UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
For the transition period from __________________ to __________________
Commission file number: 1-13130 (Liberty Property Trust)
1-13132 (Liberty Property Limited Partnership)
LIBERTY PROPERTY TRUST
LIBERTY PROPERTY LIMITED PARTNERSHIP
(Exact name of registrants as specified in their governing documents)
MARYLAND (Liberty Property Trust) 23-7768996
PENNSYLVANIA (Liberty Property Limited Partnership) 23-2766549
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
65 Valley Stream Parkway, Suite 100, Malvern, Pennsylvania 19355
(Address of Principal Executive Offices) (Zip Code)
Registrants' Telephone Number, Including Area Code (610)648-1700
Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding twelve (12) months (or for such shorter
period that the registrants were required to file such reports) and (2)
have been subject to such filing requirements for the past ninety (90)
days. YES X NO
On May 5, 2000, 67,283,326 Common Shares of Beneficial Interest, par
value $.001 per share, of Liberty Property Trust were outstanding.
LIBERTY PROPERTY TRUST/LIBERTY PROPERTY LIMITED PARTNERSHIP
FORM 10-Q FOR THE PERIOD ENDED MARCH 31,2000
INDEX
- -----
Part I. Financial Information
- -------------------------------
Item 1. Financial Statements (unaudited) Page
----
Consolidated balance sheets of Liberty Property
Trust at March 31, 2000 and December 31, 1999. 4
Consolidated statements of operations of Liberty
Property Trust for the three months ended March 31,
2000 and March 31, 1999. 5
Consolidated statements of cash flows of Liberty
Property Trust for the three months ended March 31,
2000 and March 31, 1999. 6
Notes to consolidated financial statements for
Liberty Property Trust. 7
Consolidated balance sheets of Liberty Property
Limited Partnership at March 31, 2000 and
December 31, 1999. 10
Consolidated statements of operations of Liberty
Property Limited Partnership for the three months
ended March 31, 2000 and March 31, 1999. 11
Consolidated statements of cash flows of Liberty
Property Limited Partnership for the three months
ended March 31, 2000 and March 31, 1999. 12
Notes to consolidated financial statements for
Liberty Property Limited Partnership. 13
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 15
Item 3. Quantitative and Qualitative Disclosures About Market
Risk 21
Part II. Other Information
- ---------------------------
Signatures 24
Exhibit Index 25
- -2-
<PAGE>
- -----------------------------
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Certain information included in
this Quarterly Report on Form 10-Q contains statements that are or will
be forward-looking, such as statements relating to business development
and development activities, acquisitions, dispositions, future capital
expenditures, financing sources and availability, and the effects of
regulation (including environmental regulation) and competition. Such
forward-looking information involves important risks and uncertainties
that could significantly affect anticipated results in the future and,
accordingly, such results may differ from those expressed in any
forward-looking statements made by, or on behalf of, Liberty Property
Trust and Liberty Property Limited Partnership (together, the "Company").
These risks and uncertainties include, but are not limited to,
uncertainties affecting real estate businesses generally (such as entry
into new leases, renewals of leases and dependence on tenants' business
operations), risks relating to construction and development activities,
acquisitions, dispositions, possible environmental liabilities, risks
relating to leverage and debt service (including availability of
financing terms acceptable to the Company and sensitivity of the
Company's operations to fluctuations in interest rates), the potential
for the use of borrowings to make distributions necessary to qualify as a
REIT, dependence on the primary markets in which the Company's properties
are located, the existence of complex regulations relating to status as a
REIT and the adverse consequences of the failure to qualify as a REIT,
the potential adverse impact of market interest rates on the market price
for the Company's securities.
- -3-
<PAGE>
CONSOLIDATED BALANCE SHEETS OF LIBERTY PROPERTY TRUST
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
MARCH 31, 2000 DECEMBER 31, 1999
-------------- -----------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Real estate:
Land and land improvements $ 427,822 $ 411,678
Buildings and improvements 2,671,773 2,593,002
Less accumulated depreciation (283,695) (270,174)
---------- ----------
Operating real estate 2,815,900 2,734,506
Development in progress 113,330 138,870
Land held for development 123,381 111,201
---------- ----------
Net real estate 3,052,611 2,984,577
Cash and cash equivalents 3,184 9,064
Accounts receivable 15,783 13,388
Deferred financing and leasing costs,
net of accumulated amortization
(2000, $60,744; 1999, $58,033) 47,059 46,941
Prepaid expenses and other assets 64,195 64,163
---------- ----------
Total assets $3,182,832 $3,118,133
========== ==========
LIABILITIES
Mortgage loans $ 372,642 $ 374,825
Unsecured notes 985,000 985,000
Credit facility 133,000 47,000
Convertible debentures 74,466 84,413
Accounts payable 17,709 15,599
Accrued interest 17,013 22,422
Dividend payable 39,235 39,198
Other liabilities 60,889 67,558
---------- ----------
Total liabilities 1,699,954 1,636,015
Minority interest 187,285 187,511
SHAREHOLDERS' EQUITY
8.80% Series A cumulative redeemable preferred
shares, $.001 par value, 5,000,000 shares
authorized, issued and outstanding as of
March 31, 2000 and December 31, 1999 120,814 120,814
Common shares of beneficial interest, $.001
par value, 191,200,000 shares authorized,
67,162,787 (includes 59,100 in treasury) and 67,030,199
(includes 59,100 in treasury) shares issued and
outstanding as of March 31, 2000 and December 31, 1999,
respectively 67 67
Additional paid-in capital 1,199,831 1,196,736
Unearned compensation (2,110) (743)
Distributions in excess of net income (21,682) (20,940)
Common shares in treasury, at cost, 59,100 shares as of
March 31, 2000 and December 31, 1999 (1,327) (1,327)
---------- -----------
Total shareholders' equity 1,295,593 1,294,607
---------- -----------
Total liabilities and shareholders' equity $3,182,832 $ 3,118,133
========== ===========
</TABLE>
See accompanying notes.
- -4-
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS OF LIBERTY PROPERTY TRUST
(UNAUDITED AND IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE THREE
MONTHS ENDED MONTHS ENDED
MARCH 31,2000 MARCH 31, 1999
------------- --------------
<S> <C> <C>
REVENUE
Rental $ 91,972 $ 81,468
Operating expense reimbursement 35,771 29,523
Interest and other 1,216 1,229
--------- ---------
Total revenue 128,959 112,220
--------- ---------
OPERATING EXPENSES
Rental property expenses 24,622 21,193
Real estate taxes 12,524 9,777
Interest expense 25,650 23,753
General and administrative 4,445 3,985
Depreciation and amortization 22,648 20,143
--------- ---------
Total operating expenses 89,889 78,851
--------- ---------
Income before property dispositions
extraordinary item and minority interest 39,070 33,369
Gain on property dispositions 4,353 1,269
--------- ---------
Income before extraordinary item and
minority interest 43,423 34,638
Extraordinary item-loss on extinquishment
of debt 1,875 -
--------- ---------
Income before minority interest 41,548 34,638
Minority interest 4,679 2,210
--------- ---------
Net income 36,869 32,428
Preferred distributions 2,750 2,750
--------- ---------
Income available to common shareholders $ 34,119 $ 29,678
========= =========
Earnings per share
Basic:
Income before extraordinary item $ 0.54 $ 0.45
Extraordinary item (0.03) -
--------- ---------
Income available to common shareholders $ 0.51 $ 0.45
========= =========
Diluted:
Income before extraordinary item $ 0.53 $ 0.45
Extraordinary item (0.02) -
--------- ---------
Income available to common shareholders $ 0.51 $ 0.45
========= =========
Distributions declared per common share $ 0.52 $ 0.45
========= =========
Weighted average number of common shares
Outstanding
Basic 67,025 66,018
Diluted 67,275 66,177
========= =========
</TABLE>
See accompanying notes.
- -5-
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS OF LIBERTY PROPERTY TRUST
(UNAUDITED AND IN THOUSANDS)
THREE THREE
MONTHS ENDED MONTHS ENDED
MARCH 31, 2000 MARCH 31, 1999
-------------- --------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 36,869 $ 32,428
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 22,648 20,143
Amortization of deferred financing costs 880 1,152
Minority interest in net income 4,679 2,210
Gain on sale (4,353) (1,269)
Noncash compensation 1,182 1,309
Changes in operating assets and liabilities:
Accounts receivable (2,395) 5,512
Prepaid expenses and other assets (367) 3,590
Accounts payable 2,110 5,435
Accrued interest (5,409) (9,572)
Other liabilities (6,669) (7,930)
---------- ---------
Net cash provided by operating activities 49,175 53,008
---------- ---------
INVESTING ACTIVITIES
Investment in properties (42,018) (32,921)
Proceeds from disposition of properties 30,743 12,920
Investment in development in progress (47,464) (50,992)
Investment in land held for development (24,937) (5,654)
Increase in deferred leasing costs (3,479) (3,288)
---------- --------
Net cash used in investing activities (87,155) (79,935)
---------- --------
FINANCING ACTIVITIES
Net proceeds from issuance of common shares 211 284
Proceeds from issuance of preferred units - -
Purchase of treasury shares - -
Retirement of convertible debentures (9,750) -
Proceeds from issuance of unsecured notes - 135,000
Repayment of unsecured notes - -
Repayments of mortgage loans (2,183) (5,538)
Proceeds from credit facility 86,000 36,000
Repayments on credit facility - (103,000)
Decrease (Increase) in deferred financing costs 162 (808)
Distributions paid on common shares (34,825) (29,540)
Distributions paid on preferred shares (2,750) (2,750)
Distributions paid on units (4,765) (2,386)
---------- ---------
Net cash provided by financing activities 32,100 27,262
(Decrease) increase in cash and cash equivalents (5,880) 335
Cash and cash equivalents at beginning of period 9,064 14,391
---------- ---------
Cash and cash equivalents at end of period $ 3,184 $ 14,726
========== =========
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS
Write-off of fully depreciated property and
deferred costs $ 7,062 $ -
Conversion of convertible debentures 194 4,674
========== =========
</TABLE>
See accompanying notes.
- -6-
<PAGE>
LIBERTY PROPERTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2000
NOTE 1 - BASIS OF PRESENTATION
- ------------------------------
The accompanying unaudited consolidated financial statements of Liberty
Property Trust (the "Trust") and its subsidiaries, including Liberty
Property Limited Partnership (the "Operating Partnership") (the Trust,
Operating Partnership and their respective subsidiaries referred to
collectively as the "Company"), have been prepared in accordance with
accounting principles generally accepted in the United States ("USGAAP")
for interim financial information and with the instructions to Form 10-Q
and Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by USGAAP for complete financial
statements and should be read in conjunction with the consolidated
financial statements and notes thereto included in the Annual Report on
Form 10-K of the Trust and the Operating Partnership for the year ended
December 31, 1999. In the opinion of management, all adjustments
(consisting solely of normal recurring adjustments) necessary for a fair
presentation of the financial statements for these interim periods have
been included. The results of interim periods are not necessarily
indicative of the results to be obtained for a full fiscal year. Certain
amounts from prior periods have been restated to conform to current
period presentation.
The following table sets forth the computation of basic and diluted
income per common share for the three-month period ended March 31, 2000
and 1999:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE THREE MONTHS
ENDED MARCH 31, 2000 ENDED MARCH 31, 1999
------------------------------------- -------------------------------------
INCOME SHARES PER SHARE INCOME SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT (NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- --------- ----------- ------------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
Net income $ 36,869 $ 32,428
Less: Preferred
distributions 2,750 2,750
------- --------
Basic income per
common share
Income available
to common share-
holders 34,119 67,025 $0.51 29,678 66,018 $ 0.45
======
Effect of dilutive
securities
Options - 250 - 159
-------- ------ -------- -------
Diluted income per
common share
Income available
to common share-
holders and assumed
conversions $ 34,119 67,275 $0.51 $ 29,678 66,177 $ 0.45
======== ====== ===== ======== ======= ======
</TABLE>
Diluted income per common share includes the weighted average common
shares and the dilutive effect of the outstanding options.
- -7-
<PAGE>
NOTE 2 - ORGANIZATION
- ---------------------
Liberty Property Trust (the "Trust") is a self-administered and self-
managed Maryland real estate investment trust (a "REIT"). Substantially
all of the Trust's assets are owned directly or indirectly, and
substantially all of the Trust's operations are conducted directly or
indirectly, by its subsidiary, Liberty Property Limited Partnership, a
Pennsylvania limited partnership (the "Operating Partnership" and,
together with the Trust, the "Company"). The Trust is the sole general
partner and also a limited partner of the Operating Partnership, with a
combined common equity interest in the Operating Partnership of 93.2% at
March 31, 2000. The Company provides leasing, property management,
development, acquisition, construction management and design management
for a portfolio of industrial and office properties which are located
principally within the Southeastern, Mid-Atlantic and Midwestern United
States.
NOTE 3 - SEGMENT INFORMATION
- ----------------------------
The Company reviews performance of the portfolio on a geographical
basis, as such, the following regions are considered the Company's
reportable segments: Southeastern Pennsylvania; New Jersey; Lehigh
Valley, Pennsylvania; Virginia; the Carolinas; Jacksonville, Florida;
Detroit, Michigan; and all others combined (including Maryland; Tampa,
Florida; South Florida; Minneapolis, Minnesota; and the United Kingdom).
The Company's reportable segments are distinct business units which are
each managed separately in order to concentrate market knowledge within
a geographical area. Within these reportable segments, the Company
derives its revenues from its two product types: industrial properties
and office properties.
The Company evaluates performance of the reportable segments based on
property-level net operating income, which is calculated as rental
revenue and operating expense reimbursement less rental property
expenses and real estate taxes. The accounting policies of the
reportable segments are the same as those for the Company on a
consolidated basis. The operating information by segment is as follows
(in thousands):
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31, 2000
- ------------------------------------------------------------------------------------------------------------------------
SE New Lehigh The
Pennsyl. Jersey Valley Virginia Carolinas Jacksonville Michigan All Others Total
-------- -------- -------- -------- --------- ------------ -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Real-estate
related revenues $35,374 $10,555 $12,316 $10,752 $9,621 $10,339 $13,958 $24,828 $127,743
Rental property
expenses and
real estate taxes 10,584 3,290 3,202 2,567 2,758 2,364 4,895 7,486 37,146
------- ------- ------- ------- ------ ------- ------- ------- --------
Property-level net
operating income 24,790 7,265 9,114 8,185 6,863 7,975 9,063 17,342 90,597
Other income/expenses, net 51,527
--------
Income before property dispositions, extraordinary item and minority interest 39,070
Gain on property dispositions 4,353
Extraordinary item-loss on extinguishment of debt 1,875
Minority interest 4,679
Preferred distributions 2,750
--------
Income available to common shareholders $ 34,119
========
</TABLE>
- -8-
<PAGE>
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31, 1999
- ------------------------------------------------------------------------------------------------------------------------
SE New Lehigh The
Pennsyl. Jersey Valley Virginia Carolinas Jacksonville Michigan All Others Total
-------- -------- -------- -------- --------- ------------ -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Real-estate
related revenues $26,808 $11,655 $10,739 $ 9,978 $ 9,510 $ 9,881 $11,686 $20,734 $110,991
Rental property
expenses and
real estate taxes 7,850 3,472 2,377 2,264 2,724 2,296 3,737 6,250 30,970
-------- -------- -------- -------- -------- -------- -------- -------- --------
Property-level net
operating income 18,958 8,183 8,362 7,714 6,786 7,585 7,949 14,484 80,021
Other income/expenses, net 46,652
--------
Income before property dispositions, extraordinary item and minority interest 33,369
Gain on property dispositions 1,269
Minority interest 2,210
Preferred distributions 2,750
--------
Income available to common shareholders $29,678
========
</TABLE>
NOTE 4 - SUBSEQUENT EVENTS
- --------------------------------
In April 2000, the Company obtained a new, three-year, $450 million
unsecured revolving credit facility replacing a $325 million unsecured
revolving credit facility due May 2000 and a $90 million term loan due
January 2001.
The interest rate on borrowings under the new credit facility fluctuates
based upon the Company's ratings from Moody's Investors Services, Inc.
("Moody's") and Standard & Poor's Ratings Group ("Standard & Poor's").
Moody's and Standard & Poor's currently assign senior debt ratings to
the Company of Baa3 and BBB-, respectively. At these ratings, the
interest rate for borrowings under the new credit facility is 115 basis
points over LIBOR.
In April 2000, the Company completed a private placement of 800,000
Series C Cumulative Redeemable Preferred Units of the Operating
Partnership. The Series C Preferred Units are payable at the rate of
9.125% per annum of the $25 liquidation preference, and are redeemable
at the option of the Company at any time on or after April 18, 2005 at
$25 per share.
- -9-
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS OF LIBERTY PROPERTY LIMITED PARTNERSHIP
(IN THOUSANDS)
MARCH 31, 2000 DECEMBER 31, 1999
-------------- -----------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Real estate:
Land and land improvements $ 427,822 $ 411,678
Buildings and improvements 2,671,773 2,593,002
Less accumulated depreciation (283,695) (270,174)
---------- ----------
Operating real estate 2,815,900 2,734,506
Development in progress 113,330 138,870
Land held for development 123,381 111,201
---------- ----------
Net real estate 3,052,611 2,984,577
Cash and cash equivalents 3,184 9,064
Accounts receivable 15,783 13,388
Deferred financing and leasing costs,
net of accumulated amortization
(2000, $60,744; 1999, $58,033) 47,059 46,941
Prepaid expenses and other assets 64,195 64,163
---------- ----------
Total assets $3,182,832 $3,118,133
========== ==========
LIABILITIES
Mortgage loans $ 372,642 $ 374,825
Unsecured notes 985,000 985,000
Credit facility 133,000 47,000
Convertible debentures 74,466 84,413
Accounts payable 17,709 15,599
Accrued interest 17,013 22,422
Dividend payable 39,235 39,198
Other liabilities 60,889 67,558
---------- ----------
Total liabilities 1,699,954 1,636,015
OWNERS' EQUITY
General partner's equity-preferred units 120,814 120,814
-common units 1,174,779 1,173,793
Limited partners' equity 187,285 187,511
---------- ----------
Total owners' equity 1,482,878 1,482,118
---------- ----------
Total liabilities and owners' equity $3,182,832 $3,118,133
========== ==========
</TABLE>
See accompanying notes.
- -10-
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS OF LIBERTY PROPERTY LIMITED PARTNERSHIP
(UNAUDITED AND IN THOUSANDS)
THREE THREE
MONTHS ENDED MONTHS ENDED
MARCH 31, 2000 MARCH 31, 1999
-------------- --------------
<S> <C> <C>
REVENUE
Rental $ 91,972 $ 81,468
Operating expense reimbursement 35,771 29,523
Interest and other 1,216 1,229
--------- ---------
Total revenue 128,959 112,220
--------- ---------
OPERATING EXPENSES
Rental property expenses 24,622 21,193
Real estate taxes 12,524 9,777
Interest expense 25,650 23,753
General and administrative 4,445 3,985
Depreciation and amortization 22,648 20,143
--------- ---------
Total operating expenses 89,889 78,851
--------- ---------
Income before property dispositions
and extraordinary item 39,070 33,369
Gain on property dispositions 4,353 1,269
--------- ---------
Income before extraordinary item 43,423 34,638
Extraordinary item-loss on extinguishment
of debt 1,875 -
--------- ---------
Net income $ 41,548 $ 34,638
========= =========
Net income allocated to general partner $ 36,869 $ 32,428
========= =========
Net income allocated to limited partners $ 4,679 $ 2,210
========= =========
</TABLE>
See accompanying notes.
- -11-
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS OF LIBERTY PROPERTY LIMITED PARTNERSHIP
(UNAUDITED AND IN THOUSANDS)
THREE THREE
MONTHS ENDED MONTHS ENDED
MARCH 31, 2000 MARCH 31, 1999
-------------- --------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 41,548 $ 34,638
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 22,648 20,143
Amortization of deferred financing costs 880 1,152
Gain on sale (4,353) (1,269)
Noncash compensation 1,182 1,309
Changes in operating assets and liabilities:
Accounts receivable (2,395) 5,512
Prepaid expenses and other assets (367) 3,590
Accounts payable 2,110 5,435
Accrued interest (5,409) (9,572)
Other liabilities (6,669) (7,930)
--------- ---------
Net cash provided by operating activities 49,175 53,008
--------- ---------
INVESTING ACTIVITIES
Investment in properties (42,018) (32,921)
Proceeds from disposition of properties 30,743 12,920
Investment in development in progress (47,464) (50,992)
Investment in land held for development (24,937) (5,654)
Increase in deferred leasing costs (3,479) (3,288)
--------- ---------
Net cash used in investing activities (87,155) (79,935)
--------- ---------
FINANCING ACTIVITIES
Retirement of Convertible Debentures (9,750) -
Proceeds from issuance of unsecured notes - 135,000
Repayments of unsecured notes - -
Repayments of mortgage loans (2,183) (5,538)
Proceeds from credit facility 86,000 36,000
Repayments on credit facility - (103,000)
Decrease (Increase) in deferred financing costs 162 (808)
Capital contributions 211 284
Distributions to partners (42,340) (34,676)
--------- --------
Net cash provided by financing activities 32,100 27,262
(Decrease) increase in cash and cash equivalents (5,880) 335
Cash and cash equivalents at beginning of period 9,064 14,391
--------- ----------
Cash and cash equivalents at end of period $ 3,184 $ 14,726
========= ==========
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS
Write-off of fully depreciated property and
deferred costs $ 7,062 $ -
Conversion of convertible debentures 194 4,674
========== =========
</TABLE>
See accompanying notes.
- -12-
<PAGE>
LIBERTY PROPERTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2000
NOTE 1 - BASIS OF PRESENTATION
- ------------------------------
The accompanying unaudited consolidated financial statements of Liberty
Property Limited Partnership (the "Operating Partnership") and its direct
and indirect subsidiaries have been prepared in accordance with
accounting principles generally accepted in the United States ("USGAAP")
for interim financial information and with the instructions to Form 10-Q
and Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by USGAAP for complete financial
statements and should be read in conjunction with the consolidated
financial statements and notes thereto included in the Annual Report on
Form 10-K of the Trust and the Operating Partnership for the year ended
December 31, 1999. In the opinion of management, all adjustments
(consisting solely of normal recurring adjustments) necessary for a fair
presentation of the financial statements for these interim periods have
been included. The results of interim periods are not necessarily
indicative of the results to be obtained for a full fiscal year. Certain
amounts from prior periods have been restated to conform to current
period presentation.
NOTE 2 - ORGANIZATION
- ---------------------
Liberty Property Trust (the "Trust") is a self-administered and self-
managed Maryland real estate investment trust (a "REIT"). Substantially
all of the Trust's assets are owned directly or indirectly, and
substantially all of the Trust's operations are conducted directly or
indirectly, by its subsidiary, Liberty Property Limited Partnership, a
Pennsylvania limited partnership (the "Operating Partnership" and,
together with the Trust and its consolidated subsidiaries, the
"Company"). The Trust is the sole general partner and also a limited
partner of the Operating Partnership, with a combined common equity
interest in the Operating Partnership of 93.2% at March 31, 2000. The
Company provides leasing, property management, acquisition, development,
construction management and design management for a portfolio of
industrial and office properties which are located principally within the
Southeastern, Mid-Atlantic and Midwestern United States.
NOTE 3 - SEGMENT INFORMATION
- ----------------------------
The Company reviews performance of the portfolio on a geographical
basis, as such, the following regions are considered the Company's
reportable segments: Southeastern Pennsylvania; New Jersey; Lehigh
Valley, Pennsylvania; Virginia; the Carolinas; Jacksonville, Florida;
Detroit, Michigan; and all others combined (including Maryland, Tampa,
Florida; South Florida; Minneapolis, Minnesota; and the United Kingdom).
The Company's reportable segments are distinct business units which are
each managed separately in order to concentrate market knowledge within
a geographical area. Within these reportable segments, the Company
derives its revenues from its two product types: industrial and office
properties.
- -13-
<PAGE>
The Company evaluates performance of the reportable segments based on
property-level net operating income, which is calculated as rental
revenue and operating expense reimbursement less rental property
expenses and real estate taxes. The accounting policies of the
reportable segments are the same as those for the Company on a
consolidated basis. The operating information by segment is as follows
(in thousands):
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31, 2000
- -----------------------------------------------------------------------------------------------------
SE New Lehigh The
Pennsyl. Jersey Valley Virginia Carolinas Jacksonville Michigan All Others Total
-------- -------- -------- -------- --------- ------------ -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Real-estate
related revenues $ 35,374 $ 10,555 $ 12,316 $ 10,752 $ 9,621 $ 10,339 $ 13,958 $ 24,828 $127,743
Rental property
expenses and
real estate taxes 10,584 3,290 3,202 2,567 2,758 2,364 4,895 7,486 37,146
-------- -------- -------- -------- ------- -------- -------- -------- --------
Property-level net
operating income 24,790 7,265 9,114 8,185 6,863 7,975 9,063 17,342 90,597
Other income/expenses, net 51,527
--------
Income before property dispositions and extraordinary item 39,070
Gain on property dispositions 4,353
Extraordinary item-loss on extinguishment of debt 1,875
--------
Net income $ 41,548
========
Net income allocated to general partners $ 36,869
========
Net income allocated to limited partners $ 4,679
========
</TABLE>
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31, 1999
- ------------------------------------------------------------------------------------------------------
SE New Lehigh The
Pennsyl. Jersey Valley Virginia Carolinas Jacksonville Michigan All Others Total
-------- -------- -------- -------- --------- ------------ -------- ---------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Real-estate
related revenues $ 26,808 $ 11,655 $ 10,739 $ 9,978 $ 9,510 $ 9,881 $ 11,686 $ 20,734 $110,991
Rental property
expenses and
real estate taxes 7,850 3,472 2,377 2,264 2,724 2,296 3,737 6,250 30,970
-------- -------- -------- -------- -------- -------- -------- -------- --------
Property-level net
operating income 18,958 8,183 8,362 7,714 6,786 7,585 7,949 14,484 80,021
Other income/expenses, net 46,652
--------
Income before property dispositions and extraordinary item 33,369
Gain on property dispositions 1,269
Extraordinary item-loss on extinguishment of debt -
--------
Net income $ 34,638
========
Net income allocated to general partner $ 32,428
========
Net income allocated to limited partners $ 2,210
========
NOTE 4 - SUBSEQUENT EVENTS
- --------------------------------
In April 2000, the Company obtained a new, three-year, $450 million
unsecured revolving credit facility replacing a $325 million unsecured
revolving credit facility due May 2000 and a $90 million term loan due
January 2001.
The interest rate on borrowings under the new credit facility fluctuates
based upon the Company's ratings from Moody's Investors Services, Inc.
- -14-
<PAGE>
("Moody's") and Standard & Poor's Ratings Group ("Standard & Poor's").
Moody's and Standard & Poor's currently assign senior debt ratings to
the Company of Baa3 and BBB-, respectively. At these ratings, the
interest rate for borrowings under the new credit facility is 115 basis
points over LIBOR.
In April 2000, the Company completed a private placement of 800,000
Series C Cumulative Redeemable Preferred Units of the Operating
Partnership. The Series C Preferred Units are payable at the rate of
9.125% per annum of the $25 liquidation preference, and are redeemable
at the option of the Company at any time on or after April 18, 2005 at
$25 per share.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
- -----------------------------------------------------------------------
OVERVIEW
The following discussion and analysis is based on a consolidated view of
the Company. Geographic segment data for the three-month periods ended
March 31, 2000 and 1999 is included in Note 3 of the Notes to the Liberty
Property Trust and Liberty Property Limited Partnership Financial
Statements, respectively.
In 2000, the Company has continued to pursue development and acquisition
opportunities and has continued to focus on increasing the cash flow from
its properties in operation by increasing property occupancy and
increasing rental rates.
The composition of the Company's properties in operation as of March 31,
2000 and 1999 is as follows (in thousands):
</TABLE>
<TABLE>
<CAPTION>
TOTAL PERCENT OF TOTAL
SQUARE FEET SQUARE FEET PERCENT OCCUPIED
---------------- ---------------- ----------------
MARCH 31, MARCH 31, MARCH 31,
TYPE 2000 1999 2000 1999 2000 1999
- ------------------------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Industrial - Distribution 19,612 19,244 41.6% 42.7% 94.9% 95.7%
Industrial - Flex 12,759 13,213 27.1% 29.4% 93.5% 93.8%
Office 14,733 12,561 31.3% 27.9% 94.9% 94.2%
------- ------- ------ ------ ------ ------
Total 47,104 45,018 100.0% 100.0% 94.5% 94.7%
======= ====== ====== ====== ====== ======
</TABLE>
- -15-
<PAGE>
The expiring square feet and annual base rent by year for the properties
in operation as of March 31, 2000 are as follows (in thousands):
<TABLE>
<CAPTION>
INDUSTRIAL-
DISTRIBUTION INDUSTRIAL-FLEX OFFICE TOTAL
------------------ ------------------ ------------------ ------------------
SQUARE ANNUAL SQUARE ANNUAL SQUARE ANNUAL SQUARE ANNUAL
YEAR FEET BASE RENT FEET BASE RENT FEET BASE RENT FEET BASE RENT
- ---------- ------ --------- ------ --------- ------ --------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2000 1,324 5,227 1,858 14,215 1,921 23,846 5,103 43,288
2001 3,159 13,497 2,002 15,299 1,729 21,781 6,890 50,577
2002 3,312 13,452 1,893 15,287 1,420 17,585 6,625 46,324
2003 1,753 8,461 1,997 17,996 1,360 18,301 5,110 44,758
2004 2,294 11,298 1,480 13,508 1,571 24,046 5,345 48,852
2005 1,866 9,093 702 7,235 1,794 25,177 4,362 41,505
Thereafter 4,912 25,082 1,994 20,831 4,186 68,635 11,092 114,548
------ ------ ------ ------- ------ ------- ------ -------
Total 18,620 86,110 11,926 104,371 13,981 199,371 44,527 389,852
====== ====== ====== ======= ====== ======= ====== =======
</TABLE>
The scheduled deliveries of the 2.5 million square feet of properties
under development as of March 31, 2000 are as follows (in thousands):
<TABLE>
<CAPTION>
SQUARE FEET
-----------------------------
SCHEDULED IND- IND- PERCENT PRE-LEASED
IN-SERVICE DATE DIST. FLEX OFFICE TOTAL MARCH 31, 2000 TOTAL INVESTMENT
- ---------------- ------ ------ ------- ------ ------------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
2nd Quarter 2000 - 129 302 431 71.8% $ 48,700
3rd Quarter 2000 - 55 105 160 46.1% 17,328
4th Quarter 2000 - 15 114 129 43.1% 14,315
1st Quarter 2001 250 65 32 347 - 18,340
Thereafter 855 174 383 1,412 1.9% 94,038
------ ------ ------- ------ ------ ----------
Total 1,105 438 936 2,479 18.8% $192,721
====== ====== ======= ====== ====== ==========
</TABLE>
RESULTS OF OPERATIONS
The following discussion is based on the consolidated financial
statements of the Company. It compares the results of operations of the
Company for the three months ended March 31, 2000 (unaudited) with the
results of operations of the Company for the three months ended March 31,
1999 (unaudited). As a result of the significant level of development
acquisition and disposition activities by the Company in 2000 and 1999,
the overall operating results of the Company during such periods are not
directly comparable. However, certain data, including the "Same Store"
comparison, do lend themselves to direct comparison. As used herein, the
term "Company" includes the Trust, the Operating Partnership and their
subsidiaries.
This information should be read in conjunction with the accompanying
consolidated financial statements and notes included elsewhere in this
report.
For the three months ended March 31, 2000 compared to the three months
ended March 31, 1999.
- -----------------------------------------------------------------------
Total revenue (principally rental revenue and operating expense
reimbursement) increased to $129.0 million from $112.2 million for the
three months ended March 31, 2000 compared to the same period in 1999.
This increase is primarily due to the increase in the number of
properties in operation during the respective periods. As of March 31,
- -16-
<PAGE>
1999, the Company had 625 properties in operation and, as of March 31,
2000, the Company had 645 properties in operation. From January 1, 1999
through March 31, 1999, the Company completed the development on or
acquired 19 properties for a Total Investment (as defined below) of
approximately $71.2 million. From January 1, 2000 through March 31,
2000, the Company completed the development on or acquired 15 properties
for a Total Investment of approximately $130.7 million. Offsetting the
increases in the number of properties developed and acquired and the
related Total Investments during the periods were property dispositions.
From January 1, 1999 through March 31, 1999, the Company sold two
properties, for net proceeds of approximately $8.3 million. From January
1, 2000 through March 31, 2000, the Company sold three properties, for
net proceeds of approximately $29.4 million. The "Total Investment" for
a property is defined as the property's purchase price plus closing costs
and management's estimate, as determined at the time of acquisition, of
the cost of necessary building improvements in the case of acquisitions,
or land costs and land and building improvement costs in the case of
development projects, and where appropriate, other development costs and
carrying costs required to reach rent commencement.
Rental property and real estate tax expenses increased to $37.1 million
from $31.0 million for the three months ended March 31, 2000 compared to
the same period in 1999. This increase is due to the increase in the
number of properties owned during the respective periods.
Property-level operating income for the "Same Store" properties
(properties owned as of January 1, 1999) increased to $77.8 million for
the three months ended March 31, 2000 from $75.9 million for the three
months ended March 31, 1999, with straightlining (which recognizes rental
revenue evenly over the life of the lease), and increased to $76.1
million for the three months ended March 31, 2000 from $74.3 million for
the three months ended March 31, 1999, without straightlining. These
increases of 2.4% and 2.4%, respectively, are due to increases in the
rental rates for the properties.
Set forth below is a schedule comparing the property-level operating
income for the "Same Store" properties for the three-month periods ended
March 31, 2000 and 1999 (in thousands).
<TABLE>
<CAPTION>
WITH STRAIGHTLINING WITHOUT STRAIGHTLINING
------------------------------ ------------------------------
THREE MONTHS ENDED THREE MONTHS ENDED
------------------------------ ------------------------------
MARCH 31, 2000 MARCH 31, 1999 MARCH 31, 2000 MARCH 31, 1999
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Rental Revenue $ 78,910 $ 76,928 $ 77,297 $ 75,356
Operating expense reimbursement 30,493 27,575 30,493 27,575
-------- -------- -------- --------
109,403 104,503 107,790 102,931
Rental property expense 21,121 19,611 21,121 19,611
Real estate taxes 10,521 8,981 10,521 8,981
-------- -------- -------- --------
Property-level operating income $ 77,761 $ 75,911 $ 76,148 $ 74,339
======== ======== ======== ========
</TABLE>
General and administrative expenses increased to $4.4 million for the
three months ended March 31, 2000 from $4.0 million for the three months
ended March 31, 1999. This increase is due to the increase in personnel
and other related overhead costs necessitated by the increase in the
number of properties in operation during the respective periods.
- -17-
<PAGE>
Depreciation and amortization expense increased to $22.6 million for the
three months ended March 31, 2000 from $20.1 million for the three months
ended March 31, 1999. This increase is due to an increase in the number
of properties owned during the respective periods.
Interest expense increased to $25.7 million for the three months ended
March 31, 2000 from $23.8 million for the three months ended March 31,
1999. This increase is due to an increase in the average debt
outstanding for the respective periods which was $1,528.2 million for the
first quarter of 2000 compared to $1,452.7 million for the first quarter
of 1999. In addition, the weighted average interest rates for the
respective periods have increased from 7.13% to 7.33%.
In the first quarter of 2000, the Company realized a gain on sale of $4.4
million, due to the sale of three properties and one parcel of land for
$31.6 million. In the first quarter of 1999, the Company realized a gain
on sale of $1.3 million, due to the sale of two properties for $8.7
million.
In the first quarter of 2000, the Company repurchased $9.8 million
principal amount of its Exchangeable Subordinated Debentures due 2001
(the "Convertible Debentures"). This resulted in the recognition of an
extraordinary loss in the first quarter of 2000 totaling $1.9 million.
This loss represented the redemption premium and the write-off of related
deferred financing costs. There were no extraordinary items in the first
quarter of 1999.
As a result of the foregoing, the Company's income before minority
interest increased to $41.5 million for the three months ended
March 31, 2000 from $34.6 million for the three months ended March 31,
1999. In addition, net income increased to $36.9 million for the three
months ended March 31, 2000 from $32.4 million for the three months ended
March 31, 1999.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2000, the Company had cash and cash equivalents of $3.2
million.
Net cash flow provided by operating activities decreased to $49.2 million
for the three months ended March 31, 2000 from $53.0 million for the
three months ended March 31, 1999. This $3.8 million decrease was
primarily due to the fluctuations in accounts receivable and accounts
payable during the respective periods.
Net cash used in investing activities increased to $87.2 million for the
three months ended March 31, 2000 from $79.9 million for the three months
ended March 31, 1999. This increase primarily resulted from increased
acquisition activity in 2000, and an increase in land held for
development.
Net cash provided by financing activities increased to $32.1 million for
the three months ended March 31, 2000 from $27.3 million for the three
months ended March 31, 1999. This increase is due to an increase in the
Company's financing requirements consistent with its increase in
investing activities.
The Company believes that its undistributed cash flow from operations is
adequate to fund its short-term liquidity requirements.
- -18-
<PAGE>
The Company funds its acquisitions and completed development with long-
term capital sources. In the three months ended March 31, 2000, these
activities were funded on a temporary basis through a $325.0 million
unsecured line of credit (the "$325 Million Credit Facility"), which was
replaced in April 2000.
In April 2000, the Company increased its borrowing capacity and obtained
a new $450 million unsecured revolving credit facility (the "$450 Million
Credit Facility") replacing the $325 Million Credit Facility and a $90
million term loan due January 2001 (the "$90 Million Term Loan").
The interest rate on borrowings under the $325 Million Credit Facility,
the $90 Million Term Loan and the $450 Million Credit Facility fluctuates
based upon the Company's leverage levels or ratings from Moody's
Investors Services, Inc. ("Moody's") and Standard & Poor's Ratings Group
("Standard & Poor's"). Moody's and Standard & Poor's currently assign
senior debt ratings to the Company of Baa3 and BBB-, respectively. At
these ratings, the interest rate for borrowings under the $325 Million
Credit Facility was 110 basis points over LIBOR, for borrowings under the
$90 Million Term Loan was 135 basis points over LIBOR and for borrowings
under the $450 Million Credit Facility is 115 basis points over LIBOR.
As of March 31, 2000, $372.6 million in mortgage loans, $895.0 million in
unsecured notes and $90.0 million in an unsecured term loan were
outstanding. The interest rates on $1,261.4 million of mortgage loans
and unsecured notes are fixed and range from 5.0% to 9.1%. Interest
rates on $6.3 million of mortgage loans and the unsecured term loan float
with LIBOR or a municipal bond index, none of which is subject to a cap.
The weighted average remaining term for the mortgage loans, unsecured
notes and the unsecured term loan is 7.4 years. The scheduled maturities
of principal amortization of the Company's mortgage loans, unsecured
notes and the unsecured term loan outstanding and the related weighted
average interest rates are as follows (in thousands):
<TABLE>
<CAPTION>
MORTGAGES UNSECURED WEIGHTED
-------------------------- NOTES AND AVERAGE
AMORTIZATION MATURITIES TERM LOAN TOTAL INTEREST RATE
------------ ---------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C>
2000 $ 7,390 $ 5,570 $ - $ 12,960 7.9%
2001 9,246 20,122 90,000 119,368 7.3%
2002 8,147 - 100,000 108,147 6.7%
2003 8,127 26,606 50,000 84,733 7.3%
2004 8,206 16,340 100,000 124,546 7.0%
2005 7,132 115,051 - 122,183 7.6%
2006 5,046 30,079 100,000 135,125 7.2%
2007 4,592 - 100,000 104,592 7.3%
2008 4,280 28,835 - 33,115 7.2%
2009 2,163 42,069 270,000 314,232 7.8%
2010 1,367 - - 1,367 7.7%
2011 1,104 3,303 - 4,407 7.7%
2012 193 17,674 - 17,867 7.7%
2013 - - 75,000(1) 75,000 6.4%
2018 - - 100,000 100,000 7.5%
--------- --------- --------- ---------- -------
$ 66,993 $ 305,649 $ 985,000 $1,357,642 7.3%
========= ========= ========= ========== =======
</TABLE>
(1) Callable 2003.
GENERAL
The Company believes that its existing sources of capital will provide
sufficient funds to finance its continued development and acquisition
- -19-
<PAGE>
activities. The Company's existing sources of capital include the public
debt and equity markets, proceeds from property dispositions and net
cash provided from its operating activities. Additionally, the Company
expects to incur variable rate debt, including borrowings under the $450
Million Credit Facility, from time to time.
In 1999, the Company received approximately $93.0 million in aggregate
net proceeds from the issuance of 9.25% Series B Cumulative Redeemable
Preferred Units, $135.0 million from the closing of a two-year unsecured
term loan, and approximately $246.0 million in aggregate net proceeds
from the issuance of unsecured notes. The Company used the aggregate net
proceeds from issuance of the preferred units, term loan and unsecured
notes to fund the Company's activities, including paying down the credit
facility, which funds development and acquisition activity.
In October 1999, the Board of Trustees authorized a share repurchase
program under which the Company may purchase up to $100 million of the
Company's Common Shares or Convertible Debentures. Through May 5, 2000,
the Company purchased 59,100 Common Shares and purchased Convertible
Debentures exchangeable into 877,950 Common Shares. The total cost for
the purchase of the Common Shares and Convertible Debentures was
approximately $21.9 million.
The Company has an effective S-3 shelf registration statement on file
with the Securities and Exchange Commission. As of May 5, 2000, the
Company had the capacity pursuant to this shelf registration statement to
issue $688.4 million in equity securities and the Operating Partnership
had the capacity to issue $108.0 million in debt securities.
CALCULATION OF FUNDS FROM OPERATIONS
Management generally considers Funds from operations (as defined below) a
useful financial performance measure of the operating performance of an
equity REIT, because, together with net income and cash flows, Funds from
operations provides investors with an additional basis to evaluate the
ability of a REIT to incur and service debt and to fund development,
acquisitions and capital expenditures. Funds from operations is defined
by NAREIT as net income (computed in accordance with generally accepted
accounting principles), excluding gains (or losses) from sales of
property, plus depreciation and amortization, and after adjustments for
unconsolidated partnerships and joint ventures. Funds from operations
does not represent net income or cash flows from operations as defined by
generally accepted accounting principles and does not necessarily
indicate that cash flows will be sufficient to fund cash needs. It
should not be considered as an alternative to net income as an indicator
of the Company's operating performance or to cash flows as a measure of
liquidity. Funds from operations also does not represent cash flows
generated from operating, investing or financing activities as defined by
generally accepted accounting principles. Funds from operations for the
- -20-
<PAGE>
three months ended March 31, 2000 and March 31, 1999 are as follows (in
thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
(IN THOUSANDS)
-------------------------------
MARCH 31, 2000 MARCH 31, 2000
-------------- --------------
<S> <C> <C>
Income available to common shareholders $ 34,119 $ 29,678
Addback:
Minority interest less preferred unit distributions 2,482 2,210
Depreciation and amortization 22,262 19,834
Extraordinary item-loss on extinguishment of debt 1,875 -
Gain on sale of property (4,353) (1,269)
========= =========
Funds from operations $ 56,385 $ 50,453
========= =========
</TABLE>
INFLATION
- ---------
Inflation has remained relatively low during the last three years, and as
a result, it has not had a significant impact on the Company during this
period. The $450 Million Credit Facility bears interest at a variable
rate; therefore, the amount of interest payable under the $450 Million
Credit Facility will be influenced by changes in short-term interest
rates, which tend to be sensitive to inflation. To the extent an increase
in inflation would result in increased operating costs, such as in
insurance, real estate taxes and utilities, substantially all of the
tenants' leases require the tenants to absorb these costs as part of
their rental obligations. In addition, inflation also may have the effect
of increasing market rental rates.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- -------------------------------------------------------------------
There have been no material changes to the Company's exposure to market
risk since its Annual Report on Form 10-K for 1999.
- -21-
<PAGE>
PART II: OTHER INFORMATION
- --------------------------
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
On April 18, 2000, the Operating Partnership issued 800,000
9.125% Series C Cumulative Redeemable Preferred Units of Limited
Partnership Interest (the "Units"). The aggregate sale price of the
Units was $20.0 million. The Units were sold to an institutional
investor in a private placement in reliance on the exemption from
registration under Section 4(2) of the Securities Act of 1933, as
amended. The Units are convertible after ten years (or, under limited
circumstances, a shorter period of time), on a one-for-one basis, into
the 9.125% Series C Cumulative Redeemable Preferred Shares of Beneficial
Interest of the Trust (the "Preferred Shares"), which were authorized
for issuance by the Trust in connection with this transaction. The
Units have identical rights, preferences and privileges as the Preferred
Shares. The Units do not include any mandatory redemption or sinking
fund provisions. The holders of the Units have certain rights to cause
the Trust to register the Preferred Shares pursuant to the terms of a
registration rights agreement entered into in connection with this
private placement.
The aggregate net proceeds of the sale of the Units,
approximately $19.5 million, were used to repay the borrowings under the
$325 Million Credit Facility.
In connection with the sale of the Units, the Operating
Partnership amended its Second Restated and Amended Agreement of Limited
Partnership, as amended, pursuant to the Second Amendment thereto, filed
as Exhibit 3.1.1 to this Report. The Articles Supplementary to the
Amended and Restated Declaration of Trust of the Trust creating the
Preferred Shares are filed as Exhibit 3.1.2 to this Report.
The Units are pari passu with the 8.80% Series A Cumulative
Redeemable Preferred Units of Limited Partnership and the 9.25% Series B
Cumulative Redeemable Preferred Units of Limited Partnership of the
Operating Partnership, and senior to all other units of limited
partnership interest of the Operating Partnership. The Preferred Shares
are pari passu with the 8.80% Series A Cumulative Redeemable Preferred
Shares of Beneficial Interest and the 9.25% Series B Cumulative
Redeemable Preferred Shares of Beneficial Interest of the Trust, and
senior to the Common Shares of Beneficial Interest of the Trust.
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
- -22-
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
3.1.1 Articles Supplementary to the Amended and Restated
Declaration of Trust of the Trust relating to the 9.125% Series C
Cumulative Redeemable Preferred Shares of Beneficial Interest.
3.1.2 Second Amendment to Second Restated and Amended
Agreement of Limited Partnership of the Operating Partnership.
10.1 Credit Agreement, dated as of April 25, 2000, by
and among the Operating Partnership, the Trust, the Banks named therein
and Fleet National Bank, as agent for itself and the other lending
institutions.
b. Reports on Form 8-K
None
- -23-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, each
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LIBERTY PROPERTY TRUST
/s/ WILLARD G. ROUSE III May 10, 2000
- ------------------------------------- --------------------------
Willard G. Rouse III Date
Chairman of the Board of Trustees,
President and Chief Executive Officer
/s/ GEORGE J. ALBURGER, JR. May 10, 2000
- ------------------------------------- --------------------------
George J. Alburger, Jr. Date
Chief Financial Officer
LIBERTY PROPERTY LIMITED PARTNERSHIP
By: LIBERTY PROPERTY TRUST, GENERAL PARTNER
/s/ WILLARD G. ROUSE III May 10, 2000
- ------------------------------------- --------------------------
Willard G. Rouse III Date
Chairman of the Board of Trustees,
President and Chief Executive Officer
/s/ GEORGE J. ALBURGER, JR. May 10, 2000
- ------------------------------------- --------------------------
George J. Alburger, Jr. Date
Chief Financial Officer
- -24-
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -------------------------------------------------------
3.1.1 Articles Supplementary to the Amended and Restated
Declaration of Trust of the Trust relating to the
9.125% Series C Cumulative Redeemable Preferred Shares
of Beneficial Interest
3.1.2 Second Amendment to Second Restated and Amended
Agreement of Limited Partnership of the Operating
Partnership
10.1 Credit Agreement, dated as of April 25, 2000, by and
among the Operating Partnership, the Trust, the Banks
named therein and Fleet National Bank, as agent for
itself and the other lending institutions.
27 Financial Data Schedule (EDGAR version only)
EXHIBIT 3.1.1 LIBERTY PROPERTY TRUST
ARTICLES SUPPLEMENTARY
800,000 SHARES
9.125% SERIES C CUMULATIVE REDEEMABLE PREFERRED SHARES
OF BENEFICIAL INTEREST
Liberty Property Trust, a Maryland real estate investment trust (the
"Company"), hereby certifies to the State Department of Assessments and
Taxation of Maryland (the "Department") that:
FIRST: Pursuant to the authority expressly vested in the Board of
Trustees of the Company by Sections 3.2(e), 6.1 and 6.3 of the Amended
and Restated Declaration of Trust of the Company filed with the
Department on May 29, 1997, as supplemented by the Articles
Supplementary accepted for record by the Department on August 7, 1997,
by the Articles Supplementary accepted for record by the Department on
December 23, 1997 and by the Articles Supplementary accepted for record
by the Department on July 28, 1999 (collectively, as supplemented, the
"Charter") and Section 8-203 of the Corporations and Associations
Article of the Annotated Code of Maryland, the Board of Trustees of the
Company (the "Board"), by resolutions duly adopted on April 12, 2000,
has classified 800,000 shares of the authorized but unissued shares of
beneficial interest in the Company as a series designated the 9.125%
Series C Cumulative Redeemable Preferred Shares of Beneficial Interest
with the following preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications,
terms and conditions of redemption and other terms and conditions:
Section 1. DESIGNATION AND NUMBER. A series of preferred
shares of beneficial interest of the Company, designated the "9.125%
Series C Cumulative Redeemable Preferred Shares of Beneficial Interest"
(the "Series C Preferred Shares") is hereby established. The number of
Series C Preferred Shares shall be 800,000. The par value of the
Series C Preferred Shares is established to be $.001 per share.
Section 2. RANK. The Series C Preferred Shares will, with
respect to distributions and rights upon voluntary or involuntary
liquidation, winding-up or dissolution of the Company, rank senior to
all classes or series of Common Shares (as defined in the Charter) and
to all classes or series of equity securities of the Company now or
hereafter authorized, issued or outstanding including, without
limitation, the "Series A Junior Participating Preferred Shares" and
other than any class or series of equity securities of the Company
expressly designated as ranking on a parity with or senior to the
Series C Preferred Shares as to distributions and rights upon voluntary
or involuntary liquidation, winding-up or dissolution of the Company.
For purposes of these Articles Supplementary, the term "Parity
Preferred Shares" shall be used to refer to any class or series of
equity securities of the Company now or hereafter authorized, issued or
outstanding expressly designated by the Company to rank on a parity
with Series C Preferred Shares with respect to distributions and rights
upon voluntary or involuntary liquidation, winding-up or dissolution of
the Company including, without limitation, the "8.80% Series A
Cumulative Redeemable Preferred Shares of Beneficial Interest" and the
"9.25% Series B Cumulative Redeemable Preferred Partnership Interests".
The term "equity securities" does not include debt securities, which
will rank senior to the Series C Preferred Shares prior to conversion.
Section 3. DISTRIBUTIONS.
(a) PAYMENT OF DISTRIBUTIONS.
(i) Subject to the rights of holders of Parity
Preferred Shares and holders of equity securities ranking senior to the
Series C Preferred Shares as to payment of distributions, holders of
Series C Preferred Shares will be entitled to receive, when, as and if
declared by the Board of Trustees of the Company, out of funds legally
available for the payment of distributions, cumulative preferential
cash distributions at the rate per annum of 9.125% of the $25
liquidation preference per Series C Preferred Share (the "Issuance
Rate"). All distributions shall be cumulative, shall accrue from the
original date of issuance and will be payable (i) quarterly in arrears,
on March 31, June 30, September 30 and December 31 of each year,
commencing on the first of such dates to occur after the original date
of issuance and, ii) in the event of a redemption, on the redemption
date (each a "Preferred Shares Distribution Payment Date"). The amount
of the distribution payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months and for any period
shorter than a full quarterly period for which distributions are
computed, the amount of the distribution payable will be computed based
on the ratio of the actual number of days elapsed in such period to
ninety (90) days. If any date on which distributions are to be made on
the Series C Preferred Shares is not a Business Day (as defined
herein), then payment of the distribution to be made on such date will
be made on the next succeeding day that is a Business Day (and without
any interest or other payment in respect of any such delay) except
that, if such Business Day is in the next succeeding calendar year,
such payment shall be made on the immediately preceding Business Day,
in each case with the same force and effect as if made on such date.
Distributions on the Series C Preferred Shares will be made to the
holders of record of the Series C Preferred Shares on the relevant
record dates, which, unless otherwise provided by the Company with
respect to any distribution, will be fifteen (15) Business Days prior
to the relevant Preferred Shares Distribution Payment Date (each a
"Distribution Record Date"). Notwithstanding anything to the contrary
set forth herein, each Series C Preferred Share shall also continue to
accrue all accrued and unpaid distributions up to the exchange date on
any Series C Preference Unit (as defined in the Second Restated and
Amended Agreement of Limited Partnership of Liberty Property Limited
Partnership, dated as of October 22, 1997 as amended by First Amendment
to Second Restated and Amended Agreement of Limited Partnership, dated
as of July 28, 1999 and the Second Amendment to Second Restated and
Amended Agreement of Limited Partnership, dated as of April 18, 2000
(as amended, the "Partnership Agreement")) validly exchanged into such
Series C Preferred Share in accordance with the provisions of such
Partnership Agreement.
(vi) "BUSINESS DAY" shall mean each day, other than a
Saturday or a Sunday, which is not a day on which banking institutions
in New York, New York are authorized or required by law, regulation or
executive order to close.
(b) LIMITATION ON DISTRIBUTIONS. No distributions on the
Series C Preferred Shares shall be declared or paid or set apart for
payment by the Company at such time as the terms and provisions of any
agreement of the Company, including any agreement relating to its
indebtedness, prohibits such declaration, payment or setting apart for
payment or provides that such declaration, payment or setting apart for
payment would constitute a breach thereof or a default thereunder, or
if such declaration, payment or setting apart for payment shall be
restricted or prohibited by law.
(c) DISTRIBUTIONS CUMULATIVE. Notwithstanding the
foregoing, distributions on the Series C Preferred Shares will accrue
whether or not the terms and provisions set forth in Section 3(b)
hereof at any time prohibit the current payment of distributions,
whether or not the Company has earnings, whether or not there are funds
legally available for the payment of such of such distributions and
whether or not such distributions are authorized or declared. Accrued
but unpaid distributions on the Series C Preferred Shares will
accumulate as of the Preferred Shares Distribution Payment Date on
which they first become payable. Accumulated and unpaid distributions
will not bear interest.
(d) PRIORITY AS TO DISTRIBUTIONS.
(i) So long as any Series C Preferred Shares are
outstanding, no distribution of cash or other property shall be
authorized, declared, paid or set apart for payment on or with respect
to any class or series of Common Shares or any class or series of other
Shares of the Company ranking junior as to the payment of distributions
to the Series C Preferred Shares (such Common Shares or other junior
shares including, without limitation, Series A Junior Participating
Preferred Shares authorized pursuant to Articles Supplementary filed
with the Department on December 23, 1997, collectively, "Junior
Shares"), nor shall any cash or other property be set aside for or
applied to the purchase, redemption or other acquisition for
consideration of any Series C Preferred Shares, any Parity Preferred
Shares with respect to distributions or any Junior Shares, unless, in
each case, all distributions accumulated on all Series C Preferred
Shares and all classes and series of outstanding Parity Preferred
Shares as to payment of distributions have been paid in full. The
foregoing sentence will not prohibit (i) distributions payable solely
in Junior Shares, (ii) the conversion of Junior Shares or Parity
Preferred Shares into Shares of the Company ranking junior to the
Series C Preferred Shares as to distributions and upon liquidation,
winding-up or dissolution, and (iii) purchase by the Company of such
Series C Preferred Shares, Parity Preferred Shares with respect to
distributions or Junior Shares pursuant to Article VII of the Charter
to the extent required to preserve the Company's status as a real
estate investment trust.
(ii) So long as distributions have not been paid in
full (or a sum sufficient for such full payment is not irrevocably
deposited in trust for immediate payment) upon the Series C Preferred
Shares and the Shares of any class or series of outstanding Parity
Preferred Shares, all distributions authorized and declared on the
Series C Preferred Shares and all classes or series of outstanding
Parity Preferred Shares with respect to distributions shall be
authorized and declared pro rata so that the amount of distributions
authorized and declared per share of Series C Preferred Shares and such
other classes or series of Parity Preferred Shares shall in all cases
bear to each other the same ratio that accrued distributions per share
on the Series C Preferred Shares and such other classes or series of
Parity Preferred Shares (which shall not include any accumulation in
respect of unpaid distributions for prior distribution periods if such
class or series of Parity Preferred Shares do not have cumulative
distribution rights) bear to each other. No interest, or sum of money
in lieu of interest, shall be payable in respect of any dividend
payment or payments on Series C Preferred Shares or any other Parity
Preferred Shares which may be in arrears.
(e) If, for any taxable year, the Company elects to
designate as "capital gain dividends" (as defined in Section 857 of the
Internal Revenue Code of 1986, as amended (the "Code")) any portion
(the "Capital Gains Amount") of the dividends (within the meaning of
the Code) paid or made available for the year to holders of all classes
of shares of beneficial interest in the Company (the "Total
Dividends"), then the portion of the Capital Gains Amount that will be
allocable to the holders of the Series C Preferred Units will be the
Capital Gains Amount multiplied by a fraction, the numerator of which
will be the total dividends (within the meaning of the Code) paid or
made available to the holders of the Series C Preferred Units for the
year and the denominator of which shall be the Total Dividends.
(f) NO FURTHER RIGHTS. Holders of Series C Preferred Shares
shall not be entitled to any distributions, whether payable in cash,
other property or otherwise, in excess of the full cumulative
distributions described herein.
Section 4. LIQUIDATION PREFERENCE.
(a) Payment of Liquidating Distributions. Subject to the
rights of holders of Parity Preferred Shares with respect to rights
upon any voluntary or involuntary liquidation, dissolution or winding-
up of the Company and subject to equity securities ranking senior to
the Series C Preferred Shares with respect to rights upon any voluntary
or involuntary liquidation, dissolution or winding-up of the Company,
the holders of Series C Preferred Shares shall be entitled to receive
out of the assets of the Company legally available for distribution or
the proceeds thereof, after payment or provision for debts and other
liabilities of the Company, but before any payment or distributions of
the assets shall be made to holders of Common Shares or any other class
or series of shares of the Company that ranks junior to the Series C
Preferred Shares as to rights upon liquidation, dissolution or winding-
up of the Company, an amount equal to the sum of (i) a liquidation
preference of $25 per share of Series C Preferred Shares, and (ii) an
amount equal to any accumulated and unpaid distributions thereon,
whether or not declared, to the date of payment. In the event that,
upon such voluntary or involuntary liquidation, dissolution or winding-
up, there are insufficient assets to permit full payment of liquidating
distributions to the holders of Series C Preferred Shares and any
Parity Preferred Shares as to rights upon liquidation, dissolution or
winding-up of the Company, all payments of liquidating distributions on
the Series C Preferred Shares and such Parity Preferred Shares shall be
made so that the payments on the Series C Preferred Shares and such
Parity Preferred Shares shall in all cases bear to each other the same
ratio that the respective rights of the Series C Preferred Shares and
such other Parity Preferred Shares (which shall not include any
accumulation in respect of unpaid distributions for prior distribution
periods if such Parity Preferred Shares do not have cumulative
distribution rights) upon liquidation, dissolution or winding-up of the
Company bear to each other.
(b) NOTICE. Written notice of any such voluntary or
involuntary liquidation, dissolution or winding-up of the Company,
stating the payment date or dates when, and the place or places where,
the amounts distributable in such circumstances shall be payable, shall
be given by (i) fax and (ii) by first class mail, postage pre-paid, not
less than 30 and not more than sixty (60) days prior to the payment
date stated therein, to each record holder of the Series C Preferred
Shares at the respective addresses of such holders as the same shall
appear on the share transfer records of the Company.
(c) NO FURTHER RIGHTS. After payment of the full amount of
the liquidating distributions to which they are entitled, the holders
of Series C Preferred Shares will have no right or claim to any of the
remaining assets of the Company.
(d) CONSOLIDATION, MERGER OR CERTAIN OTHER TRANSACTIONS.
The voluntary sale, conveyance, lease, exchange or transfer (for cash,
shares of stock, securities or other consideration) of all or
substantially all of the property or assets of the Company to, or the
consolidation or merger or other business combination of the Company
with or into any corporation, trust or other entity (or of any
corporation, trust or other entity with or into the Company) shall not
be deemed to constitute a liquidation, dissolution or winding-up of the
Company.
Section 5. OPTIONAL REDEMPTION.
(a) RIGHT OF OPTIONAL REDEMPTION. The Series C Preferred
Shares may not be redeemed prior to April 18, 2005. However, in order
to ensure that the Company remains a qualified real estate investment
trust ("REIT") for federal income tax purposes, the Series C Preferred
Shares shall be subject to the provisions of Article VII of the Charter
pursuant to which Series C Preferred Shares owned by a shareholder in
excess of the Ownership Limit (as defined in the Charter) will
automatically be exchanged for Excess Shares (as defined in the
Charter) and the Company will have the right to purchase Excess Shares
from the holder. On or after April 18, 2005, the Company shall have
the right to redeem the Series C Preferred Shares, in whole or in part,
at any time or from time to time, upon not less than 30 nor more than
60 days' written notice, at a redemption price, payable in cash, equal
to $25 per Series C Preferred Share plus accumulated and unpaid
distributions, whether or not declared, to the date of redemption. If
fewer than all of the outstanding Series C Preferred Shares are to be
redeemed, the Series C Preferred Shares to be redeemed shall be
selected pro rata (as nearly as practicable without creating fractional
units).
(b) LIMITATION ON REDEMPTION.
(i) The redemption price of the Series C Preferred
Shares (other than the portion thereof consisting of accumulated but
unpaid distributions) will be payable solely out of the sale proceeds
of capital stock of the Company and from no other source. For purposes
of the preceding sentence, "capital stock" means any equity securities
(including Common Shares and Preferred Shares), shares, participation
or other ownership interests (however designated) and any rights (other
than debt securities convertible into or exchangeable for equity
securities) or options to purchase any of the foregoing.
(ii) The Company may not redeem fewer than all of the
outstanding Series C Preferred Shares unless all accumulated and unpaid
distributions have been paid in full (or a sum sufficient for such
payment has been irrevocably deposited in trust for immediate payment)
on all outstanding Series C Preferred Shares for all quarterly
distribution periods, including the current period, terminating on or
prior to the date of redemption provided, however, that the foregoing
shall not prevent the purchase by the Company of Excess Shares in order
to ensure that the Company remains qualified as a REIT for federal
income tax purposes or the purchase or acquisition of Series C
Preferred Shares pursuant to a purchase or exchange offer made on the
same terms to holders of all outstanding Series C Preferred Shares.
(c) PROCEDURES FOR REDEMPTION.
(i) Notice of redemption will be (i) faxed, and (ii)
mailed by the Company, postage prepaid, not less than thirty (30) nor
more than sixty (60) days prior to the redemption date, addressed to
the respective holders of record of the Series C Preferred Shares to be
redeemed at their respective addresses as they appear on the transfer
records of the Company. No failure to give or defect in such notice
shall affect the validity of the proceedings for the redemption of any
Series C Preferred Shares except as to the holder to whom such notice
was defective or not given. In addition to any information required by
law or by the applicable rules of any exchange upon which the Series C
Preferred Shares may be listed or admitted to trading, each such notice
shall state: (i) the redemption date, (ii) the redemption price,
(iii) the number of Series C Preferred Shares to be redeemed, (iv) the
place or places where such Series C Preferred Shares are to be
surrendered for payment of the redemption price, (v) that distributions
on the Series C Preferred Shares to be redeemed will cease to
accumulate on such redemption date and (vi) that payment of the
redemption price and any accumulated and unpaid distributions will be
made upon presentation and surrender of such Series C Preferred Shares.
If fewer than all of the Series C Preferred Shares held by any holder
are to be redeemed, the notice mailed to such holder shall also specify
the number of Series C Preferred Shares held by such holder to be
redeemed.
(ii) If the Company gives a notice of redemption in
respect of Series C Preferred Shares (which notice will be irrevocable)
then, by 12:00 noon, New York City time, on the redemption date, the
Company will deposit irrevocably in trust for the benefit of the Series
C Preferred Shares being redeemed funds sufficient to pay the
applicable redemption price, plus any accumulated and unpaid
distributions, if any, on such shares to the date fixed for redemption,
without interest, and will give irrevocable instructions and authority
to pay such redemption price and any accumulated and unpaid
distributions, whether or not declared, if any, on such shares to the
holders of the Series C Preferred Shares upon surrender of the Series C
Preferred Shares by such holders at the place designated in the notice
of redemption. If fewer than all Series C Preferred Shares evidenced
by any certificate is being redeemed, a new certificate shall be issued
upon surrender of the certificate evidencing all Series C Preferred
Shares, evidencing the unredeemed Series C Preferred Shares without
cost to the holder thereof. On and after the date of redemption,
distributions will cease to accumulate on the Series C Preferred Shares
or portions thereof called for redemption, unless the Company defaults
in the payment thereof. If any date fixed for redemption of Series C
Preferred Shares is not a Business Day, then payment of the redemption
price payable on such date will be made on the next succeeding day that
is a Business Day (and without any interest or other payment in respect
of any such delay) except that, if such Business Day falls in the next
calendar year, such payment will be made on the immediately preceding
Business Day, in each case with the same force and effect as if made on
such date fixed for redemption. If payment of the redemption price or
any accumulated or unpaid distributions in respect of the Series C
Preferred Shares is improperly withheld or refused and not paid by the
Company, distributions on such Series C Preferred Shares will continue
to accumulate from the original redemption date to the date of payment,
in which case the actual payment date will be considered the date fixed
for redemption for purposes of calculating the applicable redemption
price and any accumulated and unpaid distributions.
(d) APPLICATION OF ARTICLE VII. The Series C Preferred
Shares are subject to the provisions of Article VII of the Charter,
including, without limitation, the provision for the redemption of
Excess Shares. Notwithstanding the provisions of Article IX of the
Charter, Series C Preferred Shares which have been exchanged pursuant
to the Charter for Excess Shares may be redeemed, in whole or in part,
at any time or from time to time, for cash at a redemption price of
$25.00 per share, plus all accrued and unpaid distributions thereon to
the date of redemption, without interest. If less than all of the
outstanding Excess Shares are to be redeemed, the Excess Shares to be
redeemed shall be selected pro rata (as nearly as may be practicable
without creating fractional shares).
(e) STATUS OF REDEEMED SHARES. Any Series C Preferred Shares
that shall at any time have been redeemed shall after such redemption,
have the status of authorized but unissued Preferred Shares, without
designation as to class or series until such shares are once more
designated as part of a particular class or series by the Board.
Section 6. VOTING RIGHTS.
(a) GENERAL. Holders of the Series C Preferred Shares will
not have any voting rights, except as set forth below.
(b) RIGHT TO ELECT TRUSTEES.
(i) If at any time full distributions shall not have
been timely made on any Series C Preferred Shares with respect to any
six (6) prior quarterly distribution periods, whether or not
consecutive, (a "Preferred Distribution Default"), the holders such
Series C Preferred Shares, voting together as a single class with the
holders of each class or series of Parity Preferred Shares upon which
like voting rights have been conferred and are exercisable, will have
the right to elect two (2) additional trustees to serve on the
Company's Board (the "Preferred Shares Trustees") at a special meeting
called in accordance with Section 6(b)(ii) (unless such request is
received less than ninety (90) days before the date fixed for the next
annual meeting) or at the next annual meeting of shareholders, and at
each subsequent annual meeting of shareholders or special meeting held
in place thereof, until all such distributions in arrears and
distributions for the current quarterly period on the Series C
Preferred Shares and each such class or series of Parity Preferred
Shares have been paid in full or an amount sufficient for such payment
has been irrevocably deposited in trust for immediate payment.
(ii) At any time when such voting rights shall have
vested, a proper officer of the Company shall call or cause to be
called, upon written request of holders of record of at least 20% of
the outstanding Series C Preferred Shares, a special meeting of the
holders of Series C Preferred Shares and all the series of Parity
Preferred Shares upon which like voting rights have been conferred and
are exercisable (collectively, the "Parity Securities") by mailing or
causing to be mailed to such holders a notice of such special meeting
to be held not less than ten and not more than 45 days after the date
such notice is given. The record date for determining holders of the
Parity Securities entitled to notice of and to vote at such special
meeting will be the close of business on the third Business Day
preceding the day on which such notice is mailed. At any such special
meeting, all of the holders of the Parity Securities, by plurality
vote, voting together as a single class without regard to series will
be entitled to elect two directors on the basis of one vote per $25.00
of liquidation preference to which such Parity Securities are entitled
by their terms (excluding amounts in respect of accumulated and unpaid
dividends) and not cumulatively. The holder or holders of one-third of
the Parity Securities then outstanding, present in person or by proxy,
will constitute a quorum for the election of the Preferred Shares
Trustees except as otherwise provided by law. Notice of all meetings
at which holders of the Series C Preferred Shares shall be entitled to
vote will be given to such holders at their addresses as they appear in
the transfer records. At any such meeting or adjournment thereof in
the absence of a quorum, subject to the provisions of any applicable
law, a majority of the holders of the Parity Securities present in
person or by proxy shall have the power to adjourn the meeting for the
election of the Preferred Shares Trustees, without notice other than an
announcement at the meeting, until a quorum is present. If a Preferred
Distribution Default shall terminate after the notice of a special
meeting has been given but before such special meeting has been held,
the Company shall, as soon as practicable after such termination, mail
or cause to be mailed notice of such termination to holders of the
Series C Preferred Shares that would have been entitled to vote at such
special meeting.
(iii) If and when all accumulated distributions and the
distribution for the current distribution period on the Series C
Preferred Shares shall have been paid in full or a sum sufficient for
such payment is irrevocably deposited in trust for payment, the holders
of the Series C Preferred Shares shall be divested of the voting rights
set forth in Section 6(b) herein (subject to revesting in the event of
each and every Preferred Distribution Default) and, if all
distributions in arrears and the distributions for the current
distribution period have been paid in full or set aside for payment in
full on all other classes or series of Parity Preferred Shares upon
which like voting rights have been conferred and are exercisable, the
term and office of each Preferred Shares Trustees so elected shall
terminate. Any Preferred Shares Trustees may be removed at any time
with or without cause by the vote of, and shall not be removed
otherwise than by the vote of, the holders of record of a majority of
the outstanding Series C Preferred Shares when they have the voting
rights set forth in Section 6(b) (voting separately as a single class
with all other classes or series of Parity Preferred Shares upon which
like voting rights have been conferred and are exercisable). So long
as a Preferred Distribution Default shall continue, any vacancy in the
office of a Preferred Shares Trustees may be filled by written consent
of the Preferred Shares Trustees remaining in office, or if none
remains in office, by a vote of the holders of record of a majority of
the outstanding Series C Preferred Shares when they have the voting
rights set forth in Section 6(b) (voting separately as a single class
with all other classes or series of Parity Preferred Shares upon which
like voting rights have been conferred and are exercisable). The
Preferred Shares Director shall each be entitled to one vote per
director on any matter.
(c) CERTAIN VOTING RIGHTS. So long as any Series C
Preferred Shares remain outstanding, the Company shall not, without the
affirmative vote of the holders of at least two thirds of the Series C
Preferred Shares outstanding at the time (i) (A) designate or create,
or increase the authorized or issued amount of, any class or series of
shares ranking senior to the Series C Preferred Shares with respect to
payment of distributions or rights upon liquidation, dissolution or
winding-up, (B) reclassify any authorized shares of the Company into
any such shares, or (C) create, authorize or issue any obligations or
security convertible into or evidencing the right to purchase any such
shares, (ii) (A) designate or create, or increase the authorized or
issued amount of, any Parity Preferred Shares, (B) reclassify any
authorized shares of the Company into a Parity Preferred Shares or (C)
create, authorize or issue any obligations or security convertible into
or evidencing the right to purchase any Parity Preferred Share;
provided, that restrictions contained in the clause (ii) of this
Paragraph (c) shall apply only to Parity Preferred Shares that are
issued to an Affiliate of the Company other than on arm's length terms,
or (iii) either (A) consolidate, or merge into or with, any corporation
or other entity, or (B) amend, alter or repeal the provisions of the
Company's Charter (including these Articles Supplementary) or By-laws,
whether by merger, consolidation or otherwise, in such a way that would
materially and adversely affect the powers, special rights,
preferences, privileges or voting power of the Series C Preferred
Shares or the holders thereof; provided, however, that with respect to
the occurrence of a merger or consolidation, so long as (a) the Company
is the surviving entity and the Series C Preferred Shares remains
outstanding with the terms thereof unchanged, or (b) the resulting,
surviving or transferee entity is a corporation organized under the
laws of any state and substitutes for the Series C Preferred Shares
other Preferred Shares having substantially the same terms and same
rights as the Series C Preferred Shares, including with respect to
distributions, voting rights and rights upon liquidation, dissolution
or winding-up, then the occurrence of any such event shall not be
deemed materially and adversely affect the rights, privileges or voting
powers of the holders of the Series C Preferred Shares; provided
further, that any increase in the amount of authorized Preferred Shares
or the creation or issuance of any other class or series of Preferred
Shares or any increase in an amount of authorized shares of each class
or series, shall not be deemed to materially and adversely affect the
rights, preferences, privileges or voting powers of the Series C
Preferred Shares, if such Series C Preferred Shares rank (y) junior to
the Series C Preferred Shares with respect to payment of distributions
or the distribution of assets upon liquidation, dissolution or winding-
up, or (z) on a parity with the Series C Preferred Shares with respect
to payment of distributions or the distribution of assets upon
liquidation, dissolution or winding-up; provided, that any Series C
Preferred Shares issued in reliance on the preceding clause (z) shall
not have been issued to an Affiliate of the Company or are issued to
such Affiliate on arm's length terms. In the event of any conflict or
inconsistency between this Section 6 and Sections 8.2, 10.1 and 10.3 of
the Charter, this Section 6 shall control.
Section 7. TRANSFER RESTRICTIONS. The Series C Preferred Shares
shall be subject to the provisions of Article VII of the Charter.
Section 8. NO CONVERSION RIGHTS. The holders of the Series C
Preferred Shares shall not have any rights to convert such shares into
shares of any other class or series of shares or into any other
securities of, or interest in, the Company except that the Series C
Preferred Shares may be exchanged by the Company for Excess Shares, in
accordance with the Charter.
Section 9. NO SINKING FUND. No sinking fund shall be established
for the retirement or redemption of Series C Preferred Shares.
Section 10. NO PREEMPTIVE RIGHTS. No holder of the Series C
Preferred Shares of the Company shall, as such holder, have any
preemptive rights to purchase or subscribe for additional Shares of the
Company or any other security of the Company which it may issue or
sell.
SECOND: The Series C Preferred Shares have been classified and
designated by the Board under the authority contained in the Charter.
THIRD: These Articles Supplementary have been approved by the
Board in the manner and by the vote required by law.
FOURTH: These Articles Supplementary shall be effective at the
time the State Department of Assessments and Taxation of Maryland
accepts these Articles Supplementary for record.
FIFTH: The undersigned Chairman of the Board of Trustees and
Chief Executive Officer of the Company acknowledges these Articles
Supplementary to be the corporate act of the Company and, as to all
matters or facts required to be verified under oath, the undersigned
Chairman of the Board of Trustees, Chief Executive Officer and
President acknowledges that to the best of his knowledge, information
and belief, these matters and facts are true in all material respects
and that this statement is made under the penalties for perjury.
In witness whereof, the Company has caused these Articles Supplementary
to be executed under seal in its name and on its behalf by its
President and Chief Executive Officer and attested to by its Secretary
as of April 18, 2000.
LIBERTY PROPERTY TRUST
By:
------------------------------------------
WILLARD G. ROUSE, III
President and Chief Executive Officer
[SEAL]
ATTEST:
- ---------------------------------------
JAMES J. BOWES
Secretary
EXHIBIT 3.1.2 SECOND AMENDMENT
TO
SECOND RESTATED AND AMENDED
AGREEMENT OF LIMITED PARTNERSHIP
OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
This Second Amendment to the Second Restated and Amended Agreement of
Limited Partnership (this "Amendment") dated as of April 18, 2000, is
entered into by LIBERTY PROPERTY TRUST, a Maryland real estate
investment trust, as general partner (the "General Partner") of LIBERTY
PROPERTY LIMITED PARTNERSHIP (the "Partnership"), for itself and on
behalf of the limited partners of the Partnership, and MONTEBELLO
REALTY CORP. ("Montebello").
Whereas, Section 4.2(a) of the Second Restated and Amended Agreement of
Limited Partnership of the Partnership, as amended by that certain
First Amendment to the Second Restated and Amended Agreement of Limited
Partnership, dated as of July 28, 1999 (collectively, as amended, the
"Partnership Agreement") authorizes the General Partner to cause the
Partnership to issue additional Partnership Units in one or more
classes or series, with such designations, preferences and relative,
participating, optional or other special rights, powers and duties as
shall be determined by the General Partner, subject to the provisions
of such section; and
Whereas, pursuant to the authority granted to the General Partner
pursuant to Sections 4.2(a) and 14.1(b) of the Partnership Agreement,
the General Partner desires to amend the Partnership Agreement (i) to
establish a new class of Partnership Units, the Series C Preferred
Units (as hereinafter defined), and to set forth the designations,
rights, powers, preferences and duties of such Series C Preferred
Units, (ii) to issue the Series C Preferred Units to Montebello and
admit Montebello as an Additional Limited Partner and (iii) to make
certain other changes to the Partnership Agreement.
Now, therefore, in consideration of good and valuable consideration,
the receipt and sufficiency of which hereby are acknowledged, the
General Partner hereby amends the Partnership Agreement as follows:
Section 1. DEFINITIONS. For purposes of this Amendment, the term
"Parity Preferred Units" shall be used to refer to any class or series
of Partnership Interests of the Partnership now or hereafter
authorized, issued or outstanding expressly designated by the
Partnership to rank on a parity with Series C Preferred Units with
respect to distributions and rights upon voluntary or involuntary
liquidation, winding-up or dissolution of the Partnership including,
without limitation, the "8.80% Series A Cumulative Redeemable Preferred
Partnership Interests" and the "9.25% Series B Cumulative Redeemable
Preferred Partnership Interests". The term "Priority Return" shall
mean, an amount equal to 9.125% per annum, as the same may be adjusted
pursuant to Section 3(a) below, determined on the basis of a 360 day
year of twelve 30 day months (and for any period shorter than a full
quarterly period for which distributions are computed, the amount of
the distribution payable will be computed based on the ratio of the
actual number of days elapsed in such period to ninety (90) days),
cumulative to the extent not distributed for any given distribution
period pursuant to Section 6.2 of the Partnership Agreement, of the
stated value of $ 25 per Series C Preferred Unit, commencing on the
date of issuance of such Series C Preferred Unit. The term
"Subsidiary" shall mean with respect to any person, any corporation,
partnership, limited liability company, joint venture or other entity
of which a majority of (i) voting power of the voting equity securities
or (ii) the outstanding equity interests, is owned, directly or
indirectly, by such person. The term "PTP" shall mean a "publicly
traded partnership" within the meaning of Section 7704 of the Code.
Capitalized terms used herein and not otherwise defined herein shall
have the meanings ascribed to them in the Partnership Agreement.
Section 2. DESIGNATION AND NUMBER. A series of Partnership
Interests in the Partnership designated as the "9.125% Series C
Cumulative Redeemable Preferred Partnership Interests" (the "Series C
Preferred Units") is hereby established. The maximum number of Series
C Preferred Units shall be 800,000.
Section 3.
(a) PAYMENT OF DISTRIBUTIONS. Subject to the rights of holders
of Parity Preferred Units and holders of Partnership Interests ranking
senior to the Series C Preferred Units as to payment of distributions,
pursuant to Section 6.2 of the Partnership Agreement, holders of Series
C Preferred Units will be entitled to receive, when, as and if declared
by the Partnership acting through the General Partner, out of Net
Operating Cash Flow, cumulative preferential cash distributions at the
rate per annum of 9.125% of the original Capital Contribution per
Series C Preferred Unit (the "Issuance Rate"). All distributions shall
be cumulative, shall accrue from the original date of issuance and will
be payable (i) quarterly in arrears, on or before March 31, June 30,
September 30 and December 31 of each year commencing on June 30, 2000
for the quarterly period then ended, and, (ii), in the event of (A) an
exchange of Series C Preferred Units into Series C Preferred Shares, or
(B) a redemption of Series C Preferred Units, on the exchange date or
redemption date, as applicable (each a "Preferred Unit Distribution
Payment Date"). The amount of the distribution payable for any period
will be computed on the basis of a 360-day year of twelve 30-day months
and for any period shorter than a full quarterly period for which
distributions are computed, the amount of the distribution payable will
be computed based on the ratio of the actual number of days elapsed in
such period to ninety (90) days. If any date on which distributions
are to be made on the Series C Preferred Units is not a Business Day
(as defined herein), then payment of the distribution to be made on
such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such
delay) except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding
Business Day, in each case with the same force and effect as if made on
such date. Distributions on the Series C Preferred Units will be made
to the holders of record of the Series C Preferred Units on the
relevant record dates to be fixed by the Partnership acting through the
General Partner, which record dates shall in no event exceed fifteen
(15) Business Days prior to the relevant Preferred Unit Distribution
Payment Date (the "Preferred Unit Partnership Record Date").
(b) DISTRIBUTIONS CUMULATIVE. Distributions on the Series C
Preferred Units will accrue whether or not the terms and provisions of
any agreement of the Partnership, including any agreement relating to
its indebtedness at any time prohibit the declaration, setting aside
for payment or current payment of distributions, whether or not the
Partnership has earnings, whether or not there are funds legally
available for the payment of such of such distributions and whether or
not such distributions are authorized. Accrued but unpaid
distributions on the Series C Preferred Units will accumulate as of the
Preferred Unit Distribution Payment Date on which they first become
payable. Distributions on account of arrears for any past distribution
periods may be declared and paid at any time, without reference to a
regular Preferred Unit Distribution Payment Date to holders of record
of the Series C Preferred Units on the record date fixed by the
Partnership acting through the General Partner, which date shall not
exceed fifteen (15) Business Days prior to the payment date.
Accumulated and unpaid distributions will not bear interest.
(c) PRIORITY AS TO DISTRIBUTIONS.
(i) So long as any Series C Preferred Units are outstanding,
no distribution of cash or other property shall be authorized,
declared, paid or set apart for payment on or with respect to any class
or series of Partnership Interest of the Partnership ranking junior as
to the payment of distributions or rights upon a voluntary or
involuntary liquidation, dissolution or winding-up of the Partnership
to the Series C Preferred Units (collectively, "Junior Units"), nor
shall any cash or other property be set aside for or applied to the
purchase, redemption or other acquisition for consideration of any
Series C Preferred Units, any Parity Preferred Units or any Junior
Units, unless, in each case, all distributions accumulated on all
Series C Preferred Units and all classes and series of outstanding
Parity Preferred Units have been paid in full or a sum sufficient for
such full payment has been irrevocably deposited in trust for immediate
payment. The foregoing sentence will not prohibit (a) distributions
payable solely in Junior Units, (b) the conversion of Junior Units or
Parity Preferred Units into Partnership Interests of the Partnership
ranking junior to the Series C Preferred Units as to distributions and
rights upon the voluntary or involuntary liquidation, dissolution or
winding up of the Partnership, (c) the redemption of Partnership
Interests corresponding to any Series C Preferred Shares, Parity
Preferred Shares with respect to distributions or Junior Shares to be
purchased by the General Partner pursuant to Article VII of the Amended
and Restated Declaration of Trust of the General Partner (as amended
and modified through the date hereof, the "Charter") to preserve the
General Partner's status as a real estate investment trust, provided
that such redemption shall be upon the same terms as the corresponding
purchase pursuant to Article VII of the Charter or (d) the foreclosure
by the Partnership on the Partnership Interests constituting the
Indemnity Collateral and/or the Special Indemnity Collateral (as
defined in Section 13.3 of the Partnership Agreement).
(ii) So long as distributions have not been paid in full (or
a sum sufficient for such full payment is not irrevocably deposited in
trust for immediate payment) upon the Series C Preferred Units, all
distributions authorized and declared on the Series C Preferred Units
and all classes or series of outstanding Parity Preferred Units shall
be authorized and declared so that the amount of distributions
authorized and declared per Series C Preferred Unit and such other
classes or series of Parity Preferred Units shall in all cases bear to
each other the same ratio that accrued distributions per Series C
Preferred Unit and such other classes or series of Parity Preferred
Units (which shall not include any accumulation in respect of unpaid
distributions for prior distribution periods if such class or series of
Parity Preferred Units do not have cumulative distribution rights) bear
to each other. No interest or any sum of money in lieu of interest
shall be payable in respect of any distribution, payment or payments on
Series C Preferred Units which may be in arrears.
(d) NO FURTHER RIGHTS. Holders of Series C Preferred Units shall
not be entitled to any distributions, whether payable in cash, other
property or otherwise, in excess of the full cumulative distributions
described herein.
Section 4. ALLOCATIONS. Section 1 of Exhibit C to the
Partnership Agreement is hereby deleted and replaced by the following:
(a) NET INCOME. Except as otherwise provided herein, Net Income
for any fiscal year or other applicable period shall be allocated in
the following order and priority:
(i) first, to the General Partner to the extent of Net Loss
previously allocated to the General Partner pursuant to Section
1(b)(iii) below for all prior fiscal years or other applicable periods
exceed Net Income previously allocated to the General Partner pursuant
to this Section 1(a)(i) for all prior fiscal years or other applicable
periods,
(ii) second, to Partners holding any Partnership Interests
that are entitled to any preference in distribution to the extent that
Net Loss previously allocated to such holders pursuant to Section
1(b)(ii) below for all prior fiscal years or other applicable periods
exceeds Net Income previously allocated to such Partners pursuant to
this Section 1(a)(ii) for all prior fiscal years or other applicable
periods,
(iii) third, to Partners holding Partnership Interests of a
class not entitled to preference in distribution to the extent that Net
Loss previously allocated to such holders pursuant to Section 1(b)(i)
below for all prior fiscal years or other applicable periods exceeds
Net Income previously allocated to such holders pursuant to this
Section 1(a)(iii) for all prior fiscal years or other applicable
periods,
(iv) fourth, to Partners holding any Partnership Interests
that are entitled to any preference in distribution in accordance with
the rights of any such class of Partnership Interests until each such
Partnership Interest has been allocated, Net Income equal to the excess
of (x) the cumulative amount of preferred distributions such Partners
are entitled to receive to the last day of the current fiscal year or
other applicable period or to the date of redemption, to the extent
such Partnership Interests are redeemed during such period, over (y)
the cumulative Net Income allocated to such Partners, pursuant to this
Section 1(a)(iv) for all prior fiscal years or other applicable periods
(and, within each such class, pro rata in proportion to the respective
share of such Partnership Interests each Partner holds as of the last
day of the period for which such allocation is being made), and
(v) fifth, with respect to Partnership Interests that are
not entitled to any preference in the allocation of Net Income, pro
rata to each such class in accordance with the terms of such class
(and, within each such class, pro rata in proportion to each Partner's
respective share of such Partnership Interests as of the last day of
the period for which such allocation is being made).
B. NET LOSS. Except as otherwise provided herein, Net Loss for
any fiscal year or other applicable period shall be allocated in the
following order and priority:
(i) first, with respect to classes of Partnership Interests
that are not entitled to any preference in distribution (including the
General Partner Interest), pro rata to each such class in accordance
with the terms of such class (and, within such class, pro rata in
proportion to each Partner's respective share of such Partnership
Interests as of the last day of the period for which such allocation is
being made) until the Adjusted Capital Account (ignoring for this
purpose any amounts a Partner is obligated to contribute to the capital
of the Partnership or is deemed obligated to contribute pursuant to
Regulations Section 1.704-1(b)(2)(ii)(c)(2)) of each Partner with
respect to such Partnership Interests is reduced to zero,
(ii) second, to the Partners holding any Partnership
Interests that are entitled to any preference in distribution in
accordance with the rights of any such class of Partnership Interests
(and, if there is more than one class of such Partnership Interests,
then in the reverse order of their preference in distribution), until
the Adjusted Capital Account (modified in the same manner as in clause
(i)) of each such Partner with respect to such Partnership Interests is
reduced to zero, and
(iii) third, to the General Partner.
To the extent permitted under Section 704 of the Code, solely for
purposes of allocating Net Income or Net Loss in any taxable year (or a
portion thereof) to Partners holding Series B Preferred Units or Series
C Preferred Units pursuant to Section 1 hereof, items of Net Income or
Net Loss, as the case may be, shall not include Depreciation with
respect to properties that are "ceiling limited" in respect of holders
of Series B Preferred Units or Series C Preferred Units. For purposes
of the preceding sentence, Partnership property shall be considered
"ceiling limited" in respect of a holder of Series B Preferred Units or
Series C Preferred Units if Depreciation attributable to such
Partnership property which would otherwise be allocable to such
Partner, without regard to this paragraph, exceeds depreciation
determined for federal income tax purposes attributable to such
Partnership property which would otherwise be allocable to such holder
by more than 5%. Notwithstanding the foregoing sentences in this
paragraph, in applying this paragraph, the General Partner may, in its
discretion for administrative ease and convenience, calculate Net
Income or Net Loss in any taxable year (or a portion thereof) allocable
to the Partners holding Series B Preferred Units or Series C Preferred
Units by excluding Depreciation with respect to all properties of the
Partnership.
It is the intention of the parties hereunder that the aggregate
Capital Account balance of the holders of Series B Preferred Units or
Series C Preferred Units at any date shall not exceed the amount of the
original Capital Contribution of such holder plus the cumulative
Priority Return, whether or not declared, to the extent not previously
distributed.
Section 5. CEILING ON PARTICIPATION.
(a) Notwithstanding any other provision of the Partnership
Agreement, if the holder of the Series C Preferred Units is an entity
other than a corporation, such holder shall not be allocated or
otherwise entitled to more than 19.9% of the total Net Income allocated
to the Capital Accounts of the Partners in accordance with Section
704(b) of the Internal Revenue Code for any taxable year (or any
portion thereof in which the relative interests of the Partners have
varied from their relative interests for an immediately preceding
and/or immediately succeeding portion thereof). If, by application of
this paragraph, such holder is allocated less Net Income for any period
than the amount to which it would otherwise be entitled, then (1) Net
Income equal to such shortfall shall instead be allocated to the
General Partner and (2) Net Income equal to such shortfall shall be
allocated to such holder, as applicable, in lieu of the General Partner
as soon as possible in subsequent periods to the extent that doing so
would not violate the limitations provided for in this paragraph. If
the General Partner reasonably anticipates or realizes that a
distribution to such holder on any Preferred Unit Distribution Payment
Date might cause such partner to be distributed cash in respect of more
than 19.9% of the total Net Income allocated to the Capital Accounts of
the partners in accordance with Section 704(b) of the Internal Revenue
Code for any taxable year (or any portion thereof in which the relative
interests of the partners have varied from their relative interests for
an immediately preceding and/or immediately succeeding portion
thereof), the General Partner may withhold all or a portion of such
distribution to the extent appropriate to satisfy the provisions of
this paragraph 5(a).
(b) Notwithstanding any other provision of the Partnership
Agreement (as amended), if the ceiling provision set forth in paragraph
5(a) hereof causes income which would otherwise be allocated to any
holder to be allocated to the General Partner, the cash otherwise
distributable to such holder in respect of such reallocated income
shall be reduced by an amount equal to such reallocated income. If, by
application of this paragraph 5, such holder is distributed less cash
for any period than the amount to which it would otherwise be entitled,
an amount equal to such shortfall shall be made up by distributing cash
to such Partner, on the first Preferred Unit Distribution Payment Date
following each period for which income is allocated to such Partner
pursuant to the penultimate sentence of the immediately preceding
paragraph, in an amount equal to the income so allocated. Solely for
purposes of this paragraph 5(b), income shall be deemed to be allocated
immediately prior to each Preferred Unit Distribution Payment Date.
Section 6. LIQUIDATION PROCEEDS.
(a) Upon any voluntary or involuntary liquidation, dissolution or
winding-up of the affairs of the Partnership, distributions on the
Series C Preferred Units shall be made in accordance with Section 8.2
of the Partnership Agreement.
(b) NOTICE. Written notice of any such voluntary or involuntary
liquidation, dissolution or winding-up of the Partnership, stating the
payment date or dates when, and the place or places where, the amounts
distributable in such circumstances shall be payable, shall be given by
(i) fax and (ii) by first class mail, postage pre-paid, not less than
twenty 20 and not more than sixty (60) days prior to the payment date
stated therein, to each record holder of the Series C Preferred Units
at the respective addresses of such holders as the same shall appear on
the transfer records of the Partnership.
(c) NO FURTHER RIGHTS. After payment of the full amount of the
liquidating distributions to which they are entitled, the holders of
Series C Preferred Units will have no right or claim to any of the
remaining assets of the Partnership.
(d) CONSOLIDATION, MERGER OR CERTAIN OTHER TRANSACTIONS. The
consolidation or merger of the Partnership with or into any other
corporation, trust, partnership, limited liability company or other
entity (or of any other corporation, trust, partnership, limited
liability company or other entity with or into the Partnership), or the
sale, lease, exchange, transfer or conveyance of all or substantially
all of the property or business of the Partnership shall not be deemed
to constitute a liquidation, dissolution or winding-up of the
Partnership.
Section 7. OPTIONAL REDEMPTION.
(a) RIGHT OF OPTIONAL REDEMPTION. The Series C Preferred Units
may not be redeemed prior to the fifth (5th) anniversary of the issuance
date. On or after such date, the Partnership at its sole option shall
have the right to redeem the Series C Preferred Units, in whole or in
part, at any time or from time to time, upon not less than thirty (30)
nor more than sixty (60) days' written notice, at a redemption price,
payable in cash, equal to the Capital Account balance of the holders of
Series C Preferred Units (the "Series C Redemption Price"); provided,
however, that no redemption pursuant to this Section 7 will be
permitted if the Redemption Price does not equal or exceed the original
Capital Contribution of such holder plus the cumulative Priority
Return, whether or not declared, to the redemption date to the extent
not previously distributed. If fewer than all of the outstanding
Series C Preferred Units are to be redeemed, the Series C Preferred
Units to be redeemed shall be selected pro rata (as nearly as
practicable without creating fractional units).
(b) LIMITATION ON REDEMPTION.
(i) The Redemption Price of the Series C Preferred Units
(other than the portion thereof consisting of accumulated but unpaid
distributions) will be payable solely out of the sale proceeds of
capital stock of the General Partner, which will be contributed by the
General Partner to the Partnership as additional capital contribution,
or out of the sale of limited partner interests in the Partnership and
from no other source. For purposes of the preceding sentence, "capital
stock" means any equity securities (including Common Shares and
Preferred Shares (as such terms are defined in the Charter)), shares,
participation or other ownership interests (however designated) and any
rights (other than debt securities convertible into or exchangeable for
equity securities) or options to purchase any of the foregoing.
(ii) The Partnership may not redeem fewer than all of the
outstanding Series C Preferred Units unless all accumulated and unpaid
distributions have been paid or contemporaneously are authorized and
paid (or authorized and a sum sufficient for the full payment thereof
is irrevocably deposited in trust for immediate payment) on all Series
C Preferred Units for all quarterly distribution periods terminating on
or prior to the date of redemption.
(c) PROCEDURES FOR REDEMPTION.
(i) Notice of redemption will be (A) faxed, and (B) mailed by
the Partnership, by certified mail, postage prepaid, not less than
thirty (30) nor more than sixty (60) days prior to the redemption date,
addressed to the respective holders of record of the Series C Preferred
Units at their respective addresses as they appear on the records of
the Partnership. No failure to give or defect in such notice or in the
transmission thereof shall affect the validity of the proceedings for
the redemption of any Series C Preferred Units except as to the holder
to whom such notice was defective or not given or received. In
addition to any information required by law, each such notice shall
state: (1) the redemption date, (2) the Redemption Price, (3) the
aggregate number of Series C Preferred Units to be redeemed and if
fewer than all of the outstanding Series C Preferred Units are to be
redeemed, the number of Series C Preferred Units to be redeemed held by
such holder, which number shall equal such holder's pro rata share
(based on the percentage of the aggregate number of outstanding Series
C Preferred Units the total number of Series C Preferred Units held by
such holder represents) of the aggregate number of Series C Preferred
Units to be redeemed, (4) the place or places where the Series C
Preferred Units are to be surrendered for payment of the Redemption
Price, (5) that distributions on the Series C Preferred Units to be
redeemed will cease to accumulate on such redemption date and (6) that
payment of the Redemption Price will be made upon presentation and
surrender of such Series C Preferred Units.
(ii) If the Partnership gives a notice of redemption in
respect of Series C Preferred Units (which notice will be irrevocable)
then, by 12:00 noon, New York City time, on the redemption date, the
Partnership will deposit irrevocably in trust for the benefit of the
Series C Preferred Units being redeemed funds sufficient to pay the
applicable Redemption Price and will give irrevocable instructions and
authority to pay such Redemption Price to the holders of the Series C
Preferred Units upon surrender of the Series C Preferred Units by such
holders at the place designated in the notice of redemption. If the
Series C Preferred Units are evidenced by a certificate and if fewer
than all Series C Preferred Units evidenced by any certificate are
being redeemed, a new certificate shall be issued upon surrender of the
certificate evidencing all Series C Preferred Units, evidencing the
unredeemed Series C Preferred Units without cost to the holder thereof.
On and after the date of redemption, distributions will cease to
accumulate on the Series C Preferred Units or portions thereof called
for redemption, unless the Partnership defaults in the payment thereof.
If any date fixed for redemption of Series C Preferred Units is not a
Business Day, then payment of the Redemption Price payable on such date
will be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect of any such delay)
except that, if such Business Day falls in the next calendar year, such
payment will be made on the immediately preceding Business Day, in each
case with the same force and effect as if made on such date fixed for
redemption. If payment of the Redemption Price is improperly withheld
or refused and not paid by the Partnership, distributions on such
Series C Preferred Units will continue to accumulate from the original
redemption date to the date of payment, in which case the actual
payment date will be considered the date fixed for redemption for
purposes of calculating the applicable Redemption Price.
Section 8. VOTING RIGHTS.
(a) GENERAL. Holders of the Series C Preferred Units will not
have any voting rights or right to consent to any matter requiring the
consent or approval of the Limited Partners, except as set forth below.
(b) CERTAIN VOTING RIGHTS. So long as any Series C Preferred
Units remain outstanding, the Partnership shall not, without the
affirmative vote of the holders of at least two-thirds of the Series C
Preferred Units outstanding at the time (i) (A) authorize or create, or
increase the authorized or issued amount of, any class or series of
Partnership Interests senior to the Series C Preferred Units with
respect to payment of distributions or rights upon liquidation,
dissolution or winding-up, (B) reclassify any Partnership Interests of
the Partnership into any such senior Partnership Interest, or (C)
create, authorize or issue any obligations or security convertible into
or evidencing the right to purchase any such senior Partnership
Interests, (ii) (A) authorize or create, or increase the authorized or
issued amount of any Parity Preferred Units, (B) reclassify any
Partnership Interest into a Parity Preferred Unit, or (C) create,
authorize or issue any obligations or security convertible into or
evidencing the right to purchase any Parity Preferred Unit; provided,
that restrictions contained in this clause (ii) of this Paragraph (b)
shall apply only to Parity Preferred Units that are issued to an
Affiliate of the Partnership other than on arm's length terms; and to
no other issuance, including, without limitation, an issuance to the
General Partner, the purpose of which is to allow the General Partner
to issue corresponding preferred Shares to persons who are not
Affiliates of the Partnership or (iii) either (A) consolidate or merge
into or with any corporation or other entity or (B) amend, alter or
repeal the provisions of the Partnership Agreement, whether by merger
or consolidation or otherwise, in such a way that would materially and
adversely affect the powers, special rights, preferences, privileges or
voting power of the Series C Preferred Units or the holders thereof;
provided, however, that with respect to the occurrence of a merger or
consolidation, so long as (1) the Partnership is the surviving entity
and the Series C Preferred Units remain outstanding with the terms
thereof unchanged, or (2) the resulting, surviving or transferee entity
is a partnership, limited liability company or other pass-through
entity organized under the laws of any state, and such entity
substitutes for the Series C Preferred Units other interests in such
entity having substantially the same terms and rights as the Series C
Preferred Units, including with respect to distributions, voting rights
and rights upon liquidation, dissolution or winding-up, then the
occurrence of any such event shall not be deemed to materially and
adversely affect the rights, privileges or voting powers of the holders
of the Series C Preferred Units; provided, further, that any increase
in the amount of Partnership Interests or the creation or issuance of
any other class or series of Partnership Interests, shall not be deemed
to materially and adversely affect the rights, preferences, privileges
or voting powers of the Series C Preferred Units, if such Partnership
Units rank (y) junior to the Series C Preferred Units with respect to
payment of distributions or the distribution of assets upon
liquidation, dissolution or winding up, or (z) on a parity with the
Series C Preferred Units with respect to payment of distributions or
the distribution of assets upon liquidation, dissolution or winding-up;
provided, that any Preferred Units issued in reliance on the preceding
clause (z) shall have been issued to an Affiliate of the Partnership on
arm's length terms, or to the General Partner in order to allow the
General Partner to issue corresponding preferred Shares to persons who
are not Affiliates of the Partnership. In the event of any conflict or
inconsistency between this Section 8 and Article XIV of the Partnership
Agreement, this Section 8 shall control.
Section 9. TRANSFER RESTRICTIONS. The Series C Preferred Units
shall be subject to the provisions of Article IX of the Partnership
Agreement, provided, however that (a) the General Partner shall act
reasonably in exercising its discretion pursuant to the provisions of
Sections 9.2(a) and 9.2(c) and shall not withhold its consent to any
transfer to any Person, and the admission of such Person as a
Substituted Limited Partner, which Person does not violate the
requirements of Section 9.3 and such transfers do not cause the total
number of holders of Series C Preferred Units which would be considered
partners under Treasury Regulation Section 1.7704-1(h)(3), at any time
the Partnership is satisfying the private placement safe harbor of
Treasury Regulation Section 1.7704-1(h) to exceed the lesser of (i)
(A) four (4) through December 31, 2000 and (B) six (6) after December
31, 2000 and (ii) the maximum number that would permit the Partnership
to continue to satisfy such safe harbor (but substituting "90" for
"100" in assessing the status of such safe harbor) and (b) the term
"transfer" when used in Article IX shall not be deemed to include any
exchange pursuant to Section 10 below.
Section 10. EXCHANGE RIGHTS.
(a) RIGHT TO EXCHANGE.
(i) Series C Preferred Units will be exchangeable in whole
or in part at anytime on or after the tenth (10th) anniversary of the
date of issuance, at the option of the holders thereof, for authorized
but previously unissued shares of 9.125% Series C Cumulative Redeemable
Preferred Shares of the General Partner (the "Series C Preferred
Shares") at an exchange rate of one Series C Preferred Share for one
Series C Preferred Unit, subject to adjustment as described below (the
"Exchange Price"), provided that the Series C Preferred Units will
become exchangeable at any time, in whole or in part, at the option of
the holders of Series C Preferred Units for Series C Preferred Shares
if at any time full distributions shall not have been timely made on
any Series C Preferred Unit with respect to six (6) prior quarterly
distribution periods, whether or not consecutive, provided, however,
that a distribution in respect of Series C Preferred Units shall be
considered timely made if made within two (2) Business Days after the
applicable Preferred Unit Distribution Payment Date if at the time of
such late payment there shall not be any prior quarterly distribution
periods in respect of which full distributions were not timely made or
upon receipt by a holder or holders of Series C Preferred Units of (1)
notice from the General Partner that the General Partner or a
Subsidiary of the General Partner has taken the position that the
Partnership is, or upon the occurrence of a defined event in the
immediate future will be, a PTP and (2) an opinion rendered by an
outside nationally recognized independent counsel familiar with such
matters addressed to a holder or holders of Series C Preferred Units,
that the Partnership is or likely is, or upon the occurrence of a
defined event in the immediate future will be or likely will be, a PTP.
In addition, the Series C Preferred Units may be exchanged for Series C
Preferred Shares, in whole or in part, at the option of any holder
prior to the tenth (10th) anniversary of the issuance date and after the
third (3rd) anniversary thereof if such holder of a Series C Preferred
Units shall deliver to the General Partner either (i) a private letter
ruling addressed to such holder of Series C Preferred Units or (ii) an
opinion of independent counsel reasonably acceptable to the General
Partner based on the enactment of temporary or final Treasury
Regulations or the publication of a Revenue Ruling, in either case to
the effect that an exchange of the Series C Preferred Units at such
earlier time would not cause the Series C Preferred Units to be
considered "stock and securities" within the meaning of section 351(e)
of the Code for purposes of determining whether the holder of such
Series C Preferred Units is an "investment company" under
section 721(b) of the Code if an exchange were to occur at such time.
Furthermore, the Series C Preferred Units may be exchanged in whole but
not in part by any holder thereof which is a real estate investment
trust within the meaning of Sections 856 through 859 of the Code for
Series C Preferred Shares (but only if the exchange in whole may be
accomplished consistently with the ownership limitations set forth
under Article VII of the Charter (taking into account exceptions
thereto and exemptions therefrom)) if at any time, (i) the Partnership
reasonably determines that the assets and income of the Partnership for
a taxable year after 2000 would not satisfy the income and assets tests
of Section 856 of the Code for such taxable year if the Partnership
were a real estate investment trust within the meaning of the Code or
(ii) any such holder of Series C Preferred Units shall deliver to the
Partnership and the General Partner an opinion of independent counsel
reasonably acceptable to the General Partner to the effect that, based
on the assets and income of the Partnership for a taxable year after
2000, the Partnership would not satisfy the income and assets tests of
Section 856 of the Code for such taxable year if the Partnership were a
real estate investment trust within the meaning of the Code and that
such failure would create a meaningful risk that a holder of the Series
C Preferred Units would fail to maintain qualification as a real estate
investment trust. In addition, the Series C Preferred Units may be
exchanged for Series C Preferred Share, in whole or in part, at the
option of any holder that is not a corporation (a "non-corporate
holder") if both (a) such non-corporate holder concludes based on
results or projected results that there exists (in the reasonable
judgment of the holder) an imminent and substantial risk that the
holder's interest in the Partnership will represent more than 19.9% of
the total profits or capital interests in the Partnership (determined
in accordance with Treasury regulations Section 1.731-2(e)(4)) for a
taxable year (or portion thereof), and (b) the non-corporate holder
delivers to the General Partner an opinion of nationally recognized
independent counsel to the effect that there is an imminent and
substantial risk that the holder's interest in the Partnership will
represent more than 19.9% of the total profits or capital interests in
the Partnership (determined in accordance with Treasury regulations
Section 1.731-2(e)(4)) for a taxable year (or portion thereof in which
the relative interests of the Partners may vary from their relative
interests for an immediately preceding and/or immediately succeeding
portion thereof).
(ii) Notwithstanding anything to the contrary set forth in
Section 10(a)(i) hereof, if an Exchange Notice (as defined herein) has
been delivered to the General Partner, then the General Partner may, at
its option, elect to redeem or cause the Partnership to redeem all or a
portion of the outstanding Series C Preferred Units for cash in an
amount equal to the original Capital Contribution per Series C
Preferred Unit plus all accrued and unpaid distributions thereon to the
date of redemption. The General Partner may exercise its option to
redeem the Series C Preferred Units for cash pursuant to this Section
10(a)(ii) hereof by giving each holder of record of Series C Preferred
Units notice of its election to redeem for cash, within ten (10)
Business Days after receipt of the Exchange Notice, by (m) fax, and (n)
registered mail, postage paid, at the address of each holder as it may
appear on the records of the Partnership stating (A) the redemption
date, which shall be no later than sixty (60) days following the
receipt of the Exchange Notice, (B) the redemption price, (C) the place
or places where the Series C Preferred Units are to be surrendered for
payment of the redemption price, (D) that distributions on the Series C
Preferred Units will cease to accrue on such redemption date; (E) that
payment of the redemption price will be made upon presentation and
surrender of the Series C Preferred Units and (F) the aggregate number
of Series C Preferred Units to be redeemed, and if fewer than all of
the outstanding Series C Preferred Units are to be redeemed, the number
of Series C Preferred Units to be redeemed held by such holder, which
number shall equal such holder's pro-rata share (based on the
percentage of the aggregate number of outstanding Series C Preferred
Units the total number of Series C Preferred Units held by such holder
represents) of the aggregate number of Series C Preferred Units being
redeemed.
(iii) In the event an exchange of all or a portion of Series
C Preferred Units pursuant to Section 10(a)(i) hereof would violate the
provisions on ownership limitation of the General Partner set forth in
Article VII of the Charter with respect to the Series C Preferred
Shares, the General Partner shall give written notice thereof to each
holder of record of Series C Preferred Units, within five (5) Business
Days following receipt of the Exchange Notice, by (m) fax, and (n)
registered mail, postage prepaid, at the address of each such holder
set forth in the records of the Partnership. In such event, each
holder of Series C Preferred Units shall be entitled to exchange,
pursuant to the provision of Section 10(b) a number of Series C
Preferred Units which would comply with the provisions on the ownership
limitation of the General Partner set forth in Article VII of the
Charter and any Series C Preferred Units not so exchanged (the "Excess
Units") shall be redeemed by the Partnership for cash in an amount
equal to the original Capital Contribution per Excess Unit, plus any
accrued and unpaid distributions thereon, whether or not declared, to
the date of redemption. The written notice of the General Partner
shall state (A) the number of Excess Units held by such holder, (B) the
redemption price of the Excess Units, (C) the date on which such Excess
Units shall be redeemed, which date shall be no later than sixty (60)
days following the receipt of the Exchange Notice, (D) the place or
places where such Excess Units are to be surrendered for payment of the
Redemption Price, (E) that distributions on the Excess Units will cease
to accrue on such redemption date, and (F) that payment of the
redemption price will be made upon presentation and surrender of such
Excess Units. In the event an exchange would result in Excess Units,
as a condition to such exchange, each holder of such units agrees to
provide representations and covenants reasonably requested by the
General Partner relating to (1) the widely held nature of the interests
in such holder, sufficient to assure the General Partner that the
holder's ownership of shares of beneficial interest of the General
Partner (without regard to the limits described above) will not cause
any individual to Beneficially Own in excess of the Ownership Limit
(all as defined in the Charter); and (2) to the extent such holder can
so represent and covenant without obtaining information from its
owners, the holder's ownership of tenants of the Partnership and its
affiliates.
(iv) The redemption of Series C Preferred Units described in
Sections 10(a)(ii) and (iii) hereof shall be subject to the provisions
of Sections 7(b)(i) and 7(c)(ii) hereof; provided, however, that the
term "Redemption Price" in such Section shall be read to mean the
original Capital Contribution per Series C Preferred Unit being
redeemed plus all accrued and unpaid distributions to the redemption
date.
(b) PROCEDURE FOR EXCHANGE.
(i) Any exchange shall be exercised pursuant to a notice of
exchange (the "Exchange Notice") delivered to the General Partner by
the holder who is exercising such exchange right, by (A) fax and (B) by
certified mail postage prepaid. The exchange of Series C Preferred
Units, or a specified portion thereof, may be effected after the fifth
(5th) Business Day following receipt by the General Partner of the
Exchange Notice by delivering certificates, if any, representing such
Series C Preferred Units to be exchanged together with, if applicable,
written notice of exchange and a proper assignment of such Series C
Preferred Units to the office of the General Partner maintained for
such purpose. Currently, such office is:
65 Valley Stream Parkway
Malvern, Pennsylvania 19355.
Each exchange will be deemed to have been effected
immediately prior to the close of business on the date on which such
Series C Preferred Units to be exchanged (together with all required
documentation) shall have been surrendered and notice shall have been
received by the General Partner as aforesaid and the Exchange Price
shall have been paid. Any Series C Preferred Shares issued pursuant to
this Section 10 shall be delivered as shares which are duly authorized,
validly issued, fully paid and nonassessable, free of pledge, lien,
encumbrance or restriction other than those provided in the Charter,
the Bylaws of the General Partner, the Securities Act and relevant
state securities or blue sky laws.
(ii) In the event of an exchange of Series C Preferred Units
for shares of Series C Preferred Shares, an amount equal to the accrued
and unpaid distributions, whether or not declared, to the date of
exchange on any Series C Preferred Units tendered for exchange shall
(A) accrue on the Series C Preferred Shares into which such Series C
Preferred Units are exchanged, and (B) continue to accrue on such
Series C Preferred Units, which shall remain outstanding following such
exchange, with the General Partner as the holder of such Series C
Preferred Units. Notwithstanding anything to the contrary set forth
herein, in no event shall a holder of a Series C Preferred Unit that
was validly exchanged into Series C Preferred Shares pursuant to this
Section 10 (other than the General Partner now holding such Series C
Preferred Unit), receive a cash distribution out of Available Cash of
the Partnership, if such holder, after exchange, is entitled to receive
a distribution out of Available Cash with respect to the Series C
Preferred Shares for which such Series C Preferred Unit was exchanged
or redeemed.
(iii) Fractional shares of Series C Preferred Shares are not
to be issued upon exchange but, in lieu thereof, the General Partner
will pay a cash adjustment based upon the fair market value of the
Series C Preferred Shares on the day prior to the exchange date as
determined in good faith by the Board of Directors of the General
Partner.
(c) ADJUSTMENT OF EXCHANGE PRICE.
(i) The Exchange Price is subject to adjustment upon certain
events, including, (A) subdivisions, combinations and reclassification
of the Series C Preferred Shares, and (B) distributions to all holders
of Series C Preferred Shares of evidence of indebtedness of the General
Partner or assets (including securities, but excluding dividends and
distributions paid in cash out of equity applicable to Series C
Preferred Shares).
(ii) In case the General Partner shall be a party to any
transaction (including, without limitation, a merger, consolidation,
statutory share exchange, tender offer for all or substantially all of
the General Partner's capital stock or sale of all or substantially all
of the General Partner's assets), in each case as a result of which the
Series C Preferred Shares will be converted into the right to receive
shares of capital stock, other securities or other property (including
cash or any combination thereof), each Series C Preferred Unit will
thereafter be exchangeable into the kind and amount of shares of
capital stock and other securities and property receivable (including
cash or any combination thereof) upon the consummation of such
transaction by a holder of that number of Series C Preferred Shares or
fraction thereof into which one Series C Preferred Unit was
exchangeable immediately prior to such transaction. The General
Partner may not become a party to any such transaction unless the terms
thereof are consistent with the foregoing.
(d) NO RIGHTS UNDER ARTICLE XI. Holders of Series C Preferred
Units shall not be entitled to any "Rights" provided to Limited
Partners pursuant to Article XI of the Partnership Agreement.
Section 11. NO CONVERSION RIGHTS. The holders of the Series C
Preferred Units shall not have any rights to convert such shares into
shares of any other class or series of shares or into any other
securities of, or interest in, the Partnership.
Section 12. NO SINKING FUND. No sinking fund shall be
established for the retirement or redemption of Series C Preferred
Units.
Section 13. ADMISSION OF LIMITED PARTNERS; EXHIBITS TO
PARTNERSHIP. In accordance with Section 4.1 of the Partnership
Agreement, Montebello is hereby admitted as an Additional Partner.
Exhibit A to the Partnership Agreement is hereby amended to reflect the
issuance of the Series C Preferred Units provided for herein.
Section 14. MISCELLANEOUS. The parties hereto agree that the
holders of Series C Preferred Units shall not be deemed "Limited
Partners" for the purpose of calculating the ownership level of limited
partners as contemplated by Section 7.2 of the Partnership Agreement.
Section 15. REAFFIRMATION. Except as modified herein, all terms
and conditions of the Partnership Agreement shall remain in full force
and effect, which terms and conditions the General Partner hereby
ratifies and affirms.
In witness whereof, this Amendment has been executed as of the
date first above written.
GENERAL PARTNER
LIBERTY PROPERTY TRUST
By:
------------------------------------------
Name:
Title:
ADDITIONAL LIMITED PARTNER
MONTEBELLO REALTY CORP.
By:
------------------------------------------
Name:
Title:
EXHIBIT 10.1
CREDIT AGREEMENT
AMONG
LIBERTY PROPERTY LIMITED PARTNERSHIP
and
LIBERTY PROPERTY TRUST
and
FLEET NATIONAL BANK, AS LEAD ARRANGER AND ADMINISTRATIVE AGENT
and
FIRST UNION NATIONAL BANK, AS SYNDICATION AGENT
and
PNC BANK, NATIONAL ASSOCIATION, AS DOCUMENTATION AGENT
and
BANK ONE, N.A., AS CO-AGENT
COMMERZBANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES, AS CO-AGENT
DRESDNER BANK AG, NEW YORK BRANCH AND
GRAND CAYMAN BRANCH, AS CO-AGENT
and
THE LENDERS PARTY HERETO
TABLE OF CONTENTS
Section 1. DEFINITIONS OF RULES OF INTERPRETATION 1
Section 1.1. Definitions 1
Section 1.2. Rules of Interpretation 20
Section 2. REVOLVING CREDIT FACILITY 21
Section 2.1. Commitment to Lend; Limitation on Total
Commitment 21
Section 2.2. Changes in Total Commitment 21
Section 2.3. The Notes 23
Section 2.4. Interest on Loans 23
Section 2.5. Requests for Loans 23
Section 2.6. Conversion Options 24
Section 2.7. Funds for Loans 25
Section 2.8 Swingline Loans 26
Section 2.9. Letters of Credit 27
Section 3. REPAYMENT OF THE LOANS 30
Section 3.1. Maturity 30
Section 3.2. Mandatory Repayments of Loan 30
Section 3.3. Optional Repayments of Loans 30
Section 4. CERTAIN GENERAL PROVISIONS 32
Section 4.1. Fees 32
Section 4.2. Commitment Fee 32
Section 4.3. Funds for Payments 32
Section 4.4. Computations 33
Section 4.5. Additional Costs, Etc 33
Section 4.6. Capital Adequacy 34
Section 4.7. Certificate 34
Section 4.8. Indemnity 34
Section 4.9. Interest on Overdue Amounts 35
Section 4.10. Inability to Determine Eurodollar Rate 35
Section 4.11. Illegality 35
Section 4.12. Replacement of Lenders 36
Section 5. UNENCUMBERED PROPERTIES; NO LIMITATION ON RECOURS 36
Section 5.1. Unencumbered Properties and
Unencumbered Development Properties 36
Section 5.2. Waivers by Requisite Lenders 36
Section 5.3. Rejection of Unencumbered Properties 36
Section 5.4. Change in Circumstances 37
Section 5.5. No Limitation on Recourse 37
Section 5.6. Additional Guarantor Subsidiaries 37
Section 6. REPRESENTATIONS AND WARRANTIES 37
Section 6.1. Authority; Etc 37
Section 6.2. Governmental Approvals 39
Section 6.4. Financial Statements 39
Section 6.5. No Material Changes, Etc 40
Section 6.6. Franchises, Patents, Copyrights, Etc 40
Section 6.7. Litigation 40
Section 6.8. No Materially Adverse Contracts, Etc 40
Section 6.9. Compliance With Other Instruments, Laws, Etc 40
Section 6.10. Tax Status 41
Section 6.11. Event of Default 41
Section 6.12. Investment Company Act 41
Section 6.13. Absence of Financing Statements, Etc 41
Section 6.14. Status of the Company 41
Section 6.15. Certain Transactions 41
Section 6.16. Benefit Plans: Multi-employer Plans: Guaranteed
Pension Plans 42
Section 6.17. Regulations U and X 42
Section 6.18. Environmental Compliance 42
Section 6.19. Subsidiaries and Affiliates 43
Section 6.20. Loan Documents 44
Section 6.21. Buildings on the Unencumbered Properties 44
Section 7. AFFIRMATIVE COVENANTS OF THE BORROWER 44
Section 7.1. Punctual Payment 44
Section 7.2. Maintenance of Office 44
Section 7.3. Records and Accounts 44
Section 7.4. Financial Statements, Certificates
and Information 44
Section 7.5. Notices 46
Section 7.6. Existence; Maintenance of REIT Status;
Maintenance of Properties 47
Section 7.7. Insurance 47
Section 7.8. Taxes 48
Section 7.9. Inspection of Properties and Books 48
Section 7.10 Compliance with Laws, Contracts, Licenses,
and Permits 48
Section 7.11. Use of Proceeds 48
Section 7.12. Prepayment of Existing Fleet Facilities 49
Section 7.13 Notices of Significant Transactions 49
Section 7.14. Further Assurance 49
Section 7.15. Environmental Indemnification 50
Section 7.16. Response Actions 50
Section 7.17. Employee Benefit Plans 50
Section 7.18 Required Interest Rate Contracts 51
Section 8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER 51
Section 8.1 Restrictions on Recourse Indebtedness 51
Section 8.2. Restrictions on Investments 52
Section 8.3. Merger, Consolidation and Other
Fundamental Changes 53
Section 8.4. Sale and Leaseback 54
Section 8.5. Compliance with Environmental Laws 54
Section 8.6. Distributions 54
Section 8.7. Equity Repurchase Payments 54
Section 8.8. Preferred Distributions 54
Section 9. FINANCIAL COVENANTS OF THE BORROWER 55
Section 9.1. Value of All Unencumbered Properties 55
Section 9.2. Minimum Debt Service Coverage 55
Section 9.3. Total Debt to Total Assets 55
Section 9.4. Maximum Secured Debt 55
Section 9.5. Minimum Tangible Net Worth 55
Section 9.6. Total Operating Cash Flow to Interest Expense 55
Section 9.7. Adjusted EBITDA to Fixed Charges 55
Section 9.8. Aggregate Occupancy Rate 55
Section 10. CONDITIONS TO EFFECTIVENESS 55
Section 10.1. Loan Documents 55
Section 10.2. Certified Copies of Organization Documents; Good
Standing Certificates 55
Section 10.3. By-laws; Resolutions 56
Section 10.4. Incumbency Certificate; Authorized Signers 56
Section 10.5. Opinions of Counsel Concerning Organization
and Loan Documents 56
Section 10.6. Payment of Fees 56
Section 11. CONDITIONS TO ALL CREDIT ADVANCES 56
Section 11.1. Representations True; No Event of Default;
Compliance Certificate 56
Section 11.2. No Legal Impediment 57
Section 11.3. Governmental Regulation 57
Section 11.4. Proceedings and Documents 57
Section 12. EVENTS OF DEFAULT; ACCELERATION; ETC 57
Section 12.1. Events of Default and Acceleration 57
Section 12.2. Termination of Commitments 60
Section 12.3. Remedies 60
Section 12.4. Distribution of Enforcement Proceeds 60
Section 13. SETOFF 61
Section 14. THE AGENT 62
Section 14.1. Authorization 62
Section 14.2. Employees and Agents 62
Section 14.3. No Liability 62
Section 14.4. No Representations 62
Section 14.5. Payments 63
Section 14.6. Holders of Notes 64
Section 14.7. Indemnity 64
Section 14.8. Agent as Lender 64
Section 14.9. Resignation 64
Section 14.10. Notification of Defaults and Events of Default 65
Section 14.11. Duties in the Case of Enforcement 65
Section 15. EXPENSES 65
Section 16. INDEMNIFICATION 66
Section 17. SURVIVAL OF COVENANTS, ETC 67
Section 18. ASSIGNMENT; PARTICIPATIONS; ETC 67
Section 18.1. Conditions to Assignment by Lenders 67
Section 18.2. Certain Representations and Warranties;
Limitations; Covenants 68
Section 18.3 Register 69
Section 18.4. New Notes 69
Section 18.5. Participations 69
Section 18.6. Pledge by Lender 70
Section 18.7. No Assignment by Borrower 70
Section 18.8. Disclosure 70
Section 19. NOTICES, ETC 70
Section 20. GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE 71
Section 21. HEADINGS 71
Section 22. COUNTERPARTS 71
Section 23. ENTIRE AGREEMENT 71
Section 24. WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS 72
Section 25. CONSENTS, AMENDMENTS, WAIVERS, ETC 72
Section 26. SEVERABILITY 73
Section 27. ACKNOWLEDGMENTS 73
Exhibit A Form of Note
Exhibit B Form of Loan Request
Exhibit C Form of Compliance Certificate
Exhibit D Form of Swingline Loan Request
Exhibit E Form of Assignment and Acceptance
Exhibit F Form of Letter of Credit Request
Exhibit G Form of Letter of Credit Application
Schedule 1 Lenders; Domestic and Eurodollar Lending Offices
Schedule 1.1 Unencumbered Properties and Unencumbered
Development Properties
Schedule 1.2 Commitments and Commitment Percentages
Schedule 1.3 Related Companies, Guarantor Subsidiaries and
Unconsolidated Entities
Schedule 1.4. Existing Letter of Credit
Schedule 6.3 Title to Properties
Schedule 6.7 Litigation
Schedule 6.15 Insider Transactions
Schedule 6.16 Employee Benefit Plans
Schedule 6.18 Environmental Matters
Schedule 6.19 Company Assets
Schedule 6.21 Building Structural Defects, etc.
Schedule 7.18 Interest Rate Contracts
Schedule 8.2(d)Investments
CREDIT AGREEMENT
This CREDIT AGREEMENT is made as of the 25th day of April, 2000, by and
among LIBERTY PROPERTY LIMITED PARTNERSHIP, a Pennsylvania limited
partnership (the "Borrower"), LIBERTY PROPERTY TRUST, a Maryland trust
(the "Company") and FLEET NATIONAL BANK, a national banking
association ("Fleet"), the other lending institutions which are listed
from time to time on Schedule 1 (collectively, with Fleet, the
"Lenders"), FIRST UNION NATIONAL BANK, as syndication agent, PNC BANK,
NATIONAL ASSOCIATION, as documentation agent, BANK ONE, N.A., as Co-
Agent, COMMERZBANK AG, NEW YORK AND GRAND CAYMAN BRANCHES, as Co-
Agent, and DRESDNER BANK AG, NEW YORK BRANCH AND GRAND CAYMAN BRANCH,
as Co-Agent, and FLEET NATIONAL BANK, as administrative agent for
itself and such other lending institutions (the "Agent").
WHEREAS, the Borrower has requested that Fleet and the Lenders provide
an unsecured revolving credit facility in the maximum amount of
$450,000,000 (the "Facility") to the Borrower and Fleet and the Lenders
have agreed to provide such Facility subject to the terms and
conditions set forth herein;
NOW, THEREFORE, to accomplish these purposes, the Agent, the Borrower,
the Company and the Lenders hereby agree as follows:
Section 1. DEFINITIONS OF RULES OF INTERPRETATION
Section 1.1. Definitions. The following terms shall have the
meanings set forth in this Section l or elsewhere in the provisions of
this Agreement referred to below:
Additional Commitment. The portion (if any) of any Lender's
Commitment which will become effective on the Commitment Increase Date
if the Total Commitment is increased pursuant to Section 2.2.
Additional Commitment Lenders. Those Lenders which provide
an Additional Commitment.
Adjusted EBITDA. EBITDA adjusted to remove the effect of
recognizing rental income on a straight-line basis over the applicable
lease terms.
Affiliated Lenders. Any commercial bank or financial
institution which is (i) the parent corporation of any of the Lenders,
(ii) a wholly-owned subsidiary of any of the Lenders or (iii) a
wholly-owned subsidiary of the parent corporation of any of the
Lenders.
Agent. Fleet National Bank acting in its capacity as agent
for the Lenders or any successor agent.
Agent's Head Office. The Agent's head office located at 100
Federal Street, Boston, Massachusetts 02110, or at such other location
as the Agent may designate from time to time.
Aggregate Occupancy Rate. With respect to the Unencumbered
Properties at any time, the ratio, as of such date, expressed as a
percentage, of (i) the net leasable area of all Unencumbered Properties
leased to tenants paying rent pursuant to Leases other than Leases
which are in material default, to (ii) the aggregate net leasable area
of all Unencumbered Properties.
Agreement. This Credit Agreement, including the Schedules and
Exhibits hereto.
Applicable Base Rate Margin. As of any date of
determination:
(i) 0% if the Moody's Rating is at least Baa3, the S & P
Rating is at least BBB- and the Duff & Phelps Rating (if any) is at
least BBB-.
(ii) 0.50% if the condition set forth in clause (i) of this
definition is not satisfied.
Prior to the existence of a Duff & Phelps Rating, in the
event that the Moody's Rating and the S & P Rating are not equivalent,
the Applicable Base Rate Margin will be based on the lower rating.
After the existence of a Duff & Phelps Rating, the following rules will
be applicable:
In the event that the ratings from the three Rating Agencies
are not equivalent but two of such ratings are equivalent and the
lowest rating is no more than one level below the highest rating, then
the Applicable Base Rate Margin will be based on the ratings of a
majority of two out of the three Rating Agencies.
In the event that no two of the ratings from the three Rating
Agencies are equivalent and the lowest rating is no more than one level
below the middle rating, then the Applicable Base Rate Margin will be
based on such middle rating.
In the event that the lowest rating is two or more levels
below the next closest rating, then the Applicable Base Rate Margin
will be based on the lowest rating of any of the three Rating Agencies.
Any change in the Applicable Base Rate Margin caused by a
change in the Moody's Rating, the S & P Rating or the Duff & Phelps
Rating (if any) shall become effective on the first day following the
effective date of such change.
Applicable Eurodollar Margin. As of any date of
determination:
(i) 0.95%, if the Moody's Rating is at least Baa1, the S&P
Rating is at least BBB+ and the Duff & Phelps Rating (if any) is at
least BBB+,
(ii) 1.05%, if the Moody's Rating is at least Baa2, the S&P
Rating is at least BBB and the Duff & Phelps Rating (if any) is at
least BBB but the condition set forth in clause (i) of this definition
is not satisfied,
(iii) 1.15%, if the Moody's Rating is at least Baa3, the S&P
Rating is at least BBB- and the Duff & Phelps Rating (if any) is at
least BBB- but neither the condition set forth in clause (i) of this
definition, nor the condition set forth in clause (ii) of this
definition, is satisfied,
(iv) 1.575% if the Moody's Rating is at least Ba1, the S & P
Rating is at least BB+ and the Duff & Phelps Rating (if any) is at
least BB+, but none of the conditions set forth in clause (i), clause
(ii) or clause (iii) of this definition is satisfied,
(v) 1.825%, if the Moody's Rating is lower than Ba1 (or if
there is no Moody's Rating) or if the S&P Rating is lower than BB+ (or
if there is no S&P Rating) or if the Duff & Phelps Rating (if any) is
lower than BB+ .
Prior to the existence of a Duff & Phelps Rating, in the event that the
Moody's Rating and the S & P Rating are not equivalent, the Applicable
Eurodollar Margin will be based on the lower rating. After the
existence of a Duff & Phelps Rating, the following rules will be
applicable:
In the event that the ratings from the three Rating Agencies
are not equivalent but two of such ratings are equivalent and the
lowest rating is no more than one level below the highest rating, then
the Applicable Eurodollar Margin will be based on the ratings of a
majority of two out of the three Rating Agencies.
In the event that no two of the ratings from the three Rating
Agencies are equivalent and the lowest rating is no more than one level
below the middle rating, then the Applicable Eurodollar Margin will be
based on such middle rating.
In the event that the lowest rating is two or more levels
below the next closest rating, then the Applicable Eurodollar Margin
will be based on the lowest rating of any of the three Rating Agencies.
Any change in the Applicable Eurodollar Margin caused by a
change in the Moody's Rating, the S&P Rating or the Duff & Phelps
Rating (if any) shall become effective on the first day following the
effective date of such change.
Arranger. FleetBoston Robertson Stephens, Inc. or any
successor.
Assignment and Acceptance. See Section 18. Balance Sheet
Date. December 31, 1999.
Base Rate. The higher of (a) the annual rate of interest
announced from time to time by Fleet at the Agent's Head Office as its
"base rate", and (b) one half of one percent (1/2%) above the overnight
federal funds effective rate as published by the Board of Governors of
the Federal Reserve System, as in effect from time to time.
Base Rate Loans. Those Loans bearing interest calculated by
reference to the Base Rate.
Borrower. As defined in the preamble hereto.
Borrowing Date. The date on which any Loan is made or is to
be made (including, without limitation, the date on which any Mandatory
Base Rate Loan is made), and the date on which any Loan is converted or
continued in accordance with Section 2.6.
Buildings. The buildings, structures and other improvements
now or hereafter located on the Unencumbered Properties.
Business Day. Any day on which banking institutions in
Boston, Massachusetts, are open for the transaction of banking business
and, in the case of Eurodollar Rate Loans, also a day which is a
Eurodollar Business Day.
Capitalized Leases. Leases under which the Borrower is the
lessee or obligor, the discounted future rental payment obligations
under which are required to be capitalized on the balance sheet of the
Borrower in accordance with Generally Accepted Accounting Principles.
CERCLA. See Section 6.18.
Code. The Internal Revenue Code of 1986, as amended and in
effect from time to time.
Commitment. With respect to each Lender, the amount set
forth from time to time on Schedule 1.2 hereto as the amount of such
Lender's commitment to make Loans to the Borrower, as adjusted from
time to time as a result of any assignments pursuant to Section 18 .
The Commitment of the Lender which is also the Swingline Lender shall
not be reduced by the amount of its Swingline Commitment or by the
amount of any outstanding Swingline Loans.
Commitment Percentage. With respect to each Lender, the
percentage set forth from time to time on Schedule 1.2 hereto as such
Lender's percentage of the Total Commitment. If Borrower exercises its
option to increase the Total Commitment pursuant to Section 2.2(a), the
Commitment Percentages of the Lenders will change effective upon the
Commitment Increase Date.
Commitment Increase. An increase in the Total Commitment to
not more than $500,000,000 pursuant to Section 2.2(a).
Commitment Increase Date. See Section 2.2(a).
Company. See preamble.
Conversion Request. A notice given by the Borrower to the
Agent of its election to convert or continue a Loan in accordance with
Section 2.6.
Default. See Section 12.1.
Delinquent Lender. See Section 14.5(c).
Distribution. The declaration or payment of any dividend or
distribution of cash or cash equivalents to the holders of common
shares of beneficial interest in the Company or the holders of common
units of limited partnership interest in the Borrower, or any
distribution to any officer, employee or director of the Borrower or
the Company, other than employee compensation consistent with past
practices.
Dollars or $. Dollars in lawful currency of the United
States of America.
Domestic Lending Office. Initially, the office of each
Lender designated as such in Schedule 1 hereto; thereafter, such other
office of such Lender, if any, located within the United States that
will be making or maintaining Base Rate Loans.
Drawing Date: The date on which a draft under a Letter of
Credit is paid by the Agent.
Duff & Phelps Rating. The rating for Borrower's senior long-
term unsecured debt assigned by Duff & Phelps Credit Rating Co. or its
successors. As of the date of this Agreement there is no Duff & Phelps
Rating.
EBITDA. The Borrower's net income or loss before minority
interests, excluding gains or losses from sales of property or from
extinguishment of debt and other extraordinary items, plus (to the
extent deducted in determining net income or loss) interest expense,
depreciation and amortization, all as defined and computed in
accordance with Generally Accepted Accounting Principles.
Effective Date. The date upon which this Agreement shall
become effective pursuant to Section 10. Unless the Agent notifies the
Borrower and the Lenders that some other date is the Effective Date,
the Effective Date shall be the date set forth on the first page of
this Agreement.
Eligible Assignee. Any of (a) a commercial bank organized
under the laws of the United States, or any State thereof or the
District of Columbia, and having total assets in excess of
$1,000,000,000; (b) a savings and loan association or savings bank
organized under the laws of the United States, or any State thereof or
the District of Columbia, and having a net worth of at least
$100,000,000, calculated in accordance with Generally Accepted
Accounting Principles; (c) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), and having total assets in
excess of $1,000,000,000, provided that such bank is acting through a
branch or agency located in the country in which it is organized or
another country which is also a member of the OECD; and (d) the central
bank of any country which is a member of the OECD. Notwithstanding
anything to the contrary, the term Eligible Assignee shall exclude any
Person controlling, controlled by or under common control with, the
Borrower or the Company.
Employee Benefit Plan. Any employee benefit plan within the
meaning of Section 3 (3) of ERISA maintained or contributed to by the
Borrower or any ERISA Affiliate, other than a Multiemployer Plan.
Environmental Laws. See Section 6.18(a).
Equity Repurchase Payments. All payments of cash or cash
equivalents by Borrower or the Company as consideration for the
repurchase, redemption or retirement of any common shares of beneficial
interest in the Company, or any common units of limited partnership
interest in Borrower. Payments made to prepay, repay or redeem the
Subordinated Debentures prior to the time that the holders receiving
such payments have exercised their option to exchange such debentures
for common shares of beneficial interests in the Company, shall be
treated as repayment of Indebtedness and not as Equity Repurchase
Payments.
ERISA. The Employee Retirement Income Security Act of 1974,
as amended and in effect from time to time.
ERISA Affiliate. Any Person which is treated as a single
employer with the Borrower under Section 414 of the Code.
ERISA Reportable Event. A reportable event with respect to a
Guaranteed Pension Plan within the meaning of Section 4043 of ERISA and
the regulations promulgated thereunder as to which the requirement of
notice has not been waived.
Eurocurrency Reserve Rate. For any day with respect to a
Eurodollar Rate Loan, the maximum rate (expressed as a decimal) at
which any of the Lenders would be required to maintain reserves under
Regulation D of the Board of Governors of the Federal Reserve System
(or any successor or similar regulations relating to such reserve
requirements) against "Eurocurrency Liabilities" (as that term is used
in Regulation D), if such liabilities were outstanding. The
Eurocurrency Reserve Rate shall be adjusted automatically on and as of
the effective date of any change in the Eurocurrency Reserve Rate.
Eurodollar Business Day. Any day on which commercial banks
are open for international business (including dealings in Dollar
deposits) in London or such other eurodollar interbank market as may be
selected by the Agent in its sole discretion acting in good faith.
Eurodollar Lending Office. Initially, the office of each
Lender designated as such in Schedule 1 hereto; thereafter, such other
office of such Lender, if any, that shall be making or maintaining
Eurodollar Rate Loans.
Eurodollar Rate. For any Interest Period with respect to a
Eurodollar Rate Loan, the rate per annum equal to the quotient (rounded
upwards to the nearest 1/16 of one percent) of (a) the rate per annum
for deposits in Dollars for a period equal in length to such interest
period which appears on Telerate Page 3750 as of 11:00 a.m. (London,
England time) two Eurodollar Business Days prior to the beginning of
such Interest Period, divided by (b) a number equal to 1.00 minus the
Eurocurrency Reserve Rate.
Eurodollar Rate Loans. Loans bearing interest calculated by
reference to the Eurodollar Rate.
Event of Default. See Section 12.1.
Facility. The unsecured revolving line of credit facility
provided to the Borrower pursuant to this Agreement.
Fixed Charges. With respect to any fiscal period of the
Borrower, an amount equal to the sum of (i) Interest Expense, (ii)
regularly scheduled installments of principal payable with respect to
all Indebtedness of Borrower, (iii) current maturities on Recourse
Indebtedness not refinanced with Loans hereunder or other replacement
Indebtedness or otherwise repaid plus (iv) all dividend payments due to
the holders of any preferred shares of beneficial interest of the
Company and all distributions due to the holders of any limited
partnership interests in the Borrower other than limited partner
distributions based on the per share dividend paid on the common shares
of beneficial interest of the Company.
Fixed Rate Prepayment Fee. See Section 3.3.
Funds From Operations. With respect to any fiscal period of
the Borrower, an amount equal to the Borrower's net income or loss
after Preferred Distributions (computed in accordance with Generally
Accepted Accounting Principles), excluding gains (or losses) from sales
of property and extraordinary items as defined by Generally Accepted
Accounting Principles, plus real estate-related depreciation and
amortization, and after adjustments of Unconsolidated Entities.
Adjustments for Unconsolidated Entities will be calculated to reflect
funds from operations on the same basis.
Generally Accepted Accounting Principles. Principles that
are (a) consistent with the principles promulgated or adopted by the
Financial Accounting Standards Board and its predecessors, as in effect
from time to time and (b) consistently applied with past financial
statements of the Borrower adopting the same principles; provided that
a certified public accountant would, insofar as the use of such
accounting principles is pertinent, be in a position to deliver an
unqualified opinion (other than a qualification regarding changes in
Generally Accepted Accounting Principles) as to financial statements in
which such principles have been properly applied.
Guaranteed Pension Plan. Any employee pension benefit plan
within the meaning of Section 3(2) of ERISA maintained or contributed
to by the Borrower or any ERISA Affiliate the benefits of which are
guaranteed on termination in full or in part by the PBGC pursuant to
Title IV of ERISA, other than a Multiemployer Plan.
Guarantor. Each of the Company and the Guarantor
Subsidiaries.
Guarantor Subsidiaries. The partnerships and corporations
designated as Guarantor Subsidiaries on Schedule 1.3 hereto and any
other Related Companies which are at least 85% owned by Borrower and
which execute and deliver a Guaranty.
Guaranty. The Unconditional Guaranty of Payment and
Performance from each Guarantor to the Agent pursuant to which such
Guarantor has guaranteed the Obligations.
Hazardous Substances. See Section 6.18(b).
Indebtedness. All obligations, contingent and otherwise, of
the following types: (a) the Obligations, (b) all debt and similar
monetary obligations for borrowed money, whether direct or indirect;
(c) all liabilities secured by any mortgage, pledge, negative pledge,
security interest, lien, negative lien, charge, or other encumbrance
existing on property owned or acquired subject thereto, whether or not
the liability secured thereby shall have been assumed; (d) all
guarantees, endorsements and other contingent obligations whether
direct or indirect in respect of indebtedness or obligations of others
(including, without limitation, the indebtedness or obligations of
Unconsolidated Entities), including any obligation to supply funds to
or in any manner to invest in, directly or indirectly, the debtor, to
purchase indebtedness, or to assure the owner of indebtedness against
loss, through an agreement to purchase goods, supplies, or services for
the purpose of enabling the debtor to make payment of the indebtedness
held by such owner or otherwise, and the obligations to reimburse the
issuer in respect of any letters of credit; and (e) such obligor's
liabilities, contingent or otherwise of the type set forth in (a)
through (d) above, under any joint venture, limited liability company
or partnership agreement.
Interest Expense. With respect to any fiscal period of the
Borrower, an amount equal to the sum of the following with respect to
all Indebtedness of the Borrower and the Related Companies: (i) total
interest expense, accrued in accordance with Generally Accepted
Accounting Principles plus (ii) all capitalized interest determined in
accordance with Generally Accepted Accounting Principles, plus (iii)
the amortization of deferred financing costs.
Interest Payment Date. As to any Base Rate Loan or Eurodollar
Rate Loan, the first day of each calendar month. As to any Swingline
Loan, the date that the principal of such Swingline Loan is repaid in
full.
Interest Period. With respect to each Loan, (a) initially,
the period commencing on the Borrowing Date of such Loan and ending on
the last day of one of the periods set forth below, as selected by the
Borrower in a Loan Request (except that no Loan Request is required for
Mandatory Base Rate Loans and except that Borrower shall have no
options with respect to selecting Interest Periods for Swingline Loans)
(i) for any Base Rate Loan, the day on which such Base Rate Loan is
paid in full or converted to a Eurodollar Rate Loan; and (ii) for any
Eurodollar Rate Loan, 1, 2, 3 or 6 months; and (b) thereafter, each
period commencing on the last day of the next preceding Interest Period
applicable to such Loan and ending on the last day of one of the
periods set forth above, as selected by the Borrower in a Conversion
Request; provided that all of the foregoing provisions relating to
Interest Periods are subject to the following:
(A) if any Interest Period with respect to a Eurodollar
Rate Loan would otherwise end on a day that is not a Eurodollar
Business Day, that Interest Period shall be extended to the next
succeeding Eurodollar 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
Eurodollar Business Day;
(B) if any Interest Period with respect to a Base Rate
Loan would end on a day that is not a Business Day, that Interest
Period shall end on the next succeeding Business Day;
(C) if the Borrower shall fail to give notice as
provided in Section 2.6, the Borrower shall be deemed to have requested
a conversion of the affected Eurodollar Rate Loan to a Base Rate Loan
on the last day of the then current Interest Period with respect
thereto;
(D) any Interest Period relating to any Eurodollar Rate
Loan that begins on the last Eurodollar 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 Eurodollar Business Day of a calendar month; and
(E) the Borrower may not select any Interest Period
relating to any Eurodollar Rate Loan that would extend beyond the
Maturity Date.
Interest Rate Contracts. Interest rate swap, cap or similar
agreements providing for interest rate protection.
Investments. All expenditures made and all liabilities
incurred (contingently or otherwise) for the acquisition of stock,
partnership or membership interests or Indebtedness of, or for loans,
advances, capital contributions or transfers of property to, or in
respect of any guaranties (or other commitments as described under
Indebtedness), or obligations of, any Person. In determining the
aggregate amount of Investments outstanding at any particular time: (a)
the amount of any Investment represented by a guaranty or secured by a
letter of credit shall be taken at not less than the principal amount
of the obligations guaranteed or secured by such letter of credit and
still outstanding; (b) there shall be included as an Investment all
interest accrued with respect to Indebtedness constituting an
Investment unless and until such interest is paid; (c) there shall be
deducted in respect of each such Investment any amount received as a
return of capital (but only by repurchase, redemption, retirement,
repayment, liquidating dividend or liquidating distribution) ; (d)
there shall not be deducted in respect of any Investment any amounts
received as earnings on such Investment, whether as dividends, interest
or otherwise, except that accrued interest included as provided in the
foregoing clause (b) may be deducted when paid; and (e) there shall not
be deducted from the aggregate amount of Investments any decrease in
the value thereof.
Leases. Leases, licenses and agreements whether written or
oral, relating to the use or occupation of space in the Buildings on
the Unencumbered Properties and the Unencumbered Development Properties
by persons other than the owner thereof or any of its affiliates.
Lenders. Fleet and the other lending institutions listed from
time to time on Schedule 1 hereto and any other Person who becomes an
assignee of any rights of a Lender pursuant to Section 18 or a Person
who acquires all or substantially all of the stock or assets of a
Lender.
Letter of Credit. A letter of credit issued by the Agent for
the account of the Borrower pursuant to Section 2.9 and the letters of
credit issued prior to the Effective Date and described on Schedule
1.4.
Letter of Credit Request. See Section 2.9.
Lien. Any lien, encumbrance, mortgage, deed of trust,
pledge, restriction or other security interest. If title to any Real
Estate Asset is held by a Subsidiary of Borrower or an Unconsolidated
Entity then any pledge or assignment of Borrower's stock, partnership
interest, limited liability company interest or other ownership
interest in such Subsidiary or Unconsolidated Entity shall be deemed to
be a Lien on the Real Estate Assets owned by such Subsidiary or
Unconsolidated Entity.
Loan Documents. This Agreement, the Notes, the Guaranties and
any and all other agreements, documents and instruments now or
hereafter evidencing, securing or otherwise relating to the Loans.
Loan Request. See Section 2.5.
Loans. Loans made or to be made by the Lenders to the
Borrower pursuant to Section 2.1 and Section 2.5, Swingline Loans made
by Swingline Lender pursuant to Section 2.8 and Mandatory Base Rate
Loans made pursuant to Section 2.8 or Section 2.9.
Mandatory Base Rate Loans. Loans made by the Lenders
(without a Loan Request) under the circumstances described in Section
2.8(b) or Section 2.9(d).
Material Adverse Effect means a material adverse effect on
(i) the business, Unencumbered Properties, Unencumbered Development
Properties, results of operations or financial condition of the
Borrower and the Related Companies taken as a whole or (ii) the ability
of the Borrower or any Guarantor to perform its obligations under the
Loan Documents, or (iii) the validity or enforceability of any of the
Loan Documents or the remedies or material rights of the Agent or the
Lenders thereunder.
Maturity Date. April 25, 2003, or such earlier date on which
the Loans shall become due and payable pursuant to the terms hereof.
Maximum Credit Amount. Maximum Credit Amount shall mean the
least of the following: (i) the maximum amount of Outstanding
Obligations without causing a violation of Section 9.1; (ii) the
maximum amount of Outstanding Obligations without causing a violation
of Section 9.2; and (iii) the Total Commitment.
Moody's Rating. The rating for Borrower's senior long-term
unsecured debt assigned by Moody's Investors Services, Inc. or its
successors.
Multiemployer Plan. Any multiemployer plan within the
meaning of Section 3(37) of ERISA maintained or contributed to by the
Borrower or any ERISA Affiliate.
Net Offering Proceeds. All cash proceeds received after
December 31, 1999 by the Borrower or the Company as a result of the
sale of common, preferred or other classes of stock of the Company or
the issuance of limited partnership interests in the Borrower less
customary costs and discounts of issuance paid by Company or Borrower
in connection therewith.
Net Operating Income. With respect to any fiscal period of
the Borrower and with respect to any one or more of the Real Estate
Assets, the total rental and other operating income from the operation
of such Real Estate Assets after deducting all expenses and other
proper charges incurred by the Borrower in connection with the
operation of such Real Estate Assets during such fiscal period,
including, without limitation, property operating expenses, real estate
taxes and bad debt expenses, but before payment or provision for Fixed
Charges, income taxes, and depreciation, amortization, and other
non-cash expenses, all as determined in accordance with Generally
Accepted Accounting Principles. In the case of Real Estate Assets
owned by Related Companies which are not wholly-owned by Borrower, Net
Operating Income shall be reduced by the amount of cash flow of such
Related Company allocated for distribution to the minority owners of
such Related Company. With respect to Real Estate Assets located
outside of the United States, Net Operating Income shall be converted
from the currency in which the applicable income and expenses are paid
to Dollars using the currency exchange rates in effect as of the end of
the applicable fiscal period.
Notes. See Section 2.3.
Obligations. All indebtedness, obligations and liabilities
of the Borrower or any Guarantor to any of the Lenders and the Agent,
individually or collectively, under this Agreement or any of the other
Loan Documents or in respect of any of the Loans, the Letters of Credit
or the Notes or other instruments at any time evidencing any thereof,
whether existing on the date of this Agreement or arising or incurred
hereafter, direct or indirect, joint or several, absolute or
contingent, matured or unmatured, liquidated or unliquidated, secured
or unsecured, arising by contract, operation of law of otherwise.
Outstanding Obligations. As of any date of determination,
the sum of the outstanding principal amount of the Loans plus the
stated amount of each Letter of Credit issued under Section 2.9 which
has not expired or terminated prior to the date of determination.
PBGC. The Pension Benefit Guaranty Corporation created by
Section 4002 of ERISA and any successor entity or entities having
similar responsibilities.
Permitted Acquisition. The acquisition by Borrower or any
Related Company of Real Estate Assets which, in the aggregate, are
primarily leased or intended to be leased primarily for industrial or
office purposes (including "flex" and warehouse uses), whether such
acquisition is accomplished by a direct purchase of such Real Estate
Assets or by a merger or acquisition of stock or other ownership
interests or debt securities such that the owner of such Real Estate
becomes a Related Company.
Permitted Build-To-Suit Developments. Permitted Developments
with respect to which, at the date of determination, at least sixty
percent (60%) of the net leasable area of the buildings to be
constructed pursuant thereto are subject to executed Leases having an
average term of not less than four (4) years and which obligate the
tenants named therein to accept occupancy and commence paying rent
promptly upon the issuance of a certificate of occupancy with respect
thereto.
Permitted Developments. The construction of any new
buildings or the construction of additions expanding existing buildings
or the rehabilitation of the existing buildings (other than normal
refurbishing and tenant fit up work when one tenant leases space
previously occupied by another tenant) relating to any Real Estate
Assets of the Borrower or any of the Related Companies and each
Permitted Development shall be counted for purposes of Section 8.2 from
the time of commencement of the applicable construction work until a
final certificate of occupancy has been issued with respect to such
project in the amount of the total projected cost of such project.
Permitted Inventory Developments. Permitted Developments
which are not Permitted Build-To-Suit Developments.
Permitted Liens. The following Liens, security interests and
other encumbrances:
(i) liens to secure taxes, assessments and other
governmental charges in respect of obligations not overdue, the
Indebtedness with respect to which is permitted by Section 8.1(c);
(ii) deposits or pledges made in connection with, or to
secure payment of, workmen's compensation, unemployment insurance, old
age pensions or other social security obligations;
(iii) liens in respect of judgments or awards, the
Indebtedness with respect to which is permitted by Section 8.1(d);
(iv) liens of carriers, warehousemen, mechanics and
materialmen, and other like liens which are either covered by a full
indemnity from a creditworthy indemnitor or have been in existence less
than 120 days from the date of creation thereof in respect of
obligations not overdue, the Indebtedness with respect to which is
permitted by Section 8.1(c);
(v) encumbrances consisting of easements, rights of way,
Leases, covenants, restrictions on the use of real property and defects
and irregularities in the title thereto; and other minor liens or
encumbrances none of which in the opinion of the Borrower interferes
materially with the use of the property affected in the ordinary
conduct of the business of the Borrower, and which matters (x) do not
individually or in the aggregate have a materially adverse effect on
the value of the Unencumbered Property and (xx) do not make title to
such property unmarketable by the conveyancing standards in effect
where such property is located; or
(vi) mortgages held by Borrower or a Guarantor securing
Indebtedness described in Section 8.1(i).
Person. Any individual, corporation, partnership, trust,
unincorporated association, business, or other legal entity, and any
government or any governmental agency or political subdivision thereof.
Preferred Distribution. The declaration or payment of any
dividend or distribution of cash or cash equivalents to the holders of
preferred shares of beneficial interest in the Company or the holders
of preferred units of limited partnership interest of the Borrower
Prepayment Date. See Section 3.3.
Pro Forma Unsecured Debt Service Charges. For any fiscal
quarter of the Borrower, an amount determined by the Agent based on a
twenty-five (25) year mortgage style amortization schedule, calculated
on the Pro Forma Unsecured Principal Amount and an interest rate equal
to the greater of (i) the weighted average annual interest rate
actually applicable to the Unsecured Indebtedness during such fiscal
quarter or (ii) the then current ten (10) year U.S. Treasury bill yield
plus one and three-quarters percent (1.75%).
Pro Forma Unsecured Principal Amount. (a) With respect to
Compliance Certificates delivered pursuant to Section 7.4(d), the
maximum principal amount of Unsecured Indebtedness outstanding at any
time during the applicable fiscal quarter; (b) with respect to
Compliance Certificates delivered pursuant to Section 2.5(a), Section
2.9(a) or Section 11.1, the principal amount of Unsecured Indebtedness
outstanding after giving effect to the requested Loan or after issuance
of the requested Letter of Credit; (c) with respect to Compliance
Certificates delivered pursuant to Section 7.13, the principal amount
of Unsecured Indebtedness outstanding after giving effect to the
proposed transaction including any payments on the Loans to be made in
connection therewith.
Properties. All Real Estate Assets, Real Estate, and all
other assets, including, without limitation, intangibles and personally
owned by the Borrower or any of the Related Companies.
Rating Agencies. Moody's Investors Services, Inc., Duff &
Phelps Credit Rating Co. and Standard & Poor's, a division of The
McGraw Hill Companies, Inc., or their respective successors.
Real Estate. All real property at any time owned, leased (as
lessee or sublessee) or operated by the Borrower, any Guarantor, or any
of the Related Companies.
Real Estate Assets. Those fixed and tangible properties
consisting of land, buildings and/or other improvements owned by the
Borrower, by any Guarantor or by any of the Related Companies at the
relevant time of reference thereto, including without limitation, the
Unencumbered Properties and the Unencumbered Development Properties,
but excluding all leaseholds other than leaseholds under ground leases
which either have an unexpired term of at least 30 years or contain a
purchase option for nominal consideration.
Record. The grid attached to any Note, or the continuation
of such grid, or any other similar record, including computer records,
maintained by any Lender with respect to any Loan referred to in such
Note.
Recourse Indebtedness. All Indebtedness except Indebtedness
with respect to which recourse for payment is contractually limited
(except for customary exclusions) to specific assets encumbered by a
lien securing such Indebtedness.
Register. See Section 18.3.
Related Business. A business which is either (i) customarily
ancillary to the real estate business such as real estate consulting,
brokerage or management or (ii) provides telecommunication or other
goods and services to the tenants of the Properties.
Related Companies. The entities listed and described on
Schedule 1.3 hereto, or thereafter, any entity whose financial
statements are consolidated or combined with the Company's pursuant to
Generally Accepted Accounting Principles, or any ERISA Affiliate.
Release. See Section 6.18(c)(iii).
Requisite Lenders. As of any date, the Lenders whose
aggregate Commitments constitute at least sixty-six percent (66%) of
the Total Commitment provided that the Agent must always be among the
Requisite Lenders (except that after an Event of Default all actions by
the Requisite Lenders with respect to acceleration of the Loans and the
enforcement of the Loan Documents as provided in Section 12 and in
Section 14.11 shall be made without regard to whether the Agent is
among the Requisite Lenders) and provided that the Commitments of any
Delinquent Lenders shall be disregarded when determining the Requisite
Lenders.
Reserve Amount. With respect to any Real Estate Assets or
group of Real Estate Assets, a normalized annual reserve for capital
expenditures, replacement reserves and leasing costs at the rate of
$0.10 per year per square foot of net leasable area contained in all
buildings on such Real Estate Assets. When the Reserve Amount is used
in computing an amount with respect to a fiscal period which is shorter
than a year, said amount shall be appropriately prorated.
Responsible Officer. With respect to the Company, any one of
its Chairman, President, Chief Executive Officer, Chief Operating
Officer, Chief Financial Officer, Treasurer, Executive Vice Presidents
or Senior Vice Presidents.
Rouse Kent Joint Venture. A joint venture between Rouse Kent
Limited, which is owned by certain senior executives of the Company,
and the County of Kent, England to develop a 650-acre, mixed-use park
approximately 25 miles southeast of London.
S&P Rating. The rating for Borrower's senior long-term
unsecured debt assigned by Standard & Poor's Ratings Group, a division
of The McGraw-Hill Companies, Inc., or its successors.
Secured Indebtedness. All Indebtedness of the Borrower and
any of the Related Companies which is secured by a Lien on any
Properties.
Subordinated Debentures. Indebtedness of Borrower with
respect to its Exchangeable Subordinated Debentures due July 1, 2001
issued and outstanding pursuant to the Subordinated Debenture
Indenture.
Subordinated Debenture Indenture. The Indenture dated as of
June 23, 1994 among the Borrower, the Company and The First National
Bank of Boston as Trustee relating to the Borrower's Exchangeable
Subordinated Debentures due July 1, 2001.
Subordinated Indebtedness. All Unsecured Indebtedness of
Borrower which is expressly subordinated and junior in right of payment
to the prior payment in full of the Obligations provided that the
subordination provisions applicable to such Indebtedness are
satisfactory to the Agent. On the date hereof Subordinated
Indebtedness consists of the Subordinated Debentures.
Subsidiary. Any corporation, association, trust, or other
business entity of which the designated parent or other controlling
Person shall at any time own directly or indirectly through a
Subsidiary or Subsidiaries at least a majority (by number of votes) of
the outstanding Voting Interests.
Swingline Commitment. The Commitment of the Swingline Lender
to make Swingline Loans up to a maximum principal amount of $10,000,000
at any time outstanding. The Swingline Commitment is a portion of, and
not in addition to, the Total Commitment.
Swingline Lender. Fleet or any other Lender as a successor
of Swingline Lender.
Swingline Loan. Any Loan made by the Swingline Lender to the
Borrower pursuant to the Swingline Lender's Swingline Commitment.
Swingline Loan Request. A Loan Request in the form of
Exhibit D hereto given by Borrower with respect to a Swingline Loan.
Tangible Net Worth. Total Assets minus Total Liabilities
minus all intangibles determined in accordance with Generally Accepted
Accounting Principles.
Telerate Page 3750. The display designated as "Page 3750" on
the Telerate Service, or such other page as may replace Page 3750 on
that service or such other service as may be nominated by the British
Bankers' Association as the information vender for the purpose of
displaying British Bankers' Association interest settlement rates for
U.S. Dollar deposits.
Total Assets. The sum of (i) the assets classified as cash
and cash equivalents on the consolidated balance sheet of the Borrower
prepared in accordance with Generally Accepted Accounting Principles as
of the end of the most recent fiscal quarter for which financial
statements have been provided pursuant to Section 7.4, plus (ii) the
amount determined by taking (a) Adjusted EBITDA for the most recent
fiscal quarter for which financial statements have been provided
pursuant to Section 7.4; (b) then multiplying by four (4); (c) then
subtracting from such annualized Adjusted EBITDA the Reserve Amount for
all Real Estate Assets of the Borrower and (d) then dividing such
difference by 0.095; plus (iii) development in progress as shown on the
consolidated balance sheet of the Borrower prepared in accordance with
Generally Accepted Accounting Principles as of the end of the most
recent fiscal quarter for which financial statements have been provided
pursuant to Section 7.4. Adjusted EBITDA used to compute Total Assets
will be computed on a pro forma basis as though any Real Estate Assets
acquired or disposed of since the first day of the applicable fiscal
quarter had been acquired or disposed of prior to the first day of such
fiscal quarter.
Total Debt. The sum of the following (without duplication):
(i) all Indebtedness of the Borrower included in the liabilities
portion of the Borrower's balance sheet prepared in accordance with
Generally Accepted Accounting Principles as of the end of the most
recent fiscal quarter for which financial statements have been provided
pursuant to Section 7.4, including, without limitation, the
Indebtedness presently shown on the balance sheet line items designated
as "mortgage loans", "unsecured notes", "credit facility" and
"convertible debentures" adjusted to reflect any such Indebtedness
incurred or repaid between the end of such fiscal quarter and the date
of determination, (ii) plus all of Borrower's Indebtedness of a type
which is not included on the balance sheet described in clause (i) of
this definition, and (iii) to the extent not already included in this
definition, the Unconsolidated Entity Percentage of the Indebtedness of
each of the Unconsolidated Entities provided, however, that if any such
Indebtedness of an Unconsolidated Entity is Recourse Indebtedness, then
the full amount of such Indebtedness shall be included in Total Debt
rather than only the Unconsolidated Entity Percentage thereof.
Total GAAP Assets. The aggregate book value of all assets of
the Borrower and the Related Companies consolidated and determined in
accordance with Generally Accepted Accounting Principles.
Total Commitment. The sum of the Commitments of the Lenders,
as in effect from time to time.
Total Liabilities. The sum of the following (without
duplication): (i) all liabilities of the Borrower and the Related
Companies consolidated and determined in accordance with Generally
Accepted Accounting Principles, (ii) all Indebtedness of the Borrower
and the Related Companies whether or not so classified, including,
without limitation, all outstanding Loans under this Agreement, and
(iii) the balance available for drawing under letters of credit issued
for the account of the Borrower or any of the Related Companies.
Total Operating Cash Flow. With respect to any fiscal period
of the Borrower the sum of (i) Funds From Operations minus (ii) the
portion of Funds From Operations attributable to Unconsolidated
Entities, plus (iii) cash actually distributed to Borrower during such
fiscal period from the earnings of any Unconsolidated Entities and not
subsequently reinvested by Borrower in such Unconsolidated Entity plus
(iv) Interest Expense (excluding capitalized interest and any other
portions of Interest Expense which are not deducted in the computation
of Funds From Operations) plus (v) Preferred Distributions paid minus
(vi) the Reserve Amount for all Real Estate Assets owned by the
Borrower or any of the Related Companies, all as determined in
accordance with the applicable definitions set forth herein except that
Funds From Operations shall be adjusted to remove the effect of
recognizing rental income on a straight-line basis over the applicable
lease term.
Type. As to any Loan its nature as a Base Rate Loan or a
Eurodollar Rate Loan.
Unconsolidated Entity. As of any date, any Person in whom
the Borrower, the Company or any Related Company holds an Investment,
and whose financial results would not be consolidated under Generally
Accepted Accounting Principles with the financial statements of the
Borrower, if such statements were prepared as of such date.
Unconsolidated Entities existing on the date hereof are set forth in
Schedule 1.3.
Unencumbered Development Property. A Real Estate Asset which
at the date of determination (i) is 100% owned in fee by Borrower or
one of the Guarantor Subsidiaries, (ii) is in the process of being
improved with one or more industrial or office buildings, including
"flex" and warehouse buildings, of a type consistent with the
Borrower's business strategy and is classified as "development in
progress" on the Borrower's consolidated balance sheet prepared in
accordance with Generally Accepted Accounting Principles; (iii) is not
directly or indirectly subject to any Lien (other than Permitted Liens)
or to any negative pledge agreement or other agreement that prohibits
the creation of any Lien thereon; (iv) is a Real Estate Asset with
respect to which each of the representations contained in Section 6.18
hereof is true and accurate as of such date of determination; (v) may
be legally conveyed separately from any other Real Estate without the
need to obtain any subdivision approval, zoning variance or other
consent or approval from any unrelated Person, and (vi) is located in
the United States, Canada or Europe. Each Real Estate Asset which
satisfies the conditions set forth in this definition or with respect
to which the Requisite Lenders have granted the necessary waivers
pursuant to Section 5.2 shall be deemed to be an Unencumbered
Development Property only during such periods of time as Borrower has
included the same on the list of Unencumbered Development Properties
attached to the most recent Compliance Certificate delivered hereunder,
and shall cease to be considered an Unencumbered Development Property
no later than the last day of the fiscal quarter in which the first
Certificate of Occupancy with respect to any portion of the building on
such Real Estate Asset is issued. As of the first day of the following
fiscal quarter, such Real Estate Asset may be an Unencumbered Property,
assuming that it meets the requirements set forth in the definition of
an Unencumbered Property. At no time shall the same Real Estate Asset
be counted as both an Unencumbered Property and an Unencumbered
Development Property.
Unencumbered Development Property Value. With respect to any
Unencumbered Development Property at any time, the amount related to
such property included on the line captioned "development in progress"
on the Borrower's balance sheet prepared in accordance with Generally
Accepted Accounting Principles.
Unencumbered Net Operating Income. With respect to any
fiscal period of the Borrower, the sum of the Net Operating Income of
all Real Estate Assets which were Unencumbered Properties hereunder
during such fiscal period, provided, however, there shall be excluded
therefrom (i) the amount necessary so that the Net Operating Income of
any one Unencumbered Property does not exceed fifteen percent (15%) of
Unencumbered Net Operating Income and (ii) the amount necessary so that
the aggregate Net Operating Income of all Unencumbered Properties
located in Europe does not exceed four percent (4%) of Unencumbered Net
Operating Income.
Unencumbered Property. A Real Estate Asset which at the date
of determination, (i) is 100% owned in fee by Borrower or one of the
Guarantor Subsidiaries, (ii) is improved with one or more completed
industrial or office buildings (including "flex" and warehouse
buildings) of a type consistent with the Borrower's business strategy;
(iii) is not directly or indirectly subject to any Lien (other than
Permitted Liens) or to any negative pledge agreement or other agreement
that prohibits the creation of any Lien thereon; (iv) is a Real Estate
Asset with respect to which each of the representations contained in
Section 6.18 and Section 6.21 hereof is true and accurate as of such
date of determination; (v) may be legally conveyed separately from any
other Real Estate without the need to obtain any subdivision approval,
zoning variance or other consent or approval from an unrelated Person;
(vi) is located in the United States, Canada or Europe, and (vii) to
the extent requested by the Agent, the Borrower has delivered to the
Agent historical operating and leasing information relating to such
Unencumbered Property, in form and substance satisfactory to the Agent.
Each Real Estate Asset which satisfies the conditions set forth in this
definition or with respect to which the Requisite Lenders have granted
the necessary waivers pursuant to Section 5.2 shall be deemed to be an
Unencumbered Property only during such periods of time as Borrower has
included the same on the list of Unencumbered Properties attached to
the most recent Compliance Certificate delivered hereunder.
Unencumbered Property Value. With respect to any
Unencumbered Property at any time, an amount computed as follows: (a)
the Net Operating Income of such Unencumbered Property for the most
recent fiscal quarter of the Borrower for which financial statements
have been delivered to the Agent pursuant to Section 7.4; (b) then
multiplying by four (4); (c) then subtracting from such annualized Net
Operating Income the Reserve Amount for such Unencumbered Property;
and (d) dividing such difference by 0.095. In the event that the
Unencumbered Property Value of any Unencumbered Property computed
pursuant to the preceding sentence exceeds fifteen percent (15%) of the
Value of All Unencumbered Properties as of the end of the most recent
fiscal quarter of the Borrower for which financial statements have been
delivered to the Agent pursuant to Section 7.4 then the amount in
excess of said 15% level will be excluded when computing the
Unencumbered Property Value for such Unencumbered Property. With
respect to any Unencumbered Property which, during the applicable
fiscal quarter, has been acquired by Borrower, Borrower may compute the
Unencumbered Property Value for such Unencumbered Property based on a
pro forma Net Operating Income for such fiscal quarter, which
computation must be approved by the Agent.
Unsecured Indebtedness. All Indebtedness of Borrower or of
any of the Related Companies which is not secured by a Lien on any
Properties including, without limitation, the Outstanding Obligations,
the Subordinated Indebtedness and any Indebtedness evidenced by any
bonds, debentures, notes or other debt securities presently outstanding
or which may be hereafter issued by Borrower or by the Company.
Unsecured Indebtedness shall not include accrued ordinary operating
expenses payable on a current basis.
Unused Amount. See Section 4.2
Value of All Unencumbered Properties. When determined as of
the end of a fiscal quarter, an amount computed as follows: (a)
Unencumbered Net Operating Income for such quarter; (b) then
multiplying by four (4); (c) then subtracting from such annualized Net
Operating Income the Reserve Amount for all Unencumbered Properties;
(d) dividing such difference by 0.095 and (e) then adding the aggregate
Unencumbered Development Property Value of all of the Unencumbered
Development Properties as of the date of determination. When
determined as of a date which is during a fiscal quarter based on an
updated list of Unencumbered Properties and Unencumbered Development
Properties attached to the applicable Compliance Certificate as
provided in the last sentence of Section 5.1 or in Section 7.13, the
Value of All Unencumbered Properties most recently computed as provided
in the preceding sentence of this definition will be adjusted by
subtracting the Unencumbered Property Value of the previous
Unencumbered Properties and Unencumbered Development Properties which
have been deleted from such list and by adding the Unencumbered
Property Value of the Unencumbered Properties and Unencumbered
Development Properties which have been added to such list. To the
extent the aggregate Unencumbered Property Values of the Unencumbered
Properties and Unencumbered Development Properties located in Europe
exceed four percent (4%) of the Value of All Unencumbered Properties,
the amount in excess of said 4% level will be excluded when computing
the Value of All Unencumbered Properties and to the extent the
aggregate Unencumbered Development Property Value of all of the
Unencumbered Development Properties exceeds the lesser of $150,000,000
or ten percent (10%) of the Value of All Unencumbered Properties, the
amount in excess of said level will be excluded when computing the
Value of all Unencumbered Properties.
Variable Rate Indebtedness. The Loans and all other
Indebtedness of the Borrower which bears interest at a rate which is
not fixed either through maturity or for a term of at least thirty-six
(36) months from the date that such fixed rate became effective.
Voting Interests. Stock or similar ownership interests, of
any class or classes (however designated), the holders of which are at
the time entitled, as such holders, (a) to vote for the election of a
majority of the directors (or persons performing similar functions) of
the corporation, association, partnership, trust or other business
entity involved, or (b) to control, manage or conduct the business of
the corporation, partnership, association, trust or other business
entity involved.
Section 1.2. Rules of Interpretation.
(a) A reference to any document or agreement shall include
such document or agreement as amended, modified or supplemented from
time to time in accordance with its terms and the terms of this
Agreement.
(b) The singular includes the plural and the plural includes
the singular.
(c) A reference to any law includes any amendment or
modification to such law.
(d) A reference to any Person includes its permitted
successors and permitted assigns.
(e) Accounting terms not otherwise defined herein have the
meanings assigned to them by Generally Accepted Accounting Principles
applied on a consistent basis by the accounting entity to which they
refer and, except as otherwise expressly stated, all use of accounting
terms with respect to the Borrower shall reflect the consolidation of
the financial statements of Borrower and the Related Companies.
(f) The words "include", "includes" and "including" are not
limiting.
(g) All terms not specifically defined herein or by
Generally Accepted Accounting Principles, which terms are defined in
the Uniform Commercial Code as in effect in Massachusetts, have the
meanings assigned to them therein.
(h) Reference to a particular "Section" refers to that
section of this Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words of
like import shall refer to this Agreement as a whole and not to any
particular section or subdivision of this Agreement.
(j) The words "so long as any Loan or Note is outstanding"
shall mean so long as such Loan or Note is not indefeasibly paid in
full in cash.
Section 2. REVOLVING CREDIT FACILITY.
Section 2.1. Commitment to Lend; Limitation on Total Commitment .
Subject to the provisions of Section2.5 and the other terms and
conditions set forth in this Agreement, each of the Lenders severally
agrees to lend to the Borrower and the Borrower may borrow, repay, and
reborrow from time to time between the Effective Date and the Maturity
Date upon notice by the Borrower to the Agent given and approved by the
Agent in accordance with Section 2.5, such sums as are requested by the
Borrower up to a maximum aggregate principal amount of Outstanding
Obligations (after giving effect to all amounts requested) at any one
time equal to such Lender's Commitment, provided that the sum of the
Outstanding Obligations (after giving effect to all amounts requested)
shall not at any time exceed the Maximum Credit Amount. The Loans shall
be made pro rata in accordance with each Lender's Commitment Percentage
and the Lenders shall at all times immediately adjust inter se any
inconsistency between each Lender's outstanding principal amount and
each Lender's Commitment. Each request for a Loan hereunder shall
constitute a representation and warranty by the Borrower that the
conditions set forth in Section 10 or Section 11 (whichever is
applicable) have been satisfied on the date of such request and will be
satisfied on the proposed Borrowing Date of the requested Loan,
provided that the making of such representation and warranty by
Borrower shall not limit the right of any Lender not to lend upon a
determination by the Requisite Lenders that such conditions have not
been satisfied.
Section 2.2. Changes in Total Commitment.
(a) Provided that no Default or Event of Default has occurred
and is continuing, the Borrower shall have the option to request an
increase in the Total Commitment to not more than $500,000,000 by
written notice to the Agent. Upon receipt of such notice, the Agent
shall consult with Arranger and shall notify the Borrower of the amount
of facility fees to be paid to any Lenders who provide an Additional
Commitment in connection with such increase in the Total Commitment.
If the Borrower agrees to pay the facility fees so determined, then the
Agent shall send a notice to all Lenders (the "Additional Commitment
Request Notice") informing them of the Borrower's request to increase
the Total Commitment and of the facility fees to be paid with respect
thereto. Each Lender who desires to provide an Additional Commitment
upon such terms shall provide Agent with a written commitment letter
specifying the amount of the Additional Commitment by which it is
willing to provide prior to such deadline as may be specified in the
Additional Commitment Request Notice. If the requested increase is
oversubscribed then the Agent and the Arranger shall allocate the
Commitment Increase among the Lenders who provide such commitment
letters on such basis as the Agent and the Arranger shall determine in
their sole discretion. If the Additional Commitments so provided are
not sufficient to provide the full amount of the Commitment Increase
requested by the Borrower, then the Agent may, but shall not be
obligated to, invite one or more Eligible Assignees to become a Lender
and provide an Additional Commitment. The Agent shall provide all
Lenders with a notice setting forth the amount, if any, of the
Additional Commitment to be provided by each Lender and the revised
Commitment Percentages which shall be applicable after the effective
date of the Commitment Increase specified therein (the "Commitment
Increase Date").
(b) On the Commitment Increase Date the outstanding principal
balance of the Loans shall be reallocated among the Lenders such that
after the Commitment Increase Date the outstanding principal amount of
Loans owed to each Lender shall be equal to such Lender's Commitment
Percentage (as in effect after the Commitment Increase Date) of the
outstanding principal amount of all Loans. On the Commitment Increase
Date those Lenders whose Commitment Percentage is increasing shall
advance the funds to the Agent and the funds so advanced shall be
distributed among the Lenders whose Commitment Percentage is decreasing
as necessary to accomplish the required reallocation of the outstanding
Loans. The funds so advanced shall be Base Rate Loans until converted
to Eurodollar Rate Loans which are allocated among all Lenders based on
their Commitment Percentages. To the extent such reallocation results
in certain Lenders receiving funds which are applied to Eurodollar
Loans prior to the last day of the applicable Interest Period, then the
Borrower shall pay to the Agent for the account of the affected Lenders
the Fixed Rate Prepayment Fee which shall be determined separately for
each such Lender in the manner set forth in Section 3.3. On the
Commitment Increase Date, the Lenders' respective interests in
outstanding Letters of Credit shall also be adjusted to reflect the
revised Commitment Percentages. Upon request from any Lender whose
interest in an outstanding Letter of Credit is so increasing, the
Borrower will pay additional Letter of Credit fees for the amount of
such increase at the rate provided in Section 2.9(c) prorated for the
period from the Commitment Increase Date until the expiration of the
applicable Letter of Credit.
(c) The Borrower shall have the right at any time upon at
least ten (10) Business Days' prior written notice to the Agent, to
reduce by $1,000,000 or an integral multiple of $1,000,000 in excess
thereof the unborrowed portion of the then Total Commitment, provided
that the Total Commitment shall not be reduced to less than
$300,000,000, whereupon the Commitments of the Lenders shall be reduced
pro rata in accordance with their respective Commitment Percentages by
the amount specified in such notice. Upon the effective date of any
such reduction, the Borrower shall pay to the Agent for the respective
accounts of the Lenders the full amount of any commitment fee then
accrued on the amount of the reduction. No reduction of the Commitments
may be reinstated.
(d) Upon the effective date of each increase or reduction in
the Total Commitment pursuant to this Section 2.2 the parties shall
enter into an amendment of this Agreement revising Schedule 1.2 and the
Borrower shall execute and deliver to the Agent new Notes for each
Lender whose Commitment has changed so that the principal amount of
such Lender's Note (not including the Note relating to the Swingline
Commitment) shall equal its Commitment. The Agent shall deliver such
replacement Notes to the respective Lenders in exchange for the Notes
replaced thereby which shall be surrendered by such Lenders. Such new
Notes shall provide that they are replacements for the surrendered
Notes and that they do not constitute a novation, shall be dated as of
the Commitment Increase Date or the effective date of such reduction in
the Total Commitment, as applicable, and shall otherwise be in
substantially the form of the replaced Notes. Within five (5) days of
issuance of any new Notes pursuant to this Section 2.2(d), the Borrower
shall deliver an opinion of counsel, addressed to the Lenders and the
Agent, relating to the due authorization, execution and delivery of
such new Notes and the enforceability thereof, in form and substance
satisfactory to the Lenders. The surrendered Notes shall be canceled
and returned to the Borrower.
Section 2.3. The Notes. The Loans shall be evidenced by separate
promissory notes of the Borrower in substantially the form of Exhibit A
hereto (each a "Note"), and completed with appropriate insertions and
there shall also be a Note payable to the order of the Swingline Lender
in the principal amount of the Swingline Commitment. One or more Notes
shall be payable to the order of each Lender in an aggregate principal
amount equal to such Lender's Commitment. The Borrower irrevocably
authorizes each Lender to make or cause to be made, at or about the
time of the Borrowing Date of any Loan or at the time of receipt of any
payment of principal on such Lender's Note, an appropriate notation on
such Lender's Record reflecting the making of such Loan or (as the case
may be) the receipt of such payment. The outstanding amount of the
Loans set forth on such Lender's Record shall (absent manifest error)
be prima facie evidence of the principal amount thereof owing and
unpaid to such Lender, but the failure to record, or any error in so
recording, any such amount on the Record shall not limit or otherwise
affect the obligations of the Borrower hereunder or under any Note to
make payments of principal of or interest on any Note when due.
Section 2.4. Interest on Loans.
(a) Each Base Rate Loan shall bear interest for the period
commencing with the Borrowing Date thereof and ending on the last day
of the Interest Period with respect thereto at the rate equal to the
Applicable Base Rate Margin per annum above the Base Rate.
(b) Each Eurodollar Rate Loan shall bear interest for the
period commencing with the Borrowing Date thereof and ending on the
last day of the Interest Period with respect thereto at the rate equal
to the Applicable Eurodollar Margin per annum above the Eurodollar Rate
determined for such Interest Period.
(c) The Borrower unconditionally promises to pay interest on
each Loan in arrears on each Interest Payment Date with respect
thereto.
Section 2.5. Requests for Loans.
(a) The Borrower shall give to the Agent written notice in
the form of Exhibit B hereto of each Loan requested hereunder (a "Loan
Request") no less than (a) two (2) Business Days prior to the proposed
Borrowing Date of any Base Rate Loan other than a Swingline Loan and
(b) four (4) Eurodollar Business Days prior to the proposed Borrowing
Date of any Eurodollar Rate Loan. Each such notice shall specify (i)
the principal amount of the Loan requested, (ii) the proposed Borrowing
Date of such Loan, (iii) the Interest Period for such Loan, and (iv)
the Type of such Loan, and shall be accompanied by a statement in the
form of Exhibit C hereto signed by a Responsible Officer setting forth
in reasonable detail computations evidencing compliance with the
covenants contained in Section 9.1 through Section 9.8 hereof after
giving effect to such requested Loan (a "Compliance Certificate").
Within one (1) Business Day after receipt of a Loan Request, the Agent
shall provide to each of the Lenders by facsimile a copy of such Loan
Request and accompanying Compliance Certificate and each Lender shall,
within 24 hours thereafter, notify the Agent if it believes that any of
the conditions contained in Section 11 of this Agreement has not been
met or waived. If such a notice is given the Requisite Lenders shall
promptly determine whether all of the conditions contained in Section
11 of this Agreement have been met or waived. If no such notice is
given by any Lender or if following such notice the Requisite Lenders
determine that the conditions contained in Section 11 have been met or
waived, each of the Lenders shall be obligated to fund its Commitment
Percentage of the requested Loans. Each such Loan Request shall be
irrevocable and binding on the Borrower and the Borrower shall be
obligated to accept the Loan requested from the Lenders on the proposed
Borrowing Date. Each Loan Request shall be in a minimum aggregate
amount of $5,000,000 or an integral multiple of $1,000,000 in excess
thereof.
(b) Notwithstanding anything contained in Section 2.5 (a) to
the contrary, in the event that the making of a requested Loan would
cause non-compliance with any of the covenants contained in Section 9.1
through Section 9.7 hereof, the Agent may, in its sole discretion,
reduce the amount of the Loan Request to an amount which would enable
the Borrower to maintain compliance with such otherwise defaulted
covenant or covenants and Borrower shall accept the Loan made pursuant
to such reduced Loan Request.
Section 2.6. Conversion Options.
(a) The Borrower may elect from time to time to convert any
outstanding Loan to a Loan of another Type, provided that (i) with
respect to any such conversion of a Eurodollar Rate Loan to a Base Rate
Loan, the Borrower shall give the Agent at least three (3) Business
Days, prior written notice of such election; (ii) with respect to any
such conversion of a Eurodollar Rate Loan into a Base Rate Loan, such
conversion shall only be made on the last day of the Interest Period
with respect thereto; (iii) subject to the further proviso at the end
of this section and subject to Section 2.6(b) and Section 2.6(d) hereof
with respect to any such conversion of a Base Rate Loan to a Eurodollar
Rate Loan, the Borrower shall give the Agent at least four (4)
Eurodollar Business Days, prior written notice of such election and
(iv) no Loan may be converted into a Eurodollar Rate Loan when any
Default or Event of Default has occurred and is continuing. On the date
on which such conversion is being made, each Lender shall take such
action as is necessary to transfer its Commitment Percentage of such
Loans to its Domestic Lending Office or its Eurodollar Lending Office,
as the case may be. All or any part of outstanding Loans of any Type
may be converted as provided herein, provided further that each
Conversion Request relating to the conversion of a Base Rate Loan to a
Eurodollar Rate Loan shall be for an amount equal to $5,000,000 or an
integral multiple of $1,000,000 in excess thereof and shall be
irrevocable by the Borrower.
(b) Any Loans of any Type may be continued as such upon the
expiration of an Interest Period with respect thereto by compliance by
the Borrower with the notice provisions contained in Section 2.6 (a) ;
provided that no Eurodollar Rate Loan may be continued as such when any
Default or Event of Default has occurred and is continuing but shall be
automatically converted to a Base Rate Loan on the last day of the
first Interest Period relating thereto ending during the continuance of
any Default or Event of Default of which the officers of the Agent
active upon the Borrower's account have actual knowledge.
(c) In the event that the Borrower does not notify the Agent
of its election hereunder with respect to any Loan, such Loan shall be
automatically converted to a Base Rate Loan at the end of the
applicable Interest Period.
(d) The Borrower may not request a Eurodollar Rate Loan
pursuant to Section 2.5, elect to convert a Base Rate Loan to a
Eurodollar Rate Loan pursuant to Section 2.6(a) or elect to continue a
Eurodollar Rate Loan pursuant to Section 2.6(b) if, after giving effect
thereto, there would be greater than eight (8) Eurodollar Rate Loans
outstanding. Any Loan Request for a Eurodollar Rate Loan that would
create greater than eight (8) Eurodollar Rate Loans outstanding shall
be deemed to be a Loan Request for a Base Rate Loan.
Section 2.7. Funds for Loans.
(a) Subject to Section 2.5 and other provisions of this
Agreement, not later than 11:00 a.m. (Boston time) on the proposed
Borrowing Date of any Loans, each of the Lenders will make available to
the Agent, at the Agent's Head Office, in immediately available funds,
the amount of such Lender's Commitment Percentage of the amount of the
requested Loans. Upon receipt from each Lender of such amount, and upon
receipt of the documents required by Section 10 or 11 (whichever is
applicable) and the satisfaction of the other conditions set forth
therein, to the extent applicable, the Agent will make available to the
Borrower the aggregate amount of such Loans made available to the Agent
by the Lenders. The failure or refusal of any Lender to make available
to the Agent at the aforesaid time and place on any Borrowing Date the
amount of its Commitment Percentage of the requested Loans shall not
relieve any other Lender from its several obligation hereunder to make
available to the Agent the amount of such other Lender's Commitment
Percentage of any requested Loans but shall not obligate any other
Lender or Agent to fund more than its Commitment Percentage of the
requested Loans or to increase its Commitment Percentage.
(b) The Agent may, unless notified to the contrary by any
Lender prior to a Borrowing Date, assume that such Lender has made
available to the Agent on such Borrowing Date the amount of such
Lender's Commitment Percentage of the Loans to be made on such
Borrowing Date, and the Agent may (but it shall not be required to), in
reliance upon such assumption, make available to the Borrower a
corresponding amount. If any Lender makes available to the Agent such
amount on a date after such Borrowing Date, such Lender shall pay to
the Agent on demand an amount equal to the product of (i) the average
computed for the period referred to in clause (iii) below, of the
weighted average interest rate paid by the Agent for federal funds
acquired by the Agent during each day included in such period, times
(ii) the amount of such Lender's Commitment Percentage of such Loans,
times (iii) a fraction, the numerator of which is the number of days or
portion thereof that elapsed from and including such Borrowing Date to
the date on which the amount of such Lender's Commitment Percentage of
such Loans shall become immediately available to the Agent, and the
denominator of which is 365. A statement of the Agent submitted to
such Lender with respect to any amounts owing under this paragraph
shall be prima facie evidence of the amount due and owing to the Agent
by such Lender.
Section 2.8 Swingline Loans.
(a) Subject to the provisions of this Section 2.8 and the
other terms and conditions set forth in this Agreement, the Swingline
Lender agrees to lend to the Borrower and the Borrower may borrow,
repay and reborrow from time to time between the Effective Date and the
date which is thirty (30) days prior to the Maturity Date, such sums as
are requested by Borrower up to a maximum aggregate principal amount of
Swingline Loans outstanding (after giving effect to all amounts
requested) at any one time equal to the Swingline Commitment, provided
that the Outstanding Obligations, including the outstanding amount of
Swingline Loans (after giving effect to all amounts requested) shall
not at any time exceed the Maximum Credit Amount. All Swingline Loans
will be Base Rate Loans.
(b) The Borrower shall give to the Agent a Swingline Loan
Request no later than 10:00 a.m. (Boston time) on the proposed
Borrowing Date for any Swingline Loan. Each such Swingline Loan
Request shall be irrevocable and binding on the Borrower and the
Borrower shall be obligated to accept the Swingline Loan requested from
the Swingline Lender on the proposed Borrowing Date. Each Swingline
Loan Request shall be in a minimum aggregate amount of $1,000,000 or in
integral multiple of $1,000,000 in excess thereof. Unless the
Swingline Lender determines that certain of the conditions contained in
Section 11 of this Agreement have not been met or waived as of the
proposed Borrowing Date, then the Swingline Lender will make available
to the Agent, and the Agent will make available to the Borrower, the
aggregate amount of the Swingline Loans so requested before the close
of business on the Borrowing Date. The Borrower agrees to repay each
Swingline Loan within seven (7) Business Days after the Borrowing Date
thereof. The funds used to repay such Swingline Loan may be from Loans
made pursuant to Section 2.1, or with other funds of the Borrower, but
the Borrower may not use the proceeds of one Swingline Loan to repay a
previous Swingline Loan. The Borrower and the Lenders agree that upon
written demand by the Swingline Lender (which may be given at any time
and shall be deemed given if any Swingline Loan is not repaid on the
date required by this Agreement), the Agent shall give each Lender a
notice requiring the funding of a Mandatory Base Rate Loan for the
purpose of repaying a Swingline Loan. Within one (1) business day
after receipt of such notice from the Agent, each Lender shall be
obligated to fund its Commitment Percentage of the Mandatory Base Rate
Loan. Upon the funding of such Mandatory Base Rate Loan, the Agent
shall forward the proceeds thereof to the Swingline Lender to repay the
applicable Swingline Loan. Each Lender shall be obligated to fund its
Commitment Percentage of Mandatory Base Rate Loans hereunder regardless
of whether or not all of the conditions contained in Section 11 of this
Agreement have been met or waived and even if the funding is to take
place after the Maturity Date.
(c) In the event that a Mandatory Base Rate Loan cannot be
made on the date required in the paragraph (b) above, upon written
demand by the Swingline Lender, each other Lender shall purchase from
the Swingline Lender a participating interest in the outstanding
Swingline Loan in an amount equal to such other Lender's Commitment
Percentage of such outstanding Swingline Loan as of the date of such
purchase. Each Lender agrees to purchase its Commitment Percentage of
each Swingline Loan within one (1) business day after such demand
therefor is made by the Swingline Lender and on such date of purchase,
an amount equal to such Lender's Commitment Percentage of the
outstanding principal amount of the Swingline Loan to be purchased by
such Lender shall be advanced to the Agent and upon receipt of such
funds the Agent shall transfer such funds to the Swingline Lender.
Upon any sale by the Swingline Lender to any other Lender of a
participating interest in any Swingline Loan pursuant to this
paragraph, the Swingline Lender represents and warrants to such other
Lender that the Swingline Lender is the legal and beneficial owner of
the interest being sold by it, free and clear of any liens, but makes
no other representation or warranty. Except for such representation
and warranty, the Swingline Lender shall have no responsibility or
liability to any other Lender with respect to the Swingline Loans or
the participation therein so sold, and no Lender shall have any
recourse against the Swingline Lender with respect to such Swingline
Loans or participation therein, except that the Swingline Lender shall
pay to each Lender that purchases a participation interest in Swingline
Loans pursuant to this paragraph such Lender's ratable share of the
payments, if any, actually received by the Swingline Lender on account
of such Swingline Loans. If and to the extent that any Lender does not
so advance the purchase price for such participation interest as
required by this paragraph, such Lender agrees to pay to the Agent, for
the account of Swingline Lender, on demand an amount computed in the
same manner as the amount due to the Agent from a Lender which has made
available funds for loans after the Borrowing Date thereof pursuant to
Section 2.7(b).
Section 2.9. Letters of Credit.
(a) Up to $30,000,000 of the Commitments may be used by
Borrower for the issuance of Letters of Credit by the Agent for the
account of the Borrower subject to the terms and conditions set forth
herein. Each Letter of Credit shall be denominated in Dollars and
shall be a standby letter of credit issued to support the obligations
of Borrower in connection with any purposes for which the proceeds of
the Loans may be used pursuant to Section 7.11. Each Letter of Credit
shall have an initial term of not more than one (1) year, and shall
expire no later than five (5) Business Days prior to the Maturity Date.
Although the Agent shall be the issuing bank of the Letter of Credit,
each Lender hereby accepts for its own account and risk an undivided
interest equal to its Commitment Percentage in the Agent's obligations
and rights under each Letter of Credit issued hereunder. Each Lender
unconditionally and irrevocably agrees with the Agent that, if a draft
is paid under any Letter of Credit, such Lender shall promptly pay to
the Agent an amount equal to such Lender's Commitment Percentage of
the amount of such draft or any part thereof. Upon the issuance of
each Letter of Credit hereunder, there shall be reserved from each
Lender's Commitment an amount equal to such Lender's Commitment
Percentage of the stated amount of the Letter of Credit. Such reserved
amounts shall remain in place and shall be unavailable for borrowing
under Section 2.1 until the date that the Letter of Credit expires, is
fully drawn or is terminated.
(b) The Borrower shall give to the Agent a written notice in
the form of Exhibit F hereto of each Letter of Credit requested
hereunder (a "Letter of Credit Request") no less than five (5) Business
Days prior to the proposed issuance date of the requested Letter of
Credit. Each Letter of Credit Request shall specify (i) the name and
address of the beneficiary of the requested Letter of Credit, (ii) the
stated amount of the requested Letter of Credit, (iii) the proposed
issuance date and expiration date of the requested Letter of Credit,
(iv) the proposed form of the requested Letter of Credit, and (v) the
permitted purpose for which the Letter of Credit will be used, and
shall be accompanied by a Compliance Certificate in the form of Exhibit
C hereto signed by a Responsible Officer setting forth in reasonable
detail computations evidencing compliance with the covenants contained
in Section 9 hereof after including in the Outstanding Obligations the
stated amount of the requested Letter of Credit. The Agent may also
require that the Borrower complete its standard letter of credit
application in the form of Exhibit G attached hereto, as such standard
form may be revised from time to time, and submit the same together
with the Letter of Credit Request. Within two (2) Business Days after
receipt of a Letter of Credit Request, the Agent shall provide to each
of the Lenders by facsimile a copy of such Letter of Credit Request and
accompanying Compliance Certificate and each Lender shall, within 24
hours thereafter, notify the Agent if it believes that any of the
conditions contained in Section 11 of this Agreement has not been met
or waived such that a Loan in an amount equal to the stated amount of
the requested Letter of Credit could be made on the proposed issuance
date of such Letter of Credit. If such a notice is given the Requisite
Lenders shall promptly determine whether all of the conditions
contained in Section 11 of this Agreement have been met or waived. If
no such notice is given by any Lender or if following such notice the
Requisite Lenders determine that the conditions contained in Section 11
have been met or waived, and if the Agent determines, in its
discretion, that it is willing to issue the requested Letter of Credit,
and that it is satisfied with the proposed form thereof, the Letter of
Credit shall be issued by the Agent and each of the Lenders shall then
be obligated to the Agent with respect to its Commitment Percentage of
the Letter of Credit as provided above in Section 2.9(a).
(c) On or before the issuance date of any requested Letters
of Credit, the Borrower shall pay to the Agent for its own account an
issuance fee equal to one-eighth percent (.125%) of the stated amount
of the Letter of Credit. On or before the date of any renewal or
extension of a Letter of Credit, the Borrower shall pay to the Agent
for its own account a renewal fee equal to five-hundredths percent
(.05%) of the stated amount of the Letter of Credit. The Borrower
shall pay to the Agent for the account of the Lenders a Letter of
Credit fee equal to the then prevailing Applicable Eurodollar Margin
per annum of the stated amount of the Letter of Credit, which Letter
of Credit fee shall be due and payable on the issuance date of the
Letter of Credit and on the date of each renewal or extension thereof,
and shall be prorated for any partial year based on a 360-day year and
paid for the actual number of days between the issuance date and the
expiration date of such Letter of Credit. Promptly after its receipt
thereof the Agent shall distribute such Letter of Credit fee to the
Lenders pro-rata in accordance with their respective Commitment
Percentages. Such fees shall be nonrefundable and shall not be further
prorated in the event that the Letter of Credit terminates prior to its
scheduled expiration date. The Borrower also agrees to reimburse the
Agent for all reasonable fees, costs, expenses and disbursements of the
Agent in issuing, effecting payment under, amending or otherwise
administering any Letter of Credit.
(d) Promptly after each Drawing Date the Agent shall notify
the Lenders and the Borrower of the amount of the draft paid by the
Agent on such Drawing Date. The payment of a draft under a Letter of
Credit shall constitute an advance of a Mandatory Base Rate Loan which
shall bear interest as a Base Rate Loan from the Drawing Date. On the
Drawing Date each Lender shall make available to the Agent in
immediately available funds its Commitment Percentage of the amount of
the Mandatory Base Rate Loan so advanced upon such payment of a draft
under the Letter of Credit. If the Agent receives such funds from any
Lender on a date after the Drawing Date, such Lender shall pay to the
Agent on demand an amount computed in the same manner as the amount due
to the Agent from a Lender which has made available funds for loans
after the Borrowing Date thereof pursuant to Section 2.7(b). Each
Lender's obligation to fund its Commitment Percentage of Mandatory Base
Rate Loans arising from the payment of a draft under a Letter of Credit
shall not be subject to the satisfaction of the conditions set forth in
Section 11. Within three (3) Business Days after each Drawing Date,
the Borrower shall deliver to the Agent a written explanation of the
facts and circumstances relating to such drawing and a Compliance
Certificate and any other information requested by the Agent for the
purpose of allowing the Lenders to determine whether the drawing or
related events have resulted in a Default or Event of Default. The
Agent shall promptly provide copies of such explanation and information
to the Lenders. In the event that a Mandatory Base Rate Loan cannot be
made on the date required in this paragraph, upon written demand by the
Agent, each other Lender shall purchase from the Agent a participating
interest in the unreimbursed draft paid pursuant to such Letter of
Credit in an amount equal to such other Lender's Commitment Percentage
of such unreimbursed draft. Each Lender agrees to purchase its
Commitment Percentage of such unreimbursed draft within one (1)
business day after such demand therefor is made by the Agent and on
such date of purchase, an amount equal to such Lender's Commitment
Percentage of the such unreimbursed draft to be purchased by such
Lender shall be advanced to the Agent.
(e) The Borrower's obligations under this Section 2.9 shall
be absolute and unconditional under any and all circumstances and
irrespective of any set-off, counterclaim or defense to payment which
the Borrower may have or have had against the Agent, any Lender or any
beneficiary of a Letter of Credit. The Borrower also agrees that the
Agent shall not be responsible for, and the Borrower's reimbursement
obligations hereunder shall not be affected by, among other things, (i)
the validity or genuineness of documents or of any endorsements
thereon, even though such documents shall in fact prove to be invalid,
fraudulent or forged, or (ii) any dispute between or among the Borrower
and any beneficiary of any Letter of Credit or any other party to which
such Letter of Credit may be transferred or (iii) any claims whatsoever
of the Borrower against any beneficiary of such Letter of Credit or any
such transferee. The Agent shall not be liable for any error,
omission, interruption or delay in transmission, dispatch or delivery
of any message or advice, however transmitted, in connection with any
Letter of Credit, except for errors, omissions, interruptions or delays
caused by the Agent's gross negligence or willful misconduct. The
Borrower agrees that any action taken or omitted by the Agent under or
in connection with any Letter of Credit or the related drafts or
documents, if done in the absence of gross negligence or willful
misconduct and in accordance with the standards of care specified in
the Uniform Customs and Practices for Documentary Credits as the same
may be amended from time to time, shall be binding on the Borrower and
shall not result in any liability of the Agent to the Borrower.
(f) In the event that any Letters of Credit are in effect at
the time of an acceleration of the maturity of the Loans pursuant to
Section 12.1, the amounts which shall thereupon become immediately due
and payable by the Borrower shall include a sum equal to the aggregate
stated amount of such then effective Letters of Credit. Such sum shall
be deposited in a cash collateral account to be opened by the Agent
which shall be under the sole dominion and control of the Agent. The
Borrower hereby grants to the Agent, for the benefit of the Lenders, as
security for the Obligations a first priority security interest in such
cash collateral account and all deposits at any time therein and the
proceeds thereof and the Borrower shall execute and deliver such
documents and take all actions as may be required to create and
maintain a valid and perfected first priority Lien on such cash
collateral account in favor of the Agent. Amounts held in such cash
collateral account shall be applied by the Agent on each Drawing Date
thereafter to pay any drafts presented pursuant to the Letters of
Credit. After all Letters of Credit have been fully drawn upon,
expired or otherwise terminated, any balance remaining in such cash
collateral account shall be applied in the same manner as enforcement
proceeds under Section 12.4.
Section 3. REPAYMENT OF THE LOANS.
Section 3.1. Maturity. The Borrower unconditionally promises to
pay on the Maturity Date, and there shall become absolutely due and
payable on the Maturity Date, all of the Loans outstanding on such
date, together with any and all accrued and unpaid interest and charges
thereon.
Section 3.2. Mandatory Repayments of Loan. If at any time the sum
of the Outstanding Obligations exceeds the Maximum Credit Amount, then
the Borrower shall immediately pay the amount of such excess to the
Agent for the respective accounts of the Lenders for application to the
Loans. The Borrower shall repay Swingline Loans on or before the date
required under Section 2.8.
Section 3.3. Optional Repayments of Loans. The Borrower shall
have the right, at its election, to repay the outstanding amount of the
Loans, as a whole or in part, on any Business Day, without penalty or
premium; provided that the full or partial prepayment of the
outstanding amount of any Eurodollar Rate Loans made pursuant to this
Section 3.3 may be made only on the last day of the Interest Period
relating thereto, except as set forth below in this Section 3.3. The
Borrower shall give the Agent no later than 10:00 a.m., Boston time, at
least two (2) Business Days' prior written notice of any prepayment
pursuant to this Section 3.3 of any Base Rate Loans and four (4)
Eurodollar Business Days, notice of any proposed repayment pursuant to
this Section 3.3 of any Eurodollar Rate Loans, specifying the proposed
date of payment of Loans and the principal amount to be paid. The
Agent shall promptly notify each Lender of the principal amount of such
payment to be received by such Lender. Each such partial prepayment of
the Loans shall be in an integral multiple of $1,000,000 and, to the
extent requested by the Agent, shall be accompanied by the payment of
all charges outstanding on all Loans and of accrued interest on the
principal repaid to the date of payment. The principal payments so
received shall be applied first to the principal of Swingline Loans,
next to the principal of Base Rate Loans other than Swingline Loans and
then to the principal of Eurodollar Rate Loans. Notwithstanding
anything contained herein to the contrary, the Borrower may make a full
or partial prepayment of a Eurodollar Rate Loan on a date other than
the last day of the Interest Period relating thereto, if all optional
prepayments (in whole or in part) on such Loans shall be accompanied
by, and the Borrower hereby promises to pay, a prepayment fee in an
amount determined by the Agent in the following manner:
(a) Fixed Rate Prepayment Fee. Borrower acknowledges that
prepayment or acceleration of a Eurodollar Loan during an Interest
Period shall result in the Lenders incurring additional costs, expenses
and/or liabilities and that it is extremely difficult and impractical
to ascertain the extent of such costs, expenses and/or liabilities.
(For all purposes of this Section, any Loan not being made as a
Eurodollar Rate Loan in accordance with the Loan Request therefor, as a
result of Borrower's cancellation thereof, shall be treated as if such
Eurodollar Rate Loan had been prepaid.) Therefore, on the date a
Eurodollar Rate Loan is prepaid or the date all sums payable hereunder
become due and payable, by acceleration or otherwise ("Prepayment
Date"), Borrower will pay to Agent, for the account of each Lender, (in
addition to all other sums then owing), an amount ("Fixed Rate
Prepayment Fee") determined by the Agent as follows: The current rate
for United States Treasury securities (bills on a discounted basis
shall be converted to a bond equivalent) with a maturity date closest
to the end of the Interest Period as to which prepayment is made, shall
be subtracted from the interest rate applicable to the Eurodollar Rate
Loan being prepaid. If the result is zero or a negative number, there
shall be no Fixed Rate Prepayment Fee. If the result is a positive
number, then the resulting percentage shall be multiplied by the amount
of the Eurodollar Rate Loan being prepaid. The resulting amount shall
be divided by 360 and multiplied by the number of days remaining in the
Interest Period as to which the prepayment is being made. The resulting
amount shall be the Fixed Rate Prepayment Fee.
(b) Upon the written notice to Borrower from Agent, Borrower
shall immediately pay to Agent, for the account of the Lenders, the
Fixed Rate Prepayment Fee. Such written notice (which shall include
calculations in reasonable detail) shall, in the absence of manifest
error, be conclusive and binding on the parties hereto.
(c) Borrower understands, agrees and acknowledges the
following: (i) no Lender has any obligation to purchase, sell and/or
match funds in connection with the use of the Eurodollar Rate as a
basis for calculating the rate of interest on a Eurodollar Rate Loan;
(ii) the Eurodollar Rate is used merely as a reference in determining
such rate; and (iii) Borrower has accepted the Eurodollar Rate as a
reasonable and fair basis for calculating such rate and a Fixed Rate
Prepayment Fee. Borrower further agrees to pay the Fixed Rate
Prepayment Fee, if any, whether or not a Lender elects to purchase,
sell and/or match funds.
Section 4. CERTAIN GENERAL PROVISIONS.
Section 4.1. Fees. On the Effective Date, the Borrower shall pay
to Fleet the fees in the amounts specified in the fee agreement among
Fleet, the Arranger and the Borrower dated March 30, 2000. Fleet shall
be responsible for the facility fees which it has agreed to pay to the
other Lenders.
Section 4.2. Commitment Fee. The Borrower shall pay to the Agent
for the accounts of the Lenders in accordance with their respective
Commitment Percentages a commitment fee calculated at the rates set
forth below per annum on the daily amount by which the Total Commitment
(as it may have been reduced pursuant to Section 2.2) exceeds the
Outstanding Obligations excluding Swingline Loans (the "Unused
Amount"):
Unused Amount Fee Rate
- ------------------------------------- ----------------------
less than 40% of Total Commitment 15 basis points
40% or more of Total Commitment 25 basis points
The commitment fee shall be payable on the basis of the applicable
annual rate quarterly in arrears on or before the third Business Day of
each calendar quarter for the immediately preceding calendar quarter
commencing on the first such date following the date hereof, with a
final payment on the Maturity Date or any earlier date on which the
Commitments shall terminate. If Borrower exercises its option to
increase the Total Commitment pursuant to Section 2.2(a), the
commitment fee shall be computed separately for the portions of the
quarter prior to and after the Commitment Increase Date and allocated
among the Lenders based on the Commitment Percentages applicable during
each portion of said quarter.
Section 4.3. Funds for Payments.
(a) All payments of principal, interest, closing fees,
commitment fees and any other amounts due hereunder (other than as
provided in Section 2.2(b), Section 3.1(b), Section 4.1, Section 4.5
and Section 4.6) or under any of the other Loan Documents, and all
prepayments, shall be made to the Agent, for the respective accounts of
the Lenders, at the Agent's Head Office, in each case in Dollars in
immediately available funds.
(b) All payments by the Borrower hereunder and under any of
the other Loan Documents shall be made without setoff or counterclaim
and free and clear of and without deduction for any taxes, levies,
imposts, duties, charges, fees, deductions, withholdings, compulsory
liens, restrictions or conditions of any nature now or hereafter
imposed or levied by any jurisdiction or any political subdivision
thereof or taxing or other authority therein unless the Borrower is
compelled by law to make such deduction or withholding. If any such
obligation is imposed upon the Borrower with respect to any amount
payable by it hereunder or under any of the other Loan Documents, the
Borrower shall pay to the Agent, for the account of the Lenders or (as
the case may be) the Agent, on the date on which such amount is due and
payable hereunder or under such other Loan Document, such additional
amount in Dollars as shall be necessary to enable the Lenders or the
Agent to receive the same net amount which the Lenders or the Agent
would have received on such due date had no such obligation been
imposed upon the Borrower. The Borrower will deliver promptly to the
Agent certificates or other valid vouchers for all taxes or other
charges deducted from or paid with respect to payments made by the
Borrower hereunder or under such other Loan Document.
Section 4.4. Computations. All computations of interest on the
Loans and of other fees to the extent applicable shall be based on a
360-day year and paid for the actual number of days elapsed. Except as
otherwise provided in the definition of the term "Interest Period" with
respect to Eurodollar Rate Loans, whenever a payment hereunder or under
any of the other Loan Documents becomes due on a day that is not a
Business Day, the due date for such payment shall be extended to the
next succeeding Business Day, and interest shall accrue during such
extension. The outstanding amount of the Loans as reflected on the
Records from time to time shall (absent manifest error) be considered
correct and binding on the Borrower unless within thirty (30) Business
Days after receipt by the Agent or any of the Lenders from Borrower of
any notice by the Borrower of such outstanding amount, the Agent or
such Lender shall notify the Borrower to the contrary.
Section 4.5. Additional Costs, Etc. If any present or future
applicable law which expression, as used herein, includes statutes,
rules and regulations thereunder and interpretations thereof by any
competent court or by any governmental or other regulatory body or
official charged with the administration or the interpretation thereof
and requests, directives, instructions and notices at any time or from
time to time hereafter made upon or otherwise issued to any Lender or
the Agent by any central bank or other fiscal, monetary or other
authority (whether or not having the force of law), shall:
(a) subject any Lender or the Agent to any tax, levy,
impost, duty, charge, fee, deduction or withholding of any nature with
respect to this Agreement, the other Loan Documents, such Lender's
Commitment or the Loans (other than taxes based upon or measured by the
income or profits of such Lender or the Agent), or
(b) materially change the basis of taxation (except for
changes in taxes on income or profits) of payments to any Lender of the
principal of or the interest on any Loans or any other amounts payable
to any Lender under this Agreement or the other Loan Documents, or
(c) impose or increase or render applicable (other than to
the extent specifically provided for elsewhere in this Agreement) any
special deposit, reserve, assessment, liquidity, capital adequacy or
other similar requirements (whether or not having the force of law)
against assets held by, or deposits in or for the account of, or Loans
by, or commitments of an office of any Lender, or
(d) impose on any Lender any other conditions or
requirements with respect to this Agreement, the other Loan Documents,
the Loans, the Commitment, or any class of Loans or commitments of
which any of the Loans or the Commitment forms a part;
and the result of any of the foregoing is
(i) to increase the cost to such Lender of making,
funding, issuing, renewing, extending or maintaining any of the Loans
or such Lender's Commitment, or
(ii) to reduce the amount of principal, interest or
other amount payable to such Lender or the Agent hereunder on account
of the Commitments or any of the Loans, or
(iii) to require such Lender or the Agent to make
any payment or to forego any interest or other sum payable hereunder,
the amount of which payment or foregone interest or other sum is
calculated by reference to the gross amount of any sum receivable or
deemed received by such Lender or the Agent from the Borrower
hereunder,
then, and in each such case, the Borrower will,
upon demand made by such Lender or (as the case may be) the Agent at
any time and from time to time and as often as the occasion therefor
may arise, pay to such Lender or the Agent, to the extent permitted by
law, such additional amounts as will be sufficient to compensate such
Lender or the Agent for such additional cost, reduction, payment or
foregone interest or other sum.
Section 4.6. Capital Adequacy. If any present or future law,
governmental rule, regulation, policy, guideline or directive (whether
or not having the force of law) or the interpretation thereof by a
court or governmental authority with appropriate jurisdiction affects
the amount of capital required or expected to be maintained by banks or
bank holding companies and any Lender or the Agent determines that the
amount of capital required to be maintained by it is increased by or
based upon the existence of the Loans made or deemed to be made
pursuant hereto, then such Lender or the Agent may notify the Borrower
of such fact, and the Borrower shall pay to such Lender or the Agent
from time to time on demand, as an additional fee payable hereunder,
such amount as such Lender or the Agent shall determine in good faith
and certify in a notice to the Borrower to be an amount that will
adequately compensate such Lender or the Agent in light of these
circumstances for its increased costs of maintaining such capital. Each
Lender and the Agent shall allocate such cost increases among its
customers in good faith and on an equitable basis.
Section 4.7. Certificate. A certificate setting forth any
additional amounts payable pursuant to Section 4.5 or 4.6 and a brief
explanation of such amounts which are due, submitted by any Lender or
the Agent to the Borrower, shall be prima facie evidence that such
amounts are due and owing.
Section 4.8. Indemnity. In addition to the other provisions of
this Agreement regarding any such matters, the Borrower agrees to
indemnify each Lender and to hold each Lender harmless from and against
any loss, cost or reasonable expense (including loss of anticipated
profits) that such Lender may sustain or incur as a consequence of (a)
a default by the Borrower in payment of the principal amount of or any
interest on any Eurodollar Rate Loans as and when due and payable,
including any such loss or expense caused by Borrower's breach or other
default and arising from interest or fees payable by such Lender to
lenders of funds obtained by it in order to maintain its Eurodollar
Rate Loans, (b) a default by the Borrower in making a borrowing or
conversion after the Borrower has given (or is deemed to have given) a
Loan Request or a Conversion Request, (c) the making of any payment of
a Eurodollar Rate Loan or the making of any conversion of a Eurodollar
Rate Loan to a Base Rate Loan on a day that is not the last day of the
applicable Interest Period with respect thereto, including interest or
fees payable by such Lender to lenders of funds obtained by it in order
to maintain any such Eurodollar Rate Loan and (d) any failure by the
Borrower to prepay a Eurodollar Loan on the date specified in a
prepayment notice given by the Borrower.
Section 4.9. Interest on Overdue Amounts. Overdue principal and
(to the extent permitted by applicable law) interest on the Loans and
all other overdue amounts payable hereunder or under any of the other
Loan Documents shall bear interest compounded monthly and payable on
demand at a rate per annum equal to four percent (4%) above the Base
Rate until such amount shall be paid in full (after as well as before
judgment) . In addition, the Borrower shall pay to the Agent a late
charge equal to three percent (3%) of any amount of principal and/or
interest and/or charges on the Loans which is not paid within ten (10)
days of the date when due.
Section 4.10. Inability to Determine Eurodollar Rate. In the
event, prior to the commencement of any Interest Period relating to any
Eurodollar Rate Loan, the Agent shall determine that adequate and
reasonable methods do not exist for ascertaining the Eurodollar Rate
that would otherwise determine the rate of interest to be applicable to
any Eurodollar Rate Loan during any Interest Period, the Agent shall
forthwith give notice of such determination (which shall be conclusive
and binding on the Borrower) to the Borrower. In such event (a) any
Loan Request with respect to Eurodollar Rate Loans shall be
automatically withdrawn and shall be deemed a request for Base Rate
Loans, (b) each Eurodollar Rate Loan will automatically, on the last
day of the then current Interest Period thereof, become a Base Rate
Loan, and (c) the obligations of the Lenders to make Eurodollar Rate
Loans shall be suspended until the Agent determines that the
circumstances giving rise to such suspension no longer exist, whereupon
the Agent shall so notify the Borrower.
Section 4.11. Illegality. Notwithstanding any other provisions
herein, if any present or future law, regulation, treaty or directive
or in the interpretation or application thereof shall make it unlawful
for any Lender to make or maintain Eurodollar Rate Loans, such Lender
shall forthwith give notice of such circumstances to the Borrower and
thereupon (a) the Commitment of such Lender to make Eurodollar Rate
Loans or convert Loans of another Type to Eurodollar Rate Loans shall
forthwith be suspended and (b) the Eurodollar Rate Loans then
outstanding shall be converted automatically to Base Rate Loans on the
last day of each Interest Period applicable to such Eurodollar Rate
Loans or within such earlier period as may be required by law. The
Borrower hereby agrees promptly to pay to the Agent for the account of
such Lender, upon demand, any additional amounts necessary to
compensate such Lender for any costs incurred by such Lender in making
any conversion in accordance with this Section 4.11, including any
interest or fees payable by such Lender to lenders of funds obtained by
it in order to make or maintain its Eurodollar Rate Loans hereunder.
Section 4.12. Replacement of Lenders. If any of the Lenders
shall make a notice or demand upon the Borrower pursuant to Section
4.5, Section 4.6, or Section 4.11 based on circumstances or laws which
are not generally applicable to the Lenders organized under the laws of
the United States or any State thereof, the Borrower shall have the
right to replace such Lender with an Eligible Assignee selected by the
Borrower and approved by the Agent. In such event the assignment shall
take place on a date set by the Agent at which time the assigning
Lender and the Eligible Assignee shall enter into an Assignment and
Acceptance as contemplated by Section 18.1 (and clause (d) thereof
shall not be applicable) and the assigning Lender shall receive from
the Eligible Assignee or the Borrower a sum equal to the outstanding
principal amount of the Loans owed to the assigning Lender together
with accrued interest thereon plus the accrued commitment fee under
Section 4.2 allocated to the assigning Lender, plus all other amounts
then due to the assigning Lender hereunder.
Section 5. UNENCUMBERED PROPERTIES; NO LIMITATION ON RECOURSE.
Section 5.1. Unencumbered Properties and Unencumbered Development
Properties. The Borrower represents and warrants that each of the Real
Estate Assets listed on Schedule 1.1 will on the Effective Date either
(i) satisfy all of the conditions set forth in the definition of
Unencumbered Property or (ii) satisfy all of the conditions set forth
in the definition of Unencumbered Development Property. From time to
time during the term of this Agreement additional Real Estate Assets
may become Unencumbered Properties or Unencumbered Development
Properties and certain Real Estate Assets which previously satisfied
the conditions set forth in the definition of Unencumbered Property or
in the definition of Unencumbered Development Property may cease to be
Unencumbered Properties or Unencumbered Development Properties by
virtue of property dispositions, creation of Liens or other reasons.
There shall be attached to each Compliance Certificate delivered
pursuant to Section 7.4(d) or Section 7.13 an updated listing of the
Unencumbered Properties and Unencumbered Development Properties relied
upon by the Borrower in computing the Value of All Unencumbered
Properties and the Unencumbered Net Operating Income stated in such
Compliance Certificate. Compliance Certificates delivered pursuant to
Section 2.5(a) or Section 2.9(b) may, at Borrower's option, include an
updated listing of the Unencumbered Properties and Unencumbered
Development Properties and shall include such updated listing whenever
a redetermination of the Value of All Unencumbered Properties based on
such an updated listing would result in a material decrease (from that
shown on the most recently delivered Compliance Certificate) in the
Value of All Unencumbered Properties by virtue of property
dispositions, creation of Liens or other reasons.
Section 5.2. Waivers by Requisite Lenders. If any Real Estate
Asset fails to satisfy any of the requirements contained in the
definition of Unencumbered Property or the definition of Unencumbered
Development Property then the applicable Real Estate Asset may
nevertheless be deemed to be Unencumbered Property or an Unencumbered
Development Property hereunder if the Requisite Lenders grant the
necessary waivers and vote to accept such Real Estate Asset as an
Unencumbered Property or an Unencumbered Development Property.
Section 5.3. Rejection of Unencumbered Properties and Unencumbered
Development Properties. If at any time the Agent determines that any
Real Estate Asset listed as an Unencumbered Property or an Unencumbered
Development Property by the Borrower does not satisfy all of the
requirements of the definition of Unencumbered Property or of
Unencumbered Development Property, as applicable (to the extent not
waived by the Requisite Lenders pursuant to Section 5.2) it may reject
an Unencumbered Property or an Unencumbered Development Property by
notice to the Borrower and if the Agent so requests the Borrower shall
revise the applicable Compliance Certificate to reflect the resulting
change in the Value of All Unencumbered Properties and the Unencumbered
Net Operating Income.
Section 5.4. Change in Circumstances. If at any time during the
term of this Agreement Borrower becomes aware that any of the
representations contained in Section 6 are no longer accurate with
respect to any Unencumbered Property or any Unencumbered Development
Property, it will promptly so notify the Agent and either request a
waiver pursuant to Section 5.2 or confirm that such Real Estate Asset
is no longer an Unencumbered Property or an Unencumbered Development
Property. If any waiver so requested is not granted by the Requisite
Lenders within ten (10) Business Days the Agent shall reject the
applicable Unencumbered Property or Unencumbered Development Property
pursuant to Section 5.3.
Section 5.5. No Limitation on Recourse. The Obligations are full
recourse obligations of the Borrower and, to the extent provided in the
applicable Guaranty, of the Guarantors, and all of their respective
Real Estate Assets and other properties shall be available for the
indefeasible payment in full in cash and performance of the
Obligations. Notwithstanding anything to the contrary contained
herein, the trustees of Liberty Property Trust shall have no personal
liability of any nature under this document. The Agent and the Lenders
shall look solely to the assets of Liberty Property Trust to satisfy
any liability or recourse against Liberty Property Trust hereunder.
Section 5.6. Additional Guarantor Subsidiaries. If Borrower
desires that a Real Estate Asset owned by a Related Company which is
not previously a Guarantor Subsidiary become an Unencumbered Property
or an Unencumbered Development Property, then provided that the
applicable Related Company is at least 85% owned by Borrower, such
Related Company may become a Guarantor Subsidiary upon delivery to the
Agent of the following, all in form and substance satisfactory to the
Agent: (a) a Guaranty in substantially the form of the Guaranty
executed and delivered by the Guarantor Subsidiaries prior to the
Effective Date, (b) good standing certificates, general partner
certificates, secretary certificates, opinions of counsel and such
other documents as may be reasonably requested by the Agent. The Agent
shall provide copies of said documents to the Lenders.
Section 6. REPRESENTATIONS AND WARRANTIES. The Borrower
represents and warrants to the Agent and each of the Lenders as
follows:
Section 6.1. Authority; Etc.
(a) Organization; Good Standing. The Company (i) is a
Maryland real estate investment trust duly organized, validly existing
and in good standing under the laws of the State of Maryland, (ii) has
all requisite power to own its properties and conduct its business as
now conducted and as presently contemplated, and (iii) to the extent
required by law is in good standing as a foreign entity and is duly
authorized to do business in the States in which the Unencumbered
Properties and the Unencumbered Development Properties are located and
in each other jurisdiction where such qualification is necessary except
where a failure to be so qualified in such other jurisdiction would not
have a Materially Adverse Effect. The Borrower is a Pennsylvania
limited partnership, and each Guarantor Subsidiary is a Pennsylvania
limited partnership or a Pennsylvania corporation, and each such entity
is duly organized, validly existing and in good standing under the laws
of the State of its formation, has all requisite power to own its
properties and conduct its business as presently contemplated and is
duly authorized to do business in the States in which the Unencumbered
Properties and the Unencumbered Development Properties owned by it are
located and in each other jurisdiction where such qualification is
necessary except where a failure to be so qualified in such other
jurisdiction would not have a Material Adverse Effect.
(b) Authorization. The execution, delivery and performance
of this Agreement and the other Loan Documents to which the Borrower is
to become a party and the transactions contemplated hereby and thereby
(i) are within the authority of the Borrower, (ii) have been duly
authorized by all necessary proceedings on the part of the Borrower and
the Company as general partner of Borrower, (iii) do not conflict with
or result in any breach or contravention of any provision of law,
statute, rule or regulation to which the Borrower or the Company is
subject or any judgment, order, writ, injunction, license or permit
applicable to the Borrower or the Company and (iv) do not conflict with
any provision of the Borrower's partnership agreement or Company's
declaration of trust, charter documents or bylaws, or any agreement
(except agreements as to which such a conflict would not result in a
Material Adverse Effect) or other instrument binding upon, the Borrower
or the Company or to which any of their properties are subject. The
execution, delivery and performance of the Guaranty and the other Loan
Documents to which any Guarantor is to become a party and the
transactions contemplated hereby and thereby (i) are within the
authority of such Guarantor, (ii) have been duly authorized by all
necessary proceedings on the part of such Guarantor, (iii) do not
conflict with or result in any breach or contravention of any provision
of law, statute, rule or regulation to which such Guarantor is subject
or any judgment, order, writ, injunction, license or permit applicable
to such Guarantor and (iv) do not conflict with any provision of such
Guarantor's charter documents or bylaws, partnership agreement,
declaration of trust, or any agreement (except agreements as to which
such a conflict would not result in a Material Adverse Effect) or other
instrument binding upon such Guarantor or to which any of such
Guarantor's properties are subject.
(c) Enforceability. The execution and delivery of this
Agreement and the other Loan Documents to which the Borrower is or is
to become a party will result in valid and legally binding obligations
of the Borrower enforceable against it in accordance with the
respective terms and provisions hereof and thereof, except as
enforceability is limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting generally the
enforcement of creditors' rights and except to the extent that
availability of the remedy of specific performance or injunctive relief
is subject to the discretion of the court before which any proceeding
therefor may be brought. The execution and delivery of the Guaranty and
the other Loan Documents to which any Guarantor is or is to become a
party will result in valid and legally binding obligations of such
Guarantor enforceable against such Guarantor in accordance with the
respective terms and provisions hereof and thereof, except as
enforceability is limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting generally the
enforcement of creditors, rights and except to the extent that
availability of the remedy of specific performance or injunctive relief
is subject to the discretion of the court before which any proceeding
therefor may be brought.
Section 6.2. Governmental Approvals. The execution, delivery and
performance by the Borrower and each Guarantor of this Agreement and
the other Loan Documents to which the Borrower or such Guarantor is or
is to become a party and the transactions contemplated hereby and
thereby do not require the approval or consent of, or filing with, any
governmental agency or authority other than those already obtained.
Section 6.3. Title to Properties.
(a) Either the Borrower or a Guarantor holds good and clear
record and marketable fee simple title to the Unencumbered Properties
and the Unencumbered Development Properties, subject to no Liens except
for the Permitted Liens.
(b) Except as indicated on Schedule 6.3 hereto, the Borrower
owns all of the properties reflected in the balance sheet of the
Borrower as at the Balance Sheet Date or acquired since that date
(except properties sold or otherwise disposed of in the ordinary course
of business since that date), subject to no rights of others, including
any mortgages, leases, conditional sales agreements, title retention
agreements, liens or other encumbrances except Permitted Liens.
Section 6.4. Financial Statements. The following financial
statements have been furnished to each of the Lenders.
(a) A balance sheet of the Company as of the Balance Sheet
Date, and a statement of operations and statement of cash flows of the
Company for the fiscal year then ended, a balance sheet of the Borrower
as of the Balance Sheet Date, and a statement of operations and
statement of cash flows of the Borrower for the fiscal year then ended,
all accompanied by an auditor's report prepared without qualification
by Ernst & Young LLP. Such balance sheets and statements of operations
and of cash flows have been prepared in accordance with Generally
Accepted Accounting Principles and fairly present the financial
condition of the Borrower and the Company, respectively as at the close
of business on the date thereof and the results of operations and cash
flows for the fiscal year then ended. There are no contingent
liabilities of the Borrower or the Company, respectively, as of such
date involving material amounts, known to the officers of the Company
not disclosed in said balance sheet and the related notes thereto.
(b) A balance sheet and a statement of operations and
statement of cash flows of the Company and a balance sheet and a
statement of operations and statement of cash flows of the Borrower for
each of the fiscal quarters of the Company ended since the Balance
Sheet Date for which the Company has filed form 10-Q with the SEC,
which the Company's Responsible Officer certifies has been prepared in
accordance with Generally Accepted Accounting Principles consistent
with those used in the preparation of the annual audited statements
delivered pursuant to paragraph (a) above and fairly represents the
financial condition of the Company and the Borrower, respectively, as
at the close of business on the dates thereof and the results of
operations and of cash flows for the fiscal quarters then ended
(subject to year-end adjustments). There are no contingent liabilities
of the Borrower or the Company as of such dates involving material
amounts, known to the officers of the Company, not disclosed in such
balance sheets and the related notes thereto.
(c) A statement prepared by the Borrower which sets forth
the total Net Operating Income of the Unencumbered Properties for the
fiscal quarter of the Borrower ended on the Balance Sheet Date.
Section 6.5. No Material Changes, Etc. Since the Balance Sheet
Date, there has occurred no material adverse change in the financial
condition or assets or business of the Borrower as shown on or
reflected in the balance sheet of the Borrower as of the Balance Sheet
Date, or the statement of income for the fiscal year then ended, other
than changes in the ordinary course of business that have not had any
Material Adverse Effect either individually or in the aggregate.
Section 6.6. Franchises, Patents, Copyrights, Etc. The Borrower
possesses all franchises, patents, copyrights, trademarks, trade names,
licenses and permits, and rights in respect of the foregoing, adequate
for the conduct of its business substantially as now conducted without
known conflict with any rights of others, except to the extent the
Borrower's failure to possess the same does not have a Material Adverse
Effect.
Section 6.7. Litigation. Except as listed and described on
Schedule 6.7 hereto, there are no actions, suits, proceedings or
investigations of any kind pending or, to Borrower's knowledge,
threatened against the Borrower, any Guarantor or any of the Related
Companies before any court, tribunal or administrative agency or board
that, if adversely determined, might, either in any case or in the
aggregate, have a Material Adverse Effect or materially impair the
right of the Borrower, any Guarantor or any of the Related Companies to
carry on business substantially as now conducted by it, or which
question the validity of this Agreement or any of the other Loan
Documents, any action taken or to be taken pursuant hereto or thereto,
or which would result in a Lien on any Unencumbered Property or any
Unencumbered Development Property, or which will materially adversely
affect the ability of the Borrower or any Guarantor to pay and perform
the Obligations in the manner contemplated by this Agreement and the
other Loan Documents.
Section 6.8. No Materially Adverse Contracts, Etc. Neither the
Borrower nor the Company is subject to any charter, trust or other
legal restriction, or any judgment, decree, order, rule or regulation
that has or is expected in the future to have a Material Adverse
Effect. Neither the Borrower nor the Company is a party to any
contract or agreement that has or is expected, in the judgment of the
Company's officers, to have any Material Adverse Effect.
Section 6.9. Compliance With Other Instruments, Laws, Etc.
Neither the Borrower nor the Company is in violation of any provision
of the Borrower's partnership agreement or of the Company's charter
documents, by-laws, or any agreement or instrument to which it may be
subject or by which it or any of its properties may be bound or any
decree, order, judgment, statute, license, rule or regulation, in any
of the foregoing cases in a manner that could result in the imposition
of substantial penalties or have a Material Adverse Effect.
Section 6.10. Tax Status. Each of the Borrower and the Company
(a) has made or filed all federal and state income and all other tax
returns, reports and declarations required by any jurisdiction to which
it is subject, and (b) has paid all taxes and other governmental
assessments and charges shown or determined to be due on such returns,
reports and declarations, except those being contested in good faith
and by appropriate proceedings. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any
jurisdiction, and the officers of the Company know of no basis for any
such claim.
Section 6.11. Event of Default. No Default or Event of Default
has occurred and is continuing.
Section 6.12. Investment Company Act. Neither the Borrower nor
the Company is an "investment company", or an "affiliated company" or a
"principal underwriter" of an "investment company", as such terms are
defined in the Investment Company Act of 1940.
Section 6.13. Absence of Financing Statements, Etc. There is no
financing statement, security agreement, chattel mortgage, real estate
mortgage, equipment lease, financing lease, option, encumbrance or
other document existing, filed or recorded with any filing records,
registry, or other public office, that purports to cover, affect or
give notice of any present or possible future lien or encumbrance on,
or security interest in, any Unencumbered Property or any Unencumbered
Development Property, except Permitted Liens.
Section 6.14. Status of the Company. The Company (i) is a real
estate investment trust as defined in Section 856 of the Code (or any
successor provision thereto), (ii) has not revoked its election to be a
real estate investment trust, (iii) has not engaged in any "prohibited
transactions" as defined in Section 856(b)(6)(iii) of the Code (or any
successor provision thereto), and (iv) for its current "tax year" (as
defined in the Code) is, and for all prior tax years subsequent to its
election to be a real estate investment trust has been, entitled to a
dividends paid deduction which meets the requirements of Section 857
of the Internal Revenue Code. The common stock of the Company is
listed for trading on the New York Stock Exchange.
Section 6.15. Certain Transactions. Except as set forth on
Schedule 6. 15 hereto, none of the officers or employees of the
Borrower or any Guarantor are presently a party to any transaction with
the Borrower or any Guarantor (other than for services as employees,
officers and trustees) , including any contract, agreement or other
arrangement providing for the furnishing of services to or by,
providing for rental of real or personal property to or from, or
otherwise requiring payments to or from any officer, trustee or such
employee or, to the knowledge of the Borrower and the Company, any
corporation, partnership, trust or other entity in which any officer,
trustee or any such employee or natural Person related to such officer,
trustee or employee or other Person in which such officer, trustee or
employee has a direct or indirect beneficial interest has a substantial
interest or is an officer or trustee.
Section 6.16. Benefit Plans: Multiemployer Plans: Guaranteed
Pension Plans . As of the date hereof as to any Employee Benefit Plan,
Multiemployer Plan or Guaranteed Pension Plan, neither the Borrower nor
any ERISA Affiliate maintains or contributes to any Employee Benefit
Plan, Multiemployer Plan or Guaranteed Pension Plan, except as may be
set forth on Schedule 6.16. To the extent that Borrower or any ERISA
Affiliate hereafter maintains or contributes to any Employee Benefit
Plan or Guaranteed Pension Plan, it shall at all times do so in
compliance with Section 7.17 hereof.
Section 6.17. Regulations U and X . No portion of any Loan is to
be used for the purpose of purchasing or carrying any "margin security"
or "margin stock" as such terms are used in Regulations U and X of the
Board of Governors of the Federal Reserve System, 12 C.F.R. Parts 221
and 224.
Section 6.18. Environmental Compliance . The Borrower has caused
Phase I environmental assessments to be conducted with respect to the
Real Estate Assets. Based on the information contained in the reports
received by Borrower with respect to said environmental assessments,
Borrower makes the following representations and warranties:
(a) Except as may be set forth on Schedule 6.18, to the best
of Borrower's knowledge none of the Borrower, any Guarantor, any of the
Related Companies or any operator of the Real Estate or any portion
thereof, or any operations thereon is in violation, or alleged material
violation, of any judgment, decree, order, law, license, rule or
regulation pertaining to environmental matters (hereinafter
collectively referred to as the "Environmental Laws"), including
without limitation, those arising under the Resource Conservation and
Recovery Act ("RCRA"), the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 as amended ("CERCLA"), the
Superfund Amendments and Reauthorization Act of 1986 ("SARA"), the
Federal Clean Water Act, the Federal Clean Air Act, the Toxic
Substances Control Act, or any state or local statute, regulation,
ordinance, order or decree relating to health, safety or the
environment, including, without limitation, the environmental statutes,
regulations, orders and decrees of the States in which any of the
Unencumbered Properties or any of the Unencumbered Development
Properties may be located, which violation would have a Material
Adverse Effect or would materially decrease the value of an
Unencumbered Property or an Unencumbered Development Property.
(b) Except as set forth on Schedule 6.18 attached hereto,
none of the Borrower, the Guarantors or the Related Companies has
received written notice from any third party including, without
limitation any federal, state or local governmental authority with
respect to any of the Unencumbered Properties or any of the
Unencumbered Development Properties or otherwise if the same would have
a Material Adverse Effect, (i) that it has been identified by the
United States Environmental Protection Agency ("EPA") as a potentially
responsible party under CERCLA with respect to a site listed on the
National Priorities List, 40 C.F.R. Part 300 Appendix B (1986) ; (ii)
that any hazardous waste, as defined by 42 U.S.C. Section 9601(5), any
hazardous substances as defined by 42 U.S.C. Section 9601(14), any
pollutant or contaminant as defined by 42 U.S.C. Section 9601(33) or
any toxic substances, oil or hazardous materials or other chemicals or
substances regulated by any Environmental Laws ("Hazardous Materials")
which it has generated, transported or disposed of have been found at
any site at which a federal, state or local agency or other third party
has conducted or has ordered that the Borrower, any Guarantor or any of
the Related Companies conduct a remedial investigation, removal or
other response action pursuant to any Environmental Law; or (iii) that
it is or shall be a named party to any claim, action, cause of action,
complaint, or legal or administrative proceeding (in each case,
contingent or otherwise) arising out of any third party's incurrence of
costs, expenses, losses or damages of any kind whatsoever in connection
with the release of Hazardous Materials.
(c) Except as set forth on Schedule 6.18 attached hereto and
except to the extent the same would neither have a Material Adverse
Effect nor materially decrease the value of an Unencumbered Property
or an Unencumbered Development Property, (i) to the best of Borrower's
knowledge no portion of the Real Estate has been used for the handling,
processing, storage or disposal of Hazardous Materials except in
material compliance with applicable Environmental Laws; and except as
set forth on Schedule 6.18, no underground tank or other underground
storage receptacle for Hazardous Materials is located on any portion of
the Real Estate; (ii) in the course of any activities conducted by the
Borrower, any Guarantor, any of the Related Companies or the operators
of any Real Estate, or to the best of Borrower's knowledge, any ground
or space tenants on any Real Estate, no Hazardous Materials have been
generated or are being used on the Real Estate except in material
compliance with applicable Environmental Laws; (iii) there has been no
present, or to the best of Borrower's knowledge past, releasing,
spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, disposing or dumping (a "Release") or threatened
Release of Hazardous Materials on, upon, into or from any Real Estate;
(iv) to the best of Borrower's knowledge, there have been no Releases
on, upon, from or into any real property in the vicinity of any of the
Real Estate which, through soil or groundwater contamination, may have
come to be located on; and (v) to the best of Borrower's knowledge, any
Hazardous Materials that have been generated on any of the Real Estate
have been transported off-site only by carriers having an
identification number issued by the EPA, treated or disposed of only by
treatment or disposal facilities maintaining valid permits as required
under applicable Environmental Laws, which transporters and facilities
have been and are, to the best of the Borrower's knowledge, operating
in material compliance with such permits and applicable Environmental
Laws. Notwithstanding that any representation contained herein may be
limited to the knowledge of the Borrower, any such limitation shall not
affect the covenants specified in Section 7.10 or elsewhere in this
Agreement.
(d) None of the Real Estate is or shall be subject to any
applicable environmental clean-up responsibility law or environmental
restrictive transfer law or regulation, solely by virtue of the
transactions set forth herein and contemplated hereby.
Section 6.19. Subsidiaries and Affiliates . The Borrower has no
Subsidiaries except for the Related Companies listed on Schedule 1.3
and does not have an ownership interest in any entity whose financial
statements are not consolidated with the Borrower's except for the
Unconsolidated Entities listed on Schedule 1.3. Except as set forth on
Schedule 6.19: (a) the Company is not a partner in any partnership
other than Borrower and is not a member of any limited liability
company and (b) the Company owns no material assets other than its
partnership interest in Borrower.
Section 6.20. Loan Documents . All of the representations and
warranties of the Borrower or any Guarantor made in the other Loan
Documents or any document or instrument delivered or to be delivered to
the Agent or the Lenders pursuant to or in connection with any of such
Loan Documents are true and correct in all material respects.
Section 6.21. Buildings on the Unencumbered Properties . Except
as set forth on Schedule 6.21, to the best of Borrower's knowledge
there are no material defects in the roof, foundation, structural
elements and masonry walls of the Buildings on the Unencumbered
Properties or their heating, ventilating and air conditioning,
electrical, sprinkler, plumbing or other mechanical systems which would
materially decrease the value of such Unencumbered Property.
Section 7. AFFIRMATIVE COVENANTS OF THE BORROWER. Borrower
covenants and agrees as follows, so long as any Loan or Note is
outstanding or the Lenders have any obligations to make Loans:
Section 7.1. Punctual Payment . The Borrower will unconditionally
duly and punctually pay the principal and interest on the Loans and all
other amounts provided for in the Notes, this Agreement, and the other
Loan Documents all in accordance with the terms of the Notes, this
Agreement and the other Loan Documents.
Section 7.2. Maintenance of Office . The Borrower will maintain
its chief executive office in Malvern, Pennsylvania or at such other
place in the United States Of America as the Borrower shall designate
upon written notice to the Agent to be delivered within fifteen (15)
days of such change, where notices, presentations and demands to or
upon the Borrower in respect of the Loan Documents may be given or
made.
Section 7.3. Records and Accounts . The Borrower will keep true
and accurate records and books of account in which full, true and
correct entries will be made in accordance with Generally Accepted
Accounting Principles.
Section 7.4. Financial Statements, Certificates and Information .
The Borrower will deliver to each of the Lenders:
(a) as soon as practicable, but in any event not later than
ninety (90) days after the end of each fiscal year of the Borrower, the
audited balance sheets of the Borrower and of the Company at the end of
such year, and the related audited statements of operations and
statements of cash flows and Funds From Operations and taxable income
for such year, each setting forth in comparative form the figures for
the previous fiscal year and all such statements to be in reasonable
detail, prepared in accordance with Generally Accepted Accounting
Principles on a consolidated basis including the Borrower and the
Related Companies, and accompanied by an auditor's report prepared
without qualification by Ernst & Young LLP or by another independent
certified public accountant reasonably acceptable to the Agent;
provided, however, that for so long as the Borrower and the Company are
filing form 10-K with the SEC, the delivery of a copy thereof pursuant
to paragraph (e) of this Section 7.4 shall be deemed to satisfy this
paragraph (a);
(b) as soon as practicable, but in any event not later than
forty-five (45) days after the end of each of the first three (3)
fiscal quarters of the Borrower, copies of the unaudited balance sheets
of the Borrower and of the Company as at the end of such quarter, and
the related unaudited statements of operations and statements of Funds
From Operations and estimated taxable income for the portion of the
Borrower's fiscal year then elapsed, all in reasonable detail and
prepared in accordance with Generally Accepted Accounting Principles,
together with a certification by the principal financial or accounting
officer of the Company that the information contained in such financial
statements fairly presents the financial position of the Borrower and
of the Company on the date thereof (subject to year-end adjustments);
provided, however, that for so long as the Borrower and the Company are
filing form 10-Q with the SEC, the delivery of a copy thereof pursuant
to paragraph (e) of this Section 7.4 shall be deemed to satisfy this
paragraph (b);
(c) as soon as practicable, but in any event not later than
forty-five (45) days after the end of each of the first three (3)
fiscal quarters and not later than ninety (90) days after the end of
the last fiscal quarter of each fiscal year of the Borrower, copies of
a statement of the Net Operating Income for such fiscal quarter for the
Unencumbered Properties, prepared on a basis consistent with the
statements furnished pursuant to Section 6.4 (c) , and certified by a
Responsible Officer of the Company and, at the time of the annual
financial statements referred to in subsection (a) above, and, if
requested by the Agent, at the time of quarterly financial statements
referred to in subsection (b) above, a statement setting forth the Net
Operating Income for such fiscal quarter for each Unencumbered Property
listed by address;
(d) simultaneously with the delivery of the financial
statements referred to in subsections (a) and (b) above, a statement in
the form of Exhibit C hereto signed by a Responsible Officer of the
Company and setting forth in reasonable detail computations evidencing
compliance with the covenants contained herein and (if applicable)
reconciliations to reflect changes in Generally Accepted Accounting
Principles since the Balance Sheet Date;
(e) as soon as practicable, but in any event not later than
ninety (90) days after the end of each fiscal year of the Company,
copies of the Form 10-K statement filed with the Securities and
Exchange Commission ("SEC") for such fiscal year, and as soon as
practicable, but in any event not later than forty-five (45) days after
the end of each fiscal quarter, copies of the Form 10-Q statement filed
with the SEC for such fiscal quarter, provided that in either case if
the SEC has granted an extension for the filing of such statements,
Borrower shall deliver such statements to the Agent simultaneously with
the filing thereof with the SEC;
(f) promptly following the filing or mailing thereof, copies
of all other material of a financial nature filed with the SEC or sent
to the shareholders of the Company or to the limited partners of the
Borrower and copies of all corporate press releases promptly upon the
issuance thereof;
(g) from time to time such other financial data and
information as the Agent may reasonably request including, without
limitation, financial statements of any Unconsolidated Entities.
Section 7.5. Notices .
(a) Defaults. The Borrower will promptly notify the Agent
in writing of the occurrence of any Default or Event of Default. If any
Person shall give any notice or take any other action in respect of a
claimed default (whether or not constituting a Default or an Event of
Default under this Agreement) under any note, evidence of Indebtedness,
indenture or other obligation to which or with respect to which the
Borrower, Guarantor or any of the Related Companies is a party or
obligor, whether as principal or surety, and if the principal amount
thereof exceeds $5,000,000, and such default would permit the holder of
such note or obligation or other evidence of Indebtedness to accelerate
the maturity thereof, the Borrower shall forthwith give written notice
thereof to the Agent and each of the Lenders, describing the notice or
action and the nature of the claimed default.
(b) Environmental Events. The Borrower will promptly notify
the Agent in writing of any of the following events: (i) upon
Borrower's obtaining knowledge of any violation of any Environmental
Law regarding an Unencumbered Property or an Unencumbered Development
Property or any Real Estate or Borrower's operations which violation
could have a Material Adverse Effect; (ii) upon Borrower's obtaining
knowledge of any potential or known Release, or threat of Release, of
any Hazardous Substance at, from, or into an Unencumbered Property or
an Unencumbered Development Property or any Real Estate which it
reports in writing or is reportable by it in writing to any
governmental authority and which is material in amount or nature or
which could materially affect the value of such Unencumbered Property
or Unencumbered Development Property or which could have a Material
Adverse Effect; (iii) upon Borrower's receipt of any notice of
violation of any Environmental Laws or of any Release or threatened
Release of Hazardous Substances, including a notice or claim of
liability or potential responsibility from any third party (including
without limitation any federal, state or local governmental officials)
and including notice of any formal inquiry, proceeding, demand,
investigation or other action with regard to (A) Borrower's or any
Person's operation of an Unencumbered Property or an Unencumbered
Development Property or any Real Estate if the same would have a
Material Adverse Effect, (B) contamination on, from or into an
Unencumbered Property or an Unencumbered Development Property or any
Real Estate if the same would have a Material Adverse Effect, or (C)
investigation or remediation of off-site locations at which Borrower or
any of its predecessors are alleged to have directly or indirectly
disposed of Hazardous Substances; or (iv) upon Borrower's obtaining
knowledge that any expense or loss has been incurred by such
governmental authority in connection with the assessment, containment,
removal or remediation of any Hazardous Substances with respect to
which Borrower, Guarantor or any of the Related Companies may be liable
or for which a lien may be imposed on an Unencumbered Property or an
Unencumbered Development Property.
(c) Notification of Liens Against Unencumbered Properties
and Unencumbered Development Properties or Other Material Claims. The
Borrower will, immediately upon becoming aware thereof, notify the
Agent in writing of any Liens (except Permitted Liens) placed upon or
attaching to any Unencumbered Properties or any Unencumbered
Development Properties or of any other setoff, claims (including
environmental claims), withholdings or other defenses which could have
a Material Adverse Effect.
(d) Notice of Litigation and Judgments. The Borrower will
give notice to the Agent in writing within fifteen (15) days of
becoming aware of any litigation or proceedings threatened in writing
or any pending litigation and proceedings affecting any of the
Unencumbered Properties or any of the Unencumbered Development
Properties or affecting the Borrower, Guarantor or any of the Related
Companies or to which the Borrower, Guarantor or any of the Related
Companies is or is to become a party involving an uninsured claim (or
as to which the insurer reserves rights) against the Borrower,
Guarantor or any of the Related Companies that at the time of giving of
notice could reasonably be expected to have a Materially Adverse
Effect, and stating the nature and status of such litigation or
proceedings. The Borrower will give notice to the Agent, in writing, in
form and detail satisfactory to the Agent, within ten (10) days of any
judgment not covered by insurance, final or otherwise, against the
Borrower in an amount in excess of $1,000,000.
(e) Notice of Rating Changes. The Borrower will immediately
notify the Agent in writing of the issuance of a Duff & Phelps Rating
and of the occurrence of any change in the Moody's Rating, in the S&P
Rating or in the Duff & Phelps Rating (if any).
Section 7.6. Existence; Maintenance of REIT Status; Maintenance of
Properties . The Company will do or cause to be done all things
necessary to preserve and keep in full force and effect its existence
as a Maryland trust and its status as a self administered real estate
investment trust under the Code and the existence of Borrower as a
Pennsylvania limited partnership. The common shares of beneficial
interest of the Company will at all times be listed for trading on
either the New York Stock Exchange or one of the other major stock
exchanges. The Borrower will do or cause to be done all things
necessary to preserve and keep in full force all of its rights and
franchises which in the judgment of the Borrower may be necessary to
properly and advantageously conduct the businesses being conducted by
it, the Company or any of the Related Companies. The Borrower (a) will
cause all of the properties used or useful in the conduct of the
business of Borrower, the Company or any of the Related Companies to be
maintained and kept in good condition, repair and working order and
supplied with all necessary equipment, (b) will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Borrower may be necessary so
that the business carried on in connection therewith may be properly
and advantageously conducted at all times, and (c) will continue to
engage primarily in the businesses now conducted by it and in related
businesses.
Section 7.7. Insurance. With respect to the Real Estate Assets
and other properties and businesses of Borrower, the Guarantors and the
Related Companies, the Borrower will maintain or cause to be maintained
insurance with financially sound and reputable insurers against such
casualties and contingencies as shall be in accordance with the general
practices of businesses engaged in similar activities in similar
geographic areas and in amounts, containing such terms, in such forms
and for such periods as may be reasonable and prudent. With respect to
the Unencumbered Properties, such insurance will include all risk
casualty insurance for the replacement cost of all Buildings including
loss of rents for 12 months and, to the extent available, flood
insurance. With respect to the Unencumbered Development Properties,
such insurance will include all risk builders risk insurance.
Commercial general liability insurance shall include an excess
liability policy with limits of at least $50,000,000.
Section 7.8. Taxes. The Borrower will pay real estate taxes,
other taxes, assessments and other governmental charges against the
Real Estate Assets before the same become delinquent, and will duly pay
and discharge, or cause to be paid and discharged, before the same
shall become overdue, all taxes, assessments and other governmental
charges imposed upon it and its other properties, sales and activities,
or any part thereof, or upon the income or profits therefrom, as well
as all claims for labor, materials, or supplies that if unpaid might by
law become a lien or charge upon any of its properties; provided that
any such tax, assessment, charge, levy or claim need not be paid if the
validity or amount thereof shall currently be contested in good faith
by appropriate proceedings and if the Borrower shall have set aside on
its books adequate reserves with respect thereto; and provided further
that the Borrower will pay all such taxes, assessments, charges, levies
or claims forthwith upon the commencement of proceedings to foreclose
any lien that may have attached as security therefor.
Section 7.9. Inspection of Properties and Books . The Borrower
shall permit the Lenders, through the Agent or any of the Lenders'
other designated representatives, to visit and inspect any of the
Unencumbered Properties and any of the Unencumbered Development
Properties, to examine the books of account of the Borrower, the
Company and the Related Companies (and to make copies thereof and
extracts therefrom) and to discuss the affairs, finances and accounts
of the Borrower with, and to be advised as to the same by, its
officers, all at such reasonable times and intervals as the Agent or
any Lender may reasonably request.
Section 7.10. Compliance with Laws, Contracts, Licenses, and
Permits. The Borrower will comply, and will cause each Guarantor and
all Related Companies to comply, with (a) all applicable laws and
regulations now or hereafter in effect wherever its business is
conducted, including all Environmental Laws, (b) the provisions of all
applicable partnership agreements, charter documents and by-laws, (c)
all agreements and instruments to which it is a party or by which it or
any of its Real Estate Assets may be bound including the Leases, and
(d) all applicable decrees, orders, and judgments except (with respect
to (a) through (d) above) to the extent such non-compliance would not
have a Material Adverse Effect. If at any time any permit or
authorization from any governmental Person shall become necessary or
required in order that the Borrower or any Guarantor may fulfill or be
in compliance with any of its obligations hereunder or under any of the
Loan Documents, the Borrower will immediately take or cause to be taken
all reasonable steps within the power of the Borrower to obtain such
authorization, consent, approval, permit or license and furnish the
Agent and the Lenders with evidence thereof.
Section 7.11. Use of Proceeds. Subject to the provisions of
Section 2.5 hereof, the proceeds of the Loans shall be used by the
Borrower for making Investments permitted by Section 8.2, repayment of
other Indebtedness, payment of Distributions, payment of Preferred
Distributions and for working capital and other purposes consistent
with the covenants contained herein.
Section 7.12. Prepayment of Existing Fleet Facilities . Borrower
agrees to use the initial advance of Loans on the Effective Date to
prepay in full all loans outstanding under (i) the revolving credit
facility in the maximum amount of $325,000,000 pursuant to the Amended
and Restated Loan Agreement dated June 16, 1997 among Borrower, the
Company and BankBoston, N.A. (now known as Fleet National Bank) as
Agent and the lenders party thereto as amended by First Amendment to
Amended and Restated Loan Agreement dated March 10, 1998, and (ii) the
term loan in the original principal amount of $135,000,000, and having
a presently outstanding principal balance of $90,000,000, pursuant to a
Term Loan Agreement dated January 15, 1999 among Borrower, the Company,
BankBoston, N.A. (now known as Fleet National Bank) as Agent and the
lenders party thereto. Upon such prepayment, such credit facilities
shall be deemed to be permanently terminated and each of the lenders
thereunder shall be relieved of all further obligations to advance
loans or issue letters of credit pursuant to such facilities.
Section 7.13 Notices of Significant Transactions . The Borrower
will notify the Agent in writing prior to the closing of any of the
following transactions pursuant to a single transaction or a series of
related transactions:
(a) The sale or transfer of one or more Real Estate Assets
for an aggregate sales price or other consideration of $50,000,000 or
more.
(b) The creation of a Lien on any one or more Real Estate
Assets which, if the same were an Unencumbered Property, would have an
aggregate Unencumbered Property Value (based on the most recently ended
fiscal quarter for which financial statements have been provided
pursuant to Section 7.4) of $50,000,000 or more.
(c) The creation of Indebtedness of Borrower exceeding
$50,000,000.
(d) The sale or transfer of the ownership interest of
Borrower or any of the Related Companies in any of the Related
Companies or the Unconsolidated Entities if the aggregate consideration
received by the Borrower or the Related Companies in connection with
such transaction exceeds $50,000,000.
Each notice given pursuant to this Section 7.13 shall be
accompanied by a Compliance Certificate including an updated list of
Unencumbered Properties and Unencumbered Development Properties and
demonstrating in reasonable detail compliance, after giving effect to
the proposed transaction, with the covenants contained in Section 9.1
through Section 9.8.
Section 7.14. Further Assurance . The Borrower will cooperate
with the Agent and the Lenders and execute such further instruments and
documents and perform such further acts as the Agent and the Lenders
shall reasonably request to carry out to their satisfaction the
transactions contemplated by this Agreement and the other Loan
Documents.
Section 7.15. Environmental Indemnification . The Borrower
covenants and agrees that it will indemnify and hold the Agent and each
Lender harmless from and against any and all claims, expense, damage,
loss or liability incurred by the Agent or any Lender (including all
reasonable costs of legal representation incurred by the Agent or any
Lender, but excluding, as applicable, for the Agent or a Lender any
claim, expense, damage, loss or liability as a result of the gross
negligence or willful misconduct of the Agent or such Lender) relating
to (a) any Release or threatened Release of Hazardous Substances on any
Unencumbered Property or any Unencumbered Development Property or any
Real Estate; (b) any violation of any Environmental Laws with respect
to conditions at any Unencumbered Property or any Unencumbered
Development Property or any Real Estate or the operations conducted
thereon; or (c) the investigation or remediation of off-site locations
at which the Borrower or its predecessors are alleged to have directly
or indirectly disposed of Hazardous Substances. It is expressly
acknowledged by the Borrower that this covenant of indemnification
shall survive the payment of the Loans and shall inure to the benefit
of the Agent and the Lenders, and their successors and assigns.
Section 7.16. Response Actions . The Borrower covenants and
agrees that if any Release or disposal of Hazardous Substances shall
occur or shall have occurred on any Unencumbered Property or any
Unencumbered Development Property or any other Real Estate if the same
would have a Material Adverse Effect, the Borrower will cause the
prompt containment and removal of such Hazardous Substances and
remediation of such Unencumbered Property, Unencumbered Development
Property or Real Estate as necessary to comply with all Environmental
Laws or to preserve the value of such Unencumbered Property,
Unencumbered Development Property or Real Estate to the extent
necessary to avoid a Material Adverse Effect.
Section 7.17. Employee Benefit Plans .
(a) Representation. The Borrower and its ERISA Affiliates
do not currently maintain or contribute to any Employee Benefit Plan,
Guaranteed Pension Plan or Multiemployer Plan, except as set forth on
Schedule 6.16.
(b) Notice. The Borrower will obtain the consent of the
Agent prior to the establishment of any Employee Benefit Plan or
Guaranteed Pension Plan by the Borrower or any ERISA Affiliate.
(c) In General. Each Employee Benefit Plan maintained by
the Borrower or any ERISA Affiliate will be operated in compliance in
all material respects with the provisions of ERISA and, to the extent
applicable, the Code, including but not limited to the provisions
thereunder respecting prohibited transactions.
(d) Terminability of Welfare Plans. With respect to each
Employee Benefit Plan maintained by the Borrower or an ERISA Affiliate
which is an employee welfare benefit plan within the meaning of Section
3(1) or Section 3(2)(B) of ERISA, the Borrower, or the ERISA Affiliate,
as the case may be, has the right to terminate each such plan at any
time (or at any time subsequent to the expiration of any applicable
bargaining agreement) without liability other than liability to pay
claims incurred prior to the date of termination.
(e) Multiemployer Plans. Without the consent of the Agent,
the Borrower will not enter into, maintain or contribute to, any
multiemployer Plan.
(f) Unfunded or Underfunded Liabilities. The Borrower will
not, at any time, have accruing unfunded or underfunded liabilities
with respect to any Employee Benefit Plan, Guaranteed Pension Plan or
Multiemployer Plan, or permit any condition to exist under any
Multiemployer Plan that would create a withdrawal liability.
Section 7.18 Required Interest Rate Contracts . Commencing on the
Effective Date and thereafter until all Loans are paid in full and the
Lenders have no further obligation to make Loans hereunder, the
Borrower shall maintain in effect Interest Rate Contracts with
counterparties and in form reasonably satisfactory to the Agent
covering that portion of Borrower's Variable Rate Indebtedness equal to
the amount by which Borrower's Variable Rate Indebtedness exceeds 20%
of Total GAAP Assets.
Section 8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER. The
Borrower covenants and agrees as follows, so long as any Loan or Note
is outstanding or the Lenders have any obligation to make any Loans:
Section 8.1 Restrictions on Recourse Indebtedness . Except with
the prior written consent of the Requisite Lenders, the Borrower will
not, and the Borrower will not permit any Guarantor or any of the
Related Companies to create, incur, assume, guarantee or become or
remain liable, contingently or otherwise, or agree not to do any of
same with respect to any Recourse Indebtedness other than:
(a) Indebtedness to the Lenders arising under any of the
Loan Documents;
(b) current liabilities of the Borrower incurred in the
ordinary course of business but not incurred through (i) the borrowing
of money, or (ii) the obtaining of credit except for credit on an open
account basis customarily extended and in fact extended in connection
with normal purchases of goods and services;
(c) Indebtedness in respect of taxes, assessments,
governmental charges or levies and claims for labor, materials and
supplies to the extent that payment therefor shall not at the time be
required to be made in accordance with the provisions of Section 7.8;
(d) Indebtedness in respect of judgments or awards that have
been in force for less than the applicable period for taking an appeal
so long as execution is not levied thereunder or in respect of which
the Borrower shall at the time in good faith be prosecuting an appeal
or proceedings for review and in respect of which a stay of execution
shall have been obtained pending such appeal or review;
(e) endorsements for collection, deposit or negotiation and
warranties of products or services, in each case incurred in the
ordinary course of business;
(f) Indebtedness presently outstanding under the Subordinated
Debenture Indenture consisting of the Subordinated Debentures in the
aggregate amount of approximately $84,413,000 as of December 31, 1999;
(g) Indebtedness under unsecured term notes presently
outstanding or which may be hereafter issued by Borrower provided that
the weighted average maturity date of all such term notes outstanding
at any time shall not be earlier than four (4) years after the
Effective Date. If more than one issue or series of such unsecured
term notes is outstanding at any time, the foregoing weighted average
maturity date shall be computed on an aggregate basis including all
issues or series of such notes;
(h) Recourse Indebtedness other than that described in other
paragraphs of this Section 8.1 up to a maximum principal amount
outstanding at any time equal to four percent (4%) of Total Assets at
such time.
(i) Indebtedness of the Borrower or a Related Company to the
Borrower or a Related Company provided that any such Indebtedness to a
Related Company that is not a Guarantor must be fully subordinated to
the Obligations. Section 8.2.Restrictions on Investments . The
Borrower will not, and will not permit Guarantor or any of the Related
Companies to make or permit to exist or to remain outstanding any
Investment except Investments in:
(a) marketable direct or guaranteed obligations of
the United States of America, Federal Home Loan Mortgage Corporation,
Federal National Mortgage Association or any agency or instrumentality
of the United States of America provided such obligations are backed by
the full faith and credit of the United States of America, that mature
within one (1) year from the date of purchase by the Borrower;
(b) demand deposits, certificates of deposit,
money market accounts, bankers acceptances, eurodollar time deposits
and time deposits of United States banks having total assets in excess
of $1,000,000,000 or repurchase obligations with a term of not more
than 7 days with such banks for underlying securities of the type
described in clause (a) of this Section 8.2;
(c) securities commonly known as "commercial
paper" issued by a corporation organized and existing under the laws of
the United States of America or any state thereof that at the time of
purchase have been rated and the ratings for which are not less than "
P 1 " if rated by Moody's Investors Services, Inc. , and not less than
"A 1" if rated by Standard and Poor's and participations in short term
commercial loans made to such corporations by a commercial bank which
provides cash management services to the Borrower;
(d) Investments existing or contemplated on the
date hereof and listed on Schedule 8.2(d) hereto;
(e) Investments made in the ordinary course of the
Borrower's business in Interest Rate Contracts;
(f) Investments in Permitted Acquisitions;
(g) Investments in the following categories so long
as the aggregate amount, without duplication, of all Investments
described in this paragraph (g) does not exceed, at any time, thirty
percent (30%) of Total Assets and the aggregate amount of each of the
following categories of Investments does not exceed the specified
percentage of Total Assets set forth in the following table:
Category of Investment Maximum Percentage of Total Assets
- ---------------------------------- ----------------------------------
Permitted Developments 25%
Permitted Inventory Developments 10%
Unconsolidated Entities primarily
engaged in either the business of
development or ownership of real
estate located in the United
States or in a Related Business 15%
Unconsolidated Entities primarily
engaged in a Related Business 3%
Undeveloped land 8%
Mortgages and notes receivable 10%
Rouse Kent Joint Venture 5%
Section 8.3. Merger, Consolidation and Other Fundamental Changes.
The Borrower will not, and will not permit the Company or any of the
Related Companies to (i) become a party to any merger or consolidation,
or (ii) agree to or effect any property acquisition or stock
acquisition (other than Permitted Acquisitions in compliance with the
other terms of this Agreement) , or (iii) enter into any joint venture
or invest in any Unconsolidated Entity unless prior to such transaction
the Borrower has provided the Agent with a notice describing such
transaction and, if the reasonably expected financial impact on the
Borrower as reflected on its balance sheet arising from all
transactions described in this Section 8.3 shall exceed 15% of Total
Assets, the Borrower shall have obtained the prior consent of the
Requisite Lenders provided, however, that this Section 8.3 shall not be
applicable to (A) any merger, consolidation or transfer among the
Borrower's wholly-owned subsidiaries other than Guarantors, (B) any
merger or consolidation of a Guarantor Subsidiary into the Borrower or
any transfer from a Guarantor Subsidiary to the Borrower, or (C) any
merger or consolidation with respect to which all of the following are
satisfied: (1) the surviving entity is Borrower, the Company or any
Guarantor Subsidiary and there is no substantial change in senior
management of the Company, (2) the other entity or entities involved in
such merger or consolidation are engaged in the same line of business
as Borrower, and (3) following such transaction, the Borrower and the
Company will not be in breach of any of the covenants, representations
or warranties of this Agreement. Except as set forth on Schedule 6.19,
the Company will not own or acquire any material assets other than its
partnership interest in the Borrower. If the Company is the surviving
entity in a merger, the assets acquired pursuant thereto will be
immediately transferred to the Borrower.
Section 8.4. Sale and Leaseback. The Borrower will not enter into
any arrangement, directly or indirectly, whereby the Borrower shall
sell or transfer any property owned by it in order then or thereafter
to lease such property or lease other property that the Borrower
intends to use for substantially the same purpose as the property being
sold or transferred. The Borrower will not permit the Company or any of
the Related Companies to enter into any such arrangement.
Section 8.5. Compliance with Environmental Laws. The Borrower
will not do, and will not permit the Company or any of the Related
Companies to do, any of the following: (a) use any of the Real Estate
or any portion thereof as a facility for the handling, processing,
storage or disposal of Hazardous Materials except for immaterial
amounts of Hazardous Materials used in the routine maintenance and
operation of the Real Estate and in compliance with applicable law, (b)
cause or permit to be located on any of the Real Estate any underground
tank or other underground storage receptacle for Hazardous Materials
except in material compliance with Environmental Laws, (c) generate any
Hazardous Materials on any of the Real Estate except in material
compliance with Environmental Laws, or (d) conduct any activity at any
Real Estate or use any Real Estate in any manner so as to cause a
Release.
Section 8.6. Distributions. Borrower shall not permit the total
Distributions by it and the Company during any fiscal year to exceed
90% of Funds from Operations for such year and shall not permit there
to be more than two consecutive fiscal quarters during which the total
Distributions by Borrower and the Company during each fiscal quarter
exceed 100% of Funds from Operations for such fiscal quarter except
that such limitations on Distributions may be exceeded to the extent
necessary for the Company to maintain its REIT status provided that the
Company provides the Agent with a letter from its accountants or
attorneys setting forth the basis for computation of the amount of such
necessary excess Distributions. During any period when any Default or
Event of Default has occurred and is continuing the total Distributions
by the Borrower and the Company will not exceed the minimum amount
necessary for the Company to maintain its REIT status. The Guarantor
Subsidiaries will not make any Distributions except Distributions to
Borrower.
Section 8.7. Equity Repurchase Payments. Borrower shall not
permit the total Equity Repurchase Payments by it and the Company
during any fiscal year to exceed $100,000,000. During any period when
any Default or Event of Default has occurred and is continuing no
Equity Repurchase Payments will be made.
Section 8.8. Preferred Distributions. During any period when
any Event of Default has occurred and is continuing no Preferred
Distributions will be made.
Section 9. FINANCIAL COVENANTS OF THE BORROWER. The Borrower
covenants and agrees as follows, so long as any Loan or Note is
outstanding or any Lender has any obligation to make any Loan:
Section 9.1. Value of All Unencumbered Properties. The Borrower
will not at any time permit the Value of All Unencumbered Properties to
be less than one hundred seventy five percent (175%) of the outstanding
balance of Unsecured Indebtedness.
Section 9.2. Minimum Debt Service Coverage. The Borrower will
not at any time permit the outstanding principal amount of Unsecured
Indebtedness to exceed an amount such that: (a) the Unencumbered Net
Operating Income, divided by (b) Pro Forma Unsecured Debt Service
Charges would be less than 1.5 for any fiscal quarter of Borrower.
Section 9.3. Total Debt to Total Assets. The Borrower will not at
any time permit Total Debt to exceed fifty-five percent (55%) of Total
Assets.
Section 9.4. Maximum Secured Debt. The Borrower will not at any
time permit the outstanding balance of Secured Indebtedness to exceed
thirty percent (30%) of Total Assets.
Section 9.5. Minimum Tangible Net Worth. The Borrower will not
at any time permit the Tangible Net Worth of either the Borrower or the
Company to be less than $1,014,000,000 plus 75% of Net Offering
Proceeds.
Section 9.6. Total Operating Cash Flow to Interest Expense. The
Borrower will not permit the ratio of its Total Operating Cash Flow to
Interest Expense to be less than 1.85 to 1.0 for any fiscal quarter.
Section 9.7. Adjusted EBITDA to Fixed Charges. The Borrower will
not permit the ratio of its Adjusted EBITDA to Fixed Charges to be less
than 1.75 to 1.0 for any fiscal quarter.
Section 9.8. Aggregate Occupancy Rate. The Borrower will not at
any time permit the Aggregate Occupancy Rate to be less than eighty-
five percent (85%).
Section 10. CONDITIONS TO EFFECTIVENESS. This Agreement shall
become effective when each of the following conditions precedent have
been satisfied:
Section 10.1. Loan Documents. Each of the Loan Documents shall
have been duly executed and delivered by the respective parties
thereto, shall be in full force and effect and shall be in form and
substance satisfactory to each of the Lenders. Each Lender shall have
received a fully executed copy of each such document prior to or on the
Effective Date.
Section 10.2. Certified Copies of Organization Documents; Good
Standing Certificates. The Agent shall have received (i) a Certificate
of the Company to which there shall be attached complete copies of the
Borrower's Limited Partnership Agreement and its Certificate of Limited
Partnership, certified as of a recent date by the Secretary of State of
Pennsylvania, (ii) Certificates of Good Standing for the Borrower from
the State of Pennsylvania and each State in which an Unencumbered
Property or an Unencumbered Development Property is located, (iii) a
copy of the Company's Declaration of Trust certified by the Maryland
Secretary of State, (iv) Certificates of Good Standing for the Company
from the State of Maryland and the Commonwealth of Pennsylvania, and
(v) certificates of good standing and certificates from the Borrower
with respect to the provisions of applicable organizational documents
of the Guarantor Subsidiaries.
Section 10.3. By-laws; Resolutions. All action on the part of
the Borrower and each Guarantor necessary for the valid execution,
delivery and performance by the Borrower and each Guarantor of this
Agreement and the other Loan Documents to which it is or is to become a
party shall have been duly and effectively taken, and evidence thereof
satisfactory to the Agent shall have been provided to the Agent. The
Agent shall have received from the Company true copies of its by-laws
and the resolutions adopted by its Board of Directors authorizing the
transactions described herein, each certified by its secretary to be
true and complete and in effect on the Effective Date.
Section 10.4. Incumbency Certificate; Authorized Signers. The
Agent shall have received from the Company an incumbency certificate,
dated as of the Effective Date, signed by a duly authorized officer of
the Company and giving the name and bearing a specimen signature of
each individual who shall be authorized: (a) to sign, in the name and
on behalf of the Company (in its own capacity and as general partner on
behalf of Borrower and on behalf of each Guarantor Subsidiary which is
a partnership), each of the Loan Documents to which the Borrower or any
Guarantor is or is to become a party; (b) to make Loan Requests and
Conversion Requests; and (c) to give notices and to take other action
on behalf of the Borrower under the Loan Documents.
Section 10.5. Opinions of Counsel Concerning Organization and
Loan Documents. Each of the Lenders and the Agent shall have received
favorable opinions from Borrower's counsel addressed to the Lenders and
the Agent and dated as of the Effective Date, in form and substance
satisfactory to the Agent.
Section 10.6. Payment of Fees. The Borrower shall have paid to
the Agent the fees pursuant to Section 4.1 and shall have paid all
other expenses as provided in Section 15 hereof then outstanding.
Section 11. CONDITIONS TO ALL CREDIT ADVANCES. The obligations
of the Lenders to make any Loan or to issue any Letter of Credit,
whether on or after the Effective Date, shall also be subject to the
satisfaction of the following conditions precedent:
Section 11.1. Representations True; No Event of Default;
Compliance Certificate. Each of the representations and warranties of
the Borrower and the Company contained in this Agreement, the other
Loan Documents or in any document or instrument delivered pursuant to
or in connection with this Agreement shall be true as of the date as of
which they were made and shall also be true at and as of the time of
the making of such Loan or the issuance of such Letter of Credit, with
the same effect as if made at and as of that time (except to the extent
of changes resulting from transactions contemplated or permitted by
this Agreement and the other Loan Documents and changes occurring in
the ordinary course of business that singly or in the aggregate are not
materially adverse, and except to the extent that such representations
and warranties relate expressly to an earlier date); the Borrower shall
have performed and complied with all terms and conditions herein
required to be performed by it or prior to the Borrowing Date of such
Loan or the issuance date of such Letter of Credit; and no Default or
Event of Default shall have occurred and be continuing on the date of
any Loan Request or on the Borrowing Date of such Loan or on the date
of any Letter of Credit Request or on the issuance date of such Letter
of Credit. Each of the Lenders shall have received a Compliance
Certificate of the Borrower signed by a Responsible Officer to such
effect, which certificate will include, without limitation,
computations evidencing compliance with the covenants contained in
Section 9.1 through Section 9.7 hereof after giving effect to such
requested Loan or Letter of Credit.
Section 11.2. No Legal Impediment. No change shall have occurred
in any law or regulations thereunder or interpretations thereof that in
the reasonable opinion of any Lender would make it illegal for such
Lender to make such Loan or to hold an interest in such Letter of
Credit.
Section 11.3. Governmental Regulation. Each Lender shall have
received such statements in substance and form reasonably satisfactory
to such Lender as such Lender shall require for the purpose of
compliance with any applicable regulations of the Comptroller of the
Currency or the Board of Governors of the Federal Reserve System.
Section 11.4. Proceedings and Documents. All proceedings in
connection with the transactions contemplated by this Agreement, the
other Loan Documents and all other documents incident thereto shall be
reasonably satisfactory in substance and in form to the Agent, and the
Lenders shall have received all information and such counterpart
originals or certified or other copies of such documents as the Agent
may reasonably request.
Section 12. EVENTS OF DEFAULT; ACCELERATION; ETC.
Section 12.1. Events of Default and Acceleration. If any of the
following events ("Events of Default" or, if the giving of notice or
the lapse of time or both is required, then, prior to such notice or
lapse of time, "Defaults") shall occur:
(a) the Borrower shall fail to pay any principal of the
Loans within five (5) days after the same shall become due and payable;
(b) the Borrower shall fail to pay any interest on the Loans
or any other sums due hereunder or under any of the other Loan
Documents when the same shall become due and payable;
(c) the Borrower or the Company shall fail to comply with
any of its covenants contained in Section 7.5, the first sentence of
Section 7.6, Section 7.7, Section 7.13, Section 8 or Section 9 hereof;
(d) the Borrower or any Guarantor shall fail to perform any
other term, covenant or agreement contained herein or in any of the
other Loan Documents (other than those specified elsewhere in this
Section 12) for thirty (30) days after written notice of such failure
from Agent to the Borrower;
(e) any representation or warranty of the Borrower in this
Agreement or any of the other Loan Documents or in any other document
or instrument delivered pursuant to or in connection with this
Agreement, shall prove to have been false in any material respect upon
the date when made or deemed to have been made or repeated, provided,
however, that with respect to the representations and warranties of the
Borrower contained in Section 6.2, Section 6.3, Section 6.13, Section
6.18 and Section 6.21, if the condition or event making the
representation and warranty false is capable of being cured by the
Borrower, no enforcement action has been commenced against the Borrower
or the applicable Unencumbered Property or Unencumbered Development
Property on account of such condition or event nor is the applicable
Unencumbered Property or Unencumbered Development Property subject to
risk of forfeiture due to such condition or event, and the Borrower
promptly commences the cure thereof after the Borrower's first
obtaining knowledge of such condition or event, the Borrower shall have
a period of thirty (30) days after the date that the Borrower first
obtained knowledge of such condition or event during which the Borrower
may cure such condition or event (or, if such condition or event is not
reasonably capable of being cured within such thirty (30) day period,
such additional period of time as may be reasonably required in order
to cure such condition or event but in any event such period shall not
exceed six (6) months from the date that the Borrower first obtained
knowledge of such condition or event), and no Event of Default shall
exist hereunder during such thirty (30) day or additional period so
long as the Borrower continuously and diligently pursues the cure of
such condition or event and the other conditions to such cure period
have not changed;
(f) the Borrower, the Company or any of the Related
Companies shall fail to pay at maturity, or within any applicable
period of grace, any Recourse Indebtedness, or shall fail to observe or
perform any material term, covenant or agreement contained in any
agreement by which it is bound, evidencing or securing Indebtedness for
such period of time as would permit (assuming the giving of appropriate
notice if required) the holder or holders thereof or of any obligations
issued thereunder to accelerate the maturity thereof, and in any event,
such failure shall continue for thirty (30) days, unless the aggregate
amount of all such defaulted Recourse Indebtedness plus the amount of
any unsatisfied judgments described in paragraph (i) of this Section
12.1 is less than $30,000,000.00;
(g) any of the Borrower, the Company or any Guarantor shall
make an assignment for the benefit of creditors, or admit in writing
its inability to pay or generally fail to pay its debts as they mature
or become due, or shall petition or apply for the appointment of a
trustee or other custodian, liquidator or receiver of any substantial
part of its properties or shall commence any case or other proceeding
under any bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation or similar law of any
jurisdiction, now or hereafter in effect, or shall take any action to
authorize or in furtherance of any of the foregoing, or if any such
petition or application shall be filed or any such case or other
proceeding shall be commenced against any such Person and such Person
shall indicate its approval thereof, consent thereto or acquiescence
therein or any of the events described in this paragraph shall occur
with respect to any other Related Company or any Unconsolidated Entity
and such event shall have a Material Adverse Effect;
(h) a decree or order is entered appointing any such
trustee, custodian, liquidator or receiver or adjudicating the
Borrower, the Company, or any Guarantor bankrupt or insolvent, or
approving a petition in any such case or other proceeding, or a decree
or order for relief is entered in respect of the Borrower, the Company,
or any Guarantor in an involuntary case under federal bankruptcy laws
as now or hereafter constituted or any of the events described in this
paragraph shall occur with respect to any other Related Company or any
Unconsolidated Entity and such event shall have a Material Adverse
Effect;
(i) there shall remain in force, undischarged, unsatisfied
and unstayed, for more than thirty days, whether or not consecutive,
any uninsured final judgment against the Borrower that, with other
outstanding uninsured final judgments, undischarged, against the
Borrower, the Company or any of the Related Companies plus the amount
of any defaulted Recourse Indebtedness under paragraph (f) of this
Section 12.1, exceeds in the aggregate $30,000,000.00;
(j) if any of the Loan Documents or any material provision
of any Loan Documents shall be unenforceable, cancelled, terminated,
revoked or rescinded otherwise than in accordance with the terms
thereof or with the express prior written agreement, consent or
approval of the Agent, or any action at law, suit or in equity or other
legal proceeding to make unenforceable, cancel, revoke or rescind any
of the Loan Documents shall be commenced by or on behalf of the
Borrower or any Guarantor, or any court or any other governmental or
regulatory authority or agency of competent jurisdiction shall make a
determination that, or issue a judgment, order, decree or ruling to the
effect that, any one or more of the Loan Documents is illegal, invalid
or unenforceable in accordance with the terms thereof;
(k) the Borrower or any Guarantor shall be indicted for a
federal crime, a punishment for which could include the forfeiture of
any assets of the Borrower;
(l) the Borrower shall fail to pay, observe or perform any
term, covenant, condition or agreement contained in any agreement,
document or instrument evidencing, securing or otherwise relating to
any Indebtedness of the Borrower to any Lender (other than the
Obligations) and/or relating to any Permitted Lien (other than the
Obligations) within any applicable period of grace provided for in such
agreement, document or instrument;
(m) any "Event of Default", as defined in any of the other
Loan Documents or in the Subordinated Debenture Indenture, shall occur;
then, and in any such event, so long as the same
may be continuing, the Agent may, and upon the request of the Requisite
Lenders shall, by notice in writing to the Borrower declare all amounts
owing with respect to this Agreement, the Notes and the other Loan
Documents to be, and they shall thereupon forthwith become, immediately
due and payable without presentment, demand, protest or other notice of
any kind, all of which are hereby expressly waived by the Borrower;
provided that in the event of any Event of Default specified in Section
12.1(g) or 12.1(h), all such amounts shall become immediately due and
payable automatically and without any requirement of notice from the
Agent or action by the Requisite Lenders.
Section 12.2. Termination of Commitments. If any one or more
Events of Default specified in Section 12.1(g) or Section 12.1(h) shall
occur, any unused portion of the Commitments hereunder, and of the
Swingline Commitment, shall forthwith terminate and the Lenders shall
be relieved of all obligations to make Loans to the Borrower or to
issue Letters of Credit for the benefit of the Borrower. If any other
Event of Default shall have occurred and be continuing, any Lender may
by notice to the Borrower terminate the unused portion of its
Commitment hereunder, and of the Swingline Commitment, and upon such
notice being given such unused portion of its Commitment hereunder, or
of the Swingline Commitment, shall terminate immediately and such
Lender shall be relieved of all further obligations to make Loans other
than Mandatory Base Rate Loans. No termination of such Lender's
Commitment hereunder shall relieve the Borrower of any of the
Obligations or any of its existing obligations to such Lender arising
under other agreements or instruments.
Section 12.3.Remedies. In case any one or more of the Events of
Default shall have occurred, and whether or not the Requisite Lenders
shall have accelerated the maturity of the Loans pursuant to Section
12.1, each Lender, if owed any amount with respect to the Loans, may,
with the consent of the Requisite Lenders, direct the Agent to proceed
to protect and enforce the rights and remedies of the Agent and the
Lenders under this Agreement, the Notes or any of the other Loan
Documents by suit in equity, action at law or other appropriate
proceeding, whether for the specific performance of any covenant or
agreement contained in this Agreement and the other Loan Documents or
any instrument pursuant to which the Obligations are evidenced and, if
any amount shall have become due, by declaration or otherwise, to
proceed to enforce the payment thereof or any other legal or equitable
right of such Lender. No remedy herein conferred upon any Lender or the
Agent or the holder of any Note is intended to be exclusive of any
other remedy and each and every remedy shall be cumulative and shall be
in addition to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute or any other provision of
law.
Section 12.4. Distribution of Enforcement Proceeds. In the event
that, following the occurrence or during the continuance of any Default
or Event of Default, the Agent or any Lender as the case may be,
receives any monies in connection with the enforcement of any of the
Loan Documents, such monies shall be distributed for application as
follows:
(a) First, to the payment of, or (as the case may be) the
reimbursement of the Agent for or in respect of all reasonable costs,
expenses, disbursements and losses which shall have been incurred or
sustained by the Agent in connection with the collection of such monies
by the Agent, for the exercise, protection or enforcement by the Agent
of all or any of the rights, remedies, powers and privileges of the
Agent or the Lenders under this Agreement or any of the other Loan
Documents or in support of any provision of adequate indemnity to the
Agent against any taxes or liens which by law shall have, or may have,
priority over the rights of the Agent to such monies;
(b) Second, to all other Obligations in such order or
preference as the Requisite Lenders may determine; provided, however,
that distribution in respect of such Obligations shall be made among
the Lenders pro rata in accordance with each Lender's respective
Commitment Percentage; and provided, further, that the Agent may in its
discretion make proper allowance to take into account any Obligations
not then due and payable;
(c) Third, upon payment and satisfaction in full or other
provisions for payment in full satisfactory to the Requisite Lenders
and the Agent of all of the Obligations, and the deposit in any cash
collateral account established pursuant to Section 2.9(f) of the amount
required thereby, to the payment of any obligations required to be paid
pursuant to Section 9-504(1)(c) of the Uniform Commercial Code of the
Commonwealth of Massachusetts; and
(d) Fourth, the excess, if any, shall be returned to the
Borrower or to such other Persons as are legally entitled thereto.
Section 13. SETOFF. During the continuance of any Event of
Default, any deposits (general or specific, time or demand, provisional
or final, regardless of currency, maturity, or the branch of where such
deposits are held) or other sums credited by or due from any of the
Lenders to the Borrower and any securities or other property of the
Borrower in the possession of such Lender may be applied to or set off
against the payment of Obligations and any and all other liabilities,
direct, or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising, of the Borrower to such Lender. Each of
the Lenders agrees with each other Lender that (a) if an amount to be
set off is to be applied to Indebtedness of the Borrower to such
Lender, other than Indebtedness evidenced by the Notes held by such
Lender, such amount shall be applied ratably to such other Indebtedness
and to the Indebtedness evidenced by all such Notes held by such
Lender, and (b) if such Lender shall receive from the Borrower, whether
by voluntary payment, exercise of the right of setoff, counterclaim,
cross action, enforcement of the claim evidenced by the Notes held by
such Lender by proceedings against the Borrower at law or in equity or
by proof thereof in bankruptcy, reorganization, liquidation,
receivership or similar proceedings, or otherwise, and shall retain and
apply to the payment of the Note or Notes held by such Lender any
amount in excess of its ratable portion of the payments received by all
of the Lenders with respect to the Notes held by all of the Lenders,
such Lender will make such disposition and arrangements with the other
Lenders with respect to such excess, either by way of distribution, pro
tanto assignment of claims, subrogation or otherwise as shall result in
each Lender receiving in respect of the Notes held by it its
proportionate payment as contemplated by this Agreement; provided that
if all or any part of such excess payment is thereafter recovered from
such Lender, such disposition and arrangements shall be rescinded and
the amount restored to the extent of such recovery, but without
interest, unless the Lender from whom such payment is recovered is
required to pay interest thereon, in which case each Lender returning
funds to such Lender shall pay its allocable share of such interest
based on the period of time that it was in possession of the funds
being returned.
Section 14. THE AGENT.
Section 14.1. Authorization. The Agent is authorized to take
such action on behalf of each of the Lenders and to exercise all such
powers as are hereunder and under any of the other Loan Documents and
any related documents delegated to the Agent, together with such powers
as are reasonably incident thereto, provided that no duties or
responsibilities not expressly assumed herein or therein shall be
implied to have been assumed by the Agent. The relationship between the
Agent and the Lenders is and shall be that of agent and principal only,
and nothing contained in this Agreement or any of the other Loan
Documents shall be construed to constitute the Agent as a trustee for
any Lender.
Section 14.2. Employees and Agents. The Agent may exercise its
powers and execute its duties by or through employees or agents and
shall be entitled to take, and to rely on, advice of counsel concerning
all matters pertaining to its rights and duties under this Agreement
and the other Loan Documents. The Agent may utilize the services of
such Persons as the Agent in its sole discretion may reasonably
determine, and all reasonable fees and expenses of any such Persons
shall be paid by the Borrower.
Section 14.3. No Liability. Neither the Agent nor any of its
shareholders, directors, officers or employees nor any other Person
assisting them in their duties nor any agent or employee thereof, shall
be liable for any waiver, consent or approval given or any action
taken, or omitted to be taken, in good faith by it or them hereunder or
under any of the other Loan Documents, or in connection herewith or
therewith, or be responsible for the consequences of any oversight or
error of judgment whatsoever, except that the Agent or such other
Person, as the case may be, may be liable for losses due to its willful
misconduct or gross negligence.
Section 14.4. No Representations. The Agent shall not be
responsible for the execution or validity or enforceability of this
Agreement, the Notes, any of the other Loan Documents or any instrument
at any time constituting, or intended to constitute, collateral
security for the Notes, or for the value of any such collateral
security or for the validity, enforceability or collectability of any
such amounts owing with respect to the Notes, or for any recitals or
statements, warranties or representations made herein or in any of the
other Loan Documents or in any certificate or instrument hereafter
furnished to it by or on behalf of the Borrower, or be bound to
ascertain or inquire as to the performance or observance of any of the
terms, conditions, covenants or agreements herein or in any instrument
at any time constituting, or intended to constitute, collateral
security for the Notes. The Agent shall not be bound to ascertain
whether any notice, consent, waiver or request delivered to it by the
Borrower or any holder of any of the Notes shall have been duly
authorized or is true, accurate and complete. The Agent has not made
nor does it now make any representations or warranties, express or
implied, nor does it assume any liability to the Lenders, with respect
to the credit worthiness or financial condition of the Borrower. Each
Lender acknowledges that it has, independently and without reliance
upon the Agent or any other Lender, and based upon such information and
documents as it has deemed appropriate, made its own credit analysis
and decision to enter into this Agreement. Each Lender has been
independently represented by separate counsel on all matters regarding
this Agreement.
Section 14.5.Payments.
(a) A payment by the Borrower or any Guarantor to the Agent
hereunder or any of the other Loan Documents for the account of any
Lender shall constitute a payment to such Lender subject to the pro
rata rights to repayment based upon the Commitment Percentage of each
Lender. The Agent agrees promptly to distribute to each Lender such
Lender's pro rata share of payments received by the Agent for the
account of the Lenders except as otherwise expressly provided herein or
in any of the other Loan Documents. Notwithstanding the foregoing, the
amounts advanced by the Additional Commitment Lenders on the Commitment
Increase Date and certain Fixed Rate Prepayment Fees and Letter of
Credit fees shall be distributed on a non pro rata basis as provided in
Section 2.2(b) and the commitment fees for the quarter which included
the Commitment Increase Date shall be paid as provided in Section 4.2.
(b) If in the opinion of the Agent the distribution of any
amount received by it in such capacity hereunder, under the Notes or
under any of the other Loan Documents might involve it in liability, it
may refrain from making distribution until its right to make
distribution shall have been adjudicated by a court of competent
jurisdiction. If a court of competent jurisdiction shall adjudge that
any amount received and distributed by the Agent is to be repaid, each
Person to whom any such distribution shall have been made shall either
repay to the Agent its proportionate share of the amount so adjudged to
be repaid or shall pay over the same in such manner and to such Persons
as shall be determined by such court.
(c) Notwithstanding anything to the contrary contained in
this Agreement or any of the other Loan Documents, any Lender that
fails (i) to make available to the Agent its pro rata share of any Loan
or (ii) to comply with the provisions of Section 13 with respect to
making dispositions and arrangements with the other Lenders, where such
Lender's share of any payment received, whether by setoff or otherwise,
is in excess of its pro rata share of such payments due and payable to
all of the Lenders, in each case as, when and to the full extent
required by the provisions of this Agreement, or to adjust promptly
such Lender's outstanding principal and its pro rata Commitment
Percentage as provided in Section 2.1 hereof, shall be deemed
delinquent (a "Delinquent Lender") and shall be deemed a Delinquent
Lender until such time as such delinquency is satisfied. A Delinquent
Lender shall be deemed to have assigned any and all payments due to it
from the Borrower, whether on account of outstanding Loans, interest,
fees or otherwise, to the remaining nondelinquent Lenders for
application to, and reduction of, their respective pro rata shares of
all outstanding Loans. The Delinquent Lender hereby authorizes the
Agent to distribute such payments to the nondelinquent Lenders in
proportion to their respective pro rata shares of all outstanding
Loans. A Delinquent Lender shall be deemed to have satisfied in full a
delinquency when and if, as a result of application of the assigned
payments to all outstanding Loans of the nondelinquent Lenders, the
Lenders' respective pro rata shares of all outstanding Loans have
returned to those in effect immediately prior to such delinquency and
without giving effect to the nonpayment causing such delinquency.
(d) If any amount which the Agent is required to distribute
to the Lenders pursuant to this Section 14.5 is actually distributed to
any Lender on a date which is later than the first Business Day
following the Agent's receipt of the corresponding payment from the
Borrower, the Agent shall pay to such Lender on demand an amount equal
to the product of (i) the average computed for the period referred to
in clause (iii) below, of the weighted average interest rate paid by
the Agent for federal funds acquired by the Agent during each day
included in such period, times (ii) the amount of such late
distribution to such Lender, times (iii) a fraction, the numerator of
which is the number of days or portion thereof that elapsed from and
including the second Business Day after the Agent's receipt of such
corresponding payment from the Borrower to the date on which the amount
so required to be distributed to such Lender actually is distributed,
and the denominator of which is 365.
Section 14.6. Holders of Notes. The Agent may deem and treat the
payee of any Note as the absolute owner or purchaser thereof for all
purposes hereof until it shall have been furnished in writing with a
different name by such payee or by a subsequent holder assignee or
transferee.
Section 14.7. Indemnity. The Lenders ratably agree hereby to
indemnify and hold harmless the Agent from and against any and all
claims, actions and suits (whether groundless or otherwise), losses,
damages, costs, expenses (including any expenses for which the Agent
has not been reimbursed by the Borrower as required by Section 15), and
liabilities of every nature and character arising out of or related to
this Agreement, the Notes, or any of the other Loan Documents or the
transactions contemplated or evidenced hereby or thereby, or the
Agent's actions taken hereunder or thereunder, except to the extent
that any of the same shall be directly caused by the Agent's willful
misconduct or gross negligence.
Section 14.8. Agent as Lender. In its individual capacity, Fleet
shall have the same obligations and the same rights, powers and
privileges in respect to its Commitment and the Loans made by it, and
as the holder of any of the Notes as it would have were it not also the
Agent.
Section 14.9. Resignation. The Agent may resign at any time by
giving sixty (60) days, prior written notice thereof to the Lenders and
the Borrower. Upon any such resignation, the Requisite Lenders shall
have the right to appoint a successor Agent. Unless a Default or Event
of Default shall have occurred and be continuing, appointment of such
successor Agent shall be subject to the reasonable approval of the
Borrower. If no successor Agent shall have been so appointed by the
Requisite Lenders and shall have accepted such appointment within
thirty (30) days after the giving of notice of resignation or removal
or if the Borrower has disapproved or failed to approve a successor
agent within such period, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent, which shall be a financial
institution having a rating of not less than A2/P2 or its equivalent by
Standard & Poor's Corporation. Upon the acceptance of any appointment
as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent
shall be discharged from its duties and obligations as Agent hereunder.
Such successor Agent shall issue replacement Letters of Credit and any
outstanding Letters of Credit issued by the retiring Agent shall be
canceled and returned to it. Such successor Agent shall also replace
the retiring Agent in its capacity as Swingline Lender. After any
retiring Agent's resignation, the provisions of this Agreement and the
other Loan Documents shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was
acting as Agent.
Section 14.10. Notification of Defaults and Events of Default
and other Notices. Each Lender hereby agrees that, upon learning of
the existence of a Default or an Event of Default, it shall promptly
notify the Agent thereof. The Agent hereby agrees that upon receipt of
any notice under this Section 14.10, or upon it otherwise learning of
the existence of a Default or an Event of Default, it shall promptly
notify the other Lenders of the existence of such Default or Event of
Default. The Agent shall also promptly provide each Lender with a copy
of any notices which the Agent receives from the Borrower pursuant to
Section 7.5 or Section 7.13.
Section 14.11. Duties in the Case of Enforcement. In case one of
more Events of Default have occurred and shall be continuing, and
whether or not acceleration of the Obligations shall have occurred, the
Agent may, with the consent of the Requisite Lenders (which consents
may be obtained orally in emergency situations), and the Agent shall,
if (a) so requested by the Requisite Lenders and (b) the Lenders have
provided to the Agent such additional indemnities and assurances
against expenses and liabilities as the Agent may reasonably request,
proceed to enforce the provisions of the Loan Documents and exercise
all or any such other legal and equitable and other rights or remedies
as it may have. The Requisite Lenders may direct the Agent in writing
as to the method and the extent of any such enforcement actions, the
Lenders hereby agreeing to indemnify and hold the Agent harmless from
all liabilities incurred in respect of all actions taken or omitted in
accordance with such directions, provided that the Agent need not
comply with any such direction to the extent that the Agent reasonably
believes the Agent's compliance with such direction to be unlawful or
commercially unreasonable in any applicable jurisdiction.
Section 14.12. Mandatory Resignation of Agent. In the event that
the Agent enters into one or more Assignments pursuant to Section 18
having the effect of reducing the Agent's Commitment to less than
$20,000,000 (which number will be reduced in proportion to any pro rata
reduction in the Total Commitment pursuant to Section 2.2(c)) then the
Agent shall promptly so notify the Lenders. Upon the written request
of any Lender whose Commitment exceeds that of the Agent, which written
request is made within thirty (30) days after the Agent's notice that
its Commitment is below such minimum level, the Agent shall be
obligated to resign pursuant to Section 14.9. Further, the Agent shall
be obligated to resign pursuant to Section 14.9 upon the written
request made for cause by Lenders whose aggregate Commitments
constitute at least sixty-six percent (66%) of the Total Commitment
excluding the Commitment of the Lender which is then the Agent
hereunder.
Section 15. EXPENSES. The Borrower agrees to pay (a) the
reasonable costs of producing and reproducing this Agreement, the other
Loan Documents and the other agreements and instruments mentioned
herein, (b) any taxes (including any interest and penalties in respect
thereto) payable by the Agent or any of the Lenders (other than taxes
based upon the Agent's or any Lender's net income), including any
recording, mortgage, documentary or intangibles taxes in connection
with the Loan Documents, or other taxes payable on or with respect to
the transactions contemplated by this Agreement, including any taxes
payable by the Agent or any of the Lenders after the Effective Date
(the Borrower hereby agreeing to indemnify the Lenders with respect
thereto), (c) all title examination costs, appraisal fees, engineers',
inspectors' and surveyors' fees, recording costs and the reasonable
fees, expenses and disbursements of the Agent's counsel or any local
counsel to the Agent incurred in connection with the preparation,
administration or interpretation of the Loan Documents and other
instruments mentioned herein, each closing hereunder, and amendments,
modifications, approvals, consents or waivers hereto or hereunder, (d)
the fees, costs, expenses and disbursements of the Agent incurred in
connection with the preparation, administration or interpretation of
the Loan Documents and other instruments mentioned herein including
without limitation, the costs incurred by the Agent in connection with
its inspection of the Unencumbered Properties and the Unencumbered
Development Properties, and the fees and disbursements of the Agent's
counsel and the Borrower's legal counsel in preparing documentation,
(e) the fees, costs, expenses and disbursements of the Agent incurred
in connection with the syndication and/or participation of the Loans,
(f) all reasonable out-of-pocket expenses (including reasonable
attorneys' fees and costs, which attorneys may be employees of any
Lender or the Agent and the fees and costs of appraisers, engineers,
investment bankers, surveyors or other experts retained by the Agent or
any Lender in connection with any such enforcement proceedings)
incurred by any Lender or the Agent in connection with (i) the
enforcement of or preservation of rights under any of the Loan
Documents against the Borrower or the administration thereof after the
occurrence of a Default or Event of Default (including, without
limitation, expenses incurred in any restructuring and/or "workout" of
the Loans), and (ii) any litigation, proceeding or dispute whether
arising hereunder or otherwise, in any way related to the Agent's or
the Lender's relationship with the Borrower, the Company, any
Unconsolidated Entity or any of the Related Companies, (g) all
reasonable fees, expenses and disbursements of the Agent incurred in
connection with UCC searches, and (h) all costs incurred by the Agent
in the future in connection with its inspection of the Unencumbered
Properties and the Unencumbered Development Properties. The covenants
of this Section 15 shall survive payment or satisfaction of payment of
amounts owing with respect to the Notes.
Section 16. INDEMNIFICATION. The Borrower agrees to indemnify
and hold harmless the Agent and the Lenders and the shareholders,
directors, agents, officers, subsidiaries, and affiliates of the Agent
and the Lenders from and against any and all claims, actions or causes
of action and suits whether groundless or otherwise, and from and
against any and all Liabilities, losses, settlement payments,
obligations, damages and expenses of every nature and character arising
out of this Agreement or any of the other Loan Documents or the
transactions contemplated hereby or which otherwise arise in connection
with the financing including, without limitation except to the extent
directly caused by the gross negligence or willful misconduct of a
Lender or the Agent (but such limitation on indemnification shall only
apply to the Agent or Lender being grossly negligent or committing
willful misconduct), (a) any actual or proposed use by the Borrower of
the proceeds of any of the Loans, (b) any actual or alleged
infringement of any patent, copyright, trademark, service mark or
similar right of the Borrower, (c) the Borrower entering into or
performing this Agreement or any of the other Loan Documents or (d)
with respect to the Borrower and its respective properties, the
violation of any Environmental Law, the Release or threatened Release
of any Hazardous Substances or any action, suit, proceeding or
investigation brought or threatened with respect to any Hazardous
Substances (including, but not limited to claims with respect to
wrongful death, personal injury or damage to property), (e) any cost,
claim liability, damage or expense in connection with any harm the
Borrower may be found to have caused in the role of a broker, in each
case including, without limitation, the reasonable fees and
disbursements of counsel and allocated costs of internal counsel
incurred in connection with any such investigation, litigation or other
proceeding. In litigation, or the preparation therefor, the Lenders and
the Agent shall each be entitled to select their own separate counsel
and, in addition to the foregoing indemnity, the Borrower agrees to pay
promptly the reasonable fees and expenses of such counsel. If, and to
the extent that the obligations of the Borrower under this Section 16
are unenforceable for any reason, the Borrower hereby agrees to make
the maximum contribution to the payment in satisfaction of such
obligations which is permissible under applicable law. The provisions
of this Section 16 shall survive the repayment of the Loans and the
termination of the obligations of the Lenders hereunder and shall
continue in full force and effect as to the Lenders so long as the
possibility of any such claim, action, cause of action or suit exists.
Section 17. SURVIVAL OF COVENANTS, ETC. All covenants,
agreements, representations and warranties made herein, in the Notes,
in any of the other Loan Documents or in any documents or other papers
delivered by or on behalf of the Borrower or any Guarantor pursuant
hereto shall be deemed to have been relied upon by the Lenders and the
Agent, notwithstanding any investigation heretofore or hereafter made
by it, and shall survive the making by the Lenders of the Loans, as
herein contemplated, and shall continue in full force and effect so
long as any amount due under this Agreement or the Notes or any of the
other Loan Documents remains outstanding or the Lenders have any
obligation to make any Loans. The indemnification obligations of the
Borrower provided herein and the other Loan Documents shall survive the
full repayment of amounts due and the termination of the obligations of
the Lenders hereunder and thereunder to the extent provided herein and
therein. All statements contained in any certificate or other paper
delivered to the Agent or any Lender at any time by or on behalf of the
Borrower pursuant hereto or in connection with the transactions
contemplated hereby shall constitute representations and warranties by
the Borrower hereunder.
Section 18. ASSIGNMENT; PARTICIPATIONS; ETC.
Section 18.1. Conditions to Assignment by Lenders . Except as
provided herein, each Lender may assign to one or more Eligible
Assignees all or a portion of its interests, rights and obligations
under this Agreement (including all or a portion of its Commitment
Percentage and Commitment and the same portion of the Loans at the time
owing to it, and the Notes held by it); provided that (a) the Agent
shall have given its prior written consent to such assignment, which
consent shall not be unreasonably withheld or delayed, except that such
consent shall not be needed with respect to an assignment from a Lender
to either one of its Affiliated Lenders or to another Lender hereunder,
(b) each such assignment shall be of a portion of the assigning
Lender's rights and obligations under this Agreement relating to a
specified Commitment amount and Commitment Percentage, (c) each
assignment shall be in an amount of not less than $10,000,000 that is a
whole multiple of $1,000,000, (d) each Lender either shall assign all
of its Commitment and cease to be a Lender hereunder or shall retain,
free of any such assignment, an amount of its Commitment of not less
than $10,000,000, and (e) the parties to such assignment shall execute
and deliver to the Agent, for recording in the Register (as hereinafter
defined), an Assignment and Acceptance, substantially in the form of
Exhibit E hereto (an "Assignment and Acceptance") , together with any
Notes subject to such assignment. Upon such execution, delivery,
acceptance and recording, from and after the effective date specified
in each Assignment and Acceptance, which effective date shall be at
least five (5) Business Days after the execution thereof, (i) the
assignee thereunder shall be a party hereto and, to the extent provided
in such Assignment and Acceptance, have the rights and obligations of a
Lender hereunder, and (ii) the assigning Lender shall, to the extent
provided in such assignment and upon payment to the Agent of the
registration fee referred to in Section 18.3, be released from its
obligations under this Agreement. So long as no Default or Event of
Default has occurred and is continuing, Borrower's consent shall also
be required for any assignment to an Eligible Assignee which is not at
the time a Lender hereunder or one of such Lender's Affiliated Lenders
provided that Borrower's consent shall not be unreasonably withheld or
delayed and shall not be withheld unless Borrower simultaneously
designates an alternative Eligible Assignee (approved by the Agent) who
agrees to accept an assignment of the interest which the assigning
Lender proposed to assign and pay to such assigning Lender a sum equal
to the outstanding balance of principal and interest of Loans relating
to the Commitment Percentage being assigned.
Section 18.2. Certain Representations and Warranties;
Limitations; Covenants. By executing and delivering an Assignment and
Acceptance, the parties to the assignment thereunder confirm to and
agree with each other and the other parties hereto as follows: (a)
other than the representation and warranty that it is the legal and
beneficial owner of the interest being assigned thereby free and clear
of any adverse claim, the assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement, the other Loan
Documents or any other instrument or document furnished pursuant
hereto; (b) the assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition
of the Borrower or any other Person primarily or secondarily liable in
respect of any of the Obligations, or the performance or observance by
the Borrower or any other Person primarily or secondarily liable in
respect of any of the Obligations of any of their obligations under
this Agreement or any of the other Loan Documents or any other
instrument or document furnished pursuant hereto or thereto; (c) such
assignee confirms that it has received a copy of this Agreement,
together with copies of the most recent financial statements referred
to in Section 6.4 and Section 7.4 and such other documents and
information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (d)
such assignee will, independently and without reliance upon the
assigning Lender, the Agent or any other Lender and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking
action under this Agreement, (e) such assignee represents and warrants
that it is an Eligible Assignee; (f) such assignee appoints and
authorizes the Agent to take such action as "Agent" on its behalf and
to exercise such powers under this Agreement and the other Loan
Documents as are delegated to the Agent by the terms hereof or thereof,
together with such powers as are reasonably incidental thereto; (g)
such assignee agrees that it will perform in accordance with their
terms all of the obligations that by the terms of this Agreement are
required to be performed by it as a Lender; and (h) such assignee
represents and warrants that it is legally authorized to enter into
such Assignment and Acceptance.
Section 18.3. Register. The Agent shall maintain a copy of each
Assignment and Acceptance delivered to it and a register or similar
list (the "Register") for the recordation of the names and addresses of
the Lenders and the Commitment Percentages of, and principal amount of
the Loans owing to the Lenders from time to time. The entries in the
Register shall be conclusive, in the absence of manifest error, and the
Borrower, the Agent and the Lenders may treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the
Borrower and the Lenders at any reasonable time and from time to time
upon reasonable prior notice. Upon each such recordation, the
assigning Lender agrees to pay to the Agent a registration fee in the
sum of $2,500.00, provided that such registration fee shall not be
required for assignments to an Eligible Assignee which is an affiliate
of the assigning Lender. The Agent may, without action by any other
party, amend Schedules 1 and 1.2 hereof to reflect the recording of any
such assignments.
Section 18.4. New Notes. Upon its receipt of an Assignment and
Acceptance executed by the parties to such assignment, together with
each Note subject to such assignment, the Agent shall (a) record the
information contained therein in the Register, and (b) give prompt
notice thereof to the Borrower and the Lenders (other than the
assigning Lender). Within five (5) Business Days after receipt of such
notice, the Borrower, at its own expense, shall execute and deliver to
the Agent, in exchange for each surrendered Note, a new Note to the
order of such Eligible Assignee in an amount equal to the amount
assumed by such Eligible Assignee pursuant to such Assignment and
Acceptance and, if the assigning Lender has retained some portion of
its Loans hereunder, a new Note to the order of the assigning Lender in
an amount equal to the amount retained by it hereunder. Such new Notes
shall provide that they are replacements for the surrendered Notes and
that they do not constitute a novation, shall be in an aggregate
principal amount equal to the aggregate principal amount of the
surrendered Notes, shall be dated the effective date of such Assignment
and Acceptance and shall otherwise be in substantially the form of the
assigned Notes. Within five (5) days of issuance of any new Notes
pursuant to this Section 18.4, the Borrower shall deliver an opinion of
counsel, addressed to the Lenders and the Agent, relating to the due
authorization, execution and delivery of such new Notes and the
legality, validity and binding effect thereof, and that the Obligations
evidenced by the new Notes have the same validity, enforceability and
priority as if given on the Effective Date, in form and substance
satisfactory to the Lenders. The surrendered Notes shall be cancelled
and returned to the Borrower.
Section 18.5. Participations. Each Lender may sell
participations to one or more banks or other entities in a portion of
such Lender's rights and obligations under this Agreement and the other
Loan Documents not to exceed forty-nine percent (49%) of its Commitment
Percentage; provided that (a) the Agent shall have given its prior
written consent to such participation, which consent shall not be
unreasonably withheld or delayed, except that any Lender may sell
participations to its Affiliated Lenders without such consent, (b) each
such participation, other than participations to its Affiliated Lenders
or to another Lender hereunder, shall be in an amount of not less than
$5,000,000 that is a whole multiple of $1,000,000, (c) any such sale or
participation shall not affect the rights and duties of the selling
Lender hereunder to the Borrower and the Lender shall continue to
exercise all approvals, disapprovals and other functions of a Lender,
(d) the only rights granted to the participant pursuant to such
participation arrangements with respect to waivers, amendments or
modifications of the Loan Documents shall be the rights to approve the
vote of the Lender as to waivers, amendments or modifications that
would reduce the principal of or the interest rate on any Loans, extend
the term or increase the amount of the Commitment of such Lender as it
relates to such participant, reduce the amount of any fees to which
such participant is entitled or extend any regularly scheduled payment
date for principal or interest, provided that all approvals affecting a
Loan or this Agreement under this clause (d) shall be by a fifty-one
percent (51%) vote of such Lender's Commitment Percentage, and (e) no
participant which is not a Lender hereunder shall have the right to
grant further participations or assign its rights, obligations or
interests under such participation to other Persons without the prior
written consent of the Agent. The Agent shall promptly advise the
Borrower in writing of any such sale or participation.
Section 18.6. Pledge by Lender. Any Lender may at any time
pledge all or any portion of its interest and rights under this
Agreement (including all or any portion of its Note) to any of the
twelve Federal Reserve Lenders organized under Section 4 of the Federal
Reserve Act, 12 U.S.C. Section 341. No such pledge or the enforcement
thereof shall release the pledgor Lender from its obligations hereunder
or under any of the other Loan Documents.
Section 18.7. No Assignment by Borrower. The Borrower shall not
assign or transfer any of its rights or obligations under any of the
Loan Documents without the prior written consent of each of the
Lenders, and any such attempted assignment shall be null and void.
Section 18.8. Disclosure. The Borrower agrees that in addition
to disclosures made in accordance with standard banking practices any
Lender may disclose information obtained by such Lender pursuant to
this Agreement to assignees or participants and potential assignees or
participants hereunder.
Section 19. NOTICES, ETC. Except as otherwise expressly provided
in this Agreement, all notices and other communications made or
required to be given pursuant to this Agreement or the Notes shall be
in writing and shall be delivered in hand, mailed by United States
registered or certified first class mail, postage prepaid, sent by
overnight courier, or sent by telegraph, telecopy, telefax or telex and
confirmed by delivery via courier or postal service, addressed as
follows:
(a) if to the Borrower, at 65 Valley Stream Parkway,
Malvern, PA 19355, Attention: Chief Financial Officer or at such other
address for notice as the Borrower shall last have furnished in writing
to the Agent; and
(b) if to the Agent, at 100 Federal Street, Boston,
Massachusetts 02110, Attention: Structured Real Estate, and to 115
Perimeter Center Place, N.E., Suite 500, Atlanta, Georgia 30346, Attn:
Lori Y. Litow, Vice President, or such other address for notice as the
Agent shall last have furnished in writing to the Borrower.
(c) if to any Lender, at such Lender's address set forth on
Schedule 1, hereto, or such other address for notice as such Lender
shall have last furnished in writing to the Person giving the notice.
Any such notice or demand shall be deemed to have been duly
given or made and to have become effective (i) if delivered by hand,
overnight courier or facsimile to a responsible officer of the party to
which it is directed, at the time of the receipt thereof by such
officer or the sending of such facsimile and (ii) if sent by registered
or certified first-class mail, postage prepaid, on the third Business
Day following the mailing thereof.
Section 20. GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE.
THIS AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS, EXCEPT AS
OTHERWISE SPECIFICALLY PROVIDED THEREIN, ARE CONTRACTS UNDER THE LAWS
OF THE COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SUCH
COMMONWEALTH (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF
LAW). THE BORROWER AGREES THAT ANY SUIT BY IT FOR THE ENFORCEMENT OF
THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT ONLY
IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY FEDERAL COURT
SITTING THEREIN AND BORROWER CONSENTS TO THE NONEXCLUSIVE JURISDICTION
OF SUCH COURT FOR ANY SUIT BY AGENT OR ANY LENDER AND THE SERVICE OF
PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER BY MAIL AT THE
ADDRESS SPECIFIED IN Section 19. THE BORROWER HEREBY WAIVES ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH
SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT
COURT. IN ADDITION TO THE COURTS OF THE COMMONWEALTH OR ANY FEDERAL
COURT SITTING THEREIN, THE AGENT OR ANY LENDER MAY BRING ACTION(S) FOR
ENFORCEMENT ON A NONEXCLUSIVE BASIS WHERE ANY COLLATERAL EXISTS AND THE
BORROWER CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF SUCH COURT AND
THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER BY
MAIL AT THE ADDRESS SPECIFIED IN Section 19.
Section 21. HEADINGS. The captions in this Agreement are for
convenience of reference only and shall not define or limit the
provisions hereof.
Section 22. COUNTERPARTS. This Agreement and any amendment
hereof may be executed in several counterparts and by each party on a
separate counterpart, each of which when so executed and delivered
shall be an original, and all of which together shall constitute one
instrument. In proving this Agreement it shall not be necessary to
produce or account for more than one such counterpart signed by the
party against whom enforcement is sought.
Section 23. ENTIRE AGREEMENT. The Loan Documents and any other
documents executed in connection herewith or therewith express the
entire understanding of the parties with respect to the transactions
contemplated hereby. Neither this Agreement nor any term hereof may be
changed, waived, discharged or terminated, except as provided in
Section 25.
Section 24. WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS. THE
BORROWER HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY
ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS
AGREEMENT, THE NOTES OR ANY OF THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR
OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS
AND OBLIGATIONS. EXCEPT TO THE EXTENT EXPRESSLY PROHIBITED BY LAW, THE
BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY
LITIGATION REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN,
OR IN ADDITION TO, ACTUAL DAMAGES, AND THIS WAIVER INCLUDES, WITHOUT
LIMITATION, ANY DAMAGES PURSUANT TO M.G.L. C. 93A ET SEQ. THE BORROWER
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE AGENT OR
ANY LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE AGENT OR
SUCH LENDER WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVERS AND (B) ACKNOWLEDGES THAT THE AGENT AND THE LENDERS
HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS TO WHICH THEY ARE PARTIES BY, AMONG OTHER THINGS, THE WAIVERS
AND CERTIFICATIONS CONTAINED HEREIN.
Section 25. CONSENTS, AMENDMENTS, WAIVERS, ETC. Any consent or
approval required or permitted by this Agreement may be given, and any
term of this Agreement or of any other instrument related hereto or
mentioned herein may be amended, and the performance or observance by
the Borrower of any terms of this Agreement or such other instrument or
the continuance of any Default or Event of Default may be waived
(either generally or in a particular instance and either retroactively
or prospectively) with, but only with, the written consent of the
Requisite Lenders, and, in the case of amendments, with the written
consent of the Borrower other than amendments to schedules made in the
ordinary course as contemplated by this Agreement. Notwithstanding the
foregoing, (i) the rate of interest on and the term or amount of the
Notes, (ii) the amount of the Commitments of the Lenders (other than
changes in Commitments pursuant to Assignments under Section 18 or
pursuant to changes in the Total Commitment under Section 2.2), (iii)
the amount of any fee payable to a Lender hereunder, (iv) any provision
herein or in any of the Loan Documents which expressly requires consent
of all the Lenders, (v) the funding provisions of Section 2.5 and
Section 2.7 hereof, (vi) the rights, duties and obligations of the
Agent specified in Section 14 hereof, and (vii) the definition of
Requisite Lenders, may not be amended without the written consent of
each Lender affected thereby, nor may the Agent release the Borrower or
any Guarantor from its liability with respect to the Obligations,
without first obtaining the written consent of all the Lenders. No
waiver shall extend to or affect any obligation not expressly waived or
impair any right consequent thereon. No course of dealing or delay or
omission on the part of the Agent or any Lender in exercising any right
shall operate as a waiver thereof or otherwise be prejudicial thereto.
No notice to or demand upon the Borrower shall entitle the Borrower to
other or further notice or demand in similar or other circumstances.
Section 26. SEVERABILITY. The provisions of this Agreement are
severable, and if any one clause or provision hereof shall be held
invalid or unenforceable in whole or in part in any jurisdiction, then
such invalidity or unenforceability shall affect only such clause or
provision, or part thereof, in such jurisdiction, and shall not in any
manner affect such clause or provision in any other jurisdiction, or
any other clause or provision of this Agreement in any jurisdiction.
Section 27. ACKNOWLEDGMENTS. The Borrower hereby acknowledges
that: (i) neither the Agent nor any Lender has any fiduciary
relationship with, or fiduciary duty to, the Borrower arising out of or
in connection with this Agreement or any of the other Loan Documents;
(ii) the relationship in connection herewith between the Agent and the
Lenders, on the one hand, and the Borrower, on the other hand, is
solely that of debtor and creditor and (iii) no joint venture or
partnership among any of the parties hereto is created hereby or by the
other Loan Documents, or otherwise exists by virtue of the Facility or
the Loans.
IN WITNESS WHEREOF, the undersigned have duly executed this Credit
Agreement as a sealed instrument as of the date first set forth above.
WITNESS: LIBERTY PROPERTY TRUST
By:
- -------------------------- ---------------------------------------
George J. Alburger, Jr.
Its Chief Financial Officer
LIBERTY PROPERTY LIMITED PARTNERSHIP
By: LIBERTY PROPERTY TRUST,
its general partner
By:
----------------------------------------
George J. Alburger, Jr.
Its Chief Financial Officer
FLEET NATIONAL BANK
as Agent
By:
----------------------------------------
Lori Y. Litow
Its Vice President
50
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheet at March 31, 2000 and the Consolidated Statement of
Operations for the three months ended March 31, 2000 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000921112
<NAME> LIBERTY PROPERTY TRUST
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 3,184
<SECURITIES> 0
<RECEIVABLES> 15,783
<ALLOWANCES> 1,993
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 3,052,611
<DEPRECIATION> 283,695
<TOTAL-ASSETS> 3,182,832
<CURRENT-LIABILITIES> 0
<BONDS> 1,565,108
0
120,814
<COMMON> 67
<OTHER-SE> 1,174,712
<TOTAL-LIABILITY-AND-EQUITY> 3,182,832
<SALES> 0
<TOTAL-REVENUES> 128,959
<CGS> 0
<TOTAL-COSTS> 37,146
<OTHER-EXPENSES> 22,648
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 25,650
<INCOME-PRETAX> 43,423
<INCOME-TAX> 0
<INCOME-CONTINUING> 43,423
<DISCONTINUED> 0
<EXTRAORDINARY> (1,875)
<CHANGES> 0
<NET-INCOME> 34,119
<EPS-BASIC> 0.51
<EPS-DILUTED> 0.51
</TABLE>
