EXECUTION COPY
Proprietary & Confidential
================================================================================
PARTICIPATION AGREEMENT
dated as of June 27, 2001
among
RITE AID REALTY CORP.,
as Company and Lessee,
RITE AID CORPORATION,
as Guarantor,
XXXXX FARGO BANK NORTHWEST, NATIONAL ASSOCIATION not in its
individual capacity, except as expressly set forth herein,
but solely as Trustee of RAC Distribution Statutory Trust,
as Trustee and Lessor,
THE PERSONS NAMED HEREIN,
as Note Holders and Certificate Holders,
and
CITICORP USA, INC.,
as Agent,
================================================================================
XXXXXXX XXXXX BARNEY INC.,
as Sole Arranger
THE CHASE MANHATTAN BANK,
CREDIT SUISSE FIRST BOSTON,
FLEET RETAIL FINANCE INC.,
as Syndication Agents
Participation Agreement
Proprietary & Confidential
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I FINANCING.........................................................2
SECTION 1.01. Note Advance Commitments....................................2
SECTION 1.02. Certificate Equity Investment Commitments ..................2
SECTION 1.03. Procedures for Advances and Equity Investments..............2
SECTION 1.04. Use of Proceeds.............................................3
SECTION 1.05. Payments by Company.........................................3
SECTION 1.06. Purchase Rights.............................................4
SECTION 1.07. Note and Certificate Allocation.............................4
ARTICLE II CONDITIONS PRECEDENT..............................................4
SECTION 2.01. Conditions Precedent to the Funding.........................4
ARTICLE III REPRESENTATIONS AND WARRANTIES ...................................8
SECTION 3.01. Representations and Warranties of the Company...............8
SECTION 3.02. Representations and Warranties of the Guarantor ...........11
SECTION 3.03. WFBN Representations and Warranties .......................11
SECTION 3.04. Representations and Warranties of Trustee .................13
SECTION 3.05. Representations and Warranties of the Holders..............14
ARTICLE IV COVENANTS........................................................14
SECTION 4.01. Covenants of the Company...................................14
SECTION 4.02. Covenants of the Guarantor.................................15
SECTION 4.03. Covenants of WFBN, the Trustee and the Holders ............16
ARTICLE V THE NOTES AND THE EQUITY INVESTMENT..............................19
SECTION 5.01. Interest and Yield.........................................19
SECTION 5.02. Changes in Circumstances...................................20
SECTION 5.03. Assignments and Participations.............................22
SECTION 5.04. Taxes......................................................25
SECTION 5.05. Tax Treatment..............................................30
SECTION 5.06. Compensation...............................................31
SECTION 5.07. Change of Applicable Lending Office........................31
SECTION 5.08. Sharing of Payments, Etc...................................31
SECTION 5.09. Maturity Date Extension....................................32
ARTICLE VI EVENTS OF DEFAULT; REMEDIES; NON-PERFORMANCE
EVENTS...........................................................33
SECTION 6.01. Events of Default..........................................33
SECTION 6.02. Remedies upon an Event of Default..........................36
SECTION 6.03. Non-Performance Events; Procedures.........................37
SECTION 6.04. Power of Sale..............................................38
i
Participation Agreement
Proprietary & Confidential
SECTION 6.05. Procedure for Sale of Collateral...........................40
SECTION 6.06. Application of Proceeds....................................41
ARTICLE VII APPLICATION OF FUNDS PRIOR TO DEFAULT; PREPAYMENT
OF INSTRUMENTS...................................................43
SECTION 7.01. Application of Funds Prior to Default......................43
SECTION 7.02. Awards, Compensation or Other Payments on Account of
Casualty or Condemnation ..................................45
SECTION 7.03. Prepayment of Notes and Cancellation of Certificates.......45
ARTICLE VIII THE AGENT........................................................46
SECTION 8.01. Authorization and Action...................................46
SECTION 8.02. Agent's Reliance, Etc......................................47
SECTION 8.03. CUSA and Affiliates........................................48
SECTION 8.04. Note Holder and Certificate Holder Credit Decision ........48
SECTION 8.05. Indemnification............................................48
SECTION 8.06. Successor Agent............................................49
SECTION 8.07. Certain Duties and Obligations Regarding Collateral .......49
ARTICLE IX MISCELLANEOUS....................................................50
SECTION 9.01. Survival...................................................50
SECTION 9.02. Notices....................................................51
SECTION 9.03. Severability...............................................51
SECTION 9.04. Amendments, Etc............................................51
SECTION 9.05. Headings...................................................52
SECTION 9.06. Compliance Responsibility..................................52
SECTION 9.07. Definitions................................................52
SECTION 9.08. Benefit....................................................52
SECTION 9.09. Place of Payment...........................................52
SECTION 9.10. Counterparts; Effectiveness................................53
SECTION 9.11. Governing Law and Jurisdiction.............................53
SECTION 9.12. Time; Business Day.........................................53
SECTION 9.13. Transaction Costs; Fees....................................54
SECTION 9.14. Indemnification............................................55
SECTION 9.15. Operative Documents; Further Assurances ...................58
SECTION 9.16. Confidentiality............................................58
SECTION 9.17. Interest Laws..............................................58
SECTION 9.18. Financial Advisor..........................................59
SECTION 9.19. Securities Representation..................................59
SECTION 9.20. Agreements with Respect to the Properties; Collateral......59
SECTION 9.21. Waiver of Trial by Jury....................................60
SECTION 9.22. Other Matters..............................................60
SECTION 9.23. Protective Expenditures; Payment for Services..............60
SECTION 9.24. Exculpation of Trustee.....................................60
SECTION 9.25. Certificate Holder.........................................61
ii
Participation Agreement
Proprietary & Confidential
SECTION 9.26. SPC Advances...............................................61
Schedule I - Manner of Payment and Communications to the Parties
Schedule II - Fees
Schedule III Note and Certificate Allocation
Exhibit A - Form of Requisition
Appendix A - Definitions.
iii
Participation Agreement
Proprietary & Confidential
PARTICIPATION AGREEMENT (this "Agreement") dated as of June 27, 2001
among Rite Aid Realty Corp., a Delaware corporation (the "Company"); Rite Aid
Corporation, a Delaware corporation (the "Guarantor"); Xxxxx Fargo Bank
Northwest, National Association ("WFBN"), not in its individual capacity except
as expressly set forth herein but solely as Trustee of the RAC Distribution
Statutory Trust (the "Trustee" and in its capacity as lessor under the Lease,
the "Lessor"); the Persons named from time to time on Schedule I hereto as note
holders and their permitted successors and assigns (collectively, the "Note
Holders"); the Persons named from time to time on Schedule I hereto as
certificate holders and their permitted successors and assigns (collectively,
the "Certificate Holders"); and Citicorp USA, Inc., in its capacity as
administrative agent for the Note Holders and the Certificate Holders hereunder
(the "Agent"). Capitalized terms used but not otherwise defined in this
Agreement have the meanings set forth in Appendix A hereto.
PRELIMINARY STATEMENT
In accordance with the terms of the Operative Documents:
A. The Trustee has agreed to acquire the Original Maryland Lessor's
interest in the Maryland Property and the Original California Lessor's interest
in the California Property, and thereupon lease to the Company the Properties
pursuant to the terms of the Lease and the Lease Supplements.
B. The Certificate Holders are willing to provide a portion of the
funding of the Acquisition Costs of the Properties by making Equity Investments
in the Trust.
C. The Trustee wishes to obtain, and the Note Holders are willing to
provide, limited recourse financing for the remaining portion of the Acquisition
Costs of the Properties by making Advances to the Trustee.
D. Concurrently with the execution and delivery of this Agreement,
the Trustee is entering into the Loan Agreement, pursuant to which, among other
things, provision is made for the issuance of Notes to the Note Holders as
evidence of the participation of each Note Holder in the Advances.
E. Concurrently with the execution and delivery of this Agreement,
the Lessor is entering into (i) the Maryland Mortgage, pursuant to which the
Lessor grants a mortgage on the Maryland Property, and (ii) the California
Mortgage, pursuant to which the Lessor grants a leasehold mortgage on the
California Land and a mortgage on the California Improvements, in each case for
the benefit of the Note Holders and the Certificate Holders.
F. Concurrently with the execution and delivery of this Agreement,
the Company is entering into the Security Agreement pursuant to which the
Company grants a security interest in the Equipment Collateral for the benefit
of the Lessor.
Participation Agreement
Proprietary & Confidential
In consideration of the agreements herein and in the other Operative
Documents and in reliance upon the representations and warranties set forth
herein and therein, the parties agree as follows:
ARTICLE I
FINANCING
SECTION 1.01. Note Advance Commitments. Subject to the terms and
conditions contained in this Agreement, each Note Holder hereby agrees,
severally and not jointly and severally, to make an advance (each, an "Advance")
to the Trustee pursuant to the Loan Agreement on the Funding Date in an amount
equal to its Percentage of Acquisition Costs specified in the Requisition. No
Note Holder shall have any obligation to make any Advance for any amount in
excess of its aggregate Note Commitment. Advances under the A-Notes shall be
limited to 80.0% of Acquisition Costs. Advances under the B-Notes shall be
limited to 17.0% of Acquisition Costs. After making its Advance on the Funding
Date, each Note Holder's Note Commitment shall automatically and permanently
expire.
SECTION 1.02. Certificate Equity Investment Commitments. Subject to
the terms and conditions contained in this Agreement, each Certificate Holder
hereby agrees, severally and not jointly and severally, to make an investment in
the Trust (each, an "Equity Investment") on the Funding Date in an amount equal
to its Percentage of Acquisition Costs specified in the Requisition. No
Certificate Holder shall have any obligation to make any Equity Investment for
any amount in excess of its aggregate Certificate Commitment. Equity Investments
shall in all events be in amounts not less than 3% of Acquisition Costs. After
making its Equity Investment on the Funding Date, each Certificate Holder's
Certificate Commitment shall automatically and permanently expire.
SECTION 1.03. Procedures for Advances and Equity Investments.
(a) Requisitions. (i) On or prior to the Funding Date, the Company
must submit to the Agent an irrevocable requisition for Acquisition Costs (the
"Requisition") substantially in the form attached as Exhibit A hereto, and on
such day the Agent will give notice of such Requisition to the Note Holders and
the Certificate Holders. Such notice by the Agent shall specify the amount of
the Advances to be made by each Note Holder and the amount of the Equity
Investments to be made by each Certificate Holder.
(ii) The Requisition (A) shall be irrevocable and executed by an
authorized Officer of the Company, and (B) shall request that the Note Holders
make Advances and that the Certificate Holders make Equity Investments for
Acquisition Costs.
(iii) No more than one (1) Requisition may be submitted.
(b) Funding Advances and Equity Investments. On the Funding Date,
each Note Holder and Certificate Holder, before 1:00 P.M. (New York City time)
shall make available
2
Participation Agreement
Proprietary & Confidential
to the Agent, on behalf of the Trustee, an amount equal to the Advance or the
Equity Investment, as the case may be, to be made by it, at the Agent's address
referred to in Schedule I hereto, in immediately available funds.
(c) Non-Funding Note Holder or Certificate Holder. Unless the Agent
shall have received notice from a Note Holder or Certificate Holder prior to the
Funding Date that such Note Holder or Certificate Holder will not make available
to the Agent an Advance or Equity Investment, as applicable, the Agent may
assume that such Note Holder or Certificate Holder has made its funds available
to the Agent in accordance with Section 1.03(b) and the Agent may (but shall not
be required to), in reliance upon such assumption, make available on the Funding
Date a corresponding amount. If and to the extent that such Note Holder or
Certificate Holder shall not have so made such Advance or Equity Investment
available to the Agent on the Funding Date, such Note Holder or Certificate
Holder agrees to repay the Agent on demand by the Agent such corresponding
amount, together with interest thereon, for each day from the date such amount
is made available by the Agent, until the date such amount is repaid to the
Agent, at the Federal Funds Rate. If such Note Holder or Certificate Holder
shall repay to the Agent such corresponding amount, such amount so repaid
(excluding any amounts for interest paid to the Agent) shall constitute such
Note Holder's funding of its Advance or such Certificate Holder's Equity
Investment, as applicable, for purposes of this Agreement. The failure of any
Note Holder or Certificate Holder to make an Advance or Equity Investment, as
applicable, shall not relieve any other Note Holder or Certificate Holder of its
obligations, if any, hereunder, but no Note Holder or Certificate Holder shall
be responsible for the failure of any other Note Holder or Certificate Holder to
make an Advance or Equity Investment.
SECTION 1.04. Use of Proceeds. Upon the Agent's receipt of funds
from the Note Holders and the Certificate Holders for the Funding and/or upon
the Agent's making corresponding funds available pursuant to Section 1.03(c),
and upon fulfillment of the applicable conditions set forth in Article II, the
Agent will apply the funds to the payment in respect of the termination of the
Original Leases in accordance with the Requisition.
SECTION 1.05. Payments by Company. (a) The parties hereto agree that
notwithstanding the terms of the Operative Documents, any payment required to be
made pursuant to any Operative Document by the Company to the Lessor or any Note
Holder or Certificate Holder, or by the Trustee to any Note Holder or
Certificate Holder out of amounts paid by the Company, shall be made directly to
the Agent, or at the direction of the Agent (which direction may change from
time to time), for application in accordance with the terms of the Operative
Documents on behalf of the applicable payee(s).
(b) All payments made by the Company to the Agent in accordance with
this Section 1.05 shall be deemed to have been applied by the Agent to the
purposes for which such payments were made in accordance with the terms of the
Operative Documents. Upon delivery of good funds to the Agent in any such case,
the Company's payment obligations in the particular instance shall be deemed
satisfied to the extent of the funds so furnished. All amounts payable to the
Agent hereunder shall be paid in Dollars and in immediately available funds by
12:00 Noon (New York City time) on the applicable Payment Date or on the date
when due, at the Agent's
3
Participation Agreement
Proprietary & Confidential
address as set forth in Schedule I hereto, or at such other address, to such
other Person or in such other manner as the Agent, from time to time may
designate to the Company by written instructions.
SECTION 1.06. Purchase Rights. Notwithstanding anything to the
contrary contained in the Operative Documents, in lieu of purchasing (or causing
a designee to purchase) all of the Properties then subject to the Lease the
Lessee may elect to purchase (or cause a designee to purchase) the beneficial
interest in the Trust by paying the Termination Value of the Properties
therefor, whereupon the Notes shall be paid in full and cancelled and the
Certificates shall be purchased by and assigned to the Lessee (or its designee).
SECTION 1.07. Note and Certificate Allocation. To the extent the
Operative Documents set forth that the principal amount of the Notes and/or the
Certificate Amount of the Certificates shall be allocable to any Property, such
allocation shall be based upon the amounts set forth in Schedule III hereto.
SECTION 1.08. Modifying Equipment Collateral. Modifying Equipment
Collateral. The parties hereto acknowledge and agree that the Lessee may, at
any time so long as no Default, Event of Default or Non-Performance Event has
occurred and is continuing and so long as the Lessee has not proceeded under
Section 3.03(a)(ii) of the Lease, give notice to the Lessor and the Agent
requesting that the Lessor release its security interest under the Security
Agreement in certain Equipment Collateral not required for the racking, storage,
handling or moving of inventory (the "Release Collateral"). Such notice shall
take the form of a schedule describing either the Release Collateral or the
assets in which the Lessor is entitled to retain a security interest. If the
nature and value of the assets comprising the Release Collateral are reasonably
satisfactory to the Agent and the Lessor, the Lessor shall, at the request of
the Lessee and notwithstanding the provisions of Section 9.04, (a) execute the
necessary documentation to release its security interest in the Release
Collateral and (b) file an amendment to the financing statement(s) filed against
the Lessee to reflect the release of the Lessor's security interest in the
Release Collateral. The costs and expenses in respect of the Lessor's actions
under (a) and (b) above shall be for the account of the Lessee.
ARTICLE II
CONDITIONS PRECEDENT
SECTION 2.01. Conditions Precedent to the Funding. The obligations
of each of the Note Holders to make an Advance and each of the Certificate
Holders to make an Equity Investment on the Funding Date shall be subject to the
fulfillment, on or before the Funding Date, of the following conditions
precedent:
(a) Due Authorization, Execution and Delivery. The Operative
Documents shall have been duly authorized, executed and delivered by all parties
thereto, and shall be in full force and effect, and no condition or event shall
exist or have occurred which would constitute a
4
Participation Agreement
Proprietary & Confidential
Default, an Event of Default or a Non-Performance Event under any of the
Operative Documents.
(b) Representations and Warranties. The representations and
warranties of each of the Company, the Guarantor, WFBN and the Trustee,
respectively, set forth in the Operative Documents shall be true and correct as
if made on and as of the Funding Date or, as applicable, on and as of the date
specified in such representation or warranty.
(c) Company Documents; Certificates and Opinions. The Agent shall
have received on or before the Funding Date the following, each dated as of the
Funding Date (unless otherwise specified) and in form and substance satisfactory
to the Agent:
(i) Secretary's Certificates. (A) A certificate of the Secretary or
an Assistant Secretary of the Company certifying as to (x) the articles of
incorporation and bylaws of the Company, (y) the resolutions of the board
of directors of the Company approving the execution, delivery and
performance of each Operative Document to which the Company is a party and
(z) the names and true signatures of the officers of the Company
authorized to sign each Operative Document to which the Company is a party
and the other documents or certificates to be delivered hereunder and
thereunder; and
(B) A certificate of the Secretary or an Assistant Secretary of the
Guarantor certifying as to (x) the articles of incorporation and bylaws of
the Guarantor, (y) the resolutions of the board of directors of the
Guarantor approving the execution, delivery and performance of each
Operative Document to which the Guarantor is a party and (z) the names and
true signatures of the officers of the Guarantor authorized to sign each
Operative Document to which the Guarantor is a party and the other
documents or certificates to be delivered hereunder and thereunder;
(ii) Officer's Certificates. A certificate signed by a Responsible
Officer of the Guarantor certifying that the conditions precedent set
forth in Section 2.01 have been met and complied with in all material
respects on and as of the Funding Date;
(iii) Good Standing Certificates. (A) With respect to the Company, a
good standing certificate from the Secretary of State of the State of
Delaware and a certificate of authority to transact business as a
corporation in each of the States of Maryland and California, each dated a
recent date prior to the Funding Date; and
(B) With respect to the Guarantor, a good standing certificate from
the Secretary of State of the State of Delaware dated a recent date prior
to the Funding Date; and
(iv) Legal Opinions. Favorable opinions of (A) Skadden, Arps, Slate,
Xxxxxxx & Xxxx (Illinois), counsel to the Company and the Guarantor, (B)
Piper, Marbury, Xxxxxxx & Xxxxx LLP, special Maryland counsel to the Agent
and the Holders, and (C) XxXxxxxxx, Will & Xxxxx, special California
counsel to the Agent and the
5
Participation Agreement
Proprietary & Confidential
Holders, in each case addressed to the Agent, the Trustee, each Note
Holder and each Certificate Holder.
(d) Trustee Documents. The Agent shall have received on or before
the Funding Date the following, each dated as of the Funding Date (unless
otherwise specified) and in form and substance satisfactory to the Agent:
(i) a certificate of the Secretary or an Assistant Secretary of WFBN
certifying as to (A) the organizational documents of WFBN, (B) the
appointment of WFBN as Trustee of the Trust, (C) the Certificate of Trust
of the Trust, and (D) the names and true signatures of the officers of
WFBN authorized to sign each Operative Document to which the Trust or the
Trustee is a party and the other documents or certificates to be delivered
hereunder and thereunder;
(ii) an Officer's Certificate of WFBN certifying as to the truth and
correctness of the representations and warranties made by each of WFBN and
the Trustee in each Operative Document to which it is a party;
(iii) a certificate of authority from the Comptroller of the
Currency with respect to WFBN dated a recent date prior to the Funding
Date; and
(iv) favorable opinions of Day, Xxxxx & Xxxxxx LLP and Ray, Xxxxxxx
& Xxxxxxx, special Connecticut and Utah counsel to the Trust, WFBN and the
Trustee.
(e) Certain Property Documents. The Agent shall have received and
have recorded or filed or caused to be recorded or filed, as the case may be, on
or before the Funding Date, or as otherwise specified herein, the following, in
form and substance satisfactory to the Agent:
(i) Insurance Certificates. Certificates of insurance or other
satisfactory assurances evidencing compliance with the Insurance
Requirements;
(ii) Recording and Filing Documents. The appropriate Operative
Documents (or memoranda thereof) and financing statements with respect to
the Properties and Equipment Collateral in proper form to be duly recorded
and filed, and all recording and filing fees and Taxes with respect to any
recording or filing to be made pursuant to this Agreement shall have been
paid in full or arrangements, satisfactory to the Agent, for such payment
shall have been made;
(iii) Requisition. A duly executed Requisition in accordance with
Section 1.03(a);
(iv) Environmental Audit. An existing Phase I environmental audit or
assessment of each Property dated within the past five (5) years;
6
Participation Agreement
Proprietary & Confidential
(v) Title Commitment. A commitment for an ALTA form of extended
coverage policy or policies of owner's and lender's title insurance,
covering the Properties in such amounts and under such terms as are
acceptable to the Agent (collectively, the "Title Policies") issued by a
title insurance company acceptable to the Agent (the "Title Company"). The
aforementioned title commitment shall be marked "premium paid", commit the
Title Company to issue the Title Policies subject only to Permitted
Encumbrances and contain such affirmative insurance and other
endorsements, including a comprehensive endorsement covering restrictions,
an endorsement providing mechanic's lien coverage, an endorsement
confirming legal access to a public road, a contiguity endorsement and a
zoning endorsement, as the Agent shall reasonably require;
(vi) Financing Statements. The Company shall have delivered to the
Trustee all UCC financing statements relating to the Properties and the
Equipment Collateral as the Trustee or the Agent may reasonably request;
(vii) Permits and Certain Property Matters. All Permits with respect
to the Properties that are or will become Applicable Permits shall have
been obtained, except Applicable Permits customarily obtained or which are
permitted by Law to be obtained after the Funding Date (in which case the
Company, having completed all appropriate diligence in connection
therewith, shall have no reason to believe that such Permits will not be
granted prior to the date that such Permits are required by Law). Each of
such obtained Permits shall be in proper form, shall be in full force and
effect and not subject to any appeal, consent or contest or to any
condition that, if unsatisfied, is likely to result, in the Agent's
reasonable judgment, in the forfeiture or revocation of such Permit; and
(viii) Other Documents. Such other approvals, certificates or
documents as the Agent may reasonably request to evidence satisfaction of
the conditions set forth in this Section 2.01(e).
(f) Proceedings Satisfactory and Other Evidence. All corporate and
other proceedings taken or to be taken in connection with the transactions
contemplated by the Operative Documents and all documents, papers and
authorizations relating thereto shall be satisfactory to the Agent, the Company,
the Guarantor and their respective counsel.
(g) Legality. The execution, delivery and issuance of the Notes and
Certificates by the Trustee and the purchase of the Notes and the funding of
Advances thereunder by the Note Holders and the purchase of the Certificates and
the funding and maintenance of Equity Investments thereunder by the Certificate
Holders shall not be subject to the registration requirements of the Act or any
state securities or blue sky Law, and shall not be prohibited by any applicable
Law (including Regulation T, Regulation U or Regulation X and any applicable
usury Laws) and shall not subject the Trustee, any Note Holder or any
Certificate Holder to any Tax (other than Excluded Charges), penalty, liability
or other onerous condition under or pursuant to any applicable Law.
7
Participation Agreement
Proprietary & Confidential
(h) Transaction Costs. All Transaction Costs required to be paid on
or before the Funding Date shall have been paid.
(i) Taxes. All Taxes (other than Excluded Charges), fees and other
charges which have become due and payable in connection with the execution,
delivery, recording, publishing, registering and filing of the Operative
Documents (or any memoranda thereof) and any financing statements shall have
been paid or provision for the payment thereof shall have been made satisfactory
to the Agent.
(j) Compliance with Law. The Properties shall be in compliance in
all material respects with all Laws, including all building, construction and
zoning Laws and Environmental Laws applicable thereto.
(k) Senior Credit Facility. The conditions set forth in Section 3.01
of the Senior Credit Facility shall have been satisfied or waived in accordance
with the terms of the Senior Credit Facility.
(l) Satisfaction with Contemplated Transactions. The Agent shall be
satisfied, in its discretion, with its review of the Properties and all material
matters in connection therewith, including the leasing thereof by the Lessor.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties of the Company. The
Company hereby represents and warrants to the Trustee, the Agent, the Note
Holders and the Certificate Holders that the following shall be true and correct
on and as of the Funding Date:
(a) Existence. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
(b) Corporate and Governmental Authorization; No Contravention. The
execution, delivery and performance by the Company of the Operative Documents to
which the Company is a party are within the Company's corporate powers, have
been duly authorized by all necessary corporate action, require no action by or
in respect of, or filing with, any governmental body, agency or official and do
not contravene, or constitute a default under, any provision of applicable law
or regulation or of the articles of incorporation or bylaws of the Company or of
any agreement, judgment, injunction, order, decree or other instrument binding
upon the Company or result in the creation or imposition of any Lien on any
asset of the Company.
(c) Binding Effect. The Operative Documents to which the Company is
a party constitute valid and binding agreements of the Company, enforceable in
accordance with their terms, except as may be limited by bankruptcy, insolvency
or similar laws affecting creditors' rights generally and by general principles
of equity.
8
Participation Agreement
Proprietary & Confidential
(d) Compliance with Laws With Respect to the Properties. (i) The
Company is not in violation of any Law with respect to any Property or with
respect to the conduct of its business relating to any Property, (ii) the
Company has not received any notice of, or citation for, any violation of any
Law which has not been resolved, which notice or citation relates in any way to
any Property, (iii) the acquisition, ownership, leasing, subleasing or operation
of any Property or any part thereof by the Lessor, in accordance with the terms
of the Operative Documents, will not violate any Law and (iv) each Property is
in compliance with all applicable Laws, in each case, except where a violation
or noncompliance would not have a Material Adverse Effect.
(e) Rights to Properties, Etc. (i) The Lessor has good and
marketable title to the Maryland Land and all of the Improvements and a valid
leasehold interest in the California Land, in each case free and clear of all
Liens, except for Permitted Encumbrances and Lessor Liens.
(ii) None of the Permitted Encumbrances will materially interfere
with the use or possession of any Property or any part thereof or any other
asset used in connection therewith or the use of or the exercise by the Lessor
or the Agent of their rights either under any Operative Document or to any
Property or any part thereof.
(iii) There are no material agreements, consents, instruments,
easements, leases, rights-of-way, licenses or other rights necessary to acquire,
own, lease, install, construct, operate or use any Property which the Company
does not have.
(iv) All water, sewer, electric, gas, telephone and drainage
facilities and all other utilities, to the extent required to adequately
service the applicable Improvements for each Property's Intended Use have been
completed and are in operation.
(f) Environmental Compliance. (i) Each Property complies in all
material respects with all Environmental Laws; to the Company's knowledge no
Environmental Action is pending against any Property or any part thereof; and to
the Company's knowledge no circumstances exist that would be reasonably likely
to (A) form the basis of an Environmental Action against any Property or any
part thereof or (B) cause any Property or any part thereof to be subject to any
material restrictions on ownership, occupancy, use or transferability under any
Environmental Law.
(ii) No portion of any Property is listed or, to the Company's
knowledge, proposed for listing on the NPL or on CERCLIS or any analogous state
list of sites requiring investigation or cleanup.
(iii) To the Company's knowledge, prior to the Funding Date, all
Hazardous Materials generated, used, treated, handled or stored at or
transported to or from any Property have been disposed of in compliance in all
material respects with all Environmental Laws and Environmental Permits.
9
Participation Agreement
Proprietary & Confidential
(g) No Condemnation, Casualty or Force Majeure. No portion of any
Property has suffered a Condemnation nor has any Property or any portion thereof
suffered a Casualty or any other damage or destruction which renders such
Property unusable in whole or in material part, and, under applicable Law, each
Property may be used for its Intended Use. The Company has not received any
notice of a proposed Condemnation. No event of Force Majeure has occurred and is
continuing which would adversely affect the operation of any Property.
(h) Permits. All Permits (including Environmental Permits) that are
or will become Applicable Permits have been obtained, except Applicable Permits
customarily obtained or which are permitted by Law to be obtained after the
Funding Date (in which case the Company having completed all appropriate
diligence in connection therewith, has no reason to believe that such Permits
will not be granted in the usual course of business prior to the date that such
Permits are required by Law). All such obtained Permits are in proper form, in
full force and effect and not subject to any further appeal or further contest
or to any unsatisfied condition that may allow modification or revocation except
such as are customary in the usual course of business.
(i) Recording and Filing. The appropriate Operative Documents (or
memoranda thereof) mortgages, deeds of trust and all financing statements under
the UCC recorded or filed, or to be recorded or filed hereunder, when recorded
or filed, create, perfect and publish notice of a valid and effective first
priority security interest and Lien on each Property and the Equipment
Collateral in favor of the Lessor and/or the Agent, subject to no other Liens
except in each case for Permitted Encumbrances and Lessor Liens.
(j) Intellectual Property. (i) The ownership and leasing of each
Property by the Lessor and the leasing of each Property by the Company do not
and will not conflict with, infringe on, or otherwise violate any copyright,
trademark, trade name, trade secret or patent rights of any other Person.
(ii) The Company has all rights to all patents, patent applications,
trademarks (whether registered or not), trademark applications, trade names,
proprietary computer software, "know-how", copyrights technology and processes
used or to be used in the ordinary course of the operation of each Property for
its Intended Use (the "Intellectual Property Rights") that are necessary for the
operation thereof. There is no judicial proceeding pending or, to the knowledge
of the Company, threatened, involving any claim of any infringement, misuse or
misappropriation by the Company or any Affiliate thereof of any patent,
trademark, trade name, copyright, license or similar intellectual property right
owned by any third party related to the Intellectual Property Rights.
(k) Insurance. The Company is in compliance in all material respects
with all Insurance Requirements, and all insurance policies required by the
Lease are in full force and effect.
10
Participation Agreement
Proprietary & Confidential
SECTION 3.02. Representations and Warranties of the Guarantor. The
Guarantor represents and warrants to the Trustee, the Agent, the Note Holders
and the Certificate Holders that the following shall be true and correct on and
as of the Funding Date:
(a) Corporate Existence and Power. The Guarantor is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted.
(b) Corporate and Governmental Authorization; No Contravention. The
execution, delivery and performance by the Guarantor of each Operative Document
to which it is a party are within the Guarantor's corporate powers, have been
duly authorized by all necessary corporate action, require no action by or in
respect of, or filing with, any governmental body, agency or official and do not
contravene, or constitute a default under, any provision of applicable law or
regulation or of the certificate of incorporation or bylaws of the Guarantor or
of any agreement or instrument evidencing or governing Debt of the Guarantor or
any Subsidiary or any other material agreement, instrument, judgment,
injunction, order or decree binding upon the Guarantor or any Subsidiary or
result in the creation or imposition of any Lien on any asset of the Guarantor
or any Subsidiary pursuant to any such agreement, instrument, judgment,
injunction, order or decree (other than the Liens created by the Operative
Documents).
(c) Binding Effect. Each Operative Document to which the Guarantor
is a party constitutes a valid and binding agreement of the Guarantor
enforceable in accordance with its terms.
(d) Accuracy of Information. All information (other than financial
projections) that has been or will hereafter be made available to the Agent or
any Note Holder or Certificate Holder by or on behalf of the Guarantor or any of
its representatives in connection with the transactions contemplated by the
Operative Documents is and will be complete and correct in all material respects
and does not and will not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
contained therein not misleading in light of the circumstances under which such
statements were or are made.
(e) Senior Credit Facility Representations and Warranties. The
representations and warranties of the Guarantor, as borrower under the Senior
Credit Facility, contained in the Senior Credit Facility are true and correct.
SECTION 3.03. WFBN Representations and Warranties. WFBN, in its
individual capacity and not as Trustee (with the exception of the first sentence
of Section 3.03(f), which representation and warranty is made by WFBN solely in
its trustee capacity) represents and warrants to the Company, the Guarantor, the
Note Holders, the Certificate Holders, and the Agent that the following
statements are and shall be true and correct on and as of the Funding Date:
11
Participation Agreement
Proprietary & Confidential
(a) Organization and Authority. (i) WFBN is a national banking
association duly organized, validly existing and in good standing under the laws
of the United States of America.
(ii) WFBN has all requisite corporate power and authority to execute
and deliver each Operative Document to which it is a party and to comply with
the terms thereof and perform its obligations thereunder.
(b) Pending Litigation. There is no pending or, to WFBN's knowledge,
threatened, action, suit, investigation, litigation or proceeding, including,
without limitation, any Environmental Action, affecting WFBN before any court,
governmental agency or arbitrator that (i) could be reasonably likely to have a
material adverse effect on WFBN or (ii) purports to affect the legality,
validity or enforceability of this Agreement or any of the other Operative
Documents or the consummation of the transactions contemplated hereby or
thereby.
(c) Authorization; No Conflict. The execution and delivery by WFBN
of, and compliance by WFBN with all of the provisions of, each Operative
Document to which it is a party and any other agreement entered into by WFBN in
connection with any transaction contemplated by the Operative Documents are
within the powers of WFBN and are authorized by all proper and necessary
corporate action and will not conflict with, result in any breach of any of the
provisions of, or constitute a default under, any organization document of WFBN
or any judgment, injunction, order or decree to which WFBN may be bound or which
is applicable to any of WFBN's property or result in a violation of any
applicable Connecticut, Utah or federal Law governing the banking or trust
powers of WFBN or in the creation of any Lien on any asset of WFBN (except as
contemplated by the Operative Documents).
(d) Enforceability. Each Operative Document to which WFBN is a party
and any other agreement entered into by WFBN in connection with any transaction
contemplated by the Operative Documents is the legal, valid and binding
obligation of WFBN enforceable against WFBN in accordance with its terms, except
as enforceability thereof may be limited by the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting
creditors' rights generally and by general principles of equity.
(e) Consents. The nature of WFBN, its execution, delivery and
performance of each Operative Document to which it is a party, its consummation
of the transactions contemplated thereby, its compliance with the terms thereof
or any circumstance in connection with the transactions contemplated thereby
does not require the consent of any Person or the approval or authorization of,
or filing, registration or qualification with, any Federal, Connecticut or Utah
state governmental authority governing the banking or trust powers of WFBN
(other than such as have been obtained) as a condition to such execution,
delivery, performance and compliance.
(f) No Default. No event has occurred and no condition exists which,
upon consummation of the transactions contemplated by any Operative Document,
would constitute a default by the Trustee. WFBN is not in violation in any
respect of any agreement or any other
12
Participation Agreement
Proprietary & Confidential
instrument, nor is WFBN in violation of its articles of association or any other
instrument to which it is a party or by which it or any of its property may be
bound or affected which would have a material adverse effect on either the
business, financial position or results of operations of WFBN or WFBN's ability
to perform its obligations as Trustee under the Operative Documents.
(g) Securities Representation. WFBN has not directly or indirectly
offered any Instrument, any interest in any Property or under any Operative
Document or in the Trust Estate or any similar security for sale to, or
solicited any offer to acquire the same from, anyone.
SECTION 3.04. Representations and Warranties of Trustee. The Trustee
hereby represents and warrants to the Company, the Guarantor, the Note Holders,
the Certificate Holder and the Agent that the following statements are and shall
be true and correct on and as of the Funding Date:
(a) Chief Executive Office. The Trustee's principal place of
business and the place where the documents, accounts and records relating to the
transactions contemplated hereby are kept is located at 000 Xxxxx Xxxxxx, Xxxxx
000, Xxxxxxxxxx, Xxxxxxxxxxx 00000, Attention: Corporate Trust Services.
(b) Due Organization, Etc. The Trust is a statutory trust duly
organized and validly existing in good standing under Connecticut law and the
Trustee has full trust power and authority to execute, deliver and perform its
obligations under each Operative Document to which it is or is to 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 is to be a party.
(c) Authorization; Enforceability, etc. Each Operative Document to
which the Trustee is or is to be a party have been or will be, duly authorized,
executed and delivered by or on behalf of the Trustee and are, or upon execution
and delivery will be, legal, valid and binding obligations of the Trustee,
enforceable against the Trustee in accordance with their respective terms,
except as enforceability thereof may be limited by the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium, or similar Laws affecting
creditors' rights generally and by general principles of equity.
(d) No Conflict. Neither the execution and delivery thereof, nor the
consummation of the transactions contemplated thereby, nor compliance by the
Trustee with any of the terms and provisions thereof (i) requires any approval
of its trustor or settler (other than as has been obtained) or approval or
consent of any trustee or holders of any of its indebtedness or obligations,
(ii) contravenes or will contravene any applicable Utah, Connecticut or federal
banking Laws currently in effect applicable to or binding on it (except no
representation or warranty is made as to any applicable Laws to which it or the
Properties, directly or indirectly, may be subject because of the lines of
business or other activities of the Company, the Guarantor or any of its
Affiliates) or (iii) results in any breach of or constitutes any default under,
any indenture, mortgage, chattel mortgage, deed of trust, lease, conditional
sales contract, loan or credit arrangement, other material agreement or
instrument, corporate charter, by-laws or other
13
Participation Agreement
Proprietary & Confidential
agreement or instrument to which it is a party or by which it or its properties
may be bound or affected.
(e) Lessor Liens. Each Property is free and clear of all Lessor
Liens attributable to the Trustee.
(f) Litigation. There is no action, proceeding or investigation
pending or, to the Trustee's knowledge, threatened affecting WFBN or the Trustee
which questions the validity of the Operative Documents to which the Trustee is
or is to be a party or any action taken or to be taken pursuant to the Operative
Documents to which the Trustee is or is to be a party, and there is no action,
proceeding or investigation pending or, to the Trustee's knowledge, threatened
which, if adversely determined, would have a material adverse effect on the
Trustee or on the Trustee's ability to enforce its rights under any of the
Operative Documents.
(g) Consents, etc. No authorization, consent, approval, license or
formal exemption from, nor any filing, declaration or registration with, any
Governmental Authority, is or will be required in connection with the execution
and delivery by the Trustee of the Operative Documents to which it is a party or
the performance by the Trustee of its obligations under the Operative Documents.
SECTION 3.05. Representations and Warranties of the Holders. Each
Holder represents and warrants, severally and only as to itself, to the other
Holders, the Trustee, the Agent, the Company and the Guarantor that the
following shall be true and correct on and as of the Funding Date:
(a) ERISA. Such Holder is not and will not be making its Advance or
Equity Investment 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).
(b) Investment. The Certificate or Note being acquired by such
Holder is being acquired by such Holder for investment and not with a view to
the resale or distribution of such interest or any part thereof, but without
prejudice, however, to the right of such Holder at all times to sell or
otherwise dispose of all or any part of such interest in accordance with Section
5.03, it being understood that the disposition by such Holder of the Certificate
or Note to be purchased by such Holder shall, at all times, remain entirely
within its control.
ARTICLE IV
COVENANTS
SECTION 4.01. Covenants of the Company. The Company agrees that, so
long as the principal of or interest on any Note or the Certificate Amount of or
any Distributions on any Certificate remains unpaid:
14
Participation Agreement
Proprietary & Confidential
(a) Use of Proceeds. None of the proceeds from any Advances or
Equity Investments will be used in violation of any applicable law or
regulation, including Regulation T, Regulation U and Regulation X of the Board
of Governors of the Federal Reserve System.
(b) Appraisal. Within sixty (60) days following the Funding Date,
the Company shall deliver or cause to be delivered an Appraisal of each Property
and the Equipment Collateral demonstrating that (i) as of the Funding Date the
fair market value of the Properties is at least equal to the Acquisition Costs
of the Properties and (ii) as of the Base Term Expiration Date, the fair market
value of the Properties shall be at least equal to the principal amount of the
B-Notes plus the Certificate Amount of the Certificates multiplied by a factor
of 2.5.
(c) Environmental Audit. Within sixty (60) days following the
Funding Date, the Company shall deliver or cause to be delivered a Phase I
environmental audit of each Property (an "Environmental Audit") conducted by the
Environmental Consultant, at the sole cost and expense of the Company, and based
thereon the Agent shall be satisfied that (A) no significant environmental
hazards or conditions exist on such Property or any portion thereof, (B) the
Company is employing reasonable and prudent environmental practices relative to
industry standards with respect to such Property and (C) based upon anticipated
and permitted practices and procedures there is not likely to exist on or in
respect of such Property any significant environmental hazards or conditions.
(d) As-Built Surveys. Within sixty (60) days following the Funding
Date, the Company shall deliver or cause to be delivered an ALTA/ASCM as-built
survey (or other form of survey acceptable to the Agent) of each Property
showing the location of all improvements (including the applicable
Improvements), easements, encroachments and other matters, together with an
ALTA/ASCM surveyor's certification in a form customarily provided. The survey
shall contain a statement that such land is not in a flood hazard zone (or, to
the extent any portion of such land may be in a flood zone, delineating the
portions thereof in such flood zone) and shall be dated as of a date acceptable
to the Title Company.
(e) Title Policy Endorsement. Within sixty (60) days following the
Funding Date, the Company shall cause the Title Company to deliver an
endorsement to the Title Policy deleting any customary survey exceptions.
(f) Delivery of Security Opinion. On or prior to July 2, 2001, the
Company shall deliver the opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx
(Illinois), special counsel to the Company and the Guarantor, which opinion
shall be dated July 2, 2001 and shall be substantially in the form of Exhibit Q
to the Senior Credit Facility, except addressed to the Agent, the Holders and
Trustee and except that such opinion shall relate to the Equipment Collateral
and the Security Agreement.
SECTION 4.02. Covenants of the Guarantor. The Guarantor agrees that,
so long as the principal of or interest on any Note or the Certificate Amount of
or any Distributions on any Certificate remains unpaid:
15
Participation Agreement
Proprietary & Confidential
(a) Information. The Guarantor will deliver to each of the Note
Holders and Certificate Holders:
(i) subject to Section 4.02(b), the same information (and at the
same times) required to be delivered pursuant to Section 5.01(a), (b),
(c), (d), (f), (h), (i) and (l) of the Senior Credit Facility; and
(ii) within five (5) days after any Officer of the Guarantor obtains
knowledge of any Default or Event of Default, if such Default or Event of
Default is then continuing, a certificate of a Responsible Officer of the
Guarantor setting forth information with respect thereto in reasonable
detail and the action which the Guarantor is taking or proposes to take
with respect thereto.
Information delivered hereunder which is required to be delivered
pursuant to Section 5.01(a), (b), (h) and (i) of the Senior Credit Facility
shall be deemed to have been delivered on the date on which the Guarantor
provides notice to the Holders that such information has been posted on the
Guarantor's website on the Internet at the website address listed on the
signature pages hereof, at xxx.xxx/xxxxx/xxxxxxxx.xxx or at another website
identified in such notice and accessible by the Holders without charge; provided
that (x) such notice may be included in a certificate delivered pursuant to
clause (iii), and (y) the Guarantor shall deliver paper copies of the
information referred to in Section 5.01(a), (b), (h) and (i) of the Senior
Credit Facility to any Holder which requests such delivery.
(b) Incorporation of Senior Credit Facility Covenants. Without
duplication of the covenants set forth in this Section 4.02, the covenants of
the Guarantor under Xxxxxxx 0 (xxx xxxxxxxxx Xxxxxxx 0.00(x), (x), (x), (x) and
(g) and Sections 5.08, 5.09, 5.10, 5.12, 5.13 and 5.24) the Senior Credit
Facility, as in effect on the date hereof, are hereby incorporated herein,
mutatis mutandis, by reference and shall constitute covenants of the Guarantor
hereunder. In the event any such covenant of the Guarantor set forth in the
Senior Credit Facility is amended or modified in any manner, such amendment
and/or modification shall not automatically cause this Section 4.02 to be
similarly amended or modified, and such amendment and/or modification under the
Senior Credit Facility shall only be effective as an amendment and/or
modification hereunder upon the written consent of the Majority Holders. In the
event the Senior Credit Facility is terminated prior to the Expiration Date, the
covenants of the Guarantor set forth in the above listed Sections of the Senior
Credit Facility as in effect on June 27, 2001 (together with amendments to such
covenants that became effective hereunder in accordance with the previous
sentence) shall constitute covenants of the Guarantor hereunder.
SECTION 4.03. Covenants of WFBN, the Trustee and the Holders. Each
of WFBN, the Trustee and the Holders, as applicable, hereby agrees with the
other parties hereto that so long as this Agreement shall remain in effect:
(a) Discharge of Liens. Each of WFBN, the Trustee and the
Certificate Holders, each agreeing severally and as to itself only, 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
16
Participation Agreement
Proprietary & Confidential
to discharge, or to cause to be discharged, all Lessor Liens on any Property
attributable to it; provided, however, that WFBN, the Trustee and the
Certificate Holders 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 Security Documents or of the sale,
forfeiture or loss of, and shall not interfere with the use or disposition of,
any Property or title thereto or any interest therein.
(b) Trust Agreement. Without prejudice to any right under the Trust
Agreement of the Trustee to resign, or the Certificate Holders' right under the
Trust Agreement to remove the institution acting as Trustee, each of WFBN, the
Trustee and the Certificate Holders hereby agrees with the Company, each Note
Holder and the Agent (i) not to terminate or revoke the Trust created by the
Trust Agreement except as permitted by the Trust Agreement, (ii) not to amend,
supplement, terminate or revoke or otherwise modify any provision of the Trust
Agreement in such a manner as to adversely affect the rights of any such party
without the prior written consent of such party and (iii) to comply with all of
the terms of the Trust Agreement, the nonperformance of which would adversely
affect any such party or any Property or title thereto or any interest therein
or the payment of Rent.
(c) Indebtedness; Other Business. The Trustee, in its capacity as
Trustee under the Trust Agreement, and not in its individual capacity, shall not
contract for, create, incur or assume any indebtedness, or enter into any
business or other activity, other than pursuant to or under the Operative
Documents.
(d) Change of Principal Place of Business. The Trustee shall give
prompt notice to the Company, the Certificate Holders and the Agent, if the
Trustee's principal place of business or chief executive office, or the office
where the records concerning the accounts or contract rights relating to the
Properties or the transactions contemplated by the Operative Documents are kept,
shall cease to be located at the address set forth in Section 3.04(a), or if it
shall change its name or identity.
(e) Transfer by Trustee. The Trustee shall not transfer its interest
in any Property or the Operative Documents (other than a transfer pursuant to
the provisions of the Operative Documents) without the consent of the Agent and
the Holders and, so long as no Event of Default shall have occurred and be
continuing, the Company, each such consent not to be unreasonably withheld or
delayed. The foregoing limitation shall not be applicable to the transfer of any
beneficial interests in the Trust (which shall be governed exclusively by
Section 5.03), nor of any assets of Trustee other than its rights in the
Properties and the Operative Documents.
(f) No Voluntary Bankruptcy. The Trustee shall not (i) commence any
case or proceeding under any existing or future Law of any jurisdiction
(domestic or foreign) relating to bankruptcy, insolvency, reorganization,
arrangement, winding up, liquidation, dissolution, composition or other relief
with respect to the Trust, Trustee or its debts, or (ii) seek appointment
17
Participation Agreement
Proprietary & Confidential
of a receiver, trustee, custodian or other similar official for the Trust or the
Trustee or for all or any substantial benefit of its creditors.
(g) Disposition of Assets. The Trustee shall not convey, sell,
lease, assign, transfer or otherwise dispose of any of its property, business or
assets, whether now owned or hereafter acquired, except to the extent expressly
authorized by the Operative Documents.
(h) Books and Records; Financial Statements; Bank Accounts. The
Trustee and each Certificate Holder each covenants and agrees to maintain
separate books and records. The Trustee and each Certificate Holder covenants to
maintain its own bank account in its own name. To the extent that financial
statements are prepared or issued by the Trustee and any Certificate Holder,
each of the Trustee and each such Certificate Holder covenants and agrees to
maintain separate financial statements from those financial statements which may
be prepared or issued by any of them.
(i) Separate Existence. Each Certificate Holder covenants and agrees
to maintain the separate existence and identity of such Certificate Holder and
the Trustee. The Trustee covenants and agrees not to merge or consolidate with,
or transfer any of its assets or properties to any Person. The Trustee covenants
and agrees not to commingle its assets and funds with those assets and funds of
the Certificate Holders. The Lessor and each Certificate Holder each covenant
and agree to correct any known misunderstanding regarding its separate identity.
Each of the Certificate Holders covenant and agree to conduct its own business
in such person's own name. Each of the Trustee and the Certificate Holders
covenant and agree to hold itself out, at all times, to the public as a legal
entity and distinct from each other.
(j) Certificate Amount. The aggregate of all Certificate Amounts
shall not at any time be less than 3% of Acquisition Costs.
(k) Right of Setoff. Each of the Holders, WFBN and the Agent, in its
individual capacity, covenants as to itself, and not jointly with any other
Person, that it shall not exercise, or attempt to exercise, any right of setoff,
banker's lien, or the like, against any deposit account or property of the
Guarantor, the Company or any of their Affiliates held or maintained by such
Person without the prior written consent of the Agent, which, in the case of the
Holders, WFBN or the Agent acting on behalf of the Holders, the Agent shall base
its decision to grant such consent solely upon a determination, upon the advise
of its counsel, that such exercise shall not adversely affect the right of any
Holder to resort to any other right or remedy as a result of the application of
state law.
(l) Insolvency Proceedings. Each of the Holders and the Agent, in
its individual capacity, covenants as to itself, that it will not (i) commence
any action, proceeding or other case with respect to the Trust under any
existing or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, arrangement, winding up, liquidation,
dissolution, composition or other relief with respect to indebtedness, (ii) seek
appointment of a receiver, trustee, custodian or other similar official with
respect to the Trust and for all or any substantial benefit of the creditors of
the Trust or the Trustee, or (iii) take any
18
Participation Agreement
Proprietary & Confidential
action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in this Section 4.03(l), except in
each case, as expressly permitted pursuant to the Operative Documents.
ARTICLE V
THE NOTES AND THE EQUITY INVESTMENT
SECTION 5.01. Interest and Yield.
(a) Applicable Rate. The outstanding principal amount of the Notes
shall bear interest and the Certificate Amount of the Certificates shall earn
current yield, in each case at a rate per annum equal to the Applicable Rate.
(b) Default Rate. If all or a portion of the principal amount of the
Notes, the Certificate Amount of the Certificates, any interest or Distributions
payable thereon, or any other amount payable hereunder or under the other
Operative Documents is not paid when due (whether at stated maturity, by
acceleration or otherwise), such overdue amount shall bear interest, to the
extent permitted by Law, at a rate per annum equal to the Default Rate.
(c) Determination of Rates. The Guarantor shall select whether the
Applicable Rate will be determined by reference to a LIBO Rate or the Base Rate
by giving notice of that determination to the Agent not later than (i) in the
case of the Base Rate, 10:30 a.m. (New York City time) on the first day of the
applicable Base Rate Period, and (ii) in the case of the LIBO Rate on the third
(3 rd ) LIBO Business Day before the first day of the applicable LIBO Rate
Period. If the Guarantor fails to timely give notice of such selection, the
Guarantor shall be deemed to have selected for the Applicable Rate to be
determined by reference to the LIBO Rate for a three (3) month Interest Period.
(d) Conversion of Applicable Rates. Subject to the notice
requirement set forth in Section 5.01(c) and to the payment of all Break Costs
required pursuant to Section 5.06, the Guarantor may elect to convert the
reference for the Applicable Rate from the LIBO Rate to the Base Rate on two (2)
Business Days prior notice to the Agent. Subject to the notice requirement set
forth in Section 5.01(c), the Guarantor may elect to convert the reference for
the Applicable Rate from the Base Rate to the LIBO Rate on any LIBO Business
Day.
(e) Number of Elections. All elections by the Guarantor hereunder
shall be subject to the limitations set forth in the definitions of Interest
Period, Interest Setting Date and Payment Date and the provisions of Section
5.02. Subject to the provisions of Section 5.02, any Applicable Rate and
Interest Period selected by the Guarantor shall apply to all outstanding Notes
and Certificates.
(f) Computations. Interest and yield hereunder and under any other
Operative Document based on clause (i) of the definition of the "Base Rate"
shall be computed on the basis of a year of 365 days (or 366 days in a leap
year) and for the actual number of days elapsed
19
Participation Agreement
Proprietary & Confidential
(including the first day but excluding the last day). All other computations of
interest, yield and of any fee payable hereunder and under any other Operative
Document (other than computations made for purposes of determining the Maximum
Rate) shall be computed on the basis of a year of 360 days for the actual number
of days elapsed (including the first day but excluding the last day).
(g) Rate Determination by Agent. The Agent shall determine each
interest rate applicable hereunder and under any other Operative Document. The
Agent shall give prompt notice to the Guarantor and the Holders of each rate of
interest so determined, and such determination thereof shall be conclusive in
the absence of manifest error.
(h) Interest Payment. Interest and Distributions accrued and unpaid
on the Notes and Certificates, respectively, shall be payable on each Payment
Date.
SECTION 5.02. Changes in Circumstances.
(a) LIBO Rate Unavailable. If on or prior to any Interest Setting
Date:
(i) the Agent determines that adequate and reasonable means do not
exist for ascertaining the LIBO Rate to be used in determining the
Applicable Rate for such LIBO Rate Period; or
(ii) the Agent is advised by the Majority Holders that the relevant
LIBO Rate will not adequately and fairly reflect the cost to such Holders
of making or maintaining their Advances or Equity Investments, as
applicable; or
(iii) any Holder shall notify the Agent that the introduction of or
any change in or in the interpretation of any law or regulation made after
the Funding Date makes it unlawful, or any central bank or other
governmental authority having jurisdiction over any Holder asserts after
the Funding Date that it is unlawful, for any Holder, or the office
through which such Holder makes Fundings at the LIBO Rate, or compliance
by any Holder (or its lending office) with any request or directive
(whether or not having the force of law) of any Governmental Authority
made after the Funding Date shall make it impossible, to perform its
obligations hereunder with respect to Applicable Rates determined by
reference to the LIBO Rate or to fund or maintain Advances or Equity
Investments to which an Applicable Rate determined by reference to the
LIBO Rate applies; or
(iv) an Event of Default or Non-Performance Event shall have
occurred and be continuing;
then, and in any such event, the Agent shall give notice thereof (by telephone,
promptly confirmed in writing) to the Company and the Trustee of such
determination. Thereafter the Lessor and each affected Holder shall convert the
Applicable Rate on the Notes and the Certificates to an Applicable Rate
determined by reference to the Base Rate as of the first day of the next
succeeding Interest Period or such earlier date as is required by Law and any
request for
20
Participation Agreement
Proprietary & Confidential
a conversion from an Applicable Rate determined by reference to the Base Rate to
an Applicable Rate determined by reference to the LIBO Rate pursuant to Section
5.01(d) shall in each case be ineffective; provided, however, if the
circumstances giving rise to the notice given by the Agent do not affect all the
Holders, then (i) the conversion to an Applicable Rate determined by reference
to the Base Rate shall only apply to the affected Holders and (ii) requests for
a conversion from an Applicable Rate determined by reference to the Base Rate to
an Applicable Rate determined by reference to the LIBO Rate shall be effective
for those Holders not affected by such notice.
(b) Increased Costs. If, due to either (i) the introduction of or
any change in or in the interpretation of any law or regulation, in each case,
after the Funding Date or (ii) the compliance with any guideline or request from
any central bank or other Governmental Authority having jurisdiction over any
Holder (whether or not having the force of Law) introduced or made after the
Funding Date, there shall be any change by way of imposition or increase of any
reserve requirement (including any such requirement imposed by the Federal
Reserve Board, but excluding any such requirement included in Statutory
Reserves) increase in the cost to any Holder of making or maintaining Advances
or Equity Investments at an Applicable Rate determined by reference to the LIBO
Rate or any reduction in the amount of any sum received or receivable by any
Holder hereunder or under any other Operative Document (whether of principal,
Certificate Amount, interest, Distributions or otherwise) (excluding for
purposes of this Section 5.02(b) any such increased costs resulting from Taxes
(as to which Section 5.04 shall govern)), then the Lessor shall pay to the Agent
for the account of such Holder additional amounts sufficient to compensate such
Holder for such increased cost or reduction suffered ("Increased Costs").
(c) Capital Adequacy. If any Holder shall determine that the
adoption of any applicable Law regarding capital adequacy, or any change
therein, or any change in the interpretation or administration thereof, in each
case, after the Funding Date, by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by any Holder (or its
lending office) with any request or directive made after the Funding Date
regarding capital adequacy (whether or not having the force of Law) of any such
Governmental Authority, has or would have the effect of reducing the rate of
return on capital of such Holder (or any Person controlling such Holder) as a
consequence of such Holder's obligations hereunder to a level below that which
such Holder (or such Person controlling such Holder) could have achieved but for
such adoption or change (taking into consideration such Holder's policies and
the policies of such Person controlling such Holder with respect to capital
adequacy), then from time to time the Lessor shall pay to the Agent for the
account of such Holder such additional amount or amounts as will compensate such
Holder (or such Person controlling such Holder) for such reduction suffered
("Capital Adequacy Costs").
(d) Base Rate Substituted for Affected LIBO Rate. If (x) the right
of the Guarantor to designate that the Applicable Rate with respect to any
Holder's Instruments be determined by reference to the LIBO Rate has been
suspended pursuant to Section 5.02(a) or (y) any Holder has demanded
compensation under Section 5.02(b) and the Guarantor shall, by at least five (5)
LIBO Business Days' prior notice to such Holder through the Agent, have elected
21
Participation Agreement
Proprietary & Confidential
that the provisions of this Section 5.02(d) shall apply to such Holder, then,
unless and until such Holder notifies the Company, the Guarantor and the Agent
that the circumstances giving rise to such suspension or demand for compensation
no longer apply:
(i) the Applicable Rate with respect to such Holder's Instrument
shall be determined by reference to the Base Rate in accordance with the
provisions of Sections 5.02(a) and 5.02(b);
(ii) interest and Distributions on such Holder's Instruments shall
be payable on Payment Dates applicable to the other Holders' Instruments
with respect to which the Applicable Rate is determined by reference to
the LIBO Rate; and
(iii) the Fixed Rent under the Lease shall be adjusted in a manner
designated by the Agent to take into account the provisions of this
Section 5.02(d).
SECTION 5.03. Assignments and Participations.
(a) No Assignment by Company or Guarantor. Neither the Company nor
the Guarantor may assign its rights or delegate its obligations under the
Operative Documents without the prior written consent of the Agent, the Trustee
and all of the Note Holders and the Certificate Holders. Upon an assignment to
and assumption by a Person of the rights and obligations of the Company or the
Guarantor under and in compliance with this Agreement and the other Operative
Documents, the representations, warranties and covenants of the Company or the
Guarantor, as applicable, and the conditions applicable to the Company or the
Guarantor, as applicable, hereunder and thereunder shall thereafter apply to
such Person and not to the Company or the Guarantor, as applicable.
(b) Assignment of Instruments. In addition to the assignments
permitted under Section 5.03(h), each of the Note Holders and Certificate
Holders may assign to one or more Eligible Assignees all or a portion of the
Instruments then held by it and its rights and obligations thereunder and under
this Agreement (including all or a portion of the Advances under its Notes
and/or its Equity Investment under its Certificates) and the other Operative
Documents; provided, however, that (i) each assignment of Certificates shall be
of a constant, and not a varying, percentage of all such rights and obligations;
(ii) the aggregate principal amount of the Instruments being assigned pursuant
to each such assignment (determined as of the date of the Assignment and
Acceptance with respect to such assignment) shall in no event be less than $5
million (or $1 million, with respect to the Certificates) in original principal
amount or Certificate Amount (as the case may be) and in integral multiples of
$1 million in excess thereof; (iii) no such assignment shall be made if as a
result thereof after giving effect to such assignment, any assigning Note
Holder's aggregate principal amounts of its Outstanding Notes is less than $5
million or any assigning Certificate Holder's aggregate Certificate Amount of
its Outstanding Certificates is less than $1 million (in each case determined as
of the date of the Assignment and Acceptance with respect to such assignment);
provided, however, that the required denominations for portions of the
Instruments being assigned under this Section 5.03(b) shall not be construed to
prevent an assignment of the entire principal amount of the Notes then
22
Participation Agreement
Proprietary & Confidential
held by a Note Holder or an assignment of the entire Certificate Amount of the
Certificates then held by a Certificate Holder; and (iv) each assigning Note
Holder or Certificate Holder and each Eligible Assignee shall execute and
deliver to the Agent for its acceptance and recording in the Record a
supplemental agreement in form and substance satisfactory to the Agent (the
"Assignment and Acceptance"), with an administrative fee of $4,000 to be paid by
the Assignor to the Agent. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Assignment and
Acceptance, (x) the assignee thereunder (the "Assignee") shall be a party hereto
and to the other Operative Documents to which the Note Holders or the
Certificate Holders (as the case may be) are parties and, to the extent that
rights and obligations hereunder have been assigned to and assumed by it, have
the rights and obligations of a Note Holder or a Certificate Holder (as the case
may be) hereunder and under the Operative Documents and (y) the assignor
thereunder (the "Assignor") shall, to the extent that rights and obligations
hereunder have been assigned by it, relinquish its rights (other than any rights
to indemnification it may have hereunder or under the other Operative Documents)
and be released from its obligations under this Agreement (other than the
confidentiality obligations set forth in Section 9.16) and the other Operative
Documents (and, in the case of an Assignment and Acceptance covering all or the
remaining portion of Assignor's rights and obligations under the Agreement and
the other Operative Documents, such Assignor shall, except as set forth above,
cease to be a party hereto).
(c) Assignment and Acceptance. By executing and delivering an
Assignment and Acceptance, the Assignor thereunder and the Assignee thereunder
confirm to and agree with each other and the other parties hereto as follows:
(i) other than as provided in such Assignment and Acceptance, such Assignor
makes no representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in connection with
this Agreement and the other Operative Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
the other Operative Documents or any other instrument or document furnished
pursuant hereto or thereto; (ii) such Assignor makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Company or the Guarantor or the performance or observance by the Company
or the Guarantor of any of their respective obligations under this Agreement or
any other Operative Document, or any other instrument or document furnished
pursuant hereto; (iii) such Assignee confirms that it has received a copy of
this Agreement, and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision with respect to
entering into such Assignment and Acceptance; (iv) such Assignee will make the
representations set forth in Section 3.05 and will, independently and without
reliance upon the Agent, the Trustee, such Assignor or any other Note Holder or
Certificate Holder and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) such Assignee appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under and/or referenced in this Agreement and the other Operative
Documents as are delegated to the Agent by the terms hereof and thereof,
together with such powers as are reasonably incidental thereto; and (vi) such
Assignee agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement are required to be performed by
it as a Note Holder or Certificate Holder (as the case may be).
23
Participation Agreement
Proprietary & Confidential
(d) Record. The Agent shall maintain at its address listed on
Schedule I hereto a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and addresses of
the Note Holders and the Certificate Holders and principal amount of the
Advances and Certificate Amount of the Equity Investment, as applicable, owing
to, each Note Holder and Certificate Holder from time to time (the "Record").
The entries in the Record shall be conclusive and binding for all purposes,
absent manifest error, and the Company, the Guarantor, the Agent, the Trustee,
the Certificate Holders and the Note Holders may treat each Person whose name is
recorded in the Record as a Note Holder or Certificate Holder (as the case may
be) hereunder for all purposes of this Agreement. The Record shall be available
for inspection by the Guarantor or any Note Holder or Certificate Holder at any
reasonable time and from time to time upon reasonable prior notice.
(e) Assignment Procedures. Upon its receipt of an Assignment and
Acceptance executed by an Assignor and an Assignee, the Agent shall, if such
Assignment and Acceptance has been completed, give prompt written notice to the
Guarantor and (i) accept such Assignment and Acceptance, and (ii) record the
information contained therein in the Record. The Agent shall provide the
Guarantor with a current list of all Note Holders and Certificate Holders at the
Guarantor's reasonable request but no more frequently than quarterly.
(f) Participations. Each Note Holder and Certificate Holder may sell
participations to one or more banks or other entities in or to all or a portion
of the Instruments then held by it and its rights and obligations thereunder and
under this Agreement and the other Operative Documents; provided, however, that
(i) the obligations of such Note Holder or Certificate Holder (as the case may
be) under this Agreement (including all or a portion of its Note Commitment or
Certificate Commitment (as the case may be)) and the other Operative Documents
shall remain unchanged and such Note Holder or Certificate Holder (as the case
may be) shall remain solely responsible to the other parties hereto for the
performance of such obligations; (ii) such Note Holder shall remain the Holder
of such Note, and such Certificate Holder shall remain the Holder of such
Certificate, for all purposes under this Agreement and the other Operative
Documents and the Company, the Guarantor, the Agent, the Trustee and the other
Note Holders and Certificate Holders shall continue to deal solely and directly
with such Note Holder or Certificate Holder (as the case may be) in connection
with the rights and obligations of such Note Holder or Certificate Holder (as
the case may be) under this Agreement; (iii) no such participant shall be
entitled to receive any greater payment than such Note Holder or Certificate
Holder (as the case may be) would have been entitled to receive with respect to
the rights participated (including payments for Taxes, Other Taxes or Increased
Costs); and (iv) any agreement pursuant to which any Note Holder or any
Certificate Holder (as the case may be) may grant a participation pursuant to
this Section 5.03(f) shall provide that such Note Holder or Certificate Holder
(as the case may be) shall retain the sole right and responsibility to enforce
the obligations of the Company and the Guarantor under this Agreement and the
other Operative Documents including, without limitation, the right to approve
any amendment, modification or waiver of any provisions of this Agreement and
the other Operative Documents. An assignment or other transfer which is not
permitted by Section 5.03(b) shall be given effect for purposes of this
Agreement only to the extent of a participating interest granted in accordance
with this Section 5.03(f).
24
Participation Agreement
Proprietary & Confidential
(g) Permitted Disclosure; Confidentiality. Any Note Holder or
Certificate Holder may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 5.03, disclose to
the assignee or participant or proposed assignee or participant any information
relating to the Company or the Guarantor furnished to such Note Holder or
Certificate Holder (as the case may be) by or on behalf of the Company or the
Guarantor; provided, that prior to any such disclosure, the assignee or
participant or proposed assignee or participant shall agree in writing with the
Guarantor and the Agent to preserve the confidentiality of any confidential
information relating to the Company and the Guarantor or the transactions
contemplated by the Operative Documents (including the general structure of this
transaction) received by it from such Note Holder or Certificate Holder (as the
case may be) in a manner consistent with that set forth in Section 9.16.
(h) Other Permitted Assignments. Anything in this Section 5.03 to
the contrary notwithstanding (except that at all times the requirements of
Section 5.03(g) shall be satisfied), any Note Holder or Certificate Holder may
assign and pledge, as collateral or otherwise, without notice to or consent of
the Company or the Guarantor, all or any of the Instruments held by it and any
of its rights (including rights to payment of the principal or Certificate
Amount of and interest or yield on the Instruments) under this Agreement and the
other Operative Documents to (i) any of its Affiliates and (ii) any Federal
Reserve Bank, the United States Treasury or to any other financial institution
as collateral security pursuant to Regulation A of the Federal Reserve Board and
any operating circular issued by the Federal Reserve System and/or the Federal
Reserve Bank or otherwise. No such assignment and/or pledge set forth in (ii)
above shall release the assigning and/or pledging Note Holder or Certificate
Holder from its obligations hereunder.
SECTION 5.04. Taxes.
(a) Payments Free and Clear. All payments to or for the benefit of
the Trustee, the Lessor, WFBN, the Agent, or the Holders under the Operative
Documents (including payments of Fixed Rent and Additional Rent under the
Lease, payments of principal and interest under the Notes and payments of the
Certificate Amount and Distributions under the Certificates) shall be made free
and clear of and without deduction for any and all present or future Charges. If
the Company, the Guarantor, the Trustee, the Agent, the Lessor or any other
Person ("Applicable Payor") shall be required by Law to deduct any Charges from
or in respect of any amounts payable under this Agreement or any other Operative
Document to or for the benefit of a Holder, the Trustee, the Lessor, WFBN or the
Agent ("Applicable Payee"), (i) the amounts payable by such Applicable Payor (as
rent, interest or otherwise) shall be increased by the amount necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 5.04), the Applicable Payee shall
receive an amount equal to the sum it would have received had no such deductions
been made, (ii) the Applicable Payor shall make such deductions and (iii) the
Applicable Payor shall pay the full amount deducted to the relevant taxing
authority or other Governmental Authority in accordance with all applicable
Laws. The Company will indemnify each Indemnified Party on an After Tax Basis on
demand for the full amount of any sums paid by such Indemnified Party pursuant
to the second sentence of this Section 5.04(a) and any liability such
Indemnified Party
25
Participation Agreement
Proprietary & Confidential
may incur or be required to pay. Any payment pursuant to this indemnification
shall be made within fifteen (15) days of demand by the Indemnified Party.
(b) Other Taxes. In addition, the Company shall timely pay any
present or future transfer, stamp, license, value added, goods and services,
sales, use or documentary Taxes, excise Taxes or any other property, transfer,
transfer gains or recording, publication or filing Taxes or any other Taxes in
the nature of the foregoing imposed by any Governmental Authority, which arise
directly or indirectly from (i) the acquisition, ownership, operation,
occupancy, possession, use, non-use, mortgaging, financing, leasing, subleasing,
or disposition or condition of any Property, or any other property or rights
conveyed to the Lessor or the Trustee; (ii) any payment made under the Operative
Documents; (iii) the execution, delivery or registration of, or otherwise with
respect to the Operative Documents; (iv) the conveyance or transfer of any
Property (or any portion thereof) in compliance with any requirement of the
Operative Documents; (v) the recording of any mortgage, deed of trust, financing
statement or other collateral security document in any jurisdiction; or (vi) the
transactions contemplated by any of the Operative Documents (collectively, but,
in each case other than Excluded Charges, the "Other Taxes").
(c) Indemnification. The Company shall pay and indemnify, defend and
hold harmless each Indemnified Party on an After Tax Basis from and against the
full amount of all Charges (including Other Taxes), required to be paid by such
Indemnified Party on its behalf or on behalf of any other Person, and any
liability (including penalties, interest and expenses, except those arising from
the gross negligence or willful misconduct of such Indemnified Party), arising
therefrom or with respect thereto (including from any obligation to file any Tax
return, report or statement with respect to any such Charges), whether or not
such Charges were correctly or legally asserted. Any payment pursuant to such
indemnification shall be made upon demand by the Indemnified Party.
(d) Contests. If any claim shall be made against any Indemnified
Party or if any proceeding shall be commenced against any Indemnified Party
(including a written notice of such proceeding) for any Tax as to which the
Lessee may have an indemnity obligation pursuant to this Section 5.04, such
Indemnified Party shall within thirty (30) days notify the Lessee in writing
(provided that failure to so notify the Lessee within thirty (30) days shall not
alter such Indemnified Party's rights under this Section 5.04 except to the
extent such failure precludes or materially adversely affects the ability to
conduct a contest of any indemnified Taxes) and shall not take any action with
respect to such claim, proceeding or Tax without the written consent of the
Lessee (such consent not to be unreasonably withheld or unreasonably delayed)
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 such Indemnified
Party shall be required by law or regulation to take action prior to the end of
such 30-day period, such Indemnified Party shall in such notice to the Lessee,
so inform the Lessee, and such Indemnified Party shall not take any action with
respect to such claim, proceeding or Tax without the consent of the Lessee (such
consent not to be unreasonably withheld or unreasonably delayed) for ten (10)
days after the receipt of such notice by the Lessee unless the Indemnified Party
shall be required by law or regulation to take action prior to the end of such
10-day period.
26
Participation Agreement
Proprietary & Confidential
The Lessee shall be entitled for a period of thirty (30) days from
receipt of such notice from the Indemnified Party (or such shorter period as the
Indemnified Party has notified the Lessee is required by law or regulation for
such Indemnified Party to commence such contest), to request in writing that
such Indemnified Party contest the imposition of such Tax, at the Lessee's sole
cost and expense. If (x) such contest can be pursued in the name of the Lessee
and independently from any other proceeding involving a Tax liability of such
Indemnified Party for which the Lessee has not agreed to indemnify such
Indemnified Party, (y) such contest must be pursued in the name of the
Indemnified Party, but can be pursued independently from any other proceeding
involving a Tax liability of such Indemnified Party for which the Lessee has not
agreed to indemnify such Indemnified Party or (z) the Indemnified Party so
requests, then the Lessee shall be permitted to control the contest of such
claim, provided that in the case of a contest described in clause (y), if the
Indemnified Party reasonably determines that such contest by the Lessee could
have an adverse impact on the business or operations of the Indemnified Party,
such Indemnified Party may elect to control or reassert control of the contest,
and provided, that by taking control of the contest, Lessee acknowledges that it
is responsible for the Tax ultimately determined to be due by reason of such
claim. In all other claims requested to be contested by the Lessee, such
Indemnified Party shall control the contest of such claim. In no event shall the
Lessee be permitted to contest (or the Indemnified Party be required to contest)
any claim (A) if such Indemnified Party provides the Lessee with a legal opinion
of counsel reasonably acceptable to the Lessee that such action, suit or
proceeding involves a risk of imposition of criminal liability or could involve
a material risk of the sale, forfeiture or loss of, or the creation of any Lien
(other than a Permitted Encumbrance) on any Property or any part of any thereof
unless the Lessee shall have posted and maintained a bond or other security
satisfactory to the relevant Indemnified Party in respect to such risk, (B) if
an Event of Default has occurred and is continuing under Section 6.01(a), (h) or
(i) unless the Lessee shall have posted and maintained by a bond or other
security satisfactory to the relevant Indemnified Party in respect of the Taxes
subject to such claim and any and all expenses for which the Lessee is
responsible hereunder reasonably foreseeable in connection with the contest of
such claim, (C) unless the Lessee shall have agreed to pay and shall pay, to
such Indemnified Party on demand all reasonable out-of-pocket costs, losses and
expenses that such Indemnified Party may incur in connection with contesting
such Tax including all reasonable legal, accounting and investigatory fees and
disbursements, or (D) if such contest shall involve the payment of the Tax prior
to the contest, unless the Lessee shall provide to the Indemnified Party an
interest- free advance in an amount equal to the Tax that the Indemnified Party
is required to pay (with no additional net after-tax costs to such Indemnified
Party). In addition for Indemnified Party controlled contests and claims
contested in the name of such Indemnified Party in a public forum, no contest
shall be required (A) unless 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 Indemnified Party with respect to any period
for which the Lessee may be liable to pay an indemnity under this Section 5.04)
exceeds $25,000 and (B) unless, if requested by such Indemnified Party, the
Lessee shall have provided to such Indemnified Party an opinion of independent
tax counsel selected by such Indemnified Party and reasonably acceptable to the
Lessee that a reasonable basis exists to contest such claim. In no event shall
an Indemnified Party be required to appeal an adverse judicial determination to
the United States Supreme Court.
27
Participation Agreement
Proprietary & Confidential
The party conducting the contest shall consult in good faith with
the other party and its counsel with respect to the contest of such claim for
Taxes (or claim for refund) but the decisions regarding what actions are to be
taken shall be made by the controlling party in its sole judgment, provided,
however, that if the Indemnified Party is the controlling party and the Lessee
recommends the acceptance of a settlement offer made by the relevant
Governmental Authority and such Indemnified Party rejects such settlement offer,
then the amount for which the Lessee will be required to indemnify such
Indemnified Party with respect to the Taxes subject to such offer shall not
exceed the amount which it would have owed if such settlement offer had been
accepted. In addition, the controlling party shall keep the noncontrolling party
reasonably informed as to the progress of the contest, and shall provide the
noncontrolling party with a copy of (or appropriate excerpts from) any reports
or claims issued by the relevant auditing agents or taxing authority to the
controlling party thereof, in connection with such claim or the contest thereof.
Each Indemnified Party shall, at the Lessee's sole cost and expense,
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 this Section 5.04(d);
provided, however, that such Indemnified Party shall not be required to provide
to the Lessee copies of its tax returns or any other information, documentation
or materials that it deems to be confidential or proprietary. No Indemnified
Party shall enter into any settlement or other compromise or fail to appeal an
adverse ruling with respect to any claim which is entitled to be indemnified
under this Section 5.04 (and with respect to which contest is required under
this Section 5.04) without the prior written consent of the Lessee, unless such
Indemnified Party waives its right to be indemnified under this Section 5.04
with respect to such claim.
Notwithstanding anything contained herein to the contrary, an
Indemnified Party will not be required to contest (and the Lessee shall not be
permitted to contest) a claim with respect to the imposition of any Tax if such
Indemnified Party shall waive its right to indemnification under this Section
5.04 with respect to such claim (and any claim with respect to such year or any
other taxable year the contest of which is materially adversely affected as a
result of such waiver.)
(e) Payments. Any Tax indemnifiable under this Section 5.04 shall be
paid directly when due to the applicable taxing authority if direct payment is
practicable and permitted. If direct payment to the applicable taxing authority
is not permitted or is otherwise not made, any amount payable to an Indemnified
Party pursuant to Section 5.04 shall be paid within fifteen (15) days after
receipt of a written demand therefor from such Indemnified Party accompanied by
a written statement describing in reasonable detail the amount so payable, but
not before two Business Days prior to the date that the relevant Taxes are due.
Any payments made pursuant to this Section 5.04 shall be made directly to the
Indemnified Party entitled thereto or the Lessee, as the case may be, in
immediately available funds. Upon the request of any Indemnified Party with
respect to a Tax that the Lessee is required to pay, the Lessee shall furnish to
such Indemnified Party the original or a certified copy of a receipt for the
Lessee's
28
Participation Agreement
Proprietary & Confidential
payment of such Tax or such other evidence of payment as is reasonably
acceptable to such Indemnified Party.
(f) Reports. In the case of any report, return or statement required
to be filed with respect to any Taxes that are subject to indemnification under
this Section 5.04 and of which the Lessee has knowledge, the Lessee shall
promptly notify the Indemnified Party of such requirement and, at the Lessee's
expense (i) if the Lessee is permitted (unless otherwise requested by the
Indemnified Party) by Applicable Law, timely file such report, return or
statement in its own name or (ii) if such report, return or statement is
required to be in the name of or filed by such Indemnified Party or the
Indemnified Party otherwise requests that such report, return or statement be
filed by such Indemnified Party, timely prepare such report, return or statement
in such manner as shall be satisfactory to such Indemnified Party and send the
same to the Indemnified Party for filing no later than fifteen (15) days prior
to the due date therefore. In any case in which the Indemnified Party will file
any such report, return or statement, the Lessee shall, upon written request of
such Indemnified Party, provide such Indemnified Party with such information as
is reasonably necessary to allow the Indemnified Party to file such report,
return or statement.
(g) Receipt. Within fifteen (15) days after the date of any
deduction of any Charges, the Applicable Payor shall furnish to the Applicable
Payee, the Agent and the Trustee the original or a certified copy of a receipt
or other documentation evidencing payment thereof as is reasonably acceptable to
such Applicable Payee.
(h) Withholdings Tax Exemption. Notwithstanding anything to the
contrary in any of the Operative Documents, each Applicable Payor shall be
entitled to the extent it is required to do so by Law, to deduct income or other
similar Taxes imposed by the United States of America from amounts payable
hereunder or under the other Operative Documents for the account of any
Applicable Payee except to the extent, if applicable, said Applicable Payee has
timely filed with the Agent or the appropriate party (who shall then promptly
forward the same to the Company and the Trustee) Prescribed Forms, if any, for
the applicable year indicating that deduction or withholding of such Taxes is
not required or reduced as a result of the filing of such Prescribed Forms. If
the Applicable Payor shall so deduct or withhold any such Taxes, it shall
provide a statement to the Applicable Payee setting forth the amount of such
Taxes as deducted or withheld, the applicable rate and any other information or
documentation which such Person may reasonably request for enabling such Person
to obtain any allowable credits or deductions for the Taxes so deducted or
withheld in the jurisdiction or jurisdictions in which such Person is subject to
Taxes.
(i) Determinations. The determination of all Charges to be paid or
indemnified against by the Company on an After Tax Basis under this Section 5.04
shall be made (in good faith) by the affected Applicable Payee. Such
determination shall state with reasonable clarity and detail the basis for such
determination and shall, absent manifest error, be final, conclusive and binding
on the Company. In no event shall the Company, in connection with this Section
5.04 or for any other purpose whatsoever under any Operative Document, have any
right to examine any Tax return or related books and records of any Applicable
Payee.
29
Participation Agreement
Proprietary & Confidential
(j) Survival. Without prejudice to the survival of any other
agreement of the Company hereunder, the agreements and obligations of the
Company contained in this Section 5.04 and in Section 5.05 shall survive the
payment in full of the principal, Certificate Amount, interest and Distributions
on the Notes and Certificates.
SECTION 5.05. Tax Treatment.
(a) Financing. For purposes of federal, foreign, state and local
income Taxes, the parties hereto intend that (i) the Lease and the other
Operational Documents be treated as the repayment and security provisions of a
loan to the Company, and (ii) all payments of Termination Value, Residual Value
Amount, Fixed Rent, Additional Rent and payments under Section 5.02 of the Lease
be treated as payments of principal, interest and other amounts owing with
respect to such loan, respectively.
(b) Tax Reporting by Company. The Company agrees that (i) unless
compelled, in its reasonable opinion, by action of a Governmental Authority,
neither it nor any Affiliate (whether or not consolidated or combined returns
are filed with such Affiliate for federal, foreign, state or local income Tax
purposes) will at any time take any action, directly or indirectly, or file any
return or other document inconsistent with the intended Tax treatment described
in Section 5.05(a), and (ii) it and its Affiliates will file such returns,
maintain such records, take such actions and execute such documents (as
reasonably requested by the Trustee, the Agent, the Lessor or the Holders from
time to time) as may be appropriate to facilitate the realization of such
intended Tax treatment.
(c) Tax Reporting by Indemnified Parties. Each Indemnified Party
agrees that (i) unless compelled, in its reasonable opinion, by action of a
Governmental Authority, neither it nor any Affiliate (whether or not
consolidated or combined returns are filed with such Affiliate for federal,
foreign, state or local income Tax purposes) will at any time take any action,
directly or indirectly, or file any return or other document claiming, or
asserting that it is entitled to, the Tax benefits, deductions or credits which,
pursuant to the intended income Tax treatment described in Section 5.05(a),
would otherwise be claimed or claimable by the Company, and (ii) it and its
Affiliates will file such returns, maintain such records, take such actions, and
execute such documents (as reasonably requested by the Company from time to
time) as may be appropriate (in the judgment of such Indemnified Party) to
facilitate the realization of, and as shall be consistent with, such intended
income Tax treatment; provided that no Indemnified Party shall be required to
(A) take any action which it believes would be disadvantageous to it, (B)
disclose any portion of any Tax return, or (C) engage or participate in any
contest of such Tax treatment. If any such filing, maintenance, action or
execution requested by the Company would result in any additional Tax liability
payable by the Indemnified Party, or could reasonably be expected to result in
liability payable by it, other than liability ordinarily related to the intended
Tax treatment described in Section 5.05(a), then the Company will provide an
indemnity against such unrelated Tax liability satisfactory to the Indemnified
Party, in its sole opinion, exercised reasonably and in good faith.
30
Participation Agreement
Proprietary & Confidential
SECTION 5.06. Compensation. The Company shall compensate each
Holder, in each case, upon its written request (which request shall also be sent
to the Agent), for all reasonable losses and costs the Holder (or any existing
or prospective participant of such Holder) may sustain: (a) if, for any reason
(other than a default by such Holder or the Agent), the Funding or a selection
affecting the Applicable Rate does not occur on the date specified therefor in
the Requisition or in a notice delivered pursuant to Section 5.01(c) (as
applicable, and whether or not withdrawn), (b) if any payment under the
Operative Documents or change in the Applicable Rate with respect to such
Holder's Instruments occurs on a date which is not the last day of an Interest
Period, (c) if any payment of the Residual Value Amount, Termination Value or
any payment under Section 5.02 of the Lease occurs on a date that is not the
last day of an Interest Period or on a date different from the date required
therefor under the Operative Documents or (d) as a consequence of (i) any
payment on the Notes or the Certificates due to any other Default, Event of
Default, Non-Performance Event, Casualty, Condemnation or Environmental Trigger
or (ii) an election made by the Company pursuant to Section 5.02(d) (which
losses and costs shall include, without limitation, any Loss incurred in
obtaining, liquidating or employing deposits from third parties, but excluding
loss of margin for the period after any event described in clauses (a) through
(d) above) ("Break Costs"). Any request by a Holder for payment of Break Costs
under this Section 5.06 shall be accompanied by a certificate as to the amount
of such Break Costs and describing in reasonable detail the calculation thereof,
which certificate shall be conclusive in the absence of manifest error.
SECTION 5.07. Change of Applicable Lending Office. Each Holder
agrees that, upon the occurrence of any event of which it has knowledge giving
rise to the operation of Section 5.02 or 5.04 with respect to such Holder, it
will promptly notify the Company, the Guarantor and the Agent and will designate
a different Applicable Lending Office if such designation will avoid the need
for, or reduce the amount of, any payment pursuant to Sections 5.02 and 5.04 and
will not, in the judgment of such Holder, result in any economic or regulatory
disadvantage to such Holder. A certificate of any Holder claiming any amount
payable under Section 5.02 or 5.04 and setting forth such amount or amounts,
accompanied by a computation in reasonable detail of such amount or amounts,
shall be conclusive if prepared in good faith and on a reasonable basis. In
determining any such amount, such Holder may use any reasonable averaging and
attribution methods; provided that such methods shall not be inconsistent with
the methods used by such Holder in calculating the reduction in return allocable
to other similar transactions or commitments to other customers. Nothing in this
Section 5.07 shall affect or postpone any of the obligations of the Company or
the rights of any Holder provided in Section 5.02 or Section 5.04.
SECTION 5.08. Sharing of Payments, Etc. If any Note Holder or
Certificate Holder shall obtain any payment (whether voluntary or involuntary),
on account of the Instruments held by it (other than on account of Additional
Costs and other than pursuant to Section 5.05 or any indemnification provision
of the Operative Documents) in excess of its ratable share of payments on
account of the Instruments obtained by all the Note Holders and Certificate
Holders, such Note Holder or Certificate Holder (as the case may be) shall
forthwith purchase from the other Note Holders or Certificate Holders (as the
case may be) such participations in the Instruments held by them as shall be
necessary to cause such purchasing
31
Participation Agreement
Proprietary & Confidential
Note Holder or Certificate Holder (as the case may be) to share the excess
payment ratably with each of them; provided, however, that if all or any portion
of such excess payment is thereafter recovered from such purchasing Note Holder
or Certificate Holder (as the case may be), such purchase from each Note Holder
or Certificate Holder (as the case may be) shall be rescinded and each Note
Holder or Certificate Holder (as the case may be) shall repay to the purchasing
Note Holder or Certificate Holder (as the case may be) the purchase price to the
extent of such Note Holder's or Certificate Holder's (as the case may be)
ratable share (according to the proportion of (i) the amount of the
participation purchased from such Note Holder or Certificate Holder (as the case
may be) as a result of such excess payment to (ii) the total amount of the
participations purchased in respect of such excess payment) of such recovery
together with an amount equal to such Note Holder's or Certificate Holder's (as
the case may be) ratable share (according to the proportion of (i) the amount of
such Note Holder's or Certificate Holder's (as the case may be) required
repayment to (ii) the total amount so recovered from the purchasing Note Holder
or Certificate Holder (as the case may be)) of any interest or other amounts
paid or payable by the purchasing Note Holders or Certificate Holders (as the
case may be) in respect of the total amount so recovered. Notwithstanding that
such Note Holders or Certificate Holders (as the case may be) shall have
purchased a participation in such Instruments, the purchasing Note Holder or
Certificate Holder (as the case may be) shall be deemed to have acquired the
voting rights under such Instruments to the extent of, and for the duration of,
such participation, as if such Note Holder or Certificate Holder (as the case
may be) shall have been an Assignee thereof.
SECTION 5.09. Maturity Date Extension.
(a) Procedures. (i) Pursuant to Section 3.02 of the Lease, so long
as no Default, Event of Default, Non-Performance Event or Environmental Trigger
shall have occurred and be continuing at the time the Lessee delivers the
Extension Request and such request is timely made pursuant to Section 3.02 of
the Lease, the Lessee may request that the Lessor, the Agent and the Holders
extend the Lease and the related financing by the Holders for the Extension Term
(such request by the Lessee is herein called the "Extension Request"). Each
Holder shall have thirty (30) days from receipt of such request to inform the
Agent whether such Holder, in its sole and absolute discretion, agrees to the
Extension Request. Failure of any such Holder to indicate its acceptance or
rejection by such time shall be deemed to constitute such Holder's rejection
thereof. If any Holder (a "Non-Accepting Holder") rejects (or is deemed to have
rejected) the Extension Term, the Agent, at the request of the Lessee, shall
have the right to cause such Non-Accepting Holder to transfer its interests
under the Operative Documents to any other Holder that has agreed to the
Extension Term or to a replacement Holder which would be an Eligible Assignee
hereunder. Existing Holders shall be offered the right, but shall not be
required, to acquire a pro rata share of the Non-Accepting Holders' interests.
Any such transfer shall be made pursuant to an Assignment and Assumption
executed by the Non-Accepting Holder and the Assignee. The date of transfer
shall be the then-existing Maturity Date. If any Holder rejects the Extension
Request and the Agent has been unable to locate a transferee of such Holder's or
Holders' interests under the Operative Documents at least one hundred twenty
(120) days prior to the then-existing Maturity Date, the date of the Maturity
Date shall not be
32
Participation Agreement
Proprietary & Confidential
extended or changed and the Lessee shall be deemed to have elected the option to
purchase the Lessor's interest in the Properties under the Lease.
(ii) If the Lessee shall have made the Extension Request and at any
time during the sixty (60) day period ending on the commencement date of the
Extension Term, an Event of Default shall have occurred, then the Lessee's
rights under this Section shall automatically terminate and the Lessee shall not
be entitled to the requested Extension Term.
(b) General. The Company hereby agrees to pay all reasonable and
properly documented costs and expenses (including reasonable legal fees and
expenses) incurred by the Trustee, the Agent and the Holders in connection with
the provisions of this Section 5.09, including the costs of documenting the
extension and any necessary transfer of Instruments.
ARTICLE VI
EVENTS OF DEFAULT; REMEDIES; NON-PERFORMANCE EVENTS
SECTION 6.01. Events of Default. If one or more of the following
events shall have occurred and be continuing, it shall constitute an "Event of
Default" hereunder:
(a) the Company shall fail to pay the Termination Value, the
Residual Value Amount, any Additional Rent or any amount due pursuant to
Section 5.02 of the Lease on the date on which such payment is due, or
shall fail to pay any Fixed Rent or fees payable hereunder within five (5)
days of the date on which payment is due;
(b) the Company shall fail to observe or perform any covenant
contained in Section 4.01;
(c) the Company shall fail to observe or perform any covenant or
agreement contained in this Agreement or any other Operative Document to
which the Company is a party (other than those covered by clause (a) or
(b) above) for twenty (20) days after written notice thereof has been
given to the Company by the Agent at the request of the Majority Holders
acting through the Agent;
(d) the Guarantor shall fail to observe or perform any covenant or
agreement contained in this Agreement or any other Operative Document to
which the Guarantor is a party, for twenty (20) days after written notice
thereof has been given to the Guarantor by the Agent at the request of the
Majority Holders acting through the Agent;
(e) any representation or warranty, certification or statement made
(or deemed made) by the Company or the Guarantor, in this Agreement or any
other Operative Document or in any certificate, financial statement or
other document delivered pursuant to this Agreement or any other Operative
Document shall prove to have been incorrect in any material respect when
made (or deemed made);
33
Participation Agreement
Proprietary & Confidential
(f) without duplication of the Events of Default set forth in this
Section 6.01, all Events of Default (as such term is defined in the Senior
Credit Facility) set forth in Section 6.01(i), (j) and (l) of the Senior
Credit Facility are hereby incorporated herein, mutatis mutandis, by
reference and shall constitute Events of Default hereunder. In the event
any of the foregoing Events of Default (as such term is defined in the
Senior Credit Facility) set forth in the Senior Credit Facility is amended
or modified in any manner, such amendment and/or modification shall not
automatically cause this Section 6.01 to be similarly amended or modified,
and such amendment and/or modification under the Senior Credit Facility
shall only be effective as an amendment and/or modification hereunder with
the written consent of the Majority Holders. In the event the Senior
Credit Facility is terminated prior to the Expiration Date, the above
Events of Default (as such term is defined in the Senior Credit Facility)
set forth in the Senior Credit Facility as in effect on June 27, 2001
(together with amendments to such Events of Default (as defined in the
Senior Credit Facility) that became effective hereunder in accordance with
the previous sentence) shall constitute Events of Default hereunder;
(g) the Guarantor or any Subsidiary shall commence a voluntary case
or other proceeding seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of
a trustee, receiver, liquidator, custodian or other similar official of it
or any substantial part of its property, or shall consent to any such
relief or to the appointment of or taking possession by any such official
in an involuntary case or other proceeding commenced against it, or shall
make a general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due, or shall take any corporate
action to authorize any of the foregoing;
(h) an involuntary case or other proceeding shall be commenced
against the Guarantor or any Subsidiary seeking liquidation,
reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its property, and
such involuntary case or other proceeding shall remain undismissed and
unstayed for a period of 60 days; or an order for relief shall be entered
against the Guarantor or any Subsidiary under the federal bankruptcy laws
as now or hereafter in effect;
(i) the Guarantor or any Subsidiary shall fail to make any payment
in respect of any Material Financial Obligations (as such term is defined
in the Senior Credit Facility) or in respect of the obligations under the
Senior Credit Facility, including any obligation to reimburse letter of
credit obligations or to post cash collateral with respect thereto, when
due or within any applicable grace period;
(j) any event or condition shall occur which (A) results in the
acceleration of the maturity of any Material Financial Obligations (as
such term is defined in the Senior Credit Facility) or the obligations
under the Senior Credit Facility, (B) otherwise constitutes an Event of
Default (as such term is defined in the Senior Credit Facility)
34
Participation Agreement
Proprietary & Confidential
under the Senior Credit Facility or (C) enables (or, if such event or
condition does not otherwise give rise to a Default or Event of Default
hereunder, which with the giving of notice or lapse of time or both would
enable) the holder of any Material Financial Obligations (as such term is
defined in the Senior Credit Facility) or any Person acting on such
holder's behalf to accelerate the maturity thereof;
(k) the Company shall fail to comply in any material respect with
any Insurance Requirement;
(l) the Company shall fail to comply with the Return Conditions as
of the Expiration Date or, if applicable, as of such earlier date on which
the Lease terminates in connection with a Non-Performance Event;
(m) any Operative Document shall for any reason no longer be in full
force and effect in accordance with its terms, by operation of Law or by
any other means (except if, and to the extent, such is the result of a
purchase of the Lessor's interest in the Properties or applicable Property
in accordance with the Lease);
(n) the Company shall have abandoned any Property or any part
thereof for a period of more than thirty (30) consecutive days at any time
prior to the Expiration Date other than as a result of a Casualty;
(o) the Lessor or the Agent shall cease, for any reason (other than
directly through their own actions or omissions), to have a perfected
security interest in and Lien on the Properties and the Equipment
Collateral, superior and prior to the rights of all third Persons and
subject to no other Liens, except in each case for Permitted Encumbrances;
(p) any Operative Document or any obligation of the Company or the
Guarantor thereunder shall be revoked or repudiated or attempted to be
revoked or repudiated by the Company or the Guarantor, the Lessor shall
fail to have a valid leasehold interest in the California Land (or any
part thereof), for any reason whatsoever, or the Lessor shall fail to have
unencumbered title to the Maryland Land or the Improvements;
(q) any Applicable Permits or right-of-way shall become null and
void, shall be revoked or shall otherwise become unavailable or
ineffective, as a result of which the Lessor shall be prevented from
owning and/or leasing or subleasing or the Company shall be prevented from
using any Property for its Intended Use; or
(r) the Guarantor shall fail to own at least a majority of the
Voting Stock of the Company.
35
Participation Agreement
Proprietary & Confidential
SECTION 6.02. Remedies upon an Event of Default. (a) Subject to
Section 6.02(g) and Section 6.03, if an Event of Default has occurred and is
continuing, each of the Trustee and the Agent may, and if directed in writing by
the Majority Holders shall, exercise any of the rights or remedies granted to it
under the Lease or any of the other Operative Documents, in addition to any
rights or remedies of such parties set forth in this Agreement.
(b) Upon the occurrence of an Event of Default, except as set forth
in Section 6.02(g) and Section 6.03, upon five (5) Business Days' prior written
notice to the Company, the Agent may, and upon the written request of the
Majority Holders, the Agent shall, declare the entire accrued and unpaid amount
of interest on and the principal amount of the Notes and the Certificate Amount
of and unpaid yield on the Certificates (if not then due and payable) to be due
and payable immediately, notwithstanding anything contained in the Instruments
or in any other Operative Document to the contrary; provided, however, that if
an Event of Default under Section 6.01(a) or (i) occurs, notice to the Company
may be given as to the acceleration of amounts due under the Notes and
Certificates upon such acceleration.
(c) If, however, an Event of Default occurs under Section 6.01(g) or
(h), then the entire accrued and unpaid amount of interest on and the principal
amount of the Notes and the Certificate Amount of and unpaid yield on the
Certificates shall automatically be and become due and payable immediately,
without request, demand, presentment, protest or notice, notwithstanding
anything contained in the Instruments or in any other Operative Document to the
contrary.
(d) Subject to Section 6.02(g) and Section 6.03, if an Event of
Default has occurred and is continuing, then each of the Trustee, the Agent, the
Note Holders and Certificate Holders may, and if directed in writing by the
Majority Holders the Agent shall, take all steps necessary or advisable to
protect and enforce its rights hereunder, whether by action, suit or proceeding
at Law or in equity, for the specific performance of any covenant, condition or
agreement contained herein, or in aid of the execution of any power herein
granted, or for the enforcement of any other appropriate legal or equitable
remedy or otherwise as such party shall deem necessary or advisable.
(e) If the Company shall fail to make any payment or perform any act
required to be made or performed under any Operative Document, the Agent,
without waiving any default or releasing the Company from any obligation may
(but shall be under no obligation to unless directed in writing by the Majority
Holders) make such payment and perform such act for the account and at the
expense of the Company, and may give notice and enter upon any Property or any
portion thereof for such purpose and take all such action thereon as, at the
Agent's sole discretion, may be necessary or appropriate therefor. All sums so
paid by the Agent and all costs and expenses (including reasonable attorneys'
fees and expenses so incurred, together with interest thereon to the extent
permitted by Law) shall be paid by the Company to the Agent on demand.
(f) No right or remedy hereunder or under any other Operative
Document shall be exclusive of any other right, power or remedy, but shall be
cumulative and in addition to
36
Participation Agreement
Proprietary & Confidential
any other right or remedy hereunder or now or hereafter existing by Law or in
equity, and the exercise by a party hereto of any one or more of such rights,
powers or remedies shall not preclude the simultaneous exercise of any or all of
such other rights, powers or remedies. Any failure to insist upon the strict
performance of any provision hereof or to exercise any option, right, power or
remedy contained herein shall not constitute a waiver or relinquishment thereof
for the future. The Trustee, the Note Holders, the Certificate Holders and the
Agent shall be entitled to injunctive relief in case of the violation or
attempted or threatened violation of any of the provisions hereof by any other
party hereto, a decree compelling performance of any of the provisions hereof or
any other remedy allowed by Law or in equity.
(g) The Company may, by notice to the Agent, at any time prior to
exercise of any remedies by the Trustee, the Agent and the Majority Holders,
elect to cure any Default, Event of Default, Non-Performance Event, Casualty,
Condemnation or Environmental Trigger by purchasing the Lessor's interest in the
Properties for an amount equal to the Termination Value therefor.
SECTION 6.03. Non-Performance Events; Procedures.
(a) Non-Performance Events. Notwithstanding anything to the contrary
contained herein, if at any time (i) an Event of Default described in Section
6.01(e) occurs, (ii) an Event of Default described in Section 6.01(f) occurs in
connection with (A) the Guarantor's failure to comply with Section 5.05 of the
Senior Credit Facility or (B) an Event of Default (as defined in the Senior
Credit Facility) under Section 6.01(l) of the Senior Credit Facility and, in the
case of (i) and (ii) such event is premised upon a Material Adverse Effect
standard, or (iii) any other Event of Default in any Operative Document that is
specifically premised upon a Material Adverse Effect or materiality standard
occurs, then any occurrence with respect thereto shall not constitute a Default
or an Event of Default but shall be deemed a "Non-Performance Event" and the
provisions of Section 6.03(b) shall control; provided, however, if by applying a
commercially reasonable standard, the Agent, the Trustee or any Holder
determines that any Event of Default listed above in this Section 6.03(a) shall
have occurred, then the occurrence thereof shall not constitute a
Non-Performance Event but shall constitute an Event of Default with the
provisions of Section 6.02 applying thereto.
(b) Non-Performance Event Procedures. If a Non-Performance Event
occurs, the Company shall either (i) (A) pay to the Agent within five (5)
Business Days after the occurrence of such Non-Performance Event an amount equal
to the Residual Value Amount for the Properties, (B) pay all Fixed Rent and
Additional Rent due and payable as of such date and (C) arrange to sell the
Properties on behalf of the Lessor to a third party in an arms length
transaction, such sale to close on or before ninety (90) days after the
occurrence of such Non-Performance Event; or (ii) within five (5) Business Days
after the occurrence of the Non-Performance Event, deliver an irrevocable Offer
to Purchase the Lessor's interest in the Properties pursuant to Section 5.01 or
5.03 of the Lease and purchase the Lessor's interest in the Properties upon
payment of the Termination Value therefor, any such sale to be consummated in
accordance with Article V of the Lease. If the Company pays the Residual Value
Amount
37
Participation Agreement
Proprietary & Confidential
pursuant to clause (i) above, then it shall release its entire interest in the
Properties, subject to the Company's rights under Sections 7.01(d) and (e).
SECTION 6.04. Power of Sale.
(a) Proceedings. If, upon (i) the occurrence of any Event of Default
and the notice described in Section 6.02(g) has not been given to the Agent or
(ii) the termination or expiration of the Lease, in each case, where the Company
has not purchased the Lessor's interests in the Properties in compliance with
the Operative Documents (each, a "Liquidation Event"), then the Agent, upon the
written request of the Majority Holders and receipt by the Agent of such
additional indemnification in form and substance reasonably satisfactory to the
Agent as the Agent may promptly and reasonably request, shall with or without
entry, personally or by its agents or attorneys, take all steps to protect and
enforce any rights and remedies the Holders (or the Agent on their behalf) may
have pursuant to the Operative Documents or any instrument included in the
Collateral, by appropriate Proceedings. Subject to Sections 6.04(c) and (d), the
Agent may conduct or cause the Company to conduct on the Agent's behalf any
number of sales of (or other acts of realization on) portions of the Collateral
pursuant to the applicable Operative Documents, from time to time to the extent
permitted by Law. The exercise by the Agent of any right or remedy, including
any power of sale, shall not be exhausted by any one or more such sales of (or
other acts of realization on) any part of the Collateral remaining unsold, but
shall continue unimpaired until all of the Collateral shall have been sold or
the Instruments shall have been paid in full together with accrued interest and
yield thereon.
(b) Power of Sale. Upon the occurrence of a Liquidation Event, the
Agent, pursuant to the power of sale conferred in any Operative Document, may
sell or otherwise realize upon the Collateral to the extent permitted by Law and
the Operative Documents after having given all notices, made all postings and
done all other acts required by and in the manner prescribed by applicable Law
with respect to the day, time, place, terms of the sale or realization and
otherwise; provided that prior to the occurrence of a Liquidation Event, the
Agent shall not have any authority or power whatsoever, and the Holders may not
authorize the Agent, to sell the Lessor's interests in any Property or any
portion thereof.
(c) Rights of Note Holders. Notwithstanding anything to the contrary
contained herein, upon the occurrence of a Liquidation Event, then:
(i) Subject to Section 6.04(c)(ii), upon the written direction of
the Majority Certificate Holders, the Agent, pursuant to its rights under
the Operative Documents, shall sell or otherwise realize on the
Collateral; provided that the proceeds from any such sale or realization
will be sufficient to pay the accrued and unpaid interest on and the
unpaid aggregate principal amount of the B-Notes. The Agent shall give at
least five (5) Business Days' written notice of such proposed sale or
realization to the B-Note Holders and the Certificate Holders.
38
Participation Agreement
Proprietary & Confidential
(ii) Prior to the closing of any sale of (or the occurrence of any
other realization on) the Collateral pursuant to Section 6.04(c)(i), any
and all of the B-Note Holders shall have the option (the "Senior Takeout
Option") to purchase all but not less than all of the Certificates from
the Certificate Holders. The Senior Takeout Option shall be exercisable by
written notice (the "Senior Takeout Notice") to the Agent and the
Certificate Holders at a price, payable by wire transfer of immediately
available funds, equal to the Certificate Liquidation Amount plus any
other sums then due and owing to the Certificate Holders under the
Operative Documents and any Break Costs in connection with or as a result
of such sale or realization by the Certificate Holders (the "Senior
Takeout Price"). Upon exercising its Senior Takeout Option, such B-Note
Holder shall have an irrevocable obligation to purchase all of the
Outstanding Certificates or, if more than one B-Note Holder has exercised
the Senior Takeout Option, a percentage of the Outstanding Certificates
equal to (A) the unpaid principal amount of B-Notes held by such B-Note
Holder over (B) the aggregate unpaid principal amount of B-Notes held by
the B-Note Holders exercising the Senior Takeout Option. Upon receipt by
the Agent of the Senior Takeout Notice, the Agent shall postpone any
planned sale of or realization on the Collateral pending the purchase of
the Certificates (the "Senior Takeout"). The Senior Takeout shall take
place within five (5) Business Days (the "Senior Takeout Period") after
the receipt by the Certificate Holders of the Senior Takeout Notice. If at
the end of the Senior Takeout Period, the Certificate Holders have not
received the full Senior Takeout Price, then the Majority Certificate
Holders may direct the Agent to proceed with the sale of or realization on
the Collateral and the B-Note Holders exercising the Senior Takeout
Option, shall have no further right to stop the sale of the Collateral by
the Agent.
(d) Rights of Certificate Holders. Notwithstanding anything to the
contrary contained he rein, upon the occurrence of a Liquidation Event, then
(i) Subject to Section 6.04(d)(ii), upon the written direction of
the Majority B-Note Holders, the Agent, pursuant to its rights under the
Operative Documents, shall sell or otherwise realize on the Collateral.
The Agent shall give at least five (5) Business Days' written notice of
such proposed sale or realization to the Certificate Holders and the
B-Note Holders.
(ii) Prior to the closing of any sale of (or the occurrence of any
other realization on) the Collateral pursuant to Section 6.04(d)(i), any
and all of the Certificate Holders shall have the option (the "Junior
Takeout Option") to purchase all but not less than all of the B-Notes from
the B-Note Holders. The Junior Takeout Option shall be exercisable by
written notice (the "Junior Takeout Notice") to the Agent and the B-Note
Holders at a price, payable by wire transfer of immediately available
funds, equal to the entire accrued and unpaid interest on and aggregate
principal amount of the B-Notes, plus any other sums then due and owing to
the B-Note Holders under the Operative Documents and any Break Costs in
connection with or as a result of such sale or realization by the B-Note
Holders (the "Junior Takeout Price"). Upon exercising its Junior Takeout
Option, such Certificate Holder shall have an irrevocable obligation to
39
Participation Agreement
Proprietary & Confidential
purchase all of the B-Notes or, if more than one Certificate Holder has
exercised the Junior Takeout Option, a percentage of such B-Notes equal to
(x) the unpaid Certificate Amount of Certificates held by such Certificate
Holder, over (y) the aggregate unpaid Certificate Amount of Certificates
held by the Certificate Holders exercising the Junior Takeout Option. Upon
receipt by the Agent of the Junior Takeout Notice, the Agent shall
postpone any planned sale of or realization on the Collateral pending the
purchase of the B-Notes (the "Junior Takeout"). The Junior Takeout shall
take place within five (5) Business Days (the "Junior Takeout Period")
after the receipt by the B-Note Holders of the Junior Takeout Notice. If
at the end of the Junior Takeout Period, the B-Note Holders have not
received the full Junior Takeout Price, then the Majority B-Note Holders
may direct the Agent to proceed with the sale of or realization on the
Collateral and the Certificate Holders shall have no further right to stop
the sale of or realization on the Collateral by the Agent.
SECTION 6.05. Procedure for Sale of Collateral.
(a) Postponement of Sale or Realization. To the extent permitted by
applicable Law, the Agent may postpone any sale of, or other realization on, all
or any part of the Collateral under or by virtue of this Article VI by public
announcement at the time and place of such sale or other realization or as may
be required by Law.
(b) Delivery by the Agent. Upon the completion of any sale, or other
realization on the Collateral, made by the Agent under or by virtue of any
Operative Document, the Agent shall execute and deliver to the purchaser good
and sufficient assignments, bills of sale, deeds and other instruments
conveying, assigning and transferring all its estate, right, title and interest
in and to the Collateral and rights sold all without recourse to the Agent, in
the manner and to the extent provided by applicable Law.
(c) Payment of Instruments Upon Sale or Realization. In the event of
any sale or other realization made under or by virtue of this Article VI
(whether made under the power of sale granted in any Operative Document or under
or by virtue of judicial proceedings or of a judgment or decree of sale), the
payment of accrued interest on and the then outstanding principal of all of the
Notes and the payment of the Certificate Liquidation Amount and all other
amounts payable under the Operative Documents, if not previously due and owing,
shall immediately become due and owing and payable in accordance with the terms
of this Agreement and the other Operative Documents, anything in the Instruments
to the contrary notwithstanding.
(d) Suits by the Agent. All rights of action under any Operative
Document or under any instrument included within the Collateral may be enforced
by the Agent without the possession of any of the Instruments and without the
production thereof at any trial or other proceeding relative thereto. A copy of
any Instrument, if properly certified by the Agent to be true and correct, shall
constitute conclusive evidence of all matters that could be proven by production
of the original of that Instrument in any trial or proceeding relative thereto.
Any such suit or proceeding instituted by the Agent shall be brought in its name
as Agent (subject to the provisions of Article VIII), and, subject to the rights
of the Agent, any recovery of judgment
40
Participation Agreement
Proprietary & Confidential
shall be for the ratable benefit of the registered Holders pro rata within each
series of Instruments.
SECTION 6.06. Application of Proceeds.
(a) Proceeds from Sale of Property. Upon the occurrence of an Event
of Default, after the payment of any Closing Costs and, after deducting all
amounts owing to the Trustee and the Agent for compensation, reimbursement of
expenses and indemnity, including their reasonable compensation and expenses for
the services of all attorneys, servants and agents of the Trustee and the Agent
properly engaged and employed (including compensation and expenses in connection
with any appeal), the Agent shall apply the moneys arising from any Sales
Proceeds (except proceeds from a sale of such Property to the Company, which
shall be applied pursuant to Section 7.01(c)):
(i) first, to the payment of amounts to reimburse the Trustee, the
Agent or any Holder for Protective Expenditures made by such Person in
accordance with Section 9.23;
(ii) second, the excess, if any, to the payment of all accrued and
unpaid interest on and principal of the A-Notes, ratably in respect of the
claims of the A-Note Holders;
(iii) third, the excess, if any, to the payment of all accrued and
unpaid interest on and principal of the B-Notes, ratably in respect of the
claims of the B-Note Holders;
(iv) fourth, the excess, if any, to the payment of the accrued and
unpaid Distributions on and Stated Amount of the Certificates, ratably in
respect of the claims of the Certificate Holders;
(v) fifth, the excess, if any, to the payment of any unpaid amounts
in respect of any and all other amounts due and owing under the Operative
Documents to or for the benefit of the Note Holders, ratably in respect of
the claims of the Note Holders;
(vi) sixth, the excess, if any, to the payment of any unpaid amounts
in respect of any and all other amounts due and owing under the Operative
Documents to or for the benefit of the Certificate Holders, ratably in
respect of the claims of the Certificate Holders; and
(vii) seventh, the excess, if any, to the Company.
(b) Proceeds from Other Collateral. Upon the occurrence of an Event
of Default, after deducting all amounts owing to the Trustee and the Agent for
compensation, reimbursement of expenses and indemnity, including their
reasonable compensation and expenses for the services of all attorneys, servants
and agents of the Trustee and the Agent properly engaged and employed (including
compensation and expenses in connection with any
41
Participation Agreement
Proprietary & Confidential
appeal), the Agent shall apply the moneys arising from any realization upon all
or a portion of the Collateral (other than Sales Proceeds which shall be applied
pursuant to Section 6.06(a)):
(i) first, to the payment of all accrued and unpaid interest on and
principal of the A-Notes, ratably in respect of the claims of the A-Note
Holders;
(ii) second, the excess, if any, to the payment of all accrued and
unpaid interest on and principal of the B-Notes, ratably in respect of the
claims of the B-Note Holders;
(iii) third, the excess, if any, to the payment of the accrued and
unpaid Distributions on and Stated Amount of the Certificates, ratably in
respect of the claims of the Certificate Holders;
(iv) fourth, the excess, if any, to the payment of any unpaid
amounts in respect of any and all other amounts due and owing under the
Operative Documents to or for the benefit of the Note Holders ratably in
respect of the claims of the Note Holders;
(v) fifth, the excess, if any, to the payment of any unpaid amounts
in respect of any and all other amounts due and owing under the Operative
Documents to or for the benefit of the Certificate Holders, ratably in
respect of the claims of the Certificate Holders; and
(vi) sixth, the excess, if any, to the Company.
(c) Deemed Contribution by B-Note Holders. If (A) the moneys from
any sale of or other realization on the Collateral made under or by virtue of
any Operative Document, together with any other sums which then may be held by
the Agent hereunder, are insufficient to retire in full 100% of the B-Notes and
(B) all recourse to other parties to the Operative Documents for amounts due and
owing thereunder has been exhausted, then the B-Note Holders shall have the
obligation to contribute, pro rata, to the Agent the amount of any additional
funds required to retire in full the B-Notes; provided that such obligation of
each B-Note Holder shall be deemed to be satisfied by a deemed contribution by
each such B-Note Holder of its pro rata share of unpaid principal amount of and
interest on the B-Notes, which deemed contributions shall be offset, in their
entirety, by the deemed distribution by the Agent of such contributions to
retire in full the B-Notes; provided, further, that the Agent shall have no
claim against any such B-Note Holder other than such deemed contribution and
shall not demand, institute proceedings to collect, or otherwise proceed against
any such B-Note Holder for, any monetary or other claim whatsoever under this
Section 6.06(c), any such right being hereby released and waived by the Agent.
42
Participation Agreement
Proprietary & Confidential
ARTICLE VII
APPLICATION OF FUNDS PRIOR TO DEFAULT; PREPAYMENT OF INSTRUMENTS
SECTION 7.01. Application of Funds Prior to Default. Except as
provided in Section 7.02 and except upon the occurrence of an Event of Default,
moneys received by the Lessor (or the Agent on behalf of the Lessor) shall be
applied as follows:
(a) Fixed Rent. Moneys received representing Fixed Rent shall be
applied:
(i) first, to the payment of accrued and unpaid interest on the
A-Notes, ratably in respect of the claims of the A-Note Holders;
(ii) second, the excess, if any, to the payment of accrued and
unpaid interest on the B-Notes, ratably in respect of the claims of the
B-Note Holders;
(iii) third, the excess, if any, to the payment of accrued and
unpaid Distributions due and owing to the Certificate Holders, ratably in
respect of the claims of the Certificate Holders;
(iv) fourth, the excess, if any, to the Company.
(b) Additional Rent. Moneys received representing Additional Rent
shall be applied:
(i) first, to the purposes for which such moneys were paid; and
(ii) second, the excess, if any, to the Company.
(c) Termination Value. Moneys received as payment by the Company of
the Termination Value with respect to each Property shall be applied:
(i) first, to the payment of all of the Outstanding A-Notes
allocable to such Property, together with accrued and unpaid interest
thereon to the date of payment;
(ii) second, the excess, if any, to the payment of the Outstanding
B-Notes allocable to such Property, together with accrued and unpaid
interest thereon to the date of payment;
(iii) third, the excess, if any, to the payment of all of the
Outstanding Certificates allocable to such Property, together with accrued
and unpaid yield thereon through the date of payment;
(iv) fourth, the excess, if any, to the payment of any and all other
amounts due and owing under the Operative Documents allocable to such
Property to or for the benefit of, the Note Holders, ratably in respect of
the claims of the Note Holders;
43
Participation Agreement
Proprietary & Confidential
(v) fifth, the excess, if any, to the payment of any unpaid amounts
in respect of any and all other amounts due and owing under the Operative
Documents allocable to such Property to or for the benefit of the
Certificate Holders, ratably in respect of the claims of the Certificate
Holders; and
(vi) sixth, the excess, if any, to the payment of Closing Costs; and
(vii) seventh, the excess, if any, to the Company (or its designee).
(d) Sales Proceeds. If the Company has paid the Residual Value
Amount for the Properties, then moneys received as payment of Sales Proceeds
shall be applied, whether received upon or after the termination of the Lease:
(i) first, to the payment of Closing Costs;
(ii) second, the excess, if any, to the payment of all Outstanding
B-Notes at 100% of their principal amount, together with accrued and
unpaid interest thereon to the date of payment, ratably in respect of the
claims of the B-Note Holders;
(iii) third, the excess, if any, to the payment of all Outstanding
Certificates at 100% of their unpaid Certificate Amount, together with
yield due and owing thereon to the date of payment, ratably in respect of
the claims of the Certificate Holders;
(iv) fourth, the excess, if any, to the payment of any and all other
amounts due and owing under the Operative Documents to or for the benefit
of the B-Note Holders, ratably in respect of the claims of the B-Note
Holders;
(v) fifth, the excess, if any, to the payment of any unpaid amounts
in respect of any and all other amounts due and owing under the Operative
Documents to or for the benefit of the Certificate Holders, ratably in
respect of the claims of the Certificate Holders; and
(vi) sixth, the excess, if any, to the Company.
(e) Residual Value Amount. Notwithstanding anything to the contrary
herein, moneys received representing payment of the Residual Value Amount for
the Properties shall be applied:
(i) first, to the payment of all Outstanding A-Notes at 100% of
their principal amount, together with accrued and unpaid interest thereon
to the date of payment, ratably in respect of the claims of the A-Note
Holders; and
(ii) second, the excess, if any, to the Company.
44
Participation Agreement
Proprietary & Confidential
(f) Payments under the Instrument Guaranty. Notwithstanding anything
to the contrary herein, moneys received representing payment under the
Instrument Guaranty shall be applied:
(i) if paid during the continuance of an Event of Default, in
accordance with Section 6.06(b); or
(ii) in the case of all other payments thereunder, in accordance
with Section 7.01(e).
(g) Proceeds from Maryland Land Purchase. Proceeds from any sale of
a portion of the Maryland Land pursuant to Section 5.02 of the Lease shall be
applied pro rata among all Instruments based on the amounts Outstanding
thereunder (and to each Holder ratably in respect of its claim thereunder).
(h) Other Payments. Any other sums received by the Lessor (or the
Agent on behalf of the Lessor) under the Operative Documents shall be applied:
(i) first, to the purposes for which such moneys were paid pursuant
thereto; and
(ii) second, the excess, if any, to the Company.
SECTION 7.02. Awards, Compensation or Other Payments on Account of
Casualty or Condemnation. Moneys received by the Lessee or the Lessor pursuant
to the Lease as Net Proceeds representing payment of any award, compensation,
insurance proceeds or other payment in respect of any Property or portion
thereof paid or payable to or received or receivable by reason of a Casualty or
Condemnation shall be applied as set forth in the Lease; provided that if the
Company shall have given, or be deemed to have given, an Offer to Purchase
pursuant to the Lease, or on the delivery by the Lessor of a Termination Notice
under the Lease, such moneys shall be held and applied by the Agent on the
Closing Date as provided in Section 7.01(c).
SECTION 7.03. Prepayment of Notes and Cancellation of Certificates.
(a) General. No prepayment of any Notes or cancellation of any
Certificates may be made, except to the extent and in the manner expressly
permitted or required by this Section 7.03. Any prepayment or cancellation of
the Instruments required or permitted to be made by this Section 7.03 shall be
made in accordance with the provisions of this Section 7.03 and except as set
forth in Section 7.03(c), shall be (i) with respect to the Notes, at 100% of the
then outstanding principal amount of the Notes so prepaid, together with accrued
and unpaid interest thereon to the date of prepayment and, as applicable, any
Additional Costs or other amounts owing under any of the Operative Documents or
(ii) with respect to the Certificates, at a price equal to the Certificate
Liquidation Amount owing as of the cancellation date, and as applicable, any
Additional Costs or other amounts owing under any of the Operative Documents.
Except as set forth in Section 7.03(c), unless the Notes are to be prepaid
(together with all
45
Participation Agreement
Proprietary & Confidential
accrued and unpaid interest thereon to the date of prepayment) in full
simultaneously therewith, cancellation of the Certificates will not be
permitted.
(b) Notice of Prepayment or Cancellation; Termination of Interest
and Distributions on Prepayment Date. In case of any prepayment of any of the
Notes or cancellation of any of the Certificates, notice thereof shall be given
by the Trustee, if the Trustee has notice thereof, to the Holders of the
applicable Instruments at least thirty (30) days (if practicable, and if not, as
soon as it is practicable for the Trustee to give such notice) and not more than
sixty (60) days prior to the date fixed for prepayment or cancellation. Upon the
receipt (or deemed receipt) by the Lessor pursuant to Article V of the Lease of
an Offer to Purchase or on the delivery by the Lessor of a Termination Notice
under the Lease, the Lessor shall give notice of such prepayment. Each notice of
prepayment shall specify the date fixed for prepayment or cancellation, the
Instruments subject to prepayment or cancellation and shall be accompanied by
all documents relating to such prepayment or cancellation. Interest or
Distributions on the Instruments subject to prepayment or cancellation shall
cease to accrue or become due upon the date fixed for prepayment or cancellation
unless default shall be made in the payment of the price payable upon the
prepayment or cancellation thereof.
(c) Permitted Prepayments. (i) Prepayment of the Notes and the
Certificates prior to the maturity of the Notes will be made upon the receipt by
the Agent (for the account of the Lessor) of (A) the Residual Value Amount and
the Sales Proceeds or (B) the Termination Value for the Properties, in each case
in compliance with the Operative Documents.
(ii) Prepayment of the Notes and the Certificates allocable to any
Property prior to the maturity of the Notes will be made upon receipt by the
Agent (for the account of the Lessor) of the Termination Value for such Property
in compliance with the Operative Documents.
(iii) Partial prepayment of the Notes and the Certificates will be
made in connection with a purchase of a portion of the Maryland Land pursuant to
Section 5.02 of the Lease.
ARTICLE VIII
THE AGENT
SECTION 8.01. Authorization and Action. (a) Each Note Holder and
Certificate Holder hereby appoints and authorizes the Agent to take such action
as the Agent on such Note Holder's and Certificate Holder's behalf and to
exercise such powers under this Agreement and the other Operative Documents as
are delegated to the Agent by the terms hereof and thereof, together with such
powers as are reasonably incidental thereto (including any delegation by the
Lessor of its collection and disbursement functions). The Trustee hereby
appoints and authorizes the Agent to collect, disburse, invest and otherwise
administer on the Trustee's behalf all funds paid or payable to the Agent and
the Trustee (as Lessor or otherwise) hereunder or under any of the other
Operative Documents, in each case in accordance with the terms thereof, and
XXXX,
00
Participation Agreement
Proprietary & Confidential
in its individual capacity, and in its capacity as Trustee shall not be liable
for the actions or inactions of the Agent in connection with the Agent's
collection, disbursement, investment and administration of such funds and shall
have no duty to supervise the actions of the Agent. As to any matters not
expressly provided for by this Agreement or the other Operative Documents, the
Agent shall not be required to exercise any discretion or take any action, but
shall be required to act or to refrain from acting (and shall be fully protected
in so acting or refraining from acting) upon the instructions of the Majority
Holders (except actions requiring the consent of all Note Holders and
Certificate Holders, in which case the Agent shall act or refrain from acting
upon instructions consented to by all Note Holders and Certificate Holders), and
such instructions shall be binding upon all Note Holders and Certificate
Holders; provided, however, that the Agent shall not be required to take any
action which exposes the Agent to personal liability or which is contrary to
this Agreement or applicable Law. The Agent agrees to give to each Note Holder
and Certificate Holder notice of each notice given to it by the Company, the
Guarantor and the Trustee pursuant to the terms of the Operative Documents.
(b) The Lessor and each Note Holder and Certificate Holder hereby
appoint and authorize CUSA to take such action as CUSA on the Lessor's, such
Note Holder's and Certificate Holder's behalf in connection with the
Intercreditor Agreement and to exercise such powers under the Intercreditor
Agreement as are delegated to CUSA thereunder, including the power to appoint
Wilmington Trust Company as Second Priority Collateral Trustee thereunder.
SECTION 8.02. Agent's Reliance, Etc. Neither the Agent nor any of
its Affiliates or Subsidiaries, nor any of the directors, officers, agents or
employees of any of them, shall be liable for any action taken or omitted to be
taken by it or them under or in connection with this Agreement or the other
Operative Documents, except for its or their own gross negligence or willful
misconduct, it being the intent that such Persons shall not be liable for any
such action or inaction that constitutes ordinary negligence. Without limiting
the generality of the foregoing, the Agent: (i) may consult with legal counsel,
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (ii) makes
no warranty or representation to any Note Holder or Certificate Holder and shall
not be responsible to any Note Holder or Certificate Holder for any statements,
warranties or representations made in or in connection with this Agreement or
the other Operative Documents; (iii) shall not have any duty to ascertain or to
inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement or the other Operative Documents on the part of the
Company or the Guarantor or to inspect the property (including the books and
records) of the Company or the Guarantor; (iv) shall not be responsible to any
Note Holder or Certificate Holder for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or the other
Operative Documents or any other instrument or document furnished pursuant
hereto or thereto; (v) shall have no duty to verify the Requisition or the
authenticity of any signature appearing on the Requisition other than to compare
such signature with incumbency certificates provided by the Company listing
Officers of the Company authorized to execute the Requisition, and (vi) shall
incur no liability under or in respect of this Agreement or the other Operative
Documents by acting upon any notice, consent, certificate or other instrument or
writing in accordance with the
47
Participation Agreement
Proprietary & Confidential
terms hereof or thereof believed by it to be genuine and signed or sent by the
proper party or parties.
SECTION 8.03. CUSA and Affiliates. CUSA and any of its Affiliates,
if acting as Note Holder and/or Certificate Holder, shall have the same rights
and powers under any Instrument, this Agreement and the other Operative
Documents as any other Note Holder or Certificate Holder and may exercise the
same as though CUSA or such Affiliate were not the Agent; and the terms "Note
Holder" or "Note Holders" (and "Certificate Holder" or "Certificate Holders" if
CUSA or any of its Affiliates is a Certificate Holder) shall, unless otherwise
expressly indicated, include CUSA in its individual capacity or any such
Affiliate, and CUSA and its Affiliates may accept deposits from, lend money to,
act as trustee under indentures of, and generally engage in any kind of
business with, the Company, the Guarantor and any Subsidiary thereof and any
Person who may do business with or own securities of the Company, the Guarantor
or any Subsidiary thereof, all as if CUSA were not the Agent and without any
duty to account therefor to the Note Holders and Certificate Holders.
SECTION 8.04. Note Holder and Certificate Holder Credit Decision.
Each Note Holder and Certificate Holder acknowledges that it has, independently
and without reliance upon the Agent, the Trustee or any other Note Holder or
Certificate Holder and based on the financial statements referred to in Section
3.02(d) and such other documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this Agreement. Each
Note Holder and Certificate Holder also acknowledges that it will, independently
and without reliance upon the Agent, the Trustee or any other Note Holder or
Certificate Holder and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions with respect
to this Agreement or any of the other Operative Documents.
SECTION 8.05. Indemnification. The Note Holders and the Certificate
Holders agree to indemnify the Agent, ratably according to the respective
aggregate principal and Certificate Amounts of the Instruments then held by each
Note Holder or Certificate Holder, as the case may be (or if the Notes and the
Certificates have been fully repaid and retired or if any Instruments are held
by Persons which are not Note Holders or Certificate Holders, ratably according
to either (i) the respective aggregate amounts of their Note Commitments or
Certificate Commitments, or (ii) if all such Note Commitments and Certificate
Commitments have terminated, the respective amounts of the Note Commitments and
Certificate Commitments terminated), from and against any and all losses of any
kind or nature whatsoever which may be imposed on, incurred by, or asserted
against the Agent in any way relating to or arising out of this Agreement, any
other Operative Document or any action taken or omitted by the Agent under this
Agreement or any other Operative Document; provided, that neither any Note
Holder nor any Certificate Holder shall be liable to the Agent for any portion
of such losses resulting from the Agent's gross negligence or willful
misconduct. Without limitation of the foregoing, each Note Holder and
Certificate Holder agrees to reimburse the Agent promptly upon demand for its
ratable share of any out-of-pocket expenses (including reasonable counsel fees)
incurred by the Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or
48
Participation Agreement
Proprietary & Confidential
otherwise) of, or legal advice in respect of rights or responsibilities under,
this Agreement or any other Operative Document to the extent that the Agent is
not reimbursed for such expenses by the Company.
SECTION 8.06. Successor Agent. The Agent may resign at any time as
Agent under this Agreement by giving written notice thereof to the Note Holders,
the Certificate Holders, the Trustee and the Company and may be removed at any
time with or without cause by the Majority Holders. Upon any such resignation or
removal, the Majority Holders, subject to the consent of the Company (which
consent shall not be unreasonably withheld), shall have the right to appoint a
successor Agent which shall be a commercial bank or trust company organized
under the laws of the United States of America or any State thereof (or
otherwise authorized by law to conduct a banking business in the United States
of America or any State thereof) reasonably acceptable to the Company. If no
successor Agent shall have been so appointed by the Majority Holders, and shall
have accepted such appointment, or any successor Agent appointed shall not have
accepted such appointment, in either case, within thirty (30) days after the
retiring Agent's giving of notice of resignation or the Majority Holders'
removal of the retiring Agent, then the retiring Agent may, on behalf of the
Note Holders and Certificate Holders, appoint a successor Agent, which shall be
a Note Holder which is a commercial bank organized under the laws of the United
States of America or of any State thereof and having a combined capital and
surplus of at least $250,000,000. Upon the acceptance of any appointment as
Agent under this Agreement by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent and shall function as the Agent under this
Agreement, and the retiring Agent shall be discharged from its duties and
obligations as Agent (other than those which arise prior to such Agent's removal
or resignation) under this Agreement. After any retiring Agent's resignation
hereunder as Agent, the provisions of Sections 8.01 through 8.06 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement.
SECTION 8.07. Certain Duties and Obligations Regarding Collateral.
(a) Notwithstanding anything to the contrary in this Agreement or in any other
Operative Document, the Agent shall not exercise any rights or remedies under
any of the Operative Documents or give any consent under any of the Operative
Documents or enter into any agreement amending, modifying, supplementing or
waiving any provision of any Operative Document unless it shall have been
directed to do so in writing by the requisite percentage required under the
Operative Documents or, in the absence of an express provision, by the Majority
Holders.
(b) The Agent may execute any of its duties under this Agreement or
any Operative Document by or through agents or attorneys- in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
(c) The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, 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, independent
accountants and
49
Participation Agreement
Proprietary & Confidential
other experts selected by the Agent. The Agent shall be fully justified in
failing or refusing to take action under any Operative Document or this
Agreement (i) if such action would, in the reasonable opinion of the Agent, be
contrary to Law or the terms of this Agreement or the other Operative Documents,
(ii) if such action is not specifically provided for in such Operative Document
or this Agreement, (iii) if it shall not have received any such advice or
concurrence of the Majority Holders as it deems appropriate, or (iv) if, in
connection with taking of any such action that would constitute an exercise of
remedies under such Operative Document or this Agreement, it shall not first be
indemnified to its satisfaction 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 any Operative Document or this Agreement in accordance with a
request of the Majority Holders (to the extent that the Majority Holders are
expressly authorized to direct the Agent to take or refrain from taking such
action), and such request and any action taken or failure to act pursuant
thereto shall be binding upon the Note Holders, the Certificate Holders and the
Trustee.
(d) The Agent shall not be deemed to have actual, constructive,
direct or indirect knowledge or notice of the occurrence of any Event of Default
unless and until the Agent has received a written notice or a certificate from
the Company, the Guarantor, the Trustee or the Majority Holders stating that an
Event of Default has occurred under the Operative Documents. The Agent shall
have no obligation whatsoever either prior to or after receiving such notice or
certificate to inquire whether an Event of Default has in fact occurred and
shall be entitled to rely conclusively, and shall be fully protected in so
relying, on any such notice or certificates furnished to it. No provision of
this Agreement or any other Operative Document shall require the Agent to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or under any Operative Document or in
the exercise of any of its rights or powers, if it shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it.
(e) The Agent shall be entitled to reimbursement for reasonable
out-of-pocket expenses, including the reasonable fees and expenses of its
counsel (and any local counsel) and of any experts and agents, which the Agent
may reasonably incur in connection with (i) the administration of this Agreement
and the other Operative Documents, (ii) the custody or preservation of, or the
sale of, collection from, or other realization upon, any of the Collateral or
(iii) the exercise or enforcement (whether through negotiations, legal
proceedings or otherwise) of any of the rights of the Agent, the Note Holders,
the Certificate Holders or the Trustee hereunder or under the other Operative
Documents.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Survival. Except as otherwise expressly provided, the
parties' obligations under this Agreement and in any certificate or other
instrument delivered by any
50
Participation Agreement
Proprietary & Confidential
party or on such party's behalf pursuant to this Agreement shall terminate upon
the payment in full of all amounts then and thereafter due on the Notes and the
Certificates and under any of the Operative Documents. The confidentiality and
all indemnification provisions contained in this Agreement, including the
provisions of Sections 5.04, 5.05, 9.06, 9.13, 9.14 (subject to the provisions
of Section 9.14(b)) and 9.16, shall each survive the payment in full of all
amounts then and thereafter due on the Notes and the Certificates and due under
any of the Operative Documents. Such rights and obligations shall survive the
execution and delivery of any Operative Document, any issuance or disposition of
any of the Notes, the Certificates or distribution relating thereto, any
disposition of any interest in any Property or any portion thereof or the
termination of any Operative Document and shall continue in effect regardless of
any investigation made by or on behalf of any party he reto and notwithstanding
that any party may waive compliance with any other provision of any Operative
Document. To the extent that any payments made under the Operative Documents are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, debtor in possession, receiver or other
Person under any Bankruptcy Law, common law or equitable cause, then to such
extent, the obligation so satisfied shall be revived and continue as if such
payment had not been received and the rights, powers and remedies under this
Agreement and each other Operative Document shall continue in full force and
effect. In such event, the Operative Documents shall be automatically reinstated
and the Company shall take such action as may be reasonably requested by the
Agent and the Holders to effect such reinstatement.
SECTION 9.02. Notices. Unless otherwise specifically provided in any
Operative Document, all notices, consents, directions, approvals, instructions,
requests and other communications given to any party hereto under any Operative
Document shall be in writing to such party at the address set forth in Schedule
I hereto or at such other address as such party shall designate by notice to
each of the other parties hereto and may be personally delivered (including
delivery by private or overnight courier services) or delivered by registered or
certified mail or by telecopy (with a copy of such notice sent by private or
overnight courier service for overnight delivery or by registered or certified
mail), to the party entitled thereto, and shall be deemed to be duly given or
made when delivered by hand unless such day is not a Business Day, in which case
such delivery shall be deemed to be made as of the next succeeding Business Day
or in the case of telecopy (with a copy of such notice sent by private courier
service for overnight delivery or by registered or certified mail), when sent,
so long as it was received during normal business hours of the receiving party
on a Business Day and otherwise such delivery shall be deemed to be made as of
the next succeeding Business Day.
SECTION 9.03. Severability. If any provision hereof or the
application thereof to any Person or circumstance shall be invalid, illegal or
unenforceable, the remaining provisions or the application of such provision to
Persons or circumstances other than those as to which it is invalid or
enforceable, shall continue to be valid, legal and enforceable.
SECTION 9.04. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or of any other Operative Document, nor consent to
any departure by the Company or the Guarantor therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Majority Holders
(unless the Agent is authorized hereunder or under
51
Participation Agreement
Proprietary & Confidential
any Operative Document to act without joinder of the Majority Holders, in which
case the Agent may take such action), the Company, the Guarantor and the Trustee
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided, however, that, in
addition to the requirements above, no amendment, waiver or consent shall,
unless in writing and signed by all of the Note Holders and the Certificate
Holders, do any of the following: (a) increase the Note Commitment of the Note
Holders or the Certificate Commitment or subject the Note Holders or the
Certificate Holders to any additional obligations, (b) reduce the Applicable
Rate or any fees or other amounts payable hereunder or under any other Operative
Document, (c) take action which requires the signing by all the Note Holders or
the Certificate Holders pursuant to the terms of any Operative Document, (d)
postpone any date fixed for any payment of principal or Certificate Amount of,
or interest or Distributions on the Notes or the Certificates or any fees or
other amounts payable under the Operative Documents, (e) release any of the
Liens created pursuant to the Operative Documents, other than as a result of the
purchase of the Properties in compliance with the Operative Documents, (f) amend
this Section 9.04, (g) amend the definitions of Majority Holder, Majority Note
Holders or Majority Certificate Holders, (h) amend the definition of Eligible
Assignee or any of the provisions of Section 5.03, (i) deprive any of the
Holders of their interests in the Collateral except as provided in the Operative
Documents, (j) amend the Instrument Guaranty or release the Company from its
obligations thereunder, or (k) amend the Parent Guaranty or release the
Guarantor from its obligations thereunder; provided, further, that in addition
to the requirements above, no amendment, waiver or consent shall, unless in
writing and signed by the Agent in addition to the Company, the Guarantor, the
Trustee, the Note Holders and the Certificate Holders required above to take
such action, affect the rights or duties of the Agent under this Agreement or
any of the Operative Documents.
SECTION 9.05. Headings. The table of contents and headings of the
Articles, Sections and subsections of this Agreement are for convenience only
and shall not affect the meaning of this Agreement.
SECTION 9.06. Compliance Responsibility. None of the Trustee
(notwithstanding the representations and warranties of WFBN in Section 3.03),
the Agent, or any Note Holder or any Certificate Holder shall have any
responsibility for compliance by any Property or by the Company with any Law,
engineering standards or practices or other matters.
SECTION 9.07. Definitions. Except as otherwise expressly provided
herein, capitalized terms used in this Agreement and all schedules and exhibits
hereto shall have the respective meanings given in Appendix A hereto.
SECTION 9.08. Benefit. The parties hereto and their permitted
successors and assigns, but no others (except as expressly set forth in this
Section 9.08), shall be bound hereby and entitled to the benefit hereof.
SECTION 9.09. Place of Payment. So long as a Note Holder,
Certificate Holder or an Affiliate of a Note Holder or Certificate Holder or a
bank or institutional investor is the owner of any beneficial interest in the
Instruments, the Agent will cause all amounts to be paid
52
Participation Agreement
Proprietary & Confidential
by the Trustee which become due and payable or owing on such beneficial interest
in the Instruments to be paid by bank wire transfer of immediately available
funds or, at the option of such Note Holder or Certificate Holder, such
Affiliate, bank or institutional investor, by check of the Agent (for the
account of the Trustee) duly mailed, delivered or made at the address or account
referenced in Schedule I hereto or provided in writing by such Person to the
Agent, in all cases without presentation of the underlying Instrument, provided,
that upon receipt of payment in full the underlying Instruments shall be
returned by the respective Holders thereof to the Trustee marked "canceled".
SECTION 9.10. Counterparts; Effectiveness. The parties may sign this
Agreement in any number of counterparts and on separate counterparts, each of
which shall be an original, but all of which together shall constitute one and
the same instrument. Delivery of an executed counterpart signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart signature page to this Agreement.
SECTION 9.11. Governing Law and Jurisdiction. (a) THIS AGREEMENT
SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK.
(b) Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the non-exclusive
jurisdiction of any New York State court or federal court of the United States
of America sitting in New York City, and any appellate court from any thereof,
in any action or proceeding arising out of or relating to this Agreement or any
other Operative Document, or for recognition or enforcement of any judgment, and
each of the parties hereto hereby irrevocably and unconditionally agrees that
all claims in respect of any such action or proceeding may be heard and
determined in any such New York State court or, to the extent permitted by law,
in such federal court. Each of the parties hereto agrees that a final judgment
in any such action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
law. Nothing in this Agreement shall affect any right that any party may
otherwise have to bring any action or proceeding relating to this Agreement, the
Notes or the Certificates in the courts of any jurisdiction.
(c) Each of the parties hereto irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or any other
Operative Document in any New York State or federal court located in New York
City. Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.
SECTION 9.12. Time; Business Day. (a) TIME IS OF THE ESSENCE IN THIS
AGREEMENT, AND THE TERMS HEREOF SHALL BE SO CONSTRUED.
53
Participation Agreement
Proprietary & Confidential
(b) If the date scheduled for any payment or action under any
Operative Document shall not be a Business Day, then (unless such Operative
Document provides otherwise) such payment shall be made or such action shall be
taken on the next succeeding Business Day.
SECTION 9.13. Transaction Costs; Fees. Whether or not the
transactions contemplated by this Agreement are consummated, the Company shall
pay on demand all reasonable charges, fees, expenses, disbursements and
out-of-pocket costs (collectively, "Transaction Costs") incurred before, on or
after the Funding Date in connection with the preparation, execution, delivery,
administration, performance and enforcement of any Operative Document, or any
other agreement, arrangement, document or paper relating to the transactions
contemplated hereby or thereby or any modification, amendment or supplement
thereto or any waivers or enforcement thereof, including:
(i) the reasonable fees, expenses and disbursements of each of the
Agent, the Trustee, Special Counsel, Trustee's Counsel, the Appraiser, the
Independent Engineer and the Environmental Consultant for services
rendered to such parties in connection with such transactions;
(ii) the reasonable expenses of the Trustee and the Agent incurred
in connection with such transactions;
(iii) the reasonable fees and expenses of Special Counsel (and any
local counsel), and Trustee's Counsel with respect to advising the Agent,
the Note Holders, Certificate Holders and the Trustee, respectively, as to
their rights and responsibilities under the Operative Documents, and all
costs and expenses, if any (including attorneys' fees and expenses), in
connection with any amendments or waivers to or the enforcement (whether
through negotiations, legal proceedings, or otherwise) of the Operative
Documents;
(iv) all reasonable fees and expenses of the Agent in connection
with any printing and other document reproduction and distribution
expenses, stamp or other similar Taxes, fees or excises, including
interest and penalties, and all filing fees, Taxes, and expenses in
connection with (i) the recording or filing of instruments and financing
statements in connection with the transactions described in this Agreement
and (ii) the creation, perfection, and maintenance of the security
interests created by the Operative Documents;
(v) the fees and expenses as set forth in Schedule II hereto; and
(vi) the reasonable fees, expenses and disbursements of local
counsel of the Agent or Special Counsel, for services rendered during the
term of the Operative Documents in connection with the filing,
continuation or perfection of any mortgages, deeds of trust, and any UCC
financing or continuation statements or any other document or instrument
relating to the creation, perfection, preservation protection, validity,
effectiveness or enforcement thereof.
54
Participation Agreement
Proprietary & Confidential
SECTION 9.14. Indemnification. (a) The Company agrees to indemnify
the Trustee, the Agent, the Note Holders, the Certificate Holders, their
Affiliates and any officer, director, employee, agent or controlling person of
any of the above (each an "Indemnified Party") and hold each Indemnified Party
harmless on an After Tax Basis, from and against any and all liabilities,
losses, damages, costs and reasonable out-of-pocket expenses of any kind,
including, the fees and disbursements of counsel which may be incurred by such
Indemnified Party in connection with any investigative, administrative or
judicial proceeding (whether or not such Indemnified Party shall be designated a
party thereto) with respect to the transactions contemplated by this Agreement
and the other Operative Documents based upon, arising out of or otherwise
relating to or in respect of the following:
(i) any injury to, or death of, any natural person, or damage to or
loss of property, or any matters occurring on or resulting from activities
using, on or relating to any Property or any part thereof;
(ii) the acquisition, ownership, leasing, ground leasing,
subleasing, construction, operation, management, maintenance, occupancy,
possession, use, non-use or condition of any Property or any part thereof;
(iii) any violation by the Company of any of the terms or conditions
of this Agreement, the Lease or any of the other Operative Documents;
(iv) any Default, Event of Default, Non-Performance Event, Casualty,
Condemnation or Environmental Trigger;
(v) any act or omission of the Company, the Ground Lessor or any of
their agents, contractors, licensees, sublessees, invitees,
representatives or any person for whose conduct the Company or the Ground
Lessor is legally responsible on or relating to or in connection with the
acquisition, ownership, leasing, ground leasing, subleasing, construction,
operation, management, maintenance, occupancy, possession, use, non-use or
condition of any Property or any part thereof;
(vi) the performance of any labor or services or furnishing of any
materials or other property in respect of any Property or any part
thereof;
(vii) any Liens (including, without limitation, any Permitted
Encumbrances) on or with respect of and to any Property or any part
thereof;
(viii) any permitted contest referred to in the Lease;
(ix) any breach, violation or default by the Company of any contract
or agreement directly or indirectly relating to any Property or any part
thereof or the transactions to be consummated pursuant to the Operative
Documents to which the Company is a party (or any transactions in which
any proceeds of all or any part of the proceeds of the Instruments are
applied) or of any Legal Requirement or Insurance Requirement;
55
Participation Agreement
Proprietary & Confidential
(x) any termination or invalidity of the Trustee's interest in any
Property or any part thereof (other than as a result of the purchase of
such Property in accordance with the Lease);
(xi) the non-occurrence of the Funding and Break Costs associated
therewith;
(xii) any actual or proposed use by the Company or any other Person
of the proceeds of any Advance or Equity Investment;
(xiii) the execution, delivery, and performance of (or in any other
way related to or arising out of) the Operative Documents or the
transactions contemplated thereby, or any violation or breach by the
Company of such documents and agreements;
(xiv) the operation of the business of the Company and its
Affiliates;
(xv) the impairment of all access to and from any Property or any
part thereof as required for the efficient and proper operation of such
Property;
(xvi) any defect or deficiency in or any lack of title to or right
of occupancy, access, possession or use of any real property or other
property which defect, deficiency or absence adversely affects (a) the
value, marketability, condition, use, ownership, leasing, subleasing,
ground leasing, construction, operation, management, maintenance,
occupancy, possession, sale or disposition of any Property or any part
thereof or (b) the proper and efficient operation of the Improvements (or
any portion thereof); or
(xvii) any environmental condition (including Pre-existing
Environmental Conditions) in, on, beneath, from, or involving any Property
or any portion thereof (including the presence, emission, or release of
Hazardous Materials or the violation of any applicable Environmental Law).
(b) Notwithstanding anything to the contrary contained in this
Agreement or the other Operative Documents, the Company shall not indemnify or
hold harmless any Indemnified Party against (i) any claims to the extent arising
as a result of the fraud, gross negligence or willful misconduct of an
Indemnified Party, (ii) any claims to the extent resulting from the breach of
any representation, warranty or covenant of such Indemnified Party set forth in
any Operative Document, (iii) any claims resulting from Lessor Liens which the
Lessor is responsible for discharging under the Operative Documents and (iv) any
claims arising from a breach or alleged breach by the Lessor of any agreement
entered into in connection with the assignment or participation of Rent. Without
limiting the express right of any Indemnified Party under this Section 9.14,
this Section 9.14 shall be construed as an indemnity only and not a guaranty of
residual value of any Property. In addition, nothing in Section 9.14(a) shall be
deemed to limit the obligations of the Company under Section 5.04.
(c) The obligations of the Company under this Section 9.14 shall
survive the expiration or any termination of this Agreement or any other
Operative Document (whether by operation of law or otherwise) for all matters
described in this Section 9.14 which occur or arise
56
Participation Agreement
Proprietary & Confidential
prior to such expiration or termination or arise out of or result from facts,
events, claims, liabilities, actions or conditions occurring, arising or
existing on or before such expiration or termination.
(d) Notwithstanding anything to the contrary contained in this
Agreement or the other Operative Documents, neither the Company nor any
Indemnified Party shall be liable for any settlement, compromise or consent to
the entry of any order adjudicating or otherwise disposing of any loss, claim,
damage or liability effected without the consent of the Company or such
Indemnified Party, as the case may be, which consent shall not be unreasonably
withheld.
(e) Promptly after receipt by an Indemnified Party of written notice
of any loss, claim, damage or liability in respect of which indemnity may be
sought by it hereunder, such Indemnified Party will, if a claim for indemnity is
to be made by it against the Company under Section 9.14(a), notify the Company
thereof. Thereafter, such Indemnified Party and the Company shall consult, to
the extent appropriate, with a view to minimizing the cost to the Company of its
obligations hereunder. In case any such Indemnified Party receives written
notice of any loss, claim, damage or liability in respect of which indemnity may
be sought by it hereunder, the Company will be entitled to participate in the
defense thereof, and to the extent that the Company may elect by notice
delivered to such Indemnified Party promptly after receiving the aforesaid
notice from such Indemnified Party, to assume the defense thereof, with counsel
reasonably satisfactory at all times to such Indemnified Party; provided that
(i) if the parties against whom any loss, claim, damage or liability arises
include both such Indemnified Party and the Company and such Indemnified Party
shall have reasonably concluded that there may be legal defenses available to it
or other Indemnified Parties which are different from or additional to those
available to the Company and may conflict therewith, such Indemnified Party or
Indemnified Parties shall have the right to select separate counsel to assume
such legal defense and otherwise to participate in the defense of such loss,
claim, damage or liability on behalf of such Indemnified Party or Indemnified
Parties and (ii) if any loss, claim, damage or liability arises out of actions
brought by or for the benefit of the Company, such Indemnified Party or
Indemnified Parties shall have the right to select their counsel and to assume
and direct the defense thereof and the Company shall not be entitled to
participate therein or assume the defense thereof. Upon receipt of notice from
the Company to such Indemnified Party of its election to so assume the defense
of such loss, claim, damage or liability and approval by such Indemnified Party
of counsel, the Company shall not be liable to such Indemnified Party under
Section 9.14(a) for any legal expenses subsequently incurred by such Indemnified
Party in connection with the defense thereof unless (A) such Indemnified Party
shall have employed counsel in connection with the assumption of legal defenses
in accordance with the proviso to the next preceding sentence, (B) the Company
shall not have employed and continued to employ counsel reasonably satisfactory
to such Indemnified Party to represent such Indemnified Party or (C) the Company
shall have approved the employment of counsel for such Indemnified Party at the
expense of the Company.
(f) Subject to Section 9.16, each Indemnified Party shall, at the
expense of the Company, supply the Company with such information and documents
reasonably requested by
57
Participation Agreement
Proprietary & Confidential
the Company and in the possession of such Indemnified Party as are necessary or
advisable for the Company to participate in any action, suit or proceeding to
the extent permitted hereunder.
(g) Notwithstanding anything in this Section 9.14 to the contrary,
Section 5.04 shall exclusively control with respect to Charges, Excluded
Charges, Taxes and Other Taxes.
SECTION 9.15. Operative Documents; Further Assurances. Each of the
parties hereto does hereby covenant and agree to perform and be governed and
restricted by the Operative Documents to which it is a party and, subject to the
terms and conditions thereof, to take or cause to be taken, all actions and to
do, or cause to be done, all things necessary, proper or advisable in connection
therewith. The Company, the Trustee, the Agent, the Note Holders and the
Certificate Holders, at the expense of the Company, shall execute and deliver
such further instruments and do such further acts as may be reasonably necessary
to carry out more effectively the purposes of the Operative Documents and the
transactions contemplated thereby.
SECTION 9.16. Confidentiality. (a) Each of the parties hereto, other
than the Agent and, as applicable, its Affiliates, agrees that, subject to
Section 5.03, it will maintain the confidentiality of the documentation of this
transaction, the structure of which was developed exclusively by Citibank.
(b) Each of the parties hereto agrees that unless otherwise required
by Law or by any Governmental Authority or consented to in writing by the
Company, the Guarantor and the Agent, it will maintain the confidentiality of
all non-public information (i) regarding the financial terms of this transaction
or (ii) regarding the Company, the Guarantor or the Properties which shall be
furnished to it by or on behalf of the Company or the Guarantor in connection
with the transactions contemplated by the Operative Documents, in accordance
with the procedures it generally applies to confidential material; provided,
however, that if the Lease has been terminated and the Company has not purchased
the Lessor's interest in the Properties, then the Note Holders, the Certificate
Holders, the Agent and the Trustee shall not be bound by the confidentiality
provisions of this Section 9.16(b).
(c) Except as otherwise provided in Section 9.16(b) the parties
hereto agree not to publish tombstones or other public announcements in
connection with the transactions contemplated hereby without the consent of the
Company, the Guarantor, the Agent and the Note Holders.
SECTION 9.17. Interest Laws. Nothing contained in this Agreement or
the other Operative Documents shall be deemed to require the payment of
interest, yield or other charges by the Company or any other Person in excess of
the amount which may be lawfully charged under any applicable usury laws (the
"Maximum Rate"). In the event that the Company or any other Person shall collect
moneys under this Agreement or any other Operative Document which are deemed to
constitute interest (including Fixed Rent or Additional Rent) which would
increase the effective interest or yield rate to a rate in excess of the Maximum
Rate, all such sums deemed to constitute interest in excess of the Maximum Rate
shall, upon such determination, at the option of the Person to whom such payment
was made, be returned to the
58
Participation Agreement
Proprietary & Confidential
payor thereof or credited against other amounts owed by such payor hereunder or
under the other Operative Documents.
SECTION 9.18. Financial Advisor. The parties hereto (including the
Trustee at the direction of the Note Holders and the Certificate Holders)
acknowledge and agree that neither Citibank, the Company's exclusive financial
advisor for the transactions contemplated by the Operative Documents, nor any of
Citibank's Affiliates, is making any representation or warranty, or is required
to make any disclosure, now or in the future, with respect to the parties' tax
or accounting treatment of the transactions contemplated by the Operative
Documents. Each of the parties hereto further acknowledges and agrees that
neither Citibank nor any of its Affiliates is responsible, or will be
responsible in the future, for tax and accounting advice with respect to the
transactions contemplated by the Operative Documents, and that it (i) has,
independently and without reliance on Citibank or its Affiliates, made its own
analysis and decisions with respect to such matters and has had the benefit of
the advice of its own independent tax and accounting advisers with respect to
such matters to the extent it has deemed appropriate and (ii) will,
independently and without reliance on Citibank or its Affiliates, continue to
make its own analyses and decisions with respect to such matters based on such
information and advice as it deems appropriate for such purposes.
SECTION 9.19. Securities Representation. Each Note Holder and
Certificate Holder hereby represents that it is acquiring its Instruments for
investment for its own account, and not with a view to or for sale in connection
with a distribution of any Note, except in compliance with all applicable
securities laws; provided, however, that, subject to Section 5.03, the
disposition of any Instrument held by that Note Holder or Certificate Holder
shall at all times be within its exclusive control.
SECTION 9.20. Agreements with Respect to the Properties; Collateral.
(a) Upon payment by the Company of the Termination Value for any Property (or
portion thereof pursuant to Section 5.02 of the Lease), and upon the request of
the Company, the Lessor will convey its interest in such Property (or portion
thereof pursuant to Section 5.02 of the Lease) to the Company (or its designee)
pursuant to a special warranty deed (with respect to the Maryland Land (or
portion thereof pursuant to Section 5.02 of the Lease)), an assignment of lease
or lease termination (with respect to the California Land) and pursuant to a
special warranty deed and/or xxxx of sale (with respect to the Improvements),
which assignment, termination, special warranty deed and/or xxxx of sale shall
be made without recourse, representation, or warranty of any kind, except that
such Property (or portion thereof pursuant to Section 5.02 of the Lease) will be
free and clear of any Lien (including Lessor Liens) or other adverse interest of
any kind created by the Lessor (except for Permitted Encumbrances or as
consented to or created by the Company and except as to any interest created by
the Lessor upon the exercise of any right under the Operative Documents upon any
Default, Event of Default, Non-Performance Event or Environmental Trigger).
(b) Upon the consummation of the purchase of the Lessor's interest
in any Property by the Company (or its designee) for the Termination Value or
for a portion of such Property pursuant to Section 5.02 of the Lease for the
amount set forth thereunder and otherwise
59
Participation Agreement
Proprietary & Confidential
in compliance with the Operative Documents, at the request of the Company or the
Agent, as applicable, the Lessor and the Agent shall execute releases and
termination statements (or partial releases and terminations, as applicable)
required to release or terminate the Liens granted under the Operative Documents
with respect to the Collateral (or relevant portion thereof relating to the
applicable Property or portion thereof), which releases shall be made without
recourse, representation or warranty of any kind. The Lessor shall execute the
releases and termination statements to be executed by the Lessor under the
direction of the Agent. The Company shall pay all out-of-pocket costs and Taxes
arising from the preparation, execution, filing, and recording of such releases
and termination statements.
SECTION 9.21. Waiver of Trial by Jury. IN ANY ACTION OR PROCEEDING
UNDER OR RELATED TO THIS AGREEMENT, THE OPERATIVE DOCUMENTS OR ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION WITH THE FOREGOING, THE COMPANY, THE GUARANTOR, THE
AGENT, THE TRUSTEE AND EACH NOTE HOLDER AND CERTIFICATE HOLDER HEREBY AGREE THAT
ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A
JURY, IRRESPECTIVE OF WHICH PARTY COMMENCES SUCH ACTION OR PROCEEDING.
SECTION 9.22. Other Matters. The Company acknowledges that neither
any Note Holder, any Certificate Holder, the Trustee, the Agent, or any
Affiliate of any thereof is making any representation, nor is it required to
make any disclosure, now or in the future, with respect to the parties' tax or
accounting treatment of the Properties or the financing thereof, nor is any Note
Holder, any Certificate Holder, the Trustee, the Agent, or any Affiliate of any
thereof responsible, nor will it be responsible in the future, for tax and
accounting advice with respect to the Properties or the financing thereof, and
the Company has had or will have the benefit of the advice of its own
independent tax and accounting advisors with respect to such matters.
SECTION 9.23. Protective Expenditures; Payment for Services. At any
time after the expiration or other termination of the Lease, if the Lessee has
not purchased the Lessor's interest in the Properties pursuant to the terms of
the Lease, any Note Holder, Certificate Holder or the Trustee shall have the
right, but not the obligation, to pay, or to fund the Agent's payment of, (i)
real estate Taxes due and owing with respect to the Properties or (ii) insurance
premiums required to maintain the coverage required during the term of the Lease
(each a "Protective Expenditure"). Reimbursement of Protective Expenditures made
by any Note Holder, any Certificate Holder or the Trustee in accordance with
this Section 9.23 shall be made upon a sale of the Properties pursuant to the
provisions set forth herein.
SECTION 9.24. Exculpation of Trustee. Except for liability for its
representations and warranties in Sections 3.03 and 3.04, and for its own gross
negligence and willful misconduct and as otherwise expressly provided in the
Operative Documents, it is expressly understood and agreed by the parties hereto
that (a) this Agreement is executed and delivered by WFBN, not in its individual
capacity but solely as Trustee under the Trust Agreement, in the exercise of the
powers and authority conferred and vested in it as the Trustee
60
Participation Agreement
Proprietary & Confidential
under the Trust Agreement, (b) each of the undertakings and agreements herein
made on the part of the Trustee is made and intended not as a personal
representation, undertaking and agreement by WFBN but is made and intended for
the purpose for binding only the Trustee and the Trust Estate, (c) nothing
herein contained shall be construed as creating any liability on WFBN,
individually or personally, to perform any obligation of the Trustee either
expressed or implied contained herein or in the Operative Documents, all such
liability, if any, being expressly waived by the parties to this Agreement and
by any Person lawfully claiming by, through or under the parties to this
Agreement and (d) under no circumstances shall WFBN be personally liable for the
payment of any indebtedness or expenses of the Trustee or be liable for the
breach or failure of any obligation, representation, warranty or covenant made
or undertaken by the Trustee under the Operative Documents.
SECTION 9.25. Certificate Holder. At any time within five (5) years
after the expiration or termination of the Lease and upon the discovery of an
Environmental Event the events leading to which occurred prior to the expiration
or termination of the Lease, any Note Holder or Certificate Holder shall have
the right, upon five (5) Business Days written notice, to require the Company to
purchase all of its right, title and interest in and to its Notes or
Certificates, as the case may be, from such Note Holder or Certificate Holder
(as the case may be) for a purchase price of $1, in which case such Note Holder
or Certificate Holder (as the case may be) will convey its right, title and
interest in and to such Notes or Certificates, as the case may be, to the
Company free and clear of any Lien or other adverse interest of any kind created
by such Note Holder or Certificate Holder (as the case may be) or any Person
claiming by, through or under such Note Holder or Certificate Holder (as the
case may be) (except for Permitted Encumbrances as consented to by the Company
and except as to any interest created upon the exercise of any right under any
Operative Document upon any Default, Event of Default, Non-Performance Event or
Environmental Trigger). The Note Holders' or Certificate Holders' exercise of
their respective rights under this Section 9.25 shall not limit the Note
Holders' or Certificate Holders' rights and remedies under any Operative
Document, including the Note Holders' and Certificate Holders' rights to
indemnification hereunder.
SECTION 9.26. SPC Advances. Notwithstanding anything to the contrary
contained herein, any Note Holder (a "Granting Note Holder") may grant to one
special purpose funding vehicle (an "SPC") sponsored by such Granting Note
Holder, as identified as such in writing by such Granting Note Holder to the
Agent and the Guarantor from time to time (including, without limitation, by the
execution of this Agreement on the date hereof by a Granting Note Holder and its
SPC identified as such on the signature pages hereof), the option to provide to
the Trustee all or any part of any Advances that such Granting Note Holder would
otherwise be obligated to make to the Trustee pursuant to the terms hereof;
provided, that (i) nothing herein shall constitute a commitment to make any
Advance by any SPC, and (ii) if an SPC elects not to exercise such option or
otherwise fails to provide all or any part of such Advance, the Granting Note
Holder shall be obligated to make such Advance pursuant to the terms hereof. The
making of an Advance by an SPC hereunder shall utilize the Commitment of such
Granting Note Holder to the same extent, and as if such Advance were made by
such Granting Note Holder. Any SPC that makes an Advance shall (i) have in
regard to such Advance all of the rights (exercisable, however, only through its
Granting Note Holder acting as
61
Participation Agreement
Proprietary & Confidential
its agent) that such Granting Note Holder would have had if it had made such
Advance directly, and (ii) comply with this Agreement in regard to such Advance
on the same terms as any other Note Holder party hereto; provided that (A) the
Granting Note Holder's Commitment shall remain with such Granting Note Holder,
and (B) all monetary obligations of an SPC hereunder in respect of any Advance
it provides shall remain with its Granting Note Holder to the extent at any time
that such SPC elects not to or otherwise fails to perform or pay any such
obligation. Each party hereto hereby agrees that no SPC shall be liable for any
payment under this Agreement for which a Note Holder would otherwise be liable
for so long as, and to the extent, its sponsoring Granting Note Holder makes
such payment. Notwithstanding any Advance that may be provided by an SPC
hereunder, the Agent, the Company and the Guarantor shall be entitled to
continue to communicate and deal solely and directly with the Granting Note
Holder in connection with this Agreement in respect of such Advance. Each SPC
that is a signatory hereto, and each SPC that subsequently is identified by its
Granting Note Holder as having been granted such option, shall be deemed to have
confirmed (and the Guarantor and the Agent may require a written acknowledgment
of such confirmation signed by any SPC not a signatory hereto that is
subsequently so identified by its Granting Note Holder) to the Company and the
Agent that (a) it has received a copy of the Agreement and the other Operative
Documents, together with copies of the financial statements heretofore provided
to the Note Holders under the terms of this Agreement and such other documents
and information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Agreement; (b) agrees that it will independently and
without reliance upon the Agent, its Granting Note Holder or any other Note
Holder, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under the Agreement and any other Operative Document; (c) appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers and discretion under this Agreement and any other Operative Document
as are delegated to the Agent by the terms hereof and thereof, together with
such powers and discretion as are reasonably incidental thereto; (d) agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of this Agreement and any other Operative Document are required to be
performed by it as a Note Holder, subject to the terms of this Section 9.26; and
(e) appoints its Granting Note Holder, or a specified branch or affiliate
thereof, as its agent and attorney in fact and grants to its Granting Note
Holder an irrevocable power of attorney to receive payments made for the benefit
such SPC under this Agreement, to deliver and receive all communications and
notices under this Agreement and the other Operative Documents and to exercise
on such SPC's behalf all rights to vote and to grant and make approvals,
waivers, consents of amendments to or under this Agreement and other Operative
Documents. Any document executed by such agent on such SPC's behalf in
connection with this Agreement or the other Operative Documents shall be binding
on such SPC. In furtherance of the foregoing, the Company, the Guarantor, all
the Note Holders and the Agent each hereby agrees (which agreement shall survive
the termination of this Agreement) that, prior to the date that is one (1) year
and one (1) day after the payment in full of all outstanding commercial paper or
other senior indebtedness of any SPC, it will not institute against, or join any
other person in instituting against, such SPC any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or similar proceedings under
the laws of the United States or any State thereof. In addition, notwithstanding
anything to the contrary contained in Section 5.03, any SPC may (i) with notice
to, but without the prior written consent
62
Participation Agreement
Proprietary & Confidential
of, the Guarantor or the Agent, and without the payment of any processing fee
therefor, assign all or a portion of its interests in any Advances to its
Granting Note Holder or to any financial institutions consented to by the
Company and the Agent (and such consents shall be deemed to have been granted
with respect to any SPC signatory hereto on the date hereof) providing liquidity
and/or credit facilities to or for the account of such SPC to support the
funding or maintenance of Advances, and (ii) disclose on a confidential basis
any non-public information relating to its Advances to any rating agency,
commercial paper dealer or provider of liquidity and/or credit facilities to
such SPC. Nothing in this Section 9.26 that would affect the rights or
obligations of an SPC may be amended without the written consent of any SPC that
has any Advance outstanding at the time of such amendment.
63
Participation Agreement
Proprietary & Confidential
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed by their officers thereunto duly authorized as of the day and year
first above written.
RITE AID REALTY CORP.
By: _____________________________________
Name:
Title:
RITE AID CORPORATION
By: _____________________________________
Name:
Title:
64
SIGNATURE PAGE FOR PARTICIPATION AGREEMENT
XXXXX FARGO BANK NORTHWEST, NATIONAL
ASSOCIATION, not in its individual capacity
except as expressly set forth in the
Participation Agreement but solely as Trustee of
RAC Distribution Statutory Trust
By: ____________________________________________
Name:
Title:
SIGNATURE PAGE FOR PARTICIPATION AGREEMENT
CITICORP USA, INC.,
as Note Holder and as Certificate Holder
By: _____________________________________
Name:
Title:
THE CHASE MANHATTAN BANK,
as Note Holder and as Certificate Holder
By: _____________________________________
Name:
Title:
CREDIT SUISSE FIRST BOSTON,
as Note Holder and as Certificate Holder
By: _____________________________________
Name:
Title:
By: _____________________________________
Name:
Title:
FLEET RETAIL FINANCE INC.,
as Note Holder and as Certificate Holder
By: _____________________________________
Name:
Title:
SIGNATURE PAGE FOR PARTICIPATION AGREEMENT
CITICORP USA, INC.,
as Agent
By: _____________________________________
Name:
Title:
Schedule I to the
Participation Agreement
SCHEDULE I
MANNER OF PAYMENT
AND COMMUNICATIONS TO PARTIES
This Schedule I shows the names and addresses of the parties to the
foregoing Participation Agreement and the principal amounts of the Notes to be
purchased by the Note Holders and the Certificate Amount of Certificates to be
purchased by the Certificate Holders.
Company:
(1) Address for all notices:
Rite Aid Realty Corp.
c/o Rite Aid Corporation
00 Xxxxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxxxxx Xxxxxxxx
Fax No.: (000) 000-0000
Tel No.: (000) 000-0000
(2) All payments to the Company with respect to the Operative Documents shall
be made by wire transfer of immediately available funds to The Chase
Manhattan Bank, New York, New York, ABA#000-000-000, Account No.
910-2-750222, and with sufficient information to identify the source and
application of such funds.
Guarantor:
Address for all notices:
Rite Aid Corporation
00 Xxxxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxxxxx Xxxxxxxx
Fax No.: (000) 000-0000
Tel No.: (000) 000-0000
Schedule I to the
Participation Agreement
Trustee/WFBN:
(1) Address for all notices:
Xxxxx Fargo Bank Northwest, N.A.
Corporate Trust Services
MAC: U1254-031
00 Xxxxx Xxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Fax No.: (000) 000-0000
Tel. No.: (000) 000-0000
With a copy to:
RAC Distribution Statutory Trust
c/o Wells Fargo Bank Minnesota, N.A.
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Corporate Trust Services
Fax No.: (000) 000-0000
Tel. No.: (000) 000-0000
(2) All payments to WFBN with respect to the Operative Documents shall
be made by wire transfer of immediately available funds to Account
No. 0000000000 at Xxxxx Fargo Bank, Minneapolis, MN, ABA# 000000000,
with a reference to Rite Aid Realty Corp. Trust No. 3755700 and with
sufficient information to identify the source and application of
such funds.
Agent:
(1) Address for all notices:
Citicorp USA, Inc., as Agent
Xxx Xxxxx Xxx, Xxxxx 000
Xxx Xxxxxx, Xxxxxxxx 00000
Attention: Xxx Xxxx
Fax No.: (000) 000-0000
Tel. No.: (000) 000-0000
(2) All payments and transfers of funds to the Agent with respect to the
Operative Documents shall be made by wire transfer of immediately
available funds to Account No. 00000000 at Citibank, N.A., New York, ABA#
000000000, Account Name: NAIB Agency Medium Term Finance with a reference
to Rite Aid and with sufficient information to identify the source and
application of such funds.
Schedule I to the
Participation Agreement
Holder:
CITICORP USA, INC.
Amount
------
A-Note Commitment: $21,370,067.84
B-Note Commitment: $ 4,541,139.42
Certificate Commitment $ 801,377.56
Total: $26,712,584.82
(1) All payments with respect to the Operative Documents shall be made by wire
transfer of immediately available funds to Account No. 00000000 at Citibank,
N.A., New York, ABA# 000000000, Account Name: NAIB Agency Medium Term Finance,
Reference: Rite Aid with sufficient information to identify the source and
application of such funds.
(2) Address for all notices:
Citicorp USA, Inc.
Xxx Xxxxx Xxx, Xxxxx 000
Xxx Xxxxxx, Xxxxxxxx 00000
Attention: Xxx Xxxx
Fax No.: (000) 000-0000
Tel. No.: (000) 000-0000
Schedule I to the
Participation Agreement
Holder:
THE CHASE MANHATTAN BANK
Amount
------
A-Note Commitment: $21,370,067.85
B-Note Commitment: $ 4,541,139.42
Certificate Commitment $ 801,377.54
Total: $26,712,584.81
(1) All payments with respect to the Operative Documents shall be made by wire
transfer of immediately available funds to Account Name: Commercial Loan Service
#7315 at The Chase Manhattan Bank, ABA# 000000000, with sufficient information
to identify the source and application of such funds.
(2) Address for all notices:
The Chase Manhattan Bank
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxx
Fax No.: (000) 000-0000
Tel. No.: (000) 000-0000
Schedule I to the
Participation Agreement
Holder:
CREDIT SUISSE FIRST BOSTON
Amount
------
A-Note Commitment: $21,370,067.85
B-Note Commitment: $ 4,541,139.42
Certificate Commitment $ 801,377.54
Total: $26,712,584.81
(1) All payments with respect to the Operative Documents shall be made by wire
transfer of immediately available funds to Account No. 000-0000-000 at The Bank
of New York, ABA# 021 000 018, Reference: Rite Aid Corporation, with sufficient
information to identify the source and application of such funds.
(2) Address for all notices:
Credit Suisse First Boston
00 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxxxxxx
(000) 000-0000
(000) 000-0000
Schedule I to the
Participation Agreement
Holder:
FLEET RETAIL FINANCE INC.
Amount
------
A-Note Commitment: $21,370,067.85
B-Note Commitment: $ 4,541,139.42
Certificate Commitment $ 801,377.54
Total: $26,712,584.81
(1) All payments with respect to the Operative Documents shall be made by wire
transfer of immediately available funds to Account No. 00000000 at Fleet Bank,
N.A., ABA# 000000000, Reference: Rite Aid, Attention: Xxxxxxx Xxxxx, with
sufficient information to identify the source and application of such funds.
(2) Address for all notices:
Fleet Retail Finance
00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx Xxxxx
Fax No.: (000) 000-0000
Tel. No.: (000) 000-0000
Schedule II to the
Participation Agreement
FEES
Certain Fees Payable by the Company
(1) Upfront Fee
The Company shall pay to the Agent on the Funding Date for the account of
each Holder an upfront fee of 175 basis points (1.75%) on the amount of
such Holder's Commitment.
(2) Structuring Fee
The Company shall pay on the Funding Date the structuring fee set forth in
the Mandate Letter dated June 25, 2001 among Rite Aid Corporation and
Citibank, N.A.
(3) Trustee Fee
The Company shall pay to the Trustee on the Funding Date and thereafter on
the dates referenced in annual invoices delivered by WFBN the fees set
forth in that certain fee letter dated June, 2001 from WFBN to Citibank,
N.A.
(4) Agency Fee
The Company shall pay to the Agent on the Funding Date for the account of
the Agent the administrative agency fee set forth in that certain fee
letter dated June [ ], 2001 from [CUSA] to Rite Aid Corporation.
Schedule III to the
Participation Agreement
NOTE AND CERTIFICATE ALLOCATION
The principal amount of the Notes and the Certificate Amount of the
Certificates are allocated to the Properties as follows:
Maryland Property California Property
----------------- -------------------
A-Notes: $44,000,000.00 A-Notes: $41,480,271.40
B-Notes: $ 9,350,000.00 B-Notes: $ 8,814,557.67
Certificates: $ 1,650,000.00 Certificates: $ 1,555,510.18
Total: $55,000,000.00 Total: $51,850,339.25
Exhibit A to the
Participation Agreement
[FORM OF REQUISITION]
TO: Citicorp USA, Inc., as Agent
RITE AID REALTY CORP.
CERTIFIED REQUISITION
DATED: June __, 2001
I, _____________, _______________ of Rite Aid Realty Corp., a
Delaware corporation (the "Company"), pursuant to the Participation Agreement
dated as of June 27, 2001 among Rite Aid Corporation, the Company, Xxxxx Fargo
Bank Northwest, National Association, not in its individual capacity except as
specifically set forth therein but solely as Trustee of RAC Distribution
Statutory Trust, the Persons named therein as Note Holders and Certificate
Holders, and Citicorp USA, Inc., as Agent (the "Participation Agreement"),
submit this irrevocable Requisition pursuant to Section of the Participation
Agreement and request the following:
1. The total amount of the Acquisition Costs for which this funding
is hereby requested is _______________________ ($______________), and the
Company hereby requests the Agent to request (a) each of the Note Holders
to make an Advance in an aggregate amount equal to _______________________
($______________), and (b) each of the Certificate Holders to make an
Equity Investment in an aggregate amount equal to _______________________
($______________), in each case on June 27, 2001, subject to the
satisfaction or waiver of all conditions precedent thereto set forth in
Section 2.01 of the Participation Agreement.
2. The proceeds of the funding requested hereby shall be used solely
to pay Acquisition Costs and shall be applied by the Agent as follows:
For purposes of the termination and pay-off of the Original Leases
the Agent shall pay to [ ] ABA # [ ], Account number: [ ],
Reference: [ ] the amount of $[ ].
Capitalized terms used herein but not otherwise defined herein shall
have the meanings ascribed to such terms in the Participation Agreement.
Dated this ___ day of June, 2001.
RITE AID REALTY CORP.
By:_______________________________
Name:
Title:
Draft of 6/26/01
Appendix A
Proprietary & Confidential
APPENDIX A TO THE PARTICIPATION AGREEMENT
PART I
Rules of Construction
The following rules of usage shall apply to the Participation
Agreement and the other Operative Documents (and each appendix, schedule,
exhibit and annex thereto) unless otherwise required by the context or unless
otherwise specified therein:
Appendix A
Proprietary & Confidential
Unless otherwise specified, definitions set forth herein or in any other
Operative Document shall be equally applicable to the singular and plural forms
of the terms defined.
References to articles, sections, paragraphs, clauses, annexes, appendices,
schedules or exhibits are references to articles, sections, paragraphs, clauses,
annexes, appendices, schedules or exhibits in or to any Operative Document.
The headings, subheadings and table of contents used in any Operative Document
are solely for convenience of reference, shall not constitute a part of such
Operative Document and shall not affect the meaning, construction or effect of
any provision thereof.
References to any Person in any Operative Document shall include such Person,
its successors and permitted assigns and transferees.
Reference to any agreement in any Operative Document means such agreement as
amended, supplemented or otherwise modified from time to time in accordance with
the applicable provisions thereof except as otherwise specifically set forth in
such reference and except with respect to the Senior Credit Facility, which
shall mean such agreement as in effect on June 27, 2001, as amended to the
extent such amendment becomes effective under the Operative Documents pursuant
to the terms of the Operative Documents.
References to any law in any Operative Document includes any amendment or
modification to such law and any rules or regulations issued thereunder or any
law enacted in substitution or replacement thereof.
Words such as "hereunder", "hereto", "hereof" and "herein" and other words of
like import used in any Operative Document shall, unless the context clearly
indicates to the contrary, refer to the whole of such Operative Document and not
to any particular article, section, subsection, paragraph or clause thereof.
References to "including" in any Operative Document means including without
limiting the generality of any description preceding such term.
All terms of an accounting or financial nature shall be construed in accordance
with GAAP, as in effect from time to time.
PART II
22
Appendix A
Proprietary & Confidential
This Appendix A to the Participation Agreement is a glossary of all
or substantially all of the defined terms used in the Operative Documents. Not
all of the terms defined in this Appendix A are used in the Participation
Agreement.
"A-Note Commitment" of any A-Note Holder means the commitment of
such Person to make Advances under such Person's A-Note to fund Acquisition
Costs, up to the aggregate principal amount set forth below the name of such
Person on Schedule I to the Participation Agreement next to the heading "A-Note
Commitment", which commitment shall expire on, and after giving effect to the
transactions to occur on, the Funding Date.
"A-Notes" has the meaning set forth in Section 2.02 of the Loan
Agreement.
"Acquisition Costs" means (i) all amounts paid or payable by the
Trustee to purchase the Original Maryland Lessor's fee interest in the Maryland
Land and Maryland Improvements; and (ii) all amounts paid or payable by the
Trustee to purchase the Original California Lessor's leasehold interest in the
California Land and fee interest in the California Improvements.
"Act" means the Securities Act of 1933, as amended, and the Laws
promulgated or issued from time to time thereunder.
"Additional Costs" means all Break Costs, Increased Costs, Charges,
Other Taxes, Illegality Costs and other amounts required to be paid (or
indemnified against) by the Company pursuant to the Participation Agreement and
the other Operative Documents.
"Additional Rent " means all amounts, other than Fixed Rent, which
the Lessee is required to pay to the Lessor pursuant to the Lease, including (i)
unpaid Charges and all amounts set forth in Section 4.05 of the Lease, (ii) all
sums, costs and expenses pursuant to Article X and Section 12.08 of the Lease,
(iii) all taxes, costs and expenses relating to any Property or the Lessee's use
or the Lessor's leasehold interest or ownership thereof, (iv) any and all
amounts payable upon any sale, alteration or other transfer (or otherwise
relating to) any Property, together with every fine, penalty, interest and cost
that may be added for non-payment or late payment thereof, (v) all fees and
expenses payable pursuant to Sections 5.04, 9.13 and 9.14 of the Participation
Agreement, (vi) all Transaction Costs and (vii) all Additional Costs.
"Advance" has the meaning set forth in Section 1.01 of the
Participation Agreement.
"Affected Property" has the meaning set forth in Section 7.01(a) of
the Lease.
33
Appendix A
Proprietary & Confidential
"Affiliate" means, when used with respect to a specified Person,
another person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the Person
specified, provided that under no circumstances shall the Note Holders or the
Certificate Holders be deemed to be Affiliates of the Trustee or vice versa.
"After Tax Basis" means, with respect to any payment to be received,
on a basis such that such payment received (actually or constructively) or
accrued by any Person shall be supplemented by a further payment or payments to
the recipient so that the sum of all such payments shall, after deduction for
the net increase in all Taxes (taking into account any related credits or
deductions claimed in the same or a prior period for which such Taxes are
imposed as determined in good faith by such recipient) using such ordering and
other principles as it shall reasonably determine (without regard to when such
Taxes are deemed utilized under the applicable Tax laws) resulting from the
receipt (actual or constructive) or accrual of such payments, be equal to the
payment otherwise required to be made.
"Agent" means CUSA, or any successor selected pursuant to the
Participation Agreement, acting in its capacity as administrative agent for the
Note Holders and the Certificate Holders.
"Alterations" means any and all additions to or alterations of any
Property or any portion thereof made by or for the Lessee, at the sole cost and
expense of the Lessee (as distinct from such additions and construction as shall
constitute Improvements), excluding any replacements installed as part of
scheduled maintenance procedures.
"ALTA" means American Land Title Association. "Applicable Lending
Office" means, with respect to any Holder, its office, branch or affiliate
located at its address, and designated as its lending office, set forth in its
administrative questionnaire delivered to the Agent, or such other office,
branch or affiliate as such Holder may designate as its lending office by notice
to the Company and the Agent.
"Applicable Margin" means:
(i) with respect to the A-Notes (a) for any LIBO Rate Period, 450
basis points (4.50%) and (b) for any Base Rate Period, 350 basis points (3.50%);
(ii) with respect to the B-Notes (a) for any LIBO Rate Period, 450
basis points (4.50%) and (b) for any Base Rate Period, 350 basis points (3.50%);
and
44
Appendix A
Proprietary & Confidential
(iii) with respect to the Certificates (a) for any LIBO Rate Period,
600 basis points (6.00%) and (b) for any Base Rate Period, 500 basis points
(5.00%).
"Applicable Payee" has the meaning set forth in Section 5.04(a) of
the Participation Agreement.
"Applicable Payor" has the meaning set forth in Section 5.04(a) of
the Participation Agreement.
"Applicable Permit" means any Permit, including any Environmental
Permit, that is necessary to own, construct, start up, test, maintain, operate,
lease or use all or any portion of any Property or interest therein in
accordance with any of the Operative Documents.
"Applicable Rate" means:
(i) for any LIBO Rate Period, the sum of (a) the LIBO Rate and (b)
the Applicable Margin; and
(ii) for any Base Rate Period, the sum of (a) the Base Rate and (b)
the Applicable Margin,
in each case subject to Section 5.01(b) of the Participation
Agreement.
"Appraisal" means a valuation and market study of each Property and
the Equipment Collateral, which satisfies all bank regulatory requirements
(including FIRREA) and is otherwise satisfactory in scope and content to the
Agent.
"Appraiser" means an independent MAI appraiser selected by the
Agent.
"Assignee" has the meaning set forth in Section 5.03(b) of the
Participation Agreement.
"Assignment and Acceptance" has the meaning set forth in Section
5.03(b) of the Participation Agreement.
"Assignment and Security Agreement" means the Assignment and
Security Agreement dated as of the Funding Date between the Trustee and the
Agent.
"Assignor" has the meaning set forth in Section 5.03(b) of the
Participation Agreement.
55
Appendix A
Proprietary & Confidential
"B-Note Commitment" of any B-Note Holder means the commitment of
such Person to make Advances under such Person's B-Note to fund Acquisition
Costs, up to the aggregate principal amount set forth below the name of such
Person on Schedule I to the Participation Agreement next to the heading "B-Note
Commitment," which commitment shall expire on, and after giving effect to the
transactions to occur on, the Funding Date.
"B-Notes" has the meaning set forth in Section 2.02 of the Loan
Agreement.
"Bank" has the meaning set forth in the preamble of the Trust
Agreement.
"Bankruptcy Law" means Title 11 of the United States Code, and any
applicable Federal, state or local insolvency, reorganization, moratorium,
fraudulent conveyance or similar Law now or hereafter in effect for the relief
of debtors.
"Base Rate" means, for any period, a fluctuating interest rate per
annum as shall be in effect from time to time which rate per annum shall at all
times be equal to the greater of:
(i) the rate of interest announced publicly by Citibank in New York,
New York, from time to time as Citibank's prime rate (or comparable rate, if
Citibank does not so designate a prime rate); or
(ii) 1/2 of 1% per annum above the Federal Funds Rate. Changes in
the Base Rate shall become effective on the date such change is publicly
announced by Citibank.
"Base Rate Period" means any Interest Period during which the
Applicable Rate is determined based upon the Base Rate pursuant to Article V of
the Participation Agreement.
"Base Term" has the meaning set forth in Section 3.01 of the Lease.
"Base Term Expiration Date" means June 27, 2005.
"Best's" means Best's Insurance Reports published by A.M. Best
Company, Inc. or any successor thereto which is a nationally recognized
statistical rating organization.
66
Appendix A
Proprietary & Confidential
"Break Costs" has the meaning set forth in Section 5.06 of the
Participation Agreement.
"Business Day" means any day except a Saturday, Sunday or other day
on which commercial banks in New York, New York are required or authorized by
Law to close.
"California Deed" means the Improvements Deed dated as of the
Funding Date executed by the Original California Lessor and conveying the
California Improvements to the Trustee.
"California Improvements" means that certain approximately 930,000
square foot distribution center located on the California Land at 0000 Xxxx
Xxxxxx X, Xxxxxxxxx, Xxxxxxxxxx and all integral equipment located and/or
installed therein or thereon.
"California Land " means those two certain parcels of land located
in Lancaster, Los Angeles County, California, as more particularly described in
Lease Supplement No. 2.
"California Mortgage " means the Deed of Trust, Assignment of
Leases, Security Agreement and Financing Statement dated as of the Funding Date
from the Trustee to First American Title Insurance Company, as trustee, for the
benefit of the Agent.
"California Property" means, collectively, the California Land and
the California Improvements.
"Capital Adequacy Costs" has the meaning set forth in Section
5.02(c) of the Participation Agreement.
"Casualty" has the meaning set forth in Section 7.01(a) of the
Lease.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act, as amended by the Superfund Amendments and
Reauthorization Act, 42 U.S.C. Section 9601 et seq. and as further amended from
time to time.
"CERCLIS" means the Comprehensive Environmental Response
Compensation and Liability Information System, which is a list maintained by the
United States Environmental Protection Agency of sites where there is a known or
suspected release or potential release of hazardous substances which may
require remediation.
77
Appendix A
Proprietary & Confidential
"Certificate" and "Certificates" have the meanings set forth in
Section 2.1 of the Trust Agreement.
"Certificate Amount" means with respect to each Certificate, the
aggregate Equity Investments made by the applicable Certificate Holder
thereunder, pursuant to Section 1.02 of the Participation Agreement, as
consideration for the issuance of such Certificate.
"Certificate Commitment" of any Certificate Holder means the
commitment of such Person to make Equity Investments pursuant to Section 1.02 of
the Participation Agreement up to the aggregate stated amount set forth below
the name of such Person on Schedule I to the Participation Agreement next to the
heading "Certificate Commitment", which commitment shall expire on, and after
giving effect to the transactions to occur on, the Funding Date.
"Certificate Holder" means the holder of any Certificates.
"Certificate Liquidation Amount " means the unpaid Certificate
Amounts of the Certificates, plus the Distributions accrued and unpaid thereon,
plus all Closing Costs incurred in connection with the Certificates, plus all
Break Costs incurred in connection with the Certificates, plus all other amounts
owed by the Company under the Operative Documents in connection with the
Certificates.
"Charges" means all Taxes arising directly or indirectly out of the
transactions contemplated by the Participation Agreement and the other Operative
Documents, (a) including (i) those which, at any time prior to or during the
Term, may accrue with respect to, be imposed or levied upon or assessed against
or be a Lien upon (x) the Trust Estate, any Property or any part thereof, the
Lessor or the Trust, or the Operative Documents, including the Notes and the
Certificates, (y) the Trustee or the Trust in connection with the transactions
contemplated by the Operative Documents or (z) the Lease, or the leasehold
estates thereby created, or which arise in respect of the acquisition,
ownership, renovation, construction, installation, substitution, maintenance,
manufacture, operation, occupancy, possession, disposition, use, non-use,
financing, leasing, sub-leasing or condition of the Trust Estate, any Property
or any part thereof or of the execution, delivery, expiration or termination of
the Lease, the Notes, the Certificates or any other Operative Document; (ii)
those which may be imposed or levied upon, assessed against or measured by any
Fixed Rent, Additional Rent or other sum payable under the Lease, the Notes, the
Certificates, the Participation Agreement or any other Operative Document; (iii)
all sales, value added, goods and services, use and similar Taxes at any time
levied, assessed or payable on account of the ownership, operation, occupancy,
use, leasing, or subleasing of the Trust Estate, any Property or any part
thereof; (iv) all charges, levies, fees, rents or assessments for or in respect
of utilities,
88
Appendix A
Proprietary & Confidential
communications and other services rendered or used on or about or in connection
with any Property or any part thereof; and (v) payments in lieu of each of the
foregoing and all liabilities with respect to the foregoing and (b)
notwithstanding (a), excluding Excluded Charges.
"Citibank " means Citibank, N.A.
"Closing Costs" means all charges incident to any sale, lease,
exchange, redeployment or other disposition of any Property or portion thereof,
including reasonable attorneys' fees of Special Counsel and Trustee's Counsel
and escrow fees, recording fees, broker's fees, any out-of-pocket fees, costs
(including Break Costs) or expenses incurred by the Lessor in connection with
the same and with the release of any Operative Document, and all applicable
transfer taxes which may be imposed by reason of such sale and conveyance and
the delivery of any and all instruments in connection therewith.
"Closing Date" has the meaning set forth in Section 5.04(c) of the
Lease.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute or similar import, together with the regulations thereunder,
in each case as in effect from time to time. References to sections of the Code
shall be construed to also refer to successor sections.
"Collateral" means, collectively, the Instrument Guaranty, the
Mortgaged Property (as defined in the Mortgages), the Equipment Collateral and
the Collateral (as defined in the Senior Credit Facility).
"Commission" means the Securities and Exchange Commission, or any
regulatory body that succeeds to the functions thereof.
"Commitments" means, collectively the Note Commitments and the
Certificate Commitments.
"Company" means Rite Aid Realty Corp., a Delaware corporation, and
any permitted successor or assignee pursuant to the terms of the Participation
Agreement.
"Condemnation" has the meaning set forth in Section 7.01(a) of the
Lease.
"Consent " means any consent, approval, waiver, exemption, order,
other action by, and any notice to or filing with, any Governmental Authority or
other Person.
"Consolidated Subsidiary" means, with respect to any Person, at any
date any Subsidiary or other entity the accounts of which would be consolidated
with those of such
99
Appendix A
Proprietary & Confidential
Person in its consolidated financial statements if such statements were prepared
as of such date.
"Control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a person,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "Controlling" and "Controlled" shall have meanings correlative
thereto.
"Conversion Date" means any date on which the basis for the
determination of the Applicable Rate is converted pursuant to Article V of the
Participation Agreement from the LIBO Rate to the Base Rate or vice versa.
"CUSA" means Citicorp USA, Inc., a Delaware corporation.
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of such Person as lessee which are capitalized in
accordance with generally accepted accounting principles, (v) all non-
contingent obligations of such Person to reimburse any bank or other Person in
respect of amounts paid under a letter of credit or similar instrument, (vi) all
Debt secured by a Lien on any asset of such Person, whether or not such Debt is
otherwise an obligation of such Person, and (vii) all Debt of others guaranteed
by such Person.
"Deeds" means collectively, the Maryland Deed and the California
Deed.
"Default" means an event which with the lapse of time, the giving of
notice or both would become an Event of Default.
"Default Rate" means the lesser of (i) the Maximum Rate and (ii) the
Applicable Margin plus one percent (1%) in excess of the Base Rate in effect
from time to time.
"Distributions" means the distributions of current yield payable to
the Certificate Holders on each Payment Date.
"Dollars" or "$" means United States dollars.
"Eligible Assignees" means any financial institution approved by the
Agent and the Guarantor, such approval not to be unreasonably withheld or
delayed, provided,
1010
Appendix A
Proprietary & Confidential
however, that no approval of the Guarantor shall be required during the
continuation of a Default, Event of Default or Non-Performance Event.
"Environmental Action" means any administrative, regulatory or
judicial action, suit, demand, demand letter, claim, notice of non-compliance
or violation, notice of liability or potential liability, investigation,
proceeding, consent order or consent agreement arising under any Environmental
Law or Environmental Permit relating to Hazardous Materials or arising from
alleged injury or threat of injury to health, safety or the environment in
connection with or arising from exposure to or the actual or potential release
of Hazardous Materials, including, without limitation, (i) by any Governmental
Authority for enforcement, cleanup, removal, response, remedial or other actions
or damages and (ii) by any Governmental Authority or any third party for
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief.
"Environmental Audit" has the meaning set forth in Section 4.01(c)
of the Participation Agreement.
"Environmental Consultant " means any environmental consulting firm
reasonably satisfactory to the Agent.
"Environmental Event " has the meaning set forth in Section 8.01 of
the Lease.
"Environmental Laws" means any and all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges or releases of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes into
the environment including, without limitation, ambient air, surface water,
ground water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum or petroleum products, chemicals or
industrial, toxic or hazardous substances or wastes or the clean-up or other
remediation thereof.
"Environmental Permit" means any Permit, approval, identification
number, license or other authorization required under any Environmental Law.
"Environmental Trigger" has the meaning set forth in Section 8.02 of
the Lease.
"Environmentally Affected Property" has the meaning set forth in
Section 8.01 of the Lease.
0000
Xxxxxxxx A
Proprietary & Confidential
"Equipment Collateral" means the non-integral equipment owned by
the Company and located and/or installed in or on the Improvements as more
particularly described in the Security Agreement.
"Equity Investment " has the meaning set forth in Section 1.02 of
the Participation Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, or any successor statute.
"Euro-Dollar Liabilities" has the meaning assigned to the term
"Euro-Dollar liabilities" in Regulation D.
"Event of Default" has the meaning set forth in Section 6.01 of the
Participation Agreement.
"Excess Funds" has the meaning set forth in Section 7.03 of the
Lease.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Excluded Charges" means (i) Taxes imposed on the Agent's net
income, and franchise Taxes imposed on such Person, to the extent such Tax is
determined solely by reference to the fees received by the Agent under the
Operative Documents; (ii) United States federal income Taxes (other than Taxes
withheld at the source) imposed on a Note Holder or Certificate Holder to the
extent that such Tax is not in excess of a Tax determined on the basis that such
Note Holder or Certificate Holder is a creditor entitled to receive for such Tax
purposes only payments of principal, interest, stated original issue discount,
if any, and compensation of the type described under Section 5.06 of the
Participation Agreement; (iii) Taxes imposed on a Note Holder's or Certificate
Holder's net income and franchise Taxes imposed on a Note Holder or Certificate
Holder by the jurisdiction under the Laws of which such Note Holder or
Certificate Holder is organized or by any jurisdiction in which such Note Holder
or Certificate Holder has its applicable lending office located or is doing
business, or Taxes to which such Note Holder or Certificate Holder becomes
subject as a result of a change in residence, place of incorporation or
principal place of business, or by any political subdivision of the foregoing,
to the extent that such Tax is not in excess of a Tax determined on the basis
that such Note Holder or Certificate Holder is a creditor entitled to receive
for such Tax purposes only payments of principal, interest, stated original
issue discount, if any, and compensation of the type described under Section
5.06 of the Participation Agreement; (iv) any Taxes imposed by the United States
of America by means of withholding at the source if and to the extent that (a)
such Taxes are not attributable to a change in applicable Law after the Funding
Date or the effective date of the Assignment and
1212
Appendix A
Proprietary & Confidential
Acceptance pursuant to which such Person became a Note Holder or Certificate
Holder and (b) such Taxes are not in excess of a Tax determined on the basis
that such Note Holder or Certificate Holder is a creditor entitled to receive
for such Tax purposes only payments of principal, interest, stated original
issue discount, if any, and compensation of the type described under Section
5.06 of the Participation Agreement; (v) any Tax to the extent, but only to such
extent, it results from any act, event or omission that occurs, or relates to a
period, after the termination of the Lease and the return of the Properties, so
long as the Lessor is not exercising remedies against the Lessee in respect of
the Operative Documents (but not any Tax that results from any act, event or
omission that occurs or relates to any period prior to the termination of the
Lease and the return of the Properties) to which such Tax relates; (vi) any Tax
for so long as, but only for so long as, it is being contested in accordance
with the provisions of Section 5.04 of the Participation Agreement, provided
that the foregoing shall not limit the Lessee's obligation under Section 5.04 of
the Participation Agreement to advance to such Indemnified Party amounts with
respect to Taxes that are being contested in accordance with Section 5.04 of the
Participation Agreement or any expenses incurred by such Indemnified Party in
connection with such contest; (vii) any interest or penalties imposed on an
Indemnified Party as a result of a breach by such Indemnified Party or any
Affiliate thereof of its obligations under Section 5.04 of the Participation
Agreement or otherwise as a result of an Indemnified Party's failure to file any
return or other documents timely and as prescribed by applicable law; provided
that this clause vii shall not apply if such failure is attributable to a
failure by the Lessee to fulfill its obligations under the Operative Documents
with respect to any such return; (viii) any Taxes or impositions imposed upon an
Indemnified Party with respect to any voluntary transfer, sale or other
voluntary disposition, or from any sale, assignment, transfer or other
disposition of any interest in an Indemnified Party or any Affiliate thereof, or
with respect to any involuntary transfer, sale or disposition in connection with
the bankruptcy or insolvency of any Indemnified Party or any Affiliate thereof
(other than any transfer in connection with (1) the exercise of the Lessee of
its purchase option or any termination option or other purchase of any Property
by the Lessee, (2) the occurrence of an Event of Default, (3) a Casualty or
Condemnation affecting any Property or (4) any sublease, modification or
addition to any Property by the Lessee); (ix) Taxes imposed on or payable by an
Indemnified Party to the extent such Taxes would not have been imposed but for a
breach by such Indemnified Party or any Affiliate thereof of any
representations, warranties or covenants set forth in the Operative Documents
(unless such breach is caused by the Lessee's breach of its representations,
warranties or covenants set forth in the Operative Documents); (x) Taxes to the
extent resulting from such Indemnified Party's failure to comply with the
provisions of Section 5.04 of the Participation Agreement, which failure
precludes or materially adversely affects the ability to conduct a contest
pursuant to Section 5.04 of the Participation Agreement (unless such failure is
caused by Lessee's breach of its obligations); (xi) Taxes that would have been
imposed in the absence of the transactions
1313
Appendix A
Proprietary & Confidential
contemplated by the Operative Documents and Taxes imposed on or with respect to
or payable as a result of activities of an Indemnified Party or Affiliate
thereof unrelated to the transactions contemplated by the Operative Documents;
(xii) Taxes imposed on or with respect to or payable by an Indemnified Party
resulting from, or that would not have been imposed but for the existence of,
any Lessor Lien created by or through such Indemnified Party or an Affiliate
thereof and not caused by acts or omissions of the Lessee, unless required to be
removed by the Lessee; (xiii) any Tax imposed against or payable by an
Indemnified Party to the extent that the amount of such Tax exceeds the amount
of such Tax that would have been imposed against or payable by such Indemnified
Party if such Indemnified Party were not a direct or indirect successor,
transferee or assignee of one of the original Indemnified Parties except to the
extent attributable to a change in applicable Law after such succession,
transfer or assignment, provided, however, that this exclusion (xiii) shall not
apply if such direct or indirect successor, transferee or assignee acquired its
interest as a result of a transfer while an Event of Default shall have occurred
and is continuing and (xiv) any Taxes imposed against or payable by an
Indemnified Party resulting from, or that would not have been imposed but for,
the gross negligence or willful misconduct of such Indemnified Party or any
Affiliate thereof; provided, however, that any such Taxes in clauses (i) through
(xiv) are not incurred or increased directly or indirectly by actions of the
Lessee on or after the Funding Date (other than actions specifically required of
the Lessee under any of the Operative Documents).
"Expiration Date" means (i) the Base Term Expiration Date, (ii) any
Extension Term Expiration Date and (iii) any other date on which the Lease is
terminated in accordance with its terms, individually and collectively.
"Extension Request" has the meaning set forth in Section 5.09(a) of
the Participation Agreement.
"Extension Term" has the meaning set forth in Section 3.02 of the
Lease.
"Extension Term Expiration Date" means the date as of which the
Extension Term, if any, expires.
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three federal funds brokers of
recognized standing selected by it.
1414
Appendix A
Proprietary & Confidential
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any successor thereto.
"FIRREA" means the Financial Institutions Reform and Recovery Act of
1989, 12 U.S.C. Section 1821 et seq., as amended from time to time.
"Fixed Rent " has the meaning set forth in Section 4.01 of the
Lease.
"Force Majeure" means strikes, acts of God, acts of any Governmental
Authority, natural disaster, war, insurrection, riot, terrorist acts or civil
disobedience.
"Funding" means the single funding of Acquisition Costs specified in
the Requisition, which will consist of Advances made by the Note Holders and
Equity Investments made by the Certificate Holders pursuant to Section 1.03 of
the Participation Agreement.
"Funding Date" means June 27, 2001.
"GAAP" means generally accepted accounting principles (including
principles of consolidation), in effect from time to time in the United States,
consistently applied. "Governmental Authority" means any Federal, state, local
or foreign court or governmental agency, authority, instrumentality or
regulatory body.
"Granting Note Holder" has the meaning set forth in Section 9.26 of
the Participation Agreement.
"Ground Lease" means the Ground Lease Agreement dated as of the
Funding Date between the Ground Lessor, as ground lessor, and the Trustee, as
ground lessee covering the California Land.
"Ground Lessor" means Thrifty Payless, Inc., a California
corporation, and its successors and permitted assigns under the Ground Lease.
"Guarantor" means Rite Aid Corporation, a Delaware corporation.
"Hazardous Materials " means (i) hazardous materials, hazardous
wastes, and hazardous substances as those or similar terms are defined under any
Environmental Laws, including, but not limited to, the following: the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801 et seq., as amended from
time to time, the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901
et seq., as amended from time to time, CERCLA, the Clean Water Act, 33 U.S.C.
Section 1251 et seq., as amended from time to time, the Clean Air Act, 42 U.S.C.
Section 7401 et seq., as
1515
Appendix A
Proprietary & Confidential
amended from time to time and/or the Toxic Substances Control Act, 15 U.S.C.
Section 2601 et seq., as amended from time to time; (ii) petroleum and petroleum
products including crude oil and any fractions thereof; (iii) natural gas,
synthetic gas, and any mixtures thereof; (iv) asbestos and/or any material which
contains any hydrated mineral silicate, including, but not limited to,
chrysolite, amosite, crocidolite, tremolite, anthophylite and/or actinolite,
whether friable or non-friable; (v) polychlorinated biphenyls ("PCB's"), or
PCB-containing materials, or fluids; (vi) radon; (vii) any other hazardous
radioactive, toxic or noxious substance, material, pollutant, or solid, liquid
or gaseous waste; and (viii) any hazardous substance that, whether by its nature
or its use, is subject to regulation under any Environmental Law or with respect
to which any Federal, state or local Environmental Law or governmental agency
requires environmental investigation, monitoring or remediation.
"Holder" means any Note Holder or Certificate Holder.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and all rules and regulations promulgated thereunder.
"Illegality Costs" means any additional amounts as may be necessary
to compensate any Note Holder or Certificate Holder for any losses, costs or
expenses actually incurred by it in making any conversion of the Applicable Rate
in accordance with Section 5.02(b) of the Participation Agreement.
"Improvements" means, collectively, the Maryland Improvements and
the California Improvements.
"Increased Costs" has the meaning set forth in Section 5.02(b) of
the Participation Agreement.
"Indemnified Party" has the meaning set forth in Section 9.14(a) of
the Participation Agreement.
"Independent Engineer" means any construction engineering firm
reasonably satisfactory to the Agent.
"Instrument Guaranty" means the Instrument Guaranty dated as of the
Funding Date by the Company in favor of the Agent on behalf of the Note Holders
and Certificate Holders.
"Instruments" means, collectively, the Notes and the Certificates.
"Insurance Requirements" means the insurance requirements contained
in Section 6.05 of the Lease.
0000
Xxxxxxxx A
Proprietary & Confidential
"Intellectual Property Rights" has the meaning set forth in Section
3.01(j)(ii) of the Participation Agreement.
"Intended Use" means, with respect to the Maryland Property for
warehouse, distribution and administrative purposes, and with respect to the
California Property for distribution and administrative purposes.
"Intercreditor Agreement" means the Collateral Trust and
Intercreditor Agreement, dated as of June 27, 2001, among the Guarantor, each
Subsidiary of the Guarantor listed on the signature pages thereto or which
becomes a party thereto pursuant to Section 9.11 thereof, Wilmington Trust
Company, as Second Priority Collateral Trustee, CUSA, as Senior Collateral
Agent, State Street Bank and Trust Company, as trustee for the holders of the
10.50% Notes, CUSA, as agent for the Synthetic Lease Parties, and the other
Persons party thereto.
"Interest Period" means, with respect to all Instruments, the period
commencing on the Funding Date, Conversion Date or the last day of the
immediately preceding Interest Period, as applicable, and (i) for each LIBO Rate
Period, ending on the numerically corresponding day in the calendar month that
is three (3) months thereafter, and (b) for any Base Rate Period, continuing
indefinitely until such time as the Applicable Rate is determined by reference
to the LIBO Rate pursuant to Article V of the Participation Agreement;
provided, however, that:
(i) any Interest Period which would otherwise end on a day which is
not a Business Day (and, in the case of a LIBO Rate Period, a LIBO Business
Day) shall be extended to the next succeeding Business Day (or, in the case of a
LIBO Rate Period, LIBO Business Day unless such LIBO Business Day falls in
another calendar month, in which case such Interest Period shall end on the next
preceding LIBO Business Day);
(ii) any LIBO Rate Period that begins on the last LIBO Business Day
of a calendar month (or on a day for which there is no numerically corresponding
day in
1717
Appendix A
Proprietary & Confidential
the calendar month at the end of such LIBO Rate Period) shall end on the last
LIBO Business Day of the calendar month at the end of such LIBO Rate Period;
(iii) any Interest Period which would otherwise end after the Base
Term Expiration Date or any Extension Term Expiration Date shall end on the Base
Term Expiration Date or such Extension Term Expiration Date, as applicable;
(iv) for purposes of calculating interest for any Interest Period,
such calculations shall include the first day but exclude the last day of any
such Interest Period; and
(v) there shall not be more than one (1) interest period in effect
at any time. "Interest Setting Date" means, (i) with respect to any LIBO Rate
Period, the date which is two (2) LIBO Business Days before the first day of
such LIBO Rate Period or (ii) with respect to any Base Rate Period, the date
specified by the Guarantor in the written notice delivered by the Guarantor
pursuant to Section 5.01 of the Participation Agreement as the first day that
the Base Rate is to apply.
"Junior Takeout " has the meaning set forth in Section 6.04(d)(ii)
of the Participation Agreement.
"Junior Takeout Notice" has the meaning set forth in Section
6.04(d)(ii) of the Participation Agreement.
"Junior Takeout Option" has the meaning set forth in Section
6.04(d)(ii) of the Participation Agreement.
"Junior Takeout Period" has the meaning set forth in Section
6.04(d)(ii) of the Participation Agreement.
"Junior Takeout Price" has the meaning set forth in Section
6.04(d)(ii) of the Participation Agreement.
1818
Appendix A
Proprietary & Confidential
"Land" means the Maryland Land, the California Land or both, as
applicable.
"Law" means any law (including, without limitation, any zoning law
or ordinance, ERISA, any Environmental Law, or Legal Requirements), treaty,
directive, statute, rule, regulation, ordinance, order, directive, code,
interpretation, judgment, decree, injunction, writ, determination, award,
Permit, license, authorization, direction, requirement or decision of or
agreement with or by any government or governmental department, commission,
board, court, authority, agency, official or officer having jurisdiction of the
matter in question.
"Lease" means the Lease dated as of the Funding Date between the
Lessor and the Lessee.
"Lease Supplement No. 1" means Lease Supplement No. 1 dated as of
the Funding Date between the Lessor and the Lessee, covering the Maryland
Property.
"Lease Supplement No. 2" means Lease Supplement No. 2 dated as of
the Funding Date between the Lessor and the Lessee, covering the California
Property.
"Lease Supplements" means, collectively, Lease Supplement No. 1 and
Lease Supplement No. 2.
"Legal Requirements" means (i) all Laws, ordinary or extraordinary,
or arising from any restriction of record or otherwise, which now or at any time
hereafter may be applicable to the (A) Lessor, solely as the result and directly
related to being the holder of the leasehold and/or fee estate in, or title to,
the Properties (as distinct from laws applicable to Lessor in its capacity as a
trustee or otherwise); (B) Lessee, as lessee under the Lease; or (C) any
Property or any part thereof, or any of the adjoining sidewalks, or the
ownership, construction, installation, operation, mortgaging, occupancy,
possession, use, non-use or condition of any Property or any part thereof
hereafter enacted, made or issued, and applicable to the Lessor, as owner of (or
holder of a leasehold estate in) such Property (as distinct from those
applicable to Lessor solely in its capacity as a trustee or otherwise), the
Lessee, as lessee under the Lease, or any Property or any part thereof or the
ownership, construction, installation, rebuilding, operation, mortgaging,
occupancy, possession, use, non-use or condition thereof whether or not
presently contemplated; and (ii) all agreements, Permits, covenants, and
restrictions applicable to the Land, the Improvements, or the balance of the
Properties or any part thereof or the ownership, construction, installation,
rebuilding, operation, mortgaging, occupancy, possession, use, non-use or
condition thereof.
"Lessee" means the Company, as lessee under the Lease.
0000
Xxxxxxxx A
Proprietary & Confidential
"Lessee Mortgage " has the meaning set forth in Section 11.01 of the
Lease.
"Lessor" means the Trustee, as lessor under the Lease.
"Lessor Group" has the meaning set forth in Section 6.07(a) of the
Lease.
"Lessor Lien" means any Lien, true lease or sublease or disposition
of title with respect to the Property arising as a result of (i) any claim
against the Lessor, the Trustee, the Agent or any Holder not resulting from or
related to the transactions contemplated by the Operative Documents, (ii) any
act or omission of the Lessor, the Trustee, the Agent or any Holder which is not
required or permitted by the Operative Documents or is in violation of any of
the terms of the Operative Documents, (iii) any claim against the Lessor, the
Trustee, the Agent or any Holder with respect to Taxes or Transaction Costs
against which the Lessee is not required to indemnify the Lessor, the Agent or
any Holder, in its individual capacity, pursuant to Article IX of the
Participation Agreement, (iv) any claim against the Lessor or the Agent arising
out of any transfer by the Lessor of all or any portion of interest of the
Lessor in the Property or the Operative Documents other than the transfer of
title to or possession of the Property by the Lessor pursuant to and in
accordance with the Lease, the Participation Agreement or the other Operative
Documents, or (v) any claim against any Holder arising out of any transfer by
such Holder of any Note or Certificate, or any interest therein other than in
accordance with the provisions of the Participation Agreement. Lessor Liens will
not include any Permitted Encumbrances or any interests created by the Lessor
upon the exercise of any right under the Operative Documents upon any Default,
Event of Default, Non-Performance Event or Environmental Trigger.
"LIBO Business Day" means a Business Day on which commercial banks
are open for international business (including dealings in Dollar deposits) in
London.
"LIBO Rate" means, with respect to any LIBO Rate Period, the rate
appearing on Page 3750 of the Dow Xxxxx Market Service (or on any successor or
substitute page of such Service, or any successor to or substitute for such
Service providing rate quotations comparable to those currently provided on such
page of such Service, as determined by the Agent from time to time for purposes
of providing quotations of interest rates applicable to deposits in Dollars in
the London interbank market) at approximately 11:00 a.m. (London time), on the
Interest Setting Date for such LIBO Period as the rate for deposits in Dollars
in an amount substantially equal to the applicable Instruments (or portion
thereof) to be outstanding during such LIBO Rate Period with a maturity
comparable to such LIBO Rate Period. In the event that such rate is not
available on the applicable Interest Setting Date for any reason, then the "LIBO
Rate" with respect to such LIBO Rate Period shall be the rate at which deposits
in Dollars in an amount substantially equal to the principal and stated amount
of the Instruments (or portion
2020
Appendix A
Proprietary & Confidential
thereof) to be outstanding during such LIBO Rate Period and for a maturity
comparable to such LIBO Rate Period are offered by the principal London office
of the Agent in immediately available funds in the London interbank market at
approximately 11:00 a.m. (London time) on the Interest Setting Date for such
LIBO Rate Period.
"LIBO Rate Period" means any Interest Period during which the
Applicable Rate is determined based upon the LIBO Rate pursuant to Article V of
the Participation Agreement.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
"Liquidation Event" has the meaning set forth in Section 6.04(a) of
the Participation Agreement.
"Loan Agreement" means the Loan Agreement dated as of the Funding
Date among the Trustee, as borrower, the Note Holders, as lenders, and the
Agent.
"Majority B-Note Holders" means, on the Funding Date, the B-Note
Holders holding at least 51% of the B-Note Commitment and at any time after the
Funding Date, the B-Note Holders holding at least 51% of the aggregate unpaid
principal amount of the B-Notes.
"Majority Certificate Holders" means, on the Funding Date, the
Certificate Holders holding at least 51% of the Certificate Commitment and at
any time after the Funding Date, the Certificate Holders holding at least 51% of
the aggregate unpaid Certificate Amount of the Certificates.
"Majority Holders" means, on the Funding Date, the Note Holders and
the Certificate Holders voting as one class and holding at least 51% of the
aggregate Total Commitment, and at any time after the Funding Date, the Note
Holders and Certificate Holders voting as one class and holding at least 51% of
the aggregate unpaid principal amount of the Notes and the unpaid Certificate
Amount of the Certificates.
"Margin Stock" shall have the meaning provided in Regulations T, U
and X.
"Maryland Deed" means the Deed dated as of the Funding Date executed
by the Original Maryland Lessor and covering the Maryland Property.
"Maryland Improvements" means that certain approximately 882,000
square foot warehouse and distribution center located on the Maryland Land and
at 000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx.
2121
Appendix A
Proprietary & Confidential
"Maryland Land" means that certain parcel of land located in
Perryman, Harford County, Maryland, as more particularly described in Lease
Supplement No. 1.
"Maryland Mortgage " means the Deed of Trust, Assignment of Leases,
Security Agreement and Financing Statement dated as of the Funding Date from the
Trustee to First American Title Insurance Company, as trustee, for the benefit
of the Agent.
"Maryland Property" means, collectively, the Maryland Land and the
Maryland Improvements.
"Material Adverse Effect" means a material adverse effect on any of
(i) the business, prospects, assets, operation or condition, financial or
otherwise, of the Guarantor and its Consolidated Subsidiaries, taken as a whole,
(ii) the ability of the Company or the Guarantor to perform any of its
obligations under any Operative Document to which it is a party, (iii) the
value, condition, marketability or operation of the Properties or the Lessor's
ownership or lease thereof, considered as a whole, or (iv) the legality,
validity or enforceability of any of the Operative Documents (including the
validity, enforceability or priority of the security interests to be granted
under any Security Document), or the rights and remedies of the Lessor, the
Agent and the Holders thereunder.
"Maturity Date" means June 27, 2005, subject to extension as
provided in Section 5.09 of the Participation Agreement.
"Maximum Rate" has the meaning set forth in Section 9.17 of the
Participation Agreement.
"Moody's" means Xxxxx'x Investors Service, Inc. and any successor
thereto which is a nationally recognized statistical rating organization.
"Mortgages" means, collectively, the Maryland Mortgage and the
California Mortgage.
"Net Proceeds" has the meaning set forth in Section 7.01(c) of the
Lease. "New Note" has the meaning set forth in Section 2.11(b) of the Loan
Agreement.
"Non-Accepting Holder" has the meaning set forth in Section 5.09(a)
of the Participation Agreement.
2222
Appendix A
Proprietary & Confidential
"Non-Performance Event" has the meaning set forth in Section 6.03(a)
of the Participation Agreement.
"Note" means any of, and "Notes" means all of, collectively, the
A-Notes and the B-Notes, issued and, unless the context otherwise specifies or
requires, Outstanding.
"Note Commitment" of any Note Holder means the aggregate of the
A-Note Commitment and B-Note Commitment of such Note Holder.
"Note Holder" means the holder of any Note.
"NPL" means the National Priorities List.
"Offer to Purchase" means an irrevocable, written offer to purchase
the Lessor's interest in a Property or the Properties, as applicable, pursuant
to the Lease.
"Officer" of any Person means the president, any vice president,
manager, in the case of a limited liability company, or any other duly
authorized and responsible officer of such Person.
"Officer's Certificate" or "Officers' Certificate" of a Person means
a certificate signed by an Officer or Officers of such Person.
"Old Note" has the meaning set forth in Section 2.11(b) of the Loan
Agreement.
"Operative Documents" means the Participation Agreement, the Lease,
the Lease Supplements, the Notes, the Certificates, the Loan Agreement, the
Trust Agreement, the Instrument Guaranty, the Parent Guaranty, the Deeds, the
Ground Lease, the Security Documents and the Intercreditor Agreement, in each
case individually and collectively.
"Original California Lessor" means RAC Leasing LLC, a Wyoming
limited liability company.
"Original Leases" means, collectively (i) the Master Lease and
Security Agreement dated as of May 30, 1997 between the Company, as lessee, and
the Original Maryland Lessor, as lessor, and (ii) the Master Lease and Security
Agreement dated as of March 19, 1998 between the Company, as lessee, and the
Original California Lessor, as lessor, as the same have been amended or
otherwise modified through the Funding Date.
"Original Maryland Lessor" means SMBC Leasing and Finance, Inc.
(f/k/a Sumitomo Bank Leasing and Finance Inc.).
2323
Appendix A
Proprietary & Confidential
"Other Taxes" has the meaning set forth in Section 5.04(b) of the
Participation Agreement.
"Outstanding" means, with reference to Instruments, as of any
particular time, all Instruments theretofore issued, except:
(i) Instruments theretofore canceled and destroyed by the Trustee or
surrendered to the Trustee for cancellation and destruction;
(ii) Instruments theretofore paid in full or required to be prepaid
or canceled in whole within thirty (30) days thereafter; provided that in the
case of Instruments so to be prepaid or canceled, moneys sufficient for such
prepayment or cancellation thereof shall theretofore have been deposited with,
or shall then be held by, the Trustee in accordance with the provisions of the
Participation Agreement and notice of such prepayment or cancellation shall have
been given or provision therefor satisfactory to the Trustee shall have been
made; and
(iii) Instruments for which other Instruments shall theretofore have
been issued pursuant to Section 2.8 of the Trust Agreement, with respect to
Certificates, or Section 2.11 of the Loan Agreement, with respect to Notes; and
except also that (for the purpose of determining whether the Holders of the
requisite principal amount of Notes or requisite stated amount of Certificates
have made or concurred in any notice, request, demand, direction, consent,
approval, order, waiver, acceptance, appointment or other instrument or
communication under or pursuant to any Operative Document), Instruments
registered in the name of the Company or the Guarantor or a nominee or Affiliate
of the Company or the Guarantor shall be disregarded and deemed not to be
Outstanding.
2424
Appendix A
Proprietary & Confidential
"Parent Guaranty" means the Guaranty executed by the Guarantor in
favor of the Agent, the Lessor, the Note Holders and the Certificate Holders.
"Participation Agreement " means the Participation Agreement dated
as of the Funding Date, by and among the Company, the Guarantor, the Trustee,
the Note Holders, the Certificate Holders and the Agent.
"Payment Date" means, with respect to the Notes, the Certificates
and Fixed Rent, (i) for any LIBO Rate Period, each Conversion Date and the last
day of each Interest Period, (ii) for any Base Rate Period, each Conversion Date
and the last Business Day of each March, June, September and December and (iii)
in any case, the Expiration Date or, if earlier, the termination of the Lease or
the maturity of the Instruments.
"Percentage " means, with respect to any Note Holder, the percentage
equal to its Note Commitment divided by the aggregate Total Commitment, and with
respect to any Certificate Holder, the percentage equal to its Certificate
Commitment divided by the aggregate Total Commitment.
"Permit" means any approval, certificate of occupancy, consent,
waiver, exemption, variance, franchise, order, permit, authorization, right or
license of or from any Governmental Authority.
"Permitted Encumbrances" means, with respect to each Property, but
only to the extent applicable from time to time thereto, any of the following:
(i) rights reserved to or vested in any municipality or public authority, by the
terms of any franchise, grant, license, Permit or provision of Law, to purchase,
condemn, appropriate or recapture such Property; (ii) any liens thereon for
Charges and any liens of mechanics, materialmen and laborers for work or
services performed or materials furnished in connection with such Property, in
each instance, which are not due and payable, or which are being contested in
good faith by the Lessee pursuant to Section 6.01 of the Lease; (iii) rights
reserved to or vested in any municipality or public authority to control or
regulate the use of such Property or to use such Property in any manner; (iv)
easements, rights-of-way, servitudes, restrictions and other minor defects,
encumbrances and irregularities in title to such Property which could not,
individually or in the aggregate, materially and adversely affect the value,
condition, marketability or operation of such Property or the Lessor's ownership
or lease thereof, and (v) the Operative Documents.
"Permitted Investments" means Temporary Cash Investments.
"Person" means any individual, corporation, limited liability
partnership, limited liability company, partnership, joint venture, association,
joint stock company, trust, unincorporated organization or government.
2525
Appendix A
Proprietary & Confidential
"Pre-existing Environmental Condition" means the presence or
suspected presence of Hazardous Materials or any other condition that could give
rise to an Environmental Event in, on or under any Property or any portion
thereof, which was in existence prior to the Funding Date.
"Prescribed Forms" means such duly executed form(s) or statement(s),
and in such number of copies, which may, from time to time, be prescribed by Law
and which, pursuant to applicable provisions of (i) an income tax treaty between
the United States and the country of residence of the Note Holder or Certificate
Holder (as the case may be) providing the form(s) or statement(s), (ii) the
Code, or (iii) any applicable rule or regulation under the Code, permit the
Lessee and/or the Lessor to make payments under the Operative Documents for the
account of the Lessor and/or such Note Holder or Certificate Holder (as the case
may be) free or at a reduced rate of deduction or withholding of income or
similar Taxes.
"Proceeding" means any action, suit or proceeding in equity or at
law or otherwise.
"Proceeds" has the meaning set forth in Section 7.01(c) of the
Lease.
"Proceeds Trustee" has the meaning set forth in Section 7.01(c) of
the Lease.
"Properties" means, collectively, the Maryland Property and the
California Property.
"Property" means, as applicable, the Maryland Property or the
California Property.
"Protective Expenditure" has the meaning set forth in Section 9.23
of the Participation Agreement.
"Qualified Sale" has the meaning set forth in Section 3.03(b) of the
Lease.
"Record" has the meaning set forth in Section 5.03(d) of the
Participation Agreement.
"Regulation D, T, U, or X" means such Regulations of the Federal
Reserve Board, as in effect from time to time.
"Release Collateral" has the meaning set forth in Section 1.08 of
the Participation Agreement.
2626
Appendix A
Proprietary & Confidential
"Remarketing Period" has the meaning set forth in Section 3.03(b) of
the Lease.
"Rent" means all Fixed Rent and Additional Rent payable pursuant to
the Lease, individually and collectively.
"Requisition" has the meaning set forth in Section 1.03(a) of the
Participation Agreement.
"Residual Value Amount " means, at any time, the then outstanding
principal amount of the A-Notes.
"Responsible Officer" means, with respect to the Company or the
Guarantor, any of the chief executive officer, the chief operating officer, the
chief financial officer, the principal accounting officer, the treasurer or a
vice president of such Person.
"Return Conditions" has the meaning set forth in Section 10.05 of
the Lease.
"S&P" means Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc., and any successor thereto which is a nationally
recognized statistical rating organization.
"Sales Proceeds" means the proceeds of any sale of a Property,
including a sale, or other realization of, such Property by the Agent after the
occurrence of a Liquidation Event and if the Company has proceeded under Section
3.03(a)(ii) of the Lease and the Lessor has purchased the Equipment Collateral
pursuant to Section 10.05(xii) of the Lease, then "Sales Proceeds" shall also
include the proceeds of the sale of the Equipment Collateral less the cost of
the Lessor to purchase such Equipment Collateral.
"Secured Obligations " means:
(i) payment of all Rent, with interest, if any, thereon, according
to the terms of the Lease, and any and all extensions, amendments,
modifications, substitutions or renewals thereof, pursuant to the
Participation Agreement, which accrue to the benefit (directly or
indirectly) of (a) the Note Holders, (b) the Certificate Holders, and (c)
the Lessor, and the performance and discharge of each and every obligation
of the Lessee set forth in the Lease which accrue to the benefit (directly
or indirectly) of (a) the Note Holders, (b) the Certificate Holders and
(c) the Lessor;
(ii) payment of all other sums, with interest thereon, owing by the
Company and becoming due or payable under the provisions of any of the
2727
Appendix A
Proprietary & Confidential
Operative Documents which accrue to the benefit (directly or indirectly)
of (a) the Note Holders, (b) the Certificate Holders and (c) the Lessor;
and
(iii) due, prompt and complete observance and performance of each
and every obligation, covenant and agreement of the Company contained in
any of the Operative Documents which accrue to the benefit (directly or
indirectly) of (a) the Note Holders, (b) the Certificate Holders and (c)
the Lessor.
"Security Agreement " means the Security Agreement dated as of the
Funding Date between the Company, as debtor, and the Trustee, as secured party.
"Security Documents" means, collectively, the Mortgages, the Lease
Supplements, the Security Agreement and the Assignment and Security Agreement
and all financing statements executed in connection therewith.
"Senior Credit Facility" means the Senior Credit Agreement, dated as
of June 27, 2001, among the Guarantor, as borrower, the banks party thereto and
CUSA, as Senior Administrative Agent and as Senior Collateral Agent.
"Senior Takeout" has the meaning set forth in Section 6.04(c) of the
Participation Agreement.
"Senior Takeout Notice" has the meaning set forth in Section
6.04(c)(ii) of the Participation Agreement.
"Senior Takeout Option" has the meaning set forth in Section
6.04(c)(ii) of the Participation Agreement.
"Senior Takeout Period" has the meaning set forth in Section
6.04(c)(ii) of the Participation Agreement.
"Senior Takeout Price" has the meaning set forth in Section
6.04(c)(ii) of the Participation Agreement.
"Severable Alteration" has the meaning set forth in Section 5.05(c)
of the Lease.
"Special Counsel" means Xxxxxxxxxx & Xxxxx LLP; Piper, Marbury,
Xxxxxxx and Xxxxx; and XxXxxxxxx, Will & Xxxxx or such other counsel as is
reasonably satisfactory to the Agent and the Note Holders and the Certificate
Holders.
"SPC" has the meaning set forth in Section 9.26 of the Participation
Agreement.
2828
Appendix A
Proprietary & Confidential
"Statutory Reserves" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentage (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Federal Reserve Board and any other banking authority,
domestic or foreign, to which the Agent or any Holder (including any branch,
Affiliate, or other fronting office making or holding an Advance or an Equity
Investment) is subject, with respect to the LIBO Rate, for Euro-Dollar
Liabilities. Such reserve percentages shall include those imposed pursuant to
Regulation D. Advances and Equity Investments determined by reference to the
LIBO Rate shall be deemed to constitute Euro-Dollar Liabilities and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Holder
under such Regulation D. Statutory Reserves shall be adjusted automatically on
and as of the effective date of any change in any reserve percentage.
"Subsidiary" means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned by the Guarantor.
"Tax" or "Taxes" means, without limitation, any foreign, federal,
state or local fee (including license, inspection, filing, recording, transfer
and registration fees), tax (including any income, gross receipts, withholding,
franchise, excise, sales, use, value added, goods and services, real, personal,
tangible or intangible property tax or any tax similar to any of the foregoing
taxes), interest equalization, recording, transfer or stamp tax, assessment
(including any maintenance charge, owner association dues, charges or
assessments), levy, impost, duty, charge or withholding of any kind or nature
whatsoever, general and special, ordinary and extraordinary, foreseen and
unforeseen, of every character imposed or assessed by any foreign, federal,
state or local government or agency, or governmental authority, together with
any addition to tax, penalty, fine or interest thereon.
"Temporary Cash Investment" means any investment by any Person in
(i) direct obligations of the United States or any agency thereof, or
obligations guaranteed by the United States or any agency thereof, (ii)
commercial paper rated at least A-1 by S&P and P-1 by Moody's, (iii) time
deposits with, including certificates of deposit issued by, any office located
in the United States of any bank or trust company which is organized or
licensed under the laws of the United States or any state thereof and has
capital, surplus and undivided profits aggregating at least $500,000,000, (iv)
repurchase agreements with respect to securities described in clause (i) above
entered into with an office of a bank or trust company meeting the criteria
specified in clause (iii) above, provided in each case that such investment
matures within one year from the date of
2929
Appendix A
Proprietary & Confidential
acquisition thereof by such Person or (v) money market mutual funds at least 90%
the assets of which are held in investments referred to in clauses (i) through
(iv) above (except that the maturities of certain investments held by any such
money market funds may exceed one year so long as the dollar-weighted average
life of the investments of such money market mutual fund is less than one year).
"Term" has the meaning set forth in Section 3.01 of the Lease.
"Termination Notice" means any written notice of an intention to
terminate the Lease with respect to a Property or the Properties, as applicable,
that may be issued by the Lessee or the Lessor pursuant to Sections 7.02, 7.03,
8.02 or 9.02(a) of the Lease.
"Termination Value" means, with respect any Property, as of any
given time, the sum of:
(i) the unpaid principal balance of the Notes and the unpaid
Certificate Amounts of the Certificates allocable to such Property, plus
(ii) the interest accrued and unpaid on the Notes allocable to such
Property, plus
(iii) the Distributions accrued and unpaid on the Certificates
allocable to such Property, plus
(iv) all Closing Costs with respect to such Property, plus
(v) all Break Costs associated with the Notes and the Certificates
allocable to such Property, plus
(vi) all other amounts owed by the Company under the Operative
Documents with respect to such Property.
0000
Xxxxxxxx A
Proprietary & Confidential
"Title Company" has the meaning set forth in Section 2.01(e)(v) of
the Participation Agreement.
"Title Policies" has the meaning set forth in Section 2.01(e)(v) of
the Participation Agreement.
"Total Certificate Commitment " means the aggregate Certificate
Commitment of each Certificate Holder up to the aggregate amount of
$3,205,510.18.
"Total Commitment" means the aggregate Note Commitment of each Note
Holder and the aggregate Certificate Commitment of each Certificate Holder, not
to exceed $106,850,339.25 in the aggregate.
"Total Note Commitment" means the aggregate Note Commitment of each
Note Holder, not to exceed $103,644,829.07.
"Transaction Costs" has the meaning set forth in Section 9.13 of the
Participation Agreement.
"Trust" means RAC Distribution Statutory Trust, a Connecticut
statutory trust formed under the Trust Agreement.
"Trust Act" has the meaning set forth in the preliminary statement
of the Trust Agreement.
"Trust Agreement " means the Amended and Restated Declaration of
Trust dated as of the Funding Date between WFBN and the Certificate Holders.
"Trust Estate" means all property, rights, privileges and franchises
of every kind and description, real, personal or mixed, whether previously
granted, conveyed, assigned, pledged over and confirmed, or intended, agreed or
covenanted so to be, to the Trustee or the Lessor, including all right, title
and interest (whether direct, indirect, contingent or otherwise) of the Trustee
or the Lessor in the following property:
(i) the Properties, and any contracts, instruments or documents
entered into in connection therewith or relating thereto (including the
Security Agreement);
(ii) the Lease, including all rights to receive the payments of
Termination Value, Fixed Rent, Additional Rent, Residual Value Amount,
amounts payable
3131
Appendix A
Proprietary & Confidential
pursuant to Section 5.02 of the Lease, any and all amounts payable or
rights arising under or as a result of the Insurance Requirements relating
thereto and other amounts payable or rights arising under the Lease, any
and all amounts payable pursuant to any indemnities under the Operative
Documents and the right to the Sales Proceeds, but excluding amounts paid
or payable to WFBN in its individual capacity;
(iii) the Participation Agreement, including all rights to receive
payment of the Residual Value Amount, Termination Value and Sales
Proceeds, but excluding amounts paid or payable to WFBN in its individual
capacity;
(iv) any cash, Condemnation or Casualty award or payment hereafter
deposited or required to be deposited with the Proceeds Trustee, but
excluding amounts paid or payable to WFBN in its individual capacity; and
(v) all other Operative Documents to which the Trustee is party or
to which it is the beneficiary and all other documents, moneys and other
property which may from time to time pursuant to any Operative Document be
delivered to or come into the possession of the Trust or the Trustee and
be intended to be held for the benefit of the Holders from time to time of
the Instruments or received in connection with the enforcement of any of
the Operative Documents.
"Trust Related Agreements" has the meaning set forth in preamble of
the Trust Agreement.
3232
Appendix A
Proprietary & Confidential
"Trustee" means Xxxxx Fargo Bank Northwest, National Association,
not in its individual capacity, but solely as trustee of the Trust.
"Trustee's Counsel" means Day, Xxxxx & Xxxxxx, special Connecticut
counsel, and Ray, Xxxxxxx & Nebecker, special Utah counsel.
"UCC" means the Uniform Commercial Code as in effect from time to
time in any jurisdiction whose Law governs the document in which such term is
used and/or rights thereunder.
"Voting Stock" means outstanding shares of stock having voting power
for the election of directors, whether at all times or only so long as no senior
class of stock has such voting power because of default in dividends or some
other default.
"WFBN" means Well Fargo Bank Northwest, National Association, a
national banking association.
3333
