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Exhibit 99(b)(1)
[CHASE LOGO]
September 25, 2000
PROJECT PAPA
SENIOR CREDIT FACILITIES
COMMITMENT LETTER
Hexalon Real Estate, Inc.
950 East Paces Ferry Road
Suite 2275
Atlanta, Georgia 30326
Attention: Gerald E. Egan
Ladies and Gentlemen:
You have advised The Chase Manhattan Bank ("CHASE") and Chase
Securities Inc. ("CSI") that Rodamco North America B.V., a Dutch BI ("RNA"), and
its subsidiary, Hexalon Real Estate, Inc., a Delaware REIT ("HEXALON"), intend
to form a limited partnership ("TENDERCO"), 79% of which will be owned by
Hexalon and 21% of which will be owned by certain affiliates of Hexalon owned by
RNA (the "HEXALON AFFILIATES" and, together with Hexalon, the "HEXALON
ENTITIES"), for the purpose of its acquiring all the issued and outstanding
common stock (the "COMMON SHARES"), preferred stock (the "PREFERRED SHARES") and
unit voting stock (the "UNIT VOTING SHARES" and, collectively with the Common
Shares and the Preferred Shares, the "SHARES"), par value $.01, of Urban
Shopping Centers, Inc., a Maryland REIT (the "TARGET"). The acquisition will be
effected through a tender offer (the "TENDER OFFER") by TenderCo for the Shares
followed by one or more mergers (collectively, the "MERGER") involving the
Target and TenderCo (with the surviving entity being referred to herein as NewCo
L.P. ("NEWCO L.P.")). Hexalon will be the general partner of NewCo L.P., and
NewCo L.P. will be the general partner, and 94.44% owner, of the limited
partnership operating subsidiary, Urban Shopping Centers, L.P., an Illinois
limited partnership ("USC L.P."). The Tender Offer will be contingent upon the
purchase by TenderCo pursuant thereto of not less than 66-2/3% of the Common
Shares, determined on a fully diluted basis after giving effect to the exercise
of any warrants, rights, options, conversion privileges or similar rights.
You have also advised us that prior to commencement of the Tender
Offer, RNA, Hexalon, TenderCo and the Target will have entered into a merger
agreement in substantially the form previously delivered to us and otherwise in
form and substance satisfactory to us (the "MERGER AGREEMENT") providing for the
Merger as soon as practicable after completion of the Tender Offer, pursuant to
which shareholders of the Target will be offered cash consideration of $48 per
Share. The Merger Agreement will, among other things, provide that each
shareholder of the Target (other than RNA and its affiliates) who has not
participated in the Tender Offer will, upon consummation of the Merger, receive
a cash merger price per Share of $48. References herein to the "Transaction"
shall include the
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Tender Offer, the Merger and the financings described herein and all other
transactions related to the Transaction.
We understand that to finance the Tender Offer and certain related
expenses and to refinance certain existing indebtedness of USC L.P., TenderCo
will require a senior credit facility of up to $1,250,000,000 (the "TENDER
FACILITY").
We further understand that to finance the Merger and certain related
expenses, to repay amounts owing under the Tender Facility, to refinance other
existing indebtedness of USC L.P. and RNA and to provide financing for other
general corporate purposes of NewCo L.P., NewCo L.P. will require senior credit
facilities of up to $1,368,810,000 (the "MERGER FACILITIES").
We further understand that to finance a distribution to certain of its
unitholders upon or after the closing of the Merger, USC L.P. will require a
senior credit facility of $291,190,000 (the "USC FACILITY", together with the
Tender Facility and the Merger Facilities, the "CREDIT FACILITIES").
In connection with the foregoing, you have requested that CSI agree to
structure, arrange and syndicate the Credit Facilities, and that Chase commit to
provide the entire principal amount of the Credit Facilities and to serve as
administrative agent for the Credit Facilities.
CSI is pleased to advise you that it is willing to act as exclusive
advisor, lead arranger and book manager for the Credit Facilities.
Furthermore, Chase is pleased to advise you of its commitment to
provide the entire amount of the Credit Facilities, upon the terms and subject
to the conditions set forth or referred to in this commitment letter (the
"COMMITMENT LETTER"), in the Summary of Terms and Conditions for the Tender
Facility attached hereto as Exhibit A (the "TENDER TERM SHEET"), in the Summary
of Terms and Conditions for the Merger Facilities attached hereto as Exhibit B
(the "MERGER TERM SHEET") and in the Summary of Terms and Conditions for the USC
Facility attached hereto as Exhibit C (the "USC TERM SHEET", together with the
Tender Term Sheet and the Merger Term Sheet, the "TERM SHEETS").
It is agreed that Chase will act as the sole and exclusive
administrative agent, and that CSI will act as the sole and exclusive advisor,
lead arranger and book manager, for the Credit Facilities, and each will, in
such capacities, perform the duties and exercise the authority customarily
performed and exercised by it in such roles. You agree that no other agents,
co-agents or arrangers will be appointed, no other titles will be awarded and no
compensation (other than that expressly contemplated by the Term Sheets and the
Fee Letter referred to below) will be paid in connection with the Credit
Facilities unless you and we shall so agree.
We intend to syndicate the Credit Facilities to a group of financial
institutions (together with Chase, the "LENDERS") identified by us in
consultation with you. CSI intends to commence syndication efforts immediately
following public announcement of the Tender Offer, and you agree actively to
assist CSI in completing a syndication satisfactory to it. Such assistance shall
include (a) your using commercially reasonable efforts to ensure that the
syndication efforts benefit materially from your existing lending relationships
and the existing lending relationships of the Target and its subsidiaries, (b)
direct contact between senior management and advisors of Hexalon, the Target and
its subsidiaries and the proposed Lenders, (c) assistance in the preparation of
a Confidential Information Memorandum and
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other marketing materials to be used in connection with the syndication and (d)
the hosting, with CSI, of one or more meetings of prospective Lenders
immediately following public announcement of the Tender Offer.
CSI will manage in consultation with you all aspects of the
syndication, including decisions as to the selection of institutions to be
approached and when they will be approached, when their commitments will be
accepted, which institutions will participate, the allocations of the
commitments among the Lenders and the amount and distribution of fees among the
Lenders. To assist CSI in its syndication efforts, you agree promptly to prepare
and provide to CSI and Chase all information with respect to RNA, the Hexalon
Entities, the Target, its subsidiaries and the Transaction, including all
financial information and projections (the "PROJECTIONS"), as we may reasonably
request in connection with the arrangement and syndication of the Credit
Facilities. You hereby represent and covenant that (a) all information other
than the Projections (the "INFORMATION") that has been or will be made available
to Chase or CSI by you or any of your representatives is or will be, when
furnished, complete and correct in all material respects and does not or will
not, when furnished, contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained
therein not materially misleading in light of the circumstances under which such
statements are made and (b) the Projections that have been or will be made
available to Chase or CSI by you or any of your representatives have been or
will be prepared in good faith based upon reasonable assumptions. You understand
that in arranging and syndicating the Credit Facilities we may use and rely on
the Information and Projections without independent verification thereof.
As consideration for Chase's commitment hereunder and CSI's agreement
to perform the services described herein, you agree to pay to Chase the fees set
forth in Annex I to each of the Tender Term Sheet, the Merger Term Sheet and the
USC Term Sheet, and in the Fee Letter dated the date hereof and delivered
herewith (the "FEE LETTER").
Chase's commitment hereunder and CSI's agreement to perform the
services described herein are subject to (a) there not occurring or becoming
known to us any material adverse condition or material adverse change in or
affecting the business, operations, property, condition (financial or otherwise)
or prospects of RNA and its subsidiaries (including the Hexalon Entities), taken
as a whole, or the Target and its subsidiaries, taken as a whole, (b) our
completion of and satisfaction in all respects with a due diligence
investigation of RNA, the Hexalon Entities and the Target and its subsidiaries
(it being understood that Chase and CSI are satisfied with their due diligence
investigation to the extent performed through the date hereof, with certain
confirmatory legal due diligence remaining to be completed), (c) our not
becoming aware after the date hereof of any information or other matter
(including any matter relating to financial models and underlying assumptions
relating to the Projections) affecting RNA, the Hexalon Entities or the Target
or their respective subsidiaries or the Transaction that in our judgment is
inconsistent in a material and adverse manner with any such information or other
matter disclosed to us prior to the date hereof, (d) there not having occurred a
material disruption of or material adverse change in financial, banking or
capital market conditions that, in our judgment, could materially impair the
syndication of the Credit Facilities, (e) our satisfaction that prior to and
during the syndication of the Credit Facilities there shall be no competing
offering, placement or arrangement of any debt securities or bank financing by
or on behalf of RNA or any of its subsidiaries (including the Hexalon Entities)
or the Target or any of its subsidiaries or any respective affiliate thereof
(other than any mortgage or construction financings or refinancings relating to
The Streets at Southpoint or done in the ordinary course of business which are
not consummated in the syndicated loan market), (f) the negotiation,
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execution and delivery on or before January 25, 2001 of definitive documentation
with respect to the Credit Facilities satisfactory to Chase and its counsel and
(g) the other conditions set forth or referred to in the Term Sheets. Those
matters that are not covered by the provisions hereof and of the Term Sheets are
subject to the approval and agreement of Chase, CSI and Hexalon.
You agree (a) to indemnify and hold harmless Chase, CSI, their
affiliates and their respective officers, directors, employees, advisors, and
agents (each, an "INDEMNIFIED PERSON") from and against any and all losses,
claims, damages and liabilities to which any such indemnified person may become
subject arising out of or in connection with this Commitment Letter, the Credit
Facilities, the use of the proceeds thereof, the Transaction or any claim,
litigation, investigation or proceeding relating to any of the foregoing,
regardless of whether any indemnified person is a party thereto, and to
reimburse each indemnified person upon demand for any legal or other expenses
incurred in connection with investigating or defending any of the foregoing,
PROVIDED that the foregoing indemnity will not, as to any indemnified person,
apply to losses, claims, damages, liabilities or related expenses to the extent
they are found by a final, non-appealable judgment of a court to arise from the
willful misconduct or gross negligence of such indemnified person, and (b) to
reimburse Chase, CSI and their affiliates on demand for all out-of-pocket
expenses (including due diligence expenses, syndication expenses, consultant's
fees and expenses, travel expenses, and reasonable fees, charges and
disbursements of counsel) incurred in connection with the Credit Facilities and
any related documentation (including this Commitment Letter, the Term Sheets,
the Fee Letter and the definitive financing documentation) or the
administration, amendment, modification or waiver thereof. No indemnified person
shall be liable for any damages arising from the use by unauthorized persons of
Information or other materials sent through electronic, telecommunications or
other information transmission systems that are intercepted by such persons or
for any special, indirect, consequential or punitive damages in connection with
the Credit Facilities.
You acknowledge that Chase and its affiliates (the term "Chase" as
used below in this paragraph being understood to include such affiliates) may be
providing debt financing, equity capital or other services (including financial
advisory services) to other companies that may have interests regarding RNA, the
Hexalon Entities, the Target or the Transaction. Chase will not use confidential
information obtained from you by virtue of the Transaction or its other
relationships with you in connection with the performance by Chase of services
for other companies, and Chase will not furnish any such information to other
companies. You also acknowledge that Chase has no obligation to use in
connection with the Transaction, or to furnish to you, confidential information
obtained from other companies.
This Commitment Letter shall not be assignable by you without the
prior written consent of Chase and CSI (and any purported assignment without
such consent shall be null and void), is intended to be solely for the benefit
of the parties hereto and is not intended to confer any benefits upon, or create
any rights in favor of, any person other than the parties hereto and the
indemnified persons. This Commitment Letter may not be amended or waived except
by an instrument in writing signed by you, Chase and CSI. This Commitment Letter
may be executed in any number of counterparts, each of which shall be an
original, and all of which, when taken together, shall constitute one agreement.
Delivery of an executed signature page of this Commitment Letter by facsimile
transmission shall be effective as delivery of a manually executed counterpart
hereof. This Commitment Letter and the Fee Letter are the only agreements that
have been entered into among us with respect to the Credit Facilities and set
forth the entire understanding of the parties with respect thereto. This
Commitment Letter shall be governed by, and construed in accordance with, the
laws of the State of New York.
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This Commitment Letter is delivered to you on the understanding that
neither this Commitment Letter, the Term Sheets or the Fee Letter nor any of
their terms or substance shall be disclosed, directly or indirectly, to any
other person except (a) to your officers, agents and advisors who are directly
involved in the consideration of this matter or (b) as may be compelled in a
judicial or administrative proceeding or as otherwise required by law (in which
case you agree to inform us promptly thereof), PROVIDED, that the foregoing
restrictions shall cease to apply (except in respect of the Fee Letter and its
terms and substance) after this Commitment Letter has been accepted by you.
The compensation, reimbursement, indemnification and confidentiality
provisions contained herein and in the Fee Letter shall remain in full force and
effect regardless of whether definitive financing documentation shall be
executed and delivered and notwithstanding the termination of this Commitment
Letter or Chase's commitment hereunder.
If the foregoing correctly sets forth our agreement, please indicate
your acceptance of the terms hereof and of the Term Sheets and the Fee Letter by
returning to us executed counterparts hereof and of the Fee Letter, together
with the amounts agreed upon pursuant to the Fee Letter to be payable upon the
acceptance hereof, not later than 5:00 p.m., New York City time, on September
27, 2000. Chase's commitment and CSI's agreements herein will expire at such
time in the event Chase has not received such executed counterparts and such
amounts in accordance with the immediately preceding sentence.
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Chase and CSI are pleased to have been given the opportunity to assist
you in connection with this important financing.
Very truly yours,
THE CHASE MANHATTAN BANK
By: /s/ Thomas H. Kozlark
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Name: Thomas H. Kozlark
Title: Vice President
CHASE SECURITIES INC.
By: /s/ James G. Rolison
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Name: James G. Rolison
Title: Managing Director
Accepted and agreed to
as of the date first
written above by:
HEXALON REAL ESTATE, INC.
By: /s/ Daniel S. Weaver
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Name: Daniel S. Weaver
Title: Vice President
By: /s/ Lee M. Letchford
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Name: Lee M. Letchford
Title: President
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EXHIBIT A
TENDERCO SENIOR CREDIT FACILITY
TENDER FACILITY
Summary of Terms and Conditions
September 25, 2000
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Rodamco North America B.V., a Dutch BI ("RNA"), and its subsidiary,
Hexalon Real Estate, Inc., a Delaware REIT ("HEXALON"), intend to form a limited
partnership ("TENDERCO"), 79% of which will be owned by Hexalon and 21% of which
will be owned by certain affiliates of Hexalon owned by RNA (the "HEXALON
AFFILIATES" and, together with Hexalon, the "HEXALON ENTITIES"), for the purpose
of its acquiring all of the issued and outstanding common stock (the "COMMON
SHARES"), preferred stock (the "PREFERRED SHARES") and unit voting stock (the
"UNIT VOTING SHARES" and, collectively with the Common Shares and the Preferred
Shares, the "SHARES"), par value $.01, of Urban Shopping Centers, Inc., a
Maryland REIT (the "TARGET"). The acquisition will be effected through a tender
offer (the "TENDER OFFER") by TenderCo for the Shares followed by one or more
mergers (collectively, the "MERGER") involving the Target and TenderCo (with the
surviving entity being referred to herein as NewCo L.P. ("NEWCO L.P.")), all
pursuant to a merger agreement to be entered into among RNA, Hexalon, TenderCo
and the Target prior to the Tender Offer (the "MERGER AGREEMENT"). Hexalon will
be the general partner of NewCo L.P., and NewCo L.P. will be the general
partner, and 94.44% owner, of the limited partnership operating subsidiary,
Urban Shopping Centers, L.P., an Illinois limited partnership ("USC L.P."). The
following sets forth the terms and conditions for a senior credit facility (the
"TENDER FACILITY") of up to $1,250,000,000 that will be available to TenderCo in
connection with the Tender Offer. References herein to the "Transaction" shall
include the acquisition and the financings described herein and all other
transactions related to the Transaction.
I. PARTIES
Borrower: TenderCo or its assignee, a newly formed
Delaware corporation, as contemplated by the
Merger Agreement (the "BORROWER").
Guarantors: Hexalon, the Hexalon Affiliates and each of
the other existing and future direct and
indirect U.S. subsidiaries (other than the
Borrower, RoProperty Investment Management
N.V., their respective subsidiaries and any
other subsidiary which is prohibited from
becoming a guarantor without the consent of a
joint venture partner or lender) of RNA (the
"GUARANTORS"; the Borrower and the
Guarantors, collectively, the "LOAN
PARTIES").
Advisor, Sole Book
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Manager and Lead Arranger: Chase Securities Inc. (in such capacity, the
"Arranger").
Administrative Agent: The Chase Manhattan Bank ("CHASE" and, in
such capacity, the "ADMINISTRATIVE AGENT").
Lenders: A syndicate of banks, financial institutions
and other entities, including Chase, arranged
by the Arranger (collectively, the
"Lenders").
II. TYPE AND AMOUNT OF CREDIT FACILITY
Type and Amount of Facility: Six-month delayed draw term loan facility
(the "TENDER TERM FACILITY") in the amount of
$1,250,000,000 (the loans thereunder, the
"TENDER TERM LOANS").
Availability: The Tender Term Loans shall be made in
multiple drawings, in minimum amounts to be
determined, during the period commencing on
the Tender Closing Date (as defined below)
and ending on the earlier of the date six
months thereafter and the date of the
consummation of the Merger (the "TENDER
TERMINATION DATE").
Maturity: The Tender Term Loans shall be repayable on
the Tender Termination Date.
Purpose: The proceeds of the Tender Term Loans shall
be used to finance Tender Offer, to pay
related fees and expenses and to refinance,
to the extent necessary, certain existing
indebtedness of USC L.P. by way of
intercompany loans from the Borrower to USC
L.P.
III. CERTAIN PAYMENT PROVISIONS
Fees and Interest Rates: As set forth on Annex I.
Optional Prepayments and
Commitment Reductions: The Tender Term Loans may be prepaid and
commitments may be reduced by the Borrower in
minimum amounts to be agreed upon and may not
be reborrowed.
IV. COLLATERAL The obligations of each Loan Party in respect
of the Tender Facility shall be secured by a
perfected first priority security interest in
all (i) equity interests (or, to the extent a
pledge of equity interests is prohibited by a
contractual obligation, an assignment of the
rights, including, to the extent permitted,
the right to receive proceeds, under such
contract on terms and conditions satisfactory
to the Administrative Agent) held by it in
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the Target and in entities wholly owned by
the Loan Parties which own interests in real
property (including, without limitation, all
Shares owned by the Borrower, whether
acquired in the Tender Offer or otherwise)
and (ii) intercompany obligations held by
such Loan Party.
V. CERTAIN CONDITIONS
Initial Conditions The availability of the Tender Facility shall
be conditioned upon satisfaction of, among
other things, the following conditions
precedent (the date upon which all such
conditions precedent shall be satisfied, the
"TENDER CLOSING DATE") on or before January
25, 2001:
(a) Each Loan Party shall have executed and
delivered definitive financing documentation
with respect to the Tender Facility
reasonably satisfactory to the Administrative
Agent and its counsel (the "CREDIT
DOCUMENTATION").
(b) The Merger Agreement shall have been
entered into among RNA, Hexalon, the Borrower
and the Target in a form satisfactory to the
Administrative Agent.
(c) The Tender Offer shall have been
consummated in accordance with applicable law
and pursuant to the Merger Agreement
(including that shares of the capital stock
of the Target shall have been tendered and
purchased in the Tender Offer or shall
otherwise be owned by the Borrower upon the
initial purchase in the Tender Offer that are
sufficient to assure approval of the Merger),
and no material provision thereof shall have
been waived, amended, supplemented or
otherwise modified. The capital structure of
each Loan Party shall be reasonably
satisfactory to the Administrative Agent,
including as contemplated after the Merger.
(d) No shareholders rights plan or statutory
provision that would impede, limit or
adversely affect the consummation of the
Tender Offer or the Merger in the proposed
manner shall be in effect, and any material
conditions or requirements to or for the
consummation of the Tender Offer and the
Merger (including receipt of all necessary
government and material third party approvals
for the Tender Offer and the Merger) shall
have been satisfied or shall be reasonably
capable of being satisfied.
(e) Appropriate forms with respect to the
Tender Facility and the margin regulations of
the Board of Governors of the Federal Reserve
System shall have been provided.
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(f) The documents filed publicly by the
Borrower and the Target in connection with
the Tender Offer and the Merger shall have
been furnished to the Administrative Agent
and shall be in reasonably satisfactory form
and substance to the Administrative Agent.
(g) The Administrative Agent shall have
received satisfactory evidence that USC
L.P.'s existing revolving facility shall have
been terminated and all amounts thereunder
shall have been paid in full and satisfactory
arrangements shall have been made for the
termination of all liens granted in
connection therewith.
(h) The Borrower shall have no indebtedness
(other than under the Tender Facility)
outstanding as of the Tender Closing Date,
and any intercompany indebtedness owed by the
Hexalon Entities shall have been amended in a
satisfactory manner to the extent necessary
to make such indebtedness subordinated to the
obligations of the Hexalon Entities under
their guarantees and to make interest payable
thereunder deferrable.
(i) The Administrative Agent shall have
received and be reasonably satisfied with the
partnership agreements of each of NewCo L.P.
and the form of the partnership agreement for
USC L.P., to be in effect upon consummation
of the Merger which partnership agreements
shall, in any event, provide for NewCo L.P.'s
ability to sell, refinance and distribute
cash flow from USC L.P.'s properties (with
sole exception being the prohibition of the
sale of the following properties: Water Tower
Place, Mainplace, Copley Place and Old
Orchard Center).
(j) The Lenders, the Administrative Agent and
the Arranger shall have received all fees
required to be paid, and reimbursement for
all expenses for which invoices have been
presented, on or before the Tender Closing
Date.
(k) All governmental and material third party
approvals necessary or, in the discretion of
the Administrative Agent, advisable in
connection with the Transaction, the
financing contemplated hereby and the
continuing operations of NewCo L.P. and its
subsidiaries shall have been obtained and be
in full force and effect, and all applicable
waiting periods shall have expired without
any action being taken or threatened by any
competent authority that would restrain,
prevent or otherwise impose adverse
conditions on the Tender Offer, the Merger or
the financing thereof.
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(l) The Lenders shall have received (i)
satisfactory audited consolidated financial
statements of or covering RNA, Hexalon, the
other Guarantors and the Target for the two
most recent fiscal years ended prior to the
Tender Closing Date as to which such
financial statements are available and (ii)
satisfactory unaudited interim consolidated
financial statements or covering of RNA,
Hexalon, the other Guarantors and the Target
for each quarterly period ended subsequent to
the date of the latest financial statements
delivered pursuant to clause (i) of this
paragraph as to which such financial
statements are available.
(m) The Lenders shall have received a
satisfactory PRO FORMA consolidated balance
sheet of NewCo L.P. and the Hexalon Entities
as at the date of the most recent
consolidated balance sheet delivered pursuant
to paragraph (l) above, adjusted to give
effect to the consummation of the Transaction
and the financings contemplated hereby as if
such transactions had occurred on such date.
(n) The Lenders shall have received and be
reasonably satisfied with the financial
projections (including the assumptions on
which such projections are based) for each of
the Hexalon Entities and their respective
subsidiaries, the other Guarantors and their
subsidiaries and NewCo L.P. and its
subsidiaries after giving effect to each of
the Tender Offer and the Merger and the
financings contemplated thereby.
(o) The Lenders shall have received and be
reasonably satisfied with the historical and
projected operating statements and balance
sheets with respect to each parcel of real
property owned or leased by each of the Loan
Parties.
(p) The Lenders shall have received the
results of a recent lien search in each
relevant jurisdiction with respect to the
Borrower, the Hexalon Entities and the other
Guarantors and their subsidiaries and the
Target and its subsidiaries, and such search
shall reveal no liens on any of the assets
thereof, except for liens permitted by the
Credit Documentation or liens to be
discharged on or prior to the Tender Closing
Date pursuant to documentation satisfactory
to the Administrative Agent.
(q) The Lenders shall have received a
satisfactory solvency opinion from an
independent valuation firm satisfactory to
the Administrative Agent that shall document
the solvency of each of the Hexalon Entities
and their respective subsidiaries, the other
Guarantors and their subsidiaries and NewCo
L.P. and its subsidiaries after giving effect
to the Transaction and the other
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transactions contemplated hereby (including
giving effect to any agreement or obligations
to make investments in NewCo L.P.).
(r) The Administrative Agent shall be
satisfied in all respects with its due
diligence investigation of the Target and its
subsidiaries (including, without limitation,
as it relates to the Target's joint venture
arrangements and the assignability of
contracts thereunder).
(s) The Lenders shall have received such
legal opinions (including opinions (i) from
counsel to Hexalon and the other Guarantors
and the Borrower and (ii) from such special
and local counsel as may be required by the
Administrative Agent), documents and other
instruments as are customary for transactions
of this type or as they may reasonably
request.
On-Going Conditions: The making of each extension of credit shall
be conditioned upon (a) the accuracy of all
representations and warranties in the Credit
Documentation (including, without limitation,
the material adverse change and litigation
representations) and (b) there being no
default or event of default in existence at
the time of, or after giving effect to the
making of, such extension of credit. As used
herein and in the Credit Documentation a
"material adverse change" shall mean any
event, development or circumstance that has
had or could reasonably be expected to have a
material adverse effect on (a) the
Transaction, (b) the business, property,
operations, condition (financial or
otherwise) or prospects of the Borrower and
its subsidiaries taken as a whole or (c) the
validity or enforceability of any of the
Credit Documentation or the rights and
remedies of the Administrative Agent and the
Lenders thereunder.
VI. CERTAIN DOCUMENTATION MATTERS
The Credit Documentation shall contain
representations, warranties, covenants and
events of default customary for financings of
this type and other terms deemed appropriate
by the Lenders, including, without
limitation, the following (which shall be
applicable to the Borrower and the Hexalon
Entities and the other Guarantors and their
respective subsidiaries except as noted):
Representations and
Warranties: Financial statements (including pro forma
financial statements); absence of undisclosed
liabilities; no material adverse change;
corporate existence; compliance with law;
corporate power and authority; enforceability
of Credit Documentation; no conflict
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with law or contractual obligations; no
material litigation; no default; ownership of
property; liens; intellectual property; no
burdensome restrictions; taxes; Federal
Reserve regulations; ERISA; Investment
Company Act; subsidiaries; environmental
matters; solvency; labor matters; accuracy of
disclosure; and creation and perfection of
security interests.
Affirmative Covenants: Delivery of financial statements, reports,
accountants' letters, projections, officers'
certificates and other information requested
by the Lenders; payment of other obligations;
continuation of business and maintenance of
existence and material rights and privileges;
compliance with laws and material contractual
obligations; maintenance of property and
insurance; maintenance of books and records;
right of the Lenders to inspect property and
books and records; notices of defaults,
litigation and other material events;
compliance with environmental laws; and
further assurances (including, without
limitation, with respect to security
interests in after-acquired equity interests
and intercompany obligations).
Negative Covenants: With respect to the Borrower, the negative
covenants shall essentially restrict its
activities prior to the consummation of the
Transaction in a manner consistent with that
contemplated by the Merger Agreement and the
Credit Documentation and activities
incidental thereto.
With respect to the Target and its
subsidiaries, the Borrower shall exercise its
rights to require the Target to comply with
the restrictions of the Merger Agreement
limiting its incurrence of obligations,
investments, asset sales, restricted payments
and changes in its business to those
undertaken in the ordinary course of its
business.
With respect to the Hexalon Entities and the
other Guarantors, customary limitations on:
indebtedness; liens; guarantee obligations;
mergers, consolidations, liquidations and
dissolutions; sales of assets; leases;
capital expenditures; investments, loans and
advances; optional payments and modifications
of subordinated and other debt instruments;
transactions with affiliates; sale and
leasebacks; changes in fiscal year; negative
pledge clauses; and changes in lines of
business.
In addition, the negative covenants shall
require that any proceeds of the Tender
Facility transferred to the Target or USC
L.P. be lent as intercompany debt, and not
contributed as equity.
<PAGE>
8
Events of Default: Nonpayment of principal when due; nonpayment
of interest, fees or other amounts after a
grace period to be agreed upon; material
inaccuracy of representations and warranties;
violation of covenants (subject, in the case
of certain affirmative covenants, to a grace
period to be agreed upon); cross-default;
bankruptcy events; certain ERISA events;
material judgments; actual or asserted
invalidity of any guarantee or security
document or security interest; and a change
of control (the definition of which is to be
agreed).
Voting: Amendments and waivers with respect to the
Credit Documentation shall require the
approval of Lenders holding not less than a
majority of the aggregate amount of the
Tender Facility and unused commitments under
the Tender Facility, except that (a) the
consent of each Lender directly affected
thereby shall be required with respect to (i)
reductions in the amount or extensions of the
scheduled date of final maturity of any
Tender Term Loan, (ii) reductions in the rate
of interest or any fee or extensions of any
due date thereof and (iii) increases in the
amount or extensions of the expiry date of
any Lender's commitment and (b) the consent
of 100% of the Lenders shall be required with
respect to (i) modifications to any of the
voting percentages and (ii) releases of all
or substantially all of the Guarantors or all
or substantially all of the collateral.
Assignments
and Participations: The Lenders shall be permitted to assign and
sell participations in their Tender Term
Loans and commitments, subject, in the case
of assignments (other than to another Lender
or to an affiliate of a Lender), to the
consent of the Administrative Agent and the
Borrower (which consent in each case shall
not be unreasonably withheld). In the case of
partial assignments (other than to another
Lender or to an affiliate of a Lender), the
minimum assignment amount shall be
$5,000,000, and, after giving effect thereto,
the assigning Lender shall have commitments
and Tender Term Loans aggregating at least
$5,000,000 in each case unless otherwise
agreed by the Borrower and the Administrative
Agent. Participants shall have the same
benefits as the Lenders with respect to yield
protection and increased cost provisions.
Voting rights of participants shall be
limited to those matters with respect to
which the affirmative vote of the Lender from
which it purchased its participation would be
required as described under "Voting" above.
Pledges of Tender Term Loans in accordance
with applicable law shall be permitted
without restriction. Promissory notes shall
be issued under the Tender Facility only upon
request.
<PAGE>
9
Yield Protection: The Credit Documentation shall contain
customary provisions (a) protecting the
Lenders against increased costs or loss of
yield resulting from changes in reserve, tax,
capital adequacy and other requirements of
law and from the imposition of or changes in
withholding or other taxes and (b)
indemnifying the Lenders for "breakage costs"
incurred in connection with, among other
things, any prepayment of a Eurodollar Loan
(as defined in Annex I) on a day other than
the last day of an interest period with
respect thereto.
Expenses and
Indemnification: The Borrower shall pay (a) all reasonable
out-of-pocket expenses of the Administrative
Agent and the Arranger associated with the
syndication of the Tender Facility and the
preparation, execution, delivery and
administration of the Credit Documentation
and any amendment or waiver with respect
thereto (including the reasonable fees,
disbursements and other charges of counsel)
and (b) all out-of-pocket expenses of the
Administrative Agent and the Lenders
(including the fees, disbursements and other
charges of counsel) in connection with the
enforcement of the Credit Documentation.
The Administrative Agent, the Arranger and
the Lenders (and their affiliates and their
respective officers, directors, employees,
advisors and agents) will have no liability
for, and will be indemnified and held
harmless against, any losses, claims,
damages, liabilities or expenses incurred in
respect of the financing contemplated hereby
or the use or the proposed use of proceeds
thereof, except to the extent they are found
by a final, non-appealable judgment of a
court to arise from the gross negligence or
willful misconduct of the indemnified party.
Governing Law and Forum: State of New York.
Counsel to the
Administrative Agent
and the Arranger: Simpson Thacher & Bartlett.
<PAGE>
ANNEX I
INTEREST AND CERTAIN FEES
Interest Rate Options: The Borrower may elect that the Tender Term
Loans comprising each borrowing bear interest
at a rate per annum equal to:
the ABR plus the Applicable Margin; or
the Eurodollar Rate plus the Applicable
Margin.
As used herein:
"ABR" means the highest of (i) the rate of
interest publicly announced by Chase as its
prime rate in effect at its principal office
in New York City (the "PRIME RATE"), (ii) the
secondary market rate for three-month
certificates of deposit (adjusted for
statutory reserve requirements) PLUS 1% and
(iii) the federal funds effective rate from
time to time PLUS 0.5%.
"APPLICABLE MARGIN" means (a) 0.50%, in the
case of ABR Loans (as defined below) and (ii)
1.75%, in the case of Eurodollar Loans (as
defined below).
"EURODOLLAR RATE" means the rate (adjusted
for statutory reserve requirements for
eurocurrency liabilities) for eurodollar
deposits for a period equal to one, two,
three or six months (as selected by the
Borrower) appearing on Page 3750 of the
Telerate screen.
Interest Payment Dates: In the case of Tender Term Loans bearing
interest based upon the ABR ("ABR LOANS"),
quarterly in arrears.
In the case of Tender Term Loans bearing
interest based upon the Eurodollar Rate
("EURODOLLAR LOANS"), on the last day of each
relevant interest period and, in the case of
any interest period longer than three months,
on each successive date three months after
the first day of such interest period.
Commitment Fees: The Borrower shall pay a commitment fee from
the Tender Closing Date calculated at the
rate of 0.35% per annum on the average daily
unused portion of the Tender Facility,
payable quarterly in arrears.
Default Rate: At any time when the Borrower is in default
in the payment of any amount of principal due
under the Tender Facility, such amount shall
bear interest at 3% above the rate otherwise
<PAGE>
2
applicable thereto. Overdue interest, fees
and other amounts shall bear interest at 3%
above the rate applicable to ABR Loans.
Rate and Fee Basis: All per annum rates shall be calculated on
the basis of a year of 360 days (or 365/366
days, in the case of ABR Loans the interest
rate payable on which is then based on the
Prime Rate) for actual days elapsed.
<PAGE>
EXHIBIT B
NEWCO L.P. SENIOR CREDIT FACILITIES
MERGER FACILITIES
Summary of Terms and Conditions
September 25, 2000
----------
Rodamco North America B.V., a Dutch BI ("RNA"), and its subsidiary,
Hexalon Real Estate, Inc., a Delaware REIT ("HEXALON"), intend to form a limited
partnership ("TENDERCO"), 79% of which will be owned by Hexalon and 21% of which
will be owned by certain affiliates of Hexalon owned by RNA (the "HEXALON
AFFILIATES" and, together with Hexalon, the "HEXALON ENTITIES"), for the purpose
of its acquiring all of the issued and outstanding common stock (the "COMMON
SHARES"), preferred stock (the "PREFERRED SHARES") and unit voting stock (the
"UNIT VOTING SHARES" and, collectively with the Common Shares and the Preferred
Shares, the "SHARES"), par value $.01, of Urban Shopping Centers, Inc., a
Maryland REIT (the "TARGET"). The acquisition will be effected through a tender
offer (the "TENDER OFFER") by TenderCo for the Shares followed by one or more
mergers (collectively, the "MERGER") involving the Target and TenderCo (with the
surviving entity being referred to herein as NewCo L.P. ("NEWCO L.P.")), all
pursuant to a merger agreement to be entered into among RNA, Hexalon, TenderCo
and the Target prior to the Tender Offer (the "MERGER AGREEMENT"). Hexalon will
be the general partner of NewCo L.P., and NewCo L.P. will be the general
partner, and 94.44% owner, of the limited partnership operating subsidiary,
Urban Shopping Centers, L.P., an Illinois limited partnership ("USC L.P."). The
following sets forth the terms and conditions for a senior credit facility (the
"MERGER FACILITIES") of up to $1,368,810,000 that will be available to NewCo
L.P. References herein to the "Transaction" shall include the acquisition and
the financings described herein and all other transactions related to the
Transaction.
I. Parties
Borrower: NewCo L.P. (the "BORROWER").
Guarantors: Hexalon, the Hexalon Affiliates and each of
the other existing and future direct and
indirect U.S. subsidiaries (other than the
Borrower, RoProperty Investment Management
N.V., their respective subsidiaries and any
other subsidiary which is prohibited from
becoming a guarantor without the consent of a
joint venture partner or lender) of RNA (the
"GUARANTORS"; the Borrower and the
Guarantors, collectively, the "LOAN
PARTIES").
Advisor and Arranger: Chase Securities Inc. (in such capacity, the
"ARRANGER").
<PAGE>
2
Administrative Agent: The Chase Manhattan Bank ("CHASE" and, in
such capacity, the "ADMINISTRATIVE AGENT").
Lenders: A syndicate of banks, financial institutions
and other entities, including Chase, arranged
by the Arranger (collectively, the
"Lenders").
II. TYPES AND AMOUNTS OF CREDIT FACILITIES
A. MERGER FACILITIES
1. MERGER TERM FACILITY
Type and Amount of Facility: A term loan facility (the "MERGER TERM
FACILITY") in the amount of $868,810,000 (the
loans thereunder, the "MERGER TERM LOANS").
The Merger Term Loans shall comprise two
separate tranches: (i) one tranche with a
final maturity on the date that is 24 months
after the Merger Closing Date (as defined
below), but subject to mandatory prepayment
as noted below (the loans thereunder, the
"TRANCHE I MERGER TERM LOANS") and (ii) one
tranche with a final maturity on the date
that is 36 months after the Merger Closing
Date (the loans thereunder, the "TRANCHE II
MERGER TERM LOANS"). The aggregate amount of
Merger Term Loans constituting Tranche I
Merger Term Loans and Tranche II Merger Term
Loans shall be $468,810,000 and $400,000,000,
respectively.
Availability: The Merger Term Loans shall be made in a
single drawing on the Merger Closing Date.
Maturity: The Tranche I Merger Term Loans shall be
repayable on the date that is 24 months after
the Merger Closing Date, but shall be subject
to a mandatory prepayment on the date 12
months after the Merger Closing Date to the
extent that the prepayments, as of such date
made, on the Tranche I Merger Term Loans and
the term loans under the credit facility made
available on the Merger Closing Date to USC
L.P. (the "USC TERM LOANS") do not equal
$360,000,000. The Tranche II Merger Term
Loans shall be repayable on the date that is
36 months after the Merger Closing Date.
Purpose: The proceeds of the Merger Term Loans shall
be used to finance the payment of
consideration payable in the Merger, to repay
amounts owing under the Tender Facility, to
refinance certain existing indebtedness of
RNA and, to the extent necessary, USC L.P. by
way of intercompany loans from the Borrower
to USC L.P. and to pay related fees and
expenses.
<PAGE>
3
2. MERGER REVOLVING FACILITY
Type and Amount of Facility: Three-year revolving credit facility (the
"MERGER REVOLVING FACILITY"; together with
the Merger Term Facility, the "MERGER
FACILITIES"), subject to a one-year extension
option described below, in the amount of
$500,000,000 (the loans thereunder, the
"MERGER REVOLVING LOANS"; together with the
Merger Term Loans, the "LOANS").
Availability: The Merger Revolving Facility shall be
available on a revolving basis during the
period commencing on the Merger Closing Date
and ending on the third (or, at the request
of the Borrower, fourth) anniversary thereof
(the "MERGER REVOLVING TERMINATION DATE").
Letters of Credit: A portion of the Merger Revolving Facility
not in excess of $100,000,000 shall be
available for the issuance of letters of
credit (the "LETTERS OF CREDIT") by Chase (in
such capacity, the "ISSUING LENDER"). No
Letter of Credit shall have an expiration
date after the earlier of (a) one year after
the date of issuance and (b) fifteen business
days prior to the Merger Revolving
Termination Date, PROVIDED that any Letter of
Credit with a one-year tenor may provide for
the renewal thereof for additional one-year
periods (which shall in no event extend
beyond the date referred to in clause (b)
above).
Drawings under any Letter of Credit shall be
reimbursed by the Borrower (whether with its
own funds or with the proceeds of Merger
Revolving Loans) on the same business day. To
the extent that the Borrower does not so
reimburse the Issuing Lender, the Lenders
under the Merger Revolving Facility shall be
irrevocably and unconditionally obligated to
reimburse the Issuing Lender on a PRO RATA
basis.
Competitive Loans: The Borrower shall have the option to request
that the Lenders bid for loans ("COMPETITIVE
LOANS") in an aggregate amount not to exceed
$200,000,000 bearing interest at an absolute
rate or a margin over the eurodollar rate,
with specified maturities ranging from 7 to
360 days. Each Lender shall have the right,
but not the obligation, to submit bids at its
discretion. The Borrower, by notice given
four business days in advance in the case of
eurodollar rate bids and one business day in
advance in the case of absolute rate bids,
shall specify the proposed date of borrowing,
the interest period, the amount of the
Competitive Loan and the maturity date
thereof, the interest rate basis to be used
by the Lenders in bidding and such other
terms as the Borrower may specify. The
Administrative Agent shall advise the Lenders
of the terms of the Borrower's notice, and,
subject to acceptance by the Borrower, bids
shall be allocated to each Lender in
ascending order from the lowest bid to the
highest bid
<PAGE>
4
acceptable to the Borrower. While Competitive
Loans are outstanding, the available
commitments under the Merger Revolving
Facility shall be reduced by the aggregate
amount of such Competitive Loans.
Maturity: The Merger Revolving Termination Date.
Purpose: The proceeds of the Merger Revolving Loans
shall be used to finance the working capital
needs and general corporate purposes of the
Loan Parties and their respective
subsidiaries in the ordinary course of
business.
III. CERTAIN PAYMENT PROVISIONS
Fees and Interest Rates: As set forth on Annex I.
Optional Prepayments and
Commitment Reductions: Loans may be prepaid and commitments may be
reduced by the Borrower in minimum amounts to
be agreed upon, PROVIDED, that Competitive
Loans may not be prepaid without the consent
of the relevant Lender. Optional prepayments
of the Merger Term Loans shall be applied,
FIRST, to the Tranche I Merger Term Loans
and, SECOND, to the Tranche II Merger Term
Loans and may not be reborrowed.
Mandatory Prepayments and
Commitment Reductions: The following amounts shall be applied to
prepay the Merger Revolving Loans and the
Merger Term Loans as set forth below:
(a) 100% of the net cash proceeds of any sale
or issuance of equity or incurrence of
certain indebtedness by any of the Guarantors
or any of their subsidiaries or by the
Borrower or any of its subsidiaries (other
than, in the case of USC L.P. and its
subsidiaries, to the extent such proceeds are
applied at the election of the Borrower to
repay the USC Term Loans); and
(b) 100% of the net cash proceeds of any sale
or other disposition (including as a result
of casualty or condemnation) by any of the
Guarantors or any of their subsidiaries or by
the Borrower or any of its subsidiaries
(other than, in the case of USC L.P. and its
subsidiaries, to the extent such proceeds are
applied at the election of the Borrower to
repay the USC Term Loans) of any assets
(except for the sale of inventory in the
ordinary course of business and certain other
dispositions to be agreed on); PROVIDED that,
in lieu of such prepayments, the Borrower
will have the option of reinvesting net cash
proceeds from sales of such assets (other
than Non-Core Assets (as defined in Annex
II)) within a period of time to be agreed
upon following such sale or disposition.
<PAGE>
5
All such amounts to be paid on the Loans
shall be applied, FIRST, to the prepayment of
the Merger Revolving Loans and, SECOND, to
the prepayment of the Merger Term Loans;
PROVIDED that, notwithstanding the above, the
net cash proceeds of any second mortgage up
to $50,000,000 on the Oakbrook Center
property of USC L.P. shall be applied to
prepay the Merger Revolving Loans only. Each
such prepayment of the Merger Term Loans
shall be applied, FIRST, to the Tranche I
Merger Term Loans and, SECOND, to the Tranche
II Merger Term Loans and may not be
reborrowed.
In addition, the Merger Revolving Loans shall
be prepaid and the Letters of Credit shall be
cash collateralized or replaced to the extent
such extensions of credit exceed the amount
of the Merger Revolving Facility.
As used herein, "net cash proceeds" from any
event shall be net of (i) any taxes or
distributions required to be made or paid as
a result of the occurrence of such event and
(ii) in the case of any sale or disposition
of a Non-Core Asset, the amount that, on such
date, has been required to be invested, and
has actually been invested, in Tishman Hotels
and Tishman JV; PROVIDED that, the aggregate
amount deducted pursuant to this clause (ii)
shall not exceed $43,000,000.
IV. COLLATERAL
The obligations of each Loan Party in respect
of the Merger Facilities shall be secured by
a perfected first priority security interest
in all (i) equity interests (or, to the
extent a pledge of equity interests is
prohibited by a contractual obligation, an
assignment of the rights, including, to the
extent permitted, the right to receive
proceeds, under such contract on terms and
conditions satisfactory to the Administrative
Agent) held by it in the Borrower or USC L.P.
(but not USC L.P.'s subsidiaries) and in
entities wholly owned by the Loan Parties
which own interests in real property and (ii)
intercompany obligations held by such Loan
Party.
V. CERTAIN CONDITIONS
Initial Conditions: The availability of the Merger Facilities
shall be conditioned upon satisfaction of,
among other things, the following conditions
precedent (the date upon which all such
conditions precedent shall be satisfied, the
"MERGER CLOSING DATE") on or before the
earlier of (i) the date 90 days after the
Tender Closing Date and (ii) March 31, 2001:
(a) Each Loan Party shall have executed and
delivered definitive financing documentation
with respect to the Merger Facilities
<PAGE>
6
reasonably satisfactory to the Administrative
Agent and its counsel (the "CREDIT
DOCUMENTATION").
(b) The Merger shall have been, or shall be
concurrently, consummated in accordance with
applicable law and pursuant to the Merger
Agreement, including the receipt of all
necessary governmental and material third
party approvals.
(c) The existing indebtedness contemplated to
be repaid (including under the Tender
Facility) shall concurrently be refinanced
with the proceeds of the Merger Facilities,
or arrangements for the repayment thereof
shall have been made, on satisfactory terms.
(d) The Borrower shall have no indebtedness
(other than under the Merger Facilities)
outstanding as of the Merger Closing Date.
(e) The Lenders, the Administrative Agent and
the Arranger shall have received all fees
required to be paid, and reimbursement for
all expenses for which invoices have been
presented, on or before the Merger Closing
Date.
(f) The Lenders shall have received such
legal opinions (including opinions (i) from
counsel to the Borrower and its subsidiaries
and (ii) from such special and local counsel
as may be required by the Administrative
Agent), documents and other instruments as
are customary for transactions of this type
or as they may reasonably request.
(g) The Lenders shall have received a
satisfactory PRO FORMA consolidated balance
sheet of NewCo L.P. and the Hexalon Entities
as at the Merger Closing Date, adjusted to
give effect to the consummation of the
Transaction and the financings contemplated
hereby.
On-Going Conditions: The making of each extension of credit shall
be conditioned upon (a) the accuracy of all
representations and warranties in the Credit
Documentation (including, without limitation,
the material adverse change and litigation
representations) and (b) there being no
default or event of default in existence at
the time of, or after giving effect to the
making of, such extension of credit. As used
herein and in the Credit Documentation a
"material adverse change" shall mean any
event, development or circumstance that has
had or could reasonably be expected to have a
material adverse effect on (a) the
Transaction, (b) the business, property,
operations, condition (financial or
otherwise) or prospects of the Borrower and
its subsidiaries taken as a whole or (c) the
validity or enforceability of any of the
Credit Documentation or the rights and
remedies of the Administrative Agent and the
Lenders thereunder.
<PAGE>
7
VI. CERTAIN DOCUMENTATION MATTERS
The Credit Documentation shall contain
representations, warranties, covenants and
events of default customary for financings of
this type and other terms deemed appropriate
by the Lenders, including, without
limitation, the following (with such
covenants to apply to the Borrower and the
Guarantors and their respective
subsidiaries):
Representations and
Warranties: Financial statements (including pro forma
financial statements); absence of undisclosed
liabilities; no material adverse change;
corporate existence; compliance with law;
corporate power and authority; enforceability
of Credit Documentation; no conflict with law
or contractual obligations; no material
litigation; no default; ownership of
property; liens; intellectual property; no
burdensome restrictions; taxes; Federal
Reserve regulations; ERISA; Investment
Company Act; subsidiaries; environmental
matters; solvency; labor matters; accuracy of
disclosure; and creation and perfection of
security interests.
Affirmative Covenants: Delivery of financial statements, reports,
accountants' letters, projections, officers'
certificates and other information requested
by the Lenders; payment of other obligations;
continuation of business and maintenance of
existence and material rights and privileges;
compliance with laws and material contractual
obligations; maintenance of property and
insurance; maintenance of books and records;
right of the Lenders to inspect property and
books and records; notices of defaults,
litigation and other material events;
compliance with environmental laws; further
assurances (including, without limitation,
with respect to security interests in
after-acquired equity interests and
intercompany obligations); and agreement that
at least 80% of the total aggregate secured
and unsecured debt (including under the
Merger Facilities) of the Loan Parties shall
be fixed rate debt or subject to interest
rate protection agreements on terms and
conditions satisfactory to the Administrative
Agent.
Financial Covenants: As set forth in Annex II.
Negative Covenants: Limitations on: indebtedness (including,
without limitation, a prohibition of
unsecured and secured debt (other than under
the Credit Facilities and in respect of
non-recourse secured mortgage debt)); liens;
guarantee obligations; mergers,
consolidations, liquidations and
dissolutions; sales of assets (with
appropriate exceptions for certain like-kind
or similar exchanges); leases; capital
expenditures; investments, loans and
advances; optional payments and modifications
of subordinated and other debt instruments;
transactions with affiliates; sale and
leasebacks; changes in fiscal year; negative
pledge clauses; changes in lines
<PAGE>
8
of business; and joint ventures,
construction, land and non-regional mall
assets.
The negative covenants shall also prohibit
any dividends, intercompany loans, interest
payments, investments and other restricted
payments and distributions made by the
Hexalon Entities to RNA or any other parent
company in an amount that exceeds the greater
of (i) 90% of FFO (as defined by the National
Association of Real Estate Investment Trusts)
before intercompany loan interest payments
and (ii) 100% of taxable income before
dividends paid deduction.
In addition, the negative covenants shall
require that any proceeds of the Merger
Facilities transferred to USC L.P. be lent as
intercompany debt, and not contributed as
equity.
Events of Default: Nonpayment of principal when due; nonpayment
of interest, fees or other amounts after a
grace period to be agreed upon; material
inaccuracy of representations and warranties;
violation of covenants (subject, in the case
of certain affirmative covenants, to a grace
period to be agreed upon); cross-default
(including, without limitation, to the USC
Facility); bankruptcy events; certain ERISA
events; material judgments; actual or
asserted invalidity of any guarantee or
security document or security interest; and a
change of control (the definition of which is
to be agreed).
Voting: Amendments and waivers with respect to the
Credit Documentation shall require the
approval of Lenders holding not less than a
majority of the aggregate amount of the
Merger Facilities and unused commitments
under the Merger Facilities, except that (a)
the consent of each Lender directly affected
thereby shall be required with respect to (i)
reductions in the amount or extensions of the
scheduled date of final maturity of any Loan,
(ii) reductions in the rate of interest or
any fee or extensions of any due date thereof
and (iii) increases in the amount or
extensions of the expiry date of any Lender's
commitment and (b) the consent of 100% of the
Lenders shall be required with respect to (i)
modifications to any of the voting
percentages and (ii) releases of all or
substantially all of the Guarantors or all or
substantially all of the collateral. In
addition, "class" voting requirements will
apply to modifications affecting certain
payment matters.
Assignments
and Participations: The Lenders shall be permitted to assign and
sell participations in their Loans and
commitments, subject, in the case of
assignments (other than to another Lender or
to an affiliate of a Lender), to the consent
of the Administrative Agent and the Borrower
(which consent in each case shall not be
unreasonably
<PAGE>
9
withheld). Non-pro rata assignments within
the Merger Facilities shall be permitted, but
all assignments shall be pro rata as between
the Merger Facilities and the USC Facility.
In the case of partial assignments (other
than to another Lender or to an affiliate of
a Lender), the minimum assignment amount
shall be $5,000,000, and, after giving effect
thereto, the assigning Lender shall have
commitments and Loans aggregating at least
$5,000,000 in each case unless otherwise
agreed by the Borrower and the Administrative
Agent. Participants shall have the same
benefits as the Lenders with respect to yield
protection and increased cost provisions.
Voting rights of participants shall be
limited to those matters with respect to
which the affirmative vote of the Lender from
which it purchased its participation would be
required as described under "Voting" above.
Pledges of Loans in accordance with
applicable law shall be permitted without
restriction. Promissory notes shall be issued
under the Merger Facilities only upon
request.
Yield Protection: The Credit Documentation shall contain
customary provisions (a) protecting the
Lenders against increased costs or loss of
yield resulting from changes in reserve, tax,
capital adequacy and other requirements of
law and from the imposition of or changes in
withholding or other taxes and (b)
indemnifying the Lenders for "breakage costs"
incurred in connection with, among other
things, any prepayment of a Eurodollar Loan
(as defined in Annex I) on a day other than
the last day of an interest period with
respect thereto and any prepayment of a
Competitive Loan.
Expenses and
Indemnification: The Borrower shall pay (a) all reasonable
out-of-pocket expenses of the Administrative
Agent and the Arranger associated with the
syndication of the Merger Facilities and the
preparation, execution, delivery and
administration of the Credit Documentation
and any amendment or waiver with respect
thereto (including the reasonable fees,
disbursements and other charges of counsel)
and (b) all out-of-pocket expenses of the
Administrative Agent and the Lenders
(including the fees, disbursements and other
charges of counsel) in connection with the
enforcement of the Credit Documentation.
The Administrative Agent, the Arranger and
the Lenders (and their affiliates and their
respective officers, directors, employees,
advisors and agents) will have no liability
for, and will be indemnified and held
harmless against, any losses, claims,
damages, liabilities or expenses incurred in
respect of the financing contemplated hereby
or the use or the proposed use of proceeds
thereof, except to the extent they are found
by a final, non-appealable judgment of a
court to arise from the gross negligence or
willful misconduct of the indemnified party.
<PAGE>
10
Governing Law and Forum: State of New York.
Counsel to the
Administrative Agent
and the Arranger: Simpson Thacher & Bartlett.
<PAGE>
ANNEX I
INTEREST AND CERTAIN FEES
Interest Rate Options: The Borrower may elect that the Loans (other
than Competitive Loans) comprising each
borrowing bear interest at a rate per annum
equal to:
the ABR plus the Applicable Margin; or
the Eurodollar Rate plus the Applicable
Margin.
As used herein:
"ABR" means the highest of (i) the rate of
interest publicly announced by Chase as its
prime rate in effect at its principal office
in New York City (the "PRIME RATE"), (ii) the
secondary market rate for three-month
certificates of deposit (adjusted for
statutory reserve requirements) PLUS 1% and
(iii) the federal funds effective rate from
time to time PLUS 0.5%.
"APPLICABLE MARGIN" means (a) 0.25%, in the
case of ABR Loans (as defined below), (b)
1.30%, in the case of Eurodollar Loans (as
defined below) that are Merger Revolving
Loans and (c) 1.50%, in the case of
Eurodollar Loans that are Merger Term Loans.
The foregoing margins shall be determined in
accordance with the pricing grid attached
hereto as Annex I-A after the first
anniversary of the Merger Closing Date and
upon the repayment or prepayment of at least
$360,000,000 in aggregate principal amount of
the Tranche I Merger Term Loans and the USC
Term Loans, PROVIDED that no event of default
has occurred and is continuing.
"EURODOLLAR RATE" means the rate (adjusted
for statutory reserve requirements for
eurocurrency liabilities) for eurodollar
deposits for a period equal to one, two,
three or six months (as selected by the
Borrower) appearing on Page 3750 of the
Telerate screen.
Interest Payment Dates: In the case of Loans bearing interest based
upon the ABR ("ABR LOANS"), quarterly in
arrears.
In the case of Loans bearing interest based
upon the Eurodollar Rate ("EURODOLLAR
LOANS"), on the last day of each relevant
interest period and, in the case of any
interest period longer than three months, on
each successive date three months after the
first day of such interest period.
<PAGE>
2
Facility Fees: The Borrower shall pay a facility fee
calculated at the rate of 0.20% per annum on
the aggregate commitments under the Merger
Revolving Facility, payable quarterly in
arrears. The facility fee rate shall be
determined in accordance with the pricing
grid attached hereto as Annex I-A after the
first anniversary of the Merger Closing Date
and upon the repayment or prepayment of at
least $360,000,000 in aggregate principal
amount of the Tranche I Merger Term Loans and
the USC Term Loans, PROVIDED that no event of
default has occurred and is continuing.
Revolving Extension Fee: The Borrower shall pay a revolving extension
fee in an amount equal to 0.25% of the
aggregate commitments under the Merger
Revolving Facility upon its request to extend
the Merger Revolving Termination Date to the
fourth anniversary of the Merger Closing
Date.
Letter of Credit Fees: The Borrower shall pay a fee on all
outstanding Letters of Credit at a per annum
rate equal to the Applicable Margin then in
effect with respect to Eurodollar Loans on
the face amount of each such Letter of
Credit. Such fee shall be shared ratably
among the Lenders participating in the Merger
Revolving Facility and shall be payable
quarterly in arrears.
A fronting fee equal to 0.125% per annum on
the face amount of each Letter of Credit
shall be payable quarterly in arrears to the
Issuing Lender for its own account. In
addition, customary administrative, issuance,
amendment, payment and negotiation charges
shall be payable to the Issuing Lender for
its own account.
Default Rate: At any time when the Borrower is in default
in the payment of any amount of principal due
under the Merger Facilities, such amount
shall bear interest at 3% above the rate
otherwise applicable thereto. Overdue
interest, fees and other amounts shall bear
interest at 3% above the rate applicable to
ABR Loans.
Rate and Fee Basis: All per annum rates shall be calculated on
the basis of a year of 360 days (or 365/366
days, in the case of ABR Loans the interest
rate payable on which is then based on the
Prime Rate) for actual days elapsed.
<PAGE>
ANNEX I-A
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
Applicable Margin for Applicable Margin
S&P/Moody's Rating of the Eurodollar Loans that Facility Fee for Eurodollar Loans Applicable Margin
Merger Facilities* are Merger Revolving that are Merger Term for ABR Loans
Loans Loans
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BBB+/Baa1 0.750% 0.15% 0.900% 0.00%
BBB/Baa2 0.800% - 0.900% 0.20% 1.000% - 1.100% 0.00%
BBB-/Baa3 0.950% - 1.050% 0.20% 1.150% - 1.250% 0.00%
BB+/Ba1 1.375% 0.25% 1.625% 0.25%
Less than BB+/Ba1 1.575% 0.30% 1.875% 0.25%
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
* If the Merger Facilities are rated below investment grade from either Standard
& Poor's Ratings Services ("S&P") or Moody's Investors Service, Inc.
("MOODY'S"), the lower rating will govern. If the Merger Facilities are rated
investment grade from each of S&P and Moody's, the higher rating will govern.
<PAGE>
ANNEX II
FINANCIAL COVENANTS
Financial Covenant Coverage: For the purposes of this Annex II, the term
"Borrower" shall mean the Borrower and the
Guarantors and their respective subsidiaries.
Joint Ventures: For purposes of calculating covenants, any
investment in which the Borrower has a
partial interest (a "Joint Venture") will be
treated on a pro rata basis. The Borrower
will be credited with a pro rata share of NOI
and investment, and will be charged with a
pro rata share of interest, expenses and
liabilities, including debt.
Financial Covenants: Financial covenants and other covenants shall
be tested commencing with the first full
fiscal quarter following the Merger Closing
Date and shall be re-certified by an officer
of the Borrower at each borrowing and
calculated and re-certified no less
frequently than quarterly.
A. LEVERAGE COVENANTS
(a) Total Indebtedness to Total Value, not to
exceed: Beginning at 65%, declining to 60% 18
months after the Merger Closing Date, and
declining further to 55% during the extension
period.
(b) Secured Mortgage Indebtedness to Total
Value, not to exceed: 50%.
"TOTAL INDEBTEDNESS" means all obligations
(other than current trade payables incurred
in the ordinary course of business) of the
Borrower, whether secured or unsecured,
recourse or non-recourse, including, without
limitation, loans, guarantees, capital
leases, sale-leaseback arrangements, and
hedging liabilities (including the Borrower's
and its subsidiaries' pro rata share of joint
venture debt).
"TOTAL VALUE" means the total of the
following items, but adjusted for minority
interests as applicable:
(a) "Core Assets" valued at most recent
quarter annualized Adjusted NOI capitalized
at 8.25%.
(b) Newly acquired Core Assets (exclusive of
the assets being acquired pursuant to the
Merger), at Borrower's cost for the first 2
quarters after acquisition.
(c) Management company most recent quarter
annualized Adjusted EBITDA multiplied by 4.
<PAGE>
2
(d) "Non-Core Assets" at book value (i.e.,
estimated liquidation value).
(e) Unrestricted cash and marketable
securities at the lower of cost or market
value.
(f) Construction in progress, land and
mortgages (other than Pheasant Lane Mall) at
cost, subject to an individual maximum of 10%
of Total Value for each and a maximum of 20%
of Total Value in the aggregate.
No more than 10% of Core Assets can be
composed of properties with less than 85%
occupancy.
"ADJUSTED NOI" means net operating income
(adjusted for straight-lining of rents and to
adjust for free rent, depreciation and
amortization) for wholly-owned and Joint
Venture properties; less Capital
Expenditures, less a management fee equal to
the greater of actual or 3% of gross
revenues.
"CORE ASSETS" means all regional malls and
community centers that will be initially
owned by the Borrower, and the office
building located at 745 Fifth Avenue, NY, NY,
plus all other regional malls (and ancillary
properties) acquired subsequent to the Merger
Closing Date (it being understood that
Pheasant Lane Mall shall be considered a
"Core Asset", PROVIDED that the value of
Pheasant Lane Mall shall not exceed the
principal amount outstanding under the
applicable mortgage).
"NON-CORE ASSETS" means those assets which
the Borrower intends to liquidate, identified
on the attached Exhibit II-A.
B. COVERAGE RATIOS:
(a) Minimum Interest Coverage Ratio
The Borrower shall maintain a quarterly
minimum ratio of Adjusted EBITDA to Total
Interest Expense of 1.6 to 1 initially,
increasing to 1.75 to 1 beginning 18 months
after the Merger Closing Date. "Total
Interest Expense" means the greater of (a)
actual interest expense on Total Indebtedness
(accrued, paid and capitalized), and (b)
interest expense calculated at 7% per annum
on Total Indebtedness.
The Minimum Interest Coverage Ratio will
be calculated using the most recent quarter
performance.
(b) Minimum Fixed Charge Coverage Ratio
<PAGE>
3
The Borrower shall maintain a quarterly
minimum ratio of Adjusted EBITDA less Capital
Expenditures to Fixed Charges of 1.5 to 1.
"Fixed Charges" means the sum of Total
Interest Expense, scheduled principal
amortization (excluding balloon payments due
at maturity), and payments on preferred
interests (including preferred partnership
units of USC L.P.).
Minimum Fixed Charge Coverage Ratio will
be calculated on a rolling four quarters
basis, except that until four fiscal quarters
have passed since the Merger Closing Date, it
will determined for the number of full fiscal
quarters subsequent to the Merger Closing
Date and then annualized.
"ADJUSTED EBITDA" means, for the period in
question, the Borrower's Consolidated Net
Income, per U.S. GAAP, plus interest, income
taxes, depreciation, and amortization, and
pro rata share of Joint Venture EBITDA.
"CAPITAL EXPENDITURES" means actual capital
expenditures incurred, including, without
limitation, tenant work and leasing
commissions, but excluding expenses incurred
for expansions and additions of space and
scheduled extraordinary initial capital
expenditures incurred during the first two
full fiscal quarters of ownership after the
Merger Closing Date.
C. MINIMUM EQUITY VALUE:
An amount to be determined on the Merger
Closing Date, increasing with new equity
proceeds (it being understood that such
initial amount shall equal approximately 85%
of the anticipated Equity Value on the Merger
Closing Date). "Equity Value" means Total
Value less Total Indebtedness.
Investment
Restrictions: A. The Borrower's investments in any of the
following shall not exceed 10% (or, in the
case of construction in progress, 15%) of
Total Value individually or 20% in aggregate:
(a) Undeveloped land;
(b) Construction in progress; and
(c) Mortgages and other debt instruments
(other than Pheasant Lane Mall).
B. Not more than 40% of the Borrower's
Adjusted EBITDA may arise from Joint Venture
holdings where the Borrower does not have at
least a 50% interest and control over major
decisions (e.g., sale, leasing, refinancing
and distributions).
<PAGE>
4
Certain Other
Covenants: SALE, ENCUMBRANCES OR TRANSFER:
All net cash proceeds from any capital event,
including the offering of equity interests in
the Borrower and the sale or refinancing of
any material assets of the Borrower
(including proceeds from Joint Venture
assets) will be applied to the reduction of
debt. In addition, in the event that
subsequent to the period in which the
Borrower has certified covenant compliance,
it engages in transactions involving the
sale, encumbrance or transfer of assets
(including any partnership or other ownership
interest) which transactions aggregate more
than $100 million since such certification
period, then the Borrower will notify the
Administrative Agent that such threshold has
been met and provide a re-certification of
compliance with all loan covenants.
<PAGE>
EXHIBIT II-A
EQUITY SECURITIES HELD FOR SALE:
General Growth Properties
CBL Associates Properties
NON-CORE CURRENTLY HELD FOR SALE:
SKS/Simon Realty
Abbey Properties
West Group Properties
Rouse Mortgage Note Receivable
Tishman Hotels and Realty LP (32% interest in Tishman Hotel)
Tishman JV (50% interest in a Westin New York Hotel)
<PAGE>
EXHIBIT C
USC L.P. SENIOR CREDIT FACILITY
USC FACILITY
Summary of Terms and Conditions
September 25, 2000
----------
Rodamco North America B.V., a Dutch BI ("RNA"), and its subsidiary,
Hexalon Real Estate, Inc., a Delaware REIT ("HEXALON"), intend to form a limited
partnership ("TENDERCO"), 79% of which will be owned by Hexalon and 21% of which
will be owned by certain affiliates of Hexalon owned by RNA (the "HEXALON
AFFILIATES" and, together with Hexalon, the "HEXALON ENTITIES"), for the purpose
of its acquiring all of the issued and outstanding common stock (the "COMMON
SHARES"), preferred stock (the "PREFERRED SHARES") and unit voting stock (the
"UNIT VOTING SHARES" and, collectively with the Common Shares and the Preferred
Shares, the "SHARES"), par value $.01, of Urban Shopping Centers, Inc., a
Maryland REIT (the "TARGET"). The acquisition will be effected through a tender
offer (the "TENDER OFFER") by TenderCo for the Shares followed by one or more
mergers (collectively, the "MERGER") involving the Target and TenderCo (with the
surviving entity being referred to herein as NewCo L.P. ("NEWCO L.P.")), all
pursuant to a merger agreement to be entered into among RNA, Hexalon, TenderCo
and the Target prior to the Tender Offer (the "MERGER AGREEMENT"). Hexalon will
be the general partner of NewCo L.P., and NewCo L.P. will be the general
partner, and 94.44% owner, of the limited partnership operating subsidiary,
Urban Shopping Centers, L.P., an Illinois limited partnership ("USC L.P."). The
following sets forth the terms and conditions for a $291,190,000 senior credit
facility (the "USC FACILITY") that will be available to USC L.P. References
herein to the "Transaction" shall include the acquisition and the financings
described herein and all other transactions related to the Transaction.
I. PARTIES
Borrower: USC L.P. (the "BORROWER").
Guarantors: Each future direct and indirect U.S.
subsidiary of the Borrower (the "GUARANTORS";
the Borrower and the Guarantors,
collectively, the "LOAN PARTIES").
Advisor, Sole Book
Manager, and Lead Arranger: Chase Securities Inc. (in such capacity, the
"Arranger").
Administrative Agent: The Chase Manhattan Bank ("CHASE" and, in
such capacity, the "ADMINISTRATIVE AGENT").
<PAGE>
2
Lenders: A syndicate of banks, financial institutions
and other entities, including Chase, arranged
by the Arranger (collectively, the
"LENDERS").
II. TYPE AND AMOUNT OF CREDIT FACILITY
Type and Amount of Facility: Two-year term loan facility (the "USC
FACILITY") in the amount of $291,190,000 (the
loans thereunder, the "USC TERM LOANS").
Availability: The USC Term Loans shall be made in a single
drawing on the USC Closing Date (as defined
below).
Maturity: The USC Term Loans shall be repayable on the
date that is two years after the USC Closing
Date.
Purpose: The proceeds of the USC Term Loans shall be
used to finance a distribution to certain
unitholders of USC L.P.
III. CERTAIN PAYMENT PROVISIONS
Fees and Interest Rates: As set forth on Annex I.
Optional Prepayments: The USC Term Loans may be prepaid by the
Borrower in minimum amounts to be agreed upon
and may not be reborrowed.
Mandatory Prepayments: The following amounts shall be applied to
prepay the USC Term Loans:
(a) 100% of the net cash proceeds of any sale
or issuance of equity or incurrence of
certain indebtedness (other than any second
mortgage up to $50,000,000 on the Oakbrook
Center property of the Borrower) by the
Borrower or any of its subsidiaries (other
than to the extent such proceeds are applied
at the election of the Borrower to repay the
Loans under the Merger Facilities); and
(b) 100% of the net cash proceeds of any sale
or other disposition (including as a result
of casualty or condemnation) by the Borrower
or any of its subsidiaries (other than to the
extent such proceeds are applied at the
election of the Borrower to repay the Loans
under the Merger Facilities) of any assets
(except for the sale of inventory in the
ordinary course of business and certain other
dispositions to be agreed on); PROVIDED that,
in lieu of such prepayments, the Borrower
will have the option of reinvesting net cash
proceeds from sales of
<PAGE>
3
such assets within a period of time to be
agreed upon following such sale or
disposition.
The USC Term Loans may not be reborrowed.
As used herein, "net cash proceeds" from any
event shall be net of any taxes or
distributions required to be made or paid as
a result of such event.
IV. COLLATERAL
The obligations of each Loan Party in respect
of the USC Facility shall be secured by a
perfected first priority security interest in
all equity interests (or, to the extent a
pledge of equity interests is prohibited by a
contractual obligation, an assignment of the
rights, including, to the extent permitted,
the right to receive proceeds, under such
contract on terms and conditions satisfactory
to the Administrative Agent) and intercompany
obligations held by such Loan Party.
V. CERTAIN CONDITIONS
Initial Conditions: The availability of the USC Facility shall be
conditioned upon satisfaction of, among other
things, the following conditions precedent
(the date upon which all such conditions
precedent shall be satisfied, the "USC
CLOSING DATE") on or before the earlier of
(i) the date 90 days after the Tender Closing
Date and (ii) March 31, 2001:
(a) The Borrower shall have executed and
delivered definitive financing documentation
with respect to the USC Facility reasonably
satisfactory to the Administrative Agent and
its counsel (the "CREDIT DOCUMENTATION").
(b) The Merger Facilities shall have been, or
shall be concurrently, closed in accordance
with terms thereof (including, without
limitation, satisfaction or waiver of all the
conditions precedent thereunder).
(c) The Lenders, the Administrative Agent and
the Arranger shall have received all fees
required to be paid, and reimbursement for
all expenses for which invoices have been
presented, on or before the USC Closing Date.
(d) The Lenders shall have received such
legal opinions (including opinions (i) from
counsel to the Borrower and its subsidiaries
and (ii) from such special and local counsel
as may
<PAGE>
4
be required by the Administrative Agent),
documents and other instruments as are
customary for transactions of this type or as
they may reasonably request.
(e) Each of the Hexalon Entities and NewCo
L.P. shall have executed and delivered a loan
purchase agreement in form and substance, and
including covenants, satisfactory to the
Administrative Agent with respect to their
unconditional (and joint and several)
obligation to purchase the USC Term Loans
from the Lenders and the Administrative Agent
under the USC Facility upon an insolvency of,
or payment default by, USC L.P.
On-Going Conditions: The making of each extension of credit shall
be conditioned upon (a) the accuracy of all
representations and warranties in the Credit
Documentation (including, without limitation,
the material adverse change and litigation
representations) and (b) there being no
default or event of default in existence at
the time of, or after giving effect to the
making of, such extension of credit. As used
herein and in the Credit Documentation a
"material adverse change" shall mean any
event, development or circumstance that has
had or could reasonably be expected to have a
material adverse effect on (a) the
Transaction, (b) the business, property,
operations, condition (financial or
otherwise) or prospects of the Borrower and
its subsidiaries taken as a whole or (c) the
validity or enforceability of any of the
Credit Documentation or the rights and
remedies of the Administrative Agent and the
Lenders thereunder.
VI. CERTAIN DOCUMENTATION MATTERS
The Credit Documentation shall contain
representations, warranties, covenants and
events of default customary for financings of
this type and other terms deemed appropriate
by the Lenders, including, without
limitation, the following (with such
covenants to apply to the Borrower and its
subsidiaries):
Representations and
Warranties: Financial statements (including pro forma
financial statements); absence of undisclosed
liabilities; no material adverse change;
corporate existence; compliance with law;
corporate power and authority; enforceability
of Credit Documentation; no conflict with law
or contractual obligations; no material
litigation; no default; ownership of
property; liens; intellectual property; no
burdensome restrictions; taxes; Federal
Reserve regulations; ERISA; Investment
Company Act; subsidiaries; environmental
matters; solvency; labor matters; accuracy of
disclosure; and creation and perfection of
security interests.
<PAGE>
5
Affirmative Covenants: Delivery of financial statements, reports,
accountants' letters, projections, officers'
certificates and other information requested
by the Lenders; payment of other obligations;
continuation of business and maintenance of
existence and material rights and privileges;
compliance with laws and material contractual
obligations; maintenance of property and
insurance; maintenance of books and records;
right of the Lenders to inspect property and
books and records; notices of defaults,
litigation and other material events;
compliance with environmental laws; further
assurances (including, without limitation,
with respect to security interests in
after-acquired equity interests and
intercompany obligations); and agreement that
at least 80% of the total aggregate secured
and unsecured debt (including under the USC
Facility) of the Borrower shall be fixed rate
debt or subject to interest rate protection
agreements on terms and conditions
satisfactory to the Administrative Agent.
Financial Covenants: Minimum Interest Coverage Ratio (as defined
in Annex II of Exhibit B with, for the
purposes of this covenant, the "Borrower"
meaning USC L.P. and its subsidiaries).
Negative Covenants: Limitations on: indebtedness (including,
without limitation, a prohibition of
unsecured and secured debt (other than under
the Credit Facilities and in respect of
non-recourse secured mortgage debt)); liens;
guarantee obligations; mergers,
consolidations, liquidations and
dissolutions; sales of assets (with
appropriate exceptions for certain asset
exchanges where no cash consideration is
received); leases; capital expenditures;
investments, loans and advances; optional
payments and modifications of subordinated
and other debt instruments; transactions with
affiliates; sale and leasebacks; changes in
fiscal year; negative pledge clauses; changes
in lines of business; and joint ventures,
construction, land and non-regional mall
assets.
Events of Default: Nonpayment of principal when due; nonpayment
of interest, fees or other amounts after a
grace period to be agreed upon; material
inaccuracy of representations and warranties;
violation of covenants (subject, in the case
of certain affirmative covenants, to a grace
period to be agreed upon); cross-default
(including, without limitation, to the Merger
Facilities); bankruptcy events; certain ERISA
events; material judgments; actual or
asserted invalidity of any guarantee or
security document or security interest; and a
change of control (the definition of which is
to be agreed).
Voting: Amendments and waivers with respect to the
Credit Documentation shall require the
approval of Lenders holding not
<PAGE>
6
less than a majority of the aggregate amount
of the USC Facility, except that (a) the
consent of each Lender directly affected
thereby shall be required with respect to (i)
reductions in the amount or extensions of the
scheduled date of final maturity of any USC
Term Loan and (ii) reductions in the rate of
interest or any fee or extensions of any due
date thereof and (b) the consent of 100% of
the Lenders shall be required with respect to
(i) modifications to any of the voting
percentages and (ii) releases of all or
substantially all of the Guarantors or all or
substantially all of the collateral.
Assignments
and Participations: The Lenders shall be permitted to assign and
sell participations in their USC Term Loans,
subject, in the case of assignments (other
than to another Lender or to an affiliate of
a Lender), to the consent of the
Administrative Agent and the Borrower (which
consent in each case shall not be
unreasonably withheld). All assignments shall
be pro rata as between the Merger Facilities
and the USC Facility. In the case of partial
assignments (other than to another Lender or
to an affiliate of a Lender), the minimum
assignment amount shall be $5,000,000, and,
after giving effect thereto, the assigning
Lender shall have Loans aggregating at least
$5,000,000 in each case unless otherwise
agreed by the Borrower and the Administrative
Agent. Participants shall have the same
benefits as the Lenders with respect to yield
protection and increased cost provisions.
Voting rights of participants shall be
limited to those matters with respect to
which the affirmative vote of the Lender from
which it purchased its participation would be
required as described under "Voting" above.
Pledges of USC Term Loans in accordance with
applicable law shall be permitted without
restriction. Promissory notes shall be issued
under the USC Term Facility only upon
request.
Yield Protection: The Credit Documentation shall contain
customary provisions (a) protecting the
Lenders against increased costs or loss of
yield resulting from changes in reserve, tax,
capital adequacy and other requirements of
law and from the imposition of or changes in
withholding or other taxes and (b)
indemnifying the Lenders for "breakage costs"
incurred in connection with, among other
things, any prepayment of a Eurodollar Loan
(as defined in Annex I) on a day other than
the last day of an interest period with
respect thereto.
Expenses and
Indemnification: The Borrower shall pay (a) all reasonable
out-of-pocket expenses of the Administrative
Agent and the Arranger associated with the
<PAGE>
7
syndication of the USC Facility and the
preparation, execution, delivery and
administration of the Credit Documentation
and any amendment or waiver with respect
thereto (including the reasonable fees,
disbursements and other charges of counsel)
and (b) all out-of-pocket expenses of the
Administrative Agent and the Lenders
(including the fees, disbursements and other
charges of counsel) in connection with the
enforcement of the Credit Documentation.
The Administrative Agent, the Arranger and
the Lenders (and their affiliates and their
respective officers, directors, employees,
advisors and agents) will have no liability
for, and will be indemnified and held
harmless against, any losses, claims,
damages, liabilities or expenses incurred in
respect of the financing contemplated hereby
or the use or the proposed use of proceeds
thereof, except to the extent they are found
by a final, non-appealable judgment of a
court to arise from the gross negligence or
willful misconduct of the indemnified party.
Governing Law and Forum: State of New York.
Counsel to the
Administrative Agent
and the Arranger: Simpson Thacher & Bartlett.
<PAGE>
ANNEX I
INTEREST AND CERTAIN FEES
Interest Rate Options: The Borrower may elect that the USC Term
Loans comprising each borrowing bear interest
at a rate per annum equal to:
the ABR plus the Applicable Margin; or
the Eurodollar Rate plus the Applicable
Margin.
As used herein:
"ABR" means the highest of (i) the rate of
interest publicly announced by Chase as its
prime rate in effect at its principal office
in New York City (the "PRIME RATE"), (ii) the
secondary market rate for three-month
certificates of deposit (adjusted for
statutory reserve requirements) PLUS 1% and
(iii) the federal funds effective rate from
time to time PLUS 0.5%.
"APPLICABLE MARGIN" means (a) 0.25%, in the
case of ABR Loans (as defined below) and (b)
1.50%, in the case of Eurodollar Loans (as
defined below). The foregoing margins shall
be determined in accordance with the pricing
grid attached hereto as Annex I-A after the
first anniversary of the USC Closing Date and
upon the repayment or repayment of at least
$360,000,000 in aggregate principal amount of
the Tranche I Merger Term Loans under the
Merger Facilities and the USC Term Loans,
PROVIDED that no event of default has
occurred and is continuing.
"EURODOLLAR RATE" means the rate (adjusted
for statutory reserve requirements for
eurocurrency liabilities) for eurodollar
deposits for a period equal to one, two,
three or six months (as selected by the
Borrower) appearing on Page 3750 of the
Telerate screen.
Interest Payment Dates: In the case of USC Term Loans bearing
interest based upon the ABR ("ABR LOANS"),
quarterly in arrears.
In the case of USC Term Loans bearing
interest based upon the Eurodollar Rate
("EURODOLLAR LOANS"), on the last day of each
relevant interest period and, in the case of
any interest period longer than three months,
on each successive date three months after
the first day of such interest period.
<PAGE>
2
Default Rate: At any time when the Borrower is in default
in the payment of any amount of principal due
under the USC Facility, such amount shall
bear interest at 3% above the rate otherwise
applicable thereto. Overdue interest, fees
and other amounts shall bear interest at 3%
above the rate applicable to ABR Loans.
Rate and Fee Basis: All per annum rates shall be calculated on
the basis of a year of 360 days (or 365/366
days, in the case of ABR Loans the interest
rate payable on which is then based on the
Prime Rate) for actual days elapsed.
<PAGE>
ANNEX I-A
<TABLE>
<CAPTION>
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S&P/Moody's Rating of the Merger Applicable Margin for Eurodollar Applicable Margin for ABR
Facilities* Loans Loans
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BBB+/Baa1 0.900% 0.00%
BBB/Baa2 1.000% - 1.100% 0.00%
BBB-/Baa3 1.150% - 1.250% 0.00%
BB+/Ba1 1.625% 0.25%
Less than BB+/Ba1 1.875% 0.25%
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</TABLE>
