SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarter ended June 30, 1996.
___ Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from
________________ to _______________.
Commission File Number 1-12222
BEDFORD PROPERTY INVESTORS, INC.
(Exact name of Registrant as specified in its charter)
MARYLAND 68-0306514
(state or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
270 Lafayette Circle, Lafayette, CA 94549
(Address of principal executive offices)
Registrant's telephone number, including area code (510)283-8910
Indicate by check mark whether Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months or for such shorter period
that Registrant was required to file such reports and (2) has been
subject to such filing requirements for the past 90 days. Yes x No___
Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of the latest practicable date.
Class Outstanding as of August 12, 1996
Common Stock, $0.02 par value 6,471,325
<PAGE>
BEDFORD PROPERTY INVESTORS, INC.
INDEX
PART I. FINANCIAL INFORMATION Page
ITEM 1. FINANCIAL STATEMENTS
Statement 1
Consolidated Balance Sheets as of June 30, 1996
and December 31, 1995 2
Consolidated Statements of Income for the three and six months ended
June 30, 1996 and 1995 3
Consolidated Statements of Stockholders' Equity for the six months
ended June 30, 1996 and the year ended December 31, 1995 4
Consolidated Statements of Cash Flows for the six months ended
June 30, 1996 and 1995 5
Notes to Consolidated Financial Statements 6-11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
Management's Discussion and Analysis of Results of Operations
and Financial Condition 12-15
PART II. OTHER INFORMATION
ITEMS 1 - 6 16-18
SIGNATURES 19
<PAGE>
BEDFORD PROPERTY INVESTORS, INC.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
STATEMENT
The financial statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. The information furnished reflects
all adjustments which are, in the opinion of management, necessary for
a fair presentation of results of operations for the interim periods.
Such adjustments are of a normal recurring nature. These financial
statements should be read in conjunction with the notes to financial
statements appearing in the annual report to stockholders for the year
ended December 31, 1995.
<PAGE>
BEDFORD PROPERTY INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)
AS OF JUNE 30, 1996 AND DECEMBER 31, 1995
(in thousands, except share and per share amounts)
June 30, December 31,
1996 1995
ASSETS:
Real estate investments:
Industrial buildings $115,004 $ 94,897
Office buildings 39,992 30,025
Retail buildings 6,281 6,261
161,277 131,183
Less accumulated depreciation 3,433 2,219
157,844 128,964
Cash 995 1,027
Other assets 5,249 3,487
Total assets $164,088 $133,478
LIABILITIES AND STOCKHOLDERS' EQUITY:
Bank loan payable 5,697 43,250
Mortgage loan payable 25,000 -
Accounts payable and accrued expenses 1,292 1,451
Dividend payable 2,678 1,765
Acquisition payable 3,000 3,000
Other liabilities 2,485 1,577
Total liabilities $ 40,152 $ 51,043
Redeemable preferred stock:
Series A convertible preferred stock, par value
$0.01 per share; authorized 10,000,000 shares;
issued and outstanding 8,333,334 shares;
aggregate redemption amount $50,000; aggregate
liquidation preference $52,500. 50,000 50,000
Common stock and other stockholders' equity:
Common stock, par value $0.02 per share;
authorized 15,000,000 shares, issued
and outstanding, 6,471,325 shares in
1996; 3,045,325 shares in 1995 130 61
Additional paid-in capital 148,247 107,214
Accumulated losses and distributions
in excess of net income (74,441) (74,840)
Total common stock and other
stockholders' equity 73,936 32,435
Total liabilities and
stockholders' equity $164,088 $133,478
See accompanying notes to consolidated financial statements.
<PAGE>
BEDFORD PROPERTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995 (Unaudited)
(in thousands, except share and per share amounts)
Three Months Six Months
1996 1995 1996 1995
Property operations:
Rental income $6,369 $2,616 $12,078 $5,278
Rental expenses:
Operating expenses 1,155 643 2,314 1,305
Real estate taxes 669 250 1,234 482
Depreciation and amortization 718 357 1,326 698
Income from property operations 3,827 1,366 7,204 2,793
General and administrative
expenses (495) (312) (927) (682)
Interest income 44 8 62 19
Interest expense (755) (446) (1,765) (908)
Income before gain on sale 2,621 616 4,574 1,222
Gain on sale of real estate
investment 359 - 359 -
Net income $2,980 $ 616 $ 4,933 $1,222
Net income applicable to common
stockholders (1) $1,855 $ 616 $ 2,683 $1,222
Primary earnings per common and
common equivalent share $ 0.33 $ 0.20 $ 0.61 $ 0.40
Primary weighted average number
of common and common
equivalent shares(2) 5,682,402 3,067,181 4,432,999 3,066,375
Earnings per common share -
assuming full dilution $ 0.30 $ 0.20 $ 0.57 $ 0.40
Weighted average number of
common shares(2) -
assuming full dilution 9,849,069 3,067,181 8,599,666 3,066,375
See accompanying notes to consolidated financial statements.
(1) Reflects dividend of $1,125 for each quarter of 1996 on $50,000 of
preferred stock issued on September 18, 1995.
(2) Reflects the one-for-two reverse stock split effective March 29,
1996.
<PAGE>
<TABLE>
<CAPTION>
BEDFORD PROPERTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1996
AND THE YEAR ENDED DECEMBER 31, 1995 (Unaudited)
(in thousands, except per share data)
<S>
<C> <C> <C> <C>
Total
Accumulated common
losses and stock and
Additional distributions other stock-
Common paid-in in excess of holders'
stock capital net income equity
Balance, December 31, 1994 $60 $107,151 $(70,279) $36,932
Issuance of common stock 1 63 - 64
Costs of issuance of
preferred stock - - (3,631) (3,631)
Redemption of rights - - (60) (60)
Net income - - 2,895 2,895
Dividends to common stockholders
($0.82 per share) - - (2,477) (2,477)
Dividends to preferred
stockholders (9%) - - (1,288) (1,288)
Balance, December 31, 1995 61 107,214 (74,840) 32,435
Issuance of common stock 69 43,622 - 43,691
Cost of issuance of common stock - (2,589) - (2,589)
Net income - - 4,933 4,933
Dividends to common stockholders
($0.48 per share) - - (2,284) (2,284)
Dividends to preferred
stockholders (9%) - - (2,250) (2,250)
Balance, June 30, 1996 $130 $148,247 $(74,441) $73,936
</TABLE>
See accompanying notes to consolidated financial statements.
BEDFORD PROPERTY INVESTORS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995 (Unaudited)
(in thousands)
1996 1995
Operating Activities:
Net income $ 4,933 $ 1,222
Adjustments to reconcile net
income to net cash
provided by operating activities:
Depreciation and amortization 1,664 833
Gain on sale of real estate investments (359) -
Change in other assets (2,162) (360)
Change in accounts payable and
accrued expenses (159) 57
Change in other liabilities 475 56
Net cash provided by operating activities 4,392 1,808
Investing Activities:
Investments in real estate (30,274) (471)
Proceeds from sale of real estate investments 922 -
Net cash used by investing activities (29,352) (471)
Financing Activities:
Proceeds from bank loan 22,600 2,500
Proceeds from mortgage loan 25,000 -
Repayments of bank loan (60,153) (6,377)
Issuance of common stock 41,102 58
Payment of dividends (3,621) (1,136)
Net cash provided (used) by financing activities 24,928 (4,955)
Net decrease in cash (32) (3,618)
Cash at beginning of period 1,027 4,733
Cash at end of period $ 995 $ 1,115
Supplemental disclosure of cash flow information:
a) Non cash investing and financing activities:
Debt incurred with real estate acquired $ 433 $ -
Note receivable from the sale of real
estate investments 50 -
b) Cash paid during the period for interest 1,577 812
See accompanying notes to consolidated financial statements.
<PAGE>
BEDFORD PROPERTY INVESTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. The Company and Basis of Presentation
The Company
Bedford Property Investors Inc. (the "Company") is an equity real estate
investment trust with investments primarily in industrial and suburban
office properties concentrated in the Western United States.
Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with the instructions to Form 10-Q and, therefore, do not
include all information and footnotes necessary for a fair presentation
of financial condition, results of operations, and cash flows in
conformity with generally accepted accounting principles. When
necessary, reclassifications have been made to prior period balances to
conform to current period presentation.
Per Share Data
Per share data is based on the weighted average number of common and
common equivalent shares outstanding during the period. Per share data
reflects the retroactive application of the one-for-two reverse stock
split that took place on March 29, 1996. The 1996 per share data
reflects earnings per share on a primary and fully diluted basis. Stock
options issued under the Company's stock option plans are considered
common stock equivalents and are included in the calculation of per share
data if, upon exercise, they would have a dilutive effect. The earnings
per share calculation assuming full dilution assumes the conversion of
the Company's Series A Convertible Preferred Stock. If exercised, the
Series A Convertible Preferred Stock would have a dilutive effect.
Dividends accrued on the Series A Convertible Preferred Stock are
deducted from net income for purposes of determining net income
applicable to common stockholders.
<PAGE>
Note 2. Real Estate Investments
As of June 30, 1996, the Company's real estate investments (net of
accumulated depreciation) were diversified by property type as follows
(in thousands):
Number of Investment
Properties Amount % of Total
Industrial 27 $ 113,043 72
Office 7 38,561 24
Retail 1 6,240 4
Total 35 $ 157,844 100
As of June 30, 1996, the Company's real estate investments (net of
accumulated depreciation) were diversified by geographic region as
follows:
Number of Investment
Properties Amount % of Total
San Francisco Bay Area,
California 16 $ 60,892 39
Greater Los Angeles Area,
California 5 40,880 26
Kansas City, Kansas 5 14,193 9
Denver Metropolitan Area, Colorado 3 11,226 7
Greater Portland Area, Oregon 2 10,395 6
Phoenix, Arizona 1 7,986 5
Minneapolis/St. Paul, Minnesota 2 6,160 4
Salt Lake City, Utah 1 6,112 4
Total 35 $157,844 100
<PAGE>
The following table sets forth the Company's real estate investments as
of June 30, 1996 (in thousands):
<TABLE>
<S> <C> <C> <C> <C>
Less
Accumulated
Land Building Depreciation Total
INDUSTRIAL
Greater San Francisco Bay Area, California
Building 3
Contra Costa Diablo Industrial Park,
Concord $ 495 $ 1,236 $ 162 $ 1,569
Building 8
Contra Costa Diablo Industrial Park,
Concord 877 1,690 206 2,361
Building 18
Mason Industrial Park, Concord 610 1,310 175 1,745
Milpitas Town Center, Milpitas 1,400 4,505 189 5,716
598 Gibraltar Drive, Milpitas 535 2,655 29 3,161
Auburn Court, Fremont 1,415 2,516 30 3,901
Westinghouse Drive, Fremont 271 911 11 1,171
Fourier Avenue, Fremont 2,120 7,018 13 9,125
350 E. Plumeria Drive, San Jose 3,683 4,792 80 8,395
301 East Grand, South San Francisco 2,070 1,001 12 3,059
342 Allerton, South San Francisco 2,558 1,569 19 4,108
400 Grandview, South San Francisco 3,300 3,595 43 6,852
410 Allerton, South San Francisco 1,356 905 11 2,250
417 Eccles, South San Francisco 661 521 6 1,176
Subtotal 21,351 34,224 986 54,589
Greater Los Angeles Area, California
Dupont Industrial Center, Ontario 3,588 6,163 334 9,417
3002 Dow Business Center, Tustin 4,305 7,555 105 11,755
Subtotal 7,893 13,718 439 21,172
Kansas City, Kansas
Ninety-Ninth Street #1, Lenexa 410 1,571 26 1,955
Ninety-Ninth Street #2, Lenexa 183 564 9 738
Ninety-Ninth Street #3, Lenexa 360 2,172 269 2,263
Lackman Business Center, Lenexa 628 1,681 29 2,280
Lenexa Land, Lenexa 519 - - 519
Subtotal 2,100 5,988 333 7,755
Denver, Colorado
Bryant St. Annex, Denver 495 880 10 1,365
Bryant St. Quad, Denver 1,416 2,233 28 3,621
Subtotal 1,911 3,113 38 4,986
Greater Portland Area, Oregon
Twin Oaks Tech. Center, Beaverton 1,469 4,926 61 6,334
Twin Oaks Business Park, Beaverton 1,183 2,913 35 4,061
Subtotal 2,652 7,839 96 10,395
Phoenix, Arizona
Westech Business Center - Phoenix 3,531 4,472 17 7,986
Minneapolis/St. Paul, Minnesota
St. Paul Business Center - East, Maplewood 766 1,795 22 2,539
St. Paul Business Center - West, Maplewood 1,236 2,415 30 3,621
Subtotal 2,002 4,210 52 6,160
Total Industrial carried forward 41,440 73,564 1,961 113,043
<PAGE>
Less
Accumulated
Land Building Depreciation Total
INDUSTRIAL
Total Industrial brought forward 41,440 73,564 1,961 113,043
SUBURBAN OFFICE
Greater San Francisco Bay Area, California
Village Green, Lafayette 743 1,523 75 2,191
100 View Street, Mountain View 1,020 3,104 12 4,112
Subtotal 1,763 4,627 87 6,303
Greater Los Angeles Area, California
1000 Town Center Drive, Oxnard 1,785 4,825 516 6,094
Mariner Court, Torrance 3,221 4,579 283 7,517
Laguna Hills Square, Laguna Hills 2,436 3,682 21 6,097
Subtotal 7,442 13,086 820 19,708
Kansas City, Kansas
6600 College Blvd., Overland Park 2,518 3,986 66 6,438
Salt Lake City, Utah
Woodlands Tower II, Salt Lake City 359 6,211 458 6,112
Total Suburban Office 12,082 27,910 1,431 38,561
RETAIL
Academy Place Shopping Center,
Colorado Springs 2,890 3,391 41 6,240
Total $56,412 $104,865 $3,433 $157,844
</TABLE>
350 East Plumeria Drive
The property, a suburban research and development facility located in San
Jose, California, was purchased for $8,325,000 or $58 per square foot on
September 19, 1995. The Company recorded acquisition costs of $125,000
paid to Bedford Acquisitions, Inc. ("BAI"), a company wholly-owned by Mr.
Bedford.
Lackman Business Center
The property, a single-story service center industrial project located
in Lenexa, Kansas, was purchased for $2,250,000 or $49 per square foot
on September 19, 1995. The Company recorded acquisition costs of $34,000
paid to BAI.
Ninety-Ninth Street Buildings 1 and 2
The properties, two service industrial buildings located in Lenexa,
Kansas, were purchased for $2,685,000 or $55 per square foot on September
20, 1995. The Company recorded acquisition costs of $40,000 paid to BAI.
Cody Street Park, Building 6
In the third quarter 1995, the Company decided to sell the Cody Street
Park, Building 6. The sale was completed on September 20, 1995, and
resulted in a loss of $12,000.
<PAGE>
6600 College Boulevard
The property, a suburban service center industrial complex located in
Overland Park, Kansas, was purchased for $6,360,000 or $80 per square
foot, on October 6, 1995. The property was acquired from AEW #25 Trust,
an affiliate of BED Preferred No. 1 Limited Partnership which purchased
$50 million of the Company's Series A Convertible Preferred Stock in
September 1995. The directors of the Company who are affiliated with BED
Preferred No. 1 Limited Partnership, however, played no role in this
acquisition. The Company recorded acquisition costs of $95,000 paid to
BAI.
IBM Building
During 1995, the Company continued to offer for sale the IBM Building
located in Jackson, Mississippi. This property was first offered for
sale in 1991, at which time the Company's investment in the property was
written down by $2,113,000. On October 2, 1995, the Company completed
the sale of the IBM Building for a cash sale price of $6,500,000,
resulting in a loss of $630,000.
3002 Dow Business Center
The property, a five-building industrial project located in Tustin,
California, was purchased for $11,500,000 or $60 per square foot on
December 5, 1995. The Company recorded acquisition costs of $172,500
paid to BAI.
The Landsing Pacific Portfolio
On December 14, 1995, the Company acquired the Landsing Pacific Portfolio
which consists of thirteen industrial properties and one retail property
aggregating approximately one million rentable square feet located in
Maplewood, Minnesota; Denver and Colorado Springs, Colorado; South San
Francisco and Fremont, California; and Beaverton, Oregon. The Company
paid $49,700,000 for the Landsing Pacific Portfolio or $50 per square
foot. The acquisition was financed with $4,000,000 cash, borrowings of
$42,700,000 under the Company's credit facility and a $3,000,000 payable
secured by a letter of credit due one year from the date of issuance.
The Company recorded acquisition costs of $594,000 paid to BAI.
The Landsing Pacific Portfolio comprised substantially all of the real
estate assets of the Landsing Pacific Fund, Inc., a publicly-traded REIT
based in San Mateo, California. At all times relevant to the
transaction, Martin I. Zankel, a director and stockholder of the Company,
was Chairman of the Board of Directors, Chief Executive Officer and
President of the Landsing Pacific Fund, Inc. Mr. Zankel had no role on
behalf of the Company in this acquisition.
Laguna Hills Square
The property, a suburban three-building office complex located in Laguna
Hills, California, was purchased for $5,998,000 or $117 per square foot
on March 27, 1996. The Company recorded acquisition costs of $90,000
paid to BAI.
Woodlands Tower II
On April 8, 1996, the Company sold 3.6 acres of entitled land adjacent
to its suburban office property in Salt Lake City, Utah for $1,000,000,
consisting of $950,000 of cash and a note of $50,000 due in April 1997,
with 10% interest payable monthly. The sale resulted in a gain of
$359,000.
Westech Business Center
The property, a five-building service industrial project located in
Phoenix, Arizona, was purchased for $7,677,000 or $53 per square foot on
April 25, 1996. The Company recorded acquisition costs of $115,000 paid
to BAI.
598 Gibraltar Drive
The property was developed on an unleased basis on a 3.1 acre parcel
located on the Company's Milpitas Town Center property in Milpitas,
California, and consists of a single story research and development
facility with approximately 45,090 square feet. The project was
completed in April of 1996, with total costs (excluding land) amounting
to $2,655,000. The Company recorded development costs of $63,000 paid
to BAI.
<PAGE>
100 View Street
The property, a two-story office building located in Mountain View,
California, was purchased for $4,100,000 or $97 per square foot on May
3, 1996. The Company recorded acquisition costs of $61,500 paid to BAI.
Fourier Avenue
The property, a two-building research and development/office complex in
Fremont, California, was purchased for $9,000,000 or $86 per square foot
on May 30, 1996. The Company recorded acquisition costs of $135,000 paid
to BAI.
Lenexa Land
The property, a 4.8 acre parcel of land adjacent to Ninety-Ninth Street
#2 and #3 in Lenexa, Kansas, was purchased for $508,000 on June 5, 1996.
The purchase price consists of $75,000 cash and a non-interest bearing
note of $433,000 due and payable in December 1997. The Company plans to
construct a 68,000 square-foot building on the site. The Company
recorded acquisition costs of $7,600 paid to BAI.
Lundy Avenue
The property, a research and development building in San Jose,
California, was purchased for $4,167,000 or $69 per square foot on July
9, 1996. The Company recorded acquisition costs of $62,500 paid to BAI.
There has been no significant development in environmental matters or
proceedings since the filing of the Company's 1995 Annual Report on Form
10-K.
The Company internally manages the majority of its properties and
maintains centralized financial record-keeping. For all the properties
located outside of California, Kansas and Arizona, the Company has
subcontracted on-site maintenance to local firms.
Note 3. Stock Options
In September 1995, the Company established a Management Stock Acquisition
program. Under the program, options exercised by key members of
management within thirty days of the grant date may be exercised either
in cash or with a note payable to the Company. Such note bears interest
at 7.5% or the Applicable Federal Rate as defined by the Internal Revenue
Service, whichever is higher. The note is due in five years or within
ninety days from termination of employment, with interest payable
quarterly. During 1995, options for 50,000 shares of Common Stock were
exercised in exchange for two notes, of $287,500 each, payable to the
Company. During 1996, options for 75,000 shares of Common Stock were
exercised in exchange for three notes, of $325,000 each, payable to the
Company. The notes bear interest at 7.5%. The unpaid balance of the
notes is included in the accompanying consolidated balance sheet as a
reduction of additional paid-in capital.
Note 4. Debt
Bank Loan Payable
The daily weighted average amounts owing to the Bank of America under the
Company's credit facility were $26,815,000 and $17,834,000 for the six
months ending June 30, 1996 and 1995, respectively. The weighted average
interest rates in these periods were 8.23% and 8.86%, respectively. The
effective interest rate at June 30, 1996 was 7.5%.
In July 1996, the Company's existing credit facility was amended to
increase the commitment amount from $60 million to $100 million, with
extended terms and reduced interest rates.
Mortgage Loans
In 1996, the Company obtained $25,000,000 in mortgage loans which are
secured by Woodlands Tower II, Dupont Industrial Center, 3002 Dow
Business Center and Milpitas Town Center. The loans bear interest at
7.02% per annum and have a seven year term. Interest is due and payable
monthly. The proceeds of the mortgage loans were used to pay down a
portion of the outstanding borrowings under the credit facility.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
When used in the following discussion, the words "believes,"
"anticipates" and similar expressions are intended to identify forward-
looking statements. Such statements are subject to certain risks and
uncertainties which could cause actual results to differ materially from
those projected, including, but not limited to, those set forth in the
section entitled "Potential Factors Affecting Future Operating Results,"
below. Readers are cautioned not to place undue reliance on these
forward-looking statements which speak only as of the date hereof. The
Company undertakes no obligation to publicly release the result of any
revisions to these forward-looking statements which may be made to
reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
Results of Operations - Six Months Ended June 30, 1996, Compared with Six
Months Ended June 30, 1995.
Income
Income from property operations (defined as rental income less rental
expenses) for the six months ended June 30, 1996, increased $4,411,000
or 158% compared to income from property operations for the same period
in 1995. This is due primarily to an increase in rental income of
$6,800,000 for the first six months in 1996 compared to the first six
months in 1995, offset by an increase in rental expenses of $2,389,000.
The increase in rental income and expenses is primarily attributable to
the acquisition of real estate investments in the third and fourth
quarters of 1995 and the first six months in 1996. The Company acquired
100 View Street and Fourier Avenue in May 1996; Westech Business Center
in April 1996; Laguna Hills in March 1996; the Landsing Pacific Portfolio
and 3002 Dow Business Center in December 1995; 6600 College Boulevard in
October 1995; 350 East Plumeria Drive, Lackman Business Center, Ninety-
Ninth Street #1 and Ninety-Ninth Street #2 in September 1995. In
addition, the Company completed the development of a speculative building
at 598 Gibraltar Drive which was 100% leased in May 1996. These
acquisitions and development activity increased rental income and rental
expenses by $7,338,000 and $2,407,000, respectively.
The effect of these acquisitions and development activity was partially
offset by the sales of the IBM Building and Cody Street Park, Building
6 in October and September 1995, respectively, generating a reduction in
rental income and rental expenses of approximately $709,000 and $449,000,
respectively.
Expenses
Interest expense, which includes amortization of loan fees, increased
$857,000 or 94% for the first six months of 1996 compared with the same
period in 1995. The increase is attributable to the Company's higher
level of borrowings to finance the acquisition of properties in 1996, and
higher financing costs incurred in connection with its credit facility
and mortgage loans. The amortization of loan fees was $303,000 and
$111,000 in the first six months of 1996 and 1995, respectively. General
and administrative expenses increased $245,000 or 36% for the six months
of 1996 compared with the same period in 1995, a result of managing a
larger real estate portfolio.
Gain on Sale
On April 8, 1996, the Company sold 3.6 acres of entitled land adjacent
to its suburban office property in Salt Lake City, Utah for $1,000,000,
consisting of $950,000 of cash and a note of $50,000 due in April 1997,
with 10% interest payable monthly. The sale resulted in a gain of
$359,000.
Results of Operations - Three Months Ended June 30, 1996, Compared with
Three Months Ended June 30, 1995.
Income
Income from property operations (defined as rental income less rental
expenses) for the three months ended June 30, 1996, increased $2,461,000
or 180% compared to income from property operations for the same period
in 1995. This is due primarily to an increase in rental income of
$3,753,000 for the second quarter of 1996 compared to the second quarter
of 1995, offset by an increase in rental expenses of $1,292,000.
The increase in rental income and expenses is primarily attributable to
the acquisition of real estate investments in the third and fourth
quarter of 1995 and the first six months of 1996. The Company acquired
100 View Street and Fourier Avenue in May 1996; Westech Business Center
in April 1996; Laguna Hills in March 1996; the Landsing Portfolio and
3002 Dow Business Center in December 1995; 6600 College Boulevard in
October 1995; 350 East Plumeria Drive, Lackman Business Center, Ninety-
Ninth Street #1 and Ninety-Ninth Street #2 in September 1995. In
addition, the Company completed the development of a speculative building
at 598 Gibraltar Drive which was 100% leased in May 1996. These
acquisitions and development activity increased rental income and rental
expenses by $4,024,000 and $1,284,000, respectively.
The effect of these acquisitions and development activity was partially
offset by the sales of the IBM Building and Cody Street Park, Building
6 in October and September 1995, respectively, generating a reduction in
rental income and rental expenses of approximately $354,000 and $239,000,
respectively.
Expenses
Interest expense, which includes amortization of loan fees, increased
$309,000 or 69% for the second quarter of 1996 compared with the same
period in 1995. The increase is attributable to the Company's higher
level of borrowings on its credit facility to finance the acquisition of
properties in 1995, and higher financing costs incurred in connection
with credit facility and mortgages. The amortization of loan fees was
$158,000 and $55,000 in the second quarter of 1996 and 1995,
respectively. General and administrative expenses increased $329,000 or
59% for the first three months of 1996 compared with the same period in
1995, a result of managing a larger real estate portfolio.
Gain on Sale
On April 8, 1996, the Company sold 3.6 acres of entitled land adjacent
to its suburban office property in Salt Lake City, Utah for $1,000,000,
consisting of $950,000 of cash and a note of $50,000 due in April 1997,
with 10% interest payable monthly. The sale resulted in a gain of
$359,000.
Liquidity and Capital Resources
On September 18, 1995, the Company completed the sale of $50,000,000 of
Series A Convertible Preferred Stock to an entity beneficially owned by
an investment fund managed by Aldrich Eastman Waltch. The Series A
Convertible Preferred Stock contains financial covenants and conditions
that if the Company fails to maintain or achieve, its holders have the
right to cause the Company to redeem all of the outstanding shares of
Series A Convertible Preferred Stock at a redemption price of $6.00 per
share plus all accrued dividends payable. In that case, the Company
could experience substantial difficulty in financing such redemption and
may be required to liquidate a substantial portion of its properties.
In 1996, the Company obtained $25,000,000 in mortgage loans which are
secured by Woodlands Tower II, Dupont Industrial Center, 3002 Dow
Business Center and Milpitas Town Center. The loans bear interest at
7.02% per annum and have a seven year term. Interest is due and payable
monthly. The proceeds of the mortgage loans were used to pay down a
portion of the outstanding borrowings under the credit facility.
On April 24, 1996, the Company completed the sale of 3,350,000 shares of
common stock at $13.00 per share. A portion of the net cash proceeds
from the common stock was used to pay off the outstanding borrowings
under the Company's $60 million credit facility. The facility, obtained
in December 1993 for $20 million and increased to $23 million in August
1994, was restated and amended to $60 million on September 18, 1995. The
facility was used, in part, to finance the acquisitions of Mariner Court,
Dupont Industrial Center, Village Green, and Milpitas Town Center during
the first nine months of 1994; the Landsing Pacific Fund Portfolio in
1995; Laguna Hills, Fourier Avenue, Lundy Avenue and the development of
the 598 Gibraltar Drive in 1996. At June 30, 1996, the Company was in
compliance with the covenants and requirements of the revolving credit
facility. In July 1996, the facility was amended to (i) increase the
commitment amount from $60 million to $100 million, (ii) extend the terms
to July 1, 1999 and (iii) reduce the interest rates by 0.25%.
The Company anticipates that the cash flow generated by its real estate
investments and funds available under the above credit facility will be
sufficient to meet its short-term liquidity requirements.
The Company expects to fund the cost of acquisitions, capital
expenditures, costs associated with lease renewals and reletting of
space, repayment of indebtedness, and development of properties from (i)
cash flow from operations, (ii) borrowings under the credit facility and,
if available, other indebtedness (which may include indebtedness assumed
in acquisitions), (iii) the sale of real estate investments, and (iv) the
sale of equity securities and, possibly, the issuance of equity
securities in connection with acquisitions.
The ability to obtain mortgage loans on income producing property is
dependent upon the ability to attract and retain tenants and the
economics of the various markets in which the properties are located, as
well as the willingness of mortgage-lending institutions to make loans
secured by real property. The ability to sell real estate investments
is partially dependent upon the ability of purchasers to obtain financing
at commercially reasonable rates.
Potential Factors Affecting Future Operating Results
At the present time, borrowings under the Company's credit facility bear
interest at a floating rate. The Company anticipates that its results
from operations may be impacted negatively by future increases in
interest rates and borrowings to finance additional property
acquisitions.
While the Company has historically been successful in renewing and
releasing space, the Company will be subject to the risk that certain
leases expiring in 1996 may not be renewed or the terms of renewal may
be less favorable to the Company than current lease terms. The Company
expects to incur costs in making improvements or repairs to its portfolio
of properties required by new or renewing tenants and expects to incur
expenses associated with brokerage commissions payable in connection with
the reletting of space.
Many other factors affect the Company's actual financial performance and
may cause the Company's future results to be markedly outside of the
Company's current expectations.
Inflation
Most of the leases require the tenants to pay their share of operating
expenses, including common area maintenance, real estate taxes and
insurance, thereby reducing the Company's exposure to increases in costs
and operating expenses resulting from inflation. Inflation, however,
could result in an increase in the Company's borrowing costs.
Dividends
Quarterly dividends declared for the first and second quarters of 1996
were $0.24 per share of common stock. Consistent with the Company's
policy, the dividend declared for the last quarter of 1995 was paid in
1996; as a result, the Company's statement of cash flows for the period
ended June 30, 1996 reflects dividends paid for the fourth quarter of
1995 and the first quarter of 1996. Similarly, the Company's statement
of cash flows for the period ended June 30, 1995 reflects dividends paid
for the fourth quarter of 1994 and the first quarter of 1995. The
dividends declared for the fourth quarter of 1995 and 1994 were $0.21 and
$0.19 per share of common stock, respectively. As of June 30, 1996,
dividends of $1,125,000 were accrued on the Series A Convertible
Preferred Stock. They are due and payable 45 days after the quarter end.
Government Regulations
The Company's properties are subject to various federal, state and local
regulatory requirements such as local building codes and other similar
regulations. The Company believes that the properties are currently in
substantial compliance with all applicable regulatory requirements,
although expenditures at its properties may be required to comply with
changes in these laws. No material expenditures are contemplated at this
time in order to comply with any such laws or regulations.
All of the Company's properties have had Phase I environmental site
assessments (which involve inspection without soil sampling or
groundwater analysis) by independent environmental consultants and have
been inspected for hazardous materials as part of the Company's
acquisition inspections. None of these Phase I assessments has revealed
any environmental conditions requiring material expenditures for
remediation.
The Company believes that it is in compliance in all material respects
with all federal, state and local laws regarding hazardous or toxic
substances, and the Company has not been notified by any governmental
authority of any non-compliance or other claim in connection with any of
its present or former properties. The Company does not anticipate that
compliance with federal, state and local environmental protection
regulations will have any material adverse impact on the financial
position, results of operations or liquidity of the Company.
Financial Condition
During the six months ended June 30, 1996, the Company's operating
activities provided cash flow of $4,392,000. Investing activities
utilized cash of $29,352,000, mainly for real estate acquisitions.
Financing activities provided cash flow of $24,928,000.
Management considers Funds From Operations (FFO) to be one measure of the
performance of an equity REIT. FFO during the three and six months ended
June 30, 1996 amounted to $3,340,000 and $5,900,000, respectively.
During the same periods in 1995, FFO amounted to $964,000 and $1,920,000,
respectively. FFO was determined in accordance with the National
Association of Real Estate Investment Trusts' interpretation published
in March 1995. FFO is defined as net income, excluding gains or losses
from debt restructuring and sales of property, plus depreciation and
amortization of assets related to real estate, after adjustments for
unconsolidated ventures. FFO, therefore, does not represent cash
generated from operating activities in accordance with generally accepted
accounting principles and should not be considered an alternative to net
income as an indication of the Company's performance or to cash flow as
a measure of liquidity or its ability to pay distributions.
<PAGE>
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None
Item 2. CHANGES IN SECURITIES
At the Company's special stockholders' meeting on March 28, 1996,
the Company's stockholders approved the Company's one-for-two reverse
stock split of the Company's common stock. The split, in which every two
issued and outstanding shares of common stock of the Company, par value
$0.01 per share, were changed into one share of common stock of the
Company, par value $0.02, was effective as of March 29, 1996. The
Company's common stock began trading on the New York Stock Exchange and
the Pacific Stock Exchange on a post-reverse stock split basis on April
1, 1996.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
The Company held its annual stockholders' meeting on May 16, 1996, to
consider the following proposals:
1. Election of five directors by the holders of the Common Stock
for the ensuing year.
2. Election of two directors by the holders of the Preferred Stock
for the ensuing year.
3. To approve amendments to the Company's 1992 Directors' Stock
Option Plan to (i) increase the number of shares reserved for
issuance thereunder from 250,000 to 500,000 and (ii) change the
maximum expiration date of options granted thereunder from five
and ten years; and
4. To ratify the appointment by the Board of Directors of the
Company's independent public accountants for the year ending
December 31, 1996.
All proposals were approved. Following are the results of the meetings:
For Against Abstain
1. Election of the following five
Directors by the holders
of the Common Stock
Claude M. Ballard 2,186,722 11,673 None
Peter B. Bedford 2,186,704 11,691 None
Anthony Downs 2,186,772 11,623 None
Anthony Frank 2,186,672 11,723 None
Martin I. Zankel 2,186,592 11,803 None
2. Election of the two following
Directors by the holders of the
Preferred Stock:
Thomas G. Eastman 100% 0% 0%
Thomas H. Nolan 100% 0% 0%
3. To approve amendments to the Company's
1992 Directors' Stock Option Plan 1,332,123 221,952 12,820
4. To ratify the appointment by the Board of
Directors of the Company independent
public accountants 2,177,911 12,493 7,991
Item 5. OTHER INFORMATION
None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
Exhibit No. Exhibit
3.1 Charter of the Company, as amended, is incorporated herein by
reference to Exhibit 4.1 to the Company's Registration
Statement on Form S-2, Registration No. 333-921.
3.2 Amended and Restated Bylaws of the Company are incorporated
herein by reference to Exhibit 3.2 to the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1995.
10.1 The Company's Automatic Dividend Reinvestment and Share
Purchase Plan, as adopted by the Company, is incorporated
herein by reference to Exhibit 4.1 to Amendment No. 2 to
Registration Statement No. 2-94354 of ICM Property Investors
Incorporated.
10.2 The Company's Employee Stock Option Plan, as amended and
restated, is incorporated herein by reference to Exhibit 10.2
to the Company's Registration Statement on Form S-2,
Registration No. 333-921.
10.3 The Company's 1992 Directors' Stock Option Plan, as amended and
restated, is incorporated herein by reference to Exhibit 10.3
to the Company's Registration Statement on Form S-2,
Registration No. 333-921.
10.4* Second Amended and Restated Credit Agreement dated as of June
26, 1996, by and between the Company, as Borrower, Bank of
America National Trust and Savings Association and the several
financial institutions (the "Banks").
10.5 Sale and Option Agreement dated as of August 26, 1995, by and
between Kemper Investors Life Insurance Company, on behalf of
itself and Participants (as defined therein), as Lender, the
Company, as Purchaser, and Tustin Properties, as Owner, for
3002 Dow Business Center is incorporated herein by reference to
Exhibit 10.19 to the Company's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1995.
10.6 BPIA Agreement dated as of January 1, 1995, by and between
Westminster Holdings, Inc., a California corporation and the
Company is incorporated herein by reference to Exhibit 10.14 to
the Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1995.
10.7 Employment Agreement made as of February 17, 1993, by and
between ICM Property Investors Incorporated and Peter B.
Bedford is incorporated by reference to Exhibit 10.14 to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994, as amended by Form 10-K/A filed on May 1,
1995, and Form 10-K/A-2 filed on August 8, 1995.
10.8 Amendment No. 1 to Employment Agreement dated as of September
18, 1995, by and between Peter B. Bedford and the Company is
incorporated herein by reference to Exhibit 10.10 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1995.
10.9 Series A Convertible Preferred Stock Purchase Agreement, among
the Company, AEW Partners, L.P. and Peter B. Bedford dated as
of May 18, 1995, is incorporated herein by reference to Exhibit
10.15 to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1995.
10.10 Amendment No. 1 to the Series A Convertible Preferred Stock
Purchase Agreement dated September 11, 1995, among the Company,
AEW Partners, L.P. and Peter B. Bedford, is incorporated herein
by reference to Exhibit 10.12 to the Company's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1995.
10.11 Standstill Agreement dated as of September 18, 1995, by and
between the Company and Peter B. Bedford is incorporated herein
by reference to Exhibit 10.13 to the Company's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1995.
10.12 Purchase and Sale Agreement dated as of October 19, 1995,
between Landsing Pacific Fund, Inc., a Maryland corporation as
Seller, and the Company, the Buyer, as amended, is incorporated
herein by reference to Exhibit 2.1 to the Company's Current
Report on Form 8-K filed on December 27, 1995.
10.13* Amended and Restated Promissory Note date May 24, 1996 executed
by the Company and payable to the order of Prudential Insurance
Company of America.
27* Financial Data Schedule
* Filed herewith
B. Reports on Form 8-K
During the quarter ended March 31, 1996, the Company filed on
February 15, 1995, a report on Form 8-K/A dated December 5, 1995, which
supplemented Item 7 on Form 8-K dated December 5, 1995 regarding the
acquisition of 3002 Dow Business Center. The following financial
statements were filed: (i) Historical Summary of
Gross Income and Direct Operating Expenses of 3002 Dow Business Center
for the year ended December 31, 1994 and (ii) pro forma financial
statements showing the effect resulting from the acquisition of 3002 Dow
Business Center.
During the quarter ended March 31, 1996, the Company filed on
February 23, 1996, a report on Form 8-K/A dated December 14, 1995, which
supplemented Item 7 on Form 8-K dated December 14, 1995, regarding the
acquisition of the Landsing Pacific Portfolio. The following financial
statements were filed: (i) Historical Summary of Gross Income and Direct
Operating Expenses of the Landsing Pacific Portfolio for the year ended
December 31, 1994 and (ii) pro forma financial statements showing the
effect resulting from the acquisition of the Landsing Pacific Portfolio.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, Sections 13 or 15(a), Registrant has duly caused this report to be
signed on its behalf of the undersigned, thereunto duly authorized.
Dated: August 12, 1996
BEDFORD PROPERTY INVESTORS, INC.
(Registrant)
By: /s/ PETER B. BEDFORD
Peter B. Bedford
Chairman of the Board
and Chief Executive Officer
By: /s/ DONALD A. LORENZ
Donald A. Lorenz
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
By: /s/ HANH KIHARA
Hanh Kihara
Controller
(Principal Accounting Officer)
<PAGE>
<PAGE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE>5
EXHIBIT 27
FINANCIAL DATA SCHEDULE
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> $ 995
<SECURITIES> 0
<RECEIVABLES> 1,726
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 467
<PP&E> 161,277
<DEPRECIATION> 3,433
<TOTAL-ASSETS> 164,088
<CURRENT-LIABILITIES> 3,970
<BONDS> 0
0
50,000
<COMMON> 130
<OTHER-SE> 73,806
<TOTAL-LIABILITY-AND-EQUITY> 164,088
<SALES> 972
<TOTAL-REVENUES> 12,140
<CGS> 613
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,801
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,765
<INCOME-PRETAX> 4,933
<INCOME-TAX> 0
<INCOME-CONTINUING> 4,933
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,933
<EPS-PRIMARY> 0.61
<EPS-DILUTED> 0.57
</TABLE>
EXHIBIT 10.4
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
This SECOND AMENDED AND RESTATED CREDIT AGREEMENT is entered
into as of June 26, 1996, among BEDFORD PROPERTY INVESTORS, INC.,
a Maryland corporation (the "Company"), BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, a national banking association ("BofA"); and
the several financial institutions from time to time party to this
Agreement (collectively, the "Banks"; individually a "Bank").
WHEREAS, BofA has previously made available to the Company a
revolving credit facility upon the terms and subject to the conditions
set forth in that certain Amended and Restated Credit Agreement dated
as of September 14, 1995, between the Company and BofA (the "Existing
Credit Agreement"), which amended and restated in full that certain
Credit Agreement dated as of December 20, 1993, between the Company
and BofA;
WHEREAS, the Company has requested that BofA modify the
terms of the revolving credit facility made available to the Company;
WHEREAS, the Company has completed an equity offering whose
Net Issuance Proceeds exceeded Thirty-Nine Million Dollars
($39,000,000.00);
WHEREAS, BofA has agreed to make available to the Company a
revolving credit facility upon the terms and subject to the conditions
set forth in this Agreement, which amends and restates in full the
Existing Credit Agreement; and
WHEREAS, one or more Banks wish to acquire and assume from
BofA, and BofA wishes to transfer, sell and assign, a portion of the
revolving credit facility and the outstanding Loans by syndicating the
revolving credit facility and the outstanding Loans. Upon syndication
of the revolving credit facility and the outstanding Loans, each of
the Banks, including BofA, will have a direct lender relationship with
the Company in accordance with the Loan Documents, as amended from
time to time. The Banks wish to designate BofA as Agent for the Banks
in this syndicated credit.
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained herein, the parties agree as
follows:
1. Definitions.
1.1 Defined Terms. In addition to the terms defined
elsewhere in this Agreement, the following terms have the following
meanings:
"Affiliate" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is
under common control with, such Person. A Person shall be deemed to
control another Person if the controlling PERSON possesses, directly
or indirectly, the power to direct or cause the direction of the
management and policies of the other Person, whether through the
ownership of voting securities, by contract or otherwise. In no event
shall the Banks be deemed an "Affiliate" of the Company or of any
Subsidiary of the Company.
"Agent" means BofA in its capacity as agent for the Banks
hereunder, and any successor agent designated under Section 9.5.
"Agent-Related Persons" means BofA and any successor agent
designated under Section 9.5, together with their respective
Affiliates and the officers, directors, employees and agents of such
Persons.
"Agent's Payment Office" means the address for payments set
forth herein for the Agent, or such other address as the Agent may
from time to time specify.
"Agreement" means this Second Amended and Restated Credit
Agreement, as amended, supplemented or modified from time to time.
"Applicable Margin" means (a) with respect to Reference Rate
Loans, 25 basis points; and (b) with respect to LIBOR Rate Loans, 200
basis points.
"Appraisal" means a real estate appraisal conducted in
accordance with the Uniform Standards of Professional Appraisal
Practice (as promulgated by the Appraisal Standards Board of the
Appraisal Foundation), all Requirements of Law applicable to the Banks
and all applicable internal policies of the Banks, prepared by the
Agent or undertaken by an independent appraisal firm satisfactory to
the Agent, and providing an assessment of fair market value of a
parcel of property, taking into account any and all Estimated
Remediation Costs.
"Appraised Value" means, for an Approved Parcel at any time,
an amount equal to the "as is" fair market value of such Approved
Parcel (excluding any portion of such Approved Parcel consisting of
undeveloped land, including excess land, to which no value will be
assigned) established by the Agent's most recently completed Appraisal
of such Approved Parcel. The Appraised Value of an Approved Parcel
shall be adjusted upon the completion and review by the Banks of each
Appraisal of such Approved Parcel.
"Approved Parcel" means a Parcel satisfying all of the
conditions set forth in Section 4.1.
"Approved Parcel Value" means, for any Approved Parcel at
any time, the lesser of (a) the Collateral Value of such Approved
Parcel at such time and (b) the Cash Flow Value of such Approved
Parcel at such time.
"Assignee" has the meaning specified in subsection 10.8.1.
"Attorney Costs" means and includes all reasonable fees and
disbursements of any law firm or other external legal counsel, the
allocated cost of internal legal services and all disbursements of
internal counsel.
"Availability" means, at any time, the lesser of (a) the
Total Approved Parcel Value at such time and (b) the Maximum
Commitment Amount at such time.
"Bank" has the meaning specified in the introductory
sentence of this Agreement; BofA in its capacity as a lender hereunder
is one of the Banks. Unless the context otherwise clearly requires,
any reference to a "Bank" includes any such institution in its
capacity as Swap Provider, and also includes any of such institution's
Affiliates that may, at the time of determination, be Swap Providers.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act
of 1978 (11 U.S.C. and 101, et seq.).
"BofA" means Bank of America National Trust and Savings
Association, a national banking association.
"Borrowing" means a borrowing hereunder consisting of Loans
of the same Type made to the Company on the same day by the Banks
under Article 2 and, other than in the case of Reference Rate Loans,
having the same Interest Period, but does not include (a) a conversion
of Loans of one Type to another Type or (b) a continuation of a Loan
as a Loan of the same Type, but with a new Interest Period.
"Borrowing Notice" means a notice substantially in the form
of Exhibit A given by the Company to the Agent pursuant to
Section 2.3.
"Business Day" means any day other than a Saturday, Sunday
or other day on which commercial banks in San Francisco, California,
are authorized or required by law to close and, if the applicable
Business Day relates to any LIBOR Rate Loan, means such a day on which
dealings are carried on in the applicable offshore dollar interbank
market.
"Capital Adequacy Regulation" means any guideline, request
or directive of any Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case,
regarding capital adequacy of any Bank or of any corporation
controlling any Bank.
"Cash Flow" means, as of any calendar quarter, four (4)
times the sum of (i) the quarterly consolidated income from property
operations for the Company and its Subsidiaries, and (ii) the
consolidated depreciation and amortization of the Company and its
Subsidiaries for such quarter, as evidenced by the Company s most
recently delivered quarterly financial statements.
"Cash Flow Value" means, for any Approved Parcel at any
time, the maximum amount for which 74.074% of the Net Operating Income
for such Approved Parcel at such time would be sufficient to amortize
such amount in twenty-five (25) equal annual installments of principal
and interest at a per annum rate equal to the greater of (i) 2.50% per
annum above the average yield on ten-year United States treasury bonds
maturing approximately ten (10) years from the date of determination
(as determined from the telerate screen at the opening of business on
the determination date) or (ii) 9.0%, computed on the basis of a year
of 365 or 366 days, as applicable, and actual day months.
"CERCLA" means the Comprehensive Environmental Response
Compensation and Liability Act of 1980.
"Closing Date" means the date on which all conditions
precedent set forth in Section 4.2 are satisfied or waived by the
Agent.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any regulations promulgated thereunder.
"Collateral" means all property and interests in property
and proceeds thereof now owned or hereafter acquired by the Company or
one of its Subsidiaries in or upon which a Lien securing the
Obligations now or hereafter exists in favor of the Banks or the Agent
on behalf of the Banks, whether under this Agreement or under any
other Collateral Documents executed by any such Persons and delivered
to the Agent.
"Collateral Documents" means, collectively, (i) the
Mortgages, Assignments of Leases, and all other security agreements,
mortgages, deeds of trust, lease assignments and other similar
agreements between the Company or its Subsidiaries and the Banks or
the Agent, for the benefit of the Banks, now or hereafter delivered to
the Agent pursuant to or in connection with the transactions
contemplated hereby, and all financing statements (or comparable
documents) now or hereafter filed in accordance with the UCC (or
comparable law) naming the Company or any Subsidiaries as debtor in
favor of the Banks or the Agent, for the benefit of the Banks, as
secured party in connection therewith, and (ii) any amendments,
supplements, modifications, renewals, replacements, consolidations,
substitutions and extensions of any of the foregoing.
"Collateral Value" means, for any Approved Parcel at any
time, 60% of the Appraised Value of such Approved Parcel at such time.
"Commitment" means the amount of the credit and the
outstanding Loans for which each Bank is obligated.
"Contingent Obligation" means, as to any Person, (a) any
Guaranty Obligation of that Person, and (b) any direct or indirect
obligation or liability, contingent or otherwise, of that Person in
respect of (i) any letter of credit or similar instrument issued for
the account of that Person or as to which that Person is otherwise
liable for reimbursement of drawings or (ii) any Swap Contract. The
amount of any Contingent Obligation shall (subject, in the case of
Guaranty Obligations, to the last sentence of the definition of
"Guaranty Obligation") be deemed equal to the maximum reasonably
anticipated liability in respect thereof.
"Contractual Obligation" means, as to any Person, any
provision of any security issued by such Person or of any agreement,
undertaking, contract, indenture, mortgage, deed of trust or other
instrument, document or agreement to which such Person is a party or
by which it or any of its property is bound.
"Controlled Group" means the Company and all Persons
(whether or not incorporated) under common control or treated as a
single employer with the Company pursuant to Section 414(b), (c), (m)
or (o) of the Code.
"Conversion Date" means any date on which the Company elects
to convert a Reference Rate Loan to a LIBOR Rate Loan or a LIBOR Rate
Loan to a Reference Rate Loan.
"Conversion/Continuation Notice" means a notice
substantially in the form of Exhibit B given by the Company to the
Agent pursuant to Section 2.4.
"Covenant Debt Service" means, at any time, the amount
necessary to amortize the aggregate amount of secured Indebtedness and
commercial unsecured Indebtedness of the Company and its Subsidiaries
(as evidenced by negotiable instruments or other written agreements;
and based on the most recently received consolidated balance sheet,
and including as Indebtedness all then-outstanding but undrawn Letters
of Credit) in twenty-five (25) equal annual installments of principal
and interest at a per annum rate equal to the greater of (i) 2.50% per
annum above the average yield on ten-year United States treasury bonds
maturing approximately ten (10) years from the date of determination
(as determined from the telerate screen at the opening of business on
the determination date) or (ii) 9.0%, computed on the basis of a year
of 365 or 366 days, as applicable, and actual day months.
"Default" means any event or circumstance which, with the
giving of notice, the lapse of time, or both, would (if not cured or
otherwise remedied) constitute an Event of Default.
"Disposition" means the sale, lease, conveyance or other
disposition of any Approved Parcel, other than (i) leases of an
Approved Parcel to third-party tenants in the ordinary course of
business or (ii) sales or other dispositions expressly permitted under
Section 7.2.
"Eligible Assignee" means (i) a commercial bank organized
under the laws of the United States, or any state thereof, and having
a combined capital and surplus of at least $100,000,000; (ii) a Person
that is primarily engaged in the business of commercial banking and is
an Affiliate of a Bank, or (iii) any Person approved by Majority Banks
and Agent.
"Entitled Land" means unimproved real Property satisfying
all of the following conditions: (a) the Company s intended use of
such real Property is permissible under the applicable general plan or
its equivalent, (b) such intended use is permissible under any
applicable specific plan, zoning classification and development
agreement, (c) such real Property has access to roads and utilities
adequate for the Company s intended use, and (d) the Company intends
to improve such real property within twenty-four (24) months of its
acquisition.
"Environmental Claims" means all claims, however asserted,
by any Governmental Authority or other Person alleging potential
liability or responsibility for violation of any Environmental Laws or
for injury to the environment or threat to public health, personal
injury (including sickness, disease or death), property damage,
natural resources damage, or otherwise alleging liability or
responsibility for damages (punitive or otherwise), cleanup, removal,
remedial or response costs, restitution, civil or criminal penalties,
injunctive relief, or other type of relief, resulting from or based
upon (a) the presence, placement, discharge, emission or release
(including intentional and unintentional, negligent and non-negligent,
sudden or non-sudden, accidental or non-accidental placement, spills,
leaks, discharges, emissions or releases) of any Hazardous Material
at, in or from an Approval Parcel, or (b) any other circumstances
forming the basis of any violation, or alleged violation, of any
Environmental Laws.
"Environmental Laws" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any
Governmental Authorities, in each case relating to environmental,
health, safety and land use matters; including CERCLA, the Clean Air
Act, the Federal Water Pollution Control Act of 1972, the Solid Waste
Disposal Act, the Federal Resource Conservation and Recovery Act, the
Toxic Substances Control Act, the Emergency Planning and Community
Right-to-Know Act, the California Hazardous Waste Control Law, the
California Solid Waste Management, Resource, Recovery and Recycling
Act, the California Water Code and the California Health and Safety
Code.
"Environmental Permits" has the meaning specified in
subsection 5.12(b).
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and regulations promulgated
thereunder.
"ERISA Affiliate" means any trade or business (whether or
not incorporated) under common control with the Company within the
meaning of Section 414(b), 414(c) or 414(m) of the Code.
"ERISA Event" means (a) a Reportable Event with respect to a
Qualified Plan or a Multi-employer Plan; (b) withdrawal by the Company
or any ERISA Affiliate from a Qualified Plan subject to Section 4063
of ERISA during a plan year in which it was a substantial employer (as
defined in Section 4001(a)(2) of ERISA); (c) a complete or partial
withdrawal by the Company or any ERISA Affiliate from a Multi-employer
Plan; (d) the filing of a notice of intent to terminate, the treatment
of a plan amendment as a termination under Section 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a
Qualified Plan or Multi-employer Plan subject to Title IV of ERISA;
(e) failure by the Company or any member of the Controlled Group to
make required contributions to a Qualified Plan or Multi-employer
Plan; (f) an event or condition which might reasonably be expected to
constitute grounds under Section 4042 of ERISA for the termination of,
or the appointment of a trustee to administer, any Qualified Plan or
Multi-employer Plan; (g) the imposition of any liability under
Title IV of ERISA, other than PBGC premiums due but not delinquent
under Section 4007 of ERISA, upon the Company or any ERISA Affiliate;
(h) an application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code with respect
to any Plan; (i) a non-exempt prohibited transaction occurs with
respect to any Plan for which the Company or any Subsidiary of the
Company may be directly or indirectly liable; or (j) a violation of
the applicable requirements of Section 404 or 405 of ERISA or the
exclusive benefit rule under Section 401(a) of the Code by any
fiduciary or disqualified person with respect to any Plan for which
the Company or any member of the Controlled Group may be directly or
indirectly liable.
"Estimated Remediation Costs" means all costs associated
with performing work to remediate contamination of real property or
groundwater, including engineering and other professional fees and
expenses, costs to remove, transport and dispose of contaminated soil,
costs to "cap" or otherwise contain contaminated soil, and costs to
pump and treat water and monitor water quality.
"Event of Default" means any of the events or circumstances
specified in Section 8.1.
"Event of Loss" means, with respect to any Approved Parcel,
any of the following: (a) any loss, destruction or damage of such
Approved Parcel; (b) any pending or threatened institution of any
proceedings for the condemnation or seizure of such Approval Parcel or
for the exercise of any right of eminent domain; or (c) any actual
condemnation, seizure or taking, by exercise of the power of eminent
domain or otherwise, of such Approved Parcel, or confiscation of such
Approved Parcel or the requisition of the use of such Approved Parcel.
"Federal Funds Rate" means, for any day, the rate published
by the Federal Reserve Bank of New York for the preceding Business Day
as "Federal Funds (Effective) ; (or, if not published, the arithmetic
mean of the rates for overnight Federal funds arranged prior to 9:00
a.m. (New York City time) on that day quoted by three brokers of
Federal Funds in New York City as determined by the Agent).
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System or any successor thereof.
"Funds from Operations" means, for any fiscal quarter, the
net income of the Company for such quarter, excluding gains or losses
from debt restructuring and sales of property, plus depreciation and
amortization, after adjustments for unconsolidated ventures.
"GAAP" means generally accepted accounting principles set
forth from time to time in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of Certified
Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the accounting profession), or
in such other statements by such other entity as may be in general use
by significant segments of the U.S. accounting profession, which are
applicable to the circumstances as of the date of determination.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of, or pertaining to, government, and any
corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Guaranty Obligation" means, as applied to any Person, any
direct or indirect liability of that Person with respect to any
Indebtedness, lease, dividend, letter of credit or other obligation
(the "primary obligations") of another Person. The amount of any
Guaranty Obligation shall be deemed equal to the stated or
determinable amount of the primary obligation in respect of which such
Guaranty Obligation is made or, if not stated or if indeterminable,
the maximum reasonably anticipated liability in respect thereof.
"Hazardous Materials" means all those substances which are
regulated by, or which may form the basis of liability under, any
Environmental Law, including all substances identified under any
Environmental Law as a pollutant, contaminant, hazardous waste,
hazardous constituent, special waste, hazardous substance, hazardous
material or toxic substance, or petroleum or petroleum derived
substance or waste.
"Indebtedness" of any Person means, without duplication,
(a) all indebtedness for borrowed money; (b) all obligations issued,
undertaken or assumed as the deferred purchase price of property or
services; (c) all reimbursement obligations with respect to surety
bonds, letters of credit and similar instruments (in each case, to the
extent material or non-contingent); (d) all obligations evidenced by
notes, bonds, debentures or similar instruments, including obligations
so evidenced incurred in connection with the acquisition of property,
assets or businesses; (e) all indebtedness created or arising under
any conditional sale or other title retention agreement, or incurred
as financing, in either case with respect to property acquired by the
Person (even though the rights and remedies of the seller or lender
under such agreement in the event of default are limited to
repossession or sale of such property); (f) all indebtedness referred
to in clauses (a) through (e) above secured by (or for which the
holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in property owned by
such Person, even though such Person has not assumed or become liable
for the payment of such Indebtedness; and (g) all Guaranty Obligations
in respect of indebtedness or obligations of others of the kinds
referred to in clauses (a) through (e) above.
"Indemnified Liabilities" has the meaning specified in
Section 10.5.
"Indemnified Person" has the meaning specified in
Section 10.5.
"Insolvency Proceeding" means (a) any case, action or
proceeding before any court or other Governmental Authority relating
to bankruptcy, reorganization, insolvency, liquidation, receivership,
dissolution, winding-up or relief of debtors, or (b) any general
assignment for the benefit of creditors, composition, marshalling of
assets for creditors or other similar arrangement in respect of its
creditors generally or any substantial portion of its creditors; in
each case (a) and (b) undertaken under U.S. federal, state or foreign
law, including the Bankruptcy Code.
"Interest Payment Date" means the first day of each month
following disbursement of the initial Loan.
"Interest Period" means, with respect to any LIBOR Rate
Loan, the period commencing on the Business Day the Loan is disbursed
or continued or on the Conversion Date on which the Loan is converted
to a LIBOR Rate Loan and ending on the date thirty (30), sixty (60),
ninety (90) or one hundred eighty (180) days, or one (1) year,
thereafter, as selected by the Company in its Borrowing Notice or
Conversion/Continuation Notice; provided that:
(a) if any Interest Period pertaining to a LIBOR Rate
Loan would otherwise end on a day that is not a Business Day,
that Interest Period shall be extended to the next succeeding
Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month, in which
event such Interest Period shall end on the immediately preceding
Business Day; and
(b) any Interest Period pertaining to a LIBOR Rate
Loan that begins on the last Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in
the calendar month at the end of such Interest Period) shall end
on the last Business Day of the calendar month at the end of such
Interest Period.
"Lending Office" means, as to any Bank, the office specified
as its "Lending Office" opposite its name on the signature pages
hereto, or such other office as such Bank may specify to the Company
and the Agent from time to time.
"Letter of Credit" means a letter of credit issued by BofA
for the Company's account pursuant to Article 2.
"LIBOR" means the per annum rate of interest, rounded
upward, if necessary, to the nearest 1/16th of one percent (0.0625%),
at which the Agent s London Branch, London, England, would offer U.S.
dollar deposits in amounts and for periods comparable to those of the
applicable LIBOR Rate Loan and Interest Period to major banks in the
London U.S. dollar inter-bank market at approximately 11:00 a.m.,
London time, on the first Business Day after the Company s rate
election.
"LIBOR Rate" means, for each Interest Period in respect of
any LIBOR Rate Loan, the per annum rate of interest, rounded upward,
if necessary, to the nearest 1/100th of one percent, determined by the
following formula:
LIBOR
LIBOR Rate =
(1.00 - Reserve Percentage)
"LIBOR Rate Loan" means a Loan that bears interest based on
the LIBOR Rate.
"Lien" means any mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, encumbrance,
lien (statutory or other) or preference, priority or other security
interest or preferential arrangement of any kind or nature whatsoever
(including those created by, arising under or evidenced by any
conditional sale or other title retention agreement, the lessor's
interest under a capital lease (determined in accordance with GAAP),
any financing lease having substantially the same economic effect as
any of the foregoing, or the filing of any financing statement under
the UCC or any comparable law naming the owner of the asset to which
such lien relates as debtor) and any contingent or other agreement to
provide any of the foregoing, but not including the interest of a
lessor under an operating lease (determined in accordance with GAAP).
"Loan" means an extension of credit by a Bank to the Company
pursuant to Article 2, and may be a Reference Rate Loan or a LIBOR
Rate Loan.
"Loan Documents" means this Agreement, the Revolving Notes,
the Collateral Documents, and all documents delivered to the Agent, on
behalf of the Banks, in connection therewith.
"Major Tenant" means, with respect to any Parcel, a tenant
occupying ten percent (10%) or more of the net rentable area of the
improvements located on such Parcel.
"Majority Banks" means at any time at least two Banks then
holding at least 66-2/3% of the then aggregate unpaid principal amount
of the Loans (or, if no principal amount is then outstanding, at least
two banks then having at least 66-2/3% of the unborrowed Commitments);
provided, however, that if at any time there is only one Bank, then
such one Bank shall constitute Majority Banks.
"Margin Stock" means "margin stock" as such term is defined
in Regulation G, T, U or X of the Federal Reserve Board.
"Material Adverse Effect" means a material adverse change
in, or a material adverse effect upon, any of (a) the operations,
business, properties, condition (financial or otherwise) or prospects
of the Company or the Company and its Subsidiaries taken as a whole;
(b) the ability of the Company to perform under any Loan Document and
avoid any Event of Default; (c) the legality, validity, binding effect
or enforceability of any Loan Document; or (d) the perfection or
priority of any Lien granted to the Agent under any of the Collateral
Documents.
"Maturity Date" means July 1, 1999.
"Maximum Commitment Amount" means, at any time (a) during
the period from the Closing Date through and including June 30, 1998,
an amount equal to $100,000,000.00, and (b) during any calendar month
during the period from and after July 1, 1998, commencing on the first
day of each such month, an amount equal to (i) the Maximum Commitment
Amount during the immediately preceding calendar month less (ii) the
principal component of the payment amount that would amortize the
Maximum Commitment Amount during the immediately preceding calendar
month in equal monthly installments over the period from the first day
of such calendar month to July 1, 2018, at a per annum rate of
interest equal to the greater of (x) 2.50% per annum above the average
yield on ten-year United States treasury bonds maturing approximately
ten (10) years from the date of determination (as determined from the
telerate screen at the opening of business on the determination date)
or (y) 9.0%, computed on the basis of a year of 365 or 366 days, as
applicable, and actual day months, subject to the provisions of
Section 2.5.
"Mortgage" means any deed of trust, mortgage or other
document creating a Lien on real property or any interest in real
property as security for the Obligations.
"Multi-employer Plan" means a "multi-employer plan" (within
the meaning of Section 4001(a)(3) of ERISA) to which any member of the
Controlled Group (i) makes, is making, or is obligated to make
contributions, or (ii) during the preceding three calendar years has
made, or has been obligated to make, contributions.
"Net Issuance Proceeds" means, in respect of any issuance of
debt (including secured debt) or equity, cash proceeds and non-cash
proceeds received or receivable in connection therewith, net of
reasonable out-of-pocket costs and expenses paid or incurred in
connection therewith (excluding amounts payable to the Company or any
Affiliate of the Company).
"Net Operating Income" means, for any Approved Parcel as of
any calendar quarter:
either (a) if such Approved Parcel has been owned by either
the Company or any Subsidiary for at least three (3) consecutive
calendar quarters for which quarterly operating statements have
been delivered to the Banks, the sum of (i) two (2) times the
quarterly gross income (before capital expenditures) for such
Approved Parcel, as evidenced by the most recently received
quarterly operating statements for such Approved Parcel, and
(ii) the quarterly gross income (before capital expenditures) for
such Approved Parcel for the two (2) consecutive quarters
immediately preceding the quarter for which the most recently
received quarterly operating statements relate, as evidenced by
the quarterly operating statements for such quarters,
or (b) if such Approved Parcel has been owned by either the
Company or any Subsidiary for at least two (2) consecutive
calendar quarters for which quarterly operating statements have
been delivered to the Banks but fewer than three (3) consecutive
calendar quarters for which quarterly operating statements have
been delivered to the Banks, the sum of (i) the quarterly gross
income (before capital expenditures) for such Approved Parcel for
the two (2) most recent consecutive calendar quarters, as
evidenced by the quarterly operating statements for such Approved
Parcel for such quarters, and (ii) one-half (1/2) of the annual
gross income for such Approved Parcel for the year in which the
determination is made, based on the proforma cash flow statement
set forth in the Appraisal for such Approved Parcel,
or (c) if such Approved Parcel has been owned by either the
Company or any Subsidiary for fewer than two (2) full calendar
quarters for which quarterly operating statements have been
delivered to the Banks, the annual gross income for such Approved
Parcel for the year in which the determination is made, based on
the pro forma cash flow statement set forth in the Appraisal for
such Approved Parcel,
less either (d) if such Approved Parcel has been owned by
either the Company or any Subsidiary for at least four (4)
consecutive calendar quarters for which quarterly operating
statements have been delivered to the Banks, the aggregate amount
of actual operating expenses other than capital expenditures
relating to such Approved Parcel for the immediately preceding
four (4) consecutive calendar quarters, as evidenced by the most
recently received quarterly operating statements for such
Approved Parcel and the quarterly operating statements for the
three (3) immediately preceding quarters,
or (e) if such Approved Parcel has been owned by either the
Company or any Subsidiary for fewer than four (4) full calendar
quarters for which quarterly operating statements have been
delivered to the Banks, the aggregate amount of annual operating
expenses other than capital expenditures relating to such
Approved Parcel for the year in which the determination is made,
based on the pro forma cash flow statement set forth in the
Appraisal for such Approved Parcel,
less (f) $2.00 per square foot of net rentable area of
office space actually under lease on the first day of such
calendar quarter in such Approved Parcel, representing capital
expenditures for office space,
less (g) $0.80 per square foot of net rentable area of
retail space actually under lease on the first day of such
calendar quarter in such Approved Parcel, representing capital
expenditures for retail space,
less (h) $0.40 per square foot of net rentable area of
research and development (other than office) space actually under
lease on the first day of such calendar quarter in such Approved
Parcel, representing capital expenditures for research and
development (other than office) space,
less (i) $0.25 per square of flexible industrial (other than
research and development or warehouse) space actually under lease
on the first day of such calendar quarter in such Approved
Parcel, representing capital expenditures for flexible industrial
(other than research and development or warehouse) space,
less (j) $0.07 per square foot of net rentable area of
warehouse space actually under lease on the first day of such
calendar quarter in such Approved Parcel, representing capital
expenditures for warehouse space.
"Net Proceeds" means proceeds in cash, checks or other cash
equivalent financial instruments as and when received by the Person
making a Disposition, net of: (a) the reasonable direct costs relating
to such Disposition (excluding amounts payable to the Company or any
Affiliate of the Company), (b) sale, use or other transaction taxes
paid or payable as a result thereof, and (c) amounts required to be
applied to repay principal, interest and prepayment premiums and
penalties on Indebtedness secured by a Lien on the asset which is the
subject of such Disposition. "Net Proceeds" shall also include
proceeds paid on account of any Event of Loss, net of (i) all money
actually applied to repair or reconstruct the damaged property or
property affected by the condemnation or taking, (ii) all of the costs
and expenses reasonably incurred in connection with the collection of
such proceeds, award or other payments, and (iii) any amounts retained
by or paid to parties having superior rights to such proceeds, awards
or other payments.
"Notice of Lien" means any "notice of lien" or similar
document intended to be filed or recorded with any court, registry,
recorder's office, central filing office or other Governmental
Authority for the purpose of evidencing, creating, perfecting or
preserving the priority of a Lien securing obligations owing to a
Governmental Authority.
"Obligations" means all Loans and other Indebtedness,
advances, debts, liabilities, obligations, covenants and duties owing
from the Company to the Agent, any Bank or any other Person required
to be indemnified under any Loan Document, of any kind or nature,
present or future, whether or not evidenced by any note, guaranty or
other instrument, and arising under this Agreement or under any other
Loan Document, whether or not for the payment of money, whether
arising by reason of an extension of credit, loan, guaranty,
indemnification or in any other manner, whether direct or indirect
(including those acquired by assignment), absolute or contingent, due
or to become due, now existing or hereafter arising and however
acquired.
"Ordinary Course of Business" means, in respect of any
transaction involving the Company or any Subsidiary of the Company,
the ordinary course of such Person's business, substantially as
conducted by any such Person prior to or as of the Closing Date, and
undertaken by such Person in good faith and not for purposes of
evading any covenant or restriction in any Loan Document.
"Organization Documents" means, (a) for any corporation, the
certificate or articles of incorporation, the bylaws, any certificate
of determination or instrument relating to the rights of preferred
shareholders of such corporation, and all applicable resolutions of
the board of directors (or any committee thereof) of such corporation,
and (b) for any partnership, the partnership agreement, statement or
certificate of partnership and any fictitious business name or other
filing relating to such partnership.
"Parcel" means (a) a parcel of real property (i) that
is owned in fee by the Company or (ii) that is ground leased by the
Company and (b) any parcel of real property owned in fee by any of the
Subsidiaries listed in part (a) of Schedule 5.16.
"Participant" has the meaning specified in
subsection 10.8.3.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Permitted Encumbrances" means, with respect to any Parcel,
all matters to which the Agent consents in writing as exceptions to
the Title Policy covering such Parcel.
"Permitted Liens" has the meaning specified in Section 7.1.
"Person" means an individual, partnership, corporation,
business trust, joint stock company, limited liability company, trust,
unincorporated association, joint venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in
Section 3(3) of ERISA) which the Company or any member of the
Controlled Group sponsors or maintains or to which the Company or any
member of the Controlled Group makes, is making or is obligated to
make contributions, and includes any Multi-employer Plan or Qualified
Plan.
"Property" means any estate or interest in any kind of
property or asset, whether real, personal or mixed, and whether
tangible or intangible.
"Pro Rata Share" means, as to any Bank at any time, the
percentage equivalent (expressed as a decimal rounded to the ninth
decimal place) at such time of such Bank's share of the credit and the
outstanding Loans.
"Qualified Plan" means a pension plan (as defined in
Section 3(2) of ERISA) intended to be tax-qualified under
Section 401(a) of the Code and which any member of the Controlled
Group sponsors, maintains, or to which it makes, is making or is
obligated to make contributions, or in the case of a multiple employer
plan (as described in Section 4064(a) of ERISA) has made contributions
at any time during the immediately preceding period covering at least
five (5) plan years, but excluding any Multi-employer Plan.
"Reference Rate" means the per annum rate of interest
publicly announced from time to time by the Agent at San Francisco,
California, as its "Reference Rate." The Reference Rate is set by the
Agent based on various factors, including the Agent's costs and
desired return, general economic conditions and other factors, and is
used as a reference point for pricing loans. The Agent may price
loans at, above or below the Reference Rate. Any change in the
Reference Rate shall take effect on the day specified in the public
announcement of such change.
"Reference Rate Loan" means a Loan that bears interest based
on the Reference Rate.
"Release Price" means, with respect to an Approved Parcel,
the amount, if any, necessary to reduce the aggregate principal amount
outstanding on the Loans to the Availability (computed without regard
to the Approved Parcel for which the Company is seeking release),
determined on the date of the Company's request to the Agent that the
Banks release their Lien on such Approved Parcel.
"Reportable Event" means, as to any Plan, (a) any of the
events set forth in Section 4043(b) of ERISA or the regulations
thereunder, other than any such event for which the 30-day notice
requirement under ERISA has been waived in regulations issued by the
PBGC, (b) a withdrawal from a Plan described in Section 4063 of ERISA,
or (c) a cessation of operations described in Section 4062(e) of
ERISA.
"Requirement of Law" means, as to any Person, any law
(statutory or common), treaty, rule or regulation, or any
determination of an arbitrator or of a Governmental Authority, in each
case applicable to or binding upon such Person or any of its property
or to which such Person or any of its property is subject.
"Reserve Percentage" means the total of the maximum reserve
percentages for determining the reserves to be maintained by member
banks of the Federal Reserve System for "eurocurrency liabilities," as
defined in Federal Reserve Board Regulation D. The Reserve Percentage
shall be expressed in decimal form and rounded upward, if necessary,
to the nearest 1/100th of one percent, and shall include marginal,
emergency, supplemental, special and other reserve percentages.
"Responsible Officer" means the chief executive officer or
the president of the Company, or any other officer having
substantially the same authority and responsibility or, with respect
to financial matters, the chief financial officer or the treasurer of
the Company, or any other officer having substantially the same
authority and responsibility.
"Revolving Note" means a promissory note of the Company
payable to the order of a Bank in substantially the form of Exhibit C,
and any amendments, supplements, modifications, renewals,
replacements, consolidations and extensions thereof, evidencing the
aggregate indebtedness of the Company to a Bank resulting from Loans
made by such Bank pursuant to this Agreement; Revolving Notes means,
at any time, all of the Revolving Notes executed by the Company in
favor of a Bank outstanding at such time.
"SEC" means the Securities and Exchange Commission, or any
successor thereto.
"Solvent" means, as to any Person at any time, that (a) the
fair value of the Property of such Person is greater than the amount
of such Person's liabilities (including disputed, contingent and
unliquidated liabilities) as such value is established and liabilities
evaluated for purposes of Section 101(31) of the Bankruptcy Code and,
in the alternative, for purposes of the California Uniform Fraudulent
Transfer Act and any other applicable fraudulent conveyance statute;
(b) the present fair saleable value of the Property of such Person is
not less than the amount that will be required to pay the probable
liability of such Person on its debts as they become absolute and
matured; (c) such Person is able to realize upon its Property and pay
its debts and other liabilities (including disputed, contingent and
unliquidated liabilities) as they mature in the normal course of
business; (d) such Person does not intend to, and does not believe
that it will, incur debts or liabilities beyond such Person's ability
to pay as such debts and liabilities mature; and (e) such Person is
not engaged in business or a transaction, and is not about to engage
in business or a transaction, for which such Person's property would
constitute unreasonably small capital.
"Specified Swap Contract" means any Swap Contract made or
entered into at any time, or in effect at any time, whether as a
result of assignment or transfer or otherwise, between the Company and
any Swap Provider, which Swap Contract is entered into for the purpose
of mitigating interest rate or currency exchange risk relating to any
Loan and as to which the Company s final scheduled payment is not
later than the Maturity Date.
"Specified Swap Exposure" means, at any time, an amount
equal to the sum of (a) ten percent (10%) of the notional amount of
each interest rate Specified Swap Contract outstanding at such time,
and (b) three percent (3%) of the notional amount of each interest
rate floor or interest rate collar Specified Swap Contract outstanding
at such time.
"Specified Swap Obligations" has the meaning specified in
Section 8.5.
"Subsidiary" of a Person means any corporation, association,
partnership, joint venture or other business entity of which more
than 50% of the voting stock, membership interests or other equity
interests (in the case of Persons other than corporations), is owned
or controlled directly or indirectly by the Person, or one or more of
the Subsidiaries of the Person, or a combination thereof.
"Supermajority Banks" means at any time at least two Banks
then holding at least 86% of the then aggregate unpaid principal
amount of the Loans (or, if no principal amount is then outstanding,
at least two banks then having at least 86% of the unborrowed
Commitments); provided, however, that if at any time there is only one
Bank, then such one Bank shall constitute Supermajority Banks.
"Swap Contract" means any agreement, whether or not in
writing, relating to any transaction that is a rate swap, basis swap,
forward rate transaction, commodity swap, commodity option, equity or
equity index swap or option, bond, note or bill option, interest rate
option, forward foreign exchange transaction, cap, collar or floor
transaction, currency swap, cross-currency rate swap, swaption,
currency option or any other, similar transaction (including any
option to enter into any of the foregoing) or any combination of the
foregoing and, unless the context otherwise clearly requires, any
master agreement relating to or governing any or all of the foregoing.
"Swap Provider" means any Bank, or any Affiliate of any
Bank, that is at the time of determination a party to a Swap Contract
with the Company.
"Tangible Net Worth" has the meaning specified in
Section 7.10(b).
"Title Policy" means any policy of title insurance required
pursuant to this Agreement.
"Total Approved Parcel Value" means, at any time, the sum of
the Approved Parcel Values for all of the Approved Parcels at such
time.
"Transferee" has the meaning specified in subsection 9.8.3.
"Type" means, in connection with a Loan, the
characterization of such loan as a Reference Rate Loan or a LIBOR Rate
Loan.
"UCC" means the Uniform Commercial Code as in effect in any
jurisdiction, as the same may be amended, modified or supplemented
from time to time.
"Unfunded Pension Liabilities" means the excess of a Plan's
benefit liabilities under Section 4001(a)(16) of ERISA, over the
current value of that Plan's assets, determined in accordance with the
assumptions used by the Plan's actuaries for funding the Plan pursuant
to section 412 of the Code for the applicable plan year.
1.2 Other Interpretive Provisions.
1.2.1 Use of Defined Terms. Unless otherwise
specified herein or therein, all terms defined in this Agreement shall
have the defined meanings when used in any certificate or other
document made or delivered pursuant to this Agreement. The meaning of
defined terms shall be equally applicable to the singular and plural
forms of the defined terms. Terms (including uncapitalized terms) not
otherwise defined herein and that are defined in the UCC shall have
the meanings therein described.
1.2.2 Certain Common Terms.
(a) The Agreement. The words "hereof," "herein,"
"hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and section, schedule and
exhibit references are to this Agreement unless otherwise
specified.
(b) Documents. The term "documents" includes any and
all instruments, documents, agreements, certificates, indentures,
notices and other writings, however evidenced.
(c) Including. The term "including" is not limiting
and means "including without limitation."
(d) Performance. Whenever any performance obligation
hereunder (other than a payment obligation) shall be stated to be
due or required to be satisfied on a day other than a Business
Day, such performance shall be made or satisfied on the next
succeeding Business Day. In the computation of periods of time
from a specified date to a later specified date, the word "from"
means "from and including"; the words "to" and "until" each mean
"to but excluding," and the word "through" means "to and
including". If any provision of this Agreement refers to any
action taken or to be taken by any Person, or which such Person
is prohibited from taking, such provision shall be interpreted to
encompass any and all means, direct or indirect, of taking or not
taking such action.
(e) Contracts. Unless otherwise expressly provided
in this Agreement, references to agreements and other contractual
instruments shall be deemed to include all subsequent amendments
and other modifications thereto, but only to the extent such
amendments and other modifications are not prohibited by the
terms of any Loan Document.
(f) Laws. References to any statute or regulation
are to be construed as including all statutory and regulatory
provisions consolidating, amending or replacing the statute or
regulation.
(g) Captions. The captions and headings of this
Agreement are for convenience of reference only, and shall not
affect the construction of this Agreement.
(h) Independence of Provisions. The parties
acknowledge that this Agreement and the other Loan Documents may
use several different limitations, tests or measurements to
regulate the same or similar matters, and that such limitations,
tests and measurements are cumulative and must each be performed,
except as expressly stated to the contrary in this Agreement.
(i) Exhibits. All of the exhibits attached to this
Agreement are incorporated herein by this reference.
1.2.3 Accounting Principles.
(a) Accounting Terms. Unless the context otherwise
clearly requires, all accounting terms not expressly defined
herein shall be construed, and all financial computations
required under this Agreement shall be made, in accordance with
GAAP, consistently applied.
(b) Fiscal Periods. References herein to "fiscal
year" and "fiscal quarter" refer to such fiscal periods of the
Company.
2. The Credit.
2.1 Amount and Terms of Commitment. Each Bank severally
agrees, on the terms and subject to the conditions hereinafter set
forth,
(a) to make Loans to the Company from time to time on
any Business Day during the period from the Closing Date to the
Maturity Date for the purpose of (i) facilitating the Company's
acquisition of improved real property, and (ii) financing the
Company's operations, in an aggregate amount not to exceed at any
time outstanding such Bank's Pro Rata Share of the Availability,
and
(b) to fund drawings on any Letters of Credit that
BofA issues for the Company's account from time to time, in an
aggregate amount not to exceed at any time outstanding such
Bank's Pro Rata Share of the amount of such drawing.
BofA agrees to issue Letters of Credit for the Company s account on
any Business Day during the period from the Closing Date to the date
that is six (6) months prior to the Maturity Date, for any purpose
directly related to the Company s continuing operations, in an
aggregate amount not to exceed Ten Million Dollars ($10,000,000.00) at
any time outstanding; provided, however, that no Letter of Credit
shall have an expiry date later than the earlier of (i) twelve (12)
months after the date on which such Letter of Credit is issued or
(ii) 180 days prior to the Maturity Date. Notwithstanding any
contrary provision of this Agreement, the aggregate principal amount
of all outstanding Loans shall not at any time exceed the
Availability, and the aggregate amount of outstanding but undrawn
Letters of Credit shall be considered a portion of the principal
amount outstanding on the Loans for purposes of determining (x) the
amount of Availability remaining available for disbursement and
(y) mandatory repayments under Section 2.6.2. Within the limits of
the Availability, and subject to the other terms and conditions
hereof, the Company may borrow under this Section 2.1, repay pursuant
to Section 2.6 and reborrow pursuant to this Section 2.1.
2.2 Loan Accounts.
(a) The Loans made by each Bank shall be evidenced by
one or more loan accounts or records maintained by such Bank and the
Agent in the ordinary course of business. The loan accounts or
records maintained by the Agent and each Bank shall be conclusive
absent manifest error of the amounts of the Loans made by the Banks to
the Company and the interest and payments thereon. Any failure so to
record or any error in doing so shall not, however, limit or otherwise
affect the obligation of the Company hereunder to pay any amount owing
with respect to the Loans.
(b) The Loans made by each Bank shall be evidenced by
a Revolving Note payable to the order of such Bank in an amount equal
to such Bank's Pro Rata Share of the Maximum Commitment Amount on the
Closing Date. Such Bank may endorse on the schedule annexed to its
Revolving Note the date, amount and maturity of each Loan that it
makes (which shall not include undrawn amounts on outstanding Letters
of Credit, but shall include the amounts of any drawings on
outstanding Letters of Credit), the purpose of the Loan, the amount of
each payment of principal that the Company makes with respect thereto
and the source of the funds from which each principal payment is made.
The Company irrevocably authorizes each Bank to endorse its Revolving
Note, and such Bank's record shall be conclusive absent manifest
error; provided, however, that any Bank's failure to make, or its
error in making, a notation thereon with respect to any Loan shall not
limit or otherwise affect the Company's obligations to such Bank
hereunder or under its Revolving Note.
2.3 Procedure for Obtaining Credit. Each Borrowing shall
be made and each Letter of Credit shall be issued upon the irrevocable
written notice (including notice via facsimile confirmed immediately
by a telephone call) of the Company in the form of a Borrowing Notice
(which notice must be received by the Agent prior to 9:30 a.m., San
Francisco time, (i) three (3) Business Days prior to the requested
borrowing date, in the case of LIBOR Rate Loans, or (ii) on the
requested borrowing date, in the case of Reference Rate Loans), or
(iii) five (5) Business Days prior to the requested issuance date of a
Letter of Credit, specifying:
(a) the amount of the Borrowing or the Letter of
Credit, which in the case of a Borrowing shall be in an aggregate
minimum principal amount of (i) Two Hundred Fifty Thousand
dollars ($250,000) for Reference Rate Loans, and (ii) One Million
dollars ($1,000,000) for any LIBOR Rate Loans;
(b) the requested borrowing or Letter of Credit
issuance date, which shall be a Business Day;
(c) in the case of a Borrowing, the Type of Loans
comprising the Borrowing;
(d) in the case of a Borrowing comprised of LIBOR
Rate Loans, the duration of the Interest Period applicable to the
Loans. If the Borrowing Notice fails to specify the duration of
the Interest Period for a Borrowing comprised of LIBOR Rate Loan,
such Interest Period shall be thirty (30) days.
Notwithstanding the foregoing provisions of this Section 2.3, any
amount drawn under a Letter of Credit shall, from and after the date
on which such drawing is made, constitute a Borrowing for all purposes
under this Agreement (including accrual and payment of interest and
repayment of principal) other than disbursement of Loan proceeds under
this Section 2.3. Unless the Majority Banks otherwise agree, during
the existence of a Default or Event of Default, the Company may not
elect to have a Loan made as, or converted into or continued as, a
LIBOR Rate Loan. After giving effect to any Loan, there shall not be
more than eight (8) different Interest Periods in effect.
2.4 Conversion and Continuation Elections.
2.4.1 The Company may, upon irrevocable written
notice to the Agent in accordance with subsection 2.4.2:
(a) elect to convert, on any Business Day, any
Reference Rate Loans (or any part thereof in an amount not less
than $1,000,000.00) into LIBOR Rate Loans;
(b) elect to convert on any Interest Payment Date any
LIBOR Rate Loans maturing on such Interest Payment Date (or any
part thereof in an amount not less than $1,000,000.00) into
Reference Rate Loans; or
(c) elect to renew on any Interest Payment Date any
LIBOR Rate Loans maturing on such Interest Payment Date (or any
part thereof in an amount not less than $1,000,000.00);
provided, that if the aggregate amount of LIBOR Rate Loans in respect
of any Borrowing shall have been reduced, by payment, prepayment or
conversion of part thereof, to less than $1,000,000.00, such LIBOR
Rate Loans shall automatically convert into Reference Rate Loans, and
on and after such date the right of the Company to continue such Loans
as, and convert such Loans into, LIBOR Rate Loans shall terminate.
2.4.2 The Company shall deliver by telex, cable or
facsimile, confirmed immediately in writing, a Notice of
Conversion/Continuation (which notice must be received by the Agent
not later than 9:30 a.m. San Francisco time, (i) at least three (3)
Business Days prior to the Conversion Date or continuation date, if
the Loans are to be converted into or continued as LIBOR Rate Loans,
or (ii) on the Conversion Date, if the Loans are to be converted into
Reference Rate Loans) specifying:
(a) the proposed Conversion Date or continuation
date;
(b) the aggregate amount of Loans to be converted or
continued;
(c) the nature of the proposed conversion or
continuation; and
(d) if the Company elects to convert a Reference Rate
Loan into a LIBOR Rate Loan or elects to continue a LIBOR Rate
Loan, the duration of the Interest Period applicable to such
Loan. If the Conversion/Continuation Notice fails to specify the
duration of the Interest Period for a LIBOR Rate Loan, such
Interest Period shall be thirty (30) days.
2.4.3 If upon the expiration of any Interest Period
applicable to LIBOR Rate Loans the Company has failed to select a new
Interest Period to be applicable to LIBOR Rate Loans, or if any
Default or Event of Default shall then exist, the Company shall be
deemed to have elected to convert LIBOR Rate Loans into Reference Rate
Loans effective as of the expiration date of such current Interest
Period.
2.4.4 Notwithstanding any other provision contained
in this Agreement, after giving effect to any conversion or
continuation of any Loans, there shall not be more than eight (8)
different Interest Periods in effect.
2.5 Voluntary Termination or Reduction of Commitment. The
Company may, upon not less than ninety (90) days' prior written notice
to the Agent, terminate the Banks' commitment to make Loans to the
Company or issue Letters of Credit for the Company's account, or
permanently reduce the Maximum Commitment Amount by a minimum amount
of $1,000,000.00 or any multiple of $1,000,000.00 in excess thereof;
unless, after giving effect thereto and to any prepayments of Loans
made on the effective date thereof, the aggregate principal amount of
the then-outstanding Loans and the then-outstanding but undrawn
Letters of Credit would exceed the Availability. Once reduced in
accordance with this Section 2.5, the Maximum Commitment Amount may
not be increased. Any reduction of the commitment amounts shall be
applied to each Bank according to its Pro Rata Share. No commitment
or extension fees paid prior to the effective date of any reduction of
the Maximum Commitment Amount or termination of the Bank's commitment
to make Loans to the Company or issue Letters of Credit for the
Company's account shall be refunded.
2.6 Principal Payments.
2.6.1 Optional Repayments. Subject to Section 3.4,
the Company may, at any time or from time to time, upon at least
one (1) Business Day's prior written notice to the Agent, ratably
prepay Loans in part in an amount not less than $250,000.00; provided,
however, that subject to the provisions of Sections 2.5 and 2.12, the
Company shall not repay the Loans in full prior to the Maturity Date,
and there shall be deemed outstanding at all times prior to the
Maturity Date principal in the amount of at least $10.00 to the extent
necessary to maintain the liens granted in the Collateral Documents.
Such notice of prepayment shall specify the date and amount of such
prepayment and the Type(s) of Loans to be repaid. The Agent will
promptly notify each Bank of its receipt of any such notice, and of
such Bank's Pro Rata Share of such prepayment. If the Company gives a
prepayment notice to the Agent, such notice is irrevocable and the
prepayment amount specified in such notice shall be due and payable on
the date specified therein, together with accrued interest to such
date, if required by the Agent, on the amount prepaid and all amounts
required to be paid pursuant to Section 3.4.
2.6.2 Mandatory Repayments.
(a) Availability Limit. Should the aggregate
principal amount of the outstanding Loans at any time exceed the
Availability, the Company shall immediately repay such excess to the
Agent, for the account of the Banks; provided, however, that in the
event that the aggregate amount of outstanding but undrawn Letters of
Credit exceeds the Availability, the Company shall deliver cash
collateral to the Agent in the amount of such excess.
(b) Approved Parcel Dispositions. If the Company or
any of its Subsidiaries shall at any time or from time to time agree
to enter into a Disposition, or shall suffer an Event of Loss in which
the anticipated Net Proceeds exceed $250,000.00, then (i) the Company
shall promptly notify the Agent of such proposed Disposition or such
Event of Loss (including the amount of the estimated Net Proceeds to
be received by the Company or its Subsidiary in respect thereof) and
(ii) promptly upon receipt by the Company or its Subsidiary of the Net
Proceeds of such Disposition or Event of Loss, the Company shall
ratably repay the Loans in an aggregate amount equal to the Release
Price, in the case of a Disposition, or the amount of such Net
Proceeds, in the case of an Event of Loss.
(c) Application of Repayments. Any repayments
pursuant to this subsection 2.6.2 shall be (i) subject to Section 3.4,
and (ii) applied first to any Reference Rate Loans then outstanding
and then to LIBOR Rate Loans with the shortest Interest Periods
remaining. Notwithstanding any contrary provision of this
subsection 2.6.2, but subject to the provisions of Section 2.5, there
shall be deemed outstanding on the Loans at all times prior to the
Maturity Date principal in the amount of at least $10.00 to the extent
necessary to maintain the liens granted in the Collateral Documents.
2.6.3 Repayment at Maturity. The Company shall repay
the principal amount of all outstanding Loans on the Maturity Date or,
if earlier, upon termination of the Banks commitment pursuant to
Section 2.5.
2.7 Interest.
2.7.1 Accrual Rate. Subject to subsection 2.7.3,
each Loan shall bear interest on the outstanding principal amount
thereof from the date when made (which, in the case of a drawing on a
Letter of Credit, is the date of such drawing) until it becomes due at
a rate per annum equal to the LIBOR Rate or the Reference Rate, as the
case may be, plus the Applicable Margin.
2.7.2 Payment. Interest on each Loan shall be
payable in arrears on each Interest Payment Date. Interest shall also
be payable on the date of any repayment of Loans pursuant to
subsections 2.6.1 and 2.6.2 for the portion of the Loans so repaid and
upon payment (including prepayment) in full thereof, if required by
the Agent, and, during the existence of any Event of Default, interest
shall be payable on demand.
2.7.3 Default Interest. Commencing (i) ten (10)
Business Days after the occurrence of any Event of Default under
subsection 8.1.3 or (ii) upon the occurrence of any other Event of
Default, and continuing thereafter while such Event of Default exists,
or after maturity or acceleration, the Company shall pay interest
(after as well as before entry of judgment thereon to the extent
permitted by law) on the principal amount of all Obligations due and
unpaid, at a rate per annum which is determined by adding 3% per annum
to the Applicable Margin then in effect for such Loans and, in the
case of Obligations not subject to an Applicable Margin, at a rate per
annum equal to the Reference Rate plus 3.75%; provided, however, that,
on and after the expiration of any Interest Period applicable to any
LIBOR Rate Loan outstanding on the date of occurrence of such Event of
Default or acceleration, the principal amount of such Loan shall,
during the continuation of such Event of Default or after
acceleration, bear interest at a rate per annum equal to the Reference
Rate plus 3.75%.
2.7.4 Maximum Legal Rate. Notwithstanding any
contrary provision this Agreement, the Company's obligations to any
Bank hereunder shall be subject to the limitation that payments of
interest shall not be required, for any period for which interest is
computed hereunder, to the extent (but only to the extent) that such
Bank's contracting for or receiving such payment would be contrary to
the provisions of any law applicable to such Bank limiting the highest
rate of interest that such Bank may lawfully contract for, charge or
receive, and in such event the Company shall pay such Bank interest at
the highest rate permitted by applicable law.
2.8 Fees. The Company shall pay to the Agent, for the
account of the Banks (based on an allocation agreed to by the Banks):
(a) on the Closing Date a one-time commitment fee equal to
$200,000.00; and (b) for the period from and after the first
anniversary of the Closing Date, an unused commitment fee equal to
0.25% per annum of the difference between the Maximum Commitment
Amount and the average daily amount outstanding hereunder, measured
quarterly and payable quarterly in arrears on each October 1, January
1, April 1, and July 1, commencing October 1, 1997.
2.9 Computation of Fees and Interest. All computations of
interest and fees under this Agreement shall be made on the basis of a
360-day year and actual days elapsed, which results in more interest
or fees being paid than if computed on the basis of a 365-day year.
Interest and fees shall accrue during each period during which
interest or such fees are computed from the first day thereof to the
last day thereof. Any change in the interest rate on a Loan resulting
from a change in the Reference Rate or the Reserve Percentage shall
become effective as of the opening of business on the day on which
such change in the Reference Rate or the Reserve Percentage becomes
effective. Each determination of an interest rate by the Agent
pursuant to any provision of this Agreement shall be conclusive and
binding on the Company and the Banks in the absence of manifest error.
2.10 Payments by the Company.
2.10.1 All payments (including prepayments) to be
made by the Company on account of principal, interest, fees and other
amounts required hereunder shall be made without set off or
counterclaim and shall, except as otherwise expressly provided herein,
be made to the Agent for the account of the Banks at the Agent's
Payment Office, in dollars and in immediately available funds, no
later than 10:00 a.m. San Francisco time on the date specified herein.
The Agent will promptly distribute to each Bank its Pro Rata Share (or
other applicable share as provided herein) of such payment in like
funds as received. Any payment received by the Agent later than
12:00 p.m. San Francisco time shall be deemed to have been received on
the immediately succeeding Business Day and any applicable interest or
fee shall continue to accrue.
2.10.2 Subject to the provisions set forth in the
definition of the term "Interest Period," whenever any payment
hereunder is stated to be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day, and such
extension of time shall in such case be included in the computation of
interest or fees, as the case may be.
2.10.3 Unless the Agent receives notice from the
Company prior to the date on which any payment is due and payable to
the Banks that the Company will not make such payment in full as and
when required, the Agent may assume that the Company has made such
payment in full to the Agent on such date in immediately available
funds and the Agent may (but shall not be so required), in reliance
upon such assumption, distribute to each Bank on such date an amount
equal to the amount then due and payable to such Bank. If and to the
extent the Company has not made such payment in full to the Agent,
each Bank shall repay to the Agent on demand the amount distributed to
such Bank, together with interest thereon at the Federal Funds Rate
for each day from the date such amount is distributed to such Bank
until the date repaid.
2.11 Payments by the Banks to the Agent.
2.11.1 Unless the Agent receives notice from a Bank
on or prior to the Closing Date or, with respect to any Borrowing
after the Closing Date, at least one (1) Business Day prior to the
date of such Borrowing, that such Bank will not make available to the
Agent, for the account of the Company, the amount of that Bank's Pro
Rata Share of the Borrowing as and when required hereunder, the Agent
may assume that each Bank has made such amount available to the Agent
in immediately available funds on the borrowing date and the Agent may
(but shall not be so required), in reliance upon such assumption, make
available to the Company on such date a corresponding amount. If and
to the extent any Bank shall not have made its full amount available
to the Agent in immediately available funds and the Agent in such
circumstances has made available to the Company such amount, that Bank
shall, on the Business Day following such borrowing date, make such
amount available to the Agent, together with interest at the Federal
Funds Rate for each day during such period. A notice of the Agent
submitted to any Bank with respect to amounts owing under this
Section 2.11 shall be conclusive absent manifest error. If such
amount is so made available, such payment to the Agent shall
constitute such Bank's Loan on the date of Borrowing for all purposes
of this Agreement. If such amount is not made available to the Agent
on the Business Day following the Borrowing Date, the Agent will
notify the Company of such failure to fund and, upon demand by the
Agent, the Company shall pay such amount to the Agent for the Agent's
account, together with interest thereon for each day elapsed since the
date of such Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Loans comprising such Borrowing.
2.11.2 The failure of any Bank to make any Loan on
any Borrowing Date shall not relieve any other Bank of any obligation
hereunder to make a Loan on such Borrowing Date, but no Bank shall be
responsible for the failure of any other Bank to make the Loan to be
made by such other Bank on any borrowing date.
2.12 Sharing of Payments, Etc. If, other than as expressly
provided elsewhere herein, any Bank shall obtain on account of the
Obligations owing to it any payment (whether voluntary, involuntary,
or otherwise) in excess of its ratable share (or other share
contemplated hereunder), such Bank shall immediately (a) notify the
Agent of such fact, and (b) purchase from the other Banks such
participations in the Loans made by them as shall be necessary to
cause such purchasing Bank to share the excess payment pro rata with
each of them; provided, however, that if all or any portion of such
excess payment is thereafter recovered from the purchasing Bank, such
purchase shall to that extent be rescinded, and each other Bank shall
repay to the purchasing Bank the purchase price paid therefor,
together with an amount equal to such paying Bank's ratable share
(according to the proportion of (i) the amount of such paying Bank's
required repayment to (ii) the total amount so recovered from the
purchasing Bank) of any interest or other amount paid or payable by
the purchasing Bank in respect of the total amount so recovered. The
Company agrees that any Bank so purchasing a participation from
another Bank may, to the fullest extent permitted by law, exercise all
its rights of payment (other than the right of set-off) with respect
to such participation as fully as if such Bank were the direct
creditor of the Company in the amount of such participation. The
Agent will keep records (which shall be conclusive and binding in the
absence of manifest error) of participations purchased under this
Section and will in each case notify the Banks following any such
purchases or repayments.
2.13 Security; Appraisal of Approved Parcels. All
obligations of the Company under this Agreement, the Revolving Notes
and all other Loan Documents shall be secured in accordance with the
Collateral Documents. At any time and from time to time the Agent
shall have the right to obtain a new Appraisal of any Approved Parcel;
provided, however, that so long as no Event of Default has occurred
and remains uncured, the Company shall pay the cost of only one such
Appraisal of each Approved Parcel during any twelve (12) consecutive
calendar month period. Not more often than once during any calendar
year, the Company may request, in writing, that the Agent obtain a new
Appraisal of one or more of the Approved Parcels at the Company's sole
expense.
2.14 Release of Lien on Approved Parcel.
2.14.1 Release Conditions. The Agent shall reconvey
and release its Lien on an Approved Parcel upon the Company's
satisfaction of all of the following conditions precedent:
(a) The Company shall have submitted to the Agent a
written request that the Agent reconvey and release its Lien on
such Approved Parcel;
(b) The Company shall have paid to the Agent, for the
account of the Banks, the lesser of (i) the Release Price for
such Approved Parcel, or (ii) the then-outstanding aggregate
principal amount of the Loans;
(c) There shall have occurred no Default or Event of
Default that remains uncured, and the Agent shall have received a
certificate to that effect signed by a Responsible Officer;
(d) The Approved Parcel to be reconveyed constitutes
a legally separable and transferable lot or parcel under all
applicable laws, ordinances, rules and regulations relating to
the subdivision or parceling of real property and the transfer
thereof; and
(e) Upon the Agent's request, the Agent has been
furnished, at the Company's sole cost, with a CLTA form 111
indorsement or such other indorsements to any Title Policy as the
Agent may require, assuring the Agent that the reconveyance will
not result in the subordination of the lien of any Mortgage as to
the remaining Approved Parcels to any other lien or claim
affecting any such Approved Parcels.
The foregoing conditions precedent are solely for the benefit of the
Agent and the Banks, any may be waived in a writing signed by the
Agent, with the consent of the Majority Banks, and in no other manner.
2.14.2 Application of Release Price. The Release
Price of each Approved Parcel shall be applied, in the Agent s sole
discretion, first to any amounts due hereunder other than interest or
principal then due and payable, then to interest then due, and then to
the prepayment of principal (first to any Reference Rate Loans then
outstanding and then to LIBOR Rate Loans with the shortest Interest
Periods remaining).
2.15 Tenant Documents. The Company shall deliver to the
Agent (or cause any Subsidiary to deliver to the Agent), within sixty
(60) days after the recording of a Mortgage encumbering a Parcel for
the benefit of the Agent and the Banks: (a) estoppel certificates or
subordination agreements, in form and substance satisfactory to the
Agent, executed by (i) each tenant of such Parcel whose lease covers
at least 15,000 square feet of net rentable area and (ii) tenants
whose leases, in the aggregate, cover at least eighty percent (80%) of
the net rentable area of the improvements located on such Parcel; and
(b) nondisturbance and attornment agreements, in form and substance
satisfactory to the Agent, executed by tenants whose leases, in the
aggregate, cover at least eighty percent (80%) of the net rentable
area of the improvements located on such Parcel. In the event that
the Company fails to deliver such estoppel certificates, subordination
agreements or nondisturbance and attornment agreements to the Agent
within such sixty (60) day period, such Parcel shall, at the option of
the Majority Banks exercised by written notice from the Agent to the
Company within sixty (60) days after the expiration of the sixty-day
period within which Borrower is required to comply with the provisions
of this Section 2.15, cease to be an Approved Parcel. Upon such
written notice from the Agent, the Availability shall be adjusted to
reflect such change and the Company shall repay to the Agent, for the
benefit of the Banks, within thirty (30) days after such written
notice from the Agent, any amounts payable pursuant to
Section 2.6.2(a). The Banks shall be deemed to have waived their
right to cause a Parcel to cease to be an Approved Parcel pursuant to
this Section 2.15 if the Banks fail to act within sixty (60) days
after the end of the period within which the Company is required to
comply with the provisions of this Section 2.15.
2.16 Collateral Documents. If (a) any provision of any
Collateral Document shall for any reason cease to be valid and binding
on or enforceable against the Company or any Subsidiary of the Company
party thereto, or the Company or any Subsidiary of the Company shall
so state in writing or bring an action to limit its obligations or
liabilities thereunder or (b) any Collateral Document shall for any
reason (other than pursuant to the terms thereof) cease to create a
valid security interest in the Collateral purported to be covered
thereby or such security interest shall for any reason cease to be a
perfected and first priority security interest subject only to
Permitted Liens and Permitted Encumbrances, the Parcel encumbered by
such Collateral Document shall, at the option of the Majority Banks,
immediately cease to be an Approved Parcel, the Availability shall
immediately be adjusted to reflect such change and the Company shall
repay to the Agent, for the benefit of the Banks, within thirty (30)
days after notice from the Agent, any amounts payable pursuant to
Section 2.6.2(a).
3. Taxes, Yield Protection and Illegality.
3.1 Taxes. If any taxes (other than taxes on a Bank's net
income) are at any time imposed on any payments under or in respect of
this Agreement or any instrument or agreement required hereunder,
including payments made pursuant to this Section 3.1, the Company
shall pay all such taxes and shall also pay to the Agent, for the
account of the applicable Bank, at the time interest is paid, all
additional amounts which such Bank specifies as necessary to preserve
the yield, after payment of such taxes, that such Bank would have
received if such taxes had not been imposed.
3.2 Illegality.
(a) If any Bank determines that (i) the introduction
of any Requirement of Law, or any change in any Requirement of
Law or in the interpretation or administration thereof, has made
it unlawful, or (ii) any central bank or other Governmental
Authority has asserted that it is unlawful, for such Bank or its
applicable Lending Office to make LIBOR Rate Loans, then, on
notice thereof by such Bank to the Company and the Agent, the
obligation of such Bank to make LIBOR Rate Loans shall be
suspended until such Bank shall have notified the Company and the
Agent that the circumstances giving rise to such determination no
longer exist.
(b) If any Bank determines that it is unlawful to
maintain any LIBOR Rate Loan, the Company shall, upon its receipt
of notice of such fact and demand from such Bank (with a copy to
the Agent), prepay in full all LIBOR Rate Loans of that Bank then
outstanding, together with interest accrued thereon and any
amounts required to be paid in connection therewith pursuant to
Section 3.4, either on the last day of the Interest Period
thereof, if such Bank may lawfully continue to maintain such
LIBOR Rate Loans to such day, or immediately, if such Bank may
not lawfully continue to maintain such LIBOR Rate Loans.
(c) Notwithstanding any contrary provision of
Section 2.1, if the Company is required to prepay any LIBOR Rate
Loan immediately as provided in subsection 3.2(b), then
concurrently with such prepayment the Company shall borrow a
Reference Rate Loan from the affected Bank in the amount of such
repayment.
(d) If the obligation of any Bank to make or maintain
LIBOR Rate Loans has been terminated, the Company may elect, by
giving notice to such Bank through the Agent, that all Loans
which would otherwise be made by such Bank as LIBOR Rate Loans
shall instead be Reference Rate Loans.
(e) Before giving any notice to the Agent or the
Company pursuant to this Section 3.2, the affected Bank shall
designate a different Lending Office with respect to its LIBOR
Rate Loans if such designation would avoid the need for giving
such notice or making such demand and would not, in the judgment
of such Bank, be illegal or otherwise disadvantageous to such
Bank.
3.3 Increased Costs and Reduction of Return.
(a) If any Bank determines that, due to either (i)
the introduction of, or any change (other than a change by way of
imposition of, or increase in, reserve requirements included in
the Reserve Percentage) in or in the interpretation of, any law
or regulation or (ii) the compliance by such Bank (or its Lending
Office) or any Corporation controlling such Bank with any
guideline or request from any central bank or other Governmental
Authority (whether or not having the force of law), there shall
be any increase in the cost to such Bank of agreeing to make or
making, funding or maintaining any LIBOR Rate Loans, then the
Company shall be liable for, and shall from time to time, upon
demand therefor by such Bank with a copy to the Agent, pay to the
Agent for the account of such Bank such additional amounts as are
sufficient to compensate such Bank for such increased costs.
(b) If any Bank determines that (i) the introduction
of any Capital Adequacy Regulation, (ii) any change in any
Capital Adequacy Regulation, (iii) any change in the
interpretation or administration of any Capital Adequacy
Regulation by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, or
(iv) compliance by such Bank (or its Lending Office), or any
corporation controlling such Bank, with any Capital Adequacy
Regulation affects or would affect the amount of capital that
such Bank or any corporation controlling such Bank is required or
expected to maintain, and such Bank (taking into consideration
such Bank's or such corporation's policies with respect to
capital adequacy and such Bank's desired return on capital)
determines that the amount of such capital is increased as a
consequence of any of its loans, credits or obligations under
this Agreement, then, upon demand of such Bank to the Company
through the Agent, the Company shall immediately pay to the
Agent, for the account of such Bank, from time to time as
specified by such Bank, additional amounts sufficient to
compensate such Bank for such increase.
3.4 Funding Losses. The Company agrees to pay to the
Agent, from time to time, for the account of the Banks, any amount
that would be necessary to reimburse the Banks for, and to hold the
Banks harmless from, any loss or expense which the Banks may sustain
or incur as a consequence of:
(a) the failure of the Company to make any payment or
prepayment of principal of any LIBOR Rate Loan (including
payments made after any acceleration thereof);
(b) the failure of the Company to borrow, continue or
convert a Loan after the Company has given (or is deemed to have
given) a Borrowing Notice or a Conversion/Continuation Notice;
(c) the failure of the Company to make any prepayment
after the Company has given a notice in accordance with Section
2.5;
(d) the prepayment (including pursuant to
Section 2.5.2) of a LIBOR Rate Loan on a day which is not the
last day of the Interest Period with respect thereto;
(e) the conversion pursuant to subsection 2.4 of any
LIBOR Rate Loan to a Reference Rate Loan on a day that is not the
last day of the respective Interest Period;
including any such loss or expense arising from the liquidation or
reemployment of funds obtained to maintain the LIBOR Rate Loans
hereunder or from fees payable to terminate the deposits from which
such funds were obtained. Solely for purposes of calculating amounts
payable by the Company to the Agent, for the account of the Banks,
under this Section 3.4, each LIBOR Rate Loan (and each related
reserve, special deposit or similar requirement) shall be conclusively
deemed to have been funded at the LIBOR used in determining the LIBOR
Rate for such LIBOR Rate Loan by a matching deposit or other borrowing
in the applicable offshore dollar interbank market for a comparable
amount and for a comparable period, whether or not such LIBOR Rate
Loan is in fact so funded.
3.5 Inability to Determine Rates. If any Bank determines
that for any reason adequate and reasonable means do not exist for
ascertaining the LIBOR Rate for any requested Interest Period with
respect to a proposed LIBOR Rate Loan or that the LIBOR Rate
applicable pursuant to subsection 2.7.1 for any requested Interest
Period with respect to a proposed LIBOR Rate Loan does not adequately
and fairly reflect the cost to such Bank of funding such Loan, such
Bank will forthwith give notice of such determination to the Company
through the Agent. Thereafter, the obligation of such Bank to make or
maintain LIBOR Rate Loans hereunder shall be suspended until such Bank
revokes such notice in writing. Upon receipt of such notice, the
Company may revoke any Borrowing Notice or Conversion/Continuation
Notice then submitted by it. If the Company does not revoke such
notice, the affected Bank shall make, convert or continue the Loans,
as proposed by the Company, in the amount specified in the applicable
notice submitted by the Company, but such Loans shall be made,
converted or continued as Reference Rate Loans instead of LIBOR Rate
Loans.
3.6 Certificate of Bank. Any Bank, if claiming
reimbursement or compensation pursuant to this Article 3, shall
deliver to the Company through the Agent a certificate setting forth
in reasonable detail the amount payable to such Bank hereunder, and
such certificate shall be conclusive and binding on the Company in the
absence of manifest error.
3.7 Survival. The agreements and obligations of the
Company in this Article 3 shall survive the payment and performance of
all other Obligations.
4. Conditions Precedent.
4.1 Conditions to Approving Parcels. A Parcel shall be
considered an Approved Parcel for purposes of this Agreement upon
satisfaction of all of the following conditions precedent:
4.1.1 Fee Ownership; Satisfactory Parcel; Permitted
Use. The Company or a Subsidiary owns fee title to such Parcel, and
such Parcel is satisfactory to the Supermajority Banks in their sole
and absolute discretion. The improvements located on such Parcel are
and will be used solely for office, industrial, warehouse, research
and development, or neighborhood or regional shopping center purposes.
4.1.2 No Hazardous Materials. Such Parcel shall be
free from all Hazardous Materials, including asbestos, other than
commercially reasonable quantities of Hazardous Materials typically
used in properties similar to such Parcel and permitted by all
applicable Environmental Laws, and the Agent shall have received
evidence in form and substance satisfactory to the Supermajority Banks
of such Parcel's compliance with this condition.
4.1.3 Appraised Value. An Appraised Value shall have
been established for such Parcel.
4.1.4 No Liens. Such Parcel and all related personal
property is (or at the time a Mortgage is recorded against such Parcel
it shall be) free and clear of all Liens other than (i) ground leases
as to which the Company is the lessee or (ii) Liens securing
nondelinquent taxes or assessments.
4.1.5 Deliveries to the Agent. The Agent shall have
received each of the following in form and substance satisfactory to
the Agent:
(1) a current ALTA survey of such Parcel and
Surveyor's Certification, including a complete legal description;
(2) copies of all exceptions to title with
respect to such Parcel;
(3) at the Agent s request, copies of any
available plans and specifications for any improvements located
on such Parcel;
(4) an environmental site assessment for such
Parcel, dated as of a recent date, prepared by a qualified firm
acceptable to the Agent, stating, among other things, that such
Parcel is free from Hazardous Materials other than commercially
reasonable quantities of Hazardous Materials typically used in
properties similar to such Parcel, and that any such Hazardous
Materials located thereon and all operations conducted thereon
are in compliance with all Environmental Laws and showing any
Estimated Remediation Costs;
(5) at the Agent s request, copies of all
leases and contracts not cancellable on thirty (30) days notice
and a rent roll relating to all or any portion of such Parcel;
(6) At the Agent s request, financial
statements for any Major Tenant that are available to the
Company;
(7) an operating report for such Parcel for not
less than the four (4) most recent consecutive quarters, together
with a projection of the operating results for such Parcel for
the following twelve (12) months;
(8) a certificate concerning the amount of
space at such Parcel devoted to office, retail, industrial,
research and development (other than office) and flexible
industrial (other than research and development or warehouse)
uses signed by the Company and, if such Parcel is owned by a
Person other than the Company, such other Person, substantially
in the form of Exhibit D;
(9) at the Agent s request, a cost budget for
any anticipated renovation of such Parcel;
(10) if such Parcel is owned by a Person other
than the Company, copies of all of such Person's Organization
Documents;
(11) a duly executed Mortgage, financing
statement(s) and assignment of contracts covering such Parcel;
(12) such certificates relating to the authority
of the Persons signing the documents required under
Section 4.1.5(11) as the Agent may reasonably request;
(13) at the Agent s request, a written opinion
of counsel to the Company and the Person signing the documents
required under Section 4.1.5(11) practicing in the jurisdiction
in which such Parcel is located (which counsel shall be
acceptable to the Agent) covering such matters relating to the
Company, such other Person, the Loans and such Parcel as the
Agent may require;
(14) such consents, subordination agreements and
other documents and instruments executed by tenants and other
Persons party to material contracts relating to such Parcel as
the Agent may request;
(15) certificates of insurance and loss payable
endorsements for all policies required pursuant to Section 6.6,
showing the same to be in full force and effect with respect to
such Parcel; and
(16) all other documents reasonably required by
the Agent.
4.1.6 Recording of the Mortgage. The Mortgage
relating to such Parcel shall have been duly recorded in the official
records of the jurisdiction in which such Parcel is located.
4.1.7 Title insurance. The Company shall, at its
sole expense, have delivered to the Agent an ALTA form extended
coverage lender's policy of title insurance, or evidence of a
commitment therefor satisfactory to the Agent, in form, substance and
amount, and issued by one or more insurers, reasonably satisfactory to
the Agent, together with all indorsements and binders thereto
reasonably required by the Agent, naming the Agent as the insured,
insuring the Mortgage relating to such Parcel to be a valid first
priority lien upon such Parcel, and showing such Parcel subject only
to such Mortgage and the Permitted Encumbrances.
4.1.8 Filing of Financing Statements. Financing
statement(s) shall have been filed with all of the officials
necessary, in the Agent's sole judgment, to perfect the security
interests created by the Mortgage relating to such Parcel and all
related personal property.
4.1.9 Perfection of Liens. The Agent shall have
received satisfactory evidence that all other actions necessary, or in
the Agent's sole judgment desirable, to perfect and protect the first
priority security interests for the benefit of the Agent created by
the Collateral Documents have been taken.
4.1.10 Tax Reporting Service. The Company shall, at
its sole expense, have delivered to the Agent evidence of a contract
with a property tax reporting service for such Parcel for a period of
not less than thirty (30) years.
4.1.11 Costs. The Company shall have paid to the
Agent all amounts payable pursuant to Section 10.4 in connection with
such Parcel and the Mortgage relating to such Parcel.
4.1.12 Expenses. The Agent shall have received
satisfactory evidence that the Company has paid all title insurance
premiums, tax service charges, documentary stamp or intangible taxes,
recording fees and mortgage taxes payable in connection with such
Parcel, the recording of the Mortgage relating to such Parcel or the
issuance of the Title Policy (whether due on the recording date of the
Mortgage or in the future) including sums due in connection with any
future advances.
4.2 Conditions of Initial Loan. The obligation of the
Banks to make the initial Loan after the Closing Date is subject to
the satisfaction of all of the following conditions precedent:
4.2.1 Deliveries to the Agent. The Agent shall have
received, on or before the Closing Date, all of the following in form
and substance satisfactory to the Agent and its counsel:
(a) this Agreement and the Revolving Notes executed
by the Company;
(b) copies of the resolutions of the board of
directors of the Company approving and authorizing the execution,
delivery and performance by the Company of this Agreement and the
other Loan Documents to be delivered hereunder, and authorizing
the borrowing of the Loans, certified as of the Closing Date by
the Secretary or an Assistant Secretary of the Company;
(c) a certificate of the Secretary or Assistant
Secretary of the Company certifying the names and true signatures
of the officers of the Company authorized to execute and deliver,
as applicable, this Agreement and all other Loan Documents to be
delivered hereunder;
(d) the articles or certificate of incorporation of
the Company as in effect on the Closing Date, certified by the
Secretary of State of the state of incorporation of the Company
as of a recent date and by the Secretary or Assistant Secretary
of the Company as of the Closing Date; and
(e) a good standing certificate for the Company from
the Secretary of State of (i) its state of incorporation and (ii)
each state in which an Approved Parcel is situated, evidencing
that the Company is qualified to do business as a foreign
corporation in said state as of a recent date, together with
bringdown certificates by telex or telefacsimile dated the
Closing Date;
(f) an opinion of Bartko, Zankel, Tarrant & Miller,
or other counsel to the Company acceptable to the Agent,
addressed to the Agent, substantially in the form of Exhibit E;
(g) a certificate signed by a Responsible Officer,
dated as of the Closing Date, stating that (i) the
representations and warranties contained in Article 5 are true
and correct on and as of such date, as though made on and as of
such date; (ii) no Default or Event of Default exists or would
result from the initial Loan; and (iii) there has occurred since
March 31, 1996, no event or circumstance that could reasonably be
expected to result in a Material Adverse Effect;
(h) a certified copy of financial statements of the
Company and its Subsidiaries referred to in Section 5.11;
(i) such other approvals, opinions or documents as
the Agent may request;
(j) such assurance as the Agent may require that the
validity and priority of any Mortgage encumbering a Parcel prior
to the Closing Date has not been and will not be impaired by this
Agreement or the transactions contemplated by it, including but
not limited to, a 110.5 Endorsement to be attached to each policy
of title insurance insuring the lien of a Mortgage; and
(k) fully executed and acknowledged originals of a
recordable modification agreement (the "Short Form Modification
Agreement") in the form attached as Exhibit G hereto to be
recorded in each county in which a Mortgage encumbering a Parcel
has been recorded prior to the Closing Date.
4.2.2 Payment of Expenses. The Company shall have
paid all costs, accrued and unpaid fees and expenses incurred by the
Agent, to the extent then due and payable, on the Closing Date,
including Attorney Costs incurred by the Agent, to the extent invoiced
prior to or on the Closing Date, together with such additional amounts
of Attorney Costs as shall constitute a reasonable estimate of
Attorney Costs incurred or to be incurred through the closing
proceedings, provided that such estimate shall not thereafter preclude
final settling of accounts between the Company and the Agent,
including any such costs, fees and expenses arising under or
referenced in Section 9.4.
4.2.3 Payment of Fees. The Company shall have paid
to the Agent, for the account of the Banks, the commitment fee owing
pursuant to Section 2.8.
4.3 Conditions to All Borrowings. The obligation of the
Banks to make any Loan (including the initial Loan) is subject to the
satisfaction of all of the following conditions precedent on the
relevant borrowing date:
4.3.1 Initial Approved Parcel. At least one (1)
Parcel shall have become an Approved Parcel by satisfying all of the
conditions of Section 4.1.
4.3.2 Notice of Borrowing. The Agent shall have
received a Borrowing Notice.
4.3.3 Continuation of Representations and Warranties.
The representations and warranties made by the Company contained in
Article 5 shall be true and correct on and as of such borrowing date
with the same effect as if made on and as of such borrowing date
(except to the extent such representations and warranties expressly
refer to an earlier date, in which case they shall be true and correct
as of such earlier date).
4.3.4 No Existing Default. No Default or Event of
Default shall exist or shall result from such Loan.
4.3.5 No Future Advance Notice. The Agent shall not
have received from the Company any notice that any Collateral Document
will no longer secure future advances or future Loans to be made or
extended under this Agreement.
4.3.6 Further Assurances. The Company shall have
executed and acknowledged (or caused to be executed and acknowledged)
and delivered to the Agent all documents and taken all actions,
reasonably required by the Agent or the Banks from time to time to
confirm the rights created or now or hereafter intended to be created
by the Loan Documents, or otherwise to carry out the purposes of the
Loan Documents and the transactions contemplated thereunder.
4.3.7 Title Insurance. The Agent shall have
received, in form and substance satisfactory to the Banks, from any
title insurer who issued a Title Policy, all indorsements, binders and
modifications to such policy or policies reasonably required by the
Banks.
Each Borrowing Notice submitted by the Company hereunder shall
constitute a representation and warranty by the Company hereunder, as
of the date of each such Borrowing Notice and as of the date of each
Loan, that the conditions in Section 4.3 are satisfied.
4.4 Letters of Credit. In addition to the conditions set
forth in Sections 4.2 and 4.3, BofA s obligation to issue any Letter
of Credit is subject to the satisfaction of all of the following
conditions precedent on the relevant issuance date:
4.4.1 The Company shall have executed and delivered
to the Agent an application and agreement for standby letter of credit
on the BofA's standard form.
4.4.2 The Company shall have paid to the Agent, for
the benefit of the Banks, a letter of credit fee in the aggregate
amount of 2.00% per annum on the face amount of the requested Letter
of Credit and based on the expiry date set forth therein.
5. Representations and Warranties. The Company represents and
warrants to the Agent and each of the Banks that:
5.1 Corporate Existence and Power. The Company and each of
its Subsidiaries (a) is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation; (b) is duly qualified as a foreign corporation,
licensed and in good standing under the laws of each jurisdiction
where its ownership, lease or operation of property or the conduct of
its business requires such qualification; (c) has the power and
authority, and has obtained all governmental licenses, authorizations,
consents and approvals needed, to own its assets, to carry on its
business and to execute, deliver and perform its obligations under the
Loan Documents; and (d) is in compliance with all Requirements of Law;
except, in each case referred to in clause (b) or clause (d), to the
extent that failure to do so could not reasonably be expected to have
a Material Adverse Effect.
5.2 Corporate Authorization; No Contravention. The
execution, delivery and performance by the Company of this Agreement
and any other Loan Document have been duly authorized by all necessary
corporate action, and do not and will not:
(a) contravene the terms of any of the Company's
Organization Documents;
(b) conflict with or result in any breach or
contravention of, or the creation of any Lien under, any
Contractual Obligation to which the Company is a party or any
order, injunction, writ or decree of any Governmental Authority
to which the Company or its Property is subject; or
(c) violate any Requirement of Law.
5.3 Governmental Authorization. No approval, consent,
exemption, authorization or other action by, or notice to or filing
with, any Governmental Authority (except for recordings or filings in
connection with the Liens granted to the Agent under the Collateral
Documents) is necessary or required in connection with the execution,
delivery or performance by, or enforcement against, the Company of
this Agreement or any other Loan Document.
5.4 Binding Effect. This Agreement and each other Loan
Document constitute the legal, valid and binding obligations of the
Company, enforceable in accordance with their respective terms, except
as enforceability may be limited by applicable bankruptcy, insolvency
or similar laws affecting the enforcement of creditors' rights
generally or by equitable principles relating to enforceability.
5.5 Litigation. Except as specifically disclosed in
Schedule 5.5, there are no actions, suits, proceedings, claims or
disputes pending, or to the best knowledge of the Company threatened
or contemplated, at law, in equity, in arbitration or before any
Governmental Authority, against the Company or any of its Subsidiaries
or any of their respective Properties which (a) purport to affect or
pertain to this Agreement or any other Loan Document, or any of the
transactions contemplated hereby or thereby, or (b) if determined
adversely to the Company or one or more of its Subsidiaries would
reasonably be expected to have a Material Adverse Effect. No
injunction, writ, temporary restraining order or any order of any
nature has been issued by any court or other Governmental Authority
purporting to enjoin or restrain the execution, delivery or
performance of this Agreement or any other Loan Document, or directing
that the transactions provided for herein or therein not be
consummated as herein or therein provided.
5.6 No Default. No Default or Event of Default exists or
would result from the incurring of any Obligations by the Company.
Neither the Company nor any of its Subsidiaries is in default under or
with respect to any Contractual Obligation in any respect which,
individually or together with all such defaults, could reasonably be
expected to have a Material Adverse Effect.
5.7 ERISA Compliance. Each Plan and Multi-employer Plan is
in full compliance with applicable Requirements of Law, including
ERISA, and no ERISA Events or accumulated funding deficiencies within
the meaning of ERISA have occurred with respect to any Qualified Plan
or Multi-employer Plan that, in the aggregate, could result in a
Material Adverse Effect.
5.8 Use of Proceeds; Margin Regulations. The proceeds of
the Loans are intended to be and shall be used solely for the purposes
set forth in and permitted by Section 6.11, and are intended to be and
shall be used in compliance with Section 7.6.
5.9 Title to Properties. The Company and each of its
Subsidiaries has good record and marketable title in fee simple to all
real Property necessary or used in the ordinary conduct of its
business, except for such defects in title as could not, individually
or in the aggregate, have a Material Adverse Effect. As of the
Closing Date, the Property of the Company and its Subsidiaries is
subject to no Liens that are not disclosed in the most recent
financial statements delivered to the Agent other than Permitted Liens
and, with respect to a Property that does not serve as Collateral for
any of the Obligations (i) Liens securing the performance of
obligations under recorded covenants, conditions and restrictions,
easements or other agreements among adjoining landowners, and (ii)
Liens securing purchase money financing of fixtures and equipment, or
securing other indebtedness that in the aggregate does not exceed
$100,000.
5.10 Taxes. The Company and its Subsidiaries have filed
all federal and other material tax returns and reports required to be
filed, and have paid all federal and other material taxes,
assessments, fees and other governmental charges levied or imposed
upon them or their Properties, income or assets otherwise due and
payable, except those which are being contested in good faith by
appropriate proceedings and for which adequate reserves have been
provided in accordance with GAAP, and no Notice of Lien has been filed
or recorded. There is no proposed tax assessment against the Company
or any of its Subsidiaries that would, if the assessment were made,
have a Material Adverse Effect.
5.11 Financial Condition.
(a) The unaudited consolidated financial statements
of the Company and its Subsidiaries dated March 31, 1996, and the
related consolidated statements of operations, shareholders'
equity and cash flows for the quarter ended on that date:
(i) were prepared in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise
expressly noted therein;
(ii) are complete, accurate and fairly present the
financial condition of the Company and its Subsidiaries as of the date
thereof and results of operations for the period covered thereby; and
(iii) except as specifically disclosed in Schedule 5.11,
show all material Indebtedness and other liabilities, direct or
contingent, of the Company and its consolidated Subsidiaries as of the
date thereof, including liabilities for taxes, material commitments
and Contingent Obligations.
(b) Since March 31, 1996, there has been no Material
Adverse Effect.
5.12 Environmental Matters.
(a) Except as specifically disclosed in Schedule
5.12, to the best knowledge of the Company the on-going
operations of the Company and each of its Subsidiaries comply in
all respects with all Environmental Laws, except such
non-compliance which would not (if enforced in accordance with
applicable law) result in liability in excess of $50,000 in the
aggregate.
(b) Except as specifically disclosed in
Schedule 5.12, the Company and each of its Subsidiaries has
obtained all licenses, permits, authorizations and registrations
required under any Environmental Law ("Environmental Permits")
and necessary for its ordinary course operations, all such
Environmental Permits are in good standing, and the Company and
each of its Subsidiaries is in compliance with all material terms
and conditions of such Environmental Permits.
(c) Except as specifically disclosed in Schedule
5.12, none of the Company, any of its Subsidiaries or any of
their respective present Property or operations is subject to any
outstanding written order from, or agreement with, any
Governmental Authority, or subject to any judicial or docketed
administrative proceeding, respecting any Environmental Law,
Environmental Claim or Hazardous Material.
(d) Except as specifically disclosed in
Schedule 5.12, to the best knowledge of the Company there are no
Hazardous Materials or other conditions or circumstances existing
with respect to any Parcel, or arising from operations of the
Company or any of its Subsidiaries prior to the Closing Date,
that would reasonably be expected to give rise to Environmental
Claims with a potential liability of the Company and its
Subsidiaries in excess of $50,000 in the aggregate for any such
condition, circumstance or Parcel. In addition, (i) neither the
Company nor any of its Subsidiaries has any underground storage
tanks (x) that are not properly registered or permitted under
applicable Environmental Laws, or (y) that are leaking or
disposing of Hazardous Materials off-site, and (ii) the Company
and its Subsidiaries have notified all of their employees of the
existence, if any, of any health hazard arising from the
conditions of their employment and have met all notification
requirements under Title III of CERCLA and all other
Environmental Laws.
5.13 Regulated Entities. Neither the Company nor any
Person controlling the Company is (a) an "Investment Company" within
the meaning of the Investment Company Act of 1940; or (b) subject to
regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, the Interstate Commerce Act, any state public
utilities code, or any other federal or state statute or regulation
limiting its ability to incur Indebtedness.
5.14 No Burdensome Restrictions. The Company is not a
party to, or bound by, any Contractual Obligation, or subject to any
charter or corporate restriction or any Requirement of Law, which
could reasonably be expected to have a Material Adverse Effect.
5.15 Solvency. The Company is Solvent and each of its
Subsidiaries is Solvent.
5.16 Subsidiaries. As of the Closing Date, the Company has
no Subsidiaries other than those specifically disclosed in part (a) of
Schedule 5.16, and has no equity investments in any other corporation
or entity other than those specifically disclosed in part (b) of
Schedule 5.16.
5.17 Brokers; Transaction Fees. Neither the Company nor
any of its Subsidiaries has any obligation to any Person in respect of
any finder's, broker's or investment banker's fee in connection with
the transactions contemplated hereby.
5.18 Insurance. The Properties of the Company and its
Subsidiaries are insured with financially sound and reputable
insurance companies in such amounts, with such deductibles and
covering such risks as are customarily carried by companies engaged in
similar businesses and owning similar Properties in localities where
the Company or such Subsidiary operates.
5.19 Full Disclosure. None of the representations or
warranties made by the Company or any of its Subsidiaries in the Loan
Documents, as of the date such representations and warranties are made
or deemed made, and none of the statements contained in any exhibit,
report, statement or certificate furnished by or on behalf of the
Company or any of its Subsidiaries in connection with the Loan
Documents, contains any untrue statement of a material fact or omits
any material fact required to be stated therein or necessary to make
the statements made therein, in light of the circumstances under which
they are made, not misleading.
6. Affirmative Covenants. The Company covenants and agrees
that, so long as any Bank shall have any obligation hereunder, or any
Loan or other Obligation shall remain unpaid or unsatisfied, unless
the Agent, on behalf of the Majority Banks, waives compliance in
writing:
6.1 Financial Statements. The Company shall deliver to
each of the Banks, in form and detail satisfactory to the Agent:
(a) as soon as publicly available, but not later than
120 days after the end of each calendar year, a copy of the
audited consolidated balance sheet of the Company and its
consolidated subsidiaries as at the end of such year and the
related consolidated statements of income, shareholders' equity
and cash flows for such calendar year, setting forth in each case
in comparative form the figures for the previous year, and
accompanied by the opinion of a nationally recognized independent
public accounting firm stating that such consolidated financial
statements present fairly the financial position for the periods
indicated in conformity with GAAP applied on a basis consistent
with prior years;
(b) as soon as publicly available, but not later than
60 days after the end of each calendar quarter of each year, a
copy of the unaudited consolidated balance sheet of the Company
and its consolidated Subsidiaries as of the end of such quarter
and the related consolidated statements of income, shareholders'
equity and cash flows for the period commencing on the first day
and ending on the last day of such quarter, certified by an
appropriate Responsible Officer as being complete and correct and
fairly presenting the financial position and results of
operations of the Company and the Subsidiaries in accordance with
GAAP;
(c) as soon as available, but not later than 45 days
after the end of each calendar quarter of each year, operating
statements and rent rolls for each Property securing the Loans,
certified by an appropriate Responsible Officer as being complete
and correct and fairly presenting the financial position and the
results of operations of the Company and the Subsidiaries in
accordance with GAAP, together with any additional information
relating to any such Property reasonably requested by the Agent;
and
(d) as soon as available, but not later than 60 days
after the end of each semi-annual period ending on June 30 and
December 31, rolling two-year consolidated cash flow projections
for the Company and each of its Subsidiaries, certified by an
appropriate Responsible Officer of the Company as being complete
and correct in all material respects.
6.2 Certificates; Other Information. The Company shall
furnish to the Agent, with sufficient copies for each Bank:
(a) concurrently with the delivery of the financial
statements referred to in subsections 6.1(a) and (b) above, a
certificate of a Responsible Officer (i) stating that, to the
best of such officer's knowledge, the Company, during such
period, has observed and performed all of its covenants and other
agreements, and satisfied every condition contained in this
Agreement to be observed, performed or satisfied by it, and that
such officer has obtained no knowledge of any Default or Event of
Default except as specified (by applicable subsection reference)
in such certificate, and (ii) showing in detail the calculations
supporting such statement in respect of Sections 2.6.2(a), 7.10,
7.11 and 7.17;
(b) promptly after the same are sent, copies of all
financial statements and reports which the Company sends to its
shareholders; and promptly after the same are filed, copies of
all financial statements and regular, periodical or special
reports which the Company may make to, or file with, the SEC or
any successor or similar Governmental Authority; and
(c) promptly, such additional business, financial,
corporate affairs and other information as the Agent may from
time to time reasonably request.
6.3 Notices. The Company shall promptly notify the Agent:
(a) upon, but in no event later than ten (10) days
after, becoming aware of (i) the occurrence of any Default or
Event of Default, and (ii) the occurrence or existence of any
event or circumstance that foreseeably will become a Default or
Event of Default;
(b) of (i) any breach or non-performance of, or any
default under, any Contractual Obligation of the Company or any
of its Subsidiaries which could result in a Material Adverse
Effect; and (ii) any dispute, litigation, investigation,
proceeding or suspension which may exist at any time between the
Company or any of its Subsidiaries and any Governmental
Authority;
(c) of the commencement of, or any material
development in, any litigation or proceeding affecting the
Company or any Subsidiary (i) in which the amount of damages
claimed is $500,000 or more, (ii) in which injunctive or similar
relief is sought and which, if adversely determined, would
reasonably be expected to have a Material Adverse Effect, or
(iii) in which the relief sought is an injunction or other stay
of the performance of this Agreement or any Loan Document;
(d) upon, but in no event later than ten (10) days
after, becoming aware of (i) any and all enforcement, cleanup,
removal or other governmental or regulatory actions instituted,
completed or threatened against the Company or any Subsidiary or
any of their Properties pursuant to any applicable Environmental
Laws, (ii) all other Environmental Claims, and (iii) any
environmental or similar condition on any real property adjoining
or in the vicinity of any Property of the Company or any
Subsidiary that could reasonably be anticipated to cause such
property or any part thereof to be subject to any restrictions on
the ownership, occupancy, transferability or use of such property
under any Environmental Laws;
(e) of any of the following ERISA events affecting
the Company or any member of its Controlled Group (but in no
event more than ten (10) days after such event), together with a
copy of any notice with respect to such event that may be
required to be filed with a Governmental Authority and any notice
delivered by a Governmental Authority to the Company or any
member or its Controlled Group with respect to such event:
(i) an ERISA Event;
(ii) the adoption of any new Plan that is subject to Title
IV of ERISA or section 412 of the Code by any member of the Controlled
Group;
(iii) the adoption of any amendment to a Plan that is
subject to Title IV of ERISA or section 412 of the Code, if such
amendment results in a material increase in benefits or Unfunded
Pension Liabilities; or
(iv) the commencement of contributions by any member of the
Controlled Group to any Plan that is subject to Title IV of ERISA or
section 412 of the Code;
(f) any Material Adverse Effect subsequent to the
date of the most recent audited financial statements of the
Company delivered to the Agent pursuant to subsection 6.1(a);
(g) of any change in accounting policies or financial
reporting practices by the Company or any of its Subsidiaries
within ten (10) days of their adoption; and
(h) of any notice of redemption given with respect to
any or all of the Company s preferred shares, within ten (10)
days of the date of such notice.
Each notice pursuant to this Section shall be accompanied by a written
statement by a Responsible Officer of the Company setting forth
details of the occurrence referred to therein, and stating what action
the Company proposes to take with respect thereto and at what time.
Each notice under subsection 6.3(a) shall describe with particularity
any and all clauses or provisions of this Agreement or other Loan
Document that have been breached or violated.
6.4 Preservation of Corporate Existence, Etc. Subject to
the provisions of Section 7.2, the Company shall, and shall cause each
of its Subsidiaries to:
(a) preserve and maintain in full force and effect
its corporate existence and good standing under the laws of its
state or jurisdiction of incorporation;
(b) preserve and maintain in full force and effect
all rights, privileges, qualifications, permits, licenses and
franchises necessary or desirable in the normal conduct of its
business; and
(c) use its reasonable efforts, in the Ordinary
Course of Business, to preserve its business organization.
6.5 Maintenance of Property. The Company shall maintain,
and shall cause each of its Subsidiaries to maintain, and preserve all
its Property which is used or useful in its business in good working
order and condition, ordinary wear and tear excepted and make all
necessary repairs thereto and renewals and replacements thereof except
where the failure to do so could not reasonably be expected to have a
Material Adverse Effect.
6.6 Insurance. In addition to insurance requirements set
forth in the Collateral Documents, the Company shall maintain, and
shall cause each Subsidiary to maintain, with financially sound and
reputable independent insurers, insurance with respect to its
Properties and business against loss or damage of the kinds
customarily insured against by Persons engaged in the same or similar
business, of such types and in such amounts as are customarily carried
under similar circumstances by such other Persons, including workers'
compensation insurance, public liability insurance, property and
casualty insurance and rental interruption insurance, the amount of
which shall not be reduced by the Company in the absence of thirty
(30) days' prior notice to the Agent. All casualty insurance covering
an Approved Parcel maintained by the Company and its Subsidiaries
shall name the Agent, as agent for the Banks, as loss payee, and all
liability, rental interruption and other insurance covering an
Approved Parcel maintained by the Company and its Subsidiaries shall
name the Agent, as agent for the Banks, as additional insured as its
interest may appear. Upon request of the Agent, the Company shall
furnish the Agent at reasonable intervals (but not more often than
once per calendar year) a certificate of a Responsible Officer of the
Company (and, if requested by the Agent any insurance broker for the
Company) setting forth the nature and extent of all insurance
maintained by the Company and its Subsidiaries in accordance with this
Section 6.6 or any Collateral Documents (and which, in the case of a
certificate of a broker, were placed through such broker).
6.7 Payment of Obligations. The Company shall, and shall
cause its Subsidiaries to, pay and discharge as the same shall become
due and payable, all their respective obligations and liabilities,
including:
(a) all tax liabilities, assessments and governmental
charges or levies upon it or its properties or assets, unless the
same are being contested in good faith by appropriate proceedings
(which proceedings have the effect of preventing the imposition
of a Lien on, or the forfeiture or sale of, any Property of the
Company or any of its Subsidiaries) and adequate reserves in
accordance with GAAP are being maintained by the Company or such
Subsidiary;
(b) all lawful claims which, if unpaid, would by law
become a Lien upon its Property unless the same are being
contested in good faith by appropriate proceedings (which
proceedings have the effect of preventing the imposition of a
Lien on, or the forfeiture or sale of, any Property of the
Company or any of its Subsidiaries) and adequate reserves in
accordance with GAAP are being maintained by the Company or such
Subsidiary; and
(c) all Indebtedness, as and when due and payable,
but subject to any subordination provisions contained in any
instrument or agreement evidencing such Indebtedness.
6.8 Compliance with Laws. The Company shall comply, and
shall cause each of its Subsidiaries to comply, in all material
respects with all Requirements of Law of any Governmental Authority
having jurisdiction over it or its business or any of its Property,
except such as may be contested in good faith or as to which a bona
fide dispute may exist.
6.9 Inspection of Property and Books and Records. The
Company shall maintain, and shall cause each of its Subsidiaries to
maintain, proper books of record and account in which full, true and
correct entries in conformity with GAAP consistently applied shall be
made of all financial transactions and matters involving the assets
and business of the Company and such Subsidiaries. The Company shall
permit, and shall cause each of its Subsidiaries to permit,
representatives of the Agent or any Bank to visit and inspect any of
their respective Properties, to examine their respective corporate,
financial and operating records, and make copies thereof or abstracts
therefrom, and to discuss their respective affairs, finances and
accounts with their respective directors, officers and independent
public accountants, all at the expense of the Company (which shall
include all internal or outside legal and other consultant fees and
other out-of-pocket expenses incurred by the Agent or any of the Banks
in connection with any such inspection, but shall not include the
Agent s or any Bank's normal overhead or employee costs of
administering the Loans) and at such reasonable times during normal
business hours and as often as may be reasonably desired, upon
reasonable advance notice to the Company; provided, however, that when
an Event of Default exists the Agent or any Bank may do any of the
foregoing at the expense of the Company at any time during normal
business hours and without advance notice. No actions by the Agent or
any Bank pursuant to this Section 6.9 shall unreasonably interfere
with (a) the performance by the Company's employees of their duties or
(b) the occupancy of any of the Company's tenants.
6.10 Environmental Laws. The Company shall, and shall
cause each of its Subsidiaries to, conduct its operations and keep and
maintain its Property in compliance with all Environmental Laws whose
violation could, individually or in the aggregate, result in liability
in excess of $250,000. Upon the written request of the Agent or any
Bank, the Company shall submit, and cause each of its Subsidiaries to
submit, to the Agent, with sufficient copies for each Bank, at the
Company's sole cost and expense, at reasonable intervals, a report
providing an update of the status of any environmental, health or
safety compliance, hazard or liability issue identified in any notice
or report required pursuant to subsection 6.3(d), that could,
individually or in the aggregate, result in liability in excess of
$250,000.
6.11 Use of Proceeds. Subject to the provisions of
Section 3.2(c), the Company shall use the proceeds of the Loans solely
for the purpose of (i) facilitating the Company s acquisition of
improved real property (subject to the provisions of Section 7.12),
and (ii) financing the Company's operating expenses.
6.12 Solvency. The Company shall at all times be, and
shall cause each of its Subsidiaries to be, Solvent.
6.13 Further Assurances. Promptly upon request by the
Agent, the Company shall (and shall cause any of its Subsidiaries to)
do such further acts, and execute, acknowledge, deliver, record,
re-record, file, re-file, register and re-register any and all deeds,
conveyances, security agreements, deeds of trust, mortgages,
assignments, estoppel certificates, financing statements and
continuations thereof, termination statements, notices of assignment,
transfers, certificates, assurances and other instruments, as the
Agent may reasonably require from time to time in order to (i) carry
out more effectively the purposes of this Agreement or any other Loan
Document, (ii) subject to the Liens created by any of the Collateral
Documents any of the Properties, rights or interests covered by any of
the Collateral Documents, (iii) perfect and maintain the validity,
effectiveness and priority of any of the Collateral Documents and the
Liens intended to be created thereby, and (iv) better assure, convey,
grant, assign, transfer, preserve, protect and confirm to the Agent
and the Banks the rights granted or now or hereafter intended to be
granted to the Agent or the Banks under any Loan Document or under any
other document executed in connection therewith.
7. Negative Covenants. The Company hereby covenants and agrees
that, so long as any Bank shall have any obligation hereunder, or any
Loan or other Obligation shall remain unpaid or unsatisfied, unless
the Agent, on behalf of the Majority Banks, waives compliance in
writing:
7.1 Limitation on Liens. The Company shall not, and shall
not suffer or permit any of its Subsidiaries to, directly or
indirectly, make, create, incur, assume or suffer to exist any Lien
upon or with respect to any part of the Collateral, whether now owned
or hereafter acquired, other than the following ("Permitted Liens"):
(a) any Lien created under any Loan Document;
(b) Liens for taxes, fees, assessments or other
governmental charges which are not delinquent or remain payable
without penalty, or to the extent that non-payment thereof is
permitted by Section 6.7, provided that no Notice of Lien has
been filed or recorded; or
(c) carriers', warehousemen's, mechanics',
landlords', materialmen's, repairmen's or other similar Liens
arising in the Ordinary Course of Business which are not
delinquent or remain payable without penalty or which are being
contested in good faith and by appropriate proceedings, which
proceedings have the effect of preventing the forfeiture or sale
of the Property subject thereto.
7.2 Consolidations and Mergers. The Company shall not, and
shall not suffer or permit any of its Subsidiaries to, merge,
consolidate with or into, or convey, transfer, lease or otherwise
dispose of (whether in one transaction or in a series of transactions)
all or substantially all of its assets (whether now owned or hereafter
acquired) to or in favor of any Person, except:
(a) any Subsidiary of the Company may merge with
(i) the Company, provided that the Company shall be the
continuing or surviving corporation, or (ii) any one or more
subsidiaries of the Company, provided that if any transaction
shall be between a Subsidiary and a wholly-owned Subsidiary, the
wholly-owned Subsidiary shall be the continuing or surviving
corporation; and
(b) any Subsidiary of the Company may sell all or
substantially all of its assets (upon voluntary liquidation or
otherwise) to the Company or another wholly-owned Subsidiary of
the Company;
provided, however, that so long as the continuing or surviving
corporation remains liable for all of the Company's obligations to the
Banks under the Loan Documents, the Agent and the Banks shall not
unreasonably withhold their consent to any merger or consolidation of
the Company or any of its Subsidiaries with or into any other Person.
7.3 Loans and Investments. The Company shall not, and
shall not suffer or permit any of its Subsidiaries to, make any
advance, loan, extension of credit or preferred capital contribution
to any Person, including any Affiliate of the Company, or enter into
any partnership, joint venture, limited liability company or similar
entity with any non-Affiliate of the Company, except for (a) loans to
tenants for tenant improvements in a maximum principal amount of
$1,500,000 for any such loan and (b) loans to employees of the Company
to finance their purchase of Company stock, where such employee loans
are reported on the Company s financial statements in a manner that
does not affect the Company s total assets, total liabilities or net
worth.
7.4 Limitation on Indebtedness. The Company shall not, and
shall not suffer or permit any of its Subsidiaries to, create, incur,
assume, suffer to exist, or otherwise become or remain directly or
indirectly liable with respect to any unsecured Indebtedness in an
aggregate principal amount in excess of $2,500,000.00, except accounts
payable to trade creditors for goods and services and current
operating liabilities (not the result of the borrowing of money)
incurred in the Ordinary Course of Business of the Company or such
Subsidiary in accordance with customary terms and paid within the
specified time.
7.5 Transactions with Affiliates. The Company shall not,
and shall not suffer or permit any of its Subsidiaries to, enter into
any transaction with any Affiliate of the Company or of any such
Subsidiary, except (a) as expressly permitted by this Agreement, or
(b) in the Ordinary Course of Business and pursuant to the reasonable
requirements of the business of the Company or such Subsidiary; in
each case (a) and (b), upon fair and reasonable terms no less
favorable to the Company or such Subsidiary than would obtain in a
comparable arm's-length transaction with a Person not an Affiliate of
the Company or such Subsidiary.
7.6 Use of Proceeds. The Company shall not, and shall not
suffer or permit any of its Subsidiaries to, use any portion of the
Loan proceeds, directly or indirectly, (i) to purchase or carry Margin
Stock, (ii) to repay or otherwise refinance indebtedness of the
Company or others incurred to purchase or carry Margin Stock, (iii) to
extend credit for the purpose of purchasing or carrying any Margin
Stock, (iv) to acquire any security in any transaction that is subject
to Section 13 or 14 of the Securities and Exchange Act of 1934 or any
regulations promulgated thereunder, or (v) to purchase or redeem any
equity security (including any preferred shares) issued by the
Company.
7.7 Contingent Obligations. The Company shall not, and
shall not suffer or permit any of its Subsidiaries to, create, incur,
assume or suffer to exist any Contingent Obligations except
endorsements for collection or deposit in the Ordinary Course of
Business.
7.8 Creation of Subsidiaries. The Company shall not, and
shall not suffer or permit any of its Subsidiaries to, (i) form any
additional Subsidiaries other than wholly-owned Subsidiaries, or
(ii) enter into any additional partnership, joint venture or similar
business arrangement with any Person.
7.9 Compliance with ERISA. The Company shall not, and
shall not suffer or permit any of its Subsidiaries to, (i) terminate
any Plan subject to Title IV of ERISA so as to result in any material
(in the opinion of the Agent) liability to the Company or any ERISA
Affiliate, (ii) permit to exist any ERISA Event, or any other event or
condition, which presents the risk of a material (in the opinion of
the Agent) liability to any member of the Controlled Group, (iii) make
a complete or partial withdrawal (within the meaning of ERISA
Section 4201) from any Multi-employer Plan so as to result in any
material (in the opinion of the Agent) liability to the Company or any
ERISA Affiliate, (iv) enter into any new Plan or modify any existing
Plan so as to increase its obligations thereunder which could result
in any material (in the opinion of the Agent) liability to any member
of the Controlled Group, or (v) permit the present value of all
nonforfeitable accrued benefits under any Plan (using the actuarial
assumptions utilized by the PBGC upon termination of a Plan)
materially (in the opinion of the Agent) to exceed the fair market
value of Plan assets allocable to such benefits, all determined as of
the most recent valuation date for each such Plan.
7.10 Debt to Tangible Net Worth Ratio. The Company shall
not at any time permit the ratio of (a) its total consolidated
liabilities (including as liabilities all then-outstanding but undrawn
Letters of Credit) to (b) its total consolidated stockholders' equity
(excluding as assets (i) any loans to tenants for tenant improvements
and (ii) goodwill and other intangible assets, and valuing all real
Property at the lower of book or market value (where market value is
based on the most recent Appraisal for each Approved
Parcel))( Tangible Net Worth ) to be greater than the ratio set forth
below with respect to any fiscal quarter during the corresponding
period set forth below:
Period Ratio
On or before the second
anniversary of the Closing Date 1.00
From and after the second
anniversary of the Closing Date 0.75
7.11 Debt Service Coverage Ratio. The Company shall not
permit the ratio of (a) its Cash Flow to (b) its Covenant Debt Service
at any time to be less than the ratio set forth below with respect to
any fiscal quarter during the corresponding period set forth below:
Period Ratio
On or before the first
anniversary of the Closing Date 1.40
From and after the first
anniversary of the Closing Date 1.50
7.12 Change in Business. The Company shall not, and shall
not suffer or permit any of its Subsidiaries to, engage in any
material line of business substantially different from those lines of
business carried on by it on the date hereof.
7.13 Accounting Changes. The Company shall not, and shall
not suffer or permit any of its Subsidiaries to, make any significant
change in accounting treatment or reporting practices, except as
required by GAAP, or change the fiscal year of the Company or of any
of its consolidated Subsidiaries.
7.14 Limitation on Dividends. The Company shall not,
during any fiscal quarter, declare or pay dividends to its
shareholders (including the holders of any of its preferred shares) in
an aggregate amount exceeding ninety-five percent (95%) of the average
amount of the Company's Funds From Operations during the two (2)
consecutive calendar quarters immediately preceding the declaration
date of any such dividend; provided, however, that for the calendar
quarter in which any equity offering is completed and the next two (2)
consecutive calendar quarters, the Company may pay dividends to its
shareholders that exceed, in the aggregate, the foregoing limitation
so long as such dividend payments (i) on any new issue of common stock
do not exceed the rate at which the Company pays dividends on its
other common stock and (ii) on any new issue of preferred stock do not
exceed the minimum amount needed to pay the required dividend on such
preferred stock.
7.15 Development Activity. The Company shall not, and
shall not permit any of its Subsidiaries to, engage in real estate
development activity other than projects involving at any time
aggregate acquisition, development and construction costs of Twenty
Million Dollars ($20,000,000) or less; provided, however, that
projects other than build to suit projects shall not involve at any
time aggregate construction costs in excess of Ten Million Dollars
($10,000,000). For purposes of this Section 7.15, "real estate
development activity" means the construction of a building shell that
increases the rentable area of the improvements located on a Parcel.
7.16 Undeveloped Land. The Company will not, and will not
permit any of its Subsidiaries to, purchase undeveloped land, whether
it is excess land adjacent to a Parcel or otherwise, that (a) is not
Entitled Land, or (b) is encumbered by any Lien (other than a Lien for
the benefit of (i) the Banks to secure the Obligations if such
undeveloped land is tied to an Approved Parcel that is encumbered with
a Mortgage, or (ii) the seller of such undeveloped land to secure a
nonrecourse obligation in an amount not to exceed the purchase price
of such undeveloped land), or (c) causes the aggregate value of
undeveloped land owned by the Company and its Subsidiaries to exceed
the lesser of (i) fifteen percent (15%) of the aggregate value of the
consolidated net worth of the Company and its Subsidiaries, determined
on a GAAP basis, or (ii) Thirty Million Dollars ($30,000,000.00).
7.17 Tangible Net Worth. The Company shall not at any time
permit its Tangible Net Worth to be less than the sum of (a) Sixty-
Five Million Dollars ($65,000,000.00) plus (b) seventy-five percent
(75%) of the proceeds of any equity offering of the Company after
payment of the reasonable expenses of such equity offering.
8. Events of Default and Remedies.
8.1 Event of Default. Any of the following shall
constitute an Event of Default:
8.1.1 Non-Payment. The Company fails to pay,
(i) when and as required to be paid herein, any amount of principal of
any Loan, or (ii) within twenty (20) days after the same shall become
due, any interest, fee or any other amount payable hereunder or
pursuant to any other Loan Document; or
8.1.2 Representation or Warranty. Any representation
or warranty by the Company or any of its Subsidiaries made or deemed
made in this Agreement or any other Loan Document, or which is
contained in any certificate, document or financial or other statement
by the Company, any of its Subsidiaries or their respective
Responsible Officers, furnished at any time under this Agreement or in
or under any other Loan Document, shall prove to have been incorrect
in any material respect on or as of the date made or deemed made; or
8.1.3 Specific Defaults. The Company fails to
perform or observe any term, covenant or agreement contained in
Sections 6.1, 6.2, 6.3, 6.6, 6.9, 7.10, 7.11 or 7.17; or
8.1.4 Other Defaults. The Company fails to perform
or observe any other term or covenant contained in this Agreement or
any other Loan Document, and such default shall continue unremedied
for a period of twenty (20) days after the earlier of (i) the date
upon which a Responsible Officer of the Company knew of such failure
or (ii) the date upon which written notice thereof is given to the
Company by the Agent; or
8.1.5 Insolvency; Voluntary Proceedings. The Company
or any of its Subsidiaries (i) ceases or fails to be Solvent, or
generally fails to pay, or admits in writing its inability to pay, its
debts as they become due, subject to applicable grace periods, if any,
whether at stated maturity or otherwise; (ii) voluntarily ceases to
conduct its business in the ordinary course; (iii) commences any
Insolvency Proceeding with respect to itself; or (iv) takes any action
to effectuate or authorize any of the foregoing; or
8.1.6 Insolvency; Involuntary Proceedings. (i) Any
involuntary Insolvency Proceeding is commenced or filed against the
Company or any Subsidiary of the Company, or any writ, judgment,
warrant of attachment, execution or similar process, is issued or
levied against a substantial part of the Company's or any of its
Subsidiaries' Properties, and any such proceeding or petition shall
not be dismissed, or such writ, judgment, warrant of attachment,
execution or similar process shall not be released, vacated or fully
bonded within sixty (60) days after commencement, filing or levy;
(ii) the Company or any of its Subsidiaries admits the material
allegations of a petition against it in any Insolvency Proceeding, or
an order for relief (or similar order under non-U.S. law) is ordered
in any Insolvency Proceeding; or (iii) the Company or any of its
Subsidiaries acquiesces in the appointment of a receiver, trustee,
custodian, conservator, liquidator, mortgagee in possession (or agent
therefor), or other similar Person for itself or a substantial portion
of its Property or business; or
8.1.7 ERISA Plans. The occurrence of any one or more
of the following events with respect to the Company, provided such
event or events could reasonably be expected, in the judgment of the
Agent, to subject the Company to any tax, penalty or liability (or any
combination of the foregoing) which, in the aggregate, could have a
material adverse effect on the financial condition of the Company with
respect to a Plan:
(a) A Reportable Event shall occur with respect
to a Plan which is, in the reasonable judgment of the Agent
likely to result in the termination of such Plan for purposes of
Title IV of ERISA; or
(b) Any Plan termination (or commencement of
proceedings to terminate a Plan) or the Company's full or partial
withdrawal from a Plan; or
8.1.8 Monetary Judgments. One or more final
(non-interlocutory) judgments, orders or decrees shall be entered
against the Company or any of its Subsidiaries involving in the
aggregate a liability (not fully covered by insurance) as to any
single or related series of transactions, incidents or conditions of
$1,000,000 or more, and the same shall remain unvacated and unstayed
pending appeal for a period of sixty (60) days after the entry
thereof; or
8.1.9 Adverse Change. There shall occur a Material
Adverse Effect that continues unremedied for a period of thirty (30)
days after the earlier of (i) the date upon which a Responsible
Officer of the Company knew or should have known of such Material
Adverse Effect or (ii) the date upon which written notice thereof is
given to the Company by the Bank; or
8.1.10 Management Changes. The Chairman of the Board
or the chief executive officer of the Company resigns, is terminated
or otherwise ceases to act for any reason, and such officer of the
Company is not replaced with a person reasonably satisfactory to the
Majority Banks within six (6) months after he ceases to hold such
position.
8.1.11 Preferred Dividend Defaults. The Company
fails to pay in full any two (2) consecutive quarterly dividend
payments owing to holders of the Company's preferred shares.
8.1.12 Early Termination of a Specified Swap
Contract. There occurs under any Specified Swap Contract an Early
Termination Date (as defined in such Specified Swap Contract)
resulting from (i) any event of default under such Specified Swap
Contract as to which the Company is the Defaulting Party (as defined
in such Specified Swap Contract) or (ii) any Termination Event (as
defined in such Specified Swap Contract) as to which the Company is an
Affected Party (as defined in such Specified Swap Contract), the
occurrence of such Early Termination Date gives rise to a monetary
obligation owing from the Company to the Swap Provider under the
Specified Swap Contract, and the Company fails to pay such monetary
obligation within five (5) days of such Swap Provider's demand.
8.2 Remedies. If any Event of Default occurs, the Agent
shall, at the request of, or may, with the consent of, the Majority
Banks:
8.2.1 Termination of Commitment to Lend. Declare the
commitment of each Bank to make Loans or the commitment of BofA
to issue Letters of Credit to be terminated, whereupon such
commitment shall forthwith be terminated; provided, however, that
the Agent and the Banks shall continue to honor any outstanding
Letter of Credit; and
8.2.2 Acceleration of Loans. Declare the unpaid
principal amount of all outstanding Loans, all interest accrued
and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due
and payable, without presentment, demand, protest or other notice
of any kind, all of which are hereby expressly waived by the
Company; and
8.2.3 Security for Letters of Credit. Require that
the Company deposit with the Agent, for the benefit of the Banks,
on demand and as cash security for the Company's obligations
under the Loan Documents, an amount equal to the aggregate
undrawn amount of all then-outstanding Letters of Credit (and the
Company hereby grants to the Agent, as agent for the Banks, a
security interest in any such amount deposited with the Agent
(and any amount deposited with the Agent pursuant to subsection
2.5.2(a)), all earnings thereon and all proceeds thereof, and as
to such amounts the Agent shall have the rights and remedies of a
secured party under the California Uniform Commercial Code);
provided that upon the occurrence of any event specified in
subsections 8.1.5 or 8.1.6 above (in the case of clause (i) of
subsection 8.1.6 upon the expiration of the 60-day period
mentioned therein) such amounts shall automatically become due
and payable without further act of the Agent or the Banks; and
8.2.4 Exercise of Rights and Remedies. Exercise all
rights and remedies available to it under the Loan Documents or
applicable law; provided, however, that upon the occurrence of
any event specified in subsections 8.1.5 or 8.1.6 above (in the
case of clause (i) of subsection 8.1.6 upon the expiration of the
60-day period mentioned therein), the obligation of each Bank to
make Loans and the obligation of BofA to issue Letters of Credit
shall automatically terminate, and the unpaid principal amount of
all outstanding Loans and all interest and other amounts as
aforesaid shall automatically become due and payable without
further act of the Agent or any Bank. Notwithstanding any
contrary provision of any Loan Document, the Agent shall not
incur any trustee or other foreclosure fees or expenses for which
it will seek reimbursement from the Company under Section 9.4(b)
until at least five (5) Business Days after the occurrence of an
Event of Default under subsection 8.1.3; provided, however, that
this restriction shall not apply to any other Event of Default.
Notwithstanding any contrary provision of applicable law, not
less than thirty (30) days shall elapse between the occurrence of
an Event of Default and the actual sale of any Property securing
the Loans, but the Agent may give any notices, commence any
actions, obtain the appointment of receivers and other
provisional remedies, sequester any rents, issues and profits, or
exercise any of its other rights or remedies during such
thirty (30) day period;
provided, however, that upon the occurrence of an Event of Default
under Section 8.1.11, the Agent may not exercise any of its remedies
under Sections 8.2.2, 8.2.3 or 8.2.4 until the earlier of (i) the
first date on which a notice of redemption is given with respect to
any or all of the Company s preferred shares and (ii) ninety (90) days
after the occurrence of such Event of Default, unless the Company
cures such Event of Default during such ninety (90) day period.
8.3 Rights Not Exclusive. The rights provided for in this
Agreement and the other Loan Documents are cumulative and are not
exclusive of any other rights, powers, privileges or remedies provided
by law or in equity, or under any other instrument, document or
agreement now existing or hereafter arising.
8.4 Specified Swap Contract Remedies. Notwithstanding any
contrary provision of this Article 8 (other than Section 8.5), but
subject to the provisions of Section 8.5, each Swap Provider shall
have with respect to any Specified Swap Contract of such Swap Provider
the right, to the extent so provided in the applicable Specified Swap
Contract or any master agreement relating thereto, and after notice to
the Agent, but without the approval or consent of the Agent or the
other Banks, to (a) declare an event of default, termination event or
other similar event thereunder and to create an Early Termination
Date, and (b) to determine net termination amounts in accordance with
the terms of such Specified Swap Contract and to set-off amounts
between Specified Swap Contracts.
8.5 Subordination of Swap Obligations.
8.5.1 Each Swap Provider agrees that (a) any and all
present and future obligations or liabilities of the Company to a Swap
Provider under any Specified Swap Contract, whether fixed or
contingent, matured or unmatured, or liquidated or unliquidated,
including any net termination amounts payable to the Swap Provider
under any such Specified Swap Contract (collectively, the "Specified
Swap Obligations"), shall be at all times junior and subordinate to
the Obligations, including any claim for interest or expenses accruing
after the commencement of an Insolvency Proceeding by or against the
Company, and (b) all of the Specified Swap Obligations owing from the
Company to each Swap Provider shall have the same priority, and each
Swap Provider shall share equally and ratably (based on the relative
amounts of the Specified Swap Obligations owing from the Company to
each such Swap Provider) in any payment from the Company or in the
proceeds of any Collateral after all of the Obligations have been paid
or otherwise satisfied in full and the obligations of the Banks to
make Loans hereunder have been terminated.
8.5.2 Notwithstanding any contrary provision of any
Specified Swap Contract, upon the occurrence of any event of default,
a Termination Event or an Early Termination Date under a Specified
Swap Contract, the Swap Provider shall have no right to exercise any
of its rights or remedies against the Company under the Specified Swap
Contract, and the Swap Provider's sole rights and remedies against the
Company shall be limited to those of a "Bank" under the Loan
Documents, until all of the Collateral has been exhausted. In
particular, a Swap Provider shall have no right to commence or
prosecute any action against the Company under the Specified Swap
Contract, to realize upon any of the Collateral or to set off against
any deposit account of the Company with the Swap Provider. Upon the
occurrence and during the continuance of any Event of Default, any
payment by the Company to a Swap Provider pursuant to a Specified Swap
Contract, including any payment on any claim filed by such Swap
Provider in any Insolvency Proceeding commenced by or against the
Company, shall be considered to be a payment on account of the
Obligations that is subject to the provisions of Section 2.12, until
all of the Obligations have been paid or otherwise satisfied in full,
and shall thereafter be considered to be a payment on account of all
of the Specified Swap Obligations, and shall be shared by all of the
Swap Providers pursuant to this Section 8.5 in the manner set forth in
Section 2.12. Each Swap Provider agrees that the provisions of this
Section 8.5.2 relating to restrictions on the exercise of remedies
shall not apply to BofA acting in its capacity as Agent for the Banks.
8.5.3 Upon the occurrence of an Event of Default,
including an Event of Default under Section 8.1(l), the proceeds of
any Collateral shall first be applied to the Obligations, until all of
the Obligations have been paid or otherwise satisfied in full, and
then to the Specified Swap Obligations, until all of the Specified
Swap Obligations have been paid or otherwise satisfied in full.
8.5.4 Each Swap Provider agrees that its issuance of
a Specified Swap Contract shall not alter any of its rights, duties or
liabilities, or the rights, duties or liabilities of the Agent or any
other Bank, under the Loan Documents, and each Swap Provider agrees
that the Agent's or any Bank's exercise of any of its rights under the
Loan Documents, with or without the consent of such Swap Provider,
shall not alter, waive or otherwise prejudice the Agent's or any
Bank's rights with respect to such Swap Provider under this
Section 8.5.
8.5.5 The provisions of this Section 8.5 shall survive the
full repayment or satisfaction of the Obligations, and shall continue
in force until all of the Specified Swap Obligations owing from the
Company to each Swap Provider have been paid or otherwise satisfied in
full.
9. The Agent.
9.1 Appointment and Authorization of the Agent. Each Bank
hereby irrevocably appoints, designates and authorizes the Agent to
take such action on its behalf under the provisions of this Agreement
and each other Loan Document, and to exercise such powers and perform
such duties, as are expressly delegated to it by the terms of this
Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto and as further provided in the Co-Lender
Agreement described below.
9.2 The Agent's Powers. Subject to the limitations set
forth in the Loan Documents and Co-Lender Agreement, the Agent's
powers include but are not limited to the power: (a) to administer,
manage and service the Loans; (b) to enforce the Loan Documents; (c)
to make all decisions under the Loan Documents in connection with the
day-to-day administration of the Loans, any inspections required by
the Loan Documents, and other routine administration and servicing
matters; (d) to collect and receive from the Company or any third
persons all payments of amounts due under the terms of the Loan
Documents and to distribute the amounts thereof to the Banks; (e) to
collect and distribute or disburse all other amounts due under the
Loan Documents; (f) to grant or withhold consents, approvals or
waivers, and make any other determinations in connection with the Loan
Documents; and (g) to exercise all such powers as are incidental to
any of the foregoing matters. The Agent shall furnish to the Banks
copies of material documents, including confidential ones, received
from the Company regarding the Loans, the Loan Documents and the
transactions contemplated thereby. The Agent shall have no
responsibility with respect to the authenticity, validity, accuracy or
completeness of the information provided.
9.3 Limitation on the Agent's Duties. Notwithstanding
any contrary provision of any Loan Document, the Agent shall not have
any duties or responsibilities except those expressly set forth in the
Loan Documents or the Co-Lender Agreement, nor shall the Agent have
any fiduciary relationship with any Bank, and no implied covenants,
responsibilities, duties, obligations or liabilities shall be read
into this Agreement, any other Loan Document or the Co-Lender
Agreement against the Agent.
9.4 Acknowledgment of Co-Lender Agreement. The Company
acknowledges that the Banks have executed a Co-Lender Agreement to
supplement the Loan Documents with respect to the relationship of the
Banks and the Agent among themselves in connection with the Loans.
The Co-Lender Agreement is not a Loan Document.
9.5 Successor Agent. The Agent may, and at the request of
the Majority Banks shall, resign as Agent upon thirty (30) days'
notice to the Banks. If the Agent resigns under this Agreement, the
Majority Banks shall appoint from among the Banks a successor agent.
If no successor agent is appointed prior to the effective date of the
resignation of the Agent, the Agent may appoint, after consulting with
the Banks, a successor agent which would qualify as an Eligible
Assignee. Upon its acceptance of the appointment as successor agent
hereunder, such successor agent shall succeed to all of the rights,
powers and duties of the retiring Agent, the term "Agent" shall mean
such successor agent, and the retiring Agent's appointment, powers and
duties as Agent shall terminate. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Agreement
regarding payment of costs and expenses and indemnification of the
Agent shall inure to its benefit as to any actions that such retiring
Agent took or omitted to take while it was Agent under this Agreement.
If no successor agent has accepted appointment as Agent by the date
which is thirty (30) days following a retiring Agent's notice of
resignation, the retiring Agent's resignation shall nevertheless
thereupon become effective, and the Banks shall perform all of the
duties of the Agent hereunder until such time, if any, as the Majority
Banks appoint a successor agent in the manner set forth above. Upon
replacement of the Agent as provided in this Agreement, the former
Agent shall promptly deliver to the new Agent an assignment of all
beneficial interest in any Mortgage and any other Collateral Documents
(if before acquisition of title to the Collateral encumbered thereby),
or a quitclaim deed to and assignment of any such Property (if after
acquisition of the Collateral encumbered thereby) and copies of any
books, records and documents related to the Loans and the Collateral
to which the Banks are entitled and which is then in the former
Agent's possession.
10. Miscellaneous.
10.1 Amendments and Waivers. No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no consent
with respect to any departure by the Company or any of its
Subsidiaries therefrom, shall be effective unless the same shall be in
writing and signed by the Agent (at the written request of the
Majority Banks or all of the Banks, as applicable), and then such
waiver shall be effective only in the specific instance and for the
specific purpose for which given.
10.2 Notices.
(a) All notices, requests and other communications
provided for hereunder shall be in writing (including, unless the
context expressly otherwise provides, facsimile transmission) and
mailed (by certified mail, postage prepaid, return receipt
requested), delivered or telecopied to the address or number
specified for notices on the applicable signature page hereof, or
to such other address as shall be designated by such party in a
written notice to the other parties.
(b) All such notices and communications shall, when
transmitted by overnight delivery or telecopied by facsimile, be
effective when delivered for overnight delivery or transmitted by
telecopier, respectively, or if delivered, upon delivery, except
that notices pursuant to Article 2 shall not be effective until
actually received by the Agent. All notices and communications
telecopied by facsimile will also be mailed by ordinary first
class mail, postage prepaid. All such notices and communications
delivered by mail shall be effective upon the earlier of
(i) two (2) Business Days after deposit in the United States
mail, or (ii) actual receipt, as evidenced by the return receipt.
(c) The Company acknowledges and agrees that any
agreement of the Agent at Article 2 herein to receive certain
notices by telephone and facsimile is solely for the convenience
and at the request of the Company. The Agent and the Banks shall
be entitled to rely on the authority of any Person purporting to
be a Person authorized by the Company to give such notice, and
the Agent and the Banks shall not have any liability to the
Company or any other Person on account of any action taken or not
taken by the Agent or the Banks in reliance upon such telephonic
or facsimile notice. The obligation of the Company to repay the
Loans shall not be affected in any way or to any extent by any
failure by the Agent or the Banks to receive written confirmation
of any telephonic or facsimile notice or the receipt by the Agent
or the Banks of a confirmation which is at variance with the
terms understood by the Agent or the Banks to be contained in the
telephonic or facsimile notice.
10.3 No Waiver; Cumulative Remedies. No failure on the
part of the Agent or any Bank in exercising, and no delay in its
exercising, any right, remedy, power or privilege hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise
of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right,
remedy, power or privilege.
10.4 Costs and Expenses. The Company shall, whether or not
the transactions contemplated hereby shall be consummated:
(a) pay or reimburse the Agent within fifteen (15)
Business Days after demand (subject to subsections 4.1.11 and
4.2.2) for all costs and expenses incurred by them in connection
with the development, preparation, delivery, administration
(other than normal overhead costs of administering the Loans) and
execution of, and any amendment, supplement, waiver or
modification to, this Agreement, any other Loan Document and any
other documents prepared in connection herewith or therewith, and
the consummation of the transactions contemplated hereby and
thereby, including Attorney Costs incurred by BofA (including in
its capacity as the Agent) with respect thereto;
(b) pay or reimburse the Agent within fifteen (15)
Business Days after demand (subject to subsections 4.1.11 and
4.2.2) for all costs and expenses incurred in connection with the
enforcement, attempted enforcement or preservation of any rights
or remedies (including in connection with any workout or
restructuring regarding the Loans) under this Agreement, any
other Loan Document, and any such other documents, including
Attorney Costs incurred by the Agent; and
(c) pay or reimburse BofA (including in its capacity
as the Agent) within thirty (30) days after demand (subject to
subsections 4.1.11 and 4.2.2) for all appraisal (including the
allocated cost of internal appraisal services), audit,
environmental inspection and review (including the allocated cost
of such internal services), search and filing costs, fees and
expenses incurred or sustained by BofA (including in its capacity
as the Agent) in connection with the matters referred to under
paragraphs (a) and (b) of this Section.
10.5 Indemnity. Whether or not the transactions
contemplated hereby shall be consummated, the Company shall pay,
indemnify, and hold the Agent-Related Persons, and each Bank and each
of their respective officers, directors, employees, counsel, agents
and attorneys-in-fact (each, an "Indemnified Person") harmless from
and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, charges, expenses or
disbursements (including Attorney Costs) of any kind or nature
whatsoever which may be incurred by or asserted against any such
Indemnified Person arising out of relating to the execution, delivery,
enforcement, performance or administration of this Agreement or any
other Loan Documents, or the transactions contemplated hereby and
thereby, and with respect to any investigation, litigation or
proceeding related to this Agreement or the Loans or the use of the
proceeds thereof, whether or not any Indemnified Person is a party
thereto (all the foregoing, collectively, the "Indemnified
Liabilities"); provided, that the Company shall have no obligation
hereunder to any Indemnified Person with respect to Indemnified
Liabilities arising solely from the negligence or willful misconduct
of such Indemnified Person. The obligations in this Section 10.5
shall survive payment or satisfaction of all other Obligations. At
the election of any Indemnified Person, the Company shall defend such
Indemnified Person using legal counsel satisfactory to such
Indemnified Person in such Person's sole discretion, at the sole cost
and expense of the Company. All amounts owing under this Section 10.5
shall be paid within thirty (30) days after demand.
10.6 Marshaling; Payments Set Aside. Neither the Agent not
the Banks shall be under any obligation to marshal any assets in favor
of the Company or any other Person, including any Swap Provider, or
against or in payment of any or all of the Obligations. To the extent
that the Company makes a payment or payments to the Agent or the
Banks, or the Agent or the Banks enforce their Liens, and such payment
or payments or the proceeds of such enforcement or any part thereof
are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee,
receiver or any other party in connection with any Insolvency
Proceeding, or otherwise, then to the extent of such recovery the
obligation or part thereof originally intended to be satisfied shall
be revived and continued in full force and effect as if such payment
had not been made or such enforcement had not occurred.
10.7 Successors and Assigns. The provisions of this
Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except
that the Company may not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of
the Agent and each Bank.
10.8 Assignments, Participations, Confidentiality.
10.8.1 Assignments. Each Bank may at any time assign
and delegate to one or more Eligible Assignees (each, an "Assignee")
with the written consent of the Company, which consent shall not be
unreasonably withheld (provided that no written consent of the Company
shall be required (a) after the occurrence and during the continuance
of an Event of Default or (b) in connection with any assignment and
delegation to an Affiliate of such Bank), all of the Loans, the
Commitment and the other rights and obligations of such Bank hereunder
and under the other Loan Documents; provided, however, that any Bank
other than BofA that is or becomes a party to this Agreement from time
to time shall at all times retain an interest in the Loans, the
Commitment and the other rights and obligations of a Bank hereunder in
an aggregate principal amount of not less than Ten Million Dollars
($10,000,000.00), and BofA shall at all times retain an interest in
the Loans, the Commitment and the other rights and obligations of a
Bank hereunder in an aggregate principal amount of not less than
Fifty-One Million Dollars ($51,000,000.00); provided further, however,
that any assignment of a Bank s interest in the Loans, the Commitment
and the other rights and obligations of such Bank hereunder and under
the other Loan Documents shall be in the minimum amount of Ten Million
Dollars ($10,000,000.00) and multiples of One Million Dollars
($1,000,000.00) in excess thereof; and provided further, however, that
the Company may continue to deal solely and directly with the assignor
Bank in connection with the interest so assigned to an Assignee until
(i) written notice of such assignment, substantially in the form of
Schedule 1 to the attached Exhibit H, shall have been given to the
Company and the Agent by such Bank and the Assignee, (ii) such Bank
and its Assignee shall have delivered to the Agent and the Company an
Assignment and Assumption Agreement substantially in the form of the
attached Exhibit H ("Assignment and Assumption Agreement") (together
with any Note(s) subject to such assignment), and (iii) the Assignee
shall have paid to the Agent a processing fee in the amount of $2,500.
In the event that the Company elects to permanently reduce the Maximum
Commitment Amount pursuant to Section 2.5, the minimum required hold
amounts and the minimum amount of any assignment of a Bank s interest
in the Loans, the Commitment and the other rights and obligations of
such Bank hereunder and under the other Loan Documents shall be reduce
pro rata.
10.8.2 From and after the date on which the Agent
notifies the assigning Bank that all conditions and requirements of
the assignment have been met, then to the extent that rights and
obligations hereunder have been assigned (a) the Assignee thereunder
shall be a party hereto and shall have the rights and obligations of a
Bank under the Loan Documents and the Co-Lender Agreement, (b) the
assigning Bank shall relinquish such assigned rights and be released
from such assigned obligations under the Loan Documents, (c) this
Agreement shall be deemed to be amended to the extent necessary to
reflect the addition of the Assignee and the resulting adjustment of
the Pro Rata Shares of the Loans arising therefrom, and (d) the Pro
Rata Share allocated to an Assignee shall reduce the Pro Rata Share of
the assigning Bank.
10.8.3 Participations. Subject to the limitations
set forth in Section 10.8.1, which apply equally to participations and
assignments, any Bank (the originating Bank ) may at any time sell to
one or more Persons that are not Affiliates of the Company (each, a
"Participant") participating interests in any Loans, the Commitment
and the other interests of such originating Bank hereunder and under
the other Loan Documents; provided, however, that (a) the originating
Bank's obligations under this Agreement shall remain unchanged,
(b) the originating Bank shall remain solely responsible for the
performance of such obligations, (c) the Company and the Agent shall
continue to deal solely and directly with the originating Bank in
connection with the originating Bank's rights and obligations under
this Agreement and the other Loan Documents, (d) the Participant
shall, together with the originating Bank, be entitled to the
non-exclusive protections of Sections 3.1 and 3.3 as though it were
also the originating Bank hereunder, and (e) no Bank shall transfer or
grant any participating interest under which the Participant has
rights to approve any amendment, consent or waiver with respect to any
Loan Document, except to the extent such amendment, consent or waiver
would require unanimous consent of the Banks. A Participant shall not
have any rights under the Loan Documents or the Co-Lender Agreement,
and all amounts payable by the Company hereunder shall be determined
as if the originating Bank had not sold such participation.
10.8.4 Notwithstanding any other provision, a Bank
may pledge its interest in the Commitment, in the Loans and under the
Loan Documents in favor of any Federal Reserve Bank in accordance with
Federal law.
10.8.5 Confidentiality. Each Bank agrees to take
normal and reasonable precautions and exercise due care to maintain
the confidentiality of all non-public information provided to it by
the Company or any Subsidiary of the Company in connection with this
Agreement or any other Loan Document, and the Banks and any of its
Affiliates shall not use any such information for any purpose or in
any manner other than pursuant to the terms contemplated by this
Agreement, except to the extent such information (i) was or becomes
generally available to the public other than as a result of a
disclosure by such Bank, or (ii) was or becomes available on a
non-confidential basis from a source other than the Company (provided
that such source is not bound by a confidentiality agreement with the
Company known to such Bank); provided, however, that such Bank may
disclose such information (A) at the request or pursuant to any
requirement of any Governmental Authority to which such Bank is
subject or in connection with an examination of such Bank by any such
authority; (B) pursuant to subpoena or other court process; (C) when
required to do so in accordance with the provisions of any applicable
Requirement of Law; and (D) to such Bank's independent auditors and
other professional advisors. Notwithstanding the foregoing, the
Company authorizes each Bank to disclose to any Participant or
Assignee (each, a "Transferee"), and to any prospective Transferee,
such financial and other information in such Bank's possession
concerning the Company or its Subsidiaries which has been delivered to
such Bank pursuant to this Agreement or which has been delivered to
such Bank by the Company in connection with the Bank's credit
evaluation of the Company prior to entering into this Agreement;
provided that, unless otherwise agreed by the Company, such Transferee
agrees in writing with such Bank to keep such information confidential
to the same extent required of such Bank hereunder.
10.9 Counterparts. This Agreement may be executed by one
or more of the parties to this Agreement in any number of separate
counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed
to constitute but one and the same instrument.
10.10 Severability. The illegality or unenforceability of
any provision of this Agreement or any instrument or agreement
required hereunder shall not in any way affect or impair the legality
or enforceability of the remaining provisions of this Agreement or any
instrument or agreement required hereunder.
10.11 No Third Parties Benefited. This Agreement is made
and entered into for the sole protection and legal benefit of the
Company, the Banks, the Agent and the Agent-Related Persons, and their
permitted successors and assigns, and no other Person (other than an
Indemnified Person under Section 10.5) shall be a direct or indirect
legal beneficiary of, or have any direct or indirect cause of action
or claim in connection with, this Agreement or any of the other Loan
Documents. The Agent shall have no obligation to any Person not a
party to this Agreement or other Loan Documents.
10.12 Time. Time is of the essence as to each term or
provision of this Agreement and each of the other Loan Documents.
10.13 Arbitration; Reference.
(a) Mandatory Arbitration. Any controversy or claim
between or among the parties, including but not limited to those
arising out of or relating to this Agreement or any agreements or
instruments relating hereto or delivered in connection herewith
and any claim based on or arising from an alleged tort, shall at
the request of any party be determined by arbitration. The
arbitration shall be conducted in accordance with the United
States Arbitration Act (Title 9, U.S. Code), notwithstanding any
choice of law provision in this Agreement, and under the
Commercial Rules of the American Arbitration Association ("AAA").
The arbitrator(s) shall give effect to statutes of limitation in
determining any claim. Any controversy concerning whether an
issue is arbitrable shall be determined by the arbitrator(s).
Judgment upon the arbitration award may be entered in any court
having jurisdiction. The institution and maintenance of an
action for judicial relief or pursuit of a provisional or
ancillary remedy shall not constitute a waiver of the right of
any party, including the plaintiff, to submit the controversy or
claim to arbitration if any other party contests such action for
judicial relief.
(b) Real Property Collateral. Notwithstanding the
provisions of subparagraph 10.13(a), no controversy or claim
shall be submitted to arbitration without the consent of all
parties if, at the time of the proposed submission, such
controversy or claim arises from or relates to an obligation to
the Banks which is secured by real property collateral. If all
parties do not consent to submission of such a controversy or
claim to arbitration, the controversy or claim shall be
determined as provided in subparagraph 10.13(c).
(c) Judicial Reference. At the request of any party,
a controversy or claim which is not submitted to arbitration as
provided and limited in subparagraphs 10.13(a) and 10.13(b) shall
be determined by a reference in accordance with California Code
of Civil Procedure Section 638 et seq. If such an election is
made, the parties shall designate to the court a referee or
referees selected under the auspices of the AAA in the same
manner as arbitrators are selected in AAA-sponsored proceedings.
The presiding referee of the panel, or the referee if there is a
single referee, shall be an active attorney or retired judge.
Judgment upon the award rendered by such referee or referees
shall be entered in the court in which such proceeding was
commenced in accordance with California Code of Civil Procedure
Sections 644 and 645.
(d) Provisional Remedies, Self-Help and Foreclosure.
No provision of this Section 10.13 shall limit the right of any
party to this Agreement to exercise self-help remedies such as
set-off, foreclosure against or sale of any real or personal
property collateral or security, or obtaining provisional or
ancillary remedies from a court of competent jurisdiction before,
after or during the pendency of any arbitration or other
proceeding. The exercise of a remedy does not waive the right of
either party to resort to arbitration or reference. At Bank's
option, foreclosure under a deed of trust or mortgage may be
accomplished either by exercise of a power of sale under the deed
of trust or mortgage or by judicial foreclosure.
10.14 Notice of Claims; Claims Bar. THE COMPANY HEREBY
AGREES THAT IT SHALL GIVE PROMPT WRITTEN NOTICE OF ANY CLAIM OR CAUSE
OF ACTION IT BELIEVES IT HAS, OR MAY SEEK TO ASSERT OR ALLEGE, AGAINST
THE BANK, WHETHER SUCH CLAIM IS BASED IN LAW OR EQUITY, ARISING UNDER
OR RELATED TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, OR TO
THE LOANS (OR THE COLLATERAL THEREFOR), OR ANY ACT OR OMISSION TO ACT
BY THE AGENT OR ANY BANK WITH RESPECT HERETO OR THERETO, AND THAT IF
IT SHALL FAIL TO GIVE SUCH PROMPT NOTICE TO THE AGENT OR SUCH BANK
WITH REGARD TO ANY SUCH CLAIM OR CAUSE OF ACTION, IT SHALL BE DEEMED
TO HAVE WAIVED, AND SHALL BE FOREVER BARRED FROM BRINGING OR
ASSERTING, SUCH CLAIM OR CAUSE OF ACTION IN ANY SUIT, ACTION OR
PROCEEDING IN ANY COURT OR BEFORE ANY GOVERNMENTAL AGENCY.
10.15 Entire Agreement. This Agreement, together with the
other Loan Documents, embodies the entire Agreement and understanding
among the Company, on the one hand, and the Agent and the Banks, on
the other, and supersedes all prior or contemporaneous agreements and
understandings of such Persons, verbal or written, relating to the
subject matter hereof and thereof, except for any prior arrangements
made with respect to the payment by the Company of (or any
indemnification for) any fees, costs or expenses payable to or
incurred (or to be incurred) by or on behalf of the Agent or any of
the Banks. This Agreement amends, restates and supersedes in its
entirety the Existing Credit Agreement.
10.16 Interpretation. This Agreement is the result of
negotiations between, and has been reviewed by counsel to, the Company
and the Agent, and is the product of all parties hereto. Accordingly,
this Agreement and the other Loan Documents shall not be construed
against the Agent or the Banks merely because of their involvement in
the preparation of such documents and agreements.
10.17 Existing Approved Parcels. The Agent acknowledges
that, as of the date of this Agreement, each of the Parcels identified
on Exhibit F is an Approved Parcel having the Appraised Value set
forth therein.
10.18 Amendment and Restatement. This Agreement
supersedes, amends and restates in full the Existing Credit Agreement,
provided, however, that any Offshore Rate Loan (as defined in the
Existing Credit Agreement) which remains outstanding on and after the
Closing Date shall continue to be a valid Offshore Rate Loan governed
by the terms of the Existing Credit Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their
proper and duly authorized officers as of the day and year first above
written.
"Company"
BEDFORD PROPERTY INVESTORS, INC.,
a Maryland corporation
By /s/DONALD A. LORENZ
Donald A. Lorenz
Executive Vice President
Notice Address:
270 Lafayette Circle
Lafayette, California 94549
Attention: Don Lorenz
Telephone No.: (510) 283-8910
Telecopier No.: (510) 283-5697
"Bank"
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By /s/RUSS RUHNKE
Russ Ruhnke
Vice President
Notice Address:
50 California Street, 11th Floor
San Francisco, California 94111
Attention: Russ Ruhnke
Telephone No.: (415) 445-4143
Telecopier No.: (415) 445-4096
"Agent"
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as Agent
By /s/RUSS RUHNKE
Russ Ruhnke
Vice President
Lending Office/Notice Address:
50 California Street, 11th Floor
San Francisco, California 94111
Attention: Russ Ruhnke
Telephone No.: (415) 445-4143
Telecopier No.: (415) 445-4096
<PAGE>
EXHIBIT 10.13
AMENDED AND RESTATED PROMISSORY NOTE
$25,000,000 Los Angeles, California
Loan Nos.: 6 101 024 May 24, 1996
6 101 025
6 101 026
6 101 027
FOR VALUE RECEIVED, the undersigned, BEDFORD PROPERTY INVESTORS,
INC., a Maryland corporation ("Maker"), having an address at 270
Lafayette Circle, Lafayette, California 94549, PROMISES TO PAY TO THE
ORDER OF THE PRUDENTIAL INSURANCE COMPANY OF AMERICA ("Prudential"), a
New Jersey corporation authorized to do business in the State of
California (Prudential and its successors and assigns who become
holders of this Amended and Restated Promissory Note (the "Note") are
hereinafter collectively referred to as "Holder"), to Prudential at
Morgan Guaranty Trust Company, 23 Wall Street, New York, New York
10019, Account No. 050-54-493, referencing Loan Nos. 6 101 024,
6 101 025, 6 101 026 and 6 101 027, or at such other place as Holder,
may from time to time designate, the principal sum of Twenty-Five
Million and No/100 Dollars ($25,000,000.00), together with interest on
the amount advanced from the date funds are first disbursed hereunder
until paid at a rate per annum equal to the Interest Rate (as
hereinafter defined). For the first payment due under the Loan or any
additional advance hereunder, interest shall be calculated on the
basis of a 365-day year and the actual number of days in each month.
Thereafter, interest shall be calculated on the basis of a 360-day
year and 30-day month; except with respect to partial months in which
case interest shall be calculated on the basis of the actual number of
days in the year and the actual number of days elapsed in the period
during which it accrues, in accordance with the terms and conditions
set forth below.
1. Definitions. For the purpose of this Note, the following
terms shall have the meanings set forth below; certain other terms are
defined where they appear in this Note:
(a) "Deeds of Trust" means, collectively, that certain
(i) Deed of Trust, Security Agreement and Fixture Filing with
Assignment of Leases, Rents and Agreements (Dupont Industrial Center,
Ontario), dated as of March 20, 1996, executed by Maker as "Trustor"
to the benefit of Prudential as "Beneficiary" and recorded in the
Official Records of San Bernardino County, California, (ii) Deed of
Trust, Security Agreement and Fixture Filing with Assignment of
Leases, Rents and Agreements (Tustin Business Park), dated as of
March 20, 1996, executed by Maker as "Trustor" to the benefit of
Prudential as "Beneficiary" and recorded in the Official Records of
Orange County, California, (iii) Deed of Trust, Security Agreement and
Fixture Filing with Assignment of Leases, Rents and Agreements
(Woodlands II), dated as of March 20, 1996, executed by Maker as
"Trustor" to the benefit of Prudential as "Beneficiary" and recorded
in the Official Records of Salt Lake County, Utah, and (iv) Deed of
Trust, Security Agreement and Fixture Filing with Assignment of
Leases, Rents and Agreements (Milpitas Town Center), of even date
herewith, executed by Maker as "Trustor" to the benefit of Prudential
as "Beneficiary" and recorded in the Official Records of Santa Clara
County, California.
(b) "Discount Rate" means the interest rate, which when
compounded monthly, is equivalent to the Treasury Rate, when
compounded semi-annually.
(c) "Interest Rate" means a rate of interest per annum of
seven and 02/100 percent (7.02%).
(d) "Loan Documents" means this Note, the Deeds of Trust,
and all other documents, with the exception of each of the four
documents entitled "Hazardous Substances Remediation and
Indemnification Agreement" each of even date herewith (collectively,
the "Remediation and Indemnification Agreements") executed by Maker in
favor of Holder, now or hereafter governing, securing or executed in
connection with the indebtedness evidenced by this Note or any portion
of such indebtedness.
(e) "Loan" means the loan evidenced by this Note.
(f) "Maturity Date" means that date which is the fifteenth
(15th) day of March, 2003.
(g) "Prepayment Amount" means the amount of the Principal
Balance prepaid on a Prepayment Date.
(h) "Prepayment Date" means any date, prior to the
Maturity Date, upon which all or any portion of the Principal Balance
is prepaid.
(i) "Prepayment Premium" shall have the meaning set forth
in Paragraph 6(a) hereof.
(j) "Present Value of the Loan" means the present value,
discounting from a Prepayment Date at the Discount Rate, of all
payments of principal and interest which would have been payable on
the Prepayment Amount from the Prepayment Date through and including
the Maturity Date.
(k) "Principal Balance" means the outstanding principal
balance of this Note from time to time outstanding.
(l) "Secondary Interest Rate" means a rate of interest
equal to the greater of (i) eighteen percent (18%) per annum, or
(ii) a per annum rate equal to five percent (5%) over the prime rate
(for corporate loans at large United States money center commercial
banks) published in the Wall Street Journal on the first business day
of each month in which such default occurs or continues.
(m) "Treasury Rate" means the interest rate, conclusively
determined by Holder on the Prepayment Date equal to the semi-annual
yield on the Treasury Constant Maturity Series with maturity equal to
the remaining weighted average life of the Loan for the week prior to
the Prepayment Date, as reported in Federal Reserve Statistical
Release H.15 - Selected Interest Rates ("Release H.15"). The rate
will be determined by linear interpolation between the yields reported
in Release H.15, if necessary. In the event Release H.15 is no longer
published, Holder shall select a comparable publication to determine
the Treasury Rate.
2. Payments.
(a) Subject to the provisions of the first paragraph of
this Note with respect to the calculation of the first payment
hereunder, commencing on the fifteenth day of April, 1996 and
continuing on the fifteenth day of each calendar month thereafter
through and including the fifteenth day of March, 1998, monthly
payments of interest only at the Interest Rate shall be due and
payable. Commencing on the fifteenth day of April, 1998 and
continuing on the fifteenth day of each calendar month thereafter
through and including the fifteenth day of February, 2003 monthly
installments of principal and interest in the amount of $177,013.88
shall be due and payable with the entire unpaid Principal Balance plus
accrued interest and other amounts payable under the Loan Documents
being due and payable on the Maturity Date.
(b) Notwithstanding that this Note is dated May 24, 1996,
all payments due under this Note through and including the payment due
on May 15, 1996 have been made as and when due and, as of the date of
recordation of the Milpitas Deed of Trust, there is no delinquency or
default in payment of any principal or interest or any other monetary
amount due under this Note.
3. Treatment of Payments. All payments due under this Note or
the Loan Documents shall be paid by Maker in lawful money of the
United States of America on the date such payment is due. All such
payments shall be made without deduction for any present or future
taxes, levies, imposts, deductions, charges or withholdings (including
U.S., state or local income taxes), which amounts shall be paid by
Maker. Payments from Maker to Holder under this Note shall be applied
first to the payment of any expense reimbursements under the Loan
Documents, any Per Diem Late Charges or Late Charges (each as
hereinafter defined) and any Prepayment Premium due thereon, in such
order as Holder shall determine, then to accrued and unpaid interest,
with the remainder to be applied to the Principal Balance.
4. Per Diem Late Charges, Late Charges and Secondary Interest.
(a) If Maker fails timely to pay any sum due and payable
under this Note on or before the date due, a late charge equal to
Three Hundred Dollars ($300) per day (the "Per Diem Late Charge")
shall be assessed for each day that such payment is not paid from and
including the first day following the date such payment was due to and
including the date upon which such payment is made; provided, however,
that notwithstanding the foregoing, if such payment, together with all
accrued Per Diem Late Charges, is not made on or before the fifteenth
(15th) day following the date due, a late charge equal to four
cents ($.04) for each dollar ($1.00) of each such late payment (the
"Late Charge") shall be immediately due and payable. The Late Charge
shall be in lieu of the Per Diem Late Charges that shall have accrued
during the immediately preceding fifteen (15) day period. Maker
acknowledges and agrees that its failure to make timely payments will
result in Holder incurring additional expense in servicing the Loan,
and that it is extremely difficult and impractical to ascertain the
extent of such damages and that the Per Diem Late Charges and the Late
Charge represent fair and reasonable estimates, considering all of the
circumstances existing on the date of the execution of this Note, of
the costs that Holder will incur by reason of such late payment.
Holder agrees to comply with Section 2954.5 of the California Civil
Code with respect to the giving of notice prior to imposing a Per Diem
Late Charge or Late Charge, as such Section or any successor Section
may now or hereafter be in effect. Acceptance of any Per Diem Late
Charge or Late Charge shall not constitute a waiver of the default
with respect to the late payment, and shall not prevent Holder from
exercising any of the other rights or remedies available hereunder or
at law or in equity.
(b) Maker further acknowledges and agrees that during the
time that any payment of principal, interest or other amount due under
this Note shall be delinquent, Holder will incur additional costs and
expenses attributable to its loss of use of money due to and to the
adverse impact on Holder's ability to meet its other obligations and
avail itself of other opportunities. Maker agrees that it is
extremely difficult and impractical to ascertain the extent of such
expenses, and Maker therefore agrees that interest at the Secondary
Interest Rate shall accrue on any delinquent payments of principal,
interest or other amounts due under this Note or any Loan Document
from the date such payments were due and for so long as non-payment
continues, regardless of whether or not there has been an acceleration
of the maturity of the indebtedness evidenced by this Note.
5. Event of Default and Secondary Interest.
(a) The occurrence of an "Event of Default" under any Loan
Document shall constitute an Event of Default under this Note. Upon
the occurrence of an Event of Default (including without limitation
the failure of the Maker to observe the provisions of Paragraph 4.2 of
each of the Deeds of Trust), Holder, at its option may cause the
Principal Balance together with all unpaid accrued interest, any
Prepayment Premium (as hereinafter defined) and any other sums
evidenced or secured by this Note or any Loan Document, to be
immediately due and payable, without further presentment, demand,
protest or notice of any kind, by so notifying Maker in writing
("Acceleration Notice").
(b) Maker agrees that from and after the delivery of an
Acceleration Notice pursuant to Paragraph 5(a) hereof, interest at the
Secondary Interest Rate shall accrue on the Principal Balance and all
unpaid accrued interest and other sums evidenced or secured by this
Note or any Loan Documents.
6. Prepayment.
(a) If for any reason the Principal Balance or any portion
thereof is prepaid (whether by operation of law, acceleration or
otherwise) on a date prior to the Maturity Date, Maker shall pay to
Holder as liquidated damages, immediately upon demand, together with
the related principal prepayment and any unpaid accrued interest, a
prepayment charge (the "Prepayment Premium") equal to the greater of:
(1) the product of (x) one percent (1%) of the
Prepayment Amount multiplied by (y) a fraction,
the numerator of which is the number of full
months remaining until the Maturity Date as of
the Prepayment Date and the denominator of which
is the number of full months comprising the term
of the Loan; or
(2) the Present Value of the Loan less the sum of
(x) the Prepayment Amount, and (y) unpaid accrued
interest, if any.
(b) Maker shall have the right voluntarily to prepay all
or any portion of the Principal Balance, together with accrued
interest thereon, provided that Maker gives Holder not less than
thirty (30) days prior written notice of its intention to prepay, and
delivers to Holder, on or before the Prepayment Date, the Prepayment
Premium as calculated above, together with the Prepayment Amount and
all accrued interest and other sums due under the Loan Documents.
(c) Maker agrees that such Prepayment Premium represents
the reasonable estimate of Holder and Maker of a fair average
compensation for the loss that may be sustained by Holder due to the
payment of any of the Principal Balance prior to the Maturity Date;
and by initialing this provision in the space provided below, Maker
hereby declares that Holder's agreement to enter into this transaction
on the terms set forth in this Note and in the other Loan Documents
constitutes adequate and valuable consideration, given individual
weight by Maker for this agreement. Such Prepayment Premium shall be
paid without prejudice to the right of Holder to collect any other
amount provided to be paid hereunder. Holder shall not be obligated
to actually reinvest the Prepayment Amount in any Treasury obligations
as a condition to receiving the Prepayment Premium.
INITIALS OF MAKER: /s/DL
(d) Notwithstanding anything to the contrary contained in
this Section 6, Maker shall have a right to prepay in full the entire
outstanding balance due under this Note on or after February 15, 2003
without payment of the Prepayment Premium.
7. Security. This Note is secured, among other security, by
the Deeds of Trust and the other Loan Documents, which contain
provisions for the acceleration of the maturity of this Note upon the
occurrence of certain described events.
8. Holder's Rights; No Waiver by Holder. The rights, powers
and remedies of Holder under this Note shall be in addition to all
rights, powers and remedies given to Holder under the Loan Documents
and any other agreement or document securing or evidencing the
indebtedness evidenced hereby or by virtue of any statute or rule of
law, including, but not limited to, the California Uniform Commercial
Code and the Utah Uniform Commercial Code. All such rights, powers
and remedies shall be cumulative and may be exercised successively or
concurrently in Holder's sole discretion without impairing Holder's
security interest, rights or available remedies. Any forbearance,
failure or delay by Holder in exercising any right, power or remedy
shall not preclude further exercise thereof, and every right, power or
remedy of Holder shall continue in full force and effect until such
right, power or remedy is specifically waived in a writing executed by
Holder. Maker waives any right to require the Beneficiary (as defined
in each of the Deeds of Trust) to proceed against any person or to
pursue any remedy in Holder's power.
9. Maker's Waivers.
(a) Maker and any endorsers of this Note, and each of
them, hereby waive diligence, demand, presentment for payment, notice
of non-payment, protest and notice of protest, and specifically
consent to and waive notice of any renewals or extensions of this
Note, whether made to or in favor of Maker or any person or persons.
Maker and any endorsers of this Note expressly waive all right to the
benefit of any statute of limitations and any moratorium,
reinstatement, marshalling, forbearance, extension, redemption, or
appraisement now or hereafter provided by the Constitution or the laws
of the United States or of any state thereof, as a defense to any
demand against Maker or any such endorsers, to the fullest extent
permitted by law.
(b) Maker hereby waives any right to trial by jury with
respect to any action or proceeding brought by Maker, Holder or any
other person relating to (i) the indebtedness evidenced by this Note,
or (ii) the Loan Documents. Maker hereby agrees that this Note
constitutes a written consent to waiver of trial by jury pursuant to
the provisions of California Code of Civil Procedure Section 631 and
Maker does hereby constitute and appoint Holder its true and lawful
attorney-in-fact, which appointment is coupled with an interest, and
Maker does hereby authorize and empower Holder, in the name, place and
stead of Maker, to file this Note with the clerk or judge of any court
of competent jurisdiction as statutory written consent to waiver of
trial by jury.
(c) Maker hereby expressly waives any right it may have
under California Civil Code 2954.10 to prepay this Note, in whole or
in part, without prepayment charge, upon acceleration of the Maturity
Date of this Note, and agrees that if for any reason, a prepayment of
any or all of this Note is made, whether voluntarily or upon or
following any acceleration of the Maturity Date of this Note by the
Holder, then Maker shall pay, concurrently therewith, a Prepayment
Premium calculated pursuant to Paragraph 6 hereof. By initialling
this provision in the space provided below, Maker hereby declares that
Holder's agreement to make the Loan at the Interest Rate and for the
term set forth in this Note constitutes adequate consideration, given
individual weight by Maker, for this waiver and agreement.
INITIALS OF MAKER: /s/DL
10. Transfers by Holder. This Note or any interest in this Note
and the Loan Documents may be hypothecated, transferred or assigned by
Holder without the prior consent of Maker.
11. Amendment. This Note may be amended or modified only by an
instrument in writing which by its express terms refers to this Note
and which is duly executed by the party sought to be bound thereby.
12. Successors and Assigns. This Note shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, personal representatives, successors and
permitted assigns.
13. Governing Law. This Note shall be governed by and construed
in accordance with the laws of the State of California.
14. Authority. Each individual executing this Note on behalf of
a partnership, corporation or other entity states that he or she is
duly authorized to execute and deliver this Note on behalf of said
entity, in accordance with duly and regularly adopted existing
authority and, if necessary, resolution of the governing body of such
organization, and that this Note is binding upon said entity in
accordance with its terms.
15. Time. Time is of the essence with respect to each and every
term and provision of this Note.
16. Usury. Notwithstanding any provision herein, the total
liability for payments in the nature of interest shall not exceed the
applicable limits imposed by any applicable state or federal interest
rate laws. If any payments in the nature of interest, additional
interest, and other charges made hereunder are held to be in excess of
the applicable limits imposed by any applicable state or federal laws,
it is agreed that any such amount held to be in excess shall be
considered payment of principal and the indebtedness evidenced thereby
shall be reduced by such amount in the inverse order of maturity so
that the total liability for payments in the nature of interest,
additional interest and other charges shall not exceed the applicable
limits imposed by any applicable state or federal interest rate laws
in compliance with the desires of Holder and Maker.
17. Notices. All notices, consents and other communications
required or permitted by this Note shall be in writing and shall be
given in the manner set forth in the Deeds of Trust.
18. Attorneys' Fees. The undersigned agrees to pay all costs,
including reasonable attorneys' fees and expenses, incurred by Holder
in enforcing payment or collection of this Note or the terms of any
Loan Document, whether or not suit is filed.
19. Limitation on Personal Liabilities.
(a) Except as expressly set forth in paragraph 19(b)
below, the recourse of Holder with respect to the obligations
evidenced by this Note shall be solely to the Property (which for the
purposes of this Note shall mean, collectively, the properties defined
as the "Property" in each of the Deeds of Trust).
(b) Notwithstanding anything to the contrary contained in
this Note or in any Loan Document, nothing shall be deemed in any way
to impair, limit or prejudice the rights of Holder:
(i) in foreclosure proceedings or in any ancil-
lary proceedings brought to facilitate Hol-
der's foreclosure on the Property or any
portion thereof;
(ii) to recover from Maker damages or costs
(including without limitation reasonable
attorneys' fees) incurred by Holder as a
result of waste to the Property by Maker;
(iii) to recover from Maker any condemnation or
insurance proceeds attributable to the
Property which were not paid to Holder or
used to restore the Property in accordance
with the terms of the Deeds of Trust;
(iv) to recover from Maker any rents, profits,
security deposits, advances, rebates,
prepaid rents or other similar sums
attributable to the Property collected by
or for Maker following an Event of Default
and not properly applied to the reasonable
fixed and operating expenses of the
Property, including payments of the Loan;
(v) to pursue the personal liability of Maker
under the provisions of paragraph 9.26 of
each of the Deeds of Trust, including any
indemnification provisions under said
paragraph;
(vi) to exercise any other specific rights or
remedies afforded Holder under any
provisions of the Loan Documents or at law
or in equity (or to recover under any
guarantee given in connection with the
Loan);
(vii) to recover from Maker the amount of any
unpaid taxes, assessments, and/or utility
charges affecting the Property and to
collect from Maker any sums expended by
Holder in fulfilling the obligations of
Maker, as lessor, under any leases
affecting the Property, which obligations
accrued prior to Holder's (or Holder's
nominee's) acquisition of title to the
Property; provided, however, that the cost
of any obligations of Maker as lessor under
any such leases which have been expressly
approved by Holder shall not be a recourse
liability of Maker;
(viii) to pursue any personal liability of Maker
under the Remediation and Indemnification
Agreements;
(ix) to recover from Maker damages or costs
incurred by Holder as a result of any non-
willful misrepresentation by Maker in
connection with the Property, the Loan
Documents or the Loan Applications, or any
other aspect of the Loan; and
(x) to recover from Maker damages or costs
incurred by Holder as a result of Maker's
failure to obtain and maintain in effect
all the insurance required in the Loan
Documents.
(c) The agreement contained in this Paragraph 19 to limit
the personal liability of Maker shall become null and void and of no
further force or effect in the event:
(i) that the Property or any part thereof or
any interest therein shall be further
encumbered by a voluntary lien securing any
obligation upon which Maker shall be
personally liable for repayment;
(ii) of any breach or violation of paragraph 4.2
of any of the Deeds of Trust; or
(iii) of any intentional fraud or willful and
material misrepresentation by Maker in
connection with the Property, the Loan
Documents or the Loan Applications.
(d) The agreement contained in this Section 19 to limit
the personal liability of Maker shall become null and void and of no
further force or effect in the event of the execution, modification,
amendment and/or termination of any leases for the occupancy of space
in any portion of the Property which remains encumbered by any of the
Deeds of Trust, without Holder's prior written approval if such
approval is required under the terms of the Loan Documents (such
leases being hereinafter referred to as "Unapproved Leases"), such
that the net rentable area covered by Unapproved Leases exceeds twenty
percent (20%) of the total net rentable area of all of the Property
which remains encumbered by any of the Deeds of Trust.
20. Amendment and Restatement. This Note amends and restates,
in its entirety, that certain Promissory Note made by Maker to the
order of Holder in the original principal amount of $20,200,000, dated
March 20, 1996. This Note is executed as of the date hereinabove
stated, and relates back to, and is made as of, March 20, 1996.
IN WITNESS WHEREOF, Maker has caused this Promissory Note to be
executed and delivered effective as of the date first written above.
"Maker":
BEDFORD PROPERTY INVESTORS, INC.,
a Maryland corporation
By: /s/DONALD A. LORENZ
Donald A. Lorenz, Executive Vice President
and Chief Financial Officer
[Printed Name and Title]
