-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VMsoJqWUBwmVEBQ8UT0IfchgscO8FYssWOchbEjRwn/XYf1oS8FfKxQOtgaB9KMn Hxq3IKfxH8hKqT84lMzuCw== 0000828916-97-000002.txt : 19970311 0000828916-97-000002.hdr.sgml : 19970311 ACCESSION NUMBER: 0000828916-97-000002 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 22 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970310 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: WEINGARTEN REALTY INVESTORS /TX/ CENTRAL INDEX KEY: 0000828916 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 741464203 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-09876 FILM NUMBER: 97553745 BUSINESS ADDRESS: STREET 1: 2600 CITADEL PLAZA DR CITY: HOUSTON STATE: TX ZIP: 77008 BUSINESS PHONE: 7138666000 MAIL ADDRESS: STREET 1: P O BOX 924133 STREET 2: P O BOX 924133 CITY: HOUSTON STATE: TX ZIP: 77292-4133 10-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] FOR THE TRANSITION PERIOD FROM TO COMMISSION FILE NUMBER 1-9876 WEINGARTEN REALTY INVESTORS (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) TEXAS 74-1464203 (State or other jurisdiction (IRS Employer of incorporation or organization) Identification No.) 2600 Citadel Plaza Drive P.O. Box 924133 Houston, Texas 77292-4133 (Address of principal executive offices) (Zip Code) (713) 866-6000 (Registrant's telephone number) Securities registered pursuant to Section 12(b) of the Act. Name of each exchange Title of Each Class on which registered - ------------------------------------ --------------------- Common Shares of New York Stock Beneficial Interest, $0.03 par value Exchange SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ]. Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] The aggregate market value of the common shares held by non-affiliates (based upon the closing sale price on the New York Stock Exchange) on February 27, 1997 was approximately $1,137,328,396. As of February 27, 1997, there were 26,604,173 shares of beneficial interest, $.03 par value, outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant's Proxy Statement in connection with its Annual Meeting of Shareholders to be held April 29, 1997 are incorporated by reference in Part III. Exhibit Index beginning on Page 33
TABLE OF CONTENTS ITEM NO PAGE NO. - -------- -------- PART I 1. Business 1 2. Properties 3 3. Legal Proceedings 11 4. Submission of Matters to a Vote of Security Holders 11 Executive Officers of the Registrant 12 PART II 5. Market for Registrant's Common Shares of Beneficial Interest and Related Shareholder Matters 13 6. Selected Financial Data 14 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 15 8. Financial Statements and Supplementary Data 18 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 32 PART III 10. Trust Managers and Executive Officers of the Registrant 32 11. Executive Compensation 33 12. Security Ownership of Certain Beneficial Owners and Management 33 13. Certain Relationships and Related Transactions 33 PART IV 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 33
PART I ITEM 1. BUSINESS General. Weingarten Realty Investors (the "Company"), an unincorporated trust organized under the Texas Real Estate Investment Trust Act, and its predecessor entity began the ownership and development of shopping centers and other commercial real estate in 1948. The Company is self-advised and self-managed and, as of December 31, 1996, owned or had interests in 182 developed income-producing real estate projects, 160 of which were shopping centers, located in the Houston metropolitan area and in other parts of Texas and in Louisiana, Arkansas, Oklahoma, New Mexico, Arizona, Maine, Tennessee, Kansas, Nevada, Missouri and Colorado. The Company's other commercial real estate projects included 20 industrial projects, one multi-family housing property and one office building, which serves as the Company's headquarters. The Company's interests in these projects aggregated approximately 20.2 million square feet of building area and 77.9 million square feet of land area. The Company also owned interests in 24 parcels of unimproved land held for future development which aggregated approximately 6.9 million square feet. The Company currently employs 156 persons. The Company's principal executive offices are located at 2600 Citadel Plaza Drive, Houston, Texas 77008, and its phone number is (713) 866-6000. Reorganizations. In December 1984, the Company engaged in a series of transactions primarily designed to enable it to qualify as a real estate investment trust ("REIT") for federal income tax purposes for the 1985 calendar year and subsequent years. The Company contributed certain assets considered unsuitable for ownership by the Company as a REIT and $3.5 million in cash to WRI Holdings, Inc. ("Holdings"), a Texas corporation and a newly-formed subsidiary of the Company, in exchange for voting and non-voting common stock of Holdings (which was subsequently distributed to the Company's shareholders) and $26.8 million of mortgage bonds. For additional information concerning Holdings, refer to Note 6 of the Notes to Consolidated Financial Statements at page 27. On March 22, 1988, the Company's shareholders approved the conversion of the Company's form of organization from a Texas corporation to an unincorporated trust organized under the Texas Real Estate Investment Trust Act. The conversion was effected by the Company's predecessor entity, Weingarten Realty, Inc., transferring substantially all of its assets and liabilities to the newly-formed Company in exchange for common shares of beneficial interest, $.03 par value ("Common Shares"), of the Company. The shareholders of the corporation received Common Shares for their shares of Common Stock of the corporation (on a share-for-share basis), and the Company continues the business that was previously conducted by the corporation. The change did not affect the registrant's assets, liabilities, management or federal income tax status as a REIT. Location of Properties. Historically, the Company has emphasized investments in properties located primarily in the Houston area. Since 1987, the Company has actively acquired properties outside of Houston. Of the Company's 206 properties which were owned as of December 31, 1996, 89 of its 182 developed properties and 18 of its 24 parcels of unimproved land were located in the Houston metropolitan area. In addition to these properties, the Company owned 51 developed properties and 4 parcels of unimproved land located in other parts of Texas. Because of the Company's investments in the Houston area, as well as in other parts of Texas, the Houston and Texas economies affect, to some degree, the business and operations of the Company. In 1996, the economies in Houston and Texas continued to grow, exceeding the national average; the economy of the entire southwestern United States, where the Company has its primary operations, also remained strong relative to the national average. A deterioration in the Houston or Texas economies could adversely affect the Company. However, the Company's centers are generally anchored by grocery and drug stores under long-term leases, and such types of stores, which deal in basic necessity-type items, tend to be less affected by economic change. Competition. There are other developers and operators engaged in the development, acquisition and operation of shopping centers and commercial property who compete with the Company in its trade areas. This results in competition for both acquisitions of existing income-producing properties and also for prime development sites. There is also competition for tenants to occupy the space that the Company and its competitors develop, acquire and manage. The Company believes that the principal competitive factors in attracting tenants in its market areas are location, price, anchor tenants and maintenance of properties and that the Company's competitive advantages include the favorable locations of its properties, its ability to provide a retailer with multiple locations in the Houston area with anchor tenants and its practice of continuous maintenance and renovation of its properties. Financial Information. Certain additional financial information concerning the Company is included in the Company's Consolidated Financial Statements located on pages 18 through 32 herein. ITEM 2. PROPERTIES At December 31, 1996 the Company's real estate properties consisted of 206 locations in twelve states. A complete listing of these properties, including the name, location, building area and land area (in square feet), as applicable, is as follows:
SHOPPING CENTERS Building Name and Location Area Land Area - ----------------------------------------------------- ---------- ---------- HOUSTON AND HARRIS COUNTY, TOTAL 6,871,000 27,015,000 Alabama-Shepherd, S. Shepherd at W. Alabama 28,000 * 88,000 * Almeda Road, Almeda at Cleburne 34,000 147,000 Bayshore Plaza, Spencer Hwy. at Burke Rd 36,000 196,000 Bellaire Boulevard, Bellaire at S. Rice 35,000 137,000 Bellfort, Bellfort at Southbank 48,000 167,000 Bellfort Southwest, Bellfort at Gessner 30,000 89,000 Bellwood, Bellaire at Kirkwood 136,000 655,000 Bingle Square, U.S. Hwy. 290 at Bingle 46,000 168,000 Braeswood Square, N. Braeswood at Chimney Rock 103,000 422,000 Centre at Post Oak, Westheimer at Post Oak Blvd. 170,000 468,000 Copperfield Village, Hwy. 6 at F.M. 529 153,000 712,000 Crestview, Bissonnet at Wilcrest 9,000 35,000 Crosby, F.M. 2100 at Kenning Road (61%) 36,000 * 124,000 * Cullen Place, Cullen at Reed 7,000 30,000 Cullen Plaza, Cullen at Wilmington 81,000 318,000 Cypress Pointe, F.M. 1960 at Cypress Station 191,000 737,000 Del Sol Market Place, Telephone at Monroe 26,000 87,000 Eastpark, Mesa Rd. at Tidwell 140,000 665,000 Edgebrook, Edgebrook at Gulf Fwy. 76,000 360,000 Fiesta Village, Quitman at Fulton 30,000 80,000 Fondren Southwest Village, Fondren at W. Bellfort 225,000 1,014,000 Fondren/West Airport, Fondren at W. Airport 62,000 223,000 45/York Plaza, I-45 at W. Little York 210,000 840,000 Glenbrook Square, Telephone Road 71,000 320,000 Griggs Road, Griggs at Cullen 85,000 422,000 Harrisburg Plaza, Harrisburg at Wayside 95,000 334,000 Heights Plaza, 20th St. at Yale 72,000 228,000 Humblewood Shopping Plaza, Eastex Fwy. at F.M. 1960 180,000 784,000 Inwood Village, W. Little York at N. Houston-Rosslyn 68,000 305,000 Jacinto City, Market at Baca 24,000 * 67,000 * Kingwood, Kingwood Dr. at Chesnut Ridge 155,000 648,000 Landmark, Gessner at Harwin 56,000 228,000 Lawndale, Lawndale at 75th St. 53,000 177,000 Little York Plaza, Little York at E. Hardy 115,000 486,000 Long Point, Long Point at Wirt (77%) 58,000 * 257,000 * Lyons Avenue, Lyons at Shotwell 63,000 185,000 Market at Westchase, Westheimer at Wilcrest 84,000 333,000 Miracle Corners, S. Shaver at Southmore 87,000 386,000 Northbrook, Northwest Fwy. at W. 34th 204,000 656,000 North Main Square, Pecore at N. Main 18,000 64,000
Table continued on next page
Building Name and Location Area Land Area - -------------------------------------------------------------- --------- ---------- North Oaks, F.M. 1960 at Veterans Memorial 315,000 1,246,000 North Triangle, I-45 at F.M. 1960 14,000 113,000 Northway, Northwest Fwy. at 34th 212,000 793,000 Northwest Crossing, N.W. Fwy. at Hollister (75%) 133,000 * 671,000 * Northwest Park Plaza, F.M. 149 at Champions Forest 32,000 268,000 Oak Forest, W. 43rd at Oak Forest 156,000 541,000 Orchard Green, Gulfton at Renwick 64,000 257,000 Randall's/Cypress Station, F.M. 1960 at I-45 141,000 618,000 Randall's/El Dorado, El Dorado at Hwy. 3 119,000 429,000 Randall's/Kings Crossing, Kingwood Dr. at Lake Houston Pkwy. 128,000 624,000 Randall's/Norchester, Grant at Jones 109,000 475,000 Richmond Square, Richmond Ave. at W. Loop 610 22,000 77,000 River Oaks, East, W. Gray at Woodhead 65,000 206,000 River Oaks, West, W. Gray at S. Shepherd 235,000 609,000 Sheldon Forest, North, I-10 at Sheldon 22,000 131,000 Sheldon Forest, South, I-10 at Sheldon 38,000 * 164,000 * Shops at Three Corners, S. Main at Old Spanish Trail (70%) 183,000 * 803,000 * Southgate, W. Fuqua at Hiram Clark 115,000 533,000 Spring Plaza, Hammerly at Campbell 56,000 202,000 Steeplechase, Jones Rd. at F.M. 1960 193,000 849,000 Stella Link, North, Stella Link at S. Braeswood (77%) 40,000 * 156,000 * Stella Link, South, Stella Link at S. Braeswood 15,000 56,000 Studemont, Studewood at E. 14th St 28,000 91,000 Ten Blalock Square, I-10 at Blalock 97,000 321,000 10/Federal, I-10 at Federal 132,000 474,000 University Plaza, Bay Area At Space Center 96,000 424,000 The Village Arcade, University at Kirby 184,000 398,000 West Junction, Hwy. 6 at Kieth Harrow Dr. 67,000 264,000 Westbury Triangle, Chimney Rock at W. Bellfort 67,000 257,000 Westchase, Westheimer at Wilcrest 236,000 766,000 Westhill Village, Westheimer at Hillcroft 131,000 480,000 Wilcrest Southwest, Wilcrest at Southwest Fwy. 26,000 77,000 TEXAS (EXCLUDING HOUSTON & HARRIS CO.), TOTAL 4,496,000 19,861,000 Coronado, S.W. 34th St. at Wimberly Dr., Amarillo 49,000 201,000 Puckett Plaza, Bell Road, Amarillo 133,000 621,000 Spanish Crossroads, Bell St. at Atkinson St., Amarillo 72,000 275,000 Wolfin Village, Wolfin Ave. at Georgia St., Amarillo 191,000 513,000 Merrilee, U.S. Highway 80 at Merrilee, Arlington 8,000 74,000 Southridge Plaza, William Cannon Dr. at S. 1st St., Austin 143,000 565,000 Baywood, State Hwy. 60 at Baywood Dr., Bay City 40,000 169,000 Calder, Calder at 24th St., Beaumont 34,000 129,000 North Park Plaza, Eastex Fwy. at Dowlen, Beaumont 70,000 * 318,000 * Phelan West, Phelan at 23rd St., Beaumont (67%) 16,000 * 59,000 * Southgate, Calder Ave. at 6th St., Beaumont 34,000 118,000 Westmont, Dowlen at Phelan, Beaumont 95,000 507,000 Bryan Village, Texas at Pease, Bryan 29,000 98,000 Parkway Square, Southwest Pkwy at Texas Ave., College Station 158,000 685,000
Table continued on next page
Building Name and Location Area Land Area - -------------------------------------------------------------------- --------- --------- Montgomery Plaza, Loop 336 West, Conroe 233,000 911,000 River Pointe, I-45 at Loop 336, Conroe 42,000 252,000 Portairs Shopping Center, Ayers St. at Horne Rd., Corpus Christi 121,000 416,000 Dickinson, I-45 at F.M. 517, Dickinson (72%) 55,000 * 225,000 * Coronado Hills, Mesa at Balboa, El Paso (15%) 19,000 * 86,000 * Broadway, Broadway at 59th St., Galveston (77%) 58,000 * 167,000 * Food King Place, 25th St. at Avenue P, Galveston 28,000 78,000 Galveston Place, Central City Blvd. at 61st St., Galveston 123,000 527,000 Cedar Bayou, Bayou Rd., LaMarque 15,000 51,000 Corum South, Gulf Fwy., League City 92,000 574,000 Caprock Center, 50th at Boston Ave., Lubbock 375,000 1,255,000 Town & Country, 4th St. at University, Lubbock 171,000 703,000 Angelina Village, Hwy. 59 at Loop 287, Lufkin 229,000 1,835,000 Independence Plaza, Town East Blvd., Mesquite (15%) 27,000 * 118,000 * University Park Plaza, University Dr. at E. Austin St., Nacogdoches 78,000 283,000 Mid-County, Twin Cities Hwy. at Nederland Ave., Nederland 107,000 611,000 Gilham Circle, Gilham Circle at Thomas, Port Arthur 33,000 94,000 Village, 9th Ave. at 25th St., Port Arthur (77%) 39,000 * 185,000 * Porterwood, Eastex Fwy. at F.M. 1314, Porter 99,000 487,000 Plaza, Ave. H at U.S. Hwy. 90A, Rosenberg 41,000 * 135,000 Rose-Rich, U.S. Hwy. 90A at Lane Dr., Rosenberg 104,000 386,000 Bandera Village, Bandera at Hillcrest, San Antonio 57,000 607,000 Oak Park Village, Nacogdoches at New Braunfels, San Antonio 65,000 221,000 Parliament Square, W. Ave. at Blanco, San Antonio 65,000 260,000 San Pedro Court, San Pedro at Hwy. 281N., San Antonio 2,000 18,000 Valley View, West Ave. at Blanco Rd., San Antonio 89,000 341,000 Market at Town Center, Town Center Blvd., Sugar Land 349,000 1,732,000 Williams Trace, Hwy. 6 at Williams Trace, Sugar Land 263,000 1,187,000 New Boston Road, New Boston at Summerhill, Texarkana 90,000 335,000 Island Market Place, 6th St. at 9th Ave., Texas City 27,000 90,000 Mainland, Hwy. 1765 at Hwy. 3, Texas City 69,000 279,000 Palmer Plaza, F.M. 1764 at 34th St., Texas City 97,000 367,000 Broadway, S. Broadway at W. 9th St., Tyler (77%) 46,000 * 197,000 * Crossroads, I-10 at N. Main, Vidor 116,000 516,000 LOUISIANA, TOTAL 1,337,000 5,504,000 Park Terrace, U.S. Hwy. 171 at Parish, DeRidder 137,000 520,000 Town & Country Plaza, U.S. Hwy. 190 West, Hammond 215,000 915,000 Westwood Village, W. Congress at Bertrand, Lafayette 141,000 942,000 East Town, 3rd Ave. at 1st St., Lake Charles 33,000 * 117,000 * 14/Park Plaza, Hwy. 14 at General Doolittle, Lake Charles 207,000 654,000 Kmart Plaza, Ryan St., Lake Charles 105,000 * 406,000 * Southgate, Ryan at Eddy, Lake Charles 171,000 628,000 Danville Plaza, Louisville at 19th, Monroe 143,000 539,000 Orleans Station, Paris, Robert E. Lee & Chatham, New Orleans 5,000 31,000 Southgate, 70th at Mansfield, Shreveport 73,000 359,000 Westwood, Jewella at Greenwood, Shreveport 107,000 393,000
Table continued on next page
Building Name and Location Area Land Area - -------------------------------------------------------------------- -------- --------- ARIZONA, TOTAL 725,000 3,342,000 University Plaza, Plaza Way at Milton Rd., Flagstaff 166,000 918,000 Camelback Village Square, Camelback at 7th Avenue, Phoenix 135,000 543,000 Squaw Peak Plaza, 16th Street at Glendale Ave., Phoenix 61,000 220,000 Fountain Plaza, 77th St. at McDowell, Scottsdale 107,000 460,000 Broadway Marketplace, Broadway at Rural, Tempe 86,000 347,000 Fry's Valley Plaza, S. McClintock at E. Southern, Tempe (15%) 21,000 * 85,000 * Pueblo Anozira, McClintock Dr. at Guadalupe Rd., Tempe 149,000 769,000 OKLAHOMA, TOTAL 687,000 3,173,000 Bryant Square, Bryant Ave. at 2nd St., Edmond 268,000 1,259,000 Market Boulevard, E. Reno Ave. at N. Douglas Ave., Midwest City 36,000 142,000 Town & Country, Reno Ave at North Air Depot, Midwest City 137,000 540,000 Windsor Hills Center, Meridian at Windsor Place, Oklahoma City 246,000 1,232,000 NEW MEXICO, TOTAL 606,000 2,666,000 Eastdale, Candelaria Rd. at Eubank Blvd., Albuquerque (15%) 17,000 * 90,000 * North Towne Plaza, Academy Rd. @ Wyoming Blvd., Albuquerque 103,000 607,000 Valle del Sol, Isleta Blvd. at Rio Bravo, Albuquerque 106,000 475,000 Wyoming Mall, Academy Rd. at Northeastern, Albuquerque 323,000 1,309,000 DeVargas, N. Guadalupe at Paseo de Peralta, Santa Fe (23%) 57,000 * 185,000 * ARKANSAS, TOTAL 534,000 2,054,000 Evelyn Hills, College Ave. at Abshier, Fayetteville 154,000 750,000 Broadway Plaza, Broadway at W. Roosevelt, Little Rock 43,000 148,000 Geyer Springs, Geyer Springs at Baseline, Little Rock 153,000 415,000 Markham Square, W. Markham at John Barrow, Little Rock 134,000 535,000 Westgate, Cantrell at Bryant, Little Rock 50,000 206,000 NEVADA, TOTAL 450,000 1,659,000 Mission Center, Flamingo Rd. at Maryland Pkwy, Las Vegas 71,000 254,000 Paradise Marketplace, Flamingo Rd. at Sandhill, Las Vegas 149,000 536,000 Rancho Towne & Country, Rancho Dr. at Charleston Blvd., Las Vega s 87,000 350,000 Tropicana Marketplace, Tropicana at Jones Blvd., Las Vegas 143,000 519,000 KANSAS, TOTAL 372,000 1,830,000 Westbrooke Village, Quivira Road at 75th St., Shawnee 237,000 1,269,000 Shawnee Village, Shawnee Mission Pkwy. at Quivera Rd., Shawnee 135,000 561,000 MISSOURI, TOTAL 135,000 448,000 PineTree Plaza, U.S. Hwy. 150 at Hwy. 291, Lee's Summit 135,000 448,000 COLORADO, TOTAL 127,000 460,000 Carefree, Academy Blvd. at N. Carefree Circle, Colorado Springs 127,000 460,000 MAINE, TOTAL 124,000 482,000 The Promenade, Essex at Summit, Lewiston 124,000 * 482,000 * TENNESSEE, TOTAL 20,000 84,000 Highland Square, Summer at Highland, Memphis 20,000 84,000
Table continued on next page
Building INDUSTRIAL Area Land Area --------- ---------- HOUSTON AND HARRIS COUNTY, TOTAL 3,420,000 8,603,000 Brookhollow Business Center, Dacoma at Directors Row 133,000 405,000 Cannon/So. Loop Business Park, Cannon Street (75%) 221,000 * 362,000 * Central Park North, W. Hardy Rd. at Kendrick Dr. 155,000 465,000 Central Park Northwest VI, Central Pkwy. at Dacoma 175,000 518,000 Central Park Northwest VII, Central Pkwy. at Dacoma 104,000 283,000 Jester Plaza, West T.C. Jester 101,000 244,000 Kempwood Industrial, Kempwood Dr. at Blankenship Dr. 211,000 778,000 Lathrop Warehouse, Lathrop St. at Larimer St. 252,000 436,000 Little York Mini-Storage, West Little York 32,000 * 124,000 * Navigation Business Park, Navigation At N. York 238,000 555,000 Northway Park II, Loop 610 East at Homestead 303,000 745,000 Park Southwest, Stancliff at Brooklet 52,000 159,000 Railwood Industrial Park, Mesa at U.S. 90 805,000 2,070,000 South Loop Business Park, S. Loop at Long Dr. 46,000 * 103,000 * Southwest Park II, Rockley Road 68,000 216,000 West-10 Business Center, Wirt Rd. at I-10 141,000 330,000 West Loop Commerce Center, W. Loop N. at I-10 34,000 91,000 610 and 11th St. Warehouse, Loop 610 at 11th St. 349,000 719,000 TEXAS (EXCLUDING HOUSTON & HARRIS CO.), TOTAL 143,000 425,000 River Pointe Mini-Storage, Conroe 32,000 * 97,000 * Nasa One Business Center, Nasa Road One at Hwy. 3, Webster 111,000 328,000 MULTI-FAMILY RESIDENTIAL TEXAS (EXCLUDING HOUSTON & HARRIS CO.), TOTAL 37,000 95,000 Summer Place Apartments, Hillcrest at Quill Dr., San Antonio 37,000 * 95,000 * OFFICE BUILDING HOUSTON & HARRIS COUNTY, TOTAL 121,000 171,000 Citadel Plaza, N. Loop 610 at Citadel Plaza Dr. 121,000 171,000 UNIMPROVED LAND HOUSTON & HARRIS COUNTY, TOTAL 5,046,000 Bissonnet at Wilcrest 773,000 Citadel Plaza at 610 N. Loop 137,000 East Orem 122,000 Kirkwood at Dashwood Dr. 322,000 Lockwood at Navigation 163,000 Mesa Rd. at Tidwell 901,000 Mesa Rd. at Spikewood 1 ,374,000 Mowery at Cullen 118,000 Northwest Fwy. at Gessner 484,000 Post Oak at Westheimer 37,000 Redman at W. Denham 17,000 Renwick at Gulfton 17,000 Richmond at Loop 610 60,000 Sheldon at I-10 19,000 University at Morningside 16,000
Table continued on next page
Building Name and Location Area Land Area - ---------------------------------------------- ---------- ---------- W. Little York at I-45 322,000 W. Little York at N. Houston-Rosslyn 19,000 W. Loop N. at I-10 145,000 TEXAS (EXCLUDING HOUSTON & HARRIS CO.), TOTAL 619,000 Loop 336 at I-45, Conroe 78,000 River Pointe Dr. at I-45, Conroe 186,000 Hillcrest, Sunshine at Quill, San Antonio 171,000 Hwy. 3 at Hwy. 1765, Texas City 184,000 LOUISIANA, TOTAL 1,284,000 U.S. Hwy. 171 at Parish, DeRidder 462,000 Woodland Hwy., Plaquemines Parish (5%) 822,000 * ALL PROPERTIES-BY LOCATION GRAND TOTAL 20,205,000 84,821,000 Houston & Harris County 10,412,000 40,835,000 Texas (excluding Houston & Harris County) 4,496,000 21,000,000 Louisiana 1,337,000 6,788,000 Arizona 725,000 3,342,000 Oklahoma 687,000 3,173,000 New Mexico 606,000 2,666,000 Arkansas 534,000 2,054,000 Nevada 450,000 1,659,000 Kansas 372,000 1,830,000 Missouri 135,000 448,000 Colorado 127,000 460,000 Maine 124,000 482,000 Tennessee 20,000 84,000 ALL PROPERTIES-BY CLASSIFICATION GRAND TOTAL 20,205,000 84,821,000 Shopping Centers 16,484,000 68,578,000 Industrial 3,563,000 9,028,000 Office Building 121,000 171,000 Multi-Family Residential 37,000 95,000 Unimproved Land 6,949,000
Note: Total square footage includes 6,700,000 square feet of land leased and 170,000 square feet of building leased from others. * Denotes partial ownership. The Company's interest is 50% except where noted. The square feet figures represent the Company's proportionate ownership of the entire property. General. In 1996, no single property accounted for more than 3.6% of the Company's total assets or 3.5% of gross revenues. Three properties, in the aggregate, represented approximately 8.7% of the Company's gross revenues for the year ended December 31, 1996; otherwise, none of the remaining properties accounted for more than 2.0% of the Company's gross revenues during the same period. The occupancy rate for all of the Company's improved properties as of December 31, 1996 was 93.0%. Substantially all of the Company's properties are owned directly by the Company (subject in certain cases to mortgages), although the Company's interests in certain of its properties are held indirectly through its interests in joint ventures or under long-term leases. In the opinion of management of the Company, its properties are well maintained and in good repair, suitable for their intended uses, and adequately covered by insurance. Shopping Centers. As of December 31, 1996, the Company owned, either directly or through its interests in joint ventures, 160 shopping centers with approximately 16.5 million square feet of building area. The shopping centers were located predominantly in Texas with other locations in Louisiana, Oklahoma, Arkansas, Arizona, New Mexico, Maine, Tennessee, Nevada, Kansas, Missouri and Colorado. The Company's shopping centers are primarily community shopping centers which range in size from 100,000 to 400,000 square feet, as distinguished from small strip centers which generally contain 5,000 to 25,000 square feet and from large regional enclosed malls which generally contain over 500,000 square feet. Most of the centers do not have climatized common areas but are designed to allow retail customers to park their automobiles in close proximity to any retailer in the center. The Company's centers are customarily constructed of masonry, steel and glass and all have lighted, paved parking areas which are typically landscaped with berms, trees and shrubs. They are generally located at major intersections in close proximity to neighborhoods which have existing populations sufficient to support retail activities of the types conducted in the Company's centers. The Company has approximately 3,200 separate leases with 2,400 different tenants in its portfolio, including national and regional supermarket chains, other nationally or regionally known stores (including drug stores, discount department stores, junior department stores and catalog stores) and a great variety of other regional and local retailers. The large number of locations offered by the Company and the types of traditional anchor tenants help attract prospective new tenants. Some of the national and regional supermarket chains which are tenants in the Company's centers include Albertson's, Fiesta, Jewel, Smith's, Fleming Foods, H.E.B., Kroger Company, Randall's Food Markets, Fry's Food Stores and Super Value Holdings. In addition to these supermarket chains, the Company's nationally and regionally known retail store tenants include Eckerd, Walgreen and Osco drugstores; Kmart and Venture discount stores; Bealls, Palais Royal and Weiner's junior department stores; Marshall's, Office Depot, 50-Off, Office Max, Baby Superstore, Ross and T.J. Maxx off-price specialty stores; Luby's, Piccadilly and Furr's; Academy sporting goods; Service Merchandise catalog stores; FAO Schwarz toy store; Cost Plus Imports; Linens 'N Things; Barnes & Noble bookstore; and the following restaurant chains: Arby's, Burger King, Champ's, Church's Fried Chicken, Dairy Queen, Domino's, Jack-in-the-Box, CiCi Pizza, Long John Silver's, McDonald's, Olive Garden, Outback Steakhouse, Pizza Hut, Shoney's, Steak & Ale, Taco Bell and Whataburger. The Company also leases space in 3,000 to 10,000 square foot areas to national chains such as the Limited Store, The Gap, One Price Stores, Tempo, Eddie Bauer and Radio Shack. The Company's shopping center leases have lease terms generally ranging from three to five years for tenant space under 5,000 square feet and from 10 to 35 years for tenant space over 10,000 square feet. Leases with primary lease terms in excess of 10 years, generally for anchor and out-parcels, frequently contain renewal options which allow the tenant to extend the term of the lease for one or more additional periods, each such period generally being of a shorter duration than the primary lease term. The rental rates paid during a renewal period are generally based upon the rental rate for the primary term, sometimes adjusted for inflation or for the amount of the tenant's sales during the primary term. Most of the Company's leases provide for the monthly payment in advance of fixed minimum rentals, the tenants' pro rata share of ad valorem taxes, insurance (including fire and extended coverage, rent insurance and liability insurance) and common area maintenance for the center (based on estimates of the costs for such items) and for the payment of additional rentals based on a percentage of the tenants' sales ("percentage rentals"). Utilities are generally paid directly by tenants except where common metering exists with respect to a center, in which case the Company makes the payments for the utilities and is reimbursed by the tenants on a monthly basis. Generally, the Company's leases prohibit the tenant from assigning or subletting its space and require the tenant to use its space for the purpose designated in its lease agreement and to operate its business on a continuous basis. Certain of the lease agreements with major tenants contain modifications of these basic provisions in view of the financial condition, stability or desirability of such tenants. Where a tenant is granted the right to assign or sublet its space, the lease agreement generally provides that the original lessee will remain liable for the payment of the lease obligations under such lease agreement. During 1996, the Company added approximately 1.4 million square feet to its portfolio of shopping center properties through the acquisition of properties and another .1 million square feet of space through development. The Company entered a new market with a 127,000 square foot acquisition in Colorado. The Company acquired two shopping centers in the suburbs of Kansas City aggregating 270,000 square feet. In additon the Company also added 470,000 square feet of properties in Arizona, Louisiana and San Antonio, Texas. The remaining shopping center acquisitions were located in the Houston metropolitan area. Industrial Properties. The Company currently owns a total of twenty industrial projects, all of which are located in the greater Houston area. These projects include 76 buildings having a total of 3.6 million square feet of building area situated on 9.0 million square feet of land. These figures include the Company's interests in four joint ventures. Major tenants of the Company's industrial properties include Advo (a leading direct mail advertising company), Pepsico's PFS division, Stone Container Corporation and Iron Mountain Records Storage. During 1996, the Company completed the development of a 163,000 square foot build-to-suit project on a tract of the Company's undeveloped land located in the Railwood Industrial Park. Railwood Industrial Park is a master-planned industrial park in northeast Houston, which offers full utilities, loading docks and rail service in an architecturally controlled environment. During 1996, the Company acquired three properties representing 615,000 square feet of industrial space. These acquistions included a combination of both office/service center space and bulk/dock high facilities. These properties are all located in Houston. Office Building. The Company owns a seven-story, 121,000 square foot masonry office building with a detached, covered, three-level parking garage situated on 171,000 square feet of land fronting on North Loop 610 West in Houston. The building serves as the Company's headquarters. Other than the Company, the major tenant of the building is Nations Bank, which currently occupies 11% of the office space. Multi-family Residential Properties. At December 31, 1996, the Company owned, through a joint venture interest, one apartment project located in San Antonio, Texas. The Company's percentage ownership represents approximately 79 units of the project's aggregate 159 units. This project is a garden-type project complemented by landscaping, recreational areas and adequate parking. This project is managed by our joint venture partner, who is an experienced apartment operator. During 1996, a 564 unit project in Houston, Texas in which the Company had a 26% equity interest was sold. Unimproved Land. The Company owns, directly or through its interest in a joint venture, 24 parcels of unimproved land aggregating approximately 6.9 million square feet of land area located in Texas and Louisiana. These properties include approximately 4.0 million square feet of land adjacent to certain of the Company's existing developed properties, which may be used for expansion of these developments, as well as approximately 2.9 million square feet of land, which may be used for new development. Almost all of these unimproved properties are served by roads and utilities and are ready for development. Most of these parcels are suitable for development as shopping centers, and the Company intends to emphasize the development of these parcels for such purpose. ITEM 3. LEGAL PROCEEDINGS There are no material pending legal proceedings, other than ordinary routine litigation incidental to its business, to which the Company is a party or to which any of its properties are subject. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS None. EXECUTIVE OFFICERS OF THE REGISTRANT The following table sets forth certain information with respect to the executive officers of the Company as of February 27, 1997. All executive officers of the Company are elected annually by the Board of Trust Managers and serve until the successors are elected and qualified.
Name Age Position Stanford Alexander 68 Chairman/Chief Executive Officer Martin Debrovner 60 Vice Chairman Andrew M. Alexander 40 President Joseph W. Robertson, Jr. 49 Executive Vice President/Chief Financial Officer Stephen C. Richter 42 Senior Vice President/Financial Administration and Treasurer
Mr. S. Alexander is the Company's Chairman and its Chief Executive Officer. He has been employed by the Company since 1955 and has served in his present capacity since January 1, 1993. Prior to becoming Chairman, Mr. Alexander served as President and Chief Executive Officer of the Company since 1962. Mr. Alexander is President, Chief Executive Officer and a Trust Manager of Weingarten Properties Trust and a member of the Houston Regional Advisory Board of Texas Commerce Bank National Association, Houston, Texas ("TCB"). Mr. Debrovner became Vice Chairman of the Company on February 25, 1997. Prior to assuming such position Mr. Debrovner served as President and Chief Operating Officer since January 1, 1993. Mr. Debrovner served as President of the Management Company since the Company's reorganization in December 1984. Prior to such time, Mr. Debrovner was an employee of the Company for 17 years, holding the positions of Senior Vice President from 1980 until March 1984 and Executive Vice President until December 1984. As Executive Vice President, Mr. Debrovner was generally responsible for the Company's operations. Mr. Debrovner is also a Trust Manager of Weingarten Properties Trust. Mr. A. Alexander became President of the Company on February 25, 1997. Prior to his present position, Mr. Alexander was Executive Vice President/Asset Management of the Company and President of Weingarten Realty Management Company (the "Management Company"). Prior to such time, Mr. Alexander was Senior Vice President/Asset Management of the Management Company. He also served as Vice President of the Management Company and, prior to the Company's reorganization in December 1984, was Vice President and an employee of the Company since 1978. Mr. Alexander has been primarily involved with leasing operations at both the Company and the Management Company. Mr. Alexander is also a Trust Manager of Weingarten Properties Trust. Mr. Robertson became Executive Vice President of the Company and its Chief Financial Officer on January 1, 1993. Prior to becoming Executive Vice President, Mr. Robertson served as Senior Vice President and Chief Financial Officer since 1980. He has been with the Company since 1971. Mr. Robertson is also a Trust Manager of Weingarten Properties Trust. Mr. Richter became Senior Vice President/Financial Administration and Treasurer on January 1, 1997. Prior to his present position, Mr. Richter served as Vice President/Financial Administration and Treasurer of the Company since January 1, 1993. For the five years prior to that time, he served as Vice President/Financial Administration and Treasurer of the Management Company. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON SHARES OF BENEFICIAL INTEREST AND RELATED SHAREHOLDER MATTERS The Company's Common Shares are listed and traded on the New York Stock Exchange under the symbol "WRI". The number of holders of record of the Company's Common Shares as of February 27, 1997 was 2,834. The high and low sale prices per share of the Company's Common Shares, as reported on the New York Stock Exchange composite tape, and dividends per share paid for the fiscal quarters indicated were as follows:
HIGH LOW DIVIDENDS ----- ---- --------- 1996: Fourth $ 40 3/4 $ 36 $ 0.62 Third 40 1/2 37 3/8 0.62 Second 38 7/8 34 1/4 0.62 First 38 7/8 35 5/8 0.62 1995: Fourth $ 38 1/2 $ 33 1/2 $ 0.60 Third 37 7/8 35 1/8 0.60 Second 38 1/8 34 1/4 0.60 First 38 34 1/2 0.60
ITEM 6. SELECTED FINANCIAL DATA The following table sets forth selected consolidated financial data with respect to the Company and should be read in conjunction with "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations," the Consolidated Financial Statements and accompanying Notes in "Item 8. Financial Statements and Supplementary Data" and the financial schedules included elsewhere in this Form 10-K.
(Amounts in thousands, except per share amounts) Years Ended December 31, 1996 1995 1994 1993 1992 --------- --------- --------- --------- --------- Revenues (primarily real estate rentals) $151,123 $134,197 $120,793 $103,282 $ 89,959 --------- --------- --------- --------- --------- Expenses: Depreciation and amortization 33,769 30,060 26,842 23,382 21,291 Interest 21,975 16,707 10,694 10,046 18,689 Other 47,004 42,614 39,235 35,236 30,538 --------- --------- --------- --------- --------- Total 102,748 89,381 76,771 68,664 70,518 --------- --------- --------- --------- --------- Income from operations 48,375 44,816 44,022 34,618 19,441 Gain (loss) on sales of property and securities 5,563 (14) (234) 1,631 1,807 Extraordinary charge(1) (1,167) --------- --------- --------- --------- --------- Net Income $ 53,938 $ 44,802 $ 43,788 $ 36,249 $ 20,081 ========= ========= ========= ========= ========= Weighted average number of common shares outstanding 26,555 26,464 26,190 24,211 17,503 Net income per common share $ 2.03 $ 1.69 $ 1.67 $ 1.50 $ 1.15 Cash dividends per common share $ 2.48 $ 2.40 $ 2.28 $ 2.16 $ 2.04 Property (at cost) $970,418 $849,894 $735,134 $634,814 $540,671 Total assets $831,097 $734,824 $682,037 $602,042 $472,303 Debt and convertible notes and debentures $389,225 $289,339 $229,597 $147,652 $243,627 Other Data: Funds from Operations (2) Net income $ 53,938 $ 44,802 $ 43,788 $ 36,249 $ 20,081 Depreciation and amortization(3) 33,414 29,813 26,842 23,382 21,291 (Gain) loss on sales of property and securities (5,563) 14 234 (1,631) (1,807) Extraordinary charge (1) 1,167 --------- --------- --------- --------- --------- Total $ 81,789 $ 74,629 $ 70,864 $ 58,000 $ 40,732 ========= ========= ========= ========= ========= (1) Relates to prepayment penalties paid in connection with the early retirement of debt. (2) Funds from operations do not represent cash flows from operations and should not be considered as an alternative to net income. (3) In accordance with the newly-adopted NAREIT definition of funds from operations, debt cost amortization is not included beginning with the year ended December 31, 1995.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the consolidated financial statements and notes thereto and the comparative summary of selected financial data appearing elsewhere in this report. Historical results and trends which might appear should not be taken as indicative of future operations. Weingarten Realty Investors owned and operated 160 anchored shopping centers, 20 industrial properties, one multi-family residential project and one office building at December 31, 1996. Of the Company's 182 developed properties, 140 are located in Texas (including 89 in Houston and Harris County). The Company's remaining properties are located in Louisiana (11), Arizona (7), Arkansas (5), New Mexico (5), Oklahoma (4), Nevada (4), Kansas (2), Colorado (1), Missouri (1), Tennessee (1) and Maine (1). The Company has nearly 3,200 leases and 2,400 different tenants. Leases for the Company's properties range from less than a year for smaller spaces to over 25 years for larger tenants; leases generally include minimum lease payments and contingent rentals for payment of taxes, insurance and maintenance and for an amount based on a percentage of the tenants' sales. The majority of the Company's anchor tenants are supermarkets, drugstores and other retailers which generally sell basic necessity-type items. CAPITAL RESOURCES AND LIQUIDITY The Company anticipates that cash flows from operating activities will continue to provide adequate capital for all dividend payments in accordance with REIT requirements and that cash on hand, borrowings under its existing credit facility and the use of project financing, as well as other debt and equity alternatives, will provide the necessary capital to achieve growth. Cash flow from operating activities as reported in the Statements of Consolidated Cash Flows increased to $76.3 million for 1996 from $72.5 million for 1995 and $64.3 million for 1994. Cash dividends increased to $65.9 million in 1996, compared to $63.5 million in 1995 and $59.7 million in 1994. The Company satisfied its REIT requirement of distributing at least 95% of ordinary taxable income for each of the three years ended December 31, 1996, and, accordingly, federal income taxes were not provided in these years. The Company's dividend payout ratio for 1996, 1995 and 1994 approximated 80.5%, 85.1% and 84.2%, respectively, based on funds from operations for that year. The Company continued to expand its portfolio of income-producing properties in 1996. This growth resulted primarily from acquisitions of existing properties, both shopping centers and industrial properties. During the year, the Company purchased nine shopping centers and three industrial projects. These acquisitions added 2.1 million square feet to the Company's portfolio, at a combined cost of $99.1 million. The Company expanded its presence in its existing markets and entered a new market in 1996 with the acquisition of a shopping center in Colorado. The Company completed the development of a .2 million square foot build-to-suit industrial project on a tract of the Company's undeveloped land and also completed development of three shopping centers which added .1 million square feet. Additionally, the Company has an ongoing program for maintaining and renovating its existing portfolio of properties. Capitalized expenditures for acquisitions, new development and additions to the existing portfolio were, in millions, $131.6, $114.7 and $100.5 during 1996, 1995 and 1994, respectively. All of the acquisitions and new development during 1996 were initially financed under the Company's revolving credit facility. Total debt outstanding increased to $389.2 million at December 31, 1996, from $289.3 million at December 31, 1995. The Company increased total debt by $99.9 million primarily to fund acquisitions and new development. The Company's ratio of debt to total market capitalization was 27% at December 31, 1996, as compared to 22% at year end 1995. During the year, the Company issued an additional $79 million in unsecured Medium Term Notes ("MTNs"). These MTNs were issued with an average life of 11 years at an average interest rate of 7.2% and the proceeds were used to pay down balances outstanding under the Company's revolving credit facility. Continued growth through acquisitions and new development will eventually necessitate the issuance of additional equity securities; however, the Company's current capital structure should allow the issuance of additional debt before this is required. In the interim, the Company will continue to closely monitor both the debt and equity markets and carefully consider its available alternatives, including both public and private placements. During 1996, the Company's $200 million unsecured revolving credit facility was amended to improve the pricing and effectively extend the term of the commitment. In addition, the Company executed an agreement with a bank for an unsecured and uncommitted overnight credit facility totaling $20 million to be used for cash management purposes. The Company will maintain adequate funds available under the $200 million revolving credit facility at all times to cover the outstanding balance under the $20 million facility. At December 31, 1996, the Company had approximately $98 million of funds available under the revolving credit facilities. In the third quarter of 1996, the Company filed a $250 million shelf registration statement with the Securities and Exchange Commission (which includes $23.5 million from the Company's prior shelf registration), which allows for the issuance of debt, equity securities or warrants. At December 31, 1996, amounts available under the shelf registration totaled $231 million. The Company expects to continue to issue debt under its shelf registration and to continually seek and evaluate other sources of capital. FUNDS FROM OPERATIONS The Company considers funds from operations to be an alternate measure of the performance of an equity REIT since such measure does not recognize depreciation and amortization of real estate assets as operating expenses. Management believes that reductions for these charges are not meaningful in evaluating income-producing real estate, which historically has not depreciated. The National Association of Real Estate Investment Trusts defines funds from operations as net income plus depreciation and amortization of real estate assets, less gains and losses on sales of properties. Funds from operations does not represent cash flows from operations as defined by generally accepted accounting principles and should not be considered as an alternative to net income as an indicator of the Company's operating performance or to cash flows as a measure of liquidity. Funds from operations increased to $81.8 million in 1996, as compared to $74.6 million in 1995 and $70.9 million in 1994. These increases relate primarily to the impact of the Company's acquisitions and new developments and, to a lesser degree, the activity at its existing properties. For further information on changes between years, see "Results of Operations" below. RESULTS OF OPERATIONS Rental revenues increased 15.9% or $19.9 million from $125.4 million in 1995 to $145.3 million in 1996 and by 11.8% or $13.2 million from $112.2 million in 1994. These increases are primarily the result of the Company's acquisition and new development programs. Occupancy of the Company's shopping centers and total portfolio increased from 92% at December 31, 1995 to 93% at the end of 1996. The Company's industrial portfolio remained constant at 94%. The increase in occupancy from 1995, in addition to increased rental rates obtained from the re-leasing and renewal of existing space, accounted for the remaining increase in rental revenues. The Company completed 600 renewals or leases comprising 1.9 million square feet at an average rental rate increase of 9.2%. Net of capital costs for tenant improvements, the increase averaged 4.5%. Interest income totaled $3.1 million in 1996, $5.3 million in 1995 and $5.8 million in 1994. This decrease in income is primarily the result of the Company selling $31.8 million of its investment in marketable debt securities during the fourth quarter of 1995. The sale resulted in a gain of $.1 million. Equity in earnings of real estate joint ventures and partnerships totaled $1.2 million in 1996, $1.5 million in 1995 and $1.3 million in 1994. The decrease in 1996 is due to the sale in the third quarter of 1996 of the Company's 26% interest in an apartment complex accounted for under the equity method. This sale resulted in a gain of $4.2 million. The increase in 1995 is due to improvements in the operating results from the properties held in the joint ventures and partnerships. Direct costs and expenses of operating the Company's properties (i.e., operating and ad valorem tax expenses) increased to $41.9 million in 1996 from $37.7 million in 1995 and $34.8 million in 1994. These increases are primarily due to property acquired and developed during these periods. Overall, direct operating costs and expenses as a percentage of rental revenues have continually declined from 31% in 1994 to 30% in 1995 and to 29% in 1996. Depreciation and amortization have increased to $33.8 million in 1996 from $30.1 million in 1995 and $26.8 million in 1994, also as a result of the properties acquired and developed during these periods. Gross interest costs, before capitalization of interest to development projects, increased by $3.7 million from $19.6 million in 1995 to $23.3 million in 1996. This increase in interest cost was due mainly to the increase in the average debt outstanding from $261.3 million for 1995 to $314.4 million for 1996. The weighted-average interest rate decreased slightly from 7.44% in 1995 to 7.36 % in 1996. Interest expense, net of amounts capitalized, increased $5.3 million from 1995 due to the decrease in interest capitalization from $2.9 million in 1995 to $1.3 million in 1996 as a result of the completion in 1996 of two of the Company's significant development projects. Comparing 1995 to 1994, gross interest costs increased from $12.4 million in 1994 to $19.6 million in 1995. This was due to an increase in the average debt outstanding from $181.6 million in 1994 to $261.3 million in 1995 and to an increase in the weighted-average interest rate between the two periods from 6.80% in 1994 to 7.44% in 1995. Interest expense, net of amounts capitalized, increased by only $6.0 million due to the increase in interest capitalization as a result of increased development activity during 1995. The gain on sales of property and securities of $5.6 million in 1996 is due primarily to the sale of two properties and the receipt of insurance proceeds from fires which destroyed parts of two shopping centers during 1996. There were no such occurrences in 1995 or 1994. As a result of the changes described above, net income increased 20.4% to $53.9 million in 1996 from $44.8 million in 1995 and by 2.3% from $43.8 million in 1994. Net income per common share increased to $2.03 in 1996 from $1.69 in 1995 and $1.67 in 1994. EFFECTS OF INFLATION The rate of inflation was relatively unchanged in 1996. The Company has structured its leases, however, in such a way as to remain largely unaffected should significant inflation occur. Most of the leases contain percentage rent provisions whereby the Company receives rentals based on the tenants' gross sales. Many leases provide for increasing minimum rentals during the terms of the leases through escalation provisions. In addition, many of the Company's leases are for terms of less than ten years, which allows the Company to adjust rentals to changing market conditions when the leases expire. Most of the Company's leases require the tenant to pay their proportionate share of operating expenses and ad valorem taxes. As a result of these lease provisions, increases due to inflation, as well as ad valorem tax rate increases, generally do not have a significant adverse effect upon the Company's operating results. FORWARD LOOKING STATEMENTS This Annual Report on Form 10-K includes certain forward looking statements reflecting the Company's expectations in the near term; however, many factors which may affect the actual results, especially the everchanging retail environment, are difficult to predict. Accordingly, there is no assurance that the Company's expectations will be realized. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEPENDENT AUDITORS' REPORT To the Board of Trust Managers and Shareholders of Weingarten Realty Investors: We have audited the accompanying consolidated balance sheets of Weingarten Realty Investors (the "Company") as of December 31, 1996 and 1995, and the related statements of consolidated income, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 1996. Our audits also included the financial statement schedules listed in the Index at Item 14. These financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements and financial statement schedules based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Weingarten Realty Investors at December 31, 1996 and 1995, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1996 in conformity with generally accepted accounting principles. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information set forth therein. DELOITTE & TOUCHE LLP Houston, Texas February 25, 1997
STATEMENTS OF CONSOLIDATED INCOME (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Years Ended December 31, ------------------------ 1996 1995 1994 -------- --------- --------- Revenues: Rentals $145,307 $125,400 $112,233 Interest (including amounts from related parties of $1,576 in 1996, $2,304 in 1995 and $2,478 in 1994) 3,148 5,338 5,761 Equity in earnings of real estate joint ventures and partnerships 1,232 1,549 1,330 Other 1,436 1,910 1,469 -------- --------- --------- Total 151,123 134,197 120,793 -------- --------- --------- Expenses: Depreciation and amortization 33,769 30,060 26,842 Operating 23,021 20,890 19,368 Interest 21,975 16,707 10,694 Ad valorem taxes 18,874 16,776 15,433 General and administrative 5,109 4,948 4,434 -------- --------- --------- Total 102,748 89,381 76,771 -------- --------- --------- Income from Operations 48,375 44,816 44,022 Gain (loss) on Sales of Property and Securities 5,563 (14) (234) -------- --------- --------- Net Income $ 53,938 $ 44,802 $ 43,788 ======== ========= ========= Net Income Per Common Share $ 2.03 $ 1.69 $ 1.67 ======== ========= ========= Weighted Average Number of Common Shares Outstanding 26,555 26,464 26,190 ======== ========= =========
See Notes to Consolidated Financial Statements.
CONSOLIDATED BALANCE SHEETS (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) December 31, ------------ 1996 1995 ---------- ---------- ASSETS Property $ 970,418 $ 849,894 Accumulated Depreciation (233,514) (216,657) ---------- ---------- Property - net 736,904 633,237 Investment in Real Estate Joint Ventures and Partnerships 7,282 8,960 ---------- ---------- Total 744,186 642,197 Mortgage Bonds and Notes Receivable from: Affiliate (net of deferred gain of $4,487 in 1996 and $5,514 in 1995) 14,550 15,863 Real Estate Joint Ventures and Partnerships 15,235 13,897 Marketable Debt Securities 13,806 16,262 Unamortized Debt and Lease Costs 23,411 20,602 Accrued Rent and Accounts Receivable (net of allowance for doubtful accounts of $1,236 in 1996 and $1,436 in 1995) 13,164 13,357 Cash and Cash Equivalents 169 3,355 Other 6,576 9,291 ---------- ---------- Total $ 831,097 $ 734,824 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Debt $ 389,225 $ 289,339 Accounts Payable and Accrued Expenses 36,949 30,880 Other 3,925 3,006 ---------- ---------- Total 430,099 323,225 ---------- ---------- Commitments and Contingencies Shareholders' Equity: Preferred Shares of Beneficial Interest - par value, $.03 per share; shares authorized: 10,000; shares issued and outstanding: none Common Shares of Beneficial Interest - par value, $.03 per share; shares authorized: 150,000; shares issued and outstanding: 26,576 in 1996 and 26,546 in 1995 797 796 Capital Surplus 400,201 410,803 ---------- ---------- Shareholders' Equity 400,998 411,599 ---------- ---------- Total $ 831,097 $ 734,824 ========== ==========
See Notes to Consolidated Financial Statements.
STATEMENTS OF CONSOLIDATED CASH FLOWS (AMOUNTS IN THOUSANDS) Years Ended December 31, ------------------------ 1996 1995 1994 ---------- ---------- --------- Cash Flows from Operating Activities: Net income $ 53,938 $ 44,802 $ 43,788 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 33,769 30,060 26,842 Equity in earnings of real estate joint ventures and partnerships (1,232) (1,549) (1,330) (Gain) loss on sales of property and securities (5,563) 14 234 Amortization of direct financing leases 639 664 585 Changes in accrued rent and accounts receivable (1,836) (526) (2,632) Changes in other assets (7,507) (7,087) (3,309) Changes in accounts payable and accrued expenses 4,032 6,187 58 Other, net 59 (67) 69 ---------- ---------- --------- Net cash provided by operating activities 76,299 72,498 64,305 ---------- ---------- --------- Cash Flows from Investing Activities: Investment in properties (121,379) (105,438) (75,685) Mortgage bonds and notes receivable: Advances (3,151) (6,691) (6,557) Collections 6,188 12,468 2,694 Proceeds from sales and disposition of property 7,231 444 3,063 Proceeds from sales of marketable debt securities 31,836 Real estate joint ventures and partnerships: Investments (69) (66) (249) Distributions 1,032 1,337 1,238 Other, net 3,291 2,672 2,519 ---------- ---------- --------- Net cash used in investing activities (106,857) (63,438) (72,977) ---------- ---------- --------- Cash Flows from Financing Activities: Proceeds from issuance of: Debt 95,770 144,500 145,251 Common shares of beneficial interest 231 398 410 Principal payments of debt (2,350) (89,406) (76,527) Dividends paid (65,851) (63,478) (59,735) Other, net (428) (1,014) (658) ---------- ---------- --------- Net cash provided by (used in) financing activities 27,372 (9,000) 8,741 ---------- ---------- --------- Net (decrease) increase in cash and cash equivalents (3,186) 60 69 Cash and cash equivalents at January 1 3,355 3,295 3,226 ---------- ---------- --------- Cash and cash equivalents at December 31 $ 169 $ 3,355 $ 3,295 ========== ========== =========
See Notes to Consolidated Financial Statements.
STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Years Ended December 31, 1996, 1995 and 1994 Common Shares of Beneficial Capital Retained Interest Surplus Earnings ----------- --------- ---------- Balance, January 1, 1994 $ 779 $426,308 Net income $ 43,788 Shares exchanged for property 9 11,392 Shares issued under benefit plans 3 849 Cash dividends ($2.28 per share) (15,947) (43,788) ----------- --------- ---------- Balance, December 31, 1994 791 422,602 --- Net income 44,802 Shares exchanged for property 5 6,342 Shares issued under benefit plans 679 Unrealized loss on marketable securities transferred to available for sale (144) Cash dividends ($2.40 per share) (18,676) (44,802) ----------- --------- ---------- Balance, December 31, 1995 796 410,803 --- Net income 53,938 Shares exchanged for property 1 968 Shares issued under benefit plans 469 Unrealized loss on marketable securities (125) Cash dividends ($2.48 per share) (11,914) (53,938) ----------- --------- ---------- Balance, December 31, 1996 $ 797 $400,201 $ --- =========== ========= ==========
See Notes to Consolidated Financial Statements. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business Weingarten Realty Investors (the "Company"), a Texas real estate investment trust, is engaged in the acquisition, development and management of real estate, primarily neighborhood and community shopping centers. Over 75% of the Company's properties are located in Texas, with the remainder located throughout the southwestern part of the United States. The Company's major tenants include supermarkets, drugstores and other retailers who generally sell basic necessity-type commodities. The Company currently operates and intends to operate in the future as a real estate investment trust ("REIT"). Basis of Presentation The consolidated financial statements include the accounts of the Company, its subsidiaries and its interest in 50% or more-owned joint ventures and partnerships over which the Company exercises control. All significant intercompany balances and transactions have been eliminated. Investments in less than 50%-owned joint ventures and partnerships are accounted for using the equity method. Revenue Recognition Rental revenue is generally recognized on a straight-line basis over the life of the lease for operating leases and over the lease terms using the interest method for direct financing leases. Contingent rentals (payments for taxes, maintenance and insurance by the lessees and for an amount based on a percentage of the tenants' sales) are estimated and accrued over the lease year. Property Real estate assets are carried at cost plus capitalized carrying charges. Depreciation is computed using the straight-line method, generally over estimated useful lives of 18-50 years for buildings and 10-20 years for parking lot surfacing and equipment. Major replacements are capitalized and the replaced asset and corresponding accumulated depreciation are removed from the accounts. All other maintenance and repair items are charged to expense as incurred. The Company adopted Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" effective January 1, 1996. The Company evaluates long-lived assets for impairment based upon the recoverability of the asset's carrying value. When it is probable that the undiscounted future cash flows will not be sufficient to recover the asset's carrying value, an impairment is recognized. No such impairments were recognized by the Company during the year ended December 31, 1996. Capitalization Carrying charges, principally interest and ad valorem taxes, on land under development and buildings under construction are capitalized as part of land under development and buildings and improvements. Deferred Charges Unamortized debt and lease costs are amortized primarily on a straight-line basis over the terms of the debt and over the lives of leases, respectively. Marketable Debt Securities The Company's investment in marketable securities is classified as "available for sale." The securities are carried at market with any unrealized gains or losses included as a component of shareholders' equity. Premiums and discounts are amortized (accreted) to operations over the estimated remaining lives of the securities using the constant yield method. Use of Estimates The preparation of financial statements requires management to make use of estimates and assumptions that affect amounts reported in the financial statements as well as certain disclosures. Actual results could differ from those estimates. Per Share Data Net income per common share is computed using the weighted average number of common shares outstanding during the period and excludes the negligible dilutive effect of shares issuable under benefit plans. Statements of Cash Flows The Company considers all highly liquid investments with original maturities of three months or less as cash equivalents. The Company issued .1 million, .2 million and .3 million common shares of beneficial interest valued at $1.0 million, $6.3 million and $11.4 million in 1996, 1995 and 1994, respectively, in connection with the purchases of property. The Company also assumed debt and capital lease obligations totaling $6.6 million, $2.9 million and $13.4 million in connection with the purchases of properties during 1996, 1995 and 1994, respectively. NOTE 2. DEBT The Company's debt consists of the following (in thousands):
DECEMBER 31, ------------ 1996 1995 -------- -------- Fixed-rate debt payable to 2015 at 6.0% to 10.5% $266,810 $189,413 Notes payable under revolving credit agreements 87,120 73,500 Repurchase agreements, due daily and collateralized by $13.8 million of marketable debt securities 13,475 11,900 Industrial revenue bonds payable to 2015 at 4.8% to 6.6% at December 31, 1996 7,558 7,669 Obligations under capital leases 12,467 6,001 Other 1,795 856 -------- -------- Total $389,225 $289,339 ======== ========
The Company has an unsecured $200 million revolving credit agreement with a bank syndicate. The agreement expires in November 1999, but the Company has an annual option to request a one year extension of the agreement. All members of the bank syndicate must agree to the requested extension or the agreement expires on the scheduled date, at which time all loans outstanding under the credit agreement become payable over a two-year period. The Company intends to request an extension of the agreement in 1997 and expects that the bank syndicate will agree to its request. During 1996, the Company executed an agreement for an unsecured and uncommitted overnight credit facility totaling $20 million with a bank to be used for cash management purposes. The Company will maintain adequate funds available under the $200 million revolving credit facility at all times to cover the outstanding balance under this facility. The Company also has letters of credit totaling $14.9 million outstanding under the $200 million revolving credit facility at December 31, 1996. The revolving credit agreements are subject to normal banking terms and conditions and do not adversely restrict the Company's operations or liquidity. At December 31, 1996, the variable interest rate for notes payable under the $200 million revolving credit agreement, including the cost of the related commitment fee, was 7.2% and the variable interest rates under the $20 million revolving credit agreement and the repurchase agreements were 7.0% and 6.8%, respectively. During 1996, the maximum balance and weighted-average balance outstanding under these agreements were $116.2 million and $81.5 million, respectively, at an average interest rate of 6.1%. The Company made cash payments for interest on debt, net of amounts capitalized, of $21.3 million in 1996, $13.9 million in 1995 and $10.1 million in 1994. Certain debt is collateralized by various direct financing leases or other property and current and future rentals from these leases and properties. At December 31, 1996 and 1995, the carrying value of such property aggregated $173 million and $177 million, respectively. The Company has three interest rate swap contracts with an aggregate notional amount of $40 million. Such contracts, which expire through 2004, have been outstanding since their purchase in 1992. The Company intends to hold such contracts through their expiration date and to use them as a means of fixing the interest rate on a portion of the Company's variable-rate debt. The interest rate swaps have an effective interest rate of 8.1%. The difference between the interest received and paid on the interest rate swaps is recognized as interest expense as incurred. The interest rate swaps increased interest expense and decreased net income as follows, in millions: $.9 in 1996, $.8 in 1995 and $1.4 in 1994. The interest rate swaps increased the average interest rate for the Company's debt by the following amounts: .3% for 1996, .2% for 1995 and .8% for 1994. The Company could be exposed to credit losses in the event of non-performance by the counterparty; however, the likelihood of such non-performance is remote. The Company's debt can be summarized as follows (in thousands):
DECEMBER 31, ------------ 1996 1995 -------- -------- As to interest rate: Fixed-rate debt (including amounts fixed through interest rate swaps) $306,853 $229,994 Variable-rate debt 82,372 59,345 -------- -------- Total $389,225 $289,339 ======== ========
DECEMBER 31, ------------ 1996 1995 -------- -------- As to collateralization: Secured debt $ 91,334 $ 87,133 Unsecured debt 297,891 202,206 -------- -------- Total $389,225 $289,339 ======== ========
Scheduled principal payments on the Company's debt (excluding $87.1 million potentially due under the Company's revolving credit agreements in 1997 and 1999 and $13.5 million of repurchase agreements) are due during the following years (in thousands): 1997 $ 6,466 1998 1,356 1999 1,469 2000 30,540 2001 47,792 2002 through 2006 112,465 2007 through 2011 77,414 Thereafter 10,902 Various debt agreements contain restrictive covenants, the most restrictive of which requires the Company to produce annual consolidated distributable cash flow, as defined by the agreements, of not less than 250% of interest payments, to limit the payment of dividends to no more than 100% of the Company's annual consolidated cash flow (as defined), to limit short-term debt (as defined) to the greater of 33% of total debt or $200 million (exclusive of repurchase agreements) and to maintain uncollateralized assets equal to at least 150% of unsecured debt. Management believes that the Company is in compliance with all restrictive covenants. During 1996, the Company issued $79 million of unsecured Medium Term Notes ("MTNs") with an average life of 11 years at an average interest rate of 7.2%. As of December 31, 1996, the Company had issued a total of $195.5 million of MTNs. In the third quarter of 1996, the Company filed a $250 million shelf registration statement with the Securities and Exchange Commission, which allows for the issuance of debt or equity securities or warrants. At December 31, 1996, the unused portion of the shelf registration totaled $231 million. NOTE 3. PROPERTY The Company's property consists of the following (in thousands):
DECEMBER 31, ------------ 1996 1995 -------- -------- Land $183,431 $151,985 Land under development 33,140 40,464 Buildings and improvements 743,688 636,601 Construction in-progress 1,897 11,648 Property under direct financing leases 8,262 9,196 -------- -------- Total $970,418 $849,894 ======== ========
The following carrying charges were capitalized (in thousands):
DECEMBER 31, ------------ 1996 1995 1994 ------ ------ ------ Interest $1,285 $2,878 $1,670 Ad valorem taxes 269 486 625 ------ ------ ------ Total $1,554 $3,364 $2,295 ====== ====== ======
NOTE 4. LEASING OPERATIONS Leasing Arrangements The Company's lease terms range from less than one year for smaller tenant spaces to over twenty-five years for larger tenant spaces. In addition to minimum lease payments, most of the leases provide for contingent rentals. Rentals under Operating Leases Future minimum rental income from non-cancelable operating leases at December 31, 1996, in millions, is: $115.5 in 1997; $102.1 in 1998; $88.5 in 1999; $73.9 in 2000, $63.0 in 2001 and $468.5 thereafter. The future minimum rental amounts do not include estimates for contingent rentals. Such contingent rentals, in millions, aggregated $31.2 in 1996, $26.8 in 1995 and $24.6 in 1994. Property under Direct Financing Leases Leases that are, in substance, the financing of an asset purchase by the party leasing the property are recorded as property under direct financing leases. The Company, in its capacity as lessor, has removed the leased property from its books and recorded the future lease payments receivable using the following components (in thousands):
DECEMBER 31, ------------ 1996 1995 -------- -------- Total minimum lease payments to be received $13,052 $15,303 Estimated residual values of leased property 1,984 2,005 Unearned income (6,774) (8,112) -------- -------- Property under direct financing leases $ 8,262 $ 9,196 ======== ========
The Company recognized rental revenue from direct financing leases as follows, in millions: $1.7 in 1996; $1.9 in 1995 and $1.5 in 1994. At December 31, 1996, minimum lease payments to be received in each of the five succeeding years, in millions, are: $1.8 in 1997; $1.7 in 1998; $1.5 in 1999; $1.1 in 2000; $1.0 in 2001 and $5.6 thereafter. The future minimum lease payments do not include amounts for contingent rentals. Contingent rental income on properties leased under direct financing leases, in millions, was $.8 in 1996, $.7 in 1995 and $.8 in 1994. NOTE 5. LEASE COMMITMENTS The Company leases land and a shopping center from the owners and then subleases these properties to other parties. Future minimum rental payments under these operating leases, in millions, are: $1.5 in 1997 and 1998; $1.4 in 1999; $1.3 in 2000 and 2001 and $19.6 thereafter. Future minimum rental payments on these leases have not been reduced by future minimum sublease rentals aggregating $14.6 million through 2017 that are due under various non-cancelable subleases. Rental expense (including insignificant amounts for contingent rentals) for operating leases aggregated, in millions: $1.8 in 1996 and 1995 and $1.6 in 1994. Sublease rental revenue (excluding amounts for improvements constructed by the Company on the leased land) from these leased properties was as follows, in millions: $2.0 in 1996; $2.2 in 1995 and $2.1 in 1994. Property under capital leases, consisting of two shopping centers aggregating $12.3 million at December 31, 1996 and one shopping center aggregating $6.5 million at December 31, 1995, is included in buildings and improvements. Future minimum lease payments under these capital leases total $19.0 million, with annual payments due of $.5 million in each of 1997 through 2001, and $16.4 million thereafter. The amount of these total payments representing interest is $6.5 million. Accordingly, the present value of the net minimum lease payments is $12.5 million at December 31, 1996. NOTE 6. RELATED PARTY TRANSACTIONS The Company has mortgage bonds and notes receivable of $14.6 million and $15.9 million, net of deferred gain of $4.5 million and $5.5 million, at December 31, 1996 and 1995, respectively, from WRI Holdings, Inc. ("Holdings"). The Company and Holdings share certain directors and are under common management. These receivables are collateralized by unimproved land and an investment in a joint venture which owns and manages a motor hotel ("Hospitality"). The bonds and notes bear interest at rates of 16% and prime plus 1%, respectively. However, due to its poor financial condition, Holdings reduced the payment of interest to the Company in 1988 to the cash flow received from Hospitality and, accordingly, the Company limited the recognition of interest income for financial statement purposes to the same amount. The Company does not anticipate receiving interest payments in excess of this cash flow in the near term. Interest income recognized for financial reporting purposes was $.3 million, $1.2 million and $1.6 million in 1996, 1995 and 1994, respectively. During 1995, seven of the eight motor hotels owned by Hospitality were sold. The Company received $6.6 million in cash and effective ownership of a three-year, interest-only $3.5 million note receivable which was paid down by the purchaser in 1996. These proceeds were used to repay the $2.7 million net investment (cost less related deferred gain) in the mortgage bonds secured by the seven motels plus accrued interest and $7.4 million of notes receivable. In 1996, Hospitality obtained secured financing on the remaining motor hotel. Proceeds from the borrowings were used to repay $.6 million net investment in the mortgage bonds and $1.3 million of notes receivable. The Company did not recognize any of the previously deferred gain on these transactions. The Company had an unrecorded receivable for interest on the mortgage bonds of $22.4 million and $18.7 million at December 31, 1996 and 1995, respectively. Interest income not recognized by the Company for financial reporting purposes aggregated, in millions, $3.7, $3.6 and $3.0 for 1996, 1995 and 1994, respectively. Management of the Company believes that the fair market value of the security collateralizing debt from Holdings is greater than the net investment in such debt and that there would not be a charge to operations if the Company were to foreclose on the debt. If foreclosure were required, the net investment in such debt would become the Company's basis of the repossessed assets. However, the Company does not currently anticipate foreclosure on Holdings' properties due to certain restrictions imposed on such assets in connection with the Company's REIT status. The Company's management does not presently believe that the net investment in the mortgage bonds and notes receivable from Holdings has been impaired. The Company owns interests in several joint ventures and partnerships. Notes receivable from these entities bear interest at 8.3% to 10.3% at December 31, 1996 and are due at various dates through 2020. The Company recognized interest income on these notes as follows, in millions: $1.3 in 1996; $1.1 in 1995 and $.9 in 1994. Texas Commerce Bank National Association ("TCB") is a significant participant in and the agent for the banks that provide the Company's $200 million revolving credit agreement. The Company and TCB have two common directors. NOTE 7. COMMITMENTS AND CONTINGENCIES The Company has guaranteed $1.1 million of notes payable executed by various joint ventures and partnerships at December 31, 1996. The Company is involved in various matters of litigation arising in the normal course of business. While the Company is unable to predict with certainty the amounts involved, the Company's management and counsel are of the opinion that, when such litigation is resolved, the Company's resulting liability, if any, will not have a material effect on the Company's consolidated financial statements. In connection with the acquisition of certain properties in exchange for the Company's common shares in 1994 and 1995, the Company entered into agreements with the sellers under which the Company essentially guaranteed that its common shares would equal or exceed specified values on certain future dates. The Company settled these agreements in 1996 through the issuance of $1.0 million in common shares and $.6 million in cash. In connection with the acquisition of a shopping center in 1996, the Company is obligated to fund additional payments to the seller upon the execution of new leases at the property and the satisfaction of other conditions. These additional payments will range from $2.4 million to $11.5 million and will be made prior to October of 1997. At December 31, 1996, the Company had already included $2.4 million of these payments in its consolidated balance sheet. NOTE 8. SHARE OPTIONS AND AWARDS The Company has an incentive Share Option Plan which provides for the issuance of options and share awards up to a maximum of 700,000 common shares and expires in December 1997. The Company has an additional share option plan which grants 100 share options to every employee of the Company, excluding executive officers, upon completion of each five-year interval of service. This plan, which expires in 2002, provides options for a maximum of 100,000 common shares. For both of these share option plans, options are granted to employees of the Company at an exercise price equal to the quoted fair market value of the common shares on the date the options are granted. All options granted under these plans become exercisable in equal increments over a three-year period and expire upon termination of employment or ten years from the date of grant. In January 1994, the Company issued 62,900 restricted shares and granted 434,400 share options under a compensatory Incentive Share Plan for key officers of the Company. This plan, which expires in 2003, provides for the issuance of up to 1,000,000 shares, either in the form of restricted shares or share options. The restricted shares generally vest over a ten-year period, with potential acceleration of vesting due to appreciation in the market value of the Company's shares. The share options vest over a five-year period beginning three years after the date of grant. Share options were granted at the market price on the date of grant. The Company recognized $.2 million of compensation expense relating to the restricted shares in 1996, 1995 and 1994. Effective January 1, 1996, the Company adopted SFAS No. 123, "Accounting for Stock-Based Compensation." As allowed under this standard, the Company has continued to use the intrinsic value based method of accounting for such plans. With respect to the Company's share option and incentive share plans, adoption of the fair value based approach would result in compensation expense being recognized in the results of operations when share options are granted, whereas the intrinsic value based method does not result in the recognition of compensation expense. Compensation expense for the share awards is the same under both the fair value and intrinsic value approaches. Had the Company determined compensation cost for its share option and award plans under the fair value based approach, the Company's net income would have been reduced by less than $20,000 and net income per common share would have been unchanged in both 1995 and 1996. Compensation expense as determined under the fair value approach was based only on share options granted in 1996 and 1995 and, accordingly, is not representative of amounts which will be reported in future years. The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing method with the following weighted-average assumptions; dividend yield of 6.0%, expected volatility of 18.3% and expected lives of 7.1 years for both 1996 and 1995 and risk-free interest rates of 6.4% and 6.5% in 1996 and 1995, respectively. Following is a summary of the option activity for the three years ended December 31, 1996:
SHARES WEIGHTED UNDER AVERAGE OPTION EXERCISE PRICE -------- --------------- Outstanding, January 1, 1994 228,600 $ 29.50 Granted 552,150 37.00 Canceled (15,000) 36.10 Exercised (18,500) 22.25 -------- Outstanding, December 31, 1994 747,250 35.10 Granted 3,510 35.75 Canceled (26,500) 34.25 Exercised (15,610) 29.25 -------- Outstanding, December 31, 1995 708,650 35.25 Granted 24,260 38.10 Canceled (34,300) 37.00 Exercised (10,875) 27.00 -------- Outstanding December 31, 1996 687,735 $ 35.40 ========
The number of share options exercisable at December 31, 1996, 1995 and 1994 were 243,000, 189,000 and 160,000, respectively. Options exercisable at year-end 1996 had a weighted-average exercise price of $32.30. The weighted-average fair value of share options granted during 1996 and 1995 were $5.10 and $4.85, respectively. Share options outstanding at December 31, 1996 had exercise prices ranging from $19.50 to $43.50 and a weighted-average remaining contractual life of 6.6 years. Approximately 91% of the options outstanding at year-end 1996 have exercise prices between $31.00 and $37.00. There were 878,000 common shares available for the future grant of options or awards at December 31, 1996. NOTE 9. FEDERAL INCOME TAX CONSIDERATIONS Federal income taxes are not provided because the Company believes it qualifies as a REIT under the provisions of the Internal Revenue Code. Shareholders of the Company include their proportionate taxable income in their individual tax returns. As a REIT, the Company must distribute at least 95% of its ordinary taxable income to its shareholders and meet certain income source and investment restriction requirements. Taxable income differs from net income for financial reporting purposes principally because of differences in the timing of recognition of interest, ad valorem taxes, depreciation, rental revenue, pension expense and installment gains on sales of property. As a result of these differences, the book value of the Company's net assets exceeds its tax basis by $53.2 million at December 31, 1996. For federal income tax purposes, the cash dividends distributed to shareholders are characterized as follows:
1996 1995 1994 ------ ------ ------ Ordinary income 87.1% 76.4% 94.0% Return of capital (generally non-taxable) 4.0 20.1 5.0 Long-term capital gains 8.9 3.5 1.0 ------ ------ ------ Total 100.0% 100.0% 100.0% ====== ====== ======
NOTE 10. MARKETABLE SECURITIES The Company's investment in marketable debt securities at December 31, 1996 consists of U.S. government agency guaranteed pass-through certificates which mature through 2008. During 1995, the Company sold U.S. Treasury Notes with an amortized cost of $31.8 million as determined using the specific identification method and realized a gain of $.1 million. These securities, which were classified as "held to maturity," were sold due to changes in market rates coupled with a shift in the Company's philosophy regarding the holding of marketable securities. The Company's remaining investment was reclassified to "available for sale." At December 31, 1996 and 1995, the fair value of these investments totaled $13.8 million and $16.3 million, respectively. The amortized cost of the investments at December 31, 1996 and 1995 was $14.1 million and $16.4 million, respectively, and the related unrealized losses were $.3 million and $.1 million at December 31, 1996 and 1995, respectively. NOTE 11. FAIR VALUE OF FINANCIAL INSTRUMENTS The fair value of the Company's financial instruments was determined using available market information and appropriate valuation methodologies as of December 31, 1996. Unless otherwise described below, all other financial instruments are carried at amounts which approximate their fair values. Based on rates currently available to the Company for debt with similar terms and average maturities, fixed-rate debt with a carrying value of $306.9 million has a fair value of approximately $309.6 million at December 31, 1996. The fair value of the Company's variable-rate debt approximates its carrying value of $82.4 million. The fair value of the interest rate swap agreements is based on the estimated amounts the Company would receive or pay to terminate the contracts at December 31, 1996. If the Company had terminated these agreements at December 31, 1996, the Company would have paid $3.1 million. The fair value of the mortgage bonds and notes receivable from Holdings was not determined because it is not practical to reasonably assess the credit adjustment that would be applied in the marketplace for such bonds and notes receivable. NOTE 12. EMPLOYEE BENEFIT PLANS The Company has a Savings and Investment Plan to which eligible employees may elect to contribute from 1% to 12% of their salaries. Employee contributions are matched by the Company at the rate of $.50 per $1.00 for the first 6% of the employee's salary. The employees vest in the employer contributions ratably over a six-year period. Compensation expense related to the plan was $.2 million per year for 1996, 1995 and 1994. The Company has a defined benefit pension plan covering substantially all of its employees. The benefits are based on years of service and the employee's compensation during the last five years of service. The Company's funding policy is to make annual contributions as required by applicable regulations, however, the Company has not been required to make contributions for any of the past three years. The following table sets forth the plan's funded status and amounts recognized in the Company's balance sheet (in thousands):
1996 1995 -------- ------- Actuarial present value of: Vested benefit obligation $ 6,263 $5,908 ======== ======= Accumulated benefit obligation $ 6,368 $5,976 ======== ======= Projected benefit obligation $ 7,943 $7,665 Plan assets at fair value, primarily common stocks and bonds 8,677 7,654 -------- ------- Plan assets in excess of (less than) projected benefit obligation 734 (11) Unrecognized prior service cost 102 149 Unrecognized net gain (1,882) (851) Unrecognized net transition asset (53) (125) -------- ------- Pension liability $(1,099) $ (838) ======== =======
The components of net periodic pension cost are as follows (in thousands): 1996 1995 1994 -------- -------- ------ Service cost of benefits earned during the year $ 361 $ 300 $ 248 Interest cost on projected benefit obligation 506 478 422 Actual return on plan assets (1,295) (1,499) 428 Net amortization and deferral 688 1,047 (948) -------- -------- ------ Total $ 260 $ 326 $ 150 ======== ======== ======
Assumptions used to develop periodic expense and the actuarial present value of projected benefit obligations for:
1996 1995 1994 ----- ----- ----- Weighted average discount rate 7.0% 7.0% 7.0% Expected long-term rate of return on plan assets 8.0% 8.0% 7.0% Rate of increase in compensation levels 5.0% 5.5% 5.5%
NOTE 13. PRO FORMA FINANCIAL INFORMATION (UNAUDITED) During the year ended December 31, 1996, the Company acquired nine retail centers and three industrial projects. The pro forma financial information for the years ended December 31, 1996 and 1995 shown below is based on the historical statements of the Company after giving effect to the acquisitions as if such acquisitions took place on January 1, 1996 and 1995, respectively (in thousands, except per share amounts).
DECEMBER 31, ------------ 1996 1995 -------- -------- Pro forma revenues $163,972 $151,357 ======== ======== Pro forma net income $ 57,592 $ 49,273 ======== ======== Pro forma net income per common share $ 2.17 $ 1.86 ======== ========
The pro forma financial information is presented for informational purposes only and may not be indicative of results that would have actually occurred if the acquisitions had been in effect at the dates indicated, nor does it purport to be indicative of the results that may be achieved in the future. NOTE 14. QUARTERLY FINANCIAL DATA (UNAUDITED) Summarized quarterly financial data for the years ended December 31, 1996 and 1995 is as follows:
FIRST SECOND THIRD FOURTH ------- ------- ------- ------- 1996: Revenues $36,762 $37,178 $37,956 $39,227 Net Income 12,625 12,910 16,325 (1) 12,078 Net Income per Common Share 0.48 0.48 0.61 (1) 0.46 1995: Revenues $32,092 $32,659 $33,885 $35,561 Net Income 11,364 10,931 11,259 11,248 Net Income per Common Share 0.43 0.41 0.42 0.43
(1) Increase is primarily the result of a gain on the sale of property during the quarter. NOTE 15. PRICE RANGE OF COMMON SHARES (UNAUDITED) The high and low sale prices per share of the Company's shares, as reported on the New York Stock Exchange composite tape, and dividends per share paid for the fiscal quarters indicated were as follows:
HIGH LOW DIVIDENDS ----- ---- --------- 1996: Fourth $ 40 3/4 $ 36 $ 0.62 Third 40 1/2 37 3/8 0.62 Second 38 7/8 34 1/4 0.62 First 38 7/8 35 5/8 0.62 1995: Fourth $ 38 1/2 $ 33 1/2 $ 0.60 Third 37 7/8 35 1/8 0.60 Second 38 1/8 34 1/4 0.60 First 38 34 1/2 0.60
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III ITEM 10. TRUST MANAGERS AND EXECUTIVE OFFICERS OF THE REGISTRANT (a) Information with respect to the Company's Trust Managers is incorporated by reference from pages 3 through 7 of the Company's definitive Proxy Statement for the Annual Meeting of Shareholders to be held April 29, 1997. ITEM 11. EXECUTIVE COMPENSATION Incorporated by reference from pages 11 through 13 of the Company's definitive Proxy Statement for the Annual Meeting of Shareholders to be held April 29, 1997. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Incorporated by reference from pages 2 through 4 of the Company's definitive Proxy Statement for the Annual Meeting of Shareholders to be held April 29, 1997. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Incorporated by reference from pages 14 through 15 of the Company's definitive Proxy Statement for the Annual Meeting of Shareholders to be held April 29, 1997. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) Financial Statements and Financial Statement Schedules: PAGE ---- (1) (A) Independent Auditors' Report 18 (B) Financial Statements (i) Statements of Consolidated Income for the years ended December 31, 1996, 1995 and 1994 19 (ii) Consolidated Balance Sheets as of December 31, 1996 and 1995 20 (iii) Statements of Consolidated Cash Flows for the years ended December 31, 1996, 1995 and 1994 21 (iv) Statements of Consolidated Shareholders' Equity for the years ended December 31, 1996, 1995 and 1994. 22 (v) Notes to Consolidated Financial Statements 23 (2) Financial Statement Schedules: SCHEDULE PAGE -------- ---- II Valuation and Qualifying Accounts 39 III Real Estate and Accumulated Depreciation 40 IV Mortgage Loans on Real Estate 42 All other schedules are omitted since the required information is not present or is not present in amounts sufficient to require submission of the schedule or because the information required is included in the consolidated financial statements and notes hereto. (b) No reports on Form 8-K were filed during the last quarter of the period covered by this annual report. (c) Exhibits:
3.1 - Restated Declaration of Trust, with all amendments thereto (filed as Exhibit 3.1 to the Company's Registration Statement on Form S-3 (No. 33-49206) and incorporated herein by reference). 3.2 - Bylaws of the Company (filed as Exhibit 3.2 to the Company's Registration Statement on Form S-3 (No. 33-49206) and incorporated herein by reference). 10.1** - 1988 Share Option Plan of the Company, as amended (filed as Exhibit 10.1 to the Company's Annual Report on Form 10-K for the year ended December 31, 1990 and incorporated herein by reference). 10.2** - Weingarten Realty Investors Supplemental Retirement Account Plan, as amended and restated (filed as Exhibit 10.26 to the Company's Annual Report on Form 10-K for the year ended December 31, 1992 and incorporated herein by reference). 10.3 - 16% Mortgage Bonds Due 1994 of WRI Holdings, Inc. dated December 28, 1984, payable to the Company in the original principal amount of $3,150,000 (filed as Exhibit 10.8 to the Company's Registration Statement on Form S-4 (No. 33-19730) and incorporated herein by reference). 10.3.1* - Third Bonds Renewal and Extension Agreement, effective December 28, 1996, for the 16% Mortgage Bonds of WRI Holdings, Inc., payable to the Company in the original principal amount of $3,150,000. 10.4 - Trust Indenture, dated December 28, 1984, between WRI Holdings, Inc. and Texas Commerce Bank National Association, as Trustee, relating to the 16% Mortgage Bonds Due 1994 of WRI Holdings, Inc. in the original principal amount of $3,150,000 (filed as Exhibit 10.9 to the Company's Registration Statement on Form S-4 (No. 33-19730) and incorporated herein by reference). 10.4.1 - Supplemental Indenture of Trust, dated February 22, 1995, between WRI Holdings, Inc. and Texas Commerce Bank National Association relating to the 16% Mortgage Bonds due December 28, 1994 of WRI Holdings, Inc. in the original principal amount of $3,150,000 (filed as exhibit 10.4.1 to the Company's Annual Report on Form 10-K for the year ended December 31, 1994 and incorporated herein by reference). 10.5* - Third Supplemental Indenture of Trust between WRI Holdings, Inc. and Texas Commerce Trust Company of New York, as Trustee, amending Trust Indenture, dated December 28, 1984, between WRI Holdings, Inc. and Texas Commerce Bank National Association, as Trustee, relating to the 16% Mortgage Bonds Due 1994 of WRI Holdings, Inc. in the original principal amount of $3,150,000 . 10.6 - 16% Mortgage Bonds Due 2004 of WRI Holdings, Inc., dated December 28, 1984, payable to the Company in the original principal amount of $16,682,000 (filed as Exhibit 10.10 to the Company's Registration Statement on Form S-4 (No. 33-19730) and incorporated herein by reference). 10.7 - Trust Indenture, dated December 28, 1984, between WRI Holdings, Inc. and Texas Commerce Bank National Association, as Trustee, relating to the 16% Mortgage Bonds Due 2004 of WRI Holdings, Inc. in the original principal amount of $16,682,000 (filed as Exhibit 10.11 to the Company's Registration Statement on Form S-4 (No. 33-19730) and incorporated herein by reference). 10.7.1 - First Supplemental Indenture of Trust between WRI Holdings, Inc. and Texas Commerce Trust Company of New York, as Trustee, amending Trust Indenture, dated December 28, 1984, between WRI Holdings, Inc. and Texas Commerce Bank National Association, as Trustee, relating to the 16% Mortgage Bonds Due 2004 of WRI Holdings, Inc. in the original principal amount of $16,682,000 (filed as Exhibit 10.7.1 to the Company's Annual Report on Form 10-K for the year ended December 31, 1989 and incorporated herein by reference). 10.8 - Third Amended Promissory Note, as restated, effective as of January 1, 1992, executed by WRI Holdings, Inc., pursuant to which it may borrow up to the principal sum of $40,000,000 from the Company. 10.9 - 16% Mortgage Bonds Due 2004 of WRI Holdings, Inc., dated December 28, 1984, payable to the Company in the original principal amount of $7,000,000 (filed as Exhibit 10.13 to the Company's Registration Statement on Form S-4 (No. 33-19730) and incorporated herein by reference). 10.10 - Trust Indenture, dated December 28, 1984, between WRI Holdings, Inc. and Texas Commerce Bank National Association, as Trustee, relating to the 16% Mortgage Bonds Due 2004 of WRI Holdings, Inc. in the original principal amount of $7,000,000 (filed as Exhibit 10.14 to the Company's Registration Statement on Form S-4 (No. 33-19730) and incorporated herein by reference). 10.10.1 - First Supplemental Indenture of Trust between WRI Holdings, Inc. and Texas Commerce Trust Company of New York, as Trustee, amending Trust Indenture, dated December 28, 1984, between WRI Holdings, Inc. and Texas Commerce Bank National Association, as Trustee, relating to the 16% Mortgage Bonds Due 2004 of WRI Holdings, Inc. in the original principal amount of $7,000,000 (filed as Exhibit 10.10.1 to the Company's Annual Report on Form 10-K for the year ended December 31, 1989 and incorporated herein by reference). 10.11 - Agreement Correcting Trust Indenture, dated February 11, 1985, relating to 16% Mortgage Bonds Due 2004 of WRI Holdings, Inc. in the original principal amount of $7,000,000 (filed as Exhibit 10.15 to the Company's Registration Statement on Form S-4 (No. 33-19730) and incorporated herein by reference). 10.12 - Amendment to Note Purchase Agreement, dated March 31, 1991, amending loan agreement, dated August 6, 1987, Life and Accident Insurance Company for $4,000,000, American General Life Insurance Company of Delaware for $4,000,000, Republic National Life Insurance Company for $3,000,000 and American Amicable Life Insurance Company of Texas for $2,000,000 (filed as Exhibit 10.15.1 to the Company's Annual Report on Form 10-K for the year ended December 31, 1992 and incorporated herein by reference). 10.13** - The Savings and Investment Plan for Employees of the Company, as amended (filed as Exhibit 4.1 to the Company's Registration Statement on Form S-8 (No. 33-25581) and incorporated herein by reference). 10.14** - The Fifth Amendment to Savings and Investment Plan for Employees of the Company (filed as Exhibit 4.1.1 to the Company's Post-Effective Amendment No. 1 to Registration Statement on Form S-8 (No. 33-25581) and incorporated herein by reference). 10.15 - Promissory Note and Line of Credit Loan Agreement in the amount of $5,000,000, effective as of May 13, 1991, between the Company, as payee, and Leisure Dynamics, Inc. as maker (filed as Exhibit 10.22 to the Company's Annual Report on Form 10-K for the year ended December 31, 1991 and incorporated herein by reference). 10.16 - Promissory Note in the amount of $12,000,000 between the Company, as payee, and Plaza Construction, Inc., as maker (filed as Exhibit 10.23 to the Company's Annual Report on Form 10 K for the year ended December 31, 1991 and incorporated herein by reference). 10.16.1* - Eighth Renewal and Extension of Promissory Note in the amount of $12,000,000, effective as of December 1, 1996, between the Company, as payee, and Plaza Construction, Inc., as maker. 10.17 - Amended and Restated Master Swap Agreement dated as of January 29, 1992, between the Company and Texas Commerce Bank National Association, (filed as Exhibit 10.24 to the Company's Annual Report on Form 10-K for the year ended December 31, 1992 and incorporated herein by reference). 10.17.1 - Rate swap Transaction, dated as of May 15, 1992, between the Company and Texas Commerce Bank National Association (filed as Exhibit 10.24.1 to the Company's Annual Report on Form 10 K for the year ended December 31, 1992 and incorporated herein by reference). 10.17.2 - Rate Swap Transaction, dated as of June 24, 1992, between the Company and Texas Commerce Bank National Association (filed as Exhibit 10.24.2 to the Company's Annual Report on Form 10-K for the year ended December 31, 1992 and incorporated herein by reference). 10.17.3 - Rate Swap Transaction, dated as of July 2, 1992, between the Company and Texas Commerce Bank National Association (filed as Exhibit 10.24.3 to the Company's Annual Report on Form 10 K for the year ended December 31, 1992 and incorporated herein by reference). 10.18* - Amended and Restated Credit Agreement dated as of November 21, 1996 between the Company and Texas Commerce Bank National Association, as Agent, and individually as a Bank, and the Banks defined therein. 10.19 - Note Purchase Agreement, dated April 1, 1994, between The Variable Annuity Life Insurance Company, American General Life Insurance Company and the Company in the amount of 30,000,000 (filed as Exhibit 10.25 to the Company's Annual Report on Form 10-K for the year ended December 31, 1994 and incorporated herein by reference). 10.20** - The 1993 Incentive Share Plan of the Company (filed as Exhibit 4.1 to the Company's Registration Statement on Form S-8 (No. 33-52437) and incorporated herein by reference). 10.21 - 7.10% Senior Medium Term Note (Series A) of the Company, dated 5-22-95, in the amount of 12,500,000 (filed as Exhibit 10.27 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1995 and incorporated herein by reference). 10.22 - 7.29% Senior Medium Term Note (Series A) of the Company, dated 5-22-95, in the amount of 12,500,000 (filed as Exhibit 10.28 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1995 and incorporated herein by reference). 10.23 - 7.35% Senior Medium Term Note (Series A) of the Company, dated 5-30-95, in the amount of 12,500,000 (filed as Exhibit 10.29 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1995 and incorporated herein by reference). 10.24 - 7.125% Senior Medium Term Note (Series A) of the Company, dated 5-30-95, in the amount of 12,500,000 (filed as Exhibit 10.30 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1995 and incorporated herein by reference). 10.25 - 7.22% Senior Medium Term Note (Series A) of the Company, dated 6-1-95, in the amount of 12,500,000 (filed as Exhibit 10.31 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1995 and incorporated herein by reference). 10.26 - 6.82% Senior Medium Term Note (Series A) of the Company, dated 6-1-95, in the amount of 25,000,000 (filed as Exhibit 10.32 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1995 and incorporated herein by reference). 10.27 - 7.28% Senior Medium Term Note (Series A) of the Company, dated 8-21-95, in the amount of 10,000,000 (filed as Exhibit 10.33 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1995 and incorporated herein by reference). 10.28 - 6.84% Senior Medium Term Note (Series A) of the Company, dated 11-7-95, in the amount of 2,000,000 (filed as Exhibit 10.28 to the Company's Annual Report of Form 10-K for the year ended December 31, 1995 and incorporated herein by reference). 10.29 - 6.84% Senior Medium Term Note (Series A) of the Company, dated 11-20-95, in the amount of 5,000,000 (filed as Exhibit 10.29 to the Company's Annual Report of Form 10-K for the year ended December 31, 1995 and incorporated herein by reference). 10.30 - 6.62% Senior Medium Term Note (Series A) of the Company, dated 12-11-95, in the amount of 10,000,000 (filed as Exhibit 10.30 of the Company's Annual Report of Form 10-K for the year ended December 31, 1995 and incorporated herein by reference). 10.31 - 6.65% Senior Medium Term Note (Series A) of the Company, dated 12-14-95, in the amount of 2,000,000 (filed as Exhibit 10.31 to the Company's Annual Report of Form 10-K for the year ended December 31, 1995 and incorporated herein by reference). 10.32 - 7.12% Senior Medium-Term Note (Series A) of the Company, dated 8-13-96, in the amount of 15,000,000 (filed as Exhibit 10.34 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996 and incorporated herein by reference). 10.33 - 7.44% Senior Medium-Term Note (Series A) of the Company, dated 8-14-96, in the amount of 15,000,000 (filed as Exhibit 10.35 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996 and incorporated herein by reference). 10.34 - 7.39% Senior Medium-Term Note (Series A) of the Company, dated 08-06-96, in the amount of 15,000,000 (filed as Exhibit 10.36 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996 and incorporated herein by reference). 10.35 - 6.95% Senior Medium-Term Note (Series A) of the Company, dated 8-07-96, in the amount of 15,000,000 (filed as Exhibit 10.37 to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996 and incorporated herein by reference). 10.36 - 6.90% Senior Medium-Term Note (Series A) of the Company, dated 11-22-96, in the amount of 12,000,000 (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K dated November 15, 1996 and incorporated herein by reference). 10.37 - 6.60% Senior Medium-Term Note (Series A) of the Company, dated 11-26-96, in the amount of 7,000,000 (filed as Exhibit 10.2 to the Company's Current Report on Form 8-K dated November 15, 1996 and incorporated herein by reference). 10.38 - Revolving Credit Note, dated September 20, 1995, between the Company and Texas Commerce Bank National Association in the amount of $73,000,000. 10.39 - Revolving Credit Note, dated September 20, 1995, between the Company and NationsBank of Texas, N.A. in the amount of $45,000,000. 10.40 - Revolving Credit Note, dated September 20, 1995, between the Company and First Interstate Bank of Texas, N.A. in the amount of $40,000,000. 10.41 - Revolving Credit Note, dated September 20, 1995, between the Company and Signet Bank/Virginia in the amount of $22,000,000. 10.42 - Revolving Credit Note, dated September 20, 1995, between the Company and Commerzbank, A.G. in the amount of $20,000,000. 10.43* - Master Promissory Note in the amount of $20,000,000 between the Company, as payee, and Texas Commerce Bank National Association, as maker, effective December 30, 1996. 10.44 - Distribution Agreement among the Company and the Agents dated November 15, 1996 relating to the MTN's (filed as Exhibit 1.1 to the Company's Current Report of Form 8-K dated November 15, 1996 and incorporated herein by reference). 10.45 - Senior Indenture dated as of May 1, 1995 between the Company and Texas Commerce Bank, National Association, as trustee (filed as Exhibit 4(a) to the Company's Registration Statement on Form S-3 (No. 33-57659) and incorporated herein by reference). 10.46 - Subordinated Indenture dated as of May 1, 1995 between the Company and Texas Commerce Bank, National Association (filed as Exhibit 4(b) to the Company's Registration Statement on Form S-3 (No. 33-57659) and incorporated herein by reference). 11.1* - Computation of Net Income Per Common and Common Equivalent Share. 12.1* - Computation of Fixed Charges Ratios. 21.1* - Subsidiaries of the Registrant. 23.1* - Consent of Deloitte & Touche LLP. 27.1* - Financial Data Schedule.
* Filed with this report. ** Management contract or compensatory plan or arrangement. SIGNATURE Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. WEINGARTEN REALTY INVESTORS By: /S/ STANFORD ALEXANDER ----------------------- Stanford Alexander Chairman/Chief Executive Officer Date: March 10, 1997 Pursuant to the requirement of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
SIGNATURE TITLE DATE --------- ----- ---- By: /S/ Stanford Alexander Chairman and Trust Manager March 10,1997 ------------------------ Stanford Alexander (Chief Executive Officer) By: /S/ Andrew M. Alexander President March 10,1997 ------------------------ Andrew M. Alexander and Trust Manager By: /S/ Martin Debrovner Vice Chairman March 10,1997 ------------------------ Martin Debrovner and Trust Manager By: /S/ Melvin Dow Trust Manager March 10,1997 ------------------------ Melvin Dow By: /S/ Stephen A. Lasher Trust Manager March 10,1997 ------------------------ Stephen A. Lasher By: /S/ Joseph W. Robertson, Jr. Executive Vice President and March 10,1997 ------------------------ Joseph W. Robertson, Jr. Trust Manager (Chief Financial Officer) By: /S/ Douglas W. Schnitzer Trust Manager March 10,1997 ------------------------ Douglas W. Schnitzer By: /S/ Marc J. Shapiro Trust Manager March 10,1997 ------------------------ Marc J. Shapiro By: /S/ J.T. Trotter Trust Manager March 10,1997 ------------------------ J.T. Trotter By: /S/ Stephen C. Richter Senior Vice President/ March 10,1997 ------------------------ Stephen C. Richter Financial Administration and Treasurer (Principal Accounting Officer)
SCHEDULE II
WEINGARTEN REALTY INVESTORS VALUATION AND QUALIFYING ACCOUNTS DECEMBER 31, 1996, 1995 AND 1994 (AMOUNTS IN THOUSANDS) CHARGED BALANCE AT TO COSTS CHARGED BALANCE BEGINNING AND TO OTHER DEDUCTIONS AT END OF DESCRIPTION OF PERIOD EXPENSES ACCOUNTS (A) PERIOD - ------------------------------- ----------- --------- -------- ------------ ---------- 1996: Allowance for Doubtful Accounts $ 1,436 $ 1,014 $ 1,214 $ 1,236 1995: Allowance for Doubtful Accounts 1,007 1,126 697 1,436 1994: Allowance for Doubtful Accounts 938 1,261 1,192 1,007
Note A - Write-offs of accounts receivable previously reserved.
SCHEDULE III WEINGARTEN REALTY INVESTORS REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1996 (AMOUNTS IN THOUSANDS) Total Cost ---------- Property Under Buildings Direct and Projects under Financing Total Accumulated Encumbrances Land Improvements Development Leases Cost Depreciation (A) -------- ------------- --------------- ---------- -------- ------------- -------------- SHOPPING CENTERS: Texas $133,577 $ 469,377 $ 6,256 $609,210 $ 166,121 $ 5,849 Other States 35,171 184,712 2,006 221,889 36,271 8,115 -------- ------------- ---------- -------- ------------- -------------- Total Shopping Centers 168,748 654,089 8,262 831,099 202,392 13,964 INDUSTRIAL PROPERTIES: Texas 13,750 69,399 83,149 18,896 3,569 OFFICE BUILDING: Texas 534 12,712 13,246 8,687 MULTI-FAMILY RESIDENTIAL PROPERTIES: Texas 399 1,098 1,497 678 1,083 -------- ------------- --------------- ---------- -------- ------------- -------------- Total Improved Properties 183,431 737,298 8,262 928,991 230,653 18,616 -------- ------------- ---------- -------- ------------- -------------- LAND UNDER DEVELOPMENT: Texas $ 31,268 31,268 Other States 1,872 1,872 --------------- -------- Total Land Under Development 33,140 33,140 --------------- -------- LEASED PROPERTY (SHOPPING CENTER) UNDER CAPITAL LEASE: Louisiana 6,390 6,390 2,861 5,857 ------------- -------- ------------- -------------- CONSTRUCTION IN PROGRESS: Texas 1,164 1,164 Other States 733 733 --------------- -------- Total Construction in Progress 1,897 1,897 -------- ------------- --------------- ---------- -------- ------------- -------------- TOTAL OF ALL PROPERTIES $183,431 $ 743,688 $ 35,037 $ 8,262 $970,418 $ 233,514 $ 24,473 ======== ============= =============== ========== ======== ============= ==============
Note A - Encumbrances do not include $62.0 million outstanding under a $35 million 14-year term loan and a $30 million 20-year term loan, both payable to a group of insurance companies secured by a property collateral pool including all or part of 8 shopping centers. SCHEDULE III (CONTINUED) The changes in total cost of the properties for the years ended December 31, 1996, 1995 and 1994 were as follows:
1996 1995 1994 --------- --------- --------- Balance at beginning of year $849,894 $735,134 $634,814 Additions at cost 131,814 115,687 101,402 Retirements or sales (11,585) (1,433) (1,082) Other changes (B) 295 506 --------- --------- --------- Balance at end of year $970,418 $849,894 $735,134 ========= ========= =========
The changes in accumulated depreciation for the years ended December 31, 1996, 1995 and 1994 were as follows:
1996 1995 1994 --------- --------- --------- Balance at beginning of year $216,657 $191,427 $168,405 Additions charged to expense 27,732 25,541 23,027 Retirements or sales (10,875) (311) (5) --------- --------- --------- Balance at end of year $233,514 $216,657 $191,427 ========= ========= ========= Note B - Transferred from net investment in direct financing leases.
SCHEDULE IV
WEINGARTEN REALTY INVESTORS MORTGAGE LOANS ON REAL ESTATE DECEMBER 31, 1996 (AMOUNTS IN THOUSANDS) FINAL PERIODIC FACE CARRYING INTEREST MATURITY PAYMENT AMOUNT OF AMOUNT OF RATE DATE TERMS MORTGAGES MORTGAGES(B) --------- -------- ------------------------- ---------- ------------- SHOPPING CENTERS: FIRST MORTGAGES: Sheldon Forest Channelview, TX Prime 12-01-97 Varying ($179 balloon) $ 179 $ 179 Phelan Boulevard Beaumont, TX Prime 12-31-97 Varying ($129 balloon) 733 79 +2% Eastex Venture Beaumont, TX Prime 12-31-97 Varying ($2,465 balloon) 3,500 2,465 +1 1/2% Main/O.S.T., Ltd. Houston, TX 9.3% 02-01-20 $ 476 Annual P & I 4,800 4,664 ($1,241 balloon) INDUSTRIAL: FIRST MORTGAGES: Railwood Houston, TX 10% 12-28-04 Varying ($6,223 balloon) 7,000 6,223 River Pointe, Conroe,TX (Note C) 9% 11-30-03 Varying 2,133 1,839 Little York, Houston, TX (Note C) 9% 12-31-03 Varying 1,922 1,707
SCHEDULE IV (CONTINUED)
WEINGARTEN REALTY INVESTORS MORTGAGE LOANS ON REAL ESTATE DECEMBER 31, 1996 (AMOUNTS IN THOUSANDS) FINAL PERIODIC FACE CARRYING INTEREST MATURITY PAYMENT AMOUNT OF AMOUNT OF RATE DATE TERMS MORTGAGES MORTGAGES(B) --------- -------- --------- ---------- ------------- MULTI-FAMILY RESIDENTIAL FIRST MORTGAGES: Stanford Court Apartments Houston, TX 8.00% 03-30-98 Varying 1,440 1,414 UNIMPROVED LAND: SECOND MORTGAGE: River Pointe Conroe, TX Prime 12-01-97 Varying 12,000 8,587 +1% ($8,587 balloon) ---------- ------------- TOTAL MORTGAGE LOANS ON REAL ESTATE (Note A) $ 33,707 $ 27,157 ========== =============
Note A - Changes in mortgage loans for the years ended December 31, 1996, 1995 and 1994 are summarized below:
1996 1995 1994 -------- -------- -------- Balance, Beginning of year $31,292 $28,719 $25,635 New Mortgage Loans 3,500 1,354 Additions to Existing Loans 1,075 1,041 2,032 Collections of Principal (5,210) (1,968) (302) -------- -------- -------- Balance, End of Year 27,157 $31,292 $28,719 ======== ======== ========
Note B - The aggregate cost at December 31, 1996 for federal income tax purposes is $25,580. Note C - Principal payments are due monthly to the extent of cash flow generated by the underlying property. EX-10.3.1 2 - 1 - THIRD BONDS RENEWAL AND EXTENSION AGREEMENT This THIRD BONDS RENEWAL AND EXTENSION AGREEMENT (this "Third Renewal") is executed this 21st day of February, 1997 (the "Execution Date"), but effective as of December 28, 1996, by and between WRI HOLDINGS, INC. ("Maker"), a Texas corporation, and WEINGARTEN REALTY INVESTORS ("Payee"), a Texas real estate investment trust. W I T N E S S E T H: WHEREAS, the Payee is the sole legal owner and holder of those certain 16% Mortgage Bonds Due 1994, dated December 28, 1984 (the "Original Bonds"), in the face principal sum of THREE MILLION ONE HUNDRED FIFTY THOUSAND and NO/100 DOLLARS ($3,150,000.00) executed by Maker payable to the order of Weingarten Realty, Inc. ("WRI"), a Texas corporation, payable as therein provided, which Bonds are secured by (i) that certain Trust Indenture, dated December 28, 1984 (the "Original Trust Indenture") executed by Maker and Texas Commerce Bank National Association (the "Trustee"), a national banking association; (ii) that certain River Pointe Negative Pledge Agreement, dated December 28, 1984 (the "Original Negative Pledge") executed by Maker, WRI, and Plaza Construction, Inc. ("Plaza"); and (iii) such other documents, instruments, and agreements executed in connection with, as security for, or as evidence of the obligations evidenced by the Original Bonds (collectively, the Original Trust Indenture, the Original Negative Pledge, and such other documents, instruments, and agreements being herein called the "Original Security Instruments"); and WHEREAS, WRI assigned and conveyed all of its property, both real and personal, including, without limitation, the Original Bonds, to Payee, as evidenced by that certain Master Deed and General Conveyance dated April 5, 1988 from WRI to Payee; and WHEREAS, effective as of December 28, 1994, Maker and Payee renewed and extended the maturity date of the Original Bonds to December 28, 1995 pursuant to the terms of that certain Bonds Renewal and Extension Agreement, dated as of December 28, 1994 ("First Renewal"); and WHEREAS, effective as of December 28, 1995, Maker and Payee renewed and extended the maturity date of the Original Bonds to December 28, 1996 pursuant to the terms of that certain Bonds - 4 - Second Renewal and Extension Agreement, dated as of December 28, 1995 ("Second Renewal") (the Original Bonds, Original Negative Pledge, and Original Security Instruments, each as modified, renewed, and extended by the First Renewal and Second Renewal, being herein called the "Bonds," the "Negative Pledge," and the "Security Instruments," respectively); and WHEREAS, Maker and Payee amended and supplemented the terms of the Original Trust Indenture to reflect the renewal and extension of the Bonds, as provided in the First Renewal and Second Renewal, such amendments being evidenced by (i) that certain Supplemental Trust Indenture dated as of December 28, 1994 between Maker, Trustee, and Payee, and (ii) that certain Second Supplemental Trust Indenture dated as of December 28, 1995, between Maker, Trustee and Payee; and WHEREAS, of even date herewith, Maker, the Trustee, and Payee have further amended and supplemented the terms of the Trust Indenture pursuant to that certain Third Supplemental Trust Indenture (the Original Trust Indenture, as amended and supplemented by the Supplemental Trust Indenture, the Second Supplemental Trust Indenture and the Third Supplemental Trust Indenture, being called the "Trust Indenture"); and WHEREAS, the Bonds mature on December 28, 1996, and Maker and Payee now propose to renew and extend the maturity date of the Bonds and to continue the liens and priority of the Security Instruments as security for the payment of the Bonds, as set forth more particularly herein. NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Maker and Payee hereby agree as follows: 1. The Maker reaffirms its promise to pay to the order of the Payee, at 2600 Citadel Plaza Drive, Suite 300, Houston, Harris County, Texas 77008, the principal balance due and owing on the Bonds, with interest accrued thereon, as provided in the Bonds, except that the maturity date of the Bonds is hereby renewed and extended to December 28, 1997, at which time the unpaid principal balance of the Bonds, plus all accrued and unpaid interest thereon, shall be due and payable. All liens, pledges, and security interests securing the payment of the Bonds, including, but not limited to, the liens, pledges and security interests granted in the Trust Indenture and the Negative Pledge, are hereby renewed, extended and carried forward to secure payment of the Bonds, as hereby amended, and the Security Instruments are hereby amended to reflect that the maturity date of the Bonds is December 28, 1997. 2. Maker hereby represents and warrants to Payee that (a) Maker is the sole legal and beneficial owner of the Trust Estate (as that term is defined in the Trust Indenture); (b) Maker has the full power and authority to make the agreements contained in this Third Renewal without joinder and consent of any other party; and (c) the execution, delivery and performance of this Third Renewal will not contravene or constitute an event which itself or which with the passing of time or giving of notice or both would constitute a default under any trust deed, deed of trust, loan agreement, indenture or other agreement to which Maker is a party or by which Maker or any of its property is bound. Maker hereby agrees to indemnify and hold harmless Payee against any loss, claim, damage, liability or expense (including, without limitation, attorneys' fees) incurred as a result of any representation or warranty made by Maker in this Section 2 proving to be untrue in any material respect. 3. To the extent that the Bonds are inconsistent with the terms of this Third Renewal, the Bonds are hereby modified and amended to conform with this Third Renewal. Except as modified, renewed and extended by this Third Renewal, the Bonds remain unchanged and continue unabated and in full force and effect as the valid and binding obligation of the Maker. 4. In conjunction with the extension and renewal of the Bonds and the Security Instruments, Maker hereby extends and renews the liens, pledges, and security interests as created and granted in the Security Instruments until the indebtedness secured thereby, as so extended and renewed, has been fully paid, and agrees that such extension and renewal shall, in no manner, affect or impair the Bonds or the liens, pledges, and security interests securing same, and that said liens, pledges, and security interests shall not in any manner be waived. The purpose of this Third Renewal is simply to extend the time of payment of the obligation evidenced by the Bonds and any indebtedness secured by the Security Instruments, as modified by this Third Renewal, and to carry forward all liens, pledges, and security interests securing the same, which are acknowledged by Maker to be valid and subsisting. 5. Maker covenants and warrants that the Payee is not in default under the Bonds or the Security Instruments, or this Third Renewal (collectively referred to as the "Loan Instruments"), that there are no defenses, counterclaims or offsets to such Loan Instruments; and that all of the provisions of the Loan Instruments, as amended hereby, are in full force and effect. 6. Maker agrees to pay all costs incurred in connection with the execution and consummation of this Third Renewal, including but not limited to, all recording costs and the reasonable fees and expenses of Payee's counsel. 7. If any covenant, condition, or provision herein contained is held to be invalid by final judgment of any court of competent jurisdiction, the invalidity of such covenant, condition, or provision shall not in any way affect any other covenant, condition, or provision herein contained. 8. Payee is the sole owner and holder of the Bonds. Maker and Payee acknowledge and agree that the outstanding principal balance of the Bonds as of December 28, 1996 is $3,150,000.00. 9. Payee is an unincorporated trust organized under the Texas Real Estate Investment Trust Act. Neither the shareholders of Payee, nor its Trust Managers, officers, employees, or other agents shall be personally, corporately, or individually liable, in any manner whatsoever, for any debt, act, omission, or obligation of Payee, and all persons having claims of any kind whatsoever against Payee shall look solely to the property of Payee for the enforcement of their rights (whether monetary or non-monetary) against Payee. EXECUTED this day and year first above written, but effective for all purposes as of December 28, 1996. WRI HOLDINGS, INC., a Texas corporation By: Martin Debrovner, Vice President "Maker" WEINGARTEN REALTY INVESTORS, a Texas real estate investment trust By: Bill Robertson, Jr. Executive Vice President "Payee" STATE OF TEXAS COUNTY OF HARRIS This instrument was acknowledged before me on this ______ day of February, 1997, by Martin Debrovner, Vice President of WRI HOLDINGS, INC., a Texas corporation, on behalf of said corporation. Notary Public, State of Texas STATE OF TEXAS COUNTY OF HARRIS This instrument was acknowledged before me on this ______ day of February, 1997, by Bill Robertson, Jr., Executive Vice President of WEINGARTEN REALTY INVESTORS, a Texas real estate investment trust, on behalf of said real estate investment trust. Notary Public, State of Texas EX-10.5 3 THIRD SUPPLEMENTAL TRUST INDENTURE This THIRD SUPPLEMENTAL TRUST INDENTURE (this "Third Supplemental Indenture") is executed this 21st day of February, 1997 (the "Execution Date"), but effective as of December 28, 1996, by and between WRI HOLDINGS, INC. (the "Company"), a Texas corporation, and TEXAS COMMERCE BANK NATIONAL ASSOCIATION (the "Trustee"), a national banking association. W I T N E S S E T H: WHEREAS, the Company and the Trustee executed that certain Trust Indenture dated December 28, 1984 (the "Original Trust Indenture") to secure the performance of the Company under the terms of that certain 16% Mortgage Bonds Due 1994 (the "Original Bonds") executed by the Company payable to the order of Weingarten Realty, Inc. ("WRI") dated December 28, 1984 in the face principal amount of THREE MILLION ONE HUNDRED FIFTY THOUSAND and NO/l00 DOLLARS ($3,150,000.00), payable as therein provided; and WHEREAS, WRI assigned and conveyed all of its property, both real and personal, including, without limitation, the Original Bonds, to Weingarten Realty Investors ("Weingarten"), a Texas real estate investment trust, as evidenced by that certain Master Deed and General Conveyance dated April 5, 1988, from WRI to Weingarten; and WHEREAS, effective as of December 28, 1994, the Company and Weingarten renewed and extended the maturity date of the Original Bonds to December 28, 1995 pursuant to the terms of that certain Bonds Renewal and Extension Agreement dated as of December 28, 1994 ("First Renewal"); and WHEREAS, effective as of December 28, 1995, the Company and Weingarten again renewed and extended the maturity date of the Original Bonds to December 28, 1996 pursuant to the terms of that certain Bonds Second Renewal and Extension Agreement dated as of December 28, 1995 ("Second Renewal") (the Original Bonds, as renewed and extended by the First Renewal and Second Renewal, being herein called the "Bonds"); and WHEREAS, the Company and Weingarten amended and supplemented the terms of the Original Trust Indenture to reflect the renewal and extension of the Bonds as provided in the First Renewal and Second Renewal, such amendments being evidenced by (i) that certain Supplemental Trust Indenture dated as of December 28, 1994 between the Company, the Trustee and Weingarten and (ii) that certain Second Supplemental Trust Indenture dated as of December 28, 1995, between the Company, the Trustee, and Weingarten (the Original Trust Indenture, as amended and supplemented by the Supplemental Trust Indenture and Second Supplemental Trust Indenture, being herein called the "Trust Indenture"); and WHEREAS, the Bonds mature on December 28, 1996, and the Company and Weingarten have agreed to renew and extend the maturity date of the Bonds and to continue the liens, pledges, and security interests securing the payment of the Bonds, as set forth in that certain Third Bonds Renewal and Extension Agreement ("Third Renewal") dated effective as of December 28, 1996, executed by the Company and Weingarten, Weingarten being the sole legal owner and holder of the Bonds; and WHEREAS, the Company and the Trustee desire to amend and supplement the Trust Indenture to reflect the renewal and extension of the maturity date of the Bonds to December 28, 1997. NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and the Trustee hereby agree as follows: 1. Except as otherwise provided in this Third Supplemental Indenture, all capitalized terms used in this Third Supplemental Indenture shall have the meanings ascribed to those terms in the Trust Indenture. 2. The Company and the Trustee acknowledge that the Company has re-affirmed its promise to pay to the order of the Payee, at 2600 Citadel Plaza Drive, Suite 300, Houston, Harris County, Texas 77008, the principal balance due and owing on the Bonds, with interest accrued thereon, as provided in the Bonds, except that the maturity date of the Bonds has been renewed and extended to December 28, 1997, at which time the unpaid principal balance of the Bonds, plus all accrued and unpaid interest thereon, shall be due and payable. All liens, pledges, and security interests securing the Bonds granted under the terms of the Trust Indenture, are hereby renewed, extended and carried forward to secure payment of the Bonds, as hereby amended, and the Trust Indenture is hereby amended to reflect that the maturity date of the Bonds is December 28, 1997. 3. The Company hereby represents and warrants to the Trustee that (a) the Company is the sole legal and beneficial owner of the Trust Estate; (b) the Company has the full power and authority to make the agreements contained in this Third Supplemental Indenture without joinder and consent of any other party; and (c) the execution, delivery and performance of this Third Supplemental Indenture will not contravene or constitute an event which itself or which with the passing of time or giving of notice or both would constitute a default under any trust deed, deed of trust, loan agreement, indenture or other agreement to which the Company is a party or by which the Company or any of its property is bound. The Company hereby agrees to indemnify and hold harmless the Trustee against any loss, claim, damage, liability or expense (including, without limitation, attorneys' fees) incurred as a result of any representation or warranty made by the Company in this Section 3 proving to be untrue in any material respect. 4. To the extent that the Trust Indenture is inconsistent with the terms of this Third Supplemental Indenture, the Trust Indenture is hereby modified and amended to conform with this Third Supplemental Trust Indenture. Except as modified, renewed and supplemented by this Third Supplemental Indenture, the Trust Indenture remains unchanged and continues unabated and in full force and effect as the valid and binding obligation of the Company. 5. The Company covenants and warrants that the Trustee is not in default under the Trust Indenture, as supplemented by this Third Supplemental Indenture (collectively referred to as the "Indenture"), that there are no defenses, counterclaims or offsets to the Bonds or the Indenture, and that all of the provisions of the Bonds and the Indenture are in full force and effect. 6. The Company agrees to pay all costs incurred in connection with the execution and consummation of this Third Supplemental Indenture, including but not limited to, all recording costs and the reasonable fees and expenses of Trustee's counsel. 7. If any covenant, condition, or provision herein contained is held to be invalid by final judgment of any court of competent jurisdiction, the invalidity of such covenant, condition, or provision shall not in any way affect any other covenant, condition, or provision herein contained. 8. The Company acknowledges and agrees that the outstanding principal balance of the Bonds as of December 28, 1996 is $3, 150, 000.00. 9. Weingarten joins herein to consent to the amendment and supplement of the terms of the Trust Indenture, as set forth in this Third Supplemental Indenture and to acknowledge and represent that Weingarten is the sole owner and holder of the Bonds. Weingarten is an unincorporated trust organized under the Texas Real Estate Investment Trust Act. Neither the shareholders of Weingarten, nor its Trust Managers, officers, employees, or other agents shall be personally, corporately, or individually liable, in any manner whatsoever, for any debt, act, omission, or obligation of Weingarten, and all persons having claims of any kind whatsoever against Weingarten shall look solely to the property of Weingarten for the enforcement of their rights (whether monetary or non-monetary) against Weingarten. EXECUTED this day and year first above written1 but effective for all purposes as of December 28, 1996. WRI HOLDINGS, INC. By: Martin Debrovner, Vice President "Company" TEXAS COMMERCE BANK NATIONAL ASSOCIATION By:__________________________________ Terry Stewart Assistant Vice President and Trust Officer "Trustee" WEINGARTEN REALTY INVESTORS By:_________________________________ Bill Robertson, Jr. Executive Vice President "Weingarten" STATE OF TEXAS COUNTY OF HARRIS This instrument was acknowledged before me on this ______ day of February, 1997, by Martin Debrovner, Vice President of WRI HOLDINGS, INC., a Texas corporation, on behalf of said corporation. Notary Public, State of Texas STATE OF TEXAS COUNTY OF HARRIS This instrument was acknowledged before me on this ______ day of February, 1997, by Terry Stewart, Assistant Vice President and p Trust Officer of TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a national banking association, on behalf of said national banking association. Notary Public, State of Texas STATE OF TEXAS COUNTY OF HARRIS This instrument was acknowledged before me on this _______ day of February, 1997, by Bill Robertson, Jr., Executive Vice President of WEINGARTEN REALTY INVESTORS, a Texas real estate investment trust, on behalf of said real estate investment trust. Notary Public, State of Texas -5- EX-10.16.1 4 1 Letter Sized Document, Page Numbers each Page, Auto Sheet Feed CREATED IN 5.1 EIGHTH RENEWAL AND EXTENSION AGREEMENT THE STATE OF TEXAS COUNTY OF MONTGOMERY This EIGHTH RENEWAL AND EXTENSION AGREEMENT (the "Eighth Renewal") is executed this 21st day of February, 1997 (the "Execution Date"), but effective as of December 1, 1996, by and between PLAZA CONSTRUCTION, INC. ("Maker"), a Texas corporation, and WEINGARTEN REALTY INVESTORS ("Payee"), a Texas real estate investment trust. W I T N E S S E T H: WHEREAS, the Payee is the present legal owner and holder of that certain Promissory Note dated November 29, 1982 (the "Original Note"), in the original principal sum of Twelve Million and No/100 Dollars ($12,000,000.00) executed by River Pointe Venture I ("River Pointe"), a Texas joint venture, payable to the order of Weingarten Realty, Inc. ("WRI"), a Texas corporation, payable as therein provided, which Note is secured by (i) a Deed of Trust and Security Agreement dated November 29, 1982 (the "Original Deed of Trust"), executed by River Pointe to Melvin A. Dow, Trustee, filed under Clerk's File No. 8254156 and under Film Code Reference No. 171-01-0638 in the Real Property Records of Montgomery County, Texas, covering and affecting certain property situated in Montgomery County, Texas, more particularly described therein (the "Property"), and (ii) any and all other liens, security instruments, and documents executed by River Pointe and/or Maker, securing or governing the payment of the Original Note including, but not limited to, that certain Loan Agreement dated November 29, 1982 ("Original Loan Agreement"), executed by WRI and River Pointe; and WHEREAS, by that certain River Pointe Venture I Assignment of Interest and Dissolution, dated October 16, 1987, filed on October 19, 1987, under Clerk's File No. 8747284, in the Real Property Records of Montgomery County, Texas, River Pointe was dissolved and Maker assumed all of the debts and obligations of River Pointe, and obtained ownership of all of the assets of River Pointe, including, but not limited to, the Property; and WHEREAS, on April 5, 1988, WRI assigned and conveyed all of its property, both real and personal, including, without limitation, the Original Note, to Payee, as evidenced by that certain Master Deed and General Conveyance, from WRI to Payee, a counterpart of which was filed under Clerk's File No. 8815730 and under Film Code Reference No. 520-01-0704, in the Real Property Records of Montgomery County, Texas; and WHEREAS, by instrument entitled Renewal and Extension Agreement, entered into as of November 1, 1989 (the "First Renewal"), executed by Maker and Payee, the Original Note, Original Deed of Trust, Original Loan Agreement, and all other documents evidencing, governing, or securing the payment of the Note were renewed and extended; and WHEREAS, by instrument entitled Second Renewal and Extension Agreement dated March 12, 1991, but effective as of December 1, 1990 (the "Second Renewal"), filed on March 21, 1991, under Clerk's File No. 9111519 and under Film Code Reference No. ###-##-#### in the Official Public Records of Real Property of Montgomery County, Texas, Maker and Payee further modified and extended the Original Note, Original Deed of Trust, Original Loan Agreement, and all other documents evidencing, governing or securing payment of the Original Note; and WHEREAS, by instrument entitled Third Renewal and Extension Agreement dated February 28, 1992, but effective as of December 1, 1991 (the "Third Renewal"), filed on May 14, 1992, under Clerk's File No. 9222962, and under Film Code Reference No. ###-##-#### in the Official Public Records of Real Property of Montgomery County, Texas, Maker and Payee further modified and extended the Original Note, Original Deed of Trust, Original Loan Agreement, and all other documents evidencing, governing or securing payment of the Original Note; and WHEREAS, by instrument entitled Fourth Renewal and Extension Agreement dated February 19, 1993, but effective as of December 1, 1992 (the "Fourth Renewal"), Maker and Payee further modified and extended the Original Note, Original Deed of Trust, Original Loan Agreement, and all other documents evidencing, governing or securing payment of the Original Note; and WHEREAS, by instrument entitled Fifth Renewal and Extension Agreement dated March 9, 1994, but effective as of December 1, 1993 (the "Fifth Renewal"), filed on March 18, 1994 under Clerk's File No. 9415326 and under Film Code Reference No. ###-##-#### in the Official Public Records of Real Property of Montgomery County, Texas, Maker and Payee further modified and extended the Original Note, Original Deed of Trust, Original Loan Agreement, and all other documents evidencing, governing, or securing payment of the Original Note; and WHEREAS, by instrument entitled Sixth Renewal and Extension Agreement dated February 22, 1995, but effective as of December 1, 1994 (the "Sixth Renewal"), filed on March 1, 1995 under Clerk's File No. 09511049 and under Film Code Reference No. 046-00-0785 in the Official Public Records of Real Property of Montgomery County, Texas, Maker and Payee further modified and extended the Original Note, Original Deed of Trust, Original Loan Agreement, and all other documents evidencing, governing, or securing payment of the Original Note. WHEREAS, by instrument entitled Seventh Renewal and Extension Agreement dated February 7, 1996, but effective December 1, 1995 (the "Seventh Renewal"), filed on February 23, 1996 under Clerk's File No. 9611331 and under Film Code Reference No. 135-00-0887 in the Official Public Records of Real Property of Montgomery County, Texas, Maker and Payee further modified and extended the Original Note, Original Deed of Trust, Original Loan Agreement, and all other documents evidencing, governing, or securing payment of the Original Note. WHEREAS, the Original Note, the Original Deed of Trust, and Original Loan Agreement, together with any and all other liens, security interests and documents evidencing, securing or governing payment of the Original Note, as modified by the First Renewal, Second Renewal, Third Renewal, Fourth Renewal, Fifth Renewal, Sixth Renewal, and Seventh Renewal are herein referred to as the "Note" and "Security Instruments," respectively; and WHEREAS, Maker and Payee now propose to modify the Note in certain respects and to continue the lien and priority of the Security Instruments as security for the payment of the Note, as set forth more particularly herein. NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Maker and Payee hereby agree as follows: 1. The Maker re-affirms its promise to pay to the order of the Payee, at 2600 Citadel Plaza Drive, Suite 300, Houston, Harris County, Texas 77008, the principal balance due and owing on the Note, with accrued interest thereon, as provided in the Note, except that the maturity date of the Note is hereby amended and extended until December 1, 1997, at which time the unpaid principal balance of the Note, together with all accrued but unpaid interest, shall be due and payable. All liens securing the Note, including, but not limited to, the lien created by the Original Deed of Trust, are hereby renewed, extended and carried forward to secure payment of the Note, as hereby amended, and the Original Deed of Trust is hereby amended to reflect that the maturity date of the Note is December 1, 1997. All other Security Instruments including, but not limited to, the Original Loan Agreement, are likewise hereby modified and amended to reflect the renewal and extension of the maturity date of the Note to December 1, 1997. 2. Maker hereby represents and warrants to Payee that (a) Maker is the sole legal and beneficial owner of the Property (b) Maker has the full power and authority to make the agreements contained in this Eighth Renewal, without joinder and consent of any other party; and (c) the execution, delivery and performance of this Eighth Renewal will not contravene or constitute an event which itself or which, with the passing of time, or giving of notice, or both, would constitute a default under any trust deed, deed of trust, loan agreement, indenture or other agreement to which Maker is a party or by which Maker or any of its property is bound. Maker hereby agrees to indemnify and hold harmless Payee against any loss, claim, damage, liability or expense (including, without limitation, attorneys' fees) incurred as a result of any representation or warranty made by Maker in this Section 2 proving to be untrue in any material respect. 3. To the extent that the Note is inconsistent with the terms of this Eighth Renewal, the Note is hereby modified and amended to conform with the Eighth Renewal. Except as modified, renewed and extended by this Eighth Renewal, the Note and the Security Instruments remain unchanged and continue unabated and in full force and effect as the valid and binding obligation of the Maker. 4. In conjunction with the extension, renewal and modification of the Note and the Security Instruments, Maker hereby extends and renews the liens, security interests, and assignments created and granted in the Security Instruments until the indebtedness secured thereby, as so extended, renewed and modified, has been fully paid, and agrees that such extension, renewal and modification shall in no manner affect or impair the Note, the liens or security interests securing same, and that said liens, security interests, and assignments shall not in any manner be waived. The purpose of this Eighth Renewal is simply to extend the time of payment of the loan evidenced by the Note and any indebtedness secured by the Security Instruments, as modified by this Eighth Renewal, and to carry forward all liens and security interests securing the same, which are acknowledged by Maker to be valid and subsisting. 5. Maker covenants and warrants that the Payee is not in default under the Note or Security Instruments, each as modified by this Eighth Renewal (collectively referred to as the "Loan Instruments"), that there are no defenses, counterclaims or offsets to such Loan Instruments; and that all of the provisions of the Loan Instruments, as amended hereby, are in full force and effect. 6. Maker agrees to pay all costs incurred in connection with the execution and consummation of this Eighth Renewal, including but not limited to, all recording costs, the premium for an endorsement to the Mortgagee Policy of Title Insurance insuring the validity and priority of the Original Deed of Trust, in form satisfactory to Payee, and the reasonable fees and expenses of Payee's counsel. 7. If any covenant, condition, or provision herein contained is held to be invalid by final judgment of any court of competent jurisdiction, the invalidity of such covenant, condition, or provision shall not in any way affect any other covenant, condition, or provision herein contained. 8. Payee is an unincorporated trust organized under the Texas Real Estate Investment Trust Act. Neither the shareholders of Payee, nor its Trust Managers, officers, employees, or other agents shall be personally, corporately,or individually liable, in any manner whatsoever, for any debt, act, omission, or obligation of Payee, and all persons having claims of any kind whatsoever against Payee shall look solely to the property of Payee for the enforcement of their rights (whether monetary or non-monetary) against Payee. EXECUTED this day and year first above written, but effective for all purposes as of December 1, 1996. PLAZA CONSTRUCTION, INC., a Texas corporation By: Martin Debrovner, Vice President "Maker" WEINGARTEN REALTY INVESTORS, a Texas real estate investment trust By: Bill Robertson, Jr. Executive Vice President "Payee" STATE OF TEXAS COUNTY OF HARRIS This instrument was acknowledged before me on this ______ day of February, 1997, by Martin Debrovner, Vice President of PLAZA CONSTRUCTION, INC., a Texas corporation, on behalf of said corporation. Notary Public, State of Texas STATE OF TEXAS COUNTY OF HARRIS This instrument was acknowledged before me on this ______ day of February, 1997, by Bill Robertson, Jr., Executive Vice President of WEINGARTEN REALTY INVESTORS, a Texas real estate investment trust, on behalf of said real estate investment trust. Notary Public, State of Texas EX-10.18 5 AMENDED AND RESTATED CREDIT AGREEMENT Dated as of November 21, 1996 between Weingarten Realty Investors and Texas Commerce Bank National Association, as Agent, and individually as a Bank, and The Banks Defined Herein TABLE OF CONTENTS ----------------- Page ---- ARTICLE I DEFINITIONS AND ACCOUNTING TERMS 1.01. Certain Defined Terms 1 1.02. Other Defined Terms. 16 ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES; LETTERS OF CREDIT 2.01. The Revolving Credit Loan; Letters of Credit; Term Loan 16 2.02. Making the Advances on the Revolving Credit Loan 19 2.03. Issuing the Letters of Credit 20 2.04. Fees 29 2.05. Reduction of the Commitments 31 2.06. Interest 31 2.07. Additional Interest on LIBOR Rate Advances 32 2.08. Interest Rate Determination and Protection 33 2.09. Voluntary Interest Conversion of Advances 34 2.10. Funding Losses Relating to LIBOR Rate Advances 34 2.11. Extension of Commitments 35 ARTICLE III PAYMENTS, PREPAYMENTS, INCREASED COSTS AND TAXES 3.01. Payments and Computations 36 3.02. Voluntary Prepayments 37 3.03. Mandatory Prepayments 37 3.04. Increased Costs; Capital Adequacy 38 3.05. Taxes 38 3.06. Certificate of Bank 39 ARTICLE IV CONDITIONS OF LENDING 4.01. Conditions Precedent to Initial Advances and Issuance of Letters of Credit 39 4.02. Conditions Precedent to Each Borrowing 41 ARTICLE V REPRESENTATIONS AND WARRANTIES 5.01. Existence 41 5.02. Financial Condition 42 5.03. Use of Proceeds; Margin Stock 42 5.04. Binding Obligations 42 5.05. No Conflict or Resultant Lien 43 5.06. Compliance with Other Agreements 43 5.07. No Consent 43 5.08. Litigation 43 5.09. Taxes; Governmental Charges 43 5.10. Full Disclosure 43 5.11. Investment Company Act 44 5.12. Compliance with Law 44 5.13. ERISA 44 5.14. No Default or Event of Default 44 5.15. Permits and Licenses 44 5.16. Insurance 44 ARTICLE VI AFFIRMATIVE COVENANTS OF THE BORROWER 6.01. Reporting and Notice Requirements 45 6.02. Maintenance 47 6.03. Insurance 48 6.04. Taxes and Other Claims 48 6.05. Right of Inspection 48 6.06. Guarantees of Subsidiaries 48 6.07. Compliance with Law 49 6.08. Delivery of Certain Certificates 49 ARTICLE VII NEGATIVE COVENANTS 7.01. Liens, Etc 49 7.02. Limitations on Incurrence of Debt 49 7.03. Unimproved Real Property 50 7.04. Sale or Other Disposition of Real Property 50 7.05. Mergers; Consolidations 51 7.06. Investments, Loans, and Advances 51 7.07. Coverage Ratio 52 7.08. Transactions with Affiliates 53 7.09. Change of Business 53 7.10. Intentionally Omitted 53 7.11. Amendment of Organizational Documents 53 7.12. Guarantees 53 7.13. Assets Retained 54 ARTICLE VIII EVENTS OF DEFAULT 8.01. Events of Default 55 ARTICLE IX THE AGENT 9.01. Authorization and Action 57 9.02. Agent's Reliance, Etc 57 9.03. TCB and Affiliates 58 9.04. Bank Credit Decision 58 9.05. Indemnification 58 9.06. Successor Agent 59 9.07. Agent's Reliance 60 9.08. Defaults 60 ARTICLE X MISCELLANEOUS 10.01. Amendments, Etc 60 10.02. Notices, Etc 61 10.03. No Waiver; Remedies 61 10.04. Costs, Expenses and Taxes 61 10.05. Right of Set-off 62 10.06. Sharing of Payments, Etc. 62 10.07. Binding Effect 62 10.08. Assignments and Participations 62 10.09. Limitation on Agreements 64 10.10. Severability 65 10.11. Governing Law 66 10.12. SUBMISSION TO JURISDICTION; WAIVERS 66 10.13. Execution in Counterparts 66 10.14. Liability of Borrower 66 10.15. FINAL AGREEMENT 67 EXHIBITS Exhibit 1.01-A - Form of Guaranty Exhibit 1.01-B - Existing Letters of Credit Exhibit 1.01-C - Definitions Governing Letters of Credit Supporting Bonds Exhibit 2.02(a) - Notice of Borrowing Exhibit 2.02(c) - Form of Notes Exhibit 2.03 - Form of Letter of Credit Request Exhibit 2.09 - Form of Notice of Interest Conversion Exhibit 5.01 - Subsidiaries Exhibit 5.08 - Material Litigation Exhibit 6.01(c) - Form of Compliance Certificate Exhibit 10.08 - Form of Assignment and Acceptance AMENDED AND RESTATED CREDIT AGREEMENT Dated as of November 21, 1996 Weingarten Realty Investors, a Texas real estate investment trust (the "Borrower"), Texas Commerce Bank National Association, a national banking -------- association (in its individual capacity, "TCB"), NationsBank of Texas, N.A., a --- national banking association, ("NationsBank"), Signet Bank ("Signet"), Commerzbank, A.G., a domestic branch of a bank organized under the laws of Germany ("Commerzbank"), The Sumitomo Bank, Limited, a Japanese banking corporation ("Sumitomo") and any bank that may hereafter become a party hereto in accordance with the provisions hereof (each individually, a "Bank" ---- and collectively, the "Banks"), TCB as Agent hereunder (in such capacity, the ----- "Agent") for the Banks hereunder, NationsBank, in its capacity as Documentary ----- Agent hereunder, and Commerzbank, in its capacity as Co-Agent hereunder, hereby agree as follows: ARTICLE I DEFINITIONS AND ACCOUNTING TERMS SECTION 1.01. Certain Defined Terms. As used in this Credit --------------------- Agreement (the "Agreement"), the following terms shall have the following --------- meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined): "Act" shall have the meaning specified in Section 5.01. --- "Adjusted Net Proceeds" has the meaning specified in Section 7.04. ----------------------- "Advance" means the Revolving Credit Advances provided for in Section ------- 2.01(a) hereof, and on and after the Conversion Date, means the Term Loan Advances provided for in Section 2.01(c). "Affiliate" means any Person which, directly or indirectly, controls or --------- is controlled by or is under common control with another Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlled by" and "under common control with"), as used with respect to any Person, means the power to direct or cause the direction of the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities or by contract or otherwise. "Annual Date" means, during the first 365 days of the term of this ------------ Agreement, the date which is 364 days from and after the Closing Date, and thereafter, means the anniversary of such date in each succeeding year. "Annual Service Charge" means, for any Calculation Period, the sum of (i) --------------------- the amount accrued during such period in respect of interest (including the interest component of Capitalized Lease obligations) and original issue discount of Debt of the Borrower and its Subsidiaries, plus (ii) amounts ---- accrued by the Borrower and its Subsidiaries in respect of Disqualified Stock (including, without limitation, dividends payable thereon). "Applicable Margin" shall mean with respect to any Advance, the rate per ------------------ annum for the respective Type of Advance indicated below for the credit rating assigned to (or in respect of) long-term, senior unsecured Debt of the Borrower by S&P, as reflected on the most recent Compliance Certificate of the Borrower delivered in accordance with Section 6.01(c), or the most recent Rating Certificate delivered in accordance with Section 6.01(h), as the case may be, and shall become effective with respect to each such Advance requested by the Borrower on the applicable Calculation Date, and shall remain in effect to (but not including) the next Calculation Date:
If the credit rating determined on any Calculation Date is: The Applicable Margin for the Type of - ------------------------------- Advance indicated is: ------------------------------------- For For a Revolving Term Loan: Loan: ---------- ------ A+, A or A-, or better (a) LIBOR Rate Advance .40% .65% (b) Effective Federal Funds Rate Advance .58% .83% BBB+ (a) LIBOR Rate Advance .65% .90% (b) Effective Federal Funds Rate Advance . 83% 1.08% BBB,BBB- (a) LIBOR Rate Advance .85% 1.10% (b) Effective Federal Funds Rate Advance 1.03% 1.28% BB+ and below (a) LIBOR Rate Advance 1.25% 1.50% (b) Effective Federal Funds 1.43% Rate Advance 1.68%
; provided that, if at any time no such credit rating shall be assigned to (or in respect of) long-term, senior unsecured Debt of the Borrower by S&P, the "Applicable Margin" shall mean the rate per annum for the respective Type of Advance indicated below for the Coverage Ratio in effect, as reflected on the most recent Compliance Certificate of the Borrower delivered to the Agent in accordance with Section 6.01(c), or the most recent Rating Certificate delivered in accordance with Section 6.01(h), as the case may be, and shall become effective with respect to each such Advance requested by the Borrower on the applicable Calculation Date, and shall remain in effect to (but not including) the next Calculation Date:
If the Coverage Ratio The Applicable Margin for the determined on any Calculation Type of Advance indicated is: - -------------------------------- -------------------------------- Date is: For Revolving - -------------------------------- -------------- Loan: For a Term -------------- ----------- Loan ----------- (a) LIBOR Rate Advance .40% Greater than 3.0 to 1.0 (b) Effective Federal Funds Rate .65% Advance .58% .83% (a) LIBOR Rate Advance Equal to or less than 3.0 to 1.0 (b) Effective Federal Funds Rate .65% Advance .90% .83% 1.08%
The Applicable Margin shall be computed by the Agent on each Calculation Date, and the Agent shall notify the Borrower and the Banks of the Applicable Margin. "Assignee" has the meaning specified in Section 10.08(a) hereof. -------- "Assignment and Acceptance" has the meaning specified in Section 10.08(a) ------------------------- hereof. "Borrowing" means a revolving credit loan borrowing under Section --------- 2.01(a) hereof consisting of one Revolving Credit Advance from each Bank, of the same Type made on the same day. "Business Day" means a day of the year on which banks are not required or ------------ authorized to close in Houston, Texas and, if the applicable Business Day relates to any LIBOR Rate Advances, on which dealings are carried on in the London interbank market. "Calculation Date" means (i) the Closing Date, and (ii) a date which is ----------------- the earlier of (A) the date of delivery of a Compliance Certificate in accordance with Section 6.01(c), or (B) the date that such Compliance Certificate is required to be delivered pursuant to Section 6.01(c), and (C) with respect to a Rating Certificate, the date of such Rating Certificate. "Capital Shares" means, with respect to any Person, any capital stock or ---------------- capital shares (including without limitation, preferred stock or shares), interests, participations or other ownership interests (however designated) of such Person, and any rights, warrants or options to purchase any thereof. "Capitalized Lease" means any lease of any property (whether real, ------------------ personal or mixed) which, in conformity with GAAP, is accounted for as a capital lease on the balance sheet of the lessee. "Cash Equivalents" means (a) marketable direct obligations issued or ----------------- unconditionally guaranteed by the United States Government or issued by an agency thereof or by the Federal National Mortgage Association; (b) commercial paper 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 S&P or Moody's (or, if at any time neither S&P nor Moody's shall be rating such obligations, then the highest rating from such other nationally recognized rating services acceptable to the Agent); (c) investments in repurchase agreements backed by securities described in clause (a) hereof; and (d) domestic and eurodollar certificates of deposit or bankers' acceptances maturing within ninety (90) days after the date of acquisition thereof issued by any Bank or any commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia having capital of not less than $100,000,000. "Closing Date" means the date the Agreement becomes effective in ------------- accordance with Article IV. -- "Code" means the Internal Revenue Code of 1986, as amended from time to ---- time, and any successor statute. "Commitment" means, as to any Bank, such Bank's Pro Rata Percentage of ---------- $200,000,000, as such amount is set forth on the signature pages hereof with respect to each Bank on and as of the Closing Date, and as it may be reduced from time to time in accordance with Section 2.05, and, prior to the Conversion Date, includes its commitment in respect of the Revolving Credit Loan as described in Section 2.01(a), its Letter of Credit Commitment, and on and subsequent to the Conversion Date, includes its commitment in respect of the Term Loan, as described in Section 2.01(c) and its Letter of Credit Commitment (but limited to those Letters of Credit issued prior to the Conversion Date); and "Commitments" means, collectively, the Commitments for ----------- all the Banks. "Compliance Certificate" has the meaning specified in Section 6.01(c). ----------------------- "Consent Period" has the meaning specified in Section 2.11. --------------- "Conversion Date" has the meaning specified in Section 2.01(c)(i). ---------------- "Coverage Ratio" has the meaning specified in Section 7.07. --------------- "Debt" of the Borrower or any Subsidiary means any indebtedness of the ---- Borrower, or any Subsidiary, whether or not contingent, in respect of (without duplication): (i) borrowed money, or obligations evidenced by bonds, notes, debentures or similar instruments, (ii) the portion of indebtedness secured by any Lien existing on property owned by the Borrower or any Subsidiary, (iii) the reimbursement obligations, contingent or otherwise, in connection with any letters of credit or similar instruments issued or confirmed by banks or other financial institutions for the account of the Borrower or any Subsidiary, (iv) amounts representing the balance deferred and unpaid of the purchase price of any property or services (except any such balance that constitutes trade payables) or conditional sale obligations or obligations under any title retention agreement, (v) the principal amount of all obligations of the Borrower or any Subsidiary with respect to redemption, repayment or other repurchase of any Disqualified Stock or, (vi) Guaranties, or (vii) obligations of the Borrower or any Subsidiary as lessee under a Capitalized Lease; provided that the items of indebtedness under (i), (ii), (iii) and (iv) above shall be deemed to be Debt only to the extent that any such items (other than obligations in respect of letters of credit) would appear as a quantified liability on the Borrower's consolidated balance sheet in accordance with GAAP (as distinguished from being referred to in the notes to such Financial Statement). The term "Debt" shall not include (x) contingent liabilities relating to deposit and/or endorsement of checks in the ordinary course of business of the Borrower or any Subsidiary; or (y) guaranties or contingent liabilities under leases customarily undertaken or incurred by Borrower or any Subsidiary in the ordinary course of business as either landlord or tenant. The term "Debt" includes the Borrower's and Subsidiaries' share of debt of partnerships and joint ventures (other than debt that is non-recourse to the Borrower or its Subsidiaries) which are accounted for on the Borrower's Financial Statements under the equity method of accounting. "Debtor Laws" means all applicable liquidation, conservatorship, ------------ bankruptcy, moratorium, arrangement, receivership, insolvency, reorganization -- or similar laws or general equitable principles from time to time in effect affecting the rights of creditors generally. "Default" means any event which, with the lapse of time or giving of ------- notice, or both, would constitute an Event of Default. "Disqualified Stock" means, with respect to any Person, any Capital ------------------- Shares of such Person, which by the terms thereof (or by the terms of any security or instrument into which such Capital Shares are convertible or for which such Capital Shares are exchangeable or exercisable) upon the happening of any event or otherwise, (i) mature or are mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, (ii) are convertible into or exchangeable or exercisable for Debt or Disqualified Stock, or (iii) are redeemable at the option of the holder thereof, in whole or in part, in each case on a date prior to the stated maturity of the Notes. "Effective Federal Funds Rate" means the Federal Funds Rate, plus the ------------------------------- Applicable Margin. "Effective Federal Funds Rate Advance" means an Advance which bears ---------------------------------------- interest at the Effective Federal Funds Rate as provided in Section 2.06(b). "ERISA" means the Employee Retirement Income Security Act of 1974, as ----- amended from time to time, and the regulations promulgated and rulings issued thereunder. "ERISA Affiliate" means any Subsidiary or trade or business (whether or ---------------- not incorporated) which is a member of a group of which the Borrower is a member and which is under common control within the meaning of Section 414 of the Code and the rules and regulations thereunder. "ERISA Event" means any of the following events: (a) a "Reportable ------------ Event" described in Section 4043 of ERISA and the regulations issued thereunder (other than a "Reportable Event" not subject to the provisions for the 30-day notice to the PBGC under such regulations), (b) the withdrawal of the Borrower from a PBGC Plan during a plan year in which it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA or the incurrence of liability by the Borrower under Section 4064 of ERISA, (c) the distribution of a notice of intent to terminate a PBGC Plan pursuant to Section 4041(c) of ERISA or the treatment of a PBGC Plan amendment as a termination under Section 4041 of ERISA, (d) the institution of proceedings to terminate a PBGC Plan by the PBGC, or (e) any other event or condition which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any PBGC Plan. "Eurocurrency Liabilities" has the meaning assigned to that term in ------------------------- Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time. "Events of Default" has the meaning specified in Section 8.01. ------------------- "Existing Debt" means all indebtedness of the Borrower to the Prior Banks ------------- under or in connection with the Prior Credit Agreement, the Prior Notes and the Existing Letters of Credit. "Federal Funds Rate" means, as of any particular date, a fluctuating -------------------- interest rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Agent from three federal funds brokers of recognized standing selected by it. "Existing Letters of Credit" means the Letters of Credit issued pursuant --------------------------- to the Prior Credit Agreement and outstanding as of the Closing Date, as described on Exhibit 1.01-B hereto. "Fees" means the Unused Borrowing Commitment Fee, the Letter of Credit ---- Fee and the Issuance Fee. "Financial Statements" shall mean statements of the financial condition --------------------- of the Borrower and its Subsidiaries on a consolidated basis as set forth in the Borrower's Annual Report on Form 10K for each calendar year, or in the Borrower's Quarterly Report on Form 10-Q for each quarterly accounting period, and filed with the Securities and Exchange Commission, or if such filing is not permitted or required at any time, financial statements in such form of the Borrower and its Subsidiaries on a consolidated basis, delivered to the Agent and, in such event, for quarterly financial statements, certified by a Responsible Officer as presenting fairly the consolidated financial position of the Borrower and its Subsidiaries as of the date indicated and the results of their operations for the period indicated in conformity with GAAP, consistently applied, subject to changes resulting from year-end adjustments, and for year-end financial statements together with the unqualified opinion of Deloitte & Touche, or other independent public accountants of recognized national standing selected by the Borrower, stating that such financial statements fairly present the consolidated financial position of the Borrower and its Subsidiaries as of the date indicated and the consolidated results of their operations and changes in financial position for the period indicated in conformity with GAAP, consistently applied. "Funds from Operations" means for any Calculation Period, net income of ----------------------- the Borrower and its Subsidiaries plus (i) each of the following, to the ---- extent actually deducted in arriving at such net income during such period: (A) depreciation and amortization expenses, (B) the amount accrued during such period in respect of interest (including the interest component of Capitalized Lease obligations) and original issue discount of Debt of the Borrower and its Subsidiaries, and (C) extraordinary charges plus (ii) the excess, if any, of ---- the share of distributable funds allowable under any joint venture or partnership which is not a Guarantor over net income from such joint venture or partnership, minus (iii) each of the following to the extent actually ----- included in arriving at such net income during such period: (x) gains on the sale or disposition of properties and investment securities of the Borrower and its Subsidiaries, and (y) the excess, if any, of net income from any joint venture or partnership which is not a Guarantor, over the share of distributable funds allowable under the applicable joint venture or partnership agreement. "GAAP" means generally accepted accounting principles set forth in the ---- opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants, and statements and pronouncements of the Financial Accounting Standards Board. "Governmental Authority" means any (domestic or foreign) federal, state, ----------------------- county, municipal, parish, provincial, or other government, or any department, commission, board, court, agency (including, without limitation, the Environmental Protection Agency), or any other instrumentality of any of them or any other political subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory, or administrative functions of, or pertaining to, government, including, without limitation, any arbitration panel, any court, or any commission. "Governmental Requirement" means any order, permit, law, statute ------------------------- (including, without limitation, any statute enacted in connection with or -- relating to the protection or regulation of the environment), code, ordinance, rule, regulation, certificate, or other direction or requirement of any Governmental Authority. "Guarantor" means each Subsidiary which is a corporation, 100% of the --------- capital stock of which is owned by the Borrower, or a Subsidiary, and that has executed or will execute a Guaranty Agreement, including without limitation, each Guaranty Agreement executed in accordance with Section 6.06 herein. "Guaranty" or "Guarantees" has the meaning specified in Section 7.12, and -------- ---------- does not include a "Guaranty Agreement", executed in favor of the Banks in connection with this Agreement. "Guaranty Agreement" means an Amended and Restated Guaranty Agreement ------------------- executed by each Guarantor substantially in the form of Exhibit 1.01-A, attached hereto. "Highest Lawful Rate" means, with respect to each Bank, the maximum --------------------- nonusurious interest rate, if any, that at any time or from time to time may be contracted for, taken, reserved, charged, or received with respect to any Note or on other amounts, if any, due to such Bank pursuant to this Agreement or any other Loan Document under laws applicable to such Bank which are presently in effect or, to the extent allowed by law, under such applicable laws which may hereafter be in effect. "Interest Period" means, for each LIBOR Rate Advance comprising part of ---------------- the same Borrowing, or in the case of a Term Loan, for each Term Advance, the period commencing on the date of such Advance or the date of the conversion of any Advance into such an Advance and ending on the last day of the period selected by the Borrower pursuant to the provisions below and, thereafter, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of the period selected by the Borrower pursuant to the provisions below. The duration of each such Interest Period shall be seven (7) days or one, two or three months, as the Borrower may, upon notice received by the Agent have selected in accordance with Section 2.02; provided however, that: -------- (i) the duration of any Interest Period which commences before any principal repayment date required hereunder and would otherwise end (but for this provision) after such date shall end on such date; and (ii) whenever the last day of any Interest Period would otherwise (but for this provision) occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the next succeeding Business Day, provided, that, if such extension would cause the last day of -------- such Interest Period to occur in the next following calendar month, the last day of such Interest Period shall occur on the next preceding Business Day. "Interest Rate Agreements" shall have the meaning specified in Section -------------------------- 8.01(i). "Investment" of any Person means any investment so classified under GAAP, ---------- and, whether or not so classified, includes (a) any direct or indirect loan or advance made by it to any other Person, whether by means of stock purchase, loan, advance or otherwise, (b) any capital contribution to any other Person, and (c) any ownership or similar interest in any other Person. "Issuing Bank" means TCB. ------------- "Issuance Fee" has the meaning specified in Section 2.04(b). ------------- "Letter of Credit" means the letters of credit provided for in Section ------------------- 2.01 hereof, and shall include, without limitation, the Special Letters of Credit and the Bond Support Letters of Credit. "Letter of Credit Commitment" means, as to any Bank, such Bank's Pro Rata ---------------------------- Percentage of $50,000,000, as such amount may be reduced from time to time pursuant to the terms and provisions hereof, and "Letter of Credit Commitments" means, collectively, the Letter of Credit Commitments for all the Banks. "Letter of Credit Fee" has the meaning specified in Section 2.04(b). ----------------------- "Letter of Credit Request" has the meaning specified in Section 2.03(a) -------------------------- hereof. "LIBOR Rate" means, for any Interest Period for each LIBOR Rate Advance, ----------- an interest rate per annum determined by the Agent to be the average (rounded, if necessary, to the nearest whole multiple of one thirty-second of one percent (1/32%) if such average is not a multiple thereof) of the rate per annum at which deposits in U.S. dollars are offered to prime banks in the London interbank market at 11:00 A.M. (London time) two Business Days prior to the commencement of such Interest Period, in an amount substantially equal to such LIBOR Rate Advance and for a period equal to such Interest Period. "LIBOR Rate Advance" means an Advance which bears interest at the LIBOR -------------------- Rate as provided in Section 2.06(a). "LIBOR Rate Reserve Percentage" of any Bank for any Interest Period for ------------------------------- any LIBOR Rate Advance means the reserve percentage, if any, applicable during such Interest Period (or if more than one such percentage shall be so applicable, the daily average of such percentages for those days in such Interest Period during which any such percentage shall be so applicable) under regulations issued from time to time by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, without limitation, any emergency, supplemental or other marginal reserve requirement, expressed as a percentage per annum) for such Bank with respect to liabilities or assets consisting of or including eurocurrency liabilities having a term equal to such Interest Period. "Lien" means any claim, mortgage, deed of trust, pledge, security ---- interest, encumbrance, lien, or charge of any kind (including, without - limitation, any agreement to give any of the foregoing), any conditional sale - or other title retention agreement, or the interest of the lessor under any Capitalized Lease (but otherwise excluding leases). "Loan Documents" means this Agreement, the Notes, the Letters of Credit, --------------- the Guaranty Agreements, and any document or instrument executed in connection with the foregoing. "Majority Banks" means at any time Banks holding at least 66 % of the --------------- then aggregate unpaid principal amount of the Notes held by Banks, or, if no such principal amount is then outstanding, Banks having at least 66 % of the Commitments. "Margin Stock" shall have the meaning assigned to such term in any of ------------- Regulation G, T, U or X. "Moody's" means Moody's Investors Service, Inc. ------- "Multiemployer Plan" means a "multiemployer plan" as defined in Section -------------------- 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is making or accruing or has made or accrued an obligation to make contributions. "Net Proceeds" means with respect to the disposition of Real Property of ------------- the Borrower permitted by Section 7.04 hereof, all proceeds realized from such disposition after deducting: (i) any withholding taxes arising from the disposition of assets located outside of the United States; (ii) the ordinary and customary out-of-pocket costs of such disposition; and (iii) amounts applied to the repayment of Debt secured by Liens on such Real Property, to the extent such Liens were not prohibited hereunder. "Net Proceeds" shall also include proceeds of insurance with respect to an actual or constructive loss of such property, an agreed or compromised loss of such property or the taking of any such property under the power of eminent domain and condemnation awards and awards in lieu of condemnation for the taking of property under the power of eminent domain. "Non-Recourse Debt" of any Person means Debt of such Person in respect of ----------------- which (other than with respect to agreements in respect of such Debt regarding the occurrence of certain wrongful acts or misapplication of funds) (i) the recourse of the holder of such Debt, whether direct or indirect and whether contingent or otherwise, is effectively limited to the assets directly securing such Debt; and (ii) such holder may not collect by levy of execution against assets of such Person generally (other than the assets directly securing such Debt) if such Person fails to pay such Debt when due and the holder obtains a judgment with respect thereto. "Note" or "Notes" has the meaning specified in Section 2.02(c). ---- ----- "Notice of Borrowing" has the meaning specified in Section 2.02(a). --------------------- "Notice of Conversion" has the meaning specified in Section 2.01 ---------------------- (c)(i). "Notice of Interest Conversion" has the meaning specified in Section -------------------------------- 2.09. "Obligations" means all of the obligations of the Borrower and its ----------- Subsidiaries now or hereafter existing under the Loan Documents to which it is a party, whether for principal, interest, fees, expenses, indemnification or otherwise. "Organizational Document" has the meaning set forth in Section 4.01(d). ------------------------ "PBGC" means the Pension Benefit Guaranty Corporation. ---- "Permitted Debt" means Debt which does not exceed the limits specified in -------------- Section 7.02. "Permitted Liens" means: ---------------- (a) non-consensual Liens imposed by operation of law including, without limitation, Liens for taxes not yet delinquent, landlord Liens for rent not yet due and payable, and Liens for materialmen, mechanics, warehousemen, carriers, employees, workmen, repairmen, current wages, or accounts payable not yet delinquent and arising in the ordinary course of business; provided, however, that any right to seizure, levy, attachment, -------- sequestration, foreclosure, or garnishment with respect to Property of the Borrower or any Subsidiary by reason of such Lien has not matured, or has been, and continues to be, effectively enjoined or stayed; (b) easements, rights-of-way, restrictions, and other similar Liens or imperfections to title which do not materially interfere with the occupation, use, and enjoyment by the Borrower or any Subsidiary of the Property encumbered thereby or materially impair the value of such Property subject thereto for its intended purpose; (c) Liens (other than any Lien imposed by ERISA) incurred or deposits made in the ordinary course of business (i) in connection with workers' compensation, unemployment insurance and other types of social security, or (ii) to secure (or to obtain letters of credit that secure) the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, performance or payment bonds, purchase, construction or sales contracts and other similar obligations, in each case not incurred or made in connection with the borrowing of money, the obtaining of advances or credit or the payment of the deferred purchase price of property; and (d) UCC protective filings with respect to personal property leased to the Borrower or any Subsidiary. "Person" means an individual, partnership, corporation (including a ------ business trust), joint stock company, trust, unincorporated association, joint venture or other entity, or a Governmental Authority. "Plan" means any employee benefit plan within the meaning of Section 3(3) ---- of ERISA, other than a Multiemployer Plan, maintained by the Borrower or any ERISA Affiliate. Prior Banks" means banks and other financial institutions holding a Prior ----------- Note issued by the Borrower to such Prior Bank under the Prior Credit Agreement, including such Prior Banks which are parties to this Agreement. "Prior Credit Agreement" shall have the meaning specified for such term ------------------------ in Section 4.01(i) hereof. "Property" means any interest or right in any kind of property or asset, -------- whether real, personal, or mixed, owned or leased, tangible or intangible, and whether now held or hereafter acquired. "Pro Rata Percentage" or "ratably" means as to any Bank a fraction --------------------- (expressed as a percentage) the numerator of which shall be the aggregate original principal amount of such Bank's Note and the denominator of which shall be $200,000,000. "Rating Certificate" has the meaning specified in Section 6.01(h). ------------------- "Real Property" means all of the land, buildings, improvements and -------------- projects under construction owned by the Borrower or any Subsidiary, including without limitation all improvements thereon, fixtures, and any leasehold or other interest in such property owned or held by the Borrower or any Subsidiary, but excluding Property under direct financing leases (as reflected on the balance sheet of the Borrower). "Register" has the meaning specified in subsection 10.08(c) hereof. -------- "Regulation G," "Regulation T," "Regulation U" and "Regulation X" means ------------------------------------------------------------------ Regulation G, T, U or X, as the case may be, of the Board of Governors of the Federal Reserve System, or any successor or other regulation hereafter promulgated by said Board to replace the prior Regulation G, T, U or X and having substantially the same function. "Responsible Officer" means the chief financial officer or the chief -------------------- accounting officer of the Borrower. "Revolving Credit Advance" means an advance of funds made by each Bank in ------------------------ respect of the Revolving Credit Loan. "Revolving Credit Loan" or "Revolving Loan" means the revolving credit ----------------------- -------------- loan to be made under Section 2.01 (a) hereof. "Revolving Credit Termination Date" means the earlier of (i) November ------------------------------------ 21, 1999, or such later date to which the Revolving Credit Termination Date may be extended pursuant to Section 2.11, or (ii) any date occurring prior to the Conversion Date on which (y) the Commitments have been terminated in accordance with this Agreement (including, without limitation, under Section 8.01 hereof), and (z) all amounts due and owing under the Notes have been paid in full, and (iii) the Conversion Date. "S&P" means Standard & Poor's Corporation. ---- "Subsidiary" shall mean (i) a corporation of which a sufficient number of ---------- shares of stock having ordinary voting power (other than stock having such power only by reason of the happening of a contingency) to elect a majority of the board of directors of such corporation are owned directly or indirectly by the Borrower, or (ii) any partnership or other business entity, with respect to which the Borrower or a Guarantor owns an equity interest sufficient to exercise majority voting power over management decisions. For purposes of clause (ii) aforesaid, neither the Borrower nor a Guarantor shall be deemed to own an equity interest sufficient to exercise "majority voting power over management decisions" if certain major decisions of such partnership or other business entity (e.g., a decision to sell property) require consent of Persons other than the Borrower or Guarantor. For purposes of this definition, Weingarten Properties Trust, a Texas real estate investment trust, shall not be deemed to be a Subsidiary. "Term Anniversary Date" has the meaning specified for such term in ----------------------- Section 2.01(c)(ii). "Term Loan" means the Term Loan made pursuant to Section 2.01(c) hereof. ---------- "Term Loan Advance" or "Term Advance" means an Advance made by each Bank ------------------ ------------ in respect of the Term Loan; provided that, subject to being increased by deemed Advances under Section 2.03(d), the principal amount outstanding for all Term Loan Advances from time to time shall never be increased from and after the Conversion Date. "Term Maturity Date" has the meaning specified for such term in Section -------------------- 2.01(c)(ii). "Termination Date" means November 21, 1999, or such later date to which ----------------- the Termination Date may be extended pursuant to Section 2.11 or Section 2.01(c) (the Term Maturity Date), or any earlier date on which (i) the Commitments have been terminated in accordance with this Agreement (including, without limitation, under Section 8.01 hereof), and (ii) all unpaid amounts due and owing under the Notes have been paid in full. "Total Assets" as of any date means the sum of (i) the Undepreciated Real ------------ Estate Assets, and (ii) the aggregate book value of all other assets of the Borrower and its Subsidiaries, determined on a consolidated basis in accordance with GAAP (after deducting therefrom assets classified as "intangible assets" in accordance with GAAP.) "Total Commitment" shall mean the sum of the Commitments in effect under ----------------- this Agreement from time to time. "Type" refers to the determination whether an Advance is an Effective ---- Federal Funds Rate Advance or a LIBOR Rate Advance (or a Borrowing comprised of such Advances). "UCP" has the meaning specified in Section 2.03(b). --- "Undepreciated Real Estate Assets" as of any date means the aggregate ----------------------------------- book value, before deduction for depreciation and amortization, of Real Property assets of the Borrower and the Subsidiaries, determined on a consolidated basis in accordance with GAAP. "Unimproved Real Property" shall mean Projects Under Development, as -------------------------- reflected on the Financial Statements, less (i) Construction in progress, and ---- (ii) Capitalized interest in respect of Construction in progress, and (iii) Capitalized interest on unimproved land. "Unused Borrowing Commitment Fee" has the meaning specified in Section ---------------------------------- 2.04(a). SECTION 1.02. Other Defined Terms --------------------- (a) Terms Governing Letters of Credit Supporting Bonds. All ---------------------------------------------------- terms utilized solely in connection with Letters of Credit issued hereunder in support of bonds shall have the meanings specified for such terms in Exhibit 1.01-C hereof. (b) Accounting Terms. All accounting terms not specifically ----------------- defined herein shall be construed in accordance with GAAP consistent with those applied in the preparation of the financial statements referred to in Section 5.02. ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES; LETTERS OF CREDIT SECTION 2.01. The Revolving Credit Loan; Letters of Credit; Term -------------------------------------------------- Loan. (a) Each Bank acknowledges that the Prior Credit Agreement, and the - ---- promissory notes dated as of September 20, 1995, issued pursuant to the Prior Credit Agreement (the "Prior Notes"), together with the Existing Letters of Credit, evidences the Existing Debt. The Existing Debt is held by some, but not all of the Banks under this Agreement, and the Borrower acknowledges and agrees that the Notes issued by the Borrower pursuant to this Agreement in accordance with Section 2.02(c) hereof, together with other indebtedness of the Borrower hereunder, incorporates Existing Debt, to the extent of Existing Debt held by each Prior Bank. In addition, each Bank severally agrees, on the terms and conditions hereinafter set forth, to make Advances on a revolving credit basis to the Borrower from time to time on any Business Day during the period on and after the date hereof until the Revolving Credit Termination Date, in an aggregate amount not to exceed at any time outstanding an amount equal to such Bank's Commitment; provided that, in no event shall the ratable principal amount outstanding on all Advances made by any Bank, plus the principal amount of such Bank's Pro Rata Percentage of Letters of Credit issued and outstanding at any time (whether drawn and not reimbursed or undrawn) exceed such Bank's Commitment. Each Borrowing shall be in an aggregate amount not less than $5,000,000 or an integral multiple of $1,000,000 in excess thereof and shall consist of Advances of the same Type made on the same day by the Banks ratably according to their respective Commitments. Within the limits set forth herein, until, and including, the Revolving Credit Termination Date, the Borrower may borrow, prepay pursuant to Sections 3.02 and 3.03 and reborrow under this Section 2.01. The principal amount outstanding of all Advances shall mature and, together with accrued and unpaid interest thereon, shall be due and payable on the Termination Date. (b) Each Bank hereby agrees that upon the Closing Date, the Issuing Bank (on behalf of the Prior Banks) shall be deemed, without further action by any party hereto, to have sold to each Bank under this Agreement, and each such Bank shall be deemed, without further action by any party hereto, to have purchased from the Issuing Bank (on behalf of the Prior Banks), a participation to the extent of the Pro Rata Percentage of each Bank under this Agreement in each of the Existing Letters of Credit, in the obligations of the Borrower thereunder and in the reimbursement obligations of the Borrower due in respect of drawings made under such Letters of Credit. If requested by the Issuing Bank, the other Banks will execute any other documents reasonably requested by the Issuing Bank to evidence the purchase of such participation. Additionally, the Issuing Bank agrees to issue Letters of Credit upon the request of the Borrower for the account of the Borrower at any time and from time to time on and after the Closing Date and up to, but excluding, the earlier of the Revolving Credit Termination Date and the termination of the Letter of Credit Commitments or the Commitments, in accordance with the terms hereof. Each Bank (other than the Issuing Bank) severally agrees, on the terms and conditions hereinafter set forth, to purchase participations in the Letters of Credit issued by the Issuing Bank pursuant to Section 2.03 in an aggregate amount not to exceed such Bank's Letter of Credit Commitment; provided that, in no event shall the principal amount of such Bank's Pro Rata Percentage of aggregate Letters of Credit issued and outstanding at any time (whether drawn and not reimbursed, or undrawn, including without limitation, under the Existing Letters of Credit), plus the ratable principal amount on all outstanding Advances made by such Bank, exceed such Bank's Commitment. On each day during the period commencing with the issuance by the Issuing Bank of any Letter of Credit and until such Letter of Credit shall have expired or been terminated, and, irrespective of whether such Letter of Credit has expired or terminated, if same has been drawn upon and the amount so drawn has not been reimbursed to the Issuing Bank, the Commitment of each Bank shall be deemed to be utilized for all purposes hereof in an amount equal to such Bank's Pro Rata Percentage of the undrawn face amount of such Letter of Credit, plus such Bank's Pro Rata ---- Percentage of the aggregate amount of all unreimbursed drawings under such Letter of Credit. Each Letter of Credit issued hereunder shall be in face amount not less than $100,000.00. ---- (c)(i) In the event that the Borrower shall have requested an extension of the Revolving Credit Termination Date in accordance with the provisions of Section 2.11 hereof and all Banks shall not have consented to such extension on or before the last day of the Consent Period, upon notice in writing ("Notice of Conversion") delivered by the Borrower to the Agent on a day which is not less than 15 days prior to the then current Termination Date, provided that no Default or Event of Default shall have occurred and be continuing, the Borrower may elect to convert the aggregate principal amount of all Advances outstanding under the Revolving Loan as of the Revolving Credit Termination Date, to a Term Loan in an aggregate principal amount equal to the aggregate outstanding principal amount of all such Advances. The Notice of Conversion shall specify the date of conversion ("Conversion Date"), which date shall not be beyond the Revolving Credit Termination Date, and shall be irrevocable and binding on the Borrower. The Agent shall promptly deliver a copy of the Notice of Conversion to each Bank. On the Conversion Date specified in such notice, subject to the second to last sentence of this Section 2.01(c)(i), the aggregate principal amount outstanding in respect of all Advances shall automatically convert to a Term Loan of the same Type and duration, subject to the terms and conditions of this Agreement. With respect to any Notice of Borrowing given by Borrower during the period after Borrower's giving of Notice of Conversion and prior to the third day before the then scheduled Conversion Date, Borrower shall have the special right to designate that the proposed Borrowing be made on the Conversion Date itself (rather than on the third Business Day after Borrower has given Notice of Borrowing in the case of a LIBOR Rate Advance, or on the same Business Day of the Notice of Borrowing in the case of an Effective Funds Rate Advance), and the Advance so made with reference to such Notice of Borrowing shall be deemed, for all purposes to be a Revolving Credit Advance (with interest commencing as of the Conversion Date if the proposed date of Borrowing has been designated as the Conversion Date) eligible for conversion into the Term Loan, as a Term Advance of the same Type and duration. On the Conversion Date each Bank shall be deemed to have made a Term Advance to the Borrower, and each Bank hereby severally agrees, on the terms and conditions set forth in this Agreement, to make a Term Advance to the Borrower pursuant to this Section 2.01(c) in an aggregate amount equal to, but not exceeding, its Pro Rata Percentage of the aggregate principal amount of all Advances outstanding on such Conversion Date, but in any event, not to exceed an amount equal to such Bank's Commitment, less the principal amount of such Bank's Pro Rata Percentage of Letters of Credit issued and outstanding at such time (whether drawn and not reimbursed, or undrawn). With respect to Letters of Credit issued and outstanding on the Conversion Date, the Borrower agrees that (A) unreimbursed drawings shall be paid to the Banks on or prior to the Conversion Date as a condition to the conversion of all Advances into a Term Loan, (B) all issued and outstanding Letters of Credit shall continue in effect in accordance with their terms, and (C) amounts drawn on a Letter of Credit on and after the Conversion Date, shall be deemed to be Term Advances made by the Banks under the Notes, and, to the extent not reimbursed by the Borrower, shall increase the principal amount of the Term Loan in an amount equal to such Advance; provided that such Term Advance, after giving effect thereto, shall not cause the principal amount of each Bank's Pro Rata Percentage of aggregate Letters of Credit issued and outstanding at such time (whether drawn and not reimbursed or undrawn), plus the ratable principal amount on all outstanding Advances made by such Bank, to exceed such Bank's Commitment as at such time. On and after the Conversion Date, the Borrower may not reborrow principal amounts repaid in respect of the Term Loan, except to the extent Letters of Credit outstanding as of the Conversion Date otherwise contemplate a reinstatement as provided in paragraph 2.03(j) below. Term Advances under the Term Loan shall continue to bear interest in accordance with Section 2.06 through 2.10 of this Agreement, and shall be subject to all of the terms and provisions of this Agreement. (ii) On and after the Conversion Date, the Term Advance of each Bank shall be evidenced by its Note. Each Bank's Pro Rata Percentage of the principal amount of the Term Loan shall be increased from time to time by the principal amount of Term Advances deemed made in respect of a draw under a Letter of Credit on and after the Conversion Date, as provided under Section 2.01(c) (i) above. The principal of such Term Advances shall be due and payable, together with accrued and unpaid interest thereon, (i) on the first anniversary date of the Conversion Date (the "Term Anniversary Date"), in an amount equal to fifty percent (50%) of the principal amount of such Term Loan outstanding on such date, and (ii) thereafter, in four equal quarterly principal installments, payable on the last Business Day of the third, sixth, ninth and twelfth months immediately succeeding the month in which the Term Anniversary Date shall have occurred, with all principal outstanding on the Term Loan to be due and payable, together with all accrued and unpaid interest thereon, in a final installment on the last Business Day of the twelfth month immediately succeeding the month in which the Term Anniversary Date occurred (such date, hereinafter referred to as the "Term Maturity Date"). (iii) Notwithstanding the schedule of payment required under Section 2.01(c)(ii) above, Borrower shall make mandatory prepayments in accordance with Section 3.03(c). In the event that (A) the amount due and owing in respect of the Term Loan shall be zero as a result of any regularly scheduled principal payments, any mandatory prepayments or otherwise, or (B) the Commitment of each Bank has been terminated and the Notes have become due and payable in accordance with Section 8.01 hereof, the Borrower shall deliver to the Agent, for deposit into an interest bearing collateral account, readily available funds in an amount equal to the aggregate undrawn face amount of all Letters of Credit issued and outstanding at such time, as security for the obligations of the Borrower under such Letters of Credit, with rights of return of said collateral periodically, all in accordance with Section 8.01. SECTION 2.02. Making the Advances on the Revolving Credit Loan. ------------------------------------------------ (a) Each Borrowing shall be made on the Borrower's written notice in the form set forth as Exhibit 2.02(a), attached hereto ("Notice of Borrowing") or oral ------------------- notice (containing the information required in a Notice of Borrowing) given by the Borrower to the Agent not later than 10:00 A.M. (Houston, Texas time) (i) on the third Business Day prior to the date of the proposed Borrowing in the case of a LIBOR Rate Advance, and (ii) on the same Business Day of the proposed Borrowing in the case of a Effective Federal Funds Rate Advance (to the extent permitted under Section 2.06(b)). With respect to any oral Notice of Borrowing, the Borrower shall promptly thereafter confirm such notice in writing. Each Notice of Borrowing shall specify therein the requested (i) date of such Borrowing, (ii) Type of Advances comprising such Borrowing, (iii) aggregate amount of such Borrowing, and (iv) in the case of a Borrowing comprised of LIBOR Rate Advances, the initial Interest Period for each such Advance; provided that, there shall not be more than two (2) Interest Periods for a period of seven (7) days in effect at any one time with respect to any Note, and no more than seven (7) Interest Periods in effect in the aggregate at any one time with respect to any Note. The Agent shall promptly deliver a copy of each Notice of Borrowing to each Bank. Each Bank shall, before 11:00 A.M. (Houston time) on the date of such Borrowing, make available to the Agent at its address referred to in Section 10.02, in immediately available funds, such Bank's ratable portion of such Borrowing. After the Agent's receipt from the Banks (other than TCB) of such funds (and not prior thereto), and upon fulfillment of the applicable conditions set forth in Article IV, the Agent will promptly make such funds available to the Borrower at the Agent's aforesaid address. Each Notice of Borrowing shall be irrevocable and binding on the Borrower. (b) The failure of any Bank to make an Advance to be made by it as part of any Borrowing shall not relieve any other Bank of its obligation, if any, hereunder to make its Advance on the date of such Borrowing, but no Bank shall be responsible for the failure of any other Bank to make the Advance to be made by such other Bank on the date of any Borrowing. (c) The Borrower shall execute and deliver for each Bank to evidence the Advances made or to be made by such Bank pursuant to Section 2.01(a) or (b) hereof, and on and after the Conversion Date, to evidence Advances made by each Bank outstanding or deemed made under the Term Loan (and no new Notes shall be required to be issued on the Conversion Date), a promissory note (each such note a "Note" and more than one Note, the ---- "Notes"), dated as of the Closing Date, in the amount of such Bank's Commitment. Each Note shall be substantially in the form of Exhibit 2.02(c) --------------- with the blanks appropriately filled, and shall mature on the Termination Date. SECTION 2.03. Issuing the Letters of Credit. (a) In order to ----------------------------- effect the issuance of a Letter of Credit, the Borrower shall submit a Letter of Credit Request and a Letter of Credit Application in writing to the Agent (who shall promptly notify the Issuing Bank) not later than 11:00 a.m. (Houston, Texas time) two (2) Business Days before the date of issuance of such Letter of Credit. Each such Letter of Credit Request and Letter of Credit Application shall be signed by the Borrower, specify the Business Day on which such Letter of Credit is to be issued, and, the availability for Letters of Credit under the Letter of Credit Commitment and the Commitment as of the date of issuance of such Letter of Credit; provided that, without the consent of all Banks, the expiration date thereof shall not be later than the earlier of (I) thirty (30) months from the date of issuance of such Letter of Credit and (ii) five (5) Business Days prior to a date which is two (2) years beyond the Revolving Credit Termination Date. (b) Upon satisfaction of the applicable terms and conditions set forth in Article IV, the Issuing Bank shall issue such Letter of Credit to the specified beneficiary not later than the close of business (Houston, Texas time) on the date so specified. The Agent shall provide the Borrower and each Bank with a copy of each Letter of Credit so issued. Each such Letter of Credit shall (i) provide for the payment of drafts presented for honor thereunder by the beneficiary in accordance with the terms thereof, at sight when accompanied by the documents, if any, described therein and (ii) be subject to the Uniform Customs and Practice for Documentary Credits (1993 Revision, effective January 1, 1994), International Chamber of Commerce Publication No. 500 (and any subsequent revisions thereof approved by a Congress of the International Chamber of Commerce and adhered to by the Issuing Bank) (the "UCP"), and shall, as to matters not governed by the UCP, be governed by, and construed and interpreted in accordance with, the laws of the State of Texas. (c) Upon the issuance date of each Letter of Credit (other than the Existing Letters of Credit which are governed by Section 2.01(b)), the Issuing Bank shall be deemed, without further action by any party hereto, to have sold to each other Bank, and each other Bank shall be deemed, without further action by any party hereto, to have purchased from the Issuing Bank, a participation, to the extent of such Bank's Pro Rata Percentage, in such Letter of Credit, the obligations thereunder and in the reimbursement obligations of Borrower due in respect of drawings made under such Letter of Credit. If requested by the Issuing Bank, the other Banks will execute any other documents reasonably requested by the Issuing Bank to evidence the purchase of such participation. (d) Subject to paragraph (i) hereof with respect to the Bonds and the Shawnee Village Bonds and subject to paragraph (l) below with respect to draws on and after the Conversion Date, upon the presentment of any draft for honor under any Letter of Credit by the beneficiary thereof which the Issuing Bank determines is in compliance with the conditions for payment thereunder, the Issuing Bank shall promptly notify the Borrower, the Agent and each Bank of the intended date of honor of such draft, and the Borrower hereby promises and agrees to pay to the Agent for the account of the Issuing Bank upon receipt of such notice, by 9:00 A.M. (Houston, Texas time) on the date payment is due as specified in such notice but in any event, no earlier than the Business Day after receipt of such notice, the full amount of such draft in immediately available funds (unless honor of such draft has been enjoined by a court of competent jurisdiction pursuant to Section 5.114 of the Texas Business and Commerce Code prior to its payment by the Issuing Bank). If the Borrower fails timely to make such payment (or is not required to make such payment), each Bank shall, notwithstanding any other provision of this Agreement (including the occurrence and continuance of a Default or an Event of Default), make available to the Agent for the benefit of the Issuing Bank an amount equal to its Pro Rata Percentage of the amount of the presented draft on the day the Issuing Bank is required to honor such draft. If such amount is not in fact made available to the Agent by any such Bank on such date, then such Bank shall pay to the Agent for the account of the Issuing Bank, on demand made by the Issuing Bank, in addition to such amount, an amount equal to the product of (i) the average daily Effective Federal Funds Rate per annum during the period referred to in clause (iii) of this sentence times (ii) the amount of such Bank's Pro Rata Percentage of the amount of the - ----- presented draft times (iii) the number of days that elapse from the day the ----- Issuing Bank honors such draft to the date on which the amount equal to such Bank's Pro Rata Percentage of the amount of the presented draft becomes immediately available to the Issuing Bank divided (iv) by 360. Upon receipt ------- by the Agent from the Banks of the full amount of such draft, notwithstanding any provision of this Agreement (including the occurrence and continuance of a Default or an Event of Default) the full amount of such draft shall automatically and without any action by the Borrower, be deemed to have been an Advance as of the date of payment of such draft, bearing interest at a rate per annum (except for paragraph (l) below) equal at all times to the lesser of (I) two percent (2%) per annum above the Effective Federal Funds Rate, and (ii) the Highest Lawful Rate. Nothing in this paragraph (d) or elsewhere in this Agreement (other than in paragraph (l) below) shall diminish the Borrower's obligation under this Agreement to provide the funds for the payment of, or on demand to reimburse the Issuing Bank for payment of, any draft presented to, and duly honored by, the Issuing Bank under any Letter of Credit, and the automatic funding of an Advance as in this paragraph provided shall not constitute a cure or waiver of the Event of Default for failure, timely to provide such funds as in this paragraph agreed. (e) IN ORDER TO INDUCE THE ISSUANCE OF LETTERS OF CREDIT BY THE ISSUING BANK AND THE PURCHASE OF PARTICIPATIONS THEREIN BY THE OTHER BANKS, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, THE BORROWER AGREES WITH THE AGENT, THE ISSUING BANK AND THE OTHER BANKS THAT NEITHER THE AGENT NOR ANY BANK (INCLUDING THE ISSUING BANK) SHALL BE RESPONSIBLE OR LIABLE FOR, AND BORROWER'S UNCONDITIONAL OBLIGATION TO REIMBURSE THE ISSUING BANK THROUGH THE AGENT FOR AMOUNTS PAID BY THE ISSUING BANK, AS PROVIDED IN SECTION 2.03(d), ON --------------- ACCOUNT OF DRAFTS SO HONORED UNDER THE LETTERS OF CREDIT, SHALL NOT BE AFFECTED BY, ANY CIRCUMSTANCE, ACT OR OMISSION WHATSOEVER (WHETHER OR NOT KNOWN TO THE AGENT OR ANY BANK (INCLUDING THE ISSUING BANK) OTHER THAN A CIRCUMSTANCE, ACT OR OMISSION RESULTING FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE AGENT OR ANY BANK IN DETERMINING WHETHER SUCH DRAW CONFORMS TO THE TERMS OF THE LETTER OF CREDIT BUT EXPRESSLY INCLUDING A CIRCUMSTANCE, ACT OR OMISSION CONSTITUTING ORDINARY SOLE OR CONTRIBUTING NEGLIGENCE), INCLUDING WITHOUT LIMITATION THE FOLLOWING CIRCUMSTANCES: (i) any lack of validity or enforceability of this Agreement or any of the other Loan Documents; (ii) the existence of any claim, setoff, defense or other right which the Borrower or any Subsidiary may have at any time against a beneficiary named in a Letter of Credit, any transferee of any Letter of Credit (or any person for whom any such transferee may be acting), any Agent, the Issuing Bank, any Bank, or any other person, whether in connection with this Agreement, any Letter of Credit, the transactions contemplated herein or any unrelated transactions (including any underlying transaction between the Borrower or any other party and the beneficiary named in any such Letter of Credit); (iii) any draft, certificate or any other document presented under the Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (iv) the surrender or impairment of any security for the performance or observance of any of the terms of any of the Loan Documents; (v) the occurrence of any Default or Event of Default; or (vi) any other circumstance which might otherwise constitute a defense available to, or a discharge of, the Borrower or any Guarantor. The Borrower hereby waives presentment for payment (except the presentment required by the terms of any Letter of Credit) and notice of dishonor, protest and notice of protest with respect to drafts honored under the Letters of Credit. The Issuing Bank agrees promptly to notify the Borrower whenever a draft is presented under any Letter of Credit, but failure to so notify the Borrower shall not in any way affect the Borrower's rights or obligations hereunder. (f) IN DETERMINING WHETHER TO PAY UNDER ANY LETTER OF CREDIT, THE ISSUING BANK SHALL HAVE NO OBLIGATION RELATIVE TO THE AGENT OR THE BANKS OTHER THAN TO CONFIRM THAT ANY DOCUMENTS REQUIRED TO BE DELIVERED UNDER SUCH LETTER OF CREDIT APPEAR TO HAVE BEEN DELIVERED AND THAT THEY APPEAR TO COMPLY ON THEIR FACE WITH THE REQUIREMENTS OF SUCH LETTER OF CREDIT. ANY ACTION TAKEN OR OMITTED TO BE TAKEN BY THE ISSUING BANK UNDER OR IN CONNECTION WITH ANY LETTER OF CREDIT IF TAKEN OR OMITTED IN THE ABSENCE OF GROSS NEGLIGENCE OR WILLFUL MISCONDUCT IN DETERMINING WHETHER SUCH DRAW CONFORMS TO THE TERMS OF THE LETTER OF CREDIT IN COMPLIANCE WITH REQUIREMENT OF SECTION 5.109 OF THE TEXAS BUSINESS AND COMMERCE CODE, SHALL NOT CREATE FOR THE ISSUING BANK ANY RESULTING LIABILITY TO ANY AGENT OR ANY BANK. IT IS THE INTENT OF THE PARTIES HERETO THAT THE ISSUING BANK SHALL HAVE NO LIABILITY TO THE AGENT OR BANK FOR ITS ORDINARY SOLE OR CONTRIBUTING NEGLIGENCE. (g) In the event that any provision of a Letter of Credit Application is inconsistent with, or in conflict of, any provision of this Agreement, including provisions of either document for the rate of interest applicable to drawings thereunder, delivery of collateral or rights of setoff or any representations, warranties, covenants or any events of default set forth therein, the provisions of this Agreement shall govern. (h) (i) In connection with the issuance of each of the Series 1995 Lafayette Bonds and the Series 1995 Calcasieu Bonds, on the terms and conditions set forth in subsections (a) through (c), and (e) through (k) of this Section 2.03, the Issuing Bank has issued and shall, from time to time, issue the Special Letters of Credit in favor of the Credit Facility Trustee for the benefit of holders of the Series 1995 Lafayette Bonds and the Series 1995 Calcasieu Bonds. The Special Letters of Credit shall authorize the Credit Facility Trustee to draw under the terms and conditions of each Special Letter of Credit thereunder an amount not to exceed the applicable Letter of Credit Amount (as defined in each Special Letter of Credit) then in effect (as the same may be adjusted in accordance with the terms of such Special Letter of Credit from time to time), which was initially, for the Series 1995 Lafayette Bonds, the sum of $3,735,000 in respect of the initial aggregate principal amount outstanding of such Series 1995 Lafayette Bonds plus 105 days ---- of interest on the Bonds computed at the rate of twelve percent (12%) per annum calculated on the basis of a year of 365 days, initially being an amount equal to $128,934.25, for an aggregate amount of principal and interest initially equal to $3,863,934.25, and for the Series 1995 Calcasieu Bonds, the sum of $1,990,000 in respect of the initial aggregate principal amount outstanding of such Series 1995 Calcasieu Bonds plus 105 days of interest on ---- the Bonds computed at the rate of twelve percent (12%) per annum calculated on the basis of a year of 365 days initially being an amount equal to $68,695.89, for an aggregate amount of principal and interest initially equal to $2,058,695.89, in each case, less all amounts drawn under such Special Letters of Credit prior to such time, plus all increases and minus all decreases in accordance with paragraph 2 of such Special Letters of Credit prior to such time. A Full Drawing or Partial Drawing under a Special Letter of Credit in respect of an optional redemption of the Bonds pursuant to the Indenture shall require the consent of all Banks, as evidenced to the Trustee under the Indenture and the Credit Facility Trustee by written consent of the Agent. The maximum amount that may be drawn under each Special Letter of Credit is the applicable Letter of Credit Amount as calculated hereunder. (ii) With reference to each of the Shawnee Village Bonds, on the terms and conditions set forth in subsections (a) through (c), and (e) through (k) of this Section 2.03, the Issuing Bank has issued and shall issue, from time to time, the Bond Support Letters of Credit in favor of the S.V. Trustee for the benefit of holders of such Shawnee Village Bonds. The Bond Support Letters of Credit shall authorize the S.V. Trustee to draw under the terms and conditions of each Bond Support Letter of Credit thereunder an amount not to exceed the applicable Letter of Credit Amount (as defined in each Bond Support Letter of Credit) then in effect (as the same may be adjusted in accordance with the terms of such Bond Support Letter of Credit from time to time), which was initially, for the Shawnee Village Bonds, the sum of $6,610,000 in respect of the initial aggregate principal amount outstanding of such Shawnee Village Bonds plus 65 days of interest on the ---- Bonds computed at the rate of eighteen percent (18%) per annum calculated on the basis of a year of 365 or 366 days, as the case may be, initially being an amount equal to $211,882.19, for an aggregate amount of principal and interest initially equal to $6,821,882.19, less all amounts drawn under such Bond Support Letters of Credit prior to such time, plus all increases and minus all decreases in accordance with paragraph 2 of such Bond Support Letters of Credit prior to such time. A Full Drawing- Shawnee Village Bonds or Partial Drawing-Shawnee Village Bonds under a Bond Support Letter of Credit in respect of an optional redemption or certain mandatory repurchases of the Shawnee Village Bonds pursuant to the Shawnee Village Indenture and the terms of the Bond Support Letter of Credit shall require the consent of all Banks, as evidenced to the S.V. Trustee by written consent of the Agent. The maximum amount that may be drawn under each Bond Support Letter of Credit is the applicable Letter of Credit Amount as set forth in each Bond Support Letter of Credit, or as to the Shawnee Village Bonds, as calculated hereunder. (i) (i) Upon the presentment of any draft for honor in connection with a Purchase Drawing under any Special Letter of Credit by the beneficiary thereof which the Issuing Bank determines is in compliance with the conditions for payment thereunder, the Issuing Bank shall promptly notify the Borrower, the Agent, and each Bank of the intended date of honor of such draft. In the event of a Purchase Drawing under a Special Letter of Credit in accordance with the terms of such Letter of Credit, the Borrower, except as provided in paragraph (l) below, hereby promises and agrees to pay to the Agent for the account of the Issuing Bank, notwithstanding paragraph (d) of this Section 2.03, by 9:00 A.M. (Houston, Texas time) on the 30th day after the date of honor of such Purchase Drawing (the "Payment Date"), the full amount of all principal of and accrued and unpaid interest on each Liquidity Bank Bond, plus the Interest Differential, if any, at such time (the "Purchase Price"), in immediately available funds, unless the Issuing Bank shall have been previously reimbursed for the amount thereof as a result of remarketing of such Liquidity Bank Bonds in accordance with the provisions of the applicable Remarketing Agreement before such date. Upon receipt of payment of an amount equal to the Purchase Price by the Agent for the account of the Issuing Bank, the Agent shall notify the Tender Agent to deliver the Liquidity Bank Bonds to the Borrower if such payment was made by or on behalf of the Borrower, and otherwise to the Remarketing Agent, in accordance with the provisions of the applicable Remarketing Agreement. Each Bank shall, notwithstanding any other provision of this Agreement (including the occurrence and continuance of a Default or an Event of Default), make available to the Agent for the benefit of the Issuing Bank an amount equal to its Pro Rata Percentage of the amount of the presented draft under the respective Special Letter of Credit on the date on which such draft shall have been honored by the Issuing Bank. If such amount is not in fact made available to the Agent by any such Bank on such date, then such Bank shall pay to the Agent for the account of the Issuing Bank, on demand made by the Issuing Bank, in addition to such amount, an amount equal to the product of (i) the average daily Effective Federal Funds Rate per annum during the period referred to in clause (iii) of this sentence times (ii) the amount of such ----- Bank's Pro Rata Percentage of the amount of the presented draft times (iii) ----- the number of days that elapse from the day the Issuing Bank has honored such draft to the date on which the amount equal to such Bank's Pro Rata Percentage of the amount of the presented draft becomes immediately available to the Issuing Bank divided (iv) by 360. The Liquidity Bank Bonds shall, in ------- accordance with the applicable Indenture, as of the date of payment of such draft, bear interest at a rate per annum equal at all times to the lesser of (i) the Prime Rate per annum or (ii) the Maximum Rate. In the event that the Purchase Price for Liquidity Bank Bonds shall not have been paid by the Payment Date as required hereunder, and the Issuing Bank shall not have been otherwise reimbursed, the portion of the Purchase Price not paid or reimbursed, notwithstanding any other provision of this Agreement (including the occurrence and the continuance of a Default or an Event of Default), shall be deemed automatically and without any action by the Borrower to be an Advance in an amount equal to such portion of the Purchase Price not paid or reimbursed (including, without limitation, the Interest Differential, if any) which is immediately due and payable, bearing interest at a rate per annum, except as provided in paragraph (l) below, equal to the lesser of the Prime Rate, plus 1.00% per annum, or the Highest Lawful Rate, and the Borrower shall be deemed to have purchased such Liquidity Bank Bonds. Such Advance shall be deemed a payment by Borrower of an amount equal to the Purchase Price to the Agent for the account of the Issuing Bank. The Agent shall promptly notify the Tender Agent to deliver the Liquidity Bank Bonds to the Agent for the benefit of Borrower to be held by the Agent as collateral securing such Advance. The Borrower hereby grants to the Agent, for the benefit of each Bank, a Lien on and a security interest in such Liquidity Bank Bonds, until such time as such Advance shall have been paid in full. Each drawing on a Special Letter of Credit other than a Purchase Drawing and the reimbursement obligation of the Borrower in respect thereof, shall, notwithstanding the delivery of Bonds in respect thereof to the Tender Agent as custodian for the Banks, be governed by paragraph (d) of this Section 2.03. Nothing in this paragraph (i)-(i) or elsewhere in this Agreement (other than as provided in paragraph (l) below) shall diminish the Borrower's obligation under this Agreement to provide the funds for the payment of, or on demand to reimburse the Issuing Bank for payment of, any draft presented to, and duly honored by, the Issuing Bank under any Letter of Credit at the time and in the manner provided under this Section 2.03 for each Letter of Credit, including without limitation, the Special Letters of Credit, and the automatic funding of an Advance as in this paragraph provided shall not constitute a cure or waiver of the Event of Default for failure to timely provide such funds as in this paragraph agreed. (ii) Upon the presentment of any draft for honor in connection with a Purchase Drawing - Shawnee Village Bonds , under any Bond Support Letter of Credit by the beneficiary thereof which the Issuing Bank determines is in compliance with the conditions for payment thereunder, the Issuing Bank shall promptly notify the Borrower, the Agent, and each Bank of the intended date of honor of such draft. In the event of a Purchase Drawing - Shawnee Village Bonds, under a Bond Support Letter of Credit in accordance with the terms of such Letter of Credit, the Borrower, except as provided in paragraph (l) below, hereby promises and agrees to pay to the Agent for the account of the Issuing Bank, notwithstanding paragraph (d) of this Section 2.03, by 9:00 A.M. (Houston, Texas time) on the 30th day after the date of honor of such Purchase Drawing (the "Shawnee Village Payment Date"), the full amount of such Purchase Drawing, plus an amount equal to (A) accrued and unpaid interest on each Shawnee Village Bond purchased by the Company in connection with the Purchase Drawing - Shawnee Village Bonds (without duplication of any amount of interest already included in the full amount of such Purchase Drawing), plus (B) an amount equal to the Shawnee Village Interest Differential, if any, at such time (collectively, the "Shawnee Village Purchase Price"), in immediately available funds, unless the Issuing Bank shall have been previously reimbursed for the amount thereof before such date. Upon receipt of payment of an amount equal to the Shawnee Village Purchase Price by the Agent, the Agent shall release the Lien on such Bonds securing the reimbursement obligation hereunder with respect to such Shawnee Village Bonds. Each Bank shall, notwithstanding any other provision of this Agreement (including the occurrence and continuance of a Default or an Event of Default), make available to the Agent for the benefit of the Issuing Bank an amount equal to its Pro Rata Percentage of the amount of the presented draft under the respective Bond Support Letter of Credit on the date on which such draft shall have been honored by the Issuing Bank. If such amount is not in fact made available to the Agent by any such Bank on such date, then such Bank shall pay to the Agent for the account of the Issuing Bank, on demand made by the Issuing Bank, in addition to such amount, an amount equal to the product of (i) the average daily Effective Federal Funds Rate per annum during the period referred to in clause (iii) of this sentence times (ii) the amount of ----- such Bank's Pro Rata Percentage of the amount of the presented draft times ----- (iii) the number of days that elapse from the day the Issuing Bank has honored such draft to the date on which the amount equal to such Bank's Pro Rata Percentage of the amount of the presented draft becomes immediately available to the Issuing Bank divided (iv) by 360. The Shawnee Village Bonds shall, as ------- of the date of payment of such draft by the Issuing Bank, bear interest at a rate per annum equal at all times to the Shawnee Village Bank Rate. In the event that the Shawnee Village Purchase Price for Shawnee Village Bonds shall not have been paid by the Shawnee Village Payment Date as required hereunder, and the Issuing Bank shall not have been otherwise reimbursed, the portion of the Shawnee Village Purchase Price not paid or reimbursed, notwithstanding any other provision of this Agreement (including the occurrence and the continuance of a Default or an Event of Default), shall be deemed automatically and without any action by the Borrower to be an Advance in an amount equal to such portion of the Shawnee Village Purchase Price not paid or reimbursed (including, without limitation, the Shawnee Village Interest Differential, if any) which is immediately due and payable, bearing interest at a rate per annum (except as provided in paragraph (l) below) equal to the lesser of (y) two percent (2%) per annum above the Effective Funds Rate, or (z) the Highest Lawful Rate, in accordance with Section 2.03(d) hereof. In addition to the Lien created under the Pledge and Security Agreement securing the reimbursement obligations of the Borrower hereunder for a Purchase Drawing - - Shawnee Village Bonds, the Borrower hereby grants to the Agent, for the benefit of each Bank, a Lien on and a security interest in such Shawnee Village Bonds, until such time as such Advance shall have been paid in full. Each drawing on a Bond Support Letter of Credit other than a Purchase Drawing - - Shawnee Village Bonds, and the reimbursement obligation of the Borrower in respect thereof, shall, notwithstanding the delivery of Shawnee Village Bonds in respect thereof to the Shawnee Village Tender Agent as custodian for the Banks, be governed by paragraph (d) of this Section 2.03. Nothing in this paragraph (i)-(ii) or elsewhere in this Agreement (other than as provided in paragraph (l) below) shall diminish the Borrower's obligation under this Agreement to provide the funds for the payment of, or on demand to reimburse the Issuing Bank for payment of, any draft presented to, and duly honored by, the Issuing Bank under any Letter of Credit at the time and in the manner provided under this Section 2.03 for each Letter of Credit, including without limitation, the Bond Support Letters of Credit, and the automatic funding of an Advance as in this paragraph provided shall not constitute a cure or waiver of the Event of Default for failure to timely provide such funds as in this paragraph agreed. (j) (i) Other than for purposes of calculation of the principal amount of Letters of Credit issued and outstanding under Section 2.01 of this Agreement, each drawing honored in accordance with Section 2.03(i)-(i) shall automatically reduce the Letter of Credit Amount of the applicable Special Letter of Credit; provided that (i) with respect to any Partial Drawing, the Letter of Credit Amount shall be automatically increased immediately following such payment by the amount paid for accrued interest on the Bonds (other than such interest component attributable to the Bonds, the principal of which was paid with the proceeds of such drawing) in connection therewith (provided that such automatic reinstatement shall be revoked upon notice from the Agent to the Credit Facility Trustee, at the request of the Majority Banks, of such revocation within seven (7) calendar days from and after the date on which such drawing was honored), and (ii) with respect to any Purchase Drawing, the Letter of Credit Amount shall be automatically increased by an amount equal to (x) the amount drawn by such Purchase Drawing upon reimbursement of such amount to the Issuing Bank, less (y) the portion of the amount in clause (x) ---- hereof representing principal and interest attributable to any Liquidity Bank Bonds, or Bonds held at such time in the name of the Borrower, the Issuer or the User. The Agent shall provide notice to the Credit Facility Trustee and the Trustee of receipt of funds in respect of reimbursement for each drawing under a Special Letter of Credit which has been honored by the Issuing Bank, specifying the date and amount of such reimbursement, and of the related drawing; provided that, failure to provide such notice shall not diminish the obligations of the Borrower hereunder. (ii) Other than for purposes of calculation of the principal amount of Letters of Credit issued and outstanding under Section 2.01 of this Agreement, each drawing honored in accordance with Section 2.03(i)-(ii) shall automatically reduce the Letter of Credit Amount of the applicable Bond Support Letter of Credit; provided that (i) with respect to any Partial Drawing - Shawnee Village Bonds, the Letter of Credit Amount shall be automatically increased immediately following such payment by the amount of such drawing attributable to the payment of accrued interest on the Shawnee Village Bond (other than interest attributable to the Shawnee Village Bonds, the principal of which was paid with the proceeds of a Partial Drawing - Shawnee Village Bonds) in connection therewith; provided that, an automatic reinstatement shall be revoked upon notice from the Agent to the S.V. Trustee, at the request of the Majority Banks, of such revocation within ten (10) calendar days from and after the date on which such drawing was honored), and (ii) with respect to any Purchase Drawing - Shawnee Village Bonds, the Letter of Credit Amount shall be automatically increased upon notice in writing delivered by the Agent to the S.V. Trustee (stating that the Agent has been reimbursed for such Purchase Drawing), by an amount equal to (x) the amount drawn by such Purchase Drawing-Shawnee Village Bonds, less (y) the portion of ---- the amount in clause (x) hereof representing principal and interest attributable to any Shawnee Village Bonds, or Bonds held at such time in the name of the Agent, the Borrower, the Issuer or any Special Affiliate of either of them. The Agent shall provide notice to the S.V. Trustee of receipt of funds in respect of reimbursement for each drawing under a Bond Support Letter of Credit which has been honored by the Issuing Bank, specifying the date and amount of such reimbursement, and of the related drawing; provided that, failure to provide such notice shall not diminish the obligations of the Borrower hereunder. (k) The obligations of the Borrower in respect of the Special Letters of Credit and the Bond Support Letters of Credit shall be governed in all respects by the terms and provisions of this Agreement. (l) Notwithstanding anything contained herein to the contrary, any draw on and after the Conversion Date on any Letter of Credit shall automatically, and without any action by the Borrower, be deemed to have been a Term Advance as of the date of payment of such draft and shall increase the principal amount of the Term Loan in an amount equal to such Term Advance, with Borrower obligated for interest in accordance with Sections 2.06 through 2.10 hereof (rather than as otherwise provided herein), with principal subject to repayment after the Conversion Date in accordance with Section 2.01(c)(ii), rather than subject to: (x) immediate payment on the intended date of honor (or the next Business Day) in accordance with Section 2.03(d); (y) immediate payment on the thirtieth (30th) day after the date of honor of the draft in accordance with subparagraph (i) (i), or (i) (ii); or (z) reimbursement, on demand, in accordance with Section 2.03(d) or otherwise. SECTION 2.04. Fees. (a) The Borrower agrees to pay to the Agent ---- for the account of each Bank a commitment fee (the "Unused Borrowing ---------------- Commitment Fee") on the average daily unused portion of such respective Bank's ----- Commitment from the date hereof until the Revolving Credit Termination Date, at the rate per annum indicated below for the credit rating assigned to long-term, senior unsecured Debt of the Borrower by S&P, as reflected on the most recent Compliance Certificate of the Borrower delivered in accordance with Section 6.01(c), or the most recent Rating Certificate delivered in accordance with Section 6.01(h), as the case may be, and shall become effective on the applicable Calculation Date, and shall remain in effect to (but not including) the next Calculation Date, payable quarterly in arrears on the first day of each calendar quarter for the prior calendar quarter during the term of such Bank's Commitment, commencing on the date of this Agreement, and continuing until the Revolving Credit Termination Date: If the credit rating determined The Unused Borrowing on any Calculation Date is: Commitment Fee is: - ------------------------------- --------------------------- For Revolving Credit Loans --------------------------- A+, A or A-, or better .125% BBB+ .25% BBB, BBB- .30% BB+ and below .50% ; provided that, if at any time no such credit rating shall be assigned to (or in respect of) long-term, senior unsecured Debt of the Borrower by S&P, the Unused Borrowing Commitment Fee shall mean the rate per annum indicated below for the Coverage Ratio in effect, as reflected on the most recent Compliance Certificate of the Borrower delivered to the Agent in accordance with Section 6.01(c), or the most recent Rating Certificate delivered in accordance with Section 6.01(h), as the case may be, and shall become effective on the applicable Calculation Date, and shall remain in effect to (but not including) the next Calculation Date, payable as set forth above. If the Coverage Ratio The Unused Borrowing determined on any Calculation Commitment Fee is: - -------------------------------- --------------------- Date is - -------------------------------- For Revolving Loans: --------------------- Greater than 3.0 to 1.0 .125 % Equal to or less than 3.0 to 1.0 .25 % The Unused Borrowing Commitment Fee shall be calculated by the Agent on each Calculation Date until the Revolving Credit Termination Date, and the Agent shall notify the Borrower and the Banks of the applicable Fee. (b) The Borrower agrees to pay to the Issuing Bank for the issuance of each Letter of Credit, an issuance fee ("Issuance Fee") in an ------------ amount equal to one-eighth of one percent (1/8 of 1%) of the face amount of each Letter of Credit. The Borrower further agrees to pay to each Bank (including the Issuing Bank) for the issuance, or purchase of participations in, and maintenance of each Letter of Credit, a letter of credit fee (the "Letter of Credit Fee"), in an amount equal to such Bank's Pro Rata Percentage -------------------- of four-tenths of one percent (4/10 of 1%) per annum of the undrawn face amount of each Letter of Credit, from the date of issuance thereof (or, as to Existing Letters of Credit, from the date of Closing) to the date on which such Letter of Credit expires or terminates, or the date on which funds have been deposited with the Agent, as required under Sections 2.01(c)(iii) or 8.01 hereof, whichever is earlier. The Issuance Fee shall be payable in full in advance of the issuance of such Letter of Credit. The Letter of Credit Fee shall be payable quarterly in arrears on the first day of each calendar quarter for the prior calendar quarter commencing on the date of issuance of each Letter of Credit (or, as to Existing Letters of Credit, from the date of Closing). (c) The Fees payable under Sections 2.04(a) and (b) shall be calculated by the Agent on the basis of a 365 or 366 day year, as the case may be, for the actual days (including the first day but excluding the last day) occurring in the period for which such fee is payable. Each determination by the Agent under this Section 2.04 shall be conclusive and binding for all purposes, absent manifest error. SECTION 2.05. Reduction of the Commitments. The Borrower shall ---------------------------- have the right, upon at least three (3) Business Days' notice to the Agent, to terminate in whole or reduce ratably in part the unused portions of the Commitments or the Letter of Credit Commitments of the Banks, provided that -------- each partial reduction shall be in the aggregate amount of $5,000,000 or an integral multiple thereafter of $1,000,000; and further provided that, the Letter of Credit Commitments may never be reduced below an amount equal to the aggregate undrawn face amount of Letters of Credit issued and outstanding at any time. Any termination or reduction pursuant to this Section 2.05 shall be a permanent termination or reduction of the Commitments. SECTION 2.06. Interest. Each Advance shall bear interest at the -------- rates set forth below, and the Borrower shall pay interest on the unpaid principal amount of each Advance made by each Bank from the date of such Advance until such principal amount shall be paid in full, at the times and at the rates per annum set forth below: (a) LIBOR Rate Advances. During such periods as such Advance is ------------------- a LIBOR Rate Advance, a rate per annum equal at all times during each Interest Period for such Advance to the lesser of (I) the sum of the LIBOR Rate for such Interest Period for such Advance plus the Applicable Margin, together with additional interest due under Section 2.07 hereof, if any, and (ii) the Highest Lawful Rate, payable quarterly in arrears on the first day of each calendar quarter, commencing with the calendar quarter following the calendar quarter in which the date of this Agreement occurs, and on the Termination Date; provided that, any amount of principal which is not paid when due -------- (whether at stated maturity, by acceleration or otherwise) shall bear interest, from the date on which such amount is due until such amount is paid in full, payable on demand, at a rate per annum equal at all times to the lesser of (I) two percent (2%) per annum above the Effective Federal Funds Rate in effect from time to time and (ii) the Highest Lawful Rate. (b) Effective Federal Funds Rate Advances. During such periods ------------------------------------- as such Advance is an Effective Federal Funds Rate Advance, a rate per annum equal at all times to the lesser of (i) the Effective Federal Funds Rate and (ii) the Highest Lawful Rate, payable quarterly in arrears on the first day of each calendar quarter, commencing with the calendar quarter following the calendar quarter in which the date of this Agreement occurs, and on the Termination Date; provided that the Borrower may only elect an Effective Federal Funds Rate Advance (A) during a period for which the Borrower has been notified in accordance with Sections 2.08(b) or (d) that a LIBOR Rate Advance shall not be available to the Borrower or (B) with respect to such Bank's Pro Rata Percentage of an Advance after the Borrower has received a demand for compensation pursuant to Sections 3.04(a) or (b), or pursuant to Section 2.07, and then, only for such period as such compensation shall be required; further ------- provided that, any amount of principal which is not paid when due (whether at - -------- stated maturity, by acceleration or otherwise) shall bear interest, from the date on which such amount is due until such amount is paid in full, payable on demand, at a rate per annum equal at all times to the lesser of (I) two percent (2%) per annum above the Effective Federal Funds Rate in effect from time to time and (ii) the Highest Lawful Rate. (c) All computations of interest hereunder at the Effective Federal Funds Rate pursuant to this Article II shall be made by the Agent on the basis of a year of 365 or 366 days, as the case may be, and all computations of interest hereunder at the LIBOR Rate (plus the Applicable Margin) pursuant to this Article II shall be made by the Agent on the basis of a year of 360 days (but if a 360 day calculation would result in a rate in excess of the Highest Lawful Rate, then based on a year of 365 or 366 days, as the case may be), in each case (whether for a LIBOR Rate Advance or an Effective Federal Funds Rate Advance) for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest is payable. Each determination by the Agent of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error. SECTION 2.07. Additional Interest on LIBOR Rate Advances. ------------------------------------------- Subject to Section 10.09 hereof, the Borrower shall pay to each Bank, at such time as and so long as such Bank shall be required under regulations of the Board of Governors of the Federal Reserve System to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency Liabilities, additional interest on the unpaid principal amount of each Advance of such Bank during such periods as such Advance is a LIBOR Rate Advance, from the date of such Advance until such principal amount is paid in full, at an interest rate per annum equal at all times to the remainder obtained by subtracting (i) the LIBOR Rate for such Interest Period for such LIBOR Rate Advance from (ii) the rate obtained by dividing such LIBOR Rate by a percentage equal to 100% minus the LIBOR Rate Reserve Percentage of such Bank for such Interest Period, payable on each date on which interest is payable on such LIBOR Rate Advance pursuant to Section 2.06(a) hereof. Such additional interest shall be determined by such Bank (subject to Section 10.09) and notified to the Borrower through the Agent, and each such notification shall be conclusive absent manifest error. SECTION 2.08. Interest Rate Determination and Protection. (a) ------------------------------------------ The rate of interest for each LIBOR Rate Advance specified in a Notice of Borrowing or a Notice of Interest Conversion, shall be determined by the Agent two (2) Business Days before the first day of the Interest Period applicable for such Advance. The Agent shall give prompt notice to the Borrower and the Banks of the applicable interest rate determined by the Agent for purposes of Section 2.06(a) hereof, and each such determination by the Agent shall be conclusive, absent manifest error. (b) If, with respect to any LIBOR Rate Advances, the Majority Banks notify the Agent that the LIBOR Rate (plus the Applicable Margin) for any Interest Period for such Advances will not adequately reflect the cost to such Majority Banks of making, funding or maintaining their respective LIBOR Rate Advances for such Interest Period, the Agent shall forthwith promptly so notify the Borrower and the Banks, whereupon; (i) each LIBOR Rate Advance, which has been effected, will automatically, on the last day of the then existing Interest Period therefor, convert into an Effective Federal Funds Rate Advance, and (ii) the obligation of the Banks to make, or to convert Advances into, LIBOR Rate Advances shall be suspended until the Agent shall notify the Borrower and the Banks that the circumstances causing such suspension no longer exist. (c) If the Borrower shall fail to deliver to the Agent a Notice of Interest Conversion in accordance with Section 2.09 hereof or to select the duration of any subsequent Interest Period for the principal amount outstanding under any LIBOR Rate Advance prior to the last day of the Interest Period applicable to such Advance, the Agent will forthwith so notify the Borrower and the Banks, and such Advances will automatically, on the last day of the then existing Interest Period therefor, convert into LIBOR Rate Advances at the LIBOR Rate in effect two Business Days prior to such date for an Interest Period of one month, plus the Applicable Margin. (d) Notwithstanding any other provision of this Agreement, if any Bank shall notify the Agent that the introduction of or any change in or in the interpretation of any law or regulation makes it unlawful, or any central bank or other governmental authority asserts that it is unlawful, for any Bank to perform its obligations hereunder to make LIBOR Rate Advances or to fund or maintain LIBOR Rate Advances hereunder, (i) the obligation of such Bank to make, or to convert Advances into, LIBOR Rate Advances shall be suspended until such Bank shall notify the Borrower and the Agent that the circumstances causing such suspension no longer exist and (ii) the Borrower shall forthwith prepay in full all LIBOR Rate Advances of such affected Bank then outstanding, unless the Borrower, within two (2) Business Days of notice from the Agent, converts all LIBOR Rate Advances of such Bank then outstanding into Effective Federal Funds Rate Advances in accordance with Section 2.09. SECTION 2.09. Voluntary Interest Conversion of Advances. The ----------------------------------------- Borrower may on any Business Day prior to the Termination Date, upon the Borrower's written notice in the form set forth as Exhibit 2.09 attached hereto ("Notice of Interest Conversion"), or oral notice (containing the -------------------------------- information requested in a Notice of Interest Conversion) given to the Agent not later than 10:00 A.M. (Houston, Texas time) on the third (3rd) Business Day prior to the date of the proposed interest conversion in the case of a LIBOR Rate Advance, (i) convert all such LIBOR Rate Advances into an Effective Federal Funds Rate Advances or (ii) convert all LIBOR Rate Advances for a specified Interest Period into LIBOR Rate Advances for a different Interest Period; provided however, with respect to any oral Notice of Interest -------- Conversion, the Borrower shall promptly confirm such notice in writing; provided further that, any conversion of any LIBOR Rate Advances into an -- Effective Federal Funds Rate Advance or a different Interest Period shall be made on, and only on, the last day of an Interest Period for such LIBOR Rate Advances (unless the provisions of Sections 2.07, 2.08(d) or 3.04 apply), and; provided further that the Borrower may convert an Advance into an Effective Federal Funds Rate Advance only if (i) the Borrower has been notified in accordance with Section 2.08(b) or (d) that a LIBOR Rate Advance is not available at such time to the Borrower or if (ii) additional interest becomes due under Section 2.07, or additional amounts become due under Section 3.04. Each such Notice of Interest Conversion shall specify therein (i) the requested date of such interest conversion, (ii) the Advances to be converted and (iii) if such interest conversion is into Advances constituting LIBOR Rate Advances, the duration of the Interest Period for each such Advance. The Agent shall promptly deliver a copy of each Notice of Interest Conversion to each Bank. Each Notice of Interest Conversion shall be irrevocable and binding on the Borrower. SECTION 2.10. Funding Losses Relating to LIBOR Rate Advances. ---------------------------------------------- (a) If any payment of principal of, or interest conversion of, any LIBOR Rate Advance is made other than on the last day of an Interest Period relating to such Advance, as a result of a conversion pursuant to Section 2.09, or a payment pursuant to Sections 3.02, 3.03, or acceleration of the maturity of any Note in accordance with the terms hereof, or for any other reason, the Borrower shall, upon demand by the Agent or any Bank (with a copy of such demand to the Agent), pay to the Agent for the account of such Bank any amounts required to compensate such Bank for any additional losses, costs, or expenses which it may reasonably incur as a result of such payment or interest conversion, including, without limitation, any loss, cost, or expense incurred by reason of the liquidation or reemployment of the amounts so prepaid or of deposits or other funds acquired by such Bank to fund or maintain such Advance. Each Bank requesting compensation under this Section 2.10 shall deliver to the Borrower (with a copy to the Agent) a certificate of such Bank setting forth the calculation of such amounts with reasonable specificity and such certificate shall be conclusive, absent manifest error. (b) IN THE CASE OF ANY BORROWING, THE BORROWER SHALL INDEMNIFY EACH BANK AGAINST ANY LOSS, COST, OR EXPENSE INCURRED BY SUCH BANK AS A RESULT OF ANY FAILURE OF THE BORROWER TO FULFILL ON OR BEFORE THE DATE SPECIFIED IN A NOTICE OF BORROWING THE APPLICABLE CONDITIONS SET FORTH IN ARTICLE IV, INCLUDING, WITHOUT LIMITATION, ANY LOSS, COST, OR EXPENSE INCURRED BY REASON OF THE LIQUIDATION OR REEMPLOYMENT OF THE AMOUNTS SO PREPAID OR OF DEPOSITS OR OTHER FUNDS ACQUIRED BY SUCH BANK TO FUND THE ADVANCE TO BE MADE BY SUCH BANK AS PART OF SUCH BORROWING WHEN SUCH ADVANCE, AS A RESULT OF SUCH FAILURE, IS NOT MADE ON SUCH DATE. (c) Any Bank demanding payment under this Section 2.10 shall deliver to the Borrower and the Agent a statement reasonably setting forth the amount and manner of determining such loss, cost, or expense, which statement shall be conclusive and binding for all purposes, absent manifest error. SECTION 2.11. Extension of Commitments. The Commitments -------------------------- (including the Letter of Credit Commitments) shall terminate on November 21, 1999, unless on a Business Day which is at least ninety (90) days (but no more than one hundred fifty (150) days) prior to the applicable Annual Date, the Agent shall have received notice in writing from the Borrower of its desire to extend the Revolving Credit Termination Date to a date which is the anniversary of such then current Revolving Credit Termination Date in the year immediately succeeding the year in which the Revolving Credit Termination Date is then scheduled to occur, and upon consent in writing given to the Agent and the Borrower by each Bank on or prior to a date which is thirty (30) days before the applicable Annual Date (such period ending on such date, the "Consent Period"), the Revolving Credit Termination Date shall be extended to --------------- such requested date, whereupon the Commitments (including the Letter of Credit Commitments) shall continue in force and effect until such new Revolving Credit Termination Date, on the terms and conditions set forth in this Agreement, as hereafter amended from time to time. If any Bank does not consent to the extension of the Revolving Credit Termination Date pursuant to this Section 2.11 (which determination shall be made by each Bank in its sole discretion), all of the Commitments (including the Letter of Credit Commitments) shall terminate on the Revolving Credit Termination Date in effect prior to the request for extension; provided that, notwithstanding the foregoing, the Borrower may, at its option, upon notice to the Agent in accordance with the provisions of Section 2.01(c), elect to have the principal amount of Advances outstanding as of the Revolving Credit Termination Date converted into a Term Loan, in accordance with the provisions of Section 2.01(c) hereof. ARTICLE III PAYMENTS, PREPAYMENTS, INCREASED COSTS AND TAXES SECTION 3.01. Payments and Computations. (a) The Borrower shall ------------------------- make each payment under this Agreement and under the Notes or in connection with the Letters of Credit not later than 10:00 A.M. (Houston time) on the day when due in U.S. dollars to the Agent at its address referred to in Section 10.02 in immediately available funds. The Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal or interest or commitment fees (to the extent received by the Agent) ratably to the Banks, and like funds relating to the payment of any other amount payable to any Bank (to the extent received by the Agent) to such Bank in each case to be applied in accordance with the terms of this Agreement. (b) Whenever any payment hereunder or under the Notes shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or fee, as the case may be; provided however, if such extension would cause payment of interest on or principal of LIBOR Rate Advances to be made in the next following calendar month, such payment shall be made on the next preceding Business Day; further provided that, the foregoing shall not obligate the Borrower to pay amounts under Section 2.10. (c) Unless the Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Banks hereunder that the Borrower will not make such payment in full, the Agent may assume that the Borrower has made such payment in full to the Agent on such date and the Agent may, in reliance upon such assumption, cause to be distributed to each Bank on such due date an amount equal to the amount then due such Bank. If and to the extent the Borrower shall not have so made such payment in full to the Agent, each Bank shall repay to the Agent forthwith on demand such amount distributed to such Bank together with interest thereon, for each day from the date such amount is distributed to such Bank until the date such Bank repays such amount to the Agent, at the lesser of (i) the Federal Funds Rate or (ii) the Highest Lawful Rate. (d) Notwithstanding anything in this Agreement to the contrary, proceeds of amounts paid to the Issuing Bank for reimbursement of a drawing under a Special Letter of Credit or a Bond Support Letter of Credit honored by the Issuing Bank shall be promptly thereafter distributed by the Agent to each Bank in accordance with such Bank's Pro Rata Percentage interest in such Special Letter of Credit or Bond Support Letter of Credit, as the case may be, for reduction of principal or interest outstanding, as the case may be, with respect to such Bank's participation in such drawing. SECTION 3.02. Voluntary Prepayments. Subject to Section 2.10, --------------------- the Borrower may, upon notice delivered to the Agent prior to 11:00 A.M. (Houston, Texas time) on any Business Day prior to the Termination Date stating the aggregate principal amount of the prepayment and the Advances to be prepaid, prepay the outstanding principal amounts of such Advances comprising part of the same Borrowing in whole or ratably in part, provided -------- however, that all such prepayments shall be made without premium or penalty thereon; and provided further that, losses incurred by any Bank under Section -------- 2.10 shall be payable with respect to each such prepayment. Such notice shall be irrevocable and the payment amount specified in such notice shall be due and payable on the prepayment date described in such notice. Partial prepayments with respect to any Advance shall be in an aggregate principal amount equal to the lesser of (a) $1,000,000 or in greater integral multiples of $1,000,000, or (b) the aggregate principal amount of Advances of such Banks outstanding. In the event that the Borrower fails to notify the Agent as to which Advance is to be prepaid, the partial prepayments shall be applied in the order of the next succeeding expiration of outstanding Interest Periods. SECTION 3.03. Mandatory Prepayments. (a) Within the time period --------------------- specified in Section 7.04, the Borrower shall deliver to the Agent, as a prepayment on the Notes, an amount equal to the Adjusted Net Proceeds of a disposition of Real Property of the Borrower or any Subsidiary permitted under Section 7.04. Upon receipt of such amount, the Agent shall promptly deliver to each Bank, to the extent required under Section 7.04, its Pro Rata Percentage of such prepayment. Upon the date on which a prepayment is required under Section 7.04, the Commitment of each Bank shall be permanently reduced in an amount equal to such Bank's Pro Rata Percentage of such Adjusted Net Proceeds. (b) If at any time the sum of (i) the principal balance outstanding on the Notes, and (ii) the aggregate undrawn face amount of Letters of Credit issued and outstanding at such time, exceeds the Total Commitment then in effect, the Borrower shall immediately pay to the Agent as a prepayment on the Notes for the ratable account of each Bank the amount of such excess. (c) Together with principal payments on the Term Loan required to be made in accordance with Section 2.01(c)(ii) hereof, Borrower shall deliver to the Agent, as a prepayment on the Notes, on the Term Anniversary Date, an amount equal to 50% of the aggregate undrawn face amount of all Letters of Credit issued and outstanding on such date (calculated as of the Term Anniversary Date), and on each quarterly payment date thereafter, as described under Section 2.01(c)(ii) hereof, an amount equal to twelve and one-half percent (12 1/2%) of the aggregate undrawn face amount of all Letters of Credit issued and outstanding on such date (calculated as of the Term Anniversary Date) reduced by the respective quarter's L/C Credit. As used herein, the term "L/C Credit' means the sum of (i) the face amount of all Letters of Credit under which there has been no drawing (A) which, during the quarter in which the quarterly payment is due, have expired by their terms or (B) for which, during such quarter, the original has been returned undrawn to the Issuing Bank, and (ii) the undrawn portion of any Letter of Credit under which there has been a partial drawing but (A) which, during the quarter in which the quarterly payment is due, has expired by its terms or (B) for which, during such quarter, the original has been returned to the Issuing Bank. SECTION 3.04. Increased Costs; Capital Adequacy. (a) If, due --------------------------------- to either (i) the introduction of or any change (other than any change by way of imposition or increase of reserve requirements, in the case of LIBOR Rate Advances, included in the LIBOR Rate Reserve Percentage) in or in the interpretation of any law or regulation or (ii) the compliance with any guideline or request from any central bank or other governmental authority (whether or not having the force of law), there shall be any increase in the cost to any Bank of agreeing to make or making, funding or maintaining LIBOR Rate Advances (without duplication of payments made under Section 3.05 or any other provision of this Agreement), then the Borrower shall from time to time, upon demand by such Bank (with a copy of such demand to the Agent), pay to the Agent for the account of such Bank additional amounts sufficient to compensate such Bank for such increased cost; provided that the Borrower shall only be liable for such additional costs incurred by such Bank for the period commencing thirty (30) days after the date of notice from such Bank to the Borrower of such additional amounts; and provided further, that subject to Section 2.10, the Borrower may elect to convert outstanding LIBOR Rate Advances into Effective Federal Funds Rate Advances in accordance with Section 2.09. (b) If any Bank determines that compliance with any law or regulation or any guideline or request from any central bank or other governmental authority, enacted after the date of this Agreement, or any new interpretation of an existing law, regulation, guideline or request (whether or not having the force of law) affects or would affect the amount of capital required or expected to be maintained by such Bank or any corporation controlling such Bank and that the amount of such capital is increased by or based upon the existence of such Bank's Commitment to lend hereunder and other commitments of this type, or its Letter of Credit Commitment, then, upon demand by such Bank (with a copy of such demand to the Agent), the Borrower shall pay to the Agent for the account of such Bank, from time to time as specified by such Bank, additional amounts sufficient to compensate such Bank or such corporation in the light of such circumstances for such increased capital requirement; provided that the Borrower shall only be liable for such additional costs incurred by such Bank for the period commencing thirty (30) days after the date of notice from such Bank to the Borrower of such additional amounts; and provided further, that subject to Section 2.10, the Borrower may elect to convert outstanding LIBOR Rate Advances into Effective Federal Funds Rate Advances in accordance with Section 2.09. SECTION 3.05. Taxes. (a) Any and all payments by the Borrower ----- hereunder or under the Notes (including in respect of any Letter of Credit) shall be made, in accordance with Section 3.01, free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in the case of each Bank and the Agent, taxes imposed on its income, and franchise taxes imposed on it, by the jurisdiction under the laws of which such Bank or the Agent (as the case may be) is organized or any political subdivision thereof and, in the case of each Bank, taxes imposed on its income, and franchise taxes imposed on it, by the jurisdiction of such Bank or any political subdivision thereof. If the Borrower shall be required by law to deduct any such amounts from or in respect of any sum payable hereunder or under any Note to any Bank or the Agent, (I) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 3.05) such Bank or the Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. The Borrower further agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or under the Notes or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or the Notes. (b) Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower contained in this Section 3.05 shall survive the payment in full of principal and interest hereunder and under the Notes. SECTION 3.06. Certificate of Bank. Any Bank demanding --------------------- compensation under Section 3.04 or 3.05 shall deliver to the Borrower and the Agent a statement reasonably setting forth the amount and manner of determining such loss, cost or expense, which statement shall be conclusive and binding for all purposes, absent manifest error. ARTICLE IV CONDITIONS OF LENDING SECTION 4.01. Conditions Precedent to Initial Advances and -------------------------------------------- Issuance of Letters of Credit. The obligation of each Bank to make its - --------------------------------- initial Advance or of the Issuing Bank to issue any Letter of Credit on or after the date of this Agreement is subject to the condition precedent that the Agent shall have received (or the actions described below shall have occurred, as the case may be), the following, in form and substance satisfactory to the Agent and (except for the Notes) in sufficient copies for each Bank: (a) The Notes, duly executed by the Borrower and payable to the order of the Banks, respectively. (b) This Agreement, duly executed by the Borrower. (c) A Guaranty Agreement duly executed by each Guarantor. (d) A certificate of the Secretary of the Borrower certifying (i) the names and true signatures of the officers of the Borrower authorized to sign each Loan Document to which the Borrower is a party and the notices and other documents to be delivered by the Borrower pursuant to any such Loan Document; (ii) the Restated Declaration of Trust dated March 23, 1988, together with any amendments thereto, (the "Organizational Documents") of the ------------------------ Borrower as in effect on the date of such certification; and (iii) the resolutions of the Board of Trust Managers of the Borrower approving and authorizing the execution, delivery, and performance by the Borrower of each Loan Document to which the Borrower is a party, the notices and other documents to be delivered by the Borrower pursuant to any such Loan Document, and the transactions contemplated thereunder. (e) A certificate of the Secretary of each Guarantor certifying (i) the names and true signatures of the officers of such Guarantor authorized to sign each Loan Document to which such Guarantor is a party and the notices and other documents to be delivered by such Guarantor pursuant to any such Loan Document; (ii) the By-laws and Articles of Incorporation of such Guarantor as in effect on the date of such certification; and (iii) the resolutions of the Board of Directors of such Guarantor approving and authorizing the execution, delivery, and performance by such Guarantor of each Loan Document to which each such Guarantor is a party, the notices and other documents to be delivered by such Guarantor pursuant to any such Loan Document, and the transactions contemplated thereunder. (f) Subject to Section 6.08, certificates of appropriate officials as to the existence and good standing of each of the Borrower and each Guarantor in its jurisdiction of organization or incorporation, and any and all other jurisdictions where the Property owned or the business transacted by each of the Borrower and each Guarantor requires each of the Borrower and each Guarantor to be qualified therein and where the failure to be so qualified would have a material adverse effect on the business operations or financial condition of the Borrower and the Guarantors, taken as a whole. (g) A favorable opinion of Dow, Cogburn & Friedman, P.C., counsel for the Borrower and the Guarantors, in form and substance satisfactory to the Banks. (h) Payment to the Agent of all fees and expenses payable at Closing, including, without limitation, fees of counsel to the Agent and the Banks payable under Section 10.04. (i) Payment in full of all amounts outstanding and due and owing on the Closing Date by the Borrower or any Subsidiary, if any, under the Credit Agreement, dated November 22, 1994, as such agreement has been amended from time to time (the "Prior Credit Agreement"), by and between the Borrower, the Agent and the Prior Banks, other than principal of the Prior Notes not otherwise paid to the Agent for the benefit of the Banks on the date of Closing and which is represented and evidenced by the new Notes issued hereunder pursuant to Section 2.02(c). (j) Such other documents and instruments with respect to the transactions contemplated hereby as the Agent may reasonably request. SECTION 4.02. Conditions Precedent to Each Borrowing. The -------------------------------------- obligation of each Bank to make an Advance under the Revolving Credit Loan or of the Issuing Bank to issue any Letter of Credit on the occasion of each Borrowing (including the initial Borrowing) shall be subject to the further conditions precedent that on the date of such Borrowing (a) the Agent shall have received a Notice of Borrowing, or Letter of Credit Request, as the case may be, in accordance with the terms of this Agreement, and (b) the following statements shall be true and correct (and each of the giving of the applicable Notice of Borrowing or Letter of Credit Request, as the case may be, and the acceptance by the Borrower of the proceeds of such Borrowing, shall constitute a representation and warranty by the Borrower that on the date of such Borrowing such statements are true and correct): (i) The representations and warranties contained in Article V of this Agreement are true and correct in all material respects on and as of the date of such Borrowing, before and after giving effect to such Borrowing, and to the application of the proceeds therefrom, as though made on and as of such date, and (ii) No event has occurred and is continuing, or would result from such Borrowing or from the application of the proceeds therefrom, which constitutes (or would constitute) a Default or an Event of Default. ARTICLE V REPRESENTATIONS AND WARRANTIES In order to induce the Banks to enter into this Agreement, the Borrower represents and warrants to the Banks (which representations and warranties will survive the delivery of any Note, the issuance of any Letter of Credit, the making of any Advance and the conversion of the Revolving Credit Loan into a Term Loan) that: SECTION 5.01. Existence. The Borrower (a) is a real estate --------- investment trust duly organized under the Texas Real Estate Investment Trust Act, Tex. Rev. Civ. Stat. Ann. art. 6138A (Vernon 1986) (the "Act"), and in good standing under the Act and the laws of the State of Texas, (b) has the power to own its Property and to carry on its business as now conducted, and (c) is duly qualified to do business and is in good standing in every jurisdiction where such qualification is necessary. Each Subsidiary of the Borrower (x) is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated, (b) has the power to own its property and carry on its business as now conducted, and (I) is duly qualified to do business and is in good standing in every jurisdiction in which such qualification is necessary, and where the failure to be so qualified or in good standing would have a material adverse effect on the business operations or financial condition of the Borrower and its Subsidiaries, taken as a whole. The Subsidiaries of the Borrower, and the jurisdiction of organization of each such Subsidiary, are set forth on Exhibit ------- 5.01 hereto. - ---- SECTION 5.02. Financial Condition. The Borrower has furnished ------------------- the Bank with consolidated financial statements as at and for the twelve-month period ended December 31, 1995, accompanied by the opinion of Deloitte & Touche, and quarterly unaudited consolidated financial statements as at and for the three-month periods ending March 31, 1996, June 30, 1996, and September 30, 1996. These statements are true and correct and have been prepared in conformity with GAAP consistently followed throughout the periods involved. They fully and accurately reflect the financial condition of the Borrower and its Subsidiaries and the results of their operations as at the date and for the period indicated. SECTION 5.03. Use of Proceeds; Margin Stock. Neither the ------------------------------ Borrower nor any Subsidiary owns any Margin Stock. The proceeds of the Loans shall be used for general trust purposes. None of the proceeds of Borrowings hereunder will be used for the purpose of purchasing or carrying any Margin Stock or for the purpose of reducing or retiring any indebtedness which was originally incurred to purchase or carry a Margin Stock or for any other purpose which might constitute this transaction a "purpose" credit within the meaning of said Regulation U, as now in effect or as it may hereafter be amended. Neither the Borrower nor any Subsidiary nor any agent acting on its or their behalf has taken or will take any action which might cause this Agreement or any Advance to violate Regulation G, T, U or X or any other regulation of the Board of Governors of the Federal Reserve System or to violate the Securities Exchange Act of 1934, in each case as in effect now or as the same may hereafter be in effect on the date of any Borrowing hereunder. SECTION 5.04. Binding Obligations. The Borrower has the power ------------------- and authority under the Act to make and carry out this Agreement, to make the borrowings provided for herein, to execute and deliver the Notes, and to perform its obligations hereunder and under the Notes; and all such action has been duly authorized by all necessary proceedings on its part. Each Subsidiary which is a party to a Guaranty Agreement has the power and authority to perform its obligations in accordance with the terms and conditions of the Guaranty Agreement to which it is a party, and all such action has been duly authorized by all necessary proceedings on its part. Each of this Agreement and the Notes have been duly and validly executed and delivered by the Borrower and constitute a valid and legally binding obligation of the Borrower enforceable in accordance with its terms, and the Guaranty Agreements have been duly executed and delivered by the Guarantors and constitute valid and legally binding obligations of each such Guarantor enforceable in accordance with the respective terms thereof and of this Agreement, except as limited by Debtor Laws. SECTION 5.05. No Conflict or Resultant Lien. The execution, ----------------------------- delivery, and performance by the Borrower and each Subsidiary of each Loan Document to which it is a party, the Borrowings hereunder by the Borrower as contemplated herein, and the effectuation of the transactions contemplated by any Loan Document, do not and will not violate any provision of, or result in a default under, the Borrower's Organizational Documents, or the Articles of Incorporation or other charter documents or by-laws of any Subsidiary, or any material agreement to which the Borrower or such Subsidiary is a party, or Governmental Requirement to which the Borrower or such Subsidiary is subject, or result in the creation or imposition of any Lien upon any Property of the Borrower or such Subsidiary. SECTION 5.06. Compliance with Other Agreements. Neither the -------------------------------- Borrower nor any Subsidiary is in default in any material respect under any Governmental Requirement. Neither the Borrower nor any Subsidiary is in default under any other agreement, which default could have a material adverse effect on the business, operations or financial condition of the Borrower and its Subsidiaries, taken as a whole, or the ability of the Borrower or any Guarantor to perform its obligations under this Agreement or any other Loan Document to which it is a party. SECTION 5.07. No Consent. No authorization or approval or other ---------- action by, and no notice to or filing with, any Person or any Governmental Authority is required for the due execution, delivery, and performance by each of the Borrower or any Subsidiary of any Loan Document to which it is a party or the Borrowings hereunder, in each case as contemplated herein, or the effectuation of the transactions contemplated under any Loan Document. SECTION 5.08. Litigation. Except as described on Exhibit 5.08, ---------- attached hereto or as disclosed in any Compliance Certificate, there are no material actions, suits, or proceedings pending or, to the knowledge of the Borrower, threatened against or affecting the Borrower or any Subsidiary, or the Properties of the Borrower or any Subsidiary. SECTION 5.09. Taxes; Governmental Charges. The Borrower and --------------------------- each Subsidiary has filed or caused to be filed all federal, state, and foreign income tax returns which are required to be filed, and has paid or caused to be paid all taxes as shown on such returns or on any assessment received by it to the extent that such taxes have become due and payable, except for such taxes and assessments as are being contested in good faith in appropriate proceedings and reserved for in accordance with GAAP in the manner required by Section 6.04. SECTION 5.10. Full Disclosure. All information furnished by or --------------- on behalf of the Borrower or any Subsidiary to the Agent or any Bank for purposes of or in connection with this Agreement or any transaction contemplated hereby is true and accurate in all material respects and not incomplete by omitting to state any material fact necessary to make such information not misleading. There is no material fact relevant to this Agreement or the transactions contemplated by this Agreement known to the Borrower which has not been disclosed herein or in such other written documents, information or certificates furnished to the Agent and the Banks for use in connection with the transactions contemplated hereby. SECTION 5.11. Investment Company Act. Neither the Borrower nor ---------------------- any Subsidiary is an "investment company" or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. SECTION 5.12. Compliance with Law. Except as disclosed in any ------------------- Compliance Certificate and approved by the Banks, the business and operations of the Borrower and each Subsidiary as conducted at all times have been and are in compliance in all material respects with all applicable Governmental Requirements. SECTION 5.13. ERISA. Each of the Borrower and each Subsidiary ----- is in compliance in all material respects with all applicable provisions of ERISA and the Code with respect to each Plan, including the fiduciary provisions thereof, and each Plan is, and has been, maintained in material compliance with ERISA and, where applicable, the Code. Full payment when due has been made of all material amounts which the Borrower or any Subsidiary is required under the terms of each Plan or applicable law to have paid as contributions to such Plan as of the date hereof. For purposes of this Section 5.13, the term "material" shall mean a liability in excess of $10,000,000. SECTION 5.14. No Default or Event of Default. No Default or ------------------------------ Event of Default hereunder has occurred and is continuing. SECTION 5.15. Permits and Licenses. All material permits, -------------------- licenses and other governmental authorizations necessary for the Borrower or any Subsidiary to carry on its business have been obtained and are in full force and effect and neither the Borrower nor any Subsidiary is in breach of the foregoing. Each of the Borrower and each Subsidiary owns or possesses adequate licenses or other valid rights to use United States trademarks, trade names, service marks, copyrights, patents and applications therefor which are necessary for the conduct of the business, operations or financial condition of the Borrower or such Subsidiary. SECTION 5.16. Insurance. Each of the Borrower and each --------- Subsidiary maintains insurance of such types as is usually carried by companies of established reputation engaged in the same or similar business and which are similarly situated with financially sound and reputable insurance companies and associations acceptable to the Agent, with a rating of at least A-, financial size category, Class VI as set forth in Best's Key Rating Guide, published by A.M. Best Company, Inc., and in such amounts as such insurance is usually carried by similar businesses, and in any event, in compliance with the requirements of Section 6.03. If the rating of any insurance company or association is or becomes below the aforesaid minimum requirements, then Borrower and its Subsidiaries shall have 45 days to secure (i) an appropriate reinsurance or other endorsement which will satisfy the aforesaid minimum standards, or (ii) secure replacement insurance coverage satisfying the aforesaid minimum standards. All representations and warranties in each Loan Document shall survive the delivery of the Notes, the making of any Advance and the conversion of the Revolving Credit Loan into a Term Loan, and shall continue for 366 days after the repayment of the Notes, the expiration or termination of, any Letter of Credit, and the termination of the Letter of Credit Commitment and the Commitments; any investigation at any time made by or on behalf of the Agent or any Bank shall not diminish any Bank's right to rely thereon. ARTICLE VI AFFIRMATIVE COVENANTS OF THE BORROWER So long as any Note shall remain unpaid or any Letter of Credit remains outstanding, or any Bank shall have any Commitment hereunder, the Borrower covenants and agrees that: SECTION 6.01. Reporting and Notice Requirements. The Borrower --------------------------------- will furnish to each Bank, with respect to items described in Subsections (a), (b), (c) and (f), and to the Agent for delivery to the Banks, with respect to all other items: (a) Quarterly Financial Statements. As soon as available and in any ------------------------------ event within forty-five (45) days after the end of each fiscal quarter of the Borrower (excluding the fourth quarter), Financial Statements of the Borrower and its Subsidiaries as of the end of such quarter. (b) Annual Financial Statements. As soon as available and in any --------------------------- event within ninety (90) days after the end of each fiscal year of the Borrower, Financial Statements of the Borrower and its Subsidiaries for such fiscal year. (c) Compliance Certificate. Together with and at the time of the ---------------------- delivery of any information required by Subsection (a) and Subsection (b) of this Section 6.01, a certificate (a "Compliance Certificate") substantially in the form of Exhibit 6.01(c), attached hereto, signed by a Responsible Officer, (i) stating that there exists no Event of Default or Default, or if any Event of Default or Default exists, specifying the nature thereof, the period of existence thereof, and what action the Borrower proposes to take with respect thereto; (ii) setting forth the credit rating assigned to the Borrower's senior-unsecured, long-term debt by S&P as of the date of the Compliance Certificate, and as of the date of delivery of such Financial Statements; and (iii) setting forth with reasonable specificity such schedules, computations and other information as may be required to demonstrate that the Borrower is in compliance with its covenants in Sections 7.02, 7.03, 7.04, 7.07 and 7.13 hereof. (d) Notice of Default. Promptly after any Responsible Officer of the ----------------- Borrower knows or has reason to know that any Default or Event of Default has occurred, a written statement of a Responsible Officer of the Borrower setting forth the details of such Default or Event of Default and the action which the Borrower has taken or proposes to take with respect thereto. (e) Notice of Litigation. Together with and at the time of the --------------------- delivery of information required by Subsection (a) or (b), notice of any litigation, legal, administrative, or arbitral proceeding, investigation, or other action of any nature which involves a claim (or a series of related claims in the aggregate) for an amount equal to or exceeding $5,000,000, or, promptly after any Responsible Officer of the Borrower or any Subsidiary obtaining knowledge of the commencement thereof, notice of any litigation, legal, administrative or arbitral proceeding, investigation or other action of any nature which involves the reasonable possibility, if adversely determined, in the judgment of the Borrower, of a judgment in excess of $1,000,000 which has not been stayed, or other liability, in each case which could have a material adverse effect on the business, operations or financial condition of the Borrower and its Subsidiaries, taken as a whole, or on the ability of the Borrower or any Subsidiary to perform its obligations under this Agreement or any other Loan Document to which it is a party, and upon request by the Agent or any Bank, details regarding such litigation which are satisfactory to the Agent or such Bank. (f) Securities Filings. Promptly after the sending or filing thereof ------------------ and in any event within fifteen (15) days thereof, copies of all reports which the Borrower sends to any of its security holders, and copies of all reports (including each regular and periodic report, but without duplication of Financial Statements provided in accordance with Sections 6.01(a) and (b)) and each registration statement or prospectus which the Borrower or any Subsidiary files with the Securities and Exchange Commission or any national securities exchange. (g) ERISA Notices. The Borrower will and will cause its ERISA -------------- Affiliates to obtain and deliver to the Agent, as soon as possible and in any event within 10 days from receipt, or if applicable, filing, copies of any reports, notices or filings which the Borrower or an ERISA Affiliate files with the Internal Revenue Service, PBGC or the United States Department of Labor with respect to an ERISA Event or which the Borrower or an ERISA Affiliate receives from such Governmental Authority relating to an ERISA Event, and copies of any notice, complaint or other documentation of any pending or threatened lawsuit or claim relating to any Plan or Multiemployer Plan which may have a material adverse effect on the Borrower or an ERISA Affiliate, taken as a whole. (h) Rating Certificate. Promptly upon the Borrower's knowledge of or ------------------ notification (i) by S&P or Moody's that the credit rating assigned to senior-unsecured, long-term debt of the Borrower by S&P or Moody's, as the case may be, has changed from the rating set forth in the most recent Compliance Certificate delivered in accordance with Section 6.01(c), or (ii) by any other nationally recognized rating agency that the Borrower's senior unsecured, long-term debt has been assigned a credit rating, or that subsequent to such assignment, such credit rating has been changed, the Borrower will notify the Agent in writing of the occurrence of such event, and if a notice has been received by the Borrower from S&P, Moody's or such other rating agency, shall provide to the Agent a copy of such notice (each such notice provided hereunder, a "Rating Certificate"). ------------------- (i) Other Information. Such other information respecting the ------------------ condition or operations, financial or otherwise, of the Borrower or any of its Subsidiaries as any Bank through the Agent may from time to time reasonably request. SECTION 6.02. Maintenance. The Borrower will, and will cause ----------- each of its Subsidiaries to, (a) at all times do or cause to be done all things necessary to maintain, preserve and renew its existence as a real estate investment trust under the Act or its corporate existence, as the case may be, and its rights and franchises, and comply with all governmental laws, rules, regulations or rulings with respect thereto; provided, however, that nothing contained in this Section 6.02 or any other provision of this Agreement shall (I) require the Borrower or any of its Subsidiaries to comply with any such governmental laws, rules, regulations or rulings, so long as the validity or applicability thereof shall be contested in good faith by appropriate proceedings and any such failure to comply could not reasonably be anticipated to have a material adverse effect on the business, operations or financial condition of the Borrower and its Subsidiaries taken as a whole on a consolidated basis, or the ability of the Borrower or such Subsidiary to perform its obligations under this Agreement or any other Loan Document; or (ii) require the Borrower or any of its Subsidiaries to maintain, preserve or renew any right or franchise not necessary or desirable in the conduct of its business as determined in good faith by Borrower's Trust Managers or Board of Directors, as the case may be, and (b) except for planned demolition of Real Property or Property subject to a direct financing lease (as reflected on the Financial Statements), for the purpose of increasing its ultimate value, at all times maintain, preserve, protect and keep or cause to be maintained, preserved, protected and kept its Property in good repair, working order and condition (ordinary wear and tear excepted) and, from time to time, will make or cause to be made all repairs, renewals, replacements, extensions, additions, betterments and improvements to its Property as are appropriate, so that (I) each of the Borrower and its Subsidiaries maintains its current line of business and (ii) the business carried on in connection therewith may be conducted properly and efficiently at all times. SECTION 6.03. Insurance. The Borrower will, and will cause each --------- of its Subsidiaries to, keep its Property insured against loss or damage by fire and other hazards with extended coverage and as is otherwise usually carried by companies of established reputation engaged in the same or similar business which are similarly situated, and in such amounts as such insurance is usually carried by such similar businesses. Such policy or policies shall be satisfactory in form and substance to the Banks, with the premiums thereon fully paid in advance, issued by and binding upon financially sound and reputable insurance companies and associations acceptable to the Agent, with a rating of at least A-, financial size category, Class VI as set forth in Best's Key Rating Guide, published by A.M. Best Company, Inc., and providing for at least fifteen (15) days written notice to the Agent of cancellation, failure to renew or other material change in such policy or policies. If the rating of any insurance company or association is or becomes below the aforesaid minimum requirements, then Borrower and its Subsidiaries shall have 45 days to secure (i) an appropriate reinsurance or other endorsement which will satisfy the aforesaid minimum standards, or (ii) secure replacement insurance coverage satisfying the aforesaid minimum standards. SECTION 6.04. Taxes and Other Claims. The Borrower will, and ---------------------- will cause each of its Subsidiaries to, duly pay and discharge, as the same become due and payable, all of its taxes (including without limitation all federal and state income taxes, ad valorem taxes, sales taxes, use taxes, occupational taxes, franchise taxes, withholding taxes, severance taxes, excise taxes and manufacturing taxes) and assessments, and all claims and charges of any Governmental Authority or any other Person levied or imposed, or which if unpaid might become a Lien or charge, upon the franchises, assets, earnings or businesses of the Borrower or any of its Subsidiaries, as the case may be; provided, however, that nothing contained in this Section 6.04 shall require the Borrower or any of its Subsidiaries to pay any such tax, assessment, charge or claim so long as the validity thereof shall be contested in good faith by appropriate proceedings and the Borrower or any such Subsidiary shall set aside on its books adequate reserves with respect thereto if required by GAAP. SECTION 6.05. Right of Inspection. From time to time upon ------------------- reasonable notice to the Borrower, the Borrower will, and will cause each Subsidiary to, permit any officer, or employee of, or agent designated by, the Agent or any Bank to visit and inspect any of the Properties of the Borrower or any Subsidiary, examine the Borrower's or such Subsidiary's corporate books or financial records, take copies and extracts therefrom, and discuss the affairs, finances, and accounts of the Borrower or any Subsidiary with the Borrower's or such Subsidiary's officers or certified public accountants, all as often as the Agent or any Bank may reasonably desire. SECTION 6.06. Guarantees of Subsidiaries. In the event that the -------------------------- Borrower shall at any time acquire or create a new Subsidiary all of the stock of which is 100% owned by the Borrower, the Borrower shall immediately cause such Subsidiary to provide to the Agent for the benefit of the Banks a guaranty of the obligations of the Borrower under this Agreement which shall be in the form attached hereto as Exhibit 1.01-A; provided that, it shall not -------------- constitute a Default hereunder if such new Subsidiary does not provide such Guaranty Agreement until the date required for delivery of the Compliance Certificate in accordance with Section 6.01(c). It is agreed and understood that the obligation of the Borrower under this Section6.06 to cause any such Subsidiary to provide to the Agent for the benefit of the Banks a guaranty is a condition precedent to the making of the Advances pursuant to this Agreement and that the entry into this Agreement by the Banks constitutes good and adequate consideration for the provision of such guaranty. SECTION 6.07. Compliance with Law. The Borrower will, and will ------------------- cause each of its Subsidiaries to, comply in all material respects with all laws, rules, regulations and rulings of all Governmental Authority having jurisdiction in respect of the conduct of its business and the ownership of its Property. SECTION 6.08. Delivery of Certain Certificates. The Borrower -------------------------------- agrees that to the extent it was unable to provide certificates required under Section 4.01(f) on or before the Closing Date for any Subsidiary, after using its best efforts to obtain the same, all such certificates shall be provided to the Agent, on behalf of the Banks, on or before the forty-fifth (45th) day after the Closing Date. ARTICLE VII NEGATIVE COVENANTS So long as any Note shall remain unpaid or any Bank shall have any Commitment hereunder, the Borrower covenants and agrees that: SECTION 7.01. Liens, Etc. The Borrower will not grant, permit, ---------- create or suffer to exist, and will not permit any Subsidiary to grant, permit, create or suffer to exist, any Lien, upon or with respect to any of its Properties, whether now owned or hereafter acquired, or assign, or permit any of its Subsidiaries to assign, any right to receive income, in each case to secure or provide for the payment of any Debt of any Person, other than: (a) Permitted Liens; or (b) Liens which do not violate the covenants contained in Section 7.02(b) hereof. SECTION 7.02. Limitations on Incurrence of Debt. (a) The ---------------------------------- Borrower will not, and will not permit any Subsidiary to, incur any Debt if prior to incurrence of such Debt, but after giving effect to the incurrence of such Debt and the application of the proceeds thereof, the aggregate principal amount of all outstanding Debt of the Borrower and its Subsidiaries is greater than 60% of the Total Assets, determined as at the last day of the most recent preceding calendar year or calendar quarter, as the case may be, as reflected in the Financial Statements of the Borrower most recently provided under Sections 6.01(a) or (b). (b) The Borrower will not, and will not permit any Subsidiary to, incur any Debt secured by any Lien upon any Property of the Borrower or any Subsidiary if, prior to incurrence of such Debt, but after giving effect to the incurrence of such Debt and the application of the proceeds thereof, the aggregate principal amount of all outstanding Debt of the Borrower and its Subsidiaries which is secured by a Lien on Property of the Borrower or any Subsidiary is greater than 40% of Total Assets, determined as at the last day of the most recent preceding calendar year or calendar quarter, as the case may be, as reflected in Financial Statements of the Borrower most recently provided under Sections 6.01(a) or (b). (c) For purposes of this Section 7.02, the term (i) "Total Assets" does not include securities issued or unconditionally guaranteed by the United States government or an agency thereof or by the Federal National Mortgage Association which secure a repurchase agreement with a financial institution, entered into in the ordinary course of business by the Borrower or any Subsidiary, and (ii) "Debt" does not include obligations under any such repurchase agreement or indebtedness of the Borrower or any Subsidiary owed to a financial institution, which is secured by governmental securities described in clause (i) hereof, owned by the Borrower or such Subsidiary, entered into in the ordinary course of business (a "reverse repurchase agreement"), provided that in the case of transactions described in clauses (i) and (ii) hereof, the market value of such governmental securities is at all times equal at least to the principal amount of such repurchase agreement or reverse repurchase agreement. SECTION 7.03. Unimproved Real Property. The Borrower will not ------------------------ permit Unimproved Real Property to exceed 12.5% of Undepreciated Real Estate Assets. SECTION 7.04. Sale or Other Disposition of Real Property. The ------------------------------------------ Borrower will not, and will not permit its Subsidiaries to, sell, dispose of or otherwise transfer (including, without limitation, a sale-leaseback) (i) Real Property of the Borrower or any Subsidiary with an aggregate book value in any twelve-month period, ending on the last day of the month in which such disposition occurs (or if shorter, for the period from the Closing Date to such day), for all such dispositions (after giving effect to such disposition), greater than 10% of the Undepreciated Real Estate Assets as of the last day of the preceding calendar quarter, or (ii) Real Property of the Borrower or any Subsidiary with a cumulative aggregate book value in any thirty-six month period, ending on the last day of the month in which such disposition occurs (or if shorter, for the period from the Closing Date to such day), for all such dispositions (after giving effect to such disposition) greater than 15% of the Undepreciated Real Estate Assets as of the last day of the preceding calendar quarter, unless, on the date on which the next Compliance Certificate is required to be delivered in accordance with Section 6.01(c), the Borrower shall have delivered to the Agent the excess of Net Proceeds of such disposition over such applicable percentage amounts of the Undepreciated Real Estate Assets, respectively (herein referred to as the "Adjusted Net Proceeds") as a prepayment on the Notes, in accordance with Section 3.03. For purposes of this Section 7.04, neither a lease of property (nor the existence of a financing lease) nor creation of a Lien on such property in the ordinary course of business, shall be deemed to be a disposition of such property. SECTION 7.05. Mergers; Consolidations. Except as permitted ----------------------- under Section 7.06(f), the Borrower will not, and will not permit any Subsidiary to, merge or consolidate with or into any other Person, or convey, transfer or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired); provided that (a) subject to the limitations of Section -------- 7.06(f), the Borrower may merge or consolidate with or into, or acquire all or substantially all of the assets or capital stock of any other Person, so long as the Borrower is the survivor thereof, and (b) any Subsidiary may merge or consolidate with or into, or acquire all or substantially all of the assets or capital stock of, (i) any other Subsidiary, so long as, if either such Subsidiary is a Guarantor, a Guarantor is the survivor thereof, and (ii) subject to the limitations of Section 7.06(f), any other Person (other than the Borrower), so long as a Subsidiary is the survivor thereof, and (c) any Subsidiary may merge into or transfer all or substantially all of its assets to the Borrower, so long as the Borrower is the survivor thereof, if prior to and after giving effect thereto, in the case of clauses (a), (b) and (c) no Default or Event of Default has occurred or would exist (expressly including, without limitation, under Section 7.06(f)). SECTION 7.06. Investments, Loans, and Advances. Without the -------------------------------- consent of the Banks, the Borrower will not, and will not permit any Subsidiary to, make or permit to remain outstanding any Investment, endorse, or otherwise be or become contingently liable, directly or indirectly, in connection with the stock or other securities of, or purchase, or acquire any stock or securities of, or any other interest in, any Person, except that: (a) the Borrower or any Subsidiary may permit to remain outstanding Investments existing on the date hereof; (b) the Borrower or any Subsidiary may acquire and own capital stock, obligations, or securities received in settlement of debts (created in the ordinary course of business) owing to the Borrower or any Subsidiary; (c) the Borrower or any Subsidiary may own, purchase, or acquire Cash Equivalents; (d) the Borrower and any Subsidiary may make intercompany loans and advances which are permitted under Section 7.08 hereof, and (subject to Section 6.06) may form Subsidiaries, the capital stock of which is 100% owned by the Borrower or a Guarantor; (e) the transactions permitted under Subsection (a), (b) and (c) of Section 7.05 are permissible; (f) the Borrower or any Subsidiary may (I) acquire the capital stock of a Person without the consent of the Banks, so long as (A) the aggregate purchase price, or cost, of such stock received in exchange for Capital Shares or any asset of the Borrower or a Subsidiary (measured by the value of such Capital Shares or asset of the Borrower or such Subsidiary given in exchange therefor) does not exceed, in the aggregate for any successive twelve (12) month period for all such transactions (or series of related transactions) an amount equal to one-third (33 1/3%) of Total Assets, determined as of the last day of the preceding calendar quarter, or (B) if all or a part of such purchase price is paid in cash, the cash portion of the purchase price does not exceed, in the aggregate for any successive twelve (12) month period for all such transactions (or series of related transactions) an amount equal to ten percent (10%) of the Total Assets, determined as of the last day of the preceding calendar quarter, and (ii) acquire other Investments, (in addition to Investments permitted under subsections (a) through (e), or (f)(i), or (g), of this Section 7.06) so long as the aggregate purchase price, or cost, of such acquisition (measured by the value of such Capital Shares or any assets or promissory note of the Borrower or such Subsidiary, if any, given in exchange therefor, plus the cash portion thereof) does not exceed in the aggregate for any successive twelve (12) month period for all such transactions (or series of related transactions) an amount equal to ten percent (10%) of Total Assets, determined as of the last day of the preceding calendar quarter, and in the case of each of clause (i) or (ii), (w) such action does not result in the income of the Borrower being primarily attributable to loans secured by mortgages on Real Property, (x) if the acquisition results in ownership by the Borrower or any Subsidiary (whether beneficial or of record) of a majority of the voting stock of such Person or results in a merger or consolidation with the Borrower or such Subsidiary, then the board of directors of such Person shall have approved such transaction and such transaction shall not constitute a "hostile" acquisition with respect to such Person, (y) (except for Investments described under clause (ii) hereof) the business of such Person is substantially similar to the business conducted by the Borrower or such Subsidiary, or is primarily to hold Real Property, and such purchase or acquisition is made in the ordinary course of business, and (z) in any event, prior to and after giving effect to such purchase or acquisition, no Default or Event of Default has occurred or would exist; and (g) the Borrower and any Subsidiary may purchase or acquire directly or indirectly, through partnerships, joint ventures or otherwise, title to Real Property (expressly including, for purposes of this Section 7.06, without limitation, "direct financing leases," reflected as such on the Financial Statements). SECTION 7.07. Coverage Ratio. The Borrower will not permit the -------------- ratio of (i) Funds From Operations, to (ii) the Annual Service Charge, determined as of the last day of each fiscal quarter for the four (4) successive quarterly accounting periods ending on such date (the "Coverage Ratio") to be less than 2.5 to 1.0. SECTION 7.08. Transactions with Affiliates. The Borrower will ---------------------------- not, and will not permit any Subsidiary to, directly or indirectly, enter into any transaction, or modify any existing transaction, with any Affiliate (including, without limitation, any transaction involving the payment of management fees or directors' fees to any Affiliate), except for transactions (including any loans or advances by or to any Affiliate otherwise in compliance under this Agreement) in good faith, the terms of which are fair and reasonable to the Borrower or such Subsidiary, and are at least as favorable as the terms which could be obtained by the Borrower or such Subsidiary in a comparable transaction made on an arm's-length basis between unaffiliated parties. SECTION 7.09. Change of Business. The Borrower will not, and ------------------ will not permit any Subsidiary to, make any material change in the nature of the business conducted by the Borrower and its Subsidiaries taken as a whole and will at all times qualify for taxation as a Real Estate Investment Trust under the Code. SECTION 7.10. Intentionally Omitted SECTION 7.11. Amendment of Organizational Documents. The -------------------------------------- Borrower will not, and will not permit any of its Subsidiaries to, without the prior written consent of the Banks, amend, alter or modify its Organizational Documents or articles of incorporation or other charter or bylaws, as the case may be, in such a manner as to (a) change its purpose or (b) restrict its powers in any manner. SECTION 7.12. Guarantees. "Guaranty" shall mean all obligations ---------- not otherwise reflected on the balance sheet of the Borrower or any Subsidiary whereby the Borrower or such Subsidiary guarantees the performance of any joint venture or partnership or the payment or performance of any indebtedness, dividend or other obligation of any other Person (for purposes of this Section 7.12, the "Primary Obligor") in any manner, whether directly or indirectly, including obligations incurred through an agreement or covenant, contingent or otherwise: (i) to purchase such indebtedness or obligation or any Property or assets constituting security therefor; (ii) to advance or supply funds (A) for the purchase or payment of such indebtedness or obligation, or (B) to maintain working capital or other balance sheet condition or otherwise to advance or make available funds for the purchase or payment of such indebtedness or obligation; (iii) to lease Property or to purchase securities or other Property or services primarily for the purpose of assuring the owner of such indebtedness or obligation of the ability of the Primary Obligor to make payment of the indebtedness or obligation; or (iv) to assure the owner of the indebtedness or obligation of the Primary Obligor against loss in respect thereof. Notwithstanding the above, and in any event, except for (i) Guaranties by the Borrower of indebtedness or obligations of any Subsidiary, or (ii) Guaranties of any Subsidiary of indebtedness or obligations of the Borrower, or (iii) the Guaranty by the Borrower of the obligations of the Dugas Partnership In Commendam in respect of the Series 1995 Lafayette Bonds and the Special Letter of Credit issued in connection therewith, neither the Borrower nor any Subsidiary shall enter into any Guaranty (other than checks deposited and/or endorsed in the ordinary course of business of the Borrower or any Subsidiary) unless (A) liability incurred by the Borrower or such Subsidiary under such Guaranty is secured and is for a Primary Obligor's indebtedness or other obligation, and (B) upon payment by the Borrower or such Subsidiary on account of (or in connection with) its obligations under the Guaranty or, after compliance with applicable foreclosure proceedings specified by law or otherwise agreed upon, the Borrower or such Subsidiary will become subrogated to the right, title and interests of the beneficiary of the Guaranty or of the Primary Obligor, to all Property securing such liability. By way of illustration, but not limitation: (x) in the case of a Guaranty of the obligations of a venturer or partner, the Guaranty shall be deemed secured if the Borrower or such Subsidiary is entitled (after compliance with applicable foreclosure proceedings specified by law or otherwise agreed upon) to such defaulting party's venture or partnership interest in case of a default of such venturer or partner; (y) in the case of the Guaranty of a lease, the Guaranty shall be deemed secured if the Borrower or such Subsidiary is entitled (after compliance with applicable foreclosure proceedings specified by law or otherwise agreed upon) to the leasehold estate in case of default by the tenant under such lease; and (z) in the case of the Guaranty of a secured promissory note, a Guaranty shall be deemed secured if the Borrower or such Subsidiary is entitled to purchase the note and the lien securing same, and to become subrogated to the rights of the previous payee on the Note in the case of default of the maker on such default. SECTION 7.13. Assets Retained. The Borrower will not permit the --------------- portion of Undepreciated Real Estate Assets which is subject to no Lien (other than a Permitted Lien) to be less than 150% of the aggregate principal amount outstanding at any time of Debt which is not secured by a Lien on Property of the Borrower or any Subsidiary. ARTICLE VIII EVENTS OF DEFAULT SECTION 8.01. Events of Default. If any of the following events ----------------- ("Events of Default") shall occur: ------------------- (a) The Borrower shall fail to pay principal of or interest on any Note or fees or other amounts due under any Note or this Agreement or, in connection with its reimbursement obligations under any Letter of Credit or any other Loan Document, when the same becomes due and payable; or (b) Any representation or warranty made by the Borrower (or any of its Responsible Officers) under or in connection with any Loan Document shall prove to have been incorrect in any material respect when made or deemed made; or (c) The Borrower shall fail to perform or observe any term, covenant or agreement contained in Sections 6.01(d), 6.06 or in Article VII; or (d) The Borrower shall fail to perform or observe any term, covenant or agreement contained in any Loan Document (other than those set forth in (a), (b) and (c) above) on its part to be performed or observed if such failure shall remain unremedied for thirty (30) days after the occurrence of such event; or (e) The Borrower shall fail to pay any principal of or premium or interest on any Debt (other than Non-Recourse Debt) which is outstanding in a principal amount greater than $10,000,000 in the aggregate when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise); or any other event constituting a default (however defined) shall occur or condition shall exist under any agreement or instrument relating to any such Debt outstanding in a principal amount greater than $10,000,000 (other than Non-Recourse Debt) and shall continue after the applicable grace period, if any, specified in such agreement or instrument; or (f) The Borrower or any of its Subsidiaries shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against the Borrower or any of its Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any Debtor Laws, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its Property and, in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding shall remain undismissed or unstayed for a period of 30 days, or any of the actions sought in such proceeding (including, without limitation, the entry of an order for relief against, or the appointment of a receiver, trustee, custodian or other similar official for, it or for any substantial part of its Property) shall occur; or the Borrower or any of its Subsidiaries shall take any corporate action to authorize any of the actions set forth above in this subsection (f); or (g) Any final judgment or order for the payment of money which, individually or in the aggregate, shall be in excess of $1,000,000 at any time, shall be rendered against the Borrower or any of its Subsidiaries and remains unpaid for a period of 15 days, and a stay of execution thereof (whether by supersedeas bond or otherwise) shall not be in effect after entry thereof; or (h) With respect to any Plan, Multiemployer Plan or any other employee benefit plan within the meaning of Section 3(3) of ERISA, the Borrower or any ERISA Affiliate has incurred and fails to pay (or fund, as applicable) within the maximum time period permitted by law, a liability in excess of $10,000,000; or (i) An Event of Default (however defined) in that certain Master Swap Agreement between the Borrower and TCB dated as of January 29, 1992, as amended, or in any interest rate swap agreement issued thereunder, or any other interest rate protection agreement to which the Borrower or any Subsidiary is a party (the "Interest Rate Agreements"), shall have occurred at any time during which the Agent or any Bank is a counterparty thereunder; or (j) The Borrower shall be or become, in the reasonable judgment of the Agent or any Bank, a liquidating trust under the Internal Revenue Code of 1986, as amended; then, and in any such event, the Agent (i) shall at the request, or may with the consent, of the Majority Banks, by notice to the Borrower, declare the Commitment (including the Revolving Credit Commitment, the Letter of Credit Commitment and the Term Commitment) of each Bank to be terminated, whereupon the same shall forthwith terminate, and (ii) shall at the request, or may with the consent, of the Majority Banks by notice to the Borrower, declare the Notes, all interest thereon and all other amounts payable under this Agreement to be forthwith due and payable, whereupon the Notes, all such interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower; provided however, that upon such -------- event the Borrower shall deliver to the Agent, for deposit into an interest bearing collateral account, readily available funds in an amount equal to the aggregate undrawn face amount of all Letters of Credit issued and outstanding at such time, as security for the obligations of the Borrower under such Letters of Credit; provided further that funds on deposit in such collateral account shall be returned to the Borrower periodically in an amount equal to amounts drawn under a Letter of Credit and reimbursed to the Banks by the Borrower from time to time, or upon expiration or termination otherwise of a Letter of Credit, without a draw outstanding, in the face amount of such Letter of Credit; provided further, that in the event of an entry of an order for relief with respect to the Borrower or any of its Subsidiaries under the United States Bankruptcy Code, (A) the obligation of each Bank to make Advances shall automatically be terminated and (B) the Notes, all such interest and all such amounts shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower. ARTICLE IX THE AGENT SECTION 9.01. Authorization and Action. Each Bank hereby ------------------------- appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Agent by the terms hereof, together with such powers as are reasonably incidental thereto. As to any matters not expressly provided for by this Agreement (including, without limitation, enforcement or collection of the Notes), the Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Majority Banks, and such instructions shall be binding upon all Banks and all holders of Notes; provided however, that the Agent shall not be required to -------- take any action which exposes the Agent to personal liability or which is contrary to this Agreement or applicable law. The Agent agrees to give to each Bank prompt notice of each notice given to it by the Borrower pursuant to the terms of this Agreement. SECTION 9.02. Agent's Reliance, Etc. Neither the Agent nor any ---------------------- of its directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, the Agent: (i) may, subject to the provisions of Section 10.08 hereof, treat the payee of any Note as the holder thereof until the Agent receives written notice of the assignment or transfer thereof signed by such payee and including the agreement of the assignee or transferee to be bound hereby as it would have been if it had been an original Bank party hereto, in form satisfactory to the Agent; (ii)may consult with legal counsel (including counsel for the Borrower), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (iii) makes no warranty or representation to any Bank and shall not be responsible to any Bank for any statements, warranties or representations (whether written or oral) made in or in connection with this Agreement; (iv) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement on the part of the Borrower or to inspect the property (including the books and records) of the Borrower; (v) shall not be responsible to any Bank for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto; and (vi) shall incur no liability under or in respect of this Agreement by acting upon any notice, consent, certificate or other instrument or writing (which may be by telecopier, telegram, cable or telex) believed by it to be genuine and signed or sent by the proper party or parties. SECTION 9.03. TCB and Affiliates. With respect to its -------------------- Commitment, the Advances made by it and the Note issued to it, TCB shall have the same rights and powers under this Agreement as any other Bank and may exercise the same as though it were not the Agent; and the term "Bank" or "Banks" shall, unless otherwise expressly indicated, include TCB in its individual capacity. TCB and its Affiliates may accept deposits from, lend money to, act as trustee under indentures of, and generally engage in any kind of business with, the Borrower, any of its Subsidiaries and any Person who may do business with or own securities of the Borrower or any such Subsidiary, all as if TCB were not the Agent and without any duty to account therefor to the Banks. SECTION 9.04. Bank Credit Decision. Each Bank acknowledges that -------------------- it has, independently and without reliance upon the Agent or any other Bank and based on the financial statements referred to in Sections 5.02 and 6.01 and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Bank also acknowledges that it will, independently and without reliance upon the Agent or any other Bank and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under each Loan Document. The Agent shall not be required to keep itself informed as to the performance or observance by the Borrower of any Loan Document or to inspect the Properties or books of the Borrower or any Subsidiary. Except for notices, reports, and other documents and information expressly required to be furnished to the Banks by the Agent hereunder, the Agent shall not have any duty or responsibility to provide any Bank with any credit or other information concerning the affairs, financial condition, or business of the Borrower or any Subsidiary (or any of their Affiliates) which may come into the possession of the Agent or any of its Affiliates. SECTION 9.05. Indemnification. Notwithstanding anything to the --------------- contrary herein contained, the Agent shall be fully justified in failing or refusing to take any action hereunder unless it shall first be indemnified to its satisfaction by the Banks against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, and disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against the Agent in any way relating to or arising out of its taking or continuing to take any action. EACH BANK AGREES TO INDEMNIFY THE AGENT (TO THE EXTENT NOT REIMBURSED BY THE BORROWER), ACCORDING TO SUCH BANK'S PRO RATA PERCENTAGE, FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES, AND DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST THE AGENT IN ANY WAY RELATING TO OR ARISING OUT OF ANY LOAN DOCUMENT OR ANY ACTION TAKEN OR OMITTED BY THE AGENT UNDER ANY LOAN DOCUMENT IN ITS CAPACITY AS AGENT, PROVIDED THAT NO BANK SHALL BE LIABLE FOR ANY PORTION OF SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES, OR DISBURSEMENTS RESULTING FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE PERSON BEING INDEMNIFIED; AND PROVIDED FURTHER, THAT IT IS THE INTENTION OF EACH BANK TO INDEMNIFY THE AGENT AGAINST THE CONSEQUENCES OF THE AGENT'S OWN NEGLIGENCE WHEN ACTING IN ITS CAPACITY AS AGENT, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT, OR CONCURRENT, ACTIVE OR PASSIVE. WITHOUT LIMITATION OF THE FOREGOING, EACH BANK AGREES TO REIMBURSE THE AGENT PROMPTLY UPON DEMAND FOR ITS PRO RATA PERCENTAGE OF ANY OUT-OF-POCKET EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES) INCURRED BY THE AGENT IN ITS CAPACITY AS AGENT IN CONNECTION WITH THE PREPARATION, ADMINISTRATION, OR ENFORCEMENT OF, OR LEGAL ADVICE IN RESPECT OF RIGHTS OR RESPONSIBILITIES UNDER, ANY LOAN DOCUMENT, TO THE EXTENT THAT THE AGENT IS NOT REIMBURSED FOR SUCH EXPENSES BY THE BORROWER. SECTION 9.06. Successor Agent. The Agent may resign at any time --------------- by giving written notice thereof to the Banks and the Borrower and may be removed at any time with cause by the Majority Banks. Upon any such resignation or removal, the Majority Banks shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Majority Banks, and shall have accepted such appointment, within thirty (30) days after the retiring Agent's giving of notice of resignation or the Majority Banks' removal of the retiring Agent, then the retiring Agent may, on behalf of the Banks, appoint a successor Agent, which shall be a commercial bank organized under the laws of the United States of America or of any State thereof and having capital of at least $100,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Agent's resignation or removal hereunder as Agent, the provisions of this Article IX shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. SECTION 9.07. Agent's Reliance. The Borrower shall notify the ---------------- Agent in writing of the names of its officers and employees authorized to request an Advance on behalf of the Borrower and shall provide the Agent with a specimen signature of each such officer or employee. The Agent shall be entitled to rely conclusively on such officer's or employee's authority to request an Advance on behalf of the Borrower until the Agent receives written notice from the Borrower to the contrary. The Agent shall have no duty to verify the authenticity of the signature appearing on any Notice of Borrowing, and, with respect to any oral request for an Advance, the Agent shall have no duty to verify the identity of any Person representing himself as one of the officers or employees authorized to make such request on behalf of the Borrower. Neither the Agent nor any Bank shall incur any liability to the Borrower in acting upon any telephonic notice referred to above which the Agent or such Bank believes in good faith to have been given by a duly authorized officer or other Person authorized to borrow on behalf of the Borrower or for otherwise acting in good faith. SECTION 9.08. Defaults. The Agent shall not be deemed to have -------- knowledge of the occurrence of a Default (other than the nonpayment of principal of or interest hereunder or of any fees payable hereunder) unless the Agent has received notice from a Bank or the Borrower specifying such Default. In the event that the Agent receives such a notice of the occurrence of a Default, the Agent shall give prompt notice thereof to the Banks and to the Borrower (and shall give each Bank prompt notice of each such nonpayment); provided that, failure of the Agent to give notice to the Borrower hereunder shall in no event diminish the obligations of the Borrower hereunder. The Agent shall (subject to Section 8.01 and 9.01) take such action as may be expressly required hereunder with respect to such Default; provided that, unless and until the Agent shall have received the directions referred to in Section 8.01, the Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default as it shall deem advisable and in the best interest of the Banks. ARTICLE X MISCELLANEOUS SECTION 10.01. Amendments, Etc. No amendment or waiver of any --------------- provision of this Agreement or the Notes or any Letter of Credit, nor consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by the Borrower and the Majority Banks, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided -------- however, that no amendment, waiver or consent shall, unless in writing and signed by all the Banks, do any of the following: (a) waive any of the conditions specified in Section 4.02, (b) increase the Commitments of the Banks or subject the Banks to any additional obligations, (c) reduce the principal of, or interest on, the Notes or any fees or other amounts payable hereunder or the terms of any Letter of Credit, (d) postpone any date fixed for any payment of principal of, or interest on, the Notes or any fees or other amounts payable hereunder, (e) change the definition of "Pro Rata Percentage," the percentage of the Commitments or the aggregate unpaid principal amount of the Notes, or the number or percentage of Banks, which shall be required for the Banks or any of them to take any action hereunder, (f) amend this Section 10.01, (g) alter any Guaranty Agreement or Section 6.06 hereof, or (h) amend Article VII hereof, and provided, further, that no -------- amendment, waiver or consent shall, unless in writing and signed by the Agent in addition to the Banks required above to take such action, affect the rights or duties of the Agent under this Agreement or any Note. SECTION 10.02. Notices, Etc. All notices and other ------------- communications provided for hereunder shall be in writing (including by telex or telefacsimile transmission) and shall be effective when actually delivered, or in the case of telex notice, when sent, and answerback is received, or in the case of telefacsimile transmission, when received and telephonically confirmed, addressed as follows: if to the Borrower, at its address at 2600 Citadel Plaza Drive, Houston, Texas 77018, Attention: Chief Executive Officer, with a copy to Dow, Cogburn & Friedman, P.C., 9 Greenway Plaza, Suite 2300, Houston, Texas 77046, Attention: Mr. Melvin Dow; if to any Bank, at its address specified opposite its name on the signature page hereof; and if to the Agent, at its address at 712 Main Street, Houston, Texas 77002, Attention: Ms. Catherine Arnold; with a copy to 1111 Fannin, Houston, Texas 77002, Attention: Manager, Loan Syndication Services; or, as to the Borrower, any Bank or the Agent, at such other address as shall be designated by such party in a written notice to the other parties. SECTION 10.03. No Waiver; Remedies. No failure on the part of ------------------- any Bank or the Agent to exercise, and no delay in exercising, any right under any Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. SECTION 10.04. Costs, Expenses and Taxes. The Borrower agrees ------------------------- to pay on demand all costs and expenses in connection with the preparation, execution, delivery, modification, waiver, and amendment of the Loan Documents and the other documents to be delivered under the Loan Documents, including, without limitation, the reasonable fees and out-of-pocket expenses of counsel for the Agent and each Bank with respect thereto and with respect to advising the Agent and each Bank as to its rights and responsibilities under the Loan Documents; provided that, fees of counsel for the Agent and the Banks for work performed in connection with the preparation, execution and delivery of this Agreement and the other Loan Documents on the Closing Date and all other work described in this sentence performed on or prior to the Closing Date (together with routine post-closing matters, such as preparation and delivery of closing packages), shall not exceed $_______________, plus expenses of such counsel incurred in connection therewith. In the event of the occurrence of a Default, the Borrower further agrees to pay on demand all costs and expenses, if any (including, without limitation, reasonable counsel fees and expenses), in connection with the enforcement (whether through negotiations, legal proceedings or otherwise) of the Loan Documents and the other documents to be delivered under the Loan Documents, including, without limitation, reasonable counsel fees and expenses in connection with the enforcement of rights under this Section 10.04. SECTION 10.05. Right of Set-off. Upon (i) the occurrence and ---------------- during the continuance of any Event of Default and (ii) the making of the request or the granting of the consent specified by Section 8.01 to authorize the Agent to declare the Notes due and payable pursuant to the provisions of Section 8.01, each Bank is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Bank to or for the credit or the account of the Borrower against any and all of the obligations of the Borrower now or hereafter existing under any Loan Document, whether or not such Bank shall have made any demand under this Agreement or such Note and although such obligations may be unmatured. Each Bank agrees promptly to notify the Borrower after any such set-off and application made by such Bank, provided that the failure to give such notice shall not affect the validity of - -------- such set-off and application. The rights of each Bank under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) which such Bank may have. SECTION 10.06. Sharing of Payments, Etc. If any Bank shall ------------------------ obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of any Advance made by it (other than pursuant to Sections 2.07, 2.10, 3.04 or 3.05) in excess of its Pro Rata Percentage of payments on account of the Advances, such Bank shall forthwith purchase from the other Banks such participations in the Advances made by them as shall be necessary to cause such purchasing Bank to share the excess payment ratably with each of them, provided however, that if all or any -------- portion of such excess payment is thereafter recovered from such purchasing Bank, such purchase from each Bank shall be rescinded and such Bank shall repay to the purchasing Bank the purchase price to the extent of such recovery together with an amount equal to such Bank's ratable share (according to the proportion of (i) the amount of such Bank's required repayment to (ii) the total amount so recovered from the purchasing Bank) of any interest or other amount paid or payable by the purchasing Bank in respect of the total amount so recovered. SECTION 10.07. Binding Effect. This Agreement shall become -------------- effective when it shall have been executed by the Borrower, the Agent and the Banks (and a counterpart original has been delivered to the Agent, for itself and each Bank, and to the Borrower) when the Agent shall have been notified by each Bank that such Bank has executed it and thereafter shall be binding upon and inure to the benefit of the Borrower, the Agent and each 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 prior written consent of the Banks. SECTION 10.08. Assignments and Participations. (a) Each Bank ------------------------------ may assign all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitments and the Note held by it and any interest held by it in a Letter of Credit) to any financial institution (the "Assignee"); provided however, (i) prior to the -------- -------- occurrence of an Event of Default, TCB shall not assign its rights and obligations hereunder without the consent of the Borrower, which will not be unreasonably withheld, if, after giving effect to such assignment, the Commitment of TCB would be reduced to less than $45,000,000, (ii) each assignment made hereunder shall equal or exceed the lesser of (A) $10,000,000 or (B) the remaining Commitment held by the Assigning Bank, and (iii) the parties to each such assignment shall execute and deliver to the Agent, for its acceptance and recording in the Register (with a copy to the Borrower), an Assignment and Acceptance Agreement in the form of Exhibit 10.08, attached hereto (the "Assignment and Acceptance"), together with any Note subject to -------------------------- such assignment. Upon such execution, delivery, acceptance, and recordation by the Agent of such Assignment and Acceptance, from and after the effective date specified in each Assignment and Acceptance, which effective date shall be the date on which such Assignment and Acceptance is accepted by the Agent, (A) the Assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of a Bank under the Loan Documents, and (B) the Bank assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under the Loan Documents (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Bank's rights and obligations under the Loan Documents, such Bank shall cease to be a party thereto). (b) By executing and delivering an Assignment and Acceptance, the Bank assignor thereunder and the Assignee confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Bank makes no representation or warranty and assumes no responsibility with respect to any statements, warranties, or representations made in or in connection with any Loan Document or the execution, legality, validity, enforceability, genuineness, sufficiency, or value of any Loan Document or any other instrument or document furnished pursuant thereto; (ii) such assigning Bank makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower or any other Subsidiary or the performance or observance by the Borrower or any other Subsidiary of any of its respective obligations under any Loan Document or any other instrument or document furnished pursuant thereto; (iii) such Assignee confirms that it has received a copy of the Loan Documents, together with copies of the Financial Statements referred to in Section 5.02 and Section 6.01 and such other documents and ------------- ------------ information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such Assignee, independently and without reliance upon the Agent, such assigning Bank, or any Bank and based on such documents and information as it shall deem appropriate at the time, will continue to make its own credit decisions in taking or not taking action under this Agreement; (v) such Assignee appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under any Loan Document as are delegated to the Agent by the terms thereof, together with such powers as are reasonably incidental thereto; and (vi) such Assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of any Loan Document are required to be performed by it as a Bank. (c) The Agent shall maintain at its address referred to in Section 10.02 a copy of each Assignment and Acceptance delivered to and --------- accepted by it and a register for the recordation of the names and addresses - of the Banks and the Commitment of, and principal amount of the Borrowings owing to, each Bank from time to time (the "Register"). The entries in the -------- Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrower, the Agent, and the Banks may treat each Person whose name is recorded in the Register as a Bank hereunder for all purposes of the Loan Documents. The Register shall be available for inspection by the Borrower or any Bank at any reasonable time and from time to time upon reasonable prior notice. (d) Upon its receipt of an Assignment and Acceptance executed by an assigning Bank, together with any Note subject to such assignment, the Agent, if such Assignment and Acceptance has been completed and otherwise complies with Section 10.08(a), shall (I) accept such Assignment and Acceptance; (ii) record the information contained therein in the Register; and (iii) give prompt notice thereof to the Borrower. Simultaneously upon its receipt of such notice, the Borrower at its own expense, shall execute and deliver to the Agent in exchange for each surrendered Note a new Note to the order of such Assignee in an amount equal to the Commitment assumed by it pursuant to such Assignment and Acceptance and, if the assigning Bank has retained Commitments hereunder, new Notes to the order of the assigning Bank in an amount equal to the Commitments retained by it hereunder. The new Notes shall be in an aggregate principal amount equal to the aggregate principal amount of the surrendered Notes, shall be dated the effective date of such Assignment and Acceptance and shall otherwise be in substantially the form of Exhibit 2.02(c). Upon receipt by the Agent of each such new Note conforming - ---------------- to the requirements set forth in the preceding sentences, the Agent shall return to the Borrower each such surrendered Note marked to show that each such surrendered Note has been replaced, renewed, and extended by such new Note. (e) Each Bank may sell participations to one or more financial institutions in or to all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitments and the Notes held by it), and no such sale of a participation shall reduce such Bank's obligations to the Borrower hereunder. SECTION 10.09. Limitation on Agreements. (a) All agreements ------------------------ between the Borrower, the Agent, or any Bank, whether now existing or hereafter arising and whether written or oral, are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of demand being made in respect of an amount due under any Loan Document or otherwise, shall the amount paid, or agreed to be paid, to the Agent or any Bank for the use, forbearance, or detention of the money to be loaned under this Agreement, the Notes or any other Loan Document or otherwise or for the payment or performance of any covenant or obligation contained herein or in any other Loan Document exceed the Highest Lawful Rate. If, as a result of any circumstance whatsoever, fulfillment of or compliance with any provision hereof or of any of such documents at the time performance of such provision shall be due or at any other time shall involve exceeding the amount permitted to be contracted for, taken, reserved, charged or received by the Agent or any Bank under applicable usury law, then, ipso facto, the obligation to be ---- ----- fulfilled or complied with shall be reduced to the limit prescribed by such applicable usury law, and if, from any such circumstance, the Agent or any Bank shall ever receive interest or anything which might be deemed interest under applicable law which would exceed the Highest Lawful Rate, such amount which would be excessive interest shall be applied to the reduction of the principal amount owing on account of such Bank's Note or the amounts owing on other obligations of the Borrower to the Agent or any Bank under any Loan Document and not to the payment of interest, or if such excessive interest exceeds the unpaid principal balance of any Note and the amounts owing on other obligations of the Borrower to the Agent or any Bank under any Loan Document, as the case may be, such excess shall be refunded to the Borrower. All sums paid or agreed to be paid to the Agent or any Bank for the use, forbearance, or detention of the indebtedness of the Borrower to the Agent or any Bank shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full term of such indebtedness until payment in full of the principal (including the period of any renewal or extension thereof) so that the interest on account of such indebtedness shall not exceed the Highest Lawful Rate. Notwithstanding anything to the contrary contained in any Loan Document, it is understood and agreed that if at any time the rate of interest which accrues on the outstanding principal balance of any Note shall exceed the Highest Lawful Rate, the rate of interest which accrues on the outstanding principal balance of any Note shall be limited to the Highest Lawful Rate, but any subsequent reductions in the rate of interest which accrues on the outstanding principal balance of any Note shall not reduce the rate of interest which accrues on the outstanding principal balance of any Note below the Highest Lawful Rate until the total amount of interest accrued on the outstanding principal balance of any Note equals the amount of interest which would have accrued if such interest rate had at all times been in effect. The terms and provisions of this Section 10.09 shall control and ------------- supersede every other provision of all Loan Documents. (b) The Banks and the Borrower agree that (i) if Article 1.04, Subtitle 1, Title 79 of the Revised Civil Statutes of Texas, 1925, as amended, is applicable to the determination of the Highest Lawful Rate, the indicated rate ceiling computed from time to time pursuant to Section (a) of such Article shall apply, provided that, to the extent permitted by such Article, -------- the Agent may from time to time by notice to the Borrower revise the election of such interest rate ceiling as such ceiling affects the then current or future balances of the Advances; and (ii) the provisions of Chapter 15 of Subtitle 3, Title 79, of the Revised Civil Statutes of Texas, 1925, as amended, shall not apply to this Agreement or any Note. SECTION 10.10. Severability. In case any one or more of the ------------ provisions contained in any Loan Document to which the Borrower is a party or in any instrument contemplated thereby, or any application thereof, shall be invalid, illegal, or unenforceable in any respect, the validity, legality, and enforceability of the remaining provisions contained therein, and any other application thereof, shall not in any way be affected or impaired thereby. Each covenant contained in any Loan Document to which the Borrower is a party shall be construed (absent an express contrary provision herein) as being independent of each other covenant contained therein, and compliance with any one covenant shall not (absent such an express contrary provision) be deemed to excuse compliance with one or more other covenants. SECTION 10.11. Governing Law. This Agreement and the Notes ------------- shall be governed by, and construed in accordance with, the laws of the State of Texas. SECTION 10.12. SUBMISSION TO JURISDICTION; WAIVERS. THE ------------------------------------- BORROWER IRREVOCABLY AND UNCONDITIONALLY: (a) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF TEXAS, THE COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF TEXAS, AND APPELLATE COURTS FROM ANY THEREOF; (b) WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT IN HARRIS COUNTY, TEXAS, OR THAT SUCH PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME; (c) AGREES THAT SERVICE OF PROCESS IN ANY SUCH LEGAL ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING OF A COPY THEREOF (BY REGISTERED OR CERTIFIED MAIL OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL, POSTAGE PREPAID) TO ITS ADDRESS SET FORTH IN SECTION 10.02 HEREOF OR TO SUCH OTHER ADDRESS OF WHICH THE OTHER PARTIES HERETO SHALL HAVE BEEN NOTIFIED IN WRITING BY THE BORROWER PURSUANT TO SECTION 10.02. SECTION 10.13. Execution in Counterparts. This Agreement may be ------------------------- executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. SECTION 10.14. Liability of Borrower. With respect to the --------------------- incurrence of certain liabilities hereunder and the making of certain agreements by the Borrower as herein stated, such incurrence of liabilities and such agreements shall be binding upon the Borrower only as a trust formed under the Texas Real Estate Investment Trust Act pursuant to that certain Restated Declaration of Trust dated March 23, 1988 (as it is amended from time to time), and only upon the assets of such Borrower. No Trust Manager or officer or holder of any beneficial interest in the Borrower shall have any personal liability for the payment of any indebtedness or other liabilities incurred by the Borrower hereunder or for the performance of any agreements made by the Borrower hereunder, nor for any other act, omission or obligation incurred by the Borrower or the Trust Managers except, in the case of a Trust Manager, any liability arising from his own willful misfeasance or malfeasance or gross negligence. SECTION 10.15. FINAL AGREEMENT. THIS WRITTEN AGREEMENT, THE --------------- GUARANTY, THE NOTES AND THE LETTERS OF CREDIT REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. WEINGARTEN REALTY INVESTORS, Borrower By: /S/ BILL ROBERTSON Bill Robertson Title: Executive VP/CFO ______________________________ Commitment: $60,000,000 TEXAS COMMERCE BANK - ---------- NATIONAL ASSOCIATION, in its individual capacity and as Agent By: /S/ CATERHINE A. ARNOLD Catherine A. Arnold Title: Managing Director and Senior ______________________________ Vice President ______________________________ Address: NATIONSBANK OF TEXAS, N.A., as - ------- 700 Louisiana, 5th Floor Documentary Agent, and as a Bank Houston, Texas 77002 Attention: Real Estate Loan Administration By: /S/ CYNTHIA SANFORD Cynthia Sanford Commitment: $60,000,000 Title: Senior Vice President - --------- ______________________________ Address: COMMERZBANK, A.G., as Co-Agent, and - ------- as a Bank 1230 Peachtree Street, N.E. Suite 3500 Atlanta, Georgia 30309 By: /S/ A. BREMER /S/ D. SUTTLES A. Bremer D. Suttles Title: Sen. Vice President Vice President Commitment: $40,000,000 - ---------- Address: SIGNET BANK - ------- 7799 Leesburg Pike 4th Floor Falls Church, Virginia 22043 By: /S/ ERIK LAWRENCE Erik Lawrence Commitment: $ 25,000,000 Title: Senior Vice President - ----------- Address: THE SUMITOMO BANK, LIMITED - ------- 233 South Wacker Suite 4800 Chicago, Illinois 60606 Attention: Tom Batterham By: Title: Joint General Manager Commitment: $15,000,000 - ---------- EX-10.43 6 MASTER PROMISSORY NOTE (this "Note") $20,000,000.00 December 30, 1996 FOR VALUE RECEIVED, the undersigned, WEINGARTEN REALTY INVESTORS ("Company") promises to pay to the order of TEXAS COMMERCE BANK NATIONAL ASSOCIATION ("Bank"), on or before December 15, 1997 ("Final Maturity Date") at its offices located at 712 Main Street Houston, Texas 77002 in lawful money of the United States of America and in immediately available funds, the principal amount of each loan (a "Loan") shown in Bank's records to have been made by Bank and on the relevant maturity date as set forth in Bank's records. Each Loan shall also have its own date of maturity agreed by Company and Bank which will occur prior to the Final Maturity Date. The rate of interest on each Loan evidenced hereby from time to time shall be the interest rate which shall be determined for each Loan by agreement between Company and Bank but, in no event, shall exceed the maximum interest rate permitted under applicable law ("Highest Lawful Rate"). If Texas law determines the Highest Lawful Rate, Bank has elected the "indicated" (weekly) ceiling as defined in the Texas Credit Code or any successor statute. All past due amounts shall bear interest at a per annum interest rate equal to the Prime Rate plus one percent (1%). The term "Prime Rate" shall mean the prime rate as determined from time to time by Bank and thereafter entered in the minutes of Bank's Loan and Discount Committee, fluctuating upward-or downward automatically, without notice to Company on the business day of each such determination. THE PRIME RATE IS A REFERENCE RATE AND BANK MAY MAKE LOANS AT RATES OF INTEREST AT, ABOVE OR BELOW THE PRIME RATE. Interest on each Loan shall be: (I) computed on the unpaid principal amount of the Loan outstanding from the date of advance until paid; (ii) payable at maturity end thereafter on demand; and (iii) shall be calculated on the basis of a year of 360 days for the actual days elapsed. The total amount of interest (as defined under applicable law) contracted for, charged or collected under this Note will never exceed the Highest Lawful Rate. If Bank contracts for, charges or receives any excess interest, it will be deemed a mistake. Bank will automatically reform the contract or charge to conform to applicable law, and if excess interest has been received, Bank will either refund the excess or credit the excess on the unpaid principal amount of this Note. All amounts constituting interest will be spread throughout the full term of this Note in determining whether interest exceeds lawful amounts. Each of the following is an event of default ("Events of Default"): (a) Company shall fail to pay any amount of principal of or interest on this Note when due; (b) Company shall fail to pay when due any amount of principal or interest with respect to any obligation to Bank (other than this Note); or (c) Company shall fall to pay any amount relating to any other recourse indebtedness in excess of $10,000,000 for borrowedmoney or other pecuniary obligation (including any contingent such obligation) or an event or condition shall occur or exist which gives the holder of any such indebtedness or obligation the right or option to accelerate the maturity thereof. (d) Company shall commence any bankruptcy, reorganization or similar case or proceeding r elating to it or its property under the law of any jurisdiction, or a trustee or receiver shall be appointed for itself or any substantial part of is property; (e) any involuntary bankruptcy, reorganization or similar case or proceeding under the law of any jurisdiction shall have been commenced against Company or any substantial part of its property and such case or proceeding shell not have been dismissed within 60 days, or against Company shall have consented to such case or proceeding; or (f) Company shall admit in writing its inability to pay its debts as they become due. Upon the happening of any Event of Default specified in paragraphs (d),(e) or (f) above, automatically the Loans evidenced by this Note (with accrued interest thereon) shall immediately become due and payable, and upon the happening of an Event of Default specified in paragraphs (a), (b) or (c) above, Bank may, by notice to Company, declare the Loans evidenced by this Note (with accrued interest thereon) to be due and payable, whereupon the same shall immediately become due and payable. Except as expressly provided above, presentment, demand, protest, notice of intent to accelerate, acceleration and all other notices of any kind are hereby expressly waived. The Company hereby agrees to pay on demand, in addition to unpaid principal and interest, all Bank's costs and expenses incurred in attempting or effecting collection hereunder, including the reasonable fees and expense of counsel (which may include, to the extent permitted by applicable law, allocated costs of in-house counsel), whether or not suit is instituted. This Note is executed and delivered by Company to evidence Loans which may be made by Bank to Company not to exceed $20,000,000.00. COMPANY UNDERSTANDS THAT BANK HAS NO OBLIGATION TO MAKE ANY LOAN TO COMPANY UNDER THIS NOTE. All Loans evidenced by this Note are and will be for business and commercial purposes and no Loan will be used for the purpose of purchasing or carrying any margin stock as that term is defined in Regulation U of the Board of Governors of the Federal Reverse System (the "Board"). Chapter 15 of the Texas Credit Code does not apply to this Note or to any Loan evidenced by this Note. This Note shall be governed by the laws of the Slate of Texas and the laws of the United States as applicable. Bank shall, and is hereby authorized by Company, to record in its records the date, amount, interest rate and due date of each Loan as wall as the date and amount of each payment by the undersigned in respect thereof. Payments may be applied to accrued interest or principal in whatever order Bank chooses. Loans evidenced by this Note may not be prepaid. In the event any such prepayment occurs, Company shall indemnify Bank against any loss, liability, damage, cost or expense which Bank may sustain or incur as a consequence thereof, including with out limitation any loss, liability, damage, cost or expense sustained or incurred in liquidating or employing deposits from third parties acquired to effect or maintain such Loan or any part thereof. Bank shall provide to Company a written statement explaining the amount of any such loss or expense, which statement shall be conclusive absent manifest error. No waiver of any default shall be deemed to be a waiver of any other default. No failure to exercise or delay in exercising any right or power under this Note shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power preclude any further or other exercise thereof or the exercise of any other right or power. No amendment, modification or waiver of this Note shall be effective unless the same is in writing and signed by the person against whom such amendment, modification or waiver is sought to be enforced. No notice to or demand on any person shall entitle any person to any other or further notice or demand in similar or other circumstances. This Note shall be binding upon the successors and assigns of Company and inure to the benefit of Bank, its successors, endorsees and assigns (furthermore, Bank may assign or pledge this Note or any interest therein to any Federal Reserve Bank). If any term or provision of this Note shall be held invalid, illegal or unenforceable the validity of all other terms and provisions will not be effected. This Note renewals and extends that certain Master Promissory Note dated June 25,1996, in the original principal sum of $15,000,000.00, executed by the Company, payable to the order of the Bank. THIS NOTE REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. WEINGARTEN REALTY INVESTORS By:_______________________________________ Name:_______________________________________ Title:_______________________________________ Weingarten Realty Investors ("the 'trust") is an unincorporated trust organized under the Texas Real Estate Investment Trust Act. Neither the shareholders of the trust, nor its trust managers, officers, employees or other agents are personally, corporately or individually Liable for any debt act, omission or obligation of the trust, and all persons having claims of any kind against the trust must look solely to the property of the trust for the enforcement of the enforcement of their rights. (The Bank's signature is provided as its acknowledgment of the above as the final written agreement between the parties.) TEXAS COMMERCE BANK NATIONAL ASSOCIATION By: _______________________________________ Name: _______________________________________ Title: _______________________________________ EX-11.1 7 EXHIBIT 11.1
WEINGARTEN REALTY INVESTORS COMPUTATION OF NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1996 1995 1994 ------- ------- ------- SIMPLE EARNINGS PER SHARE: Weighted Average Common Shares Outstanding 26,555 26,464 26,190 ======= ======= ======= Simple Earnings Per Share $ 2.03 $ 1.69 $ 1.67 ======= ======= ======= PRIMARY EARNINGS PER SHARE (NOTE A): Weighted Average Common Shares Outstanding 26,555 26,464 26,190 Shares Issuable from Assumed Conversion of Common Share Options Granted and Outstanding 43 29 55 ------- ------- ------- Weighted Average Common Shares Outstanding, as Adjusted 26,598 26,493 26,245 ======= ======= ======= Primary Earnings Per Share $ 2.03 $ 1.69 $ 1.67 ======= ======= ======= FULLY DILUTED EARNINGS PER SHARE (NOTE A): Weighted Average Common Shares Outstanding 26,555 26,464 26,190 Shares Issuable from Assumed Conversion of Common Share Options Granted and Outstanding 91 52 55 ------- ------- ------- Weighted Average Common Shares Outstanding, as Adjusted 26,646 26,516 26,245 ======= ======= ======= Fully Diluted Earnings Per Share $ 2.02 $ 1.69 $ 1.67 ======= ======= ======= EARNINGS FOR SIMPLE, PRIMARY AND FULLY DILUTED COMPUTATION: Earnings $53,938 $44,802 $43,788 ======= ======= =======
Note A: This calculation is submitted in accordance with Regulation S-K item 601(b)(11) although not required by footnote 2 to paragraph 14 of APB Opinion No. 15 because it results in dilution of less than 3%. EX-12.1 8 EXHIBIT 12.1
WEINGARTEN REALTY INVESTORS COMPUTATION OF FIXED CHARGES RATIOS The following table sets forth the Company's consolidated ratios of earnings to fixed charges and of funds from operations before interest expense to fixed charges for the periods shown: YEARS ENDED DECEMBER 31, 1996 1995 1994 1993 1992 ----- ----- ----- ----- ----- Ratio of Earnings to Fixed Charges 3.17x 3.05x 4.16x 3.94x 1.89x Ratio of Funds from Operations Before Interest Expense to Fixed Charges 4.28x 4.48x 6.10x 5.83x 2.82x
The ratios of earnings to fixed charges were computed by dividing earnings by fixed charges. The ratios of funds from operations before interest expense to fixed charges were computed by dividing funds from operations before interest expense by fixed charges. For these purposes, earnings is defined as income before extraordinary charge plus fixed charges (excluding interest costs capitalized). Funds from operations before interest expense is defined as net income plus depreciation and amortization of real estate assets and extraordinary charge, less gain (loss) on sales of property and securities plus interest on indebtedness. Fixed charges consist of interest on indebtedness (including interest costs capitalized), amortization of debt costs and the portion of rent expense representing an interest factor. Note: In accordance with the newly-adopted NAREIT definition of funds from operations, debt cost amortization is not included beginning with the year ended December 31, 1995. EX-21.1 9 EXHIBIT 21.1
WEINGARTEN REALTY INVESTORS LIST OF SUBSIDIARIES OF THE REGISTRANT STATE OF INCORPORATION ---------------------- SUBSIDIARY - ------------------------------------ Weingarten Realty Management Company Texas Weingarten/Nostat, Inc. Texas Weingarten/Lufkin, Inc. Texas WRI/Post Oak, Inc. Texas Weingarten Properties Trust N/A Main/O.S.T., Ltd. N/A Phelan Boulevard Venture N/A Northwest Hollister Venture N/A WRI/Interpak Venture N/A East Town Lake Charles Co. N/A Alabama-Shepherd Shopping Center N/A Sheldon Center, Ltd. N/A Jacinto City, Ltd. N/A Weingarten/Finger Venture N/A Rosenberg, Ltd. N/A Eastex Venture N/A GJR/Weingarten River Pointe Venture N/A GJR/Weingarten Little York Venture N/A WRI/Palans Joint Venture N/A South Loop Long Wayside Company N/A Lisbon St. Shopping Trust N/A WRI/Crosby N/A WRI/Dickinson N/A Market at Town Center-Sugarland N/A
EX-23.1 10 EXHIBIT 23.1 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statements No. 33-20964, No. 33-24364, No. 33-41604, No. 33-52473, No. 33-54402 and No. 33-54404 on Form S-8, in Post-Effective Amendment No. 1 to Registration Statement No. 33-25581 on Form S-8 and in Registration Statements No. 33-57659, No. 33-54529 and No. 333-12179 on Form S-3 of our report dated February 25, 1997 appearing in this Annual Report on Form 10-K of Weingarten Realty Investors for the year ended December 31, 1996. We also consent to the reference to us under the heading "Experts" in the Prospectus which is part of such Registration Statements on Form S-3. DELOITTE & TOUCHE LLP Houston, Texas March 10, 1997 EX-27.1 11
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM WEINGARTEN REALTY INVESTORS' ANNUAL REPORT FOR THE PERIOD ENDED DECEMBER 31, 1996. 1,000 YEAR DEC-31-1996 DEC-31-1996 169 13,806 14,400 1,236 0 0 970,418 (233,514) 831,097 0 0 797 0 0 400,201 831,097 0 151,123 0 41,895 33,769 0 21,975 53,938 0 53,938 0 0 0 53,938 2.03 0
EX-99.1 12 EXHIBIT 1.01 - A Exhibit 1.01-A AMENDED AND RESTATED GUARANTY ----------------------------- THIS AMENDED AND RESTATED GUARANTY is dated as of the 21st day of November, 1996, by Weingarten/Lufkin, Inc., Weingarten Nostat Inc. (formerly known as Weingarten/Arkansas, Inc.), Weingarten Realty Management Company, and WRI/Post Oak, Inc., each a Texas corporation (each of the foregoing, a "Guarantor", and collectively, the "Guarantors"), to TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a national banking association as Agent (the "Agent"), under the Credit Agreement (as defined below) for itself and for the Banks which are parties to the Credit Agreement. W I T N E S S E T H: - - - - - - - - - - WHEREAS, Weingarten Realty Investors, a Texas real estate investment trust (the "Trust"), Agent and the certain of the Banks entered into that certain Credit Agreement, dated as of November 22, 1994 (the " Original Credit Agreement"), which Credit Agreement was guaranteed by each Guarantor under a Guaranty dated as of even date therewith (the "Original Guaranty"); WHEREAS, the Original Credit Agreement has been amended and restated as of even date herewith, and each Guarantor has agreed to restate its guaranty of the obligations of the Trust under the Amended and Restated Credit Agreement (as amended from time to time, the "Credit Agreement") dated as of even date herewitih, by and among the Trust, the Agent, and the Banks which are parties thereto, including certain new Banks which were not parties to the Original Credit Agreement; WHEREAS, each Guarantor is a wholly-owned subsidiary of the Trust and will receive substantial benefits from the Credit Agreement, and in consideration therefor, the Guarantor has agreed to guarantee the obligations of the Trust under, and performance by the Trust of its cov-enants, agreements, representations and warranties pursuant to the terms of, the Credit Agreement and the promissory notes issued to the Banks pursuant thereto (the "Notes") and to make and perform the covenants and agree-ments set forth herein; NOW, THEREFORE, as an inducement for the Banks to execute and deliver the Credit Agreement and for other valu-able consideration, including, but not limited to, the direct and indirect benefits flowing to each Guarantor as a result of the execution and delivery of the Credit Agreement, each Guar-antor agrees as follows: Each Guarantor hereby absolutely, uncondition-ally and irrevocably guarantees to the Banks, jointly and severally with all other Guarantors, the full perfor-mance and observance of all of the Trust's covenants, agreements, representations and warranties (collectively the "Performance Obligations") set forth in the Credit Agreement, the Notes, any Interest Rate Agreement and all other Loan Documents. Each Guarantor hereby absolutely unconditionally and irrevocably guarantees payment to the Banks of all indebtedness and obligations due to the Banks, by acceleration or otherwise, of the Trust arising under the Credit Agreement, the Notes, the Interest Rate Agreements and all other Loan Documents, whether such indebtedness is liquidated or unliquidated, fixed or contingent, now owing or hereafter arising (collectively the "Payment Obligations" and together with the Performance Obligations, herein referred to as the "Obligations"). This is a guaranty of payment and not of collection. The Agent, on behalf of and at the instruction of the Banks may enforce such guaranty, or any part thereof, against any Guarantor without first exercising rights against the Trust or any other Guarantor. Each Guarantor hereby waives any rights to require the Agent or the Banks to pursue the Trust before enforcing the obligations of each Guarantor hereunder. Each Guarantor guarantees that the Obligations will be paid strictly in accordance with the terms of the Credit Agreement, the Notes, any Interest Rate Agreements and all other Loan Documents and any other agreement or instrument executed in connection therewith, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of the Banks with respect thereto. The liability of each Guarantor under this Guaranty shall be absolute and unconditional irrespective of: (a) any lack of validity or enforceability of or defect or deficiency in the Credit Agreement, the Notes, any Interest Rate Agreement, any of the other Loan Documents or any other agreement or instrument executed in connection with or pursuant to any such Loan Document; (b) any change in the time, manner, terms or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to departure from the Credit Agreement, the Notes, any Interest Rate Agreement, any of the other Loan Documents, or any other agreement or instrument executed in connection with or pursuant to any Loan Document; (c) any sale, exchange, release or non-perfection of any property standing as security for the liabilities hereby guaranteed or any liabilities incurred directly or indirectly hereunder or any setoff against any of said liabilities, or any release or amendment or waiver of or consent to departure from any other guaranty, for all or any of the Obligations; or (d) any other circumstance which might otherwise constitute a defense available to, or a discharge of, the Trust or any other Person that is a party to any Loan Document (including any other guarantors) in respect of the Obligations. This Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Obligations is rescinded or must otherwise be returned by any Bank upon the insolvency, bankruptcy or reorganization of the Trust, or any Guarantor or otherwise, all as though such payment had not been made. The enforceability of the obligations of each Guarantor under this Guaranty shall not be affected by the amount of credit extended to the Trust, any repayment by the Trust to the Banks (other than the full and final payment of all of the Obligations), allocation by the Banks of any repayment, any compromise or discharge of the Obligations, any application, release or substitution of collateral or other security therefor, release of any Guarantor, surety or other Person obligated in connection with the Loan Documents, or any further advances to the Trust, or for any other reason. This is a continuing Guaranty, and all extensions of credit and financial accommodations heretofore, concurrently herewith or hereafter made by the Banks to the Trust and all indebtedness of the Trust now owned or hereafter acquired by the Banks in connection with the transactions contemplated under the Credit Agreement shall be conclusively presumed to have been made or acquired in acceptance hereof. Each Guarantor hereby waives (i) notice of acceptance of this Guaranty and of presentment, demand and protest; (ii) notice of any default hereunder or under the Credit Agreement, the Notes, the Interest Rate Agreements or any other Loan Document, and of all indulgences; (iii) demand for observance or perfor-mance of, or enforcement of, any terms or provisions of this Guaranty or the Credit Agreement, the Notes, the Interest Rate Agreements or any other Loan Document; (iv) notice of intent to accelerate and notice of accel-eration; and (v) any right of subrogation under this Guaranty, until payment in full of the Obligations. Should the Agent or the Banks seek to enforce the obligations of any Guarantor hereunder by action in any court, each Guarantor waives any necessity, substantive or procedural, that a judgment previously be rendered against the Trust, any other Guarantor or any other Person, or that any action be brought against the Trust, any other Guarantor or any other Person, or that the Trust, any other Guarantor or any other Person should be joined in such cause. Such waiver shall be without prejudice to the Banks at their option to proceed against the Trust, any other Guarantor or any other Person, whether by separate action or by joinder. The obligations of each Guarantor hereunder are several from the Trust or any other Person, and are primary obligations concerning which each Guarantor is a principal obligor. Each Guarantor agrees that this Guaranty shall not be discharged except by complete performance of the obligations of the Trust under the Notes, the Credit Agreement, the Interest Rate Agreements and any other Loan Document to which the Trust is a party and the obligations of the Guarantor hereunder. The obligations of the Guarantor hereunder shall not be affected in any way by any receivership, insolvency, bankruptcy or other proceedings affecting the Trust or any of the Trust's assets, or the release or discharge of the Trust from the performance of any obligation contained in any promissory note or other instrument issued in connection with, evidencing or securing any indebtedness guaranteed by this instrument, whether occurring by reason of law or any other cause, whether similar or dissimilar to the foregoing. Each Guarantor hereby represents and warrants as follows: (a) Each Guarantor has received, or will receive, direct or indirect benefit from the making of this Guaranty. (b) No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority is required for the due execution, delivery and performance by each Guarantor of this Guaranty and the other documents and instruments executed in connection therewith, all of which have been duly obtained or made and are in full force and effect. (c) This Guaranty is, and all other documents and instruments executed in connection therewith, when delivered will be, legal, valid and binding obligations of each Guarantor, enforceable against such Guarantor in accordance with their respective terms, except as such enforceability may be (i) limited by the effect of any applicable Debtor Laws and (ii) subject to the effect of general principles of equity. (d) Each Guarantor's execution, delivery and performance of this Guaranty does not require the consent or approval of any other Person. No amendment or waiver of any provision of this Guaranty nor consent to any departure by any Guarantor therefrom shall in any event be effective unless the same shall be in writing and signed by the Banks, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. All notices and other communications provided for hereunder shall be in writing (including telex or facsimile communication) and shall be effective when actually delivered, or in the case of telex notice, when sent, answerback received, or in the case of telefacsimile transmission, when received and telephonically confirmed, addressed as follows: if to any Guarantor, at its address set forth on the signature page hereof, with a copy to Dow, Cogburn & Friedman, P.C., 9 Greenway Plaza, Suite 2300, Houston, Texas 77046, Attention: Mr. Melvin Dow; if to the Agent or any Bank, at the address for the Agent or such Bank, as the case may be, set forth in the Credit Agreement, or, as to each party, at such other address as shall be designated by such party in a written notice to the other party. No failure on the part of the Agent or any Bank to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. Each Guarantor agrees to pay on demand all costs and expenses in connection with the preparation, execution, delivery, modification, waiver and amendment of this Guaranty and any of the documents or instruments evidencing the Obligations and any other agreements or documents delivered in connection with any of the Obligations, including, without limitation, the reasonable fees and out-of-pocket expenses of counsel for the Agent and each Bank with respect thereto and with respect to advising the Agent and each Bank as to its rights and responsibilities under this Guaranty and the other Loan Documents; provided that, fees of counsel for the Agent and the Banks for work performed in connection with the preparation, execution and delivery of this Guaranty and the other Loan Documents on the Closing Date and all other work described in this sentence performed on or prior to the Closing Date (together with routine post-closing matters, such as preparation and delivery of Closing packages), shall not exceed $_______. In the event of the occurrence of a Default, each Guarantor further agrees to pay on demand, all costs and expenses, if any (including reasonable counsel fees and expenses), in connection with the enforcement of this Guaranty (whether through negotiations, legal proceedings or otherwise) and the other Loan Documents. The agreements of each Guarantor contained in this Section 12 shall survive the payment of all other amounts owing hereunder or under any of the other obligations. Should any clause, sentence, paragraph, subsection or Section of this Guaranty be judicially declared to be invalid, unenforceable or void, such decision will not have the effect of invalidating or voiding the remainder of this Guaranty, and the parties hereto agree that the part or parts of this Guaranty so held to be invalid, unenforceable or void will be deemed to have been stricken herefrom and the remainder will have the same force and effectiveness as if such part or parts had never been included herein. This Guaranty is a continuing guaranty and shall (a) remain in full force and effect until payment in full of the Obligations and all other amounts payable under this Guaranty; (b) be binding upon each Guarantor, its successors and assigns; and (c) inure to the benefit of and be enforceable by the Agent and the Banks and their respective successors, transferees and assigns. Without limiting the generality of the foregoing clause (c), the Agent and the Banks may assign or otherwise transfer the Notes to any other Person in accordance with the terms and provisions set forth in Section 10.08 of the Credit Agreement, and such other Person shall thereupon become vested with all the rights and benefits in respect thereof granted to the Agent and the Banks herein or otherwise. Notwithstanding anything contained in any of the Loan Documents executed by each Guarantor to the contrary, the maximum aggregate liability of each Guarantor under this Guaranty shall be limited to the Maximum Guaranteed Amount (as hereinafter defined) determined with respect to such Guarantor as and when provided in the definition of Maximum Guaranteed Amount. "Adjusted Net Worth" means, with respect to any Guarantor, on the Closing ------------------ Date and on any date which payment by the Guarantor in respect of the Obligations is required to be made under the terms of this Guaranty (each such date a "Calculation Date"), the excess of (i) the amount of the "present fair saleable value" of the "assets" of such Guarantor as of such Calculation Date, over (ii) the amount of all "liabilities" (other than the Obligations) of such Guarantor, whether matured or unmatured, liquidated or unliquidated, absolute, fixed or contingent, as determined on such Calculation Date, as such quoted terms are determined in accordance with applicable laws governing fraudu-lent conveyances and transfers and determinations of the insolvency of debtors. "Maximum Guaranteed Amount" means, on any Calculation Date, the greater --------------------------- of (i) ninety-five percent (95%) of the Adjusted Net Worth of each Guarantor, on the Closing Date immediately after the consumma-tion of the transactions contemplated hereby or (ii) ninety-five percent (95%) of the Adjusted Net Worth of the Guarantor on such other Calculation Date. GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY, AND -------------- CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS. SUBMISSION TO JURISDICTION; WAIVERS. EACH GUARANTOR -------------------------------------- IRREVOCABLY AND UNCONDITIONALLY: (a) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF TEXAS, THE COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF TEXAS, AND APPELLATE COURTS FROM ANY THEREOF; (b) WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT IN HARRIS COUNTY, TEXAS OR THAT SUCH PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME; (c) AGREES THAT SERVICE OF PROCESS IN ANY SUCH LEGAL ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING OF A COPY THEREOF (BY REGISTERED OR CERTIFIED MAIL OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL POSTAGE PREPAID) TO THE ADDRESS SET FORTH IN SECTION 10. HEREOF OR AT SUCH OTHER ADDRESS OF WHICH THE OTHER PARTIES HERETO SHALL HAVE BEEN NOTIFIED IN WRITING PURSUANT TO SECTION 10. FINAL AGREEMENT. THIS WRITTEN GUARANTY, THE NOTES AND THE ---------------- CREDIT AGREEMENT REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. All terms used herein and not otherwise defined herein shall have the meanings assigned to them in the Credit Agreement. IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly executed by its respective officer thereunto duly authorized, as of the date first above written. GUARANTOR: WEINGARTEN/LUFKIN, INC. By: /S/ JOSEPH WILLIAM ROBERTSON, JR. Name: Joseph William Robertson, Jr. Title: Executive Vice President WEINGARTEN/NOSTAT INC. By: /S/ JOSEPH WILLIAM ROBERTSON, JR. Name: Joseph William Robertson, Jr. Title: Executive Vice President WEINGARTEN REALTY MANAGEMENT COMPANY By: /S/ JOSEPH WILLIAM ROBERTSON, JR. Name: Joseph William Robertson, Jr. Title: Executive Vice President WRI/POST OAK, INC. By: JOSEPH WILLIAM ROBERTSON, JR. Name: Joseph William Robertson, Jr. Title: Executive Vice President EX-99.2 13 EXHIBIT 1.01 - B EXHIBIT 1.01-B EXISTING LETTERS OF CREDIT
Number Effictive Date Expiration Date Amount - ------- -------------- --------------- -------------- I451606 03/23/95 07/15/97 $ 2,184,911.00 I454505 07/12/95 10/1797/ $ 3,863,934.25 I454507 07/12/95 10/17/97 $ 2,058,695.89 I461289 04/19/96 10/17/98 $ 6,821,882.19 $14,929,423.33 ==============
EX-99.3 14 EXHIBIT 1.01 - C EXHIBIT 1.01-C DEFINITIONS GOVERNING LETTERS OF CREDIT SUPPORTING BONDS -------------------------------------------------------- "Bonds" means, together, the Series 1995 Lafayette Bonds and the Series ----- 1995 Calcasieu Bonds. "Bond Support Letter of Credit" shall mean the Letter of Credit issued ------------------------------- pursuant to Sections 2.03(h)-(ii) and (i)-(ii) hereof in respect of the Shawnee Village Bonds substantially in the form of Exhibit C attached to the Seventh Amendment to the Prior Credit Agreement. "Calcasieu Indenture" means a Trust Indenture dated June 1, 1995 between --------------------- the Industrial Development Board of the Parish of Calcasieu, Louisiana, Inc., Texas Commerce Bank National Association, as Trustee, and First Union National Bank of Florida, as Credit Facility Trustee thereunder. "Credit Facility Trustee" shall have the meaning assigned to that term in ----------------------- each Special Letter of Credit. "Fixed Rate" shall have the meaning specified for such term in the ----------- Shawnee Village Indenture. "Fixed Rate Period" shall mean the period of time during which the ------------------- Shawnee Village Bonds bear interest at the Fixed Rate pursuant to the Shawnee Village Indenture. "Floating Rate" shall have the meaning assigned to such term in the -------------- Shawnee Village Indenture. "Full Drawing" shall have the meaning assigned to such term in the ------------- applicable Special Letter of Credit. "Full Drawing - Shawnee Village Bonds" shall have the meaning assigned to ------------------------------------ such term in the applicable Bond Support Letter of Credit. "Indenture" or Indentures" means either or both of the Lafayette --------- ---------- Indenture and the Calcasieu Indenture. -- "Interest Differential" means, with respect to the principal amount of ---------------------- any Liquidity Bank Bond and for the period commencing on the date that such Bond bears interest at the Liquidity Bank Rate and ending on a date thirty (30) days thereafter, the excess, if any, of (i) interest calculated on such Bond at the lesser of (x) the Prime Rate, or (y) the Highest Lawful Rate, over (ii)interest calculated on such Bond at the Liquidity Bank Rate. "Lafayette Indenture" means a Trust Indenture dated June 1, 1995 between --------------------- the Industrial Development Board of the Parish of Lafayette, Louisiana, Inc., Texas Commerce Bank National Association, as trustee, and First Union National Bank of Florida, as Credit Facility Trustee thereunder. "Liquidity Bank Bonds" means the particular Bond (or Bonds) of the Series -------------------- 1995 Lafayette Bonds or Series 1995 Calcasieu Bonds, as the case may be, which are actually required to be purchased due to the inability of the applicable Remarketing Agent (as that term is defined in the respective Indentures) to remarket such bonds, and as a result of the requirement that such bonds be delivered to the Tender Agent for the benefit of the Banks, pursuant to the provisions of the Indentures. "Long Rate Period" shall have the meaning assigned to such term in the ------------------ applicable Indenture in respect of the Series 1995 Lafayette Bonds or the Series 1995 Calcasieu Bonds. "Maximum Rate" means 12% per annum, with respect to the Series 1995 ------------- Lafayette Bonds and the Series 1995 Calcasieu Bonds, and 18% per annum, with respect to the Shawnee Village Bonds. "Partial Drawing" shall have the meaning assigned to such term in the ---------------- applicable Special Letter of Credit. "Partial Drawing - Shawnee Village Bonds" shall have the meaning assigned --------------------------------------- to such term, as applicable, in the Bond Support Letter of Credit. "Pledge and Security Agreement" shall mean, with respect to the Shawnee ------------------------------- Village Bonds, that certain Pledge and Security Agreement, dated as of December 1, 1984, by and among Shawnee Village Associates, L.P. (the "Pledgor" thereunder), Citibank, N.A. (the "Agent" thereunder), and First National Bank of Minneapolis (the "Bank" thereunder), as amended by the First Amendment to Pledge and Security Agreement dated as of April 19, 1996, by and among the Borrower, replacing the Pledgor thereunder, State Street Bank & Trust Company, N.A. (as "Tender Agent") and Texas Commerce Bank National Association, as Agent for the Banks thereunder (the "First Amendment"), the original agreement being in the form set forth in Exhibit A to the First Amendment and incorporated by reference therein, as amended by the First Amendment, whether or not such original agreement is otherwise deemed to be in effect as to the original parties thereto . "Prime Rate" means, as of a particular date, the prime rate most recently ---------- announced by the Agent and thereafter entered in the minutes of the Agent's Loan and Discount Committee. Without notice to the Borrower or any other Person, the Prime Rate shall change automatically from time to time as and in the amount by which such prime rate shall fluctuate, with each such change to be effective as of the date of each change in such prime rate. The Prime Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer. The Agent may, in its individual capacity, make commercial loans or other loans at rates of interest at, above or below the Prime Rate. "Purchase Drawing" shall have the meaning assigned to such term in the ----------------- applicable Special Letter of Credit. "Purchase Drawing - Shawnee Village Bonds" shall have the meaning --------------------------------------------- assigned to such term in the applicable Bond Support Letter of Credit. - "Purchase Price" shall have the meaning assigned to such term in Section --------------- 2.03(i)-(i) hereof. "Remarketing Agreements" means that certain Remarketing Agreement dated ----------------------- as of June 1, 1995, among the Borrower, the Industrial Development Board of the Parish of Lafayette, Louisiana, Inc. and Rauscher Pierce Refsnes, Inc. in connection with the Series 1995 Lafayette Bonds, and that certain Remarketing Agreement dated as of June 1, 1995, among the Borrower, the Industrial Development Board of the Parish of Calcasieu, Louisiana, Inc. and Rauscher Pierce Refsnes, Inc. in connection with the Series 1995 Calcasieu Bonds. "Series 1995 Calcasieu Bonds" means the $1,990,000 Industrial Development --------------------------- Board of the Parish of Calcasieu, Louisiana Inc.Adjustable Rate Demand Industrial Development Revenue Refunding Bonds (Weingarten Realty Investors Project) Series 1995, issued by the Industrial Development Board of the Parish of Calcasieu, Louisiana, Inc. "Series 1995 Lafayette Bonds" means the $3,735,000 Industrial Development --------------------------- Board of the Parish of Lafayette, Louisiana, Inc. Adjustable Rate Demand Industrial Development Revenue Refunding Bonds (Westwood Village Project) Series 1995, issued by the Industrial Development Board of the Parish of Lafayette, Louisiana, Inc. "Shawnee Village Bonds" means the Variable Rate Demand Industrial Revenue --------------------- Bonds, Series December 1, 1984 (Shawnee Village Associates Project) issued by the City of Shawnee, Kansas. "Shawnee Village Bank Bonds" means the particular Shawnee Village Bond ----------------------------- (or Shawnee Village Bonds) which are actually required (due to the inability of the Remarketing Agent (as that term is defined in the Shawnee Village Indenture) to remarket such bonds) to be delivered to the Shawnee Village Tender Agent, to hold such bonds as agent for the Banks (in their capacity as holders of a security interest in such Shawnee Village Bonds), pursuant to the provisions of the Shawnee Village Indenture and the Pledge and Security Agreement. "Shawnee Village Bank Rate" means at the option of the Borrower (A) the --------------------------- lesser of (x) the Prime Rate, or (y) the Maximum Rate, or (z) the Highest Lawful Rate, or (B) the rate otherwise available for an Advance under Section 2.06 of this Agreement, and subject to the requirements of Sections 2.02(a), 2.08 and 2.10, as if the principal amount of such Shawnee Village Bank Bonds bearing interest at such rate were deemed, solely for the purpose of determining interest thereon, to be an Advance under this Agreement. "Shawnee Village Indenture" means a Trust Indenture dated as of December -------------------------- 1, 1984, the parties to which are currently Boatmen's First National Bank of Kansas City, as Successor Trustee, and the City of Shawnee, Kansas, as supplemented by the Supplemental Trust Indenture, dated as of December 1, 1984, and as thereafter supplemented from time to time. "Shawnee Village Interest Differential" means, with respect to the ---------------------------------------- principal amount of any Shawnee Village Bond and for the period commencing on the date that such bond bears interest at the Shawnee Village Bank Rate and ending on a date thirty (30) days thereafter, the excess, if any, of (a) interest calculated on such Shawnee Village Bank Bonds at the applicable Shawnee Village Bank Rate, over (b) interest calculated on such Shawnee Village Bank Bond at the rate of interest which would otherwise be applicable in respect of such Bonds if such Bonds were not Shawnee Village Bank Bonds. "Shawnee Village Purchase Price" shall have the meaning assigned to such ------------------------------- term in Section 2.03(i)-(ii) hereof. "Shawnee Village Tender Agent" means a Person acting as a Tender Agent ------------------------------ under the Shawnee Village Indenture in connection with the Shawnee Village Bonds. "Short Rate" shall have the meaning assigned to such term in the ----------- applicable Indenture governing the Series 1995 Calcasieu Bonds or the Series -- 1995 Lafayette Bonds, as the case may be. "Short Rate Period" shall have the meaning assigned to such term in the ------------------- applicable Indenture governing the Series 1995 Calcasieu Bonds or the Series 1995 Lafayette Bonds, as the case may be. "Special Affiliate" shall mean, for purposes of the Shawnee Village ------------------ Bonds, with respect to any Person, any Person that directly or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, such first Person or is treated as a single employer with such first Person under Section 414(b) or (c) of the Internal Revenue Code, and the regulations thereunder. As used in this definition, the term "Person" means an individual, a corporation, a limited liability company, a partnership, an association, a trust or any other entity or organization, including a government or political subdivision or any agency or instrumentality thereof. "Special Letters of Credit" shall mean the Letters of Credit issued ---------------------------- pursuant to Sections 2.03(h)-(i) and (i)-(i) hereof, each substantially in the form of Exhibits A and B, attached to the Third Amendment to the Prior Credit Agreement, in respect of the Series 1995 Calcasieu Bonds and the Series 1995 Lafayette Bonds. "S.V. Trustee" shall mean Boatmen's First National Bank of Kansas City, -------------- or such other Trustee as shall be named as Trustee under the Shawnee Village Indenture. "Tender Agent" means initially, Texas Commerce Bank National Association, ------------ and thereafter shall have the meaning assigned to such term in the Indentures governing the Series 1995 Calcasieu Bonds and the Series 1995 Lafayette Bonds. "Weekly Rate" shall have the meaning assigned to such term in the ------------ applicable Indenture governing the Series 1995 Calcasieu Bonds or the Series - 1995 Lafayette Bonds, as the case may be. "Weekly Rate Period" shall have the meaning assigned to such term in the ------------------- applicable Indenture governing the Series 1995 Calcasieu Bonds or the Series 1995 Lafayette Bonds, as the case may be. EX-99.4 15 EXHIBIT 2.02(A) Exhibit 2.02(a) NOTICE OF BORROWING ------------------- The undersigned hereby certifies that he is the Chief Executive Officer or Chief Financial Officer of Weingarten Realty Investors, a Texas real estate investment trust (the "Borrower"), and that as such he is authorized to execute this Notice of Borrowing on behalf of the Borrower. With reference to that certain Amended and Restated Credit Agreement dated November __, 1996 (as the same may be amended, modified, increased, supplemented and/or restated from time to time, the "Credit Agreement") entered into by and among the Borrower, TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a national banking association and each of the other banks to become a party thereto in accordance with the terms and provisions thereof (collectively the "Banks") and TEXAS COMMERCE BANK NATIONAL ASSOCIATION, as Agent (the "Agent"), NATIONSBANK OF TEXAS, N.A., as Documentary Agent and COMMERZBANK, A.G., as Co-Agent, the undersigned further certifies, represents and warrants on behalf of the Borrower that to his best knowledge and belief after reasonable and due investigation and review, all of the following statements are true and correct (each capitalized term used herein having the same meaning given to it in the Credit Agreement unless otherwise specified): Borrower requests that each Bank advance to the Borrower its Pro Rata Percentage of the aggregate sum of $________ by no later than ________, 19__. Immediately following such Advances, the aggregate outstanding balance of Advances shall equal $________. Borrower requests that the ratable principal amount for each Bank of the Advances consist of Effective Federal Funds Rate Advances and/or LIBOR Rate Advances as follows: Note: Borrower need only complete the line item labeled "Total". (i) The principal amount of Advances consisting of LIBOR Rate Advances for which the initial Interest Period shall be seven (7) days, if any, requested to be made by each Bank is as follows: _________________ $______________ _________________ $______________ Total $______________ (ii) The principal amount of Advances consisting of LIBOR Rate Advances for which the initial Interest Period shall be one month, if any, --------- requested to be made by each Bank is as follows: _________________ $______________ _________________ $______________ _________________ $______________ _________________ $______________ Total $______________ (iii) The principal amount of Advances consisting of LIBOR Rate Advances for which the initial Interest Period shall be two months, if any, ---------- requested to be made by each Bank is as follows: _________________ $______________ _________________ $______________ _________________ $______________ _________________ $______________ Total $______________ (iv) The principal amount of Advances consisting of Effective Federal Funds Rate Advances, if any, requested to be made by each Bank is as follows: _________________ $______________ _________________ $______________ _________________ $______________ _________________ $______________ Total $______________ (v) The principal amount of Advances consisting of LIBOR Rate Advances for which the initial Interest Period shall be three months, if any, ------------ requested to be made by each Bank is as follows: _________________ $______________ _________________ $______________ _________________ $______________ _________________ $______________ Total $______________ (a) The representations and warranties contained in Article V of the Credit Agreement are true and correct in all material respects on and as of the date hereof, before and after giving effect to such Borrowing, and to the application of the proceeds therefrom, as though made on and as of this date. (b) No event has occurred or is continuing, or would result from such Borrowing or from the application of the proceeds therefrom, which constitutes (or would constitute) a Default or an Event of Default. EXECUTED AND DELIVERED this ___ day of ________, 19__. WEINGARTEN REALTY INVESTORS By: Name: Title: EX-99.5 16 EXHIBIT 2.02(C) Exhibit 2.02(c) WEINGARTEN REALTY INVESTORS Promissory Note --------------- $_____________________ November __, 1996 FOR VALUE RECEIVED, the undersigned, Weingarten Realty Investors, a Texas real estate investment trust, hereby promises to pay to the order of ______________________________________________ (the "Bank") the principal sum of _______________________________________________ DOLLARS ($______________) or the aggregate principal amount of Advances made pursuant to the Credit Agreement hereinafter mentioned and outstanding as of the maturity hereof, whether by acceleration or otherwise, whichever may be the lesser, on or before the Termination Date, together with interest on any and all amounts remaining unpaid hereon from time to time from the date hereof until maturity, payable as described in the Credit Agreement, and at maturity, in the manner and at the rates per annum as set forth in the Amended and Restated Credit Agreement dated as of even date herewith, between the undersigned, the Bank in its own capacity and as Agent, and the other banks which are party thereto, as amended from time to time (the "Credit Agreement"). Capitalized terms used but not otherwise defined herein shall have the same respective meanings ascribed to them as in the Credit Agreement. If any payment of principal or interest on this Note shall become due on a day which is not a Business Day, such payment shall be made on the next succeeding business day, and such extension of time shall in such case be considered in computing interest in connection with such payment. Payments of both principal and interest are to be made in immediately available funds at the office of the Agent, 712 Main Street, Houston, Texas, or such other place as the holder shall designate in writing to the maker. If default is made in the payment of this Note and it is placed in the hands of an attorney for collection, or collected through bankruptcy proceedings, or if suit is brought on this Note, the maker agrees to pay reasonable attorneys' fees in addition to all other amounts owing hereunder. This Note is the Note provided for in, and is entitled to the benefits of, the Credit Agreement, which, among other things, contains provisions for acceleration of the maturity hereof upon the happening of certain stated events, for prepayments of principal hereof prior to the maturity hereof upon terms and conditions therein specified, for conversion of the Revolving Credit Loan to a Term Loan on the Conversion Date and, thereafter, for scheduled payments of principal of and interest on this Note in the manner and at the times and under the terms and conditions of the Credit Agreement, and to the effect that no provision of the Credit Agreement or this Note shall require the payment or permit the collection of interest in excess of the Highest Lawful Rate. It is contemplated that by reason of prepayments hereon there may be times when no indebtedness is owing hereunder; but notwithstanding such occurrences this Note shall remain valid and shall be in full force and effect as to Advances made pursuant to the Credit Agreement subsequent to each such occurrence. Except as expressly provided in the Credit Agreement, the maker and any and all endorsers, guarantors and sureties severally waive grace, notice of intent to accelerate, notice of acceleration, demand, presentment for payment, notice of dishonor or default, protest and notice of protest and diligence in collecting and bringing of suit against any party hereto, and agree to all renewals, extensions or partial payments hereon and to any release or substitution of security herefor, in whole or in part, with or without notice, before or after maturity. With respect to the incurrence of certain liabilities hereunder and the making of certain agreements by the Borrower as herein stated, such incurrence of liabilities and such agreements shall be binding upon the Borrower only as a trust formed under the Texas Real Estate Investment Trust Act pursuant to that certain Restated Declaration of Trust dated March 23, 1988, and only upon the assets of such Borrower. No Trust Manager or officer or other holder of any beneficial interest in the Borrower shall have any personal liability for the payment of any indebtedness or other liabilities incurred by the Borrower hereunder or for the performance of any agreements made by the Borrower hereunder, nor for any other act, omission or obligation incurred by the Borrower or by the Trust Managers except, in the case of a Trust Manager, any liability arising from his own wilful misfeasance or malfeasance or negligence. WEINGARTEN REALTY INVESTORS By: /S/ JOSEPH WILLIAM ROBERTSON, JR. Name: Joseph William Robertson, Jr. Title: Executive Vice President EX-99.6 17 EXHIBIT 2.03 Exhibit 2.03 LETTER OF CREDIT REQUEST ------------------------ The undersigned hereby certifies that he is the Chief Executive Officer or Chief Financial Officer of Weingarten Realty Investors, a Texas real estate investment trust (the "Borrower"), and that as such he is authorized to execute this Letter of Credit Request on behalf of the Borrower. With reference to that certain Amended and Restated Credit Agreement dated November __, 1996 (as the same may be amended, modified, increased, supplemented and/or restated from time to time, the "Credit Agreement") entered into by and among the Borrower, TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a national banking association and each of the other banks to become a party thereto in accordance with the terms and provisions thereof (collectively the "Banks") and TEXAS COMMERCE BANK NATIONAL ASSOCIATION, as Agent (the "Agent"), NATIONSBANK OF TEXAS, N.A., as Documentary Agent and COMMERZBANK, A.G., as Co-Agent, the undersigned further certifies, represents and warrants on behalf of the Borrower that to his best knowledge and belief after reasonable and due investigation and review, all of the following statements are true and correct (each capitalized term used herein having the same meaning given to it in the Credit Agreement unless otherwise specified): Borrower requests the issuance of a Letter of Credit under the Credit Agreement, in the face amount of $___________________. Immediately following the issuance of such Letter of Credit the aggregate outstanding face amount of Letters of Credit issued and outstanding shall equal $________. Date of issue requested; ____________, 19__; --------------------------------------------------- for the benefit of _______________; --------------------------------------- in the amount of $________________; --------------------------------------- having an expiry date of _____________, 19__; and which is --------------------------------------------------------------- subject to the conditions set forth in the Letter of Credit -------------------------------------------------------------------- Application attached hereto. -------------------------- The Borrower hereby further certifies that: (a) on the date hereof all applicable conditions to the --- --------------------------------------------------- issuance of the proposed Letter of Credit set forth in Sections 2.03, 4.01 and --------------------------------------------------------------------------- 4.02 of the Credit Agreement have been satisfied and that the proposed Letter - ------------------------------------------------------------------------------ of Credit complies with the terms of the Credit Agreement; - ------------------------------------------------------------------- (b) after giving effect to the Letter of Credit herein --- -------------------------------------------------- requested, the aggregate unused portion of the Letter of Credit Commitment is -------------------------------------------------------------------------- $_______________, and the aggregate unused portion of the Commitment is - ------------------------------------------------------------------------------ $________________. - ------------------ (c) the representations and warranties contained in Article --- ------------------------------------------------------- V of the Credit Agreement are true and correct in all material respects on and - ------------------------------------------------------------------------------ as of the date hereof, before and after giving effect to the issuance of the - ------------------------------------------------------------------------------ Letter of Credit, as though made on and as of this date. - ------------------------------------------------------------------- (d) No event has occurred or is continuing, or would result --- ------------------------------------------------------- from such issuance of Letter of Credit, which constitutes (or would - ----------------------------------------------------------------------------- constitute) a Default or an Event of Default. - ---------------------------------------------------- Upon the issuance or extension of the proposed Letter of Credit, the Borrower will be deemed to have recertified the foregoing on such issuance date or extension date, as the case may be. EXECUTED AND DELIVERED this ________ day of ________________, 199__. WEINGARTEN REALTY INVESTORS By: Name: Title: EX-99.7 18 EXHIBIT 2.09 Exhibit 2.09 NOTICE OF INTEREST CONVERSION ----------------------------- TO: TEXAS COMMERCE BANK NATIONAL ASSOCIATION, in its capacity as Agent (the "Agent") under that certain Amended and Restated Credit Agreement dated as of November __, 1996 (as the same may be amended, modified, increased, supplemented and/or restated from time to time, the "Credit Agreement"), entered into by and among WEINGARTEN REALTY INVESTORS ("Borrower"), the Banks on the signature pages thereto, the Agent, and NATIONSBANK OF TEXAS, N.A., as Documentary Agent and COMMERZBANK, A.G., as Co-Agent thereunder. Pursuant to Section 2.09 of the Credit Agreement, this Notice of Interest Conversion (the "Notice") represents the Borrower's election of [insert one or more of the following]: 1. Use if converting LIBOR Rate Advances to Effective Federal Funds Rate Advances. Convert $________ in aggregate principal amount of LIBOR Rate Advances with a current Interest Period ending on ________, 19__, to Effective Federal Funds Rate Advances on ________, 19__; and 2. Use if continuing the balance as LIBOR Rate Advances. Continue $________ in aggregate principal amount of LIBOR Rate Advances with a current Interest Period ending on ____________, 19__, to a new Interest Period commencing on _________________, 19__, and ending on ________, 19__. Unless otherwise defined herein, terms defined in the Credit Agreement shall have the same meanings in this Notice. Dated: ________, 19__. WEINGARTEN REALTY INVESTORS By: Name: Title: EX-99.8 19 EXHIBIT 5.01 Exhibit 5.01 SUBSIDIARIES ------------ Weingarten/Lufkin, Inc. (formerly WRI/Central Park North, Inc.) Weingarten Nostat, Inc. (formerly Weingarten/Arkansas, Inc.) Weingarten Realty Management Company WRI/Post Oak, Inc. EX-99.9 20 EXHIBIT 5.08 EXHIBIT 5.08 LITIGATION PENDING CLAIMS OVER 1. MILLION
AMT REQ'D LOC DATE CLAIMANT DESC IN SUIT ---- -------- -------------------- ---------- ------------------ (1) 0061 02/05/91 Phuong Anh Thi Trong Assault >$1,000,000.00 (Insurance claim prior to SIR) (2) 0095 12/08/92 Noris Faniel Fall from $ 2,500,000.00 Ceiling (3) 0140 02/09/94 Stacey Thompson Rape $ 30,000,000.00 (4) 0505 05/02/94 David Wu Shooting $ 9,750,000.00 (Death)
(5) All other matters set out in audit letter dated February 16, 1996, from Dow, Cogburn & Friedman, P.C. to Deloitte & Touche (a copy of which has been provided to Agent). Footnote: We have $76,000,000 coverage every year from 1992 to date. EX-99.10 21 EXHIBIT 6.01(C) ______________________ Date EXHIBIT 6.01(C) COMPLIANCE CERTIFICATE I. Borrower certifies that the credit rating assigned to the Borrower's senior-unsecured, long-term debt by S&P as of the date of this Compliance Certificate, and as of the date of delivery of its Financial Statements is _____________. II. Financial Covenants
In Limit Actual Compliance ----------------------------- ------ ---------- Total Debt ---------------------------- Not greater Section 7.02(a) than 60% ______ __________ Secured Debt ---------------------------- Not greater Section 7.02(b) than 40% ______ __________ Limitation of Unimproved Real Property ---------------------------- ----------------------------- Not greater Section 7.03 than 12.5% ______ __________ Limitation on Sale or Other Disposition of Real Property ---------------------------- ----------------------------- Section 7.04 See Schedule A __________ (attached hereto) Coverage Ratio ---------------------------- Section 7.07 2.5 or more ______ __________ f. Assets Retained Section 7.13 Not less than 150% ______ __________
III. Certification The undersigned hereby further certifies and warrants to the Banks that, as of the date set forth above, (i) no default under the Amended and Restated Credit Agreement (the "Credit Agreement") has occurred, and no event has occurred, which, but for the passage of time, would constitute a default (except for any default which may have been expressly waived in writing by the Banks), (ii) each representation and warranty of the Borrower contained in the Credit Agreement is still true and correct on and as of the date set forth above, as though made on and as of such date, and (iii) the undersigned is the duly elected, qualified and acting Chief Financial Officer (or Chief Accounting Officer) of the Borrower, and as such, is authorized to execute this Report on its behalf. The undersigned hereby further certifies and warrants to the Banks that, as of the date set forth above, (i) no default under the Credit Agreement has occurred, and no event has occurred, which, but for the passage of time, would constitute a default (except for any default which may have been expressly waived in writing by the Banks) except as noted on the attachment, (ii) each representation and warranty of the Borrower contained in the Credit Agreement is still true and correct on and as of the date set forth above, as though made on and as of such date, except as noted on the attachment, and (iii) the undersigned is the duly elected, qualified and acting Chief Financial Officer or Chief Accounting Officer of the Borrower, and as such, is authorized to execute this Report on its behalf. IV. .n accordance with Section 6.01(e) of the Credit Agreement, attached hereto is a description of each litigation, legal, administrative, or arbitral proceeding, investigation or other action of any nature not previously reported which involves a claim equal to or exceeding $5,000,000 against the Borrower or any Subsidiary, or which involves the reasonable possibility, if adversely determined, in the judgment of the Borrower, of a judgment in excess of $1,000,000 which has not been stayed (whether by supersedas bond or otherwise), or other liability, in each case, which could have a material adverse effect on the business, operations or financial conditions of the Borrower and its Subsidiaries, taken as a whole or otherwise required to be reported pursuant to said Section 6.01(e). V. Each Subsidiary newly formed or acquired since the Closing Date (all of the stock of which is owned by the Borrower) has executed and delivered to the Agent a Guaranty Agreement in accordance with Section 6.06 of the Credit Agreement. A Guaranty Agreement from the Subsidiary(ies) listed on the attachment is enclosed herewith. VI. Attached is Schedule A, computations and other information relevant in connection with this Compliance Certificate. By: Name: Title: Schedule A ---------- Debt - ---- Section 7.02(a) - ---------------- Calculation of "Limitations on Incurrence of Debt" as defined for purposes of Section 7.02(a). Calculations as of _________________: Components of Debt: Debt Total Assets Debt/Total Assets (Line 2 divided by Line 3) "Debt" and "Total Assets" are defined terms in the Credit Agreement. Secured Debt - ------------- Section 7.02(b) - ---------------- Calculation of "Limitations on Incurrence of Debt" as defined for purposes of Section 7.02(b). Calculation as of _________________: 1. Components of Secured Debt: 2. Secured Debt 3. Total Assets 4. Secured Debt/Total Assets (Line 2 divided by Line 3) "Debt" and "Total Assets" are defined terms in the Credit Agreement. "Secured Debt" means Debt described in Section 7.02(b) and (c) of the Credit Agreement. Limitation of Unimproved Real Property - ------------------------------------------ Section 7.03 - ------------- Calculation of "Unimproved Real Property" as defined for purposes of Section 7.03. Calculation as of ___________________: 1. Unimproved Real Property 2. Undepreciated Real Estate Assets 3. Unimproved Real Property/ Undepreciated Real Estate Assets (Line 1 divided by Line 2) "Unimproved Real Property" and "Undepreciated Real Estate Assets" are defined terms in the Loan Agreement. Limitation on Sale or Other Disposition of Real Property - ---------------------------------------------------------------- Section 7.04 - ------------- (i) Calculation of "Sale or Other Disposition of Real Property" as defined for purposes of Section 7.04(i). Calculation as of ___________________: 1. Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 (month of current disposition) 2. Total Dispositions for last 12 calendar months (or if shorter, for the period from November __, 1996 to such date). 3. Total Dispositions/Undepreciated Real Estate Assets 4. Undepreciated Real Estate Assets (as of last day of preceding quarter) 5. Ten Percent (10%) of line (4) 6. Excess of line 2 over line 5 - Amount of Adjusted Net Proceeds "Adjusted Net Proceeds" is a defined term in the Credit Agreement. Limitation on Sale or Other Disposition of Real Property - ---------------------------------------------------------------- Section 7.04 - ------------- (ii) Calculation of "Sale or Other Disposition of Real Property" as defined for purposes of Section 7.04(ii). Calculation as of ____________________: 1. Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Month 13 Month 14 Month 15 Month 16 Month 17 Month 18 Month 19 Month 20 Month 21 Month 22 Month 23 Month 24 Month 25 Month 26 Month 27 Month 28 Month 29 Month 30 Month 31 Month 32 Month 33 Month 34 Month 35 Month 36 (month of current disposition) 2. Total Dispositions for last 36 months (or if shorter, for the period from November __, 1996 to such date). 3. Total Dispositions/Undepreciated Real Estate Assets 4. Undepreciated Real Estate Assets (as of last day of preceding quarter) 5. Fifteen Percent (15%) of line (4) 6. Excess of line 2 over line 5 - Amount of Adjusted Net Proceeds "Adjusted Net Proceeds" is a defined term in the Credit Agreement. Coverage Ratio - --------------- Section 7.07 - ------------- Calculation of "Coverage Ratio" as defined for purposes of Section 7.07. Calculation as of ____________________: 1. Funds from Operations 2. Net Income 3. Plus: 4. Depreciation and Amortization 5. Interest/Original Issue Discount 6. Extraordinary Charges 7. Excess Distributable Funds 8. Minus: 9. Gains on Sale of Properties and investment securities 10. Excess Net Income 11. Total (Sum of Lines 2-7 minus Lines 9 and 10) 12. Annual Service Charge 13. Interest/Original Issue Discount 14. Amount accrued in respect of Disqualified Stock 15. Total (Line 13 plus Line 14) 16. Funds from Operations/ Annual Service Charge (Line 11 divided by Line 15) "Funds from Operations" and "Annual Service Charge" are defined terms in the Credit Agreement. Assets Retained - ---------------- Section 7.13 - ------------- Calculation of Undepreciated Real Estate Assets subject to no lien to Unsecured Debt for purposes of Section 7.13. 1. Undepreciated Real Estate Assets subject to no lien (other than Permitted Liens) 2. Principal outstanding of unsecured debt 3. 150% of line 2 4. Excess of line 1 over line 3 EX-99.11 22 EXHIBIT 10.08 Exhibit 10.08 ------------- ASSIGNMENT AND ACCEPTANCE Dated _______________, 19___ Reference is made to that certain Amended and Restated Credit Agreement dated as of November __, 1996 (the "Credit Agreement") among Weingarten Realty Investors, a Texas real estate investment trust, (the "Company"), the Banks (as defined in the Credit Agree-ment), Texas Commerce Bank National Association, a national banking association ("TCB"), as Agent for the Banks (the "Agent"), NationsBank of Texas, N.A., as Documentary Agent and Commerzbank, A.G., as Co-Agent. Terms defined in the Credit Agreement and not defined herein are used herein with the same meaning. ________________________ (the "Assignor") and _____________________ (the "Assignee") agree as follows: NOW, THEREFORE, for and in consideration of ten dollars ($10) in hand paid and for other good and valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, an aggregate interest equal to $______________ in principal amount, and a proportionate interest as of the Effective Date (as defined below) in and to all of the Assig-nor's rights and obligations under the Credit Agreement (including, without limitation, a proportionate interest in the Assignor's Commitment [including the Letter of Credit Commitment ] as in effect on the Effective Date, the Note, including without limitation, Advances owing to the Assignor on the Effective Date, and the interest of the Assignor in any Letter of Credit). 2. The Assignor (i) represents and warrants that as of the date hereof (prior to giving effect to this Assignment and Acceptance) its Commitment is $__________; (ii) its Letter of Credit Commitment is $________; and the aggregate outstanding principal amount of Advances owing to it is $__________; (iii) represents and warrants that it is the legal and bene-ficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim; (iv) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with any Loan Document or the execution, legality, validity, enforceability, genuineness, sufficiency or value of any Loan Document or any other instrument or document furnished pursuant thereto; (v) makes no representation or warranty and assumes no res-ponsibility with respect to the financial condition of the Borrower or any Guarantor or the performance or observance by the Borrower or any Guarantor of any of its obligations under any Loan Document to which it is a party, or any other in-strument or document furnished pursuant thereto; and (vi) attaches the Note referred to in paragraph 1 above and requests that the Agent exchange such Note for new Note(s) as follows: a Note dated _______________, 19___ in the principal amount of $__________ payable to the order of the Assignee; and a Note dated _______________, 19___ in the principal amount of $__________ payable to the order of the Assignor. 3. The Assignee (i) confirms that it has received a copy of the Loan Documents, together with copies of the most recent Financial Statements referred to in Section 6.01 of the Credit Agreement and such other docu-ments and informa-tion as it has deemed appropriate to make its own credit analysis and decision to enter into this Assign-ment and Acceptance; (ii) agrees that it will, independently and without reliance upon the Agent, the Assignor or any other Bank and based on such documents and information as it shall deem appropriate at the time, con-tinue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iii) appoints and authorizes the Agent to take such action as the Agent on its behalf, and to exercise such powers under the Loan Documents, as are delegated to the Agent by the terms of the Loan Documents, together with such powers as are reasonably inci-dental thereto; (iv) agrees that it will perform in accord-ance with their terms all of the obligations which by the terms of the Credit Agreement and the other Loan Documents are required to be performed by it as a Bank; (v) (if such Assignee is a bank or financial institution organized outside the United States) agrees that it will deliver to the Borrower (with a copy to the Agent) such certificates, documents or other evidence as may be required from time to time, including any certificate or statement of exemption required under Treasury Regulation Section 1.1441-4(a) or Section 1.1441-6(c) or any subsequent version thereof, to establish that it is not subject to withholding under Section 1441 or 1442 of the Code, or comparable provisions, because payments to it are effectively connected with the conduct of a trade or business conducted in the United States or because it is fully exempt from United States tax under a provision of an applicable tax treaty; and (vi) specifies as its address for notices the offices set forth beneath its name on the signature pages hereof. 4. The effective date for this Assignment and Acceptance shall be _________________________________________________________ (the "Effective Date"). Following the execution of this Assignment and Acceptance by the Assignor and the Assignee, it will be delivered to the Agent for acceptance and recording by the Agent, and a copy will be delivered to the Borrower. 5. Upon such acceptance and recording, as of the Effective Date (i) the Assignee shall be a party to the Credit Agreement and, to the extent provided in this Assign-ment and Acceptance, have the rights and obligations of a Bank there-under and under the other Loan Documents and (ii) the Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Credit Agreement and the other Loan Documents and in the event that the Assignor has assigned (pursuant to a right granted under the Credit Agreement) to the Assignee hereunder all of its rights and obligations under the Credit Agreement and the other Loan Documents, the Assignor shall cease to be a party to the Credit Agreement and such other Loan Documents. 6. Upon such acceptance and recording, from and after the Effective Date, the Agent shall make all payments under the Credit Agreement and the Note in respect of the interest assigned hereby (including, without limitation, all payments of principal, interest and commitment fees with respect thereto) to the Assignee. The Assignor and Assignee shall make all appropriate adjustments in payments under the Credit Agreement and the Note for periods prior to the Effective Date directly between themselves. 7. This Assignment and Acceptance shall be gov-erned by, and construed in accordance with, the laws of the State of Texas. [NAME OF ASSIGNOR] By Title: [NAME OF ASSIGNEE] By Title: Accepted this _____ day of _______________, 19___ TEXAS COMMERCE BANK NATIONAL ASSOCIATION, as Agent By Title: -----END PRIVACY-ENHANCED MESSAGE-----