Senior Unsecured Credit Agreement

EXHIBIT 10.4


EXECUTION COPY


=======================================================


$75,000,000 SENIOR UNSECURED CREDIT AGREEMENT


AMONG


ARDEN REALTY LIMITED PARTNERSHIP,
A MARYLAND LIMITED PARTNERSHIP,
AS BORROWER,


AND


THE SEVERAL LENDERS FROM
TIME TO TIME PARTIES HERETO,


LEHMAN BROTHERS INC., AS
SOLE LEAD ARRANGER
AND BOOK RUNNING
MANAGER


AND


LEHMAN COMMERCIAL PAPER INC.
AS SYNDICATION AGENT AND ADMINISTRATIVE AGENT


Dated as of July 27, 2000


=======================================================


TABLE OF CONTENTS
-----------------


Page
----


ARTICLE 1 - DEFINITIONS...........................................................................................1


1.1 Certain Defined Terms.............................................................1
1.2 Computation of Time Periods......................................................19
1.3 Terms............................................................................19


ARTICLE 2 - ADVANCES.............................................................................................19


2.1 Loan Advances and Repayment......................................................19
2.2 Authorization to Obtain Advances.................................................21
2.3 Lenders' Accounting..............................................................21
2.4 Interest on the Advances.........................................................21
2.5 Fees.............................................................................24
2.6 Payments.........................................................................25
2.7 Notice of Increased Costs........................................................26
2.8 Voluntary Termination or Reduction of Commitment.................................25


ARTICLE 3 - CONDITIONS TO ADVANCES...............................................................................26


3.1 Conditions to Initial Advances...................................................26
3.2 Conditions Precedent to All Advances.............................................27


ARTICLE 4 - REPRESENTATIONS AND WARRANTIES.......................................................................28


4.1 Representations and Warranties as to Borrower, Etc...............................28
4.2 Representations and Warranties as to the REIT....................................31


ARTICLE 5 - REPORTING COVENANTS..................................................................................33


5.1 Financial Statements and Other Financial and Operating
Information..................................................................33
5.2 Environmental Notices............................................................37
5.3 Confidentiality..................................................................37
5.4 Annual Evidence of Insurance.....................................................37


ARTICLE 6 - AFFIRMATIVE COVENANTS................................................................................37


6.1 With Respect to Borrower.........................................................37
6.2 With Respect to the REIT.........................................................39


ARTICLE 7 - NEGATIVE COVENANTS...................................................................................40


7.1 With Respect to all Parties......................................................40
7.2 Amendment of Constituent Documents...............................................41
7.3 REIT Directors...................................................................41
7.4 Management.......................................................................41
7.5 Margin Regulations...............................................................41
7.6 Organization of Borrower, Etc....................................................42
7.7 With Respect to the REIT.........................................................42


ARTICLE 8 - FINANCIAL COVENANTS..................................................................................42


8.1 Tangible Net Worth...............................................................42
8.2 Maximum Total Liabilities to Gross Asset Value...................................42
8.3 Minimum Interest Coverage Ratio..................................................42
8.4 Minimum Fixed Charge Coverage Ratio..............................................42
8.5 Minimum Unencumbered Pool........................................................42
8.6 Minimum Unsecured Interest Expense Coverage......................................42
8.7 Distributions....................................................................43
8.8 Investments; Asset Mix...........................................................43
8.9 Secured Debt.....................................................................43


-i-


ARTICLE 9 - EVENTS OF DEFAULT; RIGHTS AND REMEDIES...............................................................44


9.1 Events of Default................................................................44
9.2 Rights and Remedies..............................................................45
9.3 Rescission.......................................................................46


ARTICLE 10 - AGENCY PROVISIONS...................................................................................47


10.1 Appointment.....................................................................47
10.2 Nature of Duties................................................................47
10.3 Disbursements of Advances.......................................................47
10.4 Distribution and Apportionment of Payments......................................48
10.5 Rights, Exculpation, Etc........................................................49
10.6 Reliance........................................................................49
10.7 Indemnification.................................................................49
10.8 Administrative Agent Individually...............................................49
10.9 Successor Administrative Agent; Resignation of
Administrative Agent; Removal of Administrative Agent........................49
10.10 Consent and Approvals..........................................................50
10.11 Certain Agency Provisions Relating to Enforcement..............................51
10.12 Ratable Sharing................................................................51
10.13 Delivery of Documents..........................................................52
10.14 Notice of Events of Default....................................................52
10.15 Syndication Agent..............................................................52


ARTICLE 11 - MISCELLANEOUS.......................................................................................52


11.1 Expenses........................................................................52
11.2 Indemnity.......................................................................53
11.3 Change in Accounting Principles and "Funds from
Operations" Definition.......................................................53
11.4 Amendments and Waivers..........................................................53
11.5 Independence of Covenants.......................................................54
11.6 Notices and Delivery............................................................55
11.7 Survival of Warranties, Indemnities and Agreements..............................55
11.8 Failure or Indulgence Not Waiver; Remedies Cumulative...........................55
11.9 Payments Set Aside..............................................................55
11.10 Severability...................................................................55
11.11 Headings.......................................................................55
11.12 Governing Law; Waiver..........................................................55
11.13 Limitation of Liability........................................................55
11.14 Successors and Assigns.........................................................56
11.15 Consent to Jurisdiction and Service of Process;
Waiver of Jury Trial.........................................................56
11.16 Counterparts; Effectiveness; Inconsistencies...................................56
11.17 Performance of Obligations.....................................................56
11.18 Construction...................................................................56
11.19 Entire Agreement...............................................................56
11.20 Assignments and Participations.................................................57


-ii-


LIST OF EXHIBITS AND SCHEDULES


Exhibits:


A - Form of Assignment and Assumption Agreement B - [Reserved]. C - Form of Compliance Certificate D - Form of Fixed Rate Notice E - Form of Guaranty F - Form of Note G - Form of Notice of Borrowing H-1 - Form of REIT Solvency Certificate H-2 - Form of Borrower Solvency Certificate


Schedules:


1.1 - Pro Rata Shares of Lenders 2.2 - Employees Authorized to Sign Notices of Borrowing 4.1(c) - Ownership of Borrower 4.1(j) - List of Litigation 4.1(s) - Environmental Matters 4.1(v) - Management Agreements 4.2(l) - Benefit Plans 8.5 - List of Unencumbered Assets


-iii-


CREDIT AGREEMENT
----------------


THIS CREDIT AGREEMENT, dated as of July 27, 2000 (as amended, supplemented or modified from time to time, this "Agreement"), is made and entered into by and among ARDEN REALTY LIMITED PARTNERSHIP, a Maryland limited partnership ("Borrower"),the several banks and other financial institutions or entities from time to time parties to this Agreement (the "Lenders"), LEHMAN BROTHERS INC., as Sole Lead Arranger and Book Running Manager, and LEHMAN COMMERCIAL PAPER INC. ("LCPI"), as Syndication Agent and Administrative Agent.


The parties hereto hereby agree as follows:


ARTICLE 1
---------


DEFINITIONS
-----------


1.1 Certain Defined Terms. The following terms used in this Agreement shall have the following meanings (such meanings to be applicable, except to the extent otherwise indicated in a definition of a particular term, both to the singular and the plural forms of the terms defined):


"Accountants" means any (i) "big five" accounting firm or (ii) another firm of certified public accountants of recognized national standing selected by Borrower and acceptable to Administrative Agent.


"Acquisition Price" means the aggregate purchase price for an asset, including bona fide purchase money financing provided by the seller and all other Indebtedness encumbering such asset at the time of acquisition.


"Administrative Agent" means Lehman Commercial Paper Inc., in its capacity as administrative agent for the Lenders under this Agreement, and any successor administrative agent appointed pursuant hereto.


"Advance" means any advance made or to be made to Borrower pursuant to Article 2, and includes each Base Rate Advance and each LIBOR Advance.


"Affiliates" as applied to any Person, means any other Person directly or indirectly controlling, controlled by, or under common control with, that Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling", "controlled by" and "under common control with"), as applied to any Person, means (a) the possession, directly or indirectly, of the power to vote ten percent (10%) or more of the Securities having voting power for the election of directors of such Person or otherwise to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting Securities or by contract or otherwise, or (b) the ownership of ten percent (10%) or more of the outstanding general partnership or other ownership interests of such Person.


"Applicable LIBOR Rate Margin" means, for each Pricing Period, the interest rate margin set forth below (expressed in basis points per annum) opposite the Applicable Pricing Level for that Pricing Period:


--------------------------------------- ------------------------------------


Applicable Pricing Level Margin --------------------------------------- ------------------------------------ --------------------------------------- ------------------------------------


I 105.00 --------------------------------------- ------------------------------------ --------------------------------------- ------------------------------------


II 115.00 --------------------------------------- ------------------------------------ --------------------------------------- ------------------------------------


III 130.00 --------------------------------------- ------------------------------------ --------------------------------------- ------------------------------------


IV 170.00 --------------------------------------- ------------------------------------


; provided that, if the Maturity Date is extended pursuant to Section 2.1(e), the Applicable LIBOR Rate Margin during the extension period shall be adjusted to a market rate as determined by the Administrative Agent in its sole discretion and accepted by the Borrower in accordance with Section 2.1(e).


"Applicable Pricing Level" means (a) for the First Pricing Period, Pricing Level III and (b) for each Pricing Period thereafter, the pricing level set forth below, as applicable, either (i) if Borrower did not deliver a Rating Notice to Administrative Agent as required by Section 6.1(k), below, Level IV, or (ii) if Administrative Agent did receive a Rating Notice, the Pricing Level opposite Borrower's Long-Term Unsecured Senior Debt Rating as of the date of Administrative Agent's receipt of such Rating Notice as determined by Administrative Agent:


Borrower's Long-Term
Pricing Level Unsecured Senior Debt Rating
------------- ----------------------------


I Equal to or higher than BBB+/Baa1
II BBB/Baa2
III BBB-/Baa3
IV Lower than BBB-/Baa3
or No Rating


"Assignment and Assumption" means an Assignment and Assumption Agreement in the form of Exhibit A hereto (with blanks appropriately filled in) delivered to Administrative Agent in connection with each assignment of a Lender's interest under this Agreement pursuant to Section 11.20.


"Base Rate" means, on any day, the higher of (a) the rate of interest per annum established from time to time by Deutsche Bank, New York Office at its principal office in New York City, New York, and designated as its prime rate as in effect on such day and (b) the Federal Funds Rate in effect on such day plus one-half of one percent (0.5%) per annum.


"Base Rate Advance" means an Advance bearing interest at the Base Rate.


"Benefit Plan" means any employee pension benefit plan as defined in Section 3(2) of ERISA (other than a Multiemployer Plan) in respect of which a Person or an ERISA Affiliate is, or within the immediately preceding five (5) years was, an "employer" as defined in Section 3(5) of ERISA.


"Borrower" means Arden Realty Limited Partnership, a Maryland limited partnership.


"Borrower's Long-Term Unsecured Senior Debt Rating" means the lower of such rating as set by Standard & Poor's and Moody's Investors Service, Inc.


"Business Day" means (a) with respect to any Advance, payment or rate determination of LIBOR Advances, a day, other than a Saturday or Sunday, on which Administrative Agent is open for business in New York City, New York and on which dealings in Dollars are carried on in the London interbank market, and (b) for all other purposes any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of the State of New York, or is a day on which banking institutions located in New York are required or authorized by law or other governmental action to close.


"Capital Lease" means, as applied to any Person, any lease of any property (whether real, personal or mixed) by that Person as lessee which, in conformity with GAAP, is or should be accounted for as a capital lease on the balance sheet of that Person.


"Capital Lease Obligations" means all monetary obligations of a Person under any Capital Lease.


"Capitalized Loan Fees" means, with respect to the REIT and any Consolidated Entity, and with respect to any period, (a) any up-front, closing or similar fees paid by such Person in connection with the incurring or refinancing of Indebtedness during such period and (b) all other costs incurred in connection with the incurring or refinancing of Indebtedness during such period, including, without limitation, appraisal fees paid to lenders, costs and expenses incurred in connection with Swap Agreements, phase 1 environmental report review fees paid to lenders and legal fees, in each of the foregoing cases, that are capitalized on the balance sheet of such Person and amortized over the term of such Indebtedness.


-2-


"Capital Stock" means, with respect to any Person, all (i) shares, interests, participations or other equivalents (howsoever designated) of capital stock or partnership or other equity interests of such Person and (ii) rights (other than debt securities convertible into capital stock or other equity interests), warrants or options to acquire any such capital stock or partnership or other equity interests of such Person. The term "Capital Stock" includes the Partnership Units of Borrower.


"Cash" means, when used in connection with any Person, all monetary and nonmonetary items owned by that Person that are treated as cash in accordance with GAAP, consistently applied. "Cash" shall not include tenant deposits.


"Cash Equivalents" means (a) marketable direct obligations issued or unconditionally guaranteed by the United States Government or issued by an agency thereof and backed by the full faith and credit of the United States, in each case maturing within one (1) year after the date of acquisition thereof; (b) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within ninety (90) days after the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from any two of Standard & Poor's, Moody's Investors Service, Inc., Duff and Phelps, or Fitch Investors Service, Inc. (or, if at any time no two of the foregoing shall be rating such obligations, then from such other nationally recognized rating services as may be acceptable to Administrative Agent) and not listed for possible down-grade in Credit Watch published by Standard & Poor's; (c) commercial paper, other than commercial paper issued by Borrower or any of its Affiliates, maturing no more than ninety (90) days after the date of creation thereof and, at the time of acquisition, having a rating of at least A-1 or P-1 from either Standard & Poor's, or Moody's Investors Service, Inc. or, if at any time neither Standard & Poor's, nor Moody's Investors Service, Inc. shall be rating such obligations, then the highest rating from such other nationally recognized rating services as may be acceptable to Administrative Agent); and (d) domestic and Eurodollar certificates of deposit or time deposits or bankers' acceptances maturing within ninety (90) days after the date of acquisition thereof, overnight securities repurchase agreements, or reverse repurchase agreements secured by any of the foregoing types of securities or debt instruments issued, in each case, by any commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia or Canada which at the time of acquisition (A) has (or, in the case of a bank which is a subsidiary, such bank's parent has) a rating of its senior unsecured debt obligations of not less than Baa-2 by Moody's Investors Service, Inc. or a comparable rating by a rating agency acceptable to Administrative Agent and (B) has total assets in excess of Ten Billion Dollars ($10,000,000,000).


"City National Bank Loan" means revolving loans made by City National Bank to Borrower in an aggregate committed principal amount which shall not exceed $10,000,000 pursuant to the terms of that certain Loan Agreement dated March 12, 1997 between Borrower and City National Bank, as amended through the date of this Agreement.


"Closing Date" means the date on which the applicable conditions contained in Sections 3.1 and 3.2 are satisfied or waived. Within five (5) Business Days of the occurrence thereof, Administrative Agent shall deliver written notice to Borrower and the Lenders confirming the date on which the Closing Date occurred.


"CMBS Entities" means, collectively, Arden Realty Finance, Inc., a California corporation, which is a wholly-owned subsidiary corporation of the REIT, Arden Realty Finance Partnership, L.P., a California limited partnership, with respect to which limited partnership Arden Realty Finance, Inc., is the sole general partner and Borrower is a limited partner, Arden Realty Finance II, Inc., a Maryland corporation, which is a wholly-owned subsidiary corporation of the REIT, Arden Realty Finance III LLC, a Delaware limited liability company, which is wholly owned by Borrower, Arden Realty Finance IV LLC, a Delaware limited liability company, which is wholly owned by Borrower, Activity Business Center Limited Partnership, a Delaware limited partnership, with respect to which limited partnership Arden Realty Finance II, Inc. is the sole general partner and Borrower is the sole limited partner, 145 South Fairfax, LLC, a California limited liability company, which is wholly owned by Borrower, Arden Realty Finance V LLC, a Delaware limited liability company, which is wholly owned by Borrower, Westwood Center Limited Partnership, a California limited partnership, with respect to which limited partnership Borrower is the sole general partner, and Arden Realty Finance VI LLC, a Delaware limited liability company, which is wholly owned by Borrower.


-3-


"Code" means the Internal Revenue Code of 1986, as amended from time to time.


"Commission" means the Securities and Exchange Commission.


"Commitment" means, subject to Sections 2.7 and 2.8, $75,000,000. As of the Closing Date, the respective Pro Rata Shares of the Lenders with respect to the Commitment are set forth in Schedule 1.1.


"Compliance Certificate" means a certificate in the form of Exhibit C hereto delivered to Administrative Agent by Borrower pursuant to Section 5.1(d) or other provision of this Agreement and covering compliance with the covenants contained in Section 7.3 and Article 8.


"Consolidated Entity" means, collectively, (i) Borrower and (ii) any other Person the accounts of which are consolidated with those of the REIT in the consolidated financial statements of the REIT in accordance with GAAP.


"Construction in Progress" means land on ...