Exhibit 10.42
EXTENSION AGREEMENT
AND REAFFIRMATION OF LOAN DOCUMENTS
 

 
THIS EXTENSION AGREEMENT AND REAFFIRMATION OF LOAN DOCUMENTS (this “Extension
Agreement”) is made and entered into as of October 30, 2009 (the “Extension
Date”), by and among DOUGLAS EMMETT 2006, LLC, a Delaware limited liability
company (“Borrower”); BANK OF AMERICA, N.A., a national banking association, as
a Lender (in such capacity, “BofA”), Swing Line Lender and L/C Issuer; BMO
CAPITAL MARKETS FINANCING, INC., as a Lender; BAYERISCHE LANDESBANK, as a
Lender; ING REAL ESTATE FINANCE (USA) LLC, as a Lender, LANDESBANK
BADEN-WÜRTTEMBERG, as a Lender; WACHOVIA BANK, NATIONAL ASSOCIATION, as a
Lender, and BANK OF AMERICA, N.A., a national banking association, as
administrative agent for the Lenders (in such capacity, together with its
successors in such capacity, the “Administrative Agent”).  Each of the parties
identified above as a Lender, together with any other party who is currently a
lender under the Credit Agreement or becomes a lender party to the Credit
Agreement after the date hereof pursuant to Section 10.06 of the Credit
Agreement, are sometimes referred to herein individually as a “Lender” and
collectively as the “Lenders”.
 
RECITALS
 
A.           Borrower, the Administrative Agent, certain Lenders, Bank of
America, N.A., a national banking association, as L/C Issuer (the “L/C Issuer”),
Bank of America, N.A., a national banking association, as Swing Line Lender (the
“Swing Line Lender”) and certain other parties acting as Co-Syndication Agents
thereunder, entered into that certain Credit Agreement, dated as of October 30,
2006 (the “Original Credit Agreement”), as amended by that certain First
Amendment to Credit Agreement, dated as of March 1, 2007 (the “First Amendment”)
and as further amended by that certain Second Amendment to Credit Agreement,
dated as of August 31, 2007 (the “Second Amendment”, and together with the
Original Credit Agreement and the First Amendment, collectively, the “Credit
Agreement”).  By certain Assignments and Acceptances, ING Real Estate Finance
(USA) LLC, and Landesbank Baden-Württemberg acquired their respective interests
in the Credit Agreement.  All capitalized terms used in this Extension Agreement
(including in the recitals hereof) and not otherwise defined herein shall have
the meanings assigned to them in the Credit Agreement, as modified hereby.
 
B.           Pursuant to Section 2.14 of the Credit Agreement, Borrower was
granted the right to extend the Existing Maturity Date for two consecutive
one-year Extension Periods, subject to the satisfaction of certain conditions
precedent.
 
C.           On July 6, 2009, Borrower delivered a letter to the Administrative
Agent (the “Extension Notice”), requesting the extension of the Existing
Maturity Date for a one-year period (i.e., from October 30, 2009 to October 30,
2010) from the Existing Maturity Date of October 30, 2009 (the “Extension”).
 
D.           Upon receipt of the Extension Notice, Administrative Agent arranged
for new Appraisals of the Borrowing Base Properties and undertook review of the
compliance of the credit facility with the loan-to-value and Debt Service
Coverage Ratio tests set forth in Sections 2.14(a)(iv) and (v) of the Credit
Agreement and based on that review, certain changes described in this Extension
Agreement are required to be made to the Aggregate Commitments and the Allocated
Loan Amounts.
 
E.           Administrative Agent, the Lenders and Borrower are executing this
Agreement to evidence and confirm the Extension.
 

 
AGREEMENT
 
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants,
conditions and agreements herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Borrower, the Administrative Agent, the Swing Line Lender, the L/C Issuer and
the Lenders agree as follows:
 
1. Extension of Maturity Date.  The Existing Maturity Date is hereby extended to
October 30, 2010, and (a) all references to “Maturity Date” in the Credit
Agreement and the Loan Documents shall hereinafter be deemed to refer to October
30, 2010 and (b) except as set forth herein, all terms and conditions of the
Credit Agreement and the other Loan Documents, shall continue to apply.  It is
understood and agreed that after extending the Existing Maturity Date as set
forth herein, Borrower shall have only one further extension right remaining
under Section 2.14 of the Credit Agreement.
 
2. Commitment Decrease.  Borrower, the Administrative Agent, the Swing Line
Lender, the L/C Issuer and the Lenders acknowledge and agree that, as of the
Extension Date, based on sixty-five percent (65%) of the aggregate Appraised
Values of the Borrowing Base Properties, which Appraised Values are based on the
“as is” value established by a new Appraisal for each Borrowing Base Property
delivered pursuant to Section 2.14 of the Credit Agreement, the Aggregate
Commitments have decreased from $370,000,000 to $350,000,000.  Accordingly, upon
the Extension Date, the Loan Documents and all exhibits and schedules to the
Credit Agreement are hereby modified to replace any references therein to the
aggregate extension of credit pursuant to the Credit Agreement as “$370,000,000”
with “$350,000,000”.
 
3. Elimination of Accordion Feature.  Borrower, the Administrative Agent, the
Swing Line Lender, the L/C Issuer and the Lenders acknowledge and agree that, as
of the Extension Date, there shall be no further right of Borrower to request an
increase in the Commitments, and as of the Extension Date, Section 2.15 of the
Credit Agreement is hereby deleted in its entirety and replaced with “Reserved”.
 
4. Schedules.  As of the Extension Date, the following schedules to the Credit
Agreement are hereby modified as follows:
 
(a) Schedule 2.01 of the Credit Agreement (Commitments and Applicable
Percentages) and the Commitments and Applicable Percentages set forth therein
are hereby deleted and replaced in their entirety with the Third Amended and
Restated Schedule 2.01 (Commitments and Applicable Percentages) attached hereto
as Exhibit A and the Commitments and Applicable Percentages set forth
therein.  All references in the Loan Documents to the “Commitments” and all
references in the Loan Documents to the “Applicable Percentages” shall hereafter
refer to the Commitments and Applicable Percentages set forth in the Third
Amended and Restated Schedule 2.01 attached hereto as Exhibit A.
 
(b) Schedule 5.05 of the Credit Agreement (Indebtedness) is hereby revised with
respect to item 12 thereof to reference financial statements delivered prior to
the Extension Date rather than the Closing Date.
 
(c) Schedule 5.08 of the Credit Agreement (Borrowing Base Properties; Credit
Facility Guarantors; Allocated Loan Amounts; Property Managers) and the
Borrowing Base Properties, Credit Facility Guarantors, Allocated Loan Amounts
and Property Managers set forth therein are hereby deleted and replaced in their
entirety with the Second Amended and Restated Schedule 5.08 (Borrowing Base
Properties; Credit Facility Guarantors; Allocated Loan Amounts; Property
Managers) attached hereto as Exhibit B and the Borrowing Base Properties, Credit
Facility Guarantors, Allocated Loan Amounts and Property Managers set forth
therein.  All references in the Loan Documents to the “Borrowing Base
Properties”, “Credit Facility Guarantors”, “Allocated Loan Amounts” and
“Property Managers” shall hereafter refer to the Borrowing Base Properties,
Credit Facility Guarantors, Allocated Loan Amounts and Property Managers set
forth in the Second Amended and Restated Schedule 5.08 attached hereto as
Exhibit B.
 
(d) Schedule 5.25 of the Credit Agreement (Rent Rolls) is hereby replaced in its
entirety with Second Amended and Restated Schedule 5.25 attached hereto as
Exhibit C.
 
(e) Schedule 7.01 of the Credit Agreement is hereby revised with respect to item
6 thereof to include liens securing Indebtedness under title encumbrances
recorded against Excluded Properties as of the Extension Date.
 
5. Memorandum of Extension Agreement.  Concurrently herewith, each Credit
Facility Guarantor and the Administrative Agent are executing and delivering a
Memorandum of Extension Agreement and Reaffirmation of Loan Documents (the
“Memorandum of Extension Agreement”).  Borrower hereby agrees to cause Title
Insurer to record the Memorandum of Extension Agreement, and to issue such
endorsements to the Title Policies to the effect that the validity and priority
of the Deeds of Trust insured thereunder have not been and will not be impaired
by this Extension Agreement or the transactions contemplated by it, as may be
deemed reasonably necessary by the Administrative Agent, in such form as may be
reasonably acceptable to the Administrative Agent.  Borrower hereby agrees to
pay to the Title Insurer all expenses and premiums of the Title Insurer in
connection with the issuance of such endorsements, and all recording and filing
fees payable in connection with recording the Memorandum of Extension Agreement.
 
6. Fees and Expenses.  On or prior to the Extension Date, Borrower hereby agrees
to pay (which may be through a Borrowing) (a) all fees due and payable as of the
Extension Date to BofA and the Administrative Agent pursuant to the Fee Letter
and the Modification Fee Letter, (b) any other fees due as of the Extension Date
to the Administrative Agent pursuant to the Loan Documents, and (c) any fees and
expenses due as of the Extension Date to the Administrative Agent of the type to
be reimbursed by Borrower pursuant to Section 10.04(a)(ii) of the Credit
Agreement with respect to the extension provided for in this Extension Agreement
and the other documents to be delivered pursuant hereto (provided that, with
respect to the fees and expenses of legal counsel to the Administrative Agent,
Borrower shall be furnished a reasonably detailed invoice from such counsel and
90% of such fees and expenses shall be paid upon the Extension Date, with the
remaining 10% of such fees and expenses to be paid promptly following the
delivery by such legal counsel of closing binders with respect to the extension
pursuant hereto).
 
7. References.  From and after the Extension Date, all references in the Loan
Documents to the “Credit Agreement” or the “Loan Documents” or to any Loan
Document (whether by reference to a “Loan Document” or to the specific document
name or defined term for a document included within the meaning of “Loan
Document”) shall be deemed to refer to the Credit Agreement, the Loan Documents
or such Loan Document, as amended, modified and supplemented hereby and, as
applicable and subject to Section 9(g) below, by the documents executed and
delivered by the Loan Parties in connection with this Extension Agreement.
 
8. Reaffirmation.
 
(a) Borrower hereby (i) reaffirms, ratifies, confirms, and acknowledges its
obligations under each Note, the Credit Agreement, and all the other Loan
Documents, and agrees to continue to be bound thereby and perform thereunder,
and (ii) agrees and acknowledges that all such Loan Documents and all of
Borrower’s obligations thereunder are and remain in full force and effect and,
except as expressly provided herein and in the reaffirmation documents
referenced herein, have not been modified.
 
(b) Concurrently herewith, (i) each Credit Facility Guarantor is executing and
delivering to the Administrative Agent a Second Reaffirmation of Credit Facility
Guaranty and (ii) OP Guarantor is executing and delivering to the Administrative
Agent a Second Reaffirmation of OP Guaranty.  Each such reaffirmation is a “Loan
Document” and all references herein, in the Credit Agreement and in the Loan
Documents to the “Guaranty” or to any specific Loan Document included in the
definition of Guaranty shall be deemed to include the reaffirmation of such
Guaranty.
 
(c) Concurrently herewith, each Credit Facility Guarantor is executing and
delivering to Administrative Agent a Second Reaffirmation of Contribution
Agreement.  Such reaffirmation is not a “Loan Document” and all references
herein, in the Credit Agreement and in the Loan Documents to the “Contribution
Agreement” shall be deemed to include such reaffirmation.
 
(d) Concurrently herewith, Borrower and the OP Guarantor are executing and
delivering to Administrative Agent a Second Reaffirmation of the Reimbursement
Agreement.   Such reaffirmation is not a “Loan Document” and all references
herein, in the Credit Agreement and in the Loan Documents to the “Reimbursement
Agreement” shall be deemed to include such reaffirmation.
 
(e) Concurrently herewith, Property Manager is executing and delivering to
Administrative Agent the Reaffirmation of Property Manager’s Consent and
Subordination Agreement.  Such reaffirmation is a “Loan Document” and all
references herein, in the Credit Agreement and in the Loan Documents to the
“Property Manager’s Consent” shall be deemed to include such reaffirmation.
 
9. Representations and Warranties.  Borrower hereby represents and warrants to
the Administrative Agent and the Lenders as follows:
 
(a) Borrower has full power and authority to enter into this Extension Agreement
and the reaffirmation documents referenced herein and perform its obligations
hereunder and thereunder, and Borrower’s execution and delivery of this
Extension Agreement and the reaffirmation documents referenced herein have been
duly authorized by all necessary limited liability company action.  Except for
recordings or filings contemplated by this Extension Agreement or the other Loan
Documents, no approval, consent, exemption, authorization, or other action by,
or notice to, or filing with, any Governmental Authority or any other Person
that has not been obtained, taken or performed is necessary or required in
connection with the execution, delivery or performance by Borrower of this
Extension Agreement, the reaffirmation documents referenced herein or any
document or instrument to be delivered by Borrower pursuant hereto.  This
Extension Agreement, the reaffirmation documents referenced herein and the
documents and instruments delivered by Borrower pursuant hereto have been duly
executed and delivered, and constitute the legal, valid and binding obligation
of Borrower, enforceable against Borrower in accordance with their respective
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws affecting the
enforcement of creditors’ rights generally, or by equitable principles relating
to enforceability (whether such enforceability is considered in a proceeding in
equity or at law).
 
(b) As of the date of the Extension Notice, the Extension Date and immediately
after giving effect to this Extension Agreement and the modifications to the
Loan Documents contemplated hereby, no Default or Event of Default or event
which, if uncured after the giving of notice, the passage of time, or both,
would become an Event of Default, exists.
 
(c) As of the Extension Date, each Credit Facility Guarantor identified in
Second Amended and Restated Schedule 5.08 has good and marketable title in fee
simple to, and/or valid leasehold interests in (as disclosed in such Schedule),
the corresponding Borrowing Base Property listed in such Schedule, subject to no
Liens, other than Permitted Title Exceptions and rights of equipment lessors
under equipment leases that comply with the requirements of Section 7.03(e) of
the Credit Agreement.  As of the date hereof, the property of Borrower is
subject to no Liens, other than Liens in favor of the Administrative
Agent.  There are no outstanding options to purchase or rights of first refusal
to purchase affecting the Borrowing Base Properties.
 
(d) As of the Extension Date and immediately after giving effect to this
Extension Agreement and the modifications to the Loan Documents contemplated
hereby, Borrower reaffirms all of its obligations under the Loan Documents (as
so modified), and Borrower acknowledges that it has no claims, offsets or
defenses with respect to the payment of sums due under any Note or any other
Loan Document.  Without limiting the foregoing, as of the date hereof, Borrower
hereby confirms (i) that, as of the date hereof, Committed Loans in the
aggregate amount of $0 are outstanding; (ii) that, as of the date hereof, Swing
Line Loans in the aggregate amount of $0 are outstanding; (iii) that the L/C
Issuer has not issued any Letters of Credit which remain outstanding; and (iv)
that interest currently due on the Loans has been paid through (but not
including) September 30, 2009.  The Notes heretofore issued pursuant to the
Credit Agreement shall continue to evidence the obligations arising under the
Credit Agreement as modified hereby.
 
(e) As of the Extension Date and immediately after giving effect to this
Extension Agreement and the modifications to the Loan Documents contemplated
thereby, except as set forth on Exhibit D hereto (and except 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 except that
the representations and warranties contained in clauses (a) and (b) of Section
5.05 of the Original Credit Agreement shall be deemed to refer to the most
recent statements furnished pursuant to clauses (a), (b), (c) and (d), of
Section 6.01 thereof), all representations and warranties made and given by
Borrower and Guarantors in the Loan Documents are true, accurate and correct.
 
10. Miscellaneous.
 
(a) Controlling Provisions.  In the event of any inconsistencies between the
provisions of this Extension Agreement and the provisions of any other Loan
Document, the provisions of this Extension Agreement shall govern and
prevail.  Except as expressly modified by this Extension Agreement and the
reaffirmation documents referenced herein, the Loan Documents shall not be
modified and shall remain in full force and effect.
 
(b) Further Assurances.  At the Administrative Agent’s request, Borrower shall
promptly execute any other document or instrument and/or seek any consent or
agreement from any third party that the Administrative Agent reasonably
determines is necessary to evidence or further, or is otherwise relevant to, the
intent of the parties, as set forth in this Extension Agreement, provided, the
same shall not result in a decrease of the rights of Borrower or result in an
increase in Borrower’s obligations under the Loan Documents.  At the
Administrative Agent’s request, Borrower shall promptly cause any other Loan
Party or any of the holders of any equity interest in any other Loan Party, as
applicable, to execute any other document or instrument and/or diligently seek
any consent or agreement from any third party that the Administrative Agent
reasonably determines is necessary to evidence or further, or is otherwise
relevant to, the intent of the parties, as set forth in this Extension
Agreement, provided the same shall not result in a decrease of the rights of
such Loan Party or result in an increase in such Loan Party’s obligations under
the Loan Documents, as intended to be modified hereby.
 
(c) Counterparts.  This Extension Agreement may be executed by one or more of
the parties to this Extension Agreement in any number of separate counterparts,
each of which, when so executed, shall be deemed an original, and all of said
counterparts taken together shall be deemed to constitute but one and the same
instrument.
 
(d) Entire Agreement.  This Extension Agreement, together with the other Loan
Documents, set forth the entire agreement and understanding among Borrower, the
Administrative Agent and the Lenders, and supersedes all prior or
contemporaneous agreements and understandings of such Persons, verbal or
written, relating to the subject matter hereof and thereof.  This Extension
Agreement shall not prejudice any rights or remedies of the Administrative Agent
or the Lenders under the Loan Documents.  The Administrative Agent and each
Lender reserve, without limitation, all rights which each has against any
indemnitor, guarantor, or endorser of the Notes.  Nothing in this Extension
Agreement shall impair the lien of any Deed of Trust, which as hereby amended
shall remain a deed of trust with a power of sale, creating a first lien
encumbering the applicable Borrowing Base Property (subject to the Permitted
Title Exceptions applicable to such Borrowing Base Property).
 
(e) GOVERNING LAW. THIS EXTENSION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA.
 
(f) Limitation of Liability.  The provisions of Section 10.20 of the Original
Credit Agreement shall apply to the terms of the Credit Agreement as amended by
this Extension Agreement and are hereby incorporated herein by this reference.
 
(g) Loan Documents.  Notwithstanding anything to the contrary contained herein,
it is understood and agreed that none of the reaffirmations delivered pursuant
to this Extension Agreement with respect to any of the documents that (pursuant
to Section 10.23 of the Credit Agreement) are not Loan Documents shall be
considered “Loan Documents.”
 

 
 
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IN WITNESS WHEREOF, Borrower, the Administrative Agent, the Swing Line Lender,
the L/C Issuer and the Lenders party hereto have caused this Extension Agreement
to be executed by their duly authorized representatives as of the day, month and
year first above written.
 
BORROWER:

 
DOUGLAS EMMETT 2006, LLC,
 
a Delaware limited liability company

 
By:
Douglas Emmett Management, Inc., a Delaware corporation, its Manager

By: ________________________
Name:           William Kamer
Title:           Chief Financial Officer

[Signatures continue on the next page.]

 
 
 

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LENDERS:

 
BANK OF AMERICA, N.A., as a Lender, L/C Issuer
 
 
and Swing Line Lender
 

By:  _________________________________
Name:  _______________________________
Title:  ________________________________

[Signatures continue on the next page.]

 
 
 

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BMO CAPITAL MARKETS FINANCING, INC.,
 
 
as Lender
 

By:  _________________________________
Name:  _______________________________
Title:  ________________________________

 
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BAYERISCHE LANDESBANK, NEW YORK BRANCH, as Lender
 

By:  _________________________________
Name:  _______________________________
Title:  ________________________________

 
By:  _________________________________
Name:  _______________________________
Title:  ________________________________

 
[Signatures continue on the next page.]

 
 
 

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ING REAL ESTATE FINANCE (USA) LLC, as Lender
 
By:  _________________________________
Name:  _______________________________
Title:  ________________________________

By:  _________________________________
Name:  _______________________________
Title:  ________________________________

[Signatures continue on the next page.]

 
 
 

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LANDESBANK BADEN-WÜRTTEMBERG, as Lender
 

By:  _________________________________
Name:  _______________________________
Title:  ________________________________

 
By:  _________________________________
Name:  _______________________________
Title:  ________________________________

 
[Signatures continue on the next page.]

 
 
 

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WACHOVIA BANK, NATIONAL ASSOCIATION, as Lender
 

By:  _________________________________
Name:  _______________________________
Title:  ________________________________

 

 
[Signatures continue on the next page.]
 

 

 
 
 

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ADMINISTRATIVE AGENT:
 

BANK OF AMERICA, N.A., as Administrative Agent

By:  _________________________________
Name:  _______________________________
Title:  ________________________________

 
 
 

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