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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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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
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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
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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
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EXHIBITS
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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
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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;
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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").
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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
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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
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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),
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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
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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.
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(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:
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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 Quarter and the related statement of income
and statement of cash flows for such Fiscal Quarter
and for the portion of the Fiscal Year ended at the
end of such Fiscal Quarter, setting forth in each
case in comparative form the figures for the
corresponding Fiscal Quarter (Fiscal Year only in the
case of balance sheets) and the corresponding portion
of the previous Fiscal Year, all certified (subject
to the absence of footnotes and to normal year-end
audit adjustments) as to fairness of presentation,
GAAP and consistency by the chief financial officer
or the chief accounting officer of the Guarantor;
(iii) simultaneously with the delivery of each set of
financial statements referred to in paragraphs (i)
and (ii) above, a certificate, substantially in the
form of Exhibit P (a "Compliance Certificate"), of
the chief financial officer or the chief accounting
officer of the Guarantor (x) setting forth in
reasonable detail the calculations required to
establish whether the Guarantor was in compliance
with the requirements of paragraphs (c) and (k) on
the date of such financial statements and (y) stating
whether any Event of Default exists on the date of
such certificate and, if any Event of Default then
exists, setting forth the details thereof and the
action which the Guarantor or Lessee is taking or
proposes to take with respect thereto;
<PAGE> 38
(iv) within five (5) Business Days after any of the chief
executive, chief financial, chief operating, chief
legal or chief accounting officer of the Guarantor or
Lessee becomes aware of the occurrence of any Event
of Default, a certificate of the chief financial
officer or the chief accounting officer of the
Guarantor or Lessee setting forth the details thereof
and the action which the Guarantor or Lessee is
taking or proposes to take with respect thereto;
(v) promptly upon the mailing thereof to the stockholders
of the Guarantor generally, copies of all financial
statements, reports and proxy statements so mailed;
(vi) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits
thereto and any registration statements on Form S-8
or its equivalent) and annual, quarterly or monthly
reports which the Guarantor shall have filed with the
Securities and Exchange Commission;
(vii) if and when any member of the Controlled Group (i)
gives or is required to give notice to the PBGC of
any "reportable event" (as defined in Section 4043 of
ERISA) with respect to any Plan which might
constitute grounds for a termination of such Plan
under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to
give notice of any such reportable event, a copy of
the notice of such reportable event given or required
to be given to the PBGC; (ii) receives notice of
complete or partial withdrawal liability under Title
IV of ERISA, a copy of such notice; or (iii) receives
notice from the PBGC under Title IV of ERISA of an
intent to terminate or appoint a trustee to
administer any Plan, a copy of such notice; and
(viii) from time to time such additional information
regarding the financial position or business of the
Guarantor or any of its Subsidiaries or any of the
Properties, as the Agent Bank, at the request of any
Lender, or Lessor may reasonably request, including
without limitation, information regarding the
Property Balance, Property Acquisition Costs,
Property Improvement Costs and the related amount of
the Loans and Lessor Investment Amounts allocated to
each Property .
(b) Inspection of Property, Books and Records. The Guarantor will
(i) keep, and cause each Subsidiary to keep, proper books of
record and account in which full, true and correct entries in
conformity with GAAP shall be made of all dealings and
transactions in relation to its business and activities; and
(ii) permit, and cause each Subsidiary to permit,
representatives of the Agent Bank at the Lenders' expense
prior to the occurrence of a Default and at the Guarantor's
expense after the occurrence of a Default to visit and inspect
any of their respective properties, to examine and make
abstracts from any of their respective books and records and
to
<PAGE> 39
discuss their respective affairs, finances and accounts with
their respective officers, employees and independent public
accountants. The Guarantor and the Lessee agree to cooperate
and assist in such visits and inspections, in each case at
such reasonable times and as often as may reasonably be
requested.
(c) Ratio of Consolidated Funded Debt to Consolidated Total
Tangible Capital. The ratio of Consolidated Funded Debt to
Consolidated Total Tangible Capital will not exceed 0.60 to
1.00, calculated at the end of each Fiscal Quarter.
(d) Negative Pledge. Neither the Guarantor nor any Consolidated
Subsidiary will create, assume or suffer to exist any Lien on
any asset now owned or hereafter acquired by it, except:
(i) Liens existing on the date of this Participation
Agreement securing Indebtedness outstanding on the
date of this Participation Agreement in an aggregate
principal amount with respect to Indebtedness for
borrowed money and capital leases not exceeding
$99,036,000;
(ii) any Lien existing on any asset of any (i) corporation
or partnership at the time such corporation or such
partnership becomes a Consolidated Subsidiary, or
(ii) Subsidiary at the time it becomes a Significant
Subsidiary, and in either case not created in
contemplation of such event;
(iii) any Lien on any asset securing Indebtedness incurred
or assumed for the purpose of financing all or any
part of the cost of acquiring or constructing such
asset, that such Lien attaches to such asset
concurrently with or within eighteen (18) months
after the acquisition or completion of construction
thereof;
(iv) any Lien on any asset of any corporation existing at
the time such corporation is merged or consolidated
with or into the Guarantor or a Consolidated
Subsidiary and not created in contemplation of such
event;
(v) any Lien existing on any asset prior to the
acquisition thereof by the Guarantor or a
Consolidated Subsidiary and not created in
contemplation of such acquisition;
(vi) Liens securing Indebtedness owing by any Subsidiary
to the Guarantor;
(vii) any Lien arising out of the refinancing, extension,
renewal or refunding of any Indebtedness secured by
any Lien permitted by any of the foregoing paragraphs
of this Section, provided that (x) such Indebtedness
is not secured by any additional assets, and (y) the
amount of such Indebtedness secured by any such Lien
is not increased;
<PAGE> 40
(viii) Liens incidental to the conduct of its business or
the ownership of its assets which (x) do not secure
Indebtedness (other than Indebtedness arising from
operating leases which become capital leases as
required by GAAP) and (y) do not in the aggregate
materially detract from the value of its assets or
materially impair the use thereof in the operation of
its business;
(ix) any Lien on Margin Stock; and
(x) Liens not otherwise permitted by the foregoing
paragraphs of this Section securing Indebtedness in
an aggregate principal amount at any time outstanding
not to exceed twenty percent (20%) of Consolidated
Tangible Net Worth.
provided Liens permitted by the foregoing paragraphs (i) through (x)
shall at no time secure Indebtedness in an aggregate amount greater
than twenty-five (25%) of Consolidated Tangible Net Worth.
(e) Maintenance of Existence. The Guarantor shall, and shall cause
each Subsidiary to, maintain its corporate existence and carry
on its business in substantially the same manner and in
substantially the same fields as such business is now carried
on and maintained, except as permitted by clause (g) below;
provided, however, that (i) any Subsidiary may be
reincorporated under the laws of another state, and (ii) so
long as no Event of Default shall be in existence or be caused
thereby, nothing in this Participation Agreement shall prevent
the abandonment or termination of the existence, rights and
franchises, or the change in the business of any Subsidiary
which is not a Significant Subsidiary, if, in the opinion"of
the Board of" Directors of the Guarantor, such abandonment,
termination or change is in the best interest of the Guarantor
and not disadvantageous in any material respect to the
Lenders.
(f) Dissolution. Neither the Guarantor nor any of its Significant
Subsidiaries shall suffer or permit dissolution or liquidation
either in whole or"in part (except as permitted by clause (e)
above) or redeem or retire any shares of its own stock or that
of any Significant Subsidiary, except through corporate
reorganization to the extent permitted by clause (g) below.
(g) Consolidations, Mergers and Sales of Assets. The Guarantor
will not, nor will it permit any Significant Subsidiary to,
consolidate with or merge into, or sell, lease or otherwise
transfer all or any substantial part of its assets to, any
other Person; provided that (i) the Guarantor or the Lessee
may consolidate with or merge into another Person if (A) such
Person is a solvent corporation organized under the laws of
the United States of America or one of its states, (B) the
Guarantor or the Lessee is the corporation surviving such
merger or consolidation and (C) immediately after giving
effect to such merger or consolidation, no Event of Default
shall have occurred and be continuing, (ii) Subsidiaries may
consolidate with or merge into one another or into any other
Person if, in the case of a merger or consolidation
<PAGE> 41
involving a Significant Subsidiary, (A) such other Person is a
solvent corporation organized under the laws of the United
States of America or one of its states, (B) the Person
surviving such merger or consolidation is a wholly owned
Subsidiary and (C) immediately after giving effect to such
merger or consolidation no Event of Default shall have
occurred and be continuing, (iii) the Guarantor and its
Subsidiaries may sell, lease or otherwise transfer assets
among themselves, and (iv) the foregoing limitation on the
sale, lease or other transfer of assets shall not prohibit,
during any fiscal quarter, a transfer of assets (in a single
transaction or in a series of related transactions) unless the
aggregate assets to be so transferred, when combined with all
other assets transferred during such Fiscal Quarter and the
immediately preceding three (3) Fiscal Quarters, either (A)
constituted more than ten percent (10%) of Consolidated Total
Assets at the end of such Fiscal Quarter or (B) contributed
more than ten percent (10%) of Consolidated Operating Profits
during such Fiscal Quarter and the three (3) Fiscal Quarters
immediately preceding such Fiscal Quarter.
(h) Compliance with Laws; Payment of Taxes. The Guarantor will,
and will cause each of its Subsidiaries and each member of the
Controlled Group to, comply with applicable laws (including
but not limited to ERISA), regulations and similar
requirements of governmental authorities (including but not
limited to PBGC), except where the necessity of such
compliance is being contested in good faith through
appropriate proceedings or where the failure to so comply
would not reasonably be expected to have or cause a Material
Adverse Effect. The Guarantor will, and will cause each of its
Subsidiaries to, pay promptly when due all taxes, assessments,
governmental charges, claims for labor, supplies, rent and
other obligations which, if unpaid, would become a lien
against the property of the Guarantor or any Subsidiary,
except (i) liabilities being contested in good faith and
against which, if requested by the Agent Bank, the Guarantor
will set up reserves in accordance with GAAP or (ii) where the
failure to so pay would not reasonably be expected to have or
cause a Material Adverse Effect.
(i) Environmental Matters. The Guarantor and its Subsidiaries will
not use, produce, manufacture, process, treat, recycle,
generate, store, dispose of, manage at, any of its properties,
or otherwise handle, or ship or transport to or from any of
its properties any Hazardous Substances except for Hazardous
Substances used, produced, manufactured, processed, treated,
recycled, generated, stored, disposed, managed, or otherwise
handled in the ordinary course of business in compliance in
all material respects with applicable Environmental Laws, and
will take commercially reasonable steps to prohibit any other
Person from doing any of the acts prohibited by the foregoing.
(j) Environmental Release. The Guarantor and the Lessee each agree
that upon obtaining knowledge of the occurrence of a Release
at or on any of its properties, it will act promptly to
investigate the extent of, and to take appropriate remedial
action to eliminate, such Release, whether or not ordered or
otherwise directed to
<PAGE> 42
do so by any Governmental Authority.
(k) Debt of Subsidiaries. The Guarantor shall not permit any
Subsidiary to incur any Indebtedness except for (i)
Indebtedness owing to the Guarantor or another Subsidiary and
(ii) other Indebtedness which shall not exceed in the
aggregate for all Subsidiaries an amount in excess of twenty
percent (20%) of Consolidated Net Worth.
(l) With respect to all properties (other than the Properties
subject to the Lease):
(i) Insurance. The Guarantor will maintain, and will
cause each of its Subsidiaries to maintain (either in
the name of the Guarantor or in such Subsidiary's own
name), with financially sound and reputable insurance
companies, insurance on all its property in
substantially such amounts and against substantially
such risks as are usually insured against in the same
general area by companies of established repute and
of similar size and financial strength engaged in the
same or similar business;
(ii) Maintenance of Property. The Guarantor shall, and
shall cause each Significant Subsidiary to, maintain
to the extent commercially reasonable, all of its
properties and assets in good condition, repair and
working order, ordinary wear and tear excepted; and
(iii) Environmental Notices. The Guarantor shall furnish to
the Agent Bank and the Lessor prompt written notice
of all Environmental claims or proceedings, pending,
threatened or anticipated notices of Environmental
Violations, and Releases at, on, in, under or in any
way affecting all real property owned or leased or
otherwise used or occupied by Guarantor or any
Subsidiary or any adjacent property, and all facts,
events, or conditions that could lead to any of the
foregoing; provided, that, no such notification
will be required, unless any of the foregoing facts,
events or conditions would reasonably be expected to
have or cause a Material Adverse Effect.
(m) Further Assurances. Guarantor and Lessee shall promptly cause
to be taken, executed acknowledged or delivered, at the sole
joint and several expense of Guarantor and Lessee, all such
further acts, conveyances, documents and assurances as the
other parties may from time to time reasonably request in
order to carry out and effectuate the intent and purposes of
this Participation Agreement, the other Operative Documents,
and the transactions contemplated hereby and thereby
(including without limitation, the preparation, execution and
filing of all Uniform Commercial Code financing statements and
all other instruments necessary or advisable to maintain and
protect all Liens provided for hereunder or under any other
Operative Document).
SECTION 11.2. Cooperation with the Lessee. The Lessor, the Facility
Lender, the Agent
<PAGE> 43
Bank and Lenders shall, to the extent reasonably requested by Lessee (but
without assuming additional liabilities on account thereof), at Lessee's
expense, cooperate with Lessee in connection with its covenants contained herein
including, without limitation, at any time and from time to time, upon the
request of Lessee, to promptly and duly execute and deliver any and all such
further instruments, documents and financing statements and continuation
statements related thereto) as Lessee may reasonably request in order to perform
such covenants. Each of the Lessor, the Facility Lender, the Agent Bank and
Lenders agrees that, to the extent it shall obtain actual knowledge of the
occurrence of an Event of Default, a Loan Agreement Event of Default or a
Facility Agreement Event of Default under the Operative Documents, it shall
promptly notify Lessee describing the same in reasonable detail.
SECTION 11.3. Release of Properties. If the Lessee shall at any time
purchase any Property pursuant to Section 16.2 of the Lease or exercise its
Purchase Option with respect to any Property under the Lease, or if all of the
Properties shall be sold in accordance with, and the Lessee otherwise satisfies
each of the obligations and conditions set forth in the Lease for the release of
a Property therefrom, then, upon application of the proceeds of any such sale
pursuant to Section 5 and all accrued interest and any other payments due and
owing from Lessee to the Agent Bank, the Lenders, the Facility Lender or Lessor
on such date, including without limitation pursuant to Section 14 of this
Agreement, such Property shall be released from the Liens created by the
Security Documents and the Agent Bank, Lessor and the Facility Lender shall, at
the expense of the Lessee, execute and deliver such instruments as are legally
required in order to effectuate such release. In addition, upon the termination
of the Facility Lender Commitments and the payment in full of all other amounts
owing by the hereunder or under any other Operative Document, the Properties
shall be released from the Liens created by the Security Documents. Upon request
of the Lessee or Lessor following any such release, the Agent Bank and Facility
Lender shall, at the sole cost and expense of the Lessee or Lessor execute and
deliver to the Lessor or the Lessee such documents as the Lessee or Lessor shall
reasonably request to evidence such release.
SECTION 11.4. Discharge of Liens. (a) Each of the Facility Lender and
the Lessor hereby severally agrees that it will not create or permit to exist at
any time, and will, at its own cost and expense, promptly take such action as
may be necessary duly to discharge, or to cause to be discharged, all Lessor
Liens on the Properties (and its rights under the Operative Documents)
attributable to it; provided, however, that such Participants shall not be
required to so discharge any such Lessor Lien prior to any sale of the
Properties while the same is being contested in good faith by appropriate
proceedings.
(b) The Agent Bank hereby severally agrees that it will not create or
permit to exist at any time, and will, at its own cost and expense, promptly
take such action as may be necessary duly to discharge, or to cause to be
discharged, all Agent's Liens on the Properties attributable to it; provided,
however, that the Agent Bank shall not be required to so discharge any such
Agent's Lien prior to any sale of the Properties while the same is being
contested in good faith by appropriate proceedings.
SECTION 11.5. Notice of Credit Rating. Each of the Agent Bank, the
Lenders and the Lessor severally agrees that it shall immediately notify the
Guarantor and the Lessee in writing in
<PAGE> 44
the event that its (or in the case of the Lessor, its general partner's) long or
short term debt rating is downgraded or withdrawn by any Rating Agency or if
such entity (or in the case of the Lessor, its general partner) is placed on
credit watch with negative implications by any Rating Agency.
SECTION 11.6. Covenants of the Facility Lender and the Lessor. Each of
the Facility Lender and the Lessor hereby agrees, severally and not jointly,
that so long as this Participation Agreement is in effect:
(a) Maintenance of Existence. It shall maintain its corporate or
partnership existence and qualification as a foreign
corporation or foreign limited partnership in each state in
which a Property is located.
(b) Certificate of Incorporation. Facility Lender shall not allow
an amendment to its Certificate of Incorporation or other
governing documents without the consent of the Lessee, Agent
Bank and Lessor.
(c) Prepayment. Other than issuing new Commercial Paper Notes at
maturity or with the proceeds of Facility Loans or Residual
Loans under the Liquidity Agreement and other than as provided
in Section 5, the Facility Lender will not prepay, redeem or
refinance any Commercial Paper Notes. Except as expressly
required by the Operative Documents or in connection with the
issuance of Commercial Paper Notes in accordance with the
terms of the Commercial Paper Documents, the Facility Lender
shall not voluntarily prepay the Liquidity Notes, or any part
thereof, without the written consent of Lessee; provided,
however, that subject to Section 5, Facility Lender may
prepay, or cause to be prepaid, all or any portion of the
Liquidity Notes at any time following an Event of Default
where any or all of the Participants are exercising remedies.
Except as permitted by the Operative Documents, the Lessor
shall not prepay any Loans; provided, however, that subject to
Section 5, Lessor may prepay or cause to be prepaid all or any
portion of the Notes at any time following an Event of Default
where the Participants are exercising remedies.
(d) Indebtedness; Other Business. The Facility Lender shall not
contract for, create, incur or assume any Indebtedness, or
enter into any business or other activity, other than pursuant
to, under or as contemplated by the Operative Documents.
(e) Change of Chief Place of Business. Each of the Lessor and the
Facility Lender, with respect to itself only, shall give
prompt notice to Lessee and the Agent Bank if the Lessor's or
the Facility Lender's chief place of business or chief
executive office, or the office where the records concerning
the accounts or contract rights relating to a Property are
kept, shall cease to be located at the address set forth in
Section 15.3 or if it shall change its name, identity or
corporate structure.
(f) Subordination of Liens. During the Term, the Liens created by
the Security Documents related to each Property shall be
expressly made subject and subordinate
<PAGE> 45
to the Lease related to such Property.
(g) No Voluntary Bankruptcy. Neither the Lessor (unless the Lessee
shall give its prior written consent) nor the Facility Lender
shall (A) commence any case, proceeding or other action under
any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization,
arrangement, winding-up, liquidation, dissolution, composition
or other relief with respect to it or its debts, or (B) seek
appointment of a receiver, trustee, custodian or other similar
official for it or for all or any substantial benefit of its
creditors; and neither the Lessor nor the Facility Lender
shall take any action in furtherance of, or indicating its
consent to, approval of, or acquiescence in, any of the acts
set forth in this paragraph.
(h) No Sale of Properties. Neither the Lessor nor the Facility
Lender shall transfer any of their respective interests in the
Properties except as provided in the Operative Documents.
(i) Rollover of Commercial Paper Documents. Except as provided in
Section 5 or in the Commercial Paper Documents or as otherwise
directed by Lessee, during the Term, upon the maturity of the
Commercial Paper Notes, the Facility Lender shall, to the
extent permitted under the Operative Documents and otherwise
commercially feasible, issue new Commercial Paper Notes in
accordance with the terms of the Commercial Paper Documents.
(j) No Powers of Attorney. The Facility Lender shall not grant any
powers of attorney to any Person for any purposes except (i)
for the purpose of permitting any Person to perform any
ministerial or administrative functions on behalf of the
Facility Lender which are not inconsistent with the terms of
the Operative Documents, (ii) to the Agent Bank for the
purposes of the Security Documents, or (iii) where provided
for or permitted by the Operative Documents.
(k) Same Business. Unless the Lessee otherwise consents in
writing, Lessor shall stay engaged in substantially the same
business (including engaging in the business of leasing
personal and real property as lessor, or acting as agent,
broker or advisor in leasing such property and making,
acquiring or servicing loans or other investments or
extensions of credit in connection therewith or incidental
thereto) as conducted on the Initial Closing Date.
SECTION 11.7. No Bankruptcy Proceedings. The Guarantor, Lessee,
Construction Agent and each Participant hereby agrees that it will not institute
against, or join any other Person in instituting against, the Facility Lender
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding, or other proceeding under any Federal or state bankruptcy or similar
law, for one year and a day after the latest maturing Commercial Paper Note is
paid. Nothing in this Section 11.7 shall preclude, or be deemed to estop, the
Guarantor, Lessee, Construction Agent or any Participant (i) from taking or
omitting to take any action prior to such date in (A) any case or proceeding
voluntarily filed or commenced by or on behalf of the Facility Lender under or
pursuant
<PAGE> 46
to any such law or (B) any involuntary case or proceeding pertaining to the
Facility Lender which is filed or commenced by or on behalf of a Person other
than the Guarantor, Lessee, Construction Agent or any Participant under or
pursuant to any such law, or (ii) from commencing or prosecuting any legal
action which is not an involuntary case or proceeding under or pursuant to any
such law against the Participant or any of its properties or otherwise
exercising its remedies under the Operative Documents.
SECTION 11.8. Notice of Claims Against Lessor. Lessor shall promptly
notify the Lessee and the Guarantor in writing in the event that Lessor defaults
in any obligation or any Claim is asserted against Lessor (including any
Environmental Claim) which, exceeds $5,000,000 in any one instance or
$10,000,000 in the aggregate (other than defaults or Claims arising in
connection with the Operative Documents and the transactions contemplated
thereby). Upon receipt of such notice the Lessee may either:
(i) Replace the Lessor pursuant to Section 13.2; or
(ii) Require that the Lessor promptly execute, deliver and
record mortgages in form satisfactory to Lessee granting to Lessee a
Lien on the Properties to secure the performance of all obligations of
Lessor pursuant to the Lease and the other Operative Documents, which
Lien shall be second in priority to the Mortgages. Each of the
Participants hereby acknowledges and agrees that any such Liens granted
to the Lessee hereunder shall constitute "Permitted Liens" pursuant to
clause (i) of such definition.
SECTION 12.
LESSEE DIRECTIONS
SECTION 12.1. Lessee Directions. The Lenders, the Lessor, the
Guarantor, the Agent Bank, the Facility Lender agree that, so long as no Default
or Event of Default exists:
(a) Lessee shall have the right to give all borrowing notices
pursuant to the Loan Agreement and the Liquidity Agreement and
all notices relating to the issuance of the Commercial Paper
Notes pursuant to the Commercial Paper Documents;
(b) Lessee shall have the right to terminate or reduce the
Commitment pursuant to Section 4.02 of the Liquidity Agreement
and the Facility Lender Commitments pursuant to Section 2.5 of
the Loan Agreement (which commitments shall be reduced
proportionately and simultaneously); provided that, following
such reduction, the remaining amount of the Available
Commitments shall be sufficient, in the reasonable judgment of
the Construction Agent, to complete construction of the
Improvements with respect to each Construction Period Property
and Lessee shall have the right to direct the Lessor to prepay
the Loans pursuant to Section 2.4 of the Loan Agreement to the
extent that Lessee makes a payment of Supplemental Rent in the
amount of such prepayment on the date of such prepayment;
<PAGE> 47
(c) Lessee shall have the right to give Extension Notices and
Extension Requests pursuant to Section 4.04 of the Liquidity
Agreement;
(d) Lessee shall have the right to replace a Non-Consenting Lender
pursuant to Section 4.05 of the Liquidity Agreement;
(e) Lessee shall have the right to give "Notices of Conversion"
and "Notices of Continuation" pursuant to Section 3.05 of the
Liquidity Agreement;
(f) Lessee shall have the right to approve any successor "Agent
Bank" to the extent permitted pursuant to Section 10.12 of the
Liquidity Agreement;
(g) without limiting the foregoing clauses (a) through (f) and in
addition thereto, Lessee shall have the right to exercise any
other right of the Lessor under the Loan Documents and the
Facility Lender under the Liquidity Agreement and Commercial
Paper Documents upon not less than three (3) Business Days'
prior written notice from Lessee to the Lessor, Agent Bank,
and the Facility Lender, unless such party objects to such
exercise within three (3) Business Days of receipt of such
notice; and
(h) Lessee shall have the right to give notices pursuant to
Appendix C of this Participation Agreement.
SECTION 13.
TRANSFER OF INTEREST
SECTION 13.1. Restrictions on and Effect of Transfer. No Participant
shall assign, convey or otherwise transfer (including pursuant to a
participation) all or any portion of its right, title or interest in, to or
under any of the Operative Documents, any Note or Liquidity Note, except (x)
with respect to the Lenders, as provided in Section 10.04 of the Liquidity
Agreement, and (y) with respect to the Facility Lender and the Lessor, with the
prior written consent of the Agent Bank, the Lenders (to the extent required by
Section 10.04 of the Liquidity Agreement) and Lessee, which consent, in the case
of the Agent Bank, shall not be unreasonably withheld; provided that, in the
event that an Event of Default has occurred and is continuing pursuant to which
the Participants have begun to exercise remedies against the Lessee or
Guarantor, the consent of the Lessee shall not be required for any such transfer
by the Lessor. Any transfer made pursuant to the Operative Documents shall be
subject to the Security Documents and any transferee or assignee shall expressly
agree in writing to be bound by the terms of this Participation Agreement.
SECTION 13.2. Replacement of Lessor or Facility Lender. If the Lessor
or Facility Lender (i) fails to approve a renewal of the Lease pursuant to
Article XXI of the Lease, (ii) defaults in any of its material obligations
pursuant to the Operative Documents or, with respect to Facility Lender, any
Facility Agreement Event of Default shall occur, or with respect to Lessor, any
Loan
<PAGE> 48
Agreement Event of Default shall occur (which in either case, does not arise out
of, or is not attributable to, an Event of Default), or (iii) in the case of the
Lessor, (x) the Lessor or its general partner suffer a downgrade or withdrawal
or, in the reasonable judgment of the Lessee, potential downgrade or withdrawal,
of its long or short term credit rating by any Rating Agency or (y) Credit
Suisse ceases to be the sole general partner of Lessor, the Lessee shall be
permitted to replace such Person at any time; provided that (i) such replacement
does not conflict with any Requirement of Law, (ii) any replacement Lessor shall
purchase, at par, all Lessor Investment Amounts, all accrued and unpaid
Certificate Earnings thereon and other amounts owing to Lessor under the
Operative Documents on or prior to the date of replacement, (iii) the
replacement Lessor or Facility Lender shall be reasonably satisfactory to the
Required Lenders, (iv) the Guarantor and Lessee shall be obligated to pay any
Transaction Expenses arising in connection therewith, (v) the replacement Lessor
or Facility Lender shall agree in writing to be subject to all of the terms and
conditions of the Operative Documents (including the renewal of the Lease
contemplated by any relevant Renewal Request) and this Participation Agreement
and (vi) as a condition precedent to such replacement, the Guarantor or Lessee
shall have provided written confirmation from each of Moody's and S&P that
immediately after having given effect to such replacement, the Commercial Paper
Notes shall not be rated lower than the Commercial Paper Notes are rated
immediately prior to such replacement and such replacement shall not result in a
downgrade, withdrawal or qualification of the rating assigned to the Commercial
Paper Notes by Moody's or S&P. The Lessor and the Facility Lender agree to
cooperate with the Lessee in its efforts to arrange replacements as contemplated
by this Section 13.2.
SECTION 14.
INDEMNIFICATION
SECTION 14.1. General Indemnification. The Guarantor and Lessee,
jointly and severally, whether or not any of the transactions contemplated
hereby shall be consummated, hereby assume liability for, and indemnify,
protect, defend, save and keep harmless each Indemnitee, on an After Tax Basis,
from and against any and all Claims that may be imposed on, incurred by or
asserted against such Indemnitee in any way relating to or arising out of:
(a) any of the Operative Documents or any of the transactions
contemplated thereby, and any amendment, modification or
waiver in respect thereof; or
(b) the Properties or any part thereof or interest therein;
(c) the purchase, design, construction, preparation, installation,
inspection, delivery, non-delivery, acceptance, rejection,
ownership, management, possession, operation, rental, lease,
sublease, repossession (whether by summary proceedings or
otherwise), maintenance, repair, alteration, modification,
addition, substitution, storage, transfer of title,
redelivery, use, financing, refinancing, disposition,
operation, condition, sale (including, without limitation, any
sale pursuant to the Lease), return or other disposition of
all or any part of any interest in the Properties
<PAGE> 49
or the imposition of any Lien (or incurring of any liability
to refund or pay over any amount as a result of any Lien)
thereon, including, without limitation: (l) personal injury,
death or property damage, including Claims or penalties
arising from any violation of law or in tort (strict liability
or otherwise), (2) latent or other defects, whether or not
discoverable, (3) any Claim based upon a violation or alleged
violation of the terms of any Applicable Law or any
restriction, easement, condition or covenant or other matter
affecting title to the Properties or any part thereof, (4) the
making of any Modifications in violation of any Insurance
Requirements, (5) any Claim for patent, trademark or copyright
infringement, and (6) Claims arising from any public
improvements with respect to the Properties resulting in any
change or special assessments being levied against the
Properties or any Claim for utility "tap-in" fees;
(d) the offer, issuance, sale or delivery of the Commercial Paper
Notes, the Liquidity Notes or the Notes;
(e) the breach or alleged breach by the Guarantor or the Lessee of
any representation or warranty made by it or deemed made by it
in any Operative Document or any certificate required to be
delivered by any Operative Document or the breach or alleged
breach by the Guarantor or the Lessee of any covenant or
obligation made by it in any Operative Document;
(f) the retaining or employment of any broker, finder or financial
advisor by the Guarantor or Lessee to act on its behalf in
connection with the Operative Documents, or the authorization
of any broker or financial adviser retained or employed by the
Guarantor or the Lessee so to act, or the incurring of any
fees or commissions by the Lessee or the Guarantor to which
the Indemnitees might be subjected by virtue of their entering
into the transactions contemplated by the Operative Documents;
(g) the existence of any Lien on or with respect to the
Properties, any Basic Rent or Supplemental Rent, title
thereto, or any interest therein, including any Liens which
arise out of the possession, use, occupancy, construction,
repair or rebuilding of any of the Properties or by reason of
labor or materials furnished or claimed to have been furnished
to the Lessee, or any of its contractors or agents or by
reason of the financing of any personalty or equipment
purchased or leased by the Lessee or Modifications constructed
by the Lessee, except in all cases Permitted Liens;
(h) any act or omission by the Construction Agent under the
Construction Agency Agreement, and any breach of any
requirement, condition, restriction or limitation in any Deed
or other Operative Document; or
(i) any easement, license, right-of-way, covenant, restriction or
other document or agreement entered into by Issuer at the
request of Lessee;
<PAGE> 50
provided, however, neither the Guarantor nor the Lessee shall be required to
indemnify any Indemnitee under this Section 14.1 for any of the following: (1)
any Claim to the extent that such Claim resulted from the willful misconduct or
gross negligence of such Indemnitee, (2) any Claim to the extent resulting from
Lessor Liens which the Indemnitee is responsible for discharging under the
Operative Documents, (3) any Claim to the extent directly resulting from a
breach of an Operative Document or Applicable Law by such Indemnitee (except for
a breach by the Facility Lender that is arising out of or attributable to a
breach by the Lessee or Guarantor of any of its obligations under any of the
Operative Documents), and (4) any Claim related to the Properties to the extent
attributable to acts or events occurring after the Expiration Date unless an
Event of Default has occurred and is continuing and the Participants are
exercising remedies against the Lessee or the Properties in respect of the
Operative Documents (in which event all of the foregoing provisions of this
Section 14.1 shall remain in full force and effect). It is expressly understood
and agreed that the indemnity provided for herein shall survive the expiration
or termination of the Lease and the other Operative Documents and the payment by
Lessee and Guarantor of all amounts due thereunder for a period of three (3)
years (but shall continue in full force and effect following such date with
respect to any Claim asserted prior to such date), and shall be separate and
independent from any remedy under the Lease or any other Operative Document;
provided that, to the extent that any Claim arises after such three (3) year
period which was not asserted during such three (3) year period due to a failure
to discover such Claim or for any other reason, the indemnity provided for in
this Section 14.1 shall be revived upon the assertion of such Claim solely with
respect to such Claim.
SECTION 14.2. Environmental Indemnity. In addition to, and not in
derogation of, the indemnities contained in Section 14.1 and 14.4 the Guarantor
and the Lessee, jointly and severally, hereby indemnify, hold harmless and
defend each Indemnitee from and against any and all Claims, including, but not
limited to, all costs incurred in connection with any investigation or
monitoring of site conditions or any clean-up, remedial, removal or restoration
work by or at the direction of any Governmental Authority, related to the
Properties or the Lessee's use of the Properties, arising directly or
indirectly, in whole or in part, out of
(i) the presence on or under any Property of any
Hazardous Substances, or any releases or discharges of any
Hazardous Substances on, under, from or onto any Property or
any other Hazardous Condition with respect to any Property,
(ii) any Hazardous Activity, including, without
limitation, construction, carried on or undertaken on or off
any Property, and whether by the Lessee, or any predecessor in
title or any employees, Agent Bank, contractors or
subcontractors of the Lessee, or any predecessor in title, or
any other Persons, in connection with the handling, treatment,
removal, storage, decontamination, clean-up, transport or
disposal of any Hazardous Substances that at any time are
located or present on or under any Property or that at any
time migrate, flow, percolate, diffuse or in any way move onto
or under any Property,
(iii) loss of or damage to any property or the
environment (including, without limitation, clean-up costs,
response costs, remediation and removal costs, cost of
<PAGE> 51
corrective action, costs of financial assurance, fines and
penalties and natural resource damages), or death or injury to
any Person, and all expenses associated with the protection of
wildlife, aquatic species, vegetation, flora and fauna, and
any mitigative action required by or under Environmental Laws,
(iv) any Claim concerning lack of compliance with
Environmental Laws with respect to the Properties, or any act
or omission causing an environmental condition with respect to
the Properties that requires remediation or would allow any
governmental agency to record a lien or encumbrance on the
land records with respect to the Properties,
(v) any residual contamination on or under any
Property, including any such contamination affecting any
natural resources, and to any such contamination of any
property or natural resources arising in connection with the
generation, use, handling, storage, transport or disposal of
any Hazardous Substances associated with such Property and
related to the residual contamination, the obligation
existing, irrespective of whether any of such activities were
or will be undertaken in accordance with applicable laws,
regulations, codes and ordinances,
(vi) in any case with respect to the matters
described in the foregoing clauses (i) through (v) that arise
or occur
(w) during the Term,
(x) at any time during which the Lessee or
any Affiliate thereof owns any interest in or
otherwise occupies, controls or possesses the
relevant Property or any portion thereof, or
(y) during any period after and during the
continuance of any Event of Default, or
(vii) a breach of the representations and warranties
of the Guarantor and the Lessee provided herein;
provided, however, that neither the Guarantor nor the Lessee shall be required
to indemnify any Indemnitee under this Section 14.2 for any of the following:
(1) any Claim to the extent that such Claim resulted from the willful misconduct
or gross negligence of such Indemnitee, (2) any Claim to the extent proximately
caused by any action on the part of such Indemnitee or, to the extent such Claim
relates to or is attributable to, events occurring after the Term where such
Indemnitee is in control of the Property or Properties, inaction on the part of
such Indemnitee, and (3) any Claim related to the Properties to the extent
attributable to acts or events occurring before or after the Term unless, in the
case of Claims attributable to acts or events occurring after the Term, an Event
of Default has occurred and is continuing and the Participants are exercising
remedies against the Lessee or the Properties under the Operative Documents (in
which event all of the foregoing provisions of this Section 14.2 shall remain in
full force and effect), or the Claim arises out of a
<PAGE> 52
breach of the representations and warranties of the Guarantor or Lessee
contained herein. It is expressly understood and agreed that the indemnity
provided for herein shall survive the expiration or termination of the Lease and
the other Operative Documents and the payment by Lessee and Guarantor of all
amounts due thereunder for a period of three (3) years (but shall continue in
full force and effect following such date with respect to any Claim asserted
prior to such date) and shall be separate and independent from any remedy under
the Lease or any other Operative Document; provided that, to the extent that any
Claim arises after such three (3) year period which was not asserted during such
three (3) period due to a failure to discover such Claim or for any other
reason, the indemnity provided for in this Section 14.2 shall be revived upon
the assertion of such Claim solely with respect to such Claim.
SECTION 14.3. Proceedings in Respect of Claims. With respect to any
amount that the Guarantor or the Lessee is requested by an Indemnitee to pay by
reason of Section 14.1 or 14.2, such Indemnitee shall, if so requested by the
Guarantor or the Lessee and prior to any payment, submit such additional
information to the Guarantor or the Lessee as the Guarantor or the Lessee may
reasonably request and which is in the possession of such Indemnitee to
substantiate properly the requested payment. In case any action, suit or
proceeding shall be brought against any Indemnitee, such Indemnitee shall notify
the Guarantor or the Lessee of the commencement thereof, and the Guarantor or
the Lessee shall be entitled, at its expense, to participate in, and, to the
extent that the Guarantor or the Lessee desires to, assume and control the
defense thereof; provided, however, that the Guarantor or the Lessee shall have
acknowledged in writing its obligation to fully indemnify such Indemnitee in
respect of such action, suit or proceeding and the Guarantor or the Lessee shall
keep such Indemnitee fully apprised of the status of such action, suit or
proceeding and shall provide such Indemnitee with all information with respect
to such action suit or proceeding as such Indemnitee shall reasonably request,
and, provided further, that the Guarantor or the Lessee shall not be entitled to
assume and control the defense of any such action, suit or proceeding if and to
the extent that, (A) in the reasonable opinion of such Indemnitee, (x) such
action, suit or proceeding involves any possibility of imposition of criminal
liability or any material risk of material civil liability on such Indemnitee or
will involve a material risk of the sale, forfeiture or loss of, or the creation
of any Lien (other than a Permitted Lien) on the Properties or any part thereof
unless the Guarantor or the Lessee shall have posted a bond or other security
satisfactory to the relevant Indemnitees in respect to such risk or (y) the
control of such action, suit or proceeding would involve an actual or potential
conflict of interest (in which case each Indemnitee may retain separate counsel
at the expense of Lessee and Guarantor), (B) such proceeding involves Claims not
fully indemnified by the Guarantor or the Lessee which the Guarantor or the
Lessee and the Indemnitee have been unable to sever from the indemnified
claim(s), or (C) an Event of Default has occurred and is continuing. The
Indemnitee may participate in a reasonable manner at its own expense and with
its own counsel in any proceeding conducted by the Guarantor or the Lessee in
accordance with the foregoing. Neither the Guarantor nor the Lessee shall enter
into any settlement or other compromise with respect to any Claim which is
entitled to be indemnified under Section 14.1 or 14.2 without the prior written
consent of the related Indemnitee, which consent shall not be unreasonably
withheld.
No Indemnitee shall enter into any settlement or other compromise with
respect to any Claim which is entitled to be indemnified under Section 14.1 or
14.2 without the prior written
<PAGE> 53
consent of the Lessee, which consent shall not be unreasonably withheld, unless
such Indemnitee waives its right to be indemnified under Section 14.1 or 14.2
with respect to such Claim.
Upon payment in full of any Claim by the Guarantor or the Lessee
pursuant to Section 14.1 or 14.2 to or on behalf of an Indemnitee, the Guarantor
or the Lessee, as the case may be, without any further action, shall be
subrogated to any and all claims that such Indemnitee may have relating thereto
(other than claims in respect of insurance policies maintained by such
Indemnitee at its own expense) to the extent of such payment, and such
Indemnitee shall execute such instruments of assignment and conveyance, evidence
of claims and payment and such other documents, instruments and agreements as
may be reasonably necessary to preserve any such claims and otherwise cooperate
with the Guarantor and the Lessee and give such further assurances as are
reasonably necessary or advisable to enable the Guarantor or the Lessee
vigorously to pursue such claims.
Any amount payable to an Indemnitee pursuant to Section 14.1 or 14.2
shall be paid to such Indemnitee promptly upon receipt of a written demand
therefor from such Indemnitee, accompanied by a written statement describing in
reasonable detail the basis for such indemnity and the computation of the amount
so payable.
SECTION 14.4. End of Term Indemnity. In addition to the indemnities
provided in Sections 14.1 and 14.2, if the Lessee elects the Remarketing Option
set forth at Section 22.1 of the Lease with respect to the Properties (which
shall, for purposes of this Section 14.4, include all Improvements thereon being
constructed pursuant to the Construction Agency Agreement and for which the
Completion Date has not occurred) subject to the Lease and there is a Shortfall
Amount with respect to such Properties, then prior to the Expiration Date and as
a condition to Lessee's right to complete the Remarketing of such Property
pursuant to Section 22.1 of the Lease, Lessee shall cause to be delivered to
Lessor no later than the Expiration Date, at Lessee's sole cost and expense, a
report from an Appraiser in form and substance reasonably satisfactory to the
Required Lenders and the Lessor (the "End of the Term Report") to establish the
reason for any impairment to the value of any of such Property which was sold
for an amount less than the Property Balance for such Property. On the
Expiration Date, the Lessee shall pay to Lessor an amount equal to the Shortfall
Amount that the End of the Term Report demonstrates was the result of an
impairment to the value in such Property due to:
(a) extraordinary use, failure to maintain, to repair, to restore,
to rebuild or to replace, failure to comply with all
Requirements Laws, failure to use quality workmanship, method
of installation or removal or maintenance, repair, rebuilding
or replacement, (excepting in each case ordinary wear and
tear), or
(b) the existence of any Hazardous Activity, Hazardous Substance
or Environmental Violations occurring or discovered after the
Property Closing Date for such Property (regardless of the
Person so discovering any of the foregoing), or
(c) any restoration or rebuilding carried out by the Lessee or any
failure to reach Completion Date or to complete any
Modification, restoration or rebuilding, in
<PAGE> 54
either case, by the Expiration Date,
(d) any grant, release, dedication, transfer, annexation or
amendment made pursuant to Section 12.2 of the Lease or any
release of a portion of the Property made pursuant to Section
12.3 of the Lease; or
(e) the failure of the Lessor to have good and marketable title to
such Property free and clear of all Liens (including Permitted
Liens (other than Lessor Liens and Agent's Liens)) and
exceptions to title.
SECTION 14.5. General Tax Indemnity. (a) Indemnification. Guarantor and
Lessee, jointly and severally, shall pay and assume liability for, and do hereby
agree to indemnify, protect and defend each Property and all Tax Indemnitees,
and hold them harmless against, all Impositions on an After Tax Basis.
(b) Contests. If any claim shall be made against any Tax
Indemnitee or if any proceeding shall be commenced against any Tax Indemnitee
(including a written notice of such proceeding) for any Imposition as to which
the Lessee may have an indemnity obligation pursuant to Section 14.5(a), or if
any Tax Indemnitee shall determine that any Imposition as to which the Lessee
may have an indemnity obligation pursuant to Section 14.5(a) may be payable,
such Tax Indemnitee shall promptly notify Lessee in writing and shall not take
any action with respect to such claim, proceeding or Imposition without the
written consent of Lessee (such consent not to be unreasonably withheld or
unreasonably delayed) for thirty (30) days after the receipt of such notice by
Lessee; provided, however, that in the case of any such claim or proceeding, if
such Tax Indemnitee shall be required by law or regulation to take action prior
to the end of such thirty (30)-day period, such Tax Indemnitee shall in such
notice to Lessee, so inform Lessee, and such Tax Indemnitee shall not take any
action with respect to such claim, proceeding or Imposition without the consent
of Lessee (such consent not to be unreasonably withheld or unreasonably delayed)
for ten (10) days after the receipt of such notice by Lessee unless the Tax
Indemnitee shall be required by law or regulation to take action prior to the
end of such ten (10)-day period.
Lessee shall be entitled for a period of thirty (30) days from receipt
of such notice from the Tax Indemnitee (or such shorter period as the Tax
Indemnitee has notified Lessee is required by law or regulation for the Tax
Indemnitee to commence such contest) to request in writing that such Tax
Indemnitee contest the imposition of such Tax, at Guarantor's and Lessee's joint
and several expense and the Tax Indemnitee shall, at the joint and several
expense of Guarantor and Lessee, in good faith conduct and control such contest
(including, without limitation, by pursuit of appeals) related to the validity,
applicability or amount of such Impositions (provided, however, that (A) if such
contest involves a tax other than a tax on net income and can be pursued
independently from any other proceeding involving a tax liability of such Tax
Indemnitee, the Tax Indemnitee, at Lessee's request, shall allow Guarantor or
Lessee to conduct and control such contest and (B) in the case of any contest,
the Tax Indemnitee may request Guarantor or Lessee to conduct and control such
contest) by, in the sole discretion of the Person conducting and controlling
such contest, (l) resisting payment thereof, (2) not paying the same except
under protest, if protest is necessary and proper, (3) if the payment be made,
using reasonable efforts to obtain a refund
<PAGE> 55
thereof in appropriate administrative and judicial proceedings, or (4) taking
such other action as is reasonably requested by Guarantor or Lessee from time to
time.
The party controlling any contest shall consult in good faith with the
non-controlling party and shall keep the noncontrolling party reasonably
informed as to the conduct of such contest; provided that, all decisions
ultimately shall be made in the sole discretion of the controlling party. The
parties agree that a Tax Indemnitee may at any time decline to take further
action with respect to the contest of any Imposition and may settle such contest
if such Tax Indemnitee shall waive its rights to any indemnity from Lessee that
otherwise would be payable in respect of such claim (and any future claim by any
taxing authority, the contest of which is precluded by reason of such resolution
of such claim) and shall pay to Lessee any amount previously paid or advanced by
Lessee pursuant to this Section 14.5 by way of indemnification or advance for
the payment of an Imposition other than expenses of such contest.
Notwithstanding the foregoing provisions of this Section 14.5, a Tax
Indemnitee shall not be required to take any action and neither Guarantor nor
Lessee shall be permitted to contest any Impositions in its own name or that of
the Tax Indemnitee unless (A) Lessee shall have agreed to pay and shall pay to
such Tax Indemnitee on demand and on an After Tax Basis all reasonable costs,
losses and expenses that such Tax Indemnitee actually incurs in connection with
contesting such Impositions, including, without limitation, all reasonable
legal, accounting and investigatory fees and disbursements, (B) Tax Indemnitee
shall have reasonably determined that the action to be taken will not result in
any material danger of sale, forfeiture or loss of any Property, or any part
thereof or interest therein, will not interfere with the payment of Rent, and
will not result in risk of criminal liability, (C) if such contest shall involve
the payment of the Imposition prior to the contest, Lessee shall provide to the
Tax Indemnitee an interest-free advance in an amount equal to the Imposition
that the Tax Indemnitee is required to pay (with no additional net after-tax
cost to such Tax Indemnitee), (D) in the case of a claim that must be pursued in
the name of a Tax Indemnitee (or an Affiliate thereof), Lessee shall have
provided to such Tax Indemnitee an opinion of independent tax counsel selected
by the Lessee and reasonably satisfactory to Tax Indemnitee stating that a
reasonable basis exists to contest such claim (or, in the case of an appeal of
an adverse determination, an opinion of such counsel to the effect that the
position asserted in such appeal will more likely than not prevail) and (E) no
Event of Default hereunder shall have occurred and be continuing.
Each Tax Indemnitee shall at Lessee's expense supply Lessee with such
information and documents reasonably requested by Lessee as are in such Tax
Indemnitee's possession and as are necessary or advisable for Lessee to
participate in any action, suit or proceeding to the extent permitted by this
Section 14.5(b); provided that, such Tax Indemnitee shall not be required to
disclose its tax return to Lessee to the extent that the information deemed
necessary or desirable by Lessee contained therein is otherwise made available
to the Lessee in a form which will not hinder Lessee's contest of such action,
suit or proceeding.
Notwithstanding anything contained herein to the contrary, a Tax
Indemnitee will not be required to contest a claim with respect to the
imposition of any Tax if such Tax Indemnitee shall waive its right to
indemnification under this Section 14.5 with respect to such claim and any
related
<PAGE> 56
claim with respect to other taxable years the contest of which is precluded or
otherwise materially adversely affected as a result of such waiver.
(c) Reimbursement for Tax Savings. If (x) a Tax Indemnitee
shall obtain a credit or refund of any Taxes paid by Lessee pursuant to this
Section 14.5 or (y) by reason of the incurrence or imposition of any Tax for
which a Tax Indemnitee is indemnified hereunder or any payment made to or for
the account of such Tax Indemnitee by Lessee pursuant to this Section 14.5 or
any payment made by a Tax Indemnitee to Lessee by reason of this Section
14.5(c), such Tax Indemnitee at any time actually realizes a reduction in any
Taxes for which Lessee is not required to indemnify such Tax Indemnitee pursuant
to this Section 14.5 which reduction in Taxes was not taken into account in
computing such payment by Lessee to or for the account of such Tax Indemnitee or
by the Tax Indemnitee to Lessee, then such Tax Indemnitee shall promptly pay to
Lessee on an After Tax Basis (xx) the amount of such credit or refund, together
with the amount of any interest received by such Tax Indemnitee on account of
such credit or refund or (yy) an amount equal to such reduction in Taxes, as the
case may be; provided that no such payment shall be made so long as an Event of
Default shall have occurred and be continuing but shall be paid promptly after
cure of such Event of Default. Each Tax Indemnitee agrees to take such actions
as Lessee may reasonably request (provided in the good faith judgment of the Tax
Indemnitee, such actions would not result in any adverse effect on the Tax
Indemnitee for which the Tax Indemnitee is not entitled to indemnification from
Lessee) and to otherwise act in good faith to claim such refunds and other
available Tax benefits, and take such other actions as may be reasonable to
minimize any payment due from Lessee pursuant to this Section 14.5. The
disallowance or reduction of any credit, refund or other tax savings with
respect to which a Tax Indemnitee has made a payment to Lessee under this
Section 14.5(c) shall be treated as a Tax for which Lessee is obligated to
indemnify such Tax Indemnitee hereunder without regard to the exclusions set
forth in the definition of Impositions.
(d) Payments. Any Imposition indemnifiable under this Section
14.5 shall be paid directly when due to the applicable taxing authority if
direct payment is practicable and permitted. If direct payment to the applicable
taxing authority is not permitted or is otherwise not made, any amount payable
to a Tax Indemnitee pursuant to this Section 14.5 shall be paid within thirty
(30) days after receipt of a written demand therefor from such Tax Indemnitee
accompanied by a written statement describing in reasonable detail the amount so
payable, but not before two (2) Business Days prior to the date that the
relevant Taxes are due. Any payments made pursuant to Section 14.5 shall be made
in immediately available funds at such bank or to such account as specified by
the payee in written directions to the payor, or, if no such direction shall
have been given, by check of the payor payable to the order of the payee by
certified mail, postage prepaid at its address as set forth in this
Participation Agreement. Upon the request of any Tax Indemnitee with respect to
a Tax that Lessee is required to pay, Lessee shall furnish to such Tax
Indemnitee the original or a certified copy of a receipt for Lessee's payment of
such Tax or such other evidence of payment as is reasonably acceptable to such
Tax Indemnitee.
(e) Reports. In the case of any report, return or statement
required to be filed with respect to any Taxes that are subject to
indemnification under this Section 14.5, Lessee shall promptly notify the Tax
Indemnitee of such requirement and, at Lessee's expense (i) if Lessee is
<PAGE> 57
permitted (unless otherwise requested by the Tax Indemnitee) by Applicable Law,
timely file such report, return or statement in its own name or (ii) if such
report, return or statement is required to be in the name of or filed by such
Tax Indemnitee or the Tax Indemnitee otherwise requests that such report, return
or statement be prepared for filing by such Tax Indemnitee, prepare such report,
return or statement in such manner as shall be satisfactory to such Tax
Indemnitee and send the same to the Tax Indemnitee for filing no later than
fifteen (15) days prior to the due date therefor. In any case in which the Tax
Indemnitee will file any such report, return or statement, Lessee shall, upon
written request of such Tax Indemnitee, provide such Tax Indemnitee with such
information as is reasonably necessary to allow the Tax Indemnitee to file such
report, return or statement.
(f) Verification. At Lessee's request, the amount of any
indemnity payment by Lessee or any payment by a Tax Indemnitee to Lessee
pursuant to this Section 14.5 shall be verified and certified by an independent
public accounting firm mutually acceptable to Lessee and the Tax Indemnitee. The
costs of such verification shall be borne by Lessee unless such verification
shall result in an adjustment in Lessee's favor of ten percent (10%) of the
payment as computed by the Tax Indemnitee, in which case such fee shall be paid
by the Tax Indemnitee. In no event shall Lessee have the right to review the Tax
Indemnitee's tax returns or receive any other confidential information from the
Tax Indemnitee in connection with such verification. Any information provided to
such accountants by any Person shall be and remain the exclusive property of
such Person and shall be deemed by the parties to be (and the accountants will
confirm in writing that they will treat such information as) the private,
proprietary and confidential property of such Person, and no Person other than
such Person and the accountants shall be entitled thereto and all such materials
shall be returned to such Person. Such accounting firm shall be requested to
make its determination within thirty (30) days of Lessee's request for
verifications and the computations of the accounting firm shall be final,
binding and conclusive upon Lessee and the Tax Indemnitee. The parties agree
that the sole responsibility of the independent public accounting firm shall be
to verify the amount of a payment pursuant to this Participation Agreement and
that matters of interpretation of this Participation Agreement are not within
the scope of the independent accounting firm's responsibilities.
SECTION 14.6. Completion Guaranty. To the extent that the Advances made
pursuant to this Agreement are not sufficient to complete the construction of
any Improvements on any Property in accordance with the Plans and Specification
therefor, the Guarantor and the Lessee hereby agree, jointly and severally, to
pay all costs necessary to complete such Improvements substantially in
accordance with such Plans and Specifications, with the Construction Agent to
use its commercially reasonable efforts to cause such Improvement to be
completed by the Expiration Date.
SECTION 15.
MISCELLANEOUS
SECTION 15.1. Survival of Agreements. The representations, warranties,
covenants, indemnities and agreements of the parties provided for in the
Operative Documents, and the parties'
<PAGE> 58
obligations under any and all thereof, shall survive the execution and delivery
of this Participation Agreement, the transfer of any Property to the Lessor, the
construction of any Improvements, any disposition of any interest of the Lessor
in any Property or any Improvements, the payment of the Notes and any
disposition thereof shall be and continue in effect notwithstanding any
investigation made by any party and the fact that any party may waive compliance
with any of the other terms, provisions or conditions of any of the Operative
Documents. Except as expressly provided herein, it is expressly understood and
agreed that each of the indemnities provided for herein shall survive the
expiration or termination of the Lease and the other Operative Documents and the
payment by Lessee and Guarantor of all amounts due thereunder for a period of
three (3) years (but shall continue in full force and effect following such date
with respect to any Claim asserted prior to such date) and shall be separate and
independent from any remedy under the Lease or any other Operative Document;
provided that, to the extent that any Claim arises after such three (3) year
period which was not asserted during such three (3) period due to a failure to
discover such Claim or for any other reason, such indemnity shall be revived
upon the assertion of such Claim solely with respect to such Claim.
SECTION 15.2. No Broker; etc. Each of the parties hereto represents to
the others that it has not retained or employed any broker, finder or financial
adviser, other than CS First Boston, to act on its behalf in connection with
this Participation Agreement or the transactions contemplated herein, nor has it
authorized any broker, finder or financial adviser retained or employed by any
other Person so to act. Any party who is in breach of this representation shall
indemnify and hold the other parties harmless from and against any liability
arising out of such breach of this representation.
SECTION 15.3. Notices. Unless otherwise specifically provided herein,
all notices, consents, directions, approvals, instructions, requests and other
communications required or permitted by the terms hereof to be given to any
Person shall be given in writing by United States mail, by nationally recognized
courier service, by hand or by facsimile communication and any such notice shall
become effective five (5) Business Days after being deposited in the mails,
certified or registered with appropriate postage prepaid or one (1) Business Day
after delivery to a nationally recognized courier service specifying overnight
delivery or, if delivered by hand, when received, or, if sent by facsimile
communication, when confirmed by electronic or other means during business hours
on a Business Day (or, if confirmed after business hours or on a non-Business
Day, on the next Business Day) and shall be directed to the address of such
Person as indicated:
If to Guarantor, to it at:
The Home Depot, Inc.
2455 Paces Ferry Road
Atlanta, Georgia 30339
Attn: Treasurer
Telephone No.: (770) 384-4522
Telecopy No.: (770) 384-5735
<PAGE> 59
with a copy to:
L.A. Smith
Vice President/Legal
Telephone No.: (770) 431-2737
Telecopy No.: (770) 431-2752
If to Lessee, to it at:
Home Depot U.S.A., Inc.
2455 Paces Ferry Road
Atlanta, Georgia 30339
Attn: Treasurer
Telephone No.: (770) 384-4522
Telecopy No.: (770) 384-5735
with a copy to:
L.A. Smith
Vice President/Legal
Telephone No.: (770) 431-2737
Telecopy No.: (770) 431-2752
If to the Lessor, to it at:
12 East 49th Street
New York, New York 10017
Attn: Director
Telecopy No.: (212) 238-5331
Telephone No.: (212) 238-5323
If to the Agent Bank, to it at:
Tower 49
12 East 49th Street
New York, New York 10017
Attn: Agency Administration
<PAGE> 60
Telecopy No.: (212) 238-2586
Telephone No.: (212) 238-5073
If to a Lender, to it at the address set forth in Schedule 1.
If to Facility Lender, to it at:
HD Real Estate Funding Corp.
c/o JH Management Corporation
Room 520
One International Place
Boston, Massachusetts 02110
Attn: R. Douglas Donaldson
Telecopy No.: (617) 951-7050
Telephone No.: (617) 951-7690
If to Moody's or S&P, to it at the addresses set forth in the Liquidity
Agreement.
From time to time any party may designate a new address for purposes of
notice hereunder by notice to each of the other parties hereto. The Lessee shall
receive a copy of each notice delivered pursuant to the Operative Documents and
Lessee hereby agrees to notify promptly Moody's and S&P of any termination of
the Lease or determination to cease issuing Commercial Paper Notes pursuant to
the terms of the Operative Documents.
SECTION 15.4. Counterparts. This Participation Agreement may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same agreement.
SECTION 15.5. Amendments. No Operative Document nor any of the terms
thereof may be terminated, amended, supplemented, waived or modified with
respect to Guarantor, Lessee, the Lessor, the Facility Lender, the Agent Bank or
any Lender, except (a) in the case of a termination, amendment, supplement,
waiver or modification to be binding on Guarantor, Lessee, the Lessor, the
Facility Lender, or the Agent Bank with the written agreement or consent of such
party, and (b) in the case of a termination, amendment, supplement, waiver or
modification to be binding on the Lenders, with the written agreement or consent
of the Required Lenders; provided, however, that
(1) no such termination, amendment, supplement, waiver or
modification shall without written agreement or consent of each Participant
(other than Facility Lender):
(x)(i) modify any of the provisions of this Section 15.5,
change the definition of "Required Lenders" or modify any provision of
an Operative Document requiring action by
<PAGE> 61
the Required Lenders; (ii) amend, modify, waive or supplement any of
the provisions of Sections 2.01, 4.06, 10.03 or Article VI of the
Liquidity Agreement or the representations of such Participant in
Section 9 or the covenants in Section 11 of this Participation
Agreement; (iii) reduce, modify, amend or waive any fees or indemnities
in favor of any Participant, including without limitation amounts
payable pursuant to Section 14 ((except that any Person (other than the
Facility Lender) may consent to any reduction, modification, amendment
or waiver of any indemnity payable to it)); (iv) modify, postpone,
reduce or forgive, in whole or in part, any payment of Rent (other than
pursuant to the terms of any Operative Document), any Loan or Lessor
Investment Amount, the Lease Balance, Residual Value Guarantee, amounts
due pursuant to Section 22.2 of the Lease, interest or Certificate
Earnings or, subject to clause (iii) above, any other amount payable
under any Lease or this Participation Agreement, or modify the
definition or method of calculation of Rent (other than pursuant to the
terms of any Operative Document), any Loan or Lessor Investment Amount,
Lease Balance, Shortfall Amount, Residual Value Guarantee, Maximum
Property Costs, or any other definition which would affect the amounts
to be advanced or which are payable under the Operative Documents or
any of the other matters set forth above; or
(y) consent to any assignment of the Lease or the Guaranty,
releasing Lessee from its obligations in respect of the payments of
Rent and the Lease Balance or changing the absolute and unconditional
character of such obligation or releasing the Guarantor from its
obligations in respect of the payments under the Guaranty or changing
the absolute and unconditional character of such obligation (with the
express understanding that any termination, amendment, supplement,
modification or waiver of the Guaranty or any provision thereof is
subject to the prior approval and confirmation of Moody's and S&P as
set forth therein); and
(2) no other termination, amendment, supplement, waiver or
modification shall, without the written agreement or consent of the Lessor and
the Required Lenders, be made to Sections 5 or 7 of this Participation Agreement
or the definition of "Lease Event of Default".
Notwithstanding the foregoing, no termination, amendment, supplement, waiver or
modification to Sections 5 or 6 of this Participation Agreement, any provision
of the Operative Documents described in clause (b)(1)(x)(iv) above (with the
express understanding that any amendment, supplement, modification, waiver or
termination of any provision of the Operative Documents affecting the
sufficiency or timely availability of payments of Rent or other amounts due
under the Lease or the Construction Agency Agreement to repay Commercial Paper
Notes in full as and when maturing is subject to the confirmation of Moody's and
S&P described in this paragraph) or any provision of the Liquidity Agreement, or
any provision of the other Operative Documents governing the obligation of the
Lenders to fund Residual Loans thereunder shall be effective unless, as a
condition precedent thereto, the Guarantor and the Lessee shall have provided
written confirmation from each of Moody's and S&P that immediately after giving
effect to such modification, waiver or termination, the Commercial Paper Notes
shall not be rated lower than such Commercial Paper Notes are rated immediately
prior to giving effect thereto and such modification, waiver or termination
shall not result in a downgrade, withdrawal or qualification or the rating
<PAGE> 62
assigned to the Commercial Paper Notes by Moody's and S&P.l have received notice
thereof and shall have agreed that such action shall not result in a downgrade
of the rating of the Commercial Paper Notes.
SECTION 15.6. Usury. It is the intent of the parties hereto not to
violate any federal or state law, rule or regulation pertaining either to usury
or to the contracting for or charging or collecting of interest, and each of the
parties hereto agree that, should any provision of this Participation Agreement
or of any of the Operative Documents, or any act performed hereunder or
thereunder, violate any such law, rule or regulation, then the excess of
interest contracted for or charged or collected over the maximum lawful rate of
interest shall be applied to the outstanding principal indebtedness due to the
Participants under the applicable Operative Document.
SECTION 15.7. Confidentiality. Each Participant agrees to exercise
commercially reasonable efforts to keep any information delivered or made
available by the Guarantor or Lessee to it which is clearly indicated or stated
to be confidential information (or when the circumstances under which such
information is delivered or when the content thereof would cause a reasonable
person to believe that such information is confidential), confidential from
anyone other than persons employed or retained by such Participant who are or
are expected to become engaged in evaluating, approving, structuring or
administering any of the Operative Documents (such Persons to likewise be under
similar obligations of confidentiality with respect to such information);
provided, however that nothing herein shall prevent any Participant from
disclosing such information (i) to any other Participant, (ii) upon the order of
any court or administrative agency, (iii) upon the request or demand of any
regulatory agency or authority having jurisdiction over such Participant, (iv)
which has been publicly disclosed, (v) to the extent reasonably required in
connection with any litigation to which any Participant or its Affiliates may be
a party, (vi) to the extent reasonably required in connection with the exercise
of any remedy hereunder or under any other Operative Document, (vii) to such
Participant's legal counsel, independent auditors and to such Participant's
Affiliates, and (viii) to any actual or proposed Participant, assignee or other
transferee of all or part of its rights hereunder which has agreed in writing to
be bound by the provisions of this Section 15.7; provided, that, should
disclosure of any such confidential information be required by virtue of clause
(ii) or (v) of the immediately preceding provisos, any relevant Participant
shall notify Lessee and Guarantor of the same so as to allow the Lessee or
Guarantor, at Lessee's or Guarantor's sole cost and expense, to seek a
protective order or to take any other appropriate action; provided, further,
that, no Participant shall be required to delay compliance with any directive to
disclose beyond the last date such delay is legally permissible any such
information so as to allow the Lessee or Guarantor to effect any such action.
SECTION 15.8. Headings; etc. The Table of Contents and headings of the
various Articles and Sections of this Participation Agreement are for
convenience of reference only and shall not modify, define, expand or limit any
of the terms or provisions hereof.
SECTION 15.9. Parties in Interest. Except as expressly provided herein,
none of the provisions of this Participation Agreement are intended for the
benefit of any Person except the parties hereto.
<PAGE> 63
SECTION 15.10. GOVERNING LAW. THIS PARTICIPATION AGREEMENT SHALL IN ALL
RESPECTS BE GOVERNED BY THE LAWS OF THE STATE OF GEORGIA (EXCLUDING ANY OTHER
CONFLICT-OF-LAW OR CHOICE-OF-LAW RULES WHICH MIGHT LEAD TO THE APPLICATION OF
THE INTERNAL LAWS OF ANY OTHER JURISDICTION) AS TO ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE.
SECTION 15.11. Severability. Any provision of this Participation
Agreement that is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 15.12. Further Assurances. The parties hereto shall promptly
cause to be taken, executed, acknowledged or delivered, at the sole, joint and
several expense of Guarantor and the Lessee, all such further acts, conveyances,
documents and assurances as the other parties may from time to time reasonably
request in order to carry out and effectuate the intent and purposes of this
Participation Agreement, the other Operative Documents, and the transactions
contemplated hereby and thereby (including, without limitation, the preparation,
execution and filing of any and all Uniform Commercial Code financing statements
and other filings or registrations which the parties hereto may from time to
time request to be filed or effected). Lessee will, at its own expense and
without need of any prior request from any other party, to take such action as
may be necessary (including any action specified in the preceding sentence), or
(if the Lessor or Agent Bank shall so request) as so requested, in order to
maintain and protect all security interests provided for hereunder or under any
other Operative Document.
SECTION 15.13. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT
TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THE
OPERATIVE DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 15.14. Limitations on Recourse Against Lessor. Notwithstanding
anything contained in this Participation Agreement or any other Operative
Documents to the contrary, each of the parties hereto agrees to look solely to
Lessor's (or to any partner thereof's) estate and interest in the Properties and
the Improvements thereon and rights under the Operative Documents for the
collection of any judgment requiring the payment of money by Lessor in the event
of liability by Lessor, and no other property or assets of Lessor or any
shareholder, owner or partner (direct or indirect) in or of Lessor, or any
director, officer, employee, beneficiary, Affiliate of any of the foregoing
shall be subject to levy, execution or other enforcement procedure for the
satisfaction of the remedies of any party hereto against Lessor under or with
respect to the Operative Documents, the relationship of Lessor and any other
party hereto hereunder or any other liability of Lessor to any other party
hereto under the Operative Documents; provided that, nothing herein shall limit
recourse against the Lessor or its partners for the gross negligence or willful
misconduct of such Persons or claims proximately caused by Lessor's breach of
its obligations pursuant to Sections 9.1,
<PAGE> 64
11.2 (solely with respect to the first sentence thereof), 11.3, 11.4, 11.6(a),
(g), (h) or 11.7 of this Participation Agreement; provided further, that the
foregoing proviso is intended to allow a claim for damages against Lessor but
shall not be construed as creating a full recourse obligation on the part of
Lessor (or any partner thereof) to repay any of the Loans or any amounts
relating to the Loans arising under the Loan Agreement and the Notes.
SECTION 15.15. Limitation on Recourse Against Facility Lender. The
provisions of Section 3.11 of the Liquidity Agreement are hereby incorporated
herein by this reference and made a part hereof and of each of the Operative
Documents and each party hereto agrees to be bound by the limitations set forth
therein.
<PAGE> 65
[PARTICIPATION AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
THE HOME DEPOT, INC., as Guarantor
By: /s/ Marshall L. Day
--------------------------------
Marshall L. Day
Senior Vice President and
Chief Financial Officer
Attest: /s/ Lawrence A. Smith
----------------------------
Lawrence A. Smith
Assistant Secretary
[CORPORATE SEAL]
<PAGE> 66
HOME DEPOT U.S.A., INC., as Lessee and
Construction Agent
By: /s/ Marshall L. Day
------------------------------------
Marshall L. Day
Senior Vice President and
Chief Financial Officer
Attest: /s/ Lawrence A. Smith
--------------------------------
Lawrence A. Smith
Assistant Secretary
[CORPORATE SEAL]
<PAGE> 67
HD REAL ESTATE FUNDING CORPORATION, as
Facility Lender
By: /s/ R. Douglas Donaldson
------------------------------------
Name: R. Douglas Donaldson
Title: Treasurer
CREDIT SUISSE LEASING 92A, L.P., a
Delaware limited partnership, as Lessor
By: CREDIT SUISSE, its general partner
By: /s/ Carl Weatherley-White
-----------------------------------
Name: Carl Weatherly-White
Title: Associate
By: /s/ Conrad A. Meyer
-----------------------------------
Name: Conrad A. Meyer
Title: Associate
CREDIT SUISSE, as Agent Bank
By: /s/ Heather Rietenberg
------------------------------------
Name: Heather Rietenberg
Title: Member of Senior Management
By: /s/ Ira Lubinsky
--------------------------------------
Name: Ira Lubinsky
Title: Associate
<PAGE> 68
CREDIT SUISSE,
as Agent Bank
By:/s/ Carl Weatherley-White
------------------------------------
Name: Carl Weatherley-White
Title: Associate
By:/s/ Conrad A. Meyer
------------------------------------
Name: Conrad A. Meyer
Title: Associate
CREDIT SUISSE,
as Lender
By:/s/ Carl Weatherley-White
------------------------------------
Name: Carl Weatherley-White
Title: Associate
By:/s/ Conrad A. Meyer
------------------------------------
Name: Conrad A. Meyer
Title: Associate
DEUTSCHE BANK AG, NEW YORK AND/OR
CAYMAN ISLANDS BRANCH,
as Documentation Agent
By:/s/ David H. Kahn
------------------------------------
Name: David H. Kahn
Title: Assistant Vice President
By: Hans-Josef Thiele
------------------------------------
Name: Hans-Josef Thiele
Title: Vice President
<PAGE> 69
NATIONSBANK, N.A. (SOUTH)
as Lender
By: /s/ Shawn B. Welsh
------------------------------------
Name: Shawn B. Welsh
Title: Vice President
SUNTRUST BANK, ATLANTA,
as Lender
By: /s/ J. Christopher Debley
------------------------------------
Name: J. Christopher Debley
Title: Vice President-Team Leader
By:/s/ Dennis H. James, Jr.
----------------------------------
Name: Dennis H. James, Jr.
Title: Assistant Vice President
TORONTO DOMINION (TEXAS), INC.,
as Lender
By:/s/ David G. Parker
------------------------------------
Name: David G. Parker
Title: Vice President
UNION BANK OF SWITZERLAND,
as Lender
By:/s/ Robert W. Casey, Jr.
------------------------------------
Name: Robert W. Casey, Jr.
Title: Managing Director
By: /s/ Hamilton W. Bullard
------------------------------------
Name: Hamilton W. Bullard
Title: Assistant Treasurer
<PAGE> 70
BANK OF AMERICA NT&SA,
as Lender
By: /s/ Michelle W. Kacergis
------------------------------------
Name: Michelle W. Kacergis
Title: Vice President
THE BANK OF NEW YORK,
as Lender
By:/s/ Paula M. Diponzio
------------------------------------
Name: Paula M. Diponzio
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO,
as Lender
By:/s/ Paul E. Rigby
------------------------------------
Name: Paul E. Rigby
Title: Managing Director
FIRST UNION NATIONAL BANK OF GEORGIA,
as Lender
By:/s/ Mayla M. Thom
------------------------------------
Name: Mayla M .Thom
Title: Vice President
MORGAN GUARANTY TRUST CO. OF NEW YORK
as Lender
By:
------------------------------------
Name:
Title:
<PAGE> 71
WACHOVIA BANK OF GEORGIA
as Lender
By: /s/ John T. Seeds
------------------------------------
Name: John T. Seeds
Title: Senior Vice President