SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 13, 1998 (June 30, 1998)
GLENBOROUGH REALTY TRUST INCORPORATED
(Exact name of registrant as specified in its charter)
Maryland 001-14162 94-3211970
(state or other (Commission (IRS Employer
jurisdiction of File Number) I.D. Number)
incorporation)
400 South E1 Camino Real, Ste. 1100, San Mateo, California 94402
(Address of principal executive offices)
Registrant's Telephone number, including area code: (650) 343-9300
1
<PAGE>
Glenborough Realty Trust Incorporated (the "Company") hereby amends Item 7 of
its Current Report on Form 8-K filed with the Securities and Exchange Commission
(the "Commission") on July 15, 1998, to file the Financial Statements and
Exhibits of the Company related to the Bridge Loan and the acquisitions of the
Galesi Portfolio, the Donau/Gruppe Portfolio, the Pauls Portfolio and One and
Three Pacific (each as defined in such Form 8-K) ITEM 7. FINANCIAL STATEMENTS
AND EXHIBITS
(a) FINANCIAL STATEMENTS
Report of Independent Public Accountants 5
Combined statements of revenues and certain expenses of the
Galesi Portfolio for the three months ended March 31, 1998 and
for the year ended December 31, 1997 6
Notes to combined statements of revenues and certain
expenses of the Galesi Portfolio for the three months ended
March 31, 1998 and for the year ended December 31, 1997 7
Report of Independent Public Accountants 9
Combined statements of revenues and certain expenses of the
Donau/Gruppe Portfolio for the three months ended
March 31, 1998 and for the year ended December 31, 1997 10
Notes to combined statements of revenues and certain expenses
of the Donau/Gruppe Portfolio for the three months ended
March 31, 1998 and for the year ended December 31, 1997 11
Report of Independent Public Accountants 13
Combined statements of revenues and certain expenses of the
Pauls Portfolio for the three months ended March 31, 1998 and
for the year ended December 31, 1997 14
Notes to combined statements of revenues and certain
expenses of the Pauls Portfolio for the three months ended
March 31, 1998 and for the year ended December 31, 1997 15
Report of Independent Public Accountants 17
2
<PAGE>
Statements of revenues and certain expenses of
One and Three Pacific for the three months ended
March 31, 1998 and for the year ended December 31, 1997 18
Notes to statements of revenues and certain expenses
of One and Three Pacific for the three months ended
March 31, 1998 and for the year ended December 31, 1997 19
(b) PRO FORMA FINANCIAL STATEMENTS
Pro forma Condensed Consolidated Balance Sheet as of
March 31, 1998, with accompanying notes and adjustments 21
Pro forma Condensed Consolidated Statements of Operations
for the three months ended March 31, 1998 and for the year
ended December 31, 1997, with accompanying notes and adjustments 24
(c) EXHIBITS
10.1 Term Credit Agreement related to the Bridge Loan 30
23.1 Consent of Independent Auditors 79
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
GLENBOROUGH REALTY TRUST INCORPORATED
By: Glenborough Realty Trust Incorporated
Date: August 13, 1998 /s/ ANDREW BATINOVICH
Andrew Batinovich
President, Chief Operating Officer
(Principal Operating Officer)
Date: August 13, l998 /s/ TERRI GARNICK
Terri Garnick
Senior Vice President
Chief Accounting Officer, Treasurer
(Principal Accounting Officer)
4
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of
GLENBOROUGH REALTY TRUST INCORPORATED:
We have audited the accompanying combined statement of revenues and certain
expenses of the Galesi Portfolio as defined in Note 1, for the year ended
December 31, 1997. This combined financial statement is the responsibility of
the management of the Company. Our responsibility is to express an opinion on
this combined financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The accompanying combined statement of revenues and certain expenses has
been prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission, as described in Note 1, and is not intended
to be a complete presentation of the revenues and expenses of the Galesi
Portfolio.
In our opinion, the combined financial statement referred to above presents
fairly, in all material respects, the revenues and certain expenses of the
Galesi Portfolio for the year ended December 31, 1997, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
San Francisco, California
June 12, 1998
5
<PAGE>
GLENBOROUGH REALTY TRUST INCORPORATED
COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES OF
THE GALESI PORTFOLIO
For the Three Months Ended March 31, 1998 (unaudited)
and the Year Ended December 31, 1997
(in thousands)
Three Months
Ended Year Ended
March 31, 1998 December 31,
(unaudited) 1997
REVENUES...................................... $10,914 $35,542
CERTAIN EXPENSES
Operating................................... 3,417 12,507
Real estate taxes........................... 1,271 4,139
------ ------
4,688 16,646
------ ------
REVENUES IN EXCESS OF CERTAIN EXPENSES........ $ 6,226 $18,896
====== ======
The accompanying notes are an integral part of these statements.
6
<PAGE>
GLENBOROUGH REALTY TRUST INCORPORATED
NOTES TO COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES OF
THE GALESI PORTFOLIO
For the Three Months Ended March 31, 1998 (unaudited)
and the Year Ended December 31, 1997
1. Basis of Presentation and Summary of Significant Accounting Policies
Property Acquired -- The accompanying combined statements of revenues and
certain expenses include the operations (see "Basis of Presentation" below) of
the properties listed below (collectively, the "Galesi Portfolio") acquired by
the Company on June 30, 1998 from an unaffiliated third party:
Property City ST Type
Multi-family
Aspen Ridge................ Colorado Springs CO Multi-family Residential
Stone Ridge................ Atlanta GA Multi-family Residential
Woodmere Trace............. Duluth GA Multi-family Residential
Player's Club.............. Nashville TN Multi-family Residential
Wind River................. Austin TX Multi-family Residential
Walnut Creek............... Austin TX Multi-family Residential
Longspur Crossing.......... Austin TX Multi-family Residential
Hunter's Chase............. Austin TX Multi-family Residential
Silver Vale................ Austin TX Multi-family Residential
Hunterwood................. Austin TX Multi-family Residential
North Park Crossing........ Houston TX Multi-family Residential
Cypress Creek Crossing..... Houston TX Multi-family Residential
Bear Creek Crossing........ Houston TX Multi-family Residential
Willow Brook Crossing...... Houston TX Multi-family Residential
The Park at Woodlake....... Houston TX Multi-family Residential
Jefferson Place............ Irving TX Multi-family Residential
Jefferson Creek............ Irving TX Multi-family Residential
La Costa................... Plano TX Multi-family Residential
The Hollows................ San Antonio TX Multi-family Residential
Bandera Crossing........... San Antonio TX Multi-family Residential
Vista Crossing............. San Antonio TX Multi-family Residential
Basis of Presentation -- The accompanying combined statements of revenues
and certain expenses are not intended to be a complete presentation of the
actual operations of the Galesi Portfolio for the periods presented. Certain
expenses may not be comparable to the expenses expected to be incurred by the
Company in the future operations of the Galesi Portfolio; however, the Company
is not aware of any material factors relating to the Galesi Portfolio that would
cause the reported financial information not to be indicative of future
operating results. Excluded expenses consist of property management fees,
interest expense, depreciation and amortization and other costs not directly
related to the future operations of the Galesi Portfolio.
These combined financial statements have been prepared for the purpose of
complying with certain rules and regulations of the Securities and Exchange
Commission.
Revenue Recognition -- All leases are classified as operating leases.
Rental revenue is recognized as earned over the terms of the leases.
Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from these
estimates.
7
<PAGE>
GLENBOROUGH REALTY TRUST INCORPORATED
NOTES TO COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES OF
THE GALESI PORTFOLIO
For the Three Months Ended March 31, 1998 (unaudited)
and the Year Ended December 31, 1997
2. Leasing Activity
As the properties within the portfolio are all residential properties, the
Galesi Portfolio does not generally have leases in effect for more than one
year. Tenants generally may extend or renew at their option at the then
prevailing market rate for their unit.
3. Mortgage Notes Payable
The following table presents unaudited information as of June 30, 1998
regarding the notes payable assumed by the Company in connection with the
acquisition of the Galesi Portfolio. Both instruments are first lien notes
secured by the rental properties below. The Place Residential properties loan
requires monthly principal and interest payments whereas the Oly/Crossing
Residential loan requires interest only payments until maturity (dollars in
thousands).
<TABLE>
<CAPTION>
Stated Interest Principal balance at
Loan and Property Name Rate Maturity Dates June 30, 1998
<S> <C> <C> <C>
Oly/Crossing Residential Loan LIBOR + 2.5% 12/20/99 $115,590
(effective (including
interest rate unamortized
6.75%) premium of
$2,389)
Bandera Crossing
Bear Creek Crossing
Cypress Creek Crossing
Hunter's Chase
Hunterwood
Longspur Crossing
North Park Crossing
Silver Vale
Stone Ridge
The Hollows
Vista Crossing
Walnut Creek
Willow Brook Crossing
Wind River
Woodmere Trace
Place Residential Properties Loan 7.41% 09/01/00 $53,850
(effective (including
Jefferson Creek interest rate unamortized
Jefferson Place 6.75%) premium of
La Costa $729)
-------
Total $169,440
=======
</TABLE>
8
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of
GLENBOROUGH REALTY TRUST INCORPORATED:
We have audited the accompanying combined statement of revenues and certain
expenses of the Donau/Gruppe Portfolio as defined in Note 1, for the year ended
December 31, 1997. This combined financial statement is the responsibility of
the management of the Company. Our responsibility is to express an opinion on
this combined financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The accompanying combined statement of revenues and certain expenses has
been prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission, as described in Note 1, and is not intended
to be a complete presentation of the revenues and expenses of the Donau/Gruppe
Portfolio.
In our opinion, the combined financial statement referred to above presents
fairly, in all material respects, the revenues and certain expenses of the
Donau/Gruppe Portfolio for the year ended December 31, 1997, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
San Francisco, California
June 25, 1998
9
<PAGE>
GLENBOROUGH REALTY TRUST INCORPORATED
COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES OF
THE DONAU/GRUPPE PORTFOLIO
For the Three Months Ended March 31, 1998 (unaudited)
and the Year Ended December 31, 1997
(in thousands)
Three Months
Ended Year Ended
March 31, 1998 December 31,
(unaudited) 1997
REVENUES...................................... $ 727 $2,907
CERTAIN EXPENSES.............................. -- --
REVENUES IN EXCESS OF CERTAIN EXPENSES........ $ 727 $2,907
The accompanying notes are an integral part of these statements.
10
<PAGE>
GLENBOROUGH REALTY TRUST INCORPORATED
NOTES TO COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES OF
THE DONAU/GRUPPE PORTFOLIO
For the Three Months Ended March 31, 1998 (unaudited)
and the Year Ended December 31, 1997
1. Basis of Presentation and Summary of Significant Accounting Policies
Property Acquired -- The accompanying combined statements of revenues and
certain expenses include the operations (see "Basis of Presentation" below) of
the properties listed below (collectively, the "Donau/Gruppe Portfolio")
acquired by the Company on June 30, 1998 from an unaffiliated third party:
Property City State Type
15 Vreeland Road........... Florham.Park NJ Office
800 Cottontail Lane........ Franklin Township NJ Industrial
Basis of Presentation -- The accompanying combined statements of revenues
and certain expenses are not intended to be a complete presentation of the
actual operations of the Donau/Gruppe Portfolio for the periods presented.
Certain expenses may not be comparable to the expenses expected to be incurred
by the Company in the future operations of the Donau/Gruppe Portfolio; however,
the Company is not aware of any material factors relating to the Donau/Gruppe
Portfolio that would cause the reported financial information not to be
indicative of future operating results. Excluded expenses consist of property
management fees, interest expense, depreciation and amortization and other costs
not directly related to the future operations of the Donau/Gruppe Portfolio.
Both properties in the portfolio are single tenant buildings under triple
net leasing arrangements for which the tenant is responsible for the direct
payment of all operating expenses, including real estate taxes. Accordingly, no
expenses have been included in the accompanying combined statements of revenues
and certain expenses.
These combined financial statements have been prepared for the purpose of
complying with certain rules and regulations of the Securities and Exchange
Commission.
Revenue Recognition -- All leases are classified as operating leases.
Rental revenue is recognized as earned over the terms of the leases.
Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from these
estimates.
2. Leasing Activity
The minimum future rental revenues due under non-cancelable operating
leases in effect as of March 31, 1998, for the remainder of 1998 and annually
thereafter, are as follows (in thousands):
Year Amount
1998 (nine months)....................... $ 2,180
1999..................................... 2,907
2000..................................... 2,907
2001..................................... 2,907
2002..................................... 2,907
2003..................................... 2,907
Thereafter............................... 2,296
Total.......................... $ 19,011
In addition to minimum rental payments, tenants directly pay all operating
costs of the properties, including real estate taxes. Certain leases contain
options to renew.
11
<PAGE>
GLENBOROUGH REALTY TRUST INCORPORATED
NOTES TO COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES OF
THE DONAU/GRUPPE PORTFOLIO
For the Three Months Ended March 31, 1998 (unaudited)
and the Year Ended December 31, 1997
3. Mortgage Note Payable
The following table presents unaudited information as of June 30, 1998
regarding the note payable assumed by the Company in connection with the
acquisition of the Donau/Gruppe Portfolio. This note is a first lien note
secured by the rental property below and requires monthly principal and interest
payments (dollars in thousands).
Stated Interest Principal balance at
Property Name Rate Maturity Date June 30, 1998
800 Cottontail Lane 8.05% 04/10/04 $10,530
12
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of
GLENBOROUGH REALTY TRUST INCORPORATED:
We have audited the accompanying combined statement of revenues and certain
expenses of the Pauls Portfolio as defined in Note 1, for the year ended
December 31, 1997. This combined financial statement is the responsibility of
the management of the Company. Our responsibility is to express an opinion on
this combined financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The accompanying combined statement of revenues and certain expenses has
been prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission, as described in Note 1, and is not intended
to be a complete presentation of the revenues and expenses of the Pauls
Portfolio.
In our opinion, the combined financial statement referred to above presents
fairly, in all material respects, the revenues and certain expenses of the Pauls
Portfolio for the year ended December 31, 1997, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
San Francisco, California
July 15, 1998
13
<PAGE>
GLENBOROUGH REALTY TRUST INCORPORATED
COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES OF
THE PAULS PORTFOLIO
For the Three Months Ended March 31, 1998 (unaudited)
and the Year Ended December 31, 1997
(in thousands)
Three Months
Ended Year Ended
March 31, 1998 December 31,
(unaudited) 1997
REVENUES...................................... $ 1,154 $ 2,872
CERTAIN EXPENSES
Operating................................... 100 245
Real estate taxes........................... 280 524
------ ------
380 769
------ ------
REVENUES IN EXCESS OF CERTAIN EXPENSES........ $ 774 $ 2,103
====== ======
The accompanying notes are an integral part of these statements.
14
<PAGE>
GLENBOROUGH REALTY TRUST INCORPORATED
NOTES TO COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES OF
THE PAULS PORTFOLIO
For the Three Months Ended March 31, 1998 (unaudited)
and the Year Ended December 31, 1997
1. Basis of Presentation and Summary of Significant Accounting Policies
Property Acquired -- The accompanying combined statements of revenues and
certain expenses include the operations (see "Basis of Presentation" below) of
the properties listed below (collectively, the "Pauls Portfolio") acquired by
the Company on July 7, 1998 from an unaffiliated third party:
Date of
Property City State Type Completion
One Gateway Center................Aurora CO Office November 1997
Gateway 1.........................Aurora CO Office/Flex August 1996
Gateway 6.........................Aurora CO Office/Flex March 1997
Gateway 8.........................Aurora CO Office/Flex May 1998
Gateway 2.........................Aurora CO Industrial August 1996
Gateway 3.........................Aurora CO Industrial December 1996
Gateway 4.........................Aurora CO Industrial October 1996
Gateway 7.........................Aurora CO Industrial March 1997
Gateway 9.........................Aurora CO Industrial December 1997
Gateway 10........................Aurora CO Industrial May 1998
Basis of Presentation -- The accompanying combined statements of revenues
and certain expenses are not intended to be a complete presentation of the
actual operations of the Pauls Portfolio for the periods presented. Amounts for
the year ended December 31, 1997 include the operations for the properties for
the period from the later of January 1, 1997 or date of completion to December
31, 1997. The Gateway 8 and 10 properties were not in operation as of March 31,
1998; thus, no revenues or expenses for these properties are included in the
accompanying combined statements of revenues and certain expenses for the year
ended December 31, 1997 and the three months ended March 31, 1998. Certain
expenses may not be comparable to the expenses expected to be incurred by the
Company in the future operations of the Pauls Portfolio; however, the Company is
not aware of any material factors relating to the Pauls Portfolio that would
cause the reported financial information not to be indicative of future
operating results. Excluded expenses consist of property management fees,
interest expense, depreciation and amortization and other costs not directly
related to the future operations of the Pauls Portfolio.
These combined financial statements have been prepared for the purpose of
complying with certain rules and regulations of the Securities and Exchange
Commission.
Revenue Recognition -- All leases are classified as operating leases.
Rental revenue is recognized as earned over the terms of the leases.
Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from these
estimates.
2. Leasing Activity
The minimum future rental revenues due under non-cancelable operating
leases in effect as of March 31, 1998, for the remainder of 1998 and annually
thereafter, are as follows (in thousands):
Year Amount
1998 (nine months)....................... $ 3,551
1999..................................... 4,831
2000..................................... 4,650
2001..................................... 4,085
2002..................................... 2,864
Thereafter............................... 5,453
Total.......................... $ 25,434
15
<PAGE>
GLENBOROUGH REALTY TRUST INCORPORATED
NOTES TO COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES OF
THE PAULS PORTFOLIO
For the Three Months Ended March 31, 1998 (unaudited)
and the Year Ended December 31, 1997
In addition to minimum rental payments, tenants pay reimbursements for
their pro rata share of specified operating expenses, which amounted to $288
(unaudited) for the three months ended March 31, 1998 and $649 for the year
ended December 31, 1997. Certain leases contain options to renew.
3. Mortgage Notes Payable
The following table presents unaudited information as of July 7, 1998 (the
acquisition date) regarding the notes payable assumed by the Company in
connection with the acquisition of the Pauls Portfolio. All such instruments are
first lien notes secured by the rental properties below and require monthly
principal and interest payments (dollars in thousands).
<TABLE>
<CAPTION>
Stated Interest Principal balance at
Property Name Rate Maturity Dates July 7, 1998
<S> <C> <C> <C> <C>
Gateway 1 7.75% 07/01/06 $ 2,440
Gateway 2 8.25% 11/01/06 3,920
Gateway 3, 4, 6, 7 7.57% 05/10/07 14,410
Gateway 8, 9, 10 and One Gateway Plaza 6.95% 07/01/08 20,530
Total $ 41,300
</TABLE>
16
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders of
GLENBOROUGH REALTY TRUST INCORPORATED:
We have audited the accompanying statement of revenues and certain expenses
of One and Three Pacific as defined in Note 1, for the year ended December 31,
1997. This financial statement is the responsibility of the management of the
Company. Our responsibility is to express an opinion on this financial statement
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The accompanying statement of revenues and certain expenses has been
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission, as described in Note 1, and is not intended
to be a complete presentation of the revenues and expenses of One and Three
Pacific.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the revenues and certain expenses of One and Three
Pacific for the year ended December 31, 1997, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
San Francisco, California
July 15, 1998
17
<PAGE>
GLENBOROUGH REALTY TRUST INCORPORATED
STATEMENTS OF REVENUES AND CERTAIN EXPENSES OF
ONE AND THREE PACIFIC
For the Three Months Ended March 31, 1998 (unaudited)
and the Year Ended December 31, 1997
(in thousands)
Three Months
Ended Year Ended
March 31, 1998 December 31,
(unaudited) 1997
REVENUES...................................... $ 731 $ 2,742
CERTAIN EXPENSES
Operating................................... 144 589
Real estate taxes........................... 86 362
------ ------
230 951
------ ------
REVENUES IN EXCESS OF CERTAIN EXPENSES........ $ 501 $ 1,791
====== ======
The accompanying notes are an integral part of these statements.
18
<PAGE>
GLENBOROUGH REALTY TRUST INCORPORATED
NOTES TO STATEMENTS OF REVENUES AND CERTAIN EXPENSES OF
ONE AND THREE PACIFIC
For the Three Months Ended March 31, 1998 (unaudited)
and the Year Ended December 31, 1997
1. Basis of Presentation and Summary of Significant Accounting Policies
Property Acquired -- The accompanying statements of revenues and certain
expenses include the operations (see "Basis of Presentation" below) of One and
Three Pacific, an office building, located in Omaha, Nebraska ("One and Three
Pacific"), acquired by the Company on May 20, 1998 from an unaffiliated third
party.
Basis of Presentation -- The accompanying statements of revenues and
certain expenses are not intended to be a complete presentation of the actual
operations of One and Three Pacific for the periods presented. Certain expenses
may not be comparable to the expenses expected to be incurred by the Company in
the future operations of One and Three Pacific; however, the Company is not
aware of any material factors relating to One and Three Pacific that would cause
the reported financial information not to be indicative of future operating
results. Excluded expenses consist of property management fees, interest
expense, depreciation and amortization and other costs not directly related to
the future operations of One and Three Pacific.
These financial statements have been prepared for the purpose of complying
with certain rules and regulations of the Securities and Exchange Commission.
Revenue Recognition -- All leases are classified as operating leases.
Rental revenue is recognized as earned over the terms of the leases.
Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from these
estimates.
2. Leasing Activity
The minimum future rental revenues due under non-cancelable operating
leases in effect as of March 31, 1998, for the remainder of 1998 and annually
thereafter, are as follows (in thousands):
Year Amount
1998 (nine months)....................... $ 1,328
1999..................................... 1,652
2000..................................... 902
2001..................................... 470
2002..................................... 260
2003..................................... 135
Total.......................... $ 4,747
In addition to minimum rental payments, tenants pay reimbursements for
their pro rata share of specified operating expenses, which amounted to $269
(unaudited) for the three months ended March 31, 1998 and $988 for the year
ended December 31, 1997. Certain leases contain options to renew.
19
<PAGE>
PRO FORMA FINANCIAL INFORMATION
The following unaudited, pro forma, condensed consolidated balance sheet as
of March 31, 1998 has been prepared to reflect: (i)all property acquisitions
completed in 1998 through the date hereof; (ii) a pending acquisition; (iii)
loans made by the Company to enter into a development alliance; (iv) debt
assumed and borrowings under a $150 million bridge loan ("the Bridge Loan") and
the Company's $250 million unsecured acquisition credit facility ("the
Acquisition Credit Facility"); (v) repayment of a portion of the Bridge Loan;
and (vi) the sale of certain properties and the use of sales proceeds therefrom
for the repayment of related mortgage debt and for the funding of certain
property acquisitions as if each of such transactions had been completed on
March 31, 1998.
The following unaudited, pro forma, condensed consolidated statements of
operations for the three months ended March 31, 1998 and for the year ended
December 31, 1997 have been prepared to reflect: (i) all property acquisitions
completed in 1997 and in 1998 through the date hereof; (ii) a pending
acquisition; (iii) loans made by the Company to enter into a development
alliance; (iv) the March 1998 Note Offering, the January 1998 Preferred Stock
Offering, the October 1997 Common Stock Offering, the July 1997 Common Stock
Offering and the March 1997 Common Stock Offering and the application of the
respective net proceeds therefrom; (v) debt assumed and borrowings under the
Bridge Loan and the Acquisition Credit Facility; (vi) the repayment of certain
mortgage and other loans; (vii) the sale of certain properties and use of sales
proceeds therefrom for the repayment of related mortgage debt and the funding of
certain property acquisitions; (viii) the collection of a mortgage loan
receivable; (ix) the sale of various properties held by the partnerships managed
by Glenborough Corporation to the Company or to third parties; and (ix) the
transfer of management of the Company's hotel portfolio from Glenborough Hotel
Group to a third party, as if each of such transactions had been completed on
January 1, 1997.
The Company is in the process of disposing its hotel portfolio, after
concluding in 1997 that the limited service hotel sector did not significantly
enhance the Company's portfolio diversification. In June 1998, the Company sold
two hotel properties, and has entered into contractual arrangements providing
for the leasing and anticipated sale in December 1998 of three other hotel
properties. The remaining hotel has been leased for 30 months until a mortgage
lock-out period expires, at which time the Company intends to market for sale
this hotel property. The hotel sales will be structured as tax-deferred
exchanges to avoid recognition of taxable gains. As explained in Note 5 to the
pro forma, condensed consolidated statements of operations for the three months
ended March 31, 1998 and the year ended December 31, 1997, only those hotels
actually sold as of the date of this filing have been eliminated from the pro
forma results of operations, as the Company would not be able to dispose of the
others at this time.
These unaudited, pro forma, condensed consolidated financial statements
should be read in conjunction with the financial statements and related notes of
the Company in the Company's reports filed under the Exchange Act. In the
opinion of management, all adjustments necessary to reflect the effects of the
transactions have been made.
The pro forma, condensed consolidated financial information is unaudited
and is not necessarily indicative of the results of which would have occurred if
the transactions had been consummated in the periods presented, or on any
particular date in the future, nor does it purport to represent the financial
position, results of operations, or cash flows for future periods.
20
<PAGE>
<TABLE>
<CAPTION>
GLENBOROUGH REALTY TRUST INCORPORATED
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of March 31, 1998
(unaudited, dollars in thousands)
Completed Pending Repayment Other
Historical(1) Transactions(2) Acquisition(3) of Debt(4) Adjustments(5) Pro Forma
ASSETS
<S> <C> <C> <C> <C> <C> <C>
Rental property, net.......... $1,303,781 $ 464,610 $ 12,350 $ -- $ (8,529) $ 1,772,212
Investment in Associated 10,752 -- -- -- -- 10,752
Companies.......................
Mortgage loans receivable, net 3,740 -- -- -- 37,949 41,689
Notes receivable.............. -- -- -- -- 12,078 12,078
Cash and cash equivalents..... 9,816 (9,119) -- (3,573) 3,876 1,000
Other Assets.................. 34,056 500 -- -- 250 34,806
Total Assets............ $1,362,145 $ 455,991 $ 12,350 $ (3,573) $ 45,624 $ 1,872,537
LIABILITIES
Mortgage Loans................ $ 242,083 $ 253,295 $ -- $ -- $ (1,736) $ 493,642
Unsecured Senior Notes........ 150,000 -- -- -- 150,000
Acquisition Credit Facility... 50,332 43,828 12,350 -- 1,593 108,103
Bridge Loan................... -- 105,166 -- (3,573) 44,834 146,427
Other liabilities............. 18,881 1,197 -- -- -- 20,078
Total Liabilities....... 461,296 403,486 12,350 (3,573) 44,691 918,250
MINORITY INTEREST............... 52,531 49,116 -- -- -- 101,647
STOCKHOLDERS' EQUITY
Common stock.................. 31 -- -- -- -- 31
Preferred stock............... 11 -- -- -- -- 11
Additional paid--in capital... 862,962 3,389 -- -- -- 866,351
Deferred compensation......... (249) -- -- -- -- (249)
Retained earnings (deficit)... (14,437) -- -- -- 933 (13,504)
Total Equity............ 848,318 3,389 -- -- 933 852,640
Total liabilities and
Stockholders' Equity $1,362,145 $ 455,991 $ 12,350 $ (3,573) $ 45,624 $ 1,872,537
</TABLE>
21
<PAGE>
GLENBOROUGH REALTY TRUST INCORPORATED
NOTES AND ADJUSTMENTS TO PRO FORMA
CONDENSED CONSOLIDATED BALANCE SHEET
As of March 31, 1998
(unaudited)
1. Reflects the historical consolidated balance sheet of the Company as of March
31, 1998, which includes the acquisitions of the following properties and
property portfolios since January 1, 1997:
Purchase Price
Property (in 000's) Date Acquired
BGK Portfolio.................. $ 50,200 March 27, 1998
400 El Camino Real............. 34,700 March 6, 1998
Capitol Center................. 12,300 February 27, 1998
Windsor Portfolio.............. 423,200 January 8, 1998
Marion Bass Portfolio.......... 58,300 December 31, 1997
Opus Portfolio................. 27,900 December 22, 1997
Thousand Oaks.................. 51,300 December 13, 1997
Bryant Lake.................... 9,400 November 4, 1997
Copley Properties.............. 63,700 October 24, 1997
Citibank Park Property......... 23,300 September 30, 1997
Advance Properties............. 103,000 September 12, 1997
T. Rowe Price Properties....... 146,800 September 12, 1997
Centerstone Property........... 30,400 July 1, 1997
CRI Properties................. 14,800 June 18, 1997
CIGNA Properties............... 45,400 April 29, 1997
E&L Properties................. 22,200 April 18, 1997
Riverview Property............. 20,500 April 14, 1997
Lennar Properties.............. 23,200 April 8, 1997
Scottsdale Hotel............... 12,100 February 28, 1997
Also reflects the sale of sixteen retail, one residential and three industrial
properties during 1997 and through March 31, 1998 for an aggregate sales price
of approximately $42.3 million.
Certain deposits for properties acquired after March 31, 1998, have been
reclassified to cash from investments in real estate to reflect the flow of
funds as the related acquisitions are completed on a pro forma basis.
2. Reflects the completed acquisitions of the following properties and property
portfolios since March 31, 1998:
Purchase Price
(in 000's) Date Acquired
Pauls Portfolio............. $ 54,940 July 7, 1998
Galesi Portfolio............ 275,820 June 30, 1998
Donau/Gruppe Portfolio...... 28,550 June 30, 1998
Covance..................... 16,500 June 23, 1998
One and Three Pacific....... 20,100 May 20, 1998
Eaton & Lauth Portfolio..... 68,700 April 22, 1998
These acquisitions were funded with approximately $9.8 million of cash,
assumption of approximately $253.3 million of mortgage debt, approximately
$105.2 million of the proceeds of the Bridge Loan, approximately $43.8 million
of borrowings under the Acquisition Credit Facility, the issuance of 1,898,516
units of Glenborough Properties, L.P. ("the Operating Partnership") with an
aggregate approximate value of $49.1 million (based on an average per unit value
of $25.87, with values ranging from $25.00 to $26.56) and the issuance of
135,566 shares of Common Stock of the Company with an aggregate approximate
value of $3.4 million (based on a per share value of $25.00).
22
<PAGE>
GLENBOROUGH REALTY TRUST INCORPORATED
NOTES AND ADJUSTMENTS TO PRO FORMA
CONDENSED CONSOLIDATED BALANCE SHEET (Continued)
As of March 31, 1998
(unaudited)
The debt assumed in connection with the acquisitions of the Eaton & Lauth
Portfolio, the Galesi Portfolio, the Donau/Gruppe Portfolio and the Pauls
Portfolio bear interest at rates ranging from 7.41% to 8.82% and mature between
1999 and 2007. The debt secured by the Galesi Portfolio totaling $169,440
includes an unamortized premium totaling approximately $3,118 which reduces the
effective interest rate on those instruments to 6.75%.
The Bridge Loan has a term of six months and bears interest at a rate of LIBOR
plus 1.3% (assumed to be 6.99%, the rate prevailing on August 11, 1998, for the
three months ended March 31, 1998 and for the year ended December 31, 1997). The
Acquisition Credit Facility has a three year term and bears interest on a
sliding scale ranging from LIBOR plus 1.1% to LIBOR plus 1.3% (assumed to be
6.89%, the rate prevailing on August 11, 1998, for the three months ended March
31, 1998 and for the year ended December 31, 1997).
In connection with obtaining the Bridge Loan, the Company paid fees of $500,000
which are shown as a reduction of cash and an increase in other assets.
Tenant security deposits of approximately $1.2 million related to these
acquisitions are reflected as cash and other liabilities.
3. Reflects the pending acquisition of the Executive Drive Property for a total
purchase price of $12,350. This acquisition is expected to be funded with
borrowings on the Acquisition Credit Facility.
The Company also previously entered into an agreement to acquire all of the real
estate assets of Prudential-Bache/Equitec Real Estate Partnership, a California
limited partnership. The Company believes the completion of this acquisition in
the near future is not probable.
4. Reflects the partial repayment of the Bridge Loan with available cash.
5. Reflects the sale of an office/flex property in April 1998 to an unaffiliated
third party for approximately $3.6 million and two hotels in June 1998 to
unaffiliated third parties for approximately $6.1 million. In connection with
the sale of one of the hotels, the Company received a note from the buyer in the
amount of $3,600,000 bearing interest at 9.0% and due December 1998. These sales
generated total gains of approximately $933,000. The proceeds were used in part
to pay off related mortgage indebtedness.
Also reflects loans totaling approximately $46.4 million made by the Company to
enter into a development alliance with the seller of the Pauls Portfolio. The
loans were funded with a portion of the proceeds from the Bridge Loan and
borrowings under the Acquisition Credit Facility. Of these loans, $34.3 million
bear interest at 13.0% and the remainder of the loans bear interest at 9.0%. No
recognition has been given to either the interest income on these loans or the
related interest expense on a pro forma basis as these loans have been made by
the Company for development purposes.
23
<PAGE>
<TABLE>
<CAPTION>
GLENBOROUGH REALTY TRUST INCORPORATED
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 1998
(unaudited, dollars in thousands, except share data)
Other
Completed Pending Debt Trans- Adjust- Pro
Historical(1) Transactions(2) Acquisition (3) actions(4) ments(5) Forma
REVENUES
<S> <C> <C> <C> <C> <C> <C>
Rental revenue........ $ 45,963 $17,529 $ 268 $ - $ (888) $ 62,872
Equity in earnings of
Associated Companies 352 - - - (270) 82
Fees, interest and
other income....... 830 - - - 81 911
Total Revenue. 47,145 17,529 268 - (1,077) 63,865
OPERATING EXPENSES
Operating expenses.... 14,324 6,553 - - (448) 20,429
General and
administrative..... 2,222 200 - - 38 2,460
Depreciation and
amortization....... 10,009 2,988 82 - (229) 12,850
Interest expense...... 9,145 7,102 213 (845) (381) 15,235
Total operating
expenses.... 35,700 16,843 295 (845) (1,020) 50,974
Income from
operations before
minority interest.. 11,445 686 (27) 845 (57) 12,891
Minority Interest (678) - - - (31) (709)
Net income before
Preferred Stock
Distributions(6)... 10,767 686 (27) 845 (88) 12,182
Preferred Stock
Distributions...... (3,910) - - - (1,660) (5,570)
Net income allocable
to common stockholders $ 6,857 $ 686 $ (27) $ 845 $ (1,748) $ 6,612
Basic net income per
common share (7) .... $ 0.22 $ 0.21
Basic weighted average
common shares
outstanding 31,548,706 31,685,322
Diluted income per
common share(7)....... $ 0.22 $ 0.20
Diluted weighted
average common shares
outstanding.......... 34,372,364 36,390,853
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
GLENBOROUGH REALTY TRUST INCORPORATED
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1997
(unaudited, dollars in thousands, except share data)
Other
Completed Pending Debt Trans- Adjust- Pro
Historical(1) Transactions(2)Acquisition (3) actions(4) ments(5) Forma
REVENUES
<S> <C> <C> <C> <C> <C> <C>
Rental revenue........... $ 61,393 $ 177,477 $1,072 $ - $ (4,438) $ 235,504
Equity in earnings of
Associated Companies.. 2,743 - - - (337) 2,406
Fees, interest and other
income................ 2,521 - - - 274 2,795
Total Revenue.... 66,657 177,477 1,072 - (4,501) 240,705
OPERATING EXPENSES
Operating expenses....... 18,958 64,751 - - (2,005) 81,704
General and administrative 3,319 2,069 170 - 183 5,741
Depreciation and
amortization.......... 14,873 34,439 329 - (736) 48,905
Interest expense......... 9,668 40,937 851 10,225 (1,575) 60,106
Total operating
expenses....... 46,818 142,196 1,350 10,225 (4,133) 196,456
Income from operations
operations before
minority interest..... 19,839 35,281 (278) (10,225) (368) 42,249
Minority Interest........ (1,119) - - - (1,025) (2,144)
Net income before
Preferred Stock
Distributions (6)..... 18,720 35,281 (278) (10,225) (1,393) 42,105
Preferred Stock
Distributions......... - - - - (22,281) (22,281)
Net income allocable to
common stock.......... $ 18,720 $ 35,281 $ (278) $(10,225) $ (23,674) $ 19,824
Basic net income per
common share(7)....... $ 1.04 $ 0.63
Basic weighted average
common shares
outstanding........... 17,982,817 31,685,322
Diluted income per
common share(7)....... $ 1.02 $ 0.60
Diluted weighted
average common shares
outstanding........... 19,517,543 36,390,853
</TABLE>
25
<PAGE>
GLENBOROUGH REALTY TRUST INCORPORATED
NOTES AND ADJUSTMENTS TO PRO FORMA
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 1998 and
For the Year Ended December 31, 1997
(unaudited, dollars in thousands)
1. Reflects the historical consolidated operations of the Company for the three
months ended March 31, 1998, excluding gains on the sale of property totaling
$1,446, and for the year ended December 31, 1997, excluding the gains on the
sale of property and the collection of a note receivable totaling $1,491 and an
extraordinary loss on refinancing of debt of $843. All such gains and losses are
non recurring.
2. Reflects the historical operations of the Pauls Portfolio, the Galesi
Portfolio, the Donau/Gruppe Portfolio, Covance, One and Three Pacific, the Eaton
& Lauth Portfolio, the BGK Portfolio, 400 El Camino Real, Capitol Center, and
the Windsor Portfolio, (collectively the "Recent Acquisitions") for the three
months ended March 31, 1998, or portion of 1998 prior to acquisition.
<TABLE>
<CAPTION>
Three Months Ended March 31, 1998
(or portion of 1998 prior to acquisition)
One and Eaton
Pauls Galesi Donau/Gruppe Three & Lauth
Portfolio Portfolio Portfolio Covance Pacific Portfolio
<S> <C> <C> <C> <C> <C> <C>
Revenues................$ 1,154 $10,914 $727 $ 256 $ 731 $2,358
Operating expenses....... (380) (4,688) -- -- (230) (697)
$ 774 $6,226 $727 $ 256 $ 501 $1,661
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended March 31, 1998
(or portion of 1998 prior to acquisition)
BGK 400 El Capitol Windsor Combined
Portfolio Camino Real Center Portfolio Total
<S> <C> <C> <C> <C> <C>
Revenues................... $ 70 $207 $ 376 $ 736 $17,529
Operating expenses......... (26) (91) (162) (279) (6,553)
$ 44 $116 $ 214 $ 457 $10,976
</TABLE>
Also reflects the historical operations of the Recent Acquisitions and the 1997
Acquisitions for the year ended December 31, 1997 or the portion of 1997 prior
to acquisition.
<TABLE>
<CAPTION>
Year Ended December 31, 1997
(or portion of 1997 prior to acquisition)
One and Eaton
Pauls Galesi Donau/Gruppe Three & Lauth
Portfolio Portfolio Portfolio Covance Pacific Portfolio
<S> <C> <C> <C> <C> <C> <C>
Revenues................ $2,872 $35,542 $2,907 $ 1,022 $ 2,742 $ 9,362
Operating expenses...... (769) (16,646) -- -- (951) (3,034)
$2,103 $18,896 $2,907 $ 1,022 $ 1,791 $ 6,328
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31, 1997
(or portion of 1997 prior to acquisition)
BGK 400 El Capitol Windsor 1997 Combined
Portfolio Camino Real Center Portfolio Acquisitions Total
<S> <C> <C> <C> <C> <C> <C>
Revenues................ $ 6,157 $ 3,019 $ 2,369 $ 53,732 $ 57,753 $177,477
Operating expenses...... (2,120) (1,331) (1,018) (20,402) (18,480) (64,751)
$ 4,037 $ 1,688 $ 1,351 $ 33,330 $ 39,273 $112,726
</TABLE>
All properties in the Donau/Gruppe Portfolio and Covance are single tenant
buildings under triple net leasing arrangements for which the tenant is
responsible for the payment of all operating expenses.
26
<PAGE>
The results of operations of the Pauls Portfolio for the year ended December 31,
1997 include the operations for certain properties from the later of January 1,
1997 or date of completion to December 31, 1997. Two properties in the Pauls
Portfolio were not completed until May 1998; therefore, the results of
operations of these properties are not included in the periods presented above.
Also, reflects estimated annual depreciation and amortization, based upon
estimated useful lives of 30 years on a straight-line basis and estimated
general and administrative expenses related to these acquisitions.
Also, reflects the estimated pro forma interest on the mortgage debt assumed and
the Bridge Loan in connection with the Recent Acquisitions and the 1997
Acquisitions, and the related pro forma advances under the Acquisition Credit
Facility. The estimated interest on the mortgage loans assumed is based upon
rates ranging from 6.75% to 9.25% including adjustments to interest expense for
premiums recorded on certain mortgages on the date of assumption (See Note 2 to
accompanying Pro Forma Condensed Consolidated Balance Sheet as of March 31,
1998). The Bridge Loan bears interest at a rate of LIBOR plus 1.3% (assumed to
be 6.99% for the three months ended March 31, 1998 and for the year ended
December 31, 1997, the current prevailing rate as of August 11, 1998). The
Acquisition Credit Facility bears interest on a sliding scale ranging from LIBOR
plus 1.1% to LIBOR plus 1.3% (assumed to be 6.89% for the three months ended
March 31, 1998 and for the year ended December 31, 1997, the current prevailing
rate as of August 11, 1998). A 1/8% change in LIBOR would cause the interest
expense on the outstanding pro forma balances of the Bridge Loan and the
Acquisition Credit Facility as of March 31, 1998 to change by $221 on an
annualized basis.
3. Reflects the historical operations of the pending acquisition of the
Executive Drive Property for the three months ended March 31, 1998 and for the
year ended December 31, 1997, respectively.
Three Months Ended Year Ended
March 31, 1998 December 31, 1997
Revenues.................. $268 $ 1,072
Operating expenses........ -- --
$268 $ 1,072
The Executive Drive property is a single tenant building under a triple net
leasing arrangement for which the tenant is responsible for the payment of all
operating expenses.
Also, reflects estimated annual depreciation and amortization, based upon
estimated useful lives of 30 years on a straight-line basis and estimated
general and administrative expenses related to this acquisition.
Also, reflects the estimated interest on advances under the Acquisition Credit
Facility which bear interest on a sliding scale ranging from LIBOR plus 1.1% to
LIBOR plus 1.3% (assumed to be 6.89% for the three months ended March 31, 1998
and for the year ended December 31, 1997, the current prevailing rate as of
August 11, 1998).
4. Reflects the estimated pro forma interest and the related effect on loan fee
amortization expense on the repayment of various borrowings made by the Company
during periods subsequent to January 1997 including the Company's previous line
of credit, a $114,000 interim loan, a $150,000 interim loan, certain mortgage
debt, the Bridge Loan, the Unsecured Senior Notes and a portion of the
Acquisition Credit Facility for each of the periods presented. Also reflects the
pro forma unused facility fees related to the Acquisition Credit Facility for
each of the periods presented. These transactions result in net changes to
interest expense consisting of the following:
27
<PAGE>
Three Months Ended Year Ended
March 31, 1998 December 31, 1997
Interest differential................... $ 2,415 $ 16,062
Interest on repayments.................. (3,067) (6,869)
Amortization of new loan fees........... 62 924
Amortization of old loan fees........... (308) (105)
Unused Acquisition Credit Facility fees. 53 213
$ (845) $ 10,225
The Notes bear interest at a fixed rate of 7.625% and have a term of seven
years, unless previously redeemed.
The amortization of the new loan fees is based upon total estimated fees and
costs of approximately $4,358 over the respective terms of the related
Acquisition Credit Facility, the Bridge Loan and the Unsecured Senior Notes. The
unused Acquisition Credit Facility fees are based upon 0.15% of the pro forma
unused Acquisition Credit Facility capacity as of March 31, 1998 of
approximately $141,897.
5. Reflects the following adjustments:
<TABLE>
<CAPTION>
For the Three
Months Ended For the Year Ended
March 31, 1998 December 31, 1997
<S> <C> <C>
Rental Revenue
Elimination of revenues of sold properties..... $(888) $(4,438)
====== =======
Equity in earnings of
Associated Companies
Elimination of fees earned by GC and GHG... $(270) $ (337)
====== =======
Fees, interest and other income
Reduction of interest due to collection of
Hovpark note receivable at 8% per annum..... $ -- $ (50)
Interest on mortgage note receivable 81 324
------ -------
Net increase in fees, interest and other income $ 81 $ 274
====== =======
Operating expenses
Elimination of expenses of sold properties..... $(448) $ (2031)
Additional expenses of the E&L Properties...... -- 26
------ -------
Net decrease in operating expenses......... $(448) $(2,005)
====== =======
General and administrative expenses
Absorption by the Company of costs previously
reimbursed by GC.............................. $ 38 $ 183
====== =======
Depreciation and amortization expense
Elimination of expenses of sold properties..... $(229) $ (736)
====== =======
Interest expense and loan fee amortization expense
Reduction due to repayment of mortgage debt from
proceeds from sold properties.................. $(137) $ (600)
Reduction for capitalized interest (244) (975)
------ -------
Net decrease in interest expense $(381) $(1,575)
====== =======
</TABLE>
Excludes the effects of the sale of the Shannon Crossing Center and Country
Suites hotels in Tuscon, Ontario and Arlington, which will not occur until late
1998 due to provisions of a secured borrowing preventing an earlier sale.
28
<PAGE>
6. The pro forma taxable income for the Company for the three months ended March
31, 1998 and for the year ended December 31, 1997 is calculated as follows:
For the Three
Months Ended For the Year Ended
March 31, 1998 December 31, 1997
Pro forma net income from operations....... $ 6,612 $ 19,824
Add: GAAP basis depreciation and
amortization....................... 12,850 48,905
Less: Tax basis depreciation and
amortization....................... (9,452) (37,812)
Other book-to-tax differences............ (458) (3,144)
Pro forma taxable income................. $ 9,552 $ 27,773
7. Pro forma basic and diluted weighted average common shares outstanding are
determined by assuming all common shares, options and convertible units of
Operating Partnership interest outstanding at March 31, 1998, or issued
subsequent to that date or deemed to be probable of issuance on August 13, 1998,
were issued and outstanding on January 1, 1997. The components of pro forma
basic and diluted weighted average common shares outstanding are as follows:
Common shares outstanding at March 31, 1998 31,549,756
Common shares issued or to be issued in
connection with the acquisition of property 135,566
------------
Proforma basic weighted average common
shares outstanding 31,685,322
Convertible units of Operating Partnership
Interest outstanding at March 31, 1998 2,369,283
Convertible units of Operating Partnership
Interest issued or to be issued in
connection with the acquisition of property 1,898,516
Stock options 437,732
------------
Proforma diluted weighted average common
shares outstanding 36,390,853
============
Pro forma basic net income per common share is computed by dividing pro forma
basic weighted average common shares outstanding into pro forma net income
allocable to common stock. Pro forma diluted net income per common share is
computed by dividing pro forma diluted weighted average common shares
outstanding into net income before minority interest, but after preferred stock
distributions. No preferred stock is assumed to be converted as its effect is
anti-dilutive in all periods presented.
29
<PAGE>
Exhibit 10.1
Loan No. 2593
TERM CREDIT AGREEMENT
AMONG
GLENBOROUGH PROPERTIES, L.P.,
A CALIFORNIA LIMITED PARTNERSHIP,
AS BORROWER,
AND
WELLS FARGO BANK, NATIONAL ASSOCIATION
AND
THOSE ASSIGNEES
BECOMING PARTIES HERETO PURSUANT
TO SECTION 12.19,
AS LENDERS,
AND
WELLS FARGO BANK, NATIONAL ASSOCIATION,
AS AGENT
Dated as of June 29, 1998
30
<PAGE>
LIST OF EXHIBITS
Exhibits:
A - Form of Assignment and Assumption
B - Form of Loan Notes
C - Form of Notice of Borrowing
D - Form of Fixed Rate Notice
E - Form of Solvency Certificate
31
<PAGE>
TERM CREDIT AGREEMENT
THIS TERM CREDIT AGREEMENT is dated as of June 29, 1998 (as amended,
supplemented or modified from time to time, the "Agreement") and is among
GLENBOROUGH PROPERTIES, L.P., a California limited partnership ("Borrower"),
each of the Lenders, as hereinafter defined, and WELLS FARGO BANK, NATIONAL
ASSOCIATION ("Wells Fargo"), in its capacity as agent acting in the manner
described in Article XI and as a Lender.
RECITALS
WHEREAS, Borrower has previously entered into (among other existing credit
facilities) a $250,000,000 unsecured revolving credit facility (the "Revolving
Credit Agreement") with Wells Fargo and certain other lenders;
WHEREAS, Borrower has requested that Wells Fargo extend an unsecured short
term bridge loan facility, available in one or more advances (but on a
non-revolving basis), to Borrower, the proceeds of which will be used in
accordance with the provisions of this Agreement, and Wells Fargo is willing to
extend the requested facility on the terms and conditions set forth herein;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Certain Defined Terms. The following terms used in this Agreement shall have the
following meanings (such meanings to be applicable, except to the extent
otherwise indicated in a definition of a particular term, both to the singular
and the plural forms of the terms defined):
"Accountants" means Arthur Andersen LLP, any other "big six" accounting
firm or another firm of certified public accountants of national standing
selected by Borrower and acceptable to Agent.
"Affiliates" as applied to any Person, means any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. For purposes of this definition, "control" (including, with correlative
meanings, the terms "controlling", "controlled by" and "under common control
with"), as applied to any Person, means (a) the possession, directly or
indirectly, of the power to vote ten percent (10%) or more of the securities
having voting power for the election of directors of such Person or otherwise to
direct or cause the direction of the management and policies of that Person,
whether through the ownership of voting securities or by contract or otherwise,
or (b) the ownership of a general partnership interest or a limited partnership
interest representing ten percent (10%) or more of the outstanding limited
partnership interests of such Person.
"Agent" means Wells Fargo in its capacity as agent for the Lenders under
this Agreement, and shall include any successor Agent appointed pursuant hereto
and shall be deemed to refer to Wells Fargo in its individual capacity as a
Lender where the context so requires.
32
<PAGE>
"Assignment and Assumption" means an Assignment and Assumption in the form
of Exhibit A hereto (with blanks appropriately filled in) delivered to Agent in
connection with each assignment of a Lender's interest under this Agreement
pursuant to Section 12.19.
"Associated Companies" means Glenborough Corporation, a California
corporation, and Glenborough Hotel Group, a Nevada corporation.
"Base Rate" means, on any day, the higher of (a) the base rate of interest
per annum established from time to time by Agent at its principal office in San
Francisco, California, and designated as its prime rate as in effect on such
day, and (b) one-half of one percent (0.50%) per annum plus the Federal Funds
Rate in effect on such day.
"Base Rate Loans" means those Loans, if any, bearing interest at the Base
Rate.
"Borrower" means Glenborough Properties, L.P., together with, in the case
of each representation (unless the context herein otherwise specifically refers
solely to Glenborough Properties, L.P.) and covenant in this Agreement, all
subsidiaries.
"Borrowing" means a borrowing under the Facility.
"Business Day" means (a) with respect to any Borrowing, payment or rate
determination of LIBOR Loans, a day, other than a Saturday or Sunday, on which
Agent is open for business in San Francisco and on which dealings in Dollars are
carried on in the London interbank market, and (b) for all other purposes any
day excluding Saturday, Sunday and any day which is a legal holiday under the
laws of the State of California, or is a day on which banking institutions
located in California are required or authorized by law or other governmental
action to close.
"Closing Date" means June 30, 1998.
"Commission" means the Securities and Exchange Commission.
"Commitment" means, with respect to any Lender, such Lender's Pro Rata
Share of the Facility, which amount shall not exceed the principal amount set
out under such Lender's name under the heading "Loan Commitment" on the
signature pages attached to this Agreement or as set forth on an Assignment and
Assumption executed by such Lender, as assignee.
"Contractual Obligation," as applied to any Person, means any provision of
any securities issued by that Person or any indenture, mortgage, deed of trust,
lease, contract, undertaking, document or instrument to which that Person is a
party or by which it or any of its properties is bound, or to which it or any of
its properties is subject (including, without limitation, any restrictive
covenant affecting such Person or any of its properties).
"Court Order" means any judgment, writ, injunction, decree, rule or
regulation of any court or Governmental Authority binding upon or applicable the
Person in question.
"Defaulting Lender" means any Lender which fails or refuses to perform its
obligations under this Agreement within the time period specified for
performance of such obligation or, if no time frame is specified, if such
failure or refusal continues for a period of five (5) Business Days after notice
from Agent.
"Dollars" and "$" means the lawful money of the United States of America.
"Eligible Assignee" means (a) (i) (A) a commercial bank organized under the
laws of the United States or any state thereof; (B) a savings and loan
association or savings bank organized under the laws of the
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United States or any state thereof; or (C) a commercial bank organized under the
laws of any other country or a political subdivision thereof, provided that (x)
such bank is acting through a branch or agency located in the United States, or
(y) such bank is organized under the laws of a country that is a member of the
Organization for Economic Cooperation and Development or a political subdivision
of such country; that (ii) in each case, is (A) reasonably acceptable to Agent
and Borrower, and (B) has total assets in excess of $10,000,000,000 and a rating
on its (or its parent's) senior unsecured debt obligations of at least BBB by
one of the Rating Agencies (as such term is defined in the Revolving Credit
Agreement); or (b) any Lender or Affiliate of any Lender; provided that no
Affiliate of Borrower shall be an Eligible Assignee.
"Event of Default" means any of the occurrences set forth in Article X
after the expiration of any applicable grace period expressly provided therein.
"Facility" means the loan facility of One Hundred Fifty Million Dollars
($150,000,000) described in Section 2.1(a).
"FDIC" means the Federal Deposit Insurance Corporation or any successor
thereto.
"Federal Funds Rate" means, for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted average of the rates
on overnight Federal Funds transactions with members of the Federal Reserve
System arranged by Federal Funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day on such
transactions received by Agent from three Federal Funds brokers of recognized
standing selected by Agent.
"Federal Reserve Board" means the Board of Governors of the Federal Reserve
System or any governmental authority succeeding to its functions.
"Financial Statements" has the meaning given to such term in Section
6.1(b).
"FIRREA" means the Financial Institutions Recovery, Reform and Enforcement
Act of 1989, as amended from time to time.
"Fixed Rate Notice" means, with respect to a LIBOR Loan pursuant to Section
2.1(b), a notice substantially in the form of Exhibit D.
"Fixed Rate Price Adjustment" has the meaning given to such term in Section
2.4(h)(iii).
"Funding Date" means, with respect to any Loan made after the Closing Date,
the date of the funding of such Loan.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board, or in such other statements by such
other entity as may be in general use by significant segments of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
"Governmental Authority" means any nation or government, any federal,
state, local, municipal or other political subdivision thereof or any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guaranty" means the guaranty of payment and performance executed by the
REIT in favor of Agent and the Lenders.
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"Interest Period" means, relative to any LIBOR Loans comprising part of the
same Borrowing, the period beginning on (and including) the date on which such
LIBOR Loans are made as, or converted into, LIBOR Loans, and ending on (but
excluding) the day which numerically corresponds to such date thirty (30) days
thereafter, or such other date as Borrower and Agent may agree; provided,
however, that:
(a) if such Interest Period would otherwise end on a day which is not a
Business Day, such Interest Period shall end on the next following Business Day;
(b) if the Funding Date of such Borrowing falls on any day other than the
last day of the Interest Period then applicable to the outstanding Loans, the
Interest Period applicable to such Borrowing shall end on the last day of such
then-current Interest Period; and
(c) no Interest Period may end later than the then applicable Maturity
Date.
"Interim Period" means the period commencing on March 31, 1998, and ending
on the Closing Date.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as amended
from time to time hereafter, and any successor statute.
"IRS" means the Internal Revenue Service and any Person succeeding to the
functions thereof.
"Lender Taxes" has the meaning given to such term in Section 2.4(g).
"Lenders" means Wells Fargo and any other bank, finance company, insurance
or other financial institution which is or becomes a party to this Agreement by
execution of a counterpart signature page hereto or an Assignment and
Assumption, as assignee. At all times that there are no Lenders other than Wells
Fargo, the terms "Lender" and "Lenders" means Wells Fargo in its individual
capacity. With respect to matters requiring the consent to or approval of all
Lenders at any given time, all then existing Defaulting Lenders will be
disregarded and excluded, and, for voting purposes only, "all Lenders" shall be
deemed to mean "all Lenders other than Defaulting Lenders".
"Liabilities and Costs" means all claims, judgments, liabilities,
obligations, responsibilities, losses, damages (including lost profits),
punitive or treble damages, costs, disbursements and expenses (including,
without limitation, reasonable attorneys', experts' and consulting fees and
costs of investigation and feasibility studies), fines, penalties and monetary
sanctions, interest, direct or indirect, known or unknown, absolute or
contingent, past, present or future.
"LIBOR" means, relative to any Interest Period for any LIBOR Loan included
in any Borrowing, the per annum rate (reserve adjusted as hereinbelow provided)
of interest quoted by Agent, rounded upwards, if necessary, to the nearest
one-sixteenth of one percent (0.0625%) at which Dollar deposits in immediately
available funds are offered by Agent to leading banks in the Eurodollar
interbank market at approximately 9:00 A.M. San Francisco time two (2) Business
Days prior to the beginning of such Interest Period, for delivery on the first
day of such Interest Period for a period approximately equal to such Interest
Period (or, if not available, for a period of 30 days) and in an amount equal or
comparable to the LIBOR Loan to which such Interest Period relates. The
foregoing rate of interest shall be reserve adjusted by dividing LIBOR by one
(1.00) minus the LIBOR Reserve Percentage, with such quotient to be rounded
upward to the nearest whole multiple of one-hundredth of one percent (0.01%).
All references in this Agreement or other Loan Documents to LIBOR include the
aforesaid reserve adjustment.
"LIBOR Loan" means a Loan bearing interest, at all times during an Interest
Period applicable to such Loan, at a fixed rate of interest determined by
reference to LIBOR.
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"LIBOR Office" means, relative to any Lender, the office of such Lender
designated as such on the counterpart signature pages hereto or such other
office of a Lender as designated from time to time by notice from such Lender to
Agent, whether or not outside the United States, which shall be making or
maintaining LIBOR Loans of such Lender.
"LIBOR Rate Margin" means 1.30% per annum.
"LIBOR Reserve Percentage" means, relative to any Interest Period for LIBOR
Loans made by any Lender, the reserve percentage (expressed as a decimal) equal
to the actual aggregate reserve requirements (including all basic, emergency,
supplemental, marginal and other reserves and taking into account any
transactional adjustments or other scheduled changes in reserve requirements)
announced within Agent as the reserve percentage applicable to Agent as
specified under regulations issued from time to time by the Federal Reserve
Board. The LIBOR Reserve Percentage shall be based on Regulation D of the
Federal Reserve Board or other regulations from time to time in effect
concerning reserves for "Eurocurrency Liabilities" from related institutions as
though Agent were in a net borrowing position.
"Loan Account" has the meaning given to such term in Section 2.3.
"Loan Availability" means, at any time, the lesser of (a) an amount equal
to the positive difference, if any, of (i) 57.14286% of the Unencumbered Pool
Value, less (ii) Unsecured Liabilities (as such terms are defined in the
Revolving Credit Agreement) other than the outstanding principal of the Loans;
and (b) the amount of the Facility from time to time.
"Loan Documents" means this Agreement, the Loan Notes, the Guaranty, and
all other agreements, instruments and documents (together with amendments and
supplements thereto and replacements thereof) now or hereafter executed by the
REIT or Borrower that evidence, guaranty or secure the Obligations.
"Loan Notes" means the promissory notes evidencing the Loans in the
aggregate original principal amount of One Hundred Fifty Million Dollars
($150,000,000) executed by Borrower in favor of Lenders, as they may be amended,
supplemented, replaced or modified from time to time. The initial Loan Note, and
any replacements thereof, shall be substantially in the form of Exhibit B.
"Loans" means the loans made pursuant to the Facility; provided that (a) if
any such Loan or Loans (or portions thereof) is/are combined or subdivided
pursuant to Section 2.1(b)(iii) or by automatic conversion of LIBOR Loan into a
Base Rate Loan, the term "Loan" means such combination or each such subdivided
portion, as the case may be, and (b) where the context so requires, the term
"Loan" means, with respect to a particular Lender, the advance made (or required
to be made) by such Lender in the amount of such Lender's Pro Rata Share of a
Borrowing under the Facility.
"Material Adverse Effect" means, with respect to a Person, a material
adverse effect upon the condition (financial or otherwise), operations,
performance or properties of such Person. The phrase "has a Material Adverse
Effect" or "will result in a Material Adverse Effect" or words substantially
similar thereto shall in all cases be intended to mean "has resulted, or will or
could reasonably be anticipated to result, in a Material Adverse Effect", and
the phrase "has no (or does not have a) Material Adverse Effect" or "will not
result in a Material Adverse Effect" or words substantially similar thereto
shall in all cases be intended to mean "does not or will not or could not
reasonably be anticipated to result in a Material Adverse Effect".
"Maturity Date" has the meaning given to such term in Section 2.1(d).
"Moody's" means Moody's Investors Service.
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"Non Pro Rata Loan" means a Loan with respect to which fewer than all
Lenders have funded their respective Pro Rata Shares of such Loans and the
failure of the non-funding Lender or Lenders to fund its or their respective Pro
Rata Shares of such Loan constitutes a breach of this Agreement.
"Notice of Borrowing" means, with respect to a proposed Borrowing pursuant
to Section 2.1(b), a notice substantially in the form of Exhibit C.
"Obligations" means, from time to time, all indebtedness of Borrower owing
to Agent, any Lender or any Person entitled to indemnification pursuant to
Section 12.2, or any of their respective successors, transferees or assigns, of
every type and description, whether or not evidenced by any note, guaranty or
other instrument, arising under or in connection with this Agreement or any
other Loan Document, whether or not for the payment of money, whether direct or
indirect (including those acquired by assignment), absolute or contingent, due
or to become due, now existing or hereafter arising and however acquired. The
term includes, without limitation, all interest, charges, expenses, fees,
reasonable attorneys' fees and disbursements, reasonable fees and disbursements
of expert witnesses and other consultants, and any other sum now or hereinafter
chargeable to Borrower under or in connection with this Agreement or any other
Loan Document.
"Officer's Certificate" means a certificate signed by a specified officer
of a Person certifying as to the matters set forth therein.
"Permit" means any permit, approval, authorization, license, variance or
permission required from a Governmental Authority under an applicable
Requirement of Law.
"Person" means any natural person, employee, corporation, limited
partnership, general partnership, joint stock company, limited liability
company, joint venture, association, company, trust, bank, trust company, land
trust, business trust or other organization, whether or not a legal entity, or
any other non-governmental entity, or any Governmental Authority.
"Price Adjustment Date" has the meaning given to such term in Section
2.4(h)(iii).
"Pro Rata Share" means, with respect to any Lender, a fraction (expressed
as a percentage), the numerator of which shall be the amount of such Lender's
Commitment and the denominator of which shall be the aggregate amount of all of
the Lenders' Commitments.
"Proceedings" means, collectively, all actions, suits and proceedings
before, and investigations commenced or threatened by or before, any court or
Governmental Authority with respect to a Person.
"Regulations G, T, U and X" mean such Regulations of the Federal Reserve
Board as in effect from time to time.
"REIT" means Glenborough Realty Trust Incorporated, a Maryland corporation.
"Requirements of Law" mean, as to any Person, the charter and by-laws,
partnership agreement or other organizational or governing documents of such
Person, and any law, rule or regulation, Permit, or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject, including without limitation, the Securities
Act, the Securities Exchange Act, Regulations G, T, U and X, FIRREA and any
certificate of occupancy, zoning ordinance, building, environmental or land use
requirement or Permit or occupational safety or health law, rule or regulation.
"Requisite Lenders" mean, collectively, Lenders whose Pro Rata Shares, in
the aggregate, are at least sixty-six and two-thirds percent (66-2/3%), provided
that (a) in determining such percentage at any given time, all then existing
Defaulting Lenders will be disregarded and excluded and the Pro Rata Shares of
Lenders shall be
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redetermined, for voting purposes only, to exclude the Pro Rata Shares of such
Defaulting Lenders, and (b) notwithstanding the foregoing, at all times when two
or more Lenders are party to this Agreement, the term "Requisite Lenders" shall
in no event mean less than two Lenders.
"Revolving Credit Agreement" means that certain Credit Agreement, dated as
of December 22, 1997, among Borrower and each of the Lenders, as defined
therein, and Wells Fargo Bank, National Association as agent and as a Lender, as
amended, supplemented or modified from time to time.
"Secretary's Certificate" has the meaning given to such term in Section
4.1(c).
"Securities Act" means the Securities Act of 1933, as amended to the date
hereof and from time to time hereafter, and any successor statute.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended to the date hereof and from time to time hereafter, and any successor
statute.
"Senior Loans" has the meaning given to such term in Section 11.4(b).
"March 31, 1998 Financials" has the meaning given to such term in Section
5.1(g).
"Solvency Certificate" means a certificate in the form of Exhibit E.
"Solvent" means, as to any Person at the time of determination, that such
Person (a) owns property the value of which (both at fair valuation and at
present fair salable value) is greater than the amount required to pay all of
such Person's liabilities (including contingent liabilities and debts); (b) is
able to pay all of its debts as such debts mature; and (c) has capital
sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage.
"Taxes" means all federal, state and local net income and gross receipts
taxes.
"Unmatured Event of Default" means an event which, with the giving of
notice or the lapse of time, or both, would constitute an Event of Default.
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Computation of Time Periods. In this Agreement, in the computation of periods of
time from a specified date to a later specified date, the word "from" means
"from and including" and the words "to" and "until" each mean "to and
including". Periods of days referred to in this Agreement shall be counted in
calendar days unless Business Days are expressly prescribed.
Terms.
Any accounting terms used in this Agreement which are not specifically defined
shall have the meanings customarily given them in accordance with GAAP.
Any time the phrase "to the best of Borrower's knowledge" or a phrase similar
thereto is used herein, it means: "to the actual knowledge of the then executive
or senior officers of Borrower and the REIT, after reasonable inquiry of those
agents, employees or contractors of the REIT or Borrower who could reasonably be
anticipated to have knowledge with respect to the subject matter or
circumstances in question and after review of those documents or instruments
which could reasonably be anticipated to be relevant to the subject matter or
circumstances in question."
In each case where the consent or approval of Agent, all Lenders and/or
Requisite Lenders is required, or their non-obligatory action is requested by
Borrower, such consent, approval or action shall be in the sole and absolute
discretion of Agent and, as applicable, each Lender, unless otherwise
specifically indicated.
Any time the word "or" is used herein, unless the context otherwise clearly
requires, it has the inclusive meaning represented by the phrase "and/or". The
words "hereof", "herein", "hereby", "hereunder" and similar terms refer to this
Agreement as a whole and not to any particular provision of this Agreement.
Article, section, subsection, clause, exhibit and schedule references are to
this Agreement unless otherwise specified. Any reference in this Agreement to
this Agreement or to any other Loan Document includes any and all amendments,
modifications, supplements, renewals or restatements thereto or thereof, as
applicable.
ARTICLE II
LOANS
Loan Advances and Repayment.
Loan Availability.
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Subject to the terms and conditions set forth in this Agreement, Lenders
hereby agree to make Loans to Borrower from time to time during the period
from the Closing Date to the Business Day next preceding the Maturity Date,
in an aggregate principal amount, for all loans, whenever made, which shall
not exceed One Hundred Fifty Million Dollars ($150,000,000) (the
"Facility"). All Loans under this Agreement shall be made by Lenders
simultaneously and proportionately to their respective Pro Rata Shares, it
being understood that no Lender shall be responsible for any failure by any
other Lender to perform its obligation to make a Loan hereunder and that
the Commitment of any Lender shall not be increased or decreased as a
result of the failure by any other Lender to perform its obligation to make
a Loan. Loans may be voluntarily prepaid pursuant to Section 2.6(a);
however, no portion of the Loans that are prepaid may be reborrowed. The
principal balance of the Loans shall be payable in full on the Maturity
Date. The Loans will be evidenced by the Loan Notes.
Notice of Borrowing.
Whenever Borrower desires to borrow under this Section 2.1, but in no event
more than four (4) times during the term of the Facility, Borrower shall
give Agent, at Wells Fargo Real Estate Group Disbursement Center, 2120 East
Park Place, Suite 100, El Segundo, California 90245, with a copy to: Wells
Fargo Bank, Real Estate Capital Markets, 555 Montgomery Street, Seventeenth
Floor, San Francisco, California 94111, Attention: Lezlie Beam, or such
other address(es) as Agent shall designate, an original or facsimile Notice
of Borrowing no later than 9:00 A.M. (San Francisco time), not less than
three (3) nor more than five (5) Business Days prior to the proposed
Funding Date of each Loan. Each Notice of Borrowing shall specify (A) the
Funding Date (which shall be a Business Day) in respect of the Loan, (B)
the amount of the proposed Loan, provided that the aggregate amount of such
proposed Loan shall not be less than One Million Dollars ($1,000,000), (C)
that the Loan to be made thereunder will be a LIBOR Loan (or, if LIBOR
Loans are not then available by reason of Section 2.4(h), a Base Rate Loan)
and (unless LIBOR Loans are not then available) the Interest Period (which,
unless Agent otherwise agrees, shall be thirty (30) days or such lesser
period as may remain until expiration of any then-outstanding Interest
Period or (if applicable) the Maturity Date), (D) to which account of
Borrower the funds are to be directed, and (E) the proposed use of such
Loan. Any Notice of Borrowing pursuant to this Section 2.1(b) shall be
irrevocable.
Unless LIBOR Loans are not then available by reason of Section 2.4(h), all
Loans shall be made as, and (subject to Section 2.4(b)) shall remain, LIBOR
Loans, and, upon expiration of the applicable Interest Period, each LIBOR
Loan shall be continued as a LIBOR Loan for an Interest Period equal to the
shorter of thirty (30) days or the the period remaining until the Maturity
Date. The applicable Interest Period for the continuation of any LIBOR Loan
shall commence on the day on which the next preceding Interest Period
expires.
Upon receipt of a Notice of Borrowing in proper form requesting LIBOR Loans
under subparagraph (i) or (iii) above, Agent shall determine the LIBOR
applicable to the Interest Period for such LIBOR Loans, and shall, two (2)
Business Days prior to the beginning of such Interest Period, give (by
facsimile) a Fixed Rate Notice in respect thereof to Borrower and Lenders;
provided, however, that failure to give such notice to Borrower shall not
affect the validity of such rate. Each determination by Agent of the LIBOR
shall be conclusive and binding upon the parties hereto in the absence of
manifest error.
Making of Loans. Subject to Section 11.3 or as otherwise provided herein, Agent
shall disburse the proceeds of Loans, on the applicable Funding Date, by wire
transfer to such account as may be specified in Borrower's Notice of Borrowing.
All Loans made hereunder shall bear interest from the Funding Date thereof.
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Term. The outstanding balance of the Loans shall be payable in full on the
earliest to occur of (i) December 31, 1998, (ii) the acceleration of the Loans
pursuant to Section 10.2(a), (iii) Borrower's written notice to Agent (pursuant
to Section 2.6(a)) of Borrower's election to prepay all accrued Obligations and
terminate all Commitments, or (iv) the occurrence of the "Maturity Date" under,
and as defined in, the Revolving Credit Agreement (said earliest date referred
to herein as the "Maturity Date").
Authorization to Obtain Loans. Borrower shall provide Agent with documentation
satisfactory to Agent indicating the names of those employees of Borrower
authorized by Borrower to sign Notices of Borrowing, and Agent and Lenders shall
be entitled to rely on such documentation until notified in writing by Borrower
of any change(s) of the persons so authorized. Agent shall be entitled to act on
the instructions of anyone identifying himself or herself as one of the Persons
authorized to execute a Notice of Borrowing, and Borrower shall be bound thereby
in the same manner as if such Person were actually so authorized. Borrower
agrees to indemnify, defend and hold Lenders and Agent harmless from and against
any and all Liabilities and Costs which may arise or be created by the
acceptance of instructions in any Notice of Borrowing, unless caused by the
gross negligence or willful misconduct of the Person to be indemnified.
Lenders' Accounting. Agent shall maintain a loan account (the "Loan Account") on
its books in which shall be recorded (a) the names and addresses and the
Commitments of Lenders, and principal amount of Loans owing to each Lender from
time to time, and (b) all advances and repayments of principal and payments of
accrued interest under the Loans as provided in this Agreement. All entries in
the Loan Account shall be made in accordance with Agent's customary accounting
practices as in effect from time to time. Monthly or at such other interval as
is customary with Agent's practice, Agent will render a statement of the Loan
Account to Borrower and will deliver a copy thereof to each Lender. Each such
statement shall be deemed final, binding and conclusive upon Borrower in all
respects as to all matters reflected therein (absent manifest error), unless
Borrower, within thirty (30) days after the date such statement is mailed or
otherwise delivered to Borrower, delivers to Agent written notice of any
objections which Borrower may have to any such statement, or within ten (10)
days after discovery by Borrower of an error with respect to which Borrower had
no knowledge and which could not have been determined after reasonable inquiry
during said 30-day period. In that event, only those items expressly objected to
in such notice shall be deemed to be disputed by Borrower. In the event that any
such objection cannot be settled by Agent and Borrower within thirty (30) days
after Agent receives notice thereof from Borrower, Agent shall notify all
Lenders of such objection. Notwithstanding the foregoing, Agent's entries in the
Loan Account evidencing Loans and other financial accommodations made from time
to time shall be final, binding and conclusive upon Borrower (absent manifest
error) as to the existence and amount of the Obligations recorded in the Loan
Account.
Interest on the Loans.
Base Rate Loans. Subject to Section 2.4(d), all Base Rate Loans shall bear
interest on the daily unpaid principal amount thereof from the date made until
paid in full at a fluctuating rate per annum equal to the Base Rate.
LIBOR Loans. Subject to Sections 2.4(d) and 2.4(h), all LIBOR Loans shall bear
interest on the unpaid principal amount thereof during the Interest Period
applicable thereto at a rate per annum equal to the sum of LIBOR for such
Interest Period plus the LIBOR Rate Margin. LIBOR Loans shall be in tranches of
at least One Million Dollars ($1,000,000). No more than four (4) LIBOR Loan
tranches shall be outstanding at any one time. Notwithstanding anything to the
contrary contained herein and subject to the Default Interest provisions
contained in Section 2.4(d), if an Event of Default occurs and as a result
thereof the Commitments are terminated, all LIBOR Loans will convert to Base
Rate Loans upon the expiration of the applicable Interest Periods therefor or
the date all Loans become due, whichever occurs first.
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Interest Payments. Subject to Section 2.4(d), interest accrued on all Loans
shall be payable by Borrower, in the manner provided in Section 2.6(b), in
arrears on the first Business Day of the first calendar month following the
Closing Date, on the first Business Day of each succeeding calendar month
thereafter, and on the Maturity Date.
Default Interest. Notwithstanding the rates of interest specified in Sections
2.4(a) and 2.4(b) and the payment dates specified in Section 2.4(c), effective
immediately upon the occurrence and during the continuance of any Event of
Default, the principal balance of all Loans then outstanding and, to the extent
permitted by applicable law, any interest payments on the Loans not paid when
due, shall bear interest payable upon demand at a rate which is five percent
(5%) per annum in excess of the rate(s) of interest otherwise payable from time
to time under this Agreement. All other amounts due Agent or Lenders (whether
directly or for reimbursement) under this Agreement or any of the other Loan
Documents if not paid when due, or if no time period is expressed, if not paid
within ten (10) days after demand, shall bear interest from and after demand at
the rate set forth in this Section 2.4(d).
Late Fee. Borrower acknowledges that late payment to Agent will cause Agent and
Lenders to incur costs not contemplated by this Agreement. Such costs include,
without limitation, processing and accounting charges. Therefore, if Borrower
fails timely to pay any sum due and payable hereunder through the Maturity Date
(other than payment of the entire outstanding balance of the Loans on the
Maturity Date), unless waived by Agent or Requisite Lenders pursuant to Section
11.11(a), a late charge of four cents ($.04) for each dollar of any such
principal payment, interest or other charge due hereon and which is not paid
within fifteen (15) days after such payment is due, shall be charged by Agent
(for the benefit of Lenders) and paid by Borrower for the purpose of defraying
the expense incident to handling such delinquent payment. Borrower and Agent
agree that this late charge represents a reasonable sum considering all of the
circumstances existing on the date hereof and represents a fair and reasonable
estimate of the costs that Agent and Lenders will incur by reason of late
payment. Borrower and Agent further agree that proof of actual damages would be
costly and inconvenient. Acceptance of any late charge shall not constitute a
waiver of the default with respect to the overdue installment, and shall not
prevent Agent from exercising any of the other rights available hereunder or any
other Loan Document. Such late charge shall be paid without prejudice to any
other rights of Agent.
Computation of Interest. Interest shall be computed on the basis of the actual
number of days elapsed in the period during which interest or fees accrue and a
year of three hundred sixty (360) days. In computing interest on any Loan, the
date of the making of the Loan shall be included and the date of payment shall
be excluded; provided, however, that if a Loan is repaid on the same day on
which it is made, one (1) day's interest shall be paid on that Loan.
Notwithstanding any provision in this Section 2.4, interest in respect of any
Loan shall not exceed the maximum rate permitted by applicable law.
Changes; Legal Restrictions. In the event that after the Closing Date (i) the
adoption of or any change in any law, treaty, rule, regulation, guideline or
determination of a court or Governmental Authority or any change in the
interpretation or application thereof by a court or Governmental Authority, or
(ii) compliance by Agent or any Lender with any request or directive made or
issued after the Closing Date (whether or not having the force of law and
whether or not the failure to comply therewith would be unlawful) from any
central bank or other Governmental Authority or quasi-governmental authority:
subjects Agent or any Lender to any tax, duty or other charge of any kind
with respect to the Facility, this Agreement or any of the other Loan
Documents, or the Loans or changes the basis of taxation of payments to
Agent or such Lender of principal, fees, interest or any other amount
payable hereunder, except for net income, gross receipts, gross profits or
franchise taxes imposed by any jurisdiction and not specifically based upon
loan transactions (all such non-excepted taxes, duties and other charges
being hereinafter referred to as "Lender Taxes");
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imposes, modifies or holds applicable, in the determination of Agent or any
Lender, any reserve, special deposit, compulsory loan, FDIC insurance,
capital allocation or similar requirement against assets held by, or
deposits or other liabilities in or for the account of, advances or loans
by, or other credit extended by, or any other acquisition of funds by,
Agent or such Lender or any applicable lending office (except to the extent
that the reserve and FDIC insurance requirements are reflected in the "Base
Rate" or in determining LIBOR); or
imposes on Agent or any Lender any other condition materially more
burdensome in nature, extent or consequence than those in existence as of
the Closing Date,
and the result of any of the foregoing is to increase the cost to Agent or
any Lender of making, renewing, maintaining or participating in the Loans or to
reduce any amount receivable thereunder; then, in any such case, Borrower shall
promptly pay to Agent or such Lender, as applicable, upon demand, such amount or
amounts (based upon a reasonable allocation thereof by Agent or such Lender to
the financing transactions contemplated by this Agreement and affected by this
Section 2.4(g)) as may be necessary to compensate Agent or such Lender for any
such additional cost incurred or reduced amounts received; provided, however,
that (i) neither Agent nor any Lender may claim under this Section 2.4(g) any
such additional amount attributable to any period preceding the date that is
ninety (90) days prior to the date of its demand, (ii) before making any such
demand, Agent, and each Lender, agrees to use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) to designate a
different lending office as its lending office for purposes of the Loans and its
Commitment, if (1) the making of such a designation would avoid the need for, or
reduce the amount of, such demand and (2) would not, in the reasonable judgment
of Agent or such Lender, as the case may be, be otherwise disadvantageous to it,
and (iii) if the payment of such compensation may not be legally made (whether
by modification of the applicable interest rate or otherwise), then Lenders
shall have no further obligation to make Loans that cause Agent or any Lender to
incur such increased cost, and all affected Loans shall become immediately due
and payable by Borrower. Agent or such Lender shall deliver to Borrower and in
the case of a delivery by Lender, such Lender shall also deliver to Agent, a
written statement of the claimed additional costs incurred or reduced amounts
received and the basis therefor as soon as reasonably practicable after such
Lender obtains knowledge thereof. If Agent or any Lender subsequently recovers
any amount of Lender Taxes previously paid by Borrower pursuant to this Section
2.4(g), whether before or after termination of this Agreement, then, upon
receipt of good funds with respect to such recovery, Agent or such Lender will
refund such amount to Borrower if no Event of Default or Unmatured Event of
Default then exists or, if an Event of Default or Unmatured Event of Default
then exists, such amount will be credited to the Obligations in the manner
determined by Agent or such Lender.
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Certain Provisions Regarding LIBOR Loans.
LIBOR Lending Unlawful. If any Lender shall determine (which determination
shall, upon notice thereof to Borrower and Agent, be conclusive and binding
on the parties hereto) that the introduction of or any change in or in the
interpretation of any law makes it unlawful, or any central bank or other
Governmental Authority asserts that it is unlawful, for such Lender to make
or maintain any Loan as a LIBOR Loan, (A) the obligations of such Lenders
to make or maintain any Loans as LIBOR Loans shall, upon such
determination, forthwith be suspended until such Lender shall notify Agent
that the circumstances causing such suspension no longer exist, and (B) if
required by such law or assertion, the LIBOR Loans of such Lender shall
automatically convert into Base Rate Loans.
Deposits Unavailable. If Agent shall have determined in good faith that
adequate means do not exist for ascertaining the interest rate applicable
hereunder to LIBOR Loans, then, upon notice from Agent to Borrower, the
obligations of all Lenders to make or maintain Loans as LIBOR Loans shall
forthwith be suspended until Agent shall notify Borrower that the
circumstances causing such suspension no longer exist. Agent will give such
notice when it determines, in good faith, that such circumstances no longer
exist; provided, however, that Agent shall not have any liability to any
Person with respect to any delay in giving such notice.
Fixed Rate Price Adjustment. Borrower acknowledges that prepayment or
acceleration of a LIBOR Loan during an Interest Period will result in
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 subparagraph
(iii), any Loan not being made as a LIBOR Loan in accordance with the
Notice of Borrowing therefor, as a result of Borrower's cancellation
thereof or failure to satisfy the conditions precedent thereto, shall be
treated as if such LIBOR Loan had been prepaid.) Therefore, on the date a
LIBOR Loan is prepaid or the date all sums payable hereunder become due and
payable, by acceleration or otherwise ("Price Adjustment Date"), Borrower
will pay to Agent, for the account of each Lender, (in addition to all
other sums then owing), an amount ("Fixed Rate Price Adjustment") equal to
the then present value of (A) the amount of interest that would have
accrued on the LIBOR Loan for the remainder of the Interest Period at the
rate applicable to such LIBOR Loan, less (B) the amount of interest that
would accrue on the same LIBOR Loan for the same period if LIBOR were set
on the Price Adjustment Date. The present value shall be calculated by
using as a discount rate LIBOR quoted on the Price Adjustment Date. Upon
the written notice to Borrower from Agent, Borrower shall immediately pay
to Agent, for the account of Lenders, the Fixed Rate Price Adjustment as
calculated by Agent. 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.
Borrower understands, agrees and acknowledges the following: (A) no Lender
has any obligation to purchase, sell and/or match funds in connection with
the use of LIBOR as a basis for calculating the rate of interest on a LIBOR
Loan or a Fixed Rate Price Adjustment; (B) LIBOR is used merely as a
reference in determining such rate and/or Fixed Rate Price Adjustment; and
(C) Borrower has accepted LIBOR as a reasonable and fair basis for
calculating such rate and a Fixed Rate Price Adjustment. Borrower further
agrees to pay the Fixed Rate Price Adjustment and Lender Taxes, if any,
whether or not a Lender elects to purchase, sell and/or match funds.
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Withholding Tax Exemption. At least five (5) Business Days prior to the first
day on which interest or fees are payable hereunder for the account of any
Lender, each Lender that is not incorporated under the laws of the United States
of America, or a state thereof, agrees that it will deliver to Agent and
Borrower two (2) duly completed copies of United States Internal Revenue Service
Form 1001 or Form 4224, certifying in either case that such Lender is entitled
to receive payments under this Agreement without deduction or withholding of any
United States federal income taxes. Each Lender which so delivers a Form 1001 or
Form 4224 further undertakes to deliver to Agent and Borrower two (2) additional
copies of such form (or any applicable successor form) on or before the date
that such form expires (currently, three (3) successive calendar years for Form
1001 and one (1) calendar year for Form 4224) or becomes obsolete or after the
occurrence of any event requiring a change in the most recent forms so delivered
by it, and such amendments thereto or extensions or renewals thereof as may be
reasonably requested by Agent or Borrower, in each case certifying that such
Lender is entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes, unless an event
(including without limitation any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Lender from duly completing and delivering any such form with respect to it and
such Lender advises Agent that it is not capable of receiving payments without
any deduction or withholding of United States federal income taxes. If any
Lender cannot deliver such form, then Borrower may withhold from such payments
such amounts as are required by the Internal Revenue Code.
Payment of Fees. The fees described in Section 4.1(j) represent compensation for
services rendered and to be rendered separate and apart from the lending of
money or the provision of credit and do not constitute compensation for the use,
detention or forbearance of money, and the obligation of Borrower to pay the
fees described herein shall be in addition to, and not in lieu of, the
obligation of Borrower to pay interest, other fees and expenses otherwise
described in this Agreement. All fees shall be payable when due in immediately
available funds and shall be non-refundable when paid. If Borrower fails to make
any payment of fees or expenses specified or referred to in this Agreement due
to Agent or Lenders, including without limitation those referred to in this
Section 2.5, in Section 12.1, or otherwise under this Agreement or any separate
fee agreement between Borrower and Agent or any Lender relating to this
Agreement, when due, the amount due shall bear interest until paid at the Base
Rate and, after ten (10) days, at the rate specified in Section 2.4(d) (but not
to exceed the maximum rate permitted by applicable law), and shall constitute
part of the Obligations.
Payments.
Voluntary Prepayments. Borrower may, upon not less than three (3) Business Days
prior written notice to Agent not later than 11:00 a.m. (San Francisco time) on
the date given, at any time and from time to time, prepay any Loans in whole or
in part. Any notice of prepayment given to Agent under this Section 2.6(a) shall
specify the date of prepayment and the aggregate principal amount of the
prepayment. In the event of a prepayment of LIBOR Loans, Borrower shall
concurrently pay any Fixed Rate Price Adjustment payable in respect thereof.
Agent shall provide to each Lender a confirming copy of such notice on the same
Business Day such notice is received. No amount so prepaid may be reborrowed.
Manner and Time of Payment. All payments of principal, interest and fees
hereunder payable to Agent or the Lenders shall be made without condition or
reservation of right and free of set-off or counterclaim, in Dollars and by wire
transfer (pursuant to Agent's written wire transfer instructions) of immediately
available funds, to Agent, for the account of each Lender, not later than 11:00
A.M. (San Francisco time) on the date due; and funds received by Agent after
that time and date shall be deemed to have been paid on the next succeeding
Business Day.
Payments on Non-Business Days. Whenever any payment to be made by Borrower
hereunder shall be stated to be due on a day which is not a Business Day,
payments shall be made on the next succeeding Business Day and such extension of
time shall be included in the computation of the payment of interest hereunder.
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Increased Capital. If either (a) the introduction of or any change in or in the
interpretation of any law or regulation or (b) compliance by Agent or any Lender
with any guideline or request from any central bank or other Governmental
Authority (whether or not having the force of law and whether or not the failure
to comply therewith would be unlawful) made or issued after the Closing Date
affects or would affect the amount of capital required or expected to be
maintained by Agent or such Lender or any corporation controlling Agent or such
Lender, and Agent or such Lender determines that the amount of such capital is
increased by or based upon the existence of Agent's obligations hereunder or
such Lender's Commitment, then, upon demand by Agent or such Lender, Borrower
shall immediately pay to Agent or such Lender, from time to time as specified by
Agent or such Lender, additional amounts sufficient to compensate Agent or such
Lender in the light of such circumstances, to the extent that Agent or such
Lender determines such increase in capital to be allocable to the existence of
Agent's obligations hereunder or such Lender's Commitment; provided, however,
that (i) neither Agent nor any Lender may claim under this Section 2.7 any such
additional amount attributable to any period preceding the date that is ninety
(90) days prior to the date of its demand, and (ii) before making any such
demand, Agent, and each Lender, agrees to use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) to designate a
different lending office as its lending office for purposes of the Loans and its
Commitment, if (1) the making of such a designation would avoid the need for, or
reduce the amount of, such demand and (2) would not, in the reasonable judgment
of Agent or such Lender, as the case may be, be otherwise disadvantageous to it.
A certificate as to such amounts submitted to Borrower by Agent or such Lender
shall, in the absence of manifest error, be conclusive and binding for all
purposes.
Notice of Increased Costs. Each Lender agrees that, as promptly as reasonably
practicable after it becomes aware of the occurrence of an event or the
existence of a condition which would cause it to be affected by any of the
events or conditions described in Section 2.4(g) or (h) or Section 2.7, it will
notify Borrower, and provide a copy of such notice to Agent, of such event and
the possible effects thereof, provided that the failure to provide such notice
shall not affect Lender's rights to reimbursement provided for herein.
ARTICLE III
INTENTIONALLY OMITTED
ARTICLE IV
CONDITIONS TO LOANS
Conditions to Initial Disbursement of Loans. The obligation of Lenders to make
the initial disbursement of the Loans shall be subject to satisfaction of each
of the following conditions precedent on or before the Closing Date:
Borrower Documents; Evidence of Loan Availability. Borrower shall have executed
and/or delivered (or caused to be delivered) to Agent each of the following, in
form and substance acceptable to Agent and each other Lender:
this Agreement;
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the Loan Notes;
Partnership Borrowing Certificate in substantially the Agent's standard
form;
A certificate of Borrower's chief financial officer to the effect that: (i)
Borrower's execution and delivery of this Agreement, and its incurrence of
its obligations hereunder and under the other Loan Documents, will not
breach, or cause the existence of any default under, (A) the documentation
governing any outstanding indebtedness of Borrower having an outstanding
principal balance in excess of $10,000,000, or (B) Borrower's (or the
REIT's) charter documents (and further certifying that, were Borrower to
draw down the entire $150,000,000 available under this Agreement on the
Closing Date, Borrower would nevertheless remain in compliance with any
limitations on its incurrence of indebtedness imposed by any such
documentation or charter document); (ii) as of the Closing Date, all
representations and warranties of Borrower set forth in this Agreement are
true and correct in all material respects as if made on and as of the
Closing Date; and (iii) as of the Closing Date, no Event of Default or
Unmatured Event of Default, has occurred and is continuing; and
a Funds Transfer Agreement (on the Agent's standard form)
REIT Documents. The REIT shall have executed and/or delivered (or caused to be
delivered) to Agent each of the following, in form and substance acceptable to
Agent and each other Lender:
the Guaranty;
Corporate resolutions of the REIT, as certified by the Secretary of the
REIT (re: authorization to engage in partnership activity, including
borrowing, and authorization to execute guaranty); and
Incumbency Certificate as to the signatures and incumbency of the
individuals signing Loan Documents on behalf of either Borrower or the
REIT.
Unencumbered Pool Certificate; Compliance Certificate. Borrower shall have
delivered to Agent an Unencumbered Pool Certificate evidencing sufficient Loan
Availability to support the Loans being requested and a Compliance Certificate
(as such terms are defined herein or in the Revolving Credit Agreement).
Notice of Borrowing. Borrower shall have delivered to Agent a Notice of
Borrowing and, if applicable, Agent shall have delivered to Borrower a Fixed
Rate Notice, in each case in compliance with Section 2.1(b).
Performance. Borrower and the REIT shall have performed in all material respects
all agreements and covenants required by Agent to be performed by them on or
before the Closing Date.
Solvency. Each of the REIT and Borrower shall be Solvent and shall have
delivered to Agent a Solvency Certificate to that effect.
Material Adverse Changes. No change, as determined by Agent and Lenders, shall
have occurred, during the Interim Period, which has a Material Adverse Effect on
Borrower or the REIT.
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Litigation Proceedings. There shall not have been instituted or threatened,
during the Interim Period, any litigation or proceeding in any court or
Governmental Authority affecting or threatening to affect Borrower or the REIT
which has a Material Adverse Effect, thereon as reasonably determined by Agent.
No Event of Default; Satisfaction of Financial Covenants. On the Closing Date
and after giving effect to the initial disbursements of the Loans, no Event of
Default or Unmatured Event of Default shall exist and all of the covenants
contained in Sections 8.4 and 8.5 and Article IX of the Revolving Credit
Agreement shall be satisfied.
Fees. Agent shall have received an arrangement fee in the amount separately
agreed to between Agent and Borrower, and all expenses of Agent incurred prior
to such Closing Date shall have been paid by Borrower.
Opinion of Counsel. Agent shall have received, on behalf of Agent and Lenders,
favorable opinions of counsel (which may, as to certain matters, be rendered by
in-house counsel) for Borrower and the REIT dated as of the Closing Date, in
form and substance satisfactory to Agent, Lenders and their respective counsel.
Consents and Approvals. All material licenses, permits, consents, regulatory
approvals and corporate action necessary to enter into the financing
transactions contemplated by this Agreement shall have been obtained by Borrower
and the REIT.
Due Diligence. Agent and Lenders shall have completed such due diligence
investigations as Agent or any Lender deems necessary, and such review and
investigations shall provide Agent with results and information which, in
Agent's determination, are satisfactory to permit Agent to enter into this
Agreement and fund the Loans.
Representations and Warranties. All representations and warranties contained in
this Agreement and the other Loan Documents shall be true and correct in all
material respects.
REIT Financial Statements. Agent shall have received audited REIT Financial
Statements, dated December 31, 1996 and unaudited REIT Financial Statements,
dated March 31, 1998 (together with the financial statements of each of the
Associated Companies).
Conditions Precedent to All Loans. The obligation of each Lender to make any
Loan requested to be made by it, on any date, is subject to satisfaction of the
following conditions precedent as of such date:
Documents. With respect to each request for a Loan, Agent shall have received,
on or before the Funding Date and in accordance with the provisions of Section
2.1(b), an original and duly executed Notice of Borrowing, and, if not
previously delivered with respect to the account to which the proceeds of such
Loan are to be wire transferred, a certificate, in the form required under the
Funds Transfer Agreement referred to above, with respect to such account.
Additional Matters. As of the Funding Date for any Loan and after giving effect
to the Loans being requested:
Representations and Warranties. All of the representations and warranties
contained in this Agreement and in any other Loan Document (other than
representations and warranties which expressly speak only as of a different
date and other than for changes permitted or contemplated by this
Agreement) shall be true and correct in all material respects on and as of
such Funding Date, as though made on and as of such date;
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No Default. No Event of Default or Unmatured Event of Default shall have
occurred and be continuing or would result from the making of the requested
Loan; and
No Material Adverse Change. No change shall have occurred which shall have
a Material Adverse Effect on Borrower or the REIT, as determined by Agent.
Each submission by Borrower to Agent of a Notice of Borrowing with respect
to a Loan and the acceptance by Borrower of the proceeds of each such Loan made
hereunder shall constitute a representation and warranty by Borrower as of the
Funding Date in respect of such Loan that all the conditions contained in this
Section 4.2(b) have been satisfied.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
Representations and Warranties as to Borrower, Etc.. In order to induce Lenders
to make the Loans, Borrower hereby represents and warrants to Lenders as
follows:
Organization; Partnership Powers. Borrower (i) is a limited partnership duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its formation, (ii) is duly qualified to do business as a
foreign limited partnership and in good standing under the laws of each
jurisdiction in which it owns or leases other real property or in which the
nature of its business requires it to be so qualified, except for such other
jurisdictions where failure to so qualify and be in good standing would not have
a Material Adverse Effect on Borrower, and (iii) has all requisite partnership
power and authority to own and operate its property and assets and to conduct
its business as presently conducted and as proposed to be conducted in
connection with and following the consummation of the Loans contemplated by the
Loan Documents. Borrower has previously delivered to Agent true and correct
copies of the partnership agreement of Borrower and of the Articles of
Incorporation and Bylaws of the REIT, in each case, as currently in full force
and effect.
Authority. Borrower has the requisite partnership power and authority to
execute, deliver and perform each of the Loan Documents to which it is or will
be a party. The execution, delivery and performance thereof, and the
consummation of the transactions contemplated thereby, have been duly approved
by the general partner of Borrower, and no other partnership proceedings or
authorizations on the part of Borrower or its general or limited partners are
necessary to consummate such transactions. Each of the Loan Documents to which
Borrower is a party has been duly executed and delivered by Borrower and
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms, subject to bankruptcy, insolvency and other laws
affecting creditors' rights generally.
Ownership of Borrower and the Associated Companies. Schedule 5.1(c) to the
Revolving Credit Agreement sets forth the owners of Borrower and the Associated
Companies and the owners' respective ownership percentages therein, as of the
date hereof, and there are no other ownership interests outstanding. Except as
set forth or referred to in the partnership agreement, articles of incorporation
or bylaws, as applicable, of Borrower and the Associated Companies, no ownership
interest (or any securities, instruments, warrants, option or purchase rights,
conversion or exchange rights, calls, commitments or claims of any character
convertible into or exercisable for any ownership interest) of any such Person
is subject to issuance under any security, instrument, warrant, option or
purchase rights, conversion or exchange rights, call, commitment or claim of any
right, title or interest therein or thereto. All of the ownership interests in
Borrower and the Associated Companies have been issued in compliance with all
applicable Requirements of Law.
No Conflict. The execution, delivery and performance by Borrower of the Loan
Documents to which it is or will be a party, and each of the transactions
contemplated thereby, do not and will not (i) conflict with or violate
Borrower's limited partnership agreement or certificate of limited partnership
or other organizational documents, as the case may be, or (ii) conflict with,
result in a breach of or constitute (with or without notice or lapse of time or
both) a default under any Requirement of Law, Contractual Obligation or Court
Order of or binding upon Borrower, or (iii) require termination of any
Contractual Obligation, or (iv) result in or require the creation or imposition
of any lien or security interest whatsoever upon any of the properties or assets
of Borrower (other than liens or security interests in favor of Agent arising
pursuant to the Loan Documents).
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Consents and Authorizations. Borrower has obtained all consents and
authorizations required pursuant to its Contractual Obligations with any other
Person, and shall have obtained all consents and authorizations of, and effected
all notices to and filings with, any Governmental Authority, as may be necessary
to allow Borrower to lawfully execute, deliver and perform its obligations under
the Loan Documents to which Borrower is a party.
Governmental Regulation. Neither Borrower nor the REIT is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, the Investment Company Act of 1940 or any other federal
or state statute or regulation such that its ability to incur indebtedness is
limited or its ability to consummate the transactions contemplated by the Loan
Documents is materially impaired.
Prior Financials. The March 31, 1998, Consolidated Balance Sheet, Statement of
Operations and Statement of Cash Flows of the REIT contained in the REIT's Form
10Q (the "March 31, 1998 Financials") delivered to Agent prior to the date
hereof were prepared in accordance with GAAP and fairly present the assets,
liabilities and financial condition of the REIT on a consolidated basis, at such
date and the results of its operations and its cash flows, on a consolidated
basis, for the period then ended.
Financial Statements; Projections and Forecasts. Each of the Financial
Statements to be delivered to Agent pursuant to Section 6.1 (i) has been, or
will be, as applicable, prepared in accordance with the books and records of the
REIT on a consolidated basis, and (ii) either fairly present, or will fairly
present, as applicable, the financial condition of the REIT on a consolidated
basis, at the dates thereof (and, if applicable, subject to normal year-end
adjustments) and the results of its operations and cash flows, on a consolidated
basis, for the period then ended. Each of the projections delivered to Agent
prior to the date hereof and the financial plans and projections to be delivered
to Agent pursuant to Section 6.1, (1) has been, or will be, as applicable,
prepared by the REIT in light of the past business and performance of the REIT
on a consolidated basis and (2) represent, or will represent, as of the date
thereof, the reasonable good faith estimates of the REIT's financial personnel.
Litigation; Adverse Effects.
There is no action, suit, proceeding, governmental investigation or
arbitration, at law or in equity, or before or by any Governmental
Authority, pending or, to the best of Borrower's knowledge, threatened
against Borrower or any property of Borrower, which if adversely determined
would (A) result in a Material Adverse Effect on Borrower, (B) materially
and adversely affect the ability of any party to any of the Loan Documents
to perform its obligations thereunder, or (C) materially and adversely
affect the ability of Borrower to perform its obligations contemplated in
the Loan Documents.
Borrower is not (A) in violation of any applicable law, which violation has
a Material Adverse Effect on Borrower or (B) subject to or in default with
respect to any Court Order which has a Material Adverse Effect on Borrower.
There are no material Proceedings pending or, to the best of Borrower's
knowledge, threatened against Borrower which, if adversely decided, would
have a Material Adverse Effect on Borrower.
No Material Adverse Change. Since March 31, 1998, there has occurred no event
which has a Material Adverse Effect on Borrower, and no material adverse change
in Borrower's ability to perform its obligations under the Loan Documents to
which it is a party or the transactions contemplated thereby.
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Payment of Taxes. All tax returns and reports to be filed by Borrower have been
timely filed, and all taxes, assessments, fees and other governmental charges
shown on such returns or otherwise payable by Borrower have been paid when due
and payable (other than real property taxes, which may be paid prior to
delinquency so long as no penalty or interest shall attach thereto), except such
taxes, if any, as are reserved against in accordance with GAAP and are being
contested in good faith by appropriate proceedings or such taxes, the failure to
make payment of which when due and payable will not have, in the aggregate, a
Material Adverse Effect on Borrower. Borrower has no knowledge of any proposed
tax assessment against Borrower that will have a Material Adverse Effect on
Borrower, which is not being actively contested in good faith by Borrower.
Material Adverse Agreements. Borrower is not a party to or subject to any
Contractual Obligation or other restriction contained in its limited partnership
agreement, certificate of limited partnership or similar governing documents
which has a Material Adverse Effect on Borrower.
Performance. Borrower is not in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
Contractual Obligation applicable to it, and no condition exists which, with the
giving of notice or the lapse of time or both, would constitute a default under
such Contractual Obligation in each case, except where the consequences, direct
or indirect, of such default or defaults, if any, will not have a Material
Adverse Effect on Borrower.
Federal Reserve Regulations. No part of the proceeds of the Loan hereunder will
be used to purchase or carry any "margin security" as defined in Regulation G or
for the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry any margin security or for any other purpose which
might constitute this transaction a "purpose credit" within the meaning of said
Regulation G. Neither Borrower nor the REIT is engaged primarily in the business
of extending credit for the purpose of purchasing or carrying out any "margin
stock" as defined in Regulation U. No part of the proceeds of the Loan hereunder
will be used for any purpose that violates, or which is inconsistent with, the
provisions of Regulation X or any other regulation of the Federal Reserve Board.
Disclosure. The representations and warranties of Borrower contained in the Loan
Documents and all certificates, financial statements and other documents
delivered to Agent in connection therewith, do not contain any untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements contained herein or therein, in light of the circumstances under
which they were made, not misleading. Borrower has given to Agent true, correct
and complete copies of all organizational documents, Financial Statements and
all other documents and instruments referred to in the Loan Documents as having
been delivered to Agent. Borrower has not intentionally withheld any material
fact from Agent in regard to any matter raised in the Loan Documents.
Notwithstanding the foregoing, with respect to projections of Borrower's future
performance such representations and warranties are made in good faith and to
the best judgment of Borrower.
Requirements of Law. Each of Borrower and the REIT is in compliance with all
Requirements of Law (including without limitation the Securities Act and the
Securities Exchange Act, and the applicable rules and regulations thereunder,
state securities law and "Blue Sky" laws) applicable to it and its respective
businesses, in each case, where the failure to so comply will have a Material
Adverse Effect on Borrower or the REIT. The REIT has made all filings with and
obtained all consents of the Commission required under the Securities Act and
the Securities Exchange Act in connection with the execution, delivery and
performance by the REIT of the Loan Documents.
Solvency. Borrower is and will be Solvent after giving effect to the
disbursements of the Loans and the payment and accrual of all fees then payable.
Use of Proceeds. Borrower's use of the proceeds of the Loans is limited to
funding the purchase price of real property assets acquired by Borrower.
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Representations and Warranties as to the REIT. In order to induce Lenders to
make the Loans, Borrower hereby represents and warrants to Lenders as follows:
Organization; Corporate Powers. The REIT (i) is a corporation duly organized,
validly existing and in good standing under the laws of the State of Maryland,
(ii) is duly qualified to do business as a foreign corporation and in good
standing under the laws of each jurisdiction in which it owns or leases real
property or in which the nature of its business requires it to be so qualified,
except for those jurisdictions where failure to so qualify and be in good
standing will not have a Material Adverse Effect on the REIT, and (iii) has all
requisite corporate power and authority to own, operate and encumber its
property and assets and to conduct its business as presently conducted and as
proposed to be conducted in connection with and following the consummation of
the transactions contemplated by the Loan Documents.
Authority. The REIT has the requisite corporate power and authority to execute,
deliver and perform each of the Loan Documents to which it is or will be a
party. The execution, delivery and performance thereof, and the consummation of
the transactions contemplated thereby, have been duly approved by the Board of
Directors of the REIT, and no other corporate proceedings on the part of the
REIT are necessary to consummate such transactions. Each of the Loan Documents
to which the REIT is a party has been duly executed and delivered by Borrower
and constitutes its legal, valid and binding obligation, enforceable against it
in accordance with its terms, subject to bankruptcy, insolvency and other laws
affecting creditors' rights generally.
No Conflict. The execution, delivery and performance by the REIT of the Loan
Documents to which it is party, and each of the transactions contemplated
thereby, do not and will not (i) conflict with or violate its articles of
incorporation, by-laws or other organizational documents, (ii) conflict with,
result in a breach of or constitute (with or without notice or lapse of time or
both) a default under any Requirement of Law, Contractual Obligation or Court
Order of the REIT, (iii) require termination of any Contractual Obligation, (iv)
result in or require the creation or imposition of any lien or security
agreement whatsoever upon any of the properties or assets of the REIT (other
than liens or security agreements in favor of Agent arising pursuant to the Loan
Documents), or (v) require any approval of the stockholders of the REIT.
Consents and Authorizations. The REIT has obtained all consents and
authorizations required pursuant to its Contractual Obligations with any other
Person, and shall have obtained all consents and authorizations of, and effected
all notices to and filings with, any Governmental Authority, as may be necessary
to allow the REIT to lawfully execute, deliver and perform its obligations under
the Loan Documents to which the REIT is a party.
Capitalization. All of the capital stock of the REIT has been issued in
compliance with all applicable Requirements of Law.
Litigation; Adverse Effects.
There is no action, suit, proceeding, governmental investigation or
arbitration, at law or in equity, or before or by any Governmental
Authority, pending or, to best of Borrower's knowledge, threatened against
the REIT or any property of the REIT, which will (A) result in a Material
Adverse Effect on the REIT, (B) materially and adversely affect the ability
of any party to any of the Loan Documents to perform its obligations
thereunder, or (C) materially and adversely affect the ability of the REIT
to perform its obligations as contemplated in the Loan Documents.
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The REIT is not (A) in violation of any applicable law, which violation has
a Material Adverse Effect on the REIT, or (B) subject to or in default with
respect to any Court Order which has a Material Adverse Effect on the REIT.
There are no Proceedings pending or, to the best of Borrower's knowledge,
threatened against the REIT, which, if adversely decided, would have a
Material Adverse Effect on the REIT or Borrower.
No Material Adverse Change. Since March 31, 1998, there has occurred no event
which has a Material Adverse Effect on the REIT, and no material adverse change
in the REIT's ability to perform its obligations under the Loan Documents to
which it is a party or the transactions contemplated thereby.
Payment of Taxes. All tax returns and reports to be filed by the REIT have been
timely filed, and all taxes, assessments, fees and other governmental charges
shown on such returns have been paid when due and payable, except such taxes, if
any, as are reserved against in accordance with GAAP and are being contested in
good faith by appropriate proceedings or such taxes, the failure to make payment
of which when due and payable would not have, in the aggregate, a Material
Adverse Effect on the REIT. The REIT has no knowledge of any proposed tax
assessment against the REIT that would have a Material Adverse Effect on the
REIT, which is not being actively contested in good faith by the REIT.
Material Adverse Agreements. The REIT is not a party to or subject to any
Contractual Obligation or other restriction contained in its charter, by-laws or
similar governing documents which has a Material Adverse Effect on the REIT or
the ability of the REIT to perform its obligations under the Loan Documents to
which it is a party.
Performance. The REIT is not in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
Contractual Obligation applicable to it, and no condition exists which, with the
giving of notice or the lapse of time or both, would constitute a default under
such Contractual Obligation in each case, except where the consequences, direct
or indirect, of such default or defaults, if any, would not have a Material
Adverse Effect on the REIT.
Disclosure. The representations and warranties of the REIT contained in the Loan
Documents, and all certificates, financial statements and other documents
delivered to Agent in connection therewith, do not contain any untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements contained herein or therein, in light of the circumstances under
which they were made, not misleading. The REIT has not intentionally withheld
any material fact from Agent in regard to any matter raised in the Loan
Documents. Notwithstanding the foregoing, with respect to projections of the
REIT's future performance such representations and warranties are made in good
faith and to the best judgment of the management of the REIT.
Solvency. The REIT is and will be Solvent, in each case after giving effect to
the disbursement of the Loans, and the payment and accrual of all fees then
payable.
Status as a REIT. The REIT (i) is a real estate investment trust as defined in
Section 856 of the Internal Revenue 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 Internal Revenue Code (or any successor provision
thereto), and (iv) for its current "tax year" (as defined in the Internal
Revenue 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.
NYSE Listing. The common stock of the REIT is and will continue to be listed for
trading and traded on the New York Stock Exchange.
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Executive Officer Ownership. Schedule 5.2(q) to the Revolving Credit Agreement
sets forth the direct and indirect ownership interests of Robert Batinovich and
Andrew Batinovich in Borrower and the REIT, as of the date hereof, indicating
the actual names of such owners, the actual ownership interests of each such
owner in Borrower and the REIT and the percentage ownership interests of each
such owner in Borrower and the REIT in the aggregate.
ARTICLE VI
REPORTING COVENANTS
Borrower covenants and agrees that, on and after the date hereof, until
payment in full of all of the Obligations, the expiration of the Commitments and
termination of this Agreement:
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Financial Statements and Other Financial and Operating Information. Borrower
shall maintain or cause to be maintained a system of accounting established and
administered in accordance with sound business practices and consistent with
past practice to permit preparation of quarterly and annual financial statements
in conformity with GAAP, and each of the financial statements described below
shall be prepared on a consolidated basis for the REIT from such system and
records. Borrower shall deliver or cause to be delivered to Agent (with copies
sufficient for each Lender):
Information Required Under the Revolving Credit Agreement. As and when delivered
to the Agent under the Revolving Credit Agreement, all reports, financial
statements and other information, and all certifications (including each
Officer's Certificate and "Compliance Certificate", as such terms are therein
defined) accompanying such reports, financial statements and other information,
provided to such Agent under any provision of Article VI of the Revolving Credit
Agreement. All such financial statements, other information and certifications
may be relied upon by Agent and Lenders under this Agreement as if certified
directly to them. Any and all financial statements, other information and
certifications provided to the Agent under the Revolving Credit Agreement by
Accountants or other persons other than Borrower shall be specifically addressed
to Agent and the Lenders hereunder as well.
Other Information. Such other information, reports, contracts, schedules, lists,
documents, agreements and instruments in the possession of the REIT or Borrower
with respect to (i) any material change in the REIT's investment, finance or
operating policies, or (ii) Borrower's or the REIT's business, condition
(financial or otherwise), operations, performance, properties or prospects as
Agent may from time to time reasonably request, including, without limitation,
annual information with respect to cash flow projections, budgets, operating
statements (current year and immediately preceding year), rent rolls, lease
expiration reports, leasing status reports, note payable summaries, bullet note
summaries, equity funding requirements, contingent liability summaries, line of
credit summaries, line of credit collateral summaries, wrap note or note
receivable summaries, schedules of outstanding letters of credit, summaries of
cash and cash equivalents, projections of leasing fees and overhead budgets.
Provided that Agent gives Borrower reasonable prior notice and an opportunity to
participate, Borrower hereby authorizes Agent to communicate with the
Accountants and authorizes the Accountants to disclose to Agent any and all
financial statements and other information of any kind, including copies of any
management letter or the substance of any oral information, that such
accountants may have with respect to Borrower's or the REIT's condition
(financial or otherwise), operations, properties, performance and prospects.
Concurrently therewith, Agent will notify Borrower of any such communication. At
Agent's request, Borrower shall deliver a letter addressed to the Accountants
instructing them to disclose such information in compliance with this Section
6.1(b).
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Confidentiality. Confidential information obtained by Agent or Lenders pursuant
to this Agreement or in connection with the Facility shall not be disseminated
by Agent or Lenders and shall not be disclosed to third parties except to
regulators, taxing authorities and other governmental agencies having
jurisdiction over Agent or such Lender or otherwise in response to Requirements
of Law, to their respective auditors and legal counsel and in connection with
regulatory, administrative and judicial proceedings as necessary or relevant
including enforcement proceedings relating to the Loan Documents, and to any
prospective assignee of or participant in a Lender's interest under this
Agreement or any prospective purchaser of the assets or a controlling interest
in any Lender, provided that such prospective assignee, participant or purchaser
first agrees to be bound by the provisions of this Section 6.2. In connection
with disclosures of confidential information to any non-governmental
third-party, the Lender(s) from whom the same has been requested shall, to the
extent feasible and permitted, give prior notice of such request to Borrower;
however, neither Agent nor any such Lender shall incur any liability to Borrower
for failure to do so. For purposes hereof, "confidential information" shall mean
all nonpublic information obtained by Agent or Lenders, unless and until such
information becomes publicly known, other than as a result of unauthorized
disclosure by Agent or Lenders of such information.
ARTICLE VII
INTENTIONALLY OMITTED
ARTICLE VIII
NEGATIVE COVENANTS
Borrower covenants and agrees that, on and after the date hereof, until
payment in full of all of the Obligations, the expiration of the Commitments and
termination of this Agreement, neither the Borrower nor the REIT shall:
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Modification of the Revolving Credit Agreement. Except with the prior written
consent of Agent and Requisite Lenders (or all Lenders, to the extent provided
in Section 12.4), change, modify, or seek a waiver of compliance under (a) any
provisions Section 2.1(a)(iii), Articles VII, VIII or IX or Section 10.1 of the
Revolving Credit Agreement or (b) any definition of any term used in any such
provisions of the Revolving Credit Agreement.
Amendment of Constituent Documents. Borrower shall not amend its partnership
agreement or certificate of limited partnership (including, without limitation,
as to the admission of any new partner, directly or indirectly), except to
accommodate the issuance of new units of Borrower in the ordinary course of
business. The REIT shall not amend its articles of incorporation or by-laws
without the prior written consent of Requisite Lenders, except (i) to increase
authorized capital or to authorize preferred stock, (ii) as required by
applicable law or applicable tax requirements or (iii) as prudent to maintain
qualification as a REIT.
Other Indebtedness. Except with the prior written consent of Agent and Requisite
Lenders, neither Borrower nor the REIT shall incur any additional Indebtedness
(as defined in the Revolving Credit Agreement), secured or unsecured, except
Indebtedness under the Revolving Credit Agreement or otherwise outstanding as of
the Closing Date.
ARTICLE IX
INTENTIONALLY OMITTED
ARTICLE X
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
Events of Default. Each of the following occurrences shall constitute an Event
of Default under this Agreement:
Failure to Make Payments When Due. Borrower shall fail to pay (i) any amount due
on the Maturity Date, (ii) any principal when due, or (iii) any interest on any
Loan, or any fee or other amount payable under any Loan Documents, within five
(5) days after the same becomes due.
Distributions. Borrower or the REIT shall breach any covenant set forth in
Section 7.2(d) or 9.7 of the Revolving Credit Agreement.
Breach of Financial Covenants. Borrower shall fail to satisfy any financial
covenant set forth in Article IX (other than the requirement in Section 9.7) of
the Revolving Credit Agreement and such failure shall continue for thirty (30)
days.
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Other Defaults. Borrower or the REIT shall fail duly and punctually to perform
or observe any agreement, covenant or obligation binding on Borrower or the REIT
under this Agreement or under any of the other Loan Documents (other than as
described in any other provision of this Section 10.1), and with respect to
agreements, covenants or obligations for which no time period for performance is
otherwise provided, such failure shall continue for fifteen (15) days after
Borrower or the REIT knew of such failure (or such lesser period of time as is
mandated by applicable Requirements of Law); provided, however, if such failure
is not capable of cure within such fifteen (15) day period, then if Borrower
promptly undertakes action to cure such failure and thereafter diligently
prosecutes such cure to completion within forty-five (45) days after Borrower or
the REIT knew of such failure, Borrower shall not be in default hereunder.
Breach of Representation or Warranty. Any representation or warranty made or
deemed made by Borrower or the REIT to Agent or any Lender herein or in any of
the other Loan Documents or in any statement, certificate or financial
statements at any time given by Borrower or the REIT pursuant to any of the Loan
Documents shall be false or misleading in any material respect on the date as of
which made.
Default Under the Revolving Credit Agreement. There shall exist any Event of
Default under (and as defined in) the Revolving Credit Agreement.
Involuntary Bankruptcy; Appointment of Receiver, etc.
An involuntary case shall be commenced against the REIT, Borrower, or any
subsidiary of Borrower or the REIT and the petition shall not be dismissed
within sixty (60) days after commencement of the case, or a court having
jurisdiction shall enter a decree or order for relief in respect of any
such Person in an involuntary case, under any applicable bankruptcy,
insolvency or other similar law now or hereinafter in effect; or any other
similar relief shall be granted under any applicable federal, state or
foreign law; or
A decree or order of a court having jurisdiction in the premises for the
appointment of a receiver, liquidator, sequestrator, trustee, custodian or
other officer having similar powers over the REIT, Borrower, or any
subsidiary of Borrower or the REIT, or over all or a substantial part of
the property of any such Person, shall be entered; or an interim receiver,
trustee or other custodian of any such Person or of all or a substantial
part of the property of any such Person, shall be appointed or a warrant of
attachment, execution or similar process against any substantial part of
the property of any such Person, shall be issued and any such event shall
not be stayed, vacated, dismissed, bonded or discharged within sixty (60)
days of entry, appointment or issuance.
Voluntary Bankruptcy; Appointment of Receiver, Etc. The REIT, Borrower, or any
subsidiary of Borrower or the REIT shall have an order for relief entered with
respect to it or commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or shall consent to
the entry of an order for relief in an involuntary case, or to the conversion of
an involuntary case to a voluntary case, under any such law, or shall consent to
the appointment of or taking of possession by a receiver, trustee or other
custodian for all or a substantial part of its property; any such Person shall
make any assignment for the benefit of creditors or shall be unable or fail, or
admit in writing its inability, to pay its debts as such debts become due; or
the general partner of Borrower, or any subsidiary of Borrower or the REIT or
the REIT's Board of Directors (or any committee thereof), adopts any resolution
or otherwise authorizes any action to approve any of the foregoing.
Dissolution. Any order, judgment or decree shall be entered against the REIT,
Borrower, or any subsidiary of Borrower or the REIT decreeing its involuntary
dissolution or split up and such order shall remain undischarged and unstayed
for a period in excess of thirty (30) days; or the REIT or Borrower shall
otherwise dissolve or cease to exist.
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Loan Documents; Failure of Subordination. If for any reason any Loan Document
shall cease to be in full force and effect or any Obligation shall be
subordinated in right of payment to any other liability of Borrower, and, in
either such case, such condition or event shall continue for fifteen (15) days
after Borrower, or the REIT knew of such condition or event.
Solvency; Material Adverse Change. Borrower or the REIT shall cease to be
Solvent, or there shall have occurred any material adverse change in the
business, operations, properties, assets or condition (financial or otherwise)
of Borrower, or the REIT.
Breach of Guaranty. The REIT shall fail to duly and punctually perform or
observe any agreement, covenant or obligation under its Guaranty, or shall
revoke, or purport to revoke, or to disclaim liability under, the Guaranty.
An Event of Default shall be deemed "continuing" until cured or waived in
writing in accordance with Section 12.4.
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Rights and Remedies.
Acceleration, Etc.. Upon the occurrence of any Event of Default described in the
foregoing Section 10.1(g) or 10.1(h) with respect to the REIT or Borrower, the
Commitments shall automatically and immediately terminate and the unpaid
principal amount of and any and all accrued interest on the Loans shall
automatically become immediately due and payable, with all additional interest
from time to time accrued thereon and without presentment, demand or protest or
other requirements of any kind (including, without limitation, valuation and
appraisement, diligence, presentment, notice of intent to demand or accelerate
or notice of acceleration), all of which are hereby expressly waived by
Borrower, and the obligations of Lenders to make any Loans hereunder shall
thereupon terminate; and upon the occurrence and during the continuance of any
other Event of Default, Agent shall, at the request, or may, with the consent of
Requisite Lenders, by written notice to Borrower, (i) declare that the
Commitments are terminated, whereupon the Commitments and the obligation of
Lenders to make any Loan hereunder shall immediately terminate, and/or (ii)
declare the unpaid principal amount of, any and all accrued and unpaid interest
on the Loans and all of the other Obligations to be, and the same shall
thereupon be, immediately due and payable with all additional interest from time
to time accrued thereon and without presentment, demand, or protest or other
requirements of any kind (including without limitation, valuation and
appraisement, diligence, presentment, notice of intent to demand or accelerate
and of acceleration), all of which are hereby expressly waived by Borrower.
Without limiting Agent's authority hereunder, on or after the Maturity Date,
Agent shall, at the request, or may, with the consent, of Requisite Lenders
exercise any or all rights and remedies under the Loan Documents or applicable
law.
Waiver of Demand. Demand, presentment, protest and notice of nonpayment are
hereby waived by Borrower. Borrower also waives, to the extent permitted by law,
the benefit of all valuation, appraisal and exemption laws.
Waivers, Amendments and Remedies. No delay or omission of Agent or Lenders to
exercise any right under any Loan Document shall impair such right or be
construed to be a waiver of any Event of Default or an acquiescence therein, and
any single or partial exercise of any such right shall not preclude other or
further exercise thereof or the exercise of any other right, and no waiver,
amendment or other variation of the terms, conditions or provisions of the Loan
Documents whatsoever shall be valid unless in a writing signed by Agent after
obtaining written approval thereof or the signature thereon of those Lenders
required to approve such waiver, amendment or other variation, and then only to
the extent in such writing specifically set forth. All remedies contained in the
Loan Documents or by law afforded shall be cumulative and all shall be available
to Agent and Lenders until the Obligations have been paid in full, the
Commitments have expired or terminated and this Agreement has been terminated.
Rescission. If at any time after acceleration of the maturity of the Loans,
Borrower shall pay all arrears of interest and all payments on account of
principal of the Loans which shall have become due otherwise than by
acceleration (with interest on principal and, to the extent permitted by law, on
overdue interest, at the rates specified in this Agreement) and all Events of
Default and Unmatured Events of Default (other than nonpayment of principal of
and accrued interest on the Loans due and payable solely by virtue of
acceleration) shall be remedied or waived pursuant to Section 12.4, then by
written notice to Borrower, Requisite Lenders may elect, in their sole
discretion, to rescind and annul the acceleration and its consequences; but such
action shall not affect any subsequent Event of Default or Unmatured Event of
Default or impair any right or remedy consequent thereon. The provisions of the
preceding sentence are intended merely to bind Lenders to a decision which may
be made at the election of Requisite Lenders; they are not intended to benefit
Borrower and do not give Borrower the right to require Lenders to rescind or
annul any acceleration hereunder, even if the conditions set forth herein are
met.
ARTICLE XI
AGENCY PROVISIONS
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Appointment.
Each Lender hereby (i) designates and appoints Wells Fargo as Agent of such
Lender under this Agreement and the Loan Documents, (ii) authorizes and directs
Agent to enter into the Loan Documents other than this Agreement for the benefit
of Lenders, and (iii) authorizes Agent to take such action on its behalf under
the provisions of this Agreement and the Loan Documents and to exercise such
powers as are set forth herein or therein, together with such other powers as
are reasonably incidental thereto, subject to the limitations referred to in
Sections 11.10(a) and 11.10(b). Agent agrees to act as such on the express
conditions contained in this Article XI.
The provisions of this Article XI are solely for the benefit of Agent and
Lenders, and Borrower shall not have any rights to rely on or enforce any of the
provisions hereof (other than as expressly set forth in Sections 11.3, 11.9 and
12.19, provided, however, that the foregoing shall in no way limit Borrower's
obligations under this Article XI. In performing its functions and duties under
this Agreement, Agent shall act solely as Agent of Lenders and does not assume
and shall not be deemed to have assumed any obligation toward or relationship of
agency or trust with or for Borrower or any other Person.
Nature of Duties. Agent shall not have any duties or responsibilities except
those expressly set forth in this Agreement or in the Loan Documents. The duties
of Agent shall be administrative in nature. Subject to the provisions of
Sections 11.5 and 11.7, Agent shall administer the Loans in the same manner as
it administers its own loans. Promptly following the effectiveness of this
Agreement, Agent shall send to each Lender its originally executed Note and the
executed original, to the extent the same are available in sufficient numbers,
of each other Loan Document other than the Notes in favor of other Lenders and
filed or recorded security document or instruments, with the latter to be held
and retained by Agent for the benefit of all Lenders. Agent shall not have by
reason of this Agreement a fiduciary relationship in respect of any Lender.
Nothing in this Agreement or any of the Loan Documents, expressed or implied, is
intended or shall be construed to impose upon Agent any obligation in respect of
this Agreement or any of the Loan Documents except as expressly set forth herein
or therein. Each Lender shall make its own independent investigation of the
financial condition and affairs of the REIT, Borrower in connection with the
making and the continuance of the Loans hereunder and shall make its own
appraisal of the creditworthiness of the REIT and Borrower, and, except as
specifically provided herein, Agent shall not have any duty or responsibility,
either initially or on a continuing basis, to provide any Lender with any credit
or other information with respect thereto, whether coming into its possession
before the Closing Date or at any time or times thereafter.
Loan Disbursements.
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Not later than 1:00 P.M. (Pacific Standard Time) on the next Business Day
following receipt of a Notice of Borrowing, Agent shall send a copy thereof by
facsimile to each other Lender and shall otherwise notify each Lender of the
proposed Borrowing and the Funding Date. Each Lender shall make available to
Agent (or the funding bank or entity designated by Agent), the amount of such
Lender's Pro Rata Share of such Borrowing in immediately available funds not
later than the times designated in Section 11.3(b). Unless Agent shall have been
notified by any Lender not later than the close of business (San Francisco time)
on the Business Day immediately preceding the Funding Date in respect of any
Borrowing that such Lender does not intend to make available to Agent such
Lender's Pro Rata Share of such Borrowing, Agent may assume that such Lender
shall make such amount available to Agent. If any Lender does not notify Agent
of its intention not to make available its Pro Rata Share of such Borrowing as
described above, but does not for any reason make available to Agent such
Lender's Pro Rata Share of such Borrowing, such Lender shall pay to Agent
forthwith on demand such amount, together with interest thereon at the Federal
Funds Rate. In any case where a Lender does not for any reason make available to
Agent such Lender's Pro Rata Share of such Borrowing, Agent, in its sole
discretion, may, but shall not be obligated to, fund to Borrower such Lender's
Pro Rata Share of such Borrowing. If Agent funds to Borrower such Lender's Pro
Rata Share of such Borrowing and if such Lender subsequently pays to Agent such
corresponding amount, such amount so paid shall constitute such Lender's Pro
Rata Share of such Borrowing. Nothing in this Section 11.3(a) shall alter the
respective rights and obligations of the parties hereunder in respect of a
Defaulting Lender or a Non-Pro Rata Loan.
Requests by Agent for funding by Lenders of Loans will be made by telecopy. Each
Lender shall make the amount of its Loan available to Agent in Dollars and in
immediately available funds, to such bank and account, in El Segundo, California
(to such bank and account in such other place) as Agent may designate, not later
than 9:00 A.M. (San Francisco time) on the Funding Date designated in the Notice
of Borrowing with respect to such Loan, but in no event earlier than two (2)
Business Days following Lender's receipt of the applicable Notice of Borrowing.
Nothing in this Section 11.3 shall be deemed to relieve any Lender of its
obligation hereunder to make its Pro Rata Share of Loans on any Funding Date,
nor shall any Lender be responsible for the failure of any other Lender to
perform its obligations to make any Loan hereunder, and the Commitment of any
Lender shall not be increased or decreased as a result of the failure by any
other Lender to perform its obligation to make a Loan.
Distribution and Apportionment of Payments.
Subject to Section 11.4(b), payments actually received by Agent for the account
of Lenders shall be paid to them promptly after receipt thereof by Agent, but in
any event within one (1) Business Day, provided that Agent shall pay to Lenders
interest thereon, at the Federal Funds Rate from the Business Day following
receipt of such funds by Agent until such funds are paid in immediately
available funds to Lenders. Subject to Section 11.4(b), all payments of
principal and interest in respect of outstanding Loans, all payments of the fees
described in this Agreement, and all payments in respect of any other
Obligations shall be allocated among such of Lenders as are entitled thereto, in
proportion to their respective Pro Rata Shares or otherwise as provided herein.
Agent shall promptly distribute, but in any event within one (1) Business Day,
to each Lender at its primary address set forth on the appropriate signature
page hereof or on the Assignment and Assumption, or at such other address as a
Lender may request in writing, such funds as it may be entitled to receive,
provided that Agent shall in any event not be bound to inquire into or determine
the validity, scope or priority of any interest or entitlement of any Lender and
may suspend all payments and seek appropriate relief (including, without
limitation, instructions from Requisite Lenders or all Lenders, as applicable,
or an action in the nature of interpleader) in the event of any doubt or dispute
as to any apportionment or distribution contemplated hereby. The order of
priority herein is set forth solely to determine the rights and priorities of
Lenders as among themselves and may at any time or from time to time be changed
by Lenders as they may elect, in writing in accordance with Section 12.4,
without necessity of notice to or consent of or approval by Borrower or any
other Person. All payments or other sums received by Agent for the account of
Lenders shall not constitute property or assets of the Agent and shall be held
by Agent, solely in its capacity as agent for itself and the other Lenders,
subject to the Loan Documents.
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Notwithstanding any provision hereof to the contrary; until such time as a
Defaulting Lender has funded its Pro Rata Share of a Loan which was previously a
Non Pro Rata Loan, or all other Lenders have received payment in full (whether
by repayment or prepayment) of the principal and interest due in respect of such
Non Pro Rata Loan, all of the Obligations owing to such Defaulting Lender
hereunder shall be subordinated in right of payment, as provided in the
following sentence, to the prior payment in full of all principal, interest and
fees in respect of all Non Pro Rata Loans in which the Defaulting Lender has not
funded its Pro Rata Share (such principal, interest and fees being referred to
as "Senior Loans"). All amounts paid by Borrower and otherwise due to be applied
to the Obligations owing to the Defaulting Lender pursuant to the terms hereof
shall be distributed by Agent to the other Lenders in accordance with their
respective Pro Rata Shares (recalculated for purposes hereof to exclude the
Defaulting Lender's Commitment), until all Senior Loans have been paid in full.
This provision governs only the relationship among Agent, each Defaulting
Lender, and the other Lenders; nothing hereunder shall limit the obligation of
Borrower to repay all Loans in accordance with the terms of this Agreement. The
provisions of this section shall apply and be effective regardless of whether an
Event of Default occurs and is then continuing, and notwithstanding (i) any
other provision of this Agreement to the contrary, (ii) any instruction of
Borrower as to its desired application of payments or (iii) the suspension of
such Defaulting Lender's right to vote on matters which are subject to the
consent or approval of Requisite Lenders or all Lenders. In addition, until any
Lender's failure to fund Loans or to reimburse Agent for any Liabilities and
Costs as herein provided has been cured, Agent shall be entitled to (1) withhold
or setoff, and to apply to the payment of the defaulted amount and any related
interest, any amounts to be paid to such Defaulting Lender under this Agreement,
and (2) bring an action or suit against such Defaulting Lender in a court of
competent jurisdiction to recover the defaulted amount and any related interest.
In addition, the Defaulting Lender shall indemnify, defend and hold Agent and
each of the other Lenders harmless from and against any and all Liabilities and
Costs, plus interest thereon at the Default Rate, which they may sustain or
incur by reason of or as a direct consequence of the Defaulting Lender's failure
or refusal to abide by its obligations under this Agreement.
Rights, Exculpation, Etc. Neither Agent, any Affiliate of Agent, nor any of
their respective officers, directors, employees, agents, attorneys or
consultants, shall be liable to any Lender for any action taken or omitted by
them hereunder or under any of the Loan Documents, or in connection herewith or
therewith, except that Agent shall be liable for its gross negligence or willful
misconduct. In the absence of gross negligence or willful misconduct, Agent
shall not be liable for any apportionment or distribution of payments made by it
in good faith pursuant to Section 11.4, and if any such apportionment or
distribution is subsequently determined to have been made in error the sole
recourse of any Person to whom payment was due, but not made, shall be to
recover from the recipients of such payments any payment in excess of the amount
to which they are determined to have been entitled. Agent shall not be
responsible to any Lender for any recitals, statements, representations or
warranties herein or for the execution, effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any of the
other Loan Documents, or any of the transactions contemplated hereby and
thereby; or for the financial condition of the REIT or Borrower or any of their
Affiliates. Agent shall not be required to make any inquiry concerning either
the performance or observance of any of the terms, provisions or conditions of
this Agreement or any of the Loan Documents or the financial condition of the
REIT or Borrower or any of their Affiliates, or the existence or possible
existence of any Unmatured Event of Default or Event of Default.
Reliance. Agent shall be entitled to rely upon any written notices, statements,
certificates, orders or other documents, telecopies or any telephone message
believed by it in good faith to be genuine and correct and to have been signed,
sent or made by the proper Person, and with respect to all matters pertaining to
this Agreement or any of the Loan Documents and its duties hereunder or
thereunder, upon advice of legal counsel (including counsel for Borrower),
independent public accountant and other experts selected by it.
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Indemnification. To the extent that Agent is not reimbursed and indemnified by
Borrower, Lenders will reimburse, within ten (10) Business Days after notice
from Agent, and indemnify and defend Agent for and against any and all
Liabilities and Costs which may be imposed on, incurred by, or asserted against
it in any way relating to or arising out of this Agreement or any of the other
Loan Documents or any action taken or omitted by Agent or under this Agreement
or any of the other Loan Documents, in proportion to each Lender's Pro Rata
Share; provided that no Lender shall be liable for any portion of such
Liabilities and Costs resulting from Agent's gross negligence or willful
misconduct. The obligations of Lenders under this Section 11.7 shall survive the
payment in full of all Obligations and the termination of this Agreement. In the
event that after payment and distribution of any amount by Agent to Lenders, any
Lender or third party, including Borrower, any creditor of Borrower or a trustee
in bankruptcy, recovers from Agent any amount found to have been wrongfully paid
to Agent or disbursed by Agent to Lenders, then Lenders, in proportion to their
respective Pro Rata Shares, shall reimburse Agent for all such amounts.
Notwithstanding the foregoing, Agent shall not be obligated to advance
Liabilities and Costs and may require the deposit by each Lender of its Pro Rata
Share of any material Liabilities and Costs anticipated by Agent before they are
incurred or made payable.
Agent Individually. With respect to its Pro Rata Share of the Commitments
hereunder and the Loans made by it, Agent shall have and may exercise the same
rights and powers hereunder and is subject to the same obligations and
liabilities as and to the extent set forth herein for any other Lender. The
terms "Lenders", "Requisite Lenders" or any similar terms may include Agent in
its individual capacity as a Lender or one of the Requisite Lenders, but
Requisite Lenders shall not include Agent solely in its capacity as Agent and
need not necessarily include Agent in its capacity as a Lender. Agent and any
Lender and its Affiliates may accept deposits from, lend money to, and generally
engage in any kind of banking, trust or other business with Borrower or any of
its Affiliates as if it were not acting as Agent or Lender pursuant hereto.
Successor Agent; Resignation of Agent; Removal of Agent.
Agent may resign from the performance of all its functions and duties hereunder
at any time by giving at least thirty (30) Business Days' prior written notice
to Lenders and Borrower, and shall automatically cease to be Agent hereunder in
the event a petition in bankruptcy shall be filed by or against Agent or the
Federal Deposit Insurance Corporation or any other Governmental Authority shall
assume control of Agent or Agent's interests under the Facility. Further,
Lenders (other than Agent) may unanimously remove Agent at any time for good
cause by giving at least thirty (30) Business Days' prior written notice to
Agent, Borrower and all other Lenders. Such resignation or removal shall take
effect upon the acceptance by a successor Agent of appointment pursuant to
clause (b) or (c). Concurrent with the effectiveness of such appointment,
Borrower shall pay to the retiring or removed Agent any accrued and unpaid
agency fee, or Agent shall refund to Borrower any prepaid agency fee, in each
case prorated to the effective date of such appointment of a successor Agent.
Upon any such notice of resignation by or removal of Agent, Requisite Lenders
shall appoint a successor Agent which appointment shall be subject to Borrower's
consent (other than upon the occurrence and during the continuance of any Event
of Default), which shall not be unreasonably withheld or delayed. Any successor
Agent must be a bank (i) the senior debt obligations of which (or such bank's
parent's senior unsecured debt obligations) are rated not less than Baa-2 by
Moody's or a comparable rating by a rating agency acceptable to Requisite
Lenders and (ii) which has total assets in excess of Ten Billion Dollars
($10,000,000,000). Such successor Agent shall separately confirm in writing with
Borrower the fee to be paid to such Agent pursuant to Section 4.1(j).
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If a successor Agent shall not have been so appointed within said thirty (30)
Business Day period, the retiring or removed Agent, with the consent of Borrower
(other than upon the occurrence and during the continuance of any Event of
Default)(which may not be unreasonably withheld or delayed), shall then appoint
a successor Agent who shall meet the requirements described in subsection (b)
above and who shall serve as Agent until such time, if any, as Requisite
Lenders, with the consent of Borrower (other than upon the occurrence and during
the continuance of any Event of Default), appoint a successor Agent as provided
above.
Consent and Approvals.
Each consent, approval, amendment, modification or waiver specifically
enumerated in this Section 11.10(a) shall require the consent of Requisite
Lenders:
Modification or waiver of provisions of the Revolving Credit Agreement
(Section 8.1);
Approval of any material amendment of organizational documents (Section
8.2);
Approval of certain changes in Borrower's executive officers (Section
8.5(a) of the Revolving Credit Agreement);
Acceleration following an Event of Default (Section 10.2(a)) or rescission
of such acceleration (Section 10.3);
Approval of the exercise of rights and remedies under the Loan Documents
following an Event of Default (Section 10.2(a));
Appointment of a successor Agent (Section 11.9);
Approval of a change in the method of calculation of any financial
covenants, standards or terms as a result a change in accounting principles
(Section 12.3); and
Except as referred to in subsection (b) below, approval of any amendment,
modification or termination of this Agreement, or waiver of any provision
herein (Section 12.4).
Each consent, approval, amendment, modification or waiver specifically
enumerated in Section 12.4 as requiring the consent of all Lenders shall require
the consent of all Lenders.
In addition to the required consents or approvals referred to in subsection (a)
above, Agent may at any time request instructions from Requisite Lenders with
respect to any actions or approvals which, by the terms of this Agreement or of
any of the Loan Documents, Agent is permitted or required to take or to grant
without instructions from any Lenders, and if such instructions are promptly
requested, Agent shall be absolutely entitled to refrain from taking any action
or to withhold any approval and shall not be under any liability whatsoever to
any Person for refraining from taking any action or withholding any approval
under any of the Loan Documents until it shall have received such instructions
from Requisite Lenders. Without limiting the foregoing, no Lender shall have any
right of action whatsoever against Agent as a result of Agent acting or
refraining from acting under this Agreement or any of the other Loan Documents
in accordance with the instructions of Requisite Lenders or, where applicable,
all Lenders. Agent shall promptly notify each Lender at any time that the
Requisite Lenders have instructed Agent to act or refrain from acting pursuant
hereto.
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Each Lender agrees that any action taken by Agent at the direction or with the
consent of Requisite Lenders in accordance with the provisions of this Agreement
or any Loan Document, and the exercise by Agent at the direction or with the
consent of Requisite Lenders of the powers set forth herein or therein, together
with such other powers as are reasonably incidental thereto, shall be authorized
and binding upon all Lenders, except for actions specifically requiring the
approval of all Lenders. All communications from Agent to Lenders requesting
Lenders' determination, consent, approval or disapproval (i) shall be given in
the form of a written notice to each Lender, (ii) shall be accompanied by a
description of the matter or thing as to which such determination, approval,
consent or disapproval is requested, or shall advise each Lender where such
matter or thing may be inspected, or shall otherwise describe the matter or
issue to be resolved, (iii) shall include, if reasonably requested by a Lender
and to the extent not previously provided to such Lender, written materials and
a summary of all oral information provided to Agent by Borrower in respect of
the matter or issue to be resolved, and (iv) shall include Agent's recommended
course of action or determination in respect thereof. Each Lender shall reply
promptly, but in any event within ten (10) Business Days (the "Lender Reply
Period"). Unless a Lender shall give written notice to Agent that it objects to
the recommendation or determination of Agent (together with a written
explanation of the reasons behind such objection) within the Lender Reply
Period, such Lender shall be deemed to have approved of or consented to such
recommendation or determination. With respect to decisions requiring the
approval of Requisite Lenders or all Lenders, Agent shall submit its
recommendation or determination for approval of or consent to such
recommendation or determination to all Lenders and upon receiving the required
approval or consent shall follow the course of action or determination
recommended to Lenders by Agent or such other course of action recommended by
Requisite Lenders, and each non-responding Lender shall be deemed to have
concurred with such recommended course of action.
Agency Provisions Relating to Enforcement of Certain Rights.
Agent is hereby authorized on behalf of all Lenders, without the necessity of
any notice to or further consent from any Lender, to waive the imposition of the
late fees provided for in Section 2.4(e) up to a maximum of two (2) times per
calendar year.
Should Agent (i) employ counsel for advice or other representation (whether or
not any suit has been or shall be filed) with respect to any of the Loan
Documents, or (ii) commence any proceeding or in any way seek to enforce its
rights or remedies under the Loan Documents, each Lender, upon demand therefor
from time to time, shall contribute its share (based on its Pro Rata Share) of
the reasonable costs and/or expenses of any such advice or other representation,
enforcement or acquisition, including, but not limited to, fees of receivers,
court costs, appraisers' fees and fees and expenses of attorneys to the extent
not otherwise reimbursed by Borrower; provided that Agent shall not be entitled
to reimbursement of its attorneys' fees and expenses incurred in connection with
the resolution of disputes between Agent and other Lenders unless Agent shall be
the prevailing party in any such dispute. Any loss of principal and interest
resulting from any Event of Default shall be shared by Lenders in accordance
with their respective Pro Rata Shares. It is understood and agreed that in the
event Agent determines it is necessary to engage counsel for Lenders from and
after the occurrence of an Event of Default, said counsel shall be selected by
Agent.
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Ratable Sharing. Subject to Sections 11.3 and 11.4, Lenders agree among
themselves that (i) with respect to all amounts received by them which are
applicable to the payment of the Obligations, equitable adjustment will be made
so that, in effect, all such amounts will be shared among them ratably in
accordance with their Pro Rata Shares, whether received by voluntary payment, by
counterclaim or cross action or by the enforcement of any or all of the
Obligations, (ii) if any of them shall by voluntary payment or by the exercise
of any right of counterclaim or otherwise, receive payment of a proportion of
the aggregate amount of the Obligations held by it which is greater than its Pro
Rata Share of the payments on account of the Obligations, the one receiving such
excess payment shall purchase, without recourse or warranty, an undivided
interest and participation (which it shall be deemed to have done simultaneously
upon the receipt of such payment) in such Obligations owed to the others so that
all such recoveries with respect to such Obligations shall be applied ratably in
accordance with their Pro Rata Shares; provided, that if all or part of such
excess payment received by the purchasing party is thereafter recovered from it,
those purchases shall be rescinded and the purchase prices paid for such
participations shall be returned to that party to the extent necessary to adjust
for such recovery, but without interest except to the extent the purchasing
party is required to pay interest in connection with such recovery. Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section 11.12 may, to the fullest extent permitted by law,
exercise all its rights of payment with respect to such participation as fully
as if such Lender were the direct creditor of Borrower in the amount of such
participation.
Delivery of Documents. Agent shall as soon as reasonably practicable distribute
to each Lender at its primary address set forth on the appropriate counterpart
signature page hereof, or at such other address as a Lender may request in
writing, (i) copies of all documents to which such Lender is a party or of which
such Lender is a beneficiary set forth in Article 4, (ii) all documents of which
Agent receives copies from Borrower pursuant to Sections 6.1 and 12.6, (iii) all
other documents or information which Agent is required to send to Lenders
pursuant to the terms of this Agreement, and (iv) other information or documents
received by Agent at the request of any Lender. In addition, within fifteen (15)
Business Days after receipt of a request in writing from a Lender for written
information or documents provided by or prepared by Borrower, the REIT or any
subsidiary of Borrower or the REIT, Agent shall deliver such written information
or documents to such requesting Lender if Agent has possession of such written
information or documents in its capacity as Agent or as a Lender.
Notice of Events of Default. Agent shall not be deemed to have knowledge or
notice of the occurrence of any Unmatured Event of Default or Event of Default
(other than nonpayment of principal of or interest on the Loans) unless Agent
has received notice in writing from a Lender or Borrower referring to this
Agreement or the other Loan Documents, describing such event or condition and
expressly stating that such notice is a notice of an Unmatured Event of Default
or Event of Default. Should Agent receive such notice of the occurrence of an
Unmatured Event of Default or Event of Default, or should Agent send Borrower a
notice of Unmatured Event of Default or Event of Default, Agent shall promptly
give notice thereof to each Lender.
ARTICLE XII
MISCELLANEOUS
Expenses.
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Generally. Borrower agrees upon demand to pay, or reimburse Agent for, all of
Agent's external audit, legal (to the extent incurred following the Closing Date
and not relating to the closing of this Agreement), appraisal, valuation and
investigation expenses and for all other reasonable out-of-pocket costs and
expenses of every type and nature (excluding Agent's travel expenses, but
including, without limitation, the reasonable fees, expenses and disbursements
of Agent's internal appraisers, environmental advisors or legal counsel)
incurred by Agent at any time (whether prior to, on or after the date of this
Agreement) in connection with (i) its own audit and investigation of Borrower;
(ii) the negotiation, preparation and execution of this Agreement (including,
without limitation, the satisfaction or attempted satisfaction of any of the
conditions set forth in Article IV) and the other Loan Documents and the making
of the Loans; (iii) the syndication of the Loans; (iv) the administration of
this Agreement, the other Loan Documents and the Loans, including, without
limitation, consultation with attorneys in connection therewith; and (v) the
protection, collection or enforcement of any of the Obligations.
After Event of Default. Borrower further agrees to pay, or reimburse Agent and
Lenders, for all reasonable out-of-pocket costs and expenses, including without
limitation reasonable attorneys' fees and disbursements incurred by Agent or
Lenders after the occurrence of an Event of Default (i) in enforcing any
Obligation or exercising or enforcing any other right or remedy available by
reason of such Event of Default; (ii) in connection with any refinancing or
restructuring of the credit arrangements provided under this Agreement in the
nature of a "work-out" or in any insolvency or bankruptcy proceeding; (iii) in
commencing, defending or intervening in any litigation or in filing a petition,
complaint, answer, motion or other pleadings in any legal proceeding relating to
Borrower, the REIT or any subsidiary of Borrower or the REIT and related to or
arising out of the transactions contemplated hereby; or (iv) in taking any other
action in or with respect to any suit or proceeding (whether in bankruptcy or
otherwise).
Indemnity. Borrower further agrees to defend, protect, indemnify and hold
harmless Agent, each and all of the Lenders, each of their respective Affiliates
and participants and each of the respective officers, directors, employees,
agents, attorneys and consultants (including, without limitation, those retained
in connection with the satisfaction or attempted satisfaction of any of the
conditions set forth in Article IV) of each of the foregoing (collectively
called the "Indemnitees") from and against any and all Liabilities and Costs
imposed on, incurred by, or asserted against such Indemnitees (whether based on
any federal or state laws or other statutory regulations, including, without
limitation, securities and commercial laws and regulations, under common law or
in equity, and based upon contract or otherwise to the extent arising from or in
connection with the past, present or future operations of the REIT or Borrower)
in any manner relating to or arising out of this Agreement, or the other Loan
Documents, or any act, event or transaction related or attendant thereto, the
making of and participation in the Loans and the management of the Loans, or the
use or intended use of the proceeds of the Loans (collectively, the "Indemnified
Matters"); provided, however, that Borrower shall have no obligation to an
Indemnitee hereunder with respect to (a) matters for which such Indemnitee has
been compensated pursuant to or for which an exemption is provided in Section
2.4(g) or any other provision of this Agreement, and (b) Indemnified Matters to
the extent caused by or resulting from the willful misconduct or gross
negligence of that Indemnitee, as determined by a court of competent
jurisdiction. To the extent that the undertaking to indemnify, pay and hold
harmless set forth in the preceding sentence may be unenforceable because it is
violative of any law or public policy, Borrower shall contribute the maximum
portion which it is permitted to pay and satisfy under applicable law, to the
payment and satisfaction of all Indemnified Matters incurred by the Indemnitees.
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Change in Accounting Principles. Except as otherwise provided herein, if any
changes in accounting principles from those used in the preparation of the most
recent financial statements delivered to Agent pursuant to the terms hereof are
hereinafter required or permitted by the rules, regulations, pronouncements and
opinions of the Financial Accounting Standards Board or the American Institute
of Certified Public Accountants (or successors thereto or agencies with similar
functions) and are adopted by the REIT or Borrower with the agreement of its
independent certified public accountants and such changes result in a change in
the method of calculation of any of the financial covenants, standards or terms
found herein or in the Revolving Credit Agreement, the parties hereto agree to
enter into negotiations in order to amend such provisions so as to equitably
reflect such changes with the desired result that the criteria for evaluating
the financial condition of Borrower shall be the same after such changes as if
such changes had not been made; provided, however, that no change in GAAP that
would affect the method of calculation of any of the financial covenants,
standards or terms shall be given effect in such calculations until such
provisions are amended, in a manner satisfactory to Agent and Requisite Lenders,
to so reflect such change in accounting principles.
Amendments and Waivers. (a) No amendment or modification of any provision of
this Agreement shall be effective without the written agreement of Requisite
Lenders (after notice to all Lenders) and Borrower (except for amendments to
Section 11.4(a), which do not require the consent of Borrower), and (b) no
termination or waiver of any provision of this Agreement, or consent to any
departure by Borrower therefrom (except as expressly provided in Section
11.11(a) with respect to waivers of late fees), shall in any event be effective
without the written concurrence of Requisite Lenders (after notice to all
Lenders), which Requisite Lenders shall have the right to grant or withhold at
their sole discretion, except that the following amendments, modifications or
waivers shall require the consent of all Lenders:
increasing the Commitments or any Lender's Commitment;
changing the principal amount or final maturity of the Loans;
reducing the interest rates applicable to the Loans;
forgiving or delaying any amount payable or receivable under Article II
(other than late fees in accordance with Section 11.11(a));
changing the definition, as used herein or in the Revolving Credit
Agreement, of "Requisite Lenders", "Loan Availability", "Pro Rata Shares"
or "Unencumbered Pool Value";
changing any provision contained in Section 9.2 or 9.6 of the Revolving
Credit Agreement;
removal of Agent pursuant to Section 11.9;
changing any provision contained in this Section 12.4;
releasing any obligor under any Loan Document; or
consent to assignment by Borrower of all of its duties and Obligations
hereunder pursuant to Section 12.14.
No amendment, modification, termination or waiver of any provision of
Article XI or any other provision referring to Agent shall be effective without
the written concurrence of Agent, but only if such amendment,
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modification, termination or waiver alters the obligations or rights of Agent.
Any waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it was given. No notice to or demand on Borrower
in any case shall entitle Borrower to any other further notice or demand in
similar or other circumstances. Any amendment, modification, termination, waiver
or consent effected in accordance with this Section 12.4 shall be binding on
each assignee, transferee or recipient of Agent's or any Lender's Commitment
under this Agreement or the Loans at the time outstanding.
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Independence of Covenants. All covenants hereunder shall be given independent
effect so that if a particular action or condition is not permitted by any of
such covenants, the fact that it would be permitted by an exception to, or be
otherwise within the limitations of, another covenant shall not avoid the
occurrence of an Event of Default or Unmatured Event of Default if such action
is taken or condition exists, and if a particular action or condition is
expressly permitted under any covenant, unless expressly limited to such
covenant, the fact that it would not be permitted under the general provisions
of another covenant shall not constitute an Event of Default or Unmatured Event
of Default if such action is taken or condition exists.
Notices and Delivery. Unless otherwise specifically provided herein, any
consent, notice or other communication herein required or permitted to be given
shall be in writing and may be personally served, telecopied or sent by courier
service or United States mail and shall be deemed to have been given when
delivered in person or by courier service, upon receipt of a telecopy (or on the
next Business Day if such telecopy is received on a non-Business Day or after
5:00 p.m. on a Business Day) or four (4) Business Days after deposit in the
United States mail (registered or certified, with postage prepaid and properly
addressed). Notices to Agent pursuant to Article II shall not be effective until
received by Agent. For the purposes hereof, the addresses of the parties hereto
(until notice of a change thereof is delivered as provided in this Section 12.6)
shall be as set forth below each party's name on the signature pages hereof, or,
as to each party, at such other address as may be designated by such party in a
written notice to all of the other parties. All deliveries to be made to Agent
for distribution to the Lenders shall be made to Agent at the addresses
specified for notice on the signature page hereto and in addition, a sufficient
number of copies of each such delivery shall be delivered to Agent for delivery
to each Lender at the address specified for deliveries on the signature page
hereto or such other address as may be designated by Agent in a written notice.
Survival of Warranties, Indemnities and Agreements. All agreements,
representations, warranties and indemnities made or given herein shall survive
the execution and delivery of this Agreement and the other Loan Documents and
the making and repayment of the Loans hereunder and such indemnities shall
survive termination hereof.
Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or delay on
the part of Agent or any Lender in the exercise of any power, right or privilege
under any of the Loan Documents shall impair such power, right or privilege or
be construed to be a waiver of any default or acquiescence therein, nor shall
any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or privilege. All
rights and remedies existing under the Loan Documents are cumulative to and not
exclusive of any rights or remedies otherwise available.
Payments Set Aside. To the extent that Borrower makes a payment or payments to
Agent or the Lenders or Agent or the Lenders exercise their rights of setoff,
and such payment or payments or the proceeds of such setoff or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside and/or required to be repaid to a trustee, receiver or any other party
under any bankruptcy law, state or federal law, common law or equitable cause,
then to the extent of such recovery, the Obligation or part thereof originally
intended to be satisfied, and rights and remedies therefor, shall be revived and
continued in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.
Severability. In case any provision in or obligation under this Agreement or the
other Loan Documents shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby, provided,
however, that if the rates of interest or any other amount payable hereunder, or
the collectibility thereof, are declared to be or become invalid, illegal or
unenforceable, Lenders' obligations to make Loans shall not be enforceable.
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Headings. Section headings in this Agreement are included herein for convenience
of reference only and shall not constitute a part of this Agreement for any
other purpose or be given any substantive effect.
Governing Law. This Agreement shall be governed by, and shall be construed and
enforced in accordance with, the laws of the State of California.
Limitation of Liability. To the extent permitted by applicable law, no claim may
be made by Borrower, any Lender or any other Person against Agent or any Lender,
or the affiliates, directors, officers, employees, attorneys or agents of any of
them, for any special, indirect, consequential or punitive damages in respect of
any claim for breach of contract or any other theory of liability arising out of
or related to the transactions contemplated by this Agreement, or any act,
omission or event occurring in connection therewith; and Borrower and each
Lender hereby waive, release and agree not to sue upon any claim for any such
damages, whether or not accrued and whether or not known or suspected to exist
in its favor, provided that if a Lender refuses to fund a Loan and a court of
competent jurisdiction finds that such refusal was without justification and in
bad faith, such Lender may be liable to Borrower for Borrower's reasonable and
foreseeable damages resulting from such refusal to fund.
Successors and Assigns. This Agreement and the other Loan Documents shall be
binding upon the parties hereto and their respective successors and assigns and
shall inure to the benefit of the parties hereto and the successors and
permitted assigns of Agent and Lenders. The terms and provisions of this
Agreement shall inure to the benefit of any assignee or transferee of the Loans
and the Commitments of Lenders under this Agreement, and in the event of such
transfer or assignment, the rights and privileges herein conferred upon Agent
and Lenders shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions hereof. Borrower's rights or
any interest therein hereunder, and Borrower's duties and Obligations hereunder,
shall not be assigned without the consent of all Lenders.
Consent to Jurisdiction and Service of Process; Waiver of Jury Trial. ALL
JUDICIAL PROCEEDINGS BROUGHT AGAINST BORROWER WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT MAY BE AND ALL JUDICIAL PROCEEDINGS BROUGHT BY BORROWER
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT IN
ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION HAVING SITUS WITHIN THE
BOUNDARIES OF THE FEDERAL COURT DISTRICT OF THE NORTHERN DISTRICT OF CALIFORNIA,
AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, BORROWER ACCEPTS, FOR ITSELF
AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY
FINAL JUDGMENT RENDERED THEREBY FROM WHICH NO APPEAL HAS BEEN TAKEN OR IS
AVAILABLE. BORROWER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ITS NOTICE ADDRESS
SPECIFIED ON THE SIGNATURE PAGES HEREOF. BORROWER, AGENT AND LENDERS IRREVOCABLY
WAIVE (A) TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, AND (B) ANY OBJECTION (INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT IN ANY JURISDICTION SET FORTH ABOVE. NOTHING HEREIN SHALL AFFECT THE
RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE
RIGHT OF AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST BORROWER IN THE COURTS
OF ANY OTHER JURISDICTION.
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Counterparts; Effectiveness; Inconsistencies. This Agreement and any amendments,
waivers, consents or supplements may be executed in counterparts, each of which
when so executed and delivered shall be deemed an original, but all such
together shall constitute but one and the same instrument This Agreement and
each of the other Loan Documents shall be construed to the extent reasonable to
be consistent one with the other, but to the extent that the terms and
conditions of this Agreement are actually and directly inconsistent with the
terms and conditions of any other Loan Document, this Agreement shall govern.
Construction. The parties acknowledge that each party and its counsel have
reviewed and revised this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments
or exhibits hereto.
Entire Agreement. This Agreement, taken together with all of the other Loan
Documents and all certificates and other documents delivered by Borrower to
Agent, embodies the entire agreement and supersede all prior agreements, written
and oral, relating to the subject matter hereof.
Assignments and Participations.
After first obtaining the approval of Agent and Borrower (other than upon the
occurrence and during the continuance of any Event of Default), which approval
will not be unreasonably withheld, each Lender may assign to one or more
Eligible Assignees, all or a portion of its rights and obligations under this
Agreement (including without limitation all or a portion of its Commitment and
the Loans owing to it) and other Loan Documents; provided, however, that (i)
each such assignment shall be of a constant, and not a varying, percentage of
the assigning Lender's rights and obligations under this Agreement and other
Loan Documents, and the assignment shall cover the same percentage of such
Lender's Commitment and Loans, (ii) the aggregate amount of the Commitment of
the assigning Lender being assigned pursuant to each such assignment (determined
as of the date of the Assignment and Assumption with respect to such assignment)
shall in no event be less than Ten Million Dollars ($10,000,000) and shall be an
integral multiple of One Million Dollars ($1,000,000), (iii) after giving effect
to such assignment, the aggregate amount of the Commitment retained by the
assigning Lender shall in no event be less than Five Million Dollars
($5,000,000), (iv) at all times prior to its resignation or replacement or an
Event of Default, Agent's Commitment shall be equal to or exceed the Commitment
of each other Lender, (v) the parties to each such assignment shall execute and
deliver to Agent, for its approval and acceptance, an Assignment and Assumption,
and (vi) Agent shall receive from the assignor a processing fee of Three
Thousand Dollars ($3,000). Without restricting the right of Borrower or Agent to
reasonably object to any bank or financial institution becoming an assignee of
an interest of a Lender hereunder, each proposed assignee must be an existing
Lender or a bank or financial institution which (A) has (or, in the case of a
bank which is a subsidiary, such bank's parent has) a rating of its senior
unsecured debt obligations of not less than Baa-2 by Moody's or a comparable
rating by a rating agency acceptable to Agent and (B) has total assets in excess
of Ten Billion Dollars ($10,000,000,000). Unless Agent or Borrower gives written
notice to the assigning Lender that it objects to the proposed assignment
(together with a written explanation of the reasons behind such objection)
within ten (10) Business Days following receipt of the assigning Lender's
written request for approval of the proposed assignment, Agent or Borrower, as
the case may be, shall be deemed to have approved such assignment. Upon such
execution, delivery, approval and acceptance, and upon the effective date
specified in the applicable Assignment and Assumption, (X) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Assumption, have the rights and obligations of a Lender hereunder, and (Y) the
assigning Lender thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Assumption,
relinquish its rights and be released from its obligations under this Agreement.
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By executing and delivering an Assignment and Assumption, the assigning Lender
thereunder and the assignee thereunder confirm to and agree with each other and
the other parties hereto as follows: (i) other than as provided in such
Assignment and Assumption, such 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
any other Loan Document or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other Loan Document
or any other instrument or document furnished pursuant hereto; (ii) such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the REIT or Borrower
or the performance or observance by the REIT or Borrower or of any of their
respective obligations under any Loan Document or any other instrument or
document furnished pursuant hereto; (iii) such assignee confirms that it has
received a copy of this Agreement, together with copies of the financial
statements referred to in Article V or delivered pursuant to Article VI to the
date of such assignment and such other Loan Documents and other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Assumption; (iv) such assignee will,
independently and without reliance upon Agent, such assigning Lender 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; (v) such assignee appoints and
authorizes 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
Agent by the terms hereof and thereof, together with such powers as are
reasonably incidental thereto; and (vi) such assignee agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of this Agreement are required to be performed by it as a Lender.
Agent shall maintain, at its address referred to on the counterpart signature
pages hereof, a copy of each Assignment and Assumption delivered to and accepted
by it and shall record in the Loan Account the names and addresses of each
Lender and the Commitment of, and principal amount of the Loans owing to, such
Lender from time to time. Borrower, Agent and Lenders may treat each Person
whose name is recorded in the Loan Account as a Lender hereunder for all
purposes of this Agreement.
Upon its receipt of an Assignment and Assumption executed by an assigning Lender
and an assignee, Agent shall, if such Assignment and Assumption has been
properly completed and is in substantially the form of Exhibit A, (i) accept
such Assignment and Assumption, (ii) record the information contained therein in
the Loan Account, and (iii) give prompt notice thereof to Borrower. Upon
request, Borrower will execute and deliver to Agent an appropriate replacement
promissory note or replacement promissory notes in favor of each assignee (and
assignor, if such assignor is retaining a portion of its Commitment and Loans)
reflecting such assignee's (and assignor's) Pro Rata Share(s) of the Facility.
Upon execution and delivery of such replacement promissory notes the original
promissory note or notes evidencing all or a portion of the Commitments and
Loans being assigned shall be canceled and returned to Borrower.
Each Lender may sell participations to one or more banks or other entities in or
to all or a portion of its rights and obligations under this Agreement
(including without limitation all or a portion of its Commitment and the Loans
owing to it) and other Loan Documents; provided, however, that (i) such Lender's
obligations under this Agreement (including without limitation its Commitment to
Borrower hereunder) shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) Borrower, Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and with regard to any and all payments to be
made under this Agreement, and (iv) the holder of any such participation shall
not be entitled to voting rights under their participation agreement except for
voting rights with respect to (A) increases in the Facility; (B) extensions of
the Maturity Date; (C) decreases in the interest rates or fees described in this
Agreement; and (D) the release of the Guaranty. No participant shall be entitled
to vote on any matter until the Lender with which such participant is
participating in the Facility and the Loans confirms such participant's status
as a participant hereunder.
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Borrower will use reasonable efforts to cooperate with Agent and Lenders in
connection with the assignment of interests under this Agreement or the sale of
participations herein. Borrower also agrees to amend this agreement to add such
additional provisions, not materially inconsistent with those herein as of the
Closing Date, as Agent may reasonably determine are necessary to facilitate
syndication of the Facility, and to refrain from activity in the loan
syndication market until Agent has completed the syndication of the Facility or
until otherwise agreed in order to assure a clear market for the syndication.
Anything in this Agreement to the contrary notwithstanding, and without the need
to comply with any of the formal or procedural requirements of this Agreement,
including Section 12.19, any Lender may at any time and from time to time pledge
and assign all or any portion of its rights under all or any of the Loan
Documents to a Federal Reserve Bank; provided that no such pledge or assignment
shall release such Lender from its obligations thereunder. To facilitate any
such pledge or assignment, Agent shall, at the request of such Lender, enter
into a letter agreement with the Federal Reserve Bank in substantially the form
of the exhibit to Appendix C to the Federal Reserve Bank of New York Operating
Circular No. 12.
Anything in this Agreement to the contrary notwithstanding, any Lender may
assign all or any portion of its rights and obligations under this Agreement to
another branch or Affiliate of such Lender without first obtaining the approval
of Agent and Borrower, provided that (i) at the time of such assignment such
Lender is not a Defaulting Lender, (ii) such Lender gives Agent and Borrower at
least fifteen (15) days' prior written notice of any such assignment, (iii) the
parties to each such assignment execute and deliver to Agent an Assignment and
Assumption, and (iv) Agent receives from the assignor (or, if so agreed between
the assignor and the assignee, the assignee) a processing fee of Three Thousand
Dollars ($3,000).
No Lender shall be permitted to assign or sell all or any portion of its rights
and obligations under this Agreement to Borrower or any Affiliate of Borrower.
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IN WITNESS WHEREOF, this Agreement has been duly executed on the date set forth
above.
BORROWER: GLENBOROUGH PROPERTIES, L.P.,
a California limited partnership
By: GLENBOROUGH REALTY TRUST
INCORPORATED, a Maryland corporation,
its general partner
By:
Title:
ADDRESS FOR NOTICE AND DELIVERY:
Glenborough Properties, L.P.
400 South El Camino Real
San Mateo, California 94402
Attn: Stephen Saul, EVP-Chief Financial Officer
Tel: (415) 343-9300
Fax: (415) 343-9690
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AGENT/LENDER: WELLS FARGO BANK, NATIONAL
ASSOCIATION
By
Its
ADDRESS FOR NOTICE AND DELIVERY:
Real Estate Capital Markets Group
555 Montgomery Street, 17th Floor
San Francisco, CA 94111
Attn: Lezlie Beam
Vice President
Tel: (415) 222-1944
Fax: (415) 788-9421
Pro Rata Share: 100%
Loan Commitment: $150,000,000
LIBOR OFFICE:
Address: Real Estate Group
Disbursement Center
2120 East Park Place, Suite 100
El Segundo, CA 90245
Attn: Kim Masukawa
Telephone: (310) 335-9459
Telecopy: (310) 615-1014
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Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
reports included in this Form 8-K/A, into the Company's previously filed
Registration Statements File Nos. 333-40959, 333-27677 and 333-08806.
ARTHUR ANDERSEN LLP
San Francisco, California
August 13, 1998
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