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PARTICIPATION AGREEMENT
dated as of June 25, 1996
among
THE HOME DEPOT, INC.,
as Guarantor,
HOME DEPOT U.S.A., INC., as
Lessee and Construction Agent,
HD REAL ESTATE FUNDING CORP.,
as Facility Lender,
CREDIT SUISSE LEASING 92A, L.P.,
as Lessor,
OTHER FINANCIAL INSTITUTIONS LISTED ON THE
SIGNATURE PAGES HEREOF OR THAT MAY
HEREAFTER BECOME PARTY HERETO,
as Lenders,
and
CREDIT SUISSE, as Agent Bank and Lender
--------------------------------------------------------------------------------
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TABLE OF CONTENTS
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Page
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SECTION 1. DEFINITIONS; INTERPRETATION......................................................................2
SECTION 2. INITIAL CLOSING DATE.............................................................................2
SECTION 3. ACQUISITIONS OF LAND AND FACILITIES; FUNDINGS OF ADVANCES........................................3
SECTION 3.1. Agreement to Acquire and Lease................................................3
SECTION 3.2. Lessor's Commitment...........................................................3
SECTION 3.3. Facility Lender Commitments...................................................4
SECTION 3.4. Issuance of Commercial Paper..................................................4
SECTION 3.5. Procedures for Acquisitions of Land...........................................4
SECTION 3.6. Guarantor's and Lessee's Deemed Representation for Each Acquisition...........5
SECTION 3.7. Procedures for Advances.......................................................5
SECTION 3.8. Guarantor's and Lessee's Deemed Representation
for Each Advance......................................................6
SECTION 3.9. Allocation of Advances........................................................6
SECTION 3.10. Use of Proceeds...............................................................7
SECTION 3.11. Return of Advances............................................................7
SECTION 4. CERTIFICATE EARNINGS; INTEREST; COMMITMENT FEES..................................................7
SECTION 4.1. Certificate Earnings..........................................................7
SECTION 4.2. Interest on Loans.............................................................8
SECTION 4.3. Commitment Fees...............................................................8
SECTION 5. DISTRIBUTIONS OF PAYMENTS AND COLLATERAL PROCEEDS................................................8
SECTION 5.1. Agreement of Agent Bank and Participants......................................8
SECTION 5.2. Basic Rent....................................................................9
SECTION 5.3. Purchase Payments by Lessee..................................................10
SECTION 5.4. Residual Value Guarantee.....................................................11
SECTION 5.5. Sales Proceeds of Remarketing of Properties..................................12
SECTION 5.6. Supplemental Rent............................................................13
SECTION 5.7. Excepted Payments............................................................13
SECTION 5.8. Distribution of Payments after Lease Event of Default or Loan Agreement Event
of Default...........................................................13
SECTION 5.9. Other Payments...............................................................14
SECTION 5.10. Casualty and Condemnation Amounts............................................15
SECTION 5.11. Reduction of Commitment......................................................15
SECTION 5.12. Order of Application.........................................................15
</TABLE>
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<TABLE>
<S> <C>
SECTION 5.13. Remaining Funds..............................................................16
SECTION 5.14. Time of Payment..............................................................16
SECTION 6. CERTAIN INTENTIONS OF THE PARTIES...............................................................16
SECTION 7. CONDITIONS PRECEDENT TO ACQUISITIONS AND ADVANCES...............................................17
SECTION 7.1. Conditions Precedent -- Documentation........................................17
SECTION 7.2. Further Conditions Precedent.................................................19
SECTION 8. COMPLETION DATE CONDITIONS......................................................................20
SECTION 9. REPRESENTATIONS.................................................................................22
SECTION 9.1. Representations of the Lessor................................................22
SECTION 9.2. Representations of the Guarantor and the Lessee..............................24
SECTION 9.3. Representations of Guarantor and Lessee on Property Closing Date.............28
SECTION 9.4. Additional Representations of Guarantor and Lessee...........................30
SECTION 9.5. Representations of Facility Lender...........................................31
SECTION 9.6. Representations and Warranties of the Agent Bank and the Lenders.............31
SECTION 10.PAYMENT OF CERTAIN EXPENSES.....................................................................32
SECTION 10.1. Transaction Expenses.........................................................32
SECTION 10.2. Brokers' Fees and Stamp Taxes................................................33
SECTION 10.3. Certain Fees and Expenses....................................................33
SECTION 11.OTHER COVENANTS AND AGREEMENTS..................................................................33
SECTION 11.1. Covenants of Guarantor and Lessee............................................33
SECTION 11.2. Cooperation with the Lessee..................................................39
SECTION 11.3. Release of Properties........................................................40
SECTION 11.4. Discharge of Liens...........................................................40
SECTION 11.5. Notice of Credit Rating......................................................40
SECTION 11.6. Covenants of the Facility Lender and the Lessor..............................41
SECTION 11.7. No Bankruptcy Proceedings....................................................42
SECTION 11.8. Notice of Claims Against Lessor..............................................43
SECTION 12.LESSEE DIRECTIONS...............................................................................43
SECTION 12.1. Lessee Directions............................................................43
</TABLE>
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<TABLE>
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SECTION 13.TRANSFER OF INTEREST............................................................................44
SECTION 13.1. Restrictions on and Effect of Transfer.......................................44
SECTION 13.2. Replacement of Lessor or Facility Lender. ..................................45
SECTION 14.INDEMNIFICATION.................................................................................45
SECTION 14.1. General Indemnification......................................................45
SECTION 14.2. Environmental Indemnity......................................................47
SECTION 14.3. Proceedings in Respect of Claims.............................................49
SECTION 14.4. End of Term Indemnity........................................................50
SECTION 14.5. General Tax Indemnity........................................................51
SECTION 14.6. Completion Guaranty..........................................................55
SECTION 15.MISCELLANEOUS..................................................................................55
SECTION 15.1. Survival of Agreements.......................................................55
SECTION 15.2. No Broker; etc...............................................................56
SECTION 15.3. Notices..................................................................... 56
SECTION 15.4. Counterparts.................................................................58
SECTION 15.5. Amendments...................................................................58
SECTION 15.6 Usury........................................................................60
SECTION 15.7 Confidentiality..............................................................60
SECTION 15.8. Headings; etc................................................................61
SECTION 15.9. Parties in Interest..........................................................61
SECTION 15.10. GOVERNING LAW................................................................61
SECTION 15.11. Severability.................................................................61
SECTION 15.12. Further Assurances...........................................................61
SECTION 15.13. WAIVER OF JURY TRIAL.........................................................61
SECTION 15.14 Limitations on Recourse Against Lessor.......................................62
SECTION 15.15 Limitations on Recourse Against Facility Lender..............................62
SCHEDULES
SCHEDULE I Lenders and Their Addresses
APPENDICES
APPENDIX 1 Definitions and Interpretation
APPENDIX 2 Initial Closing Date Conditions Precedent
APPENDIX 3 Pricing Provisions for Lessor Investment Amounts
</TABLE>
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<TABLE>
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EXHIBITS
<S> <C>
EXHIBIT A Acquisition Request
EXHIBIT B Funding Request
EXHIBIT C Opinion of Counsel to Lessee
EXHIBIT D Supplement to the Assignment of Leases
EXHIBIT E Local Counsel Opinion
EXHIBIT F Property Closing Certificate
EXHIBIT G Opinion of Counsel to Facility Lender
EXHIBIT H Completion Date Certificate
EXHIBIT I Opinion of Counsel to Lessor
EXHIBIT J Assignment of Lease and Consent to Assignment
EXHIBIT K Construction Agency Agreement Assignment and Consent to Construction Agency
Agreement Assignment
EXHIBIT L Master Assignment and Consent to Master Assignment
EXHIBIT M Form of Security Agreement
EXHIBIT N-1 Form of Mortgage and Security Agreement
EXHIBIT N-2 Form of Deed of Trust and Security Agreement
EXHIBIT N-3 Form of Deed to Secure Debt and Security Agreement
EXHIBIT O Form of Lease
EXHIBIT P Form of Compliance Certificate
</TABLE>
<PAGE> 6
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT, dated as of June 25, 1996 (this
"Agreement" or "Participation Agreement"), is entered into by and among THE HOME
DEPOT, INC., a Delaware corporation, as Guarantor (the "Guarantor"); HOME DEPOT
U.S.A., INC. a Delaware corporation, as Lessee and Construction Agent ("Lessee"
or "Construction Agent"), HD REAL ESTATE FUNDING CORP., a Delaware corporation
("Facility Lender"), CREDIT SUISSE LEASING 92A, L.P., a Delaware limited
partnership, as lessor ("Lessor"), the financial institutions listed on the
signature pages hereto or that may hereafter become parties hereto, (each, a
"Lender" and collectively, the "Lenders") and CREDIT SUISSE, a Swiss bank
operating through its New York branch, as Agent Bank for the Lenders (in such
capacity, the "Agent Bank")
PRELIMINARY STATEMENT
In accordance with the terms of this Participation Agreement, the
Lease, the Loan Agreement, the Liquidity Agreement and the other Operative
Documents,
A. the Lessor contemplates acquiring undeveloped parcels of
Land from time to time during the Commitment Period, by purchasing Land
from third party sellers;
B. using Advances from the Lessor, Lessee contemplates
building, or causing to be built, as Construction Agent, Improvements
on such undeveloped parcels of Land for the Lessor;
C. the Lessor wishes to arrange financing for up to 97% of the
total cost of the acquisition of such Land and the construction of such
Improvements;
D. the Facility Lender has agreed to issue Commercial Paper
Notes during the Commitment Period in an aggregate amount not to exceed
the Facility Lender Commitments, with the proceeds of the sale of the
Commercial Paper Notes to be lent to the Lessor pursuant to the Loan
Agreement for the acquisition of such Land by the Lessor and the
construction of such Improvements by the Construction Agent, as agent
for the Lessor;
E. the Agent Bank and the Lenders are willing to provide the
Liquidity Facility to the Facility Lender to ensure the Facility
Lender's ability to pay the Principal Component and the Interest
Component of such Commercial Paper Notes and to make Loans to the
Lessor as needed for the acquisition and improvement of the Properties;
F. the Lessee wishes to lease the Properties from the Lessor
under the Lease and the Guarantor is willing to guarantee the Lessee's
obligations under the Operative Documents;
<PAGE> 7
G. to secure its obligations to the Facility Lender pursuant
to the Loan Agreement, the Lessor is granting a lien to the Facility
Lender, pursuant to the Mortgages and the other Security Documents, on
all of the Lessor's right, title and interest in the Properties and
substantially all of the Lessor's rights under the Lease with respect
to the Properties; and
H. to secure its obligations to the Agent Bank and the Lenders
under the Liquidity Agreement, the Facility Lender is pledging to the
Agent Bank, for the benefit of the Lenders, pursuant to the Master
Assignment and the Security Agreement, substantially all of its right,
title and interest in and to the Loan Agreement, the Notes and Security
Documents received from the Lessor.
In consideration of the mutual agreements contained in this
Participation Agreement and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1.
DEFINITIONS; INTERPRETATION
Unless the context shall otherwise require, capitalized terms used and
not defined herein shall have the meanings assigned thereto in Appendix 1
attached hereto and made a part hereof by this reference for all purposes
hereof; and the rules of interpretation set forth in Appendix 1 hereto shall
apply to this Participation Agreement.
SECTION 2.
INITIAL CLOSING DATE
The initial Closing Date shall occur on the earliest date (on or before
June 30, 1996) on which all the conditions precedent thereto set forth in
Appendix 2 attached hereto and made a part hereof by this reference shall have
been satisfied or waived by the applicable parties as set forth therein (such
date referred to herein as the "Initial Closing Date").
<PAGE> 8
SECTION 3.
ACQUISITIONS OF LAND AND FACILITIES; FUNDINGS OF ADVANCES
SECTION 3.1. Agreement to Acquire and Lease. Subject to the conditions
and terms of this Participation Agreement and the other Operative Documents, the
Lessor agrees to take the following actions at the request of Lessee from time
to time during the Commitment Period:
(a) purchase Land (through Advances funded by the Lessor and the
Facility Lender as provided herein);
(b) concurrently with each Property Closing Date, lease the
applicable Land and the existing Improvements thereon to the
Lessee under the Lease;
(c) cause the Improvements to be built by its agent, the
Construction Agent, pursuant to the Construction Agency
Agreement (utilizing funds provided by the Lessor and the
Facility Lender as provided herein); and
(d) as of the applicable Completion Date, lease the completed
Improvements to the Lessee under the Lease.
Notwithstanding any other provision hereof, the Lessor shall not be obligated to
make any Advance if (i) the amount of such Advance would exceed the Available
Commitments, (ii) if after giving effect to such Advance, the aggregate Property
Costs with respect to the Properties would exceed the Maximum Property Costs,
(iii) if after giving effect to such Advance, the Property Costs with respect to
any Property would exceed 100% of the As Built Value of such Property; or (iv)
if such Advance is for the purchase or improvement of a Support Facility and the
total amount of Advances expended for such purposes would (after giving effect
to such Advance) exceed twenty percent (20%) of the Total Commitments.
SECTION 3.2. Lessor's Commitment. Subject to the terms and conditions
of this Participation Agreement and the other Operative Documents, the Lessor,
at the request of the Lessee, agrees to make investments of its own funds in the
Properties from time to time during the Commitment Period on a Funding Date in
amounts (each a "Lessor Investment Amount") equal to the amount of the
applicable Advance requested in the applicable Funding Request to be funded by a
Lessor Investment Amount; provided that, the aggregate amount of the Lessor
Investment Amounts funded shall at all times equal or exceed the Lessor's
Commitment Percentage of the total outstanding Advances. Notwithstanding any
other provision hereof, the Lessor shall not be obligated to make available any
Lessor Investment Amount if, after giving effect to the requested Lessor
Investment Amount, the aggregate amount of Lessor Investment Amounts funded
would exceed the Lessor's Commitment.
SECTION 3.3. Facility Lender Commitments. Subject to the conditions and
terms of this Participation Agreement and the other Operative Documents, the
Facility Lender, at the request of the Lessor or its agent, the Construction
Agent, agrees to make Loans to the Lessor
<PAGE> 9
pursuant to the Loan Agreement, and the Lessor hereby agrees to make the
proceeds of such Loans available to the Lessee or the Construction Agent
pursuant to Section 3.1, from time to time during the Commitment Period on each
Funding Date in an amount in immediately available funds equal to the amount of
the Advance requested to be funded by Loan proceeds in the applicable Funding
Request; provided that, the aggregate principal amount of the Loans shall at all
times be less than or equal to the Facility Lender Commitment Percentage of the
aggregate outstanding Advances. Notwithstanding any other provision hereof, the
Facility Lender shall not be obligated to make any Loan if, (i) after giving
effect to the proposed Loan, the aggregate outstanding amount of the Loans would
exceed the Facility Lender Commitments, or (ii) the Facility Lender is unable to
issue Commercial Paper Notes in an amount sufficient to fund such Loan pursuant
to Section 3.4 or to borrow the necessary amount from the Lenders as Direct
Funding Loans pursuant to the Liquidity Facility.
SECTION 3.4. Issuance of Commercial Paper. Provided that the Liquidity
Agreement is in full force and effect and subject to the terms and conditions of
this Participation Agreement and the other Operative Documents, in order to fund
its obligation to make the Loans to the Lessor pursuant to the Loan Agreement:
(a) the Facility Lender shall (i) issue Commercial Paper Notes, the net proceeds
of which are sufficient to make Loans in a principal amount equal to the amount
of the Advance requested by the Lessee to be funded with Loan proceeds on each
Funding Date, or (ii) request a Direct Funding Loan pursuant to the Liquidity
Agreement in such principal amount; and
(b) The Facility Lender shall cause (i) the Issuing and Paying Agent
Bank to deliver the net proceeds of the Commercial Paper Notes issued on such
Funding Date, or (ii) the Agent to deliver the proceeds of any Direct Funding
Loans made pursuant to the Liquidity Agreement on such Funding Date, to the
Construction Agent or such other Person as may be directed by the Construction
Agent;
provided however, that in no event shall (i) the sum of (x) the Interest
Component and Principal Component of all outstanding Commercial Paper Notes,
plus (y) the aggregate outstanding principal amount of the Facility Loans, minus
(z) Deposited Funds at any time exceed the Commitment then in effect, or (ii)
the Facility Lender issue any Commercial Paper Notes with a maturity date later
than five (5) Business Days' prior to the Maturity Date then in effect.
SECTION 3.5. Procedures for Acquisitions of Land. With respect to each
acquisition of Land,
(a) Lessee and/or Construction Agent shall provide to Lessor
and Agent Bank with respect to the proposed acquisition, the
Environment Audit, Appraisal, survey and title insurance commitment
required to be delivered pursuant to Section 7.1 for such Property and
the Lessor and Agent Bank shall notify the Lessee of any deficiencies
in, or comments on, such items as soon as possible (and in any event
within ten (10) Business Days);
(b) Lessor and Agent Bank shall receive the form of opinion of
counsel
<PAGE> 10
required pursuant to Section 7.1(j) (with the understanding that Lessor
and Agent Bank shall respond to any draft of such opinion within five
(5) Business Days);
(c) Upon satisfaction of the foregoing conditions and receipt
of the form of Deed, Lessor shall execute and deliver a limited power
of attorney to Lessee (or a representative thereof) in recordable form
and satisfactory to Lessor and Agent Bank sufficient to allow Lessee,
upon satisfaction of the remaining conditions precedent set forth in
Sections 7.1 and 7.2, to execute and record such documents necessary or
advisable in connection with the acquisition of such Land on the
Property Closing Date;
(d) Lessor, Facility Lender and Agent Bank shall execute and
deliver such other documents as may be required to be executed by them
in order to fulfill or to confirm whether the conditions precedent set
forth in Section 7.1 have been fulfilled or waived within three (3)
Business Days' following request; and
(e) Lessee shall give the Lessor, the Facility Lender, and the
Agent Bank an irrevocable prior written notice not later than 1:00
p.m., New York time, on the Business Day of the proposed Property
Closing Date, pursuant, in each case, to an Acquisition Request in the
form of Exhibit A attached hereto and made a part hereof by this
reference (an "Acquisition Request"), specifying with respect to such
Land: (i) the Property Closing Date, (ii) the Land to be acquired,
(iii) the identity of the seller and the Property Acquisition Cost, and
(iv) the Estimated Completion Date for such Property.
SECTION 3.6. Guarantor's and Lessee's Deemed Representation for Each
Acquisition. Each Acquisition Request by Lessee shall be deemed a representation
and warranty by Guarantor and the Lessee to the Lessor, the Facility Lender,
each Lender and the Agent Bank that on the proposed Property Closing Date, (i)
no Default or Event of Default exists, (ii) the representations of Guarantor and
Lessee set forth in Section 9 are true and correct in all material respects as
though made on and as of such Property Closing 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, and (iii) the conditions
precedent to the acquisition of such Land by the Lessor on such Property Closing
Date set forth in Section 7 have been satisfied.
SECTION 3.7. Procedures for Advances. With respect to each funding of
an Advance, Construction Agent shall give the Lessor, the Facility Lender, and
the Agent Bank an irrevocable prior written notice not later than 1:00 p.m., New
York time, on the Business Day of the proposed Funding Date, pursuant, in each
case, to a Funding Request in the form of Exhibit B attached hereto and made a
part hereof by this reference (a "Funding Request"), specifying (i) the proposed
Funding Date, (ii) the amount of the Advance requested, (iii) the relative
percentages of such Advance to be funded by Lessor Investment Amounts and Loan
proceeds, and (iv) to which Properties such Advance is being allocated and the
allocation of such Advance to the respective Property Acquisition Costs and
Property Improvements Costs of such Properties. All requests for Advances shall
be in a minimum amount of $250,000; provided that, to the extent any Advances
are to be funded using the proceeds of Direct Funding Loans (other than Interest
Payment Loans),
<PAGE> 11
the portion of the Advance to be funded by Direct Funding Loans shall be in a
minimum amount of $5,000,000 and in integral multiples of $250,000. All
remittances made by the Lessor and the Facility Lender for the funding of any
Advance shall be made in immediately available funds by wire transfer to the
Construction Agent, with receipt by the Construction Agent not later than 3:00
p.m., New York time, on the applicable Funding Date. Upon (i) the Construction
Agent's receipt of the funds provided by the Lessor and the Facility Lender with
respect to an Advance and (ii) satisfaction or waiver of the conditions
precedent to such Advance set forth in Section 7, the Construction Agent shall
pay to Lessee or the Person designated by Lessee for payment or reimbursement of
the Property Acquisition Costs of such Land or Property or Property Improvements
Costs, as the case may be, the funds provided by the Lessor and the Facility
Lender for such Advance.
SECTION 3.8. Guarantor's and Lessee's Deemed Representation for Each
Advance. Each Funding Request by Lessee shall be deemed a representation and
warranty by Guarantor and the Lessee to the Lessor, the Facility Lender, each
Lender and the Agent Bank that on the proposed Funding Date, (i) the amount of
Advance requested represents amounts owing in respect of the purchase price of
Land, or amounts owed or paid by Lessee to third parties in respect of Property
Costs for which Lessee has not previously been reimbursed by an Advance, (ii)
the Advance will not cause the aggregate Advances allocated to the Properties on
such Funding Date and any prior Funding Dates to exceed the Maximum Property
Costs, (iii) the Advance will not cause the aggregate Advances allocated to
reimburse or to pay Soft Costs incurred in connection with the Properties to
exceed ten percent (10%) of the Total Commitments, (iv) no Default or Event of
Default exists, (v) the representations of the Guarantor and the Lessee set
forth in Section 9 are true and correct in all material respects as though made
on and as of such Funding Date, except to the extent such representations or
warranties relate solely to an earlier date, in which case such representations
and warranties shall have been true and correct in all material respects on and
as of such earlier date, and (vi) the conditions precedent to such Advance and
the related Lessor Investment Amount and Loans set forth in Section 7 have been
satisfied.
SECTION 3.9. Allocation of Advances. The amount of each Advance shall
be allocated to the Property Acquisition Costs and/or Property Improvement Costs
of the Properties specified in the applicable Funding Request as provided in
Section 3.7. Notwithstanding any provision of this Participation Agreement to
the contrary however, the outstanding Lessor Investment Amounts and the
outstanding Loans shall be deemed to be allocated among the respective Property
Acquisition Costs and/or Property Improvement Costs (as applicable) of each
Property pro rata based upon the percentage of the aggregate outstanding Lessor
Investment Amounts or Loans, as the case may be, to the aggregate amount of
Advances regardless of the actual application of the proceeds thereof to any
particular Property.
SECTION 3.10. Use of Proceeds. The proceeds of all Advances made
pursuant to the Operative Documents shall be used solely for the acquisition of
Land located in the United States or Canada and the construction of Improvements
thereon pursuant to the Construction Agency Agreement which shall be leased
(upon completion, in the case of Improvements constructed thereon by the
Construction Agent) by the Lessor to the Lessee pursuant to the Lease, which
<PAGE> 12
Improvements shall be constructed as a Facility on such Land; provided that the
total amount of Advances expended for the acquisition and construction of
Properties to be used as Support Facilities shall not exceed twenty percent
(20%) of the Total Commitments.
SECTION 3.11. Return of Advances. In the event that the Facility Lender
is required to return the proceeds of any Facility Loan to the Agent Bank
pursuant to Section 3.03(b) of the Liquidity Agreement, the Lessor, the Lessee
and the Construction Agent agree (without duplication) to return any such
proceeds advanced to any of them pursuant to the Operative Documents.
SECTION 4.
CERTIFICATE EARNINGS; INTEREST; COMMITMENT FEES
SECTION 4.1. Certificate Earnings. (a) The amount of the Lessor
Investment Amounts outstanding from time to time shall accrue earnings
("Certificate Earnings") at the Certificate Earnings Rate. If all or any portion
of the Lessor Investment Amounts, any Certificate Earnings payable thereon or
any other amount payable by Guarantor or a Lessee hereunder shall not be paid
within five (5) Business Days of the date when due (whether at stated maturity,
the acceleration or otherwise), such overdue amount shall bear interest at a
rate per annum which is equal to the Overdue Rate which, in the event such
amount is not paid within such five (5) Business Day period, shall be deemed to
have begun to accrue on the due date thereof).
(b) Lessor shall select the applicable Certificate Earnings
Rate in accordance with the terms and conditions set forth on Appendix 3
attached hereto and incorporated herein by this reference.
(c) On each Payment Date, the Lessor shall, subject to the
provisions of Section 5, receive from the Basic Rent paid by the Lessee, the
Lessor Basic Rent (determined on the basis of accrued Certificate Earnings)
received from the Lessee under the Lease from time to time as provided in
Section 5.
(d) The Lessor shall be deemed to have requested that, prior
to the Completion Date, the aggregate amount of accrued Certificate Earnings due
and payable on such date with respect to the Lessor Investment Amounts allocated
to the Property Acquisition Costs and Property Improvements Cost, as applicable
of the Construction Period Properties be capitalized. Such capitalization shall
be deemed to occur on the relevant Scheduled Payment Date. On each such
Scheduled Payment Date, the Lessor Investment Amounts and the Property
Acquisition Costs and Property Improvements Cost, as applicable of each
Construction Period Property shall be increased by the amount so capitalized.
SECTION 4.2. Interest on Loans. (a) Each Loan shall accrue interest
computed and payable in accordance with the terms of the Loan Agreement.
<PAGE> 13
(b) The interest on the Loans shall be paid through the
payment of the Lender Basic Rent (determined on the basis of interest on the
Loans) received from the Lessee under the Lease from time to time as provided in
Section 5.
(c) To the extent that any Interest Payment Loans are made
pursuant to the Loan Agreement to capitalize interest on the Loans allocated to
the Property Acquisition Costs and the Property Improvements Cost, as applicable
of the Construction Period Properties, such Interest Payment Loan shall be
deemed to have been made on the relevant Scheduled Payment Date. On each such
Scheduled Payment Date, the Loans and the Property Acquisition Costs and the
Property Improvements Cost, as applicable of each Construction Period Property
shall be increased by the amount so capitalized.
SECTION 4.3. Commitment Fees. Lessor shall receive commitment fees on
the Lessor's Commitment as set forth on Appendix 3.
SECTION 5.
DISTRIBUTIONS OF PAYMENTS AND COLLATERAL PROCEEDS
In order to provide for the priority and allocation of payments
received from the Lessee and Guarantor and the proceeds of the exercise of
remedies by any of the Participants pursuant to the Security Documents, the
parties hereto agree as follows:
SECTION 5.1. Agreement of Agent Bank and Participants. Pursuant to the
Master Assignment and the Security Agreement, all of the payments (other than
the Excepted Payments) under the Lease, the Construction Agency Agreement, the
Mortgages, the Notes, the Participation Agreement and the Loan Agreement have
been assigned to the Agent Bank for the benefit of the Lenders. The Agent Bank
hereby agrees to deposit all such payments, receipts and other consideration of
any kind whatsoever (other than Excepted Payments) received by the Agent Bank
pursuant to the Master Assignment, the Security Agreement and any other Security
Document in the form received into the Cash Collateral Account. Each Participant
hereby agrees that any payment received pursuant to the Guaranty (other than
payments received by the Facility Lender pursuant to Section 5.6 which shall be
deposited in the Commercial Paper Account) shall immediately be delivered in the
form received to the Agent Bank for deposit in the Cash Collateral Account and
application as set forth herein. Agent Bank shall make distributions from the
Cash Collateral Account pursuant to the requirements of this Section 5 to each
Participant or other Person entitled thereto as promptly as possible (it being
understood that any such payment received on a timely basis in accordance with
the provisions of the Lease, this Participation Agreement and the other
Operative Documents shall be distributed by the Agent Bank on the same Business
Day to the extent practicable).
SECTION 5.2. Basic Rent. Subject to Section 5.8, each payment of Basic
Rent (and any payment of interest on overdue installments of Basic Rent) shall
be made by Lessee to the Agent Bank and shall be distributed by the Agent Bank
as follows:
<PAGE> 14
first, an amount equal to the Lender Basic Rent shall be
distributed to the Lenders for application to pay in full all accrued
but unpaid interest owing to the Lenders pursuant to the terms of the
Liquidity Agreement and the Liquidity Notes and the remainder of such
amount shall be deposited in the Commercial Paper Account to pay in
full the Interest Component of all Commercial Paper Notes in order of
maturity (subject to the last paragraph of this Section 5.2), and
second, an amount equal to the Lessor Basic Rent shall be
distributed to the Lessor for application to pay in full all accrued
but unpaid Certificate Earnings not required to be capitalized pursuant
to Section 4.1(d) (together with any overdue interest thereon).
Notwithstanding any provision of this Section 5.2 to the contrary, in
the event that the Facility Lender is required pursuant to the terms of the
Operative Documents to make Interest Payment Loans to capitalize interest on the
Notes, subject to the terms and conditions of the Operative Documents,
Commercial Paper Notes shall be issued with a greater aggregate Principal
Component (or, if the Facility Lender is not able or permitted to do so,
Facility Loans shall be made pursuant to the Liquidity Agreement) to pay accrued
but unpaid interest on the Facility Loans or the Interest Component of maturing
Commercial Paper Notes such that the outstanding principal amount of the Loans
shall at all times equal the sum of (x) the outstanding principal amount of the
Facility Loans, plus (y) Principal Component of the outstanding Commercial Paper
Notes, minus (z) the Deposited Funds; provided, however, that if a Loan
Agreement Default under Section 5(a) or (e) of the Loan Agreement or a Loan
Agreement Event of Default shall have occurred and be continuing, any such
payments which would otherwise be paid to the Lessor pursuant to clause second
of this Section 5.2 shall be instead held in the Cash Collateral Account until
the earliest to occur of (i) the first date thereafter on which all such Loan
Agreement Defaults and Loan Agreement Events of Default shall have been cured
(in which case such payment under clause second shall then be made), (ii) the
date of any acceleration of the Loans (in which case such payment shall then be
applied in the manner contemplated by Section 5.8), or (iii) the 180th day after
the occurrence of such Loan Agreement Default or Loan Agreement Event of Default
(in which case such payment under clause second shall then be made).
SECTION 5.3. Purchase Payments by Lessee. Subject to Section 5.8, any
payment made by the Lessee pursuant to the Lease or by the Construction Agent
pursuant to the Construction Agency Agreement as a result of:
(a) the purchase of any of the Properties in connection with
Lessee's exercise of its Purchase Option under Section 20.1 of
the Lease or the Expiration Date Purchase Option pursuant to
Section 22.2 of the Lease (and any related purchase by the
Construction Agent pursuant to the Construction Agency
Agreement), or
(b) the Lessee's purchase of a Property or Properties pursuant to
Section 17.6 of the Lease (and any related purchase by the
Construction Agent pursuant to the Construction Agency
Agreement) or the Construction Agent's purchase pursuant
<PAGE> 15
to Section 5.3 of the Construction Agency Agreement, or
(c) payment of the Property Balance in accordance with Section
15.4, Section 16.2(b) Section 22.3(b) of the Lease (and any
related purchase by the Construction Agent pursuant to the
Construction Agency Agreement),
shall except as otherwise provided in Section 5.11, be distributed by the Agent
Bank in the following order of priority:
first, an amount equal to the Facility Lender Property Balance
with respect to such Property shall be distributed to the Lenders in an
amount sufficient to repay the outstanding Facility Loans in full, such
amount to be paid pro rata to the Lenders in accordance with the terms
of the Liquidity Agreement, with the remainder of such amount to be
deposited in the Commercial Paper Account to be applied to repay in
full the Commercial Paper Notes in order of maturity (and the
outstanding principal amount of the Notes shall be proportionately
reduced by such repayments), and
second, an amount equal to the Lessor Property Balance with
respect to such Property shall be distributed to the Lessor, and the
Lessor Investment Amounts shall be reduced by such amount, provided,
however, that if a Loan Agreement Default under Section 5(a) or (e) of
the Loan Agreement or a Loan Agreement Event of Default shall have
occurred and be continuing, any such payments which would otherwise be
paid to the Lessor pursuant to clause second of this Section 5.3 shall
be instead held in the Cash Collateral Account until the earliest to
occur of (i) the first date thereafter on which all such Loan Agreement
Defaults and Loan Agreement Events of Default shall have been cured (in
which case such payment under clause second shall then be made), (ii)
the date of any acceleration of the Loans (in which case such payment
shall then be applied in the manner contemplated by Section 5.8), or
(iii) the 180th day after the occurrence of such Loan Agreement Default
or Loan Agreement Event of Default (in which case such payment under
clause second shall then be made).
SECTION 5.4. Residual Value Guarantee. (a) Subject to Section 5.8, in
the event that upon the Expiration Date, following the election by the Lessee of
the Remarketing Option in accordance with Article XXII of the Lease, the
outstanding principal amount of Loans divided by the outstanding principal
amount of all Advances pursuant to the Total Commitment (expressed as a
percentage) equals the Facility Lender Commitment Percentage, the Residual Value
Guarantee paid by Lessee pursuant to Article XXII of the Lease (which shall
equal the Tranche A Balance) shall be distributed by the Agent Bank on the
Expiration Date in the following order of priority (with the principal amount of
Tranche A Note to be deemed to have been paid in full by such distribution):
first, to the Lenders to repay all outstanding Tranche A
Facility Loans in full,
second, the balance, if any, to be deposited in the Commercial
Paper Account to be applied to pay in full the Commercial Paper Notes
in order of maturity (with any remaining
<PAGE> 16
amount of the Commercial Paper Notes to be paid in full with Gross
Proceeds or Residual Loans).
No amount of the Residual Value Guarantee shall be applied pursuant to
this Section 5.4(a) to reduce the Tranche B Balance or any portion of the Lessor
Investor Amounts.
(b) In the event that upon the Expiration Date, following the election
by the Lessee of the Remarketing Option in accordance with Article XXII of the
Lease, the outstanding principal amount of the Loans divided by the aggregate
amount of all Advances outstanding pursuant to the Total Commitments (expressed
as a percentage) is less than the Facility Lender Commitment Percentage, the
Residual Value Guarantee shall be distributed by the Agent Bank in the following
order of priority (with the principal amount of the Notes to be reduced by the
amounts distributed pursuant to the first and second priority categories):
first, to the Lenders in an amount sufficient to pay the
outstanding Tranche A Facility Loans in full,
second, the balance, if any, to be deposited in the Commercial
Paper Account to repay in full the Commercial Paper Notes in order of
maturity in an amount sufficient to repay the outstanding Commercial
Paper Notes in full (with any remaining amount of the outstanding
Commercial Paper Notes to be repaid in full with Gross Proceeds or
Residual Loans), provided that the amount deposited in the Commercial
Paper Account pursuant to this clause second, together with the amount
applied under clause first above, shall not exceed an amount equal to
86.6% of the principal amount of the Loans outstanding on the
Expiration Date prior to any application of funds pursuant to Sections
5.3 or 5.5,
third, the balance, if any, to be distributed to the Lessor to
be applied to Certificate Earnings, any overdue interest and to repay
Lessor Investment Amounts.
SECTION 5.5. Sales Proceeds of Remarketing of Properties. Subject to
Section 5.8, any payments received by Agent Bank as Gross Proceeds from the sale
of the Properties sold pursuant to Lessee's exercise of the Remarketing Option
pursuant to Article XXII of the Lease or otherwise sold by Agent Bank, or
following the repayment in full of all of the Facility Loans and the termination
of the Master Assignment, the Facility Lender or Lessor, together with any
payment made by Lessee as a result of an indemnity payment pursuant to Section
14.4, shall be distributed by Agent Bank, Facility Lender or Lessor, as the case
may be, on the Expiration Date (or following the Expiration Date, upon receipt),
in the following order of priority:
first, to the Lenders for application to repay the Tranche B
Facility Loans in full (with a corresponding reduction in the Tranche B
Note),
second, the balance, if any, to be deposited in the Commercial
Paper Account for payment in full of the Commercial Paper Notes in
order of maturity (with any remaining amount of the outstanding
Commercial Paper Notes to be repaid with Residual Loans), provided that
the amount deposited in the Commercial Paper Account pursuant to this
clause second, together with the amount applied under clause first
above, shall not exceed
<PAGE> 17
an amount equal to 13.4% of the principal amount of the Loans
outstanding on the Expiration Date prior to any application of funds
pursuant to Sections 5.3 or 5.4,
third, the balance, if any, to be distributed to the Lessor to
be applied to payment of Certificate Earnings and overdue interest and
to repay the Lessor Investment Amounts,
fourth, the balance, if any, shall be distributed to the
Lessee to the extent permitted by Section 5.13;
provided, however, that if a Loan Agreement Default under Section 5(a) or (e) of
the Loan Agreement or a Loan Agreement Event of Default shall have occurred and
be continuing, any such payments which would otherwise be paid to the Lessor
pursuant to clause third of Section 5.5 shall be instead held in the Cash
Collateral Account until the earliest to occur of (i) the first date thereafter
on which all such Loan Agreement Defaults and Loan Agreement Events of Default
shall have been cured (in which case such payment under clause third shall then
be made), (ii) the date of any acceleration of the Loans (in which case such
payment shall then be applied in the manner contemplated by Section 5.8), or
(iii) the 180th day after the occurrence of such Loan Agreement Default or Loan
Agreement Event of Default (in which case such payment under clause third shall
then be made).
To the extent that any amounts received pursuant to this Section 5.5
relate to a specific Property, the Property Balance relating to such Property
shall be deemed to be reduced by the amounts applied pursuant hereto, with a
corresponding reduction in the principal amount of the Notes.
SECTION 5.6. Supplemental Rent. Subject to Section 5.7, all payments of
Supplemental Rent received by any Agent Bank (excluding any amounts payable
pursuant to the preceding provisions of this Section 5) shall be distributed
promptly by Agent Bank upon receipt thereof to the Persons entitled thereto
pursuant to the Operative Documents. In the event that a Lease Event of Default
has occurred and is continuing, relieving the Lenders of their obligation to
make Liquidity Loans or (in the case of a Material Lease Event of Default)
Residual Loans pursuant to the Liquidity Agreement, unless, upon electing not to
make such Loans, the Agent Bank has immediately demanded payment of the Lease
Balance from the Lessee pursuant to the Lease and, in the event such amount is
not immediately repaid, immediately demanded payment of such amount from the
Guarantor pursuant to the Guaranty, the Facility Lender, acting through the
Issuing and Payment Agent, shall be entitled to receive and to apply to the
Commercial Paper Notes in order of maturity, an amount equal to the sum of (i)
the mandatory prepayment of the Notes required by Section 2.4 of Loan Agreement,
such amount to be funded by a payment of Supplemental Rent pursuant to the
Lease, and (upon payment of such amount by Lessee or the Guarantor) the Lease
Balance shall be reduced by the amount of any such payment, plus any Basic Rent
owed by the Lessee with respect to the Interest Component of the maturing
Commercial Paper Notes giving rise to such mandatory prepayment. In the event
that the Lessee does not fund such amount, the Facility Lender, acting through
the Administrative Agent, shall be entitled to make an immediate demand therefor
in accordance with the terms of Section 7 of the Guaranty. In addition, in the
event of any voluntary prepayment of the principal amount of the
<PAGE> 18
Loans pursuant to Section 2.4 of the Loan Agreement, which amounts are applied
to repay the principal of Liquidity Loans or Commercial Paper Notes, the Lease
Balance shall be reduced by the amount of such payment to the extent funded by
the payment of Supplemental Rent.
SECTION 5.7. Excepted Payments. Notwithstanding any other provision of
this Participation Agreement or the Operative Documents, any Excepted Payment
received at any time by the Agent Bank or any Participant shall, subject to the
penultimate sentence of Section 5.1, be distributed promptly to the Person
entitled to receive such Excepted Payment.
SECTION 5.8. Distribution of Payments after Lease Event of Default or
Loan Agreement Event of Default. (a) Subject to Section 5.6, all payments (other
than Excepted Payments) received and amounts realized by Agent Bank, Facility
Lender or Lessor after a Lease Event of Default has occurred and is continuing,
including proceeds from the sale of any of the Properties or other collateral,
proceeds of any amounts from any insurer or any Governmental Authority in
connection with any Casualty or Condemnation, from the Lessee as payment in
accordance with the Lease, including any payment received from the Lessee
pursuant to Section 17 of the Lease (but excluding Section 17.6 of the Lease),
or subject to subsection (c) below from the Guarantor pursuant to the Guaranty
shall, be paid to the Agent Bank as promptly as possible and shall be
distributed by Agent Bank in the following order of priority:
first, so much of such payment or amount as shall be required
to reimburse Agent Bank, Facility Lender, the Lenders or Lessor for any
tax, expense or other loss incurred by Agent Bank, Facility Lender, the
Lenders or Lessor incurred in connection with the collection of such
amounts (to the extent not previously reimbursed) shall be distributed
to Agent Bank, Facility Lender, the Lenders or Lessor, as applicable
(to be divided amongst the Participants pro rata to the extent
insufficient to satisfy all claims);
second, subject to clause (c) below, so much of such amount as
shall be required to pay in full each Lender's Participant Balance, and
in the case that the amount so to be distributed shall be insufficient
to pay in full as aforesaid, then, pro rata among the Lenders without
priority of one Lender over the other in the proportion that each
Lender's Participant Balance bears to the aggregate Participant
Balances of all of the Lenders, shall be distributed to the Lenders;
third, subject to clause (c) below, the balance, if any, shall
be deposited in the Commercial Paper Account to repay in full the
Interest Component and Principal Component of all outstanding
Commercial Paper Notes;
fourth, so much of such amount or amounts as shall be required
to pay in full the Participant Balance of Lessor shall be distributed
to the Lessor; and
fifth, the balance, if any, of such payment or amounts
remaining thereafter shall be promptly distributed to, or as directed
by, the Lessor, pursuant to the Operative Documents.
<PAGE> 19
(b) During the occurrence and continuance of a Loan Agreement Event of
Default if the Loans have been accelerated, all amounts (other than Excepted
Payments) received or realized by any Participant and otherwise distributable
pursuant to Sections 5.2 and 5.3 shall be distributed as provided for in Section
5.8 (a) above except that if such Loan Agreement Default does not arise out of,
or is not attributable to a Lease Event of Default, clause fifth shall, subject
to Section 5.13, be directed by the Lessee.
(c) Notwithstanding the foregoing, any payments received pursuant to
the Guaranty upon the occurrence and during the continuance of a Lease Event of
Default (except as provided in Section 5.6), shall be divided amongst clause
second and clause third of subsection (a) above pro rata, without priority one
over another.
SECTION 5.9. Other Payments. (a) Except as otherwise provided in
Sections 5.2, 5.3, 5.8 and paragraph (b) below,
(i) any payment received by Agent Bank for which no provision
as to the application thereof is made in the Operative Documents or
elsewhere in this Section 5, and
(ii) all payments received and amounts realized by any
Participant under the Lease or otherwise with respect to the Properties
to the extent received or realized at any time after payment in full of
the Participant Balances of all of the Participants and any other
amounts due and owing to the Lessor, Facility Lender, Lenders or the
Agent Bank,
shall be distributed forthwith by the Agent Bank in the order of priority set
forth in Section 5.3 (in the case of any payment described in clause (i) above)
or in Section 5.8 hereof (in the case of any payment described in clause (ii)
above).
(b) Except as otherwise provided in Sections 5.2, 5.3 and 5.8
hereof and except after a Lease Event of Default has occurred and is continuing,
any payment received by Agent Bank for which provision as to the application
thereof is made in an Operative Document but not elsewhere in this Section 5
shall be distributed forthwith by Agent Bank to the Person and for the purpose
for which such payment was made in accordance with the terms of such Operative
Document.
SECTION 5.10. Casualty and Condemnation Amounts. Any amounts payable to
Agent Bank, Lessor or Facility Lender as a result of a Casualty or Condemnation
pursuant to Section 15.1 of the Lease (but excluding any amounts payable
pursuant to Section 16.2 of the Lease) shall, if no Lease Event of Default
exists, be paid over to the Lessee to reimburse Lessee for any amounts expended
by Lessee for the rebuilding or restoration of the Property to which such
Casualty or Condemnation applied, and any excess proceeds shall be paid in
accordance with the Lease. If a Lease Event of Default exists, then during the
continuance of such Lease Event of Default, all such amounts shall be held by
Agent Bank in the Cash Collateral Account and upon exercise of Agent Bank's
remedies under the Operative Documents shall be distributed pursuant to Section
5.8.
<PAGE> 20
SECTION 5.11. Reduction of Commitment. In the event of reduction of the
Commitment pursuant to the terms of Sections 4.02 or 4.04 of the Liquidity
Agreement (with an automatic and corresponding reduction of the Facility
Lender's Commitments) to an amount which is less than the sum of the Lease
Balance plus the aggregate Property Improvement Costs expended pursuant to the
Construction Agency Agreement for Properties which have not yet reached
Completion Date (the "Invested Amount"), the Lessee and the Construction Agent
shall, to the extent permitted by Section 20 of Lease (and to extent that the
Agent Bank consents to any required decrease of the Permitted Amount) purchase
Properties in accordance with the terms of the Lease to reduce the Invested
Amount to the amount of the Commitment. The Purchase Option Price paid by Lessee
in such event shall be distributed to the Non-Consenting Lenders in accordance
with Section 5.02(b)(ii) of the Liquidity Agreement.
SECTION 5.12. Order of Application. To the extent any payment made to
any Participant pursuant to Sections 5.2, 5.3, 5.4, 5.5 or 5.8 is insufficient
to pay in full the Participant Balance of such Participant, then each such
payment shall first be applied to overdue interest, then to accrued interest and
then to principal.
SECTION 5.13. Remaining Funds. Upon the termination of the Total
Commitments and the Commitments and the payment in full of (i) the Loans, the
Facility Loans, the Commercial Paper Notes, the Lessor Investment Amounts and
all accrued and unpaid Certificate Earnings, and (ii) all amounts owing by the
Lessee or Guarantor to any Person under the Operative Documents, all remaining
moneys in the Cash Collateral Account shall be paid to the Lessee.
SECTION 5.14. Time of Payment. Each payment due from Lessee or
Guarantor under the Operative Documents shall be made in immediately available
funds prior to 2:00 p.m. New York time on the date when due in immediately
available funds consisting of lawful currency of the United States of America,
unless such date shall not be a Business Day, in which case payment shall be
made on the next succeeding Business Day. Payments received after 2:00 p.m. New
York time shall be deemed received on the next succeeding Business Day.
SECTION 6.
CERTAIN INTENTIONS OF THE PARTIES
Anything else herein, in any other Operative Document, or elsewhere to
the contrary notwithstanding, it is the intention of Guarantor, the Lessee, the
Lessor, the Facility Lender, the Lenders and the Agent Bank (and, assuming
enforcement of the Operative Documents in accordance with their terms, it is the
representation and warranty of the Guarantor and the Lessee) 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 for interest on the Loans and Certificate Earnings on the Lessor
Investment Amounts on each Payment Date (to the extent such interest and
Certificate Earnings are not Property Costs with respect to Construction Period
Properties permitted to be funded by Interest Payment Loans or increases to
Lessor Investment Amounts by capitalization thereof during a Construction
Period)
<PAGE> 21
and that such interest amount payable on the Loans shall at all times equal the
aggregate accrued interest on the principal amount of Facility Loans and the
Interest Component of maturing Commercial Paper Notes (with the express
understanding that any interest on the Facility Loans or Interest Component of
maturing Commercial Paper Notes not paid with Lender Basic Rent payments due to
such capitalization of the interest on the Loans will be paid by the proceeds of
new Commercial Paper Notes or Facility Loans); (ii) the amount and timing of
Supplemental Rent payable by the Lessee shall include amounts equal to the
mandatory prepayments of the Loans required pursuant to Section 2.4 of the Loan
Agreement which shall equal the amount of maturing Commercial Paper Notes not
repaid by the issuance of new Commercial Paper Notes or Liquidity Loans to the
extent set forth in Section 5.6; (iii) if the Lessee elects the Purchase Option
or becomes obligated to purchase any Property under the Lease, the Loans, the
Lessor Investment Amounts, all interest, Certificate Earnings and Facility Fees
related to such Property and all other obligations of the Lessee owing to the
Lessor, the Facility Lender, the Lenders and the Agent Bank relating thereto
shall be paid in full by the Lessee so that the aggregate Property Costs
(including amounts owing by the Construction Agent pursuant to the Construction
Agency Agreement with respect to Construction Period Properties) shall at all
times equal the sum of (x) the Facility Loans, plus (y) the Interest Component
and Principal Component of outstanding Commercial Paper Notes (less any
Deposited Funds) plus (z) the Lessor Investment Amounts not previously prepaid;
(iv) if the Lessee properly elects the Remarketing Option with respect to a
Property and provided that no Lease Event of Default has occurred and is
continuing, Lessee shall only be required to pay to the Lessor the Gross
Proceeds of the sale of such Property, the Residual Value Guarantee for such
Property, any amounts payable pursuant to Section 14 and any Rent with respect
to such Property (which aggregate amounts may be less than the Property Balance
under the Lease with respect to such Property) with the express understanding
that any remaining amount of the Commercial Paper Notes shall be repaid with the
proceeds of Facility Loans; (v) upon a Lease Event of Default, the amounts then
due and payable by the Lessee under the Lease shall include the Lease Balance
which shall be sufficient to repay the Commercial Paper Notes, Liquidity Loans
and Lessor Investment Amounts in full; and (vi) the amount of interest accruing
on the Loans for any period shall equal the sum of the interest accruing on the
Liquidity Notes and the Interest Component of the Commercial Paper Notes
outstanding during such period.
SECTION 7.
CONDITIONS PRECEDENT TO
ACQUISITIONS AND ADVANCES
SECTION 7.1. Conditions Precedent -- Documentation. The obligation of
the Lessor to acquire a Property on a Property Closing Date, to make the initial
Advance in respect of such Property on the initial Funding Date with respect to
such Property, and to make any related Lessor Investment Amount available on
such Funding Date, the right and obligation of the Facility Lender to make any
Loans to Lessor on such Funding Date to fund such Advances and the obligation of
the Lenders to make Direct Funding Loans under the Liquidity Agreement, are
subject to satisfaction of the following conditions precedent and to the
conditions precedent set
<PAGE> 22
forth in Section 7.2:
(a) the Agent Bank, the Lessor, and the Facility Lender shall have
received a fully executed counterpart of the Acquisition
Request, appropriately completed by Lessee, in accordance with
Section 3.5, and a fully executed counterpart of the Funding
Request, appropriately completed by Lessee, in accordance with
Section 3.7;
(b) the Environmental Audit for such Property shall have been
delivered to and shall be satisfactory in form and substance
to the Agent Bank and the Lessor;
(c) on or prior to the Property Closing Date for the related
Property, the Agent Bank, the Lessor and the Facility Lender
shall have received an Appraisal of each Property being
acquired on such Property Closing Date reasonably satisfactory
to the Agent Bank and the Lessor;
(d) on or prior to the Property Closing Date for the related
Property, the Lessor shall have received a deed (a "Deed") (in
form and substance appropriate for recording with the
applicable Governmental Authorities, with respect to such
Property (and all Improvements located thereon) being
purchased on such Property Closing Date, conveying fee simple
title to such Property to the Lessor, subject only to
Permitted Exceptions;
(e) on or prior to the Property Closing Date for the related
Property, Lessee and the Lessor shall have delivered to the
Agent Bank and the Facility Lender a Construction Agency
Agreement Supplement with respect to such Property fully
executed by Construction Agent and the Lessor;
(f) on or prior to the Property Closing Date for the related
Property, the Lessee and the Lessor shall have delivered the
original counterpart of the Lease Supplement and Memorandum of
Lease executed by the Lessee and the Lessor with respect to
such Property to the Agent Bank, with a copy to the Facility
Lender;
(g) on or prior to the Property Closing Date for the related
Property, the Lessor shall have delivered to the Agent Bank a
Mortgage executed by the Lessor with respect to such Property;
(h) on or prior to the Property Closing Date for the related
Property, the Lessor shall have delivered to the Agent Bank a
Supplement to the Assignment of Leases executed by the Lessor
with respect to such Property;
(i) on or prior to the Property Closing Date for the related
Property, the Lessee shall have delivered to the Agent Bank a
consent to the Supplement to the Assignment of Leases executed
by the Lessee with respect to such Property;
<PAGE> 23
(j) on or prior to the Property Closing Date for the Property, the
Agent Bank, the Lessor and the Facility Lender shall have
received an opinion of counsel, which counsel and whose
opinion shall be reasonably satisfactory to the Agent Bank and
the Lessor and qualified with respect to the laws of the
jurisdiction in which such Property is located as to the
matters set forth in Exhibit E attached hereto and made a part
hereof by this reference;
(k) on or prior to the Property Closing Date for the related
Property, the Facility Lender shall have delivered to the
Agent Bank a Supplement to the Master Assignment assigning to
Agent Bank, for the benefit of the Lenders, substantially all
of the rights of Lessor to the documents described in
subparagraphs (e) through (i) and a consent of the Lessee and
Lessor to such assignment;
(l) on or prior to the Property Closing Date for the related
Property, the Lessee shall deliver, or cause to be delivered,
to the Agent Bank and the Lessor an ALTA extended owner's
(with respect to Lessor) and lender's (with respect to Agent
Bank) title insurance commitment covering such Property in
favor of the Agent Bank, the Facility Lender and the Lessor
reasonably satisfactory in form and substance to the Agent
Bank and Lessor, with customary coverage over the general
exceptions to such policy and customary endorsements issued by
the title company and evidencing the first priority status of
the Mortgage, subject only to the exceptions noted therein;
(m) on or prior to the Property Closing Date for the related
Property, the Agent Bank shall have received evidence
satisfactory to it that each of the Deed, the Memorandum of
Lease, the Supplement to the Assignment of Leases, the Consent
to the Assignment, the Mortgage, the Supplement to Master
Assignment and the consent to Master Assignment delivered on
any Property Closing Date shall have been or are being
recorded with the appropriate Governmental Authorities in the
order in which such documents are listed in this clause, and
the UCC Financing Statements with respect to the Property
being acquired shall have been or are being filed with the
appropriate Governmental Authorities, and that all of the
recording fees, filing fees, transfer taxes and recording
taxes with respect to the foregoing have been paid; and
(n) Lessee shall have delivered to the Agent Bank, the Lessor and
the Facility Lender its duly completed Property Closing
Certificate substantially in the form of Exhibit F attached
hereto and made a part hereof by this reference, as to the
satisfaction of the conditions precedent set forth in Section
7.2.
SECTION 7.2. Further Conditions Precedent. The obligation of the Lessor
to acquire a Property on a Property Closing Date, to make an Advance on a
Funding Date, to make available any related Lessor Investment Amount on such
Funding Date, the right and obligation of Facility Lender to make any related
Loans on such Funding Date to fund such Advances and the Lenders' obligation to
make Direct Funding Loans under the Liquidity Agreement, are subject to
satisfaction of the following conditions precedent and to satisfaction on or
before the related Property Closing
<PAGE> 24
Date of the conditions precedent set forth in Section 7.1:
(a) on such date the representations and warranties of Guarantor,
Lessee, contained herein 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 and warranties relate solely to an
earlier date, in which case such representations and
warranties shall have been true and correct in all material
respects as of such earlier date;
(b) the other parties hereto shall have performed their respective
agreements contained herein and in the other Operative
Documents to be performed by them on or prior to such date;
(c) there shall not have occurred and be continuing any Facility
Agreement Default or Facility Agreement Event of Default and
no Facility Agreement Default or Facility Agreement Event of
Default will have occurred after giving effect to the
acquisition of Land requested by such Acquisition Request
and/or the making of the Advance requested by such Funding
Request, as the case may be;
(d) the Available Commitments, in the reasonable judgment of the
Construction Agent will be sufficient to complete the
Improvements on the Construction Period Properties and the
Advances being made and which have been made with respect to
the Construction Period Properties will not exceed the Maximum
Property Costs for the Properties; and
(e) the Estimated Completion Date of such Property shall not be
after the last day of the Commitment Period or beyond the
Outside Completion Date.
Notwithstanding the foregoing, as more specifically set forth in the Liquidity
Agreement, the Facility Lender may, in compliance with the Liquidity Agreement,
continue to issue Commercial Paper Notes in an amount sufficient to repay the
Principal Component of maturing Commercial Paper Notes and Facility Loans unless
a Material Lease Event of Default shall have occurred and be continuing.
SECTION 8.
COMPLETION DATE CONDITIONS
The occurrence of the Completion Date with respect to any Property
shall be subject to the fulfillment to the reasonable satisfaction of, or waiver
by, the Agent Bank and the Lessor of the following conditions precedent:
(a) Construction Completion. The construction of the Improvements
shall have been completed substantially in accordance with the
Plans and Specifications for such Property and all applicable
Requirements of Law, and such
<PAGE> 25
Property shall be ready for occupancy and operation.
Substantially all fixtures, furniture, furnishings, equipment
and other property contemplated under such Plans and
Specifications to be incorporated into or installed in such
Property shall have been incorporated or installed, free and
clear of all Liens except for Permitted Liens.
(b) Lessee Certification. Lessee shall have furnished the Lessor,
the Facility Lender and the Agent Bank with a certification of
Lessee (substantially in the form of Exhibit H attached hereto
and made a part hereof by this reference) to the effect that:
(i) all amounts owing to third parties for the
construction of the Improvements have been paid in
full (or are being contested in good faith or held
until completion of certain punch list items and the
amount being contested or held back does not exceed
ten percent (10%) of the related Property Cost), and
no litigation or proceedings are pending, or to the
best of Lessee's knowledge, are threatened, against
such Property or Lessee which could have a Material
Adverse Effect;
(ii) a certificate of occupancy (temporary or permanent)
and all other material Governmental Action required
for the construction and operation of such Property
have been obtained and are in full force and effect;
(iii) such Property has available all services of public
facilities and other utilities necessary for use and
operation of the Facility and the other Improvements
for their intended purposes, including (as
applicable), without limitation, adequate water, gas
and electrical supply, storm and sanitary sewerage
facilities, telephone, other required public
utilities and means of access between the Facility
and public highways for pedestrians and motor
vehicles;
(iv) all material agreements, easements and other rights,
public or private, which are necessary to permit the
lawful use and operation of such Property as the
Lessee intends to use such Property under the Lease
and which are necessary to permit the lawful intended
use and operation of all then intended utilities,
driveways, roads and other means of egress and
ingress to and from the same have been obtained and
are in full force and effect and Lessee has no actual
knowledge of any pending modification or cancellation
of any of the same; and the use of such Property
substantially as intended does not depend on any
variance, special exception or other municipal
approval, permit or consent that has not been
obtained and is in full force and effect for its
continuing legal use;
(v) all of the requirements and conditions set forth in
Section 8(a) hereof have been completed and
fulfilled;
(vi) no changes or modifications were made to the related
Plans and
<PAGE> 26
Specifications after the related Property Closing
Date that have had a material adverse effect on the
current value, residual value, operation, use or
useful life of such Property; and
(vii) upon the execution and delivery of a Lease Supplement
with respect to the Improvements, Lessee will have
unconditionally accepted such Improvements subject to
such Lease Supplement and will have good and
marketable title to a valid and subsisting leasehold
interest in the Property, subject only to Permitted
Exceptions.
(c) Lease Supplement. Lessee and Lessor shall have executed and
delivered to the Agent Bank a Lease Supplement with respect to
such Improvements.
SECTION 9.
REPRESENTATIONS
SECTION 9.1. Representations of the Lessor. Lessor represents and
warrants to each of the other parties hereto as follows:
(a) Due Organization; etc. It is a limited partnership duly
organized and validly existing and in
good standing under the laws of the State of Delaware and has
the power and authority to enter into and perform its
obligations under the Operative Documents to which it is or
will be a party and each other agreement, instrument and
document to be executed and delivered by it in connection with
or as contemplated by each such Operative Document to which it
is or will be a party. It is duly qualified to transact
business in every jurisdiction where the failure to qualify
would have a material adverse effect on its ability to perform
its obligations under the Operative Documents as contemplated
on the Initial Closing Date.
(b) Authorization; No Conflict. The execution, delivery and
performance of each Operative Document to which it is or will
be a party, has been duly authorized by all necessary action
on its part and on the part of its general partner and neither
the execution and delivery thereof, nor the consummation of
the transactions contemplated thereby, nor compliance by it
with any of the terms and provisions thereof (i) does or will
require any approval or consent of any trustee or holders of
any of its indebtedness or obligations or those of its general
partner, (ii) does or will contravene any current law,
governmental rule or regulation relating to it or its general
partner, (iii) does or will contravene or result in any breach
of or constitute any default under, or result in the creation
of any Lien upon any of it or its general partner's property
under its partnership agreement or any Contractual Obligation
of the Lessor or its general partner, or (iv) does or will
require any Governmental Action by any Governmental Authority.
<PAGE> 27
(c) Enforceability; etc. Each Operative Document to which the
Lessor is or will be a party has been, or on or before any
Closing Date on which such Operative Document is to be signed
will be, duly executed and delivered by the Lessor and each
such Operative Document to which the Lessor is a party
constitutes, or upon execution and delivery will constitute,
assuming the due authorization, execution and delivery hereof
and thereof by the other parties hereto and thereto, a legal,
valid and binding obligation enforceable against the Lessor in
accordance with the terms thereof, except as such
enforceability may be limited or denied by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or similar
laws effecting creditors' rights and the enforcement of
debtors' obligations generally, and (ii) general principles of
equity, regardless of whether enforcement is pursuant to a
proceeding in equity or at law.
(d) Litigation. There is no action or proceeding pending or, to
Lessor's knowledge, threatened to which it or, to the best of
its knowledge, its general partner is or will be a party,
before any Governmental Authority that, if adversely
determined, could reasonably be expected to have a material
adverse effect on the property, operations or financial
condition of the Lessor or, to the best of its knowledge, its
general partner.
(e) Assignment. It has not assigned or transferred any of its
right, title or interest in or under the Lease, the Guaranty
or the Construction Agency Agreement except in accordance with
the Operative Documents.
(f) Defaults. No Default or Event of Default under the Operative
Documents attributable to it has occurred and is continuing.
(g) Securities Act. Neither the Lessor nor any Person authorized
by the Lessor to act on its behalf has offered or sold any
interest in the Lessor Investment Amounts or the Notes, or in
any similar security relating to a Property, or in any
security the offering of which for the purposes of the
Securities Act would be deemed to be part of the same offering
as the offering of the aforementioned securities to, or
solicited any offer to acquire any of the same from, any
Person other than the parties hereto and neither the Lessor
nor any Person authorized by the Lessor to act on its behalf
will take any action which would subject the issuance or sale
of any interest in the Lessor Investment Amounts or the Notes
to the provisions of Section 5 of the Securities Act or
require the qualification of any Operative Document under the
Trust Indenture Act of 1939, as amended.
(h) Chief Place of Business. The Lessor's chief place of business,
chief executive office and office where the documents,
accounts and records relating to the transactions contemplated
by this Participation Agreement and each other Operative
Document are kept are located at 12 East 49th Street, New
York, New York 10017.
(i) Federal Reserve Regulations. The Lessor is not engaged
principally in, and does not
<PAGE> 28
have as one of its important activities, the business of
extending credit for the purpose of purchasing or carrying any
margin stock (within the meaning of Regulation U of the
Board).
(j) Investment Company Act. The Lessor is not an "investment
company" or a company controlled by an "investment company"
within the meaning of the Investment Company Act.
(k) General Partner. Credit Suisse is the sole general partner of
the Lessor.
SECTION 9.2. Representations of the Guarantor and the Lessee. Each of
the Guarantor and the Lessee represents and warrants to each of the other
parties hereto that:
(a) Corporate Existence and Power. Each of the Guarantor and the
Lessee is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its
incorporation, is duly qualified to"transact business in every
jurisdiction where each Property is located (in the case of
Lessee) and where the failure to so qualify would reasonably
be expected to have or cause a Material Adverse Effect, and
has all corporate powers and all governmental licenses,
authorizations, consents and approvals required to carry on
its business as now conducted, except where the failure to
possess any such licenses, authorizations, consents, or
approvals would not reasonably be expected to have or cause a
Material Adverse Effect.
(b) Corporate and Governmental Authorization; No Contravention.
The execution, delivery and performance by each of the
Guarantor and the Lessee of this Participation Agreement and
the other Operative Documents to which it is a party (i) are
within its corporate powers, (ii) have been duly authorized by
all necessary corporate action, (iii) require no Governmental
Action by or in respect of or filing with, any Governmental
Authority, (iv) do not contravene, or constitute a default
under, any Applicable Law or of the certificate of
incorporation or by-laws of the Guarantor, Lessee, or of any
material agreement, judgment, injunction, order, decree or
other instrument binding upon the Guarantor, the Lessee or any
of the Guarantor's other Significant Subsidiaries, and (v) do
not result in the creation or imposition of any Lien on any
asset of the Guarantor, Lessee or any of the Guarantor's other
Significant Subsidiaries.
(c) Binding Effect. This Participation Agreement constitutes a
valid and binding agreement of each of the Guarantor and the
Lessee enforceable in accordance with its terms, and the other
Operative Documents to which it is, or will become a party,
when executed and delivered in accordance with this
Participation Agreement, will constitute valid and binding
obligations of the Guarantor or Lessee enforceable in
accordance with their respective terms, provided that the
enforceability hereof and thereof is subject in each case to
general principles of equity and to bankruptcy, insolvency and
similar laws affecting the enforcement of creditors' rights
generally.
<PAGE> 29
(d) Financial Information. The consolidated balance sheet of the
Guarantor and its Consolidated Subsidiaries as of January 28,
1996 and the related consolidated statements of income,
stockholders' equity and cash flows for the Fiscal Year then
ended, reported on by KPMG Peat Marwick, LLP, copies of which
have been delivered to each of the Lenders and the Lessor
fairly present, in conformity with GAAP, the consolidated
financial position of the Guarantor and its Consolidated
Subsidiaries as of such date and their consolidated results of
operations and cash flows for such period.
(e) No Litigation. There is no action, suit or proceeding pending,
or to the knowledge of the Guarantor or Lessee, threatened,
against or affecting the Guarantor, Lessee or any of their
other Subsidiaries, before any court or arbitrator or any
Governmental Authority which would reasonably be expected to
have or cause a Material Adverse Effect.
(f) Compliance with ERISA. (i) The Guarantor and each member of
the Controlled Group have fulfilled their obligations under
the minimum funding standards of ERISA and the Code with
respect to each Plan and are in compliance in all material
respects with the presently applicable provisions of ERISA and
the Code, and have not incurred any liability to the PBGC or a
Plan under Title IV of ERISA.
(ii) Neither the Guarantor nor to the best of
Guarantor's knowledge and belief any member of the Controlled
Group is or ever has been obligated to contribute to any
Multiemployer Plan.
(g) Compliance with Laws; Payment of Taxes. The Guarantor, the
Lessee and each of their other Subsidiaries are in compliance
with all applicable Requirements of Law, except where (i) such
compliance is being contested in good faith through
appropriate proceedings or (ii) the failure to be in
compliance would not reasonably be expected to have or cause a
Material Adverse Effect. There have been filed on behalf of
the Guarantor and its Subsidiaries all Federal, state and
local income, excise, property and other tax returns which are
required to be filed by them and all taxes shown due and owing
by such returns have been paid. The charges, accruals and
reserves on the books of the Guarantor and its Subsidiaries in
respect of taxes or other governmental charges are, in the
opinion of the Guarantor, adequate. United States federal
income tax returns of the Guarantor and its Subsidiaries have
been examined and closed through the fiscal year ended
February 3, 1991.
(h) Significant Subsidiaries. Each of the Guarantor's Significant
Subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of
incorporation, is duly qualified to transact business in every
jurisdiction where the failure to qualify would reasonably be
expected to have or cause a Material Adverse Effect, and has
all corporate powers and all governmental licenses,
authorizations, consents and approvals required to carry on
its business
<PAGE> 30
substantially as now conducted, except where the failure to
possess any such licenses, authorizations, consents or
approvals would not reasonably be expected to have or cause a
Material Adverse Effect.
(i) Investment Company Act. Neither the Guarantor, the Lessee nor
any of the other Subsidiaries is an "investment company"
within the meaning of the Investment Company Act of 1940, as
amended.
(j) Public Utility Holding Company Act. Neither the Guarantor, the
Lessee nor any of the other Subsidiaries is a "holding
company", or a "subsidiary company" of a "holding company", or
an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company", as such terms are defined in
the Public Utility Holding Company Act of 1935, as amended.
(k) Ownership of Property; Liens. Each of the Guarantor and its
Significant Subsidiaries has title to its properties
sufficient for the conduct of its business, and none of such
property is subject to any Lien except Liens permitted by the
Operative Documents.
(l) No Default. Neither the Guarantor nor any of its Consolidated
Subsidiaries is in default under or with respect to any
agreement, instrument or undertaking to which it is a party or
by which it or any of its property is bound which could
reasonably be expected to have or cause a Material Adverse
Effect. No Default or Event of Default has occurred and is
continuing.
(m) Full Disclosure. All written information heretofore furnished
by the Guarantor or the Lessee to the Agent Bank, the
Placement Agent, the Issuing and Paying Agent, any Lender or
Lessor for purposes of or in connection with this
Participation Agreement or any transaction contemplated hereby
is, and all such information hereafter furnished by the
Guarantor or the Lessee to the Agent Bank, or any Lender or
Lessor will be, true and correct in all material respects or
based on what the Guarantor or the Lessee in good faith
believes to be reasonable estimates on the date as of which
such information is stated or certified.
(n) Environmental Matters. (i) Neither the Guarantor nor any
Subsidiary is subject to any claim under the Environmental
Laws which could have or cause a Material Adverse Effect and
neither the Guarantor nor any Subsidiary has been designated
as a potentially responsible party under CERCLA or under any
state statute similar to CERCLA. None of the Properties has
been identified on any current or proposed (x) National
Priorities List under 40 C.F.R. ss. 300, (y) CERCLIS list or
(z) any list arising from a state statute similar to CERCLA.
(ii) No Hazardous Substances have been or are being
used, produced, manufactured, processed, treated, recycled,
generated, stored, disposed of, managed or otherwise handled
at, or shipped or transported to or from the Properties or are
<PAGE> 31
otherwise present at, on, in or under the Properties, or, to
the best of the knowledge of the Guarantor and Lessee, at or
from any adjacent site or facility, except for Hazardous
Substances, such as cleaning solvents, pesticides and other
materials used, produced, manufactured, processed, treated,
recycled, generated, stored, disposed of, managed, or
otherwise handled in minimal amounts in the ordinary course of
business in compliance with all applicable Environmental Laws.
(iii) Each of the Guarantor and each of its
Subsidiaries and Affiliates, (x) has procured all permits and
authorizations required under the Environmental Laws necessary
for the conduct of its business, and (y) is in compliance with
all Environmental Laws in connection with the operation of the
Properties and the Guarantor's and each of its Subsidiary's
and Affiliate's, respective businesses, in each case set forth
in either of clause (x) or (y) where the failure to procure or
non-compliance with which would reasonably be expected to have
or cause a Material Adverse Effect.
(o) Capital Stock. All Capital Stock, debentures, bonds, notes and
all other securities of the Guarantor and its Subsidiaries
presently issued and outstanding are validly and properly
issued in accordance with all Applicable Laws, including, but
not limited to, the "Blue Sky" laws of all applicable states
and the federal securities laws, except where the failure to
have complied with such laws would not reasonably be expected
to have or cause a Material Adverse Effect. The issued shares
of Capital Stock of the Lessee are owned by the Guarantor free
and clear of any Lien or adverse claim. At least a majority of
the issued shares of capital stock of each of the Guarantor's
other Significant Subsidiaries is owned by the Guarantor free
and clear of any Lien or adverse claim.
(p) Margin Stock. Neither the Guarantor nor any of its
Subsidiaries is engaged principally, or as one of its
important activities, in the business of purchasing or
carrying any Margin Stock, and no part of the proceeds of any
Advance will be used for any purpose, including, without
limitation, to purchase or carry any Margin Stock or to extend
credit to others for the purpose of purchasing or carrying any
Margin Stock, which violates, or which is inconsistent with,
the provisions of Regulation G, Regulation T, Regulation U or
Regulation X.
(q) Insolvency. After giving effect to the execution and delivery
of the Operative Documents, the Guarantor will not be
"insolvent," within the meaning of such term as used in
O.C.G.A. ss. 18-2-22 or as defined in ss. 101 of Title 11 of
the United States Code or Section 2 of the Uniform Fraudulent
Transfer Act, or any other applicable state law pertaining to
fraudulent transfers, as each may be amended from time to
time, or be unable to pay its debts generally as such debts
become due, or have an unreasonably small capital to engage in
any business or transaction, whether current or contemplated.
(r) Securities Act. Neither the Guarantor, the Lessee nor any
Person authorized by
<PAGE> 32
either of the Guarantor or Lessee to act on its behalf has
offered or sold any interest in the Notes, the Commercial
Paper Notes or in any similar security relating to a Property,
or in any security the offering of which for the purposes of
the Securities Act would be deemed to be part of the same
offering as the offering of the aforementioned securities to,
or solicited any offer to acquire any of the same from, any
Person other than an "Accredited Investor" (as such term is
defined in the Securities Act).
(s) Commercial Paper Notes. All Commercial Paper Notes shall
constitute exempt securities under Section 4(2) of the
Securities Act, no registration of the Commercial Paper Notes
under the Securities Act, nor qualification of an indenture
with respect to the Commercial Paper Documents under the Trust
Indenture Act of 1939, as amended, will be required in
connection with the offer, issuance or sale of the Commercial
Paper Notes.
SECTION 9.3. Representations of Guarantor and Lessee on Property
Closing Date. Each of the Guarantor and the Lessee hereby represents and
warrants as of each Property Closing Date, as follows:
(a) Representations. The representations and warranties of the
Guarantor, Lessee and the Construction Agent and, to the
knowledge of Guarantor and Lessee, the Facility Lender, set
forth in the Operative Documents are true and correct in all
material respects. The Guarantor, Lessee and the Construction
Agent, and, to the knowledge of the Guarantor and the Lessee,
the Facility Lender are in compliance with their respective
obligations under the Operative Documents and there exists no
Default or Event of Default under any of the Operative
Documents. No Default or Event of Default will occur under any
of the Operative Documents as a result of, or after giving
effect to, the Advance requested by the Funding Request on
such Property Closing Date.
(b) Property. The Property then being acquired consists of (i)
Land on which Facilities will be constructed pursuant to the
Construction Agency Agreement, and (ii) existing Improvements
on such Land. Such Property is located in the continental
United States or Canada.
(c) Title. Upon the acquisition by purchase of such Property on
such Property Closing Date, the Lessor will have good and
marketable title to such Property in fee simple, subject only
to Permitted Exceptions. The Lessor will at all times have
good and marketable title to all Improvements located on such
Property, subject only to Permitted Liens.
(d) Insurance. Lessee has obtained insurance coverage covering
such Property or is self-insured in a manner which meets the
requirements of the Construction Agency Agreement and Article
XIV of the Lease, and such coverage is in full force and
effect.
<PAGE> 33
(e) Lease. Upon the execution and delivery of a Lease Supplement
to the Lease and Memorandum of Lease, (i) Lessee will have
unconditionally accepted the Land and existing Improvements
subject to such Lease Supplement and will have good and
marketable title to a valid and subsisting leasehold interest
in the Land and existing Improvements, subject only to
Permitted Exceptions, (ii) no offset will exist with respect
to any Rent or other sums payable under the Lease and (iii) no
Rent under the Lease will have been prepaid.
(f) Protection of Interests. Upon recordation, each Mortgage and
each Supplement to the Assignment of Leases delivered on such
Property Closing Date will constitute a valid and perfected
first Lien on such Property and all of the Lessor's right,
title and interest in and to the Improvements located thereon
or to be constructed thereon following the Property Closing
Date subject only to Permitted Exceptions.
(g) Property as Improved. The Property as improved in accordance
with the Plans and Specifications will comply in all material
respects with all Requirements of Law (including, without
limitation, all zoning and land use laws and Environmental
Laws) and Insurance Requirements. The Plans and Specifications
have been or will be prepared in all material respects in
accordance with applicable Requirements of Law (including,
without limitation, all applicable Environmental Laws and
building, planning, zoning and fire codes) and upon completion
of the related Facility in accordance with the Plans and
Specifications, such Facility and the other Improvements on
the Property will not encroach in any manner onto any
adjoining land (except as permitted by express written
easements) and such Facility and other Improvements and the
use thereof by Lessee and its agents, assignees, employees,
invitees, lessees, licensees and tenants will comply in all
respects with all applicable material Requirements of Law
(including, without limitation, all applicable Environmental
Laws and building, planning, zoning and fire codes).
(h) Flood Hazards. No portion of any Property being acquired by
the Lessor on such Property Closing Date is located in an area
identified as a special flood hazard area by the Federal
Emergency Management Agency or other applicable agency, or if
any such 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 Section XI
of the Lease and in accordance with the National Flood
Insurance Act of 1968, as amended.
(i) Environmental Matters. The Property is in compliance with all
Environmental Laws and there neither exists nor has existed
any Hazardous Condition, Hazardous Activity, Release,
threatened Release or violation of Environmental Law which
could give rise to an Environmental Claim against Lessee or
any Indemnitee with respect to such Property.
<PAGE> 34
(j) Conditions Precedent. All conditions precedent to be performed
and delivered by Lessee contained in this Participation
Agreement and in the other Operative Documents relating to the
acquisition of such Property by the Lessor have been satisfied
in full.
SECTION 9.4. Additional Representations of Guarantor and Lessee. Each
of Guarantor and the Lessee hereby represents and warrants as of each Funding
Date on which an Advance is made as follows:
(a) Representations. The representations and warranties of the
Guarantor, Lessee and Construction Agent and, to the knowledge
of Guarantor and Lessee, the Facility Lender, set forth in the
Operative Documents (including the representations and
warranties set forth in Sections 9.2 and 9.3) are true and
correct in all material respects on and as of such Funding
Date. The Guarantor, Lessee and Construction Agent and, to the
knowledge of Guarantor and Lessee, the Facility Lender, are in
compliance with their respective obligations under the
Operative Documents and there exists no Default or Event of
Default under any of the Operative Documents. No Default or
Event of Default will occur under any of the Operative
Documents as a result of, or after giving effect to, the
Advance requested by the Funding Request on such date.
(b) Improvements. Construction of the Improvements to date has
been performed in a good and workmanlike manner, substantially
in accordance with the Plans and Specifications and in
compliance in all material respects with all Insurance
Requirements and Requirements of Law.
SECTION 9.5. Representations of Facility Lender. Facility Lender
represents and warrants to each of the other parties hereto that:
(a) Corporate Status. It (i) is a duly organized and validly
existing corporation in good standing under the laws of the
state of its incorporation and has the corporate power and
authority to own its property and assets and to transact the
business in which it is engaged and (ii) has duly qualified
and is authorized to do business and is in good standing in
all jurisdictions where it is required to be so qualified and
where the failure to be so qualified could have a material
adverse effect on the property, operations or financial
condition of Facility Lender.
(b) Corporate Power and Authority. It 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, has taken all necessary corporate action to
authorize the execution, delivery and performance of the
Operative Documents to which it is or will be a party, has
duly executed and, assuming the due authorization, execution
and delivery hereof and thereof by the other parties hereto
and thereto, delivered each Operative Document required to be
executed and delivered' by it and each such Operative Document
constitutes a legal, valid and binding obligation enforceable
<PAGE> 35
against it in accordance with its terms, except as such
enforceability may be limited or denied by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or similar
laws effecting creditors' rights and the enforcement of
debtors' obligations generally, and (ii) general principles of
equity, regardless of whether enforcement is pursuant to a
proceeding in equity or at law.
(c) No Violation. Neither the execution, delivery and performance
by it of the Operative Documents to which it is or will be a
party nor compliance with the terms and provisions thereof,
nor the consummation of the transactions contemplated therein
(i) will contravene any Applicable Law, or (iii) will violate
any provision of its certificate of incorporation or by-laws.
(d) No Other Activities. It does not hold any assets, conduct any
business nor is it party to any Contractual Obligation except
as expressly contemplated by the Operative Documents.
(e) Commercial Paper Documents. Each of the representations and
warranties of the Facility Lender set forth in the Commercial
Paper Documents are true and correct in all material respects.
SECTION 9.6. Representations and Warranties of the Agent Bank and the
Lenders. Each of the Agent Bank and the Lenders hereby represents and warrants
to each of the other Participants that:
(a) Corporate Existence and Power. It is, respectively, a banking
association or corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
organization and has all corporate powers and all material
governmental licenses, authorizations and approvals required
to perform its obligations hereunder.
(b) Binding Effect. This Participation Agreement and each other
Operative Document to which the Agent Bank or any Lender is a
party constitutes a valid and binding agreement of it
enforceable against it in accordance with its terms, provided
that the enforceability hereof is subject in each case to
general principles of equity and to bankruptcy, insolvency and
similar laws affecting the enforcement of creditors' rights
generally.
SECTION 10.
PAYMENT OF CERTAIN EXPENSES
Guarantor and Lessee agree, jointly and severally, for the benefit of
the Lessor, the Facility Lender, the Agent Bank, the Issuing and Paying Agent,
the Placement Agent and the Lenders, to:
<PAGE> 36
SECTION 10.1. Transaction Expenses. (a) On the Initial Closing Date (if
statements are received in satisfactory form within a reasonable time prior to
such date and in any event within thirty (30) day+s after receipt thereof), pay,
or cause to be paid, all reasonable fees, expenses and disbursements of the
respective counsel (including local counsel) for each of the Lessor, the
Facility Lender, the Issuing and Paying Agent, the Placement Agent and the Agent
Bank in connection with the transactions contemplated by the Operative Documents
and incurred in connection with such Initial Closing Date, including all
Transaction Expenses (arising from the Initial Closing Date), and all other
expenses in connection with such Initial Closing Date, including, without
limitation, all expenses relating to title insurance and all fees, taxes and
expenses for the recording, registration and filing of documents; and
(b) On each Property Closing Date and Funding Date (if statements are
received in satisfactory form within a reasonable time prior to such date and in
any event within thirty (30) days after receipt thereof), pay, or cause to be
paid, all reasonable fees, expenses and disbursements of the respective counsel
(including local counsel) for each of the Lessor, the Facility Lender, the
Issuing and Paying Agent, the Placement Agent and the Agent Bank in connection
with the transactions contemplated by the Operative Documents and incurred in
connection with such Property Closing Date or Funding Date, including all
Transaction Expenses (arising from such Property Closing Date or Funding Date),
and all other expenses in connection with such Property Closing Date or Funding
Date, including, without limitation, all expenses relating to all Environmental
Audits, each Appraisal, title insurance policies, and all fees, taxes and
expenses for the recording, registration and filing of documents.
SECTION 10.2. Brokers' Fees and Stamp Taxes. 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 10.3. Certain Fees and Expenses. Pay or cause to be paid (i)
any and all Transaction Expenses of the Facility Lender (or any successor
(including, without limitation, Transaction Expenses by or due to Agent Bank,
Facility Lender or Lenders pursuant to Sections 3.07, 3.09 and 4.01 of the
Liquidity Agreement) to the Facility Lender), the Lessor, the Lenders, the
Issuing and Paying Agent, the Placement Agent and the Agent Bank, (ii) all
Transaction Expenses incurred by the Facility Lender, the Agent Bank, the
Lenders or the Lessor in entering into any future amendments or supplements with
respect to any of the Operative Documents, whether or not such amendments or
supplements are ultimately entered into, or giving or withholding of waivers of
consents hereto or thereto, which have been requested by Lessee or Guarantor,
(iii) all Transaction Expenses incurred by Lessor, the Agent Bank, the Facility
Lender or any Lender in connection with a transfer made pursuant to Section 13.2
of this Participation Agreement, and (iv) all Transaction Expenses incurred by
the Lessor, the Facility Lender, the Lenders or the Agent Bank in connection
with any Property Closing Date, Completion Date or any purchase of any Property
by the Lessee or other Person pursuant to Articles XVI, XVII, XX or XXII of the
Lease and any accompanying purchase by the Construction Agent of any incompleted
Improvements thereon pursuant to the Construction Agency Agreement.
<PAGE> 37
SECTION 11.
OTHER COVENANTS AND AGREEMENTS
SECTION 11.1. Covenants of Guarantor and Lessee. Guarantor and Lessee
hereby agree that so long as this Participation Agreement is in effect:
(a) Information. The Guarantor will deliver to the Agent Bank (in
sufficient copies for each of the Lenders with respect to
deliveries pursuant to clauses (i), (ii), (iii), (v) and (vi)
below) and Lessor:
(i) as soon as available and in any event within ninety
(90) days after the end of each Fiscal Year, a
consolidated balance sheet of the Guarantor and its
Subsidiaries as of the end of such Fiscal Year and
the related consolidated statements of income,
stockholders' equity and cash flows for such Fiscal
Year, setting forth in each case in comparative form
the figures for the previous Fiscal Year, all
certified by KPMG Peat Marwick, LLP or other
independent public accountants of nationally
recognized standing, with such certification to be
free of material exceptions and qualifications not
reasonably acceptable to the Required Lenders;
(ii) as soon as available and in any event within
forty-five (45) days after the end of each of the
first three (3) Fiscal Quarters of each Fiscal Year,
a consolidated balance sheet of the Guarantor and its
Consolidated Subsidiaries as of the end of such
Fiscal Quar