EXHIBIT 4.7
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March 25, 1994
Santa Anita Realty Enterprises, Inc.
363 San Miguel Drive
Newport Beach, California 92660
Attn: Sherwood Chillingworth
Gentlemen:
Reference is made to that certain Revolving Credit and Term Note
Agreement, dated as of November 21, 1989, as amended, between us (the "Credit
Agreement"). Capitalized terms used herein without definition shall have the
meanings ascribed to them in the Credit Agreement.
Section 7.10 of the Credit Agreement prohibits you from creating,
incurring, assuming or suffering to exist any Indebtedness in excess of the
lesser of $80,000,000 or six times Net Income, subject to certain exclusions.
Section 7.12 of the Credit Agreement requires you to maintain a Net
Worth of not less than $80 million plus 90% of the net proceeds of any issue or
sale of your equity securities and other additions to capital, other than
pursuant to your dividend reinvestment plan or any stock option plan or other
employee benefit plan.
Section 7.13 of the Credit Agreement requires you to maintain a ratio
of Indebtedness to Net Worth of not greater than 2.25 to 1.00.
Section 7.14 of the Credit Agreement requires you to ensure that your
Adjusted Net Income for the twelve months period ending on each fiscal quarter
exceeds twice your total interest expense.
You have advised us that you were not in compliance with the foregoing
financial covenants at December 31, 1993 and will not be in compliance at March
31, 1994. As a result of the foregoing noncompliance, you are also in breach of
certain covenants set forth in the Amended and Restated Credit Agreement, dated
as of November 14, 1989, between you and Wells Fargo Bank (the "Wells Fargo
Credit Agreement"), and the Revolving Credit Agreement, dated October 29, 1991,
between you and Union Bank (the "Union Bank Credit Agreement"), respectively.
You have therefore requested that the Bank waive any Events of Default or
Unmatured Events of Default arising under Sections 8.1(c)
and 8.1(e) of the Credit Agreement as a result of the foregoing noncompliance
and defaults.
Subject to the terms and conditions hereof, the undersigned Bank
hereby waives through April 30, 1994 the Events of Default and Unmatured Events
of Default arising under Sections 8.1(c) and 8.1(e) of the Credit Agreement as a
result of your noncompliance with the financial covenants set forth in Sections
7.10, 7.12, 7.13 and 7.14 of the Credit Agreement at December 31, 1993 and March
31, 1994 and the defaults under the Wells Fargo Credit Agreement and the Union
Bank Credit Agreement if and only if the following conditions are timely
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satisfied in full:
(a) Immediately upon your receipt thereof, the final disbursement of
loan proceeds, in an amount not less than $10 million, received by you and/or
Anita Associates from the Teachers Insurance and Annuity Association of America
pursuant to its Loan Commitment, dated June 11, 1993, will be paid over to Union
Bank, Wells Fargo Bank, National Association, and The Bank of California, N.A.
(collectively, the "Banks") in the percentages set forth below to permanently
reduce your outstanding indebtedness to the Banks under the Credit Agreement,
the Wells Fargo Credit Agreement and the Union Bank Credit Agreement,
respectively (collectively, the "Bank Agreements"):
Union Bank 44.05%
Wells Fargo Bank 18.35%
Bank of California 37.60%
(b) On or before April 15, 1994, you will deliver to us a legal
opinion of O'Melveny & Myers to the effect that the sale by you of your multi-
family and industrial properties to Pacific Gulf Properties, Inc. was duly
authorized by your Board of Directors.
(c) Notwithstanding any provision to the contrary in any of the Bank
Agreements, the Commitment (as defined in each of the Bank Agreements) of each
of the Banks under the Bank Agreements will be reduced effective as of the date
hereof to an amount equal to the outstanding principal balance under the Credit
Agreement (including the amount of any outstanding letter of credit), and shall
be automatically further reduced by the amount of any payment or prepayment of
principal or any reduction in the amount of any outstanding letter of credit on
the date of such payment, prepayment or reduction, and the outstanding principal
balance, together with all accrued and unpaid interest, under each of the Bank
Agreements, will be due and payable in full on November 14, 1994. You
understand, however, that the two outstanding letters of credit issued
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by Wells Fargo Bank will still expire on the expiration dates set forth in such
letters of credit.
(d) From and after the date hereof, the basic interest rate per annum
under the Credit Agreement will be increased to the Applicable LIBO Rate plus
300 basis points or the Prime Rate plus 150 basis points, at your option. The
default interest rate shall remain as set forth in Section 4.5 of the Credit
Agreement.
(e) No later than April 15, 1994, you will provide the Bank with a
repayment plan in writing detailing how you propose to repay your outstanding
obligations to the Bank.
(f) You hereby covenant and agree to pay to the Banks in the
percentages set forth in paragraph (a) above, from and after the date hereof,
(i) any and all cash proceeds from the financing or refinancing or sale,
condemnation or other disposition of any of your assets, including, without
limitation, partnership interests (net of usual and customary closing costs and
amounts necessary to pay preexisting indebtedness secured by any specific asset
sold, condemned or otherwise disposed of, if any), and (ii) any and all cash
proceeds received by you from the financing or refinancing or sale, condemnation
or other disposition of any assets owned by any partnership of which you are a
partner or received by you in connection with the formation of any new
partnership or joint venture, which cash proceeds will be applied to permanently
reduce your outstanding indebtedness to the Banks under the Bank Agreements.
(g) If, as and when requested by us from time to time hereafter, you
will promptly grant us security interests in and liens on such of your real and
personal property (except the real or personal property known as the Santa Anita
Racetrack and the Santa Anita Fashion Park located in Arcadia, California (the
"Arcadia Properties") and the Towson Town Center Associates property located
in Towson, Maryland) as may be specified by us in writing; provided, however,
that the undersigned agrees not to lien any of your assets prior to April 30,
1994 unless an Event of Default, other than the Events of Default and Unmatured
Events of Default waived hereby, occurs on or before such date; and provided
further that if any payment or additional material financial Event of Default
occurs at any time after the date hereof, other than the expiration of the
waiver period and the Events of Default and the Unmatured Events of Default
waived hereby, you will promptly grant us a security interest in and lien on the
Arcadia Properties if requested by us.
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If, however, no Event of Default occurs after the date hereof, but
during the course of our negotiations with you with respect to restructuring
your outstanding indebtedness to us under the Credit Agreement, we determine
that additional collateral is required to secure the restructured obligations,
you will negotiate with us in good faith regarding granting us a lien on the
Arcadia Properties. (We acknowledge that this is only an agreement to negotiate
and that any liens on the Arcadia Properties would be subject to the approval of
your Board of Directors.) You therefore agree that you will not sell, assign or
otherwise transfer the Arcadia Properties, or any partial interest therein, to
any other Person without our prior written consent. You hereby also agree that
the provisions of Section 7.11 of the Credit Agreement shall henceforth apply to
all of your assets. The failure of any condition hereunder shall be deemed an
Event of Default.
Any and all security interests and liens granted to us will secure the
payment and performance of your obligations under the Credit Agreement and will
be granted pursuant to security documentation in form and substance acceptable
to us in our sole and absolute discretion, and the costs associated with the
preparation of such security documentation and perfection of the liens created
thereby shall be paid by you. You also agree that we and our agents and
representatives may commence appraising your California and Arizona shopping
center properties at your expense immediately following execution hereof. The
results of such appraisals will be made available to you following your
reimbursement of the cost of such appraisals; and
(h) From and after the date hereof, the Bank is authorized to charge
your Account No.069-042676 with the Bank in order to cause timely payment to
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be made to the Bank of all principal, interest, fees, expenses and charges due
under the Credit Agreement if not paid when due.
You hereby agree that the Credit Agreement is hereby ratified and
confirmed in all respects, that all of the terms and conditions thereof, except
as otherwise waived hereby, shall remain in full force and effect and that you
have no defenses, offsets or claims whatsoever in respect thereto. You further
agree that the waiver to be effected pursuant hereto shall be limited to the
specific provisions waived hereunder for the specific period of time provided
herein and the specific events and facts surrounding such waiver, and that such
waiver shall not be deemed to constitute a consent to, a waiver of or a
departure from any other provision of the Credit Agreement or any other
agreement, document or instrument executed and delivered in connection
therewith, all of which are to remain in full
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force and effect. We understand, however, that after our review of the repayment
plan you are to submit to us on or before April 15, 1994, provided no additional
Event of Default or Unmatured Event of Default occurs prior to April 30, 1994,
an extension of the waiver period on the same terms and conditions stated herein
may be necessary in order to complete the restructuring of your outstanding
indebtedness to us under the Credit Agreement and the documentation thereof. You
understand, however, that any such extension is subject to approval by all of
the Banks at that time.
If the foregoing correctly sets forth your understanding of our
agreement, please indicate your acceptance below whereupon this letter shall
constitute an agreement between us in accordance with its terms.
Very truly yours,
The Bank of California, N. A.,
a national banking association
By: /s/ W.B. BARLEY
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Its: Vice President
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By:
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Its:
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AGREED TO AND ACCEPTED
AS OF MARCH 25, 1994:
Santa Anita Realty Enterprises, Inc.,
a Delaware corporation
By: /s/ S. C. CHILLINGWORTH
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Its: Vice Chairman
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