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PARTICIPATION AGREEMENT
dated as of August 22, 1997
among
QUANTUM CORPORATION,
as Lessee
LEASE PLAN NORTH AMERICA, INC.,
as Lessor and as a Participant,
ABN AMRO BANK N.V., SAN FRANCISCO INTERNATIONAL BRANCH,
as a Participant,
and
ABN AMRO BANK N.V., SAN FRANCISCO INTERNATIONAL BRANCH,
as Agent
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Specialty Storage Product Group Facilities
TABLE OF CONTENTS
Page
SECTION 1
DEFINITIONS; INTERPRETATION..............................................................................2
SECTION 2
CLOSING DATE.............................................................................................2
SECTION 3
ACQUISITION OF THE PROPERTY; FUNDING OF ADVANCES.........................................................2
SECTION 3.1 Lessor Commitment......................................................................2
SECTION 3.2 Participants' Commitments..............................................................2
SECTION 3.3 Procedures for Acquisition of the Land Interest........................................3
SECTION 3.4 Procedures for Advances................................................................3
SECTION 3.5 Allocation of Commitments..............................................................3
SECTION 3.6 Use of Commitments.....................................................................4
SECTION 3.7 Termination, Extension or Reduction of Participants' Commitments.......................4
SECTION 3.8 Interest Rates; Yield and Payment Dates................................................6
SECTION 3.9 Computation of Interest and Yield......................................................7
SECTION 3.10 Pro Rata Treatment and Payments...............................................7
SECTION 3.11. The Account...................................................................8
SECTION 3.12. Basic Rent....................................................................8
SECTION 3.13 Purchase Payments by Lessee...................................................9
SECTION 3.14 Residual Value Guarantee Amount Payment by Lessee............................10
SECTION 3.15 Sales Proceeds of Remarketing of Property....................................10
SECTION 3.16 Supplemental Rent............................................................11
SECTION 3.17 Excepted Payments............................................................11
SECTION 3.18 Distribution of Payments After Event of Default..............................11
SECTION 3.19 Other Payments...............................................................13
SECTION 3.20 Casualty and Condemnation Amounts............................................13
SECTION 3.21 Order of Application.........................................................13
SECTION 4 FEES...................................................................................................14
SECTION 4.1 Commitment Fees.......................................................................14
SECTION 4.2 Lease Arrangement Fee.................................................................14
SECTION 4.3 Administrative Fee....................................................................14
SECTION 4.4 Extension Fee.........................................................................14
SECTION 4.5 Overdue Fees..........................................................................14
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SECTION 5
CERTAIN INTENTIONS OF THE PARTIES.......................................................................14
SECTION 5.1 Nature of Transaction.................................................................14
SECTION 5.2 Amounts Due Under Lease...............................................................15
SECTION 6
CONDITIONS PRECEDENT TO
ACQUISITION OF LAND INTEREST AND ADVANCES...............................................................16
SECTION 6.1 Conditions Precedent -- Documentation.................................................16
(a) Acquisition and Funding Request.......................................................16
(b) Closing Date; Operative Documents.....................................................16
(c) Environmental Certificate.............................................................17
(d) Preliminary Letter of Value...........................................................17
(e) Deed..................................................................................17
(f) Lease Supplement; Equipment Schedule..................................................17
(g) Survey and Title Insurance............................................................18
(h) Evidence of Recording and Filing......................................................18
(i) Evidence of Insurance.................................................................18
(j) Evidence of Use of Proceeds...........................................................18
(k) Taxes.................................................................................18
(l) Opinions of Counsel...................................................................18
(m) Approvals.............................................................................19
(n) Litigation............................................................................19
(o) Requirements of Law...................................................................19
(p) Responsible Officer's Certificate of the Lessee.......................................19
(q) The Lessee's Resolutions and Incumbency Certificate, etc..............................19
(r) Responsible Officer's Certificate of the Guarantor....................................20
(s) The Guarantor's Resolutions and Incumbency Certificate, etc...........................20
(t) Land Interest Acquisition Date........................................................20
(u) No Material Adverse Effect............................................................20
(v) Responsible Officer's Certificate of the Lessor.......................................20
(w) The Lessor's Resolutions and Incumbency Certificate, etc..............................20
(x) Construction Budget...................................................................21
(y) Termination of Liens..................................................................21
(z) Property Purchase Agreement Conditions................................................21
SECTION 6.2 Further Conditions Precedent..........................................................21
(a) Representations and Warranties........................................................21
(b) Performance of Covenants..............................................................22
(c) Title.................................................................................22
(d) No Default............................................................................22
SECTION 6.3 Further Condition Precedent................................................................22
(a) Appraisal.............................................................................22
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SECTION 7
COMPLETION DATE CONDITIONS..............................................................................23
SECTION 7.1 Conditions............................................................................23
(a) Architect's Certificate...............................................................23
(b) Construction Completion...............................................................23
(c) Lessee Certification..................................................................23
SECTION 8
REPRESENTATIONS.........................................................................................23
SECTION 8.1 Representations of the Lessor.........................................................23
(a) Due Organization, etc.................................................................24
(b) Authorization; No Conflict............................................................24
(c) Enforceability, etc...................................................................24
(d) Litigation............................................................................24
(e) Assignment............................................................................24
(f) Defaults..............................................................................24
(g) Use of Proceeds.......................................................................24
(h) Securities Act........................................................................25
(i) Chief Place of Business...............................................................25
(j) Federal Reserve Regulations...........................................................25
(k) Investment Company Act................................................................25
(l) No Plan Assets........................................................................25
(m) Equity Source.........................................................................25
SECTION 8.2 Representations of the Participants...................................................25
(a) No Plan Assets........................................................................25
(b) Due Organization, etc.................................................................26
(c) Authorization; No Conflict............................................................26
(d) Enforceability, etc...................................................................26
(e) Litigation............................................................................26
SECTION 8.3 Representations of the Lessee.........................................................26
(a) Corporate Status......................................................................26
(b) Corporate Power and Authority.........................................................27
(c) No Violation..........................................................................27
(d) Litigation............................................................................27
(e) Governmental Approvals................................................................27
(f) Investment Company Act................................................................28
(g) Public Utility Holding Company Act....................................................28
(h) Accuracy of Information Furnished.....................................................28
(i) Taxes.................................................................................28
(j) Compliance with ERISA.................................................................28
(k) Environmental and Other Regulations...................................................28
(l) Offer of Securities, etc..............................................................29
(m) Financial Statements..................................................................29
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SECTION 8.4 Representations of the Lessee With Respect to the Property on the
Land Interest Acquisition Date.................................................................30
(a) Representations.......................................................................30
(b) Property..............................................................................30
(c) Title.................................................................................31
(d) Insurance.............................................................................32
(e) Lease.................................................................................32
(f) Protection of Interests...............................................................32
(g) Flood Hazard Areas....................................................................32
(h) Conditions Precedent..................................................................32
SECTION 8.5 Representations of the Lessee With Respect to Each Advance............................32
(a) Representations.......................................................................32
(b) Improvements..........................................................................33
(c) No Liens..............................................................................33
(d) Advance...............................................................................33
(e) Lease.................................................................................33
(f) Protection of Interests...............................................................33
(g) Title Insurance Date Down Endorsement.................................................33
SECTION 9
PAYMENT OF CERTAIN EXPENSES.............................................................................34
SECTION 9.1 Transaction Expenses..................................................................34
SECTION 9.2 Brokers' Fees and Stamp Taxes.........................................................34
SECTION 9.3 Obligations...........................................................................34
SECTION 10
OTHER COVENANTS AND AGREEMENTS..........................................................................35
SECTION 10.1. Covenants of the Lessee......................................................35
(a) Financial Statements, Reports, etc....................................................35
(b) Books and Records. ...................................................................36
(c) Inspections. .........................................................................36
(d) Insurance. ...........................................................................37
(e) Governmental Charges. ................................................................37
(f) General Business Operations. .........................................................37
(g) Indebtedness. ........................................................................38
(i) Asset Dispositions. ..................................................................42
(j) Mergers, Acquisitions, Etc. ..........................................................43
(k) Investments. .........................................................................43
(l) Dividends, Redemptions, Etc. .........................................................46
(m) Change in Business. ..................................................................47
(n) Certain Indebtedness Payments, Etc. ..................................................47
(o) ERISA. ...............................................................................48
(p) Transactions With Affiliates. ........................................................48
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(q) Accounting Changes. ..................................................................48
(r) Financial Covenants...................................................................48
(s) Appraisal.............................................................................49
SECTION 10.2. Cooperation with the Lessee..................................................50
SECTION 10.3. Covenants of the Lessor......................................................50
(a) Discharge of Liens....................................................................50
(b) Change of Chief Place of Business.....................................................50
SECTION 11.
PARTICIPATIONS..........................................................................................50
SECTION 11.1. Amendments; Actions on Default...............................................50
SECTION 11.2. General......................................................................52
SECTION 11.3 Conflicts....................................................................52
SECTION 11.4. Refusal to Give Consents or Fund.............................................53
SECTION 11.5. Required Repayments..........................................................54
SECTION 11.6. Indemnification..............................................................54
SECTION 11.7. Required Supplemental Payments...............................................55
SECTION 11.8. Application of Payments Received From Defaulting Participant As a
Cure For Payment Defaults......................................................................55
SECTION 11.9. Order of Application.........................................................55
SECTION 11.10. Investments Pending Dispute Resolution; Overnight Investments................55
SECTION 11.11. Agent to Exercise Lessor's Rights............................................56
SECTION 11.12. Exculpatory Provisions Regarding the Lessor..................................56
SECTION 12.
TRANSFERS OF PARTICIPANTS' INTERESTS....................................................................57
SECTION 12.1. Restrictions on and Effect of Transfer by Participants.......................57
(a) Required Notice and Effective Date....................................................57
(b) Assumption of Obligations.............................................................57
(c) Employee Benefit Plans................................................................58
(d) Representations.......................................................................58
(e) Amounts; Agent's Fee..................................................................58
(f) Applicable Law........................................................................58
(g) Effect................................................................................58
SECTION 12.2. Covenants and Agreements of Participants.....................................59
(a) Participations........................................................................59
(b) Transferee Indemnities................................................................59
SECTION 12.3. Future Participants..........................................................59
SECTION 13.
INDEMNIFICATION.........................................................................................59
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SECTION 13.1. General Indemnification......................................................59
SECTION 13.2. End of Term Indemnity........................................................62
SECTION 13.3. Environmental Indemnity......................................................63
SECTION 13.4. Proceedings in Respect of Claims.............................................64
SECTION 13.5. General Impositions Indemnity................................................65
(a) Indemnification.......................................................................65
(b) Payments..............................................................................65
(c) Reports and Returns...................................................................66
(d) Income Inclusions.....................................................................66
(e) Withholding Taxes.....................................................................67
(f) Contests of Impositions...............................................................67
(g) Documentation of Withholding Status...................................................69
(h) Limitation on Tax Indemnification.....................................................69
SECTION 13.6. Funding Losses...............................................................70
SECTION 13.7. Regulation D Compensation....................................................70
SECTION 13.8. Basis for Determining Interest Rate Inadequate or Unfair.....................70
SECTION 13.9. Illegality...................................................................71
SECTION 13.10. Increased Cost and Reduced Return............................................72
SECTION 13.11. Substitution of Participant..................................................73
SECTION 13.12. Indemnity Payments in Addition to Residual Value Guarantee Amount............73
SECTION 14.
THE AGENT...............................................................................................73
SECTION 14.1. Appointment..................................................................73
SECTION 14.2. Delegation of Duties.........................................................74
SECTION 14.3. Exculpatory Provisions.......................................................74
SECTION 14.4. Reliance by Agent............................................................74
SECTION 14.5. Notice of Default............................................................75
SECTION 14.6. Non-Reliance on Agent and Other Participants.................................75
SECTION 14.7. Indemnification..............................................................75
SECTION 14.8. Agent in its Individual Capacity.............................................76
SECTION 14.9. Successor Agent..............................................................76
SECTION 15.
MISCELLANEOUS...........................................................................................76
SECTION 15.1. Survival of Agreements.......................................................76
SECTION 15.2. No Broker, etc...............................................................77
SECTION 15.3. Notices......................................................................77
SECTION 15.4. Counterparts.................................................................77
SECTION 15.5. Amendments...................................................................77
SECTION 15.6. Headings, etc................................................................78
SECTION 15.7. Parties in Interest..........................................................78
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SECTION 15.8. GOVERNING LAW................................................................79
SECTION 15.9. Severability.................................................................79
SECTION 15.10. Liability Limited............................................................79
SECTION 15.11. Further Assurances...........................................................80
SECTION 15.12. Submission to Jurisdiction...................................................80
SECTION 15.13. Confidentiality..............................................................80
SECTION 15.14. WAIVER OF JURY TRIAL.........................................................81
SECTION 15.15. Usury Savings Clause.........................................................81
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SCHEDULES
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SCHEDULE I Participants' Commitments
SCHEDULE II Pricing Grid
SCHEDULE III Notice Information and Funding Offices
SCHEDULE IV Environmental Matters
SCHEDULE V External LC Agreement Covenants
APPENDICES
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APPENDIX 1 Definitions and Interpretation
EXHIBITS
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EXHIBIT A Form of Acquisition Request
EXHIBIT B Form of Funding Request
EXHIBIT C Form of Environmental Certificate
EXHIBIT D Opinion of Special Counsel to Lessee
EXHIBIT E Opinion of Local Counsel to Lessee
EXHIBIT F Opinion of Special Counsel to Lessor
EXHIBIT G Opinion of Internal Counsel to Lessor
EXHIBIT H Form of Architect's Completion Certificate
EXHIBIT I Form of Lessee's Completion Certificate
EXHIBIT J Form of Assignment and Acceptance
EXHIBIT K Form of Participant's Letter
EXHIBIT L Assignment of Lease and Consent to Assignment
EXHIBIT M Construction Agency Agreement
EXHIBIT N Construction Agency Agreement Assignment
EXHIBIT O Guarantee
EXHIBIT P Mortgage
EXHIBIT Q Form of Compliance Certificate
EXHIBIT R Form of Subordinated Debt Terms
EXHIBIT S Form of Cash Collateral Agreement
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PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT, dated as of August 22, 1997 (this
"Participation Agreement"), is entered into by and among QUANTUM CORPORATION, a
Delaware corporation, as Lessee (together with its permitted successors and
assigns, the "Lessee"); LEASE PLAN NORTH AMERICA, INC., an Illinois corporation,
as Lessor (together with its permitted successors and assigns, the "Lessor") and
as a Participant; ABN AMRO BANK N.V., SAN FRANCISCO INTERNATIONAL BRANCH, as a
Participant (together with its permitted successors and assigns and Lease Plan
North America, Inc., in its capacity as a Participant, each a "Participant" and
collectively the "Participants"); and ABN AMRO BANK N.V., SAN FRANCISCO
INTERNATIONAL BRANCH, as Agent (in such capacity, together with its successors
in such capacity, the "Agent") for the Participants.
PRELIMINARY STATEMENT
In accordance with the terms of this Participation Agreement, the Lease
and the other Operative Documents,
A. the Lessor contemplates purchasing certain parcels of land
designated by the Lessee located in Colorado Springs, Colorado;
B. using Advances from the Lessor, the Lessee contemplates
building, as Construction Agent, administration, manufacturing, design,
research and development and warehouse facilities on such parcels of
land for the Lessor, acquiring certain items of Equipment to be used in
connection with such Improvements and leasing, as Lessee, such
Equipment, Improvements and Land Interest from the Lessor under the
Lease; and
C. the Lessor wishes to obtain, and the Participants are
willing to provide, financing of the funding of the costs of
acquisition of such Land Interest, the construction of the Improvements
and the acquisition of such Equipment through the purchase of
Participation Interests in the Lease and the Rent.
In consideration of the mutual agreements contained in this
Participation Agreement and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1
DEFINITIONS; INTERPRETATION
Unless the context shall otherwise require, capitalized terms used and
not defined herein shall have the meanings assigned thereto in Appendix 1 hereto
for all purposes hereof; and the rules of interpretation set forth in Appendix 1
hereto shall apply to this Participation Agreement.
SECTION 2
CLOSING DATE
The closing date (the "Closing Date") shall occur on the earliest date
on which all the conditions precedent thereto set forth in Sections 6.1 and 6.2
hereof shall have been satisfied or waived by the applicable parties as set
forth therein.
SECTION 3
ACQUISITION OF THE PROPERTY; FUNDING OF ADVANCES
SECTION 3.1 Lessor Commitment. Subject to the conditions and terms
hereof, the Lessor shall take the following actions at the written request of
the Lessee from time to time during the Commitment Period:
(a) make Advances (out of funds provided by the Participants)
for the purpose of financing the acquisition of the Land Interest and
the Equipment and construction of the Improvements;
(b) acquire the Land Interest and the Equipment (using funds
provided by the Participants); and
(c) lease the Property as lessor to the Lessee under the
Lease.
SECTION 3.2 Participants' Commitments. Subject to the terms and
conditions hereof, each Participant severally shall purchase a Participation
Interest in the Advances being made by the Lessor at the request of the Lessee
from time to time during the Commitment Period by making available to the Lessor
on each Funding Date an amount in immediately available funds equal to such
Participants' Commitment Percentage of the amount of the Advance being funded on
such Funding Date. Notwithstanding any other provision hereof, no Participant
shall be obligated to purchase its Participation Interest in any Advance if (i)
the amount of such purchase would exceed its Available Commitment, or (ii) if,
after giving effect to the proposed Advance, the outstanding aggregate amount of
such Participant's Participation Interest in the Advances would exceed such
Participant's Commitment. Notwithstanding the foregoing, until the conditions
precedent set forth
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in Section 6.3 have been satisfied, the Lessee shall not be permitted to
request, and the Participants and the Lessor shall not be obligated to fund,
Advances exceeding $38,348,000 in aggregate.
SECTION 3.3 Procedures for Acquisition of the Land Interest. The Lessee
shall give the Lessor and the Agent prior written notice not later than 10:00
a.m., San Francisco time, on the proposed Land Interest Acquisition Date,
pursuant to an Acquisition Request substantially in the form of Exhibit A (an
"Acquisition Request"), specifying with respect to such Land Interest: (i) the
proposed Land Interest Acquisition Date, (ii) the Land Interest to be acquired,
(iii) the Existing Owner of the Land Interest and the Land Interest Acquisition
Cost, and (iv) the date on which the Lessee will request the Lessor to fund the
Land Interest Acquisition Cost of such Land Interest. The Agent shall promptly
forward a copy of such Acquisition Request to each Participant.
SECTION 3.4 Procedures for Advances. With respect to each funding of an
Advance, the Lessee shall give the Lessor and the Agent prior written notice not
later than 10:00 a.m., San Francisco time, three Business Days prior to (or, in
the case of the initial Advance made on the Land Interest Acquisition Date, on
the day of) the proposed Funding Date, pursuant, in each case, to a Funding
Request substantially in the form of Exhibit B (a "Funding Request"), specifying
(i) the proposed Funding Date, (ii) the amount and purpose of the Advance
requested, (iii) the Type of Advance, (iv) the initial Interest Period for such
Advance, (v) the payee of such Advance, and (vi) the allocation of such Advance
to the respective Land Interest Acquisition Cost and Property Improvements Costs
of the Property (and pro rata portions of the related remittances from the
Participants shall likewise be deemed to be so allocated). The Agent shall
promptly forward a copy of such Funding Request to each Participant. The Lessee
shall not request more than one Funding Date during any calendar month. Each
Advance (other than an Interest Payment Advance) shall be in a minimum amount of
$1,000,000 or in amounts of $100,000 in excess thereof. Subject to the
satisfaction or waiver of the conditions precedent to such Advance set forth in
Section 6, each Participant shall purchase its Participation Interest in such
Advance by making available to the Lessor its proportionate share of such
Advance in immediately available federal funds by wire transfer to the Agent for
deposit to the Lessee's demand deposit account with the Agent not later than
12:00 noon, San Francisco time, on the applicable Funding Date. Upon (i) the
Lessee's receipt of the funds provided by the Participants with respect to an
Advance, and (ii) satisfaction or waiver of the conditions precedent to such
Advance set forth in Section 6, the Lessee shall (1) in the case of an Advance
for the acquisition of the Land Interest, pay the acquisition price for such
Land Interest to the Existing Owner, and (2) in the case of other Advances, pay
or retain as payment or reimbursement of, Property Improvements Costs, in each
case from the funds provided by the Participants for such Advance.
SECTION 3.5 Allocation of Commitments. Schedule I hereto contains an
allocation for each Participant of (i) the amount of its Commitment representing
its Tranche A Participation Interest ("Tranche A Participation Interest
Commitment"), (ii) the amount of its Commitment representing its Tranche B
Participation Interest ("Tranche B Participation Interest Commitment"), (iii)
the amount of its Commitment representing its Tranche C Participation Interest
("Tranche C Participation Interest Commitment"), (iv) the amount of its
Commitment (and allocation to its Tranche A Participation Interest Commitment,
Tranche B Participation Interest Commitment and Tranche C Participation Interest
Commitment) allocated to the 364 Day Commitment, (v) the
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amount of its Commitment (and allocation to its Tranche A Participation Interest
Commitment, Tranche B Participation Interest Commitment and Tranche C
Participation Interest Commitment) allocated to the Two Year Commitment, and
(vi) the percentage referred to in the definition of the term "Participation
Interest". The Lessee, the Lessor and the Participants have approved all such
allocations and percentages. Schedule I shall be amended as required to reflect
changes in the allocations set forth thereon due to the addition of additional
Participants pursuant to Section 12.1.
SECTION 3.6 Use of Commitments. (a) All remittances by each Participant
to the Lessor to fund Advances shall be allocated first, to the 364 Day
Commitment of such Participant, and second, to the Two Year Commitment of such
Participant. Unless extended as provided in this Section 3.6, the 364 Day
Commitment shall terminate on the day which is 364 days after the Effective Date
and the unused portion thereof shall not be available to the Lessor thereafter.
The Lessee shall notify the Lessor, the Agent and each Participant not less than
forty-five (45) days prior to the expiration date of the 364 Day Commitment
whether it wishes to extend the availability of the unused portion of the 364
Day Commitment to the Six Month Extension Termination Date. The availability of
the unused portion of the 364 Day Commitment shall not be extended unless the
Agent and each Participant, in its sole discretion, has notified the Lessor
within fifteen (15) days prior to such termination date that it will permit the
unused portion of its 364 Day Commitment to be extended to the Six Month
Extension Termination Date commencing on the Extension Date. The Agent and each
Participant may make such decision based upon such credit information regarding
the Lessee, interest rates, market conditions and such other factors as the
Agent and such Participant may consider relevant. The Lessor shall notify the
Lessee whether the Agent and the Participants have agreed to permit the
extension of such unused portion of the 364 Day Commitment to the Six Month
Extension Termination Date. Any portion that is so extended shall bear
Commitment Fees from and after the Extension Date at a rate applicable to the
364 Day Commitment. The parties hereto shall amend Schedule I hereto in
connection with any such extension. The Lessee shall have the right, upon not
less than three Business Days' written notice to the Agent, to reduce the 364
Day Commitment and/or the Two Year Commitment; provided, that after giving
effect to such notification, the aggregate outstanding amount of the Advances
shall not exceed the aggregate Commitments as so reduced.
(b) If the 364 Day Commitment is extended pursuant to Section
3.6(a), the Lessee shall pay to each Participant its pro rata share of the
Extension Fee on the Extension Date.
SECTION 3.7 Termination, Extension or Reduction of Participants'
Commitments. (a) The Lessor shall have the right, upon not less than three
Business Days' written notice to the Agent, to terminate the Participants'
Commitments or, from time to time, to reduce the amount of the Participants'
Commitments, provided that (i) after giving effect to such reduction, the
aggregate outstanding principal amount of the Tranche A Participation Interests
shall not exceed the aggregate Tranche A Participation Interest Commitments,
(ii) after giving effect to such reduction, the aggregate outstanding principal
amount of the Tranche B Participation Interests shall not exceed the aggregate
Tranche B Participation Interest Commitments, (iii) after giving affect to such
reduction, the aggregate outstanding equity investment of the Tranche C
Participation Interests shall not exceed the aggregate Tranche C Participation
Interest Commitments, and (iv) any such reduction shall be made pro rata among
the Participants' Commitments within each Tranche. As long as there
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exists no Event of Default that has occurred and is continuing, the Lessor shall
exercise such right only as directed by the Lessee, and after the occurrence and
during the continuance of an Event of Default the Lessor shall exercise such
right only as directed by the Required Participants. In the event that, after
the occurrence and during the continuance of an Event of Default, the Lessor and
the Participants exercise such right, the Lessee may exercise its Purchase
Option under Section 20.1 of the Lease upon not less than ten (10) days' written
notice to the Lessor.
(b) The Lessee may, at any time after the first anniversary of
the Effective Date, by written request to the Lessor and Agent (which the Agent
shall promptly forward to each Participant) given not later than 90 days prior
to the then current Maturity Date, request (an "Extension Request") that the
Maturity Date be extended to the date that is one (1) year after such Maturity
Date. No later than the date (the "Extension Response Date") which is 30 days
after such request has been delivered to each of the Participants, each
Participant will notify the Lessor in writing (with a copy to the Agent and the
Lessee) whether or not it consents to such Extension Request (which consent may
be granted or denied by each Participant in its sole discretion and may be
conditioned on receipt of such financial information or other documentation as
may be specified by such Participant including without limitation satisfactory
appraisals of the Property), provided that any Participant that fails to so
advise the Lessor on or prior to the Extension Response Date shall be deemed to
have denied such Extension Request. The extension of the Maturity Date
contemplated by any Extension Request shall become effective as of the Maturity
Date then in effect (the "Extension Effective Date") on or after the Extension
Response Date on which all of the Participants (other than Non-Consenting
Participants which have been replaced by Replacement Participants in accordance
with Section 3.7(c)) shall have consented to such Extension Request; provided
that:
(A) on both the date of the Extension Request and the
Extension Effective Date, (x) each of the representations and
warranties made by the Lessee and the Lessor in or pursuant to the
Operative Documents shall be true and correct in all material respects
as if made on and as of each such date, except for representations and
warranties made as of a specific date, which shall be true and correct
in all material respects as of such date and matters waived by the
Required Participants or all of the Participants, as applicable, (y) no
Event of Default shall have occurred and be continuing, and (z) on each
of such dates the Agent shall have received a certificate of the Lessee
and the Lessor, each as to itself, as to the matters set forth in
clause (x) above and from the Lessee as to the matters set forth in
clause (y) above;
(B) on the date that is 90 days prior to the date of
the Extension Effective Date that is the fifth anniversary of the
Closing Date (and on each Extension Effective Date, if any, that is
every fifth anniversary thereafter), the Lessee shall deliver to the
Lessor and the Agent (with sufficient copies for each Participant) an
Appraisal of the Property in form and substance satisfactory to the
Lessor and the Agent; and
(C) the Agent and the Required Participants shall
have received satisfactory evidence that the Expiration Date shall,
after giving effect to any extension thereof which
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has become effective on or prior to such Extension Effective Date,
occur on the Maturity Date as so extended.
(c) The Lessee shall be permitted to replace any
Non-Consenting Participant with a replacement bank or other financial
institution (a "Replacement Participant") at any time on or prior to the date
which is 30 days after the relevant Extension Response Date; provided that (i)
such replacement does not conflict with any Requirement of Law, (ii) the
Replacement Participant shall purchase, at par, all of the Participation
Interest of such Non-Consenting Participant on or prior to the date of
replacement, (iii) the Lessee shall be liable to such Non-Consenting Participant
under Section 13 of this Agreement if any Advance (or Participation Interest
therein) shall be prepaid (or purchased) other than on the last day of the
Interest Period or Interest Periods relating thereto, (iv) the Replacement
Participant, if not already a Participant, shall be reasonably satisfactory to
the Required Participants, (v) such replacement shall be made in accordance with
the provisions of Section 12 of this Agreement (provided that the relevant
Replacement Participant (or the Lessee for the benefit of such Replacement
Participant) shall be obligated to pay the Transaction Expenses arising in
connection therewith), (vi) the Replacement Participant shall have agreed to be
subject to all of the terms and conditions of this Agreement (including the
extension of the Maturity Date contemplated by the relevant Extension Request)
and other Operative Documents, and (vii) during the continuation of an Event of
Default, the Lessee shall have the exclusive right to designate the Replacement
Participant. The Agent hereby agrees to cooperate with the Lessee in the
Lessee's efforts to arrange one or more Replacement Participants as contemplated
by this Section 3.7(c).
SECTION 3.8 Interest Rates; Yield and Payment Dates. (a) The Tranche A
Participation Interest and the Tranche B Participation Interest in each Advance
shall bear interest at a rate of interest equal to (i) the Alternate Base Rate,
or (ii) at the Lessee's election in accordance with Section 3.4 or this Section
3.8, for each day during each Interest Period with respect thereto at a rate per
annum for such Interest Period equal to the Eurodollar Rate determined for such
day plus the Applicable Margin. The Tranche A Participation Interest and the
Tranche B Participation Interest in the initial Advance shall bear interest at a
rate equal to the Alternate Base Rate until commencement of the initial Interest
Period with respect thereto. The Lessee shall give irrevocable notice to the
Agent, in accordance with the applicable provisions of Section 3.4 or this
Section 3.8, of the length of each Interest Period to be applicable to each
portion of each Advance. There shall not be more than twelve Interest Periods
outstanding under Sections 3.8(a) and (b) at any time.
(b) The equity portion of each Advance (represented by the
Tranche C Participation Interest in such Advance) shall accrue equity yield (the
"Yield") at a rate equal to (i) the Alternate Base Rate, or (ii) at the Lessee's
election in accordance with Section 3.4 or this Section 3.8, for each day during
each Interest Period with respect thereto, the Eurodollar Rate determined for
such day plus the Applicable Margin. This Tranche C Participation Interest in
the initial Advance shall accrue Yield at a rate equal to the Alternate Base
Rate until commencement of the initial Interest Period with respect thereto.
(c) If all or a portion of (i) the principal amount or equity
portion of any Advance, (ii) any interest or Yield payable thereon or (iii) any
other amount payable hereunder shall not be
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paid when due (whether at the stated maturity, by acceleration or otherwise),
such overdue amount shall bear interest at a rate per annum which is equal to
the Overdue Rate.
(d) Interest and Yield shall be payable in cash (except as
provided in paragraph (e) below) in arrears on each Scheduled Payment Date,
provided that (i) interest or Yield accruing pursuant to paragraph (c) of this
Section 3.8 shall be payable from time to time on demand and (ii) each
prepayment of Advances shall be accompanied by accrued interest and Yield to the
date of such prepayment on the amount of Advances so prepaid.
(e) On each date which is three Business Days prior to any
Scheduled Payment Date during the Construction Period, the Lessee shall be
deemed to have requested an Advance comprised of an Interest Payment Advance
pursuant to Section 3.4 and the Lessor shall be deemed to have requested a
purchase pursuant to Section 3.2 of Participation Interests in such Advance in
an amount equal to the aggregate amount of the Basic Rent due and payable on
such date with respect to accrued interest and accrued Yield on outstanding
Advances. The Funding Date with respect to any such Interest Payment Advance and
purchase of Participation Interests therein shall be the relevant Scheduled
Payment Date (provided that such Advance and the purchase of such Participation
Interests shall be subject to satisfaction of the applicable conditions
precedent set forth in Section 6) and the proceeds of such payment shall be
applied to pay such accrued interest and accrued Yield. On each such Funding
Date, the Property Cost shall be increased by an amount equal to the Basic Rent
paid on such date with respect to such Property with the proceeds of such
payment, and the Land Interest Acquisition Cost and Property Improvements Costs
shall be increased by their pro rata portions of such Advance.
SECTION 3.9 Computation of Interest and Yield. (a) Whenever it is
calculated on the basis of the Alternate Base Rate, interest and Yield shall be
calculated on the basis of a 365- (or 366-, as the case may be) day year for the
actual days elapsed; and, otherwise, interest and Yield shall be calculated on
the basis of a 360-day year for the actual days elapsed. The Agent shall as soon
as practicable after the commencement of each Interest Period notify the Lessor,
the Lessee and the Participants of each determination of a Eurodollar Rate. Any
change in the interest rate or Yield rate on an Advance resulting from a change
in the Alternate Base Rate or the Eurocurrency Reserve Requirements shall become
effective as of the opening of business on the day on which such change becomes
effective. The Agent shall as soon as practicable notify the Lessor, the Lessee
and the Participants of the effective date and the amount of each such change in
interest rate or Yield rate.
(b) Each determination of an interest rate or Yield rate by
the Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Lessor, the Lessee and the Participants in the absence of
manifest error. The Agent shall, at the request of such parties, deliver to such
parties a statement showing the quotations used by the Agent in determining any
interest rate pursuant to Section 3.9(a).
SECTION 3.10 Pro Rata Treatment and Payments. (a) Each participation in
the Advances by the Participants hereunder and each reduction of the Commitments
of the Participants shall be made pro rata among the Tranche A Participants,
Tranche B Participants and Tranche C Participants according to the respective
Commitment Percentages of each such Participant. Except as otherwise
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provided in Sections 3.11 - 3.21, each payment (including each prepayment) by
the Lessor on account of Participation Interests representing the principal
amount of or equity investment in and interest or Yield on the Advances shall be
made pro rata among the Tranche A Participants, Tranche B Participants and
Tranche C Participants according to the respective Participation Interests of
each such Participant. All payments (including prepayments) to be made by the
Lessor hereunder to the Participants with respect to their Participation
Interests, whether on account of principal, equity investment, interest, Yield
or otherwise, shall be payable to the extent received by the Lessor from or on
behalf of the Lessee and shall be made without setoff or counterclaim and shall
be made prior to 12:00 noon, San Francisco time, on the due date thereof to the
Agent, for the account of the Participants, at the Agent's office referred to in
Section 15.3 of this Agreement, in Dollars and in immediately available funds.
The Agent shall distribute such payments to the Participants promptly upon
receipt in like funds as received. If any payment hereunder (other than payments
of Participation Interests in the Advances) becomes due and payable on a day
other than a Business Day, such payment shall be extended to the next succeeding
Business Day. If any payment of Participation Interests in an Advance becomes
due and payable on a day other than a Business Day, the maturity thereof shall
be extended to the next succeeding Business Day unless the result of such
extension would be to extend such payment into another calendar month, in which
event such payment shall be made on the immediately preceding Business Day. In
the case of any extension or shortening of the due date of any payment pursuant
to the preceding two sentences, interest or Yield thereon shall be payable at
the then applicable rate during such extension or until such shortened due date,
as the case may be.
(b) Unless the Agent shall have been notified in writing by any
Participant prior to funding its Participation Interest in an Advance that such
Participant will not make its share of such Advance available to the Agent, the
Agent may assume that such Participant is making such amount available to the
Agent, and the Agent may, in reliance upon such assumption, make available to
the Lessor a corresponding amount. If such amount is not made available to the
Agent by the required time on the Funding Date therefor, such Participant,
without right of reimbursement from the Lessee to such Participant, shall pay to
the Agent, on demand, such amount with interest thereon at a rate equal to the
daily average Federal Funds Effective Rate for the period until such Participant
makes such amount immediately available to the Agent. A certificate of the Agent
submitted to any Participant with respect to any amounts owing under this
Section 3.10(b) shall be conclusive in the absence of manifest error. If such
Participant's share of such Advance is not made available to the Agent by such
Participant within three Business Days of such Funding Date, the Agent shall
also be entitled to recover such amount with interest thereon at the rate borne
by such Advance, on demand, from the Lessee, to the extent the Agent has made a
corresponding amount of the Advance to the Lessee.
SECTION 3.11 The Account. The Agent may if it so desires establish an
account (the "Account") into which the Agent shall deposit all payments,
receipts and other consideration of any kind whatsoever paid under the Lease and
received by the Agent pursuant to this Agreement, the Lease and any other
Operative Document. The Agent shall make distributions of such payments,
receipts and other consideration (and, if an Account is used, from the Account)
pursuant to the requirements of Sections 3.12 -3.21 hereof.
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SECTION 3.12 Basic Rent. (a) Each payment (or portion thereof) of Basic
Rent comprising interest or Yield on the Advances (and any payment of interest
on overdue installments of such component of Basic Rent) received by the Agent
shall be distributed by the Agent as promptly as possible (it being understood
that any payments of such component of Basic Rent received by the Agent on a
timely basis and in accordance with the provisions of the Lease shall be
distributed on the date received in the funds so received) to the Participants
pro rata in accordance with, and for application to, the portion of their
Participation Interests in such portion of Basic Rent, as well as in any overdue
interest due to such Participant (to the extent permitted by applicable law).
(b) Each payment (or portion thereof) of Basic Rent comprising
principal of, or a redemption of the equity investment in, the Advances (and any
payment of interest on overdue installments of such component of Basic Rent)
received by the Agent shall be distributed as promptly as possible (it being
understood that any payments of such component of Basic Rent received by the
Agent on a timely basis and in accordance with the provisions of the Lease shall
be distributed on the date received in the funds so received) to the
Participants pro rata in accordance with, and for application to, the portion of
their Participation Interests in such portion of Basic Rent then due each
Participant.
SECTION 3.13 Purchase Payments by Lessee. Any payment received (or
offset against the Cash Collateral) by the Agent as a result of:
(a) the purchase of the Lessor's interest in the Property in
connection with the Lessee's exercise of its Purchase Option under
Section 20.1 of the Lease, or
(b) the Lessee's compliance with its obligation to purchase
the Lessor's interest in the Property in accordance with Section 20.2
of the Lease, or
(c) the payment of the Asset Termination Value in accordance
with Sections 16.2(b), 16.3 or 16.4 of the Lease, or
(d) the Lessee failing to fulfill one or more of the
conditions to exercise of the Remarketing Option pursuant to Section
22.1 of the Lease and the Agent's receipt pursuant to the next-to-last
paragraph of Section 22.1 of the Lease of the Asset Termination Value
in accordance with Section 20.2 of the Lease,
shall be distributed by the Agent as promptly as possible (it being understood
that any such payment received by the Agent on a timely basis and in accordance
with the provisions of the Lease shall be distributed on the date on which such
funds are so received) to pay in full or redeem the Participant Balance of each
Participant and in the case that the amount so distributed shall be insufficient
to pay in full as aforesaid, then pro rata among the Participants without
priority of one over the other, in the proportion that the Participant Balance
of each bears to the aggregate of all of the Participant Balances.
(e) Notwithstanding any other provision in this Agreement, the
Lease or any other Operative Document to the contrary, the Lessee, the Agent,
the Participants and the Lessor
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agree that upon the maturity or acceleration of the Lessee's obligation to pay
the Asset Termination Value, Residual Value Guarantee Amount or Purchase Option
Price, any and all amounts of Cash Collateral that have been deposited by the
Lessee pursuant to the Cash Collateral Agreement and that have not been
withdrawn by the Lessee or offset or applied by the Lessor, the Agent or any
Participant (in accordance with the terms of the Cash Collateral Agreement) as
of such maturity or acceleration date, shall be required to be applied by the
Agent and the Lessor to satisfy the Lessee's obligation to pay the unpaid amount
of such portion of the Asset Termination Value, Purchase Option Price or
Residual Value Guarantee represented by the Cash Collateral, notwithstanding the
fact that such amounts may not then be actually available, for any reason
attributable to the Lessor, the Agent or any Participant. Such reasons include,
without limitation, any fraud or misapplication of funds by the Lessor, the
Agent or any Participant, decline in value of the Collateral or the filing by or
against the Lessor, the Agent or any Participant of any insolvency, bankruptcy,
dissolution, liquidation, reorganization or similar proceeding, but except to
the extent resulting from a proceeding involving the solvency of the Lessee).
SECTION 3.14 Residual Value Guarantee Amount Payment by Lessee. The
payment by the Lessee of the Residual Value Guarantee Amount to the Agent in
accordance with Article XXII of the Lease upon the Lessee's exercise of the
Remarketing Option shall be distributed by the Agent as promptly as possible (it
being understood that any such payment received by the Agent on a timely basis
in accordance with the provisions of the Lease shall be distributed on the date
on which such funds are so received) in the following order of priority:
first, to the Tranche A Participants for application to pay in
full the Tranche A Participation Interest Balance of each Tranche A
Participant;
second, to the Tranche B Participants for application to pay
in full the Tranche B Participation Interest Balance of each Tranche B
Participant, and in the case where the amounts so distributed shall be
insufficient to pay in full as aforesaid, then pro rata among the
Tranche B Participants without priority of one Tranche B Participant
over the other in the proportion that each such Tranche B Participant's
Tranche B Participation Interest Balance bears to the aggregate Tranche
B Participation Interest Balances of all Tranche B Participants; and
third, to the Tranche C Participants for application to redeem
the Tranche C Participation Interest Balance of each Tranche C
Participant, and in the case where the amounts so distributed shall be
insufficient to fully redeem as aforesaid, then pro rata among the
Tranche C Participants without priority of one Tranche C Participant
over the other in the proportion that each such Tranche C Participant's
Tranche C Participation Interest Balance bears to the aggregate Tranche
C Participation Interest Balances of all Tranche C Participants.
SECTION 3.15 Sales Proceeds of Remarketing of Property. Any payments
received by the Agent as proceeds from the sale of the Property sold pursuant to
the Lessee's exercise of the Remarketing Option pursuant to Article XXII of the
Lease, together with any payment made by the Lessee as a result of an appraisal
pursuant to Section 13.2 of this Agreement, shall be distributed by
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the Agent as promptly as possible (it being understood that any such payment
received by the Agent on a timely basis and in accordance with the provisions of
the Lease shall be distributed on the date received) in the funds so received in
the following order of priority:
first, to the Tranche B Participants for application to pay in
full the Tranche B Participation Interest Balance of each Tranche B
Participant, and in the case where the amount so distributed shall be
insufficient to pay in full as aforesaid, then pro rata among the
Tranche B Participants without priority of one Tranche B Participant
over the other in the proportion that each Tranche B Participant's
Tranche B Participation Interest Balance bears to the aggregate Tranche
B Participation Interest Balances of all Tranche B Participants;
second, to the Tranche C Participants for application to
redeem the Tranche C Participation Interest Balance of each Tranche C
Participant, and in the case where the amount so distributed shall be
insufficient to fully redeem as aforesaid, then pro rata among the
Tranche C Participants without priority of one Tranche C Participant
over the other in the proportion that each Tranche C Participant's
Tranche C Participation Interest Balance bears to the aggregate Tranche
C Participation Interest Balances of all Tranche C Participants;
third, to the Tranche A Participants for application to pay in
full the Tranche A Participation Interest Balance of each Tranche A
Participant, and in the case where the amount so distributed shall be
insufficient to pay in full as aforesaid, then pro rata among the
Tranche A Participants without priority of one Tranche A Participant
over the other in the proportion that each Tranche A Participant's
Tranche A Participation Interest Balance bears to the aggregate Tranche
A Participation Interest Balances of all Tranche A Participants; and
fourth, the balance, if any, shall be promptly distributed to,
or as directed by, the Lessee.
SECTION 3.16 Supplemental Rent. All payments of Supplemental Rent
received by the Agent (excluding any amounts payable pursuant to the preceding
provisions of this Section 3) shall be distributed promptly by Agent upon
receipt thereof to the Persons entitled thereto pursuant to the Operative
Documents.
SECTION 3.17 Excepted Payments. Notwithstanding any other provision of
this Agreement or the Operative Documents, any Excepted Payment received at any
time by the Agent shall be distributed promptly to the Person entitled to
receive such Excepted Payment pursuant to the Operative Documents.
SECTION 3.18 Distribution of Payments After Event of Default. (a) All
payments received and amounts realized by the Lessor or the Agent after an Event
of Default exists, including under the Guarantee, the Deed of Trust or the Cash
Collateral Agreement, and proceeds from the sale of any of the Property,
proceeds of any amounts from any insurer or any Governmental
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Authority in connection with any Casualty or Condemnation during the
continuation of an Event of Default, or from Lessee as payment in accordance
with the Lease, including any payment received from Lessee pursuant to Section
17 of the Lease, shall, if received by Lessor, be paid to the Agent as promptly
as possible and shall be distributed by the Agent as promptly as possible (it
being understood that any such payment received by the Agent on a timely basis
and in accordance with the provisions of the Operative Documents shall be
distributed on the date received in the funds so received) in the following
order of priority:
first, so much of such payment or amount as shall be required
to reimburse the Lessor or the Agent for any tax, expense or other loss
incurred by the Lessor or the Agent (including, to the extent not
previously reimbursed, those incurred in connection with any duties of
the Agent as the Agent) and any unpaid ongoing fees of the Lessor and
the Agent shall be distributed to each of them for its own account;
second, so much of such payments or amounts as shall be
required to reimburse the then existing or prior Participants for
payments made by them to the Lessor pursuant to Section 18.1 of the
Lease (to the extent not previously reimbursed) and to pay such then
existing or prior Participants the amounts payable to them pursuant to
any expense reimbursement or indemnification provisions of the
Operative Documents shall be distributed to each such Participant
without priority of one over the other in accordance with the amount of
such payment or payments payable to each such Person;
third, in the case of a sale of the Property, receipt of Cash
Collateral or application of the Cash Collateral, in the order of
priority set forth in Section 3.15;
fourth, to the Tranche B Participants for application to pay
in full the Tranche B Participation Interest Balance of each Tranche B
Participant, and in the case where the amount so distributed shall be
insufficient to pay in full as aforesaid, then pro rata among the
Tranche B Participants without priority of one Tranche B Participant
over the other in the proportion that each Tranche B Participant's
Tranche B Participation Interest Balance bears to the aggregate Tranche
B Participation Interest Balances of all Tranche B Participants:
fifth, to the Tranche C Participants for application to redeem
the Tranche C Participation Interest Balance of each Tranche C
Participant, and in the case where the amount so distributed shall be
insufficient to fully redeem as aforesaid, then pro rata among the
Tranche C Participants without priority of one Tranche C Participant
over the other in the proportion that each Tranche C Participant's
Tranche C Participation Interest Balance bears to the aggregate Tranche
C Participation Interest Balances of all Tranche C Participants;
sixth, to the Tranche A Participants for application to pay in
full the Tranche A Participation Interest Balance of each Tranche A
Participant, and in the case where the amount so distributed shall be
insufficient to pay in full as aforesaid, then pro rata among the
Tranche A Participants without priority of one Tranche A Participant
over the other in
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the proportion that each Tranche A Participant's Tranche A
Participation Interest Balance bears to the aggregate Tranche A
Participation Interest Balances of all Tranche A Participants; and
seventh, the balance, if any, of such payment or amounts
remaining thereafter shall be promptly distributed to, or as directed
by, the Lessee.
SECTION 3.19 Other Payments. (a) Except as otherwise provided in
Sections 3.12, 3.13, 3.18 and paragraph (b) below,
(i) any payment received by the Agent for which no
provision as to the application thereof is made in the Operative
Documents or elsewhere in this Section 3, and
(ii)all payments received and amounts realized by the
Agent under the Lease or otherwise with respect to the Property, the
Deed of Trust or the Cash Collateral to the extent received or realized
at any time after indefeasible payment in full or redemption of the
Participant Balances of all of the Participants and any other amounts
due and owing to the Lessor, the Participants or the Agent,
shall be distributed forthwith by the Agent in the order of priority set forth
in Section 3.13 (in the case of any payment described in clause (i) above) or in
Section 3.18 hereof (in the case of any payment described in clause (ii) above),
except, that (i) in the case of any payment described in clause (ii) above, such
payment shall be distributed omitting clause third of such Section 3.18; and the
balance, if any (in the case of any payment described in clause (i) or (ii)
above), shall be distributed to, or as directed by, the Lessee, and (ii) any
payments received under the Guaranty shall be distributed solely to the
Participants in accordance with the priorities set forth in Section 3.18.
(b) Except as otherwise provided in Sections 3.12 and 3.13
hereof, any payment received by the Agent for which provision as to the
application thereof is made in an Operative Document but not elsewhere in this
Section 3 shall be distributed forthwith by the Agent to the Person and for the
purpose for which such payment was made in accordance with the terms of such
Operative Document.
SECTION 3.20 Casualty and Condemnation Amounts. Any amounts payable to
the Lessor as a result of a Casualty or Condemnation pursuant to Section 15.1 of
the Lease (but excluding any amounts payable pursuant to Section 16.2 of the
Lease) shall, if no Lease Event of Default exists, be paid over to Lessee for
the rebuilding or restoration of that portion of the Property to which such
Casualty or Condemnation applied, and any excess proceeds shall be paid to the
Lessee. If a Lease Event of Default exists, then during the continuance of such
Lease Event of Default, all such amounts shall be held by the Agent as Cash
Collateral and upon exercise of the Lessor's remedies hereunder shall be
distributed pursuant to Section 3.18.
SECTION 3.21 Order of Application. To the extent any payment made to
any Participant pursuant to Sections 3.13, 3.14, 3.15 or 3.16 is insufficient to
pay in full the Participant Balance of
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such Participant, then each such payment shall first be applied to its
Participation Interest in accrued interest and then to its Participation
Interest in principal of the Advances.
SECTION 4
FEES
SECTION 4.1 Commitment Fees. The Lessee shall pay to the Agent for the
account of each Participant a commitment fee (the "Commitment Fees") for the
period from and including the Closing Date to the earlier of (i) the Completion
Date or (ii) the Outside Completion Date, computed in the case of each
Participant at a rate per annum equal to the Commitment Fee Rate applicable to
the 364 Day Commitment or the Two Year Commitment, as the case may be, in each
case during the period for which payment is made, payable on each Commitment Fee
Payment Date. Commitment Fees shall be calculated on the basis of a 360 day year
for the actual days elapsed.
SECTION 4.2 Lease Arrangement Fee. The Lessee shall pay to the Arranger
the lease arrangement fee (the "Lease Arrangement Fee") referred to in, and at
such times as provided in, the Agent/Arranger Fee Letter.
SECTION 4.3 Administrative Fee. The Lessee shall pay an administrative
fee (the "Administrative Fee") to the Arranger for its own account as referred
to in, and at such times as provided in, the Agent/Arranger Fee Letter.
SECTION 4.4 Extension Fee. The Lessee shall pay the Extension Fee to
the Agent for the account of each Participant agreeing to an extension of the
364 Day Commitment if any portion of the 364 Day Commitment is extended pursuant
to Section 3.6. The Extension Fee shall be payable on the Extension Date.
SECTION 4.5 Overdue Fees. If all or a portion of any fee due hereunder
shall not be paid when due, such overdue amount shall bear interest, payable by
the Lessee on demand, at a rate per annum equal to the Overdue Rate from the
date of such nonpayment until such amount is paid in full (as well after as
before judgment).
SECTION 5
CERTAIN INTENTIONS OF THE PARTIES
SECTION 5.1 Nature of Transaction. (a) It is the intent of the parties
hereto that: (i) the Lease constitutes an "operating lease" pursuant to
Statement of Financial Accounting Standards No. 13, as amended, for purposes of
Lessee's financial reporting, and (ii) for purposes of federal, state and local
income or franchise taxes and for any other tax imposed on or measured by
income, the transaction contemplated hereby is a financing arrangement and
preserves ownership in the Property in the Lessee. Nevertheless, the Lessee
acknowledges and agrees that neither the Agent, the Lessor
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nor any Participant has made any representations or warranties to the Lessee
concerning the tax, accounting or legal characteristics of the Operative
Documents and that the Lessee has obtained and relied upon such tax, accounting
and legal advice concerning the Operative Documents as it deems appropriate.
Notwithstanding any provision of this Participation Agreement
to the contrary, the parties hereto agree and declare that: (i) the transactions
contemplated by the Lease are intended to have a dual, rather than single, form;
and (ii) all references in this Participation Agreement to the "lease" of the
Property which fail to reference such dual form do so as a matter of convenience
only and do not reflect the intent of the parties hereto as to the true form of
such arrangements. The parties hereto agree that, in accordance with their
intentions expressed herein and the substance of the transactions contemplated
hereby, Lessee (and not Lessor) shall be treated as the owner of the Property
for federal, state, and local income and property tax purposes and the Lease
shall be treated as a financing arrangement. Lessee shall be entitled to take
any deduction, credit, allowance or other reporting, filing or other tax
position consistent with such characterizations. The Lessor and the Participants
shall file any federal, state or local income tax returns, reports or other
statements in a manner which is consistent with the foregoing provisions of this
Section 5.1; provided, that the Lessor and any Participant may take a position
that is inconsistent with the Lessee's status as owner of the Property if: (x)
there has been a change in law or regulation so requiring as supported by an
opinion of counsel reasonably acceptable to the Lessee that there is not
substantial authority for such a consistent reporting position; or (y) (A) there
has been an administrative or judicial holding that the Lessee is not the owner
of the Property for such tax purposes, (B) the Lessee has no right to contest
such holding pursuant to Section 13.5 of the Participation Agreement, and (C)
the Lessee's lack of right to contest is not the result of an Indemnitee's
waiver of its right to indemnification pursuant to Section 13.5(f)(iii) of the
Participation Agreement or failure of the amount at issue to exceed the minimum
amount set forth in Section 13.5(f)(iv)(B) of the Participation Agreement.
(b) Specifically, without limiting the generality of
subsection (a) of this Section 5.1, the parties hereto intend and agree that
with respect to the nature of the transactions evidenced by the Lease in the
context of the exercise of remedies under the Operative Documents, including,
without limitation, in the case of any insolvency or receivership proceedings or
a petition under the United States bankruptcy laws or any other applicable
insolvency laws or statute of the United States of America or any State or
Commonwealth thereof affecting the Lessee, the Lessor or any Participant or any
enforcement or collection actions, (i) the transactions evidenced by the
Operative Documents are loans made by the Lessor and the Participants as
unrelated third party lenders to the Lessee secured by the Property, (ii) the
obligations of the Lessee under the Lease to pay Basic Rent and Supplemental
Rent or Asset Termination Value in connection with any purchase of the Property
pursuant to the Lease shall be treated as payments of interest on and principal
of, respectively, loans from the Lessor and the Participants to the Lessee,
(iii) the Lease grants a security interest and mortgage or deed of trust or
lien, as the case may be, in the Property and the collateral described in the
Mortgage to the Lessor, the Agent and the Participants to secure the Lessee's
performance and payment of all amounts under the Lease and the other Operative
Documents.
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SECTION 5.2 Amounts Due Under Lease. Anything else herein or elsewhere
to the contrary notwithstanding, it is the intention of the Lessee, the Lessor,
the Participants and the Agent that: (i) the amount and timing of installments
of Basic Rent due and payable from time to time from the Lessee under the Lease
shall be equal to the aggregate payments due to the Participants in respect of
their Participation Interests on each Payment Date; (ii) if the Lessee elects
the Purchase Option or becomes obligated to purchase the Property under the
Lease, the Participation Interests, all fees and all of the interest on overdue
amounts thereon and all other obligations of the Lessee owing to the Lessor, the
Participants and the Agent shall be paid in full by the Lessee; (iii) if the
Lessee properly elects the Remarketing Option, the Lessee shall only be required
to pay to the Lessor the proceeds of the sale of the Property, the Residual
Value Guarantee Amount and any amounts due pursuant to Section 13 of this
Participation Agreement and Section 22.2 of the Lease (which aggregate amounts
may be less than the Asset Termination Value); and (iv) upon an Event of Default
resulting in an acceleration of the Lessee's obligation to purchase the Property
under the Lease, the amounts then due and payable by the Lessee under the Lease
shall include all amounts necessary to pay in full the Asset Termination Value,
plus all other amounts then due from the Lessee to the Participants, the Agent
and the Lessor under the Operative Documents.
SECTION 6
CONDITIONS PRECEDENT TO
ACQUISITION OF LAND INTEREST AND ADVANCES
SECTION 6.1 Conditions Precedent -- Documentation. The obligation of
the Lessor to acquire the Land Interest on the Land Interest Acquisition Date
and to make the Advance in respect of such Property on the Funding Date
applicable thereto, the obligation of the Lessor to make an Advance to finance
the acquisition of Equipment or the construction of any Improvements or the
funding of any Interest Payment Advance on any Funding Date, and the obligation
of each Participant to purchase its Participation Interest in, and to make
available to the Lessor its related portion of, each such Advance on such
Funding Date are subject to satisfaction or waiver of the following conditions
precedent and the conditions precedent set forth in Section 6.2 (it being
understood that the Lessor's obligation to acquire such Land Interest or to
finance such Equipment, if any, or Improvements shall not be subject to the
conditions precedent set forth in this Section 6.1 or Section 6.2 to the extent
such conditions are actions required of the Lessor) on or prior to the Closing
Date, the Land Interest Acquisition Date or such Funding Date, as the case may
be:
(a) Acquisition and Funding Request. Prior to the Land
Interest Acquisition Date or the applicable Funding Date, the Agent and the
Lessor shall have received a fully executed counterpart of the Acquisition
Request or Funding Request, as the case may be, appropriately completed by the
Lessee, in accordance with Sections 3.3 and 3.4, respectively; provided, that
this condition shall be deemed to have been satisfied in connection with an
Interest Payment Advance pursuant to Section 3.8(d) hereof.
(b) Closing Date; Operative Documents. The Closing Date shall
have occurred or shall occur simultaneously with the earlier of the initial
Funding Date or Land Interest
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Acquisition Date and each of the Operative Documents to be entered into on the
Closing Date shall have been duly authorized, executed and delivered by the
parties thereto, and shall be in full force and effect, including, without
limitation, (i) this Participation Agreement, (ii) the Lease, (iii) the Lease
Supplement; (iv) the Guarantee, (v) the Construction Agency Agreement, (vi) the
Construction Agency Agreement Assignment, (vii) the Mortgage, (viii) the
Assignment of Lease and Supplement to Assignment of Lease, (ix) the Consent to
Assignment, (x) the Assignment of Property Purchase Agreement, (xi) the Deed and
(xii) the Cash Collateral Agreement. No Default or Event of Default shall exist
thereunder and be continuing (both before and after giving effect to the
transactions contemplated by the Operative Documents), and the Lessor, the Agent
and each Participant shall each have received a fully executed copy of each of
such Operative Documents (other than the Lease and Lease Supplement, of which
the Agent shall receive the original and the Lessor and the Participants shall
receive specimens). On or prior to the Closing Date or the Land Interest
Acquisition Date, as applicable, the Operative Documents (or memoranda thereof),
any supplements thereto and any financing statements in connection therewith
required under the Uniform Commercial Code shall have been recorded, registered
and filed, if necessary, in such manner as to enable the Lessee's counsel to
render its opinion referred to in clauses l(i)(A) and (B) below.
(c) Environmental Certificate. The Agent, each Participant and
the Lessor shall have received an Environmental Certificate substantially in the
form of Exhibit C (an "Environmental Certificate") with respect to the Property,
provided that such Environmental Certificate shall be delivered not less than
five (5) Business Days prior to the Land Interest Acquisition Date and shall
have been approved by the Agent, the Required Participants and the Lessor, and
accompanied by the Environmental Audit for the Property prepared by Harding
Lawson Associates, dated August 13, 1997.
(d) Preliminary Letter of Value. On or prior to the Land
Interest Acquisition Date, the Agent, the Lessor and the Participants shall have
received a Preliminary Letter of Value of the Property prepared by the appraiser
preparing the Appraisal referred to in Section 10.1(s), which Preliminary Letter
of Value shall (i) show that the Fair Market Sales Value of the Land Interest
with respect to such Property as of the projected Completion Date shall not
exceed 25% of the Fair Market Sales Value of such Land Interest and the
Improvements to be constructed thereon in accordance with the Plans and
Specifications for Property, and (ii) show as of the projected Completion Date
the Fair Market Sales Value of such Land Interest and the Improvements to be
constructed thereon in accordance with the Plans and Specifications, and (iii)
meet the other applicable requirements set forth in clauses (i) and (ii) of the
definition of the "Appraisal" contained in Appendix 1.
(e) Deed. On or prior to the Land Interest Acquisition Date,
the Lessor shall have received a special warranty deed (the "Deed"), in
conformity with Applicable Law and appropriate for recording with the applicable
Governmental Authorities, with respect to the Land Interest (and all
Improvements located thereon), conveying fee simple title to the Land Interest
(and all Improvements located thereon) to the Lessor, subject only to Permitted
Exceptions.
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(f) Lease Supplement; Equipment Schedule. The Lessee and the
Lessor shall have delivered (i) on or prior to the Land Interest Acquisition
Date, the original counterpart of the Lease Supplement executed by the Lessee
and the Lessor to the Agent and (ii) on or prior to the applicable Funding Date,
a duly executed Equipment Schedule covering any Equipment, if any, being
acquired with the proceeds of such Advance by the Lessor, together with invoices
or appraisals in form and substance satisfactory to the Agent, the Lessor and
the Participants.
(g) Survey and Title Insurance. On or prior to the Land
Interest Acquisition Date, the Lessee shall have delivered (i) an ALTA/ACSM
(1992)(Urban) Survey of the Property, including Table A numbers 1, 2, 3, 4, 6,
8, 9, 10 and 11, certified to the Lessor, the Participants and the title company
and otherwise in form reasonably acceptable to the Participants, (ii) an ALTA
(1992) owners title insurance policy with extended coverage over the general
exceptions, insuring fee title in the Lessor to the Property, subject only to
the Permitted Exceptions, (iii) an ALTA (1992) Loan Policy insuring the Agent
that the Lien of the Mortgage is a first and primary lien in the Lessor's
interest in the Master Lease and in the fee title to the Property, subject only
to pending disbursements for construction and the Permitted Exceptions, and (iv)
an ALTA (1992) Loan Policy insuring the Agent that the Lien of the Master Lease
is a first and primary Lien in the Lessee's interest in the Property; such
policies each in an amount not less than the estimated Property Cost and to be
reasonably satisfactory to the Lessor, the Agent and the Participants with
extended coverage, access, tax parcel, survey identicality, variable rate,
future advances, usury, comprehensive, fraudulent conveyances, doing business,
mechanics liens and zoning endorsements and such other endorsements as and to
the extent available in such jurisdiction where the Property is located, if
requested by the Agent.
(h) Evidence of Recording and Filing. On or prior to the Land
Interest Acquisition Date, the Agent shall have received evidence reasonably
satisfactory to it that each of the Deed, the Lease Supplement, the Assignment
of Lease and Supplement to Assignment of Lease, the Consent to Assignment and
the Mortgage shall have been or are being recorded with the appropriate
Governmental Authorities in the order in which such documents are listed in this
clause, and the UCC Financing Statements with respect to the Property being
acquired shall have been or are being filed with the appropriate Governmental
Authorities.
(i) Evidence of Insurance. On or prior to the Land Acquisition
Date, the Agent, the Lessor and each Participant shall have received evidence of
insurance with respect to the Property required to be maintained pursuant to the
Lease, setting forth the respective coverages, limits of liability, carrier,
policy number and period of coverage.
(j) Evidence of Use of Proceeds. On or prior to the Land
Interest Acquisition Date or the applicable Funding Date, the Agent and each
Participant shall have received evidence reasonably satisfactory to the Agent
and each Participant as to the use of the proceeds of the Advance in accordance
with the provisions of Section 8.1(g), which conditions shall be satisfied by
delivery of the applicable duly executed Funding Request with respect thereto.
(k) Taxes. On or prior to the Land Interest Acquisition Date,
all taxes, fees and other charges in connection with the execution, delivery,
recording, filing and registration of the
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Operative Documents shall have been paid or provisions for such payment shall
have been made to the satisfaction of the Agent, each Participant and the
Lessor.
(l) Opinions of Counsel. On or prior to the Land Interest
Acquisition Date, (i) the Lessee shall have delivered to the Agent, each
Participant and the Lessor (A) an opinion of Wilson, Sonsini, Goodrich & Rosati,
counsel to the Lessee, as to the matters set forth in Exhibit D; and (B) an
opinion of local counsel licensed to practice in the jurisdiction where the
Property is located as to the matters set forth in Exhibit E; and (ii) the
Lessor shall have delivered to the Agent and each Participant (A) an opinion of
special counsel in the form set forth on Exhibit F; and (B) an opinion of
internal counsel to the Lessor to the effect and in the form set forth in
Exhibit G.
(m) Approvals. All necessary (or, in the reasonable opinion of
the Lessor, the Participants or the Agent or any of their respective counsel,
advisable) Governmental Actions and covenants and approvals of or by any
Governmental Authority or other Person, in each case required by any Requirement
of Law, covenant or restriction affecting the Property or the transactions
contemplated thereby to have been obtained by such date shall have been obtained
or made and be in full force and effect.
(n) Litigation. No action or proceeding shall have been
instituted, nor shall any action or proceeding be threatened, before any
Governmental Authority, nor shall any order, judgment or decree have been issued
or proposed to be issued by any Governmental Authority (i) to set aside,
restrain, enjoin or prevent the full performance of this Participation
Agreement, the Lease or any other Operative Document or any transaction
contemplated hereby or thereby or (ii) which is reasonably likely to have a
Material Adverse Effect.
(o) Requirements of Law. In the reasonable opinion of the
Lessor, the Participants, the Agent and their respective counsel, the
transactions contemplated by the Operative Documents do not and will not violate
any Requirement of Law and do not and will not subject the Lessor, the Agent or
any Participant to any adverse regulatory or tax prohibitions or constraints.
(p) Responsible Officer's Certificate of the Lessee. On or
prior to the earlier of the initial Funding Date or the Land Interest
Acquisition Date, the Lessor, each Participant and the Agent shall each have
received a Responsible Officer's Certificate, dated as of the Land Interest
Acquisition Date, of the Lessee stating that (i) each and every representation
and warranty of the Lessee contained in the Operative Documents to which it is a
party is true and correct on and as of the Closing Date; (ii) no Default or
Event of Default under the Lease, the Property Purchase Agreement or the
Construction Agency Agreement has occurred and is continuing; (iii) each
Operative Document to which the Lessee is a party is in full force and effect
with respect to it; and (iv) the Lessee has duly performed and complied with all
covenants, agreements and conditions contained herein or in any Operative
Document required to be performed or complied with by it on or prior to the
earlier of the initial Funding Date or the Land Interest Acquisition Date.
(q) The Lessee's Resolutions and Incumbency Certificate, etc.
On or prior to the earlier of the initial Funding Date or the Land Interest
Acquisition Date, the Lessor, each Participant and the Agent shall each have
received (i) a certificate of the Secretary or an Assistant Secretary of
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the Lessee attaching and certifying as to (A) the resolutions of the Board of
Directors of the Lessee, duly authorizing the execution, delivery and
performance by the Lessee of documents and agreements of the type represented by
each Operative Document to which it is or will be a party, (B) its articles of
incorporation and bylaws, and (C) the incumbency and signature of persons
authorized to execute and deliver on its behalf the Operative Documents to which
it is a party, and (ii) a good standing certificate from the appropriate officer
of the state in which the Property is located.
(r) Responsible Officer's Certificate of the Guarantor. On or
prior to the earlier of the initial Funding Date or the Land Interest
Acquisition Date, the Lessor, each Participant and the Agent shall each have
received a Responsible Officer's Certificate, dated as of the Land Interest
Acquisition Date, of the Guarantor stating that (i) each and every
representation and warranty of the Guarantor contained in the Operative
Documents to which it is a party is true and correct on and as of the Closing
Date; (ii) no Default or Event of Default under the Guarantee has occurred and
is continuing; (iii) each Operative Document to which the Guarantor is a party
is in full force and effect with respect to it; and (iv) the Guarantor has duly
performed and complied with all covenants, agreements and conditions contained
herein or in any Operative Document required to be performed or complied with by
it on or prior to the earlier of the initial Funding Date or the Land Interest
Acquisition Date.
(s) The Guarantor's Resolutions and Incumbency Certificate,
etc. On or prior to the earlier of the initial Funding Date or the Land Interest
Acquisition Date, the Lessor, each Participant and the Agent shall each have
received a certificate of the Secretary or an Assistant Secretary of the
Guarantor attaching and certifying as to (i) the resolutions of its Board of
Directors duly authorizing the execution, delivery and performance by the
Guarantor of documents and agreements of the type represented by each Operative
Document to which it is or will be a party (ii) its articles of incorporation
and by-laws, and (iii) the incumbency and signature of persons authorized to
execute and deliver on its behalf the Operative Documents to which it is a
party.
(t) Land Interest Acquisition Date. The Land Interest
Acquisition Date shall occur on or prior to September 30, 1997.
(u) No Material Adverse Effect. As of each Funding Date, there
shall not have occurred any Material adverse change in the Lessee's, the
Guarantor's and their respective subsidiaries capital structure, ownership or
consolidated assets, liabilities, results of operations, or financial condition
taken as a whole from that set forth or contemplated in the most recent
financial statements referred to in Section 8.3(m), and no event or condition
shall have occurred that would result in a Material Adverse Effect.
(v) Responsible Officer's Certificate of the Lessor. On or
prior to the Land Interest Acquisition Date, the Lessee, the Agent and each
Participant shall have received a certificate of an authorized officer of the
Lessor, dated as of the Land Interest Acquisition Date, stating that (i) each
and every representation and warranty of the Lessor contained in the Operative
Documents to which it is a party is true and correct on and as of the Closing
Date, (ii) each Operative Document to which the Lessor is a party is in full
force and effect with respect to it, and (iii) the Lessor has duly performed and
complied with all covenants, agreements and conditions contained herein or in
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any Operative Document required to be performed or complied with by it on or
prior to the Land Interest Acquisition Date.
(w) The Lessor's Resolutions and Incumbency Certificate, etc.
On or prior to the Land Interest Acquisition Date, the Lessee, the Agent and
each Participant shall have received a certificate of the Secretary or an
Assistant Secretary of the Lessor attaching and certifying as to (i) the
resolutions of the Board of Directors duly authorizing the execution, delivery
and performance by the Lessor of documents and agreements of the type
represented by each Operative Document to which it is or will be a party, (ii)
the pertinent provisions of its by-laws and (iii) the incumbency and signature
of persons authorized to execute and deliver on its behalf the Operative
Documents to which it is a party.
(x) Construction Budget. On or prior to the Land Interest
Acquisition Date, the Lessor, the Agent and each Participant shall have received
a construction budget with respect to the Property reasonably satisfactory to
each of them.
(y) Termination of Liens. On or prior to the Land Interest
Acquisition Date, the Agent, each Participant and the Lessor shall have received
a pay-off letter from each Existing Lender, together with duly executed UCC-3
termination statements, mortgage releases and such other instruments, in form
and substance satisfactory to the Agent, each Participant and the Lessor, as
shall be necessary to terminate and satisfy all Liens created pursuant to the
Existing Financing and all other Liens except Permitted Exceptions.
(z) Property Purchase Agreement Conditions. On or prior to the
Land Interest Acquisition Date, the Lessor, the Agent and the Participants shall
have received a copy of the Property Purchase Agreement; the Property Purchase
Agreement shall be in full force and effect and shall have been validly assigned
to the Lessor pursuant to the Assignment of Property Purchase Agreement; and the
conditions to closing under the Property Purchase Agreement shall have been
satisfied to satisfaction of, or waived by, the Lessor, the Agent and the
Participants.
SECTION 6.2 Further Conditions Precedent. The obligation of the Lessor
to acquire the Land Interest on the Land Acquisition Date or to make an Advance
on any Funding Date and the obligation of each Participant to purchase its
Participation Interest in, and to make available its related portion of, such
Advance on such Funding Date are subject to satisfaction or waiver of the
following conditions precedent and to satisfaction on or before the Closing
Date, Land Interest Acquisition Date or such Funding Date of the conditions
precedent set forth in Section 6.1 (it being understood that the Lessor's
obligations to acquire the Land Interest and to make Advances to the Lessee and
each Participant's obligation to fund the purchase of its Participation Interest
in an Advance shall not be subject to the conditions precedent set forth in
Section 6.1 and this Section 6.2 to the extent such conditions are actions
required of the Lessor or such Participant):
(a) Representations and Warranties. (i) On the Closing Date,
the representations and warranties of the Lessee, the Guarantor, the Lessor and
each Participant contained herein and in each of the other Operative Documents
shall be true and correct as though made on and as of such date, except to the
extent such representations or warranties relate solely to an earlier date, in
which
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case such representations and warranties shall have been true and correct on and
as of such earlier date; and (ii) on the Land Interest Acquisition Date (if such
date occurs after the Closing Date) and each other Funding Date, the
representations and warranties of the Lessee contained herein and in each of the
Operative Documents shall be true and correct as though made on and as of such
date; in each case except to the extent such representations or warranties
relate solely to an earlier date, in which case such representations and
warranties shall have been true an correct on and as of such earlier date.
(b) Performance of Covenants. (i) On the Closing Date the
parties hereto shall have performed their respective agreements contained herein
and in the other Operative Documents to be performed by them on or prior to such
date, and (ii) on the Land Interest Acquisition Date (if such date occurs after
the Closing Date) and each other Funding Date the Lessee shall have performed
its respective agreements contained herein and in the other Operative Documents
to be performed by it on or prior to such date.
(c) Title. Title to the Property shall conform to the
representations and warranties set forth in Section 8.4(c).
(d) No Default. There shall not have occurred and be
continuing any Default or Event of Default under any of the Operative Documents,
and no Default or Event of Default under any of the Operative Documents will
have occurred after giving effect to the acquisition of the Property and/or the
making of the Advance requested by such Funding Request, as the case may be.
SECTION 6.3 Further Condition Precedent. The obligation of the Lessor
to make any Advance in respect of the Property on a Funding Date after the Land
Interest Acquisition Date, the obligation of the Lessor to make the initial
Advance to finance the acquisition of Equipment or the construction of any
Improvements or the funding of any Interest Payment Advance on any Funding Date,
and the obligation of each Participant to purchase its Participation Interest
in, and to make available to the Lessor its related portion of, each such
Advance on such Funding Date are subject to satisfaction or waiver of the
following condition precedent and the conditions precedent set forth in Section
6.1 and Section 6.2 (it being understood that the Lessor's obligation to finance
such Equipment, if any, or Improvements shall not be subject to the conditions
precedent set forth in this Section 6.3 or Section 6.1 or Section 6.2 to the
extent such conditions are actions required of the Lessor) on or prior to such
Funding Date:
(a) Appraisal. On or prior to such Funding Date, the Agent,
the Lessor and the Participants shall have received an Appraisal of that portion
of the Property not subject to the Appraisal referred to in Section 10.1(s) and
prepared by the appraiser preparing the Appraisal referred to in Section
10.1(s), which Appraisal shall (i) show that the Fair Market Sales Value of that
portion of the Land Interest with respect to such Property as of the projected
Completion Date shall not exceed 25% of the Fair Market Sales Value of such
portion of the Land Interest and the Improvements to be constructed thereon in
accordance with the Plans and Specifications for such Property, and (ii) show as
of the projected Completion Date the Fair Market Sales Value of such Land
Interest and the Improvements to be constructed thereon in accordance with the
Plans and
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Specifications, and (iii) meet the other applicable requirements set forth in
the definition of the "Appraisal" contained in Appendix 1.
If any of the conditions precedent set forth in this Section
6.3 or in Section 6.1 or Section 6.2 (if such conditions apply to subsequent
Funding Dates) shall not have been satisfied on any Funding Date subsequent to
the initial Funding Date and the Lessor and the Participants refuse to fund the
requested Advance, the Lessee may exercise its Purchase Option under Section
20.1 of the Lease upon not less than ten (10) days' written notice to the
Lessor, the Agent and the Participants.
SECTION 7
COMPLETION DATE CONDITIONS
SECTION 7.1 Conditions. The occurrence of the Completion Date shall be
subject to the fulfillment to the satisfaction of, or waiver by, the Required
Participants of the following conditions precedent:
(a) Architect's Certificate. The Lessee shall have furnished
to the Lessor and Agent a (i) certificate of the Architect (substantially in the
form of Exhibit H) dated at or about the Completion Date and stating that (a)
the Improvements have been completed substantially in accordance with the Plans
and Specifications and the Property is ready for occupancy, (b) the Property, as
so completed, complies in all material respects with all Applicable Laws, and
certifying that attached thereto are true and complete copies of an "as built"
or "record" set of the Plans and Specifications, and a plat of survey of the
Property "as built" showing all paving, driveways, fences and exterior
improvements; and (ii) a date-down endorsement to or amendment and restatement
of the title insurance policies described in Section 6.1(g).
(b) Construction Completion. The construction of the
Improvements shall have been completed substantially in accordance with the
Plans and Specifications and all Applicable Law, and such Property shall be
ready for occupancy and operation. All Fixtures, Equipment and other
Improvements contemplated under the Plans and Specifications to be incorporated
into or installed in the Property shall have been incorporated or installed free
and clear of all Liens except for Permitted Liens.
(c) Lessee Certification. The Lessee shall have furnished the
Lessor and the Agent with a certification of the Lessee (substantially in the
form of Exhibit I) as follows:
(i) The representations and warranties of the Lessee
with respect to the Property set forth in Section 8.4(b) are true and
correct as of the Completion Date. All amounts owing to third parties
for the construction of the Improvements have been paid in full.
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(ii) No changes or modifications were made to the
related Plans and Specifications after the Closing Date that have had a
Material adverse effect on the value, use or useful life of the
Property.
SECTION 8
REPRESENTATIONS
SECTION 8.1 Representations of the Lessor. The Lessor represents and
warrants to each of the other parties hereto as follows:
(a) Due Organization, etc. It is a corporation duly organized,
validly existing and in good standing under the laws of the State of Illinois
and has the corporate power and authority to enter into and perform its
obligations under each of the Operative Documents to which it is or will be a
party and each other agreement, instrument and document to be executed and
delivered by it in connection with or as contemplated by each such Operative
Document to which it is or will be a party.
(b) Authorization; No Conflict. The execution, delivery and
performance of each Operative Document to which it is or will be a party has
been duly authorized by all necessary action on its part and neither the
execution and delivery thereof, nor the consummation of the transactions
contemplated thereby, nor compliance by it with any of the terms and provisions
thereof (i) does or will require any approval or consent of any trustee or
holders of any of its indebtedness or obligations, (ii) does or will contravene
any current United States or Illinois law, governmental rule or regulation,
(iii) does or will contravene or result in any breach of or constitute any
default under, or result in the creation of any Lien upon any of its property
under, its articles of incorporation or by-laws, or any indenture, mortgage,
deed of trust, conditional sales contract, credit agreement or other agreement
or instrument to which it is a party or by which it or its properties may be
bound or affected or (iv) does or will require any Governmental Action by any
Governmental Authority, except such as have been obtained on the Lessee's or the
Lessor's behalf.
(c) Enforceability, etc. Each Operative Document to which the
Lessor is or will be a party has been, or on or before the Closing Date or
applicable Funding Date or Land Interest Acquisition Date will be, duly executed
and delivered by the Lessor and each such Operative Document to which the Lessor
is a party constitutes, or upon execution and delivery will constitute, a legal,
valid and binding obligation enforceable against the Lessor in accordance with
the terms thereof, except as the same may be limited by insolvency, bankruptcy,
reorganization or other laws relating to or affecting creditors' rights or by
general equitable principles.
(d) Litigation. There is no action or proceeding pending or,
to its knowledge, threatened to which it is a party, before any Governmental
Authority that, if adversely determined, would materially and adversely affect
its ability to perform its obligations under the Operative Documents to which it
is a party, would have a material adverse effect on the financial condition of
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the Lessor or would question the validity or enforceability of any of the
Operative Documents to which it is or will become a party.
(e) Assignment. It has not assigned or transferred any of its
right, title or interest in or under the Lease except to the Agent, for the
benefit of the Participants, in accordance with this Agreement and the other
Operative Documents.
(f) Defaults. No Default or Event of Default under the
Operative Documents attributable to it has occurred and is continuing.
(g) Use of Proceeds. The proceeds of the purchase of the
Participation Interests shall be applied by the Lessor solely in accordance with
the provisions of the Operative Documents.
(h) Securities Act. Neither the Lessor nor any Person
authorized by the Lessor to act on its behalf has offered or sold any interest
in the Lease, or in any similar security relating to the Property, or in any
security the offering of which for the purposes of the Securities Act would be
deemed to be part of the same offering as the offering of the aforementioned
securities to, or solicited any offer to acquire any of the same from, any
Person other than the Agent and the Participants, and neither the Lessor nor any
Person authorized by the Lessor to act on its behalf will take any action which
would subject the issuance or sale of any interest in the Lease or the Property
to the provisions of Section 5 of the Securities Act or require the
qualification of any Operative Document under the Trust Indenture Act of 1939,
as amended.
(i) Chief Place of Business. The Lessor's chief place of
business, chief executive office and office where the documents, accounts and
records relating to the transactions contemplated by this Participation
Agreement and each other Operative Document are kept are located at 135 South
LaSalle Street, Chicago, Illinois 60603.
(j) Federal Reserve Regulations. The Lessor is not engaged
principally in, and does not have as one of its important activities, the
business of extending credit for the purpose of purchasing or carrying any
margin stock (within the meaning of Regulation U of the Board), and no part of
the proceeds of the purchase of the Participation Interests will be used by it
to purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying any such margin stock or for any purpose that
violates, or is inconsistent with, the provisions of Regulation G, T, U, or X of
the Board.
(k) Investment Company Act. The Lessor is not an "investment
company" or a company controlled by an "investment company" within the meaning
of the Investment Company Act.
(l) No Plan Assets. The Lessor is not acquiring its interests
in the Property with the assets of any "employee benefit plan" (as defined in
Section 3(3) of ERISA) which is subject to Title I of ERISA, or "plan" (as
defined in Section 4975(e)(1) of the Code).
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(m) Equity Source. (i) The source of its 3.50% initial minimum
equity investment in the Tranche C Participation Interest is full recourse debt
the obligee of which is ABN AMRO, the ultimate parent of the Lessor; (ii) the
Lessor will not obtain residual insurance or any other residual guarantee to
ensure recovery of its equity investment; and (iii) the Lessor will be liable
for any decline in the fair value of the residual interest and has, and is
expected to continue to have during the term of the Lease, other significant
assets, in addition to and of a value that exceeds its equity investment, that
are at risk.
SECTION 8.2 Representations of the Participants. Each Participant
represents and warrants to the Lessor, each of the other Participants and the
Lessee as follows:
(a) No Plan Assets. Such Participant is not and will not be
funding its Participation Interest hereunder, and is not performing its
obligations under the Operative Documents, with the assets of an "employee
benefit plan" (as defined in Section 3(3) of ERISA) which is subject to Title I
of ERISA, or "plan" (as defined in Section 4975(e)(1) of the Code). The
advancing of any amount with respect to its Participation Interest on any
Funding Date shall constitute an affirmation by the subject Participant of the
preceding representation and warranty.
(b) Due Organization, etc. It is either (i) a duly organized
and validly existing corporation in good standing under the laws of the state of
its incorporation, or (ii) a national banking association duly organized and
validly existing under the laws of the United States or (iii) a banking
corporation duly organized and validly existing under the laws of the
jurisdiction of its organization, and, in each case, has the corporate power and
authority to execute, deliver and carry out the terms and provisions of the
Operative Documents to which it is a party.
(c) Authorization; No Conflict. The execution, delivery and
performance of each Operative Document to which it is or will be a party has
been duly authorized by all necessary action on its part and neither the
execution and delivery thereof, nor the consummation of the transactions
contemplated thereby, nor compliance by it with any of the terms and provisions
thereof (i) does or will require any approval or consent of any trustee or
holders of any of its indebtedness or obligations, (ii) does or will contravene
any current law, governmental rule or regulation of the United States or the
state or country of its organization, (iii) does or will contravene or result in
any breach of or constitute any default under, or result in the creation of any
Lien upon any of its property under, its certificate of incorporation or bylaws,
articles of association or other organizational documents or any indenture,
mortgage, deed of trust, conditional sales contract, credit agreement or other
agreement or instrument to which it is a party or by which it or its properties
may be bound or affected or (iv) does or will require any Governmental Action by
any Governmental Authority.
(d) Enforceability, etc. Each Operative Document to which it
is a party has been, or on or before the Closing Date or applicable Funding Date
or Land Interest Acquisition Date will be, duly executed and delivered by it and
each such Operative Document to which it is a party constitutes, or upon
execution and delivery will constitute, a legal, valid and binding obligation
enforceable against it in accordance with the terms thereof, except as the same
may be limited by
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insolvency, bankruptcy, reorganization or other laws relating to or affecting
creditors' rights or by general equitable principles.
(e) Litigation. There is no action or proceeding pending or,
to its knowledge, threatened to which it is or will be a party before any
Governmental Authority that is reasonably likely to be adversely determined and,
if adversely determined, would materially and adversely affect its ability to
perform its obligations under the Operative Documents to which it is a party.
SECTION 8.3 Representations of the Lessee. The Lessee represents and
warrants to each of the other parties hereto that:
(a) Corporate Status. The Lessee (i) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and (ii) has duly qualified and is authorized to do business and has
obtained a certificate of authority to transact business as a foreign
corporation in the States of California and Colorado and in each other
jurisdiction where the failure to so qualify is reasonably likely to be
Material.
(b) Corporate Power and Authority. The Lessee has corporate
power and authority to execute, deliver and carry out the terms and provisions
of the Operative Documents to which it is or will be a party and has taken all
necessary corporate action to authorize the execution, delivery and performance
of the Operative Documents to which it is or will be a party and has or will
have duly executed and delivered each Operative Document required to be executed
and delivered by it and, assuming the due authorization, execution and delivery
thereof on the part of each other party thereto, each such Operative Document
constitutes or will constitute a legal, valid and binding obligation enforceable
against it in accordance with its terms, except as the same may be limited by
insolvency, bankruptcy, reorganization or other laws relating to or affecting
the enforcement of creditors' rights or by general equitable principles.
(c) No Violation. Neither the execution, delivery and
performance by the Lessee of the Operative Documents to which it is or will be a
party nor compliance with the terms and provisions thereof, nor the consummation
by the Lessee of the transactions contemplated therein (i) will result in a
violation by the Lessee of any applicable provision of any law, statute, rule,
regulation, order, writ, injunction or decree of any court or governmental
instrumentality having jurisdiction over the Lessee or the Property that would
(x) adversely affect the validity or enforceability of the Operative Documents
to which the Lessee is a party, or the title to, or value or condition of, the
Property, or (y) have a Material Adverse Effect on the consolidated financial
position, business or consolidated results of operations of the Lessee, or (z)
have an adverse effect on the ability of the Lessee to perform its obligations
under the Operative Documents, (ii) will conflict with or result in any breach
under, or (other than pursuant to the Operative Documents) result in the
creation or imposition of (or the obligation to create or impose) any Lien upon
any of the property or assets of Lessee pursuant to the terms of, any indenture,
loan agreement or other agreement for borrowed money to which the Lessee is a
party or by which it or any of its property or assets is bound or to which it
may be subject (other than Permitted Liens), or (iii) will violate any provision
of the certificate or articles of incorporation or bylaws of the Lessee.
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(d) Litigation. There are no actions, suits or proceedings
pending or, to the knowledge of the Lessee, threatened (i) that are reasonably
likely to have a Material Adverse Effect or (ii) that question the validity of
the Operative Documents or the rights or remedies of the Lessor, the Agent or
the Participants with respect to the Lessee or the Property under the Operative
Documents.
(e) Governmental Approvals. No Governmental Action by any
Governmental Authority having jurisdiction over the Lessee or the Property is
required to authorize or is required in connection with (i) the execution,
delivery and performance by the Lessee of any Operative Document or (ii) the
legality, validity, binding effect or enforceability against the Lessee of any
Operative Document, except for the filing or recording of the Operative
Documents listed in Section 8.4(f) hereof with the appropriate Governmental
Authorities, all of which will have been completed on or prior to the Land
Interest Acquisition Date.
(f) Investment Company Act. The Lessee is not an "investment
company" or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act.
(g) Public Utility Holding Company Act. The Lessee is not a
"holding company, or a "subsidiary company," or an "affiliate" of a "holding
company, or of a "subsidiary company" of a "holding company", within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
(h) Accuracy of Information Furnished. None of the Operative
Documents and none of the other certificates, statements or information
furnished to the Lessor, the Agent or any Participant by or on behalf of the
Lessee or any of its Subsidiaries in connection with the Operative Documents or
the transactions contemplated thereby (taken together with all such Operative
Documents, certificates, statements or information) contains or will contain any
untrue statement of a material fact or omits or will omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading (it being understood by the Lessor,
the Agent or any Participant that the projections and forecasts provided by the
Lessee are not to be viewed as facts and that actual results during the period
or periods covered by such projections and forecasts may differ from the
projected or forecasted results).
(i) Taxes. All United States federal income tax returns and
all other Material tax returns which are required to have been filed have been
or will be prepared in accordance with applicable law and filed by or on behalf
of the Lessee by the respective due dates, including extensions, and all taxes
due with respect to the Lessee pursuant to such returns or pursuant to any
assessment received by the Lessee have been or will be paid. The charges,
accruals and reserves on the books of the Lessee in respect of taxes or other
governmental charges are, in the opinion of the Lessee, adequate.
(j) Compliance with ERISA. Each member of the ERISA Group has
fulfilled its obligations under the minimum funding standards of ERISA and the
Code with respect to each Plan and is in compliance in all Material respects
with the presently applicable provisions of ERISA
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and the Code with respect to each Plan. No member of the ERISA Group has (i)
sought a waiver of the minimum funding standard under Section 412 of the Code in
respect of any Plan, (ii) failed to make any contribution or payment to any Plan
or Multiemployer Plan or in respect of any Benefit Arrangement, or made any
amendment to any Plan or Benefit Arrangement, which has resulted or could result
in the imposition of a Lien or the posting of a bond or other security under
ERISA or the Code or (iii) incurred any liability under Title IV of ERISA other
than a liability to the PBGC for premiums under Section 4007 of ERISA.
(k) Environmental and Other Regulations. Except as set forth
in Schedule III attached hereto, the Lessee and the Property are in compliance
with all Environmental Laws relating to pollution and environmental control or
employee safety in the jurisdiction in which the Property is located and in all
other domestic jurisdictions, other than, with respect to such other
jurisdictions, those Environmental Laws the non-compliance with which would not
have a Material Adverse Effect.
(l) Offer of Securities, etc. Neither the Lessee nor the
Guarantor nor any Person authorized to act on their behalf has, directly or
indirectly, offered any interest in the Property or the Lease or any other
interest similar thereto (the sale or offer of which would be integrated with
the sale or offer of such interest in the Property or the Lease), for sale to,
or solicited any offer to acquire any of the same from, any Person other than
the Participants, the Lessor and other "accredited investors" (as defined in
Regulation D of the Securities and Exchange Commission).
(m) Financial Statements. The audited consolidated statement
of financial position of the Lessee and its consolidated Subsidiaries as of
March 31, 1997 and the related consolidated statements of income, shareholder's
equity and cash flows for the fiscal year then ended, reported on by Ernst &
Young, LLP, a copy of which has been delivered to each of the Lessor, the
Participants and the Agent, present fairly in all material respects, in
conformity with generally accepted accounting principles, the financial position
of the Lessee as of such date and its results of operations and cash flows for
such fiscal year.
(n) No Violation or Default. Neither the Lessee nor any of the
Lessee's Subsidiaries is in violation of or in default with respect to (i) any
Requirement of Law applicable to such Person or (ii) any Contractual Obligation
of such Person, where, in each case, such violation or default is reasonably
likely to have a Material Adverse Effect. Without limiting the generality of the
foregoing, neither the Lessee nor any of the Lessee's Subsidiaries (A) is in
violation of any Environmental Laws, (B) to the best of the Lessee's knowledge,
has any liability or potential liability under any Environmental Laws or (C) has
received written notice or other written communication of an investigation or is
under investigation by any Governmental Authority having jurisdiction over the
Lessee or any of the Lessee's Subsidiaries having authority to enforce
Environmental Laws, where, in each case, such violation, liability or
investigation could reasonably be expected to have a Material Adverse Effect,
nor, to the best of the Lessee's knowledge, have any Hazardous Materials been
released or disposed of on any of the properties owned by the Lessee or the
Lessee's Subsidiaries which, either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect. No Event of Default or
Default has occurred and is continuing.
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(o) Title; Possession Under Leases. The Lessee and the
Lessee's Subsidiaries (i) own and have good title (without regard to minor
defects of title), or leasehold interests in, all their other respective
properties and assets which are material to the business of the Lessee and its
Subsidiaries taken as a whole as reflected in the most recent Financial
Statements delivered to the Agent (except those assets and properties disposed
of since the date of such Financial Statements in compliance with this
Agreement) and (ii) own and have good title (without regard to minor defects of
title) to, or leasehold interests in, all respective properties and assets
acquired by the Lessee and the Lessee's Subsidiaries since such date which are
material to the business of the Lessee and its Subsidiaries taken as a whole
(except those assets and properties disposed of in compliance with this
Agreement). Such assets and properties are subject to no Lien, except for
Permitted Liens.
(p) Patent and Other Rights. The Lessee and the Lessee's
Subsidiaries own or license under validly existing agreements (or could obtain
such ownership, possession or license on terms not materially adverse to the
Lessee and its Subsidiaries, taken as a whole, and under circumstances that
could not reasonably be expected to have a Material Adverse Effect), and have
the full right to license without the consent of any other Person, all patents,
licenses, trademarks, trade names, trade secrets, service marks, copyrights and
all rights with respect thereto, which are material to conduct the businesses of
the Lessee and its Subsidiaries (taken as a whole) as now conducted.
(q) Solvency, Etc. The Lessee and each of its Material
Subsidiaries is Solvent and, after the execution and delivery of the Operative
Documents and the consummation of the transactions contemplated thereby, will be
Solvent.
(r) Catastrophic Events. Neither the Lessee nor any of the
Lessee's Subsidiaries and none of their properties is affected by any fire,
explosion, strike, lockout or other labor dispute, earthquake, embargo or other
casualty that is reasonably likely to have a Material Adverse Effect. As of the
Closing Date, there are no disputes presently subject to grievance procedure,
arbitration or litigation under any of the collective bargaining agreements,
employment contracts or employee welfare or incentive plans to which the Lessee
or any of the Lessee's Subsidiaries is a party, an there are no strikes,
lockouts, work stoppages or slowdowns, or, to the best knowledge of the Lessee,
jurisdictional disputes or organizing activities occurring or threatened which
alone or in the aggregate are reasonably likely to have a Material Adverse
Effect.
SECTION 8.4 Representations of the Lessee With Respect to the Property
on the Land Interest Acquisition Date. The Lessee hereby represents and warrants
as follows:
(a) Representations. The representations and warranties of the
Construction Agent and the Lessee set forth in the Operative Documents are true
and correct. The Construction Agent and the Lessee are in compliance in with
their respective obligations under the Operative Documents and there exists no
Default or Event of Default.
(b) Property. Such Property consists of the Land Interest on
which administration, manufacturing design and warehouse facilities will be
constructed pursuant to the Construction Agency Agreement. Such Property is
located in the State of Colorado. Such Property
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as improved in accordance with the related Plans and Specifications and the use
thereof by the Lessee and its agents, assignees, employees, invitees, lessees,
licensees, contractors and tenants will comply in all material respects with all
Requirements of Law (including, without limitation, Title III of the Americans
with Disabilities Act, all zoning and land use laws and Environmental Laws) and
Insurance Requirements, except for such Requirements of Law as the Lessee shall
be contesting in good faith by appropriate proceedings. The related Plans and
Specifications have been or will be prepared in all material respects in
accordance with applicable Requirements of Law (including, without limitation,
Title III of the Americans with Disabilities Act, applicable Environmental Laws
and building, planning, zoning and fire codes) and upon completion of the
facility in accordance with the Plans and Specifications, such facility and the
other Improvements on such Property will not encroach in any manner onto any
adjoining land (except as permitted by express written easements or as insured
by appropriate title insurance) and such facility and other Improvements will
comply in all Material respects with all applicable Requirements of Law
(including, without limitation, Title III of the Americans with Disabilities
Act, all applicable Environmental Laws and building, planning, zoning and fire
codes). Upon completion of such facility in accordance with the related Plans
and Specifications, the Improvements including, without limitation, structural
members, the plumbing, heating, air conditioning and electrical systems thereof,
and all water, sewer, electric, gas, telephone and drainage facilities will be
completed in a workmanlike manner and in accordance with the Plans and
Specifications and will be in first class working condition and fit for use as
administration, manufacturing design and warehouse facilities, and all other
utilities required to adequately service the Improvements for their intended use
are or will be available and "tapped on" and hooked up pursuant to adequate
permits (including any that may be required under applicable Environmental
Laws). There is no action, suit or proceeding (including any proceeding in
condemnation or eminent domain or under any Environmental Law) pending or, to
the best of the Lessee's knowledge, threatened with respect to the Lessee, its
Affiliates or such Property which adversely affects the title to, or the use,
operation or value of, the Property. As of the Land Interest Acquisition Date,
no fire or other casualty with respect to the Property shall have occurred, and
as of each other Funding Date, no fire or other casualty with respect to the
Property shall have occurred that constitutes a Significant Casualty with
respect to which the Lessee shall have delivered a Termination Notice under
Section 16.1 of the Lease. The Property has or will have available all material
services of public facilities and other utilities necessary for use and
operation of such facility and the other Improvements for their primary intended
purposes, including, without limitation, adequate water, gas and electrical
supply, storm and sanitary sewerage facilities, telephone, other required public
utilities and means of access to such facility from publicly dedicated streets
and public highways for pedestrians and motor vehicles. All utilities serving
such Property, or proposed to serve such Property in accordance with the related
Plans and Specifications, are located in, and vehicular access to the
Improvements on such Property is provided by, either public rights-of-way
abutting such Property or Appurtenant Rights. All material licenses, approvals,
authorizations, consents, permits (including, without limitation, building,
demolition and environmental permits, licenses, approvals, authorizations and
consents), easements and rights-of-way, including proof and dedication, required
for (x) the use, treatment, storage, transport, disposal or disposition of any
Hazardous Substance on, at, under or from such Property during the construction
of the Improvements thereon, and (y) construction of such Improvements in
accordance with the related Plans and Specifications and the Construction Agency
Agreement have either been obtained from the appropriate Governmental
Authorities having jurisdiction or from private parties,
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as the case may be, or will be obtained from the appropriate Governmental
Authorities having jurisdiction or from private parties, as the case may be,
prior to commencing any such construction or use and operation, as applicable
and will in each case be maintained by the Lessee during the periods for which
they are required by Applicable Law or such Governmental Authorities.
(c) Title. The Deed providing for the acquisition of the
Property is sufficient to convey title to the Property in fee simple, subject
only to Permitted Exceptions. Upon conveyance of the Deed on the Land Interest
Acquisition Date, the Lessor will own fee simple title in the Land Interest and
any Improvements and will have the right to grant the Mortgage on the Property.
The Lessor will at all times during the Term have good title to all Equipment
wherever located and to any Improvements.
(d) Insurance. The Lessee has obtained insurance coverage
covering the Property which meets the requirements of Article XIV of the Lease,
and such coverage is in full force and effect.
(e) Lease. Upon the execution and delivery of the Lease
Supplement to the Lease, (i) the Lessee will have unconditionally accepted the
Property and will be bound by the terms of the Lease Supplement and will have a
valid leasehold interest in the Property, subject only to the Permitted
Exceptions; (ii) the Lessee's obligation to pay Rent will be an independent
covenant and no right of deduction or offset will exist with respect to any Rent
or other sums payable under the Lease; and (iii) no Rent under the Lease will
have been prepaid and the Lessee will have no right to prepay the Rent, except
as specifically set forth therein.
(f) Protection of Interests. (i) On the Land Interest
Acquisition Date, the Lease Supplement, the Assignment of Lease, the Supplement
to Assignment of Lease, the Consent to Assignment and the Mortgage are each in a
form sufficient, and have been recorded in all recording offices necessary, to
grant perfected first priority liens on the Property to the Agent or the Lessor,
as the case may be, (ii) the Agent Financing Statements are each in a form
sufficient, and have been filed in all filing offices necessary, to create a
valid and perfected first priority security interest in the Lessor's interest in
all Equipment, if any, to be located on the Property and the Improvements; and
(iii) the Lessor Financing Statements are each in a form sufficient, and have
been filed in all filing offices necessary, to perfect the Lessor's interest
under the Lease to the extent the Lease is a security agreement.
(g) Flood Hazard Areas. No portion of the Property is located
in an area identified as a special flood hazard area by the Federal Emergency
Management Agency or other applicable agency, or if any portion of the Property
is located in an area identified as a special flood hazard area by the Federal
Emergency Management Agency or other applicable agency, then flood insurance has
been obtained for the Property or such portion thereof in accordance with
Section 14.2(b) of the Lease and in accordance with the National Flood Insurance
Act of 1968, as amended.
(h) Conditions Precedent. All conditions precedent contained
in this Agreement and in the other Operative Documents relating to the
acquisition and leasing of the Property by the Lessor have been satisfied in
full or waived.
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SECTION 8.5 Representations of the Lessee With Respect to Each Advance.
The Lessee hereby represents and warrants as of each Funding Date on which an
Advance is made as follows:
(a) Representations. The representations and warranties of the
Construction Agent and the Lessee set forth in the Operative Documents
(including the representations and warranties set forth in Sections 8.3 and 8.4)
are true and correct in all Material respects on and as of such Funding Date,
except to the extent such representations or warranties relate solely to an
earlier date, in which case such representations and warranties shall have been
true and correct in all Material respects on and as of such earlier date. The
Construction Agent and the Lessee are in compliance in all Material respects
with their respective obligations under the Operative Documents and there exists
no Default or Event of Default which is continuing. No Default or Event of
Default will occur as a result of, or after giving effect to, the Advance
requested by the Acquisition Request or the Funding Request on such date.
(b) Improvements. Construction of the Improvements to date has
been performed in a good and workmanlike manner, substantially in accordance
with the Plans and Specifications and in compliance with all Insurance
Requirements and Requirements of Law.
(c) No Liens. There have been no Liens against the Property
since the recordation of the Deed, the Lease Supplement, the Assignment of
Lease, the Consent to Assignment or the Mortgage other than Permitted Exceptions
and Liens that have been removed or bonded by or on behalf of the Lessee to the
satisfaction of the Lessor and the Agent. The Participation Interests funding
such Advance are secured by the Lien of the Mortgage.
(d) Advance. The amount of the Advance requested represents
amounts owing in respect of the acquisition price of the Land Interest or
amounts that the Lessee reasonably believes will be due in the sixty (60) days
following such Advance from the Lessee to third parties in respect of Property
Improvements Costs, or amounts paid by the Lessee to third parties in respect of
Property Costs for which the Lessee has not previously been reimbursed by an
Advance. The conditions precedent to such Advance and the related remittances by
the Participants with respect thereto set forth in Section 6 have been
satisfied.
(e) Lease. Upon the execution and delivery of each Equipment
Schedule to the Lease, the Lessee will have unconditionally accepted the
Equipment, if any, subject to the Lease Supplement and will have good and
marketable title to a valid and subsisting leasehold interest in such Equipment,
subject only to Permitted Exceptions.
(f) Protection of Interests. On each Funding Date for the
acquisition of Equipment, (i) the Lease Supplement, the applicable Equipment
Schedule and the Mortgage are each a form sufficient to grant perfected Liens on
the Lessee's and the Lessor's interests, respectively, in the Equipment to the
Lessor and Agent, respectively, (ii) the Agent Financing Statements are each in
a form sufficient, and have been filed in all filing offices necessary, to
create a valid and perfected first priority security interest in such interest
in such Equipment, and (iii) the Lessor Financing Statements are each in a form
sufficient, and have been filed in all filing offices necessary, to perfect
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the Lessor's interest in such Equipment under the Lease to the extent the Lease
is a security agreement.
(g) Title Insurance Date Down Endorsement. Prior to each
Advance during the Construction Period and prior to an Advance following the
Construction Period for Property Improvement Costs to which a mechanics' lien
could take priority over the lien of the Mortgage or the lien of the Lease, the
Lessee shall furnish the Lessor at the Lessee's expense an endorsement or other
coverage reasonably acceptable to the Agent from the title insurance company
issuing the policies pursuant to Section 6.1, insuring the Lessor and the Agent
that (i) all mechanics' or similar liens and claims for such liens which could
arise from that part of the Property Improvements Costs previously paid for, if
any, or to be paid for with the then proposed Advance, have been waived and (ii)
there has not been filed with respect to all or any parts of the Land Interest
and Improvements any mechanics' or similar liens or claims of such liens that
are not discharged of record, or insured over by the title insurance company, in
respect of any part of the Land Interest and Improvements.
SECTION 9
PAYMENT OF CERTAIN EXPENSES
The Lessee agrees, for the benefit of the Lessor, the Agent
and the Participants, that:
SECTION 9.1 Transaction Expenses. (a) The Lessee shall pay, or cause to
be paid, from time to time all Transaction Expenses in respect of the
transactions consummated on the Closing Date, the Land Interest Acquisition Date
or any Funding Date, it being understood and agreed that neither the Agent, the
Lessor nor any Participant shall be required to advance any Transaction Expenses
in connection with the closing. Such Transaction Expenses and the Lease
Arrangement Fee may be added to the Property Cost to the extent supported by the
Appraisal and agreed by the Agent and the Participants.
(b) The Lessee shall pay or cause to be paid (i) all
Transaction Expenses of the Lessor, (ii) the Commitment Fees, (iii) the Lease
Arrangement Fee, (iv) the Administrative Fee, (v) all Transaction Expenses
reasonably incurred by the Lessee, the Agent, ABN AMRO or the Lessor in entering
into any future amendments or supplements with respect to any of the Operative
Documents, whether or not such amendments or supplements are ultimately entered
into, or giving or withholding of waivers or consents hereto or thereto, in each
case (except after the occurrence of an Event of Default) which have been
requested by or approved by the Lessee, (vi) all Transaction Expenses incurred
by the Lessor, the Lessee, ABN AMRO or the Agent in connection with any purchase
of the Property by the Lessee or other Person pursuant to Articles XVI, XVII, XX
or XXII of the Lease, and (vii) all Transaction Expenses incurred by any of the
other parties hereto in respect of enforcement of any of their rights or
remedies against the Lessee in respect of the Operative Documents.
SECTION 9.2 Brokers' Fees and Stamp Taxes. The Lessee shall pay or
cause to be paid any brokers' fees and any and all stamp, transfer and other
similar taxes, fees and excises, if any,
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including any interest and penalties, which are payable in connection with the
transactions contemplated by this Participation Agreement and the other
Operative Documents.
SECTION 9.3 Obligations. The Lessee shall pay, on or before the due
date thereof, all costs, expenses and other amounts required to be paid by the
Mortgage and the Assignment of Lease.
SECTION 10
OTHER COVENANTS AND AGREEMENTS
SECTION 10.1. Covenants of the Lessee. The Lessee hereby agrees that so
long as this Participation Agreement is in effect:
(a) Financial Statements, Reports, etc. The Lessee shall
furnish to the Agent (and the Agent shall promptly thereupon furnish to
each Participant) the following, each in such form and such detail as
the Agent shall reasonably request:
(i) As soon as available and in no event later than
forty-five (50) days after the last day of each fiscal quarter
of the Lessee which is not a fiscal year end, a copy of the
unaudited Financial Statements of the Lessee for such quarter
and for the fiscal year to date (excluding statements of
shareholders' equity), certified by an Executive Officer of
the Lessee to present fairly the financial condition, results
of operations and other information reflected therein and to
have been prepared in accordance with GAAP (subject to normal
year-end audit adjustments);
(ii) As soon as available and in no event later than
ninety (105) days after the close of each fiscal year of the
Lessee, (A) copies of the audited consolidated Financial
Statements of the Lessee for such fiscal year, audited by a
nationally recognized accounting firm and (B) copies of the
unqualified opinions (or qualified opinions reasonably
acceptable to the Agent);
(iii) Contemporaneously with the quarterly and year-end
Financial Statements required by the foregoing clauses (i) and
(ii), (A) a certificate of an Executive Officer of the Lessee
in the form of Exhibit Q, appropriately completed, together
with such financial computations as the Agent may reasonably
request to determine compliance with the terms of this
Agreement (a "Compliance Certificate") and (B) management's
discussion of the Lessee's operations for the period covered
by such Financial Statements in the form supplied to the
Lessee's stockholders, including a comparison with the
Lessee's operations for the corresponding quarter in the
immediately preceding fiscal year or with the immediately
preceding fiscal year, as the case may be, as set forth in the
Lessee's 10-K and 10-Q reports filed by the Lessee or any of
its Subsidiaries with the Securities and Exchange Commission;
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(iv) As soon as possible and in no event later than five
(5) Business Days after any Executive Officer of the Lessee or
any Vice President of Human Resources of the Lessee knows of
the occurrence or existence of (A) any Reportable Event under
any Employee Benefit Plan or Multiemployer Plan, (B) any
litigation, suits or claims against the Lessee or its
Subsidiaries involving claimed monetary damages payable by the
Lessee or any of its Subsidiaries of $25,000,000 or more not
covered by insurance, (C) any other event or condition which
is reasonably likely to have a Material Adverse Effect, or (D)
any Default or Event of Default; the statement of an Executive
Officer of the Lessee setting forth details of such event,
condition, Default or Event of Default and the action which
the Lessee proposes to take with respect thereto;
(v) As soon as available and in no event later than five
(5) Business Days after they are sent, made available or
filed, copies of (A) all registration statements filed on
forms S-1, S-2, S-3 or S-4 and 8-K, 10-K and 10-Q reports and
such additional material reports filed by the Lessee or any of
its Subsidiaries with any securities exchange or the
Securities and Exchange Commission; (B) all reports, proxy
statements and financial statements sent or made available by
the Lessee or any of its Subsidiaries to its public security
holders generally; and (C) all press releases and other
similar public statements concerning any material developments
in the business of the Lessee or any of the Lessee's
Subsidiaries made available by the Lessee or any of the
Lessee's Subsidiaries to the public generally; and
(vi) Such other certificates, opinions, statements,
documents and information relating to the operations or
condition (financial or otherwise) of the Lessee or any of its
Subsidiaries, and compliance by the Lessee with the terms of
this Agreement and the other Operative Documents as any
Participant through the Agent may from time to time reasonably
request.
Notwithstanding the foregoing, it is understood and agreed that to the
extent the Lessee files Forms 10-K and 10-Q (or any successor forms)
with the Securities and Exchange Commission (or any successor agency)
and such forms are required to contain the same information as required
by clauses (i), (ii) and (iii) (B) of Section 10.1(a), the Lessee may
deliver copies of such forms with respect to the relevant time periods
in lieu of the deliveries specified in clauses (i), (ii) and (iii) (B)
of Section 10.1(a) when such reports are required to be filed with the
Securities and Exchange Commission.
(b) Books and Records. The Lessee and its Subsidiaries shall
at all times keep proper books of record and account in accordance with
good business practices and GAAP (and, in the case of Subsidiaries
other than Domestic Subsidiaries, local accounting rules or GAAP to the
extent required).
(c) Inspections. The Lessee and its Subsidiaries shall permit
personnel of the Agent and, if no Default or Event of Default has
occurred and is continuing, with the consent of the Lessee (which
consent shall not be unreasonably withheld or delayed; provided that
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the Lessee's consent shall not be required with respect to an
inspection of the Property permitted under Section 27.1 of the Lease),
any Person designated by the Agent, upon reasonable notice and during
normal business hours, to visit and inspect any of the properties and
offices of the Lessee and its Subsidiaries, to examine the books and
records of the Lessee and its Subsidiaries and make copies thereof and
to discuss the affairs, finances and accounts of the Lessee and its
Subsidiaries with, and to be advised as to the same by, their officers,
auditors and accountants, all at such times and intervals as the Agent
may reasonably request. Notwithstanding any provision of this Agreement
to the contrary, so long as no Default or Event of Default shall have
occurred and be continuing, neither the Lessee nor any of its
Subsidiaries shall be required to disclose, permit the inspection,
examination, photocopying or making extracts of, or discuss, any
document, information or other matter that (i) constitutes
non-financial trade secrets or non-financial proprietary information or
(ii) the disclosure of which to any Participant, or their designated
representative, is then prohibited by law or any agreement binding on
the Lessee or any of its Subsidiaries that was not entered into by the
Lessee or any such Subsidiary for the purpose of concealing information
from the Participants.
(d) Insurance. The Lessee and its Subsidiaries shall:
(i) Carry and maintain insurance of the types and in the
amounts customarily carried from time to time during the Lease
Term by others engaged in substantially the same business as
such Person and operating in the same geographic area as such
Person, including, but not limited to, fire, public liability,
property damage and worker's compensation; and
(ii) Deliver to the Agent from time to time, as the Agent
may request, schedules setting forth all insurance then in
effect.
(iii) Notwithstanding clauses (i) and (ii) above, the
Lessee and any of its Subsidiaries may self-insure in lieu of
maintaining all or a portion of the insurance required to be
maintained pursuant to this Section 10.1(d) to the extent
determined by the Lessee's Board of Directors to be
appropriate and in the best interests of the Lessee and its
Subsidiaries taken as a whole and except to the extent
provided in Article XV of the Lease with respect to the
Property.
(e) Governmental Charges. The Lessee and its Subsidiaries
shall promptly pay and discharge when due all taxes and other
Governmental Charges prior to the date upon which penalties accrue
thereon which, if unpaid, are reasonably likely to have a Material
Adverse Effect, except such taxes and other Governmental Charges as may
in good faith be contested or disputed, or for which arrangements for
deferred payment have been made, provided that in each such case
appropriate reserves are maintained in accordance with GAAP, and except
as otherwise provided in Section 13 hereof or Article XIII of the
Lease.
(f) General Business Operations. Each of the Lessee and its
Subsidiaries shall, subject to the provisions of the Lease and the
Operative Documents (i) subject to Section
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10.1(i) and 10.1(j), preserve and maintain its corporate existence and
all of its material rights, privileges and franchises reasonably
necessary to the conduct of its business, (ii) conduct its business
activities in compliance with all Applicable Law and Contractual
Obligations applicable to such Person, the violation of which is
reasonably likely to have a Material Adverse Effect, (iii) keep all
property useful and necessary in its business in good working order and
condition, ordinary wear and tear excepted in accordance with prudent
business practices, and (iv) pay and perform all Contractual
Obligations as and when due (except to the extent disputed in good
faith by the Lessee or the appropriate Subsidiary and where non-payment
would not be reasonably expected to have a Material Adverse Effect).
The Lessee shall maintain its chief executive office and principal
place of business in the United States and shall not relocate its chief
executive office or principal place of business outside of California
without providing the Agent with prior written notice.
(g) Indebtedness. Neither the Lessee nor any of its
Subsidiaries shall create, incur, assume or permit to exist any
Indebtedness or any Guaranty Obligations except for the following
("Permitted Indebtedness"):
(i) The obligations of the Lessee under the Operative
Documents and the Credit Documents;
(ii) Indebtedness listed in the Disclosure Letter
existing on June 6, 1997;
(iii) Indebtedness of the Lessee and its Subsidiaries
under loans and Capital Leases incurred by the Lessee or any
of its Subsidiaries to finance the acquisition by such Person
of real property, fixtures, equipment or other fixed assets
provided that in each case, (A) such Indebtedness is incurred
by such Person at the time of, or not later than six (6)
months after, the acquisition by such Person of the property
so financed and (B) such Indebtedness does not exceed the
purchase price of the property so financed;
(iv) Indebtedness arising from the endorsement of
instruments for collection in the ordinary course of the
Lessee's or a Subsidiary's business;
(v) Indebtedness of the Lessee under the Convertible
Subordinated Debentures;
(vi) Indebtedness of the Lessee under the External LC
Agreement, provided that (A) the only credit extended to the
Lessee pursuant to the External LC Agreement consists of
letters of credit issued for the benefit of MKE or its
affiliates to secure obligations owed by the Lessee to the
beneficiaries for the purchase price of inventory; (B) the sum
at any time of the aggregate face amount of all letters of
credit issued and outstanding under the External LC Agreement
plus the aggregate amount of all unreimbursed drawings under
such letters of credit does not exceed eighty-five million
Dollars ($85,000,000); (C) the Indebtedness of the Lessee
under the External LC Agreement is at all times either
unsecured or secured by Liens
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permitted pursuant to clause (xvii) of Section 10.1(h); and
(D) the financial covenants of the Lessee set forth in the
External LC Agreement are less restrictive than the financial
covenants set forth on Schedule V;
(vii) Subordinated Debt of the Lessee to any Person,
provided that (A) such Indebtedness contains subordination
provisions no less favorable to the Agents and the
Participants than those set forth on Exhibit R or as otherwise
approved by the Required Participants; and (B) the aggregate
principal amount of all Subordinated Debt of the Lessee
outstanding (including the Convertible Subordinated
Debentures), measured at the time of issuance of such
Subordinated Debt, does not exceed $700,000,000;
(viii) Indebtedness of the type described in clause (h)
of the definition of "Indebtedness" or clause (iii) of the
definition of "Contingent Obligations";
(ix) Indebtedness of the Lessee and its Subsidiaries
with respect to surety, appeal, indemnity, performance or
other similar bonds in the ordinary course of business;
(x) Indebtedness of the Lessee and its Subsidiaries
under initial or successive refinancings of any Indebtedness
permitted by clause (i), (ii), (iii) or (vi) above, provided
that the principal amount of any such refinancing does not
exceed the principal amount of the Indebtedness being
refinanced;
(xi) Indebtedness of the Lessee and its Subsidiaries for
trade accounts payable, provided that (A) such accounts arise
in the ordinary course of business and (B) no material part of
such account is more than ninety (90) days past due (unless
subject to a bona fide dispute and for which adequate reserves
have been established);
(xii) Indebtedness of the Lessee and its Subsidiaries
for expense accruals in the ordinary course of business;
(xiii) Guaranty Obligations or Contingent Obligations of
the Lessee in respect of Permitted Indebtedness of its
Subsidiaries or Guaranty Obligations or Contingent Obligations
of any Subsidiary of the Lessee of the Permitted Indebtedness
of one or more other Subsidiaries of the Lessee or of
Permitted Indebtedness of the Lessee;
(xiv) Indebtedness of the Lessee to any of the Lessee's
Subsidiaries, Indebtedness of any of the Lessee's Subsidiaries
to the Lessee or Indebtedness of any of the Lessee's
Subsidiaries to any of the Lessee's other Subsidiaries;
(xv) Indebtedness of the Lessee and its Subsidiaries in
respect of any Permitted Receivables Facility;
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(xvi) Indebtedness of the Lessee and its Subsidiaries
under Synthetic Leases;
(xvii) Indebtedness of the Lessee and its Subsidiaries
incurred in connection with MKE-Quantum and constituting a
Permitted Investment; and
(xviii) Indebtedness of the Lessee and its Subsidiaries
not otherwise permitted hereunder, provided that the aggregate
principal amount of all such Indebtedness does not exceed at
any time ten percent (10%) of the total assets of the Lessee
and its Subsidiaries determined as of the end of the fiscal
quarter immediately preceding the date of determination.
(h) Liens. Neither the Lessee nor any of its Subsidiaries
shall create, incur, assume or permit to exist any Lien on or with
respect to any of its assets or property of any character, whether now
owned or hereafter acquired, except for the following ("Permitted
Liens"):
(i) Liens in favor of (x) any of the Agent or any
Participant securing the obligations of the Lessee under the
Operative Documents and (y) any of the Administrative Agent or
any Bank securing the Credit Agreement Obligations;
(ii) Liens listed in the Disclosure Letter existing on
June 6, 1997;
(iii) Liens for taxes or other governmental charges not at
the time delinquent or thereafter payable without penalty or
being contested in good faith, provided that adequate reserves
for the payment thereof have been established in accordance
with GAAP;
(iv) Liens of carriers, warehousemen, mechanics,
materialmen, vendors, and landlords and other similar Liens
imposed by law incurred in the ordinary course of business for
sums (A) not overdue or (B) being contested in good faith
provided that adequate reserves for the payment thereof have
been established in accordance with GAAP;
(v) Deposits under workers' compensation, unemployment
insurance and social security laws or to secure the
performance of bids, tenders, contracts (other than for the
repayment of borrowed money) or leases, or to secure statutory
obligations of surety or appeal bonds or to secure indemnity,
performance or other similar bonds in the ordinary course of
business;
(vi) Zoning restrictions, easements, rights-of-way,
title irregularities and other similar encumbrances, which
alone or in the aggregate are not substantial in amount and do
not materially detract from the value of the property subject
thereto or interfere with the ordinary conduct of the business
of the Lessee or any of its Subsidiaries;
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(vii) Liens securing Indebtedness which constitutes
Permitted Indebtedness under clause (iii) of Section 10.1(g)
provided that, in each case, such Lien (A) covers only those
assets, the acquisition of which was financed by such
Permitted Indebtedness (together with accessions, additions,
replacements and proceeds thereof), and (B) secures only such
Permitted Indebtedness and any related obligations of the
Lessee or any of its Subsidiaries;
(viii) Liens on the property or assets of any Subsidiary
of the Lessee in favor of the Lessee or any other Subsidiary
of the Lessee;
(ix) Banker's Liens and similar Liens (including set-off
rights) in respect of bank deposits;
(x) Liens incurred in connection with the extension,
renewal or refinancing of the Indebtedness secured by the
Liens described in clause (ii) or (vii) above, provided that
any extension, renewal or replacement Lien (A) is limited to
the property covered by the terms of the existing Lien and (B)
secures Indebtedness which is no greater in amount and has
material terms no less favorable to the Participants than the
Indebtedness secured by the existing Lien;
(xi) Liens on property or assets of any corporation which
becomes a Subsidiary of the Lessee after the date of this
Agreement, provided that (A) such Liens exist at the time the
stock of such corporation is acquired by the Lessee and (B)
such Liens were not created in contemplation of such
acquisition by the Lessee;
(xii) Judgement Liens, provided that such Liens do not
have a value in excess of $10,000,000 or such Liens are
released, stayed, vacated or otherwise dismissed within thirty
(30) days after issue or levy and, if so stayed, such stay is
not thereafter removed;
(xiii) Rights of vendors or lessors under conditional sale
agreements, Capital Leases or other title retention
agreements, provided that, in each case, (A) such rights
secure or otherwise relate to Permitted Indebtedness, (B) such
rights do not extend to any property other than property
acquired with the proceeds of such Permitted Indebtedness
(together with accessions, additions, replacements and
proceeds thereof) and (C) such rights do not secure any
Indebtedness other than such Permitted Indebtedness;
(xiv) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of customs duties
and in connection with the importation of goods in the
ordinary course of the Lessee's and its Subsidiaries'
businesses;
(xv) Liens on insurance proceeds in favor of insurance
companies with respect to the financing of insurance premiums;
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(xvi) Liens in respect of any Permitted Receivables
Facility;
(xvii) Liens on cash or Cash Equivalents securing
reimbursement obligations of the Lessee under letters of
credit (other than any Letters of Credit) in an aggregate
amount of all such cash and Cash Equivalents does not exceed
$100,000,000;
(xviii) Liens securing Indebtedness and any related
obligations of the Lessee or any of its Subsidiaries which
constitutes Permitted Indebtedness under clause (xvi) of
Section 10.1(g) (or refinancings of such Indebtedness under
clause (x) of Section 10.1(g)), provided that such Lien covers
only those assets subject to such Synthetic Leases (together
with accessions, additions, replacements and proceeds
thereof);
(xix) Liens securing any obligations of the Lessee or any
of its Subsidiaries under the Prior Credit Agreement or any
security agreements, pledge agreements, charges, debentures,
agreements, documents, certificates or undertakings entered
into in connection therewith or pursuant thereto; provided
that the Lessee, its Subsidiaries and the Agents and the banks
that are a party to the Prior Credit Agreement shall use their
best efforts to terminate any such Liens within three (3)
months of June 6, 1997;
(xx) Liens incurred in connection with leases, subleases,
licenses and sublicenses granted to Persons not interfering in
any material respect with the business of the Lessee and its
Subsidiaries and any interest or title of the Lessee or
licensee under any such leases, subleases, licenses or
sublicenses;
(xxi) Liens securing Indebtedness and any related
obligations which constitute Permitted Indebtedness under
clause (xvii) of Section 10.1(g) or Investments constituting
Permitted Investments under clause (ix) of Section 10.1(j);
(xxiii) Liens on the property or assets of the Lessee and
its Subsidiaries not otherwise permitted hereunder, provided
that (A) the aggregate principal amount of all Indebtedness
secured by such Liens does not exceed at any time ten percent
(10%) of the total assets of the Lessee and its Subsidiaries
determined as of the end of the fiscal quarter immediately
preceding the date of determination and (B) such Liens do not
encumber current assets of the Lessee and its Subsidiaries in
excess of $50,000,000.
(i) Asset Dispositions. Neither the Lessee nor any of its
Subsidiaries shall Transfer all or any of its assets or property,
whether now owned or hereafter acquired, except for the following:
(i) Transfers by the Lessee and its Subsidiaries in the
ordinary course of their businesses;
(ii) Transfers of surplus, damaged, worn or obsolete
assets or properties or Transfers of other assets or
properties which are promptly being replaced;
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(iii) Transfers of assets on commercially reasonable terms
of account receivables in connection with a Permitted
Receivables Facility by the Lessee and its Subsidiaries (it
being understood that any determination as to whether a
particular Transfer is on commercially reasonable terms shall
take into consideration any larger business transaction to
which such particular Transfer is related);
(iv) Transfers by the Lessee to any of the Lessee's
Subsidiaries or by any of the Lessee's Subsidiaries to the
Lessee or any of the Lessee's other Subsidiaries;
(v) Transfers which constitute the making of or
liquidation of Permitted Investments;
(vi) Transfers in connection with Indebtedness permitted
pursuant to clause (iii) of Section 10.1(g);
(vii) Transfers of assets and property not otherwise
permitted hereunder, provided that the aggregate value of all
such assets and property (based upon the greater of the fair
market or book value of such assets and property) so
transferred in any period of four consecutive fiscal quarters
does not exceed twenty percent (20%) of Tangible Net Worth as
determined as of the end of the fiscal quarter immediately
preceding the date of determination; and
(viii) Transfers of the Property permitted or required by
the Lease and the other Operative Documents, including in
connection with the exercise of remedies thereunder.
(j) Mergers, Acquisitions, Etc. Neither the Lessee nor any of
its Subsidiaries shall consolidate with or merge into any other Person
or permit any other Person to merge into it, except that:
(i) Any Subsidiary of the Lessee may merge into or
consolidate with any other Subsidiary of the Lessee;
(ii) Any Subsidiary of the Lessee may merge into or
consolidate with the Lessee provided that the Lessee is the
surviving corporation;
(iii) the Lessee may merge into or consolidate with any
other Person, provided that (A) the Lessee is the surviving
corporation and (B) immediately after giving effect to such
merger or consolidation no Default or Event of Default shall
have occurred and be continuing; and
(iv) Any Subsidiary of the Lessee may merge into or
consolidate with any other Person to the extent such
transaction is a Transfer otherwise permitted under Section
10.1(i) or an Investment otherwise permitted under Section
10.1(k) and
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immediately after giving effect to such merger or
consolidation no Default or Event of Default shall have
occurred and be continuing.
(k) Investments. Neither the Lessee nor any of its
Subsidiaries shall make any Investment except the following ("Permitted
Investments"):
(i) Direct obligations of, or obligations the principal
and interest on which are unconditionally guaranteed by, the
United States of America or obligations of any agency of the
United States of America to the extent such obligations are
backed by the full faith and credit of the United States of
America, in each case maturing within one year from the date
of acquisition thereof;
(ii) Certificates of deposit maturing within one year
from the date of acquisition thereof issued by a commercial
bank or trust company organized under the laws of the United
States of America or a state thereof or that is a Bank,
provided that (A) such deposits are denominated in Dollars,
(B) such bank or trust company has capital, surplus and
undivided profits of not less than $100,000,000 and (C) such
bank or trust company has certificates of deposit or other
debt obligations rated at least A-1 (or its equivalent) by S&P
or P-1 (or its equivalent) by Moody's;
(iii) Open market commercial paper maturing within 270
days from the date of acquisition thereof issued by a
corporation organized under the laws of the United States of
America or a state thereof, provided such commercial paper is
rated at least A-1 (or its equivalent) by S&P or P-1 (or its
equivalent) by Moody's;
(iv) Any repurchase agreement entered into with a
commercial bank or trust company organized under the laws of
the United States of America or a state thereof or that is a
Bank, provided that (A) such bank or trust company has
capital, surplus and undivided profits of not less than
$100,000,000, (B) such bank or trust company has certificates
of deposit or other debt obligations rated at least A-1 (or
its equivalent) by S&P or P-1 (or its equivalent) by Moody's,
(C) the repurchase obligations of such bank or trust company
under such repurchase agreement are fully secured by a
perfected security interest in a security or instrument of the
type described in clause (i), (ii) or (iii) above and (D) such
security or instrument so securing the repurchase obligations
has a fair market value at the time such repurchase agreement
is entered into of not less than one hundred percent (100%) of
such repurchase obligations;
(v) Any transaction permitted by Section 10.1(j);
(vi) Money market mutual funds registered with the
Securities and Exchange Commission, meeting the requirements
of Rule 2a.-7 promulgated under the Investment Company Act of
1940;
(vii) Investments listed in the Disclosure Letter
existing on June 6, 1997;
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(viii) Investments in other assets properly classified as
"marketable securities" or "cash" or "cash equivalents" under
GAAP, and which conform to the investment policies adopted by
the Board of Directors of the Lessee from time to time;
(ix) (A) Investments in MKE-Quantum in the form of (w)
non-exclusive licenses of technology to MKE-Quantum, (x) tax
or other indemnity obligations of the Lessee or any of its
Subsidiaries in favor of MKE-Quantum, (y) advances against
product to be purchased by the Lessee or any of its
Subsidiaries from MKE-Quantum within a period of one year from
the date of the making of the advance, and (z) (1) the value
of any property transferred or leased to MKE-Quantum, (2)
employee benefit obligations of the Lessee or any of its
Subsidiaries in favor of any employees of MKE-Quantum, (3) the
value of the administrative services provided by the Lessee or
any of its Subsidiaries in favor of MKE-Quantum, (4) the value
of any personnel services provided by the Lessee or any of its
Subsidiaries in favor of MKE-Quantum, and (5) the value of the
use and occupancy of any facilities provided by the Lessee or
any of its Subsidiaries, in the case of each of (1) through
(5) above, to the extent the Lessee or any of its Subsidiaries
is, or expects to be, reimbursed therefor, within one year of
when such value is provided to MKE-Quantum, and (B) additional
Investments in MKE-Quantum, provided that the aggregate amount
of all such Investments made or incurred after June 6, 1997
pursuant to subclause (B) of this clause (ix) in any rolling
four fiscal quarter period of the Lessee does not exceed the
sum of $100,000,000 plus any amounts actually received by the
Lessee or any of its Subsidiaries as a return of Investments
in MKE-Quantum during such rolling four quarter period plus
any reductions in the primary obligations in underlying
Investments constituting Guaranty Obligations during such
rolling four fiscal quarter period; provided further that for
purposes hereof, Investments constituting Indebtedness of
MKE-Quantum acquired by the Lessee or any of its Subsidiaries
shall be deemed to be in an amount equal to such Indebtedness
and to be made when such Indebtedness is acquired (unless such
Investment is a primary obligation underlying a Guaranty
Obligation previously counted as an Investment) and
Investments constituting Guaranty Obligations shall be deemed
to be in an amount equal to the corresponding primary
obligations and to be made at the time such primary
obligations are incurred;
(x) Investments received by the Lessee and its
Subsidiaries in connection with the bankruptcy or
reorganization of customers and suppliers and in settlement of
delinquent obligations of, and other disputes with, customers
and suppliers arising in the ordinary course of business;
(xi) Investments arising from rights received by the
Lessee and its Subsidiaries upon the required payment of any
permitted Contingent Obligations of the Lessee and its
Subsidiaries;
(xii) Investments in or to the Lessee or any
Wholly-Owned Subsidiary of the Lessee;
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(xiii) Investments of any Subsidiary of the Lessee existing
at the time it becomes a Subsidiary of the Lessee provided
that such Investments were not made in anticipation of such
Person becoming a Subsidiary of the Lessee;
(xiv) Investments received by the Lessee or any of its
Subsidiaries as consideration in connection with Transfers
otherwise permitted under Section 10.1(i);
(xv) Investments in the nature of acquisitions provided
that the aggregate amount of such acquisitions in any period
of four consecutive fiscal quarters does not exceed twenty
percent (20%) of Tangible Net Worth as determined as of the
fiscal quarter immediately preceding the date of
determination;
(xvi) Investments consisting of loans to employees,
officers and directors, the proceeds of which shall be used to
purchase equity securities of the Lessee or its Subsidiaries
and other loans to employees, officers and directors;
(xvii) Investments of the Lessee and its Subsidiaries in
interest rate protection, currency swap and foreign exchange
arrangements, provided that all such arrangements are entered
into in connection with bona fide hedging operations and not
for speculation;
(xviii) Deposit accounts;
(xix) Investments constituting Cash Collateral; and
(xx) Investments (other than of the type set forth in
clause (xiv) above) not otherwise permitted hereunder,
provided that the aggregate amount of such other Investments
made after June 6, 1997 (less any return of such Investment)
does not exceed twenty percent (20%) of Tangible Net Worth as
determined as of the fiscal quarter immediately preceding the
date of determination.
(l) Dividends, Redemptions, Etc. Neither the Lessee nor any of
its Subsidiaries shall pay any dividends or make any distributions on
its Equity Securities; purchase, redeem, retire, decease or otherwise
acquire for value any of its Equity Securities; return any capital to
any holder of its Equity Securities as such; make any distribution of
assets, Equity Securities, obligations or securities to any holder of
its Equity Securities as such; or set apart any sum for any such
purpose, except as follows:
(i) the Lessee may pay dividends on its Equity
Securities payable solely in the Lessee's own Equity
Securities;
(ii) the Lessee may purchase, redeem, retire, defease or
otherwise acquire for value Equity Securities in connection
with or pursuant to any of its Employee Benefit Plans or in
connection with the employment or compensation of officers or
directors;
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(iii) the Lessee may purchase, redeem, retire, defease or
otherwise acquire for value Equity Securities with the
proceeds received from a substantially concurrent issue of new
Equity Securities or with other Equity Securities;
(iv) the Lessee may purchase Equity Securities pursuant
to stock repurchase programs provided that the aggregate
payments under such programs do not exceed ten percent (10%)
of Tangible Net Worth in any fiscal year as determined as of
the fiscal quarter immediately preceding the date of
determination;
(v) the Lessee may distribute rights pursuant to a
shareholder rights plan or redeem such rights provided such
redemption is in accordance with the terms of such shareholder
rights plan;
(vi) Any Subsidiary of the Lessee may pay dividends or
make distributions to the Lessee or any Wholly-Owned
Subsidiary of the Lessee;
(vii) Any Subsidiary of the Lessee may purchase and redeem
shares of their own Equity Securities from the Lessee or any
Wholly-Owned Subsidiary of the Lessee; or
(viii) Any Subsidiary of the Lessee may declare or pay
any dividends in respect of its Equity Securities or purchase
or redeem shares of its Equity Securities or make
distributions to shareholders not otherwise permitted
hereunder provided that the aggregate amount paid or
distributed in any period of four consecutive quarters
(excluding any amounts covered by clauses (vi) or (vii) above)
does not exceed five percent (5%) of Tangible Net Worth as
determined as of the fiscal quarter immediately preceding the
date of determination.
(m) Change in Business. Neither the Lessee nor any of its
Subsidiaries shall engage, either directly or indirectly through
Affiliates, in any line of business other than the digital storage
business, any other business incidental or reasonably related thereto,
or any businesses that are, as determined by the Board of Directors of
the Lessee, appropriate extensions thereof.
(n) Certain Indebtedness Payments, Etc. Neither the Lessee nor
any of its Subsidiaries shall pay, prepay, redeem, purchase, defease or
otherwise satisfy in any manner prior to the scheduled payment thereof
any Subordinated Debt except as otherwise permitted under this clause
(n); amend, modify or otherwise change the terms of any document,
instrument or agreement evidencing Subordinated Debt such that such
amendment, modification or change would (i) cause the outstanding
aggregate principal amount of all such Subordinated Debt so amended,
modified or changed to be increased as a consequence of such amendment,
modification or change, (ii) cause the subordination provisions
applicable to such Subordinated Debt to be less favorable to the Agents
and the Participants than those set forth on Exhibit R, (iii) increase
the interest rate applicable thereto or (iv) accelerate the scheduled
payment thereof, except that the Lessee may call for redemption the
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entire outstanding amount of the Convertible Subordinated Debentures
and, to the extent such Convertible Subordinated Debentures are not
converted prior to the redemption date, redeem such Convertible
Subordinated Debentures, provided that (A) no Default or Event of
Default has occurred and is continuing or would result from such call
for redemption or redemption and (B) the closing price of the common
stock shall have exceeded one hundred twenty percent (120%) of the then
applicable conversion price for twenty (20) trading days within a
period of thirty (30) consecutive trading days ending within five (5)
trading days prior to the notice of redemption. The Lessee shall not
cause or permit any of its obligations, except the obligations
constituting Senior Indebtedness to constitute "Designated Senior
Indebtedness" under the indentures governing the Convertible
Subordinated Debentures (it being understood that the obligations of
the Lessee under the Operative Documents to purchase or to cause a
third party purchase the Property and to pay Rent shall at all times
constitute "Designated Senior Indebtedness").
(o) ERISA. Neither the Lessee nor any ERISA Affiliate shall
(i) adopt or institute any defined benefit Employee Benefit Plan that
is an employee pension benefit plan within the meaning of Section 3(2)
of ERISA, (ii) take any action which will result in the partial or
complete withdrawal, within the meanings of sections 4203 and 4205 of
ERISA, from a Multiemployer Plan, (iii) engage or permit any Person to
engage in any transaction prohibited by section 406 of ERISA or section
4975 of the Code involving any Employee Benefit Plan or Multiemployer
Plan which would subject either the Lessee or any ERISA Affiliate to
any tax, penalty or other liability including a liability to indemnify,
(iv) incur or allow to exist any accumulated funding deficiency (within
the meaning of section 412 of the Code or section 302 of ERISA),
excluding all extensions permitted by law or contract, (v) fail to make
full payment when due of all amounts due as contributions to any
Employee Benefit Plan or Multiemployer Plan, (vi) fail to comply with
the requirements of section 4980B of the Code or Part 6 of Title I(B)
of ERISA, or (vii) adopt any amendment to any Employee Benefit Plan
which would require the posting of security pursuant to section
401(a)(29) of the Code, if any of such actions or inactions described
in clauses (vi)-(vii), either individually or cumulatively, would have
a Material Adverse Effect.
(p) Transactions With Affiliates. Neither the Lessee nor any
of its Subsidiaries shall enter into any Contractual Obligation with
any Affiliate or engage in any other transaction with any Affiliate
except upon terms at least as favorable to the Lessee or such
Subsidiary as an arms-length transaction with unaffiliated Persons.
(q) Accounting Changes. Neither the Lessee nor any of its
Subsidiaries shall change (i) its fiscal year (currently April 1 -
March 31) or (ii) its accounting practices except as permitted by GAAP.
(r) Financial Covenants.
(i) the Lessee shall not permit its Quick Ratio to be
less than 1.00 to 1.00 on the last day of each fiscal quarter.
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(ii) the Lessee shall not permit its Tangible Net Worth
on any date of determination (such date to be referred to
herein as a "determination date") which occurs after March 31,
1997 (such date to be referred to herein as the "base date")
to be less than the sum on such determination date of the
following:
(A) $760,000,000;
plus
(B) Seventy-five percent (75%) of the sum of the
Lessee's consolidated quarterly net income (ignoring
any quarterly losses) for each quarter after the base
date through and including the quarter ending
immediately prior to the determination date;
plus
(C) Seventy-Five percent (75%) of the Net
Proceeds of all Equity Securities issued by the
Lessee and its Subsidiaries (excluding any issuance
where the total proceeds are less than $10,000,000)
during the period commencing on the base date and
ending on the determination date;
plus
(D) Ninety percent (90%) of the Net Proceeds
derived from the conversion of the Convertible
Subordinated Debentures;
minus
(E) the lesser of (1) the aggregate amount paid
by the Lessee to repurchase its capital stock and (2)
$50,000,000.
(iii) In any consecutive four-quarter period, the Lessee
shall not permit (A) more than two quarterly net losses
aggregating to more than five percent (5%) of its Tangible Net
Worth as determined as of the fiscal quarter immediately
preceding the date of determination or (B) its cumulative net
income for any consecutive four-quarter period to be less than
one Dollar.
(iv) The Lessee shall not permit its Senior Funded Debt
Ratio on the last day of any fiscal quarter to exceed
thirty-five percent (35%).
(s) Appraisal. On or prior to the date that is not later than
30 days (or such later date as is acceptable to the Agent and the Lessor) after
the Land Interest Acquisition Date, the Agent, the Lessor and the Participants
shall have received an Appraisal of that portion of the Phase I project on the
Land Interest described in the Preliminary Letter of Value delivered pursuant to
Section 6.1(d), which Appraisal shall (i) show that the Fair Market Sales Value
of the Land Interest
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with respect to such Property as of the projected Completion Date shall not
exceed 25% of the Fair Market Sales Value of such Land Interest and the
Improvements to be constructed thereon in accordance with the Plans and
Specifications for Property, and (ii) show as of the projected Completion Date
the Fair Market Sales Value of such Land Interest and the Improvements to be
constructed thereon in accordance with the Plans and Specifications, and (iii)
meet the other applicable requirements set forth in the definition of the term
"Appraisal" contained in Appendix 1.
(t) No Impairment of Deposits. The Lessee shall not, nor shall
it permit any of its Subsidiaries to, directly or indirectly, enter into or
become bound by any agreement, instrument, indenture or other obligation which
could directly or indirectly restrict, prohibit or require the consent of any
Person to the making by the Lessee of any deposit of Cash Collateral or the
realization thereon or utilization thereof (or of any earnings thereon or of any
other Collateral) by the Lessor, the Agent or any of the Participants.
SECTION 10.2. Cooperation with the Lessee. The Lessor, the Participants
and the Agent shall, to the extent reasonably requested by the Lessee (but
without assuming additional liabilities, duties or other obligations on account
thereof), at the Lessee's expense, cooperate with the Lessee in connection with
its covenants contained herein including, without limitation, at any time and
from time to time, upon the request of the Lessee, to promptly and duly execute
and deliver any and all such further instruments, documents and financing
statements (and continuation statements related thereto) as the Lessee may
reasonably request in order to perform such covenants.
SECTION 10.3. Covenants of the Lessor. The Lessor hereby agrees that so
long as this Participation Agreement is in effect:
(a) Discharge of Liens. The Lessor will not create or permit
to exist at any time, and will, at its own cost and expense, promptly take such
action as may be necessary duly to discharge, or to cause to be discharged, all
Lessor Liens on the Property attributable to it; provided, however, that the
Lessor shall not be required to so discharge any such Lessor Lien while the same
is being contested in good faith by appropriate proceedings diligently
prosecuted so long as such proceedings shall not involve any material danger of
impairment of the Liens of the Lease or the Security Documents or of the sale,
forfeiture or loss of, and shall not interfere with the use or disposition of,
the Property or title thereto or any interest therein or the payment of Rent.
(b) Change of Chief Place of Business. The Lessor shall give
prompt notice to the Lessee and the Agent if the Lessor's chief place of
business or chief executive office, or the office where the records concerning
the accounts or contract rights relating to the Property are kept, shall cease
to be located at 135 South LaSalle Street, Chicago, Illinois 60603, or if it
shall change its name, identity or corporate structure.
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SECTION 11.
PARTICIPATIONS
SECTION 11.1. Amendments; Actions on Default. (a) The Lessor shall have
the right to forebear from exercising rights against the Lessee to the extent
the Lessor shall determine in good faith that such forbearance is appropriate
and is permitted by Section 15.5 and Sections 11.1, 11.2 and 11.3. Upon the
direction of the Required Participants, the Lessor shall execute any waiver,
modification or amendment of the Lease or the Construction Agency Agreement
requested by the Lessee; provided, that: (i) the waiver, modification or
amendment is not prohibited by the forgoing provisions of this Agreement, (ii)
the waiver, modification or amendment does not (A) increase the amount the
Lessor may be required to pay to the Lessee or anyone else, or (B) reduce or
postpone (and cannot reasonably be expected to reduce or postpone) any payments
that the Lessor would, but for such modification or amendment, be expected to
receive, or (C) release the Lessor's interest in all or a substantial part of
the Property; and (iii) the Lessor is not excused from executing the waiver,
modification or amendment by Section 11.3.
(b) The Lessor will, with reasonable promptness, provide each
Participant with copies of all default notices it sends or receives under the
Lease or Construction Agency Agreement and notify each Participant of any Event
of Default under the Lease of which it is aware and of any other matters which,
in the Lessor's reasonable judgment, are likely to materially affect the
payments each Participant will be required to make or be entitled to receive
under this Agreement, but the Lessor will not in any event be liable to any
Participant for the Lessor's failure to do so unless such failure constitutes
gross negligence or willful misconduct on the part of the Lessor.
(c) Before taking possession of the Property or exercising
foreclosure or offset rights against the Property or filing any lawsuit against
the Lessee because of any breach by the Lessee of the Operative Documents or if
requested in writing by any Participant at any time when an Event of Default has
occurred and is continuing, the Lessor shall promptly call a meeting with each
Participant and the Agent to discuss what, if anything, the Lessor should do.
Such meeting shall be scheduled during regular business hours in the offices of
the Agent, or another appropriate location in San Francisco, California, not
earlier than five (5) and not later than twenty (20) Business Days after the
Lessor's receipt of the written request from a Participant. If the Required
Participants shall direct the Lessor in writing to (a) send any default notices
required before a Default can become an Event of Default, or (b) bring a lawsuit
against the Lessee to enforce the Operative Documents when an Event of Default
has occurred and is continuing, then the Lessor shall send the notice or bring
the suit, and the Lessor shall prosecute any such suit with reasonable diligence
using reputable counsel. However, if the Agent is not a member of the Required
Participants voting pursuant to this subsection 11.1(d) in favor of the giving
of any such notice or the bringing of any such suit, then the Lessor may require
that it first receive the written agreement (in form reasonably acceptable to
the Lessor) of the members of the Required Participants so voting to indemnify
the Agent and the Lessor from and against all costs, liabilities and claims that
may be incurred by or asserted against the Lessor because of the action the
Required Participants direct the Agent or the Lessor to take. In no event shall
any Participant instigate any suit or other action directly against the Lessee
with respect to the Operative Documents or the Property, even if such
Participant would,
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but for this agreement, be entitled to do so as a third party beneficiary or
otherwise under the Operative Documents.
(d) In the event the Lessee or its designee fails to purchase
the Property after any exercise of its Purchase Option or Expiration Date
Purchase Obligation or following the occurrence and continuance of an Event of
Default, the Lessor shall, if the Required Participants shall agree in writing,
bring suit against the Lessee to enforce the Operative Documents in such form as
shall be recommended by reputable counsel, and thereafter the Lessor shall
prosecute the suit with reasonable diligence in accordance with the advice of
reputable counsel. If the Lessor acquires the interests of the Lessee in any of
the Property as a result of such suit or otherwise, the Lessor shall thereafter
proceed with reasonable diligence to sell the Property in a commercially
reasonable manner to one or more bona fide third party purchasers and shall in
any event endeavor to consummate the sale of the entire Property (through a
single sale of the entire Property or a series of sales of parts) within five
(5) years following the date the Lessor recovers possession of the Property at
the best price or prices the Lessor believes are reasonably attainable within
such time. Further, after the Designated Payment Date and prior to the Lessor's
sale of the entire Property, the Lessor shall retain a property management
company experienced in the area where the Property is located to manage the
operation of the Property and pursue the leasing of any completed Improvements
which are part of the Property. The Lessor shall not retain an Affiliate of the
Lessor to act as the property manager except under a bona fide, arms-length
management contract containing commercially reasonable terms. Further, after the
Designated Payment Date and until the Lessor sells the Property, the Lessor
shall (i) endeavor in good faith to maintain, or shall obtain the agreement of
one or more of such tenants to maintain, the Property in good order and repair,
(ii) procure and maintain casualty insurance against risks customarily insured
against by owners of comparable properties, in amounts sufficient to eliminate
the effects of coinsurance, (iii) keep and allow each Participant to review
accurate books and records covering the operation of the Property, and (iv) pay
prior to delinquency all taxes and assessments lawfully levied against the
Property.
(e) Notwithstanding the foregoing, Defaulting Participants
shall have no voting or consent rights under this Section 11.1 and no rights to
require the Lessor to call a meeting pursuant to Section 11.1(d) until they
cease to be Defaulting Participants. During any period that any Defaulting
Participants have no voting rights under this Section 11.1, only the Commitment
Percentages of the other Participants that still have voting rights will be
considered for purposes of determining the Required Participants.
SECTION 11.2. General. Subject to the limitations set forth in Section
11.1 and Section 14:
(a) The Lessor shall have the exclusive right to take any
action and to exercise any available powers, rights and remedies to enforce the
obligations of the Lessee under the Operative Documents, or to refrain from
taking any such action or exercising any such power, right or remedy.
(b) The Lessor shall be entitled to (i) give any consent,
waiver or approval requested by the Lessee with respect to any construction or
other approval contemplated in the Lease or (ii) waive or consent to any adverse
title claims affecting the Property, provided that, in either
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case, such action will not have a material adverse effect on the Lessee's
obligations or ability to make the payments required under the Operative
Documents, the Lessor's rights and remedies under the Operative Documents or any
Participant's rights hereunder.
SECTION 11.3 Conflicts. Notwithstanding anything to the contrary herein
contained, the Lessor shall be entitled, even over the objection of each
Participant or the Required Participants, (i) to take any action required of the
Lessor by, or to refrain from taking any action prohibited by, the Operative
Documents or any law, rule or regulation to which the Lessor is subject
(provided, that this Section shall not be construed to authorize the Lessor to
take any action required by a modification of the Operative Documents prohibited
by Section 11.1), and (ii) after notice to the Participants, to bring and
prosecute a suit against the Lessee in the form recommended by and in accordance
with advice of reputable counsel at any time when a breach of the Operative
Documents by the Lessee shall have put the Lessor (or any of its officers or
employees) at risk of criminal prosecution or significant liability to third
parties or at any time after the Lessee or its designee fails to purchase the
Property on the Designated Payment Date. Nothing herein contained shall be
construed to require the Lessor to agree to modify the Operative Documents or to
take any action or refrain from taking any action in any manner that could
increase the Lessor's liability to the Lessee or others, that could reduce or
postpone payments to which the Lessor is entitled thereunder, or that could
reduce the scope and coverage of the indemnities provided for the Lessor's
benefit therein.
SECTION 11.4. Refusal to Give Consents or Fund. If any Participant
declines to consent to any amendment, modification, waiver, release or consent
for which such Participant's consent is requested or required by reason of this
Agreement, or if any Participant fails to pay any amount owed by it hereunder,
the Lessor shall have the right, but not the obligation and without limiting any
other remedy of the Lessor, to terminate such Participant's rights to receive
any further payments under Section 3 of this Agreement (other than payments
required because of the Lessor's collection of any Rent applied by the Lessor as
reimbursement for a Defaulted Amount or interest on a Defaulted Amount) by
paying such Participant a termination fee equal to the total of:
(i) all amounts actually advanced by such Participant to the
Lessor under Section 3.4 hereof before the termination; excluding,
however, any such amounts that were repaid to such Participant before
the termination by actual payments made to such Participant by the
Lessor of, or the Lessor's offset against, sums representing:
(A) Such Participant's Commitment Percentage times
any payments of Rent received by the Lessor under the
Lease; plus
(B) Such Participant's Commitment Percentage times
any sales proceeds received by the Lessor under the
Lease; and
(ii) Such Participant's Commitment Percentage, times:
(A) the then accrued but unpaid Basic Rent and
Commitment Fees due under the Lease and hereunder;
plus
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(B) interest on past due amounts described in the
preceding clause (A) computed at the Federal Funds
Effective Rate; plus
(C) interest on any amounts (other than interest
itself) past due from the Lessee or its designees
under the Operative Documents, computed at the
Federal Funds Effective Rate.
Such Participant's rights to receive payments equal to such Participant's
Commitment Percentage of any Rent applied by the Lessor as reimbursement for a
Defaulted Amount or interest on a Defaulted Amount shall not be impaired or
affected by any termination contemplated in this Section 11.4; accordingly, the
Lessor shall not, as a condition to such a termination, be required to reimburse
such Participant for any payments such Participant has made in connection with
Defaulted Amounts pursuant to Section 3.3.
SECTION 11.5. Required Repayments. Each Participant shall repay to the
Lessor, upon written request or demand by the Lessor (i) any sums paid by the
Lessor to such Participant under this Agreement from, or that were computed by
reference to, any Rent or other amounts which the Lessor shall be required to
return or pay over to another party, whether pursuant to any bankruptcy or
insolvency law or proceeding or otherwise and (ii) any interest or other amount
that the Lessor is also required to pay to another party with respect to such
sums. Such repayment by any Participant shall not constitute a release of such
Participant's right to receive such Participant's Commitment Percentage times
the amount of any such Rent or any such other amount (or any interest thereon)
that the Lessor may later recover.
SECTION 11.6. Indemnification. Each Participant agrees to indemnify and
defend the Lessor (to the extent not reimbursed by the Lessee within ten (10)
days after demand) from and against such Participant's Commitment Percentage of
any and all liabilities, obligations, claims, expenses or disbursements
(including reasonable fees of attorneys, accountants, experts and advisors) of
any kind or nature whatsoever (in this Section 11.6 collectively called "Covered
Liabilities") which to any extent (in whole or in part) may be imposed on,
incurred by or asserted against the Lessor growing out of, resulting from or in
any other way associated with the Property or the Operative Documents (including
the enforcement thereof, whether exercised upon the Lessor's own initiative or
upon the direction of the Required Participants) and the transactions and events
at any time associated therewith or contemplated therein. The foregoing
indemnification shall apply whether or not such Covered Liabilities are in any
way or to any extent caused, in whole or in part, by any negligent act or
omission of any kind by the Lessor; provided, only that no Participant shall be
obligated under this Section 11.6 to indemnify the Lessor (i) for Covered
Liabilities incurred in connection with any transfer or assignment by the Lessor
of its right to receive Rent or its rights and interests in and to the Property,
the Operative Documents or this Agreement to its Affiliates or (ii) for that
portion or percentage, if any, of any of the Covered Liabilities which is
proximately caused by: (A) the Lessor's own gross negligence or willful
misconduct; (B) any representation made by the Lessor in the Operative Documents
that is false in any material respect and that the Lessor knew was false at the
time of the Lessor's execution of the Operative Documents; or (C) Lessor Liens
not claimed by, through or under any of the Participants. After each Participant
has paid its Percentage of any Covered Liabilities, each Participant shall be
entitled to payment from the Lessor of an
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amount equal to the Adjusted Percentage (as defined below) of any payments
subsequently received by the Lessor as Excess Reimbursement (as defined below)
for such Covered Liabilities. As used in this Section "Adjusted Percentage"
shall equal (i) such Participant's Commitment Percentage, divided by (ii) the
sum of the Commitment Percentages of all Participants who have paid the Lessor
their respective shares of the Covered Liabilities at issue. As used in this
Section, the term "Excess Reimbursement" shall mean, for the Covered Liabilities
at issue, amounts reimbursed or paid by the Lessee to or on behalf of the Lessor
on account of such Covered Liabilities in excess of (i) such Covered
Liabilities, times (ii) the Commitment Percentages of any Participants that have
not paid the Lessor their respective Percentages of such Covered Liabilities.
SECTION 11.7. Required Supplemental Payments. In the event that the
Lessee fails to pay any Required Supplemental Payment when due (a "Defaulted
Amount"), the Lessor shall notify each Participant of such Defaulted Amount,
whereupon each Participant shall pay to the Lessor an amount equal to such
Participant's Commitment Percentage times the Defaulted Amount; such payment
from Participant to the Lessor shall be due prior to 2:00 p.m., San Francisco
time, on the date of such notice if such notice is given by 12:00 noon, San
Francisco time, otherwise prior to 12:00 noon, San Francisco time, on the next
Business Day following such notice. After payment of a Participant's Commitment
Percentage times the Defaulted Amount, any payments subsequently received by the
Lessor from the Lessee as reimbursement for such Defaulted Amount, and any
interest received by the Lessor from the Lessee that accrued on the Defaulted
Amount after the date of such Participant's payment of its Commitment Percentage
times the Defaulted Amount, will constitute Supplemental Rent for purposes of
computing payments due such Participant under this Agreement.
SECTION 11.8. Application of Payments Received From Defaulting
Participant As a Cure For Payment Defaults. If after a failure to make a payment
required by Section 3.4, any Defaulting Participant cures such failure, in whole
or in part, by paying to the Lessor all or part of such payment and interest
thereon at the Late Payment Rate, then the Lessor shall apply the payments so
made to the Lessor, net of the costs of collecting such payments (the "Net Cure
Proceeds"), or other funds available to the Lessor equal to the Net Cure
Proceeds, in the following order before applying the same to any other purpose:
(i) first, to make payments to the Lessor itself equal to its
Excess Investment (if any) until the Lessor shall no longer have any
Excess Investment; and
(ii) second, to make further Advances to the Lessee under this
Agreement to the extent the Lessor is required or deems it appropriate
to do so; provided, that such further Advances do not cause the total
Property Cost to exceed the sum of the Commitments.
SECTION 11.9. Order of Application. For purposes of this Agreement, the
Lessor shall be entitled, but not required, to apply any payments received from
the Lessee under the Operative Documents to satisfy (1) unpaid Required
Supplemental Payments (and interest thereon) not included in Rent, if any, and
(2) costs incurred by the Lessor because of any sale under the Lease before
applying such payments to satisfy the Lessee's other obligations, regardless of
how the Lessee may have designated such payments.
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SECTION 11.10. Investments Pending Dispute Resolution; Overnight
Investments. Whenever the Lessor in good faith determines that it does not have
all information needed to determine how payments to Participants must be made on
account of any then existing Participation Interests which the Lessor has
received, or whenever the Lessor in good faith determines that there is any
dispute among the Participants about payments which must be made on account of
Participation Interests actually received by the Lessor, the Lessor may choose
to defer the payments which are the subject of such missing information or
dispute. However, to minimize any such deferral, the Lessor shall attempt
diligently to obtain any missing information needed to determine how payments to
the Participants must be made. Also, pending any such deferral, or if the Lessor
is otherwise required to invest funds pending distribution to the Participants,
the Lessor shall invest funds equal to (i) the total of the Commitment
Percentages of all Participants to whom payments have not been made with respect
to the Participation Interests at issue, times (ii) the total percentages at
issue. In addition, the Lessor shall endeavor to invest payments of
Participation Interests it receives after 12:00 noon, San Francisco time, on the
day in question that are to be paid to a Participant on the next Business Day
pursuant to Section 3; provided that the Lessor shall have no liability to any
Participant if the Lessor is unable to make such investments. Investments by the
Lessor shall be in the overnight federal funds market pending distribution, and
the interest earned on each dollar of principal so invested shall be paid to the
Person entitled to receive such dollar of principal when the principal is paid
to such Person.
SECTION 11.11. Agent to Exercise Lessor's Rights. The Lessor has
assigned its interest in the Lease to the Agent, for the benefit of the
Participants, pursuant to the Assignment of Lease. To the extent provided
therein, the rights, remedies, duties and responsibilities of the Lessor
contained in this Section 11 and in the other Operative Documents with respect
thereto shall be exercisable by, binding upon and inure to the benefit of the
Agent, for the benefit of the Participants.
SECTION 11.12. Exculpatory Provisions Regarding the Lessor. Subject to
the provisions of Section 11.11, each Participant hereby irrevocably authorizes
the Lessor to take such actions on its behalf as are expressly vested in or
delegated to the Lessor by the terms of this Agreement and the other Operative
Documents, together with such powers as are reasonably incidental thereto. The
provisions of the following Sections of this Agreement are hereby incorporated
by reference into this Section 11.12, substituting the word "Lessor" for "Agent"
therein:
(i) Section 14.1 - second sentence.
(ii) Section 14.2 - all.
(iii) Section 14.3 - all.
(iv) Section 14.4 - all.
(v) Section 14.5 - first sentence.
(iv) Section 14.6 - last sentence.
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SECTION 12.
TRANSFERS OF PARTICIPANTS' INTERESTS
SECTION 12.1. Restrictions on and Effect of Transfer by Participants.
No Participant may (without the prior written consent of the Agent and Lessee
(not to be unreasonably withheld)) assign, convey or otherwise transfer
(including pursuant to a participation) all or any portion of its right, title
or interest in, to or under its Participation Interest or any of the Operative
Documents or the Property, provided that (x) any Participant may pledge its
interest without the consent of the Agent or the Lessee to any Federal Reserve
Bank, (y) without the prior written consent of the Agent, any Participant may
transfer all or any portion of its interest to any Affiliate of such Participant
or to any other existing Participant and (z) the Lessor may not transfer its
Tranche C Participation Interest in the absence of an Event of Default;
provided; further, that in the case of any transfer (other than to such
Affiliate) each of the following conditions and any other applicable conditions
of the other Operative Documents are satisfied:
(a) Required Notice and Effective Date. Any Participant
desiring to effect a transfer of its interest shall give written notice of each
such proposed transfer to the Lessee, the Agent and each other Participant at
least five (5) Business Days prior to such proposed transfer, setting forth the
name of such proposed transferee, the percentage or interest to be retained by
such Participant, if any, and the date on which such transfer is proposed to
become effective. All reasonable out-of-pocket costs (including, without
limitation, legal expenses) incurred by the Lessor, the Agent or any Participant
in connection with any such disposition by a Participant under this Section 12.1
shall be borne by such transferring Participant. In the event of a transfer
under this Section 12.1, any expenses incurred by the transferee in connection
with its review of the Operative Documents and its investigation of the
transactions contemplated thereby shall be borne by such transferee or the
relevant Participant, as they may determine, but shall not be considered costs
and expenses which the Lessee is obligated to pay or reimburse under Section 9.
Any such proposed transfer shall become effective upon the later of (i) the date
proposed in the transfer notice referred to above and (ii) the date on which all
conditions to such transfer set forth in this Section 12.1 shall have been
satisfied.
(b) Assumption of Obligations. Any transferee pursuant to this
Section 12.1 shall execute and deliver to the Agent and the Lessee an Assignment
and Acceptance in substantially the form attached as Exhibit J ("Assignment and
Acceptance"), duly executed by such transferee and the transferring Participant,
and a letter in substantially the form of the Participant's Letter attached
hereto as Exhibit K ("Participant's Letter"), and thereupon the obligations of
the transferring Participant under the Operative Documents shall be
proportionately released and reduced to the extent of such transfer. Upon any
such transfer as above provided, the transferee shall be deemed to be bound by
all obligations (whether or not yet accrued) under, and to have become a party
to, all Operative Documents to which its transferor was a party, shall be deemed
the pertinent "Participant" for all purposes of the Operative Documents and
shall be deemed to have made that portion of the payments pursuant to this
Participation Agreement previously made or deemed to have been made by the
transferor represented by the interest being conveyed; and each reference herein
and in the other Operative Documents to the pertinent "Participant" shall
thereafter be
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deemed a reference to the transferee, to the extent of such transfer, for all
purposes. Upon any such transfer, the Agent shall deliver to each Participant,
the Lessor and the Lessee a new Schedule I and Schedule II to this Agreement,
revised to reflect the relevant information for such new Participant and the
Commitment of such new Participant (and the revised Commitment of the transferor
Participant if it shall not have transferred its entire interest).
(c) Employee Benefit Plans. No Participant may make any such
assignment, conveyance or transfer to or in connection with any arrangement or
understanding in any way involving any employee benefit plan (or its related
trust), as defined in Section 3(3) of ERISA, or with the assets of any such plan
(or its related trust), as defined in Section 4975(e)(1) of the Code.
(d) Representations. Notwithstanding anything to the contrary
set forth above, no Participant may assign, convey or transfer its interest to
any Person, unless such Person shall have delivered to the Agent and the Lessee
a certificate confirming the accuracy of the representations and warranties set
forth in Section 8 with respect to such Person (other than as such
representation or warranty relates to the execution and delivery of Operative
Documents) and representing that such Person has, independently and without
reliance upon the Agent, any other Participant or, except to the extent of the
Lessee's representations made under the Operative Documents when made, the
Lessee, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into this transaction,
the Property and the Lessee and made its own decision to enter into this
transaction.
(e) Amounts; Agent's Fee. Any transfer of a Tranche A
Participation Interest shall be in a principal amount which is equal to or
greater than $2,000,000; provided, that no such minimum transfer limitation
shall be imposed on a transfer of a Tranche B Participation Interest or, if
permitted to be transferred under Section 12.1, a Tranche C Participation
Interest. Each transferring Participant shall pay to the Agent a transfer fee of
$2,500.
(f) Applicable Law. Such transfer shall comply with Applicable
Law and shall not require registration under any securities law applicable
thereto.
(g) Effect. From and after any transfer of its Participation
Interest the transferring Participant shall be released, to the extent assumed
by the transferee, from its liability and obligations hereunder and under the
other Operative Documents to which such transferor is a party in respect of
obligations to be performed on or after the date of such transfer. Upon any
transfer by a Participant as above provided, any such transferee shall be deemed
a "Participant" for all purposes of such documents and each reference herein to
a Participant shall thereafter be deemed a reference to such transferee for all
purposes to the extent of such transfer, except as the context may otherwise
require. Notwithstanding any transfer as provided in this Section 12.1, the
transferor shall be entitled to all benefits accrued and all rights vested prior
to such transfer, including, without limitation, rights to indemnification under
this Participation Agreement or any other Operative Document.
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SECTION 12.2. Covenants and Agreements of Participants.
(a) Participations. Each Participant covenants and agrees that
it will not grant Participations in its Participation Interest to any Person (a
"Sub-Participant") unless such participation complies with Applicable Law and
does not require registration under any securities law applicable thereto and
such Sub-Participant (i) is a bank or other financial institution and (ii)
represents and warrants, in writing, to such Participant for the benefit of the
Participants, the Lessor and the Lessee that (A) no part of the funds used by it
to acquire an interest in any Participation Interest constitutes assets of any
"employee benefit plan" (as defined in Section 3(3) of ERISA) which is subject
to Title I of ERISA, or "plan" (as defined in Section 4975(e)(1) of the Code)
and (B) such Sub-Participant is acquiring its interest for investment purposes
without a view to the distribution thereof. Any such Person shall require any
transferee of its interest in its Participation Interest to make the
representations and warranties set forth in the preceding sentence, in writing,
to such Person for its benefit and the benefit of the Participants, the Lessor
and Lessee. In the event of any such sale by a Participant of a participating
interest in its Participation Interest to a Sub-Participant, such Participant's
obligations under this Participation Agreement and under the other Operative
Documents shall remain unchanged, such Participant shall remain solely
responsible for the performance thereof, such Participant shall remain the
holder of its Participation Interest, for all purposes under this Participation
Agreement and under the other Operative Documents, and the Lessor, the Agent
and, except as set forth in Section 12.2(b), the Lessee shall continue to deal
solely and directly with such Participant in connection with such Participant's
rights and obligations under this Participation Agreement and under the other
Operative Documents.
(b) Transferee Indemnities. Each Sub-Participant shall be
entitled to the benefits of Sections 13.5, 13.6, and 13.7 and 13.10 with respect
to its participation in the Participation Interests outstanding from time to
time; provided that no Sub-Participant shall be entitled to receive any greater
amount pursuant to such Sections than the transferor Participant would have been
entitled to receive in respect of the amount of the participation transferred by
such transferor Participant to such Sub-Participant had no such transfer or
participation occurred.
SECTION 12.3. Future Participants. Each Participant shall be deemed to
be bound by and, upon compliance with the requirements of this Section 12, will
be entitled to all of the benefits of the provisions of, this Participation
Agreement.
SECTION 13.
INDEMNIFICATION
SECTION 13.1. General Indemnification. The Lessee agrees, whether or
not any of the transactions contemplated hereby shall be consummated, to assume
liability for, and to indemnify, protect, defend, save and keep harmless each
Indemnitee, on an After Tax Basis, from and against, any and all Claims that may
be imposed on, incurred by or asserted against such Indemnitee (whether because
of action or omission by such Indemnitee or otherwise), whether or not such
Indemnitee shall also be indemnified as to any such Claim by any other Person
and whether or not
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such Claim arises or accrues prior to the Closing Date or after the Expiration
Date, in any way relating to or arising out of:
(a) any of the Operative Documents or any of the transactions
contemplated thereby or any violation thereof, and any amendment, modification
or waiver in respect thereof;
(b) the Property, the Lease or any part thereof or interest
therein;
(c) the purchase, design, construction, preparation,
installation, inspection, delivery, non-delivery, acceptance, rejection,
ownership, management, possession, operation, rental, lease, sublease,
repossession, maintenance, repair, alteration, modification, addition or
substitution, storage, transfer of title, redelivery, use, financing,
refinancing, disposition, operation, condition, sale (including, without
limitation, any sale pursuant to Sections 16.2, 16.3, 16.4, 17.2(c), 17.2(e) or
17.4 of the Lease or any sale pursuant to Articles XX or XXII of the Lease,
return or other disposition of all or any part or any interest in the Property
or the imposition of any Lien (or incurring of any liability to refund or pay
over any amount as a result of any Lien) thereon, including, without limitation:
(1) Claims or penalties arising from any violation of federal, state or local
law, rule, regulation or order or in tort (strict liability or otherwise), (2)
latent or other defects, whether or not discoverable, (3) any Claim based upon a
violation or alleged violation of the terms of any restriction, easement,
condition or covenant or other matter affecting title to the Property, (4) the
making of any Modifications in violation of any standards imposed by any
insurance policies required to be maintained by Lessee pursuant to the Lease
which are in effect at any time with respect to the Property or any part
thereof, (5) any Claim for patent, trademark or copyright infringement, and (6)
Claims arising from any public improvements with respect to the Property
resulting in any charge or special assessments being levied against the Property
or any plans to widen, modify or realign any street or highway adjacent to the
Property;
(d) the offer, issuance or sale of the Participation
Interests, provided that (i) the Lessor shall not be entitled to indemnification
under this clause (d) if it shall have been determined by a court of competent
jurisdiction to have breached its representation set forth in Section 8.1(h),
(ii) no Participant shall be entitled to indemnification under this clause (d)
if it shall have been determined by a court of competent jurisdiction to have
breached its representation set forth in Section 8.2(f) and (iii) neither the
Lessor nor any Participant shall be entitled to indemnification under this
clause (d) with respect to any Claim which a court of competent jurisdiction
determines to have arisen out of the gross negligence or willful misconduct of
the Lessor, the Agent or any Participant or its agents, employees or contractors
(other than the Lessee) or any misrepresentation of a material fact made by the
Lessor, the Agent or such Participant, unless the misrepresentation was made in
reliance upon and in conformity with information furnished to the Lessor or such
Participant, as applicable, by the Lessee or its agents, employees or
contractors;
(e) the breach by the Lessee of any covenant, representation
or warranty made by it or deemed made by it in any Operative Document or any
certificate required to be delivered by any Operative Document;
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(f) the retaining or employment of any broker, finder or
financial advisor by the Lessee to act on its behalf in connection with this
Participation Agreement, or the incurring of any fees or commissions to which
the Lessor might be subjected by virtue of entering into the transactions
contemplated by this Participation Agreement;
(g) the existence of any Lien on or with respect to the
Property, the Improvements, the Equipment, any Basic Rent or Supplemental Rent,
title thereto, or any interest therein including any Liens which arise out of
the possession, use, occupancy, construction, repair or rebuilding of the
Property or by reason of labor or materials furnished or claimed to have been
furnished to the Lessee, the Existing Owner, the Lessor or any of their
contractors or agents or by reason of the financing of the Property or any
personalty or equipment purchased or leased by the Lessee or Improvements or
Modifications constructed by the Lessee, except Lessor Liens and Liens in favor
of the Agent or the Lessor;
(h) the transactions contemplated by the Lessee hereby or by
any other Operative Document, in respect of the application of Parts 4 and 5 of
Subtitle B of Title I of ERISA and any prohibited transaction described in
Section 4975(c) of the Code (other than any Claim resulting from a breach of
representation or warranty of the Lessor or any Participant); or
(i) the Existing Financing, any documentation relating
thereto, the Existing Participants, the Existing Owner, or the purchase of the
Property by the Lessor, or any matters arising therefrom or related thereto;
provided, however, the Lessee shall not be required to indemnify (x) the Lessor
for any Claim to the extent arising from any misrepresentation by the Lessor
under Section 8.1 (e) or (l) or from the failure by the Lessor to comply with
Section 10.3 (a), or (y) any Indemnitee under this Section 13.1 for any of the
following: (1) any Claim to the extent resulting from the willful misconduct or
gross negligence of such Indemnitee or its agents, employees or contractors
(other than the Lessee and its agents, employers or contractors) (it being
understood that the Lessee shall be required to indemnify an Indemnitee even if
the ordinary (but not gross) negligence of such Indemnitee caused or contributed
to such Claim), (2) any Claim resulting from Lessor Liens which the Lessor is
responsible for discharging under the Operative Documents, (3) any Claim to the
extent attributable to acts or events occurring after the expiration of the Term
or the termination of the Lessee's right to possess and control the Property
(but not any claim to the extent attributable to acts or events occurring prior
to or during the Term or occurring at any time that the Lessee is in actual
possession or control of the Property), (4) any Imposition or other claims for
Taxes, and (5) any Claims of the type(s) described in Sections 13.2 (only with
respect to claims in respect of a decline in the Fair Market Sales Value of the
Property as a result of an event described in Section 13.2(b) and the Lessee's
exercise of the Remarketing Option), 13.6, 13.7, 13.8 and 13.10. It is expressly
understood and agreed that the indemnity provided for herein shall survive the
expiration or termination of and shall be separate and independent from any
remedy under the Lease or any other Operative Document. Without limiting the
express rights of any Indemnitee under this Section 13.1, this Section 13.1
shall be construed as an indemnity only and not a guaranty of residual value of
the Property or as a guaranty of the Participation Interests.
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SECTION 13.2. End of Term Indemnity.
(a) If the Lessee elects the Remarketing Option and there
would, after giving effect to the proposed remarketing transactions, be a
Shortfall Amount, then prior to the Maturity Date and as a condition to the
Lessee's right to complete the remarketing of the Property pursuant to Section
22.1 of the Lease, the Lessee shall cause to be delivered to the Lessor at least
30 days prior to either the Expiration Date or the last day of the Remarketing
Period, if Section 17.2(h) of the Lease is applicable, at the Lessee's sole cost
and expense, a report from an appraiser selected by the Lessor and reasonably
satisfactory to the Agent and the Required Participants in form and substance
satisfactory to the Lessor, the Agent and the Required Participants (the "End of
the Term Report") which shall state the appraiser's conclusions as to the reason
for any decline in the Fair Market Sales Value of the Property from that
anticipated for such date in the Appraisal delivered on the Closing Date.
(b) Prior to the Expiration Date, the Lessee shall pay to the
Lessor an amount (not to exceed the Shortfall Amount) equal to the portion of
the Shortfall Amount that the End of the Term Report demonstrates was the result
of a decline in the Fair Market Sales Value of the Property due to:
(i) extraordinary wear and tear, excessive usage,
failure to maintain, to repair, to restore, to rebuild or to replace,
failure to comply with the Lease and all applicable laws, failure to
use, workmanship, method of installation or removal or maintenance,
repair, rebuilding or replacement (excepting in each case ordinary wear
and tear);
(ii) any Modification made to, or any rebuilding of,
the Property or any part thereof by the Lessee or any sublessee; or
(iii) the existence of any Hazardous Activity,
Hazardous Substance or Environmental Violations; or
(iv) any restoration or rebuilding carried out by
the Lessee or any sublessee; or
(v) any condemnation of any portion of the Property
pursuant to Article XV of the Lease; or
(vi) any use of the Property or any part thereof by
the Lessee or any sublessee other than as permitted by the Operative
Documents; or
(vii) any grant, release, dedication, transfer,
annexation or amendment made pursuant to Section 12.2 of the Lease; or
(viii) the failure of the Lessor to have good and
marketable fee title to the Property free and clear of all Liens
(including Permitted Liens and Permitted Exceptions) and exceptions to
title, except (A) such Liens or exceptions to title that existed on the
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Closing Date and were disclosed in the policy of title insurance
delivered pursuant to Section 6.1; (B) Lessor Liens; and (C) to the
extent any such liability arising as a result of a title defect is
offset by the proceeds of title insurance.
SECTION 13.3. Environmental Indemnity. Without limitation of the other
provisions of this Section 13, the Lessee hereby agrees to indemnify, hold
harmless and defend each Indemnitee from and against any and all claims
(including without limitation third party claims for personal injury or real or
personal property damage), losses (including but not limited to any loss of
value of the Property), damages, liabilities, fines, penalties, charges,
administrative and judicial proceedings (including informal proceedings) and
orders, judgments, remedial action, requirements, enforcement actions of any
kind, and all reasonable and documented costs and expenses incurred in
connection therewith (including but not limited to reasonable and documented
attorneys' and/or paralegals' fees and expenses), including, but not limited to,
all costs incurred in connection with any investigation or monitoring of site
conditions or any clean-up, remedial, removal or restoration work by any
federal, state or local government agency, which such Indemnitee becomes subject
to because of its involvement with the Property, the transactions contemplated
by the Operative Documents or any other matter referred to in paragraphs (a)
through (i) of Section 13.1 arising in whole or in part, out of:
(a) the presence on or under the Property of any Hazardous
Substances, or any Releases or discharges of any Hazardous Substances on, under,
from or onto the Property;
(b) any activity, including, without limitation, construction,
carried on or undertaken on or off the Property, and whether by the Lessee, the
Lessor, the Existing Owner or any predecessor in title or any employees, agents,
contractors or subcontractors of the Lessee, the Lessor (if such activity was
undertaken with the consent or at the direction of the Lessee), the Existing
Owner or any predecessor in title, or any other Persons (including such
Indemnitee), in connection with the handling, treatment, removal, storage,
decontamination, cleanup, transport or disposal of any Hazardous Substances that
at any time are located or present on or under or that at any time migrate,
flow, percolate, diffuse or in any way move onto or under the Property;
(c) loss of or damage to any property or the environment
(including, without limitation, cleanup costs, response costs, remediation and
removal costs, cost of corrective action, costs of financial assurance, fines
and penalties and natural resource damages), or death or injury to any Person,
and all expenses associated with the protection of wildlife, aquatic species,
vegetation, flora and fauna, and any mitigative action required by or under
Environmental Laws;
(d) any claim concerning lack of compliance with Environmental
Laws, or any act or omission causing an environmental condition that requires
remediation or would allow any Governmental Authority to record a Lien on the
land records;
(e) any residual contamination on or under the Property, or
affecting any natural resources, or any contamination of any property or natural
resources arising in connection with the generation, use, handling, storage,
transport or disposal of any such Hazardous Substances, and
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irrespective of whether any of such activities were or will be undertaken in
accordance with applicable Environmental Laws; or
(f) any material inaccuracies, misrepresentations,
misstatements, and omissions and any conflicting information contained in or
omitted from the Environmental Audit;
provided, however, the Lessee shall not be required to indemnify any Indemnitee
under this Section 13.3 for (1) any Claim to the extent resulting from the
willful misconduct or gross negligence of such Indemnitee or its agents,
employees and contractors (other than the Lessee and its agents, employees and
contractors) (it being understood that the Lessee shall be required to indemnify
an Indemnitee even if the ordinary (but not gross) negligence of such Indemnitee
caused or contributed to such Claim), (2) subject to the provisions Section 15.2
of the Lease, any Claim to the extent attributable to acts or events occurring
after the expiration of the Term or the termination of the Lessee's right to
possess and control the Property (but not any claim to the extent attributable
to acts or events occurring prior to or during the Term or occurring at any time
that the Lessee is in actual possession or control of the Property), (3) any
Imposition or other claims for Taxes of the type(s) described in Section 13.5 or
(4) any Claims of the type(s) described in Sections 13.2 (only with respect to
claims in respect of a decline in the Fair Market Sales Value of the Property
and the Lessee's exercise of the Remarketing Option), 13.6, 13.7, 13.8 and
13.10. It is expressly understood and agreed that the indemnity provided for
herein shall survive the expiration or termination of and shall be separate and
independent from any remedy under the Lease or any other Operative Document.
SECTION 13.4. Proceedings in Respect of Claims. With respect to any
amount that the Lessee is requested by an Indemnitee to pay by reason of Section
13.1 or 13.3, such Indemnitee shall, if so requested by the Lessee and prior to
any payment, submit such additional information to the Lessee as the Lessee may
reasonably request and which is in the possession of such Indemnitee to
substantiate properly the requested payment.
In case any action, suit or proceeding shall be brought against any
Indemnitee, such Indemnitee shall notify the Lessee of the commencement thereof,
and the Lessee shall be entitled, at its expense, to participate in, and, to the
extent that the Lessee desires to, assume and control the defense thereof;
provided, however, that the Lessee shall have acknowledged in writing its
obligation to fully indemnify such Indemnitee in respect of such action, suit or
proceeding, and the Lessee shall keep such Indemnitee fully apprised of the
status of such action, suit or proceeding and shall provide such Indemnitee with
all information with respect to such action, suit or proceeding as such
Indemnitee shall reasonably request, and provided further, that the Lessee shall
not be entitled to assume and control the defense of any such action, suit or
proceeding if and to the extent that, (A) in the reasonable opinion of such
Indemnitee, (x) such action, suit or proceeding involves any possibility of
imposition of criminal liability or any risk of material civil liability on such
Indemnitee or will involve a material risk of the sale, forfeiture or loss of,
or the creation of any Lien (other than
a Permitted Exception) on the Property or any part thereof unless, in the case
of civil liability or Lien, the Lessee shall have posted a bond or other
security satisfactory to the relevant Indemnitee in respect to such risk or (y)
the control of such action, suit or proceeding would involve an actual or
potential conflict of interest, (B) such proceeding involves Claims not fully
indemnified
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by the Lessee which the Lessee and the Indemnitee have been unable to sever from
the indemnified claim(s), or (C) an Event of Default under the Lease has
occurred and is continuing. The Indemnitee may participate in a reasonable
manner at its own expense and with its own counsel in any proceeding conducted
by the Lessee in accordance with the foregoing. The Lessee shall not enter into
any settlement or other compromise with respect to any Claim which is entitled
to be indemnified under Section 13.1 or 13.3 without the prior written consent
of the Indemnitee which consent shall not be unreasonably withheld in the case
of a money settlement not involving an admission of liability of such
Indemnitee.
Each Indemnitee shall at the expense of the Lessee cooperate with and
supply the Lessee with such information and documents reasonably requested by
the Lessee as are necessary or advisable for the Lessee to participate in any
action, suit or proceeding to the extent permitted by Section 13.1 or 13.3.
Unless an Event of Default under the Lease shall have occurred and be
continuing, no Indemnitee shall enter into any settlement or other compromise
with respect to any Claim which is entitled to be indemnified under Section 13.1
or 13.3 without the prior written consent of the Lessee, which consent shall not
be unreasonably withheld, unless such Indemnitee waives its right to be
indemnified under Section 13.1 or 13.3 with respect to such Claim.
Upon payment in full of any Claim by the Lessee pursuant to Section
13.1 or 13.3 to or on behalf of an Indemnitee, the Lessee, without any further
action, shall be subrogated to any and all claims that such Indemnitee may have
relating thereto (other than claims in respect of insurance policies maintained
by such Indemnitee at its own expense), and such Indemnitee shall execute such
instruments of assignment and conveyance, evidence of claims and payment and
such other documents, instruments and agreements as may be necessary to preserve
any such claims and otherwise cooperate with the Lessee and give such further
assurances as are necessary or advisable to enable the Lessee vigorously to
pursue such claims.
Any amount payable to an Indemnitee pursuant to Section 13.1 or 13.3
shall be paid to such Indemnitee promptly upon receipt of a written demand
therefor from such Indemnitee, accompanied by a written statement describing in
reasonable detail the basis for such indemnity and the computation of the amount
so payable and, if requested by the Lessee, such determination shall be verified
by a nationally recognized independent accounting firm mutually acceptable to
the Lessee and the Indemnitee at the expense of the Lessee.
SECTION 13.5. General Impositions Indemnity.
(a) Indemnification. The Lessee shall pay and assume liability
for, and does hereby agree to indemnify, protect and defend the Property and all
Indemnitees, and hold them harmless against, all Impositions on an After Tax
Basis.
(b) Payments. (i) Subject to the terms of Section 13.5(f), the
Lessee shall pay or cause to be paid all Impositions directly to the taxing
authorities where feasible and otherwise to the Indemnitee, as appropriate, and
the Lessee shall at its own expense, upon such Indemnitee's reasonable request,
furnish to such Indemnitee copies of official receipts or other satisfactory
proof evidencing such payment.
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(ii) In the case of Impositions for which no contest
is conducted pursuant to Section 13.5(f) and which the Lessee pays directly to
the taxing authorities, the Lessee shall pay such Impositions prior to the
latest time permitted by the relevant taxing authority for timely payment. In
the case of Impositions for which the Lessee reimburses an Indemnitee, the
Lessee shall do so within twenty (20) days after receipt by the Lessee of demand
by such Indemnitee describing in reasonable detail the nature of the Imposition
and the basis for the demand (including the computation of the amount payable),
but in no event shall the Lessee be required to pay such reimbursement prior to
ten (10) days before the latest time permitted by the relevant taxing authority
for timely payment. In the case of Impositions for which a contest is conducted
pursuant to Section 13.5(f), the Lessee shall pay such Impositions or reimburse
such Indemnitee for such Impositions, to the extent not previously paid or
reimbursed pursuant to subsection (a), prior to the latest time permitted by the
relevant taxing authority for timely payment after conclusion of all contests
under Section 13.5(f).
(iii) At the Lessee's request, the amount of any
indemnification payment by the Lessee pursuant to subsection (a) shall be
verified and certified by an independent public accounting firm mutually
acceptable to the Lessee and the Indemnitee. The fees and expenses of such
independent public accounting firm shall be paid by the Lessee unless such
verification shall result in an adjustment in the Lessee's favor of 5% or more
of the payment as computed by the Indemnitee, in which case such fee shall be
paid by the Indemnitee.
(c) Reports and Returns. (i) The Lessee shall be responsible
for preparing and filing any real and personal property or ad valorem tax
returns in respect of the Property. In case any other report or tax return shall
be required to be made with respect to any obligations of the Lessee under or
arising out of subsection (a) and of which the Lessee has knowledge or should
have knowledge, the Lessee, at its sole cost and expense, shall notify the
relevant Indemnitee of such requirement and (except if such Indemnitee notifies
the Lessee that such Indemnitee intends to file such report or return) (A) to
the extent required or permitted by and consistent with Applicable Law, make and
file in its own name such return, statement or report; and (B) in the case of
any other such return, statement or report required to be made in the name of
such Indemnitee, advise such Indemnitee of such fact and prepare such return,
statement or report for filing by such Indemnitee or, where such return,
statement or report shall be required to reflect items in addition to any
obligations of the Lessee under or arising out of subsection (a), provide such
Indemnitee at the Lessee's expense with information sufficient to permit such
return, statement or report to be properly made with respect to any obligations
of the Lessee under or arising out of subsection (a). Such Indemnitee shall,
upon the Lessee's request and at the Lessee's expense, provide any data
maintained by such Indemnitee (and not otherwise available to or within the
control of the Lessee) with respect to the Property which the Lessee may
reasonably require to prepare any required tax returns or reports. Each
Indemnitee agrees to use its best efforts to send to the Lessee a copy of any
written request or other notice that the Indemnitee receives with respect to any
reports or returns required to be filed with respect to the Property or the
transactions contemplated by the Operative Documents, it being understood that
no Indemnitee shall have any liability for failure to provide such copies.
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(d) Income Inclusions. If as a result of the payment or
reimbursement by the Lessee of any expenses of the Lessor or the payment of any
Transaction Expenses incurred in connection with the transactions contemplated
by the Operative Documents, the Lessor or any Participant shall suffer a net
increase in any federal, state or local income tax liability, the Lessee shall
indemnify such Persons (without duplication of any indemnification required by
subsection (a)) on an After Tax Basis for the amount of such increase. The
calculation of any such net increase shall take into account any current or
future tax savings realized or reasonably expected to be realized by such person
in respect thereof, as well as any interest, penalties and additions to tax
payable by the Lessor, or any Participant or such Affiliate, in respect thereof.
(e) Withholding Taxes. As between the Lessee on one hand, and
the Lessor or the Agent and any Participant on the other hand, the Lessee shall
be responsible for, and, subject to the provisions of Sections 13.5(g) and (h),
the Lessee shall indemnify and hold harmless the Lessor, the Agent and the
Participants (without duplication of any indemnification required by subsection
(a)) on an After Tax Basis against, any obligation for United States or foreign
withholding taxes imposed in respect of payments with respect to the
Participation Interests or with respect to Rent payments under the Lease or
payments of the Asset Termination Value or Purchase Option Price (and, if the
Lessor, the Agent or any Participant receives a demand for such payment from any
taxing authority, the Lessee shall discharge such demand on behalf of the
Lessor, the Agent or such Participant). Notwithstanding the foregoing provisions
of this Section 13.5(e) or any other provision of any Operative Document to the
contrary, the Lessee shall not be responsible for and shall not be required to
indemnify or otherwise hold harmless any Person from or against any withholding
tax imposed as a collection device for, or in substitution or lieu of, an
income, franchise or similar tax to the extent such income, franchise or similar
tax would not otherwise be subject to indemnification pursuant to this Section
13.5 (a "Qualified Withholding Tax"). As used herein, Qualified Withholding
Taxes include, without limitation, any withholding taxes arising under Section
871, 881, 1441 or 1442 of the Code and any similar taxes arising under state,
local or foreign law as well as any withholding tax imposed as a collection
device for, or in substitution or lieu of the Imposition that qualifies as an
"income tax" within the meaning of United States Treasury Regulation Section
1.901-2.
(f) Contests of Impositions. (i) If a written claim is made
against any Indemnitee or if any proceeding shall be commenced against such
Indemnitee (including a written notice of such proceeding), for any Impositions,
such Indemnitee shall promptly notify the Lessee in writing and shall not take
action with respect to such claim or proceeding without the consent of the
Lessee for thirty (30) days after the receipt of such notice by the Lessee;
provided, however, that, in the case of any such claim or proceeding, if action
shall be required by law or regulation to be taken prior to the end of such
30-day period, such Indemnitee shall, in such notice to the Lessee, inform the
Lessee of such shorter period, and no action shall be taken with respect to such
claim or proceeding without the consent of the Lessee before 2 days before the
end of such shorter period; provided, further, that the failure of such
Indemnitee to give the notices referred to this sentence shall not diminish the
Lessee's obligation hereunder except to the extent such failure precludes the
Lessee from contesting all or part of such claim.
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(ii) If, within thirty (30) days of receipt of such
notice from the Indemnitee (or such shorter period as the Indemnitee has
notified the Lessee is required by law or regulation for the Indemnitee to
commence such contest), the Lessee shall request in writing that such Indemnitee
contest such Imposition, the Indemnitee shall, at the expense of the Lessee, in
good faith conduct and control such contest (including, without limitation, by
pursuit of appeals) relating to the validity, applicability or amount of such
Impositions (provided, however, that (A) if such contest involves a tax other
than a tax on net income and can be pursued independently from any other
proceeding involving an unindemnified tax liability of such Indemnitee, the
Indemnitee, at the Lessee's request, shall allow the Lessee to conduct and
control such contest and (B) in the case of any contest, the Indemnitee may
request the Lessee to conduct and control such contest) by, in the sole
discretion of the Person conducting and controlling such contest, (1) resisting
payment thereof, (2) not paying the same except under protest, if protest is
necessary and proper, (3) if the payment be made, using reasonable efforts to
obtain a refund thereof in appropriate administrative and judicial proceedings,
or (4) taking such other action as is reasonably requested by the Lessee from
time to time.
(iii) The party controlling any contest shall consult
in good faith with the non-controlling party and shall keep the non-controlling
party reasonably informed as to the conduct of such contest; provided, that all
decisions ultimately shall be made in the sole discretion of the controlling
party except that no decision shall be made to concede an indemnified issue
without the prior consent of Lessee (which consent shall not be unreasonably
withheld). The parties agree that an Indemnitee may at any time decline to take
further action with respect to the contest of any Imposition and may settle such
contest if such Indemnitee shall waive its rights to any indemnity from the
Lessee that otherwise would be payable in respect of such claim (and any future
claim by any taxing authority, the contest of which is precluded by reason of
such resolution of such claim) and shall pay to the Lessee any amount previously
paid or advanced by the Lessee pursuant to this Section 13.5 by way of
indemnification or advance for the payment of an Imposition other than expenses
of such contest.
(iv) Notwithstanding the foregoing provisions of this
Section 13.5, an Indemnitee shall not be required to take any action and the
Lessee shall not be permitted to contest any Impositions in its own name or that
of the Indemnitee unless (A) the Lessee shall have agreed such Imposition is
subject to indemnity hereunder and shall pay to such Indemnitee on demand and on
an After Tax Basis all reasonable costs, losses and expenses that such
Indemnitee actually incurs in connection with contesting such Impositions,
including, without limitation, all reasonable legal, accounting and
investigatory fees and disbursements, (B) in the case of a claim that must be
pursued in the name of an Indemnitee (or an Affiliate thereof), the amount of
the potential indemnity (taking into account all similar or logically related
claims that have been or could be raised in any audit involving such Indemnitee
for which the Lessee may be liable to pay an indemnity under this Section 13.5)
exceeds $10,000, (C) the Indemnitee shall have reasonably determined that the
action to be taken will not result in any material danger of sale, forfeiture or
loss of the Property, or any part thereof or interest therein, will not
interfere with the payment of Rent, and will not result in risk of criminal
liability, (D) if such contest shall involve the payment of the Imposition prior
to the contest, the Lessee shall provide to the Indemnitee an interest-free
advance in an amount equal to the Imposition that the Indemnitee is required to
pay (with no additional net after-tax cost to such Indemnitee), (E) in the case
of a claim that must be pursued in the name of an Indemnitee (or an
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Affiliate thereof), the Lessee shall have provided to such Indemnitee an opinion
of independent tax counsel selected by the Indemnitee and reasonably
satisfactory to the Lessee stating that a reasonable basis exists to contest
such claim (or, in the case of an appeal of an adverse judicial determination,
an opinion of such counsel to the effect that there is substantial authority for
the position asserted in such appeal) and (F) no Event of Default hereunder
shall have occurred and be continuing. In no event shall an Indemnitee be
required to appeal an adverse judicial determination to the United States
Supreme Court. In addition, an Indemnitee shall not be required to contest any
claim in its name (or that of an Affiliate) if the subject matter thereof shall
be of a continuing nature and shall have previously been decided adversely by a
court of competent jurisdiction pursuant to a contest completed in accordance
with the provisions of this Section 13.5, unless there shall have been a change
in law (or interpretation thereof) and the Indemnitee shall have received, at
the Lessee's expense, an opinion of independent tax counsel selected by the
Indemnitee and reasonably acceptable to the Lessee stating that as a result of
such change in law (or interpretation thereof), it is more likely than not that
the Indemnitee will prevail in such contest.
(g) Documentation of Withholding Status. Each Participant (or
any successor thereto or transferee thereof) that is organized under the laws of
a jurisdiction outside of the United States of America and each Lessor that is
organized under the laws of a jurisdiction outside of the United States of
America shall:
(i) on or before the date it becomes a party to any
Operative Document, deliver to the Lessee any certificates,
documents, or other evidence that shall be required by the
Code or Treasury Regulations issued pursuant thereto to
establish its exemption from United States Federal withholding
requirements, including (A) two valid, duly completed,
original copies of Internal Revenue Service Form 1001 or Form
4224 or successor applicable form, properly and duly executed,
certifying in each case that such party is entitled to receive
payments pursuant to the Operative Documents without deduction
or withholding of United States Federal income taxes, or (B) a
valid, duly completed, original copy of Internal Revenue
Service Form W-8 or Form W-9 or applicable successor form,
properly and duly executed, certifying that such party is
entitled to an exemption from United States of America backup
withholding tax; and
(ii) so long as it shall be legally entitled to do so,
on or before the date that any such form described above
expires or becomes obsolete, or after the occurrence of any
event requiring a change in the most recent such form
previously delivered to the Lessee, deliver to the Lessee two
further valid, duly completed, original copies of any such
form or certification, properly and duly executed.
(h) Limitation on Tax Indemnification. The Lessee shall not be
required to indemnify any Indemnitee, or to pay any increased amounts to any
Indemnitee or tax authority with respect to any Impositions pursuant to this
Section 13.5 to the extent that (i) such Imposition is attributable to such
Indemnitee's failure to comply with the provisions of Section 13.5(g); or (ii)
to the extent such Imposition constitutes or is collected by means of a
Qualified Withholding Tax.
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(i) Tax Savings. In the event an Indemnitee receives a refund
(or similar tax savings) in respect of any Imposition paid or reimbursed by the
Lessee which was not considered in calculating the After Tax Basis with respect
to such payment or reimbursement by Lessee, such Indemnitee shall within thirty
(30) days thereafter remit the amount of such refund (or tax savings) to the
Lessee, provided that the amount so remitted shall not exceed the lesser of: (i)
the amount received by such Indemnitee as a refund (or tax savings) net of all
reasonable costs and expenses incurred by such Indemnitee in connection with
obtaining and paying such amount; and (ii) (a) the amount of all prior payments
by the Lessee to such Indemnitee with respect to Impositions, plus any refunded
interest, less (b) the amount of all prior payments by the Indemnitee to the
Lessee under this Section 13.5(i).
SECTION 13.6. Funding Losses. If any payment of any Advance or any
portion of any Participation Interest is made on any day other than the last day
of an Interest Period applicable thereto, or if the Lessee fails to utilize the
proceeds of any purchase of Participation Interests after notice has been given
to any Participant in accordance with Section 3 or 4, the Lessee shall reimburse
each Participant within fifteen (15) days after demand for any Funding Losses
provided that such Participant shall have delivered to the Lessee a certificate
as to the amount of such loss or expense, which certificate shall be conclusive
in the absence of manifest error, and provided further that such loss shall in
no event exceed the interest on the Advances which would have been payable for
the balance of such Interest Period or other period, less the amount actually
earned by such Participant on such Advances. Such Participant will, at the
request of the Lessee, furnish such additional information concerning the
determination of such loss as the Lessee may reasonably request.
SECTION 13.7. Regulation D Compensation. For so long as any Participant
is required by a Change of Law to increase its existing reserve percentage above
that applicable under existing law as of the Effective Date against
"Eurocurrency Liabilities" (or any other category of liabilities which include
deposits by reference to which the interest rate on its Participation Interest
in any Advance is determined or any category of extensions of credit or other
assets which includes loans by a non-United States office of such Participant to
United States residents), and, as a result, the cost to such Participant (or its
Funding Office) of purchasing or maintaining its Participation Interest in any
Advance is increased, then such Participant may require the Lessee to pay,
contemporaneously with each payment of interest or Yield on the Advances an
additional amount on the Participation Interest of such Participant in the
Advances at a rate per annum up to but not exceeding the excess of (i) (A) the
applicable Eurodollar Rate divided by (B) one minus the Eurocurrency Reserve
Requirements and (ii) the applicable Eurodollar Rate. Any Participant wishing to
require payment of such additional amount (x) shall so notify the Lessee and the
Agent, in which case such additional interest on its Participation Interest in
any Advance shall be payable to such Participant at the place indicated in such
notice with respect to each Interest Period commencing at least three (3)
Business Days after the giving of such notice and (y) shall furnish to the
Lessee at least five (5) Business Days prior to each date on which interest is
payable on the Advance an officer's certificate setting forth the amount to
which such Participant is then entitled under this Section (which shall be
consistent with such Participant's good faith estimate of the level at which the
related reserves are maintained by it). Each such certificate shall be
accompanied by such information as the Lessee may reasonably request as to the
computation set forth therein.
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SECTION 13.8. Basis for Determining Interest Rate Inadequate or Unfair.
If on or prior to the first day of any Interest Period:
(a) deposits in dollars (in the applicable amounts) are not
being offered to the Agent in the relevant market for such Interest Period or
any Participants shall advise the Agent that the Eurodollar Rate as determined
by the Agent will not adequately and fairly reflect the cost to such Participant
of funding its Participation Interest in any Advance for such Interest Period;
or
(b) any Participant determines that, by reason of the
adoption, on or after the date of this Participation Agreement, of any
applicable law, rule or regulation, or any change therein, or any change in the
interpretation or administration thereof by any Governmental Authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by any Participant (or its Funding Office) with any
request or directive (whether or not having the force of law) of any such
authority, central bank or governmental agency, it is restricted, directly or
indirectly, in the amount it may hold of (i) a category of liabilities that
includes deposits by reference to which, or on the basis of which, the interest
rates applicable to Advances to fund its Participation Interest Commitment based
on the Eurodollar Rate are directly or indirectly determined, or (ii) the
category of assets which includes Advances to fund its Participation Interest
Commitment based on the Eurodollar Rate;
the Agent shall forthwith give notice thereof to the Lessee and the
Participants, whereupon until the Agent notifies the Lessee that the
circumstances giving rise to such suspension no longer exist, each outstanding
Advance shall begin to bear interest on the last day of the then current
Interest Period applicable thereto at a rate per annum equal to the sum of (i)
the Participants' average cost of funds employed to fund their Participation
Interests, as notified to the Agent and the Lessee, plus (ii) the Applicable
Margin for Eurodollar Rate-based Advances at such time.
SECTION 13.9. Illegality. If, on or after the date of this
Participation Agreement, the adoption of any applicable law, rule or regulation,
or any change therein, or any change in the interpretation or administration
thereof by any Governmental Authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any
Participant (or its Funding Office) with any request or directive (whether or
not having the force of law) of any such authority, central bank or comparable
agency (a "Charge of Law"), shall make it unlawful or impossible for any
Participant (or its Funding Office) to purchase, maintain or fund its
Participation Interest in any Advance and such Participant shall so notify the
Agent, the Agent shall forthwith give notice thereof to the other Participants
and the Lessee, whereupon until such Participant notifies the Lessee and the
Agent that the circumstances giving rise to such suspension no longer exist, the
obligation of such Participant to purchase its Participation Interest in any
Advance shall be suspended. Before giving any notice to the Agent pursuant to
this Section, such Participant shall, if practicable, with the consent of the
Lessee (which consent shall not unreasonably be withheld), designate a different
Funding Office if such designation will avoid the need for giving such notice
and will not, in the judgment of such Participant, be otherwise disadvantageous
to such Participant. If such notice is given (i) the Lessee shall be entitled
upon its request to a reasonable explanation of the factors underlying such
notice and (ii) each outstanding Participation Interest in any Advance of such
Participant then outstanding shall begin to bear interest at the Alternate Base
Rate either (a)
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on the last day of the then current Interest Period applicable to such Advance
if such Participant may lawfully continue to maintain and fund such
Participation Interest to such day or (b) immediately if such Participant shall
determine that it may not lawfully continue to maintain and fund such
Participation Interest to such day. If such notice is given the Lessee may
exercise its Purchase Option under Section 20.1 of the Lease upon not less than
ten (10) days' written notice to the Lessor, the Agent and the Participants.
SECTION 13.10. Increased Cost and Reduced Return. (a) In the event that
the adoption of any applicable law, rule or regulation, or any change therein or
in the interpretation or application thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof or compliance by any Participant with any request or
directive after the date hereof (whether or not having the force of law) of any
such authority, central bank or comparable agency:
(i) does or shall subject such Participant to any
additional tax of any kind whatsoever with respect to the Operative
Documents or any purchase of a Participation Interest in any Advance,
or change the basis or the applicable rate of taxation of payments to
such Participant of its Participation Interest or any other amount
payable hereunder (except for the imposition of or change in (x) any
tax on or measured by the overall net income of such Participant
including, without limitation, any tax that qualifies as an "income
tax" within the meaning of United States Treasury Regulation Section
1.901-2 and which is not an Imposition or (y) any Qualified Withholding
Tax);
(ii) does or shall impose, modify or hold applicable
any reserve, special deposit, insurance assessment, compulsory loan or
similar requirement against assets held by, or deposits or other
liabilities in or for the account of, advances or loans by, or other
credit extended by, or any other acquisition of funds by, any office of
such Participant which are not otherwise included in determination of
the rate of interest on Advances hereunder; or
(iii) does or shall impose on such Participant any
other condition;
and the result of any of the foregoing is to increase the cost to such
Participant of purchasing or maintaining its Participation Interest in any
Advance or to reduce any amount receivable hereunder with respect thereto, then
in any such case, the Lessee shall promptly pay such Participant, upon its
demand, any additional amounts necessary to compensate such Participant for such
increased cost or reduced amount receivable which such Participant deems to be
material as determined by such Participant provided, however, that the Lessee
shall not be obligated to pay any Participant for any such increased costs or
reduced amounts incurred more than sixty (60) days prior to the date of such
Participant's demand for payment if such demand was made more than sixty (60)
days after the latest of (A) the date such Participant received actual notice of
such increased cost or reduced amount, (B) the effective date of such change or
(C) the date such change occurred or was enacted.
(b) If any Participant shall have determined that, after the
date hereof, the adoption of any applicable law, rule or regulation regarding
capital adequacy, or any change therein,
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or any change in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency has or would have the effect of reducing the
rate of return on capital of such Participant (or any entity directly or
indirectly controlling such Participant) as a consequence of such Participant's
obligations under the Operative Documents to a level below that which such
Participant (or any entity directly or indirectly controlling such Participant)
could have achieved but for such adoption, change, request or directive (taking
into consideration its policies with respect to capital adequacy) by an amount
deemed by such Participant to be material, then from time to time, within 15
days after demand by such Participant (with a copy to the Agent), the Lessee
shall pay to such Participant such additional amount or amounts as will
compensate such Participant (or its parent) for such reduction.
(c) Each Participant will promptly notify the Lessee and the
Agent of any event of which it has knowledge, occurring after the date hereof,
which will entitle such Participant to compensation pursuant to this Section and
will, if practicable, with the consent of the Lessee (which consent shall not
unreasonably be withheld), designate a different Funding Office or take any
other reasonable action if such designation or action will avoid the need for,
or reduce the amount of, such compensation and will not, in the judgment of such
Participant, be otherwise disadvantageous to such Participant. A certificate of
any Participant claiming compensation under this Section and setting forth in
reasonable detail its computation of the additional amount or amounts to be paid
to it hereunder shall be conclusive in the absence of manifest error. In
determining such amount, such Participant may use any reasonable averaging and
attribution methods. This Section shall survive the termination of this
Participation Agreement and payment of the outstanding Advances and
Participation Interests.
SECTION 13.11. Substitution of Participant. If (i) the obligation of
any Participant to purchase or maintain its Participation Interest has been
suspended pursuant to this Section 13, or (ii) any Participant has demanded
compensation or given notice of its intention to demand compensation under
Sections 13.1, 13.2, 13.5 or 13.10, the Lessee shall have the right, with the
assistance of the Agent, to seek one or more mutually satisfactory substitute
banks or financial institutions (which may be one or more of the Participants)
to replace such Participant under the Operative Documents.
SECTION 13.12. Indemnity Payments in Addition to Residual Value
Guarantee Amount. The Lessee acknowledges and agrees that its obligations to
make indemnity payments under this Section 13 are separate from, in addition to,
and do not reduce, its obligation to pay the Residual Value Guarantee Amount
under the Lease; provided, that except as otherwise set forth in Section 13.2
hereof, the Shortfall Amount payable by the Lessee in connection with the
Remarketing Option under the Lease shall not be increased under this Section 13.
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SECTION 14.
THE AGENT
SECTION 14.1. Appointment. Each Participant hereby irrevocably
designates and appoints the Agent as the agent of such Lender under this
Agreement and the other Operative Documents, and each Participant irrevocably
authorizes the Agent, in such capacity, to take such action on its behalf under
the provisions of this Agreement and the other Operative Documents and to
exercise such powers and perform such duties as are expressly delegated to the
Agent by the terms of this Agreement and the other Operative Documents, together
with such other powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary elsewhere in this Agreement, the Agent shall not have
any duties or responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any Participant or any other party to the Operative
Documents, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other
Operative Document or otherwise exist against the Agent.
SECTION 14.2. Delegation of Duties. The Agent may execute any of its
duties under this Agreement and the other Operative Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.
SECTION 14.3. Exculpatory Provisions. Neither the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be
(a) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Agreement or any other Operative
Document (except for its or such Person's own gross negligence or willful
misconduct) or (b) responsible in any manner to any of the Participants or any
other party to the Operative Documents for any recitals, statements,
representations or warranties made by the Lessor or the Lessee or any officer
thereof contained in this Agreement or any other Operative Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Agreement or any
other Operative Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Operative Document
or for any failure of the Lessor or the Lessee to perform its obligations
hereunder or thereunder. The Agent shall not be under any obligation to any
Participant or any other party to the Operative Documents to ascertain or to
inquire as to the observance or performance of any of the agreements contained
in, or conditions of, this Agreement or any other Operative Document, or to
inspect the properties, books or records of the Lessor or the Lessee.
SECTION 14.4. Reliance by Agent. The Agent shall be entitled to rely,
and shall be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telecopy, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Lessor
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or the Lessee), independent accountants and other experts selected by the Agent.
The Agent shall be fully justified in failing or refusing to take any action
under this Agreement or any other Operative Document unless it shall first
receive such advice or concurrence of the Required Participants as it deems
appropriate or it shall first be indemnified to its satisfaction by the
Participants against any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action. The Agent shall in
all cases be fully protected in acting, or in refraining from acting, under this
Agreement and the other Operative Documents in accordance with a request of the
Required Participants, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Participants.
SECTION 14.5. Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default unless
the Agent has received notice from a Participant, the Lessor or the Lessee
describing such Default or Event of Default and stating that such notice is a
"notice of default". In the event that the Agent receives such a notice, the
Agent shall give notice thereof to the other parties hereto. Subject to the
provisions of Section 11 and Section 15.5 hereof, the Agent shall take such
action with respect to such Default or Event of Default as shall be reasonably
directed by the Required Participants; provided that unless and until the Agent
shall have received such directions, the Agent may (but shall not be obligated
to) take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable in the best interests of
the Participants.
SECTION 14.6. Non-Reliance on Agent and Other Participants. Each
Participant expressly acknowledges that neither the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates has made
any representations or warranties to it and that no act by the Agent hereinafter
taken, including any review of the affairs of the Lessor or the Lessee, shall be
deemed to constitute any representation or warranty by the Agent to any
Participant. Each Participant represents to the Agent that it has, independently
and without reliance upon the Agent or any other Participant, and based on such
documents and information as it has deemed appropriate, made its own appraisal
of and investigation into the business, operations, property, financial and
other condition and creditworthiness of the Lessor, the Lessee and the Property
and made its own decision to purchase its Participation Interest hereunder and
enter into this Agreement. Each Participant also represents that it will,
independently and without reliance upon the Agent, the Lessor or any other
Participant, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement and the other
Operative Documents, and to make such investigation as it deems necessary to
inform itself as to the business, operations, property, financial and other
condition and creditworthiness of the Lessor and the Lessee. Except for notices,
reports and other documents expressly required to be furnished to the
Participants by the Agent hereunder, the Agent shall not have any duty or
responsibility to provide any Participant with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Lessor or the Lessee which may
come into the possession of the Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates.
SECTION 14.7. Indemnification. The Participants agree to indemnify the
Agent in its capacity as such (to the extent not reimbursed by the Lessee and
without limiting the obligation of
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the Lessee to do so), ratably according to their respective Commitment
Percentages in effect on the date on which indemnification is sought under this
Section 14.7 (or, if indemnification is sought after the date upon which the
Commitments shall have terminated and the Participation Interests shall have
been paid in full, ratably in accordance with their Commitment Percentages
immediately prior to such date), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the
Participation Interests) be imposed on, incurred by or asserted against the
Agent in any way relating to or arising out of, the Commitments, this Agreement,
the Property, any of the other Operative Documents or any documents contemplated
by or referred to herein or therein or the transactions contemplated hereby or
thereby or any action taken or omitted by any of them under or in connection
with any of the foregoing; provided that no Participant shall be liable for the
payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting
solely from the gross negligence or willful misconduct of the Agent. The
agreements in this Section 14.7 shall survive the payment of the Participation
Interests and all other amounts payable hereunder.
SECTION 14.8. Agent in its Individual Capacity. The Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Lessor or the Lessee as though the Agent were not the
Agent hereunder and under the other Operative Documents. With respect to its
Participation Interest purchased by it, the Agent shall have the same rights and
powers under this Agreement and the other Operative Documents as any Participant
and may exercise the same as though it were not the Agent, and the terms
"Participant" and "Participants" shall include the Agent in its individual
capacity.
SECTION 14.9. Successor Agent. The Agent may resign as Agent upon 20
days' notice to the Participants, the Lessor or the Lessee. If the Agent shall
resign as Agent under this Agreement and the other Operative Documents, then the
Required Participants shall appoint a successor agent for the Participants,
which successor agent shall be a commercial bank organized under the laws of the
United States of America or any State thereof or under the laws of another
country which is doing business in the United States of America and having a
combined capital, surplus and undivided profits of at least $100,000,000 (and if
no Default or Event of Default exists, shall be approved by the Lessee (which
consent shall not be unreasonably withheld)), whereupon such successor agent
shall succeed to the rights, powers and duties of the Agent, and the term
"Agent" shall mean such successor agent effective upon such appointment and
approval, and the former Agent's rights, powers and duties as Agent shall be
terminated, without any other or further act or deed on the part of such former
Agent or any of the parties to this Agreement. If no successor Agent has
accepted appointment as Agent by the date which is 20 days following a resigning
Agent's notice of resignation, the resigning Agent's resignation shall
nevertheless thereupon become effective and the Participants shall perform all
of the duties of the Agent hereunder until such time, if any, as the Required
Participants appoint a successor Agent as provided above. After any retiring
Agent's resignation as Agent, all of the provisions of this Section 14 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement and the other Operative Documents.
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SECTION 15.
MISCELLANEOUS
SECTION 15.1. Survival of Agreements. The representations, warranties,
covenants, indemnities and agreements of the parties provided for in the
Operative Documents, and the parties' obligations under any and all thereof,
shall survive the execution and delivery of this Participation Agreement, the
transfer of the Property to the Lessor, the construction of any Improvements,
any disposition of any interest of the Lessor in the Property or any
Improvements, payment of the Advances and the Participation Interests and any
disposition thereof and shall be and continue in effect notwithstanding any
investigation made by any party and the fact that any party may waive compliance
with any of the other terms, provisions or conditions of any of the Operative
Documents. Except as otherwise expressly set forth herein or in other Operative
Documents, the indemnities of the parties provided for in the Operative
Documents shall survive the expiration or termination of any thereof.
SECTION 15.2. No Broker, etc. Each of the parties hereto represents to
the others that it has not retained or employed any broker, finder or financial
adviser to act on its behalf in connection with this Participation Agreement or
the transactions contemplated herein, nor has it authorized any broker, finder
or financial adviser retained or employed by any other Person so to act. Any
party who is in breach of this representation shall indemnify and hold the other
parties harmless from and against any liability arising out of such breach of
this representation.
SECTION 15.3. Notices. Unless otherwise specifically provided herein,
all notices, consents, directions, approvals, instructions, requests and other
communications required or permitted by the terms hereof to be given to any
Person shall be given in writing and delivered (i) personally, (ii) by a
nationally recognized overnight courier service, (iii) by mail (by registered or
certified mail, return receipt requested, postage prepaid) or (iv) by facsimile,
in each case directed to the address of such Person as indicated on Schedule
III. Any such notice shall be effective upon receipt or refusal.
From time to time any party may designate a new address for purposes of
notice hereunder by written notice to each of the other parties hereto in
accordance with this Section.
SECTION 15.4. Counterparts. This Participation Agreement may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
SECTION 15.5. Amendments. Subject to the provisions of Section 11
hereof, no Operative Document nor any of the terms thereof may be terminated,
amended, supplemented, waived or modified with respect to the Lessee, the
Lessor, the Agent or any Participant, except (a) in the case of a termination,
amendment, supplement, waiver or modification to be binding on the Lessee, the
Lessor or the Agent, with the written agreement or consent of such party, and
(b) in the case of a termination, amendment, supplement, waiver or modification
to be binding on the
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Participants, with the written agreement or consent of the Required
Participants; provided, however, that
(x) no such termination, amendment, supplement, waiver or
modification shall without written agreement or consent of each Participant:
(i) modify any of the provisions of Section 11 of
this Agreement or this Section 15.5, change the definition of "Required
Participants" or modify or waive any provision of an Operative
Agreement requiring action by the foregoing;
(ii) amend, modify, waive or supplement any of the
provisions of Sections 3.6, 3.7 or 3.10 - 3.21 of this Agreement or the
representations of such Participant in Section 8 or the covenants in
Sections 7 and 10 of this Participation Agreement;
(iii) reduce, modify, amend or waive any fees or
indemnities in favor of any Participant, including without limitation
amounts payable pursuant to Section 13 (except that any Person may
consent to any reduction, modification, amendment or waiver of any
indemnity or fee payable to it);
(iv) modify, postpone, reduce or forgive, in whole or
in part, any payment of Rent (other than pursuant to the terms of any
Operative Agreement), any payment in respect of its Participation
Interest, or any payment of the Asset Termination Value, Commitment
Fee, Extension Fees, Residual Value Guarantee Amount, amounts due
pursuant to Section 22.2 of the Lease, or interest or, subject to
clause (iii) above, any other amount payable under the Lease or this
Participation Agreement, or modify the definition or method of
calculation of Rent (other than pursuant to the terms of any Operative
Agreement), Participation Interest, Asset Termination Value, Commitment
Fee, Shortfall Amount, Residual Value Guarantee Amount, Required
Supplemental Payments, Property Improvements Cost, Participant Balance,
Tranche A Participation Interest Balance, Tranche B Participation
Interest Balance, or any other definition which would affect the
amounts to be advanced or which are payable under the Operative
Documents; or
(v) consent to any assignment of the Lease, releasing
the Lessee from its obligations in respect of the payments of Rent and
the Asset Termination Value or changing the absolute and unconditional
character of such obligation; and
(y) no other termination, amendment, supplement, waiver or
modification shall, without the written agreement or consent of the Lessor and
the Required Participants, be made to the Lease or Section 6 of this
Participation Agreement or the definition of "Event of Default".
SECTION 15.6. Headings, etc. The Table of Contents and headings of the
various Sections of this Agreement are for convenience of reference only and
shall not modify, define, expand or limit any of the terms or provisions hereof.
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SECTION 15.7. Parties in Interest. Except as expressly provided herein,
none of the provisions of this Participation Agreement are intended for the
benefit of any Person except the parties hereto. Subject to the provisions of
Section 25.1 of the Lease, the Lessee shall not assign or transfer any of its
rights or obligations under the Operative Documents without the prior written
consent of the Lessor, the Agent and the Participants, except that the Lessee
may without such consent assign rights or obligations of the Lessee under the
Operative Documents to an Affiliate of the Lessee, provided that the Lessee
remains primarily liable with respect to such obligations and provides its full
unconditional and irrevocable guaranty of such Subsidiary's obligations under
the Operative Documents, such guaranty to be in form and substance reasonably
satisfactory to the Required Participants. If the Lessor, the Agent and the
Participants consent to any such assignment or transfer to a Person not an
Affiliate of the Lessee, the Lessee shall remain primarily liable with respect
to such obligations and provide its full and unconditional guaranty of such
Person's obligations under the Operative Documents, such guaranty to be in form
and substance reasonably satisfactory to the Required Participants.
SECTION 15.8. GOVERNING LAW. THIS PARTICIPATION AGREEMENT SHALL IN ALL
RESPECTS BE GOVERNED BY THE LAW OF THE STATE OF ILLINOIS (EXCLUDING ANY
CONFLICT-OF-LAW OR CHOICE-OF-LAW RULES WHICH MIGHT LEAD TO THE APPLICATION OF
THE INTERNAL LAWS OF ANY OTHER JURISDICTION) AS TO ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE.
SECTION 15.9. Severability. Any provision of this Participation
Agreement that is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 15.10. Liability Limited. (a) The parties hereto agree that the
Lessor shall have no personal liability whatsoever to the Lessee, the Agent or
any Participant or their respective successors and assigns for any claim based
on or in respect of the Lease or any of the other Operative Documents or arising
in any way from the transactions contemplated hereby or thereby; provided,
however, that the Lessor shall be liable in its individual capacity (a) for its
own willful misconduct or gross negligence (or negligence in the handling of
funds), (b) for liabilities that may result from its breach of the covenant to
remove Lessor Liens set forth in Section 10.3, or (c) for any Tax based on or
measured by any fees, commission or compensation received by it for acting as
the Lessor as contemplated by the Operative Documents. It is understood and
agreed that, except as provided in the preceding proviso: (i) the Lessor shall
have no personal liability under any of the Operative Documents; (ii) all
obligations of the Lessor to the Lessee, the Agent and the Participants are
solely nonrecourse obligations and shall be enforceable solely against the
interest of the Lessor in the Property; and (iii) all such personal liability of
the Lessor is expressly waived and released as a condition of, and as
consideration for, the execution and delivery of the Operative Documents by the
Lessor. Notwithstanding anything contained herein, the limitations on liability
stated in the preceding provisions of this Section 15.10(a) shall not apply to
liability of the Lessor arising because of a breach of the Lessor's obligation
to remove Lessor Liens or because of its receiving Advances
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and failing to disburse Advances to the Lessee in accordance with the Operative
Documents, or failure to disburse proceeds from the sale of the Property in
accordance with the Lease and this Participation Agreement.
(b) No Participant shall have any obligation to any other
Participant or to the Lessee, the Lessor or the Agent with respect to
transactions contemplated by the Operative Documents, except those obligations
of such Participant expressly set forth in the Operative Documents or except as
set forth in the instruments delivered in connection therewith, and no
Participant shall be liable for performance by any other party hereto of such
other party's obligations under the Operative Documents except as otherwise so
set forth.
SECTION 15.11. Further Assurances. The parties hereto shall promptly
cause to be taken, executed, acknowledged or delivered, at the sole expense of
the Lessee, all such further acts, conveyances, documents and assurances as the
other parties may from time to time reasonably request in order to carry out and
effectuate the intent and purposes of this Participation Agreement, the other
Operative Documents, and the transactions contemplated hereby and thereby
(including, without limitation, the preparation, execution and filing of any and
all Uniform Commercial Code financing statements and other filings or
registrations which the parties hereto may from time to time request to be filed
or effected). The Lessee, at its own expense and without need of any prior
request from any other party, shall take such action as may be necessary
(including any action specified in the preceding sentence), or (if the Lessor
shall so request) as so requested, in order to maintain and protect all security
interests provided for hereunder or under any other Operative Document.
SECTION 15.12. Submission to Jurisdiction. The Lessee hereby submits to
the nonexclusive jurisdiction of the United States District Court for the
Northern District of Illinois and of any Illinois state court sitting in Cook
County for purposes of all legal proceedings arising out of or relating to the
Operative Documents or the transactions contemplated hereby. The Lessee
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding brought in such a
court has been brought in an inconvenient forum.
SECTION 15.13. Confidentiality. The Lessor, the Agent and each
Participant represent that they will maintain the confidentiality of the
transactions contemplated by, and of any written or oral information provided
under, the Operative Documents by or on behalf of the Lessee (hereinafter
collectively called "Confidential Information"), subject to the Lessor's, the
Agent's and each Participant's (a) obligation to disclose any such Confidential
Information pursuant to a request or order under applicable laws and regulations
or pursuant to a subpoena or other legal process, (b) right to disclose any such
Confidential Information to its bank examiners, Affiliates, auditors, counsel
and other professional advisors and to other Participants, (c) right to disclose
any such Confidential Information in connection with any litigation or dispute
involving the Participants and the Lessee or any of its Subsidiaries and
Affiliates and (d) right to provide such information to Sub-Participants,
prospective Sub-Participants to which sales of participating interests are
permitted pursuant to this Participation Agreement and prospective assignees to
which assignments of interests are permitted pursuant to this Participation
Agreement, but only if (i) such Sub-Participant, prospective Sub-Participant or
prospective assignee agrees in writing to maintain the confidentiality
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of such information on terms substantially similar to those of this Section as
if it were a "Participant" party hereto and (ii) the Lessee receives copies of
such written agreement prior to the release of such information. Notwithstanding
the foregoing, any such information supplied to a Participant, Sub-Participant,
prospective Sub-Participant or prospective assignee under this Participation
Agreement shall cease to be Confidential Information if it is or becomes known
to such Person by other than unauthorized disclosure, or if it becomes a matter
of public knowledge.
SECTION 15.14. WAIVER OF JURY TRIAL. EACH OF THE LESSEE, THE AGENT, THE
LESSOR, AND EACH PARTICIPANT HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE
OPERATIVE DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 15.15. Usury Savings Clause. Nothing contained in this
Participation Agreement or the other Operative Documents shall be deemed to
require the payment of interest or other charges by the Lessee or any other
Person in excess of the amount which may be may lawfully be charged under any
applicable usury laws. In the event that the Lessor or any other Person shall
collect moneys under the Participation Agreement or any other Operative Document
which are deemed to constitute interest (including, without limitation, the
Basic Rent or Supplemental Rent) which would increase the effect interest rate
to a rate in excess of that permitted to be charged by applicable law, all such
sums deemed to constitute interest in excess of the legal rate shall, upon such
determination, at the option of the Person to whom such payment was made, be
returned to the Person making such payment or credited against other amounts
owed by the person making such payment.
[signature pages follow]
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IN WITNESS WHEREOF, the parties hereto have caused this
Participation Agreement to be duly executed by their respective officers
thereunto duly authorized as of the day and year first above written.
QUANTUM CORPORATION, as Lessee
By: /s/ G. E. McClammy
-------------------------------------
Name: G. E. McClammy
Title: V.P. Finance & Treasurer
LEASE PLAN NORTH AMERICA, INC., as Lessor
By: /s/ David M. Shipley
-------------------------------------
Name: David M. Shipley
Title: Vice President
ABN AMRO BANK N.V., SAN FRANCISCO
INTERNATIONAL BRANCH, as Agent
By: /s/ Robin S. Yim
-------------------------------------
Name: Robin S. Yim
Title: Group Vice President
By: /s/ Robert N. Hartinger
-------------------------------------
Name: Robert N. Hartinger
Title: Senior Vice President
ABN AMRO BANK N.V., SAN FRANCISCO
INTERNATIONAL BRANCH, as a Participant
By: /s/ Robin S. Yim
-------------------------------------
Name: Robin S. Yim
Title: Group Vice President
By: /s/ Robert N. Hartinger
-------------------------------------
Name: Robert N. Hartinger
Title: Senior Vice President
LEASE PLAN NORTH AMERICA, INC., as a
Participant
By: /s/ David M. Shipley
-------------------------------------
Name: David M. Shipley
Title: Vice President
SCHEDULE I
Commitment
Participant Commitments Percentage
- ----------- ----------- ----------
364 Day Commitment
------------------
ABN AMRO BANK N.V., Tranche A
SAN FRANCISCO Participation
INTERNATIONAL BRANCH Interest: $42,500,000 85.00%
Tranche B
Participation
Interest: $5,750,000 11.50%
LEASE PLAN NORTH
AMERICA, INC. Tranche C
Participation
Interest: $1,750,000 3.50%
Total 364 Day Commitment: $50,000,000 100.00%
Two Year Commitment
-------------------
ABN AMRO BANK N.V., Tranche A
SAN FRANCISCO Participation
INTERNATIONAL BRANCH Interest: $13,600,000 85.00%
Tranche B
Participation
Interest: $1,840,000 11.50%
LEASE PLAN NORTH
AMERICA, INC. Tranche C
Participation
Interest: $560,000 3.50%
Total Two Year Commitment: $16,000,000 100.00%
TOTAL COMMITMENT: $66,000,000
===========
SCHEDULE II
PRICING GRID
LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 4 LEVEL 5
PERIOD PERIOD PERIOD PERIOD PERIOD
APPLICABLE MARGINS .40% .55% 0.70% 0.90% 1.10%
(other than a Tranche C
Participation Interest):
APPLICABLE MARGINS 2.00% 2.00% 2.00% 2.00% 2.00%
FOR TRANCHE C
PARTICIPATION
INTERESTS:
COMMITMENT FEE
RATE APPLICABLE TO .150% .200% .250% .300% .375%
TWO YEAR
COMMITMENT:
EXPLANATION
1. The Applicable Margin for each Eurodollar Rate Advance and the
Commitment Fee Rate will be set for each Pricing Period and will vary
depending upon whether such period is a Level 1 Period, a Level 2
Period, a Level 3 Period, a Level 4 Period or a Level 5 Period.
2. The first Pricing Period, which commences on the date of this Agreement
and ends on September 30, 1997, will be a Level 3 Period.
3. The Second Pricing Period, which commences on October 1, 1997 and ends
on November 30, 1997, will be a Level 1 Period, a Level 2 Period, a
Level 3 Period, a Level 4 Period or a Level 5 Period depending upon
Lessee's Total Funded Debt Ratio (and, with respect to determining
pricing at Level 1 Pricing only, EBITDA) for the consecutive
four-fiscal quarter period ending on June 30, 1997 as follows:
(a) If, during the Second Pricing Period (i) Lessee's Total Funded
Debt Ratio is 1.00 or less and (ii) Lessee's EBITDA for the
previous four quarters is $400,000,000 or more, Lessee's
pricing will be a Level 1 Period.
(b) If, during the Second Pricing Period, (i) Lessee's Total
Funded Debt Ratio is more than 1.00 but less than or equal to
1.50, or (ii) Lessee's Total Funded Debt Ratio is less than or
equal to 1.00 but Lessee's EBITDA for the previous four
quarters is less than $400,000,000, Lessee's pricing will be a
Level 2 Period.
(c) If, during the Second Pricing Period, Lessee's Total Funded
Debt Ratio is more than 1.50 but less than or equal to 2.00,
Lessee's pricing will be a Level 3 Period.
(d) If, during the Second Pricing Period, Lessee's Total Funded
Debt Ratio is more than 2.00 but less than or equal to 2.50,
Lessee's pricing will be Level 4 Period.
(e) If, during the Second Pricing Period, Lessee's Total Funded
Debt Ratio is more than 2.50, Lessee's pricing will be Level 5
Period.
4. Each Pricing Period thereafter will be a Level 1 Period, a Level 2
Period, a Level 3 Period, a Level 4 Period or a Level 5 Period
depending upon Lessee's Total Funded Debt Ratio (and, with respect to
determining pricing at Level 1 Pricing only, EBITDA) for the most
recent consecutive four-fiscal quarter period ending prior to the first
day of such Pricing Period as follows:
(a) If, during any Pricing Period (i) Lessee's Total Funded Debt
Ratio is 1.00 or less and (ii) Lessee's EBITDA for the
previous four quarters is $400,000,000 or more, Lessee's
pricing will be a Level 1 Period.
(b) If, during any Pricing Period, (i) Lessee's Total Funded Debt
Ratio is more than 1.00 but less than or equal to 1.50, or
(ii) Lessee's Total Funded Debt Ratio is less than or equal to
1.00 but Lessee's EBITDA for the previous four quarters is
less than $400,000,000, Lessee's pricing will be a Level 2
Period.
(c) If, during any Pricing Period, Lessee's Total Funded Debt
Ratio is more than 1.50 but less than or equal to 2.00,
Lessee's pricing will be a Level 3 Period.
(d) If, during any Pricing Period, Lessee's Total Funded Debt
Ratio is more than 2.00 but less than or equal to 2.50,
Lessee's pricing will be Level 4 Period.
(e) If, during any Pricing Period, Lessee's Total Funded Debt
Ratio is more than 2.50, Lessee's pricing will be Level 5
Period.
5. Level 1 Period will also apply during any Pricing Period (other than
the first Pricing Period) in which Lessee's senior long term debt
rating from S&P or Moody's is equal to or better than either BBB- or
Baa3 or Lessee's subordinated debt rating from S&P or Moody's is equal
to or better than BB+ or Bal.
SCHEDULE III
Notice Information and Funding Offices
Lessee: QUANTUM CORPORATION
500 McCarthy Boulevard
Milpitas, California 95035
Attention: Ed McClammy
Telephone: (408) 894-5996
Facsimile: (408) 894-4562
Lessor: LEASE PLAN NORTH AMERICA, INC.
135 S. LaSalle Street, Suite 711
Chicago, Illinois 60603
Attention: David M. Shipley
Telephone: (312) 904-2183
Facsimile: (312) 904-6217
Agent: ABN AMRO BANK N.V., SAN FRANCISCO
INTERNATIONAL BRANCH
101 California Street, Suite 4500
San Francisco, CA 94111
Attention: Robin S. Yim
Telephone: (415) 984-3712
Facsimile: (415) 362-3524
Operations Contact:
ABN AMRO BANK N.V., SAN FRANCISCO
INTERNATIONAL BRANCH
101 California Street, Suite 4500
San Francisco, CA 94111
Attention: Gloria Chang Lee
Telephone: (415) 983-2904
Facsimile: (415) 362-3524
Participant: ABN AMRO BANK N.V., SAN FRANCISCO
INTERNATIONAL BRANCH
101 California Street, Suite 4500
San Francisco, CA 94111
Attention: Robin S. Yim
Telephone: (415) 984-3712
Facsimile: (415) 362-3524
Payment
Instructions: Bank: Federal Reserve Bank of New York
Acct: ABN AMRO New York
ABA#: 026009580
Further
Credit to: ABN AMRO San Francisco
Acct#: 6510010545-1
Re: Quantum Corporation
LEASE PLAN NORTH AMERICA, INC.
135 S. LaSalle Street, Suite 711
Chicago, Illinois 60603
Attention: David M. Shipley
Telephone: (312) 904-2183
Facsimile: (312) 904-6217
SCHEDULE IV
Environmental Matters
[TO BE COMPLETED BY QUANTUM]
SCHEDULE V
External LC Agreement Covenants
See Disclosure Letter