Exhibit 10.19
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") is made as of the 23rd day of
December, 1998, by and between PROLOGIS TRUST, a Maryland real estate investment
trust ("Borrower") and CONNECTICUT GENERAL LIFE INSURANCE COMPANY, a Connecticut
corporation ("Lender").
R E C I T A L S
A. Simultaneously with the execution and delivery hereof, Lender has made
or is making a loan (the "Loan") to Borrower. The Loan is evidenced by a
Promissory Note of even date herewith in the stated original principal amount of
$150,000,000 from Borrower, as maker, to Lender, as payee (the "Note");
B. The Loan is secured, inter alia, by (i) that certain Deed to Secure
Debt and Security Agreement (the "Georgia Security Deed") of even date herewith
made by or on behalf of Borrower for the benefit of Lender encumbering with a
first priority lien and security title on and security interest in certain real
and personal properties located in the State of Georgia, which properties are
more particularly described in the Georgia Security Deed (collectively, the
"Georgia Property"); (ii) that certain Deed of Trust and Security Agreement (the
"Texas Trust Deed") of even date herewith made by Borrower, et al., for the
benefit of Lender encumbering with a first priority lien and security title on
and security interest in certain real and personal properties located in the
State of Texas, which properties are more particularly described in the Texas
Trust Deed (collectively, the "Texas Property"); and (iii) that certain Mortgage
and Security Agreement (the "Illinois Mortgage") of even date herewith made by
Borrower for the benefit of Lender encumbering with a first priority lien and
security title on and security interest in certain real and personal properties
located in the State of Illinois, which properties are more particularly
described in the Illinois Mortgage (collectively, the "Illinois Property"). The
Georgia Security Deed, the Texas Trust Deed and the Illinois Mortgage, together
with any replacement, substitute or additional security deeds, trust deeds or
mortgages hereafter granted as security for repayment of the Loan and the other
obligations of Borrower, as the same may be amended from time to time in
writing, are sometimes referred to herein, collectively, as the "Deeds". The
Georgia
Property, the Texas Property, and the Illinois Property, together with any
substitute or additional collateral now or hereafter granted as security for the
repayment of the Loan and the other obligations of Borrower, including, without
limitation, now or hereafter granted by Borrower with respect thereto, are
sometimes referred to herein collectively as the "Properties" or as the
"Security". The Properties consist of the separate buildings identified by
building name and location on Exhibit A attached hereto and by this reference
made a part hereof, and the underlying land and personalty associated with each
such building. For purposes hereof, each of such buildings, including all land
and personalty associated therewith, is hereafter referred to as a "Property."
C. The Loan is further secured, inter alia, by Assignments of Rents and
Leases of even date herewith from Borrower, et al., to Lender relating to:
(i)the Georgia Property (the "Georgia Lease Assignment"), (ii) the Texas
Property (the "Texas Lease Assignment"), and (iii) the Illinois Property (the
"Illinois Lease Assignment"). The Georgia Lease Assignment, the Texas Lease
Assignment, and the Illinois Lease Assignment, together with any amendments
thereto and any replacement, substitute or additional assignments of rents or
leases which may hereafter be granted as security for the Loan, are sometimes
referred to herein individually as a "Lease Assignment" and collectively as the
"Lease Assignments".
D. This Agreement, the Note, the Deeds, the Lease Assignments and all
other documents, instruments and agreements entered into by Borrower, whether
now or hereafter entered into, which evidence, secure, or otherwise relate to
the Loan, as the same may be amended or modified in writing from time to time,
are collectively referred to herein as the "Loan Documents".
E. The Properties, together with all rights and property granted under
any of the Loan Documents, including, without limitation, any substitute or
additional collateral hereafter granted as security for the Loan, are
collectively referred to herein as the "Encumbered Property".
NOW, THEREFORE, in consideration of the mutual covenants contained herein
and in the other Loan Documents, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby covenant and agree as follows:
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1. One Loan. Notwithstanding that the Loan is secured by multiple
Deeds on various Properties, Borrower and Lender agree and acknowledge that the
Loan constitutes one single loan and is and shall be secured in its entirety by
all of the Encumbered Property, and in no event shall the Deeds and other Loan
Documents securing the Loan be deemed to constitute individual mortgage loans
relating to the Note individually. The parties agree that, upon the occurrence
of an Event of Default (after expiration of applicable grace and cure periods)
under the Note, the Deeds or any of the other Loan Documents, Lender may (but
shall not be obligated to) proceed with any or all of the rights or remedies
that it may have at law, in equity, or as otherwise provided under the Loan
Documents in any order or priority against or with respect to any or all of the
Encumbered Property as Lender may deem necessary or desirable. Borrower hereby
waives, for itself, its successors, its assigns, any other party claiming by or
through Borrower, and on behalf of any subsequent owner of any or all of the
Encumbered Property, any rights or claims it or they may have to sever the Loan
or the Encumbered Property, to marshaling of assets or to otherwise require
Lender to realize on the collateral in any particular order or priority. Any
provisions contained herein or in any of the Loan Documents which create or
appear to create a relationship between (i) a portion of the indebtedness
evidenced by the Note, and (ii) specific Deeds or specific Properties or other
collateral under any of the other Loan Documents, including, without limitation,
the provisions relating to a partial release of the Encumbered Property upon
substitution of additional collateral, or the application of casualty insurance
proceeds and condemnation awards pursuant to the provision herein below, shall
be for the specific purposes set forth therein, and shall not be interpreted to
imply that the Note and Deeds constitute several or separate mortgage loans.
2. Substitution of Collateral. Not more than two (2) times during
any calendar year during the term of the Loan, and only with Lender's written
approval, Borrower shall have the right to have up to an aggregate of eight (8)
Properties per calendar year released from the lien of the related Deed and
Assignment and the other Loan Documents, by substituting new collateral (the
"Substitute Property") for said released Properties in accordance with the
following terms and conditions:
(a) No Event of Default. There shall be no existing Event of
Default, or any condition, which with the passage of time, or giving
of notice, or both, would constitute an Event of
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Default under the Loan Documents at the time of such release and
substitution;
(b) Lender's Expenses. Borrower shall pay all costs and
expenses incurred by Lender in evaluating any proposed release and
substitution of collateral in accordance with the provisions of this
Section 2, and all costs and expenses incurred by Lender in connection
with such release and substitution of collateral, including, but not
limited to, recording fees, title fees, survey charges, recording
taxes, engineering and environmental costs and charges, and reasonable
attorney's fees of Lender's staff and outside counsel, irrespective of
whether such substitution and release of collateral actually occurs;
(c) Additional Requirements. The Substitute Property must, in
Lender's sole reasonable judgment, satisfy the following terms and
conditions:
(i) the value of the Substitute Property must equal or
exceed the value of the Property(ies) to be released;
(ii) the Substitute Property must be improved with buildings
similar to the Property(ies) to be released (including similar in
use) and no less than 90% leased and occupied under leases
acceptable to Lender as confirmed by tenant estoppels acceptable
to Lender; and the Substitute Property must be located in one of
the submarkets wherein the initial Properties are located and the
number of Substitute Properties must be comparable to the number
of Properties to be released;
(iii) the Encumbered Property (following the release of the
Property(ies) to be released and substitution of the Substitute
Property) must in the aggregate have a Loan-to-Value (as
hereinafter defined) ratio of not more than the Loan to Value
ratio immediately preceding such substitution, based on a then-
current appraisal, as determined by Lender, as of the date of the
substitution of the Substitute Property;
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(iv) the Debt Service Coverage (as hereinafter defined) on
the Loan (following the substitution of the Substitute Property),
must equal or exceed the Debt Service Coverage immediately
preceding such substitution;
(v) Borrower must submit to Lender an engineering report
for the Substitute Property, acceptable to Lender;
(vi) Borrower must provide Lender with a current as-built
survey for the Substitute Property, which survey must be
acceptable to both Lender and the applicable title insurance
company, must comply with Lender's then standard survey
requirements, and must be certified to Lender and such title
insurance company, such certification to be in form and substance
satisfactory to Lender and the title insurance company;
(vii) Lender shall conduct, at Borrower's cost and expense,
Phase I environmental audits or studies which meet ASTM E 1527
standards regarding the Substitute Property. The results of such
audits or studies must be acceptable to Lender; and
(viii) Borrower shall execute and deliver to Lender and
obtain for Lender, all documents and instruments as may be
reasonably requested by Lender so that the Substitute Property
becomes first priority security for the Loan, including, without
limitation, amendments to the Loan Documents, new first priority
deed to secure debt, deed of trust or mortgage, new title
insurance policies or endorsements to Lender's existing title
insurance policy(ies) relating to the Loan, estoppel
certificates, subordination agreements, and legal opinions, all
in form and substance satisfactory to Lender.
Notwithstanding any of the foregoing to the contrary, Lender will have the
right to reject the proposed Substitute Property if Lender determines, in the
exercise of its reasonable judgment, that the proposed Substitute Property is
not of comparable quality to the Property(ies) to be released.
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For purposes of this Agreement, "Loan-to-Value", as of a date, is defined
as the ratio of (a) the outstanding principal balance of the Loan, as of such
date, to (b) the Fair Market Value of the Encumbered Property, as of such date.
Whenever the "Fair Market Value" of the Encumbered Property is to be
determined, as of a date, Borrower shall deliver a notice to Lender describing
the event requiring such determination, which notice shall contain Borrower's
proposed determination of Fair Market Value. Borrower and Lender shall then
endeavor to agree on such Fair Market Value by written agreement. However, if
no such agreement can be reached within fifteen (15) days after receipt by
Lender of such notice of the event requiring such determination, then the issue
shall be resolved by appraisal; and Lender and Borrower, jointly, shall
promptly appoint an independent appraiser who shall hold the M.A.I. or S.R.E.A.
designation and who shall have at least 10 years experience in appraising
comparable properties. Borrower acknowledges that Lender may appoint as an
appraiser an otherwise qualified appraiser who has previously performed
appraisals on Lender's property at Lender's request (whether in connection with
the Property(ies) or any other property owned or financed by Lender) and agrees
and consents to such appraiser acting as the appraiser hereunder. At the time
of the appointment of the appraiser, Lender shall advise the appraiser in
writing (with a copy to Borrower), of the amount of the Fair Market Value
proposed by Borrower (pursuant to the first sentence of this paragraph) as well
as the amount proposed by Lender. The sole option and role of the appraiser
shall be to select which of the two proposed Fair Market Values is closest to
appraiser's determination of the Fair Market Value, and whichever of the two
Fair Market Values the appraiser so selects shall be deemed to be the Fair
Market Value for purposes of this provision. In making his determination, the
appraiser will be asked to emphasize the discounted cash flow method of
determining the Fair Market Value of the Encumbered Property. The fees of the
appraiser shall be paid by Borrower.
For purposes of this Agreement, "Debt Service Coverage" is defined as the
ratio, as reasonably determined by Lender, of (a) Net Operating Income from the
Encumbered Property for the applicable period of time to (b) Total Annual Debt
Service. "Net Operating Income" is defined as gross income from operations of
the Encumbered Property based upon the previous twelve (12)-month period from
leases of space therein (to the extent Lender reasonably projects such income
will continue for the immediately succeeding twelve (12)
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month period), subtracting therefrom all necessary and ordinary operating
expenses applicable to the Encumbered Property for such period of time (both
fixed and variable to the extent reasonably projected by Lender to continue for
the next succeeding twelve (12) month period), including but not limited to,
utilities, administrative, cleaning, landscaping, security, repairs and
maintenance, permitted ground rent payments, if any, management fees, real
estate and other taxes, assessments, and insurance, but excluding therefrom
deductions for federal, state and other income taxes, debt service expense,
depreciation or amortization of capital expenditures and other similar noncash
items. Notwithstanding the foregoing, if Borrower proposes a Substitute Property
which, due to the recent construction of the improvements on such Substitute
Property, has been occupied by tenants, in whole or in part, at least six (6)
months but less than twelve (12) months, then Net Operating Income for such
Substitute Property shall be annualized in a manner reasonably satisfactory to
Lender, based upon the actual number of months such Substitute Property has been
occupied, in whole or in part. Gross income shall not be anticipated for any
greater time period than that approved by generally accepted accounting
principles nor shall ordinary operating expenses be prepaid. Documentation of
Net Operating Income shall be certified by the chief financial officer of
Borrower with detail satisfactory to Lender and shall be subject to the approval
of Lender. "Total Annual Debt Service" shall mean the sum of (i) the annual
required debt service payments (including principal and interest) on the Loan,
plus (ii) the annual required debt service payments (including principal and
interest) on all other indebtedness secured by a lien on all or part of the
Encumbered Property for the applicable time period.
3. Tax Escrow. Notwithstanding the requirement in Section 5 of the
Deeds that an escrow be established for real estate taxes on the Encumbered
Property, Lender agrees to waive this requirement so long as Borrower maintains
an investment grade credit rating equal to BBB- or better given by Standard &
Poor's Rating Service or the equivalent rating by Duff & ▇▇▇▇▇▇ and/or ▇▇▇▇▇'▇
(the "Minimum Credit Rating").
4. Permitted Transfer. Notwithstanding anything to the contrary
contained in the Note, the Deeds or in any of the other Loan Documents, Borrower
shall have the right to a one-time sale, transfer or assignment of the
Encumbered Property (in whole, but not in part) to any party of equal
qualification and creditworthiness to the Borrower, provided:
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(a) No Event of Default. There exists at the time of the
transfer no Event of Default, nor any condition which, with the
passage of time or the giving of notice, or both, would constitute an
Event of Default under the Loan Documents;
(b) Inspection of Property. A property inspection by Lender or
Lender's designee shows that all reasonably necessary maintenance of
the improvements on the Encumbered Property has been performed, and
any damage or destruction affecting the Encumbered Property has been
completed or repaired;
(c) Qualified Real Estate Investor. The proposed transferee
shall be a Qualified Real Estate Investor. For purposes of this
provision, a "Qualified Real Estate Investor" is defined as any
reputable corporation, partnership, limited liability company, joint
venture, joint-stock company, trust or individual that meets Lender's
then current underwriting guidelines, that is based in the United
States of America, that is not the subject of any bankruptcy,
reorganization or insolvency proceedings or any criminal charges or
proceedings, and that shall not have been, at the time of transfer or
prior thereto, a litigant, plaintiff or defendant in any suit brought
against or by Lender. Lender agrees to be reasonable in the review of
such qualifications;
(d) Debt Service Coverage. The aggregate Debt Service Coverage
on the Loan exceeds 1.70 times;
(e) Real Estate Experience. The proposed transferee has specific
related commercial real estate experience in the Metropolitan
Statistical Area(s) where the Encumbered Property(ies) are located;
(f) Management. The proposed transferee must (prior to the
proposed transfer) own or manage a minimum of 10,000,000 square feet
of industrial properties;
(g) Prior Notice of Transfer. At least sixty (60) days prior to
such a transfer Borrower must provide Lender with written notice of
all of the material provisions of such transfer,
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including without limitation, the proposed date of transfer, the name,
net worth, background and address of the proposed transferee, and the
purchase price;
(h) Assumption of Obligations. Lender shall be reasonably
satisfied that the proposed transferee shall have assumed each and
every obligation of Borrower under the Loan Documents and that such
transfer shall not affect or impair Lender's security and rights under
the Loan Documents;
(i) Lender's Fee. The notice received under (g) above shall be
accompanied by Borrower's payment to Lender of a non-refundable fee
in the amount of one percent (1%) of the then outstanding principal
balance of the Loan, in cash or certified check to be retained by
Lender in order to induce Lender to allow the proposed transferee to
assume the obligations of Borrower under the Loan Documents, and such
fee (net of Lender's expenses referenced in Section 4(k) below) shall
be returned to Borrower if Lender disapproves such transfer or if such
transfer fails to be consummated for any other reason;
(j) Loan to Value Ratio. The Loan-to-Value ratio of the Loan to
the Encumbered Property must not exceed 60%; and
(k) Lender's Expenses. Borrower shall pay all of Lender's costs
and expenses associated with the transfer, including without
limitation, reasonable attorneys' fees charged by Lender's staff
counsel and special counsel.
With respect to any transfer permitted hereunder or otherwise consented to
by Lender, Borrower and the entity acquiring the interest in the Properties
shall enter into any reasonable amendments to the Loan Documents reflecting such
transfer, including, without limitation, an assignment and assumption of the
Loan Documents and amendments to UCC financing statements. In addition, Lender
may require appropriate title insurance endorsements reflecting such transfer.
5. Approval of Leases. Notwithstanding the requirement in Section
22 of the Deeds regarding approval by Lender of leases affecting the Encumbered
Property and the terms of any other Loan Documents (including the
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Lease Assignments), Lender agrees to waive its requirement to receive and
approve all leases and sub-leases (and any amendments, modifications, renewals
or extensions, assignments and subletting thereof), provided there is no Event
of Default under any of the Loan Documents, and, provided further that the
following requirements are met:
(a) Maximum Term and Size. If the term of the lease (excluding
any renewal or extension options) is no more than 10 years, then the
lease covers an area no greater than 400,000 square feet of net
rentable area; and if the term of the lease (excluding any renewal or
extension options) is more than 10 years, then the lease covers an
area no greater than 100,000 square feet of net rentable area;
(b) Standard Form. The lease is written on a standard form of
lease which Lender has previously approved in writing with no material
changes;
(c) Rental. The effective rent provided for over the lease term
is consistent with the then current market effective rent of
comparable space in competitive properties. The schedule of rent
shall not decline over the lease term, including any extension. At
Lender's option, an effective rent schedule shall be provided by
Borrower annually for written approval by Lender;
(d) No Ownership Interest. The lease does not (i) grant the
tenant any purchase option or right of first refusal to purchase the
property, (ii) grant the tenant any interest in the ownership of the
Encumbered Property or portion thereof, or provide any incentives
equivalent to such an ownership interest, or (iii) otherwise contain
terms that would cause a material impairment of Lender's security;
(e) Tenant Concessions. The lease does not provide for the
payment for tenant improvement work or leasing commissions at any time
other than prior to or at commencement of the lease;
(f) Non-Affiliates. The lease shall be an arms length
transaction and not be to Borrower, an affiliate of Borrower, or a
creditor of Borrower (other than entities that may be trade
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creditors of Borrower in the ordinary course of Borrower's business)
(provided Borrower may execute any such lease to itself, its affiliate
or its creditor so long as the leased space is less than 50,000 square
feet), and Borrower shall not assign any portion of the rental to any
third party;
(g) Copies to Lender. Borrower provides certified copies of
such lease documentation to Lender within ten (10) days after the
execution of each such lease; and
(h) Possession. The tenant is obligated to take possession
immediately upon completion of any required improvements.
Notwithstanding the foregoing, Borrower may enter into licenses or leases
with service providers for the purpose of providing services to Borrower or to
other tenants, without the prior approval of Lender, so long as each such
license or lease (i) reflects an arms length transaction with an entity not
affiliated with Borrower, and (ii) covers no more than 50,000 rentable square
feet and is for a term of no more than 10 years (excluding renewals or
extensions).
6. Representations, Warranties and Covenants of Borrower. Borrower
represents, warrants and covenants that as of the date hereof:
(a) Existence and Power. Borrower is a trust duly created,
validly existing and in good standing under the laws of the State of
Maryland, and is duly qualified to transact business in every
jurisdiction where, by the nature of its business, such qualification
is necessary, and has all trust powers and all governmental licenses,
authorizations, consents and approvals required to carry on its
business as now conducted, except where any such failure does not have
and is not reasonably expected to cause a material adverse effect on
Borrower.
(b) Authorization; No Contravention. The execution, delivery and
performance by Borrower of this Agreement, the Note and the other Loan
Documents (i) are within the Borrower's trust powers, (ii) have been
duly authorized by all necessary trust action, (iii) require no action
by or in respect of or filing
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with, any governmental body, agency or official, (iv) do not
contravene, or constitute a default under, any provision of applicable
law or regulation or of the trust agreement of Borrower or of any
material agreement, judgment, injunction, order, decree or other
instrument binding upon Borrower, and (v) do not result in the
creation or imposition of any lien on any asset of Borrower other than
the liens created by the Loan Documents.
(c) Binding Effect. This Agreement, the Note, and the other
Loan Documents constitute valid and binding agreements of Borrower
enforceable in accordance with their terms, provided that such
enforceability is subject to general principles of equity and to
bankruptcy, insolvency and similar laws affecting the enforcement of
creditors' rights generally.
(d) No Litigation. There is no action, suit or proceeding
pending, or to the knowledge of Borrower, threatened, against or
affecting Borrower, before any court or arbitrator or any governmental
body, agency or official which has caused or is reasonably expected to
cause a material adverse effect on Borrower or which in any manner
draws into question the validity of or is reasonably expected to
impair the ability of Borrower to perform its obligations under, this
Agreement, the Note, or any of the other Loan Documents.
(e) Compliance with Laws; Payment of Taxes. To Borrower's
knowledge, Borrower is in compliance with all applicable laws,
regulations and similar requirements of governmental authorities,
except where (i) such compliance is being contested in good faith
through appropriate proceedings or (ii) any failure to comply does not
have and is not reasonably expected to cause a material adverse effect
on Borrower. There have been filed on behalf of Borrower, all
Federal, state and local income, excise, property and other tax
returns which are required to be filed by it and all taxes due
pursuant to such returns or pursuant to any assessment received by or
on behalf of the Borrower have been paid, except: (i) ad valorem taxes
not due and payable; and (ii) other liabilities, if they are being
contested in good faith and against which Borrower has set up
appropriate reserves. The charges, accruals and reserves on the books
of Borrower in respect of taxes
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or other governmental charges are, in the opinion of Borrower,
adequate.
(f) No Default. Borrower is not in default under or with respect
to any agreement, instrument or undertaking to which it is a party or
by which it or any of its property is bound which has caused or is
reasonably expected to cause a material adverse effect on Borrower.
No Default or Event of Default has occurred and is continuing.
(g) Full Disclosure. To Borrower's knowledge, all information
heretofore furnished by Borrower to Lender for purposes of or in
connection with this Agreement or any transaction contemplated hereby
is, and all such information hereafter furnished by Borrower to Lender
will be, true, accurate and complete in all material respects.
(h) Margin Stock. Borrower is not engaged principally, or as one
of its important activities, in the business of purchasing or carrying
any margin stock, and no part of the proceeds of the Loan will be used
to purchase or carry any margin stock or to extend credit to others
for the purpose of purchasing or carrying any margin stock, or be used
for any purpose which violates, or which is inconsistent with, the
provisions of Regulation X of the Board of Governors of the Federal
Reserve System.
(i) Insolvency. After giving effect to the execution and
delivery of the Loan Documents and the making of the Loan under this
Agreement: (i) Borrower will not (x) be "insolvent," within the
meaning of such term as used in O.C.G.A. (S) 18-2-22 or as defined in
(S) 101 of the "Bankruptcy Code", or Section 2 of either the "UFTA" or
the "UFCA", or as defined or used in any "Other Applicable Law" (as
those terms are defined below), or (y) be unable to pay its debts
generally as such debts become due within the meaning of Section 548
of the Bankruptcy Code, Section 4 of the UFTA or Section 6 of the
UFCA, or (z) have an unreasonably small capital to engage in any
business or transaction, whether current or contemplated, within the
meaning of Section 548 of the Bankruptcy Code, Section 4 of the UFTA
or Section 5 of the UFCA; and (ii) the obligations of Borrower under
the Loan Documents and
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with respect to the Loans will not be rendered avoidable under any
Other Applicable Law. For purposes of this Section 6(i), "Bankruptcy
Code" means Title 11 of the United States Code, "UFTA" means the
Uniform Fraudulent Transfer Act, "UFCA" means the Uniform Fraudulent
Conveyance Act, and "Other Applicable Law" means any other applicable
state law pertaining to fraudulent transfers or acts voidable by
creditors, in each case as such law may be amended from time to time.
(j) Real Estate Investment Trust. Borrower is qualified under
the Internal Revenue Code as a real estate investment trust.
(k) Millennium Compliance. All computer systems used by Borrower
will be capable of the following on December 31, 1999, as well as at
all times after January 1, 2000:
(i) handling date information involving all and any dates
before, during and/or after January 1, 2000, including accepting
input, providing output and performing date calculations in whole
or in part;
(ii) operating, accurately without interruption on and in
respect of any and all dates before, during and/or after January
1, 2000 and without any change in performance;
(iii) responding to and processing two digit year input
without creating any ambiguity as to the century; and
(iv) storing and providing date input information without
creating any ambiguity as to the century.
(l) Consolidations, Mergers and Sales of Assets. Borrower will
not consolidate or merge with or into, or sell, lease or otherwise
transfer all or any substantial part of its assets to, any other
person or entity; provided, however, the foregoing shall not be deemed
to prohibit mergers where (i) Borrower is the surviving entity and
(ii) such surviving entity has a credit
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rating immediately following such merger no lower than the Minimum
Credit Rating.
(m) No Truck Terminal Facilities. To Borrower's knowledge, based
upon the representations of its tenants, no tenant which leases space
within any of the Properties operates a Truck Terminal as its main and
primary business. "Truck Terminal" as used herein means the business
of storing, servicing and maintaining commercial trucks in order to
generate a profit directly from such activities.
7. Disbursement of Loan; Co-Lender. An initial disbursement under
the Loan in the amount of $66,000,000 has been made on the date hereof by Lender
to Borrower (the "First Disbursement"). A second disbursement (the "Second
Disbursement") in the amount of $84,000,000 will be made by Lender to Borrower
on or before February 26, 1999 (the "Second Disbursement Deadline"), subject
only to the following:
(a) No Default. At the time of the second funding, there shall
then exist no Event of Default, nor any condition which, with the
passage of time or the giving of notice, or both, would constitute an
Event of Default;
(b) Representatives and Warranties True. At the time of the
second funding, all representations and warranties of Borrower
contained in any of the Loan Documents shall remain true and correct
in all material respects as if remade by Borrower at the time of the
second funding (as confirmed by a certificate of Borrower to be given
to Lender at that time);
(c) Additional Documents. Borrower shall execute and deliver to
Lender or obtain for Lender, all documents and instruments as may be
reasonably requested by Lender (including, without limitation,
amendments to the Deeds and endorsements to Lender's title insurance
policies), sufficient to assure Lender that the Second Disbursement is
secured by the Deeds without any matters of title intervening since
the date of this Agreement; and
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(d) Lender's Expenses. Borrower shall pay all of Lender's costs
and expenses associated with the second funding including, without
limitation, reasonable attorneys' fees charged by Lender's staff
counsel and special counsel.
(e) Environmental Site Assessments. Borrower shall provide
Lender on or before February 10, 1999, with current Phase I
environmental site assessments ("Phase I Assessments") for each of the
Properties, in form and content acceptable to Lender reflecting a
state of each of the Properties with regard to environmental matters
acceptable to Lender. Should Borrower be unable to provide an
acceptable Phase I Assessment as to any of the Properties, then (i)
Borrower shall be entitled to provide as to any such non-qualifying
Property(ies), Substitute Property(ies) meeting the requirements of
Section 2 hereof, and failing that (ii) the amount of the Loan will be
reduced (by first reducing the amount of the Second Disbursement) to
the extent necessary so that the Loan to Value ratio for the
Encumbered Property (excluding such non-qualifying Properties) is not
greater than 60% (including a mandatory prepayment at par of a portion
of the First Disbursement if the aggregate Fair Market Value of the
Properties as to which satisfactory Phase I Assessments are provided
is less than $110,000,000). Borrower's deadline for qualifying for
the Second Disbursement is the Second Disbursement Deadline.
(f) Asbuilt Surveys. Borrower shall obtain and deliver to Lender
at least ten (10) days prior to the funding of the Second
Disbursement, ALTA as-built surveys for the following thirteen (13)
Properties:
. Dallas Corporate Center Nos. 1-7, 9 and 10
. International Airport Industrial Center Nos. 8 and 9
(Atlanta)
. Great Southwest Distribution Center No. 5 (Dallas)
. Post Oak Business Center No. 15 (Chicago)
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Such as built surveys shall be in the form and content consistent with
Lender's standard survey requirements and such surveys shall reflect
no matters objectionable to Lender in its reasonable discretion.
Borrower acknowledges that Lender has obtained a co-lender (the "Co-
Lender") for 50% of the amount of the Loan. In no event shall Lender be liable
for any failure or refusal of Co-Lender to fund its 50% share of the Second
Disbursement. In the event Co-Lender fails or refuses to fund its share of the
Second Disbursement on or before the Second Disbursement Deadline even though
Borrower has met all conditions for such funding, Lender shall have the option,
in its sole discretion, either (i) to decline to fund its 50% of the Second
Disbursement, in which case the maximum Loan amount shall be reduced to
$66,000,000 (less any reduction pursuant to Section 7(e) above resulting from
non-qualifying Properties for which no Substitute Properties are provided) and
Lender shall have no further obligation to disburse additional Loan proceeds, or
(ii) Lender may elect to fund its 50% of the Second Disbursement, in which case
the maximum Loan amount shall be $108,000,000 (less any reduction pursuant to
Section 7(e) above resulting from non-qualifying Properties for which no
Substitute Properties are provided) and Lender shall have no further obligation
to disburse additional Loan proceeds, or (iii) Lender may elect to extend the
Second Disbursement Date for up to twenty (20) days to seek a new or additional
Co-Lender and if at the end of such twenty (20) day period Lender has not
succeeded in securing a new or additional Co-Lender such that the Second
Disbursement can be fully funded on or before March 31, 1999, then Lender shall
have the option in its sole discretion on or before March 31, 1999 to elect
either clause (i) or clause (ii) above.
In the event less than the full $150,000,000 is ultimately funded under the
Loan due to the failure or refusal of the Co-Lender to fund its pro-rata share
of the Second Disbursement even though Borrower has met all conditions for such
funding, then (i) Borrower shall be entitled to have a pro-rata share of the
collateral encumbered by the Deeds promptly released from the lien of the Loan
Documents, and (ii) Lender shall promptly refund to Borrower a pro-rata portion
of the $375,000 loan fee previously paid by Borrower to Lender. The pro-rata
portion of the collateral to be released pursuant to the immediately preceding
sentence shall be (i) as listed in Exhibit B attached hereto and by this
reference made a part hereof, if the final total Loan amount funded is
$66,000,000, (less any reduction pursuant to Section 7(e)
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above resulting from non-qualifying Properties for which no Substitute
Properties are provided) or (ii) as listed in Exhibit C attached hereto and by
this reference made a part hereof, if the final total Loan amount funded is
$108,000,000 (less any reduction pursuant to Section 7(e) above resulting from
non-qualifying Properties for which no Substitute Properties are provided).
8. Lease Security Deposits. If at any time hereafter, Borrower
fails to maintain a Minimum Credit Rating, then Borrower will promptly escrow
with Lender or its agent, as additional security for the Loan, an amount from
time to time, equal to the aggregate of all security deposits of tenants made to
the landlord from time to time under leases affecting the Properties (except as
to those leases, if any, as to which the tenants have provided Lender with a
written waiver of any obligation to refund such deposits to such tenants unless
Borrower has actually delivered such deposits to Lender).
9. Miscellaneous.
(a) Loan Agreement Governs. To the extent that any conflict
exists between any of the terms and provisions of this Agreement and
any of the terms and provisions of the Note, the Deeds or any of the
other Loan Documents, this Agreement shall control and supersede the
terms and provisions of the Note, Deeds or other Loan Documents.
(b) Event of Default. The term "Event of Default" as used herein
shall have the meanings ascribed to that term in any of the Note, the
Deeds and the other Loan Documents. This Agreement shall constitute a
"Loan Document" under the Note and the Deeds.
(c) Time of the Essence. Time is of the essence of this
Agreement, and of each of the covenants, agreements and obligations
hereunder.
(d) Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original, but all of
which, taken together, shall constitute but one agreement.
(e) Notices. Any notice, demand, request, statement or consent
made hereunder shall be given in the same manner and with the same
effect as provided in Section 43 of the Deeds.
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(f) Severability. If any provision of this Agreement shall be
held invalid or unenforceable, the same shall not affect the validity
of the remainder of this Agreement.
(g) Captions. The captions in this instrument are inserted only
as a matter of convenience and for reference, and shall not be deemed
to be any part hereof.
(h) Modifications. This Agreement may not be changed or
terminated except in writing signed by the parties hereto. The
provisions of this Agreement shall extend and be applicable to all
renewals, extensions, amendments, modifications and consolidations of
the Note, the Deeds or any of the other Loan Documents, and any and
all references herein to the Loan Documents shall be deemed to include
any such renewals, extensions, amendments, modifications and
consolidations thereof.
(i) Bind and Inure. The provisions of this Loan Agreement shall
be binding upon Borrower and any subsequent owner or owners of any or
all of the Encumbered Property or assignee of Borrower's interests
under any or all of the Note or other Loan Documents, and upon Lender
and any assignee of Lender's interests under any or all of the Note or
the other Loan Documents, and upon their respective heirs, successors
and assigns.
(j) Governing Law. This Agreement shall be construed and applied
in accordance with the laws of the State of Georgia, without regard to
its conflicts of law principles.
(k) Interpretation. No provision of this Agreement or any of the
other Loan Documents shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental
or judicial authority by reason of such party having or being deemed
to have structured or dictated such provision.
(l) Waiver of Jury Trial; Consent to Jurisdiction. Borrower (a)
irrevocably waives, to the fullest extent permitted by law, any and
all right to trial by jury in any legal proceeding
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arising out of this Agreement, any of the other Loan Documents, or any
of the transactions contemplated hereby or thereby, (b) submits to the
nonexclusive personal jurisdiction in the State of Georgia, the courts
thereof and the United States District Courts sitting therein, for the
enforcement of this Agreement, the Note and the other Loan Documents,
(c) waives any and all personal rights under the law of any
jurisdiction to object on any basis (including, without limitation,
inconvenience of forum) to jurisdiction or venue within the State of
Georgia for the purpose of litigation to enforce this Agreement, the
Note or the other Loan Documents, and (d) agrees that service of
process may be made upon it in the manner prescribed in Section 8(e)
hereof for the giving of notice to Borrower. Nothing herein contained,
however, shall prevent the Lender from bringing any action or
exercising any rights against any security and against Borrower
personally, and against any assets of Borrower, within any other state
or jurisdiction.
(m) Rights of Co-Lenders and Co-Investors. To the extent any
portion of the Loan is funded, directly or indirectly, by Lender's co-
lenders or co-investors, such co-lenders or co-investors shall be
entitled to the benefits afforded to Lender under the Loan Documents,
as if such co-lenders or co-investors were named as lenders in the
Loan Documents.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
under seal as of the date first written above.
BORROWER:
PROLOGIS TRUST, a Maryland real estate
investment trust
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
By: _________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Managing Director
[TRUST SEAL]
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LENDER:
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
By: CIGNA Investments, Inc., its authorized
signatory
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By: _______________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President
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