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Exhibit 10.16
FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT
dated as of August 19, 1999
among
PS BUSINESS PARKS, L.P.,
THE LENDERS LISTED HEREIN,
and
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION,
as Agent
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TABLE OF CONTENTS
Page
ARTICLE I. THE AMENDMENTS....................................................1
SECTION 1.1. Definitions............................................1
SECTION 1.2. Extension Fee..........................................3
SECTION 1.3. Extension..............................................3
SECTION 1.4. Financial Information..................................4
SECTION 1.5. Intentially Deleted....................................4
SECTION 1.6. Minimum Tangible Net Worth.............................4
SECTION 1.7. Fixed Charge Coverage..................................4
SECTION 1.8. Financial Statements and Other Reports.................4
SECTION 1.9. Environmental Matters..................................5
ARTICLE II. CONDITIONS TO EFFECTIVENESS OF THIS AMENDMENT....................6
ARTICLE III. REPRESENTATIONS OF BORROWER.....................................7
ARTICLE IV. MISCELLANEOUS....................................................7
SECTION 4.1. Capitalized Terms......................................7
SECTION 4.2. Ratification...........................................7
SECTION 4.3. Counterparts...........................................7
SECTION 4.4. Governing Law..........................................7
i
FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT
THIS FIRST AMENDMENT TO REVOLVING CREDIT AGREEMENT (this "Amendment")
dated as of August 19, 1999 among PS BUSINESS PARKS, L.P., a California limited
partnership (the "Borrower"), the lenders listed on the signature pages hereof
("Lenders"), and ▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION, as agent and
representative for the Lenders (in such capacity, the "Agent").
WHEREAS, Borrower, the Agent and the lenders listed on the signature
pages thereof entered into that certain Revolving Credit Agreement ("Original
Agreement") dated as of August 6, 1998;
WHEREAS, Borrower, the Lenders and the Agent wish to extend the
Maturity Date to August 6, 2002 and make certain other amendments to the
Original Agreement. The Original Agreement, as modified by this Amendment may be
referred to herein as the "Credit Agreement";
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, the Borrower, the Lenders and
the Agent agree as follows:
ARTICLE I.
THE AMENDMENTS
SECTION 1.1. Definitions. The following terms shall be added to, or
shall be substituted in lieu of the corresponding terms in, Section 1.1 of the
Original Agreement:
"Applicable Margin" means, with respect to each Loan, the respective
percentages per annum determined, at any time, based on the range into which
Borrower's Credit Rating then falls, in accordance with the table set forth
below. Any change in Borrower's Credit Rating causing it to move to a different
range on the table shall effect an immediate change in the Applicable Margin
(including existing Loans). Promptly after learning of a change in the
Borrower's Credit Rating, Agent shall give notice of such change to the Lenders
and include in such notice the new Applicable Margin and the effective date of
such change. In the event that more than one (1) different Credit Rating has
been assigned, the lower of the Credit Ratings will prevail.
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GRID A:
Applicable
Margin for Applicable
Range of Base Rate Margin for
Borrower's Loans LIBOR Loans
Credit Rating (% per annum) (% per annum)
------------- ------------- -------------
Level I A-/A3
or better 0.0 0.75
Level II BBB+/Baa1 0.0 0.80
Level III BBB/Baa2 0.0 0.95
Level IV BBB-/Baa3 0.0 1.00
Level V Unrated or Below Investment Grade 0.0 See Grid B
GRID B:
Applicable
Margin for Applicable
Base Rate Margin for
Loans LIBOR Loans
Leverage (% per annum) (% per annum)
------------- ------------- -------------
Level I Less than or Equal to 25% 0.0 1.05
Level II > 25% Less than or Equal to 35% 0.0 1.10
Level III > 35% Less than or Equal to 45% 0.0 1.20
Level IV > 45% 0.0 1.35
"Equity Offering Net Proceeds" means, cumulatively, the Net cash
proceeds received and the value of assets acquired (net of Debt incurred or
assumed in connection therewith) through the issuance of Capital Stock of any
Borrower Party after the Amendment Date, excluding any amounts attributable to
mandatorily redeemable preferred stock (other than preferred stock redeemable
solely with common stock). "Net" means net of underwriters' discounts,
commission and other reasonable out-of-pocket expenses actually paid to any
Person (other than any Borrower Party or any Affiliate thereof).
"Fee Letter" means that certain letter dated August 19, 1999 between
the Borrower and the Agent.
"Fixed Charges" means, for any Fiscal Quarter, and without
duplication, Interest Expense for such Fiscal Quarter, plus scheduled principal
amortization payments (other than balloon payments) on Debt of the Borrower
Parties and the Consolidated Entities during such Fiscal Quarter, plus the
Capital Expenditure Reserve, plus all dividends and other distributions paid
during such Fiscal Quarter to holders of preferred stock or preferred
partnership units of the Borrower Parties and the Consolidated Entities.
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"Liquidated Cost" shall have the meaning set forth in Section 5.12.
"Maturity Date" means at any time, the then-applicable maturity date
specified hereunder. The initial Maturity Date shall be August 6, 2002, although
such date may be extended by the Lenders as provided in Section 2.5.2 hereof.
"Revolving Loan Note" means a Note made by the Borrower payable to the
order of a particular Lender, in the amount of such Lender's Revolving
Commitment, which note is substantially in the form of Exhibit A-1, as amended
(including any amendments and restatements thereof) from time to time.
SECTION 1.2. Extension Fee. Section 2.4.2 of the Original Agreement is
hereby deleted in its entirety.
SECTION 1.3. Extension. Section 2.5.2 of the Original Agreement is
hereby deleted in its entirety and the following shall be substituted in lieu
thereof:
2.5.2. Extension. Borrowers may request extensions of the Maturity
Date by making such request to Agent ("Extension Notice") in writing at least
ninety (90) days prior to each anniversary of the Closing Date (commencing with
the anniversary falling on August 6, 2000). The Agent and the Lenders have no
obligation to extend the Maturity Date and the Maturity Date shall not be
extended unless (i) the Borrower is in full compliance with all of the terms,
conditions and covenants of this Agreement at the time of request and on the
applicable anniversary Date, (ii) all of the Lenders and the Agent have agreed
to do so in writing, (iii) Borrower shall, on or prior to the applicable
anniversary, have executed and delivered to the Agent an extension agreement in
the form provided by Agent, and (iv) Borrower shall, on or prior to the
applicable anniversary, provided all Lenders shall have approved the request,
have remitted to the Agent any extension fee, and have satisfied any other
conditions to extension, agreed to between Borrower and the Agent. If Borrower's
request for extension is approved and the other foregoing conditions are met,
then (i) the extension of the Maturity Date shall be for a period of one (1)
year and (ii) such extension shall be effective as of the applicable
anniversary. The Agent and the Lenders shall have a period of forty-five (45)
days from receipt of written notice of Borrowers' intention to extend the
Maturity Date to approve such extension, in their sole and absolute discretion.
If Borrower has not received written notice of the Lenders' intention to extend
the Maturity Date within such forty-five (45) day period, then the extension
request shall be deemed to be not approved. If an extension is granted, Borrower
may request subsequent one (1) year extensions subject to the same criteria and
procedures established in this Section 2.5.2. As an example, in order to extend
the initial Maturity Date, Borrower must notify Agent at least ninety (90) days
prior to August 6, 2000. If approved, the Maturity Date would then be extended
from August 6, 2002 to August 6, 2003. In the event that Borrower's initial
request for extension is not granted, any subsequent request for extension is
not granted, or Borrower does not request an extension pursuant to this Section
2.5.2, then, commencing on the Maturity Date, Borrower shall no longer be able
to obtain Loans hereunder and all outstanding Loans shall become all due and
payable.
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SECTION 1.4. Financial Information. Section 4.5.1 of the Original
Agreement is hereby amended by deleting the dates "December 31, 1996" and
"December 31, 1997" and substituting in lieu thereof the dates "December 31,
1997" and "December 31, 1998" respectively. Section 4.5.2 of the Original
Agreement is hereby amended by deleting the words "September 30, 1997 and March
31, 1998" and substituting in lieu thereof the words "June 30, 1999".
SECTION 1.5. [Intentially Deleted].
SECTION 1.6. Minimum Tangible Net Worth. Section 6.4.3 of the Original
Agreement is hereby deleted in its entirety and the following shall be
substituted in lieu thereof:
6.4.3. Minimum Tangible Net Worth. Tangible Net Worth of Borrower and
Guarantor shall not be less than, at any time: (i) $675,000,000 plus (ii) ninety
percent (90%) of Equity Offering Net Proceeds.
SECTION 1.7. Fixed Charge Coverage. Section 6.4.6 of the Original
Agreement is hereby deleted in its entirety and the following shall be
substituted in lieu thereof:
6.4.6. Fixed Charge Coverage. At any time, the ratio of EBITDA to
Fixed Charges for the most recently completed Fiscal Quarter shall not be less
than 1.75:1.0.
SECTION 1.8. Financial Statements and Other Reports. Sections 5.1.2
through 5.1.5 of the Original Agreement are hereby deleted in their entirety and
the following shall be substituted in lieu thereof:
5.1.2. As soon as practicable and in any event within fifty (50) days
after the end of each of the first three (3) Fiscal Quarters during each Fiscal
Year a consolidated balance sheet of the Borrower Parties as of the end of such
quarter and the related consolidated statements of income, stockholders' equity
and cash flow for such quarter and the portion of the Fiscal Year ended at the
end of such quarter, setting forth in each case in comparative form the
consolidated figures for the corresponding periods of the prior Fiscal Year, all
in reasonable detail and certified by the Guarantor's chief financial officer as
fairly presenting the consolidated financial condition of the Borrower Parties
as of the dates indicated and the consolidated results of operations and cash
flows for the periods indicated, subject to normal year-end adjustments and made
in accordance with GAAP.
5.1.3. Within ninety-five (95) days after the end of each Fiscal
Quarter ending December 31 and within fifty (50) days after the end of each
other Fiscal Quarter, a certificate of the senior vice-president, corporate
finance, chief financial officer, controller or treasurer of the Guarantor
substantially in the form of Exhibit F (a "Compliance Certificate"), (a) duly
4
completed setting forth the calculations required to establish Availability and
compliance with Section 6.4 on the date of such financial statements and (b)
stating that, to the best knowledge of such officer, after making such inquiry
and other investigation as such officer deems reasonable under the
circumstances, no Default exists or, if a Default does exist, the nature thereof
and the action that the Borrower proposes to take with respect thereto;
5.1.4. Within ninety-five (95) days after the end of each Fiscal
Quarter ending December 31 and within fifty (50) days after the end of each
other Fiscal Quarter, a report showing Available Financing as of the end of such
Fiscal Quarter.
5.1.5. An Unencumbered Pool report which includes for each
Unencumbered Asset, the Property NOI for such Fiscal Quarter with reasonable
detail as to all Property Expenses, Capital Expenditures incurred, and average
Occupancy Rate during the Fiscal Quarter. This portion of the report shall be
submitted to the Agent within ninety-five (95) days after the end of each Fiscal
Quarter ending December 31 and within fifty (50) days after the end of each
other Fiscal Quarter.
SECTION 1.9. Environmental Matters. Section 5.12.1 of the Original
Agreement is hereby deleted in its entirety and the following shall be
substituted in lieu thereof:
5.12.1. Promptly upon discovery of any violation or alleged violation
of Environmental Requirements with respect to any Real Property of any Borrower
Party, the Borrower shall attempt in good faith as soon as practicable to
determine the cost to remediate such violation of Environmental Requirements and
the Borrower shall thereupon notify the Agent in writing of the Borrower's
reasonable, good faith estimate of the cost to remediate such violation or
alleged violation. Such good faith estimate of the cost of remediation
(exclusive of costs and expenses of investigation), as revised from time to time
pursuant hereto, shall be deemed to be the "Liquidated Cost" of such violation
or alleged violation of Environmental Requirements. From time to time
thereafter, not less than ninety-five (95) days after the end of each Fiscal
Quarter ending December 31 and not less than fifty (50) days after the end of
each other Fiscal Quarter, the Borrower shall review and update all Liquidated
Costs and shall deliver a written report to the Agent setting forth, in
reasonable detail, each Liquidated Cost in excess of One Million Dollars
($1,000,000), the basis for the determination of the Liquidated Cost, and the
Borrower's plans with respect to such violation or alleged violation of
Environmental Requirements.
ARTICLE II.
CONDITIONS TO EFFECTIVENESS OF THIS AMENDMENT
The closing hereunder shall occur on the date when each of the
following conditions is satisfied (or waived by the Agent and the Lenders) (the
"Amendment Date"), each document to be dated the Amendment Date unless otherwise
indicated:
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(a) the Borrower shall have executed and delivered to the Agent duly
executed original Notes for the account of each Lender dated as of the Closing
Date complying with the provisions of Section 2.3 of the Credit Agreement;
(b) the Borrower, the Agent and each of the Lenders shall have
executed and delivered to the Borrower and the Agent a duly executed original of
this Amendment;
(c) Guarantor shall have executed and delivered to the Agent a duly
executed consent to this Amendment reaffirming Guarantor's obligations under the
Guaranty;
(d) the Agent shall have received all documents the Agent may
reasonably request relating to the existence of the Borrower and Guarantor, the
authority for and the validity of this Amendment and the other Loan Documents,
and any other matters relevant hereto, all in form and substance satisfactory to
the Agent. Such documentation shall include, without limitation, the agreement
of limited partnership of the Borrower, as well as the certificate of limited
partnership of the Borrower, both as amended, modified or supplemented to the
Amendment Date, certified to be true, correct and complete by a senior officer
of the Borrower as of a date not more than ten (10) days prior to the Amendment
Date, as well as the articles of incorporation and bylaws of Guarantor, as
amended, modified or supplemented to the Amendment Date, certified to be true,
correct and complete by a senior officer of Guarantor as of a date not more than
ten (10) days prior to the Amendment Date;
(e) the Borrower and Guarantor shall have taken all actions required
to authorize the execution and delivery of this Amendment and the other Loan
Documents and the performance thereof by the Borrower and Guarantor, as the case
may be;
(f) the Agent shall have received, for its and any other Lender's
account and the account of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, all fees due and payable
pursuant to the Lender Fee Letter on or before the Amendment Date;
(g) the Borrower shall have executed and delivered to the Agent a duly
executed original of the Fee Letter;
(h) no Default or Event of Default shall have occurred; and
(i) each of the Notes executed by Borrower in connection with the
Original Agreement shall have been surrendered by the relevant Lender to the
Agent for cancellation and return to the Borrower simultaneously with the
Closing (it being acknowledged and agreed by the Lenders that the Notes
originally executed by Borrower as of the Closing Date in connection with the
Original Agreement (which are being replaced as of the Amendment Date by amended
and restated notes) shall be deemed canceled, paid in full and of no further
force and effect as of the Amendment Date.
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ARTICLE III.
REPRESENTATIONS OF BORROWER
The Borrower hereby represents and warrants to the Agent and each of
the Lenders the following:
(a) All of the representations and warranties contained in the
Original Agreement are true and correct on and as of the date hereof and will be
true and correct after giving effect to this Amendment; the foregoing
representation and warranty is not intended to modify Section 7.1.4 of the
Credit Agreement.
(b) No event which constitutes a Default or an Event of Default under
the Original Agreement, as amended hereby, has occurred and is continuing, or
would result from the execution and delivery of this Amendment.
(c) The Borrower has the power and authority to execute and deliver
this Amendment and to perform its obligations under the Original Agreement, as
amended hereby, and under the Notes; and all such action has been duly
authorized by all necessary proceeding on its part. Each of the Original
Agreement, this Amendment and the Notes has been duly and validly executed and
delivered by the Borrower and constitutes the valid and legally binding
obligation of the Borrower enforceable in accordance with its terms, except as
limited by moratorium, bankruptcy, reorganization, insolvency or other laws
affecting creditor's rights generally or by the exercise of judicial discretion
in accordance with general principles of equity.
ARTICLE IV.
MISCELLANEOUS
SECTION 4.1 Capitalized Terms The capitalized terms used herein which
are defined in the Original Agreement and not otherwise defined herein shall
have the meanings specified therein.
SECTION 4.2 Ratification The Original Agreement, as hereby amended, is
in all respects ratified and confirmed, and all other rights and powers created
thereby or thereunder shall be and remain in full force and effect.
SECTION 4.3 Counterparts This Amendment may be executed in several
counterparts, and each counterpart, when so executed and delivered, shall
constitute an original instrument, and all such separate counterparts shall
constitute one and the same instrument.
SECTION 4.4 Governing Law THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS
AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE
CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF
CALIFORNIA EXCEPT TO THE EXTENT PREEMPTED BY FEDERAL LAW (WITHOUT GIVING EFFECT
TO THE PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW).
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective authorized officers as of the day and year
first above written.
Borrower:
PS BUSINESS PARKS, L.P.,
a California limited partnership
By: PS BUSINESS PARKS, INC.,
a California corporation,
General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
Address: PS BUSINESS PARKS, L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier:(▇▇▇) ▇▇▇-▇▇▇▇
Agent:
▇▇▇▇▇ Fargo Bank, National Association
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
Address: ▇▇▇▇▇ Fargo Bank,
National Association
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Office Manager
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Lender:
▇▇▇▇▇ Fargo Bank, National Association
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
Address: ▇▇▇▇▇ Fargo Bank,
National Association
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Office Manager
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
LIBOR LENDING OFFICE:
▇▇▇▇▇ Fargo Bank, National Association
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
CONSENT OF GUARANTOR
The undersigned, PS BUSINESS PARKS, INC., a California corporation
("Guarantor"), (i) hereby consents to the foregoing First Amendment to Revolving
Credit Agreement dated as of August 19, 1999 (the "First Amendment") among PS
BUSINESS PARKS, L.P., a California limited partnership ("Borrower"), the lenders
listed therein (the "Lenders") and ▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION, as
Agent (in such capacity, the "Agent"), and (ii) hereby reaffirms its obligations
under that certain General Continuing Repayment Guaranty dated as of August 6,
1998 made by Guarantor in favor of the Lenders and the Agent pursuant to which,
among other things, Guarantor guarantees the payment and performance of
Borrower's obligations under the Revolving Credit Agreement dated as of August
6, 1998 among Borrower, the Lenders and the Agent, as amended by the First
Amendment.
PS BUSINESS PARKS, INC.,
a California corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
