
(a) Any Lender who is not a Defaulting Lender shall have the right, but
not the obligation, in its sole discretion, to acquire all of a Defaulting
Lender's Pro Rata Share of the Loans. If more than one Lender exercises such
right, each such Lender shall have the right to acquire such proportion of such
Defaulting Lender's Pro Rata Share of the Loans as they may mutually agree. Upon
any such purchase of the Pro Rata Share of the Loans of a Defaulting Lender, the
Defaulting Lender's interest in the Loans and its rights hereunder (but not its
liability in respect thereof or under the Loan Documents or this Agreement to
the extent the same relate to the period prior to the effective date of the
purchase) shall terminate on the date of purchase, and the Defaulting Lender
shall promptly execute all documents reasonably requested to surrender and
transfer such interest to the purchaser thereof, including an appropriate
Assignment and Acceptance Agreement.
<PAGE>
(b) The purchase price for the Pro Rata Share of the Loans of a
Defaulting Lender shall be equal to the amount of the principal balance of the
Loans outstanding and owed by Borrower to the Defaulting Lender. Prior to
payment of such purchase price to Defaulting Lender, Agent shall apply against
such purchase price any amounts payable in respect of such Pro Rata Share of the
Loans as contemplated by the last sentence of Section 3.5. The Defaulting Lender
shall be entitled to receive amounts owed to it by Borrower under the Loan
Documents which accrued prior to the date of the default by the Defaulting
Lender, to the extent the same are received by Agent from or on behalf of
Borrower. There shall be no recourse against any Lender or Agent for the payment
of such sums except to the extent of the receipt of payments from any other
party or in respect of the Loans.
SECTION III.7. Limitation of Interest.
<PAGE>
(a) It is expressly stipulated and agreed to be the intent of Borrower
and Lenders at all times to comply strictly with the applicable Texas law
governing the maximum rate or amount of interest payable on the Notes or the
Related Indebtedness (or applicable United States federal law to the extent that
it permits Lenders to contract for, charge, take, reserve or receive a greater
amount of interest than under Texas law). If the applicable law is ever
judicially interpreted so as to render usurious any amount (i) contracted for,
charged, taken, reserved or received pursuant to the Notes, any of the other
Loan Documents or any other communication or writing by or between Borrower and
Lenders related to the transaction or transactions that are the subject matter
of the Loan Documents, (ii) contracted for, charged or received by reason of
Lenders' exercise of the option to accelerate the maturity of the Notes and/or
the Related Indebtedness, or (iii) Borrower will have paid or Lenders will have
received by reason of any voluntary prepayment by Borrower of the Notes and/or
the Related Indebtedness, then it is Borrower's and Lenders' express intent that
all amounts charged in excess of the Maximum Lawful Rate shall be automatically
cancelled, ab initio, and all amounts in excess of the Maximum Lawful Rate
theretofore collected by Lenders shall be credited on the principal balance of
the Notes and/or the Related Indebtedness (or, if the Notes and all Related
Indebtedness have been or would thereby be paid in full, refunded to Borrower),
and the provisions of the Notes and the other Loan Documents immediately be
deemed reformed and the amounts thereafter collectible hereunder and thereunder
reduced, without the necessity of the execution of any new document, so as to
comply with the applicable law, but so as to permit the recovery of the fullest
amount otherwise called for hereunder and thereunder; provided, however, if the
Notes have been paid in full before the end of the stated term of the Notes,
then Borrower and Lenders agree that Lenders shall, with reasonable promptness
after Lenders discover or are advised by Borrower that interest was received in
an amount in excess of the Maximum Lawful Rate, either refund such excess
interest to Borrower and/or credit such excess interest against the Notes and/or
any Related Indebtedness then owing by Borrower to Lenders. Borrower hereby
agrees that as a condition precedent to any claim seeking usury penalties
against Lenders, Borrower will provide written notice to Lenders, advising
Lenders in reasonable detail of the nature and amount of the violation, and
Lenders shall have sixty (60) days after receipt of such notice in which to
correct such usury violation, if any, by either refunding such excess interest
to Borrower or crediting such excess interest against the Notes and/or the
Related Indebtedness then owing by Borrower to Lenders. All sums contracted for,
charged or received by Lender for the use, forbearance or detention of any debt
evidenced by the Notes and/or the Related Indebtedness shall, to the extent
permitted by applicable law, be amortized or spread, using the actuarial method,
throughout the stated term of the Notes and/or the Related Indebtedness
(including any and all renewal and extension periods) until payment in full so
that the rate or amount of interest on account of the Notes and/or the Related
Indebtedness does not exceed the Maximum Lawful Rate from time to time in effect
and applicable to the Notes and/or the Related Indebtedness for so long as debt
is outstanding. In no event shall the provisions of Chapter 346 of the Texas
Finance Code (which regulates certain revolving credit loan accounts and
revolving triparty accounts) apply to the Notes and/or the Related Indebtedness.
Notwithstanding anything to the contrary contained herein or in any of the other
Loan Documents, it is not the intention of Lenders to accelerate the maturity of
any interest that has not accrued at the time of such acceleration or to collect
unearned interest at the time of such acceleration. Borrower and Lenders hereby
agree that any and all suits alleging the contracting for, charging or receiving
of usurious interest shall lie in Harris County, Texas, and each irrevocably
waive the right to venue in any other county.
(b) As used herein, the term "Maximum Lawful Rate" shall mean the
maximum lawful rate of interest which may be contracted for, charged, taken,
received or reserved by Lenders in accordance with the applicable laws of the
State of Texas (or applicable United States federal law to the extent that it
permits Lender to contract for, charge, take, receive or reserve a greater
amount of interest than under Texas law), taking into account all Charges (as
herein defined) made in connection with the transaction evidenced by the Notes
and the other Loan Documents. As used herein, the term "Charges" shall mean all
fees, charges and/or any other things of value, if any, contracted for, charged,
received, taken or reserved by Lenders in connection with the transactions
relating to the Notes and the other Loan Documents, which are treated as
interest under applicable law. As used herein, the term "Related Indebtedness"
shall mean any and all debt paid or payable by Borrower to Lenders pursuant to
the Loan Documents or any other communication or writing by or between Borrower
and Lenders related to the transaction or transactions that are the subject
matter of the Loan Documents, except such debt which has been paid or is payable
by Borrower to Lender under the Notes.
(c) To the extent that Lender is relying on Chapter 1D of the Texas
Credit Title to determine the Maximum Lawful Rate payable on the Notes and/or
the Related Indebtedness, Lender will utilize the weekly ceiling from time to
time in effect as provided in such Chapter 1D, as amended. To the extent United
States federal law permits Lenders to contract for, charge, take, receive or
reserve a greater amount of interest than under Texas law, Lenders will rely on
United States federal law instead of such Chapter 1D for the purpose of
determining the Maximum Lawful Rate. Additionally, to the extent permitted by
applicable law now or hereafter in effect, Lenders may, at their option and from
time to time, utilize any other method of establishing the Maximum Lawful Rate
under such Chapter 1D or under other applicable law by giving notice, if
required, to Borrower as provided by applicable law now or hereafter in effect.
<PAGE>
(d) Notwithstanding anything in the Notes to the contrary, if at any
time (i) interest rate provided for under the Notes or any other Loan Document
(the "Stated Rate"), and (ii) the Charges computed over the full term of the
Notes, exceed the Maximum Lawful Rate, then the rate of interest payable
hereunder, together with all Charges, shall be limited to the Maximum Lawful
Rate; provided, however, that any subsequent reduction in the Stated Rate shall
not cause a reduction of the rate of interest payable hereunder below the
Maximum Lawful Rate until the total amount of interest earned hereunder,
together with all Charges, equals the total amount of interest which would have
accrued at the Stated Rate if such interest rate had at all times been in
effect. Changes in the Stated Rate resulting from a fluctuations in the rates
used to calculate the Stated Rate shall be subject to the provisions of this
paragraph.
SECTION III.8. Statements of Account.
Agent will account to Borrower monthly with a statement of Loans,
Letters of Credit, charges and payments made pursuant to this Agreement and the
other Loan Documents, and such account rendered by Agent shall be prima facie
evidence thereof. The failure of Agent or any Lender to maintain or deliver such
a statement of accounts shall not relieve or discharge Borrower from its
obligations hereunder.
SECTION III.9. Agent's Reliance.
Neither Agent, nor the Issuing Bank, nor any Lender shall incur any
liability to Borrower for acting upon any telephonic notice permitted under this
Agreement which Agent, the Issuing Bank or such Lender believes reasonably and
in good faith to have been given by an individual authorized to deliver a Notice
of Borrowing, Notice of Conversion, Notice of Continuation, a request for
issuance of a Letter of Credit or an Extension Request on behalf of Borrower.
ARTICLE IV.
POOL PROPERTIES
SECTION IV.1. Acceptance of Pool Properties.
(a) Existing Pool Properties. Subject to compliance with the
terms and conditions of Section 5.1., Lenders have
accepted the properties listed on Schedule 4.1. as of the date hereof
as Pool Properties.
(b) Approval of Additional Properties. If Borrower desires that Lenders
accept an additional Property as a Pool Property, Borrower shall so notify Agent
in writing and the Agent shall promptly notify each Lender. No Property will be
evaluated by Lenders unless it is an Eligible Property, and unless and until
Borrower delivers to Agent the following, in form and substance satisfactory to
Agent:
(i) An Executive Investment Summary in a form acceptable
to the Agent;
<PAGE>
(ii) A Pool Certificate executed by the chief financial
officer or controller of Borrower (which officer shall be authorized to
execute such certificate) in the form of Exhibit I attached hereto;
(iii) An Eligibility Certificate executed by the chief
financial officer or controller of Borrower (which officer shall be
authorized to execute such certificate) in the form of Exhibit J
attached hereto;
(iv) Operating statements for such Property for the
immediately preceding two (2) fiscal years and for the current fiscal
year through the fiscal quarter most recently ending, in each case
audited or certified by a representative of Borrower as being true and
correct in all material respects and prepared in accordance with GAAP,
provided that, with respect to any period such Property was not owned
by a Loan Party, Borrower shall only be obligated to deliver such
statements to the extent available to Borrower, and such certification
may be based upon the best of Borrower's knowledge;
(v) A pro forma operating statement for such Property;
(vi) A "Phase I" environmental assessment of such Property
not more than 12 months old, which report (1) has been prepared by an
environmental engineering firm acceptable to Agent and (2)complies with
the requirements contained in Agent's guidelines entitled "Environmental
Site Assessment - Scope of Work" dated December 29, 1994, including any
amendments, supplements or other modifications to such guidelines
adopted from time to time by Agent to be used in its lending practice
generally, or any other similar guidelines adopted by Agent in
replacement of such guidelines, to be used in its lending practice
generally and any additional environmental studies or assessments
available to the Borrower performed with respect to such Property;
(vii) Copies of all leases at such Property, together with
sales information setting forth the total sales per square foot of
leased space for the tenants under any Major Space Leases at such
Property for the prior three year period (to the extent available to
Borrower);
(viii) A current rent roll and a two-year operating and
occupancy history for such Property, certified by a representative of
Borrower as being true and correct in all material respects, provided
that with respect to any period such Property was not owned by a Loan
Party, Borrower shall only be obligated to deliver such information to
the extent available to Borrower, and such certification may be based
upon the best of Borrower's knowledge;
(ix) An operating budget and a capital expenditures budget
for such Property with respect to the current fiscal year;
(x) Copies of current engineering, mechanical, structural
and maintenance studies with respect to such Property conducted
by providers approved by Agent;
<PAGE>
(xi) A copy of the most recent ALTA Owner's Policy of Title
Insurance (or commitment to issue such a policy to the Loan Party
owning or to own such Property) relating to such Property showing the
identity of the fee titleholder thereto and all matters of record and
copies of all documents of record reflected in Schedule B of the
Owner's Policy;
(xii) Copies of (1) all Property Management Agreements and all
other Major Agreements relating to such Property and (2) the form or
forms of tenant leases used at the Property;
(xiii)If such Property is owned by, or is to be acquired by a
Subsidiary which is not already a Guarantor, all items required to be
delivered by a Subsidiary under Section 7.16.;
(xiv) An Appraisal of such Property;
(xv) Copies of all real estate tax bills for the prior two
(2) fiscal years;
(xvi) A tenant delinquency report for the two (2) most recent
fiscal years and for the current fiscal year to date, provided that
with respect to any period such Property was not owned by a Loan Party,
Borrower shall only be obligated to deliver such information to the
extent available to Borrower, and such certification may be based upon
the best of Borrower's knowledge;
(xvii)A report of all known property code violations for the
Property which remain uncured;
(xviii)A report of all pending litigation regarding the
Property;
(xix) A copy of the contract of sale executed in connection
with purchase of the Property, if the determination to accept the
Property as a Pool Property is being made contemporaneously with
purchase of the Property;
(xx) Copies of current certificates of occupancy for the
Property and any and all other licenses and permits issued by
Governmental Authorities and necessary for the ownership and operation
of the Property;
(xxi) Evidence satisfactory to Agent of the type customarily
delivered in the jurisdiction in which the Property is located that the
Property has been constructed and is being used and operated in
compliance with all applicable zoning, subdivision and other laws,
orders, ordinances, rules and regulations relating to the use and
occupancy of the Property; and
(xxii) Such other information Agent may reasonably request in
order to evaluate the Property.
<PAGE>
Following receipt of the foregoing documents and information, Agent
shall promptly submit such documents and information to Lenders, for approval by
Lenders and Agent. Upon such approval by the Majority Lenders and Agent, such
Property shall become a Pool Property. Each Lender shall have 20 days from the
day on which the Agent receives such documents and information from Borrower
(the "Review Period") to the Agent of such Lender's approval or disapproval of
the Property as a Pool Property. If neither of the foregoing actions is taken by
a Lender prior to the expiration of the Review Period, such Lender shall be
deemed to have accepted such Property as a Pool Property.
SECTION IV.2. Termination of Designation as Pool Property; Release.
From time to time Borrower may request, upon not less than 30 days
prior written notice to Agent and Lenders, that a Pool Property cease to be a
Pool Property. Agent shall grant such request if all of the following conditions
are satisfied:
(a) no Default or Event of Default shall have occurred and be
continuing both at the time of such request and immediately after giving effect
to such request; and
(b) Borrower shall have delivered to Agent a Pool Certificate
demonstrating on a pro forma basis, and Agent shall have determined, that the
outstanding principal balance of the Loans will not exceed the Maximum Loan
Availability after giving effect to such request and any prepayment to be made
and/or the acceptance of any Property as an additional or replacement Pool
Property to be given concurrently with such request.
Should Agent grant Borrower's request, Lenders shall fully release any Mortgage
encumbering the Pool Property and the related Assignment of Rents and UCC
financing statements related to such Mortgage, but Lenders shall not partially
release any Mortgage. As additional conditions to any such release, Borrower
shall pay all fees, costs and expenses, including reasonable attorneys' fees and
expenses, incurred by Lender in connection with such release.
SECTION IV.3. Additional Requirements of Pool Properties.
The aggregate average Occupancy Rate of all Pool Properties, when
determined on a combined basis, shall equal or exceed 75% for each of Borrower's
fiscal quarters. A Property shall cease to be a Pool Property if it shall cease
to be an Eligible Property.
ARTICLE V.
CONDITIONS
SECTION V.1. Conditions Precedent to Effectiveness.
<PAGE>
The effectiveness of this Agreement and the obligation of Lenders to
make any Loans to Borrower and Agent to cause the Issuing Bank to issue any
Letters of Credit in accordance with the terms hereof are subject to the
condition precedent that Borrower deliver to Agent each of the following, each
of which shall be in form and substance satisfactory to Agent:
(a) counterparts of this Agreement and all other Loan Documents
executed by the parties hereto;
(b) Revolving Notes executed by Borrower, payable to each Lender and
complying with the terms of Section 2.12.;
(c) the Guaranty executed by each Guarantor;
(d) an opinion of counsel to the Loan Parties, and addressed to Agent
and Lenders in substantially the form of Exhibit H;
(e) a certified copy of the Declaration of Trust of Borrower as filed
in the office of the County Clerk of Harris County, Texas;
(f) a certified copy of the Bylaws of Borrower;
(g) a certificate of incumbency signed by the Secretary or Assistant
Secretary of Borrower with respect to each of the officers of Borrower
authorized to execute and deliver the Loan Documents to which Borrower is a
party;
(h) certified copies (certified by the Secretary or Assistant Secretary
of Borrower) of all action taken by Borrower's Board of Trustees to authorize
the execution, delivery and performance of the Loan Documents to which it is a
party;
(i) the articles of incorporation, articles of organization,
certificate of limited partnership or other comparable organizational instrument
(if any) of each Guarantor certified as of a recent date by the Secretary of
State of the State of formation of such Guarantor;
(j) a Certificate of Good Standing or certificate of similar meaning
with respect to each Guarantor issued as of a recent date by the Secretary of
State of the State of formation of each such Guarantor and certificates of
qualification to transact business or other comparable certificates issued by
each Secretary of State (and any state department of taxation, as applicable) of
each state in which such Guarantor is required to be so qualified;
(k) a certificate of incumbency signed by the Secretary or Assistant
Secretary (or other individual performing similar functions) of each Guarantor
with respect to each of the officers of such Guarantor authorized to execute and
deliver the Loan Documents to which such Guarantor is a party;
<PAGE>
(l) copies certified by the Secretary or Assistant Secretary of each
Guarantor (or other individual performing similar functions) of (i) the by-laws
of such Guarantor, if a corporation, the operating agreement, if a limited
liability company, the partnership agreement, if a limited or general
partnership, or other comparable document in the case of any other form of legal
entity and (ii) all corporate, partnership, member or other necessary action
taken by such Guarantor to authorize the execution, delivery and performance of
the Loan Documents to which it is a party;
(m) a Pool Certificate calculated as of the date hereof;
(n) the fees then due under Section 3.1;
(o) such other documents and instruments as Agent or any Lender may
reasonably request.
SECTION V.2. Conditions Precedent to Loans and Issuance of Letters of
Credit.
The obligation of Lenders to make any Revolving Loans and of Agent to
cause the Issuing Bank to issue Letters of Credit is subject to the condition
precedent that the following conditions be satisfied in the judgment of Agent:
(a) in the case of Revolving Loans, timely receipt by Agent of
a Notice of Borrowing;
(b) in the case of Revolving Loans, Agent shall have received not less
than five (5) Business Days prior to the date of the proposed Revolving Loan
(or, if a later delivery date is expressly set forth below, on or prior to such
later date), each of the following documents, instruments and agreements, each
of which shall be satisfactory in form and substance to Agent in its reasonable
discretion:
(i) On the date of the applicable Revolving Loan, policies of
title insurance on forms of, and issued by, one or more title insurance
companies satisfactory to Agent in its sole and absolute discretion
(the "Title Companies"), showing fee simple title vested in the
Borrower or any Wholly Owned Subsidiary, as the case may be, with
respect to, or, if applicable, showing the Borrower's interest as a
tenant under a ground lease of, the applicable Property and insuring
the first priority of the Liens created under the Mortgages thereon in
an amount satisfactory to Agent in its sole and absolute discretion,
subject only to the Permitted Liens together with, as may be required
by Agent, such reinsurance schedules, endorsements and agreements in
respect of all then existing title insurance policies for such
properties and the other Pool Properties in amounts and otherwise in
form and substance satisfactory to Agent and executed by the Title
Companies. Such policies shall also contain such endorsements and
affirmative insurance provisions as Agent may reasonably require,
subject to availability in the particular jurisdiction. In addition,
Borrower shall have paid to the Title Companies (and shall have
delivered to Agent evidence of such payment) all expenses of the Title
Companies in connection with the issuance of such policies, reinsurance
schedules, endorsements and agreements and an amount equal to the
recording and stamp taxes (including, without limitation, mortgage
recording taxes) payable in connection with recording the Mortgages in
the appropriate county land offices.
<PAGE>
(ii) Not less than three (3) Business Days prior to the
proposed Revolving Loan, copies of the UCC filing searches, tax lien
searches, judgment searches and real estate tax searches and, where
available, municipal department searches setting forth any and all
building violations (if available) in each county where the applicable
Property is located (and in the case of UCC filing searches, in the
office of the Secretary of State or other applicable State office of
the State where such Property is located), demonstrating as of a recent
date the existence of no other financing statements (other than those
to be released concurrently with the subject Loan), tax liens,
judgments, building violations or delinquent real estate taxes,
together with evidence that all fees payable in connection with any
such searches have been paid.
(iii) A survey of the applicable Property, prepared by a land
surveyor licensed or registered in the State in which such Property is
located and otherwise satisfactory to Agent, in compliance with the
minimum standard detail requirements for land title surveys adopted by
the American Land Title Association and American Congress on Surveying
and Mapping, and certified to Agent, Borrower, the Title Companies and
any other parties requested by Lender, as of a date not more than two
(2) months prior to the date of the Loan.
(iv) Certified copies of all ground leases affecting the
applicable Property, including all amendments and modifications
thereto, and a ground lessor estoppel and consent satisfactory in form
and substance to Agent.
(v) Not less than five (5) Business Days prior to the proposed
Loan, certified copies of all Major Agreements relating to the
applicable Property, together with a certificate signed by Borrower
stating that such documents, instruments and agreements reflect, to the
best of its knowledge, the only Major Agreements relating to such
property.
(vi) Executed Estoppel Certificates and Subordination,
Non-Disturbance and Attornment Agreements substantially in the forms
attached hereto as Exhibit M and Exhibit N, respectively, from tenants
under all Major Space Leases and from a sufficient number of other
tenants so that Agent shall have received such instruments from tenants
representing not less than 75% of the aggregate gross revenue from each
Pool Property.
(vii) Evidence in form and substance satisfactory to Agent of
insurance providing coverages and in the amount required by the
Mortgages.
(viii) Such legal opinions (including an opinion of local
counsel in the State in which the Property is located) with respect to
such matters as Agent shall request and otherwise in form and substance
satisfactory to the Agent.
<PAGE>
(ix) Borrower shall have provided Agent with a Revolving
Credit Endorsement, if available, with respect to each Title Policy. In
any jurisdiction in which a Revolving Credit Endorsement is unavailable
or the Revolving Credit Endorsement takes exception to mechanics' liens
or other liens or encumbrances not approved by Agent, Borrower will
provide a title update or title report for the applicable Pool
Properties before the date of each Revolving Loan reflecting that there
are no mechanics' liens or to other liens or encumbrances upon the
applicable Pool Properties which have not been approved by Agent. In
the event such title update or title report discloses mechanics' liens
or other liens or encumbrances not approved by Agent, and, without
waiving any of Lenders' rights hereunder or under any other Loan
Documents on account of the existence of such liens or other
encumbrances, the obligation of Lenders to make any Revolving Loan to
Borrower is subject to the condition that such mechanics' liens or
other liens or encumbrances be cured, deleted of record or remedied to
Agent's reasonable satisfaction.
(x) Evidence that all actions necessary or, in the opinion of
Agent, desirable to perfect and protect the Liens created by the Loan
Documents have been taken, including, without limitation, evidence that
the Mortgage on the applicable Property has been duly filed and
recorded in the appropriate governmental offices and that the related
UCC financing statements have been duly filed in the appropriate
governmental offices.
(xi) Evidence (including, without limitation, payment
instructions given by Borrower) that all fees and expenses payable to
Lenders, including, without limitation, the fees and expenses referred
to in Section 3.1 and Section 11.3 hereof, to the extent then due and
payable, have been paid in full.
(xii) Such other documents relating to the transactions
contemplated hereby as Agent may reasonably request, including, without
limitation, a Reaffirmation of Guaranty executed by the Guarantors in
the form of Exhibit O attached hereto.
(c) As to each Pool Property, Agent shall have received a duly executed
Mortgage, Assignment of Rents, Environmental Indemnity Agreement and related
Collateral Documents. On or before the date of each Revolving Loan, the
Mortgages shall constitute valid first mortgage liens on the fee simple title
to, or, if applicable, on Borrower's interest as a tenant under a ground lease
of, the Pool Properties and which shall secure all of the Obligations, subject
only to the Permitted Liens and UCC-1 financing statements covering fixtures
owned by the Borrower and affixed to, or used in connection with each such
Property, in each case appropriately completed and duly executed and delivered
to Agent for filing in the appropriate county and State offices shall have been
filed to perfect the Liens in the Collateral described therein. Each of the
Mortgages shall be cross-collateralized and cross-defaulted with the other
Mortgages. In the event that the State in which the Property is located does not
impose a mortgage recording tax, then the Mortgage encumbering such Property
will be in the face amount of $30,000,000. In the event, however, that any such
State imposes a mortgage recording tax, the face amount of the applicable
Mortgage shall be limited to 100% of the Appraised Value of the Property as
determined by Agent.
<PAGE>
(d) Since the date of the most recent financial statements of Borrower
or Guarantors delivered to Agent, nothing shall have occurred which would or
could have a Material Adverse Effect on Borrower or any Guarantor.
(e) the proposed use of proceeds of such Revolving Loans or the
proposed use of such Letter of Credit, as the case may be, set forth in the
Notice of Borrowing is consistent with the provisions of Section 7.8.;
(f) immediately before and after the making of such Revolving Loans or
the issuance of such Letter of Credit, as applicable, no Default (including
without limitation the existence of the condition described in Section 2.15) or
Event of Default shall have occurred and be continuing; and
(g) the representations and warranties of Borrower and the other Loan
Parties contained in this Agreement and the other Loan Documents to which any of
them is a party shall be true in all material respects on and as of the date of
the making of such Revolving Loans or issuance of such Letter of Credit, as
applicable, except to the extent such representations or warranties specifically
relate to an earlier date or such representations or warranties become untrue by
reason of events or conditions otherwise permitted hereunder and the other Loan
Documents.
The delivery of each Notice of Borrowing, the making of each Loan and the
issuance of each Letter of Credit shall constitute a certification by Borrower
to Agent, the Issuing Bank and Lenders that the statements in the immediately
preceding clauses (e) through (g) are true.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Agent, the Issuing Bank and each
Lender as follows:
SECTION VI.1. Existence and Power.
Borrower is a real estate investment trust duly formed, validly
existing and in good standing under the laws of the State of Texas. Each of
Borrower's Subsidiaries is a corporation or other applicable legal entity, duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation. Each of Borrower and its
Subsidiaries has all requisite power and authority and all governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted and is duly qualified and is in good standing as a
foreign corporation or other applicable legal entity, and authorized to do
business, in each jurisdiction in which the character of its properties or the
nature of its business requires such qualification or authorization except where
the failure to be so qualified or authorized would not have a Materially Adverse
Effect.
<PAGE>
SECTION VI.2. Ownership Structure.
Schedule 6.2. correctly sets forth the corporate structure and
ownership interests of Borrower and all of its Subsidiaries as of the date
hereof, including the correct legal name of Borrower and each such Subsidiary,
and Borrower's relative equity interest in each such Subsidiary.
SECTION VI.3. Authorization of Agreement, Notes, Loan Documents and
Borrowings.
Each Loan Party has the right and power, and has taken all necessary
action to authorize it, to borrow hereunder (in the case of Borrower) and to
execute, deliver and perform the Loan Documents to which it is or is to be a
party, in accordance with their respective terms and to consummate the
transactions contemplated. Each of the Loan Documents has been (and when
executed and delivered in connection with this Agreement will be) duly executed
and delivered by the duly authorized officers of each Loan Party a party thereto
and each is (and each other Loan Document when executed and delivered in
connection with this Agreement will be) a legal, valid and binding obligation of
such Loan Party enforceable against such Loan Party in accordance with its
respective terms, except as the same may be limited by bankruptcy, insolvency,
and other similar laws affecting the rights of creditors generally and the
availability of equitable remedies for the enforcement of certain obligations
(other than the payment of principal) contained herein or therein may be limited
by equitable principles generally.
SECTION VI.4. Compliance of Agreement, Notes, Loan Documents and
Borrowing with Laws, etc.
The execution, delivery and performance of the Loan Documents in
accordance with their respective terms and the borrowing of Loans hereunder do
not and will not, by the passage of time, the giving of notice or otherwise (a)
require any Governmental Approval, or violate any Applicable Law relating to any
Loan Party, the failure to possess or to comply with which would have a
Materially Adverse Effect; (b) conflict with, result in a breach of or
constitute a default under the declaration of trust of Borrower, the articles of
incorporation, articles of organization, partnership agreement or other
comparable instrument of any other Loan Party, or any indenture, agreement or
other instrument to which any Loan Party is a party or by which it or any of its
properties may be bound and the violation of which would have a Materially
Adverse Effect; or (c) result in or require the creation or imposition of any
Lien upon or with respect to a Pool Property other than Permitted Liens.
SECTION VI.5. Compliance with Law; Governmental Approvals.
<PAGE>
Each of Borrower and its Subsidiaries is in compliance with each
Governmental Approval applicable to it and in compliance with all other
Applicable Law relating to it, except for noncompliances which, and Governmental
Approvals the failure to possess which, would not, singly or in the aggregate,
cause a Default or Event of Default or have a Materially Adverse Effect and in
respect of which (if Borrower has actual knowledge of such Applicable Law or
Governmental Approval) adequate reserves have been established on the books of
Borrower or such Subsidiary, as applicable.
SECTION VI.6. Indebtedness and Guarantees.
Schedule 6.6. is a complete and correct listing of all Indebtedness and
Guarantees of Borrower and the other Loan Parties as of the date hereof. Each
Loan Party has performed and is in compliance with all of the terms of such
Indebtedness and such Guarantees and all instruments and agreements relating
thereto in all material respects, and no default or event of default, or event
or condition which with the giving of notice, the lapse of time or otherwise,
would constitute such a default or event of default, exists with respect to any
such Indebtedness or Guarantees.
SECTION VI.7. Property Management Agreements and Other Major
Agreements.
Schedule 6.7 sets forth all Property Management Agreements and other
Major Agreements to which Borrower is a party or otherwise relating to any of
the Pool Properties as of the date hereof. All Property Management Agreements
and other Major Agreements are in full force and effect and to Borrower's
knowledge no default or event of default exists under any of such agreements.
SECTION VI.8. Absence of Defaults.
Neither Borrower nor any Guarantor is in default under its declaration
of trust, articles of incorporation, bylaws, operating agreement, partnership
agreement or other organizational or constituent document, and no event has
occurred, which has not been remedied, cured or waived (a) which constitutes a
Default or an Event of Default; or (b) which constitutes, or which with the
passage of time, the giving of notice or otherwise, would constitute, a default
or event of default by Borrower, any Guarantor or any other Loan Party under any
material agreement (other than this Agreement) or judgment, decree or order to
which Borrower, any Guarantor or any other Loan Party is a party or by which
Borrower or any of its properties may be bound.
SECTION VI.9. Financial Information.
The consolidated balance sheets of Borrower as at December 31, 1997 and
March 31, 1998 and the related statements of earnings, shareholders' equity and
cash flows for the twelve month period and three month period, respectively,
then ending, copies of which have been delivered to Agent and Lenders, fairly
present, in conformity with GAAP, the financial position of Borrower and its
Consolidated Subsidiaries as of such date and its results of operations and cash
flows for such fiscal period. Since March 31, 1998, and with reference to such
date, there has been no material adverse change in the business, properties,
financial position, or results of operations of Borrower and its Subsidiaries
taken as a whole.
<PAGE>
SECTION VI.10. Litigation.
There is no action, suit or proceeding pending against, or to the
knowledge of Borrower threatened against or affecting, Borrower or any of its
Subsidiaries before any court or arbitrator or any governmental body, agency or
official (a) which would reasonably be expected to have a Materially Adverse
Effect or (b) which in any manner draws into question the validity of any Loan
Document.
SECTION VI.11. ERISA.
No Loan Party maintains, and has at any time maintained, any Plan
subject to the provisions of ERISA and is, and has at any time been, a member of
any ERISA Group with any Person that has at any time maintained any such Plan.
SECTION VI.12. Taxes.
(a) As of the date hereof, no United States Federal income tax returns
of the "affiliated group" (as defined in the Internal Revenue Code) of which
Borrower is a member have been examined and closed. The members of such
affiliated group have filed all United States Federal income tax returns and all
other material tax returns which are required to be filed by them and have paid
all taxes due pursuant to such returns or pursuant to any assessment received by
any of them except for taxes being contested in good faith by appropriate
proceedings and for which appropriate reserves have been established. The
charges, accruals and reserves on the books of Borrower in respect of taxes or
other governmental charges are, in the opinion of Borrower, adequate.
(b) Borrower is in compliance with all conditions imposed under the
Internal Revenue Code to allow Borrower to maintain its status as a REIT.
SECTION VI.13. Investment Company Act; Public Utility Holding Company
Act.
Neither Borrower nor any of its Subsidiaries is (a) an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended, (b) a "holding company" or a
"subsidiary company" of a "holding company", or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company", within the meaning
of the Public Utility Holding Company Act of 1935, as amended, or (c) subject to
any other Applicable Law which purports to regulate or restrict its ability to
borrow money or to consummate the transactions contemplated by this Agreement or
the other Loan Documents or to perform its obligations hereunder or thereunder.
SECTION VI.14. Full Disclosure.
<PAGE>
All written information furnished by or on behalf of Borrower to Agent,
Issuing Bank and Lenders for purposes of or in connection with this Agreement
and the other Loan Documents or any transaction contemplated hereby is, and all
such information hereafter furnished by or on behalf of Borrower or any
Subsidiary to Agent, Issuing Bank and Lenders will be, true and accurate in all
material respects on the date as of which such information is stated or
certified and does not, and will not, fail to state any material facts necessary
to make the statements contained therein not misleading. Borrower has disclosed
to Agent in writing any and all facts known to Borrower which materially and
adversely affect or may affect (to the extent Borrower can now reasonably
foresee), the business, operations or financial condition of Borrower and of its
Subsidiaries taken as a whole, or the ability of Borrower to perform its
obligations under any of the Loan Documents.
SECTION VI.15. Insurance.
Schedule 6.15. sets forth a true and correct description of the
insurance coverage maintained by or on behalf of each Loan Party currently in
effect.
SECTION VI.16. Not Plan Assets.
The respective assets of Borrower and each other Loan Party do not and
will not constitute "plan assets" within the meaning of ERISA, the Internal
Revenue Code and the respective regulations promulgated thereunder, of any ERISA
Plan or Non-ERISA Plan. The execution, delivery and performance of this
Agreement, and the borrowing and repayment of amounts thereunder, do not and
will not constitute "prohibited transactions" under ERISA or the Internal
Revenue Code.
SECTION VI.17. Title and Liens.
Each of Borrower and its Subsidiaries has good, marketable and legal
title to, or a valid leasehold interest in, (a) its respective Properties and
(b) its other assets, except in the case of this clause (b) where the failure to
have such title to its other assets could not reasonably be expected to have a
Materially Adverse Effect. All Liens granted to Agent pursuant to the Collateral
Documents are valid and enforceable first priority Liens subject only to the
Permitted Liens.
SECTION VI.18. Pool Properties.
Each of the Pool Properties qualifies as an Eligible Property.
SECTION VI.19. Margin Stock.
Neither Borrower nor any of its Subsidiaries is engaged principally in
the business of extending credit for the purpose of purchasing or carrying
"margin stock" within the meaning of Regulation T, U or X.
SECTION VI.20. Solvency.
<PAGE>
Borrower and the other Loan Parties are Solvent and will remain Solvent
after giving effect to the execution and delivery of each Loan Document to which
any is a party, the initial disbursement of Loans hereunder and the payment and
accrual of all fees then payable under this Agreement or any of the other Loan
Documents.
ARTICLE VII.
COVENANTS
Borrower agrees that, so long as Lenders have any Commitments hereunder
or any Obligation remains unpaid:
SECTION VII.1. Information.
Borrower will deliver to Agent:
(a) as soon as available and in any event within 90 days after the end
of each fiscal year of Borrower, a consolidated balance sheet of Borrower as of
the end of such fiscal year and the related consolidated statements of funds
from operations, earnings, and cash flows for such fiscal year, setting forth in
each case in comparative form the figures for the previous fiscal year, all
(other than any statement of funds from operations) reported on in a manner
acceptable to Agent by independent public accountants of nationally recognized
standing;
(b) as soon as available and in any event within 45 days after the end
of each of the first three fiscal quarters of each fiscal year of Borrower, a
consolidated balance sheet of Borrower as of the end of such quarter and the
related consolidated statements of funds from operations or earnings,
shareholders' equity and cash flows for such quarter and for the portion of
Borrower's fiscal year ended at the end of such quarter, setting forth in
comparative form the figures for the corresponding quarter and the corresponding
portion of Borrower's previous fiscal year, all certified (subject to normal
year-end adjustments) as to fairness of presentation, GAAP (subject to absence
of full footnote disclosures and other than the statement of funds from
operations) and consistency by the chief financial officer or controller of
Borrower (which officer shall be authorized to so certify such statements);
(c) simultaneously with the delivery of each set of financial
statements referred to in the immediately preceding clauses (a) and (b), a
certificate of the chief financial officer or controller of Borrower (which
officer shall be authorized to execute such certificate) (i) setting forth in
reasonable detail the calculations required to establish whether Borrower was in
compliance with the requirements of Article VIII. on the date of such financial
statements, (ii) stating whether any Default or Event of Default is known to
Borrower on the date of such certificate and, if any Default or Event of Default
is then known to Borrower, setting forth the details thereof and the action
which Borrower is taking or proposes to take with respect thereto, (iii) setting
forth a schedule of all Contingent Obligations of Borrower as of the date of
such financial statements, and (iv) setting forth a schedule of the total assets
of each Subsidiary of Borrower that is not a Wholly Owned Subsidiary;
<PAGE>
(d) as soon as available and in any event within 30 days after the end
of each fiscal quarter of Borrower, a Pool Certificate setting forth the
information to be contained therein as of the last day of such fiscal quarter;
(e) within 45 days after the end of each fiscal quarter of Borrower, a
summary statement of Net Operating Income and occupancy rates for each Pool
Property; provided, as to any specific Property, Agent shall have the right to
require Borrower to deliver such information on a monthly basis;
(f) within 45 days after the end of each fiscal quarter of Borrower, a
current rent roll for each Pool Property; provided, as to any specific Property
Agent shall have the right to require Borrower to deliver such information on a
monthly basis;
(g) within 45 days after the beginning of each calendar year, a
projected cash flow statement of Borrower and its Subsidiaries, in a form
satisfactory to Agent, for such calendar year, prepared on a monthly basis and
setting forth the estimates and assumptions (including without limitation, with
respect to costs, revenues, general economic conditions, seasonal variations,
financial and market conditions and results of operations) on which such
projections are based;
(h) no later than 30 days before the end of each fiscal year of
Borrower, a property budget for each Pool Property for the coming fiscal year of
Borrower;
(i) promptly upon receipt thereof, copies of all management reports
relating to the financial condition of Borrower submitted to Borrower or its
Board of Trustees by Borrower's independent public accountants;
(j) within ten days after any secretary, senior vice president,
managing director or other officer of higher rank of Borrower obtains knowledge
of any Default or Event of Default, a certificate of the chief financial officer
or controller of Borrower setting forth the details thereof and the action which
Borrower is taking or proposes to take with respect thereto;
(k) promptly upon the mailing thereof to the shareholders of Borrower
generally, copies of all financial statements, reports, offering memoranda and
proxy statements so mailed;
(l) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements on
Form S-8 or its equivalent), reports on Forms 10-K, 10-Q and 8-K (or their
equivalents) and all other periodic reports, if any, which Borrower or any of
its Subsidiaries which it directly or indirectly controls shall file with the
Securities and Exchange Commission (or any Governmental Authority substituted
therefor) or any national securities exchange;
(m) promptly upon the release thereof, copies of all press releases of
Borrower and any of its Subsidiaries which it directly or indirectly controls;
<PAGE>
(n) promptly upon obtaining knowledge thereof, a description in
reasonable detail of any action, suit or proceeding commenced against Borrower,
any of its Subsidiaries or any of the Pool Properties which is reasonably likely
to have a Materially Adverse Effect;
(o) within 45 days after the end of each fiscal quarter of Borrower,
any change in the list of the Trust Managers and prompt written notice of any
change in the senior management personnel of Borrower;
(p) promptly upon the occurrence thereof, any amendment to the
Declaration of Trust of Borrower;
(q) written notice of the acquisition, incorporation or other creation
of any Subsidiary after the date hereof, such notice to be given within 10
Business Days of such acquisition, incorporation or other creation; and
(r) from time to time such additional information regarding the
financial position or business of Borrower and its Subsidiaries or any Property
as Agent or any Lender may reasonably request.
SECTION VII.2. Payment of Obligations.
Borrower will pay and discharge, and will cause each Subsidiary to pay
and discharge, at or before maturity, all their respective material obligations
and liabilities, including, without limitation, tax liabilities, except where
the same may be contested in good faith by appropriate proceedings unless the
contest thereof would have a Materially Adverse Effect, and will maintain, and
will cause each Subsidiary to maintain, in accordance with GAAP, appropriate
reserves for the accrual of any of the same. Borrower has paid or will pay (or
has caused to be paid or will be caused to be paid) in full (except for such
retainages as may be permitted or required by any Applicable Law to be withheld
pending completion of any improvements) all sums by Borrower or its Subsidiaries
owing or claimed from Borrower or such Subsidiaries for labor, material,
supplies, personal property (whether or not a fixture) and services of every
kind and character used, furnished or installed in or on any Pool Property and
no claim for same exists or will be permitted to be created, except where the
same may be contested in good faith by appropriate proceedings unless the
contest thereof would have a Materially Adverse Effect, and will maintain, and
will cause each Subsidiary to maintain, in accordance with GAAP, appropriate
reserves for the accrual of any of the same.
SECTION VII.3. Maintenance of Property; Insurance.
(a) Borrower will keep, and will cause each Subsidiary to keep, all
property useful and necessary in its business in good working order and
condition, ordinary wear and tear and insured casualty losses excepted.
<PAGE>
(b) Borrower will maintain, and will cause each Subsidiary to maintain
insurance coverage in such amounts and with respect to such risks as is
consistent with insurance maintained by businesses of comparable type and size
in the industry. In addition to the foregoing, Borrower shall maintain insurance
as may be required under the other Loan Documents. Borrower will deliver to
Agent (i) upon request of Agent from time to time full information as to the
insurance carried, (ii) within five days of receipt of notice from any insurer a
copy of any notice of cancellation or material change in coverage from that
existing on the date of this Agreement and (iii) forthwith, notice of any
cancellation or nonrenewal of coverage by Borrower.
SECTION VII.4. Conduct of Business; Maintenance of Existence;
Qualification; Amendment of Declaration of Trust.
(a) Borrower and the other Loan Parties will only engage in the
business of acquiring, developing, owning, managing and operating
income-producing properties comprised primarily of retail shopping centers,
together with related business activities and investments incidental thereto.
Nothing in this subsection shall prohibit Borrower or any other Loan Party from
selling properties from time to time.
(b) Subject to Section 7.7., Borrower will preserve, renew and keep in
full force and effect, and will cause each Subsidiary to preserve, renew and
keep in full force and effect their respective existence and their respective
rights, privileges and franchises necessary or desirable in the normal conduct
of business; provided that nothing in this Section shall prohibit (i) the merger
of a Subsidiary into Borrower or the merger or consolidation of a Subsidiary
with or into another Person if the corporation surviving such consolidation or
merger is a Subsidiary and if, in each case, after giving effect thereto, no
Default or Event of Default shall have occurred and be continuing and (ii) the
dissolution of a Subsidiary if (A) Borrower's Board of Trust Managers has
determined that such dissolution is in the best interest of Borrower, (B) such
dissolution will not be materially disadvantageous to Lenders and (C) such
dissolution will not have a Materially Adverse Effect.
(c) Borrower will, and will cause each Subsidiary to, qualify and
remain qualified and authorized to do business in each jurisdiction in which the
character of its properties or the nature of its business requires such
qualification or authorization and where the failure to be so qualified or
authorized would have a Materially Adverse Effect.
(d) Borrower shall not amend, supplement, restate or otherwise modify
its declaration of trust without the prior written consent of the Majority
Lenders unless such amendment, supplement or other modification (i) is required
under or as a result of the Internal Revenue Code or other Applicable Law (ii)
is required or prudent to maintain Borrower's status as a REIT or (iii) does not
affect the operation or management of Borrower, the rights and obligations of
any party thereto or any other material provision of the document.
SECTION VII.5. Compliance with Laws.
<PAGE>
Borrower will comply, and cause each Subsidiary to comply, with all
Applicable Laws, including without limitation, all Environmental Laws and ERISA
and the rules and regulations thereunder, except where compliance therewith is
contested in good faith by appropriate proceedings or the failure to so comply
would not have a Materially Adverse Effect.
SECTION VII.6. Inspection of Property, Books and Records.
Borrower will keep, and will cause each Subsidiary to keep, proper
books of record and account in which full, true and correct entries shall be
made of all dealings and transactions in relation to its business and
activities; and will permit, and will cause each Subsidiary to permit,
representatives of Agent to visit and inspect any of their respective
properties, to examine and make abstracts from any of their respective books and
records and to discuss their respective affairs, finances and accounts with
their respective officers, employees and independent public accountants in
Borrower's presence prior to an Event of Default, all at such reasonable times
during business hours and as often as may reasonably be desired and with
reasonable notice so long as no Event of Default shall have occurred and be
continuing. Agent and each Lender will treat non-public and proprietary
information regarding Borrower and its assets (the "Confidential Information")
as hereinafter provided in this Section 7.6. As used herein, the term
"Confidential Information" shall be limited to that information regarding the
Borrower or its assets disclosed by Borrower to Agent or any Lender in written
or other tangible form and marked "Confidential" and shall not include any
information which (i) is already in Agent's or a Lender's possession (unless the
same was delivered subject to a similar confidentiality agreement), (ii) becomes
generally available to the public other than as a result of a disclosure by
Agent or any Lender in breach of this Agreement, or (iii) becomes available to
Agent or any Lender on a non-confidential basis from a source other than the
Borrower. Confidential Information will be used solely by Agent and Lenders in
administering the Loans under this Agreement. Agent and the Lenders shall treat
such information as confidential and will use the same standard of care in
handling such information as it uses with respect to its own confidential
information. Agent and Lenders shall disclose such information only (i) to other
Lenders, (ii) to its officers, directors and employees involved in connection
with this Agreement, (iii) to such agents, representatives, attorneys and
advisors as have been retained by Agent or Lenders in connection with this
Agreement, (iv) in response to subpoena, court order or similar process (or as
otherwise may be required by applicable law or regulation), and (v) to such
other parties as the Borrower hereafter expressly agrees in writing. If Agent or
any Lender is requested or required by subpoena, court order or similar process
(or as otherwise may be required by applicable law or regulation) to disclose
any of the Confidential Information, Agent or such Lender will use reasonable
efforts to provide the Borrower with advance notice so as to afford the Borrower
the opportunity, at the Borrower's sole cost and expense, to pursue a protective
order or other remedy and Agent or such Lender shall reasonably cooperate with
the Borrower in such efforts so long as such cooperation is at the Borrower's
sole cost and expense and does not expose Agent or such Lender to risk of
liability, penalty or censure.
SECTION VII.7. Consolidations, Mergers, Acquisitions and Sales
of Assets.
<PAGE>
Borrower shall not, and shall not permit any Subsidiary to (a)
consolidate or merge with or into, acquire a Substantial Amount of the assets
of, or make any Investment of a Substantial Amount in, any other Person or (b)
sell, lease or otherwise transfer, directly or indirectly, and whether by one or
a series of related transactions, a Substantial Amount of its assets (including
capital stock or other securities of Subsidiaries) to any other Person without
the prior written consent of the Majority Lenders, which consent will not be
unreasonably withheld or delayed and (i) after giving effect thereto, no Default
or Event of Default shall have occurred and be continuing; (ii) in the case of a
consolidation or merger by Borrower or a Subsidiary, Borrower or such
Subsidiary, as applicable, is the survivor thereof and (iii) at the time
Borrower requests Lenders' consent, Borrower shall have delivered to Agent and
Lenders a Compliance Certificate, calculated on a pro forma basis, evidencing
Borrower's continued compliance with the terms and conditions of this Agreement
and the other Loan Documents, including without limitation, the financial
covenants contained in Article VIII., after giving effect to such consolidation,
merger, acquisition, Investment, sale, lease or other transfer.
SECTION VII.8. Use of Proceeds and Letters of Credit.
Borrower will only use the proceeds of the Loans made under this
Agreement (a) for the payment of pre-development and development costs incurred
in connection with Properties; (b) to finance acquisitions permitted under
Section 8.6.; (c) to finance the repayment of Indebtedness of Borrower; (d) to
finance acquisitions of unimproved real estate and for development as
Properties; (e) to make Investments permitted by this Agreement; (f) to finance
tenant improvements at the Properties and (g) to provide for the general working
capital needs of Borrower. Borrower will not use any proceeds of the Loans for
the purpose of purchasing or carrying any "margin stock" within the meaning of
Regulations T, U and X if such use would result in a violation of any of
Regulations T, U and X. Borrower will use the Letters of Credit only for the
same purposes for which it may use the proceeds of Loans.
SECTION VII.9. Major Agreements.
Borrower shall, and shall cause each other Loan Party to, duly and
punctually perform and comply with any and all material representations,
warranties, covenants and agreements expressed as binding upon Borrower or such
other Loan Party under any Major Agreement. Without Agent's prior written
consent, Borrower shall not do or knowingly permit to be done anything to impair
materially the value of any of the Major Agreements; provided, Borrower may
terminate a Major Agreement so long as Borrower enters into a materially
comparable replacement agreement.
SECTION VII.10. Major Construction.
<PAGE>
Borrower shall give Agent not less than 60-days' prior written notice
before commencing any construction, remodeling or demolition project or series
of related projects with respect to an Eligible Property of Borrower or any
Subsidiary, the aggregate cost of which will exceed $250,000. If (a) any such
project would reasonably be expected to have a Materially Adverse Effect or (b)
the aggregate cost of such project will exceed $2,000,000, then Borrower or such
Subsidiary, as applicable, shall not commence such project without the prior
written consent of the Majority Lenders.
SECTION VII.11. ERISA.
Borrower will not and will not permit any Subsidiary to at any time
maintain any Plan subject to the provisions of ERISA and will not at any time be
a member of any ERISA Group with any Person that has at any time maintained any
such Plan.
SECTION VII.12. ERISA Exemptions.
Borrower shall not, and shall not permit any of its Subsidiaries to,
permit any of its assets to become or be deemed to be "plan assets" within the
meaning of ERISA, the Internal Revenue Code and the respective regulations
promulgated thereunder, of any ERISA Plan or any Non-ERISA Plan.
SECTION VII.13. Negative Pledge.
Borrower will not, and will not permit any Subsidiary to, (a) create,
assume or suffer to exist any Lien on any Pool Property, or any direct or
indirect ownership interest of Borrower in any Subsidiary owning any Pool
Property, except for Permitted Liens; or (b) create or otherwise cause or suffer
to exist or become effective, any consensual encumbrance or restriction of any
kind on the ability of any Subsidiary: (i) if such Subsidiary is a Loan Party,
to pay or perform its obligations under the Guaranty to which it is a party
prior to its obligation to pay dividends or make any other distribution on any
of such Subsidiary's capital stock or other securities owned by Borrower or any
Subsidiary of Borrower; (ii) to pay any Indebtedness owed to Borrower or any
other Subsidiary; (iii) to make loans or advances to Borrower or any other
Subsidiary; or (iv) to transfer any of its property or assets to Borrower or any
other Subsidiary.
SECTION VII.14. REIT Status.
Borrower will maintain its status as a REIT.
SECTION VII.15. Agreements with Affiliates.
Borrower shall not, and shall not permit any of its Consolidated
Subsidiaries to, enter into any transaction requiring such Person to pay any
amounts to or otherwise transfer property to, or pay any management or other
fees to, any Affiliate other than on terms and conditions (a) substantially as
favorable to Borrower or such Consolidated Subsidiary as would be obtainable at
the time in a comparable arm's length transaction with a Person not an Affiliate
or (b) which comply 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.
<PAGE>
SECTION VII.16. New Subsidiaries.
Upon any Person becoming a Subsidiary of Borrower after the date
hereof, Borrower shall cause such Subsidiary to deliver to Agent within 15 days
of such event each of the following items (if not previously delivered to
Agent):
(a) an accession agreement in the form of Annex I to the Guaranty
duly executed by such Subsidiary;
(b) the articles of incorporation, articles of organization,
certificate of limited partnership or other comparable organizational instrument
(if any) of such Subsidiary certified as of a recent date by the Secretary of
State of the State of formation of such Subsidiary;
(c) a Certificate of Good Standing or certificate of similar meaning
with respect to such Subsidiary issued as of a recent date by the Secretary of
State of the State of formation of such Subsidiary and certificates of
qualification to transact business or other comparable certificates issued by
each Secretary of State (and any state department of taxation, as applicable) of
each state in which such Subsidiary is required to be so qualified;
(d) a certificate of incumbency signed by the Secretary or Assistant
Secretary (or other individual performing similar functions) of such Subsidiary
with respect to each of the officers of such Subsidiary authorized to execute
and deliver the Loan Documents to which such Guarantor is a party;
(e) copies certified by the Secretary or Assistant Secretary of such
Subsidiary (or other individual performing similar functions) of (i) the by-laws
of such Subsidiary, if a corporation, the operating agreement, if a limited
liability company, the partnership agreement, if a limited or general
partnership, or other comparable document in the case of any other form of legal
entity and (ii) all corporate, partnership, member or other necessary action
taken by such Subsidiary to authorize the execution, delivery and performance of
the Loan Documents to which it is a party;
(f) an opinion of legal counsel to such Subsidiary, regarding the due
formation and good standing of such Subsidiary, the enforceability of the Loan
Documents to which it is a party, and such other matters as Agent shall request;
and
(g) such other documents and instruments as Agent may reasonably
request.
SECTION VII.17. Investment Manager; Advisory Agreement.
Unless Borrower elects to become self-managed, the Investment Manager
may not be changed nor may the Advisory Agreement be terminated or otherwise
modified in any material respect, including, without limitation, modified to
increase the fees payable to the Investment Manager, without the prior written
consent of the Majority Lenders.
<PAGE>
SECTION VII.18. Borrower Securities Listed.
Borrower's common shares of beneficial interest will continue to be
approved for inclusion on the NASDAQ National Market, or in lieu thereof, such
common shares shall be listed on the New York Stock Exchange.
SECTION VII.19. Management.
Should either Lewis H. Sandler or Robert W. Scharar cease to be a Trust
Manager and/or an executive officer of Borrower, Borrower shall replace such
vacancy with a person reasonably acceptable to the Majority Lenders within 120
days after the vacancy shall occur; provided, such covenant shall be deemed
satisfied so long as either Lewis H. Sandler or Robert W. Scharar shall be a
Trust Manager and/or an executive officer of Borrower and either R. Steven
Hamner or Randall D. Keith shall be an executive officer of Borrower.
SECTION VII.20. Year 2000. Borrower shall ensure that the following are
Year 2000 Compliant in a timely manner, but in no event later than December 31,
1999: (a) the Property; (b) Borrower itself; and (c) any other major commercial
properties and entities in which Borrower holds a controlling interest. Borrower
shall further make reasonable inquiries of and request reasonable validation
that each of the following are similarly Year 2000 Compliant: (x) all Major
Space Leases and other Major Agreements or other "Major" agreements pursuant to
which Borrower receives payments; and (y) all "major" contractors, suppliers,
service providers and vendors of Borrower. As used in this paragraph, "major"
shall mean properties or entities the failure of which to be Year 2000 Compliant
would have a Materially Adverse Effect. The term "Year 2000 Compliant" shall
mean, in regard to any property or entity, that all software, hardware,
equipment, goods or systems utilized by or material to the physical operations,
business operations, or financial reporting of such property or entity
(collectively, the "systems") will properly perform date sensitive functions
before, during and after the year 2000. In furtherance of this covenant,
Borrower shall, in addition to any other necessary actions perform a
comprehensive review and assessment of all systems of Borrower and the Property
and shall adopt a detailed plan, with itemized budget, for the testing,
remediation, and monitoring of such systems. Borrower shall, within thirty
business days of Lender's written request, provide to Lender such certifications
or other evidence of Borrower's compliance with the terms of this paragraph as
Lender may from time to time reasonably require.
ARTICLE VIII.
FINANCIAL COVENANTS
Borrower agrees that, so long as Lenders have any Commitments hereunder
or any Obligation remains unpaid:
<PAGE>
SECTION VIII.1. Minimum Net Worth.
Borrower shall not at any time permit the Net Worth of Borrower and its
Consolidated Subsidiaries to be less than (a) $76,396,270.00 plus (b) 90% of the
amount of proceeds in cash or property (net of transaction costs) received by
Borrower or any Subsidiary from the sale or issuance by Borrower of Shares,
options, warrants or other equity securities of any class or character after
June 30, 1998.
SECTION VIII.2. Ratio of Total Liabilities to Gross Asset Value.
Borrower shall not at any time permit the ratio of (a) Total
Liabilities of Borrower and its Consolidated Subsidiaries to (b) Gross Asset
Value of Borrower and its Consolidated Subsidiaries to exceed 0.5 to 1.0.
SECTION VIII.3. Distributions.
If an Event of Default under Section 9.1.(a) shall have occurred and be
continuing, Borrower shall not directly or indirectly declare or make, or incur
any liability to make, any Restricted Payments. If any other Event of Default
shall have occurred and be continuing, Borrower shall not directly or indirectly
declare or make, or incur any liability to make, any Restricted Payments except
that Borrower may make distributions to its shareholders in the minimum amount
necessary to maintain compliance with Section 7.14. If no Event of Default, or
any Event of Default other than those specified above, shall have occurred and
be continuing, Borrower shall not directly or indirectly declare or make, or
incur any liability to make, any Restricted Payments other than Permitted
Distributions.
SECTION VIII.4. Ratio of EBITDA to Interest Expense.
Borrower shall not permit the ratio of (a) EBITDA of Borrower and its
Consolidated Subsidiaries to (b) Interest Expense of Borrower and its
Consolidated Subsidiaries for any consecutive four-fiscal quarter period to be
less than 2.25 to 1.0 at the end of such period. From the Effective Date through
March 31, 1999, the ratio described in this Section shall be determined on an
annualized basis for the period from April 1, 1998 to the date of determination.
SECTION VIII.5. Ratio of EBITDA to Debt Service and Capital
Expenditures Reserve.
Borrower shall not permit the ratio of (a) EBITDA of Borrower and its
Consolidated Subsidiaries to (b) the sum of Debt Service of Borrower and its
Consolidated Subsidiaries plus the Capital Expenditures Reserve for all
Properties (prorated for the period owned if such period is less than one year)
for any consecutive four-fiscal quarter period to be less than 1.75 to 1.00 for
such period. From the Effective Date through March 31, 1999, the ratio described
in this Section shall be determined on an annualized basis for the period from
April 1, 1998 to the date of determination
<PAGE>
SECTION VIII.6. Permitted Investments.
(a) Borrower shall not, and shall not permit any Subsidiary to, make
any Investment in or otherwise own the following items which would cause the
value of such holdings of Borrower and its Consolidated Subsidiaries to exceed
the following percentages of Gross Asset Value:
(i) unimproved real estate (excluding unimproved real estate
on which development of a Property has commenced) such that the
aggregate book value of all such unimproved real estate exceeds 5% of
Gross Asset Value;
(ii) Mortgages in favor of Borrower or such Subsidiary, such
that the aggregate book value of Indebtedness secured by such Mortgages
exceeds 5% of Gross Asset Value;
(iii) Capital Stock of any Unconsolidated Affiliate and
Investments in partnerships, joint ventures and other non-corporate
Persons accounted for on an equity basis (determined in accordance with
GAAP), such that the aggregate book value of such Capital Stock and
Investments exceeds 35% of Gross Asset Value during the twenty-four
month period following the Effective Date and 25% of Gross Asset Value
thereafter;
(iv) Properties in the process of development, such that the
aggregate book value of all such Properties under development exceeds
15% of Gross Asset Value;
(b) In addition to the foregoing limitations, the aggregate value of
the Investments subject to the limitations in the preceding clauses (i) through
(iv) shall not exceed 40% of Gross Asset Value during the twenty-four month
period following the Effective Date and 30% of Gross Asset Value thereafter.
SECTION VIII.7. Floating Rate Debt.
Borrower will not, and will not permit any Subsidiary to, incur, assume
or suffer to exist Unprotected Floating Rate Debt (excluding Indebtedness
hereunder) in an aggregate principal amount at any time outstanding in excess of
10% of the sum of (a) total consolidated assets of Borrower and its Consolidated
Subsidiaries plus (b) consolidated accumulated depreciation of Borrower and its
Consolidated Subsidiaries.
SECTION VIII.8. Other Secured Indebtedness.
Borrower will not permit more than 75% of the Gross Asset Value of its
assets to be encumbered by Liens to secure Indebtedness which is
cross-collateralized with other Indebtedness without prior written consent of
the Majority Lenders.
<PAGE>
ARTICLE IX.
DEFAULTS
SECTION IX.1. Events of Default.
If one or more of the following events shall have occurred and be
continuing:
(a) (i) Borrower shall fail to pay when due any Reimbursement
Obligation or any principal of any Loan or other Obligation, or (ii) Borrower
shall fail to pay when due any interest, fees or other Obligation and such
failure under this clause (ii) shall continue for a period of five days after
notice that such payment is due and payable;
(b) Borrower shall fail to observe or perform any covenant or agreement
contained in Section 7.7., or Sections 7.11. through 7.14., inclusive;
(c) Borrower shall fail to comply with any of the covenants or
agreements contained in Article VIII., and Borrower shall remain in
noncompliance with any such Section after 45 days (or 30 days in the case of
Section 8.3.) following the first failure to comply with such Section;
(d) Borrower shall fail to observe or perform any covenant or agreement
contained in this Agreement (other than those covered by the immediately
preceding clauses (a) through (c)) for a period of 45 days after written notice
thereof has been given to Borrower by Agent; provided, if the failure cannot
reasonably be cured or remedied within such 45-day period, the period for such
cure or remedy will be extended to the extent reasonably necessary to effect
such cure or remedy, up to but exceeding an additional 75 days, so long as
Borrower has promptly undertaken efforts to cure or remedy the failure and is
diligently prosecuting the same to completion;
(e) An Event of Default under and as defined in any Loan Document shall
occur and be continuing or Borrower shall fail to observe or perform any
covenant or agreement contained in any of the Loan Documents and such failure
shall continue beyond any applicable period of grace;
(f) any representation, warranty, certification or statement made or
deemed made by or on behalf of any Loan Party in this Agreement or in any
certificate, financial statement or other Loan Document delivered pursuant to
this Agreement shall prove to have been incorrect or misleading in any material
respect when made or deemed made;
(g) the maturity of any Indebtedness (excluding non-recourse
Indebtedness of less than $1,000,000 in the aggregate) shall have been (i)
accelerated in accordance with the provisions of any indenture, contract or
instrument providing for the creation of or concerning such Indebtedness or (ii)
required to be prepaid in full prior to the stated maturity thereof;
<PAGE>
(h) Borrower or any other Loan Party shall commence a voluntary case or
other proceeding seeking liquidation, reorganization or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as they
become due, or shall take any corporate action to authorize any of the
foregoing;
(i) an involuntary case or other proceeding shall be commenced against
Borrower or any other Loan Party seeking liquidation, reorganization or other
relief with respect to it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of sixty days; or an order
for relief shall be entered against any such Person under the federal bankruptcy
laws as now or hereafter in effect;
(j) a judgment or order for the payment of money in excess of $250,000
shall be rendered against Borrower or any other Loan Party and such judgment or
order shall continue unsatisfied and unstayed for a period of thirty days;
(k) the assets of Borrower or any other Loan Party at any time
constitute assets, within the meaning of ERISA, the Internal Revenue Code and
the respective regulations promulgated thereunder, of any ERISA Plan or
Non-ERISA Plan;
(l) any Guarantor shall fail to comply with any term, covenant,
condition or agreement contained in the Guaranty (after giving effect to any
applicable grace or cure periods) or any Guarantor shall disallow, revoke or
terminate or attempt to do any of the foregoing with respect to the Guaranty; or
(m) the Lien of Agent in any of the Collateral shall, for any reason,
cease to be a valid, enforceable, perfected and first priority Lien, subject to
Permitted Liens.
SECTION IX.2. Remedies Upon an Event of Default.
<PAGE>
Upon the occurrence of an Event of Default, and in every such event,
Agent shall, upon the direction of the Majority Lenders, (i) by notice to
Borrower terminate the Commitments, which shall thereupon terminate, (ii) by
notice to Borrower declare the Loans and all other Obligations and an amount
equal to the Stated Amount of all Letters of Credit then outstanding, and the
Loans and all other Obligations and an amount equal to the Stated Amount of all
Letters of Credit then outstanding shall thereupon become, immediately due and
payable without presentment, demand, protest or notice of intention to
accelerate, all of which are hereby waived by Borrower; and (iii) exercise all
rights and remedies available under all of the Loan Documents. Notwithstanding
the foregoing, upon the occurrence of any of the Events of Default specified in
clause (h) or (i) above, without any notice to Borrower or any other act by
Agent, the Commitments shall thereupon immediately and automatically terminate
and the Loans and all other Obligations and an amount equal to the Stated Amount
of all Letters of Credit then outstanding shall become immediately due and
payable without presentment, demand, protest, notice of intention to accelerate
or notice of acceleration, or other notice of any kind, all of which are hereby
waived by Borrower.
SECTION IX.3. Additional Remedies Upon Certain Default.
In addition to the other rights and remedies of Agent and Lenders upon
the occurrence and during the continuance of a Default, upon the occurrence and
during the continuance of a Default under Section 9.1.(c), Lenders shall not be
obligated to make any Revolving Loans.
SECTION IX.4. Rescission of Acceleration by Majority Lenders.
If at any time after acceleration of the maturity of the Loans,
Borrower shall pay all arrears of interest and all payments on account of
principal of the Loans and the other Obligations which shall have become due
otherwise than by acceleration (with interest on principal and, to the extent
permitted by Applicable Law, on overdue interest, at the rates specified in this
Agreement) and all Events of Default and Defaults (other than nonpayment of
principal of and accrued interest on the Loans and other Obligations due and
payable solely by virtue of acceleration) shall be remedied or waived, then by
written notice to Borrower, the Majority Lenders may elect, in their sole
discretion, to rescind and annul such acceleration and its consequences; but
such action shall not affect any subsequent Default or Event of Default or
impair any right or remedy consequent thereon. The provisions of the preceding
sentence are intended merely to bind all Lenders to a decision which may be made
at the election of the Majority Lenders and are not intended to benefit Borrower
and do not give Borrower the right to require Lenders to rescind or annul any
acceleration hereunder, even if the conditions set forth herein are satisfied.
SECTION IX.5. Allocation of Proceeds.
If an Event of Default shall have occurred and be continuing and the
maturity of the Notes has been accelerated, all payments received by Agent under
any of the Loan Documents, in respect of any principal of or interest on the
Obligations or any other amounts payable by Borrower hereunder or thereunder,
shall be applied by Agent in the following order and priority:
(a) amounts due to Agent and Lenders in respect of fees and
expenses due under Section 11.3.;
(b) payments of interest on all Loans and Reimbursement Obligations, to
be applied for the ratable benefit of the Lenders;
(c) payments of principal of all Loans and Reimbursement Obligations,
to be applied for the ratable benefit of Lenders;
(d) amounts to be deposited into the Collateral Account;
<PAGE>
(e) amounts due to Agent and Lenders pursuant to Sections 10.7.
and 11.5.;
(f) payments of all other amounts due under any of the Loan Documents,
if any, to be applied for the ratable benefit of Lenders; and
(g) any amount remaining after application as provided above, shall be
paid to Borrower or whomever else may be legally entitled thereto.
SECTION IX.6. Collateral Account.
(a) As collateral security for the prompt payment in full when due of
all Letter of Credit Liabilities, Borrower hereby pledges and grants to Agent,
for the benefit of the Issuing Bank and Lenders as provided herein, a security
interest in all of Borrower's right, title and interest in and to the Collateral
Account and the balances from time to time in the Collateral Account (including
the investments and reinvestments therein provided for below). The balances from
time to time in the Collateral Account shall not constitute payment of any
Letter of Credit Liabilities until applied by Agent as provided herein. Anything
in this Agreement to the contrary notwithstanding, funds held in the Collateral
Account shall be subject to withdrawal only as provided in this Section.
(b) Amounts on deposit in the Collateral Account shall be invested and
reinvested by Agent in such investments as Agent shall determine in its sole
discretion. All such investments and reinvestments shall be held in the name of
and be under the sole dominion and control of Agent. Agent shall exercise
reasonable care in the custody and preservation of any funds held in the
Collateral Account and shall be deemed to have exercised such care if such funds
are accorded treatment substantially equivalent to that which Agent accords
other funds deposited with Agent, it being understood that Agent shall not have
any responsibility for taking any necessary steps to preserve rights against any
parties with respect to any funds held in the Collateral Account.
(c) If an Event of Default shall have occurred and be continuing, Agent
may (and, if instructed by the Requisite Lenders or the Issuing Bank, shall) in
its (or their) discretion at any time and from time to time elect to liquidate
any such investments and reinvestments and credit the proceeds thereof to the
Collateral Account and apply or cause to be applied such proceeds and any other
balances in the Collateral Account to the payment of any of the Letter of Credit
Liabilities then due and payable.
(d) When all of the Obligations shall have been indefeasibly paid in
full and no Letters of Credit remain outstanding, Agent shall promptly deliver
to Borrower, against receipt but without any recourse, warranty or
representation whatsoever, the balances remaining in the Collateral Account.
(e) Borrower shall pay to Agent from time to time such fees as Agent
normally charges for similar services in connection with Agent's administration
of the Collateral Account and investments and reinvestments of funds therein.
<PAGE>
ARTICLE X.
THE AGENT
SECTION X.1. Appointment and Authorization.
Each Lender irrevocably appoints and authorizes Agent to take such
action as contractual representative on its behalf and to exercise such powers
under the Loan Documents as are delegated to Agent by the terms thereof,
together with all such powers as are reasonably incidental thereto. Borrower
shall be entitled to rely conclusively upon a written notice or written response
from Agent as being made pursuant to the requisite concurrence or consent of
Lenders necessary to take such action without investigation or otherwise
contacting Lenders hereunder. The relationship between Agent and Lenders shall
be that of principal and agent only and nothing herein shall be construed to
deem Agent a trustee for any Lender nor to impose on Agent duties or obligations
other than those expressly provided for herein. Not in limitation of the
foregoing, each Lender agrees Agent has no fiduciary obligations to such Lender
under this Agreement, any other Loan Document or otherwise. At the request of a
Lender, Agent will forward to each Lender copies or, where appropriate,
originals of the documents delivered to Agent pursuant to Section 5.1. Agent
will also furnish to any Lender, upon the request of such Lender, a copy of any
certificate or notice furnished to Agent by Borrower pursuant to this Agreement
or any other Loan Document not already delivered to such Lender pursuant to the
terms of this Agreement or any such other Loan Document. As to any matters not
expressly provided for by the Loan Documents (including, without limitation,
enforcement or collection of the Notes), Agent shall not be required to exercise
any discretion or take any action, but shall be required to act or to refrain
from acting (and shall be fully protected in so acting or refraining from
acting) upon the instructions of the Majority Lenders, and such instructions
shall be binding upon all Lenders and all holders of Notes; provided, however,
that Agent shall not be required to take any action which exposes Agent to
personal liability or which is contrary to this Agreement or any other Loan
Document or Applicable Law. Not in limitation of the foregoing, Agent shall not
exercise any right or remedy it or Lenders may have under any Loan Document upon
the occurrence of a Default or an Event of Default unless the Majority Lenders
have so directed Agent to exercise such right or remedy. Agent shall not be
deemed to have knowledge or notice of the occurrence of a Default or Event of
Default unless Agent has actual knowledge of such Default or Event of Default.
In the event that Agent has actual knowledge of the occurrence of a Default or
Event of Default, Agent shall give prompt notice thereof to Lenders.
SECTION X.2. Agent and Affiliates.
<PAGE>
Wells Fargo Bank, National Association, as a Lender, shall have the
same rights and powers under this Agreement and any other Loan Document as any
other Lender and may exercise the same as though it were not Agent; and the term
"Lender" or "Lenders" shall, unless otherwise expressly indicated, include Wells
Fargo Bank, National Association, in each case in its individual capacity. Wells
Fargo Bank, National Association and its affiliates and the other Lenders and
their respective affiliates may each accept deposits from, maintain deposits or
credit balances for, invest in, lend money to, act as trustee under indentures
of, and generally engage in any kind of business with Borrower, any of its
Subsidiaries and any other Affiliate of Borrower as if Wells Fargo Bank,
National Association or such Lender were any other bank and without any duty to
account therefor to the other Lenders.
SECTION X.3. Collateral Matters; Protective Advances.
(a) Each Lender authorizes and directs Agent to enter into the Loan
Documents for the benefit of Lenders. Each Lender hereby agrees that, except as
otherwise set forth herein, any action taken by the Majority Lenders in
accordance with the provisions of this Agreement or the Loan Documents, and the
exercise by the Majority Lenders of the powers set forth herein or therein,
together with such other powers as are reasonably incidental thereto, shall be
authorized and binding upon all Lenders. Agent is hereby authorized on behalf of
all of Lenders, without the necessity of any notice to or further consent from
any Lender, from time to time prior to an Event of Default, to take any action
with respect to any Collateral or Loan Documents which may be necessary to
perfect and maintain perfected the Liens upon the Collateral granted pursuant to
the Loan Documents.
(b) Lenders hereby authorize Agent, at its option and in its
discretion, to release any Lien granted to or held by Agent upon any Collateral
upon termination of the Commitments and payment and satisfaction of all of the
Obligations at any time arising under or in respect of this Agreement or the
Loan Documents or the transactions contemplated hereby or thereby.
(c) Upon any sale and transfer of Collateral which is permitted
pursuant to the terms of this Agreement, and upon at least 5 Business Days'
prior written request by Borrower, Agent shall (and is hereby irrevocably
authorized by Lenders to) execute such documents as may be necessary to evidence
the release of the Liens granted to Agent for the benefit of Lenders herein or
pursuant hereto upon the Collateral that was sold or transferred; provided,
however, that (i) Agent shall not be required to execute any such document on
terms which, in Agent's opinion, would expose Agent to liability or create any
obligation or entail any consequence other than the release of such Liens
without recourse or warranty and (ii) such release shall not in any manner
discharge, affect or impair the Obligations or any Liens upon (or obligations of
Borrower or any Subsidiary in respect of) all interest retained by Borrower or
any Subsidiary, including (without limitation) the proceeds of the sale, all of
which shall continue to constitute part of the Collateral. In the event of any
sale or transfer of Collateral, or any foreclosure with respect to any of the
Collateral, Agent shall be authorized to deduct all of the expenses reasonably
incurred by Agent from the proceeds of any such sale, transfer or foreclosure.
<PAGE>
(d) Except as expressly provided for herein, or in any of the other
Loan Documents, Agent shall have no obligation whatsoever to Lenders or to any
other Person to assure that the Collateral exists or is owned by Borrower or any
Subsidiary or is cared for, protected or insured or that the Liens granted to
Agent herein or pursuant hereto have been properly or sufficiently or lawfully
created, perfected, protected or enforced or are entitled to any particular
priority, or to exercise or to continue exercising at all or in any manner or
under any duty of care, disclosure or fidelity any of the rights, authorities
and powers granted or available to Agent in this Section or in any of the Loan
Documents, it being understood and agreed that in respect of the Collateral, or
any act, omission or event related thereto, Agent may act in any manner it may
deem appropriate, in its sole discretion, given Agent's own interest in the
Collateral as one of Lenders and that Agent shall have no duty or liability
whatsoever to Lenders, except for its gross negligence or willful misconduct.
(e) Agent may make, and shall be reimbursed by Lenders (in accordance
with their Pro Rata Shares) to the extent not reimbursed by Borrower for,
Protective Advances during any one calendar year with respect to each Pool
Property up to the sum of (i) amounts expended to pay real estate taxes,
assessments and governmental charges or levies imposed upon such Pool Property;
(ii) amounts expended to pay insurance premiums for policies of insurance
related to such Pool Property; and (iii) $100,000. Protective Advances in excess
of said sum during any calendar year for any Pool Property shall require the
consent of the Majority Lenders. Borrower agrees to pay on demand all Protective
Advances.
SECTION X.4. Post-Foreclosure Plans.
<PAGE>
If all or any portion of the Collateral is acquired by Agent as a
result of a foreclosure or the acceptance of a deed or assignment in lieu of
foreclosure, or is retained in satisfaction of all or any part of Borrower's
Obligations, the title to any such Collateral, or any portion thereof, shall be
held in the name of Agent or a nominee or Subsidiary of Agent, as agent, for the
ratable benefit of all Lenders. Agent shall prepare a recommended course of
action for such Collateral (a "Post-Foreclosure Plan"), which shall be subject
to the approval of the Majority Lenders. In accordance with the approved
Post-Foreclosure Plan, Agent shall manage, operate, repair, administer,
complete, construct, restore or otherwise deal with the Collateral acquired, and
shall administer all transactions relating thereto, including, without
limitation, employing a management agent, leasing agent and other agents,
contractors and employees, including agents for the sale of such Collateral, and
the collecting of rents and other sums from such Collateral and paying the
expenses of such Collateral. Actions taken by Agent with respect to the
Collateral, which are not specifically provided for in the approved
Post-Foreclosure Plan or reasonably incidental thereto, shall require the
written consent of the Majority Lenders by way of supplement to such
Post-Foreclosure Plan. Upon demand therefor from time to time, each Lender will
contribute its share (based on its Pro Rata Share) of all reasonable costs and
expenses incurred by Agent pursuant to the approved Post-Foreclosure Plan in
connection with the construction, operation, management, maintenance, leasing
and sale of such Collateral. In addition, Agent shall render or cause to be
rendered by the managing agent, to each Lender, on a monthly basis, an income
and expense statement for such Collateral, and each Lender shall promptly
contribute its Pro Rata Share of any operating loss for such Collateral, and
such other expenses and operating reserves as Agent shall deem reasonably
necessary pursuant to and in accordance with the approved Post-Foreclosure Plan.
To the extent that there is net operating income from such Collateral, Agent
shall, in accordance with the approved Post-Foreclosure Plan, determine the
amount and timing of distributions to Lenders. All such distributions shall be
made to Lenders in accordance with their respective Pro Rata Shares. Lenders
acknowledge and agree that if title to any Collateral is obtained by Agent or
its nominee, such Collateral will not be held as a permanent investment but will
be liquidated as soon as practicable. Agent shall undertake to sell such
Collateral, at such price and upon such terms and conditions as the Majority
Lenders reasonably shall determine to be most advantageous to Lenders. Any
purchase money mortgage or deed of trust taken in connection with the
disposition of such Collateral in accordance withe the immediately preceding
sentence shall name Agent, as agent for Lenders, as the beneficiary or
mortgagee. In such case, Agent and Lenders shall enter into an agreement with
respect to such purchase money mortgage or deed of trust defining the rights of
Lenders in the same Pro Rata Shares as provided hereunder, which agreement shall
be in all material respects similar to this Article insofar as the same is
appropriate or applicable.
SECTION X.5. Approvals of Lenders.
All communications from Agent to any Lender requesting such Lender's
determination, consent, approval or disapproval (a) shall be given in the form
of a written notice to such Lender, (b) shall be accompanied by a description of
the matter or thing as to which such determination, approval, consent or
disapproval is requested, or shall advise such Lender where such matter or thing
may be inspected, or shall otherwise describe the matter or issue to be
resolved, (c) shall include, if reasonably requested by such Lender and to the
extent not previously provided to such Lender, written materials and a summary
of all oral information provided to Agent by Borrower in respect of the matter
or issue to be resolved, and (d) shall include Agent's recommended course of
action or determination in respect thereof. Each Lender shall reply promptly,
but in any event within ten Business Days (or such shorter or longer period as
may be required under the Loan Documents for Agent to respond). Unless a Lender
shall give written notice to Agent that it objects to the recommendation or
determination of Agent (together with a written explanation of the reasons
behind such objection) within the applicable time period for reply, such Lender
shall be deemed to have conclusively approved of or consented to such
recommendation or determination.
SECTION X.6. Consultation with Experts.
Agent may consult with legal counsel (who may be counsel for Borrower),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken by it in good faith in
accordance with the advice of such counsel, accountants or experts.
SECTION X.7. Liability of Agent.
<PAGE>
Neither Agent nor any of its affiliates nor any of their respective
directors, officers, agents or employees shall be liable for any action taken or
not taken by Agent in connection with any of the Loan Documents in the absence
of its own gross negligence or willful misconduct. Neither Agent nor any of its
affiliates nor any of their respective directors, officers, agents or employees
shall be responsible for or have any duty to ascertain, inquire into or verify
(a) any statement, warranty or representation made in connection with any of the
Loan Documents, or any borrowing hereunder, (b) the performance or observance of
any of the covenants or agreements of Borrower or any other Loan Party, (c) the
satisfaction of any condition specified in Article V., or (d) the validity,
effectiveness or genuineness of any of the Loan Documents or any other
instrument or writing furnished in connection herewith or therewith. Agent shall
not incur any liability by acting in reliance upon any notice, consent,
certificate, statement, or other writing (which may be a bank wire, telex or
similar writing) believed by it to be genuine or to be signed by the proper
party or parties.
SECTION X.8. Indemnification of Agent.
Lenders agree to indemnify Agent (to the extent not reimbursed by
Borrower and without limiting the obligation of Borrower to do so) in accordance
with Lenders' respective Pro Rata Shares, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may at
any time be imposed on, incurred by, or asserted against Agent in any way
relating to or arising out of the Loan Documents or any action taken or omitted
by Agent under the Loan Documents; provided, however, that no Lender shall be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements (i) to
the extent arising from Agent's gross negligence or willful misconduct or (ii)
if Agent fails to follow the written direction of the Majority Lenders unless
such failure is pursuant to Agent's good faith reliance on the advice of counsel
of which Lenders have received notice. Without limiting the generality of the
foregoing, each Lender agrees to reimburse Agent promptly upon demand for its
ratable share of any out-of-pocket expenses (including counsel fees) incurred by
Agent in connection with the preparation, execution, administration, or
enforcement of, or legal advice with respect to the rights or responsibilities
of the parties under, the Loan Documents, to the extent that Agent is not
reimbursed for such expenses by Borrower. The agreements in this Section shall
survive the payment of the Loans and all other amounts payable hereunder or
under the other Loan Documents and the termination of this Agreement.
SECTION X.9. Credit Decision.
<PAGE>
Each Lender expressly acknowledges that neither Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or other affiliates
has made any representations or warranties to such Lender and that no act by
Agent hereinafter taken, including any review of the affairs of Borrower or any
of the Properties, shall be deemed to constitute any representation or warranty
by Agent to any Lender. Each Lender acknowledges that it has, independently and
without reliance upon Agent, any other Lender or counsel to Agent, and based on
the financial statements of Borrower and its affiliates, its review of the Loan
Documents, the legal opinions required to be delivered to it hereunder, the
advice of its own counsel and such other documents and information as it has
deemed appropriate, including without limitation, such documents and information
regarding the Properties, made its own credit and legal analysis and decision to
enter into this Agreement and the transaction contemplated hereby. Each Lender
also acknowledges that it will, independently and without reliance upon Agent,
any other Lender or counsel to Agent, and based on such review, advice,
documents and information as it shall deem appropriate at the time, continue to
make its own decisions in taking or not taking action under the Loan Documents.
Except for notices, reports and other documents expressly required to be
furnished to Lenders by Agent hereunder, Agent shall have no duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, financial and other condition or
creditworthiness of Borrower, any of its Subsidiaries or any other Affiliate of
Borrower which may come into possession of Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or other affiliates.
SECTION X.10. Successor Agent.
Agent may resign at any time by giving 30 days' prior written notice
thereof, to Lenders and Borrower. Agent may be removed as Agent under the Loan
Documents for good cause upon 30 days' prior written notice to Agent by all of
the Lenders (excluding Agent as Lender); provided, however, that the Agent
cannot be removed if there are fewer than three Lenders. Upon any such
resignation or removal, the Majority Lenders shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Majority Lenders, and shall have accepted such appointment, within 30 days after
the current Agent's giving of notice of resignation or the Majority Lenders'
removal of the current Agent, then the current Agent may, on behalf of Lenders,
appoint a successor Agent, which shall be a Lender, if any Lender shall be
willing to serve. Any successor Agent must be a bank whose senior unsecured debt
obligations (or whose parent's senior unsecured debt obligations) are rated not
less than investment grade or its equivalent by Moody's Investors Service, Inc.
or not less than investment grade or its equivalent by Standard & Poor's Ratings
Group, a division of McGraw-Hill, Inc. and which has total assets in excess of
$10,000,000,000. Upon the acceptance of its appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights and duties of the current Agent, and the current
Agent shall be discharged from its duties and obligations hereunder. The current
Agent shall at the expense of Borrower execute and deliver to such successor
Agent such instruments of transfer as may be reasonably necessary to accomplish
such succession. After any current Agent's resignation hereunder as Agent, the
provisions of this Article shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent. Notwithstanding anything herein to
the contrary, Agent may assign its rights and duties under this Agreement to any
Affiliate of the Agent without the consent of the Lenders or Borrower.
SECTION X.11. Approvals and Other Actions by Majority Lenders.
Each of the following shall require the approval of, or may be taken at
the request of, the Majority Lenders:
(a) Approving certain major construction on or renovation to
Eligible Properties as provided in Section 7.10.;
(b) Termination of the Commitments and acceleration of the Obligations
upon the occurrence of an Event of Default as provided in Section 9.2.;
<PAGE>
(c) Rescission of acceleration of the Loans and the other
Obligations as provided in Section 9.4.;
(d) Direction of Agent to undertake rights and remedies upon a Default
or Event of Default as provided in Section 10.1.;
(e) Approval of an Eligible Property as a Pool Property pursuant
to Section 4.1.(b);
(f) Approving the replacement of Agent after Agent's removal as
provided in Section 10.9.;
(g) Except as specifically provided otherwise in Section 11.7., any
consent or approval regarding, any waiver of the performance or observance by
Borrower of and the waiver of the continuance of any Default or Event of Default
in respect of, any term of this Agreement or any other Loan Document;
(h) Approving certain Protective Advances under Section 10.3(e);
and
(i) Approval of a Post-Foreclosure Plan and related matters as provided
in Section 10.4.
ARTICLE XI.
MISCELLANEOUS
SECTION XI.1. Notices.
All notices, requests and other communications to any party under the
Loan Documents shall be in writing (including facsimile transmission or similar
writing) and shall be given to such party as follows:
If to Borrower:
United Investors Realty Trust
5847 San Filipe
Suite 850
Houston, Texas 77057
Attention: Chief Financial Officer
Telecopier: (713) 268-6005
Telephone: (713) 781-2860
<PAGE>
with a copy to:
United Investors Realty Trust
8080 N. Central Expressway, Suite 500
Dallas, Texas 75231
Attention: Lewis H. Sandler, Esq.
Telecopier: (214) 360-3665
Telephone: (214) 360-3696
If to a Lender or Agent:
To such Lender's or Agent's Lending Office at the address set
forth on the signature pages of this Agreement
or as to each party at such other address as such party shall designate in a
written notice to the other parties. Each such notice, request or other
communication shall be effective (a) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (b) if given by any other means (including facsimile),
when delivered at the applicable address provided for in this Section; provided
that notices to Agent under Article II., and any notice of a change of address
for notices, shall not be effective until received. In addition to Agent's
Lending Office, Borrower shall send copies of the information described in
Section 7.1. to the following address of Agent:
Wells Fargo Bank, National Association
Disbursement and Operations Center
2120 East Park Place, Suite 100
El Segundo, California 90245
Attention: Mr. David Cannon
with a copy to:
Wells Fargo Bank, National Association
100 Louisiana - 4th Floor
Houston, Texas 77002-5093
Attention: Mr. David Williams
SECTION XI.2. No Waivers.
No failure or delay by Agent, the Issuing Bank or any Lender in
exercising any right, power or privilege under any Loan Document shall operate
as a waiver thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies provided in the Loan Documents shall be
cumulative and not exclusive of any rights or remedies provided by law.
<PAGE>
SECTION XI.3. Expenses.
Borrower will pay on demand all present and future reasonable expenses
actually incurred by Persons who are not employees of, and other third parties
engaged by:
(a) Agent in connection with the negotiation, preparation, execution,
delivery and administration (including reasonable out-of-pocket costs and
expenses incurred by Agent and its counsel (but not any Assignee, Participant or
its respective counsel) in connection with the assignment of Commitments
pursuant to Section 11.8.) of this Agreement, the Notes and each of the other
Loan Documents, whenever the same shall be executed and delivered, including,
without limitation, title insurance premiums, survey costs and expenses,
appraisers' fees, environment engineers' fees, search fees, recording fees,
mortgage recording taxes, and the reasonable fees and disbursements of: (i)
Liddell, Sapp, Zivley, Hill & LaBoon, L.L.P., counsel for Agent, and (ii) each
local counsel reasonably retained by Agent;
(b) Agent in connection with the review of Properties for acceptance as
Pool Properties and Agent's other activities under Section 4.1., including
reasonable fees and disbursements of counsel to Agent;
(c) Agent in connection with the negotiation, preparation, execution
and delivery of any waiver, amendment or consent by Agent or any Lender relating
to this Agreement, the Notes or any of the other Loan Documents, including the
reasonable fees and disbursements of counsel to Agent;
(d) Agent, Issuing Bank and each Lender in connection with any
restructuring, refinancing or "workout" of the transactions contemplated by this
Agreement, the Notes and the other Loan Documents, including the reasonable fees
and disbursements of counsel to Agent;
(e) Agent, Issuing Bank and each Lender, after the occurrence of a
Default or Event of Default, in connection with the collection or enforcement of
the obligations of Borrower under this Agreement, the Notes or any other Loan
Document, including the reasonable fees and disbursements of counsel to Agent,
Issuing Bank or to any Lender if such collection or enforcement is done by or
through an attorney;
(f) Subject to any limitation contained in Section 11.5., Agent,
Issuing Bank and each Lender in connection with prosecuting or defending any
claim in any way arising out of, related to, or connected with this Agreement,
the Notes or any of the other Loan Documents, including the reasonable fees and
disbursements of counsel to Agent, Issuing Bank or any Lender and of experts and
other consultants retained by Agent or any Lender in connection therewith;
(g) Agent, Issuing Bank and each Lender, after the occurrence of a
Default or Event of Default, in connection with the exercise by Agent, Issuing
Bank or any Lender of any right or remedy granted to it under this Agreement,
the Notes or any of the other Loan Documents including the reasonable fees and
disbursements of counsel to Agent, Issuing Bank or any Lender;
<PAGE>
(h) Agent in connection with gaining possession of, maintaining,
appraising, selling, preparing for sale and advertising to sell any Collateral,
whether or not a sale is consummated; and
(i) Agent, Issuing Bank and each Lender, to the extent not already
covered by any of the preceding subsections, in connection with any bankruptcy
or other proceeding of the type described in Sections 9.1.(h) or (i), and the
reasonable fees and disbursements of counsel to Agent, Issuing Bank and any
Lender actually incurred in connection with the representation of Agent, Issuing
Bank or such Lender in any matter relating to or arising out of any such
proceeding, including without limitation (i) any motion for relief from any stay
or similar order, (ii) the negotiation, preparation, execution and delivery of
any document relating to Agent, Issuing Bank or such Lender and (iii) the
negotiation and preparation of any plan of reorganization of Borrower, whether
proposed by Borrower, Lenders or any other Person, and whether such fees and
expenses are incurred prior to, during or after the commencement of such
proceeding or the confirmation or conclusion of any such proceeding.
SECTION XI.4. Stamp, Intangible and Recording Taxes.
Borrower will pay any and all stamp, intangible, registration,
recordation, mortgage and similar taxes, fees or charges and shall indemnify
Agent, Issuing Bank and each Lender against any and all liabilities with respect
to or resulting from any delay in the payment or omission to pay any such taxes,
fees or charges, which may be payable or determined to be payable in connection
with the execution, delivery, recording, performance or enforcement of this
Agreement, the Notes and any of the other Loan Documents or the perfection of
any rights or Liens thereunder.
SECTION XI.5. Indemnification.
<PAGE>
Borrower shall and hereby agrees to indemnify, defend and hold harmless
Agent, Issuing Bank and each Lender and their respective directors, officers,
agents and employees (each an "Indemnified Party") from and against (a) any and
all losses, claims, damages, liabilities, deficiencies, judgments or expenses
reasonably incurred by any of them (except to the extent that it results from
their own gross negligence or willful misconduct) arising out of or by reason of
any litigation, investigations, claims or proceedings which arise out of or are
in any way related to: (i) this Agreement or the transactions contemplated
thereby; (ii) the making of Loans; (iii) any actual or proposed use by Borrower
of the proceeds of the Loans or of Letters of Credit; or (iv) Agent's, Issuing
Bank's or Lenders' entering into this Agreement, the other Loan Documents or any
other agreements and documents relating hereto, including, without limitation,
amounts paid in settlement, court costs and the reasonable fees and
disbursements of counsel incurred in connection with any such litigation,
investigation, claim or proceeding or any advice rendered in connection with any
of the foregoing and (b) any such losses, claims, damages, liabilities,
deficiencies, judgments or expenses incurred in connection with any remedial or
other similar action taken by Borrower, Agent, Issuing Bank or any of Lenders in
connection with the required compliance by Borrower or any of the Subsidiaries,
or any of their respective properties, with any federal, state or local
Environmental Laws or other material environmental rules, regulations, orders,
directions, ordinances, criteria or guidelines. If and to the extent that the
obligations of Borrower hereunder are unenforceable for any reason, Borrower
hereby agrees to make the maximum contribution to the payment and satisfaction
of such obligations which is permissible under Applicable Law. Borrower's
obligations hereunder shall survive any termination of this Agreement and the
other Loan Documents and the payment in full of the Obligations, and are in
addition to, and not in substitution of, any other of its other obligations set
forth in this Agreement and the other Loan Documents. Borrower shall not be
obligated as provided in this Section to indemnify, defend or hold harmless any
Indemnified Person in respect of any litigation, investigation, claim or
proceeding commenced by any Indemnified Party against another Indemnified Party.
SECTION XI.6. Setoff.
Each Lender hereby expressly waives its right to set-off and apply any
and all deposits (general or special, including, but not limited to,
indebtedness evidenced by certificates of deposit, whether matured or unmatured)
and any other indebtedness at any time held or owing by such Lender or any
Affiliate of such Lender, to or for the credit or the account of Borrower
against and on account of any of the Obligations then due and owing.
SECTION XI.7. Amendments.
Any consent or approval required or permitted by this Agreement or in
any other Loan Document (other than any agreement evidencing the fees referred
to in Section 3.1.(c)) to be given by Lenders may be given, and the performance
or observance by Borrower of any terms of this Agreement or such other Loan
Document or the continuance of any Default or Event of Default may be waived
(either generally or in a particular instance and either retroactively or
prospectively) with, but only with, the written consent of the Majority Lenders.
Any provision of this Agreement or of any other Loan Document (other than any
agreement evidencing the fees referred to in Section 3.1.(c)) may be amended or
otherwise modified with, but only with, the written consent of Borrower and the
Majority Lenders. Any provision of any agreement evidencing the fees referred to
in Section 3.1.(c) may be amended or otherwise modified only in writing by Agent
and Borrower, and the performance or observance by Borrower of any terms of any
such agreement may be waived only with the written consent of Agent.
Notwithstanding the foregoing, none of the following may be amended or otherwise
modified, nor may Borrower's compliance thereunder or with respect thereto be
waived, without the written consent of all Lenders and Borrower:
(a) the principal amount of any Loan (including forgiveness of
any amount of principal);
(b) the rates of interest on the Loans and the amount of any
interest payable on the Loans (including the forgiveness of
any accrued but unpaid interest);
(c) the dates on which any principal or interest payable by Borrower
under any Loan Document is due;
(d) the provisions of the first sentence of Section 2.1.;
<PAGE>
(e) the Revolving Credit Termination Date;
(f) the Maturity Date;
(g) any assignment or other transfer by Borrower of any of its
rights under this Agreement;
(h) the release of any Guarantor or any other Person who has
Guaranteed, or is otherwise obligated in respect of, any
Obligations from such Obligations;
(i) the definition of Appraised Value, Commitment, Majority
Lenders (or any minimum requirement necessary for Lenders or
Majority Lenders to take action hereunder), Permanent Loan
Estimate, Pro Rata Share, Commitment and Maximum Loan
Availability (and the definitions used in either such
definition and the percentages and rates used in the
calculation thereof);
(j) Sections 8.2., 8.4. and 8.5. or any of the definitions of the
terms used in any such Sections;
(k) Section 11.7.; and
(l) the amount and payment date of any fees.
Further, no amendment, waiver or consent shall affect the rights or duties of
Agent, or Issuing Bank under this Agreement or any of the other Loan Documents
unless in writing and signed by Agent in addition to Lenders required
hereinabove to take such action. Further, no Collateral shall be released or
disposed of by Agent unless all Lenders so direct Agent in writing or unless
released or disposed of as permitted by, and in accordance with, Section 10.3.
No waiver shall extend to or affect any obligation not expressly waived or
impair any right consequent thereon. No course of dealing or delay or omission
on the part of any Lender or Agent in exercising any right shall operate as a
waiver thereof or otherwise be prejudicial thereto. No notice to or demand upon
Borrower shall entitle Borrower to any other or further notice or demand in
similar or other circumstances.
SECTION XI.8. Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns,
except that Borrower may not assign or otherwise transfer any of its rights
under this Agreement without the prior written consent of all Lenders.
<PAGE>
(b) Any Lender may at any time grant to one or more banks or other
financial institutions which are not affiliates of, or otherwise related in any
way to, Borrower (each a "Participant") participating interests in its
Commitment or the Obligations owing to such Lender; provided, however, no Lender
may grant a participating interest in its Commitment, or if the Commitments have
been terminated, the aggregate outstanding principal balance of Notes held by
it, in an amount less than $5,000,000. Except as otherwise provided in Section
11.6., no Participant shall have any rights or benefits under this Agreement or
any other Loan Document. In the event of any such grant by a Lender of a
participating interest to a Participant, such Lender shall remain responsible
for the performance of its obligations hereunder, and Borrower and Agent shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement. Any agreement pursuant to
which any Lender may grant such a participating interest shall provide that such
Lender shall retain the sole right and responsibility to enforce the obligations
of Borrower hereunder including, without limitation, the right to approve any
amendment, modification or waiver of any provision of this Agreement; provided,
however, such Lender may agree with the Participant that it will not, without
the consent of the Participant, agree to (i) increase, or except as contemplated
by Section 2.11., extend the term or extend the time or waive any requirement
for the reduction or termination of, such Lender's Commitment, (ii) extend the
date fixed for the payment of principal of or interest on the Loans or portions
thereof owing to such Lender, (iii) reduce the amount of any such payment of
principal, or (iv) reduce the rate at which interest is payable thereon. An
assignment or other transfer which is not permitted by subsection (c) or (d)
below shall be given effect for purposes of this Agreement only to the extent of
a participating interest granted in accordance with this subsection (b).
<PAGE>
(c) Any Lender may with the prior written consent of Agent and Borrower
(which consent, in each case, shall not be unreasonably withheld) at any time
assign to one or more banks or other financial institutions which are not
affiliates of, or otherwise related in any way to, Borrower (each an "Assignee")
all or a portion of its rights and obligations under this Agreement and the
Notes; provided, however, (i)(x) no such consent by Borrower or Agent shall be
required in the case of any assignment to any affiliate of such Lender and (y)
no such consent by Borrower shall be required if a Default or Event of Default
shall have occurred and be continuing; (ii) any partial assignment shall be in
an amount at least equal to $5,000,000 and after giving effect to such
assignment the assigning Lender retains a Commitment, or if the Commitments have
been terminated, holds Notes having an aggregate outstanding principal balance,
of at least $5,000,000; (iii) each such assignment shall be effected by means of
an Assignment and Acceptance Agreement and (iv) such Assignee must be a bank or
other financial institution whose senior unsecured debt obligations (or whose
parent's senior unsecured debt obligations) are rated not less than investment
grade or its equivalent by Moody's Investor Service, Inc. or Standard & Poor's
Ratings Group, a division of McGraw-Hill, Inc. and which has total assets in
excess of $10,000,000,000. Upon execution and delivery of such instrument and
payment by such Assignee to such transferor Lender of an amount equal to the
purchase price agreed between such transferor Lender and such Assignee, such
Assignee shall be deemed to be a Lender party to this Agreement and shall have
all the rights and obligations of a Lender with a Commitment as set forth in
such Assignment and Acceptance Agreement, and the transferor Lender shall be
released from its obligations hereunder to a corresponding extent, and no
further consent or action by any party shall be required. Upon the consummation
of any assignment pursuant to this subsection, the transferor Lender, Agent and
Borrower shall make appropriate arrangements so that new Notes are issued to the
Assignee and such transferor Lender, as appropriate. In connection with any such
assignment, the transferor Lender shall pay to Agent an administrative fee for
processing such assignment in the amount of $3,000.
(d) In addition to the assignments and participations permitted under
the foregoing provisions of this Section, any Lender may assign and pledge all
or any portion of its Loans and its Notes to any Federal Reserve Bank as
collateral security pursuant to Regulation A and any Operating Circular issued
by such Federal Reserve Bank, and such Loans and Notes shall be fully
transferable as provided therein. No such assignment shall release the assigning
Lender from its obligations hereunder.
(e) Subject to the provisions of Section 7.6, a Lender may furnish any
information concerning Borrower or any of its Subsidiaries in the possession of
such Lender from time to time to Assignees and Participants (including
prospective Assignees and Participants).
(f) Anything in this Section to the contrary notwithstanding, no Lender
may assign or participate any interest in any Loan held by it hereunder to
Borrower or any of its affiliates or Subsidiaries.
SECTION XI.9. Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF TEXAS.
SECTION XI.10. Litigation.
(a) EACH PARTY HERETO ACKNOWLEDGES THAT ANY DISPUTE OR CONTROVERSY
BETWEEN OR AMONG BORROWER, AGENT, ISSUING BANK OR ANY OF LENDERS WOULD BE BASED
ON DIFFICULT AND COMPLEX ISSUES OF LAW AND FACT AND THAT A TRIAL BY JURY COULD
RESULT IN SIGNIFICANT DELAY AND EXPENSE. ACCORDINGLY, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, EACH OF LENDERS, ISSUING BANK, AGENT AND BORROWER
HEREBY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING OF ANY KIND OR NATURE IN
ANY COURT OR TRIBUNAL IN WHICH AN ACTION MAY BE COMMENCED BY OR AGAINST BORROWER
ARISING OUT OF THIS AGREEMENT, THE NOTES OR ANY OTHER LOAN DOCUMENT OR BY REASON
OF ANY OTHER CAUSE OR DISPUTE WHATSOEVER BETWEEN OR AMONG BORROWER, AGENT OR ANY
OF LENDERS OF ANY KIND OR NATURE.
<PAGE>
(b) BORROWER, AGENT, ISSUING BANK, AND EACH LENDER EACH HEREBY AGREES
THAT THE FEDERAL DISTRICT COURT OF THE SOUTHERN DISTRICT OF TEXAS OR, AT THE
OPTION OF AGENT, ANY STATE COURT LOCATED IN HARRIS COUNTY, TEXAS SHALL HAVE
NON-EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN
OR AMONG BORROWER, AGENT, ISSUING BANK, OR ANY OF LENDERS, PERTAINING DIRECTLY
OR INDIRECTLY TO THIS AGREEMENT, THE NOTES OR ANY OTHER LOAN DOCUMENT OR TO ANY
MATTER ARISING HEREFROM OR THEREFROM. BORROWER EXPRESSLY SUBMITS AND CONSENTS IN
ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED IN SUCH
COURTS. THE CHOICE OF FORUM SET FORTH IN THIS SECTION SHALL NOT BE DEEMED TO
PRECLUDE THE BRINGING OF ANY ACTION BY AGENT, ISSUING BANK, OR ANY LENDER OR THE
ENFORCEMENT BY AGENT, ISSUING BANK, OR ANY LENDER OF ANY JUDGMENT OBTAINED IN
SUCH FORUM IN ANY OTHER APPROPRIATE JURISDICTION. FURTHER, BORROWER IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) THE FOREGOING WAIVERS HAVE BEEN MADE WITH THE ADVICE OF COUNSEL AND
WITH A FULL UNDERSTANDING OF THE LEGAL CONSEQUENCES THEREOF, AND SHALL SURVIVE
THE PAYMENT OF THE LOANS AND ALL OTHER AMOUNTS PAYABLE HEREUNDER OR UNDER THE
OTHER LOAN DOCUMENTS AND THE TERMINATION OF THIS AGREEMENT.
SECTION XI.11. Counterparts; Integration.
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement, together with the
other Loan Documents, constitutes the entire agreement and understanding among
the parties hereto and supersedes any and all prior agreements and
understandings, oral or written, relating to the subject matter hereof.
SECTION XI.12. Invalid Provisions.
Any provision of this Agreement or any other Loan Document held by a
court of competent jurisdiction to be illegal, invalid or unenforceable shall
not invalidate the remaining provisions of such Loan Document which shall remain
in full force and effect and the effect thereof shall be confined to the
provision held invalid or illegal.
SECTION XI.13. Limitation of Liability of Trustees, Etc.
AGENT AND LENDERS SHALL LOOK SOLELY TO BORROWER FOR THE ENFORCEMENT OF
ANY CLAIM AGAINST BORROWER AND ACCORDINGLY NEITHER THE TRUST MANAGERS, OFFICERS,
EMPLOYEES, SHAREHOLDERS OF BORROWER NOR THE INVESTMENT MANAGER OR ANY OF ITS
OFFICERS, DIRECTORS, EMPLOYEES OR SHAREHOLDERS SHALL HAVE ANY PERSONAL LIABILITY
FOR OBLIGATIONS ENTERED INTO BY OR ON BEHALF OF BORROWER.
<PAGE>
SIGNATURE PAGES TO FOLLOW
<PAGE>
Signature Page to Revolving Credit Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Credit Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
BORROWER:
UNITED INVESTORS REALTY TRUST
By:__________________________
Name:________________________
Title:_______________________
[Signatures Continued on Next Page]
<PAGE>
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Agent,
Issuing Bank and in its individual capacity as Lender
By:_______________________
Name:_____________________
Title:____________________
Lending Office (all Types of Loans):
Disbursement and Operations Center
2120 East Park Place, Suite 100
El Segundo, California 90245
Attention: David Cannon
with a copy to:
1000 Louisiana - 4th Floor
Houston, Texas 77002-5093
Attention: David Williams
Telecopier: (713) 319-1415
Telephone: (713) 739-1077
Commitment Amount:
$30,000,000.00
<PAGE>
Form of Assignment and Acceptance Agreement
Exhibit A
Page A-6
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
THIS ASSIGNMENT AND ACCEPTANCE AGREEMENT dated as of __________, 199_
(the "Agreement") by and among __________________________ (the "Assignor"),
___________________________ (the "Assignee"), UNITED INVESTORS REALTY TRUST, a
Texas real estate investment trust (the "Borrower") and WELLS FARGO BANK,
NATIONAL ASSOCIATION, as Agent (the "Agent").
WHEREAS, the Assignor is a Lender under that certain Revolving Credit
Agreement dated as of August 25, 1998 (as amended, restated, supplemented or
otherwise modified from time to time, the "Credit Agreement"), by and among the
Borrower, the financial institutions party thereto and their assignees under
Section 11.8 thereof, and the Agent;
WHEREAS, the Assignor desires to assign to the Assignee all or a
portion of the Assignor's Commitment under the Credit Agreement, all on the
terms and conditions set forth herein; and
WHEREAS, the Borrower and the Agent consent to such assignment on the
terms and conditions set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged by the parties hereto, the parties
hereto hereby agree as follows.
Section 1. Assignment.
<PAGE>
(a) Subject to the terms and conditions of this Agreement and in
consideration of the payment to be made by the Assignee to the Assignor pursuant
to Section 2 of this Agreement, effective as of ______________, 199___ (the
"Assignment Date") the Assignor hereby irrevocably sells, transfers and assigns
to the Assignee, without recourse, a $_____________ interest (such interest
being the "Assigned Commitment") in and to the Assignor's Commitment and all of
the other rights and obligations of the Assignor under the Credit Agreement,
such Assignor's Note and the other Loan Documents representing ___% in respect
of the aggregate amount of all Lender's Commitments, including without
limitation, a principal amount of outstanding Loans equal to $_____________, all
voting rights of the Assignor associated with the Assigned Commitment, all
rights to receive interest on such amount of Loans and all commitment and other
fees with respect to the Assigned Commitment and other rights of the Assignor
under the Credit Agreement and the other Loan Documents with respect to the
Assigned Commitment, all as if the Assignee were an original Lender under and
signatory to the Credit Agreement having a Commitment equal to such amount of
the Assigned Commitment. The Assignee, subject to the terms and conditions
hereof, hereby assumes all obligations of the Assignor with respect to the
Assigned Commitment as if the Assignee were an original Lender under and
signatory to the Credit Agreement having a Commitment equal to the Assigned
Commitment, which obligations shall include, but shall not be limited to, the
obligation of the Assignor to make Revolving Loans to the Borrower with respect
to the Assigned Commitment, the obligation to pay the Issuing Bank amounts due
in respect of drawings under Letters of Credit as required under Section 2.14(g)
of the Credit Agreement and the obligation to indemnify the Agent as provided
therein (the foregoing enumerated obligations, together with all other similar
obligations more particularly set forth in the Credit Agreement and the other
Loan Documents, shall be referred to hereinafter, collectively, as the "Assigned
Obligations"). The Assignor shall have no further duties or obligations with
respect to, and shall have no further interest in, the Assigned Obligations or
the Assigned Commitment.
(b) The assignment by the Assignor to the Assignee hereunder is without
recourse to the Assignor. The Assignee makes and confirms to the Agent, the
Assignor, and the other Lenders all of the representations, warranties and
covenants of a Lender under Article X of the Credit Agreement. Not in limitation
of the foregoing, the Assignee acknowledges and agrees that, except as set forth
in Section 4 below, the Assignor is making no representations or warranties with
respect to, and the Assignee hereby releases and discharges the Assignor for any
responsibility or liability for (i) the present or future solvency or financial
condition of the Borrower, (ii) any representations warranties, statements or
information made or furnished by the Borrower in connection with the Credit
Agreement or otherwise, (iii) the validity, efficacy, sufficiency, or
enforceability of the Credit Agreement, any Loan Document or any other document
or instrument executed in connection therewith, or the collectibility of the
Assigned Obligations, (iv) the perfection, priority or validity of any Lien with
respect to any Collateral at any time securing the Obligations or the Assigned
Obligations under the Notes or the Credit Agreement and (v) the performance or
failure to perform by the Borrower of any obligation under the Credit Agreement
or any document or instrument executed in connection therewith. Further, the
Assignee acknowledges that it has, independently and without reliance upon the
Agent, or on any affiliate or subsidiary thereof, or any other Lender and based
on the financial statements supplied by the Borrower and such other documents
and information as it has deemed appropriate, made its own credit analysis and
decision to become a Lender under the Credit Agreement. The Assignee also
acknowledges 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 credit decisions in taking or
not taking action under the Credit Agreement or any Note or pursuant to any
other obligation. The Agent shall have no duty or responsibility, either
initially or on a continuing basis, to provide the Assignee with any credit or
other information with respect to the Borrower or to notify the undersigned of
any Event of Default except as expressly provided in the Credit Agreement. The
Assignee has not relied on the Agent as to any legal or factual matter in
connection therewith or in connection with the transactions contemplated
thereunder.
<PAGE>
Section 2. Payment by Assignee. In consideration of the assignment made
pursuant to Section 1 of this Agreement, the Assignee agrees to pay to the
Assignor on the Assignment Date an amount equal to $_________________
representing the aggregate principal amount outstanding of the Loans owing to
the Assignor under the Credit Agreement and the other Loan Documents and being
assigned hereby.
Section 3. Payments by Assignor. The Assignor agrees to pay to the
Agent on the Assignment Date an administration fee of $3,000.
Section 4. Representations and Warranties of Assignor. The Assignor
hereby represents and warrants to the Assignee that (a) as of the Assignment
Date (i) the Assignor is a Lender under the Credit Agreement having a Commitment
under the Credit Agreement immediately prior to the Assignment Date, equal to
$________________ and that the Assignor is not in default of its obligations
under the Credit Agreement; and (ii) the outstanding principal balance of Loans
owing to the Assignor (without reduction by any assignments thereof which have
not yet become effective) is $__________ , and (b) it is the legal and
beneficial owner of the Assigned Commitment which is free and clear of any
adverse claim created by the Assignor.
Section 5. Representations, Warranties and Agreements of Assignee. The
Assignee (a) represents and warrants that it is legally authorized to enter into
this Agreement; (b) confirms that it is an "Accredited Investor" (as such term
is used in Regulation D promulgated under the Securities Act of 1933, as
amended); (c) confirms that it has received a copy of the Credit Agreement,
together with copies of the most recent financial statements delivered pursuant
thereto and such other documents and information (including without limitation
the Loan Documents) as it has deemed appropriate to make its own credit analysis
and decision to enter into this Agreement; (d) appoints and authorizes the Agent
to take such action as Agent on its behalf and to exercise such powers under the
Loan Documents as are delegated to the Agent by the terms thereof together with
such powers as are reasonably incidental thereto; and (e) agrees that it will
become a party to and shall be bound by the Credit Agreement, the other Loan
Documents to which the other Lenders are a party on the Assignment Date and will
perform in accordance therewith all of the obligations which are required to be
performed by it as a Lender.
Section 6. Recording and Acknowledgment by the Agent. Following the
execution of this Agreement, the Assignor will deliver to the Agent (a) a duly
executed copy of this Agreement for acknowledgment and recording by the Agent
and (b) the Assignor's Note. The Borrower agrees to exchange such Note for new
Notes as provided in Section 11.8(c) of the Credit Agreement. Upon such
acknowledgment and recording, from and after the Assignment Date, the Agent
shall make all payments in respect of the interest assigned hereby (including
payments of principal, interest, fees and other amounts) to the Assignee. The
Assignor and Assignee shall make all appropriate adjustments in payments under
the Credit Agreement for periods prior to the Assignment Date directly between
themselves. The Agent may unilaterally amend Annex I to the Credit Agreement to
reflect the assignment effected hereby.
<PAGE>
Section 7. Agreements of the Borrower. The Borrower hereby agrees that
the Assignee shall be a Lender under the Credit Agreement having a Commitment
equal to the Assigned Commitment. The Borrower agrees that the Assignee shall
have all of the rights and remedies of a Lender under the Credit Agreement and
the other Loan Documents as if the Assignee were an original Lender under and
signatory to the Credit Agreement, including, but not limited to, the right of a
Lender to receive payments of principal and interest with respect to the
Assigned Obligations, if any, and to the Loans made by the Lenders after the
date hereof and to receive the commitment and other fees payable to the Lenders
as provided in the Credit Agreement. Further, the Assignee shall be entitled to
the indemnification provisions from the Borrower in favor of the Lenders as
provided in the Credit Agreement and the other Loan Documents. The Borrower
further agrees, upon the execution and delivery of this Agreement, to execute in
favor of the Assignee a promissory note in substantially the form provided for
under the Credit Agreement in an initial amount equal to the Assigned
Commitment. Further, the Borrower agrees that, upon the execution and delivery
of this Agreement, the Borrower shall owe the Assigned Obligations to the
Assignee as if the Assignee were the Lender originally making such Loans and
entering into such other obligations.
Section 8. Addresses. The Assignee specifies as its address for
notices and its Lending Office for all Loans, the offices set forth below:
Notice Address:
Telephone No.: _____________
Telecopy No.: _____________
Domestic Lending Office:
Telephone No.: ______________
Telecopy No.: ______________
LIBOR Lending Office:
Telephone No.: _______________
Telecopy No.: _______________
<PAGE>
Section 9. Payment Instructions. All payments to be made to the
Assignee under this Agreement by the Assignor, and all payments to be made to
the Assignee under the Credit Agreement, shall be made as provided in the Credit
Agreement in accordance with the following instructions:
Section 10. Effectiveness of Assignment. This Agreement, and the
assignment and assumption contemplated herein, shall not be effective until (a)
this Agreement is executed and delivered by each of the Assignor, the Assignee,
the Borrower and the Agent and (b) the payment to the Assignor of the amounts
owing by the Assignee pursuant to Section 2 hereof and (c) the payment to the
Agent of the amounts owing by the Assignor pursuant to Section 3 hereof. Upon
recording and acknowledgment of this Agreement by the Agent, from and after the
Assignment Date, (i) the Assignee shall be a party to the Credit Agreement and,
to the extent provided in this Agreement, have the rights and obligations of a
Lender thereunder and (ii) the Assignor shall, to the extent provided in this
Agreement, relinquish its rights and be released from its obligations under the
Credit Agreement; provided, however, that if the Assignor does not assign its
entire interest under the Loan Documents, it shall remain a Lender entitled to
all of the benefits and subject to all of the obligations thereunder with
respect to its remaining Commitment.
Section 11. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
TEXAS.
Section 12. Counterparts. This Agreement may be executed in any number of
counterparts each of which, when taken together,
shall constitute one and the same agreement.
Section 13. Headings. Section headings have been inserted herein for
convenience only and shall not be construed to be a
part hereof.
Section 14. Amendments; Waivers. This Agreement may not be amended, changed,
waived or modified except by a writing
executed by the Assignee and the Assignor.
Section 15. Entire Agreement. This Agreement embodies the entire agreement
between the Assignor and the Assignee with respect to the subject matter hereof
and supersedes all other prior arrangements and understandings relating to the
subject matter hereof.
Section 16. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
Section 17. Definitions. Terms not otherwise defined herein are used
herein with the respective meanings given them in the Credit
Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Assignment and Acceptance Agreement as of the date and year first written above.
ASSIGNOR:
[NAME OF ASSIGNOR]
By:_________________
Name:_______________
Title:______________
ASSIGNEE:
[NAME OF ASSIGNEE]
By:__________________
Name:________________
Title:_______________
Agreed and Consented to as of the date first written above:
BORROWER:
UNITED INVESTORS REALTY TRUST
By:__________________________
Name:________________________
Title:_______________________
Accepted as of the date first written above.
AGENT:
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Agent
By:___________________________________
Name:_________________________________
Title:________________________________
<PAGE>
Form of Guaranty
Exhibit B
Page B-13
FORM OF GUARANTY
THIS GUARANTY dated as of August 25, 1998, executed and delivered by
each of the undersigned and the other Persons from time to time party hereto
pursuant to the execution and delivery of an Accession Agreement in the form of
Annex I hereto (all of the undersigned, together with such other Persons each a
"Guarantor" and collectively, the "Guarantors") in favor of (a) WELLS FARGO
BANK, NATIONAL ASSOCIATION, in its capacity as Agent (the "Agent") for the
Lenders under that certain Revolving Credit Agreement dated as of August 25,
1998 by and among the Borrower, the financial institutions party thereto and
their assignees under Section 11.8 thereof (the "Lenders"), and the Agent (as
the same may be amended, restated, supplemented or otherwise modified from time
to time in accordance with its terms, the "Credit Agreement") and (b) the
Lenders and the Issuing Bank.
WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to
extend certain financial accommodations to the Borrower;
WHEREAS, it is a condition precedent to the effectiveness of the Credit
Agreement and the extension of financial accommodations under the Credit
Agreement that the Guarantors execute and deliver this Guaranty;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each Guarantor, each Guarantor
agrees as follows:
Section 1. Guaranty. Each Guarantor hereby absolutely, irrevocably and
unconditionally guaranties the due and punctual payment and performance when
due, whether at stated maturity, by acceleration or otherwise, of all of the
following (collectively referred to as the "Guarantied Obligations"): (a) all
indebtedness and obligations owing by the Borrower to any Lender, the Issuing
Bank or the Agent under or in connection with the Credit Agreement and any other
Loan Document to which the Borrower is a party, including without limitation,
the repayment of all principal of the Revolving Loans, all Reimbursement
Obligations and all other Letter of Credit Liabilities, and the payment of all
interest, Fees, charges, reasonable and actual attorneys fees and other amounts
payable to any Lender, the Issuing Bank or the Agent thereunder or in connection
therewith; (b) any and all extensions, renewals, modifications, amendments or
substitutions of the foregoing; (c) all expenses, including, without limitation,
reasonable and actual attorneys' fees and disbursements that are incurred by the
Lenders, the Issuing Bank and the Agent in the enforcement of any of the
foregoing or any obligation of such Guarantor hereunder and (d) all other
Obligations.
<PAGE>
Section 2. Guaranty of Payment and Not of Collection. This Guaranty is a
guaranty of payment, and not of collection, and a debt or each Guarantor for its
own account. Accordingly, the Lenders, the Issuing Bank, and the Agent shall not
be obligated or required before enforcing this Guaranty against any Guarantor:
(a) to pursue any right or remedy the Lenders, the Issuing Bank or the Agent may
have against the Borrower, any other Loan Party or any other Person or commence
any suit or other proceeding against the Borrower, any other Loan Party or any
other Person in any court or other tribunal, (b) to make any claim in a
liquidation or bankruptcy of the Borrower, any other Loan Party or any other
Person; or (c) to make demand of the Borrower, any other Loan Party or any other
Person or to enforce or seek to enforce or realize upon any collateral security
held by the Lenders, the Issuing Bank or the Agent which may secure any of the
Guarantied Obligations.
Section 3. Guaranty Absolute. Each Guarantor guarantees that the Guarantied
Obligations will be paid strictly in accordance with the terms of the documents
evidencing the same, regardless of any Applicable Law now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of the Agent, the
Lenders or the Issuing Bank with respect thereto. The liability of each
Guarantor under this Guaranty shall be absolute and unconditional in accordance
with its terms and shall remain in full force and effect without regard to, and
shall not be released, suspended, discharged, terminated or otherwise affected
by, any circumstance or occurrence whatsoever, including without limitation, the
following (whether or not such Guarantor consents thereto or has notice
thereof):
(a) (i) any change in the amount, interest rate or due date or other
term of any of the Guarantied Obligations, (ii) any change in the time, place or
manner of payment of all or any portion of the Guarantied Obligations, (iii) any
amendment or waiver of, or consent to the departure from or other indulgence
with respect to, the Credit Agreement, any other Loan Document, or any other
document or instrument evidencing or relating to any Guarantied Obligations, or
(iv) any waiver, renewal, extension, addition, or supplement to, or deletion
from, or any other action or inaction under or in respect of, the Credit
Agreement, any of the other Loan Documents, or any other documents, instruments
or agreements relating to the Guarantied Obligations or any other instrument or
agreement referred to therein or evidencing any Guarantied Obligations or any
assignment or transfer of any of the foregoing;
(b) any lack of validity or enforceability of the Credit Agreement, any
of the other Loan Documents, or any other document, instrument or agreement
referred to therein or evidencing any Guarantied Obligations or any assignment
or transfer of any of the foregoing;
(c) any furnishing to the Agent, the Lenders or the Issuing Bank of any
additional security for the Guarantied Obligations, or any sale, exchange,
release or surrender of, or realization on, any collateral securing any of the
Obligations;
(d) any settlement or compromise of any of the Guarantied Obligations,
any security therefor, or any liability of any other party with respect to the
Guarantied Obligations, or any subordination of the payment of the Guarantied
Obligations to the payment of any other liability of the Borrower or any other
Loan Party,
<PAGE>
(e) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceeding relating to such
Guarantor, the Borrower, any other Loan Party or any other Person, or any action
taken with respect to this Guaranty by any trustee or receiver, or by any court,
in any such proceeding;
(f) any act or failure to act by the Borrower, any other Loan Party or
any other Person which may adversely affect such Guarantor's subrogation rights,
if any, against the Borrower to recover payments made under this Guaranty;
(g) any application of sums paid by the Borrower, any other Loan Party
or any other Person with respect to the liabilities of the Borrower to the
Agent, the Lenders, or the Issuing Bank, regardless of what liabilities of the
Borrower remain unpaid;
(h) any defect, limitation or insufficiency in the borrowing
powers of the Borrower or in the exercise thereof; or
(i) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, such Guarantor hereunder
Section 4. Action with Respect to Guarantied Obligations. The Lenders, the
Issuing Bank and the Agent may, at any time and from time to time, without the
consent of, or notice to, any Guarantor, and without discharging any Guarantor
from its obligations hereunder take any and all actions described in Section 3
and may otherwise: (a) amend, modify, alter or supplement the terms of any of
the Guarantied Obligations, including, but not limited to, extending or
shortening the time of payment of any of the Guarantied Obligations or the
interest rate that may accrue on any of the Guarantied Obligations; (b) amend,
modify, alter or supplement the Credit Agreement or any other Loan Document; (c)
sell, exchange, release or otherwise deal with all, or any part, of any
collateral securing any of the Obligations; (d) release any Loan Party or other
Person liable in any manner for the payment or collection of the Guarantied
Obligations; (e) exercise, or refrain from exercising, any rights against the
Borrower, any other Loan Party or any other Person; and (f) apply any sum, by
whomsoever paid or however realized, to the Guarantied Obligations in such order
as the Lenders shall elect.
Section 5. Representations and Warranties. Each Guarantor hereby makes to the
Agent and the Lenders all of the representations and warranties made by the
Borrower with respect to or in any way relating to such Guarantor in the Credit
Agreement and the other Loan Documents, as if the same were set forth herein in
full.
Section 6. Covenants. Each Guarantor will comply with all covenants which the
Borrower is to cause such Guarantor to comply with under the terms of the Credit
Agreement or any of the other Loan Documents.
<PAGE>
Section 7. Waiver. Each Guarantor, to the fullest extent permitted by Applicable
Law, hereby waives notice or acceptance hereof or any presentment, demand,
protest or notice or any kind, and any other act or thing, or omission or delay
to do any other act or thing, which in any manner or to any extent might vary
the risk of such Guarantor or which otherwise might operate to discharge such
Guarantor from its obligations hereunder.
Section 8. Inability to Accelerate Loan. If the Agent, the Lenders or the
Issuing Bank are prevented from demanding or accelerating payment of any of the
Guarantied Obligations by reason of any automatic stay or otherwise, the Agent,
the Lenders or the Issuing Bank shall be entitled to receive from such
Guarantor, upon demand therefor, the sums which otherwise would have been due
had such demand or acceleration occurred.
Section 9. Reinstatement of Guarantied Obligations. If claim is ever made on the
Agent, any Lender or the Issuing Bank for repayment or recovery of any amount or
amounts received in payment or on account of any of the Guarantied Obligations,
and the Agent or such Lender repays all or part of said amount by reason of (a)
any judgment, decree or order of any court or administrative body of competent
jurisdiction, or (b) any settlement or compromise of any such claim effected by
the Agent, the Lender or the Issuing Bank with any such claimant (including the
Borrower or a trustee in bankruptcy for the Borrower), then and in such event
each Guarantor agrees that any such judgment, decree, order, settlement or
compromise shall be binding on it, notwithstanding any revocation hereof or the
cancellation of the Credit Agreement, any of the other Loan Documents, or any
other instrument evidencing any liability of the Borrower, and such Guarantor
shall be and remain liable to the Agent, such Lender or the Issuing Bank for the
amounts so repaid or recovered to the same extent as if such amount had never
originally been paid to the Agent, such Lender or the Issuing Bank.
Section 10. Subrogation. Upon the making by any Guarantor of any payment
hereunder for the account or the Borrower, such Guarantor shall be subrogated to
the rights of the payee against the Borrower; provided, however, that such
Guarantor shall not enforce any right or receive any payment by way of
subrogation or otherwise take any action in respect of any other claim or cause
of action such Guarantor may have against the Borrower arising by reason of any
payment or performance by such Guarantor pursuant to this Guaranty, unless and
until all of the Guarantied Obligations have been indefeasibly paid and
performed in fill. If any amount shall be paid to such Guarantor on account of
or in respect of such subrogation rights or other claims or causes of action,
such Guarantor shall hold such amount in trust for the benefit of the Agent, the
Lenders and the Issuing Bank and shall forthwith pay such amount to the Agent to
be credited and applied against the Guarantied Obligations, whether matured or
unmatured, in accordance with the terms of the Credit Agreement or to be held by
the Agent as collateral security for any Guarantied Obligations existing.
<PAGE>
Section 11. Payments Free and Clear. All sums payable by each Guarantor
hereunder, whether of principal, interest, Fees, expenses, premiums or
otherwise, shall be paid in full, without set-off or counterclaim or any
deduction or withholding whatsoever (including any withholding tax or liability
imposed by any Governmental Authority, or any Applicable Law promulgated
thereby), and if such Guarantor is required by Applicable Law or by any
Governmental Authority to make any such deduction or withholding, such Guarantor
shall pay to the Agent, the Lenders and the Issuing Bank such additional amount
as will result in the receipt by the Agent, the Lenders and the Issuing Bank of
the full amount payable hereunder had such deduction or withholding not occurred
or been required.
Section 12. Subordination. Each Guarantor hereby expressly covenants and agrees
for the benefit of the Agent, the Lenders and the Issuing Bank that all
obligations and liabilities of the Borrower to such Guarantor of whatever
description, including without limitation, all intercompany receivables of such
Guarantor from the Borrower (collectively, the "Junior Claims") shall be
subordinate and junior in right of payment to all Guarantied Obligations. If an
Event of Default shall have occurred and be continuing, then no Guarantor shall
accept any direct or indirect payment (in cash, property, securities by set-off
or otherwise) from the Borrower on account of or in any manner in respect of any
Junior Claim until all of the Guarantied Obligations have been indefeasibly paid
in full.
<PAGE>
Section 13. Avoidance Provisions. It is the intent of each Guarantor, the Agent,
the Lenders and the Issuing Bank that in any Proceeding, such Guarantor's
maximum obligation hereunder shall equal, but not exceed, the maximum amount
which would not otherwise cause the obligations of the Guarantor hereunder (or
any other obligations of the Guarantor to the Agent, the Lenders and the Issuing
Bank) to be avoidable or unenforceable against the Guarantor in such Proceeding
as a result of Applicable Law, including, without limitation, (a) Section 548 of
the Bankruptcy Code of 1978, as amended (the "Bankruptcy Code") and (b) any
state fraudulent transfer or fraudulent conveyance act or statue applied in such
Proceeding, whether by virtue of Section 544 of the Bankruptcy Code or
otherwise. The Applicable Laws under which the possible avoidance or
unenforceability of the obligations of such Guarantor hereunder (or any other
obligations of such Guarantor to the Agent, the Lenders and the Issuing Bank)
shall be determined in any such Proceeding are referred to as the "Avoidance
Provisions". Accordingly, to the extent that the obligations of any Guarantor
hereunder would otherwise be subject to avoidance under the Avoidance
Provisions, the maximum Guarantied Obligations for which such Guarantor shall be
liable hereunder shall be reduced to that amount which, as of the time any of
the Guarantied Obligations are deemed to have been incurred under the Avoidance
Provisions, would not cause the obligations of any Guarantor hereunder (or any
other obligations of the Guarantor to the Agent, the Lenders and the Issuing
Bank), to be subject to avoidance under the Avoidance Provisions. This Section
is intended solely to preserve the rights of the Agent, the Lenders and the
Issuing Bank hereunder to the maximum extent that would not cause the
obligations of any Guarantor hereunder to be subject to avoidance under the
Avoidance Provisions, and no Guarantor or any other Person shall have any right
or claim under this Section as against the Agent, the Lenders and the Issuing
Bank that would not otherwise be available to such Person under the Avoidance
Provisions.
Section 14. Information. Each Guarantor assumes all responsibility for
being and keeping itself informed of the financial condition of the Borrower and
the other Loan Parties, and of all other circumstances bearing upon the risk of
nonpayment of any of the Guarantied Obligations and the nature, scope and extent
of the risks that such Guarantor assumes and incurs hereunder, and agrees that
none of the Agent, any Lender or the Issuing Bank shall have any duty whatsoever
to advise any Guarantor of information regarding such circumstances or risks.
Section 15. Governing Law. THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
SECTION 16. WAIVER OF JURY TRIAL. (a) EACH GUARANTOR, AND EACH OF THE AGENT, THE
LENDERS AND THE ISSUING BANK BY ACCEPTING THE BENEFITS HEREOF, ACKNOWLEDGE THAT
ANY DISPUTE OR CONTROVERSY BETWEEN OR AMONG ANY GUARANTOR, THE AGENT, ANY LENDER
AND THE ISSUING BANK WOULD BE BASED ON DIFFICULT AND COMPLEX ISSUES OF LAW AND
FACT AND THAT A TRIAL BY JURY COULD RESULT IN SIGNIFICANT DELAY AND EXPENSE.
ACCORDINGLY, THE GUARANTOR, AND EACH OF THE AGENT, THE LENDERS AND THE ISSUING
BANK BY ACCEPTING THE BENEFITS HEREOF, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, HEREBY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING OF ANY
KIND OR NATURE IN ANY COURT OR TRIBUNAL IN WHICH AN ACTION MAY BE COMMENCED BY
OR AGAINST SUCH GUARANTOR ARISING OUT OF THIS GUARANTY OR ANY OTHER LOAN
DOCUMENT OR BY REASON OF ANY OTHER CAUSE OR DISPUTE WHATSOEVER BETWEEN OR AMONG
SUCH GUARANTOR, THE AGENT, ANY LENDER OR THE ISSUING BANK OF ANY KIND OR NATURE.
<PAGE>
(b) THE GUARANTOR, AGENT, EACH LENDER OR THE ISSUING BANK EACH HEREBY
AGREES THAT THE FEDERAL DISTRICT COURT OF THE SOUTHERN DISTRICT OF TEXAS OR, AT
THE OPTION OF AGENT, ANY STATE COURT LOCATED IN HARRIS COUNTY, TEXAS SHALL HAVE
NON-EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN
OR AMONG GUARANTOR, AGENT, ANY THE LENDERS OR THE ISSUING BANK, PERTAINING
DIRECTLY OR INDIRECTLY TO THIS AGREEMENT, THE NOTES OR ANY OTHER LOAN DOCUMENT
OR TO ANY MATTER ARISING HEREFROM OR THEREFROM. GUARANTOR EXPRESSLY SUBMITS AND
CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED
IN SUCH COURTS. THE CHOICE OF FORUM SET FORTH IN THIS SECTION SHALL NOT BE
DEEMED TO PRECLUDE THE BRINGING OF ANY ACTION BY AGENT, ANY LENDER OR THE
ISSUING BANK OR THE ENFORCEMENT BY AGENT, ANY LENDER OR THE ISSUING BANK OF ANY
JUDGMENT OBTAINED IN SUCH FORUM IN ANY OTHER APPROPRIATE JURISDICTION. FURTHER,
EACH GUARANTOR IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE
OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM
(c) THE FOREGOING WAIVERS HAVE BEEN MADE WITH THE ADVICE OF COUNSEL AND
WITH A FULL UNDERSTANDING OF THE LEGAL CONSEQUENCES THEREOF, AND SHALL SURVIVE
THE PAYMENT OF THE OBLIGATIONS AND ALL OTHER AMOUNTS PAYABLE HEREUNDER OR UNDER
THE OTHER LOAN DOCUMENTS AND THE TERMINATION OF THIS GUARANTY.
Section 17. Loan Accounts . The Agent, each Lender and the Issuing Bank may
maintain books and accounts setting forth the amounts of principal, interest and
other sums paid and payable with respect to the Guarantied Obligations, and in
the case of any dispute relating to any of the outstanding amount, payment or
receipt of any of the Guarantied Obligations or otherwise, the entries in such
books and accounts shall constitute prima facie evidence of the outstanding
amount of such Guarantied Obligations and the amounts paid and payable with
respect thereto. The failure of the Agent, any Lender or the Issuing Bank to
maintain such books and accounts shall not in any way relieve or discharge any
Guarantor of any of its obligations hereunder.
Section 18. Waiver of Remedies. No delay or failure on the part of the Agent,
any Lender or the Issuing Bank in the exercise of any right or remedy it may
have against any Guarantor hereunder or otherwise shall operate as a waiver
thereof, and no single or partial exercise by the Agent, any Lender or the
Issuing Bank of any such right or remedy shall preclude other or further
exercise thereof or the exercise of any other such right or remedy.
Section 19. Termination. This Guaranty shall remain in full force and
effect until indefeasible payment in full of the Obligations and the
termination or cancellation of the Credit Agreement.
<PAGE>
Section 20. Successors and Assigns. Each reference herein to the Agent, the
Lenders or the Issuing Bank shall be deemed to include such Person's respective
successors and assigns (including, but not limited to, any holder of the
Guarantied Obligations) in whose favor the provisions of this Guaranty also
shall inure, and each reference herein to each Guarantor shall be deemed to
include such Guarantor's successors and assigns, upon whom this Guaranty also
shall be binding. The Lenders and the Issuing Bank may, in accordance with the
applicable provisions of the Credit Agreement, assign, transfer or sell any
Guarantied Obligations, or grant or sell participation in any Guarantied
Obligations, to any Person without the consent of, or notice to, any Guarantor
and without releasing, discharging or modifying any Guarantor's obligations
hereunder. Each Guarantor hereby consents to the delivery by the Agent, Lenders
or the Issuing Bank to any Assignee or Participant (or any prospective Assignee
or Participant) of any financial or other information regarding the Borrower or
any Guarantor. No Guarantor may assign or transfer its obligations hereunder to
any Person.
Section 21. JOINT AND SEVERAL OBLIGATIONS. THE OBLIGATIONS OF THE GUARANTOR
HEREUNDER SHALL BE JOINT AND SEVERAL AND ACCORDINGLY, EACH GUARANTOR CONFIRMS
THAT IT IS LIABLE FOR THE FULL AMOUNT OF THE "GUARANTEED OBLIGATIONS" AND ALL OF
THE OBLIGATIONS AND LIABILITIES OF EACH OF THE OTHER GUARANTORS HEREUNDER.
Section 22. Amendments. This Guaranty may not be amended except in writing
signed by the Agent and each Guarantor.
Section 23. Payments. All payments to be made by any Guarantor pursuant to this
Guaranty shall be made in Dollars, in immediately available funds to the Agent
at its Lending Office, not later than 11:00 a.m., on the date one Business Day
after demand therefor.
Section 24. Notices. All notices, requests and other communications hereunder
shall be in writing (including facsimile transmission or similar writing) and
shall be given (a) to each Guarantor at its address set forth below its
signature hereto, (b) to the Agent, Lender or the Issuing Bank at its address
for notices provided for in the Credit Agreement, or (c) as to each such party
at such other address as such party shall designate in a written notice to the
other parties. Each such notice, request or other communication shall be
effective (i) if mailed, when received; (ii) if telecopied, when transmitted; or
(iii) if hand delivered, when delivered; provided, however, that any notice of a
change of address for notices shall not be effective until received.
Section 25. Severability. In case any provision of this Guaranty shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
Section 26. Headings. Section headings used in this Guaranty are for convenience
only and shall not affect the construction of this Guaranty.
Section 27. Definitions. (a) For the purposes of this Guaranty:
<PAGE>
"Proceeding" means any of the following: (i) a voluntary or involuntary
case concerning any Guarantor shall be commenced under the Bankruptcy Code of
1978, as amended; (ii) a custodian (as defined in such Bankruptcy Code or any
other applicable bankruptcy laws) is appointed for, or takes charge of, all or
any substantial part of the property of any Guarantor; (iii) any other
proceeding under any Applicable Law, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, winding-up or composition for adjustment
of debts, whether now or hereafter in effect, is commenced relating to any
Guarantor; (iv) any Guarantor is adjudicated insolvent or bankrupt; (v) any
order of relief or other order approving any such case or proceeding is entered
by a court of competent jurisdiction; (vi) any Guarantor makes a general
assignment for the benefit of creditors; (vii) any Guarantor shall fail to pay,
or shall state that it is unable to pay, or shall be unable to pay, its debts
generally as they become due; (viii) any Guarantor shall call a meeting of its
creditors with a view to arranging a composition or adjustment of its debts;
(ix) any Guarantor shall by any act or failure to act indicate its consent to,
approval of or acquiescence in any of the foregoing; or (x) any corporate action
shall be taken by any Guarantor for the purpose of effecting any of the
foregoing.
(b) Terms not otherwise defined herein are used herein with the
respective meanings given them in the Credit Agreement.
Section 28. YEAR 2000. Guarantor shall ensure that the following are
Year 2000 Compliant in a timely manner, but in no event later than December 31,
1999: (a) each Property; (b) Guarantor itself; and (c) any other major
commercial properties and entities in which Guarantor holds a controlling
interest. Guarantor shall further make reasonable inquiries of and request
reasonable validation that each of the following are similarly Year 2000
Compliant: (x) all "major" tenants or other entities from which Guarantor
receives payments; and (y) all "major" contractors, suppliers, service providers
and vendors of Guarantor. As used in this paragraph, "major" shall mean
properties or entities the failure of which to be Year 2000 Compliant would have
a material adverse economic impact upon Guarantor. The term "Year 2000
Compliant" shall mean, in regard to any property or entity, that all software,
hardware, equipment, goods or systems utilized by or material to the physical
operations, business operations, or financial reporting of such property or
entity (collectively, the "systems") will properly perform date sensitive
functions before, during and after the year 2000. In furtherance of this
covenant, Guarantor shall, in addition to any other necessary actions perform a
comprehensive review and assessment of all systems of Guarantor and each
Property, and shall adopt a detailed plan, with itemized budget, for the
testing, remediation, and monitoring of such systems. Guarantor shall, within
thirty business days of Lender's written request, provide to Lender such
certifications or other evidence of Guarantor's compliance with the terms of
this paragraph as Lender may from time to time reasonably require.
[Signatures on Next Page]
<PAGE>
IN WITNESS WHEREOF, each Guarantor has duly executed and delivered this
Guaranty as of the date and year first written above.
[GUARANTOR]
By:_______________________
Name:_____________________
Title:____________________
Address for Notices:
Attention:_________________
Telecopier: (______)
Telephone: (______)
<PAGE>
ANNEX I
FORM OF ACCESSION AGREEMENT
THIS ACCESSION AGREEMENT dated as of _________, 19__, executed and
delivered by ________________, a (the "New Guarantor") in favor of (a) WELLS
FARGO BANK, NATIONAL ASSOCIATION, in its capacity as Agent (the "Agent") for the
Lenders under that certain Revolving Credit Agreement dated as of August 25,
1998 (as the same may be amended, restated, supplemented or otherwise modified
from time to time in accordance with its terms, the "Credit Agreement"), by and
among United Investors Realty Trust (the "Borrower"), the financial institutions
initially party thereto and their assignees under Section 11.8 thereof (the
"Lenders"), and the Agent and (b) the Lenders and the Issuing Bank.
WHEREAS, pursuant to the Credit Agreement, the Agent, the Lenders and
the Issuing Bank have agreed to make available to the Borrower certain financial
accommodations on the terms and conditions set forth in the Credit Agreement;
WHEREAS, the Borrower owns, directly or indirectly, ___% of the issued
and outstanding capital stock of; or other equity interest in, the New
Guarantor;
WHEREAS, the Borrower, the New Guarantor and the other Subsidiaries of
the Borrower though separate legal entities, are mutually dependent on each
other in the conduct of their respective businesses as an integrated operation
and have determined it to be in their mutual best interests to obtain financing
from the Agent, the Lenders and the Issuing Bank through their collective
efforts:
WHEREAS, the New Guarantor acknowledges that it will receive direct and
indirect benefits from the Agent, the Lenders and the Issuing Bank making such
financial accommodations available to the Borrower under the Credit Agreement
and, accordingly, the New Guarantor is willing to guarantee the Borrower's
obligations to the Agent, the Lenders and the Issuing Bank on the terms and
conditions contained herein, and
WHEREAS, the New Guarantor's execution and delivery of this Agreement
is a condition to the Agent, the Lenders and the Issuing Bank continuing to make
such financial accommodations to the Borrower.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the New Guarantor, the New
Guarantor agrees as follows:
<PAGE>
Section 1. Accession to Guaranty. The New Guarantor hereby agrees that
it is a "Guarantor" under that certain Guaranty dated as of August 25, 1998 (the
"Guaranty"), made by each Subsidiary a party thereto in favor of the Agent, the
Lenders and the Issuing Bank and assumes all obligations of a "Guarantor"
thereunder, all as if the New Guarantor had been an original signatory to the
Guaranty. Without limiting the generality of the foregoing, the New Guarantor
hereby:
(a) irrevocably and unconditionally guarantees the due and punctual
payment and performance when due, whether at stated maturity, by acceleration or
otherwise, of all Guarantied Obligations;
(b) makes to the Agent, the Lenders and the Issuing Bank as of the date
hereof each of the representations and warranties contained in Section 5 of the
Guaranty and agrees to be bound by each of the covenants contained in Section 6
of the Guaranty; and
(c) consents and agrees to each provision set forth in the Guaranty.
SECTION 2. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
Section 3. Definitions. Capitalized terms used herein and not otherwise defined
herein shall have their respective defined meanings given them in the Credit
Agreement.
[Signatures on Next Page]
<PAGE>
IN WITNESS WHEREOF, the new Guarantor has caused this Accession
Agreement to be duly executed and delivered under seal by its duly authorized
officers as of the date first written above.
[NEW GUARANTOR]
By:_____________________
Name:___________________
Title:__________________
ATTEST:
By:
Name
Title:
(CORPORATE SEAL)
Address for Notices:
Attention: ___________________
Telecopier: (_____)
Telephone: (_____)
Accepted:
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Agent
By:
Name:_________________________
Title:________________________
<PAGE>
Form of Note
Exhibit C
Page C-4
FORM OF NOTE
$30,000,000.00 Houston, Texas
August 25, 1998
FOR VALUE RECTI\ED, the undersigned, UNITED INVESTORS REALTY TRUST, a
Texas real estate investment trust (the "Borrower") hereby unconditionally
promises to pay to the order of Wells Fargo Bank, National Association (the
"Lender"), in care of Wells Fargo Bank, National Association, as Agent (the
"Agent"), to Wells Fargo Bank, National Association, Disbursement and Operations
Center, 2120 East Park Place, Suite 100, El Segundo, California 90245 or at such
other address as may be specified by the Agent to the Borrower, the principal
sum of THIRTY MILLION AND NO/100 DOLLARS ($30,000,000.00), or such lesser amount
as may be such Lender's Pro Rata Share of the then outstanding and unpaid
balance of all Revolving Loans made by the Lenders to the Borrower pursuant to,
and in accordance with the terms of, the Credit Agreement.
The Borrower further agrees to pay interest at said office, in like
money, on the unpaid principal amount owing hereunder from time to time on the
dates and at the rates and at the times specified in the Credit Agreement.
This Note is one of the "Revolving Notes" referred to in that certain
Revolving Credit Agreement dated as of August 25, 1998 (as amended, restated,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
by and among the Borrower, the financial institutions party thereto and their
assignees under Section 11.8 thereof (the "Lenders"), and the Agent, and is
subject to, and entitled to, all provisions and benefits thereof. Capitalized
terms used herein and not defined herein shall have the respective meanings
given to such terms in the Credit Agreement. The Credit Agreement, among other
things, (a) provides for the making of Revolving Loans by the Lender to the
Borrower from time to time in an aggregate amount not to exceed at any time
outstanding the Dollar amount first above mentioned, (b) permits the prepayment
of the Loans by the Borrower subject to certain terms and conditions and (c)
provides for the acceleration of the Revolving Loans upon the occurrence of
certain specified events.
<PAGE>
It is expressly stipulated and agreed to be the intent of Borrower and
Lenders at all times to comply strictly with the applicable Texas law governing
the maximum rate or amount of interest payable on this Note or the Related
Indebtedness (or applicable United States federal law to the extent that it
permits Lenders to contract for, charge, take, reserve or receive a greater
amount of interest than under Texas law). If the applicable law is ever
judicially interpreted so as to render usurious any amount (i) contracted for,
charged, taken, reserved or received pursuant to this Note, any of the other
Loan Documents or any other communication or writing by or between Borrower and
Lenders related to the transaction or transactions that are the subject matter
of the Loan Documents, (ii) contracted for, charged or received by reason of
Lenders' exercise of the option to accelerate the maturity of this Note and/or
the Related Indebtedness, or (iii) Borrower will have paid or Lenders will have
received by reason of any voluntary prepayment by Borrower of this Note and/or
the Related Indebtedness, then it is Borrower's and Lenders' express intent that
all amounts charged in excess of the Maximum Lawful Rate shall be automatically
cancelled, ab initio, and all amounts in excess of the Maximum Lawful Rate
theretofore collected by Lenders shall be credited on the principal balance of
this Note and/or the Related Indebtedness (or, if this Note and all Related
Indebtedness have been or would thereby be paid in full, refunded to Borrower),
and the provisions of this Note and the other Loan Documents immediately be
deemed reformed and the amounts thereafter collectible hereunder and thereunder
reduced, without the necessity of the execution of any new document, so as to
comply with the applicable law, but so as to permit the recovery of the fullest
amount otherwise called for hereunder and thereunder; provided, however, if this
Note has been paid in full before the end of the stated term of this Note, then
Borrower and Lenders agree that Lenders shall, with reasonable promptness after
Lenders discover or are advised by Borrower that interest was received in an
amount in excess of the Maximum Lawful Rate, either refund such excess interest
to Borrower and/or credit such excess interest against this Note and/or any
Related Indebtedness then owing by Borrower to Lenders. Borrower hereby agrees
that as a condition precedent to any claim seeking usury penalties against
Lenders, Borrower will provide written notice to Lenders, advising Lenders in
reasonable detail of the nature and amount of the violation, and Lenders shall
have sixty (60) days after receipt of such notice in which to correct such usury
violation, if any, by either refunding such excess interest to Borrower or
crediting such excess interest against this Note and/or the Related Indebtedness
then owing by Borrower to Lenders. All sums contracted for, charged or received
by Lender for the use, forbearance or detention of any debt evidenced by this
Note and/or the Related Indebtedness shall, to the extent permitted by
applicable law, be amortized or spread, using the actuarial method, throughout
the stated term of this Note and/or the Related Indebtedness (including any and
all renewal and extension periods) until payment in full so that the rate or
amount of interest on account of this Note and/or the Related Indebtedness does
not exceed the Maximum Lawful Rate from time to time in effect and applicable to
this Note and/or the Related Indebtedness for so long as debt is outstanding. In
no event shall the provisions of Chapter 346 of the Texas Finance Code (which
regulates certain revolving credit loan accounts and revolving triparty
accounts) apply to this Note and/or the Related Indebtedness. Notwithstanding
anything to the contrary contained herein or in any of the other Loan Documents,
it is not the intention of Lenders to accelerate the maturity of any interest
that has not accrued at the time of such acceleration or to collect unearned
interest at the time of such acceleration. Borrower and Lenders hereby agree
that any and all suits alleging the contracting for, charging or receiving of
usurious interest shall lie in Harris County, Texas, and each irrevocably waive
the right to venue in any other county.
<PAGE>
As used herein, the term "Maximum Lawful Rate" shall mean the maximum
lawful rate of interest which may be contracted for, charged, taken, received or
reserved by Lenders in accordance with the applicable laws of the State of Texas
(or applicable United States federal law to the extent that it permits Lender to
contract for, charge, take, receive or reserve a greater amount of interest than
under Texas law), taking into account all Charges (as herein defined) made in
connection with the transaction evidenced by this Note and the other Loan
Documents. As used herein, the term "Charges" shall mean all fees, charges
and/or any other things of value, if any, contracted for, charged, received,
taken or reserved by Lenders in connection with the transactions relating to
this Note and the other Loan Documents, which are treated as interest under
applicable law. As used herein, the term "Related Indebtedness" shall mean any
and all debt paid or payable by Borrower to Lenders pursuant to the Loan
Documents or any other communication or writing by or between Borrower and
Lenders related to the transaction or transactions that are the subject matter
of the Loan Documents, except such debt which has been paid or is payable by
Borrower to Lender under the Note.
To the extent that Lender is relying on Chapter 1D of the Texas Credit
Title to determine the Maximum Lawful Rate payable on this Note and/or the
Related Indebtedness, Lender will utilize the weekly ceiling from time to time
in effect as provided in such Chapter 1D, as amended. To the extent United
States federal law permits Lenders to contract for, charge, take, receive or
reserve a greater amount of interest than under Texas law, Lenders will rely on
United States federal law instead of such Chapter 1D for the purpose of
determining the Maximum Lawful Rate. Additionally, to the extent permitted by
applicable law now or hereafter in effect, Lenders may, at their option and from
time to time, utilize any other method of establishing the Maximum Lawful Rate
under such Chapter 1D or under other applicable law by giving notice, if
required, to Borrower as provided by applicable law now or hereafter in effect.
Notwithstanding anything in this Note to the contrary, if at any time
(i) interest rate provided for under this Note or any other Loan Document (the
"Stated Rate"), and (ii) the Charges computed over the full term of this Note,
exceed the Maximum Lawful Rate, then the rate of interest payable hereunder,
together with all Charges, shall be limited to the Maximum Lawful Rate;
provided, however, that any subsequent reduction in the Stated Rate shall not
cause a reduction of the rate of interest payable hereunder below the Maximum
Lawful Rate until the total amount of interest earned hereunder, together with
all Charges, equals the total amount of interest which would have accrued at the
Stated Rate if such interest rate had at all times been in effect. Changes in
the Stated Rate resulting from a fluctuations in the rates used to calculate the
Stated Rate shall be subject to the provisions of this paragraph.
This Note is secured by the Collateral and the holder hereof shall be
entitled to the benefits thereof and to the other Loan Documents (to the extent
and with the effect as therein provided).
The Borrower hereby waives presentment, demand, protest and notice of
any kind. No failure to exercise, and no delay in exercising any rights
hereunder on the part of the holder hereof shall operate as a waiver of such
rights.
Time is of the essence of this Note.
<PAGE>
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF TEXAS.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Note as of the date written above.
UNITED INVESTORS REALTY TRUST
By:__________________________
Name:________________________
Title:_______________________
<PAGE>
Form of Notice of Borrowing
Exhibit D
Page D-2
FORM OF NOTICE OF BORROWING
_____, 199____
Wells Fargo Bank, National Association
Disbursement and Operations Center
2120 East Park Place, Suite 100
El Segundo, California 90245
Attention: David Cannon
Ladies and Gentlemen:
Reference is made to that certain Revolving Credit Agreement dated as
of August 25, 1998, as amended (the "Credit Agreement"), by and among United
Investors Realty Trust (the "Borrower"), the financial institutions party
thereto and their assignees under Section 11.8 thereof, and Wells Fargo Bank,
National Association, as Agent (the "Agent"). Capitalized terms used herein and
not otherwise defined herein, have their respective meanings given them in the
Credit Agreement.
1. Pursuant to Section 2.2 of the Credit Agreement, the Borrower
hereby requests that the Lenders make a Revolving Loan to the
Borrower in an amount equal to $ .
2. The Borrower requests that the Revolving Loan be made
available to the Borrower on , 199 .
3. The Borrower hereby requests that the requested Revolving Loan
be of the following Type:
[Check one box only]
. Base Rate Loan
. LIBOR Loan, with an initial Interest Period for a duration of:
(Check one box only)
. one month
. two months
. three months
. six months
. twelve months (requires approval of all Lenders)
<PAGE>
4. The proceeds of the Revolving Loan will be used for the following:
The Borrower hereby certifies to the Agent and the Lenders that as of
the date hereof, as of the date of the making of the requested Revolving Loan,
and after making such Revolving Loan, (a) no Default or Event of Default shall
have occurred and be continuing and (b) the representations and warranties of
the Borrower contained in the Credit Agreement and the other Loan Documents are
and shall be true and correct in all material respects, except to the extent
such representations or warranties specifically relate to an earlier date or
such representations or warranties have become untrue by reason of events or
conditions otherwise permitted under the Credit Agreement or the other Loan
Documents.
UNITED INVESTORS REALTY TRUST
By:__________________________
Name:________________________
Title:_______________________
<PAGE>
Form of Notice of Continuation
Exhibit E
Page E-2
FORM OF NOTICE OF CONTINUATION
, 199__
Wells Fargo Bank, National Association
Disbursement and Operations Center
2120 East Park Place, Suite 100
El Segundo, California 90245
Attention: David Cannon
Ladies and Gentlemen:
Reference is made to that certain Revolving Credit Agreement dated as
of August 25, 1998, as amended (the "Credit Agreement"), by and among United
Investors Realty Trust (the "Borrower"), the financial institutions party
thereto and their assignees under Section 11.8 thereof, and Wells Fargo Bank,
National Association, as Agent (the "Agent"). Capitalized terms used herein, and
not otherwise defined herein, have their respective meanings given them in the
Credit Agreement.
Pursuant to Section 2.4 of the Credit Agreement, the Borrower hereby
requests a Continuation of a LIBOR Loan under the Credit Agreement, and in that
connection sets forth below the information relating to such Continuation as
required by such Section of the Credit Agreement:
1. The requested date of such Continuation is________ , 199__.
2. The aggregate principal amount of the LIBOR Loan subject to the requested
Continuation is $_________ and the portion of such principal amount subject to
such Continuation is $__________ .
3. The current Interest Period of the Loan subject to such Continuation ends on
__________ , 199__ .
4. The duration of the Interest Period for the Loan or portion thereof subject
to such Continuation is:
(Check one box only)
. one month
. two months
. three months
. six months
. twelve months (requires approval of all Lenders)
<PAGE>
The Borrower hereby certifies to the Agent, the Issuing Bank and the
Lenders that as of the date hereof, as of the proposed date of the requested
Continuation, and after giving effect to such Continuation, no Event of Default
shall have occurred and be continuing.
If notice of the requested Continuation was given previously by
telephone, this notice is to be considered the written confirmation of such
telephone notice required by Section 2.4 of the Credit Agreement.
UNITED INVESTORS REALTY TRUST
By:_________________________
Name:_______________________
Title:______________________
<PAGE>
Form of Notice of Conversion
Exhibit F
Page F-2
FORM OF NOTICE OF CONVERSION
_______, 199__
Wells Fargo Bank, National Association
Disbursement and Operations Center
2120 East Park Place, Suite 100
El Segundo, California 90245
Attention: David Cannon
Ladies and Gentlemen:
Reference is made to that certain Revolving Credit Agreement dated as
of August 25, 1998, as amended (the "Credit Agreement"), and among United
Investors Realty Trust (the "Borrower"), the financial institutions party
thereto and their assignees under Section 11.8 thereof, and Wells Fargo Bank,
National Association, as Agent (the "Agent"). Capitalized terms used herein, and
not otherwise defined herein, have their respective meanings given them in the
Credit Agreement.
Pursuant to Section 2.5 of the Credit Agreement, the Borrower hereby
requests a Conversion of a Loan of one Type into a Loan of another Type under
the Credit Agreement, and in that connection sets forth below the information
relating to such Conversion as required by such Section of the Credit Agreement:
1. The requested date of such Conversion is_______ , 199__.
2. The Type of Loan to be Converted pursuant hereto is currently:
(Check one box only)
. Base Rate Loan
. LIBOR Loan
3. The aggregate principal amount of the Loan subject to the requested
Conversion is $_______and the portion of such principal amount subject to such
Conversion is $___________________.
<PAGE>
4. The amount of such Loan to be so Converted is to be converted into a
Loan of the following Type:
(Check one box only)
. Base Rate Loan
. LIBOR Loan, with an initial Interest Period
for a duration of:
(Check one box only) . one month
. two months
. three months
. six months
. twelve months (requires approval of all Lenders)
The Borrower hereby certifies to the Agent, the Issuing Bank and the
Lenders that as of the date hereof, as of the proposed date of the requested
Conversion, and after giving effect to such Conversion, no Event of Default
shall have occurred and be continuing.
If notice of the requested Conversion was given previously by
telephone, this notice is to be considered the written confirmation of such
telephone notice required by Section 2.5 of the Credit Agreement.
UNITED INVESTORS REALTY TRUST
By:__________________________
Name:________________________
Title:_______________________
<PAGE>
Form of Extension Request
Exhibit G
Page G-1
FORM OF EXTENSION REQUEST
___________________, 199_
Wells Fargo Bank, National Association
1000 Louisiana, 4th Floor
Houston, Texas 77002
Attention: David Williams
Ladies and Gentlemen:
Reference is made to that certain Revolving Credit Agreement dated as
of August 25, 1998 (the "Credit Agreement"), by and among United Investors
Realty Trust (the "Borrower"), the financial institutions party thereto and
their assignees under Section 11 thereof, and Wells Fargo Bank, National
Association, as Agent (the "Agent"). Capitalized terms used herein, and not
otherwise defined herein, have their respective meanings given them in the
Credit Agreement.
Pursuant to Section 2.11 of the Credit Agreement, the Borrower hereby
requests that the Lenders and Agent extend the current Revolving Credit
Termination Date of August 25, 2000 by a one-year period to August 25, 2001.
The Borrower hereby certifies to the Agent, the Issuing Bank and the
Lenders that as of the date hereof (a) no Default or Event of Default has
occurred and is continuing, and (b) the representations and warranties of the
Borrower contained in the Credit Agreement and the other Loan Documents are true
and correct in all material respects, except to the extent such representations
or warranties specifically relate to an earlier date or such representations or
warranties have become untrue by reason of events or conditions otherwise
permitted under the Credit Agreement or the other Loan Documents
UNITED INVESTORS REALTY TRUST
By:_________________________
Name:_______________________
Title:______________________
<PAGE>
Form of Pool Certificate
Exhibit I
Page I-4
FORM OF POOL CERTIFICATE
Reference is made to that certain Revolving Credit Agreement dated as
of August 25, 1998 (the "Credit Agreement"), by and among United Investors
Realty Trust (the "Borrower"), the financial institutions party thereto and
their assignees under Section 11.8 thereof and Wells Fargo Bank, National
Association, as Agent (the "Agent"). Capitalized terms used herein, and not
otherwise defined herein, have their respective meanings given them in the
Credit Agreement.
1. Pursuant to Section 4. l(b)(ii) of the Credit Agreement, the
undersigned hereby certifies to the Lenders and the Agent that Schedule I
attached hereto accurately and completely sets forth, as of the date hereof: (i)
the identity of each Eligible Property as to which Borrower seeks Lenders'
approval as a Pool Property, (ii) assuming the approval of each such Eligible
Property as a Pool Property, (A) the Permanent Loan Estimate of all Pool
Properties and the calculation thereof, (B) the aggregate Appraised Value of all
Pool Properties, (C) the aggregate amount of the Commitments and (D) the Maximum
Loan Availability, (iii) the Occupancy Rate of each such Eligible Property and
(iv) the average aggregate Occupancy Rate of all Pool Properties, assuming the
approval of each such Eligible Property as a Pool Property.
2. Borrower has obtained, with respect to such property a "Phase I"
environmental assessment, prepared as of the date indicated on Schedule 1, by
the consultant identified on Schedule 1.
3. Such consultant is of good repute within the region in which such
property is located and is believed by Borrower to be competent.
4. Borrower has reviewed such assessments and believes it reasonable to
rely upon such assessments.
5. Such assessments do not ( 1 ) identify any contamination or
potential contamination that has resulted in, or that could reasonably be
anticipated to result in a materially adverse effect upon the condition, market
value, Net Operating Income or prospects of such property, (2) recommend that
any further material investigation be undertaken or (3) identify any potential
or actual recognized environmental condition.
6. Borrower has obtained, with respect to such property a
structural/physical report, prepared as of the date indicated on Schedule 1, by
the consultant identified on Schedule 1.
7. Such consultant is of good repute within the region in which such
property is located and is believed by Borrower to be competent.
<PAGE>
8. Borrower has reviewed such report and believes it reasonable to rely
upon such report.
9. Such report does not identify any material defect in construction or
physical condition of the property, material variance from any available plans
and specifications for the property or material violation of applicable law, or
other item of material concern with respect to the structural integrity or
physical condition of the property.
The undersigned further certifies to the Agent and the Lenders that as
of the date hereof (a) no Default or Event of Default has occurred and is
continuing, and (b) the representations and warranties of the Borrower contained
in the Credit Agreement and the other Loan Documents are true and correct in all
material respects, except to the extent such representations or warranties
specifically relate to an earlier date or such representations or warranties
become untrue by reason of events or conditions otherwise permitted under the
Credit Agreement or the other Loan Documents.
IN WITNESS WHEREOF, the undersigned has signed this Pool Certificate on
and as of __________, 19__.
Name: _______________________
Title: Chief Financial Officer
<PAGE>
Schedule 1
TO POOL CERTIFICATE
1. List all Eligible Properties as to which Borrower seeks Lenders' approval as
a Pool Property ("New Pool Properties"):
2. Maximum Loan Availability:
(a) Permanent Loan Estimate of all Pool Properties
(including New Pool Properties) $__________
(attach calculation of such amount)
(b) (i) Appraised Value of all Pool Properties
other than New Pool Properties $________
(ii) Appraised Value of each New Pool Property
$________________
$________________
$________________
(iii) Total Appraised Value of all Pool Properties
$____________
(iv) 60% of line (b)(iii)
(c) Aggregate Commitments of all Lenders
$____________________
(d) Maximum Loan Availability
Lowest of (a), (b)(iv) or (c)
$_____________
3. Occupancy Rate of each New Pool Property
$_____________
$_____________
$_____________
4. Average Occupancy Rate of all Pool Properties (including
New Pool Properties _____________%
5. Environmental Information: [For each New Pool Property]
(a) Date Phase 1 prepared:
<PAGE>
(b) The Phase I was prepared by:
5. Structural/Physical Report: [For each new Pool Property]
(a) Date Structural/Physical Report Prepared:
(b) The Structural/Physical Report was prepared by ___________.
<PAGE>
Form of Eligibility Certificate
Exhibit J
Page J-3
FORM OF ELIGIBILITY CERTIFICATE
Reference is made to that certain Revolving Credit Agreement dated as
of August 25, 1998 (the "Credit Agreement"), by and among United Investors
Realty Trust (the "Borrower"), the financial institutions party thereto and
their assignees under Section 11.8 thereof and Wells Fargo Bank, National
Association, as Agent (the "Agent"). Capitalized terms used herein, and not
otherwise defined herein, have their respective meanings given them in the
Credit Agreement.
Pursuant to Section 4.1 (b)(iii) of the Credit Agreement, the
undersigned hereby certifies to the Agent and the Lenders, with respect to each
of the properties listed on Schedule 1 attached hereto, that:
(a) such property is improved with one or more operating retail shopping
centers.
(b) such property is owned in fee simple by Borrower or by a Wholly Owned
Subsidiary designated as the owner of such property on Schedule 1. Schedule 1
sets forth the capital structure of each such Wholly Owned Subsidiary.
(c)
(i) neither such property, nor any interest of Borrower or such Wholly Owned
Subsidiary therein, is subject to any Lien other than Permitted Liens or to any
agreement (other than the Credit Agreement or any other Loan Document) that
prohibits the creation of any Lien thereon as security for Indebtedness;
(ii) if such property is owned by a Wholly Owned Subsidiary: (A) none of
Borrower's direct or indirect ownership interest in such Wholly Owned Subsidiary
is subject to any Lien other than Permitted Liens or to any agreement (other
than the Credit Agreement or any other Loan Document) that prohibits the
creation of any Lien thereon as security for Indebtedness and (B) neither such
Wholly Owned Subsidiary, nor any other Wholly Owned Subsidiary through which
Borrower holds any indirect interest in such Wholly Owned Subsidiary, is subject
to any restriction of any kind which would limit its ability to pay or perform
its obligations under the Guaranty required to be delivered under the Credit
Agreement prior to its obligation to pay dividends or make any other
distribution on any of such Wholly Owned Subsidiary's capital stock or other
securities owned by Borrower or any other Wholly Owned Subsidiary of Borrower;
(iii) such property has an Occupancy Rate of at least 80%, and (iv) such
property is free of all structural defects, title defects, environmental
conditions or other adverse matters except for defects, conditions or matters
individually or collectively which are not material to the profitable operation
of such property.
<PAGE>
IN WITNESS WHEREOF, the undersigned has signed this Eligibility
Certificate on and as of___________, 19__.
Name: _______________________
Title: Chief Financial Officer
<PAGE>
Schedule 1
TO ELIGIBILITY CERTIFICATE
(A) Property Description [For each Property]
1. Property Name:
2. Owner: [If not Borrower, set forth capital structure of the owner]
3. Location:
<PAGE>
Reaffirmation of Guaranty
Exhibit O
Page O-2
REAFFIRMATION OF GUARANTY
THIS REAFFIRMATION OF GUARANTY is made and executed as of the ___ day
of _____________, 1998 by ______________________, a _____________________ (each,
a "Guarantor") and delivered to Wells Fargo Bank, National Association, a
national banking association ("Agent") for the benefit of Lenders. Capitalized
terms used herein and not otherwise defined herein shall have the same
definition and meaning as set forth in the Credit Agreement (as hereinafter
defined).
A. Guarantor executed and delivered a Guaranty to Lenders dated as of
August 25, 1998 (the "Guaranty") pursuant to and as a requirement of the
revolving credit facility made available by Lenders to United Investors Realty
Trust, a Texas real estate investment trust (the "Borrower") in the maximum
outstanding principal amount of $30,000,000 under and pursuant to that certain
Revolving Credit Agreement dated August 25, 1998, by and among Borrower, each
bank and financial institution from time to time a Lender thereunder and Agent
(the "Credit Agreement");
B. Borrower has requested and Lenders have agreed to make a new
Revolving Loan to the Borrower in the amount of $_________________ (the "New
Revolving Loan") under the Credit Agreement on or about the date hereof;
C. Lenders are not willing to make the New Revolving Loan to the
Borrower unless each Guarantor unconditionally reaffirms his obligations under
the Guaranty as contemplated by the terms of the Credit Agreement;
D. Each Guarantor will benefit, directly or indirectly, from Lenders'
making the New Revolving Loan to the Borrower.
NOW THEREFORE, as an inducement to Lenders to make the New Revolving
Loan to the Borrower and for other good and valuable consideration, the receipt
and legal sufficiency of which are hereby acknowledged, each Guarantor hereby
agrees as follows:
1. Each Guarantor does hereby unconditionally reaffirm all of its
obligations to Lenders under the Guaranty including, without limitation, the
payment and performance of the Guaranteed Obligations as set forth in the
Guaranty, which Guaranteed Obligations shall include the Obligations evidenced
by the New Revolving Loan.
2. Each Guarantor certifies that the representations and warranties
contained in the Guaranty made by such Guarantor remain true, correct and
complete in all material respects as of the date hereof with the same force and
effect as if made on the date hereof and that it has no offsets, counterclaims
or defenses to any of its obligations under the Guaranty.
<PAGE>
3. Except as modified hereby, the Guaranty remains unmodified and in
full force and effect.
EXECUTED as of the day and year first above written.
[SIGNATURE OF GUARANTORS]
<PAGE>
Form of Environmental Indemnity Agreement
Exhibit P
Page P-6
FORM OF
ENVIRONMENTAL INDEMNITY AGREEMENT
THIS ENVIRONMENTAL INDEMNITY AGREEMENT ("Indemnity") is made as of
August __, 1998, by UNITED INVESTORS REALTY TRUST, a Texas real estate
investment trust ("Indemnitor") for the benefit of WELLS FARGO BANK, NATIONAL
ASSOCIATION, a national banking association, as Agent for the benefit of the
Lenders and the Issuing Bank (both as hereinafter defined) pursuant to the
Credit Agreement (as hereinafter defined) ("Agent"), the LENDERS, individually
and collectively, and the ISSUING BANK (as hereinafter defined) (collectively,
"Indemnitees"), and is made with reference to the recitals set forth below, and
in consideration of the covenants and agreements set forth below, and other
valuable consideration, the receipt and sufficiency of which are acknowledged by
Indemnitor.
R E C I T A L S
A. Indemnitor, as "Borrower", and Agent have executed and delivered
that certain Credit Agreement of even date, providing to Borrower a
$30,000,000.000 revolving credit facility (the "Credit Agreement"). The terms
"Lenders" and "Issuing Bank", as used in this Agreement, shall have the meanings
given such terms in the Credit Agreement. All capitalized terms not defined in
this Indemnity shall have the meanings given such terms in the Credit Agreement.
B. As part of the security for the Loan, Borrower has executed and
delivered to Agent a Deed of Trust and Security Agreement ("Deed of Trust") in
favor of Agent encumbering the real property described on Schedule 1 attached
hereto and made a part hereof by this reference (such real property, together
with all improvements now or hereafter located thereon, is hereinafter referred
to as the "Mortgaged Property").
C. In the Loan Documents, Borrower has made certain warranties,
representations and covenants, and provided certain indemnities, with respect to
Hazardous Substances (as hereinafter defined) affecting the Mortgaged Property,
upon which Lenders have relied and without which Lenders would not make the Loan
and which warranties, representations, covenants and indemnities shall, as to
the Mortgaged Property, be enforceable only with respect to the period of time
prior to conveyance of title to the Mortgaged Property through foreclosure of
the Deed of Trust or delivery of a deed in lieu thereof.
D. To induce Lenders to make the Loan, Indemnitor has agreed to enter
into this Indemnity for the benefit of Indemnitees, which will provide to
Indemnitees certain warranties, representations, covenants and Indemnitees
pertaining to the Mortgaged Property and relating to the period of time from and
after conveyance of title to the Mortgaged Property through foreclosure of the
Deed of Trust or delivery of a deed in lieu thereof (in either event, a
"Foreclosure").
<PAGE>
A G R E E M E N T
Indemnitor agrees as follows:
1. As used in this Indemnity, the term "Hazardous Substances" shall
mean and include all hazardous and toxic substances, wastes or materials, any
pollutants or contaminants (including, without limitation, petroleum, petroleum
by-products, asbestos and raw materials which include hazardous constituents),
or any other similar substances, or materials which are included under or
regulated by any local, state or federal law, rule or regulation pertaining to
environmental regulation, contamination or clean-up, including, without
limitation, "CERCLA", as amended, or as may be amended from time to time "RCRA",
as amended, or as may be amended from time to time, or state lien or state
superlien or environmental clean-up statutes (all such laws, rules and
regulations being referred to collectively as 'Environmental Laws").
2. Indemnitor warrants, represents and agrees as follows:
(a) Indemnitor has performed reasonable investigations,
studies and tests as to any environmental contamination, liabilities or problems
with respect to the Mortgaged Property, including without limitation, the
storage, disposal, presence, discharge or release of any Hazardous Substances at
or with respect to the Mortgaged Property, and, to the best of Indemnitor's
knowledge and except as disclosed pursuant to Section 3.10 of the Mortgage, or
any environmental report or questionnaire delivered to Agent, no Hazardous
Substances are present on the Mortgaged Property and no violations of any
Environmental Law exist with respect to the Mortgaged Property.
(b) To the best of Indemnitor's knowledge and except as
disclosed pursuant to Section 3.10 of the Mortgage, or any environmental report
or questionnaire delivered to Agent, the Mortgaged Property is not subject to
any private or governmental lien or judicial or administrative notice or action
relating to Hazardous Substances or environmental problems, impairments or
liabilities with respect to the Mortgaged Property or the direct or indirect
violation of any Environmental Laws, and Indemnitor has received no written
notice from a governmental authority or service of process regarding any such
matter.
<PAGE>
(c) To the best of Indemnitor's knowledge and except (i) as
disclosed pursuant to Section 3.10 of the Mortgage or any environmental report
or questionnaire delivered to Agent, and (ii) as expressly provided below in
this subsection (c), no Hazardous Substances are located on or have been stored,
processed or disposed of on or released or discharged from (including
groundwater contamination) the Mortgaged Property and no above or underground
storage tanks exist on the Mortgaged Property. Indemnitor shall not allow any
Hazardous Substances to be stored, located, discharged, possessed, managed,
processed or otherwise handled on or incorporated into the Mortgaged Property
and shall comply with all Environmental Laws affecting the Mortgaged Property;
provided that nothing contained in this Indemnity shall prohibit the use at the
Mortgaged Property of any substance of a nature, quantity or concentration that
is customarily used, stored and disposed as part of or incidental to the
operation and maintenance of the Mortgaged Property as a retail shopping center
in the ordinary course of such business so long as (1) such use, storage or
disposal is ancillary to the business otherwise conducted by a tenant at the
shopping center, e.g., dry-cleaning fluid utilized by a retail dry-cleaner or
petroleum products utilized by a retail automobile service station, and complies
fully with applicable Environmental Laws and good and safe business practice,
(2) the sale or distribution of the applicable Hazardous Substance is not the
principal business being conducted, (3) any disposal takes place in accordance
with applicable Environmental laws at disposal facilities and locations other
than the Mortgaged Property and which are fully permitted in accordance with
Environmental Laws and (4) such use, storage or disposal does not require any
Indemnitee, any agent or employee of any Indemnitee or any operator or tenant of
the Mortgaged Property to have a permit or license (other than a hazardous waste
generator identification number) as a result of any Hazardous Substance being
stored, sold or distributed. To the best of Indemnitor's knowledge and except as
disclosed pursuant to Section 3.10 of the Mortgage or any environmental report
or questionnaire delivered to Agent, no Hazardous Substances (i) are
contaminating the soil or ground water on or under property adjoining the
Mortgaged Property or (ii) are migrating toward or otherwise threaten to
contaminate the Mortgaged Property.
<PAGE>
(d) Indemnitor shall immediately notify Indemnitees should
Indemnitor become aware of (i) the presence of any Hazardous Substance not
expressly permitted by this Indemnity or other environmental problem or
liability with respect to the Mortgaged Property, (ii) any "release" or
threatened "release" (as defined in CERCLA and rules and regulations promulgated
thereunder) of any Hazardous Substances on or from the Mortgaged Property, or
(iii) any lien, action, or notice of the nature described in subparagraph (b)
above. Indemnitor shall, at its own cost and expense, take all actions as shall
be necessary or advisable to comply with Environmental Laws for the clean-up of
the Mortgaged Property, including all removal, containment and remedial actions
tin accordance with all applicable Environmental Laws (and in all events in a
manner reasonably satisfactory to Indemnitees), and shall further pay or cause
to be paid at no expense to Indemnitees all clean-up, administrative, and
enforcement costs of applicable government agencies which may be asserted
against the Mortgaged Property or the owner thereof; provided, however, that
Indemnitor may, to the extent and in the manner permitted by law, contest or
challenge any liability action, demand, proceeding or enforcement action which
is asserted by any third party (other than any Indemnitee seeking to enforce its
rights under this Indemnity) which is within the scope of this Indemnity
provided that (i) any such contest or challenge shall be prosecuted diligently
and continuously and in a manner not prejudicial to the rights, liens and
security interests of the Indemnitees which relate in any way to the Credit
Agreement, (ii) subject to (iii) below, any such contest or challenge will stay
or otherwise prevent the imposition of any lien, penalty, loss or sanction of
any nature against either the Indemnitees or the Mortgaged Property, (iii) if
any lien arising out of the matter which is the subject of the contest or
challenge is filed or recorded against the Mortgaged Property or against any of
the Indemnitees, such lien must be canceled and released by payment or bonding
within ten (10) calendar days after demand therefor by any of the Indemnitees
and (iv) Indemnitor shall at all times keep Indemnitees generally apprised of
the status of the contest or challenge. Nothing contained in this subsection (d)
is intended to limit or restrict the right of each of the Indemnitees to demand
from Indemnitor immediate performance of its obligations under this Indemnity to
the extent necessary to prevent entry of judgment or other sanction or penalty
against the Indemnitees.
3. All warranties and representations contained in the Paragraph 2,
above, shall be deemed to be continuing and shall remain true and correct in all
material respects until any applicable limitations period expires.
4. Indemnitor hereby indemnifies Agent and Lenders and agrees to defend
and hold harmless each of Agent and the Lenders from and against any and all
claims, demands, counterclaims, damages. losses, judgments, liens, liabilities,
penalties, fines, litigation and other proceedings. costs and expenses
(including, without limitation, reasonable attorneys' fees and disbursements and
court costs) which accrue against or are incurred by Agent or any of the Lenders
and arise after the occurrence of a Foreclosure directly or indirectly from or
out of or in any way connected with (i) any breach of any of the warranties,
representations and covenants of Indemnitor contained in this Indemnity; or (ii)
the presence or remediation of any Hazardous Substances upon the Mortgaged
Property; or (iii) any violation or claim of violation of Environmental Laws
with respect to the Mortgaged Property (by a governmental authority or any other
person), or any governmental or judicial claim, order or judgment alleged or
issued pursuant to any of the Environmental Laws affecting the Mortgaged
Property. Subject to the right of Indemnitor to contest or challenge third-party
claims in accordance with Section 2(d), above, any amount due Indemnitees
pursuant to this Section 4 shall be payable without any requirement of waiting
for the ultimate outcome of any litigation, claim or other proceeding, and shall
be paid by Indemnitor to Indemnitees, as from time to time suffered or incurred
by Indemnitees, within thirty (30) days after written notice from Indemnitees
itemizing the amounts it incurred to the date of such notice. The foregoing
indemnity is not conditioned in any way upon fault or culpability on the part of
Indemnitor or upon any other event, occurrence, matter or circumstance; except
that this Indemnity does not cover a claim or damage that would otherwise be
covered by this Indemnity but which arises from acts or omissions of Agent or
Lenders or acts of other parties following Foreclosure.
<PAGE>
5. At any time after the occurrence of a Foreclosure, the Indemnitee
shall have the right under this Indemnity, but no obligation, to pay any amount
of money or perform any obligation which should be paid or performed by
Indemnitor pursuant to this Indemnity, all in such manner as the Indemnitees
reasonably deem advisable to protect their interest in the Mortgaged Property.
Indemnitor shall reimburse Indemnitees for all such costs, expenses and
liabilities in the manner described in Paragraph 4, above, whether or not
Indemnitor has actual knowledge of the existence of Hazardous Substances on the
Mortgaged Property as of the date of this Indemnity and whether or not such
Hazardous Substances are present on the Mortgaged Property as a result of any
act. omission or culpability of Indemnitor; except that this Indemnity does not
cover a claim or damage that would otherwise be covered by this Indemnity but
which arises from acts or omissions of Agent or Lenders or acts of other parties
following Foreclosure.
6. Any notice, communication, request or other documents or demand
permitted or required hereunder shall be in writing and given in accordance with
the provisions of the Loan Documents. Indemnitor agreeing that its address for
this purpose shall be the address of the Borrower.
7. This Indemnity shall be governed by the laws of the State of Texas
and shall bind and inure to the benefit of the parties and their respective
heirs, successors and assigns. Notwithstanding any of the provisions contained
in this Indemnity, the representations, covenants, warranties and agreements
contained in this Indemnity shall not inure to the benefit of any person who
acquires title to the Mortgaged Property through Foreclosure unless such person
is (i) any one or more of the Indemnitees, (ii) their successors, (iii) any
subsequent holders of the Loan, or (iv) any person or entity which is affiliated
with, controls, is controlled by or is under common control with any of the
foregoing (collectively the "Indemnified Parties"). Indemnitor acknowledges and
agrees that this Indemnity shall inure to the benefit of and be enforceable by
any one or more of the Indemnified Parties which becomes the owner of the
Mortgaged Property as a result of a Foreclosure. Indemnitor waives any
acceptance of this Indemnity by Indemnitees.
8. The failure of any party to enforce any right or remedy hereunder,
or to promptly enforce any such right or remedy, shall not constitute a waiver
thereof nor give rise to any estoppel against such party, nor excuse any of the
parties from their obligations hereunder. Any waiver of such right or remedy
must be in writing and signed by the party to be bound. This Indemnity is
subject to enforcement at law and/or equity, including actions for damages
and/or specific performance. Time is of the essence hereof.
9. Indemnitor and Agent intend and agree that this Indemnity will not
be secured in any way by the Deed of Trust, or any other Loan Document, that
Agent will not exercise its rights under this Indemnity until the occurrence of
a Foreclosure and that liability of Indemnitor under this Indemnity will arise
only with respect to the period of time from and after the occurrence of a
Foreclosure (but without regard to whether or not the facts, events or
circumstances which give rise to such liability may have existed or been known
to Indemnitees prior to Foreclosure). Indemnitor and Agent intend and agree that
this Indemnity will survive Foreclosure and repayment in full of the
Indebtedness evidenced by the Credit Agreement, whether through Foreclosure or
otherwise. The foregoing indemnity is not conditioned in any way upon fault or
culpability on the part of Indemnitor or upon any other event, occurrence,
matter or circumstance; except that this Indemnity does not cover a claim or
damage that would otherwise be covered by this Indemnity but which arises from
acts or omissions of Agent or Lenders or acts of other parties following
Foreclosure.
<PAGE>
10. This Indemnity is given only with respect to the Mortgaged
Property. Nothing contained in this Indemnity and no provision in any other Loan
Document which relates only to the Mortgaged Property shall limit, alter or
otherwise affect any other Environmental Indemnity Agreement (as that term is
defined in the Credit Agreement) which may be given with respect to any other
Collateral (as that term is defined in the Credit Agreement) or any indemnity
which may be contained in the Credit Agreement pertaining to Hazardous
Substances affecting Collateral other than the Mortgaged Property.
11. Indemnitees shall look solely to the assets of Indemnitor for the
enforcement of any claim against Indemnitees as neither the trustees, officers,
employees nor shareholders of Indemnitor shall have any personal liability for
obligations entered into by or on behalf of Indemnitor.
EXECUTED as of the date first set forth above.
UNITED INVESTORS REALTY TRUST, a
Texas real estate investment trust
By:_______________
Name:_____________
Title:____________
<PAGE>
Schedule 1
[LEGAL DESCRIPTION]
<PAGE>
Form of Property Management Contract Assignment
Exhibit Q
Page Q-5
[Property Name]
[County, State]
FORM OF
PROPERTY MANAGEMENT CONTRACT ASSIGNMENT
This ASSIGNMENT is made this ___ day of August, 1998, by UNITED
INVESTORS REALTY TRUST, a Texas real estate investment trust ("Assignor"), to
WELLS FARGO BANK, NATIONAL ASSOCIATION, as agent for the benefit of the Lenders
and the Issuing Bank (both as defined below), and its successors, assigns and
agents ("Agent").
WITNESSETH:
WHEREAS, Assignor will receive loans (the Loans") pursuant to that
certain Revolving Credit Agreement dated as of August 25, 1998 between Agent,
the lenders listed on the signature pages to such Revolving Credit Agreement
together with those assignees pursuant to Section 11.8 thereof (the "Lenders"),
the Issuing Bank (as defined in such Revolving Credit Agreement and Assignor
(the "Credit Agreement");
WHEREAS, the Loans will be secured by, among other things, a Deed of
Trust and Security Agreement, dated as of ________________, 19__, of Assignor's
fee simple interest in certain land and improvements ("Mortgage") as described
on Exhibit A attached hereto (the "Mortgaged Property");
WHEREAS, as a condition to the making of the Loans, Assignor has been
required to (i) assign all of its right, title and interest in and to that
certain property management contract between Assignor and the party described
therein as Property Manager (herein so called), as more particularly described
on Schedule I attached hereto (the "Property Management Contract") with respect
to the buildings located at the Mortgaged Properties and (ii) obtain all
necessary consents to such assignment.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and to induce the Agent and the Lenders to provide the Loans to
Assignor, Assignor does hereby assign to Agent all of its right, title, and
interest in and to the Property Management Contract as follows:
1. Capitalized terms used but not otherwise defined herein shall have
the respective meanings given thereto in the Credit Agreement unless otherwise
expressly provided herein.
<PAGE>
2. Agent shall not exercise any rights under the Property Management
Contract herein assigned to Agent unless there shall have occurred an event of
default under the Credit Agreement (an "Event of Default").
3. Upon the occurrence of an Event of Default, without further notice
or demand, and at Assignor's sole cost and expense, Agent shall, upon its
election to such effect, be entitled to exercise all rights of Assignor arising
under the Property Management Contract.
4. Agent is hereby given the right, but not the obligation, to
exercise, enforce, perform, and protect the rights, title and interests herein
contained upon the occurrence of an Event of Default. Agent shall not be held
responsible for the failure to exercise diligence in taking any such actions.
5. (a) Assignor and Property Manager hereby agree that upon the
occurrence of an Event of Default, Agent shall have the right at any time
thereafter to require, without any liability therefor, that Property Manager
shall have no further role in the property management of one or more Mortgaged
Properties, by delivery of a written notice to such effect to Property Manager
(the "Termination Notice").
(b) Within 10 business days after the Termination Notice is given
following an Event of Default, Assignor and Property Manager shall deliver or
cause to be delivered to Agent or its designee, free of charge, true copies of
all books, correspondence, files, records, invoices, tapes, cards, computer runs
and other papers and documents relating to any Mortgaged Property as to which
Termination Notice has been given (collectively, the "Books and Records") in its
possession or under its control, or in the possession of any computer bureau or
service company acting for it from which it is contractually entitled to obtain
the Books and Records. After the Termination Notice is given and until the Books
and Records are delivered to Agent or its designee as set forth above, Assignor
and the Property Manager shall hold the Books and Records in its possession or
under its control in trust for the benefit of Agent. All costs incurred by
Assignor or Property Manager in connection with the delivery of the Books and
Records to Agent or its designee as set forth above shall be for its own account
or for the account of Assignor.
(c) Upon giving of the Termination Notice by Agent, Assignor and
Property Manager shall render a final accounting to Agent and cooperate with
Agent in a commercially reasonable manner with respect to the preservation of
the value of the Mortgaged Properties as to which the Termination Notice
referred, and the efficient and effective transfer of the duties Property
Manager had been performing under the Property Management Contract with respect
to such Mortgaged Properties from Property Manager to such party as Agent may
designate.
<PAGE>
6. In the event that Agent acquires or succeeds to the interests of
Assignor by reason of a foreclosure, deed-in-lieu of foreclosure or by exercise
of some similar doctrine, Property Manager agrees that it shall be bound to
Agent unless it receives a Termination Notice, under all of the terms, covenants
and conditions of the Property Management Contract, with the same force and
effect as if Agent were the owner named in the Property Management Contract and
Property Manager does hereby agree to (i) attorn to Agent as its property
manager, (ii) affirm its obligations under the Property Management Contract and
(iii) make payments of all sums thereafter becoming due under the Property
Management Contract to Agent or its designee. Said attornment, affirmation and
agreement is to be effective and self-operative (without the execution of any
further instruments) upon Agent succeeding to the interests of Assignor under
the Property Management Contract. The Property Manager agrees to execute and
deliver at any time, and from time to time, upon the request of Assignor or
Agent, any instrument or certificate, as the case may be, deemed to be necessary
or appropriate to evidence such attornment.
7. The failure of Agent at any time to avail itself of any rights,
title or interest in this Assignment or any of the other Loan Documents shall
not be construed to be a waiver of any of such rights, titles or interests, but
Agent shall have full power and authority to exercise, enforce, perform or
protect such rights at anytime or times that it deems fit, but subject to the
other terms and conditions hereof. To be effective, any waiver of any of the
terms, covenants or conditions hereto must be in writing and shall be valid only
to the extent clearly set forth in such writing. This Assignment shall
constitute a prior and continuing first lien and security interest on the
Property Management Contract. No exercise, enforcement, performance or
protective action taken by Agent with respect to any of the rights, titles and
interests assigned or granted herein shall be construed as a cure of any default
in any of the Loan Documents.
8. The appointment of a successor to the Property Manager will not
affect any liability of the predecessor Property Manager to Agent, Assignor or
any other Person which may have arisen prior to its termination as Property
Manager.
9. Assignor hereby represents that it has good right and authority to
assign all of its right, title and interest in and to the Property Management
Contract, and that it will not execute in the future any other assignment of the
Property Management Contract without Agent's prior written consent.
10. The Property Manager hereby agrees that the Property Management
Contract and the rights and benefits (including, without limitation, all fees
and other payments of the Assignor and the Property Manager) thereunder are and
shall be subject and subordinate to the lien of the Mortgage and of any deed of
trust or mortgage, or other security agreement (including any renewal,
modification, amendment, consolidation, extension or replacement of any of the
foregoing) now or hereafter encumbering the Mortgaged Property or any portion
thereof. This subordination is and shall be self operative and no further
instrument of subordination shall be required to effectuate the provisions of
this section; nonetheless, Assignor and Property Manager shall execute and
deliver to Agent such instruments as Agent may from time to time request to
further evidence and confirm the subordination effected hereby.
<PAGE>
11. Assignor and Property Manager each hereby agree, at any time, and
from time to time, upon not less than fifteen (15) days notice from the other
party (the "Requesting Party"), to execute, acknowledge and deliver to the
Requesting Party or to any person designated by the Requesting Party (including
the holder of any mortgage, deed of trust or other security agreement affecting
any Mortgaged Property or any portion thereof), a statement in writing
certifying that (i) the Property Management Contract has not been modified,
amended, supplemented or superseded (or if there have been modifications,
amendments, supplements or superseding documents, identifying the same by the
date thereof and specifying the nature thereof), (ii) to the best knowledge of
the party giving the certificate (the "Certifying Party"), no default exists
under the Property Management Contract (or if any such default does exist,
specifying the same), (iii) to the best knowledge of the Certifying Party, the
Certifying Party does not have or hold any claim, counterclaim, offset or
defense against the Requesting Party under the Property Management Contract (or
if the Certifying Party has or holds any such claim, counterclaim, offset or
defense specifying the same) and (iv) the dates to which all sums payable by or
to the Certifying Party under the Property Management Contract have been paid.
12. This Assignment shall continue in full force and effect until all
of the obligations of Assignor to Agent have been satisfied including the full
payment of all indebtedness secured by the Mortgage and all of the other Loan
Documents and the termination of the Commitments, at which time this Assignment
shall terminate and be void and of no effect without the necessity of any
further instrument.
13. Agent assumes no obligations or liability of Assignor under the
Property Management Contract hereby assigned to Agent.
14. Notwithstanding anything to the contrary contained in the Property
Management Contract, the imposition of a mortgage, deed of trust, assignment of
rents and leases or other similar security document or the exercise of remedies
under such security agreement by any mortgagee, beneficiary, assignee or Agent
shall not cause the termination of the Property Management Contract.
15. Assignor shall cause any and all substitute property managers to
enter into an agreement similar to this Assignment and to comply with the terms
and conditions of the Loan Documents.
16. This Assignment shall be binding upon Assignor and Property
Manager, their successors and assigns, and shall be binding upon and inure to
the benefit of Agent, its successors and assigns.
<PAGE>
17. By accepting this Assignment, Agent shall in no manner be
prejudiced in its right to exercise, enforce, perform or protect any one or more
rights, title, or interests available to it in any of the Loan Documents or at
law or in equity, including (without limitation) its rights to foreclose the
lien of the Mortgage or to exercise a power of sale, or any other right, title,
or interest granted to it by the terms of any of the Loan Documents or granted
to it pursuant to applicable law or equity--it being intended that all of such
rights, titles, and interests are cumulative and may be exercised, enforced,
performed, or protected concurrently with or independently of any one or more of
such rights, titles, or interests to the extent deemed advisable by Agent in the
exercise of its sole discretion from time to time.
18. THIS ASSIGNMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS, EXCEPT AS OTHERWISE REQUIRED BY MANDATORY
PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT REMEDIES PROVIDED BY THE LAWS OF
ANY JURISDICTION OTHER THAN TEXAS ARE GOVERNED BY THE LAWS OF SUCH JURISDICTION.
THE ASSIGNOR HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS AND OF ANY TEXAS STATE
COURT SITTING IN HARRIS COUNTY, TEXAS FOR PURPOSES OF ALL LEGAL PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS ASSIGNMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY. THE ASSIGNOR IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF
ANY SUCH PROCEEDING BROUGHT in SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM THE
ASSIGNOR AND THE AGENT HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS ASSIGNMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY.
19. In the event of any inconsistency or conflict between the terms and
provisions of this Assignment and those of the Property Management Contract, the
terms and provisions of this Assignment shall control.
IN WITNESS WHEREOF, Assignor has caused this Assignment to be executed,
sealed, and delivered the day and year first above written.
ASSIGNOR:
UNITED INVESTORS REALTY TRUST, a
Texas real estate investment trust
By:______________
Name:____________
Title:___________
<PAGE>
Consented and agreed to
this __ day of __________, 199__
PROPERTY MANAGER
By:______________________________
Name:____________________________
Title:___________________________
<PAGE>
Exhibit A
LIST OF PROPERTIES SUBJECT TO MORTGAGE
<PAGE>
Schedule I
PROPERTY MANAGEMENT CONTRACT
<PAGE>
Schedule 4.1
Pool Properties as of Agreement Date
Pool Properties as of Agreement Date
Autobahn Shopping Center
San Antonio, Texas
Bandera Festival Shopping Center
San Antonio, Texas
Centennial Shopping Center
Austin, Texas
The Market at First Colony
Houston, Texas
Mason Park Centre
Houston, Texas
<PAGE>
Schedule 6.2
Ownership Structure
Ownership Structure
<PAGE>
Schedule 6.6
Indebtedness & Guarantees
INDEBTEDNESS AND GUARANTEES
Benchmark Crossing Shopping Center, Houston, Texas:
1. Lender: Midland Loan Services, L.P., Trustee for
the Registered Holders of Salomon Brothers
Mortgage Securities,
VII Mortgage Pass Through Certificates,
Series 1996-C1
P.O. Box 419127
Kansas City, MO 64141
Attn: James P. Golden, Asset Manager,
Loan No. 03-21043
Amount of Note: $3,800,000.00
Acquired: March 12, 1998
Borrower: UIRT-Benchmark, Inc., a Texas corporation
Guarantor: United Investors Realty Trust (to the
extent of Borrower's non-recourse
obligations under the loan documents
(ie., standard carve-outs))
Big Curve Shopping Center, Yuma, Arizona:
2. Lender: LaSalle National Bank, as Trustee for the
Mortgage Pass-Through Certificates, Series
1996-C-2, Assignee of Liberty Mortgage
Acceptance Corporation
Amount of Note: $6,072,000.00, dated September 20, 1996
Acquired: May 27, 1998
Borrower: UIRT-Big Curve, Inc., an Arizona corporation
Guarantor: None
Colony Plaza Shopping Center, Missouri City, Texas:
3. Lender: Lehman Brothers Holdings Inc. d/b/a Lehman Capital,
a division of Lehman Brothers Holdings Inc., a
Delaware corporation, as assignee of Holliday
Fenoglio, L.P.
<PAGE>
Amount of Note: $3,200,000.00, dated November 26, 1997
Acquired: July 17, 1998
Borrower: UIRT-Colony Plaza, Inc., a Texas corporation
Guarantor: United Investors Realty Trust (to the
extent of Borrower's non-recourse
obligations under the loan
documents (ie., standard carve-outs))
Hedwig II, Houston, Texas:
4. Lender: Sundance Life Insurance Company
Attn: Director, Mortgage Lending
1 SunAmerica Center
Century City
Los Angeles, CA 90067-6022
Amount of Note: $1,300,000.00
Acquired: January 31, 1998
Borrower: United Investors Realty Trust
Guarantor: None
Hedwig III, Houston, Texas:
5. Lender: Sundance Life Insurance Company
Attn: Director, Mortgage Lending
1 SunAmerica Center
Century City
Los Angeles, CA 90067-6022
Amount of Note: $2,400,000.00
Acquired: January 31, 1998
Borrower: United Investors Realty Trust
Guarantor: None
<PAGE>
McMinn Plaza, Athens, Tennessee:
6. Lender: Conseco Mortgage Capital
Amount of Note: $1,058,900 dated June 11, 1994
Acquired: June 16, 1994
Borrower: UIRT-W-McMinn, Inc.
Guarantor: None
7. Lender: Conseco Mortgage Capita.
Amount of Note: $550,000 dated June 11, 1994
Acquired: June 16, 1994
Borrower: UIRT-I-McMinn, Inc.
Guarantor: None
Park Northern Shopping Center, Phoenix, Arizona:
8. Lender: The Travelers Insurance Company
Amount of Note: $3,400,000.00, dated November 9, 1990
Acquired: November 26, 1996
Borrower: Park Northern/Centennial Partners, L.P.
Guarantor: None
Rosemeade Shopping Center, Carrollton, Texas:
9. Lender: LaSalle National Bank, as Trustee for the
Registered Holders of Deutsche Mortgage & Asset
Receiving Corporation, Mortgage Pass-Through
Certificates, Series 1998-C1, Assignee of
HSA/Wexford Bancgroup, L.L.C., an Illinois limited
liability company
Amount of Note: $3,500,000.00, dated November 10, 1997
<PAGE>
Acquired: May 15, 1998
Borrower: UIRT-Rosemeade, Inc., a Texas corporation
Guarantor: United Investors Realty Trust (to the
extent of Borrower's non-recourse
obligations under the loan
documents (ie., standard carve-outs))
Town `N Country, Tampa, Florida:
10. Lender: South Trust Bank
Amount of Note: $2,500,000.00
Acquired: May 15, 1998
Borrower: United Investors Realty Trust
Guarantor: None
University Mall, Pembroke, Florida:
11. Lender: Lehman Brothers Holdings Inc.
d/b/a Lehman Capital
Amount of Note: $13,450,000
Acquired: March 24, 1998
Borrower: United Investors Pembroke, Inc.
Guarantor: United Investors Realty Trust (to the
extent of Borrower's non-recourse
obligations under the loan
documents (ie., standard carve-outs))
<PAGE>
Schedule 6.7
Management Agreements and Other Major Agreements
PROPERTY MANAGEMENT AGREEMENTS
AND OTHER MAJOR AGREEMENTS
Property Management Agreements
Management Agreement for Centennial Shopping Center dated July 26, 1994, as
amended between United Investors Realty Trust as Owner and Trammell Crow Central
Texas, Inc. as Manager
Management Agreement dated August 1, 1996 between United Investors Realty Trust
as Owner and Fulcrum Property Group, Inc. as Manager (Bandera)
Management Agreement dated August 1, 1996 between United Investors Realty Trust
as Owner and Fulcrum Property Group, Inc. as Manager (Autobahn)
Other Major Agreements
None
<PAGE>
Schedule 6.15
Insurance
Insurance
(To be completed by Borrower)
<PAGE>
Schedule 6.15
Insurance
SCHEDULE 6.15
INSURANCE
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<LEGEND>
(Replace this text with the legend)
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<NAME> United Investors Realty Trust
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<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Jan-1-1998
<PERIOD-END> Sep-30-1998
<EXCHANGE-RATE> 1.00
<CASH> 7,106,483
<SECURITIES> 0
<RECEIVABLES> 1,781,504
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 11,906,821
<PP&E> 133,012,146
<DEPRECIATION> (6,813,992)
<TOTAL-ASSETS> 138,104,975
<CURRENT-LIABILITIES> 3,350,611
<BONDS> 0
0
0
<COMMON> 87,081,264
<OTHER-SE> (3,073,407)
<TOTAL-LIABILITY-AND-EQUITY> 138,104,975
<SALES> 0
<TOTAL-REVENUES> 12,237,386
<CGS> 0
<TOTAL-COSTS> 2,740,497
<OTHER-EXPENSES> 3,677,993
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,009,675
<INCOME-PRETAX> 716,727
<INCOME-TAX> 0
<INCOME-CONTINUING> 716,727
<DISCONTINUED> 0
<EXTRAORDINARY> (232,532)
<CHANGES> 0
<NET-INCOME> 484,195
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