EXHIBIT 10.2
AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT dated as of April 13, 1999 by
and among SECURITY CAPITAL GROUP INCORPORATED (the "Borrower"), the financial
institutions party thereto and their assignees under Section 10.8 thereof (the
"Lenders"), and ▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION, as Agent (the "Agent").
WHEREAS, the Borrower, the Lenders and the Agent are parties to that
certain Credit Agreement dated as of June 5, 1998, as amended as of October 15,
1998 (the "Credit Agreement");
WHEREAS, the Borrower, the Lenders and the Agent desire to amend certain
provisions of the Credit Agreement on the terms and conditions contained herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
hereto hereby agree as follows:
Section 1. Specific Amendments to Credit Agreement.
(a) The Credit Agreement is amended by deleting the "WHEREAS" paragraph
appearing on the first page thereof and substituting in its place the following:
WHEREAS, Lenders desire to make available to Borrower a
$470,000,000 revolving credit facility, pursuant to the terms hereof.
(b) The Credit Agreement is amended by deleting the definitions of the
terms "Pacific", "Real Estate Company Securities", and "Revolving Period" from
Section 1.1. thereof in their entirety.
(c) The Credit Agreement is amended by deleting clause (d) of the
definition of the term "Qualifying Security" contained in Section 1.1. in its
entirety and substituting in its place the following:
(d) the ratio of (i) such Issuer's Indebtedness to (ii) its Net
Worth plus the amount of accumulated depreciation of such Issuer,
determined as of such Issuer's fiscal quarter most recently ending and
in accordance with generally accepted accounting principles (or other
method of accounting acceptable to Agent) as in effect on April 13,
1999, does not exceed 1.0 to 1.0 (or 1.20 to 1.00 solely in the case of
Homestead)(for purposes of this clause (d) only, convertible debentures
issued by Strategic Hotel Capital Incorporated and outstanding as of
April 13, 1999 shall be deemed to have been converted pursuant to their
terms); and
(d) The Credit Agreement is amended by restating the definitions of the
terms "Applicable Margin", "Cash Flow", "Cash Flow Available for Distribution",
"Fixed Charges", "Indebtedness", "Market Value", "Market Value Net Worth",
"Principal Companies", "Revolving Credit Termination Date", "Strategic
Investee", "Termination Date", "Total Liabilities", "Unencumbered Pool Value"
and "Unsecured Liabilities" from Section 1.1. thereof in their entirety as
follows:
"Applicable Margin" means the percentage 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 which would cause the Applicable Margin to be
determined based on a different Level in the table shall take effect on
the date on which such change occurs. Notwithstanding anything to the
contrary in this paragraph, during any period in which Borrower has no
Credit Rating from either S&P or ▇▇▇▇▇'▇, the Applicable Margin shall be
percentage corresponding to Level 5 in the table. During any period in
which Borrower shall only have one Credit Rating, the Applicable Margin
shall be based on such Credit Rating. During any period that Borrower
receives only two Credit Ratings and such Credit Ratings are not
equivalent, the Applicable Margin shall be determined by the lower of
such two Credit Ratings. During any period that Borrower receives more
than two Credit Ratings and such Credit Ratings are not equivalent, the
Applicable Margin shall be determined by the lower of the two highest
Credit Ratings.
Borrower's Credit Rating
Level (S&P/▇▇▇▇▇'▇ or equivalent) Applicable Margin
--------- ---------------------------------- -----------------
1 A/A2 or equivalent 1.00%
2 A-/A3 or equivalent 1.10%
3 BBB+/Baa1 or equivalent 1.20%
4 BBB/Baa2 (or equivalent) 1.30%
5 BBB-/Baa3 (or equivalent) 1.40%
6 Lower than BBB-/Baa3 or 1.80%
equivalent
"Cash Flow" means, with respect to a Person for the four fiscal
quarter period ending as of the date of determination, such Person's net
income for such period determined in accordance with generally accepted
accounting principles (excluding capital gains and losses for such
period on any disposition of Investments in any Real Estate Companies
that are Strategic Investees and, to the extent included in net income,
any unrealized gains and losses), except that cash dividends and other
cash received from Investments in Consolidated Subsidiaries, other
Subsidiaries or any other Persons shall be substituted for net income of
Consolidated Subsidiaries and for equity in earnings of any such
Subsidiaries or other Persons, plus the sum of the following amounts
(but only to the extent that any of the following amounts were taken
into account when determining such net income): (a) income taxes accrued
for such period, plus (b) interest expense paid or accrued for such
period, plus (c) depreciation and amortization expenses for such period,
plus (d) the return of the capital component of dividends received for
such period (to the extent that such component is not reflected already
in net income), plus (e) non-recurring extraordinary expenses,
non-recurring special charges (such as restructuring charges,
non-recurring asset write-downs, and costs and charges related to asset
acquisitions and dispositions), and non-recurring costs or charges
related to accounting charges for such period; provided, however, to the
extent that the cash component of the expenses, costs and charges
referred to in this clause (e) would exceed $10,000,000 in the aggregate
for such period, such excess shall not be added back to net income.
"Cash Flow Available for Distribution" means, with respect to a
Person for a given period, such Person's net income for such period
determined in accordance with generally accepted accounting principles
(excluding capital gains and losses for such period on any disposition
of Investments in any Real Estate Companies that are Strategic
Investees, and to the extent included in net income, any unrealized
gains and losses), except that cash dividends and other cash received
from Investments in Consolidated Subsidiaries, other Subsidiaries or any
other Persons shall be substituted for net income of Consolidated
Subsidiaries and for equity in earnings of any such Subsidiaries or
other Persons, plus the sum of the following amounts (but only to the
extent that any of the following amounts were taken into account when
determining such net income): (a) interest expense accrued but not paid
for such period, plus (b) depreciation and amortization expenses for
such period, plus (c) the return of the capital component of dividends
received for such period (to the extent that such component is not
reflected already in net income), plus (d) non-recurring extraordinary
expenses, non-recurring special charges (such as restructuring charges,
non-recurring asset write-downs, and costs and charges related to asset
acquisitions and dispositions), and non-recurring costs or charges
related to accounting charges for such period; provided, however, to the
extent that the cash component of the expenses, costs and charges
referred to in this clause (d) would exceed $10,000,000 in the aggregate
for such period, such excess shall not be added back to net income.
"Fixed Charges" means, with respect to a Person for the four
fiscal quarter period ending as of the date of determination, the sum of
(a) the total amount of accrued or paid interest (including, without
limitation, interest expense attributable to Capitalized Lease
Obligations but excluding interest accrued in respect of any "zero
coupon" Indebtedness and other similar Indebtedness for which interest
is not due and payable) of such Person for such period, and in any event
shall include all accrued, paid or capitalized interest with respect to
any Indebtedness or other obligation in respect of which such Person is
wholly or partially liable, whether pursuant to any repayment, interest
carry, performance Guarantee or otherwise (excluding any such "zero
coupon" Indebtedness and other similar Indebtedness) and in any event
shall include all letter of credit fees paid or accrued by such Person
during such period plus (b) regularly scheduled principal payments on
Indebtedness of such Person during such period, other than (i) any
balloon, bullet or similar principal payment payable on any Indebtedness
of such Person which spreads the final payment thereof over a period and
thereby reduces refinancing risk and repays such Indebtedness in full
and (ii) in the case of the Borrower, principal payments in respect of
the Term Loans. "Fixed Charges" shall include such Person's ownership
share of all of the foregoing of any Affiliate of such Person that is
not a Consolidated Subsidiary (with such ownership share being based on
the greater of such Person's nominal ownership interest or economic
interest in any such Affiliate). When determining the Borrower's
compliance with Section 7.7.(c), the amount of Fixed Charges of
Strategic Investees and Capital Management Entities shall be
disregarded.
"Indebtedness" of any Person means at any date, without
duplication, (a) all obligations of such Person for borrowed money, (b)
all obligations of such Person evidenced by bonds, debentures, notes or
other similar debt instruments, (c) all obligations of such Person to
pay the purchase price of property or services if such obligations are
payable after the receipt of such property or rendition of such
services, except (i) accounts payable arising in the ordinary course of
business, (ii) obligations incurred in the ordinary course to pay the
purchase price of Securities so long as such obligations are paid within
customary settlement periods and (iii) obligations to purchase
Securities pursuant to subscription or stock purchase agreements, or
otherwise make capital contributions, in or with respect to Strategic
Investees or Capital Management Entities, (d) all Capitalized Lease
Obligations of such Person, (e) all reimbursement obligations of such
Person under letters of credit or acceptances in respect of drawings
thereunder to the extent not reimbursed, (f) all Indebtedness secured by
a Lien on any asset of such Person, whether or not such Indebtedness is
otherwise an obligation of such Person, and (g) all Indebtedness of
others Guaranteed by such Person or which is otherwise recourse to such
Person, including all Indebtedness of any partnership of which such
Person is a general partner. Notwithstanding the foregoing, for purposes
of calculating Borrower's compliance with Section 7.7., accounts payable
(other than deferred compensation and obligations incurred in the
ordinary course to pay the purchase price of Securities so long as such
obligations are paid within customary settlement periods) of Borrower in
excess of 3.0% of the undepreciated book value (determined in accordance
with generally accepted accounting principles) of the assets of the
Borrower, at any time outstanding shall be treated as Indebtedness to
the extent of such excess.
"Market Value" means, with respect to a Security and on the date
of determination thereof, the value determined in accordance with the
following method applicable to such Security:
(a) in the case of a Security listed on the New York
Stock Exchange, the American Stock Exchange, or some other
principal national securities exchange in the United States of
America, the reported last sale price of a unit of such security
regular way on a given day, or, in case no such sale takes place
on such day, the average of the reported closing bid and asked
prices regular way, in each case on the New York Stock Exchange
Composite Tape, the American Stock Exchange Composite Tape or the
principal national securities exchange in the United States of
America on which the security is listed or admitted to trading,
as applicable, or, if such Security is not listed or admitted to
trading on any national securities exchange in the United States
of America, the closing sales price, or if there is no closing
sales price, the average of the closing bid and asked prices, in
the over-the-counter market as reported by the National
Association of Securities Dealers Automated Quotation System,
(b) in the case of a Security listed on a principal
national securities exchange in Luxembourg, Amsterdam or other
European country, the price of such Security as reported on such
exchange by the most widely recognized reporting method
customarily relied upon by financial institutions in such country
and which method is reasonably acceptable to Agent,
(c) in the case of a Security issued by an investment
fund which invests primarily in the Securities of publicly traded
real estate companies and the net asset value of which is
regularly determined (and in any event at least every three
months) and reported publicly, the reported net asset value of
such Security,
(d) in the case of any other Security, one of the
following, as provided below (determined on a per share basis in
a manner acceptable to Agent):
(i) in the case of a Security issued by a private
investment fund which invests primarily in the Securities
of publicly traded real estate companies and the net
asset value of which is regularly determined (and in any
event at least every three months) and reported to its
shareholders, the reported net asset value of such
Security,
(ii) the sum of (A) EBITDA of the Issuer of such
Security for the fiscal quarter of such Issuer most
recently ending times 4 divided by 9.25%, plus (B) with
respect to any tangible assets of such Issuer that did
not generate income included in the determination of
EBITDA, the book value of such assets as of the end of
such fiscal quarter, minus (C) the total liabilities of
such Issuer as of the end of such fiscal quarter, or
(iii) the book value of such Security as reflected
on the balance sheet of Borrower thereof as of the fiscal
quarter of Borrower most recently ending.
Securities issued by Strategic Hotel Capital Incorporated
and by BelmontCorp shall initially be valued in
accordance with the method described in the immediately
preceding clause (ii), Securities issued by Security
Capital European Real Estate Shares, Security Capital
Preferred Growth Incorporated and Security Capital U.S.
Real Estate Shares shall initially be valued in
accordance with the method described in the immediately
preceding clause (i), and Securities issued by Security
Capital European Realty shall initially be valued in
accordance with the method described in the immediately
preceding clause (iii). Securities of any other Issuer
shall be valued in accordance with one of such methods as
Agent and Borrower may agree. The value of Securities of
an Issuer may be determined in accordance with the method
described in the immediately preceding clause (iii) for a
maximum period of two years beginning April 13, 1999,
after which such value shall be determined in accordance
with the immediately preceding clause (ii) (or clause (i)
in the case of a private investment fund, if such method
is then acceptable to Agent) if no other valuation method
referred to above should then apply.
Any determination of the "Market Value" of a Security pursuant to this
definition shall be based on the assumption that offers of such Security
are exempt from registration under the Securities Act. In addition if
the "Market Value" of a Security determined pursuant to the above
provisions of this definition would be less than zero, then such "Market
Value" shall be equal to zero.
"Market Value Net Worth" means, on a given date, (a) the sum of
(i) the Market Value on and as of such date of all Securities (excluding
preferred stock referred to in the immediately following clause (ii))
owned by Borrower and its Consolidated Subsidiaries and which Securities
are issued by Real Estate Companies, (ii) the aggregate liquidation
preference value of any preferred stock owned by the Borrower and its
Consolidated Subsidiaries on and as of such date, (iii) the book value
of all other assets of Borrower and its Consolidated Subsidiaries
(excluding all Intangible Assets) on and as of such date and (iv) all
cash and cash equivalents of Borrower and its Consolidated Subsidiaries
on and as of such date, minus (b) the Total Liabilities (excluding
deferred taxes on unrealized gains) of Borrower and its Consolidated
Subsidiaries as of such date as determined in accordance with generally
accepted accounting principles. The Market Value of Securities which are
the subject of purchase obligations, repurchase obligations, forward
commitments and other unfunded obligations shall be included in Market
Value Net Worth to the extent that the amount of such purchase
obligations, repurchase obligations, forward commitments and other
unfunded obligations are included in Total Liabilities.
"Principal Companies" means Archstone, ProLogis, U.S. Realty and
Homestead.
"Revolving Credit Termination Date" means the earlier to occur of
(a) April 6, 2002, or such later date to which such date may be extended
in accordance with Section 2.10. or (b) the date on which the Revolving
Loans are converted into Term Loans pursuant to Section 2.11.
"Strategic Investee" means, with respect to the Borrower, any
Person (other than any of the Service Subsidiaries) of which the
Borrower initially owns, directly or indirectly, more than 25% of the
outstanding securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other
individuals performing similar functions.
"Termination Date" means April 6 in the year two calendar years
immediately following the year in which the Revolving Loans are
converted into Term Loans.
"Total Liabilities" means, as to any Person, at a particular
date, all liabilities which would, in conformity with generally accepted
accounting principles, be properly classified as a liability on the
balance sheet of such Person as at such date, and in any event shall (a)
include (without duplication) (i) Indebtedness of such Person, (ii) all
Contingent Obligations of such Person, (iii) liabilities of any
Affiliate of such Person that is not a Consolidated Subsidiary of such
Person, which liabilities such Person has Guaranteed or is otherwise
obligated on a recourse basis, (iv) such Person's ownership share (based
on the greater of such Person's nominal ownership interest or economic
interest in such Affiliate) of the Nonrecourse Indebtedness of any such
Affiliate, and (v) all purchase obligations, repurchase obligations,
forward commitments (including forward commitments to purchase equity
interests, to make investments or to make loans) and any other unfunded
obligations of such Person; and (b) not include (i) any accounts payable
owing to a trade creditor and which is not evidenced by any instrument
and any accounts payable representing deferred compensation, (ii)
accrued expenses, (iii) deferred taxes on unrealized gains, (iv)
declared but unpaid dividends and (v) in the case of the Borrower and
its Subsidiaries, Indebtedness or other liabilities of Strategic
Investees or Capital Management Entities.
"Unencumbered Pool Value" means, at any given time, the aggregate
Market Value of all Qualifying Securities subject, however, to the
following limitations: (a) at least 90% of the Unencumbered Pool Value
shall be attributable to Traded Securities issued by Approved Issuers
each having a Cash Flow to Interest Ratio for the period of four
consecutive fiscal quarters most recently ending of not less than 1.5 to
1.0 and (b) of the Unencumbered Pool Value attributable to such Issuers,
no more than (i) 50% of such value shall be individually attributable to
Securities issued by ProLogis or Archstone, respectively, (ii) 40% of
such value shall be attributable to Securities issued by U.S. Realty,
(iii) 30% of such value shall be attributable to Securities issued by
Homestead and (iv) 20% of such value shall be collectively attributable
to Securities issued by any other Persons. The amount of the obligation
to purchase Securities that are the subject of purchase obligations,
repurchase obligations, forward commitments and other unfunded
obligations of the Borrower or any Guarantor, shall be included when
determining the Unencumbered Pool Value to the extent that the amount of
such purchase obligations, repurchase obligations, forward commitments
and other unfunded obligations are included in Unsecured Liabilities.
For purposes of this definition, the Market Value of Securities that are
subject to purchase obligations, repurchase obligations, forward
commitments and other unfunded obligations of the Borrower or any
Guarantor shall not be less than the amount of these obligations.
"Unsecured Liabilities" means, as to any Person as of a given
date, all liabilities which would, in conformity with generally accepted
accounting principles, be properly classified as a liability on the
consolidated balance sheet of such Person that are not secured in any
manner by a Lien in any property, and shall in any event include
(without duplication) the following: (a) all unsecured Indebtedness of
such Person; (b) all purchase obligations, repurchase obligations,
forward commitments and unfunded obligations; (c) all accounts payable
of such Person; (d) all Guarantees by such Person of Unsecured
Liabilities of other Persons and (e) unsecured subordinated debt.
(e) The Credit Agreement is amended by adding to Section 1.1. thereof
the following new definitions in the appropriate alphabetical locations:
"Archstone" means Archstone Communities Trust, as real estate
investment trust formed under the laws of the State of Maryland.
"Capital Management Entity" means a Subsidiary of the Borrower
which (i) provides investment management or investment advisory services
pursuant to any contract or agreement or series of contracts or
agreements; or (ii) is a Person that (A) is registered under the
Investment Company Act of 1940, as amended (the "Investment Company
Act") or (B) is exempt from registration under the Investment Company
Act and makes passive investments in companies or funds in which such
Person does not have representation on the board of directors or similar
body or participate on a regular basis in the management of such company
or fund.
"EBITDA" means, with respect to a Person and for a given period,
the sum of each of the following of such Person during such period,
determined on a consolidated basis: (i) net income, (ii) income taxes
paid or accrued, (iii) interest expense paid or accrued, (iv)
depreciation and amortization deductions and (v) non-recurring
extraordinary expenses, non-recurring special charges (such as
restructuring charges, non-recurring asset write-downs, and costs and
charges related to asset acquisitions and dispositions), and
non-recurring costs or charges related to accounting charges for such
period; provided, however, to the extent that the cash component of the
expenses, costs and charges referred to in this clause (v) would exceed
$10,000,000 in the aggregate for such period, such excess shall not be
added back to net income (but only to the extent, in each case, that
such taxes, expenses and deductions are reflected in the calculation of
such Person's net income for such period).
"Nonrecourse Indebtedness" means, with respect to a Person,
Indebtedness for borrowed money in respect of which recourse for payment
(except for customary exceptions for fraud and other similar exceptions
acceptable to the Agent in its sole discretion) is contractually limited
to specific assets of such Person encumbered by a Lien securing such
Indebtedness.
"Swingline Termination Date" means the date which is 10 Business
Days prior to the Revolving Credit Termination Date.
(f) The Credit Agreement is amended by deleting Section 2.8.(c) thereof
in its entirety and substituting in its place the following:
(c) Payment of Principal of Term Loans. Borrower shall repay the
principal balance of the Term Loans in consecutive quarterly
installments due on the last day of each August, November, February and
May following the Revolving Credit Termination Date until the Term Loans
have been paid in full. Each such installment shall be in an amount
equal to 12.5% of the initial aggregate principal balance of the Term
Loans. Notwithstanding the foregoing, the entire outstanding principal
balance of all Term Loans shall be due and payable in full on the
Termination Date.
(g) The Credit Agreement is amended by deleting Section 2.10.(a) thereof
in its entirety and substituting in its place the following:
(a) Borrower may request Agent and Lenders to extend the current
Revolving Credit Termination Date by successive one-year intervals by
executing and delivering to Agent no later than March 15 (and not before
March 1) of the year one year prior to the current Revolving Credit
Termination Date, a written request for such extension (an "Extension
Request"). Agent shall forward to each Lender a copy of each Extension
Request delivered to Agent promptly upon receipt thereof. Borrower
understands that this Section has been included in this Agreement for
Borrower's convenience in requesting an extension and acknowledges that
none of Lenders nor Agent has promised (either expressly or impliedly),
nor has any obligation or commitment whatsoever, to extend the Revolving
Credit Termination Date at any time. If all Lenders shall have notified
Agent on or prior to May 1 of the year one year prior to the Revolving
Credit Termination Date that they accept such Extension Request, the
Revolving Credit Termination Date shall be extended for one year. If any
Lender shall not have notified Agent on or prior to such May 1 that it
accepts such Extension Request, the Revolving Credit Termination Date
shall not be extended. Agent shall promptly notify Borrower whether the
Extension Request has been accepted or rejected as well as which Lender
or Lenders rejected Borrower's Extension Request (each such Lender a
"Rejecting Lender").
(h) The Credit Agreement is amended by deleting Section 2.11. thereof in
its entirety and substituting in its place the following:
SECTION 2.11. Term Loan Conversion.
Subject to the terms and conditions of this Agreement, if any
Extension Request of Borrower shall be denied, Borrower may then elect
to convert on June 15 immediately preceding the current Revolving Credit
Termination Date the aggregate principal amount of Revolving Loans then
owing to each Lender and outstanding on the date of such conversion into
a term loan owing to such Lender (each a "Term Loan") provided (a)
Borrower has given Agent not less than 15 days' prior notice of
Borrower's intention to so convert the Revolving Loans and (b) the
conditions set forth in Section 5.3. have been satisfied as of the date
of such conversion. Upon the effectiveness of the conversion of the
outstanding principal balance of Revolving Loans into Term Loans as
contemplated by this Section, Borrower shall have no right to borrow,
and neither Swingline Lender nor any Lender shall have any obligation to
make, any Swingline Loans or Revolving Loans, as applicable.
(i) The Credit Agreement is amended by deleting the first sentence of
Section 2.15.(a) thereof in its entirety and substituting in its place the
following:
Subject to the terms and conditions hereof, including without
limitation, Section 2.16., if necessary to meet Borrower's funding
deadline, Swingline Lender agrees to make Swingline Loans to Borrower,
during the period from the Effective Date to but excluding the Swingline
Termination Date, in an aggregate principal amount at any one time
outstanding up to, but not exceeding, the amount of the Swingline
Commitment.
(j) The Credit Agreement is amended by deleting the first sentence of
Section 2.15.(c) thereof in its entirety and substituting in its place the
following:
Swingline Loans shall bear interest at a per annum rate equal to (i) the
Base Rate as in effect from time to time minus (ii) 1.30%, or at such
other rate or rates as Borrower and Swingline Lender may agree from time
to time in writing.
(k) The Credit Agreement is amended by deleting the second sentence of
Section 2.15.(e) thereof in its entirety and substituting in its place the
following:
Notwithstanding the foregoing, Borrower shall repay the entire
outstanding principal amount of, and all accrued but unpaid interest on,
the Swingline Loans on the Swingline Termination Date (or such earlier
date as Swingline Lender and Borrower may agree in writing).
(l) The Credit Agreement is amended by deleting subsections (a) through
(c) of Section 3.1. thereof in their entirety and substituting in their place
the following:
(a) During the period from the Effective Date to but excluding
the Revolving Credit Termination Date, Borrower agrees to pay Agent for
the account of Lenders an unused facility fee equal to the portion of
the daily amount by which the aggregate amount of the Commitments
exceeds the aggregate outstanding principal balance of Revolving Loans
set forth in the table below multiplied by the corresponding per annum
rate applicable to that portion:
Portion of Amount by Which
Commitments Exceeds Revolving Loans Unused Fee
------------------------------------------ ----------
$0 to and including an amount equal to 0.125%
50% of the aggregate amount of the
Commitments
Greater than an amount equal to 50% of 0.20%
the aggregate amount of the Commitments
Such fee shall be payable quarterly in arrears on the first day of each
January, April, July and October during the term of this Agreement and
on the Revolving Credit Termination Date. Borrower acknowledges that the
commitment fees payable hereunder are bona fide commitment fees and are
intended as reasonable compensation to Lenders for committing to make
funds available to Borrower as described herein and for no other
purposes.
(b) If, pursuant to Section 2.10., Lenders grant an extension of
the Revolving Credit Termination Date, Borrower agrees to pay to Agent
for the account of each Lender consenting to such extension an extension
fee equal to two-tenths of one percent (0.20%) of such Lender's
Commitment at such time. Such fee shall be payable on the date on which
Lenders grant such extension.
(c) If, pursuant to Section 2.11., the outstanding balance of
Revolving Loans is converted into Term Loans, Borrower agrees to pay to
Agent for the account of each Lender a conversion fee equal to
one-quarter of one percent (0.25%) per annum of the principal balance of
the Term Loans outstanding on each date such fee is payable. Such fee
shall be payable on the first anniversary date of such conversion and
shall be paid within 5 Business Days of such anniversary date.
(m) The Credit Agreement is amended by deleting Section 7.7.(a) thereof
in its entirety and substituting in its place the following:
(a) Minimum Shareholders' Equity. Borrower shall not at any time
permit the Shareholders' Equity of Borrower and its Consolidated
Subsidiaries to be less than (i) $1,806,145,000 plus (ii) 75% of the
amount by which the Shareholders' Equity of Borrower and its
Consolidated Subsidiaries has been increased by the issuance after
December 31, 1998 of capital stock.
(n) The Credit Agreement is amended by deleting Section 7.7.(e) thereof
in its entirety and substituting in its place the following:
(e) Ratio of Unsecured Liabilities to Unencumbered Pool Value.
Borrower shall not permit the ratio of (i) the Unencumbered Pool Value
to (ii) the Unsecured Liabilities of Borrower and its Consolidated
Subsidiaries, to be less than 2.00 to 1.00 at any time.
(o) The Credit Agreement is amended by deleting Section 7.10. thereof in
its entirety and substituting in its place the following:
SECTION 7.10. Consolidations, Mergers and Sales of Assets.
Neither Borrower nor any of its Subsidiaries (other than any
Public Subsidiary) may (a) consolidate or merge with or into any other
Person, (b) sell, lease or otherwise transfer, directly or indirectly,
and whether by one or a series of related transactions, a substantial
portion of any of its assets to any other Person, or (c) purchase or
otherwise acquire, directly or indirectly, by one or a series of related
transactions, all or substantially all of the assets of, or outstanding
capital stock of or other equity interest in, another Person, except
that (x) a Subsidiary (other than a Guarantor) may merge or consolidate
with another Person or sell, lease or otherwise transfer a substantial
portion of its assets to another Person, and (y) Borrower or a
Subsidiary may purchase or otherwise acquire, all or substantially all
of the assets of, or outstanding capital stock of or other equity
interests in, another Person, so long as (i) Borrower shall have given
Agent at least 10 days prior notice thereof (except in the case of a
acquisition of capital stock of or other equity interest in, existing
Affiliates), (ii) after giving effect thereto, no Default or Event of
Default shall have occurred and be continuing, and Borrower shall have
delivered to Agent a certificate of an Authorized Representative of
Borrower setting forth in reasonable detail the calculations required to
establish whether Borrower will be in compliance with the requirements
of Sections 7.7. and 7.14. after giving pro forma effect thereto and
(iii) in the case of a consolidation or merger, the Person surviving
such consolidation or merger will be a Subsidiary after giving effect
thereto.
(p) The Credit Agreement is amended by deleting Section 7.11. thereof in
its entirety and substituting in its place the following:
SECTION 7.11. Use of Proceeds.
Borrower will use the proceeds of all subsequent Loans made under
this Agreement only (a) to finance (i) the purchase by Borrower
(directly, or indirectly through wholly-owned Subsidiaries) of
Securities issued by the Principal Companies and by other Persons
created by Borrower or specified by Borrower consistent with the
business objectives of Borrower and (ii) loans by Borrower permitted
under Section 7.15., and (b) for general corporate purposes, in each
case to the extent otherwise permitted hereunder, and for no other
purposes. Borrower will not use any proceeds of the Loans for the
purpose of purchasing or carrying any "margin stock" within the meaning
of Regulations T, U and X if such use would result in a violation by any
party hereto of any of Regulations T, U and X. In addition, Borrower may
use proceeds of Revolving Loans to acquire, directly or indirectly,
shares of any of its capital stock but only to the extent Borrower has
previously repaid Revolving Loans with cash proceeds received by
Borrower since January 1, 1999 upon the sale, transfer or other
disposition of Securities owned by Borrower and has not subsequently
reborrowed such proceeds as contemplated by this sentence. In connection
with (x) any borrowing of Revolving Loans to acquire shares of any of
its capital stock and (y) any repayment by Borrower of any such
Revolving Loans with proceeds received by Borrower upon any such
disposition of Securities, Borrower shall advise Agent in writing
thereof. Further, Borrower shall keep sufficiently detailed records of
all such borrowings and repayments and shall provide copies thereof to
Agent promptly upon request.
(q) The Credit Agreement is amended by deleting subsections (a) and (b)
of Section 7.19. thereof in their entirety and substituting in their place the
following:
(a) Indebtedness and Accounts Payable. Borrower will not permit
Guarantors to incur, assume or suffer to exist any of the following
(determined on a collective basis): (i) accounts payable
(excludingobligations to purchase Securities pursuant to subscription or
stock purchase agreements, or otherwise make capital contributions, in
or with respect to Strategic Investees or Capital Management Entities)
in excess of $10,000,000 in the aggregate at any time outstanding and
(ii) any Indebtedness other than:
(w) Indebtedness owing to Borrower;
(x) Indebtedness under the Guaranty and, subject to
compliance with Section 7.18., under Guarantees of senior
unsecured long term Indebtedness of Borrower so long as such
Indebtedness so Guaranteed is of a type described in clause (a)
or (b) of the definition of Indebtedness; and
(y) Indebtedness represented by declared but unpaid
dividends.
(b) Asset Transfers. Borrower will not permit any Guarantor to
sell, transfer or otherwise convey any of its assets other than:
(x) sales and transfers of Securities of Principal
Companies and other Unencumbered Pool Securities to the extent
permitted under Section 7.8.; and
(y) transfers of assets to Borrower and any other
Guarantor so long as no Default or Event of Default shall have
occurred and be continuing or would result from such transfer.
(r) The Credit Agreement is amended by adding to the end of Article VII
thereof the following new Section 7.20.:
SECTION 7.20. Investment Limitation.
The Borrower shall not permit aggregate value of all Securities
of Strategic Investees and Securities held by the Capital Management
Entities in real estate companies, the value of which is determined in
accordance with the method referred to in clause (d)(iii) of the
definition of Market Value, to exceed 15% of the value of all Securities
held by the Borrower and its Subsidiaries. For purposes of this Section,
the value of Securities held by the Borrower and the Capital Management
Entities referred to in this Section shall be determined in accordance
with the valuations methods referred to in the definition of Market
Value.
(s) The Credit Agreement is amended by changing the Documentation Agent
to NationsBank, N.A. and by appointing Chase Bank of Texas, National Association
as Syndication Agent. In addition, the Credit Agreement is amended by deleting
Section 9.9. thereof in its entirety and substituting in its place the
following:
SECTION 9.9. Documentation Agent and Syndication Agent.
Neither the Documentation Agent nor the Syndication Agent in such
respective capacity, assumes any responsibility or obligation hereunder,
including, without limitation, for servicing, enforcement or collection
of any of the Loans, nor any duties as an agent hereunder for Lenders.
The titles of "Documentation Agent" and "Syndication Agent" are solely
honorific and imply no fiduciary responsibility on the part of the
Documentation Agent or the Syndication Agent, in its respective capacity
as such, to Agent, Borrower or any Lender and the use of such titles
does not impose on the Documentation Agent or the Syndication Agent any
duties or obligations greater than those of any other Lender or entitle
the Documentation Agent or the Syndication Agent to any rights other
than those to which any other Lender is entitled.
(t) The Credit Agreement is amended by replacing Schedules 6.2. and 6.6.
attached thereto with Schedules 6.2. and 6.6. attached to this Amendment.
Section 2. Effectiveness of Amendments and Waivers. The effectiveness of
Section 1 is subject to receipt by the Agent of eachof the following in form and
substance satisfactory to the Agent:
(a) counterparts of this Amendment executed by each of the parties
hereto;
(b) Notes executed by Borrower, payable to the order of each Lender and
in the original principal amount of such Lender's Commitment as set forth on
Schedule 1 attached hereto (the "New Notes");
(c) a copy of the resolutions of the respective Boards of Directors of
Borrower and each Guarantor authorizing the execution and delivery of this
Amendment and the New Notes (in the case of Borrower), and the increase in the
Revolving Commitment effected hereby, certified by the Secretary or an Assistant
Secretary of Borrower;
(d) an opinion of counsel to Borrower and each Guarantor, addressed to
Agent and Lenders, regarding the authority of Borrower and each Guarantor to
execute, deliver and perform this Amendment, and in the case of Borrower, the
Credit Agreement as amended hereby, and the New Notes, and such other matters as
Agent may request;
(e) a certificate of good standing or certificate of similar meaning
with respect to Borrower and each Guarantor issued as of a recent date by the
Secretary of State of the State (or corresponding governmental authority) of
formation of Borrower and each such Guarantor and certificates of qualification
to transact business or other comparable certificates issued by each Secretary
of State (and any state department of taxation, as applicable) of each state in
which Borrower or such Guarantor is required to be so qualified;
(f) payment of all accrued and unpaid fees owing under the Credit
Agreement; and
(g) such other documents and instruments as the Agent may reasonably
request.
Section 3. Acknowledgment of Lenders' Commitments; Adjustment of
Outstandings. The parties hereto agree that after giving effect to the
transactions contemplated by this Amendment, the amount of each Lender's
respective Commitment is as set forth on Schedule 1 attached hereto. The
Borrower and the Lenders agree that as of the date on which all of the
conditions precedent contained in Section 2 are satisfied (the "Amendment
Date"), all Revolving Loans outstanding under the Credit Agreement (after giving
effect to any principal repayments being made by the Borrower on the Amendment
Date) shall be allocated among Lenders in accordance with their respective Pro
Rata Shares (as set forth on Schedule 1 hereto), and each Lender agrees to make
such payments to the other Lenders and any Person who ceased to be a "Lender"
under the Credit Agreement upon the Amendment Date in such amounts as are
necessary to effect such allocation. All such payments shall be made to Agent
for the account of the Person to be paid and shall be made on a net basis.
Section 4. Representations of the Borrower. The Borrower
represents and warrants to the Agent and the Lenders that:
(a) Authorization. The Borrower has the right and power, and has taken
all necessary action to authorize it, to execute and deliver this Amendment and
to perform its obligations hereunder and under the Credit Agreement, as amended
by this Amendment, in accordance with their respective terms. This Amendment has
been duly executed and delivered by a duly authorized officer of the Borrower
and each of this Amendment and the Credit Agreement, as amended by this
Amendment, is a legal, valid and binding obligation of the Borrower enforceable
against the Borrower in accordance with its respective terms, except as the same
may be limited by bankruptcy, insolvency, and other similar laws affecting the
rights of creditors generally and the availability of equitable remedies for the
enforcement of certain obligations contained herein or therein may be limited by
equitable principles generally.
(b) Compliance with Laws, etc. The execution and delivery by the
Borrower of this Amendment and the performance by the Borrower of this Amendment
and the Credit Agreement, as amended by this Amendment, in accordance with their
respective terms, do not and will not, by the passage of time, the giving of
notice or otherwise: (i) require any Government Approval or violate any
Applicable Law relating to the Borrower the failure to possess or to comply with
which would have a Materially Adverse Effect; (ii) conflict with, result in a
breach of or constitute a default under the Organizational Documents of the
Borrower or any indenture, agreement or other instrument to which the Borrower
is a party or by which it or any of its properties may be bound and the
violation of which would have a Materially Adverse Effect; or (iii) result in or
require the creation or imposition of any Lien upon or with respect to any
property now owned or hereafter acquired by the Borrower other than Permitted
Liens.
(c) No Default. No Default or Event of Default has occurred and is
continuing as of the date hereof nor will exist immediately after giving effect
to this Amendment.
Section 5. Reaffirmation of Representations by Borrower. The Borrower
hereby repeats and reaffirms all representations and warranties made by the
Borrower to the Agent and the Lenders in the Credit Agreement and the other Loan
Documents to which it is a party on and as of the date hereof (and after giving
effect to this Amendment) with the same force and effect as if such
representations and warranties were set forth in this Amendment in full.
Section 6. Reaffirmation of Guaranty by Guarantors. Each Guarantor
hereby reaffirms its continuing obligations to the Agent and the Lenders under
the Guaranty, and agrees that the transactions contemplated by this Amendment
shall not in any way affect the validity and enforceability of the Guaranty, or
reduce, impair or discharge the obligations of such Guarantor thereunder.
Section 7. References to the Credit Agreement. Each reference to the
Credit Agreement in any of the Loan Documents (including the Credit Agreement)
shall be deemed to be a reference to the Credit Agreement, as amended by this
Amendment.
Section 8. Benefits. This Amendment shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns.
Section 9. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA.
Section 10. Effect. Except as expressly herein amended, the terms and
conditions of the Credit Agreement and the other Loan Documents shall remain in
full force and effect.
Section 11. Effective Date. This Amendment shall not be effective
until its execution and delivery by all of the parties hereto whereupon its
shall be deemed effective as of the date first written above.
Section 12. Counterparts. This Amendment may be executed in any number
of counterparts, each of which shall be deemed to be an original and shall
be binding upon all parties, their successors and assigns.
Section 13. Definitions. All capitalized terms not otherwise defined
herein are used herein with the respective definitions given them in the Credit
Agreement.
[Signatures Begin on the Following Page]
IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment
to Credit Agreement to be executed as of the date first above written.
BORROWER:
SECURITY CAPITAL GROUP INCORPORATED
By:_______________________________________
Name: _______________________________
Title: ______________________________
GUARANTORS:
SC REALTY INCORPORATED
By:_______________________________________
Name: _______________________________
Title: ______________________________
SC REALTY SHARES LIMITED
By:_______________________________________
Name: _______________________________
Title: ______________________________
[Signatures Continued on Following Page]
[Signature Page to Second Amendment to Credit Agreement dated as of April 13,
1999 with Security Capital Group Incorporated]
AGENT AND LENDERS:
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION,
individually and as the Agent
By:_______________________________________
Name:_______________________________
Title:_______________________________
NATIONSBANK, N.A., individually and as
Documentation Agent
By:_______________________________________
Name:_______________________________
Title:_______________________________
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION, individually and as
Syndication Agent
By:_______________________________________
Name:_______________________________
Title:_______________________________
CREDIT LYONNAIS NEW YORK BRANCH
By:_______________________________________
Name:_______________________________
Title:_______________________________
[Signatures Continued on Following Page]
[Signature Page to Second Amendment to Credit Agreement dated as of April 13,
1999 with Security Capital Group Incorporated]
BANK OF MONTREAL, CHICAGO BRANCH
By:_______________________________________
Name:_______________________________
Title:_______________________________
THE FIRST NATIONAL BANK OF CHICAGO
By:_______________________________________
Name:_______________________________
Title:_______________________________
GUARANTY FEDERAL BANK, F.S.B.
By:_______________________________________
Name:_______________________________
Title:_______________________________
DRESDNER BANK, AG, NEW YORK BRANCH AND
GRAND CAYMAN BRANCH
By:_______________________________________
Name:_______________________________
Title:_______________________________
By:_______________________________________
Name:_______________________________
Title:_______________________________
[Signatures Continued on Following Page]
[Signature Page to Second Amendment to Credit Agreement dated as of April 13,
1999 with Security Capital Group Incorporated]
FIRST UNION NATIONAL BANK
By:_______________________________________
Name:_______________________________
Title:_______________________________
TRANSAMERICA LIFE INSURANCE AND
ANNUITY COMPANY
By:_______________________________________
Name:_______________________________
Title:_______________________________
BANKBOSTON, N.A.
By:_______________________________________
Name:_______________________________
Title:_______________________________
KBC BANK N.V.
By:_______________________________________
Name:_______________________________
Title:_______________________________
By:_______________________________________
Name:_______________________________
Title:_______________________________
[Signatures Continued on Following Page]
[Signature Page to Second Amendment to Credit Agreement dated as of April 13,
1999 with Security Capital Group Incorporated]
AMSOUTH BANK
By:_______________________________________
Name:_______________________________
Title:_______________________________
SCHEDULE 1
Commitments and Pro Rata Shares
Lender Commitment Pro Rata Share
------------------------------------------ ------------------ --------------
▇▇▇▇▇ Fargo Bank, National Association $75,000,000.00 15.▇▇▇▇▇▇▇
Chase Bank of Texas, National Association $75,000,000.00 15.▇▇▇▇▇▇▇
NationsBank, N.A. $75,000,000.00 15.9574469
Transamerica Life Insurance and Annuity $35,000,000.00 7.4468086
Co.
First Union National Bank $25,000,000.00 5.▇▇▇▇▇▇▇
Dresdner Bank AG, New York Branch and $25,000,000.00 5.3191489
Grand Cayman Branch
Credit Lyonnais New York Branch $25,000,000.00 5.3191489
The First National Bank of Chicago $25,000,000.00 5.▇▇▇▇▇▇▇
Bank of Montreal, Chicago Branch $25,000,000.00 5.▇▇▇▇▇▇▇
AmSouth Bank $25,000,000.00 5.▇▇▇▇▇▇▇
KBC Bank N.V. $20,000,000.00 4.2553191
Guaranty Federal Bank, F.S.B. $20,000,000.00 4.▇▇▇▇▇▇▇
BankBoston, N.A. $20,000,000.00 4.2553191
TOTAL $470,000,000.00 100.0000000
