Exhibit 10.3

 

FIRST AMENDMENT TO CREDIT AGREEMENT

 

This FIRST AMENDMENT TO CREDIT AGREEMENT (this “First Amendment”) is made and
entered into as of the 18th day of October, 2017, by and among FRANKLIN STREET
PROPERTIES CORP. (the “Borrower”), JPMORGAN CHASE BANK, N.A. (“JPM”) in its
capacity as Lender, CITIZENS BANK, N. A. (“Citizens”) in its capacity as Lender,
Joint Bookrunner, Joint Lead Arranger, and Syndication Agent, BANK OF MONTREAL
(“BMO”) in its capacity as Lender, Joint Bookrunner, Joint Lead Arranger and
Syndication Agent, and JPMORGAN CHASE BANK, N.A. in its capacity as
Administrative Agent (the “Administrative Agent”) for itself and the other
lenders party to the Credit Agreement from time to time.  Capitalized terms used
herein and not otherwise defined shall have the meanings assigned to such terms
in the Credit Agreement.

 

WHEREAS, the Borrower, the Administrative Agent and Lenders are parties to that
certain Credit Agreement, dated as of November 30, 2016 (the “Original Credit
Agreement”), pursuant to which the Lenders party to the Original Credit
Agreement have extended credit to the Borrowers on the terms set forth therein;

 

WHEREAS, the parties hereto are entering into this First Amendment to make
certain amendments to the Original Credit Agreement.  The Original Credit
Agreement as amended by this First Amendment is referred to herein as the
“Credit Agreement”.

 

NOW, THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:

 

1.                                      Definition of Affiliate.  Section 1.01
of the Credit Agreement is hereby amended by deleting the definition of
“Affiliate” appearing therein and replacing it with the following definition:

 

““Affiliate” means, at any time, and with respect to any Person, any other
Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person.  In no event shall Administrative Agent or any Lender be
deemed to be an Affiliate of the Borrower.  Unless the context otherwise clearly
requires, any reference to an “Affiliate” is a reference to an Affiliate of the
Borrower, and Sponsored REITS shall not be considered Affiliates of the
Borrower.”

 

2.                                      Definition of “Audited Financial
Statements.” Section 1.01 of the Credit Agreement is hereby amended by deleting
the year “2013” appearing in the definition of “Audited Financial Statements”
and replacing it with the year “2016.”

 

3.                                      Definition of “Capitalization Rate”. 
Section 1.01 of the Credit Agreement is hereby amended by deleting the
definition of “Capitalization Rate” appearing therein and replacing it with the
following definition:

 

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““Capitalization Rate” means six and three-quarters percent (6.75%) for each CBD
or Urban Infill Property and seven and one-half percent (7.50%) for each
Suburban Property.”

 

4.                                      Definition of “Commitment”. 
Section 1.01 of the Agreement is hereby amended by deleting the definition of
“Commitment” appearing therein and replacing it with the following definition:

 

““Commitment” means, as to each Lender, its obligation to make a Loan to the
Borrower pursuant to Section 2.01, in an aggregate principal amount equal to the
amount set forth opposite such Lender’s name on Schedule 2.01, as such Schedule
2.01 may be updated from time to time pursuant to an Assignment and Assumption.”

 

5.                                      Definition of “EBITDA”.  Section 1.01 of
the Credit Agreement is hereby amended by deleting the definition of “EBITDA”
appearing therein and replacing it with the following definition:

 

““EBITDA” means for the Consolidated Parties, for the most recently ended fiscal
quarter of Borrower, without duplication, the sum of (a) net income of the
Consolidated Parties, in each case, excluding any non recurring or extraordinary
gains and losses and Hedge Ineffectiveness for such period (but including
syndication fees), plus (b) an amount which, in the determination of net income
for such period pursuant to clause (a) above, has been deducted for or in
connection with (i) Interest Expense (plus, amortization of deferred financing
costs, to the extent included in the determination of Interest Expense per
GAAP), (ii) income taxes, and (iii) depreciation and amortization, all
determined in accordance with GAAP for the prior quarter plus (c) the
Consolidated Parties’ Equity Percentage of the above attributable to
Unconsolidated Affiliates.”

 

6.                                      Definition of “Eurodollar Rate”. 
Section 1.01 of the  Credit Agreement is hereby amended by deleting the
definition of “Eurodollar Rate” in its entirety and replacing it with the
following definition:

 

““Eurodollar Rate” means for any Interest Period with respect to a Eurodollar
Rate Loan, the Adjusted LIBO Rate.  If the Eurodollar Rate for any applicable
Interest Period shall be less than zero, such rate shall be deemed zero for
purposes of this Agreement; provided that this floor of zero for any applicable
Interest Period shall not be applied to any Loan with respect to which the
Borrower has entered into a corresponding Swap Contract for the amount of such
Loan so long as the Borrower has notified the Administrative Agent of such Swap
Contract at least five (5) Business Days prior to such applicable Interest
Period.  The Eurodollar Rate for each outstanding Eurodollar Rate Loan shall be
adjusted automatically as of the effective date of any change in the Statutory
Reserve Rate.”

 

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7.                                      Definition of “Responsible Officer”. 
Section 1.01 of the Credit Agreement is hereby amended by adding the words “,
assistant treasurer” after the words “chief financial officer” in clause (d) of
the definition of “Responsible Officer”.

 

8.                                      Definition of “Total Asset Value”. 
Section 1.01 of the Credit Agreement is hereby amended by deleting the
definition of “Total Asset Value” appearing therein and replacing it with the
following definition:

 

““Total Asset Value” means, without duplication, for the most recently ended
fiscal quarter of Borrower, with respect to the Consolidated Parties on a
consolidated basis, the sum of (a) the quotient of annualized NOI for such
fiscal quarter minus the aggregate amount of NOI attributable to each Property
sold or otherwise disposed of during such fiscal quarter minus the aggregate
amount of NOI attributable to each Property acquired during the last four fiscal
quarters, divided by the Capitalization Rate plus (b) the acquisition cost of
each Property acquired during such prior four fiscal quarters, plus
(c) unrestricted cash and Cash Equivalents, plus (d) the book value of
unimproved land holdings, plus (e) the book value of construction in progress,
plus (f) the carrying value of performing mortgage loans to Sponsored REITs,
plus (g) the carrying value of preferred stock investments in Sponsored REITs as
shown on Borrower’s financial statements.

 

Notwithstanding the foregoing, for purposes of determining Total Asset Value, to
the extent the aggregate of Investments in Projects under Development,
undeveloped land holdings, Joint Venture Projects and Joint Ventures, Securities
Holdings and Mortgages to non-affiliates (excluding Mortgages to Sponsored
REITS) would exceed 10% of Total Asset Value, such aggregate excess shall be
excluded.”

 

9.                                      Section 1.01 of the Credit Agreement is
hereby amended by adding the following new definition in the proper alphabetical
order thereto:

 

“Leverage Increase Period” shall have the meaning set forth in
Section 7.11(b) hereof.

 

10.                               Section 5.11.  Section 5.11 of the Credit
Agreement is hereby amended by deleting the last sentence in Section 5.11 and
replacing it with the following:

 

“Neither the Borrower nor any Subsidiary is party to any agreement the principal
purpose of which is to share tax liabilities.”

 

11.                               Section 7.11.  Section 7.11 of the Credit
Agreement is hereby amended by deleting Section 7.11 appearing therein and
replacing it with the following Section 7.11:

 

“7.11      Financial Covenants.  Fail, at any time, to comply with any of the
following financial covenants on a consolidated basis provided that such
covenants shall be calculated as of the last day of a calendar quarter:

 

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(a)                                 Minimum Tangible Net Worth.  Borrower shall
maintain a Tangible Net Worth equal to or in excess of $661,752,000 plus
seventy-five percent (75%) of the aggregate net proceeds received by Borrower in
connection with any offering of stock or other equity in the Borrower after
October 18, 2017.

 

(b)                                 Maximum Leverage Ratio.  Borrower shall not
permit the ratio of Total Indebtedness to Total Asset Value to exceed 0.60:1.0,
to be increased at the election of the Borrower a maximum of two times during
the term of the Loans, provided that no Leverage Increase Period (hereinafter
defined) shall be consecutive) to 0.65 to 1.0 commencing on the date on which a
Significant Acquisition occurs and continuing for the succeeding three full
fiscal quarters thereafter (each, a “Leverage Increase Period”).

 

(c)                                  Maximum Secured Leverage Ratio.  Borrower
shall not permit the ratio of Total Secured Indebtedness (excluding the Credit
Extensions) to Total Asset Value to exceed 0.30:1.0.

 

(d)                                 Minimum Fixed Charge Coverage Ratio. 
Borrower shall not permit the ratio of Adjusted EBITDA to Fixed Charges to be
less than 1.50:1.0.

 

(e)                                  Maximum Unencumbered Leverage Ratio. 
Borrower shall not permit the ratio of Unsecured Indebtedness to Unencumbered
Asset Value to exceed 0.60:1.0, to be increased at the election of the Borrower
a maximum of two times during the term of the Loans, provided that no Leverage
Increase Period shall be consecutive, to 0.65 to 1.0 commencing on the date on
which a Significant Acquisition occurs and continuing for the succeeding three
full fiscal quarters thereafter.

 

(f)                                   Minimum Unsecured Interest Coverage. 
Borrower shall not permit the ratio of Unencumbered NOI to the Interest Expense
from the Eligible Unencumbered Property Pool to be less than 1.75:1.0.  For the
purpose of calculating NOI for this covenant 7.11(f), items (a)-(d) of the
definition of Net Operating Income shall be adjusted to (i) exclude the amount
attributable to the Properties disposed of during such fiscal quarter and
(ii) adjust the amount attributable to Properties owned less than a full fiscal
quarter so that such amount is grossed up as if the Property had been owned for
the entire fiscal quarter.

 

(g)                                  Dividends and Distributions.  To the extent
an Event of Default exists or would result therefrom, Borrower shall not make
Restricted Payments and no Subsidiary shall make any Restricted Payments to any
Person other than Borrower or a Subsidiary of Borrower.

 

In calculating the financial covenants pursuant to this Section 7.11, any
obligations that are secured by Cash Collateral by Borrower shall not be deemed

 

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to be secured by a mortgage, deed of trust, lien, pledge, encumbrance or other
security agreement.”

 

12.                               Exhibit E.  Exhibit E of the Credit Agreement
is hereby deleted and the Exhibit E attached hereto is substituted therefor.

 

13.                               Schedule 10.02.  Schedule 10.02 of the Credit
Agreement is hereby deleted and the Schedule 10.02 attached hereto is
substituted therefor.

 

14.                               No Waiver.  Nothing contained herein shall be
deemed to (i) constitute a waiver of any Default or Event of Default that may
heretofore or hereafter occur or have occurred and be continuing or, except as
expressly provided herein, to otherwise modify any provision of the Original
Credit Agreement, or (ii) give rise to any defenses or counterclaims to
Administrative Agent’s or any of the Lenders right to compel payment of the
Obligations when due or to otherwise enforce their respective rights and
remedies under the Credit Agreement and the other Loan Documents.

 

15.                               Conditions to Effectiveness.  This First
Amendment shall become effective as of the date (the “Effective Date”) when each
of the following conditions is met:

 

(a)         receipt by the Administrative Agent of this First Amendment duly and
properly authorized, executed and delivered by each of the Borrower and the
Lenders signatory hereto;

 

(b)         receipt by the Administrative Agent of a certificate dated as of the
date hereof signed by a Responsible Officer of Borrower certifying that, before
and after giving effect to the First Amendment, (I) the representations and
warranties contained in Article V of the Credit Agreement are true and correct
in all material respects except (i) to the extent that such representations and
warranties specifically refer to an earlier date, in which case they shall be
true and correct as of such earlier date, and (ii) that (1) the representations
and warranties contained in subsections (a), (b) and (c) of Section 5.05 shall
be deemed to refer to the most recent statements furnished pursuant to
clauses (a) and (b), respectively, of Section 6.01; and (2) the representations
and warranties contained in Section 5.13(a) shall be deemed to refer to the most
recent update to Schedule 5.13(a) furnished pursuant to Section 6.02(a)(ii), and
shall be true and correct in all material respects as of the effective date of
such update, and (3) the  representations and warranties contained in the first
and second sentences of Section 5.21 shall be deemed to refer to the most recent
update to Schedule 5.21 furnished pursuant to Section 6.02(a)(i), and shall be
true and correct in all material respects as of the effective date of such
update, and (II) no Default or Event of Default exists;

 

(c)          payment of any costs and expenses due to the Administrative Agent
or the Lenders, including all of the Administrative Agent’s reasonable legal
fees and

 

5

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expenses incurred in connection with the preparation and negotiation of this
First Amendment; and

 

(d)         amendments to the Bank of America Credit Agreement and the Bank of
Montreal Loan Agreement to accommodate this First Amendment and otherwise as
agreed to by the parties to such loan facilities to close contemporaneously with
this First Amendment.

 

16.                               Representations and Warranties.  The Borrower
represents and warrants to the Administrative Agent and the Lenders as follows:

 

(a)           The execution, delivery and performance by Borrower of this First
Amendment, has been duly authorized by all necessary corporate or other
organizational action, and do not and will not (a) contravene the terms of any
of Borrower’s Organization Documents; (b) conflict with or result in any breach
or contravention of, or the creation of any Lien under, or require any payment
to be made under (i) any Contractual Obligation to which Borrower is a party or
affecting Borrower or the properties of Borrower or any of its Subsidiaries or
(ii) any order, injunction, writ or decree of any Governmental Authority or any
arbitral award to which Borrower or its property is subject; or (c) violate any
Law.

 

(b)           This First Amendment has been duly executed and delivered by
Borrower. This First Amendment constitutes a legal, valid and binding obligation
of Borrower, enforceable against Borrower in accordance with its terms, except
as enforceability is limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting generally the enforcement of
creditors’ rights and except to the extent that availability of the remedy of
specific performance or injunctive relief is subject to the discretion of the
court before which any proceeding therefor may be brought.

 

(c)           No approval, consent, exemption, authorization, or other action
by, or notice to, or filing with, any Governmental Authority or any other Person
is necessary or required in connection with the execution and delivery of, and
the performance of the Borrower’s obligations under the Credit Agreement as
amended by this First Amendment, except where such approval, consent, exemption,
authorization, action, notice or filing has been obtained or made, and except
where the failure to do so would not reasonably be expected to have a Material
Adverse Effect.

 

(d)           There has not occurred since December 31, 2016 any event or
condition that has had or would be reasonably expected, either individually or
in the aggregate, to have a Material Adverse Effect, as determined by
Administrative Agent.

 

17.                               Ratification, etc.  Except as expressly
amended hereby, the Original Credit Agreement, the other Loan Documents and all
documents, instruments and agreements related thereto are hereby ratified and
confirmed in all respects and

 

6

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shall continue in full force and effect.  This First Amendment and the Credit
Agreement shall hereafter be read and construed together as a single document,
and all references in the Credit Agreement, any other Loan Document or any
agreement or instrument related to the Credit Agreement shall hereafter refer to
the Credit Agreement as amended by this First Amendment.

 

18.                               GOVERNING LAW.  THIS FIRST AMENDMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

19.                               Counterparts.  This First Amendment may be
executed in any number of counterparts and by different parties hereto on
separate counterparts, each of which when so executed and delivered shall be an
original, but all of which counterparts taken together shall be deemed to
constitute one and the same instrument.  Any counterpart signed by all parties
may be introduced into evidence in any action or proceeding without having to
produce or account for the other counterparts.  Likewise, the existence of this
First Amendment may be established by the introduction into evidence of
counterparts that are separately signed, provided they are otherwise identical
in all material respects.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, each of the undersigned has duly executed this First
Amendment to Credit Agreement as of the date first set forth above.

 

ADMINISTRATIVE AGENT:

 

 

JPMORGAN CHASE BANK, N.A.,

 

individually in its capacity as Administrative Agent

 

 

 

 

 

By:

/s/ Christian Lunt

 

Name:

Christian Lunt

 

Title:

Executive Director

 

[signature pages continue]

 

[Signature Page to Amendment No. 1 to Credit Agreement — Franklin Street
Properties Corp.]

 

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LENDERS:

 

 

JPMORGAN CHASE BANK, N.A.,

 

as a Lender

 

 

 

By:

/s/ Christian Lunt

 

Name:

Christian Lunt

 

Title:

Executive Director

 

[Signature Page to Amendment No. 1 to Credit Agreement — Franklin Street
Properties Corp.]

 

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CITIZENS BANK, N. A.

 

 

 

By:

/s/ Kerri Colwell

 

Name:

Kerri Colwell

 

Title:

Senior Vice President

 

[signature pages continue]

 

[Signature Page to Amendment No. 1 to Credit Agreement — Franklin Street
Properties Corp.]

 

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BANK OF MONTREAL

 

 

 

By:

/s/ Lloyd Baron

 

Name:

Lloyd Baron

 

Title:

Director

 

[signature pages continue]

 

[Signature Page to Amendment No. 1 to Credit Agreement — Franklin Street
Properties Corp.]

 

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PNC BANK, NATIONAL ASSOCIATION

 

 

 

By:

/s/ Michelle K. Gouin

 

Name:

Michelle K. Gouin

 

Title:

Vice President

 

[signature pages continue]

 

[Signature Page to Amendment No. 1 to Credit Agreement — Franklin Street
Properties Corp.]

 

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U.S. BANK, NATIONAL ASSOCIATION

 

 

 

By:

/s/ Robert H. Kaufman

 

Name:

Robert H. Kaufman

 

Title:

Vice President

 

[signature pages continue]

 

[Signature Page to Amendment No. 1 to Credit Agreement — Franklin Street
Properties Corp.]

 

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BORROWER:

 

 

FRANKLIN STREET PROPERTIES CORP.,

 

a Maryland corporation

 

 

 

By:

/s/ George J. Carter

 

Name:

George J. Carter

 

Title:

Chief Executive Officer

 

[Signature Page to Amendment No. 1 to Credit Agreement — Franklin Street
Properties Corp.]

 

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EXHIBIT E

 

FORM OF COMPLIANCE CERTIFICATE

 

Financial Statement Date:                           ,         

 

To:          JPMorgan Chase Bank, N.A., as Administrative Agent

 

Ladies and Gentlemen:

 

Reference is made to that certain Credit Agreement, dated as of November 30,
2016 (as amended, restated, extended, supplemented or otherwise modified in
writing from time to time, the “Agreement;” the terms defined therein being used
herein as therein defined), among Franklin Street Properties Corp. (the
“Borrower”), the Lenders from time to time party thereto, and JPMorgan Chase
Bank, N.A., as Administrative Agent.

 

The undersigned Responsible Officer hereby certifies as of the date hereof that
he/she is the                                         of Borrower, and that, as
such, he/she is authorized to execute and deliver this Certificate to the
Administrative Agent on the behalf of the Borrower, and that:

 

[Use following paragraph 1 for fiscal year-end financial statements]

 

1.             The Borrower has delivered the year-end audited financial
statements required by Section 6.01(a) of the Agreement for the fiscal year of
the Borrower ended as of the above date, together with the report and opinion of
an independent certified public accountant required by such section.

 

[Use following paragraph 1 for fiscal quarter-end financial statements]

 

1.             The Borrower has delivered the unaudited financial statements
required by Section 6.01(b) of the Agreement for the fiscal quarter of the
Borrower ended as of the above date.  Such financial statements fairly present,
in all material respects, the financial condition, results of operations and
cash flows of the Consolidated Parties in accordance with GAAP as at such date
and for such period, subject only to normal year-end audit adjustments and the
absence of footnotes.

 

2.             The undersigned has reviewed and is familiar with the terms of
the Agreement and has made, or has caused to be made under his/her supervision,
a detailed review of the transactions and condition (financial or otherwise) of
the Borrower during the accounting period covered by such financial statements.

 

3.             A review of the activities of the Borrower during such fiscal
period has been made under the supervision of the undersigned with a view to
determining whether during such fiscal period the Borrower performed and
observed all its Obligations under the Loan Documents, and

 

[select one:

]

[to the knowledge of the undersigned, during such fiscal period no Default or
Event of Default has occurred and is continuing.]

—or—

[to the knowledge of the undersigned, during such fiscal period the following
Defaults and Events of Default exist:(1)]

 

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(1)  Specify nature and extent thereof and what action Borrower proposes to take
with respect thereto.

 

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4.             The representations and warranties of the Borrower contained in
Article V of the Agreement are true and correct in all material respects on and
as of the date hereof, except (a) to the extent that such representations and
warranties specifically refer to an earlier date, in which case they are true
and correct as of such earlier date, and (b) except that (i) the representations
and warranties contained in subsections (a), (b) and (c) of Section 5.05 refer
to the most recent statements furnished pursuant to clauses (a) and (b),
respectively, of Section 6.01; and (ii) the representations and warranties
contained in Section 5.13(a) refer to the most recent update to Schedule
5.13(a) furnished pursuant to Section 6.02(a)(ii), and are true and correct in
all material respects as of the effective date of such update, and (iii) the
representations and warranties contained in the first and second sentences of
Section 5.21 refer to the most recent update to Schedule 5.21 furnished pursuant
to Section 6.02(a)(i), and are true and correct in all material respects as of
the effective date of such update.

 

5.             The financial covenant analyses and information set forth on
Schedule 1 attached hereto are true and accurate in all material respects as of
the Financial Statement Date covered by this Certificate.

 

6.             The updates to Schedules 5.21 and 5.13(a) attached hereto and the
list of all Projects Under Development attached hereto are true and accurate on
and as of the Financial Statement Date covered by this Certificate.

 

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IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
               ,      .

 

BORROWER:

Franklin Street Properties Corp.,

 

a Maryland corporation

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

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SCHEDULE 1

Franklin Street Properties Corp.
Financial Covenants

 

          [Date]

 

(in thousands, except percentages and ratios)

 

1.  Maximum Leverage Ratio

 

 

 

 

 

 

 

Indebtedness to

 

 

 

Total Indebtedness

 

Total Asset Value

 

Total Asset Value

 

 

 

 

 

 

 

 

 

Not to exceed 60% to be increased to 65% of Total Asset Value for the fiscal
quarter in which a Significant Acquisition occurs and for the immediately
succeeding three fiscal quarters thereafter (a “Leverage Increase Period”),
provided that (i) the Borrower may not elect more than two (2) Leverage Increase
Periods during the term of the Loans, and (ii) any such Leverage Increase
Periods shall be non-consecutive

 

 

 

 

 

 

 

 

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Total Asset Value(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unencumbered Asset Value (see Schedule A)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Encumbered Asset Value (see Schedule B)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrestricted Cash

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value of unimproved land holdings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book value of construction in progress

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Carrying value of performing mortgage loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets Held for Syndication

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage Loan Receivable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment in Sponsored REITs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Asset Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Indebtedness

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revolver Loan Balance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Term Loan Balance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative Termination Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Secured Debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Indebtedness

 

 

 

 

 

 

 

Exclude Hedge Ineffectiveness

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Parties’ Equity Percentage of Indebtedness of Unconsolidated
Affiliates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Indebtedness

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2. Maximum Secured Leverage Ratio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Secured Indebtedness of the Consolidated Parties

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Asset Value

 

 

 

 

 

 

 

 

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(2) to the extent the aggregate of Investments in Projects under Development,
undeveloped land holdings, Joint Venture Projects and Joint Ventures, Securities
Holdings and Mortgages to non-affiliates (excluding Mortgages to Sponsored
REITS) would exceed 10% of Total Asset Value, such aggregate excess shall be
excluded.

 

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% of Secured Indebtedness over Total Asset Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maximum % of Secured Indebtedness not to exceed 30% of Total Asset Value

 

 

 

 

 

 

 

 

3. Minimum Fixed Charge Cover Ratio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA to

 

 

 

Adjusted EBITDA

 

Fixed Charges

 

Fixed Charge Ratio

 

Minimum 1.5:1

 

$

 

 

 

 

 

 

 

4. Maximum Unencumbered Leverage Ratio

 

 

 

 

 

 

 

 

 

 

 

 

Unsecured

 

Unencumbered

 

Leverage

 

 

 

Indebtedness

 

Asset Value

 

Ratio

 

 

 

 

 

 

 

 

 

Not to exceed 60% to be increased to 65% of Unencumbered Asset Value for the
fiscal quarter in which a Significant Acquisition occurs and for the immediately
succeeding three fiscal quarters thereafter, provided that (i) the Borrower may
not elect more than two (2) Leverage Increase Periods during the term of the
Loans, and (ii) any such Leverage Increase Periods shall be non-consecutive.

 

 

 

 

 

 

 

 

5. Minimum Unsecured Interest Coverage

 

 

 

 

 

 

 

 

 

 

 

 

Quarterly

 

 

 

 

 

 

 

Unencumbered NOI

 

Interest Expense

 

NOI to Interest Expense

 

 

 

 

 

 

 

 

 

Equal to 1.75:1 or more

 

 

 

 

 

 

 

 

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

 

6. Minimum Tangible Net Worth(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Assets, less:

 

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

(a) Book Value of Intangible Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(b) Write-up of book value subsequent to Balance Sheet date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(c) Subscriptions Receivable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(d) Derivative assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Liabilities (excluding derivative liabilities)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tangible Net Worth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Required Net Worth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Required as of 10/18/2017

 

 

 

 

 

$

661,752,000

 

 

 

 

 

 

 

 

 

Equity Offering after 10/18/2017 (add 75% of net proceeds from equity offerings)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ATM Equity Offering after 10/18/2017 (add 75% of net proceeds from equity
offerings)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Required Net Worth

 

 

 

 

 

 

 

 

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

(3)  Total Assets and Total Liabilities shall also exclude an asset or liability
created by Hedge Ineffectiveness and the Swap Termination Value.

 

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

 

Franklin Street Properties Corp.
Financial Covenants

 

        [Date]

 

Schedule A

 

Unencumbered Asset Value

 

 

 

Date

 

Cap Rate

 

Unencumbered Asset
Value

 

 

 

 

 

 

 

 

 

Quarterly NOI

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

x 4

 

6.75%/7.5% (4)

 

$

 

 

 

 

 

 

 

 

 

 

Annual NOI

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

x 4

 

6.75%/7.5% (3)

 

$

 

 

 

 

 

 

 

 

 

 

Acquisition costs of new properties (for first 4 quarters)

 

 

 

 

 

$

 

 

 

 

 

 

 

 

 

 

Unencumbered Asset Value

 

 

 

 

 

$

 

 

 

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

(4)  6.75% for CBD or Urban Infill Property/7.5% for Suburban Property

 

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

 

Schedule B        

 

Encumbered Asset Value

 

 

 

Date

 

Cap Rate

 

Encumbered
Asset Value

 

 

 

 

 

 

 

 

 

Quarterly NOI

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

x 4

 

6.75%/7.5% (5)

 

$

 

 

 

 

 

 

 

 

 

 

Annual NOI

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

x 4

 

6.75%/7.5% (4)

 

$

 

 

 

 

 

 

 

 

 

 

Acquisition costs of new properties (for first 4 quarters)

 

 

 

 

 

$

 

 

 

 

 

 

 

 

 

 

Encumbered Asset Value

 

 

 

 

 

$

 

 

 

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

(5)  6.75% for CBD or Urban Infill Property/7.5% for Suburban Property

 

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

 

Franklin Street Properties Corp.
Consolidated Statement of Income

(Audited/Unaudited)

 

                  [Date]

 

EBITDA

 

 

 

 

 

Net Income

 

 

 

 

 

Non-recurring/Extraordinary /GOS/Acq Cost

 

 

 

 

 

Interest including deferred financing costs

 

 

 

 

 

Taxes

 

 

 

 

 

Depreciation & Amortization

 

 

 

 

 

Amortization of leases (in revenue)

 

 

 

 

 

Pro Rata Share Unconsolidated Affiliates

 

 

 

 

 

Hedge ineffectiveness

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

 

 

 

 

Capital Item allowance ($.30 sf/year)

 

 

 

 

 

Adjusted EBITDA

 

 

 

 

 

 

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

 

Franklin Street Properties Corp.
Financial Covenants

 

Quarterly Debt Service
                  [Date]

 

Interest Expense

 

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

 

Franklin Street Properties Corp.
Property NOI
                  [Date]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost

 

Q_ NOI

 

 

 

 

Name

 

City

 

State

 

S.F.

 

Most
Recent FQ

 

Most Recent
FQ

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unencumbered NOI

 

 

 

 

 

 

 

 

 

 

 

 

 

Property NOI for the quarter

 

 

 

 

 

 

 

 

 

—

 

 

 

Less: Capital Item allowance ($.30 sf/year, including acquisitions)

 

 

 

 

 

 

 

 

 

 

 

(a)

 

Adjustment for management fees to 3%

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal before gross-up of of partial quarter acquisitions

 

 

 

 

 

 

 

 

 

—

 

 

 

Gross up for current quarter

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property NOI for the quarter

 

 

 

 

 

 

 

 

 

—

 

 

 

Less: New acquisitions (if less than 4 quarters)

 

 

 

 

 

 

 

 

 

—

 

 

 

Less: Capital Item allowance ($.30 sf/year, including acquisitions)

 

 

 

 

 

 

 

 

 

 

 

(a)

 

Adjustment for management fees to 3%

 

 

 

 

 

 

 

 

 

 

 

 

 

NOI for Unencumbered Asset Value calculation

 

 

 

 

 

 

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cap rate per loan agreement

 

 

 

 

 

 

 

 

 

6.75%/7.5%(6)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Value of the Properties:

 

 

 

 

 

 

 

 

 

 

 

 

 

Calculated above

 

 

 

 

 

 

 

 

 

—

 

 

 

Acquisitions at cost

 

 

 

 

 

 

 

 

 

—

 

 

 

Unencumbered Asset Value

 

 

 

 

 

 

 

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Encumbered NOI

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOI is net of actual management fees paid, adjustment is to (increase)/ decrease
fees to 3% level

 

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

(6)  6.75% for CBD or Urban Infill Property/7.5% for Suburban Property

 

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

 

Franklin Street Properties Corp.
Management Fee Calculation(7)
                  [Date]

 

 

 

9 Months

 

6 Months

 

3 Months

 

 

 

 

 

 

 

 

 

Calculation:

 

 

 

 

 

 

 

Total rental revenue for 10-Q/10-K

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Excluded revenues:

 

 

 

 

 

 

 

Termination Fees

 

 

 

 

 

 

 

Amort - Favorable lease

 

 

 

 

 

 

 

Lease Induce/Rent reduct

 

 

 

 

 

 

 

FASB 13 Revenue

 

 

 

 

 

 

 

Management fee & interest income

 

 

 

 

 

 

 

Revenue from sold properties

 

 

 

 

 

 

 

Total excluded revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross revenues

 

$

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

3% of Gross Revenues

 

$

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

Less Actual management fees charged:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustment required

 

$

 

 

$

 

 

$

 

 

 

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

(7)  To be adjusted as appropriate to determine management fees for the quarter.

 

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

 

SCHEDULE 10.02

 

ADMINISTRATIVE AGENT’S OFFICE;

 

CERTAIN ADDRESSES FOR NOTICES

 

BORROWER:

 

 

401 Edgewater Place, Suite 200

 

Wakefield, Massachusetts 01880-6210

 

Attention: Chief Financial Officer

 

Telephone:

 

Facsimile:

 

Electronic Mail:

 

www.franklinstreetproperties.com

 

 

With a copy to:

WilmerHale

 

 

60 State Street

 

 

Boston, Massachusetts 02109

 

 

Attention: Jamie Class, Esq.

 

 

Telephone:

 

 

Telecopier:

 

 

Electronic Mail:

 

[Administrative Agent address on following page(s)]

 

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

 

ADMINISTRATIVE AGENT:

 

 

Administrative Agent’s Office

(for payments and Requests for Borrowings):

 

 

JPMorgan Loan Services

 

 

10 South Dearborn, Floor L2

 

 

Chicago, IL   60603-2003

 

 

Fax: 

 

 

Email: 

 

Administrative Agent’s Closing Contact

 

 

JPMorgan Loan Services

 

 

10 South Dearborn, Floor L2

 

 

Chicago, IL   60603-2003

 

 

Fax: 

 

 

Email: 

 

Other Notices as Administrative Agent:

 

 

JPMorgan Loan Services

 

 

10 South Dearborn, Floor L2

 

 

Chicago, IL   60603-2003

 

 

Fax: 

 

 

Email: 

 

LENDERS:

 

 

JPMorgan Loan Services

 

 

10 South Dearborn, Floor L2

 

 

Chicago, IL   60603-2003

 

 

Fax: 

 

 

Email: 

 

With a copy to: Goulston & Storrs PC

 

 

400 Atlantic Avenue

 

 

Boston, Massachusetts  02110

 

 

Attention:  James H. Lerner, Esq.

 

 

Telephone: 

 

 

Telecopier: 

 

 

Electronic Mail: 

 

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