FIRST AMENDMENT TO CREDIT AGREEMENT
---------------------------------------
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "Amendment") dated as of
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____________, 2000, is by and among ▇▇▇▇▇▇▇▇▇▇ Realty Investors, a Texas real
estate investment trust ("Borrower") and Bank of America, N.A., a national
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banking association, in its capacities as Agent and a lender ("Bank of
-------
America").
WHEREAS, Borrower and Bank of America have entered into that certain Credit
Agreement dated January 6, 1999 ("Loan Agreement");
---------------
WHEREAS, Borrower has requested that Bank of America add a provision to the
Loan Agreement which would grant Borrower an option to renew the Loan Agreement
for a period of two additional years; and
WHEREAS, Bank of America has agreed, subject to the terms and conditions
stated herein, to provide terms for such renewal.
NOW, THEREFORE, in consideration of the covenants, conditions and
agreements hereinafter set forth, and for other good and valuable consideration,
the receipt and adequacy of which are all hereby acknowledged, Borrower and Bank
of America hereby covenant and agree as follows:
ARTICLE I - RENEWAL OPTION
------------------------------
1.1 Definitions. Any capitalized terms used herein and not otherwise
-----------
defined shall have the meaning ascribed to such term in the Loan Agreement. The
following definitions are applicable to this Amendment and are hereby added to
the Loan Agreement.
(a) "Adjusted EBIDA for Unencumbered Property" means, for any period, Funds
-----------------------------------------
From Operations from all Unencumbered Property less the Capital Improvement
Reserve for such period.
(b) "Capital Expenditures" means expenditures by Borrower or any of its
---------------------
Subsidiaries for fixed or capital assets, including without limitation
expenditures for maintenance and repairs.
(c) "Capital Improvement Reserve" means, for any period, a reserve for
-----------------------------
Capital Expenditures in an amount equal to the product obtained by multiplying
$.30 times the weighted average square feet of all Unencumbered Property owned
by Borrower and its Subsidiaries during such period.
(d) "Extended Revolving Credit Termination Date" means a date two (2) years
-------------------------------------------
after the Revolving Credit Termination Date.
(e) "Facility Fee" is defined in Section 1.2 of this Amendment.
------------- ------------
(f) "Renewal Option" is defined in Section 1.2 of this Amendment.
--------------- ------------
(g) "Renewal Period" means the two year period commencing on the first day
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following the Revolving Credit Termination Date and terminating on the Extended
Revolving Credit Termination Date.
(h) "Secured Indebtedness" means Debt of Borrower and its Subsidiaries that
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is directly or indirectly secured by a Lien on any Real Property.
(i) "Total Unsecured Debt" means Debt excluding all Secured Indebtedness.
----------------------
(j) "Unencumbered Property" means all Real Property which is subject to no
----------------------
Liens other than Permitted Liens.
1.2 Terms of Renewal Option. The Agent and Banks hereby grant to
--------------------------
Borrower the option (the "Renewal Option") to extend the Revolving Credit
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Termination Date for an additional two year period on the following terms and
conditions:
(a) At the time of the exercise of such Renewal Option and on the first day
of the Renewal Period, there shall then exist no Default or Event of Default.
(b) Borrower shall submit to Agent such financial statements and other
information as Agent may reasonably request in connection with the proposed
renewal, regarding Borrower and Guarantor. In Agent=s reasonable judgment,
there shall not have occurred a material adverse change in the financial
position of Borrower and Guarantor, taken as a whole, from the date hereof, as
reflected in the then most recent financial and operating statements submitted
to Agent pursuant to the Loan Agreement.
(c) All terms and conditions of the Loan Documents pertaining to the
Revolving Loan shall continue to apply during the Renewal Period except as
modified by this Amendment.
(d) Borrower and Guarantor shall have executed and delivered to Agent a
modification and extension agreement, providing for (i) the extension of the
Revolving Credit Termination Date, (ii) the reaffirmation by each of Borrower
and Guarantor of their respective obligations under the Loan Documents and the
Guaranty Agreement, respectively, and (iii) confirmation by Borrower and
Guarantor that neither Borrower nor Guarantor have any defenses, claims,
counterclaims, or rights of offset in respect of the Obligations.
(e) The request for extension must be made to Agent in writing not more than
one hundred twenty (120) days, and not less than ninety (90) days prior to, the
Revolving Credit Termination Date.
(f) On or before the first day of the Renewal Period, Borrower shall have
paid to Agent as a condition to such renewal all fees required pursuant to that
certain Side Letter Agreement of even date herewith executed by Agent and
Borrower (the "Side Letter Agreement").
-----------------------
(g) Borrower shall be in compliance with the following covenants:
(i) For the twelve (12) month period ending on the last day of the fiscal
quarter ending prior to the Renewal Period and as of the last day of each fiscal
quarter for the four (4) successive quarterly accounting periods ending on such
date during the Renewal Period, Borrower shall not permit the ratio of (i) Total
Unsecured Debt to (ii) Adjusted EBIDA for Unencumbered Property to exceed 6.66
to 1.00.
(ii) As of the first day of the Renewal Period and during the Renewal
Period, Borrower shall not permit the Adjusted Tangible Net Worth to be less
than an amount equal to the sum of (i) $850,000,000, and (ii) eighty percent
(80%) of the net proceeds (i.e. gross proceeds less actual and customary
transaction costs) received by Borrower from all equity offerings made by
Borrower after December 31, 1999.
(iii) Except to the extent required by applicable tax laws or regulations to
maintain its REIT status, during any fiscal year of Borrower during the Renewal
Period, Borrower shall not, nor shall Borrower permit any Subsidiary (other than
to Borrower or another Subsidiary) to, declare or pay any dividends or make any
distributions on its Capital Shares (other than dividends payable in its own
Capital Shares) or redeem, repurchase or otherwise acquire or retire any of its
Capital Shares at any time outstanding, in excess of an amount equal to
ninety-five percent (95%) of the Funds From Operations during such fiscal year.
(h) As of the first day of the Renewal Period and during the Renewal Period,
the definition of "Applicable Margin" in the Loan Agreement shall mean, with
respect to any LIBOR Rate Advance, the rate per annum for any LIBOR Rate Advance
indicated below for the credit rating assigned to (or in respect of) long-term
senior unsecured Debt of Borrower by S&P, as reflected on the most recent
Compliance Certificate of Borrower delivered in accordance with Section 6.01(c),
---------------
or the most recent Rating Certificate delivered in accordance with Section
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6.01(h), as the case may be:
--
CREDIT RATING APPLICABLE MARGIN FOR LIBOR RATE ADVANCE
-------------- ---------------------------------------------
A- or better .60%
BBB+ .70%
BBB .90%
BBB- or below 1.20%
(i) During the Renewal Period, Borrower agrees to pay to Agent, a commitment
fee (the "Facility Fee") on the average daily unused portion of the aggregate
Commitment under the Revolving Loan outstanding during the applicable period, at
a rate per annum equal to the rate per annum indicated below for the credit
rating assigned to long-term, senior unsecured Debt of Borrower by S&P, as
reflected on the most recent Compliance Certificate of Borrower delivered in
accordance with Section 6.01(c) of the Loan Agreement, or the most recent Rating
---------------
Certificate delivered in accordance with Section 6.01(h), as the case may be.
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The Facility Fee shall be payable quarterly in arrears on the first day of each
calendar quarter for the prior calendar quarter commencing on the first day of
the first calendar quarter occurring after commencement of the Renewal Period,
and continuing until the Extended Revolving Credit Termination Date.
CREDIT RATING FACILITY FEE
-------------- -------------
A- or better .15%
BBB+ .20%
BBB .25%
BBB- or below .35%
Agent shall be entitled to allocate the Facility Fee among the Banks as Agent
considers appropriate in its sole discretion.
1.3 Compliance Certificate. As of the first day of the Renewal Period
-----------------------
and during the Renewal Period, together with and at the time of the delivery of
any information required by Section 6.01 (a) and (b) of the Loan Agreement,
-------------------------
Borrower shall deliver to Agent, a Compliance Certificate substantially in the
form of Exhibit A attached hereto.
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ARTICLE II - MISCELLANEOUS
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2.1 Conditions Precedent. As conditions precedent to closing this
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Amendment, Borrower shall have executed, or caused to be executed, and delivered
to Agent (a) this Amendment and (b) the Side Letter Agreement.
2.2 Representations of Borrower. Borrower hereby represents to the
-----------------------------
Banks the following:
(a) All of the representations and warranties contained in Article V of the
Loan Agreement are true and correct on and as of the date hereof and will be
true and correct after giving effect to this Amendment.
(b) No event which constitutes a Default or an Event of Default under the
Loan Agreement has occurred and is continuing, or would result from the
execution and delivery of this Amendment.
(c) Borrower has the power and authority under the Governmental Requirements
and the Organizational Documents to execute and deliver this Amendment and to
exercise the Renewal Option if it elects to do so; and the execution, delivery
and performance by Borrower of this Amendment has been duly authorized by all
necessary proceedings on the part of Borrower and each Guarantor.
2.3 Ratification. The Loan Agreement, as hereby amended, is in all respects
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ratified and confirmed, and all other rights and powers created thereby or
thereunder shall be and remain in full force and effect.
2.4 Counterparts. This Amendment may be executed in several counterparts,
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and each counterpart, when so executed and delivered, shall constitute an
original instrument, and all such separate counterparts shall constitute but one
and the same instrument.
2.5 GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
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ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
2.6 PRIOR AGREEMENTS. THE LOAN AGREEMENT, THIS AMENDMENT AND THE OTHER LOAN
----------------
DOCUMENTS CONSTITUTE A "LOAN AGREEMENT" AS DEFINED IN SECTION 26.02(a) OF THE
TEXAS BUSINESS & COMMERCE CODE, AND REPRESENT THE FINAL AGREEMENT AMONG THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG THE PARTIES.
▇▇▇▇▇▇▇▇▇▇ REALTY INVESTORS,
By:_______________________________________
Name:_____________________________________
Title:______________________________________
BANK OF AMERICA, N.A., in its individual
capacity and as Agent
By:_______________________________________
Name:_____________________________________
Title:______________________________________
EXHIBIT A
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COMPLIANCE CERTIFICATE
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1. Borrower certifies that the credit rating assigned to the Borrower=s
senior-unsecured, long-term debt by S&P as of the date of this Compliance
Certificate, and as of the date of delivery of its Financial Statements is
_______________.
2. Financial Covenants
Limit Actual In Compliance
----- ------ -------------
1. Total Debt
----
Not greater than 55%
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2. Secured Debt
----
Not greater than 40%
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3. Limitation of Unimproved Real Property
----
Not greater than 12.5%
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4. Limitation on Sale or Other Disposition of Real Property
----
See Schedule A
(attached hereto)
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5. Annual Service Charge Coverage Ratio
----
2.5 or more
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6. Fixed Charge Coverage Ratio
----
2.0 or more
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7. Minimum Adjusted Tangible Net Worth
---- ---------------------------------------
Not less than $850,000,000, plus 80% of equity offerings made by
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Borrower after 12/31/99
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8. Assets Retained
----
Not less than 150%
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9. Limitation on Central Plaza=s Incurrence of Debt
---- ------------------------------------------------------
Not more than $500,000
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10. Limitation on ▇▇▇▇ Plaza=s Incurrence of Debt
----- ---------------------------------------------------
Not more than $1,200,000
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Total Unsecured Debt to Adjusted EBIDA for
11. Unencumbered Property
----- ----------------------
6.66 to 1.0
or less
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12. Dividends
----- ---------
95% of Funds from Operations
--------------------------------
3. Certification
The undersigned hereby further certifies and warrants to the Banks that, as
of the date set forth above, (i) no default under the Credit Agreement dated
_______________, ______ by and among the Borrower, Bank of America, N.A., as
Agent, and the Banks named therein as modified or amended (the "Credit
------
Agreement") has occurred, and no event has occurred, which, but for the passage
of time, would constitute a default (except for any default which may have been
expressly waived in writing by the Banks), (ii) each representation and warranty
of the Borrower contained in the Credit Agreement is still true and correct on
and as of the date set forth above, as though made on and as of such date, and
(iii) the undersigned is the duly elected, qualified and acting Chief Financial
Officer (or Chief Accounting Officer) of the Borrower, and as such, is
authorized to execute this Report on its behalf.
The undersigned hereby further certifies and warrants to the Banks that, as
of the date set forth above, (i) no default under the Credit Agreement has
occurred, and no event has occurred, which, but for the passage of time, would
constitute a default (except for any default which may have been expressly
waived in writing by the Banks) except as noted on the attachment, (ii) each
representation and warranty of the Borrower contained in the Credit Agreement is
still true and correct on and as of the date set forth above, as though made on
and as of such date, except as noted on the attachment, and (iii) the
undersigned is the duly elected, qualified and acting Chief Financial Officer or
Chief Accounting Officer of the Borrower, and as such, is authorized to execute
this Report on its behalf.
4. In accordance with Section 6.01(e) of the Credit Agreement, attached
hereto is a description of each litigation, legal, administrative, or arbitral
proceeding, investigation or other action of any nature not previously reported
which involves a claim equal to or exceeding $5,000,000 against the Borrower or
any Subsidiary, or which involves the reasonable possibility, if adversely
determined, in the judgment of the Borrower, of a judgment in excess of
$1,000,000 which has not been stayed (whether by supersedas bond or otherwise),
or other liability, in each case, which could have a material adverse effect on
the business, operations or financial conditions of the Borrower and its
Subsidiaries, taken as a whole or otherwise required to be reported pursuant to
said Section 6.01(e).
5. Each Subsidiary newly formed or acquired since the Closing Date (all of
the stock of which is owned by the Borrower) has executed and delivered to the
Agent a Guaranty Agreement in accordance with Section 6.06 of the Credit
Agreement.
A Guaranty Agreement from the Subsidiary(ies) listed on the attachment is
enclosed herewith.
6. Attached is Schedule A, computations and other information relevant in
connection with this Compliance Certificate.
By:
Name:
Title:
SCHEDULE A
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Debt
----
Calculation of "Limitations on Incurrence of Debt" as defined for purposes of
Section 7.02(a). Calculations as of __________________:
1. Components of Debt:
---- ---------------------
2. Debt
---- ----
3. Total Assets
---- -------------
4. Debt/Total Assets (Line (ii) divided by Line (iii))
---- ----------------------------------------------------------
"Debt" and "Total Assets" are defined terms in the Credit Agreement.
Secured Debt
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Calculation of "Limitations on Incurrence of Debt" as defined for purposes of
Section 7.02(b). Calculation as of _________________:
5. Components of Secured Debt:
---- ------------------------------
6. Secured Debt
---- -------------
7. Total Assets
---- -------------
8. Secured Debt/Total Assets (Line (ii) divided by Line (iii))
---- ------------------------------------------------------------------
"Debt" and "Total Assets" are defined terms in the Credit Agreement. "Secured
Debt" means Debt described in Section 7.02(b) and (c) of the Credit Agreement.
Limitation of Unimproved Real Property
------------------------------------------
Calculation of "Unimproved Real Property" as defined for purposes of Section
7.03. Calculation as of _________________:
9. Unimproved Real Property
---- --------------------------
10. Undepreciated Real Estate Assets
----- -----------------------------------
Unimproved Real Property/
11. Undepreciated Real Estate Assets (Line (i) divided by Line (ii))
----- -----------------------------------------------------------------
"Unimproved Real Property" and "Undepreciated Real Estate Assets" are defined
terms in the Loan Agreement
Limitation on Sale or Other Disposition of Real Property
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(1) Calculation of "Sale or Other Disposition of Real Property" as defined
for purposes of Section 7.04(a). Calculation as of ____________________:
(1)
i. Month 1
-- --------
Month 2
--------
Month 3
--------
Month 4
--------
Month 5
--------
Month 6
--------
Month 7
--------
Month 8
--------
Month 9
--------
Month 10
---------
Month 11
---------
Month 12 (month of current disposition)
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12. Total Dispositions for last 12 calendar months (or if shorter,
----- -----------------------------------------------------------------
for the period from January 6, 2000, to such date).
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13. Total Dispositions/Undepreciated Real Estate Assets
----- -------------------------------------------------------
Undepreciated Real Estate Assets
14. (as of last day of preceding quarter)
----- -------------------------------------------
15. Ten Percent (10%) of line (iv)
----- -----------------------------------
Excess of line (ii) over line (v) -
16. Amount of Adjusted Net Proceeds
----- -----------------------------------
"Adjusted Net Proceeds" is a defined term in the Credit Agreement.
Limitation on Sale or Other Disposition of Real Property
----------------------------------------------------------------
------
Section 7.04
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(1) Calculation of "Sale or Other Disposition of Real Property" as defined
for purposes of Section 7.04(b). Calculation as of __________________:
i. Month 1
-- --------
Month 2
--------
Month 3
--------
Month 4
--------
Month 5
--------
Month 6
--------
Month 7
--------
Month 8
--------
Month 9
--------
Month 10
---------
Month 11
---------
Month 12
---------
Month 13
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Month 14
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Month 15
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Month 16
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Month 17
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Month 18
---------
Month 19
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Month 20
---------
Month 21
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Month 22
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Month 23
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Month 24
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Month 25
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Month 26
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Month 27
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Month 28
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Month 29
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Month 30
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Month 31
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Month 32
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Month 33
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Month 34
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Month 35
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Month 36 (month of current disposition)
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17. Total Dispositions for last 36 months (or if shorter, for the
----- -----------------------------------------------------------------
period from January 6, 2000, to such date).
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18. Total Dispositions/Undepreciated Real Estate Assets
----- -------------------------------------------------------
Undepreciated Real Estate Assets
19. (as of last day of preceding quarter)
----- -------------------------------------------
20. Fifteen Percent (15%) of line (iv)
----- ---------------------------------------
Excess of line (ii) over line (v) -
21. Amount of Adjusted Net Proceeds
----- -----------------------------------
"Adjusted Net Proceeds" is a defined term in the Credit Agreement.
Annual Service Charge Coverage Ratio
----------------------------------------
Calculation of "Annual Service Charge Coverage Ratio" as defined for purposes
of Section 7.07(a). Calculation as of _________________ for the period
_____________ through __________________.:
22. Funds from Operations
----- -----------------------
23. Net Income
----- -----------
24. Plus:
----- -----
25. Depreciation and Amortization
----- -------------------------------
26. Interest/Original Issue Discount
----- ----------------------------------
27. Extraordinary Charges
----- ----------------------
28. Excess Distributable Funds
----- ----------------------------
29. Minus:
----- ------
30. Gains on Sale of Properties and investment securities
----- ------------------------------------------------------------
31. Excess Net income
----- -------------------
32. Total (Sum of Lines (ii) - (vii) minus Lines (ix) and (x))
----- -----------------------------------------------------------------
33. Annual Service Charge
-----
34. Interest/Original Issue Discount
-----
35. Amount accrued in respect of Disqualified Stock
-----
36. Total (Line (xiii) plus Line (xiv))
-----
Funds from Operations/
37. Annual Service Charge (Line (xi) divided by Line (xv))
-----
FEX4_30_1.DOC
"Funds from Operations" and "Annual Service Charge" are defined terms in the
Credit Agreement.
Fixed Charge Coverage Ratio
------------------------------
Calculation of "Fixed Charge Coverage Ratio" as defined for purposes of Section
7.07(b). Calculation as of __________________ for the period __________ through
__________:
38. Funds from Operations;
-----
39. Net Income
----- -----------
40. Plus:
----- -----
41. Depreciation and Amortization
----- ------------------------------------
42. Interest/Original Issue Discount
----- ---------------------------------------
43. Extraordinary Charges
----- ---------------------------
44. Excess Distributable Funds
----- ---------------------------------
45. Minus:
----- ------
46. Gains on Sale of Properties and investment securities
----- -----------------------------------------------------------------
47. Excess Net Income
----- -------------------
48. Total (sums of Lines (ii) - (vii) minus Lines (ix) and (x))
----- -----------------------------------------------------------------
Interest/Original Issue Discount
----------------------------------
49. Fixed Charge:
----- --------------
50. Interest/Original Issue Discount
----- ---------------------------------------
51. Principal payments on Debt
----- ----------------------------------
52. Amounts accrued in respect of preferred stock
----- -----------------------------------------------------------------
53. Total (Sum of Line (xiii), Line (xiv) and Line xv))
----- ------------------------------------------------------------
54. Funds from Operations/Fixed Charge (Line (xi) divided by Line
----- -----------------------------------------------------------------
(xvi))
---
"Funds from Operations" and "Fixed Charge" are defined terms in the Credit
--------------------------------------------------------------------------------
Agreement.
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Minimum Adjusted Tangible Net Worth
---------------------------------------
Calculation of Adjusted Tangible Net Worth
55. Net Worth
----- ----------
56. Aggregate Book Value of Intangible Assets of the Borrower
----- -----------------------------------------------------------------
57. Difference between Line (i) and Line (ii)
----- -----------------------------------------------
58. Accumulated Depreciation
----- -------------------------
59. Total (Sum of Line (iii) and Line (iv))
----- ----------------------------------------------
Assets Retained
----------------
Calculation of Undepreciated Real Estate Assets subject to no lien to Unsecured
Debt for purposes of Section 7.13.
60. Undepreciated Real Estate Assets subject to no lien (other than
----- -----------------------------------------------------------------
Permitted Liens)
----------------
61. Principal outstanding of unsecured debt
----- -------------------------------------------
62. 150% of line (ii)
----- --------------------
63. Excess of line (i) over line (iii)
----- ----------------------------------------
Total Unsecured Indebtedness to Adjusted EBIDA for Unencumbered Property.
--------------------------------------------------------------------------------
Calculation as of _________________ for the period _________ through
__________.
i0 Total Unsecured Debt:
-- -----------------------
ii0 Debt
--- ----
iii0 Minus: Secured Indebtedness
---- -----------------------------
iv0 Total (Line 2 minus Line 3)
--- --------------------------------
v0 Adjusted EBIDA for Unencumbered Property
-- --------------------------------------------
Funds from Operation:
vi0 (components limited to Unencumbered Property)
--- -------------------------------------------------
vii0 Net Income
---- -----------
viii0 Plus:
----- -----
ix0 Depreciation and Amortization
--- -------------------------------
x0 Interest/Original Issue Discount
-- ----------------------------------
xi0 Extraordinary Charges
--- ----------------------
xii0 Excess Distributable Funds
---- ----------------------------
xiii0 Minus:
----- ------
xiv0 Gains on Sale of Properties and Investment Securities
---- ------------------------------------------------------------
xv0 Excess Net Income
--- -------------------
xvi0 Total (Sums of Lines (vii) - (xii) minus Lines (xiv) and (xv))
---- ------------------------------------------------------------------
Minus:
xvii0 Capital Improvement Reserve
----- -----------------------------
xviii0 Adjusted EBIDA for Unencumbered Property (Line (xvi) minus Line
------ ----------------------------------------------------------------
(xvii))
-------
xix0 Total Unsecured Indebtedness/Adjusted EBIDA for Unencumbered
---- -----------------------------------------------------------------
Property (Line (iv) divided by Line (xviii))
----------------------------------------------
February __, 2000
▇▇▇▇▇▇▇▇▇▇ Realty Investors
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Re: First Amendment to Credit Agreement dated as of February __, 2000 (the
"Amendment") by and between ▇▇▇▇▇▇▇▇▇▇ Realty Investors, a Texas real estate
investment trust ("Borrower"), and Bank of America, N.A., a national banking
association in its capacities as agent and a bank ("Bank of America")
Gentlemen:
This letter is delivered to you in connection with the Amendment. Unless
otherwise defined herein, capitalized terms shall have the meanings set forth in
the Loan Agreement and in the Amendment. In connection with, and in
consideration of the agreements contained in the Amendment, Borrower agrees with
Agent as follows:
Administrative Fee. On the first day of the Renewal Period, and on the
-------------------
anniversary of such date each year during the Renewal Period, Borrower will pay
--------
an administrative fee in the amount of $75,000 to Agent for its own account for
administrating the Loan during the following twelve (12) month period.
Renewal Fee. On the first day of the Renewal Period, Borrower shall pay to
------------
Agent a renewal fee in an amount equal to 50 bps on the entire commitment of
----
the Banks under the Revolving Loan on such date. Borrower acknowledges and
--
agrees that the renewal fee is a bona fide commitment fee and is intended as
--
reasonable compensation to Banks for committing to make funds available to
--
Borrower and for no other purpose. Agent shall be entitled to allocate the
--
Renewal Fee among the Banks as Agent considers appropriate in its sole
--
discretion, but without prejudice to Borrower=s refund rights hereinafter
--
specified.
--
Subject to Borrower=s rights hereinafter specified, the fees payable above
shall be fully-earned upon becoming due and payable, shall be non-refundable for
any reason whatsoever and shall be in addition to any other fee, cost or expense
payable pursuant to the Loan Agreement.
▇▇▇▇▇▇▇▇▇▇ Realty Investors
February __, 2000
Page 23
Borrower acknowledges that Bank of America desires that it be able to sell
down the Revolving Loan during the Renewal Period to the lesser of (a)
$35,000,000, or (b) 35% of Bank of America=s current commitment (the "Target
------
Hold Position"). Therefor, Borrower agrees that it shall consider actions which
-----------
are reasonably requested by Bank of America in order to enable Bank of America
to sell down the Revolving Loan to the Target Hold Position, including but not
limited to, modifying the Loan Documents to increase the price spread, increase
the renewal fee, revise financial covenants or make other structural changes to
the Loan Documents.
If Borrower notifies Bank of America that Borrower elects the Renewal
Option (the date of such notice being called the "Notice Date"), Bank of America
will endeavor to notify Borrower within fifteen (15) days after the Notice Date
of what changes (the "Anticipated Changes"), if any, need to be made to the
price spread, or any other part of the Revolving Loan, in order for Bank of
America to reach the Target Hold Position. Borrower shall then have seven (7)
days to elect by notice in writing to Bank of America to either (a) accept the
proposed modifications to the Revolving Loan, or (b) pay off the Revolving Loan
in full within sixty (60) days after expiration of the aforesaid seven (7) day
period.
If Borrower accepts the Anticipated Changes, but, thereafter, Bank of
America determines that changes to the Anticipated Changes or other changes (the
"Actual Changes") are necessary to enable Bank of America to reach the Target
Hold Position, Bank of America shall give written notice to Borrower of the
Actual Changes and Borrower shall have another seven (7) day period to either
accept (a) the Actual Changes or (b) elects to pay off the Revolving Loan within
sixty (60) days after expiration of the aforesaid seven (7) day period:
(x) because the all-in pricing, including, without limitation, interest
rate, price spread and fees, suggested by Bank of America in order to achieve
the Target Hold Position is such that Borrower would be required to pay interest
(including fees) at a rate greater than the highest applicable interest rate in
effect under this credit facility (as amended by the Amendment) or under any
other senior credit facility of Borrower (but limited to bank revolving credit
facilities) then outstanding or which was outstanding during the twelve month
period prior to the Renewal Period (herein collectively referred to as the
"Existing Senior Facilities"), or
(y) because the revisions to the financial covenants or the other
structural changes to the Loan Documents suggested by Bank of America in order
to achieve the Target Hold Position are such that the proposed new loan is
materially less favorable than any of the Existing Senior Facilities.
For purposes of comparing the highest applicable interest rate in effect on any
of the Existing Senior Facilities with that under the loan suggested by Bank of
America, all fees shall be amortized, prorated, allocated, and spread throughout
the term of the Indebtedness.
If (i) Bank of America notifies Borrower in writing of the Actual Changes
to the Revolving Loan, and (ii) Borrower elects, for one or more of the reasons
specified in (x) and (y) above, to pay off the Revolving Loan in full within
sixty (60) days, then the Administrative Fee and Renewal Fee shall be refunded
at the time the Loan is completely paid off in the following manner: The refund
of the Administrative Fee shall be equal to the Administrative Fee paid by
Borrower multiplied by the quotient of (a) the number of days of the Renewal
Period which have not lapsed prior to Borrower=s paying off the Revolving Loan,
divided by (b) three hundred sixty-five (365). The refund of the Renewal Fee
shall be equal to the Renewal Fee paid by Borrower multiplied by the quotient of
(i) the number of days of the Renewal Period which have not lapsed prior to
Borrower=s paying off the Revolving Loan, divided by (b) seven hundred thirty
(730).
If the foregoing is in accordance with your understanding, please execute
and return this letter to us.
Very truly yours,
BANK OF AMERICA, N.A.,
as Agent and a Bank
By:
Name:
Title:
Accepted and Agreed to
as of February __, 2000:
▇▇▇▇▇▇▇▇▇▇ REALTY INVESTORS
By:
Name:
Title: