Exhibit 10.3
Loan Identification No.: F003
UNSECURED LINE OF CREDIT LOAN AGREEMENT
By and Between
BRE PROPERTIES, INC.,
as Borrower,
and
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION,
as Lender
Dated as of November 17, 1997
TABLE OF CONTENTS
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PAGE
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CERTAIN DEFINITIONS............................................................. 1
1. LINE OF CREDIT AMOUNT AND TERMS............................................ 9
1.1 Line of Credit Amount............................................. 9
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1.2 Availability Period............................................... 10
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1.3 Interest Rate..................................................... 10
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1.4 Loan Documents.................................................... 10
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2. FEES, EXPENSES............................................................. 11
2.1 Fees.............................................................. 11
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2.2 Expenses and Costs................................................ 11
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3. DISBURSEMENTS, PAYMENTS AND COSTS.......................................... 12
3.1 Requests for Credit............................................... 12
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3.2 Disbursement and Payment Record................................... 12
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3.3 Authorization..................................................... 12
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3.4 Banking Days...................................................... 12
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4. CONDITIONS................................................................. 13
4.1 Documentary Conditions............................................ 13
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4.2 Non-Documentary Conditions........................................ 13
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5. REPRESENTATIONS AND WARRANTIES............................................. 14
5.1 Organization of the Borrower; Good Standing....................... 14
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5.2 Authorization; Enforceable Agreement.............................. 14
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5.3 Financial Information............................................. 15
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5.4 Lawsuits.......................................................... 16
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5.5 Title to Assets................................................... 16
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5.6 Permits, Franchises............................................... 16
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5.7 Income Tax Returns................................................ 16
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5.8 ERISA Plans....................................................... 16
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5.9 Other Obligations................................................. 17
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5.10 Event of Default.................................................. 17
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5.11 Status as a REIT.................................................. 17
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6. COVENANTS.................................................................. 17
6.1 Use of Proceeds................................................... 17
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6.2 Financial Information............................................. 18
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6.3 Other Information................................................. 19
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6.4 Financial Covenants............................................... 19
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6.5 Taxes and Other Liabilities....................................... 21
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6.6 Notices to the Bank............................................... 22
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6.7 Audits; Books and Records......................................... 22
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6.8 Compliance with Laws.............................................. 22
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6.9 Preservation of Rights............................................ 23
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6.10 Maintenance of Properties......................................... 23
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6.11 Insurance......................................................... 23
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6.12 ERISA Plans....................................................... 23
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TABLE OF CONTENTS
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(continued)
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6.13 Indemnity of Guarantors........................................... 24
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6.14 Additional Negative Covenants..................................... 24
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6.15 Continued Status as a REIT; Prohibited
Transactions..................................................... 25
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6.16 NYSE Listed Company.............................................. 25
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6.17 Conduct of Business............................................... 25
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6.18 Delivery of Guaranties............................................ 26
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6.19 Cooperation....................................................... 26
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7. COLLATERAL; OTHER SPECIAL PROVISIONS....................................... 26
7.1 Collateral........................................................ 26
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7.2 Other Special Provisions.......................................... 26
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8. DEFAULT.................................................................... 27
8.1 Failure to Pay.................................................... 27
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8.2 False Information................................................. 28
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8.3 Bankruptcy........................................................ 28
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8.4 Receivers; Dissolution............................................ 28
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8.5 Lawsuits.......................................................... 28
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8.6 Judgments......................................................... 28
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8.7 ERISA Plans....................................................... 28
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8.8 Government Action................................................. 29
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8.9 Material Adverse Change........................................... 29
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8.10 Other Breach Under This Agreement or Other Loan
Documents......................................................... 29
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8.11 Cross-Default..................................................... 29
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9. ENFORCING THIS AGREEMENT; MISCELLANEOUS.................................... 30
9.1 Remedies.......................................................... 30
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9.2 California Law.................................................... 30
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9.3 Arbitration....................................................... 30
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9.4 Presentment, Demands and Notice................................... 30
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9.5 Indemnification................................................... 31
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9.6 Attorneys' Fees................................................... 31
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9.7 Notices........................................................... 32
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9.8 Successors and Assigns............................................ 32
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9.9 No Third Parties Benefited........................................ 32
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9.10 Integration; Relation to Any Loan Commitment;
Headings.......................................................... 32
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9.11 Interpretation.................................................... 33
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9.12 Severability; Waivers; Amendments................................. 33
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9.13 Counterparts...................................................... 34
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UNSECURED
LINE OF CREDIT LOAN AGREEMENT
This Unsecured Line of Credit Loan Agreement (the "Agreement"), dated as of
November 17, 1997 is between BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION (the "Bank") and BRE PROPERTIES, INC., a Maryland corporation (the
"Borrower").
A. The Bank, together with certain other lenders, has agreed to make
advances to the Borrower (the "Prior Facility") in accordance with an Amended
and Restated Unsecured Line of Credit Loan Agreement between the Borrower and
the Bank dated July 8, 1997, as amended by the Amended and Restatement
Modification Agreement to Syndicate Loan, dated as of July 8, 1997 (as so
amended, the "Prior Loan Agreement").
B. The Borrower desires to terminate the credit facilities provided for
in the Prior Loan Agreement, and has requested that the Bank agree to provide
the Borrower with the credit facility provided for hereunder, in the form of a
line of credit (the "Line of Credit") under which advances will be made
available to the Borrower in the maximum amount of $265,000,000. Subject to the
terms and conditions hereof and of the other Loan Documents (as defined below),
the Bank is willing to make the Line of Credit available to the Borrower.
NOW, THEREFORE, the parties hereto hereby agree as follows:
CERTAIN DEFINITIONS
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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; other terms are defined elsewhere in the
Agreement):
"Accommodation Obligations", as applied to any Person, means any
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Indebtedness or other Contractual Obligation or liability, contingent or
otherwise, of another Person in respect of which that Person is liable,
including, without limitation, any such indebtedness, obligation or liability
directly or indirectly guaranteed, endorsed (otherwise than for collection or
deposit in the ordinary course of business), co-made or discounted or sold with
recourse by that Person, or in respect of which that Person is otherwise
directly or indirectly liable, including in respect of any partnership in which
that Person is a general partner, Contractual Obligations (contingent or
otherwise) arising through any agreement to purchase, repurchase or otherwise
acquire such indebtedness, obligation or liability or any security therefor, or
to provide funds for the payment or discharge thereof (whether in the form of
loans, advances, stock purchases, capital contributions or otherwise), or to
maintain solvency, assets, level of income, or other financial condition, or to
make payment other than for value received.
"Affiliate" means, as to any Person, any other Person which, directly
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or indirectly, is in control of, is controlled by, or is under common control
with, such Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, membership interests, by contract,
or otherwise.
"Applicable Capitalization Rate" means (i) (a) 9.5% for a real
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property asset improved with an apartment project, (b) 10.0% for a real property
asset improved with a shopping center or similar retail project, and (c) 10.5%
for a real property asset improved with an industrial or other commercial
project and for a real property asset (including apartment and retail projects)
that is subject to a land lease; or in each such case, such other rate as the
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Bank may establish from time to time (taking into consideration such factors as
the location and type of such real estate asset), but no more often than once in
any calendar year, as the applicable capitalization rate for a real property
asset of that type. (All references in this Agreement to "apartment project"
shall be understood to mean multi-family residential properties held for
rental.)
"Applicable Facility Fee Percentage" means, as of any date of
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determination, (i) if no Rating is then in effect, 0.20%; or (ii) effective on
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the first day of the fiscal quarter following the Borrower's obtaining a Rating
(or a change in the then-effective Rating) and giving written notice thereof to
the Bank, the Applicable Facility Fee Percentage set forth below in the
definition of "Applicable Margin" opposite the then Rating (as determined in
accordance with the definition of "Applicable Margin") of the Borrower. As of
the date of this Agreement, the Borrower has obtained Ratings of (x) BBB from
Standard & Poor's, (y) Baa2 from Moody's Investor's Service, and (z) BBB+ from
Duff & ▇▇▇▇▇▇, Inc., and the Applicable Facility Fee Percentage for the current
calendar quarter is 0.15%.
"Applicable Margin" means, as of any date of determination, (i) if no
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Rating is then in effect, 1.35%; or (ii) effective on the first day of the
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fiscal quarter following the Borrower's obtaining a Rating (or a change in the
then-effective Rating) and giving written notice thereof to the Bank, the
Applicable Margin set forth below opposite the then Rating (as hereinbelow
determined) of the Borrower:
Applicable
Rating Facility Fee
(S&P/Moody's) Applicable Margin Percentage
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A-/A3 or better 0.55% 0.10%
BBB+/Baal 0.60% 0.15%
BBB/Baa2 0.70% 0.15%
BBB-/Baa3 1.00% 0.20%
below BBB-/Baa3 1.35% 0.20%
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As used herein, the term "Rating" shall mean the rating of the Borrower's senior
long-term unsecured debt obligations, as determined by one or more Rating
Agencies. If two Ratings are obtained by the Borrower, then the lower Rating
shall control for purposes of determining the Applicable Margin; provided,
however, that if the difference between the two Ratings is greater than two
levels, then the Bank shall reasonably determine the average of such Ratings,
which shall control (and, if such average is greater than one of the rating
levels specified in the foregoing table but less than the next higher rating
level, the lower of the two rating levels shall be deemed the average of the two
Ratings for purposes of determining the Applicable Margin). If three or more
Ratings are obtained by the Borrower, then all but the two highest Ratings shall
be disregarded, and the Applicable Margin shall be determined in accordance with
the preceding sentence as if such two highest Ratings were the only two Ratings
obtained. If the Borrower shall obtain a Rating from a Rating Agency other than
Standard & Poor's Corporation or Moody's Investor's Service, Inc., then the Bank
shall reasonably determine the rating-level equivalents of such other Rating
Agency for purposes of determining the Applicable Margin in accordance with the
matrix above. Based on the Borrower's current Ratings, the Applicable Margin
for the current calendar quarter is 0.70%.
"Borrower Entity" means each Person in which the Borrower, directly or
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indirectly, has made an Investment, whether or not under GAAP the financial
results of such Person are reported on a consolidated basis with the results of
the Borrower.
"Contractual Obligation", as applied to any Person, means any
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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.
"CPA" means Ernst & Young, LLP, any other "big six" accounting firm or
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another firm of certified public accountants of national standing selected by
the Borrower and acceptable to the Bank.
"Current Value Method" means, with respect to each real property asset
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as of any date: (i) if such real property has not been operated under the
Borrower's (or a Borrower-controlled Affiliate's) ownership for at least three
(3) months, on a cost basis, as reflected in the Borrower's books in accordance
with GAAP; and (ii) in any other case, capitalization of the Net Operating
Income for such real property for the four (4) most recent calendar quarters
(or, if the Borrower has owned a real property asset for less than such time
period, then the annualized Net Operating Income for such real property based on
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of of ownership by the Borrower), as certified by the Borrower to the
Bank, at an annual rate equal to the Applicable Capitalization Rate.
"Debt Service" means, for the most recent three (3) month period,
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Interest Expense for such period plus scheduled or otherwise required principal
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amortization (i.e., excluding any balloon payment due at maturity) for such
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period on all of the Borrower's Indebtedness, determined on a consolidated
basis, plus all dividends accrued during such period in respect of any and all
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outstanding preferred shares of the Borrower, whether or not declared or paid.
"EBITDA" means, for the most recent three (3) month period, (i) the
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sum of (a) the Borrower's consolidated net income as determined in accordance
with GAAP, (b) depreciation and amortization expense and other non-cash items
deducted on the Borrower's consolidated financial statements in determining such
net income, (c) interest expense (as it appears on the Borrower's consolidated
income statement in accordance with GAAP), and (d) taxes imposed by any
jurisdiction upon the Borrower's or any consolidated Borrower Entity's net
income, absent the effect of extraordinary items or asset sales or write-ups or
forgiveness of Indebtedness; minus (ii) the sum of (a) $50 per apartment unit in
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the case of a real property asset, owned by the Borrower or any consolidated
Borrower Entity, that is improved with an apartment project, and (b) in the case
of any other real property asset owned by the Borrower or any consolidated
Borrower Entity, $0.125 for each rentable square foot of the improvements
thereon.
"Effective Date" means the date on which all conditions precedent set
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forth in Section 4 are satisfied or waived by the Bank.
"Funds From Operations" means, for any period, the Borrower's
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consolidated net income (computed in accordance with GAAP), excluding gains (or
losses) from debt restructuring and sales of property, plus depreciation and
amortization, and after adjustments for unconsolidated partnerships and joint
ventures. (Adjustments for unconsolidated partnerships and joint ventures shall
be calculated to reflect funds from operations on the same basis.)
"GAAP" means generally accepted accounting principles set forth in the
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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.
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"Gross Offering Proceeds" means all cash proceeds received by the
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Borrower as a result of the sale of common, preferred or other classes of stock
in the Borrower (if and only to the extent reflected in stockholders' equity on
the consolidated balance sheet of the Borrower prepared in accordance with
GAAP), without deduction for any costs and discounts of issuance paid by the
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Borrower.
"Guaranty" means a guaranty of the Borrower's obligations under the
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Loan Documents, executed by one or more Material Borrower Entities, in
substantially the form of Exhibit B.
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"Guarantor" means each Borrower Entity that is a party to a Guaranty.
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"Indebtedness", as applied to any Person (and without duplication),
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means (i) all indebtedness, obligations or other liabilities for borrowed money,
(ii) all indebtedness, obligations or other liabilities evidenced by notes,
bonds, debentures or other similar instruments, (iii) all reimbursement
obligations and other liabilities with respect to letters of credit, banker's
acceptances, surety bonds or similar instruments issued for such Person's
account, (iv) all obligations to pay the deferred purchase price of property or
services, (v) all obligations in respect of capital leases, (vi) all
Accommodation Obligations, and (vii) all indebtedness, obligations or other
liabilities of such Person or others secured by a Lien on any asset of such
Person, whether or not such indebtedness, obligations or liabilities are assumed
by, or are a personal liability of, such Person (including, without limitation,
the principal amount of any assessment or similar indebtedness encumbering any
asset).
"Intangible Assets" means all assets that would be classified as
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intangible assets under GAAP, including, without limitation, goodwill, patents,
trademarks, trade names, copyrights and franchises, treasury stock held by the
Borrower or any consolidated Borrower Entity, and deferred charges (including
but not limited to unamortized debt discount and expense, organization expenses,
experimental and development expenses, but excluding prepaid expenses).
"Interest Expense" means, for any period, the total interest expense
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of the Borrower, whether paid, accrued or capitalized (including the interest
component of capital leases), for such period, determined on a consolidated
basis.
"Investment" means in the case of each Borrower Entity, the Borrower's
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total investment therein determined on the basis of actual cost, including all
equity contributions, loans, advances and guaranties or other contractual
undertakings in the nature thereof, whether funded or committed.
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"Lien" means any mortgage, deed of trust, pledge, hypothecation,
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assignment, deposit arrangement, security interest, encumbrance, preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever, including without limitation any conditional sale or other
title retention agreement, the interest of a lessor under a capital lease, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement or document having similar
effect (other than a financing statement filed by a "true" lessor pursuant to
Section 9408 of the Uniform Commercial Code) naming the owner of the asset to
which such Lien relates as debtor, under the Uniform Commercial Code or other
comparable law of any jurisdiction.
"Line of Credit" means the line of credit described in Section 1.1.
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"Material Adverse Effect" means, with respect to a Person, a material
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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".
"Material Borrower Entity" means a Borrower Entity as which either of
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the following conditions exists: (i) the Borrower's pro rata share of the
assets of such Borrower Entity (as reflected on the GAAP-prepared financial
statements of the Borrower Entity) exceeds $30,000,000 at the end of any fiscal
quarter, with "pro rata" share being the Borrower's effective percentage
ownership of the Borrower Entity; or (ii) the Borrower's pro rata share of the
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Borrower Entity's consolidated net income exceeds five percent (5%) of the
Borrower's consolidated net income for the immediately preceding four fiscal
quarters, determined in accordance with GAAP.
"Net Operating Income" means, at any time with respect to any real
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property asset, the cash-basis net operating income of such real property
determined on a basis consistent with the operating statements provided by the
Borrower to the Bank prior to the Effective Date, adjusted as follows: (i) by
deducting, in respect of capital reserves, on an annualized basis: (a) $200 per
apartment unit in the case of a real property asset improved with an apartment
project, and (b) in the case of any other real property asset, $0.50 for each
rentable square foot of the improvements thereon; and (ii) by deducting (to the
extent not already deducted in determining such net operating income) actual
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management fees paid in respect of the management of such real property asset
for the period in question.
"Person" means any natural person, employee, corporation, limited
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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.
"Prudential Indebtedness" means the unsecured Indebtedness of the
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Borrower to The Prudential Life Insurance Company of America in the original
principal amount of $73,000,000.
"Rating Agency" means each of Standard & Poor's Corporation, Moody's
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Investor's Service, Inc., Duff and ▇▇▇▇▇▇ and Fitch Investors or such other
nationally recognized rating service or services as may be mutually agreed upon
by the Borrower and the Bank.
"Real Property" means all improved, income-producing real property (i)
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owned in fee entirely by the Borrower or by a consolidated, controlled Borrower
Entity that has executed and delivered a Guaranty, and (ii) as to which at least
eighty-five percent (85%) of (a) the apartment units (in the case of real
property improved with an apartment project) or (b) the net rentable square
footage of the improvements thereon, in the case of all other real property, is
occupied by tenants, under written leases, who have commenced paying rent.
"Secured Indebtedness" means all Indebtedness of the Borrower
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(determined on a consolidated basis) that is secured by a Lien on any real
property asset of the Borrower or any Borrower Entity.
"Tangible Net Worth" means, at any time, (i) shareholders' equity, as
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shown on the Borrower's consolidated financial statements prepared in accordance
with GAAP, exclusive of minority interests, minus (ii) all Intangible Assets.
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"Total Assets" means, at any time, the sum of (i) the aggregate value,
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as determined using the Current Value Method, of all real property assets
(including Real Property) wholly owned by the Borrower or any Borrower Entity
the financial results of which are reported on a consolidated basis with the
results of the Borrower and of which the Borrower is a general partner or
managing member or the holder of a majority of the outstanding equity interests,
plus (ii) the book value (net of any applicable reserves) of all other assets
(excluding Intangible Assets) of the Borrower as shown on its most recent
quarterly financial statements prepared in accordance with GAAP.
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"Total Liabilities" means (i) all Indebtedness of the Borrower,
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whether or not such Indebtedness would be included as a liability on the balance
sheet of the Borrower in accordance with GAAP, plus (ii) all other liabilities
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of every nature and kind of the Borrower that would be included as liabilities
on the balance sheet of the Borrower in accordance with GAAP (other than
minority interests), in each case, determined on a consolidated basis.
"Total Real Property Market Value" means, at any time, the aggregate
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value of all Real Properties as determined using the Current Value Method.
"Total Real Property Market Value of Unencumbered Real Property"
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means, at any time, the aggregate value of all Unencumbered Real Properties as
determined using the Current Value Method.
"Unencumbered Real Property" means all Real Property as to which (i)
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neither such Real Property, nor any interest in the Person owning such Real
Property, is subject to any Lien (other than Liens in respect of nondelinquent
real estate taxes or assessments) or to any agreement (other than this Agreement
or any other Loan Document, and including any provision of such Person's charter
documents) that (A) prohibits the creation of any Lien thereon as security for
Indebtedness of the Person owning such Real Property; or (B) limits the
Indebtedness owed to the Bank in respect of which such Real Property may be
encumbered to less than the full market value (determined using the Current
Value Method) of such Real Property; and (ii) no event described in Section 8.3
or Section 8.4 has occurred and is continuing with respect to the Person that
owns such Real Property (and including, for purposes of this definition only,
any such event with respect to a Guarantor, whether or not it is a Material
Borrower Entity, other than a merger or liquidation of a Guarantor into a
Material Borrower Entity or the Borrower).
"Unsecured Indebtedness" means Indebtedness of the Borrower not
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secured by a Lien, determined on a consolidated basis.
"Unsecured Interest Expense" means, for any period, the greater of (i)
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total interest expense of the Borrower, whether paid, accrued or capitalized, in
respect of Unsecured Indebtedness for such period, or (ii) such interest as
would have accrued for such period on the time-weighted average outstanding
principal of all Unsecured Indebtedness outstanding during such period at the
rate of nine percent (9%) per annum.
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1. LINE OF CREDIT AMOUNT AND TERMS
1.1 Line of Credit Amount.
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(a) During the Availability Period described below, the Bank will
provide a line of credit (also referred to as the "Loan") to the Borrower. The
amount of the Line of Credit is Two Hundred Sixty-Five Million Dollars
($265,000,000) (the "Commitment" or the "Maximum Loan Amount"); provided that
the Borrower shall have the right, upon each anniversary of the Effective Date,
to reduce the Commitment by up to $150,000,000 in the aggregate, in increments
of $10,000,000 or integral multiples of $10,000,000. Each such reduction shall
become effective on the date both of the following conditions have been
satisfied:
(i) The Borrower shall have given at least ten (10) Business Days'
prior written notice to the Bank irrevocably and unconditionally reducing
the Commitment, as of such anniversary, in an amount equal to $10,000,000
or an integral multiple of $10,000,000 that, together with all prior
reductions in the Commitment, does not exceed $150,000,000; and
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(ii) if the aggregate principal balance of all advances under the Loan
Documents then outstanding exceeds the Commitment as so reduced, the
Borrower shall have made a voluntary prepayment of principal of such
advances, in accordance with the applicable provisions of the Note and the
Loan Documents, in an amount sufficient to reduce the aggregate outstanding
balance thereof to such reduced amount of the Commitment or less, together
with accrued and unpaid interest on the amount of such prepayment and any
applicable "Prepayment Premium" payable under the Note or any other Loan
Documents.
No such reduction of the Commitment shall relieve the Borrower of any obligation
in respect of any fees paid or accrued prior to the date of such reduction.
Upon the effectiveness of each such reduction, all references to the
"Commitment" or the "Maximum Loan Amount" shall be understood to mean and refer
to a loan facility of an amount equal to $265,000,000 less the aggregate amount
of the reductions in the Commitment that have been so effected (including by
reason of prior reductions, if any).
(b) This is a revolving line of credit. During the Availability
Period, the Borrower may from time to time repay principal amounts (subject to
the provisions of Exhibit B to the Note referred to below) and reborrow such
principal, subject to compliance with the terms and conditions of the Loan
Documents referenced in Section 1.4 below.
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(c) Each advance under the Line of Credit must be for at least Five
Hundred Thousand Dollars ($500,000), or for the amount of the remaining
available Line of Credit if less.
(d) The Borrower agrees not to permit the aggregate principal amount
of all advances under the Loan Documents outstanding at any time to exceed the
Commitment.
1.2 Availability Period.
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The Line of Credit is available (the "Availability Period") between
the date of this Agreement and the Maturity Date (as defined in the Note),
subject to the provisions of Section 3.1 below. If there is an Event of
Default, then, in addition to the Bank's other remedies, the Bank may terminate
the Availability Period and may require the Borrower to repay any amounts
outstanding under the Line of Credit, or any other credit facilities provided by
the Bank pursuant to the Loan Documents, immediately.
1.3 Interest Rate.
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Borrower is executing a new promissory note (the "Note") in the amount
of the Commitment evidencing advances made under the Loan Documents and payable
to the Bank. The Note sets forth certain provisions regarding the interest rate
and certain other terms and conditions applicable to the credit facilities
provided pursuant to the Loan Documents. Promptly following the Effective Date,
the Bank shall ▇▇▇▇ the promissory note executed and delivered by the Borrower
pursuant to the Prior Loan Agreement "superseded" and return it to the Borrower.
1.4 Loan Documents.
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The "Loan Documents" are the documents indicated below, each dated as
of the date of this Agreement unless indicated otherwise. A capitalized term
used in this Agreement but not defined herein has the meaning given to such term
in the other Loan Documents.
(a) This Agreement;
(b) The Note;
(c) A Guaranty from BRE Property Investors LLC and each other
Material Borrower Entity or other Borrower Entity owning any real property asset
to be included as Unencumbered Real Property as of the date of this Agreement;
(d) The supplemental letter executed by the Borrower in favor of the
Bank (the "Supplemental Letter");
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(e) Corporate Resolution to borrow, certified by the Corporate
Secretary of the corporation. The Corporate Resolution shall also contain a
Certificate of Incumbency for the authorized signing officers, containing their
specimen signatures and certified by the Corporate Secretary; and
(f) Resolutions, or other required action, by each Material Borrower
Entity or other Guarantor with respect to the execution and delivery of its
Guaranty, together with a Certificate of Incumbency for the authorized signing
officers, containing their specimen signatures and certified by such Material
Borrower Entity's or other Guarantor's Secretary (or the equivalent).
2. FEES, EXPENSES
2.1 Fees.
----
(a) Facility Fee. The Borrower agrees to pay, in quarterly
------------
installments, in arrears, a facility fee in an amount equal to one quarter of
the Applicable Facility Fee Percentage of the Commitment as of the first day of
each calendar quarter during the term hereof and as of the last day of the
Availability Period (prorated for partial quarters on the basis of a year of 360
days for the actual number of days elapsed). This fee shall be due and payable
not later than fifteen (15) days following the rendering of an invoice therefor
by the Bank.
(b) Other Fees. The Borrower agrees to pay such other fees as are
----------
provided for in the Supplemental Letter, at the times and in the amounts
provided for therein.
2.2 Expenses and Costs.
------------------
(a) Borrower shall pay all costs and expenses incurred by the Bank in
connection with the making, disbursement and administration of the Line of
Credit and other credit facilities, if any, made available pursuant to the Loan
Documents, and in the exercise of any of the Bank's rights or remedies under the
Loan Documents. Such costs and expenses include legal fees and expenses of the
Bank's counsel and any other reasonable fees and costs for services, regardless
of whether such services are furnished by the Bank's employees or by independent
contractors. The Borrower acknowledges that the other fees payable to the Bank
do not include amounts payable by the Borrower under this Section 2.2.
(b) The Borrower agrees to indemnify the Bank from and hold it
harmless against any transfer or documentary taxes, assessments or charges
imposed by any governmental authority by reason of the execution, delivery and
performance of the Loan Documents. The Borrower's obligations under this
Section 2.2 shall survive payment of the advances made pursuant to the Loan
11
Documents and assignment of any rights hereunder.
3. DISBURSEMENTS, PAYMENTS AND COSTS
3.1 Requests for Credit.
-------------------
(a) Each request for an extension of credit shall be made in writing
in a manner acceptable to the Bank.
(b) Borrowing Notice. Except as otherwise provided in the Loan
----------------
Documents, each draw request shall be made upon the irrevocable written notice
of the Borrower (including notice via facsimile confirmed by a mailed copy)
pursuant to a Borrowing Notice in the form attached hereto as Exhibit A. Each
---------
Borrowing Notice shall be submitted to and received by the Bank prior to 9:00
a.m. (California time) at least two (2) Banking Days prior to the specified
borrowing date. The truth and accuracy of each statement made in the Borrowing
Notice shall be a condition precedent to the advance requested thereunder.
3.2 Disbursement and Payment Record.
-------------------------------
Each disbursement by the Bank and each payment by the Borrower will be
evidenced by records kept by the Bank.
3.3 Authorization.
-------------
(a) The Bank may honor facsimile instructions for advances or
repayments (or for the designation of any optional interest rates that may be
permitted by the Note) given by any one of the individuals authorized to sign
loan documents on behalf of the Borrower, or any other individual designated by
any one of such authorized signers.
(b) Advances will be deposited in the Borrower's account number 00333
02 305 at the Bank, or such other of the Borrower's accounts with the Bank as
designated in writing by the Borrower.
(c) The Borrower indemnifies and releases the Bank (including its
officers, employees, and agents) from all liability, loss, and costs in
connection with any act resulting from any instructions the Bank reasonably
believes are made by any individual authorized by the Borrower to give such
instructions. This indemnity and release shall survive this Agreement's
termination.
3.4 Banking Days.
------------
A Banking Day is defined in the Note. All payments and disbursements
which would be due on a day which is not a Banking Day will be due on the next
Banking Day. All payments received on a day which is not a Banking Day will be
applied to amounts due under the Loan Documents on the next Banking Day.
12
4. CONDITIONS
4.1 Documentary Conditions.
----------------------
The Bank must receive the following items, in form and content
acceptable to the Bank, before it is required to extend any credit to the
Borrower under this Agreement or any other Loan Document:
(a) Authorizations. Evidence that the execution, delivery and
--------------
performance by the Borrower and each Material Borrower Entity or other Guarantor
(if any) each of the Loan Documents to which such Person is or is to become a
party have been duly authorized.
(b) Governing Documents; Good Standing Certificates. For the
-----------------------------------------------
Borrower, BRE Property Investors LLC and each other Material Borrower Entity or
Guarantor (if any):
(i) a copy of such Person's articles of incorporation and bylaws,
articles of organization, Form LLC-1 and operating agreement, Form LP-1 and
agreement of limited partnership or other charter documents, as the case may be,
and
(ii) a certificate of good standing for the Borrower and each
Material Borrower Entity or other Guarantor from the state where formed and, at
the Bank's request, from any other state in which the Borrower or such Material
Borrower Entity or other Guarantor is required to qualify to conduct its
business.
(c) Loan Documents. Duly executed Loan Documents.
--------------
(d) Payment of Fees. Payment of all accrued and unpaid fees and
---------------
expenses due the Bank as provided for by the Loan Documents and all other
accrued and unpaid fees and expenses provided for under the Prior Loan
Agreement.
(e) Legal Opinion. An opinion of legal counsel for the Borrower and
-------------
each Material Borrower Entity and other Guarantor addressing such matters as the
Bank may reasonably request.
(f) Other Items. Any other documents and other items the Bank may
-----------
reasonably require as conditions precedent to this Agreement or any advance.
4.2 Non-Documentary Conditions.
--------------------------
(a) Termination of Prior Facility. The Prior Facility shall have been
-----------------------------
terminated, and all amounts due and payable in respect thereof shall have been
paid to the Persons entitled thereto.
13
(b) Closing of Acquisition.
----------------------
(i) The Borrower shall have consummated an issuance of equity
securities to The Prudential Life Insurance Company of America for an aggregate
issuance price equal to at least $100,000,000.
(ii) The closing under the Contribution Agreement dated as of
September 29, 1997, relating to the formation of BRE Property Investors LLC
shall have occurred, and the assets required to be contributed to BRE Property
Investors LLC pursuant thereto shall have been so contributed.
5. REPRESENTATIONS AND WARRANTIES
When the Borrower signs this Agreement, and until the Bank is repaid in
full, the Borrower makes the following representations and warranties. Each
request for an extension of credit constitutes a restatement of each such
representation and warranty.
5.1 Organization of the Borrower; Good Standing.
-------------------------------------------
(a) The Borrower, and each Material Borrower Entity, is duly formed
and existing under the laws of the state where organized. In each state in
which the Borrower or any Material Borrower Entity does business, it is properly
licensed, in good standing, and, where required, in compliance with any
fictitious name statute.
(b) Schedule 1 (if applicable, as updated pursuant to Section 6.18)
sets forth the members, general partners and limited partners, or other holders
of ownership interests in BRE Property Investors LLC and each other Material
Borrower Entity or Guarantor and their respective ownership percentages, and
there are no other membership, partnership or other ownership interests
outstanding. No membership, partnership or other 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 such interests) in any Material Borrower Entity or other
Guarantor 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 membership,
partnership or other ownership interests in Borrower and each Material Borrower
Entity and other Guarantor have been issued in compliance with all applicable
requirements of law.
5.2 Authorization; Enforceable Agreement.
------------------------------------
This Agreement and the other Loan Documents are within the powers of
Borrower or the Material Borrower Entity or other
14
Guarantor party thereto, have been duly authorized and do not conflict with any
of its organizational documents. The Loan Documents do not conflict with any
law, agreement or obligation by which the Borrower or any Material Borrower
Entity or other Guarantor is bound. This Agreement is a legal, valid and binding
agreement of the Borrower, enforceable against the Borrower in accordance with
its terms, and any instrument or document required hereunder, when executed and
delivered by the Borrower or any Material Borrower Entity or other Guarantor,
will be similarly a legal, valid, binding and enforceable agreement of such
Person.
5.3 Financial Information.
---------------------
(a) All financial statements and data submitted in writing by the
Borrower to the Bank pursuant to the Loan Agreement are true and correct, and
all such financial statements present fairly the financial condition of the
Borrower as at the date thereof and the results of the operations of the
Borrower for the period(s) covered thereby, and have been prepared in accordance
with generally accepted accounting principles on a basis consistently applied.
The Borrower has no knowledge of any liabilities, contingent or otherwise, not
reflected in said financial statements, and neither the Borrower nor any
Borrower Entity has entered into any material commitments or material contracts
which are not reflected in said balance sheet which may have a Material Adverse
Effect on the Borrower or any Material Borrower Entity. Since said date there
have been no changes in the assets or liabilities or financial condition of the
Borrower or any Material Borrower Entity other than changes in the ordinary
course of business, and no such changes have been materially adverse changes.
(b) All financial and other information that has been or will be
supplied to the Bank, including the financial statements of the Borrower or any
other Person:
(i) is sufficiently complete to give the Bank accurate
knowledge of the subject's financial condition;
(ii) is in form and content as required by the Bank;
(iii) is in compliance with any government regulations that
apply; and
(iv) does not fail to state any material facts necessary to make
the information contained therein not misleading.
All such information (other than Funds From Operations) was and will be prepared
in accordance with GAAP, unless otherwise noted.
15
5.4 Lawsuits.
--------
There is no lawsuit, arbitration, claim or other dispute pending or
threatened against the Borrower or any Borrower Entity which, if lost, would
impair the Borrower's or any Material Borrower Entity's financial condition or
ability to repay advances made, and other amounts due, under the Loan Documents,
except as has been previously disclosed in writing to the Bank.
5.5 Title to Assets.
---------------
The Borrower, and each Borrower Entity, has good and clear title to
its assets, and the same are not subject to any Liens other than those disclosed
to the Bank in writing.
5.6 Permits, Franchises.
-------------------
The Borrower, and each Material Borrower Entity, possesses all
permits, franchises, contracts and licenses required and all trademark rights,
trade name rights, and fictitious name rights necessary to enable it to conduct
the business in which it is now engaged.
5.7 Income Tax Returns.
------------------
Borrower, and each Material Borrower Entity, has filed all tax returns
and reports required to be filed and has paid all applicable federal, state and
local franchise, income and property taxes which are due and payable. The
Borrower has no knowledge of any pending assessments or adjustments of its
income taxes or property taxes (or those of any Material Borrower Entity) for
any year, except as have been disclosed in writing to the Bank. The Borrower is
not a "foreign person" within the meaning of Section 1445(f)(3) of the Internal
Revenue Code of 1986, as amended (the "Code").
5.8 ERISA Plans.
-----------
(a) As used herein, (i) "ERISA" means the Employee Retirement Income
Act of 1974, as amended; (ii) "PBGC" means the Pension Benefit Guaranty
Corporation established pursuant to ERISA; and (iii) "Plan" means any employee
pension benefit plan maintained or contributed to by the Borrower or any
Borrower Entity and insured by the PBGC.
(b) The Borrower, and each Borrower Entity, has fulfilled its
obligations, if any, under the minimum funding standards of ERISA and the Code
with respect to each Plan and is in compliance in all material respects with the
presently applicable provisions of ERISA and the Code, and has not incurred any
liability with respect to any Plan under Title IV of ERISA.
16
(c) No reportable event has occurred under Section 4043(b) of ERISA
for which the PBGC requires 30 day notice. No action by the Borrower or any
Borrower Entity to terminate or withdraw from any Plan has been taken and no
notice of intent to terminate a Plan has been filed under Section 4041 of ERISA.
No proceeding has been commenced with respect to a Plan under Section 4042 of
ERISA, and no event has occurred or condition exists which might constitute
grounds for the commencement of such a proceeding.
5.9 Other Obligations.
-----------------
Neither the Borrower nor any Material Borrower Entity is in default on
any Indebtedness or Contractual Obligation of the Borrower except as has been
previously disclosed in writing to the Bank.
5.10 Event of Default.
----------------
There is no event which is, or with notice or lapse of time or both
would be, an Event of Default hereunder.
5.11 Status as a REIT.
----------------
The Borrower (i) is a real estate investment trust as defined in
Section 856 of the Code (or any successor provision thereto), (ii) has not
revoked its election to be a real estate investment trust, (iii) has not engaged
in any "prohibited transactions" as defined in Section 856(b)(6)(iii) of the
Code (or any successor provision thereto), and (iv) for its current "tax year"
(as defined in the Code) is and for all prior tax years subsequent to its
election to be a real estate investment trust has been entitled to a dividends
paid deduction which meets the requirements of Section 857 of the Code.
6. COVENANTS
The Borrower agrees, so long as credit is available under this
Agreement or any other Loan Document and until the Bank is repaid in full:
6.1 Use of Proceeds.
---------------
Borrower shall use, and shall permit the proceeds of the advances
under the Loan Documents to be used, only for (a) the funding of costs directly
related to the acquisition of apartment projects, or (b) general working capital
purposes of the Borrower, including (but subject to Section 6.4(g)), development
expenditures. In complying with the provisions of the foregoing clause (a), the
Borrower shall not be required to apply advances under the Loan Documents in
direct payment of acquisition costs, but shall be permitted to request and
obtain such advances by way of reimbursement of acquisition costs previously
incurred and funded out of the Borrower's cash
17
reserves.
6.2 Financial Information.
---------------------
The Borrower shall provide the following financial information and
statements and such additional information as requested by the Bank from time to
time:
(a) As soon as available but not later than ninety (90) days after the
Borrower's fiscal year end, a copy of the Borrower's Form 10-K Annual Report and
(to the extent not included in such Form 10-K) a copy of the Borrower's annual
financial statements for such fiscal year including balance sheet, income
statement, statement of cash flows and statement of shareholders' equity,
prepared on both a consolidated and a consolidating basis. All such financial
statements (whether or not included in the Borrower's Form 10-K) must be audited
(with an unqualified opinion) by the Borrower's CPA and certified by the
Borrower's Chief Financial Officer (or other officer acceptable to the Bank).
(b) As soon as available but not later than sixty (60) days after each
fiscal quarter end, the Borrower's Form 10-Q Quarterly Report and (to the extent
not included in such Form 10-Q) a copy of the Borrower's financial statements
for such fiscal quarter, including balance sheet, income statement, statement of
cash flows and statement of shareholders' equity, prepared on both a
consolidated and a consolidating basis. All such financial statements must be
certified by the Borrower's Chief Financial Officer (or other officer acceptable
to the Bank).
(c) As soon as available but not later than ninety (90) days after the
Borrower's fiscal year end, the Borrower's annual two-year financial projection,
including balance sheet and income statement, in a format and with such detail
as the Bank may require. These projections must be certified by the Borrower's
Chief Financial Officer (or other officer acceptable to the Bank).
(d) Copies of the Borrower's Form 8-K Current Reports and all other
filings within fifteen (15) days after the date of filing with the Securities
and Exchange Commission, and copies of all press releases made by the Borrower.
(e) As soon as available but not later than sixty (60) days after each
fiscal quarter end, the Borrower's quarterly internal management reports
(including (i) a schedule of all Debt Service for the prior quarter, (ii) a
schedule of Net Operating Income for each Real Property and other real property
asset for the preceding four (4) fiscal quarters, (iii) a schedule listing all
Indebtedness secured by a Lien on any real property assets of the Borrower or
any Borrower Entity, and (iv) a statement of the number of apartment units (by
project and location) under development (as defined in Section 6.4(g)) at fiscal
quarter-end.
18
These reports must be certified by the Borrower's Chief Financial Officer (or
other officer acceptable to the Bank).
(f) At the time of the delivery of the financial statements provided
for in Sections 6.2(a) and (b), a certificate executed by the Chief Financial
Officer of the Borrower certifying compliance with all financial covenants
herein, including appropriate supporting schedules, and certifying that to the
best of the such officer's knowledge, no Event of Default has occurred and is
continuing or would result after notice or passage of time or both or, if any
Event of Default has occurred and is continuing or would result after notice or
passage of time or both, specifying the nature and extent thereof.
Notwithstanding anything to the contrary contained herein and without limiting
the Bank's other rights and remedies, if any certificate required under this
Section 6.2 is not provided on or before the due date therefor, the Borrower
shall be prohibited from any further borrowing under the Loan Documents until
such certificate is provided.
6.3 Other Information.
-----------------
The Borrower shall provide the Bank:
(a) Promptly upon, and in any event within forty-eight (48) hours
after the Borrower first has actual knowledge of (i) its failing to continue to
qualify as a real estate investment trust as defined in Section 856 of the Code
(or any successor provision thereof), (ii) any act by the Borrower causing its
election to be taxed as a real estate investment trust to be terminated, (iii)
any act causing the Borrower to be subject to the taxes imposed by Section
857(b)(6) of the Code (or any successor provision thereto), or (iv) the Borrower
failing to be entitled to a dividends paid deduction which meets the
requirements of Section 857 of the Code, a notice of any such occurrence or
circumstance.
(b) Such additional financial and other information as the Bank may
reasonably request from time to time.
6.4 Financial Covenants.
-------------------
(a) Minimum Net Worth. The Borrower will maintain a Tangible Net
-----------------
Worth of not less than (i) Six Hundred Twelve Million Dollars ($612,000,000),
plus (ii) eighty-five percent (85%) of Gross Offering Proceeds received by the
Borrower after the Effective Date.
(b) Total Liabilities to Total Assets. The ratio of Total Liabilities
---------------------------------
to Total Assets shall not exceed 0.50:1.
(c) Secured Indebtedness to Total Assets. The ratio of Secured
------------------------------------
Indebtedness to Total Assets shall not exceed 0.30:1.
19
(d) Unencumbered Real Property to Unsecured Indebtedness; Unencumbered
------------------------------------------------------------------
Real Property NOI to Unsecured Interest Expense.
-----------------------------------------------
(i) The ratio of (a) Total Real Property Market Value of all
Unencumbered Real Property to (b) total outstandings under Unsecured
Indebtedness shall not be less than 2.00:1.
(ii) The ratio of (a) the aggregate Net Operating Income of all
Unencumbered Real Property to (b) Unsecured Interest Expense for any fiscal
quarter shall not be less than 2.00:1.
(e) EBITDA to Debt Service. The ratio of EBITDA to Debt Service shall
----------------------
not be less than 2.00:1.
(f) Distributions.
-------------
(i) Subject to subparagraph (ii) below, aggregate distributions
by the Borrower, determined on a consolidated basis, shall not exceed the
following, as reported in accordance with GAAP, for any period of four (4)
consecutive fiscal quarters of the Borrower ended on December 31 of any
calendar year: the greater of (A) ninety-five percent (95%) of Funds From
Operations for such period, or (B) an amount, but not in excess of one
hundred percent (100%) of Funds From Operations for such period, as
Borrower may be required to distribute to its shareholders in order to
maintain compliance with Section 6.14 below. For purposes of this Section
6.4(f), the term "distributions" shall mean and include all dividends and
other distributions to, and the repurchase of shares or other equity
interests from, the holder of any equity interests in the Borrower, BRE
Property Investors LLC or any other consolidated Borrower Entity.
(ii) No distributions shall be made during the continuance of any
Event of Default arising out of the Borrower's failure to pay any monetary
obligation when due under any Loan Document (a "Monetary Default").
Aggregate distributions during the continuance of any Event of Default
other than a Monetary Default (determined on a consolidated basis) shall
not exceed the lesser of (A) the aggregate amount permitted to be made
during the continuance thereof under subparagraph (i) above, or (B) the
minimum amount that the Borrower must distribute to its shareholders in
order to maintain compliance with Section 6.14 below.
(g) Development. At no time shall the Borrower, on a consolidated
-----------
basis, have under development apartment units totaling in excess of twenty
percent (20%) of the total number of apartment units (excluding such units under
development) then owned by the Borrower or any consolidated Borrower Entity.
For purposes of the foregoing covenant, "development" shall mean all units under
construction, at or beyond the foundation stage,
20
within a particular apartment project, until the construction of all units (or
discreet phase(s) thereof, if applicable) shall have been completed,
certificates of occupancy shall have been issued with respect to such units, and
such units shall be available for immediate lease and occupancy in the normal
course of business.
(h) Maximum Unsecured Lines of Credit. The Borrower shall not permit,
---------------------------------
on a consolidated basis, total commitments (disbursed and undisbursed) with
respect to Unsecured Indebtedness under lines of credit to exceed the sum of (i)
the Commitment hereunder, plus (ii) Thirty-Five Million Dollars, plus (iii) the
total commitments (disbursed and undisbursed) made available to the Borrower
under any and all other lines of credit from time to time provided to the
Borrower by (A) the Bank or (B) a group of lenders, consisting of the Bank and
one or more other lenders, for whom the Bank serves as agent at the time such
line of credit is first made available. Further, the Borrower (on a
consolidated basis) shall not enter into any commitment for Unsecured
Indebtedness under lines of credit other than under (x) this Agreement, (y) any
other lines of credit from time to time provided to the Borrower by the Bank or
by a group of lenders, consisting of the Bank and one or more other lenders, for
whom the Bank serves as agent at the time such line of credit is first made
available, and (z) the existing line of credit established by Sanwa Bank in
favor of the Borrower in the maximum principal amount of Thirty-Five Million
Dollars ($35,000,000).
(i) Unsecured Indebtedness. The Borrower (on a consolidated basis)
----------------------
shall not incur any Unsecured Indebtedness other than (i) Indebtedness under
revolving lines of credit to the extent permitted under Section 6.4(h) above,
and (ii) non-revolving, non-amortizing Indebtedness with a maturity or call date
not earlier than two (2) years after the Maturity Date under the Note in effect
at the time such Indebtedness is incurred; provided, however, that the foregoing
amortization restriction shall not apply to amortization required, as of the
date of this Agreement, under the Prudential Indebtedness.
(j) Calculation. Each of the foregoing ratios and financial
-----------
requirements shall be calculated as of the last day of each fiscal quarter, but
shall be satisfied at all times.
6.5 Taxes and Other Liabilities.
---------------------------
The Borrower shall pay and discharge, and shall cause each Borrower
Entity under Borrower's control to pay and discharge, before the same become
delinquent and before penalties accrue thereon, all taxes, assessments and
governmental charges upon or against it or any of its properties, and all its
other liabilities at any time existing, except to the extent and so long as:
(a) The same are being contested in good faith and by
21
appropriate proceedings in such manner as not to cause any Material Adverse
Effect on the Borrower or any Material Borrower Entity or the loss of any right
of redemption from any sale thereunder; and
(b) The Borrower shall have set aside on its books reserves
(segregated to the extent required by generally accepted accounting principles)
adequate with respect thereto.
6.6 Notices to the Bank.
-------------------
The Borrower shall promptly notify the Bank in writing of:
(a) any Event of Default hereunder or any event which would become an
Event of Default hereunder upon the giving of notice, the lapse of time, or
both;
(b) any single lawsuit or arbitration claiming over Two Hundred Fifty
Thousand Dollars ($250,000), and lawsuits or arbitrations collectively claiming
over One Million Dollars ($1,000,000), against the Borrower or any Material
Borrower Entity;
(c) any significant dispute between the Borrower or any Material
Borrower Entity and any government authority;
(d) Borrower's receipt of any notice relating to (i) any change in or
reaffirmation of, or proposed change in or reaffirmation of, the rating of
Borrower's senior long-term unsecured debt obligations by any Rating Agency, or
(ii) the issuance of any Rating by a Rating Agency as to which no Rating is then
in effect; and
(e) any event, circumstance or condition which may have a Material
Adverse Effect on the Borrower or any Material Borrower Entity.
6.7 Audits; Books and Records.
-------------------------
The Borrower shall (i) maintain (and shall cause each Borrower Entity
under the Borrower's control to maintain) adequate books and records, and (ii)
allow the Bank and its agents (and cause Borrower Entities under the Borrower's
control to allow the Bank and its agents) to inspect the Borrower's and such
controlled Borrower Entities' properties and examine, audit and make copies of
books and records at any reasonable time. If any of the Borrower's properties,
books or records are in the possession of a third party, the Borrower hereby
authorizes that third party to permit the Bank or its agents to have access to
perform inspections or audits and to respond to the Bank's requests for
information concerning such properties, books and records.
22
6.8 Compliance with Laws.
--------------------
The Borrower shall comply, and shall cause each Borrower Entity under
the Borrower's control to comply, with the laws (including any fictitious name
statute), regulations, and orders of any government body with authority over the
Borrower's or such Borrower Entity's business.
6.9 Preservation of Rights.
----------------------
The Borrower shall maintain and preserve, and shall cause each
Material Borrower Entity to maintain and preserve, all rights, privileges, and
franchises the Borrower or such Material Borrower Entity now has (or, if later,
as of the date such Person becomes a Material Borrower Entity).
6.10 Maintenance of Properties.
-------------------------
The Borrower shall make, and shall cause each Borrower Entity under
the Borrower's control to make, repairs, renewals, or replacements to keep the
Borrower's, or such Borrower Entity's, properties in good working condition.
6.11 Insurance.
---------
The Borrower shall maintain, or cause to be maintained, insurance in
such amounts and covering such risks as is usually carried by companies engaged
in similar businesses and owning similar properties in the same general areas in
which the Borrower and each of its Affiliates operate and maintain such other
insurance and coverages as may be reasonably required by the Bank. All such
insurance shall be in form and amount and with companies satisfactory to the
Bank. Upon the Bank's request, the Borrower shall furnish the Bank with a copy
of the policy or binder of all such insurance and continuing evidence that such
insurance remains in force at applicable renewal dates.
6.12 ERISA Plans.
-----------
The Borrower shall give prompt written notice to the Bank of the
occurrence of any reportable event under Section 4043(b) of ERISA for which the
PBGC requires 30 day notice; any action by the Borrower or any Borrower Entity
to terminate or withdraw from a Plan or the filing of any notice of intent to
terminate under Section 4041 of ERISA; any notice of noncompliance made with
respect to a Plan under Section 4041(b) of ERISA; or the commencement of any
proceeding with respect to a Plan under Section 4042 of ERISA.
23
6.13 Indemnity of Guarantors.
-----------------------
The Borrower shall indemnify and hold harmless each Guarantor from and
against any liability (in the form of indebtedness repaid to the Bank in respect
of the Borrower's obligations under the Loan Documents, including (if
applicable) by way of foreclosure on any collateral in which such Guarantor may
at any time hereafter grant to the Bank a security interest) in excess of the
benefit realized by such Guarantor from the proceeds of the Loan. As between
the Borrower and each Guarantor, the Borrower shall be responsible to reimburse
each Guarantor in respect of amounts paid by such Guarantor pursuant to its
Guaranty of the Borrower's obligations under the Loan Documents to the end that
the Borrower, and each Guarantor, ultimately bear the burden of their respective
shares of such obligations. The Borrower's obligations to the Guarantors under
this Section 6.13 shall be subordinated to its obligations to the Bank as
provided in the Guaranties.
6.14 Additional Negative Covenants.
-----------------------------
The Borrower shall not, without the Bank's written consent:
(a) Merge or dissolve into, or consolidate with, any Person, or
permit any Material Borrower Entity to do so, except in each case for mergers
and consolidations (i) which result in the Borrower or such Material Borrower
Entity, as the case may be, being the surviving entity (provided that the
Borrower shall be the surviving entity in any merger or consolidation with a
Material Borrower Entity), (ii) which do not have a Material Adverse Effect on
the Borrower or the affected Material Borrower Entity, and (iii) which do not
result in the Borrower, following the consummation of such merger or
consolidation, being in default under any term or condition of this Agreement.
Neither the Borrower nor any Material Borrower Entity shall sell, lease,
transfer, encumber or otherwise dispose of all or any substantial part of its
properties or assets, whether in a single transaction or series of transactions,
if such sale, lease, transfer, encumbrance or other disposition would cause a
Material Adverse Effect on the Borrower or such Material Borrower Entity;
(b) Except for any such amendment that is required under any
requirement of law imposed by any governmental authority or in order to maintain
compliance with Section 6.14, amend its articles of incorporation or by-laws, or
permit any Material Borrower Entity to amend any of its charter documents,
except in each case (i) upon at least ten (10) Banking Days' prior written
notice to the Bank, and (ii) if the Bank notifies the Borrower within such 10-
---
day period that such amendment is, in Bank's reasonable judgment, a material
amendment, with the prior written consent of the Bank;
(c) Suspend its business activity, or permit any
24
Material Borrower Entity to suspend its business activity, in either case for
more than two days;
(d) Use any proceeds of any advance under the Loan Documents (or
permit such proceeds to be used), directly or indirectly, to purchase or carry,
or reduce or retire any loan incurred to purchase or carry any "Margin Stock"
(within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System) or to extend credit to others for the purpose of purchasing or
carrying any Margin Stock;
(e) Permit the Borrower's aggregate Investments in Borrower Entities
that have not executed and delivered a Guaranty at any time to exceed ten
percent (10%) of the Borrower's consolidated total assets, determined in
accordance with GAAP; or
(f) Cease (i) to own at least a majority of the outstanding equity
interests of each other Material Borrower Entity, or (ii) to control any
Material Borrower Entity.
6.15 Continued Status as a REIT; Prohibited Transactions.
---------------------------------------------------
The Borrower (i) will continue to be a real estate investment trust as
defined in Section 856 of the Code (or any successor provision thereto), (ii)
will not revoke its election to be a real estate investment trust, (iii) will
not engage in any "prohibited transactions" as defined in Section 856(b)(6)(iii)
of the Code (or any successor provision thereto), and (iv) will continue to be
entitled to a dividend paid deduction meeting the requirements of Section 857 of
the Code.
6.16 NYSE Listed Company.
-------------------
The common stock of the Borrower shall at all times be listed for
trading and be traded on the New York Stock Exchange.
6.17 Conduct of Business.
-------------------
The Borrower shall engage primarily in the business of direct
ownership, operation and acquisition or development for its own account of
apartment projects located in the Western United States (which shall be
understood to mean Colorado and States westward); provided, however, that the
foregoing shall not restrict either the Borrower's continued ownership and
operation of assets owned as of the Effective Date or other business activities
of the Borrower or any Borrower Entity reasonably incidental to business
activities otherwise permitted under this Section 6.16.
25
6.18 Delivery of Guaranties.
----------------------
Within fifteen (15) days after (a) any Borrower Entity becomes a
Material Borrower Entity, or (b) the Borrower forms or acquires, by merger or
otherwise, a Material Borrower Entity: the Borrower shall (x) give the Bank
written notice thereof, (y) cause such Material Borrower Entity to execute and
deliver to the Bank a Guaranty, and (z) deliver to the Bank (i) with respect to
such Material Borrower Entity, the documents described in each of Sections
1.4(f) and 4.1(b), and (ii) an updated Schedule 1, reflecting such information
with respect to such Material Borrower Entity as is required to be reflected on
Schedule 1 pursuant to Section 5.1(b). Upon the inclusion of any real property
asset owned by a Borrower Entity other than a Material Borrower Entity as
Unencumbered Real Property by virtue of the execution and delivery by such
Borrower Entity of a Guaranty (but without limiting the requirement that such
real property asset qualify in all respects as "Unencumbered Real Property" in
order to be included as such), the Borrower shall deliver to the Bank (1) with
respect to such Guarantor, the documents described in each of Sections 1.4(f)
and 4.1(b), and (2) an updated Schedule 1, reflecting such information with
respect to such Guarantor as is required to be reflected on Schedule 1 pursuant
to Section 5.1(b).
6.19 Cooperation.
-----------
The Borrower shall take any action reasonably requested by the Bank to
carry out the intent of the Loan Documents.
7. COLLATERAL; OTHER SPECIAL PROVISIONS
7.1 Collateral. This Line of Credit is unsecured.
----------
7.2 Other Special Provisions. For purposes of this Section 7.2,
------------------------
capitalized terms not otherwise defined in this Agreement have the definitions
given to them in Section 7.2(c).
Notwithstanding any other provision of this Agreement, effective as of the
date on which Blue Ravine Properties LLC executes and delivers to Bank a
Guaranty, together with the other documents required by Section 6.18:
(a) Until the Special Provisions Termination Date, the Blue Ravine
Property shall constitute "Unencumbered Real Property" for purposes of this
Agreement, notwithstanding that it is subject to the Borrower Lien (as defined
below); provided that, but for the existence of the Borrower Lien (and for that
-------- ----
reason alone), the Blue Ravine Property would constitute both "Real Property"
and "Unencumbered Real Property", within the meaning of those terms.
(b) The "value" of the Blue Ravine Property for all
26
purposes of this Agreement (including, without limitation, for purposes of
determining "Total Real Property Market Value" and "Total Real Property Market
Value of Unencumbered Real Property"), at any time, shall be equal to (i) its
value, as determined using the "Current Value Method", minus (ii) the then-
-----
outstanding principal amount of the Borrower-Owned Debt.
(c) As used in this Section 7.2, the following terms have the
following meanings:
(i) "Borrower Lien" means the Lien, in existence as of the date
of this Agreement, in favor of the Borrower, securing the Borrower-Owned Debt
(and only the Borrower-Owned Debt).
(ii) "Borrower-Owned Debt" means the indebtedness of Blue Ravine
Properties LLC, in an original principal not exceeding $5,700,000, outstanding
as of the date on which Blue Ravine Properties LLC acquires the Blue Ravine
Property, as reduced from time to time by any repayment or prepayment of the
principal thereof; provided that such indebtedness is, and continues to be, held
-------- ----
by the Borrower free and clear of all Liens in favor of any other Person
whatsoever.
(iii) "Blue Ravine Property" means the Real Property owned by
Blue Ravine Properties LLC as of the date of the initial advance under the Line
of Credit or acquired thereon.
(iv) "Special Provisions Termination Date" means the earliest of
(A) December 31, 1998, (B) the date as of which (1) Blue Ravine Properties LLC
is liquidated or dissolved, or merged into BRE Property Investors LLC, or (2)
the Blue Ravine Property otherwise ceases to be owned by Blue Ravine Properties
LLC; or (C) the date on which the Blue Ravine Property otherwise fails to
constitute "Unencumbered Real Property" pursuant to Section 7.2(a).
8. DEFAULT
If any of the following events occurs (an "Event of Default"), the Bank may
declare the Borrower in default, stop making any additional credit available to
the Borrower, and require the Borrower to repay its entire debt immediately and
without prior notice. However, if a bankruptcy petition is filed with respect
to the Borrower, the entire debt outstanding under the Loan Documents shall
automatically be due immediately.
8.1 Failure to Pay.
--------------
The Borrower, or any Material Borrower Entity, fails to make any
payment due under the Loan Documents (i) within fifteen (15) days after the date
when due, or (ii) within such other period, or no period, as may expressly be
provided in any other
27
Loan Document to constitute an Event of Default.
8.2 False Information.
-----------------
The Borrower, or any Material Borrower Entity, has given the Bank
false or misleading information or representations.
8.3 Bankruptcy.
----------
The Borrower, or any Material Borrower Entity, files a bankruptcy
petition or makes a general assignment for the benefit of creditors, or a
bankruptcy petition is filed against the Borrower. The default will be deemed
cured if any bankruptcy petition filed against the Borrower or any Material
Borrower Entity is dismissed within a period of forty-five (45) days after the
filing; provided, however, that the Bank will not be obligated to extend any
additional credit to the Borrower during that period.
8.4 Receivers; Dissolution.
----------------------
A receiver or similar official is appointed for the Borrower's, or any
Material Borrower Entity's, business, or the business is terminated; or any
order, judgment or decree is entered against the Borrower or any Material
Borrower decreeing its involuntary dissolution or split up and remains
undischarged and unstayed for a period in excess of thirty (30) days; the
directors or other managing body of, or the members, shareholders or other
holders of the equity interests in, the Borrower or any Material Borrower Entity
shall take any action authorizing the dissolution of the Borrower or any
Material Borrower Entity; or the Borrower or any Material Borrower Entity shall
otherwise dissolve or (except as the result of the merger of a Material Borrower
Entity into the Borrower) cease to exist.
8.5 Lawsuits.
--------
Any lawsuit(s) or arbitration(s) are initiated against the Borrower or
any Material Borrower Entity involving claims exceeding in the aggregate Fifty
Million Dollars ($50,000,000) or more at any one time in excess of any insurance
coverage.
8.6 Judgments.
---------
Any judgment or arbitration award is entered against the Borrower or
any Material Borrower Entity, or the Borrower, or any Material Borrower Entity,
enters into any settlement agreement with respect to any litigation, claim or
arbitration, in an aggregate amount of Ten Million Dollars ($10,000,000) or more
in excess of any insurance coverage.
8.7 ERISA Plans.
-----------
28
The occurrence of any of the following event(s) with respect to the
Borrower or any Material Borrower Entity, provided such event(s) could
reasonably be expected, in the judgment of the Bank, to subject the Borrower or
such Material Borrower Entity to any tax, penalty or liability (or any
combination of the foregoing) which in the aggregate could have a Material
Adverse Effect on the Borrower or such Material Borrower Entity with respect to
a Plan:
(a) A reportable event occurs with respect to a Plan which in the
reasonable judgment of the Bank may result in the termination of such Plan for
purposes of ERISA.
(b) Any Plan termination (or commencement of proceedings to terminate
a Plan) or the Borrower's, or any Material Borrower Entity's, full or partial
withdrawal from a Plan.
8.8 Government Action.
-----------------
Any government authority takes action that the Bank believes could
have a Material Adverse Effect on the Borrower or any Material Borrower Entity.
8.9 Material Adverse Change.
-----------------------
Any event, circumstance or condition shall occur which the Bank
believes could have a Material Adverse Effect on the Borrower or any Material
Borrower Entity.
8.10 Other Breach Under This Agreement or Other Loan Documents.
---------------------------------------------------------
The Borrower, or any Material Borrower Entity, fails to meet the
conditions of or fails to perform any obligation under any term of this
Agreement or any other Loan Document not specifically referred to in this
Article 8. If, in the Bank's opinion, the breach is capable of being remedied,
the breach will not be considered an Event of Default under this Agreement for a
period of thirty (30) days after the date on which the Bank gives written notice
of the breach to the Borrower; provided, however, that the Bank will not be
obligated to extend any additional credit to the Borrower during that period.
8.11 Cross-Default.
-------------
Any default occurs under any agreement in connection with any credit
the Borrower, any Material Borrower Entity or any of the Borrower's other
related entities or Affiliates has obtained from the Bank or any other creditor,
or which the Borrower, any Material Borrower Entity or any of the Borrower's
other related entities or Affiliates has guaranteed, if the default consists of
a failure to make a payment when due or gives the creditor the right to
accelerate the obligation.
29
9. ENFORCING THIS AGREEMENT; MISCELLANEOUS
9.1 Remedies.
--------
If an Event of Default occurs under the Loan Documents, the Bank may
exercise any right or remedy which it has under any of the Loan Documents or
which is otherwise available at law or in equity. All of Bank's rights and
remedies shall be cumulative. At Bank's option, exercisable in its sole
discretion, all of the Borrower's obligations under the Loan Documents will
become immediately due and payable without notice of default, presentment or
demand for payment, protest or notice of nonpayment or dishonor, or other
notices or demands of any kind.
9.2 California Law.
--------------
This Agreement is governed by California law but without regard to the
choice of law rules of California.
9.3 Arbitration.
-----------
(a) Mandatory Arbitration. Except as provided below, any controversy
---------------------
or claim between or among the parties, including those arising out of or
relating to this Agreement or the other Loan Documents and any claim based on or
arising from an alleged tort, shall at the request of any party be determined by
arbitration. The arbitration shall be conducted in accordance with the United
States Arbitration Act (Title 9, U.S. Code), notwithstanding any choice of law
provision in this Agreement, and under the Commercial Rules of the American
Arbitration Association ("AAA"). The arbitrator(s) shall give effect to
statutes of limitation in determining any claim. Any controversy concerning
whether an issue is arbitrable shall be determined by the arbitrator(s).
Judgment upon the arbitration award may be entered in any court having
jurisdiction. The institution and maintenance of an action for judicial relief
or pursuit of a provisional or ancillary remedy shall not constitute a waiver of
the right of any party, including the plaintiff, to submit the controversy or
claim to arbitration if any other party contests such action for judicial
relief.
(b) Provisional Remedies, Self-Help and Foreclosure. No provision of
-----------------------------------------------
this Agreement shall limit the right of any party to this Agreement to exercise
self-help remedies such as setoff, or obtaining provisional or ancillary
remedies from a court of competent jurisdiction before, after, or during the
pendency of any arbitration or other proceeding. The exercise of a remedy does
not waive the right of either party to resort to arbitration.
9.4 Presentment, Demands and Notice.
-------------------------------
30
The Bank shall be under no duty or obligation to make or give any
presentment, demands for performances, notices of
nonperformance, protests, notices of protest or notices of dishonor in
connection with any obligation or indebtedness under the Loan Documents.
9.5 Indemnification.
---------------
The Borrower shall indemnify, save, and hold harmless the Bank and its
directors, officers, agents and employees (collectively the "Indemnitees") from
and against:
(a) Any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, charges, expenses or disbursements
(including attorneys' fees) of any kind with respect to the execution, delivery,
enforcement, performance and administration of this Agreement and the other Loan
Documents, and the transactions contemplated hereby, and with respect to any
investigation, litigation or proceeding related to this Agreement, the other
Loan Documents, advances made pursuant to the Loan Documents or the use of the
proceeds thereof (including, without limitation, any investigation, litigation
or proceeding related to the acquisition by any Borrower Entity of all or any
portion of its assets), whether or not any Indemnitee is a party thereto (all
the foregoing, collectively, the "Indemnified Liabilities"); provided, that the
Borrower shall have no obligation hereunder to any Indemnitee with respect to
Indemnified Liabilities arising from the gross negligence or willful misconduct
of such Indemnitee.
(b) Any and all writs, subpoenas, claims, demands, actions, or causes
of action that are served on or asserted against any Indemnitee (if directly or
indirectly related to a writ, subpoena, claim, demand, action, or cause of
action against the Borrower or any Affiliate of the Borrower); and any and all
liabilities, losses, costs, or expenses (including attorneys' fees) that any
Indemnitee suffers or incurs as a result of any of said matters.
The obligations of the Borrower under this Section 9.5 shall survive
payment of the advances made pursuant to the Loan Documents and assignment of
any rights hereunder.
9.6 Attorneys' Fees.
---------------
In the event of a lawsuit or arbitration proceeding, including any
tort proceeding, between or among the parties hereto, the prevailing party is
entitled to recover costs and reasonable attorneys' fees (including any
allocated costs of in-house counsel) incurred in connection with the lawsuit or
arbitration proceeding, as determined by the court or arbitrator.
31
9.7 Notices.
-------
All notices required under this Agreement shall be personally
delivered, sent by facsimile or sent by first class mail, postage prepaid, to
the addresses on the signature page of this Agreement, or to such other
addresses as the Bank and the Borrower may specify from time to time in writing.
9.8 Successors and Assigns.
----------------------
This Agreement is binding on the Borrower's and the Bank's successors
and assignees. The Borrower agrees that it may not assign this Agreement or the
other Loan Documents without the Bank's prior consent. The Bank may sell
participations in or assign this Loan, and may provide financial information
about the Borrower to actual or potential participants or assignees, without
notice to or consent of the Borrower. Concurrent with any assignment or
participation by the Bank, the Borrower will, at the Bank's request, deliver an
opinion of counsel in form and substance reasonably satisfactory to the Bank.
9.9 No Third Parties Benefited.
--------------------------
This Agreement is made and entered into for the sole protection and
benefit of the Bank and the Borrower and their successors and assigns. No trust
fund is created by this Agreement and no other persons or entities shall have
any right of action under this Agreement or any right to the proceeds of
advances made pursuant to the Loan Documents.
9.10 Integration; Relation to Any Loan Commitment; Headings.
------------------------------------------------------
(a) The Loan Documents (i) integrate all the terms and conditions in
or incidental to this Agreement, (ii) supersede all oral negotiations and prior
writings with respect to their subject matter, including any loan commitment to
the Borrower, and (iii) are intended by the parties as the final expression of
the agreement with respect to the terms and conditions set forth in those
documents and as the complete and exclusive statement of the terms agreed to by
the parties. No representation, understanding, promise or condition shall be
enforceable against any party unless it is contained in the Loan Documents.
(b) If there is any conflict between the terms, conditions and
provisions of this Agreement and those of any other agreement or instrument,
including any other Loan Document, the terms, conditions and provisions of this
Agreement shall prevail.
(c) Headings and captions are for reference only and shall not affect
the interpretation or meaning of any provisions of this Agreement.
(d) The schedule(s) and exhibit(s) to this Agreement
32
are hereby incorporated in this Agreement.
9.11 Interpretation.
--------------
(a) Time is of the essence in the performance of this Agreement by the
Borrower.
(b) The word "include(s)" means "include(s), without limitation," and
the word "including" means "including but not limited to." No listing of
specific instances, items or matters in any way limits the scope or generality
of any language of this Agreement.
(c) Any accounting terms used in this Agreement which are not
specifically defined shall have the meanings customarily given them in
accordance with GAAP. All references herein to the Borrower or any other
Person, in connection with any financial or related covenant, representation or
calculation, shall be understood to mean and refer to the Borrower and such
other Person on a consolidated basis in accordance with GAAP, unless otherwise
specifically provided and subject in all events to any adjustments herein set
forth.
(d) Any time the phrase "to the best of the Borrower's knowledge" or a
phrase similar thereto is used herein, it means: "to the actual knowledge of
the then officers of the Borrower, after reasonable inquiry of those agents,
employees or contractors of the 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."
(e) In each case where the consent or approval of the Bank is
required, or Bank's non-obligatory action is requested by the Borrower, such
consent, approval or action shall be in the sole and absolute discretion of the
Bank, unless otherwise specifically indicated.
(f) 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.
33
9.12 Severability; Waivers; Amendments.
---------------------------------
This Agreement may not be modified or amended except by a written
agreement signed by the parties. Any consent or waiver under this Agreement
must be in writing. If any part of this Agreement is not enforceable, the rest
of the Agreement may be enforced. If the Bank waives a default, it may enforce a
later default. No waiver shall be construed as a continuing waiver. No waiver
shall be implied from Bank's delay in exercising or failure to exercise any
right or remedy against the Borrower. Consent by the Bank to any act or omission
by the Borrower shall not be construed as a consent to any other or subsequent
act or omission or as a waiver of the requirement for Bank's consent to be
obtained in any future or other instance. The Bank retains all of its rights and
remedies, even if it makes an advance after a default.
9.13 Counterparts.
------------
This Agreement may be executed in counterparts each of which, when
executed, shall be deemed an original, and all such counterparts shall
constitute one and the same agreement.
34
This Agreement is executed as of the date stated at the top of the first page.
Bank: Borrower:
BANK OF AMERICA NATIONAL BRE PROPERTIES, INC., a
TRUST AND SAVINGS ASSOCIATION Maryland corporation
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇ By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------- -------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President Executive Vice President and
Chief Financial Officer
By /s/ ▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇
Title: Sr. E.V.P
Address where notices to Address where notices to
the Bank are to be sent: the Borrower are to be sent:
Bank of America National Trust BRE Properties, Inc.
and Savings Association ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Telesis Tower, Suite 2500
Services/National ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Accounts 9105 Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Phone: (▇▇▇) ▇▇▇-▇▇▇▇
11th Floor Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
35
SCHEDULE 1
----------
MATERIAL BORROWER ENTITIES
--------------------------
EXHIBIT A
---------
BORROWING NOTICE
----------------
Schedule 1 to Borrowing Notice (Requested Advance)
EXHIBIT B
---------
FORM OF GUARANTY
----------------
SCHEDULE 1
----------
MATERIAL BORROWER ENTITIES
---------------------------
As of November 14, 1997
Member of BRE Property Investors LLC Percentage of Ownership Interest
------------------------------------ --------------------------------
BRE Properties, Inc. 99%
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 1%
--
Total 100%
1
EXHIBIT A
----------
BORROWING NOTICE
----------------
___________________, 199__
Bank of America National Trust
and Savings Association
Commercial Real Estate
Services Group 9105
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Re: Unsecured Line of Credit Loan Agreement dated as of November 17, 1997 (the
"Agreement") between BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
("Bank") and BRE PROPERTIES, INC. ("Borrower")
Dear _______________:
Reference is made to the Agreement. Capitalized terms used in this
Borrowing Notice without definition have the meanings specified in the
Agreement.
Pursuant to the Agreement, notice is hereby given that the Borrower
desires that the Bank make the advance described in attached Schedule 1 (the
----------
"Advance"). The Borrower and the undersigned Officer of the Borrower hereby
certify that:
(1) Commitment. The outstanding amount of the Line of Credit,
----------
together with any other amounts required by the Loan Documents to be charged
against the availability of advances under the Line of Credit, shall not, after
giving effect to the making of the Advance, exceed the Commitment;
(2) Representations and Warranties. All representations and
------------------------------
warranties of the Borrower or any Material Borrower Entity contained in the
Agreement and the other Loan Documents are true and correct as of the date
hereof and shall be true and correct on the date of the Advance, both before and
after giving effect to the Advance; provided, however, that the representations
and warranties of the Borrower set forth in the Agreement regarding financial
statements shall be deemed to be made with respect to the financial statements
most recently delivered to the Bank pursuant to the Agreement;
(3) No Event of Default. No Event of Default exists as of the date
-------------------
hereof or will result from the making of the Advance or would result after
notice or passage of time or both;
1
(4) Use of Proceeds. The proceeds of the Advance will be used only as
---------------
permitted by the Agreement; and
(5) No Material Adverse Effect. No event, circumstance or condition,
--------------------------
which could have a Material Adverse Effect on the Borrower or any Material
Borrower Entity, has occurred since the date of the Agreement.
Enclosed are the documents and information, if any, requested by the
Bank with respect to use of proceeds as a condition to this Advance.
BRE PROPERTIES, INC., a
Maryland corporation
By: __________________________
Its: _________________________
2
Schedule 1
----------
to Borrowing Notice
REQUESTED ADVANCE
-----------------
1. Amount of Requested Advance: $_______________
---------------------------
(must be $500,000 or more)
2. Purpose of Advance /1//:
------------------
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
3. Effective Date of Requested Advance: __________, ____
-----------------------------------
______________________
/1// See Section 6.1; specify acquisition costs for designated apartment
project or general working capital purposes.
EXHIBIT B
PAYMENT GUARANTY
This Payment Guaranty ("Guaranty") is made as of________, 199 ____ by _____
______("Guarantor") in favor of Bank of America National Trust and Savings
Association ("Bank").
Factual Background
------------------
A. Guarantor is executing this Guaranty to induce Bank to make advances
(the "Loan") to BRE Properties, Inc., a Maryland corporation ("Borrower")in
accordance with an ______________ Agreement between the Borrower and the Bank
dated, 199_, in the principal amount of .
B. Advances under the Loan are currently evidenced by a Promissory Note
dated as of _______, 199_ ("the Note") made payable to Bank in the principal
amount of the Loan. The Loan includes a revolving and unsecured line of credit.
C. The Loan is guarantied by this Guaranty and is evidenced by the
documents referenced above. Those documents, together with this Guaranty, are
referred to here as the "Loan Documents".
Guaranty
--------
1. Guaranty of Loan. Guarantor unconditionally guaranties to Bank the
----------------
full payment of the Loan, and unconditionally agrees to pay Bank the full amount
of the Loan. This is a guaranty of payment, not of collection. If Borrower
defaults in the payment when due of the Loan or any part of it, Guarantor shall
in lawful money of the United States pay to Bank or order, on demand, all sums
due and owing on the Loan, including all interest, charges, fees and other sums,
costs and expenses.
2. Loan. In this Guaranty, the term "Loan" is broadly defined to mean
----
and include all primary, secondary, direct, indirect, fixed and contingent
obligations of Borrower to pay principal, interest, prepayment charges, late
charges, loan fees and any other fees, charges, sums, costs and expenses which
may be owing at any time under the Loan Documents, as any or all of them may
from time to time be modified, amended, extended or renewed. For purposes of
this Guaranty, the Loan includes any and all such obligations which may arise in
connection with (a) any environmental and other indemnities given by Borrower in
connection with the Loan, (b) any set aside letters, and (c) any advances made
before recording of any deed of trust given to secure the Loan. If the amount
outstanding under the Loan is determined by a court of competent jurisdiction,
that determination shall be conclusive and binding on Guarantor, regardless of
whether Guarantor was a party to the proceeding in which the determination was
made or not.
3. Rights of Bank. Guarantor authorizes Bank to perform any or all of
--------------
the following acts at any time in its sole discretion, all without notice to
Guarantor and without affecting Guarantor's obligations under this Guaranty:
(a) Bank may alter any terms of the Loan or any part of it, including
renewing, compromising, extending or accelerating, or otherwise changing the
time for payment of, or increasing or decreasing the rate of interest on, the
Loan or any part of it.
(b) Bank may take and hold security for the Loan or this Guaranty,
accept additional or substituted security for either, and subordinate, exchange,
1
enforce, waive, release, compromise, fail to perfect and sell or otherwise
dispose of any such security.
(c) Bank may direct the order and manner of any sale of all or any
part of any security now or later to be held for the Loan or this Guaranty, and
Bank may also bid at any such sale.
(d) Bank may apply any payments or recoveries from Borrower, Guarantor
or any other source, and any proceeds of any security, to Borrower's obligations
under the Loan Documents in such manner, order and priority as Bank may elect,
whether or not those obligations are guarantied by this Guaranty or secured at
the time of the application.
(e) Bank may release Borrower of its liability for the Loan or any
part of it.
(f) Bank may substitute, add or release any one or more guarantors or
endorsers.
(g) In addition to the Loan, Bank may extend other credit to Borrower,
and may take and hold security for the credit so extended, all without affecting
Guarantor's liability under this Guaranty.
4. Guaranty to be Absolute. Guarantor expressly agrees that until the
-----------------------
Loan is paid and performed in full and each and every term, covenant and
condition of this Guaranty is fully performed, Guarantor shall not be released
by or because of:
(a) Any act or event which might otherwise discharge, reduce, limit or
modify Guarantor's obligations under this Guaranty;
(b) Any waiver, extension, modification, forbearance, delay or other
act or omission of Bank, or its failure to proceed promptly or otherwise as
against Borrower, Guarantor or any security;
(c) Any action, omission or circumstance which might increase the
likelihood that Guarantor may be called upon to perform under this Guaranty or
which might affect the rights or remedies of Guarantor as against Borrower;
(d) Any dealings occurring at any time between Borrower and Bank,
whether relating to the Loan or otherwise; or
(e) Any action of Bank described in Section 3 above.
Guarantor hereby acknowledges that absent this Section 4, Guarantor
might have a defense to the enforcement of this Guaranty as a result of one or
more of the foregoing acts, omissions, agreements, waivers or matters.
Guarantor hereby expressly waives and surrenders any defense to any liability
under this Guaranty based upon any of such acts, omissions, agreements, waivers
or matters. It is the express intent of Guarantor that Guarantor's obligations
under this Guaranty are and shall be absolute, unconditional and irrevocable.
5. Guarantor's Waivers. Guarantor waives:
-------------------
(a) All statutes of limitations as a defense to any action or
proceeding brought against Guarantor by Bank, to the fullest extent permitted by
law;
(b) Any right it may have to require Bank to proceed against Borrower,
proceed against or exhaust any security held from Borrower, or pursue any other
remedy in Bank's power to pursue;
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(c) Any defense based on any claim that Guarantor's obligations exceed
or are more burdensome than those of Borrower;
(d) Any defense based on: (i) any legal disability of Borrower, (ii)
any release, discharge, modification, impairment or limitation of the liability
of Borrower to Bank from any cause, whether consented to by Bank or arising by
operation of law or from any bankruptcy or other voluntary or involuntary
proceeding, in or out of court, for the adjustment of debtor-creditor
relationships ("Insolvency Proceeding") and (iii) any rejection or disaffirmance
of the Loan, or any part of it, or any security held for it, in any such
Insolvency Proceeding;
(e) Any defense based on any action taken or omitted by Bank in any
Insolvency Proceeding involving Borrower, including any election to have Bank's
claim allowed as being secured, partially secured or unsecured, any extension of
credit by Bank to Borrower in any Insolvency Proceeding, and the taking and
holding by Bank of any security for any such extension of credit;
(f) All presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor, notices of
acceptance of this Guaranty and of the existence, creation, or incurring of new
or additional indebtedness, and demands and notices of every kind except for any
demand or notice by Bank to Guarantor expressly provided for in Section 1;
(g) Any defense based on or arising out of any defense that Borrower
may have to the payment or performance of the Loan or any part of it; and
(h) Any defense based on or arising out of any action of Bank
described in Sections 3 or 4 above.
6. Guarantor's Liability
---------------------
Notwithstanding any other provision of this Guaranty to the contrary,
Guarantor agrees with Bank that Guarantor's liability under this Guaranty shall
under all circumstances be limited to the greater of (1) the net benefit to
Guarantor from the Loan, or (2) the maximum amount that, if exceeded, would
cause the occurrence of a Limiting Event, as defined herein. For purposes of
this Guaranty, a "Limiting Event" shall occur if, as a result of Guarantor's
execution and delivery of this Guaranty, or its incurring of its obligations
hereunder, as of the date incurred (as determined (i) for purposes of Bankruptcy
Code (S)548(a) in a case involving Guarantor under the Bankruptcy Code, in
accordance with the Bankruptcy Code, and (ii) in any other case, in accordance
with the California Uniform Fraudulent Transfer Act): (a) the Guarantor is left
insolvent, (b) the Guarantor incurs debts beyond its ability to pay as they
mature, or (c) Guarantor is left with unreasonably small capital to carry on its
business and any other business in which it presently intends to engage.
7. Waivers of Subrogation and Other Rights and Defenses.
----------------------------------------------------
(a) Upon a default by Borrower, Bank in its sole discretion, without
prior notice to or consent of Guarantor, may elect to: (i) foreclose either
judicially or nonjudicially against any real or personal property security it
may hold for the Loan, (ii) accept a transfer of any such security in lieu of
foreclosure, (iii) compromise or adjust the Loan or any part of it or make any
other accommodation with Borrower or Guarantor, or (iv) exercise any other
remedy against Borrower or any security. No such action by Bank shall release
or limit the liability of Guarantor, who shall remain liable under this Guaranty
after the action, even if the effect of the action is to deprive Guarantor of
any subrogation rights, rights of indemnity, or other rights to collect
reimbursement from Borrower for any sums paid to Bank, whether contractual or
arising by operation of law or otherwise. Guarantor expressly agrees
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that under no circumstances shall it be deemed to have any right, title,
interest or claim in or to any real or personal property to be held by Bank or
any third party after any foreclosure or transfer in lieu of foreclosure of any
security for the Loan.
(b) Regardless of whether Guarantor may have made any payments to
Bank, Guarantor hereby waives: (i) all rights of subrogation, indemnification,
contribution and any other rights to collect reimbursement from Borrower or any
other party for any sums paid to Bank, whether contractual or arising by
operation of law (including the United States Bankruptcy Code or any successor
or similar statute) or otherwise, (ii) all rights to enforce any remedy that
Bank may have against Borrower, and (iii) all rights to participate in any
security now or later to be held by Bank for the Loan. The waivers given in
this subsection 7(b) shall be effective until the Loan has been paid and
performed in full.
(c) Guarantor understands and acknowledges that if Bank forecloses
judicially or nonjudicially against any real property security for the Loan,
that foreclosure could impair or destroy any ability that Guarantor may have to
seek reimbursement, contribution or indemnification from Borrower or others
based on any right Guarantor may have of subrogation, reimbursement,
contribution or indemnification for any amounts paid by Guarantor under this
Guaranty. Guarantor further understands and acknowledges that in the absence of
this Section 7, such potential impairment or destruction of Guarantor's rights,
if any, may entitle Guarantor to assert a defense to this Guaranty based on
Section 580d of the California Code of Civil Procedure as interpreted in Union
-----
Bank ▇. ▇▇▇▇▇▇▇, 265 Cal.App.2d 40 (1968). By executing this Guaranty,
---------------
Guarantor freely, irrevocably and unconditionally: (i) waives and relinquishes
that defense and agrees that Guarantor will be fully liable under this Guaranty
even though Bank may foreclose judicially or nonjudicially against any real
property security for the Loan; (ii) agrees that Guarantor will not assert that
defense in any action or proceeding which Bank may commence to enforce this
Guaranty; (iii) acknowledges and agrees that the rights and defenses waived by
Guarantor under this Guaranty include any right or defense that Guarantor may
have or be entitled to assert based upon or arising out of any one or more of
Sections 580a, 580b, 580d or 726 of the California Code of Civil Procedure or
Section 2848 of the California Civil Code; and (iv) acknowledges and agrees that
Bank is relying on this waiver in making the Loan, and that this waiver is a
material part of the consideration which Bank is receiving for making the Loan.
(d) Guarantor waives any rights and defenses that are or may become
available to Guarantor by reason of Sections 2787 to 2855, inclusive, of the
California Civil Code.
(e) Guarantor waives all rights and defenses that Guarantor may have
in the event that Borrower's Loan is secured by real property. This means,
among other things:
(i) Bank may collect from Guarantor without first foreclosing on
any real or personal property collateral pledged by Borrower.
(ii) If Bank forecloses on any real property collateral pledged
by Borrower:
(A) The amount of the Loan may be reduced only by the price
for which that collateral is sold at the foreclosure sale, even if the
collateral is worth more than the sale price.
(B) Bank may collect from Guarantor even if Bank, by
foreclosing on the real property collateral, has destroyed any right
Guarantor may have to collect from Borrower.
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This subsection 7(e) is an unconditional and irrevocable waiver of any
rights and defenses Guarantor may have in the event that Borrower's Loan is
secured by real property. These rights and defenses include, but are not
limited to, any rights or defenses based upon Section 580a, 580b, 580d, or 726
of the California Code of Civil Procedure.
(f) Guarantor waives any right or defense it may have at law or
equity, including California Code of Civil Procedure Section 580a, to a fair
market value hearing or action to determine a deficiency judgment after a
foreclosure.
(g) No provision or waiver in this Guaranty shall be construed as
limiting the generality of any other provision or waiver contained in this
Guaranty.
8. Revival and Reinstatement. If Bank is required to pay, return or
-------------------------
restore to Borrower or any other person any amounts previously paid on the Loan
because of any Insolvency Proceeding of Borrower, any stop notice or any other
reason, the obligations of Guarantor shall be reinstated and revived and the
rights of Bank shall continue with regard to such amounts, all as though they
had never been paid.
9. Information Regarding Borrower and Any Collateral. Before signing
-------------------------------------------------
this Guaranty, Guarantor investigated the financial condition and business
operations of Borrower, the present and former condition, uses and ownership of
any collateral, and such other matters as Guarantor deemed appropriate to assure
itself of Borrower's ability to discharge its obligations under the Loan
Documents. Guarantor assumes full responsibility for that due diligence, as
well as for keeping informed of all matters which may affect Borrower's ability
to pay and perform its obligations to Bank. Bank has no duty to disclose to
Guarantor any information which Bank may have or receive about Borrower's
financial condition or business operations, the condition or uses of any
collateral, or any other circumstances bearing on Borrower's ability to perform.
10. Subordination. Any rights of Guarantor, whether now existing or later
-------------
arising, to receive payment on account of any indebtedness (including interest)
owed to it by Borrower or any subsequent owner of any real property collateral
for the Loan, or to withdraw capital invested by it in Borrower, or to receive
distributions from Borrower, shall at all times be subordinate as to lien and
time of payment and in all other respects to the full and prior repayment to
Bank of the Loan. Should there be any event of default under either this
Guaranty or the Loan, Guarantor shall not, without the prior written consent of
Bank, be entitled to enforce or receive payment of any sums hereby subordinated
until the Loan has been paid and performed in full, and any such sums received
in violation of this Guaranty shall be received by Guarantor in trust for Bank.
11. Financial Information. Guarantor shall keep true and correct
---------------------
financial books and records, using generally accepted accounting principles
consistently applied, or such other accounting principles as Bank in its
reasonable judgment may find acceptable from time to time. Within one hundred
and twenty (120) days after the end of each fiscal year, Guarantor shall deliver
to Bank its balance sheet and income statement, together with a statement
showing all changes in its financial condition which occurred during the
preceding fiscal year. Guarantor shall also promptly deliver to Bank all
quarterly balance sheets and income statements if they become available or if
Bank requests them. Guarantor shall promptly provide Bank with any additional
audited financial information that Guarantor may obtain, as well as signed
copies of any tax returns and such other information concerning its affairs and
properties as Bank may reasonably request.
12. Guarantor's Representations and Warranties. Guarantor represents and
------------------------------------------
warrants that:
5
(a) All financial statements and other financial information furnished
or to be furnished to Bank are or will be true and correct and do or will fairly
represent the financial condition of Guarantor (including all contingent
liabilities);
(b) All financial statements were or will be prepared in accordance
with generally accepted accounting principles, or such other accounting
principles as may be acceptable to Bank at the time of their preparation,
consistently applied; and
(c) There has been no material adverse change in Guarantor's financial
condition since the dates of the statements most recently furnished to Bank.
13. Events of Default. Bank may declare Guarantor to be in default under
-----------------
this Guaranty upon the occurrence of any of the following events ("Events of
Default"):
(a) Guarantor fails to perform any of its obligations under this
Guaranty; or
(b) Guarantor revokes this Guaranty or this Guaranty becomes
ineffective for any reason; or
(c) Any representation or warranty made or given by Guarantor to Bank
proves to be false or misleading in any material respect; or
(d) Guarantor becomes insolvent or the subject of any Insolvency
Proceeding; or
(e) Guarantor dies, dissolves or liquidates, or any of these events
happens to any of Guarantor's general partners, its chief executive, its
majority shareholder, any of its managing members, or any member that owns a
majority interest in Guarantor; or
(f) Guarantor's managing general partner, any of its managing members
or its chief executive ceases for any reason to act in that capacity.
14. Reference and Arbitration.
-------------------------
(a) Judicial Reference. This subsection 14(a) applies at any time
------------------
when there is real property collateral securing the Loan or this Guaranty. In
any judicial action between or among the parties, including any action or cause
of action arising out of or relating to this Guaranty or the Loan Documents or
based on or arising from an alleged tort, all decisions of fact and law shall at
the request of any party be referred to a referee in accordance with California
Code of Civil Procedure Sections 638 et seq. The parties shall designate to the
-- ---
court a referee or referees selected under the auspices of the American
Arbitration Association ("AAA") in the same manner as arbitrators are selected
in AAA-sponsored proceedings. The presiding referee of the panel, or the
referee if there is a single referee, shall be an active attorney or retired
judge. Judgment upon the award rendered by such referee or referees shall be
entered in the court in which such proceeding was commenced in accordance with
California Code of Civil Procedure Sections 644 and 645.
(b) Mandatory Arbitration. If there is no real property collateral
---------------------
securing the Loan or this Guaranty, or after any deed of trust securing the Loan
or this Guaranty has been released, fully reconveyed or extinguished, any
controversy or claim between or among the parties, including those arising out
of or relating to this Guaranty or the Loan Documents and any claim based on or
arising from an alleged tort, shall at the request of any party be determined by
arbitration. The arbitration shall be conducted in accordance with the United
States Arbitration Act (Title 9, U.S. Code), notwithstanding any choice of law
provision in this Guaranty, and under the Commercial Rules of the AAA. The
arbitrator(s) shall give effect to statutes of limitation in
6
determining any claim. Any controversy concerning whether an issue is arbitrable
shall be determined by the arbitrator(s). Judgment upon the arbitration award
may be entered in any court having jurisdiction. The institution and maintenance
of an action for judicial relief or pursuit of a provisional or ancillary remedy
shall not constitute a waiver of the right of any party, including the
plaintiff, to submit the controversy or claim to arbitration if any other party
contests such action for judicial relief.
(c) Real Property Collateral. Notwithstanding the provisions of
------------------------
subsection 14(b), no controversy or claim shall be submitted to arbitration
without the consent of all parties if, at the time of the proposed submission,
such controversy or claim arises from or relates to an obligation by Guarantor
or Borrower to Bank which is secured by real property collateral. If all
parties do not consent to submission of such a controversy or claim to
arbitration, the controversy or claim shall be determined by reference as
provided in subsection 14(a).
(d) Provisional Remedies, Self-Help and Foreclosure. No provision of
-----------------------------------------------
this Section 14 shall limit the right of any party to exercise self-help
remedies such as setoff, foreclosure against or sale of any real or personal
property collateral or security, or to obtain provisional or ancillary remedies
from a court of competent jurisdiction before, after, or during the pendency of
any arbitration or other proceeding. The exercise of a remedy does not waive
the right of either party to resort to arbitration or reference. At Bank's
option, foreclosure under a deed of trust or mortgage may be accomplished either
by exercise of power of sale under the deed of trust or mortgage or by judicial
foreclosure.
15. Authorization; No Violation. Guarantor is authorized to execute,
---------------------------
deliver and perform under this Guaranty, which is a valid and binding obligation
of Guarantor. No provision or obligation of Guarantor contained in this
Guaranty violates any applicable law, regulation or ordinance, or any order or
ruling of any court or governmental agency. No such provision or obligation
conflicts with, or constitutes a breach or default under, any agreement to which
Guarantor is a party. No consent, approval or authorization of or notice to any
person or entity is required in connection with Guarantor's execution of and
obligations under this Guaranty.
16. Additional and Independent Obligations. Guarantor's obligations under
--------------------------------------
this Guaranty are in addition to its obligations under any other existing or
future guaranties, each of which shall remain in full force and effect until it
is expressly modified or released in a writing signed by Bank. Guarantor's
obligations under this Guaranty are independent of those of Borrower on the
Loan. Bank may bring a separate action, or commence a separate reference or
arbitration proceeding against Guarantor without first proceeding against
Borrower, any other person or any security that Bank may hold, and without
pursuing any other remedy. Bank's rights under this Guaranty shall not be
exhausted by any action by Bank until the Loan has been paid and performed in
full.
17. No Waiver; Consents; Cumulative Remedies. Each waiver by Bank must be
----------------------------------------
in writing, and no waiver shall be construed as a continuing waiver. No waiver
shall be implied from Bank's delay in exercising or failure to exercise any
right or remedy against Borrower, Guarantor or any security. Consent by Bank to
any act or omission by Borrower or Guarantor shall not be construed as a consent
to any other or subsequent act or omission, or as a waiver of the requirement
for Bank's consent to be obtained in any future or other instance. All remedies
of Bank against Borrower and Guarantor are cumulative.
18. No Release. Guarantor shall not be released from its obligations
----------
under this Guaranty except by a writing signed by Bank.
19. Heirs, Successors and Assigns; Participations. The terms of this
---------------------------------------------
Guaranty shall bind and benefit the heirs, legal representatives, successors and
assigns of Bank
7
and Guarantor; provided, however, that Guarantor may not assign this Guaranty,
or assign or delegate any of its rights or obligations under this Guaranty,
without the prior written consent of Bank in each instance. Bank in its sole
discretion may sell or assign participations or other interests in the Loan and
this Guaranty, in whole or in part, all without notice to or the consent of
Guarantor and without affecting Guarantor's obligations under this Guaranty.
Also without notice to or the consent of Guarantor, Bank may disclose any and
all information in its possession concerning Guarantor, this Guaranty and any
security for this Guaranty to any actual or prospective purchaser of any
securities issued or to be issued by Bank, and to any actual or prospective
purchaser or assignee of any participation or other interest in the Loan and
this Guaranty.
20. Notices. All notices given under this Guaranty must be in writing and
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shall be effectively served upon delivery, or if mailed, upon the first to occur
of receipt or the expiration of forty-eight hours after deposit in certified
United States mail, postage prepaid, sent to the party at its address given at
the end of this Guaranty. Those addresses may be changed by Bank or Guarantor
by written notice to the other party. Service of any notice on any one
Guarantor signing this Guaranty shall be effective service on Guarantor for all
purposes.
21. Rules of Construction. In this Guaranty, the word "Borrower" includes
---------------------
both the named Borrower and any other person who at any time assumes or
otherwise becomes primarily liable for all or any part of the obligations of the
named Borrower on the Loan. The word "person" includes any individual, company,
trust or other legal entity of any kind. If this Guaranty is executed by more
than one person, the word "Guarantor" includes all such persons. The word
"include(s)" means "include(s), without limitation," and the word "including"
means "including, but not limited to." When the context and construction so
require, all words used in the singular shall be deemed to have been used in the
plural and vice versa. No listing of specific instances, items or matters in
any way limits the scope or generality of any language of this Guaranty. All
headings appearing in this Guaranty are for convenience only and shall be
disregarded in construing this Guaranty.
22. Governing Law. This Guaranty shall be governed by, and construed in
-------------
accordance with, the laws of the State of California.
23. Costs and Expenses. If any lawsuit, reference or arbitration is
------------------
commenced which arises out of, or which relates to this Guaranty, the Loan
Documents or the Loan, the prevailing party shall be entitled to recover from
each other party such sums as the court, referee or arbitrator may adjudge to be
reasonable attorneys' fees (including allocated costs for services of in-house
counsel) in the action or proceeding, in addition to costs and expenses
otherwise allowed by law. In all other situations, including any Insolvency
Proceeding, Guarantor agrees to pay all of Bank's costs and expenses, including
attorneys' fees (including allocated costs for services of Bank's in-house
counsel) which may be incurred in any effort to collect or enforce the Loan or
any part of it or any term of this Guaranty. From the time(s) incurred until
paid in full to Bank, all sums shall bear interest at the Default Rate, as
defined in the Loan Documents.
24. Consideration. Guarantor acknowledges that it expects to benefit from
-------------
Bank's extension of the Loan to Borrower because of its relationship to
Borrower, and that it is executing this Guaranty in consideration of that
anticipated benefit.
25. Integration; Modifications. This Guaranty (a) integrates all the
--------------------------
terms and conditions mentioned in or incidental to this Guaranty, (b) supersedes
all oral negotiations and prior writings with respect to its subject matter, and
(c) is intended by Guarantor and Bank as the final expression of the agreement
with respect to the terms and conditions set forth in this Guaranty and as the
complete and exclusive statement of the terms agreed to by Guarantor and Bank.
No representation, understanding, promise or
8
condition shall be enforceable against any party hereto unless it is contained
in this Guaranty. This Guaranty may not be modified except in a writing signed
by both Bank and Guarantor. No course of prior dealing, usage of trade, parol or
extrinsic evidence of any nature shall be used to supplement, modify or vary any
of the terms hereof.
26. Miscellaneous. The death or legal incapacity of any Guarantor shall
-------------
not terminate the obligations of such Guarantor or any other Guarantor under
this Guaranty, including its obligations with regard to future advances under
the Loan Documents. The liability of all persons who are in any manner
obligated under this Guaranty shall be joint and several. The illegality or
unenforceability of one or more provisions of this Guaranty shall not affect any
other provision. Any Guarantor who is married agrees that Bank may look to all
of his or her community property and separate property to satisfy his or her
obligations under this Guaranty. Time is of the essence in the performance of
this Guaranty by Guarantor.
27. Counsel. Guarantor acknowledges that Guarantor has had adequate
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opportunity to carefully read this Guaranty and to consult with an attorney of
Guarantor's choice prior to signing it.
28. Address Where Notices to Guarantor are to be Sent:
--------------------------------------------------
c/o BRE Properties, Inc.
One ▇▇▇▇▇▇▇▇▇▇ Street, Suite 2500
Telesis Tower
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Address Where Notices to Bank are to be Sent:
---------------------------------------------
Bank of America National Trust and Savings Association
Commercial Real Estate Services/National Accounts 9105
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇/▇▇/ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Guarantor:
___________________________
By: ______________________
Its:
___________________________
By:
Its:
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