FIRST POTOMAC REALTY TRUST - FORM 8-K - EX-10.1

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8-K - FORM 8-K - FIRST POTOMAC REALTY TRUST	d485299d8k.htm
EX-10.2 - EX-10.2 - FIRST POTOMAC REALTY TRUST	d485299dex102.htm

Exhibit 10.1

FIRST POTOMAC REALTY INVESTMENT LIMITED PARTNERSHIP

7600 Wisconsin Avenue, 11^th Floor

Bethesda, Maryland 20814

Dated as of: February 8, 2013

KeyBank National Association,

as Administrative Agent

127 Public Square

Cleveland, OH 44114

Attention: John C. Scott

Re:

Amendment No. 2 to Third Amended and Restated Revolving Credit Agreement and Consent

Ladies and Gentlemen:

We refer to the Third Amended and Restated Revolving Credit Agreement dated as of June 16, 2011 (as amended, restated, modified, renewed, supplemented and in effect from time to time, the “Credit Agreement”), by and among FIRST POTOMAC REALTY INVESTMENT LIMITED PARTNERSHIP, a Delaware limited partnership, and certain of its Wholly-Owned Subsidiaries and other Subsidiaries (collectively, the “Borrowers”), KEYBANK NATIONAL ASSOCIATION and the other lending institutions which are parties thereto (individually, a “Lender” and collectively, the “Lenders”), KEYBANK NATIONAL ASSOCIATION, as administrative agent for itself and each other Lender (the “Agent”) and certain other parties. Capitalized terms used in this letter of agreement (this “Amendment”) which are not defined herein, but which are defined in the Credit Agreement, shall have the same meanings herein as therein, as the context so requires.

We have requested that the Lenders: (1) amend the Credit Agreement to, among other things, (a) modify the covenant relating to the ratio of Consolidated Total Indebtedness to Consolidated Gross Asset Value set forth in §10.1, (b) modify the covenant relating to Consolidated Debt Yield set forth in §10.2, (c) modify the covenant relating to Consolidated Tangible Net Worth set forth in §10.4, and (d) modify the covenant relating to the ratio of Consolidated Total Indebtedness to the Value of Unencumbered Properties set forth in §10.5, and (2) consent under §9.4(b) of the Credit Agreement to the exclusion of the Permanent Disposition (as hereinafter defined) of the Real Estate Assets comprising the Industrial Portfolio (as hereinafter defined) from the calculation of net sales price of Real Estate Assets and other property sold, transferred or otherwise disposed of in any four-quarter period for the purposes of the twenty percent (20%) threshold set forth in said §9.4(b) for the sale, transfer and disposition of Real Estate Assets and other property; and you have advised us that the Lenders are prepared to make the amendments and provide the consent as set forth herein, including to reflect the foregoing as requested by us, on the terms and conditions set forth herein, including, without limitation, that we join in this Amendment.

Accordingly, in consideration of these premises, the promises, mutual covenants and agreements contained in this Amendment, and fully intending to be legally bound by this Amendment, we hereby agree as follows:

ARTICLE I

AMENDMENTS TO CREDIT AGREEMENT

Effective as of February 8, 2013 (the “Amendment No. 2 Effective Date”), and subject to the fulfillment of the conditions contained in Article III of this Amendment, the Credit Agreement is hereby amended in each of the following respects:

1. Definitions. §1.1 of the Credit Agreement is amended as follows:

(a) The following new definitions are inserted after the definition of “Amendment No. 1 Effective Date” and before the definition of “Anti-Terrorism Laws”:

“Amendment No. 2. The Amendment No. 2 to this Agreement dated as of February 8, 2013 by and among the Borrower, the Agent and the Lenders.

Amendment No. 2 Effective Date. February 8, 2013.”

(b) The following new definition is inserted after the definition of “Indebtedness” and before the definition of “Information”:

“Industrial Portfolio. The Real Estate Assets listed on Schedule 10.4 hereto.”

(c) The following new definition is inserted after the definition of “Net Operating Income” and before the definition of “New Debt”:

“Net Sales Proceeds. The aggregate cash proceeds received by the Borrower, any Subsidiary or any Partially-Owned Entity in connection with the consummation of any Permanent Disposition net of the following costs and expenses, as evidenced by invoices or other evidence reasonably acceptable to Agent: (a) all reasonable and customary out-of-pocket costs paid or payable by such Borrower, Subsidiary or Partially-Owned Entity in connection with such Permanent Disposition (including, without limitation, legal, accounting and investment banking fees, sales commissions and taxes), and (b) for Permanent Dispositions involving the sale of any Real Estate Asset that is encumbered by Indebtedness, the repayment of such Indebtedness, including, without limitation, prepayment fees and yield maintenance charges.”

(d) The following new definition is inserted after the definition of “PBGC” and before the definition of “Permits”:

“Permanent Disposition. With respect to any Real Estate Asset, the permanent disposition by sale or assignment of the entire fee simple or leasehold interest in such Real Estate Asset, as applicable.”

(e) The definition of “Unsecured Consolidated Total Indebtedness” is amended by inserting at the end thereof the following new sentence: “Notwithstanding the foregoing, Unsecured Consolidated Total Indebtedness shall include Recourse Indebtedness that is secured solely by partnership or other ownership interests in any Subsidiary or Partially-Owned Entity that owns a Real Estate Asset that is encumbered by a mortgage securing Indebtedness, provided, however, the 2007 Term Loan shall be excluded from Unsecured Consolidated Total Indebtedness except if the outstanding principal amount thereof at any date of determination exceeds $10,000,000, in which case, the principal amount thereof in excess of $10,000,000 shall be included in Unsecured Consolidated Total Indebtedness. In no event shall any Indebtedness under that certain Secured Term Loan Agreement dated as of February 8, 2013 (the “2013 Term Loan Agreement”) among certain Subsidiaries of FPLP, KeyBank National Association, individually and as administrative agent, and certain other lenders be included in Unsecured Consolidated Total Indebtedness unless, and then only to the extent that, the principal amount of such Indebtedness is increased above the Total Commitment (as defined in the 2013 Term Loan Agreement) on the date of this Agreement.”

2. Title to Properties; Leases; Eligible Unencumbered Properties in the Unencumbered Pool. §7.3(d) is amended by deleting the words “Amendment No. 1 Effective Date” where it appears therein and replacing them with “Amendment No. 2 Effective Date.”

3. Structured Finance Investments. §9.3(h) is amended by (A) deleting “June 30, 2013” where the same appears in clause (i) thereof and substituting “September 30, 2013” therefor, and (B) deleting “September 30, 2013” where the same appears in clause (ii) thereof and substituting “December 31, 2013” therefor.

4. Consolidated Total Leverage Ratio. §10.1 is deleted in its entirety and the following is substituted in lieu thereof:

“§10.1 Consolidated Total Leverage Ratio. At all times, (i) for each fiscal quarter ending on or after December 31, 2012 through the fiscal quarter ending September 30, 2013, Consolidated Total Indebtedness shall not exceed sixty-five percent (65%) of Consolidated Gross Asset Value as of the last day of such fiscal quarter, and (ii) for each fiscal quarter ending on or after December 31, 2013, Consolidated Total Indebtedness shall not exceed sixty percent (60%) of Consolidated Gross Asset Value as of the last day of such fiscal quarter. This covenant shall be tested quarterly as of the last day of the applicable quarter.”

5. Consolidated Debt Yield. §10.2 is deleted in its entirety and the following is substituted in lieu thereof:

“§10.2 Consolidated Debt Yield. At all times, as tested at the end of each fiscal quarter, (i) for each fiscal quarter ending on or after December 31, 2012 through the fiscal quarter ending September 30, 2013, the Consolidated Debt Yield shall not be less than ten percent (10%), and (ii) for each fiscal quarter ending on or after December 31, 2013, the Consolidated Debt Yield shall not be less than eleven percent (11%).”

6. Net Worth. §10.4 of the Credit Agreement is amended (i) by deleting the words “Closing Date” and substituting in lieu thereof the words “Amendment No. 1 Effective Date”, (ii) by deleting “Consolidated Net Worth” where it appears, at the end thereof, in the phrase “on or prior to the date such determination of Consolidated Net Worth is made” and substituting “Consolidated Tangible Net Worth” therefor, and (iii) adding the following proviso after the end of such phrase: “; provided, however, that the dollar amount used in clause (i) above for the purpose of calculating the sum set forth in this Section 10.4 for each date of determination shall reduce by an amount equal to sixty-five percent (65%) of the Net Sales Proceeds of the Permanent Disposition of any of the Real Estate Assets included in the Industrial Portfolio, which Real Estate Assets and the respective direct and indirect owners thereof are listed on Schedule 10.4 hereto, provided that, for each such Permanent Disposition, such reduction shall not apply unless and until (y) Agent shall have received evidence satisfactory to Agent of such Permanent Disposition and of the amount of the Net Sales Proceeds therefrom, which Agent shall endeavor to approve or disapprove, and shall provide any reasons for disapproval with reasonable specificity, in writing via electronic mail transmission to the Chief Financial Officer, Chief Accounting Officer and Director, Finance & Treasury of the Trust (at ablocher@first-potomac.com, mcomer@first-potomac.com, and ttillman@first-potomac.com, or such other electronic mail addresses of which the Borrower shall give Agent prior written notice) no later than ten (10) business days following receipt of such evidence from the Borrower, and (z) in the case of such Permanent Disposition of any Real Estate Asset which is in the Unencumbered Pool, such Real Estate Asset shall have been duly released from the Unencumbered Pool in accordance with the terms hereof.”

7. Unencumbered Pool Leverage. §10.5 is deleted in its entirety and the following is substituted in lieu thereof:

“§10.5 Unencumbered Pool Leverage. At all times, as tested at the end of each fiscal quarter and any other date of measurement, (i) for each fiscal quarter ending on or after December 31, 2012 through the fiscal quarter ending September 30, 2013, Unsecured Consolidated Total Indebtedness shall not exceed sixty-five percent (65%) of the aggregate Value of Unencumbered Properties on the last day of such fiscal quarter, and (ii) for each fiscal quarter ending on or after December 31, 2013, Unsecured Consolidated Total Indebtedness shall not exceed sixty percent (60%) of the aggregate Value of Unencumbered Properties on the last day of such fiscal quarter. For purposes of the covenant set forth in this §10.5, any New Debt incurred by the Borrower after the date hereof shall be deemed to be Unsecured Consolidated Total Indebtedness.”

8. Schedules.

(a) The existing Schedules 1, 7.1(b), 7.3(c), 7.3(d), 7.13, and 7.19 to the Credit Agreement are deleted in their entirety and the updated Schedules 1, 7.1(b), 7.3(c), 7.3(d), 7.13, and 7.19 attached hereto are substituted in lieu thereof.

(b) The new Schedule 10.4 attached hereto is attached to the Credit Agreement and made a part thereof.

ARTICLE II

CONSENT TO EXCLUSION OF INDUSTRIAL PORTFOLIO

The Borrower intends to consummate the Permanent Disposition, in a four-quarter period, of the Industrial Portfolio and of certain other Real Estate Assets (the “Other Sale Properties”). The aggregate sales price (net of (i) any Indebtedness secured by a Lien on such Real Estate Assets or other property, if any, and (ii) the purchase price of any Real Estate Assets or other property acquired during such four-quarter period, minus closing costs and any Indebtedness secured by a Lien on such acquired Real Estate Assets or other property) (the “Net Sales Price”) of the Permanent Disposition of the Industrial Portfolio and the Other Sale Properties could exceed twenty percent (20%) of the most recently reported Consolidated Gross Asset Value. Accordingly, Borrower has requested that the Lenders consent, and, subject to Article III hereof, the Lenders do consent, to the Borrower’s exclusion of the Permanent Disposition of the Industrial Portfolio (or any individual Real Estate Asset contained therein) from the calculation of the Net Sales Price that is subject to the twenty percent (20%) threshold set forth in §9.4(b) with respect to the Sale (as defined in §9.4(b)) of Real Estate Assets or other property, provided that, for any period of time during which Borrower excludes the Permanent Disposition of the Industrial Portfolio (or any individual Real Estate Asset contained therein) from such calculation, Borrower agrees that the Net Sales Price of the Sale of the Other Sale Properties and any other property shall not exceed ten percent (10%), rather than twenty percent (20%), of the most recently reported Consolidated Gross Asset Value. For the avoidance of doubt, the consent provided under this Article II shall apply only with respect to the twenty percent (20%) threshold set forth in the first sentence of §9.4(b) for the Sale of Real Estate Assets or other property and not with respect to any other threshold set forth in said §9.4(b) (including the twenty percent (20%) threshold with respect to Indebtedness Liens or the two percent (2%) threshold requiring the provision of a compliance certificate with respect to any Sale or Indebtedness Lien).

ARTICLE III

CONDITIONS PRECEDENT TO AMENDMENT AND CONSENT

The Lenders’ agreement herein to amend the Credit Agreement and provide the consent hereunder as of the Amendment No. 2 Effective Date is subject to the fulfillment to the satisfaction of the Lenders of the following conditions precedent on or prior to such date:

1. Each of the Borrowers shall have executed and delivered (or caused to be delivered) to the Agent a counterpart of this Amendment;

2. The Guarantor and each Subsidiary Guarantor shall have acknowledged and consented to the provisions of this Amendment;

3. The Agent and the Majority Lenders shall have executed this Amendment;

4. The representations and warranties of the Borrowers and the Guarantor set forth herein shall be true and correct;

5. The Borrower shall have furnished to the Agent and the Lenders a Compliance Certificate (such Compliance Certificate to be substantially in the form attached as Exhibit C to the Credit Agreement) evidencing compliance with the covenants set forth in Article 10 of the Credit Agreement for the fiscal quarter ending December 31, 2012 after giving effect to the terms of this Amendment; provided the Agent and the Lenders hereby acknowledge that such Compliance Certificate and the preliminary financial statements of the Trust for the fiscal quarter ended December 31, 2012 on which it is based are currently under review by the Accountants and are subject to further revision prior to the filing by the Trust of its Form 10-K for the year ended December 31, 2012. Borrower hereby acknowledges and agrees that, to the best of its knowledge, such financial statements are true, correct and complete in all material respects. The foregoing acknowledgement by Agent and the Lenders shall be subject in all respects to Paragraph 5 of Article IV below and, without limiting the foregoing, shall not constitute a waiver by the Agent or any Lender of any Default (including any such Default that may arise as a result of any revision to the preliminary financial statements referenced above) or otherwise limit, impair, constitute a waiver of or otherwise affect any rights or remedies of Agent or any Lender with respect to Borrower’s obligations to comply with the covenants as set forth in the Credit Agreement (after giving effect to this Amendment);

6. In consideration of the amendments contained herein, the Borrower shall have paid to the Agent a fee for the benefit of each of the Lenders executing this Amendment in an amount equal to Fifteen Thousand and 00/100 Dollars ($15,000.00) per Lender executing this Amendment, along with, to the Agent, the reasonable fees, charges and disbursements of Agent’s counsel in connection with the preparation hereof, or satisfactory arrangements therefor shall have been made; and

7. The Agent shall have received such other documentation and information as it may reasonably require, all of which shall be in form and substance satisfactory to the Agent, including, without limitation, such items set forth in the closing agenda provided by counsel to Agent to the Borrower in connection with this Amendment.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

Each of the Borrowers, the Guarantor and the Subsidiary Guarantors hereby represents and warrants to you as follows:

1. Representations and Warranties. Each of the representations and warranties made by such Borrowers, the Guarantor and such Subsidiary Guarantor, as applicable, to the Agent and the Lenders in this Amendment, the Credit Agreement and other Loan Documents, as applicable, was true, correct and complete when made and is true, correct and complete on and as of the Amendment No. 2 Effective Date with the same full force and effect as if each of such representations and warranties had been made by such Borrowers, the Guarantor or such Subsidiary Guarantor, as applicable on the Amendment No. 2 Effective Date and in this Amendment, in each case after giving effect to this Amendment, except to the extent that such representations and warranties relate solely to a prior date, in which case such representations and warranties shall be true, correct and complete on and as of the date when made.

2. No Defaults or Events of Default. After giving effect to this Amendment, no Default or Event of Default exists on the Amendment No. 2 Effective Date, and no condition exists on the date hereof which would, with notice or the lapse of time, or both, constitute a Default or an Event of Default under the Credit Agreement.

3. No Material Adverse Change. There has been no material adverse change in the business, assets, operations, condition (financial or otherwise) or properties of the Trust, FPLP or, taken as a whole, the Potomac Group since September 30, 2012 or, as of the Amendment No. 2 Effective Date, in the facts and information regarding the Trust, FPLP or, taken as a whole, the Potomac Group as most recently provided to the Agent and the Lenders.

4. Binding Effect of Documents. This Amendment has been duly authorized, executed and delivered to you by such Borrowers, the Guarantor and such Subsidiary Guarantor and is in full force and effect as of the date hereof, and the agreements and obligations of each such Borrower, the Guarantor and such Subsidiary Guarantor contained herein and therein constitute the legal, valid and binding obligations of such Borrower, the Guarantor and such Subsidiary Guarantor, enforceable against such Borrower, the Guarantor and such Subsidiary Guarantor in accordance with their respective terms.

5. No Implied Waiver. Except as expressly set forth in this Amendment, this Amendment shall not, by implication or otherwise, limit, impair, constitute a waiver of or otherwise affect any rights or remedies of the Agent or the Lenders under the Credit Agreement or the other Loan Documents, nor alter, modify, amend or in any way affect any of the terms, obligations or covenants contained in the Credit Agreement or the Loan Documents, all of which shall continue in full force and effect. Nothing in this Amendment shall be construed to imply any willingness on the part of the Agent or the Lenders to grant any similar or future consent or waiver of any of the terms and conditions of the Credit Agreement or the other Loan Documents.

ARTICLE V

MISCELLANEOUS

This Amendment may be executed in any number of counterparts, each of which when executed and delivered shall be deemed an original, but all of which together shall constitute one instrument. In making proof of this Amendment, it shall not be necessary to produce or account for more than one counterpart thereof signed by each of the parties hereto. Except to the extent specifically amended and supplemented hereby, all of the terms, conditions and provisions of the Credit Agreement and each of the other Loan Documents shall otherwise remain unmodified, and the Credit Agreement and each of the other Loan Documents, as amended and supplemented by this Amendment, are confirmed as being in full force and effect, and each of the Borrowers, the Guarantor and the Subsidiary Guarantors hereby ratifies and confirms all of its agreements and obligations contained therein, as applicable. This Amendment is a contract under the laws of the State of New York and shall for all purposes be construed in accordance with and governed by the laws of such State (excluding the laws applicable to conflicts or choice of law). The provisions of this Amendment are severable, and if any one clause or provision hereof shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision, or part thereof, in such jurisdiction, and shall not in any manner affect such clause or provision in any other jurisdiction, or any other clause or provision of this Amendment in any jurisdiction.

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If you are in agreement with the foregoing, please sign the form of acceptance on the enclosed counterpart of this Amendment, whereupon this Amendment, as so accepted by you, shall become a binding agreement between you and the undersigned.


Very truly yours, FIRST POTOMAC REALTY INVESTMENT LIMITED PARTNERSHIP

By:		First Potomac Realty Trust
		Its General Partner


By:		/s/ Andrew P. Blocher_
		Name: Andrew P. Blocher
		Title: Executive Vice President and Chief Financial Officer

(Signatures continued on next page)