LINE OF CREDIT AGREEMENT
THIS LINE OF CREDIT AGREEMENT (the "Agreement") is made and entered into this
26th day of March, 1996 by and between SANWA BANK CALIFORNIA (the "Bank") and
PUBLIC STORAGE PROPERTIES XIV, INC. (the "Borrower").
SECTION 1
AGREEMENT TO LEND
1.01 COMMITMENT TO LEND. Subject to the terms and conditions of this
Agreement and so long as no Event of Default occurs, the Bank agrees to extend
to the Borrower the credit accommodations that follow.
1.02 LINE OF CREDIT. The Bank agrees to make loans and advances
("Advances") to the Borrower, upon the Borrower's request therefor made prior to
the Expiration Date, up to a total principal amount from time to time
outstanding of not more than $2,500,000 (the "Line of Credit"); provided that
any sums repaid under the Line of Credit may be reborrowed.
A. PURPOSE. Advances made under the Line of Credit shall be used
for general working capital purposes and for stock repurchases.
B. LINE ACCOUNT. The Bank shall maintain on its books a record of
account in which the Bank shall make entries for each Advance and such other
debits and credits as shall be appropriate in connection with the Line of Credit
the ("Line Account"). The Bank shall provide the Borrower with a monthly
statement of the Borrower's Line Account, which statement shall be considered to
be correct and conclusively binding on the Borrower unless the Borrower notifies
the Bank to the contrary within 30 days after the Borrower's receipt of any such
statement which it deems to be incorrect.
C. INTEREST. Interest shall accrue from the date of each Advance
under the Line of Credit at one of the following rates, as quoted by the Bank
and as elected by the Borrower pursuant to paragraph 1.02 C 1 or paragraph 1.02
C 2 below:
1. VARIABLE RATE ADVANCES: A variable rate per annum
equivalent to an index for a variable interest rate which is quoted, published
or announced from time to time by the Bank as its reference rate (the "Reference
Rate") and as to which loans may be made by the Bank at, below or above such
reference rate plus .25% (the "Variable Rate"). Interest shall be adjusted
concurrently with any change in the Reference Rate. An Advance based upon the
Variable Rate is hereinafter referred to as a "Variable Rate Advance".
2. LIBOR ADVANCES: A fixed rate quoted by the Bank for 1, 2,
3, or 6 months or for such other period of time that the Bank may quote and
offer (provided that any such period of time does not extend beyond the
Expiration Date) [the "LIBOR Interest Period"] for Advances in the minimum
amount of $100,000 and in $10,000 increments thereafter. Such interest rate
shall be a percentage approximately equivalent to 2.25% in excess of the Bank's
LIBOR Rate which is that rate determined by the Bank's Treasury Desk as being
the arithmetic mean (rounded upwards, if necessary, to the nearest whole
multiple of one-sixteenth of one percent (1//16%)) of the U.S. dollar London
Interbank Offered Rates for such period appearing on page 3750 (or such other
page as may replace page 3750 of the Telerate screen at or about 11:00 a.m.
(London time) on the second Business Day prior to the first days of such period
(adjusted for any and all assessments, surcharges and reserve requirements) [the
"LIBOR Rate"]. An Advance based upon the LIBOR Rate is hereinafter referred to
as the "LIBOR Advance".
Interest on any Advance shall be computed on the basis of 360
days per year, but charged on the actual number of days elapsed.
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Interest on Variable Rate Advances and LIBOR Advances shall be
paid in monthly installments commencing on the first day of the month following
the date of the first such Advance and continuing on the first day of each month
thereafter.
If interest is not paid as and when it is due, it shall be
added to the principal, become and be treated as a part thereof, and shall
thereafter bear like interest.
D. NOTICE OF ELECTION TO ADJUST INTEREST RATE. The Borrower may
elect:
1. That interest on a Variable Rate Advance shall be adjusted
to accrue at the LIBOR Rate; provided, however, that such notice shall be
received by the Bank no later than two business days prior to the day (which
shall be a business day) on which the Borrower requests that interest be
adjusted to accrue at the LIBOR Rate.
2. That interest on a LIBOR Advance shall continue to accrue
at a newly quoted LIBOR Rate or shall be adjusted to commence to accrue at the
Variable Rate; provided, however, that such notice shall be received by the Bank
no later than two business days prior to the last day of the LIBOR Interest
Period pertaining to such LIBOR Advance. If the Bank shall not have received
notice (as prescribed herein) of the Borrower's election that interest on any
LIBOR Advance shall continue to accrue at the newly quoted LIBOR Rate, the
Borrower shall be deemed to have elected that interest thereon shall be adjusted
to accrue at the Variable Rate upon the expiration of the LIBOR Interest Period
pertaining to such Advance.
E. PREPAYMENT. The Borrower may prepay any Advance in whole or in
part, at any time and without penalty, provided, however, that: (i) any partial
prepayment shall first be applied, at the Bank's option, to accrued and unpaid
interest and next to the outstanding principal balance; and (ii) during any
period of time in which interest is accruing on any Advance on the basis of the
LIBOR Rate, no prepayment shall be made except on a day which is the last day of
the LIBOR Interest Period pertaining thereto. If the whole or any part of any
LIBOR Advance is prepaid by reason of acceleration or otherwise, the Borrower
shall, upon the Bank's request, promptly pay to and indemnify the Bank for all
costs and any loss (including interest) actually incurred by the Bank and any
loss (including loss of profit resulting from the re-employment of funds)
sustained by the Bank as a consequence of such prepayment.
F. INDEMNIFICATION FOR LIBOR RATE COSTS. During any period of
time in which interest on any Advance is accruing on the basis of LIBOR Rate,
the Borrower shall, upon the Bank's request, promptly pay to and reimburse the
Bank for all costs incurred and payments made by the Bank by reason of any
future assessment, reserve, deposit or similar requirement or any surcharge, tax
or fee imposed upon the Bank or as a result of the Bank's compliance with any
directive or requirement of any regulatory authority pertaining or relating to
funds used by the Bank in quoting and determining the LIBOR Rate.
G. CONVERSION FROM LIBOR RATE TO VARIABLE RATE. In the event that
the Bank shall at any time determine that the accrual of interest on the basis
of the LIBOR Rate (i) is infeasible because the Bank is unable to determine the
LIBOR Rate due to the unavailability of U.S. dollar deposits, contracts or
certificates of deposit in an amount approximately equal to the amount of the
relevant Advance and for a period of time approximately equal to relevant LIBOR
Interest Period or (ii) is or has become unlawful or infeasible by reason of the
Bank's compliance with any new law, rule, regulation, guideline or order, or any
new interpretation of any present law, rule, regulation, guideline or order,
then the Bank shall give telephonic notice thereof (confirming in writing) to
the Borrower, in which event the LIBOR Advance, shall be deemed to be a Variable
Rate Advance and interest shall thereupon immediately accrue at the Variable
Rate.
H. PRINCIPAL. Unless sooner due in accordance with the terms of
this Agreement, on the Expiration Date, the Borrower hereby promises and agrees
to pay to the Bank in full the aggregate unpaid principal amount of all Advances
then outstanding, together with all accrued and unpaid interest thereon.
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I. EXPIRATION OF LINE OF CREDIT. Unless earlier terminated in
accordance with the terms of this Agreement, the Bank's commitment to make
Advances to the Borrower hereunder shall automatically expire on December 31,
1998 (the "Expiration Date").
J. DISBURSEMENT OF PROCEEDS FROM ADVANCES. Any Advance made
hereunder shall be conclusively presumed to have been made to and for the
Borrower's benefit when the proceeds of such Advance are disbursed in accordance
with the Borrower's instructions or deposited into a checking account of the
Borrower maintained at the Bank.
1.03 TERM LOAN. The Bank agrees to lend to the Borrower on the
Expiration Date, upon the Borrower's request therefore, up to the maximum amount
of $2,500,000 (the "Term Loan").
A. PURPOSE. Proceeds from the Term Loan shall be used to
refinance the Line of Credit.
B. TERM LOAN ACCOUNT. The Bank shall maintain on its books a
record of account in which the Bank shall make entries setting forth all
payments made, the application of such payments to interest and principal,
accrued and unpaid interest (if any) and the outstanding principal balance under
the Term Loan (the "Term Loan Account"). The Bank shall provide the Borrower
with a monthly statement of the Borrower's Term Loan Account, which statement
shall be considered to be correct and conclusively binding on the Borrower
unless the Borrower notifies the Bank to the contrary within 30 days after the
Borrower's receipt of any such statement which deems to be incorrect.
C. INTEREST. Interest shall accrue at one of the following rates
as elected by Borrower:
a. VARIABLE RATE BALANCES. The outstanding principal balance
of the Term Loan ("Term Balance") shall bear interest at a rate per annum equal
to Bank's Reference Rate, as it may change from time to time, plus .25%
("Variable Rate Balances"). The rate of interest shall be adjusted concurrently
with any change in Bank's Reference Rate.
b. FIXED RATE BALANCES. In addition to Variable Rate Balances,
the Bank hereby agrees to make the Term Balance or a portion thereof, accrue
interest at a fixed rate quoted by the Bank for 1, 2, 3, or 6 months or for such
other period of time that the Bank may quote and offer (provided that any such
period of time does not extend maturity date hereof) [the "Interest Period"] for
Term Balances in the minimum amount of $100,000 and in $10,000 increments
thereafter. Such interest rate shall be a percentage approximately equivalent to
2.25% in excess of the Bank's LIBOR Rate which is that rate determined by the
Bank's Treasury Desk as being the arithmetic mean (rounded upwards, if
necessary, to the nearest whole multiple of one-sixteenth of one percent (1/16%)
of the U.S. dollar London Interbank Offered Rates for such period appearing on
page 3750 (or such other page as may replace page 3750 of the Telerate screen at
or about 11:00 a.m. (London time) on the second Business Day prior to the first
days of such period (adjusted for any and all assessments, surcharges and
reserve requirements) [the "Fixed Rate"]. Term Balances based upon the Fixed
Rate are hereinafter referred to as "Fixed Rate Balances".
Borrower hereby promises and agrees to pay interest on any Fixed
Rate Balances and Variable Rate Balances monthly in arrears on the 1st calendar
day of each month.
Interest shall be calculated on a year of 360 days for actual
days elapsed.
c. NOTICE OF ELECTION TO ADJUST INTEREST RATE. Upon telephonic
notice which shall be received by the Bank at or before 2:00 p.m. (California
time) on a business day, the Borrower may elect:
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(1) That interest on a Variable Rate Balance shall be adjusted
to accrued at the Fixed Rate; provided, however, that such notice shall be
received by the Bank no later than two business days prior to the day (which
shall be a business day) on which Borrower requests that interest be adjusted to
accrue at the Fixed Rate.
(2) That interest on a Fixed Rate Balance shall continue to
accrue at a newly quoted Fixed Rate or shall be adjusted to commence to accrue
at the Variable Rate; provided, however that such notice shall be received by
the Bank no later than two business days prior to the last day of the Interest
Period pertaining to such Fixed Rate Balance. If the Bank shall not have
received notice as prescribed herein of Borrower's election that interest on any
Fixed Rate Balance shall continue to accrue at the Fixed Rate, Borrower shall be
deemed to have elected that interest thereon shall be adjusted to accrue at the
Variable Rate upon the expiration of the Interest Period pertaining to such Term
Balance.
d. PROHIBITION AGAINST PREPAYMENT OF FIXED RATE BALANCES.
Notwithstanding anything to the contrary in the Agreement, no prepayment shall
be made on any Fixed Rate Balance except on a day which is the last day of the
Interest Period pertaining thereto. If the whole or any part of any Fixed Rate
Balance is prepaid by reason of acceleration or otherwise, the Borrower shall
upon the Bank's request, promptly pay to and indemnify the Bank for all costs
and any loss (including interest) actually incurred by the Bank and any loss
(including loss of profit resulting from the re-employment of funds) sustained
by the Bank as a consequence of such prepayment. Any prepayment shall first be
applied to pay accrued interest, then be applied to reduce the principal balance
payable on the date set forth in numbered subparagraph D hereinbelow, and the
remaining portion (if any) of such prepayment shall then be applied to pay the
principal installment(s) of latest maturity under the Note.
e. INDEMNIFICATION FOR FIXED RATE COSTS. During any period of
time in which interest on any Term Balance is accruing on the Fixed Rate, the
Borrower shall, upon the Bank's request, promptly pay to and reimburse the Bank
for all costs incurred and payments made by the Bank by reason of any future
assessment, reserve deposit or similar requirements or any surcharge, tax or fee
imposed upon the Bank or as a result of the Bank's compliance with any directive
or requirement of any regulatory authority pertaining or relating to funds used
by the Bank in quoting and determining the Fixed Rate.
f. CONVERSION FROM FIXED RATE TO VARIABLE RATE. In the event that
the Bank shall at any time determine that the accrual of interest on the basis
of the Fixed Rate (i) is infeasible because the Bank is unable to determine the
Fixed Rate due to the unavailability of U.S. dollar deposits, contracts or
certificates of deposit in an amount approximately equal to the amount of the
relevant Balance and for a period of time approximately equal to the relevant
Interest Period; or (ii) is or has become unlawful or infeasible by reason of
the Bank's compliance with any new law, rule, regulation, guideline or order, or
any new interpretation of any present law, rule, regulation guideline or order,
then the Bank shall give telephonic notice thereof (confirmed in writing) to the
Borrower, in which event any Fixed Rate Balance shall be deemed to be a Variable
Rate Balance and interest shall thereupon immediately accrue at the Variable
Rate.
D. Principal. The Borrower hereby promises and agrees to pay
principal in 11 equal monthly installments in an amount equal to 1/48th of the
outstanding principal amount of the Line of Credit on December 31, 1998,
commencing on January 31, 1999. On December 31, 1999, the Borrower hereby
promises and agrees to pay the Bank the entire unpaid principal balance,
together with accrued and unpaid interest.
1.04 Late Payment: If any payment of principal or interest, or any
portion thereof, under this Agreement is not paid within (10) ten calendar days
after it is due, a late payment charge equal to five percent (5%) of such past
due payment may be assessed and shall be immediately payable.
1.05 Account Debit. Borrower hereby authorizes Bank to charge, from
time to time, against any or all of any Borrower's deposit accounts with Bank
any amount due under this Agreement.
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Each payment received by the Bank shall, at the Bank's option, be
applied to pay interest then due and unpaid and the remainder thereof (if any)
shall be applied to pay principal.
SECTION II
CONDITIONS PRECEDENT
2.01 CONDITIONS PRECEDENT TO FIRST ADVANCE. Prior to the first Advance
hereunder the Borrower shall deliver or cause to be delivered to the Bank, in
form and substance satisfactory to the Bank:
A. AUTHORITY TO BORROW. Evidence relating to the duly given
approval and authorization of the execution, delivery and performance of this
Agreement, all other documents, instruments and agreements required under this
Agreement and all other actions to be taken by the Borrower hereunder or
thereunder.
B. LOAN DOCUMENTS. The documents described herein, as applicable,
and all other documents, instruments and agreements required or necessary to
consummate the transactions contemplated under this Agreement (collectively the
"Loan Documents"), all fully executed.
C. LOAN FEES. A loan fee of $6,250.
D. MISCELLANEOUS DOCUMENTS. Such other documents and opinions as
the Bank may require with respect to the transactions described in this
Agreement.
2.02 CONDITIONS PRECEDENT TO ALL ADVANCES. The obligation of the Bank
to make each Advance (including the first Advance) is subject to the further
conditions precedent that, as of the date of each Advance and after the making
of such Advance:
A. REPRESENTATIONS AND WARRANTIES. The representations and
warranties set forth in Section III hereof and in any other document, instrument
agreement or certificate delivered to the Bank hereunder are true and correct.
B. EVENT OF DEFAULT. No event has occurred and is continuing
which constitutes, or, with the lapse of time or giving of notice or both, would
constitute an Event of Default as defined in Section V hereof.
For the purposes hereof, the Borrower's acceptance of the proceeds of
any Advance shall be deemed to constitute the Borrower's representation and
warranty that the statements set forth in section 2.02 A and 2.02 B above are
true and correct.
SECTION III
REPRESENTATIONS AND WARRANTIES
The Borrower hereby makes the following representations and warranties
to the Bank, which representations and warranties are continuing:
3.01 STATUS. The Borrower is a corporation, duly organized and validly
existing under the laws of the State of California and is properly licensed,
qualified to do business and in good standing in, and, where necessary to
maintain the Borrower's rights and privileges, has complied with the fictitious
name statute of every jurisdiction in which the Borrower is doing business.
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3.02 AUTHORITY. The execution, delivery and performance by the
Borrower of this Agreement and the Loan Documents have been duly authorized and
do not and will not: (i) violate any provision of any law, rule regulation,
writ, judgment or injunction presently in effect affecting the Borrower; (ii)
result in a breach of or constitute a default under any material agreement to
which the Borrower is a party or by which it or its properties may be bound of
affected; (iii) require any consent or approval of its stockholders or violate
any provision of its articles of incorporation or by-laws.
3.03 LEGAL EFFECT. This Agreement constitutes, and any document,
instrument or agreement required hereunder when delivered will constitute,
legal, valid and binding obligations of the Borrower enforceable against the
Borrower in accordance with their respective terms.
3.04 FICTITIOUS TRADE STYLES. There are no fictitious trade styles
used by the Borrower in connection with its business operations, other than the
following service marks: "Public Storage" and "PS: Public Storage Rental
Spaces". The Borrower shall notify the Bank not less than 30 days prior to
effecting any change in the matters described herein or prior to using any other
fictitious trade style at any future date, indicating the trade style and
state(s) of its use.
3.05 FINANCIAL STATEMENTS. All financial statements, information and
other data which may have been or which may hereafter be submitted by the
Borrower to the bank are true, accurate and correct and have been or will be
prepared in accordance with generally accepted accounting principles
consistently applied and accurately represent the Borrower's financial condition
or, as applicable, the other information disclosed therein. Since the most
recent submission of any such financial statement, information or other data to
the Bank, the Borrower represents and warrants that no material adverse change
in the Borrower's financial condition or operations has occurred which has not
been fully disclosed to the Bank in writing.
3.06 LITIGATION. Except as have been disclosed to the Bank in writing,
there are no actions, suits or proceedings pending or, to the knowledge of the
Borrower, threatened against or affecting the Borrower or the Borrower's
properties before any court or administrative agency which, if determined
adversely to the Borrower, would have a material adverse effect on the
Borrower's financial condition or operations.
3.07 TITLE TO ASSETS; PERMITTED LIENS. The Borrower has good and
marketable title to all of its assets and the same are not subject to any
security interest, encumbrance, lien or claim of any third person other than:
(i) liens and security interests securing indebtedness owed by the Borrower to
the Bank; (ii) liens for taxes, assessments or similar charges either not yet
due or being duly contested in good faith; (iii) liens of mechanics,
materialmen, warehousemen or other like liens arising in the ordinary course of
business and securing obligations which are not yet delinquent; (iv) liens and
security interests which, as of the date of this Agreement, have been disclosed
to and approved by the Bank in writing; (v) purchase money liens or purchase
money security interests upon or in any property acquired or held by the
Borrower in the ordinary course of business to secure indebtedness outstanding
on the date hereof or permitted to be incurred hereunder; and (vi) those liens
and security interests which in the aggregate constitute an immaterial and
insignificant monetary amount with respect to the net value of the Borrower's
assets (collectively "Permitted Liens").
3.08 ERISA. If the Borrower has a pension, profit sharing or
retirement plan subject the Employee Retirement Income Security Act of 1974, as
amended from time to time, including any rules and regulations promulgated
thereunder ("ERISA"), such plan has been and will continue to be funded in
accordance with its terms and otherwise complies with and continues to comply
with the requirements of ERISA.
3.09 TAXES. The Borrower has filed all tax returns required to be
filed and paid all taxes shown thereon to be due, including interest and
penalties, other than taxes which are currently payable without penalty or
interest or those which are being duly contested in good faith.
3.10 ENVIRONMENTAL COMPLIANCE. The Borrower has implemented and
complied in all material respects with all applicable federal, state and local
laws, ordinances, statutes and regulations with respect to hazardous or toxic
wastes, substances or related materials, industrial hygiene or environmental
conditions. There are not suits, proceedings, claims or disputes pending or, to
the knowledge of the Borrower, threatened against or affecting the Borrower or
its property claiming violations of any federal, state or local law, ordinance,
statute or regulation relating to hazardous or toxic wastes, substances or
related materials.
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3.11 MARGIN STOCK. The proceeds of any Advance under the Line of
Credit will not be used to purchase or carry margin stock as such term in
defined under Regulation U of the Board of Governors of the Federal Reserve
System.
SECTION IV
COVENANTS
The Borrower covenants and agrees that, during the term of this
Agreement, and so long thereafter as the Borrower is indebted to the Bank under
this Agreement, the Borrower shall, unless the Bank otherwise consents in
writing:
4.01 COMPLIANCE WITH APPLICABLE LAWS. Maintain and preserve all rights
and privileges now enjoyed; and conducts its business in accordance with all
applicable laws, rules and regulations.
4.02 MAINTENANCE OF INSURANCE. Maintain insurance in such amounts and
covering such risks as is usually carried by companies engaged in similar
businesses and owning similar properties in the same general areas in which the
Borrower operates and maintain such other insurance and coverages as may be
required by the Bank.
4.03 PAYMENT OF OBLIGATIONS AND TAXES. Make timely payment of all
assessments and taxes and all of its liabilities and obligations unless the same
are being contested in good faith.
4.04 INSPECTION RIGHTS. At any reasonable time and from time to time
permit the Bank or any representative thereof to examine and make copies of the
records and visit the properties of the Borrower and to discuss the business and
operations of the Borrower with any employee or representative thereof. If the
Borrower now or at any time hereafter maintains any records (including, but not
limited to, computer generated records and computer programs for the generation
of such records) in the possession of a third party, the Borrower hereby agrees
to notify such third party to permit the Bank free access to such records at all
reasonable time and to provide the Bank with copies of any records it may
request, all at the Borrower's expense, the amount of which shall be payable
immediately upon demand.
4.05 REPORTING REQUIREMENTS. Deliver or cause to be delivered to the
Bank in form and detail satisfactory to the Bank:
A. ANNUAL STATEMENTS. Not later than 90 days after the end of
each of the Borrower's fiscal years, a copy of the annual audited financial
report of the Borrower for such year, which report shall be prepared by a firm
of certified public accountants acceptable to Bank, and a copy of the Borrower's
Form 10-K filed with the Securities and Exchange Commission.
B. INTERIM STATEMENTS. Not later than 45 days after the end of
each fiscal quarter, the Borrower's financial statement as of the end of such
quarter and a copy of the Borrower's Form 10-Q filed with the Securities and
Exchange Commission.
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C. COMPLIANCE CERTIFICATE. Not later than 90 days after the end
of each fiscal year and 45 days after the end of each fiscal quarter, a
certificate signed by the chief financial officer or other financial officer of
the Borrower stating that the representations and warranties contained herein
and in any other document, instrument or certificate delivered to the Bank
hereunder are correct and that no event has occurred and is continuing which
constitutes, or, with the lapse of time or giving of notice or both, would
constitute an Event of Default hereunder, substantially in the form attached
hereto.
D. OTHER INFORMATION. Promptly upon the Bank's request, such
other information pertaining to the Borrower as the Bank may reasonably request.
4.06 ADDITIONAL INDEBTEDNESS. Not, after the date hereof, create,
incur or assume, directly or indirectly, any liability or indebtedness other
than (i) indebtedness owed or to be owed to the Bank or (ii) indebtedness to
trade creditors incurred in the ordinary course of the Borrower's business.
4.07 LIENS AND ENCUMBRANCES. Not create, assume or permit to exist any
security interest, encumbrance, mortgage, deed of trust or other lien including,
but not limited to, a lien of attachment, judgment or execution) affecting any
of the Borrower's properties, or execute or allow to be filed any financing
statement or continuation thereof affecting any such properties, except for
Permitted Liens and as otherwise provided in this Agreement.
4.08 CHANGE IN THE NATURE OF BUSINESS. Not make any material change in
its financial structure or in the nature of its business as existing or
conducted as of the date of this Agreement.
4.09 FINANCIAL CONDITION. Maintain at all times:
A. ADVANCES TO ASSETS. A ratio of the aggregate Advances
outstanding hereunder to total assets of not more than .15 to 1.
B. DEBT TO EQUITY. A debt to shareholders equity ratio of not
more than .20 to 1.
C. FIXED CHARGE COVERAGE RATIO. A ratio of the sum of net profit
plus depreciation and amortization expense plus non-cash charges plus interest
expense to sum of the current portion of long term debt plus interest expense,
plus dividends plus capital expenditures of not less than 1 to 1 at the end of
each fiscal quarter for the immediately preceding four fiscal quarters.
For purposes of the foregoing, the term "debt" shall mean all of the
Borrower's liabilities excluding indebtedness subordinated (by its terms or by
written agreement) to indebtedness owed by the Borrower to the Bank.
4.10 NOTICES. Give prompt written notice to the Bank of any and all
Events of Default and litigation, arbitration or administrative proceedings to
which the Borrower is a party and in which the claim or liability exceeds
$100,000.
4.11 PRESERVATION OF EXISTENCE; COMPLIANCE WITH APPLICABLE LAWS.
Maintain and preserve existence and all rights and privileges now enjoyed; not
liquidate or dissolve, merge or consolidate with or into, or acquire any other
business organization; and conduct its business in accordance with all
applicable laws, rules and regulations.
4.12 TRANSFER ASSETS. Not sell, contract for sale, transfer, convey,
assign, lease or sublet any of its assets except in the ordinary course of
business as presently conducted by the Borrower, and then, only for full, fair
and reasonable consideration.
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4.13 ENVIRONMENTAL COMPLIANCE. The Borrower shall:
A. Implement and comply in all material respects with all
applicable federal, state and local laws, ordinances, statutes and regulations
with respect to hazardous or toxic wastes, substances or related materials,
industrial hygiene or to environmental conditions.
B. Not own, use, generate, manufacture, store, handle, treat,
release or dispose of any hazardous or toxic wastes, substances or related
materials.
C. Give prompt written notice of any discovery of or suit,
proceeding, claim, dispute, threat, inquiry or filing respecting hazardous or
toxic wastes, substances or related materials.
D. At all times indemnify and hold harmless Bank from and against
any and all liability arising out of the use, generation, manufacture, storage,
handling, treatment, disposal or presence of hazardous or toxic wastes,
substances or related materials.
SECTION V
EVENTS OF DEFAULT
Any one or more of the following described events shall constitute an
event of default (an "Event of Default") under this Agreement:
5.01 NON-PAYMENT. The Borrower shall fail to pay any payment of
principal or interest or any other sum referred to in this Agreement within 10
days of when due.
5.02 PERFORMANCE UNDER THIS AND OTHER AGREEMENTS. The Borrower shall
fail in any material respect to perform or observe any term, covenant or
agreement contained in this Agreement or in any document, instrument or
agreement evidencing or relating to any indebtedness of the Borrower (whether
owed to the Bank or third persons), and any such failure (exclusive of the
payment of money to the Bank under this Agreement or under any other document,
instrument or agreement, which failure shall constitute and be an immediate
Event of Default if not paid when due or when demanded to be due) shall continue
for more than 30 days after written notice from the Bank to the Borrower of the
existence and character of such Event of Default.
5.03 REPRESENTATIONS AND WARRANTIES; FINANCIAL STATEMENTS. Any
representation or warranty made by the Borrower under or in connection with this
Agreement or any financial statement given by the Borrower or any Guarantor
shall prove to have been incorrect in any material respect when made or given
when deemed to have been made or given.
5.04 INSOLVENCY. The Borrower or any Guarantor shall: (i) become
insolvent or be unable to pay its debts as they mature; (ii) make an assignment
for the benefit of creditors or to an agent authorized to liquidate any
substantial amount of its properties or assets; (iii) file a voluntary petition
in bankruptcy or seeking reorganization or to effect a plan or other arrangement
with creditors; (iv) file an answer admitting the material allegations of an
involuntary petition relating to bankruptcy or reorganization or join in any
such petition; (v) become or be adjudicated a bankrupt; (vi) apply for or
consent to the appointment of, or consent that an order be made, appointing any
receiver, custodian or trustee for itself or any of its properties, assets or
businesses; or (vii) any receiver, custodian or trustee shall have been
appointed for all or a substantial part of its properties, assets or businesses
and shall not be discharged within 30 days after the date of such appointment.
5.05 EXECUTION. Any writ of execution or attachment or any judgment
lien shall be issued against any property of the Borrower and shall not be
discharged or bonded against or released within 30 days after the issuance or
attachment of such writ or lien.
5.06 SUSPENSION. The Borrower shall voluntarily suspend the
transaction of business or allow to be suspended, terminated, revoked or expired
any permit, license or approval of any governmental body necessary to conduct
the Borrower's business as now conducted.
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5.07 MANAGEMENT AGREEMENT. Any breach of or termination of that
certain management agreement by and between Borrower and Public Storage
Management, Inc.
SECTION VI
REMEDIES OF DEFAULT
Upon the occurrence of any Event of Default, the Bank may, at its sole
election, without demand any upon only such notice may be required by law:
6.01 ACCELERATION. Declare any or all of the Borrower's indebtedness
owing to the Bank, whether under this Agreement or under any other document,
instrument or agreement, immediately due and payable, whether or not otherwise
due and payable.
6.02 CEASE EXTENDING CREDIT. Cease making Advances or otherwise
extending credit to or for the account of the Borrower under this Agreement or
under any other agreement now existing or hereafter entered into between the
Borrower and the Bank.
6.03 TERMINATION. Terminate this Agreement as to any future obligation
of the Bank without affecting the Borrower's obligations to the Bank or the
Bank's rights and remedies under this Agreement or under any other document,
instrument or agreement.
6.04 NON-EXCLUSIVITY OF REMEDIES. Exercise one or more of the Bank's
rights set forth herein or seek such other rights or pursue other remedies as
may be provided by law, in equity or in any other agreement now existing or
hereafter entered into between the Borrower and the Bank, or otherwise.
SECTION VII
MISCELLANEOUS PROVISIONS
7.01 AMOUNTS PAYABLE ON DEMAND. If the Borrower fails to pay on demand
any amount so payable under this Agreement, the Bank may, at its option and
without any obligation to do so and without waiving any default occasioned by
the Borrower's failure to pay such amount, create an Advance in an amount equal
to the amount so payable, which Advance shall thereafter bear interest as
provided under the Line of Credit.
7.02 DEFAULT INTEREST RATE. If an Event of Default, or an event which
, with notice or passage of time could become an Event of Default, has occurred
or is continuing, the Borrower shall pay to the Bank interest on any
indebtedness or amount payable under this Agreement at a rate which is 3% in
excess of the rate or rates then in effect under this Agreement.
7.03 ACCOUNTING AND OTHER TERMS. All references to financial
statements, assets, liabilities and similar accounting terms not specifically
defined in this Agreement shall mean such financial statements prepared and such
terms determined in accordance with generally accepted accounting principles
consistently applied. Except where otherwise specified in this Agreement, all
financial data submitted or to be submitted to the Bank pursuant to this
Agreement shall be prepared in accordance with generally accepted accounting
principles consistently applied. Terms not otherwise defined in this Agreement
shall have the meanings attributed to such terms in the California Uniform
Commercial Code.
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7.04 RELIANCE. Each warranty, representation, covenant and agreement
contained in this Agreement shall be conclusively presumed to have been relied
upon by the Bank regardless of any investigation made or information possessed
by the Bank and shall be cumulative and in addition to any other warranties,
representations, covenants or agreements which the Borrower shall now or
hereafter give or cause to be given, to the Bank.
7.05 ATTORNEY'S FEES. Borrower shall pay to the Bank all costs and
expenses, including but not limited to reasonable attorneys fees, incurred by
Bank in connection with the administration, enforcement, or any refinancing or
restructuring in the nature of a "work-out", of this Agreement or any document,
instrument or agreement executed with respect to, evidencing or securing the
indebtedness hereunder.
7.06 NOTICES. All notices, payments, requests, information and demands
which either party hereto may desire, or may be required to give or make to the
other party shall be given or made to such party by hand delivery or through
deposit in the United States mail, postage prepaid, or by Western Union
telegram, addressed to the address set forth below such party's signature to
this Agreement or to such other address as may be specified from time to time in
writing by either party to the other.
7.07 WAIVER. Neither the failure nor delay by the Bank in exercising
any right hereunder or under any document, instrument or agreement mentioned
herein shall operate as a waiver thereof, nor shall any single or partial
exercise of any right hereunder or under any document, instrument or agreement
mentioned herein preclude other or further exercise thereof or the exercise of
any other right; nor shall any waiver of any right or default hereunder or under
any other document, instrument or agreement mentioned herein constitute a waiver
of any other right or default or constitute a waiver of any other default of the
same or any other term or provision.
7.08 CONFLICTING PROVISIONS. To the extent that any of the terms or
provisions contained in this Agreement are inconsistent with those contained in
any other document, instrument or agreement executed pursuant hereto, the terms
and provisions contained herein shall control. Otherwise, such provisions shall
be considered cumulative.
7.09 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the Borrower and the Bank and their respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights hereunder or any interest herein without the Bank's prior
written consent. The Bank may sell, assign or grant participations in all or any
portion of its rights and benefits hereunder. The Borrower agrees that, in
connection with any such sale, grant or assignment, the Bank may deliver to the
prospective buyer, participant or assignee financial statements and other
relevant information relating to the Borrower.
7.10 JURISDICTION. This Agreement, any notes issued hereunder, and any
documents, instruments or agreements mentioned or referred to herein shall be
governed by and construed according to the laws of the State of California, to
the jurisdiction of whose courts the parties hereby submit.
7.11 DISPUTE RESOLUTION. It is understood and agreed that upon the
request of any party to this agreement any dispute, claim, or controversy of any
kind, whether in contract or in tort, statutory or common law, legal or
equitable now existing or hereinafter arising between the parties in any way
arising out of, pertaining to or in connection with: (1) this Agreement, or any
related agreements, documents, or instruments, (2) all past and present loans,
credits, accounts, deposit accounts (whether demand deposits or time deposits),
safe deposit boxes, safekeeping agreements, guarantees, letters of credit, goods
or services, or other transactions, contracts or agreements of any kind, (3) any
incidents, omissions, acts, practices, or occurrences causing injury to either
party whereby the other party or its agents, employees or representatives may be
liable, in whole or in part, or (4) any aspect of the past or present
relationships of the parties, shall be resolved through a two-step dispute
resolution process administered by Judicial Arbitration & Mediation Services,
Inc. ("J.A.M.S.") as follows:
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a) STEP I - MEDIATION: At the request of any party to the dispute,
claim or controversy of the matter shall be referred to the nearest office of
J.A.M.S. for mediation, that is, an informal, non-binding conference or
conferences between the parties in which a retired judge or justice for the
J.A.M.S. panel will seek to guide the parties to a resolution of the case.
b) STEP II - UNSECURED CONTRACTS - ARBITRATION: Should any dispute,
claim or controversy remain unresolved at the conclusion of the Step I Mediation
Phase then all such remaining matters shall be resolved by final and binding
arbitration before a different judicial panelist, unless the parties shall agree
to have the mediator panelist act as arbitrator. The hearing shall be conducted
at a location determined by the arbitrator in Los Angeles County and shall be
administered by and in accordance with the then existing Rules of Practice and
Procedure of Judicial Arbitration & Mediation Services, Inc. and judgment upon
any award rendered by the arbitrator may be entered by any State or Federal
Court having jurisdiction thereof. The arbitrator shall determine which is the
prevailing party and shall include in the award that party's reasonable
attorneys fees and costs. This subparagraph (b) shall apply only if, at the time
of the submission of the matter to J.A.M.S., the dispute(s) or issue(s) do(es)
not arise out of a transaction(s) which is/are secured by real property
collateral or, if so secured, all parties consent to such submission.
As soon as practicable after selection of the arbitrator, the arbitrator or
his/her designated representative shall determine a reasonable estimate of
anticipated fees and costs of the Arbitrator, and render a statement to each
party setting forth that party's pro-rata share of said fees and costs.
Thereafter each party shall, within 10 days of receipt of said statement,
deposit said sum with the Arbitrator. Failure of any party to make such a
deposit shall result in a forfeiture by the non-depositing party of the right to
prosecute or defend the claim which is the subject of the arbitration, but shall
not otherwise serve to abate, stay or suspend the arbitration proceedings.
c) Provisional Remedies, Self Help and Foreclosure: No provision
of, or the exercise of any right(s) under subparagraph (b), nor any other
provision of this Dispute Resolution Provision, shall limit the right of any
party to exercise self help remedies such as set off, to foreclose against any
real or personal property collateral, or obtain provisional or ancillary
remedies such as injunctive relief or the appointment of a receiver from any
court having jurisdiction before, during or after the pendency of any
arbitration. At Bank's option, foreclosure under a deed of trust or mortgage may
be accomplished either by exercise of power of sale under the deed of trust or
mortgage, or by judicial foreclosure. The institution and maintenance of an
action for provisional remedies pursuit of provisional or ancillary remedies or
exercise of self help remedies shall not constitute a waiver of the right of any
party, including the plaintiff, to submit the controversy or claim to
arbitration.
7.12 WAIVER OF JURY TRIAL. THE BORROWER AND THE BANK EACH WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR
PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE
BORROWER AND THE BANK EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE
TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE
PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED
BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF.
THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND OTHER LOAN DOCUMENTS.
7.13 HEADINGS. The headings set forth herein are solely for the
purpose of identification and have no legal significance.
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7.12 ENTIRE AGREEMENT. This Agreement and the Loan Documents shall
constitute the entire and complete understanding of the parties with respect to
the transactions contemplated hereunder. All previous conversations, memoranda
and writings between the parties or pertaining to the transactions contemplated
hereunder that are not incorporate or referenced in this Agreement or the Loan
Documents are superseded hereby.
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of the date first hereinabove written.
BANK: BORROWER:
SANWA BANK CALIFORNIA PUBLIC STORAGE PROPERTIES XIV, INC.
By:/s/ John F. Marder By:/s/ David P. Singelyn
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Vice President Controller
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(Name/Title) (Name/Title)
Address: 601 So. Figueroa Address: 600 N. Brand Blvd.
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Los Angeles, California 90017 Glendale , California 91203
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