<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
------------
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
Commission file number 1-11918
TRINET CORPORATE REALTY TRUST, INC.
(Exact name of Registrant as specified in its Charter)
Maryland 94-3175659
(State of incorporation) (I.R.S. Employer Identification No.)
Four Embarcadero Ctr., Suite 3150, San Francisco, CA 94111
(Address of principal executive offices) (Zip Code)
(415) 391-4300
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No___
---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
13,902,667 shares of Common Stock, $.01 par value as of November 6, 1996
<PAGE> 2
TRINET CORPORATE REALTY TRUST, INC.
FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, 1996
----------
INDEX
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION PAGE
- ------------------------------ ----
<S> <C>
Item 1. Consolidated Financial Statements (Unaudited)
Consolidated Balance Sheets as of September 30, 1996
and December 31, 1995 3
Consolidated Statements of Operations for the nine months
and three months ended September 30, 1996 and 1995 4
Consolidated Statements of Cash Flows for the nine months
ended September 30, 1996 and 1995 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
</TABLE>
-2-
<PAGE> 3
TRINET CORPORATE REALTY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
----------
<TABLE>
<CAPTION>
September 30, 1996 December 31, 1995
------------------ -----------------
(Unaudited) (Audited)
ASSETS
<S> <C> <C>
Real estate, at cost:
Land $ 108,059 $ 95,748
Depreciable property 517,872 442,969
Real estate held for sale 17,231 --
Other real estate 22,239 --
------------ ------------
665,401 538,717
Less accumulated depreciation (32,874) (30,260)
------------ ------------
632,527 508,457
Investment in joint venture 6,788 --
------------ ------------
Total real estate 639,315 508,457
Cash and cash equivalents 5,141 9,376
Restricted cash and investments 3,703 12,242
Deferred rent receivable 15,051 11,456
Interest rate protection agreements and loan costs, net 14,987 16,312
Other assets, net 2,270 1,884
------------ ------------
$ 680,467 $ 559,727
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Debt $ 283,107 $ 244,750
Dividends payable 10,530 8,582
Other liabilities 24,879 17,055
------------ ------------
Total liabilities 318,516 270,387
------------ ------------
Stockholders' equity:
Preferred stock, $.01 par value, 10,000,000 shares authorized:
Series A: issued and outstanding 2,000,000 shares
at September 30, 1996 and no shares at December 31, 1995
(aggregate liquidation preference $50,000) 20 --
Series B: issued and outstanding 1,300,000 shares
at September 30, 1996 and no shares at December 31, 1995
(aggregate liquidation preference $32,500) 13 --
Common stock, $.01 par value, 40,000,000 shares authorized:
issued and outstanding 13,887,667 shares at September 30, 1996
and 13,841,667 shares at December 31, 1995, respectively 139 138
Paid-in-capital 392,755 312,904
Distributions in excess of net income (30,976) (23,702)
------------ ------------
Total stockholders' equity 361,951 289,340
------------ ------------
$ 680,467 $ 559,727
============ ============
</TABLE>
The accompanying notes are an integral
part of these financial statements
-3-
<PAGE> 4
TRINET CORPORATE REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited and dollars in thousands, except per share data)
----------
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
------------- -------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Rent $ 55,042 $ 40,666 $ 19,686 $ 15,311
Joint venture income 238 -- 223 --
Other 525 506 170 169
------------ ------------ ------------ ------------
Total revenues 55,805 41,172 20,079 15,480
Expenses:
Property operating costs 1,995 925 777 350
General and administrative 3,853 2,973 1,597 917
Interest 15,537 12,546 5,024 5,098
Depreciation 9,843 7,642 3,427 2,862
Amortization 2,242 2,892 757 963
------------ ------------ ------------ ------------
Income before gain on sale and extraordinary charge 22,335 14,194 8,497 5,290
Gain on sale of real estate 660 -- 659 --
------------ ------------ ------------ ------------
Income before extraordinary charge 22,995 14,194 9,156 5,290
Extraordinary charge from early
extinguishment of debt (1,165) -- (1,165) --
------------ ------------ ------------ ------------
Net income $ 21,830 $ 14,194 $ 7,991 $ 5,290
============ ============ ============ ============
Earnings available to common shares $ 20,104 $ 14,194 $ 6,421 $ 5,290
============ ============ ============ ============
Per common share:
Income available before extraordinary charge,
net of preferred dividend requirement $ 1.53 $ 1.33 $ 0.54 $ 0.49
Extraordinary charge $ (0.08) $ -- $ (0.08) $ --
------------ ------------ ------------ ------------
Earnings available $ 1.45 $ 1.33 $ 0.46 $ 0.49
============ ============ ============ ============
Weighted average number of common
shares outstanding 13,847,470 10,653,432 13,858,754 10,841,667
============ ============ ============ ============
Dividends declared per common share $ 1.86 $ 1.83 $ 0.62 $ 0.61
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral
part of these financial statements
-4-
<PAGE> 5
TRINET CORPORATE REALTY TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited and dollars in thousands)
----------
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 21,830 $ 14,194
Noncash income and expenses included in net income:
Extraordinary charge from early
extinguishment of debt 1,158 --
Depreciation and amortization 12,085 10,534
Straight line rent adjustments (3,716) (3,288)
Gain on sale of real estate (660) --
Joint venture income (238) --
Cash provided by (used for) operating assets and liabilities:
Other assets (442) (426)
Other liabilities 7,901 11,864
--------- ---------
Net cash provided by operating activities 37,918 32,878
--------- ---------
Cash flows from investing activities:
Real estate acquisitions (151,493) (127,197)
Proceeds from sale of real estate 12,212 --
Other capital expenditures (532) (853)
--------- ---------
Net cash used in investing activities (139,813) (128,050)
--------- ---------
Cash flows from financing activities:
1995 Acquisition Facility proceeds 209,711 --
1995 Acquisition Facility payments (228,311) --
Mortgage note proceeds -- 114,913
Mortgage note principal payments (92,750) (39,415)
Proceeds from issuance of common stock 1,119 40,713
Proceeds from senior unsecured debt offering 149,691 --
Proceeds from issuance of preferred stock 78,766 --
Preferred dividends paid (1,407) --
Common dividends paid (25,749) (18,865)
Decrease (increase) in restricted cash and investments 8,539 (546)
Increase in interest rate protection agreements,
loan costs, and other assets (1,949) (566)
--------- ---------
Net cash provided by financing activities 97,660 96,234
--------- ---------
(Decrease) increase in cash and cash equivalents (4,235) 1,062
Cash and cash equivalents, at beginning of period 9,376 9,311
--------- ---------
Cash and cash equivalents, at end of period $ 5,141 $ 10,373
========= =========
</TABLE>
The accompanying notes are an integral
part of these financial statements
-5-
<PAGE> 6
TRINET CORPORATE REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited and dollars in thousands, except per share data)
----------
1. Consolidated Financial Statements:
Principles of Consolidation and Basis of Presentation:
The accompanying consolidated financial statements include the
accounts of TriNet Corporate Realty Trust, Inc. (the "Company") and its
wholly owned subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation.
In the opinion of the Company's management, all material adjustments
considered necessary for a fair presentation of results of operations for
the interim periods have been included. The results of consolidated
operations for the nine and three month periods ended September 30, 1996
are not necessarily indicative of the results that may be expected for
the year ending December 31, 1996.
Earnings Available Per Common Share:
The computation of earnings available per common share is based
on the weighted average number of common shares outstanding during the
period. For the purpose of these calculations, net income is reduced
by the preferred stock dividend requirement for the period.
2. Real Estate and Depreciation
On March 21, 1996 the Company's 1.2 million square foot
warehouse/distribution property located in New Orleans, Louisiana was
destroyed by fire. The building is fully insured by both the tenant and
the Company. In addition, the Company's triple net lease with the tenant
requires the tenant to rebuild the property and to continue paying rent
to the Company during the reconstruction period. As a result, the
Company stopped recording depreciation on the property as of March 21,
1996. On September 26, 1996, the Company and the tenant agreed to the
terms of a settlement that will compensate the Company for the
destruction of the property, waive the requirement that the tenant
rebuild, and result in the cancellation of the lease. The settlement is
subject to the resolution of certain issues. During the interim, the
Company will continue to receive rent payments from the tenant. The net
book value of the property is reflected as "Other real estate" on the
balance sheet as of September 30, 1996.
During the nine months ended September 30, 1996, the Company sold
two properties: one of the five Schwegmann Giant Super Markets
properties (the "Schwegmann Denham Springs Property") and the Linvatec
Corporation property (the "Linvatec Property"). The 32,000 square foot
Schwegmann Denham Springs Property, located in Denham Springs,
Louisiana, was sold in April 1996 for gross proceeds of $1,321,
resulting in a gain of $1. The 124,950 square foot Linvatec Property,
located in Largo, Florida, was sold in July 1996 for gross proceeds of
$10,891, resulting in a gain of $659. The proceeds from these sales were
primarily used to reduce the Company's indebtedness.
On September 30, 1996, the Company entered into an agreement for
the sale of its 34 retail properties leased to REX Stores Corporation.
The completion of this sale is subject to certain conditions. The net
book value of this real estate is reflected as "Real estate held for
sale" on the balance sheet as of September 30, 1996.
The following table sets forth the components of depreciation
expense for the periods indicated:
<TABLE>
<CAPTION>
For the nine months For the three months
ended September 30, ended September 30,
1996 1995 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
Real estate $9,714 $7,552 $3,383 $2,826
Corporate furniture and equipment 129 90 44 36
------ ------ ------ ------
$9,843 $7,642 $3,427 $2,862
====== ====== ====== ======
</TABLE>
-6-
<PAGE> 7
TRINET CORPORATE REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited and dollars in thousands, except per share data)
-------------
3. Investment in Joint Venture:
In June 1996, the Company contributed $6,100 in cash in exchange
for a 44.7% sole general partner interest in TriNet Sunnyvale Partners,
L.P. (the "Partnership"). The Partnership owns a four building research
and development campus in Sunnyvale, California, subject to a $17,000
non-recourse first mortgage. Interest on the mortgage is due monthly at
the London Interbank Offered Rate ("LIBOR") plus a margin of 2.00%, with
the principal balance due on April 1, 1998. The Company accounts for its
partnership investment under the equity method. The limited partners'
interest is convertible into 258,894 shares of the Company's common
stock in June 1998.
4. Debt:
Debt consists of the following:
<TABLE>
<CAPTION>
Balance Balance Rate as of Maturity
Loan September 30, 1996 December 31, 1995 September 30, 1996 Date
- -------------------------------------- ------------------ ----------------- ------------------ --------
<S> <C> <C> <C> <C>
7.30% $100,000 Notes due 2001 $ 100,000 $ -- 7.30% 5/15/2001
Unamortized discount on Notes due 2001 (221) -- -- --
1994 Mortgage Loan 75,000 110,000 LIBOR + 1.00% 12/01/2004
1995 Acquisition Facility 58,400 77,000 LIBOR + 1.20% * 10/03/1997 *
7.95% $50,000 Notes due 2006 50,000 -- 7.95% 5/15/2006
Unamortized discount on Notes due 2006 (72) -- --
NationsBank Mortgage Loan -- 29,250 -- --
CIGNA Mortgage Loan -- 28,500 -- --
--------- ---------
$ 283,107 $ 244,750
========= =========
</TABLE>
* On October 15, 1996, the borrowing agreement for the 1995
Acquisition Facility was amended such that the margin on LIBOR based
borrowings was reduced from 1.50% to 1.20% effective September 30, 1996,
and the maturity date was extended to October 3, 1999.
On May 22, 1996, the Company completed a public offering of
$100,000 of its 7.30% Notes due 2001 (the "2001 Notes") and $50,000 of
its 7.95% Notes due 2006 (the "2006 Notes" and, together with the 2001
Notes, the "Notes"). The 2001 Notes were sold at a price of 99.764% of
the face value, and the 2006 Notes were sold at a price of 99.853% of
the face value resulting in proceeds (net of the price discount and
issuance costs) of approximately $147,800. The Notes are senior
unsecured obligations of the Company and rank equally with the Company's
other unsecured and unsubordinated indebtedness. Subject to certain
conditions, the Notes are redeemable at any time at the option of the
Company. Interest on the Notes is paid semi-annually in arrears. The
discounts on the Notes are being amortized over the respective lives of
the Notes the effective interest method.
On July 1, 1996, the Company prepaid $35,000 of the 1994 Mortgage
Loan, which reduced the interest rate on the remaining balance of
$75,000 from LIBOR plus 1.25% to LIBOR plus 1.00%. Additionally, this
prepayment resulted in an extraordinary charge of $1,165 of which $1,158
was non-cash.
The 30-day LIBOR as of September 30, 1996 was 5.43%. During 1995,
the Company entered into interest rate protection agreements with a
financial institution which, together with certain existing interest
rate cap agreements, effectively fix the interest rates on varying
amounts of indebtedness, currently up to $160,000 of the Company's LIBOR
based borrowings, at 5.58% plus the applicable margin. The actual
borrowing cost to the Company with respect to indebtedness covered by
the protection agreements will depend upon the applicable margin over
LIBOR for such indebtedness, which will be determined by the terms of
the relevant debt instruments.
-7-
<PAGE> 8
TRINET CORPORATE REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited and dollars in thousands, except per share data)
-------------------
The following table represents the costs and accumulated
amortization associated with these loans and unsecured notes as of
September 30, 1996:
<TABLE>
<CAPTION>
Accumulated
Balance Amortization
------- ------------
<S> <C> <C>
Loan origination and debt issuance costs $ 9,211 $ 2,267
Interest rate protection agreement costs 9,845 1,802
------- -------
$19,056 $ 4,069
======= =======
</TABLE>
The following table sets forth the components of amortization
expense associated with these loans and unsecured notes for the periods
indicated:
<TABLE>
<CAPTION>
For the nine months For the three months
ended September 30, ended September 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Loan origination and debt
issuance costs $1,485 $1,592 $ 505 $ 529
Interest rate protection
agreement costs 739 1,286 246 429
------ ------ ------ ------
$2,224 $2,878 $ 751 $ 958
====== ====== ====== ======
</TABLE>
5. Stockholders' Equity:
On June 19, 1996, the Company completed a public offering of
2,000,000 shares of 9.375% Series A Cumulative Preferred Stock (the
"Series A Preferred Stock") which generated proceeds of $47,691 (net of
underwriters' discount and offering expenses). Dividends on the Series A
Preferred Stock are paid quarterly in arrears at the rate of 9.375% per
annum of the $25 per share liquidation preference (equivalent to a fixed
annual rate of $2.34375 per share) in March, June, September, and
December. The Series A Preferred Stock is not redeemable prior to June
15, 2001. The Series A Preferred Stock has no stated maturity and is not
subject to any sinking fund or mandatory redemption.
On August 13, 1996, the Company completed a public offering of
1,300,000 shares of 9.20% Series B Cumulative Preferred Stock (the
"Series B Preferred Stock") which generated proceeds of $31,075 (net of
underwriters' discount and offering expenses). Dividends on the Series B
Preferred Stock are paid quarterly in arrears at the rate of 9.20% per
annum of the $25 per share liquidation preference (equivalent to a fixed
annual rate of $2.30 per share) in March, June, September, and December.
The Series B Preferred Stock is not redeemable prior to August 15, 2001.
The Series B Preferred Stock has no stated maturity and is not subject
to any sinking fund or mandatory redemption.
-8-
<PAGE> 9
TRINET CORPORATE REALTY TRUST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited and dollars in thousands, except per share data)
-------------------
6. Subsequent Events:
On October 15, 1996, the Company amended certain terms of the
$200,000 1995 Acquisition Facility. The Company obtained a reduction of
30 basis points on its current LIBOR based borrowings cost from LIBOR +
1.50% to LIBOR +1.20%. The commitment fee on the average undrawn
commitment was reduced from 25 basis points to 20 basis points. In
addition, the expiration date of the facility was extended two years and
will mature in October 1999. All of the available commitment under the
facility may be borrowed for general corporate and working capital
needs, as well as for the acquisition of real estate. The revised terms
were effective September 30, 1996.
On October 30, 1996, the Company completed the purchase of a
563,210 square foot warehouse/distribution center located in
Spartanburg, South Carolina for $18,300 in cash. The property is net
leased to adidas America, Inc. pursuant to a lease which expires in
December 2003.
-9-
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
Consolidated Financial Statements and Notes thereto appearing elsewhere
in this report. The dollar amounts shown are in thousands, except per
share data.
RESULTS OF OPERATIONS - SEPTEMBER 30, 1996 TO SEPTEMBER 30, 1995
Rental revenues for the first nine months of 1996 increased by
$14,376 or 35% compared to the first nine months of 1995. The growth in
rental revenue is consistent with the Company's growth through the
acquisition of 18 properties since September 30, 1995. However, two of
these properties were purchased during September and therefore did not
contribute significantly to rental revenues for the quarter. Included in
total revenue for the nine months ended September 30, 1996 is $238 of
joint venture income from the Company's investment in TriNet Sunnyvale
Partners, L.P. As of September 30, 1996, the Company owned 109
properties, including the properties owned by TriNet Sunnyvale Partners,
L.P.
For the nine months ended September 30, 1996, property operating
costs increased by $1,070 compared to the same period in 1995. This
increase was primarily due to the acquisition of the Federal Express
property in Memphis, Tennessee, which is subject to a net lease whereby
the Company is responsible for up to $1,452 in annual operating costs.
General and administrative expenses increased by $880 compared to the
same period in 1995 due to the Company's increase in personnel and
related overhead as a result of the growth in the Company's portfolio
since September 30, 1995. However, as a percentage of total revenue,
general and administrative expenses decreased from 7.2% for the nine
months ended September 30, 1995 to 6.9% for the same period in 1996.
Interest expense increased $2,991 to $15,537 for the nine months
ended September 30, 1996, when compared to the same period in 1995. This
increase was due to an increased weighted average level of debt
outstanding, offset in part by a decreased weighted average interest
rate in 1996. The weighted average debt outstanding was $278,687 during
the nine months ended September 30, 1996 compared to $219,210 during the
same period of 1995. This increase was primarily due to borrowings to
finance the acquisition of the 18 new properties, offset by periodic
payments on the 1995 Acquisition Facility and the repayment of the
NationsBank and the CIGNA mortgage loans as a result of the Notes
offering, the Series A Preferred Stock and the Series B Preferred Stock
offerings and excess cash flow. The weighted average interest rate
during the nine months ended September 30, 1996 was 7.29% compared to
7.55% during the same period of 1995. This decrease is attributable to
the decrease in the 30-day LIBOR from 5.875% at September 30, 1995 to
5.434% at September 30, 1996, and the .25% decrease in the interest rate
on the 1995 Acquisition Facility on April 1, 1996 as a result of the
Company obtaining investment grade ratings. The effect of these factors
was offset in part by the higher average interest rates payable on the
Company's fixed rate term debt, the 2001 Notes and the 2006 Notes
compared to the variable rate debt replaced.
Depreciation expense for the nine months ended September 30, 1996
increased by $2,201 when compared to the same period in 1995 as a result
of the Company's larger asset base. Amortization expense decreased by
22% to $2,242 for the nine months ended September 30, 1996 compared to
$2,892 in the same period of 1995 as a result of the write off of
deferred loan costs in connection with various debt refinancings. During
the nine months ended September 30, 1996, the Company prepaid a portion
of the 1994 Mortgage Loan which resulted in an extraordinary charge of
approximately $1,165. This charge represents the deferred financing and
other costs written off in connection with the early satisfaction of
this mortgage loan.
During the nine months ended September 30, 1996, the Company sold
two properties: one of the five Schwegmann Giant Super Markets, Inc.
properties (the "Schwegmann Denham Springs Property") and the Linvatec
Corporation property (the "Linvatec Property"). The 32,000 square foot
Schwegmann Denham Springs Property, located in Denham Springs,
Louisiana, was sold in April 1996 for gross proceeds of $1,321,
resulting in a gain of $1. The 124,950 square foot Linvatec Property,
located in Largo, Florida, was sold in July 1996 for gross proceeds of
$10,952, resulting in a gain of $659. The proceeds from these sales were
primarily used to reduce the Company's indebtedness.
-10-
<PAGE> 11
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities increased $5,040 to
$37,918 for the first nine months of 1996 compared to the same period in
1995. The increase was primarily due to rent from the 18 additional
properties offset by the increased expenses due to the increased
portfolio size. Net cash used for investing activities was $139,813 for
the first nine months of 1996 compared to $128,050 for the same period
of 1995. Net cash used for investing activities in 1996 includes the
offsetting effect of $12,212 in gross proceeds from the sale of the
Schwegmann Denham Springs Property and the Linvatec Property. The
properties acquired during 1996 are as follows: the Lever Brothers
property in Missouri; the Federal Express property in Tennessee; the
MJDesigns property and the Northern Telecom property in Texas; the
Lockheed Martin property in Pennsylvania; the Lam Research property and
the Fresenius and Teradyne properties in California; the Olympus
property in New York; and the investment in TriNet Sunnyvale Partners,
L.P., which owns the Sunnyvale Research Center in California.
Following is an analysis of the Company's capital expenditures for
the nine months ended September 30,
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Real estate acquisitions $151,493 $127,197
Building improvements 334 637
Corporate FF&E 198 216
-------- --------
$152,025 $128,050
======== ========
</TABLE>
The Company did not incur any leasing costs or tenant improvement
expenditures during the nine months ended September 30, 1996, and it
does not anticipate incurring any such costs until at least 1997, the
first scheduled lease expiration date in the current portfolio. The
Company anticipates approximately $350 in capital expenditures for the
remainder of 1996 and approximately $1,400 in 1997.
Net cash provided by financing activities for the nine months
ended September 30, 1996 was $97,660 resulting primarily from the
issuance of the Notes and the Series A Preferred Stock and Series B
Preferred Stock offerings described below, offset by payments of
mortgage indebtedness and payments on the 1995 Acquisition Facility.
In April 1996, the Company received unsecured debt ratings of
Baa2, BBB, BBB, and BBB- and preferred stock ratings of Baa3, BBB-, BBB-
and BB+ from Moody's Investors Service, Fitch Investors Service, Duff &
Phelps and Standard & Poors Corporation, respectively.
On May 22, 1996, the Company completed a public offering of
$100,000 of its 2001 Notes and $50,000 of its 2006 Notes. The Notes are
senior unsecured obligations of the Company. The 2001 Notes were sold at
a price of 99.764% of the face value, and the 2006 Notes were sold at a
price of 99.853% of the face value. The proceeds (net of the price
discount and issuance costs) of approximately $147,800 were used to
repay the remaining $28,300 balance of a $29,250 mortgage loan from
NationsBank of Texas, N.A. and to reduce indebtedness under the 1995
Acquisition Facility.
On June 3, 1996, the Company repaid the $28,500 mortgage loan with
CIGNA with funds borrowed under the 1995 Acquisition Facility.
On June 19, 1996, the Company completed a public offering of
2,000,000 shares of 9.375% Series A Preferred Stock which generated
proceeds of $47,691 (net of underwriters' discount and offering
expenses). Dividends on the Series A Preferred Stock are paid quarterly
in arrears at the rate of 9.375% per annum of the $25 per share
liquidation preference (equivalent to a fixed annual rate of $2.34375
per share) in March, June, September, and December. The Series A
Preferred Stock is not redeemable prior to June 15, 2001. The Series A
Preferred Stock has no stated maturity and is not subject to any sinking
fund or mandatory redemption.
On July 1, 1996, the Company prepaid $35,000 of the 1994 Mortgage
Loan, which reduced the interest rate on the remaining balance of
$75,000 from LIBOR plus 1.25% to LIBOR plus 1.00%. Additionally, this
prepayment resulted in an extraordinary charge of $1,165 of which $1,158
was non-cash.
-11-
<PAGE> 12
On August 13, 1996, the Company completed a public offering of
1,300,000 shares of 9.20% Series B Preferred Stock which generated
proceeds of $31,075 (net of underwriters' discount and offering
expenses). Dividends on the Series B Preferred Stock are paid quarterly
in arrears at the rate of 9.20% per annum of the $25 per share
liquidation preference (equivalent to a fixed annual rate of $2.30 per
share) in March, June, September, and December. The Series B Preferred
Stock is not redeemable prior to August 15, 2001. The Series B Preferred
Stock has no stated maturity and is not subject to any sinking fund or
mandatory redemption.
On October 15, 1996, the Company amended certain terms of the
$200,000 1995 Acquisition Facility. The Company obtained a reduction of
30 basis points on its current LIBOR based borrowings cost from LIBOR +
1.50% to LIBOR +1.20%. The commitment fee on the average undrawn
commitment was reduced from 25 basis points to 20 basis points. In
addition, the expiration date of the facility was extended two years
and will mature in October 1999. All of the available commitment under
the facility may be borrowed for general corporate and working capital
needs, as well as for the acquisition of real estate. The revised terms
were effective September 30, 1996.
The Company expects to meet certain long-term liquidity
requirements, such as property acquisitions and scheduled debt
maturities, by long-term secured and unsecured borrowings and the
issuance of debt securities or preferred and common stock of the
Company. As of September 30, 1996, the Company had on file with the
Securities and Exchange Commission two Form S-3 Registration Statements
with combined remaining availability of $138,750. The exact amount of
debt, preferred stock and common stock issued will depend on market
conditions, acquisitions, asset sales and the Company's senior unsecured
debt and preferred stock ratings at the time of issuance.
The debt outstanding as of September 30, 1996 consisted of
mortgage notes and notes payable totaling $283,107. There are no
scheduled principal amortization payments in 1996.
The Company has learned that one of its tenants, New Orleans
based Schwegmann Giant Super Markets ("Schwegmann") is experiencing
financial difficulties due to an increasingly competitive grocery
retailing environment. The Company owns four retail properties leased to
Schwegmann, which represent approximately 5% of current total annualized
rental revenues. Schwegmann recently curtailed operations at two of the
properties as a cost savings measure, and is working with the Company to
explore possible sale or subleasing options for these properties to
alternative retail users. While Schwegmann continues to meet its rental
obligations to the Company, there can be no assurance of timely payments
in the future.
Consistent with its stated strategy of reducing its ownership in
retail properties, the Company recently entered into a contract to sell
its 34 retail properties leased to REX Stores Corporation. Subject to
satisfaction of certain conditions, this sale is expected to be
completed before December 31, 1996 and is expected to result in a gain.
FUNDS FROM OPERATIONS
The Company believes that to facilitate a clear understanding of
the operating results of the Company, Funds From Operations ("FFO")
should be examined in conjunction with net income. The definition of FFO
was clarified in the National Association of Real Estate Investment
Trusts, Inc. ("NAREIT") White Paper, adopted by the NAREIT Board of
Governors on March 3, 1995, as net income (computed in accordance with
generally accepted accounting principles) excluding gains (or losses)
from debt restructuring and sales of property, plus depreciation and
amortization (in each case only on real estate related assets), less
preferred stock dividends, and after adjustments for unconsolidated
partnerships and joint ventures. Adjustments for unconsolidated
partnerships and joint ventures will be calculated to reflect FFO on the
same basis. FFO should not be considered as a substitute for net income
as an indication of the Company's performance or as a substitute for
cash flow as a measure of its liquidity. For the quarter ended September
30, 1996, FFO totaled $10,440 versus $8,116 for the quarter ended
September 30, 1995. For the nine months ended September 30, 1996, FFO
totaled $30,460 versus $21,746 for the nine months ended September 30,
1995. Common dividends declared for the nine months ended September 30,
1996 totaled $25,778. In the same period in 1995, common dividends
declared totaled $19,840.
<TABLE>
<CAPTION>
For the nine months For the three months
ended September 30, ended September 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Income before gain and
extraordinary charge $ 22,335 $ 14,194 $ 8,497 $ 5,290
Real estate depreciation 9,714 7,552 3,383 2,826
Joint venture income (238) -- (223) --
Joint venture FFO 375 -- 353 --
Preferred dividend requirement (1,726) -- (1,570) --
-------- -------- -------- --------
Total Funds From Operations $ 30,460 $ 21,746 $ 10,440 $ 8,116
======== ======== ======== ========
</TABLE>
-12-
<PAGE> 13
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
Exhibits
1.1 Definitive Underwriting Agreement, dated August 8, 1996,
relating to the sale of 1,300,000 shares of 9.20% Series B
Cumulative Preferred Stock, par value $.01 per share.
(Incorporated by reference to Exhibit 1.1 to the Current
Report on Form 8-K, dated August 8, 1996, filed with the
Securities and Exchange Commission on August 16, 1996.)
3.1 Definitive Articles Supplementary Establishing and Fixing the
Rights and Preferences of a Series of Shares of Preferred
Stock (Series B Preferred Stock). (Incorporated by reference
to Exhibit 1 of Form 8-A/A of TriNet Corporate Realty Trust,
Inc., dated August 9, 1996, filed with the Securities and
Exchange Commission on August 12, 1996.)
10.1 Amended and Restated Agreement of Limited Partnership between
TriNet Corporate Realty Trust, Inc. and the O'Donnell
Revocable Trust, the Donald S. Grant Revocable Trust and John
W. Hopkins, dated June 26, 1996. (Incorporated by reference to
Exhibit 10.1 of Form 8-K of TriNet Corporate Realty Trust,
Inc., and dated July 3, 1996, filed with the Securities and
Exchange Commission on July 17, 1996 and as amended by Form
8-K/A of TriNet Corporate Realty Trust, Inc., dated July 3,
1996, filed with the Securities and Exchange Commission on
August 7, 1996.)
10.2 Amended and Restated Revolving Credit Agreement among TriNet
Corporate Realty Trust, Inc., as borrower, Morgan Guaranty
Trust Company of New York, as lead agent, and First National
Bank of Boston, as managing co-agent, dated October 9, 1996.
27. Financial Data Schedule
Reports on Form 8-K
1. On August 7, 1996, the Company filed a report on Form 8-K/A
with the Securities and Exchange Commission to report the
audited historical financial statements and pro forma
financial statements relating to the acquisition of nine
additional properties and the sale of two properties reported
in the Form 8-K filed with the Securities and Exchange
Commission on July 17, 1996.
2. On August 16, 1996, the Company filed a report on Form 8-K
with the Securities and Exchange Commission to provide certain
documents relating to the Series B Preferred Stock Offering.
-13-
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRINET CORPORATE REALTY TRUST, INC.
(Registrant)
BY: /s/ A. William Stein
-----------------------------------------
A. William Stein
Executive Vice President and
Chief Financial Officer
(Authorized Officer of the Registrant and
Principal Financial Officer)
DATE: November 12, 1996
-14-
<PAGE> 1
Exhibit 10.2
=========================================================
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
dated as of October 9, 1996
among
TriNet Corporate Realty Trust, Inc.,
The Banks Listed Herein
and
Morgan Guaranty Trust Company of New York,
as Lead Agent
and
The First National Bank of Boston,
as Managing Co-Agent
and
Dresdner Bank AG, Los Angeles Agency
and Grand Cayman Branch,
as Co-Agent
and
Bank of Montreal, Chicago Branch
as Co-Agent
=========================================================
<PAGE> 2
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
THIS AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT (this
"Agreement") dated as of October 9, 1996 among TRINET CORPORATE REALTY TRUST,
INC. (the "Borrower"), the BANKS listed on the signature pages hereof, MORGAN
GUARANTY TRUST COMPANY OF NEW YORK, as Lead Agent, THE FIRST NATIONAL BANK OF
BOSTON, as Managing Co-Agent, DRESDNER BANK AG, LOS ANGELES AGENCY AND GRAND
CAYMAN BRANCH, as Co-Agent, and BANK OF MONTREAL, CHICAGO BRANCH, as Co-Agent.
W I T N E S S E T H
WHEREAS, the Borrower, the Lead Agent, the Managing Co-Agent,
the Co-Agents and the Banks that were parties thereto entered into the Revolving
Credit Agreement, dated as of October 3, 1995, (the "Original Credit
Agreement"); and
WHEREAS, the parties hereto desire to amend and restate the
Original Credit Agreement in its entirety as set forth in this Agreement.
NOW, THEREFORE, with reference to the foregoing recitals, in
reliance thereon and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree that,
effective as of the Effective Date, the Original Credit Agreement is hereby
amended and restated in its entirety to read as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. The following terms, as used herein,
have the following meanings:
"Adjusted CD Rate" has the meaning set forth in Section
2.6(b).
<PAGE> 3
"Adjusted London Interbank Offered Rate" has the meaning set
forth in Section 2.6(c).
"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 and the Managing
Co-Agent) duly completed by such Bank.
"Agreement" shall mean this Amended and Restated Revolving
Credit Agreement as the same may from time to time hereafter be modified,
supplemented or amended.
"Annual EBITDA" means, with respect to all Real Property
Assets and Minority Holdings of the Borrower and its Consolidated Subsidiaries,
measured as of the last day of each calendar quarter, an amount derived from (i)
for the previous four consecutive quarters including the quarter then ended,
total revenues relating to such Real Property Assets or to the Borrower's
interest in Minority Holdings for such period, on a cash basis, plus (ii)
interest and other income of the Borrower and its Consolidated Subsidiaries for
such period, less (iii) total operating expenses and other expenses relating to
such Real Property Assets and to the Borrower's interest in Minority Holdings
for such period (other than interest, taxes, depreciation, amortization, and
other non-cash items), less (iv) total corporate operating expenses (including
general overhead expenses) and other expenses of the Borrower, the Consolidated
Subsidiaries and the Borrower's interest in Minority Holdings (other than
interest, taxes, depreciation, amortization and other non-cash items), for such
period. In the case of any Real Property Assets or Minority Holdings which the
Borrower or the applicable Consolidated Subsidiary shall have owned for less
than four consecutive quarters, the same shall be included in the calculation of
Annual EBITDA on a pro forma basis (i.e., the results for the period during
which the Borrower or the Consolidated Subsidiary has owned the applicable Real
Property Asset or Minority Holding shall be annualized, with appropriate
adjustments for items of income and expense which are not earned or incurred in
equal monthly amounts).
"Applicable Interest Rate" means (i) with respect to any Fixed
Rate Indebtedness, the fixed inter-
2
<PAGE> 4
est rate applicable to such Fixed Rate Indebtedness at the time in question, and
(ii) with respect to any Floating Rate Indebtedness, the lesser of (x) the rate
at which the interest rate applicable to such Floating Rate Indebtedness could
be fixed for the remaining term of such Floating Rate Indebtedness, at the time
of calculation, by Borrower's entering into any unsecured interest rate hedging
device either not requiring an upfront payment or if requiring an upfront
payment, such upfront payment shall be amortized over the term of such device
and included in the calculation of the interest rate (or, if such rate is
incapable of being fixed by entering into an unsecured interest rate hedging
device at the time of calculation, a fixed rate equivalent reasonably determined
by Lead Agent), and (y) the rate at which the interest rate applicable to such
Floating Rate Indebtedness is actually capped (or fixed pursuant to an interest
rate hedging device), at the time of calculation, if Borrower has entered into
an interest rate cap agreement or other interest rate hedging device with
respect thereto.
"Applicable Lending Office" means, with respect to any Bank,
(i) in the case of its Domestic 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, at any time, based on the range
into which Borrower's Credit Rating then falls, in accordance with the table set
forth below. Any change in Borrower's Credit Rating causing it to move to a
different range on the table shall effect an immediate change in the Applicable
Margin. In the event that Borrower receives two (2) Credit Ratings that are not
equivalent, the Applicable Margin shall be determined by the lower of such two
(2) Credit Ratings. In the event that Borrower receives more than two (2) Credit
Ratings, and such ratings are not equivalent, the Applicable Margin shall be
determined by the lower of the two (2) 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. In the event
that only one of the Rating Agencies shall have set Borrower's Credit Rating,
then the Applicable Margin shall be based on such rating only.
3
<PAGE> 5
<TABLE>
<CAPTION>
Range of Applicable
Borrower's Margin for Applicable Applicable
Credit Rating Base Rate Margin for Margin for Euro-
(S&P/Moody's Loans CD Loans Dollar Loans
Ratings) (% per annum) (% per annum) (% per annum)
- ------------ ------------- ------------- -------------
<S> <C> <C> <C>
Non-Investment
Grade .50 1.875 1.75
BBB-/Baa3 .15 1.50 1.375
BBB/Baa2 0.0 1.325 1.20
BBB+/Baa1 0.0 1.250 1.125
</TABLE>
"Approved Bank" shall mean banks which have (i)(a) a minimum
net worth of $500,000,000 and/or (b) total assets of $10,000,000,000, and (ii) a
minimum long term debt rating of (a) BBB+ or higher by S&P, and (b) Baa1 or
higher by Moody's.
"Assessment Rate" has the meaning set forth in Section 2.6(b).
"Assignee" has the meaning set forth in Section 9.6(c).
"Available Commitment" means, with respect to each Bank, at
any time, the amount obtained by multiplying such Bank's Commitment at such time
by a fraction, the numerator of which is the Total Available Commitments at such
time and the denominator of which is $200,000,000.
"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.
"Bank of Boston" means The First National Bank of
Boston.
"Bankruptcy Code" shall mean Title 11 of the United States
Code, entitled "Bankruptcy", as amended from time to time, and any successor
statute or statutes.
4
<PAGE> 6
"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 0.5% 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 applicable 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
Multiemployer Plan and which is maintained or otherwise contributed to by any
member of the ERISA Group.
"Borrower" means TriNet Corporate Realty Trust, Inc., a
Maryland corporation.
"Borrower's 1995 Form 10-K" means the Borrower's annual report
on Form 10-K for 1995, as filed with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934.
"Borrower Net Operating Cash Flow" means, as of any date of
determination, with respect to all Real Property Assets and Minority Holdings of
the Borrower and its Consolidated Subsidiaries, Property Income as of such date,
but less (x) Property Expenses with respect to all such Real Property Assets and
Minority Holdings for the preceding four quarters (which, with respect to Real
Property Assets or the Borrower's interest in Minority Holdings owned for less
than such four quarter period, shall be calculated on an estimated, pro forma
(i.e., the results for the period during which such Real Property Assets or the
Borrower's interest in such Minority Holdings have been owned shall be
annualized, with appropriate adjustments for items of income and expense which
are not earned or incurred in equal monthly amounts) basis), and (y) the greater
of an amount equal to the straight-line depreciation taken or to be taken by the
Borrower and its Consolidated Subsidiaries based on applicable useful lives
determined in accordance with federal income tax laws and regulations with
respect to Capital Expenditures incurred from and after the date hereof which
are not related to new construction with respect to the preceding four quarters,
and appropriate reserves for replacements of not less than 10 cents per square
foot per annum
5
<PAGE> 7
for each Real Property Asset which is subject to a Non-Triple Net Lease.
"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 Domestic Loans or a
"Euro-Dollar Borrowing" if such Loans are Euro-Dollar Loans. A Domestic
Borrowing is a "CD Borrowing" if such Domestic Loans are CD Loans or a "Base
Rate Borrowing" if such Domestic Loans are Base Rate Loans.
"Capital Expenditures" shall mean, for any period, the sum of
all expenditures (whether paid in cash or accrued as a liability) by the
Borrower which are capitalized on the balance sheet of the Borrower in
conformity with GAAP.
"Capitalized Interest" shall mean interest which is not
expensed under GAAP.
"Cap Rate" means the Treasury Rate plus 2.8%.
"Cash and Cash Equivalents" shall mean (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 Approved Banks 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, and 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, a AA
rating by S&P or better rated credit, floating rate notes, other money market
instruments and letters of credit each issued by Approved Banks (provided that
the same shall cease to be a "Cash or Cash Equivalent" if at any time any such
bank shall cease to be an Approved Bank), (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 guaranteed by an Aa rating by Moody's, a AA rating by S&P or
better rated credit, (vi) obligations issued by states and local governments or
their
6
<PAGE> 8
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 an Approved Bank (provided that the same
shall cease to be a "Cash or Cash Equivalent" if at any time any such bank shall
cease to be an Approved Bank), (vii) repurchase agreements with major banks and
primary government security dealers fully secured by the 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 AA rating given by S&P or Aa2 rating given by Moody's or better
rated credit. Cash and Cash Equivalents shall exclude items otherwise includable
in the definition and delivered to the Existing Facility Bank in connection with
the defeasance of the Existing Facility or otherwise as security for any thereof
other than the "Reserve Account" as defined in the Loan Agreement, dated as of
December 6, 1994, between Nomura Asset Capital Corporation and TriNet Essential
Facilities XII.
"CD Base Rate" has the meaning set forth in Section 2.6(b).
"CD Loan" means a Loan to be made by a Bank as a CD Loan
pursuant to the applicable Notice of Borrowing.
"CD Reference Bank" means Morgan Guaranty Trust Company of New
York.
"Charges" has the meaning set forth in Section 9.17.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and as it may be further amended from time to time, any successor
statutes thereto, and applicable U.S. Department of Treasury regulations issued
pursuant thereto in temporary or final form.
"Combined Asset Value" shall mean the book value of the assets
of the Borrower (including Minority Holdings) and its Consolidated Subsidiaries,
calculated on a consolidated basis, in accordance with GAAP, but without
deduction for depreciation and net of monetary obligations which are not for
borrowed money (such as accounts payable and working capital liabilities).
7
<PAGE> 9
"Commitment" means, with respect to each Bank, the amount set
forth opposite the name of such Bank on the signature pages hereof (and, for
each Bank which is an Assignee, the amount set forth in the Assignment and
Assumption Agreement entered into pursuant to Section 9.6(c) as the Assignee's
Commitment), as such amount may be reduced from time to time pursuant to Section
2.10(c) or in connection with an assignment to an Assignee.
"Consolidated Subsidiary" means at any date any Subsidiary or
other entity which is consolidated with Borrower in accordance with GAAP.
"Consolidated Tangible Net Worth" means at any date the
consolidated stockholders' equity of the Borrower and its Consolidated
Subsidiaries (determined on a book basis), less their 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 (other than write-ups resulting from foreign currency
translations and write-ups of assets of a going concern business made within
twelve months after the acquisition of such business) subsequent to June 30,
1996 in the book value of any asset (other than Real Property Assets) 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. The amount of any
Contingent Obligation described in clause (ii) shall be deemed to be (a) with
respect to a
8
<PAGE> 10
guaranty of interest or interest and principal, or operating income guaranty,
the Net Present Value of 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
Borrower required to be delivered pursuant to Section 4.4 hereof.
Notwithstanding the foregoing, Contingent Obligations described in clause (ii)
shall be included only to the extent that any thereof exceed the amount (as
calculated above) of $1,000,000 individually, or $5,000,000 in the aggregate.
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
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
Borrower owns an interest (which guarantees are non-recourse to Borrower), to
the extent the guarantees, in the aggregate, exceed 15% of Combined Asset Value,
the amount in excess of 15% shall be deemed to be a Contingent Obligation of
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 constitut-
9
<PAGE> 11
ing Debt of such Person. Notwithstanding anything contained herein to the
contrary, "Contingent Obligations" shall be deemed not to include guarantees of
Unused Commitments or of construction loans to the extent the same have not been
drawn. All matters constituting "Contingent Obligations" shall be calculated
without duplication.
"Credit Rating" means the rating assigned by the Rating
Agencies to Borrower's senior unsecured long term indebtedness.
"Current Closing Date" means the date on or after the
Effective Date on which the conditions set forth in Section 3.1 shall have been
satisfied to the satisfaction of the Lead Agent.
"Debt" of any Person means, without duplication, (A) as shown
on such Person's 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 (but
only to the extent disbursed with respect to construction loans), (B) the face
amount of all letters of credit issued for the account of such Person and,
without duplication, all unreimbursed amounts drawn thereunder (except to the
extent any such letter of credit is intended as a guaranty of the Debt of a
Consolidated Subsidiary), (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 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 and to the extent that such Debt is nonrecourse, both
directly and indirectly, to the Borrower. Debt shall not include any undrawn but
uncancelled amounts under this facility.
10
<PAGE> 12
"Default" means any condition or event which with the giving
of notice or lapse of time or both would, unless cured or waived, become an
Event of Default.
"Default Rate" has the meaning set forth in Section 2.6(d).
"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 at its address in the United States set forth in its Administrative
Questionnaire (or identified in its Administrative Questionnaire as its Domestic
Lending Office) or such other office as such Bank may hereafter designate as its
Domestic Lending Office by notice to the Borrower and the Lead Agent; provided
that any Bank may so designate separate Domestic Lending Offices for its Base
Rate Loans, on the one hand, and its CD Loans, on the other hand, in which case
all references herein to the Domestic Lending Office of such Bank shall be
deemed to refer to either or both of such offices, as the context may require.
"Domestic Loans" means CD Loans or Base Rate Loans or both.
"Domestic Reserve Percentage" has the meaning set forth in
Section 2.6(b).
"Duff & Phelps" means Duff & Phelps Credit Rating Co. or any
successor thereto.
"Effective Date" means September 30, 1996.
"Environmental Affiliate" means any partnership, joint
venture, trust or corporation in which an equity interest is owned by the
Borrower, either directly or indirectly.
"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
11
<PAGE> 13
liability of such Person 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 Materials 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 (with respect to both (i) and (ii) above) as to which there is a
reasonable possibility of an adverse determination with respect thereto and
which, if adversely determined, would have a Material Adverse Effect on the
Borrower.
"Environmental Laws" means any and all federal, state, and
local statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
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, Materials of Environmental
Concern or wastes into the environment including, without limitation, ambient
air, surface water, ground water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, Materials of Environmental
Concern or wastes or the clean-up or other remediation thereof.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, or any successor statute.
"ERISA Group" means 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 Code.
"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
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<PAGE> 14
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.
"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.
"Euro-Dollar Reference Bank" means the principal London
offices of Morgan Guaranty Trust Company of New York.
"Euro-Dollar Reserve Percentage" has the meaning set forth in
Section 2.6(c).
"Event of Default" has the meaning set forth in Section 6.1.
"Existing Facility" means the $110 million loan facility
pursuant to the Mortgage Loan Agreement, dated as of December 6, 1994, among
TriNet Essential Facilities XII and Nomura Asset Capital Corporation.
"Existing Facility Bank" means LaSalle National Bank, as
trustee.
"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.
"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,
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<PAGE> 15
after adjustments for Minority Holdings. Adjustments for Minority Holdings will
be calculated to reflect FFO on the same basis.
"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.
"Fixed Rate Indebtedness" means all Debt which accrues
interest at a fixed rate.
"Floating Rate Indebtedness" means all Debt which is not Fixed
Rate Indebtedness and which is not a Contingent Obligation or an Unused
Commitment.
"FMV Cap Rate" means 9.5%.
"Fronting Bank" means any Bank which is a party hereto, 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, subject,
however, to the limitations set forth in Section 2.5., which Bank shall have
agreed so to act pursuant to a separate agreement to be entered into between the
Borrower and such Bank.
"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
the Financial Accounting Standards 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, (ii) all
Loans which are Euro-Dollar Loans having the same Interest Period at such time
or (iii) all Loans which are CD 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 8.5, 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.
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<PAGE> 16
"Indemnitee" has the meaning set forth in Section 9.3(b).
"Initial Closing Date" means October 3, 1995.
"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 on the date specified in the applicable Notice of
Interest Rate Election and ending 30, 60, 90, or 180 days thereafter, as the
Borrower may elect in the applicable Notice of Borrowing or 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; and
(c) if any Interest Period includes a date on which a payment
of principal of the Loans is required to be made under Section 2.9 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 (it being understood that the
foregoing shall not be deemed to relieve the Borrower of any obligation
to pay any amounts otherwise required pursuant to Section 2.12 in
connection with such prepayment) and (ii) the remainder (if any) of
each such Euro-Dollar Loan shall have an Interest Period determined as
set forth above.
(2) with respect to each CD Borrowing, the period commencing on the date of such
Borrowing specified in the Notice of Borrowing or on the date specified in the
applicable Notice of Interest Rate Election and ending one, two or three months
(or six months, if available, as such availability may be determined by the Lead
Agent in its sole discretion)
15
<PAGE> 17
thereafter, as the Borrower may elect in the applicable Notice of Borrowing or
Notice of Interest Rate Election; provided that:
(a) any Interest Period (other than an Interest Period
determined pursuant to clause (b)(i) below) 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 2.9 but
does not end on such date, then (i) the principal amount (if any) of
each CD Loan required to be repaid on such date shall have an Interest
Period ending on such date (it being understood that the foregoing
shall not be deemed to relieve the Borrower of any obligation to pay
any amounts otherwise required pursuant to Section 2.12 in connection
with such prepayment) and (ii) the remainder (if any) of each such CD
Loan shall have an Interest Period determined as set forth above.
(3) with respect to each Base Rate Borrowing, the period commencing on the date
of such Borrowing specified in the Notice of Borrowing or on the date specified
(or deemed specified) in the applicable Notice of Interest Rate Election and
ending 30 days thereafter; provided that:
(a) any Interest Period (other than an Interest Period
determined pursuant to clause (b)(i) below) 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 2.9 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.
"Interest Rate Hedges" has the meaning set forth in Section
5.14.
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<PAGE> 18
"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 Lead Agent (as to any such other evidence, the
Lead Agent shall present the same to, and discuss the same with, the Banks).
"Lead Agent" shall mean Morgan Guaranty Trust Company of New
York in its capacity as Lead Agent hereunder, and its permitted successors in
such capacity in accordance with the terms of this Agreement.
"Legal Rate" has the meaning set forth in Section 9.17.
"Letter(s) of Credit" has the meaning set forth in Section
2.2.
"Letter of Credit Collateral" has the meaning set forth in
Section 6.4.
"Letter of Credit Collateral Account" has the meaning set
forth in Section 6.4.
"Letter of Credit Documents" has the meaning set forth in
Section 2.16.
"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
in such Letters of Credit, and (ii) the aggregate amount which has been drawn
under Letters Credit but for which the applicable Fronting Bank and/or Banks
have not been reimbursed at such time.
"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 effect of creating a security interest,
in respect of such asset. For purposes of this definition, materialman's,
mechanic's, labor liens and tax liens shall
17
<PAGE> 19
not be included in the definition of Lien. For the purposes of this Agreement,
the Borrower or any Consolidated 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 Domestic Loan or a Euro-Dollar Loan and "Loans"
means Domestic Loans or Euro-Dollar Loans or any combination of the foregoing.
"Loan Documents" means this Agreement and the Notes.
"London Interbank Offered Rate" has the meaning set forth in
Section 2.6(c).
"LTV Ratio" means the ratio, expressed as a percentage and
calculated on a quarterly basis by the Borrower, of the aggregate amount of
Unsecured Debt outstanding as of the date of determination, to the Unleveraged
Assets Value as of the date of determination.
"Managing Co-Agent" shall mean The First National Bank of
Boston, in its capacity as co-agent for the Banks hereunder, and its permitted
successors in such capacity in accordance with the terms of this Agreement.
"Margin Stock" shall have the meaning provided such term in
Regulation U and Regulation G of the Federal Reserve Board.
"Material Adverse Effect" means an effect resulting from any
circumstance or event or series of circumstances or events, of whatever nature
(but excluding general economic conditions), which does or could reasonably be
expected to, materially and adversely (i) effect the business, operations,
properties, assets or financial condition of the Borrower and its Consolidated
Subsidiaries taken as a whole, (ii) impair the ability of the Borrower and its
Consolidated Subsidiaries, taken as a whole, to fulfill its material
obligations, including their ability to perform their respective obligations
under the Loan Documents, or (iii) cause a Default under Sections 5.8, 5.9, 5.13
or 5.14 (subject, however, to the right to cure as set forth in Section 2.9).
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<PAGE> 20
"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, wastes, toxic and hazardous substances, petroleum and
petroleum by-products.
"Maturity Date" shall mean the date when all of the
Obligations hereunder shall be due and payable which shall be October 8, 1999,
unless accelerated pursuant to the terms hereof.
"Maximum Total Debt Ratio" shall mean the ratio as of the date
of determination of (i) the aggregate Debt of the Borrower and its Consolidated
Subsidiaries at the time of determination to (ii) the Tangible FMV Net Worth of
the Borrower and its Consolidated Subsidiaries.
"Minority Holdings" means partnerships, limited liability
companies and corporations held or owned by the Borrower which are not
consolidated with Borrower on Borrower's financial statements.
"Moody's" means Moody's Investors Services, 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.
"Net Present Value" shall mean, as to a specified or
ascertainable dollar amount, the present value, as of the date of calculation of
any such amount using a discount rate equal to the Base Rate in effect as of the
date of such calculation.
"New Acquisitions" shall have the meaning set forth in Section
5.19.
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<PAGE> 21
"Non-Recourse Debt" shall mean Debt of the Borrower or any
Consolidated Subsidiary 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).
"Non-Triple Net Lease" means any lease which does not at a
minimum provide that the tenant is responsible for the payment and performance
of all maintenance and repairs relating to the real property asset.
"Notes" means promissory notes of the Borrower, substantially
in the form of Exhibit A hereto, evidencing the obligation of the Borrower to
repay the Loans, and "Note" means any one of such promissory notes issued
hereunder.
"Notice of Borrowing" means a Notice of Borrowing (as defined
in Section 2.3).
"Notice of Interest Rate Election" has the meaning set forth
in Section 2.5.
"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.
"Operating Lease" means, with respect to any Person, any lease
of an asset which is not a lease required to be capitalized under GAAP, other
than any such lease under which such Person is the lessor.
"Operating Rent" means, as of the last day of any fiscal
period, the aggregate rent payable with respect to that fiscal period to a
lessor under an Operating Lease.
"Original Credit Agreement" has the meaning set forth in the
recitals.
"Parent" means, with respect to any Bank, any Person
controlling such Bank.
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<PAGE> 22
"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.
"Period Fraction" means with respect to any period of time, a
fraction, the numerator of which is the actual number of days in such period,
and the denominator of which is three hundred and sixty (360).
"Permitted LTV Ratio" means a LTV Ratio which is 54% or lower.
"Person" means an individual, a corporation, 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 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.
"Pro-Forma Debt Service" means the amount determined by
applying a 25 year mortgage style amortization schedule to the aggregate amount
of Unsecured Debt outstanding as of the last day of each calendar quarter, using
an interest rate equal to the greater of (i) (A) in the case of all Unsecured
Debt other than the Loans, the Treasury Rate plus 1.32%, and (B) in the case of
the Loans, the Treasury Rate plus 1.75% and (ii) the actual rate of interest in
effect with respect to all Unsecured Debt outstanding as of the last day of such
quarter, all determined on an annualized basis.
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<PAGE> 23
"Property Expenses" means, when used with respect to any Real
Property Asset, the costs of maintaining such Real Property Asset which are the
responsibility of the owner thereof and that are not reimbursed by the tenant
thereof, including, without limitation, 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.
"Property Income" means, when used with respect to any Real
Property Asset, annual contractual rents (other than prepaid rents and revenues
and security deposits except to the extent applied in satisfaction of tenants'
obligations for rent), in effect as of the last day of a quarter in accordance
with the applicable leases, but provided that if any tenant is more than 60 days
in arrears in the payment of base or fixed rent as of the last day of a quarter,
the annual contractual rents payable pursuant to such tenant's lease shall not
constitute "Property Income".
"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 the Borrower's
interest therein is characterized as equity according to GAAP) owned directly or
indirectly by the Borrower and the Consolidated Subsidiaries at such time.
"Reference Bank" means the CD Reference Bank or the Euro-
Dollar Reference Bank, as the context shall require.
"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 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.
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<PAGE> 24
"S&P" means Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc., or any successor thereto.
"Subsidiary" means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned by the Borrower.
"Solvent" means, with respect to any Person, that the fair
saleable value of such Person's assets exceeds the Debts of such Person.
"Tangible FMV Net Worth" means (a) the sum of (v) the quotient
of Borrower Net Operating Cash Flow as of the last day of the previous calendar
quarter and divided by the FMV Cap Rate, (w) Cash and Cash Equivalents of the
Borrower and the Consolidated Subsidiaries as of the date of determination, (x)
all deferred rent receivables with respect to tenants of the Real Property
Assets who are not more than 60 days past due in the payment of base or fixed
rent, (y) the then current market value of any Interest Rate Hedges of the
Borrower and its Consolidated Subsidiaries, and (z) the value of land acquired
by the Borrower or its Consolidated Subsidiaries after the date hereof or the
value of land owned by the Borrower or its Consolidated Subsidiaries as of the
date hereof used in connection with a build-to-suit project, in either case
based upon a then current independent MAI appraisal, less (b) all liabilities
(determined in accordance with GAAP) of such Person.
"Term" has the meaning set forth in Section 2.8.
"Termination Event" shall mean (i) a "reportable event" as
such term is described in Section 4043 of ERISA (other than a "reportable event"
not subject to the provision for 30-day notice to the PBGC), or an event
described in Section 4062(e) of ERISA, (ii) the withdrawal by any member of the
ERISA Group from a Multiemployer Plan during a plan year in which it is a
"substantial employer" (as defined in Section 4001(a)(2) of ERISA), or the
incurrence of liability by any member of the ERISA Group under Section 4064 of
ERISA upon the termination of a Multiemployer Plan, (iii) the filing of a notice
of intent to terminate any Plan under Section 4041 of ERISA, other than in a
standard termination within the meaning of Section
23
<PAGE> 25
4041 of ERISA, or the treatment of a Plan amendment as a distress termination
under Section 4041 of ERISA, (iv) the institution by the PBGC of proceedings to
terminate, impose liability (other than for premiums under Section 4007 of
ERISA) in respect of, or cause a trustee to be appointed to administer, any Plan
or (v) any other event or condition that might reasonably constitute grounds for
the termination of, or the appointment of a trustee to administer, any Plan or
the imposition of any liability or encumbrance or Lien on the Real Property
Assets or any member of the ERISA Group under ERISA.
"Total Available Commitments" means at any time of
determination, the lesser of (a) the aggregate amount of the Commitments at such
time, or (b) the product of the Unleveraged Assets Value and 54%, less Unsecured
Debt outstanding (other than Loans hereunder), or (c) that amount which would
permit the Borrower to be in compliance with the Unleveraged Assets Minimum Debt
Service Coverage requirements, after taking into account all outstanding
Unsecured Debt.
"Total Debt Service" shall mean, measured as of the last day
of each calendar quarter, an amount for the previous four consecutive quarters,
including the quarter then ended, equal to the sum of (i) interest (whether
accrued, paid or capitalized) actually payable by Borrower and its Consolidated
Subsidiaries on its Debt, plus (ii) scheduled payments of principal on such
Debt, whether or not paid by Borrower and its Consolidated Subsidiaries
(excluding balloon payments) and (iii) an amount equal to the greater of (y) an
amount equal to the straight-line depreciation taken or to be taken by the
Borrower and its Consolidated Subsidiaries based on applicable useful lives,
determined in accordance with federal income tax laws and regulations with
respect to Capital Expenditures incurred from and after the date hereof which
are not related to new construction with respect to the preceding four quarters,
and (z) a customary reserve for Capital Expenditures of not less than 10 cents
per square foot for each Real Property Asset which is subject to a Non-Triple
Net Lease, as calculated by the Borrower.
"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
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<PAGE> 26
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.
"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.
"Unimproved Assets" means Real Property Assets upon which no
material improvements have been completed which completion is evidenced by a
certificate of occupancy or its equivalent.
"United States" means the United States of America, including
the fifty states and the District of Columbia.
"Unleveraged Assets" means, as of any date, the Real Property
Assets listed in Exhibit C attached hereto and made a part hereof, each of which
is 100% owned in fee (or leasehold in the case of such assets listed in Exhibit
C) by Borrower or a Consolidated Subsidiary and each of which is not subject to
any Lien, subject to adjustment as set forth herein, together with all New
Acquisitions or Real Property Assets which have become part of the Unleveraged
Assets as of such date in accordance with Section 3.4 and which are not subject
to any Lien, subject to adjustment as set forth herein, but excluding (i) any
Unleveraged Assets which have been released from this Agreement as of such date
in accordance with Sections 5.16, 5.17 and all other terms of this Agreement,
(ii) Unimproved Assets, or (iii) owned directly or indirectly by a Minority
Holding.
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<PAGE> 27
"Unleveraged Assets Net Operating Cash Flow" means as of any
date of determination with respect to the Unleveraged Assets, Property Income as
of such date, but less (x) Property Expenses with respect to the Unleveraged
Assets for the preceding four quarters (which, with respect to a Unleveraged
Asset owned for less than such four quarter period, shall be calculated on an
estimated, pro forma basis (i.e., the results for the period during which such
Unleveraged Asset has been owned shall be annualized, with appropriate
adjustments for items of income and expense which are not earned or incurred in
equal monthly amounts)), and (y) the greater of an amount equal to the
straight-line depreciation taken or to be taken by the Borrower and its
Consolidated Subsidiaries based on applicable useful lives determined in
accordance with federal income tax laws and regulations with respect to Capital
Expenditures incurred from and after the date hereof which are not related to
new construction with respect to the preceding four calendar quarters, and
appropriate reserves for replacements of not less than 10 cents per square foot
per annum for each Real Property Asset where the Unleveraged Asset is subject to
a Non-Triple Net Lease, and (z) management fees which shall be deemed to be
equal to two percent (2%) of Property Income of the Unleveraged Assets.
"Unleveraged Assets Value" means the quotient of (i) the
aggregate Unleveraged Asset Net Operating Cash Flow determined as of the last
day of the calendar quarter, and (ii) the FMV Cap Rate.
"Unleveraged Assets Minimum Debt Service Coverage" means as of
the last day of each calendar quarter, Unleveraged Asset Net Operating Cash Flow
equal to or greater than 175% of Pro-Forma Debt Service.
"Unsecured Debt" means Debt of the Borrower and all
Consolidated Subsidiaries which is not secured by a Lien.
"Unused Commitments" shall mean 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 Borrower or
another Person or otherwise pursuant to any loan document, written instrument or
otherwise (in the case of a loan to another Person, Borrower's share of the Debt
shall be calculated in the same
26
<PAGE> 28
manner as that set forth in the last sentence of the definition of "Debt").
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 GAAP 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 the Borrower and its Consolidated
Subsidiaries delivered to the Lead Agent; provided that, if the Borrower
notifies the Lead Agent that the Borrower wishes to amend any covenant in
Article V to eliminate the effect of any change in GAAP on the operation of such
covenant (or if the Lead Agent notifies the Borrower that the Required Banks
wish to amend Article V for such purpose), then the Borrower's compliance with
such covenant shall be determined on the basis of GAAP in effect immediately
before the relevant change in GAAP became effective, until either such notice is
withdrawn or such covenant is amended in a manner reasonably satisfactory to the
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).
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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 Loans to the
Borrower or participate in Letters of Credit issued by the Fronting Bank on
behalf of Borrower pursuant to this Article from time to time during the term
hereof in amounts such that the aggregate principal amount of Loans by such Bank
at any one time outstanding together with such Bank's pro rata share (based on
the ratio of its Commitment to the aggregate of all Commitments) of Letter of
Credit Usage shall not exceed the amount of its Available Commitment. The
aggregate amount of Loans together with the Letter of Credit Usage shall not
exceed the lesser of (i) Two Hundred Million Dollars ($200,000,000) or (ii) the
Total Available Commitments (subject, however, to the right to cure as set forth
in Section 2.10(a), provided the LTV Ratios do not exceed 57%, as set forth
therein, or Section 2.10(c), and provided further that during such cure period,
the Borrower may only borrow in order to acquire a New Acquisition that will
cure any Default under Sections 2.10(a) or (c)), and the aggregate dollar amount
of all Letters of Credit issued and outstanding shall not exceed Thirty Million
Dollars ($30,000,000). Each Borrowing outstanding under this Section 2.1 (other
than a Borrowing in connection with a draw under a Letter of Credit) shall be in
an aggregate principal amount of $2,500,000, or an integral multiple of $100,000
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.
SECTION 2.2. Notice of Borrowing. (a) The Borrower shall give
Lead Agent notice not later than 12:00 noon (New York City time) (x) one
Domestic Business Day before each Base Rate Borrowing, (y) three Euro-Dollar
Business Days before each Euro-Dollar Borrowing or (z) three Domestic Business
Days before each CD Borrowing, specifying:
(i) the date of such Borrowing, which shall be a Domestic
Business Day in the case of a Domestic Borrowing or
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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, CD Loans or Euro-Dollar Loans,
(iv) in the case of a Euro-Dollar Borrowing or a CD Borrowing,
the duration of the Interest Period applicable thereto, subject to the
provisions of the definition of Interest Period, and
(v) the intended use for the proceeds of such Borrowing.
(b) The Borrower shall give the Lead Agent and the designated
Fronting Bank, written notice that it desires to have Letters of Credit (a
"Letter of Credit") issued hereunder no later than 10:00 A.M., New York City
time, at least three (3) 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 Letters 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 ten (10) Domestic
Business Days prior to the Maturity Date), (vii) the purpose and circumstances
for which such Letter of Credit is being issued, and (viii) the terms upon which
each such Letters of Credit may be drawn down (which terms shall not leave any
discretion to Fronting Bank). Each such notice may be revoked telephonically by
Borrower to each of 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 Borrower to 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 three (3) Domestic
Business Days prior to the date of issuance, 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
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require 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, 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, 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. Notice to Banks; Funding of Loans.
(a) Upon receipt of a notice from Borrower in accordance with
Section 2.2 hereof (each such notice being a "Notice of Borrowing"), the Lead
Agent shall, on the date such Notice of Borrowing is received by the Lead Agent,
notify Managing Co-Agent and each Bank of the contents thereof and of such
Bank's share of such Borrowing, of the interest rate determined pursuant thereto
and the Interest Period(s) (if different from those requested by the Borrower)
and (unless such Notice of Borrowing is for the issuance of a Letter of Credit)
such Notice of Borrowing shall not thereafter be revocable by the Borrower.
(b) Not later than 1:00 p.m. (New York City time) on the date
of each Borrowing as indicated in the Notice of Borrowing, each Bank shall
(except (x) with respect to Notices of Borrowing for issuances of Letters of
Credit, and (y) as provided in subsection (c) of this Section) make available
its share of such Borrowing in Federal funds immediately available in New York
City, to the Lead Agent at its
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address referred to in Section 9.1. If 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, Fronting Bank shall issue
such Letter of Credit in the amount so requested and deliver the same to
Borrower, with a copy thereof to the Lead Agent. Immediately upon the issuance
of each Letter of Credit by 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 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 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 applicable 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. Unless the Lead Agent determines that any applicable condition
specified in Article III has not been satisfied, the Lead Agent will instruct
the applicable Fronting Bank to make such Letter of Credit available to the
Borrower and such Fronting Bank shall make such Letter of Credit available to
the Borrower at the Borrower's aforesaid address on the date of the issuance of
such Letter of Credit. Without in any way implying a right of Fronting Bank not
to issue a Letter of Credit as provided for herein, if a Fronting Bank shall
fail to issue a Letter of Credit (notwithstanding that the applicable conditions
specified in Article III have been satisfied), the Borrower may designate a
substitute Fronting Bank, provided that the notice periods set forth in Section
2.2(b) above shall begin anew.
(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 2.3 and the
Lead Agent may,
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in reliance upon such assumption, but shall not be obligated to, make available
to the Borrower on such date a corresponding amount on behalf of such Bank. 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 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
Borrower until the date such amount is repaid to the Lead Agent, at (i) in the
case of the Borrower, a rate per annum equal to the higher of the Federal Funds
Rate and the interest rate applicable thereto pursuant to Section 2.6 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 2.4. Notes.
(a) The Loans of each Bank shall be evidenced by a single Note
payable to the order of such Bank for the account of its Applicable Lending
Office in an amount equal to the aggregate amount of such Bank's Commitment.
(b) Each Bank may, by notice to the Borrower, the Lead Agent
and the Managing Co-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. Any additional costs incurred by the Lead Agent,
the Borrower or the Banks in connection with preparing such a Note shall be at
the sole cost and expense of the Bank requesting such Note. In the event any
Loans evidenced by such a Note are paid in full prior to the Maturity Date, any
such Bank shall return such Note to Borrower. Each such Note shall be in
substantially the form of Exhibit A hereto 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.
(c) Upon receipt of each Bank's Note pursuant to Section
3.1(a), 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 the Borrower with
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respect thereto, and may, if such Bank so elects in connection with any transfer
or enforcement of its Note, endorse on the appropriate schedule 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.
(d) The Loans shall mature, and the principal amount thereof
shall be due and payable, on the Maturity Date.
(e) There shall be no more than fifteen (15) Euro-Dollar
Loans and CD Loans outstanding at any one time.
SECTION 2.5 Letters of Credit. (a) Subject to the terms
contained in this Agreement and the other Loan Documents, upon the receipt of a
Notice of Borrowing requesting the issuance of a Letter of Credit, Fronting Bank
shall issue a Letter of Credit or Letters of Credit in such form or as is
reasonably acceptable to Borrower, in an aggregate amount equal to the amount
requested, provided that after the issuance of such Letters of Credit, (i) the
aggregate amount of issued and outstanding Letters of Credit shall not exceed
Thirty Million Dollars ($30,000,000), and (ii) the Letter of Credit Usage, when
added to the aggregate principal amount of the Loans outstanding, shall not
exceed the lesser of (y) Two Hundred Million Dollars ($200,000,000) or (z) the
Total Available Commitments (subject, however, to the right to cure as set forth
in Section 2.10(a), provided the LTV Ratios do not exceed 57%, as set forth
therein, or Section 2.10(c), and provided further that during such cure period,
the Borrower may only borrow in order to acquire a New Acquisition that will
cure any Default under Sections 2.10(a). Fronting Bank shall notify Agent and
each Bank of the issuance of any such Letter of Credit, together with the amount
thereof, simultaneously therewith.
(b) Each Letter of Credit shall be issued in the minimum
aggregate amount of Three Hundred Thousand Dollars ($300,000) or any amount in
excess thereof.
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(c) In the event of any request for a drawing under any Letter
of Credit by the beneficiary thereunder, Fronting Bank shall notify Borrower and
the Lead Agent (and the Lead Agent shall promptly notify each Bank thereof) on
or before the date on which Fronting Bank intends to honor such drawing, and,
except as provided in this subsection (c), Borrower shall reimburse 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 Borrower shall have
notified the Lead Agent and Fronting Bank prior to 10:00 a.m. (New York time) on
the date of such drawing (provided that the same shall be a Domestic Business
Day) that Borrower intends to reimburse Fronting Bank for the amount of such
drawing with funds other than the proceeds of the Loans, 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 shall, in accordance with Section 2.3(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 Fronting Bank for the amount of such draw. In the
event that any Bank fails to make available to Fronting Bank the amount of such
Bank's participation on the date of a drawing, 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 of drawing.
(d) 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 Fronting Bank) or (b) impose on any Bank any other condition
regarding this Agreement or such Bank (including 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
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such Bank, upon written demand therefor to the Borrower from the Lead Agent,
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 Federal Funds Rate
plus the Applicable Margin on Base Rate Loans at such time. The amount specified
in the written demand shall be conclusive in the absence of demonstrable error.
(e) Borrower hereby agrees to protect, indemnify, pay and save
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 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 Fronting Bank or (ii) the
failure of 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"). As between Borrower or any Fronting Bank, Borrower assumes
all risks of the acts and omission of, or misuses of the Letters of Credit
issued by Fronting Bank by the beneficiaries of such Letters of Credit. In
furtherance and not in limitation of the foregoing, 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 unless such
noncompliance constitutes gross negligence or willful misconduct; (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
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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
Fronting Bank including any Government Acts. None of the above shall affect,
impair or prevent the vesting of 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 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 Fronting Bank under any
resulting liability to Borrower.
(f) If 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 Borrower any reimbursement by Borrower of any drawing
under any Letter of Credit, each Bank shall pay to Fronting Bank or the Lead
Agent, as the case may be, its share of such payment, but without interest
thereon unless 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
Fronting Bank or the Lead Agent is required to pay.
SECTION 2.6. 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 or CD 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 CD 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, or on such other date
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designated by Borrower in the Notice of Interest Rate Election, provided
Borrower shall pay any losses pursuant to Section 2.13;
(iii) if such Loans are CD Loans, the Borrower may elect to
convert such Loans to Base Rate Loans or Euro-Dollar Loans or elect to continue
such Loans as CD Loans for an additional Interest Period, in each case effective
on the last day of the then current Interest Period applicable to such Loans or
on such other date designated by Borrower in the Notice of Interest Rate
Election, provided Borrower shall pay any losses pursuant to Section 2.13.
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. 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 $500,000 or any larger multiple of
$100,000, (iii) there shall be no more than fifteen (15) Euro-Dollar Loans and
CD Loans outstanding at any time, (iv) no Loan may be continued as, or converted
into, a Euro-Dollar Loan or CD 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 or CD Loans,
the duration of the initial Interest Period applicable thereto; and
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(iv) if such Loans are to be continued as Euro-Dollar Loans
or CD 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 the
Managing Co-Agent and each Bank the same day as it receives such Notice of
Interest Rate Election of the contents thereof, the interest rates determined
pursuant thereto and the Interest Periods (if different from those requested by
the Borrower) 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 or CD Loans, such Loans shall
be converted into Base Rate Loans on the last day of the then current Interest
Period applicable thereto.
(d) The Borrower may elect CD Loans only if Euro-Dollar Loans
are not available in accordance with Sections 8.2 or 8.3 hereof.
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 the
date it is repaid or converted into a Euro-Dollar Loan or CD Loan pursuant to
Section 2.6 or at the Maturity Date, at a rate per annum equal to the Base Rate
plus the Applicable Margin for Base Rate Loans for such day. Such interest shall
be payable for each Interest Period on the last day thereof.
(b) Each CD 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 CD
Loans for such day plus the Adjusted CD Rate applicable to such Interest Period;
provided that if any CD Loan or any portion thereof shall, as a result of clause
(2)(a) or (2)(b)(i) of the definition of Interest Period, have an Interest
Period of less than one month, such portion shall bear interest during such
Interest Period at the rate applicable to Base
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Rate Loans during such period. Such interest shall be payable for each Interest
Period on the last day thereof, or if such Interest Period is longer than one
month, at intervals of 30 days after the first day thereof.
The "Adjusted CD Rate" applicable to any Interest Period means
a rate per annum determined pursuant to the following formula:
[ CDBR ]*
ACDR = [ ---------- ] + AR
[ 1.00 - DRP ]
ACDR = Adjusted CD Rate
CDBR = CD Base Rate
DRP = Domestic Reserve Percentage
AR = Assessment Rate
----------
* The amount in brackets being rounded upward, if
necessary, to the next higher 1/100 of 1%
The "CD Base Rate" applicable to any Interest Period is the
rate of interest determined by the Lead Agent to be the average (rounded upward,
if necessary, to the next higher 1/100 of 1%) of the prevailing rates per annum
bid at 10:00 A.M. (New York City time) (or as soon thereafter as practicable) on
the first day of such Interest Period by two or more New York certificate of
deposit dealers of recognized standing for the purchase at face value from the
CD Reference Bank of its certificates of deposit in an amount comparable to the
principal amount of the CD Loan of such CD Reference Bank to which such Interest
Period applies and having a maturity comparable to such Interest Period.
"Domestic 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 (including without
limitation any basic, supplemental or emergency reserves) for a member bank of
the Federal Reserve System in New York City with deposits exceeding five billion
dollars in respect of new non-personal time deposits in dollars in New York City
having a maturity comparable to the related Interest Period and in an amount of
$100,000 or more. The Adjusted CD Rate
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shall be adjusted automatically on and as of the effective date of any change in
the Domestic Reserve Percentage.
"Assessment Rate" means for any day the annual assessment rate
in effect on such day which is payable by a member of the Bank Insurance Fund
classified as adequately capitalized and within supervisory subgroup "A" (or a
comparable successor assessment risk classification) within the meaning of 12
C.F.R. Section 327.3(d) (or any successor provision) to the Federal Deposit
Insurance Corporation (or any successor) for such Corporation's (or such
successor's) insuring time deposits at offices of such institution in the United
States. The Adjusted CD Rate shall be adjusted automatically on and as of the
effective date of any change in the Assessment Rate.
(c) 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 30 days, at intervals of 30 days after the first day thereof.
The "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 London
Interbank Offered Rate applicable during such Interest Period by (ii) 1.00 minus
the Euro-Dollar Reserve Percentage.
The "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.
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"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.
(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 applicable law, overdue interest
in respect of all Loans, shall bear interest at the annual rate equal to the sum
of the Prime Rate and four percent (4%) (the "Default Rate").
(e) 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 demonstrable error.
The Lead Agent shall send an invoice to the Borrower setting forth the interest
due at least five (5) Domestic Business Days prior to any interest payment date,
provided that failure to do so shall not affect the Borrower's obligations
hereunder to pay interest. It is understood that the Borrower shall not be in
Default under Section 6.1(a) as to interest for so long as it shall pay in
accordance with the provisions hereof any amounts indicated on any such invoices
or revised invoices.
(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 is not the Lead Agent and does not furnish a timely quotation,
the provisions of Section 8.1 shall apply.
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SECTION 2.8. Fees.
(a) Upfront Fee. On the Current Closing Date, the Borrower
shall pay to the Lead Agent for the account of the Banks an upfront fee equal to
.25% of the Commitments of each Bank.
(b) Unused Commitment Fee. The Borrower shall pay to the Lead
Agent for the account of the Banks ratably in proportion to their respective
Commitments a commitment fee at a rate per annum equal to .20% on the daily
average of undrawn and uncancelled Commitments, less the Letter of Credit Usage
during the applicable quarter, commencing as of the Current Closing Date. The
commitment fee shall be payable in arrears on each January 1, April 1, July 1
and October 1 during the Term.
(c) Letter of Credit Fee. During the Term, but provided no
Event of Default shall have occurred and be continuing, Borrower shall pay to
the Lead Agent, for the account of the Banks in proportion to their interests in
respective undrawn issued Letters of Credit, a fee (the "Letter of Credit Fee")
in an amount equal to a rate per annum of the Applicable Margin for Euro-Dollar
Loans on the daily average of the amount undrawn and available under issued
Letters of Credit, which fee shall be payable, in arrears, on the first Domestic
Business Day of each January, April, July and October. From the occurrence and
during the continuance of an Event of Default, the Letter of Credit Fee shall be
increased to such Applicable Margin plus 4% per annum on the daily average of
such issued and undrawn Letters of Credit.
(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
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, the
Managing Co-Agent and the Banks regardless of whether any Loans are actually
made.
SECTION 2.9. Maturity Date.
The term (the "Term") of the Commitments shall terminate and
expire on October 8, 1999 (the "Maturity Date"). Upon the date of the
termination of the Term, any
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Loans then outstanding (together with accrued interest thereon) shall be due and
payable on such date.
SECTION 2.10. Mandatory Prepayment.
(a) If as of the last day of any calendar quarter the LTV
Ratio exceeds the Permitted LTV Ratio, but the LTV Ratio is not greater than
57%, and provided that no Event of Default has occurred and is continuing,
Borrower shall either (i) add additional Real Property Assets to the Unleveraged
Assets within ninety (90) days of the date the LTV Ratio exceeded the Permitted
LTV Ratio, in accordance with the provisions of Section 3.4, or (ii) pay to the
Lead Agent, for the account of the Banks, or pay to the holder(s) of any
outstanding Unsecured Debt, within 90 days of the date the LTV Ratio exceeded
the Permitted LTV Ratio, in each case in an amount such that the LTV Ratio
subsequent to such payment is in compliance with the Permitted LTV Ratio. In the
event that the LTV Ratio exceeds 57%, then Borrower shall, within five (5)
Domestic Business Days from the date the Permitted LTV Ratio is exceeded, pay to
the Lead Agent, for the account of the Banks, or pay to the holder(s) of any
outstanding Unsecured Debt, an amount such that the LTV Ratio subsequent to such
payment is in compliance with the Permitted LTV Ratio.
(b) Borrower shall not sell or release an Unleveraged Asset
unless after giving effect to such sale or release, either (i) Borrower shall
remain in compliance with the provisions hereof, including without limitation,
the provisions of Section 5.8, or (ii) prepay an amount at least equal to, the
greater of (x) the amount required such that the LTV Ratio remains in compliance
with the Permitted LTV Ratio and the Unleveraged Assets Minimum Debt Service
Coverage after such sale or release calculated on a pro forma basis (i.e.,
calculated as though the contemplated transaction has occurred as of the date
four (4) quarters previously), and (y) the amount required such that the Loans,
on a pro forma basis (i.e., calculated as though the contemplated transaction
had occurred as of the date four (4) quarters previously), remain in compliance
with the requirements of Section 5.8.
(c) In the event that the Unleveraged Assets Minimum Debt
Service Coverage is not maintained as of the last day of a calendar quarter, the
Borrower will either (i) add a New Acquisition or a Real Property Asset to the
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Unleveraged Assets in accordance with Section 3.4 which, on a pro forma basis
(i.e. the Unleveraged Assets Minimum Debt Service Coverage shall be recalculated
to include such New Acquisition or Real Property Asset as though the same had
been a Unleveraged Asset for the entire applicable period) would result in
compliance with the Unleveraged Assets Minimum Debt Service Coverage, or (ii)
prepay an amount necessary to cause the Unleveraged Assets Minimum Debt Service
Coverage to be in compliance. Failure by the Borrower to comply with the
Unleveraged Assets 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 Borrower may, upon at least one (1) Domestic Business
Day's notice to the Lead Agent, prepay 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 any larger multiple of One Hundred Thousand Dollars ($100,000),
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.
(b) The Borrower may, upon at least three (3) Euro-Dollar
Business Days' notice to the Lead Agent, prepay any Euro-Dollar Loan or CD Loan
as of the last day of the Interest Period applicable thereto. Except as provided
in Article 8, the Borrower may not prepay all or any portion of the principal
amount of any Euro-Dollar Loan or CD Loan prior to the end of the Interest
Period applicable thereto 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. The Lead Agent
shall notify the Borrower of any amounts due pursuant to Section 2.13 in
connection with such prepayment within two (2) Euro-Dollar Business Days after
receipt of such notice from the Borrower (but subject to the right to submit
subsequently a corrected statement). 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 at any time and from time to time cancel
all or any part of the Commitments by the deliv-
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ery to the Lead Agent of a notice of cancellation within the applicable time
periods set forth in Sections 2.11(a) and (b) if there are Loans then
outstanding or, if there are no Loans outstanding at such time as to which the
Commitments with respect thereto are being cancelled, upon at least one (1)
Domestic Business Day's notice to the Lead Agent, whereupon, in either event,
all or such portion of the 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, Borrower shall prepay, as applicable, all
or such portion of Loans outstanding on such date in accordance with the
requirements of Section 2.11(a) and (b). Borrower shall be permitted to
designate in its notice of cancellation which Loans, if any, are to be prepaid.
In no event shall Borrower be permitted to cancel Commitments for which a Letter
of Credit has been issued and is outstanding unless Borrower returns such Letter
of Credit to the applicable Fronting Bank.
(d) The Borrower may, upon at least one Domestic Business
Day's notice to the Lead Agent (by 11:00 a.m. New York time of such Domestic
Business Day), reimburse the Lead Agent on behalf of the appropriate Fronting
Bank for the amount of any drawing under a Letter of Credit in whole or in part
in any amount.
(e) 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 promptly cancel such returned Letters of Credit and give the Borrower, the
Lead Agent and each of the Banks notice of such cancellation.
(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 notify the Managing Co-Agent and 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.
(g) Any amounts so prepaid pursuant to Section 2.11 (a) or (b)
may be reborrowed. In the event Borrower elects to cancel all or any portion of
the Commitments pursuant to Section 2.11(c) hereof, such amounts may not be
reborrowed.
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SECTION 2.12. General Provisions as to Payments.
(a) The Borrower shall make each payment of 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 promptly (and in any event within one (1) Domestic Business Day after
receipt thereof) distribute to each Bank its ratable share of each such payment
received by the Lead Agent for the account of the Banks. Whenever any payment of
principal of, or interest on the Base Rate Loans or CD 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.
SECTION 2.13. Funding Losses. If the Borrower makes any
payment of principal with respect to any Euro-Dollar Loan or CD 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 if the Borrower fails
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to borrow any Euro-Dollar Loans or CD Loan after notice has been given to any
Bank in accordance with Section 2.3(a), or if Borrower shall deliver a Notice of
Interest Rate Election specifying that a Euro-Dollar Loan or CD Loan shall be
converted on a date other than the first (lst) day of the then current Interest
Period applicable thereto, the Borrower shall reimburse each Bank within 15 days
after certification of such Bank of such loss or expense (which shall be
delivered by each such Bank to Lead Agent for delivery to Borrower) for any
resulting loss or expense incurred by it (or by an existing or prospective
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 Lead Agent and Lead
Agent shall have delivered to the Borrower a certification as to the amount of
such loss or expense, which certification shall set forth the basis for such
loss or expense and shall be conclusive in the absence of demonstrable error.
SECTION 2.14. Computation of Interest and Fees. Interest based
on the Prime Rate or Federal Funds 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. Use of Proceeds. The Borrower shall use the
proceeds of the Loans for general corporate purposes, including, without
limitation, for the repayment of any Debt of the Borrower or of any of its
Consolidated Subsidiaries, as well as for the acquisition, financing and
improvement of Real Property Assets intended to be used in the Borrower's
existing business and the Unleveraged Assets and for general working capital
needs of the Borrower.
SECTION 2.16 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 such
other agreement or instrument under
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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 no Fronting Bank shall 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
trans- feree may be acting), the Lead Agent, the Managing Co-Agent or any Bank
(other than a defense based on the gross negligence or wilful misconduct of the
Lead Agent, the Managing Co-Agent, 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
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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 or any issuing Bank.
ARTICLE III
CONDITIONS
SECTION 3.1. Closing. The closing hereunder shall occur on the
date (the "Current Closing Date") when each of the following conditions is
satisfied (or waived by the Lead Agent and the Banks), each document to be dated
the Current Closing Date unless otherwise indicated:
(a) the Borrower shall have executed and delivered to the Lead
Agent a Note for the account of each Bank dated on or before the Current Closing
Date complying with the provisions of Section 2.4 (and upon receipt of same, the
"Notes" delivered pursuant to the Original Credit Agreement shall be returned to
Borrower);
(b) the Borrower, the Lead Agent and Managing Co-Agent and
each of the Banks shall have executed and delivered to the Borrower, the Lead
Agent and Managing Co-Agent a duly executed original of this Agreement;
(c) the Lead Agent shall have received an opinion of
Pillsbury, Madison & Sutro LLP, counsel for the Borrower, acceptable to the Lead
Agent, the Managing Co-Agent, the Banks and their counsel;
(d) the Lead Agent shall have received all documents the Lead
Agent may reasonably request relating to the existence of the Borrower, 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
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satisfactory to the Lead Agent. Such documentation shall include, without
limitation, the articles of incorporation of the Borrower, as amended, modified
or supplemented to the Current Closing Date, certified to be true, correct and
complete by a senior officer of the Borrower as of a date not more than ten (10)
days prior to the Current Closing Date, together with a good standing
certificate as to the Borrower from the Secretary of State (or the equivalent
thereof) of Maryland, each to be dated not more than thirty (30) days prior to
the Current Closing Date;
(e) the Lead Agent shall have received all certificates,
agreements and other documents and papers referred to in this Section 3.1 and
the Notice of Borrowing referred to in Section 3.2, if applicable, unless
otherwise specified, in sufficient counterparts, satisfactory in form and
substance to the Lead Agent in its sole discretion;
(f) the Borrower 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 Borrower;
(g) the Lead Agent shall be satisfied that neither the
Borrower nor any Consolidated Subsidiary is subject to any present or contingent
environmental liability which could have a Material Adverse Effect;
(h) the Lead Agent shall have received wire transfer
instructions in connection with the Loans, if any, to be made on the Current
Closing Date;
(i) 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 Current Closing Date, and the fees and expenses accrued through the
Current Closing Date of Skadden, Arps, Slate, Meagher & Flom;
(j) 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 applicable Consolidated
Subsidiaries, 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;
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(k) the Lead Agent shall have received the audited financial
statements of the Borrower and its Consolidated Subsidiaries for the fiscal year
ending December 31, 1995; and
(l) no "Default" or "Event of Default" (as such terms are
defined in the Original Credit Agreement) shall have occurred and be continuing
under the Original Credit Agreement.
SECTION 3.2. Borrowings. The obligation of any Bank to make a
Loan 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 is subject to
the satisfaction of the following conditions (as reasonably determined by the
Lead Agent; it being agreed that the Lead Agent shall notify the Banks of any
condition that it intends to waive):
(a) the Current Closing Date shall have occurred on or prior
to October 15, 1996;
(b) receipt by the Lead Agent of a Notice of Borrowing as
required by Section 2.2 and 2.3;
(c) immediately after such Borrowing, the aggregate
outstanding principal amount of the Loans and the Letter of Credit Usage will
not exceed the aggregate amount of the Total Available 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 or issuing of such Letters of Credit;
(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 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,
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which does or seeks to enjoin, prohibit or restrain, the making or repayment of
the Loans, the issuance of any Letter of Credit or any participations therein or
the consummation of the transactions contemplated by this Agreement;
(g) no event, act or condition shall have occurred after the
Current 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; and
(h) immediately after such Borrowing or issuance of such
Letter of Credit, the aggregate outstanding undrawn issued Letters of Credit
shall not exceed Thirty Million Dollars ($30,000,000).
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), (d), (e), (f), and (g) (to the extent that Borrower is or should have been
aware of any Material Adverse Effect) of this Section, except as otherwise
disclosed in writing by Borrower to the Banks. Notwithstanding anything to the
contrary, no Borrowing shall be permitted if such Borrowing would cause Borrower
to fail to be in compliance with any of the covenants contained in this
Agreement or in any of the other Loan Documents.
SECTION 3.3. Intentionally Omitted.
SECTION 3.4 New Acquisitions and Additional Real Property
Assets. In the event Borrower shall acquire one or more New Acquisitions, each
such New Acquisition may be added to the Unleveraged Assets upon written notice
from Borrower to the Lead Agent specifying that such New Acquisition has been
acquired and setting forth with respect to such New Acquisition, the same
information currently set forth in Exhibit C with respect to each Unleveraged
Asset listed thereon and provided that the same shall comply in all respects
with the provisions hereof (including Section 5.19). In addition, any Real
Property Asset may be added to the Unleveraged Assets upon written notice from
the Borrower to the Lead Agent, provided that, as of the date of such notice,
such Real Property Asset shall satisfy the criteria set forth in Section 5.19
with respect to New Acquisitions, and provided further that such notice shall
contain the same information with respect to such Real Property Asset as is
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currently set forth in Exhibit C with respect to each Unleveraged Asset listed
thereon and provided that the same shall comply in all respects with the
provisions hereof. Borrower may deliver any such notice to the Lead Agent
simultaneously with the delivery of any Notice of Borrowing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Lead Agent, Managing Co-Agent and each
of the other Banks which is or may become a party to this Agreement to make the
Loans, the Borrower makes the following representations and warranties as of the
Current Closing Date. 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. The Borrower is a
corporation, duly formed, validly existing and in good standing as a corporation
under the laws 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. Power and Authority. The 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 corporate action to authorize the execution and delivery on behalf
of the Borrower and the performance by the Borrower of such Loan Documents. The
Borrower has duly executed and delivered each Loan Document to which it is a
party in accordance with the terms of this Agreement, and each such Loan
Document constitutes the legal, valid and binding obligation of the 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.
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SECTION 4.3. No Violation. Neither the execution, delivery or
performance by or on behalf of the Borrower of the Loan Documents to which it is
a party, nor compliance by the Borrower with the terms and provisions thereof
nor the consummation of the transactions contemplated by the Loan Documents, (i)
will materially contravene any applicable provision of any law, statute, rule,
regulation, order, writ, injunction or decree of any court or governmental
instrumentality or (ii) will materially 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 or
any of its Consolidated Subsidiaries pursuant to the terms of any indenture,
mortgage, deed of trust, or other agreement or other instrument to which the
Borrower (or of any partnership of which the Borrower is a partner) or any of
its Consolidated Subsidiaries 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 material
default by the Borrower under any organizational document of any Person in which
the Borrower has an interest, or cause a material default under the Borrower's
articles of incorporation or by laws.
SECTION 4.4. Financial Information.
(a) The consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries dated as of December 31, 1995 and the related
consolidated statements of Borrower's financial position for the fiscal year
then ended, reported on by Coopers & Lybrand LLP and set forth in the Borrower's
1995 Form 10-K, a copy of which has been delivered to each of the Banks, fairly
present, in conformity with GAAP, the consolidated financial position of the
Borrower and its Consolidated Subsidiaries as of such date and their
consolidated results of operations and cash flows for such fiscal year.
(b) Since June 30, 1996, (i) except as may have been disclosed
in writing to the Banks, nothing has occurred having a Material Adverse Effect,
and (ii) except as previously disclosed to the Banks, the Borrower has not
incurred any material indebtedness or guaranty.
SECTION 4.5. Litigation. Except as previously disclosed by the
Borrower in writing to the Banks, there is
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no action, suit or proceeding pending against, or to the knowledge of the
Borrower threatened against or affecting, (i) the Borrower or any of its
Consolidated Subsidiaries, (ii) the Loan Documents or any of the transactions
contemplated by the Loan Documents or (iii) any of its assets, before any court
or arbitrator or any governmental body, agency or official in which there is a
reasonable possibility 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.
SECTION 4.6. Compliance with ERISA. (a) Each member of the
ERISA Group has fulfilled its obligations under the minimum funding standards of
ERISA and the Code with respect to each Plan and is in compliance in all
material respects with the presently applicable provisions of ERISA and the Code
with respect to each Plan. No member of the ERISA Group has (i) sought a waiver
of the minimum funding standard under Section 412 of the 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 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, Managing Co-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 4.7. Environmental Matters. In the ordinary course of
its business, the Borrower conducts periodic reviews of the effect of
Environmental Laws on the business, operations and properties of the Borrower
and its Consolidated Subsidiaries, including without limitation the Real
Property Assets, in the course of which it identifies and evaluates associated
liabilities and costs (including, without limitation, any capital or operating
expenditures required for clean-up or closure of properties presently owned, any
capital or operating expenditures required to
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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, and any actual or potential liabilities to
third parties, including employees, and any related costs and expenses). On the
basis of this review, the Borrower has reasonably concluded that such associated
liabilities and costs, including the costs of compliance with Environmental
Laws, are unlikely to have a Material Adverse Effect on the Borrower and its
Consolidated Subsidiaries.
SECTION 4.8. Taxes. United States Federal income tax returns
of the Borrower and its Consolidated Subsidiaries have been prepared and filed
through the fiscal year ended December 31, 1995. The Borrower and its
Consolidated Subsidiaries 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 Borrower or any Consolidated Subsidiary. The charges,
accruals and reserves on the books of the Borrower and its Consolidated
Subsidiaries in respect of taxes or other governmental charges are, in the
opinion of the Borrower, adequate.
SECTION 4.9. Full Disclosure. All information heretofore
furnished by the Borrower to the Lead Agent, Managing Co-Agent or any Bank for
purposes of or in connection with this Agreement or the Original Credit
Agreement or any transaction contemplated hereby or thereby 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 Lead Agent, Managing Co-Agent and
the Banks in writing any and all facts which have or may have (to the extent the
Borrower can now reasonably foresee) a Material Adverse Effect.
SECTION 4.10. Solvency. On the Current Closing Date and after
giving effect to the transactions contemplated by the Loan Documents occurring
on the Current Closing Date, the Borrower will be Solvent.
SECTION 4.11. 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
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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 G, T, U or X of the Federal
Reserve Board.
SECTION 4.12. 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 or those which, if not made or obtained, would not have a Material
Adverse Effect;
SECTION 4.13. Investment Company Act; Public Utility Holding
Company Act. Neither the Borrower nor any Consolidated Subsidiary 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.
SECTION 4.14. Principal Offices. As of the Current Closing
Date, the principal office, chief executive office and principal place of
business of the Borrower is Four Embarcadero Center, Suite 3150, San Francisco,
California 94111.
SECTION 4.15. REIT Status. For the fiscal year ended December
31, 1995, the Borrower qualified and the Borrower intends to continue to qualify
as a real estate investment trust under the Code.
SECTION 4.16. Patents, Trademarks, etc. The Borrower has
obtained and holds in full force and effect all patents, trademarks,
servicemarks, trade names, copyrights and other such rights, free from
burdensome restrictions, which are necessary for the operation of its business
as
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presently conducted, the impairment of which is likely to have a Material
Adverse Effect.
SECTION 4.17. Ownership of Property. Schedule 4.17 attached
hereto and made a part hereof sets forth all the real property owned or leased
by the Borrower and Persons in which the Borrower, directly or indirectly, owns
an interest as of the Current Closing Date. As of the Current Closing Date, the
Borrower and such Persons have good and insurable fee simple title (or leasehold
title if so designated on Schedule 4.17) 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 4.17.
SECTION 4.18. No Default. No Event of Default or, to the best
of the Borrower's knowledge, Default exists under or with respect to any Loan
Document and the Borrower is not 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
result in a Material Adverse Effect.
SECTION 4.19. Licenses, etc. The Borrower has obtained and
does hold in full force and effect, all franchises, licenses, permits,
certificates, authorizations, qualifications, accreditation, 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 have a
Material Adverse Effect.
SECTION 4.20. Compliance With Law. The Borrower and each of
the Real Property Assets are 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 have a Material Adverse Effect.
SECTION 4.21. No Burdensome Restrictions. Except as may have
been disclosed by the Borrower in writing to the Banks, Borrower is not a party
to any agreement or
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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 have a Material Adverse Effect.
SECTION 4.22. Brokers' Fees. The Borrower has not dealt with
any broker or finder with respect to the transactions contemplated by this
Agreement or otherwise in connection with this Agreement, and the Borrower has
not done any act, 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, other than the fees payable to the Lead
Agent, the Managing Co-Agent and the Banks, and certain other Persons as
previously disclosed in writing to the Lead Agent.
SECTION 4.23. 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 years.
SECTION 4.24. Insurance. The Borrower currently maintains, or,
if the Borrower does not maintain, then it will cause 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 liability and casualty insurance 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.
SECTION 4.25. Organizational Documents. The documents
delivered pursuant to Section 3.1(d) constitute, as of the Current 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.
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ARTICLE V
AFFIRMATIVE AND NEGATIVE COVENANTS
The 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 each of
the Banks:
(a) as soon as available and in any event within five (5)
Domestic Business Days after the same is required to be filed with the
Securities and Exchange Commission (but in no event later than 120 days after
the end of each fiscal year of the Borrower) a consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries as of the end of such fiscal year and
the related consolidated statements of Borrower's financial position for such
fiscal year, setting forth in each case in comparative form the figures for the
previous fiscal year, all reported on in a manner acceptable to the Securities
and Exchange Commission and reported on by Coopers & Lybrand LLP or other
independent public accountants of nationally recognized standing;
(b) as soon as available and in any event within five (5)
Domestic Business Days after the same is required to be filed with the
Securities and Exchange Commission (but in no event later than 75 days after the
end of each of the first three quarters of each fiscal year of the Borrower),
(i) a consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries as of the end of such quarter and the related consolidated
statements of Borrower's financial position for such quarter and for the portion
of the Borrower's fiscal year ended at the end of such quarter, setting forth in
the case of such Borrower's financial position in comparative form the figures
for the corresponding quarter and the corresponding portion of the Borrower's
previous fiscal year, and (ii) and such other information reasonably requested
by the Lead Agent and Managing Co-Agent or any Bank;
(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) setting
forth in reasonable detail the calculations required to establish
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whether the Borrower was in compliance with the requirements of Section 5.8 on
the date of such financial statements; (ii) stating whether, to such officer's
knowledge, 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
Borrower 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 the Borrower on the dates and for the
periods indicated, on the basis of GAAP, with respect to the Borrower subject,
in the case of interim financial statements, to normally recurring 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 Current Closing Date) and ending on a date
not more than ten (10) Domestic Business Days prior to the date of such delivery
and that (1) on the basis of such financial statements and such review of the
Loan Documents, no Event of Default existed under Section 6.1(b) with respect to
Sections 5.8 and 5.9 at or as of the date of said financial statements, and (2)
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 and (3) no event has occurred which would give rise to a mandatory
prepayment pursuant to Section 2.10 hereof. Such certificate shall set forth the
calculations required to establish the matters described in clauses (1) and (3)
above;
(d) Intentionally Omitted.
(e) (i) within five (5) Domestic Business Days after any
officer of the Borrower obtains knowledge of any Default, if such Default is
then continuing, a certificate of the chief financial officer, the chief
accounting officer, controller, or other executive officer of the Borrower
setting forth the details thereof and the action which the Borrower is taking or
proposes to take with
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respect thereto; and (ii) promptly and in any event within five (5) Domestic
Business Days after the Borrower obtains knowledge thereof, notice of (x) any
litigation or governmental proceeding pending or threatened against the Borrower
or the Real Property Assets as to which there is a reasonable possibility of an
adverse determination and which, if adversely determined, is likely to
individually or in the aggregate, result in a Material Adverse Effect, (y) any
other event, act or condition which is likely to result in a Material Adverse
Effect, and (z) any event giving rise to a mandatory prepayment pursuant to
Section 2.10;
(f) promptly upon the mailing thereof to the shareholders of
the Borrower generally, copies of all financial statements, reports and proxy
statements so mailed;
(g) 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) (other than the exhibits thereto, which exhibits will
be provided upon request therefor by any Bank) which the Borrower shall have
filed with the Securities and Exchange Commission;
(h) 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 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
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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;
(i) promptly and in any event within five (5) Domestic
Business Days after the Borrower obtains actual knowledge of any of the
following events, a certificate of the Borrower, executed by an officer of the
Borrower, specifying the nature of such condition, and the Borrower's or, if the
Borrower has actual knowledge thereof, the Environmental Affiliate's proposed
initial response thereto: (i) the receipt by the Borrower, or, if the Borrower
has actual knowledge thereof, any of the Environmental Affiliates of any
communication (written or oral), whether from a governmental authority, citizens
group, employee or otherwise, that alleges that the Borrower, or, if the
Borrower has actual knowledge thereof, 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 Borrower shall obtain actual
knowledge that there exists any Environmental Claim pending against the Borrower
or any Environmental Affiliate and such Environmental Claim is likely to have a
Material Adverse Effect or (iii) the Borrower obtains actual knowledge of any
release, emission, discharge or disposal of any Material of Environmental
Concern that is likely to form the basis of any Environmental Claim against the
Borrower or any Environmental Affiliate which in any such event is likely to
have a Material Adverse Effect;
(j) 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 loss in excess of $1,500,000 of the Borrower, copies of such
notices and correspondence;
(k) simultaneously with delivery of the certificate required
pursuant to Section 5.1(c), an updated Schedule 4.17, certified by the chief
financial officer or
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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;
(l) within five (5) days after filing of the annual income tax
return with the Internal Revenue Service, evidence reasonably satisfactory to
the Lead Agent that the Borrower continues to qualify as a real estate
investment trust under the Internal Revenue Code;
(m) simultaneously with delivery of the information required
by Sections 5.1(a) and (b), a statement of Unleveraged Asset Net Operating Cash
Flow with respect to each Unleveraged Asset and a list of all Unleveraged Assets
and all other Real Property Assets and Minority Holdings;
(n) from time to time such additional information regarding
the financial position or business of the Borrower and its Subsidiaries as the
Lead Agent, at the request of any Bank, may reasonably request in writing; and
(o) promptly after request therefor by any Bank, copies of
insurance certificates with respect to each Unleveraged Asset.
SECTION 5.2. Payment of Obligations. The Borrower and its
Consolidated Subsidiaries will pay and discharge, at or before maturity, all its
respective 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 liabilities, except where such liabilities may be contested in
good faith by appropriate proceedings, and will maintain in accordance with
GAAP, appropriate reserves for the accrual of any of the same.
SECTION 5.3. Maintenance of Property; Insurance; Leases.
(a) The Borrower will keep, and will cause each Consolidated
Subsidiary to keep, all property useful and necessary in its business, including
without limitation the Real Property Assets (for so long as it constitutes Real
Property Assets), in good repair, working order and condition, or shall take all
reasonable steps to cause the tenant of such Real Property Asset to perform its
maintenance obligation under its lease, ordinary wear and tear excepted.
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(b) The Borrower shall maintain, or cause to be maintained,
insurance comparable to that described in Section 4.24 hereof with insurers
meeting the qualifications described therein, which insurance shall in any event
not provide for less coverage than insurance customarily carried by owners of
properties similar to, and in the same locations as, the Real Property Assets,
and (b) furnish to each Bank from time to time, upon written request,
certificates of insurance and such other information relating to such insurance
as such Bank may reasonably request. The Borrower will deliver to the Banks (i)
on the date of the first Borrowing hereunder, a certificate dated such date
showing the amount of coverage as of such date, (ii) upon request of any Bank
through the Lead Agent from time to time full information as to the insurance
carried, (iii) within five (5) days of receipt of notice from any insurer a copy
of any notice of cancellation or material change in coverage from that existing
on the date of this Agreement and (iv) forthwith, notice of any cancellation or
nonrenewal of coverage by the Borrower.
(c) The Borrower will not, and will not permit any of its
Consolidated Subsidiaries to amend, modify or terminate any lease with respect
to any Unleveraged Asset, without prior written notice to the Lead Agent, if,
in the Borrower's reasonable judgment, such amendment, modification or
termination would result in a decrease of two percent (2%) or more in the
Unleveraged Assets Value at the time. The Lead Agent promptly shall notify the
Banks of any such consent given by the Lead Agent.
SECTION 5.4. Conduct of Business and Maintenance of Existence.
The Borrower will continue to engage in business of the same general type as now
conducted by the Borrower, and will preserve, renew and keep in full force and
effect, its corporate existence and its respective rights, privileges and
franchises necessary for the normal conduct of business.
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,
Environmental Laws, and all zoning and building codes with respect to the Real
Property Assets and ERISA and the rules and regulations thereunder and all
federal securities laws)
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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, including without
limitation the Real Property Assets, to examine and make abstracts from any of
its books and records and to discuss its affairs, finances and accounts with its
officers and independent public accountants, all at such reasonable times, upon
reasonable prior notice and as often as may reasonably be desired.
SECTION 5.7. Existence. The Borrower shall do or cause to be
done, all things necessary to preserve and keep in full force and effect its and
its Consolidated Subsidiaries' existence and its patents, trademarks,
servicemarks, tradenames, copyrights, franchises, licenses, permits,
certificates, authorizations, qualifications, accreditation, 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. Measured as of the last day of each
calendar quarter, the ratio of Annual EBITDA to Total Debt Service will not be
less than 2.0:1.
(b) Maximum Debt to Tangible FMV Net Worth. As of the last day
of each calendar quarter, the Maximum Total Debt Ratio will be less than 1.0:1.
(c) EBITDA Coverage. As of the last day of each calendar
quarter, the ratio of (x) Annual EBITDA to (y) the sum of (i) total dividends
paid by the Borrower for the last four consecutive quarters, plus (ii) Total
Debt Service, will not be less than 1.0:1.
(d) Intentionally Omitted.
(e) Dividends. The Borrower will not, as determined on an
aggregate annual basis, pay any dividends in excess of 95% of the Borrower's FFO
for such year.
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During the continuance of a monetary Event of Default, Borrower shall only pay
those dividends necessary to maintain its status as a real estate investment
trust.
(f) Minimum Consolidated Tangible Net Worth. Consolidated
Tangible Net Worth of the Borrower and its Consolidated Subsidiaries will at no
time be less than $320,000,000.
(g) Intentionally Omitted.
(h) LTV Ratio. At no time shall the LTV Ratio exceed the
Permitted LTV Ratio, subject, however, to the Borrower's rights to cure pursuant
to Section 2.10(a). Failure to restore compliance with this Section 5.8(h) in
accordance with Section 2.10(a) shall be an immediate Event of Default.
(i) Unleveraged Assets Minimum Debt Service Coverage. As of
the last day of each calendar quarter, the Borrower shall be in compliance with
the Unleveraged Assets Minimum Debt Service Coverage, subject, however, to the
Borrower's rights to cure pursuant to Section 2.10(c). Failure to restore
compliance with this Section 5.8(i) in accordance with Section 2.10(c) shall be
an immediate Event of Default.
SECTION 5.9. Restriction on Fundamental Changes. (a) The
Borrower shall not enter into any merger or consolidation, unless (i) the
Borrower is the surviving entity, (ii) the entity which is merged into Borrower
is predominantly in the commercial real estate business, (iii) the
creditworthiness of the surviving entity's long term unsecured debt or implied
senior debt, as applicable, is not lower than Borrower's creditworthiness two
months immediately preceding such merger and (iv) in the case of any merger
where the then fair market value of the assets of the entity which is merged
into the Borrower is (a) fifteen percent (15%) or more of the Borrower's then
Combined Asset Value, the Lead Agent and Managing Co-Agent consent thereto in
writing, (b) thirty-five percent (35%) or more of the Borrower's then Combined
Asset Value, the Required Banks consent thereto in writing. The Borrower shall
not 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 substantially all of
its
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business or property, whether now or hereafter acquired. No new Minority
Holdings or other new business lines shall be created without the prior written
consent of the Lead Agent and Managing Co-Agent (which consent shall not be
unreasonably withheld or delayed), excluding any joint ventures in which, in
aggregate, Borrower's ownership interest is less than 30% of Borrower's Combined
Asset Value. Nothing in this Section shall be deemed to prohibit the sale or
leasing of portions of the Real Property Assets in the ordinary course of
business.
(b) The Borrower shall not amend its articles of
incorporation, by-laws, or other organizational documents in any manner that
would have a Material Adverse Effect without the Lead Agent's consent, which
shall not be unreasonably withheld.
(c) The Borrower shall deliver to Lead Agent copies of all
amendments to its articles of incorporation, by-laws, or other organizational
documents no less than ten (10) days after the effective date of any such
amendment.
SECTION 5.10. Changes in Business. The Borrower shall not
enter into any business which is substantially different from that conducted by
the Borrower on the Current Closing Date after giving effect to the transactions
contemplated by the Loan Documents. The Borrower shall carry on its business
operations through the Borrower and its Subsidiaries. For purposes of this
Section, the activities permitted under Section 5.20 shall be considered part of
the Borrower's current business.
SECTION 5.11. Intentionally Omitted.
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. Hedging Requirements. Within five (5) Domestic
Business Days after the last day of each calendar quarter, commencing December
31, 1995, the Borrower shall have in effect "Interest Rate Hedges" on the
greater of (i) 50% of Borrower's average Debt during the immediately preceding
twelve-month period, and (ii) 50% of the then
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aggregate Debt of the Borrower. "Interest Rate Hedges" shall mean interest rate
exchange, collar, cap, swap, adjustable strike cap, adjustable strike corridor
or similar agreements, each of which (i) shall have a minimum term of two (2)
years, or, in the case of loans pursuant to which interest shall accrue at a
rate other than a fixed rate, a term equal to the term of such floating rate
loan (to the extent the term of such floating rate loan is less than two (2)
years), (ii) shall have the effect of capping the interest rates covered thereby
at a rate equal to or lower than the Cap Rate at the time of purchase or
execution, and (iii) shall be with an Approved Bank (which for purposes of this
Section 5.14 only shall be deemed to be an entity other than an Approved Bank
but with a long-term credit rating of "A" or better by S&P and "A2" or better by
Moody's) as the counterparty. It is acknowledged and agreed that the Borrower
shall have no obligation to replace any Interest Rate Hedge even if the
counterparty thereto shall cease to be an Approved Bank. The Borrower shall
submit evidence of its compliance with Interest Rate Hedges to the Lead Agent
together with the certificate required to be delivered by the Borrower pursuant
to Section 5.1(c).
SECTION 5.15. Borrower Status. Borrower 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 Code.
SECTION 5.16. Sale of Unleveraged Assets. Prior to the sale or
transfer of any Real Property Asset or Minority Holding with a Property Income
representing more than ten percent (10%) of the Property Income of the
Unleveraged Assets, the Borrower shall (i) deliver prior written notice to the
Lead Agent and the Banks, (ii) deliver to the Lead Agent a certificate from its
Chief Financial Officer certifying that at the time of such sale or other
disposal, the Borrower is in compliance with, and expects to remain in
compliance with all of the covenants contained in Sections 5.8 and 5.14 are and
shall continue to be true and accurate in all respects, and (iii) in the case of
an Unleveraged Asset, pay to the Lead Agent an amount equal to that required
pursuant to Section 2.10(b).
SECTION 5.17. Liens; Release of Liens. Neither the Borrower
nor any of its 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 unless the same is being contested in good faith or the same
is discharged, bonded off or paid within thirty (30)
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days of filing of such Lien, on or with respect to any Unleveraged Asset.
Notwithstanding the foregoing, Borrower may obtain a release from the terms of
this Agreement of any Unleveraged Asset if, with respect to the release of any
Unleveraged Asset with a Property Income representing more than ten percent
(10%) of the Property Income of the Unleveraged Assets, Borrower has complied
with Section 2.10(b) and prior to or simultaneously with such release (i)
Borrower shall pay to the Lead Agent any amounts due pursuant to Section
2.10(b), and (ii) Borrower delivers to the Lead Agent a certificate from its
Chief Financial Officer certifying that at the time of the release the Borrower
is in compliance with, and expects to remain in compliance with, all of the
covenants contained in Sections 5.8 and 5.14.
SECTION 5.18. Intentionally Omitted.
SECTION 5.19 New Acquisitions. Borrower may use proceeds of
the Loans to acquire additional Real Property Assets to be included as an
Unleveraged Asset, subject to the requirements set forth below ("New
Acquisitions"). It is understood and agreed that the Borrower may also use
proceeds of the Loans to acquire Real Property Assets that are not New
Acquisitions and in accordance with all other terms of this Agreement. New
Acquisitions to be included as Unleveraged Assets shall be (i) income producing
commercial properties (x) subject to existing long-term leases or (y) purchased
in connection with sale-leaseback transactions, (ii) free of any Liens, and
(iii) either (x) at a minimum, 90% leased or (y) at a minimum, 80% leased at the
time of acquisition and 90% leased within six (6) months thereafter (it being
understood that if such New Acquisition is not 90% leased within such six (6)
months, then such New Acquisition shall not be deemed to be an Unleveraged
Asset.
SECTION 5.20 Development Activities. The Borrower shall not
engage in any development activities other than development of "build-to-suit"
improvements pre-leased to the tenant (in connection with which the Borrower
shall have no construction completion risk) except for development in connection
with the expansion and/or repositioning or restoration following a casualty or
condemnation of existing improvements on Real Property Assets. Notwithstanding
the foregoing, the Borrower may engage in all other build-to-suit development
activities where there is construction completion risk provided that in no event
shall the value (determined in accordance with the definition of Combined Asset
Value) of the Real Property
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Assets under such other type of development exceed twenty percent (20%) of the
Borrower's Combined Asset Value.
SECTION 5.21 Intentionally Omitted.
SECTION 5.22 Intentionally Omitted.
SECTION 5.23 Business Loans. The Borrower acknowledges that
all of the Loans are business loans and no portion of the proceeds of the Loans
will be used for personal, family or household purposes.
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 interest on any Loan or any
fees or any other amount payable hereunder and the same shall continue for a
period of two (2) Domestic Business Days;
(b) the Borrower shall fail to observe or perform any covenant
contained in Section 5.8, Section 5.9(a) or (b), or Sections 5.10 to 5.18,
inclusive, and Section 5.20.
(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, or if such default is of such a nature that it
cannot with reasonable effort be completely remedied within said period of
thirty (30) days (other than payment of any monetary amount or a default
pursuant to Section 5.8(f)) such additional period of time as may be reasonably
necessary to cure same, provided Borrower commences such cure within said thirty
(30) day period and diligently prosecutes same, until completion, but in no
event shall such extended period exceed one hundred twenty (120) days;
(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
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been incorrect in any material respect when made (or deemed made);
(e) The Borrower or any Consolidated Subsidiary 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 Debt
the aggregate outstanding principal amount is in excess of $10,000,000 (other
than the Obligations) and such default shall continue beyond the giving of any
required notice and the expiration of any applicable grace period and such
default has not been waived, in writing, by the holder of any such Debt; or the
Borrower 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, if the effect of such default, event or condition
is to accelerate the maturity of any such indebtedness 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
indebtedness;
(f) the Borrower or any Consolidated Subsidiary 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 the Borrower or any Consolidated Subsidiary 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 90 days; or an order for relief shall be entered against the Borrower
or any Consolidated Subsidiary
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under the federal bankruptcy laws as now or hereafter in effect;
(h) one or more final, non-appealable judgments or decrees in
an aggregate amount of Five Million Dollars ($5,000,000) or more shall be
entered by a court or courts of competent jurisdiction against the Borrower or
its Consolidated Subsidiaries (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;
(i) there shall be a change in the majority of the Board of
Directors of Borrower during any twelve (12) month period;
(j) any Person (including affiliates of such Person) or
"group" (as such term is defined in applicable federal securities laws and
regulations) shall acquire more than thirty percent (30%) of the common shares
of the Borrower;
(k) the Borrower shall cease at any time to qualify as a real
estate investment trust under the Code;
(l) if any Termination Event with respect to a Plan shall
occur as a result of which Termination Event or Events any member of the ERISA
Group has incurred or may incur any liability to the PBGC or any other Person
and the sum (determined as of the date of occurrence of such Termination Event)
of the insufficiency of such Plan and the insufficiency of any and all other
Plans with respect to which such a Termination Event shall occur and be
continuing (or, in the case of a Multiple Employer Plan with respect to which a
Termination Event described in clause (ii) of the definition of Termination
Event shall occur and be continuing, the liability of the Borrower) is equal to
or greater than $5,000,000;
(m) if, any member of the ERISA Group shall commit a failure
described in Section 402(f)(1) of ERISA or Section 412(n)(1) of the Code and the
amount of the lien determined under Section 402(f)(3) of ERISA or Section
412(n)(3) of the Code that could reasonably be expected to be imposed on any
member of the ERISA Group or their assets in respect of such failure shall be
equal to or greater than $5,000,000;
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(n) at any time, for any reason the Borrower seeks to
repudiate its obligations under any Loan Document; or
(o) a default beyond any applicable notice or grace period
under any of the other Loan Documents.
SECTION 6.2. Rights and Remedies. (a) Upon the occurrence of
any Event of Default described in Sections 6.1(f) or (g), the Commitment shall
immediately terminate and 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 Borrower; and upon the occurrence and during the
continuance of any other Event of Default, the Lead Agent may (and upon the
demand of the Required Banks shall), by written notice to the Borrower,
terminate the Commitment and may (and upon the demand of the Required Banks
shall), in addition to the exercise of all of the rights and remedies permitted
the Lead Agent and the Banks at law or equity or under any of the other Loan
Documents, 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 ap-
praisement, diligence, presentment, notice of intent to demand or accelerate and
notice of acceleration), all of which are hereby expressly waived by the
Borrower.
(b) Notwithstanding anything to the contrary contained in this
Agreement or in any other Loan Document, the Managing Co-Agent, the Lead Agent,
and the Banks each agree that any exercise or enforcement of the rights and
remedies granted to the Managing Co-Agent, the Lead Agent or the Banks under
this Agreement or at law or in equity with respect to this Agreement or any
other Loan Documents shall be commenced and maintained by the Managing Co-Agent
or the Lead Agent on behalf of the Managing Co-Agent, the Lead Agent and/or the
Banks. The Lead Agent shall act at the direction of the Required Banks in
connection with the
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exercise of any and all remedies at law, in equity or under any of the Loan
Documents or, if the Required Banks are unable to reach agreement, then, from
and after an Event of Default, the Lead Agent may pursue such rights and
remedies as it may determine.
SECTION 6.3. Notice of Default. The Lead Agent shall give
notice to the Borrower under Section 6.1(c) promptly upon being requested to do
so by the Required Banks and shall thereupon notify all the Banks thereof. The
Lead Agent promptly will notify the Banks after becoming aware of any Default or
Event of Default.
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, grants and assigns to the Lead Agent,
as Lead Agent, for its benefit and for 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 the Borrower in substitution for
or in respect of any or all of the then existing Letter of Credit Collateral;
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(iii) all interest, dividends, cash, instru-
ments 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 or shall 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).
(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 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
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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 AGENTS
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. Agency and Affiliates. Morgan and Bank of Boston
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 or Managing Co-Agent respectively, and Morgan and Bank of Boston and their
affiliates may accept deposits from, lend money to, and generally engage in any
kind of business
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with the Borrower or any Subsidiary or affiliate of the Borrower as if it were
not the Lead Agent and Managing Co-Agent, respectively, hereunder, and the term
"Bank" and "Banks" shall include Morgan and Bank of Boston in their individual
capacities.
SECTION 7.3. Action by Lead Agent and Managing Co-Agent. The
obligations of the Lead Agent and Managing Co-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 or Event of 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 and Managing Co-Agent.
None of the Lead Agent, the Managing Co-Agent nor any of their 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 (ii) in the absence of its
own gross negligence or wilful misconduct. None of the Lead Agent, the Managing
Co-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 the Managing Co-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. Neither the Lead Agent nor the
Managing Co-Agent shall incur any liability by acting in reliance upon any
notice, consent, certificate, statement, or other writing (which may be a bank
wire, telex or similar writing) believed by it to be genuine or to be signed by
the proper party or parties.
SECTION 7.6. Indemnification. Each Bank shall, ratably in
accordance with its Commitment, indemnify the
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Lead Agent and the Managing Co-Agent and their 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
indemnitee's gross negligence or wilful misconduct) that such indemnitee may
suffer or incur in connection with this Agreement, the other Loan Documents or
any action taken or omitted by such indemnitee hereunder. In the event that the
Managing Co-Agent or the Lead Agent shall, subsequent to its receipt of
indemnification payment(s) from Banks in accordance with this section, recoup
any amount from the Borrowers, or any other party liable therefor in connection
with such indemnification, such Managing Co-Agent or the Lead Agent shall
reimburse the Banks which previously made the payment(s) pro rata, based upon
the actual amounts which were theretofore paid by each Bank. The Managing
Co-Agent or the Lead Agent, as the case may be, shall reimburse such Banks so
entitled to reimbursement within two (2) Domestic Business Days of its receipt
of such funds from the Borrowers or such other party liable therefor.
SECTION 7.7. Credit Decision. Each Bank acknowledges that it
has, independently and without reliance upon the Lead Agent, the Managing
Co-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, Managing Co-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 or Managing Co-Agent. The
Lead Agent or the Managing Co-Agent may resign at any time by giving notice
thereof to the Banks, the Borrower and each other and the Lead Agent or the
Managing Co-Agent, as applicable, shall resign in the event its Commitment is
reduced to zero. Upon any such resignation, the Required Banks shall have the
right to appoint a successor Lead Agent or Managing Co-Agent, as applicable,
which successor Lead Agent or successor Managing Co-Agent (as applicable) shall,
provided no Event of Default has occurred and is then continuing, be subject to
Borrower's approval, which approval shall not be unreasonably withheld or
delayed (except that Borrower shall, in all events, be deemed to have approved
Bank of Boston as a successor Lead Agent and Morgan as a successor Managing
Co-Agent). If no successor
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Lead Agent or Managing Co-Agent (as applicable) shall have been so appointed by
the Required Banks and approved by the Borrower, and shall have accepted such
appointment, within 30 days after the retiring Lead Agent or Managing Co-Agent
(as applicable) gives notice of resignation, then the retiring Lead Agent or
retiring Managing Co-Agent (as applicable) may, on behalf of the Banks, appoint
a successor Lead Agent or Managing Co-Agent (as applicable), which shall be the
Managing Co-Agent or the Lead Agent, as the case may be, who shall act until the
Required Banks shall appoint a Lead Agent or Managing Co-Agent. Upon the
acceptance of its appointment as the Lead Agent or Managing Co-Agent hereunder
by a successor Lead Agent or successor Managing Co-Agent, as applicable, such
successor Lead Agent or successor Managing Co-Agent, as applicable, shall
thereupon succeed to and become vested with all the rights and duties of the
retiring Lead Agent or retiring Managing Co-Agent, as applicable, and the
retiring Lead Agent or the retiring Managing Co-Agent, as applicable, shall be
discharged from its duties and obligations hereunder. After any retiring Lead
Agent's or retiring Managing Co-Agent's resignation hereunder, 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 or the Managing Co-Agent, as applicable.
In addition, if Morgan Guaranty Trust Company of New York ("Morgan"), as Lead
Agent, shall at any time hold Commitments equal to less than $10,000,000 in the
aggregate, it shall promptly notify the Banks and the Borrower thereof and shall
offer to resign as Lead Agent. If such offer shall be accepted by the Required
Banks (for this purpose only, Morgan shall be deemed to have accepted its own
offer to resign), a successor Lead Agent shall be appointed in accordance with
this Section 7.8.
SECTION 7.9. Financial Covenants. The Lead Agent shall monitor
and confirm all financial calculations made by the Borrower contained in the
officer's certificate which shall be delivered by the Borrower pursuant to
Section 5.1 hereof within five (5) days after the Lead Agent's receipt thereof.
If the Lead Agent finds any calculation to be incorrect or believes that an
Event of Default shall have occurred, the Lead Agent shall notify the Borrower,
the Managing Co-Agent and the Banks thereof, within two (2) Domestic Business
Days after such determination.
SECTION 7.10. Receipt of Notices. All notices, reports and
information received by the Lead Agent with respect to the Borrower and not
otherwise delivered to the Banks by the Borrower, shall be delivered to the
Banks
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within one (1) Domestic Business Day of the Lead Agent's receipt thereof.
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 CD 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 or the
Adjusted CD Rate, as the case may be, as determined by the Lead Agent will not
adequately and fairly reflect the cost to such Banks of funding their
Euro-Dollar Loans or CD Loans for such Interest Period, the Lead Agent shall
forthwith give notice thereof to the Borrower and the Banks, 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 or CD 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 or CD 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, on or after the date of this
Agreement, 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 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 CD Loans or to issue any Letter of Credit as a
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Fronting Bank or to participate in any Letter of Credit issued by a Fronting
Bank, 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 CD Loans or to issue
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 or CD Loans to maturity and shall so specify in such notice, the Borrower
shall be deemed to have delivered a Notice of Interest Rate Election and such
Euro-Dollar Loan or CD Loan shall be converted as of such date to a Base Rate
Loan (without payment of any amounts that Borrower would otherwise be obligated
to pay pursuant to Section 2.13 hereof with respect to Loans converted pursuant
to this Section 8.2) in an equal principal amount from such Bank (on which
interest and principal shall be payable contemporaneously with the related
Euro-Dollar Loans or CD Loans of the other Banks), and such Bank shall make such
a Base Rate Loan.
If at any time, it shall be unlawful or impossible for any
Bank to make, maintain or fund its Euro-Dollar Loans and CD Loans, the Borrower
shall have the right, upon five (5) Domestic Business Day's notice to the Lead
Agent, to either (x) cause a bank, reasonably acceptable to the Lead Agent, to
offer to purchase the Commitments of such Bank for an amount equal to such
Bank's outstanding Loans, and to become a Bank hereunder, which offer such Bank
is hereby required to accept, or (y) to repay in full all Loans then outstanding
of such Bank, together with interest and all other amounts due thereon, upon
which event, such Bank's Commitments shall be deemed to be cancelled pursuant to
Section 2.11(c).
SECTION 8.3. Increased Cost and Reduced Return.
(a) If, on or after the date hereof, 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
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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 or CD Loan any such requirement reflected in an applicable
Euro-Dollar Reserve Percentage or Domestic 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 or CD Loans, its Note, or its obligation to make Euro-Dollar Loans or CD
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 Euro-Dollar
Loan or CD Loan, 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
and Managing Co-Agent), 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 reasonably 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 reasonably 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 and
Managing Co-Agents), the Borrower shall pay to such Bank such additional amount
or amounts as will compensate such Bank (or its Parent) for such reduction.
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(c) Each Bank will promptly notify the Borrower, the Lead
Agent and the Managing Co-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 reasonable 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
demonstrable error. In determining such amount, such Bank may use any reasonable
averaging and attribution methods.
(d) If at any time, any Bank shall be owed amounts pursuant to
this Section 8.3, the Borrower shall have the right, upon five (5) Domestic
Business Days' notice to the Lead Agent to either (x) cause a bank, reasonably
acceptable to the Lead Agent, to offer to purchase the Commitments of such Bank
for an amount equal to such Bank's outstanding Loans, and to become a Bank
hereunder, which offer such Bank is hereby required to accept, or (y) to repay
in full all Loans then outstanding of such Bank, together with interest and all
other amounts due thereon, upon which event, such Bank's Commitment shall be
deemed to be cancelled pursuant to Section 2.11(c).
SECTION 8.4. Taxes.
(a) Any and all payments by the Borrower to or for the account
of any Bank, the Managing Co-Agent 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, the Managing Co-Agent 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, the Managing Co-Agent 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 (all such non-excluded taxes, duties, levies, im-
posts, 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
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Letter of Credit or participation therein to any Bank, the Fronting Bank, the
Managing Co-Agent 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
Managing Co-Agent 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 Managing
Co-Agent 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 Managing Co-Agent 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 Managing Co-Agent 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 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 re-
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ceivable 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 becomes a party to this Agreement indicates a United States
interest withholding tax rate in excess of zero, withholding tax at such rate
shall be considered excluded from "Taxes" as defined in Section 8.4(a).
(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 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 Section 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) Borrower shall be deemed to have delivered a Notice of
Interest Rate Election with respect to such affected Euro-Dollar Loans and
thereafter 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) unless the
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Borrower shall deliver a Notice of Interest Rate Election specifying CD Loans,
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, and
(c) Borrower will not be required to make any payment which
would otherwise be required by Section 2.13 with respect to such Euro-Dollar
Loans converted to CD Loans or Base Rate Loans pursuant to clause (a) above.
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 followed by telephonic confirmation or similar
writing) and shall be given to such party: (x) in the case of the Borrower, the
Managing Co-Agent or the Lead Agent, at its address, telex number or facsimile
number set forth on the signature pages hereof with a duplicate copy thereof, in
the case of the Borrower, to the Borrower, at Four Embarcadero Center, Suite
3150, San Francisco, CA 94111, Attn.: A. William Stein, and to Pillsbury Madison
& Sutro, LLP, 235 Montgomery Street, 14th Floor, San Francisco, California
94104, Attn.: Glenn Q. Snyder, Esq., (y) in the case of any Bank, at its
address, telex number or facsimile number set forth in its Administrative
Questionnaire or (z) in the case of any party, such other address, telex number
or facsimile number as such party may hereafter specify for the purpose by
notice to the Lead Agent and the Borrower. Each such notice, request or other
communication shall be effective (i) if given by telex or facsimile
transmission, when such telex or facsimile is transmitted to the telex number or
facsimile number specified in this Section and the appropriate answerback or
facsimile confirmation is received, (ii) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid, (iii) if given by a nationally recognized overnight
carrier, 24 hours after such communication is deposited with such carrier with
postage prepaid, or (iv) if given by any other means, when delivered at the
address specified in this Section; provided that notices to the Lead
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Agent and the Managing Co-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, the Managing Co-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
costs and expenses of the Lead Agent and the Managing Co-Agent (including
reasonable fees and disbursements of special counsel Skadden, Arps, Slate,
Meagher & Flom and, in connection with the preparation of this Agreement, the
Loan Documents and the documents and instruments referred to therein, or any
waiver or consent hereunder or any amendment 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 fees
and disbursements of counsel for the Lead Agent and each of the Banks, 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 Managing Co-Agent,
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 but excluding those liabilities, losses, damages,
costs and expenses incurred solely by reason of the gross negligence or wilful
misconduct of any Indemnitee as finally determined by a
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court of competent jurisdiction, 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 Borrower 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
Borrower or any of the Environmental Affiliates, 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, the Managing Co-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 (vi) the exercise by the Lead Agent,
the Managing Co-Agent, and the Banks of their rights and remedies (including,
without limitation, foreclosure) under any agreements creating any such Lien.
The Borrower's obligations under this Section shall survive the termination of
this Agreement and the payment of the Obligations.
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,
but subject to the prior consent of the Lead Agent and the Managing Co-Agent, to
set off and to appropriate and apply any and all deposits (general or special,
time or demand, provisional or final) 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 issued by it (in its capacity as a Fronting Bank) or
participation therein which is greater than the proportion received by any other
Bank in respect of the aggregate amount of principal and interest due with
respect to any Note held by such other Bank or Letter of Credit issued by
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such other Bank (in its capacity as a Fronting Bank) or participated in by such
other Bank, the Bank receiving such proportionately greater payment shall
purchase such participations in the Notes held by the other Banks, 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 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 to any deposits not received in connection with the Loans 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, 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.
Notwithstanding anything to the contrary contained herein, any Bank may, by
separate agreement with the Borrower, waive its right to set off contained
herein or granted by law and any such written waiver shall be effective against
such Bank under this Section 9.4.
SECTION 9.5. Amendments and Waivers. Any provision of this
Agreement or the Notes 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 or the
Managing Co-Agent are affected thereby, by the Lead Agent or the Managing
Co-Agent, as applicable); provided that no such amendment or waiver with respect
to this Agreement, the Notes or any other Loan Documents 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 hereunder, (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) modify the
provisions of Section 9.15, (vi) permit Liens on the Unleveraged Assets, or
(vii) modify the provisions of this Section 9.5. From and after an Event of
Default, the
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Lead Agent shall act in accordance with the provisions of Section 6.2(b).
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
its rights under this Agreement or the other Loan Documents without the prior
written consent of all Banks and the Lead Agent. The Lead Agent and the Banks
shall not assign their respective interests under this Agreement except as set
forth in Section 7.8 (with respect to the Lead Agent and the Managing Co-Agent)
and this Article IX (with respect to the Banks).
(b) Any Bank may at any time grant (i) prior to the occurrence
of an Event of Default, to one or more banks or other financial institutions in
minimum amounts of not less than $10,000,000 (or any lesser amount in the case
of participations to an existing Bank) and (ii) after the occurrence and during
the continuation of an Event of Default, to any Person in any amount (in each
case, a "Participant") participating interests in its Commitment or any or all
of its Loans. Any participation made during the continuation of an Event of
Default shall not be affected by the subsequent cure of such Event of Default.
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, the Managing Co-Agent 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), (iv) or (v) 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
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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 (i) prior to the
occurrence of an Event of Default to one or more banks or other financial
institutions in minimum amounts of not less than $10,000,000 (or any lesser
amount in the case of assignments to an existing Bank) and (ii) after the
occurrence and during the continuation of an Event of Default, to any Person (in
each case, 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 "B"
hereto executed by such Assignee and such transferor Bank, with (and subject to)
the consent of the Borrower and the Lead Agent, which consent shall not be
unreasonably withheld or delayed; provided that if an Assignee is an affiliate
of such transferor Bank, no such consent shall be required, provided that if
the transferor Bank has a rating as of the date of such assignment of A or
better, such affiliate shall have a rating of at least A and with respect to all
other Banks, the rating of such affiliate's senior unsecured indebtedness shall
be at least investment grade at such time (although nothing contained in this
Agreement shall limit that right of any Bank to assign its interest herein as
aforesaid to any successor by merger or consolidation); and provided further
that, upon the occurrence and during the continuation of an Event of Default, a
Bank may assign its interest herein to any affiliate, regardless of rating and
furthermore, that Borrower's consent to an Assignee will not be required. 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 no further consent
or action by any party shall be required and the transferor Bank shall be
released from its obligations hereunder to a corresponding extent. Upon the
consummation of any assignment pursuant to this subsection (c), the transferor
Bank, the Lead Agent and the Borrower shall make appropriate arrangements so
that, if required, a new Note is 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
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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. Any
assignment made during the continuation of an Event of Default shall not be
affected by any subsequent cure of such Event of Default.
(d) Any Bank may at any time assign all or any portion of its
rights under this Agreement and its Note to a Federal Reserve Bank. No such
assignment shall release the transferor Bank from its obligations hereunder.
(e) 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. Collateral. Each of the Banks represents to the
Lead Agent and each of the other Banks that it in good faith is not relying upon
any "margin stock" (as defined in Regulation U) as collateral in the extension
or maintenance of the credit provided for in this Agreement.
SECTION 9.8. 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
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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 or the Managing Co-Agent 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.
Section 9.9. Marshalling; Recapture. Neither of the Lead
Agent, the Managing Co-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 in connection with this Agreement, 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 9.10. 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 and
the Borrower 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
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confirmation from such party of execution of a counterpart hereof by such
party).
SECTION 9.11. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE
LEAD AGENT, THE MANAGING CO-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 9.12. 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 9.13. Domicile of Loans. 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 9.14. Limitation of Liability. No claim may be made by
the Borrower or any other Person acting by or through Borrower against the Lead
Agent, the Managing Co-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 the 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.
SECTION 9.15. Recourse Obligation. This Agreement and the
Obligations hereunder are fully recourse to the Borrower. Notwithstanding the
foregoing, no recourse under or upon any obligation, covenant, or agreement
contained in this Agreement shall be had against any officer, director,
shareholder or employee of the Borrower except in the event of fraud or
misappropriation of funds on the part of such officer, director, shareholder or
employee.
SECTION 9.16. Confidentiality. The Lead Agent, the Managing
Co-Agent and the Banks each agree (on behalf of themselves and each of their
affiliates, directors, officers, employees and representatives) to use
reasonable precautions to keep confidential, in accordance with their customary
procedures for handling confidential information of this nature and in
accordance with safe and sound practices, any non-public information supplied to
them by the
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Borrower or its agents pursuant to this Agreement which is identified by the
Borrower as being confidential at the time the same is delivered to the Lead
Agent, Managing Co-Agent or a Bank, as applicable, provided that nothing herein
shall limit the disclosure of any such information (i) to the extent required by
statute, rule, regulation or judicial process, (ii) to counsel for the Lead
Agent, Managing Co-Agent or a Bank, (iii) to examiners, auditors or accountants
(provided that with respect to such auditors or accountants only, they agree to
be bound by the restrictions set forth in this Section 9.16) or, (iv) to any
assignee or participant (or prospective assignee or participant) so long as such
assignee or participant (or prospective assignee or participant) first agrees to
be bound by these provisions. None of the Lead Agent, Managing Co-Agent or the
Banks shall be deemed to have breached this Section 9.16 if a prohibited
disclosure of confidential information by such party is inadvertent.
SECTION 9.17. Legal Rate. Notwithstanding anything in this
Credit Agreement or any Loan Document to the contrary, if at any time the
interest rate applicable to the Notes, together with all fees and charges which
are treated as interest under applicable law (collectively, the "Charges",
as provided for in this Credit Agreement or in any other document executed
in connection herewith, or otherwise contracted for, charged, received, taken or
reserved by the Lead Agent, on behalf of the Banks, shall exceed the maximum
lawful rate (the "Legal Rate") which may be contracted for, charged,
taken, received or reserved by the Lead Agent, on behalf of the Banks in
accordance with applicable law, the rate of interest payable under such Notes,
together with all Charges payable, shall be limited to the Legal Rate and any
interest or Charges not so charged, taken, received or reserved by Lead Agent,
on behalf of the Banks at such time shall be spread, prorated or amortized over
the term of such Notes to the fullest extent permitted by law.
96
<PAGE> 98
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.
TRINET CORPORATE REALTY TRUST, INC.
By:______________________________
Name:
Title:
Facsimile number: (415) 391-6259
Address: Four Embarcadero Center
Suite 3150
San Francisco, CA 94111
Attn: Chief Financial
Officer
Commitments
$25,000,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: ______________________________
Name: Timothy O'Donovan
Title: Vice President
$25,000,000 THE FIRST NATIONAL BANK OF BOSTON
By: ______________________________
Name:
Title:
<PAGE> 99
$22,500,000 DRESDNER BANK AG, NEW YORK BRANCH
By: _____________________________
Name:
Title:
By: _____________________________
Name:
Title:
$25,000,000 BANK OF MONTREAL, CHICAGO BRANCH
By: _____________________________
Name:
Title:
$17,500,000 COMMERZBANK AKTIENGESELLSCHAFT,
LOS ANGELES BRANCH
By: _____________________________
Name:
Title:
By: _____________________________
Name:
Title:
$17,500,000 NBD BANK
By: _____________________________
Name:
Title:
<PAGE> 100
$17,500,000 KEY BANK NATIONAL ASSOCIATION
(f/k/a Society Bank)
By: _____________________________
Name:
Title:
$15,000,000 PNC BANK, N.A.
By: _____________________________
Name:
Title:
$15,000,000 SIGNET BANK/VIRGINIA
By: _____________________________
Name:
Title:
$10,000,000 BANQUE NATIONALE DE PARIS
By: _____________________________
Name:
Title:
$10,000,000 THE INDUSTRIAL BANK OF JAPAN,
LIMITED, LOS ANGELES AGENCY
By: _____________________________
Name:
Title:
<PAGE> 101
Total Commitments
$200,000,000
THE FIRST NATIONAL BANK
OF BOSTON, as Managing Co-Agent
By: ___________________________
Name:
Title:
The First National Bank
of Boston
100 Federal Street
Boston, MA 02110
Attention: _________________
Telecopy: _________________
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Lead Agent
By: ___________________________
Name: Timothy O'Donovan
Title: Vice President
c/o J.P. Morgan Services Inc.
500 Stanton Christiana Road
Newark, DE 19713-2107
Attention: Nancy K. Dunbar
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
<PAGE> 102
EXHIBIT A
NOTE
$ ________________ New York, New York
________ __, 1996
For value received, TriNet Corporate Realty Trust, Inc., a
Maryland corporation (the "Borrower"), promises 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 pursuant
to the Credit Agreement referred to below on the Maturity Date (as such term is
defined in the Credit Agreement). 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, and is delivered
pursuant to and subject to all of the terms of, the Amended and Restated
Revolving Credit Agreement dated as of ________ __, 1996 among the Borrower, the
banks listed on the signature pages thereof, The First National Bank of Boston,
as Managing Co-Agent
<PAGE> 103
and 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. The Borrower waives presentment, demand, protest and
notice of protest and non-payment of this Note.
This Note and the Obligations hereunder are fully recourse to
the Borrower. Notwithstanding the foregoing, no recourse under or upon any
obligation, covenant, or condition contained in this Note shall be had against
any officer, director, shareholder or employee of the Borrower except in the
event of fraud or misappropriation of funds on the part of such officer,
director, shareholder or employee.
This Note shall be governed by, and construed in accordance
with, the laws of the State of New York, without reference to the conflict of
laws principals thereof.
TRINET CORPORATE REALTY TRUST, INC.
By: ______________________
Name:
Title:
A-2
<PAGE> 104
Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Amount of
Amount of Type of Principal Maturity Notation
Date Loan Loan Repaid Date Made By
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
A-3
<PAGE> 105
EXHIBIT B
ASSIGNMENT AND ASSUMPTION AGREEMENT
TRANSFER SUPPLEMENT (this "Transfer Supplement") dated
as of ___________, 199__ between ___________________________ (the "Assignor")
and _________________________ having an address at ________________________
(the "Purchasing Bank").
W I T N E S S E T H:
WHEREAS, the Assignor has made loans to TriNet Corporate
Realty Trust, Inc., a Maryland corporation(the "Borrower"), pursuant to the
Amended and Restated Revolving Credit Agreement, dated as of ___________, 1996
(as the same may be amended, supplemented or otherwise modified through the date
hereof, the "Credit Agreement"), among the Borrower, the banks party thereto,
Morgan Guaranty Trust Company of New York, as Lead Agent, and The First National
Bank of Boston, as Managing Co-Agent. All capitalized terms used and not
otherwise defined herein shall have the respective meanings set forth in the
Credit Agreement;
WHEREAS, the Purchasing Bank desires to purchase and assume
from the Assignor, and the Assignor desires to sell and assign to the Purchasing
Bank, certain rights, title, interest and obligations under the Credit
Agreement;
NOW, THEREFORE, IT IS AGREED:
1. In consideration of the amount set forth in the receipt (the
"Receipt") given by Assignor to Purchasing Bank of even date herewith, and
transferred by wire to Assignor, the Assignor hereby assigns and sells, without
recourse, representation or warranty except as specifically set forth herein, to
the Purchasing Bank, and the Purchasing Bank hereby purchases and assumes from
the Assignor, a __% interest (the "Purchased Interest") of the Loans
constituting a portion of the Assignor's rights and obligations under the Credit
Agreement as of the Effective Date (as defined below) including, without
limitation, such percentage interest of the Assignor in any Loans owing to the
Assignor, any Note held by the Assignor, any Loan Commitment of the Assignor and
any other interest of the Assignor under any of the Loan Documents.
B-1
<PAGE> 106
2. The Assignor (i) represents and warrants that as of the date hereof
the aggregate outstanding principal amount of its share of the Loans owing to it
(without giving effect to assignments thereof which have not yet become
effective) is $_____________; (ii) represents and warrants that it is the legal
and beneficial owner of the interests being assigned by it hereunder and that
such interests are free and clear of any adverse claim; (iii) represents and
warrants that it has not received any notice of Default or Event of Default from
the Borrower; (iv) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations (or
the truthfulness or accuracy thereof) made in or in connection with the Credit
Agreement, or the other Loan Documents or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit Agreement, or
the other Loan Documents or any other instrument or document furnished pursuant
thereto; and (v) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its obligations under the
Credit Agreement or the other Loan Documents or any other instrument or document
furnished pursuant thereto. Except as specifically set forth in this Paragraph
2, this assignment shall be without recourse to Assignor.
3. The Purchasing Bank (i) confirms that it has received a copy of the
Credit Agreement, and the other Loan Documents, together with such financial
statements and such other documents and information as it has deemed appropriate
to make its own credit analysis and decision to enter into this Transfer
Supplement and to become a party to the Credit Agreement, and has not relied on
any statements made by Assignor or Skadden, Arps, Slate, Meagher & Flom; (ii)
agrees that it will, independently and without reliance upon any of the Lead
Agent, the Managing Co-Agent, the Assignor or any other Bank and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own appraisal of and investigation into the business, operations,
property, prospects, financial and other conditions and creditworthiness of the
Borrower and will make its own credit analysis, appraisals and decisions in
taking or not taking action under the Credit Agreement, and the other Loan
Documents; (iii) appoints and authorizes the Lead Agent to take such action as
agent on its behalf and to exercise such powers under the Credit Agreement, and
the other Loan Documents as are delegated to the Agent by the terms thereof,
together with such powers as are incidental thereto; (iv) agrees that it will be
bound by and perform in accordance with their terms all of the obligations which
by the terms of the Credit Agreement are required to be performed by it as a
Bank; (v) specifies as its address for notices and lending office, the office
set forth
B-2
<PAGE> 107
beneath its name on the signature page hereof; (vi) it has full power and
authority to execute and deliver, and perform under, this Transfer Supplement,
and all necessary corporate and/or partnership action has been taken to
authorize, and all approvals and consents have been obtained for, the execution,
delivery and performance thereof; (vii) this Transfer Supplement constitutes its
legal, valid and binding obligation enforceable in accordance with its terms;
and (viii) the interest being assigned hereunder is being acquired by it for its
own account, for investment purposes only and not with a view to the public
distribution thereof and without any present intention of its resale in either
case that would be in violation of applicable securities laws.
4. This Transfer Supplement shall be effective on the date (the
"Effective Date") on which all of the following have occurred (i) it shall have
been executed and delivered by the parties hereto, (ii) copies hereof shall have
been delivered to the Lead Agent and the Borrower, and (iii) the Purchasing Bank
shall have paid to the Assignor the agreed purchase price as set forth in the
Receipt.
5. On and after the Effective Date, (i) the Purchasing Bank shall be a
party to the Credit Agreement and, to the extent provided in this Transfer
Supplement, have the rights and obligations of a Bank thereunder and be entitled
to the benefits and rights of the Banks thereunder and (ii) the Assignor shall,
to the extent provided in this Transfer Supplement as to the Purchased Interest,
relinquish its rights and be released from its obligations under the Credit
Agreement.
6. From and after the Effective Date, the Assignor shall cause the Lead
Agent to make all payments under the Credit Agreement, and the Notes in respect
of the Purchased Interest assigned hereby (including, without limitation, all
payments of principal, fees and interest with respect thereto and any amounts
accrued but not paid prior to such date) to the Purchasing Bank.
7. This Transfer Supplement may be executed in any number of
counterparts which, when taken together, shall be deemed to constitute one and
the same instrument.
8. Assignor hereby represents and warrants to Purchasing Bank that it
has made all payments demanded to date by Morgan Guaranty Trust Company of New
York ("Morgan") as Lead Agent in connection with the Assignor's pro rata share
of the obligation to reimburse the Agent for its expenses. In the event Morgan,
as Lead Agent, shall demand reimbursement for fees and expenses from Purchasing
Bank for any period prior to the Effective Date,
B-3
<PAGE> 108
Assignor hereby agrees to promptly pay Morgan, as Lead Agent, such sums
directly, subject, however, to Paragraph 12 hereof.
9. Assignor will, at the cost of Assignor, and without expense to
Purchasing Bank, do, execute, acknowledge and deliver all and every such further
acts, deeds, conveyances, assignments, notices of assignments, transfers and
assurances as Purchasing Bank shall, from time to time, reasonably require, for
the better assuring, conveying, assigning, transferring and confirming unto
Purchasing Bank the property and rights hereby given, granted, bargained, sold,
aliened, enfeoffed, conveyed, confirmed, assigned and/or intended now or
hereafter so to be, on which Assignor may be or may hereafter become bound to
convey or assign to Purchasing Bank, or for carrying out the intention or
facilitating the performance of the terms of this Agreement or for filing,
registering or recording this Agreement.
10. The parties agree that no broker or finder was instrumental in
bringing about this transaction. Each party shall indemnify, defend the other
and hold the other free and harmless from and against any damages, costs or
expenses (including, but not limited to, reasonable attorneys' fees and
disbursements) suffered by such party arising from claims by any broker or
finder that such broker or finder has dealt with said party in connection with
this transaction.
11. Subject to the provisions of Paragraph 12 hereof, if, with respect
to the Purchased Interest only, Assignor shall on or after the Effective Date
receive (a) any cash, note, securities, property, obligations or other
consideration in respect of or relating to the Loan or the Loan Documents or
issued in substitution or replacement of the Loan or the Loan Documents, (b) any
cash or non-cash consideration in any form whatsoever distributed, paid or
issued in any bankruptcy proceeding in connection with the Loan or the Loan
Documents or (c) any other distribution (whether by means of repayment,
redemption, realization of security or otherwise), Assignor shall accept the
same as Purchasing Bank's agent and hold the same in trust on behalf of and for
the benefit of Purchasing Bank, and shall deliver the same forthwith to
Purchasing Bank in the same form received, with the endorsement (without
recourse) of Assignor when necessary or appropriate. If the Assignor shall fail
to deliver any funds received by it within the same Business Day of receipt,
unless such funds are received by Assignor after 4:00 p.m., Eastern Standard
Time, then the following business day after receipt, said funds shall accrue
interest at the federal funds interest rate and in addition to promptly
remitting said amount, Assignor shall remit such interest from the date received
to the date such amount is remitted to the Purchasing Bank.
B-4
<PAGE> 109
12. Assignor and Purchasing Bank each hereby agree to
indemnify and hold harmless the other, each of its directors and each of its
officers in connection with any claim or cause of action based on any matter or
claim based on the acts of either while acting as a Bank under the Credit
Agreement. Promptly after receipt by the indemnified party under this Section of
notice of the commencement of any action, such indemnified party shall notify
the indemnifying party in writing of the commencement thereof. If any such
action is brought against any indemnified party and that party notifies the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein, and to the extent that it may elect by written
notice delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof, with counsel
satisfactory to such indemnified party, and after receipt of notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof. In no event
shall the indemnified party settle or consent to a settlement of such cause of
action or claim without the consent of the indemnifying party.
B-5
<PAGE> 110
13. THIS TRANSFER SUPPLEMENT 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.
Wire Transfer Instructions: ________________________________________
By:_____________________________________
Name:
Title:
________________________________________
By:_____________________________________
Name:
Title:
Receipt Acknowledged this
_____ day of __________, 199__:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK, as Lead Agent
By:____________________________
Name:
Title:
B-6
<PAGE> 111
EXHIBIT C
Unleveraged Assets Information
(1) Location
(2) Purchase price or value
(3) Rent roll
(4) Square footage of improvements; percentage leased
(5) ownership interest (fee/leasehold)
(6) disclosure of any material environmental condition
<PAGE> 112
SCHEDULE 4.17
B-2
<PAGE> 113
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE I*
DEFINITIONS
<S> <C> <C> <C>
SECTION 1.1 Definitions................................................................... 1
1.2 Accounting Terms and Determinations........................................... 27
1.3 Types of Borrowings........................................................... 27
ARTICLE II
THE CREDITS
SECTION 2.1 Commitments to Lend........................................................... 28
2.2 Notice of Borrowing........................................................... 28
2.3 Notice to Banks; Funding of Loans............................................. 30
2.4 Notes......................................................................... 32
2.5 Letters of Credit............................................................. 33
2.6 Method of Electing Interest Rates............................................. 36
2.7 Interest Rates................................................................ 38
2.8 Fees.......................................................................... 42
2.9 Maturity Date................................................................. 42
2.10 Mandatory Prepayment.......................................................... 43
2.11 Optional Prepayments.......................................................... 44
2.12 General Provisions as to Payments............................................. 46
2.13 Funding Losses................................................................ 46
2.14 Computation of Interest and Fees.............................................. 47
2.15 Use of Proceeds............................................................... 47
2.16 Letter of Credit Usage Absolute............................................... 47
ARTICLE III
CONDITIONS
SECTION 3.1 Closing....................................................................... 49
3.2 Borrowings.................................................................... 51
3.3 Intentionally Omitted......................................................... 52
3.4 New Acquisitions and Additional Real Property
Assets.................................................................... 52
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1 Existence and Power........................................................... 53
4.2 Power and Authority........................................................... 53
</TABLE>
- --------
* The Table of Contents is not a part of this Agreement.
i
<PAGE> 114
<TABLE>
<CAPTION>
Page
<S> <C> <C> <C>
4.3 No Violation.................................................................. 54
4.4 Financial Information......................................................... 54
4.5 Litigation.................................................................... 54
4.6 Compliance with ERISA......................................................... 55
4.7 Environmental Matters......................................................... 55
4.8 Taxes......................................................................... 56
4.9 Full Disclosure............................................................... 56
4.10 Solvency...................................................................... 56
4.11 Use of Proceeds; Margin Regulations........................................... 56
4.12 Governmental Approvals........................................................ 57
4.13 Investment Company Act; Public Utility Holding
Company Act............................................................... 57
4.14 Principal Offices............................................................. 57
4.15 REIT Status................................................................... 57
4.16 Patents, Trademarks, etc...................................................... 57
4.17 Ownership of Property......................................................... 58
4.18 No Default.................................................................... 58
4.19 Licenses, etc................................................................. 58
4.20 Compliance With Law........................................................... 58
4.21 No Burdensome Restrictions.................................................... 58
4.22 Brokers' Fees................................................................. 59
4.23 Labor Matters................................................................. 59
4.24 Insurance..................................................................... 59
4.25 Organizational Documents...................................................... 59
ARTICLE V
AFFIRMATIVE AND NEGATIVE COVENANTS
SECTION 5.1 Information................................................................... 60
5.2 Payment of Obligations........................................................ 64
5.3 Maintenance of Property; Insurance; Leases.................................... 64
5.4 Conduct of Business and Maintenance of Existence.............................. 65
5.5 Compliance with Laws.......................................................... 65
5.6 Inspection of Property, Books and Records..................................... 66
5.7 Existence..................................................................... 66
5.8 Financial Covenants........................................................... 66
5.9 Restriction on Fundamental Changes............................................ 67
5.10 Changes in Business........................................................... 68
5.11 Intentionally Omitted......................................................... 68
5.12 Margin Stock.................................................................. 68
5.13 Intentionally Omitted......................................................... 68
5.14 Hedging Requirements.......................................................... 68
5.15 Borrower Status............................................................... 69
5.16 Sale of Unleveraged Assets................................................... 69
5.17 Liens; Release of Liens....................................................... 69
5.18 Intentionally Omitted......................................................... 70
5.19 New Acquisitions.............................................................. 70
</TABLE>
ii
<PAGE> 115
<TABLE>
<CAPTION>
Page
<S> <C> <C> <C>
5.20 Development Activities........................................................ 70
5.21 Intentionally Omitted......................................................... 71
5.22 Intentionally Omitted......................................................... 71
5.23 Business Loans................................................................ 71
ARTICLE VI
DEFAULTS
SECTION 6.1 Events of Default............................................................. 71
6.2 Rights and Remedies........................................................... 74
6.3 Notice of Default............................................................. 75
6.4 Actions in Respect of Letters of Credit....................................... 75
ARTICLE VII
THE AGENTS
SECTION 7.1 Appointment and Authorization................................................. 77
7.2 Agency and Affiliates......................................................... 77
7.3 Action by Lead Agent and Managing Co-Agent.................................... 78
7.4 Consultation with Experts..................................................... 78
7.5 Liability of Lead Agent and Managing Co-Agent................................. 78
7.6 Indemnification............................................................... 78
7.7 Credit Decision............................................................... 79
7.8 Successor Lead Agent or Managing Co-Agent..................................... 79
7.9 Financial Covenants........................................................... 80
7.10 Receipt of Notices............................................................ 80
ARTICLE VIII
CHANGE IN CIRCUMSTANCES
SECTION 8.1 Basis for Determining Interest Rate Inadequate or
Unfair.................................................................... 81
8.2 Illegality.................................................................... 81
8.3 Increased Cost and Reduced Return............................................. 82
8.4 Taxes......................................................................... 84
8.5 Base Rate Loans Substituted for Affected
Euro-Dollar Loans......................................................... 86
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Notices....................................................................... 87
9.2 No Waivers.................................................................... 88
9.3 Expenses; Indemnification..................................................... 88
9.4 Sharing of Set-Offs........................................................... 89
</TABLE>
iii
<PAGE> 116
<TABLE>
<CAPTION>
Page
<S> <C> <C> <C>
9.5 Amendments and Waivers........................................................ 90
9.6 Successors and Assigns........................................................ 91
9.7 Collateral.................................................................... 93
9.8 Governing Law; Submission to Jurisdiction..................................... 93
9.9 Marshalling; Recapture........................................................ 99
9.10 Counterparts; Integration; Effectiveness...................................... 94
9.11 WAIVER OF JURY TRIAL.......................................................... 95
9.12 Survival...................................................................... 95
9.13 Domicile of Loans............................................................. 95
9.14 Limitation of Liability....................................................... 95
9.15 Recourse Obligation........................................................... 95
9.16 Confidentiality............................................................... 96
9.17 Legal Rate.................................................................... 96
</TABLE>
Exhibit A - Note
Exhibit B - Transfer Supplement
Exhibit C - Unleveraged Assets Information
Schedule 4.17 - Real Property owned or leased by Borrower
iv
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet at September 30, 1996 and the consolidated
statement of operations for the nine months ended September 30, 1996 and is
qualified in its entirety by reference to such third quarter filing on form 10-Q
for the quarter ended September 30, 1996.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 8,844
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 665,401
<DEPRECIATION> 32,874
<TOTAL-ASSETS> 680,467
<CURRENT-LIABILITIES> 0
<BONDS> 283,107
0
33
<COMMON> 139
<OTHER-SE> 361,779
<TOTAL-LIABILITY-AND-EQUITY> 680,467
<SALES> 55,042
<TOTAL-REVENUES> 55,805
<CGS> 0
<TOTAL-COSTS> 1,995
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,537
<INCOME-PRETAX> 22,995
<INCOME-TAX> 0
<INCOME-CONTINUING> 22,995
<DISCONTINUED> 0
<EXTRAORDINARY> (1,165)
<CHANGES> 0
<NET-INCOME> 21,830
<EPS-PRIMARY> 1.45
<EPS-DILUTED> 0
</TABLE>
