================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20543
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED September 30, 1998
------------------
COMMISSION FILE NO. 1-11706
-------
CARRAMERICA REALTY CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 52-1796339
- -------------------------------- --------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
1850 K Street, N.W., Washington, D.C. 20006
--------------------------------------------------
(Address or principal executive office) (Zip code)
Registrant's telephone number, including area code (202) 729-7500
--------------
N/A
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Number of shares outstanding of each of the registrant's
classes of common stock, as of November 13, 1998:
Common Stock, par value $.01 per share: 71,760,172
- --------------------------------------------------------------------------------
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 twelve (12) months (or such shorter period that the Registrant was
required to file such report) and (2) has been subject to such filing
requirements for the past ninety (90) days.
YES X NO
----- -----
================================================================================
<PAGE>
Index
<TABLE>
<CAPTION>
Page
----
<S> <C>
Part I: Financial Information
Item 1. Financial Statements
Condensed consolidated balance sheets of CarrAmerica Realty Corporation and subsidiaries
as of September 30, 1998 (unaudited) and December 31, 1997........................................4
Condensed consolidated statements of operations of CarrAmerica Realty Corporation and
subsidiaries for the three months ended September 30, 1998
and 1997 (unaudited)..............................................................................5
Condensed consolidated statements of operations of CarrAmerica Realty Corporation and
subsidiaries for the nine months ended September 30, 1998
and 1997 (unaudited)..............................................................................6
Condensed consolidated statements of cash flows of CarrAmerica Realty Corporation and
subsidiaries for the nine months ended September 30, 1998
and 1997 (unaudited)..............................................................................7
Notes to condensed consolidated financial statements (unaudited)............................8 to 16
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................................................17 to 29
Part II: Other Information
Item 1. Legal Proceedings................................................................................30
Item 2. Changes in Securities............................................................................30
Item 3. Defaults Upon Senior Securities..................................................................30
Item 4. Submission of Matters to a Vote of Security Holders..............................................30
Item 5. Other Information................................................................................30
Item 6. Exhibits and Reports on Form 8-K...........................................................30 to 31
</TABLE>
<PAGE>
Part I
Item 1. Financial Information
The information furnished in the accompanying condensed consolidated
balance sheets, condensed consolidated statements of operations and condensed
consolidated statements of cash flows of CarrAmerica Realty Corporation and
subsidiaries (the Company) reflect all adjustments which are, in the opinion of
management, necessary for a fair presentation of the aforementioned financial
statements for the interim periods.
The aforementioned financial statements should be read in conjunction
with the notes to the financial statements and Management's Discussion and
Analysis of Financial Condition and Results of Operations.
<PAGE>
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets As Of
September 30,1998 and December 31, 1997
- --------------------------------------------------------------------------------
(In thousands, except share amounts)
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
---- ----
(Unaudited)
<S> <C> <C>
Assets Rental property (note 2):
Land $ 662,742 557,536
Buildings 1,984,599 1,692,389
Tenant improvements 163,338 131,527
Furniture, fixtures and equipment 46,137 15,571
----------- -----------
2,856,816 2,397,023
Less - accumulated depreciation (239,500) (184,266)
----------- -----------
Total rental property 2,617,316 2,212,757
Land held for development 113,403 81,647
Construction in progress 398,454 210,829
Cash and cash equivalents 41,557 23,845
Restricted cash and cash equivalents (note 2 and 7) 94,063 18,049
Accounts and notes receivable 53,207 38,321
Investments 69,945 20,128
Accrued straight-line rents 36,937 33,212
Tenant leasing costs, net 32,474 19,473
Deferred financing costs, net 18,920 6,899
Prepaid expenses and other assets, net 257,349 78,900
----------- -----------
$ 3,733,625 2,744,060
=========== ===========
Liabilities, Minority Interest, and Stockholders' Equity
Liabilities:
Mortgages and notes payable (note 2) 1,602,383 1,025,145
Accounts payable and accrued expenses 114,905 71,112
Rent received in advance and security deposits 41,492 20,151
----------- -----------
Total liabilities 1,758,780 1,116,408
Minority interest (note 3) 93,507 74,955
Stockholders' equity (note 4):
Preferred Stock, $.01 par value, authorized 35,000,000 shares:
Series A Cumulative Convertible Redeemable Preferred Stock, $.01 par value,
680,000 shares issued and outstanding at September 30, 1998, and 780,000
shares issued and outstanding at December 31, 1997, with an aggregate
liquidation preference of $17.0 million and $19.5 million, respectively. 7 8
Series B, C and D Cumulative Redeemable Preferred Stock, outstanding
8,800,000 shares with an aggregate liquidation preference of $400.0
million. 88 88
Common Stock, $.01 par value, authorized 180,000,000 shares, issued and
outstanding 71,732,456 shares at September 30, 1998 and 59,993,778
shares at December 31, 1997. 717 600
Additional paid in capital 1,965,434 1,629,214
Accumulated other comprehensive income 1,472 --
Cumulative dividends in excess of net income (86,380) (77,213)
----------- -----------
Total stockholders' equity 1,881,338 1,552,697
----------- -----------
Commitments and Contingencies (note 6)
$ 3,733,625 2,744,060
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements
4
<PAGE>
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
For the Three Months Ended September 30, 1998 and 1997
- --------------------------------------------------------------------------------
(Unaudited and in thousands, except per common share amounts)
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Operating revenue:
Rental revenue:
Minimum base rent $ 98,127 74,630
Recoveries from tenants 12,175 9,921
Parking and other tenant charges 3,355 3,304
--------- --------
Total rental revenue 113,657 87,855
Executive suites revenue 46,860 5,000
Real estate service income 4,471 3,575
--------- --------
Total revenue 164,988 96,430
--------- --------
Operating expenses:
Property operating expenses:
Operating expenses 30,033 23,653
Real estate taxes 9,897 7,876
Interest expense 19,560 14,275
Executive suites operating expenses 38,563 4,124
General and administrative 8,379 5,445
Depreciation and amortization 28,523 20,378
--------- --------
Total operating expenses 134,955 75,751
--------- --------
Operating income 30,033 20,679
--------- --------
Other operating income:
Interest Income 1,391 510
Equity in earnings of unconsolidated partnerships 1,285 314
Gain on sales of assets (note 5) 6,844 --
--------- --------
Total other operating income 9,520 824
--------- --------
Net operating income before income taxes, minority
interest and extraordinary item 39,553 21,503
Income taxes (574) --
--------- --------
Net operating income before minority interest
and extraordinary item 38,979 21,503
Minority interest (2,598) (2,022)
--------- --------
Income before extraordinary item 36,381 19,481
Extraordinary item - loss on early extinguishment of debt -- (608)
--------- --------
Net income $ 36,381 18,873
========= ========
Basic net income per common share:
Income before extraordinary item $ 0.38 0.29
Extraordinary item - loss on early extinguishment of debt -- (0.01)
--------- --------
Basic net income per common share $ 0.38 0.28
========= ========
Diluted net income per share:
Income before extraordinary item $ 0.37 0.29
Extraordinary item - loss on early extinguishment of debt -- (0.01)
--------- --------
Diluted net income per share $ 0.37 0.28
========= ========
</TABLE>
See accompanying notes to condensed consolidated financial statements
5
<PAGE>
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
For the Nine Months Ended September 30, 1998 and 1997
- --------------------------------------------------------------------------------
(Unaudited and in thousands, except per common share amounts)
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Operating revenue:
Rental revenue:
Minimum base rent $ 276,199 196,530
Recoveries from tenants 35,391 26,188
Parking and other tenant charges 9,360 9,114
--------- --------
Total rental revenue 320,950 231,832
Executive suites revenue 97,169 5,000
Real estate service income 10,985 11,512
--------- --------
Total revenue 429,104 248,344
--------- --------
Operating expenses:
Property operating expenses:
Operating expenses 78,223 60,664
Real estate taxes 28,858 21,256
Interest expense 54,137 37,266
Executive suites operating expenses 82,004 4,124
General and administrative 22,841 15,777
Depreciation and amortization 78,402 54,561
--------- --------
Total operating expenses 344,465 193,648
--------- --------
Operating income 84,639 54,696
--------- --------
Other operating income:
Interest Income 3,698 1,603
Equity in earnings of unconsolidated partnerships 3,753 377
Gain on sales of assets (note 5) 33,030 353
--------- --------
Total other operating income 40,481 2,333
--------- --------
Net operating income before income taxes, minority
interest and extraordinary item 125,120 57,029
Income taxes (574) --
--------- --------
Net operating income before minority interest
and extraordinary item 124,546 57,029
Minority interest (13,549) (5,758)
--------- --------
Income before extraordinary item 110,997 51,271
Extraordinary item - loss on early extinguishment of debt -- (608)
--------- --------
Net income $ 110,997 50,663
========= ========
Basic net income per common share:
Income before extraordinary item $ 1.25 0.88
Extraordinary item - loss on early extinguishment of debt -- (0.01)
--------- --------
Basic net income per common share $ 1.25 0.87
========= ========
Diluted net income per share:
Income before extraordinary item $ 1.25 0.87
Extraordinary item - loss on early extinguishment of debt -- (0.01)
--------- --------
Diluted net income per share $ 1.25 0.86
========= ========
</TABLE>
See accompanying notes to condensed consolidated financial statements
6
<PAGE>
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 1998 and 1997
- --------------------------------------------------------------------------------
(Unaudited and in thousands)
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 110,997 50,663
---------- ---------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 78,402 54,561
Minority interest in income 13,549 5,758
Equity in earnings of unconsolidated partnerships (3,753) (377)
Loss on write-off of assets 605 330
Extraordinary item loss on early extinguishment of debt -- 608
Increase in accounts and notes receivable (14,886) (16,357)
Increase in accrued straight-line rents (3,725) (7,177)
Additions to tenant leasing costs (8,654) (7,977)
Decrease (increase) in prepaid expenses and other assets 3,131 (13,602)
Increase in accounts payable and accrued expenses 43,793 21,280
Increase in rent received in advance and security deposits 21,341 8,194
---------- ---------
Total adjustments 129,803 45,241
---------- ---------
Net cash provided by operating activities 240,800 95,904
---------- ---------
Cash flows from investing activities:
Acquisition of executive suites assets (203,615) (45,736)
Additions to rental property (42,410) (21,582)
Acquisitions of rental property (281,260) (485,399)
Additions to land held for development (126,915) (96,326)
Additions to construction in progress (283,694) (91,051)
Distributions from unconsolidated partnerships 4,367 1,439
Investments in unconsolidated partnerships (50,430) (2,700)
Increase in restricted cash and cash equivalents (76,014) (3,958)
Proceeds from sale of rental property 62,806 --
---------- ---------
Net cash used by investing activities (997,165) (745,313)
---------- ---------
Cash flows from financing activities:
Net proceeds from sales of common and preferred stock 335,960 541,225
Net borrowings (repayments) on unsecured credit facility 388,000 (68,000)
Proceeds from issuance of unsecured notes 200,000 275,000
Net proceeds from exercise of options 41 1,809
Repayment of mortgages payable (21,848) (16,972)
Contributions from minority interests 13,498 1,360
Dividends paid (120,163) (74,103)
Additions to deferred financing costs (14,716) (5,894)
Distributions to minority interests (8,167) (6,850)
---------- ---------
Net cash provided by financing activities 772,605 647,575
---------- ---------
Effect of currency exchange rate change 1,472 --
---------- ---------
Increase (decrease) in unrestricted cash and cash equivalents 17,712 (1,834)
Unrestricted cash and cash equivalents, beginning of the period 23,845 27,637
---------- ---------
Unrestricted cash and cash equivalents, end of the period $ 41,557 25,803
========== =========
Supplemental disclosure of cash flow information:
Cash paid for interest (net of capitalized interest of $21,408 and $7,850
for the nine months ended September 30, 1998 and 1997, respectively) $ 58,839 32,347
========== =========
Supplemental disclosure of noncash investing and financing activities:
During the nine month periods ended September 30, 1998 and 1997, the Company funded a portion of the aggregate
purchase price of its property acquisitions by assuming $11.1 million and $57.6 million of debt and liabilities,
respectively, and by issuing $10.0 million and $17.6 million, respectively, of Units.
</TABLE>
See accompanying notes to condensed consolidated financial statements
7
<PAGE>
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
(1) Description of Business and Summary of Significant Accounting Policies
(a) Business
CarrAmerica Realty Corporation (the "Company") is a
self-administered and self-managed equity real estate
investment trust ("REIT"), organized under the laws of
Maryland, which owns, develops, acquires and operates office
properties. The Company's office properties are located
primarily in 15 suburban markets across the United States.
(b) Basis of Presentation
The accounts of the Company and its majority-owned
subsidiaries are consolidated in the accompanying financial
statements. The Company uses the equity method of accounting
for its investments in and earnings and losses of
unconsolidated partnerships not controlled by the Company.
Management of the Company has made a number of estimates and
assumptions relating to the reporting of assets and
liabilities, revenues and expenses, and the disclosure of
contingent assets and liabilities to prepare these financial
statements in conformity with generally accepted accounting
principles. Actual results could differ from those estimates.
(c) Interim Financial Statements
The information furnished reflects all adjustments which are,
in the opinion of management, necessary to reflect a fair
presentation of the results for the interim periods, and all
such adjustments are of a normal, recurring nature.
(d) Rental Property
Rental property is recorded at cost less accumulated
depreciation (which is less than the net realizable value of
the rental property). Depreciation is computed on the
straight-line basis over the estimated useful lives of the
assets, as follows:
Base Building.............................30 to 50 years
Building components.......................7 to 20 years
Tenant improvements.......................Terms of the leases
or useful lives,
whichever is
shorter
Furniture, fixtures and equipment.........5 to 15 years
Expenditures for maintenance and repairs are charged to
operations as incurred. Significant renovations are
capitalized.
The Company reviews its long-lived assets for impairment
whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net
cash flows expected to be generated by the asset. If such
assets are considered to be impaired, the impairment to be
recognized is measured by the amount by which the carrying
amount of the assets exceed the fair value of the assets.
(e) Development Property
Land held for development and construction in progress is
carried at cost. Specifically identifiable direct and indirect
development, construction and external acquisition costs are
capitalized including, where applicable, salaries and related
costs, real estate taxes, interest and certain
pre-construction costs essential to the development of a
property.
8
<PAGE>
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
(f) Tenant Leasing Costs
Fees and costs incurred in the successful negotiation of
leases have been deferred and are being amortized on a
straight-line basis over the terms of the respective leases.
(g) Deferred Financing Costs
Deferred financing costs include fees and costs incurred to
obtain financing and are being amortized over the terms of the
respective loans on a basis which approximates the interest
method.
(h) Goodwill, Real Estate Service Contracts and Other Intangibles
Real estate service contracts and other intangible assets
represent the purchase price of net assets of real estate
service operations acquired and are amortized on the
straight-line basis over the expected lives of the respective
real estate service contracts. Goodwill, which represents the
excess of purchase price over the fair value of net assets
acquired in the acquisition of executive suite businesses, is
amortized on the straight-line basis over 30 years. The
Company assesses the recoverability of these intangible assets
by determining whether the balance can be recovered over its
remaining life through undiscounted future operating cash
flows of the related assets or operations acquired. The amount
of impairment loss, if any, is measured as the amount by which
the carrying amount of the assets exceeds the fair value of
the assets. The assessment of the recoverability of these
intangible assets will be impacted if estimated future
operating cash flows are not achieved.
(i) Fair Value of Financial Instruments
The carrying amount of the following financial instruments
approximates fair value because of their short-term maturity:
cash and cash equivalents; accounts and notes receivable;
accounts payable and accrued expenses.
(j) Revenue Recognition
The Company reports base rental revenue for financial
statement purposes straight-line over the terms of the
respective leases. Accrued straight-line rents represent the
amount that straight-line rental revenue exceeds rents
collected in accordance with the lease agreements. Management,
considering current information and events regarding the
tenants' ability to fulfill their lease obligations, considers
accrued straight-line rents to be impaired if it is probable
that the Company will be unable to collect all rents due
according to the contractual lease terms. If accrued
straight-line rents associated with a tenant are considered to
be impaired, the amount of the impairment is measured based on
the present value of expected future cash flows. Impairment
losses, if any, are recorded through a loss on the write-off
of assets. Cash receipts on impaired accrued straight-line
rents are applied to reduce the remaining outstanding balance
and as rental revenue, thereafter.
The Company earns real estate service revenue for certain
properties it manages, leases and develops for third parties.
Executive suites revenue represents rental income from
executive suites customers and income from various services
provided to these customers, such as, telephone and
administrative support. Such revenue is recognized as earned.
(k) New Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board (FASB)
issued SFAS No. 130, "Reporting Comprehensive Income," which
requires an enterprise to display comprehensive income and its
components in a financial statement to be included in an
enterprise's full set of financial statements. Comprehensive
income represents a measure of all changes in equity of an
enterprise that result from recognized transactions and other
economic events for the period other than transactions with
9
<PAGE>
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
owners in their capacity as owners. Comprehensive income
includes net income and such items as foreign currency items
and certain unrealized gains and losses. For the three and
nine month periods ended September 30, 1998, foreign currency
translation adjustments were $685 and $1,472, respectively,
net of tax. Therefore, comprehensive income was $37,066 and
$112,469, respectively, for the three and nine month periods
ended September 30, 1998.
In June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 131 (FAS No.
131), "Disclosure about Segment of an Enterprise and Related
Information." FAS No. 131 requires the Company to present
certain information about operating segments and related
information, including geographic and major customer data, in
its annual financial statements and in condensed financial
statements for interim periods. The Company is required to
adopt the provisions of this statement during fiscal year 1998
and plans to implement the provisions of this statement at
December 31,1998. Management is currently determining the
necessary additional disclosures, if any.
In June 1998, the FASB issued SFAS No. 133 "Accounting for
Derivative Instruments and Hedging Activities", which requires
that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure
those instruments at fair value. This statement is effective
for all fiscal quarters of fiscal years beginning after June
15, 1999. The Company has not yet determined the impact of
this pronouncement, if any.
(l) Income and Other Taxes
The Company qualifies as a REIT under Sections 856 through 860
of the Internal Revenue Code of 1986, as amended. A REIT will
generally not be subject to federal income taxation on that
portion of its income that qualifies as REIT taxable income to
the extent that it distributes at least 95 percent of its
taxable income to its shareholders and complies with certain
other requirements. Accordingly, no provision has been made
for federal income taxes for the Company and certain of its
subsidiaries in the accompanying consolidated financial
statements.
Certain subsidiaries, organized as partnerships, of the
Company are subject to District of Columbia franchise taxes.
Franchise taxes are recorded as general and administrative
expenses in the accompanying consolidated financial
statements.
CarrAmerica Development, Inc. ("CarrAmerica Development"), the
Company's development subsidiary, Carr Real Estate Services,
Inc. ("Carr Services, Inc."), the Company's real estate
service subsidiary, OmniOffices, Inc. ("OmniOffices"), and
OmniOffices (UK) Limited ("Omni-UK"), the Company's executive
suites subsidiaries, file separate tax returns and are subject
to federal, state and local income taxes as well as certain
foreign taxes. The Company has adopted the asset and liability
method of accounting for income taxes for these subsidiaries.
Under the asset and liability method, deferred tax assets and
liabilities are recognized for the future tax consequences
attributable to temporary differences between the financial
statement carrying amounts of existing assets and liabilities
and their respective tax bases and to operating loss and tax
credit carryforwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred
tax assets and liabilities of a change in tax rates is
recognized in income in the period of the enactment date.
(m) Hedging Transactions
From time to time, the Company enters into interest rate lock
and collar agreements that are designed to hedge against the
impact of interest rate fluctuations on certain of the
Company's existing and probable future long-term debt
instruments. Because these agreements qualify for hedge
accounting treatment, any gains or losses are recognized as
adjustments to interest expense over the lives of the
underlying debt instruments. For hedge agreements that are
associated with anticipated future debt instruments, gains or
losses are deferred until those debt instruments are entered
into. If the Company determines it is no longer probable that
the Company will enter into an anticipated debt instrument,
any related deferred gains or losses are recognized in the
current period.
10
<PAGE>
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
(n) Per Share Data and Dividends
Effective December 31, 1997, the Company adopted the
provisions of SFAS No. 128 "Earnings Per Share." SFAS No. 128
supersedes APB No. 15 and specifies computation, presentation
and disclosure requirements for EPS and requires restatement
of prior years' comparative EPS amounts. The following is a
reconciliation of the numerators and denominators of the basic
and diluted EPS computations for income before extraordinary
item:
<TABLE>
<CAPTION>
Three Months Three Months
------------ ------------
Ended September 30, 1998 Ended September 30, 1997
------------------------ ------------------------
Income Per Income Per
(000's) Shares Share (000's) Shares Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS $ 27,418 71,665 $0 .38 $ 16,792 57,834 $ 0.29
Effect of Dilutive
Securities:
Stock Options 80 214
Units in Carr Realty, L.P. 1,234 4,774 -- --
------- -------- -------- ------
Diluted EPS $ 28,652 76,519 $0 .37 $ 16,792 58,048 $ 0.29
======== ======== ======== ======
</TABLE>
Income before extraordinary item has been reduced by preferred
stock dividends of $8,963 and $2,689 for the three month
periods ending September 30, 1998 and 1997, respectively.
<TABLE>
<CAPTION>
Nine Months Nine Months
----------- -----------
Ended September 30, 1998 Ended September 30, 1997
------------------------ ------------------------
Income Per Income Per
(000's) Shares Share (000's) Shares Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS $ 84,358 67,504 $1.25 $ 47,059 53,689 $ 0.88
Effect of Dilutive
Securities:
Stock Options 154 197
-------- ------ -------- ------
Diluted EPS $ 84,358 67,658 $1.25 $ 47,059 53,886 $ 0.87
======== ====== ======== ======
</TABLE>
Income before extraordinary item has been reduced by preferred
stock dividends of $26,639 and $4,212 for the nine month
periods ending September 30, 1998 and 1997, respectively.
The effects of units and Series A Preferred Stock are not
included in the computation of diluted EPS for a given period
if their effect is antidilutive.
(o) Cash Equivalents
For the purposes of reporting cash flows, the Company
considers all highly liquid investments with a maturity of
three months or less at the time of purchase to be cash
equivalents.
(p) Accumulated Other Comprehensive Income
The financial statements of Omni-UK, a foreign subsidiary,
have been prepared in the respective local currency and
translated into U.S. dollars based on the current exchange
rate at the end of the period for assets and liabilities and
at an average exchange rate for the period on the statement of
operations. Translation adjustments have no effect on net
income and are reflected in Stockholders' Equity as
accumulated other comprehensive income.
11
<PAGE>
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
(q) Reclassifications
Certain reclassifications of the prior quarter and December
31, 1997 amounts have been made to conform to the current
period's presentation.
(2) Mortgages, Unsecured Notes and Credit Facilities
The Company's mortgages payable, unsecured notes and credit facilities
are summarized as follows (in thousands):
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
---- ----
<S> <C> <C>
Fixed rate mortgages $ 579,883 590,645
Unsecured credit facilities 547,500 159,500
Senior unsecured notes 475,000 275,000
----------- ----------
$ 1,602,383 1,025,145
=========== ==========
</TABLE>
Mortgages payable are collateralized by certain rental properties and
generally require monthly principal and/or interest payments. Mortgages
payable mature at various dates from December 1998 through July 2019.
The weighted average interest rate of mortgages payable was 8.2% at
September 30, 1998 and 8.1% at December 31, 1997. In compliance with
the terms of the mortgage instrument, a mortgage payable of $27.4
million at September 30, 1998 is held by Carr Redmond Corporation, a
wholly-owned subsidiary of the Company, which owns the Redmond East
office campus.
The Company has a $450.0 million unsecured credit facility with Morgan
Guaranty Trust Company of New York (Morgan), as agent for a group of
banks. At September 30, 1998, the credit facility bore interest, as
selected by the Company, at either (i) the higher of the prime rate or
the Federal Funds Rate for such day or (ii) an interest rate equal to
90 basis points above the 30 day London Interbank Offered Rate (LIBOR).
The Company has predominately selected interest rates equal to 90 basis
points above the 30 day LIBOR rate for initial draws and upon the
expiration of current LIBOR contracts. The credit facility matures in
August 2001.
OmniOffices also has a $200.0 million unsecured credit facility with
Morgan, as agent for a group of banks. At September 30, 1998, the
credit facility bore interest, as selected by OmniOffices, at either
(i) the higher of the prime rate or the Federal Funds Rate for such day
or (ii) an interest rate equal to 90 basis points above the 30 day
LIBOR. OmniOffices has predominately selected interest rates equal to
90 basis points above the 30 day LIBOR rate for initial draws and upon
the expiration of current LIBOR contracts. The credit facility matures
in August 2001. The facility is unconditionally guaranteed by the
Company.
12
<PAGE>
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
The annual maturities of debt as of September 30, 1998 are summarized
as follows (in thousands):
1998 $ 22,211
1999 30,838
2000 49,403
2001 648,794 (1,2)
2002 42,646
2003 & thereafter 808,491 (3)
----------
$1,602,383
==========
(1) Includes $448 million outstanding as of September 30,
1998 under the Company's $450 million unsecured line
of credit.
(2) Includes $99.5 million outstanding as of September
30, 1998 under OmniOffices' $200 million unsecured
line of credit.
(3) Includes $475 million of senior unsecured notes, $150
million of which matures in 2004, $100 million of
which matures in 2005, $125 million of which matures
in 2007, and $100 million of which matures in 2008.
Restricted cash and cash equivalents include escrow deposits required
by lenders to be used for future building renovations or tenant
improvements, escrow deposits for the acquisition of executive suites
assets and collateral for letters of credit.
(3) Minority Interest
In conjunction with the formation of the Company and its majority-owned
subsidiary, Carr Realty, L.P., persons contributing interests in
properties to Carr Realty, L.P. had the right to elect to receive
either common stock of the Company or Units in Carr Realty, L.P. In
addition, the Company has acquired certain assets since its formation
by issuing distribution paying Units and non-distribution paying Units
of Carr Realty, L.P. and CarrAmerica Realty, L.P. The non-distribution
paying Units are not entitled to any distributions until they
automatically convert into distribution paying Units at various dates
in the future. Each distribution paying Unit, subject to certain
restrictions, may be redeemed for either one share of common stock or,
at the option of the Company, cash equal to the fair market value of a
share of common stock at the time of the redemption. When a Unitholder
redeems a distribution paying Unit for a share of common stock or cash,
minority interest is reduced and the Company's investment in Carr
Realty, L.P. or CarrAmerica Realty, L.P., as the case may be, is
increased. During the three and nine month periods ended September 30,
1998, 10,421 and 24,897 distribution paying Units, respectively, of
Carr Realty, L.P. and CarrAmerica Realty, L.P., were redeemed for
common stock of the Company.
The following table sets forth the common stock and preferred stock
which is convertible into common stock of the Company and Units of Carr
Realty, L.P. and CarrAmerica Realty, L.P. (in thousands):
<TABLE>
<CAPTION>
Convertible Distribution Non-Distribution
Common Stock Preferred Stock Paying Units Paying Units
Outstanding Outstanding Outstanding Outstanding
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Outstanding as of:
September 30, 1998 71,732 680 6,005 540
December 31, 1997 59,994 780 5,699 540
Weighted average for the three
months ended:
September 30, 1998 71,665 741 6,012 540
September 30, 1997 57,834 1,041 5,460 540
Weighted average for the nine
months ended:
September 30, 1998 67,504 767 5,988 540
September 30, 1997 53,689 1,505 5,279 540
</TABLE>
13
<PAGE>
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
Minority interest in the accompanying consolidated financial statements
relates primarily to holders of Units.
(4) Preferred Stock
The Company is authorized to issue up to 35,000,000 shares of Preferred
Stock. On October 25, 1996, the Company issued 1,740,000 shares of
Series A Cumulative Convertible Redeemable Preferred Stock ("Series A
Preferred Stock") at $25 per share. Dividends for the Series A
Preferred Stock are cumulative from the date of issuance and are
payable quarterly in arrears in an amount per share equal to the
greater of (1) $1.75 per share per annum, or (2) the cash dividend paid
on the number of shares, or portion thereof, of the Company's common
stock into which a share of Series A Preferred Stock is convertible.
The Series A Preferred Stock has a liquidation preference of $25 per
share. After April 25, 1997, each share of Series A Preferred Stock
became convertible, at the option of the holder, into one share of the
Company's common stock, subject to certain conversion adjustments. As
of September 30, 1998, 1,060,000 shares of Series A Preferred Stock had
been converted into the Company's common stock. After October 25, 1999,
each outstanding share of Series A Preferred Stock is redeemable at the
Company's option, at $25 per share, plus accrued and unpaid dividends.
As of September 30, 1998, the following additional preferred stock
issued by the Company was outstanding:
<TABLE>
<CAPTION>
Liquidation
Shares Issue Date Preference Dividend Rate
------------- ------ ---------- ---------- -------------
<S> <C> <C> <C> <C>
Series B 8,000,000 August 1997 $ 25.00 8.57%
Series C 6,000,000 November 1997 $ 25.00 8.55%
Series D 2,000,000 December 1997 $ 25.00 8.45%
</TABLE>
Series C and D shares listed above are Depositary Shares, each
representing a 1/10 fractional interest in a share of preferred stock.
Dividends for the Series B, C and D shares are cumulative from the date
of issuance and are payable quarterly in arrears on the last day of
February, May, August and November of each year. These preferred shares
are redeemable at the option of the Company not prior to the following
dates:
Series B - August 12, 2002
Series C - November 6, 2002
Series D - December 19, 2002
(5) Gain on Sale of Assets
The Company has disposed of certain assets that are inconsistent with
its long-term strategic or return objectives or where market conditions
for sale are favorable. The proceeds of the sales were redeployed into
other office properties (utilizing tax-deferred exchanges where
possible). During the first nine months of 1998, the Company disposed
of two operating properties and land that was being held for
development. The Company recognized a gain totaling $33.0 million on
these dispositions.
(6) Commitments and Contingencies
At September 30, 1998, the Company is contingentally liable on letters
of credit amounting to approximately $6.5 million for various
completion escrows and on performance bonds amounting to approximately
$11.8 million to ensure completion of required public improvements on
its construction projects.
On June 22, 1998, the Company entered into an interest rate hedge
agreement in the notional amount of $200.0 million at a rate of 9.5% in
order to hedge against the impact that interest rate fluctuations would
have on the interest rate attainable on the Company's line of credit.
As of September 30, 1998, unrealized gain/loss on the agreement was
zero.
14
<PAGE>
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
The Company has entered into the following forward treasury agreements.
The Company entered into these agreements in order to hedge against the
impact that interest rate fluctuations would have on debt instruments
the Company plans to issue in the future.
<TABLE>
<CAPTION>
Unrealized Unrealized
Date Notional Loss Loss
of Amount 10-Year Treasury @ 9-30-98 @ 11-12-98
Agreement (in millions) Bill Rate (in millions) (in millions)
--------- ------------- ---------------- ------------- -------------
<S> <C> <C> <C> <C>
September 2, 1998 $ 50.0 5.898% $ 5.7 $ 4.3
September 2, 1998 25.0 5.788 2.6 1.9
September 2, 1998 25.0 5.647 2.4 1.7
September 2, 1998 25.0 5.566 2.2 1.5
August 27, 1998 75.0 5.128 (1) 4.5 2.3
------------ -------------
Total $17.4 $ 11.7
============ =============
</TABLE>
(1) This is tied to Treasury maturing 2/15/06.
(7) Subsequent Events
From October 1 to November 14, 1998, the Company acquired two office
properties. The Company paid $36.2 million in cash to purchase the
properties. These acquisitions added to the Company's holdings as
follows:
# of Square
Region Buildings Feet
------ --------- ----
Pacific Region 1 105,000
Mountain Region 1 133,000
------------- -----------
Total 2 238,000
============= ===========
In April 1998, the Company sold 5,000,000 shares of common stock to
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"),
resulting in net proceeds to the Company of approximately $147 million,
in what is commonly known as a "forward equity sale" transaction. In
connection with that transaction, the Company entered into an agreement
with Merrill Lynch under which the parties agreed to adjust the number
of shares of common stock issued to Merrill Lynch (or the aggregate
purchase price paid for such shares) based upon the proceeds received
by Merrill Lynch upon a resale of the shares by April 1999 in relation
to the amount originally paid by Merrill Lynch ($150 million), plus a
forward accretion component and less dividends paid on the shares. The
final settlement under the agreement will occur no later than April
1999, although Merrill Lynch has the right to cause an earlier
settlement if the market price of the Company's common stock declines
below certain levels. At monthly intervals up until the final
settlement, CarrAmerica is required to deposit into escrow either cash
or additional shares of common stock if the market price of the
Company's common stock declines. As a result of declines in the market
price of the Company's common stock, the Company deposited $39.3
million in cash with Merrill Lynch over various times between April
1998 and October 5, 1998.
On October 5, 1998, the Company and Merrill Lynch entered into an
amendment to the agreement pursuant to which the Company paid to
Merrill Lynch the $39.3 million currently on deposit, and in connection
therewith the aggregate settlement amount under the agreement was
reduced from $150 million to $112 million (i.e, the purchase price
adjustment mechanism takes effect if the aggregate proceeds received by
Merrill Lynch from the sale of the 5,000,000 shares is less than or
greater than $112 million), plus a forward accretion component and less
dividends paid on the shares. The effect of this amendment is to permit
the Company to benefit from the increase in the market price of its
common stock over $22.40, but also subjects the Company to the risk
that it may have to deliver additional shares or return a portion of
the purchase price if there is a decrease in the market price of its
common stock below $22.40. The final settlement under the agreement
remains no later than April 1999.
15
<PAGE>
CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
In October 1998, the Company sold $150 million in two-year unsecured
notes at a rate of 6.625%.
16
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations of the Company
- --------------------------------------------------------------------------------
Item 2. Management's Discussion And Analysis of Financial Condition
And Results of Operations
The following discussion is based primarily on the Consolidated
Financial Statements of CarrAmerica Realty Corporation and its subsidiaries (the
"Company") as of September 30, 1998 and December 31, 1997, and for the three and
nine months ended September 30, 1998 and 1997. The comparability of the periods
is significantly impacted by acquisitions made during 1998 and 1997. As of
September 30, 1997, the Company owned 230 properties.
This number grew to 288 as of September 30, 1998.
This information should be read in conjunction with the accompanying
condensed consolidated financial statements and notes thereto. These condensed
consolidated financial statements include all adjustments which are, in the
opinion of management, necessary to reflect a fair statement of the periods
presented, and all such adjustments are of a normal, recurring nature.
Results of Operations - Three Months Ended September 30, 1998 and 1997
Operating Revenue. Total operating revenue increased $68.6 million, or 71.1%, to
$165.0 million for the three months ended September 30, 1998 as compared to
$96.4 million for the three months ended September 30, 1997. The increase in
revenue was primarily attributable to a $25.8 million and a $42.8 million
increase in rental revenue and other operating revenue, respectively. The
Company experienced net growth in its rental revenue as a result of its
acquisitions, and development properties placed in service net of dispositions,
which together contributed approximately $23.5 million of additional rental
revenue in the three month period ended September 30, 1998. Rental revenue from
properties that were fully operational throughout both periods increased by
approximately $3.2 million primarily due to increased occupancy and rental rate
increases. Other operating revenue increased by $42.8 million, or 498.6%, for
the three months ended September 30, 1998 to $51.3 million as compared to $8.5
million for the three months ended September 30, 1997, primarily as a result of
the executive office suites revenue related to the Company's acquisitions of
executive suite businesses.
Operating Expenses. Total operating expenses increased $59.2 million for the
three months ended September 30, 1998, or 78.2%, to $135.0 million as compared
to $75.8 million for the three months ended September 30, 1997. The net increase
in operating expenses was attributable to a $8.5 million increase in property
operating expenses, a $5.3 million increase in interest expense, the addition of
$34.4 million in executive office suites operating expenses, a $2.9 million
increase in general and administrative expenses, and an $8.1 million increase in
depreciation and amortization. Property operating expenses increased primarily
as a result of property acquisitions, with property operating expenses from
properties that were fully operational in both periods increasing approximately
$.6 million. The increase in the Company's interest expense is primarily related
to borrowings necessary to fund acquisitions and development commitments. The
addition of executive office suites operating expenses is a result of the
acquisition of executive suite businesses. The increase in general and
administrative expenses is predominately a result of the addition of new staff
to implement the Company's business strategy and the write-off of approximately
$1.1 million of costs associated with abandoned acquisitions. The increase in
depreciation and amortization is predominately a result of depreciation and
amortization on the Company's real estate and executive suite acquisitions.
Other Operating Income. Other operating income increased $8.7 million for the
three months ended September 30, 1998, to $9.5 million as compared to $.8
million for the three months ended September 30, 1997, primarily due to a gain
recognized on the disposition of 189,000 square feet of office space, earnings
from the Company's additional investments in unconsolidated partnerships and the
interest income earned on increased cash balances.
17
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations of the Company
- --------------------------------------------------------------------------------
Net Income. Net income of $36.4 million was earned for the three months ended
September 30, 1998 as compared to $18.9 million during the three months ended
September 30, 1997. The comparability of net income between the two periods is
impacted by the acquisitions the Company made and the other changes described
above.
Results of Operations - Nine Months Ended September 30, 1998 and 1997
Operating Revenue. Total operating revenue increased $180.8 million, or 72.8%,
to $429.1 million for the nine months ended September 30, 1998 as compared to
$248.3 million for the nine months ended September 30, 1997. The increase in
revenue was primarily attributable to an $89.1 million and a $91.7 million
increase in rental revenue and other operating revenue, respectively. The
Company experienced net growth in its rental revenue as a result of its
acquisitions, and development properties placed in service net of dispositions,
which together contributed approximately $84.8 million of additional rental
revenue in the nine month period ended September 30, 1998. Rental revenue from
properties that were fully operational throughout both periods increased by
approximately $6.9 million, primarily due to rental rate increases. Other
operating revenue increased by $91.7 million, or 555.0%, for the nine months
ended September 30, 1998 to $108.2 million as compared to $16.5 million for the
nine months ended September 30, 1997, primarily as a result of the executive
office suites revenue earned on the Company's acquisitions of executive suite
businesses.
Operating Expenses. Total operating expenses increased $150.9 million for the
nine months ended September 30, 1998, or 77.9%, to $344.5 million as compared to
$193.6 million for the nine months ended September 30, 1997. The net increase in
operating expenses was attributable to a $25.2 million increase in property
operating expenses, a $16.9 million increase in interest expense, the addition
of $77.9 million in executive office suites operating expenses, a $7.1 million
increase in general and administrative expenses, and a $23.8 million increase in
depreciation and amortization. Property operating expenses increased primarily
as a result of property acquisitions, with property operating expenses from
properties that were fully operational in both periods increasing approximately
$1.3 million. The increase in the Company's interest expense is primarily
related to borrowings necessary to fund acquisitions and development
commitments. The addition of executive office suites operating expenses is a
result of the acquisition of executive suite businesses. The increase in general
and administrative expenses is predominately a result of the addition of new
staff to implement the Company's business strategy and the write-off of
approximately $1.8 million of costs associated with abandoned acquisitions. The
increase in depreciation and amortization is predominately a result of
depreciation and amortization on the Company's real estate and executive suite
acquisitions.
Other Operating Income. Other operating income increased $38.2 million for the
nine months ended September 30, 1998, to $40.5 million as compared to $2.3
million for the nine months ended September 30, 1997, primarily due to the gain
recognized on the disposition of 456,000 square feet of office space, earnings
from the Company's additional investments in unconsolidated partnerships, and
the interest income earned on cash balances.
Net Income. Net income of $111.0 million was earned for the nine months ended
September 30, 1998 as compared to $50.7 million during the nine months ended
September 30, 1997. The comparability of net income between the two periods is
impacted by the acquisitions the Company made and the other changes described
above.
Cash Flows. Net cash provided by operating activities increased $144.9 million,
or 151.1%, to $240.8 million for the nine months ended September 30, 1998 as
compared to $95.9 million for the nine months ended September 30, 1997,
primarily as a result of the acquisitions made and development placed in service
by the Company. Net cash used by investing activities increased $251.9 million,
to $997.2 million for the nine months ended September 30, 1998 as compared to
$745.3 million for the nine months ended September 30, 1997, primarily as a
result of capital deployed by the Company for acquisitions of office properties,
executive suite businesses, land held for future development and investments in
construction in progress. Net cash provided by financing activities increased
$125.0 million, to $772.6 million for the nine months ended September 30, 1998
as compared to $647.6 million for the nine months ended September 30, 1997,
primarily as a result of borrowings on the unsecured credit facility, and
proceeds from sales of common stock and unsecured bonds net of dividends paid to
the common and preferred stockholders.
18
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations of the Company
- --------------------------------------------------------------------------------
Liquidity And Capital Resources
The Company seeks to create and maintain a capital structure that will
enable it to diversify its capital sources and thereby allow the Company to
obtain additional capital from a number of different sources, including
additional equity offerings of common and/or preferred stock, public and private
debt financings, and, where appropriate, asset dispositions. Management believes
that the Company will have access to the capital resources necessary to expand
and develop its business, to fund its operating and administrative expenses, to
continue debt service obligations, to pay dividends in accordance with REIT
requirements, to acquire additional properties and land as market conditions
permit, and to pay for construction in progress in both the short and long term.
The Company has three investment grade ratings. Duff & Phelps Credit
Rating Co. (DCR) and Standard & Poors (S&P) have each assigned their BBB rating
to prospective senior unsecured debt offerings of the Company and their BBB-
rating to prospective cumulative preferred stock offerings of the Company.
Moody's Investor Service (Moody's) has assigned its Baa3 rating to prospective
senior unsecured debt offerings of the Company and its Ba2 rating to prospective
cumulative preferred stock offerings of the Company.
The Company's total indebtedness at September 30, 1998 was $1.602
billion, of which $547.5 million, or 34.2%, bears a LIBOR-based floating
interest rate. Currently, the unsecured credit facilities bear interest at 90
basis points over LIBOR on the $450 million facility and the $200 million
facility. The Company's mortgages payable fixed rate indebtedness bears an
effective weighted average interest rate of 8.2% at September 30, 1998 and has a
weighted average term to maturity of 4.6 years. Based upon the Company's total
market capitalization at September 30, 1998 of $3.809 billion (the common stock
price was $22.88 per share; the total shares of common stock, convertible
preferred stock and Units outstanding was 78,957,151 and the aggregate
liquidation value of the cumulative redeemable preferred stock was $400
million), the Company's debt represented 42.1% of its total market
capitalization. As of November 13, 1998, the Company had $353.5 million
outstanding under the unsecured credit facilities, leaving $296.5 million for
draw.
Rental revenue, executive suites revenue and real estate service
revenue have been the principal sources of capital to fund the Company's
operating expenses, debt service and capital expenditures, excluding
nonrecurring capital expenditures. The Company believes that these sources of
revenue will continue to provide the necessary funds for its operating expenses
and debt service. The Company also requires capital to invest in its existing
portfolio of operating assets for major capital projects such as large-scale
renovations, routine capital expenditures and deferred maintenance on certain
properties recently acquired and tenant related capital expenditures, such as
tenant improvements and allowances and leasing commissions.
Additionally, the Company and it's subsidiaries (including CarrAmerica
Development) will require a substantial amount of capital for development
projects currently underway and planned for the future. As of September 30,
1998, the Company had approximately 5.0 million square feet of office space in
63 development projects underway which is expected to require a total investment
by the Company of approximately $767 million. As of September 30, 1998, the
Company had expended $399 million, or 52.0 percent of the total expected
investment.
The Company's subsidiaries also have various capital needs.
Specifically, OmniOffices is currently developing approximately 20 executive
office suite centers. The total cost to complete these projects is approximately
$26.8 million, of which approximately $15.5 million was expended as of September
30, 1998. In addition, OmniOffices currently is considering several acquisitions
of existing executive office suite centers, although no binding agreements have
been executed. Future cash needs of OmniOffices are expected to be met by draws
on the OmniOffices line of credit facility. As this subsidiary continues to
grow, the Company may in the future elect to dispose of part or all of its
equity interest in OmniOffices, including through a distribution of stock in
OmniOffices to the Company's stockholders, but no decision with respect to any
such disposition has been made at this time.
19
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations of the Company
- --------------------------------------------------------------------------------
Finally, the Company may need additional capital to satisfy its
obligations under the agreement entered into with Merrill Lynch in connection
with the Company's "forward equity sale" transaction, described in more detail
in note 7 to the Company's Condensed Consolidated Financial Statements above.
Historically, management has primarily met the Company's capital
requirements by accessing the public equity and debt markets. However, because
of certain unfavorable conditions currently existing in the public equity and
debt markets, the Company does not believe that these markets are currently
providing the Company with the most attractive sources of capital. If conditions
in the public equity or debt markets improve, the Company will evaluate the cost
of capital raised in such markets to determine if it is the most attractive
capital available to the Company at the time. However, there can be no assurance
that conditions will improve in the near term.
In response to the current conditions in the equity and debt markets,
the Company plans to address its cash needs through utilization of the Company's
line of credit, refinancing select assets, prudent use of joint ventures and the
disposition of certain assets. Currently, the Company has 25 assets under
contract for sale primarily in the Northern California, Dallas and Atlanta
markets. In addition, the Company has 6 properties under letter of intent for
sale. These properties are expected to produce net proceeds of approximately
$188 million. Due to the uncertainties in the disposition process, there can be
no assurances that these sales will close or that they will achieve the expected
net proceeds.
If (i) the debt and equity capital markets do not improve, (ii) the
Company is unable to raise the expected net proceeds from dispositions of
properties, and (iii) the Company is unable to obtain capital from other
sources, the Company believes that it would continue to have sufficient funds to
continue to pay its operating and debt service expenses, its regular quarterly
dividends and to meet the necessary capital requirements with respect to its
existing portfolio of operating assets. However, the Company's ability to
continue to fund all of its current development projects could be materially
adversely affected. If the Company determined that it was in the best interests
of the Company to continue to fund all of its current development projects, the
Company may have to access either the public equity or debt markets, which, at
that time, may not be the most attractive source of capital.
Net cash provided by operating activities was $240.8 million for the
nine months ended September 30, 1998, compared to $95.9 million for the nine
months ended September 30, 1997. The increase in net cash provided by operating
activities was primarily a result of acquisitions made and development placed in
service by the Company. The Company's investing activities used approximately
$997.2 billion and $745.3 million for the nine months ended September 30, 1998
and 1997, respectively. The Company's investment activities included the
acquisitions of office buildings, executive office suites businesses, and land
held for future development and additions to construction in process of
approximately $895.5 million for the nine months ended September 30, 1998, as
compared to $718.5 million in acquisitions during the same period in 1997.
Additionally, the Company invested approximately $42.4 million and $21.6 million
in its existing real estate assets for the nine months ended September 30, 1998
and 1997, respectively. Net of distributions to the Company's stockholders and
minority interests, the Company's financing activities provided net cash of
$900.9 million and $728.5 million for the nine months ended September 30, 1998
and 1997, respectively. For the nine months ended September 30, 1998, the
Company raised $335.9 million through the sale of common stock which was used to
repay amounts outstanding under its unsecured credit facility and to fund
acquisitions. The Company also drew amounts from its unsecured credit facilities
during 1998 to finance its acquisitions and other investing activities. For the
nine months ended September 30, 1998, the Company's net borrowings on its
unsecured credit facility were approximately $388.0 million.
Rental revenue and real estate service revenue have been the principal
sources of capital to fund the Company's operating expenses, debt service and
capital expenditures, excluding non-recurring capital expenditures. The Company
believes that rental revenue and real estate service revenue will continue to
provide the necessary funds for its operating expenses and debt service.
20
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations of the Company
- --------------------------------------------------------------------------------
The Company's dividends are paid quarterly. Amounts accumulated for
distribution are primarily invested by the Company in short-term investments
that are collateralized by securities of the United States Government or certain
of its agencies.
Year 2000 Compliance
The Year 2000 issue results from a programming convention in which
computer programs use two digits rather than four to define the applicable year.
Software and hardware may recognize a date using "00" as the year 1900, rather
than the year 2000. Such an inability of computer programs to recognize a year
that begins with "20" could result in business or building system failures,
miscalculations or errors causing disruptions of operations or other business
problems, including, among other things, a temporary inability to process
transactions, send invoices or engage in other normal business activities.
The Company has undertaken a comprehensive program to address the Year
2000 issue. In the second quarter of 1998, the Company expanded its program and
appointed a Year 2000 Steering Committee to manage centrally its Year 2000
compliance program (known internally as "Project 2000"). The Steering Committee
includes representatives of senior level management representing a wide array of
the organization. The Steering Committee is charged with overseeing the
Company's comprehensive action plan designed to address Year 2000 issues.
The Company's Steering Committee has engaged the independent consulting
firm of Computer Technology Associates, Inc. ("CTA") to serve as the Project
Manager for Project 2000. The project is organized into two areas of
concentration: (i) Property Operations Embedded Systems and (ii) Internal
Business Operations Technology. The Property Operations segment of the program
focuses primarily on equipment and systems present in the Company's operating
properties that may contain embedded microcontroller technology (such as
elevators and HVAC systems). The Internal Business Operations segment focuses
primarily on the Company's information technology, operating systems (such as
such as billing, accounting and financial reporting systems) and certain systems
of the Company's major vendors and material service providers. As described
below, Project 2000 involves (i) the assessment of the Year 2000 problems that
may affect the Company, (ii) the development of remedies to address the problems
discovered in the assessment phase, (iii) the testing of such remedies and (iv)
the preparation of contingency plans to deal with the potential failure of
important and critical systems.
Assessment. During the course of its assessment phase, the Company
continues to identify substantially all of the major components of its property
and business operations systems which may be vulnerable to the Year 2000 issue.
In terms of Property Operations, the Company is conducting a comprehensive
inventory of all the buildings' systems and equipment. Systems are ranked (0-3)
based upon each systems' importance to the properties' operations. Those systems
classified as level 2 or 3 (the highest levels of importance) are compared to
CTA's existing embedded systems database to determine the status of Year 2000
compliance if it is not already known by the Company. If relevant information is
not contained in the existing database, the system is then identified for
processing through vendor management coordinated by CTA. Vendor management
involves concentrated communication with the vendor in an attempt to determine
the status of a systems Year 2000 compliance and any available remedies. As of
the third quarter of 1998, inventory of the Company's operating properties was
substantially complete (approximately 98%). Assessment of property operations is
scheduled for completion in the fourth quarter of 1998.
21
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations of the Company
- --------------------------------------------------------------------------------
In terms of Internal Business Operations Technology, team leaders have
been selected from each business unit and market office to assist in identifying
software, hardware and external interfaces which may be vulnerable to Year 2000
issues. Inventory of both core business units and all market offices is expected
to be completed by the end of the fourth quarter of 1998. The Company's primary
billing and accounting software is currently undergoing a routine application
upgrade expected to be complete by the end of the fourth quarter of 1998. The
vendor of the software has received the Information Technology Association of
America (ITAA) 2000 Certification and represents that the system is Year 2000
ready, and the Company expects to test the system during the first quarter of
1999. In addition, during the third quarter of 1998, the Company continued
communicating with other significant hardware, software and other material
services providers, requesting them to provide the Company with detailed,
written information concerning existing or anticipated Year 2000 compliance of
their systems insofar as the systems relate to such parties' business activities
with the Company. The Company expects that it will complete its distribution of
these inquiries by the end of the fourth quarter of 1998.
Remediation and Testing Phase. Based upon the results of its assessment
efforts, the Company will undertake remediation and testing activities. The
Company intends to complete this phase by the end of the third quarter of 1999.
The activities conducted during the remediation and testing phase are intended
to provide assurance from both the Property Operation and the Internal Business
perspectives that critical and important applications, systems and equipment
will be substantially Year 2000 compliant on a timely basis. In this phase, the
Company will first evaluate applications, systems and equipment. If a potential
Year 2000 problem is identified, the Company will take steps to attempt to
remediate the problem and, where applicable, test to confirm that the
remediating changes are effective and have not adversely affected the
functionality of that application. After the various applications, system
components and equipment have undergone remediation and testing phases, the
Company, where applicable, will conduct integrated testing for the purpose of
demonstrating functional integrated systems operations.
Contingency Plans. The Company intends to develop contingency plans to
handle its most reasonably likely worst case Year 2000 scenarios, which it is in
the process of identifying. The Company intends to complete its determination of
worst case scenarios after it has received and analyzed responses to
substantially all of the inquiries it has made of third parties. The Company
expects to complete contingency plans by the end of the third quarter of 1999.
Costs Related to the Year 2000 Issue. To date, the Company, has
incurred approximately $.3 million in costs for its Year 2000 program. The
Company currently estimates that it will incur additional costs, which are not
expected to exceed approximately $4.3 million, to complete its Year 2000
compliance work. Of such additional costs, approximately $1.5 million are
expected to be incurred during 1998 and approximately $2.8 million are expected
to be during 1999. The Company believes that a portion of these costs may be
recoverable from tenants but has not determined at this time the extent to which
such recovery can be realized.
Risks Related to the Year 2000 Issue. Although the Company's Year 2000
efforts are intended to minimize the adverse effects of the Year 2000 issue on
the Company's business and operations, the actual effects of the Year 2000 issue
and the success or failure of the Company's efforts described above cannot be
known until the year 2000. Failure by the Company and its major vendors, other
material service providers and material clients to address adequately their
respective Year 2000 issues in a timely manner (insofar as such issues relate to
the Company's business) could have a material adverse effect on the Company's
business, results of operations and financial condition.
22
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations of the Company
- --------------------------------------------------------------------------------
Other Matters
Effective March 19, 1998, the Company has adopted the Emerging Issues
Task Force's Issue 97-11, "Accounting for Internal Costs Relating to Real Estate
Property Acquisitions." Issue 97-11 states that internal costs from acquiring
operating property should be expensed as incurred. Costs that have been
capitalized in the Company's financial statements from January 1, 1998 through
March 19, 1998 amounted to $.7 million. The Company believes that this will not
have a material effect on the Company's operations.
Funds From Operations
The Company believes that funds from operations is helpful to investors
as a measure of the performance of an equity REIT because, along with cash flow
from operating activities, financing activities and investing activities, it
provides investors with an indication of the ability of the Company to incur and
service debt, to make capital expenditures and to fund other cash needs. In
accordance with the final National Association of Real Estate Investment Trusts
(NAREIT) White Paper on Funds From Operations as approved by the Board of
Governors of NAREIT on March 3, 1995, funds from operations represents net
income (loss) (computed in accordance with generally accepted accounting
principles), excluding gains (or losses) from debt restructuring or sales of
property, plus depreciation and amortization of assets uniquely significant to
the real estate industry and after adjustments for unconsolidated partnerships
and joint ventures. Adjustments for unconsolidated partnerships and joint
ventures are calculated to reflect funds from operations on the same basis. The
Company calculates its Funds From Operations by combining the Funds From
Operations from its real estate operations, calculated in accordance with
NAREIT's definition of Funds From Operations, and the earnings before
depreciation, amortization and deferred taxes ("EBDADT") of the Company's
executive suite business, excluding operating losses from centers under
development. The Company's funds from operations may not be comparable to funds
from operations reported by other REITs that do not define the term in
accordance with the current NAREIT definition or that interpret the current
NAREIT definition differently than the Company. Funds from operations does not
represent net income or cash flow generated from operating activities in
accordance with generally accepted accounting principles and, as such, should
not be considered an alternative to net income as an indication of the Company's
performance or to cash flow as a measure of liquidity or the Company's ability
to make distributions.
23
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations of the Company
- --------------------------------------------------------------------------------
The following table provides the calculation of the Company's Funds
From Operations ("FFO"):
<TABLE>
<CAPTION>
(in thousands) Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income before minority interest and extraordinary item $ 38,979 21,503 124,546 57,029
Adjustments to derive funds from operations:
Add:
Depreciation and amortization 28,382 19,543 77,306 51,881
Losses associated with executive suites centers under
development 1,410 -- 2,952 --
Deferred taxes 248 -- 248 --
Deduct:
Minority interests' (non Unitholders) share
of depreciation and amortization and net income (60) (379) (255) (965)
Gain on sale of assets (6,844) -- (32,450) (353)
-------- -------- -------- --------
FFO before allocations to the minority Unitholders 62,115 40,667 172,347 107,592
Less: FFO allocable to the minority Unitholders (3,677) (3,276) (11,565) (9,376)
-------- -------- -------- --------
FFO allocable to CarrAmerica Realty Corporation 58,438 37,391 160,782 98,216
Less: Preferred stock dividends (1) (8,963) (2,689) (26,639) (4,212)
-------- -------- -------- --------
FFO attributable to common shareholders $ 49,475 34,702 134,143 94,004
======== ======== ======== ========
</TABLE>
(1) For the three months ended September 30, 1998 and 1997, included
are dividends of $345 and $341, respectively, of Series A Preferred
Stock which are convertible into common shares. For the nine months
ended September 30, 1998 and 1997, included are dividends of $1,067 and
$1,864, respectively, of Series A Preferred Stock which are convertible
into common shares.
Changes in funds from operations are largely attributable to changes in net
income between the periods, as previously discussed.
24
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations of the Company
- --------------------------------------------------------------------------------
Building And Lease Information
The following table sets forth certain information about each operating property
owned by the Company as of September 30, 1998:
<TABLE>
<CAPTION>
Company's Net
Effective Rentable
Property Area Percent # of
Property Ownership (square feet)(1) Leased(2) Buildings
- -------- --------- ---------------- --------- ---------
<S> <C> <C> <C> <C>
Consolidated Properties
SOUTHEAST REGION
Downtown Washington, D.C.:
International Square 100.0% 1,014,537 93.4% 3
1730 Pennsylvania Avenue 100.0 229,292 99.3 1
2550 M Street 100.0 187,931 97.4 1
1775 Pennsylvania Avenue (3) 100.0 143,981 99.1 1
900 19th Street 100.0 100,907 100.0 1
1747 Pennsylvania Avenue 89.7 (4) 151,864 94.4 1
1255 23rd Street 75.0 (5) 305,237 92.5 1
Suburban Washington, D.C.:
One Rock Spring Plaza (3) 100.0 205,298 100.0 1
Tycon Courthouse 100.0 416,195 99.2 1
Three Ballston Plaza 100.0 302,875 100.0 1
Sunrise Corporate Center 100.0 260,253 100.0 3
Parkway One 100.0 87,842 100.0 1
Suburban Atlanta:
Veridian 100.0 190,781 85.5 22
Glenridge 100.0 64,052 76.3 1
Century Springs West 100.0 94,893 98.0 1
Holcomb Place 100.0 72,823 96.7 1
DeKalb Tech 100.0 163,159 81.2 5
Midori 100.0 99,900 100.0 1
Crestwood 100.0 88,186 92.0 1
Parkwood 100.0 151,296 64.8 1
Lakewood 100.0 80,338 95.3 1
The Summit 100.0 179,085 100.0 1
Triangle Parkway 100.0 82,102 100.0 3
2400 Lake Park 100.0 100,491 93.1 1
680 Engineering Drive 100.0 62,154 100.0 1
Embassy Row 100.0 465,858 94.7 3
Waterford Center 100.0 82,161 85.1 1
Spalding Ridge 100.0 128,233 92.3 1
Boca Raton:
Peninsula Plaza 100.0 160,081 92.6 1
Presidential Circle 100.0 279,227 84.3 1
--------- ---- --
Southeast Region Subtotal 5,951,032 93.9 63
PACIFIC REGION
Southern California,
Orange County/Los Angeles:
Scenic Business Park 100.0 139,012 100.0 4
Harbor Corporate Park 100.0 148,598 95.4 4
Plaza PacifiCare 100.0 104,377 100.0 1
Katella Corporate Center 100.0 79,917 97.4 1
Warner Center 100.0 342,866 89.3 12
South Coast Executive Center 100.0 161,310 92.9 2
Warner Premier 100.0 61,553 100.0 1
Westlake Corporate Center 100.0 72,282 89.1 2
Von Karman 100.0 103,713 100.0 1
2600 W. Olive 100.0 145,474 95.7 1
Bay Technology Center 100.0 107,481 100.0 2
Alton Deere Plaza 100.0 181,196 99.5 6
</TABLE>
25
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations of the Company
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Company's Net
Effective Rentable
Property Area Percent # of
Property Ownership (square feet)(1) Leased(2) Buildings
- -------- --------- ---------------- --------- ---------
<S> <C> <C> <C> <C>
Southern California,
San Diego:
Del Mar Corporate Plaza 100.0% 123,142 100.0% 2
Wateridge Pavilion 100.0 62,194 100.0 1
Lightspan 100.0 64,800 100.0 1
Towne Center Technology Park II 100.0 62,367 100.0 1
Palomar Oaks Technology Park 100.0 170,358 100.0 6
Century Park II 100.0 198,306 100.0 3
Northern California,
San Francisco Bay Area:
CarrAmerica Corporate Center 100.0 994,930 100.0 6
Sunnyvale Research Plaza 100.0 126,000 100.0 3
Rio Robles 100.0 368,178 100.0 7
Valley Business Park II 100.0 166,928 100.0 6
Bayshore Centre 100.0 195,249 100.0 2
Rincon Centre 100.0 201,178 100.0 3
Valley Centre II 100.0 212,082 100.0 4
Valley Office Centre 100.0 68,731 97.2 2
Valley Centre 100.0 102,291 100.0 2
Valley Business Park I 100.0 67,784 100.0 2
3745 North First Street 100.0 67,582 100.0 1
3571 North First Street 100.0 116,000 100.0 1
Mission Plaza 100.0 102,687 100.0 2
North San Jose Technology Park 100.0 299,233 100.0 4
Foster City Technology Center 100.0 66,869 100.0 2
150 River Oaks 100.0 100,024 100.0 1
Amador/Rinconada 100.0 134,611 100.0 3
Amador III 100.0 82,944 100.0 1
Arroyo Center 100.0 104,741 100.0 2
San Mateo I 100.0 70,000 100.0 1
San Mateo II and III 100.0 141,404 97.2 2
900-910 East Hamilton 100.0 351,811 100.0 2
Hacienda West 100.0 205,724 95.6 2
Sunnyvale Technology Centre 100.0 165,520 100.0 5
Baytech Business Park 100.0 300,000 100.0 4
Golden Gateway Commons 100.0 269,405 100.0 3
Techmart Commerce Center (3) 100.0 259,596 98.7 1
995 Benecia Avenue 100.0 36,344 100.0 1
Oakmead West A-C 100.0 202,655 100.0 3
Santa Clara Technology Park 100.0 178,132 100.0 3
Northern California,
Sacramento:
1860 Howe Avenue 100.0 98,992 87.6 1
University Office Park 100.0 122,288 86.8 2
Capital Corporate Center 100.0 94,561 94.5 5
Suburban Portland:
RadiSys Corporate Headquarters 100.0 80,525 100.0 1
RadiSys II 100.0 45,655 100.0 1
Suburban Seattle:
Redmond East 100.0 397,948 94.5 10
Willow Creek 100.0 96,179 100.0 1
Canyon Park Business Center 100.0 246,565 100.0 6
Canyon Park Commons 100.0 95,290 100.0 1
Willow Creek Corporate Center 100.0 208,656 100.0 4
Redmond Hilltop B & C 100.0 90,880 100.0 2
--------- ----- ---
Pacific Region Subtotal 9,665,118 98.5 166
</TABLE>
26
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations of the Company
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Company's Net
Effective Rentable
Property Area Percent # of
Property Ownership (square feet)(1) Leased(2) Buildings
- -------- --------- ---------------- --------- ---------
<S> <C> <C> <C> <C>
CENTRAL REGION
Austin, Texas:
Great Hills Plaza 100.0% 135,333 100.0% 1
Balcones Center 100.0 75,761 77.6 1
Park North 100.0 132,744 93.4 2
City View Centre 100.0 136,183 100.0 3
Riata 4 100.0 91,538 93.6 1
Tower of the Hills 100.0 166,099 98.1 2
Suburban Chicago:
Parkway North 100.0 507,839 99.9 2
Unisys 100.0 359,633 93.0 2
The Crossings 100.0 296,624 98.7 2
Bannockburn I & II 100.0 209,860 100.0 2
Bannockburn IV 100.0 108,469 100.0 1
Summit Oaks 100.0 91,626 92.7 1
Dallas, Texas:
Greyhound 100.0 92,890 100.0 1
Search Plaza 100.0 152,790 95.5 1
Quorum North 100.0 115,845 88.2 1
Quorum Place 100.0 179,303 93.9 1
Cedar Maple Plaza 100.0 113,011 96.1 3
Tollhill East & West 100.0 241,337 93.0 2
Two Mission Park 100.0 77,731 90.8 1
Citymark 100.0 207,397 93.5 1
5000 Quorum 100.0 160,122 87.5 1
--------- ----- --
Central Region Subtotal 3,652,135 95.5 32
MOUNTAIN REGION
Southeast Denver:
Harlequin Plaza 100.0 329,070 100.0 2
Quebec Court I & II 100.0 287,294 100.0 2
Greenwood Center 100.0 75,866 97.2 1
Quebec Center 100.0 106,849 90.2 3
Panorama Corporate Center I 100.0 100,881 100.0 1
Panorama II 100.0 100,916 96.7 1
Phoenix, Arizona:
Camelback Lakes 100.0 199,149 99.8 2
Pointe Corridor IV 100.0 178,745 93.6 1
Highland Park 100.0 78,093 76.2 1
The Grove at Black Canyon 100.0 104,187 95.2 1
US West 100.0 532,506 100.0 4
Salt Lake City, Utah:
Sorenson Research Park 100.0 285,144 98.8 5
Wasatch Corporate Center 100.0 178,098 100.0 3
---------- ----- --
Mountain Region Subtotal 2,556,798 97.9 27
---------- ----- --
TOTAL CONSOLIDATED PROPERTIES: 21,825,083 288
WEIGHTED AVERAGE ---------- ---
96.7%
----
</TABLE>
27
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations of the Company
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Company's Net
Effective Rentable
Property Area Percent # of
Property Ownership (square feet)(1) Leased(2) Buildings
- -------- --------- ---------------- --------- ---------
<S> <C> <C> <C> <C>
Unconsolidated Properties
Downtown Washington, D.C.:
1717 Pennsylvania Avenue 50.0%(6) 184,446 100.0% 1
AARP Headquarters 24.0 (7) 477,394 99.9 1
Bond Building 15.0 (8) 162,097 100.0 1
Willard Office/Hotel 5.0 (9) 242,787 98.9 1
Suburban Washington, D.C.:
Booz-Allen & Hamilton Building 50.0 (10) 222,989 100.0 1
---------- ----- -
TOTAL UNCONSOLIDATED PROPERTIES: 1,289,713 5
WEIGHTED AVERAGE ---------- -
99.7%
----
ALL OPERATING PROPERTIES
TOTAL: 23,114,796
==========
WEIGHTED AVERAGE 96.8%
====
</TABLE>
- ----------
(1) Includes office and retail space but excludes storage space.
(2) Includes space for leases that have been executed and have commenced as of
September 30, 1998.
(3) The Company owns the improvements on the property and has a leasehold
interest in all of the underlying land.
(4) The Company holds a general and limited partner interest in a partnership
that owns the property.
(5) The Company holds a 50% joint venture interest in the joint venture that
owns this property and a 50% joint venture interest in another joint
venture, which holds the remaining 50% interest in the joint venture that
owns the property. As a result of preferential rights to annual
distributions from another venture, the Company will receive distributions
of less than 75% (but in no event less than 50%) of the total amount
distributed with respect to this property in each year until the
preferential distribution requirements are satisfied, but will receive 100%
of any subsequent distributions during the year until its aggregate
distributions equal 75% of the cumulative distributions with respect to the
property since inception of the partnership. Thereafter, the Company will
receive 75% of the distributions made during the year with respect to the
property. Upon sale of the property, the Company will receive 75% of the
distributions until the Company receives its preference amount, 50% until
the remaining venturer receives its preference amount, and 75% of the
distributions thereafter.
(6) The Company holds a 50% interest in the limited liability company that owns
the property and serves as the entity's managing member.
(7) The Company holds an effective 24% interest in the property by virtue of a
48% general partner interest in a partnership that owns a 50% general
partner interest in the property.
(8) The Company holds an effective 15% interest in the property by virtue of a
30.6% limited partner interest in a partnership that has a 49% limited
partner interest in the property.
(9) The Company holds an effective 5% interest in the property by virtue of a
7.85% limited partner interest in a partnership that owns, through a
subsidiary, a 63.7% limited partner interest in the property. The
partnership in which the Company holds an interest owns the improvements on
the property and has a leasehold interest in the underlying land.
(10) The Company holds a 50% joint venture interest, and is the managing
venturer.
28
<PAGE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations of the Company
- --------------------------------------------------------------------------------
The following table sets forth a schedule of the lease expirations for
leases in place as of September 30, 1998 in each of the next ten years beginning
with 1998 and thereafter for the 288 operating office properties whose results
are consolidated in the financial statements of the Company, assuming that no
tenants exercise renewal options:
<TABLE>
<CAPTION>
Net Rentable Area Percent of Leased
Subject to Square Footage
Year Expiring Represented
of Lease Leases (1) by Expiring
Expiration (square feet) Leases
---------- ------------- ------
<S> <C> <C>
1998 1,164,000 5.5%
1999 2,165,000 10.3
2000 2,704,000 12.8
2001 2,792,000 13.2
2002 2,945,000 14.0
2003 3,145,000 14.9
2004 1,580,000 7.5
2005 880,000 4.2
2006 1,255,000 5.9
2007 and thereafter 2,469,000 11.7
</TABLE>
- ----------------------
(1) Excludes 726,000 square feet of space that was vacant as of September 30,
1998.
Building and Lease Information. The following table sets forth certain
lease-related information for the consolidated operating properties presented in
order to show downtown Washington, D.C. operating properties separate from other
operating properties. The table presents leases that commenced during the twelve
month period from October 1, 1997 to September 30, 1998, excluding the leases
for operating properties that were executed prior to the date of acquisition:
<TABLE>
<CAPTION>
Calculated on a Weighted Average Basis
----------------------------------------------------------------------------------
Tenant Base
Total Improvements & Rent Leasing
Square Cash per Lease Abatements Commission
Feet Allowances per Square Life in in Per Square
Type of Lease Leased Square Foot Foot Years Months Foot
- ------------- ------ ----------- ---- ----- ------ ----
Operating Properties,
Downtown
Washington, D.C.
(9 Properties)
- ---------------------------
<S> <C> <C> <C> <C> <C> <C>
Office 361,879 $ 4.48 $ 30.96 5.5 0.5 $ 0.58
Retail 15,403 27.12 29.67 7.5 2.3 1.96
--------
Total/Weighted Average 377,282 5.40 30.91 5.6 0.6 0.64
======== ======= ======= === === =======
New leases or expansion
space 229,807 $ 6.70 $ 30.07 6.1 1.0 $ 1.05
Renewals of existing
tenants' space 147,475 3.38 32.21 4.8 0.0 0.00
--------
Total/Weighted Average 377,282 5.40 30.91 5.6 0.6 0.64
======== ======= ======= === === =======
- ---------------------------
Operating Properties,
Other Than Downtown
Washington, D.C.
(279 Properties)
- ---------------------------
Office 5,004,336 $ 5.19 $ 17.04 5.4 0.2 $ 1.93
Retail 23,454 5.96 12.67 6.9 0.0 0.05
----------
Total/Weighted Average 5,027,790 5.19 17.02 5.4 0.2 1.92
========== ======= ======= === === =======
New leases or expansion
space 3,437,461 $ 6.67 $ 17.19 5.3 0.4 $ 2.51
Renewals of existing
tenants' space 1,590,329 1.98 16.66 5.8 0.0 0.66
----------
Total/Weighted Average 5,027,790 5.19 17.02 5.4 0.2 1.92
=========== ======= ======= === === =======
</TABLE>
29
<PAGE>
Part II
OTHER INFORMATION
- -----------------
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission 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
10.1 Fourth Amended and Restated Revolving Credit Agreement
dated as of August 27, 1998 by and among CarrAmerica
Realty Corporation, Carr Realty, L.P., CarrAmerica
Realty, L.P., Morgan Guaranty Trust Company of New York,
J.P. Morgan Securities Inc., Commerzbank
Aktiengesellschaft, New York Branch, NationsBank, N.A.,
PNC Bank, National Association, Bank of America National
Trust and Savings Association, Societe Generale, a
French Banking Corporation, acting through its Southwest
Agency, and the other banks listed therein.
10.2 Amended and Restated Revolving Credit Agreement dated as
of August 27, 1998 by and among OmniOffices, Inc.,
Morgan Guaranty Trust Company of New York, J.P. Morgan
Securities Inc., Commerzbank Aktiengesellschaft, New
York Branch, NationsBank, N.A., PNC Bank, National
Association, Bank of America National Trust and Savings
Association, Societe Generale, a French Banking
Corporation, acting through its Southwest Agency, and
the other banks listed therein.
10.3 Amended and Restated Guaranty Agreement dated as of
August 27, 1998 made by CarrAmerica Realty Corporation
in favor of Morgan Guaranty Trust Company, as bank and
lead agent.
10.4 Indenture, dated as of October 1, 1998, by and among
CarrAmerica Realty Corporation, as primary obligor,
CarrAmerica Realty, L.P., as guarantor, and Bankers
Trust Company, as trustee (incorporated by reference to
Exhibit 4.1 to the Company's Form 8-K filed on October
2, 1998).
10.5 Amendment Agreement to Purchase Price Adjustment
Agreement dated July 8, 1998 by and between CarrAmerica
Realty Corporation and Merrill Lynch, Pierce, Fenner &
Smith Incorporated.
10.6 Amendment Agreement to Purchase Price Adjustment
Agreement dated October 5, 1998 by and between
CarrAmerica Realty Corporation and Merrill Lynch,
Pierce, Fenner & Smith Incorporated.
30
<PAGE>
27.1 Financial Data Schedule - Nine Months Ended
September 30, 1998.
27.2 Financial Data Schedule - Nine Months Ended
September 30, 1997.
(b.) Reports on Form 8-K
a. Current Report on Form 8-K filed on July 1, 1998
regarding Historical Summaries of Operating Revenue and
Expense for the year-ended December 31, 1997 for
Sunnyvale Technology Park and Golden Gate Commons, and
Historical Summaries of Operating Revenue and Expense
for the three months ended March 31, 198 and the year
ended December 31, 1998 for Checkfree Corporate Campus
and Hacienda West.
b. Current Report on Form 8-K/A filed on July 8,1998
regarding the proforma condensed consolidated balance
sheet (unaudited) at March 31, 1998.
c. Current Report on Form 8-K filed on August 6, 1998
regarding certain supplemental data included in the
Company's press release, dated August 6, 1998.
d. Current Report on Form 8-K filed on September 25, 1998
regarding the Historical Summaries of Operating Revenue
and Expense for the year-ended December 31, 1997 for
Citymark Tower.
e. Current Report on Form 8-K filed on September 29, 1998
regarding the proforma condensed consolidated balance
sheet (unaudited) at June 30, 1998 and proforma
condensed consolidated statements of operations
(unaudited) for the six months ended June 30, 1998 and
the year ended December 31, 1997 relating to the
Company.
31
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CARRAMERICA REALTY CORPORATION
/s/ Thomas A. Carr
- ----------------------------------------------
Thomas A. Carr, President and
Chief Executive Officer
/s/ Brian K. Fields
- ----------------------------------------------
Brian K. Fields, Chief Financial Officer
Date: November 16, 1998
32
<PAGE>
Exhibit Index
<TABLE>
<CAPTION>
Exhibit Description Page
- ------- ----------- ----
<S> <C>
10.1 Fourth Amended and Restated Revolving Credit Agreement dated as
of August 27, 1998 by and among CarrAmerica Realty Corporation,
Carr Realty, L.P., CarrAmerica Realty, L.P., Morgan Guaranty
Trust Company of New York, J.P. Morgan Securities Inc.,
Commerzbank Aktiengesellschaft, New York Branch, NationsBank,
N.A., PNC Bank, National Association, Bank of America National
Trust and Savings Association, Societe Generale, a French
Banking Corporation, acting through its Southwest Agency, and
the other banks listed therein.
10.2 Amended and Restated Revolving Credit Agreement dated as of
August 27, 1998 by and among OmniOffices, Inc., Morgan Guaranty
Trust Company of New York, J.P. Morgan Securities Inc.,
Commerzbank Aktiengesellschaft, New York Branch, NationsBank,
N.A., PNC Bank, National Association, Bank of America National
Trust and Savings Association, Societe Generale, a French
Banking Corporation, acting through its Southwest Agency, and
the other banks listed therein.
10.3 Amended and Restated Guaranty Agreement dated as of August 27,
1998 made by CarrAmerica Realty Corporation in favor of Morgan
Guaranty Trust Company, as bank and lead agent.
10.4 Indenture, dated as of October 1, 1998, by and among CarrAmerica
Realty Corporation, as primary obligor, CarrAmerica Realty,
L.P., as guarantor, and Bankers Trust Company, as trustee
(incorporated by reference to Exhibit 4.1 to the Company's Form
8-K filed on October 2, 1998).
10.5 Amendment Agreement to Purchase Price Adjustment Agreement dated
July 8, 1998 by and between CarrAmerica Realty Corporation
and Merrill Lynch, Pierce, Fenner & Smith Incorporated.
10.6 Amendment Agreement to Purchase Price Adjustment Agreement dated
October 5, 1998 by and between CarrAmerica Realty Corporation
and Merrill Lynch, Pierce, Fenner & Smith Incorporated.
27.1 Financial Data Schedule - Nine Months Ended September 30, 1998.
27.2 Financial Data Schedule - Nine Months Ended September 30, 1997.
</TABLE>
Exhibit 10.1
================================================================================
FOURTH AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
dated as of August 27, 1998
among
CARRAMERICA REALTY CORPORATION,
CARR REALTY, L.P.,
CARRAMERICA REALTY, L.P.,
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Bank and as Lead Agent for the Banks,
J.P. MORGAN SECURITIES INC.,
as Syndication Agent,
COMMERZBANK AKTIENGESELLSCHAFT, NEW YORK BRANCH,
as Bank and as Managing Agent for the Banks,
NATIONSBANK, N.A.,
as Bank and as Managing Agent for the Banks,
PNC BANK, NATIONAL ASSOCIATION,
as Bank and as Managing Agent for the Banks,
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Bank and as Co-Agent for the Banks,
SOCIETE GENERALE, A FRENCH BANKING CORPORATION, ACTING
THROUGH ITS SOUTHWEST AGENCY,
as Bank and as Co-Agent for the Banks,
and
THE BANKS LISTED HEREIN
================================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS ........................................................... 2
SECTION 1.1. Definitions .................................... 2
SECTION 1.2. Accounting Terms and Determinations ............ 31
SECTION 1.3. Types of Borrowings ............................ 31
ARTICLE II
THE CREDITS ........................................................... 31
SECTION 2.1. Commitments to Lend ............................ 31
SECTION 2.2. Notice of Committed Borrowing .................. 32
SECTION 2.3. Money Market Borrowings ........................ 34
SECTION 2.4. Notice to Banks; Funding of Loans .............. 40
SECTION 2.5. Notes .......................................... 42
SECTION 2.6. Maturity of Loans .............................. 43
SECTION 2.7. Interest Rates ................................. 43
SECTION 2.8. Fees ........................................... 45
SECTION 2.9. Mandatory Termination .......................... 46
SECTION 2.10. Mandatory Prepayment ........................... 46
SECTION 2.11. Optional Prepayments ........................... 47
SECTION 2.12. General Provisions as to Payments .............. 49
SECTION 2.13. Funding Losses ................................. 50
SECTION 2.14. Computation of Interest and Fees ............... 51
SECTION 2.15. Method of Electing Interest Rates .............. 56
SECTION 2.16. Letters of Credit .............................. 53
SECTION 2.17. Letter of Credit Usage Absolute ................ 57
ARTICLE III
CONDITIONS ............................................................ 57
SECTION 3.1. Closing ........................................ 58
SECTION 3.2. Borrowings ..................................... 60
SECTION 3.3. New Acquisitions ............................... 61
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES ........................................ 61
SECTION 4.1. Existence and Power ............................ 62
SECTION 4.2. Existence and Power ............................ 62
SECTION 4.3. Power and Authority of Carr .................... 62
SECTION 4.4. Power and Authority of Carr LP ................. 62
SECTION 4.5. No Violation ................................... 63
SECTION 4.6. Financial Information .......................... 63
SECTION 4.7. Litigation ..................................... 64
SECTION 4.8. Compliance with ERISA .......................... 64
SECTION 4.9. Environmental Matters .......................... 65
SECTION 4.10. Taxes .......................................... 65
SECTION 4.11. Full Disclosure ................................ 66
SECTION 4.12. Solvency ....................................... 66
SECTION 4.13. Use of Proceeds; Margin Regulations ............ 66
SECTION 4.14. Governmental Approvals ......................... 66
SECTION 4.15. Investment Company Act; Public Utility
Holding Company Act ............................ 67
SECTION 4.16. Closing Date Transactions ...................... 67
SECTION 4.17. Representations and Warranties in Loan
Documents ...................................... 67
SECTION 4.18. Patents, Trademarks, etc ....................... 67
SECTION 4.19. No Default ..................................... 68
SECTION 4.20. Licenses, etc .................................. 68
SECTION 4.21. Compliance With Law ............................ 68
SECTION 4.22. No Burdensome Restrictions ..................... 68
SECTION 4.23. Brokers' Fees .................................. 68
SECTION 4.24. Labor Matters .................................. 69
SECTION 4.25. Organizational Documents ....................... 69
SECTION 4.26. Principal Offices .............................. 69
SECTION 4.27. REIT Status .................................... 69
SECTION 4.28. Ownership of Property .......................... 69
SECTION 4.29. Insurance ...................................... 70
SECTION 4.30. Year 2000 Compliance ........................... 70
ARTICLE V
AFFIRMATIVE AND NEGATIVE COVENANTS .................................... 70
SECTION 5.1. Information .................................... 70
SECTION 5.2. Payment of Obligations ......................... 75
SECTION 5.3. Maintenance of Property ........................ 75
SECTION 5.4. Conduct of Business ............................ 75
SECTION 5.5. Compliance with Laws ........................... 75
ii
<PAGE>
SECTION 5.6. Inspection of Property, Books and Records ...... 76
SECTION 5.7. Existence ...................................... 76
SECTION 5.8. Financial Covenants ............................ 76
SECTION 5.9. Restriction on Fundamental Changes ............. 78
SECTION 5.10. Changes in Business ............................ 79
SECTION 5.11. Fiscal Year; Fiscal Quarter .................... 79
SECTION 5.12. Margin Stock ................................... 79
SECTION 5.13. Sale of Unencumbered Asset Pool Properties ..... 79
SECTION 5.14. Liens .......................................... 79
SECTION 5.15 Use of Proceeds ................................ 80
SECTION 5.16 Development Activities ......................... 80
SECTION 5.17 Restrictions on Secured Debt ................... 81
SECTION 5.18. Carr's Status .................................. 81
SECTION 5.19 Certain Requirements for the Unencumbered
Asset Pool Properties .......................... 81
SECTION 5.20 Hedging Requirements ........................... 81
SECTION 5.21. Transfer of Real Property Assets ............... 82
SECTION 5.22. CarrAmerica Realty GP Holdings, Inc. ........... 82
iii
<PAGE>
ARTICLE VI
DEFAULTS .............................................................. 82
SECTION 6.1. Events of Default .............................. 82
SECTION 6.2. Rights and Remedies ............................ 86
SECTION 6.3. Notice of Default .............................. 87
SECTION 6.4. Actions in Respect of Letters of Credit ........ 87
ARTICLE VII
THE LEAD AGENT ........................................................ 90
SECTION 7.1. Appointment and Authorization .................. 90
SECTION 7.2. Lead Agent and Affiliates ...................... 90
SECTION 7.3. Action by Lead Agent ........................... 90
SECTION 7.4. Consultation with Experts ...................... 91
SECTION 7.5. Liability of Lead Agent ........................ 91
SECTION 7.6. Indemnification ................................ 91
SECTION 7.7. Credit Decision ................................ 92
SECTION 7.8. Successor Lead Agent ........................... 92
SECTION 7.9. Lead Agent's Fee ............................... 92
SECTION 7.10. Copies of Notices .............................. 92
SECTION 7.11. Removal of Lead Agent .......................... 93
ARTICLE VIII
CHANGE IN CIRCUMSTANCES ............................................... 93
SECTION 8.1. Basis for Determining Interest Rate
Inadequate or Unfair ........................... 93
SECTION 8.2. Illegality ..................................... 94
SECTION 8.3. Increased Cost and Reduced Return .............. 94
SECTION 8.4. Taxes .......................................... 96
SECTION 8.5. Base Rate Loans Substituted for Affected
Euro-Dollar Loans .............................. 99
ARTICLE IX
MISCELLANEOUS ......................................................... 100
SECTION 9.1. Notices ........................................ 100
SECTION 9.2. No Waivers ..................................... 100
SECTION 9.3. Expenses; Indemnification ...................... 100
SECTION 9.4. Sharing of Set-Offs ............................ 102
SECTION 9.5. Amendments and Waivers ......................... 104
iv
<PAGE>
SECTION 9.6. Successors and Assigns ......................... 105
SECTION 9.7. Governing Law; Submission to Jurisdiction ...... 108
Section 9.8. Marshalling; Recapture ......................... 109
SECTION 9.9. Counterparts; Integration; Effectiveness ....... 109
SECTION 9.10. WAIVER OF JURY TRIAL ........................... 110
SECTION 9.11. Survival ....................................... 110
SECTION 9.12. Domicile of Loans .............................. 110
SECTION 9.13. Limitation of Liability ........................ 110
SECTION 9.14. Confidentiality ................................ 110
SECTION 9.15. Agents ......................................... 111
SECTION 9.16. No Bankruptcy Proceedings ...................... 112
v
<PAGE>
FOURTH AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
FOURTH AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT, dated
as of August 27, 1998, among CARRAMERICA REALTY CORPORATION ("Carr"), CARR
REALTY, L.P. ("Carr LP"; Carr and Carr LP each, a "Borrower" and collectively,
the "Borrowers"), CARRAMERICA REALTY, L.P. ("CarrAmerica LP"), MORGAN GUARANTY
TRUST COMPANY OF NEW YORK, as Bank, Arranger and as Lead Agent for the Banks,
COMMERZBANK AKTIENGESELLSCHAFT, NEW YORK BRANCH, as Bank and as Managing Agent
for the Banks, NATIONSBANK, N.A., as Bank and as Managing Agent for the Banks,
PNC BANK, NATIONAL ASSOCIATION, as Bank and as Managing Agent for the Banks,
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Bank and as Co-Agent
for the Banks, and SOCIETE GENERALE, A FRENCH BANKING CORPORATION, ACTING
THROUGH ITS SOUTHWEST AGENCY, as Bank and as Co-Agent for the Banks
(collectively, the "Agents"), and the BANKS listed on the signature pages hereof
(the "Banks").
W I T N E S S E T H:
WHEREAS, the Borrowers, CarrAmerica LP and the Lead Agent
entered into the Revolving Credit Agreement, dated as of May 23, 1996 which was
amended and restated by the Borrowers, CarrAmerica LP, the Lead Agent, and the
Banks as that certain Amended and Restated Revolving Credit Agreement, dated as
of August 23, 1996, as amended by the First Amendment to Amended and Restated
Revolving Credit Agreement, dated as of October 18, 1996, the Second Amendment
to Amended and Restated Revolving Credit Agreement, dated as of March 31, 1997,
the Third Amendment to Amended and Restated Revolving Credit Agreement, dated as
of July 29, 1997, and the Second Amended and Restated Revolving Credit
Agreement, dated as of September 15, 1997, and the Third Amended and Restated
Revolving Credit Agreement, dated as of March 11, 1998, as amended by Amendment
to Third Amended and Restated Revolving Credit Agreement, dated as of July 1998
(collectively, the "Existing Credit Agreement"); and
2
<PAGE>
WHEREAS, the parties hereto have agreed to amend and restate
the terms and conditions contained in the Existing Credit Agreement in their
entirety as hereinafter set forth.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
I. The Existing Credit Agreement is hereby modified so that
all of the terms and conditions of the aforesaid Existing Credit Agreement shall
be restated in their entirety as set forth herein, and the Borrowers and
CarrAmerica LP agree to comply with and be subject to all of the terms,
covenants and conditions of this Agreement.
II. This Agreement shall be binding upon and inure to the
benefit of the parties hereto, and their respective successors and assigns, and
shall be deemed to be effective as of the date hereof.
III. Any reference in the Notes, any other Loan Document or
any other document executed in connection with this Agreement to the Existing
Credit Agreement shall be deemed to refer to this Agreement.
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. The following terms, as used herein,
have the following meanings:
"Absolute Rate Auction" means a solicitation of Money Market
Quotes setting forth Money Market Absolute Rates pursuant to Section 2.3.
"Adjusted London Interbank Offered Rate" has the meaning set
forth in Section 2.7(b).
"Administrative Questionnaire" means, with respect to each
Bank, an administrative questionnaire in the form prepared by the Lead Agent and
submitted to the Lead Agent (with a copy to the Borrowers) duly completed by
such Bank.
3
<PAGE>
"Agreement" means this Fourth Amended and Restated Revolving
Credit Agreement as the same may from time to time hereafter be modified,
supplemented or amended.
"Annual EBITDA" means, measured as of the last day of each
calendar quarter, an amount equal to (i) total revenues relating to all Real
Property Assets of the Borrowers and their Consolidated Subsidiaries or to the
Borrowers' interest in Minority Holdings for the previous four consecutive
calendar quarters including the quarter then ended, calculated in accordance
with GAAP, plus (ii) interest and other income of the Borrowers and their
Consolidated Subsidiaries, including, without limitation, real estate service
revenues, for such period, less (iii) total operating expenses and other
expenses relating to such Real Property Assets and to the Borrowers' interest in
Minority Holdings for such period (other than interest, income taxes,
depreciation, amortization, and other non-cash items), less (iv) total corporate
operating expenses (including general overhead expenses) and other expenses of
the Borrowers, their Consolidated Subsidiaries and the Borrowers' interest in
Minority Holdings (other than interest, taxes, depreciation, amortization and
other non-cash items), for such period.
"Applicable Interest Rate" means the lesser of (x) the rate at
which the interest rate applicable to any floating rate Indebtedness could be
fixed, at the time of calculation, by the applicable Borrower entering into an
unsecured interest rate swap agreement (or, if such rate is incapable of being
fixed by entering into an unsecured interest rate swap agreement at the time of
calculation, a reasonably determined fixed rate equivalent), and (y) the rate at
which the interest rate applicable to such floating rate Indebtedness is
actually capped, at the time of calculation, if such Borrower has entered into
an interest rate cap agreement with respect thereto.
"Applicable Lending Office" means, with respect to any Bank,
(i) in the case of its Base Rate Loans, its Domestic Lending Office, (ii) in the
case of its Euro-Dollar Loans, its Euro-Dollar Lending Office and (iii) in the
case of its Money Market Loans, its Money Market Lending Office.
4
<PAGE>
"Applicable Margin" means, with respect to each Loan, the
respective percentages per annum determined based on the range into which the
rating or "shadow" rating on Carr's senior long-term unsecured debt then falls,
in accordance with the following table. Any change in Carr's Investment Grade
Rating causing it to move to a different range on the table shall effect an
immediate change in the Applicable Margin. In the event that Carr receives two
(2) Investment Grade Ratings that are not equivalent, the Applicable Margin
shall be determined by the lower of such two (2) Investment Grade Ratings, at
least one of which shall be an Investment Grade Rating from S&P or Moody's. In
the event Carr receives more than two (2) ratings (from S&P, Moody's, Duff &
Phelps or Fitch) and such ratings are not equivalent, the Applicable Margin
shall be determined by the lower of the two highest ratings; provided that each
of said two (2) highest ratings shall be Investment Grade Ratings and at least
one of which shall be an Investment Grade Rating from S&P or Moody's.
Range of Applicable
Carr's Margin for Applicable
Credit Rating Base Rate Margin for Euro
(S&P/Moody's Loans Dollar Loans
Ratings) (% per annum) (% per annum)
- -------- ------------- -------------
BBB-/Baa3 0 .80
BBB/Baa2 0 .70
BBB+/Baa1 0 .55
The Applicable Margin for so long as Carr shall not have
obtained two Investment Grade Ratings (at least one of which shall be from S&P
or Moody's) or after Borrower loses its Investment Grade Rating, shall be as
follows:
Applicable
Margin for Applicable
Base Rate Margin for Euro
Loans Dollar Loans
(% per annum) (% per annum)
------------- -------------
0 1.175
5
<PAGE>
In addition, the Applicable Margin shall be increased if at
any time Borrowers LTV Ratio shall exceed 50%, as follows:
Borrowers LTV Ratio Borrowers LTV Ratio
>50% < or = 55% >55% < or = 60%
(% per annum) (% per annum)
------------------- -------------------
.15 .30
Lead Agent shall notify the Banks in writing promptly after it
obtains knowledge of any change in Carr's Investment Grade Rating or in
Borrowers LTV Ratio which shall effect a change in the Applicable Margin.
"Assignee" has the meaning set forth in Section 9.6(c).
"Bank" means each bank listed on the signature pages hereof,
each Assignee which becomes a Bank pursuant to Section 9.6(c), and their
respective successors and each Designated Lender; provided, however, that the
term "Bank" shall exclude each Designated Lender when used in reference to a
Committed Loan, the Commitments or terms relating to the Committed Loans and the
Commitments and shall further exclude each Designated Lender for all other
purposes hereunder except that any Designated Lender which funds a Money Market
Loan shall, subject to Section 9.6(d), have the rights (including the rights
given to a Bank contained in Section 9.3 and otherwise in Article 9) and
obligations of a Bank associated with holding such Money Market Loan.
"Bankruptcy Code" means Title 11 of the United States Code,
entitled "Bankruptcy", as amended from time to time, and any successor statute
or statutes.
"Base Rate" means, for any day, a rate per annum equal to the
higher of (i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the
Federal Funds Rate for such day.
"Base Rate Loan" means a Committed Loan to be made by a Bank
as a Base Rate Loan in accordance with the applicable Notice of Committed
Borrowing or pursuant to Article VIII.
6
<PAGE>
"Benefit Arrangement" means at any time an employee benefit
plan within the meaning of Section 3(3) of ERISA which is not a Plan or a
Multiemployer Plan and which is maintained or otherwise contributed to by any
member of the ERISA Group.
"Borrower" means either (i) Carr and its successors or (ii)
Carr LP and its successors, and, collectively, "Borrowers" shall mean both
Borrowers.
"Borrowers LTV Ratio" means the ratio, expressed as a
percentage and calculated on a quarterly basis by Carr, of the aggregate amount
of all Unsecured Debt (inclusive of the Loans) of Borrowers, CarrAmerica LP,
their Consolidated Subsidiaries and Borrowers' and CarrAmerica LP's pro rata
share of all Unsecured Debt of any Subsidiaries which are not Consolidated
Subsidiaries outstanding as of the date of determination, to the Unencumbered
Asset Pool Properties Value as of the date of determination.
"Borrowing" means a borrowing hereunder consisting of Loans
made to the Borrowers or CarrAmerica LP at the same time by the Banks pursuant
to Article II. A Borrowing is a "Domestic Borrowing" if such Loans are Base Rate
Loans, a "Euro-Dollar Borrowing" if such Loans are Euro-Dollar Loans or a "Money
Market Borrowing" if such Loans are Money Market Loans.
"Capital Expenditures" means, for any period, the sum of all
expenditures (whether paid in cash or accrued as a liability) by Carr, Carr LP
or CarrAmerica LP, as applicable, which are capitalized on the consolidated
balance sheet of such Borrower or CarrAmerica LP in conformity with GAAP, but
less all expenditures made with respect to the acquisition by Carr or Carr LP
and their Consolidated Subsidiaries of any interest in real property within nine
months after the date such interest in real property is acquired.
"Carr LP LTV Ratio" means the ratio, expressed as a percentage
and calculated on a quarterly basis by Carr LP, of the aggregate amount of the
sum of the Tranche B Loans outstanding and all other Unsecured Debt of Carr LP
and its Consolidated Subsidiaries and Carr LP's pro rata share of all Unsecured
Debt of any Subsidiaries which are not Consolidated Subsidiaries of Carr LP as
of the date of determination, to the Carr LP Unencumbered Asset Pool Properties
Value as of the date of determination.
7
<PAGE>
"Carr LP Maximum Total Debt Ratio" means the ratio as of the
date of determination of (i) the sum of (x) the aggregate Debt of Carr LP and
its Consolidated Subsidiaries and (y) Carr LP's pro rata share of the Debt of
any Subsidiaries of Carr LP which are not Consolidated Subsidiaries, at the time
of determination to (ii) Carr LP Tangible FMV.
"Carr LP Tangible FMV" means the sum of (x) (i) with respect
to Real Property Assets owned by Carr LP or its Consolidated Subsidiaries for a
period of at least six months, the quotient of Net Operating Income with respect
to such Real Property Assets determined as of the last day of the previous
calendar quarter, less reserves for Capital Expenditures of $.50 per square foot
per annum for Real Property Asset, as divided by the FMV Cap Rate, and (ii) with
respect to Real Property Assets owned by Carr LP or its Consolidated
Subsidiaries for a period of less than six months, the purchase price of such
Real Property Assets, (y) with respect to any Qualified Development Properties,
40% of the costs incurred in connection therewith, and (z) Cash or Cash
Equivalents of Carr LP and its Consolidated Subsidiaries as of the date of
determination.
"Carr LP Unencumbered Asset Pool Properties" means, as of any
date, the Real Property Assets listed in Exhibit B-2 attached hereto and made a
part hereof, each of which is 100% owned in fee (or leasehold in the case of
assets listed as such on Exhibit B-2) by Carr LP or any Consolidated Subsidiary
of Carr LP and each of which is not subject to any Lien (other than Permitted
Liens), subject to adjustment as set forth herein, together with all New
Acquisitions or Real Property Assets which have become part of the Carr LP
Unencumbered Asset Pool Properties as of such date in accordance with Section
3.3 and excluding any Carr LP Unencumbered Asset Pool Properties which have been
released from this Agreement and the other Loan Documents as of such date in
accordance with Sections 5.13 and 5.14 and all other terms of this Agreement.
"Carr LP Unencumbered Asset Pool Properties Value" means the
aggregate of (i) with respect to the Carr LP Unencumbered Asset Pool Properties
owned by Carr LP or any of its Consolidated Subsidiaries for a period of at
least six months, the quotient of (x) Net Operating Income with respect to the
Carr LP Unencumbered Asset Pool Properties less reserves for Capital
Expenditures of $.50 per square foot per annum for each Carr LP Unencumbered
Asset Pool Property and (y) the FMV Cap Rate and (ii) with respect to the Carr
LP Unencumbered Asset Pool Properties owned by Carr LP or any of its
Consolidated Subsidiaries for a period of less than six months, the lesser of
(A) the quotient of (x) Net Operating Income with respect to the Carr LP
Unencumbered Asset Pool Properties less reserves for Capital Expenditures of
$.50 per square foot per annum for each Carr LP Unencumbered Asset Pool Property
and (y) the FMV Cap Rate and (B) the purchase price of such Carr LP Unencumbered
Asset Pool Property, and (iii) with respect to any Qualified Development
Properties, 40% of the costs incurred in connection therewith.
8
<PAGE>
"Carr LTV Ratio" means the ratio, expressed as a percentage
and calculated on a quarterly basis by Carr, of the aggregate amount of the sum
of the Tranche A Loans and all other Unsecured Debt of Carr and its Consolidated
Subsidiaries (other than Carr LP) and Carr's pro rata share of all Unsecured
Debt of any Subsidiaries which are not Consolidated Subsidiaries of Carr (other
than Subsidiaries which are not Consolidated Subsidiaries of Carr LP),
outstanding as of the date of determination, to the Carr Unencumbered Asset Pool
Properties Value as of the date of determination.
"Carr Maximum Total Debt Ratio" means the ratio as of the date
of determination of (i) the sum of (x) the aggregate Debt of Carr and its
Consolidated Subsidiaries (other than Carr LP) and (y) Carr's pro rata share of
the Debt of any Subsidiaries of Carr which are not Consolidated Subsidiaries
(other than Subsidiaries which are not Consolidated Subsidiaries of Carr LP), at
the time of determination to (ii) Carr Tangible FMV.
"Carr Tangible FMV" means the sum of (x) (i) with respect to
Real Property Assets owned by Carr or its Consolidated Subsidiaries (other than
Carr LP) for a period of at least six months, the quotient of Net Operating
Income with respect to such Real Property Assets determined as of the last day
of the previous calendar quarter, less reserves for Capital Expenditures of $.50
per square foot per annum for each Real Property Asset, as divided by the FMV
Cap Rate, and (ii) with respect to Real Property Assets owned by Carr or its
Consolidated Subsidiaries (other than Carr LP) for a period of less than six
months, the purchase price of such Real Property Assets, (y) with respect to any
Qualified Development Properties, 40% of the costs incurred in connection
therewith, and (z) Cash or Cash Equivalents of Carr and its Consolidated
Subsidiaries (other than Carr LP) as of the date of determination.
"Carr Unencumbered Asset Pool Properties" means, as of any
date, the Real Property Assets listed in Exhibit B-1 attached hereto and made a
part hereof, each of which is 100% owned in fee (or leasehold in the case of
assets listed as such on Exhibit B-1) by Carr or any Consolidated Subsidiary of
Carr (other than Carr LP) and each of which is not subject to any Lien (other
than Permitted Liens), subject to adjustment as set forth herein, together with
all New Acquisitions or Real Property Assets which have become part of the Carr
Unencumbered Asset Pool Properties as of such date in accordance with Section
3.3 and excluding any Carr Unencumbered Asset Pool Properties which have been
released from this Agreement and the other Loan Documents as of such date in
accordance with Sections 5.13 and 5.14 and all other terms of this Agreement.
9
<PAGE>
"Carr Unencumbered Asset Pool Properties Value" means the
aggregate of (i) with respect to the Carr Unencumbered Asset Pool Properties
owned by Carr or any of its Consolidated Subsidiaries (other than Carr LP) for a
period of at least six months, the quotient of (x) Net Operating Income with
respect to the Carr Unencumbered Asset Pool Properties less reserves for Capital
Expenditures of $.50 per square foot per annum for each Carr Unencumbered Asset
Pool Property and (y) the FMV Cap Rate and (ii) with respect to the Carr
Unencumbered Asset Pool Properties owned by Carr or any of its Consolidated
Subsidiaries (other than Carr LP) for a period of less than six months, the
lesser of (A) the quotient of (x) Net Operating Income with respect to the Carr
Unencumbered Asset Pool Properties less reserves of $.50 per square foot per
annum for each Carr Unencumbered Asset Pool Property and (y) the FMV Cap Rate
and (B) the purchase price of such Carr Unencumbered Asset Pool Property, and
(iii) with respect to any Qualified Development Properties, 40% of the costs
incurred in connection therewith.
"Cash or Cash Equivalents" means (i) cash, (ii) direct
obligations of the United States Government, including, without limitation,
treasury bills, notes and bonds, (iii) interest bearing or discounted
obligations of Federal agencies and Government sponsored entities or pools of
such instruments offered by banks rated AA or better by S&P or Aa2 by Moody's
and dealers, including, without limitation, Federal Home Loan Mortgage
Corporation participation sale certificates, Government National Mortgage
Association modified pass-through certificates, Federal National Mortgage
Association bonds and notes, Federal Farm Credit System securities, (iv) time
deposits, domestic and Eurodollar certificates of deposit, bankers acceptances,
commercial paper rated at least A-1 by S&P and P-1 by Moody's, and/or guaranteed
by an Aa rating by Moody's, an AA rating by S&P, or better rated credit,
floating rate notes, other money market instruments and letters of credit each
issued by banks which have a long-term debt rating of at least AA by S&P or Aa2
by Moody's, (v) obligations of domestic corporations, including, without
limitation, commercial paper, bonds, debentures, and loan participations, each
of which is rated at least AA by S&P, and/or Aa2 by Moody's, and/or
unconditionally guaranteed by an AA rating by S&P, an Aa2 rating by Moody's, or
better rated credit, (vi) obligations issued by states and local governments or
their agencies, rated at least MIG-1 by Moody's and/or SP-1 by S&P and/or
guaranteed by an irrevocable letter of credit of a bank with a long-term debt
rating of at least AA by S&P or Aa2 by Moody's, (vii) repurchase agreements with
major banks and primary government securities dealers fully secured by U.S.
Government or agency collateral equal to or exceeding the principal amount on a
daily basis and held in safekeeping, and (viii) real estate loan pool
participations, guaranteed by an entity with an AA rating given by S&P or an Aa2
rating given by Moody's, or better rated credit.
10
<PAGE>
"Closing Date" means the date on which the Lead Agent shall
have received the documents specified in or pursuant to Section 3.1.
"Commitment" means, collectively, the Tranche A Commitment and
the Tranche B Commitment with respect to each Bank.
"Committed Loan" means a Loan made by a Bank pursuant to
Section 2.1; provided that, if any such Loan or Loans (or portions thereof) are
combined or subdivided pursuant to a Notice of Interest Rate Election, the term
"Committed Loan" shall refer to the combined principal amount resulting from
such combination or to each of the separate principal amounts resulting from
such subdivision, as the case may be.
"Consolidated Subsidiary" means at any date any Subsidiary or
other entity which is consolidated with either Borrower in accordance with GAAP.
"Consolidated Tangible Net Worth" means at any date the
consolidated stockholders' equity of Carr (determined on a book basis), less its
consolidated Intangible Assets, all determined as of such date. For purposes of
this definition "Intangible Assets" means with respect to any such intangible
assets, the amount (to the extent reflected in determining such consolidated
stockholders' equity) of all write-ups subsequent to December 31, 1995 in the
book value of any asset owned by either Borrower or a Consolidated Subsidiary
and (ii) goodwill, patents, trademarks, service marks, trade names, anticipated
future benefit of tax loss carry forwards, copyrights, organization or
developmental expenses and other intangible assets.
11
<PAGE>
"Contingent Obligation" as to any Person means, without
duplication, (i) any contingent obligation of such Person required to be shown
on such Person's balance sheet in accordance with GAAP, and (ii) any obligation
required to be disclosed in the footnotes to such Person's financial statements,
guaranteeing partially or in whole any non-recourse Debt, lease, dividend or
other obligation, exclusive of contractual indemnities (including, without
limitation, any indemnity or price-adjustment provision relating to the purchase
or sale of securities or other assets) and guarantees of non-monetary
obligations (other than guarantees of completion) which have not yet been called
on or quantified, of such Person or of any other Person. The amount of any
Contingent Obligation described in clause (ii) shall be deemed to be (a) with
respect to a guaranty of interest or interest and principal, or operating income
guaranty, the sum of all payments required to be made thereunder (which in the
case of an operating income guaranty shall be deemed to be equal to the debt
service for the note secured thereby), calculated at the Applicable Interest
Rate, through (i) in the case of an interest or interest and principal guaranty,
the stated date of maturity of the obligation (and commencing on the date
interest could first be payable thereunder), or (ii) in the case of an operating
income guaranty, the date through which such guaranty will remain in effect, and
(b) with respect to all guarantees not covered by the preceding clause (a), an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such guaranty is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof (assuming such
Person is required to perform thereunder) as recorded on the balance sheet and
on the footnotes to the most recent financial statements of the applicable
Borrower required to be delivered pursuant to Section 5.1 hereof.
Notwithstanding anything contained herein to the contrary, guarantees of
completion shall not be deemed to be Contingent Obligations unless and until a
claim for payment or performance has been made thereunder, at which time any
such guaranty of completion shall be deemed to be a Contingent Obligation in an
amount equal to any such claim. Subject to the preceding sentence, (i) in the
case of a joint and several guaranty given by such Person and another Person
(but only to the extent such guaranty is recourse, directly or indirectly to the
applicable Borrower), the amount of the guaranty shall be deemed to be 100%
thereof unless and only to the extent that such other Person has delivered Cash
or Cash Equivalents to secure all or any part of such Person's guaranteed
obligations, (ii) in the case of joint and several guarantees given by a Person
in whom the applicable Borrower owns an interest (which guarantees are
non-recourse to the applicable Borrower), to the extent the guarantees, in the
aggregate, exceed 15% of total real estate investments, the amount in excess of
15% shall be deemed to be a Contingent Obligation of the applicable Borrower,
and (iii) in the case of a guaranty (whether or not joint and several) of an
obligation otherwise constituting Debt of such Person, the amount of such
guaranty shall be deemed to be only that amount in excess of the amount of the
obligation constituting Debt of such Person. Notwithstanding anything contained
herein to the contrary, "Contingent Obligations" shall not be deemed to include
guarantees of Unused Commitments or of construction loans to the extent the same
have not been drawn.
12
<PAGE>
"Credit Rating" means the ratings assigned by not less than
two of the Rating Agencies (at least one of which shall be S&P or Moody's) to
Carr's senior long-term unsecured indebtedness.
"Debt" of any Person means, without duplication, (A) as shown
on such Person's consolidated balance sheet (i) all indebtedness of such Person
for borrowed money or for the deferred purchase price of property and, (ii) all
indebtedness of such Person evidenced by a note, bond, debenture or similar
instrument (whether or not disbursed in full in the case of a construction
loan), (B) the face amount of all letters of credit issued for the account of
such Person and, without duplication, all unreimbursed amounts drawn thereunder,
(C) all Contingent Obligations of such Person, (D) all payment obligations of
such Person under any interest rate protection agreement (including, without
limitation, any interest rate swaps, caps, floors, collars and similar
agreements) and currency swaps and similar agreements which were not entered
into specifically in connection with Debt set forth in clauses (A), (B) or (C)
hereof. For purposes of this Agreement, Debt (other than Contingent Obligations)
of the applicable Borrower shall be deemed to include only the applicable
Borrower's pro rata share (such share being based upon the applicable Borrower's
percentage ownership interest as shown on the applicable Borrower's annual
audited financial statements) of the Debt of any Person in which the applicable
Borrower, directly or indirectly, owns an interest, provided that such Debt is
nonrecourse, both directly and indirectly, to the applicable Borrower.
"Debt Service" means, measured as of the last day of each
calendar quarter, an amount equal to the sum of (i) interest (whether accrued,
paid or capitalized) actually payable by either Borrower or the Borrowers on its
Debt for the previous four consecutive quarters including the quarter then
ended, plus (ii) scheduled payments of principal on such Debt, whether or not
paid by either Borrower or the Borrowers (excluding balloon payments) for the
previous four consecutive quarters including the quarter then ended.
13
<PAGE>
"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.
"Designated Lender" means a special purpose corporation that
(i) shall have become a party to this Agreement pursuant to Section 9.6(d), and
(ii) is not otherwise a Bank.
"Designated Lender Notes" means promissory notes of the
Borrower, substantially in the form of Exhibit A-3 and Exhibit A-4 hereto,
evidencing the obligation of the Borrower to repay Money Market Loans made by
Designated Lenders, and "Designated Lender Note" means any one of such
promissory notes issued under Section 9.6(d) hereof.
"Designating Lender" has the meaning set forth in Section
9.6(d) hereof.
"Designation Agreement" means a designation agreement in
substantially the form of Exhibit G attached hereto, entered into by a Bank and
a Designated Lender and accepted by the Lead Agent.
"Domestic Business Day" means any day except a Saturday,
Sunday or other day on which commercial banks in New York City are authorized by
law to close.
"Domestic Lending Office" means, as to each Bank, its office
located within the United States at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its Domestic
Lending Office) or such other office within the United States as such Bank may
hereafter designate as its Domestic Lending Office by notice to the Borrowers
and the Lead Agent.
"Duff & Phelps" means Duff & Phelps Credit Rating Co. or any
successor thereto.
"Environmental Affiliate" means any partnership, or joint
venture, trust or corporation in which an equity interest is owned by either
Borrower or CarrAmerica LP, either directly or indirectly.
14
<PAGE>
"Environmental Approvals" means any permit, license, approval,
ruling, variance, exemption or other authorization required under applicable
Environmental Laws.
"Environmental Claim" means, with respect to any Person, any
notice, claim, demand or similar communication (written or oral) by any other
Person alleging potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damage, property damages,
personal injuries, fines or penalties arising out of, based on or resulting from
(i) the presence, or release into the environment, of any Material of
Environmental Concern at any location, whether or not owned by such Person or
(ii) circumstances forming the basis of any violation, or alleged violation, of
any Environmental Law, in each case as to which there is a reasonable likelihood
of an adverse determination with respect thereto and which, if adversely
determined, would have a Material Adverse Effect.
"Environmental Laws" means any and all federal, state, local
and foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating to
the environment, the effect of the environment on human health or to emissions,
discharges or releases of pollutants, contaminants, Hazardous Substances or
hazardous 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
hazardous 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 the Borrowers, any Subsidiary and all
members of a controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control which, together with the
Borrowers or any Subsidiary, are treated as a single employer under Section 414
of the Internal Revenue Code.
"Euro-Dollar Borrowing" has the meaning set forth in Section
1.3.
15
<PAGE>
"Euro-Dollar Business Day" means any Domestic Business Day on
which commercial banks are open for international business (including dealings
in dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Bank, its
office, branch or affiliate located at its address set forth in its
Administrative Questionnaire (or identified in its Administrative Questionnaire
as its Euro-Dollar Lending Office) or such other office, branch or affiliate of
such Bank as it may hereafter designate as its Euro-Dollar Lending Office by
notice to the Borrowers and the Lead Agent.
"Euro-Dollar Loan" means a Committed Loan to be made by a Bank
as a Euro-Dollar Loan in accordance with the applicable Notice of Committed
Borrowing or Notice of Interest Rate Election.
"Euro-Dollar Reserve Percentage" has the meaning set forth in
Section 2.7(b).
"Event of Default" has the meaning set forth in Section 6.1.
"Facility Fee" has the meaning set forth in Section 2.8(a).
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upward, if necessary, to the nearest 1/100th of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Domestic
Business Day next succeeding such day, provided that (i) if such day is not a
Domestic Business Day, the Federal Funds Rate for such day shall be such rate on
such transactions on the next preceding Domestic Business Day as so published on
the next succeeding Domestic Business Day, and (ii) if no such rate is so
published on such next succeeding Domestic Business Day, the Federal Funds Rate
for such day shall be the average rate quoted to Morgan Guaranty Trust Company
of New York on such day on such transactions as determined by the Lead Agent.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System as constituted from time to time.
16
<PAGE>
"FFO" means "funds from operations," defined to mean net
income (loss) (computed in accordance with GAAP), excluding gains (or losses)
from debt restructurings and sales of properties, plus depreciation and
amortization, after adjustments for Minority Holdings. Adjustments for Minority
Holdings will be calculated to reflect FFO on the same basis.
"Fitch" means Fitch Investors Services, L.P. or any successor
thereto.
"FMV Cap Rate" means 9%.
"Fronting Bank" shall mean Morgan or such other Bank which
Borrower is notified by the Lead Agent may be a Fronting Bank and which is
designated by Borrower in its Notice of Borrowing as the Bank which shall issue
a Letter of Credit with respect to such Notice of Borrowing.
"GAAP" means generally accepted accounting principles
recognized as such in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and
Board or in such other statements by such other entity as may be approved by a
significant segment of the accounting profession, which are applicable to the
circumstances as of the date of determination.
"Group of Loans" means, at any time, a group of Loans
consisting of (i) all Committed Loans which are Base Rate Loans at such time or
(ii) all Committed Loans which are Euro-Dollar Loans having the same Interest
Period at such time; provided that, if a Committed Loan of any particular Bank
is converted to or made as a Base Rate Loan pursuant to Section 8.2 or 8.4, such
Loan shall be included in the same Group or Groups of Loans from time to time as
it would have been in if it had not been so converted or made.
"Hazardous Substances" means any toxic, radioactive, caustic
or otherwise hazardous substance, including petroleum, its derivatives,
by-products and other hydrocarbons, or any substance having any constituent
elements displaying any of the foregoing characteristics.
"Indemnitee" has the meaning set forth in Section 9.3(b).
17
<PAGE>
"Interest Period" means: (1) with respect to each Euro-Dollar
Borrowing, the period commencing on the date of such Borrowing specified in the
Notice of Committed Borrowing or the date of continuation or conversion
specified in the Notice of Interest Rate Election, as the case may be, and
ending one, two, three or six months thereafter, as each Borrower or CarrAmerica
LP, as the case may be, may elect in the applicable Notice of Committed
Borrowing or in the Notice of Interest Rate Election; provided that:
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business
Day falls in another calendar month, in which case such Interest Period
shall end on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month;
(c) if any Interest Period includes a date on which a payment
of principal of the Loans is required to be made under Section 2.10 but
does not end on such date, then (i) the principal amount (if any) of
each Euro-Dollar Loan required to be repaid on such date shall have an
Interest Period ending on such date and (ii) the remainder (if any) of
each such Euro-Dollar Loan shall have an Interest Period determined as
set forth above; and
(d) no Interest Period shall end after the Maturity Date.
(2) with respect to each Base Rate Borrowing, the period commencing on the date
of such Borrowing specified in the Notice of Committed Borrowing or the date of
conversion specified in the Notice of Interest Rate Election, as the case may
be, and ending 30 days thereafter; provided that:
(a) any Interest Period (other than an Interest Period
determined pursuant to clause (c)(i) above) which would otherwise end
on a day which is not a Euro-Dollar Business Day shall be extended to
the next succeeding Euro-Dollar Business Day; and
18
<PAGE>
(b) if any Interest Period includes a date on which a payment
of principal of the Loans is required to be made under Section 2.10 but
does not end on such date, then (i) the principal amount (if any) of
each Base Rate Loan required to be repaid on such date shall have an
Interest Period ending on such date and (ii) the remainder (if any) of
each such Base Rate Loan shall have an Interest Period determined as
set forth above; and
(c) any Interest Period which would otherwise end after the
Maturity Date shall end on the Maturity Date.
(3) with respect to each Money Market LIBOR Loan, the period commencing on the
date of such Borrowing specified in the applicable Notice of Money Market
Borrowing and ending one, two, three or six months thereafter, as the Borrower
may elect in the applicable Notice of Money Market Borrowing in accordance with
Section 2.3; provided that:
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business
Day falls in another calendar month, in which case such Interest Period
shall end on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, subject to clause (c) below, end on the last
Euro-Dollar Business Day of a calendar month;
(c) if any Interest Period includes a date on which a payment
of principal of the Loans is required to be made under Section 2.10 but
does not end on such date, then (i) the principal amount (if any) of
each Money Market LIBOR Loan required to be repaid on such date shall
have an Interest Period ending on such date, and (ii) the remainder (if
any) of each such Money Market LIBOR Loan shall have an Interest Period
determined as set forth above; and
19
<PAGE>
(d) any Interest Period which would otherwise end after the
Maturity Date shall end on the Maturity Date.
(4) with respect to each Money Market Absolute Rate Loan, the period commencing
on the date of such Borrowing specified in the applicable Notice of Money Market
Borrowing and ending such number of days thereafter (but not less than 14 days
or more than 180 days) as the Borrower may elect in the applicable Notice of
Money Market Borrowing in accordance with Section 2.3; provided that:
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day; and
(b) if any Interest Period includes a date on which a payment
of principal of the Loans is required to be made under Section 2.10 but
does not end on such date, then (i) the principal amount (if any) of
each Money Market Absolute Rate Loan required to be repaid on such date
shall have an Interest Period ending on such date, and (ii) the
remainder (if any) of each such Money Market Absolute Rate Loan shall
have an Interest Period determined as set forth above; and
(c) any Interest Period which would otherwise end after the
Maturity Date shall end on the Maturity Date.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended, or any successor statute.
"Investment Grade Rating" means a rating for a Person's senior
long-term unsecured debt, or if no such rating has been issued, a "shadow"
rating, of BBB- or better from S&P, and a rating or "shadow" rating of Baa3 or
better from Moody's or a rating or "shadow" rating equivalent to the foregoing
from either Duff & Phelps or Fitch. Any such "shadow" rating shall be evidenced
by a letter from the applicable Rating Agency or by such other evidence as may
be reasonably acceptable to the Required Banks.
"Invitation for Money Market Quotes" has the meaning set forth
in Section 2.3.
20
<PAGE>
"Lead Agent" means Morgan Guaranty Trust Company of New York
in its capacity as Lead Agent for the Banks hereunder, and its successors in
such capacity.
"Letter(s) of Credit" has the meaning provided in Section
2.2(b).
"Letter of Credit Collateral" has the meaning provided in
Section 6.4.
"Letter of Credit Collateral Account" has the meaning provided
in Section 6.4.
"Letter of Credit Documents" has the meaning provided in
Section 2.17.
"Letter of Credit Usage" means at any time the sum of (i) the
aggregate maximum amount available to be drawn under the Letters of Credit then
outstanding, assuming compliance with all requirements for drawing referred to
therein, and (ii) the aggregate amount of the Borrowers' unpaid obligations
under this Agreement in respect of the Letters of Credit.
"LIBOR Auction" means a solicitation of Money Market Quotes
setting forth Money Market Margins based on the London Interbank Offered Rate
pursuant to Section 2.3.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind, or any other type
of preferential arrangement that has the practical effect of creating a security
interest, in respect of such asset. For the purposes of this Agreement, each of
the Borrowers or any Subsidiary shall be deemed to own subject to a Lien any
asset which it has acquired or holds subject to the interest of a vendor or
lessor under any conditional sale agreement, capital lease or other title
retention agreement relating to such asset.
"Loan" means a Base Rate Loan, a Euro-Dollar Loan or a Money
Market Loan and "Loans" means Base Rate Loans, Euro-Dollar Loans or Money Market
Loans or any combination of the foregoing.
21
<PAGE>
"Loan Amount" means the aggregate of the Tranche A Loan Amount
and the Tranche B Loan Amount.
"Loan Documents" means this Agreement, the Notes, Letters of
Credit and Letter of Credit Documents.
"London Interbank Offered Rate" has the meaning set forth in
Section 2.7(b).
"Margin Stock" shall have the meaning provided such term in
Regulation U of the Federal Reserve Board.
"Material Adverse Effect" means a material adverse effect upon
(i) the business, operations, properties or assets of either Borrower or (ii)
the ability of either Borrower to perform its obligations hereunder in all
material respects, including to pay interest and principal.
"Material Plan" means at any time a Plan or Plans having
aggregate Unfunded Liabilities in excess of $5,000,000.
"Materials of Environmental Concern" means and includes
pollutants, contaminants, hazardous wastes, toxic and hazardous substances,
petroleum and petroleum by-products.
"Maturity Date" has the meaning set forth in Section 2.9.
"Maximum Total Debt Ratio" means the ratio as of the date of
determination of (i) the sum of (x) the aggregate Debt of the Borrowers and
their Consolidated Subsidiaries and (y) the Borrowers' pro rata share of the
Debt of any Subsidiaries of the Borrowers which are not Consolidated
Subsidiaries, at the time of determination to (ii) the Tangible FMV of the
Borrowers and their Consolidated Subsidiaries.
"Minority Holdings" means partnerships, limited liability
companies and corporations held or owned by either Borrower which are not
consolidated with such Borrower on such Borrower's financial statements, other
than Bond Texas Limited Partnership, Carr Square 225 Associates, 1717
Pennsylvania, LLC, CCJMI Associates and Phase I 456 Associates.
22
<PAGE>
"Money Market Absolute Rate" has the meaning set forth in
Section 2.3(d).
"Money Market Absolute Rate Loan" means a loan to be made by a
Bank pursuant to an Absolute Rate Auction.
"Money Market Lending Office" means, as to each Bank, its
Domestic Lending Office or such other office, branch or affiliate of such Bank
as it may hereafter designate as its Money Market Lending Office by notice to
the Borrower and the Lead Agent; provided that any Bank may from time to time by
notice to the Borrower and the Lead Agent designate separate Money Market
Lending Offices for its Money Market LIBOR Loans, on the one hand, and its Money
Market Absolute Rate Loans, on the other hand, in which case all references
herein to the Money Market Lending Office of such Bank shall be deemed to refer
to either or both of such offices, as the context may require.
"Money Market LIBOR Loan" means a loan to be made by a Bank
pursuant to a LIBOR Auction (including such a loan bearing interest at the Base
Rate pursuant to Section 2.3).
"Money Market Loan" means a Money Market LIBOR Loan or a Money
Market Absolute Rate Loan.
"Money Market Margin" has the meaning set forth in Section
2.3.
"Money Market Quote" means an offer by a Bank to make a Money
Market Loan in accordance with Section 2.3.
"Money Market Quote Request" has the meaning set forth in
Section 2.3.
"Moody's" means Moody's Investors Service, Inc. or any
successor thereto.
"Morgan" means Morgan Guaranty Trust Company of New York, in
its individual capacity.
"Multiemployer Plan" means at any time an employee pension
benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any
member of the ERISA Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made contributions,
including for these purposes any Person which ceased to be a member of the ERISA
Group during such five year period.
23
<PAGE>
"Net Offering Proceeds" means all cash or other assets
received by Carr or Carr LP or CarrAmerica LP as a result of the sale of common
stock, preferred stock, partnership interests, limited liability company
interests, Convertible Securities or other ownership or equity interests in Carr
or Carr LP less customary costs and discounts of issuance paid by Carr or Carr
LP, as the case may be.
"Net Operating Cash Flow" means, as of any date of
determination, with respect to all Real Property Assets and Minority Holdings of
Carr and its Consolidated Subsidiaries, the product of (A) Property Income for
the previous quarter in the case of all Real Property Assets of Carr and its
Consolidated Subsidiaries, and Carr's pro rata share in the case of Minority
Holdings, but less (x) Property Expenses (or in the case of Minority Holdings,
Carr's pro rata share thereof) for the previous quarter and (y) the greater of
(i) Capital Expenditures which are not related to new construction for the
previous quarter, and (ii) reserves for such quarter for Capital Expenditures of
$1.50 per square foot per annum for each Real Property Asset, and (B) four (4).
"Net Operating Income" means as of any date of determination
with respect to any Real Property Asset, the product of (A) Property Income for
the previous quarter, but less Property Expenses for the previous quarter and
(B) four (4).
"New Acquisition" has the meaning set forth in Section 5.15.
"Non-Recourse Debt" means Debt of either Borrower on a
consolidated basis for which the right of recovery of the obligee thereof is
limited to recourse against the Real Property Assets securing such Debt (subject
to such limited exceptions to the non-recourse nature of such Debt such as
fraud, misappropriation, misapplication and environmental indemnities, as are
usual and customary in like transactions at the time of the incurrence of such
Debt).
"Notes" means collectively, the Tranche A Notes, the Tranche B
Notes, and any Designated Lender Notes.
24
<PAGE>
"Notice of Borrowing" means a Notice of Committed Borrowing
(as defined in Section 2.2 and 2.3) or a Notice of Money Market Borrowing (as
defined in Section 2.3(f)).
"Notice of Interest Rate Election" has the meaning set forth
in Section 2.15 hereof.
"Obligations" means all obligations, liabilities and
indebtedness of every nature of the Borrowers or CarrAmerica LP, from time to
time owing to any Bank under or in connection with this Agreement or any other
Loan Document, including, without limitation, (i) the outstanding principal
amount of the Committed Loans at such time, plus (ii) the Letter of Credit Usage
at such time, plus (iii) the outstanding principal amount of any Money Market
Loans at such time.
"Outstanding Balance" means the sum of (i) the aggregate
outstanding and unpaid principal balance of all Loans and (ii) the Letter of
Credit Usage.
"Parent" means, with respect to any Bank, any Person
controlling such Bank.
"Participant" has the meaning set forth in Section 9.6(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Permitted Liens" means (a) Liens in favor of either or both
of the Borrowers or CarrAmerica LP on all or any part of the assets of
Subsidiaries of either Borrower or CarrAmerica LP, provided that (i) such
Subsidiary shall be a co-maker of the Tranche A Notes or Tranche B Notes, as
applicable, (ii) the Debt to which such Lien relates is held by a Borrower or
CarrAmerica LP, (iii) such Debt is not otherwise pledged or encumbered and (iv)
no more than 25% of the Unencumbered Asset Pool Properties Value may be subject
to any such Liens; (b) Liens to secure the performance of statutory obligations,
surety or appeal bonds, performance bonds, completion bonds, government
contracts or other obligations of a like nature, including Liens in connection
with workers' compensation, unemployment insurance and other types of statutory
obligations or to secure the performance of tenders, bids, leases, contracts
(other than for the repayment of Debt) and other similar obligations incurred in
25
<PAGE>
the ordinary course of business; (c) Liens for taxes, assessments or
governmental charges or claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings promptly instituted and
diligently concluded; provided, that any reserve or other appropriate provision
as shall be required in conformity with GAAP shall have been made therefor; (d)
Liens on property of either Borrower or any Subsidiary thereof in favor of the
Federal or any state government to secure certain payments pursuant to any
contract, statute or regulation; (e) easements (including, without limitation,
reciprocal easement agreements and utility agreements), rights of way,
covenants, consents, reservations, encroachments, variations and zoning and
other restrictions, charges or encumbrances (whether or not recorded), which do
not interfere materially with the ordinary conduct of the business of the
applicable Borrower or any Subsidiary thereof and which do not materially
detract from the value of the property to which they attach or materially impair
the use thereof by the applicable Borrower or Subsidiary; (f) statutory Liens of
carriers, warehousemen, mechanics, suppliers, materialmen, repairmen or other
Liens imposed by law and arising in the ordinary course of business, for sums
not then due and payable (or which, if due and payable are being contested in
good faith and with respect to which adequate reserves are being maintained to
the extent required by GAAP); (g) Liens not otherwise permitted by this
definition and incurred in the ordinary course of business of either or both of
the Borrowers or any Subsidiary with respect to obligations which do not exceed
$2,000,000 in principal amount in the aggregate at any one time outstanding; (h)
Liens existing on the date of this Agreement which have been disclosed on
Schedule 4.28; (i) the interests of lessees and lessors under leases of real or
personal property made in the ordinary course of business which would not have a
material adverse effect on the Borrowers and their Subsidiaries taken as a
whole; and (j) judgment and attachment Liens not giving rise to an Event of
Default.
"Person" means an individual, a corporation, a limited
liability company, a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Plan" means at any time an employee pension benefit plan
(other than a Multiemployer Plan) which is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Internal
Revenue Code and either (i) is maintained, or contributed to, by any member of
the ERISA Group for employees of any member of the ERISA Group or (ii) has at
any time within the preceding five years been maintained, or contributed to, by
any Person which was at such time a member of the ERISA Group for employees of
any Person which was at such time a member of the ERISA Group.
26
<PAGE>
"Prime Rate" means the rate of interest publicly announced by
Morgan Guaranty Trust Company of New York in New York City from time to time as
its Prime Rate.
"Property Expenses" means, when used with respect to any Real
Property Asset, the costs of maintaining and operating such Real Property Asset,
calculated in accordance with GAAP, which are the responsibility of the owner
thereof and that are not paid directly by the tenant thereof, including, without
limitation, real estate taxes, insurance, repairs and maintenance, but provided
that if such tenant is more than 60 days in arrears in the payment of base or
fixed rent, then such costs will also constitute "Property Expenses", but
excluding depreciation, amortization and interest costs.
"Property Income" means, when used with respect to any Real
Property Asset, rents and other revenues earned in accordance with GAAP, in the
ordinary course therefrom, including, without limitation, revenues from any
parking leases and lease termination fees amortized over the remaining term of
the lease for which such termination fee was received (other than the paid rents
and revenues and security deposits except to the extent applied in satisfaction
of tenants' obligations for rent).
"Qualified Development Properties" means any of the Carr LP
Unencumbered Asset Pool Properties or the Carr Unencumbered Asset Pool
Properties which are under construction and which, in accordance with GAAP, has
not yet been placed into service, but as to which not less than 66.67% of net
rentable leaseable area has been pre-leased to tenants other than tenants that
are affiliates of the Borrowers or Carr LP, unless the same are approved by the
Required Banks.
"Rating Agencies" means, collectively, S&P, Moody's, Duff &
Phelps and Fitch.
"Real Property Assets" means as of any time, the real property
assets (including interests in participating mortgages in which either
Borrower's interest therein is characterized as equity according to GAAP) owned
directly or indirectly by either Borrower at such time.
27
<PAGE>
"Recourse Debt" shall mean Debt of the Borrower or any
Consolidated Subsidiary that is not Non-Recourse Debt.
"Reference Bank" means the principal London offices of Morgan
Guaranty Trust Company of New York.
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"Required Banks" means initially, at any time Banks having at
least 66 2/3% of the aggregate amount of the Commitments or, if the Commitments
shall have been terminated, holding Notes evidencing at least 66 2/3% of the
aggregate unpaid principal amount of the Loans, provided, however, that from and
after such time as no four or fewer Banks have 51% or more of the aggregate
amount of the Commitments or, if the Commitments shall have been terminated,
hold Notes evidencing 51% or more of the aggregate unpaid principal amount of
the Loans, then, at any time "Required Banks" shall mean Banks having at least
51% of the aggregate amount of the Commitments or, if the Commitments shall have
been terminated, holding Notes evidencing at least 51% of the aggregate unpaid
principal amount of the Loans.
"Solvent" means, with respect to any Person, that the fair
saleable value of such Person's assets exceeds the Debts of such Person.
"S&P" means Standard & Poor's Ratings Group, or any successor
thereto.
"Subsidiary" means any corporation or other entity of which
securities or other ownership interests representing either (i) ordinary voting
power to elect a majority of the board of directors or other persons performing
similar functions or (ii) a majority of the economic interest therein, are at
the time directly or indirectly owned by Carr or Carr LP.
"Tangible FMV" means the aggregate of (i) Carr Tangible FMV
and (ii) Carr LP Tangible FMV.
28
<PAGE>
"Term" has the meaning set forth in Section 2.9.
"Third Amendment" has the meaning set forth in Section 5.4.
"Tranche A Commitment" means, with respect to each Bank, the
amount committed by such Bank pursuant to this Agreement with respect to any
Tranche A Loans, as such amount may be reduced from time to time pursuant to
Sections 2.10 and 2.11.
"Tranche A Loan" means the loan or loans to be made to Carr
and CarrAmerica LP for the purposes set forth in Section 5.15 hereof which loan
or loans shall be a Base Rate Loan or Loans, a Euro-Dollar Loan or Loans, or a
Money Market Loan or Loans.
"Tranche A Loan Amount" has the meaning set forth in Section
2.1.
"Tranche A Notes" means the promissory notes of Carr and
CarrAmerica LP, each substantially in the form of Exhibits A-1 or A-3 hereto,
evidencing the joint and several obligation of Carr and CarrAmerica LP to repay
the Tranche A Loans, and "Tranche A Note" means any one of such promissory notes
issued hereunder.
"Tranche B Commitment" means, with respect to each Bank, the
amount committed by such Bank pursuant to this Agreement with respect to any
Tranche B Loans, as such amount may be reduced from time to time pursuant to
Sections 2.10 and 2.11.
"Tranche B Loan" means the loan or loans to be made to Carr LP
and Carr for the purposes set forth in Section 5.15 hereof which loan or loans
shall be a Base Rate Loan or Loans, a Euro-Dollar Loan or Loans, or a Money
Market Loan or Loans.
"Tranche B Loan Amount" has the meaning set forth in Section
2.1.
"Tranche B Notes" means the promissory notes of Carr LP and
Carr, each substantially in the form of Exhibits A-2 or A-4 hereto, evidencing
the joint and several obligation of Carr LP and Carr to repay the Tranche B
Loans, and "Tranche B Note" means any one of such promissory notes issued
hereunder.
29
<PAGE>
"Treasury Rate" means, as of any date, a rate equal to the
annual yield to maturity on the U.S. Treasury Constant Maturity Series with a
ten year maturity, as such yield is reported in Federal Reserve Statistical
Release H.15 -- Selected Interest Rates, published most recently prior to the
date the applicable Treasury Rate is being determined. Such yield shall be
determined by straight line linear interpolation between the yields reported in
Release H.15, if necessary. In the event Release H.15 is no longer published,
the Lead Agent shall select, in its reasonable discretion, an alternate basis
for the determination of Treasury yield for U.S. Treasury Constant Maturity
Series with ten year maturities.
"Unencumbered Asset Pool Net Operating Cash Flow" means as of
any date of determination with respect to the Unencumbered Asset Pool
Properties, the product of (A) Property Income with respect to the Unencumbered
Assets for the previous quarter, but less (x) Property Expenses with respect to
the Unencumbered Asset Pool Properties for the previous quarter and (y) the
greater of (i) Capital Expenditures which are not related to new construction
for the previous quarter and (ii) reserves for such quarter for Capital
Expenditures of $1.50 per square foot per annum for each Unencumbered Asset Pool
Property, and (B) four (4). For purposes of Section 5.1(m) hereof, the
calculation of Unencumbered Asset Pool Net Operating Cash Flow shall be made
separately as to each Unencumbered Asset Pool Property.
"Unencumbered Asset Pool Properties" means, as of any date,
collectively the Carr Unencumbered Asset Pool Properties and the Carr LP
Unencumbered Asset Pool Properties.
"Unencumbered Asset Pool Minimum Debt Service Coverage" means
as of the last day of each calendar quarter, Unencumbered Asset Pool Net
Operating Cash Flow equal to or greater than 200% of an amount equal to the
product of (A) the sum of (i) interest (whether accrued, paid or capitalized)
actually payable by either Borrower or the Borrowers on its Unsecured Debt for
the previous quarter, plus (ii) scheduled payments of principal on such
Unsecured Debt, whether or not paid by either Borrower or the Borrowers
(excluding balloon payments) for the previous quarter, and (B) four (4).
30
<PAGE>
"Unencumbered Asset Pool Properties Value" means the aggregate
of (i) the Carr Unencumbered Asset Pool Properties Value and (ii) the Carr LP
Unencumbered Asset Pool Properties Value.
"Unfunded Liabilities" means, with respect to any Plan at any
time, the amount (if any) by which (i) the value of all benefit liabilities
under such Plan, determined on a plan termination basis using the assumptions
prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the
fair market value of all Plan assets allocable to such liabilities under Title
IV of ERISA (excluding any accrued but unpaid contributions), all determined as
of the then most recent valuation date for such Plan, but only to the extent
that such excess represents a potential liability of a member of the ERISA Group
to the PBGC or any other Person under Title IV of ERISA.
"United States" means the United States of America, including
the States and the District of Columbia, but excluding its territories and
possessions.
"Unsecured Debt" means all Debt which is not secured by a
Lien.
"Unused Commitments" means an amount equal to all unadvanced
funds (other than unadvanced funds in connection with any construction loan)
which any third party is obligated to advance to either of the Borrowers or
otherwise, pursuant to any loan document, written instrument or otherwise.
SECTION 1.2. Accounting Terms and Determinations. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with generally accepted accounting principles as in effect from time
to time, applied on a basis consistent (except for changes concurred in by the
Borrowers' independent public accountants) with the most recent audited
consolidated financial statements of Carr delivered to the Lead Agent and the
Banks; provided that, if Carr notifies the Lead Agent and the Banks that Carr
wishes to amend any covenant in Article V to eliminate the effect of any change
in generally accepted accounting principles on the operation of such covenant
(or if the Lead Agent notifies Carr that the Required Banks wish to amend
Article V for such purpose), then Carr's compliance with such covenant shall be
determined on the basis of generally accepted accounting principles in effect
immediately before the relevant change in generally accepted accounting
principles became effective, until either such notice is withdrawn or such
covenant is amended in a manner satisfactory to Carr and the Required Banks.
31
<PAGE>
SECTION 1.3. Types of Borrowings. The term "Borrowing"
denotes the aggregation of Loans of one or more Banks to be made to the
Borrowers pursuant to Article II on a single date and for a single Interest
Period. Borrowings are classified for purposes of this Agreement either by
reference to the pricing of Loans comprising such Borrowing (e.g., a
"Euro-Dollar Borrowing" is a Borrowing comprised of Euro-Dollar Loans) or by
reference to the provisions of Article II under which participation therein is
determined (i.e., a "Committed Borrowing" is a Borrowing under Section 2.1 in
which all Banks participate in proportion to their Commitments, while a "Money
Market Borrowing" is a Borrowing under Section 2.3).
ARTICLE II
THE CREDITS
SECTION 2.1. Commitments to Lend. Each Bank severally agrees,
on the terms and conditions set forth in this Agreement, to make the Tranche A
Loans to Carr and CarrAmerica LP and participate in Letters of Credit issued by
the Fronting Bank on behalf of Carr or CarrAmerica LP pursuant to this Section
from time to time, but, together with the Tranche B Loans, not more frequently
than four times monthly, during the Term in amounts such that the aggregate
principal amount of Tranche A Loans by such Bank at any one time outstanding
together with such Bank's pro rata share of Letter of Credit Usage with respect
to Carr and CarrAmerica LP shall not exceed the amount of its Tranche A
Commitment. The aggregate amount of Tranche A Loans to be made hereunder
together with the Letter of Credit Usage with respect to Carr and CarrAmerica
LP, shall not exceed Three Hundred Fifty Million Dollars ($350,000,000) (the
"Tranche A Loan Amount"). Each Bank severally agrees, on the terms and
conditions set forth in this Agreement, to make the Tranche B Loans to Carr LP
and Carr and participate in Letters of Credit issued by the Fronting Bank on
behalf of Carr LP pursuant to this Section from time to time, but, together with
the Tranche A Loans, not more frequently than four times monthly, during the
Term in amounts such that the aggregate principal amount of Tranche B Loans by
such Bank at any one time outstanding, together with such Bank's pro rata share
of Letter of Credit Usage with respect to Carr LP, shall not exceed the amount
32
<PAGE>
of its Tranche B Commitment. The aggregate amount of Tranche B Loans to be made
hereunder, together with the Letter of Credit Usage with respect to Carr LP,
shall not exceed One Hundred Million Dollars ($100,000,000) (the "Tranche B Loan
Amount"). Each Borrowing under this subsection (a) shall be in an aggregate
principal amount of at least $2,500,000, or an integral multiple of $1,000,000
in excess thereof (except that any such Borrowing may be in the aggregate amount
available in accordance with Section 3.2(c)) and shall be made from the several
Banks ratably in proportion to their respective Commitments. Subject to the
limitations set forth herein, any amounts repaid may be reborrowed.
Notwithstanding anything to the contrary, the number of new Borrowings shall be
limited to four Borrowings per month and no more than ten Borrowings shall be
outstanding at any time.
SECTION 2.2. Notice of Committed Borrowing. (a) The
applicable Borrower or CarrAmerica LP, as the case may be, shall give the Lead
Agent notice (a "Notice of Committed Borrowing") not later than 10:00 a.m. (New
York City time) (x) one Domestic Business Day before each Base Rate Borrowing or
(y) the third Euro-Dollar Business Day before each Euro-Dollar Borrowing,
specifying:
(i) the date of such Borrowing, which shall be a
Domestic Business Day in the case of a Domestic Borrowing or a Euro-Dollar
Business Day in the case of a Euro-Dollar Borrowing,
(ii) the aggregate amount of such Borrowing,
(iii) whether the Loans comprising such Borrowing are
to be Base Rate Loans or Euro-Dollar Loans, and
(iv) in the case of a Euro-Dollar Borrowing, the
duration of the Interest Period applicable thereto, subject to the provisions of
the definition of Interest Period.
(b) Either Borrower or CarrAmerica LP shall give the Lead
Agent, and the designated Fronting Bank, written notice in the event that it
desires to have Letters of Credit (each, a "Letter of Credit") issued hereunder
no later than 10:00 a.m., New York City time, at least four (4) Domestic
Business Days prior to the date of such issuance. Each such notice shall specify
(i) the designated Fronting Bank, (ii) the aggregate amount of the requested
33
<PAGE>
Letters of Credit, (iii) the individual amount of each requested Letter of
Credit and the number of Letters of Credit to be issued, (iv) the date of such
issuance (which shall be a Domestic Business Day), (v) the name and address of
the beneficiary, (vi) the expiration date of the Letter of Credit (which in no
event shall be later than twelve (12) months after the issuance of such Letter
of Credit or the Maturity Date, whichever is earlier), (vii) the purpose and
circumstances for which such Letter of Credit is being issued, (viii) the terms
upon which each such Letter of Credit may be drawn down (which terms shall not
leave any discretion to Fronting Bank), and (ix) whether such Letters of Credit
shall be attributable to Tranche A Loan Amount or Tranche B Loan Amount. Each
such notice may be revoked telephonically by the applicable Borrower or
CarrAmerica LP, as the case may be, to the applicable Fronting Bank and the Lead
Agent any time prior to the date of issuance of the Letter of Credit by the
applicable Fronting Bank, provided such revocation is confirmed in writing by
such Borrower or CarrAmerica LP to the Fronting Bank and the Lead Agent within
one (1) Domestic Business Day by facsimile. No later than 10:00 a.m., New York
City time, on the date that is four (4) Domestic Business Days prior to the date
of issuance, the applicable Borrower or CarrAmerica LP shall specify a precise
description of the documents and the verbatim text of any certificate to be
presented by the beneficiary of such Letter of Credit, which if presented by
such beneficiary prior to the expiration date of the Letter of Credit would
require the Fronting Bank to make a payment under the Letter of Credit; provided
that Fronting Bank may, in its reasonable judgment, require changes in any such
documents and certificates only in conformity with changes in customary and
commercially reasonable practice or law and provided further, that no Letter of
Credit shall require payment against a conforming draft to be made thereunder on
the following Domestic Business Day that such draft is presented if such
presentation is made later than 10:00 A.M. New York City time (except that if
the beneficiary of any Letter of Credit requests at the time of the issuance of
its Letter of Credit that payment be made on the same Domestic Business Day
against a conforming draft, such beneficiary shall be entitled to such a same
day draw, provided such draft is presented to the applicable Fronting Bank no
later than 10:00 A.M. New York City time and provided further that, prior to the
issuance of such Letter of Credit, such Borrower or CarrAmerica LP shall have
requested to Fronting Bank and the Lead Agent that such beneficiary shall be
entitled to a same day draw). In determining whether to pay on such Letter of
Credit, the Fronting Bank shall be responsible only to determine that the
documents and certificates required to be delivered under the Letter of Credit
have been delivered and that they comply on their face with the requirements of
that Letter of Credit.
34
<PAGE>
SECTION 2.3. Money Market Borrowings.
(a) The Money Market Option. In addition to Committed
Borrowings pursuant to Section 2.1 and Section 2.2 hereof, the applicable
Borrower or CarrAmerica LP, as the case may be, may, as set forth in this
Section and provided that at the time Carr shall have two Investment Grade
Ratings (at least one of which shall be from S&P or Moody's), and Borrowers LTV
Ratio shall be less than 55%, request the Banks at any time or from time to time
during the Term to make offers to make Money Market Loans to such Borrower or
CarrAmerica LP, as the case may be, not to exceed $225,000,000 in the aggregate
outstanding at any one time. The Banks may, but shall have no obligation to,
make such offers and the applicable Borrower or CarrAmerica LP, as the case may
be, may, but shall have no obligation to, accept any such offers in the manner
set forth in this Section.
(b) Money Market Quote Request. When the applicable Borrower
or CarrAmerica LP, as the case may be, wishes to request offers to make Money
Market Loans under this Section, it shall transmit to the Lead Agent by telex or
facsimile transmission a request for Money Market Quotes substantially in the
form of Exhibit D hereto (a "Money Market Quote Request") so as to be received
not later than 10:30 A.M. (New York City time) on (x) the fourth Euro-Dollar
Business Day prior to the date of Borrowing proposed therein, in the case of a
LIBOR Auction or (y) the Domestic Business Day next preceding the date of
Borrowing proposed therein, in the case of an Absolute Rate Auction (or, in
either case, such other time or date as the Borrowers and the Lead Agent shall
have mutually agreed and shall have notified to the Banks not later than the
date of the Money Market Quote Request for the first LIBOR Auction or Absolute
Rate Auction for which such change is to be effective) specifying:
(i) the proposed date of Borrowing, which shall be a
Euro-Dollar Business Day in the case of a LIBOR Auction or a Domestic
Business Day in the case of an Absolute Rate Auction,
(ii) the aggregate amount of such Borrowing, which shall be
$10,000,000 or a larger multiple of $500,000,
35
<PAGE>
(iii) the duration of the Interest Period applicable thereto,
subject to the provisions of the definition of Interest Period,
(iv) whether the Money Market Quotes requested are to set
forth a Money Market Margin or a Money Market Absolute Rate,
(v) whether the Money Market Loan will consist in full or in
part of the Tranche A Loan and/or the Tranche B Loan, and if consisting
in part of each, the portions consisting of Tranche A Loans and Tranche
B Loans, and
(vi) whether a Bank may designate a Designated Lender in
connection with such Money Market Loan.
The applicable Borrower or CarrAmerica LP, as the case may be, may request
offers to make Money Market Loans for more than one Interest Period in a single
Money Market Quote Request. No Money Market Quote Request shall be given within
five Euro-Dollar Business Days (or such other number of days as the Borrowers
and the Lead Agent may agree) of any other Money Market Quote Request.
(c) Invitation for Money Market Quotes. Promptly upon receipt
of a Money Market Quote Request, but no later than 1:00 p.m. (New York City
time) on (i) the fourth Euro-Dollar Business Day prior to the proposed date of
Borrowing, or (ii) the Domestic Business next preceding the date of the proposed
Borrowing, the Lead Agent shall send to the Banks by telex or facsimile
transmission an Invitation for Money Market Quotes substantially in the form of
Exhibit E hereto (an "Invitation for Money Market Quotes"), which shall
constitute an invitation by the applicable Borrower or CarrAmerica LP, as the
case may be, to each Bank to submit Money Market Quotes offering to make the
Money Market Loans to which such Money Market Quote Request relates in
accordance with this Section.
(d) Submission and Contents of Money Market Quotes. (i) Each
Bank may submit a Money Market Quote containing an offer or offers to make Money
Market Loans in response to any Invitation for Money Market Quotes. Each Money
Market Quote must comply with the requirements of this subsection (d) and must
be submitted to the Lead Agent by telex or facsimile transmission at its offices
specified in or pursuant to Section 9.1 not later than (x) 10:00 A.M. (New York
City time) on
36
<PAGE>
the third Euro-Dollar Business Day prior to the proposed date of Borrowing, in
the case of a LIBOR Auction or (y) 10:00 A.M. (New York City time) on the
proposed date of Borrowing, in the case of an Absolute Rate Auction (or, in
either case, such other time or date as the Borrowers and the Lead Agent shall
have mutually agreed and shall have notified to the Banks not later than the
date of the Money Market Quote Request for the first LIBOR Auction or Absolute
Rate Auction for which such change is to be effective); provided that Money
Market Quotes submitted by the Lead Agent (or any affiliate of the Lead Agent)
in its capacity of a Bank may be submitted, and may only be submitted, if the
Lead Agent or such affiliate notifies the applicable Borrower or CarrAmerica LP,
as the case may be, of the terms of the offer or offers contained therein not
later than thirty (30) minutes prior to the applicable deadline for the other
Banks. Subject to Articles III and VI, any Money Market Quote so made shall be
irrevocable except with the written consent of the Lead Agent given on the
instructions of the applicable Borrower or CarrAmerica LP, as the case may be.
If, and only if, the applicable Borrower or CarrAmerica LP, as the case may be,
elected in the applicable Money Market Quote Request to permit the Banks to
designate Designated Lenders to fund such Money Market Loans, such Money Market
Loans may be funded by such Bank's Designated Lender (if any) as provided in
Section 9.6(d), however such Bank shall not be required to specify in its Money
Market Quote whether such Money Market Loans will be funded by such Designated
Lender.
(ii) Each Money Market Quote shall be in substantially the
form of Exhibit F hereto and shall in any case specify:
(1) the proposed date of Borrowing,
(2) the principal amount of the Money Market Loan for which
each such offer is being made, which principal amount (w) may be
greater than or less than the Commitment of the quoting Bank, (x) must
be $5,000,000 or a larger multiple of $500,000, (y) may not exceed the
principal amount of Money Market Loans for which offers were requested
and (z) may be subject to an aggregate limitation as to the principal
amount of Money Market Loans for which offers being made by such
quoting Bank may be accepted,
(3) in the case of a LIBOR Auction, the margin above or below
the applicable London Interbank Offered Rate (the "Money Market
Margin") offered for each such Money Market Loan, expressed as a
percentage (specified to the nearest 1/10,000th of 1%) to be added to
or subtracted from the applicable London Interbank Offered Rate,
37
<PAGE>
(4) in the case of an Absolute Rate Auction, the rate of
interest per annum (specified to the nearest 1/10,000th of 1%) (the
"Money Market Absolute Rate") offered for each such Money Market Loan,
and
(5) the identity of the quoting Bank.
A Money Market Quote may set forth up to five separate offers by the quoting
Bank with respect to each Interest Period specified in the related Invitation
for Money Market Quotes.
(iii) Any Money Market Quote shall be disregarded if it:
(1) is not substantially in conformity with Exhibit F hereto
or does not specify all of the information required by subsection
(d)(ii) above;
(2) contains qualifying, conditional or similar language;
(3) proposes terms other than or in addition to those set
forth in the applicable Invitation for Money Market Quotes; or
(4) arrives after the time set forth in subsection (d)(i).
(e) Notice to Borrower. The Lead Agent shall promptly notify
the applicable Borrower or CarrAmerica LP, as the case may be, (x) with respect
to each Money Market Quote submitted in accordance with subsection (d), of the
terms of such Money Market Quote and the identity of the Bank submitting such
Money Market Quote and (y) of any Money Market Quote that amends, modifies or is
otherwise inconsistent with a previous Money Market Quote submitted by such Bank
with respect to the same Money Market Quote Request. Any such subsequent Money
Market Quote shall be disregarded by the Lead Agent unless such subsequent Money
Market Quote is submitted solely to correct a manifest error in such former
Money Market Quote. The Lead Agent's notice to the applicable Borrower or
CarrAmerica LP, as the case may be, shall specify (A) the aggregate principal
amount of Money Market Loans for which Money Market Quotes have been received
for each Interest Period specified in the related Money Market Quote Request,
(B) the respective principal amounts and Money Market Margins or Money Market
Absolute Rates, as the case may be, so offered and (C) if applicable,
limitations on the aggregate principal amount of Money Market Loans for which
offers in any single Money Market Quote may be accepted.
38
<PAGE>
(f) Acceptance and Notice by Borrower. Not later than 12:00
noon (New York City time) on (x) the third Euro-Dollar Business Day prior to the
proposed date of Borrowing, in the case of a LIBOR Auction or (y) the proposed
date of Borrowing, in the case of an Absolute Rate Auction (or, in either case,
such other time or date as the Borrowers and the Lead Agent shall have mutually
agreed and shall have notified the Banks not later than the date of the Money
Market Quote Request for the first LIBOR Auction or Absolute Rate Auction for
which such change is to be effective), the applicable Borrower, or CarrAmerica
LP, as the case may be, shall notify the Lead Agent of its acceptance or
non-acceptance of the Money Market Quotes specified in the Lead Agent's notice
to the applicable Borrower or CarrAmerica LP, as the case may be, pursuant to
subsection (e). In the case of acceptance, such notice (a "Notice of Money
Market Borrowing") shall specify the aggregate principal amount of offers for
each Interest Period that are accepted and shall specify whether such offer is
to be allocated to Tranche A or Tranche B. The applicable Borrower or
CarrAmerica LP, as the case may be, may accept any Money Market Quote in whole
or in part; provided that:
(i) the aggregate principal amount of each Money Market
Borrowing may not exceed the applicable amount set forth in the
related Money Market Quote Request;
(ii) the principal amount of each Money Market Borrowing
must be $10,000,000 or a larger multiple of $500,000;
(iii) acceptance of offers may only be made on the basis
of ascending Money Market Margins or Money Market Absolute Rates,
as the case may be; and
(iv) the applicable Borrower or CarrAmerica LP, as the
case may be, may not accept any Money Market Quote that is
described in subsection (d)(iii) or that otherwise fails to
comply with the requirements of this Agreement.
39
<PAGE>
For the purposes of Section 2.1 hereof, all Money Market Loans
made on the same date of Borrowing for the same Interest Period shall constitute
a single Borrowing.
(g) Allocation by Lead Agent. If Money Market Quotes are made
by two or more Banks with the same Money Market Margins or Money Market Absolute
Rates, as the case may be, for a greater aggregate principal amount than the
amount in respect of which such Money Market Quotes are accepted for the related
Interest Period, the principal amount of Money Market Loans in respect of which
such Money Market Quotes are accepted shall be allocated by the Lead Agent among
such Banks as nearly as possible (in multiples of $500,000, as the Lead Agent
may deem appropriate) in proportion to the aggregate principal amounts of such
Money Market Quotes. Determinations by the Lead Agent of the amounts of Money
Market Loans shall be conclusive in the absence of manifest error.
(h) Notification by Lead Agent. Upon receipt of a Notice of
Money Market Borrowing in accordance with Section 2.3(f) hereof, the Lead Agent
shall, on the date such Notice of Money Market Borrowing is received by the Lead
Agent, notify each Bank of the principal amount of the Money Market Borrowing
accepted by the applicable Borrower or CarrAmerica LP, as the case may be, and
of such Bank's share (if any) of such Money Market Borrowing and such Notice of
Money Market Borrowing shall not thereafter be revocable by the applicable
Borrower or CarrAmerica LP, as the case may be. Provided that the applicable
Borrower or CarrAmerica LP, as the case may be, elected in the applicable Money
Market Quote Request to permit the Banks to designate Designated Lenders to fund
such Money Market Loans, a Bank who is notified that it has been selected to
make a Money Market Loan may designate its Designated Lender (if any) to fund
such Money Market Loan on its behalf, as described in Section 9.6(d). Any
Designated Lender which funds a Money Market Loan shall on and after the time of
such funding become the obligee under such Money Market Loan and be entitled to
receive payment thereof when due. No Bank shall be relieved of its obligation to
fund a Money Market Loan, and no Designated Lender shall assume such obligation,
prior to the time the applicable Money Market Loan is funded.
40
<PAGE>
SECTION 2.4. Notice to Banks; Funding of Loans.
(a) Upon receipt of a Notice of Committed Borrowing, the Lead
Agent shall notify each Bank on the same day as it receives such Notice of
Committed Borrowing of the contents thereof and of such Bank's share of such
Borrowing and such Notice of Committed Borrowing shall not thereafter be
revocable by the applicable Borrower or CarrAmerica LP.
(b) Not later than 2:00 P.M. (New York City time) on the date
of each Committed Borrowing as indicated in the Notice of Committed Borrowing,
each Bank shall (except as provided in subsection (c) of this Section) make
available its share of such Borrowing, in Federal or other funds immediately
available in New York City, to the Lead Agent at its address referred to in
Section 9.1. The Lead Agent will make the funds so received from the Banks
available to the applicable Borrower or CarrAmerica LP, as applicable, at the
Lead Agent's aforesaid address. If a Borrower or CarrAmerica LP has requested
the issuance of a Letter of Credit, no later than 12:00 Noon (New York City
time) on the date of such issuance as indicated in the Notice of Committed
Borrowing, the Fronting Bank shall issue such Letter of Credit in the amount so
requested and deliver the same to the applicable Borrower or CarrAmerica LP with
a copy thereof to the Lead Agent. Immediately upon the issuance of each Letter
of Credit by the Fronting Bank, such Fronting Bank shall be deemed to have sold
and transferred to each other Bank, and each such other Bank shall be deemed to,
and hereby agrees to, have irrevocably and unconditionally purchased and
received from Fronting Bank, without recourse or warranty, an undivided interest
and a participation in such Letter of Credit, any drawing thereunder, and the
obligations of the applicable Borrower or CarrAmerica LP hereunder with respect
thereto, and any security therefor or guaranty pertaining thereto, in an amount
equal to such Bank's ratable share thereof (based upon the ratio its Commitment
bears to the aggregate of all Commitments). Upon any change in any of the
Commitments in accordance herewith, there shall be an automatic adjustment to
such participations to reflect such changed shares. The Fronting Bank shall have
the primary obligation to fund any and all draws made with respect to such
Letter of Credit notwithstanding any failure of a participating Bank to fund its
ratable share of any such draw. The Lead Agent will instruct the Fronting Bank
to make such Letter of Credit available to such Borrower and the Fronting Bank
shall make such Letter of Credit available to the applicable Borrower or
CarrAmerica LP at the applicable Borrower's or CarrAmerica's LP aforesaid
address on the date of the Borrowing.
41
<PAGE>
(c) Unless the Lead Agent shall have received notice from a
Bank prior to the date of any Borrowing that such Bank will not make available
to the Lead Agent such Bank's share of such Borrowing, the Lead Agent may assume
that such Bank has made such share available to the Lead Agent on the date of
such Borrowing in accordance with subsection (b) of this Section 2.4 and the
Lead Agent may, in reliance upon such assumption, make available to the
applicable Borrower or CarrAmerica LP, as applicable, on such date a
corresponding amount. If and to the extent that such Bank shall not have so made
such share available to the Lead Agent, such Bank and the applicable Borrower or
CarrAmerica LP severally agree to repay to the Lead Agent forthwith on demand
such corresponding amount together with interest thereon, for each day from the
date such amount is made available to the applicable Borrower or CarrAmerica LP
until the date such amount is repaid to the Lead Agent, at (i) in the case of
either Borrower or CarrAmerica LP, a rate per annum equal to the higher of the
Federal Funds Rate and the interest rate applicable thereto pursuant to Section
2.7 and (ii) in the case of such Bank, the Federal Funds Rate. If such Bank
shall repay to the Lead Agent such corresponding amount, such amount so repaid
shall constitute such Bank's Loan included in such Borrowing for purposes of
this Agreement.
SECTION 2.5. Notes.
(a) The Tranche A Loans shall be evidenced by the Tranche A
Notes, each of which shall be payable to the order of each Bank for the account
of its Applicable Lending Office in an amount equal to each such Bank's Tranche
A Commitment.
(b) The Tranche B Loans shall be evidenced by the Tranche B
Notes, each of which shall be payable to the order of each Bank for the account
of its Applicable Lending Office in an amount equal to each such Bank's Tranche
B Commitment.
(c) Each Bank may, by notice to the Borrowers and CarrAmerica
LP and the Lead Agent, request that its Loans of a particular type be evidenced
by a separate Note in an amount equal to the aggregate unpaid principal amount
of such Loans. Each such Note shall be in substantially the form of Exhibit A-1
or Exhibit A-2 hereto, as applicable, with appropriate modifications to reflect
the fact that it evidences solely Loans of the relevant type. Each reference in
this Agreement to the "Note" of such Bank shall be deemed to refer to and
include any or all of such Notes, as the context may require.
42
<PAGE>
(d) Upon receipt of each Bank's Note pursuant to Section
3.1(a) or (b), the Lead Agent shall forward such Note to such Bank. Each Bank
shall record the date, amount, type and maturity of each Loan made by it and the
date and amount of each payment of principal made by either Borrower or
CarrAmerica LP with respect thereto, and may, if such Bank so elects in
connection with any transfer or enforcement of its Note, endorse on the schedule
forming a part thereof appropriate notations to evidence the foregoing
information with respect to each such Loan then outstanding; provided that the
failure of any Bank to make any such recordation or endorsement shall not affect
the obligations of the Borrowers hereunder or under the Notes. Each Bank is
hereby irrevocably authorized by the Borrowers and CarrAmerica LP so to endorse
its Note and to attach to and make a part of its Note a continuation of any such
schedule as and when required.
(e) There shall be no more than ten (10) Euro-Dollar
Borrowings outstanding at any one time pursuant to this Agreement.
SECTION 2.6. Maturity of Loans. The Loans shall mature, and
the principal amount thereof shall be due and payable, on the Maturity Date.
SECTION 2.7. Interest Rates.
(a) Each Base Rate Loan shall bear interest on the outstanding
principal amount thereof, for each day from the date such Loan is made until it
becomes due, at a rate per annum equal to the sum of the Applicable Margin for
Base Rate Loans for such day plus the Base Rate for such day. Such interest
shall be payable for each Interest Period on the last day thereof.
(b) Each Euro-Dollar Loan shall bear interest on the
outstanding principal amount thereof, for each day during the Interest Period
applicable thereto, at a rate per annum equal to the sum of the Applicable
Margin for Euro-Dollar Loans for such day plus the Adjusted London Interbank
Offered Rate applicable to such Interest Period. Such interest shall be payable
for each Interest Period on the last day thereof and, if such Interest Period is
longer than three months, at intervals of three months after the first day
thereof.
43
<PAGE>
"Adjusted London Interbank Offered Rate" applicable to any
Interest Period means a rate per annum equal to the quotient obtained (rounded
upward, if necessary, to the next higher 1/100 of 1%) by dividing (i) the
applicable London Interbank Offered Rate by (ii) 1.00 minus the Euro-Dollar
Reserve Percentage.
"Euro-Dollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement for a member bank of
the Federal Reserve System in New York City with deposits exceeding five billion
dollars in respect of "Eurocurrency liabilities" (or in respect of any other
category of liabilities which includes deposits by reference to which the
interest rate on Euro-Dollar Loans is determined or any category of extensions
of credit or other assets which includes loans by a non-United States office of
any Bank to United States residents). The Adjusted London Interbank Offered Rate
shall be adjusted automatically on and as of the effective date of any change in
the Euro-Dollar Reserve Percentage.
"London Interbank Offered Rate" applicable to any Interest
Period means the average (rounded upward, if necessary, to the next higher 1/16
of 1%) of the respective rates per annum at which deposits in dollars are
offered to the Reference Bank in the London interbank market at approximately
11:00 a.m. (London time) two Euro-Dollar Business Days before the first day of
such Interest Period in an amount approximately equal to the principal amount of
the Euro-Dollar Loan of such Reference Bank to which such Interest Period is to
apply and for a period of time comparable to such Interest Period.
(c) Subject to Section 8.1, each Money Market LIBOR Loan shall
bear interest on the outstanding principal amount thereof, for the Interest
Period applicable thereto, at a rate per annum equal to the sum of the London
Interbank Offered Rate for such Interest Period (determined in accordance with
Section 2.7(b) as if the related Money Market LIBOR Loan were a Euro-Dollar
Loan) plus (or minus) the Money Market Margin quoted by the Bank making such
Loan in accordance with Section 2.3. Each Money Market Absolute Rate Loan shall
bear interest on the outstanding principal amount thereof, for the Interest
Period applicable thereto, at a rate per annum equal to the Money Market
Absolute Rate quoted by the Bank making such Loan in accordance with Section
2.3. Such interest shall be payable for each Interest Period on the last day
thereof and, if such Interest Period is longer than ninety days, at intervals of
ninety days after the first day thereof.
44
<PAGE>
(d) In the event that, and for so long as, any Event of
Default shall have occurred and be continuing, the outstanding principal amount
of the Loans, and, to the extent permitted by law, overdue interest in respect
of all Loans, shall bear interest at the annual rate of the sum of the Prime
Rate and four percent (4%).
(e) The Lead Agent shall determine each interest rate
applicable to the Loans (other than Money Market Loans) hereunder. The Lead
Agent shall give prompt notice to the applicable Borrower or CarrAmerica LP and
the Banks of each rate of interest so determined, and its determination thereof
shall be conclusive in the absence of manifest error.
(f) The Reference Bank agrees to use its best efforts to
furnish quotations to the Lead Agent as contemplated by this Section. If the
Reference Bank does not furnish a timely quotation, the provisions of Section
8.1 shall apply.
SECTION 2.8. Fees.
(a) Facility Fee. Effective as of the date hereof, during the
Term, the Borrowers and/or CarrAmerica LP shall pay to the Lead Agent for the
account of the Banks ratably in proportion to their respective Commitments a
facility fee (the "Facility Fee") equal to .20% per annum on the aggregate
Commitments. The Facility Fee shall be payable in arrears on each January 1,
April 1, July 1 and October 1 during the Term.
(b) Letter of Credit Fee. During the Term, the Borrowers
and/or CarrAmerica LP shall pay to the Lead Agent, for the account of the Banks
ratably in proportion to their respective interests in undrawn issued Letters of
Credit, a fee (a "Letter of Credit Fee") in an amount, provided that no Event of
Default shall have occurred and be continuing, equal to a rate per annum equal
to the Applicable Margin for Euro-Dollar Loans on the daily average of such
issued and undrawn Letters of Credit, which fee shall be payable, in arrears, on
each January 1, April 1, July 1 and October 1 during the term. From the
occurrence, and during the continuance, of an Event of Default, such fee shall
be increased to be equal to four percent (4%) per annum on the daily average of
such issued and undrawn Letters of Credit.
45
<PAGE>
(c) Fronting Bank Fee. The Borrowers and/or CarrAmerica LP
shall pay any Fronting Bank, for its own account, a fee (a "Fronting Bank Fee")
at a rate per annum equal to .15% of the issued and undrawn amount of such
Letter of Credit, which fee shall be in addition to and not in lieu of, the
Letter of Credit Fee. The Fronting Bank Fee shall be payable in arrears on each
January 1, April 1, July 1 and October 1 during the Term.
(d) Fees Non-Refundable. All fees set forth in this Section
2.8 shall be deemed to have been earned on the date payment is due in accordance
with the provisions hereof and shall be non-refundable. The obligation of the
Borrowers and CarrAmerica LP to pay such fees in accordance with the provisions
hereof shall be binding upon the Borrowers and CarrAmerica LP and shall inure to
the benefit of the Lead Agent and the Banks regardless of whether any Loans are
actually made.
SECTION 2.9. Mandatory Termination. The term (the "Term") of
the Commitments shall terminate and expire on August 26, 2001 (the "Maturity
Date").
SECTION 2.10. Mandatory Prepayment.
(a) Intentionally Omitted.
(b) In the event that an Unencumbered Asset Pool Property is
sold or released from the restrictions of Section 5.14 hereof, in accordance
with this Agreement, the applicable Borrower shall simultaneously with such sale
or release, prepay to the Lead Agent, for the account of the Banks, an amount
equal to the amount required such that the Tranche A Loans or Tranche B Loans,
as applicable, remain in compliance with Sections 5.8(h), (i) or (j), as the
case may be, after such sale or release. Notwithstanding the foregoing, a
simultaneous like-kind exchange under Section 1031 of the Internal Revenue Code
will not be subject to the provisions of this Section 2.10(b) provided that the
exchanged property has qualified as a New Acquisition and any "boot" associated
therewith shall be applied to prepayment of the Tranche A Loans or Tranche B
Loans, as applicable. Sale of a property in violation of this Section 2.10 shall
constitute an Event of Default.
46
<PAGE>
(c) In the event that the Unencumbered Asset Pool Properties
Minimum Debt Service Coverage is not maintained as of the last day of a calendar
quarter, either (i) the Borrowers will add a New Acquisition or a Real Property
Asset to the Unencumbered Asset Pool Properties in accordance with this
Agreement which, on a pro forma basis (i.e. the Unencumbered Asset Pool
Properties Minimum Debt Service Coverage shall be recalculated to include such
New Acquisition or Real Property Asset as though the same had been an
Unencumbered Asset Pool Property for the entire applicable period, with
appropriate pro forma adjustments to Unencumbered Asset Pool Net Operating Cash
Flow) would result in compliance with the Unencumbered Asset Pool Properties
Minimum Debt Service Coverage or (ii) the Borrowers and/or CarrAmerica LP shall
prepay to the Lead Agent, for the account of the Banks, an amount necessary to
cause the Unencumbered Asset Pool Properties Minimum Debt Service Coverage to be
in compliance. Failure by the Borrowers and/or CarrAmerica LP to comply with the
Unencumbered Asset Pool Properties Minimum Debt Service Coverage within 90 days
of the date of such non-compliance shall be an Event of Default.
SECTION 2.11. Optional Prepayments.
(a) The Borrowers or CarrAmerica LP may, upon at least one
Domestic Business Day's notice to the Lead Agent, prepay to the Lead Agent, for
the account of the Banks, any Base Rate Borrowing in whole at any time, or from
time to time in part in amounts aggregating One Million Dollars ($1,000,000), or
an integral multiple of One Million Dollars ($1,000,000) in excess thereof or,
if less, the outstanding principal balance, by paying the principal amount to be
prepaid together with accrued interest thereon to the date of prepayment. Each
such optional prepayment shall be applied to prepay ratably the Loans of the
several Banks included in such Borrowing. Any notice of prepayment delivered
pursuant to this Section 2.11(a) shall set forth the amount of such prepayment
which is applicable to any Loan made for working capital purposes after such
prepayment is made.
(b) Except as provided in Section 8.2, a Borrower or
CarrAmerica LP may not prepay all or any portion of the principal amount of any
Euro-Dollar Loan prior to the maturity thereof unless the applicable Borrower or
CarrAmerica LP shall also pay any applicable expenses pursuant to Section 2.13.
Any such prepayment shall be upon at least three (3) Euro-Dollar Business Days'
notice to the Lead Agent. Any notice of prepayment delivered pursuant to this
Section 2.11(b) shall set forth the amount of such prepayment which is
applicable to any Loan made for working capital purposes after such prepayment
is made. Each such optional prepayment shall be in the amounts set forth in
Section 2.11(a) above and shall be applied to prepay ratably the Loans of the
Banks included.
47
<PAGE>
(c) The Borrower may not prepay any Money Market Loan pursuant
to this Section 2.11 except with the prior consent of the applicable Bank or
Designated Lender, as the case may be.
(d) A Borrower or CarrAmerica LP may, upon at least one (1)
Domestic Business Day's notice to the Lead Agent (by 11:00 a.m New York time on
such Domestic Business Day), reimburse the Lead Agent for the benefit of the
Fronting Bank for the amount of any drawing under a Letter of Credit in whole or
in part in any amount.
(e) A Borrower or CarrAmerica LP may at any time return any
undrawn Letters of Credit to the Fronting Bank in whole, but not in part, and
the Fronting Bank shall give the Lead Agent and each of the Banks notice of such
return.
(f) Either Borrower may at any time and from time to time
cancel all or any part of the Tranche A Commitments or Tranche B Commitments, as
applicable, in amounts aggregating One Million Dollars ($1,000,000), or an
integral multiple of One Million Dollars ($1,000,000) in excess thereof, by the
delivery to the Lead Agent and the Banks of a notice of cancellation upon at
least three (3) Domestic Business Days' notice to Lead Agent and the Banks,
whereupon, in either event, all or such portion of the Tranche A Commitments or
Tranche B Commitments, as applicable, shall terminate as to the Banks, pro rata
on the date set forth in such notice of cancellation, and, if there are any
Loans then outstanding in an aggregate amount which exceeds the aggregate
Tranche A Commitments or Tranche B Commitments, as applicable (after giving
effect to any such reduction), the applicable Borrower shall prepay to the Lead
Agent, for the account of the Banks, as applicable, all or such portion of Loans
outstanding on such date in accordance with the requirements of Sections 2.11(a)
and (b). In no event shall either Borrower be permitted to cancel Commitments
for which a Letter of Credit has been issued and is outstanding unless such
Borrower returns (or causes to be returned) such Letter of Credit to the
Fronting Bank. A Borrower shall be permitted to designate in its notice of
cancellation which Loans, if any, are to be prepaid.
48
<PAGE>
(g) Upon receipt of a notice of prepayment or cancellation or
a return of a Letter of Credit pursuant to this Section, the Lead Agent shall
promptly, and in any event within one (1) Domestic Business Day, notify each
Bank of the contents thereof and of such Bank's ratable share (if any) of such
prepayment or cancellation and such notice shall not thereafter be revocable by
the Borrowers or CarrAmerica LP.
(h) Any amounts so prepaid pursuant to this Section 2.11 may
be reborrowed subject to the other terms of this Agreement. In the event either
Borrower elects to cancel all or any portion of the Commitments pursuant to
Section 2.11(e) hereof, such amounts may not be reborrowed.
SECTION 2.12. General Provisions as to Payments.
(a) The Borrowers and CarrAmerica LP shall make each payment
of principal of, and interest on, the Loans and of fees hereunder, not later
than 12:00 Noon (New York City time) on the date when due, in Federal or other
funds immediately available in New York City, to the Lead Agent at its address
referred to in Section 9.1. The Lead Agent will distribute to each Bank its
ratable share of each such payment received by the Lead Agent for the account of
the Banks on the same day as received by the Lead Agent if received by the Lead
Agent by 3:00 p.m. (New York City time), or, if received by the Lead Agent after
3:00 p.m. (New York City time), on the immediately following Domestic Business
Day. Whenever any payment of principal of, or interest on, the Base Rate Loans
or of fees shall be due on a day which is not a Domestic Business Day, the date
for payment thereof shall be extended to the next succeeding Domestic Business
Day. Whenever any payment of principal of, or interest on, the Euro-Dollar Loans
shall be due on a day which is not a Euro-Dollar Business Day, the date for
payment thereof shall be extended to the next succeeding Euro-Dollar Business
Day unless such Euro-Dollar Business Day falls in another calendar month, in
which case the date for payment thereof shall be the next preceding Euro-Dollar
Business Day. Whenever any payment of principal of, or interest on, the Money
Market Loans shall be due on a day which is not a Euro-Dollar Business Day, the
date for payment thereof shall be extended to the next succeeding Euro-Dollar
Business Day. If the date for any payment of principal is extended by operation
of law or otherwise, interest thereon shall be payable for such extended time.
49
<PAGE>
(b) Unless the Lead Agent shall have received notice from a
Borrower or CarrAmerica LP prior to the date on which any payment is due to the
Banks hereunder that such Borrower or CarrAmerica LP will not make such payment
in full, the Lead Agent may assume that such Borrower or CarrAmerica LP, as
applicable has made such payment in full to the Lead Agent on such date and the
Lead Agent may, in reliance upon such assumption, cause to be distributed to
each Bank on such due date an amount equal to the amount then due such Bank. If
and to the extent that such Borrower or CarrAmerica LP shall not have so made
such payment, each Bank shall repay to the Lead Agent forthwith on demand such
amount distributed to such Bank together with interest thereon, for each day
from the date such amount is distributed to such Bank until the date such Bank
repays such amount to the Lead Agent, at the Federal Funds Rate.
SECTION 2.13. Funding Losses. If a Borrower or CarrAmerica LP
makes any payment of principal with respect to any Euro-Dollar Loan (pursuant to
Article II, VI or VIII or otherwise) on any day other than the last day of the
Interest Period applicable thereto, or the last day of an applicable period
fixed pursuant to Section 2.7(b), or if a Borrower fails to borrow any
Euro-Dollar Loans, after notice has been given to any Bank in accordance with
Section 2.4(a), such Borrower or CarrAmerica LP shall reimburse each Bank within
15 days after demand for any resulting loss or expense incurred by it (or by an
existing Participant in the related Loan), including (without limitation) any
loss incurred in obtaining, liquidating or employing deposits from third
parties, but excluding loss of margin for the period after any such payment or
failure to borrow, provided that such Bank shall have delivered to such Borrower
or CarrAmerica LP a certificate as to the amount of such loss or expense and the
calculation thereof, which certificate shall be conclusive in the absence of
manifest error.
SECTION 2.14. Computation of Interest and Fees. Interest based
on the Prime Rate hereunder shall be computed on the basis of a year of 365 days
(or 366 days in a leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All other interest and
fees shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding the last
day).
50
<PAGE>
SECTION 2.15. Method of Electing Interest Rates.
(a) The Loans included in each Borrowing shall bear interest
initially at the type of rate specified by such Borrower or CarrAmerica LP in
the applicable Notice of Borrowing. Thereafter, such Borrower or CarrAmerica LP,
as applicable, may from time to time elect to change or continue the type of
interest rate borne by each Group of Loans (subject in each case to the
provisions of Article VIII), as follows:
(i) if such Loans are Base Rate Loans, a Borrower or
CarrAmerica LP, as applicable, may elect to convert such Loans to Euro-Dollar
Loans as of any Euro-Dollar Business Day;
(ii) if such Loans are Euro-Dollar Loans, a Borrower or
CarrAmerica LP, as applicable, may elect to convert such Loans to Base Rate
Loans or elect to continue such Loans as Euro-Dollar Loans for an additional
Interest Period, in each case effective on the last day of the then current
Interest Period applicable to such Loans.
Each such election shall be made by delivering a notice (a "Notice of Interest
Rate Election") to the Lead Agent at least three (3) Euro-Dollar Business Days
before the conversion or continuation selected in such notice is to be effective
(unless the relevant Loans are to be continued as Base Rate Loans, in which case
such notice shall be delivered to the Lead Agent no later than 12:00 Noon (New
York City time) at least one (1) Domestic Business Day before such continuation
is to be effective). A Notice of Interest Rate Election may, if it so specifies,
apply to only a portion of the aggregate principal amount of the relevant Group
of Loans; provided that (i) such portion is allocated ratably among the Loans
comprising such Group, (ii) the portion to which such notice applies, and the
remaining portion to which it does not apply, are each $1,000,000 or any larger
multiple of $1,000,000, (iii) subject to Section 2.1, there shall be no more
than ten (10) Borrowings comprised of Euro-Dollar Loans outstanding at any time
under this Agreement, (iv) no Loan may be continued as, or converted into, a
Euro-Dollar Loan when any Event of Default has occurred and is continuing, and
(v) no Interest Period shall extend beyond the Maturity Date.
(b) Each Notice of Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which such
notice applies;
51
<PAGE>
(ii) the date on which the conversion or continuation
selected in such notice is to be effective, which shall comply with the
applicable clause of subsection (a) above;
(iii) if the Loans comprising such Group are to be
converted, the new type of Loans and, if such new Loans are Euro-Dollar Loans,
the duration of the initial Interest Period applicable thereto; and
(iv) if such Loans are to be continued as Euro-Dollar
Loans for an additional Interest Period, the duration of such additional
Interest Period.
Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of Interest Period.
(c) Upon receipt of a Notice of Interest Rate Election from a
Borrower or CarrAmerica LP pursuant to subsection (a) above, the Lead Agent
shall notify each Bank on the same day as it receives such Notice of Interest
Rate Election of the contents thereof and such notice shall not thereafter be
revocable by such Borrower or CarrAmerica LP. If such Borrower or CarrAmerica LP
fails to deliver a timely Notice of Interest Rate Election to the Lead Agent for
any Group of Euro-Dollar Loans, such Loans shall be converted into Base Rate
Loans on the last day of the then current Interest Period applicable thereto.
SECTION 2.16. Letters of Credit. (a) Subject to the terms
contained in this Agreement and the other Loan Documents, upon the receipt of a
notice in accordance with Section 2.2(b) requesting the issuance of a Letter of
Credit, the Fronting Bank shall issue a Letter of Credit or Letters of Credit in
such form as is reasonably acceptable to the applicable Borrower or CarrAmerica
LP, as applicable, in an amount or amounts equal to the amount or amounts
requested by the applicable Borrower or CarrAmerica LP.
(b) Each Letter of Credit shall be issued in the minimum
amount of One Million Dollars ($1,000,000).
(c) The Letter of Credit Usage shall be no more than
$30,000,000 at any one time.
52
<PAGE>
(d) There shall be no more than five (5) Letters of Credit
outstanding at any one time.
(e) In the event of any request for a drawing under any Letter
of Credit by the beneficiary thereunder, the Fronting Bank shall notify the
applicable Borrower and the Lead Agent (and the Lead Agent shall endeavor to
notify each Bank thereof) on or before the date on which the Fronting Bank
intends to honor such drawing, and, except as provided in this subsection (e),
the applicable Borrower shall reimburse the Fronting Bank, in immediately
available funds, on the same day on which such drawing is honored in an amount
equal to the amount of such drawing. Notwithstanding anything contained herein
to the contrary, however, unless such Borrower or CarrAmerica LP shall have
notified the Lead Agent, and the Fronting Bank prior to 11:00 a.m. (New York
time) on the Domestic Business Day immediately prior to the date of such drawing
that such Borrower intends to reimburse the Fronting Bank for the amount of such
drawing with funds other than the proceeds of the Loans, the applicable Borrower
or CarrAmerica LP shall be deemed to have timely given a Notice of Borrowing
pursuant to Section 2.2 to the Lead Agent, requesting a Borrowing of Base Rate
Loans on the date on which such drawing is honored and in an amount equal to the
amount of such drawing. Each Bank (other than the Fronting Bank) shall, in
accordance with Section 2.4(b), make available its share of such Borrowing to
the Lead Agent, the proceeds of which shall be applied directly by the Lead
Agent to reimburse the Fronting Bank for the amount of such draw. In the event
that any such Bank fails to make available to the Fronting Bank the amount of
such Bank's participation on the date of a drawing, the Fronting Bank shall be
entitled to recover such amount on demand from such Bank together with interest
at the Federal Funds Rate commencing on the date such drawing is honored.
(f) If, after the date hereof, any change in any law or
regulation or in the interpretation thereof by any court or administrative or
governmental authority charged with the administration thereof shall either (a)
impose, modify or deem applicable any reserve, special deposit or similar
requirement against letters of credit issued by, or assets held by, or deposits
in or for the account of, or participations in any letter of credit, upon any
Bank (including the Fronting Bank) or (b) impose on any Bank any other condition
regarding this Agreement or such Bank (including the Fronting Bank) as it
pertains to the Letters of Credit or any participation therein and the result of
any event referred to in the preceding clause (a) or (b) shall be to increase
53
<PAGE>
the cost to the Fronting Bank or any Bank of issuing or maintaining any Letter
of Credit or participating therein then the applicable Borrower or CarrAmerica
LP shall pay to the Fronting Bank or such Bank, within 15 days after written
demand by such Bank (with a copy to the Lead Agent), which demand shall be
accompanied by a certificate showing, in reasonable detail, the calculation of
such amount or amounts, such additional amounts as shall be required to
compensate the Fronting Bank or such Bank for such increased costs or reduction
in amounts received or receivable hereunder together with interest thereon at
the Base Rate. The amount specified in the written demand shall, absent manifest
error, be final and conclusive and binding upon the Borrowers and CarrAmerica
LP.
(g) The Borrowers and CarrAmerica LP hereby agree to protect,
indemnify, pay and save the Fronting Bank harmless from and against any and all
claims, demands, liabilities, damages, losses, costs, charges and expenses
(including reasonable attorneys' fees and disbursements) which the Fronting Bank
may incur or be subject to as a result of (i) the issuance of the Letters of
Credit, other than as a result of the gross negligence or wilful misconduct of
the Fronting Bank or (ii) the failure of the Fronting Bank to honor a drawing
under any Letter of Credit as a result of any act or omission, whether rightful
or wrongful, of any present or future de jure or de facto government or
governmental authority (collectively, "Governmental Acts"), other than as a
result of the gross negligence or wilful misconduct of the Fronting Bank. As
between the Borrowers, CarrAmerica LP and the Fronting Bank, the Borrowers and
CarrAmerica LP assume all risks of the acts and omissions of, or misuses of, the
Letters of Credit issued by the Fronting Bank, by the beneficiaries of such
Letters of Credit. In furtherance and not in limitation of the foregoing, the
Fronting Bank shall not be responsible (i) for the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document submitted by any party in
connection with the application for and issuance of such Letters of Credit, even
if it should in fact prove to be in any and all respects invalid, insufficient,
inaccurate, fraudulent or forged; (ii) for the validity or insufficiency of any
instrument transferring or assigning or purporting to transfer or assign any
such 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 such 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 message, by mail, cable, telegraph, telex, facsimile
transmission, or otherwise; (v) for errors in interpretation of any technical
terms; (vi) for any loss or delay in the transmission or otherwise of any
54
<PAGE>
documents required in order to make a drawing under any such Letter of Credit or
of the proceeds thereof; (vii) for the misapplication by the beneficiary of any
such Letter of Credit of the proceeds of such Letter of Credit; and (viii) for
any consequence arising from causes beyond the control of the Fronting Bank,
including any Government Acts, in each case other than as a result of the gross
negligence or willful misconduct of the Fronting Bank. None of the above shall
affect, impair or prevent the vesting of the Fronting Bank's rights and powers
hereunder. In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by the Fronting
Bank under or in connection with the Letters of Credit issued by it or the
related certificates, if taken or omitted in good faith, shall not put the
Fronting Bank under any resulting liability to the Borrowers or CarrAmerica LP.
(h) If the Fronting Bank or the Lead Agent is required at any
time, pursuant to any bankruptcy, insolvency, liquidation or reorganization law
or otherwise, to return to the Borrowers or CarrAmerica LP any reimbursement by
the Borrowers or CarrAmerica LP of any drawing under any Letter of Credit, each
Bank shall pay to the Fronting Bank or the Lead Agent, as the case may be, its
share of such payment, but without interest thereon unless the Fronting Bank or
the Lead Agent is required to pay interest on such amounts to the person
recovering such payment, in which case with interest thereon, computed at the
same rate, and on the same basis, as the interest that the Fronting Bank or the
Lead Agent is required to pay.
SECTION 2.17. Letter of Credit Usage Absolute. The obligations
of the Borrowers and CarrAmerica LP under this Agreement in respect of any
Letter of Credit shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement (as the same may be
amended from time to time) and any Letter of Credit Documents (as hereinafter
defined) under all circumstances, including, without limitation, to the extent
permitted by law, the following circumstances:
(a) any lack of validity or enforceability of any Letter of
Credit or any other agreement or instrument relating thereto (collectively, the
"Letter of Credit Documents") or any Loan Document;
(b) any change in the time, manner or place of payment of, or
in any other term of, all or any of the obligations of either Borrower or
CarrAmerica LP in respect of the Letters of Credit or any other amendment or
waiver of or any consent by either Borrower or CarrAmerica LP to departure from
all or any of the Letter of Credit Documents or any Loan Document, provided that
the Fronting Bank shall not consent to any such change or amendment unless
previously consented to in writing by either Borrower or CarrAmerica LP, as
applicable;
55
<PAGE>
(c) any exchange, release or non-perfection of any collateral,
or any release or amendment or waiver of or consent to departure from any
guaranty, for all or any of the obligations of either Borrower or CarrAmerica LP
in respect of the Letters of Credit;
(d) the existence of any claim, set-off, defense or other
right that either Borrower or CarrAmerica LP may have at any time against any
beneficiary or any transferee of a Letter of Credit (or any Persons for whom any
such beneficiary or any such transferee may be acting), the Lead Agent, the
Fronting Bank or any Bank (other than a defense based on the gross negligence or
wilful misconduct of the Lead Agent, the Fronting Bank or such Bank) or any
other Person, whether in connection with the Loan Documents, the transactions
contemplated hereby or by the Letters of Credit Documents or any unrelated
transaction;
(e) any draft or any other document presented under or in
connection with any Letter of Credit or other Loan Document proving to be
forged, fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect; provided that payment by the
Fronting Bank under such Letter of Credit against presentation of such draft or
document shall not have constituted gross negligence or wilful misconduct of the
Fronting Bank;
(f) payment by the Fronting Bank against presentation of a
draft or certificate that does not comply with the terms of the Letter of
Credit; provided that such payment shall not have constituted gross negligence
or wilful misconduct of the Fronting Bank; and
(g) any other circumstance or happening whatsoever other than
the payment in full of all obligations hereunder in respect of any Letter of
Credit or any agreement or instrument relating to any Letter of Credit, whether
or not similar to any of the foregoing, that might otherwise constitute a
defense available to, or a discharge of, the Borrowers or CarrAmerica LP;
provided that such other circumstance or happening shall not have been the
result of gross negligence or wilful misconduct of the Fronting Bank.
56
<PAGE>
ARTICLE III
CONDITIONS
SECTION 3.1. Closing. The closing hereunder shall occur on the
date (the "Closing Date") when each of the following conditions is satisfied (or
waived by the Lead Agent), each document to be dated the Closing Date unless
otherwise indicated:
(a) Carr and CarrAmerica LP shall have executed and delivered
to the Lead Agent a Tranche A Note for the account of each Bank dated on or
before the Closing Date complying with the provisions of Section 2.5;
(b) Carr and Carr LP shall have executed and delivered to the
Lead Agent a Tranche B Note for the account of each Bank dated on or before the
Closing Date complying with the provisions of Section 2.5;
(c) the Borrowers and CarrAmerica LP shall have executed and
delivered to the Lead Agent a duly executed original of this Agreement;
(d) Lead Agent shall have received an opinion of Hogan &
Hartson L.L.P., with respect to certain matters of New York and Maryland law,
acceptable to the Lead Agent, the Banks and their counsel;
(e) the Lead Agent shall have received all documents the Lead
Agent may reasonably request relating to the existence of the Borrowers and
CarrAmerica LP, the authority for and the validity of this Agreement and the
other Loan Documents, and any other matters relevant hereto, all in form and
substance reasonably satisfactory to the Lead Agent. Such documentation shall
include, without limitation, the articles of incorporation and by-laws of Carr
and the partnership agreement and limited partnership certificate of Carr LP and
CarrAmerica LP, as amended, modified or supplemented to the Closing Date, each
certified to be true, correct and complete by a senior officer of Carr, Carr LP
or CarrAmerica LP, as applicable, as of a date not more than forty-five (45)
days prior to the Closing Date, together with a good standing certificate from
the Secretary of State (or the equivalent thereof) of Maryland with respect to
Carr and a good standing certificate from the Secretary of State (or the
equivalent thereof) of Delaware with respect to Carr LP and CarrAmerica LP and
from the Secretary of State (or the equivalent thereof) of each other State in
which Carr, Carr LP and CarrAmerica LP is required to be qualified to transact
business, each to be dated not more than forty-five (45) days prior to the
Closing Date;
57
<PAGE>
(f) the Lead Agent shall have received all certificates,
agreements and other documents and papers referred to in this Section 3.1 and
Section 3.2, unless otherwise specified, in sufficient counterparts,
satisfactory in form and substance to the Lead Agent in its sole discretion;
(g) the Borrowers and CarrAmerica LP shall have taken all
actions required to authorize the execution and delivery of this Agreement and
the other Loan Documents and the performance thereof by the Borrowers and
CarrAmerica LP;
(h) the Lead Agent shall have received an unaudited
consolidated balance sheet and income statement of Carr for the fiscal quarter
ended June 30, 1998;
(i) the Lead Agent shall have received wire transfer
instructions in connection with the Loans to be made on the Closing Date;
(j) the Lead Agent shall have received, for its and any other
Bank's account, all fees due and payable pursuant to Section 2.8 hereof on or
before the Closing Date, and the reasonable fees and expenses accrued through
the Closing Date of Skadden, Arps, Slate, Meagher & Flom LLP;
(k) the Lead Agent shall have received copies of all consents,
licenses and approvals, if any, required in connection with the execution,
delivery and performance by the Borrower and CarrAmerica LP, and the validity
and enforceability, of the Loan Documents, or in connection with any of the
transactions contemplated thereby, and such consents, licenses and approvals
shall be in full force and effect;
(l) the Lead Agent shall have received satisfactory reports of
Uniform Commercial Code filing searches conducted by a search firm acceptable to
the Lead Agent with respect to the Borrowers, such searches to be conducted in
each of the locations specified by the Lead Agent;
58
<PAGE>
(m) no material defaults or Events of Default (as defined
therein) shall exist under the Existing Credit Agreement or any existing
agreement entered into by either Borrower or CarrAmerica LP in connection with
any Debt of such Borrower or CarrAmerica LP;
(n) the representations and warranties of the Borrowers and
CarrAmerica LP contained in this Agreement shall be true and correct in all
material respects on and as of the Closing Date both before and after giving
effect to the making of any Loans;
(o) receipt by the Lead Agent and the Banks of a certificate
of the chief financial officer or the chief accounting officer of Carr
certifying that the Borrowers and CarrAmerica LP are in compliance with all
covenants of the Borrowers and CarrAmerica LP contained in this Agreement,
including, without limitation, the requirements of Section 5.8, as of the
Closing Date.
The Lead Agent shall promptly notify the Borrowers and CarrAmerica LP and the
Banks of the Closing Date, and such notice shall be conclusive and binding on
all parties hereto.
SECTION 3.2. Borrowings. The obligation of any Bank to make a
Loan on the occasion of any Borrowing or to participate in any Letter of Credit
issued by the Fronting Bank and the obligation of the Fronting Bank to issue a
Letter of Credit on the occasion of any Borrowing is subject to the satisfaction
of the following conditions:
(a) the Closing Date shall have occurred on or prior to
September 30, 1998;
(b) receipt by the Lead Agent of a Notice of Borrowing as
required by Section 2.2 or Section 2.3;
(c) immediately after such Borrowing, the Outstanding Balance
will not exceed the aggregate amount of the Commitments and with respect to each
Bank, such Bank's pro rata portion of the Committed Loans and Letter of Credit
Usage will not exceed such Bank's Commitment;
59
<PAGE>
(d) immediately before and after such Borrowing, no Default or
Event of Default shall have occurred and be continuing both before and after
giving effect to the making of such Loans;
(e) the representations and warranties of the Borrowers and
CarrAmerica LP contained in this Agreement shall be true and correct in all
material respects on and as of the date of such Borrowing both before and after
giving effect to the making of such Loans;
(f) no law or regulation shall have been adopted, no order,
judgment or decree of any governmental authority shall have been issued, and no
litigation shall be pending or threatened, which does or, with respect to any
threatened litigation, seeks to enjoin, prohibit or restrain, the making or
repayment of the Loans, the issuance of any Letters of Credit or any
participations therein or the consummation of the transactions contemplated
hereby; and
(g) no event, act or condition shall have occurred after the
Closing Date which, in the reasonable judgment of the Lead Agent or the Required
Banks, as the case may be, has had or is likely to have a Material Adverse
Effect.
Each Borrowing hereunder shall be deemed to be a representation and warranty by
the applicable Borrower and CarrAmerica LP, if applicable, on the date of such
Borrowing as to the facts specified in clauses (c) through (g) of this Section
(except that with respect to clause (f), such representation and warranty shall
be deemed to be limited to laws, regulations, orders, judgments, decrees and
litigation affecting the Borrowers or CarrAmerica LP and not solely the Banks).
SECTION 3.3 New Acquisitions and Additional Real Property
Assets.
All New Acquisitions or Real Property Assets may be added to
the Unencumbered Asset Pool Properties upon written notice from either Borrower
to the Lead Agent specifying that such New Acquisition has been acquired and
that the same qualify as an Unencumbered Asset Pool Property.
60
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Lead Agent and each of the other Banks
which may become a party to this Agreement to make the Loans, the applicable
Borrower or CarrAmerica LP makes the following representations and warranties
as of the date hereof. Such representations and warranties shall survive the
effectiveness of this Agreement, the execution and delivery of the other Loan
Documents and the making of the Loans.
SECTION 4.1. Existence and Power of Carr. Carr is duly
organized, validly existing and in good standing as a corporation under the laws
of the State of Maryland and has all powers and all material governmental
licenses, authorizations, consents and approvals required to own its property
and assets and carry on its business as now conducted or as it presently
proposes to conduct and has been duly qualified and is in good standing in every
jurisdiction in which the failure to be so qualified and/or in good standing is
likely to have a Material Adverse Effect.
SECTION 4.2. Existence and Power of Carr LP and CarrAmerica
LP. Carr LP and CarrAmerica LP are each duly organized, validly existing and in
good standing as a limited partner ship under the laws of the State of Delaware
and each has all powers and all material governmental licenses, authorizations,
consents and approvals required to own its property and assets and carry on its
business as now conducted or as it presently proposes to conduct and each has
been duly qualified and is in good standing in every jurisdiction in which the
failure to be so qualified and/or in good standing is likely to have a Material
Adverse Effect.
SECTION 4.3. Power and Authority of Carr. Carr has the
corporate power and authority to execute, deliver and carry out the terms and
provisions of each of the Loan Documents to which it is a party and has taken
all necessary action to authorize the execution and delivery on behalf of Carr
and the performance by Carr of such Loan Documents. Carr has duly executed and
delivered each Loan Document to which it is a party, and each such Loan Document
constitutes the legal, valid and binding obligation of Carr, enforceable in
accordance with its terms, except as enforce ability may be limited by
applicable insolvency, bankruptcy or other laws affecting creditors rights
generally, or general principles of equity, whether such enforceability is
considered in a proceeding in equity or at law.
61
<PAGE>
SECTION 4.4. Power and Authority of Carr LP and CarrAmerica
LP. Carr LP and CarrAmerica LP each have the partner ship power and authority to
execute, deliver and carry out the terms and provisions of each of the Loan
Documents to which it is a party and has taken all necessary action to authorize
the execution and delivery on behalf of Carr LP or CarrAmerica LP, as
applicable, and the performance by Carr LP or CarrAmerica LP, as applicable, of
such Loan Documents. Carr LP and CarrAmerica LP have each duly executed and
delivered each Loan Document to which it is a party, and each such Loan Document
constitutes the legal, valid and binding obligation of Carr LP or CarrAmerica
LP, as applicable, enforceable in accordance with its terms, except as
enforceability may be limited by applicable insolvency, bankruptcy or other laws
affecting creditors rights generally, or general principles of equity, whether
such enforceability is considered in a proceeding in equity or at law.
SECTION 4.5. No Violation. Neither the execution, delivery
or performance by or on behalf of the Borrowers or CarrAmerica LP of the Loan
Documents, nor compliance by the Borrowers or CarrAmerica LP with the terms and
provisions thereof nor the consummation of the transactions contemplated by the
Loan Documents, (i) will contravene any applicable provision of any law,
statute, rule, regulation, order, writ, injunction or decree of any court or
governmental instrumentality or (ii) will conflict with or result in any breach
of, any of the terms, covenants, conditions or provisions of, or constitute a
default under, or result in the creation or imposition of (or the obligation to
create or impose) any Lien upon any of the property or assets of the Borrowers
or CarrAmerica LP pursuant to the terms of any indenture, mortgage, deed of
trust, or other agreement or other instrument to which the Borrowers or
CarrAmerica LP (or of any partnership of which either Borrower is a partner) is
a party or by which it or any of its property or assets is bound or to which it
is subject or (iii) will cause a default by either Borrower or CarrAmerica LP
under any organizational document of any Subsidiary, or cause a default under
Carr's articles of incorporation or by-laws or Carr LP's or CarrAmerica LP's
agreement of limited partnership.
SECTION 4.6. Financial Information.
(a) The unaudited consolidated balance sheet of Carr as of
June 30, 1998, a copy of which has been delivered to the Lead Agent, fairly
presents, in conformity with generally accepted accounting principles, the
consolidated financial position of Carr as of such date.
62
<PAGE>
(b) Since June 30, 1998, (i) there has been no material ad
verse change in the business, financial position or results of operations of the
Borrowers and (ii) except as previously disclosed to the Lead Agent or as
publicly disclosed, neither the Borrowers nor CarrAmerica LP have incurred any
material indebtedness or guaranty.
SECTION 4.7. Litigation.
(a) There is no action, suit or proceeding pending against, or
to the knowledge of the Borrowers or CarrAmerica LP, threatened against or
affecting, (i) the Borrowers or CarrAmerica LP or any of their Subsidiaries,
(ii) the Loan Documents or any of the transactions contemplated by the Loan
Documents or (iii) any of their assets, in any case before any court or
arbitrator or any governmental body, agency or official in which there is a
reason able likelihood of an adverse decision which could, individually or in
the aggregate, have a Material Adverse Effect or which in any manner draws into
question the validity of this Agreement or the other Loan Documents.
(b) There are no final nonappealable judgments or decrees in
an aggregate amount of Five Million Dollars ($5,000,000) or more entered by a
court or courts of competent jurisdiction against the Borrowers or either
Borrower or CarrAmerica LP (other than any judgment as to which, and only to the
extent, a reputable insurance company has acknowledged coverage of such claim in
writing).
SECTION 4.8. Compliance with ERISA.
(a) Except as previously disclosed to the Lead Agent in
writing, each member of the ERISA Group has fulfilled its obligations under the
minimum funding standards of ERISA and the Internal Revenue Code with respect to
each Plan and is in compliance in all material respects with the presently
applicable provisions of ERISA and the Internal Revenue Code with respect to
each Plan, except where failure to do so would not result in a Material Adverse
Effect. No member of the ERISA Group has (i) sought a waiver of the minimum
funding standard under Section 412 of the Internal Revenue Code in respect of
any Plan, (ii) failed to make any contribution or payment to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement, or made any
amendment to any Plan or Benefit Arrangement, which has resulted or could result
in the imposition of a Lien or the posting of a bond or other security under
ERISA or the Internal Revenue Code or (iii) incurred any liability under Title
IV of ERISA other than a liability to the PBGC for premiums under Section 4007
of ERISA.
63
<PAGE>
(b) The transactions contemplated by the Loan Documents will
not constitute a nonexempt prohibited transaction (as such term is defined in
Section 4975 of the Code or Section 406 of ERISA) that could subject the Lead
Agent or the Banks to any tax or penalty or prohibited transactions imposed
under Section 4975 of the Code or Section 502(i) of ERISA.
SECTION 4.9. Environmental Matters. In the ordinary course of
its business, the Borrowers and CarrAmerica LP each review the effect of
Environmental Laws on the business, operations and properties of the Borrowers
and their subsidiaries or CarrAmerica LP, as applicable, in the course of which
they identify and evaluate associated liabilities and costs (including, with
out limitation, any capital or operating expenditures required for clean-up or
closure of properties presently or previously owned, any capital or operating
expenditures required to achieve or maintain compliance with environmental
protection standards imposed by law or as a condition of any license, permit or
contract, any related constraints on operating activities, including any
periodic or permanent shutdown of any facility or reduction in the level of or
change in the nature of operations conducted thereat, any costs or liabilities
in connection with off-site disposal of wastes or Hazardous Substances, and any
actual or potential liabilities to third parties, including employees, and any
related costs and expenses). On the basis of this review, the Borrowers and
CarrAmerica LP have reasonably concluded that such associated liabilities and
costs, including the costs of compliance with Environmental Laws, are unlikely
to have a Material Adverse Effect.
SECTION 4.10. Taxes. The initial tax year of each Borrower
for federal income tax purposes was 1993. The initial tax year of CarrAmerica LP
for federal income tax purposes was 1996. The Borrowers and their subsidiaries
and CarrAmerica LP have filed all United States Federal income tax returns and
all other material tax returns which are required to be filed by them and have
paid all taxes due pursuant to such returns or pursuant to any assessment
received by the Borrowers or any subsidiary. The charges, accruals and reserves
on the books of the Borrowers and their subsidiaries and CarrAmerica LP in
respect of taxes or other governmental charges are, in the opinion of the
Borrowers and CarrAmerica LP, adequate.
64
<PAGE>
SECTION 4.11. Full Disclosure. All information heretofore
furnished by the Borrowers or CarrAmerica LP to the Lead Agent or any Bank for
purposes of or in connection with this Agreement or any transaction contemplated
hereby is true and accurate in all material respects on the date as of which
such information is stated or certified. The Borrowers and CarrAmerica LP have
disclosed to the Banks in writing any and all facts known to the Borrowers or
CarrAmerica LP which materially and adversely affect or are likely to materially
and adversely affect (to the extent the Borrowers or CarrAmerica LP can now
reasonably foresee), the business, operations or financial condition of the
Borrowers and CarrAmerica LP considered as one enterprise or the ability of the
Borrowers or CarrAmerica LP, as applicable, to perform their obligations under
this Agreement or the other Loan Documents.
SECTION 4.12. Solvency. On the Closing Date and after giving
effect to the transactions contemplated by the Loan Documents occurring on the
Closing Date, each Borrower and CarrAmerica LP is Solvent.
SECTION 4.13. Use of Proceeds; Margin Regulations. All
proceeds of the Loans will be used by the Borrowers only in accordance with the
provisions hereof. No part of the proceeds of any Loan will be used by the
Borrowers to purchase or carry any Margin Stock or to extend credit to others
for the purpose of purchasing or carrying any Margin Stock. Neither the making
of any Loan nor the use of the proceeds thereof will violate or be inconsistent
with the provisions of Regulations T, U or X of the Federal Re serve Board.
SECTION 4.14. Governmental Approvals. No order, consent,
approval, license, authorization, or validation of, or filing, re cording or
registration with, or exemption by, any governmental or public body or
authority, or any subdivision thereof, is required to authorize, or is required
in connection with the execution, delivery and performance of any Loan Document
or the consummation of any of the transactions contemplated thereby other than
those that have already been duly made or obtained and remain in full force and
effect.
SECTION 4.15. Investment Company Act; Public Utility Holding
Company Act. Neither Borrower nor CarrAmerica LP is (x) an "investment company"
or a company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended, (y) a "holding company" or a
"subsidiary company" of a "holding company" or an "affiliate" of either a
"holding company" or a "subsidiary company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended, or (z) subject to any other
federal or state law or regulation which purports to restrict or regulate its
ability to borrow money.
65
<PAGE>
SECTION 4.16. Closing Date Transactions. On the Closing Date
and immediately prior to the making of the Loans, the trans actions (other than
the making of the Loans) intended to be consummated on the Closing Date will
have been consummated in accordance with all applicable laws. All consents and
approvals of, and filings and registrations with, and all other actions by, any
Person required in order to make or consummate such transactions have been
obtained, given, filed or taken and are in full force and effect.
SECTION 4.17. Representations and Warranties in Loan
Documents. All representations and warranties made by the Borrowers and
CarrAmerica LP in the Loan Documents are true and correct in all material
respects.
SECTION 4.18. Patents, Trademarks, etc. Each Borrower and
CarrAmerica LP has obtained and holds in full force and effect all patents,
trademarks, service marks, trade names, copyrights and other such rights, free
from burdensome restrictions, which are necessary for the operation of its
business as presently conducted, the impairment of which is likely to have a
Material Adverse Effect. To the Borrowers' and CarrAmerica LP's knowledge, no
material product, process, method, substance, part or other material presently
sold by or employed by the Borrowers or CarrAmerica LP in connection with such
business infringes any patent, trademark, service mark, trade name, copyright,
license or other such right owned by any other Person. There is not pending or,
to the Borrowers' and CarrAmerica LP's knowledge, threatened any claim or
litigation against or affecting either Borrower or CarrAmerica LP contesting its
right to sell or use any such product, process, method, substance, part or other
material.
SECTION 4.19. No Default. No Default or Event of Default
exists under or with respect to any Loan Document. Neither Borrower nor
CarrAmerica LP is in default in any material respect beyond any applicable grace
period under or with respect to any other material agreement, instrument or
undertaking to which it is a party or by which it or any of its property is
bound in any respect, the existence of which default is likely (to the extent
that the Borrowers or CarrAmerica LP, as applicable, can now reasonably foresee)
to result in a Material Adverse Effect.
66
<PAGE>
SECTION 4.20. Licenses, etc. Each Borrower and CarrAmerica LP
has obtained and holds in full force and effect, all franchises, licenses,
permits, certificates, authorizations, qualifications, accreditations,
easements, rights of way and other consents and approvals which are necessary
for the operation of its businesses as presently conducted, the absence of which
is likely (to the extent that the Borrowers or CarrAmerica LP, as applicable,
can now reasonably foresee) to have a Material Adverse Effect.
SECTION 4.21. Compliance With Law. Each Borrower and
CarrAmerica LP is in compliance with all laws, rules, regulations, orders,
judgments, writs and decrees, including, without limitation, all building and
zoning ordinances and codes, the failure to comply with which is likely (to the
extent that the Borrowers or CarrAmerica LP, as applicable, can now reasonably
foresee) to have a Material Adverse Effect.
SECTION 4.22. No Burdensome Restrictions. Neither Borrower
nor CarrAmerica LP is a party to any agreement or instrument or subject to any
other obligation or any charter or corporate or partnership restriction, as the
case may be, which, individually or in the aggregate, is likely (to the extent
that the Borrowers or CarrAmerica LP, as applicable, can now reasonably foresee)
to have a Material Adverse Effect.
SECTION 4.23. Brokers' Fees. Neither Borrower nor CarrAmerica
LP has dealt with any broker or finder with respect to the transactions
contemplated by the Loan Documents (except with respect to the acquisition or
disposition of Real Property Assets) or otherwise in connection with this
Agreement, and neither Borrower nor CarrAmerica LP has done any acts, had any
negotiations or conversation, or made any agreements or promises which will in
any way create or give rise to any obligation or liability for the payment by
the Borrower or CarrAmerica LP of any brokerage fee, charge, commission or other
compensation to any party with respect to the transactions contemplated by the
Loan Documents (except with respect to the acquisition or disposition of Real
Property Assets), other than the fees payable hereunder.
SECTION 4.24. Labor Matters. There are no collective bar
gaining agreements or Multiemployer Plans covering the employees of the
Borrowers or CarrAmerica LP and the Borrowers or CarrAmerica LP have not
suffered any strikes, walkouts, work stop pages or other material labor
difficulty within the last five (5) years.
67
<PAGE>
SECTION 4.25. Organizational Documents. The documents
delivered pursuant to Section 3.1(e) constitute, as of the Closing Date, all of
the organizational documents (together with all amendments and modifications
thereof) of the Borrowers. The Borrowers represent that they have delivered to
the Lead Agent true, correct and complete copies of each of the documents set
forth in this Section 4.25. CarrAmerica LP represents that it has delivered to
the Lead Agent and the Banks true, correct and complete copies of all of the
organizational documents (together with all amendments and modifications
thereof) of CarrAmerica LP as of the Closing Date.
SECTION 4.26. Principal Offices. The principal office, chief
executive office and principal place of business of each of the Borrowers and
CarrAmerica LP is 1850 K Street, Suite 500, N.W., Washington, D.C. 20006
SECTION 4.27. REIT Status. For the fiscal year ended December
31, 1997, Carr qualified and Carr intends to continue to qualify as a real
estate investment trust under the Code.
SECTION 4.28. Ownership of Property. Schedule 4.28 attached
hereto and made a part hereof sets forth all the real property owned or leased
by the Borrowers and Persons in which the Borrowers, directly or indirectly, own
an interest as of the Closing Date. As of the Closing Date, each Borrower and
such Persons have good and insurable fee simple title (or leasehold title if so
designated on Schedule 4.28) to all of such real property, subject to customary
encumbrances and liens as of the date of this Agreement. As of the date of this
Agreement, there are no mortgages, deeds of trust, indentures, debt instruments
or other agreements creating a Lien against any of the Real Property Assets
except as disclosed on Schedule 4.28.
SECTION 4.29. Insurance. Each Borrower and CarrAmerica LP
currently maintains, or causes its tenants to maintain, insurance at 100%
replacement cost insurance coverage (subject to customary deductibles) in
respect of each of the Real Property Assets, as well as commercial general
liability insurance (including "builders' risk") against claims for personal,
and bodily injury and/or death, to one or more persons, or property damage, as
well as workers' compensation insurance, in each case with respect to the Real
Property Assets with insurers having an A.M. Best policyholders' rating of not
less than A-IX in amounts that prudent owner of assets such as the Real Property
Assets would maintain.
68
<PAGE>
SECTION 4.30. Year 2000 Compliance. Each Borrower and
CarrAmerica LP has conducted a comprehensive review and assesment of its
computer applications and has made such inquiry as it determined to be advisable
of its key suppliers, vendors and customers or prospects with respect to the
"year 2000 problem" (i.e., the risk that computer applications may not be able
to properly perform date-sensitive functions after December 31, 1999) and, based
on that review and inquiry, neither Borrower nor CarrAmerica LP believes that
the year 2000 problem will result in a material adverse change in its business
condition (financial or otherwise), operations, properties or prospects, or
ability to repay the Loans.
ARTICLE V
AFFIRMATIVE AND NEGATIVE COVENANTS
Each Borrower and CarrAmerica LP covenant and agree that, so
long as any Bank has any Commitment hereunder or any Obligations remain unpaid:
SECTION 5.1. Information. The applicable Borrower will
deliver to the Lead Agent and to each of the Banks:
(a) as soon as available and in any event within 105 days
after the end of each fiscal year of Carr, an audited consolidated balance sheet
of Carr as of the end of such fiscal year and the related consolidated
statements of cash flow and operations for such fiscal year, setting forth in
each case in comparative form the figures for the previous fiscal year, audited
by KPMG Peat Marwick LLP or other independent public accountants of similar
standing;
(b) as soon as available and in any event within fifty (50)
days after the end of each quarter of each fiscal year of Carr, a statement of
Carr, prepared on a GAAP basis, setting forth the operating income and operating
expenses of Carr, in sufficient detail so as to calculate net operating cash
flow of Carr for the immediately preceding quarter;
69
<PAGE>
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of the chief
financial officer or the chief accounting officer of Carr (i) setting forth in
reasonable detail the calculations required to establish whether the Borrowers
were in compliance with the requirements of Section 5.8 on the date of such
financial statements;(ii) stating whether any Default exists on the date of such
certificate and, if any Default then exists, setting forth the details thereof
and the action which the applicable Borrower or CarrAmerica LP is taking or
proposes to take with respect thereto; and (iii) certifying (x) that such
financial statements fairly present the financial condition and the results of
operations of Carr as of the dates and for the periods indicated, on the basis
of generally accepted accounting principles, subject, in the case of interim
financial statements, to normal year-end adjustments, and (y) that such officer
has reviewed the terms of the Loan Documents and has made, or caused to be made
under his or her supervision, a review in reasonable detail of the business and
condition of the applicable Borrower or CarrAmerica LP during the period
beginning on the date through which the last such review was made pursuant to
this Section 5.1(c) (or, in the case of the first certification pursuant to this
Section 5.1(c), the Closing Date) and ending on a date not more than ten (10)
Domestic Business Days prior to the date of such delivery and that on the basis
of such review of the Loan Documents and the business and condition of the
applicable Borrower or CarrAmerica LP, to the best knowledge of such officer,
no Default or Event of Default under any other provision of Section 6.1 occurred
or, if any such Default or Event of Default has occurred, specifying the nature
and extent thereof and, if continuing, the action the applicable Borrower or
CarrAmerica LP proposes to take in respect thereof;
(d) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements confirming the
calculations set forth in the officer's certificate delivered simultaneously
therewith pursuant to clause (c) above;
(e) (i) within five (5) days after the president, chief
financial officer, treasurer, controller or other executive officer of either
Borrower or CarrAmerica LP obtains knowledge of any Default, if such Default is
then continuing, a certificate of the chief financial officer or the president
of such Borrower or CarrAmerica LP setting forth the details thereof and the
action which such Borrower or CarrAmerica LP is taking or proposes to take with
respect thereto; (ii) promptly and in any event within ten (10) days after
either Borrower or CarrAmerica LP obtains knowledge thereof, notice of (x) any
litigation or governmental proceeding pending or threatened against the Borrower
or CarrAmerica LP, as applicable, as to which, if adversely deter mined, is
likely to individually or in the aggregate, result in a Material Adverse Effect,
and (y) any other event, act or condition which is likely to result in a
Material Adverse Effect;
70
<PAGE>
(f) if and when any member of the ERISA Group (i) gives or is
required to give notice to the PBGC of any "reportable event" (as defined in
Section 4043 of ERISA) with respect to any Plan which might constitute grounds
for a termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give notice of any such
reportable event, a copy of the notice of such reportable event given or
required to be given to the PBGC; (ii) receives notice of complete or partial
withdrawal liability under Title IV of ERISA or notice that any Multiemployer
Plan is in reorganization, is insolvent or has been terminated, a copy of such
notice; (iii) receives notice from the PBGC under Title IV of ERISA of an intent
to terminate, impose liability (other than for premiums under Section 4007 of
ERISA) in respect of, or appoint a trustee to administer any Plan, a copy of
such notice; (iv) applies for a waiver of the minimum funding standard under
Section 412 of the Internal Revenue Code, a copy of such application; (v) gives
notice of intent to terminate any Plan under Section 4041(c) of ERISA, a copy of
such notice and other information filed with the PBGC; (vi) gives notice of
withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such
notice; or (vii) fails to make any payment or contribution to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement or makes any
amendment to any Plan or Benefit Arrangement which has resulted or could result
in the imposition of a Lien or the posting of a bond or other security, a
certificate of the chief financial officer or the chief accounting officer of
such Borrower or CarrAmerica LP setting forth details as to such occurrence and
action, if any, which such Borrower, CarrAmerica LP or applicable member of the
ERISA Group is required or proposes to take;
(g) promptly and in any event within five (5) Domestic
Business Days after either Borrower or CarrAmerica LP obtains actual knowledge
of any of the following events, a certificate of the applicable Borrower or
CarrAmerica LP, executed by an officer of the applicable Borrower or CarrAmerica
LP, specifying the nature of such condition and such Borrower's or CarrAmerica
LP's, if the applicable Borrower or CarrAmerica LP, as the case may be, has
actual knowledge thereof, the Environmental Affiliate's pro posed initial
response thereto: (i) the receipt by the applicable Borrower or CarrAmerica LP,
or, if such Borrower or CarrAmerica LP has actual knowledge thereof, any of the
71
<PAGE>
Environmental Affiliates, of any communication (written or oral), whether from a
govern mental authority, citizens group, employee or otherwise, that alleges
that the applicable Borrower or CarrAmerica LP, or, if the applicable Borrower
or CarrAmerica LP has actual knowledge there of, any of the Environmental
Affiliates, is not in compliance with applicable Environmental Laws, and such
noncompliance is likely to have a Material Adverse Effect, (ii) the applicable
Borrower or CarrAmerica LP shall obtain actual knowledge that there exists any
Environmental Claim pending or threatened against the applicable Borrower,
CarrAmerica LP or any Environmental Affiliate or (iii) the applicable Borrower
obtains actual knowledge of any release, emission, discharge or disposal of any
Materials of Environmental Concern that are likely to form the basis of any
Environmental Claim against the applicable Borrower, CarrAmerica LP or any
Environmental Affiliate;
(h) promptly and in any event within five (5) Domestic
Business Days after receipt of any material notices or correspondence from any
company or agent for any company providing insurance coverage to either Borrower
or CarrAmerica LP relating to any material loss or loss in excess of $1,500,000
of the applicable Borrower or CarrAmerica LP, copies of such notices and
correspondence; and
(i) promptly upon the mailing thereof to the shareholders or
partners of either Borrower or CarrAmerica LP, copies of all financial
statements, reports and proxy statement so mailed;
(j) 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) and reports on Forms 10-K, 10-Q and
8-K (or their equivalents) which either Borrower or CarrAmerica LP shall have
filed with the Securities and Exchange Commission;
(k) simultaneously with delivery of the certificate required
pursuant to Section 5.1(c), an updated Schedule 4.28, certified by the chief
financial officer or any senior vice president or executive vice president of
Carr as true, correct and complete as of the date such updated schedules are
delivered;
(l) within 5 days after filing of the annual income tax return
with the Internal Revenue Service, a certificate of the chief financial officer
or chief accounting officer of Carr certifying that Carr is properly classified
and continues to qualify as a real estate investment trust under the Internal
Revenue Code and has taken all actions consistent with maintaining such status;
72
<PAGE>
(m) simultaneously with delivery of the information required
by Sections 5.1(a) and (b), a statement of Unencumbered Asset Pool Net Operating
Cash Flow with respect to each Unencumbered Asset Pool Property and a list of
all Unencumbered Asset Pool Properties and a statement with respect to the
occupancy at the end of the relevant period for each Unencumbered Asset Pool
Property; and
(n) from time to time such additional information regarding
the financial position or business of the Borrowers as the Lead Agent, at the
request of any Bank, may reasonably request.
SECTION 5.2. Payment of Obligations. Each Borrower and
CarrAmerica LP will pay and discharge, at or before maturity, all its material
obligations and liabilities including, without limitation, any obligation
pursuant to any agreement by which it or any of its properties is bound and any
tax liabilities, except where such tax liabilities may be contested in good
faith by appropriate proceedings, and will maintain in accordance with generally
accepted accounting principles, appropriate reserves for the accrual of any of
the same, in any case, where failure to do so will likely result in a Material
Adverse Effect.
SECTION 5.3. Maintenance of Property; Insurance.
(a) Each Borrower and CarrAmerica LP will keep, and will cause
each of its Subsidiaries to keep, all property useful and necessary in its
business, including, without limitation, the Real Property Assets, in good
repair, working order and condition, ordinary wear and tear and the provisions
of any mortgage with respect to casualty or condemnation events excepted.
(b) Each Borrower and CarrAmerica LP shall or shall cause the
Subsidiaries to maintain "all risk" insurance covering 100% replacement cost of
its real property assets with insurers having an A.M. Best policyholder's rating
of not less than A-IX, which insurance shall in any event not provide for
materially less coverage than the insurance in effect on the Closing Date, and
furnish to each Bank from time to time, upon written request, copies of
certificates of insurance under which such insurance is issued and such other
information relating to such insurance as such Bank may reasonably request.
73
<PAGE>
SECTION 5.4. Conduct of Business. Each Borrower and
CarrAmerica LP will continue to engage in business of the same general type as
now conducted by each Borrower and CarrAmerica LP, as the case may be.
SECTION 5.5. Compliance with Laws. Each Borrower and
CarrAmerica LP will comply in all material respects with all applicable laws,
ordinances, rules, regulations, and requirements of governmental authorities
(including, without limitation, Environmental Laws, all zoning and building
codes and ERISA and the rules and regulations thereunder) except where the
necessity of compliance therewith is contested in good faith by appropriate
proceedings.
SECTION 5.6. Inspection of Property, Books and Records. The
Borrowers and CarrAmerica LP will keep proper books of record and account in
which full, true and correct entries shall be made of all dealings and
transactions in relation to its business and activities; and will permit
representatives of any Bank at such Bank's expense to visit and inspect any of
its properties to examine and make abstracts from any of its books and records
and to discuss its affairs, finances and accounts with its officers, employees
and independent public accountants, all at such reason able times, upon
reasonable notice, and as often as may reasonably be desired.
SECTION 5.7. Existence.
(a) Each Borrower and CarrAmerica LP shall do or cause to be
done all things necessary to preserve and keep in full force and effect its
corporate existence or its partnership existence, as applicable.
(b) Each Borrower and CarrAmerica LP shall do or cause to be
done all things necessary to preserve and keep in full force and effect its
patents, trademarks, servicemarks, tradenames, copyrights, franchises, licenses,
permits, certificates, authorizations, qualifications, accreditations,
easements, rights of way and other rights, consents and approvals the
nonexistence of which is likely to have a Material Adverse Effect.
SECTION 5.8. Financial Covenants.
(a) Debt Service Coverage. At all times and calculated as of
the last day of each calendar quarter, the ratio of (i) Annual EBITDA to (ii)
the sum of (x) Debt Service plus (y) reserves for Capital Expenditures of $1.50
per square foot per annum for each Real Property Asset, will not be less than
1.75:1.
74
<PAGE>
(b) Maximum Total Debt to Tangible FMV. At all times and
calculated as of the last day of each calendar quarter, the Maximum Total Debt
Ratio will not be greater than (x) from the period commencing as of the Closing
Date through September 30, 1999, 55%, and (y) from and after October 1, 1999,
50%.
(c) Carr Maximum Total Debt to Carr Tangible FMV. At all times
and calculated as of the last day of each calendar quarter, the Carr Maximum
Total Debt Ratio will not be greater than (x) from the period commencing as of
the Closing Date through September 30, 1999, 55%, and (y) from and after October
1, 1999, 50%.
(d) Carr LP Maximum Total Debt to Carr LP Tangible FMV. At all
times and calculated as of the last day of each calendar quarter, the Carr LP
Maximum Total Debt Ratio will not be greater than 60%.
(e) EBITDA Interest Coverage. At all times and calculated as
of the last day of each calendar quarter, the ratio of (x) Annual EBITDA to (y)
interest (whether accrued, paid or capitalized) actually payable by either
Borrower or the Borrowers on its Debt for the previous four consecutive quarters
including the quarter then ended, will not be less than 2.25:1.
(f) EBITDA Coverage. At all times and calculated as of the
last day of each calendar quarter, the ratio of (x) Annual EBITDA to (y) the sum
of (i) Debt Service plus (ii) Capital Expenditures of the Borrowers for the
previous four consecutive quarters including the quarter then ended plus (iii)
dividends or other payments payable by Carr with respect to any preferred stock
issued by Carr, will not be less than 1.25:1.
(g) Dividends. Carr will not, as determined on an aggregate
annual basis, pay any dividends in excess of 90% of Carr's consolidated FFO for
such year. During the continuance of an Event of Default under Section 6.1(a),
Carr shall only pay those dividends necessary to maintain its status as a real
estate investment trust.
(h) Borrowers LTV Ratio. At all times and calculated as of the
last day of each calendar quarter and as of the date of any New Acquisition, the
Borrowers LTV Ratio shall not exceed (x) for the period from the Closing Date
through September 30, 1999, 60%, (y) from October 1, 1999 through June 30, 2000,
55%, and (z) thereafter, 50%.
75
<PAGE>
(i) Carr LTV Ratio. At all times and calculated as of the last
day of each calendar quarter and as of the date of any New Acquisition, the Carr
LTV Ratio shall not exceed (x) for the period from the Closing Date through
September 30, 1999, 60%, (y) from October 1, 1999 through June 30, 2000, 55%,
and (z) thereafter, 50%.
(j) Carr LP LTV Ratio. At all times and calculated as of the
last day of each calendar quarter and as of the date of any New Acquisition, the
Carr LP LTV Ratio shall not exceed 60%.
(k) Unencumbered Asset Pool Properties Minimum Debt Service
Coverage. At all times and calculated as of the last day of each calendar
quarter, the Borrowers shall be in compliance with the Unencumbered Asset Pool
Properties Minimum Debt Service Coverage, subject, however, to the Borrowers'
rights to cure pursuant to Section 2.10(c). Failure to restore compliance with
this Section 5.8(k) in accordance with Section 2.10(c) shall be an immediate
Event of Default.
(l) Minimum Consolidated Tangible Net Worth. The Consolidated
Tangible Net Worth will at no time be less the sum of (x) $1,314,300,000 and (y)
90% of the Net Offering Proceeds from and after the date hereof.
76
<PAGE>
SECTION 5.9. Restriction on Fundamental Changes; Operation
and Control. (a) Carr shall carry on its business operations through Carr and
its Subsidiaries. Neither Borrower nor CarrAmerica LP shall enter into any
merger or consolidation, unless such Borrower or CarrAmerica LP, as applicable,
is the surviving entity, or liquidate, wind-up or dissolve (or suffer any
liquidation or dissolution), discontinue its business or convey, lease, sell,
transfer or otherwise dispose of, in one transaction or series of transactions,
all or any substantial part of its business or property, whether now or
hereafter acquired, hold an interest in any subsidiary which is not a
Subsidiary, or enter into other business lines, without the prior written
consent of the Required Banks, except for (i) joint ventures in which Carr's
ownership interest shall be less than 15% of the fair market value of the Real
Property Assets owned by Carr as of the date hereof and (ii) Carr Real Estate
Services, Inc., CarrAmerica Development, Inc., OmniOffices, Inc. or OmniOffices
(U.K.) Limited and any other similar service or executive office suites company.
For purposes hereof, "fair market value" shall mean the quotient of (x) Net
Operating Income with respect to the Real Property Assets owned by Carr as of
the date hereof and (y) the FMV Cap Rate.
(b) Neither Borrower nor CarrAmerica LP shall amend its
articles of incorporation, by-laws or agreement of limited partnership, as
applicable, in any material respect, without the Lead Agent's consent, which
shall not be unreasonably withheld.
SECTION 5.10. Changes in Business. The Borrowers and
CarrAmerica LP shall not enter into any business which is substantially
different from that conducted by the Borrowers and CarrAmerica LP on the Closing
Date after giving effect to the transactions contemplated by the Loan Documents.
SECTION 5.11. Fiscal Year; Fiscal Quarter. The Borrowers and
CarrAmerica LP shall not change their fiscal year or any of their fiscal
quarters.
77
<PAGE>
SECTION 5.12. Margin Stock. None of the proceeds of the Loan
will be used, directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of buying or carrying any Margin Stock.
SECTION 5.13. Sale of Unencumbered Asset Pool Properties.
Prior to the sale or transfer of any Unencumbered Asset Pool Property, the
applicable Borrower shall (i) deliver prior written notice to the Lead Agent and
the Banks, (ii) deliver to the Lead Agent and the Banks a certificate from its
Chief Financial Officer certifying that at the time of such sale or other
disposal (based on pro-forma calculations for the previous period assuming that
such Unencumbered Asset Pool Property was not an Unencumbered Asset Pool
Property for the relevant period) all of the covenants contained in Sections 5.8
through 5.14 and 5.16 through 5.21 are and after giving effect to the
transaction shall continue to be true and accurate in all respects, and (iii)
pay to the Lead Agent an amount equal to that required pursuant to Section
2.10(b).
SECTION 5.14. Liens; Release of Liens. Neither Borrower nor
any of their Subsidiaries shall at any time during the Term directly or
indirectly create, incur, assume or permit to exist any Lien for borrowed monies
or any other Lien other than Permitted Liens unless the same is being contested
in good faith and the same is discharged, bonded off or paid within thirty (30)
days of filing of such Lien, on or with respect to any Unencumbered Asset Pool
Property. Notwithstanding the foregoing, the Borrowers may obtain a release from
the terms of this Agreement of any Unencumbered Asset Pool Property provided
that such Borrower has complied with Section 2.10(b) and prior to or
simultaneously with such release (i) such Borrower shall pay to the Lead Agent
any amounts due pursuant to Section 2.10(b), and (ii) such Borrower delivers to
the Lead Agent and the Banks a certificate from its Chief Financial Officer
certifying that at the time of the release all of the covenants contained in
Sections 5.8 through 5.14 and 5.16 through 5.21 are and after giving effect to
the transaction shall continue to be true and accurate in all respects.
SECTION 5.15 Use of Proceeds. The Borrowers and CarrAmerica
LP shall use the proceeds of the Loans solely (i) to facilitate the acquisition
by Carr (either directly or indirectly through Subsidiaries) of real properties
(or interests therein) (the "New Acquisitions") which are office buildings (it
being understood that Carr LP may distribute, lend or otherwise transfer the
proceeds of a Tranche B Loan to Carr for such purpose, and that Carr may
distribute, lend or otherwise transfer the proceeds of a Tranche A Loan (or the
78
<PAGE>
proceeds of a Tranche B Loan received from Carr LP) to a Subsidiary for such
purpose), (ii) for other purposes related to the acquisition of office buildings
(including, without limitation, the acquisition of property service companies in
connection therewith and the payment of fees and other costs related to such
acquisition), (iii) for working capital purposes, (iv) for development and
construction activities in accordance with Section 5.16 hereof or (v) for
additional investments in OmniOffices, Inc., OmniOffices (U.K.) Limited or any
other executive office suites business. Neither the Borrowers nor CarrAmerica LP
shall use any of the proceeds of the Loans to satisfy any obligations of the
Borrowers of CarrAmerica LP under any forward equity contracts.
SECTION 5.16 Development Activities. Neither the Borrowers
nor CarrAmerica LP shall have invested more than an amount in the aggregate as
to all such Persons in any current development and construction activities,
equal to ten percent (10%) of Tangible FMV at any time other than (i)
development of "build-to-suit" improvements in excess of 85% pre-leased to
tenants (in connection with which the Borrowers and CarrAmerica LP shall have no
construction completion risk) or (ii) development in connection with the
expansion and/or repositioning or restoration following a casualty or
condemnation of existing improvements on Real Property Assets.
SECTION 5.17 Restrictions on Secured Debt. Neither of the
Borrowers nor CarrAmerica LP shall incur Debt secured by a Lien which in the
aggregate exceeds 30% of Tangible FMV.
SECTION 5.18. Carr's Status. Carr shall at all times (i)
remain a publicly traded company listed on the New York Stock Exchange, and (ii)
maintain its status as a self-directed and self-administered real estate
investment trust under the Internal Revenue Code.
SECTION 5.19 Certain Requirements for the Unencumbered Asset
Pool Properties. (a) At all times, the Unencumbered Asset Pool Properties Value
of the Unencumbered Asset Pool Properties which are less than 85% leased to
tenants (including as leased any space for which a lease termination payment has
been made to either Borrower or CarrAmerica LP but only for the period for which
such payment shall cover the rental income for such space) shall not comprise
more than 20% of the Unencumbered Asset Pool Properties Value. In the event that
the requirements of this Section 5.19 are not satisfied, the Borrowers and
79
<PAGE>
CarrAmerica LP shall be prohibited from further Borrowings unless such Borrower
or CarrAmerica LP adds a New Acquisition or Real Property Asset to the
Unencumbered Asset Pool Properties in accordance with this Agreement in order to
restore compliance with the requirements of this provision. Failure to restore
compliance with the requirements of this Section 5.19 within 90 days of such
non-compliance shall be an Event of Default.
(b) At all times, the Unencumbered Asset Pool Properties Value
of the Unencumbered Asset Pool Properties which are Qualified Development
Properties shall not comprise more than 10% of the Unencumbered Asset Pool
Properties Value.
SECTION 5.20 Hedging Requirements. The Borrowers and
CarrAmerica LP shall maintain "Interest Rate Hedges" (as defined below) on a
notional amount of the Debt of the Borrowers and CarrAmerica LP and their
Subsidiaries which, when added to the aggregate principal amount of the Debt of
the Borrowers, CarrAmerica LP and their Subsidiaries which bears interest at a
fixed rate, equals or exceeds 75% of the aggregate principal amount of all Debt
of the Borrowers and CarrAmerica LP and their Subsidiaries. "Interest Rate
Hedges" shall mean interest rate ex change, collar, cap, swap, adjustable strike
cap, adjustable strike corridor or similar agreements having terms, conditions
and tenors reasonably acceptable to the Lead Agent entered into by the Borrowers
and/or CarrAmerica LP and/or their Subsidiaries in order to provide protection
to, or minimize the impact upon, the Borrowers and/or CarrAmerica LP and/or such
Subsidiaries of in creasing floating rates of interest applicable to Debt.
SECTION 5.21. Ownership and Transfer of Real Property Assets.
Neither Carr nor CarrAmerica LP shall transfer its interest or any portion of
any interest in any Real Property Asset to Carr LP. Without the consent of the
Required Banks, Carr shall not transfer its interest or any portion of any
interest in any Real Property Asset to CarrAmerica LP. At no time shall
CarrAmerica LP own interests in Real Property Assets representing in the
aggregate more than 30% of Tangible FMV.
SECTION 5.22. CarrAmerica Realty GP Holdings, Inc. Carr hereby
covenants that at all times CarrAmerica Realty GP Holdings, Inc. shall remain a
wholly-owned Subsidiary of Carr.
80
<PAGE>
ARTICLE VI
DEFAULTS
SECTION 6.1. Events of Default. If one or more of the
following events ("Events of Default") shall have occurred and be continuing:
(a) either Borrower or CarrAmerica LP shall fail to pay when
due any principal of any Loan, or either Borrower or CarrAmerica LP shall fail
to pay when due any interest on any Loan, provided, however, that a Borrower
shall be entitled to a three (3) Domestic Business Day grace period with respect
thereto but only as to two (2) payments of interest during the Term, or either
Borrower or CarrAmerica LP shall fail to pay within three (3) Domestic Business
Days after the same is due any fees or other amounts payable hereunder;
(b) either Borrower or CarrAmerica LP shall fail to observe or
perform any covenant contained in Sections 5.7(a), 5.8 to 5.19, inclusive, or
5.21, subject to any applicable grace periods set forth therein;
(c) either Borrower or CarrAmerica LP shall fail to observe or
perform any covenant or agreement contained in this Agreement (other than those
covered by clause (a) or (b) above) for 30 days after written notice thereof has
been given to such Borrower or CarrAmerica LP by the Lead Agent;
(d) any representation, warranty, certification or statement
made by either Borrower or CarrAmerica LP in this Agreement or in any
certificate, financial statement or other document delivered pursuant to this
Agreement shall prove to have been incorrect in any material respect when made
(or deemed made);
(e) Either Borrower or CarrAmerica LP shall default in the
payment when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) of any amount owing in respect of any
Recourse Debt or Debt guaranteed by such party (other than the Obligations and
provided that such Debt is in an aggregate amount of Ten Million Dollars
($10,000,000) or more) and such default shall continue beyond the giving of any
required notice and the expiration of any applicable grace period (as the same
may be extended by the applicable lender) and such default shall not be waived
by the applicable lender (which waiver shall serve to reinstate the applicable
loan), or either Borrower or CarrAmerica LP shall default in the performance or
observance of any obligation or condition with respect to any such Debt or any
81
<PAGE>
other event shall occur or condition exist beyond the giving of any required
notice and the expiration of any applicable grace period (as the same may be
extended by the applicable lender), if in any such case the effect of such
default, event or condition is to accelerate the maturity of any such Debt or to
permit (without any further requirement of notice or lapse of time) the holder
or holders thereof, or any trustee or agent for such holders, to accelerate the
maturity of any such Debt and such default shall not be waived by the applicable
lender (which waiver shall serve to reinstate the applicable loan), or any such
Debt shall become or be declared to be due and payable prior to its stated
maturity other than as a result of a regularly scheduled payment;
(f) either Borrower or CarrAmerica LP 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;
(g) an involuntary case or other proceeding shall be commenced
against either Borrower or CarrAmerica LP 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 60 days; or an order for
relief shall be entered against either Borrower under the federal bankruptcy
laws as now or hereafter in effect;
(h) either Borrower or CarrAmerica LP shall default in its
obligations under any Loan Document other than this Agreement beyond any
applicable notice and grace periods;
82
<PAGE>
(i) any member of the ERISA Group shall fail to pay when due
an amount or amounts aggregating in excess of $1,000,000 which it shall have
become liable to pay under Title IV of ERISA, or notice of intent to terminate a
Material Plan shall be filed under Title IV of ERISA by any member of the ERISA
Group, any plan administrator or any combination of the foregoing, or the PBGC
shall institute proceedings under Title IV of ERISA to terminate, to impose
liability (other than for premiums under Section 4007 of ERISA) in respect of,
or to cause a trustee to be appointed to administer any Material Plan, or a
condition shall exist by reason of which the PBGC would be entitled to obtain a
decree adjudicating that any Material Plan must be terminated, or there shall
occur a complete or partial withdrawal from, or a default, within the meaning of
Section 4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans
which could cause one or more members of the ERISA Group to incur a current
payment obligation in excess of $1,000,000;
(j) one or more final nonappealable judgments or decrees in an
aggregate amount of six percent (6%) or more of the Consolidated Tangible Net
Worth as of such date shall be entered by a court or courts of competent
jurisdiction against either Borrower or CarrAmerica LP (other than any judgment
as to which, and only to the extent, a reputable insurance company has
acknowledged coverage of such claim in writing) and (i) any such judgments or
decrees shall not be stayed, discharged, paid, bonded or vacated within thirty
(30) days or (ii) enforcement proceedings shall be commenced by any creditor on
any such judgments or decrees;
(k) (i) any Environmental Claim shall have been asserted
against either Borrower, CarrAmerica LP or any Environmental Affiliate, (ii) any
release, emission, discharge or disposal of any Materials of Environmental
Concern shall have occurred, and such event is reasonably likely to form the
basis of an Environmental Claim against either Borrower, CarrAmerica LP or any
Environmental Affiliate, or (iii) either Borrower, CarrAmerica LP or the
Environmental Affiliates shall have failed to obtain any Environmental Approval
necessary for the ownership, or operation of its business, property or assets or
any such Environmental Approval shall be revoked, terminated, or otherwise
cease to be in full force and effect, in the case of clauses (i), (ii) or (iii)
above, if the existence of such condition has had or is reasonably likely to
have a Material Adverse Effect;
(l) during any consecutive two year period commencing on or
after the date hereof, individuals who at the beginning of such period
constituted the Board of Directors of Carr (together with any new directors
whose election by the Board of Directors or whose nomination for election by
Carr stockholders was approved by a vote of at least a majority of the members
of the Board of Directors then in the office who either were members of the
Board of Directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the members of the Board of Directors then in office;
or
83
<PAGE>
(m) Carr shall cease at any time to qualify as a real estate
investment trust under the Internal Revenue Code.
SECTION 6.2. Rights and Remedies. (a) Upon the occurrence of
any Event of Default described in Sections 6.1(f) or (g), the unpaid principal
amount of, and any and all accrued interest on, the Loans and any and all
accrued fees and other Obligations hereunder shall automatically become
immediately due and payable, with all additional interest from time to time
accrued thereon and without presentation, demand, or protest or other
requirements of any kind (including, without limitation, valuation and
appraisement, diligence, presentment, notice of intent to demand or accelerate
and notice of acceleration), all of which are hereby expressly waived by the
Borrowers and CarrAmerica LP; and upon the occurrence and during the continuance
of any other Event of Default, the Lead Agent may exercise any of its rights and
remedies hereunder and by written notice to the Borrowers, declare the unpaid
principal amount of and any and all accrued and unpaid interest on the Loans and
any and all accrued fees and other Obligations hereunder to be, and the same
shall thereupon be, immediately due and payable with all additional interest
from time to time accrued thereon and without presentation, demand, or protest
or other requirements of any kind other than as provided in the Loan Documents
(including, without limitation, valuation and appraisement, diligence,
presentment, and notice of intent to demand or accelerate), all of which are
hereby expressly waived by the Borrowers and CarrAmerica LP. Notwithstanding
anything contained in this Agreement to the contrary, (i) Carr and CarrAmerica
LP shall be jointly and severally liable for all Obligations arising hereunder
in connection with the Tranche A Loans, (ii) Carr and Carr LP shall be jointly
and severally liable for all Obligations arising hereunder in connection with
the Tranche B Loans and (iii) Carr LP shall not be liable for any Borrowings
made by Carr or CarrAmerica LP pursuant to the terms hereof.
(b) Notwithstanding the foregoing, upon the occurrence and
during the continuance of any Event of Default other than any Event of Default
described in Sections 6.1(f) or (g), the Lead Agent shall not exercise any of
its rights and remedies hereunder nor declare the unpaid principal amount of and
84
<PAGE>
any and all accrued and unpaid interest on the Loans and any and all accrued
fees and other Obligations hereunder to be immediately due and payable, until
such time as the Lead Agent shall have delivered a notice to the Banks
specifying the Event of Default which has occurred and whether Lead Agent
recommends the acceleration of the Obligations due hereunder or the exercise of
other remedies hereunder. The Banks shall notify the Lead Agent if they approve
or disapprove of the acceleration of the Obligations due hereunder or the
exercise of such other remedy recommended by Lead Agent within five (5) Domestic
Business Days after receipt of such notice. If any Bank shall not respond within
such five (5) Domestic Business Day period, then such Bank shall be deemed to
have accepted Lead Agent's recommendation for acceleration of the Obligations
due hereunder or the exercise of such other remedy. If the Required Banks shall
approve the acceleration of the Obligations due here under or the exercise of
such other remedy, then Lead Agent shall declare the unpaid principal amount of
and any and all accrued and unpaid interest on the Loans and any and all accrued
fees and other Obligations hereunder to be immediately due and payable or
exercise such other remedy approved by the Required Banks. If the Required Banks
shall neither approve nor disapprove the acceleration of the Obligations due
hereunder or such other remedy recommended by Lead Agent, then Lead Agent may
accelerate the Obligations due hereunder or exercise any of its rights and
remedies hereunder in its sole discretion. If the Required Banks shall
disapprove the acceleration of the Obligations due hereunder or the exercise of
such other remedy recommended by Lead Agent, but approve of another remedy, then
to the extent permitted hereunder, Lead Agent shall exercise such remedy.
SECTION 6.3. Notice of Default. If the Lead Agent shall not
already have given any notice to the Borrowers under Section 6.1, the Lead Agent
shall give notice to the Borrowers under Section 6.1 promptly upon being
requested to do so by the Required Banks and shall thereupon notify all the
Banks thereof.
SECTION 6.4. Actions in Respect of Letters of Credit. (a) If,
at any time and from time to time, any Letter of Credit shall have been issued
hereunder and an Event of Default shall have occurred and be continuing, then,
upon the occurrence and during the continuation thereof, the Lead Agent may,
whether in addition to the taking by the Lead Agent of any of the actions
described in this Article or otherwise, make a demand upon the Borrowers to, and
forthwith upon such demand (but in any event within ten (10) days after such
demand), the Borrowers and/or CarrAmerica LP shall, pay to the Lead Agent, on
85
<PAGE>
behalf of the Banks, in same day funds at the Lead Agent's office designated in
such demand, for deposit in a special cash collateral account (the "Letter of
Credit Collateral Account") to be maintained in the name of the Lead Agent (on
behalf of the Banks) and under its sole dominion and control at such place as
shall be designated by the Lead Agent, an amount equal to the amount of the
Letter of Credit Usage under the Letters of Credit. Interest shall accrue on the
Letter of Credit Collateral Account at a rate equal to the rate on over night
funds.
(b) The Borrowers and CarrAmerica LP hereby pledge, assign and
grant to the Lead Agent, as administrative agent for its benefit and the
ratable benefit of the Banks a lien on and a security interest in, the following
collateral (the "Letter of Credit Collateral"):
(i) the Letter of Credit Collateral Account, all
cash deposited therein and all certificates and instruments, if any, from time
to time representing or evidencing the Letter of Credit Collateral Account;
(ii) all notes, certificates of deposit and other
instruments from time to time hereafter delivered to or otherwise possessed by
the Lead Agent for or on behalf of either Borrower or CarrAmerica LP in
substitution for or in respect of any or all of the then existing Letter of
Credit Collateral;
(iii) all interest, dividends, cash, instruments
and other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the then existing
Letter of Credit Collateral; and
(iv) to the extent not covered by the above
clauses, all proceeds of any or all of the foregoing Letter of
Credit Collateral.
The lien and security interest granted hereby secures the payment of all
obligations of the Borrowers and CarrAmerica LP now or hereafter existing
hereunder and under any other Loan Document.
(c) The Borrowers and CarrAmerica LP hereby authorize the Lead
Agent for the ratable benefit of the Banks to apply, from time to time after
funds are deposited in the Letter of Credit Collateral Account, funds then held
in the Letter of Credit Collateral Account to the payment of any amounts, in
such order as the Lead Agent may elect, as shall have become due and payable by
the Borrowers and CarrAmerica LP to the Banks in respect of the Letters of
Credit.
86
<PAGE>
(d) Neither Borrower, CarrAmerica LP nor any Person claiming
or acting on behalf of or through either Borrower or CarrAmerica LP shall have
any right to withdraw any of the funds held in the Letter of Credit Collateral
Account, except as provided in Section 6.4(h) hereof.
(e) Each Borrower and CarrAmerica LP agrees that it will not
(i) sell or otherwise dispose of any interest in the Letter of Credit Collateral
or (ii) create or permit to exist any lien, security interest or other charge or
encumbrance upon or with respect to any of the Letter of Credit Collateral,
except for the security interest created by this Section 6.4.
(f) If any Event of Default shall have occurred and be
continuing:
(i) The Lead Agent may, in its sole discretion,
without notice to the Borrowers or CarrAmerica LP except as required by law and
at any time from time to time, charge, set off or other wise apply all or any
part of first, (x) amounts previously drawn on any Letter of Credit that have
not been reimbursed by the Borrowers or CarrAmerica LP and (y) any Letter of
Credit Usage described in clause (ii) of the definition thereof that are then
due and payable and second, any other unpaid Obligations then due and payable
against the Letter of Credit Collateral Account or any part thereof, in such
order as the Lead Agent shall elect. The rights of the Lead Agent under this
Section 6.4 are in addition to any rights and remedies which any Bank may have.
(ii) The Lead Agent may also exercise, in its sole
discretion, in respect of the Letter of Credit Collateral Account, in addition
to the other rights and remedies provided herein or otherwise available to it,
all the rights and remedies of a secured party upon default under the Uniform
Commercial Code in effect in the State of New York at that time.
(g) The Lead Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the Letter of Credit
Collateral if the Letter of Credit Collateral is accorded treatment
substantially equal to that which the Lead Agent accords its own property, it
being understood that, assuming such treatment, the Lead Agent shall not have
any responsibility or liability with respect thereto.
87
<PAGE>
(h) At such time as all Events of Default have been cured or
waived in writing, all amounts remaining in the Letter of Credit Collateral
Account shall be promptly returned to the Borrowers. Absent such cure or written
waiver, any surplus of the funds held in the Letter of Credit Collateral Account
and remaining after payment in full of all of the Obligations of the Borrowers
and CarrAmerica LP hereunder and under any other Loan Document after the
Maturity Date shall be paid to the Borrowers or to whomsoever may be lawfully
entitled to receive such surplus.
ARTICLE VII
THE LEAD AGENT
SECTION 7.1. Appointment and Authorization. Each Bank
irrevocably appoints and authorizes the Lead Agent to take such action as agent
on its behalf and to exercise such powers under this Agreement and the other
Loan Documents as are delegated to the Lead Agent by the terms hereof or
thereof, together with all such powers as are reasonably incidental thereto.
SECTION 7.2. Lead Agent and Affiliates. Morgan shall have the
same rights and powers under this Agreement as any other Bank and may exercise
or refrain from exercising the same as though it were not the Lead Agent, and
Morgan and its affiliates may accept deposits from, lend money to, and generally
engage in any kind of business with the Borrowers and/or CarrAmerica LP or any
subsidiary or affiliate of the Borrowers or CarrAmerica LP as if it were not
the Lead Agent hereunder, and the term "Bank" and "Banks" shall include Morgan
in its individual capacity.
SECTION 7.3. Action by Lead Agent. The obligations of the
Lead Agent hereunder are only those expressly set forth herein. Without limiting
the generality of the foregoing, the Lead Agent shall not be required to take
any action with respect to any Default, except as expressly provided in Article
VI.
SECTION 7.4. Consultation with Experts. The Lead Agent may
consult with legal counsel (who may be counsel for the Borrowers or CarrAmerica
LP), 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.
88
<PAGE>
SECTION 7.5. Liability of Lead Agent. Neither the Lead Agent
nor any of its affiliates nor any of their respective directors, officers,
agents or employees shall be liable for any action taken or not taken by it in
connection herewith (i) with the consent or at the request of the Required Banks
or, where required by the terms of this Agreement, all of the Banks, or (ii) in
the absence of its own gross negligence or willful misconduct. Neither the Lead
Agent nor any of its directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into or verify (i) any
statement, warranty or representation made in connection with this Agreement or
any borrowing hereunder; (ii) the performance or observance of any of the
covenants or agreements of the Borrowers or CarrAmerica LP; (iii) the
satisfaction of any condition specified in Article III, except receipt of items
required to be delivered to the Lead Agent; or (iv) the validity, effectiveness
or genuineness of this Agreement, the other Loan Documents or any other
instrument or writing furnished in connection herewith. The Lead 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 in good faith to be genuine or to be signed by the proper party
or parties.
SECTION 7.6. Indemnification. Each Bank shall, ratably in
accordance with its Commitment, indemnify the Lead Agent, its affiliates and
their respective directors, officers, agents and employees (to the extent not
reimbursed by the Borrowers or CarrAmerica LP) against any cost, expense
(including counsel fees and disbursements), claim, demand, action, loss or
liability (except such as result from such indemnitees' gross negligence or
willful misconduct) that such indemnitees may suffer or incur in connection with
this Agreement, the other Loan Documents or any action taken or omitted by such
indemnitees hereunder.
SECTION 7.7. Credit Decision. Each Bank acknowledges that it
has, independently and without reliance upon the Lead Agent or any other Bank,
and based on such documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this Agreement. Each Bank
also acknowledges that it will, independently and without reliance upon the Lead
Agent or any other Bank, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking any action under this Agreement.
89
<PAGE>
SECTION 7.8. Successor Lead Agent. The Lead Agent may resign
at any time by giving notice thereof to the Banks and the Borrowers. Upon any
such resignation or the removal of the Lead Agent in accordance with Section
7.11, the Required Banks shall have the right to appoint a successor Lead Agent.
If no successor Lead Agent shall have been so appointed by the Required Banks,
and shall have accepted such appointment, within 30 days after the retiring Lead
Agent gives notice of resignation, then the retiring Lead Agent may, on behalf
of the Banks, appoint a successor Lead Agent, which shall be a commercial bank
organized or licensed under the laws of the United States of America or of any
State thereof and having a combined capital and surplus of at least
$500,000,000. Upon the acceptance of its appointment as the Lead Agent hereunder
by a successor Lead Agent, such successor Lead Agent shall thereupon succeed to
and become vested with all the rights and duties of the retiring Lead Agent, and
the retiring Lead Agent shall be discharged from its duties and obligations
hereunder first accruing or arising after the effective date of such retirement.
After any retiring Lead Agent's resignation hereunder as Lead 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 the Lead Agent.
SECTION 7.9. Lead Agent's Fee. The Borrowers shall pay to the
Lead Agent for its own account fees in the amounts and at the times previously
agreed upon between the Borrowers and the Lead Agent.
SECTION 7.10. Copies of Notices. Lead Agent shall deliver to
each Bank a copy of any notice sent to either Borrower or CarrAmerica LP by Lead
Agent in connection with the performance of its duties as Lead Agent hereunder.
SECTION 7.11. Removal of Lead Agent. If the Lead Agent shall
breach any of its material obligations under this Agreement, then, upon the
unanimous consent of all the Banks (other than the Lead Agent), the Lead Agent
may be removed as Lead Agent hereunder. Upon any such removal of the Lead Agent
in accordance with this Section 7.11, the Required Banks shall have the right to
appoint a successor Lead Agent in accordance with Section 7.8.
90
<PAGE>
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.1. Basis for Determining Interest Rate Inadequate or
Unfair. If on or prior to the first day of any Interest Period for any
Euro-Dollar Borrowing or Money Market LIBOR Borrowing:
(a) the Lead Agent is advised by the Reference Bank that
deposits in dollars (in the applicable amounts) are not being offered to the
Reference Bank in the relevant market for such Interest Period, or
(b) Banks having 50% or more of the aggregate amount of the
Commitments advise the Lead Agent that the Adjusted London Interbank Offered
Rate as determined by the Lead Agent will not adequately and fairly reflect the
cost to such Banks of funding their Euro-Dollar Loans for such Interest Period,
the Lead Agent shall forthwith give notice thereof to the Borrowers and the
Banks, whereupon until the Lead Agent notifies the Borrowers that the
circumstances giving rise to such suspension no longer exist, the obligations of
the Banks to make Euro-Dollar Loans shall be suspended. Unless the applicable
Borrower notifies the Lead Agent at least two Domestic Business Days before the
date of any Euro-Dollar Borrowing or Money Market LIBOR Borrowing for which a
Notice of Borrowing has previously been given that it elects not to borrow on
such date, (i) if such Borrowing is a Committed Borrowing, such Borrowing shall
instead be made as a Base Rate Borrowing and (ii) if such Borrowing is a Money
Market LIBOR Borrowing, the Money Market LIBOR Loans comprising such Borrowing
shall bear interest for each day from and including the first day to but
excluding the last day of the Interest Period applicable thereto at the Base
Rate for such day.
SECTION 8.2. Illegality. If, after the date of this Agreement,
the adoption of any applicable law, rule or regulation, or any change in any
existing applicable law, rule or regulation, or any change in the interpretation
or administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Bank (or its Euro-Dollar Lending Office) 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
Bank (or its Euro-Dollar Lending Office) to make, maintain or fund its
Euro-Dollar Loans or Money Market LIBOR Loans or to participate in any Letter of
Credit issued by the Fronting Bank or, with respect to the Fronting Bank, to
issue any Letters of Credit, and such Bank shall so notify the Lead Agent, the
Lead Agent shall forthwith give notice thereof to the other Banks and the
91
<PAGE>
Borrowers, whereupon until such Bank notifies the Borrowers and the Lead Agent
that the circumstances giving rise to such suspension no longer exist, the
obligation of such Bank to make Euro-Dollar Loans or Money Market LIBOR Loans or
to participate in any Letter of Credit issued by the Fronting Bank or, with
respect to the Fronting Bank, to issue any Letters of Credit, shall be
suspended. With respect to Euro-Dollar Loans or Money Market LIBOR Loans, before
giving any notice to the Lead Agent pursuant to this Section, such Bank shall
designate a different Euro-Dollar Lending Office if such designation will avoid
the need for giving such notice and will not, in the judgment of such Bank, be
otherwise disadvantageous to such Bank. If such Bank shall determine that it may
not lawfully continue to maintain and fund any of its outstanding Euro-Dollar
Loans or Money Market LIBOR Loans (as the case may be) to maturity and shall so
specify in such notice, the Borrowers and/or CarrAmerica LP shall immediately
prepay in full the then outstanding principal amount of each such Euro-Dollar
Loan or Money Market LIBOR Loan, together with accrued interest thereon.
Concurrently with prepaying each such Euro-Dollar Loan, the Borrowers shall
borrow a Base Rate Loan in an equal principal amount from such Bank (on which
interest and principal shall be payable contemporaneously with the related
Euro-Dollar Loans or Money Market LIBOR Loan of the other Banks), and such Bank
shall make such a Base Rate Loan.
SECTION 8.3. Increased Cost and Reduced Return.
(a) If on or after (x) the date hereof, in the case of any
Committed Loan or any obligation to make Committed Loans or (y) the date of the
applicable Money Market Quote, in the case of any Money Market Loan, the
adoption of any applicable law, rule or regulation, or any change in any
applicable law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Bank (or its Applicable Lending Office) with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency shall impose, modify or deem applicable any reserve
(including, without limitation, any such requirement imposed by the Board of
Governors of the Federal Reserve System (but excluding with respect to any
Euro-Dollar Loan any such requirement reflected in an applicable Euro-Dollar
Reserve Percentage)), special deposit, insurance assessment or similar
requirement against assets of, deposits with or for the account of, or credit
extended by, any Bank (or its Applicable Lending Office) or shall impose on any
92
<PAGE>
Bank (or its Applicable Lending Office) or on the London interbank market any
other condition affecting its Euro-Dollar Loans or Money Market LIBOR Loans, its
Note, or its obligation to make Euro-Dollar Loans, and the result of any of the
foregoing is to increase the cost to such Bank (or its Applicable Lending
Office) of making or maintaining any such Loans, or to reduce the amount of any
sum received or receivable by such Bank (or its Applicable Lending Office) under
this Agreement or under its Note with respect thereto, by an amount deemed by
such Bank to be material, then, within 15 days after demand by such Bank (with a
copy to the Lead Agent), which demand shall be accompanied by a certificate
showing, in reasonable detail, the calculation of such amount or amounts, the
Borrowers and/or CarrAmerica LP shall pay to such Bank such additional amount or
amounts as will compensate such Bank for such increased cost or reduction.
(b) If any Bank shall have determined that, after the date
hereof, the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change in any such law, rule or regulation, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the rate of return
on capital of such Bank (or its Parent) as a consequence of such Bank's
obligations hereunder to a level below that which such Bank (or its Parent)
could have achieved but for such adoption, change, request or directive (taking
into consideration its policies with respect to capital adequacy) by an amount
deemed by such Bank to be material, then from time to time, within 15 days after
demand by such Bank (with a copy to the Lead Agent), which demand shall be
accompanied by a certificate showing, in reasonable detail, the calculation of
such amount or amounts, the Borrowers and/or CarrAmerica LP shall pay to such
Bank such additional amount or amounts as will compensate such Bank (or its
Parent) for such reduction.
(c) Each Bank will promptly notify the Borrowers and
CarrAmerica LP and the Lead Agent of any event of which it has knowledge,
occurring after the date hereof, which will entitle such Bank to compensation
pursuant to this Section and will designate a different Applicable Lending
Office if such designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank. A certificate of any Bank claiming compensation
under this Section and setting forth the additional amount or amounts to be paid
to it hereunder shall be conclusive in the absence of manifest error. In
determining such amount, such Bank may use any reasonable averaging and
attribution methods.
93
<PAGE>
SECTION 8.4. Taxes.
(a) Any and all payments by the Borrowers or CarrAmerica LP to
or for the account of any Bank or the Lead Agent hereunder or under any other
Loan Document shall be made free and clear of and without deduction for any and
all present or future taxes, duties, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding, in the case
of each Bank and the Lead Agent, taxes imposed on its income, and franchise
taxes imposed on it, by the jurisdiction under the laws of which such Bank or
the Lead Agent (as the case may be) is organized or any political subdivision
thereof and, in the case of each Bank, taxes imposed on its income, and
franchise or similar taxes imposed on it, by the jurisdiction of such Bank's
Applicable Lending Office or any political subdivision thereof (and, if
different from the jurisdiction of such Bank's Applicable Lending Office, the
jurisdiction of the domicile of its Loans either established by the Bank
pursuant to Section 9.12 or determined by the applicable taxing authorities)(all
such non-excluded taxes, duties, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as "Taxes"). If the
Borrowers and/or CarrAmerica LP shall be required by law to deduct any Taxes
from or in respect of any sum payable hereunder or under any Note or Letter of
Credit or participation therein to any Bank or the Lead Agent, (i) the sum
payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 8.4) such Bank, the Fronting Bank or the Lead Agent (as the case
may be) receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrowers or CarrAmerica LP shall make such
deductions, (iii) the Borrowers or CarrAmerica LP shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance
with applicable law and (iv) the Borrowers or CarrAmerica LP shall furnish to
the Lead Agent, at its address referred to in Section 9.1, the original or a
certified copy of a receipt evidencing payment thereof.
(b) In addition, the Borrowers and CarrAmerica LP agree to pay
any present or future stamp or documentary taxes and any other excise or
property taxes, or charges or similar levies which arise from any payment made
hereunder or under any Note or Letter of Credit or participation therein or from
the execution or delivery of, or otherwise with respect to, this Agreement or
any Note or Letter of Credit or participation therein (hereinafter referred to
as "Other Taxes").
94
<PAGE>
(c) The Borrowers and CarrAmerica LP agree to indemnify each
Bank, the Fronting Bank and the Lead Agent for the full amount of Taxes or Other
Taxes (including, without limitation, any Taxes or Other Taxes imposed or
asserted by any jurisdiction on amounts payable under this Section 8.4) paid by
such Bank, the Fronting Bank or the Lead Agent (as the case may be) and any
liability (including penalties, interest and expenses) arising there from or
with respect thereto. This indemnification shall be made within 15 days from the
date such Bank, the Fronting Bank or the Lead Agent (as the case may be) makes
demand therefor.
(d) Each Bank organized under the laws of a jurisdiction
outside the United States, on or prior to the date of its execution and delivery
of this Agreement in the case of each Bank listed on the signature pages hereof
and on or prior to the date on which it becomes a Bank in the case of each other
Bank, and from time to time thereafter if requested in writing by the Borrowers
or CarrAmerica LP (but only so long as such Bank remains lawfully able to do
so), shall provide the Borrowers or CarrAmerica LP with Internal Revenue Service
form 1001 or 4224, as appropriate, or any successor form prescribed by the
Internal Revenue Service, certifying that such Bank is entitled to benefits
under an income tax treaty to which the United States is a party which reduces
the rate of withholding tax on payments of interest or certifying that the
income receivable pursuant to this Agreement is effectively connected with the
conduct of a trade or business in the United States. If the form provided by a
Bank at the time such Bank first became a party to this Agreement or at any time
thereafter (other than solely by reason of a change in United States law or a
change in the terms of any treaty to which the United States is a party after
the date hereof) indicates a United States interest withholding tax rate in
excess of zero (or would have indicated such a withholding tax rate if such form
had been submitted and completed accurately and completely and either was not
submitted or was not completed accurately and completely), or if a Bank
otherwise is subject to United States interest withholding tax at a rate in
excess of zero at any time for any reason (other than solely by reason of a
change in United States law or regulation or a change in any treaty to which the
United States is a party after the date hereof), withholding tax at such rate
shall be considered excluded from "Taxes" as defined in Section 8.4(a). In
addition, any amount that otherwise would be considered "Taxes" or "Other Taxes"
for purposes of this Section 8.4 shall be excluded therefrom if the Bank either
has transferred the domicile of its Loans pursuant to Section 9.12 or changed
the Applicable Lending Office with respect to such Loans and such amount would
not have been incurred had such transfer or change not been made.
95
<PAGE>
(e) For any period with respect to which a Bank has failed to
provide the Borrowers or CarrAmerica LP with the appropriate form pursuant to
Section 8.4(d) (unless such failure is due to a change in treaty, law or
regulation occurring subsequent to the date on which a form originally was
required to be provided), such Bank shall not be entitled to indemnification
under Section 8.4(a) with respect to Taxes imposed by the United States;
provided, however, that should a Bank, which is otherwise exempt from or subject
to a reduced rate of withholding tax, become subject to Taxes because of its
failure to deliver a form required hereunder, the Borrowers and CarrAmerica LP
shall take such steps as such Bank shall reasonably request to assist such Bank
to recover such Taxes.
(f) If the Borrowers or CarrAmerica LP are required to pay
additional amounts to or for the account of any Bank pursuant to this Section
8.4, then such Bank will change the jurisdiction of its Applicable Lending
Office so as to eliminate or reduce any such additional payment which may
thereafter accrue if such change, in the judgment of such Bank, is not otherwise
disadvantageous to such Bank.
SECTION 8.5. Base Rate Loans Substituted for Affected
Euro-Dollar Loans. If (i) the obligation of any Bank to make Euro-Dollar Loans
has been suspended pursuant to Sections 8.1 or 8.2 or (ii) any Bank has demanded
compensation under Section 8.3 or 8.4 with respect to its Euro-Dollar Loans and
the Borrowers shall, by at least five Euro-Dollar Business Days' prior notice to
such Bank through the Lead Agent, have elected that the provisions of this
Section shall apply to such Bank, then, unless and until such Bank notifies the
Borrowers that the circumstances giving rise to such suspension or demand for
compensation no longer exist:
(a) all Loans which would otherwise be made by such Bank as
Euro-Dollar Loans shall be made instead as Base Rate Loans (on which interest
and principal shall be payable contemporaneously with the related Euro-Dollar
Loans of the other Banks), and
96
<PAGE>
(b) after each of its Euro-Dollar Loans has been repaid, all
payments of principal which would otherwise be applied to repay such Euro-Dollar
Loans shall be applied to repay its Base Rate Loans instead.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including bank wire,
telex, facsimile transmission or similar writing) and shall be given to such
party: (x) in the case of the Borrowers, CarrAmerica LP or the Lead Agent, at
its address or telecopy number set forth on the signature pages hereof, together
with copies thereof, in the case of the Borrowers or CarrAmerica LP, to Hogan &
Hartson L.L.P., 555 13th Street, N.W., Washington, D.C. 20004, Attention: J.
Warren Gorrell, Jr., Esq., Telephone: (202) 637-5600, Telecopy: (202) 637-5910,
and in the case of the Lead Agent, to Skadden, Arps, Slate, Meagher & Flom LLP,
919 Third Avenue, New York, New York 10022, Attention: Martha Feltenstein, Esq.,
Telephone: (212) 735-2272, Telecopy: (212) 735-2000, (y) in the case of any
Bank, at its address or telecopy number set forth on the signature pages hereof
or in its Administrative Questionnaire or (z) in the case of any party, such
other address or telecopy number as such party may hereafter specify for the
purpose by notice to the Lead Agent, the Banks, the Borrowers and CarrAmerica
LP. Each such notice, request or other communication shall be effective (i) if
given by telecopy, when such telecopy is transmitted to the telecopy number
specified in this Section, (ii) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage prepaid,
addressed as afore said or (iii) if given by any other means, when delivered at
the address specified in this Section; provided that notices to the Lead Agent
under Article II or Article VIII shall not be effective until received.
SECTION 9.2. No Waivers. No failure or delay by the Lead
Agent or any Bank in exercising any right, power or privilege hereunder or under
any Note shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.
97
<PAGE>
SECTION 9.3. Expenses; Indemnification.
(a) The Borrowers and CarrAmerica LP shall pay (i) all
reasonable out-of-pocket expenses of the Lead Agent (including, without
limitation, reasonable fees and disbursements of special counsel Skadden, Arps,
Slate, Meagher & Flom, local counsel for the Lead Agent, and travel,
environmental and engineering expenses), in connection with the preparation and
administration of this Agreement, the Loan Documents and the documents and
instruments referred to therein, the syndication of the Loans, any waiver or
consent hereunder or any amendment or modification hereof or any Default or
alleged Default hereunder and (ii) if an Event of Default occurs, all
out-of-pocket expenses incurred by the Lead Agent and each Bank, including,
without limitation, reasonable fees and disbursements of counsel for the Lead
Agent, in connection with the enforcement of the Loan Documents and the
instruments referred to therein and such Event of Default and collection,
bankruptcy, insolvency and other enforcement proceedings resulting therefrom.
(b) The Borrowers and CarrAmerica LP agree to indemnify the
Lead Agent and each Bank, their respective affiliates and the respective
directors, officers, agents and employees of the foregoing (each an
"Indemnitee") and hold each Indemnitee harmless from and against any and all
liabilities, losses, damages, costs and expenses of any kind, including, without
limitation, the reasonable fees and disbursements of counsel, which may be
incurred by such Indemnitee in connection with any investigative, administrative
or judicial proceeding (whether or not such Indemnitee shall be designated a
party thereto) that may at any time (including, without limitation, at any time
following the payment of the Obligations) be imposed on, asserted against or
incurred by any Indemnitee as a result of, or arising out of, or in any way
related to or by reason of, (i) any of the transactions contemplated by the Loan
Documents or the execution, delivery or performance of any Loan Document, (ii)
any violation by the Borrowers, CarrAmerica LP or the Environmental Affiliates
of any applicable Environmental Law, (iii) any Environmental Claim arising out
of the management, use, control, ownership or operation of property or assets
by the Borrowers, CarrAmerica LP or any of the Environmental Affiliates,
98
<PAGE>
including, without limitation, all on-site and off-site activities involving
Materials of Environmental Concern, (iv) the breach of any environmental
representation or warranty set forth herein, (v) the grant to the Lead Agent and
the Banks of any Lien in any property or assets of the Borrowers or CarrAmerica
LP or any stock or other equity interest in the Borrowers or CarrAmerica LP, and
(vi) the exercise by the Lead Agent and the Banks of their rights and remedies
(including, without limitation, foreclosure) under any agreements creating any
such Lien (but excluding, as to any Indemnitee, any such losses, liabilities,
claims, damages, expenses, obligations, penalties, actions, judgments, suits,
costs or disbursements incurred solely by reason of (i) the gross negligence or
willful misconduct of such Indemnitee as finally determined by a court of
competent jurisdiction and (ii) any investigative, administrative or judicial
proceeding imposed or asserted against any Indemnitee by any bank regulatory
agency or by any equity holder of such Indemnitee). Carr and CarrAmerica LP
shall be jointly and severally liable for all Obligations arising hereunder in
connection with the Tranche A Loans and Carr and Carr LP shall be jointly and
severally liable for all Obligations arising hereunder in connection with the
Tranche B Loans. Notwithstanding the foregoing, Carr LP shall not be liable for
any Borrowings made by Carr pursuant to the terms hereof. The Borrowers' and
CarrAmerica LP's obligations under this Section shall survive the termination of
this Agreement and the payment of the Obligations.
(c) The Borrowers and CarrAmerica LP shall pay, and hold the
Lead Agent and each of the Banks harmless from and against, any and all present
and future U.S. stamp, recording, transfer and other similar foreclosure related
taxes with respect to the fore going matters and hold the Lead Agent and each
Bank harmless from and against any and all liabilities with respect to or
resulting from any delay or omission (other than to the extent attributable to
such Bank) to pay such taxes.
SECTION 9.4. Sharing of Set-Offs. In addition to any rights
now or hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence and during the continuance of
any Event of Default, each Bank is hereby authorized at any time or from time to
time, without presentment, demand, protest or other notice of any kind to the
Borrowers, CarrAmerica LP or to any other Person, any such notice being hereby
expressly waived, to set off and to appropriate and apply any and all deposits
99
<PAGE>
(general or special, time or demand, provisional or final), other than deposits
held for the benefit of third parties, and any other indebtedness at any time
held or owing by such Bank (including, without limitation, by branches and
agencies of such Bank wherever located) to or for the credit or the account of
the Borrowers or CarrAmerica LP against and on account of the Obligations of the
Borrowers or CarrAmerica LP then due and payable to such Bank under this
Agreement or under any of the other Loan Documents, including, without
limitation, all interests in Obligations purchased by such Bank. Each Bank
agrees that if it shall, by exercising any right of set-off or counterclaim or
otherwise, receive payment of a proportion of the aggregate amount of principal
and interest due with respect to any Note held by it or Letter of Credit
participated in by it, or, in the case of the Fronting Bank, Letter of Credit
issued by it, which is greater than the proportion received by any other Bank or
Letter of Credit issued or participated in by such other Bank, in respect of the
aggregate amount of principal and interest due with respect to any Note held by
such other Bank, the Bank receiving such proportionately greater payment shall
purchase such participations in the Notes held by the other Banks or Letter of
Credit issued or participated in by such other Bank, and such other adjustments
shall be made, as may be required so that all such payments of principal and
interest with respect to the Notes held by the Banks or Letter of Credit issued
or participated in by such other Banks shall be shared by the Banks pro rata;
provided that nothing in this Section shall impair the right of any Bank to
exercise any right of set-off or counterclaim it may have and to apply the
amount subject to such exercise to the payment of indebtedness of the Borrowers
or CarrAmerica LP other than their indebtedness under the Notes or the Letters
of Credit. The Borrowers and CarrAmerica LP agree, to the fullest extent they
may effectively do so under applicable law, that any holder of a participation
in a Note or Letter of Credit, whether or not acquired pursuant to the foregoing
arrangements, may exercise rights of set-off or counterclaim and other rights
with respect to such participation as fully as if such holder of a participation
were a direct creditor of the Borrowers or CarrAmerica LP in the amount of such
participation. Notwithstanding the foregoing, any Bank shall not exercise any
right of set-off or counterclaim or any similar right it may have against any
other indebtedness at any time held or owing by such Bank (including, without
limitation, by branches and agencies of such Bank wherever located) to or for
the credit or the account of Carr LP against and on account of any Obligations
of Carr (whether or not then due and payable) or to apply the amount subject to
such exercise to the payment of indebtedness or other Obligations of Carr.
SECTION 9.5. Amendments and Waivers. Any provision of this
Agreement, the Notes, the Letters of Credit or other Loan Documents may be
amended or waived if, but only if, such amendment or waiver is in writing and is
signed by the Borrowers and the Required Banks (and, if the rights or duties of
the Lead Agent are affected thereby, by the Lead Agent); provided that no such
amendment or waiver shall, unless signed by all the Banks, (i) in crease or
decrease the Commitment of any Bank (except for a ratable decrease in the
Commitments of all Banks) or subject any Bank to any additional obligation, (ii)
100
<PAGE>
reduce the principal of or rate of interest on any Loan or any fees specified
herein, including, without limitation, the waiver of any Default or Event of
Default in the payment of interest, principal or fees hereunder if such waiver
would result in a permanent reduction in the amount or change in the timing of
the payment of interest, principal or fees payable hereunder by Borrowers or
CarrAmerica LP, unless the Borrowers or CarrAmerica LP have cured such Default
or Event of Default and paid all amounts, including any default interest, due
hereunder at the time a request for consent is made by Lead Agent to the Banks
to the waiver of any Default or Event of Default in the payment of interest,
principal or fees hereunder, in which event only the consent of the Required
Banks to the waiver of such Default or Event of Default shall be required, (iii)
postpone the date fixed for any payment of principal of or interest on any Loan
or any fees hereunder or for any reduction or termination of any Commitment,
(iv) change the percentage of the Commitments or of the aggregate unpaid
principal amount of the Notes, or the number of Banks, which shall be required
for the Banks or any of them to take any action under this Section or any other
provision of this Agreement, or (v) amend the provisions of this Section 9.5.
Notwithstanding the foregoing, no amendment, waiver or consent shall, unless in
writing and signed by the Designating Lender on behalf of its Designated Lender
affected thereby, (a) subject such Designated Lender to any additional
obligations, (b) reduce the principal of, interest on, or other amounts due with
respect to, the Designated Lender Note made payable to such Designated Lender,
or (c) postpone any date fixed for any payment of principal of, or interest on,
or other amounts due with respect to the Designated Lender Note made payable to
the Designated Lender.
SECTION 9.6. Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, except that the Borrowers may not assign or otherwise transfer any of
their rights under this Agreement or the other Loan Documents without the prior
written consent of all Banks.
(b) Any Bank may at any time grant to one or more banks or
other institutions (each a "Participant") participating interests in its
Commitment or any or all of its Loans. In the event of any such grant by a Bank
of a participating interest to a Participant, whether or not upon notice to the
Borrowers, CarrAmerica LP and the Lead Agent, such Bank shall remain responsible
for the performance of its obligations hereunder, and the Borrowers, CarrAmerica
LP and the Lead Agent shall continue to deal solely and directly with such Bank
101
<PAGE>
in connection with such Bank's rights and obligations under this Agreement. Any
agreement pursuant to which any Bank may grant such a participating interest
shall provide that such Bank shall retain the sole right and responsibility to
enforce the obligations of the Borrowers and CarrAmerica LP hereunder including,
without limitation, the right to approve any amendment, modification or waiver
of any provision of this Agreement; provided that such participation agreement
may provide that such Bank will not agree to any modification, amendment or
waiver of this Agreement described in clause (i), (ii), (iii) or (iv) of Section
9.5 without the consent of the Participant. The Borrowers and CarrAmerica LP
agree that each Participant shall, to the extent provided in its participation
agreement, be entitled to the benefits of Article VIII with respect to its
participating interest. 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).
(c) Any Bank may at any time assign to one or more banks or
other institutions (each an "Assignee") all, or a proportionate part of all, of
its rights and obligations under this Agreement, the Notes and the other Loan
Documents, and such Assignee shall assume such rights and obligations, pursuant
to an Assignment and Assumption Agreement in substantially the form of Exhibit C
attached hereto executed by such Assignee and such transferor Bank, with (and
subject to) the consent of the Lead Agent and, provided no Event of Default
shall have occurred and be continuing, the Borrowers, which consent shall not
be unreasonably withheld or delayed. Notwithstanding the foregoing, however, if
at any time any Bank shall hold Commitments hereunder that, together with
commitments (the "Omni Commitments") it holds pursuant to the provisions of the
Amended and Restated Revolving Credit Agreement, dated as of even date herewith,
among OmniOffices, Inc., the Lead Agent and the Banks, exceeds $75,000,000 in
the aggregate, then, provided that the amount such Bank shall desire to assign
pursuant to the provisions of this Section shall be not less than $10,000,000,
then no consent of either the Lead Agent or the Borrowers shall be required
until such time as such Bank's aggregate Commitments and Omni Commitments shall
equal or be less than $75,000,000. Upon execution and delivery of such
instrument and payment by such Assignee to such transferor Bank of an amount
equal to the purchase price agreed between such transferor Bank and such
Assignee, such Assignee shall be a Bank party to this Agreement and shall have
all the rights and obligations of a Bank with a Commitment as set forth in such
instrument of assumption, and the transferor Bank shall be released from its
102
<PAGE>
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 (c), the transferor Bank, the Lead Agent, the
Borrowers and CarrAmerica LP, if applicable, shall make appropriate
arrangements so that, if required, a new Note or Notes are issued to the
Assignee. In connection with any such assignment, the transferor Bank shall pay
to the Lead Agent an administrative fee for processing such assignment in the
amount of $2,500. If the Assignee is not incorporated under the laws of the
United States of America or a state thereof, it shall deliver to the Borrowers
and the Lead Agent certification as to exemption from deduction or withholding
of any United States federal income taxes in accordance with Section 8.4.
(d) Any Bank (each, a "Designating Lender") may at any time
designate one Designated Lender to fund Money Market Loans on behalf of such
Designating Lender subject to the terms of this Section 9.6(d) and the
provisions in Section 9.6(b) and (c) shall not apply to such designation. No
Bank may designate more than one (1) Designated Lender at a time. The parties to
each such designation shall execute and deliver to the Lead Agent for its
acceptance a Designation Agreement in the form of Exhibit G hereto. Upon such
receipt of an appropriately completed Designation Agreement executed by a
Designating Lender and a designee representing that it is a Designated Lender,
103
<PAGE>
the Lead Agent will accept such Designation Agreement and will give prompt
notice thereof to the Borrowers and CarrAmerica LP, whereupon, (i) the Borrower
shall execute and deliver to the Designating Bank a Designated Lender Note
payable to the order of the Designated Lender, (ii) from and after the effective
date specified in the Designation Agreement, the Designated Lender shall become
a party to this Agreement with a right (subject to the provisions of Section
2.3(d)) to make Money Market Loans on behalf of its Designating Lender pursuant
to Section 2.3 after the Borrower has accepted a Money Market Loan (or portion
thereof) of the Designating Lender, and (iii) the Designated Lender shall not be
required to make payments with respect to any obligations in this Agreement
except to the extent of excess cash flow of such Designated Lender which is not
otherwise required to repay obligations of such Designated Lender which are then
due and payable; provided, however, that regardless of such designation and
assumption by the Designated Lender, the Designating Lender shall be and remain
obligated to the Borrower, the Agents and the Banks for each and every of the
obligations of the Designating Lender and its related Designated Lender with
respect to this Agreement, including, without limitation, any indemnification
obligations under Section 7.6 hereof and any sums otherwise payable to the
Borrower by the Designated Lender. Each Designating Lender shall serve as the
administrative agent of the Designated Lender and shall on behalf of, and to the
exclusion of, the Designated Lender: (i) receive any and all payments made for
the benefit of the Designated Lender and (ii) give and receive all
communications and notices and take all actions hereunder, including, without
limitation, votes, approvals, waivers, consents and amendments under or relating
to this Agreement and the other Loan Documents. Any such notice, communication,
vote, approval, waiver, consent or amendment shall be signed by the Designating
Lender as administrative agent for the Designated Lender and shall not be signed
by the Designated Lender on its own behalf and shall be binding upon the
Designated Lender to the same extent as if signed by the Designated Lender on
its own behalf. The Borrower, the Lead Agent, the Agents and the Banks may rely
thereon without any requirement that the Designated Lender sign or acknowledge
the same. No Designated Lender may assign or transfer all or any portion of its
interest hereunder or under any other Loan Document, other than assignments to
the Designating Lender which originally designated such Designated Lender or
otherwise in accordance with the provisions of Section 9.6 (b) and (c).
(e) Any Bank may at any time assign all or any portion of its
rights under this Agreement and its Note and the Letters of Credit participated
in by such Bank (as a Fronting Bank) or, in the case of the Fronting Bank,
issued by it, to a Federal Reserve Bank. No such assignment shall release the
transferor Bank from its obligations hereunder.
(f) No Assignee, Participant or other transferee of any Bank's
rights shall be entitled to receive any greater payment under Section 8.3 or 8.4
than such Bank would have been entitled to receive with respect to the rights
transferred, unless such transfer is made with the Borrowers' prior written
consent or by reason of the provisions of Section 8.2, 8.3 or 8.4 requiring such
Bank to designate a different Applicable Lending Office under certain
circumstances or at a time when the circumstances giving rise to such greater
payment did not exist.
SECTION 9.7. Governing Law; Submission to Jurisdiction.
(a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT
GIVING EFFECT TO THE PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW).
104
<PAGE>
(b) Any legal action or proceeding with respect to this
Agreement or any other Loan Document and any action for enforcement of any
judgment in respect thereof may be brought in the courts of the State of New
York or of the United States of America for the Southern District of New York,
and, by execution and delivery of this Agreement, each Borrower and CarrAmerica
LP hereby accepts for itself and in respect of its property, generally and
unconditionally, the non-exclusive jurisdiction of the aforesaid courts and
appellate courts from any thereof. Each Borrower and CarrAmerica LP irrevocably
consents to the service of process out of any of the aforementioned courts in
any such action or proceeding by the hand delivery, or mailing of copies thereof
by registered or certified mail, postage prepaid, to the applicable Borrower or
CarrAmerica LP at its address set forth below. Each Borrower and CarrAmerica LP
hereby irrevocably waives any objection which it may now or hereafter have to
the laying of venue of any of the aforesaid actions or proceedings arising out
of or in connection with this Agreement or any other Loan Document brought in
the courts referred to above and hereby further irrevocably waives and agrees
not to plead or claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient forum. Nothing
herein shall affect the right of the Lead Agent, any Bank or any holder of a
Note to serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against the Borrowers or CarrAmerica LP in any
other jurisdiction.
Section 9.8. Marshalling; Recapture. Neither the Lead Agent
nor any Bank shall be under any obligation to marshall any assets in favor of
the Borrowers, CarrAmerica LP or any other party or against or in payment of any
or all of the Obligations. To the extent any Bank receives any payment by or on
behalf of the Borrowers or CarrAmerica LP, which payment or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to either Borrower or CarrAmerica LP or its estate,
trustee, receiver, custodian or any other party under any bankruptcy law, state
or federal law, common law or equitable cause, then to the extent of such
payment or repayment, the Obligation or part thereof which has been paid,
reduced or satisfied by the amount so repaid shall be reinstated by the amount
so repaid and shall be included within the liabilities of the Borrowers and
CarrAmerica LP to such Bank as of the date such initial payment, reduction or
satisfaction occurred.
105
<PAGE>
SECTION 9.9. Counterparts; Integration; Effectiveness. This
Agreement may be signed in any number of counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument. This Agreement constitutes the entire agreement and
understanding among the parties hereto and supersedes any and all prior
agreements and understandings, oral or written, relating to the subject matter
hereof. This Agreement shall become effective upon receipt by the Lead Agent of
counterparts hereof signed by each of the parties hereto (or, in the case of any
party as to which an executed counterpart shall not have been received, receipt
by the Lead Agent in form satisfactory to it of telegraphic, telex or other
written confirmation from such party of execution of a counterpart hereof by
such party).
SECTION 9.10. WAIVER OF JURY TRIAL. EACH OF THE BORROWERS,
CARRAMERICA LP, THE LEAD AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVE ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 9.11. Survival. All indemnities set forth herein
shall survive the execution and delivery of this Agreement and the other Loan
Documents and the making and repayment of the Loans hereunder.
SECTION 9.12. Domicile of Loans. Subject to the provisions of
Article VIII, each Bank may transfer and carry its Loans at, to or for the
account of any domestic or foreign branch office, subsidiary or affiliate of
such Bank.
SECTION 9.13. Limitation of Liability. (a) No claim may be
made by the Borrowers, CarrAmerica LP or any other Person against the Lead Agent
or any Bank or the affiliates, directors, officers, employees, attorneys or
agents of any of them for any consequential or punitive damages in respect of
any claim for breach of contract or any other theory of liability arising out of
or related to the transactions contemplated by this Agreement or by the other
Loan Documents, or any act, omission or event occur ring in connection
therewith; and each Borrower and CarrAmerica LP hereby waives, releases and
agrees not to sue upon any claim for any such damages, whether or not accrued
and whether or not known or suspected to exist in its favor.
(b) The Lead Agent or any Bank may look to all the assets of
the Borrowers and CarrAmerica LP in seeking to enforce the Borrowers' and
CarrAmerica LP's liability and obligations hereunder, and the lien of any
106
<PAGE>
judgment against the Borrowers and CarrAmerica LP and any proceeding instituted
on, under or in connection with any Note or any of the other Loan Documents
shall extend to all property now or hereafter owned by the Borrowers and
CarrAmerica LP, except as set forth in Sections 6.2 and 9.3.
SECTION 9.14. Confidentiality.
Prior to the occurrence and continuance of an Event of Default
and except in connection with the sale or assignment or potential sale or
assignment of any Bank's Commitment or portion of its Commitment pursuant to
Section 9.6, each Bank agrees that it will use reasonable efforts, consistent
with its customary policies for maintaining information as confidential, not to
disclose without the prior consent of the Borrowers (other than to its
subsidiaries, directors, agents, employees, auditors, counsel or other
professional consultants, provided that each such recipient shall either agree
to be bound by the terms of this Section 9.14 or is otherwise bound to keep such
information confidential on a similar basis pursuant to professional ethical
obligations) any information with respect to the Borrowers, CarrAmerica LP, any
Subsidiary thereof or any of their assets or properties which is furnished
pursuant to this Agreement or any Loan Documents and which is designated as
confidential, provided that any Bank may disclose any such information (a) that
has become generally available to the public (other than as a consequence of any
Bank's breach of this Section 9.14), (b) as may be required or appropriate in
any report, statement or testimony submitted to any local, state or federal
regulatory body having or claiming to have jurisdiction over such Bank, any
nationally recognized rating agency or similar organization, (c) as may be
required or appropriate in response to any summons or subpoena or in connection
with any litigation, or (d) in order to comply with any applicable law, order,
regulation or ruling; provided, further that in the case of the foregoing
clauses (b), (c) and (d), such Bank shall use reasonable efforts to give Carr
prior notice of any such disclosure.
SECTION 9.15. Agents. Commerzbank Aktiengesellschaft, New York
Branch, Nationsbank, N.A., PNC Bank, National Association, each as Bank and as
Managing Agent for the Banks hereunder, and Bank of America National Trust and
Savings Association (successor by merger to Bank of America Illinois) and
Societe Generale, a French banking corporation, acting through its Southwest
Agency, each as a Bank and as Co-Agent for the Banks hereunder (collectively,
the "Agents") shall have no other rights, obligations and liabilities under this
107
<PAGE>
Agreement except as any other Bank hereunder. Each Bank shall, ratably in
accordance with its Commitment, indemnify the Agents, their affiliates and their
respective directors, officers, agents and employees (to the extent not
reimbursed by the Borrowers or CarrAmerica LP) against any cost, expense
(including counsel fees and disbursements), claim, demand, action, loss or
liability (except such as result from such indemnitees' gross negligence or
willful misconduct) that such indemnitees may suffer or incur but solely in
connection with any such claim that may result pursuant to the Agents acting as
Agents under this Agreement.
SECTION 9.16. No Bankruptcy Proceedings. Each of the Borrower,
the Banks, the Lead Agent, and the Agents hereby agrees that it will not
institute against any Designated Lender or join any other Person in instituting
against any Designated Lender any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceeding under any federal or state bankruptcy or
similar law, until the later to occur of (i) one year and one day after the
payment in full of the latest maturing commercial paper note issued by such
Designated Lender and (ii) the Maturity Date.
108
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
CARRAMERICA REALTY CORPORATION
By: /s/ Brian K. Fields
------------------------------------
Name: Brian K. Fiends
Title: Chief Financial Officer
1850 K Street, N.W.
Washington, D.C. 20006
Telecopy number: (202) 729-
CARR REALTY, L.P.
By: CarrAmerica Realty
Corporation, General Partner
By: /s/ Brian K. Fields
--------------------------------
Name: Brian K. Fields
Title: Chief Financial Officer
1850 K Street, N.W.
Washington, D.C. 20006
Telecopy number: (202) 729
CARRAMERICA REALTY, L.P.
By: CarrAmerica Realty GP
Holdings, Inc.,
General Partner
By: /s/ Brian K. Fields
--------------------------------
Name: Brian K. Fields
Title: Chief Financial Officer
1850 K Street, N.W.
Washington, D.C. 20006
Telecopy number: (202) 729-
109
<PAGE>
Commitments:
$122,830,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Arranger and a Bank
By: /s/ Richard L. Dugoff
------------------------------------
Name: Richard L. Dugoff
Title: Vice President
110
<PAGE>
$51,900,000 COMMERZBANK AKTIENGESELLSCHAFT, NEW
YORK BRANCH, as Managing Agent and a
Bank
By: /s/ Douglas P. Traynor
------------------------------------
Name: Douglas P. Traynor
Title: Vice President
By: /s/ David Buettner
------------------------------------
Name: David Buetner
Title: Assistant Treasurer
111
<PAGE>
$51,900,000 NATIONSBANK, N.A., as Managing Agent
and a Bank
By: /s/ Leslie Furst
------------------------------------
Name: Leslie Furst
Title: Vice President
112
<PAGE>
$51,900,000 PNC BANK, NATIONAL ASSOCIATION, as
Managing Agent and a Bank
By: /s/ Richard B. Trzybinski
--------------------------------
Name: Richard B. Trzybinski
Title: Vice President
113
<PAGE>
$34,700,000 BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Co-Agent and a
Bank
By: /s/ Nicholas Yakubik
------------------------------------
Name: Nicholas Yakubik
Title: Vice President
114
<PAGE>
$34,700,000 SOCIETE GENERALE, A FRENCH BANKING
CORPORATION, ACTING THROUGH ITS
SOUTHWEST AGENCY, as Co-Agent
and a Bank
By: /s/ Rick Bower
------------------------------------
Name: Rick Bower
Title: Vice President
115
<PAGE>
$27,680,000 FIRST UNION NATIONAL BANK, as a Bank
By: /s/ Rox E. Rudy
------------------------------------
Name: Rox E. Rudy
Title: Vice President
116
<PAGE>
$25,950,000 BAYERISCHE HYPOTHEKEN -UND WECHSEL
BANK AKTIENGESELLSCHAFT, NEW YORK
BRANCH, as a Bank
By: /s/ Stephen G. Melidones
------------------------------------
Name: Stephen G. Melidones
Title: Assistant Vice President
By: /s/ Eva Lam
------------------------------------
Name: Eva Lam
Title: Assistant Treasurer
117
<PAGE>
$24,220,000 WACHOVIA BANK, N.A., as a Bank
By: /s/ Judith A. Nunn
------------------------------------
Name: Judith A. Nunn
Title: Vice President
118
<PAGE>
$13,840,000 CREDITANSTALT CORPORATE FINANCE, INC.,
as a Bank
By: /s/ Robert M. Biringer
------------------------------------
Name: Robert M. Biringer
Title: Executive Vice President
By: /s/ Carl G. Drake
------------------------------------
Name: Carl G. Drake
Title: Vice President
119
<PAGE>
$10,380,000 ERSTE BANK DER OESTERREICHISCHEN
SPARKASSEN AG, as a Bank
By: /s/ Paul Judicke
------------------------------------
Name: Paul Judicke
Title: Vice President
Erste Bank New York
By: /s/ Arcinee Hovanessian
------------------------------------
Name: Arcinee Hovanessian
Title: Vice President
Erste Bank New York
120
<PAGE>
Total Commitments
$450,000,000
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Lead Agent
By: /s/ Richard Dugof
------------------------------------
Name: Richard Dugof
Title: Vice President
c/o J.P. Morgan Services Inc.
500 Stanton Christiana Road
Newark, DE 19713-2107
Attention: William Lamb
Telecopy: (302) 634-4222
Domestic and Euro-Currency
Lending Office:
c/o J.P. Morgan Services Inc.
500 Stanton Christiana Road
Newark, DE 19713-2107-
Attention: Kevin M. McCann
Telecopy: (302) 634-1852/1872
121
<PAGE>
SCHEDULE 4.28
Ownership of Property
<PAGE>
EXHIBIT A-1
TRANCHE A NOTE
New York, New York
___________, 1998
For value received, CarrAmerica Realty Corporation, a Maryland
corporation (the "Borrower") and CarrAmerica Realty L.P., a Delaware limited
partnership ("CarrAmerica LP"), jointly and severally promise to pay to the
order of (the "Bank"), for the account of its Applicable Lending Office, the
unpaid principal amount of each Loan made by the Bank to the Borrower or
CarrAmerica LP pursuant to the Credit Agreement referred to below on the
Maturity Date. The Borrower and CarrAmerica LP jointly and severally promise to
pay interest on the unpaid principal amount of each such Loan on the dates and
at the rate or rates provided for in the Credit Agreement. All such payments of
principal and interest shall be made in lawful money of the United States in
Federal or other immediately available funds at the office of Morgan Guaranty
Trust Company of New York, 60 Wall Street, New York, New York.
All Loans made by the Bank, the respective types and
maturities thereof and all repayments of the principal thereof shall be recorded
by the Bank and, if the Bank so elects in connection with any transfer or
enforcement hereof, appropriate notations to evidence the foregoing information
with respect to each such Loan then outstanding may be endorsed by the Bank on
the schedule attached hereto, or on a continuation of such schedule attached to
and made a part hereof; provided that the failure of the Bank to make any such
recordation or endorsement shall not affect the obligations of the Borrower and
CarrAmerica LP hereunder or under the Credit Agreement.
This Note is one of the Tranche A Notes referred to in the
Fourth Amended and Restated Revolving Credit Agreement, dated as of August ,
1998, among the Borrower, CarrAmerica LP, Carr Realty, L.P., the Banks parties
thereto, Morgan Guaranty Trust Company of New York, as Lead Agent, Bank of
America National Trust and Savings Association, Commerzbank Aktiengesellschaft,
New York Branch, Nationsbank, N.A., and Wells Fargo Bank, National Association,
each as Bank and as Co-Agent for the Banks (as the same may be amended from time
to time, the "Credit Agreement"). Terms defined in the Credit Agreement are used
herein with the same meanings. Reference is made to the Credit Agreement for
provisions for the prepayment hereof and the acceleration of the maturity
hereof.
1
<PAGE>
CARRAMERICA REALTY CORPORATION
By:
------------------------------------
Name:
Title:
CARRAMERICA REALTY L.P.
By:
------------------------------------
Name:
Title:
2
<PAGE>
Tranche A Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
- --------------------------------------------------------------------------------
Amount of
Amount of Type of Principal Maturity Notation
Date Loan Loan Repaid Date Made By
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3
<PAGE>
EXHIBIT A-2
TRANCHE B NOTE
New York, New York
__________, 1998
For value received, Carr Realty, L.P., a Delaware limited
partnership (the "Borrower") and CarrAmerica Realty Corporation, a Maryland
corporation ("Carr"), jointly and severally promise to pay to the order of (the
"Bank"), for the account of its Applicable Lending Office, the unpaid principal
amount of each Loan made by the Bank to the Borrower or Carr pursuant to the
Credit Agreement referred to below on the Maturity Date. The Borrower and Carr
jointly and severally promise to pay interest on the unpaid principal amount of
each such Loan on the dates and at the rate or rates provided for in the Credit
Agreement. All such payments of principal and interest shall be made in lawful
money of the United States in Federal or other immediately available funds at
the office of Morgan Guaranty Trust Company of New York, 60 Wall Street, New
York, New York.
All Loans made by the Bank, the respective types and
maturities thereof and all repayments of the principal thereof shall be recorded
by the Bank and, if the Bank so elects in connection with any transfer or
enforcement hereof, appropriate notations to evidence the foregoing information
with respect to each such Loan then outstanding may be endorsed by the Bank on
the schedule attached hereto, or on a continuation of such schedule attached to
and made a part hereof; provided that the failure of the Bank to make any such
recordation or endorsement shall not affect the obligations of the Borrower and
Carr hereunder or under the Credit Agreement.
This Note is one of the Tranche B Notes referred to in the
Fourth Amended and Restated Revolving Credit Agreement, dated as of August ,
1998, among the Borrower, Carr, CarrAmerica Realty, L.P., the Banks parties
thereto, Morgan Guaranty Trust Company of New York, as Lead Agent, Bank of
America National Trust and Savings Association, Commerzbank Aktiengesellschaft,
New York Branch, Nationsbank, N.A., and Wells Fargo Bank, National Association,
each as Bank and as Co-Agent for the Banks (as the same may be amended from time
to time, the "Credit Agreement"). Terms defined in the Credit Agreement are used
herein with the same meanings. Reference is made to the Credit Agreement for
provisions for the prepayment hereof and the acceleration of the maturity
hereof.
<PAGE>
CARR REALTY, L.P.
By:
------------------------------------
Name:
Title:
CARRAMERICA REALTY
CORPORATION
By:
------------------------------------
Name:
Title:
<PAGE>
Tranche B Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
- --------------------------------------------------------------------------------
Amount of
Amount of Type of Principal Maturity Notation
Date Loan Loan Repaid Date Made By
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT A-3
TRANCHE A DESIGNATED LENDER NOTE
New York, New York
________ __, 1998
For value received, CarrAmerica Realty Corporation, a Maryland
corporation (the "Borrower") and CarrAmerica Realty L.P., a Delaware limited
partnership ("CarrAmerica LP"), jointly and severally promise to pay to the
order of (the "Bank"), for the account of its Applicable Lending Office, the
unpaid principal amount of each Loan made by the Bank to the Borrower or
CarrAmerica LP pursuant to the Credit Agreement referred to below on the
Maturity Date. The Borrower and CarrAmerica LP jointly and severally promise to
pay interest on the unpaid principal amount of each such Loan on the dates and
at the rate or rates provided for in the Credit Agreement. All such payments of
principal and interest shall be made in lawful money of the United States in
Federal or other immediately available funds at the office of Morgan Guaranty
Trust Company of New York, 60 Wall Street, New York, New York.
All Loans made by the Bank, the respective types and
maturities thereof and all repayments of the principal thereof shall be recorded
by the Bank and, if the Bank so elects in connection with any transfer or
enforcement hereof, appropriate notations to evidence the foregoing information
with respect to each such Loan then outstanding may be endorsed by the Bank on
the schedule attached hereto, or on a continuation of such schedule attached to
and made a part hereof; provided that the failure of the Bank to make any such
recordation or endorsement shall not affect the obligations of the Borrower and
CarrAmerica LP hereunder or under the Credit Agreement.
This Note is one of the Designated Lender Notes referred to
in, and is delivered pursuant to and subject to all of the terms of, the Fourth
Amended and Restated Revolving Credit Agreement dated as of August , 1998
among the Borrower, Carr, CarrAmerica LP, Carr Realty L.P., the Banks parties
thereto, Morgan Guaranty Trust Company of New York, as Lead Agent, Bank of
America National Trust and Savings Association, Commerzbank Aktiengesellschaft,
New York Branch, Nationsbank, N.A., and Wells Fargo Bank, National Association,
each as Bank and as Co-Agent for the Banks (as the same may be amended from time
to time, the "Credit Agreement"). Terms defined in the Credit Agreement are used
herein with the same meanings. Reference is made to the Credit Agreement for
provisions for the prepayment hereof and the acceleration of the maturity
hereof.
<PAGE>
CARRAMERICA REALTY CORPORATION
By:
------------------------------------
Name:
Title:
CARRAMERICA REALTY L.P.
By:
------------------------------------
Name:
Title:
<PAGE>
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
- --------------------------------------------------------------------------------
Amount of
Amount of Type of Principal Maturity Notation
Date Loan Loan Repaid Date Made By
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT A-4
TRANCHE B DESIGNATED LENDER NOTE
New York, New York
________ __, 1998
For value received, Carr Realty, L.P., a Delaware limited
partnership (the "Borrower") and CarrAmerica Realty Corporation, a Maryland
corporation ("Carr"), jointly and severally promise to pay to the order of (the
"Bank"), for the account of its Applicable Lending Office, the unpaid principal
amount of each Loan made by the Bank to the Borrower or Carr pursuant to the
Credit Agreement referred to below on the Maturity Date. The Borrower and Carr
jointly and severally promise to pay interest on the unpaid principal amount of
each such Loan on the dates and at the rate or rates provided for in the Credit
Agreement. All such payments of principal and interest shall be made in lawful
money of the United States in Federal or other immediately available funds at
the office of Morgan Guaranty Trust Company of New York, 60 Wall Street, New
York, New York.
All Loans made by the Bank, the respective types and
maturities thereof and all repayments of the principal thereof shall be recorded
by the Bank and, if the Bank so elects in connection with any transfer or
enforcement hereof, appropriate notations to evidence the foregoing information
with respect to each such Loan then outstanding may be endorsed by the Bank on
the schedule attached hereto, or on a continuation of such schedule attached to
and made a part hereof; provided that the failure of the Bank to make any such
recordation or endorsement shall not affect the obligations of the Borrower and
Carr hereunder or under the Credit Agreement.
This Note is one of the Designated Lender Notes referred to
in, and is delivered pursuant to and subject to all of the terms of, the Fourth
Amended and Restated Revolving Credit Agreement dated as of August , 1998
among the Borrower, Carr, CarrAmerica Realty, L.P., the Banks parties thereto,
Morgan Guaranty Trust Company of New York, as Lead Agent, Bank of America
National Trust and Savings Association, Commerzbank Aktiengesellschaft, New York
Branch, Nationsbank, N.A., and Wells Fargo Bank, National Association, each as
Bank and as Co-Agent for the Banks (as the same may be amended from time to
time, the "Credit Agreement"). Terms defined in the Credit Agreement are used
herein with the same meanings. Reference is made to the Credit Agreement for
provisions for the prepayment hereof and the acceleration of the maturity
hereof.
<PAGE>
CARR REALTY, L.P.
By:
------------------------------------
Name:
Title:
CARRAMERICA REALTY
CORPORATION
By:
------------------------------------
Name:
Title:
<PAGE>
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
- --------------------------------------------------------------------------------
Amount of
Amount of Type of Principal Maturity Notation
Date Loan Loan Repaid Date Made By
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT B-1
CARR UNENCUMBERED ASSET POOL PROPERTIES
1
<PAGE>
EXHIBIT B-2
CARR LP UNENCUMBERED ASSET POOL PROPERTIES
2
<PAGE>
EXHIBIT C
ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as of ____________,
199 , among [ASSIGNOR] (the "Assignor"), [ASSIGNEE] (the "Assignee"),
CARRAMERICA REALTY CORPORATION ("Carr"), CARR REALTY, L.P. ("Carr LP"),
CARRAMERICA REALTY, L.P. ("CarrAmerica LP"; Carr, Carr LP and CarrAmerica LP
collectively, the "Borrowers") and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
Lead Agent (the "Lead Agent") for certain banks (the "Banks").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement (the
"Assignment") relates to the Fourth Amended and Restated Revolving Credit
Agreement, dated as of August , 1998 (the "Credit Agreement"), among the
Borrowers, the Assignor and the Agent, as agent for the Banks, and Commerzbank
Aktiengesellschaft, New York Branch, Nationsbank, N.A., and PNC Bank, National
Association, each as Bank and as Managing Agent for the Banks, Bank of America
National Trust and Savings Association and Societe Generale, a french banking
corporation, acting through its Southwest Agency, and the Banks listed on the
signature pages thereof;
WHEREAS, as provided under the Credit Agreement, the Assignor
has a Commitment to make Loans to the Borrowers in an aggregate principal amount
at any time outstanding not to exceed $_____________;
WHEREAS, Loans made to the Borrowers by the Assignor under the
Credit Agreement in the aggregate principal amount of $____________ are
outstanding at the date hereof; and
WHEREAS, the Assignor proposes to assign to the Assignee all
of the rights of the Assignor under the Credit Agreement in respect of a portion
of its Commitment thereunder in an amount equal to $__________ (the "Assigned
Amount"), together with a corresponding portion of its outstanding Loans, and
the Assignee proposes to accept assignment of such rights and assume the
corresponding obligations from the Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements contained herein, the parties hereto agree as follows:
SECTION 1. Definitions. All capitalized terms not
otherwise defined herein shall have the respective meanings set forth
in the Credit Agreement.
1
<PAGE>
SECTION 2. Assignment. The Assignor hereby assigns and sells
to the Assignee all of the rights of the Assignor under the Credit Agreement to
the extent of the Assigned Amount, and the Assignee hereby accepts such
assignment from the Assignor and assumes all of the obligations of the Assignor
under the Credit Agreement to the extent of the Assigned Amount, including the
purchase from the Assignor of the corresponding portion of the principal amount
of the Loans made by the Assignor outstanding at the date hereof. Upon the
execution and delivery hereof by the Assignor, the Assignee, the Borrowers and
the Agent and the payment of the amounts specified in Section 3 required to be
paid on the date hereof (i) the Assignee shall, as of the date hereof, succeed
to the rights and be obligated to perform the obligations of a Bank under the
Credit Agreement with a Commitment in an amount equal to the Assigned Amount and
(ii) the Commitment of the Assignor shall, as of the date hereof, be reduced by
a like amount and the Assignor released from its obligations under the Credit
Agreement to the extent such obligations have been assumed by the Assignee. The
assignment provided for herein shall be without recourse to the Assignor.
SECTION 3. Payments. As consideration for the assignment and
sale contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on
the date hereof in Federal funds the amount heretofore agreed between them
(1) It is understood that Commitment Fees accrued to the date hereof are for the
account of the Assignor and such fees accruing from and including the date
hereof are for the account of the Assignee. Each of the Assignor and the
Assignee hereby agrees that if it receives any amount under the Credit Agreement
which is for the account of the other party hereto, it shall receive the same
for the account of such other party to the extent of such other party's interest
therein and shall promptly pay the same to such other party.
SECTION 4. Consent of the Borrowers and the Agent. This
Agreement is conditioned upon the consent of the Borrowers and the Agent
pursuant to Section 9.6(c) of the Credit Agreement. The execution of this
Agreement by the Borrowers and the Agent is evidence of this consent. Pursuant
to Section 9.6(c) of the Credit Agreement, Carr agrees to execute and deliver a
Tranche A Note payable to the order of Assignee and Carr LP agrees to execute
and deliver a Tranche B Note payable to the order of the Assignee to evidence
the assignment and assumption provided for herein.
- --------
(1) Amount should combine principal together with accrued interest and
breakage compensation, if any, to be paid by the Assignee, net of any
portion of any upfront fee to be paid by the Assignor to the As signee. It
may be preferable in an appropriate case to specify these amounts
generically or by formula rather than as a fixed sum.
2
<PAGE>
SECTION 5. Non-Reliance on Assignor. The Assignor makes no
representation or warranty in connection with, and shall have no responsibility
with respect to, the solvency, financial condition, or statements of the
Borrowers, or the validity and enforceability of the obligations of the
Borrowers in respect of the Credit Agreement or any Note. The Assignee
acknowledges that it has, independently and without reliance on the Assignor,
and based on such documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this Agreement and will
continue to be responsible for making its own independent appraisal of the
business, affairs and financial condition of the Borrowers.
SECTION 6. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York
SECTION 7. Counterparts. 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.
3
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date first
above written.
[ASSIGNOR]
By:
------------------------------------
Name:
Title:
[ASSIGNEE]
By:
------------------------------------
Name:
Title:
CARRAMERICA REALTY CORPORATION
By:
------------------------------------
Name:
Title:
CARR REALTY, L.P.
By: CarrAmerica Realty Corporation
General Partner
By:
--------------------------------
Name:
Title:
CARRAMERICA REALTY, L.P.
By: CarrAmerica Realty GP Holdings,
Inc., General Partner
By:
--------------------------------
Name:
Title:
4
<PAGE>
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, AS LEAD AGENT
By:
------------------------------------
Name:
Title:
5
<PAGE>
EXHIBIT D
Form of Money Market Quote Request
[Date]
To: Morgan Guaranty Trust Company of New York (the "Lead Agent")
From: CarrAmerica Realty Corporation, Carr Realty, L.P., and
CarrAmerica Realty, L.P.
Re: Fourth Amended and Restated Credit Agreement (the "Credit Agreement")
dated as of August , 1998 among CarrAmerica Realty Corporation, Carr
Realty, L.P., and CarrAmerica Realty, L.P., Morgan Guaranty Trust
Company of New York, as Bank and Lead Agent for the Banks, Bank of
America National Trust and Savings Association, Commerzbank
Aktiengesellschaft, New York Branch, Nationsbank, N.A. and Wells Fargo
Bank, National Association, each as Bank and Co-Agent, and the Banks
parties thereto
We hereby give notice pursuant to Section 2.3 of the Credit
Agreement that we request Money Market Quotes for the following proposed Money
Market Borrowing(s):
Date of Borrowing: __________________
Principal Amount(1) Interest Period(2)
- ------------------- ------------------
$
Principal Amount allocated to Tranche A: $________________
Principal Amount allocated to Tranche B: $________________
- --------
(1) Amount must be $10,000,000 or a larger multiple of $500,000.
(2) Not less than one month (LIBOR Auction) or not less than 14 days
(Absolute Rate Auction), subject to the provisions of the definition of
Interest Period.
<PAGE>
Such Money Market Quotes should offer a Money Market
[Margin] [Absolute Rate]. [The applicable base rate is the London
Interbank Offered Rate.]
The funding of Money Market Loans made in connection with this
Money Market Quote Request [may/may not] be made by Designated Lenders.
Terms used herein have the meanings assigned to them in the
Credit Agreement.
[Borrower]
By:
------------------------------------
Name:
Title:
<PAGE>
EXHIBIT E
Form of Invitation for Money Market Quotes
To: [Name of Bank]
Re: Invitation for Money Market Quotes to CarrAmerica Realty
Corporation, Carr Realty, L.P. and CarrAmerica Realty, L.P. (the
"Borrower")
Pursuant to Section 2.3 of the Fourth Amended and Restated
Credit Agreement dated as of August , 1998 among CarrAmerica Realty
Corporation, Carr Realty, L.P., and CarrAmerica Realty, L.P., Morgan Guaranty
Trust Company of New York, as Bank and Lead Agent for the Banks, Bank of America
National Trust and Savings Association, Commerzbank Aktiengesellschaft, New York
Branch, Nationsbank, N.A. and Wells Fargo Bank, National Association, each as
Bank and Co-Agent, and the Banks parties thereto, we are pleased on behalf of
the Borrower and CarrAmerica LP to invite you to submit Money Market Quotes to
the Borrower and/or CarrAmerica LP for the following proposed Money Market
Borrowing(s):
Date of Borrowing: __________________
Principal Amount Interest Period
- ---------------- ---------------
$
Such Money Market Quotes should offer a Money Market
[Margin] [Absolute Rate]. [The applicable base rate is the London
Interbank Offered Rate.]
Please respond to this invitation by no later than 10:00 A.M.
(New York City time) on [date].
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Lead Agent
By:
------------------------------------
Authorized Officer
1
<PAGE>
EXHIBIT F
Form of Money Market Quote
To: Morgan Guaranty Trust Company of New York, as Lead Agent
Re: Money Market Quote to CarrAmerica Realty Corporation, Carr Realty,
L.P., and CarrAmerica Realty, L.P. (the "Borrower")
In response to your invitation on behalf of the Borrower dated
_____________, 19__, we hereby make the following Money Market Quote on the
following terms:
1. Quoting Bank: ________________________________
2. Person to contact at Quoting Bank:
-----------------------------
3. Date of Borrowing: ____________________*
4. We hereby offer to make Money Market Loan(s) in the following principal
amounts, for the following Interest Periods and at the following rates:
Principal Interest Money Market
Amount** Period*** [Margin****] [Absolute Rate*****]
- -------- --------- ------------ --------------------
$
$
[Provided, that the aggregate principal amount of Money Market Loans
for which the above offers may be accepted shall not exceed
$____________.]**
We understand and agree that the offer(s) set forth
above, subject to the satisfaction of the applicable conditions set
forth in the Fourth Amended and Restated Credit Agreement dated as of
August , 1998 among CarrAmerica Realty Corporation, Carr Realty,
L.P., and CarrAmerica Realty, L.P., Bank of America National Trust and
Savings Association, Commerzbank Aktiengesellschaft, New York Branch,
1
<PAGE>
Nationsbank, N.A. and Wells Fargo Bank, National Association, each as
Bank and Co-Agent, and the Banks parties thereto, and yourselves, as
Lead Agent, irrevocably obligates us to make the Money Market Loan(s)
for which any offer(s) are accepted, in whole or in part.
Very truly yours,
[NAME OF BANK]
Dated: _________________ By:
------------------------------------
Authorized Officer
2
<PAGE>
EXHIBIT G
FORM OF DESIGNATION AGREEMENT
Dated _____________, 199___
Reference is made to that certain Fourth Amended and Restated Revolving
Credit Agreement dated as of August , 1998 (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement") among CARRAMERICA
REALTY CORPORATION, CARR REALTY, L.P., and CARRAMERICA REALTY, L.P., BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Bank and Co-Agent,
COMMERZBANK AKTIENGESELLSCHAFT, NEW YORK BRANCH, as Bank and Co-Agent,
NATIONSBANK, N.A., as Bank and Co-Agent, WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Bank and Co-Agent, and the Banks parties thereto, and yourselves, as Lead
Agent, and MORGAN GUARANTY TRUST COMPANY OF NEW YORK (the "Lead Agent"), as Lead
Agent. Terms defined in the Credit Agreement are used herein with the same
meaning.
[NAME OF DESIGNOR] (the "Designor"), [NAME OF DESIGNEE] (the
"Designee"), the Lead Agent and Borrower agree as follows:
1. The Designor hereby designates the Designee, and the Designee hereby accepts
such designation, to have a right to make Money Market Loans pursuant to Section
2.3 of the Credit Agreement. Any assignment by Designor to Designee of its
rights to make a Money Market Loan pursuant to such Article III shall be
effective at the time of the funding of such Money Market Loan and not before
such time.
2. Except as set forth in Section 7 below, the Designor makes no representation
or warranty and assumes no responsibility pursuant to this Designation Agreement
with respect to (a) any statements, warranties or representations made in or in
connection with any Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of any Loan Document or any
other instrument and document furnished pursuant thereto and (b) the financial
condition of the Borrower or the performance or observance by the Borrower of
any of its obligations under any Loan Document or any other instrument or
document furnished pursuant thereto.
3. The Designee (a) confirms that it has received a copy of each Loan Document,
together with copies of the financial statements referred to in Section 5.1 of
the Credit Agreement and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Designation Agreement; (b) agrees that it will independently and without
reliance upon the
1
<PAGE>
Lead Agent, the Designor or any other Bank and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under any Loan Document; (c)
confirms that it is a Designated Lender; (d) appoints and authorizes the Lead
Agent to take such action as agent on its behalf and to exercise such powers and
discretion under any Loan Document as are delegated to the Lead Agent by the
terms thereof, together with such powers and discretion as are reasonably
incidental thereto; and (e) agrees to be bound by each and every provision of
each Loan Document and further agrees that it will perform in accordance with
their terms all of the obligations which by the terms of any Loan Document are
required to be performed by it as a Bank, subject to Section 9.6(d) of the
Credit Agreement.
4. The Designee hereby appoints Designor as Designee's agent and attorney in
fact, and grants to Designor an irrevocable power of attorney, to receive
payments made for the benefit of Designee under the Credit Agreement, to deliver
and receive all communications and notices under the Credit Agreement and other
Loan Documents and to exercise on Designee's behalf all rights to vote and to
grant and make approvals, waivers, consents of amendments to or under the Credit
Agreement or other Loan Documents, subject to Section 9.5 of the Credit
Agreement. Any document executed by the Designor on the Designee's behalf in
connection with the Credit Agreement or other Loan Documents shall be binding on
the Designee. The Borrower, the Lead Agent and each of the Banks may rely on and
are beneficiaries of the preceding provisions.
5. Following the execution of this Designation Agreement by the Designor and its
Designee, it will be delivered to the Lead Agent for recording by the Lead
Agent. The effective date for this Designation Agreement (the "Effective Date")
shall be the date of receipt hereof by the Lead Agent, unless otherwise
specified on the signature page thereto.
6. The Lead Agent hereby agrees that it will not institute against any
Designated Lender or join any other Person in instituting against any Designated
Lender any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding under any federal or state bankruptcy or similar law, until the later
to occur of (i) one year and one day after the payment in full of the latest
maturing commercial paper note issued by such Designated Lender and (ii) the
Maturity Date.
2
<PAGE>
7. The Designor unconditionally agrees to pay or reimburse the Designee and
save the Designee harmless against all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed or asserted by any of the
parties to the Loan Documents against the Designee (except as set forth in
Section 8 below), in its capacity as such, in any way relating to or arising out
of this Agreement or any other Loan Documents or any action taken or omitted by
the Designee hereunder or thereunder, provided that the Designor shall not be
liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements if the
same results from the Designee's gross negligence or willful misconduct.
8. Upon such acceptance and recording by the Lead Agent, as of the Effective
Date, the Designee shall be a party to the Credit Agreement with a right
(subject to the provisions of Section 2.3(b)) to make Money Market Loans as a
Bank pursuant to Section 2.3 of the Credit Agreement and the rights and
obligations of a Bank related thereto; provided, however, that the Designee
shall not be required to make payments with respect to such obligations except
to the extent of excess cash flow of such Designee which is not otherwise
required to repay obligations of such Designated Lender which are then due and
payable. Notwithstanding the foregoing, the Designor, as administrative agent
for the Designee, shall be and remain obligated to the Borrower, the Agents and
the Banks for each and every of the obligations of the Designee and its Designor
with respect to the Credit Agreement, including, without limitation, any
indemnification obligations under Section 7.6 of the Credit Agreement and any
sums otherwise payable to the Borrower by the Designee.
9. This Designation Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York.
10. This Designation Agreement may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement. Delivery of an executed counterpart of a
signature page to this Designation Agreement by facsimile transmission shall be
effective as delivery of a manually executed counterpart of this Designation
Agreement.
3
<PAGE>
IN WITNESS WHEREOF, the Designor and the Designee, intending to be
legally bound, have caused this Designation Agreement to be executed by
their officers thereunto duly authorized as of the date first above
written.
Effective Date: ________________________, 199__
[NAME OF DESIGNOR], as
Designor
By:
------------------------------------
Title:
[NAME OF DESIGNEE] as Designee
By:
------------------------------------
Title:
Applicable Lending Office (and address
for notices):
[ADDRESS]
Accepted this _____ day
of ______ , 19
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Lead Agent
By:
-------------------------
Title:
---------------------
4
Exhibit 10.2
================================================================================
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
dated as of August 27, 1998
among
OMNIOFFICES, INC.,
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Bank, Arranger and as Lead Agent
for the Banks,
J.P. MORGAN SECURITIES INC.,
as Syndication Agent,
COMMERZBANK AKTIENGESELLSCHAFT, NEW YORK BRANCH,
as Bank and as Managing Agent for the Banks,
NATIONSBANK, N.A.,
as Bank and as Managing Agent for the Banks,
PNC BANK, NATIONAL ASSOCIATION,
as Bank and as Managing Agent for the Banks,
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Bank and as Co-Agent for the Banks,
SOCIETE GENERALE, A FRENCH BANKING CORPORATION, ACTING
THROUGH ITS SOUTHWEST AGENCY,
as Bank and as Co-Agent for the Banks,
and
THE BANKS LISTED HEREIN
================================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS ....................................................... 1
SECTION 1.1. Definitions ......................................... 1
SECTION 1.2. Accounting Terms and Determinations ................. 15
SECTION 1.3. Types of Borrowings ................................. 15
ARTICLE II
THE CREDITS ....................................................... 16
SECTION 2.1. Commitments to Lend ................................. 16
SECTION 2.2. Notice of Borrowing ................................. 16
SECTION 2.3. Intentionally Omitted ............................... 18
SECTION 2.4. Notice to Banks; Funding of Loans ................... 18
SECTION 2.5. Notes ............................................... 20
SECTION 2.6. Maturity of Loans ................................... 21
SECTION 2.7. Interest Rates ...................................... 21
SECTION 2.8. Fees ................................................ 22
SECTION 2.9. Mandatory Termination ............................... 23
SECTION 2.10. Intentionally Omitted ............................... 23
SECTION 2.11. Optional Prepayments ................................ 23
SECTION 2.12. General Provisions as to Payments ................... 25
SECTION 2.13. Funding Losses ...................................... 26
SECTION 2.14. Computation of Interest and Fees .................... 26
SECTION 2.15. Method of Electing Interest Rates ................... 26
SECTION 2.16. Letters of Credit ................................... 28
SECTION 2.17. Letter of Credit Usage Absolute ..................... 31
ARTICLE III
CONDITIONS ........................................................ 33
SECTION 3.1. Closing ............................................. 33
SECTION 3.2. Borrowings .......................................... 35
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES .................................... 37
SECTION 4.1. Existence and Power ................................. 37
SECTION 4.2. Intentionally Omitted ............................... 37
SECTION 4.3. Power and Authority of Borrower ..................... 37
SECTION 4.4. Subordination of CarrAmerica Loans .................. 37
SECTION 4.5. No Violation ........................................ 38
SECTION 4.6. Financial Information ............................... 38
SECTION 4.7. Litigation .......................................... 38
SECTION 4.8. Compliance with ERISA ............................... 39
SECTION 4.9. Intentionally Omitted ............................... 39
SECTION 4.10. Taxes ............................................... 40
SECTION 4.11. Full Disclosure ..................................... 40
SECTION 4.12. Solvency ............................................ 40
SECTION 4.13. Use of Proceeds; Margin Regulations ................. 40
SECTION 4.14. Governmental Approvals .............................. 40
SECTION 4.15. Investment Company Act; Public
Utility Holding Company Act ........... 41
SECTION 4.16. Closing Date Transactions ........................... 41
SECTION 4.17. Representations and Warranties in
Loan Documents ........................ 41
SECTION 4.18. Patents, Trademarks, etc ............................ 41
SECTION 4.19. No Default .......................................... 42
SECTION 4.20. Licenses, etc ....................................... 42
SECTION 4.21. Compliance With Law ................................. 42
SECTION 4.22. No Burdensome Restrictions .......................... 42
SECTION 4.23. Brokers' Fees ....................................... 42
SECTION 4.24. Labor Matters ....................................... 43
SECTION 4.25. Organizational Documents ............................ 43
SECTION 4.26. Principal Offices ................................... 43
SECTION 4.27. Subordination of CarrAmerica Loan ................... 43
SECTION 4.28. Ownership of Property ............................... 43
SECTION 4.29. Insurance ........................................... 44
SECTION 4.30. Year 2000 Compliance ................................ 44
ARTICLE V
AFFIRMATIVE AND NEGATIVE COVENANTS ................................ 44
SECTION 5.1. Information ......................................... 44
<PAGE>
SECTION 5.2. Payment of Obligations .............................. 47
SECTION 5.3. Maintenance of Property ............................. 47
SECTION 5.4. Conduct of Business ................................. 48
SECTION 5.5. Compliance with Laws ................................ 48
SECTION 5.6. Inspection of Property, Books and Records ........... 48
SECTION 5.7. Existence ........................................... 48
SECTION 5.8. Financial Covenants ................................. 49
SECTION 5.9. Restriction on Fundamental Changes; Operation and
Control ............................... 49
SECTION 5.10. Changes in Business ................................. 50
SECTION 5.11. Fiscal Year; Fiscal Quarter ......................... 50
SECTION 5.12. Margin Stock ........................................ 50
SECTION 5.13. Intentionally Omitted ............................... 50
SECTION 5.14. Intentionally Omitted ............................... 50
SECTION 5.15. Use of Proceeds ..................................... 50
SECTION 5.16. Transfer of Lease Assets ............................ 50
ARTICLE VI
DEFAULTS .......................................................... 51
SECTION 6.1. Events of Default ................................... 51
SECTION 6.2. Rights and Remedies ................................. 54
SECTION 6.3. Notice of Default ................................... 55
SECTION 6.4. Actions in Respect of Letters of Credit ............. 56
ARTICLE VII
THE LEAD AGENT .................................................... 58
SECTION 7.1. Appointment and Authorization ....................... 58
SECTION 7.2. Lead Agent and Affiliates ........................... 58
SECTION 7.3. Action by Lead Agent ................................ 59
SECTION 7.4. Consultation with Experts ........................... 59
SECTION 7.5. Liability of Lead Agent ............................. 59
SECTION 7.6. Indemnification ..................................... 59
SECTION 7.7. Credit Decision ..................................... 60
SECTION 7.8. Successor Lead Agent ................................ 60
SECTION 7.9. Lead Agent's Fee .................................... 60
SECTION 7.10. Copies of Notices ................................... 61
SECTION 7.11 Removal of Lead Agent ............................... 61
<PAGE>
ARTICLE VIII
CHANGE IN CIRCUMSTANCES ........................................... 61
SECTION 8.1. Basis for Determining Interest Rate Inadequate
or Unfair .............................. 61
SECTION 8.2. Illegality .......................................... 62
SECTION 8.3. Increased Cost and Reduced Return ................... 62
SECTION 8.4. Taxes ............................................... 64
SECTION 8.5. Base Rate Loans Substituted for Affected Euro-Dollar
Loans ................................. 67
ARTICLE IX
MISCELLANEOUS ............................................................. 67
SECTION 9.1. Notices ............................................. 68
SECTION 9.2. No Waivers .......................................... 68
SECTION 9.3. Expenses; Indemnification ........................... 70
SECTION 9.4. Sharing of Set-Offs ................................. 71
SECTION 9.5. Amendments and Waivers .............................. 71
SECTION 9.6. Successors and Assigns .............................. 69
SECTION 9.7. Governing Law; Submission to Jurisdiction ........... 74
Section 9.8. Marshalling; Recapture .............................. 74
SECTION 9.9. Counterparts; Integration; Effectiveness ............ 75
SECTION 9.10. WAIVER OF JURY TRIAL ................................ 75
SECTION 9.11. Survival ............................................ 75
SECTION 9.12. Domicile of Loans ................................... 75
SECTION 9.13. Limitation of Liability ............................. 75
SECTION 9.14. Confidentiality ..................................... 76
Schedule 4.28 - Ownership of Property
Exhibit A Form of Note
Exhibit B Assignment and Assumption Agreement
<PAGE>
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT, dated as of
August 27, 1998, among OMNIOFFICES, INC. (the "Borrower"), MORGAN GUARANTY TRUST
COMPANY OF NEW YORK, as Bank, Arranger and as Lead Agent for the Banks,
COMMERZBANK AKTIENGESELLSCHAFT, NEW YORK BRANCH, as Bank and as Managing Agent
for the Banks, NATIONSBANK, N.A., as Bank and as Managing Agent for the Banks,
PNC BANK, NATIONAL ASSOCIATION, as Bank and as Managing Agent for the Banks,
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Bank and as Co-Agent
for the Banks, and SOCIETE GENERALE, A FRENCH BANKING CORPORATION, ACTING
THROUGH ITS SOUTHWEST AGENCY, as Bank and as Co-Agent for the Banks
(collectively, the "Agents"), and the BANKS listed on the signature pages hereof
(the "Banks").
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. The following terms, as used herein,
have the following meanings:
"Adjusted London Interbank Offered Rate" has the meaning set
forth in Section 2.7(b).
"Administrative Questionnaire" means, with respect to each
Bank, an administrative questionnaire in the form prepared by the Lead Agent and
submitted to the Lead Agent (with a copy to the Borrower) duly completed by such
Bank.
2
<PAGE>
"Agreement" means this Amended and Restated Revolving Credit
Agreement as the same may from time to time hereafter be modified, supplemented
or amended.
"Applicable Lending Office" means, with respect to any Bank,
(i) in the case of its Base Rate Loans, its Domestic Lending Office and (ii) in
the case of its Euro-Dollar Loans, its Euro-Dollar Lending Office.
"Applicable Margin" means, with respect to each Loan, the
respective percentages per annum determined based on the range into which the
rating or "shadow" rating on CarrAmerica's senior long-term unsecured debt then
falls, in accordance with the following table. Any change in CarrAmerica's
Investment Grade Rating causing it to move to a different range on the table
shall effect an immediate change in the Applicable Margin. In the event that
CarrAmerica receives two (2) Investment Grade Ratings that are not equivalent,
the Applicable Margin shall be determined by the lower of such two (2)
Investment Grade Ratings, at least one of which shall be an Investment Grade
Rating from S&P or Moody's. In the event that CarrAmerica receives more than two
(2) ratings (from S&P, Moody's, Duff & Phelps or Fitch) and such ratings are not
equivalent, the Applicable Margin shall be determined by the lower of the two
highest ratings; provided that each of said two (2) highest ratings shall be
Investment Grade Ratings and at least one of which shall be an Investment Grade
Rating from S&P or Moody's.
Range of Applicable
CarrAmerica's Margin for Applicable
Credit Rating Base Rate Margin for Euro
(S&P/Moody's Loans Dollar Loans
Ratings) (% per annum) (% per annum)
- -------- ------------- -------------
BBB-/Baa3 0 .80
BBB/Baa2 0 .70
BBB+/Baa1 0 .55
The Applicable Margin for so long as CarrAmerica shall not
have obtained two Investment Grade Ratings (at least one of which shall be from
S&P or Moody's) or after CarrAmerica loses its Investment Grade Rating, shall be
as follows:
3
<PAGE>
Applicable
Margin for Applicable
Base Rate Margin for Euro
Loans Dollar Loans
(% per annum) (% per annum)
------------- -------------
0 1.175
In addition, the Applicable Margin shall be increased if at
any time Borrowers LTV Ratio shall exceed 50%, as follows (provided, however,
that the increase in Borrowers LTV Ratio shall have not given rise to an Event
of Default (as defined in the Carr Credit Agreement)):
Borrowers LTV Ratio Borrowers LTV Ratio
>50% < or = 55% >55% < or = 60%
(% per annum) (% per annum)
------------------- -------------------
.15 .30
Lead Agent shall notify the Banks in writing promptly after it
obtains knowledge of any change in CarrAmerica's Investment Grade Rating or
Borrowers LTV Ratio which shall effect a change in the Applicable Margin.
"Assignee" has the meaning set forth in Section 9.6(c).
"Bank" means each bank listed on the signature pages hereof,
each Assignee which becomes a Bank pursuant to Section 9.6(c), and their
respective successors.
"Bankruptcy Code" means Title 11 of the United States Code,
entitled "Bankruptcy", as amended from time to time, and any successor statute
or statutes.
"Base Rate" means, for any day, a rate per annum equal to the
higher of (i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the
Federal Funds Rate for such day.
"Base Rate Loan" means a Loan to be made by a Bank as a Base
Rate Loan in accordance with the Notice of Borrowing or pursuant to Article
VIII.
"Benefit Arrangement" means at any time an employee benefit
plan within the meaning of Section 3(3) of ERISA which is not a Plan or a
4
<PAGE>
Multiemployer Plan and which is maintained or otherwise contributed to by any
member of the ERISA Group.
"Borrower" as defined in the recitals hereof.
"Borrowers LTV Ratio" means the ratio, expressed as a
percentage and calculated on a quarterly basis by CarrAmerica, of the aggregate
amount of all Unsecured Debt (as defined in the Carr Credit Agreement) of
Borrowers, CarrAmerica LP, their Consolidated Subsidiaries (as such terms are
defined in the Carr Credit Agreement) and Borrowers' and CarrAmerica LP's pro
rata share of all Unsecured Debt of any Subsidiaries (as defined in the Carr
Credit Agreement) which are not Consolidated Subsidiaries outstanding as of the
date of determination, to the Unencumbered Asset Pool Properties Value (as
defined in the Carr Credit Agreement) as of the date of determination.
"Borrowing" means a borrowing hereunder consisting of Loans
made to the Borrower at the same time by the Banks pursuant to Article II. A
Borrowing is a "Domestic Borrowing" if such Loans are Base Rate Loans or a
"Euro-Dollar Borrowing" if such Loans are Euro-Dollar Loans.
"CarrAmerica" means CarrAmerica Realty Corporation, a Maryland
corporation.
"CarrAmerica Loan" means the loan from CarrAmerica to the
Borrower as evidenced by a promissory note dated as of March 31, 1998 in the
principal amount of $110,707,070.
"Carr Credit Agreement" means the Fourth Amended and Restated
Revolving Credit Agreement, dated as of even date herewith, by and among
CarrAmerica Realty Corporation, Carr Realty, L.P., CarrAmerica Realty, L.P.,
Morgan Guaranty Trust Company of New York, as lead agent, Commerzbank
Aktiengesellschaft, New York Branch, as bank and as managing agent for the
banks, Nationsbank, N.A., as bank and as managing agent for the banks, PNC Bank,
National Association, as bank and as managing agent for the banks, Bank of
America National Trust and Savings Association, as bank and as co-agent for the
banks, Societe Generale, a French banking corporation, acting through its
Southwest Agency, as bank and as co-agent for the banks, and the banks listed on
the signature pages thereof.
5
<PAGE>
"Closing Date" means the date on which the Lead Agent shall
have received the documents specified in or pursuant to Section 3.1.
"Commitment" means, with respect to each Bank, the amount
committed by such Bank with respect to any Loans, as such amount may be reduced
from time to time pursuant to Section 2.11.
"Consolidated Subsidiary" means at any date any Subsidiary or
other entity which is consolidated with the Borrower in accordance with GAAP.
"Consolidated Tangible Net Worth" means at any date the
consolidated stockholders' equity of the Borrower (determined on a book basis),
less its consolidated Intangible Assets, all determined as of such date. For
purposes of this definition "Intangible Assets" means with respect to any such
intangible assets, the amount (to the extent reflected in determining such
consolidated stockholders' equity) of all write-ups subsequent to December 31,
1997 in the book value of any asset owned by the Borrower or a consolidated
Subsidiary and (ii) goodwill, patents, trademarks, service marks, trade names,
anticipated future benefit of tax loss carry forwards, copyrights, organization
or developmental expenses and other intangible assets.
"Contingent Obligation" as to any Person means, without
duplication, (i) any contingent obligation of such Person required to be shown
on such Person's balance sheet in accordance with GAAP, and (ii) any obligation
required to be disclosed in the footnotes to such Person's financial statements,
guaranteeing partially or in whole any non-recourse Debt, lease, dividend or
other obligation, exclusive of contractual indemnities (including, without
limitation, any indemnity or price-adjustment provision relating to the purchase
or sale of securities or other assets) and guarantees of non-monetary
obligations (other than guarantees of completion) which have not yet been called
on or quantified, of such Person or of any other Person.
"Credit Rating" means the ratings assigned by not less than
two of the Rating Agencies (at least one of which shall be S&P or Moody's) to
CarrAmerica's senior long-term unsecured indebtedness.
6
<PAGE>
"Customer Licenses" means any license agreement, sublease or
other contract pursuant to which the Borrower leases to a customer of the
Borrower an executive office suite and provides the services related thereto.
"Debt" of any Person means, without duplication, (A) as shown
on such Person's consolidated balance sheet (i) all indebtedness of such Person
for borrowed money or for the deferred purchase price of property and, (ii) all
indebtedness of such Person evidenced by a note, bond, debenture or similar
instrument (whether or not disbursed in full in the case of a construction
loan), (B) the face amount of all letters of credit issued for the account of
such Person and, without duplication, all unreimbursed amounts drawn thereunder,
(C) all Contingent Obligations of such Person, (D) all payment obligations of
such Person under any interest rate protection agreement (including, without
limitation, any interest rate swaps, caps, floors, collars and similar
agreements) and currency swaps and similar agreements which were not entered
into specifically in connection with Debt set forth in clauses (A), (B) or (C)
hereof. For purposes of this Agreement, Debt (other than Contingent Obligations)
of the Borrower shall be deemed to include (i) the CarrAmerica Loan and (ii)
only the Borrower's pro rata share (such share being based upon the Borrower's
percentage ownership interest as shown on the Borrower's annual audited
financial statements) of the Debt of any Person in which the Borrower, directly
or indirectly, owns an interest, provided that such Debt is nonrecourse, both
directly and indirectly, to the Borrower.
"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.
"Domestic Business Day" means any day except a Saturday,
Sunday or other day on which commercial banks in New York City are authorized by
law to close.
"Domestic Lending Office" means, as to each Bank, its office
located within the United States at its address set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its Domestic
Lending Office) or such other office within the United States as such Bank may
7
<PAGE>
hereafter designate as its Domestic Lending Office by notice to the Borrower and
the Lead Agent.
"Duff & Phelps" means Duff & Phelps Credit Rating Co. or any
successor thereto.
"Environmental Laws" means any and all federal, state, local
and foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating to
the environment, the effect of the environment on human health or to emissions,
discharges or releases of pollutants, contaminants, Hazardous Substances or
hazardous 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
hazardous 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 the Borrower, any Subsidiary and all
members of a controlled group of corporations and all trades or businesses
(whether or not incorporated) under common control which, together with the
Borrower or any Subsidiary, are treated as a single employer under Section 414
of the Internal Revenue Code.
"Euro-Dollar Borrowing" has the meaning set forth in Section
1.3.
"Euro-Dollar Business Day" means any Domestic Business Day on
which commercial banks are open for international business (including dealings
in dollar deposits) in London.
"Euro-Dollar Lending Office" means, as to each Bank, its
office, branch or affiliate located at its address set forth in its
Administrative Questionnaire (or identified in its Administrative Questionnaire
as its Euro-Dollar Lending Office) or such other office, branch or affiliate of
such Bank as it may hereafter designate as its Euro-Dollar Lending Office by
notice to the Borrower and the Lead Agent.
8
<PAGE>
"Euro-Dollar Loan" means a Loan to be made by a Bank as a
Euro-Dollar Loan in accordance with the applicable Notice of Borrowing or Notice
of Interest Rate Election.
"Euro-Dollar Reserve Percentage" has the meaning set forth in
Section 2.7(b).
"Event of Default" has the meaning set forth in Section 6.1.
"Executive Suites Business" shall mean the business of leasing
or subleasing office space and office equipment to an individual or company on
an office-by-office basis together with secretarial support, telephone answering
and other office support services.
"Facility" shall mean the revolving credit facility
established pursuant to this Agreement.
"Facility Fee" has the meaning set forth in Section 2.8(a).
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upward, if necessary, to the nearest 1/100th of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Domestic
Business Day next succeeding such day, provided that (i) if such day is not a
Domestic Business Day, the Federal Funds Rate for such day shall be such rate on
such transactions on the next preceding Domestic Business Day as so published on
the next succeeding Domestic Business Day, and (ii) if no such rate is so
published on such next succeeding Domestic Business Day, the Federal Funds Rate
for such day shall be the average rate quoted to Morgan Guaranty Trust Company
of New York on such day on such transactions as determined by the Lead Agent.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System as constituted from time to time.
"Fitch" means Fitch Investors Services, L.P. or any successor
thereto.
9
<PAGE>
"Fronting Bank" shall mean Morgan or such other Bank which
Borrower is notified by the Lead Agent may be a Fronting Bank and which is
designated by Borrower in its Notice of Borrowing as the Bank which shall issue
a Letter of Credit with respect to such Notice of Borrowing.
"GAAP" means generally accepted accounting principles
recognized as such in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants and
Board or in such other statements by such other entity as may be approved by a
significant segment of the accounting profession, which are applicable to the
circumstances as of the date of determination.
"Group of Loans" means, at any time, a group of Loans
consisting of (i) all Loans which are Base Rate Loans at such time or (ii) all
Loans which are Euro-Dollar Loans having the same Interest Period at such time;
provided that, if a Loan of any particular Bank is converted to or made as a
Base Rate Loan pursuant to Section 8.2 or 8.4, such Loan shall be included in
the same Group or Groups of Loans from time to time as it would have been in if
it had not been so converted or made.
"Guarantor" means CarrAmerica.
"Guaranty" means the Amended and Restated Guaranty Agreement,
dated as of the date hereof, made by Guarantor for the benefit of the Banks.
"Indemnitee" has the meaning set forth in Section 9.3(b).
"Interest Period" means: (1) with respect to each Euro-Dollar
Borrowing, the period commencing on the date of such Borrowing specified in the
Notice of Borrowing or the date of continuation or conversion specified in the
Notice of Interest Rate Election, as the case may be, and ending one, two, three
or six months thereafter, as the Borrower may elect in the Notice of Borrowing
or in the Notice of Interest Rate Election; provided that:
(a) any Interest Period which would otherwise end on a day
which is not a Euro-Dollar Business Day shall be extended to the next
succeeding Euro-Dollar Business Day unless such Euro-Dollar Business
10
<PAGE>
Day falls in another calendar month, in which case such Interest Period
shall end on the next preceding Euro-Dollar Business Day;
(b) any Interest Period which begins on the last Euro-Dollar
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall, end on the last Euro-Dollar Business Day of a
calendar month; and
(c) no Interest Period shall end after the Maturity Date.
(2) with respect to each Base Rate Borrowing, the period commencing on the date
of such Borrowing specified in the Notice of Borrowing or the date of conversion
specified in the Notice of Interest Rate Election, as the case may be, and
ending 30 days thereafter; provided that any Interest Period which would
otherwise end on a day which is not a Euro-Dollar Business Day shall be extended
to the next succeeding Euro-Dollar Business Day; and provided further that any
Interest Period which would otherwise end after the Maturity Date shall end on
the Maturity Date.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended, or any successor statute.
"Investment Grade Rating" means a rating for a Person's senior
long-term unsecured debt, or if no such rating has been issued, a "shadow"
rating, of BBB- or better from S&P, and a rating or "shadow" rating of Baa3 or
better from Moody's or a rating or "shadow" rating equivalent to the foregoing
from either Duff & Phelps or Fitch. Any such "shadow" rating shall be evidenced
by a letter from the applicable Rating Agency or by such other evidence as may
be reasonably acceptable to the Required Banks.
"Lead Agent" means Morgan Guaranty Trust Company of New York
in its capacity as Lead Agent for the Banks hereunder, and its successors in
such capacity.
"Lease Assets" means as of any time, the leasehold interests
owned directly or indirectly as lessee by the Borrower at such time in
furtherance of Borrower's Executive Suites Business.
11
<PAGE>
"Letter(s) of Credit" has the meaning provided in Section
2.2(b).
"Letter of Credit Collateral" has the meaning provided in
Section 6.4.
"Letter of Credit Collateral Account" has the meaning provided
in Section 6.4.
"Letter of Credit Documents" has the meaning provided in
Section 2.17.
"Letter of Credit Usage" means at any time the sum of (i) the
aggregate maximum amount available to be drawn under the Letters of Credit then
outstanding, assuming compliance with all requirements for drawing referred to
therein, and (ii) the aggregate amount of the Borrower's unpaid obligations
under this Agreement in respect of the Letters of Credit.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind, or any other type
of preferential arrangement that has the practical effect of creating a security
interest, in respect of such asset. For the purposes of this Agreement, the
Borrower or any Subsidiary shall be deemed to own subject to a Lien any asset
which it has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, capital lease or other title retention
agreement relating to such asset.
"Loan" means a loan made by a Bank pursuant to Section 2.1
hereof; provided that, if any such loan or loans (or portions thereof) are
combined or subdivided pursuant to a Notice of Conversion/Continuation, the term
"Loan" shall refer to the combined principal amount resulting from such
combination or to each of the separate principal amounts resulting from such
subdivision, as the case may be.
"Loan Documents" means this Agreement, the Notes, Letters of
Credit, Letter of Credit Documents and the Guaranty.
"London Interbank Offered Rate" has the meaning set forth in
Section 2.7(b).
12
<PAGE>
"Margin Stock" shall have the meaning provided such term in
Regulation U of the Federal Reserve Board.
"Material Adverse Effect" means a material adverse effect upon
(i) the business, operations, properties or assets of either the Borrower or
Guarantor or (ii) the ability of the Borrower to perform its obligations
hereunder in all material respects or the ability of the Guarantor to perform
its obligations under the Guaranty in all material respects, including to pay
interest and principal.
"Material Plan" means at any time a Plan or Plans having
aggregate Unfunded Liabilities in excess of $5,000,000.
"Maturity Date" has the meaning set forth in Section 2.9.
"Maximum Loan Amount" shall mean, at any time and from time to
time, an amount up to Two Hundred Million Dollars ($200,000,000).
"Minority Holdings" means partnership interests, membership
interests in limited liability companies and corporations held or owned by
Borrower which are not consolidated with Borrower on Borrower's financial
statements.
"Moody's" means Moody's Investors Service, Inc. or any
successor thereto.
"Morgan" means Morgan Guaranty Trust Company of New York, in
its individual capacity.
"Multiemployer Plan" means at any time an employee pension
benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any
member of the ERISA Group is then making or accruing an obligation to make
contributions or has within the preceding five plan years made contributions,
including for these purposes any Person which ceased to be a member of the ERISA
Group during such five year period.
"New Acquisition" has the meaning set forth in Section 5.15.
13
<PAGE>
"Non-Recourse Debt" means Debt of the Borrower on a
consolidated basis for which the right of recovery of the obligee thereof is
limited to recourse against the Customer Licenses securing such Debt (subject to
such limited exceptions to the non-recourse nature of such Debt such as fraud,
misappropriation, misapplication and environmental indemnities, as are usual and
customary in like transactions at the time of the incurrence of such Debt).
"Notes" means the promissory notes of the Borrower made
pursuant to Section 2.5 hereof, substantially in the form of Exhibit A hereto,
evidencing the obligation of the Borrower to repay the Loans, as such promissory
notes may be amended, restated, reissued, extended or modified.
"Notice of Borrowing" has the meaning set forth in Section 2.2
hereof.
"Notice of Interest Rate Election" has the meaning set forth
in Section 2.15 hereof.
"Obligations" means all obligations, liabilities and
indebtedness of every nature of the Borrower, from time to time owing to any
Bank under or in connection with this Agreement or any other Loan Document,
including, without limitation, (i) the outstanding principal amount of the Loans
at such time, plus (ii) the Letter of Credit Usage at such time.
"Outstanding Balance" means the sum of (i) the aggregate
outstanding and unpaid principal balance of all Loans and (ii) the Letter of
Credit Usage.
"Parent" means, with respect to any Bank, any Person
controlling such Bank.
"Participant" has the meaning set forth in Section 9.6(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Person" means an individual, a corporation, a limited
liability company, a partnership, an association, a trust or any other entity or
14
<PAGE>
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Plan" means at any time an employee pension benefit plan
(other than a Multiemployer Plan) which is covered by Title IV of ERISA or
subject to the minimum funding standards under Section 412 of the Internal
Revenue Code and either (i) is maintained, or contributed to, by any member of
the ERISA Group for employees of any member of the ERISA Group or (ii) has at
any time within the preceding five years been maintained, or contributed to, by
any Person which was at such time a member of the ERISA Group for employees of
any Person which was at such time a member of the ERISA Group.
"Prime Rate" means the rate of interest publicly announced by
Morgan Guaranty Trust Company of New York in New York City from time to time as
its Prime Rate.
"Rating Agencies" means, collectively, S&P, Moody's, Duff &
Phelps and Fitch.
"Recourse Debt" shall mean Debt of the Borrower or any
Consolidated Subsidiary that is not Non-Recourse Debt.
"Reference Bank" means the principal London offices of Morgan
Guaranty Trust Company of New York.
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"Release Date" has the meaning set forth in the Guaranty.
"Required Banks" means initially, at any time Banks having at
least 66 2/3% of the aggregate amount of the Commitments or, if the Commitments
shall have been terminated, holding Notes evidencing at least 66 2/3% of the
aggregate unpaid principal amount of the Loans, provided, however, that from and
after such time as no four or fewer Banks have 51% or more of the aggregate
amount of the Commitments or, if the Commitments shall have been terminated,
hold Notes evidencing 51% or more of the aggregate unpaid principal amount of
the Loans, then, at any time "Required Banks" shall mean Banks having at least
51% of the aggregate amount of the Commitments or, if the Commitments shall have
15
<PAGE>
been terminated, holding Notes evidencing at least 51% of the aggregate unpaid
principal amount of the Loans.
"Solvent" means, with respect to any Person, that the fair
saleable value of such Person's assets exceeds the Debts of such Person.
"S&P" means Standard & Poor's Ratings Group, or any successor
thereto.
"Subsidiary" means any corporation or other entity of which
securities or other ownership interests representing either (i) ordinary voting
power to elect a majority of the board of directors or other persons performing
similar functions or (ii) a majority of the economic interest therein, are at
the time directly or indirectly owned by Borrower.
"Term" has the meaning set forth in Section 2.9.
"Unfunded Liabilities" means, with respect to any Plan at any
time, the amount (if any) by which (i) the value of all benefit liabilities
under such Plan, determined on a plan termination basis using the assumptions
prescribed by the PBGC for purposes of Section 4044 of ERISA, exceeds (ii) the
fair market value of all Plan assets allocable to such liabilities under Title
IV of ERISA (excluding any accrued but unpaid contributions), all determined as
of the then most recent valuation date for such Plan, but only to the extent
that such excess represents a potential liability of a member of the ERISA Group
to the PBGC or any other Person under Title IV of ERISA.
"United States" means the United States of America, including
the States and the District of Columbia, but excluding its territories and
possessions.
"Unsecured Debt" means all Debt which is not secured by a
Lien.
SECTION 1.2. Accounting Terms and Determinations. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder shall be prepared in
16
<PAGE>
accordance with generally accepted accounting principles as in effect from time
to time, applied on a basis consistent (except for changes concurred in by the
Borrower's independent public accountants) with the most recent audited
consolidated financial statements of Borrower delivered to the Lead Agent and
the Banks; provided that, if Borrower notifies the Lead Agent and the Banks that
Borrower wishes to amend any covenant in Article V to eliminate the effect of
any change in generally accepted accounting principles on the operation of such
covenant (or if the Lead Agent notifies Borrower that the Required Banks wish to
amend Article V for such purpose), then Borrower's compliance with such covenant
shall be determined on the basis of generally accepted accounting principles in
effect immediately before the relevant change in generally accepted accounting
principles became effective, until either such notice is withdrawn or such
covenant is amended in a manner satisfactory to Borrower and the Required Banks.
SECTION 1.3. Types of Borrowings. The term "Borrowing" denotes
the aggregation of Loans of one or more Banks to be made to the Borrower
pursuant to Article II on a single date and for a single Interest Period.
Borrowings are classified for purposes of this Agreement by reference to the
pricing of Loans comprising such Borrowing (e.g., a "Euro-Dollar Borrowing" is a
Borrowing comprised of Euro-Dollar Loans).
ARTICLE II
THE CREDITS
SECTION 2.1. Commitments to Lend. Each Bank severally agrees,
on the terms and conditions set forth in this Agreement, to make the Loans to
Borrower and to participate in Letters of Credit issued by the Fronting Bank on
behalf of Borrower pursuant to this Section, from time to time, but not more
frequently than four times monthly during the Term in amounts such that the
aggregate principal amount of the Loans by such Bank at any one time
outstanding, together with such Bank's pro rata share of Letter of Credit Usage,
shall not exceed the amount of its Commitment. The aggregate amount of Loans to
be made hereunder, together with the Letter of Credit Usage, shall not exceed
the Maximum Loan Amount. Each Borrowing under this subsection (a) shall be in an
17
<PAGE>
aggregate principal amount of at least $1,000,000, or an integral multiple of
$1,000,000 in excess thereof (except that any such Borrowing may be in the
aggregate amount available in accordance with Section 3.2(c)) and shall be made
from the several Banks ratably in proportion to their respective Commitments.
Subject to the limitations set forth herein, any amounts repaid may be
reborrowed. Notwithstanding anything to the contrary, the number of new
Borrowings shall be limited to four Borrowings per month and no more than
fifteen (15) Borrowings shall be outstanding at any time.
SECTION 2.2. Notice of Borrowing. (a) The Borrower shall give
the Lead Agent notice (a "Notice of Borrowing") not later than 10:00 a.m. (New
York City time) (x) one Domestic Business Day before each Base Rate Borrowing or
(y) the third Euro-Dollar Business Day before each Euro-Dollar Borrowing,
specifying:
(i) the date of such Borrowing, which shall be a
Domestic Business Day in the case of a Domestic Borrowing or a Euro-Dollar
Business Day in the case of a Euro-Dollar Borrowing,
(ii) the aggregate amount of such Borrowing,
(iii) whether the Loans comprising such Borrowing are
to be Base Rate Loans or Euro-Dollar Loans, and
(iv) in the case of a Euro-Dollar Borrowing, the
duration of the Interest Period applicable thereto, subject to the provisions of
the definition of Interest Period.
(b) The Borrower shall give the Lead Agent, and the designated
Fronting Bank, written notice in the event that it desires to have Letters of
Credit (each, a "Letter of Credit") issued hereunder no later than 10:00 a.m.,
New York City time, at least four (4) Domestic Business Days prior to the date
of such issuance. Each such notice shall specify (i) the designated Fronting
Bank, (ii) the aggregate amount of the requested Letters of Credit, (iii) the
individual amount of each requested Letter of Credit and the number of Letters
of Credit to be issued, (iv) the date of such issuance (which shall be a
Domestic Business Day), (v) the name and address of the beneficiary, (vi) the
expiration date of the Letter of Credit (which in no event shall be later than
twelve (12) months after the issuance of such Letter of Credit or the Maturity
18
<PAGE>
Date, whichever is earlier), (vii) the purpose and circumstances for which such
Letter of Credit is being issued and (viii) the terms upon which each such
Letter of Credit may be drawn down (which terms shall not leave any discretion
to Fronting Bank). Each such notice may be revoked telephonically by the
Borrower to the applicable Fronting Bank and the Lead Agent any time prior to
the date of issuance of the Letter of Credit by the applicable Fronting Bank,
provided such revocation is confirmed in writing by the Borrower to the Fronting
Bank and the Lead Agent within one (1) Domestic Business Day by facsimile. No
later than 10:00 a.m., New York City time, on the date that is four (4) Domestic
Business Days prior to the date of issuance, the Borrower shall specify a
precise description of the documents and the verbatim text of any certificate to
be presented by the beneficiary of such Letter of Credit, which if presented by
such beneficiary prior to the expiration date of the Letter of Credit would
require the Fronting Bank to make a payment under the Letter of Credit; provided
that Fronting Bank may, in its reasonable judgment, require changes in any such
documents and certificates only in conformity with changes in customary and
commercially reasonable practice or law and provided further, that no Letter of
Credit shall require payment against a conforming draft to be made thereunder on
the following Domestic Business Day that such draft is presented if such
presentation is made later than 10:00 A.M. New York City time (except that if
the beneficiary of any Letter of Credit requests at the time of the issuance of
its Letter of Credit that payment be made on the same Domestic Business Day
against a conforming draft, such beneficiary shall be entitled to such a same
day draw, provided such draft is presented to the applicable Fronting Bank no
later than 10:00 A.M. New York City time and provided further that, prior to the
issuance of such Letter of Credit, the Borrower shall have requested to Fronting
Bank and the Lead Agent that such beneficiary shall be entitled to a same day
draw). In determining whether to pay on such Letter of Credit, the Fronting Bank
shall be responsible only to determine that the documents and certificates
required to be delivered under the Letter of Credit have been delivered and that
they comply on their face with the requirements of that Letter of Credit.
SECTION 2.3. Intentionally Omitted.
SECTION 2.4. Notice to Banks; Funding of Loans.
(a) Upon receipt of a Notice of Borrowing, the Lead Agent
shall notify each Bank on the same day as it receives such Notice of Borrowing
of the contents thereof and of such Bank's share of such Borrowing and such
Notice of Borrowing shall not thereafter be revocable by the Borrower.
19
<PAGE>
(b) Not later than 2:00 P.M. (New York City time) on the date
of each Borrowing as indicated in the Notice of Borrowing, each Bank shall
(except as provided in subsection (c) of this Section) make available its share
of such Borrowing, in Federal or other funds immediately available in New York
City, to the Lead Agent at its address referred to in Section 9.1. The Lead
Agent will make the funds so received from the Banks available to the Borrower
at the Lead Agent's aforesaid address. If the Borrower has requested the
issuance of a Letter of Credit, no later than 12:00 Noon (New York City time) on
the date of such issuance as indicated in the Notice of Borrowing, the Fronting
Bank shall issue such Letter of Credit in the amount so requested and deliver
the same to the Borrower with a copy thereof to the Lead Agent. Immediately upon
the issuance of each Letter of Credit by the Fronting Bank, such Fronting Bank
shall be deemed to have sold and transferred to each other Bank, and each such
other Bank shall be deemed to, and hereby agrees to, have irrevocably and
unconditionally purchased and received from Fronting Bank, without recourse or
warranty, an undivided interest and a participation in such Letter of Credit,
any drawing thereunder, and the obligations of the Borrower hereunder with
respect thereto, and any security therefor or guaranty pertaining thereto, in an
amount equal to such Bank's ratable share thereof (based upon the ratio its
Commitment bears to the aggregate of all Commitments). Upon any change in any of
the Commitments in accordance herewith, there shall be an automatic adjustment
to such participations to reflect such changed shares. The Fronting Bank shall
have the primary obligation to fund any and all draws made with respect to such
Letter of Credit notwithstanding any failure of a participating Bank to fund its
ratable share of any such draw. The Lead Agent will instruct the Fronting Bank
to make such Letter of Credit available to the Borrower and the Fronting Bank
shall make such Letter of Credit available to the Borrower at the Borrower's
aforesaid address on the date of the Borrowing.
(c) Unless the Lead Agent shall have received notice from a
Bank prior to the date of any Borrowing that such Bank will not make available
to the Lead Agent such Bank's share of such Borrowing, the Lead Agent may assume
that such Bank has made such share available to the Lead Agent on the date of
such Borrowing in accordance with subsection (b) of this Section 2.4 and the
Lead Agent may, in reliance upon such assumption, make available to the Borrower
20
<PAGE>
on such date a corresponding amount. If and to the extent that such Bank shall
not have so made such share available to the Lead Agent, such Bank and the
Borrower agree to repay to the Lead Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date such amount is
made available to the Borrower until the date such amount is repaid to the Lead
Agent, at (i) in the case of Borrower, a rate per annum equal to the higher of
the Federal Funds Rate and the interest rate applicable thereto pursuant to
Section 2.7 and (ii) in the case of such Bank, the Federal Funds Rate. If such
Bank shall repay to the Lead Agent such corresponding amount, such amount so
repaid shall constitute such Bank's Loan included in such Borrowing for purposes
of this Agreement.
SECTION 2.5. Notes.
(a) The Loans shall be evidenced by the Notes, each of which
shall be payable to the order of each Bank for the account of its Applicable
Lending Office in an amount equal to each such Bank's Commitment.
(b) Each Bank may, by notice to the Borrower and the Lead
Agent, request that its Loans of a particular type be evidenced by a separate
Note in an amount equal to the aggregate unpaid principal amount of such Loans.
Each such Note shall be in substantially the form of Exhibit A hereto. Each
reference in this Agreement to the "Note" of such Bank shall be deemed to refer
to and include any or all of such Notes, as the context may require.
(c) Upon receipt of each Bank's Note pursuant to Section
3.1(a) or (b) hereof, the Lead Agent shall forward such Note to such Bank. Each
Bank shall record the date, amount, type and maturity of each Loan made by it
and the date and amount of each payment of principal made by Borrower with
respect thereto, and may, if such Bank so elects in connection with any transfer
or enforcement of its Note, endorse on the schedule forming a part thereof
appropriate notations to evidence the foregoing information with respect to each
such Loan then outstanding; provided that the failure of any Bank to make any
such recordation or endorsement shall not affect the obligations of the Borrower
hereunder or under the Notes. Each Bank is hereby irrevocably authorized by the
Borrower so to endorse its Note and to attach to and make a part of its Note a
continuation of any such schedule as and when required.
21
<PAGE>
(d) There shall be no more than fifteen (15) Euro-Dollar
Borrowings outstanding at any one time pursuant to this Agreement.
SECTION 2.6. Maturity of Loans. The Loans shall mature, and
the principal amount thereof shall be due and payable, on the Maturity Date.
SECTION 2.7. Interest Rates.
(a) Each Base Rate Loan shall bear interest on the outstanding
principal amount thereof, for each day from the date such Loan is made until it
becomes due, at a rate per annum equal to the sum of the Applicable Margin for
Base Rate Loans for such day plus the Base Rate for such day. Such interest
shall be payable for each Interest Period on the last day thereof.
(b) Each Euro-Dollar Loan shall bear interest on the
outstanding principal amount thereof, for each day during the Interest Period
applicable thereto, at a rate per annum equal to the sum of the Applicable
Margin for Euro-Dollar Loans for such day plus the Adjusted London Interbank
Offered Rate applicable to such Interest Period. Such interest shall be payable
for each Interest Period on the last day thereof and, if such Interest Period is
longer than three months, at intervals of three months after the first day
thereof.
"Adjusted London Interbank Offered Rate" applicable to any
Interest Period means a rate per annum equal to the quotient obtained (rounded
upward, if necessary, to the next higher 1/100 of 1%) by dividing (i) the
applicable London Interbank Offered Rate by (ii) 1.00 minus the Euro-Dollar
Reserve Percentage.
"Euro-Dollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement for a member bank of
the Federal Reserve System in New York City with deposits exceeding five billion
dollars in respect of "Eurocurrency liabilities" (or in respect of any other
category of liabilities which includes deposits by reference to which the
interest rate on Euro-Dollar Loans is determined or any category of extensions
of credit or other assets which includes loans by a non-United States office of
any Bank to United States residents). The Adjusted London Interbank Offered Rate
shall be adjusted automatically on and as of the effective date of any change in
the Euro-Dollar Reserve Percentage.
22
<PAGE>
"London Interbank Offered Rate" applicable to any Interest
Period means the average (rounded upward, if necessary, to the next higher 1/16
of 1%) of the respective rates per annum at which deposits in dollars are
offered to the Euro-Dollar Reference Bank in the London interbank market at
approximately 11:00 a.m. (London time) two Euro-Dollar Business Days before the
first day of such Interest Period in an amount approximately equal to the
principal amount of the Euro-Dollar Loan of such Euro-Dollar Reference Bank to
which such Interest Period is to apply and for a period of time comparable to
such Interest Period.
(c) In the event that, and for so long as, any Event of
Default shall have occurred and be continuing, the outstanding principal amount
of the Loans, and, to the extent permitted by law, overdue interest in respect
of all Loans, shall bear interest at the annual rate of the sum of the Prime
Rate and four percent (4%).
(d) The Lead Agent shall determine each interest rate
applicable to the Loans hereunder. The Lead Agent shall give prompt notice to
the Borrower and the Banks of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of manifest error.
(e) The Reference Bank agrees to use its best efforts to
furnish quotations to the Lead Agent as contemplated by this Section. If the
Reference Bank does not furnish a timely quotation, the provisions of Section
8.1 shall apply.
SECTION 2.8. Fees.
(a) Facility Fee. Effective as of the date hereof, during the
Term, the Borrower shall pay to the Lead Agent for the account of the Banks
ratably in proportion to their respective Commitments a facility fee (the
"Facility Fee") equal to .20% per annum on the aggregate Commitments. The
Facility Fee shall be payable in arrears on each January 1, April 1, July 1 and
October 1 during the Term.
(b) Letter of Credit Fee. During the Term, the Borrower shall
pay to the Lead Agent, for the account of the Banks ratably in proportion to
their respective interests in undrawn issued Letters of Credit, a fee (a "Letter
of Credit Fee") in an amount, provided that no Event of Default shall have
occurred and be continuing, equal to a rate per annum equal to the Applicable
23
<PAGE>
Margin for Euro-Dollar Loans on the daily average of such issued and undrawn
Letters of Credit, which fee shall be payable, in arrears, on each January 1,
April 1, July 1 and October 1 during the Term. From the occurrence, and during
the continuance, of an Event of Default, such fee shall be increased to be equal
to four percent (4%) per annum on the daily average of such issued and undrawn
Letters of Credit.
(c) Fronting Bank Fee. The Borrower shall pay any Fronting
Bank, for its own account, a fee (a "Fronting Bank Fee") at a rate per annum
equal to .15% of the issued and undrawn amount of such Letter of Credit, which
fee shall be in addition to and not in lieu of, the Letter of Credit Fee. The
Fronting Bank Fee shall be payable in arrears on each January 1, April 1, July 1
and October 1 during the Term.
(d) Fees Non-Refundable. All fees payable to Lead Agent shall
be deemed to have been earned on the date payment is due in accordance with the
provisions hereof and shall be non-refundable. The obligation of the Borrower to
pay such fees in accordance with the provisions hereof shall be binding upon the
Borrower and shall inure to the benefit of the Lead Agent and the Banks
regardless of whether any Loans are actually made.
SECTION 2.9. Mandatory Termination. The term (the "Term") of
the Commitments shall terminate and expire on August 26, 2001 (the "Maturity
Date").
SECTION 2.10. Intentionally Omitted.
SECTION 2.11. Optional Prepayments.
(a) The Borrower may, upon at least one Domestic Business
Day's notice to the Lead Agent, prepay to the Lead Agent, for the account of the
Banks, any Base Rate Borrowing in whole at any time, or from time to time in
part in amounts aggregating One Million Dollars ($1,000,000), or an integral
multiple of One Million Dollars ($1,000,000) in excess thereof or, if less, the
outstanding principal balance, by paying the principal amount to be prepaid
together with accrued interest thereon to the date of prepayment. Each such
optional prepayment shall be applied to prepay ratably the Loans of the several
Banks included in such Borrowing.
24
<PAGE>
(b) Except as provided in Section 8.2, the Borrower may not
prepay all or any portion of the principal amount of any Euro-Dollar Loan prior
to the maturity thereof unless the Borrower shall also pay any applicable
expenses pursuant to Section 2.13. Any such prepayment shall be upon at least
three (3) Euro-Dollar Business Days' notice to the Lead Agent. Each such
optional prepayment shall be in the amounts set forth in Section 2.11(a) above
and shall be applied to prepay ratably the Loans of the Banks included.
(c) The Borrower may, upon at least one (1) Domestic Business
Day's notice to the Lead Agent (by 11:00 a.m New York time on such Domestic
Business Day), reimburse the Lead Agent for the benefit of the Fronting Bank for
the amount of any drawing under a Letter of Credit in whole or in part in any
amount.
(d) The Borrower may at any time return any undrawn Letters of
Credit to the Fronting Bank in whole, but not in part, and the Fronting Bank
shall give the Lead Agent and each of the Banks notice of such return.
(e) The Borrower may at any time and from time to time cancel
all or any part of the Commitments in amounts aggregating Five Million Dollars
($5,000,000), or an integral multiple of One Million Dollars ($1,000,000) in
excess thereof, by the delivery to the Lead Agent and the Banks of a notice of
cancellation upon at least three (3) Domestic Business Days' notice to Lead
Agent and the Banks, whereupon, in either event, all or such portion of the
Commitments, shall terminate as to the Banks, pro rata on the date set forth in
such notice of cancellation, and, if there are any Loans then outstanding in an
aggregate amount which exceeds the Commitments (after giving effect to any such
reduction), the Borrower shall prepay to the Lead Agent, for the account of the
Banks, as applicable, all or such portion of Loans outstanding on such date in
accordance with the requirements of Sections 2.11(a) and (b). In no event shall
Borrower be permitted to cancel Commitments for which a Letter of Credit has
been issued and is outstanding unless the Borrower returns (or causes to be
returned) such Letter of Credit to the Fronting Bank. The Borrower shall be
permitted to designate in its notice of cancellation which Loans, if any, are to
be prepaid.
(f) Upon receipt of a notice of prepayment or cancellation or
a return of a Letter of Credit pursuant to this Section, the Lead Agent shall
promptly, and in any event within one (1) Domestic Business Day, notify each
Bank of the contents thereof and of such Bank's ratable share (if any) of such
prepayment or cancellation and such notice shall not thereafter be revocable by
the Borrower.
25
<PAGE>
(g) Any amounts so prepaid pursuant to this Section 2.11 may
be reborrowed subject to the other terms of this Agreement. In the event the
Borrower elects to cancel all or any portion of the Commitments pursuant to
Section 2.11(e) hereof, such amounts may not be reborrowed.
SECTION 2.12. General Provisions as to Payments.
(a) The Borrower shall make each payment of principal of, and
interest on, the Loans and of fees hereunder, not later than 12:00 Noon (New
York City time) on the date when due, in Federal or other funds immediately
available in New York City, to the Lead Agent at its address referred to in
Section 9.1. The Lead Agent will distribute to each Bank its ratable share of
each such payment received by the Lead Agent for the account of the Banks on the
same day as received by the Lead Agent if received by the Lead Agent by 3:00
p.m. (New York City time), or, if received by the Lead Agent after 3:00 p.m.
(New York City time), on the immediately following Domestic Business Day.
Whenever any payment of principal of, or interest on, the Base Rate Loans or of
fees shall be due on a day which is not a Domestic Business Day, the date for
payment thereof shall be extended to the next succeeding Domestic Business Day.
Whenever any payment of principal of, or interest on, the Euro-Dollar Loans
shall be due on a day which is not a Euro-Dollar Business Day, the date for
payment thereof shall be extended to the next succeeding Euro-Dollar Business
Day unless such Euro-Dollar Business Day falls in another calendar month, in
which case the date for payment thereof shall be the next preceding Euro-Dollar
Business Day. If the date for any payment of principal is extended by operation
of law or otherwise, interest thereon shall be payable for such extended time.
(b) Unless the Lead Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the Banks hereunder
that the Borrower will not make such payment in full, the Lead Agent may assume
that the Borrower has made such payment in full to the Lead Agent on such date
and the Lead Agent may, in reliance upon such assumption, cause to be
distributed to each Bank on such due date an amount equal to the amount then due
such Bank. If and to the extent that the Borrower shall not have so made such
payment, each Bank shall repay to the Lead Agent forthwith on demand such amount
distributed to such Bank together with interest thereon, for each day from the
date such amount is distributed to such Bank until the date such Bank repays
such amount to the Lead Agent, at the Federal Funds Rate.
26
<PAGE>
SECTION 2.13. Funding Losses. If the Borrower makes any payment of
principal with respect to any Euro-Dollar Loan (pursuant to Article II, VI or
VIII or otherwise) on any day other than the last day of the Interest Period
applicable thereto, or the last day of an applicable period fixed pursuant to
Section 2.7(b), or if the Borrower fails to borrow any Euro-Dollar Loans, after
notice has been given to any Bank in accordance with Section 2.4(a), the
Borrower shall reimburse each Bank within 15 days after demand for any resulting
loss or expense incurred by it (or by an existing Participant in the related
Loan), including (without limitation) any loss incurred in obtaining,
liquidating or employing deposits from third parties, but excluding loss of
margin for the period after any such payment or failure to borrow, provided that
such Bank shall have delivered to the Borrower a certificate as to the amount of
such loss or expense and the calculation thereof, which certificate shall be
conclusive in the absence of manifest error.
SECTION 2.14. Computation of Interest and Fees. Interest based on the
Prime Rate hereunder shall be computed on the basis of a year of 365 days (or
366 days in a leap year) and paid for the actual number of days elapsed
(including the first day but excluding the last day). All other interest and
fees shall be computed on the basis of a year of 360 days and paid for the
actual number of days elapsed (including the first day but excluding the last
day).
SECTION 2.15. Method of Electing Interest Rates.
(a) The Loans included in each Borrowing shall bear interest initially
at the type of rate specified by the Borrower in the applicable Notice of
Borrowing. Thereafter, the Borrower may from time to time elect to change or
continue the type of interest rate borne by each Group of Loans (subject in each
case to the provisions of Article VIII), as follows:
(i) if such Loans are Base Rate Loans, the Borrower may elect
to convert such Loans to Euro-Dollar Loans as of any Euro-Dollar Business Day;
(ii) if such Loans are Euro-Dollar Loans, the Borrower may
elect to convert such Loans to Base Rate Loans or elect to continue such Loans
as Euro-Dollar Loans for an additional Interest Period, in each case effective
on the last day of the then current Interest Period applicable to such Loans.
27
<PAGE>
Each such election shall be made by delivering a notice (a "Notice of Interest
Rate Election") to the Lead Agent at least three (3) Euro-Dollar Business Days
before the conversion or continuation selected in such notice is to be effective
(unless the relevant Loans are to be continued as Base Rate Loans, in which case
such notice shall be delivered to the Lead Agent no later than 12:00 Noon (New
York City time) at least one (1) Domestic Business Day before such continuation
is to be effective). A Notice of Interest Rate Election may, if it so specifies,
apply to only a portion of the aggregate principal amount of the relevant Group
of Loans; provided that (i) such portion is allocated ratably among the Loans
comprising such Group, (ii) the portion to which such notice applies, and the
remaining portion to which it does not apply, are each $1,000,000 or any larger
multiple of $1,000,000, (iii) subject to Section 2.1, there shall be no more
than fifteen (15) Borrowings comprised of Euro-Dollar Loans outstanding at any
time under this Agreement, (iv) no Loan may be continued as, or converted into,
a Euro-Dollar Loan when any Event of Default has occurred and is continuing, and
(v) no Interest Period shall extend beyond the Maturity Date.
(b) Each Notice of Interest Rate Election shall specify:
(i) the Group of Loans (or portion thereof) to which such
notice applies;
(ii) the date on which the conversion or continuation selected
in such notice is to be effective, which shall comply with the applicable clause
of subsection (a) above;
(iii) if the Loans comprising such Group are to be converted,
the new type of Loans and, if such new Loans are Euro-Dollar Loans, the duration
of the initial Interest Period applicable thereto; and
(iv) if such Loans are to be continued as Euro-Dollar Loans
for an additional Interest Period, the duration of such additional Interest
Period.
Each Interest Period specified in a Notice of Interest Rate Election shall
comply with the provisions of the definition of Interest Period.
(c) Upon receipt of a Notice of Interest Rate Election from the
Borrower pursuant to subsection (a) above, the Lead Agent shall notify each Bank
on the same day as it receives such Notice of Interest Rate Election of the
contents thereof and such notice shall not thereafter be revocable by the
Borrower. If the Borrower fails to deliver a timely Notice of Interest Rate
Election to the Lead Agent for any Group of Euro-Dollar Loans, such Loans shall
be converted into Base Rate Loans on the last day of the then current Interest
Period applicable thereto.
28
<PAGE>
SECTION 2.16. Letters of Credit. (a) Subject to the terms
contained in this Agreement and the other Loan Documents, upon the receipt of a
notice in accordance with Section 2.2(b) requesting the issuance of a Letter of
Credit, the Fronting Bank shall issue a Letter of Credit or Letters of Credit in
such form as is reasonably acceptable to the Borrower in an amount or amounts
equal to the amount or amounts requested by the Borrower.
(b) Each Letter of Credit shall be issued in the minimum
amount of Ten Thousand Dollars ($10,000).
(c) The Letter of Credit Usage shall be no more than Twenty
Million Dollars ($20,000,000) at any one time.
(d) There shall be no more than twenty-five (25) Letters of
Credit outstanding at any one time.
(e) In the event of any request for a drawing under any Letter
of Credit by the beneficiary thereunder, the Fronting Bank shall notify the
Borrower and the Lead Agent (and the Lead Agent shall endeavor to notify each
Bank thereof) on or before the date on which the Fronting Bank intends to honor
such drawing, and, except as provided in this subsection (e), the Borrower shall
reimburse the Fronting Bank, in immediately available funds, on the same day on
which such drawing is honored in an amount equal to the amount of such drawing.
Notwithstanding anything contained herein to the contrary, however, unless the
Borrower shall have notified the Lead Agent, and the Fronting Bank prior to
11:00 a.m. (New York time) on the Domestic Business Day immediately prior to the
date of such drawing that the Borrower intends to reimburse the Fronting Bank
for the amount of such drawing with funds other than the proceeds of the Loans,
the Borrower shall be deemed to have timely given a Notice of Borrowing pursuant
to Section 2.2 to the Lead Agent, requesting a Borrowing of Base Rate Loans on
the date on which such drawing is honored and in an amount equal to the amount
of such drawing. Each Bank (other than the Fronting Bank) shall, in accordance
with Section 2.4(b), make available its share of such Borrowing to the Lead
Agent, the proceeds of which shall be applied directly by the Lead Agent to
29
<PAGE>
reimburse the Fronting Bank for the amount of such draw. In the event that any
such Bank fails to make available to the Fronting Bank the amount of such Bank's
participation on the date of a drawing, the Fronting Bank shall be entitled to
recover such amount on demand from such Bank together with interest at the
Federal Funds Rate commencing on the date such drawing is honored.
(f) If, after the date hereof, any change in any law or
regulation or in the interpretation thereof by any court or administrative or
governmental authority charged with the administration thereof shall either (a)
impose, modify or deem applicable any reserve, special deposit or similar
requirement against letters of credit issued by, or assets held by, or deposits
in or for the account of, or participations in any letter of credit, upon any
Bank (including the Fronting Bank) or (b) impose on any Bank any other condition
regarding this Agreement or such Bank (including the Fronting Bank) as it
pertains to the Letters of Credit or any participation therein and the result of
any event referred to in the preceding clause (a) or (b) shall be to increase
the cost to the Fronting Bank or any Bank of issuing or maintaining any Letter
of Credit or participating therein then the Borrower shall pay to the Fronting
Bank or such Bank, within 15 days after written demand by such Bank (with a copy
to the Lead Agent), which demand shall be accompanied by a certificate showing,
in reasonable detail, the calculation of such amount or amounts, such additional
amounts as shall be required to compensate the Fronting Bank or such Bank for
such increased costs or reduction in amounts received or receivable hereunder
together with interest thereon at the Base Rate. The amount specified in the
written demand shall, absent manifest error, be final and conclusive and binding
upon the Borrower.
(g) The Borrower hereby agrees to protect, indemnify, pay and
save the Fronting Bank harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
attorneys' fees and disbursements) which the Fronting Bank may incur or be
subject to as a result of (i) the issuance of the Letters of Credit, other than
as a result of the gross negligence or wilful misconduct of the Fronting Bank or
(ii) the failure of the Fronting Bank to honor a drawing under any Letter of
Credit as a result of any act or omission, whether rightful or wrongful, of any
present or future de jure or de facto government or governmental authority
(collectively, "Governmental Acts"), other than as a result of the gross
negligence or wilful misconduct of the Fronting Bank. As between the Borrower
and the Fronting Bank, the Borrower assumes all risks of the acts and omissions
of, or misuses of, the Letters of Credit issued by the Fronting Bank, by the
beneficiaries of such Letters of Credit. In furtherance and not in limitation of
30
<PAGE>
the foregoing, the Fronting Bank shall not be responsible (i) for the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application for and issuance of
such Letters of Credit, even if it should in fact prove to be in any and all
respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) for the
validity or insufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such 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 such 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 message, by mail, cable, telegraph,
telex, facsimile transmission, or otherwise; (v) for errors in interpretation of
any technical terms; (vi) for any loss or delay in the transmission or otherwise
of any documents required in order to make a drawing under any such Letter of
Credit or of the proceeds thereof; (vii) for the misapplication by the
beneficiary of any such Letter of Credit of the proceeds of such Letter of
Credit; and (viii) for any consequence arising from causes beyond the control of
the Fronting Bank, including any Government Acts, in each case other than as a
result of the gross negligence or willful misconduct of the Fronting Bank. None
of the above shall affect, impair or prevent the vesting of the Fronting Bank's
rights and powers hereunder. In furtherance and extension and not in limitation
of the specific provisions hereinabove set forth, any action taken or omitted by
the Fronting Bank under or in connection with the Letters of Credit issued by it
or the related certificates, if taken or omitted in good faith, shall not put
the Fronting Bank under any resulting liability to the Borrower.
(h) If the Fronting Bank or the Lead Agent is required at any
time, pursuant to any bankruptcy, insolvency, liquidation or reorganization law
or otherwise, to return to the Borrower any reimbursement by the Borrower of any
drawing under any Letter of Credit, each Bank shall pay to the Fronting Bank or
the Lead Agent, as the case may be, its share of such payment, but without
interest thereon unless the Fronting Bank or the Lead Agent is required to pay
interest on such amounts to the person recovering such payment, in which case
with interest thereon, computed at the same rate, and on the same basis, as the
interest that the Fronting Bank or the Lead Agent is required to pay.
31
<PAGE>
SECTION 2.17. Letter of Credit Usage Absolute. The obligations of the
Borrower under this Agreement in respect of any Letter of Credit shall be
unconditional and irrevocable, and shall be paid strictly in accordance with the
terms of this Agreement (as the same may be amended from time to time) and any
Letter of Credit Documents (as hereinafter defined) under all circumstances,
including, without limitation, to the extent permitted by law, the following
circumstances:
(a) any lack of validity or enforceability of any Letter of Credit or
any other agreement or instrument relating thereto (collectively, the "Letter of
Credit Documents") or any Loan Document;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the obligations of the Borrower in respect of the
Letters of Credit or any other amendment or waiver of or any consent by the
Borrower to departure from all or any of the Letter of Credit Documents or any
Loan Document, provided that the Fronting Bank shall not consent to any such
change or amendment unless previously consented to in writing by the Borrower;
(c) any exchange, release or non-perfection of any collateral, or any
release or amendment or waiver of or consent to departure from any guaranty, for
all or any of the obligations of the Borrower in respect of the Letters of
Credit;
(d) the existence of any claim, set-off, defense or other right that
the Borrower may have at any time against any beneficiary or any transferee of a
Letter of Credit (or any Persons for whom any such beneficiary or any such
transferee may be acting), the Lead Agent, the Fronting Bank or any Bank (other
than a defense based on the gross negligence or wilful misconduct of the Lead
Agent, the Fronting Bank or such Bank) or any other Person, whether in
connection with the Loan Documents, the transactions contemplated hereby or by
the Letters of Credit Documents or any unrelated transaction;
(e) any draft or any other document presented under or in connection
with any Letter of Credit or other Loan Document proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect; provided that payment by the Fronting
Bank under such Letter of Credit against presentation of such draft or document
shall not have constituted gross negligence or wilful misconduct of the Fronting
Bank;
32
<PAGE>
(f) payment by the Fronting Bank against presentation of a draft or
certificate that does not comply with the terms of the Letter of Credit;
provided that such payment shall not have constituted gross negligence or wilful
misconduct of the Fronting Bank; and
(g) any other circumstance or happening whatsoever other than the
payment in full of all obligations hereunder in respect of any Letter of Credit
or any agreement or instrument relating to any Letter of Credit, whether or not
similar to any of the foregoing, that might otherwise constitute a defense
available to, or a discharge of, the Borrower; provided that such other
circumstance or happening shall not have been the result of gross negligence or
wilful misconduct of the Fronting Bank.
ARTICLE III
CONDITIONS
SECTION 3.1. Closing. The closing hereunder shall occur on the date
(the "Closing Date") when each of the following conditions is satisfied (or
waived by the Lead Agent), each document to be dated the Closing Date unless
otherwise indicated:
(a) Borrower shall have executed and delivered to the Lead Agent a Note
for the account of each Bank dated on or before the Closing Date complying with
the provisions of Section 2.5;
(b) the Borrower shall have executed and delivered to the Lead Agent a
duly executed original of this Agreement;
(c) the Guarantor shall have executed and delivered to the Lead Agent a
duly executed original of the Guaranty;
(d) Lead Agent shall have received an opinion of Hogan & Hartson
L.L.P., with respect to certain matters of New York and Maryland law and the
General Corporation Law of the State of Delaware, acceptable to the Lead Agent,
the Banks and their counsel;
33
<PAGE>
(e) the Lead Agent shall have received all documents the Lead Agent may
reasonably request relating to the existence of the Borrower and the Guarantor,
the authority for and the validity of this Agreement and the other Loan
Documents, and any other matters relevant hereto, all in form and substance
reasonably satisfactory to the Lead Agent. Such documentation shall include,
without limitation, the certificate of incorporation and by-laws of the Borrower
and the Guarantor, as amended, modified or supplemented to the Closing Date,
certified to be true, correct and complete by a senior officer of the Borrower
or the Guarantor, as of a date not more than forty-five (45) days prior to the
Closing Date, together with a good standing certificate from the Secretary of
State (or the equivalent thereof) of Delaware with respect to Borrower or
Maryland with respect to the Guarantor and a good standing certificate from the
Secretary of State (or the equivalent thereof) of each other State in which
Borrower or the Guarantor is required to be qualified to transact business, each
to be dated not more than forty-five (45) days prior to the Closing Date;
(f) the Lead Agent shall have received all certificates, agreements and
other documents and papers referred to in this Section 3.1 and Section 3.2,
unless otherwise specified, in sufficient counterparts, satisfactory in form and
substance to the Lead Agent in its sole discretion;
(g) the Borrower shall have taken all actions required to authorize the
execution and delivery of this Agreement and the other Loan Documents;
(h) the Lead Agent shall have received an unaudited consolidated
balance sheet and income statement of Borrower for the fiscal quarter ended June
30, 1998;
(i) the Lead Agent shall have received wire transfer instructions in
connection with the Loans to be made on the Closing Date;
(j) the Lead Agent shall have received, for its and any other Bank's
account, all fees due and payable to Lead Agent on or before the Closing Date,
and the reasonable fees and expenses accrued through the Closing Date of
Skadden, Arps, Slate, Meagher & Flom LLP;
(k) the Lead Agent shall have received copies of all consents, licenses
and approvals, if any, required in connection with the execution, delivery and
performance by the Borrower, and the validity and enforceability, of the Loan
Documents, or in connection with any of the transactions contemplated thereby,
and such consents, licenses and approvals shall be in full force and effect;
34
<PAGE>
(l) the Lead Agent shall have received satisfactory reports of Uniform
Commercial Code filing searches conducted by a search firm acceptable to the
Lead Agent with respect to the Borrower, such searches to be conducted in
Delaware and Georgia;
(m) no material defaults or Events of Default (as defined therein)
shall exist under any existing agreement entered into by the Borrower in
connection with any Debt of the Borrower;
(n) no material defaults or Events of Default (as defined therein)
shall exist under the Carr Credit Agreement;
(o) the representations and warranties of the Borrower contained in
this Agreement shall be true and correct in all material respects on and as of
the Closing Date both before and after giving effect to the making of any Loans;
(p) receipt by the Lead Agent and the Banks of a certificate of the
chief financial officer or the chief accounting officer of Borrower certifying
that the Borrower is in compliance with all covenants of the Borrower contained
in this Agreement, including, without limitation, the requirements of Section
5.8, as of the Closing Date; and
(q) receipt by the Lead Agent and the Banks of a certificate of the
chief financial officer or the chief accounting officer of Guarantor certifying
that Guarantor is in compliance with all covenants of Guarantor contained in the
Carr Credit Agreement, including, without limitation, the requirements of
Section 5.8 thereof, as of the Closing Date.
The Lead Agent shall promptly notify the Borrower and the Banks of the
Closing Date, and such notice shall be conclusive and binding on all parties
hereto.
SECTION 3.2. Borrowings. The obligation of any Bank to make a Loan on
the occasion of any Borrowing or to participate in any Letter of Credit issued
by the Fronting Bank and the obligation of the Fronting Bank to issue a Letter
of Credit on the occasion of any Borrowing is subject to the satisfaction of the
following conditions:
35
<PAGE>
(a) the Closing Date shall have occurred on or prior to September 30,
1998;
(b) receipt by the Lead Agent of a Notice of Borrowing as required by
Section 2.2;
(c) immediately after such Borrowing, the Outstanding Balance will not
exceed the aggregate amount of the Commitments and with respect to each Bank,
such Bank's pro rata portion of the Loans and the Letter of Credit Usage will
not exceed such Bank's Commitment;
(d) immediately before and after such Borrowing, no Default or Event of
Default shall have occurred and be continuing both before and after giving
effect to the making of such Loans;
(e) the representations and warranties of the Borrower contained in
this Agreement shall be true and correct in all material respects on and as of
the date of such Borrowing both before and after giving effect to the making of
such Loans;
(f) no material default or Event of Default (as defined under the Carr
Credit Agreement) shall have occurred under the Carr Credit Agreement as of the
date of such Borrowing;
(g) no law or regulation shall have been adopted, no order, judgment or
decree of any governmental authority shall have been issued, and no litigation
shall be pending or threatened, which does or, with respect to any threatened
litigation, seeks to enjoin, prohibit or restrain, the making or repayment of
the Loans, the issuance of any Letters of Credit or any participations therein
or the consummation of the transactions contemplated hereby; and
(h) no event, act or condition shall have occurred after the Closing
Date which, in the reasonable judgment of the Lead Agent or the Required Banks,
as the case may be, has had or is likely to have a Material Adverse Effect.
Each Borrowing hereunder shall be deemed to be a representation and
warranty by the Borrower on the date of such Borrowing as to the facts specified
in clauses (c) through (h) of this Section (except that with respect to clause
(g), such
36
<PAGE>
representation and warranty shall be deemed to be limited to laws, regulations,
orders, judgments, decrees and litigation affecting the Borrower and not solely
the Banks).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Lead Agent and each of the other Banks which may
become a party to this Agreement to make the Loans, the Borrower makes the
following representations and warranties as of the date hereof. Such
representations and warranties shall survive the effectiveness of this
Agreement, the execution and delivery of the other Loan Documents and the making
of the Loans.
SECTION 4.1. Existence and Power of Borrower. Borrower is duly
organized, validly existing and in good standing as a corporation under the laws
of the State of Delaware and has all powers and all material governmental
licenses, authorizations, consents and approvals required to own its property
and assets and carry on its business as now conducted or as it presently
proposes to conduct and has been duly qualified and is in good standing in every
jurisdiction in which the failure to be so qualified and/or in good standing is
likely to have a Material Adverse Effect.
SECTION 4.2. Intentionally Omitted.
SECTION 4.3. Power and Authority of Borrower. Borrower has the
corporate power and authority to execute, deliver and carry out the terms and
provisions of each of the Loan Documents to which it is a party and has taken
all necessary action to authorize the execution and delivery and the performance
of such Loan Documents. Borrower has duly executed and delivered each Loan
Document to which it is a party, and each such Loan Document constitutes the
legal, valid and binding obligation of Borrower, enforceable in accordance with
its terms, except as enforceability may be limited by applicable insolvency,
bankruptcy or other laws affecting creditors rights generally, or general
principles of equity, whether such enforceability is considered in a proceeding
in equity or at law.
37
<PAGE>
SECTION 4.4. Subordination of CarrAmerica Loans. The rights and
remedies of Lead Agent and the Banks granted hereunder are and shall remain
superior to and prior to the rights of CarrAmerica in, to and under the
CarrAmerica Loan and any existing or future loans made by CarrAmerica to
Borrower.
SECTION 4.5. No Violation. Neither the execution, delivery or
performance by or on behalf of the Borrower of the Loan Documents, nor
compliance by the Borrower with the terms and provisions thereof nor the
consummation of the transactions contemplated by the Loan Documents, (i) will
contravene any applicable provision of any law, statute, rule, regulation,
order, writ, injunction or decree of any court or governmental instrumentality
or (ii) will conflict with or result in any breach of, any of the terms,
covenants, conditions or provisions of, or constitute a default under, or result
in the creation or imposition of (or the obligation to create or impose) any
Lien upon any of the property or assets of the Borrower pursuant to the terms of
any indenture, mortgage, deed of trust, or other agreement or other instrument
to which the Borrower is a party or by which it or any of its property or assets
is bound or to which it is subject or (iii) will cause a default by Borrower
under any organizational document of any Subsidiary, or cause a default under
Borrower's articles of incorporation or by-laws.
SECTION 4.6. Financial Information.
(a) The unaudited consolidated balance sheet of Borrower as of June 30,
1998, and unaudited consolidated income statements for the three months ended
June 30, 1998, copies of which have been delivered to the Lead Agent, fairly
presents, in conformity with generally accepted accounting principles, the
consolidated financial position of Borrower as of such date and its consolidated
results of operations for such fiscal quarter.
(b) Since June 30, 1998, (i) there has been no material adverse change
in the business, financial position or results of operations of the Borrower and
(ii) except as previously disclosed to the Lead Agent or as publicly disclosed,
the Borrower has not incurred any material indebtedness or guaranty.
SECTION 4.7. Litigation.
(a) There is no action, suit or proceeding pending against, or to the
knowledge of the Borrower, threatened against or affecting, (i) the
38
<PAGE>
Borrower or any of its Subsidiaries, (ii) the Loan Documents or any of the
transactions contemplated by the Loan Documents or (iii) any of their assets, in
any case before any court or arbitrator or any governmental body, agency or
official in which there is a reasonable likelihood of an adverse decision which
could, individually or in the aggregate, have a Material Adverse Effect or which
in any manner draws into question the validity of this Agreement or the other
Loan Documents.
(b) There are no final nonappealable judgments or decrees in an
aggregate amount of Five Million Dollars ($5,000,000) or more entered by a court
or courts of competent jurisdiction against the Borrower (other than any
judgment as to which, and only to the extent, a reputable insurance company has
acknowledged coverage of such claim in writing).
SECTION 4.8. Compliance with ERISA.
(a) Except as previously disclosed to the Lead Agent in writing, each
member of the ERISA Group has fulfilled its obligations under the minimum
funding standards of ERISA and the Internal Revenue Code with respect to each
Plan and is in compliance in all material respects with the presently applicable
provisions of ERISA and the Internal Revenue Code with respect to each Plan,
except where failure to do so would not result in a Material Adverse Effect. No
member of the ERISA Group has (i) sought a waiver of the minimum funding
standard under Section 412 of the Internal Revenue Code in respect of any Plan,
(ii) failed to make any contribution or payment to any Plan or Multiemployer
Plan or in respect of any Benefit Arrangement, or made any amendment to any Plan
or Benefit Arrangement, which has resulted or could result in the imposition of
a Lien or the posting of a bond or other security under ERISA or the Internal
Revenue Code or (iii) incurred any liability under Title IV of ERISA other than
a liability to the PBGC for premiums under Section 4007 of ERISA.
(b) The transactions contemplated by the Loan Documents will not
constitute a nonexempt prohibited transaction (as such term is defined in
Section 4975 of the Code or Section 406 of ERISA) that could subject the Lead
Agent or the Banks to any tax or penalty or prohibited transactions imposed
under Section 4975 of the Code or Section 502(i) of ERISA.
SECTION 4.9. Intentionally Omitted.
39
<PAGE>
SECTION 4.10. Taxes. The initial tax year of the Borrower for federal
income tax purposes was the year ended December 31, 1997. The Borrower and its
subsidiaries have each filed all United States Federal income tax returns and
all other material tax returns which are required to be filed by them and have
paid all taxes due pursuant to such returns or pursuant to any assessment
received by the Borrower. The charges, accruals and reserves on the books of the
Borrower and its subsidiaries in respect of taxes or other governmental charges
are, in the opinion of the Borrower, adequate.
SECTION 4.11. Full Disclosure. All information heretofore furnished by
the Borrower to the Lead Agent or any Bank for purposes of or in connection with
this Agreement or any transaction contemplated hereby is true and accurate in
all material respects on the date as of which such information is stated or
certified. The Borrower has disclosed to the Banks in writing any and all facts
known to the Borrower which materially and adversely affect or are likely to
materially and adversely affect (to the extent the Borrower can now reasonably
foresee), the business, operations or financial condition of the Borrower and
its subsidiaries considered as one enterprise or the ability of the Borrower to
perform its obligations under this Agreement or the other Loan Documents.
SECTION 4.12. Solvency . On the Closing Date and after giving effect to
the transactions contemplated by the Loan Documents occurring on the Closing
Date, the Borrower is Solvent.
SECTION 4.13. Use of Proceeds; Margin Regulations. All proceeds of the
Loans will be used by the Borrower only in accordance with the provisions
hereof. No part of the proceeds of any Loan will be used by the Borrower to
purchase or carry any Margin Stock or to extend credit to others for the purpose
of purchasing or carrying any Margin Stock. Neither the making of any Loan nor
the use of the proceeds thereof will violate or be inconsistent with the
provisions of Regulations T, U or X of the Federal Reserve Board.
SECTION 4.14. Governmental Approvals. No order, consent, approval,
license, authorization, or validation of, or filing, recording or registration
with, or exemption by, any governmental or public body or authority, or any
subdivision thereof, is required to authorize, or is required in connection with
the execution, delivery and performance of any Loan Document or the consummation
of any of the transactions contemplated thereby other than those that have
already been duly made or obtained and remain in full force and effect.
40
<PAGE>
SECTION 4.15. Investment Company Act; Public Utility Holding Company
Act. Borrower is not (x) an "investment company" or a company "controlled" by
an "investment company", within the meaning of the Investment Company Act of
1940, as amended, (y) a "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" of either a "holding company" or a
"subsidiary company" within the meaning of the Public Utility Holding Company
Act of 1935, as amended, or (z) subject to any other federal or state law or
regulation which purports to restrict or regulate its ability to borrow money.
SECTION 4.16. Closing Date Transactions. On the Closing Date and
immediately prior to the making of the Loans, the transactions (other than the
making of the Loans) intended to be consummated on the Closing Date will have
been consummated in accordance with all applicable laws. All consents and
approvals of, and all other actions by, any Person required in order to make or
consummate such transactions have been obtained, given or taken and are in full
force and effect.
SECTION 4.17. Representations and Warranties in Loan Documents. All
representations and warranties made by the Borrower in the Loan Documents are
true and correct in all material respects.
SECTION 4.18. Patents, Trademarks, etc. The Borrower has obtained and
holds in full force and effect all patents, trademarks, service marks, trade
names, copyrights and other such rights or licenses to utilize such patents,
trademarks, service marks, trade names, copyrights and other such rights, free
from burdensome restrictions, which are necessary for the operation of its
business as presently conducted, the impairment of which is likely to have a
Material Adverse Effect. To the Borrower's knowledge, no material product,
process, method, substance, part or other material presently sold by or employed
by the Borrower in connection with such business infringes any patent,
trademark, service mark, trade name, copyright, license or other such right
owned by any other Person. There is not pending or, to the Borrower's knowledge,
threatened any claim or litigation against or affecting Borrower contesting its
right to sell or use any such product, process, method, substance, part or other
material.
SECTION 4.19. No Default. No Default or Event of Default exists under
or with respect to any Loan Document. Borrower is not in default in any material
respect beyond any applicable grace period under or with respect to any other
41
<PAGE>
material agreement, instrument or undertaking to which it is a party or by which
it or any of its property is bound in any respect, the existence of which
default is likely (to the extent that the Borrower can now reasonably foresee)
to result in a Material Adverse Effect.
SECTION 4.20. Licenses, etc. The Borrower has obtained and holds in
full force and effect, all franchises, licenses, permits, certificates,
authorizations, qualifications, accreditations, easements, rights of way and
other consents and approvals which are necessary for the operation of its
businesses as presently conducted, the absence of which is likely (to the extent
the Borrower can now reasonably foresee) to have a Material Adverse Effect.
SECTION 4.21. Compliance With Law. The Borrower is in compliance with
all laws, rules, regulations, orders, judgments, writs and decrees, including,
without limitation, all building and zoning ordinances and codes, the failure to
comply with which is likely (to the extent the Borrower can now reasonably
foresee) to have a Material Adverse Effect.
SECTION 4.22. No Burdensome Restrictions. The Borrower is not a party
to any agreement or instrument or subject to any other obligation or any charter
or corporate or partnership restriction, as the case may be, which, individually
or in the aggregate, is likely (to the extent the Borrower can now reasonably
foresee) to have a Material Adverse Effect.
SECTION 4.23. Brokers' Fees. The Borrower has not dealt with any
broker or finder with respect to the transactions contemplated by the Loan
Documents (except with respect to the acquisition or disposition of Lease
Assets) or otherwise in connection with this Agreement, and Borrower has not
done any acts, had any negotiations or conversation, or made any agreements or
promises which will in any way create or give rise to any obligation or
liability for the payment by the Borrower of any brokerage fee, charge,
commission or other compensation to any party with respect to the transactions
contemplated by the Loan Documents (except with respect to the acquisition or
disposition of Lease Assets), other than the fees payable hereunder.
SECTION 4.24. Labor Matters. There are no collective bargaining
agreements or Multiemployer Plans covering the employees of the Borrower and the
Borrower has not suffered any strikes, walkouts, work stoppages or other
material labor difficulty within the last five (5) years.
42
<PAGE>
SECTION 4.25. Organizational Documents. The documents delivered
pursuant to Section 3.1(e) constitute, as of the Closing Date, all of the
organizational documents (together with all amendments and modifications
thereof) of the Borrower. The Borrower represents that it has delivered to the
Lead Agent true, correct and complete copies of each of the documents set forth
in this Section 4.25.
SECTION 4.26. Principal Offices. The principal office, chief executive
office and principal place of business of the Borrower is 1117 Perimeter Center
West, Suite 500 East, Atlanta, Georgia 30338.
SECTION 4.27. Subordination of CarrAmerica Loan. Subject to the
provisions of Section 5.8(a), the CarrAmerica Loan and all other obligations or
liabilities of Borrower to CarrAmerica have been subordinated, by their terms,
to this Facility and all of CarrAmerica's rights and interests in and to the
collateral for the CarrAmerica Loan have been subordinated by their terms to
this Facility.
SECTION 4.28. Ownership of Property. The Borrower's interest in real
property is limited to the Lease Assets. The Borrower has not owned and does not
intend to own any fee simple or groundleasehold interests in real property.
Schedule 4.28 attached hereto and made a part hereof sets forth all the real
property leased by the Borrower and Persons in which the Borrower, directly or
indirectly, owns an interest as of the Closing Date. As of the Closing Date, the
Borrower and such Persons have good and insurable leasehold title to all of such
real property, subject to customary encumbrances and liens as of the date of
this Agreement. As of the date of this Agreement, there are no mortgages, deeds
of trust, indentures, debt instruments or other agreements creating a Lien
against any of the Lease Assets except as disclosed on Schedule 4.28.
SECTION 4.29. Insurance. The Borrower currently maintains, or causes
its tenants to maintain, insurance at 100% replacement cost insurance coverage
(subject to customary deductibles) in respect of each of the Lease Assets, as
well as commercial general liability insurance (including "builders' risk")
against claims for personal, and bodily injury and/or death, to one or more
persons, or property damage, as well as workers' compensation insurance, in each
case with respect to the Lease Assets with insurers having an A.M. Best
policyholders' rating of not less than A-IX in amounts that prudent owner of
assets such as the Lease Assets would maintain.
43
<PAGE>
SECTION 4.30. Year 2000 Compliance. The Borrower has conducted a
comprehensive review and assesment of its computer applications and has made
such inquiry as it determined to be advisable of its key suppliers, vendors and
customers or prospects with respect to the "year 2000 problem" (i.e., the risk
that computer applications may not be able to properly perform date-sensitive
functions after December 31, 1999) and, based on that review and inquiry, the
Borrower does not believe that the year 2000 problem will result in a material
adverse change in its business condition (financial or otherwise), operations,
properties or prospects, or ability to repay the Loans.
ARTICLE V
AFFIRMATIVE AND NEGATIVE COVENANTS
Borrower covenants and agrees that, so long as any Bank has any
Commitment hereunder or any Obligations remain unpaid:
SECTION 5.1. Information. The Borrower will deliver to the Lead Agent
and to each of the Banks:
(a) as soon as available and in any event within 105 days after the end
of each fiscal year of the Borrower, an audited consolidated balance sheet of
the Borrower as of the end of such fiscal year and the related consolidated
statements of cash flow and operations for such fiscal year, setting forth in
each case in comparative form the figures for the previous fiscal year, audited
by KPMG Peat Marwick LLP or other independent public accountants of similar
standing;
(b) as soon as available and in any event within fifty (50) days after
the end of each quarter of each fiscal year of the Borrower, a statement of the
Borrower, prepared on a GAAP basis, setting forth the operating income and
operating expenses of the Borrower, in sufficient detail so as to calculate net
operating cash flow of the Borrower for the immediately preceding quarter;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of the chief
financial officer or the chief accounting officer of the Borrower (i) stating
whether any Default exists on the date of such certificate and, if any Default
44
<PAGE>
then exists, setting forth the details thereof and the action which the Borrower
is taking or proposes to take with respect thereto; and (ii) certifying (x) that
such financial statements fairly present the financial condition and the results
of operations of the Borrower as of the dates and for the periods indicated, on
the basis of generally accepted accounting principles, subject, in the case of
interim financial statements, to normal year-end adjustments, and (y) that such
officer has reviewed the terms of the Loan Documents and has made, or caused to
be made under his or her supervision, a review in reasonable detail of the
business and condition of the Borrower during the period beginning on the date
through which the last such review was made pursuant to this Section 5.1(c) (or,
in the case of the first certification pursuant to this Section 5.1(c), the
Closing Date) and ending on a date not more than ten (10) Domestic Business Days
prior to the date of such delivery and that on the basis of such review of the
Loan Documents and the business and condition of the Borrower, to the best
knowledge of such officer, no Default or Event of Default under any other
provision of Section 6.1 occurred or, if any such Default or Event of Default
has occurred, specifying the nature and extent thereof and, if continuing, the
action the Borrower proposes to take in respect thereof;
(d) Intentionally Omitted;
(e) (i) within five (5) days after the president, chief financial
officer, treasurer, controller or other executive officer of the Borrower
obtains knowledge of any Default, if such Default is then continuing, a
certificate of the chief financial officer or the president of the Borrower
setting forth the details thereof and the action which the Borrower is taking or
proposes to take with respect thereto; (ii) promptly and in any event within ten
(10) days after the Borrower obtains knowledge thereof, notice of (x) any
litigation or governmental proceeding pending or threatened against the Borrower
as to which, if adversely determined, is likely to individually or in the
aggregate, result in a Material Adverse Effect, and (y) any other event, act or
condition which is likely to result in a Material Adverse Effect;
(f) if and when any member of the ERISA Group (i) gives or is required
to give notice to the PBGC of any "reportable event" (as defined in Section 4043
of ERISA) with respect to any Plan which might constitute grounds for a
termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give notice of any such
reportable event, a copy of the notice of such reportable event given or
required to be given to the PBGC; (ii) receives notice of complete or partial
45
<PAGE>
withdrawal liability under Title IV of ERISA or notice that any Multiemployer
Plan is in reorganization, is insolvent or has been terminated, a copy of such
notice; (iii) receives notice from the PBGC under Title IV of ERISA of an intent
to terminate, impose liability (other than for premiums under Section 4007 of
ERISA) in respect of, or appoint a trustee to administer any Plan, a copy of
such notice; (iv) applies for a waiver of the minimum funding standard under
Section 412 of the Internal Revenue Code, a copy of such application; (v) gives
notice of intent to terminate any Plan under Section 4041(c) of ERISA, a copy of
such notice and other information filed with the PBGC; (vi) gives notice of
withdrawal from any Plan pursuant to Section 4063 of ERISA, a copy of such
notice; or (vii) fails to make any payment or contribution to any Plan or
Multiemployer Plan or in respect of any Benefit Arrangement or makes any
amendment to any Plan or Benefit Arrangement which has resulted or could result
in the imposition of a Lien or the posting of a bond or other security, a
certificate of the chief financial officer or the chief accounting officer of
the Borrower setting forth details as to such occurrence and action, if any,
which the Borrower or applicable member of the ERISA Group is required or
proposes to take; notwithstanding anything in this Section 5.1(f) to the
contrary, no such certificate shall be required to be delivered to the Lead
Agent or the Banks unless the occurrence of an event listed in clauses (i) -
(vii) above would result in a Material Adverse Effect;
(g) promptly and in any event within five (5) Domestic Business Days
after receipt of any material notices or correspondence from any company or
agent for any company providing insurance coverage to the Borrower relating to
any material loss or loss in excess of $1,500,000 of the Borrower, copies of
such notices and correspondence; and
(h) simultaneously with delivery of the certificate required pursuant
to Section 5.1(c), an updated Schedule 4.28, certified by the chief financial
officer or any senior vice president or executive vice president of the Borrower
as true, correct and complete as of the date such updated schedules are
delivered; and
(i) from time to time such additional information regarding the
financial position or business of the Borrower as the Lead Agent, at the request
of any Bank, may reasonably request.
SECTION 5.2. Payment of Obligations. The Borrower will pay and
discharge, at or before maturity, all its material obligations and liabilities
including, without limitation, any obligation pursuant to any agreement by which
it or any of its properties is bound and any tax liabilities, except where such
46
<PAGE>
tax liabilities may be contested in good faith by appropriate proceedings, and
will maintain in accordance with generally accepted accounting principles,
appropriate reserves for the accrual of any of the same, in any case, where
failure to do so will likely result in a Material Adverse Effect.
SECTION 5.3. Maintenance of Property; Insurance.
(a) The Borrower will keep, and will cause each of its Subsidiaries to
keep, all property useful and necessary in its business, including, without
limitation, the Lease Assets, in good repair, working order and condition,
ordinary wear and tear and the provisions of any mortgage with respect to
casualty or condemnation events excepted.
(b) The Borrower shall or shall cause the Subsidiaries to maintain "all
risk" insurance covering 100% replacement cost of its real property assets with
insurers having an A.M. Best policyholder's rating of not less than A-VIII,
which insurance shall in any event not provide for materially less coverage than
the insurance in effect on the Closing Date, and furnish to each Bank from time
to time, upon written request, copies of certificates of insurance under which
such insurance is issued and such other information relating to such insurance
as such Bank may reasonably request.
SECTION 5.4. Conduct of Business. The Borrower will continue to engage
in business of the same general type as now conducted by the Borrower.
SECTION 5.5. Compliance with Laws. The Borrower will comply in all
material respects with all applicable laws, ordinances, rules, regulations, and
requirements of governmental authorities (including, without limitation, all
Environmental Laws, all zoning and building codes and ERISA and the rules and
regulations thereunder) except where the necessity of compliance therewith is
contested in good faith by appropriate proceedings.
SECTION 5.6. Inspection of Property, Books and Records. The Borrower
will keep proper books of record and account in which full, true and correct
entries shall be made of all dealings and transactions in relation to its
business and activities; and will permit representatives of any Bank at such
Bank's expense to visit and inspect any of its properties to examine and make
abstracts from any of its books and records and to discuss its affairs, finances
and accounts with its officers, employees and independent public accountants,
all at such reasonable times, upon reasonable notice, and as often as may
reasonably be desired.
47
<PAGE>
SECTION 5.7. Existence.
(a) The Borrower shall do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence.
(b) The Borrower shall do or cause to be done all things necessary to
preserve and keep in full force and effect its patents, trademarks,
servicemarks, tradenames, copyrights, franchises, licenses, permits,
certificates, authorizations, qualifications, accreditations, easements, rights
of way and other rights, consents and approvals the nonexistence of which is
likely to have a Material Adverse Effect.
SECTION 5.8. Financial Covenants.
(a) Dividends and Distributions. The Borrower shall not declare any
dividends or distributions during the term of the Loan except to the Guarantor,
provided, however, that from and after an Event of Default, no payments of
dividends or distributions shall be made to any Person.
(b) No Additional Debt. From and after the date hereof, the Borrower
shall not incur any Recourse Debt or Non-Recourse Debt or any other obligations
or liabilities except capital leases incurred or entered into in the ordinary
course of business, guarantees of lease obligations made by the Borrower for the
benefit of any of its subsidiaries, the CarrAmerica Loan or such other unsecured
loans made by CarrAmerica, its affiliates or by unaffiliated third parties which
have been (or will be, upon creation) subordinated, by their terms, in all
respects to this Facility.
(c) Negative Pledge. From and after the date hereof, the Borrower shall
not, and shall not permit any Subsidiary, to enter into any agreement containing
any provision prohibiting the creation or assumption of any Lien upon the Lease
Assets, revenues or assets, whether now owned or hereafter acquired, or
restricting the ability of the Borrower to amend or modify this Agreement or any
other Loan Documents.
48
<PAGE>
SECTION 5.9. Restriction on Fundamental Changes; Operation and Control.
(a) The Borrower shall carry on its business operations through the Borrower
and its Subsidiaries. Borrower shall not enter into any merger or consolidation,
unless the Borrower is the surviving entity, or liquidate, wind-up or dissolve
(or suffer any liquidation or dissolution), discontinue its business or convey,
lease, sell, transfer or otherwise dispose of, in one transaction or series of
transactions, all or any substantial part of its business or property, whether
now or hereafter acquired, hold an interest in any subsidiary which is not
controlled by the Borrower or enter into other business lines, without the prior
written consent of the Required Banks.
(b) Borrower shall not amend its articles of incorporation or by-laws
in any material respect, without the Lead Agent's consent, which shall not be
unreasonably withheld.
SECTION 5.10. Changes in Business. (a) The Borrower shall not enter
into any business which is substantially different from that conducted by the
Borrower on the Closing Date after giving effect to the transactions
contemplated by the Loan Documents.
(b) The Borrower shall not own any fee simple or groundleasehold
interests in real property.
SECTION 5.11. Fiscal Year; Fiscal Quarter. The Borrower shall not
change its fiscal year or any of its fiscal quarters.
SECTION 5.12. Margin Stock. None of the proceeds of the Loan will be
used, directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of buying or carrying any Margin Stock.
SECTION 5.13. Intentionally Omitted.
SECTION 5.14. Intentionally Omitted.
SECTION 5.15 Use of Proceeds. The Borrower shall use the proceeds of
the Loans solely (i) to facilitate the acquisition by the Borrower (either
directly or indirectly through Subsidiaries) of executive office suites or any
Executive Suites Business (the "New Acquisitions"), (ii) to fund costs
associated with the opening of new executive office suites, (iii) for the
49
<PAGE>
purchase of intellectual property or other proprietary rights associated with
operating an Executive Suites Business and (iv) for other purposes related to
the acquisition of executive office suites (including, without limitation, the
acquisition of property service companies in connection therewith and the
payment of fees and other costs related to such acquisition) or (v) for working
capital and general corporate purposes.
SECTION 5.16. Transfer of Lease Assets. The Borrower shall not
transfer its interest or any portion of any interest in any Lease Asset other
than to an entity controlled by the Borrower, except where such transfer would
not have a material Adverse Effect.
ARTICLE VI
DEFAULTS
SECTION 6.1. Events of Default. If one or more of the following events
("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of any Loan,
or the Borrower shall fail to pay when due any interest on any Loan, provided,
however, that the Borrower shall be entitled to a three (3) Domestic Business
Day grace period with respect thereto but only as to two (2) payments of
interest during the Term, or the Borrower shall fail to pay within three (3)
Domestic Business Days after the same is due any fees or other amounts payable
hereunder;
(b) the Borrower shall fail to observe or perform any covenant
contained in Sections 5.7(a), 5.8 to 5.16, inclusive, subject to any applicable
grace periods set forth therein;
(c) the Borrower shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those covered by clause (a) or
(b) above) for 30 days after written notice thereof has been given to the
Borrower by the Lead Agent;
(d) any representation, warranty, certification or statement made by
the Borrower in this Agreement or in any certificate, financial statement or
other document delivered pursuant to this Agreement shall prove to have been
incorrect in any material respect when made (or deemed made);
50
<PAGE>
(e) the Borrower shall default or, prior to the Release Date, the
Guarantor shall default in the payment when due (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise) of any amount owing in
respect of any Recourse or Non-Recourse Debt or Debt made or guaranteed by the
Borrower or Guarantor, as applicable (other than the CarrAmerica Loan or the
Obligations and provided that such Debt is in an aggregate amount of Ten Million
Dollars ($10,000,000) or more) and such default shall continue beyond the giving
of any required notice and the expiration of any applicable grace period (as the
same may be extended by the applicable lender) and such default shall not be
waived by the applicable lender (which waiver shall serve to reinstate the
applicable loan), or the Borrower shall default or, prior to the Release Date,
the Guarantor shall default in the performance or observance of any obligation
or condition with respect to any such Debt or any other event shall occur or
condition exist beyond the giving of any required notice and the expiration of
any applicable grace period (as the same may be extended by the applicable
lender), if in any such case the effect of such default, event or condition is
to accelerate the maturity of any such Debt or to permit (without any further
requirement of notice or lapse of time) the holder or holders thereof, or any
trustee or agent for such holders, to accelerate the maturity of any such Debt
and such default shall not be waived by the applicable lender (which waiver
shall serve to reinstate the applicable loan), or any such Debt shall become or
be declared to be due and payable prior to its stated maturity other than as a
result of a regularly scheduled payment;
(f) prior to the Release Date, the Guaranty shall fail to remain in
full force and effect or an Event of Default (as defined under the Guaranty)
shall have occurred;
(g) the Borrower or the Guarantor 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
51
<PAGE>
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;
(h) an involuntary case or other proceeding shall be commenced against
the Borrower or the Guarantor 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 60 days; or an order for
relief shall be entered against the Borrower under the federal bankruptcy laws
as now or hereafter in effect;
(i) the Borrower shall default in its obligations under any Loan
Document other than this Agreement beyond any applicable notice and grace
periods;
(j) any member of the ERISA Group shall fail to pay when due an amount
or amounts aggregating in excess of $1,000,000 which it shall have become liable
to pay under Title IV of ERISA, or notice of intent to terminate a Material Plan
shall be filed under Title IV of ERISA by any member of the ERISA Group, any
plan administrator or any combination of the foregoing, or the PBGC shall
institute proceedings under Title IV of ERISA to terminate, to impose liability
(other than for premiums under Section 4007 of ERISA) in respect of, or to cause
a trustee to be appointed to administer any Material Plan, or a condition shall
exist by reason of which the PBGC would be entitled to obtain a decree
adjudicating that any Material Plan must be terminated, or there shall occur a
complete or partial withdrawal from, or a default, within the meaning of Section
4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which
could cause one or more members of the ERISA Group to incur a current payment
obligation in excess of $1,000,000;
(k) one or more final nonappealable judgments or decrees in an
aggregate amount of six percent (6%) or more of the Consolidated Tangible Net
Worth as of such date shall be entered by a court or courts of competent
jurisdiction against the Borrower (other than any judgment as to which, and only
52
<PAGE>
to the extent, a reputable insurance company has acknowledged coverage of such
claim in writing) and (i) any such judgments or decrees shall not be stayed,
discharged, paid, bonded or vacated within thirty (30) days or (ii) enforcement
proceedings shall be commenced by any creditor on any such judgments or decrees;
(l) during any consecutive two year period commencing on or after the
date hereof, individuals who at the beginning of such period constituted the
Board of Directors of the Borrower (together with any new directors whose
election by the Board of Directors or whose nomination for election by
stockholders of the Borrower was approved by a vote of at least a majority of
the members of the Board of Directors then in the office who either were members
of the Board of Directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the members of the Board of Directors then in office;
(m) more than 49.99% of the issued and outstanding shares of common
stock of the Borrower shall be acquired by, or dividended to, any Person or
Persons other than the Guarantor and such acquisition or dividend shall not be
approved by 100% of the Banks; or
(n) during any consecutive two year period commencing on or after the
date hereof, individuals who at the beginning of such period constituted the
Board of Directors of the Guarantor (together with any new directors whose
election by the Board of Directors or whose nomination for election by
stockholders of the Guarantor was approved by a vote of at least a majority of
the members of the Board of Directors then in the office who either were members
of the Board of Directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the members of the Board of Directors then in office.
SECTION 6.2. Rights and Remedies. (a) Upon the occurrence of any Event
of Default described in Sections 6.1(g) or (h), the unpaid principal amount of,
and any and all accrued interest on, the Loans and any and all accrued fees and
other Obligations hereunder shall automatically become immediately due and
payable, with all additional interest from time to time accrued thereon and
without presentation, demand, or protest or other requirements of any kind
53
<PAGE>
(including, without limitation, valuation and appraisement, diligence,
presentment, notice of intent to demand or accelerate and notice of
acceleration), all of which are hereby expressly waived by the Borrower; and
upon the occurrence and during the continuance of any other Event of Default,
the Lead Agent may exercise any of its rights and remedies hereunder and by
written notice to the Borrower, declare the unpaid principal amount of and any
and all accrued and unpaid interest on the Loans and any and all accrued fees
and other Obligations hereunder to be, and the same shall thereupon be,
immediately due and payable with all additional interest from time to time
accrued thereon and without presentation, demand, or protest or other
requirements of any kind other than as provided in the Loan Documents
(including, without limitation, valuation and appraisement, diligence,
presentment, and notice of intent to demand or accelerate), all of which are
hereby expressly waived by the Borrower.
(b) Notwithstanding the foregoing, upon the occurrence and during the
continuance of any Event of Default other than any Event of Default described in
Sections 6.1(g) or (h), the Lead Agent shall not exercise any of its rights and
remedies hereunder nor declare the unpaid principal amount of and any and all
accrued and unpaid interest on the Loans and any and all accrued fees and other
Obligations hereunder to be immediately due and payable, until such time as the
Lead Agent shall have delivered a notice to the Banks specifying the Event of
Default which has occurred and whether Lead Agent recommends the acceleration of
the Obligations due hereunder or the exercise of other remedies hereunder. The
Banks shall notify the Lead Agent if they approve or disapprove of the
acceleration of the Obligations due hereunder or the exercise of such other
remedy recommended by Lead Agent within five (5) Domestic Business Days after
receipt of such notice. If any Bank shall not respond within such five (5)
Domestic Business Day period, then such Bank shall be deemed to have accepted
Lead Agent's recommendation for acceleration of the Obligations due hereunder or
the exercise of such other remedy. If the Required Banks shall approve the
acceleration of the Obligations due hereunder or the exercise of such other
remedy, then Lead Agent shall declare the unpaid principal amount of and any and
all accrued and unpaid interest on the Loans and any and all accrued fees and
other Obligations hereunder to be immediately due and payable or exercise such
other remedy approved by the Required Banks. If the Required Banks shall neither
approve nor disapprove the acceleration of the Obligations due hereunder or such
other remedy recommended by Lead Agent, then Lead Agent may accelerate the
Obligations due hereunder or exercise any of its rights and
54
<PAGE>
remedies hereunder in its sole discretion. If the Required Banks shall
disapprove the acceleration of the Obligations due hereunder or the exercise of
such other remedy recommended by Lead Agent, but approve of another remedy, then
to the extent permitted hereunder, Lead Agent shall exercise such remedy.
SECTION 6.3. Notice of Default. If the Lead Agent shall not already
have given any notice to the Borrower under Section 6.1, the Lead Agent shall
give notice to the Borrower under Section 6.1 promptly upon being requested to
do so by the Required Banks and shall thereupon notify all the Banks thereof.
SECTION 6.4. Actions in Respect of Letters of Credit. (a) If, at any
time and from time to time, any Letter of Credit shall have been issued
hereunder and an Event of Default shall have occurred and be continuing, then,
upon the occurrence and during the continuation thereof, the Lead Agent may,
whether in addition to the taking by the Lead Agent of any of the actions
described in this Article or otherwise, make a demand upon the Borrower to, and
forthwith upon such demand (but in any event within ten (10) days after such
demand), the Borrower shall, pay to the Lead Agent, on behalf of the Banks, in
same day funds at the Lead Agent's office designated in such demand, for deposit
in a special cash collateral account (the "Letter of Credit Collateral Account")
to be maintained in the name of the Lead Agent (on behalf of the Banks) and
under its sole dominion and control at such place as shall be designated by the
Lead Agent, an amount equal to the amount of the Letter of Credit Usage under
the Letters of Credit. Interest shall accrue on the Letter of Credit Collateral
Account at a rate equal to the rate on overnight funds.
(b) The Borrower hereby pledges, assigns and grants to the Lead Agent,
as administrative agent for its benefit and the ratable benefit of the Banks a
lien on and a security interest in, the following collateral (the "Letter of
Credit Collateral"):
(i) the Letter of Credit Collateral Account, all cash deposited therein
and all certificates and instruments, if any, from time to time representing or
evidencing the Letter of Credit Collateral Account;
55
<PAGE>
(ii) all notes, certificates of deposit and other instruments from
time to time hereafter delivered to or otherwise possessed by the Lead Agent for
or on behalf of the Borrower in substitution for or in respect of any or all of
the then existing Letter of Credit Collateral;
(iii) all interest, dividends, cash, instruments and other property
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of the then existing Letter of Credit Collateral; and
(iv) to the extent not covered by the above clauses, all proceeds
of any or all of the foregoing Letter of Credit Collateral.
The lien and security interest granted hereby secures the payment of all
obligations of the Borrower now or hereafter existing hereunder and under any
other Loan Document.
(c) The Borrower hereby authorizes the Lead Agent for the ratable
benefit of the Banks to apply, from time to time after funds are deposited in
the Letter of Credit Collateral Account, funds then held in the Letter of Credit
Collateral Account to the payment of any amounts, in such order as the Lead
Agent may elect, as shall have become due and payable by the Borrower to the
Banks in respect of the Letters of Credit.
(d) Neither the Borrower nor any Person claiming or acting on behalf of
or through the Borrower shall have any right to withdraw any of the funds held
in the Letter of Credit Collateral Account, except as provided in Section 6.4(h)
hereof.
(e) The Borrower agrees that it will not (i) sell or otherwise dispose
of any interest in the Letter of Credit Collateral or (ii) create or permit to
exist any lien, security interest or other charge or encumbrance upon or with
respect to any of the Letter of Credit Collateral, except for the security
interest created by this Section 6.4.
(f) If any Event of Default shall have occurred and be continuing:
(i) The Lead Agent may, in its sole discretion, without notice to
the Borrower except as required by law and at any time from time to time,
charge, set off or otherwise apply all or any part of first, (x) amounts
56
<PAGE>
previously drawn on any Letter of Credit that have not been reimbursed by the
Borrower and (y) any Letter of Credit Usage described in clause (ii) of the
definition thereof that are then due and payable and second, any other unpaid
Obligations then due and payable against the Letter of Credit Collateral Account
or any part thereof, in such order as the Lead Agent shall elect. The rights of
the Lead Agent under this Section 6.4 are in addition to any rights and remedies
which any Bank may have.
(ii) The Lead Agent may also exercise, in its sole discretion, in
respect of the Letter of Credit Collateral Account, in addition to the other
rights and remedies provided herein or otherwise available to it, all the rights
and remedies of a secured party upon default under the Uniform Commercial Code
in effect in the State of New York at that time.
(g) The Lead Agent shall be deemed to have exercised reasonable care in
the custody and preservation of the Letter of Credit Collateral if the Letter of
Credit Collateral is accorded treatment substantially equal to that which the
Lead Agent accords its own property, it being understood that, assuming such
treatment, the Lead Agent shall not have any responsibility or liability with
respect thereto.
(h) At such time as all Events of Default have been cured or waived in
writing, all amounts remaining in the Letter of Credit Collateral Account shall
be promptly returned to the Borrower. Absent such cure or written waiver, any
surplus of the funds held in the Letter of Credit Collateral Account and
remaining after payment in full of all of the Obligations of the Borrower
hereunder and under any other Loan Document after the Maturity Date shall be
paid to the Borrower or to whomsoever may be lawfully entitled to receive such
surplus.
ARTICLE VII
THE LEAD AGENT
SECTION 7.1. Appointment and Authorization. Each Bank irrevocably
appoints and authorizes the Lead Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement and the other Loan
Documents as are delegated to the Lead Agent by the terms hereof or thereof,
together with all such powers as are reasonably incidental thereto.
57
<PAGE>
SECTION 7.2. Lead Agent and Affiliates. Morgan shall have the same
rights and powers under this Agreement as any other Bank and may exercise or
refrain from exercising the same as though it were not the Lead Agent, and
Morgan and its affiliates may accept deposits from, lend money to, and generally
engage in any kind of business with the Borrower or any subsidiary or affiliate
of the Borrower as if it were not the Lead Agent hereunder, and the term "Bank"
and "Banks" shall include Morgan in its individual capacity.
SECTION 7.3. Action by Lead Agent. The obligations of the Lead Agent
hereunder are only those expressly set forth herein. Without limiting the
generality of the foregoing, the Lead Agent shall not be required to take any
action with respect to any Default, except as expressly provided in Article VI.
SECTION 7.4. Consultation with Experts. The Lead Agent may consult
with legal counsel (who may be counsel for the Borrower), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts.
SECTION 7.5. Liability of Lead Agent. Neither the Lead Agent nor any
of its affiliates nor any of their respective directors, officers, agents or
employees shall be liable for any action taken or not taken by it in connection
herewith (i) with the consent or at the request of the Required Banks or, where
required by the terms of this Agreement, all of the Banks, or (ii) in the
absence of its own gross negligence or willful misconduct. Neither the Lead
Agent nor any of its directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into or verify (i) any
statement, warranty or representation made in connection with this Agreement or
any borrowing hereunder; (ii) the performance or observance of any of the
covenants or agreements of the Borrower; (iii) the satisfaction of any condition
specified in Article III, except receipt of items required to be delivered to
the Lead Agent; or (iv) the validity, effectiveness or genuineness of this
Agreement, the other Loan Documents or any other instrument or writing furnished
in connection herewith. The Lead 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 in good
faith to be genuine or to be signed by the proper party or parties.
58
<PAGE>
SECTION 7.6. Indemnification. Each Bank shall, ratably in accordance
with its Commitment, indemnify the Lead Agent, its affiliates and their
respective directors, officers, agents and employees (to the extent not
reimbursed by the Borrower) against any cost, expense (including counsel fees
and disbursements), claim, demand, action, loss or liability (except such as
result from such indemnitees' gross negligence or willful misconduct) that such
indemnitees may suffer or incur in connection with this Agreement, the other
Loan Documents or any action taken or omitted by such indemnitees hereunder.
SECTION 7.7. Credit Decision. Each Bank acknowledges that it has,
independently and without reliance upon the Lead Agent or any other Bank, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement. Each Bank also
acknowledges that it will, independently and without reliance upon the Lead
Agent or any other Bank, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking any action under this Agreement.
SECTION 7.8. Successor Lead Agent. The Lead Agent may resign at any
time by giving notice thereof to the Banks and the Borrower. Upon any such
resignation or the removal of the Lead Agent in accordance with Section 7.11,
the Required Banks shall have the right to appoint a successor Lead Agent. If no
successor Lead Agent shall have been so appointed by the Required Banks, and
shall have accepted such appointment, within 30 days after the retiring Lead
Agent gives notice of resignation, then the retiring Lead Agent may, on behalf
of the Banks, appoint a successor Lead Agent, which shall be a commercial bank
organized or licensed under the laws of the United States of America or of any
State thereof and having a combined capital and surplus of at least
$500,000,000. Upon the acceptance of its appointment as the Lead Agent hereunder
by a successor Lead Agent, such successor Lead Agent shall thereupon succeed to
and become vested with all the rights and duties of the retiring Lead Agent, and
the retiring Lead Agent shall be discharged from its duties and obligations
hereunder first accruing or arising after the effective date of such retirement.
After any retiring Lead Agent's resignation hereunder as Lead Agent, the
59
<PAGE>
provisions of this Article shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was the Lead Agent.
SECTION 7.9. Lead Agent's Fee. The Borrower shall pay to the Lead
Agent for its own account fees in the amounts and at the times previously agreed
upon between the Borrower and the Lead Agent.
SECTION 7.10. Copies of Notices. Lead Agent shall deliver to each Bank
a copy of any notice sent to the Borrower by Lead Agent in connection with the
performance of its duties as Lead Agent hereunder.
SECTION 7.11. Removal of Lead Agent. If the Lead Agent shall breach any
of its material obligations under this Agreement, then, upon the unanimous
consent of all the Banks (other than the Lead Agent), the Lead Agent may be
removed as Lead Agent hereunder. Upon any such removal of the Lead Agent in
accordance with this Section 7.11, the Required Banks shall have the right to
appoint a successor Lead Agent in accordance with Section 7.8.
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.1. Basis for Determining Interest Rate Inadequate or Unfair.
If on or prior to the first day of any Interest Period for any Euro-Dollar
Borrowing:
(a) the Lead Agent is advised by the Reference Bank that deposits in
dollars (in the applicable amounts) are not being offered to the Reference Bank
in the relevant market for such Interest Period, or
(b) Banks having 50% or more of the aggregate amount of the Commitments
advise the Lead Agent that the Adjusted London Interbank Offered Rate as
determined by the Lead Agent will not adequately and fairly reflect the cost to
such Banks of funding their Euro-Dollar Loans for such Interest Period, the Lead
Agent shall forthwith give notice thereof to the Borrower and the Banks,
60
<PAGE>
whereupon until the Lead Agent notifies the Borrower that the circumstances
giving rise to such suspension no longer exist, the obligations of the Banks to
make Euro-Dollar Loans shall be suspended. Unless the Borrower notifies the Lead
Agent at least two Domestic Business Days before the date of any Euro-Dollar
Borrowing for which a Notice of Borrowing has previously been given that it
elects not to borrow on such date, such Borrowing shall instead be made as a
Base Rate Borrowing.
SECTION 8.2. Illegality. If, after the date of this Agreement, the
adoption of any applicable law, rule or regulation, or any change in any
existing applicable law, rule or regulation, or any change in the interpretation
or administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Bank (or its Euro-Dollar Lending Office) 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
Bank (or its Euro-Dollar Lending Office) to make, maintain or fund its
Euro-Dollar Loans or to participate in any Letter of Credit issued by the
Fronting Bank or, with respect to the Fronting Bank, to issue any Letters of
Credit, and such Bank shall so notify the Lead Agent, the Lead Agent shall
forthwith give notice thereof to the other Banks and the Borrower, whereupon
until such Bank notifies the Borrower and the Lead Agent that the circumstances
giving rise to such suspension no longer exist, the obligation of such Bank to
make Euro-Dollar Loans or to participate in any Letter of Credit issued by the
Fronting Bank or, with respect to the Fronting Bank, to issue any Letters of
Credit, shall be suspended. With respect to Euro-Dollar Loans, before giving any
notice to the Lead Agent pursuant to this Section, such Bank shall designate a
different Euro-Dollar Lending Office if such designation will avoid the need for
giving such notice and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank. If such Bank shall determine that it may not
lawfully continue to maintain and fund any of its outstanding Euro-Dollar Loans
to maturity and shall so specify in such notice, the Borrower shall immediately
prepay in full the then outstanding principal amount of each such Euro-Dollar
Loan, together with accrued interest thereon. Concurrently with prepaying each
such Euro-Dollar Loan, the Borrower shall borrow a Base Rate Loan in an equal
principal amount from such Bank (on which interest and principal shall be
payable contemporaneously with the related Euro-Dollar Loans of the other
Banks), and such Bank shall make such a Base Rate Loan.
61
<PAGE>
SECTION 8.3. Increased Cost and Reduced Return.
(a) If on or after the date hereof, in the case of any Loan or any
obligation to make Loans the adoption of any applicable law, rule or regulation,
or any change in any applicable law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or its Applicable Lending Office) with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency shall impose, modify or deem
applicable any reserve (including, without limitation, any such requirement
imposed by the Board of Governors of the Federal Reserve System (but excluding
with respect to any Euro-Dollar Loan any such requirement reflected in an
applicable Euro-Dollar Reserve Percentage)), special deposit, insurance
assessment or similar requirement against assets of, deposits with or for the
account of, or credit extended by, any Bank (or its Applicable Lending Office)
or shall impose on any Bank (or its Applicable Lending Office) or on the London
interbank market any other condition affecting its Euro-Dollar Loans, its Note,
or its obligation to make Euro-Dollar Loans, and the result of any of the
foregoing is to increase the cost to such Bank (or its Applicable Lending
Office) of making or maintaining any such Loans, or to reduce the amount of any
sum received or receivable by such Bank (or its Applicable Lending Office) under
this Agreement or under its Note with respect thereto, by an amount deemed by
such Bank to be material, then, within 15 days after demand by such Bank (with a
copy to the Lead Agent), which demand shall be accompanied by a certificate
showing, in reasonable detail, the calculation of such amount or amounts, the
Borrower shall pay to such Bank such additional amount or amounts as will
compensate such Bank for such increased cost or reduction.
(b) If any Bank shall have determined that, after the date hereof, the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change in any such law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
62
<PAGE>
bank or comparable agency charged with the interpretation or administration
thereof, or any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on capital
of such Bank (or its Parent) as a consequence of such Bank's obligations
hereunder to a level below that which such Bank (or its Parent) could have
achieved but for such adoption, change, request or directive (taking into
consideration its policies with respect to capital adequacy) by an amount deemed
by such Bank to be material, then from time to time, within 15 days after demand
by such Bank (with a copy to the Lead Agent), which demand shall be accompanied
by a certificate showing, in reasonable detail, the calculation of such amount
or amounts, the Borrower shall pay to such Bank such additional amount or
amounts as will compensate such Bank (or its Parent) for such reduction.
(c) Each Bank will promptly notify the Borrower and the Lead Agent of
any event of which it has knowledge, occurring after the date hereof, which will
entitle such Bank to compensation pursuant to this Section and will designate a
different Applicable Lending Office if such designation will avoid the need for,
or reduce the amount of, such compensation and will not, in the judgment of such
Bank, be otherwise disadvantageous to such Bank. A certificate of any Bank
claiming compensation under this Section and setting forth the additional amount
or amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error. In determining such amount, such Bank may use any reasonable
averaging and attribution methods.
SECTION 8.4. Taxes.
(a) Any and all payments by the Borrower to or for the account of any
Bank or the Lead Agent hereunder or under any other Loan Document shall be made
free and clear of and without deduction for any and all present or future taxes,
duties, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each Bank and the
Lead Agent, taxes imposed on its income, and franchise taxes imposed on it, by
the jurisdiction under the laws of which such Bank or the Lead Agent (as the
case may be) is organized or any political subdivision thereof and, in the case
of each Bank, taxes imposed on its income, and franchise or similar taxes
imposed on it, by the jurisdiction of such Bank's Applicable Lending Office or
63
<PAGE>
any political subdivision thereof (and, if different from the jurisdiction of
such Bank's Applicable Lending Office, the jurisdiction of the domicile of its
Loans either established by the Bank pursuant to Section 9.12 or determined by
the applicable taxing authorities) (all such non-excluded taxes, duties, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to as "Taxes"). If the Borrower shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder or under any Note or
Letter of Credit or participation therein to any Bank or the Lead Agent, (i) the
sum payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 8.4) such Bank, the Fronting Bank or the Lead Agent (as the case
may be) receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions, (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law and (iv) the Borrower shall
furnish to the Lead Agent, at its address referred to in Section 9.1, the
original or a certified copy of a receipt evidencing payment thereof.
(b) In addition, the Borrower agrees to pay any present or future stamp
or documentary taxes and any other excise or property taxes, or charges or
similar levies which arise from any payment made hereunder or under any Note or
Letter of Credit or participation therein or from the execution or delivery of,
or otherwise with respect to, this Agreement or any Note (hereinafter referred
to as "Other Taxes").
(c) The Borrower agrees to indemnify each Bank, the Fronting Bank and
the Lead Agent for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed or asserted by any jurisdiction on
amounts payable under this Section 8.4) paid by such Bank, the Fronting Bank or
the Lead Agent (as the case may be) and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto. This
indemnification shall be made within 15 days from the date such Bank, the
Fronting Bank or the Lead Agent (as the case may be) makes demand therefor.
64
<PAGE>
(d) Each Bank organized under the laws of a jurisdiction outside the
United States, on or prior to the date of its execution and delivery of this
Agreement in the case of each Bank listed on the signature pages hereof and on
or prior to the date on which it becomes a Bank in the case of each other Bank,
and from time to time thereafter if requested in writing by the Borrower (but
only so long as such Bank remains lawfully able to do so), shall provide the
Borrower with Internal Revenue Service form 1001 or 4224, as appropriate, or any
successor form prescribed by the Internal Revenue Service, certifying that such
Bank is entitled to benefits under an income tax treaty to which the United
States is a party which reduces the rate of withholding tax on payments of
interest or certifying that the income receivable pursuant to this Agreement is
effectively connected with the conduct of a trade or business in the United
States. If the form provided by a Bank at the time such Bank first became a
party to this Agreement or at any time thereafter (other than solely by reason
of a change in United States law or a change in the terms of any treaty to which
the United States is a party after the date hereof) indicates a United States
interest withholding tax rate in excess of zero (or would have indicated such a
withholding tax rate if such form had been submitted and completed accurately
and completely and either was not submitted or was not completed accurately and
completely), or if a Bank otherwise is subject to United States interest
withholding tax at a rate in excess of zero at any time for any reason (other
than solely by reason of a change in United States law or regulation or a change
in any treaty to which the United States is a party after the date hereof),
withholding tax at such rate shall be considered excluded from "Taxes" as
defined in Section 8.4(a). In addition, any amount that otherwise would be
considered "Taxes" or "Other Taxes" for purposes of this Section 8.4 shall be
excluded therefrom if the Bank either has transferred the domicile of its Loans
pursuant to Section 9.12 or changed the Applicable Lending Office with respect
to such Loans and such amount would not have been incurred had such transfer or
change not been made.
(e) For any period with respect to which a Bank has failed to provide
the Borrower with the appropriate form pursuant to Section 8.4(d) (unless such
failure is due to a change in treaty, law or regulation occurring subsequent to
65
<PAGE>
the date on which a form originally was required to be provided), such Bank
shall not be entitled to indemnification under Section 8.4(a) with respect to
Taxes imposed by the United States; provided, however, that should a Bank, which
is otherwise exempt from or subject to a reduced rate of withholding tax, become
subject to Taxes because of its failure to deliver a form required hereunder,
the Borrower shall take such steps as such Bank shall reasonably request to
assist such Bank to recover such Taxes.
(f) If the Borrower is required to pay additional amounts to or for the
account of any Bank pursuant to this Section 8.4, then such Bank will change the
jurisdiction of its Applicable Lending Office so as to eliminate or reduce any
such additional payment which may thereafter accrue if such change, in the
judgment of such Bank, is not otherwise disadvantageous to such Bank.
SECTION 8.5. Base Rate Loans Substituted for Affected Euro-Dollar
Loans. If (i) the obligation of any Bank to make Euro-Dollar Loans has been
suspended pursuant to Sections 8.1 or 8.2 or (ii) any Bank has demanded
compensation under Section 8.3 or 8.4 with respect to its Euro-Dollar Loans and
the Borrower shall, by at least five Euro-Dollar Business Days' prior notice to
such Bank through the Lead Agent, have elected that the provisions of this
Section shall apply to such Bank, then, unless and until such Bank notifies the
Borrower that the circumstances giving rise to such suspension or demand for
compensation no longer exist:
(a) all Loans which would otherwise be made by such Bank as Euro-Dollar
Loans shall be made instead as Base Rate Loans (on which interest and principal
shall be payable contemporaneously with the related Euro-Dollar Loans of the
other Banks), and
(b) after each of its Euro-Dollar Loans has been repaid, all payments
of principal which would otherwise be applied to repay such Euro-Dollar Loans
shall be applied to repay its Base Rate Loans instead.
66
<PAGE>
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including bank wire, telex,
facsimile transmission or similar writing) and shall be given to such party: (x)
in the case of the Borrower or the Lead Agent, at its address or telecopy number
set forth on the signature pages hereof, together with copies thereof, in the
case of the Borrower, to Hogan & Hartson L.L.P., 555 13th Street, N.W.,
Washington, D.C. 20004, Attention: J. Warren Gorrell, Jr., Esq., Telephone:
(202) 637-5600, Telecopy: (202) 637-5910, and in the case of the Lead Agent, to
Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New York
10022, Attention: Martha Feltenstein, Esq., Telephone: (212) 735-2272, Telecopy:
(212) 735-2000, (y) in the case of any Bank, at its address or telecopy number
set forth on the signature pages hereof or in its Administrative Questionnaire
or (z) in the case of any party, such other address or telecopy number as such
party may hereafter specify for the purpose by notice to the Lead Agent, the
Banks and the Borrower. Each such notice, request or other communication shall
be effective (i) if given by telecopy, when such telecopy is transmitted to the
telecopy number specified in this Section, (ii) if given by mail, 72 hours after
such communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iii) if given by any other means, when delivered at
the address specified in this Section; provided that notices to the Lead Agent
under Article II or Article VIII shall not be effective until received.
SECTION 9.2. No Waivers. No failure or delay by the Lead Agent or any
Bank in exercising any right, power or privilege hereunder or under any Note
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided shall
be cumulative and not exclusive of any rights or remedies provided by law.
SECTION 9.3. Expenses; Indemnification.
(a) The Borrower shall pay (i) all reasonable out-of-pocket expenses of
the Lead Agent (including, without limitation, reasonable fees and disbursements
of special counsel Skadden, Arps, Slate, Meagher & Flom, local counsel for the
Lead Agent, and travel expenses), in connection with the preparation and
67
<PAGE>
administration of this Agreement, the Loan Documents and the documents and
instruments referred to therein, the syndication of the Loans, any waiver or
consent hereunder or any amendment or modification hereof or any Default or
alleged Default hereunder and (ii) if an Event of Default occurs, all reasonable
out-of-pocket expenses incurred by the Lead Agent and each Bank, including,
without limitation, reasonable fees and disbursements of counsel for the Lead
Agent, in connection with the enforcement of the Loan Documents and the
instruments referred to therein and such Event of Default and collection,
bankruptcy, insolvency and other enforcement proceedings resulting therefrom.
(b) The Borrower agrees to indemnify the Lead Agent and each Bank,
their respective affiliates and the respective directors, officers, agents and
employees of the foregoing (each an "Indemnitee") and hold each Indemnitee
harmless from and against any and all liabilities, losses, damages, costs and
expenses of any kind, including, without limitation, the reasonable fees and
disbursements of counsel, which may be incurred by such Indemnitee in connection
with any investigative, administrative or judicial proceeding (whether or not
such Indemnitee shall be designated a party thereto) that may at any time
(including, without limitation, at any time following the payment of the
Obligations) be imposed on, asserted against or incurred by any Indemnitee as a
result of, or arising out of, or in any way related to or by reason of, (i) any
of the transactions contemplated by the Loan Documents or the execution,
delivery or performance of any Loan Document,(ii) the grant to the Lead Agent
and the Banks of any Lien in any property or assets of the Borrower or any stock
or other equity interest in the Borrower, and (iii) the exercise by the Lead
Agent and the Banks of their rights and remedies (including, without limitation,
foreclosure) under any agreements creating any such Lien (but excluding, as to
any Indemnitee, any such losses, liabilities, claims, damages, expenses,
obligations, penalties, actions, judgments, suits, costs or disbursements
incurred solely by reason of (i) the gross negligence or willful misconduct of
such Indemnitee as finally determined by a court of competent jurisdiction and
(ii) any investigative, administrative or judicial proceeding imposed or
asserted against any Indemnitee by any bank regulatory agency or by any equity
holder of such Indemnitee). The Borrower's obligations under this Section shall
survive the termination of this Agreement and the payment of the Obligations.
68
<PAGE>
(c) The Borrower shall pay, and hold the Lead Agent and each of the
Banks harmless from and against, any and all present and future U.S. stamp,
recording, transfer and other similar foreclosure related taxes with respect to
the foregoing matters and hold the Lead Agent and each Bank harmless from and
against any and all liabilities with respect to or resulting from any delay or
omission (other than to the extent attributable to such Bank) to pay such taxes.
SECTION 9.4. Sharing of Set-Offs. In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence and during the continuance of
any Event of Default, each Bank is hereby authorized at any time or from time to
time, without presentment, demand, protest or other notice of any kind to the
Borrower or to any other Person, any such notice being hereby expressly waived,
to set off and to appropriate and apply any and all deposits (general or
special, time or demand, provisional or final), other than deposits held for the
benefit of third parties, and any other indebtedness at any time held or owing
by such Bank (including, without limitation, by branches and agencies of such
Bank wherever located) to or for the credit or the account of the Borrower
against and on account of the Obligations of the Borrower then due and payable
to such Bank under this Agreement or under any of the other Loan Documents,
including, without limitation, all interests in Obligations purchased by such
Bank. Each Bank agrees that if it shall, by exercising any right of set-off or
counterclaim or otherwise, receive payment of a proportion of the aggregate
amount of principal and interest due with respect to any Note held by it or
Letter of Credit participated in by it, or, in the case of the Fronting Bank,
Letter of Credit issued by it, which is greater than the proportion received by
any other Bank or Letter of Credit issued or participated in by such other Bank,
in respect of the aggregate amount of principal and interest due with respect to
any Note held by such other Bank, the Bank receiving such proportionately
greater payment shall purchase such participations in the Notes held by the
other Banks or Letter of Credit issued or participated in by such other Bank,
and such other adjustments shall be made, as may be required so that all such
payments of principal and interest with respect to the Notes held by the Banks
or Letter of Credit issued or participated in by such other Banks shall be
69
<PAGE>
shared by the Banks pro rata; provided that nothing in this Section shall impair
the right of any Bank to exercise any right of set-off or counterclaim it may
have and to apply the amount subject to such exercise to the payment of
indebtedness of the Borrower other than its indebtedness under the Notes. The
Borrower agrees, to the fullest extent it may effectively do so under applicable
law, that any holder of a participation in a Note or Letter of Credit, whether
or not acquired pursuant to the foregoing arrangements, may exercise rights of
set-off or counterclaim and other rights with respect to such participation as
fully as if such holder of a participation were a direct creditor of the
Borrower in the amount of such participation.
SECTION 9.5. Amendments and Waivers. Any provision of this Agreement,
the Notes, the Letters of Credit or other Loan Documents may be amended or
waived if, but only if, such amendment or waiver is in writing and is signed by
the Borrower and the Required Banks (and, if the rights or duties of the Lead
Agent are affected thereby, by the Lead Agent); provided that no such amendment
or waiver shall, unless signed by all the Banks, (i) increase or decrease the
Commitment of any Bank (except for a ratable decrease in the Commitments of all
Banks) or subject any Bank to any additional obligation, (ii) reduce the
principal of or rate of interest on any Loan or any fees specified herein,
including, without limitation, the waiver of any Default or Event of Default in
the payment of interest, principal or fees hereunder if such waiver would result
in a permanent reduction in the amount or change in the timing of the payment of
interest, principal or fees payable hereunder by the Borrower, unless the
Borrower has cured such Default or Event of Default and paid all amounts,
including any default interest, due hereunder at the time a request for consent
is made by Lead Agent to the Banks to the waiver of any Default or Event of
Default in the payment of interest, principal or fees hereunder, in which event
only the consent of the Required Banks to the waiver of such Default or Event of
Default shall be required, (iii) postpone the date fixed for any payment of
principal of or interest on any Loan or any fees hereunder or for any reduction
or termination of any Commitment, (iv) change the percentage of the Commitments
or of the aggregate unpaid principal amount of the Notes, or the number of
Banks, which shall be required for the Banks or any of them to take any action
under this Section or any other provision of this Agreement, (v) amend, release
or terminate the Guaranty, or (vi) amend the provisions of this Section 9.5.
70
<PAGE>
SECTION 9.6. Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns,
except that the Borrower may not assign or otherwise transfer any of their
rights under this Agreement or the other Loan Documents without the prior
written consent of all Banks.
(b) Any Bank may at any time grant to one or more banks or other
institutions (each a "Participant") participating interests in its Commitment or
any or all of its Loans. In the event of any such grant by a Bank of a
participating interest to a Participant, whether or not upon notice to the
Borrower and the Lead Agent, such Bank shall remain responsible for the
performance of its obligations hereunder, and the Borrower and the Lead Agent
shall continue to deal solely and directly with such Bank in connection with
such Bank's rights and obligations under this Agreement. Any agreement pursuant
to which any Bank may grant such a participating interest shall provide that
such Bank shall retain the sole right and responsibility to enforce the
obligations of the Borrower hereunder including, without limitation, the right
to approve any amendment, modification or waiver of any provision of this
Agreement; provided that such participation agreement may provide that such Bank
will not agree to any modification, amendment or waiver of this Agreement
described in clause (i), (ii), (iii) or (iv) of Section 9.5 without the consent
of the Participant. The Borrower agrees that each Participant shall, to the
extent provided in its participation agreement, be entitled to the benefits of
Article VIII with respect to its participating interest. 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).
(c) Any Bank may at any time assign to one or more banks or other
institutions (each an "Assignee") all, or a proportionate part of all, of its
rights and obligations under this Agreement, the Notes and the other Loan
Documents, provided that such Assignee shall assume such rights and obligations,
71
<PAGE>
pursuant to an Assignment and Assumption Agreement in substantially the form of
Exhibit B attached hereto executed by such Assignee and such transferor Bank,
with (and subject to) the consent of the Lead Agent and, provided no Event of
Default shall have occurred and be continuing, the Borrower, which consent shall
not be unreasonably withheld or delayed. Notwithstanding the foregoing, however,
if at any time any Bank shall hold Commitments hereunder that, together with
commitments (the "Carr Commitments") it holds pursuant to the provisions of the
Carr Credit Agreement, exceeds $75,000,000 in the aggregate, then, provided that
the amount such Bank shall desire to assign pursuant to the provisions of this
Section shall be not less than $10,000,000, then no consent of either the Lead
Agent or the Borrowers shall be required until such time as such Bank's
aggregate Commitments and Carr Commitments shall equal or be less than
$75,000,000. Upon execution and delivery of such instrument and payment by such
Assignee to such transferor Bank of an amount equal to the purchase price agreed
between such transferor Bank and such Assignee, such Assignee shall be a Bank
party to this Agreement and shall have all the rights and obligations of a Bank
with a Commitment as set forth in such instrument of assumption, and the
transferor Bank shall be released from its obligations hereunder to a
corresponding extent, and no further consent or action by any party shall be
required. Upon the consummation of any assignment pursuant to this subsection
(c), the transferor Bank, the Lead Agent and the Borrower, if applicable, shall
make appropriate arrangements so that, if required, a new Note or Notes are
issued to the Assignee. In connection with any such assignment, the transferor
Bank shall pay to the Lead Agent an administrative fee for processing such
assignment in the amount of $2,500. If the Assignee is not incorporated under
the laws of the United States of America or a state thereof, it shall deliver to
the Borrower and the Lead Agent certification as to exemption from deduction or
withholding of any United States federal income taxes in accordance with Section
8.4.
(d) Intentionally omitted.
(e) Any Bank may at any time assign all or any portion of its rights
under this Agreement and its Note and the Letters of Credit participated in by
such Bank (as a Fronting Bank) or, in the case of the Fronting Bank, issued by
it, to a Federal Reserve Bank. No such assignment shall release the transferor
Bank from its obligations hereunder.
72
<PAGE>
(f) No Assignee, Participant or other transferee of any Bank's rights
shall be entitled to receive any greater payment under Section 8.3 or 8.4 than
such Bank would have been entitled to receive with respect to the rights
transferred, unless such transfer is made with the Borrower's prior written
consent or by reason of the provisions of Section 8.2, 8.3 or 8.4 requiring such
Bank to designate a different Applicable Lending Office under certain
circumstances or at a time when the circumstances giving rise to such greater
payment did not exist.
SECTION 9.7. Governing Law; Submission to Jurisdiction.
(a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT
GIVING EFFECT TO THE PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW).
(b) Any legal action or proceeding with respect to this Agreement or
any other Loan Document and any action for enforcement of any judgment in
respect thereof may be brought in the courts of the State of New York or of the
United States of America for the Southern District of New York, and, by
execution and delivery of this Agreement, the Borrower hereby accepts for itself
and in respect of its property, generally and unconditionally, the non-exclusive
jurisdiction of the aforesaid courts and appellate courts from any thereof. The
Borrower irrevocably consents to the service of process out of any of the
aforementioned courts in any such action or proceeding by the hand delivery, or
mailing of copies thereof by registered or certified mail, postage prepaid, to
the Borrower at its address set forth below. The Borrower hereby irrevocably
waives any objection which it may now or hereafter have to the laying of venue
of any of the aforesaid actions or proceedings arising out of or in connection
with this Agreement or any other Loan Document brought in the courts referred to
above and hereby further irrevocably waives and agrees not to plead or claim in
any such court that any such action or proceeding brought in any such court has
been brought in an inconvenient forum. Nothing herein shall affect the right of
the Lead Agent, any Bank or any holder of a Note to serve process in any other
manner permitted by law or to commence legal proceedings or otherwise proceed
against the Borrower in any other jurisdiction.
73
<PAGE>
SECTION 9.8. Marshalling; Recapture. Neither the Lead Agent nor any
Bank shall be under any obligation to marshall any assets in favor of the
Borrower or any other party or against or in payment of any or all of the
Obligations. To the extent any Bank receives any payment by or on behalf of the
Borrower, which payment or any part thereof is subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to be repaid to
the Borrower or its estate, trustee, receiver, custodian or any other party
under any bankruptcy law, state or federal law, common law or equitable cause,
then to the extent of such payment or repayment, the Obligation or part thereof
which has been paid, reduced or satisfied by the amount so repaid shall be
reinstated by the amount so repaid and shall be included within the liabilities
of the Borrower to such Bank as of the date such initial payment, reduction or
satisfaction occurred.
SECTION 9.9. Counterparts; Integration; Effectiveness. This Agreement
may be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement constitutes the entire agreement and understanding
among the parties hereto and supersedes any and all prior agreements and
understandings, oral or written, relating to the subject matter hereof. This
Agreement shall become effective upon receipt by the Lead Agent of counterparts
hereof signed by each of the parties hereto (or, in the case of any party as to
which an executed counterpart shall not have been received, receipt by the Lead
Agent in form satisfactory to it of telegraphic, telex or other written
confirmation from such party of execution of a counterpart hereof by such
party).
SECTION 9.10. WAIVER OF JURY TRIAL. THE BORROWER AND THE LEAD AGENT
AND THE BANKS HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 9.11. Survival. All indemnities set forth herein shall survive
the execution and delivery of this Agreement and the other Loan Documents and
the making and repayment of the Loans hereunder.
74
<PAGE>
SECTION 9.12. Domicile of Loans. Subject to the provisions of Article
VIII, each Bank may transfer and carry its Loans at, to or for the account of
any domestic or foreign branch office, subsidiary or affiliate of such Bank.
SECTION 9.13. Limitation of Liability. (a) No claim may be made by the
Borrower or any other Person against the Lead Agent or any Bank or the
affiliates, directors, officers, employees, attorneys or agent of any of them
for any consequential or punitive damages in respect of any claim for breach of
contract or any other theory of liability arising out of or related to the
transactions contemplated by this Agreement or by the other Loan Documents, or
any act, omission or event occurring in connection therewith; and each Borrower
hereby waives, releases and agrees not to sue upon any claim for any such
damages, whether or not accrued and whether or not known or suspected to exist
in its favor.
(b) The Lead Agent or any Bank may look to all the assets of the
Borrower in seeking to enforce the Borrower's liability and obligations
hereunder, and the lien of any judgment against the Borrower and any proceeding
instituted on, under or in connection with any Note or any of the other Loan
Documents shall extend to all property now or hereafter owned by the Borrower.
SECTION 9.14. Confidentiality.
Prior to the occurrence and continuance of an Event of Default and
except in connection with the sale or assignment or potential sale or assignment
of any Bank's Commitment or portion of its Commitment pursuant to Section 9.6,
each Bank agrees that it will use reasonable efforts, consistent with its
customary policies for maintaining information as confidential, not to disclose
without the prior consent of the Borrower (other than to its subsidiaries,
directors, agents, employees, auditors, counsel or other professional
consultants, provided that each such recipient shall either agree to be bound by
the terms of this Section 9.14 or is otherwise bound to keep such information
confidential on a similar basis pursuant to professional ethical obligations)
any information with respect to the Borrower, any Subsidiary
75
<PAGE>
thereof or any of their assets or properties which is furnished pursuant to this
Agreement or any Loan Documents and which is designated as confidential,
provided that any Bank may disclose any such information (a) that has become
generally available to the public (other than as a consequence of any Bank's
breach of this Section 9.14), (b) as may be required or appropriate in any
report, statement or testimony submitted to any local, state or federal
regulatory body having or claiming to have jurisdiction over such Bank, any
nationally recognized rating agency or similar organization, (c) as may be
required or appropriate in response to any summons or subpoena or in connection
with any litigation, or (d) in order to comply with any applicable law, order,
regulation or ruling; provided, further that in the case of the foregoing
clauses (b), (c) and (d), such Bank shall use reasonable efforts to give the
Borrower prior notice of any such disclosure.
76
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
OMNIOFFICES, INC.
By: /s/ Joseph D. Wallace
------------------------------------
Name: Joseph D. Wallace
Title: Executive Vice President
1117 Perimeter Circle West
Suite 500 East
Atlanta, Georgia 30338
Telecopy number: (770)390-9518
<PAGE>
Commitments:
$54,670,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Arranger and a Bank
By: /s/ Richard L. Dugoff
------------------------------------
Name: Richard L. Dugoff
Title: Vice President
<PAGE>
$23,100,000 COMMERZBANK AKTIENGESELLSCHAFT, NEW
YORK BRANCH, as Managing Agent and a Bank
By: /s/ Douglas P. Traynor
------------------------------------
Name: Douglas P. Traynor
Title: Vice President
By: /s/ David Buettner
------------------------------------
Name: David Buettner
Title: Assistant Treasurer
<PAGE>
$23,100,000 NATIONSBANK, N.A., as Managing
Agent and a Bank
By: /s/ Leslie Furst
------------------------------------
Name: Leslie Furst
Title: Vice President
<PAGE>
$23,100,000 PNC BANK, NATIONAL ASSOCIATION, as
Managing Agent and a Bank
By: /s/ Richard B. Trzybinski
--------------------------------
Name: Richard B. Trzybinski
Title: Vice President
<PAGE>
$15,300,000 BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Co-Agent
and a Bank
By: /s/ Nicholas Yakubik
------------------------------------
Name: Nicholas Yakubik
Title: Vice President
<PAGE>
$15,300,000 SOCIETE GENERALE, A FRENCH BANKING
CORPORATION, ACTING THROUGH ITS
SOUTHWEST AGENCY, as Co-Agent and a Bank
By: /s/ Rick Bower
------------------------------------
Name: Rick Bower
Title: Vice President
<PAGE>
$12,320,000 FIRST UNION NATIONAL BANK, as a Bank
By: /s/ Rox E. Rudy
------------------------------------
Name: Rox E. Rudy
Title: Vice President
<PAGE>
$11,550,000 BAYERISCHE HYPOTHEKEN -UND WECHSEL
BANK AKTIENGESELLSCHAFT, NEW YORK BRANCH,
as a Bank
By: /s/ Stephen G. Melidones
------------------------------------
Name: Stephen G. Melidones
Title: Assistant Vice President
By: /s/ Eva Lam
------------------------------------
Name: Eva Lam
Title: Assistant Treasurer
<PAGE>
$10,780,000 WACHOVIA BANK, N.A., as a Bank
By: /s/ Judith A. Nunn
------------------------------------
Name: Judith A. Nunn
Title: Vice President
<PAGE>
$6,160,000 CREDITANSTALT CORPORATE FINANCE,
INC., as a Bank
By: /s/ Robert M. Biringer
------------------------------------
Name: Robert M. Biringer
Title: Executive Vice President
By: /s/ Carl G. Drake
------------------------------------
Name: Carl G. Drake
Title: Vice President
<PAGE>
$4,620,000 ERSTE BANK DER OESTERREICHISCHEN
SPARKASSEN AG, as a Bank
By: /s/ Paul Judicke
------------------------------------
Name: Paul Judicke
Title: Vice President
Erste Bank New York
By: /s/ Arcinee Hovanessian
------------------------------------
Name: Arcinee Hovanessian
Title: Vice President
Erste Bank New York
<PAGE>
TOTAL COMMITMENTS: $200,000,000
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Lead Agent
By: /s/ Richard Dugof
------------------------------------
Name: Richard Dugof
Title: Vice President
c/o J.P. Morgan Services Inc.
500 Stanton Christiana Road
Newark, DE 19713-2107
Attention: William Lamb
Telecopy: (302) 634-1840
Total Commitments
$200,000,000
<PAGE>
Domestic and Euro-Currency
Lending Office:
c/o J.P. Morgan Services Inc.
500 Stanton Christiana Road
Newark, DE 19713-2107-
Attention: Kevin M. McCann
Telecopy: (302) 634-1852/1872
<PAGE>
IN WITNESS WHEREOF, the undersigned has cuased this Guaranty
to be duly executed and delivered as of the date first set forth above.
GUARANTOR:
CARRAMERICA REALTY CORPORATION
a Maryland corporation
By: /s/ Brian K. Fields
------------------------------------
Name: Brian K. FIELDS
Title: Chief Financial Officer
<PAGE>
SCHEDULE 4.28
Ownership of Property
<PAGE>
EXHIBIT A
FORM OF NOTE
New York, New York
___________ , 1998
For value received, OmniOffices, Inc., a Delaware corporation
(the "Borrower"), promises to pay to the order of Morgan Guaranty Trust Company
of New York (the "Bank"), for the account of its Applicable Lending Office, the
unpaid principal amount of each Loan made by the Bank to the Borrower pursuant
to the Credit Agreement referred to below on the Maturity Date. The Borrower
promises to pay interest on the unpaid principal amount of each such Loan on the
dates and at the rate or rates provided for in the Credit Agreement. All such
payments of principal and interest shall be made in lawful money of the United
States in Federal or other immediately available funds at the office of Morgan
Guaranty Trust Company of New York, 60 Wall Street, New York, New York.
All Loans made by the Bank, the respective types and
maturities thereof and all repayments of the principal thereof shall be recorded
by the Bank and, if the Bank so elects in connection with any transfer or
enforcement hereof, appropriate notations to evidence the foregoing information
with respect to each such Loan then outstanding may be endorsed by the Bank on
the schedule attached hereto, or on a continuation of such schedule attached to
and made a part hereof; provided that the failure of the Bank to make any such
recordation or endorsement shall not affect the obligations of the Borrower
hereunder or under the Credit Agreement.
This Note is one of the Notes referred to in the Amended and
Restated Revolving Credit Agreement, dated as of August , 1998, among the
Borrower, the Banks parties thereto, Morgan Guaranty Trust Company of New York,
as Lead Agent (as the same may be amended from time to time, the "Credit
Agreement"). Terms defined in the Credit Agreement are used herein with the same
meanings. Reference is made to the Credit Agreement for provisions for the
prepayment hereof and the acceleration of the maturity hereof.
1
<PAGE>
OMNIOFFICES, INC.
By:
--------------------------------
Name:
Title:
2
<PAGE>
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
- --------------------------------------------------------------------------------
Amount of
Amount of Type of Principal Maturity Notation
Date Loan Loan Repaid Date Made By
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3
<PAGE>
EXHIBIT B
FORM OF ASSIGNMENT AND ASSUMPTION
ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as of _________ ,
199 , among [ASSIGNOR] (the "Assignor"), [ASSIGNEE] (the "Assignee"),
OMNIOFFICES, INC. (the "Borrower") and MORGAN GUARANTY TRUST COMPANY OF NEW
YORK, as Lead Agent (the "Lead Agent") for certain banks (the "Banks").
W I T N E S S E T H
WHEREAS, this Assignment and Assumption Agreement (the
"Assignment") relates to the Amended and RestatedRevolving Credit Agreement,
dated as of August , 1998 (the "Credit Agreement"), among the Borrower, the
Assignor and the Lead Agent, as agent for the Banks and the Banks listed on the
signature pages thereof;
WHEREAS, as provided under the Credit Agreement, the Assignor
has a Commitment to make Loans to the Borrower in an aggregate principal amount
at any time outstanding not to exceed $__________;
WHEREAS, Loans made to the Borrower by the Assignor under the
Credit Agreement in the aggregate principal amount of $____________ are
outstanding at the date hereof; and
WHEREAS, the Assignor proposes to assign to the Assignee all
of the rights of the Assignor under the Credit Agreement in respect of a portion
of its Commitment thereunder in an amount equal to $__________ (the "Assigned
Amount"), together with a corresponding portion of its outstanding Loans, and
the Assignee proposes to accept assignment of such rights and assume the
corresponding obligations from the Assignor on such terms;
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements contained herein, the parties hereto agree as follows:
SECTION 1. Definitions. All capitalized terms not otherwise
defined herein shall have the respective meanings set forth in the Credit
Agreement.
1
<PAGE>
SECTION 2. Assignment. The Assignor hereby assigns and sells
to the Assignee all of the rights of the Assignor under the Credit Agreement to
the extent of the Assigned Amount, and the Assignee hereby accepts such
assignment from the Assignor and assumes all of the obligations of the Assignor
under the Credit Agreement to the extent of the Assigned Amount, including the
purchase from the Assignor of the corresponding portion of the principal amount
of the Loans made by the Assignor outstanding at the date hereof. Upon the
execution and delivery hereof by the Assignor, the Assignee, the Borrower and
the Agent and the payment of the amounts specified in Section 3 required to be
paid on the date hereof (i) the Assignee shall, as of the date hereof, succeed
to the rights and be obligated to perform the obligations of a Bank under the
Credit Agreement with a Commitment in an amount equal to the Assigned Amount and
(ii) the Commitment of the Assignor shall, as of the date hereof, be reduced by
a like amount and the Assignor released from its obligations under the Credit
Agreement to the extent such obligations have been assumed by the Assignee. The
assignment provided for herein shall be without recourse to the Assignor.
SECTION 3. Payments. As consideration for the assignment and
sale contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on
the date hereof in Federal funds the amount heretofore agreed between them(1) It
is understood that Commitment Fees accrued to the date hereof are for the
account of the Assignor and such fees accruing from and including the date
hereof are for the account of the Assignee. Each of the Assignor and the
Assignee hereby agrees that if it receives any amount under the Credit Agreement
which is for the account of the other party hereto, it shall receive the same
for the account of such other party to the extent of such other party's interest
therein and shall promptly pay the same to such other party.
SECTION 4. Consent of the Borrower and the Agent. This
Agreement is conditioned upon the consent of the Borrower and the Agent pursuant
to Section 9.6(c) of the Credit Agreement. The execution of this Agreement by
the Borrower and the Agent is evidence of this consent. Pursuant to Section
9.6(c) of the Credit Agreement, Borrower agrees to execute and deliver a Note
payable to the order of Assignee to evidence the assignment and assumption
provided for herein.
SECTION 5. Non-Reliance on Assignor. The Assignor makes no
representation or warranty in connection with, and shall have no responsibility
with respect to, the solvency, financial condition, or statements of the
Borrower, or the validity and enforceability of the obligations of the Borrower
in respect of the Credit Agreement or any Note. The Assignee acknowledges that
- --------
(1) Amount should combine principal together with accrued interest and breakage
compensation, if any, to be paid by the Assignee, net of any portion of any
upfront fee to be paid by the Assignor to the Assignee. It may be preferable
in an appropriate case to specify these amounts generically or by formula
rather than as a fixed sum.
2
<PAGE>
it has, independently and without reliance on the Assignor, and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and will continue to be
responsible for making its own independent appraisal of the business, affairs
and financial condition of the Borrower.
SECTION 6. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York
SECTION 7. Counterparts. 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.
3
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date first
above written.
[ASSIGNOR]
By:
--------------------------------
Name:
Title:
[ASSIGNEE]
By:
--------------------------------
Name:
Title:
OMNIOFFICES, INC.
By:
--------------------------------
Name:
Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, AS LEAD AGENT
By:
--------------------------------
Name:
Title:
Exhibit 10.3
AMENDED AND RESTATED GUARANTY AGREEMENT
UNCONDITIONAL AMENDED AND RESTATED GUARANTY OF PAYMENT (this
"Guaranty"), is made as of August 27, 1998 by CARRAMERICA REALTY CORPORATION, a
Maryland corporation ("CarrAmerica" or the "Guarantor"), in favor of MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, as Bank and as Lead Agent for the Banks (the
"Lead Agent") for the benefit of the banks (the "Banks") that are from time to
time parties to that certain Amended and Restated Revolving Credit Agreement
(the "Credit Agreement"), dated of even date herewith among OmniOffices, Inc.
(the "Borrower"), the Lead Agent and the Banks.
Capitalized terms not otherwise defined in this Guaranty shall
have the meanings ascribed to them in the Credit Agreement.
W I T N E S S E T H:
WHEREAS, pursuant to the terms of the Credit Agreement, the
Borrower has requested that the Banks make a Loan to the Borrower, to be
guaranteed by CarrAmerica and to be evidenced by certain Promissory Notes (the
"Notes"), each dated as of even date herewith, in the aggregate principal amount
of Two Hundred Million Dollars ($200,000,000), payable by the Borrower to the
order of the Banks;
WHEREAS, this Guaranty is the "Guaranty" referred to in the
Credit Agreement;
WHEREAS, CarrAmerica is the owner of all of the issued and
outstanding nonvoting common stock of the Borrower; and
WHEREAS, in order to induce the Lead Agent and the Banks to
make the Loan to the Borrower, and to satisfy one of the conditions contained in
the Credit Agreement with respect thereto, CarrAmerica has agreed to enter into
this Guaranty.
NOW THEREFORE, in consideration of the premises and the direct
and indirect benefits to be derived from the making of the Loans by the Banks to
the Borrower, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, CarrAmerica hereby agrees as
follows:
<PAGE>
1. CarrAmerica, on behalf of itself and its successors and assigns, hereby
irrevocably, absolutely, and unconditionally guarantees the full and
punctual payment when due, whether at stated maturity or otherwise, of
all obligations of the Borrower now or hereafter existing under the
Notes or under any of the other Loan Documents to which the Borrower is
a party (such obligations being the "Guaranteed Obligations"), and any
and all reasonable costs and expenses (including, without limitation,
reasonable attorneys' fees and disbursements) incurred by the Lead
Agent in enforcing its rights under this Guaranty.
2. It is agreed that the obligations of CarrAmerica hereunder are primary
and this Guaranty shall be enforceable against CarrAmerica and its
successors and assigns without the necessity for any suit or proceeding
of any kind or nature whatsoever brought by the Lead Agent against the
Borrower or its successors or assigns or any other party or against any
security for the payment and performance of the Guaranteed Obligations
and, to the extent permitted by applicable law, without the necessity
of any notice of non-payment or non-observance or of any notice of
acceptance of this Guaranty or of any notice or demand to which
CarrAmerica might otherwise be entitled (including, without limitation,
diligence, presentment, notice of maturity, extension of time, change
in nature or form of the Guaranteed Obligations, acceptance of further
security, release of further security, imposition or agreement arrived
at as to the amount of or the terms of the Guaranteed Obligations,
notice of adverse change in the Borrower's financial condition and any
other fact which might materially increase the risk to CarrAmerica),
all of which CarrAmerica, to the extent permitted by applicable law,
hereby expressly waives; and, to the extent permitted by applicable
law, CarrAmerica hereby expressly agrees that the validity of this
Guaranty and its obligations hereunder shall in no way be terminated,
affected, diminished, modified or impaired by reason of the assertion
of, or the failure to assert by the Lead Agent against the Borrower or
its successors or assigns, any of the rights or remedies reserved to
the Lead Agent pursuant to the provisions of the Loan Documents.
CarrAmerica hereby agrees that, to the extent permitted by applicable
law, any notice or directive given at any time to the Lead Agent which
is inconsistent with the waiver in the immediately preceding sentence
shall be void and may be ignored by the Lead Agent, and, in addition,
may not be pleaded or introduced as evidence in any litigation relating
to this Guaranty for the reason that such pleading or introduction
would be at variance with the written terms of this Guaranty, unless
the Lead Agent has specifically agreed otherwise in writing, signed by
a duly authorized officer. CarrAmerica specifically acknowledges and
agrees that the foregoing waivers are of the essence of this
transaction and that, but for this Guaranty and such waivers, the Lead
Agent and the Banks would not make the requested Loan to the Borrower.
<PAGE>
3. To the extent permitted by applicable law, CarrAmerica hereby waives,
covenants and agrees that it will not at any time insist upon, plead or
in any manner whatsoever claim or take the benefit or advantage of, any
and all appraisal, valuation, stay, extension, marshalling-of-assets or
redemption laws, or right of homestead exemption, whether now or at any
time hereafter in force, which may delay, prevent or otherwise affect
its performance of its obligations under, or the enforcement by the
Lead Agent of, this Guaranty. To the extent permitted by applicable
law, CarrAmerica further covenants and agrees not to set up or claim
any defense, counterclaim, offset, set-off or other objection of any
kind to any action, suit or proceeding in law, equity or otherwise, or
to any demand or claim that may be instituted or made by the Lead Agent
other than the defense of the actual timely payment and performance by
the Borrower of the Guaranteed Obligations hereunder. CarrAmerica
represents, warrants and agrees that, as of the date hereof, its
obligations under this Guaranty are not subject to any counterclaims,
offsets or defenses against the Lead Agent of any kind.
4. The provisions of this Guaranty are for the benefit of the Lead Agent
on behalf of the Banks and their successors and permitted assigns, and
nothing herein contained shall impair as between the Borrower and the
Lead Agent the obligations of the Borrower under the Loan Documents.
5. This Guaranty shall be a continuing, unconditional and absolute
guaranty and, to the extent permitted by applicable law, the liability
of CarrAmerica hereunder shall in no way be terminated, affected,
modified, impaired or diminished by reason of the happening, from time
to time, of any of the following, although without notice or the
further consent of the Guarantor:
(a) any assignment, amendment, modification or waiver of or
change in any of the terms, covenants, conditions or provisions of any
of the Guaranteed Obligations or the Loan Documents or the invalidity
or unenforceability of any of the foregoing; or
(b) any extension of time that may be granted by the Lead
Agent to the Borrower, the Guarantor, or their respective successors or
assigns; or
(c) any action which the Lead Agent may take or fail to take
under or in respect of any of the Loan Documents or by reason of any
waiver of, or failure to enforce any of the rights, remedies, powers or
privileges available to the Lead Agent under this Guaranty or available
to the Lead Agent at law, in equity or otherwise, or any action on the
part of the Lead Agent granting indulgence or extension in any form
whatsoever; or
(d) any sale, exchange, release, or other disposition of any
property pledged, mortgaged or conveyed, or any property in which the
Lead Agent and/or the Banks have been granted a lien or security
interest to secure any indebtedness of the Borrower to the Lead Agent
and/or the Banks; or
<PAGE>
(e) any release of any person or entity who may be liable in
any manner for the payment and collection of any amounts owed by the
Borrower to the Lead Agent and/or the Banks; or
(f) the application of any sums by whomsoever paid or however
realized to any amounts owing by the Borrower to the Lead Agent and/or
the Banks under the Loan Documents in such manner as the Lead Agent
shall determine in its sole discretion; or
(g) the Borrower's or the Guarantor's voluntary or involuntary
liquidation, dissolution, sale of all or substantially all of their
respective assets and liabilities, appointment of a trustee, receiver,
liquidator, sequestrator or conservator for all or any part of the
Borrower's or guarantor's assets, insolvency, bankruptcy, assignment
for the benefit of creditors, reorganization, arrangement, composition
or readjustment, or the commencement of other similar proceedings
affecting the Borrower or any guarantor or any of the assets of any of
them, including, without limitation, (i) the release or discharge of
the Borrower or the Guarantor from the payment and performance of their
respective obligations under any of the Loan Documents by operation of
law, or (ii) the impairment, limitation or modification of the
liability of the Borrower or any guarantor in bankruptcy, or of any
remedy for the enforcement of the Guaranteed Obligations under any of
the Loan Documents, or the liability of CarrAmerica under this
Guaranty, resulting from the operation of any present or future
provisions of the Bankruptcy Code or other present or future federal,
state or applicable statute or law or from the decision in any court;
or
(h) any improper disposition by the Borrower of the proceeds
of the Loans, it being acknowledged by CarrAmerica that the Lead Agent
shall be entitled to honor any request made by the Borrower for a
disbursement of such proceeds and that the Lead Agent shall have no
obligation to see the proper disposition by the Borrower of such
proceeds.
<PAGE>
6. CarrAmerica hereby agrees that if at any time all or any part of any
payment at any time received by the Lead Agent from the Borrower under
any of the Notes or other Loan Documents or from the Guarantor under or
with respect to this Guaranty is or must be rescinded or returned by
the Lead Agent for any reason whatsoever (including, without
limitation, the insolvency, bankruptcy or reorganization of the
Borrower or CarrAmerica), then the obligations of CarrAmerica hereunder
shall, to the extent of the payment rescinded or returned, be deemed to
have continued in existence notwithstanding such previous receipt by
the Lead Agent, and the obligations of CarrAmerica hereunder shall
continue to be effective or reinstated, as the case may be, as to such
payment, as though such previous payment to the Lead Agent had never
been made.
7. Until this Guaranty is terminated pursuant to the terms hereof,
CarrAmerica (i) shall have no right of subrogation against the Borrower
or any entity comprising same by reason of any payments or acts of
performance by the such party in compliance with the obligations of a
"Guarantor" hereunder; (ii) hereby waives any right to enforce any
remedy which CarrAmerica now or hereafter shall have against the
Borrower or any entity comprising same by reason of any one or more
payment or acts of performance in compliance with the obligations of
the Guarantor hereunder; and (iii) shall subordinate any liability or
indebtedness of the Borrower or any entity comprising same now or
hereafter held by CarrAmerica to the obligations of the Borrower under
the Loan Documents; provided that nothing contained herein shall limit
the right of CarrAmerica to receive any amount from the Borrower or any
entity comprising the same that is not prohibited by the terms of the
Loan Documents.
8. CarrAmerica hereby represents and warrants to the Lead Agent with the
knowledge that the Lead Agent is relying upon the same, as follows:
(a) as of the date hereof, CarrAmerica is the owner of all of
the issued and outstanding nonvoting common stock of the Borrower, and
CarrAmerica is familiar with the financial condition of Borrower;
<PAGE>
(b) based upon such relationship, CarrAmerica has determined
that it is in its best interest to enter into this Guaranty;
(c) this Guaranty is necessary and convenient to the conduct,
promotion and attainment of the business and is in furtherance of the
business purposes of CarrAmerica;
(d) the benefits to be derived by CarrAmerica from the
Borrower's access to funds made possible by the Loan Documents are at
least equal to the obligations of CarrAmerica undertaken pursuant to
this Guaranty;
(e) CarrAmerica is solvent and has full corporate power, and
legal right to enter into this Guaranty and to perform its obligations
under the terms hereof and (i) CarrAmerica is organized or formed and
validly existing under the law of the state of its establishment or
formation, (ii) CarrAmerica has complied with all provisions of
applicable law in connection with the execution and delivery of this
Guaranty, and (iii) the person executing this Guaranty on behalf of
CarrAmerica has all the requisite power and authority to execute and
deliver this Guaranty; and
(f) this Guaranty has been duly executed by CarrAmerica and
constitutes the legal, valid and binding obligation of the Guarantor,
enforceable against it in accordance with its terms except as
enforceability may be limited by applicable insolvency, bankruptcy or
other laws affecting creditors' rights generally or general principles
of equity whether such enforceability is considered in a proceeding in
equity or at law.
<PAGE>
9. CarrAmerica covenants and agrees that, so long as the Guaranteed
Obligations remain outstanding:
(a) CarrAmerica shall be in compliance with the financial
covenants set forth in Section 5.8 of the Carr Credit Agreement,
subject to any applicable grace periods set forth therein;
(b) CarrAmerica shall maintain an aggregate investment in the
Borrower in an amount not less than One Hundred Thirty Million Dollars
($130,000,000) except with the prior written consent of Banks having at
least 66 2/3% of the aggregate amount of the Commitments, or if the
Commitments shall have been terminated, holding Notes evidencing at
least 66 2/3% of the aggregate unpaid principal amount of the Loans,
such consent to be in such Banks' sole discretion;
(c) CarrAmerica shall not pledge, transfer, sell or otherwise
encumber any or all of the stock of the Borrower; and
(d) If at any time during the term of the Credit Agreement,
the Carr Credit Agreement shall be terminated, then, CarrAmerica shall
nevertheless continue to provide the Lead Agent and the Banks with
those financial statements and other reporting requirements set forth
in Section 5.1 of the Carr Credit Agreement.
10. CarrAmerica and the Lead Agent acknowledge and agree that this Guaranty
is a guaranty of payment and not of collection and enforcement in
respect of any obligations which may accrue to the Lead Agent and/or
the Banks from the Borrower under the provisions of any Loan Document.
11. Subject to the terms and conditions of the Credit Agreement, and only
in conjunction with a transfer permitted thereunder, the Lead Agent may
assign any or all of its rights under this Guaranty.
12. CarrAmerica agrees, upon the written request of the Lead Agent, to
execute and deliver to the Lead Agent, from time to time, any
modification or amendment hereto or any additional instruments or
documents reasonably considered necessary by the Lead Agent or its
counsel to cause this Guaranty to be, become or remain valid and
effective in accordance with its terms or in order to implement more
fully the intent of this Guaranty, provided, that, any such
modification, amendment, additional instrument or document shall not
increase its obligations or diminish its rights hereunder and shall be
reasonably satisfactory as to form to CarrAmerica and to its counsel.
<PAGE>
13. The representation and warranties of CarrAmerica set forth in this
Guaranty shall survive until this Guaranty shall terminate in
accordance with the terms hereof.
14. This Guaranty together with the Credit Agreement and the other Loan
Documents contains the entire agreement among the parties with respect
to the Loans being made to the Borrower simultaneously with the
execution and delivery hereof, and supersedes all prior agreements
relating to the Loans and may not be modified, amended, supplemented or
discharged except by a written agreement signed by CarrAmerica and the
Lead Agent.
15. If all or any portion of any provision contained in this Guaranty shall
be determined to be invalid, illegal or unenforceable in any respect
for any reason, such provision or portion thereof shall be deemed
stricken and severed from this Guaranty and the remaining provisions
and portions thereof shall continue in full force and effect.
16. In order for any demand, request or notice to the respective parties
hereto to be effective, such demand, request or notice shall be given,
in writing, by delivering the same personally or by nationally
recognized overnight courier service or by mailing, by certified or
registered mail, postage prepaid or by telecopying the same, addressed
to such party at the address set forth below or to such other address
as may be identified by any party in a written notice to the others.
Any such demand, request or notice sent as aforesaid shall be deemed to
have been received by the party to whom it is addressed upon delivery,
if personally delivered and on the actual receipt thereof, if sent by
certified or registered mail or by telecopier, and when transmitted, if
sent by telex:
<PAGE>
If to the
Borrower: 1117 Perimeter Center West
Suite 500 East
Atlanta, Georgia 30338
Attention: [ ]
Telecopy: 770-390-9518
If to
CarrAmerica: CarrAmerica Realty Corporation
1850 K Street, N.W.
Washington, D.C. 20006
Attention: [ ]
Telecopy: (202)
With Copies of
Notices to the
Borrower or
Guarantor to: Hogan & Hartson L.L.P.
555 13th Street, N.W.
Washington, D.C. 20004
Attn: J. Warren Gorrell, Jr., Esq.
Telephone: (202) 637-5600
Telecopy: (202) 637-5910
If to Lead Agent: Morgan Guaranty Trust Company
of New York
60 Wall Street
New York, New York
Attn: Richard Dugoff
Telecopy: (212) 648-5249
With Copies to: Skadden, Arps, Slate,
Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: Martha Feltenstein, Esq.
Telecopy: (212) 735-2000
<PAGE>
17. This Guaranty shall be binding upon CarrAmerica and its successors and
assigns and shall inure to the benefit of the Lead Agent and its
successors and assigns.
18. The failure of the Lead Agent to enforce any right or remedy hereunder,
or promptly to enforce any such right or remedy, shall not constitute a
waiver thereof, nor give rise to any estoppel against the Lead Agent,
nor excuse CarrAmerica from its obligations hereunder. Any waiver of
any such right or remedy to be enforceable against the Lead Agent must
be expressly set forth in a writing signed by the Lead Agent.
19. (a) THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED
BY THE LAWS OF THE STATE OF NEW YORK.
(b) Any legal action or proceeding with respect to this
Guaranty and any action for enforcement of any judgment in respect
thereof may be brought in the courts of the State of New York or of the
United States of America for the Southern District of New York, and, by
execution and delivery of this Guaranty, CarrAmerica hereby accepts for
itself and in respect of its property, generally and unconditionally,
the non-exclusive jurisdiction of the aforesaid courts and appellate
courts from any thereof. CarrAmerica irrevocably consents to the
service of process out of any of the aforementioned courts in any such
action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, with delivery to the address for
notices set forth herein. CarrAmerica hereby irrevocably waives any
objection which they may now or hereafter have to the laying of venue
of any of the aforesaid actions or proceedings arising out of or in
connection with this Guaranty brought in the courts referred to above
and hereby further irrevocably waive and agrees not to plead or claim
in any such court that any such action or proceeding brought in any
such court has been brought in an inconvenient forum. Nothing herein
shall affect the right of the Lead Agent to serve process in any other
manner permitted by law or to commence legal proceedings or otherwise
proceed against CarrAmerica in any other jurisdiction.
<PAGE>
(c) CARRAMERICA AND THE LEAD AGENT EACH HEREBY WAIVES ITS
RIGHTS TO A JURY TRIAL OF ANY AND ALL CLAIMS OR CAUSES OF ACTION BASED
UPON OR ARISING OUT OF THIS GUARANTY. IT IS HEREBY ACKNOWLEDGED BY THE
GUARANTOR THAT THE WAIVER OF A JURY TRIAL IS A MATERIAL INDUCEMENT FOR
THE LEAD AGENT TO ACCEPT THIS GUARANTY AND THAT THE LOANS MADE BY THE
BANKS ARE MADE IN RELIANCE UPON SUCH WAIVER. THE GUARANTOR FURTHER
WARRANT AND REPRESENT THAT SUCH WAIVER HAS BEEN KNOWINGLY AND
VOLUNTARILY MADE, FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE
EVENT OF LITIGATION, THIS GUARANTY MAY BE FILED BY THE LEAD AGENT IN
COURT AS A WRITTEN CONSENT TO A NON-JURY TRIAL.
(d) CarrAmerica hereby further covenants and agrees to and
with the Lead Agent that it may be joined in any action against the
Borrower in connection with the Loan Documents and that recovery may be
had against CarrAmerica in such action or in any independent action
against CarrAmerica (with respect to the Guaranteed Obligations),
without the Lead Agent first pursuing or exhausting any remedy or claim
against the Borrower or its successors or assigns.
(e) CarrAmerica hereby agrees to pay all expenses (including,
without limitation, reasonable attorneys' fees and disbursements) which
may be incurred by the Lead Agent in connection with the enforcement of
its rights under this Guaranty, whether or not suit is initiated;
provided, however, that such expenses shall be paid by the Lead Agent
if a final judgment in favor of CarrAmerica is rendered by a court of
competent jurisdiction. Moreover, CarrAmerica covenants and agrees to
indemnify and save the Lead Agent harmless of and from, and defend it
against, all losses, out-of pocket costs and expenses, liabilities,
damages or claims arising by reason of the failure of CarrAmerica to
perform its obligations hereunder.
<PAGE>
20. Subject to the terms of Section 6 hereof, this Guaranty shall terminate
and be of no further force or effect upon the full performance and
payment of the Guaranteed Obligations hereunder (the "Release Date").
Notwithstanding the foregoing, upon the unanimous consent of the Lead
Agent and the Banks, this Guaranty may be released prior to the payment
of the Guaranteed Obligations. CarrAmerica acknowledges that the
conditions to the release of this Guaranty shall be determined in the
sole and absolute discretion of the Banks and may include, but not be
limited to, a change to the Applicable Margin with respect to the
Loans. Upon termination or release of this Guaranty in accordance with
the terms hereof, the Lead Agent promptly shall deliver to CarrAmerica
such documents as CarrAmerica or its counsel may reasonably may request
in order to evidence such termination.
21. All of the Lead Agent's rights and remedies under each of the Loan
Documents or under this Guaranty are intended to be distinct, separate
and cumulative and no such right or remedy therein or herein mentioned
is intended to be in exclusion of or a waiver of any other right or
remedy available to the Lead Agent.
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Guaranty
to be duly executed and delivered as of the date first set forth above.
GUARANTOR:
CARRAMERICA REALTY CORPORATION,
a Maryland corporation
By: /s/ Brian K. Fields
-----------------------
Name: Brian K. Fields
Title: Chief Financial Officer
Exhibit 10.5
AMENDMENT AGREEMENT
AMENDMENT AGREEMENT (the "Amendment Agreement") dated as of July 8,
1998, by and between CarrAmerica Realty Corporation (the "Company") and Merrill
Lynch, Pierce, Fenner & Smith Incorporated ("MLPF&S"). Reference is made herein
to the Purchase Price Adjustment Agreement dated as of April 2, 1998 by and
between the Company and MLPF&S (the "Adjustment Agreement"). Capitalized terms
not otherwise defined herein shall have the meaning ascribed thereto in the
Adjustment Agreement.
WHEREAS, Section 5 of the Adjustment Agreement provides, among other
things, that the Company shall deliver the Interim Settlement Amount in Interim
Settlement Shares; and
WHEREAS, the Company and MLPF&S desire to amend the Adjustment
Agreement so as to allow for the delivery by the Company of the Interim
Settlement Amount in cash, subject to the terms and conditions hereof,
NOW, THEREFORE, in consideration of the mutual undertakings herein set
forth, the parties, intending to be legally bound, hereby agree as follows:
1. Within 5 Business Days following each Reset Date, the Company may
deliver the Interim Settlement Amount in cash to MLPF&S or its
agent for deposit in a collateral account at MLPF&S or a custodian
or depository designated by MLPF&S.
2. MLPF&S or its agent may invest the cash so delivered in such of
the following securities ("Permitted Investments"), and in such
proportions, as the Company shall specify in its written
instructions to MLPF&S:
(i) direct obligations of the United States of America or any
instrumentality thereof for the payment of which the full
faith and credit of the United States of America is pledged;
and/or
(ii) certificates of deposit of banks, trust companies organized
under the laws of the United States of America or any state
thereof, and having combined capital and surplus of at least
$50,000,000; and/or
(iii) bank accounts, including savings accounts and bank money
market accounts, the entire balance of which are insured by
the Federal Deposit Insurance Corporation.
Cash deposited in the collateral account, any unreinvested
earnings on Permitted Investments and cash distributions on any
Interim Settlement Shares held in the collateral account, that the
Company does not direct MLPF&S to invest in Permitted Investments
will not bear interest.
<PAGE>
3. On any Reset Date, if the sum of (i) the cash value of the
Permitted Investments on such Reset Date, (ii) the amount, if any,
in Interim Settlement Shares held by MLPF&S (valued at the Closing
Price on such Reset Date) and (iii) any cash amounts held in the
collateral account in which such Interim Settlement Shares are
held exceeds the Interim Settlement Amount on such Reset Date (or
150% of the Interim Settlement Amount, in the event that MLPF&S
holds restricted Interim Settlement Shares that are not the
subject of an Effective Registration Statement), MLPF&S shall
deliver to the Company within five (5) Business Days following
such Reset Date the amount of such excess in cash from uninvested
cash amounts in the collateral account and cash realized upon the
liquidation of Permitted Investments ("Available Cash"); provided
that if the amount of such excess exceeds Available Cash, MLPF&S
shall deliver the balance of such excess to the Company in Interim
Settlement Shares.
4. This Amendment Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which shall
constitute one and the same instrument.
5. Except as hereby amended, the Adjustment Agreement shall remain in
full force and effect.
6. This Amendment Agreement shall be governed by, and interpreted in
accordance with, the laws of the State of New York, all rights and
remedies being governed by such laws.
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Amendment Agreement as of the date first above written.
CARRAMERICA REALTY CORPORATION
By:_______________________________________
Name: Brian K. Fields
Title: Chief Financial Officer
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:_______________________________________
Name: Matthew Pomerantz
Title: Vice President
Exhibit 10.6
AMENDMENT AGREEMENT
AMENDMENT AGREEMENT (the "Agreement") dated as of October 5, 1998, by
and between CarrAmerica Realty Corporation (the "Company") and Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("MLPF&S"). Reference is made herein to the
Purchase Agreement and the Purchase Price Adjustment Agreement, each dated as of
April 2, 1998, by and between the Company and MLPF&S (the "Purchase Agreement,"
and the "Adjustment Agreement," respectively) and the Amendment Agreement, dated
as of June, 1998 (the "First Amendment Agreement"), by and between the Company
and the MLPF&S. Capitalized terms not otherwise defined herein shall have the
meaning ascribed thereto in the Adjustment Agreement and the Purchase Agreement.
WHEREAS, pursuant to Section 5 of the Adjustment Agreement, as amended
by Section 1 of the Amendment Agreement, MLPF&S holds cash collateral of the
Company totaling $39,379,721.01 (the "Cash Collateral") in a collateral account
at MLPF&S (the "Collateral Account"); and
WHEREAS, the parties desire to provide that (i) the Cash Collateral be
paid to MLPF&S in partial satisfaction of the Company's obligations to MLPF&S
under the Adjustment Agreement, (ii) the Reference Price be reduced to reflect
such payment (iii), subject to the terms and conditions hereof, the Company
deliver the Interim Settlement Amount on a biweekly basis and (iv) the schedule
of Termination Prices and corresponding Percentages of Adjustment Shares in
Section 4.1 of the Adjustment Agreement be revised as set forth herein;
NOW, THEREFORE, in consideration of the mutual undertakings herein set
forth, the parties intending to be legally bound, hereby agree as follows:
1. The Company authorizes MLPF&S to transfer the Cash Collateral from the
Collateral Account to MLPF&S on the date of this Agreement as payment for
the reduction of the Reference Price.
2. In order to effect the reduction of the Reference Price, the Distribution
Amount, as calculated pursuant to Section 1(k) of the Adjustment Agreement,
shall be deemed to include a distribution of $7.876 per Common Share as of
the date hereof.
3. Within three days following October 6, 1998 and within three days following
each second Tuesday thereafter (or, if any such day is not a Business Day,
the next Business Day) (each such day a "Biweekly Delivery Date"), until
the number of Adjustment Shares has been reduced to zero, the Company shall
deliver the Interim Settlement Amount in cash to MLPF&S for deposit in the
Collateral Account or, if applicable, MLPF&S shall release any cash in
excess of the Interim Settlement Amount to the Company; provided however,
that if the Closing Price on any Exchange Trading is below $21.00, the
Company shall deliver the Interim Settlement Amount in cash to MLPF&S or,
if applicable, MLPF&S shall release any cash in excess of the Interim
Settlement Amount to the Company within three days following each Tuesday
thereafter (or, if any such day is not a Business Day, the next Business
Day) (each such day a, "Weekly Delivery Date"), until the Closing Price is
equal to or greater than the Reference Price for three consecutive Exchange
Trading Days, in which case the Company shall resume delivery of the
Interim Settlement Amount on each Biweekly Delivery Date unless and until
the Closing Price is subsequently below $21.00.
<PAGE>
4. Solely for purposes of calculation of the Interim Settlement Amount, each
Biweekly Delivery Date and each Weekly Delivery Date shall be deemed a
Reset Date.
5. The schedule of Termination Prices and corresponding Percentages of
Adjustment Shares to be Settled in Section 4.1 of the Adjustment Agreement
is hereby amended to read as follows:
Percentage of Adjustment
Shares to be Settled Termination Price
-------------------- -----------------
25% $21.00
50% $19.50
100% $18.00
6. MLPF&S agrees that it presently has no right and shall not have any right to
settle Adjustment Shares pursuant to Section 4.1 of the Adjustment
Agreement, as hereby amended, until the Closing Price on any Exchange
Trading Day subsequent to the date hereof falls below the Termination Prices
listed above.
7. Except as hereby amended, the Adjustment Agreement, as amended by the First
Amendment Agreement, shall remain in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement as of the date first above written.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:
------------------------------------
Name: Dean D'Onofrio
Title: Managing Director
CARRAMERICA REALTY CORPORATION
By:
------------------------------------
Name: Brian K. Fields
Title: Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CARRAMERICA
REALTY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET AS OF
SEPTEMBER 30, 1998 AND FROM CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1998
</LEGEND>
<CIK> 0000893577
<NAME> CarrAmerica Realty
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1.000
<CASH> 135,620
<SECURITIES> 0
<RECEIVABLES> 53,207
<ALLOWANCES> 0<F1>
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 2,856,816
<DEPRECIATION> 239,500
<TOTAL-ASSETS> 3,733,625
<CURRENT-LIABILITIES> 0
<BONDS> 1,602,383
0
95
<COMMON> 717
<OTHER-SE> 1,881,338
<TOTAL-LIABILITY-AND-EQUITY> 3,733,625
<SALES> 0
<TOTAL-REVENUES> 429,104
<CGS> 0
<TOTAL-COSTS> 344,465
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 125,120
<INCOME-TAX> 574
<INCOME-CONTINUING> 124,546
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 110,997
<EPS-PRIMARY> 1.25
<EPS-DILUTED> 1.25
<FN>
<F1>
Notes & accounts receivable are presented net of allowance for doubtful accounts
as the allowance is immaterial.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CARRAMERICA
REALTY CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET AS OF
SEPTEMBER 30, 1997 AND FROM CARRAMERICA REALTY CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1997
</LEGEND>
<CIK> 0000893577
<NAME> CarrAmerica Realty
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-1-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1.000
<CASH> 37,990
<SECURITIES> 0
<RECEIVABLES> 28,131
<ALLOWANCES> 0<F1>
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 2,094,308
<DEPRECIATION> 167,462
<TOTAL-ASSETS> 2,351,017
<CURRENT-LIABILITIES> 0
<BONDS> 903,058
0
88
<COMMON> 582
<OTHER-SE> 1,308,114
<TOTAL-LIABILITY-AND-EQUITY> 2,351,017
<SALES> 0
<TOTAL-REVENUES> 248,344
<CGS> 0
<TOTAL-COSTS> 193,648
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 57,029
<INCOME-TAX> 0
<INCOME-CONTINUING> 57,029
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 50,663
<EPS-PRIMARY> 0.87
<EPS-DILUTED> 0.86
<FN>
<F1>
Notes & accounts receivable are presented net of allowance for doubtful accounts
as the allowance is immaterial.
</FN>
</TABLE>
