EXECUTION COPY
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PARTICIPATION AGREEMENT
dated as of October 18, 1996
among
SYMANTEC CORPORATION,
as Lessee, Pledgor and Guarantor,
SUMITOMO BANK LEASING AND FINANCE, INC.,
as Lessor,
THE SUMITOMO BANK, LIMITED, SAN XXXXXXXXX XXXXXX,
and the other
VARIOUS FINANCIAL INSTITUTIONS
IDENTIFIED HEREIN,
as Lenders,
and
THE SUMITOMO BANK, LIMITED, SAN XXXXXXXXX XXXXXX
as Agent
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Lease Financing of Three Properties
Located in Cupertino, California
for Symantec Corporation
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PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT (this "PARTICIPATION AGREEMENT"), dated as of
October 18, 1996, is entered into by and among SYMANTEC CORPORATION, a Delaware
corporation, as the Lessee, Pledgor and Guarantor (together with its permitted
successors and assigns, the "LESSEE"; in its capacity as Pledgor, the "PLEDGOR";
and in its capacity as Guarantor, the "GUARANTOR"); SUMITOMO BANK LEASING AND
FINANCE, INC., a Delaware corporation, as Lessor (together with its permitted
successors and assigns, the "LESSOR"); THE SUMITOMO BANK, LIMITED, SAN XXXXXXXXX
XXXXXX, a Japanese banking organization acting through its San Xxxxxxxxx Xxxxxx,
and the other various financial institutions as are or may from time to time
become lenders (the "LENDERS") under the Loan Agreement; and THE SUMITOMO BANK,
LIMITED, SAN XXXXXXXXX XXXXXX, as Agent (in such capacity, the "AGENT").
W I T N E S E T H:
WHEREAS, on each Acquisition Date, the Lessor will purchase from one or
more third parties designated by the Lessee parcels of Land, together with all
Improvements thereon, if any;
WHEREAS, the Lessor desires to lease to the Lessee, and the Lessee desires
to lease from the Lessor, each Property; and
WHEREAS, the Lessor is willing to provide a portion of the funding of the
costs of the acquisition of Land and all Improvements thereon, if any, Fees and
the Transaction Expenses incurred in connection therewith;
WHEREAS, the Lenders are willing to provide financing of the remaining
portion of the costs of acquisition of Land and all Improvements thereon, if
any, Fees and the Transaction Expenses incurred in connection therewith; and
WHEREAS, to secure such financing (a) the Lessor will have the benefit of a
first priority Lien on the Properties and
(b) the Lenders will have the benefit of (i) a Lien on the Lessor's right, title
and interest in the Properties, (ii) a guaranty of all of the obligations of the
Lessor under the Loan Agreement, and (iii) a pledge of certain marketable
securities of the Lessee;
In consideration of the mutual agreements contained in this Participation
Agreement and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS; INTERPRETATION
Unless the context shall otherwise require, capitalized terms used and not
defined herein shall have the meanings assigned thereto in APPENDIX A hereto for
all purposes hereof; and the rules of interpretation set forth in APPENDIX A
hereto shall apply to this Participation Agreement.
ARTICLE II
CONDITIONS PRECEDENT TO DOCUMENTATION AND ACQUISITION DATES
SECTION II.1. DOCUMENTATION DATE. The date of effectiveness of this
Participation Agreement (the "DOCUMENTATION DATE") shall be deemed to have
occurred on the earliest date on which the following conditions precedent shall
have been satisfied or waived, in the reasonable discretion of the Lessor and
Agent:
(a) PARTICIPATION AGREEMENT. This Participation Agreement shall have
been duly authorized, executed and delivered by the parties hereto.
(b) MASTER LEASE. The Master Lease shall have been
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xxxx authorized, executed and delivered by the parties thereto.
(c) LOAN AGREEMENT. The Loan Agreement shall have been duly
authorized, executed and delivered by the parties thereto.
(d) ASSIGNMENT OF LEASE AND RENT. The Assignment of Lease and Rent,
shall have been duly authorized, executed and delivered by the Lessor, as
assignor, to the Lenders, as assignees, and the Assignment of Lease and
Rent, shall have been consented to and acknowledged by the Lessee.
(e) GUARANTY. The Guaranty shall have been duly authorized, executed
and delivered by the Company.
(f) PLEDGE AGREEMENT. The Pledge Agreement shall have been duly
authorized, executed and delivered by the parties thereto.
(g) CORPORATE DOCUMENTS. The Lessee shall have delivered to the
Agent, the Lessor and each Lender
(i) a certificate of its Secretary or an Assistant Secretary
attaching and certifying as to (A) the resolutions of the Board of
Directors duly authorizing the execution, delivery and performance by
it of each Operative Document to which it is or will be a party, (B)
its certificate of incorporation and by-laws, and (C) the incumbency
and signature of persons authorized to execute and deliver on its
behalf the Operative Documents to which it is a party; and
(ii) a certificate of good standing with respect to it issued by
the Secretary of State of the State of Delaware.
(h) LEGAL OPINION. The Agent and the Lessor shall
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have received, with a copy for each Lender, an opinion of counsel for the
Lessee, covering the matters set forth in EXHIBIT C, dated the
Documentation Date and addressed to the Agent, the Lessor and the Lenders,
and otherwise in form and substance reasonably satisfactory to the Agent,
the Lessor and the Lenders.
(i) REPRESENTATIONS AND WARRANTIES. On the Documentation Date, the
representations and warranties of each of the Lessee and in each of the
other Operative Documents shall be true and correct in all material
respects as though made on and as of such date, except to the extent such
representations or warranties relate solely to an earlier date, in which
case such representations and warranties shall have been true and correct
in all material respects on and as of such earlier date.
(j) FEES. The Agent and the Lessor shall have received all Fees then
due and payable pursuant to the Fee Letter.
(k) CERTAIN TRANSACTION EXPENSES. Counsel for each of the
Participants shall have received, to the extent then invoiced, payment in
full in cash of all Transaction Expenses payable to such counsel pursuant
to SECTION 9.1.
All documents and instruments required to be delivered pursuant to this SECTION
2.1 shall be delivered at the offices of Xxxxx, Brown & Xxxxx, 0000 Xxxxxxxx,
Xxx Xxxx, Xxx Xxxx, or at such other location as may be determined by the
Lessor, the Lenders and the Lessee.
SECTION II.2. ACQUISITION DATES. Each closing date with respect to an
acquisition of Land (and the Improvements existing thereon, if any) (each an
"ACQUISITION DATE") shall occur on the date on which all the conditions
precedent thereto set forth in this SECTION 2.2 with respect to such acquisition
of Land shall have been satisfied or waived by the applicable parties as set
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forth herein. The parties hereto agree that the Lessor's obligations to acquire
any parcel of Land (and Improvements thereon, if any) and the obligation of the
Lessor to make available any related Lessor Amount shall not be subject to any
conditions precedent set forth in this SECTION 2.2 to the extent such conditions
are actions required of the Lessor. Subject to the preceding sentence, the
obligation of the Lessor to acquire any Land (and/or Improvements, if any) on an
Acquisition Date, the obligation of the Lessor to make available any related
Lessor Amount on such Acquisition Date and the obligation of each Lender to make
any related Loan on such Acquisition Date, are subject to satisfaction or waiver
of the following conditions precedent:
(a) FUNDING REQUEST. Each of the Lenders, the Lessor and the Agent
shall have received a fully executed counterpart of the applicable Funding
Request in accordance with SECTION 3.4. Each of the delivery of a Funding
Request and the acceptance of the proceeds of such Advance shall constitute
a representation and warranty by the Lessee that on such Acquisition Date
(both immediately before and after giving effect to the making of such
Advance and the application of the proceeds thereof), the statements made
in SECTION 8.1 are true and correct.
(b) RESPONSIBLE OFFICER'S CERTIFICATE. The Lessor and the Lenders
shall each have received a Responsible Officer's Certificate of the Lessee,
in substantially the form of EXHIBIT B attached hereto, dated as of the
Acquisition Date, stating that (i) to such Responsible Officer's knowledge
each and every representation and warranty of the Lessee contained in each
Operative Document to which it is a party is true and correct in all
material respects on and as of such Acquisition Date; (ii) to such
Responsible Officer's knowledge no Default or Event of Default has occurred
and is continuing under any Operative Document to which it is a party with
respect to the Lessee; (iii) to such Responsible Officer's knowledge each
Operative Document to which the Lessee is a party is in full force and
effect with respect
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to it; and (iv) the Lessee has duly performed and complied with all
conditions contained herein or in any other Operative Document required to
be performed or complied with by it on or prior to such Acquisition Date.
(c) DEED. On or prior to such Acquisition Date, the Lessor shall
have received a Deed with respect to such Property (and/or all Improvements
located thereon) being purchased on such Acquisition Date, conveying fee
simple title to the applicable Land, and all Improvements existing thereon,
if any, to the Lessor and subject only to Permitted Liens.
(d) BILL OF SALE. On or prior to the Acquisition Date, the Lessor
shall have received a bill of sale (a "BILL OF SALE"), conveying title to
the Lessor in any Improvements and other personal property (other than
inventory) comprising part of the applicable Property.
(e) LEASE SUPPLEMENT LESSOR AND FINANCING STATEMENTS; RECORDATION.
On or prior to the Acquisition Date
(i) the Lessee and the Lessor shall have delivered to the Agent
and the Lenders the original counterpart of each of the Lease
Supplement executed by the Lessee and the Lessor with respect to the
applicable Property;
(ii) the Lessee shall have delivered to the Lessor all Lessor
Financing Statements relating to such Property as the Lessor or any
other Participant may reasonably request in order to protect the
Lessor's interest under the Master Lease and the Lease Supplement
relating to the applicable Property to the extent the Master Lease and
such Lease Supplement constitute security agreements; and
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(iii) each of the Participants shall have received evidence
reasonably satisfactory to it that each of (i) the Lease Supplement
and any other instrument constituting a Lessor Mortgage, and (ii) the
Lessor Financing Statements, in each case relating to such Property,
has been, or are being, recorded in a manner sufficient to properly
secure each of their interests therein.
(f) APPRAISAL. On or prior to the Acquisition Date, the Lessor and
the Lenders shall have received an Appraisal of the applicable Property, in
form and substance satisfactory to the Agent and the Lessor, which
Appraisal shall show that, as of the Acquisition Date, the Fair Market
Sales Value of such Property shall not be less than 100% of the sum of the
Property Acquisition Costs for such Property.
(g) EVIDENCE OF INSURANCE. The Lessor and the Lenders shall have
received evidence that the insurance maintained by the Lessee with respect
to such Property satisfies the requirements set forth in Article XIII of
the Master Lease, setting forth the respective coverage, limits of
liability, carrier, policy number and period of coverage.
(h) ENVIRONMENTAL AUDIT. The Lessor and each Lender shall have
received an Environmental Audit with respect to the applicable Property in
form and Substance reasonably satisfactory to the Lessor and the Agent.
(i) PROPERTY SURVEY AND TITLE INSURANCE. On or prior to the
Acquisition Date, the Lessee shall have delivered to each of the Lessor and
the Agent, on behalf of the Lenders, an American Land Title Association
("ALTA")/1992 (Urban) Survey of such Property certified to the Participants
and the title company and otherwise in form reasonably acceptable to the
Participants and a commitment to deliver an ALTA extended owners and
lenders title insurance policy covering such Property in favor of the
Lessor and the Agent,
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on behalf of the Lenders, respectively, such policy in an amount not less
than the sum of the related Property Acquisition Costs and to be reasonably
satisfactory to the Agent and the Lessor with such customary endorsements
issued by the title company as a routine matter, if requested by the Agent.
(j) SUBLEASES. With respect to any Property that as of the
Acquisition Date is subject to a sublease between the Lessee, as sublessor,
and the sublessee thereof, then on or prior to such Acquisition Date (i)
the Lessee shall have delivered a copy of each such sublease to the Lessor
and the Agent, and (ii) with respect to each such sublease, the Lessee
shall have executed and delivered, and caused each such sublessee to
execute and deliver, to the Lessor and the Agent, a Subordination,
Nondisturbance and Attornment agreement in the form of EXHIBIT D.
(k) GOVERNMENTAL APPROVALS. All necessary Governmental Actions
required by any Requirement of Law or any Property Legal Requirements for
the purpose of authorizing the Lessor to acquire the applicable Property
shall have been obtained or made and be in full force and effect.
(l) LITIGATION. No action or proceeding shall have been instituted,
nor shall any action or proceeding be threatened, before any Governmental
Authority, nor shall any order, judgment or decree have been issued or
proposed to be issued by any Governmental Authority (i) to set aside,
restrain, enjoin or prevent the full performance of any Operative Document
or any transaction contemplated hereby or thereby or (ii) which is
reasonably likely to materially and adversely affect the Lessee.
(m) REQUIREMENTS OF LAW. The transactions contemplated by the
Operative Documents do not and will not violate any Material Requirement of
Law and do not and will
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not subject the Lessor to any Material adverse regulatory prohibitions or
constraints.
(n) NO DEFAULT. There shall not have occurred and be continuing any
Default or Event of Default under any of the Operative Documents, and no
Default or Event of Default under any of the Operative Documents will have
occurred after giving effect to the acquisition of the Land and
Improvements located thereon, if any, requested by such Funding Request.
(o) NO MATERIAL ADVERSE CHANGE. As of the Acquisition Date, there
shall not have occurred any Material adverse change in the consolidated
assets, liabilities, results of operations, or financial condition of the
Lessee from that set forth in the Submitted Financial Statements.
(p) SUPPLEMENT TO ASSIGNMENT OF LEASE AND RENT. On or prior to such
Acquisition Date, the Lessor shall have delivered to the Agent a Supplement
to the Assignment of Lease and Rent with respect to the applicable Property
substantially in the form of Exhibit A thereto, together with a consent to
and acknowledgement of such Supplement duly executed by the Lessee.
(q) OPINION OF COUNSEL TO THE LESSEE. On the initial Acquisition
Date only, the Participants shall have received an opinion of counsel
located in the jurisdiction in which the applicable Land is situated in
form and substance reasonably acceptable to the Lessor and the Agent.
All documents and instruments required to be delivered pursuant to this SECTION
2.2 shall be delivered to the Lessor at the offices of Xxxxx, Brown & Xxxxx,
0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx, or at such other locations as may be
determined by the Lessor, the Lenders and the Lessee.
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ARTICLE III
FUNDING OF ADVANCES
SECTION III.1. ADVANCES. Subject to the conditions and terms hereof, the
Lessor and the Agent shall take the following actions at the written request of
the Lessee on the Acquisition Date for each Property:
(a) the Lessor and the Agent shall make an Advance (out of the funds
provided by the Lessor and the Lenders) to the Lessee, for the purpose of
financing the acquisition of Land and Improvements existing thereon, if
any, and the Fees and the Transaction Expenses incurred in connection
therewith, and the proceeds of such Advances shall be made directly to the
Lessee or to such payees designated in writing by the Lessee;
(b) the Lessor shall acquire the Land and Improvements, if any (using
the funds provided by the Lessor and the Lenders); and
(c) the Lessor shall lease the Land and Improvements to the Lessee
under the Master Lease and the respective Lease Supplements.
Notwithstanding any other provision hereof, the Participants shall not be
obligated to make any Advance if, after giving effect thereto, the aggregate
outstanding amounts of each of the Loans and the Lessor Amounts would exceed the
Maximum Commitment Amount.
SECTION III.2. LESSOR COMMITMENT. Subject to the conditions and terms
hereof, the Lessor shall make available to the Lessee on the Acquisition Date
for each Property an amount (each such amount, a "LESSOR AMOUNT") in immediately
available funds equal to the Commitment Percentage of the Lessor of the
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amount of the Advance being funded on such Acquisition Date. Notwithstanding
any other provision hereof, the Lessor shall not be obligated to make available
any Lessor Amount if, after giving effect to the proposed Lessor Amount, the
outstanding aggregate amount of the respective Lessor Amounts of the Lessor
would exceed the Lessor's Commitment.
SECTION III.3. LENDERS' COMMITMENTS. Subject to the conditions and terms
hereof, the Lenders severally shall make Loans to the Lessor at the request of
the Lessee on the Acquisition Date for each Property in an amount in immediately
available funds equal to such Xxxxxx's Commitment Percentage of the amount of
the Advance being funded to Lessee on such Acquisition Date. Notwithstanding
any other provision hereof, no Lender shall be obligated to make any Loan if,
after giving effect to the proposed Loan, the outstanding aggregate amount of
such Xxxxxx's Loans would exceed such Xxxxxx's Commitment.
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SECTION III.4. PROCEDURES FOR ADVANCES.
(a) With respect to each funding of an Advance, the Lessee shall give
the Lessor and the Agent prior written notice pursuant to a Funding Request
substantially in the form of EXHIBIT A (a "FUNDING REQUEST"), which Funding
Request shall be delivered not later than 10:00 a.m., five (5) Business
Days prior to the proposed Acquisition Date, specifying: (i) the proposed
Acquisition Date, (ii) the amount of Advance requested, and (iii) to which
Properties such Advance is being allocated and the amount allocated to each
Property. The Agent and the Lessor shall calculate the amounts of the
Lessor Amounts and the Loans required to fund the requested Advance as it
relates to each Property. In the event that the Lessor and the Lenders are
unable to obtain a LIBO Rate (Reserve Adjusted) for the period of the
Advance requested in any Funding Request, the Lessor and the Lenders shall
make available Lessor Amounts and Loans, as the case may be, at the
Alternate Base Rate equal to the Advance requested in such Funding Request.
Such Lessor Amounts and Loans shall accrue Yield or Interest, as the case
may be, at the Alternate Base Rate until the date on which the Lessor and
the Lenders shall be able to obtain a LIBO Rate (Reserve Adjusted) for the
amount of such Advance, at which time such Lessor Amounts and Loans shall
convert and thereafter accrue Yield and Interest, as the case may be, at
the LIBO Rate (Reserve Adjusted); PROVIDED, HOWEVER, that no such
conversion shall occur unless the Lessee shall have submitted an Interest
Period Selection Notice in connection therewith.
(b) The proceeds of each Advance shall be used solely to provide the
Lessee with funds with which to pay or reimburse itself for Property
Acquisition Costs.
ARTICLE IV
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YIELD; INTEREST; FEES
SECTION IV.1. YIELD.
(a) The amount of the Lessor Amounts outstanding from time to time
shall accrue yield ("YIELD") at the Yield Rate, calculated using the actual
number of days elapsed and, when the Yield Rate is based on the LIBO Rate
(Reserve Adjusted), a 360-day year basis and, if calculated at the
Alternate Base Rate, a 360-day year basis if the Alternate Base Rate is
calculated at the Federal Funds Rate, and a 365-, or, if applicable, 366-,
day year basis if the Alternate Base Rate is calculated at the Prime Rate.
If all or any portion of the Lessor Amounts, any Yield payable thereon or
any other amount payable hereunder shall not be paid when due (whether at
stated maturity, acceleration thereof or otherwise), such overdue amount
shall bear interest at a rate per annum which is equal to the Overdue Rate.
(b) The Agent shall distribute, in accordance with ARTICLE VII, the
Lessor Basic Rent and all other amounts due with respect to the Lessor
Amounts paid to the Agent by the Lessee under the Lease from time to time.
(d) During the Base Lease Term, Yield shall accrue on outstanding
Lessor Amounts and shall be paid on each Scheduled Payment Date.
(e) During the Base Lease Term, the Lessee shall make an amortization
payment, if any, with respect to the aggregate Lessor Amounts, on the date
and in the amount(s) set forth in the Master Rent Schedule.
(f) The outstanding aggregate Lessor Amounts shall be repaid in full
on the Maturity Date.
SECTION IV.2. INTEREST ON LOANS.
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(a) Each Loan shall accrue interest computed and payable in
accordance with the terms of the Loan Agreement.
(b) The Agent shall distribute, in accordance with the ARTICLE VII,
the Lender Basic Rent and all other amounts due with respect to the Loans
paid to the Lessor by the Lessee under the Lease from time to time.
SECTION IV.3. FEES. The Lessee shall pay the Fees to the Lessor and the
Agent.
ARTICLE V
CERTAIN INTENTIONS OF THE PARTIES
SECTION V.1. NATURE OF TRANSACTION.
(a) The parties hereto intend that (i) for financial accounting
purposes with respect to the Lessee, the Lessor will be treated as the
owner and the lessor of the Properties and the Lessee will be treated as
the lessee of the Properties and (ii) for all other purposes, including
federal and all state and local income tax purposes, state real estate and
commercial law and bankruptcy purposes, (A) the Lease will be treated as a
financing arrangement, (B) the Lessor and the Lenders will be deemed
lenders making loans to the Lessee in an amount equal to the sum of the
Lessor Amounts and the outstanding principal amount of the Loans, which
loans are secured by the Properties and (C) the Lessee will be treated as
the owner of the Properties and will be entitled to all tax benefits
ordinarily available to an owner of properties like the Properties for such
tax purposes. Nevertheless, the Lessee acknowledges and agrees that
neither the Lessor nor any of the Lenders has made any representations or
warranties to the Lessee concerning the tax, accounting or legal
characteristics of the Operative Documents and that the Lessee has obtained
and relied upon
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such tax, accounting and legal advice concerning the Operative Documents as
it deems appropriate.
(b) Specifically, without limiting the generality of CLAUSE (a) of
this SECTION 5.1, the parties hereto intend and agree that in the event of
any insolvency or receivership proceedings or a petition under the United
States bankruptcy laws or any other applicable insolvency laws or statute
of the United States of America or any State or Commonwealth thereof
affecting the Lessee, the Lessor, or the Lenders or any collection actions,
the transactions evidenced by the Operative Documents shall be regarded as
loans made by the Lessor and the Lenders as unrelated third party lenders
of the Lessee.
SECTION V.2. AMOUNTS DUE UNDER LEASE. Anything else herein or elsewhere
to the contrary notwithstanding, it is the intention of the Lessee, the Lessor
and the Lenders that: (i) the amount and timing of installments of Basic Rent
due and payable from time to time from the Lessee under the Lease shall be equal
to the aggregate payments due and payable as interest on the Loans and Yield on
the Lessor Amounts on each Basic Rent Payment Date; (ii) if the Lessee elects
the Purchase Option or becomes obligated to purchase any of the Properties under
the Lease, the Loans, the Lessor Amounts, all interest, Yield and Fees thereon
and all other obligations of the Lessee owing to the Lessor and the Lenders
shall be paid in full by the Lessee; (iii) if the Lessee properly elects the
Remarketing Option, the Lessee shall only be required to pay to the Lessor the
proceeds of the sale of each of the Properties, the Loan Balance and any amounts
due pursuant to ARTICLE XIII hereof and Section 20.2 of the Master Lease (which
aggregate amounts may be less than the Lease Balance); and (iv) upon an Event of
Default resulting in an acceleration of the Lessee's obligation to purchase the
Properties under the Lease, the amounts then due and payable by the Lessee under
the Lease shall include all amounts necessary to pay in full the Lease Balance,
plus all other amounts then due from the Lessee to the Participants under the
Operative
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Documents.
ARTICLE VI
ADDITIONAL COLLATERAL
SECTION VI.1. DEFICIENCY. If the fair market value, as determined by the
Collateral Agent, of the Additional Collateral held by the Collateral Agent
shall be less than 102.0% of the Loan Balance then outstanding (any such day of
determination, a "DEFICIENCY DATE"), and the Lessee has been given notice of
such deficiency by the Collateral Agent pursuant to the terms and conditions of
the Pledge Agreement, THEN, within two Business Days of such Deficiency Date,
the Lessee shall deposit with the Collateral Agent such Additional Collateral
("DEFICIENCY COLLATERAL") so as to cause the fair market value, as determined by
the Collateral Agent, of Additional Collateral then held by the Collateral Agent
pursuant to the terms and conditions of the Pledge Agreement, and after giving
effect to the deposit of such Deficiency Collateral, to be equal to or in excess
of 102.0% of the then outstanding Loan Balance.
SECTION VI.2. SURPLUS. If on any day the fair market value of the
Additional Collateral held by the Collateral Agent pursuant to terms and
conditions of the Pledge Agreement shall exceed 102.0% of the then outstanding
Loan Balance, and provided that no Default or Event of Default has occurred and
is continuing, then the Lessee may request in writing to the Agent and the
Lessor that the Lessor and the Agent cause the Collateral Agent to release to
the Lessee Additional Collateral in an amount such that after giving effect to
such release, the fair market value, as determined by the Collateral Agent of
the remaining Additional Collateral held by the Collateral Agent subject to the
terms and conditions of the Pledge Agreement shall equal or exceed 102.0% of the
then outstanding Loan Balance (such released Additional Collateral, "SURPLUS
COLLATERAL"). Upon receipt of such notice, and subject to the terms and
conditions of the
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Pledge Agreement, the Agent and the Lessor promptly shall cause the Collateral
Agent to release such Surplus Collateral to the Lessee; PROVIDED, HOWEVER, that
after giving effect to such release, no Default of Event of Default shall occur;
and PROVIDED FURTHER, that no release of Surplus Collateral shall in any way
affect the obligations of the Lessee pursuant to SECTION 6.1.
ARTICLE VII
DISTRIBUTIONS
SECTION VII.1. BASIC RENT. Each payment of Basic Rent (and any payment of
interest on overdue installments of Basic Rent) received by the Agent shall be
distributed by the Agent to the Lessor and the Lenders PRO RATA, without
priority, in accordance with, and for application to, the Lender Basic Rent and
Lessor Basic Rent then due, as well as any overdue interest or yield due to the
Lenders (to the extent permitted by applicable law).
SECTION VII.2. PURCHASE PAYMENTS BY THE LESSEE.
(a) Any payment received by the Agent as a result of:
(i) the purchase of any or all of the Properties in connection
with the exercise of the Purchase Option under Section 18.1 of the
Master Lease,
(ii) compliance with the obligation to purchase (or cause its
designee to purchase) all of the Properties in accordance with Section
18.2 of the Master Lease,
(iii) compliance with the obligation to purchase all unsold
Properties in accordance with Section 16.2(e) of the Master Lease,
(iv) failure to fulfill one or more of the
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conditions to exercise of the Remarketing Option with respect to any
Property pursuant to Section 20.1 of the Master Lease and Xxxxxx's
receipt of the Lease Balance pursuant to the next-to-last paragraph of
Section 20.1 of the Master Lease,
(v) the payment of the Property Balance with respect to any
Property in accordance with Section 15.1 of the Master Lease,
shall be distributed by the Agent to the Lessor and the Lenders PRO RATA
without priority of one over the other, in the proportion that the
Participant Balance of each of the Lenders and the Lessor bears to the
aggregate of all of the Participant Balances.
SECTION VII.3. PAYMENT OF LOAN BALANCE. The payment of the Loan Balance
to the Agent in accordance with Section 20.1(k) of the Master Lease upon the
exercise of the Remarketing Option shall be distributed to the Lenders for
application to pay in full the Participant Balance of each Lender.
SECTION VII.4. SALES PROCEEDS OF REMARKETING OF PROPERTIES. Any payments
received by the Agent as proceeds from the sale of the Properties sold pursuant
to the exercise of the Remarketing Option pursuant to Article XX of the Master
Lease, together with any payment made as a result of an appraisal pursuant to
SECTION 13.2, shall be distributed by Agent in the funds so received in the
following order of priority:
FIRST, to the Lessor for application to pay in full the Participant
Balance of the Lessor, and
SECOND, the balance, if any, shall be promptly paid to the Lessor to
be distributed as provided in the Lease.
SECTION VII.5. SUPPLEMENTAL RENT. All payments of Supplemental Rent
received by the Agent (excluding any amounts
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payable pursuant to the preceding provisions of this ARTICLE VII) shall be
distributed promptly by the Agent upon receipt thereof to the Persons entitled
thereto pursuant to the Operative Documents.
SECTION VII.6. ADDITIONAL COLLATERAL REALIZATIONS. All amounts realized
and received by the Agent on account of the exercise of its remedies with
respect to the Additional Collateral shall be distributed by the Agent in the
following order of priority:
FIRST, so much of such payment or amount as shall be required to
reimburse the Agent or Collateral Agent for any tax, expense or other
loss incurred by the Agent or Collateral Agent, as the case may be (to
the extent not previously reimbursed and to the extent incurred in
connection with any duties as the Agent or Collateral Agent, as the
case may be), shall be distributed to the Agent for its own account;
SECOND, so much of such payments or amounts as shall be required
to pay the Agent or the Collateral Agent the amounts payable to it
pursuant to any expense reimbursement or indemnification provisions of
the Operative Documents shall be distributed to the Agent or the
Collateral Agent, as the case may be;
THIRD, so much of such payments or amounts as shall be required
to pay the then existing or prior Lenders the amounts payable to them
pursuant to any expense reimbursement or indemnification provisions of
the Operative Documents shall be distributed to each such Lender
without priority of one over the other in accordance with the amount
of such payment or payments payable to each such Person;
FOURTH, to the Lenders for application to pay in full the
Participant Balance of each Lender and, in the
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case where the amounts so distributed shall be insufficient to pay in
full as aforesaid, then PRO RATA among the Lenders without priority of
one over the other in the proportion that the Participant Balance of
each such Lender bears to the aggregate Participant Balances of all
Lenders; and
FIFTH, the balance, if any, of such payment or amounts remaining
thereafter shall be promptly distributed to, or as directed by, the
Lessee.
Notwithstanding the foregoing, (i) proceeds derived from the liquidation of
the Additional Collateral shall be distributed FIRST, among the Lenders without
priority of one over the other in the proportion that the Participant Balance of
each such Lender bears to the aggregate Participant Balances of all Lenders,
SECOND, to the Lessor in satisfaction of the Lessor Balance and THIRD, to the
extent of any excess, to the Lessee and (ii) proceeds derived from the sale of
Properties shall be distributed FIRST, to the Lessor in satisfaction of the
Lessor Balance, SECOND, among the Lenders as provided in foregoing CLAUSE (i)
and THIRD, to the extent of any excess, to the Lessee.
SECTION VII.7. DISTRIBUTION OF PAYMENTS AFTER LEASE EVENT OF DEFAULT.
(a) All amounts received by the Agent during the continuance of a
Lease Event of Default, shall, except as provided in SECTION 7.6, be
distributed by the Agent in the following order of priority:
FIRST, so much of such payment or amount as shall be required to
reimburse the Agent for any tax, expense or other loss incurred by the
Agent (to the extent not previously reimbursed and to the extent
incurred in connection with any duties as the Agent), shall be
distributed to the Agent for its own account;
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SECOND, so much of such payments or amounts as shall be required
to pay the Agent the amounts payable to it pursuant to any expense
reimbursement or indemnification provisions of the Operative Documents
shall be distributed to the Agent;
THIRD, so much of such payments or amounts as shall be required
to pay the then existing or prior Lenders and the Lessor the amounts
payable to them pursuant to any expense reimbursement or
indemnification provisions of the Operative Documents shall be
distributed to each such Lender and Lessor without priority of one
over the other in accordance with the amount of such payment or
payments payable to each such Person;
FOURTH, to the Lessor to pay in full the Lessor Balance then to
the Lenders to pay in full any outstanding Loan Balance; and
FIFTH, the balance, if any, of such payment or amounts remaining
thereafter shall be promptly distributed to, or as directed by, the
Lessee.
(b) All payments received and amounts realized by the Agent in
connection with any Condemnation during the continuance of a Lease Event of
Default shall be distributed by the Agent as follows:
(i) in the event that Lessor and the Agent elect to pay all or a
portion of such amounts to the Lessee for the repair of damage caused
by such Condemnation in accordance with Section 14.1(a) of the Master
Lease, then such amounts shall be distributed to the Lessee, and
(ii) in the event that the Lessor and the Agent
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elect to apply all or a portion of such amounts to the purchase price
of the related Property in accordance with Section 14.1(a) and Article
XV of the Master Lease, then such amounts shall be distributed in
accordance with CLAUSE (a).
SECTION VII.8. OTHER PAYMENTS.
(a) Except as otherwise provided in SECTIONS 7.1, 7.2, 7.6, 7.7 and
CLAUSE (b) below, any payment received by the Agent for which no provision
as to the application thereof is made in the Operative Documents or
elsewhere in this ARTICLE VII shall be distributed PRO RATA among the
Lenders and the Lessor without priority of one over the other, in the
proportion that the Participant Balance of each bears to the aggregate of
all the Participant Balances.
(b) Except as otherwise provided in SECTIONS 7.1, 7.2, 7.6 and
7.7, all payments received and amounts realized by Lessor under the
Master Lease or otherwise with respect to the Properties to the extent
received or realized at any time after indefeasible payment in full of
the Participant Balances of all of the Lenders and the Lessor and any
other amounts due and owing to the Lenders or the Lessor, shall be
distributed forthwith by the Agent in the order of priority set forth in
SECTION 7.7.
(c) Except as otherwise provided in SECTIONS 7.1 and 7.2, any payment
received by Lessor for which provision as to the application thereof is
made in an Operative Document but not elsewhere in this ARTICLE VI shall be
distributed forthwith by the Agent to the Person and for the purpose for
which such payment was made in accordance with the terms of such Operative
Document.
SECTION VII.9. CASUALTY AND CONDEMNATION AMOUNTS. Subject to SECTION
7.7(b), any amounts payable to the Agent as a result of a Casualty or
Condemnation pursuant to Section 14.1 of the
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Master Lease and the Assignment of Lease and Rent shall be distributed as
follows:
(a) all amounts payable to a Lessee for the repair of damage caused
by such Casualty or Condemnation in accordance with Section 14.1(a) of the
Master Lease shall be distributed to the Lessee, and
(b) all amounts that are to be applied to the purchase price of the
related Property in accordance with Section 14.1(a) and Article XV of the
Master Lease shall be distributed by the Agent to the Lenders and the
Lessor PRO RATA without priority of one over the other, in the proportion
that the Participant Balance of each bears to the aggregate of all of the
Participant Balances. SECTION 13.10 shall not apply to any distribution or
prepayment made pursuant to this Section 7.9(b).
SECTION VII.10. ORDER OF APPLICATION. To the extent any payment made to
any Lender or the Lessor pursuant to SECTION 7.2, 7.3, 7.4, 7.6 or 7.7 is
insufficient to pay in full the Participant Balance of such Lender or the
Lessor, then each such payment shall first be applied to accrued interest or
Yield and then to principal or the Lessor Amount, as applicable.
ARTICLE VIII
REPRESENTATIONS
SECTION VIII.1. REPRESENTATIONS OF THE PARTICIPANTS. Each Participant
represents and warrants to each other Participant and the Lessee that:
(a) ERISA. Such Participant is not and will not be making its Loans
or funding its Lessor Amounts hereunder, and is not performing its
obligations under the Operative Documents, with the assets of an "employee
benefit plan" (as
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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) STATUS. Such Participant is a commercial bank, savings and loan
association, savings bank, pension plan, depository institution, insurance
company, branch or agency of a foreign bank or other similar financial
institution, or an Affiliate thereof.
(c) POWER AND AUTHORITY. Such Participant has the requisite power
and authority to enter into and perform under the Operative Documents to
which it is a party.
SECTION VIII.2. REPRESENTATIONS OF THE LESSEE. The Lessee hereby
represents and warrants to each Participant and the Agent that:
(a) CORPORATE STATUS. The Lessee (i) is a duly organized and validly
existing corporation in good standing under the laws of the State of
Delaware and (ii) has duly qualified and is authorized to do business and
is in good standing in all jurisdictions where the failure to do so might
have a Material adverse effect on it or its properties.
(b) CORPORATE POWER AND AUTHORITY. The Lessee has the corporate
power and authority to execute, deliver and carry out the terms and
provisions of the Operative Documents to which it is or will be a party and
has taken all necessary corporate action to authorize the execution,
delivery and performance of the Operative Documents to which it is a party
and has duly executed and delivered each Operative Document required to be
executed and delivered by it and, assuming the due authorization, execution
and delivery thereof on the part of each other party thereto, each such
Operative Document constitutes a legal, valid and binding obligation
enforceable against it in accordance with its
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terms, except as the same may be limited by insolvency, bankruptcy,
reorganization or other laws relating to or affecting the enforcement of
creditors' rights or by general equitable principles and except as the same
may be limited by certain circumstances under law or court decisions in
respect of provisions providing for indemnification of a party with respect
to liability where such indemnification is contrary to public policy.
(c) NO VIOLATION. Neither the execution, delivery and performance by
the Lessee of the Operative Documents to which it is or will be a party nor
compliance with the terms and provisions thereof, nor the consummation by
the Lessee of the transactions contemplated therein (i) will result in a
violation by the Lessee of any provision of any Applicable Law or
Materially adversely affect (x) the validity or enforceability of the
Operative Documents to which the Lessee is a party, or the title to, or
value or condition of, any Property, or (y) the consolidated financial
position, business or consolidated results of operations of the Lessee or
the ability of the Lessee to perform its obligations under the Operative
Documents, (ii) will conflict with or result in any breach which would
constitute a default under, or (other than pursuant to the Operative
Documents) result in the creation or imposition of (or the obligation to
create or impose) any Lien upon any of the property or assets of the Lessee
pursuant to the terms of any indenture, loan agreement or other agreement
for borrowed money to which the Lessee is a party or by which it or any of
its property or assets is bound or to which it may be subject (other than
Permitted Liens), or (iii) will violate any provision of the certificate of
incorporation or by-laws of the Lessee.
(d) LITIGATION. There are no actions, suits or proceedings pending
(except for the action entitled XXXXX XXXXXXXXX ET XX x. XXXXXX XXXXXXX,
XX. ET AL, case no. CV756665, which has been disclosed to the Lessor) or,
to the
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knowledge of the Lessee, threatened (i) that are reasonably likely to have
a Materially Adverse Effect on any Property or on the businesses,
operations, financial condition or Material Assets of the Lessee or (ii)
that question the validity of the Operative Documents or the rights or
remedies of any Participant with respect to the Lessee or any Property
under the Operative Documents. There is no action, suit or proceeding
(including any proceeding in condemnation or eminent domain or under any
Environmental Law) pending or, to the best of the Lessee's knowledge,
threatened with respect to the Lessee or any Property which adversely
Materially affects the title to, or the use, operation or value of, such
Property.
(e) GOVERNMENTAL APPROVALS. No Governmental Action by any
Governmental Authority having jurisdiction over the Lessee or any Property
is required to authorize or is required in connection with (i) the
execution, delivery and performance by the Lessee of any Operative Document
to which it is a party, (ii) the Construction or (iii) the legality,
validity, binding effect or enforceability against the Lessee of any
Operative Document to which it is a party.
(f) INVESTMENT COMPANY ACT. The Lessee is not an "investment
company" or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act.
(g) PUBLIC UTILITY HOLDING COMPANY ACT. The Lessee is not a "holding
company" or a "subsidiary company", or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company", within the
meaning of the Public Utility Company Act of 1935, as amended.
(h) PROVIDED INFORMATION. The information and materials which have
been provided by the Lessee or on its behalf by any Person to any
Participant with respect to each Property, in each case as supplemented or
amended prior to the Acquisition Date, are true and accurate in all
Material respects on the date as of which such information and
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materials are dated or certified and are not incomplete by omitting to
state any fact necessary to make such information (taken as a whole) not
misleading at such time in light of the circumstances under which such
information was provided.
(i) TAXES. All United States Federal income tax returns and all
other tax returns which are required to have been filed have been or will
be filed by or on behalf of the Lessee by the respective due dates,
including extensions, and all taxes due with respect to the Lessee pursuant
to such returns or pursuant to any assessment received by the Lessee have
been or will be paid. The charges, accruals and reserves on the books of
the Lessee in respect of taxes or other governmental charges are, in the
opinion of the Lessee adequate.
(j) COMPLIANCE WITH XXXXX. Each member of the ERISA Group has
fulfilled its obligations under the minimum funding standards of ERISA and
the Code with respect to each Plan and is in compliance in all Material
respects with the presently applicable provisions of ERISA and the Code
with respect to the Plan. No member of the ERISA Group has (i) sought a
waiver of the minimum funding standard under Section 412 of the Code in
respect of any Plan, (ii) failed to make any contribution or payment to any
Plan or Multiemployer Plan or in respect of any Benefit Arrangement, or
made any amendment to any Plan or Benefit Arrangement, which has resulted
or could result in the imposition of a Lien or the posting of a bond or
other security under ERISA or the Code or (iii) incurred any liability
under Title IV of ERISA other than a liability to the PBGC for premiums
under Section 4007 of ERISA. No Plan Termination Event has occurred with
respect to any Plan or Multiple Employer Plan. No member of the ERISA
Group has any knowledge of any event that could result in a liability of
any such member to the PBGC, whether under a Plan, a Multiemployer Plan, a
Multiple Employer Plan, or otherwise. There have not been any nor are
there now existing any events or conditions that would permit any Plan to
be terminated under circumstances that
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would cause the lien provided under Section 4068 of ERISA to attach to the
Material Assets of the Lessee or its ERISA Affiliates. The value of the
Plans' benefits guaranteed under Title IV of ERISA on the date hereof does
not exceed the value of such Plans' assets allocable to such benefits as of
the date of this Agreement. No "Prohibited Transaction" within the meaning
of Section 406 of ERISA exists or will exist upon the execution and
delivery of this Agreement or any Operative Document.
(k) ENVIRONMENTAL LAWS. The Lessee is in compliance with all
Environmental Laws relating to pollution and environmental control in all
domestic jurisdictions in which all real property of the Lessee, including
the Land, are located, other than those the non-compliance with which would
not have a Material adverse effect on such real property, including the
Land, or the consolidated results of operations, business, or consolidated
financial position of the Lessee.
(l) OFFER OF SECURITIES, ETC. Neither the Lessee nor any Person
authorized to act on the Lessee's behalf has, directly or indirectly,
offered any interest in each Property or any other interest similar thereto
(the sale or offer of which would be integrated with the sale or offer of
such interest in each such Property), for sale to, or solicited any offer
to acquire any of the same from, any Person other than each Participant and
the Agent and other "accredited investors" (as defined in Regulation D of
the Securities and Exchange Commission).
(m) FINANCIAL STATEMENTS.
(i) The Submitted Financial Statements, copies of which have been
delivered to the Agent and each Participant, present fairly, in
conformity with GAAP, the financial position of the Lessee as of such
date and its results of operations and cash flows for such fiscal
year.
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(ii) The unaudited consolidated statement of financial position
of the Lessee as of June 30, 1996 and the related unaudited
consolidated statements of income, and cash flows for the year to
date, copies of which have been delivered to the Agent and each
Participant, present fairly, in conformity with GAAP applied on a
basis substantially consistent with the financial statements referred
to in CLAUSE (i) of this SUBSECTION (m), the consolidated financial
position of the Lessee as of such date and its consolidated results of
operations and cash flows for such year-to-date period (subject to
normal year-end adjustments).
(n) PROPERTY. Each Property and the contemplated use thereof by the
Lessee and its agents, assignees, employees, lessees, licensees and tenants
complies with all Material Requirements of Law (including, without
limitation, all zoning and land use laws and Environmental Laws) and
Material Insurance Requirements, except for such Requirements of Law as the
Lessee shall be contesting in good faith by appropriate proceedings. There
is no action, suit or proceeding (including any proceeding in condemnation
or eminent domain or under any Environmental Law) pending or, to the best
of the Lessee's knowledge, threatened with respect to the Lessee, its
Affiliates, or any Property which Materially adversely affects the title
to, or the use, operation or value of, any Property.
(o) UTILITIES, ETC.. All water, sewer, electric, gas, telephone and
drainage facilities and all other utilities required to adequately service
the applicable Improvements for such Property's intended use are available
pursuant to adequate permits (including any that may be required under
applicable Environmental Laws). No fire or other casualty with respect to
any Property has occurred which fire or other casualty has had a Material
adverse effect on any such Property. Each Property has available all
Material services of public facilities and other utilities necessary for
use and operation of each Property for its intended purposes including,
without limitation, adequate water, gas and
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electrical supply, storm and sanitary sewerage facilities, telephone, other
required public utilities and means of access between such Improvements and
public highways for pedestrians and motor vehicles. All utilities serving
each Property are located in, and vehicular access to the Improvements on
each Property is provided by, either public rights-of-way abutting each
Property or Appurtenant Rights. All Material licenses, approvals,
authorizations, consents, permits (including, without limitation, building,
demolition and environmental permits, licenses, approvals, authorizations
and consents), easements and rights-of-way, including proof and dedication,
required for the use, treatment, storage, transport, disposal or
disposition of any Hazardous Substance on, at, under or from each Property
during the use thereof have either been irrevocably obtained from the
appropriate Governmental Authorities having jurisdiction or from private
parties, as the case may be, or will be irrevocably obtained from the
appropriate Governmental Authorities having jurisdiction or from private
parties, as the case may be, prior to commencing any use and operation of
such Property.
(p) TITLE. The applicable Deed will be in form and substance
sufficient to convey good and marketable title to the applicable Property
in fee simple, subject only to Permitted Liens. The Lessor will at all
times during the applicable Term have good title to all Equipment located
on each Property and in any Improvements on each Property, subject only to
Permitted Liens.
(q) INSURANCE. The Lessee has obtained insurance coverage covering
the applicable Property which meets the requirements of the Master Lease,
and such coverage is in full force and effect. The Lessee carries
insurance with reputable insurers in respect of its Material Assets, in
such manner, in such amounts and against such risks as is customarily
maintained by other Persons of similar size engaged in similar business.
(r) FLOOD HAZARD AREAS. Except as otherwise
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identified on the applicable survey delivered pursuant to SECTION 2.1(q),
no portion of any Property is located in an area identified as a special
flood hazard area by the Federal Emergency Management Agency or other
applicable agency. If any Property is located in an area identified as a
special flood hazard area by the Federal Emergency Management Agency or
other applicable agency, then flood insurance has been obtained for such
Property in accordance with ARTICLE XIII of the Lease and in accordance
with the National Flood Insurance Act of 1968, as amended.
(s) OUTSTANDING DEBT. As of the date hereof, the Lessee has no
outstanding Indebtedness, other than Indebtedness arising or permitted
hereunder or under the Operative Documents, except as reflected on the
balance sheets in the Submitted Financial Statements.
(t) TITLE TO PROPERTIES. The Lessee has good and marketable title to
all of its Material Assets reflected on the balance sheets in the Submitted
Financial Statements, except for such Material Assets as have been disposed
of in the ordinary course of business, and all such Material Assets are
free and clear of any Lien, except as reflected in the Submitted Financial
Statements and/or notes thereto or as otherwise permitted by the provisions
hereof or under the Operative Documents, and except for Permitted Liens.
The Lessee has such trademarks, trademark rights, trade names, trade name
rights, franchises, copyrights, patents, patent rights and licenses as to
allow it to conduct its business as now operated, without known conflict
with the rights of others.
(u) DEFAULTS. The Lessee is not in default under (and no event has
occurred which with the lapse of time or notice or action by a third party
could result in a default under) any instrument evidencing any Indebtedness
in excess of $1,000,000.00 or under any agreement relating thereto or any
indenture, mortgage, deed of trust, security agreement, lease, franchise or
other agreement or other instrument to which any such Person is a party or
by which any such Person
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or any of its Material Assets is subject to or bound.
(v) USE OF ADVANCES. No part of any Advance will be used directly or
indirectly for the purpose of purchasing or carrying, or for payment in
full or in part of Debt that was incurred for the purposes of purchasing or
carrying, any margin security as such term is defined in Section 207.2 of
Regulation G of the Board of Governors of the Federal Reserve System (12
C.F.R., Chapter II, Part 207).
(w) SOLVENCY. The Lessee is Solvent.
ARTICLE IX
PAYMENT OF CERTAIN EXPENSES
The Lessee agrees, for the benefit of the Lessor, the Agent and the
Lenders, that:
SECTION IX.1. TRANSACTION EXPENSES.
(a) The Lessee shall pay, or cause to be paid, from time to time all
Transaction Expenses in respect of the transactions on the Documentation
Date and each Acquisition Date; PROVIDED, HOWEVER, that, if the Lessee has
not received written invoices therefor prior to such date, such Transaction
Expenses shall be paid within ten (10) days after the Lessee has received
written invoices therefor.
(b) The Lessee shall pay or cause to be paid (i) all Transaction
Expenses incurred by the Lessor, the Agent or any Lender in entering into
any future amendments or supplements with respect to any of the Operative
Documents, whether or not such amendments or supplements are ultimately
entered into, or giving or withholding of waivers of consents hereto or
thereto, in each case which have been requested by or approved by the
Lessee, (ii) all Transaction Expenses incurred by the Lessor, the Agent or
the Lenders in connection with any purchase of any Property by the Lessee
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or other Person pursuant to Articles XVIII and XXI of the Master Lease and
(iii) all Transaction Expenses incurred by any of the other parties hereto
in respect of enforcement of any of their rights or remedies against the
Lessee or any other Affiliate of the Lessee in respect of the Operative
Documents.
SECTION IX.2. BROKERS' FEES AND STAMP TAXES. The Lessee shall pay or
cause to be paid any brokers' fees and any and all stamp, transfer and other
similar taxes, fees and excises, if any, including any interest and penalties,
which are payable in connection with the transactions contemplated by this
Participation Agreement and the other Operative Documents.
SECTION IX.3. LOAN AGREEMENT AND RELATED OBLIGATIONS. The Lessee shall
pay, without duplication of any other obligation of the Lessee to pay any such
amount under the Operative Documents, before the due date thereof, all costs,
expenses and other amounts (other than principal and interest on the Loans which
are payable to the extent otherwise required by the Operative Documents)
required to be paid by the Lessor under the Loan Agreement.
ARTICLE X
OTHER COVENANTS AND AGREEMENTS
SECTION X.1. AFFIRMATIVE COVENANTS OF LESSEE. The Lessee hereby agrees
that so long as this Participation Agreement is in effect, the Lessee shall:
(a) INFORMATION. The Lessee will deliver to the Agent, and each
Participant:
(i) as soon as available and in any event within one hundred
(100) days after the end of each fiscal year of the Lessee,
consolidated statements of financial position of the Guarantor and its
consolidated subsidiaries as of the end of such fiscal
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year and the related consolidated statements of income and cash flows
for such fiscal year, setting forth in each case in comparative form
the figures for the previous fiscal year, with such consolidated
financial statements reported on by Xxxxx & Young or other independent
public accountants of nationally recognized standing reasonably
acceptable to the Required Participants;
(ii) as soon as available and in any event within sixty (60)
days after the end of each of the first three quarters of each fiscal
year of the Guarantor, a consolidated statement of financial position
of the Guarantor as of the end of such quarter and the related
consolidated statements of income and cash flows for such quarter and
for the portion of the Guarantor's fiscal year ended at the end of
such quarter;
(iii) if and when any member of the ERISA Group (1) gives or is
required to give notice to the PBGC of any "reportable event" (as
defined in Section 4043 of ERISA) with respect to any Plan which might
constitute grounds for a termination of such Plan under Title IV or
ERISA, or knows that the plan administrator of any Plan has given or
is required to give notice of any such reportable event, a copy of the
notice of such reportable event given or required to be given to the
PBGC; (2) receives notice of complete or partial withdrawal liability
under Title IV of ERISA or notice that any Multiemployer Plan is in
reorganization, is insolvent or has been terminated, a copy of such
notice; (3) receives notice from the PBGC under Title IV of ERISA of
an intent to terminate, impose liability (other than for premiums
under Section 4007 of ERISA) in respect of, or appoint a trustee to
administer any Plan, a copy of such notice; (4) applies for a waiver
of the minimum funding standard under Section 412 of the Code, a copy
of such application; (5) gives notice of intent to terminate any Plan
under Section 4041(c) of ERISA, a copy of such notice and other
information
-34-
filed with the PBGC; (6) gives notice of withdrawal from any Plan
pursuant to Section 4063 of ERISA, a copy of such notice; or (7) fails
to make any payment or contribution to any Plan or Multiemployer Plan
or in respect of any Benefit Arrangement or makes any amendment to any
Plan or Benefit Arrangement which has resulted or could result in the
imposition of a Lien or the posting of a bond or other security, a
certificate of the chief financial officer or the chief accounting
officer of the Lessee setting forth details as to such occurrence and
action, if any, which the Lessee or applicable member of the ERISA
Group is required or proposes to take;
(iv) as soon as possible and in any event within five days after
the occurrence of each Event of Default or each event that, with the
giving of notice or time elapse, or both, would constitute an Event of
Default continuing on the date of such statement, a statement of the
authorized officer setting forth details of such Event of Default or
event and the action that the Lessee proposes to take with respect
thereto;
(v) immediately upon any change of the Lessee's independent
public accountants, notification thereof and such further information
as the Agent or the Lessor may reasonably request concerning the
resignation, refusal to stand for reappointment after completion of
the current audit or dismissal of such accountants;
(vi) promptly upon becoming aware thereof, written notice of any
Material adverse change in the business, or operations of the Lessee;
(vii) promptly upon becoming aware thereof, written notice of
the commencement or existence of any proceeding against the Lessee or
any Affiliate of the Lessee by or before any court or governmental
agency that might, in the reasonable judgment of the Lessee, result in
a Material adverse effect on the business,
-35-
operations or financial conditions of the Lessee or the ability of the
Lessee to perform its obligations under the Operative Documents;
(viii) as soon as possible and in any event within five days
after the occurrence of any material violation or alleged violation of
an Environmental Law, a statement of an authorized officer setting
forth the details of such violation and the action which the Lessee
proposes to take with respect thereto; and
(ix) from time to time such additional information regarding the
business, properties, condition or operations, financial or otherwise,
of the Lessee, or regarding any Property or the status of any
construction thereon, as the Agent or the Lessor may reasonably
request.
(b) COMPLIANCE WITH LAWS. The Lessee will comply in all Material
respects with all applicable laws, ordinances, rules, regulations, and
requirements of governmental authorities (including, without limitation,
Environmental Laws and ERISA and the rules and regulations thereunder) with
respect to its Material Assets, including each Property, except where the
necessity of compliance therewith is contested in good faith by appropriate
proceedings.
(c) FURTHER ASSURANCES. The Lessee shall take or cause to be taken
from time to time all action necessary to assure that the intent of the
parties pursuant to the Operative Documents is given effect as contemplated
by this Lease and that the Lessor holds a perfected Lien on each Property
securing the Lease Balance as contemplated by ARTICLE V. The Lessee shall
execute and deliver, or cause to be executed and delivered, to the Lessor
and the Agent from time to time, promptly upon request therefor, any and
all other and further instruments (including correction instruments and
supplemental mortgages, deeds of trust and security agreements) that may be
reasonably requested by the any Participant to cure any deficiency in the
execution and
-36-
delivery of any Operative Document to which it is a party.
(d) PRESERVATION OF EXISTENCE, ETC. The Lessee will preserve and
maintain its existence and all rights, privileges and franchises necessary
and desirable in the normal conduct of its business and the performance of
its obligations hereunder and under the Operative Documents.
(e) PAYMENT OF TAXES, ETC. The Lessee shall pay and discharge before
the same shall become delinquent, (i) all taxes, assessments and
governmental charges or levies imposed upon it or upon its Material Assets,
and (ii) all lawful claims that, if unpaid, might by law become a Lien upon
its Material Assets; PROVIDED, HOWEVER, that the Lessee shall not be
required to pay or discharge any such tax, assessment, charge or claim that
is being contested in good faith and by proper proceedings, so long as no
public tax sale divesting Lessee of its interest in the Lessor Property can
occur during such proceedings.
(f) FINANCIAL COVENANTS.
(i) QUICK RATIO. The Lessee shall maintain as of the last day
of any fiscal quarter (on a consolidated basis) a ratio of "A" to "B"
at least equal to 1.15:1.00 where:
"A" means the sum of cash, short-term investments, marketable
securities not classified as long-term investments and accounts
receivable less all security interests, liens, encumbrances or rights
of others (including any agreement to grant such a security interest,
lien or encumbrance in the future, whether contingent or not and
including any lien permitted under subsection 9.03 of the Credit
Agreement hereof) on such assets; and
"B" means current liabilities including all funded obligations,
outstanding Letter of Credit Obligations (as defined in the Credit
Agreement), and Bank
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guaranties outstanding under the Credit Agreement and all similar
unfunded instruments under the Credit Agreement and, in each case, any
instrument and agreement required under the Credit Agreement.
(ii) TANGIBLE NET WORTH. The Lessee shall maintain as of the
last day of any fiscal quarter (on a consolidated basis) Tangible Net
Worth of at least $133,500,000 plus the sum of (i) 75% of net income
after income taxes (without subtracting losses) earned in each
quarterly accounting period commencing after December 29, 1995 and
(ii) 100% of Equity Proceeds (as defined in the Credit Agreement);
PROVIDED, however, that for the purposes of computing compliance with
this paragraph, the amount of (a) any goodwill recognized and (b) any
charges to income taken during the fiscal quarter (without giving
effect to any retroactive adjustments) which are associated with any
acquisitions consummated during any quarter commencing after December
29, 1995, and reflected in the financial statements for the quarter in
which they are consummated, shall not be taken into account.
(iii) LEVERAGE RATIO. The Lessee shall not permit at any time
(on a consolidated basis) total liabilities to exceed, for the period
from the Documentation Date, 1.25 times Tangible Net Worth.
ARTICLE XI
LESSEE DIRECTIONS
SECTION XI.1. LESSEE DIRECTIONS. The Lessor and the Lenders hereby agree
that, so long as no Lease Default or Lease Event of Default exists, the Lessee
shall have the exclusive right to exercise any right of the Lessor under the
Loan Agreement upon not less than two (2) Business Days' prior written notice
from the Lessee to the Lessor.
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ARTICLE XII
TRANSFERS OF PARTICIPANTS' INTERESTS
SECTION XII.1. ASSIGNMENTS. All or any part of the interest of any
Participant in, to or under this Participation Agreement, the other Operative
Documents, the Properties or the Notes may be assigned or transferred by such
Participant at any time; PROVIDED, HOWEVER, that (a) each assignment or transfer
shall comply with all applicable securities laws, (b) any assignment or transfer
by a Lender to a Person that is not an Affiliate of the transferor thereof shall
be subject to the consent of the Lessee (which consent shall not be unreasonably
withheld, and no such consent being required with respect to the interest of the
Lessor under the Operative Documents), and (c) any assignee or transferee
(i) acknowledges that the obligations to be performed from and after the date of
such transfer or assignment under this Participation Agreement and all other
Operative Documents are its obligations, including the obligations imposed by
this SECTION 12.1 (and the transferor and transferee Participant shall deliver
to the Lessee, the Lessor and the Agent an Assignment Agreement, in
substantially the form of EXHIBIT E, executed by the assignee or transferee) and
(ii) further represents and warrants to the Lessor, each Participant and the
Lessee that:
(A) it is a commercial bank, savings and loan association, savings
bank, pension plan, depository institution, insurance company, branch or
agency of a foreign bank or other similar financial institution, in each
case, having a minimum capital and surplus of $50,000,000;
(B) it has the requisite power and authority to accept such
assignment or transfer;
(C) it will not transfer such Note or interest in a Lessor Amount, as
the case may be, unless the proposed transferee makes the foregoing
representations and
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covenants;
(D) it will not take any action with respect to such Note or interest
in a Lessor Amount, as the case may be, that would violate any applicable
securities laws; and
(E) it will not assign or transfer any interest such Note or interest
in a Lessor Amount, as the case may be, except in compliance with this
SECTION 12.1.
Notwithstanding the foregoing, the Lessor shall not sell, transfer, assign
or otherwise encumber title to any Property, or any portion of any Property,
except as expressly permitted by the Operative Documents or enter into any lease
or easement with respect to any Property, or portion of any Property, except as
expressly permitted by the Operative Documents.
SECTION XII.2. PARTICIPATIONS. Any Participant may at any time sell to
one or more commercial banks or other Persons (each of such commercial banks and
other Persons being herein called a "SUB-PARTICIPANT"), participating interests
in all or a portion of its rights and obligations under this Participation
Agreement, the other Operative Documents, the Properties or its Notes
(including, without limitation, all or portion of the Rent owing to it);
PROVIDED, HOWEVER, that
(a) no participation contemplated in this SECTION 12.2 shall relieve
such Participant from its obligations hereunder or under any other
Operative Document;
(b) such Participant shall remain solely responsible for the
performance of its Commitment and such other obligations;
(c) the Lessee shall continue to deal solely and directly with such
Participant in connection with such Participant's rights and obligations
under this Participation Agreement and each of the other Operative
documents;
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(d) such Participant shall notify the Lessee of any proposed
Sub-Participant; and
(e) no Sub-Participant shall be entitled to require such Participant
to take or refrain from taking any action hereunder or under any other
Operative Document except with respect to (i) any change to the amount or
timing of the payment of any fees, principal or interest; or (ii) the
release of any Lien under the Operative Document.
Each Participant agrees that it will notify the Lessee and Agent promptly of the
identity of each Sub-Participant to which it sells a participating interest
hereunder and the amount of such participating interest. The Lessee
acknowledges and agrees that each Sub-Participant, for purposes of ARTICLE XIII,
shall be considered a Participant.
SECTION XII.3. WITHHOLDING TAXES; DISCLOSURE OF INFORMATION; PLEDGE UNDER
REGULATION A.
(a) If any Participant (or the assignee of or sub-participant of a
Participant, each a "TRANSFEREE") is organized under the laws of any
jurisdiction other than the United States or any State thereof, then such
Participant or the Transferee of such Participant, as applicable, shall (as
a condition precedent to acquiring or participating in such Loan or lessor
Amount and as a continuing obligation to the Lessor and the Lessee)
(i) furnish to the Lessor and the Lessee in duplicate, for each taxable
year of such Participant or Transferee during the term of the Lease, a
properly completed and executed copy of either Internal Revenue Service
Form 4224 or Internal Revenue Service Form 1001 and Internal Revenue
Service Form W-8 or Internal Revenue Service Form W-9 and any additional
form (or such other form) as is necessary to claim complete exemption from
United States withholding taxes (wherein such Transferee claims entitlement
to complete exemption from United States withholding taxes on all payments
hereunder), and (ii) provide to the Lessor and the Lessee a new Internal
Revenue Service Form 4224 or Internal Revenue Service Form
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1001 and Internal Revenue Service Form W-8 or Internal Revenue Service
Form W-9 and any such additional form (or any successor form or forms) upon
the expiration or obsolescence of any previously delivered form and
comparable statements in accordance with applicable United States laws and
regulations and amendments duly executed and completed by such Participant
or Transferee, and to comply from time to time with all applicable United
States laws and regulations with regard to such withholding tax exemption.
By its acceptance of a participation or assignment of a Participant's Note,
each Transferee shall be deemed bound by the provisions set forth in this
ARTICLE XII.
(b) Any Participant may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this
ARTICLE XII, disclose to the assignee or participant or proposed assignee
or participant, any information relating to the Lessee, subject to any
confidentiality requirements relating to such information.
(c) Anything in this ARTICLE XII to the contrary notwithstanding, any
Participant may without the consent of the Lessee assign and pledge all or
any portion of the Notes held by it to any Federal Reserve Bank, the United
States Treasury or to any other financial institution as collateral
security pursuant to Regulation A of the F.R.S. Board and any operating
circular issued by the Federal Reserve System and/or the Federal Reserve
Bank or otherwise; PROVIDED, any payment by the Lessee for the benefit of
the assigning or pledging Participant shall be deemed to satisfy the
Lessee's obligations with respect thereto.
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ARTICLE XIII
INDEMNIFICATION
SECTION XIII.1. GENERAL INDEMNIFICATION. The Lessee agrees, whether or
not any of the transactions contemplated hereby shall be consummated, to assume
liability for, and to indemnify, protect, defend, save and keep harmless each
Indemnitee, on an After Tax Basis, from and against, any and all Claims that may
be imposed on, incurred by or asserted against such Indemnitee (whether because
of action or omission by such Indemnitee or otherwise), whether or not such
Indemnitee shall also be indemnified as to any such Claim by any other Person
and whether or not such Claim arises or accrues prior to the Acquisition Date or
after the Expiration Date, in any way relating to or arising out of:
(a) any of the Operative Documents or any of the transactions
contemplated thereby, and any amendment, modification or waiver in respect
thereof;
(b) the Properties or any part thereof or interest therein;
(c) the purchase, design, construction, preparation, installation,
inspection, delivery, non-delivery, acceptance, rejection, ownership,
management, possession, operation, rental, lease, sublease, repossession,
maintenance, repair, alteration, modification, addition or substitution,
storage, transfer of title, redelivery, use, financing, refinancing,
disposition, operation, condition, sale (including, without limitation, any
sale pursuant to Section 16.2(c), 16.2(e) or 18.3 of the Master Lease or
any sale pursuant to Article XV, XVIII or XX of the Master Lease), return
or other disposition of all or any part or any interest in the Properties
or the imposition of any Lien (or incurring of any liability to refund or
pay over any amount as a result of any Lien) thereon, including, without
limitation: (1) Claims or penalties arising from any
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violation of law or in tort (strict liability or otherwise), (2) latent or
other defects, whether or not discoverable, (3) any Claim based upon a
violation or alleged violation of the terms of any restriction, easement,
condition or covenant or other matter affecting title to the Properties,
(4) the making of any Modifications in violation of any standards imposed
by any insurance policies required to be maintained by Lessee pursuant to
the Lease which are in effect at any time with respect to the Properties or
any part thereof, (5) any Claim for patent, trademark or copyright
infringement, and (6) Claims arising from any public improvements with
respect to the Properties resulting in any change or special assessments
being levied against any Property or any plans to widen, modify or realign
any street or highway adjacent to any of the Properties, or any Claim for
utility "tap-in" fees;
(d) the breach by the Lessee of any covenant, representation or
warranty made by it or deemed made by it in any Operative Document or any
certificate required to be delivered by any Operative Document;
(e) the retaining or employment of any broker, finder or financial
advisor by the Lessee to act on its behalf in connection with this
Participation Agreement;
(f) the existence of any Lien on or with respect to the Properties,
the Improvements, any Basic Rent or Supplemental Rent, title thereto, or
any interest therein including any Liens which arise out of the possession,
use, occupancy, construction, repair or rebuilding of any Property or by
reason of labor or materials furnished or claimed to have been furnished to
the Lessee, or any of its contractors or agents or by reason of the
financing of any personalty or equipment purchased or leased by the Lessee
or Modifications constructed by the Lessee, except Lessor Liens and Liens
in favor of the Lender or the Lessor; or
(g) subject to the accuracy of any Participant's representation set
forth in SECTION 8.1(a), as to such
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Participant, the transactions contemplated by the Lease or by any other
Operative Document, in respect of the application of Parts 4 and 5 of
Subtitle B of Title I of ERISA and any prohibited transaction described in
Section 4975(c) of the Code;
PROVIDED, HOWEVER, the Lessee shall not be required to indemnify any Indemnitee
under this SECTION 13.1 for any of the following: (1) any Claim to the extent
resulting from the willful misconduct or gross negligence of such Indemnitee or
any member of its Indemnitee Group (IT BEING UNDERSTOOD that the Lessee shall be
required to indemnify an Indemnitee even if the ordinary (but not gross)
negligence of such Indemnitee caused or contributed to such Claim) or the breach
of any representation, warranty or covenant of such Indemnitee set forth in any
Operative Document, (2) any Claim resulting from Lessor Liens which the Lessor
or the Lenders is responsible for discharging under the Operative Documents, (3)
any Claim to the extent attributable to acts or events occurring after the
Expiration Date or the return or remarketing of any Property so long as the
Lessor or the Lenders are not exercising remedies against the Lessee in respect
of the Operative Documents, and (4) any Claim arising from a breach or alleged
breach by the Lenders or the Lessor of any agreement entered into in connection
with the assignment or participation of any Loan or Lessor Amount. It is
expressly understood and agreed that the indemnity provided for herein shall
survive the expiration or termination of and shall be separate and independent
from any remedy under the Lease or any other Operative Document. Without
limiting the express rights of any Indemnitee under this SECTION 13.1, this
SECTION 13.1 shall be construed as an indemnity only and not a guaranty of
residual value of the Properties or as a guaranty of the Notes.
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SECTION XIII.2. END OF TERM INDEMNITY.
(a) If the Lessee elects the Remarketing Option and there would,
after giving effect to the proposed remarketing transactions, be a
Shortfall Amount, then prior to the Expiration Date and as a condition to
the Lessee's right to complete the remarketing of the Properties pursuant
to Section 20.1 of the Master Lease, the Lessee shall cause to be delivered
to the Lessor at least one hundred twenty (120) days prior to the
Expiration Date, at the Lessee's sole cost and expense, a report from the
Appraiser in form and substance satisfactory to the Participants (the "END
OF THE TERM REPORT") which shall state the appraiser's conclusions as to
the reason for any decline in the Fair Market Sales Value of the applicable
Property from that anticipated for such date in the Appraisal delivered on
the Acquisition Date.
(b) If the Lessee elects the Remarketing Option, then on or prior to
the Expiration Date the Lessee shall pay to the Lessor an amount (not to
exceed the Shortfall Amount) equal to the portion of the Shortfall Amount
that the End of the Term Report demonstrates was the result of a decline in
the Fair Market Sales Value of the applicable Property due to
(i) any rebuilding of the applicable Properties or any part
thereof by the Lessee (except in connection with a Casualty, unless
such rebuilding failed to restore the Property as required under the
Lease), or any failure to restore a Property after a Condemnation
where the proceeds derived therefrom were made available to the Lessee
for restoration, or
(ii) the existence of any Hazardous Activity, Hazardous
Materials or Environmental Violations, the indemnity for which shall
not exceed the cost of the remediation thereof, or
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(iii) any restoration or rebuilding carried out by the Lessee,
or
(iv) any condemnation of any portion of any of the applicable
Properties pursuant to Article XIV of the Master Lease, or
(v) any use of any of the applicable Properties or any part
thereof by the Lessee or any sublessee other than as contemplated by
the applicable Appraisal, or
(vi) any grant, release, dedication, transfer, annexation or
amendment made pursuant to Section 11.2 of the Master Lease, or
(vii) the failure of the Lessor to have good and marketable
title to any of the applicable Properties free and clear of all Liens
(excluding Permitted Liens), or
(viii) the existence of any sublease relating to any of the
applicable Properties that shall survive the Expiration Date.
SECTION XIII.3. ENVIRONMENTAL INDEMNITY. Without limitation of the other
provisions of this ARTICLE XIII, the Lessee hereby agrees to indemnify, hold
harmless and defend each Indemnitee from and against any and all claims
(including without limitation third party claims for personal injury or real or
personal property damage), losses (including but not limited to, to the extent
the Lease Balance has not been fully paid, any loss of value of the Property
related thereto), damages, liabilities, fines, penalties, charges,
administrative and judicial proceedings (including informal proceedings) and
orders, judgments, remedial action, requirements, enforcement actions of any
kind, and all reasonable and documented costs and expenses incurred in
connection therewith (including but not limited to reasonable and documented
attorneys' and/or paralegals' fees and expenses), including, but not limited to,
all costs incurred in
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connection with any investigation or monitoring of site conditions or any
clean-up, remedial, removal or restoration work by any federal, state or local
government agency, arising in whole or in part, out of
(a) the presence on or under any of the Properties of any Hazardous
Materials, or any releases or discharges of any Hazardous Materials on,
under, from or onto any of the Properties,
(b) any activity, including, without limitation, construction,
carried on or undertaken on or off any of the Properties, and whether by
the Lessee or any predecessor in title or any employees, agents,
contractors or subcontractors of the Lessee or any predecessor in title, or
any other Persons (including such Indemnitee), in connection with the
handling, treatment, removal, storage, decontamination, clean-up, transport
or disposal of any Hazardous Materials that at any time are located or
present on or under or that at any time migrate, flow, percolate, diffuse
or in any way move onto or under any of the Properties,
(c) loss of or damage to any property or the environment (including,
without limitation, clean-up costs, response costs, remediation and removal
costs, cost of corrective action, costs of financial assurance, fines and
penalties and natural resource damages), or death or injury to any Person,
and all expenses associated with the protection of wildlife, aquatic
species, vegetation, flora and fauna, and any mitigative action required by
or under Hazardous Materials Laws,
(d) any claim concerning lack of compliance with Hazardous Materials
Laws, or any act or omission causing an environmental condition that
requires remediation or would allow any Governmental Authority to record a
Lien on the land records, or
(e) any residual contamination on or under any of the
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Land, or affecting any natural resources, and to any contamination of any
property or natural resources arising in connection with the generation,
use, handling, storage, transport or disposal of any such Hazardous
Materials, and irrespective of whether any of such activities were or will
be undertaken in accordance with applicable laws, regulations, codes and
ordinances;
PROVIDED, HOWEVER, the Lessee shall not be required to indemnify any Indemnitee
under this SECTION 13.3 for (1) any Claim to the extent resulting from the
willful misconduct or gross negligence of such Indemnitee or (2) any Claim to
the extent attributable to acts or events occurring after the expiration of the
Term or the return or remarketing of any such Property so long as the Lessor and
the Lenders are not exercising remedies against the Lessee in respect of the
Operative Documents. It is expressly understood and agreed that the indemnity
provided for herein shall survive the expiration or termination of and shall be
separate and independent from any remedy under the Lease or any other Operative
Document.
SECTION XIII.4. PROCEEDINGS IN RESPECT OF CLAIMS. With respect to any
amount that the Lessee is requested by an Indemnitee to pay by reason of SECTION
13.1 or 13.3, such Indemnitee shall, if so requested by the Lessee and prior to
any payment, submit such additional information to the Lessee as the Lessee may
reasonably request and which is in the possession of such Indemnitee to
substantiate properly the requested payment.
In case any action, suit or proceeding shall be brought against any
Indemnitee, such Indemnitee shall notify the Lessee of the commencement thereof,
and the Lessee shall be entitled, at its expense, to participate in, and, to the
extent that the Lessee desires to, assume and control the defense thereof;
PROVIDED, HOWEVER, that the Lessee shall have acknowledged in writing its
obligation to fully indemnify such Indemnitee in respect of such action, suit or
proceeding, and, the Lessee shall keep such Indemnitee fully apprised of the
status of such action, suit or proceeding and shall provide such Indemnitee with
all information with respect to such action, suit or proceeding as
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such Indemnitee shall reasonably request, and PROVIDED, FURTHER, that the Lessee
shall not be entitled to assume and control the defense of any such action, suit
or proceeding if and to the extent that, (A) in the reasonable opinion of such
Indemnitee, (x) such action, suit or proceeding involves any risk of imposition
of criminal liability or will involve a risk of the sale, forfeiture or loss of,
or the creation of any Lien (other than a Permitted Lien) on any Property or any
part thereof unless, in the case of civil liability, the Lessee shall have
posted a bond or other security satisfactory to the relevant Indemnitees in
respect to such risk or (y) the control of such action, suit or proceeding would
involve an actual or potential conflict of interest, (B) such proceeding
involves Claims not fully indemnified by the Lessee which the Lessee and the
Indemnitee have been unable to sever from the indemnified claim(s), or (C) a
Lease Event of Default has occurred and is continuing. The Indemnitee will join
in the Lessee's efforts to sever such action. The Indemnitee may participate in
a reasonable manner at its own expense and with its own counsel in any
proceeding conducted by the Lessee in accordance with the foregoing. The Lessee
shall not enter into any settlement or other compromise with respect to any
Claim which is entitled to be indemnified under SECTION 13.1 or 13.3 without the
prior written consent of the Indemnitee, which consent shall not be unreasonably
withheld in the case of a money settlement not involving an admission of
liability of such Indemnitee.
Each Indemnitee shall at the expense of the Lessee supply the Lessee with
such information and documents reasonably requested by the Lessee as are
necessary or advisable for the Lessee to participate in any action, suit or
proceeding to the extent permitted by SECTION 13.1 or 13.3. Unless an Event of
Default under the Lease shall have occurred and be continuing, no Indemnitee
shall enter into any settlement or other compromise with respect to any Claim
which is entitled to be indemnified under SECTION 13.1 or 13.3 without the prior
written consent of the Lessee, which consent shall not be unreasonably withheld,
unless such Indemnitee waives its right to be indemnified under SECTION 13.1 or
13.3 with respect to such Claim.
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Upon payment in full of any Claim by the Lessee pursuant to SECTION 13.1 or
13.3 to or on behalf of an Indemnitee, the Lessee, without any further action,
shall be subrogated to any and all claims that such Indemnitee may have relating
thereto (other than claims in respect of insurance policies maintained by such
Indemnitee at its own expense), and such Indemnitee shall execute such
instruments of assignment and conveyance, evidence of claims and payment and
such other documents, instruments and agreements as may be necessary to preserve
any such claims and otherwise cooperate with the Lessee and give such further
assurances as are necessary or advisable to enable the Lessee vigorously to
pursue such claims.
Any amount payable to an Indemnitee pursuant to SECTION 13.1 or 13.3 shall
be paid to such Indemnitee promptly upon receipt of a written demand therefor
from such Indemnitee, accompanied by a written statement describing in
reasonable detail the basis for such indemnity and the computation of the amount
so payable.
SECTION XIII.5. GENERAL TAX INDEMNITY.
(a) INDEMNIFICATION. The Lessee shall pay and assume liability for,
and does hereby agree to indemnify, protect and defend the applicable
Property and all Tax Indemnitees, and hold them harmless against, all
Impositions on an After Tax Basis.
(b) CONTESTS. If any claim shall be made against any Tax Indemnitee
or if any proceeding shall be commenced against any Tax Indemnitee
(including a written notice of such proceeding) for any Imposition as to
which the Lessee may have an indemnity obligation pursuant to this
SECTION 13.5, or if any Tax Indemnitee shall determine that any Imposition
to which the Lessee may have an indemnity obligation pursuant to this
SECTION 13.5 may be payable, such Tax Indemnitee shall promptly (and in any
event, within 30 days) notify the Lessee in writing (PROVIDED that failure
to so notify the Lessee within 30 days shall not alter such Tax
Indemnitee's rights under this SECTION 13.5 except to the extent such
failure precludes or materially adversely
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affects the ability to conduct a contest of any indemnified Taxes) and
shall not take any action with respect to such claim, proceeding or
Imposition without the written consent of the Lessee (such consent not to
be unreasonably withheld or unreasonably delayed) for 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 Tax Indemnitee shall be required
by law or regulation to take action prior to the end of such 30-day period,
such Tax Indemnitee shall in such notice to the Lessee, so inform the
Lessee, and such Tax Indemnitee shall not take any action with respect to
such claim, proceeding or Imposition without the consent of the Lessee
(such consent not to be unreasonably withheld or unreasonably delayed) for
10 days after the receipt of such notice by the Lessee unless such Tax
Indemnitee shall be required by law or regulation to take action prior to
the end of such 10-day period.
The Lessee shall be entitled for a period of 30 days from receipt of
such notice from such Tax Indemnitee (or such shorter period as such Tax
Indemnitee has notified the Lessee is required by law or regulation for
such Tax Indemnitee to commence such contest), to request in writing that
such Tax Indemnitee contest the imposition of such Tax, at the Lessee's
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
Tax Indemnitee for which the Lessee has not agreed to indemnify such Tax
Indemnitee, (y) such contest must be pursued in the name of such Tax
Indemnitee, but can be pursued independently from any other proceeding
involving a Tax liability of such Tax Indemnitee for which the Lessee has
not agreed to indemnify such Tax Indemnitee or (z) such Tax Indemnitee 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
such Tax Indemnitee determines reasonably and in good faith that such
contest by the Lessee could have a material adverse impact on the business
or operations of such Tax Indemnitee and provides a written explanation to
the Lessee of such determination, such Tax Indemnitee may
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elect to control or reassert control of the contest, and PROVIDED, that
by taking control of the contest, the Lessee acknowledges that it is
responsible for the Imposition ultimately determined to be due by reason of
such claim, and PROVIDED, FURTHER, that in determining the application of
CLAUSES (x) and (y) of the preceding sentence, each Tax Indemnitee shall
take any and all reasonable steps to segregate claims for any Taxes for
which the Lessee indemnifies hereunder from Taxes for which the Lessee is
not obligated to indemnify hereunder, so that the Lessee can control the
contest of the former. In all other claims requested to be contested by
the Lessee, such Tax Indemnitee shall control the contest of such claim,
acting through counsel reasonably acceptable to the Lessee. In no event
shall the Lessee be permitted to contest (or such Tax Indemnitee required
to contest) any claim, (A) if such Tax Indemnitee 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 will involve a material risk of the sale, forfeiture or loss
of, or the creation of any Lien (other than a Permitted Lien) 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 Tax
Indemnitee in respect to such risk, (B) if an Event of Default has occurred
and is continuing unless the Lessee shall have posted and maintained a bond
or other security satisfactory to the relevant Tax Indemnitee 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 Tax Indemnitee on demand all reasonable
out-of-pocket costs, losses and expenses that such Tax Indemnitee may incur
in connection with contesting such Imposition 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 such Tax Indemnitee an interest-free advance in
an amount equal to
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the Imposition that the Indemnitee is required to pay (with no additional
net after-tax costs to such Tax Indemnitee). In addition for Tax
Indemnitee controlled contests and claims contested in the name of such Tax
Indemnitee 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 Tax Indemnitee with respect to any period for which the
Lessee may be liable to pay an indemnity under this SECTION 13.5(b))
exceeds $75,000 or (B) unless, if requested by such Tax Indemnitee, the
Lessee shall have provided to such Tax Indemnitee an opinion of counsel
selected by the Lessee (which may be in-house counsel) (except, in the case
of income taxes indemnified hereunder which shall be an opinion of
independent tax counsel selected by such Tax Indemnitee and reasonably
acceptable to the Lessee) that a reasonable basis exists to contest such
claim. In no event shall a Tax Indemnitee be required to appeal an adverse
judicial determination to the United States Supreme Court.
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 to be
taken shall be made by the controlling party in its sole judgement,
PROVIDED, HOWEVER, that if such Tax Indemnitee is the controlling party and
the Lessee recommends the acceptance of a settlement offer made by the
relevant Governmental Authority and such Tax Indemnitee rejects such
settlement offer then the amount for which the Lessee will be required to
indemnify such Tax Indemnitee 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
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with such claim or the contest thereof.
Each Tax Indemnitee shall at the Lessee's 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 13.5(b).
Notwithstanding anything in this SECTION 13.5(b) to the contrary, no Tax
Indemnitee 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 13.5 (and with respect to which contest is
required under this SECTION 13.5(b)) without the prior written consent of
the Lessee, unless such Tax Indemnitee waives its right to be indemnified
under this SECTION 13.5 with respect to such claim.
Notwithstanding anything contained herein to the contrary, a Tax
Indemnitee 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 Tax Indemnitee shall waive its right to indemnification from Lessee
under this SECTION 13.5 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).
(c) REIMBURSEMENT FOR TAX SAVINGS. If (x) a Tax Indemnitee or any
Affiliate thereof realizes a deduction, offset, credit or refund of any
Taxes or any other savings or benefit as a result of any indemnity paid by
the Lessee pursuant to this SECTION 13.5 or (y) by reason of the incurrence
or imposition of any Tax (or the circumstances or event giving rise
thereto) for which a Tax Indemnitee is indemnified hereunder or any payment
made to or for the account of such Tax Indemnitee by the Lessee pursuant to
this SECTION 13.5 or any payment made by a Tax Indemnitee to the Lessee by
reason of this SECTION 13.5(c), such Tax Indemnitee at any time actually
realizes a reduction in any Taxes for which the Lessee is not required to
indemnify such
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Tax Indemnitee pursuant to this SECTION 13.5 which reduction in Taxes was
not taken into account in computing such payment by the Lessee to or for
the account of such Tax Indemnitee or by such Tax Indemnitee to the Lessee,
then such Tax Indemnitee shall promptly pay to the Lessee (xx) the amount
of such deduction, offset, credit, refund, or other savings or benefit
together with the amount of any interest received by such Tax Indemnitee on
account of such deduction, offset, credit, refund or other savings or
benefit or (yy) an amount equal to such reduction in Taxes, as the case may
be, in either case together with an amount equal to any reduced Taxes
payable by such Tax Indemnitee as a result of such payment; PROVIDED that
no such payment shall be made so long as a Default or Event of Default
shall have occurred and be continuing but shall be paid promptly after cure
of such Default or Event of Default. Each Tax Indemnitee agrees to take
such actions as the Lessee may reasonably request (provided in the good
faith judgment of such Tax Indemnitee, such actions would not result in a
material adverse effect on such Tax Indemnitee for which such Tax
Indemnitee is not entitled to indemnification from the Lessee) and to
otherwise act in good faith to claim such refunds and other available Tax
benefits, and take such other actions as may be reasonable to minimize any
payment due from the Lessee pursuant to this SECTION 13.5 and to maximize
the amount of any Tax savings available to it. The disallowance or
reduction of any credit, refund or other tax savings with respect to which
a Tax Indemnitee has made a payment to the Lessee under this SECTION
13.5(e) shall be treated as a Tax for which the Lessee is obligated to
indemnify such Tax Indemnitee hereunder without regard to the exclusions
set forth in the definition of Impositions except the exclusions set forth
in (iv), (v), (vi), (vii), (ix), (x), (xi), (xiv) and (xvi).
(d) PAYMENTS. Any Imposition indemnifiable under this SECTION 13.5
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
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amount payable to a Tax Indemnitee pursuant to SECTION 13.5 shall be paid
within thirty (30) days after receipt of a written demand therefor from
such Tax Indemnitee 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 13.5 shall be made directly to such Tax Indemnitee
entitled thereto or the Lessee, as the case may be, in immediately
available funds at such bank or to such account as specified by the payee
in written directions to the payor, or, if no such direction shall have
been given, by check of the payor payable to the order of the payee by
certified mail, postage prepaid at its address as set forth in SCHEDULE II
hereto. Upon the request of any Tax Indemnitee with respect to a Tax that
the Lessee is required to pay, the Lessee shall furnish to such Tax
Indemnitee the original or a certified copy of a receipt for the Lessee's
payment of such Tax or such other evidence of payment as is reasonably
acceptable to such Tax Indemnitee.
(e) 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 13.5 and of which the Lessee has knowledge, the Lessee
shall promptly notify such Tax Indemnitee of such requirement and, at the
Lessee's expense (i) if the Lessee is permitted (unless otherwise requested
by such Tax Indemnitee) 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 Tax Indemnitee or such Tax
Indemnitee otherwise requests that such report, return or statement for
filing by such Tax Indemnitee in such manner as shall be satisfactory to
such Tax Indemnitee and send the same to such Tax Indemnitee for filing no
later than 15 days prior to the due date therefor. In any case in which
such Tax Indemnitee will file any such report, return or statement, the
Lessee shall, upon written request of such Tax Indemnitee, provide such Tax
Indemnitee with such information as is reasonably necessary to allow such
Tax Indemnitee to file such report, return or
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statement.
(f) VERIFICATION. At the Lessee's request, the amount of any
indemnity payment by the Lessee or any payment by a Tax Indemnitee to the
Lessee pursuant to this SECTION 13.5 shall be verified and certified by an
independent public accounting firm mutually acceptable to the Lessee and
such Tax Indemnitee. The costs of such verification shall be borne by the
Lessee unless such verification shall result in an adjustment in the
Lessee's favor of the lesser of (i) $10,000, and (ii) 5 percent of the
payment as computed by such Tax Indemnitee, in which case such fee shall be
paid by such Tax Indemnitee. In no event shall the Lessee have the right
to review such Tax Indemnitee's tax returns or receive any other
confidential information from such Tax Indemnitee in connection with such
verification. Any information provided to such accountants by any Person
shall be and remain the exclusive property of such Person and shall be
deemed by the parties to be (and the accountants will confirm in writing
that they will treat such information as) the private, proprietary and
confidential property of such Person, and no Person other than such Person
and the accountants shall be entitled thereto and all such materials shall
be returned to such Person. Such accounting firm shall be requested to
make its determination within 30 days of the Lessee's request for
verifications and the computations of the accounting firm shall be final,
binding and conclusive upon the Lessee and such Tax Indemnitee. The
parties agree that the sole responsibility of the independent public
accounting firm shall be to verify the amount of a payment pursuant to this
Master Lease and that matters of interpretation of this Master Lease are
not within the scope of the independent accounting firm's responsibilities.
(g) TAX OWNERSHIP. Each Tax Indemnitee represents and warrants that
it will not, prior to the termination of the Master Lease, claim ownership
of (or any tax benefits, including depreciation, with respect to) any
Property for any income tax purposes, it being understood that the Lessee
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is and will remain the owner of the applicable Property for such income tax
purposes until the termination of the Master Lease. If, notwithstanding
the income tax intentions of the parties as set forth herein, any Tax
Indemnitee actually receives any income tax deductions, reductions in
income tax or other income tax benefit as a result of any claim for, or
recharacterization requiring such party to take, any tax benefits
attributable to ownership of any Property for income tax purposes, such Tax
Indemnitee shall pay to the Lessee, together with an amount equal to any
reduced Taxes payable by such Tax Indemnitee as a result of such payment,
the amount of such income tax savings actually realized by such Tax
Indemnitee (less the amount of any anticipated increase in income tax which
such Tax Indemnitee determines is currently payable as a result of such
claim or recharacterization), PROVIDED that the Lessee shall agree to
reimburse such Tax Indemnitee for any subsequent increase in such Tax
Indemnitee's income taxes resulting from such claim or recharacterization
not taken into account in the payment made to the Lessee, up to the net
amount paid to the Lessee by each Tax Indemnitee. The parties agree that
this SECTION 13.5(g) is intended to require a payment to the Lessee if and
only if each Tax Indemnitee shall have actually received an unanticipated
tax savings with respect to any Property that would not have been received
if each Tax Indemnitee had advanced funds to the Lessee in the form of a
loan secured by such Property in an amount equal to the applicable Property
Cost. Nothing in this SECTION 13.5(g) shall be construed to require each
Tax Indemnitee to take any affirmative action to realize any tax savings if
in its good faith reasonable judgment such action may have a material
adverse affect on each Tax Indemnitee.
SECTION XIII.6. INDEMNITY PAYMENTS IN ADDITION TO LEASE OBLIGATIONS. The
Lessee acknowledges and agrees that the Lessee's obligations to make indemnity
payments under this Article XIII are separate from, in addition to, and do not
reduce, the Lessee's obligation to pay under the Lease that portion of the Lease
Balance constituting the Loan Balance.
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SECTION XIII.7. LIBO RATE LENDING UNLAWFUL. If, on or after the date
hereof, the adoption of any applicable law, rule or regulation, or any change
therein, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Participant (or
its Funding Office) with any request or directive (whether or not having the
force of law) of any such authority, central bank or comparable agency shall
make it unlawful or impossible for any Participant (or its Funding Office) to
make, maintain or fund Loans or Lessor Amounts, as applicable, and such
Participant shall so notify the Lessee, whereupon until such Participant
notifies the Lessee that the circumstances giving rise to such suspension no
longer exist, the obligation to make Loans or Lessor Amounts, as applicable,
shall be suspended. Such Participant, with the consent of the Lessee (which
consent shall not unreasonably be withheld), will designate a different Funding
Office if such designation will avoid the need for giving such notice and will
not, in the judgment of such Participant, be otherwise disadvantageous to such
Participant. If such notice is given (i) each Lessee shall be entitled upon its
request to a reasonable explanation of the factors underlying such notice and
(ii) each Advance then outstanding shall begin to bear interest at the Alternate
Base Rate either (a) on the last day of the then current Interest Period
applicable thereto, if such Participant may lawfully continue to maintain and
fund such Advance to such day or (b) immediately, if such Participant shall
determine that it may not lawfully continue to maintain and fund such Advance to
such day.
SECTION XIII.8. DEPOSITS UNAVAILABLE. If any of the Participants shall
have determined that
(i) Dollar deposits in the relevant amount and for the relevant
Interest Period are not available to the Participant in its relevant
market; or
(ii) by reason of circumstances affecting the Participant's relevant
market, adequate means do not exist for ascertaining the interest rate or
Yield, as the case may
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be, applicable to such Participant's Loans or Lessor Amounts,
then, upon notice from such Participant to the Lessee and the other
Participants, (i) the obligations of the Participants to make Loans or Lessor
Amounts, as the case may be, shall be suspended and (ii) each outstanding Loan
or Lessor Amount, as the case may be, shall begin to bear interest or accrue
Yield at the Alternate Base Rate on the last day of the then current Interest
Period applicable thereto.
SECTION XIII.9. INCREASED COSTS, ETC.
(a) In the event that the adoption of any applicable law, rule or
regulation, or any change therein or in the interpretation or application
thereof by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof or compliance by
any Participant with any request or directive after the date hereof
(whether or not having the force of law) of any such authority, central
bank or comparable agency:
(i) does or shall subject any Participant to any additional tax
of any kind whatsoever with respect to the Operative Documents or any
Loan or Lessor Amount, as applicable, made by it, or change the basis
or the applicable rate of taxation of payments to such Participant of
principal, interest or any other amount payable hereunder (except for
the imposition of or change in any tax on or measured by or with
respect to the overall gross or net income, or gross or net receipts
(including, without limitation, any minimum taxes, income or capital
gains taxes, or taxes on, or measured by or with respect to or in the
nature of capital, net worth, excess profits, items of tax preference,
capital stock, business privilege or doing business or any other
similar taxes) of such Participant (other than any such tax imposed by
means of withholding and specifically excluding income taxes merely
collected by means of withholding) or any tax
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imposed in lieu thereof);
(ii) does or shall impose, modify or hold applicable any
reserve, special deposit, insurance assessment, compulsory loan or
similar requirement against assets held by, or deposits or other
liabilities in or for the account of, advances or loans by, or other
credit extended by, or any other acquisition of funds by, any office
of such Participant which are not otherwise included in determination
of the rate of interest on Loan or Lessor Amount, as applicable,
hereunder; or
(iii) does or shall impose on such Participant any other
condition;
and the result of any of the foregoing is to increase the cost to such
Participant of making or maintaining Loan or Lessor Amount, as applicable,
or to reduce any amount receivable hereunder, then in any such case, the
Lessee shall promptly pay to such Participant, upon demand, any additional
amounts necessary to compensate such Participant for such increased cost or
reduced amount receivable which such Participant deems to be material as
determined by such Participant with respect to Loan or Lessor Amount, as
applicable.
(b) If any Participant shall have determined that, after the date
hereof, the adoption of any applicable law, rule or regulation regarding
capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, has or would have the effect of reducing
the rate of return on capital of such Participant (or any entity directly
or indirectly controlling such Participant) as a consequence of such
Participant's obligations under the
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Operative Documents to a level below that which such Participant (or any
entity directly or indirectly controlling such Participant) could have
achieved but for such adoption, change, request or directive (taking into
consideration its policies with respect to capital adequacy) by an amount
deemed by such Participant to be material, then from time to time, within
fifteen (15) days after demand by such Participant, the Lessee shall pay to
such Participant such additional amount or amounts as will compensate such
Participant (or its Parent) for such reduction.
(c) Each Participant will promptly notify the Lessee of any event of
which it has knowledge, occurring after the date hereof, which will entitle
such Participant to compensation pursuant to this Section and will, if
practicable, with the consent of the Lessee (which consent shall not
unreasonably be withheld), designate a different Funding Office or take any
other reasonable action if such designation or action will avoid the need
for, or reduce the amount of, such compensation and will not, in the
reasonable judgment of such Participant, be otherwise disadvantageous to
such Participant. A certificate of such Participant claiming compensation
under this Section and setting forth in reasonable detail its computation
of the additional amount or amounts to be paid to it hereunder shall be
presumed correct in the absence of demonstrable error. In determining such
amount, such Participant may use any reasonable averaging and attribution
methods.
(d) Notwithstanding the foregoing CLAUSES (a) and (b) of this SECTION
13.9, the Lessee shall only be obligated to compensate such Participant for
any amount arising or accruing both:
(i) during (A) any time or period commencing (x) in the case of
SUBSECTION (a), not earlier than the first day of any Interest Period
in effect on the date which, and (y) in the case of SUBSECTION (b),
not earlier than the date on which such Participant notifies the
Lessee that it proposes to demand such
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compensation and identifies to the Lessee the statute, regulation or
other basis upon which the claimed compensation is or will be based
and (B) any time or period during which, because of the retroactive
application of such statute, regulation or other basis, such
Participant did not know that such amount would arise or accrue; and
(ii) within six months prior to any demand therefor, accompanied
by a certificate of such Participant claiming compensation and setting
forth in reasonable detail its computation of the additional amount or
amounts to be paid to it hereunder.
SECTION XIII.10. FUNDING LOSSES. If any payment of principal amount of
any Loan or Lessor Amount is made on any day other than the last day of an
Interest Period applicable thereto, the Lessee shall reimburse the party
claiming reimbursement therefor within fifteen (15) days after demand for any
resulting loss or expense incurred by it, including (without limitation) any
loss incurred in obtaining, liquidating or employing deposits from third
parties, but excluding loss of margin for the period after any such payment or
conversion or failure to borrow or prepay, PROVIDED that the such party shall
have delivered to the Lessee a certificate as to the amount of such loss or
expense, which certificate shall be presumed correct in the absence of
demonstrable error. Such party will, at the request of the Lessee, furnish such
additional information concerning the determination of such loss as the Lessee
may reasonably request.
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ARTICLE XIV
MISCELLANEOUS
SECTION XIV.1. SURVIVAL OF AGREEMENTS. The representations, warranties,
covenants, indemnities and agreements of the parties provided for in the
Operative Documents, and the parties' obligations under any and all thereof,
shall survive the execution and delivery of this Participation Agreement, the
transfer of any Property to the Lessor, any disposition of any interest of the
Lessor in any Property or any Improvements and the payment of the Notes and any
disposition thereof and shall be and continue in effect notwithstanding any
investigation made by any party and the fact that any party may waive compliance
with any of the other terms, provisions or conditions of any of the Operative
Documents. Except as otherwise expressly set forth herein or in other Operative
Documents, the indemnities of the parties provided for in the Operative
Documents shall survive the expiration or termination of any thereof for a
period not to exceed one year after the later of (x) the Expiration Date and (y)
the payment in full in cash of the Lease Balance.
SECTION XIV.2. NO BROKER, ETC. Each of the parties hereto represents to
the others that it has not retained or employed any broker, finder or financial
adviser, except Xxxx Financial Corporation to act on its behalf in connection
with this Participation Agreement or the transactions contemplated herein, nor
has it authorized any broker, finder or financial adviser retained or employed
by any other Person so to act. Any party who is in breach of this
representation shall indemnify and hold the other parties harmless from and
against any liability arising out of such breach of this representation.
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SECTION XIV.3. NOTICES. Unless otherwise specifically provided herein,
all notices, consents, directions, approvals, instructions, requests and other
communications required or permitted by the terms hereof to be given to any
Person shall be given in writing by United States mail, by nationally recognized
courier service, by hand or by facsimile transmission and any such notice shall
become effective five Business days after being deposited in the mails,
certified or registered with appropriate postage prepaid or one Business Day
after delivery to a nationally recognized courier service specifying overnight
delivery or, if delivered by hand or facsimile transmission, when received, and
shall be directed to the address of such Person as indicated on SCHEDULE II.
From time to time any party may designate a new address for purposes of notice
hereunder by written notice to each of the other parties hereto in accordance
with this Section.
SECTION XIV.4. COUNTERPARTS. This Participation Agreement may be executed
by the parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION XIV.5. AMENDMENTS.
(a) The provisions of this Participation Agreement may from time to
time be amended, modified or waived, PROVIDED, HOWEVER, that such
amendment, modification or waiver is in writing and consented to by the
Lessee and the Required Participants; PROVIDED, FURTHER, HOWEVER, that no
amendment or waiver of any provision relating to payment or performance of
an obligation owed to any Participant shall be effective against such
Participant unless it has been consented to in writing by such Participant.
(b) Neither any Operative Document nor any of the terms thereof may
be terminated (except upon payment in full of the Lease Balance or
effective exercise and consummation of the Remarketing Option in accordance
with Article XX of
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the Master Lease and payment in full of all amounts due in accordance
therewith), amended, supplemented, waived or modified without the written
agreement or consent of each party thereto and, regardless of whether the
Lenders and the Lessor are parties thereto, the Required Participants.
SECTION XIV.6. HEADINGS, ETC. The Table of Contents and headings of the
various Articles and Sections of this Participation Agreement are for
convenience of reference only and shall not modify, define, expand or limit any
of the terms or provisions hereof.
SECTION XIV.7. PARTIES IN INTEREST. Except as expressly provided herein,
none of the provisions of this Participation Agreement is intended for the
benefit of any Person except the parties hereto. The Lessee shall not assign or
transfer any of its rights or obligations under the Operative Documents except
in accordance with the terms and conditions thereof.
SECTION XIV.8. GOVERNING LAW. THIS PARTICIPATION AGREEMENT SHALL IN ALL
RESPECTS BE GOVERNED BY THE LAW OF THE STATE OF CALIFORNIA (EXCLUDING ANY
CONFLICT-OF-LAW OR CHOICE-OF-LAW RULES WHICH MIGHT LEAD TO THE APPLICATION OF
THE INTERNAL LAWS OF ANY OTHER JURISDICTION) AS TO ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE.
SECTION XIV.9. SEVERABILITY. Any provision of this Participation
Agreement that is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
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SECTION XIV.10. LIABILITY LIMITED. (a) The parties hereto agree that
except as specifically set forth herein or in any other Operative Document,
Lessor shall have no personal liability whatsoever to the Lessee or any
Participant or their respective successors and assigns for any claim based on or
in respect hereof or any of the other Operative Documents or arising in any way
from the transactions contemplated hereby or thereby and the recourse shall be
solely had against the Lessor's interest in any Property; PROVIDED, HOWEVER,
that Lessor shall be liable in its individual capacity (a) for its own willful
misconduct or gross negligence (or negligence in the handling of funds), (b)
breach of any of its representations, warranties or covenants under the
Operative Documents, or (c) for any Tax based on or measured by any fees,
commission or compensation received by it for acting as the Lessor as
contemplated by the Operative Documents. It is understood and agreed that,
except as provided in the preceding sentence: (i) Lessor shall have no personal
liability under any of the Operative Documents as a result of acting pursuant to
and consistent with any of the Operative Documents; (ii) all obligations of
Lessor to the Lessee are solely nonrecourse obligations except to the extent
that it has received payment from others; and (iii) all such personal liability
of Lessor is expressly waived and released as a condition of, and as
consideration for, the execution and delivery of the Operative Documents by
Lessor.
(b) No Participant shall have any obligation to any other Participant
or to the Lessee, the Lessor or the Lenders with respect to transactions
contemplated by the Operative Documents, except those obligations of such
Participant expressly set forth in the Operative Documents or except as set
forth in the instruments delivered in connection therewith, and no Participant
shall be liable for performance by any other party hereto of such other party's
obligations under the Operative Documents except as otherwise so set forth.
SECTION XIV.11. FURTHER ASSURANCES. The parties hereto shall promptly
cause to be taken, executed, acknowledged or delivered, at the sole expense of
the Lessee, all such further
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acts, conveyances, documents and assurances as the other parties may from time
to time reasonably request in order to carry out and preserve the security
interests and liens (and the priority thereof) intended to be created pursuant
to this Participation Agreement, the other Operative Documents, and the
transactions thereunder (including, without limitation, the preparation,
execution and filing of any and all Uniform Commercial Code financing statements
and other filings or registrations which the parties hereto may from time to
time request to be filed or effected); PROVIDED, HOWEVER, that the Lessee shall
not be required to pay expenses pursuant to this Section to the extent arising
from a breach or alleged breach by the Lenders or the Lessor of any agreement
entered into in connection with the assignment or participation of any Loan or
Lessor Amount. The Lessee, at its own expense and without need of any prior
request from any other party, shall take such action as may be necessary
(including any action specified in the preceding sentence), or as so requested,
in order to maintain and protect all security interests provided for hereunder
or under any other Operative Document.
SECTION XIV.12. SUBMISSION TO JURISDICTION. The Lessee hereby submits to
the nonexclusive jurisdiction of any United States District Court located in the
State of California for purposes of all legal proceedings arising out of or
relating to the Operative Documents or the transactions contemplated hereby.
The Lessee irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of the venue of any
such proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum.
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SECTION XIV.13. SETOFF. The Lenders and the Lessor shall, upon the
occurrence of any Lease Event of Default, have the right to appropriate and
apply to the payment of the Lessee's obligations under the Lease as security for
the payment of such obligations, any and all balances, credits, deposits,
accounts or moneys of the Lessee then or thereafter maintained with any Lender
or Lessor. The rights of the Lenders and the Lessor under this Section are in
addition to other rights and remedies (including other rights of setoff under
applicable law or otherwise) which such Person may have.
SECTION XIV.14. REPLACEMENT OF LENDER. If a Lender fails to fund its
share of the Loans, and such failure is not based on a right granted thereto
under the Operative Documents, then the Lessee shall have the right (but not the
obligation) to require such Lender to assign and delegate in accordance with
SECTION 12.1 all of such Xxxxxx's total Loans and Commitment to any of the
Lenders or to any other financial institution selected by Lessee that, in each
case, is willing to accept such assignment and delegation and if no such Lender
or financial institution will accept such assignment and delegation, the Lessee
shall (in addition to any other right Lessee may have at law or in equity) have
the right to prepay all outstanding amounts with respect to such Lender and
terminate such Xxxxxx's Commitment.
SECTION XIV.15. WAIVER OF JURY TRIAL. THE PARTIES HERETO VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS PARTICIPATION AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF
ANY OF THE PARTIES HERETO. THE PARTIES HERETO HEREBY AGREE THAT THEY WILL NOT
SEEK TO CONSOLIDATE ANY SUCH LITIGATION WITH ANY OTHER LITIGATION IN WHICH A
JURY TRIAL HAS NOT OR CANNOT BE WAIVED. THE PROVISIONS OF THIS SECTION 14.15
HAVE BEEN FULLY NEGOTIATED BY THE PARTIES HERETO AND SHALL BE SUBJECT TO NO
EXCEPTIONS. THE LESSEE ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND
SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH
OTHER OPERATIVE DOCUMENT TO
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WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
PARTICIPANTS ENTERING INTO THIS PARTICIPATION AGREEMENT AND EACH SUCH OTHER
OPERATIVE DOCUMENT.
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IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
SYMANTEC CORPORATION, as
Lessee, Pledgor and Guarantor
By
--------------------------------------
Name:
Title:
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SUMITOMO BANK LEASING AND FINANCE,
INC., as Lessor
By
--------------------------------------
Name:
Title:
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THE SUMITOMO BANK, LIMITED, SAN
XXXXXXXXX XXXXXX, as Lender and as
Agent
By
--------------------------------------
Name:
Title:
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SCHEDULE I
TO PARTICIPATION AGREEMENT
COMMITMENTS
------------------------------------------------------------
------------------------------------------------------------
PARTICIPANT COMMITMENT
------------------------------------------------------------
------------------------------------------------------------
LENDER
------------------------------------------------------------
------------------------------------------------------------
The Sumitomo Bank, $45,800,000.00
Limited, San Xxxxxxxxx
Xxxxxx
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
LESSOR
------------------------------------------------------------
------------------------------------------------------------
Sumitomo Bank Leasing $7,200,000.00
and Finance, Inc.
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
--------------
--------------
------------------------------------------------------------
TOTAL: $53,000,000.00
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
------------------------------------------------------------
SCHEDULE II
TO PARTICIPATION AGREEMENT
NOTICE INFORMATION, WIRE INSTRUCTIONS AND FUNDING OFFICES
LESSEE AND GUARANTOR
SYMANTEC CORPORATION
00000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Treasury Department
Facsimile No: (000) 000-0000
Wire Transfer Instructions:
Bank: Bank of America
ABA Number: 000000000
Account Number: 12338-10287
Ref: Symantec Lease
LESSOR:
SUMITOMO BANK LEASING AND FINANCE, INC.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Credit Officer
Facsimile No.: (000) 000-0000
Wire Transfer Instructions:
Bank: Xxxxxx Guaranty Trust Company of New york
ABA Number: 000000000
Account Name: The Sumitomo Bank, Ltd., San Xxxxxxxxx Xxxxxx
Account Number: 000-00-000
Ref: Symantec Lease
Further Credit to: Sumitomo Bank Leasing and Finance
A/C#283572
AGENT AND LENDER:
THE SUMITOMO BANK, LIMITED, SAN XXXXXXXXX XXXXXX
000 Xxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Chief Credit Officer
Facsimile No.: (000) 000-0000
Wire Transfer Instructions:
Bank: The Sumitomo Bank of California
ABA Number: 000000000
Ref: Symantec Corporation Lease
II-2
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS; INTERPRETATION.................................. 2
ARTICLE II
CONDITIONS PRECEDENT TO DOCUMENTATION AND ACQUISITION DATES
SECTION 2.1................................................Documentation Date 2
SECTION 2.2.................................................Acquisition Dates 4
ARTICLE III
FUNDING OF ADVANCES
SECTION 3.1..........................................................Advances 8
SECTION 3.3..............................................Lenders' Commitments 8
SECTION 3.4...........................................Procedures for Advances 9
ARTICLE IV
YIELD; INTEREST; FEES
SECTION 4.1.............................................................Yield 10
SECTION 4.2.................................................Interest on Loans 10
SECTION 4.3..............................................................Fees 11
ARTICLE V
CERTAIN INTENTIONS OF THE PARTIES
SECTION 5.1.............................................Nature of Transaction 11
SECTION 5.2...........................................Amounts Due Under Lease 11
ARTICLE VI
TABLE OF CONTENTS
(continued)
Page
----
ADDITIONAL COLLATERAL
SECTION 6.1........................................................Deficiency 12
SECTION 6.2..........................................................Surplus. 12
ARTICLE VII
DISTRIBUTIONS
SECTION 7.1........................................................Basic Rent 13
SECTION 7.2...................................Purchase Payments by the Lessee 13
SECTION 7.3...........................................Payment of Loan Balance 14
SECTION 7.4.......................Sales Proceeds of Remarketing of Properties 14
SECTION 7.5.................................................Supplemental Rent 14
SECTION 7.6................................Additional Collateral Realizations 14
SECTION 7.7.............Distribution of Payments after Lease Event of Default 15
SECTION 7.8....................................................Other Payments 17
SECTION 7.9.................................Casualty and Condemnation Amounts 17
SECTION 7.10.............................................Order of Application 18
ARTICLE VIII
REPRESENTATIONS
SECTION 8.1...............................Representations of the Participants 18
SECTION 8.2.....................................Representations of the Lessee 18
ARTICLE IX
PAYMENT OF CERTAIN EXPENSES
SECTION 9.1..............................................Transaction Expenses 25
SECTION 9.2.....................................Brokers' Fees and Stamp Taxes 26
SECTION 9.3............................Loan Agreement and Related Obligations 26
ARTICLE X
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TABLE OF CONTENTS
(continued)
Page
----
OTHER COVENANTS AND AGREEMENTS
SECTION 10.1..................................Affirmative Covenants of Lessee 26
ARTICLE XI
LESSEE DIRECTIONS
SECTION 11.1................................................Lessee Directions 30
ARTICLE XII
TRANSFERS OF PARTICIPANTS' INTERESTS
SECTION 12.1......................................................Assignments 30
SECTION 12.2...................................................Participations 31
SECTION 12.3..........Withholding Taxes; Disclosure of Information; Pledge Under
Regulation A 32
ARTICLE XIII
INDEMNIFICATION
SECTION 13.1..........................................General Indemnification 33
SECTION 13.2............................................End of Term Indemnity 36
SECTION 13.3..........................................Environmental Indemnity 37
SECTION 13.4.................................Proceedings in Respect of Claims 39
SECTION 13.5............................................General Tax Indemnity 40
SECTION 13.6..............Indemnity Payments in Addition to Lease Obligations 47
SECTION 13.7.......................................LIBO Rate Lending Unlawful 47
SECTION 13.8.............................................Deposits Unavailable 48
SECTION 13.9............................................Increased Costs, etc. 48
SECTION 13.10..................................................Funding Losses 51
ARTICLE XIV
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TABLE OF CONTENTS
(continued)
Page
----
MISCELLANEOUS
SECTION 14.1...........................................Survival of Agreements 51
SECTION 14.2..................................................No Broker, etc. 52
SECTION 14.3..........................................................Notices 52
SECTION 14.4.....................................................Counterparts 52
SECTION 14.5.......................................................Amendments 52
SECTION 14.6...................................................Headings, etc. 53
SECTION 14.7..............................................Parties in Interest 53
SECTION 14.8....................................................GOVERNING LAW 53
SECTION 14.9.....................................................Severability 53
SECTION 14.10...............................................Liability Limited 53
SECTION 14.11..............................................Further Assurances 54
SECTION 14.12......................................Submission to Jurisdiction 55
SECTION 14.13..........................................................Setoff 55
SECTION 14.14...........................................Replacement of Lender 55
SECTION 14.15............................................WAIVER OF JURY TRIAL 55
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SCHEDULES
SCHEDULE I Participants' Commitments
SCHEDULE II Notice Information, Wire Instructions, and Funding Offices
EXHIBITS
EXHIBIT A Form of Funding Request
EXHIBIT B Form of Responsible Officer's Certificate
EXHIBIT C Form of Legal Opinion
EXHIBIT D Form of Nondisturbance, Subordination and Attornment Agreement
EXHIBIT E Form of Assignment Agreement
- 5 -
